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

Purcell Tire & Rubber Co. hired Executive Beechcraft to inspect a used airplane that Purcell was considering buying. The contract signed by Purcell and Beechcraft limited Beechcraft's liability from any damages claimed under the agreement to the contract price of $1,250. Beechcraft inspected the plane and issued a written report that did not mention any oil leak. Purcell purchased the plane for $2,080,000 and discovered an oil leak that grew progressively worse. After Purcell repaired the oil leak, it sued Beechcraft for $372,000 in damages. The trial court enforced the limitation of liability clause in the contract, limiting Purcell's recovery to $1,250. The Supreme Court of Missouri affirmed in Purcell Tire & Rubber Co. v. Executive Beechcraft, No. SC 83383 (Mo. banc 2001).

Purcell Tire and Beechcraft are sophisticated businesses that contracted at arm's length. Sophisticated parties have freedom of contract; they may contractually limit future remedies. Clear, unambiguous, unmistakable and conspicuous limitations of negligence liability – as in this contract – do not violate public policy. Sophisticated businesses that negotiate at arm's length may limit liability without specifically mentioning negligence, fault, or equivalent terms. To the extent that other Missouri appellate court decisions require sophisticated parties to specifically negotiate and "bargain for" a liability limitation, they should no longer be followed.

Moreover, the damages fixed in the contract are not so disproportionately small as to make the liability limitation unconscionable. Where both parties are sophisticated businesses and damages are economic, courts rarely find that liability limitations are unconscionable. Finally, the contract was not ambiguous in the commercial context here. Language that is ambiguous to an unsophisticated party may not be ambiguous to a sophisticated commercial entity. Beechcraft and Purcell Tire were sophisticated businesses, experienced in this type of transaction.

Wal-Mart Liable For Wrongful Death of Pedestrian Struck by Car in Parking Lot

Hazel Poloski was killed when she was struck by a vehicle while walking in a crosswalk in a Wal-Mart parking lot. The vehicle was driving parallel to the front of the store and the driver was looking to her left in search of a parking space. She was approaching the third of three entrances to the Wal-Mart store. Although each of the entrances had yellow stripes painted on the pavement designating crosswalks, the yellow paint in front of the third entrance, where Ms.Poloski was struck, was somewhat faded. Also, the first two crosswalks were marked by pedestrian crosswalk signs, but the third was not. The jury assessed damages against Wal-Mart of $122,000 and the Court of Appeals affirmed in Poloski v. Wal-Mart Stores, No. WD 59205 (Mo. App. W.D. 2001).

A jury's verdict will not be overturned unless there is a complete absence of probative facts to support it. In order to prove causation, a plaintiff must prove that "but for" the breach of duty, the event would not have occurred. The "but for" test is neither an onerous nor difficult test for causation. The trier of fact normally decides causation, particularly where under the facts of the case, reasonable minds could differ as to causation. Among the factors the jury could have considered was the absence of a crosswalk marking sign at the area where Ms. Poloski was killed. Although a pole for the sign was present, the sign had been missing for some time, so that the first two crosswalks through which the driver proceeded were marked, while the third was not. Viewed in the light most favorable to the plaintiff and disregarding all contrary evidence and inferences, there was substantial evidence that Wal-Mart's negligence was a direct and proximate cause of Ms. Poloski's death.

Successor Corporation May Be Liable for Debts of Predecessor Under Corporate Continuation Doctrine Even If There is No Identity of Officers

Roper Electric Company was hired by Quality Castings, Inc. to repair QCI's electrical control panels. QCI experienced financial difficulties and never paid Roper for its repair services. As QCI's financial difficulties increased, it entered into a "Sale of Assets Agreement," by which Bagby Enterprises, Inc. received the assets of QCI and agreed to pay the bank loan secured by the assets of QCI. Bagby retained all of QCI's employees, and continued the exact same business of QCI using the same equipment. Bagby never notified Roper Electric or QCI's customers of any change in ownership and held itself out to the public by utilizing the same trade name as QCI. It operated in the same location as QCI, had the same phone number and collected QCI's accounts receivable. The trial court found that Bagby was liable for QCI's debt to Roper Electric, since it was a mere corporate continuation of QCI. The Court of Appeals affirmed in Roper Electric Co. v. Quality Castings and Bagby Enterprises, Inc., No. 24081 (Mo. App. S.D. 2001).

