Magruder v. Pauley

411 S.W.3d 323, 2013 WL 5525832, 2013 Mo. App. LEXIS 1174
CourtMissouri Court of Appeals
DecidedOctober 8, 2013
DocketNos. WD 75513, WD 75638
StatusPublished
Cited by10 cases

This text of 411 S.W.3d 323 (Magruder v. Pauley) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Magruder v. Pauley, 411 S.W.3d 323, 2013 WL 5525832, 2013 Mo. App. LEXIS 1174 (Mo. Ct. App. 2013).

Opinion

GARY D. WITT, Judge.

Introduction

Four real estate agents formed a limited liability company and jointly owned a real estate franchise. When one member, Diane Magruder (“Magruder”), withdrew from the company, the others refused to comply with the existing Operating Agreement which required that the remaining members obtain an appraisal of the company and then pay the withdrawing member twenty-five percent of the appraised value. Early in the litigation, a bench trial was held after which the court granted specific performance of the contract to Magruder. Later, a jury awarded damages to Magru-der. Yet, to this day, the specific performance of the contract ordered by the trial court has not been completed. Thus, Ma-gruder comes before us appealing the trial court’s final judgment in that it brought her no closer to receiving the specific performance that she was granted.

On appeal, Magruder raises three points. First, Magruder alleges that the trial court erred in not determining the company’s appraised value because there [326]*326was sufficient evidence in the record that allowed it to do so. Second, Magruder contends that the trial court erred in denying her motion for contempt when the Respondents did not comply with the trial court’s order of specific performance. And third, Magruder alleges that the trial court erred in denying her motion for attorney fees because such fees are provided for in the contract at issue.

The judgment of the trial court is affirmed in part, reversed in part and the cause is remanded with instructions.

Factual and Procedural Background

Diane Magruder was a member2 in a real estate franchise known as Assist2Sell Partners Realty, L.L.C. (“Assist2Sell” or “Company”), located in Columbia, Missouri. The three other members were Susan Myers, Marshelle Clark and Betty Pauley3 (collectively, the “Respondents”). The Company was first formed on December 28, 2001 with three members and on January 2, 2002, the fourth was added. The four members each owned twenty-five percent of the company.4 All four agreed to the terms of the Operating Agreement which had been drafted by Pauley. The Operating Agreement contained specific provisions regarding the rights of a withdrawing member. Section 20(D) requires, upon notice that a member is withdrawing, the remaining members to cause an appraisal of the business to be performed and purchase the withdrawing member’s share for twenty-five percent of the appraised value:

If any partner chooses to leave the partnership or dies after the third anniversary date of the formation of the partnership [12/28/2004], then an appraisal of the business will be commissioned and paid by the company and/or remaining partners. The remaining partners agree to purchase the departing partner’s share in the business for 1/4 the appraisal value and the departing partner agrees to sell their share for 1/4 of the appraisal value. This shall be binding on the estates and/or heirs of any deceased partners.

Five years after it was formed, Magru-der decided to withdraw from Assist2Sell. On November 24, 2006, Magruder’s counsel sent a letter to the Respondents notifying them of Magruder’s decision to withdraw and requesting the appraisal required by the Operating Agreement. In response to the letter, the Respondents held a meeting the following day at which they voted not to commission an appraisal and ordered the company’s manager not to cooperate with an appraisal. The Respondents also refused to purchase Ma-gruder’s share. Magruder filed suit in the Circuit Court of Boone County on January 19, 2007 alleging counts for specific performance of the Operating Agreement (Count I), breach of contract (Count II), breach of fiduciary duty (Count III) and prima facie tort (Count IV). The Respondents answered and raised multiple counter-claims.

[327]*327At the parties’ request, the trial court bifurcated the parties’ claims so that the claims based in equity would be heard at a bench trial and the remaining claims would be presented to a jury. On November 12, 2009, the court held a bench trial on Ma-gruder’s claim for specific performance and on Respondents’ counterclaim seeking declaratory judgment. The Respondents sought declaratory judgment as to the parties’ obligations under the agreement, arguing that the withdrawal provision did not apply unless a member had contributed capital into the Company. The court found in favor of Magruder on both her claim and on Respondents’ counterclaim and granted the equitable relief of specific performance. On February 17, 2010, the court issued a Partial Judgment in which it found as follows:

Finally, the Court notes that even if it were to consider the Parties’ testimony concerning their intentions, the Defendants’ evidence was inconsistent and contradictory, and the weight of credible evidence established that the Parties intended that there be a professional business valuation that included “blue sky” and other intangibles, in addition to the fair market value of the Company’s real property.
The Court hereby orders said Defendants to commission and pay for an appraisal of the company, either jointly or by causing the Company to do so, and thereafter to purchase Magruder’s share in the Company for H4 the appraisal value. The appraisal shall be completed and payment to Magruder shall be tendered within 180 days of the effective date of this Order. The appraisal shall be performed by a professional business appraiser to be selected by Defendants, subject to the objection of Magruder and approval by the Court. The appraiser shall determine the fair market value of Magruder’s interest in the Company as of November 24, 2006, based upon Magruder’s right to share in distributions from the Company as an ongoing operation. The appraiser shall consider intangibles. (Emphasis added).

Following the court’s order, the Respondents failed to commission an appraiser so the court ordered each party to suggest a proposed appraiser, from which the court could select one. On June 17, 2010, the court selected Jeff Guinn (“Guinn”) and ordered that the Respondents commission him to perform the appraisal.5 On August 6, 2010, just nine days before the appraisal was due, Guinn sent the court a letter asking for additional time to “complete his interviews of Defendants.” Guinn did not consult Magruder in any fashion in regard to the appraisal. The court granted Guinn an extension through September 15. Guinn issued an appraisal that was produced to Magruder on September 17, 2010, though dated September 1.

In contradiction to the court’s order, the appraisal specifically excluded the value of the real property and improvements. Page two contained the statement:

The value does not include the Real Estate and Improvements. The Company owns the real estate and improvements which are not part of this appraisal. However, a fair market rent has been deducted from earnings, which allows the real estate and improvements [328]*328to be added to the value of the business in this report.

The appraisal valued Assist2Sell as being worth $275,000 as of December 31, 2006. The appraisal further deducted the amount of some salaries twice.

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Bluebook (online)
411 S.W.3d 323, 2013 WL 5525832, 2013 Mo. App. LEXIS 1174, Counsel Stack Legal Research, https://law.counselstack.com/opinion/magruder-v-pauley-moctapp-2013.