Opinion
No. ED104026
04-11-2017
GARY S. HEIFETZ, JEFFREY S. GERSHMAN, STEVEN B. SPEWAK, JEAN MAYLACK, FALLON MAYLACK, STEVEN M. STONE, INDIVIDUALLY AND AS PERSONAL REPRESENTATIVE OF THE ESTATE OF SIDNEY L. STONE AND, SIDNEY M. STONE, Respondents, v. APEX CLAYTON INC., Appellant.
Appeal from the Circuit Court of St. Louis County
10SL-CC04883 Honorable Robert S. Cohen
OPINION
Apex Clayton, Inc. ("Apex") appeals from the Amended Judgment in favor of Gary S. Heifetz, Jeffrey S. Gershman, Steven B. Spewak, Jean Maylack, Fallon Maylack, Steven M. Stone, Individually and as Personal Representative of the Estate of Sidney L. Stone, and Sidney M. Stone (collectively "Limited Partners") on the claims of breach of contract, breach of fiduciary duty, and the punitive damages awards. We dismiss for lack of a timely appeal.
Subsequent to the submission of briefs and original arguments in this case, the parties entered into a consent judgment regarding the attorneys' fees and expert witnesses costs, thus eliminating those issues on appeal.
Factual and Procedural Background
Apex is a Missouri corporation and the general partner of the 8182 Maryland Associates Limited Partnership ("8182 Partnership") which was formed in 1984 and whose purpose it was to acquire, construct, lease, and operate various structures, including an office building and parking garage in the downtown Clayton business district. In forming 8182 Partnership, Apex entered into a limited partnership agreement ("Partnership Agreement") that included several limited partnerships, including PS Maryland Avenue Associates ("PSMI") and PS Maryland Avenue Associates II ("PSMII"). Limited Partners originally were limited partners in both PSMI and PSMII. Collectively, Limited Partners' current ownership interest in 8182 Partnership totals approximately 5.79%.
Section 9.2(A) of the Partnership Agreement provides that "Available Cash Flow shall be distributed at such reasonable intervals during the fiscal year as shall be determined by the General Partner and in any event shall be distributed within ninety days after the close of each fiscal year." The Partnership Agreement also contained a forced sale clause, Section 18, which provided in relevant part as follows:
18.1 First Option—General Partner. If, after September 1, 2005, [PSMI] and [PSMII], collectively, Limited Partners hereunder, (hereinafter "PSMs") desire that the Partnership liquidate and sell the Project, PSMs shall so notify the General Partner. Thereafter, the General Partner, shall be obligated to purchase all of PSMs' interests for the purchase price determined in the manner and upon the terms and conditions hereinafter set forth, unless within thirty (30) days after its receipt of the notice sent by PSMs, the General Partner notifies PSMs that it does not wish to purchase PSMs' interests. In the event the General Partner notifies PSMs that it does not wish to purchase PSMs' interests, the General Partner shall forthwith offer and continue to offer the Project for sale on the open market to prospective third-party purchasers at a price equal to its Fair Market Value or at such other price as may be mutually agreeable to the General Partner and PMSs.In June 1993, PSMI and PSMII were dissolved through a Resolution and Plan of Liquidation agreed to and approved by at least two-thirds of the partners of PSMI and PSMII. The Partnership Agreement was amended with regard to PSMI, substituting Gary Heifetz, James Chervitz, and S.M. Stone as limited partners in place of PSMI and referring to them as the PS I and II Partners. The Partnership Agreement was also amended with regard to PSMII, substituting Heifetz, Chervitz, Ronald Lurie, Nancy Lurie, and the Stones as limited partners in place of PSMII and referring to them as the PS II Partners. Both amendments to the Partnership Agreement stated that each of the substituted limited partners would be "subject to and bound by all provisions of the Partnership Agreement as if he were originally a party to the Partnership Agreement."
In July 1993, under another amendment to the Partnership Agreement, Gershman, Jeffrey Michelman, Spewak, Fallon, and the Maylacks became substituted limited partners in 8182 Partnership. Like the previous amendments, this amendment stated that each of the substituted limited partners was "subject to and bound by all provisions of the Partnership Agreement as if he or she was originally a party to the Partnership Agreement."
Over a decade later, on September 9, 2005, Heifetz sent a certified letter to Apex stating that he wished to exercise buyout rights under Section 18 of the Partnership Agreement. Thereafter, Chervitz, Gershman, Michelman, Spewak, and the Stones requested that Apex buy their interests in 8182 Partnership under Section 18. Apex declined the demands as inconsistent with the Partnership Agreement.
