Renaissance Leasing LLC. v. Vermeer Mfg. Co.

• Decision Date: 26 October 2010
• Docket Number: No. SC 90258.,SC 90258.
• Citation: 322 S.W.3d 112
• Parties: RENAISSANCE LEASING, LLC, et al., Appellants, v. VERMEER MANUFACTURING COMPANY, Vermeer Great Plains, Inc., Respondents.
• Court: Missouri Supreme Court

322 S.W.3d 112

RENAISSANCE LEASING, LLC, et al., Appellants,

v.VERMEER MANUFACTURING COMPANY, Vermeer Great Plains, Inc., Respondents.

No. SC 90258.

Supreme Court of Missouri,En Banc.

Aug. 31, 2010.

Rehearing Denied Oct. 26, 2010.

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Kirk T. May, William D. Beil, Rouse Hendricks German May PC, Kansas City, for Renaissance Leasing and the other plaintiffs/appellants.

W. Perry Brandt, Fred L. Sgroi, Bryan Cave LLP, Gary J. Willnauer, Ryan R. Cox, Morrow, Willnauer & Klosterman LLC, Kansas City, for Respondents.

WILLIAM RAY PRICE, JR., Chief Justice.

I. Introduction

Renaissance Leasing LLC, TEAM Excavating LLC, and John Uhlmann appeal the grant of summary judgment in favor of Vermeer Manufacturing Company and Vermeer Great Plains, Inc., on claims for fraud, negligent misrepresentation, breach of express and implied warranty, and breach of contract. All of the claims arise from the sale of a piece of heavy mining equipment-a T1055 terrain leveler-to a non-party, Crush Technology LLC. Crush purportedly transferred ownership of the T1055 to Renaissance and then later distributed its liquidation assets to Uhlmann, who assigned any rights of action to TEAM. Uhlmann owns both Renaissance and TEAM.

Evidence in the record is sufficient to demonstrate a genuine issue of material fact about transfer of the T1055 and assignment of the warranty rights. The grant of summary judgment in favor of Vermeer on Renaissance's breach of express warranty claim is reversed, as is the grant of summary judgment in favor of Vermeer on Uhlmann's negligent misrepresentation claim. The grant of summary judgment for all other claims and parties is affirmed.

Affirmed in part, reversed in part, vacated in part, and remanded.

II. Facts and Procedural History

The facts underlying this multi-party lawsuit are complicated due to the financing relationships among the various business entities associated with Uhlmann, which were formed to hold, lease, or operate the terrain leveler at issue. In addition, the original purchaser of the terrain leveler and holder of the warranty rights is not a party to the litigation. Crush Technology LLC (“Crush”) was formed by Jeff Hall and several others to quarry limestone from the Phenix Quarry near Springfield. To that end, they acquired a Vermeer T1055 terrain leveler from Vermeer Great Plains (“Great Plains”), an independent dealer and regional distributor for Vermeer Manufacturing Company (“Vermeer”). The T1055 was designed and marketed for surface mining, overburden removal, road construction, and soil remediation. Before any payment or sales contract was made, the terrain leveler was transported to the quarry for a two-month demonstration period, during which Crush tested it under various conditions to see how well it would perform overburden crushing and rock excavation. The T1055 performed well on the overburden or scrap rock but experienced problems when used to excavate hard limestone on the quarry floor. Crush chose to purchase the machine after the demonstration period but notified Great Plains and Vermeer about its concerns.

Soon after formation, Crush sought investment or financing for its business from John Uhlmann (“Uhlmann”) ¹ and the Uhlmann Company, a Kansas City firm consisting of members of the Uhlmann family. The Uhlmann Company declined investment in the business but agreed to make loans to Crush on the condition that Uhlmann personally guarantee the loans. Uhlmann, who was impressed by Crush's business plan and by the performance of the T1055, made additional loans to Crush on his own behalf. Crush executed a sales contract with Great Plains for purchase of the T1055 for $670,000 on September 30, 2002. The T1055 was warranted against defects by the manufacturer for a period of one year or 1,000 operating hours. Even though Uhlmann was not a member of Crush, he participated in the decision to purchase the terrain leveler. Using the money loaned by the Uhlmann Company, Crush paid $600,000 to Great Plains on October 8. Prior to paying the remaining $70,000 on October 25, Crush members ² and Uhlmann met with Vermeer representatives at Vermeer's headquarters, where they sought and received assurance that the T1055 would be repaired or redesigned to function as represented.

