Court of Appeals of Missouri, Eastern District, Fourth Division
from the Circuit Court of St. Louis County Honorable Joseph
Van Amburg, Judge.
Payne and Dominic Petrulli (Appellants) appeal the trial
court's directed verdict in favor of Wayne Cunningham and
Southtown Dodge, Inc. (Sellers) in this contract dispute
involving the sale of the dealership. We reverse and remand.
2016, the parties negotiated a Stock Purchase Agreement (SPA)
by which Sellers would sell Southtown Dodge to Appellants and
their colleague Curtis Pratt (collectively Buyers) in two
phases. First, Buyers were to purchase 21% of the dealership
for $500, 000 cash. Second, and only after the
dealership's debt was paid down to a specific amount,
Buyers would acquire the remaining 79% for $3 million
pursuant to a promissory note secured by the shares. For both
phases, Buyers' respective equity holdings were to be 49%
for Payne, 36% for Petrulli, and 15% for Pratt. The closing
for phase one was to occur May 31. Deliverables at closing
included a shareholders' agreement, employment agreements
for Buyers and Cunningham, a lease amendment, stock
certificates, and the purchase price. However, on May 31,
Buyers still hadn't secured financing to pay the purchase
price and needed additional time to do so. As a result, on
that date, the parties executed the SPA and closing
documents, Cunningham signed the share certificates, and all
were placed in escrow with Sellers' counsel pending
payment. The parties dispute whether and to what extent
Cunningham agreed to extend the time for payment. Appellants
claim that Cunningham granted them an undefined extension
(the "escrow agreement") and then refused
Payne's offer to write a check on June 27. Sellers
expressly rescinded the entire transaction by email later
that day (June 27). Buyers tendered a cashier's check
July 18; Sellers rejected it.
filed a petition for declaratory and equitable relief
alleging breaches of contract (specifically the SPA and the
escrow agreement) and seeking a declaration of rights and
injunctive relief. Appellants amended the petition twice,
eliminating the words "for declaratory and equitable
relief" from the title and adding prayers for damages
and specific performance. Before trial, the court requested
clarification as to the nature of Appellants' cause of
action. The exchange included the following excerpts
(redacted for brevity).
Court: What are we proceeding on? … So now you are
saying you are proceeding under declaratory judgment because
on Friday you said you weren't.
Counsel: … It's a claim for specific performance,
and we do want you to declare the parties' rights and
obligations under the contract.
Court: But are we doing a declaratory judgment?
Counsel: Yes, your Honor.
Court: … How did you plan on proceeding here?
Counsel: So, the factual issues are for a jury to decide,
and, if they return a verdict in favor of the plaintiffs,
then it is up to you to grant the relief that you deem
appropriate. … At its core, this case is a breach of
contract claim, Judge. … Under the equitable clean-up
doctrine, you do the remedy consistent with the factual
findings of the jury.
Court: I'm trying to figure out what you would be asking
the jury to decide as it relates to declaratory judgment.
Counsel: To decide whether or not the contract was wrongfully
Court: Isn't that like a breach of contract?
Counsel: Correct. That's what we've pleaded.
parties proceeded to trial, where Appellants sought to prove
the existence of the escrow agreement, specifically that
Cunningham gave Buyers an undefined extension of time to
secure financing. At the close of Appellants' evidence,
Sellers moved for directed verdict on the basis that
Appellants failed to make a submissible case for declaratory
judgment by failing to show that they had no adequate remedy
at law. Appellants insisted that the claim was for breach of
contract where monetary damages were inadequate, warranting a
declaration of rights and specific performance. After a
lengthy debate, the trial court granted Sellers' motion
for directed verdict, reasoning that Appellants merely
asserted a breach of contract claim, so declaratory judgment
was improper. However, the court denied Sellers' motion
for attorney fees as the prevailing party under the SPA.
assert that the trial court erred in that: (1) they have no
adequate remedy at law because Pratt was a necessary party
and refused to join Appellants' suit for breach of
contract, (2) they had no adequate remedy at law because the
transaction required ongoing collaboration with Sellers, (3)
they made a submissible case for breach of contract
warranting specific performance, particularly in that
monetary damages are inadequate, and (4) they are entitled to
a jury trial on factual issues under §527.090 RSMo
(2016). Sellers cross-appeal and assert that the trial court
erred in denying their motion for attorney fees.