W. Dudley McCarter
Behr, McCarter & Potter
St. Louis

James Berger filed suit against Cameron Mutual Insurance Company, alleging breach of an insurance contract by Cameron's refusal to pay a claim. The trial court entered judgment in favor of Cameron. Within 30 days after the judgment, Berger filed a motion for rehearing. That motion was never ruled on and Berger did not file a notice of appeal. Nine months later, Berger filed with the Court of Appeals his motion for a special order to file a late notice of appeal, pursuant to Supreme Court Rule 81.07. Attached to the motion was an affidavit from Berger's counsel stating that the delays in the case were attributable to various medical issues and computer problems that resulted in the file being lost. The Court of Appeals overruled Berger's motion, but the Supreme Court granted it in Berger v. Cameron Mutual Insurance Co., No. SC 86622 (Mo. banc 2005).

Timely filing of a notice of appeal is jurisdictional. A notice of appeal must be filed no later than 10 days after the judgment being appealed becomes final. Rule 81.07(a) establishes a process for obtaining a special order permitting a late notice of appeal. That rule states that the motion for the special order must be filed within six months from the date of final judgment. Cases should be heard on the merits, if possible, and court rules should be construed liberally to allow an appeal to proceed. In determining whether a motion is an authorized after-trial motion, Missouri courts have looked not to the nomenclature employed by the parties, but to the actual relief requested in the motion. A motion that operates as a motion for a new trial is an authorized after-trial motion.

Berger's motion for rehearing alleged several bases of trial court error regarding contested legal and factual issues and constitutes an authorized after-trial motion. Because the motion was never ruled upon, by operation of Rule 81.05(a)(2), the judgment became final 90 days after the motion was filed, i.e. on June 23, 2004. The December 20, 2004 motion of Berger to file a late notice of appeal was timely, because it was filed within six months of the date the judgment became final, as required by Rule 81.07. The affidavit of Berger's counsel shows that the failure to timely file the notice of appeal was the result not of culpable negligence, but of negligence arising out of difficult circumstances largely beyond counsel's control. The motion for special order to file a late notice of appeal is sustained.

Political Subdivision May Be Sued for Breach of Contract in County Where Plaintiff Resides

Control Technology and Solutions (CTS) entered into a contract with the Malden R-1 School District to provide certain work and materials for the improvement of two school buildings. CTS is located in St. Louis County; Malden School District is located in Dunklin County. CTS filed a lawsuit against Malden in St. Louis County seeking payment of $720,000 for the work it did under the contract. CTS alleged that venue was proper in St. Louis County under § 70.320, RSMo. Malden filed a motion to dismiss for improper venue, requesting that the action be transferred to Dunklin County pursuant to § 508.050, RSMo. The trial court granted Malden's motion, but the Court of Appeals reversed in Control Technology and Solutions v. Malden R-1 School District, No. ED85796 (Mo. App. E.D. 2005).

Venue is determined solely by statute. Statutory construction is a question of law, not judicial discretion. The fact that venue is proper in one county does not mean that venue is improper in another. Section 508.050, entitled "Suits Against Municipal Corporations, Where Commenced," states that suits against municipal corporations shall be commenced only in the county in which the municipal corporation is situated. On the other hand, § 70.320, RSMo, entitled "Suits May Be Brought In Circuit Courts," provides that suits affecting the terms of any contract may be brought in the circuit court of the county in which any contracting municipality or political subdivision is location or in the circuit court of the county in which a party to the contract resides. Section 70.320 is a more specific statute than § 508.050 because it was enacted as part of a specific statutory scheme creating and governing a specific act, namely contracting, between specific parties, namely municipal corporations and governmental units as well as private persons.

Also, § 70.320 was enacted eight years after § 508.050. A chronologically later statute, which functions in a particular way, will prevail over an earlier statute of a more general nature, and the latter statute will be regarded as an exception to or qualification of the earlier general statute. We presume the legislature acts with the knowledge of statutes involving similar or related subject matters. The two statutes can be reasonably reconciled, in that § 70.320 provides an alternative venue against municipal corporations when the lawsuit involves a dispute over a contract. If we held that § 508.050 governed all cases against municipal corporations, including ones involving contracts to the exclusion of § 70.320, then § 70.320, as it reads on its face, would be rendered meaningless. We presume the legislature does not enact meaningless provisions.

