*1 KILLION, Killion, E. Mika Mabel N. Mike Killion, Killion, Richard Tresa Kil
J.
lion, Killion, Re J. Killion Mitzi Bill &
spondents, MIDWEST, and Dickinson
BANK N.A. Corporation and John
Financial
Crist, Appellants.
No. WD 53455. Appeals,
Missouri Court District.
Western
Dec. Rehearing
Motion for Transfer and/or 2, 1999. Supreme Feb. Court Denied
Application Transfer Denied 27, 1999.
April *2 (2) parties;
ing between the Killions’ jury it could draw im- arguing to the failure proper conclusions from Shepherd, Paul and Dickinson to call appellants, legal counsel for the former *3 Additionally, testify. the Bank and Dickin- argue that the trial court should not have son punitive the Killions’ claim for submitted damages jury the Killions to the because did punitive submissible claim for not make a damages, punitive damage the and instruc- require proof by clear and con- tion did not Killions vincing evidence. Because the failed a submissible case of facie to make tort, is judgment of the trial court re- versed. Background
Factual and Procedural court is to the evidence in This review case, plaintiffs’ favorable light most to the contrary disregard Gary all evidence. and Yamaha, Donelson, Surdyke Inc. v. 522, 523 In (Mo.App.1987). light, the evidence owned Ward, Bledsoe, operated a farm in Pettis Coun- R. and 643-acre Philip Lawrence W. Noah, and Shughart City, ty. August, who died in his Kilroy, Thomson & Kansas Stouffer, in Marshall, Mabel lived a house on the farm. appellants. wife Donald G. for respondents remaining are the sons and Kempton, Christopher Span- T. J. Mark daughters-in-law of Noah and Mabel. Wesner, gler, Kempton, Russell and Domi- Sedalia, mortgages nique, the Killions had three respоndents. $435,000.00. the farm which totalled Two on P.J., HOWARD, Before mortgages from the Federal were HANNA, BRECKENRIDGE and JJ. Bank, money one purchase and was a Land seller, a mortgage for 250 acres from the Mr. BRECKENRIDGE, J. Bales. The Killions were in default Midwest, N.A., formerly mortgages, as Land Bank so Noah Bank known Federal (the Brown, Bank), Community president Dickinson Don interim went to (Dickinson) Bank, Corporation appeal inquire refinancing Financial about loans. judgment against long-standing relationship trial court’s them and in had a with Noah Killion, Killion, years as favor Mika and had for 17 of Mabel Mike E. served Killion, Killion, Killion, advisory J. Bill director on its hoard of directors. Richard Tresa Killions) (the Killion, advisory J. as an was to and Mitzi Killion Noah’s role director $55,000 $500,- monthly damages attend compensatory solicit bank business and damages pri- review in default and vote meetings on the Killions’ loans punitive 8,1988, On of credit. On June appeal, ma tort claim. on extensions facie promissory payable did not executed a note and Dickinson claim Killions Killions (the $345,000.00 tort. Bank in the amount of case of make a submissible note”). The off the loans paid contend that note The Bank and also “land Bank. The Killions overruling their ob- the Federal Land the trial court erred from (1) separate in the jections note amount reading the Killions’ also executed note”). (the $125,827.63 “equipment Both jury inflammаtory prejudicial allegedly by a deed of trust on the by judge prior proceed- in a were secured *4 difficulty making payments. their loan The trust were Shepherd, drafted Paul legal Crist, Killions had discussions with John the counsel for the Bank and Dickinson. Under loan officer assigned at Dickinson to service note, the terms of the land the Killions were They their loan. they told Mr. Crist that $42,000.00 to make payment one of each wanted partially liquidate to property their year, payment and a balloon of the remaining modify the terms of the land note to principal any unpaid accrued but interest reduce the payment annual amount so that at years. the end of six One of the condi- they would be able to service the note. tions of default on the land note was the February of the Killions held an auc- failure of the Killions to sell the farm within tion and sold 250 acres of their land and most years ten after the note’s execution. The of equipment. the farm gave The Killions land note contingent also contained a interest sale, proceeds Bank the from the clause, which provided that the sale of were significantly more than deficiency farm, the Killions would owe additional payment. their 1991 The Bank reduced the interest. The additional interest would be principal balance on approxi- the land note to $90,000.00 the lesser of 40% the amount $171,500.00 mately principal and the balance gross which the price sales of the farm $25,000.00. equipment on the note to outstanding exceeded the principal balance of $35,129.09 applied also proceeds of the the loan on the date sale if the farm was payment toward the contingent interest. prior date, sold maturity to the or the out- The remaining property real equipment standing principal balance due on the maturi- securing $356,000.00. the notes was valued at ty date if it was sold after maturity date. The land note granted also the holder of the Mr. Crist testified that he knew there was right note the of first purchase refusal to authority no under the land note to collect and, trust, farm in the deed of the Killions contingent interest from the Killions without waived their equity Thus, of redemption. a sale of property the entire or the note note, pursuant to the deed and the Killions maturing, and authority there was no had to sell the farm years within ten after under the note compute to a contingent inter- signing note, regardless they whether $35,129.09 est amount of at that time. He paid had principal due, all of the and interest authority testified that his collecting for con- right buy had the price to it at a tingent interest at time and in that discounted contingent interest amount came frоm agree- the modification amount, and the Killions could not exercise ment the proposed Bank had to the Killions. right redemption buy back their they When learned that the ap- Bank had farm. plied portion proceeds of the sale timely pay- made the first payment interest, contingent the Killions notes, ments on the which were due Fischer, Decem- attorney, consulted an Adam be- However, ber the Killions were cause the promissory provided note pay- late in making payments for the next ment of contingent only “[u]pon years. three The Bank allowed the Killions sale of all the real which secures late, charged added). but them interest which this (Emphasis note.” The Killions percentage was 3.0 points higher during the also asked Mr. Fischer review the Bank’s the Bank and agreement. relationship end their with modification Mr. proposed sign Dickinson. the Killions not to Fischer advised agreement, as it contained an
