Lipton Realty, Inc. v. St. Louis Housing Authority, s. 49261

• Decision Date: 14 January 1986
• Docket Number: Nos. 49261,49265,s. 49261
• Citation: 705 S.W.2d 565
• Parties: LIPTON REALTY, INC., Appellant and Respondent, v. ST. LOUIS HOUSING AUTHORITY, Respondent and Appellant.
• Court: Missouri Court of Appeals

Page 565

705 S.W.2d 565

78 A.L.R.4th 557

LIPTON REALTY, INC., Appellant and Respondent, v. ST. LOUIS HOUSING AUTHORITY, Respondent and Appellant.

Nos. 49261, 49265.

Missouri Court of Appeals,

Eastern District,

Division Four.

Jan. 14, 1986.

Motion for Rehearing and/or Transfer

Denied Feb. 11, 1986.

Application to Transfer Denied

March 25, 1986.

P. Terence Crebs, St. Louis, for Lipton Realty, Inc.

Edward C. Cody, Mark S. Howenstein, St. Louis, for St. Louis Housing.

CRANDALL, Presiding Judge.

Plaintiff, Lipton Realty, Inc. (Lipton), in a jury-tried case, appeals from the trial court's dismissal of Count I of its petition against defendant, St. Louis Housing Authority (Housing Authority), and from the judgment in favor of Housing Authority on Count II of its petition. Housing Authority cross-appeals from the judgment in favor of Lipton on Count III of Lipton's petition. We affirm.

Housing Authority by written consent leased an apartment complex in St. Louis, Missouri, from Lipton. After the term of the lease expired, Lipton filed a three-count petition for damages against Housing Authority. Count I sought $397,481 in damages for the cost of repairs which Housing Authority was required but failed to make under the lease agreement. Count II sought "in the alternative" $152,100 which represented the diminution of the fair market value of the property caused by Housing Authority's failure to make repairs as alleged in Count I. Count III was for unpaid rent allegedly due under an extension of the lease agreement.

On Lipton's motion, the trial court ordered a separate trial of Count I, the cost of repair claim, pursuant to Rule 66.02. The trial court then sustained Housing Authority's motion to dismiss Count I and designated the order a final judgment for purposes of appeal under Rule 81.06. We dismissed the appeal without prejudice as premature for the reason that Counts I and II constituted one claim with alternative theories of recovery. The dismissal of Count I was only a partial disposition of a single claim and therefore not a final judgment. Lipton Realty, Inc. v. St. Louis Housing Authority, 655 S.W.2d 792 (Mo.App.1983).

At trial, the jury found for Housing Authority on Lipton's diminution of fair market value claim (Count II) and for Lipton in the amount of $18,100 on its unpaid rent claim (Count III). On appeal we view the evidence in the light most favorable to the verdict, considering only that which supports it, and disregarding contrary evidence and inferences. Lane v. Cape Mut. Ins. Co., 674 S.W.2d 644, 645 (Mo.App.1984).

Lipton's first point challenges the trial court's dismissal of Count I of its petition. ¹ Count I sought damages for Housing Authority's failure to repair and maintain the apartment building. Lipton asserts that cost of repair is the proper measure of damages for breach of an express covenant to repair and maintain. ²

The scope of review for a motion to dismiss requires an examination of the pleadings, allowing them their broadest intendment, treating all facts alleged as true, construing allegations favorably to plaintiff, and determining whether the petition invokes principles of substantive law. Green Quarries, Inc. v. Raasch, 676 S.W.2d 261, 263 (Mo.App.1984). If the trial court does not specify the theory upon which it based its ruling in granting a motion to dismiss, we presume it was on the grounds specified in defendant's motion. Johnson v. Great Heritage Life Ins. Co., 490 S.W.2d 686, 690 (Mo.App.1973). Housing Authority's motion alleged that the cost of repair sought in Count I was the improper measure of damages.

Count I of Lipton's petition sought the cost of repairs. Count II sought, in the alternative, diminution in value which represented the difference between the fair market value of the apartment complex before and the value after it was leased by Housing Authority. Lipton's petition alleged that the cost of repair was $397,481, which was substantially more than the diminution in fair market value of $152,100. Recovery based upon cost of repairs is subject to an absolute ceiling of diminution in value. Missouri Baptist Hospital v. United States, 555 F.2d 290, 296, 213 Ct.Cl. 505 (1977). Lipton's petition, on its face compels the use of diminution in fair market value to measure damages.

