Opinion
No. ED 81573
May 20, 2003
Appeal from Writ of Mandamus.
Jeffrey L. Cramer, T. Michael Ward, Andrew Rothchild, Richard A. Ahrens, John H. Quinn, III, John R. Musgrave and James M. Cox, for Appellant.
Jeffrey L. Lowe, Kevin S. Hannon, Robert B. Reeser, Jr., Robert F. Ritter and Morry S. Cole, for Respondent.
The Doe Run Resources Corporation ("Doe Run"), Acquisition Corporation, Bruce C. Clark, Ira L. Rennert, The Renco Group, Inc. and Homestake Lead Company of Missouri (collectively "Relators") seek a writ of prohibition barring Respondent from taking any further action in the underlying cause, No. 012-08641, other than transfer to a proper venue. After briefing and argument, we order that our previously issued preliminary writ of prohibition now be made permanent.
The underlying action was filed by eight named plaintiffs individually and as putative class representatives of all persons or legal entities owning property in a defined area within the City of Herculaneum, Missouri ("Plaintiffs"). Plaintiffs are seeking to recover damages from Relators and other defendants for property damage allegedly resulting from the release of metals and other substances from Doe Run's lead smelter located in Herculaneum based on the theories of negligence and negligence per se, strict liability, private nuisance and trespass.
Three of the named Plaintiffs in the underlying case were also named plaintiffs in a prior putative class action filed in 1995 in the Circuit Court of Jefferson County which likewise sought to recover for damage to real property in the City of Herculaneum allegedly caused by emissions from the smelter. After extensive discovery and a hearing, the judge in the Jefferson County case denied the plaintiff's motion for class certification. Those plaintiffs then dismissed the Jefferson County case without prejudice.
The Jefferson County case also included a medical monitoring claim which is not asserted in the instant case.
The same day, the underlying case was filed in the Circuit Court of the City of St. Louis. The original petition named only three defendants, two individuals and one corporation, all non-residents of Missouri. Plaintiffs pleaded that venue was proper pursuant to section 508.010(4) RSMo 2000, which allows a plaintiff to bring suit in any Missouri county when none of the defendants is a Missouri resident.
All statutory references are to RSMo 2000 unless otherwise indicated.
The following day, Plaintiffs filed a First Amended Petition asserting the same claims but adding five additional corporate defendants. Some of the corporate defendants were Missouri residents for venue purposes, but none have either a registered agent in the City of St. Louis or an office for the conduct of their usual and customary business in the City of St. Louis. Plaintiffs again pleaded that venue was proper pursuant to section 508.010(4), which applies when none of the defendants are Missouri residents. The defendants moved to dismiss or transfer for improper venue arguing, inter alia, that venue should be determined on the basis of the First Amended Petition, which included Missouri residents as defendants, rather than the original petition, which did not.
While this motion was pending, the Missouri Supreme Court handed down its decision in State ex rel. Linthicum v. Calvin, 57 S.W.3d 855 (Mo.banc 2001), holding that venue must be examined each time a plaintiff brings a new defendant into a lawsuit.
Because the First Amended Petition included corporate defendants that were Missouri residents for venue purposes, this meant that venue would no longer be proper in the City of St. Louis and Plaintiffs could no longer rely on section 508.010(4).
Over the defendants' objection, Plaintiffs obtained leave to file a Second and a Third Amended Petition, which named three additional defendants, one of whom, Marvin Kaiser, is a resident of the City of St. Louis. It is undisputed that venue is now predicated solely on the fact that Mr. Kaiser resides in the City of St. Louis.
According to an affidavit filed by Doe Run's Vice President-Human Resources, Mr. Kaiser was the only one of Doe Run's 1,419 Missouri employees who resided in the City of St. Louis when he was named as a defendant.
In response to the Third Amended Petition, Relators again moved to dismiss or transfer, urging that Mr. Kaiser was pretensively joined for the purpose of creating venue. Mr. Kaiser also moved to dismiss himself from the lawsuit on the ground that the Third Amended Petition failed to state any claims against him upon which relief can be granted. Respondent denied the motions and Relators filed their petition in this court seeking a writ of prohibition. As they did in the trial court, Relators claim that Mr. Kaiser was pretensively joined for the purpose of obtaining venue in the City of St. Louis and that, absent the claims against Mr. Kaiser, there is no basis for venue in the City of St. Louis. Respondent does not dispute that the claims against Mr. Kaiser are the sole basis for venue in the City of St. Louis.
