Court of Appeals of Missouri, Southern District, First Division
MEADOWFRESH SOLUTIONS USA, LLC, et al., Plaintiffs-Respondents,
MAPLE GROVE FARMS, LLC, a Missouri limited liability company, et al., Defendants-Appellants.
FROM THE CIRCUIT COURT OF GREENE COUNTY Honorable Michael J.
Cordonnier, Circuit Judge
Steffen Rahmeyer, J.
Appellants appeal the trial court's
judgment in favor of Meadowfresh Solutions USA, LLC
("Meadowfresh"), John W. "Jock" Fulton,
and Susan Maree Fulton (collectively,
"Respondents") after a jury found that the attempt
by minority members of Maple Grove to oust majority member
Meadowfresh from the company and to remove Mr. Fulton as
managing member caused Respondents over 7.3 million dollars
in damages. Appellants bring eleven points on appeal. Finding
no merit to any of Appellants' points, we affirm the
in the Light Most Favorable to the Verdicts Background and
case involves a dispute among the members of Maple Grove, a
Missouri limited liability company that operated a large
dairy farm in Jasper County. The company was owned by
Respondent Meadowfresh and Appellants the Dahlstroms, the
Halls, and Leon Rinehart.
was undisputedly the largest owner of Maple Grove, with at
least a 63% interest in the company and made the largest
capital contribution of all the members. Meadowfresh's
members were the Fultons, the Dahlstroms, and Kyle Bounous.
The Fultons owned approximately 75% of Meadowfresh.
Accordingly, by virtue of their interest in Meadowfresh, the
Fultons had the largest interest in Maple Grove.
and Maple Grove were governed by their respective operating
agreements, which were signed by all of their respective
members. Pursuant to the terms of the Maple Grove Operating
Agreement, Mr. Fulton was the sole manager of Maple Grove.
Likewise, Mr. Fulton was the sole manager of Meadowfresh.
operating agreements provided the manager, Mr. Fulton, with:
the exclusive right, power, authority and responsibility to
manage and operate the business and affairs of the
Compan[ies] and to make all decisions with respect thereto
and enter into transactions on behalf of the Compan[ies] for
apparently carrying on the business of the Compan[ies] and no
Member shall have any right or power to act for or on behalf
of the Compan[ies] or make decisions with respect
Operating Agreements also spelled out the procedure for
calling a meeting of the members. Section 10 of the Operating
Agreements required a "majority in interest" of the
members to be present to achieve a quorum.
Operations of Maple Grove
Grove's main source of revenue came from milk production.
Maple Grove sold its milk to Dairy Farmers of America
("DFA"), which required Maple Grove to designate an
authorized representative. Maple Grove selected its managing
member, Mr. Fulton, an experienced dairy farmer from New
Zealand, as the DFA representative.
addition to being the designated DFA representative for Maple
Grove, Mr. Fulton managed Maple Grove from the fall of 2011
to July 2015, and treated the position as a full-time job,
averaging 60 to 70 hours per week. Mr. Fulton searched for
best practices and handled the finances and performed
compliance work. His wife, Susan Fulton, assisted with
paperwork from the home office. Mr. Fulton regularly
communicated with the other members regarding issues such as
using particular minerals in the feed and the health of the
cows. Mr. Fulton did not make decisions regarding minerals
and animal health unilaterally.
there was never a formal vote for anyone to receive money
from Maple Grove, the members were compensated for providing
services. Curtis Hall, a member of Maple Grove, worked on the
farm daily as an employee of Maple Grove and received a
salary of $45, 000 to $50, 000 a year. Likewise, Kyle
Bounous, a member of Meadowfresh but not Maple Grove, was
also paid for silage purchased from him by Maple Grove. One
year, Mr. Bounous received close to $80, 000 from Maple Grove
for the silage. Leon Rinehart was a member of Maple Grove and
raised some calves for which Maple Grove acknowledged it owed
him. Leon Rinehart's son, Kyle Rinehart, received a
salary while employed by Maple Grove.
