Opinion
No. WD 64370, Consolidated with WD 64407
March 28, 2006
Appeal from the Circuit Court of Platte County, Missouri, The Honorable Abe Shafer, IV, Judge.
Before Howard, P.J., Smith, C.J., and Newton, J.
Dennis E. Hess (Hess) appeals the circuit court's dismissal on the pleadings, pursuant to Rule 55.27(a)(6), for failure to state a claim upon which relief can be granted, of Count III of his second amended petition, for actual and punitive damages, attorney's fees, and costs, against the respondent and cross-appellant, Chase Manhattan Bank (Chase), alleging a violation of the Missouri Merchandising Practices Act (MPA), Chapter 407, specifically a violation of § 407.020.1. Hess alleged in Count III that Chase, in violation of § 407.020.1, failed to disclose the involvement of the United States Environmental Protection Agency (EPA) with the real property Chase sold to him in 1999. Chase cross-appeals the trial court's judgment for Hess, awarding him $52,000 in actual damages on Count II of his second amended petition, alleging common law fraud with respect to the same failure to disclose alleged in Count III.
All rule references are to Missouri Rules of Civil Procedure 2005, unless otherwise indicated.
All statutory references are to RSMo 2000, unless otherwise indicated.
In his sole point on appeal, Hess claims that the trial court erred in dismissing his MPA count, Count III, pursuant to Rule 55.27(a)(6), for failure to state a claim upon which relief could be granted, on the basis that the version of § 407.025.1 of the MPA in effect at the time of the parties' real estate transaction, providing for a private cause of action for a violation of § 407.020.1, did not apply to real estate transactions to allow a private cause of action by Hess against Chase, as alleged in Count III. Hess claims that the trial court's dismissal on that basis was error because, inasmuch as § 407.025.1 is procedural and remedial, rather than substantive, the court, rather than applying the version of § 407.025.1 in effect at the time of the transaction, should have applied retrospectively the 2000 amended version of § 407.025.1, which extended its application to the parties' 1999 real estate transaction, authorizing a private cause of action by Hess against Chase for an alleged violation of § 407.020.1. In its sole point on cross-appeal, Chase claims that the trial court erred in overruling its motion for a directed verdict, at the close of the plaintiff's and all the evidence, and its motion for judgment not withstanding the verdict (JNOV), with respect to the judgment for Hess on his fraud count, Count II, because Hess did not make a submissible case on Count III with respect to the requisite proof elements of that claim that Chase owed a duty to Hess to disclose the EPA's involvement with the property it sold to him and that Hess relied on Chase's silence with respect to the EPA's involvement in purchasing the property.
As to Hess's appeal, we reverse and remand for a trial on Count III. With respect to Chase's cross-appeal, as to Count II, we affirm.
Facts
In 1999, Hess was living and working in the Kansas City area. On April 23, 1999, he purchased from Chase property located at 19015 Humphrey Access Road in Platte County, Missouri, for $52,000. At the time, there was located on the property a three-bedroom home that was in need of extensive repairs, which Hess planned to rehabilitate.
At the time the property was sold to Hess, the EPA was investigating paint and solvent dumping on the property, which had been occurring since 1988. Chase had foreclosed on the property and had purchased it at the foreclosure sale on January 22, 1999. The property's previous owner, Billy Stevens, was convicted of several federal criminal charges on December 21, 1998, for various acts of dumping hazardous waste on the property. Prior to the sale of the property to Hess, the EPA had numerous contacts with Chase and its representatives regarding its investigation of the property. However, Chase never disclosed this fact to Hess prior to the sale.
Prior to purchasing the property, Hess had visited the property on several occasions and did observe some debris. However, he never observed any paint cans or any other signs of hazardous waste dumping. The paint cans that were on the property were not easily accessible or visible. They were located in the foundation of an old barn that no longer existed, which was located about 300 feet southwest of the house and was overgrown with weeds. When the paint cans were ultimately discovered, Hess learned that they came from the Mizzou Paint Company, a Kansas City painting firm that was owned by Stevens.
At some point, Hess hired Stinnett Construction to pull up two trees and bury or burn all the trash and debris located on the property, including the paint cans. Following the required inspections by local government agencies, Hess obtained a permit from the City of Platte City to burn and dispose of the trash and debris. At Hess's direction, Stinnett dug three large holes on the property, one of which was used to bury the paint cans.
After the paint cans had been buried, Hess was contacted by the EPA, advising him that it had received a report that he had disposed of hazardous waste on the property. He later learned that the hazardous waste to which the EPA was referring was the paint cans. The EPA ultimately issued a "Unilateral Administrative Order," dated January 18, 2000, ordering Hess to remove the buried paint cans within ten days. Hess hired Kingston Environmental Services to perform the clean-up, which was done with oversight by the EPA's contractor, Ecology Environment. In February of 2002, at Hess's request, the EPA issued him a clean-bill-of-health letter, confirming that he had fully complied with its administrative order.
On April 20, 2000, Hess filed suit in the Circuit Court of Platte County, Missouri, against Chase, Americana Real Estate, Inc., and Kenneth Karns. Americana had handled the sale of the property to Hess for Chase. Karns, a licensed real estate agent, who was employed by Americana, handled the sale for Americana. On August 23, 2002, Hess, with leave of the court, filed a second amended petition for damages and equitable relief, alleging six counts, including Counts II and III against Chase alleging fraudulent non-disclosure, and a violation of § 407.020 of the MPA, respectively, both of which were based on Chase's alleged failure to disclose to him at the time of sale that the EPA was involved with the property.
On September 23, 2003, Chase filed a motion to dismiss Count III of Hess's second amended petition for failure to state a cause of action on which relief could be granted. In its motion, Chase alleged that Hess, in accordance with the version of § 407.025.1 in effect at the time of the sale of the property, could not maintain a private cause of action against it for a violation of § 407.020.1. The motion was taken up and heard on October 6, 2003. Hess, in opposition to the motion, argued that the amended version of § 407.025.1, allowing a private cause of action with respect to real estate transactions for a violation of § 407.020.1, should be applied retrospectively to the parties' real estate transaction in that the amendment was procedural and remedial, not substantive. On October 16, 2003, the trial court dismissed Count III.
On January 9, 2004, Hess dismissed his claims against Americana and Karns, pursuant to a settlement agreement he had reached with them. On April 29, 2004, Chase filed a motion for summary judgment on Hess's claim in Count II for fraudulent non-disclosure, alleging that it had no duty to disclose the EPA's involvement with the property because the parties had contractually agreed that Hess could not construe its silence as an implied representation of any fact. The motion was overruled on April 29, 2004.
On May 3, 2004, Hess's claim against Chase on Count II, for fraudulent non-disclosure, proceeded to a jury trial. At the close of Hess's evidence, Chase moved, inter alia, for a directed verdict on Count II for fraudulent non-disclosure, alleging that Hess failed to make a submissible case because Chase had no duty to disclose the EPA's involvement with the property, which motion was overruled. At the conclusion of all the evidence, Chase renewed its motion, which was again overruled. Count II was submitted to the jury, on which it found for Hess, assessing actual damages of $52,000, but denying punitive damages.
On June 8, 2004, Chase filed a motion for JNOV, alleging that Hess failed to make a submissible case as to Count III because Chase had no legal duty to disclose that the EPA was involved with the property, and because Hess did not present substantial evidence that Chase had a duty to disclose or that Hess had a right to rely on Chase to disclose, which motion was denied. On June 9, 2004, Hess filed a post-trial motion requesting that the trial court reinstate his MPA claim, enter a judgment in favor of Hess on that claim based upon the facts presented at trial, grant him a new trial to determine actual and punitive damages, and award Hess his attorney's fees and costs, and injunctive relief. On July 9, 2004, the trial court denied Hess's post-trial motion, accepted the jury's verdict, and entered its final judgment in favor of Hess on his claim of common law fraud.
