Court Opinion

ID: 2673796
Source: CourtListenerOpinion
Date Created: 2014-05-10 21:12:54.254594+00
Date Added: 2024-06-11T09:20:02.720911
License: Public Domain

2 MIKES, INC.,                                 )
                                               )
       Plaintiff-Appellant,                    )
                                               )
vs.                                            )       No. SD32688
                                               )
TURNING LEAF PROPERTIES, LLC.,                 )       Filed: March 5, 2014
                                               )
       Defendant-Respondent.                   )

            APPEAL FROM THE CIRCUIT COURT OF TANEY COUNTY

                           Honorable Mark E. Orr, Circuit Judge

AFFIRMED

       This is an appeal from a declaratory judgment. 2 Mikes, Inc. ("Plaintiff") leased a

bar and restaurant from Turning Leaf Properties, LLC ("Defendant") in March 2011.

Based mostly upon written communications the parties exchanged in December 2011,

Plaintiff filed a petition seeking a judicial declaration that the parties had agreed to a

modification of the terms of their lease. After a bench trial, the trial court entered a

judgment declaring that the lease 'ha[d] not been modified[.]"

       In two points relied on, Plaintiff contends the judgment was against the weight of

                                               1
the evidence.1 Point I contends the trial court erred in ruling that "there was no lease

modification agreement" because "the parties exchanged letters that contained an offer,

counter-offer and acceptance[,]" Defendant "instructed [its] attorney to draft a written

lease modification according to the terms the parties agreed on, and [Defendant] accepted

the modified rent amount for four weeks." Point II alternatively contends that the lease

was "at least partially modified" because "[o]n at least two, if not three, of the four

matters the parties were negotiating on, there was an unambiguous, precise and definite

agreement that modified the lease."

         Because the trial court could reasonably find from the evidence presented that

Defendant had conditioned any modification of the lease upon its attorney first drafting

1
 Although Plaintiff's points claim the judgment is against the weight of the evidence, the argument portion
of the brief fails to follow the steps necessary to present such a claim.

         "[A]n against-the-weight-of-the-evidence challenge requires completion of four
         sequential steps:

                  (1)      identify a challenged factual proposition, the existence of which is
                           necessary to sustain the judgment;

                  (2)      identify all of the favorable evidence in the record supporting the
                           existence of that proposition;

                  (3)      identify the evidence in the record contrary to the belief of that
                           proposition, resolving all conflicts in testimony in accordance with the
                           trial court's credibility determinations, whether explicit or implicit; and,

                  (4)      demonstrate why the favorable evidence, along with the reasonable
                           inferences drawn from that evidence, is so lacking in probative value,
                           when considered in the context of the totality of the evidence, that it
                           fails to induce belief in that proposition.

Houston v. Crider, 317 S.W.3d 178, 187 (Mo. App. S.D. 2010). While such a challenge "involves some
consideration of evidence contrary to the judgment," we still defer to the trial court on its factual
determinations and credibility determinations. Id. at 186. Ultimately, the appellant must "demonstrate why
the favorable evidence, along with the reasonable inferences drawn from that evidence, is so lacking in
probative value, when considered in the context of the totality of the evidence, that it fails to induce belief
in that proposition." Id. at 187. However, because Defendant's brief addresses the claims on their merits,
we will address the claims, as best we understand them, ex gratia. Cf. Comp & Soft, Inc. v. AT & T Corp.,
252 S.W.3d 189, 194 (Mo. App. E.D. 2008) ("the court prefers to decide cases on their merits whenever
possible and therefore elects to review this appeal ex gratia").

                                                      2
an amendment to be executed by the parties, and such an execution did not occur, we

deny the points and affirm the judgment.

                               Facts and Procedural Background

        No party requested written findings of fact, and the judgment contains none.

"Where the trial court does not include findings of fact in its judgment, the factual issues

are assumed to have been found in accordance with the result reached." Glass v.

