Sangamon Associates, Ltd. v. Carpenter 1985 Family Partnership, Ltd., No. WD 63485 (MO 10/19/2004)
| Decision Date | 19 October 2004 |
| Docket Number | No. WD 63485,WD 63485 |
| Parties | SANGAMON ASSOCIATES, LTD., et al., Appellants, v. THE CARPENTER 1985 FAMILY PARTNERSHIP, LTD, et al., Respondent. |
| Court | Missouri Supreme Court |
Appeal from the Circuit Court of Jackson County, Missouri, Honorable Sandra C. Midkiff, Judge.
Frederick H. Riesmeyer, II, Attorney for Appellant — Kansas City, MO.
Rhonda E. Smiley, Esq., Attorney for Respondent — Kansas City, MO.
Before Ellis, P.J., Lowenstein and Ulrich, JJ.
This appeal arises from a dispute involving the jointly-owned property of Dale E. Fredericks and the late Allan R. Carpenter through a limited partnership they formed, Broadway-Washington Associates ("BWA"). At issue is a specific parcel of property Carpenter bought back from BWA. Fredericks later purchased a 10% interest in this parcel, sharing ownership with Carpenter as a tenant in common. Sangamon Associates, Ltd. and Fredericks (collectively referred to as "Sangamon")1 now challenge the court-ordered partition and judgment resolving numerous partnership disputes surrounding ownership of this property.
The history, both factually and procedurally, underlying this appeal is vast and complex. Only that most relevant to resolution of the issues at hand will be discussed. A prior recitation of these facts may be found at 112 S.W.3d 112, 113-16 (Mo. App. 2003), where this court dismissed Sangamon's appeal for the lack of a final judgment.
In 1985, Allan R. Carpenter and Dale E. Fredericks formed a Missouri limited partnership, BWA, to acquire, own, and develop real property in downtown Kansas City, Missouri. In doing so, each partner formed his own respective limited partnership to act as a general and limited partner of BWA. Fredericks and his wife formed Sangamon Associates, Ltd.; Allan Carpenter formed The Carpenter 1985 Family Partnership, Ltd. In addition, several other Carpenter entities were involved in different aspects of BWA property acquisitions. Each of these entities, in addition to Allan Carpenter individually and BWA, were named defendants and will collectively be referred to as "Carpenter" unless expressly denominated otherwise.2
The BWA property in dispute includes several parcels of land known as "Block 105." Although the parties initially planned to develop this acquisition, the real estate market was poor and, instead, the land was used as a surface parking lot. As a result of the market, BWA began experiencing financial difficulties. In 1988, Allan Carpenter purchased a 63.53% interest in this property in order to prevent BWA from defaulting on its note and to prevent additional capital calls. He subsequently had difficulty repaying the debt on his individually-owned percentage and asked BWA and Sangamon to buy back part of the property. Fredericks purchased 10% through an Individual Retirement Account ("IRA") and obtained ownership as a tenant in common.
Disputes ultimately arose between the parties concerning a failed sale of their jointly-owned property. Allan Carpenter, who had done most of the negotiations for the sale, blamed Fredericks for the failed transaction and sued Fredericks in California. Fredericks, in turn, alleged that Carpenter made defamatory remarks about him, stating that Fredericks had "killed the sale" of the disputed property. This, Fredericks claimed, was relayed to John Carpenter, Allan Carpenter's son, who then relayed the statement to his wife, staff counsel at a major client of Fredericks' law firm. Fredericks asserted that, as a result of these remarks, he was forced to leave his firm. The California court entered summary judgment in favor of Fredericks.
Sangamon then filed this action. The twenty-two count second amended petition included direct and derivative claims for an accounting, a mandatory injunction for production of books and records, breach of fiduciary duty, breach of contract, appointment of a receiver, removal of managing general partner and manager of projects, conversion, constructive trust, civil conspiracy, defamation, and tortious interference with business relations. Carpenter's answer included a two-count counterclaim requesting a partition of real estate and court-supervised winding-up of BWA's partnership affairs. Sangamon and Carpenter's claims involving issues of fact were tried before a jury. At the close of Sangamon's evidence, the trial court entered a directed verdict in favor of Carpenter on Sangamon's civil conspiracy, defamation, and tortious interference counts. It then severed Sangamon's remaining claims and Carpenter's counterclaims and resumed trial without a jury.
