Opinion
No. WD 62808, Consolidated with WD 62848
October 25, 2005.
Appeal from the Circuit Court of Jackson County, Missouri, Honorable Kenneth P. Dean, II, Judge.
Before: Smart, P.J., Holliger and Hardwick, JJ.
This appeal arises from a lawsuit filed by Leonard Verni alleging a fraudulent misrepresention claim against Cleveland Chiropractic College and a breach of contract claim against Alexander Makarov. A jury awarded Verni damages in the amount of $20,000 for the fraudulent misrepresentation and $10,000 for breach of contract. The trial court granted the College's motion for judgment notwithstanding the verdict (JNOV) and vacated the award for fraudulent misrepresentation. Verni appeals from the JNOV and the trial court's denial of his motion for additur or new trial on the issue of damages. Makarov cross-appeals, contending the trial court erred in denying his motion for JNOV on the breach of contract claim. We reverse in part and affirm in part.
FACTUAL AND PROCEDURAL HISTORY
Lee Verni enrolled at the Cleveland Chiropractic College in Kansas City, Missouri in the fall of 1995. Verni was a student in the doctor of chiropractic degree program and expected to graduate in December 1999.
On February 10, 1999, a student anonymously contacted the College's Academic Dean, Ruth Sandefur, and accused Verni of selling copies of a test to be administered on February 11, 1999, in a dermatology course taught by Alexsandr Makarov. The anonymous student provided Sandefur with a copy of the test. Verni was enrolled in the dermatology course taught by Makarov, who was a full-time faculty member at the College.
On February 16, 1999, Sandefur filed an incident report with the Director of Student Services, Cindy Miller, alleging that Verni violated student conduct standards by engaging in theft and academic dishonesty. After investigating the incident, Miller notified Verni that he was dismissed from the College based on evidence of academic misconduct. Verni appealed the disciplinary action, pursuant to appeal procedures set forth in the Student Handbook. The appeals committee conducted a hearing and then upheld Miller's decision to permanently dismiss Verni from the College as of March 23, 1999.
Verni filed a petition for damages against the College and Makarov in Jackson County Circuit Court on April 26, 2000. An amended petition alleged fourteen counts, primarily asserting that the College breached the terms of the Student Handbook and made fraudulent representations about the due process procedures applicable to the disciplinary appeals hearing. Verni further alleged that he was a third-party beneficiary of the employment contract between Makarov and the College, and that Makarov breached his contractual obligation to treat Verni fairly during the investigation of the alleged test theft.
At trial, four counts were submitted to the jury: a breach of contract claim against Makarov, and breach of contract, fraudulent misrepresentation, and fraudulent non-disclosure claims against the College. Verni claimed damages of $356,155 for lost wages, tuition reimbursement, moving expenses, and travel expenses.
The jury found in Verni's favor on two counts, awarding him $10,000 on the breach of contract claim against Makarov and $20,000 on the fraudulent misrepresentation claim against the College. The jury denied relief on the two remaining counts.
Verni filed a motion for additur or, in the alternative, for a new trial solely on the issue of damages. Makarov and the College filed motions for judgment notwithstanding the verdict (JNOV). The trial court denied Verni's and Makarov's motions but granted the College's motion for JNOV on the fraudulent misrepresentation claim. The court determined there was no evidence to support two elements of the fraud claim and, therefore, entered judgment in favor of the College. Verni and Makarov appeal from the final judgment.
VERNI'S POINTS ON APPEAL
Verni brings four points on appeal, contending the trial court erred in denying his motion for additur/new trial and in granting the College's motion for JNOV. We first address Points III and IV related to the JNOV.
Verni argues that he made a submissible case on each element of the fraudulent misrepresentation claim and, thus, the trial court erred in granting judgment to the College notwithstanding the jury's verdict in his favor. He contends the trial court failed to consider "substantial evidence" that the College made false statements about following its due process rules, and the court further failed to make all favorable inferences from the evidence in support of the jury's verdict.