modification 23,1993 letter Upon receipt of the October illegal clause on usurious or in- exculpatory informing him from Mr. Fischer terest, fiduciary relationship disclaimed a be- the modification sign Killions would provid- and the tween the Killions agreement and that Mr. Fischer believed the Killions released the Bank from ed that not en- contingent liability any might claims the Killions forceable, foreсlos- Crist recommended Mr. had it. Mr. Fischer also ad- have Crist re- ing property. on the Killions’ Mr. vised the Killions not make further by sending a sponded Fischer’s letter to Mr. land note he payments on the because Kil- 1992 to the letter dated November apply that the Bank would more concerned lions, to the fact that in which he referred interest, payments toward and the proposed not execute the note on contingent interest on this was owed modification, then demanded that principal the difference between balance payment December make the scheduled price proper- on the note and the sale provided payoff 1992. Mr. Crist also $35,129.09 ty. Every payment time the Killions made a quote, applied he which he balance, reducing principal inter- previously collected as *5 However, actually increasing contingent principal amount est toward reduction. time, During payoff quote interest due. the Killions also included a demand for $90,000.00 began negotiating contingent with Chemical Bank of interest. He told loan; only letter be the Springs to refinance the howev- the Killions that the Sweet er, prior to they demand letter would receive Chemical Bank would not commit to the refinancing it foreclosure. until was determined whether $90,000.00 contingent in owed attorney sent another letter The Killions’ interest. He to Mr. Crist on December not again advised that he did believe letter Mr. Fischer wrote a contingent provision enforce- interest was 23, 1992, advising dated October it that the able, pay the but that the Killions would sign Killions would not the modification $15,000.00 contingent in- to settle the agreement. He told Bank that he be- issue, unpaid princi- terest all of the contingent lieved the interest was pal plus *6 another foreclosure sale on their farm set for other corporations. It has also raised a 23, March 1993.2 A Notice of Foreclosure question whether banks can contract to again published newspaper. was in the On receive pur- additional interest or stock 2,1993, peti- March the Killions filed another chase warrants from a borrower contin- County against tion in Pettis the Bank for
gent upon the success of the borrower’s declaratory judgment asking the court to business. This rule authorizes contract provisions contingent declare the provision to receive interest additional interest or unenforceable, or, purchase stock the note invalid and warrants from the borrow- in the alternative, contingent upon er the success of the bor- that no interest was Further, permits 22, 1993, rower’s business. it a owed at that time. On March the negotiate new business to agree- a loan petition Killions also filed an additional ment may with a commercial bank which County against Pettis Mr. Crist for tempo- a substantially reduce expense rary restraining preliminary order and in- early years until a date when the busi- junction prohibiting the foreclosure sale. ness is more established. granted temporary restraining The court (1) order, 23rd, may A bank contract to which was served on im- receive addi- March mediately tional interest on loan for before the sale After business started. be- purposes contingent only upon ing profita- temporary restraining served with the bility order, operation attorney successful of the busi- for Dickinson told the 1993, 12, February January 1. Mr. Crist was never with the served sent to the Killions stated on 4, However, petition. appear spe- he did that he was the "successor trustee.” On the 11,1993 cially February hearing at the to contest foreclosure, second Mr. Crist was removed as 4, February venue. The Killions dismissed the 1993, 25, February day successor trustee on one petition against May Mr. Crist on after the foreclosure notice was sent to the Kil- lions. The evidence shows that he in fact acted 2. Mr. original was Crist not the trustee under the foreclosures, instituting as trustee in both deed of trust as executed June 1988. Al- damages. was the source of the Killions’ though appointed he was not the successor trust- 14, 1993, Jаnuary ee until the foreclosure notice attorney for Dickinson ing the sale because foreclosure sale that at the crowd $29,000.00in attor- the Killions owed claimed day, will be “[t]here off for that but City law firm3 ney by a Kansas fees incurred farm sell.” sale. This will applica- prepare the hired to Dickinson had 12, 1993, Judge Donald Barnes May On Midwest, Killion v. Bank tion to transfer against Mr. petition Killions’ granted the Supreme Court. the Missouri to injunction against the preliminary Crist for a hearing in December court held a The trial order, Judge In his proceedings. the Bank re- and recommended following about comments Barnes made trust, upon the conditioned lease its deed of Bank: $40,000.00 receiver retaining receiver short, Kil- [the the Bank has ahold income, attor- until the collected in farm hair and refuses to by the let lions] short The Bank ney fee issue was decided. payment in full. loose even agree, the court en- refused to so Dickinson effectuating its recommenda- tered an order of Chemical Bank representative A tion. may cir- appear hearing, there be some a blank check It would and had attended cumstances, however, however, note; Killions] where ready [the the Killions’ to off challenge to the may accept mount a reasonable attorney for Dickinson refused enforceability validity it, of what seems claiming Bank’s check was that Chemical very arguably first review this Court on The Bank “good and available funds.” onerous, perhaps harsh and Chemical Bank required and Dickinson facts, egregiously unfair contract which payoff funds them. wire transfer represented drawn the Killions did not owe court later ruled that Killions], fees, entered into [the counsel and as the the Bank and non-traditional unexperienced such prevailing party in de- Killions were the apparently unrepresented transactions claratory judgment action. by counsel. action present The Killions filed the declaratory judgment The Killions’ action Dickinson, damages Bank, seeking holding against the Crist, alleging that the Bank made and John was unlawful misrepresentations to the fraudulent seeking damages, was transferred to and also note, Killions executed the at the time the County requested Saline after the Bank had *7 fiduciary duty to the his Mr. Crist breached granted the change of venue. The court trust, the deed of Killions as trustee under appoint a receiver to collect Bank’s motion fiduciary duty to the its Dickinson breached pending the all of the income from the farm acting Killions as an because Mr. Crist was dispute. of the
resolution Dickinson, the Bank breached employee of The trial court found by duty good of faith tо the Killions its was invalid and unenforce the fore allowing proceed Dickinson to with it 4 C.S.R. 140-6.050. able because violated Bank, sales, Dickinson and and the closure affirmed that decision Killion in This court by prima facie tort Mr. Crist committed Midwest, N.A., 886 S.W.2d Bank 33-34 foreclosure sales without proceeding with the (Mo.App.1994). jury. tried to a justification. The case was evidence, decision, of the the trial court the At the close
Upon receiving appellate Bank, Dick in favor of the they Bank that directed a verdict informed Chemical except for Crist on all counts contingent interest. Chemical inson and Mr. did not owe the Killions’ facie tort claim. On they willing prima to refinance indicated claim, jury found in favor facie tort prima release its deed of the loan if the against the Bank and the Killions and to release the deed of trust. The Bank refused $55,000 Dickinson, the refinanc- and awarded on the to allow trust appeal. this prepare the transfer was inson on firm hired 3. The law representing the Bank and Pick- the law firm 808 compensatory damages.
