BSCR Firm News/Blogs Feed Sep 2021 00:00:00 -0800firmwise Court of Appeals Finds Arbitrator Lacked Authority to Resolve Automobile Repossession Dispute Sep 2021Missouri Law Blog<p>The Missouri Court of Appeals, Western District, recently <a href="">reversed</a> a trial court decision and subsequent arbitration award in favor of an automobile repossessor. In Car Credit, Inc. v. Pitts, the Court of Appeals held that the trial court incorrectly allowed arbitration of Pitts&rsquo; claims against Car Credit. The contract at issue designated the National Arbitration Forum (&ldquo;NAF&rdquo;) as arbitrator of disputes arising between Car Credit and Pitts related to the vehicle purchase.&nbsp; At the time Pitts filed her lawsuit, the NAF was not available to serve as arbiter.&nbsp; Consequently, Car Credit could not resolve Pitts&rsquo; claims through arbitration.&nbsp;&nbsp;</p> <p>Following Car Credit&rsquo;s repossession of her vehicle in 2015, Pitts sued Car Credit and claimed breach of contract.&nbsp; Pitts also sought to pursue a class action lawsuit against Car Credit.&nbsp; Pitts alleged Car Credit engaged in a &ldquo;deceptive pattern of wrongdoing . . . regarding collection of alleged deficiencies.&rdquo;&nbsp; Car Credit moved to compel arbitration of Pitts&rsquo; claims.&nbsp; Pitts purchased the vehicle at issue from Car Credit in 2011 and financed the purchase.&nbsp; Pitts signed an arbitration agreement at the time of purchase:</p> <p style="margin-left: 40px;">You and we [Car Credit] agree that if any Dispute arises, either you or we may choose to have the Dispute resolved by binding arbitration under the rules then in effect of the Arbitration Organization shown below (if no Arbitration Organization is shown below, the Arbitration Organization shall be the National Arbitration Forum). If such rules conflict with this Arbitration Agreement, the terms of this Arbitration Agreement shall apply.</p> <p>While the arbitration clause referenced an arbitration organization &ldquo;listed below,&rdquo; the arbitration agreement did not identify any specific organization, leaving the NAF as the applicable arbitration organization.&nbsp; Car Credit cited this arbitration agreement and moved to compel arbitration.&nbsp; Pitts correctly pointed out that the NAF was no longer available to serve as arbitrator.&nbsp; Pitts argued that since the NAF was the sole designated arbitration agency and was not available, the court should not compel arbitration.&nbsp; The NAF stopped providing arbitration services in 2009 after Minnesota&rsquo;s Attorney General sued it for alleged consumer fraud, false advertising, and deceptive trade practices.</p> <p>The trial court denied Car Credit&rsquo;s first motion to compel arbitration.&nbsp; However, after Pitts moved to certify the class action claims against Car Credit, Car Credit made a renewed motion to compel arbitration.&nbsp; At the time, the Missouri Court of Appeals had recently held that an arbitration agreement was enforceable even though it designated the NAF as arbitrator in <i>A-1 Premium Acceptance v. Hunter</i>, WD79735, 2017 WL 3026917, at * 5 (Mo. App. W.D. July 18, 2017).&nbsp; The trial court granted Car Credit&rsquo;s renewed motion and Pitts&rsquo; claims proceeded to arbitration.&nbsp; After the trial court granted arbitration of Pitts&rsquo; claims, the Missouri Supreme Court overruled the Court of Appeals&rsquo; decision in the separate case,<i> A-1 Premium Acceptance v. Hunter</i>, 557 S.W.3d 923, 929 (Mo. banc 2018), and held that separate organization could not arbitrate disputes where the NAF was unavailable.&nbsp;</p> <p>Meanwhile, in Pitts&rsquo; case, since the NAF was unavailable, an arbitrator from the American Arbitration Association (&ldquo;AAA&rdquo;) reviewed Pitts&rsquo; claims.&nbsp; That arbitrator found in favor of Car Credit.&nbsp; Based on that determination, the trial court entered judgment in favor of Car Credit and decertified the class action claims.&nbsp; Pitts appealed.&nbsp;</p> <p>The Court of Appeals reversed, holding that since Pitts and Car Credit agreed to resolve their disputes before the NAF, the AAA arbitrator lacked the authority to determine the validity of Pitts&rsquo; claims.&nbsp; The appellate Court held that the applicable federal law&mdash;the Federal Arbitration Act&mdash;does not require a court to compel arbitration when the parties agree to arbitrate only before a specified arbitrator.&nbsp; Furthermore, the Missouri Supreme Court&rsquo;s recent decision in <i>A-1 Premium Acceptance v. Hunter </i>was on point.&nbsp; In both cases, the parties agreed that the NAF would resolve disputes: &ldquo;[T]he agreement clearly provided the parties the opportunity to identify an organization other than NAF, and, with equal clarity, the parties unambiguously declined to do so . . .&rdquo;</p> <p>&nbsp;While Car Credit will have the opportunity to appeal this decision to the Missouri Supreme Court, it is likely that the recent decision in <i>A-1 Premium Acceptance v. Hunter </i>will result in Pitts&rsquo; claims against Car Credit, including Pitts&rsquo; class action claims, moving forward.&nbsp; If the applicable arbitration agreement had designated a different arbitrator from the NAF, or had provided an alternative arbitrator, Pitts&rsquo; claims likely would have been resolved through arbitration.&nbsp; Careless drafting was also a key factor here.&nbsp; Pitts entered into this agreement in 2011, nearly two years <u>after</u> the NAF had stopped arbitration.&nbsp; Had the applicable arbitration agreement been updated to remove the NAF as arbitrator and designate a different organization after Minnesota&rsquo;s lawsuit in 2009, Car Credit may have been able to successfully compel arbitration.&nbsp; Parties seeking to resolve disputes through arbitration should be careful to ensure their agreements are up to date with the current law.&nbsp;&nbsp;</p> to Basics: Missouri Court of Appeals Highlights Importance of "Plain-Meaning" Rule in Contract Interpretation Sep 2021Missouri Law Blog<p>The Eastern District of the Missouri Court of Appeals <a href="">reversed</a> a trial court&rsquo;s grant of summary judgment in <i>Pelopidas, LLC et al. v. Keller</i> due to that court&rsquo;s erroneous contract interpretation, and instead ordered that summary judgment be entered for the opposing party. In its ruling, the Court of Appeals underscored the basic tenets of contract interpretation and highlighted the role of the American Bar Association&rsquo;s <i>A Manual of Style for Contract Drafting</i> as &ldquo;a highly regarded authority on contract drafting.&rdquo;</p> <p>The case originated from a 2016 dispute concerning the management of a commercial enterprise jointly owned by ex-spouses. The parties entered into a settlement agreement in September 2019, whereby the ex-wife (Keller) agreed to transfer her 50% ownership in the business to Respondents (Pelopidas, LLC and Brown) in exchange for compensation of $8.85 million. Following the September 2019 settlement agreement, the timing of the Keller&rsquo;s transfer of her Pelopidas stock became a point of contention between the parties, as the contract itself did not contain a date of transfer. Respondents sued to enforce the terms of the settlement agreement, claiming that Keller had transferred her 50% ownership interest effective as of the date of the settlement agreement; seeking to enjoin Keller from claiming she still had an ownership interest in the company; instructing the parties to finalize the settlement under which Keller was to be paid $1.1 million that Brown had placed in escrow; and awarding Respondents their reasonable attorneys&rsquo; fees. Keller counterclaimed, seeking damages for Respondents&rsquo; alleged failure and refusal to make an accelerated payment of $8.6 million pursuant to the terms of the settlement agreement.