City of Harrisonville v. McCall Service Stations d/b/a Big Tank Oil The Missouri Petroleum Storage Tank Insurance Func

• Court: Missouri Court of Appeals
• Decided: February 25, 2014
• Docket: WD74429
• Status: Published

Opinion

IN THE MISSOURI COURT OF APPEALS WESTERN DISTRICT CITY OF HARRISONVILLE, ) Appellant-Respondent, ) ) v. ) WD74429 (consolidated with WD74436 ) and WD74950) McCALL SERVICE STATIONS d/b/a ) BIG TANK OIL, et al; ) FILED: February 25, 2014 THE MISSOURI PETROLEUM ) STORAGE TANK INSURANCE FUND, ) Respondent-Appellant. )

Appeal from the Circuit Court of Cass County The Honorable Jacqueline A. Cook, Judge

Before Division Two: Alok Ahuja, P.J., Mark D. Pfeiffer and Anthony Rex Gabbert, JJ.

During construction of a sewer upgrade project, a contractor for the City of Harrisonville

discovered soil contaminated by petroleum products which had migrated from a nearby service

station‟s underground storage tank system. The City contends that the Missouri Petroleum

Storage Tank Insurance Fund promised the City that the Fund would pay the increased

construction costs associated with the contamination, but that the Fund later reneged. The City

sued the Fund and the service station‟s present and former owners, alleging claims of nuisance

and trespass against the station owners, and fraudulent and negligent misrepresentation against

the Fund. Following a jury trial, the City was awarded compensatory and punitive damages

against the past and present station owners, and against the Fund. The trial court remitted the punitive damages awarded against the Fund in part, finding that the award violated due process

principles.

The Fund and the station owners appeal; the City cross-appeals from the trial court‟s

remittitur of the jury‟s punitive damages award. We affirm the bulk of the trial court‟s rulings,

but reverse the trial court‟s refusal to apply § 510.265.1(2),1 which limits the punitive damages

awarded against the Fund to five times the net amount of the judgment. Employing our authority

under Supreme Court Rule 84.14, we modify the trial court‟s judgment to reduce the punitive

damages awarded against the Fund to the amount authorized by § 510.265.1(2).

Factual Background

McCall Service Stations, doing business as Big Tank Oil, owned a gas station in

Harrisonville. In September 1997 McCall discovered that its underground gasoline storage tank

system was leaking. McCall notified the Missouri Petroleum Storage Tank Insurance Fund. The

Fund is a special trust fund created by the Missouri Legislature to provide insurance to service

station owners for the cleanup costs associated with spills and leaks from underground petroleum

storage tanks. The Fund investigated the leak and determined that a significant amount of

gasoline had leaked into the soil surrounding McCall‟s tank system.

McCall and the Fund hired Bob Fine, an environmental engineer, to determine the extent

of the leakage. In October of 1997, Fine notified that Department of Natural Resources (“DNR”)

that the leaking tank system on McCall‟s property had caused petroleum contamination to

migrate off site in a northwesterly direction toward a nearby creek. Additional reports from Fine

indicated that contamination had been detected north of the creek. Fine prepared a plan to

1 Statutory citations refer to the 2000 edition of the Revised Statutes of Missouri, updated through the 2013 Cumulative Supplement.

2 contain and monitor the leak. Fine installed several monitoring wells on the streets that were

contiguous to the service station.

In 2000, McCall sold the service station to Fleming Petroleum.

In 2003, the City of Harrisonville determined that its sewer system needed to be upgraded

to provide increased capacity to accommodate its growing population. Harrisonville residents

approved a bond issue for a multi-million-dollar sewer upgrade project. The sewer project called

for the City to replace about one and one-half miles of its existing sewer line with larger

diameter pipe. Part of the new pipe was to be laid under the street adjacent to Fleming‟s service

station. Another part of the new pipe was to be laid adjacent to the creek on the north side of the

service station. The City hired George Butler & Associates, a local engineering firm, to design

the project and prepare a scope of services so that the construction work could be let for

competitive bidding.

Rose-Lan Construction won the bidding process and was engaged by the City to

complete the sewer project. During construction, Rose-Lan encountered contaminated soil

adjacent to Fleming‟s service station. Rose-Lan did not have the expertise to complete

construction in contaminated soil; it declined to complete this portion of the sewer project.

The City notified DNR of the contaminated soil, and was informed that the Fund had

retained Fine to monitor the contamination since 1997, when it was first discovered. The Fund

was contacted and hired Fine to determine whether gasoline from the service station was

responsible for the soil contamination in the City‟s sewer easement. Fine confirmed that the

service station was the source of the contamination.

The City began discussions with the Fund on the best way to address the contaminated

soil, and complete construction of the sewer upgrade project. Ted Martin, the City‟s engineer,

3 estimated that to completely remove and replace the contaminated soil would cost in excess of

$500,000. A more cost-effective approach, suggested by Fine and the Fund, involved leaving the

contaminated soil in place, and substituting petroleum-resistant pipe and fittings for the sewer

pipe the City had intended to install. Fine and BV Construction submitted a bid of $190,226.38

to install the petroleum-resistant pipe.

Pat Vuchetich, an employee with Williams and Company, the Fund‟s third-party

administrator, concluded that the Fine/BV Construction estimate was too high, and made efforts

to find a cheaper bid. Vuchetich contacted three companies he knew were capable of completing

this type of remediation work. Ultimately, he decided that Midwest Remediation was best suited

for the project, based on his prior experience with the company. Vuchetich spoke to Shaun

Thomas of Midwest Remediation, and requested that Midwest Remediation prepare a bid for the

project. Vuchetich worked with Thomas to prepare a low bid, making suggestions about specific

cost items. Vuchetich indicated that with the changes Midwest‟s bid would “knock the socks

off” of the City, and that he “would be a sure bet then to push the City to hire Midwest for the

job.” Midwest‟s bid, prepared by Thomas, was for $175,161.41, more than $15,000 lower than

the Fine/BV Construction bid.

On April 13, 2004, Vuchetich forwarded Midwest‟s bid to Carol Eighmey, the Fund‟s

executive director. Vuchetich indicated that the Fund‟s exposure would be $135,571 after

subtracting Rose-Lan‟s estimated costs for the relevant section of pipe (which the City would

avoid, since Rose-Lan would not be constructing this portion of the project). Vuchetich

informed Eighmey that he would meet with the City and inform them that Midwest‟s costs were

reasonable.

4 On April 15, 2004, the City held a meeting involving all of the parties involved in the

remediation project. Vuchetich represented the Fund. The City was represented by Dianna

Wright, the City Administrator, Martin, the City Engineer, and Steve Mauer, the City Attorney.

Also in attendance at the meeting were Thomas, representing Midwest Remediation, and

Willman Rextroat, representing Rose-Lan. Vuchetich presented Midwest‟s bid to the City

officials and informed them that it was reasonable.

Vuchetich expressed concerns that Rose-Lan‟s initial bid for installing the relevant

section of pipe ($19,061.31) was too low. In response, Rose-Lan revised the bid upward to

$25,138.41 (which had the effect of reducing the amount of the contamination-related costs for

which the Fund would be responsible). Vuchetich also stated that the Fund felt that both the City

and George Butler & Associates should share some of the additional costs of the cleanup project

based upon their failure to discover the soil contamination before preparing their sewer

construction plan. The City responded that if the Fund had an issue with George Butler &

Associates for failing to discover the contamination, the Fund should take it up with the firm, not

with the City.

Wright, Martin, and Rextroat left the meeting with the understanding that the Fund

wanted the City to hire Midwest Remediation for the project, and that the Fund would reimburse

the City for Midwest Remediation‟s costs, less the amount that the City would otherwise have

paid Rose-Lan for the affected portion of the sewer project.

Various discussions between the City and the Fund occurred over the following months.

Vuchetich, on at least two occasions, made an offer of $50,000 to the City to settle the Fund‟s

liability. The City authorized Rose-Lan to subcontract with Midwest Remediation to install the

petroleum-resistant pipe with Change Order No. 3, dated August 3, 2004. On August 4, 2004,

5 the City‟s attorney sent a letter to Vuchetich stating that the City was going forward in reliance

on his promise that the Fund would pay the full amount of Midwest Remediation‟s costs.

The Fund did not reimburse the City for the expenses associated with Midwest

Remediation‟s work. The City filed suit against the Fund for fraudulent and negligent

misrepresentation, alleging that the City had hired Midwest Remediation in reliance on the

Fund‟s promise to pay Midwest Remediation‟s costs. The City also asserted claims for nuisance

and trespass against McCall and Fleming, based on the migration of petroleum contamination

from the underground petroleum tank system on the service station property. The City sought

compensatory and punitive damages from each defendant.

A jury trial was conducted on the City‟s claims. During trial, the circuit court granted the

City‟s motion for directed verdict on liability against McCall and Fleming, leaving only damages

issues for jury determination on the City‟s nuisance and trespass claims.

The jury returned a verdict for the City on all claims. The jury awarded compensatory

damages of $172,100.98 against McCall, Fleming and the Fund. The jury awarded punitive

damages of $100 each against McCall and Fleming, and punitive damages of $8,000,000 against

the Fund. The circuit court entered judgment accordingly.

