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Sheffield v. Matlock

Court of Appeals of Missouri, Southern District, First Division

November 13, 2019

MICHAEL SHEFFIELD, Plaintiff-Appellant,

          APPEAL FROM THE CIRCUIT COURT OF GREENE COUNTY Honorable Michael O'Brien Hendrickson


          GARY W. LYNCH, P.J.

         Michael Sheffield ("Appellant") appeals the trial court's judgment dismissing his claims against Greg Matlock, Husch Blackwell, L.P. ("Husch"), Cory Collins, and Shelly Rosenfelder (all four collectively "Respondents" and Husch, Collins, and Rosenfelder sometimes collectively "Respondent Attorneys"). Appellant argues: (1) the trial court erred in dismissing his claims against Respondents based on claim preclusion because Respondents were not parties to Greene County Circuit Court case number 1531-AC05819-01 ("Prior Case"); (2) the trial court erred in declaring that the withdrawal of his "[Rule] 52.11 Motion" in Prior Case was ineffective; (3) the trial court erred in dismissing his claims against Respondents for lack of standing and failure to state a claim; (4) the trial court erred when it ruled Respondent Attorneys were immune from claims that they assisted Matlock in violating the Foreclosure Consulting Act ("FCA")[1]; and (5) the trial court erred in denying Appellant leave to amend because it "allow[s] criminals to evade justice." Finding no merit in Appellant's fourth and fifth points against Respondent Attorneys and that the resolution of those two points is dispositive of this appeal as to them, we affirm the trial court's judgment dismissing Appellant's claim in count two of his petition against Respondent Attorneys. Because Appellant has standing under section 407.943 to bring his FCA violation claim against Matlock as alleged in count one of his petition and Matlock's res judicata (claim preclusion) affirmative defense asserted in his motion to dismiss is not established by the record on appeal, we reverse the trial court's judgment as to Appellant's count one claim against Matlock and remand the case back to the trial court for further proceedings.

         Allegations in Appellant's Petition and Procedural Background

         Appellant's petition alleges the following. In 2013, Appellant hired Alec and Lauren Financial Investments, LLC ("A & L"), a Missouri limited liability company, to assist him in halting the foreclosure of his home. Matlock is A & L's managing member. A & L, acting through Matlock, agreed to assist Appellant by purchasing the home from Appellant for $2, 066.97 and selling it back to him for $9, 857.04, plus interest. A & L hired Respondent Attorneys to draft the documents for the transaction. A & L, represented by Respondent Attorneys, later filed Prior Case for rent and possession, seeking to evict Appellant from the home for failing to pay the amount owed to A & L. In that case, Appellant counterclaimed against A & L for violating the FCA and obtained a judgment against A & L on that claim.

         Thereafter, Appellant filed this case against Respondents, alleging "Unlawful Foreclosure Consulting" by Matlock (Count 1) and "Accessory Liability" against Respondent Attorneys (Count 2). The first count of Appellant's Petition against Matlock alleges, among other matters:

Greg Matlock, in the course [sic] scope of his agency for [A & L], represented that he could stop the foreclosure on [Appellant's] home, if [Appellant] borrowed 2066.97 from [A & L]. . . .
. . . .
Greg Matlock, in the course and scope of his agency for [A & L], performed foreclosure consulting services as defined by the Missouri Foreclosure Consultant Act. RSMo 407.935 et. Seq. Those services include planning a transaction to halt the foreclosure pending on [Appellant's] home, representing to [Appellant] that the transaction it planned and proposed would halt the foreclosure, having deeds and contracts drawn up, and appraisals made. Greg Matlock hired attorneys and a title company to aid him in planning the transaction, drawing up the contracts, performing the closing and to perfect [A & L]'s interest by ejecting [Appellant] from his home. . . .
. . . .
On March 3, 2017, the Court, in [Prior Case], found that, through actions of its agent Greg Matlock, that [A & L] acted as a foreclosure consultant, and violated the [sic] Rsmo 407.940 in "one or more" ways, finding for [Appellant] on Count II of his amended Counterclaim. As such Greg Matlock is a foreclosure consultant under Rsmo 407.935 and has performed an illegal and criminal act under Rsmo 407.940.

The second count of Appellant's Petition against Respondent Attorneys alleges, among other matters:

Greg Matlock hired [Husch] to aid in providing foreclosure consulting services for [A & L]. Those services included planning the transaction and drafting the documents that evidence the September 12, 2014 transaction at issue here. Defendant Cory L. Collins, in the course and scope of his employment with [Husch], planned and drafted the documentation for the transaction of September 12, 2014.
. . . .
Also on December 2, 2015, Ms. Shelly Rosenfelder, acting in the course and scope of her employment with [Husch], despite personally being put on notice that she was proceeding on a voided contract, aided Greg Matlock and [A & L], by ejecting [Appellant] from his home, thereby perfecting [A & L]'s unlawful interest in [Appellant's] home in [Prior Case].
. . . .
While attorneys are exempted from the [FCA], they may not help others violate the act. Per Rsmo 562.046. "It is no defense to any prosecution for an offense in which the criminal responsibility of the defendant is based upon the conduct of another that … (2) The defendant does not belong to that class of persons who was legally capable of committing the offense in an individual capacity."
For aiding [A & L] by planning the transaction, executing the transaction, and ultimately perfecting [A & L']s unlawful interest by ejecting [Appellant] from his home, [Respondent Attorneys] are all liable to [Appellant] by operation of RSMo 562.041 as accessories to the acts of [A & L] and Greg Matlock, and are jointly and severally liable to [Appellant] with [A & L] and Greg Matlock.