</p> <p>The disputed language in the settlement agreement reads as follows: &ldquo;&hellip; [Keller&rsquo;s] stock <b><i>shall be</i> </b>surrendered/sold, escrowed and pledged back to plaintiff.&rdquo; Respondents argued that the language required Keller&rsquo;s stock to be immediately transferred upon the date of settlement, September 30, 2019. Keller contended that, according to the settlement agreement&rsquo;s language, the transfer would become effective on &ldquo;some future date (i.e., whenever the parties could negotiate, draft, and execute the necessary supplemental documentation).&rdquo;</p> <p>The trial court granted summary judgment in favor of the Respondents, finding that &ldquo;Keller surrendered, transferred, and assigned all right, title, and interest in Pelopidas, LLC effective September 20, 2019.&rdquo; &nbsp;The trial court likewise denied Keller&rsquo;s cross-motion for summary judgment, and awarded Respondents over $400,000 in attorneys&rsquo; fees.</p> <p>On appeal, Keller argued that the lower court erred and that Respondents were not entitled to judgment as a matter of law because the settlement agreement &ldquo;contained a promise of <i>future performance</i> regarding the transfer of her stock in Pelopidas to Brown.&rdquo;&nbsp; Rather, Keller argued, she was entitled to summary judgment, ordering that payment be made at some reasonable future date. The Court of Appeals agreed with Keller.</p> <p>The appellate court noted that summary judgment in contract interpretation disputes is not appropriate where the contract language is ambiguous or requires a factual determination by the court. But here, there was no dispute that the contract language required Keller to transfer her stock, and the only question at issue was <i>when </i>that transfer should occur. That issue, the Court of Appeals concluded, was ripe for summary disposition.</p> <p>On the matter of contract interpretation, the appellate court emphasized the familiar principle that the judiciary should use the &ldquo;plain, ordinary, and usual meaning of the contract&rsquo;s words&rdquo; in order to give effect to the intention of the contracting parties. In determining the timing of Keller&rsquo;s stock transfer to Respondents, the court ruled that the use of &ldquo;<i>shall be</i>&rdquo; in the parties&rsquo; settlement agreement imposed a <i>future</i> obligation on Keller and did not create a requirement for <i>immediate</i> performance.</p> <p>In its decision, the court endorsed Keller&rsquo;s citations to the ABA<a href=""><i> Manual of Style for Contract Drafting</i></a>,<i> </i>which instructs that contract drafters can select between &ldquo;language of performance&rdquo; and &ldquo;language of obligation&rdquo; among other types operative contract language. Language of performance &ldquo;expresses actions accomplished by means of signing the contract itself&rdquo; and is typically accompanied by use of the word &ldquo;hereby.&rdquo; Language of obligation &ldquo;is used to state any duty a contract imposes on one or more parties and is typically accomplished by the use of the word &ldquo;shall.&rdquo;&rdquo; The court further emphasized that because the English language does not contain a future tense, &ldquo;shall and will have come to be used with future time.&rdquo; The court further instructs that, even though &ldquo;shall&rdquo; is &ldquo;now used in a variety of other ways, &ldquo;in the stylized context of the language of business contracts &hellip; <i>shall</i> continues to serve as the principal means of expressing obligations.&rdquo; The court also found that Keller&rsquo;s interpretation of &ldquo;shall&rdquo; was consistent with dictionary definitions for the term.</p> <p>Based on their findings, the appellate court reversed the trial court&rsquo;s grant of summary judgment against Keller and instead directed the circuit court to enter judgment for Keller, plus interest and attorneys&rsquo; fees.</p> <p>This case serves as an important reminder to go back to basics when drafting business contracts in Missouri. Drafters must pay special attention to the plain language meaning of the language they choose, to avoid ambiguity and ensure that the contract accurately reflects the intention of the parties. And they should pay special heed to the distinction between &ldquo;language of performance&rdquo; and &ldquo;language of obligation&rdquo;.<br /> <br /> <em>* Hannah D. Chanin assisted in the research and drafting of this post.&nbsp; Chanin earned her J.D. from Washington University School of Law in St. Louis this spring and is a current candidate for admission to the Missouri Bar.&nbsp; &nbsp;</em></p> Court of Appeals affirms denial of motion to compel arbitration based on contract of adhesion Aug 2021Missouri Law Blog<p>The Eastern District Missouri Court of Appeals recently affirmed a trial court decision that denied Verizon&rsquo;s motion to compel arbitration. In <i>Rose v. Verizon Wireless Services, LLC, </i>the Court of Appeals held that an arbitration provision was not enforceable because the contract at issue was an unenforceable contract of adhesion and did not match the reasonable expectations of the parties.</p> <p>Plaintiff Breanna Rose sued Verizon Wireless and its employee Santiago Sabala, Jr. based on a visit to a Verizon store in St. Louis County to exchange her iPhone 6s for a newer model. Rose alleged that Sabala took her iPhone into the back of the store, purportedly to evaluate its condition for the trade in; but that four months later, she discovered Sabala sent an email from Rose&rsquo;s phone to Sabala&rsquo;s email address, attaching intimate photographs of Rose. Obtaining private, intimate images of a person without their consent is a felony under Missouri law. R.S. Mo &sect; 573.110.2. Rose claimed negligent infliction of emotional distress and invasion of privacy by Sabala, and negligence and negligent hiring, retention and supervision by Verizon Wireless Services, as the employer of Sabala.</p> <p>Verizon moved to compel arbitration. Verizon argued that Rose agreed to Verizon&rsquo;s customer agreement when she purchased her iPhone 6s. That agreement contained a clause requiring arbitration of any customer dispute, under the Federal Arbitration Act:</p> <p style="text-align: left; margin-left: 40px;">ANY DISPUTE THAT IN ANY WAY RELATES TO OR ARISES OUT OF THIS AGREEMENT OR FROM ANY EQUIPMENT, PRODUCTS AND SERVICES YOU RECEIVE FROM US (OR FROM ANY ADVERTISING FOR ANY SUCH PRODUCTS OR SERVICES), INCLUDING ANY DISPUTES YOU HAVE WITH OUR EMPLOYEES OR AGENTS, WILL BE RESOLVED BY ONE OR MORE NEUTRAL ARBITRATORS . . ..</p> <p>Rose argued that Verizon&rsquo;s customer agreement constituted a contract of adhesion. Contracts of adhesion are typically contracts offered on a &ldquo;take this or nothing basis,&rdquo; as opposed to a contract where the terms are negotiated by the parties. <i>Swain v. Auto Servs., Inc.</i>, 128 S.W.3d 103, 107 (Mo. App. E.D. 2003). Most people have experienced contracts of adhesion when scrolling through lengthy terms and conditions of service and clicking &ldquo;accept,&rdquo; usually without actually reading the terms and conditions. The Circuit Court agreed with Rose, and denied Verizon&rsquo;s motion to compel arbitration. Ordinarily parties must wait to appeal until a final judgment is entered, but Missouri law allows an immediate appeal from an order denying an application to compel arbitration. &sect; 435.440.1(1), RSMo. Verizon appealed.