Court of Appeals of Missouri, Western District, Fourth Division
from the Circuit Court of Nodaway County, Missouri The
Honorable Roger M. Prokes, Judge.
Before: Mark D. Pfeiffer, Chief Judge, and James Edward Welsh
and Edward R. Ardini, Jr., Judges.
D. Pfeiffer, Chief Judge.
Foods Midwest Cooperative, Inc. ("Affiliated
Foods") appeals from the judgment of the Circuit Court
of Nodaway County, Missouri ("trial court"),
entered following a jury verdict for compensatory and
punitive damages in favor of Rock Port Market, Inc.
("Rock Port") on its claim of breach of the duty of
good faith and fair dealing. We affirm in part and reverse in
and Procedural Background
Port was a grocery store in Rock Port, Missouri, owned by the
Leisman family since 1949. In 1999 it submitted an
application to become a member of Affiliated Foods, a
Nebraska cooperative. Affiliated Foods obtained groceries at
a discounted rate from food distributors and sellers because
of its purchasing power and sold those groceries to member
retail grocery stores. To become a member, Rock Port was
required to make a membership deposit of $2, 500 with its
application, and thereafter make a membership investment of
two percent of its weekly purchases from Affiliated Foods for
the first year and one percent thereafter. As part of the
membership agreement, Rock Port was required to accumulate a
non-interest-bearing debenture bond in the amount of $50,
000, from which Rock Port would derive an annual patronage
rebate of the one percent weekly fee. If Rock Port ceased to
be a member of Affiliated Foods, the bond would be returned
to Rock Port without interest.
2008, Affiliated Foods had approximately 900 member stores.
In September of that year, Affiliated Foods representative
Richard York met with Hubert Turnbull of Nodaway County Bank,
the banker for Roger Pennel, LouAnn Pennel, WC Farmer, Dr.
Aron Burke, and Roger Livengood ("investor group"),
to discuss a grocery business they were interested in
starting in Rock Port, Missouri. Turnbull asked York for a
pro forma or an estimated business plan. York had discussions
in October with the investor group. On November 4, 2008,
LouAnn Pennel notified York that the investor group had
decided to move forward with the project. In November, York
provided Turnbull a ten-page pro forma, which included
financial projections based on weekly and annual sales,
margins, expenses, insurance, store labor, laundry, and
uniforms. Because York was aware that the investor group was
going to apply for Tax Increment Financing ("TIF"),
he included a $15, 000 TIF projection. On December 22, 2008,
York forwarded to an Affiliated Foods engineer photographs of
a plat for the new store project to determine what size
building would fit on that location. York also obtained
building quotes for the new store project. In addition, the
Affiliated Foods graphic design team provided proposed logo
designs for the investor group. All of these services were
provided to the investor group free of charge and at a time
when the group was not a member of Affiliated Foods, an
Affiliated Foods member - Rock Port - already operated a
grocery store in this small community, and York believed that
the investor group's prospective grocery store operation
would likely force Rock Port out of business.
January 2009, York visited with Rock Port and told the store
owners that Affiliated Foods had been contacted by people who
were interested in building a new grocery store in the town.
In March 2009, Rock Port's attorney asked York to provide
a letter to the owners regarding the sustainability of two
stores in Rock Port, Missouri. York complied, stating in his
In my opinion, and my opinion only, it would be most
beneficial to have only one grocery retail outlet in the
community to continually meet purchase requirements not only
from Affiliated Foods Midwest, but other direct store
delivery vendors. . . . It would be a challenge for two
retail outlets to survive in this community. Not impossible
but not probable.
4, 2009, York attended a TIF Commission meeting at the
request of the investor group. When the size of the Rock
Port, Missouri, grocery market and the viability of two
stores were discussed, York expressed his opinion that it was
possible, not probable, for two grocery stores to survive in
that community, but it would be better to consolidate. That
same day, York emailed Affiliated Foods' officers
regarding his attendance at the TIF Commission meeting. He
stated that he assumed the owners of Rock Port would say that
he undermined them at the meeting: "I assume he [Michael
Leisman] will threaten to leave [Affiliated Foods], but under
the circumstances [Affiliated Foods] will be better served
supplying new store with weekly purchases of 28- to 30, 000 a
week versus a failing store struggling to purchase 10, 000 a
week." On the date York made the statement, Affiliated
Foods had not even received a membership application or $2,
500 deposit from the investor group, later to be known as FC
or July 2009, the TIF for FC Food Country was passed.
