Case Summary for May 21, 2014

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Case Summary for May 21, 2014

THE FOLLOWING DOCKET SUMMARIES ARE PREPARED BY THE COURT'S STAFF FOR THE INTEREST AND CONVENIENCE OF THE READER. THE SUMMARIES MAY NOT INCLUDE ALL ISSUES PENDING BEFORE THE COURT AND DO NOT REFLECT ANY OPINION OF THE COURT ON THE MERITS OF A CASE. COPIES OF ALL BRIEFS FILED WITH THE COURT ARE AVAILABLE AT THE SUPREME COURT BUILDING, COURT EN BANC DIVISION. SUMMARIES ARE UNOFFICIAL AND SHOULD NOT BE QUOTED OR CITED.

Attached to the following docketed cases are electronic copies of briefs filed by the parties. These electronic briefs have been converted to PDF to accommodate various word processors. If you do not already have Acrobat reader, which is necessary to open the PDFs, you may obtain it free at the Adobe website. (A set of free tools that allow visually disabled users to read documents in Adobe PDF format is available from access.adobe.com.) These briefs do not reflect any opinion of the Court about the appropriateness of the format of the briefs or the merits of the case, nor are they official court records. Copies of all briefs filed with the Court are available at the Supreme Court Building in the court en banc division.

The attachments below may not reflect all briefs filed with the Court, the complete filing or the format of the original filing. Appendices and other attachments generally will not be posted here. To see what documents have been filed in a particular case, visit Case.net.

DOCKET SUMMARIES
SUPREME COURT OF MISSOURI

9:30 a.m. Wednesday, May 21, 2014
____________________________________________________________________________________________________

SC93719
Daniel B. Nickell v. Michael F. Shanahan, Sr., et al.
St. Louis city
Fiduciary duty to corporation’s shareholders

Listen to the oral argument:

SC93719.mp3
Nickell was represented during arguments by Francis A. Bottini of Bottini & Bottini Inc. in La Jolla, California; Shanahan was represented by James Martin of Armstrong Teasdale LLP in St. Louis; and Mark Newman was represented by Haar & Wood LLP in St. Louis.

Daniel Nickell owned more than 437 shares of Engineered Support Systems Incorporated (ESSI), of which Michael Shanahan Sr and the other defendants were the directors and officers. When ESSI merged with DRS Technologies, Nickell sold his stock in exchange for DRS stock. Following the merger, Nickell filed a class action on behalf of DRS shareholders claiming DRS paid too much for ESSI stock, for which the federal courts awarded DRS $9.6 million dollars. After evidence surfaced that ESSI officials may have profited unfairly from backdating stock sales related to the merger, Nickell filed a second class action on behalf of all former ESSI shareholders against the director and officers of ESSI, as well as Mark Newman, the chief executive officer of DRS at the time of the merger. Nickell claimed the parties issued a false and misleading statement regarding stock prices and the terms of the ESSI and DRS merger. He claimed that ESSI directors and officers, who were also shareholders, improperly backdated stock and diverted financial benefits to take immediate advantage of the increased stock price due to the merger. The collective defendants removed the case to federal court, but the federal court found removal improper and directed the parties to return to state court. The state circuit court dismissed three of Nickell’s claims, finding he did not have a cause of action to sue the directors, officers or Newman individually and that he failed to prove the parties owed him a fiduciary duty. Nickell appeals.

Nickell argues the circuit court erred in dismissing the three claims. He contends a fiduciary duty was present between ESSI’s directors and officers and the shareholders. Nickell asserts ESSI’s directors and officers breached their fiduciary duties to him and the other members of the shareholder class, causing direct injury to the shareholders. He argues the directors and officers breached their fiduciary relationship to the shareholders because they violated the shareholders’ individual rights by backdating the stock and receiving financial benefit. Nickell contends he suffered harm distinct from that suffered by the directors and officers.