The general rule in Missouri is that where one corporation sells or otherwise transfers all of its assets to another corporation, the latter is not liable for the debts of the former. There are, however, four exceptions to this general rule and one is where the purchasing corporation is merely a continuation of the selling corporation. The identity of the officers, directors and shareholders is merely one factor in determining liability under the corporate continuation theory, and lack of identity of officers, directors and shareholders does not preclude a finding of corporate continuation. While other jurisdictions require an identity of officers, directors and shareholders in both corporations before a corporate continuation can be found to exist, this identity is not a prerequisite to corporate continuation liability in Missouri. There was substantial evidence to support the trial court's determination that Bagby was the corporate continuation of QCI, without the identity of officers, directors and shareholders between QCI and Bagby. Other factors the court could consider were whether the business operations were identical, whether the transferee used the same trucks, equipment, labor force, supervisors and name of the transferor, and whether notice had been given of the transfer to employees or customers.

College May Be Liable For Injury to Student at Fraternity House

John Letsinger was a student at Drury College and lived in the Kappa Alpha fraternity house (K.A. House). Following an argument with Letsinger over the phone, Joe Daniel came to K.A. House, pulled a gun and shot Letsinger. After the conversation, and before Daniel had arrived, Letsinger attempted to close and lock the front door of the K.A. House, but couldn't do so. The property on which the K.A. House was located was owned by Drury. In the lease agreement by which Drury leased the property, Drury agreed to maintain the premises in good repair and had authority to enter the leased premises at reasonable times to examine the condition of the house. Letsinger filed suit against Drury, alleging that it breached this duty to maintain and repair the K.A. House and, thereby, failed to ensure the security of its occupants. The trial court granted summary judgment for Drury, but the Court of Appeals reversed in Letsinger v. Drury College, et al, No. 24037 and 24160 (Mo. App. S.D. 2001).

As a general rule, Drury had no duty to protect Letsinger from a deliberate criminal attack by a third person, but there is an exception to this general rule when: (1) a landlord-tenant relationship exists, and (2) other special circumstances are present warranting, as a matter of policy, the shift of responsibility for tenant security from the tenant to the landlord. Special circumstances in this context means evidence that shows the risk of being attacked was increased by some action or failure of the landlord. The evidence regarding a landlord-tenant relationship was conflicting and there was also contradictory evidence regarding who made occupancy decisions for the K.A. House and who collected the rent from its occupants. If it is determined that Drury was Letsinger's landlord, however, Drury's allegedly reckless enhancement of the ordinary risks of criminal activity constitutes a special circumstance under which liability can be imposed on Drury.

The K.A. House doors were not reasonably safe for some time and there was evidence that Drury knew of the need to replace the K.A. House doors, but did nothing to do so. There was also testimony that Drury maintenance personnel were frequently at the K.A. House to perform maintenance and repairs. With the exercise of reasonable diligence, Drury could have foreseen that some type of injury to K.A. House occupants was a natural and probable consequence of its failure to replace the defective doors on the K.A. House. There is evidence to support the view that Drury should have known there was a chance of injury to the K.A. House occupants if intruders could freely enter the house without the impediment of locked doors, especially since Drury officials knew, long before this incident, that frequent alcohol consumption occurred at the K.A. House. If the evidence shows that Drury enhanced the ordinary risk that K.A. House occupants might be injured by intruders by failing to supply adequate locks to safeguard the K.A. House after Drury had notice of this defect, then Drury could be liable for Letsinger's injuries, even though an intervening criminal act occurred.

