Missouri State Contract Cases 2012 (Part 10): Escrow and Collateral Estoppel

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.

According to the Missouri Court of Appeals, Southern District, an escrow agent is bound to perform the duties specified in the escrow agreement, and neither party can alter the terms of the agreement without the other party’s consent. Because the seller didn’t consent to the buyer’s instructions not to deposit the earnest deposit in a trust account, the title company had a duty to deposit the check in accordance with the escrow agreement contained in the real estate purchase agreement.

The Business Bank of St. Louis v. Apollo Investments, Inc.

The Business Bank sued Apollo Investments and related parties, alleging breach of promissory notes and commercial guarantees, and the defendants countersued, alleging wrongful foreclosure. The trial court granted The Business Bank’s motion for summary judgment on its claims for breach of promissory notes and guarantees. The court also granted the bank’s motion to dismiss Apollo’s counterclaims because they were in default on the promissory notes when the foreclosure proceedings began. Further, the Apollo entities failed to request that the foreclosure sales be set aside and so didn’t state a claim for which relief could be granted.

Kinsky v. 154 Land Company, LLC

The Missouri Court of Appeals, Eastern District affirmed the trial court’s grant of summary judgment in favor of the successor to a subdivision developer. The case turned on whether John Kinsky, who had represented a subdivision plot owner in prior litigation, was in privity with the plot owner for purposes of collateral estoppel.

Collateral estoppel bars a party from re-litigating issues that have already been decided in previous litigation. For collateral estoppel to apply, (1) the issue decided in the first action must be identical to the issue in the second, (2) the prior litigation must have resulted in a judgment on the merits, (3) the party to be estopped must have been a party or in privity with a party to the prior adjudication, and (4) the party to the prior adjudication must have had a full and fair opportunity to litigate the issue in the prior suit.

At issue in this case was whether Kinsky was in privity to the plaintiff in the prior litigation by virtue of his having represented him as an attorney. The court adopted section 39 of the Restatement (Second) of Judgments, which states, “A person who is not a party to an action but who controls or substantially participates in the control of the presentation on behalf of a party is bound by the determination of issues decided as though he were a party.” The court stated that the primary element in determining whether privity exists is control over the litigation and concluded that Kinsky was in privity with the plaintiff.

Papa John’s USA, Inc. v. Allstate Insurance Co.

Finding that Papa John’s wasn’t an “insured person” under an automobile insurance policy, the Missouri Court of Appeals, Western District affirmed the trial court’s order granting summary judgment in favor of Allstate Insurance Company.

The case involved a dispute over coverage for damages stemming from an accident in which one of Papa John’s employees was involved during the course of the employee’s work for Papa John’s. The car was borrowed from the employee’s grandparents, who were the named insureds under the policy.

As defined under the policy’s omnibus clause, an “insured person” included any person using the vehicle with the named insureds’ permission. The court found that, although the Papa John’s employee had permission to use the car, that permission didn’t extend to Papa John’s.

China Worldbest Group Co., Ltd. v. Empire Bank

The Missouri Court of Appeals, Southern District affirmed the lower court’s judgment that found that Empire Bank was negligent but that awarded no damages to the plaintiff. Although Empire Bank negligently handled the documentary collections at issue, the plaintiff suffered no damages as a result because it had delivered nonconforming products in the underlying transaction.

In Category: Missouri Contract Cases

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