City of Harrisonville, Appellant-Respondent v. McCall Service Stations d/b/a Big Tank Oil, the Missouri Petroleum Storage Tank Insurance Fund , 495 S.W.3d 738 ( 2016 )

SUPREME COURT OF MISSOURI
en banc
CITY OF HARRISONVILLE, ) Opinion issued August 23, 2016
)
Appellant-Respondent, )
)
v. ) No. SC94115
)
McCALL SERVICE STATIONS d/b/a )
BIG TANK OIL, et al., )
)
Respondent-Appellant, )
)
THE MISSOURI PETROLEUM )
STORAGE TANK INSURANCE FUND, )
)
Respondent-Appellant. )
APPEAL FROM THE CIRCUIT COURT OF CASS COUNTY
The Honorable Jacqueline A. Cook, Judge
PER CURIAM
The City of Harrisonville filed a petition for damages against McCall Service
Stations d/b/a Big Tank Oil, Fleming Petroleum Corporation, and the Missouri Petroleum
Storage Tank Insurance Fund after the City discovered that petroleum from a service
station’s underground storage tank had leaked and contaminated the soil where the City
was working on a sewer upgrade project. The City alleged counts of nuisance and trespass
against McCall, the service station’s previous owner, and Fleming, the service station’s
current owner. The City also alleged counts of negligent and fraudulent misrepresentation
against the Fund because the increased construction costs resulting from the contamination
in the City’s sewer easement were not paid from the Fund. The jury returned verdicts in
favor of the City on all counts and awarded the City compensatory and punitive damages
against McCall, Fleming, and the Fund. The circuit court then remitted the punitive
damages awarded against the Fund. McCall, Fleming, and counsel for the Fund appealed.
The City cross-appealed from the remittitur of the punitive damages award.
The nuisance and trespass instructions submitted to the jury were not erroneous.
McCall and Fleming failed to establish that prejudice resulted from the inclusion of the
“consequential damages” language in the nuisance and trespass instructions. McCall and
Fleming also failed to establish that the nuisance and trespass instructions gave the jury a
roving commission on damages or gave the jury an opportunity to award improper
economic damages. Likewise, the circuit court did not err in refusing to remit the
compensatory damages awarded against McCall and Fleming in that substantial evidence
in the record supported the compensatory damages award. Accordingly, the judgment is
affirmed with respect to the damages awarded against McCall and Fleming.
The award of punitive damages against the Fund, however, was erroneous. The
City’s claims against the Fund are not cognizable under the Fund’s enabling statutes.
Furthermore, the Fund cannot be liable for its own conduct because the Fund’s statutory
structure is such that the Fund is merely an account and only its Board of Trustees is
responsible for the administration and operation of the Fund. It follows that, because the
City failed to allege cognizable claims against the Fund for actual or compensatory
damages, it also cannot recover punitive damages against the Fund. Accordingly, the
2
punitive damages award against the Fund is reversed. This Court, however, will not disturb
the compensatory damages awarded against the Fund given that counsel for the Fund did
not seek relief on appeal from the compensatory damages award. Moreover, because
counsel for the Fund failed to raise the argument that the Fund’s trustees – not the Fund
itself – are the proper parties until after the jury rendered its verdict and because the
allegations in the City’s petition may state a cause of action against the Fund’s Board of
Trustees for the actions of its agents, the cause is remanded in the interest of fairness and
justice. The judgment against the Fund is affirmed in all other respects.
I. Factual and Procedural Background 1
McCall owned a gas station in Harrisonville that had an underground petroleum
storage tank system. In September 1997, McCall discovered that its tank system was
leaking and submitted notice of this claim against the Fund. The Fund is a special trust
fund created by the legislature, in section 319.129, 2 to provide insurance to service station
owners for the cleanup costs associated with spills and leaks from underground petroleum
storage tanks. Representatives of the Fund investigated the leak and determined that a
significant amount of gasoline had leaked into the soil surrounding McCall’s tank system.
McCall and the Board of Trustees for the Fund hired Bob Fine, an environmental
engineer, to determine the extent of the leak. In October 1997, Mr. Fine notified the
Department of Natural Resources that McCall’s leaking tank system had caused petroleum
1
This opinion includes portions of the opinion of the court of appeals without further
attribution.
2
Unless otherwise noted, all statutory citations are to RSMo Supp. 2013.
3
contamination to migrate offsite toward a nearby creek. Mr. Fine prepared a plan to contain
the leak by installing monitoring wells on the streets contiguous to McCall’s service
station. McCall subsequently sold the service station to Fleming.
In 2003, the City decided to upgrade its sewer system to accommodate its growing
population. The City’s residents approved a bond issue for the multi-million dollar sewer
upgrade project. The City hired George Butler & Associates, a local engineering firm, to
design the project and prepare a scope of services so that the construction work could be
let for competitive bidding.
Rose-Lan Construction won the bidding process and was engaged by the City to
complete the sewer project. During construction, Rose-Lan encountered contaminated soil
adjacent to Fleming’s service station. Because Rose-Lan did not have expertise in
remediation of contaminated soil, it could not complete that portion of the sewer project.
The City notified the department of natural resources of the contaminated soil and
was informed that the Fund’s Board of Trustees had retained Mr. Fine to monitor the
contamination since 1997. The Fund’s Board of Trustees then hired Mr. Fine to determine
whether gasoline from Fleming’s service station was responsible for the soil contamination
in the City’s sewer easement. Mr. Fine confirmed that the leak from Fleming’s
underground storage tank was the source of the contamination.
The City began discussions with Mr. Fine regarding the best way to address the
contaminated soil and to complete construction of the sewer upgrade project. The City’s
engineer, Ted Martin, estimated that to completely remove and replace the contaminated
soil would cost in excess of $500,000. Mr. Fine, on behalf of the Fund, suggested that a
4
more cost-effective approach would be to leave the contaminated soil in place and install
petroleum-resistant pipe and fittings. BV Construction submitted a bid of $190,226.38 to
install the petroleum resistant pipe according to Mr. Fine’s suggested approach.
Pat Vuchetich, the Fund’s third-party administrator, concluded that Mr. Fine and
BV Construction’s estimate was too high and made efforts to find a cheaper bid.
Mr. Vuchetich contacted multiple companies and determined that Midwest Remediation
was best suited for the project based on his prior experience with the company.
Mr. Vuchetich requested that Midwest Remediation prepare a bid and assisted Midwest
Remediation’s project manager, Shaun Thomas, in preparing the bid by making
suggestions about specific cost items. Midwest Remediation’s bid was for $175,161.41,
more than $15,000 lower than the bid submitted by BV Construction.
On April 13, 2004, Mr. Vuchetich forwarded Midwest Remediation’s bid to Carol
Eighmey, the executive director of the Fund’s Board of Trustees. Mr. Vuchetich stated
that the exposure to the Fund would be $135,571 after subtracting Rose-Lan’s estimated
costs for the relevant section of pipe that the City would avoid because Rose-Lan would
not be constructing that portion of the project. Mr. Vuchetich informed Ms. Eighmey that
he would tell the City that Midwest’s costs were reasonable.
On April 15, 2004, the City held a meeting for all parties involved in the
remediation project. Mr. Vuchetich represented the Fund at the meeting. The City was
represented by the City administrator, Dianna Wright, the City attorney, Steve Mauer, and
Mr. Martin, the City engineer. Mr. Thomas of Midwest Remediation and William Rextroat
of Rose-Lan were also in attendance.
5
At the meeting, Mr. Vuchetich presented Midwest Remediation’s bid and informed
the City that the bid was reasonable. Mr. Vuchetich also expressed concerns that Rose-
Lan’s initial bid of $19,061.31 for installing the relevant section of pipe was too low. In
response, Rose-Lan revised its bid to $25,138.41. Rose-Lan’s revised bid reduced the
amount of the contamination-related costs for which the Fund would be responsible.
Mr. Vuchetich also stated, on behalf of the Fund, that both the City and George Butler &
Associates should share some of the additional costs of the cleanup project based upon
their failure to discover the soil contamination before preparing the sewer construction
plan. The City responded that the Fund should address those concerns with George Butler
& Associates, not with the City. Ms. Wright, Mr. Martin, and Mr. Rextroat left the meeting
with the understanding that Mr. Vuchetich, on behalf of the Fund, wanted the City to hire
Midwest Remediation for the remediation project and that the City would be reimbursed
from the Fund for the cost of Midwest Remediation’s work, less the amount that the City
would otherwise have paid to Rose-Lan for the affected portion of the sewer project.
Various discussions between the City and Mr. Vuchetich occurred over the
following months. Mr. Vuchetich, on at least two occasions, made an offer of $50,000 to
the City to settle the Fund’s liability. On August 3, 2004, the City authorized Rose-Lan to
subcontract with Midwest Remediation to install the petroleum-resistant pipes. The
following day, the City’s attorney sent a letter to Mr. Vuchetich stating that the City was
going forward in reliance on his promise that the Fund would pay the full amount of
Midwest Remediation’s costs.