Ted and Carol Dahlstrom, members of both Meadowfresh and
Maple Grove, are veterinary doctors and owned The Animal
Clinic of Monett, LLC ("the Animal Clinic"). The
Animal Clinic provided veterinary services and care for the
cows and it billed Maple Grove for those services. The Animal
Clinic charged Maple Grove $483, 979 for services throughout
the years. The Animal Clinic made between 10 and 20 percent
profit on veterinary services to Maple Grove. Dr. Ted
Dahlstrom acknowledged receiving compensation for providing
veterinary services to Maple Grove.
Fulton's Compensation as Manager
Fulton testified that the operating agreement authorized him
to be compensated for serving as manager. Mr. Fulton's
salary for the first 17 to 18 months was $3, 500 per month.
He did not take a draw his first 12 months because he wanted
to make sure the business was profitable. Instead, during
this first year, Mr. Fulton's $42, 000 salary was left in
the company and treated as a capital contribution.
August 2012, Mr. Fulton sent two emails to "[a]ll the
members of Maple Grove and Meadowfresh, plus Tammy and Kyle
Rinehart" explaining he "just wanted them all to
know what [he] was doing and how [his] thought process was
working. And [he] felt like [he] needed to get compensated
for the stuff [he] was doing, at least something[.]" Mr.
Fulton's August 15, 2012 email proposed the following:
a) Compensation for the $14, 000 income negotiated in August
2011 as part of the original purchase deal. This is to be
considered as a "fee" to get business started.
b) Compensation of $3500/month from 11/1/2011 until
31/10/2012 for strategic, financial and planning and
organizational services provided.
c) Shareholders to review the ongoing compensation, i.e.:
from 11/01/2012 at a strategic planning meeting to be
arranged for mid October 2012.
2013, Mr. Fulton wrote to Dr. Ted Dahlstrom and Leon
Rinehart, stating "I write to seek approval (need
majority only) for an increase in my management fee." At
trial, Mr. Fulton explained that he "didn't need
approval, because [he] already had it through the operating
agreement, but what [he] wanted to make sure of was that
people were engaged and connected."
Fulton received no negative feedback or objections regarding
his compensation proposal in the August 2012 emails. In fact,
the Dahlstroms sent an email to Mr. Fulton, on or around May
24, 2013, approving a pay raise. Further, during his tenure
as manager, he never received a single text, e-mail,
document, note or notification at any point in time that the
members had problems with the way he was managing the
November 2012, Mr. Fulton started receiving an actual salary
rather than receiving credit as a capital contribution. Mr.
Fulton set his salary at $114, 000. Mr. Fulton asked for the
increase because the job required more time and management
and more personal capital input than he ever expected. Over
the four years he was at Maple Grove, Mr. Fulton received
total compensation in the amount of $350, 122.
Fulton claimed that his salary as manager was discussed
"at length a lot of times" especially with Mr.
Bounous and the Dahlstroms. These conversations were held
during meetings conducted in Mr. Fulton's home basement.
He further testified, "We had heaps and heaps of
meetings before this whole thing started and continued after
it started." According to Mr. Fulton, Mr. Hall was the
only one who was not informed of Mr. Fulton's pay
Dahlstroms acknowledged that Mr. Fulton would receive a
management fee in a letter they sent to immigration officials
supporting Mr. Fulton's application for a green card:
Now that he is in a position to apply for a green card we
have taken the opportunity to utilize his skills to assist us
improve our business and investment opportunities here in the
United States. . . . A farm we collectively have an
investment share in, will also pay him a management fee that
will grow as the business grows.
Dahlstrom admitted there were no texts, emails, notes or
documentation to prove there was an agreement not to
compensate members for services.
Breakdown in the Relationship
2015, the members of Maple Grove became upset with Mr.
Fulton's rate of compensation. They questioned Mr.
