Pointe Royale Prop. Owners' Ass'n, Inc. v. McBroom

672 S.W.3d 68

POINTE ROYALE PROPERTY OWNERS’ ASSOCIATION, INC., Plaintiff-Respondent,

v.Rickey MCBROOM, Defendant-Appellant.

No. SD 37274

Missouri Court of Appeals, Southern District, In Division.

Filed: April 17, 2023

Rehearing and/or Transfer Denied May 4, 2023

Attorneys for Appellant – Brian K. McBrearty and Lori A. Schmidt of St. Louis, MO, and Jerry (Jay) Kirksey of Bolivar, MO.

Attorneys for Respondent – Russ Schenewerk and Laura M. Stringfellow of Branson, MO, and Kristie S. Crawford of Springfield, MO.

JENNIFER R. GROWCOCK, J.

Rickey McBroom ("McBroom") appeals from a final judgment in favor of Pointe Royale Property Owners’ Association, Inc. ("Pointe Royale") removing McBroom as a Director from the Pointe Royale Board of Directors ("Board") under section 355.356, RSMo 2016.¹ McBroom raises three points relied on that challenge only the trial court's ruling on Pointe Royale's claim.² McBroom's second and third points are moot and we do not reach the merits of those points. We reject McBroom's first point, and affirm the trial court's judgment.

Facts and Procedural Background

McBroom was elected as a Director to the Board in November 2019. Five months later in April 2020, Pointe Royale filed a two-count petition seeking McBroom's removal from the Board pursuant to section 355.356. Count I requested the trial court remove McBroom from the Board for "fraudulent and dishonest conduct" and "gross abuse of authority and discretion," and also requested that the trial court prohibit McBroom "from serving again in that capacity for a period of at least ten (10) years" – all under section 355.356. Count II requested a preliminary and permanent injunction enjoining McBroom "from participating as Director of [Pointe Royale] until this matter can be decided on its merits."

On September 3, 2020, the trial court granted McBroom leave to file a counterclaim. The counterclaim alleged that McBroom has not been "guilty of gross negligence or willful misconduct in the performance of his duty as [a] Board member"; "has been damaged by the wrongful filing of the Petition ... including, but not limited to expense[s], attorney fees and loss of income"; and is "entitled to indemnification" under Article VII, section 1 of Pointe Royale's By-laws.

Article VII, section 1 of Pointe Royale's By-laws, provides, in relevant part:

INDEMNIFICATION. [Pointe Royale] shall indemnify every Board Member and Officer ... against all losses, costs and expenses, including counsel fees reasonably incurred by him in connection with any action, suit or proceeding in which he may be made a party by reason of his being or have [sic] been a Board Member or Officer of [Pointe Royale]. Except as to matters as to which he shall be finally judged in such action, suit or proceeding to be liable for gross negligence or willful misconduct. In the event of a settlement, indemnification shall be provided only in connection with such matters covered by the settlement as to which [Pointe Royale] is advised by counsel that the person to be indemnified has not been guilty of gross negligence or willful misconduct in the performance of his duty as such Board Member or Officer in relation to the matter involved....

On September 10, 2020, the trial court scheduled the case for jury trial on March 22, 2021, and a pretrial conference was scheduled for February 3, 2021.

On January 14, 2021, the trial court granted Pointe Royale leave to file its second amended petition. The second amended petition added a third count seeking a declaratory judgment to determine if McBroom's actions as alleged in Count I of the first amended petition³ "also constitute ‘gross negligence’ and/or ‘willful misconduct’ " under Article VII, section 1 of Pointe Royale's By-laws. On February 3, 2021, at a pre-trial conference, the trial court granted McBroom leave to file an amended counterclaim with similar allegations and request for damages as McBroom's original counterclaim.

Also at the February 3, 2021 pre-trial conference, the trial court "overruled" McBroom's motion for continuance of the jury trial, and, "guided by State ex rel. Leonardi v. Sherry , 137 S.W.3d 462 (Mo. [b]anc 2004)," "announce[d] its intent to quash the March 22, 2021, jury panel for this case and to conduct a bench trial on the equitable claims in [Pointe Royale's] Second Amended Petition and [McBroom's] Amended Counterclaim prior to trying [McBroom's] remaining counterclaims to a jury." The trial court then quashed the jury panel, but ordered the case to remain set for a bench trial beginning March 22, 2021, and "invited" the parties "to brief the issue of which claims should be included in the bench trial and which claims should be included in any subsequent jury trial."

