Missouri Contract Cases

Midwest Coal LLC v. Cabanas

In an action for fraudulent misrepresentation, the Missouri Court of Appeals, Western District affirmed the trial court’s grant of summary judgment in favor of the defendant, concluding that the plaintiff, a coal company, was unable to prove damages for lost profits.

Lost profits are generally not recoverable as damages, because they are too speculative; however, they are recoverable with sufficient proof to provide a rational estimate of the amount of lost profit. In this case, however, the plaintiff had never turned a profit and was unable prove its case. (“With no history of profitability, Plaintiff cannot present sufficient evidence to prove lost profits from an existing commercial business.”)

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The Missouri Supreme Court decided an important case a few months ago involving non-competition and non-solicitation provisions in employment agreements. In Whelan Security Co. v. Kennebrew, the Supreme Court enforced a non-competition agreement and modified non-solicitation agreements against out-of-state former employees.

My labor and employment colleague, Gerry Richardson, wrote a blog post about the Whelan decision soon after it was filed in August 2012, and he included the following takeaways for employers:

  • Limit post-employment restrictions on customer solicitations to those customers with whom the employee interacted.
  • Use the one-year safe harbor for post-employment restrictions on a former employee’s solicitation of employees.
  • Include a statutorily recognized purpose for an employee non-solicitation obligation longer than one year in the text of the non-compete agreement, such as protection of confidential or trade secret business information, relationships with customers or suppliers, the employer’s goodwill, or loyalty to the employer.
  • Avoid general post-employment non-compete obligations with geographic scopes of more than a 50-mile radius from the employee’s last workplace with the employer and durations of greater than two years after the termination of employment.

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Lafarge North America, Inc. v. Miller

The Missouri Court of Appeals, Western District reversed the trial court’s grant of summary judgment in favor of Lafarge North America in its claim against Miller, the sole owner of a limited liability company, holding that material facts were in dispute as to whether Miller had agreed to personally guarantee Tiger’s obligations.

An employee of Tiger Ready Mix LLC, Miller’s company, had stamped Miller’s signature on a credit application and agreement to buy bags of concrete from Lafarge. When Tiger failed to pay several invoices, Lafarge sued Tiger for the debt and Miller on his purported personal guarantee. The appellate court quoted at length from Capitol Group, Inc. v. Collier, an opinion from earlier in the year in which the court stated that it would be difficult to prevail in an action to enforce a personal guarantee contained in a commercial contract where the individual didn’t sign the agreement twice — once in his capacity as an agent of the company and once in his individual capacity. (“While our caselaw does not hold that the only way an agent can be liable under a guaranty of this nature is by signing twice, this is the preferred method because it ‘clearly manifests his intent to assume personal liability.'”)

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American Eagle Waste Industries, LLC v. St Louis County, Missouri

The Missouri Supreme Court held that the plaintiffs — trash haulers — weren’t entitled to relief from the county’s actions based on an implied-in-law contract theory, as the intermediate appellate court had held, because the county hadn’t received a benefit from the haulers. (“The essential elements of quasi-contract are: (1) a benefit conferred upon the defendant by the plaintiff; (2) appreciation by the defendant of the fact of such benefit; and (3) acceptance and retention by the defendant of that benefit under circumstances in which retention without payment would be inequitable.”) However, the haulers were entitled to relief because R.S. Mo. § 260.247 provides an implied private right of action.

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Truman Bank v. New Hampshire Insurance Co.

In this case, Truman Bank’s debtor, a marina, suffered storm damage, repaired the damage using insurance proceeds, later sold the marina, and paid off the bank debt. The bank sued because the insurance company failed to pay the bank directly as a loss payee, seeking a second payment as well as statutory damages for vexatious refusal to pay. Here’s a short excerpt of the appellate court’s narration of the facts. Clearly, the court wasn’t impressed with the bank:

Still, the bank continued to demand that the insurer pay a second time for the storm damage. Undeterred by the fact that the owner had repaired the marina and paid off its loan, the bank filed suit against the insurer. To add insult to injury, the bank sued both for breach of contract and statutory penalties for vexatious refusal to pay.

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Rivermont Village, Inc. v. Preferred Land Title, Inc.

Preferred Land Title agreed to act as an escrow agent under a real estate purchase agreement, although there was no written escrow agreement. The buyer delivered an earnest money deposit check to the title company, and the title company informed the seller that it had received the check and would deposit it that business day. The buyer then instructed the title company not to deposit the check until the buyer had completed due diligence. The title company didn’t deposit the check and failed to inform the seller.

The transaction didn’t close and the seller eventually sold the property to a different buyer for considerably less money. The seller sued the title company for breach of fiduciary duty and negligence, seeking liquidated damages in the amount of the deposit, punitive damages, and attorneys’ fees. After a bench trial, the trial court entered judgment in favor of the seller in the amount of the deposit plus interest.

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Graham v. State Farm Mutual Automobile Insurance Co.

In a case involving two uninsured motorist policies, the Missouri Court of Appeals, Eastern District held that a State Farm policy provided coverage only to the extent that its policy limits exceeded the primary underinsured motorist coverage.

Two provisions in the policy were at issue. One read,

The most we pay will be the lesser of: a. the difference between the amount of the insured’s damages for bodily injury, and the amount paid to the insured by or for any person or organization who is or may be held legally liable for the bodily injury; or b. the limits of liability of this coverage.

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Most areas of contract law change very little over time. When a new way of doing business comes along, the law might take a while to figure out how to deal with it, but eventually a consensus approach (or two) is adopted by the courts, and things hum along once again.

Recent developments in contract law

An example during my lifetime are boxtop or shrinkwrap agreements that reflect a “terms to come later” approach to contracting. In these situations, merchants sell their computers or software and enclose additional terms in the product package. Thus, the buyer doesn’t have an opportunity to read all of the terms when they purchase the product. This poses a challenge to traditional contract law, which generally doesn’t give effect to silent terms.

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