Because improper venue is a fundamental defect, a court that acts when venue is improper acts in excess of its jurisdiction. State ex rel. SSM Health Care St. Louis v. Neill, 78 S.W.3d 140, 142 (Mo.banc 2002). Accordingly, prohibition lies to bar the trial court from taking any further action, except to transfer the case to a proper venue. Id.
Courts will not permit plaintiffs to engage in the pretense of joining defendants for the sole purpose of obtaining venue. State ex rel. Malone v. Mummert, 889 S.W.2d 822, 824 (Mo.banc 1994). Courts recognize pretensive joinder (1) where the pretensive nature of the joinder appears on the face of the pleadings, and (2) where there is in fact no cause of action against the resident defendant. State ex rel. Coca Cola Bottling Co. of Mid-America v. Gaertner, 681 S.W.2d 445, 447 (Mo.banc 1984). "[T]here are two possible avenues open for attacking joinder on the ground that it is pretensive: First, the party can assert that the facts pleaded in the petition are not true; and, second, the party can claim that the facts, even if true, do not support a valid claim based on substantive law." Mummert, 889 S.W.2d at 825. Joinder is pretensive if either prong is satisfied. Hefner v. Dausmann, 996 S.W.2d 660, 663 (Mo.App. 1999).
Although Relators assert that both tests of pretensive joinder are satisfied in this case, we find that joinder is pretensive because the facts pleaded in the Third Amended Petition do not support a valid claim against Mr. Kaiser based on substantive law.
The petition alleges that at all relevant times, Mr. Kaiser was and is the Vice President and Chief Financial Officer of Doe Run. All of the acts and omissions Mr. Kaiser allegedly committed were performed within the course and scope of his employment. The petition alleges that Mr. Kaiser is liable to Plaintiffs because, as an officer of Doe Run, he had actual or constructive knowledge of Doe Run's wrongful conduct and participated in it. Specifically, Plaintiffs allege that Mr. Kaiser approved expenditures for pollution control equipment and measures, expenditures for the remediation of properties and expenditures for the purchase of contaminated properties around the smelter as a pollution buffer. Mr. Kaiser made representations of financial assurance to the State of Missouri for the purpose of complying with state environmental laws. As Chief Financial Officer, Mr. Kaiser had involvement in Doe Run's budgeting process including setting environmental goals for the smelter and the pollution control budget that included the purchase of contaminated properties. Mr. Kaiser allegedly participated in and approved budgets which delayed or rejected implementation of proper pollution control measures and remediation of properties in the area defined in the petition. Plaintiffs further allege that Mr. Kaiser had knowledge of technologies available to remediate contaminated soils that were not used, and failed to take action to eliminate or reduce the emission of toxic substances from the smelter.
Finally, Plaintiffs allege that Mr. Kaiser, as an officer of Doe Run, engaged in a conspiracy to fail to adequately control emissions from Doe Run's smelter and/or to not implement adequate pollution controls at the smelter and/or to violate the Ambient Air Quality Standard for lead because of the cost and reduction of profits, bonuses and the value of the wages, stock and/or stock options of Doe Run and other corporate defendants. Thus, Plaintiffs allege that Mr. Kaiser had an economic motive and personally benefited from the alleged conspiracy.
Relators urge that these allegations are plainly insufficient to state a claim against Mr. Kaiser in his individual capacity because the petition specifically alleges that Mr. Kaiser's alleged actions and omissions occurred within the course and scope of his employment. Indeed, the very nature of the actions Mr. Kaiser is alleged to have taken is such that that they could only be undertaken in Mr. Kaiser's official capacity as the Chief Financial Officer of Doe Run and not in an individual capacity. Relators rely on Lynch v. Blanke Baer Bowey Krimko, Inc., 901 S.W.2d 147, 153-54 (Mo.App. 1995) for the proposition that such allegations are fatal to any claim of individual liability on the part of Mr. Kaiser.
In Lynch, a former employee of a corporation sued for wrongful discharge in the City of St. Louis. The plaintiff named as defendants both the corporation, a resident of St. Louis County for venue purposes, and its president who was a resident of the City of St. Louis. 901 S.W.2d at 150. The president personally terminated the plaintiff's employment.Id. at 154. On the defendants' motion, the trial judge found that the president had been pretensively joined, dismissed the case against him, and transferred the action against the corporation to St. Louis County.Id. at 152-53. On appeal, this court affirmed, noting that the plaintiff had specifically pled that in terminating his employment, the president was "acting for" the corporation. Id. at 153. Because there was no allegation that the president had acted in an individual capacity the petition did not state a cause of action against the president as an individual. Id. at 154.