Following McBroom's filing of a motion to dismiss Count III of Pointe Royale's second amended petition, motion to reconsider ruling as to trial, and brief on right to jury trial, and request for jury trial and hearing on the same, the trial court "overrule[d]" McBroom's motion and announced it:

intend[ed] to conduct a bench trial on Counts 1 and 2 of [Pointe Royale's] Petition, beginning March 22, 2021 .... All remaining claims – including Count 3 of [Pointe Royale's] Petition, and [McBroom's] counterclaims – will be tried in a jury trial.... This Court expects parties to be ready with available and conflict dates at the close of the bench trial, so that a jury trial may be scheduled for remaining claims.

The trial court held the bench trial on March 22, 23, and 24, 2021. On April 2, 2021, the trial court ruled in favor of Pointe Royale on Count I of its second amended petition under section 355.356, and, among other things, (1) found McBroom engaged in "dishonest behavior" and "gross abuse of authority or discretion" under section 355.356 ; (2) ordered McBroom "immediately removed as a Member/Director from the Board" under section 355.356.1; (3) "barred" McBroom "from serving as a Member/Director on the Board" for ten years from the date of the order under section 355.356.2; and (4) found Count II of Pointe Royale's second amended petition was "moot" based on the trial court's ruling on Count I.

Before a jury trial on Count III of Pointe Royale's second amended petition and on McBroom's amended counterclaim could be scheduled, Pointe Royale filed a motion for summary judgment on McBroom's amended counterclaim on June 15, 2021. The motion requested summary judgment denying McBroom's amended counterclaim on the basis of collateral estoppel and that the trial court, "in finding that ... McBroom engaged in dishonest behavior and a gross abuse of discretion and authority" in the bench trial, also "implicitly found that ... McBroom engaged in willful misconduct and gross negligence."

On September 2, 2021, Pointe Royale dismissed Count III of its second amended petition without prejudice. On September 3, 2021, the trial court granted summary judgment and entered its "Judgment and Order on [Pointe Royale's] Motion for Summary Judgment" on McBroom's amended counterclaim. In doing so, the trial court stated:

the Court finds that Plaintiff Pointe Royale is entitled to summary judgment on Defendant Rickey McBroom's Counterclaim based on collateral estoppel, as well as based upon the statements of uncontroverted material fact submitted in the pleadings.

By this Court's Judgment of April 2, 2021, it was adjudged that Defendant Rickey McBroom was being removed from Plaintiff Pointe Royale's Board for his acts of gross negligence and willful misconduct — even where those exact phrases may not have been used in this Court's Judgment in favor of Plaintiff Pointe Royale. Also, the statements of uncontroverted material facts provide clear and convincing evidence that Defendant Rickey McBroom was removed based upon his acts of gross negligence and willful misconduct. Therefore, Defendant Rickey McBroom cannot prevail on his Counterclaim.

McBroom timely appealed the trial court's final judgment.

Analysis

McBroom raises three points relied on in this appeal – each point challenges only the trial court's ruling on Count I of Pointe Royale's second amended petition. McBroom's first point relied on states:

The Trial Court erred in entering judgment for [Pointe Royale] on Count I of the Second Amended Petition and ordering McBroom's removal from the Board pursuant to Missouri Revised Statute Section 355.356 [.1](1) and 355.356[.1](2) because conducting a bench trial and ruling on the equitable claims in Counts I and II before a jury trial on the legal claims in Count III and the Counterclaim deprived McBroom of his Constitutional right to a jury trial.

McBroom's second point relied on states:

The Trial Court erred in entering judgment for [Pointe Royale] on Count I of the Second Amended Petition and ordering McBroom's removal from the Board pursuant to Missouri Revised Statute Sections 355.356 [.1](1) and 355.356[.1](2) and barring him from serving on the Board for 10 years because the Trial Court misinterpreted and misapplied Missouri Revised Statute Sections 355.356 [.1](1) and 355.356[.1](2) regarding what actions constitute grounds for removal under the statute.

McBroom's third point relied on states:

The Trial Court erred in entering judgment for [Pointe Royale] on Count I of the Second Amended Petition, because the finding that McBroom engaged in fraudulent conduct, was dishonest, grossly abused his discretion and grossly abused his authority was against the manifest weight of the evidence.

For clarity and ease of analysis, we take McBroom's points out of order.

Points II and III are Moot

Mootness is a threshold question to appellate review because it implicates the justiciability of a controversy. D.C.M. v. Pemiscot Co. Juvenile Office , 578 S.W.3d 776, 780 (Mo. banc 2019). Thus, an appellate court must consider, either on a party's motion or acting sua sponte , whether an appeal is moot. Id. "When an event occurs that makes a court's decision unnecessary or makes granting effectual relief by

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