Trial Court Abused Its Discretion in Admitting Evidence of Prior Conviction

Michael McCoy was pulled over for a traffic violation and arrested for driving with a suspended license. The arresting officer noticed that McCoy's hands were stained yellow, consistent with stains from Iodine, an ingredient used to manufacture methamphetamine. The night of his arrest, he and Karrie Bowen were at a house that contained an operational metham-phetamine laboratory. McCoy asked Bowen to tear apart matchbooks to help him make methamphetamine and she complied. A later search of the house revealed the methamphetamine laboratory and the items that Bowen had identified. McCoy was charged with attempting to manufacture a controlled substance and unlawful use of drug paraphernalia. Bowen reached a plea agreement with the state and testified against McCoy at trial. McCoy presented no evidence at trial. McCoy filed a motion in limine to prohibit the state from referring to his prior conviction for creation of a controlled substance with the intent to manufacture methamphetamine. The trial court ruled that the conviction could be admitted for the limited purpose of showing McCoy's knowledge of the methamphetamine manufacturing process. The state referred to his prior conviction during trial, which was admitted over McCoy's objection. McCoy was convicted, but the Court of Appeals reversed in State of Missouri v. McCoy, No. E.D. 85010 (Mo. App. E.D. 2005).

Evidence of prior crimes is legally relevant, and therefore admissible, only when its probative value outweighs its prejudicial effect. Generally, evidence of other similar crimes is not admissible to show that a person has a propensity to commit the crime charged. Evidence of other crimes may be admissible, however, to show intent, motive, identity, absence of mistake, or a common scheme or plan. If intent is the basis for the admission of otherwise inadmissible evidence, then the defendant's intent must be a legitimate issue in the case. Otherwise, there is no need for such evidence.

McCoy argued that the police did not find him in possession of any methamphetamine paraphernalia. This did not raise the specific issues of his intent to commit the crime, or his knowledge of how to manufacture methamphetamine. General denial of involvement in a crime is not sufficient to make intent a legitimate issue. The fact that knowledge and intent were elements of the charged crimes did not render McCoy's prior conviction automatically admissible. The probative value of McCoy's prior conviction was slight and was outweighed by its highly prejudicial effect of alluding to McCoy's propensity to commit the crime and his bad character. Admitting the prior conviction was an abuse of the trial court's discretion.

Trial Court Erred in Failing to Submit Verdict Directing Instruction That Had Evidentiary Support

April Banther went to the Aurora Community Hospital Emergency Room, where she stated that she had shortness of breath and had been coughing for a week. Dr. Steven Drew examined her and decided she did not have the usual symptoms of pneumonia. He did not order any tests that would rule out pneumonia and diagnosed her with asthmatic bronchitis. He ordered a breathing treatment for her, which resulted in significant improvement of her air flow. After she told Dr. Drew that she felt better, he discharged her with a prescription for cough medicine and an inhaler. The next day, her condition became worse and she went back to the emergency room. She was then transferred to St. John's Hospital in Springfield, where she was found to be in critical condition due to her breathing problems. After a battery of tests and treatment, she was diagnosed with pneumonia and died two days later. Her mother filed a wrongful death action against Dr. Drew. At trial, plaintiff submitted a verdict directing instruction that would have allowed the jury to render a verdict in favor of plaintiff if it found that Drew negligently failed to prescribe antibiotics. The trial court rejected this instruction and the jury returned a verdict for Dr. Drew. The Court of Appeals reversed, however, in Banther v. Drew, No. 26466 (Mo. App. S.D. 2005).

To make a prima facie case for medical malpractice, plaintiff must prove that defendant failed to use that degree of skill and learning ordinarily used under the same or similar circumstances by members of defendant's profession and that the negligent act or acts caused plaintiff's injury. Whether an issue has been sufficiently proven at trial to be submitted to the jury is a legal question and not an exercise of judicial discretion. In order for a claim to be properly submitted to the jury, each fact essential to liability must be predicated upon legal and substantial evidence. Substantial evidence is that evidence which, if true, is probative of the issues and from which the jury can decide the case. Plaintiff's expert testified that the standard of care was not met because there was no chest x-ray, no laboratory and no antibiotics prescribed. He further testified that he would have prescribed an oral antibiotic in the macrobiotic class and that the failure to administer antibiotics directly contributed to April's death.