ESSI responds the circuit court correctly dismissed the three counts of Nickell’s claim. It argues Nickell did not suffer unique individual injuries different from the rest of the shareholders. ESSI contends a claim for an injury suffered the same by all shareholders must be brought derivatively (against a third-party on behalf of the corporation). It asserts Nickell already was compensated for his injury through the judgment awarded to DRS for ESSI’s actions and Nickell is not permitted to bring a direct claim. ESSI argues that the circuit court should not be reversed even if a portion of Nickell’s claim is not derivative. It contends the directors and officers listed in the petition are not controlling shareholders. ESSI asserts Nickell failed to allege a necessary element to prove the directors and officers owed a fiduciary duty to the shareholders.

Newman makes substantially the same argument as ESSI, except Newman also argues the circuit court lacked subject matter jurisdiction because Nickell’s claims did not meet the requirements for an exception to federal law under the federal act regarding derivative actions. He also contends Nickell cannot bring a claim against Newman for aiding and abetting a breach of fiduciary duty because no state law applies. Newman asserts there is insufficient evidence to prove he did anything other than go along with ESSI’s alleged violations.

Lillian Ruyle and Linda Hoffman, who have a similar proceeding pending in St. Charles County, argue as friends of the Court, that this Court should not overturn the doctrine of aiding and abetting breach of fiduciary duty, which Nickell relies on in his argument against Newman. They contend the applicable state law has been upheld for more than 175 years. Ruyle and Hoffman assert that, even if directors and officers do not have a fiduciary duty, they have a duty to be honest to shareholders. They argue that participating in fraud is substantial evidence of knowledge of the fraud.

SC93719_Newman_brief.pdf

SC93719_ESSI_defendants_brief.pdf

SC93719_Nickell_reply_brief.pdf

SC93846
State ex rel. Todd Hewitt v. Honorable Kristine Kerr, Judge, Circuit Court for St. Louis County, Missouri
St. Louis County
Challenge to motion to compel arbitration

Listen to the oral argument:

SC93846.mp3
Hewitt was represented during arguments by John D. Lynn of Sedey Harper PC in St. Louis, and the St. Louis Rams were represented by Bradley A. Winters of Sher Corwin Winters LLC in St. Louis.

Todd Hewitt worked as equipment manager for the St. Louis Rams for 40 years. After Hewitt was terminated from employment at age 54, he filed suit against the St. Louis Rams Partnership and three affiliates, claiming he was terminated due to his age. The partnership filed a motion to compel arbitration pursuant to an arbitration agreement clause in Hewitt’s employment contract. The agreement provided the NFL commissioner would serve as arbitrator. Hewitt filed a motion in opposition to the motion to compel arbitration. The circuit judge granted the partnership’s motion to compel arbitration and stayed the suit, allowing either party to dismiss the case and file an appeal. Hewitt dismissed the case and now appeals.

Hewitt argues the circuit court should not have awarded the partnership’s motion to compel arbitration. He contends the arbitration agreement is invalid and unenforceable because he did not agree to the essential terms, consideration or waiver of a court proceeding as contained in the agreement. Hewitt asserts the agreement was unfair and violates his statutory rights. He argues the affiliates – Rams Football Company Incorporated, ITB Football Company LLC and St. Louis Rams LLC – were not parties to the arbitration agreement.

The Rams Partnership responds the circuit court properly granted its motion to compel arbitration. It argues the arbitration agreement is valid and enforceable because Hewitt agreed to all essential terms, consideration and the waiver of a court proceeding. The partnership contends the arbitration provision is fair and the NFL commissioner’s selection as arbitrator is valid. It asserts the agreement does not violate Hewitt’s statutory rights. The partnership argues the other three parties are properly included in arbitration because Hewitt’s petition brings the parties within the scope of the arbitration agreement.

SC93846_Hewitt_brief.pdf

SC93846_St._Louis_Rams_brief.pdf

SC93846_Hewitt_reply_brief.pdf

SC93848
Missouri Bankers Association, Inc., and Jonesburg State Bank v. St. Louis County, Missouri, and Charlie A. Dooley
St. Louis County
Challenge to county mediation program

Listen to the oral argument:

SC93848.mp3
The Missouri Bankers Association was represented during arguments by Jane E. Dueker of Stinson Leonard Street LLP in St. Louis, and the county was represented by St. Louis County Counselor Patricia Redington of Clayton.

