Opinion
No. 73101 73766
October 20, 1998
Appeal from Circuit Court of St. Louis County, Hon. John F. Kintz.
Francis E. Pennington, III, and Francix X. Neuner, Jr., Counsel for Appellant.
Joseph F. Devereux, Jr., Steven H. Schwartz, and James L. Rohfling, Counsel for Respondent.
Opinion Summary
Dock owners appeal the court's judgments in favor of their attorneys on claims of professional negligence and common law fraud.
AFFIRMED.
Division Four holds: 1) The trial court did not err in giving a contributory negligence instruction. Contributory negligence remains a defense in cases involving economic loss.
2) Dock owners waived their objections stated on appeal to instructions. They were not the same as the ones given at the instruction conference.
(3) Dock owners failed to preserve their third point on appeal. They cited no authority in support of the point nor explained why authority was unavailable.
(4) The trial court did not abuse its discretion in granting attorneys' Motion to Strike and in excluding testimony of attorneys' expert. It was not unreasonable for the court to conclude that the question at issue would be confusing to the jury.
(5) The trial court did not err in granting attorneys' motion for directed verdict on dock owners' breach of fiduciary duty claim. Dock owners failed to make a submissible case for such a claim.
(6) The trial court did not err in refusing to set aside the judgment based on a finding of fraud. There was no evidence that dock owners were prevented by attorneys, through fraud, from fully exhibiting and trying their case.
(7) The trial court did not err in granting summary judgment in favor of the seller of the docks. The release on which the judgment was based was a general release which discharged the dock owners' claims in this lawsuit.
Opinion:
John and Rhonda Blackstock ("dock owners") filed suit against their attorneys and the man who sold them boat docks for professional negligence, common law fraud, breach of fiduciary duty, negligent misrepresentation, and conspiracy to commit fraud. The trial court granted summary judgment in favor of Jerry Jaycox ("seller") on all counts, except the negligent misrepresentation and conspiracy counts which were dismissed by stipulation. The attorneys, Michael Kohn and Joseph Mooney, were granted a directed verdict on the breach of fiduciary duty claim, and the jury returned verdicts in favor of the attorneys on the remaining counts. Dock owners appeal the judgments entered in favor of their attorneys and the seller. We affirm.
Dock owners also sued seller's wholly owned corporation, Harbor Consultants, Inc., which is now in default. As no claims were submitted to the jury against Harbor Consultants, Inc., any claims against the corporation are deemed abandoned. Murray v. Ray, 862 S.W.2d 931, 932 n. 1 (Mo.App. 1993).
Dock owners purchased three "dockominiums" at the Harbor Point Yacht Club ("Harbor Point") on the Mississippi River during the late 1980s from seller, who had a large interest in Harbor Point.
Dockominiums are boat docks that are purchased rather than rented by a boat owner.
In September 1993, near the end of the great flood of that year, seller approached dock owners about reaping potential tax benefits from the flood. He invited dock owners to a meeting with his tax attorney, Kohn. At this meeting, Kohn discussed taking advantage of the Flood Relief Act of 1993 by taking casualty loss deductions on docks damaged by the flood. Kohn offered to amend the tax returns of the meeting attendees. According to dock owners, Kohn never informed them at this meeting or at any other time that one had to own the docks prior to the flood in order to claim the tax deduction.
At some point during the meeting, seller proposed to dock owners that they purchase more docks in order to take greater advantage of the tax benefits. Sometime later, dock owners agreed to purchase fourteen more docks from seller and Harbor Consultants. The closing was to occur in late October. Dock owners engaged Kohn as their tax attorney in late September or early October and delivered their past years' tax returns and financial profile to him. The attorneys claim during the course of their representation of dock owners, dock owners informed them they and seller had entered into an agreement prior to the flood to purchase the additional fourteen docks. Under the tax laws, in order to claim a casualty loss the taxpayer must either own the property when the casualty occurs, or s/he must have made an agreement to purchase the property prior to the casualty event. Dock owners claim there was never any agreement between themselves and seller prior to the flood to purchase the docks. They also contend they never told the attorneys any such agreement existed.
Kohn was also one of the sellers of record in the transaction. However, he maintains he owned the docks purely as an investment, and at the behest of seller. Seller was to sell Kohn's docks on Kohn's behalf, with little involvement by Kohn.