McCall, Fleming and the Fund each filed post-trial motions. Among other things, the

Fund argued that the $8,000,000 punitive damage award exceeded the cap on punitive damages

found in § 510.265.1(2), and that it violated the due process requirements of the United States

and Missouri Constitutions. The trial court refused to apply the statutory damages cap, because

the City‟s cause of action had accrued before the cap was enacted in 2005. The court remitted

the punitive damages award on due process grounds, however, reducing it from $8,000,000 to

$2,500,000. The trial court denied the remaining post-trial motions.

6 McCall, Fleming and the Fund appeal. The City cross-appeals the trial court‟s remittitur

of the punitive damages award.

Analysis

McCall and Fleming filed a consolidated brief, which raises different substantive issues

than the Fund. We first address the claims made by McCall and Fleming.

I.

The trial court granted a directed verdict finding McCall and Fleming liable for nuisance

and trespass; the only issue submitted to the jury concerned the City‟s recoverable damages. The

jury awarded actual damages of $172,100.98 on each claim. Because the separate damage

awards are duplicative, the trial court‟s judgment awarded the City a single recovery of

$172,100.98 in compensatory damages against both McCall and Fleming, as well as punitive

damages of $100 against each defendant.

On appeal, McCall and Fleming do not challenge the trial court‟s liability finding.

Instead, their three Points relate to the trial court‟s rulings on the City‟s damages claim.

McCall and Fleming first argue that the trial court erred in submitting Jury Instructions

No. 7 and 9, the damages instructions on the City‟s nuisance and trespass claims. Both

instructions authorized the jury to award the City “the reasonable cost of remediation of the

contaminated soil,” as well as “any consequential damages resulting from” the nuisance or

trespass. McCall and Fleming argue that the instructions erroneously told the jury that it could

award the City its “consequential damages.”

Whether a jury is properly instructed is a matter of law subject to de novo review by this court. The court will determine if the instruction is supported by substantial evidence by viewing the evidence in a light most favorable to the instruction and disregard contrary evidence. The party challenging the instruction must show that the instruction misled, misdirected, or confused the jury, and that prejudice resulted from the error. A trial court's instructional error is reversible if the error substantially prejudiced a party.

7 Syn, Inc. v. Beebe, 200 S.W.3d 122, 128 (Mo. App. W.D. 2006) (citations omitted).

If a Missouri Approved Instruction (“MAI”) is applicable in a particular case, that

instruction must be given “to the exclusion of any other instruction on the same subject.” Rule

70.02(b). “The law is well-settled that where an MAI instruction applies to the case, the use of

such instruction is mandatory.” Syn, Inc., 200 S.W.3d at 128 (citation omitted). Missouri

Approved Instructions do not exist for every particular legal issue, however. In cases in which a

“not-in-MAI” instruction must be given to fairly submit the issues in a particular case, “such

modifications or such instructions shall be simple, brief, impartial, free from argument, and shall

not submit to the jury or require findings of detailed evidentiary facts.” Rule 70.02(b); see also

Shutt v. Chris Kaye Plastics Corp., 962 S.W.2d 887, 889-90 (Mo. banc 1998). “To obtain

reversal of a jury verdict on grounds of instructional error, Appellants must show that: 1) the

offending instruction misdirected, misled or confused the jury, and 2) prejudice resulted from the

error.” Holder v. Schenherr, 55 S.W.3d 505, 507 (Mo. App. W.D. 2001) (citation omitted). The

party alleging error bears the burden of proof. Id.

Although McCall and Fleming‟s Point Relied On challenges the jury instructions

submitted on both the City‟s nuisance and trespass claims, the authority they cite addresses only

the damages recoverable in a common-law trespass action. We limit our discussion accordingly.

“There are no approved MAI instructions for trespass to land.” Sterbenz v. Kansas City

Power & Light Co., 333 S.W.3d 1, 13 (Mo. App. W.D. 2010). McCall and Fleming argue that

the trial court inappropriately relied on Sterbenz to support its modification of MAI 4.02 to

authorize the recovery of “consequential damages.” They argue that Sterbenz is limited to

trespass claims against public utilities possessing the power of eminent domain, and which are

8 subject to § 523.283.4 (which recognizes a trespass cause of action against public utilities which

improperly use easements or rights-of-way).

We do not believe Sterbenz is limited in the manner McCall and Fleming contend.

Sterbenz holds that a public utility may be subject to a common-law trespass claim for certain

unauthorized uses of another‟s land. 333 S.W.3d at 7-8. Sterbenz specifically states that, “[i]n

any trespass action, the measure of damages could be modified to permit recovery of

consequential damages supported by the evidence, beyond the applicable trespass measure of

damages.” Id. at 14 n.20 (emphasis added).

Sterbenz‟s observation that a plaintiff in a common-law trespass action may recover

consequential damages, beyond the diminution in market value of its property, or the cost to

restore the property to its former condition, is consistent with well-established Missouri caselaw

decided outside the public-utility context. Those decisions recognize that “„[a] trespasser is

liable for all damages proximately caused by his trespass.‟” Brand v. Mathis & Assoc., 15

S.W.3d 403, 406 (Mo. App. S.D. 2000) (quoting Crook v. Sheehan Enters., Inc., 740 S.W.2d

333, 336 (Mo. App. E.D. 1987)). For example, in Kitterman v. Simrall, 924 S.W.2d 872 (Mo.

App. W.D. 1996), we stated that a trespasser is “liable for damages for the natural, necessary,

direct, and proximate consequences of his wrongful act,” id. at 878 (citation and internal

quotation marks omitted); we held that the trespasser in that case could properly be held liable

for plaintiff‟s temporary loss of access to a portion of its property. Similarly, in Shady Valley

Park & Pool, Inc. v. Fred Weber, Inc., 913 S.W.2d 28 (Mo. App. E.D. 1995), which involved

trespass to a lake through the introduction of mud and silt from a highway construction project,

9 the Eastern District held that the plaintiff could recover damages resulting from the consequent

closure of its wholesale fish hauling and fee fishing businesses. Id. at 35.2

Thus, substantive trespass law authorizes the recovery of consequential damages

proximately caused by a trespass. The trial court‟s damages instruction did not misstate

Missouri trespass law.

McCall and Fleming also argue that the inclusion of the phrase “consequential damages”

in the damages instructions gave the jury a “roving commission”; they argue that “consequential

damages” should have been defined in the instruction, to exclude the sort of “economic

damages” which they contend the City was seeking to recover.

We first note that McCall and Fleming did not object on the record to the lack of a

definition of “consequential damages” in the relevant instructions; because they did not make a

specific objection on this basis, they failed to preserve the issue. See Rule 70.03; Edwards v.

Gerstein, 363 S.W.3d 155, 167-68 (Mo. App. W.D. 2012); McGuire v. Kenoma, LLC, 375

S.W.3d 157, 173-74 (Mo. App. W.D. 2012).3

We turn, then, to McCall and Fleming‟s contention that the reference to “consequential

damages” in Instructions No. 7 and 9 constituted a “roving commission.” “A „roving

commission‟ occurs when an instruction assumes a disputed fact or submits an abstract legal

question that allows the jury to roam freely through the evidence and choose any facts which suit

2 Although McCall and Fleming do not cite authority to support their claim that consequential damages are not recoverable on a nuisance claim, and we therefore need not decide the issue, we note that the damages recoverable for common-law nuisance appear similar to those recoverable in a trespass action. See, e.g., Brown v. Cedar Creek Rod & Gun Club, 298 S.W.3d 14, 21 (Mo. App. W.D. 2009) (measure of damages for nuisance includes “actual damages for any diminished property value and compensatory damages for physical injuries, property damage, inconvenience, and discomfort caused by the nuisance”). 3 For the same reason, we do not address McCall and Fleming‟s argument that the trial court improperly submitted damages instructions based on MAI 4.02, rather than MAI 4.01.

10 its fancy or its perception of logic to impose liability.” Klotz v. St. Anthony’s Med. Ctr., 311

S.W.3d 752, 766 (Mo. banc 2010) (quoting Scanwell Freight Express STL, Inc. v. Chan, 162

S.W.3d 477, 482 (Mo. banc 2005)). In determining whether a jury instruction failed to give the

jury meaningful guidance, but instead constituted a “roving commission,” “[t]he issue is whether

the phrase as used in the verdict director was misleading in the context of the evidence at trial.”

Id. at 767 (emphasis added; citing Edgerton v. Morrison, 280 S.W.3d 62, 67 (Mo. banc 2009)).

“Where the testimony in a case explains a phrase used in the verdict director, there is no „roving

commission.‟” Id. (citing Edgerton, 280 S.W.3d at 67).

In this case, the testimony at trial made clear precisely what damages the City was

seeking to collect, which it alleged were proximately caused by the petroleum contamination.

Dianna Wright, Harrisonville‟s former City Administrator, testified at trial to the City‟s

damages. Wright testified that the City was required to hire Midwest Remediation to address the

contaminated soil and install petroleum-resistant piping in the area where the contamination had

been discovered, because Midwest Remediation was qualified to deal with the petroleum

contamination, and Rose-Lan was not. Wright testified that Midwest Remediation charged the

City $155,257.98 more than Rose-Lan had contracted to charge for completion of the sewer

upgrade project in the contaminated area. Wright testified that these additional costs were a

direct result of the soil contamination. She also testified that the City incurred additional costs of

$4,660 for soil testing to determine the scope of the contamination, and $12,183 in additional

fees to George Butler & Associates due to the increased scope of the sewer project caused by the

soil contamination. Wright testified that the sum of these costs to the City, a total of

$172,100.98, was the City‟s damages directly resulting from the soil contamination. Finally, she

testified that without the soil contamination, the City would have incurred only $25,135.41 for

11 construction of the sewer upgrade in the contaminated area. The testimony of William Rextroat

of Rose-Lan confirmed that it would have charged the City only $25,135.41 for this portion of

the sewer project, but for the discovery of the petroleum contamination.

