Schieve v. Meyer
| Decision Date | 01 June 2021 |
| Docket Number | WD 83700 |
| Citation | 628 S.W.3d 726 |
| Court | Missouri Court of Appeals |
| Parties | Lynn SCHIEVE, Individually and as a Member of the Carroll Meyer Family Limited Liability Company, LLC, Respondent, v. John MEYER, Appellant. |
Jerry D. Rank, Overland Park, KS, Attorney for Respondent.
Jonathan Sternberg, Kansas City, MO, Attorney for Appellant.
Before Division Two: Mark D. Pfeiffer, Presiding Judge, and Alok Ahuja and Karen King Mitchell, Judges
John Meyer appeals, following a bench trial, a judgment in the amount of $205,982.55 plus court costs entered against him in favor of Lynn Schieve on her claim that Meyer, as acting manager of the Carroll Meyer Family Limited Liability Company, breached his fiduciary duty to the members of the LLC by taking the LLC's money for his own personal use and failing to issue distributions required by the LLC's Operating Agreement. Meyer raises three points on appeal. He argues first that Schieve lacked standing to bring a direct claim against Meyer and that she could proceed only in a derivative action on behalf of the LLC, rather than as an individual member. Second, he argues that there was no substantial evidence to support the trial court's finding that Meyer owed any duties for which he could be personally liable. And, finally, he argues that the court misapplied the law in awarding Schieve attorneys’ fees. Finding no error, we affirm.
On November 3, 2010, siblings John Meyer, Brad Meyer, and Lynn Schieve filed Articles of Organization with the Missouri Secretary of State to start the Carroll Meyer Family Limited Liability Company, LLC. Meyer, who was both a member and the manager of the LLC, owned 39.1666 percent of the LLC, and Brad and Schieve, both designated as members, owned 30.4166 percent each.1
On September 30, 2013, the LLC sold a tract of land in Iowa to Hy-Vee for $640,000, with net proceeds in the amount of $609,849.85; both the contract and the payments were written in the LLC's name. Meyer, Brad, and Schieve held discussions about how to distribute the funds, and Meyer initially suggested funneling 95% of the money through another business of his (The Classic Cup) to get a tax credit. Both Brad and Schieve were opposed, believing that Meyer's suggestion would constitute tax fraud; this opposition led to a rift in the family, and Meyer stopped communicating with Brad and Schieve. On November 7, 2013, Schieve sent an email to Meyer, demanding that he distribute the proceeds from the Hy-Vee land sale. Schieve and Brad, acting as members holding a majority interest, subsequently drafted a declaration in the LLC's name, directing Meyer—as the manager—to distribute the funds by December 31, 2013. Meyer never distributed the funds.
On December 31, 2013, Schieve and Brad, acting as members with a majority interest, issued a resolution freezing the LLC's bank account unless transactions were approved by a majority of the members. In response, Meyer began threatening Schieve with tax penalty payments if they did not unfreeze the account, so Schieve and Brad agreed to lift the freeze. On March 12, 2014, Meyer wrote a check for $50,000 from the LLC to The Classic Cup, designating the funds as a loan repayment. But the LLC had never taken a loan from The Classic Cup.
On October 14, 2014, Schieve and Brad sent Meyer a letter demanding an accounting from the LLC no later than October 31, 2014, as Meyer still had not disbursed the proceeds from the Hy-Vee sale. On October 15, 2014, Meyer wrote two checks from the LLC account; one went to the Treasurer for the State of Iowa in the amount of $8,603.00 and the other went to the United States Treasury in the amount of $20,204.00, both for payment of Meyer's personal taxes. On November 3, 2014, in response to the demand for an accounting, Meyer sent Schieve an email stating, 2 Meyer further indicated that there was no money in the LLC and that the LLC had never purchased or been gifted any property (contrary to the multiple quitclaim deeds showing property transferred from the Meyer Family Partnership to the LLC before the Hy-Vee land sale).
On March 25, 2015, a $200,000 check issued from the LLC account to a holding company for CrossFirst Bank, where Meyer held accounts. On March 21, 2016, a cashier's check in the amount of $109,444.35, payable to Meyer, was issued from the LLC account, bringing its balance to zero and closing the account. Neither Schieve nor Brad knew anything about or authorized either of these payments. Schieve and Brad contacted CrossFirst Bank and explained to them that Meyer had not been authorized to take the $200,000 from the LLC that he had deposited at CrossFirst. CrossFirst indicated they did not wish to be involved and insisted Meyer take the money out.
