Category Archives: Copyright (c) 2013 Royce Barondes.

Jurisdiction of Small Claims Court–Seeking Money as Specific Performance

In Schler v. Coves North Homes Ass’n, 2013 WL 6516030 (Mo. Ct. App. W.D.), we have an assertion that a claim seeking monetary compensation involves equitable claims and hence is outside the jurisdiction of a Small Claims Court.  The claim involves failure to make repairs, brought by a homeowner against an association, allegedly required under the recorded covenants, conditions and restrictions.  Here’s what the association argues:

The unequivocal claim that the Declaration requires the Association to repair or fund the repair of the Schlers’ patio, porch, steps, or anything else, makes this suit one for specific performance. It is axiomatic that regardless of the terminology used, courts look to substance and not form in determining what the “true cause” of action is. By way of analogy only, there is the case of DeVitre v. Orthopedic Center of Saint Louis, LLC, 349 S.W.3d 327, 331-332 (Mo. 2011) (en banc), in which the Court essentially pointed out that regardless of the terminology used, e.g., calling the claim one for breach of fiduciary duty, assault, battery, libel, false imprisonment, tortious interference with contract, etc., where the “true cause” was one of medical negligence, the legal principles applicable to medical malpractice suits would be applied.

Here, the Schlers’ “true cause” is one of specific performance, even though Mindy L. Schler testified at trial that she didn’t want the trial court to order the Association to specifically perform, i.e., to make the repairs, because she didn’t trust the Association to honor the order, and instead wanted the money paid to them. [TR. 84/13 to 85/2.]

This argument is curious.  In the ordinary case, where a promisee claims a promisor failed to fulfill a contractual promise, the promisee claims a contract “requires” an obligor to perform some act.  A claim for money damages for failure to perform a contractual obligation is not inherently one for specific performance.  The homeowner’s association’s argument would make all claims for money damages for breach of contractual obligations equitable.  It obviously proves too much.

Now, there are certainly some anomalies.  The requirement for “mutuality of obligation”, now typically discredited in the U.S., allowing a seller to receive specific performance of a contract for sale of land because the buyer would have a right to specific performance, is one such anomaly.  But the homeowner’s association’s argument goes beyond that, in a way that would make equitable all claims for money damages for breach of contractual promise.  A puzzling argument indeed.

Jake C. Byers, Inc. v. J.B.C. Investments–A Favorite Statement on the Nature of Legal Opinions

While in the process of collecting supplemental reading on the parol evidence rule for my spring class in Contracts, I’ve once again happened-upon the following statement Jake C. Byers, Inc. v. J.B.C. Investments, 834 S.W.2d 806, 811 (Mo. App. E.D. 1992).  Though we attempt to focus this blog’s discussion on recent developments and pending cases, we’ve decided to direct attention to its statement on the nature of legal opinions:

To answer these two questions, we, in Missouri, no different than the courts in most other jurisdictions, have used a variety of principles, chosen randomly with no consistency, from the common law, the treatises of Professor Williston and Corbin, and the First and Second Restatement of the Law of Contracts. The principles developed within each source may well be consistent with one another. The principles of one source, however, are not necessarily consistent with the principles of another source. Thus, the random selection of principles from more than one source to resolve parol evidence issues has made the parol evidence rule in Missouri, no different than in most other jurisdictions, a deceptive maze rather than a workable rule. We do not intend to solve this maze and tidy up the Missouri law. We follow the holdings and teachings of our cases as we understand them.

Jake C. Byers, Inc. v. J.B.C. Investments, 834 S.W.2d 806, 811 (Mo. App. E.D. 1992).

Writing Requirement in Contracting With Counties, Etc.

