May 1, 2012 -- The Supreme Court issued a preliminary writ of prohibition in State ex rel. Airservices Australia v. The Honorable J. Dan Conklin, SC 92405.
A third-party petition was filed against Relator Airservices Australia ("ASA") and several other parties seeking contribution and indemnity in the underlying action. ASA filed a motion to dismiss for lack of personal jurisdiction that was denied by Respondent Judge Conklin.
ASA argued in its writ petition that the trial court did not have personal jurisdiction "because ASA has not engaged in any acts that are enumerated in the Missouri long-arm statute" and "ASA lacks sufficient minimum contacts with Missouri, such that exercising personal jursidiction over ASA would offend traditional notions of fair play and substantial justice." In addition, ASA argued that the Foreign Sovereign Immunities Act does not make it susceptible to being sued in Missouri.
ASA is represented by J. Kent Lowry, Thomas Weaver, Jeffery McPherson and Matthew Reh of Armstrong Teasdale LLP. Respondent is represented by Frank Evans and Matthew Growcock of Lathrop & Gage LLP.
May 1, 2012 -- The Supreme Court ordered transfer in Travelers Property Cas. Co. of America v. The Manitowoc Co., Inc., SC 92429, following the Eastern District Court of Appeals' opinion (Knaup Crane, P.J., Clayton and Romines, JJ.), available at 2012 WL 195322 and here.
After a petition was filed against The Manitowoc Company (Manitowoc) arising from the collapse of a crane, Manitowoc filed a third-party petition against U.S. Steel seeking contribution/indemnity. 2012 WL 195322, *1-2. The St. Louis County Circuit Court (DePriest, J.) dismissed Manitowoc's third-party petition with prejudice. Id. at *1. The Eastern District affirmed and found Manitowoc failed to state a claim of relief for contribution/indemnity because "Manitowoc failed to admit or allege its own liability." Id. at *4.
Manitowoc argued in its transfer application that the Eastern District's "conclusion that [Manitowoc] was required to specifically admit liability . . . in order to state a claim for contribution is contrary to previous Appellate Decisions and raises a question of general interest and importance." Manitowoc's transfer application cited to Rule 55.10 and the decisions in Major v. Frontenac Industries, Inc., 899 S.W.2d 895 (Mo. App. E.D. 1995), Mid-Continent News Co., Inc. v. Ford Motor Co., 671 S.W.2d 796 (Mo. App. W.D. 1984) and Stephenson v. McClure, 606 S.W.2d 208 (Mo. App. S.D. 1980), among others.
Manitowoc is represented by James Morrow and M. Todd Moulder of Morrow Willnauer Klosterman Church, L.L.C. U.S. Steel is represented by Stephen Beimdiek and Sarah Hugg of Lashly & Baer, P.C.
May 1, 2012 -- The Supreme Court ordered transfer in Manner v. Schiermeier, SC 92408, following the Eastern District Court of Appeals' opinion (Knaup Crane, P.J., Mooney and Romines, JJ.), available at 2011 WL 6776153 and here.
The case involves a dispute between plaintiff-insured and defendant-insurance companies over the interpretation of identical owned-vehicle exclusion clauses contained in four Underinsured Motorist ("UIM") policies. Plaintiff argued there was UIM coverage under each policy, while the insurance companies asserted no coverage based on the owned-vehicle exclusion clauses.
The St. Charles County Circuit Court (Schneider, J.) entered summary judgment in favor of the insurance companies. 2011 WL 6676153, *1. The Eastern District found there was no coverage under two of the policies, but that genuine issues of material fact remained on one of the policies, which had to be determined before the applicability of the owned-vehicle exclusion clause could be made on the fourth policy. Id. at *9.
Plaintiff argued in his transfer application that the Eastern District's "opinion creates a new and incorrect rule of law" and "also presents conflict and issues of general importance pertaining to the nature of UIM coverage, as well as the effect of owned-vehicle exclusions." Plaintiff argued the Eastern District's opinion was contrary to the decisions in Lightner v. Farmer's Ins. Co. Inc., 789 S.W.2d 487 (Mo. banc 1990) and U.S. Fidelity & Guar. Co. v. Safeco Ins. Co. of Am., 522 S.W.2d 809 (Mo. 1975), among others.
