Court of Appeals of Missouri, Western District, Third Division
from the Circuit Court of Jackson County, Missouri, The
Honorable W. Brent Powell, Judge.
Before: Anthony Rex Gabbert, Presiding Judge, Victor C.
Howard, Judge and Cynthia L. Martin, Judge.
CYNTHIA L. MARTIN, JUDGE.
Massood ("Massood") appeals from a judgment
reflecting the disposition of various claims following a jury
trial, and reflecting the trial court's disposition of a
claim seeking to dissolve and wind-up the affairs of Midwest
Outdoor Media, LLC ("Midwest"). Massood asserts
that the trial court erred in entering judgment in favor of
Midwest on a derivative claim for conversion asserted by
member Craig Fedynich ("Fedynich") because: (1)
there was insufficient evidence to support the jury's
verdict; (2) the jury's verdict was inconsistent with the
jury's other verdicts; and (3) in the alternative, the
trial court improperly instructed the jury regarding the
calculation of damages. Massood also argues that the trial
court erred in awarding Fedynich attorney's fees on the
derivative claim because the award was not statutorily
permitted and included charges for work unrelated to the
derivative claim. Finally, Massood asserts that the trial
court erroneously ordered the dissolution and wind-up of
Midwest based on a finding that the owners of Midwest are
deadlocked. We affirm.
and Procedural History
2002, Fedynich controlled several undeveloped billboard
locations in Missouri, based on existing leases, lease
options, or easement options. Fedynich had procured or was
prepared to procure the permits necessary to construct
billboards on the locations. However, Fedynich did not have
the necessary capital to construct the billboards. In July
2002, Fedynich approached Massood with a business proposal to
form Midwest, a billboard business.
forming Midwest, Fedynich and Massood entered into an
operating agreement ("Operating Agreement") and a
subscription agreement ("Subscription Agreement")
on July 12, 2002. The Operating Agreement provided that
Massood and Fedynich were the sole members of Midwest, with
Massood having a 51 percent ownership interest and Fedynich
having a 49 percent ownership interest. The Operating
Agreement also provided that profits and losses were to be
allocated to Massood and Fedynich equally. The Subscription
[Massood] shall have an initial member interest in [Midwest]
in the amount of 51%. [Fedynich] shall have an initial member
interest in [Midwest] in the amount of 49%. These member
interests shall be in those percentages at any time that
[Massood] shall be personal liability [sic] for any of the
liabilities of [Midwest] in excess of the personal liability
of [Fedynich] for any of the liabilities of [Midwest]. At any
time [Massood] shall not have personal liability for any of
the liabilities of [Midwest] in excess of the personal
liability of [Fedynich] for any of the liabilities of
[Midwest], the membership interests of [Massood] and
[Fedynich] shall be 50% each.
Operating Agreement provided that Massood and Fedynich would
each contribute $1, 000 of capital to Midwest. In addition,
the Subscription Agreement provided that Fedynich would
provide ground leases and ground easements to Midwest or
would provide easements sufficient to allow Midwest to
construct billboards. The Subscription Agreement provided
that Massood would loan Midwest the amount of $40, 000 to
construct each billboard but limited Massood's total
obligation to $500, 000.
contributed fourteen billboard locations to the company.
Midwest purchased three additional billboard locations.
Massood loaned Midwest a total of $554, 339.54. By the end of
2005, Midwest had completed the construction of thirteen
billboards. The four remaining billboard locations were still
vacant as of June 2016.
to both Fedynich and Massood, their intention in forming
Midwest was to build billboards on the contributed billboard
locations, to rent each side of the billboard to advertisers,
and then to sell Midwest or its assets within a few years of
the company's formation. By late 2006, Massood and
Fedynich both believed that Midwest had built and rented a
sufficient number of billboards to permit Midwest or its
assets to be sold for a sufficient amount to repay
Massood's loans, to pay Fedynich for the value of the
contributed billboard sites, and to result in profit to be
split between the members. Over the course of 2006 and 2007,
there were three offers to purchase Midwest's billboards
and locations. Massood received two offers that he declined
without informing Fedynich, and Massood and Fedynich received
one offer that Fedynich wanted to accept but that Massood
and Fedynich met in September 2007 to discuss dividing
Midwest's assets. Fedynich memorialized their
conversation in a handwritten document, signed by both
Massood and Fedynich. Fedynich filed suit in 2008 against
Massood and Midwest, arguing that the handwritten document
was a contract to divide the company's assets that should
be specifically performed. On appeal, we concluded that
"[b]ecause Mr. Fedynich failed to prove an enforceable
contract to divide all of the assets of Midwest, the trial
court should have entered judgment in favor of [Massood and
Midwest]." Fedynich v. Massood, 342 S.W.3d 887,
893 (Mo. App. W.D. 2011).
in 2004, Midwest and Craig Outdoor Advertising, Inc.
("Craig") joined as plaintiffs in a lawsuit filed in
federal court against Viacom Outdoor, Inc.