This appeal and cross-appeal followed.
I. Hess's Appeal
In his sole point on appeal, Hess claims that the trial court erred in dismissing his MPA count, Count III, pursuant to Rule 55.27(a)(6), for failure to state a claim upon which relief could be granted, on the basis that the version of § 407.025.1 of the MPA in effect at the time of the parties' real estate transaction, providing for a private cause of action for a violation of § 407.020.1, did not apply to such transactions to allow a private cause of action by Hess against Chase for non-disclosure. Hess claims that the trial court's dismissal on that basis was error because, inasmuch as § 407.025.1 is procedural and remedial, rather than substantive, the court, rather than applying the version of § 407.025.1 in effect at the time of the transaction, should, as a matter of law, have applied retrospectively the 2000 amended version of § 407.025.1, which extended its application to the parties' 1999 real estate transaction, authorizing a private cause of action by Hess against Chase for non-disclosure.
If the trial court sustains a motion to dismiss without stating the basis therefor, the appellate court must assume that it did so on one of the grounds alleged in the motion and will affirm the trial court's ruling if it can be sustained on any ground alleged in the motion. Basye v. Fayette R-III Sch. Dist. Bd. of Educ. , 150 S.W.3d 111, 114 (Mo.App. 2004). Here, the trial court did not specify the ground for dismissal of Hess's MPA count, Count III, of his second amended petition. It matters not, however, in that the only ground for dismissal alleged in the respondent's motion to dismiss was that at the time of the parties' real estate transaction, § 407.025.1 did not apply to real estate transactions so as to create a private cause of action in Hess against Chase for a violation of § 407.020.1. Thus, as to Hess's appeal, we must review to determine whether the trial court's dismissal of Hess's MPA claim in Count III was valid on that basis. Our review is de novo. Id.
Pursuant to Rule 67.03, an involuntary dismissal of a petition is without prejudice, unless the trial court's order of dismissal specifies otherwise. In this case, the trial court specifically provided that the dismissal was with prejudice. As such, the trial court's dismissal of Count III of Hess's petition is considered final and subject to appellate review. Doe v. Visionaire Corp. , 13 S.W.3d 674, 676 n. 3 (Mo.App. 2000).
A motion to dismiss for failure to state a cause of action, pursuant to Rule 55.27(a)(6), tests the adequacy of the plaintiff's petition. Geiger v. Bowersox , 974 S.W.2d 513, 515 (Mo.App. 1998) ( citing Nazeri v. Mo. Valley Coll. , 860 S.W.2d 303, 306 (Mo. banc 1993)). Hence, in reviewing the trial court's granting of a motion to dismiss, we must review the allegations of Count III of Hess's second amended petition to determine whether they invoke principles of substantive law entitling the plaintiff to relief. Brock v. Blackwood , 143 S.W.3d 47, 56 (Mo.App. 2004). In doing so, we are to treat the facts alleged as true, allowing them their broadest intendment and construing them in a light most favorable to the plaintiff. Id.
In Count III of his second amended petition for damages and other relief, Hess alleged that, in violation of § 407.020.1 of the MPA, Chase failed to disclose, as required, that the EPA was involved with the real estate he purchased from it, directly resulting in damage to him. Chase alleged, in its motion to dismiss, that because § 407.025.1, at the time of the parties' real estate transaction, did not apply to real estate transactions, Hess could not maintain a private cause of action against it for its alleged non-disclosure of EPA involvement with the property, in violation of § 407.020.1, and, therefore, Count III did not state a cause of action on which relief could be granted. Hess countered by contending that the 2000 amendment to § 407.025.1, extending its application to real estate transactions, should be applied retrospectively to the parties' real estate transaction in that it was procedural and remedial in nature so that, in Count III, he did, in fact, allege a MPA cause of action for a violation of § 407.020.1 such that the trial court erred in dismissing Count III. Hence, in reviewing the trial court's dismissal of Count III, we must determine whether the trial court should have applied retrospectively § 407.025.1, as amended in 2000, to the parties' 1999 real estate transaction so as to allow, in Count III, a private cause of action by Hess against Chase for its alleged non-disclosure concerning the real estate it sold to Hess.
At the time of the parties' real estate transaction in 1999, § 407.025.1, RSMo 1990, read, in pertinent part:
Any person who purchases or leases goods or services primarily for personal, family or household purposes and thereby suffers an ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of a method, act or practice declared unlawful by section 407.020, may bring a private civil action . . . to recover actual damages. The court may, in its discretion, award punitive damages and may award to the prevailing party attorney's fees, based on the amount of time reasonably expended, and may provide such equitable relief as it deems necessary or proper.
Thus, by its express terms, the version of § 407.025.1 in effect at the time of the parties' real estate transaction applied to "goods and services" only and did not apply to real estate transactions. Detling v. Edelbrock , 671 S.W.2d 265, 272-73 (Mo. banc 1984). As such, under that version of the statute, Hess could not maintain a private cause of action against Chase for its alleged violation of § 407.020.1, for failing to disclose the EPA's involvement with the real estate in question.
Section 407.025.1 was amended in 2000 to read as it reads presently. It reads, in pertinent part:
Any person who purchases or leases merchandise primarily for personal, family or household purposes and thereby suffers an ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of a method, act or practice declared unlawful by section 407.020, may bring a private civil action . . . to recover actual damages. The court may, in its discretion, award punitive damages and may award to the prevailing party attorney's fees, based on the amount of time reasonably expended, and may provide such equitable relief as it deems necessary or proper.§ 407.025.1. By its terms then, rather than applying only to "goods and services," the amended version applies to "merchandise," which is defined in § 407.010(4), for purposes of § 407.020 and § 407.025, as "any objects, wares, goods, commodities, intangibles, real estate or services." (Emphasis added.) Thus, under the amended version of § 407.025.1, Hess could maintain a private cause of action against Chase for its alleged violation of § 407.020.1 with respect to the sale of the real estate in question, as alleged in Count III of his second amended petition. Hence, for Hess to maintain, in Count III, a MPA action against Chase, pursuant to § 407.025.1, the amended version of that statute, extending its application to "merchandise," would have to be retrospectively applied to the parties' 1999 real estate transaction. And, because Chase only alleged one basis for dismissal in its motion to dismiss Count III, that the version of § 407.025.1 in effect at the time of the parties' real estate transaction did not allow a private cause of action by Hess against Chase, the trial court, in dismissing Count III, necessarily found, as a matter of law, that the amended version of § 407.025.1 should not be applied retrospectively to the transaction.
As a general proposition, statutes are presumed to operate prospectively, "unless the legislative intent that they be given retroactive operation clearly appears from the express language of the act or by necessary or unavoidable implication." Dep't of Soc. Servs. v. Villa Capri Homes, Inc. , 684 S.W.2d 327, 332 (Mo. banc 1985) (citation omitted). However, even if this presumption is overcome, a statute cannot be applied retrospectively if it falls within the constitutional ban against laws that operate retrospectively, found in article I, section 13 of the Missouri Constitution, which reads: "That no ex post facto law, nor law impairing the obligation of contracts, or retrospective in its operation, or making any irrevocable grant of special privileges or immunities, can be enacted." This ban on statutes that operate retrospectively, however, does not extend to all statutes. Vaughan v. Taft Broad. Co. , 708 S.W.2d 656, 660 (Mo. banc 1986). It does not extend to procedural or remedial laws, in which a litigant has no vested rights. Id. "No person may claim a vested right in any particular mode of procedure for the enforcement or defense of his rights, and where a new statute deals only with procedure it applies to all actions including those pending or filed in the future." Id. Procedural and remedial statutes, not affecting substantive rights, may be applied retrospectively, without violating the constitutional ban of article I, section 13. Dial v. Lathrop R-II Sch. Dist. , 871 S.W.2d 444, 447 (Mo. banc 1994). Such statutes are presumed to operate retrospectively only, unless the legislature expressly states otherwise. Wilkes v. Mo. Hwy. Transp. Comm'n , 762 S.W.2d 27, 28 (Mo. banc 1988).