Transamerica Life Ins. Co., 322 S.W.3d 556, 562 (Mo. App. S.D. 2010).

        The only witness at trial was Plaintiff's president, Dr. Michael Hynes. Dr. Hynes

testified that the lease was "dated March 31st, 2011[,]" and the rental rate was $700 per

week. Defendant cross-examined Dr. Hynes and offered exhibits during that cross-

examination that were received into evidence.2 In a November 28, 2011 memorandum,

Dr. Hynes informed Defendant that Plaintiff's restaurant-bar was losing money. As a

result, he asked Defendant to "lengthen the term of the lease" and "reduce the rental costs

for the near term[.]"

        Defendant responded in an undated letter from Clint Smith that stated, inter alia:

        In response to your memo dated 11/28/2011, following are responses to
        your questions and requests.

                 ....

        We do however understand that you are requesting a reduction in rent and
        a lease term extension in hopes to be able to recover some of your losses.
        We are willing to agree to the following:

                 1.       A reduction in rent from $700.00 per month [sic3]
                          (scheduled to being [sic] Jan. 3, 2012) to $450.00 per
                          month [sic] for the months of January 2012, February 2012,
                          and March 2012. The rent from April 2012 through the end

2
  All of the documents referenced in this opinion were received into evidence by the trial court.
3
  As later acknowledged, the reference to $700 per "month" was in error; during the relevant time period,
the lease provided rent of $700 per week, not $700 per month.

                                                     3
                       of the lease would continue at the amounts listed in the
                       lease.

                  2.   Lengthen the term of the base lease agreement for an
                       additional two years.

                  3.   Allow you to pay the $2,300.00 (for last month's rent
                       deposit) scheduled for Jan. 3, 2012 on Jan. 3, 2013.

        Please let us know if these changes to the lease are acceptable to you so
        that we may have our attorney draft an amendment as soon as possible.
        We would require the amendment be executed before we make any of the
        changes, therefore time is of the essence.

(Emphasis added.)

        Dr. Hynes's response, dated December 7, 2011, stated in pertinent part:

        I would like you to consider making some minor changes to your
        proposal.

        Item 1.        extending the rent reduction to July 1, 2012, six months vs.
                       the three months you suggested;

        Item 2.        lengthen the term of the lease by an additional five years
                       vs. the two years you suggested;

        Item 3.        is acceptable as you suggested and is very helpful and
                       appreciated;

        [N]ew Item 4. at the end of the lease periods we would have right of first
                      refusal to continue leasing the area.

        A letter from Mr. Smith to Dr. Hynes followed on December 9, 2011 and stated,

inter alia:

        Please note that I made an error in our memo to you responding to your
        memo dated 11/28/11. . . .

        Obviously, the 'per month' stated should have been 'per week'.

        In response to your memo dated 12/07/11, following are points that we
        will agree on.

                                             4
               1.      A reduction in rent from $700.00 per week (scheduled to
                       begin Jan. 3, 2012) to $450.00 per week for the months of
                       January, 2012, February 2012, March 2012, April 2012,
                       May 2012, and June 2012. The rent from July 2012
                       through the end of the lease would continue at the amounts
                       listed in the lease.

               2.      Lengthen the term of the base lease agreement for an
                       additional five years.

               3.      Allow you to pay the $2,300.00 (for last month's rent
                       deposit) scheduled for Jan. 3, 2012 on Jan. 3, 2013.

               4.      Add a first right of refusal clause to continue the lease at
                       the end of the lease period.

                       ....

       I will forward this letter to our attorney and have him draft an amendment
       to the lease and get it to you for execution as soon as possible.

       Instead of waiting for that draft, Dr. Hynes drafted a proposed lease addendum

and sent it to Defendant. Mr. Smith responded with a letter dated December 14, 2011,

which stated in relevant part:

       This letter is in response to your memo dated 12/07/11.

