GARY D. WITT, Judge.
Four real estate agents formed a limited liability company and jointly owned a real estate franchise. When one member, Diane Magruder ("Magruder"), withdrew from the company, the others refused to comply with the existing Operating Agreement which required that the remaining members obtain an appraisal of the company and then pay the withdrawing member twenty-five percent of the appraised value. Early in the litigation, a bench trial was held after which the court granted specific performance of the contract to Magruder. Later, a jury awarded damages to Magruder. Yet, to this day, the specific performance of the contract ordered by the trial court has not been completed. Thus, Magruder comes before us appealing the trial court's final judgment in that it brought her no closer to receiving the specific performance that she was granted.
On appeal, Magruder raises three points. First, Magruder alleges that the trial court erred in not determining the company's appraised value because there
The judgment of the trial court is affirmed in part, reversed in part and the cause is remanded with instructions.
Diane Magruder was a member
Five years after it was formed, Magruder decided to withdraw from Assist2Sell. On November 24, 2006, Magruder's counsel sent a letter to the Respondents notifying them of Magruder's decision to withdraw and requesting the appraisal required by the Operating Agreement. In response to the letter, the Respondents held a meeting the following day at which they voted not to commission an appraisal and ordered the company's manager not to cooperate with an appraisal. The Respondents also refused to purchase Magruder's share. Magruder filed suit in the Circuit Court of Boone County on January 19, 2007 alleging counts for specific performance of the Operating Agreement (Count I), breach of contract (Count II), breach of fiduciary duty (Count III) and prima facie tort (Count IV). The Respondents answered and raised multiple counter-claims.
Following the court's order, the Respondents failed to commission an appraiser so the court ordered each party to suggest a proposed appraiser, from which the court could select one. On June 17, 2010, the court selected Jeff Guinn ("Guinn") and ordered that the Respondents commission him to perform the appraisal.
In contradiction to the court's order, the appraisal specifically excluded the value of the real property and improvements. Page two contained the statement:
The appraisal valued Assist2Sell as being worth $275,000 as of December 31, 2006. The appraisal further deducted the amount of some salaries twice. Consequently, four days following receipt of the appraisal, Magruder filed a motion to show cause asking the court to find Respondents in contempt for violating the court's February 17, 2010 order by not satisfying the partial judgment on or before September 15, 2010. At a subsequent hearing held on October 12, 2010, the court heard argument on the motion, took it under advisement but concluded at the end of the hearing that the motion for contempt was "moot" because the parties were "proceeding differently at the moment." The court also ordered that Guinn provide a memorandum to the court addressing the deficiencies raised by Magruder and then either supplement the appraisal or state that the deficiencies do not affect the outcome of the appraisal. The court stated further that "at that point, you know, his numbers are either going to be good or he's going to change it." A week later, Magruder submitted questions regarding her concerns about the appraisal to Guinn. Guinn gave written answers to these concerns but refused to supplement his appraisal without being paid additional sums by the Respondents. Ultimately, and almost one year past the court's deadline for completion of specific performance,
The court heard argument on September 6, 2011, September 9, 2011, and October 3, 2011, and at each hearing, ordered the parties to "work it out" and eventually asked for proposed final orders from each party. Also presented at these hearings were various other motions concerning attorney fees, attorney fee liens and garnishments of the Respondents' wages. Suffice it to say that a significant amount of time and resources were devoted to the issues, including a bench trial, a separate jury trial and at least eleven post-trial hearings spanning the course of five years, involving multiple counsel and large sums of attorney fees.
The standard of review for a court-tried case is governed by Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Fedynich v. Massood, 342 S.W.3d 887, 890 (Mo. App.W.D.2011). Thus, the judgment of the trial court will be affirmed unless insufficient evidence supports it, it is against the weight of the evidence, or it erroneously declares or applies the law. Id. The appellate court defers to the factual findings of the trial court, which is in a superior position to assess credibility. Id. It will, however, independently evaluate the trial court's conclusions of law. Id. Contract interpretation and questions of contract ambiguity are issues of law that will be reviewed de novo. Id.