In this case, as in Lynch, Plaintiffs specifically alleged that all of Mr. Kaiser's actions were undertaken within the course and scope of his employment and agency. This is fatal to any claim that Mr. Kaiser is liable in his individual capacity.
In the trial court and in this court, however, Plaintiffs urged that Mr. Kaiser may be liable in his capacity as an officer of Doe Run. Under Missouri law, "merely holding a corporate office will not subject one to personal liability for the misdeeds of the corporation." Id. at 153. "In order to make an officer or agent of a corporation liable to a third person, something more must be shown than a mere act of nonfeasance on the part of the agent." Premier Bank v. Tierney, 114 F. Supp.2d 877, 886 (W.D.Mo. 2000) (citing Darling Co. v. Fry, 24 S.W.2d 722, 723 (Mo.App. 1930). "Nothing short of active participancy in a positively wrongful act intendedly and directly operating injuriously to the prejudice of the party complaining will give origin to individual liability." Darling, 24 S.W.2d at 723 (quoting Fusz v. Spaunhorst, 67 Mo. 256, 264 (Mo.banc 1978). As the court explained in Darling:
[I]t seems that the true basis of liability should be the violation by the officer or servant of some duty owed to the third person by reason whereof injury results to such third person. Certainly the managing officer of a corporation would not be liable to a third person for any injury resulting from a neglect of duty unless that duty was one he owed to such third person. 24 S.W.2d at 724.
The cases Plaintiffs cite as authority are consistent with these principles but readily distinguishable from the case at bar. In Curlee v. Donaldson, 233 S.W.2d 746 (Mo.App. 1950), a landowner had authorized a corporation to cut timber on his land. Id. at 749. At some point during the project it became apparent that timber had been cut from the plaintiff's adjacent land. Plaintiff sued for trespass and named both the corporation and its president as defendants. Id. at 748. The plaintiff obtained judgment against both defendants. On appeal, the court upheld the judgment against both the corporation and the president. Id. at 754. By ordering and directing the woodcutters to the tract where they were authorized to cut and failing to provide supervision, the president became liable for the trespass. Id. The court emphasized the complete control the president had over the woodcutting operation. In addition to being the president, he was the treasurer and general manager and one of only three directors and stockholders. Id. at 749. The court found that the president had complete control over the cutters. Moreover, when the foreman who had been in direct charge of woodcutting resigned, the president failed to replace him.
In contrast, Plaintiffs in this case have not alleged that Mr. Kaiser has any kind of management or supervisory authority over the day-to-day operation of the lead smelter or in the area of environmental compliance. His role at Doe Run appears to be completely restricted to managing the company's finances. In performing his obligations, his duty runs to the corporation and its shareowners, not to Plaintiffs.
In Constance v. B.B.C. Dev. Co., 25 S.W.3d 571 (Mo.App. 2000), the court held that a corporation's president who had guaranteed the corporation's construction loans could be found liable for fraud. Id. at 589-90. The president had been present and remained silent when the construction supervisor told the prospective buyer that the lots at issue were "buildable," without disclosing prior landslides and street failures that had occurred on the property. Id. at 579. Because he remained silent despite his personal knowledge of the prior problems with the property, the court found that he was a direct participant in the actionable fraud and thus could be held liable along with the corporation. Id. at 590.
Making fraudulent misrepresentations to a third party is a breach of a personal duty in and of itself, regardless of whether it is done within the course and scope of employment. In contrast, the only representations Plaintiffs allege Mr. Kaiser made in this case is a representation of financial assurance made to the State of Missouri. Such representations are required by law. 10 CSR 45-6.030(2)(C). There is no allegation that any financial assurance document signed by Mr. Kaiser was false or caused anyone any injury. As for his approval of corporate budgets, nothing in the petition suggests that Mr. Kaiser's involvement was any more active or direct than it would be for any substantial expenditure made by Doe Run for any purpose.
Likewise, in Osterberger v. Hites Const. Co., 559 S.W.2d 221 (Mo.App. 1980), the corporation's president, who personally signed warranty deeds to home purchasers without disclosing outstanding deeds of trust, was held liable for fraud based on evidence that he had knowledge of and personally participated in the fraudulent concealment of the encumbrance. No such wrongful conduct is alleged on the part of Mr. Kaiser.
