Court Opinion

ID: 3047043
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:20:31.073278+00
Date Added: 2024-06-11T11:41:11.014653
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 08-2210
                                    ___________

Lafarge North America, Inc., formerly   *
known as Lafarge Corporation,           *
                                        *
            Plaintiff-Appellant,        *
                                        * Appeal from the United States
      v.                                * District Court for the Western
                                        * District of Missouri.
Discovery Group L.L.C.; Explorer        *
Investments 1 L.L.C.; Steven J. Tharpe; *
Douglas E. Pope,                        *
                                        *
            Defendants-Appellees.       *
                                  ___________

                              Submitted: January 16, 2009
                                 Filed: July 27, 2009
                                  ___________

Before BYE, COLLOTON, and GRUENDER, Circuit Judges.
                           ___________

BYE, Circuit Judge.

       Lafarge North America, Inc. (“Lafarge”) appeals from the district court’s order
granting summary judgment in favor of Discovery Group L.L.C. (“Discovery
Group”), Explorer Investments 1 L.L.C. (“Explorer”), Steven Tharpe, and Douglas
Pope (collectively, the “Defendants”) on its claims for breach of contract, negligent
and fraudulent misrepresentation, breach of fiduciary duty, negligence, and rescission.
We reverse.
                                            I

       This case arises from a transaction in which Lafarge hired the Defendants to
assist with the relocation of its Missouri Division Headquarters, which prior to March
2001 had been located in Kansas City, Missouri. Lafarge found it necessary to
relocate because the headquarters was situated on a very active floodplain. In July
1999, Robert Diakiw, then Vice President and General Manager of Lafarge’s Missouri
operation, began discussions with Discovery Group concerning its ability to assist
Lafarge with the relocation.

       In July 1999, Discovery Group submitted a Real Estate Services Proposal (the
“Proposal”) to Lafarge, which stated Discovery Group would “provide an initial
profile of the project objectives.” The Proposal included wording as to Discovery
Group having already begun “to identify the key players in terms of Owners, Brokers,
Government authorities and general resources to assist with the site/building selection
phase of our work.” The Proposal further stated it would be Discovery Group’s “goal
to essentially serve as an extension of the Lafarge real estate department function,”
and Discovery Group would serve as “[a] single source for all Kansas City relocation
activities,” offer “[a] strategic approach to the relocation process,” and integrate “the
research, capital, economic, planning, design, construction, transaction and consulting
functions.”

       Thereafter, Discovery Group and Lafarge entered into an Exclusive
Representation Agreement (“ERA”) effective as of August 1, 1999. Discovery Group
agreed to assist Lafarge with site selection for the relocation of its headquarters. They
also agreed upon selection of a site, it was Lafarge’s intentions to have an entity
related to Discovery Group, i.e., Explorer, purchase the selected property and enter
into a triple net operating lease with Lafarge. Relevant to this appeal, the ERA
provided:

                                          -2-
      Discovery will undertake it best efforts to represent [Lafarge] in
      prospecting for and identifying prospective real estate sites . . . .
      Discovery will search for sites and/or buildings and review each
      prospective real estate location with regard to its ability to achieve the
      objectives of [Lafarge] with respect to the Representation Agreement.

The ERA also stated that Lafarge “confirms its review and acknowledgment of the
Attached Exhibit ‘A’ Agency Disclosure and Representation Provisions required by
the Missouri Real Estate Commission.” Exhibit A was Missouri Revised Statute
§ 339.730, which sets forth various disclosures and responsibilities of a real estate
agent; it includes, among other things, a requirement for the agent to exercise
reasonable care and skill and to disclose to the client all adverse material facts known
by the agent.

       As Discovery Group began prospecting for and analyzing various potential sites
for Lafarge’s Missouri headquarters, it periodically sent Lafarge updates on its
progress. On September 16, 1999, Discovery Group sent its first progress report to
Lafarge, which listed one of the priority objectives of Phase One as “Understand
Local Government Policies.” The report stated Discovery Group was “In Process”
with respect to this objective, noting it has “met with officials in Blue Spring and
Independence to discuss economic and site concerns.” On October 1, 1999, Discovery
Group sent Lafarge another progress report indicating it was “In Process” with respect
to the objective of “[f]urther understand[ing] land values and government incentives
at each of the locations.” On October 15, 1999, a third progress report once again
affirmed that Discovery Group was “In Process” with respect to “understand[ing] land
values and government incentives at each of the locations.”

