Case Summary for October 25, 2005

Your Missouri Courts - Supreme Court

Home

Case Summary for October 25, 2005

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 a.m. Tuesday, October 25, 2005
______________________________________________________________________________

SC86937
Terri Jo Hemme and Terry Hemme v. Sam Bharti and Kusum Bharti, et al.
Lafayette County
Availability of filing suit after previously filing cross-claim in related suit

In February 1998, vehicles driven by Terri Jo Hemme and Deborah Harrison collided near Bharti Liquor Store on Highway 13 in Lexington, Missouri. Both drivers were injured in the accident. Harrison filed a negligence suit against Hemme for personal injuries and later amended her suit to add Sam Bharti, Kusum Bharti and their company, as well as R. J. Reynolds Tobacco Company, as defendants. Harrison alleged the automobile collision occurred because a sign advertising Doral cigarettes that R.J. Reynolds placed next to the highway on the Bharti's liquor store property impaired Hemme's visibility. In May 2002, Hemme filed a permissive cross-claim against the Bhartis and R.J. Reynolds, seeking contribution or apportionment of fault. In November 2002, the parties settled the Harrison suit, dismissing all of Harrison's claims against all defendants. In February 2003, Hemme and her husband sued the Bhartis and R.J. Reynolds for damages for personal injuries she suffered in the February 1998 accident and for loss of consortium damages her husband suffered. In April 2003, the Bhartis and R.J. Reynolds each sought summary judgment, asserting that the Hemmes' claims were barred by the compulsory counterclaim rule of Rule 55.32(a) and the doctrine of res judicata. Following a September 2003 hearing, the court in December 2003 granted summary judgment to all the defendants. The Hemmes appeal.

The Hemmes argue the court erred in granting summary judgment to the Bhartis and R.J. Reynolds. They contend the compulsory counterclaim rule of Rule 55.32(a), as discussed in Jacobs v. Corley, 732 S.W.2d 910 (Mo. App. 1987), should not apply because Hemme's cross-claims against the Bhartis and R.J. Reynolds for contribution and indemnity in the prior action were permissive cross-claims, which did not make her an opposing party to require her to assert all related claims against the Bhartis and R.J. Reynolds in that prior action. Hemme and her husband note that the federal courts interpret similar federal procedural rules as limiting the compulsory counterclaim rule to instances in which substantive cross-claims other than contribution and indemnity are asserted. They assert that the court violated their due process rights to assert their substantive claims by disregarding or changing precedent governing the procedural bar of the compulsory counterclaim rule. The Hemmes argue the trial court should not have relied on Jones v. Corcoran, 625 S.W.2d 173 (Mo. App. 1981), which factually is not similar to this case. They contend that it is fundamentally unfair to bar substantive claims of parties who reasonably relied on precedent that did not require them to assert all potential cross-claims in the prior action and that any change to that precedent should have prospective application only. They also assert that the doctrine of res judicata does not bar Terri Hemme's current claims because she was not required to bring all her claims in her previous cross-claim.

The Bhartis respond that the court properly granted them summary judgment. They argue Rule 55.32(a) bars the Hemmes claims against them because, in the Harrison suit, they became opposing parties when they filed cross-claims. They contend the court did not violate Terri Hemme's due process rights to assert her substantive claims. They assert that, because Jones v. Corcoran and not Jacobs v. Corley correctly states Missouri law, the trial court here did not disregard or change existing precedent concerning the procedural bar of the compulsory counterclaim rule. The Bhartis respond that both federal courts and state courts have ruled that cross-claimants become opposing parties. They argue that because the Hemmes' suit is based on the facts as those litigated in the Harrison suit, res judicata bars the Hemmes from raising the claims again here.

R.J. Reynolds responds that the court properly granted it summary judgment. It argues it is entitled to judgment as a matter of law because Terri Hemme's claims are barred by the compulsory counterclaim rule. It contends Hemme was required to bring all claims for personal injury against it in the Harrison lawsuit because both actions hinge on the February 1998 automobile accident.