In Callahan v. Cardinal Glennon Hospital , 863 S.W.2d 852, 872 (Mo. banc 1993), the Court, in dicta, misspoke concerning this issue, confusing the general presumption regarding the prospective application of statutes with the absolute ban of article I, section 13, banning the enactment of statutes that operate retrospectively. The Court in Callahan seemed to be suggesting that despite the constitutional ban, a substantive law could operate retrospectively if that was the intent of the legislature, as expressed in the statute. Quoting verbatim the general-presumption language of Villa Capri Homes, Inc. , 684 S.W.2d at 332, set out, supra, the Court misapplied it to the retrospective operation of "statutory provisions that are substantive," stating:
Under the rules of statutory construction, statutory provisions that are substantive 'are generally presumed to operate prospectively, unless the legislative intent that they be given retroactive operation clearly appears from the express language of the act or by necessary or unavoidable implication.'
Callahan , 863 S.W.2d at 872 ( quoting Villa Capri Homes , 684 S.W.2d at 332). This same confusion of the presumption and the constitutional ban was addressed by the Court in Doe v. Roman Catholic Diocese of Jefferson City , 862 S.W.2d 338, 341 (Mo. banc 1993), in which the appellant claimed an "exception" to the absolute prohibition of article I, section 13, contending that the constitutional prohibition did not apply "where the legislature manifests a clear intent that it do so," relying on State ex rel. St. Louis-San Francisco Railway Co. v. Buder , 515 S.W.2d 409 (Mo. banc 1974). Doe , 862 S.W.2d at 341. In other words, the appellant in Doe was contending that the legislature, by statutory enactment, could trump a constitutional mandate.
In Buder , the Court stated, in pertinent part:
Article I, Sec. 13 of the 1945 Missouri Constitution, V.A.M.S., provides that no ex post facto law, nor law impairing the obligations of contracts nor retrospective in its operation shall be enacted. There are, however, two recognized exceptions to the rule that a statute shall not be applied retrospectively: (1) where the legislature manifests a clear intent that it do so, and (2) where the statute is procedural only and does not affect any substantive right of the parties.
515 S.W.2d at 410. In addressing this language, which was relied upon by the Court in Callahan to suggest the legislature could mandate a change in the substantive law to be applied retrospectively, the Doe court began by noting that the same "exception" contention made by the appellant in Doe was made by the appellant in Villa Capri , and was rejected, the Villa Capri Court stating: "Such is not the case; the legislative intent is pertinent only to the construction of the statute and whether the presumption of retroactivity should not apply. This was our holding in Lincoln Credit Co. v. Peach, [ 636 S.W.2d 31 (Mo. banc 1982)], and was intended by our holding in State ex rel. St. Louis-San Francisco Ry. Co. v. Buder, 515 S.W.2d 409 (Mo. banc 1974)." 862 S.W.2d at 341 ( quoting Villa Capri , 684 S.W.2d at 332, n. 5) (emphasis added). The Villa Capri Court made it clear that legislative intent was relevant only to the construction of the statute and the general presumption of prospective application of statutes, and was not relevant to the constitutional ban of article I, section 13. It made that point crystal clear when it stated: "Regardless of legislative intent, it should be obvious that a statute cannot supercede a constitutional provision." Doe , 862 S.W.2d at 341.
While the subsequent decisions of the Court: Mendelsohn v. State Board of Registration for the Healing , 3 S.W.3d 783, 786 (Mo. banc 1999); Beatty v. State Tax Commission , 912 S.W.2d 492, 496 (Mo. banc 1995); Dial v. Lathrop R-II School District , 871 S.W.2d 444, 447 (Mo. banc 1994), clearly recognized the absolute prohibition of article I, section 13, with respect to substantive laws, without exception, at least one decision of this court, Cook v. Newman , 142 S.W.3d 880, 893 (Mo.App. 2004), quoting Callahan , has misstated the law as to the constitutional ban and should not be followed. There are numerous other decisions of this court, i.e., Stark v. Missouri State Treasurer , 954 S.W.2d 645, 647 (Mo.App. 1997); Cartwright v. Wells Fargo Armored Services , 921 S.W.2d 165, 167 (Mo.App. 1996); Reinerd v. A.B. Chance Co. , 800 S.W.2d 777, 778 (Mo.App. 1990); Danaher v. Smith , 666 S.W.2d 452, 455 (Mo.App. 1984), although not relying on Callahan , have mistakenly referred to legislative intent as an exception to the constitutional ban of article I, section 13.
As the Missouri Supreme Court pointed out in Beatty v. State Tax Commission , 912 S.W.2d 492, 496 (Mo. banc 1995), the ban of article I, section 13 only applies to laws that " operate retrospectively" and does not apply to laws that are merely retrospective, citing Dial v. Lathrop R-II School District , 871 S.W.2d 444, 447 (Mo. banc 1994) (citations omitted), which held, in pertinent part:
"Article I, section 13 of our state constitution prohibits any law 'retrospective in its operation. ' This prohibition applies to laws that operate retrospectively; that is to say, laws that are retroactive. The prohibition does not apply to laws that are retrospective in the sense that they merely look back on or contemplate the past. The constitutional prohibition against laws that operate retrospectively applies if the law in question impairs some vested right or affects past transactions to the substantial prejudice of the parties.
Hess contends that the 2000 amendment to § 407.025.1, authorizing a private cause of action for MPA violations involving real estate, was procedural and remedial, not substantive, so that, in the absence of express statutory language that it was to be applied prospectively only, it should have been retrospectively applied by the trial court to the parties' 1999 real estate transaction, creating a private cause of action in Hess against Chase, with respect to Chase's alleged violation of § 407.020.1 for non-disclosure. From this, he claims that the trial court erred in dismissing his MPA claim, alleged in Count III of his second amended petition, on the basis that the amended version of § 407.025.1 could not be applied retrospectively.
We see nothing in § 407.025.1, as amended, that demonstrates an express legislative intent that the amendment should not be applied retrospectively. Hence, if Hess is correct, that the 2000 amendment of § 407.025.1, authorizing private causes of action with respect to violations of § 407.020.1 involving real estate, constituted a procedural and remedial change, rather than a substantive one, then Count III did state a cause of action for a MPA violation such that the trial court erred in dismissing it on the basis that § 407.025.1 had no retrospective application in that it was substantive in nature. Thus, in determining whether Count III of Hess's second amended petition stated a cause of action, the issue is whether the 2000 amendment to § 407.025.1 was procedural and remedial, not substantive, such that the trial court should have applied it retrospectively to the parties' 1999 real estate transaction.
As a general proposition, "substantive laws are those that relate to the rights and duties giving rise to a cause of action[, while] procedural laws relate to the machinery for processing the cause of action." Doe v. Roman Catholic Diocese of Jefferson City , 862 S.W.2d 338, 341 (Mo. banc 1993); see also Mendelsohn v. State Bd. of Registration for the Healing Arts , 3 S.W.3d 783, 786 (Mo. banc 1999). The constitutional ban of article I, section 13 extends only to substantive laws that "take away or impair vested or substantial rights, acquired under existing laws, or impose new obligations, duties, or disabilities with respect to past transactions." Mendelsohn , 3 S.W.3d at 785-86; see also Beatty v. State Tax Comm'n , 912 S.W.2d 492, 496 (Mo. banc 1995); State ex rel. St. Louis-San Francisco Ry. Co. v. Buder , 515 S.W.2d 409, 410 (Mo. banc 1974); Wilkes , 762 S.W.2d at 28. A vested right has been defined as "a title, legal or equitable, to the present or future enjoyment of property or to the present or future enjoyment of [a] demand." State Bd. of Registration for Healing Arts v. Boston , 72 S.W.3d 260, 265 (Mo.App. 2002). A vested right is a right that is "fixed, accrued, settled or absolute." Id. It must be something more than "a mere expectation based upon an anticipated continuance of existing law." Id. "Procedural law prescribes a method of enforcing rights or obtaining redress for their invasion; substantive law creates, defines and regulates rights. . . ." Wilkes , 762 S.W.2d at 28.
