State ex rel. Leonardi v. Sherry

• Decision Date: 01 July 2004
• Docket Number: No. SC 85520.,SC 85520.
• Parties: STATE of Missouri ex rel. Craig L. LEONARDI and Craig L. Leonardi, M.D., P.C., Relators, v. The Honorable Thea A. SHERRY, Judge of the Circuit Court of St. Louis County, Missouri, Respondent.
• Court: Missouri Supreme Court

137 S.W.3d 462

STATE of Missouri ex rel. Craig L. LEONARDI and Craig L. Leonardi, M.D., P.C., Relators, v. The Honorable Thea A. SHERRY, Judge of the Circuit Court of St. Louis County, Missouri, Respondent.

No. SC 85520.

Supreme Court of Missouri, En Banc.

July 1, 2004.

Eric M. Trelz, James P. Martin, St. Louis, MO, for Relators.

Ann K. Covington, Lisa Demet Martin, St. Louis, MO, for Respondent.

WILLIAM RAY PRICE, JR., Judge.

I.

Craig L. Leonardi and Craig L. Leonardi, P.C.,¹ request a writ of prohibition precluding the trial court from exercising jurisdiction under the equitable cleanup doctrine and denying a jury trial as to Leonardi's counterclaim for damages in the underlying case. A preliminary order was issued. The preliminary order is made absolute as modified.

II.

Pharmaceutical companies contracted with Radiant Research, Inc., to oversee human clinical trials testing new drugs. Radiant and Leonardi, a medical doctor, entered into several clinical trial consulting agreements whereby Leonardi agreed to conduct some of those trials for Radiant. The agreements included restrictive covenants that prohibited Leonardi from conducting further trials for the pharmaceutical companies for one year following the termination of the consulting agreements unless Radiant served as the intermediary.

After notifying Radiant approximately two weeks in advance, Leonardi terminated their relationship in November 2001. Radiant filed a six-count petition against Leonardi in February 2002 seeking injunctive relief and damages on every count. Radiant's claims included breach of contract, anticipatory repudiation, tortious interference with contracts, and civil conspiracy. In its requests for injunctive relief, Radiant sought to enforce restrictive covenants in the consulting agreements.

In response to Radiant's petition, Leonardi filed a four-count counterclaim and asserted multiple affirmative defenses, including laches, estoppel, and unclean hands. He included actions for breach of contract and breach of the implied covenant of good faith and fair dealing. He also requested a declaratory judgment.

Following a hearing in January 2003, the trial court denied Radiant's request for a preliminary injunction. The trial court declined to issue the injunction because it would "not have the necessary effect of reinstating Radiant as the site manager." Furthermore, the order stated, "the impact on the participant/patients, the status of these trials vis a vis The Food and Drug Administration and the public interest in continuing valuable medical research all support" the trial court's decision not to enjoin Leonardi from continuing the trials without Radiant. In conclusion, the order included the following:

It is well settled that injunctive relief is inappropriate where there appears to be an adequate remedy at law. From the evidence adduced, there is a viable cause of action for breach of contract and that damages are quantifiable and capable of being ascertained, all subject to further evidentiary hearing on the issues of liability and damages.

The trial court entered an order later that month setting the case for trial during a certified jury week.

In February 2003, Leonardi voluntarily dismissed his action for a declaratory judgment. He then filed a motion for a ruling on the merits of Radiant's equitable claims. In early March 2003, the trial court heard arguments and received briefs from Radiant and Leonardi discussing the availability of a jury trial and the applicability of the equitable cleanup doctrine.

The trial court issued an order on March 21, 2003, stating that its denial of Radiant's request for a preliminary injunction did not dispose of Radiant's request for a permanent injunction and that Radiant's requests for equitable relief and damages were still before it. The trial court concluded that Leonardi was not entitled to a jury trial because it retained jurisdiction over Radiant's claims pursuant to the equitable cleanup doctrine in that "a court of equity may retain jurisdiction to award damages where equity requires this form of relief in the circumstances."

Following the trial court's denial of a jury trial, Leonardi filed his request for a writ in prohibition. A preliminary order in prohibition was issued instructing the trial court to refrain from all action in the case until further notice. Leonardi argues that the equitable cleanup doctrine is inapplicable under the circumstances and that the trial court violated his constitutional right to a jury.

III.

The problem of determining whether a jury trial should occur in cases involving claims for both damages and equitable relief is not new, nor is it simple, in Missouri or elsewhere. See generally, Right in Equity Suit to Jury Trial of Counterclaim Involving Legal Issue, 17 A.L.R.3d 1321 (William E. Shipley et al. eds., 1968) (overview of how different states have resolved this issue). This Court has addressed the issue, directly and indirectly, on numerous occasions. In its present state, the law in Missouri is inconsistent and confusing. Throughout the precedent, different principles have been repeatedly cited.