Mo. Rev. Stat. 432.070 requires a writing for any of the following to contract: counties, cities, towns, villages, school townships, school districts and other municipal corporations.  Gill Construction, Inc. v. 18th & Vine Authority, 157 S.W.3d 699, 708 (Mo. App. W.D. 2004) notes, “A contract made in violation of the statute is ‘void rather than voidable.’”  Somewhat interestingly, Mays-Maune & Associates, Inc. v. Werner Bros., Inc., 139 S.W.3d 201 (Mo. App. E.D. 2004), holds a claim in restitution cannot be made against a school district, by virtue of this statue of frauds provision.

An appellate brief in Drury Co. v. Jackson R-2 School District, 2013 WL 6169464 (Mo. Ct. App. E.D.) discusses a related question:  Whether this writing requirement bars enforcement of a written agreement within the statute by a third-party beneficiary.  The basic circumstances are a subcontractor alleges it has been harmed by the school district’s alleged failure to obtain insurance the district’s contract with the prime contract obligated the district to obtain.

The brief reports the claim was dismissed:

On November 18, 2010, the Circuit Court entered a “Judgment on Motions to Dismiss,” stating summarily: “The motion of Defendant, Jackson R-2 School District to dismiss Count I of Plaintiff’s Petition is SUSTAINED. Count I of Plaintiff’s petition is dismissed without prejudice. Gill Construction, Inc. v. 18th & Vine Authority, 157 S.W.3d 699 (Mo. App. W.D., 2005).”

The cryptic reference to Gill is evidently to that court’s determination that municipal ordinances did not satisfy the writing reqirement (though it could perhaps be to the court’s deference to the trial court’s determination as to a claim the municipality was not liable as a principal).

Gill states, “The purpose of Section 432.070 is to protect municipalities.”  “Protect” presumably does not mean allow to chisel–I mean avoid liability for failure to perform properly authorized obligations.  Gill references City of Kansas City v. Southwest Tracor Inc., 71 S.W.3d 211 (Mo. App. W.D. 2002).   Southwest Tracor, at 215-16, explains the purposes in greater detail (citations omitted):

The statute recognizes that municipal corporations represent the public and should be protected from the unauthorized actions of their agents. The purpose of the statute is to provide protection for municipalities; not parties who seek to impose obligations upon government entities. To that end, “ ‘[a] court should unhesitatingly enforce compliance with all mandatory legal provisions designed to protect a municipal corporation and its inhabitants.’ ” City of Washington, 533 S.W.2d at 558.

… A party contracting with a municipality is charged with the knowledge of the requirements set out in the statute. As a result, “any contract entered into by a municipality beyond the scope of its power is void and not merely voidable.” [Software A.G. of N. Am., Inc. v. City of Columbia, 903 S.W.2d 641, 643 (Mo.App. W.D.1995)]  “ ‘[I]t is … ultra vires for a Missouri municipality to incur a liability in the nature of a contractual obligation … not within the scope of its corporate powers or one not expressly authorized by law.’ ” Duckett Creek Sewer Dist. of St. Charles County v. Golden Triangle Dev. Corp., 32 S.W.3d 178, 183 (Mo.App. E.D.2000) (quoting Donovan v. Kansas City, 352 Mo. 430, 175 S.W.2d 874, 882 (banc 1943)).

Allowing recovery by an intended beneficiary under a properly authorized contract, memorialized in writing, does not implicate the referenced purposes. This does, however, seem to be the type of circumstance where a court may extract some snippet from a prior case, repeat it as mantra, and find the absence of a writing between the sub and the governmental entity a basis to avoid liability.

A finding for the district, of course, will result in increased transaction costs, as each subcontractor would evidently need to get a separate agreement signed by the governmental entity.  One supposes that each such separate agreement would be required to be properly authorized.  And one would expect the increased costs of contractors in assuring compliance, and the risk of noncompliance, will ultimately increase amounts charged on covered contracts.

At best a Pyrrhic victory in the offing for governmental units.

Are Fiduciary Relationships Necessarily Excluded from the MMPA? Someone Claims So. McFarland v. Trame.

