John R. Boyce Family Trust v. Snyder, ED 82749.

• Decision Date: 02 March 2004
• Docket Number: No. ED 82749.,ED 82749.
• Citation: 128 S.W.3d 630
• Parties: JOHN R. BOYCE FAMILY TRUST, John R. Boyce, Mary Ann Boyce, Daniel P. Boyce, M. Elizabeth Boyce, Emily Ann Boyce and Stephen Pallen Boyce, Plaintiffs/Respondents, v. Robert B. SNYDER, Defendant/Appellant.
• Court: Missouri Court of Appeals

128 S.W.3d 630

JOHN R. BOYCE FAMILY TRUST, John R. Boyce, Mary Ann Boyce, Daniel P. Boyce, M. Elizabeth Boyce, Emily Ann Boyce and Stephen Pallen Boyce, Plaintiffs/Respondents, v. Robert B. SNYDER, Defendant/Appellant.

No. ED 82749.

Missouri Court of Appeals, Eastern District, Division Three.

March 2, 2004.

James R. Dankenbring & Erik O. Solverud, St. Louis, MO, for appellant.

Leo V. Garvin & Paul M. Maloney, St. Louis, MO, for respondent.

WILLIAM H. CRANDALL, JR., Judge.

Defendant, Robert B. Snyder, appeals from the judgment, entered in a court-tried case, in favor of plaintiffs, the John R. Boyce Family Trust, John R. Boyce, Mary Ann Boyce, Daniel P. Boyce, M. Elizabeth Boyce, Emily Ann Boyce, and Stephen Pallen Boyce, in their action for removal of the trustee and for damages for the trustee's breach of fiduciary duty. We affirm in part and reverse in part.

In a court-tried case, the judgment of the trial court will be affirmed unless there is no substantial evidence to support the judgment, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We accept all evidence and inferences favorable to the judgment, and disregard all contrary evidence and inferences. Central Dist. Alarm, Inc. v. Hal-Tuc, Inc., 886 S.W.2d 210, 211 (Mo.App. E.D.1994). The trial court is in the best position to judge the credibility of the witnesses. VanBooven v. Smull, 938 S.W.2d 324, 327 (Mo.App. W.D. 1997).

The evidence established that the John R. Boyce Family Trust (hereinafter "family trust") was created by the Henrietta Boyce Revocable Living Trust upon the death of Henrietta Boyce in February 1994. The beneficiaries of the trust were John R. Boyce,¹ Henrietta's son; Mary Ann Boyce, Boyce's wife; and their four children, Daniel P. Boyce, M. Elizabeth Boyce, Emily Ann Boyce, and Stephen Pallen Boyce. Henrietta named Anthony Ribaudo as trustee of the family trust; and in the event Ribaudo resigned, designated defendant, Snyder, as successor trustee.

For years, plaintiff, Boyce, and defendant, Snyder, were close personal friends and business associates; and Boyce, an attorney, represented Snyder in legal matters. Snyder began working in the family grocery store as a teenager. In 1962, at the age of 22, he acquired his first ownership interest in a grocery store. He later formed Arnold Discount Foods, Inc. (hereinafter "ADF"), a corporation that owned and operated several small grocery stores. He converted the stores to Save-a-Lot stores, which were part of a chain of discount grocery stores. He also bought grocery stores which had failed or were failing. In 1983, he acquired a store in Eureka, Missouri, forming a second corporation, Eureka Discount Foods, Inc. (hereinafter "EDF"), to own and operate the store as a Save-a-Lot store (hereinafter "Eureka store"). After 1983, Snyder opened additional Save-a-Lot stores and placed them in ADF corporation.

Snyder was also an owner and director of First Exchange Bank (hereinafter "the bank"), which failed and was taken over by the FDIC. At Snyder's urging, Boyce had placed several loans with the bank. After the bank's failure, the FDIC called Boyce's loans. When Boyce was unable to obtain financing elsewhere, the FDIC obtained a judgment against him.

In the fall of 1994, Boyce met with Snyder several times to discuss Boyce's financial problems. During the meetings, Boyce learned that Snyder was interested in selling the Eureka store. Snyder's reasons for selling the Eureka store, as stated by him, were that he wanted to lessen his workload, to reduce the number of stores he owned, and to work with his son under only one corporation, ADF.

Boyce expressed an interest in purchasing the Eureka store not only as an investment opportunity for the family trust but also as a way of providing a job for his son, Daniel. Boyce expressed concern to Snyder, however, that neither he nor Daniel had any experience in the grocery business. Snyder assured Boyce that Daniel could be trained to operate the store. Snyder and Boyce were both aware that a Wal-Mart super center was planning to open in Eureka.