To manage increased foreclosure proceedings, St. Louis County enacted an ordinance requiring mandatory mediation between lenders of residential property loans and defaulting owners of real property prior to filing a foreclosure deed. The mediators and mediation coordinator were to be appointed by the county executive. The homeowner would be granted mediation as an option, and a lender could file foreclosure only if the homeowner turned down mediation or failed to reach settlement. The lender was to pay fees to the mediation coordinator, send notice of mediation to the homeowner and pay an additional mediation fee if the homeowner chose mediation. The Missouri Bankers Association and Jonesburg State Bank filed suit seeking a declaratory judgment (determination of the ordinance’s validity), a temporary restraining order (temporarily preventing enforcement of the ordinance) and an injunction (permanently preventing enforcement of the ordinance). The circuit court granted the county’s motion for summary judgment (judgment on the merits, without presentation of evidence). The banks filed a motion to modify the judgment, which the circuit court overruled. The banks appeal.

The banks argue the circuit court erred in granting the county summary judgment. They contend that, by enacting the ordinance, the county exceeded its constitutional authority because the ordinance conflicts with the state constitution, statutes and the county charter. The banks assert the ordinance imposes new taxes and fees, delegates judicial authority, uses county resources, and improperly compensates the county mediation coordinator but has not been approved by voters. They argue the ordinance is an invalid exercise of the county’s police power and an improper retrospective law (that affects prior non-criminal conduct). The banks further contend the law constitutes an impairment of contract and taking without compensation and deprives the banks of due process. They assert the county does not have the authority to enact this legislation due to the passing of section 443.454, RSMo, prohibiting local ordinances from interfering with loan agreements, mortgages or deeds of trust. The banks argue the authority granted to the county by the state constitution has been overruled by the new law.

The county responds the circuit court correctly granted it summary judgment because the bank’s claims are frivolous. It argues the matter of the county’s authority to implement a mediation program is moot due to the recent passing of a law, which overrules the statute granting authority for these programs. However, the county contends the program is not void because the county had authority at the time the program was created. It asserts it constitutionally was authorized to implement a mediation program at the time of creation. The county argues the charter permits implementation of a mediation program.

The Business Bank of Saint Louis argues, as a friend of the Court, that laws such as the ordinance in this matter make real estate loans insecure, raise the cost of credit, and decrease loan sizes and real property values. It contends the state has an interest in maximizing the value of real property and should prohibit local laws decreasing that value. The bank asserts the ordinance will cause mortgage rates to increase, thereby decreasing the number of persons who can afford loans. It argues that the legislature, not the counties, should pass such laws, and that the law conflicts with a state statute. The bank contends other banks should be permitted to join this proceeding and present evidence in the circuit court.

SC93848_MO_Bankers_&_Jonesburg_brief.pdf

SC93848_St_Louis_County_brief.pdf

SC93848_MO_Bankers_&_Jonesburg_reply_brief.pdf

SC93848_Business_Bank_of_STL_amicus_brief.pdf

SC93937
State of Missouri v. Linda L. Gargus
Clark County
Challenge to elder abuse conviction

Listen to the oral argument:

SC93937.mp3
Gargus was represented during arguments by Samuel Buffaloe of the public defender's office in Columbia, and the state was represented by Gregory L. Barnes of the attorney general's office in Jefferson City.

Linda Gargus, a certified medication technician, began caring for her mother in 2008 after she became bedridden. In February 2010, Gargus called paramedics, stating her mother had bedsores, was weak, was not eating and was diabetic. At the hospital, doctors determined the mother had open sores, her foot was missing flesh, she had an ulcer on her back, had multiple infections and her leg needed to be amputated below the knee. Upon investigation of the mother’s living conditions, the department of social services found animals roaming the home, molding food in the kitchen and a broken toilet containing waste. The mother died at the hospital March 2011. The state charged Gargus with involuntary manslaughter and elder abuse. At trial, the jury was given instructions, including one regarding elder abuse. The jury found Gargus knowingly caused serious physical injury to her mother by leaving her in unsanitary conditions susceptible to injury and, therefore, was guilty of first-degree elder abuse. Gargus filed motions for judgment of acquittal (to dismiss the charges) and a new trial, both of which the trial court overruled. Gargus appeals.