Mechanic's Lien Was Valid, Even Though Non-Lienable Items Were Included in the Account Statement

KMC Construction Co. performed work on a building owned by the Monias. KMC did not finish all of the work under its agreement with the Monias, and the Monias hired others to finished the job. When KMC was not paid, it filed a mechanic's lien against the Monias' property in the amount of $17,880. After a non-jury trial, the trial court entered judgment enforcing KMC's mechanic's lien in the amount of $6,316, and also awarded KMC judgment on its quantum meruit claim in the amount of $7,738. On appeal, the Monias contended that the mechanic's lien was void because it included non-lienable items. The Court of Appeals affirmed the judgment, however, in American Property Maintenance d/b/a KMC Construction Co. v. Monia, No. ED 78346 (Mo. App. E.D. 2001).

There is no precise definition of the statutory requirement that a lien contain a just and true account, and whether the lien statement is a just and true account depends upon the particular facts of the case. The lien statement may be regarded as just and true, so as not to vitiate the entire lien, if the inclusion of non-lienable items is a result of honest mistake or inadvertence without the intent to defraud and if the non-lienable items can be separated from the lienable items. There was no indication that KMC included the non-lienable items in the lien account statement, either with the intent to defraud, or as the result of anything other than an honest mistake or inadvertence. The trial court is permitted to separate the lienable items from an item improperly included in the lien statement if it was not included with the intent to defraud. Also, prejudgment interest was properly awarded; an award of prejudgment interest is mandatory in a mechanic's lien claim, once the trial court assesses the principal amount due on the claim.

Restrictive Covenants May Be Waived By Wide Spread Violations

Prairie Heights was a 10-lot subdivision. In 1977, the owner of lot 9 began using that lot as a parking lot for his adjoining business. In 1984, Joe and Judy Mackey bought the adjacent lot and made it their residence. In 1994, Mr. Griggs began using lot 9 as a parking lot for the employees of his t-shirt manufacturing facility. Griggs purchased lot 9 in 1995 and in 1997 began using the lot for parking of his new restaurant and bar. The Mackeys filed suit against Griggs, contending that his use of lot 9 as a parking lot violated the restrictive covenants for the subdivision. The trial court enjoined Griggs, but the Court of Appeals reversed in Mackey v. Griggs, No. 23998 (Mo. App. S.D. 2001).

Restrictive covenants are to be strictly construed, as the law favors untrammeled use of real estate. When there is ambiguity as to the meaning of the terms, the covenants will be read narrowly in favor of free use of the property. The restrictive covenants state that the lots are restricted to residential uses only and no commercial establishments are allowed. Though inartfully drafted, the covenant restricts the use of the land and is not simply a structural restriction. Use of the lot for parking violates the commercial use prohibition and residential use requirement.

The Mackeys were not barred from enforcing the restrictive covenants under the doctrine of laches. Delay alone is insufficient to establish laches. The use of lot 9 by Griggs substantially changed with the opening of the restaurant and bar. The Mackeys did not delay assertion of their claim for an unreasonable or unexplained length of time. Equity does not encourage laches except to prevent injustice.

There were, however, widespread violations of the restrictions in that only two of the ten lots have residential homes. A restrictive covenant may be waived and abandoned by a conscious acquiescence, as evidenced by persistent violations of the covenant. It can also be waived by failure to object to violations of the restriction. The long-standing use of lot 9 as a parking lot and the use of a majority of the lots for purposes other than residential constitutes a waiver and abandonment of the restrictive covenants. Because the law favors free and untrammeled use of real property, and because restrictions are strictly construed, the widespread non-residential use in the subdivision constitutes a waiver and abandonment of the restrictive covenant.

Weed Ordinance Not Unconstitutionally Vague, But Board Failed to Consider Prior Non-Conforming Use of Property

In 1976, David Rose purchased residential property in Platte County. Rose was experienced in wildlife management and he permitted the natural vegetation to grow so that his property would become a natural woodlands area. In 1991, he was acquitted by a jury on charges that he violated the Platte County nuisance ordinance. In 1999, the Platte County Commission replaced the nuisance ordinance with a new weed ordinance. The weed ordinance prohibited weeds and vegetation from exceeding 12 inches in height. The ordinance defined weeds as wild shrubbery, brush or vines, noxious or poisonous plants, and vegetation or grasses that, because of their height, have a blighting effect on the neighborhood. After being found in violation of the weed ordinance by the Platte County Director of Planning & Zoning, Rose appealed to the Platte County Board of Zoning Adjustment and also requested a variance based on his prior non-conforming use of the property. The board denied his appeal and request for a variance. Rose then filed suit in circuit court. The circuit court denied all of Rose's claims, but the Court of Appeals remanded in Rose v. Board of Zoning Adjustment of Platte County, No. W.D. 59529 (Mo. App. W.D. 2001).

