Case Summary for February 26, 2002

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Case Summary for February 26, 2002

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DOCKET SUMMARIES
SUPREME COURT OF MISSOURI

Tuesday, February 26, 2002
________________________________________________________________________

SC83739
State ex rel. American Economy Insurance Company v. The Honorable William C. Crawford, Circuit Judge, Jasper County Circuit Court
Jasper County
Availability of expert witness for deposition

In July 1998, Curtis Jackson Sr. was involved in an automobile collision at an intersection in Parsons, Kansas. Jackson received serious neck injuries and was treated in Joplin. He suffered brain damage that left him legally incapacitated. In May 2000, Jackson, through his guardian, sued American Economy Insurance Company in Kansas, seeking underinsured motorist coverage benefits. Jackson designated accident reconstruction specialist James Loumiet as an expert witness in the Kansas case. Jackson also gave American Economy a copy of Loumiet's report, in which Loumiet concluded that vegetation obstructing a stop sign and the sign's inadequate reflectivity made the intersection dangerous and substantially contributed to the accident. After the Kansas court dismissed the case, Jackson sued American Economy in Jasper County, Missouri. When American Economy sought to take Loumiet's deposition, Jackson filed a motion to quash the deposition notice, claiming Loumiet's findings and opinions were the work product of Jackson's attorney. The court sustained Jackson's motion, and American Economy sought a writ of prohibition or mandamus. This Court entered its preliminary writ in prohibition on August 21, 2001.

American Economy asks this Court to make its writ permanent, arguing Jackson waived any work product privilege claims he might have had as to Loumiet. American Economy argues that Jackson waived the privilege when he identified Loumiet as an expert and provided American Economy with a copy of Loumiet's written opinions, conclusions and report.

Jackson responds that the court's order quashing the deposition notice should be enforced. He argues that he never designated Loumiet as an expert who would testify in the Missouri case and has not offered any of Loumiet's documents or opinions in the Missouri case. Jackson argues that, as a result, Loumiet is merely a consulting expert who is beyond the scope of discovery and therefore is not subject to deposition.

SC83505
Dyno Nobel, Inc. v. Director of Revenue
Pike County
Appellate jurisdiction and use tax refund claims

Dyno Nobel Inc. and Hercules Inc. share ownership and certain costs associated with the operation of a chemical manufacturing plant near Louisiana, Mo. They allocate these costs pursuant to a utility agreement into which they entered in 1985. Hercules owns the on-site utility plant that provides all the water, steam and electricity for the manufacturing plant. If the manufacturing plant needs additional electricity, Hercules buys it from local electric companies and pays tax on the net purchases of supplemental electricity. As it does for other purchases, Dyno reimburses Hercules its share of these taxes. Because the two companies always have considered their relationship regarding the utilities plant as an agreement to share costs, Hercules never charged Dyno sales tax on the cost reimbursements, and Dyno never provided Hercules with any evidence of tax exemption. From October 1994 through September 1997, Dyno paid approximately $85,225 in use taxes on the cost reimbursements.

After a department of revenue auditor concluded that Dyno was due a refund of the tax it remitted on the cost reimbursements because it shared utility production costs with Hercules, Dyno sought a refund. The director denied the claim, concluding that Dyno had paid the correct tax amount. Dyno sought review by the administrative hearing commission, which concluded that Dyno was not entitled to a refund and granted summary judgment to the director. The commission determined that Dyno's reimbursements under the cost sharing agreement constituted taxable purchases of electricity within the meaning of sections 144.010.1(9) and 144.020.1(3). The commission also determined that Dyno legally was obligated to remit tax to the director even though Dyno never made any written claim of exemption.

Dyno appeals, arguing that construction of revenue laws is necessary to resolve this case. Dyno contends that its reimbursements to Hercules for the costs of operating the on-site utility plant do not constitute purchases of electricity within the meaning of sections 144.010.1(9) and 144.020.1(3) and therefore are not subject to Missouri tax. Dyno further argues that even if its cost reimbursements are subject to tax, Dyno was not liable for use taxes because the applicable tax would be sales tax imposed on Hercules.

The director responds that because this case does not require construction of any revenue laws, jurisdiction over the appeal should lie with the court of appeals rather than this Court. The director contends that Dyno explicitly contracted to purchase electricity from Hercules and that the sales were taxable because Dyno took title, paid consideration and consumed the electricity. The director also argues that Dyno is not entitled to a refund of the use tax it should have paid as sales tax because it never presented a claim for a sales tax refund.