       We appreciate your attempt at the amendment, however Don Ingrum
       [Defendant's attorney] is working on the lease amendment according to
       the terms detailed in our letter dated 12/9/11 (attached). You indicated at
       that time that our terms were satisfactory. Once Don Ingrum has a draft, I
       will forward it to you for your review.

       A subsequent letter from Mr. Smith to Dr. Hynes, dated January 13, 2011, stated:

       Please find enclosed a "First Amendment to Lease Agreement". After
       consulting with our attorney, these are the changes we will agree to.
       Please review and let me know if you have any questions. Also, please
       remember that until we get this amendment signed, we expect the terms of
       the current lease to remain in effect.

       Dr. Hynes testified that when he received the letter with the amended lease

agreement, he observed what he thought were differences from what the parties "had

                                              5
agreed on." He "immediately wrote to [Defendant] and said something went wrong here

and this is not acceptable."

       Plaintiff's Exhibit 8, at least as filed with this court, consisted of photocopies of

the front side of four checks drawn on Plaintiff's account and payable to Defendant. Each

check was in the amount of $450. Two were dated January 18, 2012, one was dated

January 28, 2012, and the fourth check was dated January 31, 2012. The checks were

signed by Dean Fagan. Dr. Hynes testified that Mr. Fagan worked for both Plaintiff and

Defendant. Dr. Hynes testified that Defendant then "filed an eviction notice" as Plaintiff

"did not pay the $700 rent." Dr. Hynes replied that he would "pay the $700 rent" and

informed Defendant that they would "argue over that later."

       The trial court took the case under advisement and gave the parties an opportunity

to file written suggestions in support of their respective positions. After the parties did

so, the trial court found "the issue in favor of Defendant-that the [lease] has not been

amended" and ordered Defendant to submit a proposed judgment. The trial court's

judgment was entered on February 25, 2013. It stated:

               1.      The terms of the Lease between the parties dated March 31,
                       2011, have not been modified, and more specifically:

                       A.      The rent under the terms of the Lease has not been
                               modified;

                       B.      The terms of the Lease regarding the rent deposit,
                               length of the lease, and the right of first refusal if
                               the building is sold have not been modified.

               2.      Costs are taxed to [Plaintiff].

                                              6
           Plaintiff filed a motion for new trial on March 21, 2013. The record does not

indicate any ruling on the motion by the trial court. As a result, the motion was deemed

overruled 90 days after it was filed under Rule 78.06,4 and this appeal timely followed.

                      Applicable Principles of Review and Governing Law

           We "will affirm the judgment of the circuit court unless it misapplied or

erroneously declared the law, or the judgment is not supported by substantial evidence, or

the judgment is against the weight of the evidence." JAS Apartments, Inc. v. Naji, 354
S.W.3d 175, 182 (Mo. banc 2011). "We must defer to the trial court's factual

determinations, reviewing the evidence in a light most favorable to the judgment and

disregarding all contrary evidence." Langdon v. United Restaurants, Inc., 105 S.W.3d
882, 886 (Mo. App. W.D. 2003). "[Q]uestions of law are reserved for the independent

judgment of the appellate court and are reviewed without deference to the circuit court's

determination." Olathe Millwork Co. v. Dulin, 189 S.W.3d 199, 203 (Mo. App. W.D.

2006).

           "The basic elements of a contract are offer, acceptance and consideration. In

order to contract, there must be a definite offer and an unequivocal acceptance." Tinucci

v. R.V. Evans Co., 989 S.W.2d 181, 184 (Mo. App. E.D. 1998). "[N]egotiations or

preliminary steps towards a contract do not themselves constitute a contract." L.B. v.

State Comm. of Psychologists, 912 S.W.2d 611, 617 (Mo. App. W.D. 1995). "Any

acceptance that includes new or variant terms from the offer amounts to a counteroffer

and a rejection of the offer, which becomes open again only when renewed by the

offeror." Tinucci, 989 S.W.2d at 184.