One week after closing on the docks in October 1993, dock owners received their amended tax returns that claimed casualty loss deductions on their seventeen docks. Dock owners claim this meeting with the attorneys was brief, with no discussion about the tax returns or the dock transaction. The attorneys maintain the meeting lasted for approximately three hours, and they thoroughly explained the amended tax returns and casualty loss calculation process to dock owners. Mooney had prepared the amended tax returns for dock owners; however, this was apparently the first time dock owners had ever met Mooney.
The attorneys claim they made it clear to dock owners they either had to own the docks prior to the flood or have entered into a binding agreement to purchase the docks prior to the flood in order to claim a casualty loss.
In June 1995, the IRS audited dock owners. Their casualty loss deductions were ultimately disallowed, and the IRS also assessed penalties against them in the amount of forty percent of their tax liability. Dock owners assert seven points of error from their unsuccessful trial. In their first point on appeal, dock owners claim the trial court erred in giving Instruction No. 11 because it misstates the law in that contributory negligence is not a proper defense to a claim of professional negligence. The offending instruction provides:
Your verdict must be for Defendants Michael Kohn and Joseph Mooney if you believe: First, Plaintiff John Blackstock represented to Defendants that Plaintiffs had an agreement to purchase the docks prior to the flood, and
Second, Plaintiffs were thereby negligent, and
Third, such negligence of Plaintiffs directly caused any damages Plaintiffs may have sustained.
owners argue the contributory negligence defense has been abolished in Missouri; therefore, any instruction submitting such a theory was erroneous. In Gustafson v. Benda, 661 S.W.2d 11 (Mo. banc 1983), the Missouri Supreme Court adopted the pure comparative fault doctrine for Missouri. Under this doctrine, a plaintiff's recovery is reduced by the percentage of fault attributed to that plaintiff's own negligence. SinceGustafson, Missouri appellate courts have uniformly held that the comparative fault doctrine does not apply to cases involving only economic loss. See Murphy v. City of Springfield, 738 S.W.2d 521, 530 (Mo.App. 1987); Chicago Title Ins. Co. v. Mertens, 878 S.W.2d 899, 902 (Mo.App. 1994); Roskowske v. Iron Mountain Forge Corp., 897 S.W.2d 67, 73 (Mo.App. 1995). None of these cases, however, specifically hold that contributory negligence remains in effect in economic loss actions. Thereafter, this court took the next logical step and held that contributory negligence remains an absolute defense in cases involving only economic damages. Miller v. Ernst Young, 892 S.W.2d 387, 388 n. 1 (Mo.App. 1995). We decline to follow dock owners' suggestion that neither comparative fault nor contributory negligence should apply in economic loss cases. We follow this court's precedent and hold that contributory negligence is a defense in cases involving economic loss. Id. Viewing the evidence in a light most favorable to submission of the instruction, we conclude the trial court did not err in submitting Instruction No. 11. See Shop `n Save Warehouse Foods v. Soffer, 918 S.W.2d 851, 862 (Mo.App. 1996). Point I is denied.
Dock owners argue that the Missouri cases holding that comparative fault principles are not applicable in economic loss cases should not apply to legal malpractice suits. In those types of suits, Missouri courts have applied, at the very most, comparative fault principles rather than contributory negligence principles. The cases dock owners cite, however, are distinguishable from this case. In London v. Weitzman, 884 S.W.2d 674 (Mo.App. 1994), the court did uphold the application of comparative fault principles to a legal malpractice claim, discounting the defendant's argument on appeal that such principles are not applicable to economic loss cases. Id. at 679. In London, however, defendant had offered the comparative fault instruction at trial, and, therefore, "could not be heard on appeal to complain of the theory of defense he chose to submit to the jury." Id. Williams v. Preman, 911 S.W.2d 288 (Mo.App. 1995), is also distinguishable. In that legal malpractice action, the court declined to address the issue of whether comparative fault or contributory negligence principles should apply. Id. at 303. Rather, the court held that the instances of alleged negligence on the part of plaintiff at issue were not proper submissions under either theory. Id. at 303-04.
In their second point, dock owners claim the trial court erred in giving a contributory negligence instruction because the conduct it asserts could not, as a matter of law, constitute negligence under the circumstances. The attorneys maintain dock owners have waived this point as their objections given at the instruction conference were not the same as the one on appeal. At the instruction conference, dock owners proffered essentially three objections to Instruction No. 11: (1) the instruction did not properly instruct on the law; (2) the instruction did not submit all elements of negligent misrepresentation; and (3) the law does not allow a contributory negligence instruction in this type of case.