</p> <p>The appellate Court ruled against Verizon and affirmed the circuit court&rsquo;s decision to deny arbitration. As the appellate Court noted, contracts of adhesion can be enforceable, depending on whether the contract matches the reasonable expectations of the parties. However, the store receipt signed by Rose when she purchased her phone did not contain the above arbitration clause itself, but merely referenced the online customer agreement and arbitration, as follows (emphasis added):</p> <p style="margin-left: 40px;">I AGREE TO THE CURRENT VERIZON WIRELESS CUSTOMER AGREEMENT (WITH EXTENDED LIMITED WARRANTY/SERVICE CONTRACT, IF APPLICABLE), INCLUDING THE TERMS AND CONDITIONS OF MY PLAN AND ANY OPTIONAL SERVICES I HAVE AGREED TO PURCHASE AS REFLECTED ON THE SERVICE SUMMARY, ALL OF WHICH I HAVE HAD THE OPPORTUNITY TO REVIEW. I UNDERSTAND THAT I AM AGREEING TO AN EARLY TERMINATION FEE PER LINE, LIMITATIONS OF LIABILITY FOR SERVICE AND EQUIPMENT, <b><u>SETTLEMENT OF DISPUTES BY ARBITRATION INSTEAD OF JURY TRIALS</u></b>, AND OTHER IMPORTANT TERMS IN THE CUSTOMER AGREEMENT. I AM AWARE THAT I CAN VIEW THE CUSTOMER AGREEMENT ANYTIME AT VERIZONWIRELESS.COM OR IN MY VERIZON ACCOUNT.</p> <p>The appellate Court noted that while the receipt Rose signed does mention settling disputes by arbitration, that reference was merely a portion of a single sentence and did not set out the full terms of arbitration, as described in Verizon&rsquo;s customer agreement. The full customer agreement was a separate document from the one signed by Rose. The appellate Court also ruled that the circumstances of the transaction weighed against Verizon, in that Santiago&rsquo;s alleged actions did not relate to Verizon&rsquo;s telecommunications business. Because the reasonable expectations of the parties would not include arbitrating disputes related to a Verizon employee allegedly obtaining intimate photographs of a customer, the appellate Court held that Verizon was not entitled to arbitration.</p> <p>Arbitration is often favored as a less expensive method of resolving disputes. Parties can forego the expense related to interviewing and selecting jurors and generally reach a quicker resolution, while trials may take months or even years. The appellate Court&rsquo;s decision does not mean that all contracts of adhesion are unenforceable, or even that contracts of adhesion containing arbitration clauses are unenforceable. The Court emphasized that its decision was narrow and based on the specific allegations of misconduct by Sabala. If the allegations were different &ndash; for example, if an employee dropped and broke a customer&rsquo;s phone while handling it &ndash; the appellate Court may have permitted arbitration. Likewise, if the full terms regarding arbitration were contained in the receipt signed by Rose, the appellate Court may have permitted arbitration. Parties entering into written contracts should be careful to ensure both sides fully appreciate the contractual terms they are agreeing to, especially terms requiring arbitration of disputes.&nbsp;</p> Consequences of Extending Counteroffers to Pre-Suit Settlement Demands Jul 2021Missouri Law Blog<p><a href=""><i>Jameson v. Still</i></a>&nbsp;arose from an auto accident between Still&rsquo;s vehicle and Jameson&rsquo;s on New Year&rsquo;s Eve 2018. Jameson&rsquo;s counsel sent a settlement demand for $150,000 or all available coverages to Still&rsquo;s insurer. Jameson&rsquo;s demand was entitled &ldquo;Offer to Settle Pursuant to RSMo &sect;408.040 and RSMo &sect;537.058.&rdquo; By law, offers of settlement made pursuant to &sect; 408.040 and &sect; 537.058 &ldquo;shall remain open&rdquo; for a period of 90 days.</p> <p>Section 408.040 provides that a plaintiff must comply with specific statutory requirements to recover prejudgment interest. Section 537.058 provides that a settlement demand is inadmissible in a bad faith failure to settle claim unless the demand complies with the statute. In compliance with &sect; 408.040 and &sect; 537.058, Jameson&rsquo;s settlement demand stated the &ldquo;offer to settle will remain open for ninety (90) days.&rdquo; Jameson&rsquo;s demand was sent on May 20, 2019 and expired on August 18, 2019.</p> <p>Still&rsquo;s insurer responded to Jameson&rsquo;s settlement demand with an offer of settlement for $24,751 on June 21, 2019. On June 24, 2019, Jameson filed his Petition alleging negligence by Still in St. Louis County Circuit Court. Jameson&rsquo;s Petition alleged, &ldquo;Plaintiff&rsquo;s RSMo section 408.040 offer was rejected on June 21, 2019.&rdquo; On August 6, 2019 Still&rsquo;s insurer offered the applicable policy limits of $100,000. On August 14, 2019 Still&rsquo;s insurer re-offered the $100,000 policy limits. Then, on August 15, 2019, prior to expiration of the original time-limited demand, Still&rsquo;s insurer sent a letter purporting to accept the original May 20, 2019 settlement demand. Still moved for summary judgment, alleging the parties settled the case. The trial court granted that motion. Jameson appealed.</p> <p>Until 2015, Missouri&rsquo;s pre-judgment interest statute contained language specifically addressing rejection of a time-limited demand: &ldquo;2. Any such demand or offer shall be made in writing and sent by certified mail and shall be left open for sixty days <b>unless rejected earlier</b>.&rdquo; &sect; 408.040 2005 Mo. Legis. Serv. H.B. 393 (emphasis added). In 2015, the Missouri legislature amended &sect; 408.040 and extended the time for pre-judgment settlement demands to ninety days. The amended version of &sect;408.040 did not contain the &ldquo;unless rejected earlier&rdquo; language. In her brief in support of her summary judgment motion, Still argued that the removal of the &ldquo;unless rejected earlier&rdquo; language in the amended &sect; 408.040 reflected the legislature&rsquo;s intent that pre-suit settlement demands are not rejected by a counteroffer.</p> <p>The Missouri Court of Appeals disagreed. Longstanding black letter Missouri law provides that a counteroffer operates as a rejection of a contractual offer and as a new offer. Here, Jameson&rsquo;s 90-day settlement demand was a contractual offer of settlement, and Still&rsquo;s June 21, 2019 offer of $24,751 modified the proposed contractual terms. The appellate Court held that in doing so, Still extended a counteroffer.</p> <p>The Court noted two circumstances under Missouri law where contractual offers may be irrevocable: 1) when parties enter into an option contract - inapplicable here - and 2), when a statute mandates the offer is irrevocable. Missouri courts interpret statutes by reviewing the plain and ordinary meaning of the words contained. As the appellate Court noted, &ldquo;[n]either section 408.040 nor section 537.058 use the words <i>irrevocable </i>or<i> non-rejectable</i> or their equivalents.&rdquo; &nbsp;It thus concluded that the Missouri legislature did not intend to make time-limited settlement demands pursuant to &sect; 408.040 and &sect; 537.058 irrevocable.</p> <p>The appellate Court reversed and remanded the case to the trial court. Still has applied to have the case transferred to the Missouri Supreme Court, and that application is still pending. Given the frequency of pre-suit settlement demands in litigation, it is possible the Missouri Supreme Court may accept transfer of this matter to resolve a question of general importance.</p> <p>Parties should be aware of the consequences of time-limited demands before providing a response to a pre-suit settlement demand. While this case is not yet fully resolved, and it is possible the Missouri Supreme Court may choose to weigh in, it appears the longstanding rule that a counteroffer constitutes rejection and a new offer still applies in the context of settlement demands made pursuant to &sect;408.040 and &sect;537.058, RSMo. Accordingly, a response to a pre-suit settlement demand that modifies the terms - here, the amount of settlement - may function as a counteroffer. Parties who extend counteroffers to pre-suit settlement demands should carefully evaluate the potential for excess liability and a corresponding bad faith claim.