JOHN MICK and TERESA MICK v. WAYNE MAYS and CONNIE MAYS, Defendants-Respondents , 459 S.W.3d 924 ( 2015 )

JOHN MICK and TERESA MICK, )
)
Plaintiffs-Appellants, )
)
vs. ) No. SD33149
)
WAYNE MAYS and CONNIE MAYS, ) Filed: May 11, 2015
)
Defendants-Respondents. )
APPEAL FROM THE CIRCUIT COURT OF BUTLER COUNTY
Honorable Michael M. Pritchett, Circuit Judge
AFFIRMED
Mike Mick and Teresa Mick appeal from the trial court's judgment in favor
of Wayne Mays and Connie Mays.1 The judgment was entered after a bench trial
regarding the petition filed by Mike and Teresa, which sought an accounting and
windup of a partnership, damages for breach of fiduciary duty, and rescission of a
buy-sell agreement. The arguments raised by Mike and Teresa ignore the
standard of review, and we affirm the trial court's judgment.
Standard of Review
In a court-tried matter, this Court will "affirm the trial court's judgment
unless there is no substantial evidence to support it, it is against the weight of the
1
Because some of the parties have the same last name, first names are used for the sake of clarity.
No disrespect is intended.
evidence, or it erroneously declares or applies the law." State Resources
Corp. v. Lawyers Title Ins. Corp, 224 S.W.3d 39, 41 (Mo. App. S.D. 2007).
When reviewing factual questions, "this Court accepts 'as true the evidence and
inferences therefrom that support the trial court's judgment and disregard[s]
contrary evidence.'" Id. (quoting Vaughn v. Willard, 37 S.W.3d 413, 415 (Mo.
App. S.D. 2001)).
Factual and Procedural Background
Teresa and Connie were the daughters of farmer Glen Harrison. In 2000,
Mr. Harrison retired from farming. Teresa and her husband, Mike, and Connie
and her husband, Wayne, formed a farming partnership to continue the family
farming business under the name Glenco Farms.
While the partnership was engaged in the farming business, a company
called Bayer Crop Science ("Bayer") planted genetically modified rice in the area
near the Glenco Farms operation. In 2006 the genetically modified rice spread
into other rice operations and caused the price of rice to drop. Other farmers in
the area considered suing Bayer, but Mike was convinced a lawsuit would not
"amount to anything."
Wayne, however, agreed to meet with one of the lawyers bringing suit
against Bayer and with another farmer on September 6, 2006, to discuss the
Bayer litigation. Wayne hired the lawyer to represent Glenco Farms in the Bayer
litigation.
Wayne had notified Mike of the meeting, but Mike did not arrive until the
conclusion of the meeting. Mike drove up to the Glenco Farms office as the
others were leaving. Wayne told Mike about the meeting. Mike swore, told
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Wayne "it wasn't worth [messing] with[,]" rolled up his window, and drove off.
At that time Wayne believed Glenco Farms would get "little to nothing" from the
Bayer litigation.
During the following years, Mike and Wayne did not discuss the Bayer
litigation. Glenco Farms received letters about the progress of the suit, and, as
was their usual partnership procedure, Wayne put the letters on the desk in the
office with the other mail for Glenco Farms. Mike came to the office daily and
would look through the mail. Wayne provided information to the lawyer when
required for the Bayer litigation. There was no indication that any of the
approximately 19 letters received from Bayer were hidden or undisclosed.
In 2010, Mike decided to retire from farming for health reasons. Mike
wanted to liquidate the business, but Wayne wanted to continue farming.
Around this same time, Glenco Farms received information by letter that Bayer
had indicated an interest in settling the claims in the Bayer litigation. This letter
was also put on the desk for review.
Mike, Teresa, Wayne, and Connie entered into a buy-sell agreement on
December 17, 2010. That agreement provided that "Seller shall deliver to Buyer
at closing a Bill of Sale to transfer said undivided one-half interest in the
Partnership, including all assets and equipment, free of all encumbrances, except
as otherwise disclosed in this agreement." The agreement did not mention the
Bayer litigation.
On December 20, 2010, Glenco Farms received a letter indicating Bayer
was recommending a settlement amount of $310 per acre. According to Wayne,
the information regarding the settlement "was in every paper in the [s]tate of
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Missouri," but Wayne and Mike were not talking at that time, and they did not
discuss it. Wayne put this letter on the desk in the Glenco Farms office for Mike
to examine with the rest of the mail. No money was paid to Glenco Farms at that
time, nor was the settlement final.
On January 31, 2011, Mike and Teresa executed a bill of sale that conveyed
an "undivided one-half interest in Glenco Farms" to Wayne and Connie. The
consideration paid was $825,000 and included some land. Mike and Teresa also
resigned from the Glenco Farms Partnership on that date.
