Allstar Capital, Inc. v. Wade

• Decision Date: 15 November 2011
• Docket Number: No. ED 94415.,ED 94415.
• Citation: 352 S.W.3d 633
• Parties: ALLSTAR CAPITAL, INC., Respondent, v. Jonathan WADE, Appellant.
• Court: Missouri Court of Appeals

352 S.W.3d 633

ALLSTAR CAPITAL, INC., Respondent,

v.Jonathan WADE, Appellant.

No. ED 94415.

Missouri Court of Appeals, Eastern District, Division One.

Nov. 15, 2011.

Frank A. Conard, St. Peters, MO, for Appellant.

Stephen L. Beimdiek, Sarah J. Hugg, St. Louis, MO, for Respondent.

ROY L. RICHTER, Judge.

In this court tried case, AllStar Capital, Inc. (“AllStar”) brought suit against Jonathon Wade (“Wade”) for failure to pay on a promissory note. Finding that Wade had defaulted on his repayment obligations under the note, the trial court entered judgment for AllStar and against Wade. Wade brings two claims of error on appeal: (1) the trial court erred because AllStar failed to prove its corporate existence, and (2) the trial court erroneously disallowed the application of certain statutes and regulations on Wade's behalf. We affirm.

I. BACKGROUND

Wade, a professional football player, was signed to his first National Football League contract in June 2007 and received $516,375 as an initial signing bonus. In January 2008, Wade sought and received a loan from AllStar in the amount of $48,500. In exchange, Wade executed a promissory note that provided he would make payments of $1,500 per month for eight consecutive months. At the conclusion of that period, in September 2008, the remainder of the balance was due, together with any accrued interest at the rate of 76 percent per annum. Wade failed to make the monthly payments and subsequently defaulted on the loan. AllStar brought suit to collect.

AllStar's six-count petition alleged: two breach of contract claims; one replevin claim; one unjust enrichment claim; one conversion claim; and one claim for accounts stated. In order to expedite the trial, and with the consent of the parties, a master was appointed to hear the case pursuant to Rule 68.01.¹ The master submitted his final findings of fact and conclusions of law in November 2009, finding for AllStar on the first breach of contract claim. On the remaining counts, the master recommended that judgment be entered for Wade because those claims were either duplicitous or not supported by the evidence.

In January 2010, the findings and conclusions of the master were adopted in their entirety by the circuit judge. Judgment was entered in favor of AllStar and against Wade in the amount of $121,573.70 for principal and interest and $50,000 for attorney's fees and costs. This appeal follows.

II. DISCUSSION

As a court tried case, we will sustain the judgment of the trial court 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. ² Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We will accept all evidence and inferences in the light most favorable to the prevailing party and disregard all contrary evidence. Essex Contracting, Inc. v. Jefferson County, 277 S.W.3d 647, 652 (Mo. banc 2009) (citing Murphy, 536 S.W.2d at 32).

A. AllStar Met Its Burden of Proving Its Corporate Existence.

In his first point, Wade argues the trial court erred in ordering judgment in favor of AllStar because AllStar failed to prove its corporate existence after Wade specifically denied it as required by Rule 55.13. We disagree.

Rule 55.13 states in relevant part:

When a person desires to raise an issue as to the legal existence of any party or the capacity of any party to sue or be sued or the authority of a party to sue or be sued in a representative capacity, the person shall do so by specific negative averment, which shall include such supporting particulars as are peculiarly within the pleader's knowledge. When a party so raises such issue, the burden of proof thereon shall be placed upon the opposite party.

If a defendant wishes to deny a corporation's capacity to sue or be sued, that denial must be raised in the defendant's responsive pleading in accordance with Rule 55.13. Gilmore v. Bi–State Dev., 936 S.W.2d 193, 194 (Mo.App. E.D.1996). Should a defendant's responsive pleading fail to assert this required specific negative averment, it will be considered an admission of the plaintiff's corporate status. Id.

1. Wade's Specific Negative Averment Shifted the Burden to AllStar.

In the present case, AllStar asserted in the first paragraph of its petition that it is “a corporation organized and existing under the laws of the State of Nevada, with its principal place of business in Las Vegas, Nevada.” In response, Wade averred in his answer, “Defendant denies the allegations set forth in paragraph one (1) of Plaintiff's petition.” Further, Wade's first affirmative defense averred, “The court lacks jurisdiction to hear and enter orders regarding this matter because the Plaintiff is not in good standing with the State of Nevada and is therefore restricted from bringing suit or participating in litigation.”