Rule 70.03 provides:
Counsel shall make specific objections to instructions considered erroneous. No party may assign as error the giving or failure to give instructions unless that party objects thereto before the jury retires to consider its verdict, stating distinctly the matter objected to and the grounds of the objection. Rule 70.03 (emphasis added).
The Rule is clear that objections to instructions must be specific and distinct. In this case, the objections made at the trial level were not sufficiently similar to the objection proffered on appeal to preserve the issue for review. Where the alleged error relating to an instruction differs from objections made to the trial court, the error may not be reviewed on appeal. Seidel v. Gordon A. Gundaker Real Estate Co., 904 S.W.2d 357, 364 (Mo.App. 1995). Point II is denied.
Dock owners next argue in their third point the trial court erred in refusing to give their proffered verdict directing instruction concerning their professional negligence claim. Dock owners, however, cite no authority in support of their conclusions. An appellant must cite authority in support of its point relied on if the point is one for which precedent is appropriate and available. Luft v. Schoenhoff, 935 S.W.2d 685, 687 (Mo.App. 1996). Authorities should be cited or discussed in the argument supporting the point relied on or a rationale must be advanced explaining why such authority is unavailable.Id. Failure to cite any relevant authority or to explain the failure to do so preserves nothing for review. Seidel, 904 S.W.2d at 365. As dock owners failed to cite any authority, Point III is denied. In their fourth point on appeal, dock owners argue the trial court erred in granting attorneys' Motion to Strike and in excluding certain testimony of attorneys' expert in that (1) attorneys stated no legitimate objection to or basis for excluding this testimony; (2) sufficient evidence supported the hypothetical question posed to the expert; and (3) dock owners were prejudiced by the exclusion. Where evidence is excluded, the issue is whether the trial court abused its discretion, not whether the evidence was admissible. Howe v. ALD Services, Inc., 941 S.W.2d 645, 654 (Mo.App. 1997). A trial court abuses its discretion when the ruling shocks one's sense of justice, indicates a lack of consideration, and is clearly against the logic of the circumstances. Strycharz v. Barlow, 904 S.W.2d 419, 423 (Mo.App. 1995).
We defer to the trial court because of its superior opportunity to evaluate the proffered evidence in the context of the trial. Howe, 941 S.W.2d at 654. Refusal to admit evidence does not constitute reversible error unless it would have changed the result. Id.
After dock owners had agreed to purchase fourteen more docks, four of which were Kohn's, and after dock owners had engaged Kohn as their tax attorney, Kohn filed his own amended tax return claiming a casualty loss deduction on those same four docks. Kohn claimed at trial that he was not aware at the time he filed his amended return that dock owners had entered into an agreement prior to the flood to purchase the four docks. Kohn further testified he corrected his mistake by either filing an amended tax return or in his 1993 return. To counter Kohn's testimony, dock owners offered the following testimony from the deposition of one of attorneys' experts:
[Dock owners' attorney]: If at the time Mr. Kohn filed his tax return in October of 1993 claiming a casualty loss on those four docks he knew that Mr. Kohn [sic] had such an ownership interest, would he have complied with his duty to conform his conduct to the standard of care that a reasonable competent attorney owes to his client?
[Expert]: He wouldn't have done it. [Attorneys' attorney]: Excuse me. Same objection as before. Thank you.
[Expert]: He is a recognized tax lawyer with a Master's Degree in Taxation from New York University which is like the Harvard of all tax schools. He would have never filed his return that way. So in answer to your question, he wouldn't have done it.
[Dock owners' attorney]: All right. So your answer is he wouldn't have done it. [Expert]: Right.
[Dock owners' attorney]: But I'm asking you to assume that he did do it, sir.
[Expert]: Well, assuming that he did do something like that which, of course, he wouldn't have, but assuming he did, then the standard of care to the client has not been dutifully exercised, if that's what you want to hear, but the fact of the matter remains that anybody that knowingly files a tax return on the basis that you called for has committed an act of fraud, and he wouldn't have done it.
The record shows the attorneys objected to the testimony at the deposition. The attorneys also objected to the introduction of this testimony at trial, which was sustained by the trial court. The apparent reason for the attorneys' objection at trial was that the question was misleading, in that dock owners' attorney referred to "Mr. Kohn" when he meant to refer to "dock owners."
Dock owners maintain the attorneys waived their objection to the admission of the expert's deposition testimony because they did not proffer the objection during the deposition. We decline to address this issue as dock owners did not include it in their Points Relied On. Rule 84.04(d). We also note dock owners failed to raise this waiver issue before the trial court.