The trial court also entered an order for partition with respect to the property owned by Fredericks and Carpenter as tenants in common. A lawfully conducted public judicial sale was conducted at which Carpenter was the highest bidder. Sangamon filed a motion to have the sale set aside. The court granted its motion, finding that the price was grossly inadequate. In order to remedy this disparity, the trial court allowed Carpenter to increase his bid ten-fold before it confirmed the order for sale by partition. Additional facts concerning the sale are set out immediately below in Part I.A of this opinion. When the court ultimately entered a final judgment for partition using the modified bid amount, it also entered judgment on the twenty-two-count petition. This appeal follows.
Sangamon appeals numerous portions of the judgment concerning both the partition and partnership claims. All portions of the judgment entered in favor of Allan Carpenter, aside from the partition action, are not appealable. Allan Carpenter died in November 2000. Sangamon only moved to substitute a successor or representative of the deceased regarding the partition. As such, all portions of the judgment entered for Carpenter, individually, on partnership issues are void. Rule 52.13(a)(1). Those resolved in favor of the remaining ten defendants-respondents are reviewable.
In its first point on appeal, Sangamon argues that the trial court erred in entering a final order and judgment of partition of real estate. Specifically, Sangamon claims that (1) the trial court unilaterally set the price of the property without conducting a public judicial sale pursuant to Rule 96, (2) Carpenter failed to plead sufficient grounds for partition in his counterclaim as required by Section 528.010,3 and (3) unclean hands prevented an equitable remedy. Each of these arguments will be addressed in turn.
Sangamon first contends that the trial court entered a final order and judgment of partition without strictly following the mandates of Rule 96. An appellate court must affirm a trial court's judgment "unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law."Murphy v. Carron, 563 S.W.2d 30, 32 (Mo. banc 1976). This court's review is thus limited to whether the final order and judgment was entered based upon an erroneous application of Rule 96.
Supreme Court Rule 96 and Chapter 528 authorize two methods of partition. Darrington v. George, 982 S.W.2d 823, 825 (Mo. App. 1998). A court may either "partition in kind or may order a sale and division of the proceeds if it finds partition in kind cannot be made without great prejudice to the owners." Id. (citing Rules 96.01 and 96.11). In instances where a partition in kind would be prejudicial, a court orders a public sale; private sales are not permitted. Id. "[A] judgment for partition and an order of sale are interlocutory." Heintz v. Hudkins, 824 S.W.2d 139, 144 (Mo. App. 1992) (citing Smith v. Hackleman, 467 S.W.2d 61, 64 (Mo. App. 1971); Hiatt v. Hiatt, 188 S.W.2d 863, 895 (Mo. App. 1945)). As with all interlocutory judgments, a judgment in a partition action may be modified at any time before the final judgment is entered. Id. (citing Lee's Summit Bldg. & Loan Ass'n v. Cross, 134 S.W.2d 19, 22-23 (Mo. 1939)).
Rule 96 describes the manner in which a partition by sale must occur. Specifically, the court must first make an order of sale. Rule 96.19. It then delivers a "certified copy of the sale to the sheriff or commissioner who shall conduct the sale." Rule 96.19. Only after the court confirms the sale of the property and orders the proceeds to be disbursed does the judgment become final. Lester v. Tyler, 69 S.W.2d 633, 638 (Mo. 1934).
A partition in kind occurs in much the same fashion. After determining that a partition in kind would not result in great prejudice to the parties, a court "shall appoint three commissioners . . . to make the partition." Rule 96.12. The commissioners must file a written report with the court following division of the property. Rule 96.15. Like a partition by public sale, final judgment in a partition in kind is not entered until the court confirms the commissioners' report. Lester, 69 S.W.2d at 638.
In this case, the trial court took an action that was not explicitly contemplated by Rule 96. Due to the unusual factual circumstances, the protracted litigation history, and because the trial court's action did not result in prejudice to either party or deviate so far as to disrupt Rule 96's statutory scheme, however, this procedural anomaly is permissible. Make no mistake; although this court does not condone variance in compliance with Rule 96 and cannot ensure that similar deviations will be overlooked in the future, the trial court's reinstatement and confirmation of a prior sale at a higher price does not warrant reversal in this case.
To best understand the situation with which the trial court was faced, a detailed recitation of the events leading up to the final judgment is necessary. The issue of property division arose when Carpenter filed a counterclaim for partition of the disputed property in...
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