Strcue, Inc. v. Potts

• Decision Date: 27 November 2012
• Docket Number: No. WD 74572.,WD 74572.
• Parties: STRCUE, INC., Respondent, v. Steven Christopher POTTS and Lawrence C. Potts, Jr., and Opal Potts, Appellants.
• Court: Missouri Court of Appeals

386 S.W.3d 214

STRCUE, INC., Respondent,

v.Steven Christopher POTTS and Lawrence C. Potts, Jr., and Opal Potts, Appellants.

No. WD 74572.

Missouri Court of Appeals,

Western District.

Nov. 27, 2012.

Christina T. Coen, Lexington, MO, for respondent.

John Christiansen and Dennis J. Campbell Owens, Kansas City, MO, for appellants.

Before Division Three: ALOK AHUJA, Presiding Judge, VICTOR C. HOWARD, Judge and CYNTHIA L. MARTIN, Judge.

CYNTHIA L. MARTIN, Judge.

Steven Potts, Lawrence C. Potts, Jr., and Opal Potts (collectively, the “Appellants”) ¹ appeal from the trial court's declaratory judgment finding two cash farm leases (collectively, the “Leases”), one between STRCUE, Inc. (“STRCUE”) and Steven Potts (“Lease I”), and one between STRCUE and Lawrence C. Potts, Jr., and Opal Potts (“Lease II”), valid and in full force and effect. Appellants claim that the trial court erred in finding that the Leases were not breached by STRCUE, and that the Leases had not been effectively terminated by the Appellants.

Because we find the issues raised on appeal to be moot, this appeal is dismissed.

Factual and Procedural History ²

STRCUE is a corporation duly organized and existing under the laws of the state of Missouri. The Appellants are residents of Missouri and former owners of real property (“Property”) located in Caldwell County which is the subject of the Leases. Gary Guilford (“Guilford”) was the holder of promissory notes secured by deeds of trust against the Property.³

Under Lease I, dated March 4, 2010, Steven Potts leased 360 acres to STRCUE for a period of two years in exchange for $54,000.00 in rent per year. Under Lease II, dated April 1, 2010, Lawrence and Opal Potts leased 100 acres to STRCUE for a period of two years in exchange for $12,500.00 in rent per year. The Leases provided that the 2010 annual rent payment was due upon lease execution and that the 2011 annual rent payment was due on or before January 5, 2011. Lease I was silent as to whom rent should be made payable, but directed that payment should be mailed to Guilford's mailing address. Lease II provided that rent should be made payable to “Lawrence C. Potts, Jr., and Opal Potts or Gary Guilford, Manager, Platte, LLC” and directed that payment should be mailed to Guilford's mailing address. Both Leases expired by their terms on December 31, 2011.

On April 15, 2010, and thus shortly after the Leases were entered into, Appellants entered into an agreement with Guilford which required all rent payments from the Leases to be paid jointly to Appellants and Guilford (“Agreement”). STRCUE was made aware of the Agreement. STRCUE delivered the 2010 rent payments due under the Leases to Guilford.

On January 3, 2011, the Appellants sent STRCUE a letter alleging that STRCUE was not farming the proper amount of acreage, that STRCUE had interfered with Appellants' ability to lease parts of the Property for hunting, and that STRCUE had not paid Appellants amounts they were owed.⁴ The letter advised STRCUE that “Guilford and [Guilford's address] are no longer acceptable for receipt of the rent payment.”

The Leases included a provision permitting the Appellants to terminate if rent was “not paid on time or if [Appellants became] apprised of any other act or circumstance [leading them] to reasonably conclude that [STRCUE was] unable or unwilling to fulfill any and all obligations” under the Leases. To exercise this right, Appellants were required to send a notice of termination to STRCUE by certified mail. The Leases provided that the notice of termination would be effective upon mailing.

On January 5, 2011, STRCUE paid the annual rent due under the Leases, and delivered the rent checks to Guilford. The rent checks were made payable jointly to Guilford and the respective Appellants. The unendorsed checks were held at Guilford's counsel's office.

On February 10, 2011, the Appellants' bankruptcy attorney,⁵ Joel Pelofsky (“Pelofsky”), sent Guilford's counsel a letter confirming that “the lease dispute is resolved,” and advising that STRCUE would continue as tenant under the Leases. The letter advised that Steven Potts would endorse the rent checks, and provided directions for application of the rent proceeds. At some point thereafter, the rent checks were delivered to Pelofsky's office. However, they remained unendorsed.

On March 28, 2011, the Appellants sent a second letter to STRCUE entitled “Termination for Non Payment of Rent.” Appellants took the position that because the January 3, 2011 letter had advised STRCUE that rent should not be delivered to Guilford, the rent due on January 5, 2011, had not been paid because it was not delivered to Appellants. The letter advised that the Leases were terminated.