Thus, Wright‟s testimony establishes that the City incurred increased costs of

$172,100.98 to complete the sewer upgrade project, as a direct result of the contamination for

which McCall and Fleming are responsible. None of the costs for which the City sought

reimbursement would have been incurred had the City not encountered petroleum-contaminated

soil. The increased costs to which Wright testified are the costs for which the City sought

compensation in its closing arguments, and the jury awarded the City compensatory damages in

this precise amount. Under the caselaw discussed above, the City was entitled to recover these

costs, which were proximately caused by the trespass of contaminants into its easement. In these

circumstances, the reference to “consequential damages” in Instructions No. 7 and 9 was

sufficiently definite to inform the jury of the legal standard it was required to apply. The

instructions did not constitute a prohibited “roving commission.”

McCall and Fleming argue that the City was improperly seeking to recover “economic

damages.” They rely on the following exchange from Wright‟s testimony:

Q. . . . So . . . the difference in the money you paid [to Midwest Remediation] and the money that Rose-Lan said they would have spent, that represented the loss of the benefit of your good bargain with Rose-Lan; is that your understanding?

A. That‟s my understanding.

McCall and Fleming claim that this exchange establishes that the City was seeking “benefit of

the bargain” damages, rather than recovery of only those costs which were directly attributable to

the petroleum contamination.

12 We are unpersuaded. In agreeing with McCall and Fleming‟s counsel that part of the

City‟s damages reflected “the loss of the benefit of [the City‟s] good bargain with Rose-Lan,”

Wright was merely testifying that, due to the petroleum contamination, the City could no longer

construct this portion of the sewer upgrade project at the lower costs to which Rose-Lan had

agreed, but instead had to hire a specialized contractor, to perform only part of the sewer upgrade

project, at a much higher cost. Although McCall and Fleming‟s counsel asked his questions in

terms of “benefit of the bargain,” Wright‟s response is consistent with the remainder of her

testimony: the City could have had the relevant work performed at a much lower price, but for

the discovery of the contamination. We do not read the isolated excerpt from Wright‟s testimony

on which McCall and Fleming rely as altering the tenor of Wright‟s overall testimony, or as

permitting the City to recover any sort of impermissible “benefit of the bargain” damages.4

Point I is denied.

II.

In their second Point, McCall and Fleming argue that the trial court abused its discretion

by failing to grant their motions for a directed verdict and for judgment notwithstanding the

verdict, which sought to limit the City‟s compensatory damages to $72,009.98. McCall and

Fleming argue that there was no competent evidence that the damages attributable to the

contamination exceeded that amount. We disagree.

4 We recognize that the City‟s installation of petroleum-resistant pipe and fittings did not serve to remediate the contaminated soil, but instead allowed the City to complete its sewer upgrade project while leaving the contaminated soil in place. McCall and Fleming do not argue, however, that the City‟s costs were unrecoverable because they were not incurred to directly address the contaminated soil itself. Moreover, the evidence at trial indicated that the cost to remediate the contamination – by excavation and disposal of all contaminated soils – was almost three times the damages the City actually recovered.

13 “The standard of review for the denial of a judgment notwithstanding the verdict (JNOV)

is essentially the same as review of the denial of a motion for directed verdict.” All Am. Painting,

LLC v. Fin. Solutions & Assocs., Inc., 315 S.W.3d 719, 723 (Mo. banc 2010).

A defendant is entitled to a judgment notwithstanding the verdict only when the plaintiff fails to make a submissible case. To make a submissible case, a plaintiff must present substantial evidence for every fact essential to liability. Substantial evidence is that which, if true, has probative force upon the issues, and from which the trier of fact can reasonably decide the case.

In reviewing for a submissible case, the evidence and all reasonable inferences drawn therefrom are viewed in the light most favorable to the plaintiff. The plaintiff‟s evidence is presumed to be true. Any of the defendant‟s evidence that does not support the plaintiff's case is disregarded. An appellate court will not, however, supply missing evidence or give the plaintiff the benefit of unreasonable, speculative or forced inferences. Whether the evidence in a case is substantial and whether the inferences drawn therefrom are reasonable are questions of law. Granting a JNOV is a drastic action that should be done only when reasonable persons could not differ on a correct disposition of the case. An appellate court will not overturn a jury's verdict unless there is a complete absence of probative facts to support it.

Porter v. Toys ‘R’ Us-Delaware, Inc., 152 S.W.3d 310, 315-316 (Mo. App. W.D. 2004)

(citations and internal quotation marks omitted).

McCall and Fleming claim that the only evidence on which the jury could have relied to

determine the City‟s damages was the testimony of Shaun Thomas, a former employee of

Midwest Remediation who prepared its bid for the work at issue. (Midwest Remediation was

defunct by the time of trial). When asked by McCall and Fleming‟s counsel, Thomas testified

that only $72,009.98 of Midwest Remediation‟s bid of $175,161.44 was directly attributable to

the soil contamination at the site.

Despite Thomas‟ testimony, as we have discussed above the City submitted evidence,

through the testimony of City Administrator Wright, that all of the damages it was seeking to

recover resulted from the necessity to hire Midwest Remediation to construct a portion of the

14 sewer upgrade project which Rose-Lan was not qualified to perform, due to the discovery of

petroleum contamination. Furthermore, the City‟s evidence indicated that the Fund

recommended Midwest Remediation and viewed its bid as “reasonable” for the work needed.

Even if Thomas‟ testimony were viewed as inconsistent with the City‟s evidence, any

inconsistency was for the jury to resolve. Under our standard of review, we disregard evidence

contrary to the jury‟s verdict, and presume that the jury resolved any inconsistency in the

evidence by relying on Wright‟s testimony that all of the City‟s damages had been proximately

caused by the soil contamination.

We also note that Thomas‟ testimony was equivocal; the jury had every reason to

discount it. Thomas testified that he and spent “very little” time attempting to distinguish the

contamination-related from the non-contamination-related costs in Midwest Remediation‟s bid.

Indeed, on cross-examination Thomas estimated that his analysis took him only “about eight

minutes” to complete.

Thomas also testified that he categorized Midwest Remediation‟s costs “from memory,”

seven years after he prepared its bid. Because Midwest Remediation was defunct, Thomas

testified that “I don‟t have a file and don‟t know where to look for a file.” When he was asked

what total amount of costs he calculated as being “specific . . . to the job because of dealing with

contaminated soil,” Thomas provide the following ambivalent response:

A. Well, from the ones marked with an X and you highlighted, we come up with 72,000. But, you know, there‟s – there‟s things within the whole quote that – just bits and pieces that just, in a short amount of time that I spent on this, I can‟t specifically say. But that‟s the amount, $72,009.88 is what I come up with.

Q. And do you believe that is a fair representation of the portion of the total job that was specifically necessary to do dealing with the contaminated soil?

15 A. Well, that‟s what I‟ve – that‟s what I‟ve attributed it to. So I don‟t know if it‟s fair or not, but, yes, I guess it would be.

In addition, on cross-examination Thomas acknowledged that other costs, beyond those

which he had specifically identified as contamination-related, were affected by the fact that

contamination was present in the work zone. For example, Thomas agreed that, even though

Rose-Lan would have had to lay pipe in the affected area even if no contamination had been

discovered, Midwest Remediation‟s pipe-laying work was different, since it was required to

“put[ ] in a new pipe in a contaminated trench.” Thomas agreed that comparing the work

Midwest Remediation did in contaminated soil, to the work Rose-Lan would have done if the

area had not been contaminated, “isn‟t really apples to apples.”

McCall and Fleming‟s argument also ignores that Midwest Remediation‟s costs were

undoubtedly affected by the fact that it was specially retained to perform a small part of a larger,

ongoing construction project. Presumably,5 some of Midwest Remediation‟s costs were

duplicative; thus, Midwest Remediation likely incurred costs (whether for mobilization or

demobilization, equipment rental, bonding, insurance, or other matters) that would not have been

separately incurred by a second contractor if Rose-Lan had been able to complete the entire

sewer upgrade project as originally planned. Moreover, we presume that, because it had been

hired to perform only a part of a larger construction project, Midwest Remediation‟s per-unit

costs for performance of the work exceeded Rose-Lan‟s per-unit cost. The testimony also

indicated that Midwest Remediation was qualified to conduct construction work in the

contaminated area, but that Rose-Lan was not; presumably Midwest Remediation was required 5 The Fund did not submit to this Court Defendant‟s Exhibit 199, which is apparently the line-item breakdown of Midwest Remediation‟s costs on which Thomas‟ testimony depended. The Fund‟s failure to provide us with this exhibit makes it difficult to fully respond to the Fund‟s argument. The omission of this exhibit from the record on appeal must be construed against the Fund. See, e.g., Dawson v. Dawson, 366 S.W.3d 107, 113 (Mo. App. W.D. 2012) (citing U.S. Bank v. Lewis, 326 S.W.3d 491, 496 (Mo. App. S.D. 2010)).