Fulton's authority to pay himself a salary for his
full-time work despite the fact that the other members
received compensation for their services provided to Maple
began to exclude Mr. Fulton from Maple Grove business and
communications, including changing the company's bank
account and loan accounts. On July 3, 2015, there was an
attempt to hold an official meeting of Maple Grove. The
members of Maple Grove did not send notice indicating that
any vote would take place, and Mr. Fulton, the only one
authorized to act on Meadowfresh's behalf, did not
appear. At that meeting, the members voted to remove M r.
Fulton as the manager of Maple Grove. Minority members, the
Dahlstroms and M r. Bounous, purportedly voted on behalf of
also attempted to remove M r. Fulton as Maple Grove's DFA
authorized representative. When that attempt was rejected by
DFA because they did not have Meadowfresh's signature,
Appellants attempted to solve the problem by retroactively
altering various corporate documents to reflect the expulsion
of Meadowfresh as the majority owner of Maple
Consequences and Damages
the meeting, Appellants took actions to prevent Mr. Fulton
from accessing Maple Grove funds and removed his ability to
oversee Maple Grove operations. Appellants failed to pay
Meadowfresh its interest in the company and doubled the other
members' interest in Maple Grove.
minority members redistributed Meadowfresh's membership
interest among themselves, with no compensation to the
Fultons, and gifted to Mr. Bounous, who had previously only
been a member of Meadowfresh and not Maple Grove, a 25%
membership interest in Maple Grove for no consideration or
capital contribution. Although Appellants' actions
purportedly caused a forfeiture of all Meadowfresh's
interest in Maple Grove, they compounded the Fultons'
(the largest owners of Meadowfresh) damages by refusing to
release them from their obligations under personal guaranties
on the debts held by Maple Grove.
result of the actions taken at the July 3, 2015 meeting, Mr.
Fulton was no longer able to manage Maple Grove. Mr. Fulton
was forced to sell some of his shares in his farm in New
Zealand. Mr. Fulton lost his $114, 000 base salary along with
an additional $24, 000 he was receiving for feed. He also
incurred attorney's fees. He received $134, 000 for his
shares of his New Zealand farm but estimated a loss of 50% on
the value of the shares due to the market conditions at the
time in New Zealand. Curtis Hall and Leon Rinehart took over
as purported co-managers of Maple Grove, changed the bank
account from Mr. Fulton being a signatory and without his
knowledge, denying him access to the funds of Maple Grove.
the July 2015 meeting, Mr. Fulton discovered that Appellants
had attempted to kick him out as manager and filed the
underlying lawsuit based on Appellants' actions. After
Respondents filed the underlying lawsuit, Appellants created
a company that did business with Maple Grove called All
American Cattle Leasing, LLC
("AACL").AACL borrowed 2.1 million dollars and
purchased the loans held by Maple Grove; the original loans
were not repaid. Appellants acknowledged that they did this
so that Meadowfresh and the Fultons would remain guarantors
on the notes. The guaranties of debts under these notes were
in proportion to each members' ownership interest.
Accordingly, the Fultons, as owners of a 75% interest in
Meadowfresh, were guarantors of the largest amount of debt.
Appellants acknowledged that they could foreclose on Maple
Grove's assets if they wanted. Appellants wanted the
assets held in a different company other than Maple Grove
because "[t]hat's the only way [Appellants] could
get the assets."
also entered into a lease agreement with Maple Grove where
AACL owned the cattle and leased them to Maple Grove.
AACL's lease agreement with Maple Grove included terms
favorable to AACL. Maple Grove paid the expenses while AACL
got 100% of the proceeds from milk sales. The lease began in
February of 2016 for a period of two years. The lease
agreement provided that 100% of all proceeds earned for milk
production owned by AACL at Maple Grove would be paid to AACL
for the first 12 months. Maple Grove had to pay all health
and maintenance costs of the cows. Accordingly, Maple Grove
had to pay all expenses associated with the cows that it
could not afford to buy, but 100% of all the proceeds from
those cows went to AACL for the first twelve months. Maple
Grove was already a defendant in this lawsuit at the time the
lease was made.