in jury The test, also der balancing of interests the court $100,000 awarded the Killions punitive weigh conflicting must interests of the damages $400,000 from parties litigation light and to the of the social punitive damages from Dickinson.4 society. economic interests of Restate- timely Bank and Diсkinson appeal. c,d,e. § (Second) filed this 870 cmts. ment of ToRts Essentially, The Killions did not appeal the the court “the directed ver- balances bad moti- against dicts vation them. of the defendant the claimed
justification for the act.” Porter v. Cranford The Killions Failed to Make Co., & (Mo.App.1980). S.W.2d a Submissible Case of this, To do the court considers four factors:
Prima Facie
“(1)
Tort
the nature and seriousness of the harm
(2)
injured
to the
party;
pro-
the interests
The Bank and Dickinson’s first
(3)
conduct;
moted
the actor’s
the charac-
point is that
the Killions failed to make a
(4)
actor;
ter of the means used
submissible
case of
facie tort. Sub-
the actor’s
Lundberg,
motive.”
missibility
question
is a
Gary
of law.
Sur-
at 671.
Yamaha,
dyke
809 legally protected of a they that in- them is not an invasion of trust. There was evidence interest, attorney compensable in ob- constitute a curred fees connection with cannot restraining orders taining temporary injury. sales, attorney
halting both foreclosure attorney incurring In addition to expenses fees and in connection with obtain- fees, they suf Killions also claimed ing judicial that the a declaration injury the institution of fered emotional from of the note was invalid and Emotional harm proceedings. foreclosure unenforceable. “legally protected a qualifies as a harm to Generаlly, not Missouri does allow support can a interest” which recovery attorney litigation fees and other noted, but, previously action as tort cause of expenses damage actions. Ashworth v. significance of the emotional harm var “[t]he Schneider, 16, (Mo.App.1984); 17 S.W.2d considerably depending largely upon its ies Osceola, City Powell v. (Second) severity.” Restatement Torts (Mo.App.1982). exceptions There are § 870 cmt. f. may Attorney fees be recovered this rule. contract, statute or of emotional harm was provided when The evidence sons, because of involvement in col provided when incurred Noah and Mabel Killion’s Michael, litigation, lateral or “when needed to balance Killion Bill and Richard. Michael equity.” Corp. benefits in a court of Carlund community people testified that in the indi Redevelop., v. Crown Center 910 S.W.2d seen the notice of cated to him case, no statute (Mo.App.1995). very paper, foreclosure in the and that it was or contract allows the Killions to collect at bothersome to him. He testified that he torney litigation fees. To meet the collateral “things neighbors,” heard from the and that exception, showing be there must that the parents. He caused stress on him and his attorney litiga fees were incurred in other impending also testified thаt against party actually tion a third which is embarrassing humiliating sale was litigation involving parties, collateral to him. Bill Killion testified that the threat party’s such as when breach of contract very on his ened foreclosure was stressful party causes another to the contract to sue relationship. Killion testi marital Richard party. or be sued an outside third Smith per fied that he heard comments from other Chatfield, (Mo.App. community after notice of sons in the 1990); Corp., 910 Carlund S.W.2d at 277. published, and that those foreclosure was Killions, exception apply embarrassed, This does not very comments made him feel asking as are fees and ashamed, He also testified and humiliated. expenses previous litigation incurred in negative it had a effect on his relation Dickinson, against wife, the Bank and that it hard to face ship with his party. a third community day-to-day people in the on a basis, little bit concerned” and that he was “a Likewise, the Killions cannot recover the effect it would have on his business about attorney fees the balance of benefits Michael, Like his brother Richard credit. either, exception exception applies as that impending also testified only equitable in “those proceedings rare parents, hard on his and it was hard for party’s pursuit litiga situations which being parеnts him to watch his humiliated. par tion enures to the benefit of other that the Killions were Supply proves ties....” Consol. Public Water This evidence Kreuter, stressed, by the (Mo.App.1996). humiliated and embarrassed *9 excep The Killions do not meet of the actions of the Bank and Dickinson. Never- theless, recovery attorney harm not serious allowing tions of the fees their emotional was litigation hierarchy of harms of expenses prior and incurred in their or severe under the Restatement; Therefore, slight the Killions have a with the Bank and Dickinson. deserving pro- of incursion of fees and harm to the interest least the Killions’ (Second) of ToRts expenses due to the Bank’s and Dickinson’s tection. Restatement facts, instituting proceedings against § f. Under similar factor one 870 cmt. 810 weighted
in other cases been has deed of Billions’ farm. trust on the The 670, Lundberg, defendant. 661 S.W.2d at Bank and contend that Dickinson had plaintiff that “his claimed demotion every right would contingent to believe the interest cause him to suffer loss income and retire- provision enforceable, of the note was ment benefits thereafter and he was justified attempting were in to enforce it humiliated, disgraced and embarrassed.” until illegal. this it court determined only Because his claim was emotional harm was entitled to Bank contract interests, pecuniary and harm to prospective interest, for contingent but its method of factor weighted one was in favor of defen- computing contingent interest was found dant. Id. at 671. Plaintiffs emotional harm Killion, 33-34, to be invalid in 886 at nervous, being sleep unable to or eat and contingent because it was not the suc being distraught weighed for two months in cess required by of the as Billions’ business 4 Kiphart favor of Community defendant in v. C.S.R. only prob 146-6.050. If this were the Ass’n, 510, Fed. Sav. & 729 Loan lem calculating with the method contin (Mo.App.1987), considering the short dura- interest, gent Dickinson would Likewise, tion of the emotional harm. justified have in enforcing been more appellate Riley, 89, court in 847 S.W.2d at provision interest it until was ruled invalid. weighted against found factor one party computing contingent The method of interest injury, who did physical only not claim but invalid, however, was also because it was duration, emotional short noting distress of unconscionable.5 injury evidence of emotional came only party from the not substantiat- substantively A contract is un testimony. ed medical Considering the conscionable if there is undue harshness in injury, nature of the Bullions’ the first factor the terms of Enterpris the contract. World weighted is of the favor Bank and Dickin- es, Aviation, Inc. v. Midcoast 713 S.W.2d son. 606, Or, (Mo.App.1986). as more color factor, On the second sig- nature and stated, fully “an unconscionable contract is nificance promoted by of the interests one, ‘such as no in his senses man and not conduct, actor’s the court is to afford estab- make, hand, under delusion on the one rights privileges lished of the proper actor and as no fair accept honest and man would case, weight. Id. In the note and deed other, Liberty Mgmt. on the ...’” Fin. v. gave of trust the Bank and Dickinson the 40, Data, (Mo.App. 670 S.W.2d Beneficial right proceed foreclosure in with the event 1984) States, (quoting v. United Hume default, and the Bullions’ Billions were 406, 415, 134, 137, 393, U.S. 10 S.Ct. 33 L.Ed. admittedly provides in default. Missouri law (1889)). Under legal that foreclosure is proper following Billions, provision of the Bank’s loan to the default requires publication and the law the Bank was allowed to collect the lesser of foreclosure, notice of the which is the sole $90,000.00 or the difference between the basis of the Billions’ claim of emotional dam- price outstanding principal sales and the bal 443.290, 443.320, ages. Sections RSMo 1994. Thus, ance of the note on date of sale.