16 to employ more highly skilled (and thus more expensive) personnel than Rose-Lan. Thomas also

testified that the City and Rose-Lan stressed to him the urgency of Midwest Remediation‟s work,

based on their desire to complete the ongoing sewer upgrade project; Thomas testified that this

urgency “played a role” in the amount Midwest Remediation bid for the work.

Thomas‟ equivocal testimony as to the amount of Midwest Remediation‟s costs which he

could specifically identify as being contamination-related did not foreclose the jury from

crediting the City‟s evidence concerning its contamination-related costs. The trial court did not

err in denying McCall and Fleming‟s motions for directed verdict and for judgment

notwithstanding the verdict.

III.

McCall and Fleming‟s third Point argues that the trial court erred in not ordering

remittitur of the jury award of $172,100.98 in compensatory damages, based on Thomas‟

testimony that Midwest Remediation‟s contamination-related costs were only $72,009.98. We

disagree.

The trial court is given broad discretion in deciding whether remittitur should be ordered. The appellate court will interfere only when the verdict is so excessive it shocks the conscience of the court and convinces the appellate court that both the jury and the trial court abused its discretion. In reviewing whether a verdict is excessive, we are limited to a consideration of the evidence which supports the verdict excluding that which disaffirms it.

McGathey v. Davis, 281 S.W.3d 312, 320 (Mo. App. W.D. 2009) (internal quotation marks and

citations omitted).

As explained in § II, above, Thomas‟ testimony concerning Midwest Remediation‟s

contamination-related costs was equivocal, and it did not foreclose the jury from awarding the

City the greater amount it sought. Because substantial evidence supported the jury‟s

17 compensatory damage award, the trial court did not abuse its “broad discretion” in refusing to

remit the compensatory damages awarded against McCall and Fleming. Point III is denied.

IV.

We turn now to the Fund‟s arguments. In its first Point, the Fund argues that the trial

court erred in failing to grant its motion for judgment notwithstanding the verdict (“JNOV”) on

the City‟s fraudulent and negligent misrepresentation claims. The Fund argues that it was

entitled to JNOV because the City could not have actually or justifiably relied on any statements

made by Vuchetich at the April 15, 2004 meeting that the Fund would indemnify the City for the

entirety of Midwest Remediation‟s net costs. The Fund argues that such reliance was foreclosed

by Vuchetich‟s later correspondence to the City and to George Butler & Associates, in which he

offered $50,000 to settle the Fund‟s liability, and stated that George Butler & Associates should

be required to contribute to funding the cleanup. Because the City had Vuchetich‟s post-April 15

correspondence at the time it authorized Rose-Lan to subcontract with Midwest Remediation, the

Fund argues that the City could not have actually, or reasonably, believed that the Fund would

pay all of Midwest Remediation‟s expenses at the time the City chose to retain it.

The Fund made this argument (that Vuchetich‟s post-April 15, 2004 correspondence

prevented actual and justifiable reliance) in its post-trial motion for judgment notwithstanding

the verdict. It failed, however, to make this argument at trial in its oral motions for directed

verdict at the close of the City‟s evidence, or at the close of all the evidence. At the end of the

City‟s case, the Fund argued that it was entitled to a directed verdict on the City‟s fraud and

negligent misrepresentation claims because: there was no evidence that Vuchetich made a

specific, actionable representation at the April 15, 2004 meeting; the City had failed to prove that

the Fund and/or Vuchetich had a present intention not to perform at the time any representation

was made; and the City suffered no detriment from any reliance on Vuchetich‟s representations,

18 because Midwest Remediation “did a fine job,” and saved the City money compared to the

Fine/BV Construction bid. No reference was made to Vuchetich‟s post-April 15, 2004

correspondence, and no argument was made that the correspondence defeated the City‟s claims

of actual and justifiable reliance on Vuchetich‟s representations at the April 15, 2004 meeting.

The Fund‟s motion for directed verdict at the close of all the evidence repeated its earlier

arguments, largely by incorporating the earlier arguments by reference.

Because the Fund failed to move for a directed verdict during trial on the basis asserted in

its first Point, it did not preserve that issue as a basis for JNOV, or for appellate review.

A motion for judgment notwithstanding the verdict is a motion “to have judgment entered in accordance with the motion for a directed verdict.” Rule 72.01(b). Therefore, a sufficient motion for directed verdict is required to preserve the motion for judgment notwithstanding the verdict and for appeal. [¶] An issue not raised in a motion for directed verdict may not be used to seek a judgment notwithstanding the verdict on that issue or for obtaining appellate review of the trial court's denial of judgment notwithstanding the verdict on that ground.

Daniels v. Bd. of Curators of Lincoln Univ., 51 S.W.3d 1, 5–6 (Mo. App. W.D. 2001) (emphasis

added; other citations and footnote omitted). Rule 72.01(a) provides that “[a] motion for a

directed verdict shall state the specific grounds therefor.” “In the absence of a motion for

directed verdict which complies with the mandates of Rule 72.01(a), a post-verdict motion for

judgment n.o.v. is without basis and preserves nothing for review.” Pope v. Pope, 179 S.W.3d

442, 457 (Mo. App. W.D. 2005) (en banc); see also, e.g., Bailey v. Hawthorn Bank, 382 S.W.3d

84, 100 (Mo. App. W.D. 2012).

Because it was not preserved in the Fund‟s motions for directed verdict during trial, we

reject the Fund‟s first Point without further discussion.

19 V.

In its second Point, the Fund argues that the trial court erred in denying its motion for

JNOV because the evidence establishes that the City did not suffer any damages associated with

the sewer project. We disagree.

As explained in § II, above, a JNOV is appropriate only when a plaintiff fails to make a

submissible case; in determining whether a plaintiff did so, we view the evidence, and all

reasonable inferences from the evidence, in the light most favorable to the verdict, and disregard

all contrary evidence. Porter, 152 S.W.3d at 315-316.

In fraudulent misrepresentation cases, the plaintiff is required to establish each and every

element of a fraud claim, and its failure to do so is fatal to the claim. Heberer v. Shell Oil Co.,

744 S.W.2d 441, 443 (Mo. banc 1988) (citation omitted). An injury directly and proximately

caused by the misrepresentation is an essential element of a fraudulent misrepresentation claim.

Hess v. Chase Manhattan Bank, USA, N.A., 220 S.W.3d 758, 765 (Mo. banc 2007) (citation

omitted).

The Fund argues that, even if the City relied on Vuchetich‟s representations that the Fund

would reimburse the cost of hiring Midwest Remediation, the result was that the City actually

saved money, because Midwest Remediation‟s bid was less than the Fine/BV Construction bid

for the same work. Thus, according to the Fund, the City sustained no compensable damages as

a matter of law. The Fund‟s argument ignores, however, that the City presented evidence that it

would have acted differently if Vuchetich had not promised that the Fund would pay Midwest

Remediation‟s fees. Former City Administrator Dianna Wright testified that if she would have

been told that the Fund was not going to pay for all of the costs in excess of Rose-Lan‟s contract

price, she would have told the Fund to “come and get your contaminated soil, and get it out of

our easement, and completely remove it, clean it up, get a certification that it‟s now clean.” She

20 testified that the City would then have had Rose-Lan complete the sewer installation as originally

planned. City Engineer Ted Martin provided similar testimony. The evidence indicated that the

cost of excavation of all contaminated soils would have been approximately $500,000.

Beyond the fact that the City did not insist on complete excavation of all contaminated

soil, its evidence indicates that it authorized Rose-Lan to subcontract with Midwest Remediation,

without conducting a competitive bidding process, based on Vuchetich‟s assurances. Rose-Lan‟s

William Rextroat testified that after the April 15, 2004 meeting, the Fund “pretty much

demanded that we use their number and use them [i.e., Midwest Remediation].” When asked

why the City did not go through a competitive bidding process before hiring Midwest, Rextroat

testified that “[t]he tank fund was happy with those guys. We didn‟t have anything against them,

either, so it was fine with us.”

Based upon the preceding facts, the City presented substantial evidence to allow the trier

of fact to find that the City relied on the Fund‟s representations when it decided: to hire Midwest

Remediation at all; to hire them without a competitive bidding process; and to accept the less

costly alternative of leaving much of the contaminated soil in place, rather than excavating all of

it. The trial court did not err in denying the Fund‟s motion for a directed verdict based upon the

alleged lack of evidence that the City relied on Vuchetich‟s representations to its detriment.6

6 In its appellate briefing, the Fund argues that the City‟s fraud claim is in essence a claim that the Fund breached an oral contract to reimburse the City for Midwest Remediation‟s costs; the Fund contends that the City was required to prove that it incurred damages on its fraud claim separate and apart from the breach of oral contract claim the Fund contends the City could have asserted. This argument was not made in the Fund‟s directed verdict motions; for the reasons stated in § IV, above, we do not address this unpreserved argument. The Fund‟s argument is that the City incurred no harm as a result of its reliance on Vuchetich‟s representations; the Fund does not argue that the City‟s recovery was based on an inappropriate measure of its harm, or that the City was allowed to recover for damages which were not proximately caused by Vuchetich‟s misrepresentations.

21 VI.

In its third Point, the Fund argues that the trial court erred in failing to grant its motion

for JNOV because the jury‟s award of actual and punitive damages violated § 319.131.5, which

specifies the types of damages for which the Fund will compensate tank owners and operators

and third parties.