The decision of the trial court to grant JNOV will only be affirmed if the plaintiff failed to make a submissible case. Payne v. City of St. Joseph , 135 S.W.3d 444, 449 (Mo.App. 2004). "We view the evidence and all reasonable inferences in the light most favorable to the plaintiff." Huxoll v. McAlister's Body Frame, Inc. , 129 S.W.3d 33, 35 (Mo.App. 2004). Directing a verdict is a drastic remedy and we will "affirm the trial court's ruling only if the evidence is so strongly against the plaintiff that it leaves reasonable jurors no room to differ." Id.
"To make a submissible case, the plaintiff must present substantial evidence establishing each and every element of his claim." Payne , 135 S.W.3d at 450. The elements of fraudulent misrepresentation are: "1) a false, material representation; 2) the speaker's knowledge of its falsity or his ignorance of its truth; 3) the speaker's intent that it should be acted upon by the hearer in the manner reasonably contemplated; 4) the hearer's ignorance of the falsity of the representation; 5) the hearer's reliance on its truth; 6) the hearer's right to rely thereon; and 7) the hearer's consequent and proximately caused damages." Mprove v. KLT Telecom, Inc. , 135 S.W.3d 481, 489-90 (Mo.App. 2004).
Verni's fraudulent misrepresentation claim was based on his allegation that the College falsely stated that it would follow the Student Handbook's due process procedures in conducting the appeal hearing. At trial, Verni presented a memo from Cindy Miller, the Director of Student Services, directing him to abide by and refer to the Student Handbook procedures if he chose to appeal the disciplinary action. Marcia Thomas, the chair of the appeals committee, also testified that she referred Verni to the Student Handbook for the appeals procedures. In regard to due process, the relevant provisions of the Student Handbook stated:
8. At the hearing of the [appeal], the following procedures will be followed:
a) The student is allowed
i) To be present and give evidence in support of his/her side of the case (however, the Appeal Committee, at its sole discretion, may require the student to leave part of the hearing if it believes there could be any disruption in the hearing);
ii) To see and/or hear all evidence presented against him/her, unless a complaining witness has been promised that he/she will not have to confront the student due to the nature of the allegations, in which case the Committee will summarize orally for the student the substance of the witness's testimony;
. . . .
iv) To question any testimony presented by witnesses as evidence against him/her.
Verni testified that the College failed to follow these procedures, in that he was not allowed to be present during most of his appeals board hearing, he was not provided a summary of each witnesses' testimony, and he was not allowed to question any of the witnesses who testified against him. He argued the College falsely told him the Student Handbook procedures would be followed when it had no intention of complying with the due process provisions. The jury found in Verni's favor on the fraudulent misrepresentation claim and awarded him $20,000 in damages.
After the trial, the court granted the College's motion for JNOV. The court concluded that Verni failed to make a submissible case on two elements of the fraudulent misrepresentation claim: the existence of a false representation and the hearer's reliance on the misrepresentation. The court further explained its reasoning on these two elements:
First, because the language in the Student Handbook on which plaintiff relies is not a representation of current or past fact. It is a representation of future fact. Such a representation will not support submission of a fraudulent misrepresentation count.
Second, plaintiff testified he did not rely on the due process language in the Student Handbook. Plaintiff suggests he also testified he relied. That is not reflected in my notes. Because plaintiff did not rely on the language in question, a submission on fraudulent misrepresentation was improper.
Although the trial court was correct in stating that a representation of a future fact generally is not actionable as fraud, "[a] promise accompanied by a present intent not to perform is a misrepresentation sufficient to constitute fraud." Volker Court, LLC v. Santa Fe Apartments, LLC , 130 S.W.3d 607, 612 (Mo.App. 2004). Verni presented evidence to satisfy this first element through the testimony of Marcia Thomas.
