Opinion
No. ED77522
Filed: December 26, 2000
APPEAL FROM CIRCUIT COURT OF THE CITY OF ST. LOUIS, HON. DAVID C. MASON
CAUSE TRANSFERRED TO THE SUPREME COURT PURSUANT TO RULE 83.02.
Sanford J. Boxerman, ROSENBLUM, GOLDENHERSH, SILVERSTEIN ZAFFT, P.C., 7733 Forsyth, Fourth Floor, St. Louis, MO 63105, for appellant.
Daniel V. Conlisk, Amany Ragab Hacking, DANKENBRING, GREIMAN OSTERHOLT, LLP, 120 S. Central Avenue, Fifth Floor, St. Louis, MO 63105, for respondent.
Before Mooney, P. J., and Sullivan, J., concur.
Jack Dubinsky Sons, Rosalie Ginsburg, Trustee, William M. Haas, Trustee of Cynthia M. Guren Qualified Income Trust, Harold Dubinsky, Melvin Dubinsky, and Ira H. Dubinsky, Trustee of the Ira H. Dubinsky Trust (Dubinsky), appeal the trial court's judgment in favor of Becker Glove International, Inc. (Becker) on Becker's claim that Dubinsky provided inadequate heating for a building Dubinsky leased to Becker. Dubinsky contends the trial court erred by refusing to dismiss Becker's claim, because the trial court had no jurisdiction to consider the inadequate heat claim in that the claim should have been raised as a compulsory counterclaim in a previous action by Dubinsky seeking judgment for Becker's failure to pay rent under the same lease. We transfer to our Supreme Court pursuant to Rule 83.02.
Our review is in accordance with Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.banc 1976). We will affirm the judgment of the trial court unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Id. A bench tried judgment that reaches a correct result, however, will not be set aside even if the trial court gives a wrong or insufficient reason for its judgment. Fix v. Fix, 847 S.W.2d 762, 766 (Mo.banc 1993). Here, we are concerned with the correctness of the judgment, not the route taken to reach that result. Vilsick v. Standard Insulations, Inc., 926 S.W.2d 499, 501 (Mo.App.E.D. 1996).
On September 29, 1995, Becker and Dubinsky entered a commercial lease for Becker to occupy premises located at 5049 Fyler Avenue in the City of the St. Louis. Becker imports and distributes winter clothing and accessories. It uses the warehouse not only for storage of products, but also as the center of its operations. At the warehouse its employees receive, unpack, tag, re-pack, and ship these goods. As an addendum to the lease agreement, Dubinsky promised to provide sufficient heat in the warehouse such that the temperature inside the building could be maintained at sixty-five degrees Fahrenheit when the temperature outside reached zero degrees Fahrenheit.
Becker occupied the warehouse in January, 1996, and from the outset, the heating system did not perform as promised. Initially, Becker believed the problem may have been caused by open doors associated with its moving-in activities and receipt of goods, but shortly thereafter, Becker complained to Dubinsky concerning the inadequate heat.
In the latter part of 1996, when the weather again made heat necessary, Dubinsky sent the contractor who renovated the building to assess the heating system and warehouse configuration. The contractor suggested Dubinsky and Becker redirect the flow of heat from the existing units by turning them. The parties accepted the suggestion, and the contractor redirected the heating units. Becker waited approximately a month to see if this solution would work, but it did not make a noticeable difference. Once again, Becker complained to Dubinsky, but Dubinsky did nothing.
In addition to disagreements concerning the heat, Becker also complained about leaks in the roof. Becker withheld its rent in October, 1996, because Dubinsky would not remedy the roof. The lease prohibited Becker from engaging in such self-help remedies, and on October 31, 1996, Dubinsky filed an action against Becker in the Associate Division of the Circuit Court of the City of St. Louis (the First Action) seeking a judgment in the amount of the unpaid rent, plus attorney fees. The petition did not seek possession of the premises.
Becker was served in the First Action on November 12, 1996, and the summons specified a return date of December 4, 1996. Other than an entry of appearance, Becker did not file a responsive pleading. After commencement of the First Action, Becker paid the withheld rent, but the action remained pending as to Dubinsky's claim for attorney fees. On January 15, 1997, the trial court in the First Action entered judgment in favor of Dubinsky in the amount of $322.00 for attorney fees.
During the pendency of the First Action, Becker decided to take matters concerning the heating problem into its own hands pursuant to Section 33 of the Lease Addendum which provides:
If either party fails to carry out any covenant or responsibility of such party set forth in the lease and such failure continues for a period of 15 days after notice from the other party of such failure, the other party may, at its option, carry out such covenant, and the party failing to carry out such covenant shall pay to the party carrying out such covenant, upon demand, the cost incurred in carrying out such covenant.
