Lim v. Chong

• Decision Date: 20 November 2001
• Docket Number: No. ED 78755.,ED 78755.
• Citation: 66 S.W.3d 97
• Parties: Goretti LIM, Appellant, v. King Chuen CHONG et al., Respondent.
• Court: Missouri Court of Appeals

66 S.W.3d 97

Goretti LIM, Appellant, v. King Chuen CHONG et al., Respondent.

No. ED 78755.

Missouri Court of Appeals, Eastern District, Division Two.

November 20, 2001.

Motion for Rehearing and/or Transfer to Supreme Court Denied January 24, 2002.

G. William Wynne, Clayton, MO, for appellant.

David G. Dempsey, St. Louis, MO, for respondent.

JAMES R. DOWD, Chief Judge.

This is an equity case. Goretti Lim filed a petition requesting the court to order her sister, Cathy Chong, and her sister's husband, King Chuen Chong (the Chongs), to account for the assets of their deceased mother, Lin Tang Wong (mother). The trial court granted the Chongs' motion to dismiss with prejudice for failure to state a claim.

When a motion to dismiss is granted we view all well-pled allegations to be true. Harrison v. Harrison, 28 S.W.3d 500, 501 (Mo.App. E.D.2000). According to Lim's petition, her mother lived with the Chongs from 1974 until her death in 1993. During this period it is alleged that the Chongs were in charge of mother's financial affairs, including her twelve million dollars in banks, financial institutions and real estate; that throughout her life mother clearly expressed her wish that all of her children should benefit equally from her property; that she died without assets; and that all of her property is now in the possession of the Chongs.

According to the petition, the Chongs had actual or supervisory custody of the real estate and personal property of mother and by "undue influence, deceit, misrepresentation, and fraud" converted or caused mother to sell the property and transfer the proceeds to the Chongs, depriving Lim and her sisters of an inheritance. Lim further alleges the transfer of mother's property to the Chongs was done without written authorization and that mother died without a will or a trust. Despite repeated requests by Lim for records of her mother's property and its disposition, the Chongs have refused to provide any records. In her petition Lim requested the following from the court:

An order that the Defendants account to her for all of the property, both real and personal, of Lin Tang Wong that has come into their possession, to disclose to her all legal documents that have allowed Defendants to administer, transfer or otherwise dispose of Lin Tang Wong's property, to declare the rights and interest of the Plaintiff in the property, to award the Plaintiff the reasonable value of her interest, to impose a judgment of damages in the amount determined to be due to Plaintiff by the accounting, to assess punitive damages, if appropriate, and for all other and further orders as the Court deems necessary and proper.

As stated, the trial court dismissed Lim's cause of action for failure to state a claim.

The law generally favors trials upon the merits, and the criteria by which the sufficiency of petitions is judged have been developed to promote this purpose. Collins v. Swope, 605 S.W.2d 538, 540 (Mo.App. S.D.1980). When confronted with a motion to dismiss for failure to state a claim, a court is required to construe the petition liberally and favorably, and plaintiffs will be given the benefit of every favorable and reasonable intendment the facts alleged will allow. Behrenhausen v. All About Travel, Inc., 967 S.W.2d 213, 216 (Mo.App. W.D.1998). The facts alleged in such a petition are taken to be true. Harrison, 28 S.W.3d at 501. A petition cannot be dismissed for failure to state a claim unless it appears that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. McIntosh v. Foulke, 360 Mo. 481, 228 S.W.2d 757, 761 (1950).

The petition here is an action for an accounting. The law in Missouri requires an accounting to be tried in two phases: First, a determination of the right to an accounting, and if a right to an accounting is found, then an actual accounting must occur. State ex rel. Rowlett v. Wilson, 574 S.W.2d 376, 378 (Mo. banc 1978). Because the trial court must determine if a plaintiff is entitled to an accounting before hearing evidence in the actual accounting, the court should determine if it has equitable jurisdiction to order an accounting. Id. This requires the plaintiff to adequately plead: (1) the need for discovery, (2) the complicated nature of the accounts, (3) the existence of a fiduciary or trust relationship, and (4) the inadequacy of legal remedies. Bossaler v. Red Arrow Corp., 897 S.W.2d 629, 630 (Mo.App. E.D.1995).

