Twin Chimneys v. J.E. Jones Const., ED 82976.
| Decision Date | 30 August 2005 |
| Docket Number | No. ED 82976.,ED 82976. |
| Citation | 168 S.W.3d 488 |
| Parties | TWIN CHIMNEYS HOMEOWNERS ASSOCIATION, Plaintiff/Respondent, v. J.E. JONES CONSTRUCTION CO., et al., Defendants/Appellants. |
| Court | Missouri Supreme Court |
Gary Edward Snodgrass, William Stuart Thomas — co-counsel, St. Louis, MO, for Howard Chilcutt, Jones Company Custom Homes, Inc, and J.E. Jones Construction Company.
Martin John Buckley, St. Louis, MO, for Howard Chilcutt, Jones Company Custom Homes, Inc, and J.E. Jones Construction Company, Lloyd Potts and Steve Mullen.
Robert Engel Tucker, St. Louis, MO, for Twin chimneys Homeowners Associations.
Gary Phillip Paul, Clayton, MO, for J.L. Mason of Missouri, Inc.
Kevin Paul Schnurbusch, St. Louis, MO, for Dave Kolb Grading, Inc.
J.E. Jones Construction Company (J.E. Jones) and Jones Company Custom Homes, Inc. (Custom Homes) (collectively Jones Company) and Howard Chilcutt (Chilcutt) (collectively Appellants) appeal from a trial court judgment entered upon a jury verdict in favor of Twin Chimneys Homeowners Association (the Association) and against Jones Company in the amount of $13,960 for damages based on negligence and against Jones Company and Chilcutt in the amount of $987,940 for damages based on breach of fiduciary duty. We affirm.
In 1988, J.L. Mason of Missouri, Inc. (J.L. Mason) began construction of the Twin Chimneys subdivision (the Subdivision). After construction of the infrastructure began, J.L. Mason determined that it needed a partner in the Subdivision project, and it approached J.E. Jones. In November 1988, J.L. Mason and J.E. Jones entered into a joint venture agreement, forming Twin Chimneys Partnership, to purchase real property and sell single family developed lots.
In January 1989, Twin Chimneys Partnership and Lloyd L. Potts (Potts), Steven A. Mullen (Mullen), Homer Clark (Clark), and Chilcutt entered into an Indenture of Trust governing the Subdivision, wherein Potts, Mullen, Clark and Chilcutt consented to serve as original Trustees. Potts and Mullen were affiliated with J.L. Mason. Clark and Chilcutt were employees of J.E. Jones. The Indenture of Trust included the following general provision:
The Trustees are authorized to act through a representative, provided, however, that all acts of the Trustees shall be agreed upon by at least a majority of said Trustees. No Trustee shall be held personally responsible for his or her wrongful acts, and no Trustee shall be responsible for the wrongful acts of others. No Trustee shall be held personally liable for injury or damage to persons or property by reason of any act or failure to act of the Trustees, collectively or individually. . . . The owners of the Lots and other parcels shall indemnify and hold the Trustees harmless from and against any and all liability, loss, damage, costs and expense, including reasonable attorney's fees and court costs which the Trustees may suffer or incur solely by the reason of being Trustees hereunder or by reason of any action taken by the Trustees in good faith believed to be in the best interests of the Owners.
The parties also entered into a Subindenture of Trust (sometimes referred to as Subindenture or Subindenture Agreement), which included a general provision substantially the same as the one quoted above. The Subindenture of Trust also provided that the Trustees had ownership and control of the common property within the Subdivision and were responsible for the maintenance of the common property.
The construction of the lakes, monuments, and irrigation system within the Subdivision was completed by 1990. In 1991, J.L. Mason went out of business and J.E. Jones took over the Twin Chimneys Partnership. J.H. Berra was hired to replace J.L. Mason as general contractor to complete the infrastructure for the individual lots within the Subdivision.
In August 1992, Custom Homes, formed in 1989, bought all of the assets of J.E. Jones. An Amendment to the Subindenture of Trust identified Custom Homes as the successor to J.E. Jones.
On March 24, 1999, the Association filed a Petition for Damages, asserting one count of negligence against J.E. Jones and one count of breach of fiduciary obligation against Potts, Mullen, Clark, and Chilcutt.1 Subsequently, the Association filed a Second Amended Petition, adding J.L. Mason and Custom Homes as defendants and adding one count each of breach of contract and promissory estoppel. The Second Amended Petition also divided the negligence claim into three counts, one each relating to the lakes, the entrance monuments, and the sprinkler system.
