Missouri Case Law
MARTHA’S HANDS v. STARRS, ED 85638 (Mo.App.E.D. 12-12-2006)
MARTHA’S HANDS, LLC, Respondent/Cross-Appellant, v. GREGORY
STARRS, Appellant/Cross-Respondent. No. ED 85638.
Missouri Court of Appeals, Eastern District, Division
Three. December 12, 2006.
Appeal from the Circuit Court of St. Louis County,
Honorable Bernhardt C. Drumm.
Karl Walter Dickhaus, Attorney St. Louis, MO 63114, for
appellant.
John Robert Sears, Suite 1300, Attorney, St. Louis, MO
6310, for respondent.
BOOKER T. SHAW, Judge.
Gregory Starrs (“Employee”) appeals from the trial court’s
judgment entered upon a jury verdict in favor of Martha’s
Hands, LLC (“Employer”) on its claims for breach of
contract and fraudulent misrepresentation. Employee argues
the trial court erred in denying his motion for judgment
notwithstanding the verdict on Employer’s fraudulent
misrepresentation claim; instructing the jury on Employer’s
fraudulent misrepresentation count; and entering judgment
on Employer’s breach of contract and fraudulent
misrepresentations claims because the judgment provided a
double recovery to Employer.[fn1] On cross-appeal, Employer
argues the trial court erred in directing a verdict in
favor of Employee on its claims for computer tampering,
trespass to chattels and malicious trespass to personalty.
We affirm in part and dismiss in part.
Facts and Procedural History
Employer provides nursing services to patients in their
homes, as well as nursing services to patients in facility
settings. Eileen Hendrick founded Employer and serves as
its director of nursing. Her husband, John Hendrick, is the
president, CEO and an owner of Employer.
Mrs. Hendrick’s responsibilities include overseeing the
nursing duties and establishing relationships with patients
and families. She also performs or oversees the performance
of patient assessments and care plans. She testified that
the preparation of an initial assessment and care plan is
part of the standard of care in the home health care
practice and it is the policy of Employer to perform
assessments and care plans for all of its patients.
In February 2002, Employer hired Employee as staffing
division manager. Pursuant to his employment contract,
Employee was to receive an annual salary of $75,000.
Employee also paid $5,000 for a five percent interest in
the company. The employment contract provided that in the
event Employer terminated Employee, he would be entitled to
his base salary and health benefits for six months after
the date of his termination unless:
[I]n the good faith determination of the Employer,
Employee has (i) breached any material fiduciary duty or
material contractual obligation to the Employer, (ii)
engaged in willful or grossly negligent misconduct which
is injurious to the Employer, or (iii) been convicted or
pleaded guilty or nolo contendere to any felony or to any
misdemeanor relating to the affairs of Employer. . . .
The employment contract further provided:
Employee will not use or disclose or otherwise provide
information or documents (other than in the ordinary
course of his duties for Employer) to any person regarding
Employer, without the prior written consent of Employer,
as the case may be. Immediately upon Employee’s
termination, Employee shall deliver to Employer all
property and materials owned by Employer or relating to
Employee’s retention by and services to Employer,
including any and all property and materials embodying any
of the information described in this Section. Employees
shall not retain any copies or reproductions thereof nor
deliver any such materials, copies or reproductions
thereof to any third person. This [S]ection survives the
termination of this Agreement and applies to all
information and documents regarding Employer, whether or
not the same is confidential.
A few weeks after Employee began working for Employer, Mrs.
Hendrick testified she spoke with Employee regarding the
Employer’s policies and procedures and showed him where he
could access them. Specifically, Mrs. Hendrick testified
that she told Employee that it was Employer’s policy to
prepare care plans for each patient, including those in
private facilities. Employee testified he was not aware of
this policy. He also testified that he instructed employees
not to prepare care plans for patients in private
facilities.
On October 20, 2003, two patients in private facilities,
for whom Employer provided nursing services, fell. These
patients, whose care was coordinated by Employee, did not
receive initial assessments or care plans. This failure to
prepare care plans caused Mrs. Hendrick to become concerned
about Employer’s potential liability and Employee’s
veracity at work. After several communications with
Employee regarding the performance of his job
responsibilities with Employer, on November 11, 2003,
Employee was terminated from his employment with Employer.
The reasons for his termination were provided in a letter
which stated:
WILLFUL OR GROSS NEGLIGENT MISCONDUCT: without the proper
authority or permission you instructed the staff to relax
our health care standards on private duty cases.
MATERIAL BREACH OF CONTRACT: in direct violation of his
Job Description attached to his Employment Agreement, he
has been insubordinate to the General Manager and to the
Principal Man[a]ger (CEO).