In Point One, Magruder contends that the trial court erred "in denying [her] requests to include a determination of Assist2Sell's value in the final judgment because there was evidence of Assist2Sell's value in the record in that Magruder submitted business and real estate appraisals showing that Assist2Sell had a fair market value of $558,000."
Magruder contends that in light of the deficient business appraisal obtained by the Respondents, the court should have acted in equity and included a valuation in its final order because there was sufficient evidence in the record for the court to make such a valuation. Specifically, Magruder asserts that because both the business appraisal and the value of the company's real estate were submitted to the court, the court had before it, in essence, the full appraisal it ordered. Respondents contend that the trial court did not have sufficient evidence before it to make a valuation because the evidence "consisted of hearsay statements and other inadmissible evidence." We agree with Magruder for three reasons. First, there was sufficient evidence in the record for the court to determine the Company's value. Second, the court found that the contract was breached by Respondents. And third, a court sitting in equity has the authority to do what is necessary to afford complete relief to the prevailing party.
Magruder contends that although an appraisal that included real estate was not obtained by the Respondents, there was sufficient evidence before the trial court to determine a valuation of the business. Magruder filed with the court Guinn's business appraisal, the real estate appraisal previously commissioned by the Respondents, and Guinn's answers addressing the deficiencies in his appraisal. Guinn's responses confirmed that once a real estate appraisal was added and the duplicative salary deductions corrected, the appraisal would conform to the court's order. Guinn
As to the sufficiency of the information before the court, the main "missing" elements were an appraisal of the real property owned by the company and a correction of the duplicative deduction of salaries in Guinn's appraisal. In response to additional questions sanctioned by the court, Guinn agreed that the value of real estate owned by the company was not included in the appraisal but could be easily added. Guinn also responded that he did not know why certain salaries were deducted twice. He offered to correct the appraisal but, as noted above,
The real estate appraisal, commissioned by the Respondents, valued the real estate at $625,000. Magruder also filed with the court the Company's bank statement showing the debt on the real estate to be $515,198.92 as of the date closest to her withdrawal from the Company. This shows the value of the real estate after subtracting the debt to be $109,801.08 as of the relevant time frame.
The Respondents assert that this evidence was not competent evidence from which the court could deduce a business valuation. They contend that the answers provided by Guinn constituted hearsay. They also contend that the appraisal itself is hearsay since they were not given an opportunity to question Guinn concerning it. Respondents argue that the hearsay statements made by Guinn "were never introduced into evidence with proper evidentiary and procedural safeguards." Further, Respondents assert that Guinn's statements were "not subject to cross-examination and themselves are ambiguous in many cases" and that Magruder is taking portions of Guinn's appraisal "out of context."
Notably, the Respondents delayed in hiring an appraiser until the court ordered them to do so on June 17, 2010, four months after the court initially ordered them to perform this task, and only three weeks before the jury trial was set to begin. Further, Guinn was the appraiser suggested to the court by the Respondents as the proper appraiser that should be used to value the business, was paid by the Respondents, relied solely on information provided by the Respondents and refused to change anything unless approved by the Respondents. He was equally available or even more available to the Respondents to call before the court if they wished to question his appraisal or his methodology.
Magruder argues that since the Respondents obtained a deficient appraisal, the trial court had the authority to determine a business valuation in its final order. The Respondents maintain that the trial court never found them to be in breach of the contract; thus, they argue that Magruder cannot now seek a remedy that requires a finding that the contract was breached by them. They further assert that because Magruder sought only specific performance, the court was without authority to modify its order to include a business valuation in its final judgment or order its payment. However, the trial court's judgment for specific performance ordered the Respondents to not only obtain a proper
The trial court specifically found that the Respondents "failed and refused to commission and pay for an appraisal ... and refused to purchase Magruder's share in the Company pursuant to ... the Withdrawal Provision" of the contract. It is difficult to imagine how this could be construed as anything short of a finding that the Respondents breached the contract. Further, "[t]he general rule of the law of contracts is well settled that in certain cases a breach of contract may give rise to two remedies." Savannah Place, Ltd. v. Heidelberg, 122 S.W.3d 74, 81 (Mo.App. S.D.2003) (citation omitted). "One is an action at law for damages for the breach; the other is a suit in equity for the specific performance of the contract." Id. Had there been no breach, then there would be no remedy to order. Specific performance is a remedy to a breach of contract and here it was ordered. Id. A breach of contract is implicit in the court's ordering of the remedy of specific performance.
