Schroff v. Smart, WD 61801.

• Decision Date: 16 September 2003
• Docket Number: No. WD 61801.,WD 61801.
• Parties: William SCHROFF d/b/a R & S Coatings, Respondent, v. David SMART, Jr., et al., Defendants, TEC, LLC., Appellant, Northland National Bank, Amicus Curiae.
• Court: Missouri Court of Appeals

120 S.W.3d 751

William SCHROFF d/b/a R & S Coatings, Respondent, v. David SMART, Jr., et al., Defendants TEC, LLC., Appellant Northland National Bank, Amicus Curiae.

No. WD 61801.

Missouri Court of Appeals, Western District.

September 16, 2003.

Motion for Rehearing and/or Transfer to Supreme Court Denied October 28, 2003.

Application for Transfer Denied December 23, 2003.

Theodore C. Beckett, III, Kansas City, MO, for Appellant.

Eugene J. Twellman, Kansas City, MO, for Respondent.

Leonard L. Wagner, Kansas City, MO, for Defendant.

John R. Shank, Jr., Kansas City, MO, for Amicus Curiae.

Before: HARDWICK, P.J., BRECKENRIDGE and SPINDEN, JJ.

LISA WHITE HARDWICK, Judge.

The circuit court entered summary judgment allowing William Schroff to exercise his contractual right of first refusal to purchase commercial property from David Smart, Jr. Third-party defendant, TEC, L.L.C., appeals the summary judgment, claiming Schroff did not have a valid right of first refusal, and that the court erred in denying a change of judge motion. We affirm.

FACTUAL AND PROCEDURAL HISTORY

In 1985, William Schroff began operating a business, American Sandblasting & Coating, Inc., at 1211 W. 27th Street in Kansas City, Missouri ("the property"). Schroff leased the property from David Smart, Jr. pursuant to two three-year lease agreements executed in 1985 and 1988.¹ Both leases included a "right of first refusal" provision allowing Schroff to purchase the property if Smart decided to sell it. Schroff continued to occupy the property until 1999, eight years beyond the end of the second lease agreement.

In August 1998, Smart entered into an agreement to sell the property to TEC, L.L.C. Smart did not notify Schroff of his intent to sell or allow Schroff to exercise the right of first refusal. In September 1998, Schroff filed a lawsuit in Jackson County Circuit Court against Smart, seeking specific performance of his contractual right of first refusal to purchase the property. Smart then filed a separate rent and possession action against Schroff in regard to the property.

In January 1999, Schroff and Smart attempted to settle both lawsuits. They pre-signed dismissal stipulations, which Smart's counsel prematurely filed without the consent of Schroff's counsel. The circuit court thereupon dismissed the specific performance lawsuit and the rent and possession action on January 22, 1999. Schroff promptly filed a motion to set aside the dismissal of his specific performance action on January 27, 1999.

While the motion to set aside was pending, Smart closed his sale of the property to TEC on February 9, 1999. (S.L.F.58) Pursuant to the real estate sales agreement, TEC acquired the property by quit claim deed and subject to the claims of Schroff. The agreement further provided that TEC would indemnify and hold Smart harmless from any claims related to the property. TEC paid Smart the agreed upon purchase price of $160,000. TEC's purchase was financed by Northland National Bank, which acquired a security interest in the property.

On May 4, 1999, the circuit court granted Schroff's motion to set aside the dismissal of the specific performance lawsuit. Upon reinstatement of the lawsuit, Smart therein filed a Third-Party Petition against TEC seeking to enforce the indemnity and hold harmless provisions of the real estate sales agreement.

On May 25, 2000, Schroff filed a Motion for Summary Judgment on his specific performance claim against Smart. After full briefing by the parties in the lawsuit, including the third-party defendant TEC, the circuit court granted summary judgment and held that Schroff had an enforceable right of first refusal to purchase the property. The court ordered Smart to sell the property to Schroff within forty-five days if Schroff was able to pay the purchase price of $160,000. The court further ordered that any other sales or conveyances of the property since 1985 (when Schroff received his contractual right of first refusal) were declared "null and void."

TEC appealed the summary judgment. We dismissed this prior appeal because the summary judgment was a conditional order that was not a final judgment for purposes of appeal.² Schroff v. Smart, 73 S.W.3d 28 (Mo.App. W.D.2002). On July 3, 2002, the circuit court entered a final judgment³ transferring the property to Schroff based on his payment of the $160,000 purchase price to Smart. The final judgment also declared null and void all other sales or conveyances of the property occurring since 1985.