“Statutory interpretation is a question of law, which is subject to de novo review on

appeal.” Hervey v. Missouri Dept. of Corr., 379 S.W.3d 156, 163 (Mo. banc 2012) (citation

The Fund is a special trust fund created by statute to cover the costs of cleaning up

contamination caused by leaking underground petroleum storage tanks. § 319.129.1. The statute

specifies that:

The fund shall provide coverage for third-party claims involving property damage or bodily injury caused by leaking petroleum storage tanks whose owner or operator is participating in the fund at the time the release occurs or is discovered. Coverage for third-party property damage or bodily injury shall be in addition to the coverage described in subsection 4 of this section [(addressing cleanup costs)] but the total liability of the petroleum storage tank insurance fund for all cleanup costs, property damage, and bodily injury shall not exceed one million dollars per occurrence or two million dollars aggregate per year. The fund shall not compensate an owner or operator for repair of damages to property beyond that required to contain and clean up a release of a regulated substance or compensate an owner or operator or any third party for loss or damage to other property owned or belonging to the owner or operator, or for any loss or damage of an intangible nature, including, but not limited to, loss or interruption of business, pain and suffering of any person, lost income, mental distress, loss of use of any benefit, or punitive damages.

§ 319.131.5 (emphasis added).

The Fund argues that the statutory prohibition on compensation for “loss or damage of an

intangible nature, including . . . punitive damages,” prohibited the jury from awarding the City

either compensatory or punitive damages.

22 With respect to actual damages, for the reasons stated in § I, above, we reject the Fund‟s

argument that the City was seeking “economic” or “benefit of the bargain” damages. Instead, as

we explained in § I, the City presented evidence that all of the damages it sought to recover were

directly attributable to the petroleum contamination.

More fundamentally, however, we do not read § 319.131.5 as specifying limitations on

the Fund‟s liability for its own actions. The first two sentences of § 319.131.5 make clear that

the sub-section is intended to define the “coverage” provided by the Fund; namely, the insurance

or indemnity coverage which the Fund provides for property damage or bodily injury “caused by

leaking petroleum storage tanks” which are insured by the Fund. Nothing in § 319.131.5 suggest

that it is intended to address the scope of the Fund‟s liability for its own actions.

This is confirmed by the immediately preceding and succeeding sections of the statute.

Section 319.131.4 specifies the monetary limits of the Fund‟s liability for cleanup costs

“associated with a release from a petroleum storage tank.” The following section (§ 319.131.6)

specifies that, “within limits specified in this section,” the Fund shall provide a defense to, and

assume the cost of, third-party claims and cleanup costs “caused by releases from petroleum

storage tanks.” Once again, these provisions refer to contamination-related costs, and

contamination-related claims, not to any claims or liabilities imposed on the Fund directly, for its

own conduct.

“In determining the legislature's intent, we are to read the statute as a whole and in pari

materia with related sections.” Heslop v. Sanderson, 123 S.W.3d 214, 222 (Mo. App. W.D.

2003) (citation omitted). Reading § 319.131.5 as a whole, and in conjunction with the preceding

and succeeding sections, we conclude that the statement that “[t]he fund shall not compensate . . .

any third party . . . for any loss or damage of an intangible nature, including . . . punitive

23 damages” defines the scope of the Fund‟s insurance or indemnity coverage. Read in context, the

phrase prohibits the fund from “compensat[ing]” or indemnifying owners or operators, or third

parties, for punitive damages assessed as a result of a release from a petroleum storage tank. The

quoted phrase does not address punitive damages awarded directly against the Fund for its own

conduct in resolving an underlying indemnity claim.7 Section § 319.131.5 did not prevent the

trial court from entering judgment against the Fund for compensatory and punitive damages

based on its own fraud or negligent misrepresentations.8

VII.

The Fund‟s fourth Point argues that the statements made by Vuchetich on April 15, 2004,

were too vague and uncertain to support a cause of action for fraudulent or negligent

misrepresentation, and that Instructions No. 14 and 17, which submitted the City‟s fraud and

negligent misrepresentation claims based upon the April 15, 2004 statements, gave the jury an

impermissible roving commission.

The City presented substantial evidence that Vuchetich‟s representation, that the Fund

would pay “the costs to remove the petroleum contamination,” was neither vague nor uncertain.

Wright, Rextroat, and Martin all testified that they understood Vuchetich‟s statements at the

April 15, 2004 meeting to mean that the Fund would pay for all costs incurred by the City, above

what Rose-Lan would have charged, if it hired Midwest Remediation to construct the sewer

upgrade in the contaminated area. Wright testified that, at the April 15, 2004 meeting, Vuchetich

7 In a similar vein, liability insurance policies are frequently read to exclude coverage for punitive damages. See, e.g., DeShong v. Mid-States Adjustment, Inc., 876 S.W.2d 5, 7 (Mo. App. W.D. 1994); Heartland Stores, Inc. v. Royal Ins. Co., 815 S.W.2d 39, 42-43 (Mo. App. W.D. 1991); Schnuck Mkts., Inc. v. Transam. Ins. Co., 652 S.W.2d 206, 208-11 (Mo. App. E.D. 1983). Yet we are unaware of any case in which an insurer contended that such contractual limits on its indemnity obligations limited the insurer‟s tort liability for its own actions, such as its bad-faith failure to resolve an insurance claim. 8 The Fund has not argued that it is entitled to sovereign immunity from the City‟s tort claims, and we therefore do not address the issue.

24 spent “an enormous amount of time . . . talking about what some of those [specific

contamination-related expenses] were,” including discussions about the need for petroleum-

resistant piping and petroleum-resistant fittings, the need to dispose of the contaminated dirt

removed from the area where the pipe would lay, and the need for new bonds to cover the

project‟s increased cost. Vuchetich‟s representations at the April 15, 2004 meeting were not so

uncertain or vague as to defeat the City‟s fraud and negligent misrepresentation claims.

The instructions submitting the City‟s fraud and negligent misrepresentation claims did

not give the jury a “roving commission.” The instructions told the jury that its “verdict must be

for the City if you believe . . . that on April 15, 2004 [the Fund] represented to the City that [the

Fund] would pay the costs to remove the petroleum contamination from the City‟s property if the

City used Midwest Remediation as a contractor . . . .” The Fund asserts that because the

statement does not further define “costs to remove the petroleum contamination,” it gave the jury

no guidance. However, as explained in § I, above, in deciding whether a jury instruction

constituted a “roving commission,” “[t]he issue is whether the phrase as used in the verdict

director was misleading in the context of the evidence at trial.” Klotz v. St. Anthony’s Med. Ctr.,

311 S.W.3d 752, 767 (Mo. banc 2010) (emphasis added; citing Edgerton v. Morrison, 280

S.W.3d 62, 67 (Mo. banc 2009)). “Where the testimony in a case explains a phrase used in the

verdict director, there is no „roving commission.‟” Id. (citing Edgerton, 280 S.W.3d at 67).

As we have explained above, the City presented evidence that both it and the Fund

understood that “the costs to remove the petroleum contamination” consisted of Midwest

Remediation‟s costs, less the amount the City would have paid Rose-Lan for the relevant work,

plus any incidental additional costs the City incurred. In light of this evidence, the statement in

25 the jury instructions was specific enough to allow the jury to decide if it believed the City‟s

evidence. There was no “roving commission.”

VIII.

In its fifth Point, the Fund argues that the trial court abused its discretion by excluding

evidence of settlement discussions between the Fund and the City following the April 15, 2004

meeting. The Fund argues that these settlement offers were relevant to mitigate the Fund‟s

exposure to punitive damages, since they would demonstrate that the Fund was making good-

faith efforts to resolve its dispute with the City.

At the outset, we note that the Fund‟s Point Relied On attacks the trial court‟s “granting

[of] the City‟s pre-trial Motion in Limine” excluding the parties‟ communications concerning the

City‟s claim. But the grant of a pre-trial motion in limine is not appealable; instead, it is the

exclusion of evidence which is offered at trial which is reviewable on appeal. The Missouri

Supreme Court has only recently explained that “„[a] ruling in limine is interlocutory only and is

subject to change during the course of the trial. The motion in limine, in and of itself, preserves

nothing for appeal.‟” Smith v. Brown & Williamson Tobacco Corp., 410 S.W.3d 623, 636 (Mo.

banc 2013) (quoting State v. Purlee, 839 S.W.2d 584, 592 (Mo. banc 1992)). “Generally, in

order to preserve an issue of exclusion of evidence for appeal, a definite and specific offer of

proof demonstrating why the evidence is relevant and admissible must be made at trial.”

Chamberlain v. Dir. of Revenue, 342 S.W.3d 334, 339 (Mo. App. S.D. 2011) (internal quotation

omitted). “When a motion in limine is granted so as to exclude evidence from trial, the party

offering the evidence must still offer it at trial in order to preserve the issue for review on

appeal.” Rogers v. Hester ex rel. Mills, 334 S.W.3d 528, 540 (Mo. App. S.D. 2010) (citing

Henderson v. Fields, 68 S.W.3d 455, 469 (Mo. App. W.D. 2001)).

26 Because a ruling on a motion in limine is interlocutory, and by itself preserves nothing for

review, “[a] point relied on that refers only to a ruling on a motion in limine is deficient.”

Marquis Fin. Servs. of Ind., Inc. v. Peet, 365 S.W.3d 256, 260 (Mo. App. E.D. 2012).

