Lead Opinion
Dennis Hess purchased property in Platte County, Missouri, from Chase Manhattan Bank (“Chase”) for $52,000 in April 1999. At the time of the sale, Chase was
The trial court granted Chase’s motion to dismiss the MPA claim because the MPA was not amended to allow a private right of action for misrepresentation in the sale of real estate until after the date of the sale. Hess appeals that ruling. Hess’ fraud claim proceeded to trial. The jury found in Hess’ favor and awarded him actual but not punitive damages. Chase cross-appeals the submission of the fraud claim to the jury.
The trial court correctly denied Chase’s motion for judgment notwithstanding the verdict on the fraud claim. Because Hess’ claim was one for fraudulent inducement to contract, it is not precluded by the inclusion of disclaimers in the contract itself, and Hess presented evidence that the EPA investigation should have been disclosed despite the disclaimers. Further, the trial court erred in dismissing Hess’ MPA claim. The MPA has long barred the kind of real estate representations alleged here. The fact that it was not amended until 2000 to permit a private right of action for such misrepresentations, in addition to suit by the attorney general, is no bar to suit by Hess for actual damages and attorneys’ fees. The MPA did not, however, allow recovery of punitive damages at the time of Chase’s misrepresentations; therefore, Hess may not recover them. The judgment is affirmed in part and reversed in part, and the case is remanded.
I. FACTUAL AND PROCEDURAL BACKGROUND
Chase held a mortgage on a four-acre property in southwestern Platte County (“the property”) when it was owned by Billy Stevens (the “mortgagor”). The mortgagor also owned a paint company. Hess presented evidence at trial that, on several occasions, the mortgagor ordered his employees to load a trailer with ten or twelve 55-gallon paint drums and dump them at the property so that he could avoid the costs of proper storage and disposal. He also caused his employees to dump three or four pallets of old paint cans near the foundation of an old barn on the property. In June 1997, former employees of the paint company informed the EPA of this illegal dumping. The mortgagor thereafter filed for bankruptcy protection and defaulted on the mortgage.
In April 1998, the EPA obtained a search warrant and discovered numerous rusty, leaking containers of waste paint and paint-related products. A few months later, in December 1998, the mortgagor pled guilty to federal environmental crimes and was sentenced to serve one year and a day in prison. The next month, Chase, who earlier had initiated foreclosure pro
Chase then listed the property for public sale. The property generated interest from a number of persons, three of whom, including Hess, ultimately made offers to buy it. At the time of their offers, the other two prospective purchasers had seen the paint cans the previous owner had dumped near the old barn, but Hess had not. None of the three individuals who offered to purchase the property undertook any environmental inspections of the property. The uncontradicted trial testimony of experienced real estate agents was that such inspections would have been extraordinary under the circumstances, as none of the potential purchasers knew the EPA was concerned about the property.
Chase knew that the EPA was investigating the property, but it did not disclose that fact to Hess or to other potential buyers prior to the sale. Hess offered to purchase the property for $52,000, and Chase accepted the offer. Chase asserted in the sale contract that it “had never seen nor occupied the property” and that it had “not inspected [the] property.” The sale contract expressly required Chase to complete a “Seller’s Disclosure-Statement of Condition of the Property,” which Chase never completed.
After the purchase, Hess was cleaning up the property and preparing for renovations when he discovered the paint cans. Not realizing the EPA was concerned about the cans, he hired a construction company to bury the paint cans along with other waste on the property. In January 2000, the EPA issued a unilateral administrative order for Hess to exhume and dispose of the buried paint cans within 10 days.
Hess sued Chase once he learned of the EPA’s order and investigation, alleging that Chase had a duty to disclose the EPA investigation prior to the sale and that its failure to do so constituted common law fraud and violated the MPA. The trial court dismissed Hess’ MPA claim. After a two-week trial, the jury returned a verdict for Hess on his fraud claim for $52,000 in actual damages but did not award punitive damages. As previously noted, Hess appeals from the dismissal of his MPA claim and Chase cross-appeals from the judgment for actual damages on the fraud claim. After opinion by the Missouri Court of Appeals, Western District, this Court granted transfer. Mo. Const, art. V. sec. 10.
