Smith v. Stewart

644 S.W.3d 5

Sharon SMITH, et al., Appellants,

v.Julia L. STEWART, Respondent.

No. ED 109668

Missouri Court of Appeals, Eastern District, DIVISION TWO.

Filed: April 12, 2022

FOR APPELLANTS: Kurt D. Breeze, Jonathan E. Skrabacz, 610 Collins Ave., P.O. Box 99, Festus, MO 63028.

FOR RESPONDENT: Michael P. Stephens, Katherine I. McLaughlin, 150 North Meramec, Ste. 400, St. Louis, MO 63105.

ROBERT M. CLAYTON III, Presiding Judge

Sharon Smith (individually "Plaintiff Sharon Smith"), Rebecca Howell (individually "Plaintiff Howell"), and Margaret Smith (individually "Plaintiff Margaret Smith") (collectively "Plaintiffs") appeal the judgment granting Julia L. Stewart's (individually "Defendant Stewart" or "Defendant") motion to dismiss Plaintiffs’ petition seeking declaratory relief, injunctive relief, and specific performance relating to a parcel of residential property. The trial court dismissed Plaintiffs’ petition with prejudice for failure to state a claim upon which relief may be granted.

As explained in detail below, we affirm the trial court's judgment to the extent the court found Plaintiffs’ petition should be dismissed for failure to state a claim upon which relief may be granted. However, we reverse the trial court's judgment to the extent the court dismissed Plaintiffs’ petition with prejudice. Additionally, we remand the case with instructions to the trial court to enter an order reflecting the dismissal of Plaintiffs’ petition is without prejudice ; with instructions to the trial court to give Plaintiffs the opportunity to amend their petition; and for further proceedings consistent with this opinion.

I. BACKGROUND

A. Plaintiffs’ Petition and the Allegations Therein

Plaintiffs filed the petition at issue in this case – their original petition – on September 23, 2019. Because this appeal involves a dismissal by the trial court for failure to state a claim upon which relief may be granted, we begin by setting out the relevant factual allegations of Plaintiffs’ petition and the exhibits attached thereto.¹

Plaintiff Margaret Smith is the daughter of Plaintiff Sharon Smith and is Defendant Stewart's niece. Plaintiff Sharon Smith, Plaintiff Howell, and Defendant Stewart are siblings, and their mother Dorothy A. Watson ("Mother") passed away in August 2015. Prior to Mother's death, she owned a parcel of residential property located at 704 East High Street in Potosi, Missouri ("Mother's Residence").

Plaintiffs’ petition alleges Defendant Stewart has an enforceable contractual obligation to immediately sell Mother's Residence to Plaintiff Margaret Smith and Defendant breached such obligation. The basis of Plaintiffs’ petition pertains to three agreements relating to the distribution of properties, which were entered into following Mother's death: an August 2016 Watson-Casey Agreement; a December 2016 Settlement Agreement; and a December 2017 addendum to the December 2016 Settlement Agreement.

The August 2016 Watson-Casey Agreement was entered into on or about August 5, 2016 by Plaintiff Sharon Smith, Plaintiff Howell, and Defendant Stewart (all individually and as successor trustees of their Mother's trust)² ; "Casey LLC"; and "members of the Casey family" ("Watson-Casey Agreement"). While the Watson-Casey Agreement is not attached as an exhibit to Plaintiffs’ petition, at least some of its alleged terms are referred to in the petition and the exhibits attached thereto. Taking Plaintiffs’ allegations in their petition and the exhibits attached thereto as true and viewing all reasonable inferences therefrom in their favor,³ the Watson-Casey Agreement allegedly provides Plaintiff Sharon Smith, Plaintiff Howell, and Defendant Stewart would receive multiple parcels of real property, including Mother's Residence, which are collectively referred to as the "Watson Properties."

The second agreement relevant to Plaintiffs’ petition and the distribution of properties – a settlement and mutual release agreement – was entered into on or about December 27, 2016 by Plaintiff Sharon Smith, Plaintiff Howell, and Defendant Stewart ("Settlement Agreement"). The Settlement Agreement is referenced in and attached to the petition as an exhibit and provides in relevant part that, (1) "the effective date of this Settlement Agreement and all transactions consummated in connection herewith, shall be on or before January 5, 2017, unless otherwise expressly provided herein (the ‘Effective Date’)" (emphasis omitted); (2) promptly after, inter alia , the Effective Date, the parties shall cause Mother's Residence to be titled solely in the name of Defendant Stewart; and (3) Defendant Stewart is obligated to sell Mother's Residence to Plaintiff Margaret Smith for $170,000.00 subject to closing adjustments and prorations if Plaintiff Margaret Smith successfully closed on the property on or before the effective date of June 1, 2017 or if Plaintiff Margaret Smith's failure to close on or before June 1, 2017 was through the fault of Defendant.

