Agri Process Innovations Inc. v. Envirotrol Inc.

• Citation: 338 S.W.3d 381
• Decision Date: 05 April 2011
• Docket Number: WD 72658.,Nos. WD 72403,s. WD 72403
• Parties: AGRI PROCESS INNOVATIONS, INC., Appellant–Respondent,v.ENVIROTROL, INC., Respondent–Appellant.
• Court: Court of Appeal of Missouri (US)

338 S.W.3d 381

AGRI PROCESS INNOVATIONS, INC., Appellant–Respondent,

v.ENVIROTROL, INC., Respondent–Appellant.

Nos. WD 72403

WD 72658.

Missouri Court of Appeals, Western District.

April 5, 2011.

Gary J. Barrett, Little Rock, AR, for Appellant–Respondent.Greg T. Spies and Mikki L. Copeland, Kansas City, MO, for Respondent–Appellant.Before Division II: KAREN KING MITCHELL, Presiding Judge, and JOSEPH M. ELLIS and VICTOR C. HOWARD, Judges.KAREN KING MITCHELL, Presiding Judge.

This is an agency case. The issue on appeal is whether the trial court erred in failing to submit to the jury the issue of whether the alleged agent acted within the scope and course of his alleged agency with the defendant. We hold that it did so err and that it therefore correctly granted the defendant's motion for a new trial. Accordingly, we affirm. The issue on cross-appeal is whether the trial court should have granted the defendant's motion for judgment notwithstanding the verdict in that, as a matter of law, the alleged agent lacked the authority to bind the defendant. We hold that a reasonable juror could have found that the alleged agent had apparent authority sufficient to bind the defendant. Accordingly, we affirm.

Facts and Procedural Background¹

Appellant–Respondent Agri Process Innovations, Inc. (“Agri Process”) entered into an agreement with Allen Hoover for installing ceramic insulation on bio-diesel fuel tanks. The only aspect of the contract that is relevant to this appeal is whether Respondent–Appellant Envirotrol, Inc. (“Envirotrol”) was bound by the agreement.

Representatives of Agri Process testified that, in negotiating the contract, Hoover held himself out as a representative of Envirotrol. Hoover's business cards stated that he was an employee of Envirotrol. Envirotrol's website listed Hoover as a technical consultant. When Agri Process began having problems with the insulation, it contacted Envirotrol, and Envirotrol's president travelled to the site to review the problem. Envirotrol's president stated that Envirotrol would correct the problem. Envirotrol paid Hoover $136,593.81 in 2006, the year before he entered into the contract with Agri Process.

Hoover himself testified that he had not been representing Envirotrol in the subject transaction. Rather, he testified that he had represented a company called Thermal Corrosion Solutions and that Agri Process knew that Thermal Corrosion Solutions was the contracting party. Thermal Corrosion Solutions is a sole proprietorship, and Hoover is its owner, operator, and sole employee. Thermal Corrosion Solutions subcontracted the work on Agri Process's tanks to a separate company called Mid South Thermal Coatings. Chris Bennett of Mid South Thermal Coatings purchased product from Envirotrol to use on the Agri Process job. Hoover directed Agri Process to submit payment for the project to Thermal Corrosion Solutions, which Agri Process did. Agri Process's personnel testified that they believed that Thermal Corrosion Solutions was affiliated with Envirotrol.

Agri Process alleged that only three instead of eight coats of insulation were installed on the tanks, resulting in moisture being trapped and inconsistency in the thickness of the insulation. The defective application of the insulation allegedly caused Agri Process damages. Agri Process sued Envirotrol for breach of contract and pled that Hoover, in entering into and performing under the contract, had acted as Envirotrol's agent.

In the course of discovery, Envirotrol propounded the following request for admission to Agri Process: “The contract upon which Plaintiff's claim is based contained no promise by Envirotrol.” Agri Process responded: “Admit.”

The circuit court held a jury trial on Agri Process's claims. Over Envirotrol's objection, the court submitted the following instruction to the jury:

Your verdict must be for Agri Process Innovation, Inc. if you believe:

First, Agri Process Innovation, Inc. and Envirotrol, Inc. entered into an agreement ... and

Second, Agri Process Innovation, Inc. performed its agreement, and

Third, Envirotrol, Inc. failed to perform its agreement, and

Fourth Agri Process Innovation, Inc. was thereby damaged.

Envirotrol objected to the instruction because it did not require the jury to find that Hoover acted within the scope and course of his agency with Envirotrol. The trial court overruled the objection, stating that “it's the discretion of the Court to make the apparent agency [instruction] part of and include it on the verdict director or not.” The court stated further that, if it included within the verdict director a required finding that Hoover acted as the agent of Envirotrol, it would be “adding additional elements into the burden of proof placed upon the plaintiff which are simply not required by Missouri law.”