After Mr. Hendrick gave Employee his termination letter, he
asked Employee to return all property he had that belonged
to Employer. Employee indicated he wanted to pack up his
belongings and left the room. When Employee attempted to
leave with his laptop computer and PDA, which were owned by
Employer and contained confidential information, Mr.
Hendrick informed Employee that his employment contract
prohibited him from taking company property. Employee
claimed that the devices contained personal information and
that he wanted to take them home so he could remove this
information. Mr. Hendrick offered to sit down with Employee
and allow him to remove his personal information, but when
Employee persisted on leaving, Mr. Hendrick let him do so.
Employee returned Employer’s laptop and PDA on November 14,
2003. Mr. Hendrick, who operated a computer engineering
firm for thirteen years prior to joining Employer, examined
the laptop and determined that Employee had copied company
data. Based on this examination, Employer sent a letter to
Employee on November 21, 2003 stating that “A forensic
examination of your laptop indicates that . . . you copied
and retained data from the company’s system, which you had
no authorization to do, and which is in breach of your
contractual obligation to the company.” This letter
demanded that Employee “immediately cease and desist from
any and all use, copying, and/or dissemination of any of the
data [in your possession,]” and that Employee “immediately
retrieve and return all iterations and copies of such data.
. . .”
On November 25, 2003, Employer filed a motion for
temporary restraining order and petition for preliminary
and permanent injunction against Employee. At the hearing
on the temporary restraining order, Employee testified that
he had not copied any company data. At the hearing on the
motion for permanent injunction and in his deposition,
Employee stated that although he made copies of company
data, he destroyed the copies. In various pleadings filed
by Employee, he made similar representations.
In 2004, Employer hired a forensics expert to examine
Employee’s personal computer to determine whether he had
retained company data. This expert determined that Employee
in fact retained copies of Employer’s data and that
Employee used the data as recently as February 4, 2004.
Employer estimated the value of this data to be
approximately $90,000. The forensics expert was paid $7,700
for his services.
On April 27, 2004, Employer filed a motion for sanctions,
which included a request for attorney’s fees. The motion
alleged Employee “has maintained factually false positions
before this Court in pleadings and other filed papers, in
sworn deposition testimony, and in statements before this
Court and in testimony in open court.” On May 6, 2004,
Employee turned over to the court copies of Employer’s data
which he had retained.
Six months after being terminated by Employer, Employee
started a company called StarResource, LLC, which competes
with Employer. Employee is a sixty percent majority owner
of the company. At trial, Employer introduced a draft
service agreement used by StarResource, LLC that was on one
of its computers. Apparently this document referenced
“Transitional Location Concepts, LLC,” which was the name of
Employer before Employee was hired there. Employee
testified that he possessed this agreement prior to his
employment with Employer. When he started StarResource,
LLC, he performed a global replace to insert StarResource,
LLC in place of Employer.
Employer sued Employee for breach of contract, fraudulent
misrepresentation, computer tampering, trespass to chattels
and malicious trespass to personalty. Employee
counterclaimed for breach of contract. The trial court
directed a verdict in favor of Employee on Employer’s
claims for computer tampering, trespass to chattels and
malicious trespass to personalty. The trial court also
directed a verdict in favor of Employer on Employee’s
breach of contract counterclaim. The jury returned a
verdict in favor of Employer on its breach of contract and
fraudulent misrepresentation claims. The jury awarded
Employer $8,150 on the breach of contract claim, and $20,000
in compensatory damages and $75,000 in punitive damages on
the fraudulent misrepresentation claim. Employee filed a
Motion for Judgment Notwithstanding the Verdict or in the
Alternative Motion for New Trial. Employer filed a Motion
for Judgment as a Matter of Law or in the Alternative for
New Trial. The trial court denied both motions. This appeal
follows.
Analysis
On appeal, Employee argues the trial court erred in: (1)
denying his motion for judgment notwithstanding the verdict
on Employer’s fraudulent misrepresentation claim; (2)
instructing the jury on Employer’s fraudulent
misrepresentation count; and (3) entering judgment on
Employer’s breach of contract and fraudulent
misrepresentation claims because the judgment provided a
double recovery to Employer. On cross-appeal, Employer
argues the trial court erred in directing a verdict in
favor of Employee on its claims for computer tampering,
trespass to chattels and malicious trespass to personalty.
Because we affirm the trial court’s judgment and award of
damages in favor of Employer, we will not address
Employer’s cross-appeal. As Employer conceded at oral
argument, the damages it is seeking on the causes of action
that are the basis for the cross-appeal are the same
damages that it has already been awarded by the trial court,
which we are affirming in this opinion. As such, we dismiss
Employer’s cross-appeal as moot. See Jackson v. Christian
Salvesen Holdings, Inc., 978 S.W.2d 377, 385 & n. 2
(Mo.App.E.D. 1998).
