Weber v. MOERSCHEL

• Decision Date: 15 June 2010
• Docket Number: No. ED 93652.,ED 93652.
• Citation: 313 S.W.3d 220
• Parties: William R. WEBER, John C. Hannegan, and HMW Leasing Company, a Missouri General Partnership, Plaintiffs/Respondents, v. Jane R. MOERSCHEL, Personal Representative of the Estate of Rollin J. Moerschel, Deceased, Defendant/Appellant.
• Court: Missouri Court of Appeals

313 S.W.3d 220

William R. WEBER, John C. Hannegan, and HMW Leasing Company, a Missouri General Partnership, Plaintiffs/Respondents, v. Jane R. MOERSCHEL, Personal Representative of the Estate of Rollin J. Moerschel, Deceased, Defendant/Appellant.

No. ED 93652.

Missouri Court of Appeals, Eastern District, Division Two.

June 15, 2010.

Daniel K. Barklage, St. Charles, MO, for Plaintiffs/Respondents.

Scott Simpson, Jayson B. Lenox, St. Charles, MO, for Defendant/Appellant.

SHERRI B. SULLIVAN, P.J.

Introduction

Jane Moerschel, Personal Representative of the Estate of Rollin J. Moerschel, Deceased (Appellant), appeals from the trial court's judgment on the Amended Claim Relating to the Estate of Rollin J. Moerschel, Deceased, Against the Personal Representative Jane R. Moerschel filed by William R. Weber (Weber), John C. Hannegan (Hannegan) and HMW Leasing Company, a Missouri General Partnership (HMW or the partnership) (collectively Respondents), requesting a declaration of rights and accounting concerning the partnership interest of Rollin J. Moerschel (Moerschel) as agreed to by the parties in the Restated Partnership Agreement (partnership agreement) dated June 1, 1987; and on Appellant's Verified Petition for Discovery of Assets (Petition) and Motion for Authority to Continue Business (Motion). We reverse and remand.

Factual and Procedural Background

At the time of Moerschel's death on June 12, 2007, Moerschel, Weber and Hannegan were partners in HMW. Moerschel owned 20% of the partnership; Hannegan, 60%; and Weber, 20%. The single asset of the partnership is a 3-story office building, built in 1891 and renovated in the early 1980s, used for the law offices of the law practice of Weber, Hannegan, and about eleven other lawyers and fifteen support staff. On February 6, 2008, Appellant filed the Motion and Petition, seeking a declaration of rights, interests and entitlements between the parties based on the partnership agreement. On April 18, 2008, Respondents filed their "Claim Relating to the Estate of Rollin J. Moerschel, Deceased, Against the Personal Representative Jane R. Moerschel—Breach`of Contract —Specific Performance—Damages" (Claim). On April 30, 2008, Respondents filed an amended claim (Amended Claim) adding a third count seeking a declaratory judgment and asking for a determination of their rights and liabilities under the partnership agreement.

After a hearing on the merits the trial court entered a Judgment requiring the Respondents to buy out Moerschel's 20% partnership interest. Respondents hired Real Estate Analysts Limited to prepare an appraisal of the real estate, and Appellant consented to that appraisal. Commercial Real Estate Appraiser Michael Green (Green) performed the appraisal of the partnership property, the appraised value of which was $1,225,000. This appraisal was as of the date of Moerschel's death, as required by the partnership agreement. Green testified in detail about how he went about performing the appraisal. Appellant's 20% share of the appraised value of the property is $245,000.

After Green's testimony, Weber testified, over Appellant's continued objections, about the updates and repairs he would like to make to the property, and how much such updates and repairs would cost. The court accepted Weber's testimony and deducted $225,000 from the appraised value of the property, thereby reducing Appellant's share to $200,000.¹

The trial court ordered Respondents to make three equal payments to Appellant of one-third (1/3) of the total judgment amount; the first within six months of the judgment, the second within one year of the judgment, and the third within two years of the judgment. The trial court also ordered that there shall be no interest on the first payment, but that interest on the second and third payments shall begin accruing three months after the date of judgment, at 7% per annum. These orders were made in accordance with the terms of the partnership agreement's buyout clause, with the exception that the clause states that payments will be made, as outlined above, from the date of retirement (death), as opposed to from the date of judgment. The trial court denied Appellant's Motion, finding that there was no authority set forth in the partnership agreement for a deceased partner's estate's personal representative to assume the deceased's partnership status.