Nevertheless,
every
the evidence showed
principal pay
time the Billions made a
ment,
the Billions’
on the
increasing
default
note was
caused
inability
the Billions’
liability.
required
refinance their
note further
debt
Bank because
the Billions to
their farm
sell
within ten
years
previously
insisted that
Bullions
con-
even if
the note
been
full,
tingent
illegal provision
paid
right
interest under
Bank had the
and the
buy
price
the note before the Bank would
release the
at a
discounted
Data,
promissory
Liberty
5. "A
is a
Mgmt.
note
written contract for the
Fin.
670 S.W.2d
Beneficial
40,
1984);
Ltd.,
payment money.”
(Mo.App.
v. First Nat.
49-50
Merz
Waters v. Min
(Mass.
County,
(Mo.App.
Franklin
682 S.W.2d
412 Mass.
587 N.E.2d
232-34
1984).
Leonard,
1992);
Management
See also Sabine
Resource
Co. v. Weston
Ranch,
(Utah 1985);
837-38
An
unconsciona
There was also evidence from which the permitting recovery under a facie tort jury find that the Bank and could Dickinson allegations cause of action based invalidity potential were aware of the of the lending intentionally harmed a institution ques- and its by wrongfully attempting debtor to foreclose. Crist, enforceability tionable because Mr. potential There is the that a lender would agent employee, Bank’s and Dickinson’s tried non-judicial hesitate to utilize foreclosure of a get sign proposed the Killions to note anytime challenged deed of trust a borrower agreement. proposed modification mod- debt, validity underlying of the because agreement exculpatory ification contained an be the lender would be fearful that it could illegal clause on usurious or interest in favor punitive damages for found liable actual and provided of the that the Killions liability challenge if the borrower’s was successful released the Bank of for claims they might prove and the borrower could that the lender have had it. The reason- motivated, any part, by malice. The able inference is that the Bank and Dickinson was knowledge invalidity considering had of the of the factor the character of the means contin- gent provision. weighs by weighs This factor used the actor of the Bank favor in favor of the Killions. and Dickinson. factor, regard to the fourth the ac- three, With On factor the character of the motive, degree tor’s the issue is whether the actor, by
means used
we consider wheth
motivating
of malice
the Bank
er there is “conduct which offends our socie
overwhelming
tip
is so
so as to
the scales in
concepts
morality
tal
of fairness and
favor
liability. Riley,
favor of
at 89.
847 S.W.2d
liability.” Riley,
Bank
Dickinson
with foreclo-
proceedings
foreclosure
was neither shocking
Killions
sure as retribution
the
immoral,
nor
and a lender’s use of the expe-
refusing
sign
the
agreement
modification
non-judicial
ditious
foreclosure of deeds of
challenging
and for
the
trust
discouraged.
is not to be
And most
provision. The Bank’s and Dickinson’s ill-
importantly,
regarding
the evidence
the Kil-
the
will toward
Killions can also be inferred
injury
lions’
only
demonstrates
that the Kil-
Frick,
by
from the statement made Mr.
the
lions suffered emotional distress in the form
Dickinson,
day
on the
stress, humiliation,
and embarrassment
attempted
second
foreclosure sale when Mr.
that was not severe. There
nowas
evidence
Frick told the crowd at the foreclosure sale
regarding the duration of the Killions’ emo-
the sale was off
day,
for that
but
tiоnal
inju-
distress. The Killions’ emotional
“[t]here will be a sale. This farm will sell.”
ry as a result of the Bank’s and Dickinson’s
After this court affirmed the trial court’s
conduct is the harm
deserving
pro-
least
judgment declaring that
the
inter-
tection
prima
under a
facie tort cause of
est
in the Killions’ note was invalid
action,
significance depends upon
and its
its
unenforceable,
the Bank refused to re-
severity.
this
While
court does not minimal-
lease its
deed
trust until it was ordered to
ize the effects that the Bank’s and Dickin-
and,
by
then,
do so
the trial court
even
the
family,
son’s actions
on
the Killion
required
and Dickinson
Chemical Bank
requires
law
plaintiff
that a
demonstrate
payoff
wire transfer the
funds to them.6
more serious harm to an interest which is
degree
motivating
While the
of malice
least deserving
protection. Weighing
Bank and Dickinson is
overwhelming
not so
conflicting
parties
interests of the
to this case
tip
so as to
liability,
scales in favor of
light
in
of the social and economic interests
supports
evidence
finding
that in addition
society, legal
inappropri-
redress would be
debt,
intending
to collect the Killions’
ate and the Killions failed to make a submis-
Bank and Dickinson
injure
intended to
sible
prima
case of
facie tort.7
by instituting
proceed-
Thus,
ings.
weighs equally
factor
The Bank and
argue
that this
favor of the Bank and Dickinson and the
court
primа
should abolish the
facie tort
Killions.
cause of
Although
action.
the doctrine has
been
criticized
summary,
Supreme
Missouri
application
of the balanc-
Co.,
Court in Brown v.
ing of
Missouri
R.
interests tests to the facts of this case
Pacific
(Mo.
