549 S.W.3d 43
Mo. Ct. App.2018Background
- In 2016 Sellers (Cunningham and Southtown Dodge) and Buyers (Payne, Petrulli, Pratt) executed a Stock Purchase Agreement (SPA) to sell Southtown Dodge in two phases: 21% for $500,000 immediately and the remaining 79% later for $3,000,000 via promissory note once dealership debt hit a target.
- Closing documents and share certificates were executed and placed in escrow on May 31, but Buyers lacked financing to pay then; parties dispute whether Cunningham granted an undefined extension (an alleged "escrow agreement").
- Buyers claim Cunningham agreed to extend the payment deadline and attempted payment in late June and July; Sellers expressly rescinded the transaction June 27 and later rejected a cashier's check tendered July 18.
- Appellants sued alleging breach of contract, seeking declaratory relief (to resolve rights under the SPA and any escrow extension) and specific performance; pleadings were somewhat unclear, combining breach allegations with declaratory and equitable remedies.
- At trial, after Appellants rested, Sellers moved for a directed verdict arguing declaratory relief was improper because an adequate legal remedy (damages) existed; the trial court granted the directed verdict for Sellers, concluding the action was essentially a breach of contract and thus not a proper declaratory-judgment case.
- The appellate court reversed: it held Appellants made a submissible case that (1) an enforceable escrow extension existed was a factual question for the jury, (2) declaratory relief and specific performance were appropriate if the jury found in Buyers’ favor, and (3) jury findings should guide the court’s equitable relief determination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether declaratory judgment was proper (adequate remedy at law) | Buyers: monetary damages are inadequate because the shares/control are unique; declaratory relief and specific performance are appropriate | Sellers: Plaintiffs pleaded breach of contract and had an adequate remedy at law, so declaratory relief is improper | Court: Declaratory relief was available because Buyers made a submissible case showing inadequacy of legal remedy and need to determine parties' rights under the SPA and alleged escrow agreement |
| Whether specific performance was available | Buyers: specific performance warranted because shares/control are unique and damages are inadequate | Sellers: remedy at law (damages) suffices; plaintiffs failed to show equitable relief necessary | Court: Specific performance may be appropriate if jury finds escrow agreement and breach; equitable relief reserved to court informed by jury findings |
| Whether factual issues (existence/terms of escrow agreement) require a jury | Buyers: factual questions should go to jury to inform court’s declaration and equitable remedy | Sellers: framing as declaratory prevented proper breach-of-contract adjudication and jury trial not appropriate for equitable issues | Court: Jury should decide factual issues; declaratory judgment actions involving facts may be tried like other civil issues and jury findings inform equitable relief |
| Whether directed verdict was proper at close of plaintiffs’ case | Buyers: they presented sufficient evidence to make issues submissible on breach, declaratory relief, and specific performance | Sellers: plaintiffs failed to prove lack of an adequate remedy at law and thus failed to state a declaratory claim | Court: Directed verdict was improper because plaintiffs made a submissible case on declaratory relief and specific performance; reversal and remand granted |
Key Cases Cited
- Barron v. Shelter Mut. Ins. Co., 220 S.W.3d 746 (Mo. 2007) (trial court has considerable discretion in declaratory judgment matters)
- Schaefer v. Koster, 342 S.W.3d 299 (Mo. 2011) (wide discretion in administering Declaratory Judgment Act)
- Dujakovich v. Carnahan, 370 S.W.3d 574 (Mo. 2012) (sufficiency of petition for declaratory relief tests entitlement to declaration under averments)
- Cincinnati Casualty Co. v. GFS Balloons, 168 S.W.3d 523 (Mo. App. E.D. 2005) (petition seeking declaration of contract breach is essentially breach of contract claim)
- Powell v. Kennedy, 463 S.W.2d 802 (Mo. 1971) (specific performance appropriate where shares are unique or damages inadequate)
- Turnbull v. Car Wash Specialties, LLC, 272 S.W.3d 871 (Mo. App. E.D. 2008) (declaratory relief is sui generis; factual issues may be tried as in other civil actions)
- Savannah Place, Ltd. v. Heidelberg, 164 S.W.3d 64 (Mo. App. S.D. 2005) (preference to conduct jury trial first and reserve equitable issues for bench determination)
- State ex rel. Hawley v. City of St. Louis, 531 S.W.3d 602 (Mo. App. E.D. 2017) (supplemental relief based on declaratory judgment may be granted when necessary)