Westmoreland v. Midwest St. Louis, LLC
| Decision Date | 23 February 2021 |
| Docket Number | No. ED 107787,ED 107787 |
| Citation | 623 S.W.3d 618 |
| Parties | Christopher WESTMORELAND, Respondent, v. MIDWEST ST. LOUIS, LLC d/b/a, Gas Mart 6, Appellant. |
| Court | Missouri Court of Appeals |
FOR APPELLANT: Jeffrey T. McPherson, Paul L. Brusati, Thomas B. Weaver, Abigail L. Twenter, 7700 Forsyth Blvd., Suite 1800, St. Louis, Missouri 63105, Spencer P. Desai, 120 South Central, Suite 1800, St. Louis, Missouri 63105.
FOR RESPONDENT: Jeremy A. Gogel, 4542 West Pine Blvd., St. Louis, Missouri 63108, Joseph M. Morris, 800 Market Street, Ste. 1100, St. Louis, Missouri 63101, M. Adina Johnson, 1034 S. Brentwood, Ste. 2100, St. Louis, Missouri 63117.
A 2012 gasoline price war between two neighboring gas stations, Appellant Midwest St. Louis and the non-party Energy Express, located near Interstate 70 and Grand Avenue in the City of St. Louis, gave rise to this case of first impression brought by Respondent Christopher Westmoreland, who owned a third station nearby, and requires us to construe the private cause of action created by § 416.635 of the Motor Fuel Marketing Act (MFMA), §§ 416.600 – 416.635.1
The MFMA, adopted by the Missouri legislature in 1993 to protect competition in the retail motor fuel market and prevent the harm caused by monopolistic takeovers in the marketplace through predatory pricing,2 makes it unlawful to sell gas below market cost with the intent to damage competition, or to divert sales or trade from or otherwise injure a competitor. § 416.615.1. The Act gives the attorney general broad investigative and enforcement authority. It also creates a private right of action for "[a]ny person injured in his business or property" as a result of the unlawful conduct proscribed by the Act. § 416.625; § 416.635.
Here, the private cause of action was brought by Respondent Westmoreland who owned Go West Mart, the third gas station involved in this case, which was located near the two aforementioned belligerents. On November 5, 2015, Westmoreland filed suit against Midwest alleging that in 2012, Midwest repeatedly sold fuel below cost in violation of the MFMA and caused him to suffer substantial business losses, to lose his business through a bank foreclosure, and to suffer an approximately $500,000 judgment taken against him personally.
The jury agreed. Following a three-day trial in October 2018, the jury awarded Westmoreland $1.8 million in damages against Midwest. Pursuant to the mandatory provisions of § 416.635(1), the trial court trebled Westmoreland's damages to $5.4 million and awarded him $200,000 in attorney's fees and $1,161.80 in taxable costs.
Midwest now appeals. In Points I and II, Midwest argues that Westmoreland failed to make a submissible case under the MFMA because as a mere shareholder of Westmoreland Service, LLC d/b/a Go West Mart, Westmoreland was not Midwest's competitor and did not suffer any direct injuries from Midwest's alleged violations of the MFMA. In Points III and IV, Midwest claims the trial court erred in connection with certain evidentiary rulings regarding (1) other lawsuits to which Westmoreland and his business had been parties, and (2) some of Westmoreland's financial documents including certain tax returns. In Point V, Midwest argues the trial court erred by denying its motion for remittitur or for a new trial because the verdict was excessive and unsupported by the evidence. Finally, in Point VI, Midwest argues the trial court's attorney's fees award was excessive. We find in favor of Westmoreland on all six points and affirm the judgment.
In 1967, Westmoreland's parents opened the Go West Mart filling station on North Broadway near Interstate 70 in the City of St. Louis. Westmoreland worked at the station during his youth and into his adulthood and in the late 1990s, Westmoreland took over the station's ownership and operation when he became the 90% shareholder of Westmoreland Service, LLC and of Westmoreland Real Estate, LLC, which owned the land on which the station was located. Westmoreland's sister was given the remaining 10% at their mother's request.
