Am. Equity Mortg., Inc. v. Vinson

• Decision Date: 29 May 2012
• Docket Number: No. ED 97103.,ED 97103.
• Citation: Am. Equity Mortg., Inc. v. Vinson, 371 S.W.3d 62 (Mo. App. 2012)
• Parties: AMERICAN EQUITY MORTGAGE, INC., Respondent, v. Ray VINSON, Jr., Defendant, and Vinson Mortgage Services, Inc., Appellant.
• Court: Missouri Court of Appeals

371 S.W.3d 62

AMERICAN EQUITY MORTGAGE, INC., Respondent,

v.Ray VINSON, Jr., Defendant,andVinson Mortgage Services, Inc., Appellant.

No. ED 97103.

Missouri Court of Appeals,

Eastern District,

Division Four.

April 24, 2012.

Motion for Rehearing and/or Transfer to

Supreme Court Denied May 29, 2012.

Application for Transfer Denied

Aug. 14, 2012.

Steven M. Hamburg, Stephanie L. Gold, Clayton, MO, for Appellant.

Gerard T. Carmody, James P. Carmody, David P. Stoeberl, St. Louis, MO, for Respondent.

ROBERT M. CLAYTON, III, Judge.

Vinson Mortgage Services, Inc.(“VM”) appeals the judgment entered upon a jury's verdict in favor of American Equity Mortgage, Inc.(“AEM”) on its claim for unfair competition.We affirm.

I.BACKGROUND

AEM is a Missouri corporation with its headquarters in St. Louis.AEM conducts residential mortgage and brokerage business.The company was founded by Deanna Daughhetee and Ray Vinson, Jr., during their marriage.Daughhetee and Vinson's marriage was dissolved in 2006, and during the dissolution proceedings, each claimed ownership of AEM.The dissolution decree granted ownership and control of AEM to Daughhetee.Vinson subsequently created VM and began advertising on the radio, television, and in print advertisements.In October 2006, AEM filed suit against Vinson and VM for unfair competition based upon VM's alleged use of deceptive advertising practices to pass itself off as AEM and trade on AEM's established reputation.¹After trial, a jury found in favor of AEM, awarding it $300,000.00 for its claim of unfair competition.The trial court entered judgment upon the jury's verdict.VM filed a motion to vacate, correct, reopen or modify the judgment and alternative motion for new trial, which the trial court denied.VM now appeals.

II.DISCUSSION

In its sole point on appeal, VM claims the trial court erred in submitting Instruction 7, the verdict director, to the jury.According to VM, the jury was improperly instructed on the claim of unfair competition because Instruction 7 did not include any requirement that AEM prove a secondary meaning to the phrases or words VM allegedly unfairly used in its advertising.VM argues this secondary meaning was a required element of AEM's claim of unfair competition.We disagree.

A.Standard of Review

Whether a jury is properly instructed is a question of law, which we review de novo.Fleshner v. Pepose Vision Institute, P.C.,304 S.W.3d 81, 90(Mo. banc 2010).When reviewing a claim of instructional error, we view the evidence most favorable to the submission of the instruction, we disregard evidence to the contrary, and we reverse only where the party claiming the error shows that the instruction misled, misdirected, or confused the jury.Moore ex rel. Moore v. Bi–State Dev. Agency,87 S.W.3d 279, 293(Mo.App. E.D.2002).

Rule 70.02² mandates the use of the Missouri Approved Instructions (“MAI”) if the instructions are applicable.However, the MAI do not cover every claim, and therefore, Rule 70.02(b) allows for the modification of MAI, as well as the use of non-approved instructions.Where a non-MAI instruction must be used, as in the present case, the instruction must follow the applicable substantive law and be readily understood by the jury.Doe v. McFarlane,207 S.W.3d 52, 75(Mo.App. E.D.2006).

B.Unfair Competition

In this case, AEM filed an action for unfair competition against VM, alleging VM attempted to “pass off” its services as those of AEM.In its petition, AEM cites VM's use of AEM's “distinctive marketing,” as well as their slogans and advertising.AEM relies upon The Restatement (Third) of Unfair Competition (1995)(“the Restatement”) to argue the doctrine of unfair competition encompasses separate theories under which a claim can be brought.“Missouri courts may look to the Restatement (Third) of Unfair Competition when analyzing unfair competition claims.”Hubbs Machine & Manufacturing, Inc. v. Brunson Instrument Co.,635 F.Supp.2d 1016, 1018(E.D.Mo.2009);citingDoe v. TCI Cablevision,110 S.W.3d 363, 368(Mo. banc 2003).

Section 1 of the Restatement provides that a party can be subject to liability for harm to another's commercial relations where the party engages in certain deceptive practices.These practices include, in relevant part, deceptive marketing, infringement of trademarks and other indicia of identification, and appropriation of “intangible” trade values, such as trade secrets.Chapter two of the Restatement further defines the concept of deceptive marketing.The Restatement, Section 2, states that one who advertises goods or services in a way likely to deceive or mislead prospective patrons to the commercial detriment of another is subject to liability for such deceptive practices.Section 4 of the Restatement provides:

One is subject to liability to another under the rule stated in § 2 if, in connection with the marketing of goods or services, the actor makes a representation likely to deceive or mislead prospective purchasers by causing the mistaken belief that the actor's business is the business of the other, or that the actor is the agent, affiliate, or associate of the other, or that the goods or services that the actor markets are produced, sponsored, or approved by the other.

Missouri case law is largely in accord with this provision.SeeNational Motor Club of Mo., Inc. v. Noe,475 S.W.2d 16, 19–20(Mo.1972)(unfair competition consists of passing off or attempting to pass off the business of one as the business of another);Essex v. Getty Oil Co.,661 S.W.2d 544, 555(Mo.App. W.D.1983)(unfair competition is a “species of commercial hitchhiking which the law finds offensive.”);Soft–Lite Lens Co. v. Optical Service Co.,133 S.W.2d 1078, 1082(Mo.App.1939)(unfair competition consists of passing off or attempting to pass off goods or services of one as the goods or services of another);andJoseph S. Baum Mercantile Co. v. Levin,189 Mo.App. 237, 174 S.W. 442, 444–445(1915)(conduct, the natural and probable effect of which is to deceive the public as to pass off the goods or business of one for that of another, constitutes actionable unfair competition).

At trial, the jury was given Instruction 7, which required the jury to find in favor of AEM if it believed VM engaged in conduct likely to deceive or mislead prospective customers, and that such conduct caused the mistaken belief that:

(i) Vinson Mortgage's business was that of American Equity, or

(ii)Vinson Mortgage is American Equity or an agent, affiliate or associate of American Equity, or

(iii)Vinson Mortgage's mortgage services were produced, sponsored, or approved by American Equity ...

Instruction 7 further required the jury to find that AEM was damaged by VM's...