6
The City was not reimbursed from the Fund for the costs of Midwest Remediation’s
work. As a result, the City filed suit against the Fund for fraudulent and negligent
representation, alleging that the City had hired Midwest Remediation in reliance on
Mr. Vuchetich’s promise that the cost of Midwest Remediation’s work would be paid from
the Fund. The City also asserted claims for nuisance and trespass against McCall and
Fleming based on the migration of petroleum contamination from the underground tank
system. 3 The City sought compensatory and punitive damages from each defendant.
A jury trial was conducted on the City’s claims. During trial, the circuit court
granted the City’s motion for directed verdict on liability against McCall and Fleming. This
left only the issue of damages for jury determination on the City’s nuisance and trespass
claims against McCall and Fleming and the issue of liability and damages on the City’s
claims of negligent and fraudulent misrepresentation against the Fund. McCall and
Fleming made oral and written motions for directed verdict that were overruled by the
circuit court. The Fund made only an oral motion for directed verdict at the close of all
evidence that the circuit court also overruled.
The jury returned a verdict for the City on all claims. The jury awarded $172,100.98
in compensatory damages against McCall, Fleming, and the Fund. The jury also awarded
$100 in punitive damages against McCall and Fleming and $8 million in punitive damages
against the Fund. The circuit court entered its judgment accordingly.
3
In its petition, the City alleged a count of negligence against McCall and Fleming. The
City dismissed the negligence count at trial.
7
McCall, Fleming, and counsel for the Fund each filed post-trial motions. Counsel
for the Fund argued that the $8 million punitive damages award exceeded the cap on
punitive damages in section 510.265.1(2) and that the punitive damages award violated the
due process requirements of the United States and Missouri constitutions. In refusing to
apply the statutory damages cap, the circuit court found that the City’s cause of action
accrued before the statutory cap’s enactment in 2005. Nevertheless, the circuit court
remitted the punitive damages award to $2.5 million on due process grounds. The circuit
court overruled the remaining post-trial motions.
McCall, Fleming, and counsel for the Fund appeal. The City cross-appeals the
circuit court’s remitter of the punitive damages award. After an opinion by the court of
appeals, the case was transferred to this Court. 4 Mo. Const. art. V. sec. 10.
II. The Jury Instructions Were Not Erroneous
In their first point, McCall and Fleming assert that the circuit court erred by
submitting instruction Nos. 7 and 9, which pertained to the City’s nuisance and trespass
claims, respectively, because the instructions erroneously permitted the recovery of
consequential damages. “Whether a jury was instructed properly is a question of law this
Court reviews de novo.” Hervey v. Missouri Dep’t of Corrections, 379 S.W.3d 156, 159
(Mo. banc 2012). This Court conducts its review in the light most favorable to the record
4
McCall and Fleming did not file substitute briefs with this Court. The City and the Fund
filed substitute briefs after this Court granted transfer. Pursuant to Rule 83.08(b), any
material “included in the court of appeals brief that is not included in the substitute brief is
abandoned.” Therefore, any material, including arguments, that the City or the Fund did
not include in their respective substitute briefs is abandoned.
8
and will find submission of an instruction proper “if the instruction is supported by any
theory[.]” Id. “The party challenging the instruction must show that the offending
instruction misdirected, misled, or confused the jury, resulting in prejudice to the party
challenging the instruction.” Id. This Court will reverse instructional errors “only if the
error resulted in prejudice that materially affects the merits of the action.” Id.
If a Missouri approved instruction (MAI) is applicable in a particular case, that
instruction must be given “to the exclusion of any other instruction on the same subject.”
Rule 70.02(b). “Any deviation from an approved MAI instruction is presumed prejudicial
error unless the contrary is shown.” Kenney v. Wal-Mart Stores, Inc., 100 S.W.3d 809,
813 (Mo. banc 2003). MAIs, however, do not exist for every particular legal issue. When
there is no applicable MAI, the instruction given “shall be simple, brief, impartial, free
from argument, and shall not submit to the jury or require findings of detailed evidentiary
facts.” Rule 70.02(b). Although McCall and Fleming’s point relied on challenges the jury
instructions submitted on both the City’s nuisance claim and trespass claim, the authority
on which McCall and Fleming rely addresses only the damages recoverable in a common
law trespass action. McCall and Fleming do not cite any authority to support their claim
that consequential damages are not recoverable in a common law nuisance action. “Where
a party fails to support a contention with relevant authority or argument beyond
conclusions, the point is considered abandoned.” Beatty v. State Tax Comm’n, 912 S.W.2d
492, 498-99 (Mo. banc 1995). McCall and Fleming, therefore, abandoned their argument
that the circuit court erroneously instructed the jury that consequential damages were
recoverable under the City’s nuisance claim. Because the jury was instructed on and
9
awarded consequential damages under the nuisance claim, no prejudice resulted from the
trespass instruction also including the consequential damages language. Fleshner v.
Pepose Vision Inst., P.C., 304 S.W.3d 81, 91 (Mo. banc 2010).
McCall and Fleming also assert that the circuit court improperly submitted damages
instructions based on MAI 4.02 rather than MAI 4.01. McCall and Fleming, however, did
not object to the instructions on such grounds. Rule 70.03 provides: “No party may assign
as error the giving or failure to give instructions unless that party objects thereto before the
jury retires to consider its verdict, stating distinctly the matter objected to and the grounds
of the objection.” The only objection raised by McCall and Fleming was that the language
regarding consequential damages should not have been included in the instruction. In fact,
McCall and Fleming modeled their instructions after MAI 4.02. Accordingly, because
McCall and Fleming failed to make the specific objection to the instructions they are now
claiming to be error, the issue is not preserved for appellate review. See Howard v. City of
Kansas City, 332 S.W.3d 772, 790 (Mo. banc 2011).
McCall and Fleming further assert that the inclusion of the phrase “consequential
damages” in instruction Nos. 7 and 9 gave the jury a “roving commission.” “A roving
commission occurs when an instruction assumes a disputed fact or submits an abstract legal
question that allows the jury to roam freely through the evidence and choose any facts
which suit its fancy or its perception of logic to impose liability.” Klotz v. St. Anthony’s
Med. Ctr., 311 S.W.3d 752, 766 (Mo. banc 2010) (internal quotations omitted). In
determining whether a jury instruction failed to give the jury meaningful guidance but,
instead, constituted a roving commission, “[t]he issue is whether the phrase as used in the
10
verdict director was misleading in the context of the evidence at trial.” Id. at 767. “Where
the testimony in a case explains a phrase used in the verdict director, there is no 'roving
commission.’” Id.
In this case, the testimony at trial made clear precisely what damages the City was
seeking to collect as a result of the petroleum contamination. Dianna Wright, the City’s
former administrator, testified that the City was required to hire Midwest Remediation to
install petroleum-resistant piping in the area where the contamination had been discovered
because Rose-Lan was not qualified to deal with the petroleum contamination. Ms. Wright
further explained that Midwest Remediation charged the City $155,257.98 more than Rose-
Lan had contracted to charge for completion of the sewer upgrade project in the
contaminated area. Ms. Wright testified that these additional costs were a direct result of
the soil contamination. She also testified that the City incurred additional costs of $4,660
for soil testing to determine the scope of the contamination and $12,183 in additional fees
to George Butler & Associates due to the increased scope of the sewer project caused by
the soil contamination. Ms. Wright testified that the City’s damages were the sum of these
costs, $172,100.98, which directly resulted from the soil contamination.
Therefore, Ms. Wright’s testimony establishes that the City incurred increased costs
of $172,100.98 to complete the sewer upgrade project as a direct result of the
contamination for which McCall and Fleming are responsible. None of the costs for which
the City sought reimbursement would have been incurred had the City not encountered
petroleum-contaminated soil. The increased costs to which Ms. Wright testified are the
costs for which the City sought compensation in its closing arguments, and the jury
11
awarded the City compensatory damages in this precise amount. The City was entitled to
recover these costs, which were proximately caused by the trespass of contaminants into
the City’s sewer easement. Under these circumstances, the reference to “consequential
damages” in instruction Nos. 7 and 9 was sufficiently definite to inform the jury of the
legal standard to be applied, and these instructions did not constitute a prohibited “roving
commission.”
McCall and Fleming also assert that instructions Nos. 7 and 9 were erroneous
because the instructions allowed the City to seek recovery of “economic damages.” In
support of their argument, McCall and Fleming rely on the following exchange during
Ms. Wright’s cross-examination by their counsel:
Q. ... So ... the difference in the money you paid [to Midwest Remediation]
and the money that Rose-Lan said they would have spent, that represented
the loss of the benefit of your good bargain with Rose-Lan; is that your
understanding?
