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Renaissance Academy for Math and Science of Missouri, Inc. v. Imagine Schools, Inc.

United States District Court, W.D. Missouri, Western Division

August 4, 2014

RENAISSANCE ACADEMY FOR MATH AND SCIENCE OF MISSOURI, INC., Plaintiff,
v.
IMAGINE SCHOOLS, INC., Defendant.

ORDER

NANETTE K. LAUGHREY, District Judge.

In November 2007, Plaintiff Renaissance Academy for Math and Science, a charter school, and Imagine Schools, a charter school management company, entered into an Operating Agreement in which Imagine Schools agreed to provide management services to Renaissance for the operation of its charter school. After the termination of their agreement, Renaissance filed this lawsuit against Imagine Schools alleging breach of fiduciary duty (Counts I-III), unjust enrichment (IV), conversion (V), and violations of the Racketeer Influenced Corrupt Organizations Act (RICO) (VI-VII). Before the Court is Imagine Schools' Motion for Partial Summary Judgment on Counts I-III of Renaissance's Amended Complaint, [Doc. 66]. The primary issue raised by the Motion is whether the undisputed facts establish that Renaissance and Imagine Schools had a purely contractual relationship or whether Imagine Schools had a fiduciary duty to Renaissance. For the reasons set forth below, the Motion for Partial Summary Judgment is DENIED.

I. Undisputed Facts

Imagine Schools is a full-service operator of public charter schools. [Doc. 88-1, ¶ 1]. Imagine Schools has considerable experience operating charter schools. Id. at ¶ 25. Imagine Schools contracts with each independent local charter school governing board. Id. at ¶ 2. The governing board oversees Imagine Schools, which has responsibility for the day-to-day operations of the charter school. Id. In November 2007, Imagine Schools and Renaissance entered into a Charter School Operating Agreement (Operating Agreement). Imagine Schools was required

to provide all of the charter school management services provided for in [the Operating] Agreement, including without limitation the administration and supervision of the personnel, materials, equipment, and facilities necessary for the provision of the educational service to students, and the management, operation and maintenance of the Charter School....

[Doc. 8-1, at p. 1]; [Doc. 88-1, ¶ 4]. Imagine Schools was also required to assist the Renaissance Board in locating a facility suitable for the operation of the school, [Doc. 8-1; at p. 3], was authorized to make purchases on behalf of the Board, Id., had access to Renaissance's financial and educational records, Id. at pp. 2, 9, and used Renaissance's funds - which were deposited in an account established by Imagine Schools - to regularly pay the school's operating expenses, Id. at 10-11. Imagine Schools was also required to select and hire personnel to perform services at the school, and those personnel, including the principal, teachers, and non-instructional staff, were Imagine Schools' employees, unless otherwise agreed upon by the parties. Id. at p. 12.

The Operating Agreement was signed by Board President Tomika Booker after the Renaissance Board voted to approve it. Before Booker signed the Operating Agreement, the Renaissance Board received the Operating Agreement and discussed it at least once. [Doc. 88-1, ¶¶ 18-19]. The Renaissance Board was comprised of people from various backgrounds and experiences, such as a state legislator, an experienced educator and administrator and member of the Board of Trustees of the Kansas City Public School Retirement System, a former teacher, an associate pastor, and a PTA treasurer. Id. at ¶ 13. Before chairing the Renaissance Board, Booker served on the board of another charter school. Id. Under the Operating Agreement, the Renaissance Board of Directors was responsible for overseeing Imagine Schools' provision of management services, Id. at ¶ 5, and was responsible for ensuring that Imagine Schools fulfilled its obligations under the Operating Agreement, Id. at ¶ 16.

II. Discussion

In Count I, Renaissance alleges Imagine Schools breached its fiduciary duty to Renaissance by using its access to Renaissance's funds to pay or loan itself and its employees unauthorized amounts of money. Counts II and III allege Imagine Schools breached its fiduciary duty by negotiating leases and amended leases detrimental to Renaissance and in favor of Renaissance's sister company, SchoolHouse Finance, while failing to disclose the relationship between Imagine Schools and SchoolHouse Finance. To succeed on a breach of fiduciary duty claim, Renaissance must establish the existence of a fiduciary duty between it and Imagine Schools, a breach of that duty by Imagine Schools, and harm caused by the breach. Zakibe v. Ahrens & McCarron, Inc., 28 S.W.3d 373, 381 (Mo.Ct.App. 2000).

Imagine Schools argues summary judgment on Counts I-III should be granted in its favor because no fiduciary duty existed between Renaissance and Imagine Schools. To establish a fiduciary duty under Missouri law, a plaintiff must satisfy five elements:

(1) as between the parties, one must be subservient to the dominant mind and will of the other as a result of age, state of health, illiteracy, mental disability, or ignorance;
(2) things of value such as land, monies, a business, or other things of value which are the property of the subservient person must be possessed or managed by the dominant party;
(3) there must be a surrender of independence by the subservient party to the dominant party;
(4) there must be an automatic or habitual manipulation of the actions of the subservient party ...

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