Missouri State Contract Cases 2012 (Part 13): Lost Profits, Punitive Damages, and Malicious Prosecution

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.

Bailey v. Hawthorne Bank

The Missouri Court of Appeals, Western District upheld a jury verdict awarding a restaurant owner lost profits in his claim against a bank for breach of a loan commitment, although the amount of lost profits couldn’t be determined with certainty because the restaurant was unprofitable and the owner’s proposed business expansion might not have been profitable.  The appellate court quoted a Missouri Supreme Court case that sets out a lower bar for proof of lost profits in some cases, so long as the fact of damages is proved with reasonable certainty:

While an estimate of prospective or anticipated profits must rest upon more than mere speculation, uncertainty as to the amount of profits that would have been made does not prevent a recovery. The claimant must establish the fact of damages with reasonable certainty, but it is not always possible to establish the amount of damages with the same degree of certainty.

In some cases, the evidence weighed in common experience demonstrates that a substantial pecuniary loss has occurred, but at the same time it is apparent that the loss is of a character which defies exact proof. In that situation, it is reasonable to require a lesser degree of certainty as to the amount of loss, leaving a greater degree of discretion to the court or jury. This principle is applicable in the case of proof of lost profits. [citations and internal quotations omitted]

On another point, the appellate court rejected the bank’s argument that a loan summary delivered by the bank didn’t satisfy the Statute of Frauds, holding that the loan summary wasn’t within the statute, because, although it contemplated a five-year loan term, it was capable of being performed within one year. The courts stated, “But Missouri law is clear that the statute of frauds defense is inapplicable if the agreement was capable of being performed within one year. Our cases hold, consistently, that a contract is not unenforceable under the statute of frauds if it could possibly be performed in compliance with its terms within one year, even though the actual performance is expected to continue over a much longer period.” [citations and internal quotations omitted]

The appellate court reversed the trial court’s granting of the bank’s judgment notwithstanding the verdict motion on the issue of punitive damages, holding that a reasonable jury could conclude that the bank’s conduct in refusing to close the loan and timely inform the plaintiff that it wouldn’t be making the loan was sufficiently egregious to support a claim for punitive damages on the negligent misrepresentation claim.

Berlin-Wheeler, Inc. v. Howard

In a very brief opinion, the Missouri Court of Appeals, Southern District affirmed the trial court’s judgment in favor of a hospital’s assignee on its action on account. The court held that the plaintiff had presented sufficient evidence to prove each element of the claim, namely that “(1) [the hospital] assigned its accounts to [the defendant]; (2) the exhibits showed dollar amounts, services, and charges; and (3) the charges were reasonable and necessary.”

Shiddell v. The Bar Plan Mutual

The Bar Plan denied coverage under a legal malpractice policy for a claim involving the prosecution of a suit brought by the law firm Dysart Taylor and its attorney Kent Bevan. Dysart Taylor’s client, Cameron Mutual Insurance Company, wanted to deny coverage under a business automobile policy. After examining the policy, Bevan concluded that there was coverage. Nonetheless, in an attempt to get an insurance broker’s errors and omissions insurance carrier to pay a portion of the claim that was insured by the automobile policy, Bevan filed suit against the brokers, alleging that they had forged a document to obtain coverage. After litigating the case for two years — “long after Bevan was made aware that the claim was baseless” — Bevan dismissed the case against the brokers.

The brokers filed a malicious prosecution suit against Dysart Taylor and Bevan. The Bar Plan tendered a defense under a reservation of rights, noting that the malpractice policy had an exclusion for malicious and intentionally wrongful acts, but Dysart Taylor and Bevan assumed their own defense. They settled the malicious prosecution case for $4.5 million, and the brokers agreed to limit execution of the judgment to the proceeds that could be obtained from The Bar Plan malpractice policy.

On a motion for summary judgment, the trial court ruled in favor of The Bar Plan on its denial of coverage. On appeal, the brokers argued that the phrase “deliberately wrongful acts” in an exclusion in the legal malpractice policy was ambiguous. The Missouri Court of Appeals, Western District disagreed, holding that the phrase wasn’t ambiguous and that it encompassed the behavior of Dysart Taylor and Bevan.

Mendenhall v. Property and Casualty Insurance Co. of Hartford

In a close case, the Supreme Court of Missouri held that a worker was a “temporary worker” under an insurance policy because whether the language “furnished to” in the policy required a referral by an employment agency was ambiguous, and the ambiguity was to be construed against the insurer.

In Category: Missouri Contract Cases

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