Relying on Wilkes , Hess contends that the 2000 amendment to § 407.025.1 was procedural or remedial, rather than substantive, so that it was subject to retrospective application by the trial court, with respect to Count III of his second amended petition, in that the amendment simply prescribed another manner of enforcing his existing right under § 407.020.1 and obtaining redress for its invasion, and did not create, define or regulate that right. In that regard, he argues that, at the time of the parties' real estate transaction and prior to the 2000 amendment to § 407.025.1, he had an existing right, under § 407.020.1, for full disclosure from Chase concerning EPA involvement with the property, which Chase violated, as Hess alleged in Count III of his second amended petition, and that the amendment simply authorized him, in addition to the Attorney General, pursuant to § 407.100, to enforce this existing right. Chase contends that the amendment was substantive in that it created a private cause of action in Hess that did not previously exist. In that regard, Chase equates the authorization of a previously barred cause of action with "'creat[ing] and defin[ing]' the rights of purchasers and lessees of real estate with respect to violations of the [MPA]." This is contrary, however, to the Missouri Supreme Court's holding and reasoning in Wilkes.
In Wilkes , the Missouri Supreme Court addressed the issue of whether the amendment of § 537.600 in 1986, abrogating sovereign immunity of the Missouri Highway and Transportation Commission as to the negligent, defective or dangerous design of a highway, was a substantive, or a procedural or remedial change for purposes of retrospective application of the amendment. Id. The Court, holding that the amendment was remedial and subject to retrospective application, stated that: "An act abrogating sovereign immunity does not create a new cause of action but provides a remedy for a cause of action already existing for which redress could not be had because of the immunity." Id. (citations omitted). "As presently enacted, § 537.600 provides a remedy for a cause of action whose remedy was previously barred so it is procedural or remedial." Id. Thus, Wilkes teaches us that a statutory amendment, which does not create a right, but provides for a new and/or additional manner for enforcing an existing right or seeking redress for a violation of that right, is procedural and remedial in nature subject to retrospective application, absent express statutory language to the contrary. Wilkes implicitly rejects the proposition, urged by Chase, that the authorization of the prosecution of a cause of action that was previously barred is substantive in nature.
Hess, at the time of the parties' real estate transaction, had an existing right, under § 407.020.1, for full disclosure by Chase concerning EPA involvement with the property. However, at that time, the only mode of addressing a violation of that right, under the MPA, was via the Attorney General, in accordance with § 407.100. In other words, Hess, at the time of the parties' real estate transaction, had an existing right, under § 407.020.1, for full disclosure from Chase, the violation of which, in effect, he was prevented from enforcing individually, due to the express terms of § 407.025.1, limiting prosecution of such violations to the Attorney General, pursuant to § 407.100. Thus, there is no question that in extending, by amendment, the application of § 407.025.1 to real estate transactions, so as to allow individual redress, in addition to any action by the Attorney General, the legislature was providing a new and additional remedy for an alleged violation of the right guaranteed by § 407.020.1. Hence, in accordance with Wilkes , it would appear that the 2000 amendment to § 407.025.1, authorizing a private cause of action for an alleged violation of § 407.020.1 involving real estate, was procedural and remedial in nature, subject to retrospective application.
In contending that the amendment to § 407.025.1 was substantive, Chase cites State ex rel. Webster v. Cornelius , 729 S.W.2d 60, 66 (Mo.App. 1987), for the proposition that a change in the law, exposing a defendant to new or added liability, creates an additional disability for the defendant making it substantive in nature. Of course, even if Cornelius stood for that proposition, and it does not, as we discuss, infra, that would be contrary to Wilkes , which is controlling Supreme Court precedent. See Custer v. Hartford Ins. Co. , 174 S.W.3d 602, 609 (Mo.App. 2005) (holding that we are bound by the most recent decision of the Supreme Court of Missouri).
In Cornelius , the court addressed the issue of whether the 1985 amendment to § 407.130, allowing the Attorney General to recover, in addition to "normal costs," costs of "investigation and prosecution," which would include attorney's fees, and the enactment of § 407.140.3, authorizing the court to assess, in addition to the award of restitution and costs, as provided in § 407.100, an amount equal to ten percent of the restitution or such other amount agreed upon by the parties or ordered by the court, constituted substantive or remedial changes. 729 S.W.2d at 65-66. Finding that the "additional fine of ten percent interest and the additional investigation and prosecutory cost [were] clearly punitive in nature" and recognizing that "[l]aws providing for penalties and forfeitures are always given only prospective application," the court ruled that the amendment to § 407.130 and the enactment of § 407.140.3 could not be applied retrospectively. Id. at 66. However, the court went on to say: "It should be noted that this opinion does not disturb that part of the order granting restitution to injured parties. Those injured may still seek relief under the trial court's order consistent with this opinion." Id. Thus, any fair reading of Cornelius indicates that added liability alone does not constitute a substantive change in the law. Rather, for a substantive change to occur for added liability, the added liability has to be punitive in nature.
Even if we were to give some merit to Chase's contention, that any added liability is substantive in nature, it still would fail in that, prior to the amendment, Chase was already subject to injunctive relief, damages in the form of restitution, fines, and attorney's fees, pursuant to §§ 407.100, 407.130 , and 407.140. As we note, supra, prior to the 2000 amendment to § 407.025.1, a violation of § 407.020.1, with respect to a real estate transaction, could not be prosecuted by the victim of the violation. That task was left to the Attorney General, as provided in § 407.100. That section, as it existed at the time of the parties' real estate transaction, authorized the Attorney General to prosecute violations of Chapter 407 by seeking injunctive relief, orders of restitution for victims, and/or civil penalties, with such civil penalties capped at $1,000 per violation. In addition, the Attorney General was authorized by § 407.130 to "recover as costs, in addition to normal court costs, the costs of the investigation and prosecution of any action to enforce the provisions of [chapter 407]." Further, pursuant to § 407.140.3, Chase was subject to an additional penalty to be paid into the merchandise practices revolving fund. Hence, Chase, prior to the 2000 amendment to § 407.025.1, was already subject to damages in restitution, civil fines and penalties, attorney's fees and costs, as would be the case in applying retrospectively the provisions of § 407.025.1, as amended, except as to punitive damages. Thus, contrary to the assertions of Chase, to that extent, the application of the amended version of § 407.025.1 to the parties' real estate transaction not only did not take away or impair a vested or substantial right acquired by Chase under the existing law at the time of the transaction, it did not impose upon him any new obligations, duties, or disabilities with respect thereto.
At the time of the parties' real estate transaction, with respect to punitive damages, Chase was not subject to such an award for a violation of § 407.020.1. Section 407.025.1, as amended, however, provides for punitive damages. Thus, Chase argues that applying retrospectively the punitive damages provision of the amended version of § 407.025.1 would expose it to a new disability that is penal in nature, making the amendment, with respect to that provision, a substantive change, subject to prospective application only. Hess, however, relying on Vaughan v. Taft Broadcasting Company , 708 S.W.2d 656, 660 (Mo. banc 1986), contends that punitive damages are remedial and, therefore, an amendment providing for an award of punitive damages is presumed to apply retroactively.
In Vaughn , the Missouri Supreme Court addressed the issue of whether the 1982 amendment to the service letter statute, § 290.140, restricting punitive damages, was a remedial change allowing it to be applied retrospectively. 708 S.W.2d at 660. In holding that the plaintiff could not recover punitive damages, retrospectively applying the statute, the Court found that: "under Missouri law, punitive damages are remedial and a plaintiff has no vested right to such damages prior to the entry of judgment." Id.