In July 2011, Teresa received a mailing regarding the finalized Bayer
settlement from Bayer. She confronted Wayne with the mailing. He refused to
give Mike and Teresa a portion of the settlement. Ultimately, Glenco Farms
received over $177,000 in settlement of its claims against Bayer.
Mike and Teresa sued Wayne and Connie seeking an accounting and
winding up of the partnership, damages for breach of fiduciary duty for failing to
disclose the Bayer litigation, rescission of the buy-sell agreement based on
mutual mistake and unilateral mistake, and punitive damages. The trial court
held a bench trial and issued a judgment including detailed findings. First, the
trial court found the partnership was dissolved on January 31, 2011, and was a
sale of the partnership interest with all the assets divided, so there was no basis
for an accounting and winding up. The trial court noted it did not believe Mike's
testimony that he did not know about the Bayer litigation and denied the claim
for breach of fiduciary duty. Finally, the trial court determined there was no
mistake justifying recession of the buy-sell agreement because Mike knew about
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the Bayer litigation. The trial court entered judgment in favor of Wayne and
Connie on all counts. Mike and Teresa appeal.
Discussion
Mike and Teresa raise three points on appeal. For ease of analysis, we first
address Point I and Point III together.
Mike Knew About the Bayer Litigation
In their first point, Mike and Teresa argue the trial court erred when it
found Wayne did not breach his fiduciary duty to Mike and Teresa by failing to
disclose the Bayer litigation. In their third point, Mike and Teresa argue the trial
court erred in denying their request for rescission of the buy-sell agreement
based on unilateral mistake because Wayne failed to disclose the Bayer litigation.
Both of these points fail because the trial court found Wayne did notify Mike
regarding the Bayer litigation, and there was substantial evidence to support that
finding.
Mike and Teresa correctly state the nature of the duty between partners.
With respect to their claim for breach of fiduciary duty, Mike and Teresa are
correct that Wayne owed them a fiduciary duty because they were partners and
that the duty continued through the sale of Mike and Teresa's partnership
interests. See State Auto. and Cas. Underwriters v. Johnson, 766 S.W.2d
113, 124 (Mo. App. S.D. 1989). Nevertheless, Mike and Teresa's argument
overlooks the other elements of a claim for breach of fiduciary duty and the trial
court's explicit credibility findings regarding the facts relevant to those elements.
To succeed on a claim of breach of fiduciary duty, "the proponent must establish
that a fiduciary duty existed between it and the defendant party, that the
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defending party breached the duty, and that the breach caused the proponent to
suffer harm." Zakibe v. Ahrens & McCarron, Inc., 28 S.W.3d 373, 381 (Mo.
App. E.D. 2000). In the context of this case, the alleged breach of fiduciary duty
was the failure to inform Mike and Teresa about the Bayer litigation. If Wayne
informed Mike and Teresa about the Bayer litigation there was no breach. The
claim for rescission was based on an allegation of mistake, which may be, under
appropriate circumstances, a ground for rescission. See R & R Land Dev.,
L.L.C. v. American Freightways, Inc., 389 S.W.3d 234, 239 (Mo. App. S.D.
2012). However, if Mike knew about the Bayer litigation, there was no mistake.
Despite the attempt by Mike and Teresa to treat these points as errors of
law, the trial court's judgment must be affirmed if the trial court's finding that
Mike and Teresa knew about the Bayer litigation is supported by substantial
evidence and is not against the weight of the evidence. "A claim that there is no
substantial evidence to support the judgment or that the judgment is against the
weight of the evidence necessarily involves review of the trial court's factual
determinations." Pearson v. Koster, 367 S.W.3d 36, 43 (Mo. banc 2012). "A
court will overturn a trial court's judgment under these fact-based standards of
review only when the court has a firm belief that the judgment is wrong." Id. "In
reviewing of questions of fact, the reviewing court will defer to the trial court's
assessment of the evidence if any facts relevant to an issue are contested." Id. at
44. "Once contested, 'a trial court is free to disbelieve any, all, or none of th[e]
evidence,' and 'the appellate court's role is not to re-evaluate testimony through
its own perspective.'" Id. (quoting White v. Director of Revenue, 321
S.W.3d 298, 308-09 (Mo. banc 2010)).
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When the facts are viewed as they must be, in the light most favorable to
the trial court's judgment, it is clear Wayne provided Mike and Teresa notice of
the Bayer litigation and the progress of the Bayer litigation. When the Bayer
litigation started in 2006, Wayne informed Mike of the initial meeting with the
lawyer, but Mike chose not to attend. By late December 2010 and early January
2011, Mike and Wayne were not on speaking terms. Wayne communicated with
Mike and Teresa by leaving documents and letters on the desk in the partnership
office. When Wayne received documents informing him that Bayer might settle
the Bayer litigation, he placed them on the desk in the partnership office. Mike
was in the office and looked through the mail. Teresa, as a partner, had the right
and responsibility to do the same. Thus, Wayne gave Mike and Teresa notice of
the Bayer litigation and the potential settlement, and the trial court's conclusion
to that effect was supported by substantial evidence.
