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Friday, June 20, 2008
Wednesday, February 13, 2008
New Missouri Arbitration Case - Ullrich v. Cadco
The Missouri Court of Appeals for the Eastern District of Missouri has recently (January 29, 2008) issued an opinion clarifying several issues with regard to the Missouri Merchandising Practices Act (MMPA), chapter 407. The case, Ullrich v. Cadco, ED 89395, involved a purchaser's fraud claim against the seller of a modular home. The purchaser made various allegations of fraud. He claimed that the seller indicated, for instance, that a special septic system would not be necessary when it actually was, at an additional cost of more than $8,000. The plaintiff claimed that the trial court improperly dismissed several of his theories of recovery and improperly limited his damages (the court had ruled in favor of the plaintiff after a two-day nonjury trial).
In his first point, the plaintiff argued that the trial court improperly applied Missouri rule 55.15, when it held that the plaintiff had to plead violations of the MMPA with particularly, under the same requirement as common-law fraud. The Court of Appeals agreed. The Court of Appeals ruled that "the MMPA supplements the definition of common-law fraud, eliminating the need to prove an intent to defraud or reliance. The statute and the regulation paint in broad strokes to prevent evasion thereof due to overly meticulous definitions." The court indicated that the plaintiff's fourth amended petition "included detailed descriptions of the circumstances leading up to the filing of a lawsuit. For instance, the plaintiff alleged that:
A second issue concerned the statute of limitations for MMPA claims. The court held that, under the "relation back doctrine," if the claim asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading. Consequently, "a claim alleging a violation of the MMPA based on a contract must be filed within five years from the time the plaintiff discovers he sustained damage as a result of the violation."
A third major issue in the case concerned the merging of damages. As the Court of Appeals explained, in a contract action, consequential damages are those damages naturally and proximately caused by the commission of the breach of contract. The plaintiff bears the burden of proving these. The court held that claims for breach of contract, fraud and MMPA violations are not inconsistent legal theories of recovery. Thus, "a plaintiff asserting all of those claims is not required to make an election of remedies and may recover consequential damages in addition to actual damages and benefit of the bargain damages. These damages urge, however, if the damages for all of those claims are the same.
The court also considered the admissibility of offers of settlement. Although they are not generally admissible at trial, they might be admissible to the extent that they constitute "an admission of an independent fact relevant to an issue between the parties." In this case, a settlement proposal was admissible on the issue of whether the defendant ever intended to perform the party's original agreement, at least on the issue of punitive damages.
A final issue was whether evidence of defendant's transactions not connected with the case could be admissible. The court held that evidence of such other acts is admissible "if those acts are sufficiently connected to the wrongful acts at issue so that evidence of the other acts may tend to show the defendant's disposition, and tent, or motive in the commission of the accident near instant case."
In his first point, the plaintiff argued that the trial court improperly applied Missouri rule 55.15, when it held that the plaintiff had to plead violations of the MMPA with particularly, under the same requirement as common-law fraud. The Court of Appeals agreed. The Court of Appeals ruled that "the MMPA supplements the definition of common-law fraud, eliminating the need to prove an intent to defraud or reliance. The statute and the regulation paint in broad strokes to prevent evasion thereof due to overly meticulous definitions." The court indicated that the plaintiff's fourth amended petition "included detailed descriptions of the circumstances leading up to the filing of a lawsuit. For instance, the plaintiff alleged that:
CADCO engaged in unlawful practices as defined in Section 407.020 by
misrepresenting their qualifications to act as general contractors in the
aforementioned contract ... by failing to deliver the modular home to the
construction site and erecting it; by failing to remain within the budget for
the construction process; and by failing to perform the terms of the contract as
originally agreed to by the parties.” It was not necessary for Ullrich to allege
the elements of common law fraud or that CADCO intended to defraud him by
misrepresenting its qualifications to act as general contractor or that Ullrich
relied on CADCO's misrepresentations as the basis for entering into the contract
in order to adequately plead his cause of action under the MMPA.
This sort of information was sufficient to allege a cause of action under the MMPA,
according to the Court of Appeals.
A second issue concerned the statute of limitations for MMPA claims. The court held that, under the "relation back doctrine," if the claim asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading. Consequently, "a claim alleging a violation of the MMPA based on a contract must be filed within five years from the time the plaintiff discovers he sustained damage as a result of the violation."
A third major issue in the case concerned the merging of damages. As the Court of Appeals explained, in a contract action, consequential damages are those damages naturally and proximately caused by the commission of the breach of contract. The plaintiff bears the burden of proving these. The court held that claims for breach of contract, fraud and MMPA violations are not inconsistent legal theories of recovery. Thus, "a plaintiff asserting all of those claims is not required to make an election of remedies and may recover consequential damages in addition to actual damages and benefit of the bargain damages. These damages urge, however, if the damages for all of those claims are the same.
The court also considered the admissibility of offers of settlement. Although they are not generally admissible at trial, they might be admissible to the extent that they constitute "an admission of an independent fact relevant to an issue between the parties." In this case, a settlement proposal was admissible on the issue of whether the defendant ever intended to perform the party's original agreement, at least on the issue of punitive damages.
A final issue was whether evidence of defendant's transactions not connected with the case could be admissible. The court held that evidence of such other acts is admissible "if those acts are sufficiently connected to the wrongful acts at issue so that evidence of the other acts may tend to show the defendant's disposition, and tent, or motive in the commission of the accident near instant case."
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