On November 3, 2017, Meyer created a new bank account at Country Club Bank in the LLC's name and deposited $224,500 in the new account.3 On November 6, 2017, Meyer withdrew $224,480 from the LLC account and closed it. Schieve emailed back and forth with Meyer in various attempts to resolve the dispute without avail.
Schieve filed suit, individually and as a member of the LLC, against Meyer in Clay County on January 12, 2018. Schieve's petition alleged a breach of fiduciary duty, conversion, breach of contract, and unjust enrichment. Following a bench trial, the court entered judgment in favor of Schieve, finding that Meyer "breached his fiduciary duty to the two members of the LLC, including [Schieve], when he took the LLC's money for his own personal use and benefit while not issuing the required distributions per the LLC's Operating Agreement." The court awarded Schieve $165,982.55 in damages and $40,000 in attorneys’ fees. Meyer appeals.
Meyer raises three points on appeal. First, he argues that the trial court misapplied the law in entering judgment in favor of Schieve because Schieve lacked standing to bring her claims individually in a direct action rather than on behalf of the LLC in a derivative action. Second, he argues that the trial court lacked substantial evidence to support its finding that Meyer owed any duties to Schieve for which he could be personally liable. And, finally, Meyer argues that the court misapplied the law in awarding Schieve attorneys’ fees because, he claims, they were not authorized by the Operating Agreement.
"Our review of a court-tried case is governed by Murphy v. Carron , 536 S.W.2d 30, 32 (Mo. banc 1976)." In Their Representative Capacity as Trs. for Indian Springs Owners Ass'n v. Greeves , 277 S.W.3d 793, 797 (Mo. App. E.D. 2009). "We will affirm the trial court's judgment unless it is not supported by substantial evidence, it is against the weight of the evidence, it erroneously declares the law, or it erroneously applies the law." Id.
In his first point, Meyer argues that Schieve lacked standing to bring suit individually in a direct action insofar as the claims she raised could be brought only on behalf of the LLC in a shareholder's derivative action. His entire argument is based on the premise that Schieve failed to raise her claims on behalf of the LLC. There are two flaws in this argument, however. First, Schieve's petition plainly raised each of her claims both in her individual capacity and on behalf of the LLC in her capacity as a member; thus, Meyer's first point is based on a factual inaccuracy.4 And, second, Meyer failed to identify any flaws in Schieve's petition below and, therefore, his claim is not reviewable.
To begin, Schieve's petition very plainly states in multiple places that she was seeking relief both individually and on behalf of the LLC. The caption itself identifies the Plaintiff as "LYNN SCHIEVE, Individually and as a Member of the Carroll Meyer Family Limited Liability Company, LLC." Paragraph 5 of the petition states, "Plaintiff has filed this lawsuit and submits the causes of action set forth below both individually and on behalf of the Carroll Meyer Family Limited Liability Company, LLC." Paragraphs 15, 25, 36, and 47 all allege that Schieve demanded that Meyer either return the money to the LLC or pay her as required under the Operating Agreement. And Paragraphs 17, 30, 41, and 49 all allege injury and damages to both Schieve and the LLC from Meyer's alleged misconduct. In light of the plain language of Schieve's petition, Meyer's claim that Schieve failed to raise claims on behalf of the LLC is factually inaccurate.5
Because Schieve did, in fact, raise the claims on behalf of the LLC, it seems that Meyer's true complaint is that Schieve failed to raise the claims properly. But Meyer made no such complaint to the trial court.
In his brief, Meyer argues that Schieve's petition utterly fails to comply with the requirements of Rule 52.09, governing petitions for derivative actions by shareholders.6 Though Meyer's answer generally asserted that Schieve's petition failed to state a claim, he neither mentioned Rule 52.09 ’s requirements nor sought any relief for this alleged failure (e.g., a motion to dismiss). And no claim of error related to any deficiency in the petition was raised in his motion for new trial.
"It is well recognized that a party should not be entitled on appeal to claim error on the part of the trial court when the party did not call attention to the error at trial and did not give the court the opportunity to rule on the question." Brown v. Brown , 423 S.W.3d 784, 787 (Mo. banc 2014) (quoting Niederkorn v. Niederkorn , 616 S.W.2d 529, 535 (Mo. App. E.D. 1981) ). "This requirement is intended to eliminate error by allowing the trial...
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...of Review"Our review of a court-tried case is governed by Murphy v. Carron , 536 S.W.2d 30, 32 (Mo. banc 1976)." Schieve v. Meyer , 628 S.W.3d 726, 731 (Mo. App. W.D. 2021) (quoting In Their Representative Capacity as Trs. for Indian Springs Owners Ass'n v. Greeves , 277 S.W.3d 793, 797 (Mo......