Vantage Credit Union v. Jimmy M. Chisholm ( 2014 )

In the Missouri Court of Appeals
Eastern District
DIVISION III
VANTAGE CREDIT UNION, ) No. ED100333
)
Respondent, ) Appeal from the Circuit Court
) of Jefferson County
vs. )
) Honorable Stephen D. Bouchard
JIMMY M. CHISHOLM, )
)
Appellant. ) FILED: August 19, 2014
Introduction
Appellant Jimmy Chisholm (“Chisholm”) appeals from the judgment of the trial court
granting summary judgment in favor of Respondent Vantage Credit Union (“Vantage”) on
Vantage‟s claim for breach of contract and Chisholm‟s counterclaims for vexatious refusal to
pay, fraud, violation of the Missouri Merchandising Practices Act (“MMPA”), and breach of
contract. The trial court found no genuine issue as to the material facts establishing that
Chisholm breached his credit agreement with Vantage by failing to make payments on his
outstanding credit card balance. Chisholm‟s counterclaims allege Vantage breached its
obligations relating to Chisholm‟s purchase of credit disability insurance through Vantage. The
trial court also granted summary judgment in favor of Vantage on the counterclaims finding that
Chisholm could not succeed on his counterclaims because Vantage is not an insurer. Because
genuine issues of material fact exist as to whether Vantage performed its obligations with regard
to Chisholm‟s purchase of credit disability insurance coverage, we reverse the trial court‟s
judgment with respect to Chisholm‟s counterclaim for breach of contract only. Because the trial
court properly found no genuine issues of material fact with regard to the remaining claims, we
affirm the trial court‟s entry of judgment in all other respects.
Factual and Procedural History
Viewed in the light most favorable to the non-moving party, the record contains the
following facts: On May 3, 2006, Chisholm applied for a VISA Gold credit card with Vantage
by completing a one-page loan application form. The application contained a section titled
“Optional Credit Insurance.” By completing this section of the application, Chisholm could elect
to purchase optional credit life and/or disability insurance. The application explained:
Credit Life and/or Credit Disability Insurance is not required to obtain credit
under this plan and will be included only if requested immediately below by the
APPLICANT. You have the right to use alternative coverage or to buy insurance
elsewhere. The Insurance rates are shown below. Each month, the Insurance
charge is calculated and disclosed to You separately. You must be under age 66
for Credit Disability Insurance and under age 71 for Credit Life Insurance. Also,
you must be in active full time work for wages or profit and physically present at
work for at least 30 hours for each of the two consecutive weeks prior to each
loan advance in order for the Insurance to take effect for that advance.
...
If this application is for a Credit Line account and You are applying for Credit
Insurance, You authorize Us to add the required premiums to Your Account,
charge a Finance Charge on the premiums at the rate which applies to Your
Account, and forward such premiums to the Insurance Company.
Chisholm elected to purchase single coverage credit life insurance and single coverage credit
disability insurance.
By signing the loan application, Chisholm agreed to the terms of Vantage‟s Credit Line
Account Agreement and Federal Disclosure Statement (“credit agreement”). The credit
agreement required monthly payments of 3.00% of the new unpaid account balance at the end of
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each billing cycle, subject to the lesser of $26.00 or the balance, plus any portion of the
minimum payments shown on prior statements that remain unpaid, and any amount that exceeds
any approved credit limit. The credit agreement also provided for an annual interest rate of
12.90%.
Vantage approved Chisholm‟s application and thereafter extended credit to him in the
amount of $19,183.83. On or about December 31, 2008, Chisholm became disabled and stopped
working.1 Sometime thereafter, Chisholm attempted to make a claim for benefits under the
credit disability insurance he obtained through Vantage. It is not disputed that Chisholm
contacted both Vantage and its third-party insurer, Life Investors Insurance Company of
America n/k/a Transamerica Life Insurance (“Transamerica”), about obtaining benefits under his
credit disability insurance benefits policy. However, the parties dispute the extent and content of
the communications between Chisholm, Vantage, and Transamerica. Chisholm made no further
payments to Vantage toward the unpaid balance on his VISA Gold account after December 16,
2010.
