Transit Cas. Co., In re, WD

• Decision Date: 27 June 1995
• Docket Number: No. WD,WD
• Citation: 900 S.W.2d 671
• Parties: In re TRANSIT CASUALTY COMPANY in Receivership. WILLIAM BLAIR REALTY PARTNERS, III, Appellant, v. TRANSIT CASUALTY COMPANY in Receivership, Respondent. 50118.
• Court: Missouri Court of Appeals

Page 671

900 S.W.2d 671

In re TRANSIT CASUALTY COMPANY in Receivership WILLIAM BLAIR REALTY PARTNERS, III, Appellant, v. TRANSIT CASUALTY COMPANY in Receivership, Respondent.

No. WD 50118.

Missouri Court of Appeals Western District.

June 27, 1995.

Ronald Medin, Jefferson City, for appellant.

Todd Massa, Katherine Walsh, Chesterfield, for respondent.

Before HANNA, P.J., and BERREY and SPINDEN, JJ.

HANNA, Presiding Judge.

In 1983, Transit Casualty Company entered into a lease agreement with Foster Plaza, a joint venture, for 14,348 square feet of office space located in Norcross, Georgia. K & E Joint Venture was a successor in interest to the property, and it extended the property leased to Transit Casualty another 1,678 square feet with a corresponding increase in rent to $15,479.06 per month. The appellant acquired its interest in the property (and, therefore, in the lease) by warranty deed in September 1985. The lease was to expire on January 31, 1989.

On November 26, 1985, the Cole County Circuit Court entered an order placing the assets of Transit Casualty under conservatorship with the director of Missouri Division of Insurance acting as the conservator. The acting director advised the appellant that "[u]ntil further notice, Transit's lease with you will remain in effect." A week later, on December 3, 1985, the plaintiff was informed that the insurance company had been placed in receivership. Informal discussions continued between the parties until April 16, 1986, at which time the Receivership gave written notice that it intended to vacate the premises on May 31, 1986. The May rent in the amount of $16,440.42 was paid. The Receivership continued to occupy the premises during June 1986. The rental payments were made in full through the date that Transit Casualty physically vacated the premises. The appellant took steps to locate a replacement tenant. A portion of the premises was rented after Transit Casualty left, thereby mitigating the loss claimed by the amount of $104,144. The appellant's claim is for unpaid rent in the amount of $588,749.84 from the time that Transit Casualty physically vacated the premises in July 1986, through the end of the lease, January 31, 1989.

Judge Byron L. Kinder has supervised the activities of the Receivership since its inception close to ten years ago. In that capacity, he enacted a set of local rules in order to facilitate the efficient administration of the liquidation of Transit Casualty. The court's ruling that is challenged in this proceeding is the demotion of appellant's claim from Class I to Class IV. ¹

In May 1987, plaintiff filed its claim again the Receivership in the amount of $588,749.84 for unpaid rent accruing after Transit Casualty vacated the premises. The court appointed Mr. Riley, a local attorney, as one of several "Commissioners of Claims" to take evidence and submit findings and conclusions to the court pursuant to Amended Rule 75. Mr. Riley held a hearing and determined that the appellant was a Class IV general creditor and was owed $476,772.18. Both parties appealed the decision. The court remanded the claim to Commissioner Riley to consider whether the appellant had mitigated its damages. The Commissioner determined that appellant had mitigated its damages and reduced the claim to $405,509.02. Further, Mr. Riley reversed his initial decision and concluded that the claim should be classified as a Class I expense of administration of the Receivership. An appeal was taken and the trial court reinstated the Commissioner's original conclusion that the claim was a Class IV claim and adopted the revised damage award of $405,509.02.

When the Receivership filed its appeal, it did so by filing a "Petition for Review," which the appellant claims was outdated and, instead, should have been filed as a Motion for Reconsideration. Appellant argues that because a Motion for Reconsideration was not filed within fifteen days as the rule requires, the Receivership's appeal was jurisdictionally defective. Additionally, the appellant states that, assuming the Receivership's pleading is considered a Motion for Reconsideration, Second Amended Rule 75 dictates that the trial court decide the appeal within ninety days following the filing date, which the court did not accomplish. For these two reasons, the appellant maintains that the trial court was without jurisdiction to rule and the Commissioner's award is final. Simply stated, the appellant's position is that the Receivership sought review under an appeals process that had been superseded by a subsequent rule.

