Lundstrom v. Flavan

• Decision Date: 24 March 1998
• Docket Number: No. 71798,71798
• Parties: James D. LUNDSTROM and John Kanas, Respondents, v. David B. FLAVAN, Appellant.
• Court: Missouri Court of Appeals

Page 861

965 S.W.2d 861

James D. LUNDSTROM and John Kanas, Respondents, v. David B. FLAVAN, Appellant.

No. 71798.

Missouri Court of Appeals,

Eastern District,

Division Four.

March 24, 1998.

Daniel P. Card, II, Paule, Camazine & Blumenthal, P.C., St. Louis, for Appellant.

Joel D. Brett, Kevin L. Wibbenmeyer, Barklage, Barklage, Brett, Ohlms & Martin, P.C., St. Charles, for Respondents.

SIMON, Judge.

David B. Flavan, appellant, appeals from a judgment awarding $165,000.00 and $51,948.36 in prejudgment interest to James D. Lundstrom (Lundstrom) and John Kanas (Kanas), collectively respondents, on an oral contract.

On appeal, appellant contends that the trial court erred in: (1) rendering judgment for respondents on a purported oral contract between appellant and respondents, where both parties understood that performance could not be made in less than one year, and where such an agreement was required by Section 432.010 RSMo 1994 (all further references shall be to RSMo 1994 unless otherwise noted) to be in writing; (2) enforcing the oral contract which was further barred by the statute of frauds, Section 432.010, because respondents were attempting to hold appellant liable for the debt of another; (3) finding clear, cogent and convincing evidence of the "requisite meeting of the minds" and "mutual assent" to establish the existence of an oral agreement between appellant and respondents and that any agreement was independent of respondents' efforts to market their water park; and (4) awarding prejudgment interest to respondents on the purported oral agreement pursuant to Section 408.020 from the date of the filing of the suit. We affirm.

Reviewing a court-tried case, we will affirm the judgment unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.banc 1976).

The record reveals that respondents were Denver residents, working together to develop a water park, "Surf's Up USA," (water park) in Saint Charles County, Missouri. Respondents first met with appellant pursuant to this venture in 1985. Lundstrom testified that by 1990 to 1991, respondents had developed a close business and social relationship with appellant. In June or July of 1991, appellant learned that Lundstrom had moved to Las Vegas and in response commented on the possibility of gambling coming to Saint Charles. Appellant told Lundstrom that appellant had a river boat in Saint Charles and was planning to actively pursue operating the river boat. Lundstrom was unaware that the river boat was actually owned by a corporation, of which appellant was the sole shareholder. In July or August 1991, Lundstrom called appellant and offered that respondents would find a buyer for the river boat in exchange for a commission. Appellant agreed and offered ten percent. No talk of the water park was made during the conversation. Kanas was not present for the conversation but learned of the agreement from Lundstrom.

In the conversation regarding the sale, Lundstrom also asked appellant to send pictures, brochures and other information regarding the river boat. Appellant did as requested. Thereafter, respondents began contacting potential purchasers for the river boat, eventually entering into discussions with the eventual buyer Palace Station (Palace), now known as Station Casinos, Inc. on August 30, 1991.

From September 15 to September 17, 1991, respondents and Palace representatives (representatives) met with appellant in Saint Charles to negotiate a deal and view the river boat. At that time respondents also showed representatives the site for the proposed water park. Respondents learned early in the discussion that Palace was not interested in the water park but only in the river boat, which became the main focus of all later discussions between respondents and the representatives.

Representatives submitted a proposal for the purchase of the river boat on or about October 9, 1991. Kanas discussed the proposal with representatives but never furnished appellant with a copy. Later that month, representatives, Palace's attorney and respondents again went to Saint Charles so that representatives could present a revised proposal to appellant. Respondents never viewed the proposal.

At some point during the discussions with appellant, representatives, Palace's attorney, respondents and appellant went to appellant's attorney's office. Appellant, appellant's attorney, representatives, and Palace's attorney met in a conference room, while respondents waited in the waiting room. Thereafter, respondents had no further contact with Palace representatives.

