Tucker v. Vincent

• Decision Date: 06 October 2015
• Docket Number: No. ED 102388,ED 102388
• Citation: Tucker v. Vincent, 471 S.W.3d 787 (Mo. App. 2015)
• Parties: Steven Tucker, Appellant, v. Michael S. Vincent, et al., Respondents.
• Court: Missouri Court of Appeals

471 S.W.3d 787

Steven Tucker, Appellant,

v.Michael S. Vincent, et al., Respondents.

No. ED 102388

Missouri Court of Appeals, Eastern District, DIVISION FOUR .

FILED: October 6, 2015

Gerald P. Greiman, Thomas W. Hayde, 1 N. Brentwood, Suite 1000, St. Louis, MO 63105, for appellant.

Yvette Boutaugh, 701 Market St., Suite 1300, St. Louis, MO 63101, for respondent.

KURT S. ODENWALD, Judge

Introduction

Appellant Steven Tucker (“Tucker”) appeals from the trial court's grant of summary judgment in favor of Respondent Michael Vincent (“Vincent”) on Tucker's petition for accounting malpractice and negligent misrepresentation against Vincent. On appeal, Tucker contends that if the trial court's grant of summary judgment was based upon a finding that Tucker's claims are subject to the mandatory arbitration provision in the Stock Purchase Agreement (“SPA”) entered into between Tucker and Electromedico, LLC, then the trial court erred because Tucker's tort claims against Vincent are not subject to the SPA. Tucker further argues that if the trial court granted summary judgment because it found that Tucker's claims barred by res judicata, then the trial court erred because res judicata does not apply to this action. Lastly, Tucker maintains that if it is necessary to determine the basis of the trial court's summary judgment ruling, we must find that the trial court limited its ruling to a finding that Tucker must pursue his claims in arbitration.

Because no valid agreement to arbitrate existed between Tucker and Vincent, and because the limited circumstances under which a non-party to an arbitration agreement may compel arbitration are not present here, Tucker's claims are not subject to mandatory arbitration. Because there is no identity of parties between the Florida arbitration proceeding and Tucker's present lawsuit, and no identity of the causes of action filed in Pinellas County and Tucker's present lawsuit, Tucker's claims for accounting malpractice and negligent misrepresentation are not barred by the principles of res judicata. Accordingly, the trial court erred in granting summary judgment. We reverse the judgment of the trial court and remand for proceedings consistent with this opinion.

Factual and Procedural History

I. The 2007 SPA

In 2001, David Tucker (“David”),¹Tucker's brother, started a business called Electromedical Solutions, Inc. (“ESI”). Tucker later purchased 49 percent of ESI's shares with the intention of serving as a passive investor in the company. Throughout this time, Vincent served as David's personal accountant and the accountant for ESI. Vincent also was Tucker's personal accountant during this time.

In 2007, David decided to sell ESI. David and Tucker each owned 49 percent of the shares of ESI, while a third party, Dorothy Quinn (“Quinn”) owned the remaining two percent. Vincent emerged as a prospective buyer, and the SPA was structured and consummated to that effect. Under the terms of the SPA, dated June 26, 2007, David, Tucker, and Quinn sold their respective shares of ESI to Electromedico, LLC (“Electromedico”), an entity formed by Vincent. The total purchase price paid by Electromedico for all of the shares of ESI was $1,250,000. David, Tucker, and Quinn were listed as the Sellers; each signed the SPA in their individual capacities. Electromedico was listed as the Buyer; Vincent signed the SPA on behalf of Electromedico, as its Manager. The SPA contained an arbitration clause which read, in relevant part:

Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Rules of Arbitration and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

II. Florida Proceedings

In 2009, Electromedico filed suit against both David and Tucker in Florida alleging breach of representations and warranties in the SPA regarding the value of ESI's assets transferred as part of the sale. In accordance with the arbitration clause in the SPA, the claims were submitted to binding arbitration. In 2011, Electromedico filed a statement of claim with the American Arbitration Association (“AAA”). The statement of claim alleged that, following execution of the SPA, Vincent discovered that David and Tucker had not fully disclosed certain information about ESI and had made certain misrepresentations about the value of ESI. Specifically, Electromedico alleged that the amount of accounts receivable for ESI was much lower than the amount represented by David and Tucker. Electromedico also alleged that ESI did not own certain assets itemized on its financial statements, and that there were issues with ESI's customer accounts.

