Grosser v. Kandel-Iken Builders, Inc.

• Decision Date: 22 February 1983
• Docket Number: No. 44932,KANDEL-IKEN,44932
• Citation: 647 S.W.2d 911
• Parties: Larry GROSSER, et al., Plaintiffs-Respondents, v.BUILDERS, INC., Defendant-Appellant.
• Court: Missouri Court of Appeals

Page 911

647 S.W.2d 911

Larry GROSSER, et al., Plaintiffs-Respondents, v. KANDEL-IKEN BUILDERS, INC., Defendant-Appellant.

No. 44932.

Missouri Court of Appeals,

Eastern District,

Division One.

Feb. 22, 1983.

Rosenblum, Goldenhersh, Silverstein & Zafft, P.C., Richard S. Bender, Clayton, for defendant-appellant.

Homer N. Mastorakos, Chesterfield, for plaintiffs-respondents.

PER CURIAM.

Plaintiffs-respondents, homeowners in Conway Forest Subdivision in St. Louis County, sued the developer, defendant-appellant Kandel-Iken Builders, Inc. for fraudulent misrepresentation. Plaintiffs charged generally that defendant falsely represented that it would build a swimming pool for the residents' use after eighty-five of the planned 130 homes were sold. The eighty-fifth house was sold sometime prior to January 1, 1977. No pool was ever built.

The original petition was filed on August 25, 1977 as a class action. On July 8, 1980 the trial court ordered the suit to proceed as a class action on behalf of "all persons who were and are purchasers and owners of real estate located in Conway Forest Subdivision." The subdivision here contained four stages (plats). After notice of the order was duly published as prescribed by Rule 52.08(c)(2), twenty-one homeowners signed disclaimers. On December 23, 1980, plaintiffs filed a third amended petition which alleged that they fairly represented the homeowners in Stages I and II (approximately sixty-five homes) as representative parties, and that defendant falsely represented orally and in writing to the class of plaintiffs that they would construct a swimming pool as a part of the planned recreational facilities of the subdivision. The trial court was not called upon to re-determine the class after the third amended petition was filed.

The case was tried as a class action and resulted in a jury verdict in favor of plaintiffs, as a class, in the amount of $51,300 actual damages and $10,000 punitive damages.

Defendant argues that plaintiffs failed to make a submissible case of proof of fraudulent misrepresentation and damages. Defendant also contends that plaintiffs failed to meet their burden of proof pursuant to Rule 52.08 that there were questions of law and fact common to the members of the class, and thus the class was improperly certified.

Defendant prepared and filed of record Indentures of Trust and Restrictions on December 10, 1971. Sales of homes began in January, 1972 and continued through 1980. The named plaintiffs purchased homes in Stage I of the subdivision, in 1972 and 1973. Defendant withdrew any mention of a pool after a meeting of property owners sometime in 1976.

Plaintiffs' documentary evidence consisted of the Indentures of Trust, a sales brochure, and nine real estate sales contracts. The Indentures of Trust failed to mention a swimming pool, while the brochure described a "swimming pool" as a "special feature" of the subdivision. Two of the sales contracts offered into evidence contained statements that defendant "would construct at no capital cost to purchaser a swimming pool to be available no sooner than the summer following sale of the eighty-fifth Conway Forest lot." One contract stated that a subdivision pool was to be started when 75% of the homes in the subdivision were completed. The remaining contracts made no mention of a swimming pool.

Plaintiffs' witnesses testified that they had observed the brochure which mentioned a swimming pool. Some witnesses said that they were told the pool would be built on common ground. According to the witnesses, defendant never indicated the size or dimensions of the pool to be constructed, the exact date of construction or the precise location of the pool. They stated that they had no reason to believe defendant's statement of intention to build a swimming pool was false when made.

Defendant's president, Mr. Kandel, testified that at all times he intended to build a swimming pool. His original plan was to build a pool that he or others would own and make available to the subdivision residents. A study ordered by Kandel concluded, however, that such an arrangement would be economically unfeasible. Kandel's second plan was for the residents to maintain the swimming facility through assessments provided for in the Indentures of Trust. He concluded that to maintain the pool, the Indentures would have to be amended to permit an assessment of $250 per year in place of the original assessment of $75 per year. After the homeowners were notified of the plan they voted to reject the amendment to increase the assessments. Kandel testified that at all times he was willing to build a pool and would do so if the residents would approve the amendment so as to provide sufficient funds to maintain the pool. After the property owners' vote, however, he discontinued the representation that he would build a swimming pool.