Plaintiff is represented Maurice Graham, Gretchen Garrison, and Morry Cole of Gray, Ritter & Graham, P.C. Defendants are represented by Robert Wulff of Evans & Dixon L.L.C.
April 18, 2012. Yesterday, the Supreme Court of Missouri handed down four civil decisions:Mercy Hospitals East Communities, f/k/a St. John's Mercy Health System v. Missouri Health Facilities Review Committee, SC92015, affirming the validity of a rule by Missouri Health Facilities Review Committee (MHFRC) that exempts new hospitals costing less than $1 million from the statutory requirement of obtaining a certificate of need before expanding or constructing a health care facility; First Bank v. Fischer & Fichtel Inc., SC91951, holding that the amount of the deficiency owed by a sophisticated commercial debtor after a foreclosure sale of its property should be measured by the difference between the amount of the unpaid debt and the amount obtained at the foreclosure sale, not by the difference between the amount of the unpaid debt and the fair market value of the property at the time of the foreclosure sale; State ex rel. MoGas Pipeline LLC v. Missouri Public Service Commission, SC91968, holding that the PSC has no authority to intervene in matters pending before the Federal Energy Regulatory Commission; and Western Blue Print Co. LLC v. Roberts, SC91831, holding that an at-will employee who is not constrained by a non-compete agreement does not have a fiduciary duty to her employee, but otherwise affirming that the employer had submitted submissible cases of tortious interference with a valid business expectancy and computer tampering and affirming an attorney fee award based on the computer tampering claim.
The Court's communications counsel provided the following summaries:
A hospital appeals the trial court’s dismissal of its challenge to a rule exempting hospitals costing less than $1 million from the statutory requirement that healthcare facilities obtain a certificate of need showing that the facility serves a healthcare need in the community before being allowed to build a new facility or expand an existing one. In a unanimous decision written by Chief Justice Richard B. Teitelman, the Supreme Court of Missouri affirms the judgment, modifying it to deny relief to the hospital. Because the health facilities review committee determined, after the case was dismissed, that an applicant need not obtain a certificate of need, the hospital’s challenge to the rule is ripe for judicial review, and it has shown it has standing. The challenged rule does not conflict with the statute, which applies in part to new facilities and in part to existing facilities, and the commission was within its authority to promulgate the rule.
Judge Michael W. Manners, a circuit judge in the 16th Judicial Circuit (Jackson County), sat by special designation in place of Judge George W. Draper III.
A real estate developer appeals the trial court’s grant of a new trial to a bank, claiming that the trial court properly instructed the jury to use the fair market value of the property at the time of foreclosure to measure the amount of the deficiency the developer owed the bank, even though Missouri precedent stretching back more than a century holds that the foreclosure sale price is the proper measure of a deficiency. In a 6-1 decision written by Judge Laura Denvir Stith, the Supreme Court of Missouri affirms the trial court’s grant of a new trial. Every jurisdiction that has switched from the foreclosure sale price to fair market value has done so by statute, not the common law. Furthermore, the developer’s argument that the limited notice period between foreclosure and sale prevents competitive bidding and leads to below market value sale prices does not apply to sophisticated commercial entities such as the developer, which have the resources to obtain financing and bid at the foreclosure sale. Finally, this Court will not overturn longstanding precedent lightly, especially when overruling the precedent would modify thousands of existing contracts.
Chief Justice Richard B. Teitelman dissents. He would reverse the court’s grant of a new trial for the bank and would order the trial court to enter judgment consistent with the jury’s finding. He further would hold that the Court should alter the common law measure of damages in a deficiency action so it comes in line with the common law for most damages, which are based on fair market value and, therefore, avoid giving the lender a windfall.
Judge T. Bennett Burkemper Jr., an associate circuit judge from Lincoln County, sat by special designation in place of Judge William Ray Price Jr., and Judge John E. Parrish, a senior judge of the Missouri Court of Appeals, Southern District, sat by special designation in place of Judge George W. Draper III.
The operator of an interstate natural gas pipeline seeks review of the Missouri Public Service Commission’s order denying its request that the PSC terminate its intervention in matters pending before the Federal Energy Regulatory Commission. The trial court reversed the order and remanded the cause to the PSC for further action after finding that the PSC has no authority to intervene in FERC proceedings. In a 4-3 opinion written by Judge Laura Denvir Stith, the Supreme Court of Missouri affirms the trial court’s holding but, because no remand to the PSC is necessary, modifies the judgment to eliminate that requirement. The PSC currently has no authority to intervene in matters pending before the FERC.
