Court of Appeals of Missouri, Eastern District, Fourth Division
from the Circuit Court of St. Charles County Honorable Norman
C. Steimel, III
S. ODENWALD, JUDGE
Roy H, Smith Real Estate Company, d/b/a Smith Management
Group ("SMG"), appeals the judgment of the trial
court entered after a bench trial. SMG entered into a
one-year contract with respondent Homefield Commons
Homeowners Association ("HCHOA") to provide
property-management services. Section 4 of the parties'
contract specified the method by which either party could
terminate the contract for cause prior to its expiration.
HCHOA contends that it properly terminated the contract
pursuant to Section 4. Following a bench trial, the trial
court agreed. Because the trial court erroneously applied the
terms of the contract as required by law, we hold that HCHOA
did not terminate the contract in conformance with the
requirements of Section 4. We reverse the judgment of the
trial court and remand this matter to the trial court with
instructions to enter judgment in favor of SMG on HCHOA's
petition; to consider SMG's counterclaim and make the
required factual findings; and to enter judgment on SMG's
counterclaim in accordance with its finding of facts.
and Procedural History
Commons is a subdivision of detached villas in St. Charles
County. Homefield Commons is governed by a homeowners'
association, respondent HCHOA, and is part of a larger
real-estate development. The entire development is governed
by a master homeowners' association, Homefield Master
Homeowners Association ("Homefield Master"). In
other words, Homefield Master controls the entire
development, while the HCHOA subassociation only governs the
Homefield Commons subdivision.
entered into a valid contract with SMG to manage the
Homefield Commons subdivision. The contract between HCHOA and
SMG ran for the calendar year of 2014. Included in the
contract was the following termination clause, contained in
[E]ither party may terminate this Agreement for cause by the
dissatisfied party giving the other party written notice of
the concerns, along with a written list or matters on which
said dissatisfaction is based. The dissatisfied party will
allow the other party thirty (30) days to rectify and address
such concerns. If the dissatisfied party is still not
satisfied with the management relationship thereafter, said
dissatisfied party shall give the other party written notice
terminating this Management Agreement for cause effective
thirty (30) days from the date of said written notice.
letter to SMG dated March 29, 2014,  HCHOA wrote, "Pursuant
to [Section] 4 of our Management Agreement, 30 day notice is
hereby given to terminate the agreement." The letter
asserted that SMG's management of both Homefield
Master and HCHOA created a conflict of interest.
This conflict allowed HCHOA's issues "to go
unaddressed or ignored" because the SMG property manager
followed the direction of Homefield Master rather than HCHOA.
The letter identified two issues that illustrated the
conflict problem, "the Trash Can Screening issue and the
Solar Panel issue, " but lacked any specificity
regarding those issues. However, with both issues, HCHOA
alleged that it had given specific directions to an SMG
property manager and those directions were ignored. The
letter concluded that a "person cannot have two masters
and therefore we respectfully wish to terminate our
management agreement with [SMG]." Although the letter
was dated in March, the trial court found that SMG did not
receive the letter until April 23.
responded by letter dated April 28. In its letter, SMG
expressed disappointment that HCHOA would want to terminate
the agreement and stated it was confident it could
"correct and/or explain the issues if given the
opportunity." The letter also declared SMG's
position that HCHOA had not followed the proper procedure
under Section 4 to terminate the agreement. Specifically, SMG
expressed that the concerns listed were vague or inaccurate,
and that the termination letter did not allow SMG the
requisite thirty days to rectify HCHOA's concerns.
sent another letter dated May 5. The letter provided notice
that SMG was appointing a new manager for HCHOA. This new
manager, SMG stated, would follow all of SMG's
operational procedures. Nothing in SMG's letter
acknowledged HCHOA's claim that a conflict of interest
responded by letter dated May 6 rejecting SMG's
appointment of a manager as a solution to the conflict of
interest. HCHOA reiterated its complaint about the perceived
conflict of interest and its desire to terminate the
contract. HCHOA emphasized that the termination letter to SMG
dated March 29 would "stand" because SMG's
efforts to rectify the conflict of interest were not
acceptable. In its letter, HCHOA instructed SMG to transition
all files associated with HCHOA to another management
SMG did not transfer the files to another management company,
HCHOA sent an email to SMG on May 21 repeating HCHOA's
termination of the contract, and again directing SMG to
transfer all files to the new management company.
HCHOA's communications, SMG continued to collect its
management fees from HCHOA-at the contractual rate of $2, 385
per month-from HCHOA's bank account for June, July,
and August. In September, HCHOA closed the bank account
accessible to SMG, and SMG ...