Sunbelt Environmental Services, Inc. v. Rieder's Jiffy Market, Inc., Charles F. Rieder, Trustee of the Charles F. Rieder Trust dated the 19th day of April, 1993, and Ozark Mountain Associates, Inc.

Rieder's Jiffy Market, Inc. ("Jiffy Market"), Charles F. Rieder, as Trustee of the Charles F. Rieder Trust dated April 19, 1993 ("Trustee" ;), and Ozark Mountain Associates, Inc. ("OMA") appeal from a November 10, 2003, judgment granting the motion for creditor's bill filed by Sunbelt Environmental Services, Inc. ("Sunbelt"). Within the judgment, the trial court pierced the corporate veil of Jiffy Market and OMA, and declared that Jiffy Market, OMA, and Trustee were "deemed to be one and the same."

Jiffy Market, OMA, and Trustee raise three points in this appeal. Points I and II are similar and assert that the trial court erred in its interpretation and application of section 428.024, RSMo 2000, and in assessing liability against Trustee and OMA, respectively, because there was insufficient evidence to pierce the corporate veil and assess the liability of Jiffy Market against them. In Point III, Trustee argues that the trial court was without jurisdiction to enter judgment against him because the pleadings and allegations filed before the court sought judgment against Charles Rieder individually and not as Trustee.

Background and Procedural History
On April 17, 1997, Sunbelt filed an action for breach of contract against Jiffy Market and Trustee following a dispute over payment for environmental remediation work after a gasoline spill. The jury returned a verdict in favor of Sunbelt on its breach of contract claim against Jiffy Market for $67,524.20. On Sunbelt's quantum meruit claim against Trustee, the jury returned a verdict in Trustee's favor.

In February 1998, an execution was issued on the above judgment against the property and assets of Jiffy Market. The execution was returned unsatisfied by the Taney County Sheriff. On April 3, 1998, Sunbelt sent out a writ of garnishment, which was returned showing no assets under Jiffy Market.

On July 14, 1998, Sunbelt filed a motion for creditor's bill against Jiffy Market, Trustee, and OMA. Within the motion, Sunbelt alleged that the assets of Jiffy Market had been fraudulently transferred to OMA in an attempt to defraud, hinder, or delay Jiffy Market's creditors and that Charles Rieder had formed both Jiffy Market and OMA for the same reason. Sunbelt's prayer for relief asked the court to declare "that all assets in possession of [Jiffy Market, OMA,] or Charles Rieder personally are subject to execution to satisfy" the previous judgment against Jiffy Market.
Following a hearing on the motion for creditor's bill, the trial court filed its judgment on February 21, 2002. The trial court pierced the corporate veil of Jiffy Market and OMA and found that Jiffy Market, OMA, and Charles Rieder were "one and the same."

That judgment was appealed to this Court. See Sunbelt Envtl. Serv., Inc. v. Rieder's Jiffy Mkt., Inc., 106 S.W.3d 556 (Mo.App. 2003). The appeal was dismissed based on this Court's determination that the trial court's order was not a final judgment because the judgment did not dispose of the claim against Trustee; "[i]n short, the judgment does not mention Trustee." Id. at 557.

Following the issuance of the opinion referenced above, on November 10, 2003, the trial court entered a judgment in which it pierced the corporate veil of Jiffy Market and OMA, and declared that Jiffy Market, OMA, and Trustee were "deemed to be one and the same." The judgment further stated, "The assets of said corporate entities and Charles F. Rieder, Trustee are subject to execution to satisfy the judgment entered herein."

This appeal followed.

Discussion
As this was a judge-tried case, we will affirm the trial court's judgment 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. Feinberg v. Feinberg, 924 S.W.2d 328, 329 (Mo.App. 1996). Due deference is given to the trial court's ability to judge the credibility of the witnesses and evidence before it. Id. Further, we will view the evidence and any reasonable inferences in the light most favorable to the prevailing party and disregard all contradictory evidence. Id.
Jiffy Market, Trustee, and OMA raise three points on appeal. We find it most logical to address Point III first. Following that analysis, we will discuss Points I and II together.

Point III -- Trial court without jurisdiction to enter judgment against Trustee

Within this point it is argued that the trial court erred in assessing liability against Trustee because the trial court was without jurisdiction to enter judgment against him. The point further alleges that Trustee was without notice of the claims against him because, although he was named in the case caption as a party, Sunbelt's motion for creditor's bill made no allegations nor any prayer of relief against Trustee, as the pleadings and allegations filed before the trial court sought judgment only against Charles Rieder personally.

Trustee argues that the judgment here exceeded Sunbelt's prayer for relief in its motion for creditor's bill, as the pleadings did not ask for relief against Trustee. Trustee cites to specific cases for his assertion, including one that notes the well-established precedent that the judgment may not exceed the prayer. First Missouri Bank of St. Francois Co. v. Patterson, 696 S.W.2d 800, 801 (Mo.App. 1985). However, as indicated in that case, that precedent holds when the judgment is a judgment by default, which we did not have in the case at bar. Id.

