Court Opinion

ID: 3174213
Source: CourtListenerOpinion
Date Created: 2016-02-05 08:43:56.378518+00
Date Added: 2024-06-11T14:08:10.250109
License: Public Domain

HARLEY ROGERS,                                   )
                                                 )
        Plaintiff-Respondent,                    )
                                                 )
vs.                                              )        No. SD33696
                                                 )
SUPERIOR METAL, INC.,                            )        Filed: February 4, 2016
RANDY MUELLER, and                               )
JONATHAN HOLTZMAN,                               )
                                                 )
        Defendants-Appellants.                   )

         APPEAL FROM THE CIRCUIT COURT OF LAWRENCE COUNTY

                           Honorable Judge Scott S. Sifferman

AFFIRMED AND REMANDED

        Superior Metal, Inc. ("Contractor") and Contractor's owners, Randy

Mueller ("Mr. Mueller") and Jonathan1 Holtzman ("Mr. Holtzman"),2 appeal

from the trial court's judgment for Harley Rogers ("Owner"). Contractor raises

1 Mr. Holtzman's first name is spelled in different ways in different documents in the record on

appeal. For consistency's sake, we adopt the spelling used in the transcript, Jonathan. No
disrespect is intended.
2 When Contractor, Mr. Mueller, and Mr. Holtzman are discussed collectively, they will be

referred to as "Appellants."
four points on appeal. These points are without merit, and we affirm the trial

court's judgment.

                     Factual and Procedural Background

         There was conflicting evidence at trial. In preparing this summary, we

view that evidence in the light most favorable to the trial court's judgment. Ken

Cucchi Const., Inc. v. O'Keefe, 973 S.W.2d 520, 523-24 (Mo. App. E.D.

1998).

         Contractor is a construction company which installs metal buildings,

roofing, siding, and windows. In March 2013, Owner decided he wanted to build

a shed on his property for storage. Owner discussed the building project with Mr.

Mueller, and Mr. Mueller told him that "it would be a stand-up product" and that

"the building would be straight, free of defects, and it would be good lumber."

Contractor and Owner then entered a written agreement in which Owner was to

pay $13,500 for Contractor to build a pole barn on Owner's property.

         During the construction process, Owner noticed defects in the

construction and mentioned his concerns to Mr. Holtzman. After completion, the

building had numerous construction defects. Owner demanded his money back,

and Mr. Mueller refused to issue a refund.

         Thereafter, Owner sued Appellants. The petition sought damages from

Contractor based on breach of contract, unjust enrichment, fraudulent

misrepresentation, negligence, and violations of the Missouri Merchandising

Practices Act ("MMPA"). Owner also sought damages from Mr. Mueller and Mr.

Holtzman based on the theory of piercing the corporate veil. Prior to trial, Owner

amended the allegation of fraudulent misrepresentation to seek recovery from

                                          2
Appellants collectively rather than Contractor alone and voluntarily dismissed

the allegations regarding piercing the corporate veil.

       The parties had a bench trial. The trial court found for Owner on all

counts submitted. The trial court awarded Owner $23,500 in damages, $10,000

in attorney's fees, and $1 in punitive damages. Appellants appeal.

                               Standard of Review

       As this was a court-tried case, this Court will "affirm the trial court's

judgment unless there is no substantial evidence to support it, unless it is against

the weight of the evidence, or unless it erroneously declares or applies the law."

Kelley v. Widener Concrete Const., LLC, 401 S.W.3d 531, 539 (Mo. App.

S.D. 2013). "The trial court's judgment is presumed valid, [and] the burden is on

the appellant to demonstrate its incorrectness[.]" Id. (quoting Harness v.

Wallace, 167 S.W.3d 288, 289 (Mo. App. S.D. 2005)). Additionally, "this Court

defers to the trial court's credibility determinations." Id. "That is because

credibility of witnesses and the weight to be given their testimony is a matter for

the trial court, which is free to believe none, part, or all of any witness's

testimony." Id. (quoting Watson v. Moore, 8 S.W.3d 909, 911 (Mo. App. S.D.

2000)).

                         Point I: Measure of Damages

       In their first point on appeal, Appellants argue the trial court erred in

applying the cost measure of damages rather than the diminished-value measure

of damages because Owner "presented no evidence to support the correct

measure of damage." We disagree.

                                           3
       "[T]he goal of damages in a contract action is to place the injured party in

the same position that the party would have been in had the contract been

performed[.]" Kelley, 401 S.W.3d at 541 (quoting White v. Marshall, 83

S.W.3d. 57, 62 (Mo. App. W.D. 2002)). In Missouri, two tests have been applied

to calculate damages in cases involving defective performance of a building

contract: the cost-to-repair method and the diminished-value method. Id. "The

'cost rule' measures damages by the cost of repairing the defective work." Id.