In light of Dubinsky's failure to respond to Becker's further complaints and inquiries about the lack of heat, in late November, 1996, Becker contacted Gennaro Contracting Company (Gennaro), which installed the heating system for Dubinsky before Becker took possession, and one other heating contractor, requesting competitive bids to remedy the inadequate heat in the warehouse. Gennaro provided the least expensive proposal which sought to make portions of the warehouse warm enough for Becker's employees to work. The two contractors provided the proposals to Becker on November 22, 1996, and November 27, 1996. On December 2, 1996, Becker accepted Gennaro's proposal.
On December 12, 1996, Becker's attorney wrote to Dubinsky concerning the heating problems. The letter expressed Becker's belief that any solution remained Dubinsky's responsibility, but Becker expressed a willingness to discuss any basis on which Dubinsky believed Becker was responsible. Becker also stated it was undertaking its own solution due to Dubinsky's inaction, and the letter attached the proposals from the two contractors.
Dubinsky did not respond to this letter, so Becker's attorney contacted Dubinsky's attorney proposing that their clients meet in order to discuss the heating problems and roof problems as well as the attorney fees in connection with the lawsuit for rent. Dubinsky's counsel rejected Becker's offer to negotiate the parties' disputes. Becker's attorney memorialized these discussions in a letter to Dubinsky's attorney dated January 6, 1997.
In early February of 1997, Gennaro installed three new heating units in the warehouse. On February 18, 1997, Dubinsky paid Gennaro $6,297.00 for the improvements. While this improved heating system would not fully heat the warehouse as promised, it would heat certain areas in a manner which allowed Becker's employees to work during cold weather. The resulting employee work space in these heated areas was cramped and limited. The inability of the system to properly heat the entire warehouse resulted in a loss of a percentage of the work space. Becker claimed $1,500 a month damage for this loss of usable space.
Becker's heating expert, Brian Bretz, testified that seeking to heat the areas in which employees were working, rather than the entire warehouse, was an economically efficient and reasonable way to partially resolve the lack of adequate heat in the warehouse. Bretz also testified that, because of the condition of the walls, roof, and placement of the heaters, Becker's heating bills were twice as high as they should have been to heat a warehouse of this size. For the period of January 16, 1997 through 1998, this amounted to $9,000 more in gas bills than would have been charged had Dubinsky properly readied the warehouse and its heating system as agreed in the Lease.
On June 24, 1997, Becker's attorneys informed Dubinsky that suit would be filed if the parties could not resolve the disagreement concerning the heating obligations required by the lease. On July 11, 1997, Becker filed an action for breach of the lease in the Circuit Court of the City of St. Louis (the Second Action). The petition sought damages resulting from Dubinsky's breach of its heating obligations under the lease.
Dubinsky filed its Answer on August 25, 1997, alleging Becker's petition should be dismissed because the inadequate heat claim constituted a compulsory counterclaim which should have been asserted in the First Action for rent and that the principle of res judicata should bar Becker's claim. Furthermore, Dubinsky filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction based on the same grounds. Becker filed a Memorandum in Opposition, alleging that the compulsory counterclaim rule does not apply in associate circuit court cases, and that, even if the rule did apply, Becker's inadequate heat claim had not sufficiently matured at the time of the prior lawsuit for rent such that Becker was not required to raise it.
On June 30, 1999, Judge Michael B. Calvin ruled that the compulsory counterclaim rule applies to associate circuit court proceedings, but that the inadequate heat claim could not be dismissed because the court could not determine, from the record before it, whether the alleged breach giving rise to the claim occurred before or after January 15, 1997, the date judgment was entered in the First Action for rent. Judge Calvin stated that any breach that occurred after the date of the judgment in the prior case could not have been raised in such action, either as a defense to a claim for rent or as an affirmative claim for relief. Therefore, the motion to dismiss for lack of subject matter jurisdiction was denied.
The case was transferred to Judge David C. Mason for trial. At the conclusion of a bench trial, the trial court entered its Findings of Fact, Conclusion of Law, and Judgment. The trial court set aside Judge Calvin's ruling insofar as it was inconsistent with its judgment. The trial court inferred that the compulsory counterclaim rule applies to actions in the associate division of the circuit court. The trial court entered judgment in favor of Becker and against Dubinsky in the amount of $30,577.68 concluding that the inadequate heat claim was not a compulsory counterclaim for two reasons:
1. The inadequate heat claim required for its adjudication the presence of third parties (the general contractor and the heating contractor) of whom the court could not acquire jurisdiction in the First Action for rent. The court reasoned that these third parties, who could not be made a party to the First Action for rent, were likely necessary to resolve the Second Action for inadequate heat.
