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Meridian Creative Alliance, LLC v. O'Reilly Automotive Stores, Inc.

Court of Appeals of Missouri, Southern District

March 24, 2017

MERIDIAN CREATIVE ALLIANCE, LLC, Plaintiff-Appellant/Respondent,
O'REILLY AUTOMOTIVE STORES, INC., Defendant/Counterclaim Plaintiff-Respondent/Cross-Appellant,

         APPEAL FROM THE CIRCUIT COURT OF GREENE COUNTY Honorable C. David Darnold, Senior Judge

          Before Rahmeyer, J., Scott, J., and Francis, Jr., J.

          PER CURIAM.

         Meridian Creative Alliance, LLC ("Meridian") and O'Reilly Automotive Stores, Inc. ("O'Reilly") entered into a series of both verbal and written contracts, culminating in a 2007 written contract for the provision of services for radio and print advertising. O'Reilly terminated the contract in 2008; Meridian sued. Meridian claimed that it was to be the "exclusive" agency for O'Reilly's media advertising, which O'Reilly denied, alternatively claiming that Meridian had breached the contract. O'Reilly also asserted several ancillary counter and third-party claims that were tried in the same trial: the counterclaim was against Meridian and its three principals for a breach of the contract; the third-party claim was against Ron Byerly, O'Reilly's former employee who had negotiated the contract, for a breach of fiduciary duty.[1] After seventeen days of trial, the jury returned verdicts in Meridian's favor on its claims against O'Reilly, and against O'Reilly on its counter and third-party claims.

         Meridian appeals, claiming the trial court erred in failing to award prejudgment interest on the judgment. O'Reilly cross-appeals, raising six points: the first claims error in allowing a total of nine peremptory challenges; then two points charge instructional error; two points complain of failure to grant JNOV; and a final point charges juror misconduct by injecting extrinsic evidence into the jury's deliberations.

         For ease of discussion and because it effectively disposes of two of O'Reilly's complaints, we first address O'Reilly's Point II claim of error in submitting Instruction No. 7, Meridian's verdict director for breach of contract. At trial, the parties were in sharp disagreement whether the contract required O'Reilly to employ Meridian - and only Meridian - to procure radio and print advertising. The 2007 written contract at issue stated, in pertinent part, "O'Reilly agrees to use [Meridian] as its agency for radio and print advertising during the term of this agreement." (Emphasis added.) The trial court ruled, prior to the trial, that the language in the contract, "its agency, " was ambiguous as to whether it meant "exclusive" and, thus, was an issue for the trier of fact after hearing all the evidence. Despite that determination that the language was ambiguous and the disagreement of the parties as to what the language meant, the trial court submitted as a verdict director Instruction No. 7, which incorporated the ambiguous contract term ("its agency") without any definition or guidance in defining that term.

         O'Reilly claims this was error; that Instruction No. 7 did not require the jury to resolve the central issue - whether the 2007 contract was "exclusive" - a finding necessary to sustain Meridian's theory of liability for breach of the contract. We agree.

         Instruction No. 7 was based on MAI 26.06. "MAI 26.06 was adopted by the Supreme Court as appropriate for the submission of the two-element dispute of 1) what agreement was made and 2) whether that agreement was breached." Penberthy v. Nancy Transp., Inc., 804 S.W.2d 404, 407 (Mo.App. E.D. 1991). "Where a dispute exists as to one or more of the terms of the agreement relied on by the claimant to support recovery, that issue must be hypothesized in the verdict directing instruction." Id. (internal quotations and citation omitted). "Failure to do so is prejudicial error." Id.

         Instruction No. 7 provided:

Your verdict must be for Plaintiff Meridian and against defendant O'Reilly if you believe:
First, Meridian entered into an agreement whereby Meridian agreed to perform certain radio and print advertising services and O'Reilly agreed that it was required to use plaintiff Meridian as its agency for radio and print advertising during the term of the agreement, and
Second, plaintiff Meridian performed its agreement, and
Third, defendant O'Reilly failed to perform its agreement, and
Fourth, plaintiff Meridian was thereby damaged.

(Emphasis added.)

         Initially, the verdict director refers to the parties entering into "an" agreement. The parties had a long history of oral and written contracts. The details of all of the oral and written contracts were discussed for days throughout the trial. The jury instruction did not instruct the jury that the only contract at issue in the lawsuit was the 2007 written contract, which encompassed the years 2008-2013. The jury could have found that the hand-shake deal of the early 2000's or the contract of 2005 that actually used the words "exclusive" still applied to this claim for damages by Meridian.

         Although Meridian claims that there was no doubt that the jury knew which contract was at issue, we cannot be sure that is accurate. The transcript was approximately 4, 000 pages. The parties spent hours delving into the prior oral and written contracts. Many of the objections and rulings involved evidence that would not have been relevant to the 2007 written contract dispute but may have been relevant on some of the counterclaims and third-party claims. There are many ways the jury could have been misled after hearing all of the evidence of the parties' dealings. The jury must rely upon the court to give it the correct law in the matter by way of the formal instructions. In this case, the jury was not instructed by the court that the 2007 written contract was the contract at issue in Instruction No. 7.

         The confusion about which contract was at issue is compounded by other language in the verdict director. The first paragraph continues that Meridian agreed to perform "certain" radio and print advertising services for O'Reilly and O'Reilly agreed that it was "required" to use Meridian as "its agency" for radio and print advertising. The jury could have found that the choice was Meridian's whether to perform certain radio and print advertising. There certainly was ample testimony that Meridian was actually under no obligation to purchase any advertising for O'Reilly if it could not meet O'Reilly's "price point."[2] The word "certain" in the verdict director implies that Meridian had the choice whether to perform the contract and, if they chose to do so, O'Reilly had to pay.

         Further, and most importantly, the jury instruction does not instruct the jury that O'Reilly had to use Meridian as its exclusive agency for all radio and print advertising, nor does it use the word "sole" agency. Thus, the court instructed the jury that they must find for Meridian if O'Reilly entered into a contract, which O'Reilly admittedly entered, when the real issue was the legal effect of the words in the contract. ...

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