Joplin, MO Business Blog

Case Review - Breach of Contract

In Harrell, et al. v. Mercy Health Services Corp. three doctors sued Mercy Health Services Corp., a subsidiary of St. John's Regional Medical Center in Joplin, Missouri (St. John's), for breach of employment contracts.  Each of the doctors went to work for St. John's.  Each had at least an initial employment contract that mentioned  an incentive compensation clause.  Dr. Harrell's clause stated: 

(b) Incentive Compensation. [Defendant] shall implement an incentive compensation arrangement for Emergency Department physician employees of the Emergency Department based upon productivity ("Incentive Compensation"). Such Incentive Compensation arrangement shall apply retroactively to the Effective Date, and [Defendant] will provide Physician with a written statement of a compensation arrangement incorporating the Incentive Compensation. Maximum Compensation, as discussed below, may be adjusted as a result of incorporating the Incentive Compensation arrangement.

The other two doctors' employment contracts were similar.  Each doctor left their employment with St. John's before an incentive compensation plan was implemented. 

The three doctors (plaintiffs) sued Mercy Health Services Corp.(defendant) alleging that it had breached their employment contracts and had failed and refused to perform its duty under the incentive compensation plan.  The jury found in favor of the plaintiffs but awarded the plaintiffs zero damages.  The trial court stated thereafter that it believed the verdict was inconsistent and the plaintiffs agreed.  Based upon the evidence presented, the defendant did not agree that it was an inconsistent verdict.  The plaintiffs requested a mistrial but the trial court refused to rule on the motion at that time.   It discharged the jury and took the matter under advisement.  Thereafter the defendant filed its motion for judgment notwithstanding the verdict.  Subsequently the trial court entered a judgment based upon the jury's verdict - judgment for the plaintiffs but zero damages.  The plaintiffs filed a motion for new trial and the defendant filed a supplemental motion for judgment notwithstanding the verdict.  The trial court overruled both motions.

On appeal the plaintiffs alleged that the trial court erred in not ruling on their motion for mistrial prior to discharging the jury because the discharge before the ruling caused the jury to render an inconsistent verdict, and the defendant cross-appealed and alleged the trial court erred in overruling its motion for judgment notwithstanding the verdict.   In addressing the plaintiffs' appeal, the appellate court restated the general rule that an objection to inconsistency in the verdict must be made before the jury is discharged and failure to do so waives  the inconsistency.  In this case the appellate court found that the plaintiffs had failed to request that the trial court order the jury to return for further deliberation and the plaintiffs' failure to request further deliberation  waived the inconsistency.

The defendant claimed that there was no evidence of mutuality of agreement regarding the incentive compensation arrangement.   The appellate court agreed and stated that to make a submissible case for breach of contract the plaintiff must establish: (1) mutual agreement between parties capable of contracting; (2) mutual obligations arising out of the agreement; (3) valid consideration; (4) part performance by one party; and (5) damages resulting from the breach of contact.  In this case the appellate court found that the parties reserved the essential terms of the incentive compensation agreement for future determination and there was no mutuality of agreement because the parties did not mutually assent to the terms.  It further stated that if the essential terms of the contract are reserved for future determination, as in this case, there can be no valid agreement.

The judgment was reversed  and the case remanded with instructions to enter judgment for the defendant.

Source:  Harrell v. Mercy Health Services Corp., SD27401 & SD27403, 07//10/2007

Case Review - Mechanic's Lien vs. Tort & Breach of Contract

The Missouri Supreme Court held in George Weis Co. v. Stratum Design-Build, Inc. that a plaintiff seeking relief under breach of contract or tort against persons or entities and not real property does not have to join  suit with other claimants seeking to recover on a lien against the property under section 429.300, RSMo.

George Weis Co. (Weis) was a drywall subcontractor on a construction project  where  Stratum Design-Build, Inc. was the general contractor.  Weis was not paid for its work and sued the general contractor and others.  Based upon motions filed by the defendants, the trial court dismissed Weis' petition for lack of subject matter jurisdiction, stating that section 429.300 required that Weis raise its claims by intervening in a prior mechanic's liens brought by other subcontractors.

