552 S.W.3d 143
Mo. Ct. App.2018Background
- MPO (medical office LLC) built a building on land owned by DSII; Jess Davis was sole member of DSII and 40% member/manager of MPO. A Ground Lease (with an absolute purchase option for land at $650,000) and a Settlement Agreement (Dec. 27, 2013) governed disentanglement.
- Settlement Agreement required removing Davis as a member; his 40% interest value would be 40% of MPO net asset value (building equity minus loan), determined by an appraisal selected through a lender chosen by MPO’s manager; various offsets/penalties applied if closing was delayed.
- Valbridge appraisal (selected by First Citizens Bank) valued building such that net equity was negative; Davis disputed that valuation and sought a second appraisal (Integra), which produced a similar result. MPO sent an April 14, 2014 letter calculating payoffs and stating it would exercise the Ground Lease purchase option and close soon; parties agreed to a May 22, 2014 closing but Davis did not cooperate.
- MPO sued Davis and DSII; jury trials and court-tried equity claims were split. Jury found for MPO on breach of the Settlement Agreement and implied covenant (awarding $150,000 each) and for DSII on MPO’s Ground Lease nonpayment claim ($54,000). The court (equity) found Davis/DSII first breached by failing to close, denied Appellants’ requested declaratory relief/fees, and ordered specific performance per MPO’s April 14, 2014 calculations, offset by the jury award — but included an incorrect double-counted offset.
- Appellants appealed multiple points (jurisdiction, jury trial rights, sufficiency/weight of evidence on option exercise, remedies, double recovery). The appellate court affirmed the judgment with modifications to avoid double recovery and corrected clerical references.
Issues
| Issue | Plaintiff's Argument (MPO) | Defendant's Argument (Davis/DSII) | Held |
|---|---|---|---|
| 1. Subject-matter jurisdiction to adjudicate whether Appellants breached Ground Lease | MPO: Circuit court has plenary jurisdiction over civil matters; breach was before the court via pleadings/defenses and trial by consent | Davis: MPO failed to plead breach of Ground Lease; court lacked jurisdiction to decide it | Affirmed: Webb controls—trial court had subject-matter jurisdiction; issue was legal error, not lack of jurisdiction. |
| 2. Jury-trial/due-process right to have jury decide breach of Ground Lease | MPO: Breach was an equity issue reserved for the court; parties treated it as such | Davis: Fact question of breach should have been submitted to jury; court deprived constitutional jury right | Denied (not preserved): Davis failed to timely raise constitutional claim and did not request jury submission. |
| 3. Whether MPO properly exercised purchase option under Ground Lease | MPO: April 14 letter sufficiently manifested exercise; parties waived strict procedural requirements by conduct/consent | Davis: MPO failed to give 90-days' certified-mail notice and didn’t strictly follow lease procedure | Affirmed: Trial court reasonably found exercise adequate and Appellants waived strict compliance; finding not against the weight of the evidence. |
| 4. Whether Appellants could obtain declaratory relief terminating Ground Lease / attorneys’ fees after failing to close | MPO: Appellants’ own bad faith and first breach (failure to close) bars equitable relief; unclean hands doctrine applies | Davis: MPO breached first by nonpayment; Appellants entitled to termination/fees | Affirmed: Court properly denied equitable relief and fees based on Appellants’ prior breach and lack of good faith. |
| 5. Award of both monetary damages and specific performance for breach of Settlement Agreement (double recovery) | MPO: Money damages under Sec.1.H were proper and specific performance necessary because damages alone were inadequate to sever relationships | Davis: Cannot obtain both remedies or get a double recovery; judgment double-counted offsets | Partially granted: Both remedies allowed, but appellate court corrected judgment to remove $94,104 offsets already reflected in jury damages to avoid double recovery. |
| 6. Jury instruction / special interrogatory on fair market value of building | Davis: Jury should have determined FMV (Interrogatory 18) | MPO: Value issues were addressed and Appellants later withdrew the interrogatory; appraisal process was as agreed | Denied (not preserved): Appellants withdrew/interrogatory abandoned; no preserved error. |
| 7. Submission of implied covenant claim to jury | MPO: Evidence showed Appellants failed to cooperate/act in good faith to close | Davis: No legal/sufficient evidence to submit implied covenant claim | Affirmed: Sufficient evidence to submit; damages overlap with breach-of-contract award but were handled via offsets. |
Key Cases Cited
- Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976) (standard of review for court-tried matters)
- J.C.W. ex rel. Webb v. Wyciskalla, 275 S.W.3d 249 (Mo. banc 2009) (Missouri recognizes only subject-matter and personal jurisdiction; pleading defects generally do not deprive subject-matter jurisdiction)
- Pilla v. Estate of Pilla, 689 S.W.2d 727 (Mo. App. E.D. 1985) (parties may waive strict contractual procedural requirements by conduct or oral agreement)
- Metropolitan St. Louis Sewer Dist. v. Zykan, 495 S.W.2d 643 (Mo. 1973) (equity courts may decree specific performance and also award damages)
- Doe 1631 v. Quest Diagnostics, Inc., 395 S.W.3d 8 (Mo. banc 2013) (equitable relief is inappropriate where adequate remedy at law exists)