Thomas admitted that she referred Verni to the Student Handbook, prior to the Appeals Committee hearing, because she intended for him to rely on the due process procedures explained therein. By reasonable inference, Thomas made a promise that the College would follow the printed procedures; otherwise there would have been no reason to refer Verni to the Student Handbook. Thomas further admitted that at the time she told Verni to refer to Student Handbook procedures, she knew that she would not allow Verni to be present when other witnesses testified against him at the hearing and that she would not provide a summary of any testimony unless it was "new material." Given Thomas' position as the chair of the College's appeals committee, her testimony was sufficient to show that the College made a promise to abide by the due process procedures in the Student Handbook when it had no intention of complying with certain procedures provided therein.
There is also substantial evidence that Verni relied on the College's promise to provide due process at the appeals hearing. In her memorandum explaining the disciplinary action, Cindy Miller instructed Verni that compliance with the Student Handbook procedures was mandatory for any appeal:
Should you wish to appeal this sanction, you must abide by the procedures for due process set forth in the attached document. You have until Tuesday, March 30, at 5:00 pm to make such an appeal, should you choose to do so. If you do choose to appeal, please refer to the due process procedures as described in the attached pages of the Student Handbook.
(emphasis added). Verni testified that he read the due process procedures in accordance with this instruction. He also made a written request to appeal, stating that he wanted "the opportunity to address the panel and [his] accuser or accusers" as permitted by the Student Handbook procedures. Based on his reading of the Student Handbook, Verni testified that he believed he "would be allowed to hear all the evidence, all the testimony, unless [his] behavior was such that it was disruptive to the process" and that he "would be allowed to question the evidence brought against [him]." He fully expected to confront and question his accusers, and he prepared for the hearing accordingly.
Verni also presented evidence that showed that if he had been allowed to confront and cross-examine witnesses, Makarov would have recanted accusations he made against Verni during the misconduct investigation. Verni testified that when he confronted Makarov in the presence of another professor, Makarov admitted lying, saying he did so because he felt pressure. Verni also testified that the Academic Dean, Sandefur, was informed of Makarov's confession. Verni recalled that Sandefur led him to believe he would be re-instated or at least get a new appeals hearing. Verni told her he would present evidence of Makarov's confession if a new hearing was held. Ultimately, no new hearing was held and Sandefur informed Verni that his dismissal would stand.
The trial court recalled hearing testimony from Verni that "he did not rely on the due process language in the Student Handbook." However, we find nothing in the record to suggest that Verni did not rely on the verbal references to the Handbook once the College administrators told him to abide by the due process procedures. Verni merely testified that he did not rely on the Student Handbook in considering whether he would enroll in the College in the fall of 1995. The evidence in the record provides a reasonable inference that Verni invoked the appeals process in reliance on the College's promises that the Student Handbook procedures would be followed.
The trial court erred in concluding that Verni failed to make a submissible case on the first and fifth elements of his fraudulent misrepresentation claim. Viewed in a light most favorable to the plaintiff, the evidence was sufficient to show that the College made a false representation regarding its due process procedures and that Verni relied upon that representation in preparing for and pursuing his appeal of the disciplinary action. The directed verdict was improper because the evidence was not "so strongly against the plaintiff that it [left] reasonable jurors no room to differ" on the challenged elements of the fraud claim. Huxoll , 129 S.W.3d at 35. It should be noted that, although this is an unusual fraud case, the College offers no argument as to any other reasons the JNOV should be affirmed. Accordingly, the order granting the JNOV motion is reversed.
In Points I and II, Verni contends the trial court erred in denying his motion for additur or, alternatively, a new trial because the damage awards of $10,000 and $20,000 were grossly inadequate and against the weight of the evidence. Verni asserts his evidence of more than $350,000 in damages was uncontroverted, and that the comparatively low damage awards resulted from jury confusion and mistake.