Nevertheless, “[i]f the point does not impede disposition on the merits, we may review the

point.” Id. at 261; see also, e.g., Arrington v. Goodrich Quality Theaters, Inc., 266 S.W.3d 856,

863 (Mo. App. S.D. 2008).

Ignoring any technical deficiencies in the Fund‟s Point Relied On, we limit our review to

the two documents which the Fund offered at trial, and whose exclusion it specifically challenges

in its appellate briefing: Defendant‟s Exhibit 153C, a May 6, 2004 letter from Vuchetich to the

City‟s attorney, which “propose[d] a settlement of $50,000 in exchange for a full release” of the

Fund and the service station owners; and Defendant‟s Exhibit 194, a table prepared by the City,

and provided to the Fund in a February 2005 meeting, which listed the City‟s total “damages” as

$445,951.03, including $273,850.05 related to “Change Order No. 9.”

The admission or exclusion of evidence is within the sound discretion of the trial court. Where evidence is excluded, the issue is whether or not the trial court abused its discretion, not whether the evidence was admissible. A trial court abuses its discretion when the ruling is clearly against the logic of the circumstances and is so arbitrary and unreasonable as to shock one's sense of justice and indicates a lack of careful consideration. We give substantial deference to the trial court's decision to admit or exclude evidence because of its superior opportunity to evaluate the proffered evidence in the context of the trial.

Romeo v. Jones, 144 S.W.3d 324, 332 (Mo. App. W.D. 2004) (citations omitted).

Merely showing the trial court erred by excluding evidence is insufficient to justify

reversal, without a showing that the erroneous ruling prejudiced the appellant. Byers v. Cheng,

238 S.W.3d 717, 726 (Mo. App. E.D. 2007). In particular, “the exclusion of evidence that is

merely additional evidence of the same kind bearing upon the same point will not be considered

prejudicial error upon appeal.” Id. at 727 (quoting Sampson v. Missouri Pacific R. Co., 560

27 S.W.2d 573, 590 (Mo. banc 1978)); see also Adkins v. Hontz, 337 S.W.3d 711, 720 (Mo. App.

W.D. 2011) (“The exclusion of cumulative evidence is not considered prejudicial on appeal.”).

Even assuming that the trial court erred in excluding Defendant‟s Exhibits 153C and 194,

the Fund cannot establish that it was prejudiced by the exclusion, because other evidence was

admitted at trial concerning both the Fund‟s May 6, 2004 settlement offer, and concerning the

City‟s February 2005 assertion that it had incurred a total of $445,951.03 in damages.

Although Vuchetich‟s May 6, 2004 settlement letter (Defendant‟s Exhibit 153C) was not

itself admitted into evidence, the trial court permitted the Fund to elicit testimony from

Vuchetich that reported the letter‟s substance. During Vuchetich‟s direct examination, the

Fund‟s counsel was permitted to show Vuchetich the May 6, 2004 letter to refresh his

recollection. Based on his review of the letter, Vuchetich testified that, “prior to early May of

2004,” he had “tr[ied] . . . to see if [he] couldn‟t help resolve these issues and get this matter put

to rest . . . so that everybody would be happy.” Vuchetich specifically testified that the Fund

made a settlement offer of $50,000 to the City “in early May of 2004,” in a letter addressed to

the City‟s attorney; after reviewing the letter to confirm the date, Vuchetich testified that the

letter was sent on May 6, 2004.

Similarly, the Fund‟s Executive Director, Carol Eighmey, testified that the Fund made a

settlement offer of $50,000 to the City prior to the commencement of Midwest Remediation‟s

work, which the City rejected, although Eighmey felt that if was “a very generous offer.”

Eighmey testified that, because the Fund “w[as] trying at the time to be reasonable,” it

“continued to try to discuss the matter with the City even after we made that offer.”

In light of the testimony of Vuchetich and Eighmey, which essentially told the jury the

entire relevant contents of Defendant‟s Exhibit 153C, we cannot find that the Fund was

28 prejudiced by the exclusion of Exhibit 153C, even on the assumption that the trial court‟s

exclusion of the letter was erroneous. Frankly, we are at a loss to identify any additional

information that would have been put before the jury by physically admitting Exhibit 153C into

evidence.

We reach a similar conclusion with respect to the February 2005 “Damages” table,

Defendant‟s Exhibit 194, which listed the City‟s total “damages” as $445,951.03. The difference

between the compensatory damages the City sought at trial and which the jury awarded

($172,100.98) and the total figure on Defendant‟s Exhibit 194 ($445,951.03) is explained by the

costs associated with “Change Order No. 9” ($273,850.05). During the direct examination of

City Administrator Wright, Change Order No. 9 was admitted into evidence. Wright testified

that Change Order No. 9 related to a southerly extension of the existing sewer system. Wright

testified that test bores discovered contaminated soils in the area where the City contemplated

constructing this additional southerly extension. The City obtained a cost estimate for

construction of the southerly extension, in contaminated soils, of $273,850.05. Wright testified

that “[w]e had correspondence with [the Fund] [concerning this cost estimate], because we

wanted to make sure they were aware of our findings, that we found contaminated soil, and that

this would certainly be a potential reimbursement to them on the Big Tank claim.” Wright also

testified, however, that the City ultimately did not construct the southerly extension reflected in

Change Order No. 9, and that it was therefore not seeking compensation from the Fund for that

amount.

On cross-examination, Wright acknowledged that the City informed the Fund of the

$445,951.03 figure at a meeting on February 22, 2005; she testified that the City did so to “put[ ]

them on notice that if we did the second phase, these were the estimated costs that we had to do

29 that particular project.” In a similar vein, the Fund‟s Executive Director, Carol Eighmey, tesified

that, in early 2005, “the City started asking again for lots and lots of money.”

Given this testimony, Defendant‟s Exhibit 194 would have constituted “merely additional

evidence of the same kind bearing upon the same point”; its exclusion “will not be considered

prejudicial error upon appeal.” Byers, 238 S.W.3d at 727.

IX.

In its sixth Point, the Fund argues that the trial court erred in submitting punitive damages

to the jury because there was insufficient evidence of malicious conduct. We disagree.

Whether there is sufficient evidence for an award of punitive damages is a question of law. We review the evidence presented to determine whether, as a matter of law, it was sufficient to submit the claim for punitive damages. In doing so, we view the evidence and all reasonable inferences in the light most favorable to submissibility.

Perkins v. Dean Mach. Co., 132 S.W.3d 295, 299 (Mo. App. W.D. 2004) (citations and internal

quotation marks omitted).

“Punitive damages are „so extraordinary or harsh‟ that they should be awarded only

sparingly and must be proven by clear and convincing evidence.” O’Riley v. U.S. Bank, N.A.,

412 S.W.3d 400, 417 (Mo. App. W.D. 2013) (quoting Rodriguez v. Suzuki Motor Corp., 936

S.W.2d 104, 110 (Mo. banc 1996)). “„A submissible case for punitive damages requires clear

and convincing proof that the defendant intentionally acted either by a wanton, willful or

outrageous act, or reckless disregard for an act‟s consequences (from which evil motive is

inferred).‟” Smith v. Brown & Williamson Tobacco Corp., 410 S.W.3d 623, 630 (Mo. banc

2013) (quoting Howard v. City of Kansas City, 332 S.W.3d 772, 788 (Mo. banc 2011)).

Generally, a defendant who “acts in good faith and honestly believes that his act is

lawful” cannot be held liable for punitive damages. Tamko Asphalt Prods., Inc. v. Arch Assocs.,

830 S.W.2d 434, 441 (Mo. App. E.D. 1992). However, malice or evil motive may be inferred

30 from the defendant‟s acts despite the contention that it was acting in good faith. See Harrell v.

Cochran, 233 S.W.3d 254, 260 (Mo. App. W.D. 2007).

The City presented evidence that, at the April 15, 2004 meeting, Vuchetich advised the

City that Midwest Remediation‟s estimate for completing the sewer upgrade project in the

contaminated area was reasonable, and that the Fund would pay Midwest Remediation‟s costs,

less the amount the City would avoid because Rose-Lan was not performing this portion of the

project. Although City Administrator Wright testified that Vuchetich stated at the meeting that

George Butler & Associates “should have known before the project began that there was a

potential for contamination along the city‟s easement,” the Fund never identified any costs that

would have been saved if the engineering firm had acted more diligently. Wright testified that

despite Vuchetich‟s complaints regarding George Butler & Associates‟ work, the conclusion at

the meeting was that the Fund would pay the entire net cost to complete the sewer upgrade

project in the affected area. In contrast to this evidence concerning Vuchetich‟s representations,

the Fund‟s Executive Director Carol Eighmey testified that, even prior to the meeting, the Fund

had no intention of paying the entire net cost, because of the Fund‟s belief that George Butler &

Associates should bear part of the responsibility for the increased costs.

The City also presented evidence that, subsequent to the April 2004 meeting at which

Vuchetich promised that the Fund would pay Midwest Remediation‟s net costs, the Fund raised a

series of objections to the costs associated with the project. First, although Vuchetich had

assured the City at the April 2004 meeting that Midwest Remediation‟s estimate was reasonable,

City Adminstrator Wright testified that the Fund later objected that the remediation costs were

too high (although the Fund made only “a general statement,” and would not “pinpoint what

component of the bid or the costs were too high”). Wright testified that the Fund next

31 complained that the City had not provided all necessary information; she testified that, although

the City “provided all the paperwork we had and tried to answer all their questions,” the Fund

was not satisfied and still refused to pay.