1986)
(“No
that,
720 S.W.2d
indicates
banc
while the Bank and Dickinson
resulting
case
plaintiff
for the
part
motivated in
verdict
malice
institut-
ing
theory
facie tort
has
proceedings against
been affirmed
Killions,
courts.”),
appellate
legitimate
had an
Missouri
and in
additional
Tuell,
(Mo.
motivation to collect
Dake v.
the Killions’ debt. The
banc
1985)
right
(referring
“misty
and Dickinson did have the
pri-
shroud of
tort”),
the deed of trust and note to
ma
Supreme
institute fore-
the most recent
proceedings
closure
in the event of the
Court opinion,
Valley
Kil-
Nazeri v. Missouri
default,
lions’
although
College,
1993),
their conduct contrib-
uted to cause the default. Their
specifically
initiation of
recognizes
facie tort
Although
attempt
these acts occurred after the
accepts
position
7. Even if one
the dissent’s
foreclosures,
ed
constitute circumstantial
had made
submissible case of
evidence of the Bank’s and Dickinson’s earlier
tort,
prima facie
this court believes that a rever-
intent at the time the foreclosure sales were
judgment
sal of the
and a remand would still be
Co.,
instituted. See Brеier v. Koncen Meat
warranted based
the trial court’s abuse of
(finding
(Mo.App.1988)
in allowing
its discretion in
the Killions to read
misrepresentation
employment
action for
of an
Judge
inflammatory
prejudicial
Barnes’
re-
agreement
promisor’s
that evidence of the
con
jury,
marks to the
as raised in the Bank and
prior
subsequent
duct
to and
to the execution of
Dickinson’s Point II.
agreement
was sufficient circumstantial evi
jury
question
dence to create a fact
for the
on the
promisor’s
issue of the
intent at the time the
executed).
agreement was
*12
under the deed of
by
right
the
foreclose
this court is
cause of
Since
bound
action.
378;
at
Farris
precedent
Supreme
Spires,
of the most recent
trust. See
513 S.W.2d
the
(Mo.
decision,
185,
authority
Hendrichs,
Court
we are without the
188-89
413 S.W.2d
prima
of
tort.
to abolish the doctrine
facie
1967); Edwards,
at 777. The
322 S.W.2d
Highway
and
Schumann
v. Missouri
case on
Killions did
make a submissible
not
(Mo.
Com’n,
Transp.
S.W.2d
against
duty
fiduciary
their breach of
claim
App.1995).
Therefore,
Mr. Crist and Dickinson.
of this claim.
not entitled to remand
are
to Make a
The Killions Failed
Submissible
Fiduciary Duty
of
Breach
and
Case of
Likewise,
failed make
the Killions
Duty of
Faith
Breach of the
Good
for
on their claim breach
a submissible case
argued that if
The Killions
this court
Bank. In
duty
good
against
of
faith
the
of the
erroneously
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lions contend that
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fiduciary duty
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Bank. On their
Co.,
Chilton v. Prima Facie Tort S.D.1997). App. majority sets forth the four factors the attorney The Killions’ argue did Bullionsneed to establish to make a submissi- foreclosure sale “illegal was based on an (1) (2) act;
ble case: note,” an intentional lawful an and that the Killions were not in de- (3) (4) injure; injury; intent to an an attempted fault at the time of the justification absence of or justifi- insufficient sales payment because their partial after the cation for the act. Nazeri v. Missouri Val- sale in February only of 1992 up not made ley College, 860 S.W.2d deficiency payment in the 1991 but also prepayment served as a of the December payment. attorney The Killions’ was determining In whether the Killions have not admitting the fact that there was no tort, made a submissible case of facie but, instead, default arguing legal con- the initial consideration is whether the Kil- clusion from the facts in evidence. This is lions have sufficient evidence of each of the judicial not a admission. four elements of their claim. The first ele- required ment is an addition, intentional lawful act In attorney the Killions’ also ar- the Bank and Dickinson. The gued intentional attempting that instead of to foreclose alleged by lawful acts the Killions are the on property, the Killions’ the Bank and Dick- institution of foreclosure sales of the Killions’ inson could have sued the Killions on the property February on 1993 and March Implicit argument note. in this latter is the 1993. The deed of trust allows the Bank and Killions’ admission that the Killions in were to foreclose on the in the default. This is consistent with the testimo- event of a default the Killions. ny One of the presented by during the Killions events of default listed on both the land note case-in-chief. As counsel for the Bank and equipment and the note is the failure to closing, Dickinson stated his in “[TJhe evi- any when due principal payments. or interest plaintiffs dence from all of the that testified The Bank and Dickinson contend they they that be- was that knew were in default.” cause the Killions’ stated in his clos- Specifically, Bill Michael and Killion both ing argument that the Killions were not in testified that in were default at the time default at the time the foreclosure sales were the Bank and Dickinson instituted fore- instituted, essentially the Killions “conceded proceedings. closure There was evidence away” the first element of their that the Killions failed to make the Decem- 31,1992 tort claim. The argue $42,000 Bank and Dickinson payments ber on the land closing argument $19,706.51 that the statements in were note and equipment note. conduct, judicial admissions that their in in- light of the evidence and the Killions’ stituting the foreclosure sales when the Kil- essentially counsel’s other statements аdmit- time, default, the Bank and Dickinson ting that the Killions were in the Also at that get sign a modi- attempted to statement the Killions’ counsel that argument legal agreement which consented is an of a fication were not default interest, unclear, $35,000 contingent crediting equivocal conclusion exculpatory clause on usurious judicial not constitute contained and therefore does favor of illegal admission that the institution the foreclo- provided that the Killions released the presented sures was unlawful. might liability claims the Killions instituting sufficient evidence sales, have had it. the Bank and Dickinson committing acts. intentional lawful that, receiving after Mr. Crist testified letter from the Killions’ October The second element the Killions need attorney, he be- recommended foreclosure prove actual Bank’s Dickinson’s sign the modifi- cause Killions would injure intent to them. The Killions have *14 they claiming agreement and were cation element, “heavy burden shoulder” on this to contingent provision of the that the interest “actual, they prove specific as must intent a unenforceable. Mr. Crist sent note was injure, merely and an intent do the to to demanding letter to the Killions the Decem- may injury.” Kiphart act which result in 31, payment month a half ber 1992 a and Ass’n, Community Fed. & Loan Sav. it was before Killions before due and the E.D.1987). 