504 S.W.3d 772
Mo. Ct. App.2016Background
- Plaintiff (New York resident) contracted to buy a 1954 Cadillac from Daniel Schmitt & Co. (Missouri dealer); parties signed a Retail Buyers Order (RBO) for $60,000 on Jan. 5, 2011.
- Plaintiff paid $1,500 by credit card (expressly labeled non‑refundable) and separately mailed a $5,500 check; parties disputed whether the $5,500 was refundable.
- After inspecting the car in person, Plaintiff rescinded the purchase; Defendant retained the full $7,000 deposit.
- Plaintiff sued under the Missouri Merchandising Practices Act (MMPA) and common‑law fraud/negligent misrepresentation; Defendant counterclaimed for breach of contract.
- Trial court awarded Defendant $7,000 as liquidated damages, $16,019.85 in actual damages, and $43,033.75 in attorney’s fees and costs.
- On appeal the court affirmed enforcement of the RBO liquidated‑damages clause (upholding retention of $7,000) but reversed the award of actual damages above the liquidated amount and reversed the award of attorney’s fees and costs to Defendant.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RBO liquidated‑damages clause limited forfeiture to $1,500 | The clause should be read to permit forfeiture of only the $1,500 nonrefundable deposit | The clause forfeits “any cash deposit,” so both $1,500 and $5,500 are forfeitable | Court: The clause covers “any cash deposit”; Plaintiff admitted $5,500 was an additional cash deposit; appellate court upheld $7,000 forfeiture |
| Whether $7,000 is an unenforceable penalty under Restatement §339 | $7,000 is not a reasonable forecast and damages were ascertainable, so clause is a penalty | $7,000 was a reasonable forecast and losses were difficult to estimate at contracting | Court: Clause valid under §339; prongs satisfied; liquidated damages enforceable |
| Whether defendant may recover both liquidated damages and actual damages for same breach | Liquidated clause limits recovery to the stipulated amount; awarding both is duplicative | Defendant sought both because liquidated amount did not fully compensate actual loss | Court: Must elect; cannot recover liquidated plus actual for the same injury; reversed award of actual damages exceeding $7,000 |
| Whether prevailing defendant may be awarded attorney’s fees under MMPA | Plaintiff: awarding fees to prevailing defendant undermines MMPA’s consumer‑protection purpose and deters private enforcement | Defendant: statute permits fees to the "prevailing party" without limiting to plaintiffs | Court: Treating “prevailing party” as a term of art, fees against a losing consumer are permissible only in rare cases (vexatious/frivolous claims); here plaintiff’s claims were non‑frivolous—attorney’s fees reversed |
Key Cases Cited
- Murphy v. Carron, 536 S.W.2d 30 (Mo. banc) (standard of appellate review in bench trial)
- Paragon Grp., Inc. v. Ampleman, 878 S.W.2d 878 (Mo. App. E.D.) (discussing liquidated damages vs. penalty and Restatement §339)
- Star Dev. Corp. v. Urgent Care Assocs., Inc., 429 S.W.3d 487 (Mo. App.) (contract interpretation; intent controls)
- Grand Bissell Towers, Inc. v. Joan Gagnon Enters., Inc., 657 S.W.2d 378 (Mo. App. E.D.) (party seeking liquidated damages must show some actual harm)
- Goldberg v. Charlie's Chevrolet, Inc., 672 S.W.2d 177 (Mo. App. E.D.) (distinguishing penalty clauses from liquidated damages)
- Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health & Hum. Res., 532 U.S. 598 (U.S. Sup. Ct.) ("prevailing party" as term of art)
- Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (U.S. Sup. Ct.) (standards for awarding fees to prevailing defendants)
- Kawin v. Chrysler Corp., 636 S.W.2d 40 (Mo. banc) (noting difficulty of deciding whether prevailing defendant may recover MMPA fees)