A. That’s my understanding.
McCall and Fleming claim that this exchange establishes that the City was seeking “benefit
of the bargain” damages rather than recovery of only those costs that were directly
attributable to the petroleum contamination.
By agreeing with McCall and Fleming’s counsel that part of the City’s damages
reflected “the loss of the benefit of [the City’s] good bargain with Rose-Lan,” Ms. Wright
was merely testifying that, due to the petroleum contamination, the City could no longer
construct this portion of the sewer upgrade project at the lower costs to which Rose-Lan
had agreed but, instead, had to hire a specialized contractor to perform part of the sewer
12
upgrade project at a much higher cost. Although McCall and Fleming’s counsel asked his
questions in terms of the “benefit of the bargain,” Ms. Wright’s response is consistent with
the remainder of her testimony that the City could have had the relevant work performed
at a much lower price but for the discovery of the contamination. The isolated excerpt
from Ms. Wright’s testimony, therefore, does not establish that the instructions permitted
the City to seek “benefit of the bargain” damages.
III. Competent Evidence Supports the Compensatory Damages Award
In their second point, McCall and Fleming argue that the circuit court abused its
discretion by failing to sustain their motions for a directed verdict and for judgment
notwithstanding the verdict, which sought to limit the City’s compensatory damages to
$72,009.89. McCall and Fleming argue that there was no competent evidence that the
damages attributable to the contamination exceeded that amount.
“The standard of review for the denial of a judgment notwithstanding the verdict
(JNOV) is essentially the same as review of the denial of a motion for directed verdict.”
All Am. Painting, LLC v. Fin. Solutions & Assocs., Inc., 315 S.W.3d 719, 723 (Mo. banc
2010).
When reviewing a circuit court’s denial of a judgment notwithstanding the
verdict, this Court must determine whether the plaintiff presented a
submissible case by offering evidence to support every element necessary for
liability. Evidence is viewed in the light most favorable to the jury’s verdict,
giving the plaintiff all reasonable inferences and disregarding all conflicting
evidence and inferences. This Court will reverse the jury’s verdict for
insufficient evidence only where there is a complete absence of probative
fact to support the jury’s conclusion.
13
Smith v. Brown & Williamson Tobacco Corp., 410 S.W.3d 623, 630 (Mo. banc 2013)
(internal citation and quotation omitted).
McCall and Fleming claim that the only evidence on which the jury could have
relied to determine the City’s damages was the testimony of Mr. Thomas, who prepared
Midwest Remediation’s bid for the remediation project. Mr. Thomas testified that only
$72,009.98 of Midwest Remediation’s bid of $175,161.44 was directly attributable to the
soil contamination at the site. This claim ignores the other evidence presented by the City
to support its claim for damages.
Ms. Wright testified that all of the damages it was seeking to recover resulted from
the necessity to hire Midwest Remediation to construct a portion of the sewer upgrade
project that Rose-Lan was not qualified to perform because of the petroleum
contamination. Furthermore, the City’s evidence indicated that representatives of the Fund
recommended Midwest Remediation and viewed its bid to install the petroleum-resistant
pipes for $155,257.98 more than Rose-Lan’s contract charged as “reasonable” for the work
needed. Even if Mr. Thomas’ testimony were viewed as inconsistent with the City’s other
evidence, any inconsistency was for the jury to resolve. Accordingly, viewing the evidence
in the light most favorable to the verdict and disregarding any evidence to the contrary, the
circuit court did not err in overruling McCall and Fleming’s motion for directed verdict or
motion for JNOV.
IV. Remittitur of Compensatory Damages
In their third point, McCall and Fleming assert that the circuit court abused its
discretion by not remitting the compensatory damages award based on Mr. Thomas’s
14
testimony that Midwest Remediation’s contamination-related costs were only $72,009.98.
Because substantial evidence supported the jury’s compensatory damage award, the circuit
court did not abuse its discretion in refusing to remit the compensatory damages awarded
against McCall and Fleming. Badahman v. Catering St. Louis, 395 S.W.3d 29, 39-40 (Mo.
banc 2013).
V. The Evidence Supports a Finding of Detrimental Reliance
On cross-appeal, counsel for the Fund asserts that the circuit court erred in
overruling its motion for judgment notwithstanding the verdict because the City did not
make a submissible case of fraud or negligent misrepresentation in that the City presented
no evidence that it relied to its detriment on Mr. Vuchetich’s representations. In fraudulent
misrepresentation cases, the plaintiff is required to establish each and every element of a
fraud claim, and its failure to do so is fatal to the claim. Heberer v. Shell Oil Co., 744
S.W.2d 441, 443 (Mo. banc 1988). An injury directly and proximately caused by the
misrepresentation is an essential element of a fraudulent misrepresentation claim. Hess v.
Chase Manhattan Bank, USA, N.A., 220 S.W.3d 758, 765 (Mo. banc 2007).
Counsel for the Fund contends that the uncontroverted evidence shows that the City
actually saved $30,000.00 by relying on Mr. Vuchetich’s statements and hiring Midwest
Remediation. Counsel argues that the City provided no proof that hiring Midwest
Remediation resulted in costs to the City beyond those that the City was to incur if it did
not hire Midwest Remediation. This argument, however, ignores that the City presented
evidence that it would have acted differently if Mr. Vuchetich had not promised that the
cost of Midwest Remediation’s work would be paid from the Fund.
15
Ms. Wright testified that, based on Mr. Vuchetich’s representations, the City left the
April 2004 meeting with the understanding that the Fund’s representatives wanted the City
to hire Midwest Restoration and that the City would be reimbursed from the Fund for the
costs of Midwest Remediation’s work, less the amount that the City would have otherwise
paid Rose-Lan for the same portion of the sewer project. As a result, the City authorized
Rose-Lan to subcontract with Midwest Restoration for that portion of the sewer project.
The City then paid Midwest Restoration for its work on the sewer project. Ultimately,
however, the City was not reimbursed from the Fund for the costs of Midwest
Remediation’s work. Ms. Wright testified that, if she would have been told that the City
would not be reimbursed from the Fund for all of the costs in excess of Rose-Lan’s contract
price, she would have told representatives of the Fund to “come and get your contaminated
soil, and get it out of our easement, and completely remove it, clean it up, get a certification
that it’s now clean.” Ms. Wright further testified that the City would then have had Rose-
Lan complete the sewer installation as originally planned at no additional cost. Mr. Martin
provided similar testimony. Testimony at trial reflected that the cost of excavation of all
contaminated soils would have been approximately $500,000, for which the City claimed
the Fund would have been responsible.
Based upon the proceeding facts, the City presented substantial evidence to allow
the trier of fact to find that the City relied on Mr. Vuchetich’s representations to its
detriment in that the City incurred additional costs when it hired and paid Midwest
Restoration to complete that portion of the sewer project that it otherwise would not have
incurred had the City demanded representatives of the Fund remove all contaminated soil
16
for Rose-Lan to complete that portion of the sewer project as initially planned. The circuit
court, therefore, did not err in overruling the Fund’s motion for JNOV because the City
presented sufficient evidence to support its fraudulent misrepresentation claim. 5
VI. The Punitive Damages Award against the Fund Was Erroneous
Counsel for the Fund further asserts that the circuit court erred in awarding punitive
damages against the Fund. 6 More specifically, counsel asserts that section 319.131
provides no authority for the payment of punitive damages from the Fund.
5
As discussed below, the City’s claim, if any, was against the Fund’s Board of Trustees
for the misrepresentations of its agents.
6
The claim of error raised in the second point relied on by counsel for the Fund is that the
circuit court erred in submitting the punitive damages claim to the jury because section
319.131 governs payments from the Fund and authorizes payments only for participants’
cleanup costs and third-parties’ claims involving property damage or bodily injury and
expressly precludes payment from the Fund of punitive damages. The separate opinions
of Judge Fischer and Judge Teitelman would hold that counsel for the Fund failed to
properly preserve this issue for appellate review by not raising the issue in a motion for a
directed verdict or a motion for a JNOV. The separate opinions of Judge Fischer and Judge
Teitelman raise these preservation issues sua sponte. None of the parties has questioned
the preservation of this issue on appeal, and even the court of appeals reviewed this issue
on the merits.