       Consistent with the ERA, Discovery Group presented Lafarge with fifteen
possible site locations. Based on Discovery Group’s advice, Lafarge selected a parcel
referred to as the “Chapel Ridge” site located in Lee’s Summit, Missouri. Lafarge
received no economic incentives for relocating to the Chapel Ridge site other than

                                          -3-
standard state tax credits. Discovery Group next contacted Chapel Development
L.L.C. (“Chapel Development”) about having an entity related to Discovery Group
(Explorer) purchase the property. Involved in the transaction were two representatives
of Chapel Development, Michael Atcheson and Larry Haas.1 Chapel Development
eventually agreed to acquire the Chapel Ridge property and sell it to Explorer.

       Around this same time, Chapel Development and other entities owned by or
associated with Atcheson and Haas brought a petition in the Circuit Court of Jackson
County, Missouri, for the formation of the Strother Transportation Development
District (the “Strother District”). The Strother District sought to impose an additional
1/2 percent sales tax on all transactions occurring within the district, the proceeds of
which would fund a proposed interchange and other infrastructure improvements. The
Chapel Ridge site is located within the Strother District. Shortly before closing on the
property, Discovery Group learned of the proposed Strother District. Despite
knowledge of the proposed Strother District – and its tax consequences for those
located therein – Discovery Group/Explorer completed the purchase of the Chapel
Ridge property on December 3, 1999, without informing Lafarge of the Strother
District.

       The Strother District was formed on January 21, 2000. On March 30, 2000,
Lafarge and Explorer executed a lease of the Chapel Ridge property. The Strother
District was approved on April 25, 2000.

      Throughout this process, Lafarge did not, consistent with its past practice,
intend to collect sales tax from its Missouri headquarters regardless of its location.
Lafarge believed that, because the vast majority of its sales were made by mobile sales
associates, its responsibility was to collect sales tax applicable to the plant from which

      1
       The Defendants filed a third-party claim for breach of contract and
indemnification against Chapel Development, Atcheson, and Haas. The district
court’s resolution of the third-party claims is the subject of a separate appeal.

                                           -4-
the material being sold originated. Lafarge first learned of the Strother District in
March 2001 when representatives contacted Lafarge regarding collection of the 1/2
percent sales tax. Lafarge claimed it did not owe sales tax to the Strother District
because it did not conduct any sales from its headquarters in Chapel Ridge. Lafarge
then sent a letter to the Missouri Department of Revenue seeking clarification. The
Department of Revenue disagreed with Lafarge and concluded it must collect sales tax
at its headquarters in Chapel Ridge, which in turn made Lafarge liable for the sales tax
imposed by the Strother District. Shortly thereafter, Lafarge once again relocated its
headquarters, choosing a location outside of the Strother District and for which it
received governmental incentives based on sales tax revenue.

       Lafarge brought this diversity action against the Defendants in the Western
District of Missouri for (1) breach of the ERA, (2) fraudulent misrepresentation, (3)
negligent misrepresentation, (4) breach of fiduciary duty, (5) negligence, and (6)
rescission of the lease agreement. Lafarge contended the Defendants had an
obligation, both in contract and tort, to disclose the existence of the Strother District.
Defendants moved for summary judgment, which the district court granted. The court
concluded Lafarge’s breach of contract claim failed because the ERA did not impose
an obligation on Discovery Group to investigate or disclose economic incentives and
tax obligations. It likewise granted summary judgment on Lafarge’s fraudulent
misrepresentation, negligent misrepresentation, and breach of fiduciary duty claims
because it determined the existence of the Strother District was not a material fact, and
the court further concluded the negligence claim failed because Defendants did not
owe a duty to disclose the Strother District. Finally, the court granted judgment on
Lafarge’s rescission claim because it determined the lease was not based on any
fraudulent misrepresentation, misapprehension, or mistake. Lafarge appeals each of
the district court’s conclusions.

