TRUSTEES OF CLAYTON TERRACE SUBDIVISION, Respondent/Cross-Appellant,
6 CLAYTON TERRACE, LLC, and JEANNETTE R. HUEY, TRUSTEE OF THE JANE R. HUEY LIFETIME TRUST AGREEMENT DATED MAY 21, 1998, Appellants/Cross-Respondents.
from the Circuit Court of St. Louis County The Honorable Dale
Denvir Stith, Judge.
R. Huey, 6 Clayton Terrace, LLC, and the Trustees of Clayton
Terrace Subdivision ("trustees") appeal from
portions of the circuit court's judgment not in their
favor. This Court affirms the portion of the circuit
court's judgment upholding Ms. Huey's sale of her
home located in the Clayton Terrace subdivision despite
allegations she failed to comply with the right of first
refusal contained in the subdivision indentures. But this
Court reverses the portion of the circuit court's
judgment holding the trustees' attempt to have the sale
set aside constituted an abuse of process and awarding
attorney's fees to Ms. Huey on that claim. An abuse of
process claim requires more than the proof Ms. Huey offered
that the trustees' purpose was allegedly improper. She
also failed to show the trustees made an improper use of
Court affirms the circuit court's refusal to reject the
amended indenture provision prohibiting the building of more
than one residence per lot. That provision could not be
avoided by attempting to divide the lot into two sub-lots.
But the circuit court erred in awarding attorney's fees
to the trustees against 6 Clayton Terrace on the basis the
latter's failure to reveal its subdivision plan
constituted "special circumstances" justifying the
award of attorney's fees for intentional misconduct.
Assuming attorney's fees could be awarded where, as here,
the trustees did not seek declaratory relief against 6
Clayton Terrace, the trustees fail to identify any basis on
which 6 Clayton Terrace, as an arms' length purchaser,
had a duty to reveal its planned use of the property.
Further, the fact 6 Clayton Terrace ultimately lost its claim
does not create "special circumstances" for
purposes of attorney's fees, as one party loses every
FACTUAL AND PROCEDURAL BACKGROUND
Huey lived in a home on a 2.3-acre piece of property referred
to as Lot 6 in a subdivision called Clayton Terrace in
Frontenac, Missouri. Clayton Terrace was established by plat
in 1923, at which time it had 23 recorded lots. The subdivision
is subject to the original indentures, which are handwritten
and recorded on the same document that contains the plat. The
original indentures provide the restrictions will be "in
force and binding upon the owners of this Subdivision for a
period of 25 years from date of this instrument, unless
amended or extended by two-thirds of the lot owners in this
Subdivision and publicly recorded."
original indentures have been amended or extended
approximately five times. There are two relevant indenture
amendments and extensions. One was approved in 1928,
providing that "only one residence shall be erected on
each lot." In 1972, a "right of first refusal"
provision was approved under which any lot owner selling a
lot was required to provide "15 days' written notice
to the owners of all other lots in the subdivision …
such notice to contain the selling price and other terms of
the proposed sale and to whom it is made." The 1972
provision grants the other lot owners "the right to
elect in writing to purchase said lot on the same terms
(including the closing date) as offered to the third party
buyer …." Both the "one residence per
lot" provision and "right of first refusal"
provision were restated in the most recent amendment and
extension, which was recorded in 1998 and approved by
two-thirds of the lot owners. The indentures also provide for
the election of subdivision trustees. The indentures impose a
fiduciary duty on the trustees to the lot owners and provide
"the Trustees shall have the power to enforce the
restrictions spread upon the plat of Clayton Terrace
Huey died October 15, 2011. Her daughter, Jeannette Huey, as
trustee of her mother's trust, became responsible for Lot
6. Ms. Huey listed Lot 6 with a real estate agent in
September 2012. A career real estate developer, Kevin
McGowan, testified at trial that, "as soon as I saw it,
when I noticed it was almost three acres, my very first
thought was that this might be able to be split." Before
making an offer, he confirmed with Frontenac that its
municipal ordinances would not prohibit subdivision of the
property. To purchase the property, he secured an investor,
Century Renovations, LLC, and both he and the investor
reviewed the Clayton Terrace indentures. In January 2013, Ms.
