Tag Archives: statute of frauds

Making a Useful Counterclaim–Gordon v. Heller

Gordon v. Heller, 2014 WL 462933 (Mo. Ct. App. E.D.), provides an interesting illustration of the desirability of making a counterclaim.

The case involves claims by a real estate agent, who also provided staging furniture, against the former client/homeowners.  As reported in the brief of the appellants/homeowners, following termination of the listing, the staging furniture remained for quite some time. The brief reports an evident judgment for the provider of staging furniture, although the brief challenges the existence of a pertinent contract.  It notes there was not a signed contract–the precise terms of any oral or implicit agreement as to terms are not detailed.

The brief does not discuss application of UCC Article 2A to the arrangements (e.g., Mo. Rev. Stat. 400.2A-201 (writing requirements)). Perhaps additional briefing will illuminate that choice.

For the moment, however, we can note the homeowners make an interesting argument. They sought in a counterclaim recovery for the value of having had their house used as a storage facility for the furniture. They allege the lessor undertook to remove the furniture but did not do so promptly. I look forward to seeing the respondent’s discussion of these issues.

 

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.

Wallace v. St. Francis Medical Center, 2013 WL 3191820 (Mo. App. E.D.)

An employee, a trauma assistant, initially under at-will employment is paid additional amounts for being “on call”, there being sign-up sheets and the like for this.  The employee alleges the arrangements were made in 2004 so this employee is to have scheduled on-call times.  It is alleged these were complied-with for some time, but the employer, it is alleged, stopped paying the additional amounts some time in 2006.

After summary judgment, in response to the appellant/employee’s brief, some curious observations are made by the employer:

 It is Appellant’s contention that an oral contract created in 1983 and modified by an oral amendment in 2004, both for indefinite periods, neither of which were reduced to writing, falls under an exception to the Statute of Frauds. The Statute of Frauds was designed to prevent just such a situation. As discussed supra, Appellant’s Amended Petition relies entirely on an alleged oral agreement for her employment as the “Trauma Assistant On Call.”

***

Here, Appellant does not allege the contract was to be performed within one year. In fact, Appellant’s Amended Petition indicates she performed under the alleged contract from October 1, 2004 through March 3, 2011. (LF 36 – Amended Petition, ¶ 8). As such, it is clear the alleged agreement was of unlimited duration and, therefore, must have been in writing to be enforceable under the Statute of Frauds. Even assuming the alleged agreement was memorialized in writing, as Appellant suggests was accomplished by Exhibit A of the Amended Petition, the writing must contain all of the essential terms of the agreement, one of which is duration. See Sales Service, Inc. v. Daewoo International (America) Corp., 770 S.W.2d 453, 455 (Mo.App.E.D.1989). Appellant has failed to allege how Exhibit A memorializes a duration provision of the alleged oral contract. Nothing on Exhibit A promises on call pay. (LF 40 – Amended Petition). Further, nothing on Exhibit A limits Saint Francis’ right to interpret its policies and determine who would or would not receive on call pay. The “Surgical Personnel On Call” sheet depicted in Exhibit A is nothing more than a collection of employee names and telephone numbers compiled for easy access by Saint Francis administration and certainly does not memorialize the alleged oral contract and amendment as Appellant suggests.

As such, Appellant has failed to state a claim upon which relief can be granted inasmuch as the Statute of Frauds precludes the enforcement of an oral agreement for an indefinite period of time.

What?  Although there are complicated issues as to whether part performance takes a contract out of the statute of frauds, certainly it cannot be a bar to recovery of what is alleged to be part of the agreed-upon compensation for parts of at-will employment that have been fully performed.

The statute of frauds does not foreclose recovery on oral contracts by application of the statute if the contract has been fully performed by one of the parties. Straatmann v. Straatmann, 809 S.W.2d 95, 99 (Mo.App.1991). Serafin v. Med 90, Inc.,
932 S.W.2d 422 (Mo. App. E.D. 1996).

Clearly Serafin states the doctrinally-correct answer.