Some cases state that "once having acquired jurisdiction equity will retain it, under a prayer for general relief ... to administer full and complete justice, within the scope of pleadings and evidence, between the parties." State ex rel. Drey v. Hoester, 608 S.W.2d 401, 404 (Mo. banc 1980); see, e.g., Deutsch v. Wolff, 994 S.W.2d 561, 567 (Mo. banc 1999); Metro. St. Louis Sewer Dist. v. Zykan, 495 S.W.2d 643, 658 (Mo.1973); Townsend v. Maplewood Inv. & Loan Co., 351 Mo. 738, 173 S.W.2d 911, 914 (1943); Seested v. Dickey, 318 Mo. 192, 300 S.W. 1088, 1101-02 (1927).² Similarly phrased is the rule that "when a court of equity once acquires jurisdiction of a cause it will not relax its grasp upon the res until it shall have avoided a multiplicity of suits by doing full, adequate and complete justice between the parties." Real Estate Saving Inst. v. Collonious, 63 Mo. 290, 295 (1876). Similarly, Rockhill Tennis Club of Kansas City v. Volker noted that "a court of equity when unable to grant specific performance of a contract will not dismiss the bill, but will retain jurisdiction and award damages in place of such performance." 331 Mo. 947, 56 S.W.2d 9, 20 (1932).

Another line of cases, however, states that "a court of equity does not have jurisdiction to render a judgment for a plaintiff on legal issues in the absence of a finding that some equitable right of the plaintiff has also been violated," Krummenacher v. Western Auto Supply Co., 358 Mo. 757, 217 S.W.2d 473, 475 (1949), and "where a case for relief in equity fails a court of equity is without jurisdiction to award other relief by way of disposing of the entire controversy; unless, indeed, it appears that the remedy at law will be inadequate." Jaycox v. Brune, 434 S.W.2d 539, 543 (Mo. 1968). Or, "when the [f]acts relied on to sustain the equity jurisdiction fail of establishment" a case will not proceed in equity "because a court of equity does not have jurisdiction to render a judgment for a plaintiff on legal issues in the absence of a finding that some equitable right of the plaintiff has also been violated." State ex rel. Willman v. Sloan, 574 S.W.2d 421, 422-23 (Mo. banc 1978). A related concept is that equity may be invoked at the outset only when "there is no adequate remedy at law that can give appropriate relief to a deserving petitioner." Robert H. Dierker, Contracts, Equity, and Statutory Actions Handbook, 35 Missouri Practice secs. 23.1, 23.4, 23.7 (2004); see Becker v. Tower Nat'l Life Inv. Co., 406 S.W.2d 553, 559 (Mo. 1966) (plaintiff who failed to demonstrate inadequacy of legal remedy not entitled to specific performance of contract); Wilkinson v. Tarwater, 393 S.W.2d 538, 542 (Mo. 1965) (doctrine of equitable lien applies only when "law fails to give relief and justice would suffer" otherwise); Collins v. Shive, 261 S.W.2d 58, 60 (Mo.1953) (pleading must demonstrate that legal remedy is inadequate); Hanson v. Neal, 215 Mo. 256, 114 S.W. 1073, 1080 (1908) (claim will be heard in equity "where a plain, adequate, and complete remedy cannot be had in the courts of common law").

The Court has reached mixed results in attempting to apply these various principles. For example, in Rockhill Tennis Club v. Volker, the plaintiff tennis club sought to exercise an option in its lease and sued for specific performance to compel the defendant city to convey real estate. 56 S.W.2d at 10. Because the land in question was intended to be used by the city for an art gallery, the Court reversed on public interest grounds the trial court's grant of specific performance but found that the plaintiff was "not, however, to be turned out of court without remedy." Id. at 19-20. Noting that it could "deny the relief prayed for and remit plaintiff to an action for damages," the Court remanded and instructed the trial court to refuse specific performance and to hold a new trial, without a jury, solely to determine the plaintiff's damages. Id. at 20.

In Krummenacher v. Western Auto Supply Company, the plaintiffs filed a one-count petition seeking equitable relief, namely abatement of a nuisance, and damages from that nuisance. 217 S.W.2d at 473. Both types of relief thus relied on the same factual pleadings and proof. The trial court denied the equitable relief but found, without a jury, that the plaintiffs sustained damages and awarded them $500. Id. at 475. The plaintiffs did not appeal the denial of equitable relief, but the defendants appealed the judgment. Id. at 476. This Court reversed and remanded for a jury to determine damages, holding that "a court of equity does not have jurisdiction to render a judgment for a plaintiff on [claims at law] in the absence of a finding that some equitable right of the plaintiff has been violated." Id. at 475. Thus, two trials were necessary to...