On April 1, 2011, Vantage filed a petition for breach of contract. Vantage alleged that
Chisholm breached the credit agreement by failing to make the required payments to Vantage on
the VISA Gold account. Vantage sought damages in the amount of $21,208.50 plus interest and
attorneys‟ fees. On August 5, 2011, Chisholm filed a counterclaim petition against Vantage and
Transamerica alleging vexatious refusal to pay, fraud, violation of the MMPA, and breach of
contract. Chisholm averred that Vantage and Transamerica sold him a credit disability insurance
policy, accepted his premium payments, and thereafter failed and refused to provide him credit
disability insurance coverage. Despite naming Transamerica as a defendant in his counterclaim
petition, Chisholm never secured and completed service on Transamerica.
1
Chisholm was determined by the Social Security Administration to have been disabled since December 31, 2008.
3
On February 21, 2012, Vantage filed for summary judgment on its breach of contract
claim against Chisholm and on Chisholm‟s four counterclaims against Vantage. After hearing
argument, the trial court granted Vantage‟s motion for summary judgment in full. The trial court
then entered judgment in favor of Vantage on its breach of contract claim and on Chisholm‟s
four counterclaims.2 This appeal follows.
Point on Appeal
In his sole point on appeal, Chisholm alleges that the trial court erred in granting
summary judgment in favor of Vantage because genuine issues of material fact exist as to
whether Vantage performed its obligations under its contract with Chisholm, including whether
Vantage undertook the role of an insurer and whether it properly processed and forwarded
Chisholm‟s claim for disability payments.
Standard of Review
We review the grant of summary judgment de novo, giving no deference to the trial
court‟s findings or determinations. ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply
Corp., 854 S .W.2d 371, 376 (Mo. banc 1993). We review the record in the light most favorable
to the party against whom judgment was entered and give the non-movant the benefit of all
reasonable inferences from the record. Id.; Calvert v. Plenge, 351 S.W.3d 851, 854–55 (Mo.
App. E.D. 2011).
Discussion
I. Summary Judgment Standard
A movant‟s right to judgment as a matter of law differs depending upon whether
2
The trial court also dismissed Chisholm‟s claims against Transamerica without prejudice for failure to prosecute.
Transamerica is not a party to this appeal.
4
that movant is a “claimant” or a “defending party.” ITT Commercial Fin. Corp., 854 S.W.2d at
380. A claimant is one who seeks to recover either by claim, counterclaim, cross-claim or
declaratory judgment. Rule 74.04(a).3 A defending party is one against whom recovery is
sought. Rule 74.04(b). To be entitled to summary judgment, a claimant must establish (1) that
there is no genuine dispute as to those material facts upon which the claimant would have had
the burden of persuasion at trial, and that (2) based on these undisputed facts, it is entitled to
judgment as a matter of law. ITT Commercial Fin. Corp., 854 S.W.2d at 380-81. To do so, the
claimant must state with particularity all the undisputed material facts necessary to establish each
and every element of its claim, referencing the pleadings, discovery, or affidavits that
demonstrate the lack of a genuine issue as to those facts. Id.
On the other hand, a defending party may establish a right to judgment by showing any
one of the following: (1) facts that negate any one of the claimant‟s elements, (2) that the non-
movant, after an adequate period of discovery, has not been able to produce, and will not be able
to produce, evidence sufficient to allow the trier of fact to find the existence of any one of the
claimant‟s elements, or (3) that there is no genuine dispute as to the existence of each of the facts
necessary to support the movant‟s properly pleaded affirmative defense. Id. at 381.
The showing required of the non-movant in the face of a properly pleaded summary
judgment motion is the same regardless of whether the non-movant is a claimant or defending
party:
The non-movant never needs to establish a right to judgment as a matter of law;
the non-movant need only show that there is a genuine dispute as to the facts
underlying the movant‟s right to judgment. For purposes of Rule 74.04, a
„genuine issue‟ exists where the record contains competent materials that
evidence two plausible, but contradictory, accounts of the essential facts. A
„genuine issue‟ is a dispute that is real, not merely argumentative, imaginary or
3
All rule references are to Mo. Sup. Ct. R. (2013), unless otherwise indicated.
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frivolous. Where the „genuine issues‟ raised by the non-movant are merely
argumentative, imaginary or frivolous, summary judgment is proper.
Id. at 381-82.