("Viacom") ("Viacom suit"). The Viacom
suit alleged that:
[Viacom and its executives] perpetrated a scheme by which
Viacom and its employees and consultants would represent to
businesses and individuals interested in constructing
billboards on railroad property that Viacom was acting as the
agent for those railroads with respect to billboard
construction and that applications to build on railroad
property would be evaluated on a first-come, first-served
basis. In reality, however, Viacom employees or consultants
reviewed each site application to determine if Viacom wanted
to develop the site itself.
Craig Outdoor Advert., Inc. v. Viacom Outdoor, Inc.,
528 F.3d 1001, 1008 (8th Cir. 2008). Midwest and Craig were
represented by the same attorneys in the Viacom suit. The
suit was based on Midwest and Craig's interests in three
billboard sites, acquired from a company named Ad Trend. Two
of the sites were owned jointly by Midwest and Craig, and the
third site was solely owned by Midwest. Midwest's
interest in the three sites was acquired using $15, 000 of
Massood's personal funds.
a jury trial, judgment was entered in favor of Midwest and
Craig in federal court. Following appeal and remand, the
initial judgment was reduced. In January 2010, Midwest
received a check for $776, 372.25, which represented its
share of the final judgment against Viacom minus
attorney's fees and expenses. Massood endorsed that check,
and it was deposited into Midwest's bank account. Then,
Massood paid himself a total of $807, 060.53 from Midwest,
which represented the Viacom judgment plus amounts advanced
by Massood to fund the Viacom litigation.
on the reduction of the initial judgment in the Viacom suit,
Midwest filed a legal malpractice suit in July 2010 against
the attorneys who represented Midwest and Craig
("malpractice suit"). Midwest settled the
malpractice suit in May 2011. The settlement provided that
Midwest was to be paid a total of $1, 350, 000, after
attorney's fees, in two installments of $675, 000.
Midwest received the first $675, 000 check in June 2011 and
received the second $675, 000 check in January 2012. Massood
deposited both checks directly into his personal account.
2011, Massood filed suit against Fedynich claiming breach of
fiduciary duty, breach of contract, and tortious interference
in connection with the operation of Midwest. Massood's
suit also named Midwest, and sought declaratory judgments on
several issues, including that the funds Massood gave Midwest
to construct billboards were loans and not capital
contributions, that Midwest properly distributed $807, 060.53
to Massood following the Viacom judgment, and that Massood
was entitled to the $1, 350, 000 in proceeds from the
malpractice suit settlement.
September 2011, Fedynich filed suit against Massood alleging
breach of fiduciary duty and breach of contract based on
Midwest's distribution of the Viacom judgment proceeds to
Massood and based on Massood's deposit of the malpractice
settlement into his own account. Fedynich also sought a
judgment ordering dissolution and wind-up of Midwest.
Finally, Fedynich filed a derivative action on behalf of
Midwest against Massood for conversion of the malpractice
trial court consolidated the cases. Thirteen claims were
submitted to the jury, and Fedynich's action to dissolve
and wind-up Midwest was tried to the court. The claims
submitted to the jury were disposed as follows:
(1) On Massood's claim for a declaratory judgment that
the money he contributed to Midwest to construct billboards
were loans, the jury returned a verdict in Massood's
favor and found that from 2002 to 2003, Massood loaned
Midwest $554, 339.54.
(2)On Massood's claim for a declaratory judgment setting
the interest rate chargeable on the loans made to Midwest,
the jury returned a verdict declaring that Massood was not
entitled to interest on the loans he made to Midwest.
(3)On Massood's claim for a declaratory judgment that he
was entitled to the proceeds Midwest received from the Viacom
suit, the jury returned a verdict declaring that
"Massood is entitled to the entire amount [Midwest]
received from the Viacom litigation."
(4)On Massood's claim for a declaratory judgment that he
was entitled to the proceeds from the malpractice suit
settlement, the jury returned a verdict declaring that
"Massood is not entitled to the entire amount [Midwest]
received from the malpractice settlement."
(5) On Massood's claim against Fedynich for breach of the
Subscription Agreement that asserted Fedynich failed to
provide a sufficient number of ground leases and ground
easements to allow Midwest to engage in its business
activities, the jury returned a verdict in favor of Fedynich.
(6) On Massood's claim against Fedynich for breach of
fiduciary duty alleging that Fedynich engaged in
mismanagement of Midwest's day-to-day affairs, the jury
returned a verdict in favor of Fedynich.
(7)On Massood's claim against Fedynich for breach of
contract alleging that Fedynich mismanaged Midwest's
day-to-day affairs, the jury returned a verdict in favor of
(8) On Massood's claim against Fedynich for tortious
interference with a brokerage agreement Midwest entered into
with a company that regarding a sale of Midwest's assets,
the jury returned a verdict in favor of Fedynich.
(9) On Fedynich's claim against Massood for breach of
fiduciary duty regarding Massood's distribution of the
proceeds from the Viacom suit from Midwest to himself, the
jury returned a verdict in favor of Massood.
(10)On Fedynich's claim against Massood for breach of
contract for failing to distribute the proceeds from the
Viacom suit in accordance with the Operating Agreement, the
jury returned a verdict in favor of Massood.
(11) On Fedynich's claim against Massood for breach of
fiduciary duty regarding Massood's deposit of the
malpractice settlement into his personal account, the jury