Holliday Invs., Inc. v. Hawthorn Bank

• Decision Date: 08 December 2015
• Docket Number: WD 78640
• Citation: 476 S.W.3d 291
• Parties: Holliday Investments, Inc., Appellant, v. Hawthorn Bank, Respondent.
• Court: Missouri Court of Appeals

476 S.W.3d 291

Holliday Investments, Inc., Appellant,

v.Hawthorn Bank, Respondent.

WD 78640

Missouri Court of Appeals, Western District.

OPINION FILED: DECEMBER 8, 2015

Thomas Michael Schneider, Columbia, MO, Counsel for Appellant.

Michael Joseph Schmid, Jefferson City, MO, Counsel for Respondent.

Before Division One: Anthony Rex Gabbert, P.J., Victor C. Howard, and Cynthia Martin, JJ.

Anthony Rex Gabbert, Judge

Holliday Investments, Inc. (Holliday) appeals the circuit court's judgment in favor of Hawthorn Bank (Hawthorn) on Holliday's claim that Hawthorn was unjustly enriched by a home that Holliday built on property later foreclosed upon by Hawthorn. Holliday contends that the circuit court misapplied the law in striking Holliday's demand for a jury trial. Holliday argues that its claim was one of quantum meruit which is an action at law entitling Holliday to a jury trial upon request, as evidenced by there being an MAI jury instruction for use in quantum meruit actions. We affirm.

On July 17, 2012, Holliday filed its First Amended Petition against Hawthorn. Therein, Holliday alleged that in 2008 it built an earth contact home on real estate owned by Richard and Annette Sells (the Sells) during a time that Holliday had a contract with the Sells to purchase the real estate. Holliday alleged that, after the home was built, Hawthorn loaned money to the Sells and Sells Farms, Inc., who executed a note and deed of trust encumbering the real estate upon which the home was built. Holliday alleged that "[o]n information and belief Defendant was aware or should have been aware at the time it made the aforesaid loan that a third party, the Plaintiff, was constructing valuable improvements upon the real estate encumbered by the subject deed of trust." Holliday alleged that it had an equitable interest in the earth contact home which provided additional collateral to Hawthorn for which Hawthorn "did not confer value" to Holliday or anyone else. Holliday alleged that Hawthorn then foreclosed upon the property and became the owner of the property. Holliday alleged that Hawthorn would be "unjustly enriched" if it did not "reimburse" Holliday for the value of the home and, that, "[b]ased on quantum meruit, Plaintiff is entitled to recover the value of said earth contact home from Defendant."

On August 22, 2014, Holliday requested a jury trial. Holliday argued that its claim was one of quantum meruit and quantum meruit claims are triable to a jury. Hawthorn objected to Holliday's request, arguing that Holliday's claims were equitable in nature and, therefore, Holliday was not entitled to a jury. The circuit court issued an order striking Holliday's demand for a jury trial and, thereafter, the matter was tried before the court.

Holliday's evidence at trial presented a time frame different from that alleged in Holliday's petition with regard to when Hawthorn issued its loan to the Sells and when Holliday constructed the earth contact home. Holliday's own undisputed evidence showed that the Sells and Sells Farms, Inc. executed a real estate deed of trust as collateral for a loan from Hawthorn. The deed of trust was recorded on March 12, 2008. On March 25, 2008, Holliday entered into a contract to purchase the Sells's turkey business which included 683 acres of land as well as turkey barns, cattle, and equipment located on the farm. The contract price was approximately 2.5 million dollars. Holliday did not conduct a title search prior to entering into the contract. Holliday and the Sells did not intend for there to be a closing date where all of the real estate and assets would be conveyed simultaneously in exchange for a total purchase price. Rather, the parties agreed that, as Holliday freed up capital, it would purchase part of the real estate and assets that were under contract. This allowed Holliday to engage in Section 1031 exchanges under the tax code. At least two of these transactions occurred prior to March of 2009. Prior to each transaction, Holliday conducted a title search that disclosed Hawthorn's deed of trust against the real estate, but Holliday did not read the title searches.