We first consider the question of whether plaintiffs made a submissible case of fraudulent misrepresentation. We hold that they did not and that the trial court erred in failing to direct a verdict at the close of all the evidence. In so holding, we view the evidence in the light most favorable to the plaintiffs and give them the benefit of all reasonable, favorable inferences. Snodgrass v. Headco Industries, Inc., 640 S.W.2d 147, 156 (Mo.App.1982).

Plaintiffs must present sufficient evidence to reasonably support each element of its cause of action. Smith v. Archbishop of St. Louis ex rel. Archdiocese of St. Louis, 632 S.W.2d 516, 521 (Mo.App.1982). Further, the evidence to support an inference of fraud must arise above mere suspicion and point logically and convincingly to that conclusion. Brown v. Pritchett, 633 S.W.2d 294 (Mo.App.1982). All doubt should be entertained in favor of good faith in determining whether a statement constitutes a misrepresentation. Empire Gas Corporation v. Small's LP Gas Co., 637 S.W.2d 239, 243 (Mo.App.1982).

Plaintiffs' theory required them to prove that defendant's statement of intention was false when made. A false statement of present purpose may under some circumstances be a misstatement of fact and will support a cause of action for fraudulent misrepresentation. Citizens Bank of Windsor v. Landers, 570 S.W.2d 756, 761 (Mo.App.1978); Brennaman v. Andes & Roberts Brothers Construction Co., 506 S.W.2d 462, 465 (Mo.App.1973). However, the giving of a promise, even though breached the next day, is not such a fraudulent misstatement of fact as will support an action for fraud. Parthenopoulos v. Maddox, 629 S.W.2d 563, 568 (Mo.App.1981); McGuire v. Bode, 607 S.W.2d 165, 167 (Mo.App.1980); Klecker v. Sutton, 523 S.W.2d 558, 562 (Mo.App.1975). There must be proof of a current intention not to perform and a failure of performance is insufficient to establish this intent or to shift the burden of proof. Dillard v. Earnhart, 457 S.W.2d 666, 671 (Mo.1970); Brennaman, 506 S.W.2d at 465.

A false representation of intention is actionable if the statement is reasonably interpretable as expressing a firm intention. Dillard, 457 S.W.2d at 670. Therefore, as in Dillard, we must measure the nature and probative value of the evidence adduced at trial to determine first whether defendant made the required representation, and second, whether plaintiffs demonstrated defendant's intention not to perform at the time of the representation. See Brennaman, 506 S.W.2d at 465.

Plaintiffs have assumed the burden of proving a "diversified promise," as distinguished from a "uniform promise"--the usual subject matter of a fraudulent misrepresentation suit. A uniform promise, for example, would be statements made in a stock prospectus, or an advertisement in a publication, where the same representation was made to a group of people in identical language, at roughly the same time. Here the promise is diversified in that it is made to different individuals at different times and contains different language. The brochure in this case is the only common document that mentions a swimming pool. The sale contracts dated from 1972 to 1975, were the product of separate negotiations, contained different terms and involved only a minority of the class of plaintiffs. The oral testimony concerning representations about the swimming pool varied as to what was promised. Although there were similarities, the language and the nature of the representation were not identical.

Moreover, the undisputed evidence disclosed that twenty-four homeowners in Stages I and II did not purchase their property from defendant, but from original purchasers. As to these subsequent purchasers, there is no evidence of any promise of any kind from defendant. Further, at least seventeen homeowners purchased property in Stages I and II after January, 1977, when defendant had withdrawn any promise, written or oral, of a swimming pool. There was no evidence that a promise of a pool was made to these homeowners.

We fail to discern any uniform representation made to the class of plaintiffs from which we can say that defendant made a promise that was false when made. We have only the statement made in the brochure, prior to 1977, that a swimming pool was a "feature," of the subdivision. We have nothing definite as to its size, location, means of maintenance and ownership. A representation which is so vague and abstract that the court would have to guess as to its precise nature will not support a cause of action for fraudulent misrepresentation, Chase Resorts, Inc. v. Johns-Manville Corp., 476 F.Supp. 633, 639 (E.D.Mo.1979); aff'd., 620 F.2d 203 (8th Cir.1980), and cannot be the basis of a submissible case.

Even if defendant's promise was sufficiently definite, there was no evidence that at the time the promise was made, the defendant did not intend to build a swimming pool. On the contrary, when defendant decided not to construct the pool, after residents refused to amend the Indentures of Trust, it withdrew the brochure and made no further...