510, Thus, (Mo.App. lettеr, actually in In the Mr. were default. the Killions to establish the Bank need that the fail- specifically Crist referred to Killions’ injure and Dickinson intended to them sign agreement the be- ure to modification instituting the foreclosure two sales. payment made for and fore he the demand may prove Killions intent circumstantial Dick- threatened foreclosure. Bank and Inc., Mitchell-Hugeback, evidence. Butler the offer all of inson refused Killions’ to 15, 895 S.W.2d Circum- unpaid principal the and annual interest stantial evidence is evidence which “does not $15,000 plus to settle contin- both notes the directly prove a gives fact in issue but rise to gent out majority points interest issue. The logical City a the fact inference that exists.” pri- Bank’s that “the and Dickinson’s actions Waddell, 499, Springfield v. 904 S.W.2d of attempted give to the first foreclosure rise or S.D.1995). (Mo.App. The fact that the to the reasonable inference that injury might be the natural probable proceeded Dickinson with foreclosure as of the result Bank’s and Dickinson’s acts is refusing retribution the Killions for insufficient to the required establish malice agreement for sign to the modification prima for a facie cause of tort action. Boat- challenging contingent provi- the Berwald, men’s Bank Butler v. 752 of 811-812.) (Op. sion.” at W.D.1988). (Mo.App. satisfy To the tort, requirement intent a for facie be Ill will tоward can also spite necessary. actual ill is J.S. will inferred from the statement made Mr. Hughes-Treitler Mfg. Co. v. Corp., DeWeese Frick, Dickinson, attorney during the the E.D.1994). (Mo.App. being attempt. second foreclosure After temporary a order restraining served with is There substantial circumstantial evi- sale, halting the Mr. the second Frick told giving logical rise dence inference that at the sale the sale crowd foreclosure that injure the Bank and Dickinson intended to “[tjhere day, for that but be a was off will by instituting the the foreclosure This farm sell.” statement sale. will This partial liquidation After the Killions’ sales. the and Dickinson’s intent evidences Bank’s February of their of sale Killions, injure the to to not their intent Crist, Dickinson, officer John loan at a simply collect debt. $35,129.09 proceeds the sale applied of interest, payment attempted of the second foreclosure toward After though authority enjoined, he Bank even knew he no sale was and Dickinson terms to to take under the of the note collect contin- continued actions indicate injure “Although at time and in the Killions. gent interest that amount. intent to attempted argue these acts occurred after the fore- because had the closures, they right begin proceedings constitute circumstantial evi- when mortgage, dence the Bank’s and Dickinson’s earlier on their Killions defaulted intent at the time the sales requires publish were Missouri law no- (Footnote 812.) foreclosure, op. instituted.” at After tice the Killions suffered judgment injury this court affirmed the trial court’s no because Bank’s Dickinson’s case, declaring provi- If actions lawful. this were no succeed, plaintiff sion in the Killions’ note was invalid and ever tort could unenforceable, the requires plaintiff Killions informed Chemi- as the cause of action appellate cal decision. Chemical establish that the defendant committed a willing Bank was loan if refinance the lawful act. release its deed of trust. The out, majority points As the the “evidence Bank refused release its deed trust to stressed, proves that the Killions were humil- as refinancing, allow the 809.) at (Op. iated and embarrassed.” That
Dickinson claimed that the Killions owed repeated will evidence not be here. Permit- $29,000 attorney fees. The trial court held ting recovery damages for emotional hearing on matter. in prima distress facie tort cause of action
Even general after trial court recommended consistent with rule in Mis- that the Bank deed trust inju- release its condi- souri that one can recover for emotional receiver, tioned previously appointed physical injury ries accompanying without an *15 $40,000 “malice, request, willfulness, at the Bank’s retaining the when there is wanton- pend- inhumanity.” receiver had in farm collected income ness or Medlock Farmers ing the dispute, resolution of the fee County, State Bank Texas of S.D.1985). the Bank and to (Mo.App. Dickinson refused release of Since cause finally the deed trust. prima The trial court action for facie tort includes the ele- effectuating malice, law, entered an general order its recommen- ment of Missouri dation. The Bank then injury and Dickinson re- emotional alone be sufficient to accept Here, prove injury. fused to a check from a Chemical Kil- the element the representative injury off the presented to Killions’ lions evidence of emotional note, claiming stressed, they they Chemical Bank’s check in that were testified “good by was not and available funds.” The humiliated and embarrassed the actions of required Bank and Dickinson Chemical Bank the Bank and Dickinson. wire payoff
to transfer the funds to them. The fourth element the Killions to need by The prove Bank’s Dickinson’s conduct be- substantial evidence the absence fore, during attempted justification justification after the foreclo- or insufficient for provides sure sales threatening substantial evidence of the Bank’s and to Dickinson’s injure by proceed their intent the Killions institut- with the The foreclosure sales. ing argue the foreclosure The sales. Bank’s and Bank and Dickinson that because the default, just they lawfully Dickinson’s actions indicate more than were in were Killions permitted proceedings an intent to foreclose and collect the debt to initiate foreclosure Killions; they so, by doing the owed indicate actual and had valid business reason spite any the despite dispute malice and toward Killions. The over the in- contend, therefore, presented provision. They sufficient evidence on the terest they justified following second element of their facie tort Were estab- legal cause of procedure by initiating action. lished foreclo- sure proceedings. element the Killions need next by they injured the prove support is that were In of their claim that had a threatening to proceed foreclosing, and Dickinson with valid business reason for injury sales. An is defined as Bank cite and Dickinson Centerre Bank of Distributors, Inc., protected of a legally City, “the invasion interest.” Kansas N.A. W.D.1985). Co., & Centerre is (Mo.App. Porter v. Crawford W.D.1980). (Mo.App. present The Bank case. In distinguishable from rights waiving their agreement Centerre, jury verdict in modification this court reversed a Dickinson, and caused against the Bank and plaintiff on the basis that Cen- favor of the refusing release by default the Killions’ calling a reason for terre had a valid business paid trust unless due, the deed of justification note and such promissory As indicated illegal contingent interest. plaintiff’s to defeat the sufficient alone was could majority, Bank and Dickinson of action. at 54. prima facie tort cause Id. proceedings suspended foreclosure well have to believe in Centerre had reason The bank validity of a adjudication of the pending the inadequate because of it was insecure knowing that provision, questionable interest Id. There was evidence that