Dean v. Noble
| Decision Date | 15 December 2015 |
| Docket Number | WD 78359 |
| Citation | 477 S.W.3d 197 |
| Parties | Lester M. Dean, Jr., Appellant, v. Richard W. Noble, et al., Respondents. |
| Court | Missouri Court of Appeals |
Jonathan Sternberg, Kansas City, MO, Counsel for Appellant.
James Morrow, Counsel, Hillary Hyde, Co–Counsel, Kansas City, MO, for Respondent Noble.
Karen Renwick, Counsel, Bruce Nguyen, Co–Counsel, Kansas City, MO, for Respondents, Kiefer and ARN.
Before Division Two: Mark D. Pfeiffer, P.J., Lisa White Hardwick, and James Edward Welsh, JJ.
Lester M. Dean appeals the circuit court's dismissal of his petition against Richard W. Noble, ARN, L.L.C., and Wilanna R. Kiefer (collectively, "the Respondents") for fraud and related claims. Finding that Dean's claims are barred by the statute of limitations, we affirm.
In 1989, Lester Dean and three others, Don Maddux, Louis Steele, and Douglas Patterson, formed Royal Main Partners, LP ("the Partnership") in order to acquire and develop property at 37th and Main Streets in Kansas City. Under the original terms of the Partnership, Dean, Maddux, and Steele each owned a 30% general interest and a 1.66% or 1.67% limited interest, and Patterson owned a 5% limited interest. The development was completed in the spring of 1990, after which an office supply chain leased the building and continued as a tenant throughout this lawsuit.
In 1990, Dean pledged his interests in the Partnership as collateral for a loan from Dean Realty Company (his father's business). Dean Realty subsequently transferred the loan to Certified Business Systems ("CBS"). When Dean defaulted on the loan, CBS sued him. Dean hired Respondent, Richard Noble, to defend him in that lawsuit. Noble, a Missouri attorney, was married to Dean's sister at the time, and Dean considered him a friend.
In November 1996, while the CBS suit was pending, Noble represented Dean in a lawsuit against two of his partners, Maddux and Steele. The parties eventually entered into a settlement agreement, under which Dean would purchase Maddux's and Steele's combined shares in the Partnership, giving him a 95% ownership interest.
Noble advised Dean to transfer the Partnership interests that he was going to acquire from Maddux and Steele to him (Noble) until the CBS lawsuit was resolved. Noble told Dean that he would hold the interests until the appropriate time and would then return them at Dean's request. Dean told Noble that he wanted something in writing to confirm that Noble would, in fact, return the Partnership interests to him. Although the agreement was not memorialized in writing at that time, Dean alleges that the parties, nevertheless, "moved forward" with the plan for Noble to "hold" a 60% general interest and a 3.32% limited interest for Dean until the CBS lawsuit was concluded.2 Dean retained his original 30% general and 1.66% limited interests.
Dean alleges that in July 1999, after the settlement with his partners was complete, he prepared a document memorializing his agreement with Noble to ensure that Noble would return the newly acquired Partnership interests to him. He claims that Noble later modified that document, creating a "Transfer Agreement," which Dean attached to his petition as Exhibit A. The Transfer Agreement was signed by both Noble and Dean on July 14, 1999. It gave Dean the right to purchase all of Noble's interests in the Partnership for $10, provided that (1) CBS's lien was extinguished "or adequately dealt with to [Dean]'s satisfaction" and (2) Noble was released as a guarantor of any Partnership loans.3 It also provided that both Dean and Noble must agree on all Partnership decisions and must consent to the disbursement of any Partnership funds.
Dean claims that Noble, nevertheless, disbursed funds, made management decisions, and paid himself and his law firm over $205,000 from the Partnership, all without Dean's approval. Dean further claims that he received K–1 tax reports from the Partnership for income in excess of $111,000, but that Noble made no distributions to him with which to cover his tax liability.
In February 2007, Dean sent Noble a money order for $10 and a letter stating that the conditions of the Transfer Agreement had been met and that he was exercising his right to reacquire his Partnership interests. Noble refused to honor the Transfer Agreement. He claimed that the required conditions had not been met, and he demanded approximately $75,000 to cover his own Partnership-related tax liabilities before he would transfer the interests back to Dean.
In July 2007, Noble filed for dissolution of his marriage to Dean's sister. Also in 2007, the IRS imposed a tax lien/levy against Dean's 30% general interest and his 1.66% limited interest in the Partnership. According to Dean, the IRS was acting upon "inside information" provided by Noble which he had gained while acting as Dean's attorney. In October 2007, Dean paid $100,000 in taxes, and the IRS released the tax lien/levy.