As a threshold matter, Wade's cursory denial of AllStar's paragraph one is inadequate under Rule 55.13. It is well established that a general denial of allegations of corporate capacity or existence fails to satisfy the requirements of Rule 55.13. See id. (holding that a denial of “each and every allegation” is insufficient under Rule 55.13); Student Loan Mkt. Ass'n v. Holloway, 25 S.W.3d 699, 704–05 (Mo.App. W.D.2000) (finding insufficient a defendant's general denial accompanied by a demand of “strict proof” of the plaintiff's corporate existence). Likewise, a defendant's denial of a plaintiff's corporate existence that is based on a lack of “sufficient knowledge, information, or belief” is inadequate to raise the issue of a plaintiff's corporate existence or its right to sue. Petry Roofing Supply, Inc. v. Sutton, 839 S.W.2d 337, 341–42 (Mo.App. E.D.1992); Fox Plumbing Supply, Inc. v. Kootman, 955 S.W.2d 220, 221–22 (Mo.App. E.D.1997). Wade's denial of the “allegations set forth in paragraph one (1) of Plaintiff's petition” is a general denial and thus fails to meet the requirements of Rule 55.13.

Despite the insufficiency of Wade's initial general denial, we nonetheless find that the specific negative averment made in his first affirmative defense was adequate to raise the issue of AllStar's corporate capacity. Wade's affirmative defense was not merely a general denial. He plainly stated that AllStar was “restricted from bringing suit or participating in litigation” because AllStar was “not in good standing with the State of Nevada.” This averment is in line with those denials that have consistently been found sufficient under Rule 55.13. In DePaul Community Health Center v. Trefts, this Court found sufficient a defendant's answer, which read, “[Defendant] denies that plaintiff is a corporation duly authorized and existing under the law.” 688 S.W.2d 379, 380–81 (Mo.App. E.D.1985); see also HDH Dev. & Realty Corp., Inc. v. Smith, 717 S.W.2d 274, 276 (Mo.App. E.D.1986) (finding satisfactory an averment that specifically denied the plaintiff was a corporation duly organized and existing under the laws of Missouri). More recently, this Court found it sufficient to raise the issue of corporate capacity when a defendant averred as an affirmative defense that “the plaintiffs do not have legal capacity to sue.” ADP Dealer Svcs. Group v. Carroll Motor Co., 195 S.W.3d 1, 9 (Mo.App. E.D.2005). Thus, the thrust of the above authority leads us to conclude that Wade made a specific negative averment as required under Rule 55.13.

Now that we have determined that Wade made a satisfactorily specific negative averment, the next issue to be addressed is whether his averment fails for a lack of supporting particulars. Rule 55.13 provides that supporting particulars are required “as are peculiarly within the pleader's knowledge.” This does not mean, however, that supporting particulars are required in every responsive pleading that challenges corporate capacity.

Rule 55.13 is similar to Rule 9(a) of the Federal Rules of Civil Procedure, in that it governs denials of capacity and largely utilizes the same terminology as Rule 55.13.³ Under the federal rules, “a party ... must state any supporting facts that are peculiarly within the party's knowledge.” Fed.R.Civ.P. 9(a)(1), (2). That language has been interpreted to mean that the pleading of supporting particulars is relevant only “when a party is denying his or her own capacity to sue or be sued or the capacity of someone with whom he or she is closely associated.” 5A Charles Alan Wright, et al., Federal Practice and Procedure § 1294 (3d ed.1998); see also Berkel & Co. Contractors v. JEM Dev. Corp., 740 S.W.2d 683, 685 (Mo.App. S.D.1987) (comparing the language of Rule 55.13 to the federal rules). Put another way, absent special knowledge on the part of the pleader, supporting particulars are not required to raise the issue of a plaintiff's corporate capacity.

In line with that interpretation, this Court has held that a specific denial lacking supporting particulars is effective under Rule 55.13 so long as the denial is made in good faith pursuant to Rule 55.03. Fox Plumbing, 955 S.W.2d at 221. Rule 55.03(c) states that for every argument in a pleading filed with the court, the filing party is certifying that a reasonable inquiry has been made into the law and facts contained therein. Although this is not an onerous standard, any matters regarding corporate capacity, which would be disclosed by a reasonable examination of public records, should be included in the specific negative averment. Gilmore, 936 S.W.2d at 194; Fox Plumbing, 955 S.W.2d at 222. Moreover, as with all pleadings, a defendant's specific negative averment is subject to be stricken by the trial court pursuant to a motion for more definite statement. Gilmore, 936 S.W.2d at 194; Rule 55.27(d) (“A party may move for a more definite statement of any matter contained in a pleading that is not averred with sufficient definiteness or particularity....”).

Here, AllStar could have moved for a definite statement and requested the...