It is not necessary to review the procedural history of the case to determine whether
the claim of error in the second point was timely made and preserved because this claim of
error, although not labeled as such by counsel for the Fund, is a claim that the City failed
to state a cause of action against the Fund for punitive damages. In other words, counsel
for the Fund asserts that claims for cleanup costs and third-party property damage are the
only cognizable claims authorized against the Fund and that any claims for payments
beyond those authorized by statute are not cognizable against the Fund. Prior to 2012, the
rules of this Court permitted the defense of failure to state a claim to be raised for the first
time on appeal. Rule 55.27(g)(2) (2011) (“A defense of failure to state a claim upon which
relief can be granted ... may be made in any pleading permitted or ordered under Rule
55.01, or by motion for judgment on the pleadings, or at the trial on the merits, or on
appeal.”) (emphasis added). During trial and at the time counsel for the Fund appealed
from the circuit court’s judgment, the failure to state a claim still could be raised on appeal.
See Barlett by and through Barlett v. Kansas City S. Ry. Co., 854 S.W.2d 396, 399 (Mo.
17
The Fund is a statutorily created account. See section 319.129.1. Creatures of
statute like the Fund can operate only in accordance with their enabling statutes. See State
ex rel. MoGas Pipeline, LLC v. Missouri Pub. Serv. Comm’n, 366 S.W.3d 493, 496 (Mo.
banc 2012). Section 319.131 speaks in terms of the Fund’s liability. It outlines two
instances in which the Fund provides coverage: (1) the Fund will pay all of its participants’
cleanup “costs ... which are greater than ten thousand dollars but less than one million
banc 1993). Accordingly, the claim of error advanced on appeal that the City’s claims
against the Fund were not cognizable under section 319.131 is properly before this Court.
Moreover, contrary to the assertions made in the separate opinions of Judge Fischer
and Judge Teitelman, this issue is not one that needs to be raised in a motion for directed
verdict to be preserved for appellate review. Even though Rule 72.01, which governs
motions for directed verdict and motions for JNOV, does not speak in terms of
submissibility, a motion for directed verdict and a motion for judgment notwithstanding
the verdict are legal terms of art with well-established meanings. A motion for directed
verdict is defined as “[a] party’s request that the court enter judgment in its favor before
submitting the case to the jury because there is no legally sufficient evidentiary foundation
on which a reasonable jury could find for the other party.” Black’s Law Dictionary 1170
(10th ed. 2014) (emphasis added). Likewise, a motion for JNOV is defined as “[a] party’s
request that the court enter a judgment in its favor despite the jury’s contrary verdict
because there is no legally sufficient evidentiary basis for a jury to find for the other party.”
Id. (emphasis added). Therefore, motions for directed verdict and motions for JNOV are
intended to address whether there is a sufficient evidentiary basis to support a verdict, i.e.,
whether a submissible case has been made. This Court’s jurisprudence provides that, in
civil, jury-tried cases, it is necessary, “in order to preserve the question of submissibility
for appellate review, to file a motion for directed verdict at the close of all evidence and to
assign the error of the court in having failed to have directed such a verdict in an after-trial
motion” such as a motion for a new trial or a motion for JNOV. Ukman v. Hoover Motor
Express Co., 269 S.W.2d 35, 36 (Mo. 1954) (emphasis added); see also Millar v. Berg, 316
S.W.2d 499, 502 (Mo. banc 1958). Questions of submissibility raised in a motion for
JNOV, therefore, must have been raised in a motion for directed verdict to be preserved
for appellate review. See Sanders v. Ahmed, 364 S.W.3d 195, 207 (Mo. banc 2012);
Howard, 332 S.W.3d at 790; see also Grippe v. Momttazee, 696 S.W.2d 797, 798 (Mo.
banc 1985). Because counsel for the Fund is not asserting that the City failed to make a
submissible case as to punitive damages, the issue did not need to be raised in a motion for
directed verdict to be preserved for this Court’s review.
18
dollars per occurrence or two million dollars aggregate per year” and (2) the Fund “shall
provide coverage for third-party claims involving property damage or bodily injury caused
by leaking petroleum storage tanks whose owner or operator is participating in the fund at
the time the release occurs or is discovered.” See section 319.131.4; section 319.131.5.
There is no authority for payment from the Fund for claims beyond those expressly
articulated in section 319.131. Therefore, pursuant to its enabling statutes, the Fund is to
be used for payment of its participants’ cleanup costs and third-parties’ claims involving
property damage or bodily injury.
Here, the City’s claims against the Fund did not fall within the statutorily authorized
claims set out in section 319.131. Instead, the City sought and was awarded compensatory
and punitive damages against the Fund for fraudulent and negligent misrepresentation
made by representatives of the Fund. Under section 319.131, the Fund is not authorized to
provide coverage for such claims as they do not constitute participants’ cleanup costs or
involve third-party claims for property damage or bodily injury. The tort claims alleged
by the City, therefore, are beyond the coverage articulated in the Fund’s enabling statutes.
It follows, therefore, that the City’s claims are not cognizable under section 319.131.
MoGas Pipeline, 366 S.W.3d at 496.
Moreover, the statutory structure of the Fund is such that it cannot be liable for its
own conduct. The City named the Fund as the defendant, but the Fund is merely an account
within the state’s treasury. Specifically, section 319.129.4 provides that the Board of
Trustees is responsible for the “general administration of the fund” and the “proper
operation of the fund, including all decisions relating to payments from the fund.” Because
19
the Fund is merely an account within the state treasury, “it” cannot provide coverage, pay
claims, or take any other action. Instead, some person or entity must be authorized to do
these things using the Fund. Accordingly, section 319.129.4 provides: “The general
administration of the fund and the responsibility for the proper operation of the fund,
including all decisions relating to payments from the fund, are hereby vested in a board of
trustees.” The Board is a state agency, designated “a type III agency,” and it has authority
to “appoint an executive director and other employees as needed, who shall be state
employees[.]” Section 319.129.8. The Board also “may select and employ, or may
contract with, persons experienced in insurance underwriting, accounting, the servicing of
claims and rate making, and legal counsel to defend third-party claims, who shall serve at
the board’s pleasure.” Section 319.129.10.
Here, the City did not sue the Board or its members, employees, or contractors.
Instead, it sued the Fund itself. There are no reported cases in which the Fund – as an entity
– has sued or been sued. Instead, suits have been brought against the Board of Trustees,
see, e.g., Chouteau Dev. Co., LLC v. Sinclair Mktg., Inc., 200 S.W.3d 68 (Mo. App. 2006);
Rees Oil Co. & Rees Petroleum Products v. Dir. of Revenue, 992 S.W.2d 354 (Mo. App.
1999), or the chair of the Board in his or her official capacity, see, e.g., River Fleets, Inc.
v. Creech, 36 S.W.3d 809 (Mo. App. 2001); River Fleets, Inc. v. Carter, 990 S.W.2d 75
(Mo. App. 1999). 7 Because enabling statutes for the Fund vest the Board of Trustees with
7
By the same token, suits seeking to recover damages from the Second Injury Fund are not
brought against the fund itself. Instead, they are brought against the state treasurer, who is
charged by section 287.220 with responsibility as custodian of the fund for issuing warrants
for payment of covered claims as defined by applicable statutes. See, e.g., Treasurer of
20
the administration and the operation of the Fund, the Fund can do nothing to subject itself
to the liability alleged by the City.
But even though counsel for the Fund initially moved to dismiss the City’s claims
on the very grounds that result in this Court vacating the award of punitive damages now,
the Fund’s counsel abandoned this argument on appeal with respect to the award of
compensatory damages and seeks relief only from the award of punitive damages. Perhaps
counsel for the Fund believed that the issue of compensatory damages was moot because,
whether it paid “its own” compensatory damages judgment or paid the third-party claim
against McCall, the cost to the Fund would be the same. Whatever the reason, however,
the Fund does not seek relief on appeal in this Court from the judgment against it for
compensatory damages, and this Court should not grant relief that is not sought.
Consequently, this Court does not disturb the compensatory award against the Fund.
Nevertheless, because the City did not have had a cognizable claim against the Fund for
actual or compensatory damages, it could not recover punitive damages from the Fund.
See Ellison v. Fry, 437 S.W.3d 762, 777 (Mo. banc 2014). Accordingly, the punitive
damages judgment against the Fund is reversed. By reversing the punitive damages award,
however, an issue of fairness and justice arises because counsel for the Fund failed to raise
the argument that the Fund’s trustees – not the Fund itself – are the proper parties until
after the jury rendered its verdict. This means that, when the issue finally was raised, the
State-Custodian of Second Injury Fund v. Witte, 414 S.W.3d 455 (Mo. banc 2013); Pierson
v. Treasurer of State, 126 S.W.3d 386 (Mo. banc 2004).
21
City was not in a position to request leave to amend its petition to add or substitute parties.