A trial court may allow "additur" to increase a jury award upon a finding that the verdict is inadequate because it is less than fair and reasonable compensation for the plaintiff's injuries and damages. Tucci v. Moore , 875 S.W.2d 115, 116 (Mo. banc 1994). Before considering additur, the court must find that a new trial is warranted for "good cause shown" under Rule 78.01 or because "the verdict is against the weight of the evidence" under Rule 78.02. Id. Additur can only occur when the party against whom the new trial would be granted agrees, instead, to increase the amount of the verdict. Id.
The trial court has broad discretion in deciding whether to grant a motion for new trial on grounds of inadequacy of the verdict. Moses v. Halstead , 144 S.W.3d 309, 311 (Mo.App. 2004). While the trial court may take into consideration the credibility of the witnesses and weigh the evidence when determining the adequacy of the verdict, our review on appeal is limited to consideration of the evidence that supports the decision of the trial court. Rains v. Herrell , 950 S.W.2d 585, 589 (Mo.App. 1997); Kenniston v. McCarthy, 858 S.W.2d 268, 271 (Mo.App. 1993).
The court's denial of a new trial and additur is conclusive unless the verdict is so shockingly inadequate as to indicate it resulted from passion and prejudice or a gross abuse of discretion. Moses , 144 S.W.3d at 311; Root v. Manley , 91 S.W.3d 144, 147 (Mo.App. 2002). "The size of the jury award alone does not establish that it resulted from bias or passion." Norris v. Barnes , 957 S.W.2d 524, 527 (Mo.App. 1997) (citations omitted). "The complaining party must show that some trial error or misconduct of the prevailing party was responsible for prejudicing the jury." Id. at 528.
Verni's damages claim was largely based on his allegation that the disciplinary dismissal in March 1999 prevented him from graduating from the College's chiropractic degree program in December 1999. He resumed his education in the fall of 2000 at the Texas Chiropractic College, graduated in April 2002, and eventually made plans to begin working in Louisiana as a chiropractor in August 2003. An economist testified that the delayed graduation caused Verni to lose 3.67 working years and approximately $272,432 in income as a practicing chiropractor. Verni also sought recovery of $19,972 in tuition reimbursement, $5,000 in moving expenses, and $46,200 in travel expenses for monthly visitation with his daughter in Kansas City for an eleven-year period.
These damage figures were not uncontroverted. During cross-examination of the economist, the College pointed out that the income figure for 3.67 years was based on the national average of the career lifetime earnings of a chiropractor and not the first 3.67 years of practice in the specific geographic area where Verni planned to live. The College also argued that Verni did not lose 3.67 working years as result of the disciplinary dismissal. There was evidence that Verni waited sixteen months after the dismissal before enrolling in the Texas Chiropractic College. After graduating in April 2002, Verni did not even plan to begin practicing until more than a year later when he moved to Louisiana after his wife completed her education. He failed parts of the chiropractic licensing examination twice and then was financially unable to obtain a license in Texas. Eventually, sometime in 2003, he was licensed in Louisiana.
The College challenged the amount of Verni's claim for tuition reimbursement on the basis that he failed to produce any tuition statements from the Texas Chiropractic College. Likewise, Verni offered no documentation of moving expenses and merely testified that he thought a truck, apartment deposit, and utilities cost him "in the neighborhood of about $5,000." With regard to the travel expenses, Verni admitted that he did not visit his daughter every month and that he might eventually regain custody, which would make future travel unnecessary.
The jury was free to believe all, part, or none of Verni's damage estimates, even if the testimony had been uncontroverted. Russell v. Farmers Merchants Ins. Co. , 834 S.W.3d 209, 219 (Mo.App. 1992). The decision to award only a fraction of the requested damages was reasonable in light of the fact that the figures were disputed and were not corroborated by reliable documentation or relevant economic data. The total verdict of $30,000 is not so shockingly inadequate as to indicate it resulted from jury prejudice, confusion, or the trial court's abuse of discretion. Moreover, Verni failed to show that the College committed some trial error or misconduct that was responsible for prejudicing the jury. Accordingly, the trial court properly determined that he was not entitled to a new trial on the issue of damages or additur. Point I and II of Verni's appeal are denied.
