Case Summary for February 24, 2010

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Case Summary for February 24, 2010

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.

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DOCKET SUMMARIES
SUPREME COURT OF MISSOURI

9 a.m. Wednesday, February 24, 2010

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SC90442
D. R. Sherry Construction, LTD. v. American Family Mutual Insurance Company
Platte County
Coverage for property damage in house construction project
Listen to the oral argument:

American Family was represented during argument by Keith A. Cary of Franke, Shultz & Mullen, P.C. of Kansas City; and Sherry was represented by Jonathan Sternberg of Kansas City.

D.R. Sherry Construction LTD is a general contractor that built a house just south of Platte City beginning in March 2003. At that time, Sherry had liability insurance through American Family Mutual Insurance Company. The house was completed in August 2003 and was sold. Some months later, the new home owners notified Sherry that there were cracks in the house’s foundation and walls. It was determined the house was not level by eight inches due to soil conditions. In 2004, Sherry filed a claim for the loss under its policy with American Family. In March 2005, Sherry reached an agreement with the homeowners to repurchase the home for the full sale price. American Family did not pay Sherry for its claim, arguing its liability coverage did not include the time when the cracks appeared. In November 2005, Sherry sued, and, in January 2008, the jury returned a verdict in Sherry’s favor for the price of the house plus interest and attorney’s fees. American Family moved for a judgment notwithstanding the verdict or for a new trial. The circuit court overruled American Family’s motion and entered judgment in accordance with the jury’s verdict. American Family appeals.

American Family argues the jury improperly was asked to determine whether the damage was covered by the insurance policy. It contends the interpretation of an insurance policy and the coverage in dispute is a question of law for determination by the court, not by a jury. American Family asserts the evidence did not support the jury’s verdict with respect to the breach of contract claim because there was no evidence to establish the property damage was the result of an “occurrence” as defined in the contract, there was no evidence that the loss occurred during the policy period and there was no evidence Sherry legally was obligated to pay damages to the homeowners. American Family further argues the jury instructions did not inform the jurors of the applicable and controlling law and did not advise the jurors of events that constitute an “occurrence” under Missouri law. American Family contends a report by Sherry’s expert witness should not have been admitted into evidence because there was no foundation for the opinions expressed in the report. It asserts that the verdict on the breach of contract claim was against the weight of the evidence and that there was no evidence American Family refused to pay or denied Sherry’s claim. Finally, it argues Sherry blocked its investigation of the claim with a confidentiality agreement.

Sherry responds that its contract with American Family was ambiguous on its face and, therefore, construction of the contract was a question of fact to be resolved by the jury. It contends that American Family failed to provide it with a single insurance policy, that the terms of the various policy documents were so varied that they did not constitute a complete and unambiguous written account of the parties’ intent, and that the parties’ evidence of their intent was in dispute. Sherry argues that it presented evidence the damage to the home was covered by the policy, that Sherry legally was obligated to pay damages to the homeowner, and that a loss occurred during the applicable coverage period of its contract with American Family. Sherry asserts that the jury instructions required the jury to determine whether there was damage to the residence, that the cause of that damage was covered by Sherry’s insurance policy, that American Family failed to perform its obligations under the contract, and that Sherry thereby was damaged. Sherry contends American Family waived the right to object to Sherry’s expert’s exhibit when the insurer did not object initially to the admission of the exhibit and only moved to strike it after it was admitted without objection. Sherry further responds there was substantial evidence that American Family refused to pay Sherry’s claim and that such refusal to pay the claim was without reasonable cause or excuse. It contends a reasonable juror could conclude from the evidence introduced that American Family was notified of Sherry’s claim in July 2004 and never took any steps to provide Sherry with an attorney, did not inspect the premises and did not keep proper records of the claim. It further contends American Family intentionally manipulated its own documents to alter the reported date of loss so as to be outside of its perceived coverage period.