Yet, the allegations in the City’s petition may state a cause of action against the Fund’s
Board of Trustees for the actions of its agents. Without expressing any opinion about the
merits of the claims that may be asserted or the source for payment of any judgment against
the Board on such claim, the furtherance of justice and fairness require that the cause be
remanded to the circuit court. See East v. McMenamy, 266 S.W.2d 728, 732 (Mo. 1954)
(“The furtherance of justice requires that a case should not be reversed without remanding
unless the appellate court is convinced that the facts are such that a recovery cannot be
had[.]”). 8
VII. Conclusion
The judgment against McCall and Fleming is affirmed. The City, however, was not
entitled to recover punitive damages from the Fund. Accordingly, the judgment is reversed
with respect to the punitive damages awarded against the Fund. Nevertheless, this Court
affirms the award of compensatory damages against the Fund because counsel for the Fund
did not challenge the compensatory damages award on appeal. Additionally, because
counsel for the Fund failed to raise the argument that the Fund’s trustees – not the Fund
itself – are the proper parties until after the jury rendered its verdict and because the
allegations in the City’s petition may state a cause of action against the Fund’s Board of
8
Counsel for the Fund raises two other points, and the City raises three points on appeal
regarding the punitive damages awarded against the Fund. This Court need not address
those points because the Court’s opinion is dispositive of all issues raised regarding the
Fund’s liability for punitive damages.
22
Trustees for the actions of its agents, the cause is remanded in the interest of justice and
fairness. The circuit court’s judgment is affirmed in all other respects.
Breckenridge, C.J., Stith, Draper and Russell, JJ., concur;
Wilson, J., concurs in part in separate opinion filed;
Fischer, J., concurs in part and dissents in part in separate
opinion filed; Teitelman, J., concurs in part and dissents in
part in separate opinion filed.
23
SUPREME COURT OF MISSOURI
en banc
CITY OF HARRISONVILLE, )
)
Appellant-Respondent, )
)
v. ) No. SC94115
)
McCALL SERVICE STATIONS d/b/a )
BIG TANK OIL, et al, )
)
Respondent-Appellant, )
)
THE MISSOURI PETROLEUM )
STORAGE TANK INSURANCE FUND, )
)
Respondent-Appellant. )
OPINION CONCURRING IN PART
I concur in the result reached in the opinion of the Court and in much of its
reasoning. I write separately, however, to address the question of whether the defect in
the judgment on which the Court’s disposition of this case turns was (or was not)
preserved for appellate review. The per curiam opinion holds that it was, and the
dissenting opinion by Judge Fischer would hold it was not. In my view, whatever the
relative merits of these arguments in other contexts, neither is relevant here.
Simply stated, the Missouri Petroleum Storage Tank Insurance Fund (“PSTIF”) is
not a legal entity. It is a thing. As a result, one cannot sue the PSTIF, and any judgment
resulting from such a suit (i.e., a judgment purporting to determine the rights, interests,
and obligations of the PSTIF) is a nullity. It is no more valid than a judgment purporting
to determine the rights, interests, and obligations of a “keg o’ nails” or a bowl of soup.
Whether such a defect is pointed out now or in the future (when, for instance, someone
seeks to enforce that judgment) is immaterial because there is nothing to enforce.
On direct appeal, rules concerning preservation serve to limit the claims of trial
court error that may be reviewed. Once such a claim is waived (either because a party
failed to preserve it below or failed to pursue it on appeal) or the claim is passed upon
and rejected by the appellate court, the judgment cannot be collaterally attacked on that
basis. But such rules of preservation and abandonment have no impact on whether a
judgment, on its face, is a nullity. To be sure, the particular type of fundamental defect
present in this case is rare and, perhaps, sui generis. But it also is inescapable.
Accordingly, I would hold that the Court has both the authority and the duty to identify
and act upon such a fundamental defect regardless of whether or how it was raised below
or on appeal. 1 In all other respects, I join the Court’s opinion.
_________________________________
Paul C. Wilson, Judge
1
Because the judgment against the PSTIF is a nullity, the portion of that judgment purporting to
hold “it” liable for compensatory damages is of no more effect than the portion purporting to
hold “it” liable for punitive damages. Moreover, just as the Court’s authority and duty to
identify and act upon this defect does not depend upon a party “preserving” the issue below, it
does not depend upon a party raising the issue here. Accordingly, even though I agree with the
Court’s opinion that vacating the judgment as to compensatory damages may have little practical
effect, I would vacate the judgment against the PSTIF in its entirety.
2
SUPREME COURT OF MISSOURI
en banc
CITY OF HARRISONVILLE, )
)
Appellant-Respondent, )
)
v. ) No. SC94115
)
McCALL SERVICE STATIONS d/b/a )
BIG TANK OIL, et al., )
)
Respondent-Appellant, )
)
THE MISSOURI PETROLEUM )
STORAGE TANK INSURANCE FUND, )
)
Respondent-Appellant. )
OPINION CONCURRING IN PART AND DISSENTING IN PART
I respectfully dissent from Section VI of the per curiam opinion, which holds that
§ 319.131 1 prohibits the Fund from having liability for punitive damages and that this
case should be remanded to the circuit court for substitution of the Fund's board as party
defendant and a new trial. 2 It is perplexing that the per curiam opinion is willing to
require the Fund to adhere to some of this Court's rules regarding preservation and
presentment of issues for appellate review but not others. 3 Although not explained by the
1
Statutory citations are to RSMo Supp. 2013, unless otherwise specified.
2
I concur in Sections II through V of the per curiam opinion.
3
The failure of the per curiam to follow some, but not all, of the rules regarding preservation of
claims creates the conundrum expressed by Judge Teitelman's dissent. In doing so the per
per curiam opinion, this Court has jurisdiction of this case because it granted transfer
after opinion by the court of appeals pursuant to article V, § 10 of the Missouri
Constitution. Rule 83.08(b) permits the parties to file substitute briefs after transfer is
granted but the parties are not permitted to "alter the basis of any claim that was raised in
the court of appeals brief."
I. The Fund Failed to Preserve Its Claims That It Was Statutorily Barred
From Payment of Punitive Damages and That It Was the Incorrect Party
Defendant
As a preliminary matter, the per curiam opinion neglects to restrain its review to
the Fund's point on appeal, which states:
The trial court erred in failing to grant the Fund's motion for
judgment notwithstanding the verdict and set aside the jury's award of
punitive damages, because the Fund is not subject to an award of punitive
damages, in that no statute authorized the Fund to pay punitive damages
awarded against the Fund itself, and § 319.131.5, RSMo, provides that the
Fund shall not pay damages of an intangible nature or punitive damages
awarded against insureds.
curiam opinion ignores or fails to recognize that a necessary condition to receive a punitive
damage award is an award of compensatory damages against the same party. See Tietjens v.
Gen. Motors Corp., 418 S.W.2d 75, 88 (Mo. 1967). The per curiam opinion holds the Fund
could not be liable for compensatory damages, but the per curiam opinion accepts that the Fund
waived that claim by failing to include it in a point relied on in its brief. It should be equally
apparent to the per curiam that the Fund does not include a point relied on that the City sued the
wrong party or that the circuit court erred in overruling a motion for new trial on that basis.
Further, in my view, the waiver by failure to present a claim in a point relied on in a brief is no
more significant than the failure to properly present a claim in a motion for directed verdict and a
motion for JNOV. As a result of the per curiam opinion, the City has a judgment for
compensatory damages that six members of this Court affirm against the Fund, and therefore it is
presumably collectable against the Fund. But the per curiam remands to the circuit court for the
City to name a different party—the "Trustees" of the Fund from which to proceed to a retrial on
the issue of punitive damages. To quote the per curiam, "this Court should not grant relief that is
not sought." Per curiam op. at 21.
2
(Emphasis added). 4 The Fund is not claiming that pursuant to Rule 55.27(g)(2) the City
failed to state a claim for fraud, which was the basis of the jury's verdict, but rather that it
has a legal defense to the payment of punitive damages. Equally significant, in my view,
is that the Fund did not challenge the circuit court's decision to overrule its motion for
new trial; rather, it challenged the decision to overrule its motion for JNOV 5—a point the
per curiam opinion acknowledges. Nor does the Fund even suggest this argument was
included by reference or otherwise in its motion for JNOV. This is an important
distinction because a motion for JNOV and a motion for new trial serve different
purposes.
The motion for new trial is required to raise grounds that would entitle a
party to a new trial. As explained, an allegation that the court erred in
failing to grant a new trial because the court should have granted a
motion for a directed verdict at the close of all of the evidence does not
state a ground for new trial. It only states a ground for judgment
notwithstanding the verdict and must be raised in a motion seeking
that relief and not in a motion for new trial. A motion for new trial
joined with a motion for judgment notwithstanding the verdict should raise
issues of trial error which would constitute grounds for a new trial rather
than grounds stating the pleader is entitled to judgment as a matter of law.
Buttram v. Auto-Owners Mut. Ins. Co., 779 S.W.2d 1, 3 n.1 (Mo. App. 1989). Critically,
according to the per curiam opinion's holding, the Fund is statutorily barred from the
4
Note the Fund did not claim that it was the incorrect party defendant in the point on appeal, nor
does it request a remand for a new trial on this point.