SC86854
Nitro Distribution, Inc., et al. v. Jimmy V. Dunn
Greene County
Amway arbitration dispute over business-support materials

Amway (now known as Alticor and Quixtar) is a multilevel marketing corporation that administers an international network of independent distributors who make money by selling consumer products and sponsoring new distributors. They also may sell Amway-related business-support materials. All Amway distributors are organized by "lines of sponsorship." When distributors bring new individuals into the Amway business, they become part of the new distributors' "upline," while the new distributors are in the sponsors' "downline." Amway has rules of conduct that govern all Amway-related businesses. All Amway distributors are required to complete a yearly application in which they agree to adhere to current rules of conduct. In September 1997, Amway's rules of conduct were amended to include an arbitration provision that is designed to settle disputes between any Amway entities regarding any Amway-related issue and that is governed by the federal arbitration act. The provision requires Amway entities to settle disputes using alternative dispute resolution. If mediation is not successful, the provision requires the dispute to be settled by binding arbitration.
Ken Stewart owns the Amway distributorship Stewart & Associates International and also is the principal of Nitro Distributing, Inc., and West Palm Convention Services, Inc., which provide, respectively, Amway-related business-support tools and functions for Amway distributors in Stewart's downline. Collectively, these distributorships are known as the Stewart organization. In February 1998, Stewart and four other Amway distributors founded Pro Net Global Association, Inc., to facilitate the sales of Amway-related business-support tools by its members and the organizing of functions for Amway distributors. Pro Net allows its members to transfer the copyright in their business tools to Pro Net, making them available for sale to all other members, including those in other lines of sponsorship. Pro Net contracted with Global Support Services, Inc., to fill these orders and to provide other administrative functions. Before incorporating Pro Net, Stewart and the other founders and their downlines were obtaining business tools from the Yager Group. When they created Pro Net, the founders severed their ties with the Yager Group and assumed responsibility for training and teaching their downlines. In spring 1998, Stewart and the other founders, along with the Yager Group and Global Support, executed a transition to Pro Net agreement that contained a binding arbitration clause. The Pro Net terms and conditions required members to adhere to the Amway rules of conduct and contained a specific clause requiring members for whom mediation was unsuccessful to arbitrate their disputes according to American Arbitration Association procedures.

In July 1998, Stewart, in the name of "Ken Stewart/Nitro Distributing," applied for Pro Net membership, agreeing to abide by all terms and conditions of such membership. The Pro Net founders do not agree about whether a Pro Net membership included a distributor's entire Amway-related organization. During the next four years, the Stewart organization bought more than 1.5 million audiotapes through Global Support and made more than $6.7 million in distributable profit from selling the tapes. At some point before the end of December 1999, Stewart was removed from the Pro Net steering committee. Nitro and West Palm subsequently sued 18 defendants, including Pro Net, Global Support, and Amway distributors and their Amway-related organizations, at least some of whom were in Stewart's upline. Many of the distributors were founders or early members of Pro Net. The defendants moved to compel arbitration. After extensive discovery, briefing and oral argument, the court in September 2003 overruled the motion to compel arbitration under the Amway rules of conduct, finding that some of the Amway arbitration procedures were unconscionable. It also denied arbitration under the Pro Net terms and conditions but did not mention the Pro Net arbitration provision. Pro Net, Global Support and the distributors appeal.

