Horizon Memorial Group, L.L.C. v. Bailey

• Decision Date: 27 January 2009
• Docket Number: No. WD 68755.,WD 68755.
• Citation: 280 S.W.3d 657
• Parties: HORIZON MEMORIAL GROUP, L.L.C., and Bailey & Cox Family Funeral Service, L.L.C., Appellants, v. Mark H. BAILEY, Defendant, Memorial Park Cemetery Association of Missouri and Henry W. Devry, III, Respondents.
• Court: Missouri Court of Appeals

280 S.W.3d 657

HORIZON MEMORIAL GROUP, L.L.C., and Bailey & Cox Family Funeral Service, L.L.C., Appellants, v. Mark H. BAILEY, Defendant Memorial Park Cemetery Association of Missouri and Henry W. Devry, III, Respondents.

No. WD 68755.

Missouri Court of Appeals, Western District.

January 27, 2009.

Motion for Rehearing and/or Transfer to Supreme Court Denied March 3, 2009.

Application for Transfer Denied May 5, 2009.

R. Dan Boulware, Edwin H. Smith, St. Joseph, MO, for Appellants.

William J. Foland, Jr., Kansas City, MO, Frederick R. Edmunds, Overland Park, KS, for Respondents.

Before RONALD R. HOLLIGER, P.J.,¹ LISA WHITE HARDWICK, and JAMES EDWARD WELSH, JJ.

JAMES EDWARD WELSH, Judge.

Horizon Memorial Group, L.L.C. (Horizon) and Bailey & Cox Family Funeral Services, L.L.C. (Bailey & Cox) sued Mark Bailey for breach of their non-compete agreement and sued Memorial Park Cemetery Association of Missouri (Memorial Park) and Henry W. DeVry, III (DeVry) for tortious interference of the agreement. The jury found for Horizon and Bailey & Cox on both claims. The jury awarded them $439,273 in compensatory damages and $100,000 in punitive damages on their tortious interference claim, and the circuit court granted them an injunction prohibiting Mark Bailey from working for Memorial Park. Memorial Park and DeVry filed a motion for a judgment notwithstanding the verdict (JNOV)² on Horizon's and Bailey & Cox's punitive damage claim. Memorial Park and DeVry also requested that the circuit court reduce Horizon's and Bailey & Cox's damage award for tortious interference because the circuit court's injunction and the circuit court's relieving Horizon and Bailey & Cox of paying the balance of a promissory note to Bailey cured them of their damages. The circuit court granted the motion and entered a judgment reducing Horizon's and Bailey & Cox's compensatory damages to $90,774 and eliminating the punitive damage award. On appeal, Horizon and Bailey & Cox raise eight points asserting that the circuit court erred in entering a JNOV on their punitive damage claim and reducing their compensatory damages to $90,774.

We affirm in part and reverse in part. We agree that the circuit court erred in entering Memorial Park's and DeVry's motion for JNOV on Horizon's and Bailey & Cox's punitive damage claim. We also agree that the circuit court erred in reducing Horizon's and Bailey & Cox's compensatory damage award by $268,499 on the basis that its grant of an injunction cured their damages. We find, however, that the circuit court was correct to reduce Horizon's and Bailey & Cox's compensatory damages by $80,000 and affirm that part of the judgment.

Bailey owned and operated the only funeral parlor in Lathrop, Missouri. In 2000, the Meierhoffer family, who own Horizon, a holding company that operates funeral parlors in Northwest Missouri, approached Bailey about purchasing his business. Between 2000 and 2002, the Meierhoffer family engaged in negotiations with Bailey for the purchase of his business. Eventually, Bailey agreed to sell his business for $800,000. As part of the sale, Bailey agreed to become the funeral director of Bailey & Cox, the company Horizon formed to operate its new funeral home. The parties also entered into a non-compete agreement that prohibited Bailey from providing funeral services within a thirty mile radius of any funeral home owned by Horizon for ten years from the date of the sales agreement. The parties did include an exception to the non-compete agreement that allowed Bailey to work for Memorial Park at its Liberty location but only on the condition that Memorial Park did not otherwise engage in direct competition with Horizon and Bailey & Cox. In return for signing the non-compete agreement, Horizon and Bailey & Cox executed a promissory note for $100,000. The agreement did include a forfeiture clause, which stated that, in the event that Bailey breached the agreement, Horizon and Bailey & Cox would not have to pay Bailey the remaining balance on the note.

After the sale of his business, Bailey worked as the funeral director of Bailey & Cox. In June 2004, Bailey & Cox demoted Bailey because of his poor work performance. A few months later, Bailey submitted his resignation from Bailey & Cox. Bailey & Cox kept Bailey on the payroll until September 1, 2004. Thereafter, Bailey began working for Memorial Park at its Liberty location. After Bailey left Bailey & Cox, 38 percent of its pre-need clients transferred to Memorial Park.³

Around the same time, DeVry, the owner of Memorial Park, purchased a building in Lathrop with the intention of opening up a funeral parlor. The building was approximately a block and half from Bailey & Cox. In March 2005, DeVry obtained a license to operate the funeral home and performed his first funeral in Lathrop.