5
I disagree with the per curiam opinion's conclusion in footnote 6 that Ukman v. Hoover Motor
Exp. Co., 269 S.W.2d 35 (Mo. 1954), stands for the proposition that only the question of
submissibility has to be included in a motion for directed verdict at the close of evidence and in a
motion for JNOV. Nevertheless, current Rule 72.01(b), which has governed this issue since
1974, makes it crystal clear that a legal defense must have been made in a motion for directed
verdict and after trial in a motion for judgment not withstanding the verdict. Furthermore, there
is no need for the per curiam to go to a secondary source like Black's Law Dictionary to
determine what must be included in a motion for JNOV when Rule 72.01(b) makes it clear.
3
payment of punitive damages and is the incorrect party defendant for the City to have
sued for fraud—neither of which can be properly remedied by a new trial. 6 Rather, these
claims had to be presented in a motion for directed verdict and preserved for appellate
review through a motion for JNOV. This Court's rules make it clear what is required to
be in a motion for JNOV and motion for new trial and this Court should not now decide a
case on a claim of error that is not properly preserved and briefed. Rule 72.01(a), (b),
Rule 78.07, Rule 78.09, and Rule 84.13(a).
Even if this Court were to consider these claims properly presented in the Fund's
points on appeal—an impossibility with regard to the substitution of a different party
defendant—neither claim was properly preserved below. The per curiam opinion
suggests that the Fund preserved for appellate review the argument that it is statutorily
barred from payment of punitive damages, and that it was not the proper party defendant,
only because the per curiam is willing to redraft and recast the arguments made by the
Fund into a basic "[f]ailure to state a claim upon which relief can be granted" pursuant to
Rule 55.27(a)(6). Per curiam op. at 17–18 n.6. Reliance and citation to this rule is not
only absent from the Fund's brief, but it also is not included in any post-trial motion or
even its motion to dismiss. The express motivation for mutating the Fund's point is so the
per curiam opinion can conclude the argument is preserved because, at the time this case
was tried, a claim that a petition failed to state a claim upon which relief could be granted
6
"A new trial is available only when trial error or misconduct of the prevailing party incited
prejudice in the jury." Dodson v. Ferrara, No. SC95151, Slip op. at 6 (Mo. banc Apr. 19, 2016).
The Fund does not allege either basis is properly remedied by a new trial, but instead, of course
claims that it is statutorily barred from the payment of punitive damages and request for a
judgment to that effect.
4
could be raised for the first time on appeal. This advocacy on the part of the per curiam,
which is searching for any way to resurrect the waived potential legal defense, neglects
the fact that the Fund raised completely different claims in its motion to dismiss than it
did in its motion for new trial, neither of which was the failure to state a claim upon
which relief can be granted. The Fund's motion to dismiss expressly relied on Rule 52.06
(rather than Rule 55.27(a)(6)'s failure to state a claim) and challenged whether a direct
action could be brought against the Fund itself, instead of the Fund's board. 7 This
argument was never pursued once the motion to dismiss was overruled, so it was waived.
The Fund's motion for new trial (not the motion for JNOV), however, argued that
§ 319.131.5 does not permit the Fund to pay an award of punitive damages. These, of
course, are distinct claims and, if briefed, would be in separate points relied on.
Because I am not willing to engage in judicial advocacy by mutating the actual
claims made by the Fund to the circuit court or in its points on appeal, I am required to
analyze the claims made and points briefed to determine if they were properly preserved.
At the outset, it should be considered that:
A motion to dismiss attacks the plaintiff’s pleadings. . . . A motion to
dismiss for failure to state a [claim] is solely a test of the adequacy of the
plaintiff’s petition. It assumes that all of plaintiff’s averments are true, and
7
Paragraphs 2(e), 2(f), and 2(g) of the Fund's motion to dismiss provide:
(e) The provisions of 100-5.030 do not provide for a direct action against
the PSTIF. Rather, the proper procedure for third-party claims calls for the fund
participant to forward notice of any claim to the fund's board. The board will then
decide how to proceed.
(f) 100-5.030(6) states that "the board has the right to defend any suit
seeking property or bodily injury damages, and may investigate and settle any
claim for third-party damages or suit at its sole discretion."
(g) The Missouri Legislature, in 100-5.030(6), grants the board the right
but not the obligation to defend suits against those covered by the fund.
5
liberally grants to plaintiff all reasonable inferences therefrom. No attempt
is made to weigh any facts alleged as to whether they are credible or
persuasive. Instead, the petition is reviewed in an almost academic manner,
to determine if the facts alleged meet the elements of a recognized cause of
action, or of a cause that might be adopted in that case.
Bosch v. St. Louis Healthcare Network, 41 S.W.3d 462, 463–64 (Mo. banc 2001).
The Fund's motion to dismiss did not challenge the City’s cause of action for fraud
against the Fund nor did it allege § 319.131.5 provided an affirmative defense. See
footnote 6. Rather, the Fund argued its board had the right but not the obligation to
defend against the claim and therefore the proper procedure to forward notice of the
claim to the board. Further, the Fund's motion for new trial (not the motion for JNOV)
asserted for the first time a legal defense that it was statutorily barred from paying
punitive damages to the City based on a claim of fraud. 8 Because this alleged defense is
not a jurisdictional one, it was required to be raised as an affirmative defense or it is
8
Paragraph 36 of the Fund's motion for new trial provides:
36. The Court should set aside the jury's verdict against PSTIF for punitive
damages and order a new trial, said verdict being based on PSTIF's failure and
refusal to pay the City's claim in full and the alleged delay associated therewith,
as such verdict was against the substantial weight of the evidence. As it stands,
the jury awarded substantial punitive damages against PSTIF, a state-created
insurance fund, based on the Fund's failure to agree to pay a claim that it would
not have paid as a matter of law under the controlling provisions of Missouri law,
to-wit: Section 319.131(5), RSMo 2000, which statute prevents the fund from
being responsible to third party claimants for other than the reasonable costs of
containment and cleanup and which statute specifically prevents the fund from
being responsible for economic and other intangible damages such as the loss of
the City's benefit of their contractual bargain with Rose-Lan in the amount of
approximately $100,000. As set out in 10 CSR 100-2.010(7), "'Cleanup' consists
of all actions necessary to investigate, contain, control, analyze, treat, assess,
remediate or monitor the effects of a petroleum release to standards established by
the Department of Natural Resources."
6
deemed waived. 9 McCracken v. Wal-Mart, 298 S.W.3d 473, 476–79 (Mo. banc 2009)
(holding § 287.040.1 of the worker’s compensation law had to be asserted as an
affirmative defense or it was deemed waived.)
The per curiam opinion concedes that its basis for reversing the punitive damages
award and for remanding for substitution of the Fund as a party defendant were not made
in a motion for directed verdict or in a motion for JNOV. In my view, the failure to
present these purely legal issues in its motion for directed verdict and, after trial, in a
motion for JNOV results in waiver of the argument. See Sanders v. Ahmed, 364 S.W.3d
195, 207–208 (Mo. banc 2012); Howard v. City of Kansas City, 332 S.W.3d 772, 790
(Mo. banc 2011). The Fund made two oral motions for directed verdict, one at the close
of plaintiff's evidence and again at the close of all evidence, neither of which pertained to
the Fund being statutorily barred from payment of punitive damages nor that it was an
incorrect party defendant in the case.
In my view, the law regarding what is required to preserve an issue for appellate
review is well settled.
As originally adopted, Rules 72.01 and 72.02 10 provided that the party who made
a motion for directed verdict pursuant to Rule 72.01 could make a motion for JNOV in
accordance with his motion for directed verdict.
9
Why the Fund did not include a paragraph similar to Paragraph 36 in its motion for judgment
notwithstanding the verdict is hard to say, but it could be that the Fund recognized it could not be
included because it failed to present this legal defense in its answer, a motion to dismiss or even
in its motion for directed verdict.
10
Motion for Directed Verdict. The demurrer to the evidence and the request for
peremptory instructions are abolished and in lieu thereof a party may make a
7
In 1974, when this Court reviewed these rules and reorganized them into what is
currently Rules 72.01(a) and (b), and again when this Court later amended Rules 72.01(a)
and (b), it decided to keep the text relevant to this requirement in place. Current Rule
72.01(b), in pertinent part, provides:
A party may move for a directed verdict at the close of all the evidence.
Whenever such motion is denied or for any reason is not granted, the
court is deemed to have submitted the action to the jury subject to a
motion for a directed verdict. A party who moves for a directed verdict at the
close of the evidence offered by an opponent may offer evidence in the event that
the motion is not granted, without having reserved the right so to do and to the
same extent as if the motion had not been made. A motion for a directed verdict
which is not granted is not a waiver of trial by jury even though all parties to the
action have moved for directed verdicts. Upon motion for a directed verdict by a
party opposing a claim the court, whether so requested or not, may dismiss the
claim without prejudice if justice so requires.