"The 'diminished value rule,' an exception to the 'cost rule,' is 'the difference

between the value of the property with the defective work and what its value

would have been if it had been constru[ct]ed according to the terms of the

contract." Id. (quoting White River Dev. Co. v. Meco Systems, Inc., 806
S.W.2d 735, 741 (Mo. App. S.D. 1991)). The cost rule is the preferred measure of

damages while the diminished-value rule is used when the cost of repair would

cause "unreasonable economic waste." Id.

       The choice between these methods is determined by a shifting burden of

proof. "Once the landowner presents evidence on the cost of repair or

replacement, the contractor has the burden of presenting evidence that the cost

of repairing or replacing the property is disproportionate to the diminution in

value of the property." Ken Cucchi Const., Inc. v. O'Keefe, 973 S.W.2d 520,

527 (Mo. App. E.D. 1998) (emphasis added). If the contractor presents no

evidence of the value of the building as actually constructed, a trial court does not

err in applying the cost measure of damages. Id.

       Here, Appellants presented no evidence regarding the value of the building

as actually constructed. The only evidence of the value of the building was the

                                          4
contract price of $13,500. Although Appellants' expert disagreed with Owner's

expert regarding the extent of the repairs needed, Appellants' evidence on

damages comprised cost-to-repair estimates. Appellants' expert testified it would

cost $445 to repair the defects in the building. Under these circumstances, there

was no evidence regarding the difference between the value of the building as

actually constructed and the value the building would have had if constructed in

accordance with the terms of the contract. The trial court did not err in applying

the cost rule rather than the diminished-value rule. See id.

       Appellants' first point is denied.

                         Point II: Individual Liability

       In their second point, Appellants argue the trial court erred in entering

judgment against Mr. Mueller and Mr. Holtzman individually because there was

no evidence that Mr. Mueller and Mr. Holtzman acted in their individual

capacities and because Owner dismissed his claim involving piercing the

corporate veil. This argument ignores the other claims in the petition.

       Appellants are correct that generally, "merely holding a corporate office

does not subject one to personal liability for the misdeeds of the corporation."

Constance v. B.B.C. Dev. Co., 25 S.W.3d 571, 590 (Mo. App. W.D. 2000).

But the shield is not absolute: "A corporate officer may be held liable if it is

'shown by evidence of probative force that he had actual or constructive

knowledge of the actionable wrong and participated therein.'" Estate of

Overbey v. Chad Franklin Nat'l Auto Sales North, LLC, 361 S.W.3d 364,

371 (Mo. banc 2012) (quoting Wolfersberger v. Miller, 39 S.W.2d 758, 764

                                            5
(1931)). One situation in which such liability may be found includes fraud. E.g.,

id.

       Here, the trial court found against Appellants regarding Owner's claim for

fraudulent misrepresentation. The trial court's discussion of that claim includes

the finding that Mr. Mueller made affirmative misrepresentations and that

Appellants omitted material facts in their communications with Owner. These

communications with Owner required Mr. Mueller and Mr. Holtzman's

affirmative participation in the actionable wrong and so justify imposition of

individual liability. See id. Appellants do not challenge those findings on appeal,

and without a challenge to those findings, they cannot show imposition of

individual liability was erroneous.

       Appellants' second point is denied.

                          Point III: Attorney's Fees

       In Point III, Appellants argue the trial court erred in awarding $10,000 in

attorney's fees under the MMPA because Owner "submitted no evidence as to

itemization of time spent on the case on [Owner's] behalf." This argument is

without merit.

       "In Missouri, the general rule is that 'attorney fees are not awarded to

every successful litigant.'" Berry v. Volkswagen Group of Am., Inc., 397
S.W.3d 425, 431 (Mo. banc 2013) (quoting Lucas Stucco & EIFS Design,

LLC v. Landau, 324 S.W.3d 444, 445 (Mo. banc 2010)). "However, attorneys'

fees may be awarded when they are provided for in a contract or when they are

authorized statutorily." Id. Here, Count V of Owner's petition sought damages

for violations of the MMPA. Under the MMPA, besides actual damages, the trial

                                         6
court may award punitive damages and "attorney's fees, based on the amount of

time reasonably expended[.]" § 407.025.1.3 Appellants seize on the statutory

language to argue that an itemized list or some evidence of the actual hours

expended is necessary to support recovery of attorney's fees under the statute.

But that argument ignores the plain language of the statute.

          Nothing in the statute requires an itemized list of the attorney's services.

Nor does the statute mention actual hours expended. Rather, the statue says "the

amount of time reasonably expended," without further definition. "The circuit

court is deemed an expert at fashioning an award of attorneys' fees and may do so

at its discretion." Western Blue Print Co., LLC v. Roberts, 367 S.W.3d 7,

23 (Mo. banc 2012). "The circuit court that 'tries a case and is acquainted with all

the issues involved may "fix the amount of attorneys' fees without the aid of

evidence."'" Id. (quoting Essex Contracting, Inc. v. Jefferson County, 277
S.W.3d 647, 656 (Mo. banc 2009)).