                                           -5-
                                            II

       We review the district court’s grant of summary judgment de novo. Urban
Hotel Dev. Co., Inc. v. President Dev. Group, L.C., 535 F.3d 874, 877 (8th Cir. 2008).
“Summary judgment is appropriate if the evidence, viewed most favorably to the non-
moving party, establishes that no genuine issue of material fact exists and the moving
party is entitled to judgment as a matter of law.” Id. In a diversity action such as this,
we are required to apply Missouri law. See id.

                                  Breach of Contract
        In Missouri, a party seeking to establish a breach of contract claim must prove:
“(1) the existence of a valid contract; (2) the rights and obligations of each party; (3)
breach; and (4) damages.” Evans v. Wele, 31 S.W.3d 489, 493 (Mo. Ct. App. 2000).
Though the parties agree the ERA is a valid contract, they dispute the rights and
obligations of each party under the contract.2 Specifically, Lafarge asserts the ERA
obligated Discovery Group to investigate economic incentives and disclose important
tax information, i.e., the Strother District. Although the contract nowhere discusses
economic incentives or prevailing tax rates, Lafarge relies on the ERA’s language
which states, “Discovery will search for sites and/or buildings and review each
prospective real estate location with regard to its ability to achieve the objectives of
[Lafarge] with respect to the Representation Agreement.” Lafarge argues its
“objectives” as intended by the contract include available economic incentives and tax
rates; thus, it argues Discovery Group was obligated under the terms of the contract
to investigate economic incentives and disclose prevailing tax rates. To support its
interpretation of the ERA, Lafarge relies on Discovery Group’s Services Proposal –
in which it states Discovery Group would provide a profile of project objectives and
had begun to identify key players in terms of government authorities – and its status
updates – in which Discovery Group identified understanding government policies

      2
      Lafarge’s breach of contract claim is asserted solely against Discovery Group
because it is the only Defendant that is a party to the ERA.

                                           -6-
and incentives at each location as “objectives.” In response, Discovery Group argues
the contract is unambiguous and contains no reference to economic incentives or tax
rates, and, as such, the parole evidence rule bars Lafarge’s attempts to create an
ambiguity through extrinsic evidence.

       “The cardinal rule in the interpretation of a contract is to ascertain the intention
of the parties and give effect to that intention.” J.E. Hathman v. Sigma Alpha Epsilon
Club, 491 S.W.2d 261, 264 (Mo. 1973). If the contract is unambiguous, then the
intent of the parties is to be gathered from the contract alone, and “any extrinsic or
parole evidence as to the intent and meaning of the contract must be excluded from
the court’s review.” Vidacak v. Okla. Farmers Union Mut. Ins. Co., 274 S.W.3d 487,
490 (Mo. Ct. App. 2008). Where a contract is ambiguous and unclear, however, “a
court may resort to extrinsic evidence to resolve an ambiguity.” Burrus v. HBE Corp.,
211 S.W.3d 613, 616 (Mo. Ct. App. 2006). “A contract is ambiguous when it is
reasonably susceptible to different constructions.” Id. (internal quotation marks
omitted). Whether a contract is ambiguous is a question of law. Edgewater Health
Care, Inc. v. Health Sys. Mgmt., Inc., 752 S.W.2d 860, 865 (Mo. Ct. App. 1988). If
a contract is ambiguous, “then a question of fact arises as to the intent of the parties,
and thus it is error to grant summary judgment.” Essex Dev., Inc. v. Cotton Custom
Homes, L.L.C., 195 S.W.3d 532, 535 (Mo. Ct. App. 2006).

       Viewing the ERA in its entirety, we conclude it is ambiguous whether
Discovery Group was obligated to investigate economic incentives and disclose
prevailing tax rates. Discovery Group contracted to search for sites and review each
prospective location with regard to its ability to achieve Lafarge’s “objectives,” which
is an undefined term in the ERA. See Burrus, 211 S.W.3d at 618 n.4 (noting that
while a contract term is not automatically rendered ambiguous simply because it is
undefined, it is relevant to the court’s analysis when the term is capable of more than
one reasonable construction). It seems axiomatic that part of Lafarge’s objectives in
selecting prospective sites included economic considerations, such as a location’s cost,

                                           -7-
appraised value, potential for appreciation, etc. As such, it is reasonable to conclude
one of those economic considerations relevant to Lafarge’s search was the economic
incentives and tax rates existing at particular locations. Therefore, it is reasonable to
construe the term “objectives” in the ERA to include the economic benefits and
drawbacks to Lafarge of selecting a particular site, which in turn imposes an
obligation to investigate and disclose to Lafarge existing economic incentives and tax
rates.