Mike and Teresa implicitly acknowledge that conclusion and focus their
factual arguments on an against-the-weight-of-the-evidence challenge. In
support of their contention that the finding was against the weight of the
evidence, Mike and Teresa discuss the fact that Mike did not attend the meeting
where Wayne retained counsel for the Bayer litigation, that Wayne did not have a
verbal conversation with Mike about the Bayer litigation, and that Mike was
meticulous in identifying assets to be divided in the buy-sell agreement, but did
not include the Bayer litigation. The problem with these arguments is that they
ignore the trial court's credibility findings and do not explain why those
circumstances are more probative than Wayne's testimony. Even in an against-
the-weight-of-the-evidence argument, this Court must resolve all conflicts in the
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evidence "in accordance with the trial court's credibility determinations[.]"
Houston v. Crider, 317 S.W.3d 178, 187 (Mo. App. S.D. 2010). The trial court
found Mike's testimony that he did not know about the litigation to be unworthy
of belief. The circumstantial evidence on which Mike and Teresa rely does not
have more probative value than Wayne's testimony regarding the partnership
practice for sharing information.
Point I and Point III are denied.
No Assets Were Omitted from the Buy-Sell Agreement
In their second point, Mike and Teresa argue the trial court erred in
denying their request for an accounting and winding up of the partnership
because "as a matter of law, the partnership continued as it related to the Bayer
Rice Litigation partnership asset[.]" As with their other points, this point is
without merit because it rests on factual allegations contrary to the trial court's
findings.
Mike and Teresa are correct that the Uniform Partnership Law provides
any partner with a right to a formal accounting of partnership affairs under
certain circumstances. § 358.220, RSMo (2000). However, this right does not
extend to former partners after the completion of an agreement regarding the
sale of the partnership interest. Pupillo v. Pupillo, 863 S.W.2d 631, 632 (Mo.
App. E.D. 1993). This is because, after the completion of such an agreement, the
business belongs to the remaining partners alone. Id.
On December 17, 2010, the parties entered into an agreement regarding
the sale of Mike and Teresa's partnership interests. Wayne testified that this
agreement was to be a sale of Mike and Teresa's partnership interests in Glenco
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Farms. The written agreement provided that any partnership assets not
mentioned in the agreement were transferred as part of the partnership interest.
The parties finalized the agreement on January 31, 2011. Mike and Teresa
formally withdrew from the partnership on that date. Thus, as the trial court
correctly found, after January 31, 2011, Mike and Teresa were not partners and
had no right to demand an accounting.
Mike and Teresa attempt to avoid this conclusion by characterizing the
potential proceeds of the Bayer litigation as an asset that was omitted from the
agreement regarding the winding up of the partnership affairs. They make two
primary arguments in support of this characterization. First, they analyze the
property division in the buy-sell agreement in an effort to demonstrate that the
transaction completed on January 31, 2011, was an equal division of the
partnership assets rather than a sale of their partnership interests. They cite
Johnson in support of the proposition that "[w]here partners attempt to strike a
settlement of partnership property and accounts in winding up the partnership,
but omit certain partnership property or accounts therefrom, the partnership
continues as to those properties or accounts." Both of these arguments are
incorrect.
Mike and Teresa's discussion of the property division ignores the standard
of review. The trial court credited Wayne's testimony that the agreement was
intended to be a sale of the partnership interest. The text of the buy-sell
agreement is in accord with that understanding. The inferences Mike and Teresa
attempt to draw from the other terms of the agreement are contrary to the plain
language of the parties' written agreement.
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Mike and Teresa's reliance on Johnson is misplaced because the terms of
the agreement in Johnson were different from the terms of the agreement in
this case. In Johnson the agreement explicitly provided the new partnership
had to pay rent to the old partnership for use of an asset. 766 S.W.2d at 115. That
fact indicated the parties in that case did not intend to transfer all the assets to
the new partnership. Id. Here, in contrast, the agreement provided for the sale
of an undivided one-half interest in the partnership and all its assets. The
agreement specifically stated that any assets not mentioned in the agreement
were transferred with the partnership interest. The agreement contemplated that
there were other assets not stated in the agreement and provided that any
unidentified assets would be transferred to Wayne and Connie.
As the trial court correctly found, there were no omitted assets. Point II is
denied.
Decision
The trial court's judgment is affirmed.
MARY W. SHEFFIELD, P.J. – OPINION AUTHOR
NANCY STEFFEN RAHMEYER, J. – CONCURS
DON E. BURRELL, J. – CONCURS
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