Constance, and Marcon County Homes

• Citation: 25 S.W.3d 571
• Parties: (Mo.App. W.D. 2000) . Marlin Constance, Individually, and Marcon Country Homes, Inc., and Jet Services, Inc., d/b/a Riverchase Properties, a joint venture, Appellants, v. B.B.C. Development Company, et al., Respondents. Case Number: WD57142 Missouri Court of Appeals Western District Handdown Date: 0
• Decision Date: 25 July 2000
• Court: Court of Appeal of Missouri (US)

25 S.W.3d 571 (Mo.App. W.D. 2000)

This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court.

Marlin Constance, Individually, and Marcon Country Homes, Inc., and Jet Services, Inc., d/b/a Riverchase Properties, a joint venture, Appellants, v. B.B.C. Development Company, et al., Respondents.

Case Number: WD57142

Missouri Court of Appeals Western District

Handdown Date: 07/25/2000

Appeal From: Circuit Court of Platte County, Hon. Ward B. Stuckey

Counsel for Appellant: John Tongier

Counsel for Respondent: Arlen Tanner

Opinion Summary:

Marlin Constance, Individually and Marcon Country Homes, Inc. and Jet Services, Inc., d/b/a/ Riverchase Properties, appeal the order of the Circuit Court of Platte County, Missouri, granting a directed verdict after the conclusion of plaintiffs' evidence in favor of last remaining defendant Edward Bayless. At trial, plaintiffs alleged affirmative misrepresentations and concealment of material information by defendant with regard to subsurface instability and whether the property was suitable for improvement. They claim the trial court erred in directing a verdict for defendant because none of the points raised by defendant in his motion for directed verdict support entry of same, including the arguments that any affirmative misrepresentation was made by an individual not an agent of defendant, that such statement was opinion rather than fraud, and that the acceptance doctrine applied to relieve defendant of liability. Plaintiffs contend also that they made a submissible case on the alternative theory of fraudulent concealment and that their theory of affirmative misrepresentation was sufficiently proven.

REVERSED AND REMANDED.

Division holds: Division holds that while plaintiffs did not prove defendant had a clear duty to disclose under its fraudulent concealment theory, they did prove a duty to disclose based on partial disclosure. The partial disclosure of information about some landslides created a duty to disclose information about other landslides. Further, as to the agency issue, the general rule is that even in the absence of a principal-agent relationship, a party not actually making the fraudulent representation is liable if he accepted the benefits of the transaction and had either actual or constructive knowledge at the time of the fraud or at the time he accepted the benefits, that fraud had been committed. Bayless substantially benefited from the transaction and, therefore, agency was established by the sale. The division holds that the acceptance doctrine does not apply factually to the present case.

Opinion Author: Ronald R. Holliger, Judge

Opinion Vote: REVERSED AND REMANDED. Lowenstein, P.J., and Ulrich, J., concur.

Opinion:

Marlin Constance, individually, Marcon Country Homes, Inc. and Jet Services, Inc., d/b/a Riverchase Properties, appeal the order of the Circuit Court of Platte County, Missouri, granting a directed verdict in favor of defendant Edward Bayless after the conclusion of plaintiffs' evidence.

This suit arose from a real estate contract for the sale of a subdivision located in Parkville, Missouri. Plaintiffs as the buyers of the subdivision sued defendants B.B.C. Development Co., Inc., and Ralph Bax, L. Edward Bayless, and James Camp, individually, as officers and directors of B.B.C.. Marcon Country Homes is owned by Marlin Constance, and Jet Services, Inc. is owned by Josh Tobin. The trial proceeded upon plaintiffs' First Amended Petition, which alleged: (1) the defendants made fraudulent misrepresentations and fraudulently concealed material information regarding previous landslides and subsurface instability of property defendants sold to plaintiffs; (2) they negligently made material misrepresentations and concealed material information regarding previous landslides and subsurface instability on the property; and (3) they materially breached the contract of the parties by affirmatively representing the property as suitable for residential improvement. Prior to trial, plaintiffs dismissed all the original defendants except L. Edward Bayless, and dismissed Counts II and III, leaving only the alternative theories of fraudulent misrepresentation and fraudulent concealment that were pled together in Count I. After oral arguments and briefing by the parties, the trial court granted Bayless' motion for directed verdict at the close of plaintiffs' evidence.