Magruder contends that because the Respondents failed to comply with the order of specific performance, the court had authority to enforce its order. Respondents, however, contend that because a business valuation was not the relief Magruder requested under this count, the court was without power to determine a business valuation.
After the court found that the contract's withdrawal provision should be enforced, it then ordered specific performance of that provision. The specific performance of the contract included two actions: (1) the Respondents were to obtain a proper appraisal, and (2) "thereafter to purchase Magruder's share in the Company for 1/4 the appraisal value." Initially a dispute arose among the parties as to what was required to be included in the appraisal. The court found that the contract contained an ambiguity regarding how the business should be valued, based on a potential conflict between the provision addressing the withdrawal of a member and the provisions addressing the dissolution of the company. Following a hearing, the court added to its order for specific performance a requirement that the appraisal include real estate and intangibles.
In Jhala v. Patel, the Eastern District of this court faced an analogous situation in which the plaintiff sought only specific performance, yet the trial court awarded both specific performance and monetary damages. 154 S.W.3d 12 (Mo.App.E.D.2004). There, as here, the defendant contended that the trial court was without power to award anything beyond the specific performance
As the Eastern District of this court held in Licare, a court sitting in equity can do what it deems necessary to make the prevailing party complete when fashioning a remedy for a breach of contract. Licare, 879 S.W.2d at 779. Thus, although the count in the petition which in the alternative requested monetary damages for breach of contract was dismissed once the original order granting specific performance was entered, the court retained authority to grant additional remedies to provide complete relief. Id. Further, at the time the order for specific performance was granted, neither Magruder nor the trial court could have anticipated the extent to which the Respondents would go to avoid compliance with the order for specific performance.
In an analogous case, our Supreme Court determined that a court sitting in equity could order relief beyond the specific performance requested by the plaintiff when specific performance was no longer an adequate remedy. In JAS Apartments, Inc. v. Naji, the owner of an apartment complex contracted with JAS Apartments to sell the complex. JAS Apartments, Inc. v. Naji, 354 S.W.3d 175, 177 (Mo. banc 2011). The owner's wife, however, disagreed with the sale and refused to sign the documents to allow her marital interest in the property to be sold. Id. at 177. JAS filed suit seeking specific performance of the contract. Eight years later, the action was still being litigated. Id. at 185, n. 12. The Supreme Court noted that JAS no longer sought the equitable remedy of specific performance and that "[i]t may be that, for other reasons, the equitable remedy of specific performance no longer remains an appropriate remedy." Id. at 186. "Should the circuit court on remand so determine, an award of damages to JAS may be appropriate." Id. The court went on to state that "the circuit court will have the power to assess whether specific performance remains an appropriate remedy and, if not, to award JAS compensatory relief." Id. at 187. The court further ordered the circuit court to calculate an award of attorney fees based on a contract provision. Id.
In this case, pursuant to the contract and the trial court's order, it was the obligation of the Respondents to obtain and pay the cost of a proper appraisal of the business, including its real property and then it was the Respondents' obligation to pay Magruder twenty-five percent of that value. There was no obligation for the trial court to approve the final appraisal, but if either party disagreed with it, it was their obligation to bring that issue before the court. In this case, an appraisal of the company's real property was completed by an appraiser selected by and paid for by the Respondents before the litigation ensued that showed the value of the real property, minus the debt thereon, to be $109,801.08. Further, there was a business appraisal of the company ordered by the court and prepared by Guinn, but it was done without including the real property owned by the Company. Guinn acknowledged in writing that this appraisal had a discrepancy regarding certain salaries, but set forth what that discrepancy entailed. The business appraisal, as modified by just two of the errors that Guinn acknowledged, established the "Value" of the business to be $333,078.26.