On April 20, 2011, STRCUE filed its petition for declaratory judgment and for temporary injunction (the “Petition”).⁶ STRCUE sought a declaration that the Leases were valid and remained in force and effect. In their separate answers to the Petition, the Appellants asserted an affirmative defense that “[t]here is a failure of consideration as the rent checks are not capable of being negotiated by [Appellants].”

On May 3, 2011, the Appellants entered into a contract (“Contract”) to sell the Property to William A. Mast (“Mast”), Trustee of the William A. Mast Revocable Trust Agreement dated January 10, 2005, and Mary Beth Mast, Trustee of the Mary Beth Mast Revocable Trust Agreement dated January 10, 2005 (the “Mast Trust”). The Contract anticipated that at closing, the parties would sign a Lease with Option to Purchase, permitting Appellants to Lease the Property. Mast testified that he understood that notwithstanding the Lease with Option to Purchase, the Mast Trust was acquiring the Property subject to the STRCUE Leases, and that the Mast Trust was not entitled to the 2011 rent from the STRCUE Leases. The Lease with Option to Purchase expressly noted that Appellants' rights to lease the Property back from the Mast Trust were subject to the existing STRCUE Leases. The transaction anticipated by the Contract closed on or about May 20, 2011.

A bench trial on STRCUE's declaratory judgment action was held on July 13, 2011. Following trial, but while the matter was still under submission, the parties filed a joint motion advising the court of the following additional evidence: (1) on June 7, 2011, the Appellants filed motions in their pending bankruptcy seeking orders to show cause why Guilford should not be required to endorse the 2011 rent checks; (2) the Bankruptcy Court ordered Guilford to endorse the 2011 rent checks and divided the proceeds of the checks between Guilford and the Appellants; (3) the 2011 rent checks were thereafter endorsed by Guilford and the Appellants and divided in accordance with the Bankruptcy Court's order.

On September 7, 2011, the trial court entered its judgment (“Judgment”). The Judgment declared that the Leases were valid and remained in force and effect, and directed the Appellants to refrain from interfering with STRCUE's farming operations on the Property. Specifically, the trial court found that STRCUE “made timely payment in full of the cash leases for 2011;” that Appellants “accepted the cash lease payments for the year 2011 from [STRCUE];” that “[n]o other breach of the [Leases] [other than non-payment of 2011 rent] was plead [sic] or proved” by Appellants; and that while Appellants were the owners of the Property at the time the Petition was filed, Appellants thereafter “terminated their interest in the [Leases] except for the right to receive the 2011 payment, when they conveyed all their interest in the [Property] to the Mast Trust.” Based on the latter finding, the trial court concluded that Appellants “no longer have any right to contest the validity of the [Leases].”

The Appellants filed a motion for new trial or to amend the judgment in which they alleged that the Leases were irrevocably terminated on January 3, 2011, prior to the sale of the Property on May 3, 2011, and that the January 3, 2011 termination letter raised issues of performance other than non-payment of rent which were supported by the evidence at trial. The motion for new trial requested surrender of the Property to Appellants on or before the Leases' termination date of December 31, 2011. On November 17, 2011, the trial court denied the Appellants' post-trial motion.

This appeal followed.

Standard of Review

“The standard of review in a declaratory judgment case is the same as in any other court-tried case.” Levinson v. State, 104 S.W.3d 409, 411 (Mo. banc 2003). “The judgment will be affirmed unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law.” Id.

Analysis

The Appellants raise two points on appeal. In their first point, Appellants claim that the trial court erred in finding that STRCUE was not in breach of the Leases. In their second point, Appellants claim that the trial court erred in finding that the Leases were valid and in full force and effect because the Leases were effectively and irrevocably terminated by the January 3, 2011 letter.

We need not reach the issues raised in Appellants' points relied on as they have been rendered moot. “ ‘Whether a case is moot is a legal issue that we raise sua sponte on appeal.’ ” Westcott v. State, 361 S.W.3d 468, 471–72 (Mo.App. W.D.2012) (quoting T.C.T. v. Shafinia, 351 S.W.3d 34, 36 (Mo.App. W.D.2011)).

With regard to justiciability, a case is moot if a judgment rendered has no practical effect upon an existent controversy. Because mootness implicates the justiciability of a case, the court may dismiss a case for mootness sua sponte. When an event occurs that makes a decision on appeal unnecessary or makes it impossible for the appellate court to grant effectual relief, the appeal is moot and generally should be dismissed.

State ex rel. Missouri Public Defender Comm'n v. Waters, 370 S.W.3d 592, 614 (Mo....