STANDARD OF REVIEW

In reviewing a directed verdict granted in favor of a defendant, an appellate court views the evidence and permissible inferences in the light most favorable to the plaintiff, disregards contrary evidence and inferences, and determines whether the plaintiff made a submissible case. Thong v. My River Home Harbour, Inc., 3 S.W.3d 373, 377 (Mo. App. 1999). Directing a verdict is a drastic measure. Id. A presumption, therefore, exists in favor of reversing the trial court's judgment sustaining a motion for directed verdict unless the facts and inferences therefrom are so strongly against the plaintiff as to leave no room for reasonable minds to differ as to a result. Id. A case, nevertheless, should not be submitted to the jury unless each and every fact essential for liability is predicated on legal and substantial evidence; the question whether the evidence is substantial is one of law for the court. Meridian Enterprises Corp. v. KCBS, Inc., 910 S.W.2d 329, 331 (Mo. App. 1995).

The trial court gave no explanation for and made no findings as to its reasons for granting the directed verdict in favor of defendant. Therefore, our concern on review is whether the trial court reached the proper result and not the route by which it reached that result. Runny Meade Estates, Inc. v. Datapage Tech. Int'l, Inc. 926 S.W.2d 167 (Mo. App. 1996).

FACTS

Viewed in accordance with the above standard, the following evidence is considered in determining the submissibility of the plaintiffs' claim. The subdivision was known as Riverchase Properties and originally included twenty-seven lots. B.B.C. purchased the property in 1986 and general contractor Tomahawk Construction constructed the streets and sewers. Tomahawk was selected by Bayless. The construction manager for Tomahawk was Jim Kissick. To finance the purchase, Bayless secured a line of credit for B.B.C., backed by the personal guarantees of Bayless and Camp. Construction began in November of 1987, but because of engineering and construction problems, road and utility infrastructure was not completed until November of 1989.¹

Riverchase Properties Plat Mat:

One of the primary streets in the subdivision is Wall Street. In the spring of 1990, a lateral crack developed in Wall Street, resulting in a landslide in the area of Lots 19 through 22. Following the landslide, substantial repair work was undertaken by Tomahawk. In April 1991, Bayless, Bax and Camp met with Tomahawk to discuss Tomahawk's invoice for the repairs to Wall Street. In preparation for that meeting, Camp prepared a memorandum detailing the events leading up to and following the 1990 landslide and Wall Street failure. That memorandum has become known as the "Camp Memo" and was distributed to all attending the meeting.

Wall Street had been built into a slope on the side of a bluff. Camp testified at trial that such a street can be constructed on a hillside so long as it is "keyed in properly" to the slope and the fill dirt utilized is properly compacted. In his 1991 memorandum, Camp wrote that he believed Wall Street was not keyed into the slope and the fill was not properly compacted. He testified that he believed these failures led to the 1990 collapse. The Camp Memo also addressed poor drainage along Wall Street; that Camp had concerns about landslides; that there were soft spots along Wall Street that were not corrected with newly compacted fill dirt but, instead, with asphalt; and that the fill material used was full of organic materials such as tree stumps and roots. Camp testified at trial that such items decay and eventually leave voids that lead to settlement; that fill should be compacted in layers, but this was not done; and that compaction was so poor along Wall Street that he saw Jim Kissick sink up to his shin in fill material. He described repair attempts that failed to hold and that Wall Street slid a second time in the spring or early summer of 1990.

Following the first repair attempts, Bayless hired a soils engineer, Larry Houghton of KC Testing Lab, to design repairs to be made by Tomahawk. Repairs were again made by Tomahawk, pursuant to Houghton's design. The Camp Memo, however, indicated that compaction remained a problem, and predicted future problems. Bayless was provided with the Camp Memo and attended the meeting in April 1991, during which Camp's concerns were aired.

Bayless and Constance and Tobin had been acquainted for years. In the spring of 1992, Bayless contacted Constance and advised he was having trouble marketing Riverchase Properties, said something to the effect that he was desperate to sell, and asked Constance for marketing suggestions. There was no discussion of sale of the property. Constance, at that time, toured the subdivision with Bayless and provided marketing ideas. During this visit, Bayless did not provide Constance with any information regarding landslides or street failures.

In July 1992, B.B.C. entered into a contract to sell Riverchase Properties to Pat O'Connor. On August 21, 1992, Bayless received a letter from O'Connor's attorney, requesting assurances with respect to the soil and substrata. Specifically, he wanted an engineer's opinion that "the property, including the soil and substrata, is suitable for home building..." (emphasis added). Bayless responded by providing a May 22, 1992 letter from engineer Houghton. The letter discussed the causes of three slides (near Lot 18) observed by Houghton in May on slopes in a cul-de-sac several hundred feet west of...