       Discovery Group argues the only “objectives” contemplated by the agreement
were Lafarge’s goals in having an entity related to Discovery Group purchase a site,
build or renovate a building as necessary, and thereafter enter into a triple net
operating lease with Lafarge. Thus, according to Discovery Group, its only obligation
under the contract was to review sites in accordance with their ability to meet those
goals without regard to any other factors – economic or otherwise – impacting the site.
While this may be a reasonable interpretation of the contract, it is also reasonable to
construe the term “objectives” as encompassing more considerations than those
advanced by Discovery Group. Under Discovery Group’s interpretation of the word
“objectives,” Lafarge apparently would not be concerned with several major details
impacting the attractiveness of particular sites, such as a location’s cost, whether it
was overpriced, its potential for appreciation, taxation rates, etc. This would mean
Discovery Group’s sole obligation was to identify sites that could be purchased and
leased to Lafarge, without having to disclose any beneficial or negative facts relevant
to that site. For example, under Discovery Group’s interpretation of the contract,
Lafarge did not even have the objective of ensuring that its new location was not in
a floodplain, even though that was the very reason Lafarge was relocating in the first
place.

      As such, it is reasonable to conclude that the term “objectives” in the contract
encompasses more than Discovery Group selecting a site which could be purchased
by Explorer, renovated to suit Lafarge’s needs, and then leased to Lafarge. Given the

                                          -8-
obvious economic considerations involved, as well as the contract’s failure to define
the relevant terms, it is reasonable to interpret Discovery Group’s obligation to
“search for sites” and “review each prospective location” in accordance with Lafarge’s
“objectives” as requiring Discovery Group to investigate and disclose the economic
considerations impacting a particular site, which necessarily encompasses taxation
rates. In the end, however, we do not decide which interpretation is more reasonable,
but only that both interpretations are reasonable. Because the ERA is reasonably
susceptible to multiple constructions – one of which imposes a requirement on
Discovery Group to review and disclose existing economic incentives and prevailing
tax rates and one of which does not – the contract is ambiguous about whether the
parties intended Discovery Group to undertake such an obligation.

       Because the contract is ambiguous, a question of fact arises as to the parties’
intent, and extrinsic evidence may be introduced as proof of the parties’ intent. See
Burrus, 211 S.W.3d at 616. Both parties have extrinsic evidence favorable to their
interpretation of the contract and the meaning of the term “objectives.” Discovery
Group can introduce evidence that Lafarge did not care about prevailing tax rates
because it did not believe them relevant, never discussed economic incentives, and
could have easily included this obligation in the contract if such was its desire. In
contrast, Lafarge can introduce evidence that Discovery Group represented prior to
the contract they would meet with government authorities, and it identified
“Understand Local Government Policies” as an “objective” in its status reports. It is
for a jury, not this court, to weigh the evidence, along with the terms of the contract,
and make a factual determination of the parties’ intent concerning Discovery Group’s
obligation to investigate and disclose economic incentives and tax rates.3 Thus, we

      3
        The district court concluded even if the contract was ambiguous, Lafarge’s
extrinsic evidence was “minimal.” As previously noted, however, once a contract is
deemed ambiguous, a question of fact arises and the issue is reserved for the jury.
Essex, 195 S.W.3d at 535.

                                          -9-
reverse the district court’s grant of summary judgment in favor of Discovery Group
on Lafarge’s breach of contract claim.