Huey and Century Renovations agreed to terms for the sale of
Lot 6 and set the closing for February 2013.
sale was pending, Insight Title Company, LLC, on behalf of
Ms. Huey, reached out to the trustees concerning the sale.
The trustees advised Insight Title of the "right of
first refusal" provision. Insight Title prepared a
notice of sale for the property and the real estate agent
hand-delivered notice to Clayton Terrace lot owners of the
proposed sale 15 days before the closing date. Whether all
lot owners were given this notice later became the subject of
dispute. The notice of sale did not contain the identity of
the proposed purchaser.
one homeowner returned her notice of sale indicating she
might be interested in acquiring the property. Her request to
walk through the property was denied. Ultimately, that
homeowner delivered a written document expressly waiving her
right of first refusal and later confirmed she did not want
to buy the property. The day before closing, and after the
notices had gone out, Century Renovations assigned the sale
contract to an entirely new entity, 6 Clayton Terrace. 6
Clayton Terrace is a limited liability company owned by
February 15, 2013, Ms. Huey sold Lot 6 to 6 Clayton Terrace.
The proceeds from the sale of Lot 6 went into Jane Huey's
trust. Believing the sale of the property to be final, Ms.
Huey disbursed its proceeds to the trust beneficiaries in
April 2014. As part of the sale, Insight Title tendered the
outstanding homeowners' association fees to the trustees
of Clayton Terrace. The trustees deposited these funds in the
subdivision account. Following the sale of the lot to 6
Clayton Terrace, Mr. McGowan leased the home and moved in
with his children. He began substantial renovations that
would have been evident to those passing or living near the
home, including renovating the pool and deck, removing
multiple trees and significant brush, knocking out walls
within the residence, and cutting holes in the exterior walls
to add more doors.
meantime, 6 Clayton Terrace began attempting to obtain
approval from the Frontenac planning and zoning commission to
split the 2.3 acres into two lots. No formal notice of this
plan was given to the Clayton Terrace trustees, although 6
Clayton Terrace presented evidence Mr. McGowan's
nine-year-old son informally told a Clayton Terrace resident
about the plan shortly after closing, and that resident
informed one or more trustees. The trustees were concerned
about the idea of having the lot subdivided but had received
no direct notice of an intent to subdivide and they did not
approach the owners or those living in the home about the
rumor the lot would be subdivided.
following spring, in April 2014, 6 Clayton Terrace filed an
application with Frontenac to subdivide Lot 6 into two lots,
to be known as Lots 6A and 6B. The trustees and several of
the Clayton Terrace residents strongly opposed 6 Clayton
Terrace's proposal and appeared at public meetings to
voice their opposition. Frontenac advised the trustees it was
bound only by its own municipal ordinances, which simply
required that each lot be greater than one acre in size, and
it had no authority to enforce private indentures. In June
2014, Frontenac approved 6 Clayton Terrace's application
as it did not violate city ordinances.
months later, in August 2014, the trustees sued both Ms. Huey
and 6 Clayton Terrace. Count I sought a declaratory judgment
against Ms. Huey, claiming she violated the amended
indentures by failing to provide sufficient written notice to
all the subdivision lot owners and failing to accept one lot
owner's offer to purchase Lot 6. In support, the trustees
asserted the hand-delivered notice did not show the property
was being purchased by a developer rather than a family, gave
an incorrect closing date, and one or more Clayton Terrace
owners were not given the notice.
count II the trustees sought injunctive relief against 6
Clayton Terrace to prohibit it from subdividing the lot and
constructing an additional home on Lot 6, claiming division
of Lot 6 into two sub-lots would violate the restrictions in
the amended indentures. The trustees also sought
attorney's fees. Both 6 Clayton Terrace and Ms. Huey
denied these claims and asserted affirmative defenses,
including that the trustees had waived and ratified the
purchase by waiting more than one year to challenge the sale
and alleging the amendments to the original indentures were
invalid because they were adopted without the unanimous
consent of all lot owners. Ms. Huey also filed a counterclaim
against the trustees for abuse of process, based on her
contention the trustees filed count I against her for the
sole and allegedly improper purpose of preventing 6 Clayton
Terrace from constructing another residence on Lot 6.
