Davis v. Cleary Building Corp.

• Citation: 143 S.W.3d 659
• Decision Date: 14 September 2004
• Docket Number: No. WD 62449.,WD 62449.
• Parties: Dennis DAVIS and Susan Davis, Respondents, v. CLEARY BUILDING CORPORATION, Appellant.
• Court: Court of Appeal of Missouri (US)

143 S.W.3d 659

Dennis DAVIS and Susan Davis, Respondents, v. CLEARY BUILDING CORPORATION, Appellant.

No. WD 62449.

Missouri Court of Appeals, Western District.

September 14, 2004.

Appeal from the Circuit Court, DeKalb County, Barbara G. Lame, J Patrick M. Reidy, Kansas City, MO, for appellant.

Drew F. Davis, Cameron, MO, for respondents.

Before NEWTON, P.J., BRECKENRIDGE and SPINDEN, JJ.

PATRICIA BRECKENRIDGE, Judge.

Cleary Building Corporation appeals the judgment entered in favor of Dennis and Susan Davis, husband and wife, on the Davises' action for rescission of their contract with Cleary to build a horse barn on the Davises' property. Cleary argues that rescission was not a proper remedy in this case because it fully performed under the terms of the contract and it is impossible to restore the parties to the status quo. Cleary also contends that the trial court erred in awarding the Davises consequential damages. Because this court finds that the trial court erred in ordering rescission because the nature of the transaction in this case made it impossible to restore the parties to the status quo, that portion of the judgment is reversed, and the case is remanded for retrial on the issue of damages and the Davises' claims for breach of contract and violation of the Missouri Merchandising Practices Act.

Factual and Procedural Background

During the summer of 2000, the Davises decided to purchase horses to raise on their property in Cameron. In need of shelter for their horses, the Davises began to gather information about horse barns. For several months, Mr. Davis researched post-frame building companies, including Cleary. On four to five occasions during November 2000, Mr. Davis met with Terry Sunderland, a sales representative for Cleary, to discuss Cleary's building products and the specifications of the building that the Davises desired. Throughout the course of these discussions, Mr. Sunderland told Mr. Davis that the advantage of choosing Cleary was that the building would be constructed with "Cleary columns," which are "continuous, non-spliced laminated treated columns from footing to eave." Cleary promoted such columns as being stronger than the columns used by its competitors.

Mr. Sunderland also provided Mr. Davis with several documents, which highlighted the strength of "Cleary columns." For example, Mr. Sunderland read an article from a trade magazine to Mr. Davis entitled "US Industry Today." This article touted Cleary and the "Cleary column," and specifically noted that a "Cleary column" is a continuous column of CCA treated timber that has no splices of untreated wood, is created by running three 2-by-6-inch pieces of lumber through a machine that nails them together, and that such columns are stronger than a solid 6-by-6-inch post. Mr. Sunderland also gave Mr. Davis a document entitled "Clearly Cleary Test," which compared Cleary to its competitors. This document represented "Cleary columns" as non-spliced lumber that is 2.4 times stronger than spliced columns used by Cleary's competitors. Another document presented to Mr. Davis, entitled "The Cleary Column," represented the "Cleary column" as unspliced from footing to eave and noted that tests performed on the columns have shown the columns to be "approximately twice as strong as a spliced laminated treated column." This document further represented that its test results are consistent with tests previously run by the University of Wisconsin.

Based on Cleary's representations, Mr. Davis ultimately determined that one important factor differentiating the post-frame building companies was the type of support columns used in the construction of the buildings, and that Cleary's columns were stronger than Cleary's competitors. Consequently, on November 28, 2000, the Davises entered into a contract with Cleary to construct a 36 x 54-foot horse barn on the Davises' property for $18,500. The contract specified that the construction was to be completed sometime between January and April 2001. The Davises told Cleary that they wanted their building to be constructed with columns placed every six feet on center throughout the building to give the building added strength. Even though this request deviated from Cleary's standard placement of the columns at nine feet on center, Cleary told the Davises that their building would be so constructed and the Davises agreed to pay the extra cost associated with their request. The Davises paid Cleary $3,700 upon signing the contract and made an additional payment of $7,400 when the building materials were delivered to their property.