Chase contends that Vaughn is not controlling in that it is factually distinguishable from this case in that there the plaintiff was seeking to apply the existing law, authorizing an award of punitive damages, whereas here, the plaintiff, Hess, is seeking to apply retrospectively the amendatory law, authorizing such an award. Stated from the defendant's perspective, in Vaughn the defendant was seeking to apply retrospectively the amendatory law, prohibiting an award of punitive damages, whereas here, the defendant, Chase, is seeking to apply the existing law, prohibiting such an award. This distinction, from both the plaintiff and defendant's perspective, is significant in that in Vaughn , it was the plaintiff who was arguing against the retrospective application of the amendatory law, claiming that its application would interfere with a vested right guaranteed under the existing law — the issue on which the Court decided the case. The Vaughn court, in refusing to apply retrospectively the amendment in question, was not required, unlike in this case, to address whether the application of the amendatory law affected the existing rights of the defendant to deny its application, because it was, in fact, the defendant who was seeking the application of the amendatory law.
Unlike in Vaughn , in our case it is the defendant, Chase, who is arguing against the retrospective application of the amendatory law, claiming that its application would impose on it an additional disability, which is penal in nature and, as such, is substantive and cannot be applied retrospectively. Thus, unlike in Vaughn , here, in determining whether the amended version of § 407.025.1 is remedial in nature and should presumptively be applied retrospectively, the issue is whether such an application would take away or impair a vested right, acquired by Chase under the existing law, or impose on it new obligations, duties, or disabilities with respect to past transactions. Hence, for this reason, we agree with Chase, that the Court's determination in Vaughn , that punitive damages were remedial, because the plaintiff did not have a vested right in receiving an award of such damages, is limited to the Vaughn situation where the plaintiff is seeking to prevent the application of an amendatory law, which prohibits the plaintiff from receiving such an award, as provided by existing law.
Further reason for not agreeing with Hess's contention that Vaughn stands for the proposition that regardless of the circumstances, punitive damages are always deemed remedial, can be found in the fact that it is well settled in the law that "laws providing for penalties and forfeitures are always given only prospective application, and retrospective application would render such a statute unconstitutional." Yellow Freight Sys., Inc. v. Mayor's Comm'n on Human Rights of City of Springfield , 791 S.W.2d 382, 387 (Mo. banc 1990). Punitive damages are penal in nature in that their purpose is to "further society's interests of punishing unlawful conduct and deterring its repetition" and "is an exercise of state power" implicating due process. Letz v. Turbomeca Engine Corp. , 975 S.W.2d 155, 177 (Mo.App. 1997). The "well-established purpose of punitive damages is to inflict punishment and to serve as an example and a deterrent to similar conduct." Call v. Heard , 925 S.W.2d 840, 849 (Mo. banc 1996). Thus, because punitive damages are penal in nature, applying retrospectively an amendment authorizing them, where penalties are not already authorized, would be unconstitutional. This is consistent with Vaughn in that, as we discuss, supra, there, the issue was not whether to apply retrospectively an amendment that authorized punitive damages; rather, the issue was whether to apply retrospectively an amendment that prohibited punitive damages.
Having found that punitive damages are not always remedial does not resolve the issue of whether the punitive damage provision of the amended version of § 407.025.1 can be applied retrospectively in this case. Here, although not remedial in nature, as in Vaughn , there is reason to allow the retrospective application of the punitive damages provision of the amended version of § 407.025.1, without violating the ban of article I, section 13. Where, as here, the party in question is already subject to penalties without limit for MPA violations, the amendatory law, in providing for punitive damages as to a private cause of action, simply is providing a different or additional mechanism for punishing or penalizing that party. As such it neither imposes new obligations, duties or disabilities. Mendelsohn , 3 S.W.3d at 785-86.
In State ex rel. St. Louis-San Francisco Railway Co. v. Buder , 515 S.W.2d 409 (Mo. banc 1974), the Missouri Supreme Court was faced with the issue of whether the 1973 amendment of § 537.090, RSMo 1969, removing the wrongful death cap of $50,000, was a substantive change in the law prohibiting its retrospective application. The Buder Court, finding that the cap "was not a legislative determination of the value of human life," but "operated to protect defendants from verdicts in excess of a certain maximum," declined to remove this protection retrospectively. Id. at 411. We read Buder , inter alia, for the proposition that caps as to damages constitute a vested right that cannot be retrospectively removed. However, in our case, under the law that existed at the time of the parties' real estate transaction, there were no caps on the amount of the penalties to which Chase was exposed as an alleged MPA violator.
Here, at the time of the parties' real estate transaction, Chase was already subject to penalties in that the General Assembly, in § 407.100, expressly provided for civil penalties for violations of § 407.020.1. In that regard, it provided, as it does now: "The court may award to the state a civil penalty of not more than one thousand dollars per violation." § 407.100.6. While the penalty of § 407.100.6 has a cap, the penalty authorized by § 407.140.3 does not. Section 407.140.3 reads:
In any case in which the court awards damages as provided in section 407.100, there shall be added, in addition to restitution and costs, an amount equal to ten percent of the total restitution awarded, or such other amount as may be agreed upon by the parties or awarded by the court, which amount shall be paid into the state treasury to the credit of the merchandising practices revolving fund.
(Italics added). In Cornelius , the Eastern District of this court, found that this provision was clearly punitive in nature. 729 S.W.2d at 66. Thus, the punitive damages authorized by the amended version of § 407.025.1 was just another mechanism to punish MPA violators, who were already subject to punishment without statutory limit. As such, it was remedial in nature and subject to retrospective application, in the absence of any legislative intent to the contrary.
In Cornelius , the court also found that an award of fees to the Attorney General, pursuant to § 407.130, to prosecute MPA violations was punitive in nature, subject to prospective application only. Id. That provision has no limit or cap on the amount of such fees that can be awarded. Hence, like the punitive damages provision of the amended version of § 407.025.1, the attorney's fees provision of that statute did not function as a substantive change, but a procedural and remedial change subject to retrospective application.
In summary, because the amended version of § 407.025.1, expanding enforcement of the MPA, with respect to real estate transactions, to the filing of private causes of action, did not impose on Chase any new obligations, duties or disabilities, the amendment was procedural and remedial in nature. Hence, in the absence of statutory language to the contrary, the amended version of § 407.025.1 should have been applied retrospectively by the trial court to the parties' real estate transaction, resulting in Count III of Hess's second amended petition stating a cause of action for a violation of § 407.020.1.
Having determined that the trial court erred in not applying § 407.025.1 retrospectively, wrongfully denying him his day in court on Count III, we now must turn to the issue of the proper appellate relief for such error.
Hess contends that because the jury found for him on Count II of his second amended petition, asserting his claim of fraudulent non-disclosure, the jury necessarily found the MPA violation he alleged in Count III, which was based on the same operative facts with respect to Chase's non-disclosure as to the EPA's involvement in the property sold to Hess. From this, he contends that we should reverse the trial court's order dismissing Count III and remand the case to the trial court, instructing it to assess, in accordance with § 407.025.1, punitive damages and attorney's fees as to Count III, and then allow him to elect between his common law remedy, under Count II, and his MPA remedy, under Count III.