Horizon and Bailey & Cox filed suit in circuit court against Bailey, Memorial Park, and DeVry. They sued Bailey for breach of their non-compete agreement and sued Memorial Park and DeVry for tortious interference of their agreement. Bailey filed a breach of contract counterclaim in which he alleged that Horizon and Bailey & Cox had defaulted on their promissory note and owed him the $80,000 balance.

The jury found for Horizon and Bailey & Cox on their tortious interference and breach of contract claims. The jury also found against Bailey on his breach of contract counterclaim. On their tortious interference claim, the jury awarded Horizon and Bailey & Cox $439,273 in compensatory damages and $100,000 in punitive damages. On their breach of contract claim against Bailey, the circuit court granted them an injunction prohibiting Bailey from working for Memorial Park for the duration of the non-compete agreement. On Bailey's breach of contract counterclaim, the circuit court, pursuant to the forfeiture clause in the agreement, entered an order relieving Horizon and Bailey & Cox from paying the promissory note's remaining $80,000 balance.

Memorial Park and DeVry filed a motion for a JNOV on Horizon's and Bailey & Cox's punitive damage claim. Memorial Park and DeVry also requested that the circuit court reduce Horizon's and Bailey & Cox's damage award for tortious interference because the circuit court's injunction and the circuit court's relieving Horizon and Bailey & Cox of paying the balance of the promissory note cured them of their damages. The circuit court granted the motion and entered a judgment reducing Horizon's and Bailey & Cox's compensatory damage award to $90,774. This appeal follows.

In their first three points, Horizon and Bailey & Cox assert that the circuit court erred in entering a JNOV for Memorial Park and DeVry, which set aside the jury's award of punitive damages on the basis that they failed to make a submissible case for punitive damages. These points are raised in the alternative, so, if Horizon and Bailey & Cox are correct on any one of them, we would be required to reverse the circuit court's judgment. Since we conclude that Horizon's and Bailey & Cox's third point is correct, we address that point only.

In their third point, Horizon and Bailey & Cox assert that the circuit court erred in entering a JNOV in regard to the punitive damage award because they presented evidence establishing a submissible case for punitive damages on their tortious interference claim. Specifically, they assert that they presented evidence from which the jury could have found that Memorial Park and DeVry acted with an evil motive and in reckless disregard for Horizon's and Bailey & Cox's rights and interests by hiring Bailey to work at their Liberty location and by opening a funeral parlor in Lathrop, which caused Bailey to violate his non-compete agreement.

"A defendant is entitled to a [JNOV] only when the plaintiff fails to make a submissible case." Porter v. Toys `R' Us-Delaware, Inc., 152 S.W.3d 310, 315 (Mo.App.2004). Whether the plaintiff presented sufficient evidence to support his award of punitive damages is a question of law, which we review de novo. Drury v. Mo. Youth Soccer Assn., Inc., 259 S.W.3d 558, 573 (Mo.App.2008). We review only to determine whether or not, as a matter of law, the plaintiff presented enough evidence to submit his claim of punitive damages to the jury. Id. In conducting this review, we view the evidence and all reasonable inferences that can be drawn from that evidence in a light most favorable to the verdict, and we disregard all contrary evidence and inferences. Id. There is a presumption favoring the reversal of a JNOV, which can be overcome only if the evidence and inferences favorable to the plaintiff leave no room for reasonable minds to conclude that he made a submissible case. Laws v. St. Luke's Hosp., 218 S.W.3d 461, 466 (Mo.App.2007).

In this case, Horizon and Bailey & Cox requested punitive damages on their claim against Memorial Park and DeVry for tortious interference with a contract. A claim for tortious interference with a contract requires the plaintiff to establish "`(1) a contract or a valid business expectancy; (2) defendant's knowledge of the contract or relationship; (3) intentional interference by the defendant inducing or causing a breach of contract or relationship; (4) absence of justification; and (5) damages resulting from defendant's conduct.'" Envirotech, Inc. v. Thomas, 259 S.W.3d 577, 590 (Mo.App.2008) (citation omitted). To establish the absence of justification element, the plaintiff must establish that the defendant lacked a legal right to justify his actions. Id. In making their claim for tortious interference, Horizon and Bailey & Cox presented evidence that Memorial Park and DeVry interfered with Bailey's non-compete agreement by Memorial Park's and DeVry's employing Bailey at their Liberty location and by Memorial Park's and DeVry's opening up a funeral parlor in Lathrop. The parties concede that Horizon and Bailey & Cox made a submissible case for tortious interference.

For...