Supreme Court Rule 72.01 (1959).
Denial of motion for Directed Verdict—Motion to Set Aside Verdict,
Judgment—Motion for New Trial. Whenever a motion for a directed verdict
made at the close of all the evidence is denied or for any reason is not granted the
court is deemed to have submitted the action to the jury subject to a later
determination of the legal questions raised by the motion. Within fifteen days
after the reception of a verdict, a party who has moved for a directed verdict
may move to have the verdict and any judgment entered thereon set aside
and to have judgment entered in accordance with his motion for a directed
verdict; or if a verdict was not returned, such party, within ten days after the jury
has been discharged, may move for judgment in accordance with his motion for a
directed verdict. A motion for a new trial may be joined with this motion, or a
new trial may be prayed for in the alternative. If a verdict was returned the court
may allow the judgment to stand or may reopen the judgment and either order a
new trial or direct the entry of judgment as if the requested verdict had been
directed. If no verdict was returned the court may direct the entry of judgment as
if the requested verdict had been directed or may order a new trial. If the trial
court sustains a motion for judgment in accordance with a directed verdict joined
with a motion for new trial in the alternative, the trial court shall make and enter
of record a ruling on the alternative motion for new trial to be effective if the
ruling on the motion for judgment is reversed.
Supreme Court Rule 72.02 (1959).
8
later determination of the legal questions raised by the motion. Not
later than thirty days after entry of judgment, a party who has moved for a
directed verdict may move to have the verdict and any judgment
entered thereon set aside and to have judgment entered in accordance
with the motion for a directed verdict[.]
(Emphasis added).
This well-settled law was recently reaffirmed in two of this Court's
opinions:
In terms of preservation, a motion for directed verdict at the close of
plaintiff's case is necessary only if defendant seeks to have the case
determined at that point without introduction of additional evidence.
Alternatively, if defendant chooses to put on evidence, the state of the
record changes. The case then is decided on all of the evidence. A motion
for directed verdict at the close of all evidence becomes the meaningful
motion to preserve the issue as it presented itself to the trial court at
that time, prior to submission to the jury. After verdict, of course, a
motion for JNOV also is required to preserve the issues raised for
appeal.
Sanders, 364 S.W.3d at 207–08 (emphasis added); see also Howard, 332 S.W.3d at 790
("[W]here an insufficient motion for directed verdict has been made, a subsequent
post-verdict motion is without basis and preserves nothing for review.") (Emphasis
added).
Because the Fund failed to preserve its arguments that it was statutorily barred
from payment of punitive damages, and that it was an incorrect party defendant, in its
motions for directed verdict and in its motion for JNOV, these claims were waived and
cannot properly be the basis of the per curiam opinion's reversal of the punitive damages
award or remand for substitution of a party. While there are a plethora of cases following
this well-settled law, defenses based on a statute must be included in motions for directed
9
verdict and later in a motion for JNOV. A recent example from the court of appeals is
Lewis v. Beigel, 364 S.W.3d 670, 677 (Mo. App. 2012). In Lewis, the court held that a
defendant who failed to raise a statute-of-limitations defense in her motion for directed
verdict at the close of all evidence failed to preserve the issue for a motion for JNOV and
appeal. Id.
In my view, because the Fund failed to present the purely legal defense that it was
not authorized to pay punitive damages, or that it was the incorrect party defendant, to the
circuit court in either motion for directed verdict, or a motion for JNOV, those claims
were waived and therefore not preserved for appellate review.
II. The City Failed to Preserve Its Argument That § 510.265.1(2) Violates Article I,
Section 22(a) of the Missouri Constitution
The City also argued, to this Court, that § 510.265.1(2) violates the right to jury trial.
To raise a constitutional challenge properly, the party must: (1) raise the
constitutional question at the first available opportunity; (2) designate
specifically the constitutional provision claimed to have been violated, such
as by explicit reference to the article and section or by quotation of the
provision itself; (3) state the facts showing the violation; and (4) preserve
the constitutional question throughout for appellate review. The purpose of
this rule is to prevent surprise to the opposing party and permit the trial
court an opportunity to fairly identify and rule on the issue.
…
It is well recognized that a party should not be entitled on appeal to claim
error on the part of the trial court when the party did not call attention to the
error at trial and did not give the court the opportunity to rule on the
question. To give the court an opportunity to rule on the issue, a party must
make a timely objection or request, which is one made when the occasion
for the ruling desired first appears.
Mayes v. Saint Luke's Hosp. of Kansas City, 430 S.W.3d 260, 266–67 (Mo. banc 2014)
(internal citations and quotations omitted). Failure to do so constitutes a waiver of the
10
objection. The Fund argued for a reduction of the punitive damages award under
§ 510.265.1 in a post-trial motion. In response, the City argued that the statute could not
be applied to its pre-enactment claim and that it was exempt from the statute because the
City was "the state of Missouri" and, therefore, explicitly exempt from § 510.265.1's
operation. At no time in the circuit court did the City argue § 510.265.1 was
unconstitutional because it violated the City's right to a trial by jury, protected by article
I, section 22(a) of the Missouri Constitution. By failing to challenge the constitutional
validity of § 510.265.1 in the circuit court on this basis, the City failed to preserve the
constitutional challenge for appellate review.
III. Application of Punitive Damages Cap Does Not Violate Article I,
Section 13 of the Missouri Constitution
The City argues the circuit court did not err in refusing to apply
§ 510.265.1(2) because it is a retrospective law. Section 510.265.1(2) provides that
punitive damages are limited to the greater of $500,000 or five times the net amount of
the damages awarded to the plaintiff. The General Assembly specified § 510.265.1's cap
on punitive damages would apply to "all causes of action filed after August 28, 2005."
Section 538.305. 11 The City filed its lawsuit in November 2005, after the punitive
damages cap became effective. Therefore, § 510.265, the cap on punitive damages, is
applicable unless application would violate a provision of the Missouri or United States
Constitution. The circuit court held application of § 510.265.1 to this case violates article
I, section 13 because the cause of action accrued before the statute became effective, but
11
Sections 510.265 and 538.305 were both enacted as part of House Bill No. 393. See 2005
Mo. Laws 641, 647, 655.
11
reduced the award of punitive damages as excessive in violation of the Fund's due
process rights.
No due process analysis is required in this case because the Fund is not a citizen
and does not have due process rights. This is not a novel concept as it has been
consistently recognized by this Court that the state and political subdivisions of the state,
such as cities, are not entitled to the same constitutional protections as citizens. This
Court has previously recognized in several respects that municipalities, like the City, do
not have the same constitutional protections as citizens. See City of Chesterfield v. Dir.
of Revenue, 811 S.W.2d 375, 377 (Mo. banc 1991) (holding municipalities are not
"persons" and do not have due process or equal protection rights and noting this was a
holding often repeated by both state and federal courts). Similar to our due process and
equal protection clauses, the prohibition against laws retrospective in operation is
contained in our state constitution's bill of rights.
Just as the Fund does not have due process rights, the City has no constitutional
right to be free from a law retrospective in operation. This Court recently held:
Our constitutional prohibition against laws retrospective in operation is
located in our citizen bill of rights. "Because the retrospective law
prohibition was intended to protect citizens and not the state, the legislature
may constitutionally pass retrospective laws that waive the rights of the
state." Savannah R-III Sch. Dist. v. Pub. Sch. Ret. Sys. of Mo., 950 S.W.2d
854, 858 (Mo. banc 1997). By extension, the legislature may also waive or
impair the vested rights of political subdivisions, such as cities, without
violating the prohibition on retrospective laws. Id.; see also Barton Cnty. v.
Walser, 47 Mo. 189, 205 (Mo. 1871). Therefore, the petition failed to state
a permissible claim by a municipality pursuant to article I, §13 and the
State was entitled to a dismissal of this claim.
12
Mo. Mun. League v. State, No. SC95337, Slip op. at 3-4 (Mo. banc May 24,
2016). 12
The imposition of § 510.265 cannot be held unconstitutional as applied to the City
because article I, section 13 of the Missouri Constitution only protects citizens against
retrospective laws. Therefore, the statutory cap should be applied to reduce the jury's
award to $860,504.90. See § 510.265.1(2).
_______________________________
Zel M. Fischer, Judge
12
Neither the circuit court nor the court of appeals had the benefit of this case when it was
presented with this issue.