This appeal follows.

Points on Appeal

In her first point, Appellant maintains that the trial court erred in deducting the $225,000 cost of updates and repairs to the building from the real estate appraisal of $1,225,000 because the partnership agreement was misinterpreted and the parties' intentions were not followed, in that the partnership agreement does not provide for a reduction in the appraised value for building repairs.

In her second point, Appellant claims that the trial court erred in the timing of the buyout payments and the interest thereon because the express language of the partnership agreement is controlling, in that the partnership agreement sets forth a clear and unambiguous payment and interest schedule that uses Moerschel's date of death to determine when the buyout payments are due and when interest begins to accrue.

Standard of Review

The standard by which this Court reviews a declaratory judgment action is the same as in any other court-tried case. Scott v. Ranch Roy-L, Inc., 242 S.W.3d 401, 405 (Mo.App. E.D.2007). The standard of review in an appeal from a court-tried case is governed by Murphy v. Carron.² G.H.H. Investments, L.L.C. v. Chesterfield Management Associates, L.P., 262 S.W.3d 687, 691 (Mo.App. E.D.2008). The judgment will be affirmed unless it is against the weight of the evidence, there is insufficient evidence to support it, or it erroneously declares or applies the law. Id. We defer to the factual findings of the trial court, which is in a superior position to assess credibility. Id. However, this Court independently evaluates the trial court's conclusions of law. Id. Contract interpretation is an issue of law, which we review de novo on appeal. Id.

Discussion—Point I

Appellant maintains that there is no provision in the contract providing for a reduction in the appraised value of the property for building repairs. We agree.

Article Nineteen of the partnership agreement provides: "A partner may retire from the Partnership upon the following terms: A. If a Partner dies or becomes disabled from engaging regularly in the practice of law. . . ."

Article Twenty provides:

A. The value of a retiring Partner's interest in the Partnership property, adjusted to reflect appraised values as provided in this Article, shall be the sum of his capital account and his proportionate share of accrued net income of the Partnership to the date of his retirement, unless included in his drawing account.

B. All Partnership assets shall be valued at book value except the appraised value of real property and improvements thereon, if any, shall be substituted for book value. The difference between the total appraised value of real property and improvements thereon, if any, and its total depreciated book value shall increase or decrease the Partners' capital accounts in the proportions of their interests in profits or losses of the partnership specified in Article Eight. The appraised value shall be determined as of the date of retirement of the retiring Partner and shall be made by an appraiser selected by agreement between the continuing Partners and the retiring Partner. If they cannot agree on an appraiser, the appraisal shall be made in accordance with the rules of the American Arbitration Association then in effect . . .

Emphasis added.

"`The cardinal rule in the interpretation of a contract is to ascertain the intention of the parties and to give effect to that intention.'" G.H.H. Investments, 262 S.W.3d at 692, quoting J.E. Hathman, Inc. v. Sigma Alpha Epsilon Club, 491 S.W.2d 261, 264 (Mo. banc 1973). Here, the partnership agreement is clear in its language on how the value of the partnership's real estate asset is to be ascertained, when the time comes to buy out a partner's share upon his death or retirement: "The appraised value shall be determined as of the date of retirement of the retiring partner and shall be made by an appraiser selected by agreement between the continuing partners and the retiring partner." Emphasis added.

The use of the word "shall" is compulsory. The use of the appraiser's value in determining Appellant's buyout percentage is mandatory. There is no language in the agreement stating that the appraised value may be reduced by a partner's opinion testimony regarding deductions for repairs and updates. No such intent may be read into the contract, either, because the agreement designates itself a fully integrated agreement. Article Sixteen explicitly provides:

This partnership Agreement contains the entire understanding between the partners and supersedes any prior written or oral

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