Here, the expert's testimony, when considered in the light most favorable to plaintiff, constituted substantial evidence that defendant violated the applicable standard of care and that it caused or contributed to April's death. It is not for the appellate court to pass on the credibility of the evidence, but rather to assess whether there was substantial evidence as to the claim plaintiff sought to submit to the jury. Substantial does not necessarily mean quantity or even quality, it simply means that the evidence relied on must be probative of the issues it was offered to prove. While the evidence concerning antibiotics was not overwhelming, that which was presented tended to prove that defendant had a duty to administer antibiotics to April, that he did not do so, and that this omission caused or contributed to her death. The testimony that was put before the jury was probative of the essential facts necessary to support giving the verdict directing instruction that included defendant's failure to prescribe antibiotics.

Separate Guarantee of Payment Document Not Required Where Payment Terms in Agreement Were Not Ambiguous

Willye Horton admitted her father to the Care Center of Kansas City, a skilled nursing facility. She signed a one-page document entitled "Conditions of Admission." The final paragraph, entitled "Financial Agreement," states that "The undersigned agrees.that in consideration of the services to be rendered to the resident, he/she hereby individually obligates himself/herself to pay the account of the facility in full at discharge." In addition, above the signature line where Ms. Horton signed as "Responsible Party," another provision stated, "I/We, the undersigned, agree on consent of admission, to pay all costs, charges and expense incurred on behalf of the resident admitted. . . ." Horton's father was a resident at the Care Center for four years prior to his death. After his death, the Care Center sent Ms. Horton a final account statement with a balance due of $14,773. When Ms. Horton refused to pay, the Care Center filed suit against her. The trial court found in favor of Horton, stating that the document she signed was ambiguous because it was entitled "Conditions of Admission," and that the financial agreement was buried in the document instead of being set forth in a separate document. The Court of Appeals reversed, however, in Care Center of Kansas City v. Horton, No. WD 64613 (Mo. App. W.D. 2005).

Words used in a contract must be given their plain and ordinary meaning. A contract is ambiguous only if its terms are reasonably open to more than one meaning, and the meaning of the language is uncertain. A provision is not ambiguous merely because the parties disagree over its meaning. Based on the plain and ordinary meaning of the words used in the "Conditions of Admission," the financial terms were neither uncertain nor capable of conflicting interpretations. The document clearly states that a party who signs the document thereby accepts personal responsibility for payment of the resident's account. Given the clarity of the contractual language, no separate document was necessary to bind Ms. Horton as a guarantor on her father's account. The trial court erred in concluding the financial agreement was ambiguous and unenforceable. The contract must be enforced as written.

Trial Court Did Not Err in Refusing to Give Withdrawal Instruction

Kevin Haffey purchased a gas-powered generator manufactured by Generac Portable Products. He placed the generator on a concrete slab and partially enclosed it with a metal roof and two walls. One day, while using the generator, his wife heard noises and noticed the lights flicker. She went outside and discovered that the wall next to the generator was in flames. As a result of the fire, the building was completely destroyed. Haffey filed a products liability suit against Generac. At trial, Haffey and his two expert witnesses were cross-examined extensively about the extent to which the gas tank on top of the generator was filled, whether the generator was too close to the wall of the building, preventing proper ventilation, and whether the generator had been left in its original wooden crate when placed on the concrete slab. Generac presented no evidence and the jury returned a verdict for Generac. Haffey appealed, contending that the trial court failed to give three withdrawal instructions, but the Court of Appeals affirmed in Haffey v. Generac Portable Products, No. 26437 (Mo. App. S.D. 2005).

Withdrawal instructions may be given when evidence on an issue has been received, but there is inadequate proof for submission of the issue to the jury; when there is evidence presented which might mislead the jury in its consideration of the case as pleaded and submitted; when there is evidence presented directed to an issue that is abandoned; or when there is evidence of such character that might easily raise a false issue. Determining whether to give a withdrawal instruction is within the trial court's discretion. Abuse of discretion occurs only when a trial court's ruling is clearly against the logic of the circumstances and is so arbitrary and unreasonable as to shock one's sense of justice and indicate a lack of careful consideration.