collateral. than security worth far more losing money period for a had been plaintiff any inter- the loans and principal amount of time, inventory figures given to the during pendency accrue est which would suspect, and the bank believed bank were notes, majority action. As negative company position. was in a Id. computing contingent interest method of case, and Dickinson well- it was unconscionable. also invalid because liquidation proceeds secured. The from the evidence presented The Killions substantial principal balance on the sale reduced Dickinson lacked sufficient that the Bank and $171,500 approximately and the land note to proceed- justification to maintаin equipment balance on the note principal claim for ings, element of their the fourth $25,000, and this does not include credit prima facie tort. $35,129.09 that the Bank and Dickinson incorrectly payment applied toward evidence presented Since the Killions remaining interest. real elements of their claim for each of the Dickinson, equipment securing the notes the Bank and facie tort $356,000. “balancing of valued at undertake the the court must whether their interests” test to determine Additionally, the showed that the evidence factors tortious. The four conduct was Killions’ default on the note was caused are: under this test weighed the court *16 inability the Killions’ to refinance their debt “(1) harm seriousness of the the nature and the Bank because the Bank would not to (2) pro- injured party; the interests release the deed of trust on the Killions’farm (3) conduct; the charac- by the actor’s moted an paid unless interest under (4) actor; used ter of the means majority illegal provision in the note. The Lundberg Prudential motive.” v. the actor’s argu- properly discounted the defendants’ America, Co. Ins. of believed the inter- ment that W.D.1983). (Mo.App. provision enforceable. est “There is agree majority that factor one I with the that the Bank and Dickinson were evidence Dickinson. weighed in favor of the Bank and potential invalidity of the contin- aware of the previously as The Killions suffered real harm gent questionable and its majority opinion. in the pointed out here and Crist, enforceability because Mr. the Bank’s However, proper- physical person harm to agent employee, get and Dickinson’s tried to weight emotional ty receives more than sign proposed the Killions to note modifi- harm. Id. proposed The modifica- agreement. cation exculpatory agreement contained an tion very that majority demonstrates well The illegal interest in favor on usurious or clause weighed in favor of second factor is provided that the Killions of the attempt improve to Killions. I won’t liability any for claims released the Bank analysis. reason- they might have had it. The consideration requires three Factor inference is that the Bank and Dickinson able so- “offends there is conduct which whether invalidity of the contin- knowledge of the morality.” Id. concepts of fairness and cietal 810-811.) (Op. at gent provision.” in favor of majority weighs this factor The initiating Dickinson because knowledge, they initiated fore- the Bank and Despite this publishing the proceedings and ques- foreclosure proceedings when closure shocking or notices “were not sign the provision and refused to tioned the light Co., immoral in fact that the note & 273 (Mo.App. W.D. gave right deed trust them the to responded way: foreclose The court in this 811.) the event (Op. of default.” at Thus, the defendants continue to to refuse recognize principle duty violat- Merely because the documents conferred a ed in tort duty intentional is the to right to not foreclose does mean the exercise intentionally causing avoid harm to anoth- right shocking of that cannot be or immoral. justification. er without Possessing legal right to act is not an tort, Id. In the it context is fact, absolute defense. it is an element of not the act of the defendant which creates tort complained that the act of be lawful. the tort. It the act is that was done with The regarding focus factor three is wheth- injure intent justifica- without sufficient er the conduct concepts here offends societal Porter, tion. at morality. of fairness and I believe it does. innovation, Prima facie tort not a recent having developed evolved and almost attenuating The circumstances surround- century. Smentowski, Schmitz 109 N.M. ing prevent the defendants’ act “right” (N.M.1990). sig- P.2d being to foreclose from used as a shield from safeguards nificant balancing consider- liability. procedures The foreclosure unique majority’s ations to this tort make the carried out under circumstances that were chilling сoncerns about a effect unwarranted. unfair and offensive. The conduct described majority opinion here and in the offends majority weighs opinion the fourth concepts societal and morality of fairness factor equally in favor of the Bank and Dick weighs in liability. favor of defendants’ inson and the Killions. It evi acknowledges dence of ill toward the will Killions and that The majority points also the ease of supports finding evidence Reese First Bank & Missouri Trust Com- injure defendants intended 1987), pany, 736 S.W.2d 371 which However, instituting the foreclosure sales. declined to authorize cause of action for even, majority tips the scales back to wrongful attempted foreclosure. Whether or citing Lundberg proposition wrongful is, attempted not in and defendants are entitled advance “a valid itself, a cause not dispose of action does society purpose” business and because “in a inquiry. our professes to believe the free enter Prima facie been recognized tort has prise system, motivation, as a profit economic Supreme cause of action self-interest, our Court and and business success are *17 requires a analysis much different 811, than the (Op. offensive at quoting terms.” Lund 671.) Reese court was confronted with. The berg, inten- 661 at S.W.2d defendant, tional act of a whether an at- аgree I terms patently those are not tempted act, some foreclosure or other is but offensive and believe defendants were fact, one element of a facie tort. In it by profit, indeed motivated economic self- requirement ais the act complained price? interest and At what success. be, itself, not in and of a cause of action. perverted defendants’ actions those time- cause, tort, not Otherwise that honored business terms and the conduct in pursued. must be this case bears little resemblance to “free” enterprise.1 weighs I believe that this factor In the landmark first recognizing case in favor of the Killions. Missouri, argued tort the defendants there could be no of action cause because of The majority concedes evidence of the first statutory right stop payment their to on a two factors of a submissible case: an inten- given plaintiff. check to Porter v. tional injure. lawful act and an intent to I Crawford points 1. Two of error additional were raised an adverse inference from the Bank’s failure They allege the Bank and Dickinson. that the president, Sheperd, testify. call its do Paul I jury Judge should not have had contents of point believe either constitutes er- reversible during Barnes’ court order read them and