In 2002, not long after he obtained the controlling interest in the family business, Westmoreland took out a loan on behalf of the corporation to finance renovations and improvements to the business. In 2004, Westmoreland took out another loan to add a car wash. The loans were consolidated, and Westmoreland executed a personal guarantee of the consolidated loan and granted the bank a deed of trust against his home as security. In 2008, the bank renewed Westmoreland's loan which at that time had a balance owed of $1.8 million. Under the renewal conditions, Westmoreland was required to make 59 payments of approximately $15,000 per month and, at the end of the renewed loan period on December 30, 2012, $1.3 million would still be owed.
The other two gas stations involved here, Midwest's Gas Mart 6 and the non-party Energy Express (Express), whose gas price war triggered this case, were located on Grand Avenue near Interstate 70, approximately one mile from Westmoreland's Go West Mart station. Before Express opened in 2012, Westmoreland and Midwest had been competing in the gas retail market for several years. In 2008, Midwest offered Westmoreland $3 million to buy his station. Westmoreland declined. Then, in March 2012, Express opened its large, modern gas pumping and retail operation directly across the street from Midwest.
And at that point, the gas price war of 2012 began. The scene was the Grand Avenue exit off of busy Interstate 70 where gas customers upon exiting the interstate had two immediate fuel options – the new Express facility or Midwest's smaller and more dated station. The jury heard testimony regarding gas customer behavior patterns including the effect that newer stations like Express had in initially drawing drivers off the highway but that once off the highway, a significant number of gas customers, if given a choice between two or more stations, tend to choose the station with lower prices, even if just slightly lower.
Trouble started soon after Express opened in March 2012 when Midwest began repeatedly lowering its gas prices to just under Express's prices. The skirmish escalated as Express in turn matched Midwest's price reductions. The battle continued until both Midwest and Express were 30 cents per gallon below market price and well below cost. At one point, the police were summoned to control the line of customers dangerously backing out onto the interstate.
Steve Madrass, Express's owner, testified at length regarding the price war telling the jury that Midwest was the sole driver of downward prices in that area in 2012. Madrass stated that the price war ended in November 2012 because he decided to yield to Midwest's pricing aggression by allowing Midwest to maintain its gas priced just below Express's.
Meanwhile, Westmoreland watched the price war unfold. He told the jury he had weathered price wars before - in 2007 and 2011 - so between March 7 and November 7, 2012, he drove by Midwest and Express each day and recorded their prices onto a spreadsheet published to the jury as Exhibit 15.
The jury heard testimony on the price war's impact on Westmoreland's financial situation. Westmoreland testified he was financially unable to lower his prices below the market price. He told the jury that by the end of 2012, his business had lost $150,000 - $160,000 in profits for the year. He began having difficulty making his monthly loan payments and paying his fuel supplier, and his loan was scheduled to mature on December 31, 2012 with a balance owed of $1.3 million.
Westmoreland told the jury that before the 2012 price war, he had expected the bank to renew his loan upon its December 2012 maturation just as it had done in 2004 and 2008. The record showed that the balance on the loan in 2004 and 2008 when the bank renewed the loan was more than $1.8 million or approximately a half million dollars higher than it was in 2012. Adding to his optimism was the bank's decision, after it learned of his end-of-year financial struggles, to accept smaller loan payments of just $1,250 per week.
But when the bank became aware in December 2012 that Westmoreland was having difficulty paying his fuel supplier, and was seeking another supplier to continue operations, the bank decided not to renew the loan. Instead, on January 14, 2013, the bank foreclosed on Westmoreland, repossessed the business, and placed it in receivership. One year later, the receiver sold the station to Midwest, for $1.55 million, approximately half the price Midwest had offered Westmoreland in 2008. Since the proceeds from that sale did not pay off his entire debt, the bank obtained a judgment against Westmoreland personally for the remaining balance of $447,897.19 accruing at 9% interest per annum.
In addition, Westmoreland told the jury his wages from his truck driving job and all the income he received from a rental property were being garnished by the bank. The bank also retained its deed of trust against Westmoreland's home.
After the court entered its judgment on the jury verdict, Midwest filed a motion for new trial and a motion for judgment notwithstanding the verdict or for remittitur. These motions were based on grounds similar to those raised in this appeal and were denied by the trial court. This appeal follows.
In its first two points, Midwest asserts that Westmoreland failed to make a submissible case under the MFMA in that he failed to prove (1) that he was Midwest's competitor and (2) that he was directly injured by Midwest's alleged violations of the MFMA. While couched as an attack on submissibility, Midwest is essentially claiming that Westmoreland lacks standing or that he is not the real pa...
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