          Here, the judge who awarded the fees also presided over the trial. He was

familiar with the issues and the conduct of the attorneys and so had a basis for

determining the amount of time that would be reasonably expended without the

aid of additional evidence. See id.

          Appellants' third point is denied.

                        Point IV: Material Breach of Contract

          In Point IV, Appellants argue the trial court erred in finding Appellants

materially breached the contract "because the evidence from both parties was

that [Appellants] substantially performed the agreed upon construction

3   All statutory references are to RSM0 Cum. Supp. (2013).

                                                 7
contract." However, we need not address this point because the trial court gave

other grounds for its ruling that Appellants do not challenge.

         "[T]he fundamental requirement for an appellate argument is that it

demonstrate the erroneousness of the basis upon which a lower court or agency

issued an adverse ruling." Knight v. Con-Agra Foods, Inc., No. WD78591,

2015 WL 8238917, at *2 (Mo. App. W.D. December 8, 2015). "As a corollary to

this principle, if a trial court or administrative agency relies on multiple,

independently sufficient grounds in issuing an adverse ruling, the appellant must

challenge each of those independent grounds of decision." Id. This is because

reversal requires a finding "that all of the reasons that the circuit court

articulated in its judgment were wrong." Id. (quoting City of Peculiar v.

Hunt Martin Materials, LLC, 274 S.W.3d 588, 591 (Mo. App. W.D. 2009)).

Where the trial court states numerous reasons to support the judgment and

where the appellant does not challenge each reason on appeal, the appellant does

not meet his or her burden of establishing circuit court error. Id.

         Here, the trial court stated numerous grounds supporting the damage

award. Specifically, besides finding Appellants materially breached the contract,

the trial court found Owner was entitled to judgment based on unjust

enrichment, fraudulent misrepresentation, negligence, and violation of the

MMPA. Appellants do not challenge these rulings, any of which would support

the judgment. Appellants have failed to meet their burden of proving trial court

error.

         Appellant's fourth point is denied.

                                           8
                           Attorney's Fees on Appeal

       While this appeal was pending, Owner moved for attorney's fees on appeal

under Section 407.025. When a statute permits an award of attorney's fees, full

compensation can involve an award of attorney's fees on appeal. DeWalt v.

Davidson Surface Air, 449 S.W.3d 401, 407 (Mo. App. E.D. 2014). Even

though this Court has "the expertise to fix attorney['s] fees on appeal, 'the trial

court is in a much better position to hear evidence and argument on this issue

and make a determination of the reasonableness of the requested fees and

costs[.]"' Percy's High Performance, Inc. v. Krough, 445 S.W.3d 577, 583

(Mo. App. S.D. 2013) (quoting SE Co-Op Serv. Co. v. Hampton, 263 S.W.3d
689, 696-97 (Mo. App. S.D. 2008)). We remand this case to the trial court with

instructions to conduct a hearing regarding attorney's fees on appeal and to enter

judgment accordingly. See id.

                                      Decision

       The trial court's judgment is affirmed. The case is remanded for

consideration of an award of attorney's fees on appeal.

MARY W. SHEFFIELD, C.J. - OPINION AUTHOR

DANIEL E. SCOTT, P.J. – CONCURS IN SEPARATE OPINION

JEFFREY W. BATES, J. – CONCURS

                                          9
HARLEY ROGERS,                        )
                                      )
      Plaintiff-Respondent,           )
                                      )
vs.                                   )
                                      )         No. SD33696
SUPERIOR METAL, INC.,                 )
RANDY MUELLER, and                    )
JONATHAN HOLTZMAN,                    )
                                      )
      Defendants-Appellants.          )

                         CONCURRING OPINION

      I concur. As to Point I, cost to repair or replace was the preferred

measure   of   damages    unless   Appellants    proved   that   would   cause

“unreasonable economic waste.” See, e.g., Kelley v. Widener Concrete

Const., LLC, 401 S.W.3d 531, 540-41 (Mo.App. 2013) (contractor’s burden to

prove that repair cost would result in unreasonable economic waste); Matt

Miller Co. v. Taylor-Martin Holdings, LLC, 393 S.W.3d 68, 84

(Mo.App. 2012) (same).

      The trial court heard the evidence and found that Appellants did not

carry this burden; that cost of repair or replacement would not be
unreasonable economic waste. As in Kelley, the trial court weighed

competing testimony, and “credibility of the witnesses and that testimony was

for the trial court’s determination as the trier of fact.” 401 S.W.3d at 543. We

are not free to reweigh the testimony or second-guess the trial court’s

determination that Defendants did not carry their burden of proving that cost

of repair or replacement would be unreasonably wasteful.

DANIEL E. SCOTT, P.J. – CONCURRING OPINION AUTHOR

                                       2