II. FRAUD CLAIM
A. Standard of Review.
B. Required Elements for a Submis-sible Case of Fraudulent Nondisclosure.
In order to make a submissible case of fraudulent misrepresentation, a plaintiff must prove nine essential elements: (1) a representation; (2) its falsity; (3)its materiality; (4) the speaker’s knowledge of its falsity or ignorance of its truth; (5) the speaker’s intent that it should be acted on by the person and in the manner reasonably contemplated; (6) the hearer’s ignorance of the falsity of the representation; (7) the hearer’s reliance on the representation being true; (8) the hearer’s right to rely thereon; and (9) the hearer’s consequent and proximately caused injury. Heberer v. Shell Oil Co.,
This Court has not recognized a separate tort of fraudulent nondisclosure, such as Hess asserts here. Instead, in such cases, a party’s silence in the face of a legal duty to speak replaces the first element: the existence of a representation. Andes v. Albano,
C. Chase had a Duty to Disclose the EPA’s Investigation.
In nondisclosure cases, a party’s silence amounts to a representation where the law imposes a duty to speak. Andes,
Similarly, a jury is empowered to find that the buyer has a right to rely on the seller to disclose where the undisclosed material information would not be discoverable through ordinary diligence. See Groothand v. Schlueter,
Hess presented evidence that Chase learned that the EPA was investigating the property before Chase completed its foreclosure of the mortgage and that Chase informed the property appraiser that the EPA was scheduled to inspect the site and it was possible that remediation requirements would be imposed. These facts provided a basis for the jury to find that Chase had superior knowledge of the EPA investigation of the property.
Even with superior knowledge, a duty to disclose will be imposed only if the material facts would not be discovered through the exercise of ordinary diligence. See Bayne,
Hess presented evidence that two potential buyers who did discover the paint cans each still made an offer to purchase the property. Both testified that the presence of paint cans did not give them notice that the EPA was investigating and that, had they known of its investigation, they would not have made offers for the property. From this evidence, the jury could have found that even had Hess further inspected the property and discovered the paint cans, this would not have put him on notice that the EPA had an ongoing investigation into hazardous waste dumping on the property.
Similarly, Hess presented evidence that further precautionary steps to test the groundwater and soil for environmental contamination were well beyond the scope of ordinary diligence in a real estate transaction such as this and that, even had Hess undertaken further tests, he would not have learned of the EPA’s ongoing investigation. Since the jury could find that Chase knew of the EPA’s investigation and that Hess could not reasonably have discovered it, Chase had a duty to disclose this fact.
Droz v. Trump,
Chase asserts that in spite of the evidence of its knowledge and Hess’ inability to discover the EPA investigation, a duty to disclose should not be imposed because the contract specified that Chase was making “no representations, guaranties, or warranties, either written or implied, regarding the property” and that “the property is being sold in AS-IS condition with no express or implied representations or warranties by the seller or its
What Chase misapprehends is that Hess alleges fraud in the inducement to contract, not fraud in the terms of the contract. “Missouri law ... holds that a party may not, by disclaimer or otherwise, contractually exclude liability for fraud in inducing that contract.” Lollar v. A.O. Smith Harvestore Prods., Inc.,
Moreover, the fact that the contract required the seller to complete a form disclosing the condition of the property — a form Chase did not fill out — demonstrates that a duty to disclose is not inconsistent with the presence of disclaimers. Indeed, while there was evidence that an “as — is” provision has the twin effects of preventing the buyer from requiring the seller to make or to pay for necessary repairs to the property and of excluding implied warranties (of title, of habitability, etc.), real estate agents testified that even where the sale contract specifies the seller makes no warranties and the property is sold as-is, a seller would be expected to disclose the EPA’s involvement.
Finally, the Chase employee responsible for overseeing the sale also testified that, notwithstanding the “as-is” clause in the purchase contract, “anything factual that we know as a certainty should be disclosed. It would be illegal not to disclose that.” The following exchange from her testimony further clarifies the issue:
Q: So if you had known that the EPA had investigated the property, you would have made sure that that information was disclosed to Mr. Hess?
A: Yeah.