Sometime before March 15, 2001, while the Davises were out of town, Cleary constructed the Davises' horse barn. On March 15, when the Davises returned, Mr. Davis inspected the building and discovered problems with the construction and placement of the columns. Of particular significance, Mr. Davis found that, even though the building had the load-bearing columns on six-foot centers as the contract provided, four end-wall columns were missing. Additionally, Mr. Davis discovered that, of the twenty-four total columns that made up the building, only the four corner columns were "Cleary columns," with the remaining columns being spliced and untreated. Mr. Davis observed that every truss in the building was bowed in a "C" or "S" shape. Mr. Davis also discovered other problems with the building, such as the metal on the interior of the building was caked in mud; the dirt floor of the building had huge ruts; several mounds of dirt were within the interior of the building; and the base of the columns were not compacted with dirt, as the dirt at the base of each column was approximately one foot down from the surface of the ground.

Upon his discoveries, Mr. Davis contacted Mr. Sunderland, who promptly came to the building site. Mr. Sunderland examined the barn and noted Mr. Davis' concerns. He informed Mr. Davis that he would relay his concerns to Cleary and get back with him. On March 16, 2001, Mr. Sunderland informed Mr. Davis that the building conformed to applicable industry standards and Cleary expected payment of the final installment of $7,400. As Mr. Sunderland was leaving, he reminded Mr. Davis that under the terms of the contract, any use of the building by the Davises would constitute acceptance.¹

To avoid acceptance of the building, the Davises were forced to construct an interim structure to house their horses. For this project, the Davises spent a total of $11,651: $2,312 in building materials; $1,145 for gravel to extend the road to the interim structure; $2,042 in materials and labor to extend water and electric service to the interim structure; $5,867 in materials and labor for additional fencing; and $285 for an automatic feeder.

Dissatisfied with Cleary's response to their complaints, the Davises filed this suit. Count I of their petition sought damages, including punitive damages, or alternatively, rescission, for fraudulent misrepresentation. Count II sought damages, or alternatively, rescission, for negligent misrepresentation. Count III sought damages for breach of contract. Count IV sought damages, including punitive damages, for violation of the Missouri Merchandising Practices Act.² Cleary counterclaimed for the balance due under the contract.

At the conclusion of a one-day bench trial, the trial court indicated that it would take the matter under advisement and allow both parties to submit briefs. Cleary then stated that to guide briefing, the Davises needed to address what "remedy" they were pursuing. In response, the Davises indicated that they were pursuing "rescission." Cleary immediately moved to dismiss Count III, breach of contract, and Count IV, violation of the Missouri Merchandising Practices Act, of the Davises' petition. The Davises did not object, and the trial court granted Cleary's motion to dismiss Counts III and IV. Thus, only Count I, fraudulent misrepresentation against Cleary, and Count II, negligent misrepresentation against Cleary, of the Davises' first amended petition remained.

On January 3, 2003, the trial court entered judgment in favor of the Davises on their claim for fraudulent misrepresentation, dismissed their claim for negligent misrepresentation, and ordered rescission of the contract. Specifically, the trial court found that: (1) the contract between Cleary and the Davises had not been fully performed; (2) rescission is a proper remedy when fraud is present; (3) Cleary made numerous representations to the Davises, including that the building would be built with "Cleary columns"; (4) Cleary's representations were false, in that the building only contained four "Cleary columns" and four columns were completely missing; (5) Cleary's representations were material, in that they were in regard to the strength of the building; (6) Cleary knew its representations were false; (7) the Davises relied on Cleary's representations; and (8) the Davises had a right to rely on Cleary's representations in a manner reasonably contemplated by Cleary.

The trial court ordered Cleary to refund the $11,100 already paid by the Davises, plus prejudgment interest, and to reimburse the Davises $5,499 of the additional expenses the Davises incurred in constructing the interim structure. In addition, the trial court granted Cleary the right to remove the structure by May 31, 2003, or forfeit the structure. The trial court also ordered Cleary to pay $10,000 in punitive damages. Finally, the trial court found against Cleary on its counterclaim. Cleary filed this appeal.

Standard of Review

Review of this court-tried case is governed by the standard announced in Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976). The judgment of the trial court will be affirmed unless it is not supported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law. Id. at 32. The evidence and all reasonable...