We find no abuse of discretion. It was not unreasonable for the trial court to conclude the question posed by dock owners' counsel would be confusing to the jury. It is unlikely inclusion of this testimony, alone, would have changed the result. Therefore, no reversible error exists. Point IV is denied.
In their fifth point on appeal, dock owners state the trial court erred in granting the attorneys' motion for directed verdict on dock owners' breach of fiduciary duty claim in that dock owners made a submissible case on this claim. In reviewing a directed verdict granted in favor of a defendant, the appellate court views the evidence and permissible inferences most favorably to the plaintiff, disregards contrary evidence and inferences, and determines whether the plaintiff made a submissible case. Head v. National Super Markets, Inc., 902 S.W.2d 305, 306 (Mo.App. 1995).
Dock owners maintain Kohn had a duty to inform dock owners he had a potential conflict of interest as he was selling four docks to them on which dock owners were seeking tax deductions. Due to this potential conflict, Kohn also had a duty to recommend to dock owners that they seek the advice of an independent attorney regarding the transaction.
To make a submissible case of a breach of fiduciary duty, the plaintiff must show the following elements: (1) attorney-client relationship; (2) breach of fiduciary obligation by the attorney; (3) proximate causation; (4) damages to the client; and (5) no other recognized tort encompasses the facts alleged. Klemme v. Best, 941 S.W.2d 493, 496 (Mo. banc 1997). If the alleged breach can be characterized as both a breach of the standard of care and a breach of fiduciary obligation, then the sole claim is for legal malpractice.Id.
Dock owners have not made a submissible case for breach of fiduciary duty, for they have failed to meet the element that no other recognized tort encompasses the facts alleged. The breach of fiduciary duty count in their petition merely realleges and incorporates by reference the same facts and allegations in the professional negligence count. In addition, dock owners allege essentially the same damages under both claims. Dock owners maintain they have proven this element in that the jury instruction for their legal malpractice claim did not contain the same facts dock owners are now alleging constitute a breach of fiduciary duty. We fail to see how this jury instruction could be considered as evidence of the fifth element of a breach of fiduciary duty, for it was not before the trial court when it made its decision on the directed verdict motion. As the alleged breach can be characterized as both legal malpractice and a breach of fiduciary duty, dock owners' sole claim was for legal malpractice. See Klemme, 941 S.W.2d at 496. Therefore, the trial court did not err in granting the directed verdict motion. Point V is denied. In their sixth point, dock owners argue the trial court erred in denying their amended motion for relief from judgment in that dock owners demonstrated convincingly the judgment was procured on the basis of fraud, misrepresentation, and misconduct of Kohn. Dock owners contend Kohn committed perjury when he testified that he had corrected, either by filing an amended return or in a 1993 return, the casualty loss deductions Kohn had originally taken for the four docks he had sold to dock owners. Dock owners maintain Kohn's perjury was material and outcome-determinative, and therefore, the trial court should have granted their Rule 74.06(b) motion for relief from judgment.
Rule 74.06(b) allows the trial court to set aside the judgment based on a finding of fraud. Hewlett v. Hewlett, 845 S.W.2d 717, 719 (Mo.App. 1993). Trial courts have broad discretion in deciding whether to grant a motion to set aside a final judgment. Cotleur v. Danziger, 870 S.W.2d 234, 238 (Mo. banc 1994). An appellate court should not interfere with a trial court's ruling unless the record convincingly indicates an abuse of discretion. Jeffries v. Jeffries, 840 S.W.2d 291, 293 (Mo.App. 1992).
Whether extrinsic or intrinsic fraud, there is no basis for setting aside a judgment unless one party prevented the other party, through fraud, from fully exhibiting and trying the case. Missouri-Nebraska Exp. v. Jackson, 876 S.W.2d 730, 734 (Mo.App. 1994). When a party is aware of the inaccuracy of a statement made by the other party, he cannot claim he has relied on the misrepresentation, and there is no fraud without reliance. Id. at 735.
The record demonstrates dock owners were aware of Kohn's inaccuracy concerning the amended tax returns. Dock owners attempted to have an IRS Disclosure Officer testify to whether or not Kohn filed an amended return or corrected the deduction in a 1993 return. In addition, dock owners' counsel argued in closing argument the jury should not believe Kohn's statements regarding the amended returns. Therefore, dock owners had an adequate opportunity to present their position on this issue at trial. Dock owners further argue that by refusing to allow the IRS Officer to testify, Kohn thereby prevented dock owners from fully trying and exhibiting their case. Merely preventing the other party from fully trying its case, however, is insufficient for the granting of a Rule 74.06(b) motion. Rather, prevention must occur through fraud. Missouri-Nebraska Exp., 876 S.W.2d at 734. In this case, dock owners were allegedly prevented from fully trying their case through Kohn's refusal to allow the IRS Officer to testify. This is not fraud, for Kohn had a right to so refuse. See 26 U.S.C. Sec. 6103. Therefore, dock owners were not prevented from fully trying and exhibiting their case through fraud by the other party. We find no abuse of discretion by the trial court in denying the Rule 74.06(b) motion. Point VI is denied.