III. MPA CLAIM
A. Standard of Review.
The trial court dismissed Hess’ count claiming an MPA violation prior to trial. “A motion to dismiss for failure to state a cause of action is solely a test of the adequacy of the plaintiffs petition. It assumes that all of plaintiffs averments are true, and liberally grants to plaintiff all reasonable inferences therefrom.” Bosch v. St. Louis Healthcare Network,
B. MPA Always Prohibited Deceptive Practices in Sales of All Merchandise, Including Goods, Services, and Real Estate.
Section 407.020 has at all times proscribed deceptive or fraudulent acts in connection with the sale of “merchandise,” sec. 407.020, RSMo 2000,
In 2000, the private right of action permitted under the MPA was broadened to include all transactions in “merchandise.” Sec. 407.025.1. The parties agree that for
In this case, the alleged violations occurred during Chase’s sale of the property to Hess in 1999, prior to the 2000 amendment of the MPA. The parties disagree whether the 2000 amendment applies to Hess’ MPA claim in these circumstances.
C. The State Constitutional Ban on Retrospective Laws Does Not Bar Retrospective Application of Procedural or Remedial Laws.
The Missouri Constitution prohibits laws that are retrospective in operation. Mo. Const, art. I, sec. 13. A law is retrospective in operation if it takes away or impairs vested or substantial rights acquired under existing laws or imposes new obligations, duties, or disabilities with respect to past transactions. Doe v. Roman Catholic Diocese of Jefferson City,
Procedural and remedial statutes “not affecting substantive rights, may be applied retrospectively, without violating the constitutional ban on retrospective laws.” Mendelsohn v. State Bd. of Registration for the Healing Arts,
Laws that provide for penalties where none existed before, however, are substantive and “are always given only prospective application.” See Yellow Freight Sys., Inc. v. Mayor’s Comm’n on Human Rts.,
Chase insists that the 2000 amendment to the MPA created a new cause of action and it is unconstitutional to apply it retrospectively. A “cause of action” is “a group of operative facts giving rise to one or more bases for suing.” Chesterfield Village, Inc. v. City of Chesterfield,
Rather than imposing a new duty on Chase, the amendment as a whole “merely substitute^] a new or more appropriate remedy for the enforcement of an existing right.” Pierce v. State, Dept, of Social Svcs.,
1. Actual Damages Are not a Substantive Additional Disability.
The MPA allows the attorney general to bring suit and seek “restitution . as may be necessary to restore to any person who has suffered any ascertainable loss” as a result of violation of the MPA in a real estate transaction. Sec. 407.100.4. Chase argues that these damages are different in kind than the “actual damages” that a private litigant may recover under the 2000 amendment. Restitution is merely a form of actual damage, however, and the MPA itself defines both restitution and actual damages in terms of “ascertainable losses.” Compare sec. 407.025.1 (allowing actual damages where plaintiff “suffers an ascertainable loss of money or property”), with sec. 407.100.4 (allowing restitution to “restore to any person who has suffered any ascertainable loss”).
Even assuming for the sake of argument that the dollar amounts recoverable may vary under these two definitions in a particular factual situation, Chase cites no authority that a mere change in how actual damages are measured requires a statute to be applied prospectively only, when the nature of the wrong and the remedy are both remedial and similar in kind. In such a case, a mere change in how damages are measured is no different from a change in the language of how damages are computed under the applicable Missouri approved instructions. The nature of the duty and remedy are still the same. The actual damage remedy under the MPA applies retrospectively.
2. Recovery of Attorneys’ Fees is Not a New Disability and Applies Retrospectively.
Hess is also entitled to seek recovery of his attorneys’ fees. Indeed, recovery of attorneys’ fees is nothing new under the MPA. Since 1985, the attorney general has been permitted to collect attorneys’ fees under the MPA, just as prevailing private plaintiffs acting as “private attorneys general” in enforcing this and other remedial statutes are permitted to collect their at
The 2000 amendment merely allowed private parties to sue for alleged MPA violations in all merchandise transactions, rather than just in regard to goods and services. As noted above, that did not impose a new obligation.