The facts of the case indicate that Lipton's action is essentially one for waste. § 537.420, RSMo (1969). It was characterized as such in Lipton's own pleadings. In an action for waste the measure of damages is generally the difference between the market value of the realty prior to being damaged and the value immediately thereafter. Helton v. City of St. Joseph, 340 S.W.2d 198, 199 (Mo.App.1960). Damages based upon diminution of value are used where the damage to the realty is permanent, or where the damage is not expressed well in specific items of injury, but is so extensive that it substantially affects the value of the property in its entirety. Smith v. Norman, 586 S.W.2d 84, 86 (Mo.App.1979). In contrast, when the damage is small in comparison to the total value of the property and is readily ascertainable, the amount of such damage is determined by the cost necessary to restore the property to its former condition. Lustig v. U.M.C. Industries, Inc., 637 S.W.2d 55, 58 (Mo.App.1982).

In the present case, Lipton, together with representatives of Housing Authority, inspected the 22 apartments in the complex at the end of the leasing period. Although the list is not all-inclusive, the following items of damages were discovered: holes in the walls; broken windows; missing electrical fixtures; raised hardwood flooring; missing floor and wall tiles; deteriorating wall plaster; rubbish-blocked stairways; inoperative plumbing; missing door and window hardware; damaged exterior doors; and graffiti on the walls. The damage to the individual apartments and to the apartment building as a whole was extensive and permanent. Compare Smith v. Norman, 586 S.W.2d at 85-87 (damage to one apartment in a six-unit building). By Lipton's own admission in its pleadings, the expense involved in repairing or restoring the apartments to their original condition would greatly exceed the before-and-after value of the real estate. Missouri Baptist Hospital, 555 F.2d at 295. Given these facts, a cost of repair recovery for Lipton would be improper.

In its brief, Lipton contends that its action is not one for waste but one for breach of contract because of Housing Authority's continual breach of its covenant to repair or maintain. The purpose of damages in a contract action is to restore a plaintiff to the position he would have been in had the contract not been breached, rather then to place him in a better position. Missouri Baptist Hospital, 555 F.2d at 294. In the present case, damages based upon diminution in value accomplishes this end, because Lipton did not attempt to restore the property upon termination of the lease but rather sold the real estate pursuant to an "as is" sales contract. A diminution in value award makes Lipton whole, because it reflects the amount by which the property was reduced in value at the time of sale. Whether the action was one for waste or for breach of contract, the court was correct to submit diminution in fair market value as the proper measure of damages. The trial court properly dismissed Lipton's cost of repair claim in Count I. Lipton's first point is denied.

In its second point Lipton asserts that, even if the proper standard for damages is diminution in value, the trial court erred in refusing to admit evidence of cost of repairs. Evidence both as to cost of repairs and as to diminution in value of the property is essential only to establish which measure of damages results in a smaller recovery, for plaintiff is awarded only the lower amount. See Reutner v. Vouga, 367 S.W.2d 34, 41-42 (Mo.App.1963). The particular facts of each case determine which measure of damages is to be used. Hensic v. Afshari Enterprises, Inc., 599 S.W.2d 522, 524 (Mo.App.1980). In the present case, Lipton's own petition specified the exact amounts for both cost of repair and diminution in value and further established that the cost of repair was substantially more than diminution in value. Lipton's own pleadings therefore settled that the cost of repair was not the proper measure of damages. It is not necessary to admit evidence of cost of repairs where cost of repair is obviously not the appropriate measure of damages and where such evidence is not required to prove the appropriate before-and-after damages. Lipton's second point is denied.

Lipton's third point actually consists of three allegations of error. The first alleges error in the trial court's refusal to admit into evidence all or any portion of a letter written by an attorney representing Housing Authority. At trial, Housing Authority objected to the admission of the letter on the basis of attorney-client and work-product privileges and because of references to settlement contained therein. The judge sustained the objection.

In its brief Lipton advances the argument that the Missouri Supreme Court implicitly ruled the letter was admissible when it denied a writ of prohibition against a trial judge who had ordered the letter to be produced in discovery. The granting or denial of a writ of prohibition is discretionary with an appellate court. State ex rel. City of St. Louis v. Sartorius, 340 Mo. 832, 102 S.W.2d 890, 895 (1937). In the exercise of its discretion, an appellate court may deny the application without ever passing on the merits of the issues involved. Id. The denial of an application for a writ therefore has no precedential value.

In the present case the writ of prohibition was denied without a written opinion. It is impossible to determine if the merits of the issues were addressed by the Supreme Court. The denial of Housing Authority's application for a writ therefore did not implicitly...