Stein v. Novus Equities Co.

• Decision Date: 27 January 2009
• Docket Number: No. ED 90988.,ED 90988.
• Citation: 284 S.W.3d 597
• Parties: Rosanne STEIN, et al., Appellants, v. NOVUS EQUITIES COMPANY, et al., Respondents.
• Court: Missouri Court of Appeals

284 S.W.3d 597

Rosanne STEIN, et al., Appellants, v. NOVUS EQUITIES COMPANY, et al., Respondents.

No. ED 90988.

Missouri Court of Appeals, Eastern District, Division One.

January 27, 2009.

Motion for Rehearing and/or Transfer to Supreme Court Denied March 10, 2009.

Application for Transfer Denied June 30, 2009.

William A. Brasher, Paul R. Ferber, Paul E. Littleton, Saint Louis, MO, for Appellants.

J. Vincent Keady, Jr., John C. Grellner, Clayton, MO, for Respondents.

OPINION

GLENN A. NORTON, Judge.

Rosanne Stein, et al., several residential property owners in the Sunset Manor area ("the Manor") of the City of Sunset Hills, Missouri ("Plaintiffs"), appeal the judgment dismissing their petition against real estate developer Novus Equities Company and Jonathan Browne, Novus' chief executive officer ("Defendants"),¹ for failure to state a claim upon which relief can be granted. Plaintiffs' petition asserted claims against Defendants for fraudulent misrepresentation, negligent misrepresentation, injurious falsehood, and negligence. In their petition, Plaintiffs alleged that they were damaged by Defendants' representations about their proposed redevelopment of the Manor, and by Defendants' failure to redevelop the Manor. We affirm.

I. BACKGROUND

The allegations in Plaintiffs' petition are as follows. In May 2004, the City of Sunset Hills issued a Request for Proposal for the redevelopment of the Manor. In response, Defendants submitted a redevelopment proposal to the City, which included a request for financial assistance in the form of tax increment financing ("TIF").

In order to have their redevelopment proposal and request for TIF approved, Defendants were required to submit a financial feasibility and cost benefit analysis to the City and to the TIF Commission. Accordingly, Defendants submitted a Pro Forma financial feasibility and cost benefit analysis ("Pro Forma") of its proposed redevelopment of the Manor to Peckam Guyton Albers & Viets, Inc. ("PGAV"), a consulting firm hired by the City. Defendants' Pro Forma proposed that the Manor be redeveloped as a shopping center. It stated that the anchor tenant for the redevelopment project would be Bass Pro Shops, and that Defendants would pay Bass Pro Shops $15 million for construction of its facility. Plaintiffs alleged that, in fact, Defendants had offered to pay Bass Pro Shops $30 million for construction of its facility, and thus failed to disclose the additional $15 million cost in the Pro Forma.

In August 2004, the City passed an ordinance designating Novus as the preferred developer of the Manor. Thereafter, Defendants entered into written option contracts with Manor property owners other than Plaintiffs ("the other property owners"). In these contracts, the other property owners agreed that Defendants would have options to purchase their property.

Then, in February 2005, PGAV prepared, on behalf of the City, a financial feasibility and cost benefit analysis based upon the information submitted by Defendants in the Pro Forma. PGAV submitted its analysis to the TIF Commission for approval. Thereafter, Defendants became aware of various changes to the redevelopment plan as it was submitted in the Pro Forma. Yet, Defendants did not submit a new financial feasibility and cost benefit analysis to PGAV, the City, or the TIF Commission with this updated information. Plaintiffs specifically alleged that Defendants knew but failed to disclose to PGAV, the City, and/or the TIF Commission: (1) that Bass Pro Shops would not be the anchor tenant in the redevelopment project; (2) that Defendants had solicited May Department Stores to be the new anchor tenant, which would occupy less square feet than Bass Pro Shops; and (3) that there would be additional construction costs for the project.

In July 2005, the City passed an ordinance authorizing Defendants to use eminent domain to acquire Plaintiffs' properties. At a meeting on August 8, 2005, Browne stated that Defendants were going to exercise their options to purchase the other property owners' homes beginning on August 22, 2005. After the August 8 meeting, many of the other property owners began stripping and salvaging materials from their homes. Plaintiffs alleged that as a result, all properties in the Manor depreciated in value. At a second meeting on August 20, 2005, Browne stated that Defendants' bank had "pulled the financing" for the purchase of the other property owners' homes. Plaintiffs alleged that Defendants knew that they never had the necessary funding in place to purchase the other property owners' homes under the option contracts or to acquire Plaintiffs' homes through eminent domain.

Defendants neither exercised their options to purchase the other property owners' homes nor acquired Plaintiffs' properties through eminent domain. Additionally, Defendants never redeveloped the Manor as a shopping center.