Grove began to fail as a business with a high "cull and
death rate" of the dairy cows. Several AACL cows died in
the first year. The lease agreement provided that any loss
more than 10% is to be reimbursed to AACL. The loss was over
10%. Dr. Ted Dahlstrom admitted that the "cull and death
rate" was high and that it occurred under his watch. In
fact, Maple Grove lost 62% of the AACL herd. Maple Grove had
to cover all expenses, give AACL all proceeds, and reimburse
AACL for the cost of the cows. Maple Grove had not paid all
proceeds for milk production to AACL and Maple Grove had not
reimbursed AACL for the costs of the cattle deaths.
Grove owed AACL $250, 000 under the lease and approximately
another $275, 000 in loans. These are debts on the books of
Maple Grove. Maple Grove only paid AACL $5, 000. AACL had the
ability to foreclose on Maple Grove and all assets owned by
Maple Grove. AACL had no other business other than with Maple
Grove. AACL has never provided written notice of any meeting
and it has never produced any meeting minutes. AACL has no
budgets or corporate books and uses the same email address as
Maple Grove. Maple Grove paid the attorney's fees for
AACL up through June 30, 2017. The attorney's fees
between Maple Grove and AACL were not separated until after
Respondents sent discovery requests regarding attorney's
months after Respondents' filed their civil suit and
approximately three years after Mr. Fulton began receiving
compensation for his work, Dr. Ted Dahlstrom and Kyle
Bounous, on behalf of Appellants, contacted the Barry County
Sheriff's Department and told Detective Evenson their
concerns with Mr. Fulton's compensation. According to Mr.
Bounous, he contacted his personal attorney, Donald Cupps,
regarding Mr. Fulton's compensation before going to the
Sheriff's office. Mr. Bounous told Mr. Cupps he was
concerned about the checks Mr. Fulton had written to himself.
Mr. Cupps told Mr. Bounous to take the information, the
checks, and the operating agreement to the Barry County
Bounous and Dr. Ted Dahlstrom went to the Barry County
Sheriff's Department and met with Detective Evenson. Dr.
Ted Dahlstrom testified at trial that he did not provide
Detective Evenson with all of the details related to Mr.
Fulton's compensation. He testified the information
provided to the detective could be interpreted as false and
that he now interprets it as false. Dr. Ted Dahlstrom
admitted he did not point out the provision in the operating
agreement giving Mr. Fulton sole discretion to pay expenses
and did not mention that they received advice from an
attorney on that same issue the year before. Dr. Ted
Dahlstrom admitted he did not tell the detective about Curtis
Hall receiving a salary or that his veterinary clinic was
paid by Maple Grove. Dr. Ted Dahlstrom testified that he
"regret[ted] not giving all the information to the
based on the information provided to Detective Evenson, the
Barry County Prosecuting Attorney filed a criminal complaint
against Mr. Fulton in May 2016. The criminal complaint
contained one count of Class B felony theft, pursuant to
section 570.030, RSMo Cum. Supp. 2009, and alleged that:
on or about November 30, 2012 . . . the defendant
appropriated funds of a value of at least twenty-five
thousand dollars, which property was owned by Maple Grove
Farms LLC, and the defendant appropriated such property
without the consent of Maple Grove Farms and with the purpose
to deprive them thereof.
funds Appellants alleged Mr. Fulton "stole" were
paid to him as his compensation for his full-time work as
manager of Maple Grove. The probable cause statement in
support of the complaint stated that Mr. Fulton did not have
authorization to pay himself and was based on Appellants'
representations to the Barry County Sheriffs' Department.
charges were filed, Mr. Fulton appeared in Barry County
Circuit Court through counsel where he presented evidence to
the prosecuting attorney that the statements made to the
Sheriff's office by Appellants were false and the subject
of the ongoing civil lawsuit. Mr. Fulton spent $5, 000 in
attorney's fees defending the criminal charges. The Barry
County Prosecuting Attorney voluntarily dismissed the
criminal charges against Mr. Fulton. Detective Evenson
testified (through deposition transcript) that after he
learned about the pending lawsuit, he no longer believed
there was probable cause for filing charges against Mr.