In McKeehan v. Wittels, 508 S.W.2d 277, 283 (Mo.App. 1974), two officers of an investment company were held liable for breach of fiduciary duty for failing to follow their client's instructions and failure to disclose their own interest in the investments. Id. at 280-83. The two officers as well as the corporation were found to have a fiduciary relationship to the plaintiff and therefore could properly be held liable for breach of that duty. Id. Plaintiffs in this case do not allege Mr. Kaiser had a fiduciary relationship or owed them any other form of personal duty.
In Honigmann v. Hunter Group, Inc., 733 S.W.2d 799, 802 (Mo.App. 1987), the franchisee of a brokerage business franchise sued the franchisor and two of its officers for tortious interference with his contract with the franchisor and interference with business expectancy.Id. The dispute centered around an interpretation of the agreement and whether the franchisor breached its agreement by competing in franchisee's territory. The jury returned a verdict against all three defendants. Id. at 802. On appeal, the court noted that there was evidence that there was a confidential or fiduciary relationship between the plaintiff and the defendants. Id. at 807. The two individual defendants personally participated in the tortious interference. Id. In addition, there was evidence that the defendants used improper means in interfering with the franchisee's contract and that they had acted in their own personal interest. Id. at 808. Given those circumstances, the judgments against the corporate officers were affirmed. Id. at 810. We find no comparable allegations in the Third Amendment Petition.
Grothe v. Helterbrand, 946 S.W.2d 301 (Mo.App. 1997) is another case, like Curlee, in which the individual defendant was president and general manager of a closely held corporation. Id. at 303-04. The defendant inGrothe personally made representations to the plaintiff which induced him to leave silver recovered from processed film with the corporation on consignment. Id. The defendant personally represented to the plaintiff that the silver would be physically stored at the corporation's facility and would be surrendered to him at his request. Id. Contrary to these representations, at the defendant's direction, the silver was periodically sold and the funds were absorbed in the corporation's accounts. Id. The corporation was later administratively dissolved. Id. On appeal, a directed verdict for the defendant was reversed based on the defendant's personal participation in the conversion of the plaintiff's silver. Id. This was sufficient to constitute a personal act of misfeasance and a positive wrong. Id. In this case, there is no allegation that Mr. Kaiser personally participated in the discharge of metals or other substances onto the Plaintiffs' property or that he had any responsibility or authority to control such emissions. Grothe does not support Plaintiffs' position.
Likewise Boyd v. Wimes, 664 S.W.2d 596, 598 (Mo.App. 1984), involved a closely held corporation and an individual owner who held many corporate offices. In Boyd, the owner allegedly personally participated in the conversion of the plaintiff's escrow funds. Id. Such personal participation in the conversion was held sufficient to support personal liability on the part of the owner. Boyd is thus plainly distinguishable from the allegations at issue in this case.
Finally, Relators urge that Plaintiffs' allegations that Mr. Kaiser engaged in a conspiracy with other unnamed and unspecified conspirators to violate the environmental laws are conclusory and do not allege sufficient facts to support a cause of action for conspiracy. Moreover, as a matter of law, a corporation cannot conspire with its agents.Creative Walking, Inc. v. American States Ins. Co., 25 S.W.3d 682, 688 (Mo.App. 2000). We agree. To state a claim for civil conspiracy, a plaintiff must allege, "(1) two or more persons; (2) with an unlawful objective; (3) after a meeting of the minds; (4) committed at least one act in furtherance of the conspiracy; and (5) the plaintiff was thereby damaged." Rice v. Hodapp, 919 S.W.2d 240, 245 (Mo.banc 1996). The grounds of a civil conspiracy must be set out with the same certainty and particularity as an ordinary civil action against a single defendant. See Royster v. Baker, 365 S.W.2d 496, 500 (Mo. 1963). In her order, Respondent found that Plaintiffs' allegations are conclusory. We agree. There is no allegation of any specific "meeting of the minds" as to any specific objective with any specific individual. Plaintiffs have not stated a claim against Mr. Kaiser for civil conspiracy.
We hold that the Third Amended Petition does not state a claim for which relief can be granted against Mr. Kaiser and that he was pretensively joined for the purpose of obtaining venue in the City of St. Louis. Accordingly, we order that our preliminary writ of prohibition now be made permanent and direct Respondent to take no further action in the case other than to transfer the underlying cause to a county of proper venue.
R. Dowd, Jr., and Hoff, JJ., concur.