In December 2002, Uhlmann took a 92.5 percent membership interest in Crush after the members of Crush executed an amended operating agreement, purportedly in consideration for the money Uhlmann personally had loaned to the company. At the same time, Uhlmann formed Renaissance Leasing Company LLC (“Renaissance”), with himself as sole member, for the purpose of owning and leasing Crush's mining equipment. Soon afterward, the terrain leveler allegedly was transferred to Renaissance-as security for Uhlmann's “investment”-and then leased back to Crush. No records document the transfer. The record on appeal is silent as to whether the written limited warranty also was transferred to Uhlmann. Beginning in October 2002, Great Plains and Vermeer performed warranty repairs on the terrain leveler. In January 2003, the machine was moved from the Phenix Quarry to a highway location, where it continued to be operated.

By April 2003, Uhlmann had fired Jeff Hall, Gary Watts, and Terry Watts, three of the founding members of Crush. He renamed the company Mo-Kan Rock & Gravel Company LLC (“Mo-Kan”). Renaissance notified Mo-Kan in August 2003 that Mo-Kan had defaulted on its rental payments. At the same time, Uhlmann formed TEAM Excavating LLC (“TEAM”) with himself as sole member. In September 2003, he dissolved Mo-Kan and, as the only remaining member with a positive capital account balance, received distribution of the liquidation proceeds. In June 2004-nearly a year later-Uhlmann assigned Mo-Kan's liquidation proceeds to TEAM by written agreement. Also in June, TEAM executed a lease agreement with Renaissance for the same equipment that previously had been leased back to Crush/Mo-Kan. Between September 2003 and June 2004, TEAM used the T1055 and other Renaissance-owned equipment without any kind of lease agreement in place. At no time during this series of transfers and leases did any of the equipment physically change hands.

A diagram summarizing the various business entities and transactions involved in the underlying lawsuit is included below:

In May 2005, Uhlmann, Renaissance, and TEAM filed suit against Vermeer and Great Plains in United States district court for damages associated with the purchase of the T1055. They claimed that the defendants had engaged in misleading advertising in violation of the Lanham Act, 15 U.S.C. § 1125, as well as fraud, negligent misrepresentation, and breach of warranty in violation of state law. The federal court dismissed the Lanham Act claim on the merits and the state claims for lack of subject matter jurisdiction.

In August 2006, the plaintiffs filed the underlying action in Jackson County circuit court, asserting claims of fraud, negligent misrepresentation, breach of express and implied warranty, and breach of contract. Vermeer and Great Plains moved separately for summary judgment on several grounds, including plaintiffs' lack of standing. The trial court granted summary judgment in favor of Vermeer in June 2007 and in favor of Great Plains in September 2007. This appeal followed.

III. Standard of Review

The standard of review when considering an appeal from summary judgment is essentially de novo. ITT Commercial Finance Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). Summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Larabee v. Eichler, 271 S.W.3d 542, 545 (Mo. banc 2008); Rule 74.04(c)(6). A defending party moving for summary judgment may establish a right to judgment by showing facts that negate any one of the claimant's elements. Fetick v. American Cyanamid Co., 38 S.W.3d 415, 418 (Mo. banc 2001). If the moving party makes a prima facie showing that it is entitled to judgment as a matter of law, the non-moving party then has a specific burden: “A denial may not rest upon the mere allegations or denials of the party's pleading. Rather, the response shall support each denial with specific references to the discovery, exhibits or affidavits that demonstrate specific facts showing that there is a genuine issue for trial.” Rule 74.04(c)(2). The court accords the non-moving party the benefit of all reasonable inferences in the record. ITT, 854 S.W.2d at 376. An order of summary judgment may be affirmed under any theory that is supported by the record. Burns v. Smith, 303 S.W.3d 505, 509 (Mo. banc 2010).

IV. Analysis

As a preliminary matter, the plaintiffs' petition attempts to establish a collective identity for the separate business entities and individuals involved. In an apparent effort to simplify the pleadings, the petition states that the term “TEAM” when used alone refers to Crush, Renaissance, and TEAM collectively. By pleading this way, the plaintiffs conflate the interests of a non-party-Crush-with the separate interests of Renaissance and TEAM. They create confusion about which party is alleging harm for each count and which party is entitled to relief on a particular theory.

Separate entities rise and fall on their own claims. Missouri law does not recognize a “collective” corporate identity, so each entity must plead and prove its claims individually to be entitled to relief. Uhlmann's position as sole or majority member of various companies does not equate to an identity of interests between them. Each company is a distinct legal entity with the right to own property, sue and be sued, contract, and acquire and transfer property. See §§ 347.061, 347.063, and 347.069, RSMo 2000. ³ The mere identity of members or officers of two...