Lick Creek Sewer Systems, Inc. v. Bank of Bourbon

• Decision Date: 15 March 1988
• Docket Number: Nos. 15204,15258,s. 15204
• Citation: 747 S.W.2d 317
• Parties: LICK CREEK SEWER SYSTEMS, INC., Lawrence Chura and Anne Chura, Appellants, v. BANK OF BOURBON, Grover Johnson and John Woodward, Respondents.
• Court: Missouri Court of Appeals

Page 317

747 S.W.2d 317

LICK CREEK SEWER SYSTEMS, INC., Lawrence Chura and Anne

Chura, Appellants, v. BANK OF BOURBON, Grover Johnson and John Woodward, Respondents.

Nos. 15204, 15258.

Missouri Court of Appeals,

Southern District,

Division One.

March 15, 1988.

John J. Allan, Mary V. Taylor, St. Louis, for appellants.

R. Brooks Kenagy, Steelville, for respondent Bank of Bourbon.

Mazzei, Bell & Broshot, Steelville, for respondent Grover Johnson.

John J. Horgan, Brian R. Plegge, Moser, Marsalek, Carpenter, Cleary, Jaeckel & Keaney, St. Louis, for respondent John Woodward.

HOLSTEIN, Judge.

This is the second of two actions filed by Lick Creek Sewer Systems, Inc., Lawrence Chura, and Anne Chura (plaintiffs) alleging various irregularities and improprieties arising out of a foreclosure sale of plaintiffs' property, said sale having occurred in January of 1982. Plaintiffs appeal from an order sustaining motions to dismiss filed on behalf of defendants Bank of Bourbon (the Bank), Grover Johnson, and John Woodward. On appeal, the plaintiffs claim the trial court erred in determining that a prior dismissal of similar claims against these defendants was res judicata as to the claims presented here and because the trial court erred in finding that the claims alleged in plaintiffs' petition failed to state a cause of action against defendants. We reverse.

The first action was commenced on January 29, 1982. The petition in the first action, as amended, consisted of four counts naming the Bank, Woodward, Johnson, the Estate of George Knapp, and seven others as defendants. Count I alleged that plaintiffs had executed two notes secured by two deeds of trust in favor of the Bank, one note for $228,030.25 dated April 3, 1981, and the second for $16,750 dated July 28, 1981; that there had been discussions regarding extensions of credit among plaintiffs, the Bank, and Johnson; that plaintiffs had been lulled into a false feeling of security because of a course of dealing with the Bank and Johnson; and that the Bank and Johnson had given them only ten days opportunity to cure defaults before giving directions to Woodward to proceed with foreclosure. Count I further alleged that Woodward had acted as attorney for the plaintiffs, and he had breached a fiduciary duty toward plaintiffs by acting on behalf of the Bank in the foreclosure. Count I asked for damages against Johnson, the Bank, and Woodward for their alleged wrongful foreclosure. Count II sought to set aside the foreclosure sale and subsequent conveyances after the sale and to enjoin further conveyances. Count III of the petition in the prior action alleged that plaintiffs had rights to the proceeds of the sale at the foreclosure and that Woodward, Johnson, and the Bank had conspired to interfere with plaintiffs' contractual rights to the proceeds of the sale. Count IV was a claim by Anne Chura for damages resulting from an alleged conversion of personal property which she claimed was located on the real estate at the time the Bank and Johnson took possession of the real property.

Following the filing of motions to dismiss by various defendants in the former case, including the Bank, Johnson, and Woodward, the trial court on June 1, 1983, dismissed all four counts with prejudice against the Bank and Woodward. For reasons not apparent on the record, the court did not rule on Grover Johnson's motion to dismiss. The claims against Johnson were still pending when plaintiffs made an abortive attempt to appeal from the order dismissing the petition as to other defendants. The appeal was dismissed because the trial court had failed to adjudicate all the issues among all the parties. Chura v. Bank of Bourbon, 674 S.W.2d 675, 678 (Mo.App.1984).

Following the dismissal of the appeal, the plaintiffs appeared before the trial court and filed a dismissal of all claims against all defendants in the original action without prejudice. Pursuant to that request, the court made the following minute entry on September 4, 1984:

Counts I, II, III, and IV of petition ... dismissed as per said Dismissal Without Prejudice.

On the date the order was entered, all parties were present, either in person or by attorney, and joined plaintiffs' attorney in signing a memorandum titled "Dismissal Without Prejudice" which purported to dispose of all claims and counterclaims. The record gives no indication that any of the parties objected to the court's minute entry.