Judge Karl A. DeMarce, an associate circuit judge from Scotland County who sat by special designation in place of Judge Mary R. Russell, dissents. He would affirm the PSC’s order, permitting it to continue to intervene in matters before the FERC so it may present evidence enabling the FERC to make a more informed decision about rates and related matters. The statutory language is broad enough to allow such communication, and the dictionary definitions of “communicate” include intervention in a case.
Judge Lisa K. Page, presiding judge of the 23rd Judicial Circuit (Jefferson County), sat by special designation in place of Judge William Ray Price Jr.
A former company employee, her husband and her husband’s real estate development company appeal the trial court’s judgment in favor of the employer and awarding it attorneys’ fees. In a 7-0 decision written by Judge George W. Draper III, the Supreme Court of Missouri reverses the portion of the judgment overruling the defendants’ motion for a directed verdict or new trial based on the company’s claim for breach of fiduciary duty, affirms the rest of the judgment and remands the case for further proceedings. As an at-will employee with no contract or non-compete clause, the former employee did not owe a duty of fiduciary responsibility to the company and, therefore, could not breach it. The company did prove its claims regarding tortious interference with a business expectancy and computer tampering, the latter of which entitled the company to attorneys’ fees, which the court calculated properly under the statute and the evidence presented by the attorneys for both parties.
Judge Charles E. Atwell, presiding judge of the 16th Judicial Circuit (Jackson County) sat by special designation in place of Judge William Ray Price Jr.
April 4, 2012. Yesterday, the Supreme Court of Missouri handed down decisions in two civil cases: Sanders v. Ahmed, SC91492, upholding the constitutionality of Section 538.210's cap on non-economic damages in wrongful death cases and Section 538.220's provision for a periodic payment plan, and Bateman v. Platte County, SC91898, regarding pleading requirements for a statute of limitations defense.
The court's communications counsel provided the following summaries:
In a wrongful death lawsuit, a man appeals a trial court’s reduction of the amount of noneconomic damages awarded to him pursuant to a statutory cap, and the doctor appeals the court’s decision not to reduce the amount of damages based on the amount of a settlement with other defendants and not to allow him to make periodic payments. In a 5-2 decision written by Judge William Ray Price Jr., the Supreme Court of Missouri affirms the judgment in part, reverses it in part and remands the case for further consideration. The legislature has the right to create causes of action and to prescribe their remedies, including giving courts the right to establish a plan for future payments, and did not violate the constitution in doing so here. Because the doctor failed to object and move to strike opinion testimony of the man’s expert witness at trial, he waives the right to object to its admissibility now. The man established a submissible case for the jury regarding evidence of what caused the wrongful death. State law requires the doctor to present evidence of the man’s settlement with other parties for reduction. Because proper discovery of this evidence was denied the doctor at trial, this portion of the judgment is reversed, and the case is remanded.
In a dissenting opinion, Judge George W. Draper III disagrees that the statutory cap on noneconomic damages is not unconstitutional. He believes the Court should find that the statutory cap on noneconomic damages is an impermissible burden on the right to a trial by jury and violates the separation of powers as set in the state constitution.
A county and certain property owners appeal a trial court’s judgment that a particular road is a private, not public, road. In a unanimous decision written by Chief Justice Richard B. Teitelman, the Supreme Court of Missouri affirms the judgment. Because the county never pleaded a specific statute of limitations as a defense before the trial, it waived this defense. Further, the evidence supports the trial court’s finding that the road never was used by the public.
April 4, 2012. The Missouri Supreme Court heard oral arguments today in two civil cases.
The cases are:
- SC92288, Hill v. Director of Revenue, a proceeding originating in Montgomery County regarding the constitutional validity of a statute regarding reinstatement of driving privileges;
and
- SC92062, Dujakovich v. Carnahan, an appeal from Cole and Jackson counties regarding dismissal of a petition challenging the earnings tax amendment.
Copes of the briefs are available by clicking here.