Pro Net, Global Support and the distributors argue the court erred in overruling their motion to compel arbitration and stay litigation pending arbitration. They contend the court improperly based its decision solely on the Amway rules of conduct arbitration clause without addressing the Pro Net terms and conditions arbitration clause, which they assert bound all parties to arbitrate all issues in this case independent of the Amway rules of conduct. Pro Net, Global Support and the distributors argue that they all are entitled to compel arbitration of all of Nitro and West Palm's claims under the Pro Net agreement. They also contend that both Nitro and West Palm are bound by the Pro Net arbitration clause because Nitro signed the agreement, the entire Stewart organization belonged to Pro Net and West Palm is a third-party beneficiary of the Pro Net agreement. Pro Net, Global Support and the distributors assert that Nitro and West Palm are not entitled to a jury trial about the arbitration agreements at issue because Missouri and other states permit a court, without a jury, to decide whether to grant specific performance on a motion to compel arbitration. Pro Net, Global Support and the distributors argue that the procedures of section 4 of the federal arbitration act do not preempt those in section 435.355.1, RSMo, and that the same result occurs under either the federal or the state arbitration procedures. They contend the transition to Pro Net arbitration agreement binds Nitro, West Palm and all but four of the appellants to arbitrate all issues in the case. Pro Net, Global Support and the distributors assert that the court erred in finding that the Amway rules of conduct did not bind all parties and misapplied the law in finding that the Amway arbitration procedures are not unconscionable. They argue that they are entitled under the rules of conduct to compel arbitration and that both Nitro and West Palm are bound to arbitration by the rules of conduct. They contend the Amway arbitration procedures are not unconscionable because they do not give individual "veto power" over arbitrator retention and because the confidentiality provisions are not unconscionable. They further assert that the court erred in not severing the provisions it found unconscionable.

Nitro and West Palm respond that they did not make an agreement to arbitrate, are not third-party beneficiaries and do not seek to enforce an Amway distributorship agreement. They argue they did not sign any agreements and cannot be compelled to arbitrate because they are not agents of Stewart himself and, therefore, did not agree to Amway arbitration via Pro Net. They contend that the Amway arbitration provision is unconscionable and that the unconscionable portions are too intertwined with other portions to be severed from the arbitration provision. They assert that their claims are not within the scope of arbitration because they are not independent business owners under Amway's rules of conduct and because these rules of conduct do not govern disputes relating to business-support materials. Nitro and West Palm respond that the court properly did not address the Pro Net arbitration provision in its decision and properly found that they are not bound to arbitrate under this provision. They argue Nitro is entitled to rescission or reformation to correct the unilateral mistake on its Pro Net membership application because, as a business-support material business and not an Amway distributorship, Nitro is not eligible for Pro Net membership. They contend the Pro Net arbitration provision does not apply to its founding members. They assert that West Palm is not a third-party beneficiary. Nitro and West Palm respond that they are permitted to deny arbitration and that Pro Net, Global Support and the distributorships are not entitled to enforce arbitration because some defendants are not eligible for Pro Net membership and because other defendants are founding members not entitled to enforce arbitration. Nitro and West Palm respond that their claims are not within the scope of the Pro Net arbitration provisions and that they have a right to a trial to resolve disputed fact issues about the arbitration issues. They argue they are not bound by the "transition to Pro Net" arbitration agreement because it is unconscionable, they are not signatories to the agreement, their claims are not within the scope of the agreement, and most of the defendant organizations are not entitled to enforce the arbitration provision as they also are not signatories to it.

SC86855
Netco, Inc., et al. v. Jimmy Dunn, et al.
Greene County
Amway arbitration dispute over business-support materials

Amway (now known as Alticor and Quixtar) is a multilevel marketing corporation that administers an international network of independent distributors who make money by selling consumer products and sponsoring new distributors. They also may sell Amway-related business-support materials. All Amway distributors are organized by "lines of sponsorship." When distributors bring new individuals into the Amway business, they become part of the new distributors' "upline," while the new distributors are in the sponsors' "downline." Amway has rules of conduct that govern all Amway-related businesses. All Amway distributors are required to complete a yearly application in which they agree to adhere to current rules of conduct. In September 1997, Amway's rules of conduct were amended to include an arbitration provision that is designed to settle disputes between any Amway entities regarding any Amway-related issue and that is governed by the federal arbitration act. The provision requires Amway entities to settle disputes using alternative dispute resolution. If mediation is not successful, the provision requires the dispute to be settled by binding arbitration.