SC90258
Renaissance Leasing, LLC, et al. v. Vermeer Manufacturing Company, Vermeer Great Plains, Inc.
Jackson County
Breach of warranty
Listen to the oral argument:

Uhlmann, Renaissance and TEAM were represented during argument by Kirk T. May of Rouse Hendricks German May PC of Kansas City, Vermeer was represented by W. Perry Brandt of Bryan Cave LLP of Kansas City, and Great Plains was represented by Gary J. Willnauer of Morrow, Willnauer & Klosterman L.L.C. of Kansas City.

In October 2002, Vermeer Manufacturing built a machine that performed surface mining, cut rock and leveled soil. It sold the machine for $670,000 to Crush Tech LLC through Vermeer Great Plains, its franchise dealer. Crush was loaned the money to purchase the machine from John Uhlmann through The Uhlmann Company. The warranty on the leveling machine was for one full year after purchase or 1,000 operating hours, and the express warranty obligated Vermeer to repair or replace the machine if there was a defect in material or workmanship. In December 2002, Uhlmann became the majority owner of Crush, owning 92.5 percent of the company. Uhlmann alleges Crush transferred ownership of the leveling machine through him to Renaissance Leasing LLC, also owned by Uhlmann. In January 2003, Renaissance leased the leveling machine back to Crush. In September 2003, Crush dissolved and, in June 2004, Crush’s assets were transferred to TEAM Excavating LLC. TEAM is owned by Uhlmann. Uhlmann, Renaissance and TEAM alleged the machine broke down on three projects and did not cut rock as it was advertised to do. Great Plains did numerous repairs between October 2002 and July 2003, but Uhlmann, Renaissance and TEAM claim the machine never worked as represented. Uhlmann, Renaissance and TEAM asked Vermeer Manufacturing to repurchase the model for $670,000. Vermeer refused.

In August 2006, Uhlmann, Renaissance and TEAM sued Vermeer and Great Plains, asserting claims for fraudulent and negligent misrepresentation as well as for breach of express and implied warranties. Uhlmann, Renaissance and TEAM allege the leveling machine is defective because it would not cut hard rock, which is what it purportedly was designed to do. They contend they relied on Vermeer’s advertisements and representations when they bought the machine, and the machine did not work under the circumstances it was advertised to be able to work under. Vermeer and Great Plains both moved for summary judgment, arguing Uhlmann, Renaissance and TEAM did not have standing because the warranty rights belonged to Crush, the machine’s original purchaser. In September 2007, the trial court sustained both motions for summary judgment and awarded costs to Vermeer and Great Plains, including video taping costs incurred. Uhlmann, Renaissance and TEAM moved for review of Vermeer’s bill of costs, challenging the inclusion of videograpy fees. Vermeer conceded the videography costs were not recoverable, but the trial court overruled the motion and awarded the costs including the videography fees. Uhlmann, Renaissance and TEAM appeal.

Uhlmann, Renaissance and TEAM argue they showed that genuine issues of disputed material fact exist, precluding summary judgment as a matter of law. They assert evidence existed from which a reasonable jury could conclude that Crush transferred ownership of the machine and the warranty rights to Renaissance and that all of Crush’s assets, including any breach of warranty claims, later were transferred to TEAM, making Uhlmann, Renaissance and TEAM proper parties with standing. Uhlmann, Renaissance and TEAM assert that Vermeer breached its express written warranty on the machine and that Great Plains breached its implied warranties of merchantability and fitness for a particular purpose. Uhlmann, Renaissance and TEAM further argue the evidence contained disputed material facts, precluding judgment for fraudulent and negligent misrepresentation as a matter of law. Uhlmann contends he loaned money to Crush for the machine based on Vermeer’s misrepresentations and, therefore, he and his companies have standing to pursue misrepresentation claims. Uhlmann, Renaissance and TEAM assert the record contains evidence from which a reasonable jury could conclude Crush transferred its assets to TEAM, including Crush’s claims for misrepresentation, and, therefore, TEAM has standing to assert the misrepresentation claims previously owned by Crush. They contend that material facts exist showing Uhlmann and TEAM can establish each element of their fraud and negligent misrepresentation claims and that the economic loss doctrine does not apply to Renaissance’s fraud and negligent misrepresentation claims. Finally, they assert the trial court erred in granting costs of videography expenses as such an expense is precluded by Rule 57.03.