&nbsp;</p> Liability Bill Update - Governor Signs Legislation Shielding Healthcare Providers and Others From Most COVID-Related Lawsuits Jul 2021Missouri Law Blog<p>As discussed in our<u><a href=";an=116511&amp;format=xml&amp;stylesheet=blog&amp;p=5258"><u>June 1, 2021, blog post</u></a></u>, the Missouri Legislature passed a COVID liability bill (SB 51) that contains protections for healthcare providers, manufacturers, and other businesses from tort liability related to the COVID-19 pandemic. On July 7, Governor Parson signed the legislation, which has an effective date of August 28, 2021.</p> <p>Whether COVID-19 tort liability protections are reasonable and necessary is a hotly debated topic among various stakeholders, including the Missouri Chamber of Commerce, the American Medical Association, and trial lawyer organizations.&nbsp; Proponents of the new law believe it is critical to the State's economic recovery and to stopping those who would seek to profit from the pandemic. &nbsp;Opponents argue that the law will provide blanket immunity to negligent nursing homes and others who harm innocent Missourians.</p> <p>As discussed in our&nbsp;<a href=";an=114077&amp;format=xml&amp;stylesheet=blog&amp;p=5258">December 21, 2020 blog post</a>, Governor Parson has encouraged lawmakers to author this sort of tort liability legislation since at least November 2020, when he issued a written proclamation on the topic.&nbsp; SB 51 passed the Missouri Senate in February 2021.&nbsp; A key benefit of the bill to defendants generally is protection from suits stemming from COVID-19 exposures unless a plaintiff can show clear and convincing evidence of recklessness or willful misconduct and the exposure caused personal injury.&nbsp;</p> <p>There are protections in the bill specific to healthcare providers.&nbsp; In the healthcare context, the bill states that &ldquo;[a]n elective procedure that is delayed for good cause shall not be considered recklessness or willful misconduct.&rdquo;&nbsp; There is also a shortened limitations period for bringing a COVID-19 medical liability action.&nbsp; Such an action &ldquo;may not be commenced in any Missouri court later than one year after the date of the discovery of the alleged harm, damage, breach, or tort unless tolled for proof of fraud, intentional concealment, or the presence of a foreign body which has no therapeutic or diagnostic purpose or effect.&rdquo;&nbsp;</p> <p>The bill also limits punitive damages in a COVID-19 related action to a maximum of nine times the compensatory damages.&nbsp; However, &sect; 510.265, RSMo. (2005), may provide greater protection to healthcare provider defendants, in that it limits punitive damages to $500,000, or five times the net amount of the judgment awarded to the plaintiff, whichever is greater.</p> <p>SB 51 comes in the wake of the filing of thousands of COVID-related lawsuits nationally.&nbsp; Missouri alone has seen more than 140 COVID-related suits since the start of 2020.&nbsp; One potential unintended consequence of this legislation could be a sharp rise in COVID-related suits filed hastily in Missouri courts during the several weeks leading up to the August 28 effective date to circumvent the new law.&nbsp; Should this occur, many of these suits could be meritless and lacking adequate pre-suit investigation.&nbsp;</p> <p>Missouri will not be alone in providing COVID-19 tort liability protections.&nbsp; Other states have done so through executive order and/or legislative action.&nbsp; In addition, federal liability protections are already available under the 2005 Public Readiness and Emergency Preparedness (PREP) Act, which provides immunity to certain defendants, including healthcare provider defendants in certain situations.</p> <p>We will continue to monitor the implementation of this new law and its impact on our courts.&nbsp;&nbsp;</p> Now, You're an All Star, Get Your Punitives, Get Paid. Missouri Court of Appeals Finds Punitive Damages Cap Unconstitutional Jul 2021Missouri Law Blog<p>The Missouri Court of Appeals, Western District, recently held, in a case involving an employee&rsquo;s breach of his duty of loyalty to his employer, that a statutory cap on punitive damages was a violation of the prevailing plaintiff&rsquo;s constitutional right to trial by jury. Referring back to the establishment of the Missouri Constitution, the court of appeals reexamined the constitutionality of the punitive damages cap.</p> <p><i>All Star Awards v. Halo</i> involved an employee at All Star who decided to leave his employer to work for a competitor. Before leaving All Star, however, the employee poached a few clients from his former employer by telling the clients that All Star was experiencing cash flow and ownership issues. Finding this behavior reprehensible, the trial court stated that &ldquo;taking business from a small mom-and-pop awards and promotions shop with supposed cash-flow issues <i>while its sales manager was still in its employ</i> is the definition of evil motive and reckless indifference.&rdquo; The jury, like the trial court, also upset with the defendants, awarded actual damages of $512,000, and punitive damages of $5.5 million. However, the trial court reduced the punitive damages by almost half ($2,627,709) on the basis of Section 510.265, which imposed a punitive-damages cap, because All Star&rsquo;s claims &ldquo;were not common law claims.&rdquo;</p> <p>On appeal, All Star contended that the trial court misapplied the section on the punitive-damages cap, violating All Star&rsquo;s right to a jury. Citing the case of <i>Lewellen,</i> the court of appeals stated that they would review constitutional challenges <i>de novo</i>, without regard to the trial court&rsquo;s decision.</p> <p>The Missouri Constitution states that the right to a jury trial &ldquo;as heretofore enjoyed shall remain inviolate.&rdquo; In other words, any changes to the rights to a jury as existed when the constitution was adopted in 1820 are unconstitutional. Halo contended that there were no claims like the breach of duty of loyalty in Missouri before the Constitution was signed and, therefore, it would not have been recognized. All Star argued to the contrary that it does not matter if Missouri recognized the cause of action in 1820, but rather whether this claim for relief existed in English common law prior to the signing of the Missouri constitution.</p> <p>The Court of Appeals agreed with All Star finding these types of loyalty and tortious interference claims have been recognized under English common law since at least 1621. Therefore, the date that the Missouri courts recognized a particular common law cause of action is irrelevant. Rather, the more important question to ask is, &ldquo;did the action or an analogous action exist at common law when our constitution was adopted?&rdquo; &nbsp;Finding the answer in the affirmative here, the court found the punitive damage cap to be unconstitutional.</p> <p>Although Halo raised a concern that this ruling could radically expand <i>Lewellen</i>, the Court disagreed, concluding that Missouri&rsquo;s common law is based on the common law of England as of 1607 - the common law claims of England became a part of Missouri common law when the state constitution was adopted; and that its refusal to apply the damages cap was therefore consistent with <i>Lewellen</i>. In the back and forth on the application of a cap on punitive damages, this is a win for the &ldquo;no-cap&rdquo; folks.&nbsp;Whether this Court of Appeals decision is the last word on this subject remains to be seen.<br /> <br /> <em>* Avery Goodman, a summer law clerk in the firm's St. Louis office,&nbsp;assisted in the research and drafting of this post.&nbsp;Goodman is a&nbsp;rising 3L student at&nbsp;Washington University School of Law.</em></p> Question of Separation of Powers: The Battle Over Missouri Civil Discovery Rules Jun 2021Missouri Law Blog<p>The Missouri legislature passed a bill to amend certain rules of court, including civil discovery rules 56.01, 57.01, 57.03, 57.04, 58.01, 59.01, and 61.01, in 2019, via Senate Bill 224. These particular rules relate to the scope of discovery, interrogatories, and requests for production of documents and things. &nbsp;The governor signed the bill on July 10, 2019.