4
    Missouri Court Rules (2013).

                                                7
         "Where the evidence regarding a contract is conflicting or is capable of more than

one inference, the question raised is one of fact for the trier of fact to determine." Id. 5

What a party subjectively intended is not the controlling factor in finding that there was

an acceptance, instead "[t]he standard is what a reasonably prudent person would be led

to believe from the actions and words of the parties and this is a question to be resolved

by the trier of fact." Silver Dollar City, Inc. v. Kitsmiller Constr. Co., 931 S.W.2d 909,

914 (Mo. App. S.D. 1996).

                                                 Analysis

         Plaintiff's first point contends the judgment's declaration that the lease had not

been modified was against the weight of the evidence because "the parties exchanged

letters that contained an offer, counter-offer and acceptance[,]" Defendant "instructed

[its] attorney to draft a written lease modification according to the terms the parties

agreed on, and [Defendant] accepted the modified rent amount for four weeks."

Plaintiff's second point contends that the weight of the evidence was that the lease was "at

least partially modified" as there was "an unambiguous, precise and definite agreement"

"[o]n at least two, if not three, of the four matters the parties were negotiating on[.]"

Because both points challenge the trial court's factual finding that the parties never

5
  Plaintiff asserts that the standard of review to be applied in this case is de novo, quoting a statement in
State v. Nationwide Life Ins. Co., 340 S.W.3d 161, 189 (Mo. App. W.D. 2011), that "[t]he trial court's
determination that the letters formed a contract is a conclusion of law we review de novo." There, the court
was considering whether a letter constituted an offer. Id. The authority cited in the opinion for the
statement quoted by Plaintiff was "Crestwood Shops, LLC v. Hilkene, 197 S.W.3d 641, 656 (Mo. App.
W.D. 2006) ('Interpretation of a contract is a question of law and is subject to de novo review.')." Id.
Plaintiff's proffered authority is distinguishable. Here, the parties' dispute is not over the terms of a
contract; the question is whether the parties reached an agreement to modify their lease based on a
particular set of terms -- a question of fact for the trial court to resolve. In Tinucci, the parties disputed
whether a sentence in a letter revived a previously rejected offer. 989 S.W.2d at 184. The Eastern District
regarded this as "a genuine issue of material fact[,]" reversed summary judgment, and remanded the case.
Id.

                                                      8
reached an agreement to modify the lease, we resolve the appeal by addressing only that

common, dispositive issue.

        Plaintiff argues that a contract is generally construed so as to find it valid, citing

Kansas City v. Kansas City Transit, Inc., 406 S.W.2d 18, 22 (Mo. 1966) (if a contract is

open to two constructions -- one legal and the other illegal -- the legal construction is

preferred); Haeffner v. A.P. Green Fire Brick Co., 76 S.W.2d 122, 126 (Mo. 1934)

(plaintiff could not forfeit a lease by refusing payment when the lease permitted a grace

period for payment); and Citizens Trust Co. v. Tindle, 199 S.W. 1025, 1029 (Mo. banc

1917) (sureties are bound by their agreement "except as to such parts as may be illegal").

The cited cases are inapposite because each addressed a situation in which one of the

parties to an existing contract was advancing a construction of its terms that would

essentially render it invalid or meaningless; they do not address the question of whether

an agreement was reached. The disputed fact question in the case at bar is whether the

parties ever mutually agreed to be bound by a set of provisions modifying the lease.

        It must be remembered that "[t]he mere fact that parties contemplate a formal

written draft of their agreement at a later time is not sufficient in itself to demonstrate that

they did not intend to be bound at the time of their original agreement." Hunt v.

Dallmeyer, 517 S.W.2d 720, 724 (Mo. App. St.L.D. 1974).