The court did, however, submit to the jury an instruction defining “scope and course of agency”:

Acts of Allen Hoover were within the “scope and course of agency” as that phrase is used in these instructions if:

First, the conduct of Allen Hoover was such that an ordinarily careful person would believe that Allen Hoover had authority to perform such acts on behalf of Envirotrol, Inc., and

Second, Envirotrol, Inc. knew or had reason to know of such conduct and allowed such conduct, and

Third, Agri Process Innovations, Inc. reasonably relied on such conduct of Allen Hoover at the time of the transaction mentioned in the evidence.

The jury returned a verdict for Agri Process. Envirotrol filed a motion for a new trial, or, in the alternative, for judgment notwithstanding the verdict. In its motion for a new trial, Envirotrol argued that the court improperly submitted the verdict director in that the instruction did not require a finding that Hoover acted within the scope and course of his agency with Envirotrol. In its motion for judgment notwithstanding the verdict, Envirotrol argued that a verdict should be entered in its favor because Agri Process judicially admitted that Envirotrol had made no promise.

In its judgment, the trial court granted the motion for a new trial and denied ( sub silentio ) the motion for judgment notwithstanding the verdict. ² Agri Process appeals the former part of the judgment; Envirotrol cross-appeals the latter.

Standard of Review

“When a motion for new trial is granted because of prejudicial error in the instructions, the question presented on appeal is [a] question of law.” Luyties Pharmacal Co. v. Frederic Co., 716 S.W.2d 831, 834 (Mo.App. E.D.1986). As always, we review questions of law de novo. Smith v. Am. Family Mut. Ins. Co., 289 S.W.3d 675, 680–81 (Mo.App. W.D.2009). In reviewing the denial of a motion for judgment notwithstanding a verdict, the question is whether the plaintiff made a submissible case. Clevenger v. Oliver Ins. Agency, Inc., 237 S.W.3d 588, 590 (Mo. banc 2007). Whether the plaintiff made a submissible case is also a question of law. Taylor v. F.W. Woolworth Co., 641 S.W.2d 108, 111 (Mo. banc 1982).

A case may not be submitted unless each and every fact essential to liability is predicated upon legal and substantial evidence. In determining whether the evidence was sufficient to support the jury's verdict, the evidence is viewed in the light most favorable to the result reached by the jury, giving the plaintiff the benefit of all reasonable inferences and disregarding evidence and inferences that conflict with that verdict. [An appellate court] will reverse the jury's verdict for insufficient evidence only where there is a complete absence of probative fact to support the jury's conclusion. Accordingly, a motion for JNOV is properly granted when the motion identifies at least one element of the plaintiff's case that is not supported by the evidence.

Clevenger, 237 S.W.3d at 590 (internal citation omitted).

Legal Analysis

I. Agri Process's Appeal

Agri Process argues that the trial court erred in granting the motion for a new trial in that the verdict director was sufficient to submit all necessary issues for the jury to decide. We disagree.

“An instruction authorizing a verdict must require a finding of all ultimate facts necessary to sustain the verdict except those which have been unmistak[ab]ly conceded by both parties.” Young v. Kan. City Power & Light Co., 773 S.W.2d 120, 125 (Mo.App. W.D.1989). It is error to submit an instruction that assumes or omits a controverted fact that is essential to the plaintiff's claim. Id. The party claiming instructional error has the burden to show that the instruction prejudiced it, in that the instruction “ ‘misdirected, misled, or confused the jury.’ ” Kearbey v. Wichita Se. Kan., 240 S.W.3d 175, 183 (Mo.App. W.D.2007) (quoting Martens v. White, 195 S.W.3d 548, 557 (Mo.App. S.D.2006)). In determining whether the jury was misdirected, misled, or confused, we must decide whether, from reading the instruction, an average juror would understand the applicable law. Rice v. Bol, 116 S.W.3d 599, 606 (Mo.App. W.D.2003). When a Missouri Approved Instruction applies, the court shall give it if requested to do so. Rule 70.02(b). We presume that the failure to give an applicable Missouri Approved Instruction caused prejudice. Rice, 116 S.W.3d at 610. However, “it is not error for the trial court to fail to instruct on a factual issue or proof element on which there is no serious dispute.” Id. at 613.

a. The erroneous instruction

Here, whether Hoover acted within the scope and course of his alleged agency with Envirotrol was an “ultimate fact[ ] necessary to sustain the verdict.” See Young, 773 S.W.2d at 125. Agri Process's claim was for breach of contract. In order for Agri Process to have recovered against Envirotrol on that claim, it had to prove that Envirotrol had, in fact, entered into the subject contract. See Volker Court, LLC v. Santa Fe Apts., LLC, 130 S.W.3d 607, 611 (Mo.App. W.D.2004); MAI 26.06 (dealing with breach of a bilateral contract). Moreover, there is...