Thereafter, the investor group obtained a $315, 000 loan from
Nodaway Valley Bank to finance the new grocery business. FC
Food Country started doing business out of the meat market
owned by the Pennels before the new grocery store was built.
Foods had a business relationship with Loyalty Lane, a
company that provided reward cards for grocery stores. In
July 2009, York emailed a Loyalty Lane representative,
informing him that FC Food Country wanted to be a Loyalty
Lane customer but not if Rock Port was going to be a Loyalty
Lane customer. York stated: "Matt Leisman from the old
store always talks a good story but never does anything[, ]
and they will probably go away within the year. I would
suggest we sign up a new store as their yearly sales will be
about 2.5 million versus the old store, which would be about
$600, 000 a year." Loyalty Lane responded: "Rich,
per your request, we have told Roger and WC that we will give
them a 5 mile exclusivity." FC Food Country received the
five-mile exclusivity from Loyalty Lane.
Leisman family closed Rock Port in December 2009 because
"the playing field was not going to be equal." FC
Food Country became a member of Affiliated Foods on June 29,
2012, Rock Port brought suit against Affiliated Foods for (1)
breach of its duty of good faith and fair dealing, (2)
fraudulent misrepresentation, and (3) breach of contract
against Richard York, a claim that was dismissed by the trial
court via summary judgment. In 2014, the matter was tried
before a jury, which rendered verdicts in favor of Affiliated
Foods on both remaining counts. Thereafter, the trial court
granted Rock Port's motion for new trial, but only as to
its claim of breach of duty of good faith and fair dealing.
The case went to trial for the second time in 2015. At the
close of Rock Port's evidence in the second trial,
Affiliated Foods moved for a directed verdict "to
request dismissal of the case as a matter of law for failure
to establish the elements of proof necessary to permit
submission to the jury, " which was denied by the trial
court. At the close of all the evidence, Affiliated Foods
"renew[ed]" its motion made at the close of Rock
Port's evidence, which was denied by the trial court.
instruction conference of the 2015 trial, counsel for
Affiliated Foods objected to Rock Port's tendered verdict
directing instruction and punitive damages instruction. The
trial court overruled the objections and submitted both
instructions to the jury.
three-day trial, the jury returned a verdict on Rock
Port's claim for breach of the duty of good faith and
fair dealing in favor of Rock Port and assessed actual
damages against Affiliated Foods in the amount of $370, 000.
The jury assessed punitive damages against Affiliated Foods
in the amount of $500, 000. The trial court entered its
judgment on December 6, 2015, for Rock Port on the jury's
verdict and awarded it $870, 000 ($370, 000 as actual
damages, and $500, 000 as punitive damages).
Foods moved for judgment notwithstanding the verdict, new
trial, and/or remittitur, which was denied by the trial
court, and Affiliated Foods timely appealed.
a jury was instructed properly is a question of law that this
[c]ourt reviews de novo." City of
Harrisonville v. McCall Serv. Stations, 495 S.W.3d 738,
746 (Mo. banc 2016) (internal quotation omitted). Our review
is conducted in the light most favorable to the record, and
we will find submission of an instruction proper if any
theory supports the instruction. Id. "The party
challenging the instruction must show that the offending
instruction misdirected, misled, or confused the jury,
resulting in prejudice to the party challenging the
instruction." Id. (internal quotation omitted).
We will reverse instructional errors "only if the error
resulted in prejudice that materially affects the merits of
the action." Id. (internal quotation omitted).
Affiliated Foods' first point, it asserts that the trial
court erred in submitting Rock Port's claim for punitive
damages to the jury because Rock Port had ...