Under the "election of inconsistent theories of recovery" doctrine, the plaintiff, before the case is submitted to the trier of fact, must elect between inconsistent theories of recovery. Scott v. Blue Springs Ford Sales, Inc. , 176 S.W.3d 140, 142-43 (Mo. banc 2005). "If two counts are so inconsistent that proof of one necessarily negates, repudiates, and disproves the other, it is error to submit them together." Id. at 143. Here, the theories of recovery of Count II, fraud, and Count III, MPA violation, are not inconsistent. See id. (holding, inter alia, that there is no inconsistency between a punitive damage award for fraud and such an award for violation of chapter 407). On the contrary, not only are both counts predicated on the same operative facts, with respect to Chase's alleged failure to disclose to Hess the EPA's involvement with environmental issues concerning the property it sold to him, as Hess contends, but, as we discuss, infra, the requisite proof elements of Count II, as submitted to the jury in Instruction No. 6, necessarily include the requisite proof elements of Count III, as alleged. Hence, because Counts II and III are not inconsistent, an election of remedies between them, as Hess contends, is not appropriate. Of course, Hess would not be entitled to double recovery on the same claim, submitted under different theories. See Vogt v. Hayes , 54 S.W.3d 207, 211 (Mo.App. 2001) (holding that the plaintiffs were entitled to be made whole by one damage award, but not to the windfall of a double recovery). Consequently, once Count III is resolved on remand, the trial court would be required to determine the extent to which the awards on Counts II and III would merge and enter judgment accordingly. Scott , 176 S.W.3d at 143.
Hess contends that there is no need, on remand, for the trial court to address the issue of liability on Count III in that Count II, on which the jury found for him, involved the same operative facts. The mere fact that both counts depend on the same operative facts is significant, but not conclusive on the issue of whether liability as to Count III would be at issue on remand of this case. As a matter of due process, in order for liability on Count III to be a moot point on remand, as Hess contends, it is essential that the jury was instructed upon and decided in his favor all the proof elements of the MPA violation alleged in Count III. See Boggs ex rel. Boggs v. Lay , 164 S.W.3d 4, 20 (Mo.App. 2005) (holding that in a civil case, to be entitled to judgment, the jury must be instructed on each and every element of the plaintiff's case). Our review indicates that that was the case.
Section 407.020.1 reads, in pertinent part:
The act, use or employment by any person of any deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce or the solicitation of any funds for any charitable purpose, as defined in section 407.453, in or from the state of Missouri, is declared to be an unlawful practice.
Incorporating, by reference, the general paragraphs and the paragraphs of Counts I and II, Hess alleged, in pertinent part, in Count III of his second amended petition, entitled "Unlawful Merchandising Practice," that in violation of § 407.020, Chase had engaged in an unlawful practice by concealing, suppressing, or omitting a material fact, in the sale of the property to Hess, specifically, EPA involvement with the property sold to Hess, directly resulting in an "ascertainable loss of money and/or property." Thus, to instruct the jury on Count III, the verdict director would have to include the contested elements necessary to establish a violation of § 407.020.1, based on the operative facts pled.
If there is an applicable MAI, a jury must be instructed in accordance with that instruction. Rice v. Bol , 116 S.W.3d 599, 606 (Mo.App. 2003). There is, however, no MAI instruction for submitting a MPA violation. Hence, in submitting Count III to a jury, either a modified or non-MAI instruction would have to be drafted, setting forth the elements of a § 407.020.1 violation, as alleged in Count III. See id. (holding that in the absence of an applicable MAI, a non-MAI instruction must be given that follows the substantive law and can be readily understood)
To prove a MPA violation, the elements of common law fraud do not have to be proven. Clement v. St. Charles Nissan, Inc. , 103 S.W.3d 898, 900 (Mo.App. 2003); State ex rel. Webster v. Eisenbeis , 775 S.W.2d 276, 278 (Mo.App. 1989). The MPA serves as a supplement to the definition of common law fraud, whose purpose is "to preserve fundamental honesty, fair play and right dealings in public transactions." Clement , 103 S.W.3d at 899. The MPA eliminates the need to prove an intent to defraud or reliance. State ex rel. Nixon v. Beer Nuts, Ltd. , 29 S.W.3d 828, 837 (Mo.App. 2000). It is the actor's conduct, rather than his intent, that determines a violation of § 407.020. Eisenbeis , 775 S.W.2d at 278-79.
With respect to violations of § 407.020, "[t]here is no definitive definition of deceptive practices. Section 407.020 is broad in scope in order to prevent evasion by overly meticulous definitions; the determination of whether fair dealing has been violated turns on the unique facts and circumstances of each case." Clement , 103 S.W.3d at 900 (internal citations omitted). In accordance with the express language of § 407.020.1, an unlawful practice, subject to enforcement via § 407.025.1, includes the concealment, suppression, or omission of any material fact in connection with the sale of real estate. Thus, under the operative facts alleged in Count III of Hess's second amended petition, to succeed on his MPA claim, he would have to prove that, at the time of the sale of the property by Chase: (1) the EPA was involved with the property; (2) Chase knew of the EPA's involvement, which knowledge was not within the fair and reasonable reach of Hess; (3) Chase did not disclose to Hess the EPA's involvement with the property; (4) Chase's failure to disclose this fact to Hess was material to the sale of the property; and, (5) such failure, directly resulted in damage to Hess. Thus, in order for Hess to be correct in contending that the jury, in finding for him on Count II, necessarily found a violation of § 407.020.1, he not only would have to show that the underlying operative facts, as to his claim of non-disclosure, were the same for both Counts II and III, he would have to show that each of the five proof elements of his alleged MPA violation were necessarily included in the verdict director on Count II.
Centerre Bank of Kansas City, N.A. v. Distrib., Inc. , 705 S.W.2d 42 (Mo.App. 1985) (holding that plaintiffs could not recover for an alleged misrepresentation by silence when they were aware of, or could have discovered, the true financial status of the debtor corporation before guarantying its note).
Hess's claim of fraudulent non-disclosure, in Count II, was submitted to the jury in Instruction No. 6. That instruction was patterned after a modified version of MAI 23.05 [1996], the mandatory MAI for fraudulent misrepresentation. "Silence or nondisclosure of a material fact can be an act of fraud if there exists a duty to disclose. Concealment of a fact which one has a duty to disclose properly serves as a substitute element for a false representation in the tort of fraudulent misrepresentation." Reeves v. Keesler , 921 S.W.2d 16, 21 (Mo.App. 1996) (internal citations omitted). MAI 23.05 reads:
Your verdict must be for plaintiff if you believe:
First, defendant ( describe act such as "represented to plaintiff that the motor vehicle was new"), intending that plaintiff rely upon such representations in ( purchasing the motor vehicle), and
Second, the representation was false, and
Third, [defendant knew that it was false] [defendant knew that it was false at the time the representation was made] [defendant did not know whether the representation was true or false], and
Fourth, the representation was material to the ( purchase by plaintiff of the motor vehicle), and
Fifth, plaintiff relied on the representation in ( making the purchase), and [in so relying plaintiff used that degree of care that would have been reasonable in plaintiff's situation, and]
Sixth, as a direct result of such representation the plaintiff was damaged.
Hess's Count II verdict director, Instruction No. 6, modified MAI 23.05 in accordance with Lowdermilk v. Vescovo Building Realty Co. , 91 S.W.3d 617, 623, 630 (Mo.App. 2002), and Reeves v. Keesler , 921 S.W.2d 16, 21 (Mo.App. 1996). Instruction No. 6 reads:
Your verdict must be for plaintiff if you believe:
First, defendant failed to disclose that the EPA was involved with environmental issues concerning the property sold by defendant to plaintiff, intending that plaintiff rely upon defendant's silence in purchasing the property, and
Second, the EPA was involved with environmental issues concerning the property sold by defendant to plaintiff at the time of its sale to plaintiff, and
Third, defendant had superior knowledge or information that the EPA was involved with environmental issues concerning the property sold by defendant to plaintiff which knowledge was not within the fair and reasonable reach of the plaintiff, and
Fourth, the failure to disclose that the EPA was involved with environmental issues concerning the property sold by defendant to plaintiff was material to the purchase of the property by plaintiff, and
Fifth, plaintiff relied on defendant's silence regarding the EPA involvement with environmental issues concerning the property sold by defendant to plaintiff in making the purchase and in so relying plaintiff used that degree of care that would have been reasonable in plaintiff's situation, and
Sixth, as a direct result of defendant's silence about the EPA involvement with environmental issues concerning the property sold by defendant to plaintiff, plaintiff was damaged.