&nbsp; Pursuant to Article III, &sect;&nbsp;20 of the Missouri Constitution, the General Assembly&rsquo;s regular session terminates on May 30 of each year.&nbsp; &ldquo;A law passed by the general assembly takes effect ninety days after the adjournment of the session at which it is enacted.&rdquo;&nbsp; Mo. Rev. Stat. &sect;&nbsp;1.130.&nbsp; This equates to August 28 of the year in which the law is passed.&nbsp; Accordingly, SB 224 should have become effective on August&nbsp;28, 2019.&nbsp;</p> <p>We believe that it did.&nbsp;However, the Missouri Supreme Court resisted the General Assembly&rsquo;s amendment of the rules of civil procedure. &nbsp;The court initially noted that SB 224 &ldquo;purports to amend&rdquo; the rules, subsequently failed to acknowledge SB 224 at all, and ultimately, in March 2021, adopted its own version of the affected rules to take effect September&nbsp;2, 2021.&nbsp;This leaves civil litigators in something of a limbo state as to what are the current versions of rules 56.01, 57.01, 57.03, 57.04, 58.01, 59.01, and 61.01.&nbsp;As discussed herein, the legislature had the legal authority to enact modifications to the court rules, including the rules of civil procedure, and the Missouri Supreme Court&rsquo;s March 2021 order does not invalidate the General Assembly&rsquo;s law under well-settled principals of the separation of powers.&nbsp;Indeed, the Supreme Court&rsquo;s order makes no reference at all to SB 224.&nbsp;It is not a finding that SB 224 was enacted without authority.</p> <p>The Supreme Court&rsquo;s own precedent admonishes against the approach it has taken with respect to SB 224.&nbsp;&ldquo;It is essential that the bench, the bar, and the public be clearly advised as to the procedural rules that are actually in effect at a given time.&rdquo;&nbsp;<i>State ex rel. K.C. v. Gant</i>, 661 S.W.2d 483, 485 (Mo. 1983).&nbsp;Rather than any express order addressing the status of SB 224, the Supreme Court dropped a footnote on its rules website, designating the law as one that &ldquo;purports&rdquo; to amend the rules, without <b><i>clearly advising</i></b> the bench, the bar, or the public as to what the rules are post-SB 224 and before the effective date of the court&rsquo;s own rule amendments ordered as of March&nbsp;2, 2021.&nbsp;Indeed, there will be a two-year period between the effective date of SB&nbsp;224 and the Supreme Court&rsquo;s own amendment of Rules 56.01, 57.01, 57.03, 57.04, 58.01, 59.01, and 61.01, in which there is an unsettled dispute as to what the rules of civil procedure even are.</p> <p>Article V, &sect;&nbsp;5 of the Missouri Constitution expressly authorizes the General Assembly to amend court rules: &ldquo;The supreme court may establish rules relating to practice, procedure and pleading for all courts . . .&nbsp;Any rule may be annulled or amended in whole or in part by a law limited to the purpose.&rdquo;&nbsp;Accordingly, the General Assembly had the authority to amend, in whole or in part, court rules, by a law &ldquo;limited to the purpose.&rdquo;</p> <p>Was SB 224 &ldquo;limited to the purpose&rdquo; of amending the court rules?&nbsp;Absolutely.&nbsp;SB 224, in its entirety, was a bill &ldquo;to amend supreme court rules 25.03, 56.01, 57.01, 57.03, 57.04, 58.01, 59.01, and 61.01, relating to discovery.&rdquo;&nbsp;&ldquo;For a statute to qualify as one &lsquo;limited to the purpose&rsquo; of annulling or amending a rule, it &lsquo;must refer expressly to the rule&rsquo; and be limited to the purpose of amending or annulling it.&rdquo;&nbsp;<i>City of Normandy v. Greitens</i>, 518 S.W.3d 183, 201 (Mo. 2017).&nbsp;SB 224 expressly refers to the rules to be amended, and is limited to the purpose of amending these rules.&nbsp;On the face of SB 224, it addresses no matter other than changes to the listed court rules.</p> <p>The counterargument on whether SB 224 was &ldquo;limited to the purpose&rdquo; of amending court rules is the claim that, because multiple rules were amended in one bill, the bill was not limited to the purpose of amending &ldquo;any rule.&rdquo;&nbsp;The judicial doctrine adopted by the Missouri Supreme Court in case law is simply that the bill must identify the rule to be amended and do nothing but amend the rule.&nbsp;No prior case has held that the constitution requires a separate bill for each rule to be amended, nor is that interpretation compelled by Article V, &sect;&nbsp;5.&nbsp;The only circumstances in which the Missouri Supreme Court has previously found that the General Assembly failed to properly exercise its constitutional authority to amend court rules are (1) where the bill fails to explicitly identify the rule amended, and (2) where the bill was a &ldquo;massive piece of legislation&rdquo; that enacted or modified statutes other than the court rules.&nbsp;<i>See State ex rel. Collector of Winchester v. Jamison</i>, 357 S.W.3d 589, 593 (Mo. 2012).</p> <p>To the extent that opponents of SB 224 might argue that there was insufficient time between the signing of SB 224 and its effective date on August&nbsp;28, 2019, Article V, &sect;&nbsp;5 prevents <b><i>court-established</i></b> rules from taking effect sooner than six months after its publication by the Supreme Court.&nbsp;There is no corresponding restriction in the Constitution on actions by the General Assembly to annul or amend court rules.&nbsp;Indeed, it would be highly impractical for this to be the case, as the General Assembly is only in general session between &ldquo;the first Wednesday after the first Monday in January&rdquo; and May 30.&nbsp;Missouri Constitution, Article III, &sect;&nbsp;20.&nbsp;Any bills enacted during this approximately four-month session take effect by August&nbsp;28 of the same year.&nbsp;Mo. Rev. Stat. &sect;&nbsp;1.130.</p> <p>The Missouri Supreme Court has repeatedly recognized that, in adopting procedural rules, it may be &ldquo;overruled&rdquo; by the General Assembly if it chooses to annul or amend the Court&rsquo;s rules.&nbsp;<i>See State v. Reese</i>, 920 S.W.2d 94, 95 (Mo. 1996); <i>Ostermueller v. Potter</i>, 868 S.W.2d 110, 111 (Mo. 1993); <i>see also State ex rel. Kinsky v. Pratte</i>, 994 S.W.2d 74, 76 (Mo. App. E.D. 1999) (&ldquo;the constitution did not make its grant of rule making power to the judiciary exclusive. &nbsp;.&nbsp;.&nbsp;. &nbsp;The legislature continues to have the power to establish procedures&rdquo;).&nbsp;&ldquo;The constitution does not make this power the exclusive province of the judiciary.&rdquo;&nbsp;<i>In re Marriage of Chastain</i>, 1996 Mo. LEXIS 67, at *7 (Mo. Oct.&nbsp;21, 1996).&nbsp;The court recognizes that Article V, &sect;&nbsp;5 strikes a balance between the legislature and the court, with express limitations on the court&rsquo;s authority.&nbsp;<i>See, e.g., Goldsby v. Lombardi</i>, 559 S.W.3d 878, 881 (Mo. banc 2018) (recognizing that the section carves out authority for each branch).</p> <p style="margin-left: 40px;">The Constitution of 1945 introduced an innovative distribution of power between the General Assembly and this Court in the formulation of rules of practice and procedure for the courts of the state. Procedural requirements, historically, had been prescribed by statute. This Court now may adopt rules of practice and procedure, and rules so adopted, with a few exceptions not here material, may even go to the point of modifying existing statutory requirements. The apparent purpose of the new constitutional procedure is to relieve the legislature of the burden of continuous surveillance of details of judicial procedure, <b>while preserving its ultimate authority through the power to amend or annul any rule adopted by the Court</b> by means of &quot;a law limited to the purpose.&quot;</p> <p><i>State ex rel. K.C. v. Gant</i>, 661 S.W.2d 483, 485 (Mo. 1983) (emphasis added).