David and Tucker filed an answer to the claim of arbitration. In their answer, they asserted numerous affirmative defenses, including that Electromedico failed to act with due negligence in running ESI; that Electromedico had equal or greater access to the means of verifying any representations made by David and Tucker; and that the complained-of “representations” were mere opinion or “puffing.” Finally, David and Tucker asserted that they were entitled to a setoff against any recovery by Electromedico due to the undervaluation of ESI when it was sold to Electromedico. David and Tucker alleged that Vincent undervalued ESI when he represented to them that $1,250,000 was the fair value of ESI, when in fact ESI had a significantly greater value.

While the arbitration proceeding was pending, David and Tucker filed a lawsuit against Vincent and his accounting firm in the Circuit Court of Pinellas County, Florida. In their lawsuit David and Tucker asserted claims for professional negligence and failure to comply with a request for insurance information, the latter claim a violation of Florida statute.²David and Tucker alleged that Vincent offered to buy all of the outstanding shares of ESI for $1,250,000 and told Tucker that $1,250,000 represented the fair value of ESI. David and Tucker alleged that they relied on Vincent's knowledge of and familiarity with ESI, accepted and relied upon his valuation of the company, and entered into the subsequent SPA with Electromedico with $1,250,000 as the purchase price. David and Tucker further alleged that they became aware in 2012 that ESI had been undervalued by Vincent and was worth substantially more than the purchase price.

In support of their professional negligence claims, David and Tucker averred that both Vincent and his accounting firm had a duty to exercise reasonable professional care, including the specific duties of objectivity and integrity; a duty to refrain from knowingly misrepresenting facts to clients; and a duty to obtain sufficient relevant data to afford a reasonable basis for any conclusions, advice, or recommendations made to clients. David and Tucker alleged that conclusions, advice, or recommendations made to clients. David and Tucker alleged that Vincent and his firm breached these duties by acting negligently in the following ways: (1) by acquiring a direct financial interest in ESI (through Electromedico) during the time of Vincent's professional engagement as ESI's accountant; (2) by using his position as their accountant to influence David and Tucker for his own personal gain by suggesting that the fair value of ESI was only $1,250,000; (3) by failing to recommend retaining another CPA or expert to provide advice in evaluating Electromedico's purchase offer of $1,250,000; (4) by failing to use reasonable care in valuing ESI; (5) by failing to obtain sufficient data to make a recommendation on the fair value of ESI; (6) by knowingly misrepresenting the value of ESI to David and Tucker prior to the sale of ESI to Electromedico; (7) by representing to David and Tucker that $1,250,000 was the fair value of ESI when Vincent knew they would accept that valuation as true, and when the true value was, in fact, much higher; and (8) by making fraudulent representations in violation of various Florida statutes.

On May 18, 2012, while the arbitration proceeding was pending but subsequent to David and Tucker filing suit in Pinellas County against Vincent, David and Tucker filed a motion in the pending arbitration for leave to amend to add a third-party claim. The motion sought leave to amend the pleadings in the arbitration proceeding to assert against Vincent, who was not a party to the arbitration proceeding, the same claims David and Tucker brought against Vincent in the Pinellas County lawsuit. The motion noted that the final arbitration hearing was set for May 21, 2012. The arbitration hearing proceeded as scheduled on May 21, 2012. The arbitration panel never granted David and Tucker leave to amend their pleadings.

Following the final arbitration hearing, the arbitration panel entered an award of $1,070,743.09 in favor of Electromedico against David and Tucker, jointly and severally. A judgment confirming the arbitration award was subsequently entered. In October of 2013, after the arbitration panel's final award, David and Tucker's Pinellas County lawsuit was dismissed with prejudice.

III. Tucker's 2013 Missouri action against Vincent

In December of 2013, Tucker filed suit against Vincent and Vincent's accounting firm (collectively referred to throughout this opinion as “Vincent”) in the Circuit Court of St. Louis County. Tucker's petition asserted claims against Vincent for accounting malpractice (Count I) and negligent misrepresentation (Count II). Tucker's petition alleged that in 2007, when David decided to sell ESI, Vincent expressed an interest in buying the company. The petition further alleged that, while Vincent's purchase of ESI was being considered, but before it was consummated, David, Tucker, and Vincent held a conference call. During that call, Tucker stated his desire to have the transaction structured so that Tucker would first transfer his...