Commonwealth Land Title Ins. Co. v. Miceli

Citation480 S.W.3d 354
Decision Date28 April 2015
Docket NumberNo. ED 101473,ED 101473
Parties Commonwealth Land Title Insurance Company, Plaintiff/Appellant, v. Frank J. Miceli, et al., Defendants/Respondent.
CourtCourt of Appeal of Missouri (US)

John Hein, St. Louis, Missouri, for Appellant.

David G. Bender (Attorney for Frank Miceli), Clayton, Missouri, Daniel S. Peters (Attorney for Stephen Miceli) Brian M. Wacker (co-counsel), St. Louis, Missouri, for Respondent.

Lisa S. Van Amburg, Judge

I. INTRODUCTION

Plaintiff Commonwealth Land Title Insurance Company appeals the judgment of the Circuit Court of St. Louis County in favor of defendants Frank J. Miceli, in his individual capacity and as trustee of the Frank Miceli Revocable Trust, the unknown beneficiaries of said trust, Stephen Miceli, in his individual capacity and as trustee of the Joseph J. Miceli Revocable Trust, the unknown beneficiaries of said trust, Miceli Homes, Inc. ("Miceli Homes"), Miceli Development Company, Miceli Holding Company, Masterwork Homes, Inc., and Miceli Masterwork Homes, Inc., D/B/A Miceli Custom Homes. Commonwealth raises three points on appeal. First, Commonwealth argues that the trial court erred by dismissing Counts I–V of its petition on the grounds of res judicata. Second, Commonwealth argues that the trial court erred by dismissing Counts VII and VIII of its petition on the grounds of res judicata and failure to allege the necessary elements of either equitable lien or constructive trust. Third, Commonwealth argues that the trial court erred by denying its motion for creditor's bill and to pierce the corporate veil. We affirm in part, reverse in part, and remand to the trial court for further proceedings consistent with this opinion.

II. FACTS

In 2006, Miceli Homes sought to sell three houses it had constructed in Chesterfield, Missouri, to three private homebuyers. Commonwealth was to underwrite each transaction with a policy of homeowners' title insurance. In order to secure Commonwealth's participation and to complete the sales with the homebuyers, Frank Miceli, president of Miceli Homes, executed sworn affidavits attesting that all subcontractors that had worked on the houses had been paid in full for their services. Miceli's affidavit contained a request that Commonwealth issue its policies of title insurance without exception as to any possible unfiled mechanic's liens. Commonwealth did so, and the home sales were completed. Frank Miceli would later admit in deposition that the affidavits were false, and that he in fact knew at the time they were executed that many of the subcontractors had not been paid.

Soon after the sales were completed, dozens of subcontractors filed approximately 1.5 million dollars in mechanic's liens against the homebuyers' properties. Because the title insurance policies on the properties had been issued without exception as to any possible unfiled mechanic's liens, Commonwealth was obliged to defend the homebuyers and indemnify them for the full amount of the liens.

While the lien litigation was pending, the homebuyers filed cross-claims against Miceli Homes to recover the money owed to the lien claimants. After several days of trial on the cross-claims, the trial court entered consent judgments against Miceli Homes. The homebuyers then assigned the judgments to Commonwealth.

This case is the product of Commonwealth's attempts to collect on the consent judgments in order to recover the approximately 1.5 million they spent to indemnify the homebuyers. By the time the consent judgments were entered against Miceli Homes, the corporation was assetless. Therefore, Commonwealth filed its own petition for damages against Miceli Homes as well as several individuals and entities related thereto, including Frank Miceli and his brother Stephen Miceli, the Frank Miceli Revocable Trust, the Joseph J. Miceli Revocable Trust, Miceli Development Company, Miceli Holding Company, Miceli Masterwork Homes, and Masterwork Homes. Counts I–V of Commonwealth's petition alleged negligent misrepresentation, fraudulent misrepresentation, negligent concealment, fraudulent concealment, and indemnification against Frank Miceli and Miceli Homes. Count VI alleged civil conspiracy against Frank and Stephen Miceli. Counts VII–VIII sought to impose an equitable lien or constructive trust on the assets of all defendants.

The defendants filed motions to dismiss, and two hearings were held before the trial court. The trial court granted Frank Miceli and Miceli Homes' motion to dismiss Counts I–V, concluding that the consent judgments assigned to Commonwealth barred its claims on the grounds of res judicata. The court initially denied the defendants' motions to dismiss as to Counts VI–VIII. The defendants then filed a second motion to dismiss Counts VI–VIII. After a third hearing, the trial court dismissed Counts VI–VIII on the basis of res judicata and failure to allege the necessary elements of civil conspiracy, equitable lien, or constructive trust.