2. The inadequate heat claim was not mature at the time service of pleadings on the adversarial party in the First Action for rent. Becker paid for the improvements to the heating system on February 18, 1997, which was after the Judgment on January 15, 1997 in the First Action for rent. Under section 33 of the Lease Addendum, which provides for reimbursement, the court reasoned that Becker's claim for inadequate heat accrued after Dubinsky's claim for rent. The court reasoned that Becker's claim did not mature until Becker paid for the new heating system.
In its point on appeal, Dubinsky contends the trial court erred in refusing to dismiss Becker's petition in the Second Action, because Becker's claim was a compulsory counterclaim and its failure to assert the claim in the First Action resulted in a waiver of the claim under Rule 55.32(a) which requires compulsory counterclaims be filed or lost.
For Becker's claim in the Second Action to be barred as a compulsory counterclaim, we must determine if Rule 55.32(a) and its procedure for compulsory counterclaims apply in the associate division of the circuit court. If the rule does not apply, the trial court properly refused to dismiss the action.
Becker argues that the First Action for its failure to pay rent was an action for rent and possession pursuant to Chapter 535, and Rule 55 does not apply in such actions. Rahman v. Matador Villa Assoc., 821 S.W.2d 102, 104 (Mo.banc 1991).
There is nothing in Dubinsky's petition or the record in the First Action that the action instituted was for possession of the premises. Separate actions for possession and rent are provided under 441.200 and 535.010, RSMo 1996 (all further references herein will be to RSMo 1996 unless otherwise indicated). Cook v. American Maintenance Co., 588 S.W.2d 171, 172 (Mo.App.E.D. 1979). Dubinsky did not pray for possession in the First Action, so it was not a rent and possession case under Chapter 535 where Rule 55 does not apply. Id.
Rule 41.01(d) provides that "[c]ivil actions pending in the associate circuit court division shall be governed by Rule 41 through 101 except where otherwise provided by law." [Emphasis added.] Chapter 517 applies to "the practice and procedure in civil cases originally filed before associate circuit judges." Section 517.011. Section 517.021 provides: "The rules of civil procedure shall apply to cases or classes of cases to which this chapter is applicable, except where otherwise provided by law." [Emphasis added.]
We must determine if the statutory provisions of Chapter 517 otherwise provide for counterclaims such that Rule 55.32(a) does not apply. Section 517.031 provides in pertinent part:
2. Affirmative defenses, counterclaims and cross claims shall be filed in writing not later than the return date and time of summons. . . . No other responsive pleading need be filed. If no responsive pleading is filed, the statements made in the petition, affirmative defenses, counterclaims or cross claims shall be considered denied . . . [with exceptions not pertinent here].
Becker argues that Section 517.031.2 is the "except where otherwise provided by law" to which Section 517.021 and Rule 41.01(d) refer and argues that portions of Rule 55, particularly the requirement under Rule 55.32(a) that a compulsory counterclaim be pleaded or waived, are not applicable. If Rule 55.32(a) does not apply, no other pertinent statute or rule requires counterclaims to be filed. Rahman, 821 S.W.2d at 103.
In Rahman, our Supreme Court applying Section 517.031.2, RSMo 1986, prior to its amendment in 1988, found:
Section 517.031.2, RSMo 1986, in effect when the rent and possession suit was filed (since amended, see RSMo Supp. 1990) allowed counterclaims and provided that they shall be in writing, but did not require counterclaims. That section "does not speak to the compulsoriness of filing counterclaims; it only speaks to the manner of filing counterclaims." [Citations omitted].