The plaintiff has the burden of proof and a verdict for defendant need not be supported by any evidence. The party not having the burden of proof on an issue need not offer any evidence concerning it. As a general rule, a witness may be asked any questions on cross-examination that tend to test accuracy, veracity or credibility, or shake the witness' credit by injuring his or her character. The trial court may not exclude relevant and material facts simply because counsel seeks to elicit such facts on cross-examination. Here, Generac's defense was based on evidence elicited during cross-examination of plaintiff and his experts, tending to show misuse of the generator by plaintiff. Generac properly exercised its right to cross-examine plaintiff and his witnesses regarding their factual observations and conclusions. The jury is the sole judge of the credibility of the witnesses and the weight and value of their testimony and may believe or disbelieve any portion of their testimony. The tendered withdrawal instructions went too far in withdrawing from consideration evidence relating to the possible misuse of the generator by plaintiff. Such evidence was properly admitted for the consideration of the jury in determining the existence of a defect and the causation of the accident.

Trial Court Lacked Jurisdiction Once Petition Had Been Dismissed

Nick and Faye Fortner filed a lawsuit against Fleetwood Enterprises alleging, among other things, that their son suffered mold sickness resulting from the defects in the manufactured home that they purchased from Fleetwood. Fleetwood filed a motion for partial summary judgment, which was argued before the trial court. After that hearing, the trial court entered a ruling on its docket sheet stating that it was sustaining defendant's motion for partial summary judgment. The next day, relying on Rule 67.02, the Fortners filed a voluntary dismissal, without prejudice, of their suit against Fleetwood. After that dismissal, the trial court signed and file-stamped a partial judgment in favor of Fleetwood and dismissed the suit with prejudice. The Fortners filed a petition for a writ of prohibition to set aside the trial court's judgment. The Court of Appeals made its preliminary writ of prohibition absolute in State of Missouri, ex rel. Fortner v. Rolf, No. WD64974 (Mo. App.W.D. 2005).

A voluntary dismissal is effective on the date it is filed with the court. Once a plaintiff dismisses a case under Rule 67.02(a), it is as if the suit were never brought. Thereafter, the trial court loses jurisdiction to enter any subsequent orders as to the dismissed action. Here, the dispositive question is whether the Fortners' voluntary dismissal was proper under Rule 67.02(a)(2), i.e. whether it was made prior to the introduction of evidence. To interpret Rule 67.02 in a manner that would preclude a plaintiff from voluntarily dismissing a case after the introduction of evidence concerning pre-trial matters for court-tried cases, but to permit a voluntary dismissal up until the point a jury panel is sworn for voir dire examination in jury-tried cases, would create an absurd result. Interpreting "prior to the introduction of evidence" to mean introduction of evidence "at the trial" is consistent with the standard for jury-tried cases where the point in time in which a plaintiff loses the absolute right to voluntarily dismiss a case is immediately prior to the beginning of trial, i.e. when the jury panel is sworn for voir dire examination. Thus, this court finds that "prior to the introduction of evidence" in Rule 67.02(a)(2) means "prior to the introduction of evidence" at the trial. While it may seem unfair that the Fortners can use a voluntary dismissal to avoid a partial summary judgment, it would be more inequitable to have rulings on partial summary judgments preclude a voluntary dismissal in a court-tried case, but not in a jury-tried case. Therefore, because the Fortners voluntarily dismissed their cause of action prior to the introduction of evidence at trial, their dismissal under Rule 67.02 was effective on the date it was filed and the trial court lost jurisdiction to enter any subsequent orders.