                     Fraudulent and Negligent Misrepresentation
        The elements of a fraudulent representation claim in Missouri are: “(1) a false,
material representation; (2) the speaker’s knowledge of its falsity or his ignorance of
its truth; (3) the speaker’s intent that it should be acted upon by the hearer in the
manner reasonably contemplated; (4) the hearer’s reasonable reliance on its truth; and
(5) the hearer’s consequent and proximately caused injury.” Kesselring v. St. Louis
Group, Inc., 74 S.W.3d 809, 813 (Mo. Ct. App. 2003). To state a claim for negligent
misrepresentation, a plaintiff must prove:

      (1) the speaker supplied information in the course of his business; (2)
      because of a failure by the speaker to exercise reasonable care, the
      information was false; (3) the information was intentionally provided by
      the speaker for the guidance of a limited group of persons in a particular
      business transaction; (4) the listener justifiably relied on the information;
      and (5) due to the listener’s reliance on the information, the listener
      suffered a pecuniary loss.

Id. While similar, there are two differences between a fraudulent misrepresentation
claim and a negligent misrepresentation claim. First, “fraudulent misrepresentation
requires that the person knowingly or recklessly supplied false information, whereas
negligent misrepresentation requires no such knowledge or recklessness.” Id.
Second, “negligent misrepresentation requires that the information be supplied in the
course of the defendant’s business.” Id.

       The district court granted summary judgment on Lafarge’s misrepresentation
claims because it concluded the existence of the Strother District, of which the failure
to disclose made certain prior representations false, was not material to Lafarge. The
court relied on the undisputed fact that Lafarge had not in the past reported sales tax
from the location of its headquarters and did not intend to report sales tax from its new

                                          -10-
location. Furthermore, the court relied on testimony by David Addison, Lafarge’s
controller of its North America Division, explicitly stating the existence of the
Strother District would not have been of consequence to him. For the following
reasons, we disagree with the district court’s materiality analysis.

       Materiality is a question of fact for the jury, “but when the misrepresentation
is of such a nature that all minds would agree it is or is not material the question is
appropriate for summary judgment.” Continental Cas. Co. v. Maxwell, 799 S.W.2d
882, 889 (Mo. Ct. App. 1990). A “representation is material if a reasonable person
would attach importance to it in determining his choice of action in the transaction in
question.” St. Louis Air Cargo Serv., Inc. v. City of St. Louis, 929 S.W.2d 821, 826
(Mo. Ct. App. 1996); Brown v. Bennett, 136 S.W.3d 552, 556 (Mo. Ct. App. 2004)
(“Facts to which a reasonable person might be expected to attach importance in
making one’s choice of action are material.”). Because it focuses on a reasonable
person, the “test of materiality . . . is an objective one, to be evaluated by the facts and
circumstances of the transaction in question.” DeLong v. Hilltop Lincoln-Mercury,
Inc., 812 S.W.2d 834, 840 (Mo. Ct. App. 1991). Thus, the participants’ subjective
beliefs concerning the importance of the misrepresentation at issue are immaterial to
our analysis.

        We conclude a genuine issue of fact exists whether disclosure of the Strother
District was material. A factfinder could conclude that a reasonable business engaged
in selling construction materials would attach importance to a special sales tax when
choosing the location of its new headquarters. Lafarge is a business which conducts
sales from its headquarters and is obligated to pay sales tax according to the rate of
taxation in the jurisdiction of its headquarters. It seems simple enough to say that a
business conducting sales from its headquarters would attach importance to a special
sales tax when choosing where to relocate it headquarters.

                                           -11-
       Although the above point is easily made, the confusion lies in the fact that while
Lafarge is required to pay sales tax at its headquarters, it did not – at the time –
understand its obligation. As such, Lafarge had not reported sales tax from its
headquarters and did not intend to report sales tax from its headquarters in its new
location. By considering such facts, however, the district court (and Defendants)
mistakenly take subjective considerations into account while applying an objective
standard. A reasonable business conducting sales from its headquarters would have
placed importance on the Strother District in selecting a site for its headquarters. The
fact that Lafarge, based on an incorrect interpretation of Missouri law, mistakenly
believed it did not conduct sales from its headquarters is a subjective factor irrelevant
under an objective analysis. A reasonable company in Lafarge’s position with a
correct understanding of the law would have attached importance to the Strother
District. That Lafarge was mistaken in its understanding of the law goes to the
subjective importance it would have placed on the Strother District, not the
importance a reasonable company would have placed on the same information. See
Osterberger v. Hites Constr. Co., 599 S.W.2d 221, 228 (Mo. Ct. App. 1980) (“The test
of materiality . . . is not, subjectively, whether the fact concealed would have affected
the conduct of the particular buyer concerned but, rather, whether, objectively, the fact
concealed would have affected the conduct of a reasonably prudent buyer.”).