On December 6, 1991, respondents prepared a written contract to evidence the terms of the oral agreement and sent it to appellant, but appellant did not sign the writing. Respondents had been in contact with appellant regarding the negotiations with Palace, but appellant did not inform respondents of the eventual sale. Respondents never learned of the sale until Lundstrom read about the deal in the Las Vegas papers. Thereafter, respondents filed suit.

At trial, Lundstrom testified that he asked appellant if appellant wanted respondents to pursue a purchaser for the river boat and appellant said that he did want them to find purchasers, offering a ten percent commission for the sale, to be paid on closing. Sale was to be contingent on the passage of proposed legislation approving river boat gambling in Missouri, scheduled for a vote in November, 1992. Appellant did not object to this testimony at trial. Kanas testified at trial that he learned of the agreement from Lundstrom, the parties considered an oral agreement sufficient because of respondents' relationship with appellant, and respondents trusted appellant.

Appellant denied at trial that there ever was any agreement and contended that any efforts put forth by respondents to bring about the sale of the river boat were in connection with respondents' motives to market the water park. Respondents testified that they initially did hope to market the water park in addition to the sale of the boat, but early in the negotiations they realized that Palace was interested solely in the boat. Representatives' depositions, which were accepted into evidence, confirm that Palace's concern was with the sale of the boat, not a water park. In his deposition, Mr. Christenson, a representative, stated that Palace likely would not have even addressed the opportunity except for the gaming site.

Representatives also testified in their depositions that they had never met appellant before respondents introduced appellant and Palace's only contact with appellant, up to the October meeting with appellant's attorney, was through respondents. Representatives also indicated that respondents' role in the sale was critical. Representative deponents indicated that it was representatives' understanding that respondents would be receiving a commission from appellant, and it was their opinion that respondents deserved a commission for their efforts.

Additionally, representatives testified in their depositions that an asset purchase agreement for the purchase of the river boat had been made between appellant, acting for himself and for the corporation he controls, and Palace on January 13, 1993 and that payments were being made by Palace to appellant at the time of the depositions, August 19, 1994.

At trial, after the close of the respondents' case, appellant made an oral motion for a directed verdict, in which appellant for the first time argued that an oral agreement to answer for the debt of another is required to be in writing by the Statute of Frauds, Section 432.010. This defense was not pled in appellant's answer, nor did he move to amend his answer. The argument was renewed in appellant's motion for a new trial.

In his first point, appellant contends that the trial court erred in rendering judgment for respondents on an oral contract to pay a sales or broker's commission for the sale of the river boat because under the terms of the contract performance could not be had in less than one year. Here, the payment of the commission was contingent upon voter approval of the river boat gambling legislation, scheduled for a vote in November of 1992--more than one year after the making of the oral agreement. Section 432.010, the statute of frauds provides, in pertinent part:

[N]o action shall be brought ... upon any agreement that is not to be performed within one year from the making thereof ... unless the agreement upon which the action shall be brought, or some memorandum or note thereof, shall be in writing and signed by the party to be charged therewith ...

Rule 55.08 provides that affirmative defenses, including the statute of frauds, must be set forth in the pleadings. Our Supreme Court held that where a party fails to raise the statute of frauds defense in the pleadings or at trial by objecting to testimony regarding the oral contract, that party waives the defense. Norden v. Friedman 756 S.W.2d 158, 162 (Mo.banc 1988).

Here, appellant did not plead in his answer that the statute of frauds required a writing because the contract could not be performed within one year and did not object to the introduction of evidence at trial, or even raise this defense at any point during trial. Therefore, the defense that the contract need be in writing because it could not be performed within one year, was waived.

Appellant alternatively requests that we review this under plain error review. Rule 84.13(c) provides that on appeal, a court may, in its discretion, consider plain error when the court finds that a manifest injustice or miscarriage of justice has resulted. The doctrine of plain error may not be used to cure a mere failure to make a proper and timely objection at trial. Elfrink v. Burlington Northern R. Co.,...