Wright also testified that, days before the trial was originally set to commence in 2008,

the Fund sought a continuance on the basis that it was not responsible for any of the

contamination north of the creek, because the source of that contamination was a store north of

the site; this change of heart was nearly four years after the April 15, 2004 meeting with the City.

Wright testified that the Fund‟s contention that the contamination had another source was belied

by the fact that Rose-Lan had not encountered any contamination when they were working

between the store and the contaminated area; she testified, in addition, that the City had not seen

“any reports, any borings, anything that showed any flow of contamination” from the other site.

Notably, Fine had not suggested that the contamination north of the creek had a different source

during his initial investigations; and the Fund presented no evidence at trial to substantiate its

contention that the contamination had migrated from another location.

Finally, as discussed in § II, above, at trial the Fund argued that the majority of Midwest

Remediation‟s bill was not contamination-related, and that the majority of its costs – over

$100,000 – would have been incurred whether or not contamination had been detected. As

discussed in § II, the Fund made this argument based on a brief, casual analysis which was

performed, from memory, by a former Midwest Remediation employee six years after Midwest

Remediation‟s work was done. In addition, the Fund‟s claim that only part of Midwest

Remediation‟s costs were reimbursable was inconsistent with the City‟s evidence as to

Vuchetich‟s representations at the April 2004 meeting (that the Fund would pay the entirety of

Midwest Remediation‟s net fees). In addition, the City presented evidence that this claim – that

32 only part of Midwest Remediation‟s costs were contamination-related – was an after-the-fact

attempt to justify the Fund‟s refusal to pay. Thomas testified that the Fund raised no issues

concerning the portion of Midwest Remediation‟s bill that was contamination-related in 2004,

but instead first asked him to analyze Midwest Remediation‟s bill in 2010, six years later, at a

time when supporting documentation was unavailable.

The City also presented evidence that the Fund‟s shifting, after-the-fact objections were

merely a specific instance of a pattern of behavior in which the Fund would alter its coverage

positions over time, and unreasonably delay the resolution of claims, to decrease the amount it

would ultimately have to pay. Laura Luther, Remediation Unit Chief for the Missouri

Department of Natural Resources, testified that on more than one occasion, the Fund had either

denied a claim or refused to pay the full amount of a claim on the ground that the scope of

remedial work being conducted was unreasonable, despite the fact that the Department had

approved the remediation plan to which the Fund was objecting. Devin Pollock, an

environmental scientist who had worked extensively with the Fund on remediation projects,

testified that, in his experience, “[a]t the beginning [a cleanup project] would start off okay, but

toward the middle or end when they had to pay invoices it was always delayed. It was – I would

review invoices, submit those invoices to thee [sic] company, [the Fund], and then they would sit

on them.”

It is also significant that the Fund‟s Executive Director, Carol Eighmey, testified that

Vuchetich‟s work with Midwest Remediation, to fashion a bid that would be “a sure bet” to be

selected by the City, was inappropriate. Yet despite Eighmey‟s belief that Vuchetich had acted

inappropriately, there was no evidence that Vuchetich had been reprimanded or disciplined, and

he remained in the same position at the time of trial in 2011 as he had held in 2004.

33 Viewing the evidence in the light most favorable to the trial court‟s submission of the

punitive damages claim, as required by our standard of review, we conclude that the City made a

submissible case for punitive damages.

X.

In its seventh Point, the Fund argues that the trial court erred by entering judgment

against it for punitive damages of $2,500,000, because under § 510.265.1(2), punitive damages

are limited to the greater of $500,000 or five times the net amount of the damages awarded to the

plaintiff. The trial court held that § 510.265.1 could not be applied in this case, because the

City‟s cause of action arose before the statute‟s 2005 effective date. The trial court erred in

refusing to apply § 510.265.1.

“The interpretation of a statute and whether it applies to a given set of facts are questions

of law, which we review de novo.” Hecht v. Hecht, 289 S.W.3d 647, 649 (Mo. App. E.D. 2009).

The legislature specified that § 510.265.1‟s cap on punitive damages would apply to “all causes

of action filed after August 28, 2005.” § 538.305.9 The City filed its lawsuit in November 2005,

after the punitive damages cap became effective. Therefore, § 538.305 requires that the punitive

damages cap be applied.

The City argues that, despite § 538.305, the statutory cap on punitive damages cannot

constitutionally be applied to this case, citing Klotz v. St. Anthony’s Medical Center, 311 S.W.3d

752, 760 (Mo. banc 2010). Klotz was a medical malpractice suit in which a jury awarded

economic and noneconomic damages to a patient and his wife. The trial court applied the newly

enacted noneconomic damages cap found in § 538.210 (part of the same legislation as §

510.265), and eliminated the noneconomic damages awarded by the jury. Although the Klotzes

9 Sections 510.265 and 538.305 were both enacted as part of H.B. 393. See 2005 Mo. Laws. 641, 647, 655.

34 cause of action accrued before the August 28, 2005 effective date, the trial court held that

§ 538.210 was applicable, because they did not file suit until after that date. The Missouri

Supreme Court disagreed. It held that:

It is well established that the Missouri Constitution prohibits laws that are retrospective in operation. Mo. Const. art. I, sec. 13 (“That no ex post facto law, nor law impairing the obligation of contracts, or retrospective in its operation, ... can be enacted.”). The prohibition reflects the underlying repugnance to the retrospective application of laws. This provision has been part of Missouri law since this State adopted its first Constitution in 1820.

It is settled law in Missouri that the legislature cannot change the substantive law for a category of damages after a cause of action has accrued. In [State ex rel. St. Louis-San Franscisco Ry. Co. v.] Buder[, 515 S.W.2d 409 (Mo. banc 1974)], when the legislature passed a law that increased the defendants‟ exposure to more damages for wrongful death than existed at the time the cause of action accrued, this Court unanimously held the legislation was unconstitutional as applied under the constitutional prohibition of retrospective laws. 515 S.W.2d at 411. Similarly, when, as here, the legislature, contrary to this clearly established constitutional precedent, passes a statute that purports to decrease the amount of damages a victim of medical malpractice could recover after the cause of action has accrued, this Court is bound by Buder to find the statute unconstitutional as applied to the Klotzes. Therefore, the new noneconomic damages cap established by HB 393 may not be applied to a cause of action that accrued prior to August 28, 2005.

Klotz, 311 S.W.3d at 759-60 (other citations and internal quotation marks omitted); see also

Gervich v. Condaire, Inc., 370 S.W.3d 617, 623 (Mo. banc 2012).

The City argues that, as in Klotz, its cause of action accrued before August 28, 2005; the

City contends that under Klotz, the punitive-damage-limiting provisions of § 510.265.1 cannot be

applied to it. Klotz is readily distinguishable, however. Klotz dealt with § 538.210, which

limited a plaintiff‟s recoverable compensatory damages. Klotz emphasized that Missouri‟s

prohibition against the retrospective application of laws only prohibits a change in the

“substantive law”; Klotz holds that changes to the measure of compensatory damages is

“substantive.”

35 The Missouri Supreme Court has not characterized a plaintiff‟s right to punitive damages

as “substantive,” however, and Klotz is therefore inapplicable to statutes which limit the recovery

of punitive damages. In Vaughan v. Taft Broadcasting Co., 708 S.W.2d 656 (Mo. banc 1986),

the Supreme Court held that a statute enacted after a plaintiff‟s cause of action accrued, which

wholly eliminated plaintiff‟s right to punitive damages, could be applied to plaintiff‟s pre-

enactment claim. The Court explained that,

[u]nder article I, section 13 of the Missouri Constitution, no statute retrospective in its operation can be enacted. This provision does not apply, however, to a statute dealing only with procedure or remedies. No person may claim a vested right in any particular mode of procedure for the enforcement or defense of his rights, and where a new statute deals only with procedure it applies to all actions including those pending or filed in the future. Nor does the federal constitution prevent a remedial or procedural provision from being applied retroactively because although a vested cause of action is property, the plaintiff has no property, in the constitutional sense, in any particular form of remedy; all that he is guaranteed by the Fourteenth Amendment is the preservation of his substantial right to redress by some effective procedure.

. . . This Court finds that under Missouri law, punitive damages are remedial and a plaintiff has no vested right to such damages prior to the entry of judgment. Punitive damages are never allowable as a matter of right and their award lies wholly within the discretion of the trier of fact. The purpose of punitive damages is to inflict punishment and to serve as an example and deterrent to similar conduct. . . . [¶] . . . Such damages being allowed in the interest of society, and not to recompense solely the victim, to deny them cannot be said to deny any constitutional right or to encroach upon any judicial function, or to violate any constitutional guaranty of separation of powers.

This Court concludes that the trial court erred in submitting a punitive damages instruction to the jury; plaintiff cannot recover punitive damages because he had no vested right to such damages at the time the 1982 statute became effective.

Id. at 660-61 (emphasis added; citations and internal quotation marks omitted); see also Goad v.