This instruction, in accordance with the differences between common law fraud and an MPA violation, does not include a paragraph Second as to the falsity of a representation by Chase, or a paragraph Third as to Chase's knowledge of such a falsity. Rather, in paragraph Second, it asks the jury to consider whether the EPA was involved with environmental issues concerning the property sold by Chase to Hess, and in paragraph Third, asks the jury to consider whether Chase had superior knowledge or information concerning such EPA involvement, which was not within the fair and reasonable reach of Hess. Paragraph Third encompasses the MPA duty of Chase, as the seller, to disclose to Hess the EPA's involvement with the property. See Ringstreet Northcrest, Inc. v. Bisanz , 890 S.W.2d 713, 720 (Mo.App. 1995) (holding that "[a] duty to disclose information exists where a classical fiduciary relationship exists or where one party has superior knowledge which is not within the fair and reasonable reach of the other party.").
In reading Instruction No. 6, instructing the jury on Hess's fraud count, Count II, it is readily apparent that all five proof elements of Hess's MPA count, Count III, were implicitly included in that instruction. Thus, inasmuch as the underlying operative facts were identical, the jury, in finding for Hess on Count II, would have been duty-bound to have found for him on Count III, as to liability, had it been submitted. To do otherwise would have rendered inconsistent verdicts. See Franklin v. Allstate Ins. Co. , 985 S.W.2d 893, 896 (Mo.App. 1999) (holding that "[j]ury verdicts are inconsistent when they are so contradictory that they cannot be construed with certainty or when they cannot fairly be resolved as a definite finding in favor of either party.").
As such, on remand, the trial court must be instructed to find for Hess on Count III. The question then becomes what to do about damages, both actual and punitive, and attorney's fees, under Count III.
Pursuant to § 407.025.1, Hess contends that he is entitled, on remand, to an assessment by the trial court of punitive damages and attorney's fees, at which point he would be entitled to elect between his remedies. However, Chase contends that Hess is not entitled to an award of punitive damages on Count III because the jury would have also decided the issue of punitive damages on Count III and in denying punitive damages on Count II, to be consistent, would have been duty-bound to have denied punitive damages on Count III. Chase argues that the jury's denial of punitive damages on Count II extended to Count III in that both counts were based on the same conduct of Chase — failure to disclose the EPA's involvement with the property.
As we discuss, supra, there is nothing inconsistent between the alternative theories of recovery pled in Counts II and III. As such, contrary to Hess's assertion, there is no election of remedies implicated on remand. Hess is also wrong in his assertion that punitive damages for violations of § 407.020.1, Count III, are to be determined by the trial court. In Scott v. Blue Springs Ford Sales, Inc. , 176 S.W.3d 140, 143 (Mo. banc 2005), the Missouri Supreme Court held that punitive damages for a violation of Chapter 407 were subject to determination by the jury. Thus, pursuant to § 407.025.1, as amended, Hess is entitled to a jury determination of damages, both actual and punitive, on his MPA count, Count III, which brings us to Chase's assertion that the jury's denial of punitive damages on Count II is conclusive on any award of punitive damages on Count III.
With respect to an award of punitive damages on Count II, fraud, the jury was instructed in Instruction No. 10, patterned after MAI 10.01 [1990 Revision]:
If you find in favor of [Hess], and if you believe the conduct of [Chase] as submitted in Instruction No. 6 was outrageous because of [Chase's] evil motive or reckless indifference to the rights of others, then in addition to any damages to which you find [Hess] entitled under Instruction Number 8, you may award [Hess] an additional amount as punitive damages in such sum as you believe will serve to punish [Chase] and to deter [Chase] and others from like conduct.
This is the same instruction that would be given for punitive damages on Count III. In contending as it does on this issue, Chase essentially is arguing that in denying punitive damages on Count II, the jury necessarily found that Chase's failure to disclose EPA involvement with the real estate sold to Hess was not "outrageous because of [Chase's] evil motive or reckless indifference to the rights of others" and that to be consistent, a jury would be duty-bound to find the same way as to Count III inasmuch as it is predicated on the same conduct of Chase. While Chase's argument appears to have merit, it is contrary to the Court's holding in Scott.
In Scott , the Court was faced with the issue of whether the trial court erred in denying a jury determination of punitive damages with respect to the plaintiff's MPA count. Id. at 141. The jury was instructed upon and awarded punitive damages on the plaintiff's common law fraud count, submitting the same claim of non-disclosure. Id. at 143. The Court, interpreting § 407.025.1, held that the plaintiff was entitled, as a constitutional right, to a jury determination of punitive damages as to his MPA count. Id. In reversing the trial court and remanding for a jury determination of punitive damages on the MPA count, the Court stated: "It would not be proper to assume that the same, or any, amount of punitive damages would be awarded for such violations. Therefore, a new trial must be awarded to determine the amount of punitive damages for the chapter 407 claim." Id. The Court's reference to "any, amount of punitive damages" would suggest that the jury on remand could refuse to award any punitive damages on the MPA count even though on the common law fraud count, the jury had already made the requisite findings to support and had made such an award, based on the same conduct. Hence, although we find merit to Chase's argument, with respect to punitive damages on Count III, we are bound by the Court's decision in Scott , which we read as requiring a jury determination of punitive damages on Count III on remand.
For the reasons stated, on remand, Hess is entitled to a determination by a jury of actual and punitive damages, if any, on Count III, and a determination by the trial court of attorney's fees, if any, on Count III. Once done, the trial court then must determine whether the awards under Count III, if any, merge with those awards made with respect to Count II.
II. Chase's Cross-Appeal
In its sole point on cross-appeal, Chase claims that the trial court erred in overruling its motion for a directed verdict, at the close of the plaintiff's and all the evidence, and its motion for JNOV, with respect to the judgment for Hess on his fraud count, Count II, because Hess did not make a submissible case with respect to the requisite proof elements of his claim that Chase owed a duty to Hess to disclose the EPA's involvement with the property it sold to him and that Hess relied on Chase's silence with respect to the EPA's involvement in purchasing the property. Specifically, Chase claims that, as a matter of law, it had no duty to disclose to Hess the EPA's involvement with the property and that Hess could not rely on Chase's silence on that issue in that "the parties contractually agreed that Chase was making no representations, guaranties, or warranties, either express or implied, regarding the property." In so claiming, Chase points to paragraphs 9 and 10 of the Addendum to the parties' real estate contract, which read:
9. The seller is a corporation who acquired the property through foreclosure sale. The seller has never seen nor occupied the property. The seller makes no representations, guaranties, or warranties, either written or implied, regarding the property.
10. The property is being sold in "AS-IS" condition with no expressed or implied representations or warranties by the seller or its agents as to the physical conditions, quality of construction, workmanship or fitness for any particular purposes. The seller has no obligation to make any changes, alterations, or repairs to the property.
Chase also points to paragraph 18 of the contract, which reads:
Buyer may, at Buyer's expense, have property inspections which may include, but are not limited to, the: appliances, plumbing (including septic system), electrical, heating system, central air conditioning, fireplace, chimney, foundation, roof, siding, windows or doors, ceilings, floors, insulation, drainage, interior and exterior components, any wall, decks, driveways, patios, sidewalks, fences, slabs, health and/or environment concerns (including lead-based paint) and wood-destroying insect or other pest infestation and/or damage.