In his first point on appeal, Employee argues the trial
court erred in denying his motion for judgment
notwithstanding the verdict on Employer’s fraudulent
misrepresentation claim because Employer failed to prove
two of the essential elements of this cause of action.
Specifically, Employee argues there was insufficient
evidence at trial to establish that (1) anyone relied on
Employee’s representation that he would remove only his
personal information from the laptop and PDA; and (2) any
such reliance on Employee’s representation was reasonable
under the circumstances. We disagree.
Our review of a trial court’s denial of a motion for
judgment notwithstanding the verdict is whether the party
made a submissible case. Payne v. Cornhusker Motor Lines,
Inc., 177 S.W.3d 820, 832 (Mo.App.E.D. 2005). “In order to
make a submissible case, one must present substantial
evidence for every fact essential to liability.” Id. We
view all the evidence and reasonable inferences drawn
therefrom in the light most favorable to the prevailing
party. Id. Because whether a submissible case was made is a
question of law, our review is de novo. Id.
A jury verdict will not be overturned unless there is a
complete absence of probative facts to support the verdict.
Id. “A judgment notwithstanding the verdict is a drastic
action, and will only be granted when reasonable persons
could not differ on a correct disposition of the case.” Id.
To prove a fraudulent misrepresentation claim, the
plaintiff must prove the following elements:
(1) a representation; (2) its falsity; (3) its
materiality; (4) the speaker’s knowledge of its falsity or
ignorance of the truth; (5) the speaker’s intent that the
statement be acted upon; (6) the hearer’s ignorance of the
falsity of the statement; (7) the hearer’s reliance on
the truth of the statement; (8) the hearer’s right to rely
on the statement; and (9) the hearer’s consequent and
proximate injuries.
Botanicals on the Park, Inc. v. Microcode Corp., 7 S.W.3d
465, 468 (Mo.App.E.D. 1999). The key elements Employee
argues Employer failed to show are Employer’s reliance on
the truth of Employee’s representations, and that its
reliance on such representations was reasonable.
Under our standard of review, we find substantial evidence
to support the jury’s verdict. The evidence before us shows
that after Employee was terminated, Mr. Hendrick asked
Employee to return all property he had that belonged to
Employer. Employee indicated he wanted to pack up his
belongings and left the room. When Employee attempted to
leave with his laptop computer and PDA, which were owned by
Employer and contained confidential information, Mr.
Hendrick informed Employee that his employment contract
prohibited him from taking company property. Employee
claimed that the devices contained his personal information
and that he wanted to take them home so he could remove
that information. Mr. Hendrick offered to sit down with
Employee and allow him to remove his personal information,
but when Employee persisted on leaving, Mr. Hendrick let
him do so. From this evidence, the jury could have
determined that Employer relied on Employee’s
representations that he would simply remove his personal
information and then return the items back to Employer.
As to the reasonableness of Employer’s reliance, it appears
Employee’s argument on appeal is that because Employee was
untrustworthy, it was unreasonable for Employer to rely on
his representations and as a result, Employer could not
prove this element of fraudulent misrepresentation.
However, Employee failed to cite us any authority for this
proposition.
On the contrary, from the evidence presented at trial, the
jury could have found that Employer’s reliance on
Employee’s representations was reasonable. Employee worked
with Employer for almost two years, was in a managerial
position and owned five percent of the company. In
addition, Employee’s contract provided that he
“[i]mmediately upon Employee’s termination . . . shall
deliver to Employer all property and materials owned by
Employer . . .,” and that “Employee[] shall not retain any
copies or reproductions thereof. . . .” Therefore, the trial
court did not err in denying Employee’s motion for judgment
notwithstanding the verdict on Employer’s fraudulent
misrepresentation claim. Point I is denied.
In his second point on appeal, Employee argues the trial
court erred in instructing the jury on Employer’s
fraudulent misrepresentation count because the jury
instruction submitted on this count provided that the
burden of proof of each element of the count was a
preponderance of the evidence, when the proper burden of
proof was clear and convincing evidence. We disagree.
Employee is requesting that we review this point for plain
error because the alleged instructional error was not
presented to the trial court. Rule 70.03 requires a party
objecting to a jury instruction to make their specific
objections prior to the court submitting the case to the
jury. Missouri Highway and Transp. Comm’n v. Kansas City
Cold Storage Inc., 948 S.W.2d 679, 682 (Mo.App.W.D. 1997).