Treasurer of State, 372 S.W.3d 1, 8 n. 6 (Mo. App. W.D. 2011) (“statutory amendments

reducing or eliminating penalties may be retrospectively applied”); Ball–Sawyers v. Blue Springs

Sch. Dist., 286 S.W.3d 247, 256-57 (Mo. App. W.D. 2009) (applying statute limiting the penalty

36 for an employer‟s failure to fully pay temporary worker‟s compensation award, to an

underpayment which pre-dated the amendatory statute). Although the City argues that

Vaughan‟s holding was limited to statutory causes of action, Vaughan relied on numerous cases

involving common-law causes of action to support its characterization of punitive damages as

procedural and remedial. Vaughan is fully applicable to the City‟s non-statutory fraud and

negligent misrepresentation claims.10

Because punitive damages are remedial in nature, the City had no vested right to punitive

damages at the time the 2005 statute went into effect. Therefore, Article I, § 13 of the Missouri

Constitution did not prevent § 510.265.1 from being applied in this case, and the legislature‟s

directive to apply the statute to “all causes of action filed after August 28, 2005,” § 538.305,

10 In Hess v. Chase Manhattan Bank, USA, N.A., 220 S.W.3d 758 (Mo. banc 2007), the Missouri Supreme Court held that a new statute authorizing the award of punitive damages could not be applied retrospectively, because it “impose[d] a new disability” on a defendant, in violation of the rule that “laws providing for penalties and forfeitures are always given only prospective application.” Id. at 771-72 (citation and internal quotation marks omitted). Hess is not controlling here, however, because it presents the opposite situation to this case. In Hess, a new statute authorized the imposition of punitive damages for the first time, and thereby imposed a new disability on the defendant. Here, by contrast, the new statute limits the imposition of punitive damages; as Vaughan explains, this limitation takes away no vested right of a plaintiff. Hess is distinguishable. Vaughan‟s holding that punitive damages are remedial and procedural, and that new statutory limitations on punitive damages may therefore be applied retrospectively, is arguably in tension with Klotz‟s statement that “[i]t is settled law in Missouri that the legislature cannot change the substantive law for a category of damages after a cause of action has accrued.” 311 S.W.3d at 759-60; see also, Gervich, 370 S.W.3d at 623. Vaughan‟s emphasis on the “procedural” or “remedial” nature of punitive damages is also arguably in tension with the statement in State ex rel. St. Louis-San Francisco Railway Co. v. Buder, 515 S.W.2d 409 (Mo. banc 1974), that “[m]erely to label certain consequences as susbstantive and others as procedural” is not decisive of the retrospectivity question. Id. at 411. Instead, Buder suggests that retrospectivity analysis should be guided by the principle “that an act or transaction, to which certain legal effects were ascribed at the time they transpired, should not, without cogent reasons, thereafter be subject to a different set of effects which alter the rights and liabilities of the parties thereto.” Id. The fact remains, however, that Vaughan addresses the precise question presented in this appeal: whether a statute limiting the recovery of punitive damages may be retrospectively applied to a cause of action accruing before the statute‟s enactment. We consider ourselves bound to follow the specific holding of Vaughan, despite more general statements in other cases which arguably point in a different direction.

37 must be applied. The trial court erred in failing to limit the punitive damages awarded in this

case to five times the net amount of the judgment entered against the Fund.11

The City argues that, even if it is otherwise applicable, § 510.265.1 violates its right to

trial by jury and is therefore unconstitutional. See Watts v. Lester E. Cox Med. Ctr., 376 S.W.3d

633 (Mo. banc 2012).

Because the City‟s argument deals with the constitutional validity of a statute, our first

task is determining whether this Court has jurisdiction in this case. The Supreme Court of

Missouri has exclusive appellate jurisdiction over issues involving the validity of a statute. Mo.

Const. art. V, § 3; Glass v. First Nat’l Bank of St. Louis, N.A., 186 S.W.3d 766 (Mo. banc 2005).

Where, however, a party has not properly preserved its constitutional claim for appellate review,

jurisdiction is vested in this Court, not the Supreme Court. See, e.g., Youngs v. Pitts, 335 S.W.3d

47, 54 (Mo. App. W.D. 2011); S.A.S. v. B.P., 314 S.W.3d 348, 353 n.2 (Mo. App. E.D. 2010).

To properly raise a constitutional issue, a party must: (1) raise the question at the first available opportunity; (2) specifically designate the constitutional provision alleged to have been violated, such as by explicit reference to the article and section, or by quotation from the particular provision; (3) state the facts showing the violation; and (4) preserve the constitutional question throughout for appellate review. Additionally, a constitutional challenge to a statute must not

11 Section 510.265.1 provides that its limitations on punitive damages “shall not apply if the state of Missouri is the plaintiff requesting the award of punitive damages.” The City argues that it should be considered “the state of Missouri” for purposes of § 510.265, and that the punitive damages cap is therefore inapplicable to it. The sole authority cited by the City to support this argument is § 70.120(3), which defines a “political subdivision,” for purposes of §§ 70.120 to 70.200, as “any agency or unit of this state which now is, or hereafter shall be, authorized to levy taxes or empowered to cause taxes to be levied.” Section 70.120(3) does not define “the state of Missouri,” but only defines the term “political subdivision.” Cf. P.L.S. ex rel. Shelton v. Koster, 360 S.W.3d 805, 813 (Mo. App. W.D. 2011) (distinguishing school district, which is a “political subdivision,” from the “agenc[ies] of the state” covered by the State Legal Expense Fund, § 105.711.2(1)). Moreover, by its terms § 70.120(3) has no applicability to § 510.265.1, and the City cites no caselaw which holds that a municipality should be considered “the state of Missouri” for the purposes of § 510.265, or in interpreting statutes generally. We reject the City‟s argument without further discussion. We note, however, that it would be curious if we were to find that the plaintiff City is the “state of Missouri” for purposes of § 510.265.1, when it is the defendant Fund which is a special trust fund within the Missouri treasury, and is being represented by the Attorney General in this litigation.

38 only have been presented to the trial court, but the trial court must have ruled thereon. The purpose for this requirement is to give the trial court an opportunity to fairly identify and rule on the issues and to prevent surprise to the opposing party.

S.A. v. Miller, 248 S.W.3d 96, 101 (Mo. App. W.D. 2008) (citations and internal quotation marks

omitted). Where a party “first challenges the constitutionality of [a statute] on appeal, the issue

has not been preserved for appellate review.” Young, 335 S.W.3d at 55.

The Fund argued for a reduction of the punitive damages award under § 510.265.1 in a

post-trial motion. In response, the City argued that the statute could not be applied to its pre-

enactment claim, and that it was exempt from the statute because the City was “the state of

Missouri” and thus explicitly exempted from § 510.265.1‟s operation. At no time in the trial

court did the City argue that § 510.265.1 was unconstitutional because it violated the City‟s right

to a trial by jury.

By failing to challenge the constitutionality of § 510.265.1 in the trial court, the City

failed to preserve the constitutional challenge for appellate review. The City argues that this

preservation principle should not apply to it because it is the respondent on appeal, and because

it prevailed against the application of § 510.265.1 in the trial court on other grounds. To the

contrary, however, we found constitutional challenges to a state statute to be waived in a similar

procedural context in McCormack v. Capital Electric Construction Company, 159 S.W.3d 387

(Mo. App. W.D. 2004). In McCormack, the trial court entered a judgment in a personal-injury

action which included the award of prejudgment interest. Id. at 394. Although the plaintiff had

sought prejudgment interest under the challenged statute in a pretrial settlement offer letter, and

in an amended petition, the defendant did not argue that the prejudgment interest statute was

unconstitutional until after the trial court had entered judgment awarding prejudgment interest.

Id. at 404. The trial court granted the defendant‟s motion to amend the judgment, and eliminated

39 the prejudgment interest, but (as here) on grounds other than the constitutional validity of the

prejudgment interest statute.

Thus, the defendant in McCormack was in the identical position to the City in this appeal:

it had prevailed in the trial court against application of a statute on non-constitutional grounds;

and it was the respondent on appeal. If anything, the defendant in McCormack was in a better

position than the City, because it actually raised its constitutional claim in the trial court (albeit

belatedly); here, by contrast, the City never raised its constitutional argument in any fashion in

the trial court.

Although the defendant was the prevailing party on the statute‟s applicability in the trial

court, and was the respondent on appeal, we nevertheless refused to consider its constitutional

challenge on appeal. We held that the defendant failed to preserve the constitutional issue in the

trial court, because “it failed to raise any constitutional challenge to the statute at an earlier stage

that would have allowed the trial court a full opportunity to identify and rule on the issue prior to

the entry of judgment.” Id. at 404. Under McCormack, the City‟s failure to raise its current

constitutional argument in any manner in the trial court prevents it from raising that issue now.

Section 510.265.1(2) limits the City‟s recovery of punitive damages to five times the net

amount of the judgment awarded against the Fund. The City does not dispute that the relevant

amount of the judgment is $172,100.98. Given the underlying judgment amount, the punitive

damages award must be remitted to $ 860,504.90. Under Rule 84.14, we have the authority to

modify the circuit court‟s judgment to reflect this reduced punitive damage award, without the

necessity of a remand. Because we conclude that the punitive damages award was limited by

§ 510.265.1, we need not address the parties‟ arguments concerning the application of due

process principles to the punitive damages awarded in this case.

40 Conclusion

The circuit court‟s judgment is affirmed, except that we modify the judgment pursuant to

Rule 84.14 to reduce the punitive damages awarded against the Missouri Petroleum Storage

Tank Insurance Fund to $ 860,504.90.

Alok Ahuja, Judge All concur.