Holliday Investments, INC. v. Hawthorn Bank

In the
Missouri Court of Appeals
Western District

HOLLIDAY INVESTMENTS, INC, 
 WD78640
Appellant,  OPINION FILED:
v. 
 DECEMBER 8, 2015
HAWTHORN BANK, 

Respondent. 


Appeal from the Circuit Court of Boone County, Missouri
The Honorable Kevin M.J. Crane, Judge
Before Division One: Anthony Rex Gabbert, P.J., Victor C. Howard, and Cynthia Martin,
JJ.
Holliday Investments, Inc. (Holliday) appeals the circuit court’s judgment in favor of
Hawthorn Bank (Hawthorn) on Holliday’s claim that Hawthorn was unjustly enriched by a home
that Holliday built on property later foreclosed upon by Hawthorn. Holliday contends that the
circuit court misapplied the law in striking Holliday’s demand for a jury trial. Holliday argues
that its claim was one of quantum meruit which is an action at law entitling Holliday to a jury
trial upon request, as evidenced by there being an MAI jury instruction for use in quantum
meruit actions. We affirm.
On July 17, 2012, Holliday filed its First Amended Petition against Hawthorn. Therein,
Holliday alleged that in 2008 it built an earth contact home on real estate owned by Richard and
Annette Sells (the Sells) during a time that Holliday had a contract with the Sells to purchase the
real estate. Holliday alleged that, after the home was built, Hawthorn loaned money to the Sells
and Sells Farms, Inc., who executed a note and deed of trust encumbering the real estate upon
which the home was built. Holliday alleged that “[o]n information and belief Defendant was
aware or should have been aware at the time it made the aforesaid loan that a third party, the
Plaintiff, was constructing valuable improvements upon the real estate encumbered by the
subject deed of trust.” Holliday alleged that it had an equitable interest in the earth contact home
which provided additional collateral to Hawthorn for which Hawthorn “did not confer value” to
Holliday or anyone else. Holliday alleged that Hawthorn then foreclosed upon the property and
became the owner of the property. Holliday alleged that Hawthorn would be “unjustly enriched”
if it did not “reimburse” Holliday for the value of the home and, that, “[b]ased on quantum
meruit, Plaintiff is entitled to recover the value of said earth contact home from Defendant.”
On August 22, 2014, Holliday requested a jury trial. Holliday argued that its claim was
one of quantum meruit and quantum meruit claims are triable to a jury. Hawthorn objected to
Holliday’s request, arguing that Holliday’s claims were equitable in nature and, therefore,
Holliday was not entitled to a jury. The circuit court issued an order striking Holliday’s demand
for a jury trial and, thereafter, the matter was tried before the court.
Holliday’s evidence at trial presented a time frame different from that alleged in
Holliday’s petition with regard to when Hawthorn issued its loan to the Sells and when Holliday
constructed the earth contact home. Holliday’s own undisputed evidence showed that the Sells
and Sells Farms, Inc. executed a real estate deed of trust as collateral for a loan from Hawthorn.
The deed of trust was recorded on March 12, 2008. On March 25, 2008, Holliday entered into a
contract to purchase the Sells’s turkey business which included 683 acres of land as well as
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turkey barns, cattle, and equipment located on the farm. The contract price was approximately
2.5 million dollars. Holliday did not conduct a title search prior to entering into the contract.
Holliday and the Sells did not intend for there to be a closing date where all of the real estate and
assets would be conveyed simultaneously in exchange for a total purchase price. Rather, the
parties agreed that, as Holliday freed up capital, it would purchase part of the real estate and
assets that were under contract. This allowed Holliday to engage in Section 1031 exchanges
under the tax code. At least two of these transactions occurred prior to March of 2009. Prior to
each transaction, Holliday conducted a title search that disclosed Hawthorn’s deed of trust
against the real estate, but Holliday did not read the title searches.
In March of 2009, Holliday began constructing an earth contact home that was completed
in September of 2009. Chris Holliday, sole shareholder of Holliday, testified that he could have
built the home on nearby land that he already owned, but chose to build the home on land not yet
owned because the placement of the home in that location was more beneficial to Holliday. He
testified that, the home was built for an Amish employee who oversaw the turkey farm and
needed to be in close proximity to the turkey barns in the event of power failure or other
potentially harmful events. Due to the employee/tenant being Amish, the home had plywood
floors and various fixtures had not yet been installed. Chris Holliday testified that he was not
sure if the home had trim on the doors or windows as his tenant worked on the home himself as
he got the time. It was a part of the employee/tenant’s contract that part of the employee’s pay
was having the home to live in. Chris Holliday testified that, due to the proximity of the home to
the turkey barns and the barns’ odors, the home would not be ideal for most people to live in.