13
SUPREME COURT OF MISSOURI
en banc
CITY OF HARRISONVILLE, )
)
Appellant-Respondent, )
)
vs. ) No. SC94115
)
McCALL SERVICE STATIONS d/b/a )
BIG TANK OIL, et al., )
)
Respondent-Appellant, )
)
THE MISSOURI PETROLEUM )
STORAGE TANK INSURANCE FUND, )
)
Respondent-Appellant. )
OPINION CONCURRING IN PART AND DISSENTING IN PART
I respectfully dissent from the per curiam opinion to the extent that it reverses the
award of punitive damages against the fund and in favor of the City. Before explaining
the basis of my disagreement, some context is in order.
As noted in the per curiam opinion, the City filed the underlying lawsuit in 2005.
The City’s suit included allegations that it incurred substantial cleanup costs in reliance
on the Fund’s fraudulent misrepresentation that the Fund would reimburse the City.
After nearly a decade of litigation, the case proceeded to trial, and the jury awarded the
City compensatory damages of approximately $172,000. The jury also awarded the City
punitive damages of $8 million against the Fund. The circuit court determined that the
punitive damage award was not subject to limitation pursuant to the punitive damage cap
set forth in section 510.265.1(2) 1 because the statute was enacted after the City’s cause
of action accrued. The circuit court sustained the Fund’s motion to remit the punitive
damage award to $2,500,000 on due process grounds.
I. The City’s suit against the Fund is not a nullity
The per curiam opinion concludes, erroneously in my view, that there is no
statutory authority for the payment of punitive damages from the Fund. 2 If there is no
statutory authority for the payment of punitive damages from the Fund, then the analysis
should end there. But it does not. Despite years of litigation, the per curiam opinion
asserts that the City’s lawsuit against the Fund is, in effect, a nullity because the City
filed suit against the Fund rather than the Fund’s board of trustees. The per curiam
opinion notes that the Fund is merely an account in the state treasury and, as such, is an
intangible “it” that “cannot provide coverage, pay claims, or take any other action.”
Aside from the fact that this precise issue was not raised in a motion for directed verdict
or in the motion for a new trial and, therefore, is waived, an equally fundamental problem
is that hundreds of pages of record in this case demonstrate that, since this lawsuit was
commenced over a decade ago, the Fund – the “it” that is incapable of action – has
managed to retain counsel, answer the petition, file numerous motions and responsive
1
All statutory citations are to RSMo Supp. 2006.
2
I agree with Judge Fischer’s conclusion that the issue of Fund’s statutory authority to pay
punitive damages was not preserved for appellate review.
2
pleadings, participate in discovery, litigate this case through the circuit court, the court of
appeals and, ultimately, to this Court. Presumably, the Fund’s board of trustees
authorized this course of litigation just as it authorized the actions that form the basis of
the City’s lawsuit. Rather than holding that the City’s damages and the Fund’s vigorous
defense over the last decade were nothing more than a legal mirage that no one else
recognized until now, I would hold that the jury’s verdict and the trial court’s judgment
were based firmly on real consequences caused by real actions undertaken by the Fund
per its board of trustees.
II. The affirmance of the compensatory damage award does not justify the reversal of the
punitive damage award
After concluding that the City’s lawsuit against the Fund amounts to nothing more
than a suit against an account – an “it” that can take no action and incur no liability – the
per curiam opinion doubles down on this conceptual quandary by affirming the award of
compensatory damages and reversing the punitive damages because “the City should not
have had a cognizable claim” against the Fund for compensatory damages after all. One
would think that, by affirming the jury’s award of compensatory damages, the per curiam
opinion would similarly conclude that the award of punitive damages could be affirmed.
That is not the case, however, because the per curiam opinion cites Ellison v. Fry, 437
S.W.3d 762 (Mo. banc 2014), for the proposition that its conclusion that the City should
not have had a claim for compensatory damages means that the City was barred from
recovering punitive damages. Ellison is exactly the opposite of this case.
3
In Ellison, this Court held, “Because this Court reverses the damage judgments
against Defendants, Plaintiffs are entitled to no actual damages and the punitive damages
issue is rendered moot.” Ellison, 437 S.W.3d at 777. A case holding that the issue of
punitive damages is moot when an award of compensatory damages is reversed does not
establish that a punitive damage award must be reversed when an award of compensatory
damages is affirmed. If Ellison is relevant at all, it supports the converse proposition that,
when compensatory damages are affirmed, the award of punitive damages can also be
affirmed.
III. The Fund is statutorily authorized to pay punitive damages
Having determined that the City has filed a real lawsuit against a real defendant
for real damages, the issue then becomes whether the City’s claims for actual and
punitive damages are barred by the Fund’s enabling statutes. The per curiam opinion
asserts that section 319.131 “speaks in terms of the Fund’s liability” and limits the Fund
to “coverage” of its participants’ cleanup costs and third-parties’ claims involving
property damage or bodily injury. The per curiam opinion concludes, therefore, that the
tort claims alleged by the City are “beyond the coverage” authorized by the Fund’s
enabling statutes.
The per curiam opinion’s rationale conflates the insurance “coverage” the Fund
provides pursuant to section 319.131 with the Fund’s “liability” for its own actions. By
characterizing section 319.131 as defining the Fund’s “liability,” the per curiam opinion
has reframed what section 319.131 actually says. Section 319.131 outlines the Fund’s
obligation to provide insurance “coverage” for cleanup costs and claims for property
4
damage or bodily injury caused by leaking petroleum storage tanks. See sections
319.131.4-5. While section 319.131.5 does prohibit compensation for “loss or damage of
an intangible nature, including . . . punitive damages,” this limitation applies to the
Fund’s payment of property damage or bodily injury claims “caused by leaking
petroleum storage tanks” insured by the Fund. There is simply no language in section
319.131.5 defining or limiting the Fund’s liability for its own actions. Given the lack of
any statutory text immunizing the Fund from liability for its own actions, I would not
hold that Fund is free to engage in fraud and misrepresentation with impunity.
IV. The punitive damage cap does not apply
As the circuit court determined and the jury found, the Fund is liable for punitive
damages. Section 538.305 provides that the section 510.265 cap on punitive damages
applies to “all causes of action filed after August 28, 2005.” The City filed its lawsuit in
November 2005, after the punitive damages cap became effective. Nonetheless, the
circuit court correctly declined to apply section 510.265 because retroactively limiting the
City’s damages after the City’s cause of action accrued violates article I, section 13 of the
Missouri Constitution.
Article I, section 13 provides 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.” The plain language of article I,
section 13 provides that no law “retrospective in its operation . . . can be enacted.” The
plain meaning of this language is that the General Assembly is barred, without exception,
from enacting any retrospective laws.
5
Despite the self-evident, plain meaning of article I, section 13, barring the General
Assembly from enacting retrospective laws, this Court has held that the ban on
retrospective laws does not mean what it says and, instead, permits the legislature to
enact some retrospective laws so long as those laws retroactively change the legal rights
of the state or a state-created entity. For instance, in Barton County v. Walser, 47 Mo.
189, 205 (Mo. 1871), this Court held that a county could not successfully challenge a
statute pursuant to article I, section 13 because “[n]o vested right of a citizen is interfered
with.” Similarly, in Savannah R-II Sch. Dist. v. Pub. Sch. Ret. Sys. of Mo., 950 S.W.2d
854, 858 (Mo. banc 1997), the Court held that a school district could not challenge a
statute pursuant to article I, section 13 because the ban on retrospective laws “was
intended to protect citizens and not the state” and, as a result, “the legislature may
constitutionally pass laws that waive the rights of the state” as well the rights of
“instrumentalities of the state established by statute ….” The net result of the Barton
County rationale is that article I, section 13 has been judicially amended from “no laws
retrospective in operation … can be enacted” to “some retrospective laws in operation ….
can be enacted.” These cases are inconsistent with the plain and simple text of article I,
section 13 and should no longer be followed. The section 510.265 cap on punitive
damages does not apply to this case because retroactively limiting the City’s damages
after the City’s cause of action accrued violates article I, section 13 ban on the enactment
of retrospective laws.
6
V. The Fund is not entitled to remittitur of the punitive damage award
Although the circuit court correctly declined to apply the punitive damage cap, the
court erred in remitting the punitive damage award to $2.5 million on due process
grounds. The Missouri Constitution, article I, section 10 provides “[t]hat no person shall
be deprived of life, liberty or property without due process of law.” The Fifth
Amendment of the United States Constitution provides: “No person shall be . . . deprived
of life, liberty, or property, without due process of law[.]” The Fund is not a person and,
therefore, does not have due process rights. See State ex rel. Brentwood Sch. Dist. V.
State Tax Comm'n, 589 S.W.2d 613, 615 (Mo. banc 1979). Accordingly, the punitive
damage award could not be remitted on due process grounds.
I would reverse the circuit court judgment to the extent that it remits the punitive
damage award from $8 million to $2.5 million. I would affirm the remainder of the
judgment.
_________________________________
Richard B. Teitelman, Judge
7