It is generally true that, although the powers of a court of equity are broad, those powers "are limited to the claim for relief and issues made by the pleadings." Ruestman v. Ruestman, 111 S.W.3d 464, 477 (Mo.App. 2003) (internal quotation omitted). It is also true, however, that issues not raised by the pleadings may be tried by express or implied consent of the parties and, under those circumstances, such issues shall be treated as if they had been raised in the pleadings. Wallace v. Grasso, 119 S.W.3d 567, 575 (Mo.App. 2003). Further, if evidence is introduced on an issue without objection, the pleadings may be amended by implied consent. State ex. Rel Moore v. Brewster, 116 S.W.3d 630, 639 (Mo.App. 2003).

During its opening statement, Sunbelt's counsel indicated that he intended to show that the conveyance of the assets from Jiffy Market to OMA was a fraudulent conveyance. Sunbelt's counsel also stated that Sunbelt was asking the trial court to find that Jiffy Market and OMA were the alter egos of each other and to pierce the corporate veil to allow Sunbelt "to collect [its] judgment against not only [OMA], but also Mr. Rieder individually . . . as the controlling entity -- person behind these corporations."

All parties agree the trust owns the property on which the convenience store (when run as either Jiffy Market or OMA) stands. In addition, the trust owns the fixtures and "hard assets" associated with operating the business; Jiffy Market and OMA were formed as the operating corporations for the business and therefore, did not "own much of anything."

Trustee admitted that he is grantor, as well as trustee, of the trust. According to Trustee, he was the sole shareholder, officer, and director of Jiffy Market, and that the only difference in the business after the dissolution of Jiffy Market and formation of OMA was that he and his wife, to whom he was not married when Jiffy Market was formed, were the shareholders of OMA.

Trustee was called as a witness by Sunbelt. During cross-examination by Trustee's attorney, the following exchange occurred:

Q: Charles, you -- you understand that this creditor's bill was brought by Sunbelt against the trust?

A: Yes.

Q: Did -- This transaction [transfer of assets from Jiffy Market to OMA], has the trust benefited in any fashion?

A: No.

Q: It -- It was also brought -- The creditor's bill was also brought against you personally. Did you personally benefit in any fashion?

A: No.

Because a trust is not a legal entity, and the trustee is the legal owner of the trust property, if a suit is brought that involves the trust property, it is the general rule that all trustees and beneficiaries are considered necessary parties. Rosenfeld v. Thoele, 28 S.W.3d 446, 451 n.8 (Mo.App. 2000). Given that general rule, and the evidence before the trial court, including the questioning of Trustee by Trustee's own counsel at the hearing, Trustee's argument that he had no notice of any claim fails.

A court of equity, although restrained from deciding an unpleaded fact issue, may grant any relief that is warranted by the pleaded issues regardless of whether or not a particular issue was included in the prayer for relief. Fienberg, 924 S.W.2d at 330. The contemporary view of pleading is that the prayer is not part of the petition. Id. Therefore, a trial court may grant relief absent an express prayer when such relief is fully supported by the facts that were either pled or tried by consent. Id.

Based on the analysis presented in the cited cases, and given the evidence presented as indicated above, there was sufficient evidence for the trial court to include a determination regarding Trustee in its judgment. Point III is denied.

Point I -- Insufficient evidence for trial court to assess liability against Trustee

Point II -- Insufficient evidence for trial court to assess liability against OMA

Since the evidence presented and the necessary analyses are so intertwined as they relate to Points I and II, we will address the two points together. Within Point I, it is argued that the trial court erred in its interpretation and application of section 428.024, RSMo 2000, as well as common law related to a creditor's bill, in assessing liability against Trustee and obligating him to pay the Sunbelt judgment for services provided to Jiffy Market. Trustee contends there was insufficient evidence to pierce the corporate veil and assess to Trustee the liability of Jiffy Market. Point II makes the same arguments, only as it relates to OMA, rather than Trustee.

All parties agree that section 428.024, RSMo 2000, is our starting point for the analysis of Points I and II. Under section 428.024, RSMo 2000, a transfer "is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation: (1) [w]ith actual intent to hinder, delay, or defraud any creditor or the debtor . . . ." section 428.024.1, RSMo2000; see also State ex rel. Missouri Highway and Transp. Comm'n v. Overall, 53 S.W.3d 222, 226 (Mo.App. 2001).

Section 428.024.2, RSMo 2000, contains eleven factors that may be given consideration in determining actual intent under section 428.024.1, RSMo 2000. In its judgment, the trial court found six of those factors applicable in the case.(FN1)

The transfer was to an insider (factor 1);

Mr. Rieder retained control of the property transferred (factor 2);

Prior to the transfer, the debtor had been sued (factor 4);

Substantially all assets were transferred (factor 5);

Less than reasonably equivalent value was received (factor 8);

The debtor was or became insolvent (factor 9); and

The transfer occurred shortly after a substantial debt was incurred (10)

The judgment is affirmed in favor of Defendent for $67,524.20

Unavailable

Unavailable

Reported by L. Hargraves