Chase’s contention that the statute authorizing the attorney general to collect, “in addition to normal court costs, the cost of investigation and prosecution of any action,” does not authorize the attorney general to collect attorneys’ fees is plainly erroneous and previously has been rejected. See State ex rel. Webster v. Areaco Inv. Co.,
3. Recovery of Punitive Damages is a New Disability and Cannot be Applied Retrospectively.
A different result obtains in regard to the right to bring a private right of action for punitive damages. “The well-established purpose of punitive damages is to inflict punishment and to serve as an example and a deterrent to similar conduct.” Call v. Heard,
Chase argues that, under the pre-amendment statute, sellers of real estate could be obligated to recompense a private party for her injuries and the attorney general for his attorneys’ fees, but they could not be assessed punitive damages. This Court agrees.
Prior to the 2000 amendment, a person who violated the MPA in regard to a real estate transaction was subject to civil penalties of up to $1000 per violation and a small penalty of 10 percent “or such other amount as may be agreed upon by the parties or ordered by the Court.” See sec. 407.100.4; sec. 407.100.6; Sec. 407.140.3. While these sums are penal in nature, they are not similar in kind to the assessment of punitive damages. “[P]uni-tive damages are extraordinary and harsh.” Rodriguez v. Suzuki Motor Corp.,
4. Federal Authority.
The dissent heavily relies on the Eighth Circuit’s decision in Owner-Operator Independent Drivers Ass’n, Inc. v. New Prime, Inc.,
The reasoning of Arctic Express mirrors that of this Court today and is the proper result under Missouri’s rules governing retroactive application of the laws. As this Court unanimously held in Wilkes v. Mo. Hwy & Transp. Comm’n,
D. The MPA Claim Should be Remanded for Consideration of its Merits.
The final issue is the nature and scope of remand on the MPA claim. Chase argues that if this Court finds that the trial court erred in dismissing Hess’ MPA claim, it should remand for a new trial on both liability and damages. Hess argues that the elements necessary to prove his claim under the MPA are subsumed within the facts the jury necessarily found in his favor in finding for him on the fraud claim.
In order for liability to be moot on remand, it is essential that the jury at the first trial necessarily decide “each and every fact essential to liability” in their verdict. Dhyne, 188 S.W.Sd at 456 (submis-sible case requires evidence of all facts essential to liability). Determining whether the jury found each and every fact essential to liability under the MPA claim in deciding the fraud claim in Hess’ favor requires a comparison of the elements of the common law fraud claim submitted in the first trial, set out earlier, with the elements of Hess’ MPA claim.
Section 407.025 sets out the elements of a private right of action for MPA violations. It states in relevant part:
Any person who purchases or leases merchandise primarily for personal, family or household purposes and thereby suffers an ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of a method, act or practice declared unlawful by section 407.020, may bring a private civil action ...
Sec. 407.025.1. In this case, Hess must prove that he has: (1) purchased real estate; (2) for personal, family, or household purposes; and (3) suffered an ascertainable loss of money or property; (4) as a result of an act declared unlawful by section 407.020. Section 407.020 bars a variety of conduct, including concealment, suppression or omission of any material fact in connection with the sale of merchandise, which includes real estate.
In finding for Hess on his fraud claim against Chase, the jury necessarily found that Hess satisfied the first and third elements just listed. In addition, reviewing the pertinent regulations the attorney general promulgated under the MPA, sec. 407.145, reveals that Hess’ proof that Chase committed common law fraud was sufficient to prove the fourth element of Hess’ MPA claim: that Chase engaged in unlawful conduct under the MPA when it concealed, suppressed or omitted a “material fact” in connection with the sale. Sec. 407.020.1.
MPA regulations define “material fact,” in pertinent part, as “any fact which a reasonable consumer would likely consider to be important in making a purchasing decision ...”. 15 C.S.R. 60-9.010(l)(C). This definition of material is broader than the materiality requirement of common law fraud. See Carnahan v. American Family Mut. Ins. Co.,
The regulations under the MPA further define omission of a material fact as “any failure by a person to disclose material facts known to him/her, or upon reasonable inquiry would be known to him/ her.” 15 C.S.R. 60-9.110(3). Again, this imposes a broader duty on sellers than the common law imposes for fraud liability, as a fraud claim requires the seller to have actual knowledge of the material facts. See State ex rel. PaineWebber, Inc. v. Voo-rhees,
Proof of omission or concealment of a material fact under the MPA, therefore, plainly requires less proof than was required to prove the comparable elements of Hess’ common law fraud claim. The jury’s verdict in Hess’ favor on the fraud claim establishes that Chase failed to disclose material facts for purposes of the MPA claim.