Potts and Mullen filed motions for directed verdict at the close of the Association's case, which the trial court sustained. Accordingly, the court entered judgments in favor of Potts and Mullen and against the Association.
After a trial of about two and a half weeks, the jury returned the following verdicts: (1) in favor of Jones Company and J.L. Mason on the Association's claim of negligence in constructing the lakes; (2) in favor of Jones Company on the Association's claim of negligence in constructing the irrigation system; (3) in favor of the Association and against Jones Company for damages based on negligence in constructing the entrance monument lighting in the amount of $13,960; and (4) in favor of the Association and against Jones Company and Chilcutt for damages based on breach of fiduciary duty in the amount of $987,940. The trial court entered a judgment in accordance with the jury verdicts.
Appellants raise eight points on appeal. In their first point, Appellants argue that the trial court erred in denying their motions for directed verdict and for judgment notwithstanding the verdict (JNOV), or, in the alternative, for new trial because the Association did not have standing to bring the claims raised in the Second Amended Petition in that there were no allegations in the pleadings or evidence at trial showing that the Association was the owner of the common ground of the Subdivision and therefore, the Association was not the real party in interest to prosecute the cause of action.
The standard of review of a trial court's denial of motions for directed verdict and judgment notwithstanding the verdict are treated the same. Erdman v. Condaire, Inc., 97 S.W.3d 85, 88 (Mo.App. E.D.2002). In reviewing a trial court's denial of a motion for JNOV, the primary inquiry is whether the plaintiff has made a submissible case. Id. To make a submissible case, a plaintiff must present substantial evidence for every fact essential to liability. Id. In determining whether a plaintiff made a submissible case, we view the evidence and all reasonable inferences therefrom in the light most favorable to the plaintiff. Id. The standard of review for the denial of a motion for new trial is abuse of discretion by the trial court. Echard v. Barnes-Jewish Hosp., 98 S.W.3d 558, 567 (Mo.App. E.D.2002). A new trial will be available only upon a showing that trial error or misconduct of the prevailing party incited prejudice in the jury. Id.
Under Rule 52.01,2 a civil action must be prosecuted in the name of the real party in interest. The purpose of this rule is to enable those who are interested in the subject matter of the suit and entitled to the benefits of the litigation to be those who maintain the action. Boyer v. Sinclair & Rush, Inc., 67 S.W.3d 627, 635 (Mo.App. E.D.2002). Clearly, the Association was the real party in interest to pursue this cause of action, as it is the one entitled to the benefits of the litigation against Appellants. Appellants performed substandard work on the common areas, promised to repair, and did not. The residents were induced to purchase property in the Subdivision in part because of the lakes, working irrigation system and monuments. When these inducements turned out to be defective or non-functioning, and Appellants promise to fix them but do not, the residents, whether in the form of the Association or individual resident trustees, most certainly have standing to bring suit against Appellants. As we said in Terre Du Lac Ass'n, Inc. v. Terre Du Lac, Inc., 737 S.W.2d 206, 215-216 (Mo.App. E.D.1987):
Defendants' argument that Association lacks standing is untenable for practical considerations as well. Two interests are conveyed in a condominium or in a home located within a homeowners' association development: a dwelling on one hand and a proportionate share of the common elements on the other. Concepts of Liability in the Development and Administration of Condominium and Home Owners Associations, 12 Wake Forest L.Rev. 915, 961 (1976). Frequently, the common amenities are highlighted in the developer's marketing and sales program. The common elements, however, present unique problems. Id. The first problem is that many owners buy into a development at a stage when much of the construction of the common elements is unfinished. Id. The second problem is the sheer size and complexity of the investigation which would be required to assure an individual owner that the common areas are complete and fit for the use for which they were intended. Id. In this context, the condominium or home owners association takes on a critical role as a representative of the individual owners.... As a result, the powers of an association are extensive with regard to enforcing the common rights of all owners.
In the instant case, the Association, incorporated pursuant to the Subindenture and comprised of resident trustees of the Subdivision, was the real party in interest to bring a civil action against Appellants for negligence and breach of fiduciary duty with regard to the...
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