Corporate Veil May Be Pierced Where Corporation Was Undercapitalized and Used to Commit Wrong

Mobius Management Systems leased commercial property to West Physician Search, LLC. The lease was signed by David West as managing member. West Physicians defaulted under the lease and Mobius filed a rent and possession lawsuit. Mobius obtained a judgment against West for $175,000. When collection efforts were unsuccessful, Mobius filed a motion to pierce the corporate veil and for a creditor's bill, seeking to recover personally from David West. The motion alleged that the LLC was undercapitalized, failed to follow corporate formalities and was a sham entity used by David West, who had complete control over it. The motion to dismiss of West Physician Search, LLC was granted, but the Court of Appeals reversed in Mobius Management Systems v. West Physician Search, LLC, No. ED 85723 (Mo. App. E.D. 2005).

In some circumstances, a court may disregard a corporate entity and hold its owners personally liable for corporate debts. In order to "pierce the corporate veil," the plaintiff must first show control - not mere majority or stock control, but complete domination, not only of finances, but of policy and business practice with respect to the transaction, such that the corporate entity had no separate mind, will or existence of its own. The plaintiff must show that the corporation is the alter ego of the defendant. When a corporation is so dominated by a person as to be a mere instrument of that person, and indistinct from the person controlling it, the court will disregard the corporate form if its retention would result in injustice.

Second, plaintiff must show a breach of duty - that this control was used by the corporation to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or to commit a dishonest and unjust act in contravention of the plaintiff's legal rights. It is not necessary, however, to show actual fraud. In some situations, the corporate veil may be pierced when a corporation is undercapitalized, or when its assets are stripped to avoid creditors. Inadequate capitalization is circumstantial evidence of an improper purpose or reckless disregard for the rights of others. In his deposition, David West acknowledged that the LLC never had sufficient capital to operate and entered into the lease without sufficient capital to fulfill its obligations. Thus, David West used his control over the LLC to avoid its obligations to Mobius.

Finally, plaintiff must show that the control and breach of duty proximately caused the injury or unjust loss. Clearly, Mobius suffered an injury - an unpaid judgment of $175,000 - and this injury was proximately caused by David West's conduct. All three elements required to pierce the corporate veil - control, breach of duty and proximate cause - are present. Thus, the judgment is reversed and remanded.

Insurer Must Show Prejudice Before Denying Coverage on Basis of Untimely Claim

Michael Carroll was injured in an automobile collision when he ran a stop sign in the City of Stanberry. He filed suit against the city alleging that the city failed to trim overgrown trees that obscured the stop sign. The city notified the Missouri Intergovernmental Risk Management Association (MIRMA) of the lawsuit, but MIRMA denied the claim as being untimely under MIRMA's claim procedures. Prior to trial, Carroll and the city agreed that Carroll would only seek collection of any judgment from MIRMA. At trial, the city presented no evidence and the court found in Carroll's favor, awarding him $150,000. Carroll filed an equitable garnishment action against MIRMA and MIRMA defended on the grounds that the city's claim was not covered due to its untimely submission. The trial court granted summary judgment to Carroll and the Court of Appeals affirmed in Carroll v. Missouri Intergovernmental Risk Management Association, No. WD 64180 (Mo. App. W.D. 2005).

Missouri courts have consistently placed the burden on insurers to demonstrate that they are prejudiced by receiving late notice of a claim before allowing the companies to avoid coverage under a policy because of the late notice. The requirement that the insurer bear the burden of proving prejudice from late notice is a judicially-created exception to the rule that the insured bears the burden of showing compliance with the requisite policy conditions in order to make a submissible claim for recovery. This exception is based on public policy. The function of the notice requirement is simply to prevent the insurer from being prejudiced, not to provide a technical escape-hatch by which to deny coverage in the absence of prejudice, nor to evade the fundamental protective purpose of the insurance contract to assure the insured and the general public that liability claims will be paid up to the policy limits for which premiums were collected. Therefore, unless the insurer is actually prejudiced by the insured's failure to give notice immediately, the insurer cannot defeat its liability under the policy because of the non-prejudicial failure of its insured to give immediate notice of an accident or claim as stipulated by a policy provision.

Missouri courts have not limited the prejudice requirement to insurance companies, but have extended it to entities that act as self-insurance associations, such as MIRMA. Missouri courts have applied the prejudice exception whenever a business entity is contractually obligated to provide liability insurance, no matter how the entity is organized or operates under law. MIRMA provides insurance to its members and is thereby subject to the prejudice requirement under Missouri common law.