There remains one element that was not submitted to the jury that Hess must prove to establish his MPA claim: that he purchased the real estate “primarily for personal, family or household purposes.” Sec. 407.025.1. Hess asserts that this element is uncontested, noting that uncontro-verted trial testimony establishes that he built a home for his family on the property. Because the MPA claim had been dismissed prior to trial, and because the use for which Hess purchased the property was not necessary to prove his fraud claim, Chase had no reason to contest this issue. Chase states in this Court that it disputes the purpose for which the property was purchased and intends to contest the issue on remand.
Because no record has been developed on the one unproven element, this Court cannot resolve whether any controverted facts preclude entry of judgment against Chase on Hess’ MPA claim. On remand, following such discovery as may be appropriate on this issue, the trial court may determine whether this issue is truly controverted. If so, then Chase is entitled to a trial on its liability on Hess’ MPA claim and on damages, though the parties are bound by law of the case on the three already proven issues. If not, then the parties are entitled to a trial on damages for the MPA violation. See Scott v. Blue Springs Ford Sales, Inc.,
IV. CONCLUSION
For the foregoing reasons, the judgment on the MPA claim is reversed, the judgment in all other respects is affirmed, and the case is remanded.
Notes
. For the assistance of the reader, the votes on the various opinions in this case can be summarized as follows: the entire court concurs with this opinion's resolution of the fraud claim in section II; a majority consisting of the author, Chief Justice Wolff, Judge Teitelman and Special Judge Shaw concurs that recovery of actual damages and attorneys’ fees under the MPA is permissible as set out in sections III.C.l and III.C.2; and a majority consisting of the author, Chief Justice Wolff, Judges Russell, Limbaugh and White, and Special Judge Shaw concurs that recovery of punitive damages under the MPA was not permitted at the relevant time as discussed in section III.C.3.
. Count I of Hess’ petition stated a claim for breach of contract based on this failure, but Hess voluntarily dismissed this count without prejudice prior to trial.
. Hess asserts that Chase waived this argument by failing to plead it as an affirmative defense in its answer. This is a legal argument about the import of the terms of a contract that Hess attached to his petition in the first instance, as they affect the elements of duty and reliance. It is not an affirmative defense, and Chase need not have pleaded it as one.
. The testimony of one real estate agent, with 27 years of experience, was:
Q: If the seller knew that the U.S. EPA was involved with this property ... is that something that you would expect would not be disclosed to you ... by the seller ... because there was an 'as-is' provision in this contract?
A: No, it should have been disclosed to me.
The other real estate agent, with 15 years of experience, testified, "I would expect them to disclose if the EPA were involved ... [i]rre-gardless [sic] of what their standard form would say.”
. Chase relies heavily on Ringstreet North-crest, Inc. v. Bisanz,
. Unless otherwise noted, all subsequent statutory references are to RSMo 2000.
. The attorney general, acting as a friend of the court, affirmed that he has initiated enforcement actions against sellers of real estate for violations of the MPA.
. This Court rejects Chase's corollary argument that if the right to recover any one of these types of damages can only be given prospective effect, then the entire cause of action can be given only a prospective effect even if the remainder of the statute is procedural or remedial in nature. Chase's citations are not to the contrary. U.S. Life Title Ins. Co. v. Brents,
. Citing Hughes Aircraft Co. v. United States,
. Hess also asks that a hearing be held on the issue of punitive damages under the MPA. Chase argues that since the jury rejected Hess' claim for punitive damages under the fraud count, it would be improper to allow an award of punitive damages under the MPA since the same conduct underlies both counts. This Court need not resolve this issue, as it finds that Hess is not entitled to recover punitive damages under the MPA since the right to such recovery is prospective only.
. In argument in this Court, Hess contended that Chase’s contract contained an affirmative misrepresentation in the clause stating that Chase had “neither seen nor occupied the property.” There is no need for this Court to address whether this would provide an alternative ground for recovery for affirmative misrepresentation under the MPA. The Court leaves that issue to the trial court and the parties on remand. Cf. 15 C.S.R. 60-9.620 (defining deception); 15 C.S.R. 60-9.070 (defining misrepresentation); 15 C.S.R. 60-9.080 (defining material untruths).