to trial, the parties submitted stipulated facts and
exhibits. In December 2016, the circuit court entered
judgment in favor of Ms. Huey and against the Clayton Terrace
trustees on count I, holding the "right of first
refusal" provision was invalid and unenforceable, and in
any event equitable considerations and the doctrines of
waiver and ratification militated against enforcement of the
indentures because the trustees: (1) did not raise any
failure to comply for a year and a half after the sale
despite their awareness of substantial modifications being
made to the property by the new owners; and (2) ratified the
sale by accepting funds out of the proceeds of the closing
for homeowner association fees.
circuit court also found in Ms. Huey's favor on her abuse
of process counterclaim, finding the trustees' attempts
to set aside the sale of the property were done with what it
said was the improper purpose of coercing 6 Clayton Terrace
into withdrawing its request to subdivide the property by
placing its title at risk. The circuit court awarded Ms. Huey
count II, the circuit court found in the trustees' favor.
Noting the text of the indentures neither expressly
prohibited nor expressly allowed for the subdivision of lots,
the circuit court looked to the various provisions of the
indentures and concluded the limitation of one house per lot
was intended to preclude subdivision of the lots. It enjoined
6 Clayton Terrace from subdividing Lot 6 or constructing an
additional residence on Lot 6 and awarded the trustees'
their costs. Finding that 6 Clayton Terrace had acted in bad
faith in failing to reveal its plan to subdivide the property
and that this constituted "special circumstances,"
it included substantial attorney's fees in its judgment
against 6 Clayton Terrace. All parties appealed. After an opinion
by the court of appeals, this Court granted transfer. Mo.
Const. art. V, sec. 10.
STANDARD OF REVIEW
trial court's judgment will be affirmed unless there is
no substantial evidence to support it, it is against the
weight of the evidence, or it erroneously declares or applies
the law." Robinson v. Title Lenders, Inc., 364
S.W.3d 505, 510 (Mo. banc 2012). "The circuit
court's determinations of questions of law are subject to
de novo review." Hill v. Mo. Dep't of
Conservation, 550 S.W.3d 463, 467 (Mo. banc 2018).
THE CIRCUIT COURT'S FINDING THAT THE SALE OF LOT 6 WAS
VALID IS NOT AGAINST THE WEIGHT OF THE EVIDENCE
trustees contend the circuit court's ruling that Ms.
Huey's sale of Lot 6 was valid because she complied with
the "right of first refusal" provision was against
the weight of the evidence. That provision required she
provide at least 15 days' notice to each lot owner, and
that such notice contain the selling price and "other
terms." Because the circuit court reasonably could have
found from the record that she complied with the "right
of first refusal" provision, that finding was not
against the weight of the evidence.
courts act with caution in exercising the power to set aside
a decree or judgment on the ground that it is against the
weight of the evidence." Ivie v. Smith, 439
S.W.3d 189, 205 (Mo. banc 2014). "When reviewing the
record in an against-the-weight-of-the-evidence challenge,
this Court defers to the circuit court's findings of fact
when the factual issues are contested and when the facts as
found by the circuit court depend on credibility
determinations." Id. at 206. "A circuit
court's judgment is against the weight of the evidence
only if the circuit court could not have reasonably found,
from the record at trial, the existence of a fact that is
necessary to sustain the judgment." Id.
circuit court found notice of the sale for Lot 6 was prepared
by Insight Title and that the real estate agent hand
delivered the notices to each home in Clayton Terrace. After
delivering the notices, Insight Title postponed the closing
date of the sale for 15 days to accommodate the 15-day
requirement contained in the "right of first
refusal" provision. The circuit court found the majority
of homeowners filled out and returned these written waivers,
which said the homeowner was not interested in purchasing Lot
6. Further, none of the witnesses called by the trustees
testified they did not receive notice of the sale or
currently desired to purchase Lot 6. The only homeowner who
had indicated an interest in buying Lot 6 did receive notice
and later delivered a written document expressly waiving her
right of first refusal. Based on this evidence, the circuit
court found that Insight Title complied with the indenture.
the trustees note they presented substantial evidence certain
lot owners did not receive the notice, Ms. Huey presented
evidence she had delivered the notice to all homes. The
circuit court clearly found that more credible. The circuit
court "is free to believe all, some, or none of the
evidence offered to prove a contested fact, and the appellate
court will not re-find facts based on credibility
determinations through its own perspective."