In 2007, Heifetz, Chervitz, Gershman, Michelman, Spewak, and the Stones ("the 2007 Limited Partners") filed their initial lawsuit against Apex. Their First Amended Petition alleged in relevant part that Apex had breached the Partnership Agreement and a "fiduciary duty" to them in connection with Section 18, the forced sale provision.
After briefing and argument on cross-motions for partial summary judgment, the trial court granted Apex's motion for partial summary judgment on the breach of contract and fiduciary duty claims, finding the 2007 Limited Partners did not have the non-economic right to a forced buyout of their interests in 8182 Partnership and that the interests they acquired were limited by statute or agreement.
The 2007 Limited Partners appealed, and on February 9, 2010, this Court affirmed the trial court's judgment. This Court did not decide whether the 2007 Limited Partners acquired rights under Section 18 as a result of the dissolution and amendments to the Partnership Agreement. It simply held that it did not need to reach that issue because the record showed "that not all of the limited partnership expressed a desire to invoke Section 18" to pursue a forced sale "collectively."
On August 4, 2010, counsel for Limited Partners sent a demand letter to Apex stating that they wished to exercise the buyout rights in Section 18 of the Partnership Agreement and Apex again declined. On December 3, 2010, Limited Partners filed their Petition against Apex in the underlying lawsuit alleging breach of contract ("Count I") and breach of fiduciary duty ("Count II"). The Petition alleged Apex was required but failed to make cash distributions to Limited Partners under Section 9.2(A) of the Partnership Agreement. The Petition also alleged Apex was required but failed to purchase Limited Partners' interests in 8182 Partnership. In Count I of their Petition, Limited Partners alleged that by "refusing to comply with the 'forced sale' provision of the Partnership Agreement," Apex breached the Partnership Agreement. Limited Partners sought compensatory damages in amounts specified in the Petition. In Count II of their Petition, Limited Partners alleged that Apex breached a purported fiduciary duty in not making cash distributions pursuant to the Partnership Agreement. For the breach of fiduciary duty claim, they requested compensatory damages in the exact amounts sought on Limited Partners' contract claim. Limited Partners also sought punitive damages and fees.
Count III of the Petition alleged civil conspiracy against Apex and former defendant Paul Novelly ("Novelly"), Apex's president and CEO and chairman of its board of directors. On June 19, 2015, both Count III and Novelly were dismissed and are not at issue in this appeal.
The parties filed cross- motions for partial summary judgment on liability for the Section 18 contract claim. The trial court granted Limited Partners' motion and denied Apex's motion stating as follows:
The Court finds that Limited Partners have the right to demand that their interests in the 8182 Maryland Associates Limited Partnership be bought out pursuant to Section 18 of the Partnership Agreement as amended. The Limited Partners succeeded to that right as substitute limited partners in the place of PS Maryland Avenue Associates I and PS Maryland Avenue Associates II. The Court finds that Limited Partners have made the effective collective demand required by Section 18 of the Partnership Agreement. Limited Partners' group consists of all the remaining substitute limited partners possessing the right to be bought out under Section 18 of the Partnership Agreement, and the Court finds that their unanimous joinder in the demand satisfies the "collective" requirement of the Partnership Agreement. The Court finds that Defendant Apex Clayton, Inc., as general partner, has failed to act on its obligation to buy out Limited Partners' interests, thereby breaching the Partnership Agreement as amended.Beginning on June 16, 2015, during a four-day jury trial, Limited Partners argued three issues: (1) valuation of Limited Partners' ownership interests in 8182 Partnership ("Instruction No. 7"); (2) breach of fiduciary duty in failing to make cash distributions ("Instruction No. 9"); and (3) punitive damages based on Apex's alleged breach of fiduciary duty ("Instruction No. 11"). On June 19, 2015, following extensive argument and presentation of competing evidence, the jury returned its verdicts. On the contract claim, the jury found the value of Limited Partners' ownership interests to be $2,804,689. On the fiduciary duty claim, the jury found in favor of Limited Partners and awarded nominal damages of $1,000 to each Plaintiff. The jury also found in favor of Limited Partners on punitive damages and awarded an additional $2.8 million in punitives.
On June 26, 2015, the trial court entered its Judgment (the "June 26, 2015 Judgment"). On July 24, 2015, Limited Partners filed a motion for a contract-based award of attorneys' fees and expert costs. On July 27, 2015, Apex filed an after-trial motion for judgment notwithstanding the verdict or for new trial.
On October 26, 2015, the trial court granted Limited Partners' motion for attorneys' fees and costs and denied Apex's initial motion for judgment notwithstanding the verdict or for new trial in an "Order." On the same day, the trial court separately entered an "Amended Judgment." The "Amended Judgment" included the verdict amounts for the claims tried to the jury and the fees awarded by the trial court.