Concurrence Opinion
concurring in part and dissenting in part.
Contrary to the majority opinion, I would hold that the punitive damages pro
I agree with the majority that laws providing for penalties where none existed before are to be given prospective application. However, this case does not involve the imposition of any new penalties for violating a new standard of conduct. Instead, this case involves a new procedural means of obtaining a “more appropriate remedy for the enforcement of an existing right.” Pierce v. State Dept, of Social Services,
When the conduct at issue in this case occurred, the MPA already prohibited Chase from concealing material facts in a real estate transaction and provided for enforcement action by the Attorney General. The MPA also already provided that when a court found an MPA violation and awarded restitution, “there shall be added” penalties of ten percent “or such other amount as may be agreed by the parties or awarded by the court.” Section 407.140.3. This statutory language indicates that Chase, even before the 2000 amendments, was already subject to penalties for its conduct in an amount limited only by the constraints of due process. Such liability is materially indistinguishable from punitive damages liability. Thus, the provision for punitive damage in the 2000 amendments did not alter the pre-existing potential for liability in a meaningful way and, instead, simply expanded the procedural options for enforcing pre-existing standards of conduct among real estate vendors. There is no bar to the retroactive application of a procedural or remedial statute that expands the procedural options for enforcing pre-existing standards of conduct. Mendelsohn v. State Bd. Of Registration for the Healing Arts,
Concurrence Opinion
concurring in part and dissenting in part.
I concur in the majority opinion except to the extent that it allows plaintiffs to bring a private cause of action against Chase under the Merchandising Practices Act. The amendment to that law authorizing a private cause of action is substantive, not procedural, and its application here violates the prohibition against retrospective laws under article I, section 13, of the Missouri Constitution.
“A retrospective law takes away or impairs vested or substantial rights acquired under existing laws, or imposes new obligations, duties, or disabilities with respect to past transactions.” Mendelsohn v. State Bd. of Registration for the Healing Arts,
Under the MPA, there are certain obligations and duties owed by sellers of real estate to buyers of real estate, and it follows that buyers have a corresponding substantive right to sellers’ fulfillment of those obligations and duties. Before the amendment, however, buyers had no private cause of action to enforce that right. The corollary is that at least before the amendment, if not after, sellers had a substantive right not to be subjected to such a private cause of action.
The majority maintains that although there was no private cause of action, the creation of a private cause of action did not “impose new obligations, duties or disabilities with respect to past transactions.” According to the majority, those obligations, duties or disabilities were already mandated by the MPA, and defendants were subject to those same provisions both before and after the amendment. The majority thus holds that the private cause of action is not a new cause of action and that the amendment was merely a procedural mechanism to allow private parties to enforce preexisting substantive rights.
Logically, however, the very right of a party to bring a cause of action is no less substantive than the substantive rights the party seeks to enforce, and it is no less an integral part of the cause of action. In other words, substantive rights encompass not only what the majority calls the “operative facts that give rise to [defendant’s] liability” — the defendant’s violation of the obligations and duties imposed by the statute — but also the right or standing of a party to enforce those rights. In the simplest terms, then, one cannot divorce a cause of action from who may bring a cause of action. In contrast, the right to bring a cause of action is not a procedural right because it does not pertain to the “machinery used for carrying on the suit” — it is instead the right to use that machinery. Because the right to bring a cause of action is a part of the substantive cause of action itself, it cannot be applied retrospectively. Unfortunately, this is so fundamental a notion that it goes without saying, and our Missouri opinions have not addressed it, not that they have ever held to the contrary.
The federal courts, however, have addressed this issue head-on. The recent 8th Circuit opinion in Owner-Operator Independent Drivers Association, Inc. v. New Prime, Inc.,
Prior to the ICCTA, only the ICC could bring claims against motor carriers for failure to comply with the applicable regulations. The ICCTA shifts this power and permits individual Owner-Operators to bring defendants directly into court. We find that this creates an impermissible retroactive effect.