Are legal services within the M.M.P.A.?  McFarland v. Trame, No. ED99669, 2013 WL 6169474 (Mo. Ct. App., E.D. 2013), is a brief that argues so:

Appellant’s Count VI in her First Amended Petition, alleging violation of the Missouri Merchandising Practices Act, was dismissed on or about November 23, 2010. See L.F. 4. This ruling was proper and should not be disturbed because Missouri courts have not applied the MMPA to fiduciary causes of action such as the present case (i.e., cases against attorneys), and instead have only applied the MMPA to its intended types of cases, such as consumer transactions such as claims brought by automobile purchasers against automobile dealerships, and customers against roof repair and air conditioning companies. See, e.g., Schuchmann v. Air. Serv. Heating & Air. Cond., Inc., 199 S.W.3d 228 (Mo. App. S.D. 2006); Morehouse v. Behlmann Pontiac-GMC Truck Serv., Inc., 31 S.W.3d 55 (Mo. App. E.D. 2000); Viene v. Concours Auto Sales, Inc., 787 S.W.2d 814 (Mo. App. 1990); State ex rel. Webster v. Milbourn, 759 S.W.2d 862 (Mo. App. E.D. 1988).

That’s interesting.  What about real estate brokers?  Categorization of that relationship has changed in various jurisdictions over time.  What was the characterization in, let’s say, 1984, in a case discussing the relationship of H.S.C., as the real estate broker, to American, its principal and the seller?

More after the break …

Continue reading

Riprap and an Anomalous Argument Against Set-off–Bucksaw Resort, LLC v. Mehrtens, 2013 WL 6065091 (Mo. App. W.D. 2013)

In Bucksaw Resort, LLC v. Mehrtens, 2013 WL 6065091 (Mo. App. W.D. 2013), we have a surprising brief submitted on behalf of a party losing on appeal.  Frankly, it’s difficult not to be confused by the brief.

The basic facts involve a claim that an insurance broker failed to procure coverage on the all the requested property, and a claim against the insurers who issued the coverage in question.  Though this author spent quite some time sailing as a youngster, he cannot recall having previously heard the term “riprap”.  Now he has been reliably informed by a footnote in the opinion:

Riprap is a larger rock that is placed on the edge of a waterway to help control erosion.

Evidently, coverage for riprap is uncommon.

Bucksaw, the insured, sued both the insurers and the broker.  The opinion recites:

Bucksaw filed a four-count petition against Federal, XL, and Broker. In the first two counts, Bucksaw asserted breach of contract claims against the two insurance companies. In the third count, Bucksaw asserted a claim of reformation against all three defendants. In the fourth count, Bucksaw asserted a claim of negligence against all three defendants claiming that each defendant had a duty to provide the insurance appropriate for the marina and with coverages represented to Bucksaw, including all structures, improvements, and business interruption.

After filing suit but before trial, Bucksaw settled with both insurance companies. An offer of proof was made outside the presence of the jury to show that the stipulated amounts of the respective settlements were $24,000 paid by XL and $97,100 paid by Federal. After the settlement, both insurance companies were dismissed with prejudice from the lawsuit. Bucksaw then continued its negligent failure to procure insurance suit against Broker.

At trial, the court did not allow evidence of the settlement to be introduced to the jury. The court did allow the Broker to put on evidence to show that the two insurance companies had paid Bucksaw for damages. At the close of Bucksaw’s evidence and again at the close of all evidence, Broker moved for a directed verdict. The trial court denied the motions. The jury entered a verdict in favor of Bucksaw in the amount of $54,000. The trial court entered judgment upon the jury’s verdict for the full amount. Subsequently, Broker filed his motion for judgment notwithstanding the verdict, or, in the alternative, motion to amend the judgment, which the court also denied.

OK; I can see a number of possibilities, including:

  • the insurance covered part of the loss, some other loss allegedly should have been included in coverage for “riprap”, etc., and was not, hence, there is an additional claim against the broker;
  • the settlement with the insurers included some settlement as to matters the insured claimed should have been procured by the broker but were not.

For more on how the insured’s counsel founders on the shoals …

Continue reading