                Where parties negotiate an agreement and clearly express an
        intention not to be bound until a formal contract is executed, such
        intention must be respected. But, where the parties fail to state that their
        negotiations are to be regarded as merely contingent upon the final
        execution of a written agreement, the question of whether they intended to
        be bound by anything less than such a contract is sometimes a rather
        difficult question. It is resolved by ascertaining whether the parties
        actually looked upon the formal writing merely as evidence of their
        preliminary agreement, or as an operative fact without which they
        intended not to be bound.

                                               9
Shapleigh Inv. Co. v. Miller, 193 S.W.2d 931, 937 (Mo. App. St.L.D. 1946) (emphasis

added).

          In Shapleigh Inv. Co., the court went on to state that "[s]uch expressions in

correspondence as 'mailing contract' or 'please forward contract,' or an acceptance 'subject

to drawing contract' or 'pending issuance of formal contract,' have been held not to

destroy the binding effect of the preliminary agreements." Id. (citations omitted).

          [A[lthough the parties did contemplate a formal writing, they did not
          expressly stipulate that they would not be bound until such instrument was
          executed. Therefore, it becomes a question of fact as to whether the
          parties intended the formal writing to be merely a memorial of their
          agreement arrived at through their correspondence, or whether they
          intended that there should be no contract until the execution of the formal
          extension agreement.

Id. The fact that the parties had discussed that an attorney would "'draw up the necessary

extension papers'" was "merely a circumstance to be considered along with all the other

evidence in the case which tend[ed] to throw light upon the intention of the parties." Id.

In addition to the letters, the other circumstances were that "[t]he loan had been extended

several times, in previous years, without the execution of a formal document[,]" and both

parties began performing the agreement "without either party insisting that a signed

agreement was necessary." Id. The court affirmed the trial court's judgment, which

found "that the parties had by their letters . . . reached an agreement to extend the loan" in

question. Id. at 936, 938.

          Here, the letters sent on behalf of Defendant each stated that Defendant's lawyer

would draft an amendment to the lease. Mr. Smith's first letter in response to Dr. Hynes's

November 2011 request for a modification of the lease specifically stated:

                                              10
       Please let us know if these changes to the lease are acceptable to you so
       that we may have our attorney draft an amendment as soon as possible.
       We would require the amendment be executed before we make any of the
       changes, therefore time is of the essence.

(Emphasis added.) Mr. Smith's second letter on behalf of Defendant to Plaintiff

expressed points of agreement between the parties, but it also provided: "I will forward

this letter to our attorney and have him draft an amendment to the lease and get it to you

for execution as soon as possible." In response, Dr. Hynes sent a draft lease on behalf of

Plaintiff to Defendant. Mr. Smith replied that while it appreciated Dr. Hynes's attempt,

Defendant's attorney was "working on the lease amendment according to the terms

detailed in our letter dated 12/9/11 (attached). You indicated at that time that our terms

were satisfactory. Once [our attorney] has a draft, I will forward it to you for your

review."

       When Defendant subsequently sent its attorney-drafted lease modification to

Plaintiff, the letter accompanying it stated that "[a]fter consulting with our attorney, these

are the changes we will agree to. Please review and let me know if you have any

questions. Also, please remember that until we get this amendment signed, we expect the

terms of the current lease to remain in effect." When Dr. Hynes received the draft, he

"immediately" responded that it was "not acceptable."

       The trial court could credit and rely on Defendant's repeated statements, through

Mr. Smith, that Defendant's lawyer would be drafting any modification to the lease and

that Defendant would require that "the amendment be executed before we make any of

the changes" as evidence demonstrating Defendant's intent not to be bound until a formal

amendment prepared by its attorney had been executed by the parties. See Shapleigh

Inv. Co., 193 S.W.2d at 937. Mr. Smith's statement in his second letter that Defendant

                                             11
would "have [its attorney] draft an amendment to the lease and get it to you for

execution" was consistent with his prior statement that such an event would have to take

place before Defendant would be bound by any new agreement.