Our standard of review for a trial court's ruling on a motion for a directed verdict or a JNOV is the same: Did the plaintiff make a submissible case? Blue v. Harrah's N. Kansas City, LLC , 170 S.W.3d 466, 472 (Mo.App. 2005). "To make a submissible case, a plaintiff must present substantial evidence for every fact essential to liability. Substantial evidence is that which, if true, has probative force upon the issues, and from which the trier of fact can reasonably decide the case. Id. (quoting Porter v. Toys 'R' Us — Del., Inc. , 152 S.W.3d 310, 315 (Mo.App. 2004)). When deciding whether the plaintiff made a submissible case, we view the evidence and all reasonable inferences from it in the light most favorable to the plaintiff and disregard all evidence to the contrary. Brockman v. Regency Fin. Corp. , 124 S.W.3d 43, 46 (Mo.App. 2004). The granting of a JNOV is a drastic step, and we will not affirm a trial court's decision in overturning a jury's verdict, unless there are no probative facts to support it. Porter , 152 S.W.3d at 316. There is a presumption in favor of reversing a JNOV. Brockman , 124 S.W.3d at 46.
In Count II, Hess alleged fraud with respect to the parties' real estate transaction based on Chase's failure to disclose EPA involvement with the property. Silence or non-disclosure of a material fact with respect to a real estate transaction can constitute an act of fraud, provided there exists a duty to disclose. Reeves , 921 S.W.2d at 21. In his second amended petition, as to duty, Hess alleged that Chase "had a duty to disclose these material facts to Hess because, among other things, [it] had superior information not known by or reasonably available to Hess." The duty to disclose can arise "where one party has superior knowledge or information not within the fair and reasonable reach of the other party." Id ; see Ringstreet Northcrest, Inc. , 890 S.W.2d at 720. Accordingly, in paragraph Third of Hess's verdict director submitting fraudulent non-disclosure, Count II, the jury was instructed to consider whether Chase "had superior knowledge or information that the EPA was involved with environmental issues concerning the property sold by [Chase] to [Hess] which knowledge was not within the fair and reasonable reach of [Hess]." In other words, paragraph Third of Hess's verdict director submitted to the jury the issue of Chase's duty to disclose to Hess the EPA's involvement with the property it sold to Hess. Thus, to be successful on its claim in this point, that the trial court erred in overruling its motions for directed verdict and JNOV because Hess failed to make a submissible case on Count II on the issue of duty, Chase, as the appellant, had the burden of demonstrating on appeal, Blue v. Harrah's N. Kansas City, LLC , 170 S.W.3d 466, 472 (Mo.App. 2005), that there is no evidence in the record, which if believed by the jury, would support a finding by it on paragraph Third of Hess's verdict director. Chase makes no showing in that respect, and, in fact, does not even argue that matter.
Rather than claiming that there was no evidence in the record to support Hess's alleged basis for Chase's duty to disclose the EPA's involvement with the property, as submitted in paragraph Third of Instruction No. 6, Chase claims that there was no duty to disclose, as a matter of law, in that the "parties [had] contractually agreed that Chase was making no representations, guaranties, or warranties, either express or implied, regarding the property." Thus, in so claiming, Chase is not attacking the basis on which Hess was asserting a duty to disclose. Rather, it is claiming that any duty to disclose on that basis was trumped by the "as-is" provisions of the parties' contract. Hence, in not attacking the basis on which duty was submitted to the jury, Chase, in effect, does not make a submissible-case claim at all. Rather, Chase is claiming in this point that the "as-is" provisions of the parties' contract waived any duty it had to disclose the EPA's involvement with the property sold to Hess or released it from any liability for its silence because of its superior knowledge, as found by the jury. Such a waiver or release are affirmative defenses, which in accordance with Rule 55.08, must have been pled by Chase in its answer to Hess's second amended petition. Roth v. Roth , 176 S.W.3d 735, 738 (Mo.App. 2005).
In its answer, Chase did not plead the affirmative defenses of waiver or release. It did plead, under "defenses," that Hess's claims "are barred by the doctrines of waiver, estoppel, laches, and unclean hands." However, such conclusory allegations are not sufficient to plead the defenses of waiver or release. To properly plead an affirmative defense, under Rule 55.08, the rule requires that the pleading contain a short and plain statement of the facts showing that the pleader is entitled to the defense. Mobley v. Baker , 72 S.W.3d 251, 258 (Mo.App. 2002). "[A]n affirmative defense must be pled in the same manner as required in alleging a claim such that mere conclusory allegations are insufficient." Id. Because waiver and release as to its duty to disclose to Hess the EPA's involvement with the property were not pled by Chase, it cannot rely on either as a basis for defeating the jury's verdict for Hess on Count II.
In summary, as to its submissibility claim with respect to duty, Chase makes no argument in its brief as to why Hess failed to make a submissible case on Count II on the issue of duty, as submitted in paragraph Third of his verdict director, Instruction No. 6. This failure constitutes abandonment of that claim. Eagle ex rel. Estate of Eagle v. Redmond , 80 S.W.3d 920, 924 (Mo.App. 2002). The argument that was made by Chase, asserting the affirmative defense of waiver or release, does not correspond to its claim of error as to a submissible case on the issue of duty, rendering it irrelevant. And, even if Chase's argument did correspond to that claim, it would still not prevail on this point inasmuch as its failure to plead either of the affirmative defenses raised precludes it from relying on either to defeat the jury's verdict for Hess on Count II.
Chase also claims that Hess did not make a submissible case on Count II on the issue of reliance. The basis for this claim is the same as the basis for its claim as to the issue of duty, that being that, as a matter of law, Hess did not make a submissible case with respect to the requisite proof element of his claim that Hess relied on Chase's silence with respect to the EPA's involvement in purchasing the property. Chase's claim is without merit.
The requisite proof element of reliance, as to Hess's claim of fraudulent non-disclosure in Count II, was submitted to the jury in paragraph Fifth of Hess's verdict director. That paragraph instructed the jury to consider whether Hess "relied on [Chase's] silence regarding the EPA involvement with environmental issues concerning the property sold by [Chase] to [Hess] in making the purchase and in so relying [Hess] used that degree of care that would have been reasonable in [Hess's] situation." Thus, to attack the jury's verdict for Hess on Count II, on the basis that Hess did not make a submissible case on the issue of reliance, Chase, as the appellant, had the burden of showing that there is no evidence in the record from which the jury could have inferred reasonably that Hess relied reasonably on Chase's silence as to EPA involvement with the property. Chase never makes that argument. Rather, it argues that Hess waived any right to rely on its silence as to the EPA's involvement with the property or, in essence, had released it from any liability for that silence such that he was "barred," as a matter of law, by the "as-is" provisions of the parties' contract from relying on its silence. Such a waiver or release are affirmative defenses, which in accordance with Rule 55.08, must have been pled by Chase in its answer to Hess's second amended petition. Roth , 176 S.W.3d at 738. Because Chase did not plead waiver or release, he cannot rely on either of these affirmative defenses for defeating the jury's verdict for Hess on Count II.
Chase makes no argument as to why Hess failed to make a submissible case on Count II on the issue of reliance, as submitted in paragraph Fifth of his verdict director, Instruction No. 6. This failure constitutes abandonment of that claim. Eagle , 80 S.W.3d at 924. The argument that was made by Chase, asserting the affirmative defense of waiver or release, does not correspond to its claim of error as to a submissible case on the issue of reliance, rendering it irrelevant. And, even if Chase's argument did correspond to that claim, it would still not prevail on this point inasmuch as its failure to plead either of the affirmative defenses raised precludes it from relying on either to defeat the jury's verdict for Hess on Count II.
Point denied.
Conclusion
The circuit court's judgment for Hess on Count II of his second amended petition, awarding him $52,000 in actual damages and denying him punitive damages, is affirmed. The circuit court's order dismissing Count III of the petition, for failure to state a cause of action on which relief could be granted, is reversed, with the case remanded to the court for trial on Count III on the issue of damages only, both actual and punitive, and to assess attorney's fees, if any, all in accordance with § 407.025.1, as amended, and this opinion, and then to determine the extent to which the awards on Counts II and III would merge and enter judgment accordingly.