Snyder provided Boyce with the past financial records for the Eureka store and introduced him to Save-a-Lot executives. The Save-a-Lot representatives told Boyce that the stores were so easy to run that a "chimpanzee could run one." On the basis of their experience, they predicted that the opening of the Wal-Mart super center would cause an initial drop in sales of ten to 15 percent, but that the Eureka store would recover the loss within six months. Snyder concurred in that opinion.

Boyce determined that the family trust should purchase the Eureka store and agreed with Snyder on a purchase price of $403,000.00. The sale was structured as a sale of the common stock of EDF, so that Snyder could offset the capital gain from the sale of the store against the capital loss he incurred when the bank failed. No date was set for closing. Boyce agreed to close when Snyder felt that Daniel was sufficiently trained to operate the Eureka store successfully.

In January 1995, Daniel began working at one of Snyder's stores located in Fenton, Missouri. Snyder told his general manager to train Daniel to take over the Eureka store. The Fenton store manager started Daniel at an entry level position and after two months moved him into a management trainee program when he became aware that he was training Daniel to take over the management of the Eureka store. In May 1995, Daniel continued his training at the Eureka store under Bob Heaton, the manager of the Eureka store who had been interested in purchasing the Eureka store but had decided against it. Snyder's general manager continued to monitor Daniel's training several times per week and told Daniel to contact her whenever necessary. Daniel was also free to contact the manager of the Fenton store for guidance. Heaton and Daniel, however, did not get along. Heaton eventually left employment at the Eureka store at Daniel's request. Daniel was left to manage the Eureka store on his own, with occasional help from Snyder and his two managers. Snyder's own store managers had years of experience in the grocery business before they were promoted to store manager.

The Wal-Mart super center was scheduled to open in the mid-summer of 1995. Snyder was anxious to close on the sale of the Eureka store. In May 1995, Snyder told Boyce that Daniel was ready to manage the Eureka store. Boyce relied on Snyder's representation in deciding to proceed with the closing. When the purchase of the Eureka store was proposed to the trustee of the family trust, Anthony Ribaudo, he resigned as trustee because he did not have any experience in the grocery business. As the designated successor trustee, Snyder agreed to serve as trustee.

On May 30, 1995, Snyder signed documents accepting the trustee position. On May 31, 1995, the closing on the sale of the Eureka store took place. Boyce drafted the terms of the purchase agreement, which provided as follows: $265.00 to purchase one share of EDF from Snyder and $265,000.00 to redeem the remaining shares from Snyder, with the result that the family trust owned the only share of EDF corporation; $13,000.00 to Snyder for ADF corporation to provided consulting to EDF corporation, payable in monthly installments; $125,000.00 to Snyder for a non-compete agreement to prohibit him from owning or operating a grocery store within 10 miles of the Eureka store for a period of five years, payable in monthly installments. The family trust guaranteed EDF's loan of $175,000.00 from Rockwood Bank and loaned EDF an additional $75,000.00. Snyder signed the documents for the sale and financing on his own behalf and as successor trustee of the family trust.

For the first fiscal year the Eureka store was in business, after the opening of the Wal-Mart super center, the figures reflected an average decline in sales of 17 percent per week. In addition, shortly after closing, the Eureka store's refrigeration equipment needed extensive repairs and in some cases replacement. In the fall of 1995, Snyder acquired an interest in real property within a ten-mile radius of the Eureka store, with the intent of opening another grocery store with his son. Snyder and his son formed a new limited liability company to operate the new store and opened the store in May 1998. Rockwood Bank renewed EDF's loan in August 1997, August 2000, and August 2001. At the time of trial, the family trust remained liable on its guaranty of the EDF loan; and the family trust's loan to EDF remained unpaid and had increased to $160,676.27.

In 2000, plaintiffs brought the present action against Snyder. Their petition against Snyder was in six counts: Count I for his removal as trustee; Count II for breach of his fiduciary duty; Count III for his ultra vires acts; Count IV for avoidance of the ultra vires acts; Count V for fraudulent misrepresentation; and Count VI for imposition of a constructive trust. In their action, they sought money damages, a rescission of the sale of the Eureka store, and the imposition of a constructive trust on the proceeds of the sale of the Eureka store for the benefit of the family trust. Plaintiffs also brought one count for negligent misrepresentation (Count VII) against Moran Foods, Inc. d/b/a Save-a-Lot, Ltd.; but dismissed that count without prejudice before trial. Snyder counterclaimed, seeking indemnification from the family trust for his attorney's fees and a declaratory judgment that he was entitled to indemnification. During the pendency of this action, Snyder resigned as trustee and the court appointed Daniel as interim trustee.

After a bench trial, the court entered judgment in favor of plaintiffs and against Snyder on Count I for the removal of Snyder as trustee. On Count II for breach of fiduciary duty, the court awarded total damages of $285,000.00: $185,000.00...