First, the court rejected Rose's challenge that the weed ordinance was unconstitutionally vague. Upon a challenge for unconstitutional vagueness, the court views the statutory language as it applies to the facts at hand. Language that reasonable people can understand is not impermissibly vague merely because it requires interpretation on a case-by-case basis. The Platte County weed ordinance contains a very detailed definition of the term "weeds" and uses language that enables a reasonable person to understand what is prohibited. The descriptive phrases in the ordinance provide guidance and a context for identifying specific situations that might fall within the definition of weeds. The ordinance, in its entirety, provided a clear context for understanding and application, sufficient to avoid a challenge for vagueness. The evidence presented showed that the vegetative growth on Rose's property was more than 12 inches high, had not been purchased at a nursery, had not been cultivated, and was allowed to grow naturally without mowing or trimming. There was nothing vague or ambiguous about the ordinance that permitted Platte County to arbitrarily or capriciously enforce it against Rose. Thus, there was no unconstitutional defect in the language of the weed ordinance as applied in this case.

The Board of Zoning Adjustment, however, failed to rule on Rose's claim of vested property rights based on prior non-conforming use of his property. Missouri law requires that zoning ordinances permit continuation of a non-conforming use in existence at the time of an ordinance's enactment, so long as such use is maintained. Although government may regulate the use of private property through zoning ordinances, an unconstitutional taking can occur when an ordinance is enforced against a property owner's prior non-conforming use of his land. Zoning ordinances must permit continuation of non-conforming uses to avoid violation of constitutional provisions preventing the taking of private property without compensation. Because the BZA decision failed to make any findings or rulings on the issue of Rose's non-conforming use, the case is remanded to the BZA for determination of whether Rose had a prior non-conforming use and, if so, whether he should be allowed to continue that use or be compensated for the value of the taken use.

Demolition Ordinance Must Provide For An Evidentiary Hearing

The Goe family owned a mobile home in the City of Mexico. The city sent notices to the Goes advising them that the mobile home was dilapidated and unsafe for human occupancy. When the Goes failed to make corrections to the mobile home, the city removed it from the property and disposed of it under the city's demolition ordinance. The Goes filed suit against the city seeking damages for violation of due process and wrongful appropriation of their property. The trial court dismissed the suit, but the Court of Appeals reversed in Goe v. City of Mexico, No. ED 79327 (Mo. App. E.D. 2001).

The city's demolition ordinance did not provide for a full and adequate evidentiary hearing for the affected parties, as is required by §67.400 et seq. RSMo. The city's ordinances only provided an aggrieved party the right to appeal a decision of the city's code official; they provided for a hearing only if the party adversely affected requested one. Section 67.410, RSMo, clearly requires a city to have a full and adequate hearing for the affected parties. Because the city's demolition ordinance did not provide for a hearing to be held automatically, it did not comply with the requirements of §67.410 and was, therefore, invalid.

The Goes did not waive their due process claim by failing to appeal from the city code official's decision. The right to appeal afforded the Goes by the ordinance is significantly different from the statutory right to have a "full and adequate hearing" on the merits in the first instance, as required by §67.400, RSMo. Under the city's ordinances, the Goes were required to request an appeal; but under the state statutes, the city was required to provide an evidentiary hearing automatically, whether or not one was requested. Because the Goes were not given the statutorily mandated hearing, they did not waive any right to challenge the validity of the demolition ordinance for the city's failure to provide for that hearing. The city's demolition ordinance did not comply with §67.410, RSMo, by requiring a full evidentiary hearing and was, therefore, invalid.