Great Plains responds that the undisputed facts show it is entitled to judgment as a matter of law. It contends that Uhlmann, Renaissance and TEAM lack standing and that there is no valid, enforceable contract between Great Plains and Uhlmann, Renaissance or TEAM. Great Plains asserts the economic loss doctrine bars the claims. It further responds the trial court erred in granting it costs to the extent Rule 57.03 precludes recovery of videography expenses.

Vermeer responds that the trial court properly sustained its motion for summary judgment on Uhlmann, Renaissance and TEAM’s claims for breach of warranty and fraudulent and negligent misrepresentation. Vermeer argues they did not have standing to assert such a claim, and they cannot prove the essential elements of the claims against Vermeer. It contends the trial court’s order awarding costs should be reversed and remanded with directions to deduct videography expenses from the costs awarded.

SC90383
Jay Purcell v. Cape Girardeau County Commission
Cape Girardeau County
County commission’s compliance with state’s sunshine law
Listen to the oral argument:

Purcell was represented during argument by John P. Clubb of Cape Girardeau, and the commission was represented by Thomas A. Ludwig of Jackson.

In April 2008, during a closed portion of its meeting, the Cape Girardeau County commission discussed whether it could fire the county auditor, the procedure for notarizing easements and whether improperly recorded easements were recognized, the sale of park land, and an insurance bid. Unbeknownst to the rest of the commission, one of its members – Jay Purcell – was recording the closed session with an audio recorder hidden in his jacket pocket. After learning of the recording, a county prosecutor asked the attorney general’s office to investigate Purcell for violating section 610.020.3, RSMo, a criminal offense. In May 2008, in his individual capacity, Purcell sued the county commission for violating the Missouri Open Records and Meetings Act (Missouri’s “sunshine law”) during its closed session of the April 2008 meeting. Purcell contends the commission violated sections 610.020.1 and 610.020.2, RSMo, by failing to include several items on the agenda that were discussed at the meeting and by failing to provide proper notice that conformed to section 610.020.2. Purcell also alleged that the commission discussed topics during the closed portion of its meeting without justification pursuant to section 610.021, RSMo. At trial, Purcell moved for summary judgment after playing a recording of the commission’s meeting. The commission alleged Purcell’s tape violated section 610.020.3, RSMo, and moved to dismiss and for declaratory judgment. The circuit court treated the commission’s motion to dismiss as a motion for summary judgment, overruled Purcell’s motion for summary judgment, and sustained the commission’s motion for summary judgment. It held that the commission’s notice complied with the sunshine law and that the commission did not violate the sunshine law knowingly or purposefully. Purcell appeals.

Purcell argues that the commission can be sued as a public governmental body pursuant to section 610.010, RSMo, and that the commission’s meeting notice and agenda violated sections 610.020 and 610.022. He asserts the notice did not reasonably advise the public of the matters the commission considered at its April 2008 meeting and failed to cite to the specific exception of chapter 610 that allows public business to be conducted in closed session. Purcell contends the topics discussed at the closed session included matters that were not covered by any exception. He asserts there was no basis for determining the commission unintentionally violated the sunshine law; because he is not seeking the imposition of civil penalties, he argues, intent is not required to prove a violation.

The commission responds that it is not a legal entity that can be sued and that the courts have jurisdiction over only natural persons or legal entities. It argues its meeting notice and agenda did not violate sections 610.020 or 610.022 because the notice advised the public of the time, date and place of the closed session and cited the applicable exception in section 610.021. The commission contends the trial court found the three commissioners “wandered off of potential litigation” discussions while in closed session but granted the commission summary judgment because the material facts and the law did not allow relief in that there was no act to set aside pursuant to section 610.027.5, RSMo, there were no grounds for injunction or declaratory judgment, and there was no basis for attorney fees or other damages under subsections 3 and 4 of section 610.027. The commission further responds that the trial court properly determined there was no showing that any commissioner acted knowingly or purposely. It argues such a finding was necessary to determine the issue of attorney’s fees, costs and other unspecified relief because Purcell had led the trial court to believe he was requesting attorney’s fees.