      While the importance Lafarge would have placed on the Strother District
because of its beliefs concerning its tax obligations is relevant for purposes of
causation – i.e, whether Lafarge in fact would have proceeded differently had it
known of the Strother District – it is irrelevant with respect to materiality.4 Because

      4
       Although the parties argued the element of causation below, the district court
did not discuss causation, and the Defendants do not argue a lack of causation on
appeal. Thus, we leave this issue for the district court to resolve. See Schweiss v.
Chrysler Motors Corp., 922 F.2d 473, 476 (8th Cir. 1990) (explaining that we may
decline to address an issue not reached by the district court “where there are factual
questions still to be resolved or where we would benefit from having the District
Court decide the issue in the first instance”). Furthermore, we make no ruling with

                                          -12-
a reasonable company in Lafarge’s position would have attached importance to the
Strother District, the failure to disclose its existence was material. Therefore, we
reverse the district court’s grant of summary judgment in favor of Defendants on
Lafarge’s claims of fraudulent and negligent misrepresentation.5

                               Breach of Fiduciary Duty
       In Missouri, a claim for breach of fiduciary duty has four elements: (1) the
existence of a fiduciary relationship between the parties; (2) a breach of that fiduciary
duty; (3) causation; and (4) harm. Koger v. Hartford Life Ins. Co., 28 S.W.3d 405,
411 (Mo. Ct. App. 2000). Under Missouri common law, a real estate broker and client
have a fiduciary relationship. Am. Mortgage Inv. Co. v. Hardin-Stockton Corp., 671
S.W.2d 283, 290 (Mo. Ct. App. 1984). As such, a broker, among other things, is
“obligated . . . to make a complete and full disclosure of all material facts concerning
the transaction.” Id. In 1997, Missouri enacted Missouri Revised Statute § 339.730,
“which is intended to take the typical real estate agency relationship out of the realm
of common law agency.” Lowdermilk v. Vescovo Bldg. & Realty Co., Inc., 91
S.W.3d 617, 629 (Mo. Ct. App. 2002) (internal quotation marks and citation omitted).
The statute imposes upon a broker an obligation to disclose “all material adverse facts

respect to the other elements of Lafarge’s misrepresentation claims.
      5
        We affirm the district court with respect to certain specific representations
made in a brochure produced by Discovery Group. The brochure was not created until
April 2000 (after Lafarge contracted with Discovery Group, selected the Chapel Ridge
site, and entered into a lease with Explorer), and there is no evidence how Lafarge
could have relied on representations contained therein. However, it is important to
note that Lafarge’s misrepresentation claims do not necessarily rely on affirmative
misrepresentations. “Concealment of a fact which one has a duty to disclose properly
serves as a substitute element for a false and fraudulent misrepresentation.”
Osterberger, 599 S.W.2d at 227. Because Defendants, as real estate brokers, had a
duty to disclose all adverse material facts, Missouri Revised Statute § 339.730(1),
their failure to disclose the Strother District, if found to be material, constitutes its
own misrepresentation without reliance on any other representation or statement.

                                          -13-
actually known or that should have been known” by the broker. Mo. Rev. Stat. §
339.730(1)(3)(c). An adverse material fact is defined as “a fact related to the property
not reasonably ascertainable or known to a party which negatively affect the value of
the property.” Mo. Rev. Stat. § 339.710(1).

        As with its other claims, Lafarge alleges Defendants breached their fiduciary
duty by failing to disclose the existence of the Strother District. The district court
granted summary judgment on Lafarge’s breach of fiduciary duty claim, once again
concluding the Strother District was not an adverse material fact. For many of the
same reasons as before, we conclude there is a factual dispute whether the Strother
District was a material fact. A reasonable person could conclude that an objective
business would have found the Strother District important in making its decision, and
it is safe to say the Strother District more than likely negatively affected the value of
the property. Again, the fact that Lafarge may have mistakenly believed the Strother
District to be unimportant goes to causation, not materiality.6 For this reason, we
reverse the district court’s grant of summary judgment in favor of Defendants on
Lafarge’s breach of fiduciary duty claim.