Amway distributors Charlie and Kim Schmitz, their corporation Netco, Inc., and their other Amway-related businesses collectively are known as the Schmitz organization, which functions as an Amway distributor that sells Amway products and related business-support materials and sponsors major functions for other Amway distributors. In December 1998, Netco applied for a membership in Pro Net, an association of organizations formed to support Amway-related business by selling business-support materials. By signing the application and submitting a membership fee, Netco agreed to Pro Net's terms and conditions, which include an arbitration provision requiring member disputes to be resolved by mediation or, if that is not successful, by binding arbitration. The parties dispute whether Pro Net accepted Netco's application.

In June 2000, the Schmitz organization sued Pro Net, Global Support Services and nine Amway distributors in its upline, alleging they had breached an implied contract concerning business tools used and functions attended by Amway distributors. Pro Net, Global Support and the distributors asked the court to compel arbitration and to stay litigation. In September 2003, after extensive briefing, discovery and a hearing, the court denied the motion to compel arbitration under the Amway rules of conduct, finding that some of the Amway arbitration procedures were unconscionable. It also denied arbitration under the Pro Net terms and conditions but did not mention the Pro Net arbitration provision. Pro Net, Global Support and the upline distributors appeal.

Pro Net, Global Support and the upline distributors argue the trial court erred in denying their motion to compel arbitration and stay litigation because the Amway rules of conduct bound all the parties to arbitration. They contend the Schmitz organization's claims were within the scope of the Amway arbitration agreement. They assert that the organization is not entitled to a jury trial about the arbitration issues at issue because Missouri and other states permit a court, without a jury, to decide whether to grant specific performance on a motion to compel arbitration. They argue that the procedures of section 4 of the federal arbitration act do not preempt those in section 435.355.1, RSMo, and that the same result occurs under either the federal or the state arbitration procedures. Pro Net, Global Support and the upline distributors contend the court erred in concluding that the Amway arbitration procedures were unconscionably one-sided and in failing to recognize that, even if the procedures are unconscionable, they should have been severed from the Amway rules of conduct. They assert that Netco and Pro Net have a valid agreement and that the court failed to address the separate arbitration agreement in the Pro Net terms and conditions, which they argue independently binds all the parties to arbitrate all issues under the American Arbitration Association rules.

The Schmitz organization responds that the court properly denied the motion to arbitrate as a matter of law. It argues that none of its entities – including Netco and Schmitz Associates –ever agreed to arbitrate. It contends Netco did not agree to future amendment of Amway's rules and did not assent to arbitration by renewing its Amway distributorship. The Schmitz organization asserts that because no implied-in-fact contract exists, there can be no implied waiver of its constitutional right to a jury trial. It argues Netco had no notice of arbitration prior to renewal and, therefore, Netco's renewal does not signify assent. It contends Schmitz Associates is not a third-party beneficiary or agent of the Schmitzes and is not prevented from denying arbitration. It asserts that Pro Net, Global Support and the upline distributors are not entitled to enforce arbitration and that the Pro Net members are not entitled to enforce the Amway arbitration provision. It argues that its claims are not within the scope of arbitration and do not relate to the Amway rules of conduct. The Schmitz organization responds that the Amway arbitration provision is unconscionably one-sided and that, because the unconscionable aspects permeate the arbitration provision, it is impractical to sever them. It argues this Court should not consider the appellants' third point because they failed to preserve it for consideration. To the extent this Court considers this point, then the Schmitz organization argues the trial court properly did not discuss the Pro Net arbitration provision because Pro Net, Global Support and the upline distributors withdrew that argument from the trial court proceeding. It contends they are not entitled to enforce arbitration.