that ror. closing argument plaintiff impermissibly argued damages in- objection punitive to the proper the Killions established the re- also believe maining injured, preserved. been Id. two factors: that struction has injury justification. and that the was without 17,1996, December Rodriguez was decided wrongful actions were The defendants’ 21, January rehearing denied on 1997. liability established. as of the date Rodri- pending This case was guez appeal the direct was decided since Jury Damages Instruction on Punitive Cobb, 875 not exhausted. State v. S.W.2d The Bank and Dickinson also claim that 1994). (Mo. Therefore, banc by refusing the trial court erred to instruct Rodriguez, have in- the trial court should jury convincing that it needed clear and jury proof structed the that the burden of companies evidence that acted with evil punitive damages in this case was “clear and rights motive or reckless indifference to the convincing Goodyear Tire evidence.” Cole v. imposing punitive damages. of others before Co., (Mo.App. & Rubber They pronouncement that the recent claim E.D.1998). I therefore reverse the Supreme Rodriguez Court in the Missouri judgment punitive damages remand Corp., Suzuki Motor the matter for trial on that issue. a new 1996) compels this court to remand this case to the trial court in order to instruct the
jury convincing on the clear and standard of
proof regard punitive damages. with I
agree. trial,
At for the Bank and objected jury instruction on ground that it jury did not instruct the convincing
on the clear and evidence stan objec dard. The trial court overruled their VAN, Appellant, Linzzie merely tion jury instructed the was, effect, preponderance standard the evidence. The Bank and Dickinson also trial,
raised this issue in their motion for new Missouri, Respondent. STATE properly preserving thus the issue for our No. 22211. review. See Balke v. Central Missouri Elec.
Coop., (Mo.App. W.D. Appeals, Missouri Court of District, Southern Rodriguez, Supreme the Missouri Court Division One. appropriate determined the proof standard of jury for cases in which the must determine Feb. impose punitive damages against whether to a defendant. The court determined that
“[bjecause punitive damages are extraordi- *18 harsh,
nary higher ... standard of For
proof required: punitive common law claims,
damage the evidence must meet the convincing proof.”
clear and standard
Rodriguez,
guez change court determined that apply prospectively
the common law should
only. Specifically, Id. the court determined convincing clear and standard of
proof punitive damages apply shall to all begins February
cases in which trial after pending and all other cases in which a remarks made notes Killions’ 643 acres of real property periods late, in Pettis were as allowed County, security and a first in all terms of the notes. When Killions were growing crops, government payments timely pay able to payment, payments land, lease received for the all the Bank extended another loan to the Kil- machinery equipment, money, and all lions to cover the payment Killions’ interest securities, and other for 1991 crop input held and their cost. The repaid Killions at the time the notes were that loan at an percent executed eleven and in the interest rate. future. Both loans were serviced by Dickinson Corporation, Financial the sole By the fall of the Killions decided owner and stockholder of the Bank. they would need to sell some of their land equipment having because promissory notes and the deeds of
Notes
on notes the annual balance both not enforceable because the Bank had mis- interest accrued. represented they signed to the Killions when 12,1993, January attorney for Dick- On contingent the note how the interest would Killions that a foreclosure inson notified the calculated, be and that the terms of the note held sale of the Killions’ would be contingent did not entitle the Bank to collect 9,1993. February The Notice of Foreclo- only part, interest the sale of but not published sure was in the Sedalia Democrat all, of the real estate. He also told the Bank peo- Killions that newspaper. The testified exculpatory language that the in the modifi- community ple who saw the foreclo- agreement acceptable to cation was paper sure notice in the made comments testified that he Killions. Mr. Fischer had They humiliated them. embarrassed and counsel for two banks for served as in-house threatened foreclosure also testified that the twenty-eight years, and had re- a total of marriages, and was stressful on their agreements. note modification In his viewed particularly on Noah and Mabel stressful experience, exculpatory illegal clause on Killion, they losing because worried about agreement interest in the note modification their home. unusual, seen and he had never a dis- 4, 1993, fiduciary relationship February the Killions filed a claimer of a between a On County a release of all in the Circuit Court of Pettis petition bank and a borrower or Crist, liability agree- against in a note modification the Bank and Mr. as successor lender’s trust, seeking pre- the deed of a ment. Mr. Fischer asked trustee under restraining preliminary that the Killions order and pare payoff quote temporary so could injunction sale, prohibiting the receiving proceeds ness of the loan. In declaratory judgment that the contin- no repayment event shall the of principal gent interest provision of the land note was subject any be contingency. unenforceable, or, invalid and in the alterna- attorney argued The Killions’ reg- that this tive, contingent interest was not at owed ulation contingent provi- made the that time because thеre had been no sale of sion of the note unenforceable because the property. all of the The court entered the profita- interest was not based on temporary restraining prohibiting order bility and operation successful of the Killions’ 11, 1993, February sale. On 408.035, § argued business. The Bank hearing court petition held on the Killions’ Cum.Supp.1992, applied. RSMo Section injunction. Killion, preliminary for a Noah provided 408.035 parties that “it is lawful for Killion, Crist, Mike Mr. respective and their agree interest, writing rate of appeared counsel hearing. at this At the fees, other hearing, terms and conditions in con- they the Killions testified that equity afraid would lose nection” corporation, in the with a loan to a busi- farm if the place, $5,000, foreclosure sale took ness loan over real estate loan other sought refinancing loans, from Chemical than residential real estate and certain Bank, but Chemical Bank would not commit other argued loans. The Bank also until the issue was set- case improper should be dismissed due to tled. The Killions’ asked the court venue. The court took the matter under judicial to take notice of 4 C.S.R. 140-6.050. and, prior ruling, advisement to the court regulation provides, This pertinent part, as voluntarily petition dismissed their follows: February the Bank on 1993.1 legal separation PURPOSE: The depos- 24, 1993, February a letter dated taking it banking pre- from investment attorney for Dickinson notified the Killions of investing vents banks from in the stock of