II. Vantage’s Breach of Contract Claim
With respect to Vantage‟s claim for breach of contract, Vantage is the claimant. Thus, to
prevail on its motion for summary judgment for breach of contract, Vantage must show the
absence of any genuine dispute as to the material facts establishing each element of its claim,
and, based upon those facts, that it is entitled to judgment as a matter of law. The essential
elements of a breach of contract action include: (1) the existence and terms of a contract; (2) that
plaintiff performed or tendered performance pursuant to the contract; (3) breach of the contract
by the defendant; and (4) damages suffered by the plaintiff. Keveney v. Mo. Military Acad., 304
S.W.3d 98, 104 (Mo. banc 2010).
Here, the undisputed facts establish that Vantage and Chisholm entered into a contract,
the credit agreement, wherein Vantage agreed to extend credit to Chisholm and Chisholm agreed
to make specified payments. Thereafter, Vantage extended credit to Chisholm in the amount of
$19,183.83. Despite having an unpaid balance, Chisholm has not made payments to Vantage as
required by the credit agreement since December 16, 2010. Consequently, the facts
unequivocally prove that Chisholm breached the credit agreement. As a result of the breach,
Vantage sustained damages in the principal amount $19,183.83, plus interest, attorneys‟ fees,
and finance charges.
Chisholm does not dispute that he was contractually bound to the terms of the credit
agreement, or that he failed to make the payments required thereunder. Rather, Chisholm argues
that Vantage cannot recover on its breach of contract claim because Vantage did not perform the
conditions precedent to the credit agreement. Specifically, Chisholm asserts that Vantage
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promised to provide or procure credit disability insurance coverage to Chisholm but failed to do
so. Chisholm contends that because Vantage did not provide credit disability insurance as it
agreed, Vantage is precluded from suing to enforce the credit agreement.
Not every obligation arising under a contract constitutes a condition precedent. A
condition precedent is a condition that must be fulfilled before the duty to perform an existing
contract arises. Buchheit v. Cape Toyota–Suzuki, Inc., 903 S.W.2d 644, 646 n.3 (Mo. App. E.D.
1995). Conditions precedent are usually created by such phrases as “on condition,” “provided
that,” “so that,” and the like, although such expressions are not necessary if the contract is of
such a nature as to show that parties intended to provide for a condition precedent. Globe Am.
Corp. v. Miller Hatcheries, 110 S.W.2d 393, 396 (Mo. App. K.C. 1937); Kansas City S. Ry. Co.
v. St. Louis-S.F. Ry. Co., 509 S.W.2d 457, 460 (Mo. 1974). We note that conditions precedent
are disfavored by Missouri courts, and contract provisions are construed as such only if
unambiguous language so requires or they arise by necessary implication. Juengel Const. Co.,
Inc. v. Mt. Etna, Inc., 622 S.W.2d 510, 513 (Mo. App. E.D. 1981).
Even assuming, arguendo, that the credit agreement obligated Vantage to provide or
procure credit disability insurance to Chisholm, we are not convinced that any such obligation
was a condition precedent to Chisholm‟s obligation to pay on his unpaid balance. The credit
agreement unequivocally states: “You [Chisholm] promise to pay Us [Vantage] all amounts
charged to Your Account by You or by an user who has access to Your Account, with actual,
apparent or implied authority for use of Your Account, including Finance Charges and other fees
or charges described herein.” The credit agreement then sets forth the minimum monthly
payment and annual interest rate. Notably, the credit agreement lacks any language conditioning
Chisholm‟s obligation to make payments toward his unpaid balance on Vantage‟s procurement
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of credit disability insurance. Chisholm‟s proffered interpretation of the contract is misguided
because Chisholm‟s duty to make payments under the credit agreement is independent of any
duty Vantage owed with respect to providing or procuring credit disability insurance.
Based upon the record before us, we find no genuine dispute as to the material facts
establishing each element of Vantage‟s breach of contract claim. Accordingly, the trial court
properly granted summary judgment in favor of Vantage on its breach of contract claim.
II. Chisholm’s Counterclaims
As to Chisholm‟s counterclaims for vexatious refusal, fraud, and breach of contract,
Vantage is a defending party.4 Thus, to establish a right to summary judgment on each of
Chisholm‟s counterclaims, Vantage is required to show only one of the following: (1) facts that
negate any one of the facts required to establish an element of the claim; (2) that Chisholm, after
a reasonable period for discovery, has not and will not be able to produce evidence for the trier
of fact to find the existence of any one of the elements of his claim; or (3) that there is no
genuine dispute as to the existence of each of the facts necessary to support Vantage‟s properly
pleaded affirmative defense. ITT Commercial Fin. Corp., 854 S.W.2d at 381.