On November 5, 2007, Dean filed a lawsuit against Noble seeking specific performance of the Transfer Agreement. While that suit was pending, Dean received another notice of a tax lien/levy against his interests in the Partnership in March 2008. Dean alleges that this was again the result of information provided by Noble. This notice was broader than the first, providing that the IRS was seizing "[a]ll the rights, title and interest of [Dean] as a general partner of Royal Main Partners, LP, including, but not limited to, all rights of [Dean] whether direct or indirect, whether statutory, contractual or otherwise relating to Royal Main Partners, LP." Dean engaged tax counsel to represent him in the IRS case. Dean alleges that he advised counsel that he "had the funds to pay the IRS in full" but would rather have the amount mitigated or make payments.
With the taxes still unpaid, the IRS scheduled a sale of all of Dean's rights and interests in the Partnership for May 14, 2008. Dean's tax counsel advised him that the actual sale would not occur on that date, but only bids would be received. In the late afternoon of May 14th, however, tax counsel called Dean and advised him to go to the IRS first thing the next morning and pay the taxes in full because he did not have "things worked out" as he had earlier indicated.
On May 12, 2008, two days prior to the tax sale, Noble joined with his paramour, Respondent Kiefer, to form Respondent ARN, L.L.C. ARN is a Missouri limited liability company that is 5% owned by Noble and 95% owned by Kiefer. Dean alleges that Noble and Kiefer formed ARN as "the vehicle in which to execute [Noble's] scheme to divest [Dean] of his interest in [the Partnership]."4
According to Dean, ARN was the sole bidder at the tax sale, and the IRS sold all of Dean's interests in the Partnership (including "all rights ... whether direct or indirect, whether statutory, contractual or otherwise") to ARN for $54, 144.20. To finance the purchase, Noble used a line of credit for another company that he controlled and then loaned that money to ARN. Noble later transferred his own interest in the Partnership (which he once valued to a bank at $1.26 million) to ARN for $10, thereby giving ARN 95% ownership.
The day after the tax sale, Dean went to the IRS offices, as tax counsel had advised, to pay the taxes in full. The sale to ARN already had taken place, however, and tax counsel was unsuccessful in having the sale set aside.
Noble thereafter sought summary judgment in Dean's specific performance case against him, arguing that, because ARN had purchased all of Dean's rights and interest in the Partnership at the tax sale, Dean lacked standing to assert any claims relating to the Partnership as he had no ownership interest in it and no right to purchase Noble's interest in it.5 On October 8, 2008, the circuit court granted Noble's motion for summary judgment. This Court affirmed via a per curiam order and memorandum opinion. Dean v. Noble, 299 S.W.3d 5 (Mo.App.2009).
On May 13, 2013, Dean filed a lawsuit against the Respondents, asserting claims related to the loss of his rights and interests in the Partnership. Dean's initial petition asserted claims for fraud, fraud requiring the imposition of a constructive trust, tortious interference with contracts, conversion, replevin, unjust enrichment, and breach of fiduciary duty. He voluntarily dismissed his suit on August 16, 2013, and refiled it on August 14, 2014.6 The new petition asserted the same claims but also asserted a new claim for conspiracy. The claim for breach of fiduciary duty is alleged solely against Noble; the other seven counts are alleged against all the Respondents.
Noble filed a motion to dismiss, arguing that Dean failed to state a claim upon which relief could be granted, because (1) all of the claims were barred by the five-year statute of limitations in section 516.120, RSMo,7 (2) Dean lacked standing to bring any of his claims due to his lack of current ownership in the Partnership, and (3) Dean failed to properly plead a claim for conspiracy. The circuit court granted Noble's motion without explanation, dismissing all claims with prejudice. A month later, Respondents Kiefer and ARN filed a motion to dismiss, asserting the same grounds as Noble plus the additional ground that the derivative conspiracy claim was barred because the underlying claims against Noble were dismissed. The circuit court again granted the motion to dismiss without explanation.
Dean raises two points on appeal. In Point I, he contends that the circuit court erred in dismissing his petition based on the Respondents' argument that the claims were barred by the applicable statute of limitations. In his second point, Dean contends that the circuit court erred in dismissing his petition on the basis that he lacked standing to raise the claims set forth therein. Finding Point I to be dispositive, we limit our discussion to it.
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