The Supreme Court held that the mechanic's lien statutes apply to claims against property, not persons.  The purpose of section 429.300 is to enforce multiple mechanic's lien claims filed against the same real property and to adjudicate the rights claimed under the statutes in the property.  Section 429.300 only requires that all mechanic's lien claimants bring their claims in a single action and it does not require Weis to join in the mechanic's lien action because it was not bringing a lien action against the property.  It reversed the trial court's judgment and remanded the case.

Source:  George Weis Co. v. Stratum Design-Build, Inc., SC88194, 07/06/2007

Case Review - Ambiguity in Insurance Policies

In Williams v. Silvola the appellate court considered whether Missouri or Kansas law would apply to stacking of insurance policies.  The plaintiff, Jaynes, was a resident of Kansas and had purchased seven automobile insurance policies from Farmers Insurance Co. and Mid-Century Insurance Co. (collectively called "Farmers") in Kansas, which prohibits the stacking of policies.  While driving her sister's vehicle in Missouri, Jaynes was rear-ended by Silvola, who was uninsured.  The sister's vehicle was insured and registered in Missouri.  Farmers paid Jaynes $50,000, which was the limit per person per occurrence under each of Jaynes' insurance policies.  Farmers' position was that Kansas prohibited stacking and Jaynes was not entitled to any more money under the policies even though her medical bills were over $350,000.  Jaynes sued for breach of the insurance policies and vexatious refusal to pay on the grounds that each of the insurance policies contained language in the "Limits of Liability" section that contained the phrase that the limits were "subject to the laws of the state of the occurrence" and Missouri was the state of the occurrence and allowed stacking.

The trial court ruled that the insurance policies purchased by Jaynes were ambiguous due to the above-stated provision and other limiting clauses in the policies prohibiting stacking and found against Famers Insurance Co. for $250,000 and against Mid-Century Insurance Co. for $50,000.  Farmers appealed.  The appellate court found that  under  the law of both Missouri and Kansas, where there is ambiguity in an insurance policy the ambiguity must be construed against the insurer and in favor of the insured.  Ambiguity is found where different constructions of the language can reasonably be made; the language will be given the ordinary interpretation understood by the layman who bought  the policy.  The appellate court found that the trial court did not err in its ruling.

Source:  Williams v. Silvola, Missouri Court of Appeals, Western District, WD66055, April 10, 2007

Case Review - Sellers' Breach of Contract on Sale of Property

The Sellers in Minor v. Rush contracted to sell their 230 acre farm to the Buyers for a price lower than they had anticipated.  Before entering into the contract the Sellers contacted their bank to see if the sale price would pay off enough of their debt for the bank to release the property.  The bank told them it "looked like" it would.  Time was of the essence in the deal so the Sellers signed the contract with the Buyers but did not put in the contract a contingency provision should the sale proceeds not be enough to release the property.  After the signing of the contract the Sellers learned that the proceeds would not be enough for the bank to release the property and allow them to tender title in fee simple at closing.  The Sellers refused to give the Buyers a deed to the property.  The Buyers sued for specific performance on the contract and the trial court ruled in favor of the Buyers.  The Sellers appealed on the ground that their refusal should be excused on the basis of impossibility of performance.  The appellate court ruled against the Sellers and affirmed the trial court judgment.  It held that a party must comply with the terms of a contract "unless performance is rendered impossible by an Act of God, the law, or the other party," and if a party desires to be excused upon a contingency, the contingency must be included in the contract.  The Sellers failed to have the contingency that the sale would not go forward if  the sale proceeds were not  enough to release the property put into the contract.  This failure results in them having to perform the terms of the contract.

