532 S.W.3d 180
Mo. Ct. App.2017Background
- Rock Port Market (family-owned grocery) joined Affiliated Foods Midwest (a purchasing cooperative) and paid membership/investment fees; cooperative supplied services funded by member fees.
- Affiliated Foods employee Richard York assisted a prospective competitor (FC Food Country) before it became a member: provided pro formas, engineering photos, building quotes, logo designs, attended TIF meeting, and sought Loyalty Lane exclusivity for the new store.
- Rock Port closed in December 2009 alleging Affiliated Foods’ assistance to the new store undermined its business. FC Food Country later joined Affiliated Foods.
- Rock Port sued (counts: breach of covenant of good faith and fair dealing; fraudulent misrepresentation; contract claim against York). Contract claim was dismissed; fraud verdict for Affiliated Foods in 2014; court granted new trial limited to the breach-of-covenant claim.
- 2015 trial: jury found Affiliated Foods liable for breach of the covenant and awarded $370,000 compensatory and $500,000 punitive damages; trial court entered judgment for $870,000. Affiliated Foods appealed.
- Court of Appeals affirmed liability and compensatory damages but reversed and vacated punitive damages as not submissible on the pleaded contract claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether punitive damages were submissible | Rock Port argued Affiliated Foods’ conduct was outrageous and supported punitive damages | Affiliated Foods argued punitive damages were not pleaded for the count retried and punitive damages require an independent tort or fiduciary relationship | Court: Punitive damages not submissible—vacated punitive award because Count I (breach of covenant) did not plead/request punitive damages nor show independent tort/fiduciary duty |
| Whether Rock Port’s business relationship with Affiliated Foods created a fiduciary duty supporting punitive damages | Rock Port argued the cooperative relationship imposed special duties and supported tort liability | Affiliated Foods argued the relationship was ordinary business/member relationship, not a fiduciary one imposing tort liability | Court: No fiduciary relationship shown; contract claim remains a contract action and does not alone support punitive damages |
| Whether the verdict-directing instruction was a "roving commission" | Rock Port proposed a specific instruction listing acts showing breach | Affiliated Foods argued the instruction was overly broad and let jury roam through evidence | Court: Instruction was specific (enumerated acts, causation, misuse of member funds) and not a roving commission; submission proper |
| Whether compensatory damages verdict was supported | Rock Port argued evidence showed use of member-paid resources to aid competitor causing Rock Port’s loss | Affiliated Foods argued insufficiency of proof to support liability/damages | Court: Affirmed compensatory damages ($370,000) as supported by evidence and instructions |
Key Cases Cited
- City of Harrisonville v. McCall Serv. Stations, 495 S.W.3d 738 (Mo. banc 2016) (standard for reviewing jury instructions)
- City of Greenwood v. Martin Marietta Materials, Inc., 299 S.W.3d 606 (Mo. App. W.D. 2009) (punitive damages must be pleaded and proved)
- Koger v. Hartford Life Ins. Co., 28 S.W.3d 405 (Mo. App. W.D. 2000) (implied covenant of good faith and fair dealing in every contract)
- Glenn v. HealthLink HMO, Inc., 360 S.W.3d 866 (Mo. App. E.D. 2012) (defining breach of implied covenant and its purpose)
- Schell v. LifeMark Hosps. of Mo., 92 S.W.3d 222 (Mo. App. W.D. 2002) (distinguishing tort of bad faith from contract claim for breach of covenant)
- Carter v. St. John's Reg'l Med. Ctr., 88 S.W.3d 1 (Mo. App. S.D. 2002) (punitive damages in contract cases require independent tort)
- Freeman v. Leader Nat'l Ins. Co., 58 S.W.3d 590 (Mo. App. E.D. 2001) (insurer-insured fiduciary context where tort liability may arise)
- Kratky v. Musil, 969 S.W.2d 371 (Mo. App. W.D. 1998) (business relationship does not alone create fiduciary duty)
- Comprehensive Care Corp. v. RehabCare Corp., 98 F.3d 1063 (8th Cir. 1996) (implied covenant does not transform business relationship into fiduciary relationship)
- Minze v. Mo. Dep't of Pub. Safety, 437 S.W.3d 271 (Mo. App. W.D. 2014) (definition and standards for a "roving commission" instruction)