In March of 2009, Holliday began constructing an earth contact home that was completed in September of 2009. Chris Holliday, sole shareholder of Holliday, testified that he could have built the home on nearby land that he already owned, but chose to build the home on land not yet owned because the placement of the home in that location was more beneficial to Holliday. He testified that, the home was built for an Amish employee who oversaw the turkey farm and needed to be in close proximity to the turkey barns in the event of power failure or other potentially harmful events. Due to the employee/tenant being Amish, the home had plywood floors and various fixtures had not yet been installed. Chris Holliday testified that he was not sure if the home had trim on the doors or windows as his tenant worked on the home himself as he got the time. It was a part of the employee/tenant's contract that part of the employee's pay was having the home to live in. Chris Holliday testified that, due to the proximity of the home to the turkey barns and the barns' odors, the home would not be ideal for most people to live in.

The Sells defaulted on the loan with Hawthorn, and Hawthorn foreclosed its deed of trust on May 7, 2012. The bank was the sole bidder at the foreclosure sale and became the owner of 190 acres, including the real estate upon which the earth contact house was constructed. Chris Holliday testified at trial that he now owns the earth contact home and the property upon which it sits. He purchased the home along with 80 acres for $200,000 from an individual who purchased the property from Hawthorn after Hawthorn foreclosed.

After hearing the evidence, the circuit court found in favor of Hawthorn on Holliday's demand for reimbursement for the value of the earth contact home.¹ Holliday appeals.

Our standard of review is set forth in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Schollmeyer v. Schollmeyer, 393 S.W.3d 120, 122 (Mo. App. 2013). We will affirm the circuit court's judgment unless it is unsupported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law. Id. at 122–123. We will affirm under any reasonable theory supported by the evidence. Williams v. State, Dept. of Social Ser vi ces, Children's Div., 440 S.W.3d 425, 427 (Mo. banc 2014).

In Holliday's sole point on appeal, Holliday contends that the circuit court misapplied the law in striking its demand for a jury trial. Holliday argues that its claim was one of quantum meruit which is an action at law entitling Holliday to a jury trial upon request, as evidenced by there being an MAI jury instruction for use in quantum meruit actions.

We find that we need not decide whether Holliday would have been entitled to a jury trial on a properly pled quantum meruit claim because, even if Holliday could prove that the court erred in denying a jury trial, Holliday cannot prove that he was prejudiced by that denial.

"Quantum meruit is a remedy to enforce quasi-contractual obligations and is generally justified on the theory of unjust enrichment." Turner v. Wesslak, 453 S.W.3d 855, 860 (Mo. App. 2014) (internal citation and quotation marks omitted.) "Where there is no formal contract, a promise to pay for services or materials may be implied by the law." City of Cape Girardeau ex rel. Kluesner Concreters v. Jokerst, Inc., 402 S.W.3d 115, 122 (Mo. App. 2013). The essential elements of a claim of quantum meruit are:

(1) that the plaintiff provided to the defendant materials or services at the defendant's request or with the acquiescence of the defendant, (2) that the materials or services had reasonable value, and (3) that the defendant has failed and refused to pay the reasonable value of such materials or services despite the demands of plaintiff. County Asphalt Paving, Co. v. Mosley Constr., Inc., 239 S.W.3d 704, 710 (Mo. App. E.D. 2007). ‘The principal function of this type of implied contract is the prevention of unjust enrichment.’ Id. (quoting Bellon Wrecking & Salvage Co. v. Rohlfing, 81 S.W.3d 703, 711 (Mo. App. E.D. 2002) ). In quantum meruit, there is no requirement of an express agreement between the parties or a promise on the part of the party to be bound. Id.²

Id. at 122–123.

"To properly and sufficiently establish a claim for unjust enrichment, the plaintiff must prove three elements: (1) the defendant was enriched by the receipt of a benefit; (2) that the enrichment was at the expense of the plaintiff; and (3) that it would be unjust to allow the defendant to retain the benefit." Brunner v. City of Arnold, 427...