The Sells defaulted on the loan with Hawthorn, and Hawthorn foreclosed its deed of trust
on May 7, 2012. The bank was the sole bidder at the foreclosure sale and became the owner of
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190 acres, including the real estate upon which the earth contact house was constructed. Chris
Holliday testified at trial that he now owns the earth contact home and the property upon which it
sits. He purchased the home along with 80 acres for $200,000 from an individual who purchased
the property from Hawthorn after Hawthorn foreclosed.
After hearing the evidence, the circuit court found in favor of Hawthorn on Holliday’s
demand for reimbursement for the value of the earth contact home.1 Holliday appeals.
Our standard of review is set forth in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc
1976). Schollmeyer v. Schollmeyer, 393 S.W.3d 120, 122 (Mo. App. 2013). We will affirm the
circuit court’s judgment unless it is unsupported by substantial evidence, it is against the weight
of the evidence, or it erroneously declares or applies the law. Id. at 122-123. We will affirm
under any reasonable theory supported by the evidence. Williams v. State, Dept. of Social
Sercies, Children’s Div., 440 S.W.3d 425, 427 (Mo. banc 2014).
In Holliday’s sole point on appeal, Holliday contends that the circuit court misapplied the
law in striking its demand for a jury trial. Holliday argues that its claim was one of quantum
meruit which is an action at law entitling Holliday to a jury trial upon request, as evidenced by
there being an MAI jury instruction for use in quantum meruit actions.
We find that we need not decide whether Holliday would have been entitled to a jury trial
on a properly pled quantum meruit claim because, even if Holliday could prove that the court
erred in denying a jury trial, Holliday cannot prove that he was prejudiced by that denial.
1
Hawthorn filed a counterclaim against Holliday alleging that from May 7, 2012 through November 26,
2012, and while Hawthorn owned the property, Holliday allowed its cattle to remain on the property without
Hawthorn’s consent, failed and refused to remove his cattle from the property, did not pay rent for the property or
otherwise compensate Hawthorn for its use, and, therefore, Holliday would be unjustly enriched if not required to
reimburse Hawthorn for its use of the property. The court found in favor of Holliday on Hawthorn’s counterclaim.
4
“Quantum meruit is a remedy to enforce quasi-contractual obligations and is generally
justified on the theory of unjust enrichment.” Turner v. Wesslak, 453 S.W.3d 855, 860 (Mo. App.
2014) (internal citation and quotation marks omitted.) “Where there is no formal contract, a
promise to pay for services or materials may be implied by the law.” City of Cape Girardeau ex
rel. Kluesner Concreters v. Jokerst, Inc., 402 S.W.3d 115, 122 (Mo. App. 2013). The essential
elements of a claim of quantum meruit are:
(1) that the plaintiff provided to the defendant materials or services at the
defendant’s request or with the acquiescence of the defendant, (2) that the
materials or services had reasonable value, and (3) that the defendant has failed
and refused to pay the reasonable value of such materials or services despite the
demands of plaintiff. County Asphalt Paving, Co. v. Mosley Constr., Inc., 239
S.W.3d 704, 710 (Mo. App. E.D. 2007). ‘The principal function of this type of
implied contract is the prevention of unjust enrichment.’ Id. (quoting Bellon
Wrecking & Salvage Co. v. Rohlfing, 81 S.W.3d 703, 711 (Mo. App. E.D. 2002)).
In quantum meruit, there is no requirement of an express agreement between the
parties or a promise on the part of the party to be bound. Id.2
Id. at 122-123.
“To properly and sufficiently establish a claim for unjust enrichment, the plaintiff must
prove three elements: (1) the defendant was enriched by the receipt of a benefit; (2) that the
enrichment was at the expense of the plaintiff; and (3) that it would be unjust to allow the
defendant to retain the benefit.” Brunner v. City of Arnold, 427 S.W.3d 201, 233 (Mo. App.
2013) (overruled on other grounds by Tupper v. City of St. Louis, 468 S.W.3d 360 (Mo. banc
2015)).
While the lines are often blurred with regard to quantum meruit and unjust enrichment,
we recognize these as separate causes of action. Hale v. Wal-Mart Stores, Inc., 231 S.W.3d 215,
2
MAI 26.05, which Holliday argues proves a right to jury trial for quantum meruit claims, instructs that a
jury must find for a plaintiff on a quantum meruit claim if it first finds that the plaintiff furnished specified goods or
services to the defendant and, second, that the defendant accepted the goods or services.
5
225 n10 (Mo. App. 2007); Johnson Group, Inc. v. Grasso Bros., Inc., 939 S.W.2d 28, 30 (Mo.
App. 1997); See also Patrick v. Koepke Const., Inc. v. Woodsage Const Co., 844 S.W.2d 508, 516
(Mo. App. 1992) (stating that “Missouri courts have tended to blur any distinction between
unjust enrichment and quantum meruit.”) Because quantum meruit is justified on the theory of
unjust enrichment, it is understandable that both generally require that a benefit be conferred and
inequitably retained. However, as shown above, the elements of each claim are not identical.