April 4, 2012. On March 29, 2012, the Supreme Court of Missouri expanded what information will be available to the public in attorney discipline actions. Pursuant to the order, which takes effect July 1, 2012, the following are considered public, unless subject to a specific protective order:
- On the filing with the Supreme Court’s advisory committee an information by the chief disciplinary counsel and answer or other responsive pleading by the attorney, all materials filed in connection with the information as well as all related proceedings;
- Written admonitions;
Previously, materials connected with attorney discipline proceedings and the proceedings themselves were not public until and unless the chief disciplinary counsel filed an information with the Supreme Court.
The order further provides that, if a disciplinary action against an attorney is dismissed by this Court or, with the acceptance of the chief disciplinary counsel, by a disciplinary hearing panel, then the attorney may request that the records of the information be made confidential.
In a written statement, Missouri Chief Justice Richard B. Teitelman stated, “Citizens have a right to expect a high level of professional service from their lawyers, and when lawyers fail to meet the ethical standards set out in this Court’s rules, they are subject to disciplinary action.” “Disciplinary proceedings in this Court always have been open, and for six years, we have published online this Court’s disciplinary orders and opinions. But we realize it is important for the public to know if an attorney is facing disciplinary action, even before the case might get to this Court. That is why we are opening the disciplinary process up at a much earlier stage, at the point when the chief disciplinary counsel has found cause to believe an attorney has violated the rules of ethics and, therefore, begins the process of seeking discipline against that attorney’s license to practice law in Missouri.
March 27, 2012. On Tuesday, March 27, 2012, the Missouri Supreme Court issued a one-page order stating that it was affirming the judgment of circuit court that had rejected a challenge to the reapportionment plan for the Missouri House of Representatives. The order indicated that a formal opinion will follow.
March 6, 2012 -- The Supreme Court ordered transfer in Whelan Sec. Co. v. Kennebrew, SC 92291, following the Eastern District Court of Appeals' opinion (Ahrens, P.J., Gaertner and Richter, JJ.), available at 2011 WL 5926166 and here.
Charles Kennebrew, Sr. and W. Landon Morgan are former employees of Whelan Security Company who signed employment contracts that included covenants not to compete against Whelan. 2011 WL 5926166, *1. After Kennebrew and Morgan left Whelan's employment, Whelan filed a lawsuit against them claiming they violated the restrictive covenants and seeking injunctive relief and damages for breach of contract, unjust enrichment and civil conspiracy. Id. at *2.
The St. Louis County Circuit Court (Maura Bridget McShane, J.) granted summary judgment for the former employees, finding that "the employment agreements at issue in this case, as written, are overbroad, not reasonable as to time and space and are therefore not valid." Id. at *3. The Eastern District reversed and found that "[n]othing in the restrictive covenants . . . are, as a matter of law, unreasonable on their face." Id. at *5.
In his transfer application, Kennebrew argued the Eastern District's decision "contradicts Missouri law" and cited, among other cases, Healthcare Services of the Ozarks, Inc. v. Copeland, 198 S.W.3d 604 (Mo. banc 2006), Schott v. Beussink, 950 S.W.2d 621 (Mo. App. E.D. 1997), Mills v. Murray, 472 S.W.2d 6 (Mo. App. 1971), and Schmersahl, Treloar & Co., P.C. v. McHugh, 28 S.W.3d 345 (Mo. App. E.D. 2000). Whelan opposed transfer and argued that the Eastern District's "Opinion rests on long established principles of Missouri law . . . [and] transfer is not appropriate for any of the specific reasons that [Kennebrew] cites."
Kennebrew is acting pro se. Morgan is represented by William Wooten of the Law Office of J. Houston Gordon. Whelan is represented by Mark Weisman and Bradley Kafka of Gallop, Johnson & Neuman, L.C.
March 6, 2012. On February 14, 2012, the Supreme Court handed down one civil decision: Legends Bank v. State of Missouri, SC91742, in which the Court found an original purpose violation in ethics legislation.