The only behavior Verni points to as affecting the jury's damage calculation is the College's cross-examination of him. The Appellant's Brief states: "Respondent's Counsel, by way of clever and studied cross-examination, severely and contrary to the economist's testimony, minimized the probable extent of [Verni's] loss of future wages." Notably, Verni does not argue the cross-examination rose to the level of misconduct or error, as is required to warrant a new trial. Further, the record reveals that Verni did not object to any of the questioning referenced in his brief. He thereby waived any challenge to this cross-examination on appeal. Bowls v. Scarborough , 950 S.W.2d 691, 698 (Mo.App. 1997).
MAKAROV'S POINTS ON APPEAL
In his cross-appeal, Makarov contends the trial court erred in denying his motion for JNOV on the breach of contract claim for two reasons: (1) Verni lacked standing to assert breach of the employment contract because he was neither a party to the contract nor a third-party beneficiary; and (2) the obligation to treat students fairly arose from unilateral terms of the Faculty Handbook, which did not create an enforceable contract.
In reviewing these points, we must affirm the trial court's denial of a motion for JNOV if the plaintiff made a submissible case. Cohen v. Express Fin. Servs., Inc. , 145 S.W.3d 857, 865 (Mo.App. 2004). We view the evidence and inferences in a light most favorable to the plaintiff, while disregarding all unfavorable inferences and evidence. Id. "A motion for [JNOV] should be granted only when reasonable minds cannot differ as to the ultimate disposition of the case." Altenhofen v. Fabricor, Inc. , 81 S.W.3d 578, 584 (Mo.App. 2002). This court will reverse a jury verdict "for insufficient evidence only where there is a `complete absence of probative fact' to support the jury's conclusion." Id.
Verni's breach of contract claim was based on the employment contract, dated August 15, 1999, between the College and Makarov. The one-page contract required Makarov to "comply with and support the policies and procedures stipulated to in the Faculty Handbook" and reserved the College's right to terminate Makarov for violation of such policies. The Faculty Handbook stated: "Faculty members have the duty to treat each student with courtesy, respect, fairness, and professionalism. The student is entitled to expect such treatment and that faculty members will provide an example worthy of emulation." Verni asserted that Makarov breached this obligation of fairness by failing to inform school officials — during the investigation of the test theft allegations — that most of the questions on the dermatology test had been prepared by Verni at Makarov's request.
At trial, Verni testified that Makarov asked the students in his dermatology class to submit suggested questions for the test to be given on February 11, 1999. Verni drafted and submitted twenty-six questions. He made multiple copies of the questions but discarded one of the copies in a trash bin, which was apparently found by another student and turned in to the Academic Dean. Verni theorized that Makarov decided to use most of the questions he submitted, thus explaining why his own handwritten questions were nearly identical to the questions on Makarov's typewritten test.
Aaron Lorenzen, the assistant director of student services, interviewed Makarov during the College's investigation of the test theft allegations against Verni. Lorenzen testified that Makarov acknowledged asking his dermatology students to turn in suggested test questions. Makarov told the investigator that he did not use any questions submitted by Verni. At trial, Makarov denied even receiving any test questions from Verni.
Based on this evidence, Verni argued to the jury that Makarov breached his contractual obligation to treat students fairly by making false statements to conceal his use of test questions submitted by Verni. The jury agreed and awarded Verni damages of $10,000 on the breach of contract claim. Makarov moved for JNOV. In denying the motion, the trial court found that the Faculty Handbook's fairness provision existed to benefit students of the College; therefore, as a student, Verni was a third-party beneficiary of the provision as incorporated in Makarov's employment contract. The court explained: "If the jury believed Makarov was being dishonest about the test, they were justified in believing that he had breached the requirement that he treat students with fairness and professionalism."