“Where specific objections to jury instructions were not
made prior to submission of the case, the matter is not
preserved for review except for plain error under Rule
84.13. . . .” Id. Rule 84.13(c) states, “Plain errors
affecting substantial rights may be considered on appeal, in
the discretion of the court, though not raised or
preserved, when the court finds that manifest injustice or
miscarriage of justice has resulted therefrom.” Rule
84.13(c). However, plain error is rarely used in civil
cases. Slankard v. Thomas, 912 S.W.2d 619, 628 (Mo.App.S.D.
1995).
We find the submission of Employer’s fraudulent
misrepresentation claim on the preponderance of the
evidence burden of proof was not plain error. In Artilla
Cove Resort, Inc. v. Hartley, 72 S.W.3d 291, 295-96
(Mo.App.S.D. 2002), the court was specifically asked to
determine what the proper burden of proof was for a claim
of fraudulent misrepresentation. The court held that
contrary to appellants’ argument, respondents did not have
to prove the elements of their claim for fraudulent
misrepresentation by clear and convincing evidence, but
rather only by a preponderance of the evidence. Id.; see
also, Crawford v. Smith, 470 S.W.2d 529, 531-32 (Mo. 1971)
(“[I]n a fraudulent misrepresentation case tried to a jury,
the burden of proof is not greater than in other cases
tried to a jury, and . . . the proper burden of proof
instruction is MAI 3.01.”).
In addition, the jury in this case awarded Employer
punitive damages on the fraudulent misrepresentation claim
based on the clear and convincing burden of proof.
Therefore, even if the burden of proof for fraudulent
misrepresentation was clear and convincing evidence, we
cannot find a manifest injustice or a miscarriage of justice
here. Point II is denied.
In his final point on appeal, Employee argues the trial
court erred in entering judgment on Employer’s breach of
contract and fraudulent misrepresentation claims because
the judgment provided a double recovery to Employer.
Specifically, Employee argues that the damages sought for
both of these claims were based on Employee’s retention and
use of company data. We disagree.
Again, Employee is requesting plain error review because
the allegation of error asserted in this point was not
preserved. Rule 84.13(c) provides “Plain errors affecting
substantial rights may be considered on appeal, in the
discretion of the court, though not raised or preserved,
when the court finds that manifest injustice or miscarriage
of justice has resulted therefrom.” Rule 84.13(c).
Employee is correct that a party is “not entitled to ‘be
made more than whole or receive more than one full recovery
for the same harm.'” Davis v. Cleary Building Corp., 143
S.W.3d 659, 670 (Mo.App.W.D. 2004) (internal citation
omitted). Thus, if the damages for two causes of action
“‘are the same, then the damage award merges.'” Id.
(internal citations omitted). However, a party “may recover
any damages proved on [a] fraudulent misrepresentation
claim which are not coextensive with the actual damages
awarded on [a] breach of contract claim.” Dierker
Associates, D.C., P.C. v. Gillis, 859 S.W.2d 737, 750
(Mo.App. E.D. 1993).
Here, our review of the record and evidence presented at
trial reflects that Employer proved two separate sources of
damages at trial — the cost of a computer forensic
expert; and the loss of value of Employer’s data. First,
Mr. Hendrick testified at trial regarding the cost of
hiring a computer forensic expert to prove Employee’s
unauthorized use and retention of its data, in violation of
the Employee’s employment contract. The jury awarded
Employer $8,150 in damages on its breach of contract claim.
Second, Mr. Hendrick testified at trial regarding the
approximate value of Employer’s data that Employee
continued to use and retain for his own purposes, despite
his representations to the contrary. The jury awarded
Employer $20,000 in compensatory damages and $75,000 in
punitive damages on its fraudulent misrepresentation claim.
Therefore, we find the jury’s award of damages on these
claims is supported by the evidence, and not coextensive.
The trial court’s entry of judgment on these jury awards
does not constitute a manifest injustice or a miscarriage
of justice. Point III is denied.
Conclusion
The trial court’s judgment entered upon a jury verdict in
favor of Employer on its claims of breach of contract and
fraudulent misrepresentation is affirmed. Because we are
affirming the jury’s award of damages on the breach of
contract and fraudulent misrepresentation claims, and
because Employer is not seeking additional or different
damages on the causes of action that are the basis of its
cross-appeal, we dismiss Employer’s cross-appeal as moot.
AFFIRMED IN PART; DISMISSED IN PART.
Kathianne Knaup Crane, P.J., Lawrence E. Mooney, J.
[fn1] Employee also argued in his original brief that the
trial court erred in granting Employer’s motion for
directed verdict on his counterclaim for breach of
contract. In his reply brief, however, Employee withdrew
this argument. Therefore, we will not address this point in
our opinion.