Magruder, in fact, did raise issues with Guinn's appraisal due to its failure to include the real estate and the discrepancy regarding the salaries. Those issues were addressed by the parties and the appraiser.
Based on these facts, we hold that it was error for the court sitting in equity not to effectuate full relief and order the Respondents to pay twenty-five percent of the entire business valuation together with interest from a date to be determined by the trial court on remand. While the contract did not set a deadline for completion of the appraisal and payment for the interest of the withdrawing party, the trial court shall determine a reasonable time for the performance of these tasks following the date of the notice of withdrawal and shall assess statutory interest from that date.
Kopp v. Franks, 792 S.W.2d 413, 425-26 (Mo.App.S.D.1990) (citation omitted).
Here, specific performance did not occur. Thus, the trial court should have modified its order to include a valuation because the Respondents failed to complete the specific performance that the contract required and the court ordered. Point One is granted.
In Point Two, Magruder argues that the trial court erred in denying her motion for contempt because the Respondents failed to comply with the court's order of specific performance. We disagree.
"It has been said that there are four classes of contempt: civil; criminal; direct; and indirect." State ex rel. Chassaing v. Mummert, 887 S.W.2d 573, 578 (Mo. banc 1994) (citation omitted). "Civil contempt is intended to benefit a party for whom an order, judgment, or decree was entered." Id. The purpose of civil contempt is to coerce compliance with the relief granted. Id. (citing Teefey v. Teefey, 533 S.W.2d 563, 566 (Mo. banc 1976)). "Its function is to provide a coercive means to compel the other party to the litigation to comply with relief granted to his adversary." Teefey, 533 S.W.2d at 566.
In civil contempt cases, the ruling of the trial court will not be disturbed
Here, the complaining party, Magruder, bore the burden of establishing a prima facie case for civil contempt. Stuart, 292 S.W.3d at 514. Magruder needed to prove: (1) the Respondents' obligation to perform an action as required by the court's order, and (2) their failure to meet the obligation. Id. Here, the Respondents did not, by September 15, 2010, obtain an appraisal that included real estate nor did they pay Magruder 1/4 of the appraisal's value. Thus, Magruder established a prima facie case.
Based on the foregoing, it is clear that the trial court had the power to grant an order of contempt as a coercive measure to force compliance with the court's order. Id. However, because the issue of contempt involves a subjective analysis of the parties' actions with regard to compliance, it is within the discretion of the court to grant relief. Notably, the parties were before the court both for a bench trial and a jury trial. In addition to the two trials, the court had already conducted five hearings with the parties by the time Magruder filed her motion for contempt. The court was free to believe or disbelieve the testimony of any witness. Emmons v. Emmons, 310 S.W.3d 718, 725-26 (Mo.App. W.D.2010) (citation omitted). While we find the actions of Respondents to be egregious, in light of the discretion afforded the court in analyzing a party's failure to meet a deadline and because reasonable minds could differ, we find no clear abuse of discretion in the court's denial of the motion for contempt. Point Two is denied.
In Point Three, Magruder alleges that the trial court erred in denying her motion for attorney fees because an award of attorney fees is contained in the Operating Agreement. Respondents contend that the Operating Agreement only awards attorney fees to the prevailing party in the case of a "breach of contract." We agree with Magruder.
We follow the "American Rule," under which litigants generally bear their own attorney fees. Cowbell, LLC v. Borc Bldg. and Leasing Corp., 328 S.W.3d 399, 407 (Mo.App.W.D.2010) (citation omitted). However, there are several exceptions to the rule, including where the payment of attorney fees is provided for by statute or contract. See Rosehill Gardens, Inc. v. Luttrell, 67 S.W.3d 641, 648 (Mo. App.W.D.2002) (with respect to attorney fees on appeal, a party may be allowed to recover these fees if they are based upon a written agreement that is the subject of the issues that are presented in the appeal). Here, Section 22(A) of the Operating Agreement provided that:
The Respondents contend that because the court's order did not "hold" that a "breach of contract" took place, the provision governing the payment of attorney fees does not apply. This argument is without merit. As previously established above, the remedy of specific performance is, in fact, a remedy to a breach of contract. Savannah Place, 122 S.W.3d at 81. Further, the trial court specifically found that the Respondents "failed and refused to commission and pay for an appraisal ... and refused to purchase Magruder's share in the Company pursuant to ... the Withdrawal Provision" of the contract. Thus, section 22(A) of the Operating Agreement is applicable here.