On November 10, 2015, Apex filed a motion for judgment notwithstanding the verdict, for new trial, or to amend the judgment. The trial court never ruled on Apex's November 10, 2015 motion. On February 17, 2016, Apex filed its notice of appeal with respect to the "Amended Judgment."
Discussion
Apex raises three points on appeal challenging the trial court's rulings with respect to the Limited Partners' claims on the issues of breach of fiduciary duty, and nominal and punitive damages. Before we can address the merits of Apex's appeal however, we must determine whether we have jurisdiction to review the appeal.
As noted earlier, the parties entered into a consent judgment regarding the attorneys' fees and expert witnesses costs, thus eliminating those issues on appeal.
This case was tried before a jury from June 16, 2015 to June 19, 2015. The jury reached its verdict on June 19, 2015 and judgments on the verdict were entered June 26, 2015. The court entered six individual judgments, one in favor of each Limited Partner.
Rule 81.05 provides that a judgment becomes final at the expiration of 30 days after its entry if no timely authorized after-trial motion is filed. Rule 81.05(a)(1). Under Rule 81.04, a notice of appeal must be filed no later than 10 days after a judgment becomes final. Rule 81.04(a). Here, Limited Partners filed a motion for an award of attorneys' fees and expenses on July 24, 2015. However, a motion for attorneys' fees is not an authorized after-trial motion under Rule 81.05(a); therefore, the motion for attorneys' fees filed by Limited Partners did not prevent the judgments from becoming final. Burton v. Klaus, 455 S.W.3d 9, 11-12 (Mo. App. E.D. 2014); Glandon v. Daimler Chrysler Group, 142 S.W.3d 174, 178 (Mo. App. E.D. 2004); see 17 Mo. Practice Series §81.05:3, Authorized After-Trial Motions (2015 ed.) ("A motion for attorneys' fees is not an authorized after-trial motion and does not toll the time for appeal"); see also SKMDV Holdings, Inc. v. Green Jacobson, P.C., 494 S.W.3d 537, 560 (Mo. App. E.D. 2016).
In Burton, purchasers alleged breach of the residential sale contract, fraudulent misrepresentation, negligent misrepresentation, and violation of the Merchandising Practices Act against prospective vendor. Purchasers' petition requested judgment in their favor as well as costs, expenses, and attorney fees. Burton, 455 S.W.3d at 10. Vendor filed a motion for summary judgment and the trial court entered summary judgment in favor of vendor on all counts. Id. Thereafter, vendor filed its motion for attorneys' fees and related costs, per the contract. Id. The trial court entered a subsequent order and judgment awarding attorneys' fees and costs per the terms and conditions of the residential sales contract. Id. Purchasers then filed of their notice of appeal, which this Court held was untimely finding that the entry of summary judgment related to residential sale contract between purchasers and vendor became final 30 days after its entry, rather than 90 days after its entry, even though vendor filed motion for attorney fees following entry of summary judgment. Id. at 13. For purposes of determining time within which appeal would be taken, the Court reasoned that the motion for attorney fees was not authorized after-trial motion for purposes of extending time period for appeal. Id.; Rule. 81.04(a); Rule 81.05(a)(1, 2). Similarly, in Glandon, that Burton relied on in reaching its result, the Court held that an automobile purchaser's petition for attorney fees under the Magnuson-Moss Warranty Act did not qualify as an authorized after-trial motion that extended the time at which judgment in purchaser's breach of warranty action became final, and thus purchaser's notice of appeal was untimely. Glandon v. Daimler Chrysler Corp., 142 S.W.3d 174, 178 (Mo. App. E.D. 2004).