SC86358
State of Missouri v. David S. Zink
St. Clair County
Direct appeal of murder conviction and death sentence

In 1980, at age 21, David Stanley Zink pled guilty to and served 20 years for one federal charge of kidnapping and two state charges of rape. After Zink's release from prison, in July 2001, he rear-ended Amanda Morton, who was driving home from a boyfriend's house. The accident occurred near the intersections of Interstate 44 and Highway 125 near Strafford, Missouri. Morton called 911 to report the accident. The officer who arrived at the scene found Morton's car running and abandoned. Later that night, Zink and Morton checked into a motel. The next day, after the motel-keeper learned that Morton was reported missing, he contacted the police with personal information that Zink provided to rent his room. The police went to Zink's residence and found paint chips on his bumper resembling the color of Morton's car and brought him in for questioning. After first denying any knowledge of Morton, Zink confessed to killing her and told the authorities where they could find her body. Following a September 2004 trial, the jury found Zink guilty of first-degree murder, and he was sentenced to death. He appeals.

Zink argues the court abused its discretion in allowing the state to disclose late and refuse to admit into evidence a police report that demonstrated Morton's history of violating her curfew, which Zink contends prejudiced him in both the guilt and penalty phases of his trial. He asserts that the court violated his right to counsel by failing to appoint substitute counsel after he expressed dissatisfaction with the public defender assigned to represent him. Zink argues he was denied his right to act as a pro se defendant as the court appointed a public defender, which prevented him from controlling the defense presented. He contends the court failed to resolve conflicts between him and his appointed counsel, causing him to choose between his right to present his defense and right to counsel and ultimately violating his right to a fair trial. Zink asserts the trial court erred in allowing him to represent himself with assistance of the public defenders during the guilt phase of the trial because it did not fully question him about his mental health and did not advise him that counsel would interfere with his strategic decisions. He argues the court erred by allowing the state to cross-examine a defense expert improperly with primary testimony during the guilt phase. Zink argues the state invaded the jury's province when it described events at issue as "murder," "kidnapping," "abduction" and "crime scene." He contends the court barred him from his right to an impartial jury when it permitted the state to remove from the jury pool one more person than it was allowed. Zink asserts the trial court abused its discretion by excluding certain items as evidence, which prevented him from fully presenting his defense to the jury. He argues the jury was provided with improper penalty phase instructions that shifted the burden of proof from the state to him. Zink contends that the court erred in accepting the jury's recommendation of death and failed to supply language limiting the aggravating circumstance for depravity of mind. He asserts that the court lacks jurisdiction to sentence him to death because he was charged with unaggravated first-degree murder, which he argues is not punishable by death.

The state responds that it disclosed the police report as soon as it received it. The state also argues the court properly excluded the police report from evidence. The state contends the report was irrelevant as it did not indicate that Morton willingly left with Zink. It also asserts the exclusion of the report did not prejudice Zink as there was overwhelming evidence indicating he intentionally killed Morton. The state argues Zink did not demonstrate good cause to replace counsel because he was made aware of the disadvantages of self-representation and chose to retain counsel. The state contends the court did not have the authority to interfere with counsel’s strategic decisions, in Zink's decision to act pro se, or in his request that his counsel remain silent. It asserts that the cross-examination of a defense expert was proper because it tested the veracity and credibility of the expert and showed the bias of another expert and because the questions asked likely did not affect the outcome of either phase of the trial. The state argues the jury's province was not invaded through the state’s use of the terms "murder," "kidnapping," "abduction" and "crime scene" as the terms are shorthand descriptions of common vernacular and were used infrequently. It contends it did not remove from the jury pool more people than allowed because it only struck six people from the jury instead of nine because the potential juror in question had a valid hardship based on his medical condition. The state asserts that the court did not abuse its discretion in excluding several items as evidence because these items were not relevant to any issue in the case and had no bearing on the jury's determination of whether Zink had the necessary mental state to be found guilty. The state argues the instructions given to the jury were model approved instructions that conform to substantive law and do not shift the burden of proof or misdirect the jury as to the evidence it can consider in weighing aggravating circumstances against mitigating circumstances. The state contends the court did not err in accepting the jury's recommendation of death as the instructions gave a limiting definition under which the jury could find depravity of mind as an aggravating circumstance. The state further asserts the trial court did have jurisdiction to sentence Zink to death as the state provided him constitutionally sufficient notice of the statutory aggravating circumstances and filed a timely notice of intent to seek the death penalty.