Id. As the circuit court could reasonably have found
Ms. Huey complied with the "right of first refusal"
provision from facts in the record, this Court rejects the
trustees' argument that the circuit court's ruling
was against the weight of the evidence.
CLAYTON TERRACE TRUSTEES DID NOT ABUSE PROCESS IN SUING TO
INVALIDATE THE SALE OF LOT 6
Ms. Huey's sale of Lot 6 is affirmed, this Court reverses
the circuit court's finding that there was an abuse of
process by the trustees in seeking to have the sale
invalidated. "The general rule is that no right of
action exists for damages resulting from the initiation of a
civil action, unless the action was prosecuted maliciously
and without probable cause or there was an abuse of
process." Dillard Dep't Stores, Inc., v.
Muegler, 775 S.W.2d 179, 183 (Mo. App. 1989). To prevail
on her abuse of process claim, Ms. Huey was required to show
three elements: "(1) the present defendant made an
illegal, improper, perverted use of process, a use neither
warranted nor authorized by the process; (2) the defendant
had an improper purpose in exercising such illegal, perverted
or improper use of process; and (3) damage resulted."
Ritterbusch v. Holt, 789 S.W.2d 491, 493 (Mo. banc
1990), citing Stafford v. Muster, 582 S.W.2d 670,
678 (Mo. banc 1979).
Huey's abuse of process counterclaim asserted the
trustees' purpose in seeking to set aside the sale was
wholly pretextual and was brought solely for the allegedly
improper collateral purpose of coercing 6 Clayton Terrace
into abandoning or withdrawing its request to subdivide the
property. The circuit court discussed the evidence in detail
and concluded Ms. Huey had proved the second element by
showing the trustees' purpose was an improper one in that
they did not actually care about the alleged improprieties in
the notice given by Ms. Huey nor did they identify an owner
who wanted to utilize the right of first refusal. The circuit
court further found the third element - damage resulted.
Huey, however, also was required to adduce evidence of the
first element, "an illegal, improper, perverted use of
process, a use neither warranted nor authorized by the
process." Id. To support this element, she and
the circuit court relied on the same evidence used to support
the second element - improper motive. That was error. The
test for liability in an abuse of process claim is
"whether the process has been used to accomplish some
unlawful end, or to compel the defendant to do some
collateral thing which he could not legally be compelled to
do." Moffett v. Commerce Trust Co., 283 S.W.2d
591, 600 (Mo. 1955) (quotations omitted). "The ulterior
motive may be inferred from the wrongful use made of the
process, but the use itself may not be inferred from the
motive." Id. at 599 (quotations omitted). It is
improper to conflate these two separate elements by inferring
an improper use of process from bad motive. Id.
test employed to see whether there has been a misuse of
process "is whether process had been used to accomplish
some unlawful end or to compel the opposite party to do some
collateral thing which he [or she] could not be compelled to
do legally." Ritterbusch, 789 S.W.2d at 493
n.1, citing, Owen v. Owen, 642 S.W.2d 410, 414 (Mo.
App. 1982). Courts have found misuse of legal process when a
party "employs legal process in a manner technically
correct, but for a wrongful and malicious purpose to attain
an unjustifiable end or an object" that the particular
process is not meant to effectuate. Montgomery GMC
Trucks, Inc. v. Nunn, 657 S.W.2d 334, 336 (Mo. App.
1983) (quotations omitted).
"[n]o liability attaches where a party has done nothing
more than pursue the lawsuit to its authorized conclusion
regardless of how evil a motive he possessed at the
time." Pipefitters Health & Welfare Trust v.
Waldo R., Inc.,760 S.W.2d 196, 198-99 (Mo. App. 1988).
To the contrary, in the rare cases in which a valid abuse of
process claim will lie, there has been evidence the
complained-about action was brought "to obtain a result
which the process was not intended ...