Subsequently, Plaintiffs filed a petition against Defendants asserting claims for fraudulent misrepresentation (Count I), negligent misrepresentation (Count II), injurious falsehood (Count III), and negligence (Count IV). Plaintiffs alleged in their petition that they were damaged by Defendants' representations about their proposed redevelopment of the Manor, and by Defendants' failure to redevelop the Manor.² Defendants filed their motion to dismiss Plaintiffs' petition for failure to state a claim for which relief can be granted, which the trial court granted without further explanation.³ Plaintiffs appeal.

II. DISCUSSION

A. Standard of Review

Our review of a trial court's judgment granting a motion to dismiss is de novo. ORF Construction, Inc. v. Black Jack Fire Protection District, 239 S.W.3d 685, 686 (Mo.App. E.D.2007). A motion to dismiss for failure to state a claim upon which relief can be granted is solely a test of the adequacy of the plaintiff's petition. S & P Properties, Inc. v. City of University City, 178 S.W.3d 579, 581 (Mo.App. E.D.2005). When reviewing a motion to dismiss on appeal, we accept as true all well-pled allegations in the plaintiff's petition and liberally grant him all reasonable inferences therefrom. Id. This Court does not attempt to weigh whether the factual allegations are credible or persuasive. Id. "Instead, the petition is reviewed in an almost academic manner, to determine if the facts alleged meet the elements of a recognized cause of action, or of a cause that might be adopted in that case." Id. (quoting Nazeri v. Missouri Valley College, 860 S.W.2d 303, 306 (Mo. banc 1993)). If the plaintiff's petition sets forth any set of facts which, if proven, would entitle him to relief, then the petition states a claim. Lynch v. Lynch, 260 S.W.3d 834, 836 (Mo. banc 2008). On the other hand, dismissal for failure to state a claim is proper where facts essential to recovery are not pled. Halamicek Brothers, Inc. v. St. Louis County, 883 S.W.2d 108, 110 (Mo.App. E.D.1994).

When the trial court's judgment does not specify its grounds for dismissal, we presume the dismissal was based on one of the reasons stated in the defendant's motion to dismiss. Boulds v. Chase Auto Finance Corp., 266 S.W.3d 847, 849-50 (Mo.App. E.D.2008). We must affirm the dismissal as a matter of law if any ground within the motion to dismiss supports the trial court's ruling. Id. at 850.

B. The Facts Alleged in Plaintiffs' Petition do not Meet the Elements of a Cause of Action for Fraudulent Misrepresentation or Negligent Misrepresentation

In their first and second points on appeal, Plaintiffs maintain that their petition states claims for fraudulent misrepresentation (Count I) and negligent misrepresentation (Count II), and therefore, the trial court erred in dismissing these counts.

In Count I, Plaintiffs alleged in relevant part that: (1) Defendants fraudulently and intentionally provided inaccurate, false, and misleading information that would be relied upon by PGAV, the City, and all the owners of property in the Manor; (2) Defendants intentionally failed to disclose relevant material information regarding the redevelopment knowing that the information submitted in the Pro Forma was false or no longer accurate; and (3) as a result, Plaintiffs incurred damages, including a reduction in the value of their properties. In Count II, Plaintiffs' negligent misrepresentation claim, they alleged in pertinent part that: (1) Defendants failed to exercise reasonable care or competence in providing truthful, accurate, and updated information regarding the redevelopment project; (2) Defendants sought to influence all residents of the Manor, directly or indirectly, by the false, misleading, and inaccurate information supplied to PGAV and the City; (3) Defendants should have known that there was a reasonable likelihood that a majority of the residents, PGAV, and the City would act in reliance upon their false, misleading and inaccurate representations; and (4) a majority of the residents, PGAV, and the City did so rely, thereby diminishing the value of all the homes in the Manor. Both counts alleged that "Plaintiffs ... relied on the inaccurate, false, and misleading information made by Defendants in that they did not have any access to any other information than that presented by Defendants."

To state a claim for fraudulent misrepresentation, a plaintiff must plead facts that support each of the following elements: (1) a false, material representation; (2) the speaker's knowledge of the falsity of the representation, or his ignorance of its truth; (3) the speaker's intent that the hearer act upon the misrepresentation in a manner reasonably contemplated; (4) the hearer's ignorance of the falsity of the misrepresentation; (5) the hearer's reliance on the truth of the representation; (6) the hearer's right to rely thereon; and (7) the hearer's consequent and proximately caused injury. Bohac v. Walsh, 223 S.W.3d 858, 862-63 (Mo.App. E.D.2007). In order for a plaintiff to state a claim for...