         Respondent Attorneys filed a motion to dismiss Appellant's petition. In their motion, they contend that Appellant's claim against them should be dismissed because it fails to state a claim for which relief could be granted for three reasons: (1) the claim was precluded by Prior Case (referred to as the "rule against splitting causes of action[[2] and the doctrine of res judicata"); (2) section 562.041 is a criminal statute and does not give rise to a private civil claim (referred to as lack of "standing"); and (3) "absent exceptional circumstances, an attorney is not liable for an injury to a nonclient arising out of the representation of the client[.]" As to the last reason, the motion further asserts that Appellant's petition does not "allege any conduct constituting the exceptional circumstances that would allow [Appellant] to assert a claim against them."

         Matlock also filed a motion to dismiss, claiming that Appellant's claim against him was barred by Prior Case and the application of "the rule against splitting causes of action[[3] and the doctrine of res judicata" and that Appellant "does not have standing or authority to assert claims of criminal liability."

         The trial court thereafter entered judgment sustaining Respondents' motions to dismiss on the grounds that Appellant's claims were litigated in Prior Case and, therefore, Appellant was precluded from litigating those claims in this case and that Appellant "cannot state a claim against [Respondents] because it is well established that attorneys are not liable to third parties for actions taken during the course of representation." Within thirty days thereafter, Appellant filed a motion to set aside the judgment and for leave to file an amended petition. The trial court denied both motions, and this appeal timely followed. Additional facts, as required and related to particular points, will be set out in our discussion of Appellant's points relied on.

         Standard of Review and Applicable Legal Principles

A motion to dismiss for failure to state a cause of action is solely a test of the adequacy of the plaintiff's petition. It assumes that all of plaintiff's averments are true, and liberally grants to plaintiff all reasonable inferences therefrom. No attempt is made to weigh any facts alleged as to whether they are credible or persuasive. Instead, the petition is reviewed in an almost academic manner, to determine if the facts alleged meet the elements of a recognized cause of action, or of a cause that might be adopted in that case.

Bosch v. St. Louis Healthcare Network, 41 S.W.3d 462, 464 (Mo. banc 2001) (quoting Nazeri v. Missouri Valley College, 860 S.W.2d 303, 306 (Mo. banc 1993) (internal citations omitted)).


         For ease of analysis, we address Appellant's points out of order.

         Dismissal of Count Two against Respondent Attorneys

         In his fourth point, Appellant claims the trial court erred in dismissing his claim against Respondent Attorneys because the second count in his petition against them pleaded an "exceptional act" exception to the general rule that "lawyers are not liable to third parties for the acts of their clients or for the actions of the lawyer in the ordinary course of the practice of law."

         Generally, an attorney is not liable to a third party who is not his or her client because the attorney is not in an attorney-client relationship with the third party." Roth v. La Societe Anonyme Turbomeca France, 120 S.W.3d 764, 776 (Mo.App. 2003) (citing Macke Laundry Serv. Ltd. P'ship v. Jetz Serv. Co., Inc., 931 S.W.2d 166, 176- 77 (Mo.App. 1996)). This general rule arises out of "the attorney's fiduciary duty to the client, and the public policy that attorneys be able to discharge that duty by freely using those procedures that are necessary to competently represent their clients unfettered by fear of personal liability." Macke, 931 S.W.2d at 177.

         One exception to this general rule, which has come to be known as the "exceptional circumstances" rule, are cases involving fraud, collusion, or malicious or tortious acts by the attorney. Donahue v. Shughart, Thomson & Kilroy, P.C., 900 S.W.2d 624, 627 (Mo. banc 1995); Macke, 931 S.W.2d at 177. "Although the rule states that an attorney may be liable to a nonclient when the attorney has committed a 'tortious act,' not all tortious conduct is encompassed by the rule. The rule is limited to intentional torts." Macke, 931 S.W.2d at 178 (citing Mark Twain Kansas City v. Jackson, 912 S.W.2d 536, 538 (Mo.App.1995)). Because "the client's misconduct cannot be imputed to the attorney[, ]" Macke, 931 S.W.2d at 176 (citing Henderson v. Cape Trading Co., 316 Mo. 384, 289 S.W. 332, 335 (1926)), this rule necessarily focuses only upon the attorney's conduct.

         The second count of Appellant's petition alleges that Respondent Attorneys conducted themselves in two respects: first, they "planned and drafted the documentation for the transaction of September 12, 2014[, ]" and, second, they represented their client in court "by ejecting [Appellant] from his home[, ]" while on notice from Appellant that Appellant claimed that the underlying ...

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