Clark v. Francis

• Decision Date: 04 February 2014
• Docket Number: No. WD 75829.,WD 75829.
• Citation: 422 S.W.3d 369
• Parties: Terry CLARK, Appellant, v. David FRANCIS, Respondent.
• Court: Missouri Court of Appeals

422 S.W.3d 369

Terry CLARK, Appellant,

v.David FRANCIS, Respondent.

No. WD 75829.

Missouri Court of Appeals, Western District.

Oct. 29, 2013.

Motion for Rehearing and/or Transfer to Supreme Court Denied Nov. 26, 2013.

Application for Transfer Denied Feb. 4, 2014.

Terry J. Clark, Olathe, KS, pro se.

David F. Oliver and Timothy R. West, Kansas City, MO, for Respondent.

Before Division Three: KAREN KING MITCHELL, Presiding Judge, and LISA WHITE HARDWICK and GARY D. WITT, Judges.

KAREN KING MITCHELL, Presiding Judge.

Terry Clark appeals the denial of his declaratory judgment action against David Francis, in which Clark sought a declaration that he and Francis had a partnership agreement as to ownership of certain business entities. Clark argues that the trial court lacked subject matter jurisdiction over the claim because some of the property owned by the entities was located in Kansas. Clark further argues that the court's judgment was not supported by substantial evidence, was against the weight of the evidence, misapplied the law, and constituted an abuse of discretion. Finding no error, we affirm.

Factual Background ¹

Sometime in 2001 or 2002, Francis and Clark first met when Clark worked as a marshal at the Prairie Highlands Golf Course, which was owned in part by Francis.² At the time, Clark's only compensation for his work was free golf. After their initial meeting, the two men had no further interactions with one another until May 2003, when the City of Olathe, Kansas, was contemplating building a public golf course approximately one-half mile from Prairie Highlands. Clark began collecting financial information from golf courses in the area in hopes of stopping the City from building the course, because he believed it to be a waste of taxpayer money. Clark suggested to Francis that the new course would be a threat to Prairie Highlands, so Clark and Francis began working together to stop the City's development of the new course.

After working as a marshal for two years and seeing Prairie Highlands's financial information, Clark believed that Prairie Highlands was not meeting its potential; thus, in July or August 2003, he suggested to Francis that he become a consultant and use Prairie Highlands “as a laboratory” to test some of his business ideas in the event that future business opportunities presented themselves. Francis agreed. From 2003 through 2006, Clark served as a business consultant for Prairie Highlands, and the only compensation he received was free golf, free meals, and free golf accessories.

Sometime after Clark began consulting with Francis, Francis became involved in additional business ventures connected with Clark. Clark had created a trust for his children, and among the assets of that trust were a tree farm (Coram Farms) and a strip-mall building (Shops at Sedona I). Coram Farms and Shops at Sedona I were initially owned by CV Enterprises, which consisted of the Clark Trust and Doug Veach (who served as trustee for the Clark Trust). At some point, Francis, his wife, and their two children formed an entity known as Apex, and Apex became a part owner, along with CV Enterprises, of both Coram Farms and Shops at Sedona I. A third entity was formed, CVF Enterprises, which consisted of the Clark Trust, Veach, and Apex. CVF Enterprises purchased a second building in the strip mall (Shops at Sedona II). Clark was not identified in any documentation as an owner, member, or partner of any of these entities (CV Enterprises, Apex, or CVF Enterprises). ³

In the early part of 2006, Clark noticed that another nearby golf course, Hillcrest Country Club, appeared to be in distress, and he believed it had the potential to be a good investment. Clark suggested to Francis that he consider purchasing it and turning it around. In June or July 2006, Francis began seriously considering the idea and asked what Clark wanted out of it. Clark said that he would like to work on developing the business, and, once it became profitable and Francis was reimbursed for the money he invested, Clark wanted 50% of the profits. Clark refused to put anything in writing because he liked to “be below the radar screen.” Francis ultimately agreed that he would purchase Hillcrest, allow Clark to run it in an effort to make it profitable, and then, after Francis recouped his investment, Francis and Clark would split the profits 50/50. Francis further agreed that, if the course became profitable, he would consider making Clark a part owner. Thereafter, Francis, his wife, and his two children formed a limited liability company, Heartland Golf Development II (HGD II), and on October 31, 2006, HGD II purchased Hillcrest.