The question here is: did Lim sufficiently plead these elements? Assuming the allegations in the petition are true, mother had assets of approximately twelve million dollars in real estate, banks and other financial institutions in the United States and Hong Kong. Mother consistently expressed her desire that her assets be used to benefit her daughters equally when she died. The petition states that prior to mother's death the Chongs "were in charge of [her] financial affairs and managed her considerable portfolio" and "had supervisory custody or actual custody of the property." When mother died, she had neither a will nor assets and Lim has been unable to determine what happened to the assets. Lim has repeatedly requested the Chongs to provide an accounting, but the Chongs have refused. Lim's petition asserts that she has "no means of discovering . . . [those assets] without the cooperation and assistance of the Defendants;" that she has no adequate remedy at law; and that she will suffer irreparable injury without an accounting.

The Chongs do not challenge that Lim has adequately pleaded the need for discovery, the complicated nature of the accounts and the inadequacy of legal remedies. They claim, however, that Lim has failed to sufficiently plead a fiduciary or trust relationship. First they argue that Lim's petition fails to plead that the Chongs "controlled" mother's assets. This contention elevates words over substance. We construe the petition liberally and favorably, and give plaintiffs the benefit of every favorable and reasonable intendment the facts alleged will allow. Behrenhausen, 967 S.W.2d at 216. Lim's petition alleges that the Chongs were "in charge of" and had actual or supervisory custody of mother's assets before her death. Though Lim does not use the word "control," her petition nonetheless sufficiently informs the Chongs what she will attempt to establish at trial. See Scheibel v. Hillis, 531 S.W.2d 285, 289 (Mo. banc 1976). Lim thus sufficiently alleges that the Chongs "controlled" mother's property.

The Chongs then argue that Lim's petition is insufficient because she has pleaded a fiduciary relationship only between the Chongs and mother, not between the Chongs and Lim. The Chongs argue that in order for an accounting to lie Lim must plead a fiduciary relationship between the Chongs and Lim. This misstates the law. As is made clear in Suhre v. Busch, 343 Mo. 679, 123 S.W.2d 8 (1938), courts of equity may impose a constructive trust even in the absence of a fiduciary relationship between parties.

Constructive trusts do not, like express trusts and resulting trusts, arise by virtue of agreement or intention, either actual or implied, but by operation of law, or, more accurately, by construction of the court, regardless and independently of any actual or presumed intention of the parties to create a trust....

[I]n imposing or declaring a constructive trust a court of equity merely uses the machinery of a trust to prevent fraud or provide a remedy in cases of fraud, actual or constructive, by making the person who has wrongfully acquired property, or has acquired property under such circumstances as make it inequitable for him to retain it, a trustee for the person defrauded or injured by such fraudulent or wrongful conduct.... [A] constructive trust is the method or formula used by a court of equity as a means of effecting restitution or of rectifying a situation where, as the result of the violation of confidence or faith reposed in another, or fraudulent act or conduct of such other, the plaintiff, who seeks the aid of equity, has been wrongfully deprived of, or has lost, some title, right, equity, interest, expectancy, or benefit, in the property which, otherwise and but for such fraudulent or wrongful act or conduct, he would have had.

Id. at 15. The court in Suhre went on to make clear that when one person gives property to another under the assurance that the grantee will apply the property for the benefit of other parties, equity will impose a constructive trust in favor of the other parties. Id. at 16-17. This is especially true in the case of close family members. See RESTATEMENT (SECOND) OF TRUSTS § 44, Comment c (1959).

Justice Cardozo, in Sinclair v. Purdy, 235 N.Y. 245, 139 N.E. 255 (1923), speaking of a conveyance by a brother to his sister, explained the rationale for courts of equity intervening in these situations:

We think a confidential relation was the...