TEC appeals this final judgment, raising ten points of error. Schroff has moved to dismiss the appeal on grounds that TEC is not an aggrieved party and, therefore, lacks standing to challenge the summary judgment under Section 512.020 R.S.Mo. 2000.⁴ Alternatively, Schroff seeks dismissal of Points I through IX, wherein TEC contends the circuit court erred in granting specific performance because Schroff did not have a valid right of first refusal under the lease agreement with Smart. Schroff argues all nine points must be dismissed because TEC has no standing to challenge the enforceability of a lease agreement to which it was not a party. Schroff has also filed a motion to strike TEC's Points IX and X due to violations of Rule 84.04.

Northland National Bank has filed a Motion to Intervene in this appeal based on its security interest in the property.

MOTION TO DISMISS APPEAL

The right to appeal is established by Section 512.020, which provides in relevant part:

Any party to a suit aggrieved by any judgment of any trial court in any civil cause from which an appeal is not prohibited... may take his appeal to any court having appellate jurisdiction from... any final judgment.

A party must be "aggrieved" by the judgment below to have any right to appeal. Calarosa v. Stowell, 32 S.W.3d 138, 143 (Mo.App. W.D.2000). An aggrieved party is one who suffers from an infringement or denial of legal rights. Jackson County Bd. of Election Comm'rs v. Paluka, 13 S.W.3d 684, 687-88 (Mo.App. W.D.2000). The judgment in question must operate directly and prejudicially on the party's personal or property rights or interests and such effect must be immediate and not merely a possible remote consequence. Calarosa, 32 S.W.3d at 143.

Schroff contends TEC has no standing to appeal because it was not a "party ... aggrieved" by the circuit court's summary judgment, as required by Section 512.020. He points out that TEC was not a party to the specific performance claim on which judgment was rendered. Oberhellmann v. Oberhellmann, 950 S.W.2d 487, 488 (Mo. App. E.D.1997) ("only a party to a suit may appeal"). He further argues that TEC was not a party to the lease contract, which gave Schroff a right to purchase the subject property, and, thus, TEC could not be aggrieved by court's enforcement of the contract. Stephens v. Brekke, 977 S.W.2d 87, 94 (Mo.App. S.D.1998) (non-parties to a contract "lack standing to question the contract").

This court has recognized that the determination of whether an entity is an aggrieved party depends not on the application of a precise definition or formula but rather on "the circumstances of the particular situation at hand." Bydalek v. Brines, 29 S.W.3d 848, 852 (Mo.App. S.D. 2000). A party to a lawsuit may be aggrieved even when it was not a named party on the claim upon which judgment was rendered. Id. at 852-53 (counterclaim defendants, who were joined after action was initiated, were "aggrieved parties" who had right to appeal the verdict in favor of original defendants against original plaintiffs). The right to appeal "should be liberally construed as appeals are favored in the law. Where doubt exists as to the right of appeal, it should be resolved in favor of that right." Id. at 852.

Our review of the procedural history of the underlying lawsuit and the language of the final judgment indicates that TEC is an aggrieved party within the meaning of Section 512.020. In his First Amended Petition seeking specific performance, Schroff alleged Smart had improperly sold the subject property to a "Third Party," TEC. The petition requested the court to "order that the Third Party has no interest in the [p]roperty." Schroff sought this relief even though he did not name TEC as a party in the lawsuit. Smart subsequently filed a Third-Party Petition, arising out of allegations in the specific performance action and naming TEC as a third-party defendant in the lawsuit. Although TEC was never expressly named as a party on the specific performance claim, it is beyond dispute that Schroff sought relief against TEC on that claim and that TEC was a party in the lawsuit, albeit a third-party defendant.

The court's final judgment granted the relief specifically requested by Schroff. The court declared "null and void" all sales and transfers of the property occurring after 1985. This order extinguished TEC's ownership interest in the property. Because TEC had paid $160,000 and obtained title to the property in February 1999, it is clear that TEC suffered a denial of legal rights as a result of the court's order. The fact that TEC acquired the property subject to Schroff's claims does not diminish the reality that TEC's interest in the property was immediately and adversely affected by the court's ruling. The judgment "operate[d] prejudicially and directly" on TEC's property rights and did not invoke a "possible remote consequence." Calarosa, 32 S.W.3d at 143. We deny the motion to dismiss the appeal because TEC is a party aggrieved by the judgment.

MOTION TO DISMISS POINTS I THROUGH IX

In Points I through IX of its appeal, TEC contends the court erred in granting the specific performance relief because Schroff did not have an enforceable right of first refusal under the lease agreement.⁵ Schroff has moved to dismiss these points because they all relate to the court's interpretation and enforcement of a contract to which TEC indisputably was not a party. As a...