530 S.W.3d 49
Mo. Ct. App.2017Background
- In 2002 Curtis Massood and Craig Fedynich formed Midwest Outdoor Media, LLC; Massood nominally held 51% and Fedynich 49% under the Operating Agreement, but the Subscription Agreement created conditions that could make ownership 50/50. Both intended to build and sell billboards; Massood advanced substantial funds to Midwest.
- Midwest (and an affiliated company) sued Viacom; after appeals Midwest ultimately recovered funds and later pursued a legal-malpractice suit that settled for $1,350,000, paid in two $675,000 checks.
- Those malpractice settlement checks were deposited by Massood into his personal account rather than Midwest’s account. Fedynich sued derivatively on behalf of Midwest for conversion of the malpractice proceeds and also sought dissolution and wind-up of Midwest; Massood asserted various counterclaims and declaratory reliefs.
- A consolidated jury trial produced multiple verdicts: the jury found Massood had loaned Midwest money, declared Massood entitled to the Viacom proceeds distribution, found Massood was not entitled to the entire malpractice settlement, and returned a $1,350,000 verdict for Midwest on the derivative conversion claim. The trial court awarded Fedynich (derivatively) attorney’s fees and ordered dissolution and winding up of Midwest.
- Massood appealed, challenging (1) sufficiency of evidence for conversion, (2) alleged inconsistency among jury verdicts, (3) instructional error fixing damages at $1,350,000, (4) award of attorney’s fees under Mo. Rev. Stat. § 347.175, and (5) the court’s dissolution order as premised on a deadlock despite Massood’s claimed 51% interest.
Issues
| Issue | Plaintiff's Argument (Massood) | Defendant's Argument (Fedynich/Midwest) | Held |
|---|---|---|---|
| Sufficiency of evidence for derivative conversion of malpractice settlement | The 2006 oral agreement with Fedynich entitled Massood to all Midwest recoveries (so no conversion) | Midwest owned the malpractice claim and proceeds; Massood deposited the checks into his personal account, depriving Midwest of possession | Affirmed: sufficient evidence supported conversion verdict; the 2006 conversation did not cover a later malpractice suit |
| Inconsistent jury verdicts | The conversion verdict conflicts with the jury’s finding that Massood was entitled to the Viacom proceeds and that he did not breach duties | The jury separately found Massood not entitled to the malpractice settlement; inconsistency objection was not preserved at trial | Affirmed: no reversible inconsistency and Massood waived contemporaneous objection when he approved verdicts in court |
| Instructional error fixing damages at $1,350,000 | Instruction 48 wrongly forced the jury to award the full settlement amount instead of letting jury apportion damages | Measure of damages for conversion of an identifiable check is prima facie the value of the paper; jury properly awarded the face amount | Affirmed: instruction reflected correct legal measure of damages and massood did not present a claim seeking partial entitlement to malpractice funds |
| Award of attorney’s fees under § 347.175 | Statute’s rationale doesn’t apply to member-on-member derivative claims; award included fees unrelated to derivative claim | § 347.175 expressly authorizes reasonable fees when a derivative action is successful; much work concerned the common core of facts so fees were properly awarded | Affirmed: statute applied as written; trial court did not abuse discretion in fee allocation |
| Dissolution for deadlock / wind-up order | Massood (51%) argued no deadlock and majority control precludes dissolution | Trial court found operating documents and conduct produced 50/50 management and that it was not reasonably practicable to carry on business in conformity with the operating agreement due to deadlock and litigation | Affirmed: substantial evidence supported the finding under § 347.143.2 and dissolution does not require a literal voting tie |
Key Cases Cited
- McGhee v. Schreiber Foods, Inc., 502 S.W.3d 658 (Mo. App. W.D.) (standard for reversing jury verdict for insufficient evidence)
- Herron v. Barnard, 390 S.W.3d 901 (Mo. App. W.D.) (elements of conversion)
- Craig Outdoor Advert., Inc. v. Viacom Outdoor, Inc., 528 F.3d 1001 (8th Cir.) (background on the underlying Viacom litigation)
- Moore Equip. Co. v. Callen Const. Co., 299 S.W.3d 678 (Mo. App. W.D.) (measure of damages for conversion of an identifiable check)
- Williams v. Fin. Plaza, Inc., 78 S.W.3d 175 (Mo. App. W.D.) (common core of facts justification for allocating attorney fees)