&nbsp;</p> <p>&ldquo;The constitutional prescription of the manner in which the General Assembly must act is of <b>pristine importance</b>.&rdquo;&nbsp;<i>Id.</i> (emphasis added). &nbsp;&ldquo;The constitution, therefore, in no way &lsquo;limit[s] or constrict[s] the power of the General Assembly. Its power is plenary, so long as it follows the constitutional procedure.&rsquo;&rdquo;&nbsp;<i>State ex rel. Collector of Winchester v. Jamison</i>, 357 S.W.3d 589, 592 (Mo. banc 2012) (quoting <i>Grant</i>).</p> <p>The most developed area of Missouri Supreme Court precedent is with respect to rules that it enacts that conflict with pre-existing statutes.&nbsp;The Supreme Court has created a doctrine whereby its rules can purportedly invalidate statutes unless the General Assembly acts to invalidate the court rule.&nbsp;&ldquo;Where such a rule adopted by this court under the express authority of the constitution is inconsistent with a statute and has not been annulled or amended by later enactment of the legislature, the rule supersedes that statute.&rdquo;&nbsp;<i>State ex rel. Peabody Coal Co. v. Powell</i>, 574 S.W.2d 423, 426 (Mo. 1978).&nbsp;Although this is now a decades-old common law rule, it is unclear how this approach is properly reconciled with the Missouri Constitution&rsquo;s separation of powers.&nbsp;However, it is an acknowledgement that the legislature has the authority to countermand the Supreme Court&rsquo;s rules of procedure.</p> <p>It is worth noting that, while Article V, &sect;&nbsp;5 of the Missouri Constitution authorizes the Missouri Supreme Court to enact court rules, &ldquo;The rules shall not change substantive rights, or the law relating to evidence, the oral examination of witnesses, juries, the right of trial by jury, or the right of appeal.&rdquo;&nbsp;There is a branch of the Missouri government that has the authority to change substantive rights and the laws relating to evidence and competence of witnesses &ndash; the General Assembly.&nbsp;Indeed, unlike in many other jurisdictions, Missouri has no rules of evidence, but has many statutes pertaining to evidence and witnesses, including a statute regarding the admissibility of expert testimony.&nbsp;The separation of powers contemplated by the Missouri Constitution evidences an intent to temper the authority of the Missouri Supreme Court, and for the General Assembly to occupy the same sphere of power with respect to amendment of court rules.</p> <p style="margin-left: 40px;">Article II, &sect;&nbsp;1 provides:</p> <p style="margin-left: 80px;">The powers of government shall be divided into three distinct departments&mdash;the legislative, executive and judicial&mdash;each of which shall be confided to a separate magistracy, and no person, or collection of persons, charged with the exercise of powers properly belonging to one of those departments, shall exercise any power properly belonging to either of the others, except in the instances in this constitution expressly directed or permitted.</p> <p>The General Assembly is expressly permitted to exercise power to amend court rules by Article V, &sect;&nbsp;5.&nbsp;Accordingly, it is unclear on what basis the Missouri Supreme Court&rsquo;s skepticism of SB 224 has any legal force or effect.&nbsp;There is no provision in the Missouri Constitution for a &ldquo;pocket veto&rdquo; of legislation by the Missouri Supreme Court.&nbsp;There is no precedent for the Court to simply ignore or refuse to implement legislation without a specific order making findings that the General Assembly acted without authority.</p> <p>We are of the belief, therefore, that the 2019 General Assembly amendments to Rules 56.01, 57.01, 57.03, 57.04, 58.01, 59.01, and 61.01 took effect on August 28, 2019, and will remain in effect until September&nbsp;2, 2021.&nbsp;A redline comparison of the court rules, per the Supreme Court&rsquo;s March&nbsp;2, 2021 order, compared to the provisions of SB 224, can be found&nbsp;<a href="/B07AF5/assets/files/Documents/A Question of Separation of Powers Blog Post Attachment.pdf">here</a>.</p> Inconvenient Forum? Move to Dismiss Before It's Too Late May 2021Missouri Law Blog<p>The Eighth Circuit Court of Appeals recently <a href="">reversed</a> a District Court&rsquo;s dismissal on <i>forum non conveniens</i> grounds, finding that the motion to dismiss was untimely. The Court of Appeals held that the Defendants undermined their own inconvenience arguments by litigating in the forum for 18 months before filing their motion.</p> <p>The doctrine of f<i>orum non conveniens</i> arose out of due process concerns that defendants from across the country (or indeed the world) can be hauled into federal court in far-flung jurisdictions having no significant connection to the case. Courts are also concerned that attractive districts will face the undue financial burden of supporting litigation of claims of no significant interest to the district. Practitioners in the Eastern District of Missouri are no doubt well-versed on these concerns.</p> <p>Defendants can obtain dismissal of a lawsuit filed in an inconvenient forum<i>.</i> But <i>forum non conveniens</i> is mentioned neither in Rule 12 nor anywhere else in the Federal Rules of Civil Procedure, and courts have often held that such motions can be filed at any time, even on the day of trial. If there is no set deadline for when the motion to dismiss must be filed, how can such a motion ever be <i>un</i>timely?</p> <p>The Court of Appeals attempted to answer that question in <i>Hersh v. CKE Restaurants, Holdings, Inc.</i>, No. 19-2794 (Apr. 28, 2021). It held that those seeking to dismiss on <i>forum non conveniens</i> grounds must show that it is <i>actually</i> <i>inconvenient</i> to litigate in the current forum<i> and</i> such a showing should be made at a reasonably early time, lest defendants inadvertently undermine the purported &ldquo;inconvenience&rdquo; of litigating in the forum.</p> <p>The Court of Appeals found that the District Court abused its discretion in granting a motion to dismiss on <i>forum non conveniens</i> grounds. To dismiss on <i>forum non conveniens </i>grounds, the movant must establish that an adequate alternative forum exists. This is essentially any forum in which the defendant can be served. Then the court weights private-interest factors (e.g., location of the parties, attorneys, evidence, and witnesses) and public-interest factors (e.g., choice of law issues, court resources, and strains on the jury pool) to determine whether dismissal is appropriate. The overriding goal is to ensure that the forum is convenient.</p> <p>&nbsp;The <i>Hersh </i>case involved a little boy who was playing in a restaurant playground in Amman, Jordan, and was tragically electrocuted by an exposed wire. The case was filed in the Eastern District of Missouri, the restaurant holding company&rsquo;s home. Yet, the Plaintiffs, several of the Defendants, and most of the witnesses were located in Jordan. Plaintiffs&rsquo; attorneys were located in Michigan. Other potential defendants to implead were located in Jordan and not subject to personal jurisdiction in Missouri. Jordanian law would govern the wrongful death claims and the standard of care. Documents and testimony would have to be translated from Arabic. On these grounds, and others, the District Court granted defendants&rsquo; motion to dismiss for <i>forum non conveniens</i>. At first blush, the District Court&rsquo;s ruling appeared completely reasonable. However, the Court of Appeals held that the District Court abused its discretion and reinstated the case in St. Louis.</p> <p>According to the Court of Appeals, 18 months was just too long to wait to file a motion to dismiss based on <i>forum non conveniens</i>, because all of the factors supporting dismissal were available to the defendants much earlier on in the case. In fact, virtually all of the factors identified by the District Court were apparent or ascertainable from the face of the Complaint. The Court of Appeals did not decide whether timeliness is a public- or private-interest factor, or a separate independent consideration, and did not elaborate further on what constitutes a reasonable amount of time.