Approximately one month after the trial court dismissed Counts VI–VIII, Commonwealth filed a separate motion against Frank Miceli, individually and as trustee of the Frank Miceli Revocable Trust, Miceli Homes, Miceli Development Company, Miceli Holding Company, Miceli Masterwork Homes, and Masterwork Homes for a creditor's bill and to pierce the corporate veil. These defendants filed motions in opposition. After a hearing, the trial court granted judgment in favor of the defendants. This appeal follows.

III. DISCUSSION
A. COUNTS I–V
1. Standard of Review

The trial court dismissed Commonwealth's Counts I–V for failure to state a claim. "Our review of a dismissal for failure to state a claim is de novo." Chochorowski v. Home Depot U.S.A., Inc., 295 S.W.3d 194, 197 (Mo. App. E.D. 2009). "A motion to dismiss for failure to state a claim ... is solely a test of the adequacy of the petition." Id. "[W]e accept all properly pleaded facts as true, giving the pleadings their broadest intendment, and we construe all allegations favorably to the pleader .... ‘to determine if the facts alleged meet the elements of a recognized cause of action, or of a cause that might be adopted in that case.’ " Armistead v. A.L.W. Grp., 155 S.W.3d 814, 816 (Mo. App. E.D. 2005) (quoting Nazeri v. Mo. Valley Coll., 860 S.W.2d 303, 306 (Mo. banc 1993) ).

2. Analysis

In its first point on appeal, Commonwealth argues that the trial court erred by concluding that Counts I–V of its petition against Frank Miceli and Miceli Homes are barred by the consent judgments on the basis of res judicata. Commonwealth contends that the consent judgments do not bar Counts I–V, because they are "separate and distinct" claims from those underlying the consent judgments. Specifically, Commonwealth asserts that Counts I–V are based on the fact that Miceli Homes' misrepresentation about having paid all of its subcontractors induced it to issue policies of title insurance, whereas the consent judgments are based on the fact that that misrepresentation induced the homebuyers to purchase their homes. Commonwealth also contends that Count I–V and the consent judgments involve different parties. Namely, Commonwealth asserts that the consent judgments were brought by the homebuyers against Miceli Homes, whereas Counts I–V were brought by Commonwealth against Miceli Homes and Frank Miceli in his individual capacity.1

In response, the defendants argue that Counts I–V are barred by the consent judgments, because they are based on the same basic series of transactions, i.e., the home sales in which Commonwealth, the homebuyers, Frank Miceli, and Miceli Homes all participated. Additionally, the defendants contend that Counts I–V and the consent judgments should be treated as if they were brought by the same party, because the homebuyers' assignment of the consent judgments to Commonwealth demonstrates they were in privity with one another.

"Res judicata [or claim preclusion] operates as a bar to the reassertion of a cause of action that has been previously adjudicated in a proceeding between the same parties or those in privity with them." Lauber–Clayton, L.L.C. v. Novus Props. Co., 407 S.W.3d 612, 618 (Mo. App. E.D. 2013). "The doctrine is designed to prevent a multiplicity of lawsuits." Id. Res judicata applies where "four identities" are present: "(1) identity of the things sued for; (2) identity of the cause of action; (3) identity of the persons or parties to the action; and (4) identity of the quality or status of the person for or against whom the claim is made." Id. "When these four identities concur, res judicata operates to bar ‘any claim that was previously litigated between the same parties or those in privity with them.’ " Id. (quoting Spath v. Norris, 281 S.W.3d 346, 350 (Mo. App. W.D. 2009) ).

"Res judicata also precludes all points ‘properly belonging to the subject matter of the litigation and which the parties, exercising reasonable diligence, might have brought forward at the time.’ " Id. (quoting King Gen. Contractors, Inc. v. Reorganized Church of Jesus Christ of Latter Day Saints, 821 S.W.2d 495, 501 (Mo. banc 1991) ). In other words, if res judicata applies, the doctrine precludes a litigant from bringing " ‘claims that should have been brought in the first suit.’ " Id. (quoting Kesterson v. State Farm Fire & Cas. Co., 242 S.W.3d 712, 715 (Mo. banc 2008) ). "However, res judicata does not operate to preclude later litigation, including those claims that could have been brought, unless the four identities first occur." Id.

Here, as we will explain, the doctrine of res judicata bars Commonwealth's Counts I–V against defendant Miceli Homes, but does not bar these claims as to defendant Frank Miceli. As such, we will discuss each defendant separately, beginning with Miceli Homes. Because the trial court dismissed Counts I–V, we look only to the face of Commonwealth's petition and the consent judgments for the facts upon which the following discussion is based.2 S...

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