Day Adver., Inc. v. Hasty

606 S.W.3d 122

DAY ADVERTISING, INC., et al., Appellants,

v.Paul HASTY Jr., et al., Respondents.

WD 83379

Missouri Court of Appeals, Western District.

OPINION FILED: JULY 21, 2020

Rehearing Denied August 27, 2020

Paul Andrew Burnett, Clayton, MO, Counsel for Appellants.

Derek H. Mackay, Kansas City, MO, Counsel for Respondent.

Before Division Two: Karen King Mitchell, Chief Judge, Presiding, Anthony Rex Gabbert, Judge, W. Douglas Thomson, Judge

Anthony Rex Gabbert, Judge

Day Advertising, Inc., Heartland Title Services, Inc., and James C. Day ("Appellants" collectively)¹ appeal the circuit court's grant of summary judgment to Paul Hasty, Jr. and Hasty and Associates, LLC ("Respondents" collectively) on Appellants’ September 5, 2018, Petition alleging legal malpractice against Respondents. Appellants assert six points on appeal claiming the circuit court, 1) erred in granting summary judgment on the claim regarding Day Advertising, Inc. ("Day Advertising"), arguing the circuit court improperly based its ruling on an argument not raised by Respondents, 2) erred in granting summary judgment on the claim regarding Day Advertising, because genuine issues of material fact existed as to whether Eric Johnson damaged Day Advertising, 3) erred in granting summary judgment on the claim regarding Heartland Title Services, Inc. ("Heartland"), because genuine issues of material fact existed as to whether the claim was timely filed, 4) erred in granting summary judgment on the individual claims of James Day, arguing Day had cognizable claims with allegations of compensable damage against Respondents, 5) erred in granting summary judgment on Appellants’ claim of fraudulent misrepresentation, arguing genuine issues of material fact existed that precluded judgment as a matter of law, and 6) erred in severing Appellants’ claims for trial after dismissing Day's individual claims, arguing the claims were not misjoined and arose from the same series of transactions or occurrences. We affirm.

Factual and Procedural Background²

The claims involving Day Advertising, alleged in Counts I and III of Appellants’ Petition, arise from Respondents’ alleged mishandling of a legal malpractice lawsuit Day Advertising had against attorney, Arthur Benson, II, who allegedly mishandled a separate legal malpractice suit against F. Coulter DeVries, Daniel Jones, and DeVries and Associates for their alleged mishandling of a breach of employment contract dispute involving former Day Advertising employee, Eric Johnson. In 2003, this court discussed the underlying facts as follows in Day v. deVries and Associates , 98 S.W.3d 92 (Mo. App. 2003).³

In September 1998, Day and Day Advertising hired F. Coulter DeVries, Daniel Jones, and DeVries and Associates to represent them in litigation against Eric Johnson to enforce a covenant not to compete against Johnson and to take action against Johnson for his alleged default on a loan. Id. at 93. Day produced a "copy" of a promissory note which Jones attached to the petition, and also used to obtain an ex parte order authorizing the seizure of Eric Johnson's automobile. Id. After Johnson obtained his own ex parte order to search Day's and Day Advertising's computer files, DeVries and Jones learned that the note submitted to the court was not a copy of the original, but was a new document created by Day shortly before the replevin action was filed. Id. On October 14, 1998, DeVries and Jones asked Day to sign a statement explaining that, although Day told Jones the document was a copy of an original, the document was actually drafted by Day based on his recollection of the original document. Id. at 93-94. Further, that Jones was not apprised of this when Day presented the document to Jones, and was instead advised of this on October 12, 1998. Id.

DeVries and Jones advised Day they were withdrawing as his counsel, but DeVries agreed to determine whether a settlement could be negotiated with Johnson. Id. at 94. Day ultimately signed an agreement that all litigation against Johnson would be dismissed with prejudice, Day would forfeit a $10,000 replevin bond to Johnson, return Johnson's auto and assume all costs associated with its seizure, pay Johnson his final wages, withdraw any opposition to Johnson's claims for unemployment compensation, and cancel Johnson's employment contract, including the covenant not to compete. In the midst of the negotiations, however, Day consulted another attorney because he was concerned DeVries was no longer acting in his best interest and that Day was being asked to capitulate to Johnson as a result of what he perceived as DeVries and Jones’ mishandling of the case. Id.