Fultons were devastated and terrified that criminal charges
were filed against Mr. Fulton. Mrs. Fulton testified that it
negatively impacted Mr. Fulton's health. The Fultons felt
uncomfortable, quit attending events they had been invited
to, and were afraid people were talking about them. Mr.
Fulton amended his petition against Appellants to include a
claim for malicious prosecution.
lawsuit alleged nineteen counts arising from the breakdown in
the business relationship among the parties. Respondents
chose not to submit all counts to the jury. The issues
before the jury were:
(1) Mr. Fulton's claims (Count XVI) against the
Dahlstroms, the Halls, Leon Rinehart, and Bounous for
(2) Meadowfresh's (Count III) claims against Maple Grove,
the Dahlstroms, the Halls, Leon Rinehart, and Bounous for
breach of contract;
(3) Meadowfresh's and the Fultons' claims (Count IX)
against Maple Grove, the Dahlstroms, the Halls, Leon
Rinehart, Bounous, and AACL for civil conspiracy;
(4) Mr. Fulton's claims (Count IV) against Maple Grove,
the Dahlstroms, the Halls, Leon Rinehart, and Bounous and for
breach of contract;
(5) Mr. Fulton's claims (Count VIII) against Maple Grove,
the Dahlstroms, the Halls, Leon Rinehart and Bounous for
tortious interference with a contract;
(6) The Fultons and Meadowfresh's claims (Count X) for
piercing the corporate veil of the Maple Grove Appellants,
Meadowfresh Appellants, and AACL;
(7) Maple Grove's claim against Mr. Fulton for
(8) Maple Grove's claim against Mr. Fulton for
(9) whether Respondents Meadowfresh and Mr. Fulton were
entitled to attorney's fees.
to trial, the trial court entered partial summary judgment on
Count I of Respondents' Fifth Amended Petition in
Respondents' favor as to whether a quorum was present at
the July 3, 2015 meeting, whether Mr. Fulton had been removed
as manager, and whether Meadowfresh had been expelled as a
member of Maple Grove. The court held all actions
"purported to have been taken by the company at that
meeting are necessarily void and of no effect."
Appellants did not contest the trial court's entry of
summary judgment on this issue and admitted all facts upon
which the summary judgment was based.
two-week jury trial was conducted on the remaining issues.
Respondents and Appellants (except Carol Dahlstrom and Lisa
Hall) testified, along with three expert witnesses on behalf
of Respondents. After Respondents and Appellants presented
their evidence, the trial court entered a partial directed
verdict as to the element of breach on Respondents'
breach of contract claim based on its prior entry of summary
judgment finding that Appellants' conduct in conducting
the July 3, 2015 meeting in the absence of a quorum was in
violation of the operating agreement.
jury found in favor of Respondents on every count submitted,
as well as Appellants' counterclaim. The jury also found
that Appellants created and misused AACL, and pierced the
corporate veil as to that company.
Appellants' claim multiple allegations of error on
appeal, the gravamen of their primary and first argument
challenges the trial court's grant of a partial directed
verdict on the issue of whether Appellants' breached the
Maple Grove Operating Agreement by conducting the July 3,
2015 meeting without a quorum. The trial court's basis
for entry of partial directed verdict was its entry of
summary judgment on that issue, which Appellants do not
challenge. Instead, Appellants argue that because the trial
court entered summary judgment finding that a quorum was not
achieved as required by the operating agreement, it was
impossible for them to breach the contract because their
actions were "void and ...