Source:  Minor v. Rush, WD65439, (Mo. App. W.D.  03/06/2007)

Case Review - Mortgage Co. Must Give Homeowner Deed of Release or Face Statutory Damages

When a homeowner pays off the mortgage on his residence the mortgage company or financial institution must release the deed of trust and give to the homeowner the deed of release.  In Huber v. Wells Fargo Home Mtg. the homeowner paid off the loan on his residence and Wells Fargo recorded a deed of release.  However, Wells Fargo failed to provide to the homeowner the deed of release.  The homeowner sent a demand letter to Wells Fargo demanding immediate release of the deed of trust and for the deed of release to be delivered to the homeowner within 15 days.  Wells Fargo failed to respond to the letter and the homeowner filed suit against Wells Fargo and Franklin American Mortgage Co., which initially made the loan but then sold it to Wells Fargo.  The trial court granted summary judgment for both defendants because Wells Fargo had recorded the deed of release and, therefore, the homeowner was not entitled to statutory damages.  The homeowner appealed.  The appellate court determined that the homeowner had failed to provide Franklin American with the required notice and it affirmed the summary judgment as to it.  However, Wells Fargo was not so lucky.  The court determined that even though Wells Fargo had complied with the purpose of section 443.130, which is aimed at financial institutions who fail to release the mortgagee's property, in accordance with the ruling the Missouri Supreme Court handed down in Glass v. First National Bank of St. Louis, 191 S.W.3d 662 (Mo. banc 2006), that did not excuse it from providing the homeowner with the deed of release as required by section 443.130.1.  The homeowner was entitled to statutory damages and the appellate court reversed the trial court's ruling as to Wells Fargo.

Source:  Huber v. Wells Fargo Home Mtg., ED88183, (Mo. App. E.D., 03/06/2007)

Prenups for Women

What do you think about first when someone mentions the words "prenup" or "alimony"  (called "maintenance" in Missouri)?  You probably think that the man is wanting the prenup so he doesn't have to pay alimony to the woman in the event of a divorce.  Right?  Well, it is time to rethink this.  Women should start thinking about protecting their assets before they get married or even enter into a living arrangement with a man.  Why?  More and more women are seeing an increase in their income due to owning their own business, working their way up the corporate ladder, etc.  In many cases the woman's income will be more than the man.  Women need to start thinking about protecting their assets just like the men have always done.

You may be thinking that no man will ask for alimony - that it will hurt their "manly" pride.  Wrong, think again.  Men are starting to seek alimony and it just isn't the rich and famous like Nick Lachey or Elizabeth Taylor's ex.  It is the man who stayed home with the children while the woman went off to work; it is the man who works part-time  or who doesn't make as much as the woman and got used to the finer things that her money helped provide.  It could be the man you are planning on marrying or moving in with.

How do you protect your assets?  If you plan ahead you can have a prenuptial agreement or living arrangement agreement prepared by your attorney.  Be prepared to reveal all of your assets to your attorney and to your soon-to-be spouse.  If you don't reveal all of the assets in the prenup those assets will not be part of the agreement and there could possibly be grounds for fraud and setting aside the whole agreement.  If you want to enter into a contract before you live with someone you will need to include whether any or all monies will be combined, how the joint bills are to be paid, how the separate and personal bills will be paid, what will happen to the joint assets should there be a separation or parting of the ways, etc.

What if you are already married but want to protect your assets?  PINK magazine, February/March 2007 issue, has listed four things you can do.  These include:

1. Getting the man back into the workforce before you ask for a divorce or even hint that you are thinking about one.  If he is working and earning money on his own, he should not need as much or any support from you;
2. Keep all assets that you inherit in your name alone and do not co-mingle them with your spouse.  This means you do not put any monies into a joint account with your husband, you do not put his name on any real property, stocks, etc. Do not let your parents or other persons give assets to you and your spouse.  Have them just give it to you.  In other words, keep the assets totally in your control and name. 
3. You should build up a nest egg in a separate account under your control only.  This way should something happen you will have access to money if you need it.
4. You may be able to get your husband to sign a post-nuptial agreement, but don't count on it.  If you ask for one after the marriage you are probably going to be giving up more assets than you would have had you entered into a prenuptial agreement (think along the terms of a divorce settlement on this one.)

Due to tradition a woman may not feel comfortable asking the man in her life to enter into the agreements described above.  Women have come a long way in the work force and have worked hard to build up their assets and to provide for themselves and not have to rely upon the man taking care of them.  Women want to be treated as equals and are equal to men in this area and they should not hesitate to protect their assets just like the men should not hesitate to protect theirs.  Remember - entering into an agreement before the marriage or living arrangement is concluded is the best way to do this.

Source:  PINK, February/March 2007