A. Vexatious Refusal to Pay
To establish a claim for vexatious refusal to pay, Chisholm must prove that he had an
insurance policy with Vantage, Vantage refused to pay, and that Vantage‟s refusal was without
reasonable cause or excuse. Dhyne v. State Farm Fire & Cas. Co., 188 S.W.3d 454, 457 (Mo.
banc 2006). Vantage sought summary judgment on the ground that Chisholm cannot prove that
he had an insurance policy with Vantage. Vantage argued that the unambiguous language of the
credit agreement establishes that the agreement was a contract for financial credit, not insurance.
4
Chisholm does not appeal the trial court‟s entry of summary judgment in favor of Vantage on his claim for
violation of the MMPA.
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The elements of an insurance contract are: (1) subject matter, (2) risk or contingency
insured against, (3) the amount of the coverage, (4) the duration of the risk, and (5) the amount
of the premiums to be paid for the protection afforded. Progressive Nw. Ins. Co. v. Wilson, 996
S.W.2d 532, 536 (Mo. App. W.D. 1999). On its face, the credit agreement fails to meet at least
three of these criteria – it does not set forth the risk or contingency insured against; it does not
state the amount of coverage provided; and it does not establish the duration of the risk. As a
result, we find that the credit agreement is not an insurance policy, an element required to prove
vexations refusal to pay. Chisholm may have a claim for vexations refusal to pay against
Transamerica, but that issue is not before us. Because Vantage has negated a required element
of Chisholm‟s claim for vexatious refusal to pay, the trial court properly granted summary
judgment in favor of Vantage on said claim.
B. Fraud
To recover on a claim for fraud, Chisholm must prove the following elements: (1) a
representation; (2) its falsity; (3) its materiality; (4) Vantage‟s knowledge of its falsity; (5)
Vantage‟s intent that the representation be acted upon by Chisholm; (6) Chisholm‟s ignorance of
its falsity and right to rely on its truth; which (7) proximately caused injury. Hanrahan v. Nashua
Corp., 752 S.W.2d 878, 883 (Mo. App. E.D. 1988). Importantly, a plaintiff must state all
averments of fraud with particularity, except malice, intent, knowledge and any other condition
of mind which can be averred generally. O‟Neal v. Stifel, Nicolaus & Co., Inc., 996 S.W.2d
700, 703 (Mo. App. E.D. 1999); Rule 55.15.
Vantage sought summary judgment on this counterclaim on the grounds that Chisholm
could not prove the first two elements of fraud – a representation and its falsity. In his petition,
Chisholm does not aver any specific language in the credit agreement alleged to be false, nor
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does he assert that Vantage made an oral misrepresentation. Instead, Chisholm‟s petition only
generally alleges that he “relied upon [Vantage‟s] representations that [it] would provide
coverage in the event that Chisholm became disabled.” We agree with the trial court that
Chisholm did not identify any allegedly fraudulent representation with the specificity necessary
to prove fraud under Missouri law. Id. Because a required element of this counterclaim is
negated by Chisholm‟s pleading, the trial court did not err in granting summary judgment in
favor of Vantage on Chisholm‟s claim for fraud.
C. Breach of Contract
Vantage‟s motion for summary judgment on Chisholm‟s counterclaim for breach of
contract is premised on Vantage‟s assertion that Chisholm sued Vantage as an insurer for breach
of an insurance contract. In support of its summary judgment motion, Vantage simply argued
that it is not an insurance company and that the credit agreement was not a contract for
insurance. The trial court agreed and concluded that because the credit agreement is not a
contract for insurance, Chisholm cannot prove a necessary element of his breach of contract
claim.
We agree with the trial court that the credit agreement entered into by Chisholm and
Vantage is not a contract for insurance, and therefore, Chisholm cannot recover against Vantage
for failure to provide credit disability insurance coverage. See supra section A. However,
though the counterclaim as drafted is no model for clarity, we read Chisholm‟s counterclaim to
allege more than the breach of an insurance contract. Viewing the record in the light most
favorable to Chisholm, we find that Chisholm‟s counterclaim for breach of contract includes
allegations that when Chisholm purchased optional credit disability insurance through Vantage,
Vantage agreed to process any potential claims on behalf of Transamerica, as an agent of
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