Opinion ID: 2003625
Heading Depth: 2
Heading Rank: 2

Heading: The second Malone test

Text: Relators also argue that even if plaintiffs' petition states a cause of action, the facts pleaded are not true and demonstrate that Mr. Kaiser was joined pretensively. To prevail on this argument, Relators must show that the record, pleadings, and facts presented in support of [their] motion asserting pretensive joinder establish that there is, in fact, no cause of action against the [joined] defendant and that the information available at the time the petition was filed would not support a reasonable legal opinion that a case could be made against the [joined] defendant. Malone, at 825. Even if the plaintiffs' reasonable belief subsequently proves false, it is irrelevant to the pretensive joinder determination. Bottger v. Cheek, 815 S.W.2d 76, 79 (Mo.App.1991). To refute the plaintiffs' allegations, Relators included the affidavits of Mr. Kaiser and another corporate officer. Both affidavits challenge the plaintiffs' allegations that Mr. Kaiser approved budgets that rejected or delayed the implementation of pollution controls. However, these affidavits were not made until after the plaintiffs filed their petition, and, as such, were not among the information available at the time the petition was filed. See Malone at 825. Furthermore, where the plaintiffs can point to specific facts that support their belief that a cause of action existed against Mr. Kaiser at the time the petition was filed, joinder is not pretensive. See State ex rel. Hoeft v. Koehr, 825 S.W.2d 65, 67 (Mo.App.1992). The plaintiffs contested the affidavits by filing numerous exhibits containing the facts and data relied upon to plead their claim against Mr. Kaiser. These exhibits included information on general environmental conditions around the smelter as well as specific budget decisions regarding environmental matters. As the CFO, Mr. Kaiser was or likely was involved in these decisions. After briefing, argument, and reviewing the evidence, Respondent found that the information available to the plaintiffs at the time the petition was filed supported a realistic belief that a valid claim against Mr. Kaiser exists under Missouri law. This Court agrees. While it is possible that Mr. Kaiser may eventually succeed on a motion for summary judgment or at trial, the ultimate substantive merits of plaintiffs' allegations as determined later in the judicial process are not relevant at this stage. The only relevant inquiry is whether the records and pleadings support a realistic belief that there is a claim against Mr. Kaiser. Relators have not carried their burden of showing that the facts pled are in fact false. The preliminary writ previously issued is quashed. WHITE, C.J., WOLFF and STITH, JJ., concur. BENTON, J., dissents in separate opinion filed. PRICE and LIMBAUGH, JJ., concur in opinion of BENTON, J. DUANE BENTON, Judge, dissenting. I dissent. This case exemplifies the general rule: Merely holding a corporate office will not subject one to personal liability for the misdeeds of the corporation. Boyd v. Wimes, 664 S.W.2d 596, 598 (Mo. App.1984). This is common sense because corporations must act through individuals, who are not personally liable for doing their jobs. Someone must hire and fire employees, without incurring personal liability. Lynch v. Blanke Baer & Bowey Krimko, Inc., 901 S.W.2d 147, 154 (Mo. App.1995). Someone must carry out contracts, without incurring personal liability. Zipper v. Health Midwest, 978 S.W.2d 398, 414 (Mo.App.1998). There is an exception: [N]othing short of active participancy in a positively wrongful act intendedly and directly operating injuriously to the prejudice of the party complaining will give origin to individual liability. Fusz v. Spaunhorst, 67 Mo. 256, 264 (1878); Wolfersberger v. Miller, 327 Mo. 1150, 39 S.W.2d 758, 764 (1931). A corporate president that defrauds or steals is personally liable, although acting in the corporation's name. See Boyd, 664 S.W.2d at 598; Grothe v. Helterbrand, 946 S.W.2d 301, 304 (Mo.App.1997); Rauch v. Brunswig, 155 Mo.App. 367, 137 S.W. 67, 67-68 (1911); Osterberger v. Hites Constr. Co., 599 S.W.2d 221, 229 (Mo.App.1980); Constance v. B.B.C. Dev't Co., 25 S.W.3d 571, 589-90 (Mo.App.2000). A manager who controls the operations of the corporation, and directs the wrong, is individually liable. Robinson v. Moark-Nemo Consol. Mining Co., 178 Mo.App. 531, 163 S.W. 885, 887-88 (1914); Curlee v. Donaldson, 233 S.W.2d 746, 754 (Mo.App.1950). Usually, an officer held personally liable is an owner of the corporation. See, e.g., Grothe, 946 S.W.2d at 304; Constance, 25 S.W.3d at 589; Curlee, 233 S.W.2d at 754. In this case, the officer is not the president, not a manager of operations, and not an owner. He is a staff officer, the chief financial officer. Before a corporate staff officer may be sued individually, active participancy requires more than the performance of normal job duties. Suit should not be allowed for rubber stamp financial approval or authorization. To constitute active participancy, a chief financial officer must have the freedom to disburse funds in a discretionary manner, and actively do so with the intent to accomplish a positively wrongful act. Plaintiffs do not allege that Marvin K. Kaiser, the chief financial officer, had any discretion over environmental funding. The petition does not state a cause of action against Kaiser. See State ex rel. Malone v. Mummert, 889 S.W.2d 822, 825 (Mo. banc 1994). Most allegations against him repeatedly re-state the precise words of the exception. Mere conclusions of the pleader not supported by factual allegations are disregarded in determining whether a petition states a claim on which relief can be granted. Commercial Bank of St. Louis County v. James, 658 S.W.2d 17, 22 (Mo. banc 1983). The more specific allegations in the petition reference Kaiser's involvement in budgeting, such as helping to set budgets, approving expenditures, and signing financial assurances to the State of Missouri. See Section 444.368 RSMo 2000. Plaintiffs never allege that he had any discretionary authority, the minimum for active participation. More importantly, joinder is pretensive if there is in fact no cause of action against the joined defendant, even if the petition on its face states a cause of action. See Mummert, 889 S.W.2d at 825. Here, joinder is pretensive because Kaiser did not actively participate in making environmental decisions. Kaiser never refused to authorize a funding request. He supplied one of six required signatures for financial disbursements, in order to ensure that spending was properly authorized, funded, and accounted for. He never had authority over any environmental employees or programs. He did not propose or reject specific environmental expenditures. Venue is not proper in the Circuit Court for the City of St. Louis. Fortunately, the General Assembly can correct the state of the law. Venue is determined solely by statute. State ex rel. BJC Health System v. Neill, 121 S.W.3d 528, 529 (Mo. banc 2003). The legislature can prescribe that, when the corporation is also a defendant, venue is not determined by the personal residence of a corporate officer who does not intend to actively participate in a positively wrongful act.