In addition to attorney fees being allowed in the contract which is at issue, we note further that the trial court could have awarded fees on the basis of noncompliance with the court's order of specific performance. In SW Parts Supply Inc. v. Winterer, the Eastern District of this court affirmed the award of attorney fees when the losing party "intentionally took no action to follow the trial court's order enforcing the settlement." 360 S.W.3d 349, 354-55 (Mo.App. E.D.2012). The court held that the trial court did not abuse its discretion in awarding to the plaintiff its attorney fees spent pursuing its motion to compel and motion for sanctions, given that those actions would have been unnecessary but for defendant's refusal to perform his court-ordered obligations. Id. at 355.
Respondents further contend that there was no evidence before the court as to what portion of the attorney fees were incurred in regard to the breach of contract claims for which attorney fees can be recovered and the tort claims for which attorney fees are generally not recoverable. This portion of Respondents' brief contains no supporting authority whatsoever for the argument asserted. "Rule 84.13(a) provides that allegations of error not properly briefed `shall not be considered in any civil appeal.'" In re Marriage of Weinshenker, 177 S.W.3d 859, 864 (Mo. App.E.D.2005).
Ex gratia on this point we note the following. While the bench trial contained some claims based in tort, Magruder's Count I seeking the remedy of specific performance was a claim based on Respondents' breach of the contract, as was Respondents' Count V of their Counterclaim, which sought declaratory judgment as to Magruder's rights in the Company under the contract. "If the claims for relief have a common core of facts and are based on related legal theories and much of counsel's time is devoted generally to the litigation as a whole making it difficult to divide
In sum, because Magruder was the prevailing party, she is contractually entitled to attorney fees under the Operating Agreement. Thus, attorney fees were required to have been awarded to Magruder. Point Three is granted.
The judgment of the trial court is affirmed in part, reversed in part and the cause is remanded with instructions. Pursuant to Rule 84.14, in order to bring forth justice, we determine that the evidence before the court was that the appraisal of Assist2Sell as of November 24, 2006, was $558,288.34 and hereby order the Respondents
The cause is remanded to the trial court to hear evidence of attorney fees and for a determination of a reasonable amount of attorney fees and to award said amount to Magruder. We note that most of the fees could have been avoided but for the recalcitrance of the Respondents throughout this litigation. Further, Magruder is entitled to attorney fees on appeal. Although we have the ability and authority to determine the amount of attorney fees on appeal, the trial court is in a much better position to hear evidence and argument regarding the reasonableness of the requested fee, and also will be addressing the attorney fees issues identified above; therefore, we defer our authority on this issue to the trial court. In re C.J.G., 358 S.W.3d 549, 559 (Mo.App.S.D.2012). We remand this issue to the trial court with directions to conduct a hearing to determine the reasonableness of the attorney fees requested on appeal and enter judgment accordingly.
Further the judgment is affirmed as to the damages assessed by the jury for the remaining claims that are not challenged in this appeal; to wit, as to Magruder's Count III, in favor of Magruder in the amount of $3,000 as actual damages jointly and severally against all Respondents and the amount of $25,000 as punitive damages solely against Pauley; as to Magruder's Count IV, in favor of Magruder in the amount of $5,000 solely against Pauley. We also affirm as to Respondents' Counterclaim, as to Respondents' Counts I, II, III, IV, VI and VII, judgment entered in favor of Magruder and against all Respondents; as to Respondents' Count V, judgment entered in favor of Respondents. In addition, the costs assessed as of the date of the jury trial in the amount of $3,760.45 are assessed against all Respondents jointly and severally. Any costs incurred following the jury trial may also be assessed
All concur.