</p> <p>The Court of Appeals cited <i>In re Air Crash Disaster near New Orleans</i>, 821 F.2d 1147, 1165 (5th Cir. 1987), but did not explicitly adopt its straightforward and well-articulated rule: &ldquo;a defendant must assert a motion to dismiss for <i>forum non conveniens</i> within a reasonable time after the facts or circumstances which serve as the basis for the motion have developed and become known or reasonably known to the defendant.&rdquo; Had the Court adopted this guideline, it might better serve practitioners in evaluating the timeliness of their motions.</p> <p>&nbsp;<u>Takeaways</u>:</p> <p>Although most cases will not have the <i>forum non conveniens</i> issues set out as dramatically as in <i>Hersh</i>, practitioners can take a few lessons from the Court of Appeals opinion.</p> <p>First, if you have considered a motion to dismiss for lack of personal jurisdiction, or if the court has personal jurisdiction only because of a long-arm statute, then you should consider <i>forum non conveniens</i>.</p> <p>Second, evaluate how discovery is progressing early on. If you find that every interview, deposition, accident site visit, or expert consultation involves an associate flying across the country, the current forum may be inconvenient. Go ahead and file your motion now.</p> <p>Third, nothing in the Court of Appeals&rsquo; opinion precludes a motion to dismiss where new information turns up in discovery. However, act quickly once new information arises.</p> <p>Finally, evaluate the alternative forum. In most cases, as in <i>Hersh</i>, the movant is precluded from challenging jurisdiction in the new forum.</p> <p>Here, the District Court&rsquo;s opinion seemed quite persuasive. If not for the passage of 18 months, the Court of Appeals likely would have upheld the dismissal. However, for the Court of Appeals, by litigating in the forum for 18 months, defendants apparently proved that the forum was not inconvenient, after all.</p> an Arbitration Clause Have to Provide for Equivalent Rights and Remedies to Both Sides, in Order to Be Enforceable? Apr 2021Missouri Law Blog<p>The Missouri Court of Appeals for the Southern District recently reversed a Circuit Court decision that denied a corporate defendant&rsquo;s motion to compel arbitration, in <a href=";ci=SD36713&amp;di=169027&amp;so=D"><i>Keeling v. Preferred Poultry Supply, LLC</i></a><i>. </i> Plaintiff Brandon Keeling sued Preferred Poultry Supply, alleging breach of contract, fraudulent misrepresentation, and negligent misrepresentation. Preferred Poultry and Keeling entered into a written contract in May of 2016. Preferred Poultry agreed to construct six broiler chicken buildings on Keeling&rsquo;s poultry farm in Newton, Missouri in exchange for a payment of $2,048,321.00.</p> <p>Following construction of the buildings, Keeling sued Preferred Poultry. Keeling alleged that he discovered defects related to the construction and repairs would cost in excess of $745,516.00. Keeling also alleged Preferred Poultry made false and misleading representations to Keeling. In response, Preferred Poultry filed a combined dispositive motion: a motion to dismiss, or in the alternative, motion to order arbitration. Preferred Poultry attached the contract between Keeling and Preferred Poultry to its motion and highlighted the arbitration clause of the contract, titled &ldquo;<b><u>BINDING ARBITRATION</u></b>&rdquo;:</p> <p style="margin-left: 40px;">All claims, disputes and matters in question arising out of or relating to this Contract or any claimed breach of this Contract shall be decided by binding arbitration in accordance with the Uniform Arbitration Act in force in Arkansas . . . . This agreement to arbitrate shall be specifically enforceable under the Federal Arbitration Act since this Contract involves interstate commerce. . . . The location of the arbitration proceedings shall be in Fayetteville, Arkansas. . . . Any award of arbitration may be entered in the Circuit Court for Washington County, Arkansas and will have the force of a judgment from that court.</p> <p>The contract provided that Arkansas law would govern disputes between Keeling and Preferred Poultry. The trial court denied Preferred Poultry&rsquo;s motion to compel arbitration. Preferred Poultry appealed that denial. Missouri law allows the right to an immediate appeal of an order denying a stay of proceedings relating to a matter that may be arbitrable. &nbsp;If Preferred Poultry had not appealed, the case would have continued in Newton County Circuit Court through the completion of a trial.</p> <p>On appeal, Keeling first challenged Preferred Poultry&rsquo;s appeal as premature. Typically, a party may only appeal a final judgment which disposes of all issues in a case. But Missouri law (&sect; 435.440.1(1), RSMo.), federal law (9 U.S.C.A. &sect; 16(a)(1)(C)), and Arkansas law (Ark. Code Ann. &sect; 16-108-228(a)(1)) all specifically allow an appeal from an order denying an application to compel arbitration. The appellate Court applied Missouri law and deemed the appeal timely.</p> <p>Keeling also argued that his tort claims for negligent misrepresentation and fraudulent misrepresentation should not be arbitrated because under Arkansas law, tort claims are not subject to arbitration. The appellate Court disagreed. The Court cited <i>Riley v. Lucas Lofts Investors, LLC</i>, 412 S.W. 3d 285, 290 (Mo. App. E.D. 2013), as well as Arkansas case law, and concluded that Keeling&rsquo;s claims all related to the contract with Preferred Poultry.</p> <p>Even though Keeling characterized his some of his claims as tort claims, the Court determined that he could not avoid the arbitration provision. The Court noted that Keeling&rsquo;s tort claims both sought damages, as opposed to rescission of the contract. Under Missouri law, when damages are sought for claims of poor workmanship, those claims are typically subject to arbitration.</p> <p>Finally, the Court reviewed the arbitration clause in the contract to determine whether it was enforceable. Keeling argued that the arbitration agreement was invalid because the arbitration clause allowed Preferred Poultry to pursue all available rights under any state law, including filing a lien upon Keeling&rsquo;s property. Keeling, however, was limited to arbitration as a remedy. Keeling argued this clause created a non-mutual obligation.</p> <p>The appellate Court rejected this argument. The appellate Court noted that the Federal Arbitration Act does not require mutual obligations to arbitrate. Furthermore, the Court reviewed both Arkansas law and Missouri law, and noted that both states allow non-identical obligations in contracts as a whole, as long as the contract contains sufficient consideration. The appellate Court cited <i>Eaton v. CMH Homes, Inc.</i>, 461 S.W.3d 426, 431 (Mo. banc 2015), where the Missouri Supreme Court found that the trial court erred in denying the defendant&rsquo;s motion to compel arbitration. The appellate Court noted that the arbitration clause in <i>Eaton</i> similarly allowed only the contractor the option to pursue other remedies beyond arbitration, including foreclosure. In <i>Eaton</i>, as here, there was sufficient consideration on both sides: the contractor in <i>Eaton</i> (and Preferred Poultry) agreed to provide a building, and the buyer (and Keeling) agreed to pay a set amount for the building.</p> <p>Accordingly, the appellate Court reversed and remanded the case to the trial court, with directions to refer the case to arbitration, because the parties&rsquo; arbitration agreement was valid and enforceable.