Further, the amount of recovery is different for each cause of action. Johnson Group, Inc., 939
S.W.2d at 30. For a quasi-contract based upon quantum meruit, recovery is based upon the
reasonable value of the goods or services furnished to the defendant. Id. For a quasi-contract
based upon unjust enrichment, recovery is not the actual amount of the enrichment, but the
amount of enrichment which would be unjust for the defendant to retain. Id.
Here, Holliday insists that its claim is one of quantum meruit entitling it to a jury.3 Yet, at
trial, Holliday abandoned a necessary element to prevail on such a claim. Holliday admitted at
trial that it had erred in alleging that Hawthorn accepted the land as collateral after the home was
already built upon the land; Holliday admitted that the home was built after Hawthorn had a
properly recorded lien on the property. Holliday advised the court that it was abandoning the
allegation in its petition that “[o]n information and belief Defendant was aware or should have
been aware at the time it made the aforesaid loan that a third party, the Plaintiff, was constructing
valuable improvements upon the real estate encumbered by the subject deed of trust.”
3
At trial, Holliday distinguished quantum meruit and unjust enrichment by their forms of recovery and
averred to the court: “[W]e have a quantum meruit claim; we don’t have an unjust enrichment claim. Those are not
the same thing. They’re similar, but they’re not the same thing.”
6
Nevertheless, Holliday argued that Hawthorn’s knowledge of the home was irrelevant to
its claim of quantum meruit. Holliday argued that the bank had approximately 683 acres of
collateral which had a certain value, and Holliday added to that value by building a house on that
property. To recover on its claim of quantum meruit, Holliday argued that it only needed to
prove that a benefit was conferred to Hawthorn by Holliday, and that it was unjust for Hawthorn
not to pay for it. Holliday argued that it was not necessary that Hawthorn acknowledge or
appreciate that it had received a benefit. Holliday further argued that MAI 26.05, the jury
instruction for quantum meruit claims, proved its contentions by only requiring that a benefit be
conferred and unjustly retained. Holliday makes these same arguments on appeal.
We find that, not only do these arguments misstate the law, but they also reveal that
Holliday’s evidence would not have supported submission of a claim of quantum meruit to a
jury. Although a claim for quantum meruit does not require the existence of an express
agreement between parties, it still requires that valuable goods or services were provided at the
request, or with the acquiescence, of the beneficiary. By their nature, requests and acts of
acquiescence require some form of knowledge. MAI 26.05, which Holliday argues proves its
right to jury trial, advises that a jury must find for a plaintiff on a quantum meruit claim if it first
finds that the plaintiff furnished specified goods or services to the defendant and, second, that the
defendant “accepted” the goods or services. Acceptance, by its nature, also requires some form
of knowledge. Holliday admitted at trial that Hawthorn had no knowledge of, and did not
acquiesce in, Holliday’s construction of the home upon the property. Thus, Holliday’s
undisputed evidence in support of its petition does not support the elements of a quantum meruit
claim and, therefore, the issue could not have been submitted to a jury had there been one. “Any
issue submitted to the jury in an instruction must be supported by substantial evidence from
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which thee jury could reasonably find such isssue.” Hayess v. Price, 3113 S.W.3d 6445, 650 (Mo.
banc 2010) (internal quotation om
mitted). “Su
ubstantial evvidence is evidence whicch, if true, is
probativee of the issuees and from which the ju
ury can decidde the case.”” Id. (internnal quotationn
omitted).. Consequen
ntly, even if Holliday cou
uld prove enntitlement to a jury, it cannnot prove tthat
4
denial off a jury in thiis case was prejudicial.
p
Holliday’s
H po
oint on appeaal is denied and m the circuitt court’s judggment.5
a we affirm
Anthhony Rex Gabbert, Judgge
ur.
All concu
4
We
W emphasize that, characterrization of a casse in terms of llaw or equity, tthereby determ mining entitlem ment to
a jury, ‘“deepends on the issue
i ngs”’ and not thhe evidence preesented at trial. See State ex rel.
tendered by the pleadin
Diehl v. O’Malley, 95 S.W W.3d 82, 89 (M Mo. banc 2003)) (quoting Lee v. Conran, 111 S.W. 1151, 11153 (1908)). Here,
however, because
b Hollidaay’s own undissputed evidencce established tthat it was not entitled to a juury trial and,
therefore, Holliday
H failed
d to show any prejudice
p basedd upon the triall court’s rulingg as to the rightt to a jury trial,, we
need not ad ddress Hollidayy’s pleadings in
i this case.
5
Although
A not addressed in Ho olliday’s point relied on, Hollliday contends in the body off its brief and m more
extensively y in its reply brrief that, becau
use it sought on
nly money dam mages, its claimm was an actionn at law entitlinng it to
a jury trial. Claims of errror raised in th he argument portion of a brieff that are not raaised in the poiint relied on arre not
preserved for
f our review.. Cordes v. Wiilliams, 201 S.W W.3d 122, 1311 (Mo. App. 20006). We decliine to review thhis
claim ex grratia.
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