Second Amended Rule 75 was retroactive to December 3, 1985, except for those claims already assigned to the Commissioner of Claims. The cover page of the rule directs: "Amended Rule 75 (Revised 1990), shall still apply to all claims which were already assigned to the Commissioner of Claims as of 8/28/92."

The circuit court instituted the rule and a series of other rules regarding the processing of claims. Those relevant to this inquiry are Administrative Order No. 36, which replaced "Exceptions" with "Petition for Review" as the pleading to be used in the appeal process, and Administrative Order No. 38, which instituted a new disputed claims procedure and adopted Second Amended Rule 75. Specifically, appellant states that Second Amended Rule 75 directs that an appeal be initiated by filing a Motion for Reconsideration and that the motion be acted on by the trial court within ninety days of its filing or the motion would be considered denied for all purposes. The appellant maintains that Second Amended Rule 75 was in effect when the Commissioner's decision was issued on September 8, 1993. Since the trial court's ruling was made more than ninety days after the filing of the appeal, it would be void, leaving the Commissioner's decision as final.

Fundamental fairness and due process require that a trial court is not allowed to dispense with a procedural rule of its own making. Henningsen v. Independent Petrochem. Corp., 875 S.W.2d 117, 120 (Mo.App.1994). Second Amended Rule 75 defines a procedure for the court's exercise of its inherent power, and if the rule was applicable, it was required to be followed. Id.

Because the title of the pleading is of no particular consequence, we understand appellant's real objection to be that the trial court did not act within ninety days of the filing of the appeal. ² Appellant argues that the date of the remand order, December 3, 1992, was the date of the assignment and, therefore, determines whether Second Amended Rule 75 is applicable to this case. The appellant considers the trial court's remand to the Commissioner as constituting a new assignment, separate and distinct from the first one. On the other hand, if the original date is considered as the assignment date, the previous rule controls, which placed no restriction on the time in which the trial court had to decide. We hold that the claim was assigned before August 28, 1992, the date when the Second Amended Rule 75 took effect. In so holding, we give due deference to the court that enacted and interpreted the local court rule.

Appellant's claim was presented to the Receivership on May 7, 1987. The claim was assigned to the Commissioner on a date not readily apparent from the briefs or the record before us. Clearly, the assignment preceded the hearing date of November 6, 1991, and the Commissioner's order of December 4, 1991.

These local rules were enacted by the circuit court as a necessary adjunct to the efficient operation of the liquidation proceeding. The construction of the rule is for the court which enunciated it, State ex rel. Logan v. Ellison, 267 Mo. 321, 184 S.W. 963, 964 (Banc 1916), since it is the best judge of its own rules. State ex rel. Missouri Highway & Transp. Comm'n v. McCann, 685 S.W.2d 880, 884 (Mo.App.1984); 21 C.J.S. Courts § 131(a) (1990). Thus, a higher court is reluctant to interfere with a court's construction of its own rule. Ellison, 184 S.W. at 964.

The rules provide that in the event an appeal is taken to the circuit court, the circuit court may either affirm the decision, modify it, enter a new determination or remand the cause to the same Commissioner for further proceedings as directed by the circuit court as the interests of justice may require. A remand to the Commissioner is specifically provided for. The rules do not suggest that the remand is a separate and new assignment of the claim. We believe that the two proceedings before the Commissioner were part of one continuous litigation process. There was one claim and it was "assigned" to the Commissioner only once as that term is used in the rule. We believe that this interpretation is in accordance with the procedures in effect at the time of the assignment and is a reasonable one. It is apparent that the court interpreted the remand in this manner. The court's interpretation did not violate the plain terms of the rule or of any statutory law. Under the local court rule in effect on August 28, 1992, the trial court did not have a ninety-day restriction in which to review the Commission's decision and render its decision. Point denied.

Next, the appellant claims that the Receivership became the lessee under the lease because a novation of the lease took place between the appellant and the Receivership. It argues that the trial court erred in reversing the Commissioner's decision because there was substantial evidence presented to support the Commissioner's determination of a novation resulting...