Gargus argues the trial court erred in overruling her motion for judgment of acquittal at the close of evidence. She contends the trial court also erred in upholding the jury’s guilty verdict and convicting her of elder abuse because there was insufficient evidence to find her guilty beyond a reasonable doubt. Gargus asserts the only act of which she could be found guilty is failing to perform, but she argues did not have a duty to act under applicable law. She argues there is insufficient evidence to prove she secluded her mother from family members to prevent others from aiding her. Gargus contends the trial court should not have instructed the jury as to first-degree elder abuse because the instruction included language that is not authorized by the Missouri approved instructions. She asserts the jury instruction also listed some information as if it were factual and not as if it required jury findings. Gargus also argues the jury instruction failed to require the jury to find she had a duty to perform.

The state responds the trial court correctly overruled Gargus’ motion for judgment of acquittal and convicted her of elder abuse. It argues there was sufficient evidence to find that Gargus caused unsanitary conditions for her mother, resulting in her death. The state contends Gargus’ failure to perform amounts to a voluntary act even if this Court finds she did not voluntarily act to harm her mother. The state asserts Gargus chose to keep her mother at home rather than seeking medical assistance and thereby created peril. The state argues Gargus had a duty to summon aid because she knew that bed sores should be treated due to her mother’s diabetic condition. It contends the jury instruction regarding elder abuse was proper because any additional language in the instruction was required by applicable law. The state asserts the instruction required the jury to find every element of the crime, including those regarding legal duty. It argues Gargus failed to preserve any issues for appeal except that the jury instruction contacted additional language.

SC93937_Gargus_brief.pdf

SC93937_State_brief.pdf

SC93937_Gargus_reply_brief.pdf

SC93698
John T. Impey v. Missouri Ethics Commission, et al.
Cole County
Challenge to fine on campaign materials

Listen to the oral argument:

SC93698.mp3
Impey was represented during arguments by R. Todd Wilhelmus of Caskey, Hopkins & Wilhelmus LLC in Butler, and the commission was represented by Matthew J. Laudano of the attorney general's office in Jefferson City.

John Impey opposed a referendum placed on the ballot in Houston, Missouri, regarding the annexation of the Houston school district to a different taxing district, including a new property tax. To voice his opposition, Impey painted a yard sign and created fliers that he distributed to local voters. Impey did not identify himself on the sign or in the fliers. Chairperson of the Concerned Citizens for the Future of our Community Joe Richardson, who supported the referendum, filed a complaint against Impey with the Missouri Ethics Commission. The ethics commission brought a complaint against Impey under section 130.031.8, RSMo, requiring identification of the source of funding on printed campaign materials. Impey filed an answer asserting his right to free speech as an affirmative defense. The ethics commission conducted a hearing, determined Impey knowingly violated the statute and fined him $100 dollars. Impey filed a petition for review in circuit court, and the ethics commission filed a motion to dismiss for failure to exhaust administrative remedies. The circuit court dismissed Impey’s petition. Impey appeals.

Impey argues the circuit court erred in dismissing his petition for judicial review because he had exhausted his administrative remedies. He contends he was entitled to judicial review because the commission’s decision was judicial or quasi-judicial and affects his private rights. Impey asserts section 130.031.8 violates his right to free speech. He argues the ethics commission improperly imposed an unauthorized fine. Impey contends the commission violated both his personal and property rights and interests with its final decision. He asserts he has a specific legal interest in the commission’s final decision and was immediately prejudiced by the decision.

The ethics commission responds that the circuit court correctly dismissed Impey’s petition for judicial review. It argues the administrative process does not violate Impey’s rights and is not equivalent to a contested case entitled to judicial review. The ethics commission contends Impey has not exhausted his administrative remedies because its final decision gave Impey standing to bring his claim before the administrative hearing commission. It asserts Impey’s legal rights, duties and privileges have not been violated. The ethics commission argues the circuit court lacked jurisdiction to review Impey’s rights or the ethics commission’s statutory limitations.

SC93698_MO_Ethics_commission_brief.pdf

SC93698_Impey_reply_brief.pdf