Rahman, 821 S.W.2d at 102-103. Further, the pre-amendment version of "Chapter 517 does not compel counterclaims although it permits them to be filed if done so in writing." Id. at 103. According to the Court, the pre-amendment statute describes the pleading requirements for counterclaims, and Rule 41.01(d) defers to this statute. Therefore, under the procedures of the pre-amendment version of Section 517.031.2, counterclaims were not compulsory, because counterclaims were "otherwise provided by law" making Rule 55.32(a) inapplicable. Rahman, 821 S.W.2d at 103
Directing our attention to the present version of Section 517.031.2, our Supreme Court in Exchange National Bank of Jefferson City v. Wolken, 819 S.W.2d 45 (Mo.banc 1991) analyzed the interplay of the Rules of Civil Procedure and the relaxed procedures of Chapter 517 in cases before the associate division of the circuit court. The Court considered whether a plaintiff in an associate circuit case waives an affirmative avoidance by failing to plead it in response to an affirmative defense. Initially, the Court states Rule 55.01 requires the pleading of "a defense consisting of an affirmative avoidance to any matter alleged in a preceding pleading must be pleaded." However, the Court, in its examination of Section 517.031, as amended in 1988, found that the statute otherwise provided for pleading an affirmative avoidance, and that an affirmative avoidance was not waived by failing to plead it in response to an affirmative defense. Wolken, 819 S.W.2d at 48. The Court found that Chapter 517 otherwise provided for affirmative avoidances even though Section 517.031.2 only lists affirmative defenses, counterclaims, and cross-claims and as a result concluded that Rule 55.01 of the Rules of Civil Procedure concerning omitted affirmative avoidances was not applicable.
Reviewing the present version of 517.031.2, we find that it essentially provides the same pleading requirements as formerly required and that counterclaims are "otherwise provided by law." Nothing in the statute's language indicates counterclaims are mandatory in the associate division of the circuit court. Therefore, nothing in the 1988 amendment to Chapter 517 causes a different reading of the pleading requirements for counterclaims than the rule announced in Rahman: Chapter 517 permits, but does not require, counterclaims.
While Rahman and Wolken consider different versions of the statute, the answer is the same. It is interesting to note that Wolken, which interprets the present version of Section 517.031.2, was rendered a month before Rahman, which interprets the statute prior to its amendment in 1988, and Rahman cites Wolken approvingly. Rahman's citation to Wolken reinforces the rationale that the legislative changes were not significant. Each case analyzes whether Chapter 517 has otherwise provided for certain pleading requirements under Rule 55 in the associate division of the circuit court, and each determined that the pleading requirements have been otherwise provided so that certain provisions of Rule 55 do not apply. Rahman, 821 S.W.2d at 103; Wolken, 821 S.W.2d at 48.
However, in Neenan Co. v. Cox, 955 S.W.2d 595 (Mo.App.W.D. 1997), the Western District Court of Appeals determined that the filing of counterclaims in an associate division is governed by Section 517.031, but that since Section 517.031.2 is "silent as to an omitted counterclaim, then to that extent, pursuant to Rule 41.01(d)," [emphasis added] Rule 55 would apply. Neenan, 955 S.W.2d at 598. The Western District concluded that since Section 517.031.2 does not address compulsory or permissive counterclaims, the issue of compulsory and permissive counterclaims has not been "otherwise provided by law" pursuant to Rule 41.01(d) or Section 517.021. Since the Rules of Civil Procedure apply, Rule 55.32(a) requires that counterclaims arising out of the same transaction or occurrence as the main claim are compulsory and must be pleaded or are waived. Neenan, 955 S.W.2d at 598-599.
The Western District's reasoning that 517.031.2 only mentions counterclaims and not the consequences of omitting a counterclaim, making Rule 55.32(a) applicable, is inconsistent with our Supreme Court's holding in Wolken, in that counterclaims in the associate division have been "otherwise provided by law" under the dictates of Section 517.031.2, and the Rules of Civil Procedure do not apply to such omitted counterclaims. If in Wolken the Supreme Court interpreted the phrase "except where otherwise provided by law" as the Western District did inNeenan, the Court would have determined that Section 517.031.2 does not address affirmative avoidances and Rule 55.01 applies.
The narrow reading utilized by the Western District in finding that omitted counterclaims were not "otherwise provided" for by Section 517.031.2 mandates the application of all the formalities of the Rules of Civil Procedure and would be inconsistent with the legislative intent to provide less formal procedures in the associate division of the circuit court. Wolken, 819 S.W.2d at 48. The Supreme Court liberally interpreted "otherwise provided" concerning affirmative avoidances, even though affirmative avoidances are not mentioned in Section 517.031.2. We perceive the Western District's rationale in Neenan concerning omitted counterclaims to be inconsistent with our Supreme Court's holdings and reasoning in Wolken and Rahman.
In conclusion, we find that the judgment should be affirmed because Rule 55.32(a) does not apply, which was not the rationale for the trial court's conclusion. However, due to the general importance of the question and for the purpose of reexamining the law, pursuant to Rule 83.02 we order the case transferred to our Supreme Court.
Lawrence E. Mooney, P. J. and Sherri B. Sullivan, J., concur.