This issue is analogous to the issue presented in Hughes Aircraft Co. v. United States,520 U.S. 939 ,117 S.Ct. 1871 ,138 L.Ed.2d 135 (1997), in which the Supreme Court held that when a statute expanded the class of plaintiffs who could bring claims, the statute altered the defendant’s substantive rights and therefore had a retroactive effect. Id. at 950,520 U.S. 939 ,117 S.Ct. 1871 ,138 L.Ed.2d 135 ) (“In permitting actions by an expanded universe of plaintiffs with different incentives, the [new statute] essentially creates a new cause of action, not just an increased likelihood that an existing cause of action will be pursued.”) (citation omitted). Here, by permitting Owner-Operators to bring their own actions against motor carriers, the ICCTA expands the class of plaintiffs who could bring claims, thereby altering the motor carriers’ substantive rights....
The Hughes Court also noted that individual plaintiffs will be motivated “primarily by prospects of monetary reward rather than the public good.”520 U.S. at 949 ,117 S.Ct. 1871 . We find this to be the case here as well: Owner-Operators who sue motor carriers will likely be motivated by their own potential financial gain. This increases defendant motor carriers’ potential liability, thereby creating a retroactive effect.
Id. at 1007. Just as in New Prime, the private cause of action in this case is a new cause of action that alters the defendant’s substantive right to be free from suit by private parties, increases defendant’s potential liability, and thereby creates an impermissible retroactive effect.
The majority disparages New Prime’s reliance on the Supreme Court precedent in Hughes Aircraft, a case in which the Court refused to give retroactive effect to an amendment to the False Claims Act that allowed suits by private individuals. According to the majority, “New Prime did not involve either suit by a party unharmed themselves [the parties bringing suit were qui tarn plaintiffs], or elimination of the defense [the government’s knowledge of the facts underlying the false claim], and thus erred in relying on Hughes.” However, the fact that the qui tarn plaintiffs in Hughes Aircraft were unharmed themselves (their claim for damages is essentially a reward for their whistle blowing efforts) is irrelevant, because the defendants were nonetheless exposed to the potential for increased liability from new suits by that new class of plaintiffs. Furthermore, the fact that Hughes Aircraft involved the elimination of a statutory defense is also irrelevant, because, as the New Prime court implicitly recognized, the presence of a new class of plaintiffs is couched as an independently sufficient ground for its holding. The Supreme Court’s bottom line on this issue bears mention again: “In permitting actions by an expanded universe of plaintiffs with different incentives, the [amendment] essentially creates a new cause of action, not just an increased likelihood that an existing cause of action will be pursued.” Hughes Aircraft,520 U.S. at 950 ,117 S.Ct. 1871 .
The majority makes the same mistake in relying on the district court opinion in Owner-Operator Independent Drivers*778 Assn, Inc. v. Arctic Express, Inc.,270 F.Supp.2d 990 (S.D.Ohio 2003). Arctic Express is cited for the proposition that the provision for a new class of plaintiffs does not violate the ban against retrospective laws because it “simply shifted the power to bring the Defendants into court from the [government agency] to the owner-operators themselves.” Not so. The provision for separate suits by a new class of plaintiffs increased the defendant’s potential liability by subjecting them to suit from both the government and the new class of plaintiffs. As Hughes Aircraft instructs, the increased potential liability results from the fact that these new plaintiffs, unlike government plaintiffs, will be motivated “primarily by prospects of monetary reward rather than the public good.” Id. at 949. And indeed, the motivation of these new plaintiffs, who suffered actual harm, will be even greater than the qui tam plaintiffs in Hughes Aircraft, who suffered no harm.
Finally, Wilkes v. Mo. Hwy. & Transp. Comm’n,762 S.W.2d 27 (Mo. banc 1988), is inapposite. Wilkes holds that “[a]n act abrogating sovereign immunity does not create a new cause of action but provides a remedy for a cause of action already existing for which redress could not be had because of the immunity.” Id. at 28. The plaintiffs in Wilkes, in other words, had an “already existing” private cause of action that they could have pursued but for sovereign immunity or some other defense. But the plaintiffs here had no “already existing” private cause of action, and they could not have brought suit regardless of sovereign immunity or any other defense.
For the foregoing reasons, I would disallow the private cause of action and affirm the trial court’s dismissal of that claim.