Here, the June 26, 2015 Judgment stated in its entirety:
Pursuant to the Verdicts of the Jury herein, Judgment is hereby entered, as follows, to-wit:
1.) In favor of Plaintiff Gary S. Heifetz and against Defendant Apex Clayton, Inc. in the sum of $1,348,793.00 for his ownership interest plus $1,000.00 for breach of fiduciary duty plus $1,346,000.00 for punitive damages, aggregating a total Judgment of $2,695,793.00;
2.) In favor of Plaintiff Steven M. Stone and against Defendant Apex Clayton, Inc. in the sum of $611,767.00 for his ownership interest plus $1,000.00 for breach of fiduciary duty plus $610,000.00 for punitive damages, aggregating a total Judgment of $1,222,767.00;
3.) In favor of Plaintiffs Jean Maylack and Fallon Maylack and against Defendant Apex Clayton, Inc. in the sum of $297,714.00 for their ownership interest plus $1,000.00 for breach of fiduciary duty plus $297,000.00 for punitive damages, aggregating a total Judgment of $595,714.00;
4.) In favor of Plaintiff Jeffrey S. Gershman and against Defendant Apex Clayton, Inc. in the sum of $290,453.00 for his ownership interest plus $1,000.00 for breach of fiduciary duty plus $290,000.00 for punitive damages, aggregating a total Judgment of $581,453.00;
5.) In favor of Plaintiff Estate of Sidney L. Stone and against Defendant Apex Clayton, Inc. in the sum of $212,394.00 for its ownership interest plus $1,000.00 for breach of fiduciary duty plus $212,000.00 for punitive damages, aggregating a total Judgment of $425,394.00;
6.) In favor of Plaintiff Steven B. Spewak and against Defendant Apex Clayton, Inc. in the sum of $43,568.00 for his ownership interest plus $1,000.00 for breach of fiduciary duty plus $45,000.00 for punitive damages, aggregating a total Judgment of $89,568.00.The "Amended Judgment" was identical to the June 26, 2015 Judgment in all respects except that three new paragraphs were added each awarding attorneys' fees directly to the three law firms that had represented the Limited Partners in the trial court. These paragraphs state, in their entirety, as follows:
7.) Plaintiffs shall transfer, assign and convey all right, title and interest in and to their ownership interests in the 8182 Maryland Associates Limited Partnership to the General Partner, Apex Clayton, Inc.; simultaneously, and in exchange therefor, Apex Clayton, Inc. shall pay over to Plaintiffs the aforesaid values of their ownership interests.
Court costs assessed to Defendant Apex Clayton, Inc.
7.) In favor of Green Jacobson, P.C. and against Defendant Apex Clayton, Inc. in the sum of $135,388.12 as and for attorneys fees herein;Apex relies on Rule 78.07 to argue that its notice of appeal was in fact timely based on the entry of the "Amended Judgment." Rule 78.07(d) states: "The trial court may amend or modify any judgment in accordance with Rule 75.01 or upon motion by any party. Unless an amended judgment shall otherwise specify, an amended judgment shall be deemed a new judgment for all purposes." Rule 78.07 (d). However, based on our review of the record and following Missouri precedent, we find that while the trial court signed a document captioned "Amended Judgment," contrary to Apex's contention, that document did not "amend" the June 26, 2015 Judgment and extend the deadline for filing a notice of appeal.
8.) In favor of the Law Offices of Martin Green, P.C. and against Defendant Apex Clayton, Inc. in the sum of $49,241.25 as and for attorneys fees herein;
9.) In favor of Jacobson, Press and Fields, P.C. and against Defendant Apex Clayton, Inc. in the sum of $54,382.88 as and for attorneys fees herein, together with expert witness expense of $74,018.60, aggregating a total Judgment of $128,401.48.
Our analysis is supported by the following timeline of events: On June 26, 2015, Judgment in favor of Limited Partners was entered. On July 24, 2015, Limited Partners filed a post-judgment motion for attorneys' fees. The motion stated that the parties entered into three agreements that included provisions entitling the prevailing parties to attorneys' fees and expenses. However, the motion did not request an amendment of the June 26, 2015 Judgment. On July 27, 2015, Apex filed its first after-trial motion, which was a motion for judgment notwithstanding the verdict, or alternatively for a new trial or remittitur, and to amend the judgment. The trial court denied Apex's after-trial motion on October 26, 2015. This was the only motion that could grant the trial court authority to amend the Judgment more than 30 days after its entry. That same day, the trial court granted the Limited Partners' motion for attorneys' fees in what the trial court styled an "Amended Judgment entered separately adding a Judgment for attorneys' fees and expenses."
When Apex's first after-trial motion was denied, on October 26, 2015, the Judgment became final and Apex's notice of appeal was due within 10 days, on November 5, 2015. Apex did not appeal the Judgment. Instead, on November 10, 2015, after the deadline for filing a notice of appeal had passed, Apex filed a second duplicative after-trial motion. Apex never appealed the Judgment. While Apex did appeal the "Amended Judgment," that notice of appeal was filed on February 17, 2016, over three months after the deadline for Apex's notice of appeal from the Judgment. Apex's failure to file a timely notice of appeal from the Judgment, and its subsequent failure to seek a special order from this court under Rule 81.07, deprives this court of jurisdiction to hear Apex's appeal of the six individual judgments entered in favor of the individual Limited Partners in the Judgment.
Apex claims that as a result of the "Amended Judgment," it did not know whether to file another post-trial motion in the circuit court or a notice of appeal. We note that Rule 81.05(b) authorizes parties to file a premature notice of appeal. If it is premature, the notice of appeal will be deemed to be filed immediately after the judgment becomes final. Nevertheless, the conclusion reached here is that a notice of appeal filed in this case would not have been premature. --------
Conclusion
The appeal is dismissed.
/s/_________
Mary K. Hoff, Judge Robert M. Clayton III, Presiding Judge, and Lisa P. Page, Judge, concur.