At some point after the Hillcrest purchase, Clark mentioned in passing to Francis that he would like the arrangement they had with Hillcrest to also apply to Prairie Highlands. Francis indicated that, as long as he recouped the $4.6 million he had invested in Prairie Highlands, he would consider “something like that.” There was no further discussion of the matter.

Until 2008, Clark received compensation only in the form of free golf and golf accessories, free meals, a company vehicle, and free gas. Clark indicated that he did not want any other compensation; he wanted the experience and to share in potential future profits. But, in 2008, upon the advice of either an accountant or an attorney, or both, Clark and Francis began receiving minimum wage payments.

In late 2008, there were accounting problems—purportedly caused by Veach—with Coram Farms, Shops at Sedona I, and Shops at Sedona II. Accordingly, Francis (either individually or through Apex) intended to become the sole owner of Coram Farms, Shops at Sedona I, and Shops at Sedona II. Francis believed that, once he acquired sole ownership of Coram Farms and the Shops at Sedona entities from the other partial owners, Clark wanted the same arrangement that they had regarding Hillcrest. Eventually, Francis reached an agreement with Veach whereby Francis (or Apex) owned 60% of the businesses, while the Clark Trust and Veach owned 40%.

As time went on, none of the businesses became profitable, except Prairie Highlands for a brief period, and that profit was not enough to satisfy the outstanding loans. Near the end of 2010, Francis advised Clark that he was running out of money and needed to start liquidating some of his assets. Clark protested the idea, informing Francis:

It would serve no purpose to me to get nothing. I have 8 to 10 years invested. If you trust my judgment then you and I should be able to work out a deal. You in bankruptcy serves no benefit to me. But after all these years I feel I am entitled to be more than an employee. If you aren't comfortable with me and my judgment then maybe we have larger problems. I want to be more than an inputter.

Clark suggested creating a liquidation agreement whereby he would be able to obtain some of the proceeds from the various sales. Francis was amenable to some sort of commission-based contract, but the two could never reach a final agreement.

In April 2011, Clark and Francis had a heated discussion, which ended with Clark telling Francis, “I quit.” The next day, Francis went out to Prairie Highlands and Clark was there. Francis confronted Clark and asked what he was doing there since he had “quit,” and Clark said, “no, I quit you.” Francis advised Clark that if he “quit [Francis], he quit everything.” Clark then threatened to take Francis “into receivership,” ⁴ and Francis responded by pointing out that he knew what their existing agreement was, to which Clark responded, “it's going to be my word against yours.”

Thereafter, Francis and Clark had weekly meetings to discuss accounting, and Clark indicated that he would like to be in charge of the accounting to try to make some sense of it. Francis agreed, but indicated that he did not think their association with one another was working out very well. After a meeting on May 9, 2011, Francis attempted to access some financial records at Hillcrest but was denied access. He contacted Clark and asked what was going on. Clark initially indicated that he did not know, but later advised Francis that Francis did not need access to the records he was trying to see. Francis disagreed and demanded an immediatemeeting. Clark refused. The following day, Francis went to Clark's apartment to speak with him, but Clark refused to come downstairs. Francis then terminated Clark's employment and ordered him to leave the property.⁵

On June 20, 2011, Clark filed a lawsuit against Francis, seeking a temporary restraining order. On October 26, 2011, Clark filed his first amended petition, seeking a declaratory judgment,⁶ declaring that he and Francis had a partnership agreement regarding ownership of Hillcrest Country Club, Prairie Highlands Golf Course, the Links at Prairie Highlands, Shops at Sedona I, Shops at Sedona II, Coram Farms, Heartland Golf Development I, Heartland Golf Development II, Heartland Golf Management, and CVF Enterprises.

At the bench trial, Francis testified that he and Clark came to an agreement in June or July 2006 regarding Hillcrest only and that the agreement was that Clark and Francis would equally split any of Hillcrest's future profits, but only after Francis and his family members were reimbursed for all the money they had invested. Francis also testified that Clark had mentioned, “in passing,” that he would like the same agreement with Prairie Highlands, and Francis indicated that he was willing to consider it. Francis also believed that Clark wanted the same agreement as to Coram Farms and Shops at Sedona I and II, though Francis claimed it was never actually discussed.⁷

Clark testified that he and Francis made their initial agreement in September 2003, before Francis was ever involved in Coram Farms or either of the Shops at Sedona. Clark testified that the Prairie Highlands agreement was that Clark would be a 50% owner, that Francis would...