On March 6, 2012, the Supreme Court handed down seven more civil decisions: Brewer v. Missouri Title Loans Inc., SC9064 and Robinson v. Title Lenders, Inc. d/b/a Missouri Payday Loans, SC91728, both of which involved enforceability of mandatory arbitration provisions for consumer class actions; Aquila Foreign Qualifications Corp. v. Director of Revenue, SC91784, a sales tax case; Emerson Electric Co. v. Marsh & McLennan Cos., SC92026, regarding the scope of an insurance broker's fiduciary duties; Gurley v. Missouri Board of Private Investigators Examiners, SC91741, a licensing case; Fannie Mae v. My Quang Truong, SC91880, an unlawful detainer case dismissed for lack of appellate jurisdiction; and King-William v. Webster Groves School District, SC92125, finding that an evidentiary hearing should have been held before a circuit court issued a writ of mandamus that required a school district to enroll a student of an unaccredited school and remanding for an evidentiary hearing.
The court's communications counsel provided the following summaries:
The state appeals a circuit court's determination that a bill ultimately titled as relating to ethics is unconstitutional, severing and leaving standing only two sections relating to the bill’s original purpose of procurement. In a 7-0 decision written by Chief Justice Richard B. Teitelman, the Supreme Court of Missouri affirms the circuit court's decision. The bill violates the original purpose clause of the state constitution. Because this issue is dispositive, the Court does not reach other points on appeal. The Court severs the portions of the bill enacted in violation of this constitutional provision, leaving intact only the two sections relating to the bill's original purpose of procurement.
In a concurring opinion, Judge Zel M. Fischer agrees with the principal opinion that the bill violates the original purpose clause. He also agrees with the circuit court that the bill also violates the single subject requirement of the state constitution. He writes separately to explain why the Court should discontinue the judicially created doctrine of severance, which permits the adoption of procedurally unconstitutional legislation to be upheld against the clear will of the people as expressed in the Missouri Constitution.
A borrower and a lender entered into a loan agreement that required the borrower to resolve any disputes relating to the agreement in binding, individual arbitration under the federal arbitration act. The borrower filed suit, and the circuit court found the class arbitration waiver was unconscionable and unenforceable. On appeal, this Court held that the class arbitration waiver was unconscionable and struck it from the agreement. Brewer v. Missouri Title Loans, Inc. 323 S.W.3d 18 (Mo. banc 2010). The United States Supreme Court subsequently vacated that decision and remanded the case to this Court for consideration as to whether the class arbitration waiver was unconscionable in light of the Supreme Court’s recent decision in AT&T Mobility, LLC v. Concepcion, 131 S.Ct. 1740 (2011).
In a 4-3 decision written by Chief Justice Richard B. Teitelman, the Supreme Court of Missouri affirms the circuit court’s judgment in part, reverses it in part and remands the case. The presence and enforcement of the class arbitration waiver does not make the arbitration clause unconscionable. The borrower, however, has demonstrated unconscionability in the formation of the agreement. The Court affirms the circuit court’s judgment that the class arbitration waiver is unconscionable, reverses the trial court’s severance of the class arbitration waiver and requirement of an arbitrator to determine the propriety of class arbitration, and remands the case.
In a dissenting opinion, Judge Zel M. Fischer points out that the circuit court’s judgment must be reversed and remanded for factual determinations because the circuit court only considered the class arbitration provision of the contract and not the whole contact to determine conscionability.
In another dissenting opinion, Judge William Ray Price Jr. disagrees with the principal opinion that the contract in this case may be invalidated by the agreement to arbitrate absent an additional defense such as fraud, duress or unconscionability. He writes separately to explain why, regardless of the goal behind the principal opinion, this contract should have been enforced as written.
Judge Michael A. Wolff, a retired judge of the Supreme Court of Missouri, and Judge Mark D. Pfeiffer, a judge of the Missouri Court of Appeals, Western District, sat in this case by special designation in place of judges George W. Draper III and Mary R. Russell, respectively.
A lending company appeals a circuit court’s determination that the arbitration agreement in its payday loan contracts is unconscionable and unenforceable. In a 7-0 decision written by Judge Mary R. Russell, the Supreme Court of Missouri reverses the circuit court’s decision. In light of the United States Supreme Court’s recent decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011), the trial court here erred in finding the arbitration agreement unconscionable because of the class waiver it contained. The trial court should have decided whether the arbitration agreement was enforceable under state law principles of contracts that do not single out or disfavor arbitration. There are factual issues remaining for the trial court to consider in determining unconscionability.