</p> <p>The key takeaway from the Court&rsquo;s decision is that arbitration clauses are enforceable under Missouri law, even where they are more favorable to one party, provided there is consideration on both sides. Arbitration is often less expensive than a trial because the rules of evidence are more informal and there is no jury panel. A party in arbitration can spend less time preparing for trial and navigating written discovery. The appellate Court&rsquo;s decision here emphasizes that when both parties agree to arbitration as the forum for resolving their disputes, that contractual agreement will ordinarily be enforced. Keeling and Preferred Poultry agreed to arbitration, and Preferred Poultry was able to successfully enforce arbitration.</p> is Open and Obvious? Time to Ask the Jury. Apr 2021Missouri Law Blog<p><i>Open and obvious:</i> &quot;both the condition and the risk are apparent to and would be recognized by a reasonable man . . . exercising ordinary perception, intelligence, and judgment.&quot;</p> <p>The Missouri Court of Appeals for the Western District reversed and remanded <a href=""><i>Michael Lee v. Missouri Department of Transportation</i></a>, a wrongful death lawsuit, back to the Circuit Court of Boone County, Missouri. Michael Lee appealed a dismissal by the trial court of his Third Amended Petition, alleging wrongful death claims for the death of his daughter against the Missouri Highway and Transportation Commission (MHTC).&nbsp;</p> <p>The claims arose from a tragic accident involving Mr. Lee&rsquo;s daughter and his grandchild who were ultimately unable to escape a flooded area on a road where they were driving one early morning. Mr. Lee&rsquo;s granddaughter was following another vehicle just before the tragic incident, she stopped, just as the other vehicle did, to examine the flooded portion of the road, before unsuccessfully attempting to drive through the flooded area.</p> <p>Mr. Lee alleged that the portion of the roadway at issue was known to MHTC as a flood hazard, that MHTC failed to provide adequate barriers or guardrails to keep vehicles from being swept off the roadway, and failed to provide adequate warnings that the road would flood.&nbsp;</p> <p>The Court dismissed Plaintiff&rsquo;s Petition, after MHTC filed a combined dispositive motion, seeking alternative forms of relief (Motion for Judgment on the Pleadings; Motion to Dismiss; Motion to Strike), arguing that that the flooded roadway was an open and obvious condition and that Mr. Lee&rsquo;s daughter had a duty to exercise reasonable care for her own safety. The trial court ruled that dismissal was proper due to Plaintiff&rsquo;s own pleadings and the reasonable inferences therefrom indicating that Mr. Lee&rsquo;s daughter &ldquo;saw the danger, examined the danger and decided to proceed anyway.&rdquo;</p> <p>On appeal, Mr. Lee first asserted the trial court failed to consider the facts pleaded and the reasonable inferences from the Petition in the light most favorable to Mr. Lee, as the non-moving party. &nbsp;&nbsp;The appellate Court focused on whether the Petition adequately set forth the elements to support a claim of imposing liability on a possessor of land (MHTC) for injuries sustained by an invitee (Mr. Lee&rsquo;s daughter) due to conditions on that land, i.e.:</p> <p>(a) MHTC knows or by the exercise of reasonable care would discover the condition, and should realize that it involves an unreasonable risk of harm to such invitees, and</p> <p>(b) MHTC should expect that they will not discover or realize the danger or will fail to protect themselves against it, and</p> <p>(c) Invitee (Mr. Lee&rsquo;s daughter) fails to exercise reasonable care to protect them against the danger.&nbsp;</p> <p>The ultimate question for the Court thus became whether Mr. Lee&rsquo;s daughter should have realized the danger posed by the flooded condition of the roadway. The trial court ultimately concluded the cause of action fell under a case called <a href=";hl=en&amp;as_sdt=6,26"><i>Harris v. Niehaus</i>, 857 S.W.2d at 224</a>, which involved another tragic accident in which a mother lost her three children to drowning after her vehicle, parked on a sloped roadway, rolled down the street and into a lake that was plainly visible (aka open and obvious) to the mother.</p> <p>The appellate Court in <i>Lee</i>, however, found the case to be distinguishable from <i>Harris</i>, concluding that evidence that needed to be considered could be presented at trial and a juror could infer whether it was reasonable or safe to cross the roadway. In other words, the Court ruled in favor of Mr. Lee on Point 1, finding that what is reasonable is for a jury to decide.</p> <p>Mr. Lee&rsquo;s second point on appeal focused on the trial court failing to properly construe and apply the meaning of section 343A of the Second Restatement of Torts.&nbsp;Specifically, he argued the Petition properly alleged that MHTC should have anticipated the harm despite any knowledge or obviousness that may have existed on the part of his daughter.</p> <p>As explained by the Court, even if the flooded roadway was open and obvious, if the jury determined that MHTC should have anticipated the harm, then it would still be liable. The Court found that the Petition adequately alleged that MHTC was aware of certain issues of flooding with the roadway, as well as ingress and egress of local residents on that roadway.&nbsp;Agreeing with the Plaintiff, the Court found reasonable minds could differ on the facts surrounding roadway flooding, and it was up to the jury to determine whether the possessor of land should have anticipated harm to an invitee despite the open and obvious hazard.</p> <p>So what does this all mean?</p> <p>As defense lawyers, we are generally pleased to see successful trial court outcomes in cases of this type.&nbsp;Frankly, however, the Court of Appeals ruling in this case did not come as much of a surprise.</p> <p>When considering a motion to dismiss in Missouri, the trial court reviews the Petition and the facts stated within its four corners in a light most favorable to the non-moving party (typically the Plaintiff), also giving all reasonable inferences in favor of the non-moving party.&nbsp;However, in this case, the trial court appeared to give the inferences to the defendant, ultimately finding that the open and obvious doctrine supported dismissal at the pleading stage.&nbsp;While we are aware of cases that were ultimately resolved in favor of the defendant based on the open and obvious doctrine, including the appellate case the trial court relied on to support dismissal, such cases typically have a greater developed factual record that has been before the Court and/or the jury.</p> <p>The procedural posture of this case was somewhat unusual.&nbsp;The Plaintiff, Michael Lee, appears to have had two separate cases &ndash; one for his grandchild and the present case for his daughter.&nbsp;The case brought for the death of Michael Lee&rsquo;s grandchild was dismissed (affirmed on appeal) for various reasons. Curiously, however, in this case, MHTC did not raise the open and obvious issue as an affirmative defense to prior amended Petitions, which made the same allegations.&nbsp;It was only when Mr. Lee amended to fix another problem with his prior Petitions that MHTC raised this argument along with other defenses.&nbsp;In addition, there appears to have been discovery, depositions, and more motions, but none of that was part of this appellate record, because the defendant sought to have the case disposed of via a Motion to Dismiss, rather than a Motion for Summary Judgment (which focuses on undisputed facts elicited in discovery, rather than the legal sufficiency of Plaintiff&rsquo;s Petition).</p> <p>In any event, <i>Michael Lee v. Mo. Dept. of Transp.</i> is back before the trial court, and it remains to be seen what will happen next.&nbsp;Unless the case is settled, a jury may well get to decide what is &ldquo;open and obvious&rdquo; and reasonable.&nbsp;</p>