On April 27, 1999, Day and Day Advertising filed a malpractice suit against DeVries, Jones, and DeVries and Associates in Kansas state court. Id. After their attorney withdrew, the plaintiffs did not obtain replacement counsel or appear at a scheduled hearing, and the court dismissed the case without prejudice July 25, 2000. Id. Day and Day Advertising then hired Arthur Benson of Benson & Associates to pursue the malpractice action, which was filed December 18, 2000, in Missouri state court. Id. The plaintiffs alleged they had "suffered damages in excess of $900,000 from, among other things, lost business." The trial court granted summary judgment to the defendants on statute of limitations grounds. Id. This court reversed, finding that the claim accrued in Missouri, rather than Kansas, and was therefore timely filed. Id. at 96.

The case proceeded to an eight-day jury trial. Day Advertising Inc. v. Devries and Associates, P.C. , 217 S.W.3d 362 (Mo. App. 2007). (The "Jury Trial Minutes and Judgment" show that James Day voluntarily dismissed his individual claims prior to trial.) Day Advertising claimed at trial that, but for the Defendants’ alleged negligence, Day Advertising would have recovered liquidated damages in the underlying contract action against Johnson. Id. at 367. The defendants presented evidence to show that there was inadequate consideration for the employment contract and that the liquidated damages clause was unenforceable. Id. The jury returned a verdict assessing 10% fault to DeVries, 5% fault to Jones, and 85% fault to Day Advertising. Id. at 365. Despite having found fault on the part of DeVries and Jones, the jury awarded no damages to Day Advertising. Id. There were no objections to the verdict at that time, and the court entered a judgment consistent with the verdict. Id.

Day Advertising appealed the judgment. On review, we discussed that Day Advertising had the burden in its legal malpractice suit to show that the defendants’ negligence proximately resulted in damages. Id. at 367. Also, because the alleged damages were based on the resolution of an underlying action, Day Advertising had to prove a case within a case. Id. Further, because the legal malpractice claim was brought after the underlying action was settled, Day Advertising had to prove the settlement was necessary to mitigate damages, or that Day Advertising was driven to the necessity of settling because the plaintiff would have been worse off had the case not settled. Id.

Following this Opinion, Appellants Day and Day Advertising then claimed that Benson's negligence in the case against DeVries, Jones, and DeVries and Associates yielded an unfavorable result, prompting them to hire Respondents to sue Benson for malpractice. Appellants claimed that, as a result of Respondents’ negligence, Appellants suffered damages which included "the adverse result in the earlier case and attendant loss of compensation for the damages at issue in that case, and the expenditure of legal fees to defendants in connection with their representation of Plaintiffs Day and Day Advertising in their earlier case, and general damages."

Appellants’ Petition alleged the following: 1) Respondents damaged Appellants Day and Day Advertising by negligently mishandling a legal malpractice claim against Arthur Benson, II and Benson & Associates; 2) Respondent Hasty made fraudulent misrepresentations regarding the services he would provide Appellants Day and Day Advertising and Appellants relied on those representations to their detriment, and; 3) Respondents damaged Appellants Day and Heartland by negligently mishandling an adversarial bankruptcy matter involving a former executive of Heartland, f/k/a Heartland Title Company, Inc. With regard to Appellant Day's individual claims, the Petition alleged Day suffered the same injuries as the corporate appellants. Additionally, Day alleged he suffered damages from having to pay for attorney fees himself, having to use his own money to finance Heartland's expenses, and suffered general damages in the form of mental and emotional distress.

The trial court dismissed Day's individual claims as it found he had no valid individual claims against Respondents. The court then severed the Day Advertising and Heartland claims for trial under Rules 52.05 and 52.06.

Following the trial court's dismissal of Day's individual claims, Respondents moved for summary judgment on the remaining claims against the corporate parties. Respondents argued they were entitled to summary judgment on the Day Advertising claim because, after the close of discovery, Appellants could not present sufficient evidence from which a jury could find Appellants met their burden to establish the cause of Day Advertising's complete destruction, or the amount of Day Advertising's alleged damages. Respondents argued they were entitled to summary judgment on the Heartland claim because it was barred by the statute of limitations. Further, that Appellants failed to present sufficient evidence of the cause of Heartland's destruction or its alleged damages. Finally, Respondents argued they were entitled to summary judgment on the fraudulent misrepresentation claim because Appellants failed to present evidence from which a jury could reasonably conclude Respondents had an intent to...