In their final point, dock owners argue the trial court erred in granting summary judgment in favor of seller in that the release on which the judgment was based did not discharge the claims in this lawsuit. We disagree.
In early 1995, seller filed suit against dock owners seeking payment of sums allegedly due him for the docks purchased by dock owners in 1993. A settlement was ultimately reached. Seller argued in his Second Amended Motion to Dismiss or, in the Alternative, for Summary Judgment, that this settlement agreement contained a general release that covered the claims by dock owners in this case. The trial court agreed and granted the motion for summary judgment.
In reviewing an appeal from a grant of summary judgment, the appellate court reviews the record in a light most favorable to the party against whom judgment is entered and accords the non-movant the benefit of all reasonable inferences therefrom. Bauer v. Southwestern Bell Telephone Co., 958 S.W.2d 568, 569 (Mo.App. 1997). Review is essentially de novo. Id.
The section of the settlement agreement purported to be a general release contains the following language:
5. The Jaycoxes and Harbor Consultants, Inc. further release and forever discharge the Blackstocks from any and all claims, causes of action or liability of any sort whatsoever for any sums due arising from the sale, transfer, ownership or use of the Docks or from any other transaction between the Blackstocks and Jaycoxes and/or Harbor Consultants, Inc. so that the Blackstocks are free forever from any further money claims by the Jaycoxes and/or Harbor Consultants, Inc. Likewise, the Blackstocks release and forever discharge the Jaycoxes and/or Harbor Consultants, Inc. from any and all claims, causes of action or liability of any sort whatsoever for any sums due arising from the sale, transfer, ownership or use of the Docks or from any other transaction between the Blackstocks and the Jaycoxes and/or Harbor Consultants, Inc. so that the Jaycoxes and/or Harbor Consultants, Inc. are free forever from any money claims by the Blackstocks.
The interpretation of a release or settlement agreement is governed by the same principles applicable to any other contractual agreement, and the primary rule of construction is that the intention of the parties shall govern. Andes v. Albano, 853 S.W.2d 936, 941 (Mo. banc 1993). Any question regarding the scope and extent of a release is to be resolved according to what may fairly be said to have been within the contemplation of the parties at the time the release was given. Id. This, in turn, is to be resolved in light of all the surrounding facts and circumstances under which the parties acted. Id. However, language that is plain and unambiguous on its face will be given full effect within the context of the agreement as a whole unless the release was based on fraud, accident, misrepresentation, mistake, or unfair dealings. Id.
Examining the settlement agreement as a whole, we conclude the trial court did not err in construing it as a general release and granting summary judgment to seller on that basis. A general release disposes of the whole subject matter or cause of action involved. Clayton Plaza Intern. Leasing Co., Inc. v. Sommer, 817 S.W.2d 933, 936 (Mo.App. 1991). In this case, the language used in the agreement is indicative of a general release and demonstrates the parties' intent to dispose of the entire subject matter of the dock transaction. See Swope v. General Motors Corp., 445 F. Supp. 1222, 1228-29 (W. D. Mo. 1978). Terms such as "release and forever discharge" and "any and all claims, causes of action or liability of any sort whatsoever" are indicative of terms found in general, not specific, releases. See Clayton Plaza, 817 S.W.2d at 936. We find no merit in dock owners' assertion that the terms "money claims" and "for any sums due" limit the release in this case. Such a reading is not in accordance with the plain and ordinary meaning of those terms. See Andes, 853 S.W.2d at 941. As we find no specific and clear limitation of the intended scope of the settlement agreement, we conclude it is a general release that encompassed dock owners' claims against seller in this suit. See Swope, 445 F. Supp. at 1228-29. Point VII is denied.
We note dock owners' claims against seller are indeed encompassed within the agreement, for all are based on misrepresentations seller allegedly made regarding the purchase, ownership, or use of the docks by dock owners.
The judgment of the trial court is affirmed.
AFFIRMED. Hoff, P.J., and Gaertner, J., concur.