The present case began with the filing of plaintiffs' seven-count petition on January 23, 1987, naming the Bank, Johnson, Woodward, and the Estate of George Knapp as defendants. ¹

Count I of plaintiffs' petition alleges that Lick Creek had executed two notes secured by two deeds of trust in favor of the Bank, as described in the former petition; that the Churas had guaranteed payment of the notes; that Woodward, as trustee for the Bank and under the Bank's direction, had foreclosed on the deed of trust secured by the lesser of the two notes and that Woodward had received $200,000 at the foreclosure sale; that the lesser note should have been satisfied; and that Woodward should pay the balance of $183,250 over to plaintiffs. Count II alleges that Johnson and the Bank had knowledge of Woodward's fiduciary and contractual obligations under the deed of trust and induced Woodward to violate those obligations maliciously and without justification; and that Johnson, the Bank, and Woodward had conspired together to interfere with the plaintiffs' contractual rights to be paid the excess over $16,750 received at the foreclosure sale. Count V alleges that the Bank, through its officer Johnson, "wrongfully foreclosed" on the July 28, 1981, deed of trust by giving plaintiffs "a false sense of security about their obligations, and misrepresented the amount due at the time of foreclosure...." The manner in which this allegedly occurred was that the Bank had failed to require prompt and timely payment over several years of dealing with plaintiffs; that in the fall of 1981 the Bank approved a "refinancing arrangement" and represented it would not foreclose but would continue the "financing arrangement" pending the completion of a "refinancing package"; and that on November 20, 1981, the Bank requested that plaintiffs renew the "financing arrangement" by December 4, 1981, which plaintiffs made "arrangements" to do. However, after December 4, 1981, the Bank failed to meet with the plaintiffs and dispel their belief "in the security of their position with the ... Bank." The Bank thereafter is alleged to have foreclosed without giving a "proper and adequate demand" for payment by demanding $244,780.25 while it only foreclosed on a $16,750 debt. In Count VI, Anne Chura makes a claim for damages resulting from conversion by the Bank and Johnson of certain personal property which she claims was located on the real estate at the time of the foreclosure.

Motions to dismiss were filed by Woodward, the Bank, and Johnson. These motions claim that the June 1, 1983, order of dismissal with prejudice operates as a bar to this action under the doctrines of res judicata, collateral estoppel, and splitting causes of action and that the petition fails to state any claim upon which the relief sought can be granted. The trial court sustained the motions as to all three defendants. Plaintiffs appeal from the order of dismissal.

The effect of a dismissal is controlled by Rule 67.03, ² which provides:

A dismissal without prejudice permits the party to bring another civil action for the same cause ... A dismissal with prejudice bars the assertion of the same cause of action or claim against the same party....

The dismissal with prejudice of the claims against the Bank and Woodward, followed approximately 15 months later by an order dismissing the same claims against all three defendants without prejudice, creates the apparent dilemma of two mutually exclusive orders. Woodward and the Bank now claim the trial court in the original action was without authority to dismiss the plaintiffs' petition without prejudice as to them. In their briefs, they make the following statement:

While the June 1, 198, judgment was not final for purposes of appeal, it was final for all other purposes.

The only authority cited for this proposition is Rule 75.01. That rule provides:

The trial court retains control over judgments during the thirty-day period after entry of judgment and may, after giving the parties an opportunity to be heard and for good cause, vacate, reopen, correct, amend, or modify its judgment within that time....

The argument is made that the trial court was therefore without authority to modify its order after the passage of 30 days. The term "entry of judgment" as used in Rule 75.01 has been interpreted to mean a final, appealable judgment that disposes of all parties and all issues, and the time limits of that rule are not applicable if the judgment is not final. Kozeny-Wagner, Inc. v. Shark, 709 S.W.2d 149, 151-152 (Mo.App.1986). As stated in State ex rel Schweitzer v. Greene, 438 S.W.2d 229, 232 (Mo. banc 1969):

Logic and justice would seem to indicate that a trial court should be permitted to retain control of every phase of a case so that it may correct errors, or, in its discretion, modify or set aside orders or judgments until its jurisdiction is extinguished by the judgment becoming final and appealable....

Both Woodward and the Bank argue that because the order of September 4, 1984, did not expressly set aside the order of June 1, 1983, the former order was still effective. No authority is cited for this statement, and we find none. The order of September 4, 1984, dismissing plaintiffs' claims without prejudice is in direct and irreconcilable conflict with the earlier dismissal of plaintiffs' petition with prejudice. Inasmuch as the trial court had the authority to enter the latter order, the effect of that order was to modify the earlier order....