SC83987
Joseph Lovenduski v. Craig L. McGrain
Platte County
Personal jurisdiction and default judgment

Missouri resident Joseph Lovenduski loaned a total of $120,000 to New York resident Craig McGrain in 1998. Lovenduski stated he advanced the loans by withdrawing the money from Citizens Bank and Trust in Livingston County and transferring it directly to First Austin Funding Corporation. He stated that McGrain agreed to repay the loan, plus interest, in monthly installments, and that he made some payments but later defaulted. Lovenduski sued, and although McGrain apparently was served in New York in April 2000, the return on that service was not filed in Missouri for more than a year. In May 2000, McGrain's attorney filed a special appearance to contest the court's exercise of personal jurisdiction over McGrain but made no other answer to Lovenduski's petition. The court subsequently entered a default judgment against McGrain. In August 2000, the court set aside the default judgment, permitted McGrain to file an answer on the pleadings out of time and ordered him to pay Lovenduski $500 in attorney's fees. McGrain's attorney never paid these fees, however, and withdrew from the case in October 2000. After a subsequent hearing, the court found that McGrain failed to comply with its order and reinstated the default judgment.

McGrain appeals, arguing the court's judgments were void because it never had personal jurisdiction over him. He contends that the court file did not contain any return on the service and that Lovenduski's petition failed to establish that McGrain had conducted any business or made any contract in Missouri. McGrain argues that he lacked sufficient minimum contacts with the state to satisfy due process requirements. McGrain further argues that he did not fail to "plead or otherwise defend" against the case and that he never waived his defense of lack of personal jurisdiction. He also argues neither he nor his first attorney was aware of the time limit for paying the attorney's fees.

Lovenduski responds that the court had personal jurisdiction over McGrain. He contends that McGrain had been served with process, had sufficient contacts with Missouri, and had waived his defenses regarding personal jurisdiction and improper service by recognizing the case in court. Lovenduski also argues that McGrain failed to appeal the court's denial of his motion to dismiss for lack of personal jurisdiction, failed to file a Rule 74.06 motion challenging the judgment as void, and failed to present the issue of personal jurisdiction to the court properly. Lovenduski also contends that the court properly reinstated the default judgment because McGrain failed to pay the attorney's fees in a timely manner and because McGrain did not establish that his failure to file an answer was due to mistake, inadvertence or other good cause.

SC84028
Beverly Lines v. Mercantile Bank, N.A., f/k/a Mercantile Bank of South Central Missouri
Greene County
Satisfaction of mortgage debt

In November 1999, Beverly Lines and Mercantile Bank ended negotiations and settled litigation pending between them in Greene County. The settlement provided that Mercantile would release Lines and others from any and all obligations of outstanding indebtedness, including debt the bank claimed was secured by a deed of trust. The settlement agreement was filed December 13, 1999, and the court dismissed the suit the next day. In the meantime, after she and all the members of her group executed the settlement agreement and delivered it to the bank's attorneys, the Lines group demanded the bank release the deed of trust securing the indebtedness by a certified letter, return receipt requested. Twenty-five days after the bank received the demand letter, Lines sued the bank seeking damages under section 443.130, RSMo. Two days later, the bank recorded its deed of release. The court granted summary judgment to Mercantile, ruling that the outstanding debt had not been satisfied by the time Lines made the demand.

Lines appeals, arguing the court erred in holding that the indebtedness was not satisfied fully until it dismissed the first suit on December 14, 1999. She contends the bank's obligation to release the deed of trust legally was enforceable after November 30, 1999, when the bank received the fully executed settlement agreement. She argues that because the bank could have asked the court to dismiss the first suit on November 30 or any day thereafter, formal dismissal was merely a ministerial act and did not have to occur before the debt could be considered satisfied. Lines further argues she enclosed proof of satisfaction of the indebtedness with her demand letter and that she met all the elements necessary to receive damages under section 443.130.

Mercantile responds that in entering the settlement agreement, which did not give the bank a timeline within which it had to release the deed of trust, Lines specifically waived any claims she might have against the bank, including those arising under section 443.130. The bank contends that this statute is penal in nature and must be construed strictly, and that it does not control the rights, duties or obligations of the bank or Lines. Mercantile argues Lines failed to provide sufficient evidence that the indebtedness secured by the deed of trust was satisfied fully, and that the demand letter was insufficient to invoke section 443.130. The bank further argues that even if the statute is applicable and Lines complied with all its requirements, she is not entitled to relief because Mercantile fulfilled its obligations under the statute.