       Plaintiff ineffectually argues that "[Defendant] put on no evidence regarding the

intent of the parties." A party is not required to "present contradictory or contrary

evidence" to contest an issue; such a contest may be made by cross-examining witnesses,

arguing a lack of witness credibility, or "by pointing out internal inconsistencies in the

evidence." White v. Director of Revenue, 321 S.W.3d 298, 308 (Mo. banc 2010). And

when facts relevant to an issue are contested, we "defer[ ] to the trial court's assessment

of the evidence." Id.

       Here, Defendant contested Plaintiff's evidence of mutual assent by cross-

examining Dr. Hynes, offering its own exhibits, and arguing to the trial court that the

evidence proved that no agreement had been reached. We therefore defer to the trial

court's determination of this contested factual issue (assumed in accord with the result

found): that Defendant "clearly express[ed] an intention not to be bound until a formal

contract [was] executed[.]" See Shapleigh Inv. Co., 193 S.W.2d at 937.

       Plaintiff makes several arguments based on evidence it believes supports its

position that a mutual agreement to modify the lease had been reached. For instance, it

argues that Defendant "accepted rent at the modified rate of $450.00 per week for

January, 2012." But Plaintiff does not articulate why the probative value of the

aforementioned statements in Mr. Smith's letters pales in comparison to this particular

evidence. Regarding Defendant's acceptance of the checks, "[t]here is no accord and

satisfaction unless payment is tendered on the express condition that it be accepted in full

                                             12
satisfaction of the claim." Cranor v. Jones Co., 921 S.W.2d 76, 81 (Mo. App. E.D.

1996). "The condition that acceptance means full satisfaction must be made clearly

apparent to the creditor. Whether an accord and satisfaction has been reached is

generally a question of fact." Id. (citation omitted).

         Here, nothing on the face of the checks indicated that the payments were tendered

in full satisfaction of the weekly rent due.6 The trial court was entitled to view any

acceptance of the checks by Defendant as an attempt to mitigate its damages, especially

since Mr. Smith had rejected Dr. Hynes's attempt to draft the lease amendment and Dr.

Hynes informed Mr. Smith that the lease amendment provided by Plaintiff was "not

acceptable." Plaintiff also insists that because "the rent checks were written by

[Defendant]'s agent and accepted by the same [Defendant]'s agent . . . . [this amounted to

a]nother outward manifestation of an agreement by [Defendant]." The trial court was not

obligated to view the evidence in this manner. It could just as easily have determined

(and apparently did) that Defendant's agent was simply accepting as much money as

Plaintiff was willing to pay at that time -- that Mr. Fagan (as Defendant's agent) knew

that Defendant had conditioned its acceptance of any lease amendment upon the

execution of a formal lease modification agreement drafted by Defendant's attorney.

         The trial court, as a matter of fact, determined that the parties did not agree to

modify the lease. Plaintiff has failed to "demonstrate why the favorable evidence, along

with the reasonable inferences drawn from that evidence, is so lacking in probative value,

when considered in the context of the totality of the evidence, that it fails to induce belief

6
 Presumably, Plaintiff would have also offered into evidence copies of the backs of the checks if they
would have provided support for Plaintiff's position. Whether or not they were offered at trial, they were
not included in the record on appeal. As a result, we presume that they would not support Plaintiff's
argument. Cf. Barnett v. Rogers, 400 S.W.3d 38, 49 (Mo. App. S.D. 2013) (court presumed that exhibits
which were not a part of the record on appeal were unfavorable to appellant).

                                                    13
in that proposition." Houston, 317 S.W.3d at 187. Plaintiffs' points are denied, and the

judgment of the trial court is affirmed.

DON E. BURRELL, J. - OPINION AUTHOR

JEFFREY W. BATES, P.J. - CONCURS

MARY W. SHEFFIELD, J. - CONCURS

                                           14