                                       Negligence
       To prevail on a negligence claim in Missouri, the plaintiff must prove: “1) the
existence of a duty on the part of the defendant to protect the plaintiff from injury; 2)
the defendant’s failure to perform that duty; and 3) the plaintiff’s injury was
proximately caused by that failure.” Smith v. Dewitt & Assoc., Inc., 279 S.W.3d 220,
224 (Mo. Ct. App. 2009). A duty arises when “there is a foreseeable likelihood that
particular acts or omissions will cause harm or injury,” and the scope of that duty “is
measured by whether a reasonably prudent person would have anticipated danger and
provided against it.” Id. (internal quotation marks and citation omitted).

      6
        Again, we do not address causation or any other element of Lafarge’s breach
of fiduciary duty claim not addressed by the district court. See Schweiss, 922 F.2d at
476.

                                          -14-
       The district court granted summary judgment in favor of Defendants because
it concluded Defendants did not breach any duty owed to Lafarge. We disagree.
First, Missouri courts have long recognized a real estate broker owes a duty of care
towards his clients, which requires him “to exercise reasonable skill, diligence, and
care in the handling of business given over or entrusted to the broker.” Am. Mortgage
Inv. Co., 671 S.W.2d at 293. Courts also recognize such a standard is “dependent
upon the nature and extent of the job undertaken by the broker.” Id. Whether that
duty is breached in a particular case is a question of fact for the jury to decide. Pyle
v. Layton, 189 S.W.3d 679, 685 (Mo. Ct. App. 2006). Therefore, “[s]ummary
judgment is frequently inappropriate in a negligence case particularly where the issue
is whether there are facts upon which the trier of fact could find a breach of an
admitted or otherwise established duty.” Lumbermans Mut. Cas. Co. v. Thornton, 92
S.W.3d 259, 263 (Mo. Ct. App. 2002).

        In light of the evidence, there is an issue of fact whether Defendants exercised
reasonable care in handling Lafarge’s business. In light of Defendants agreeing to
handle all of Lafarge’s business with respect to the relocation of its headquarters, a
factfinder could conclude a reasonably prudent person would have disclosed the
existence of the Strother District to Lafarge. First, Discovery Group had little reason
to believe the Strother District would have been of no consequence to Lafarge.
Lafarge never told Defendants that it did not intend to pay sales tax at its new
location.7 More importantly, even if Defendants had reason to believe the Strother
District may be inconsequential to Lafarge, they have yet to provide a persuasive
justification for not disclosing the information. Informing Lafarge of the Strother

      7
        Although Defendants are correct in pointing out Lafarge represented that its
headquarters would be used for office space and research, this does not necessarily
preclude the possibility that sales taxation rates would be applicable. It is possible,
as this case demonstrates, that work undertaken in an office could incur sales tax. In
fact, when Lafarge sent Defendants a spreadsheet of the individuals who would be
working in the new headquarters, it identified fifteen people under the category “RM
Sales.”

                                         -15-
District would have been very easy, and would not have imposed upon the Defendants
any additional burdens or costs. If Defendants truly believed the Strother District was
immaterial to Lafarge, they could have easily disclosed its existence and then
proceeded to closing with Lafarge’s blessing. Thus, a factfinder could conclude a
reasonable person/company in Defendants’ position would have disclosed the Strother
District to Lafarge. The district court erred in finding as a matter of law that
Defendants did not breach their duty.

         The district court also erred in holding that, even if Defendants did breach their
duty, such breach was not the proximate cause of Lafarge’s injuries. According to the
district court, the cause of Lafarge’s damage was the letter by the Missouri
Department of Revenue concluding Lafarge conducted sales at its headquarters. The
district court erred, however, because the test “of proximate cause is whether the
negligence is an efficient cause which sets in motion the chain of circumstances
leading to the plaintiff’s injuries or damages.” English v. Empire Dist. Elec. Co., Inc.,
220 S.W.3d 849, 856 (Mo. Ct. App. 2007). Thus, a “defendant’s negligence does not
need to be the sole cause of the injury, but rather need only be one of the efficient
causes thereof without which the injury would not have occurred.” Id. Proximate
causation is satisfied when “the purported intervening cause occurs in combination or
concurrent with earlier negligence, or where the intervening act itself constitutes an
act . . . which is a foreseeable consequence of the original act of negligence.” Id.
“The test is not whether a reasonably prudent person would have foreseen the
particular injury, but whether, after the occurrences, the injury appears to be the
reasonable and probable cause of the act or omission of the defendant.” Simonian v.
Gevers Heating & Air Conditioning, Inc., 957 S.W.2d 452, 475 (Mo. Ct. App. 1997).