A third party beneficiary is one to whom the law extends relief for breach of contract even though the third party is not privy to the contract or its consideration. OFW Corp. v. City of Columbia , 893 S.W.2d 876, 879 (Mo.App. 1995). In determining the existence of a third-party beneficiary, "the question of intent is paramount" and "is to be gleaned from the four corners of the contract. Id. (citations omitted) The third party need not be named in the contract, but the contractual terms "must clearly express an intent to benefit either that party or an identifiable class of which plaintiff is a member." Mitchell v. K.C. Stadium Concessions , 865 S.W.2d 779, 786 (Mo.App. 1993).
Makarov argues in his brief that Verni is not a third-party beneficiary because the terms of the employment contract "do not express a clear intent to benefit [Verni]." However, as Verni points out, the contract clearly expressed an intent to benefit the students of the College, of which he is a member of the class. The third paragraph of Makarov's employment contract states:
This full-time position requires a minimum of 40 hours per week on campus, of which at least five hours must be regularly scheduled office hours . . . You are to comply with and support the policies and procedures stipulated in the Faculty Handbook.
The provision requiring Makarov to maintain office hours provided a direct benefit to students by making the faculty member accessible at least five hours per week. The contract also required Makarov to comply with the Faculty Handbook, which imposed a "duty" on faculty members to "treat each student with courtesy, respect, fairness and professionalism." (emphasis added) The evidence was sufficient to make a submissible case that Verni was a third-party beneficiary because the employment contract was intended for the benefit of him and other students.
Makarov further argues that his JNOV motion should have been granted on the breach of contract claim because the provisions in the Faculty Handbook were unilateral and did not create an enforceable contract. In support of this argument, Makarov primarily relies on Johnson v. McDonnell Douglas Corp. , 745 S.W.2d 661, 661-62 (Mo. banc 1988), wherein the Supreme Court determined there was no "handbook exception" to the employment-at-will doctrine in a wrongful discharge case. Johnson is inapplicable in this case where there is an employment contract that expressly incorporates the terms of the handbook. As the Supreme Court noted in Dunn v. Industrial Group, Inc. v. City of Sugar Creek , 112 S.W.3d 421, 435 n. 5 (Mo. banc 2003), "matters incorporated into a contract by reference are as much a part of the contract as if they had been set out in the contract in haec verba."
In his final point, Makarov contends that even if the Faculty Handbook was included in the contract, "the terms contained therein are too vague to permit enforcement." He argues that the meaning of the term "fairness" is arbitrary and cannot be objectively measured. While the general concept of fairness may be subject to interpretation, "[a] contract should not be held void for uncertainty unless there is no possibility of giving meaning to the agreement." Bldg. Erection Servs. Co. v. Plastic Sales Mfg. Co. , 163 S.W.3d 472, 477 (Mo.App. 2005).
The term "fairness" must be construed in the overall context of the employment agreement and the duty of faculty members to serve the interests of the students for whom the College exists. McGilley v. McGilley , 951 S.W.2d 632, 637 (Mo.App. 1997) (court is required to examine the contract as a whole to determine its meaning and purpose). Fairness is not an arcane or unusual term, nor is it a term of art that requires specialized training or experience to understand. Contractual language must be interpreted based on the plain and ordinary meaning of the words used, or the meaning that a person of average intelligence, knowledge, and experience would deem reasonable. Bailey v. Federated Mut. Ins. Co. , 152 S.W.3d 355, 357 (Mo.App. 2004). We see no reason that the jury in this case, presumably composed of average people, would have had difficulty understanding the plain and ordinary meaning of fairness in the context of Makarov's role as faculty member of the College. At a minimum, the concept of fairness would certainly preclude giving blatant false testimony in the course of a student displinary proceeding. Accordingly, the contract was not void for vagueness.
CONCLUSION
We reverse the trial court's judgment in favor of the College on the fraudulent misrepresentation claim. The cause is remanded for entry of a judgment in Verni's favor based on the jury's verdict awarding $20,000 on the fraudulent misrepresentation claim. The trial court's judgment is affirmed on all remaining points.
All concur.