The third and final agreement relevant to Plaintiffs’ petition and the distribution of properties – an addendum to the December 2016 Settlement Agreement – was entered into on or about December 27, 2017 by Plaintiff Sharon Smith, Plaintiff Howell, and Defendant Stewart ("Addendum"). The Addendum is referenced in and attached to the petition as an exhibit and provides in relevant part that, (1) "[t]he Effective Date of the Settlement Agreement shall be the date upon which the closing of the transactions contemplated by the Watson-Casey Agreement occurs"; (2) "any reference in the Settlement Agreement to any obligation being performed on or before the Effective Date shall mean the date upon which the closing of the transactions contemplated by the Watson-Casey Agreement occurs"; and (3) "[e]xcept as expressly set forth herein, the Settlement Agreement shall remain unmodified, unamended and in full force and effect."

Taking Plaintiffs’ allegations as true and viewing all reasonable inferences therefrom in their favor, Plaintiffs’ petition seeks declaratory relief, injunctive relief, and specific performance. Plaintiffs’ petition specifically alleges Defendant Stewart has an enforceable contractual obligation to immediately sell Mother's Residence to Plaintiff Margaret Smith and Defendant breached such obligation because, (1) the Addendum to the Settlement Agreement "extended the closing date for the transactions contemplated by [the Settlement] Agreement, including the sale of [Mother's] [R]esidence to Plaintiff Margaret Smith, until a time when there was a closing on all propert[y] [transactions], which were subject to certain litigation and ... [contemplated by] the Watson-Casey Agreement"; (2) "recently the real estate exchanges as required in the Watson-Casey Agreement were substantially completed so that title to ‘Mother's [R]esidence’ ... transferred to Defendant [Stewart]"; and (3) "Plaintiffs have made requests upon Defendant Stewart to close [on Mother's Residence] and Defendant [ ] has failed and refused to do so ...."

B. Defendant's Motion to Dismiss and Subsequent Procedural Posture

On January 14, 2020, Defendant Stewart filed a motion to dismiss Plaintiffs’ petition, or, in the alternative, for a more definite statement ("motion to dismiss"). Defendant's motion to dismiss asserts Plaintiffs’ petition fails to state a claim because, inter alia , although the petition alleges the Addendum to the Settlement Agreement extended the closing deadline for the sale of Mother's Residence from June 1, 2017 to the date of when there was a closing on all property transactions contemplated by the Watson-Casey Agreement, "Plaintiffs fail to specify the date of [such] closing [related to] the Watson-Casey Agreement, [so] that [Defendant] Stewart cannot determine whether Plaintiffs have satisfied any and all conditions required for the sale of [ ] Mother's Residence." Notably, Defendant's motion to dismiss did not request Plaintiffs’ petition to be dismissed with prejudice.

After various motions were filed by the parties and Plaintiffs’ original attorney withdrew from the case, a second attorney entered his appearance for Plaintiffs on November 6, 2020 ("Plaintiffs’ second attorney"). Subsequently, hearings on Defendant's motion to dismiss were continued multiple times, including at least once due to the Covid-19 pandemic.

On March 16, 2021, Defendant's counsel filed a notice of hearing for Defendant's motion to dismiss to be heard on April 15, 2021. Three days before the hearing (on April 12), Plaintiffs’ second attorney filed a motion to withdraw but did not file a notice of hearing on the motion. The trial court granted the motion to withdraw the day after it was filed (on April 13, 2021), without a hearing.

Three relevant docket entries took place the next day (on April 14). First, the trial court entered a docket entry, which states, "[the] court notes [Plaintiffs’ second attorney] has withdrawn as attorney of record and orders all parties to appear for hearing on April 15th, 2021 [at] 9:00 a.m. Clerk to notify[.]" (emphasis omitted). Second, Defendant's counsel filed a memorandum with the court, asking for Defendant's motion to dismiss to still be heard on April 15 whether or not Plaintiffs appeared. And third, Plaintiffs’ second attorney filed a motion, on behalf of Plaintiffs, requesting the April 15 hearing on the motion to dismiss to be continued "for thirty days to allow Plaintiffs time to seek new counsel."

On April 15, and without the presence of Plaintiffs, nor any counsel on their behalf, the trial court heard Defendant's motion to dismiss. The next day (on April 16), the trial court entered an order denying Plaintiffs’ motion for a continuance of the April 15 hearing and a judgment dismissing Plaintiffs’ petition with prejudice for failure to state a claim upon which relief may be granted.

Subsequently on April 16, new counsel entered his appearance for Plaintiffs. Plaintiffs then filed a motion for leave to file...