       We conclude that if Defendants are found to be negligent in failing to disclose
the Strother District, such negligence was the proximate cause of Lafarge’s injuries.
See Payne v. City of St. Joseph, 135 S.W.3d 444, 451 (Mo. Ct. App. 2004) (noting

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that proximate causation is generally a question of law).8 Because Lafarge was
required to pay the special tax imposed by the Strother District it was also a
reasonable and probable consequence of the Defendants’ failure to inform Lafarge of
the Strother District. Although Lafarge had not in the past paid sales tax from the
jurisdiction of its headquarters, its failure to do so was based on an incorrect
interpretation of the law. It is foreseeable that Lafarge would eventually have its
understanding of the law corrected and thus begin paying the special sales tax imposed
by the Strother District. See Jones v. Tritter, 938 S.W.2d 165, 168 (Mo. Ct. App.
1998) (“It is only necessary that the party charged knew or should have known there
was an appreciable chance some injury would result.”). Notably, the letter from the
Department of Revenue did not constitute a change in the law – which would allow
Defendants to argue that such a change was not foreseeable – but simply an
application of existing law to the circumstances of this case. Therefore, Lafarge
paying the special sales tax imposed by the Strother District was a reasonable,
probable, and foreseeable consequence of Defendants not disclosing the Strother
District to Lafarge.

                                      Rescission
      In its final claim, Lafarge seeks to rescind the lease it entered into with
Explorer. Lafarge alleges that because the lease was induced through the fraudulent
representations and omissions of the various Defendants, it is entitled to rescission.
Missouri courts have held that “rescission may be based upon actual fraud, i.e., a false
representation of a material fact, made with the knowledge of its falsity and with the

      8
        This presupposes that Defendant’s negligence is found to be the cause in fact,
or “but for” cause, of Lafarge’s injuries, i.e., Lafarge would have chosen a different
site for its headquarters had Defendants acted in a reasonably prudent manner. See
Simonian, 957 S.W.2d at 474-75 (explaining the differences between “but for”
causation and proximate causation; a plaintiff in a negligence action must demonstrate
both). The district court did not address causation in fact, and the parties do not argue
causation in fact on appeal. Therefore, we decline to address this element of Lafarge’s
negligence claim. See Scweiss, 922 F.2d 476.

                                          -17-
intent to deceive.” Osterberger, 599 S.W.2d at 227. In addition, “a party to a contract
can rescind if the contract was induced by an innocent misrepresentation.” Groothand
v. Schlueter, 949 S.W.2d 923, 927 (Mo. Ct. App. 1997). Thus, “[t]here is no
requirement that the party prove the speaker’s knowledge of the falsity or intent to
cheat or defraud.” Id.

       The district court granted summary judgment against Lafarge on this claim,
concluding, based on its other rulings, Lafarge could not demonstrate the lease was
based on a misrepresentation of a material fact. For the reasons previously explained,
this ruling was incorrect; there is a genuine issue of fact whether the Strother District
was a material fact. Therefore, we reverse the district court’s ruling with respect to
Lafarge’s rescission claim.9

                                           III

      For the aforementioned reasons, we reverse the district court’s order with
respect to Lafarge’s claims against Defendants and remand for further proceedings.
                        ______________________________

      9
        Defendants also argue that Explorer, the lessor, cannot be held liable for the
misdeeds of other parties (i.e., Discovery Group, Tharpe, and Pope), and that Lafarge
failed to seek rescission in a timely manner. The district court did not address these
arguments. Because we believe it would be beneficial for the district court to address
these issues in the first instance, we decline to affirm on these alternative theories.
Schweiss, 922 F.2d at 476.

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