Judge Michael A. Wolff, a retired judge of the Supreme Court of Missouri, sat in this case by special designation in place of Judge George W. Draper III.
The administrative hearing commission determined that a portion of the electricity a convenience store purchased from an electrical utility is exempt from state sales and use tax, holding that food-processing operations are “processing” within the meaning of the statute. In a 5-2 decision written by Judge Mary R. Russell, the Supreme Court of Missouri reverses the commission’s decision. Although “processing” is defined in the statute, the definition itself is ambiguous because it does not define what it means “to transform or reduce materials.” Considering the industrial connotation of other words listed in the statutory exemption, prior holdings of this Court that “processing” essentially is the same as “manufacturing,” and another prior holding of this Court that restaurants do not engage in “manufacturing,” the Court concludes that preparing food for retail consumption is not “processing” within the meaning of the statute and, therefore, the convenience store is not entitled to a refund of sales and use taxes on the electricity it purchased to power its food-preparation operations.
Judge William Ray Price Jr. dissents. He would find that, although the statutory definition of “processing” is broad, it is not ambiguous. As such, he would not resort to other mechanisms to construe the words of the statute beyond their plain, ordinary and usual meaning. He also would not apply this Court’s holding in a previous case because that case interpreted a different term appearing in a different statute.
A utility company appeals the trial court’s holding that its insurance broker was entitled to judgment without trial finding, as a matter of law, that the broker did not violate its fiduciary duty or any duty of loyalty to the utility when the broker received undisclosed extra commissions from insurers to which it referred the utility’s business, and when the broker deposited the utility’s premium payments in interest-bearing accounts while it waited to send the premiums to particular insurers. In a 7-0 decision written by Judge Laura Denvir Stith, the Supreme Court of Missouri reverses the judgment and remands the case. The broker does owe its insureds a fiduciary duty, which includes a duty of loyalty. The trial court is correct that receiving contingent commissions and interest on premiums did not themselves violate those duties, nor do those duties require the broker always to obtain the lowest possible price. But the broker had a duty to act with reasonable care in procuring insurance for the utility and should have been able to investigate whether it did so. It also had a 20-year broker relationship with the utility and may have enlarged its duties to the utility through contract or through their course of dealing. The trial court erred in granting the broker judgment before the utility was permitted to present facts on these issues, and the case is remanded so the utility can investigate and present facts on these issues.
Judge Charles E. Atwell, presiding judge of the 16th Judicial Circuit (Jackson County), sat in this case by special designation in place of Judge George W. Draper III.
A man whose private investigator license application was denied by a statewide board appeals the circuit court’s dismissal of his claims that the new statewide statutory scheme is unconstitutional and that the board violated his due process rights in denying his license. In a unanimous decision written by Judge William Ray Price Jr., the Supreme Court of Missouri affirms the circuit court’s decision. The court correctly held that Missouri’s private investigator licensure statutory scheme is constitutional because its restrictions are limited to those engaged in private investigations as a commercial business and correctly determined that the due process claims of the man, who since has received his statewide private investigator license, are moot.
A homeowner appeals the grant of summary judgment to Fannie Mae on its unlawful detainer action (to remove him from the property). In a 6-1 decision written by Judge George W. Draper III, the Supreme Court of Missouri dismisses this action for lack of appellate jurisdiction. The homeowner failed to apply for a trial de novo prior to seeking relief in this Court, depriving this Court of authority to decide his claim. The right to appeal in Missouri is purely statutory, and if the statute gives no right to appeal, then no right exists.
In a dissenting opinion, Chief Justice Richard B. Teitelman disagrees that the homeowner was compelled or limited to applying for trial de novo over the normal course of appellate review. He writes separately to explain why the Court should hear the appeal of this case on the merits and reverse the trial court’s judgment, alternatively allowing the homeowner to have a full trial before a jury or circuit judge.
A school district appeals an order mandating that it enroll a student who allegedly lives in a neighboring unaccredited school district. In a unanimous per curiam decision that cannot be attributed to any particular judge, the Supreme Court of Missouri reverses the trial court’s judgment and remands the case. Because the parties disagree as to material issues of fact, the judgment is not supported by sufficient competent evidence in the record. On remand, the school district may not raise the Hancock amendment as a defense because it is not a “taxpayer” entitled to raise such a claim.
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