Scanwell Freight Express STL, Inc., Respondent, v. Stevie Chan and Dimerco Express (U.S.A.) Corp., Appellants.

This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court. Opinion Missouri Court of Appeals Eastern District Case Style: Scanwell Freight Express STL, Inc., Respondent, v. Stevie Chan and Dimerco Express (U.S.A.) Corp., Appellants. Case Number: ED83035 Handdown Date: 03/30/2004 Appeal From: Circuit Court of St. Louis County, Hon. John F. Kintz Counsel for Appellant: James W. Erwin, Mary C. Bonacorsi and Mark L. Brown Counsel for Respondent: Charles A. Seigel III Opinion Summary:

Scanwell Freight Express STL, Inc, brought this underlying action against Stevie Chan for breach of fiduciary duty and Dimerco Express (U.S.A.) Corp. for conspiracy to breach fiduciary duty. Following a jury trial, Scanwell was awarded $54,000 in damages from Chan and $254,000 from Dimerco. Chan and Dimerco raise seven points on appeal, claiming, inter alia, prejudicial error in instructing the jury. REVERSED AND REMANDED. Division Five holds: The court failed to instruct the jury properly regarding the definition of "fiduciary duty." Because the definition of "fiduciary duty" was improper, the other complained-of jury instructions constituted roving instructions because they failed to give guidance to the jury. Citation: Opinion Author: George W. Draper III, Judge Opinion Vote: REVERSED AND REMANDED. Sullivan, C.J., and Russell, J., concur. Opinion: Scanwell Freight Express STL, Inc. (hereinafter, "Scanwell") brought this underlying action against Stevie Chan (hereinafter, "Chan") for breach of fiduciary duty and Dimerco Express (U.S.A.) Corp. (hereinafter, "Dimerco") for

conspiracy to breach fiduciary duty. Following a jury trial, Scanwell was awarded $54,000 in damages from Chan and $254,000 from Dimerco. Chan and Dimerco appeal. We reverse and remand. Scanwell, a freight forwarding business, hired Chan in April 1996 to be the general manager for its Saint Louis office. Chan was an at-will employee, and she was not required to sign a non-compete agreement. Chan effectively ran the Saint Louis office for approximately five years. Effective March 1, 2001, Chan resigned from her position with Scanwell. Due to Chan's resignation, Scanwell issued notice to its Saint Louis employees that the Saint Louis office would be closed as of April 1, 2001, and the entire staff would be laid off. Dimerco, Scanwell's competitor, opened its Saint Louis office approximately one month after Chan resigned from Scanwell. Dimerco opened its office with Chan as its general manager. Additionally, Dimerco operated in the same location as Scanwell previously occupied, employed the same employees as Scanwell had, and used the same telephone number. Scanwell filed suit against Chan for breach of fiduciary duty and against Dimerco for conspiracy to breach fiduciary duty. A jury trial was held in March 2003. The jury returned its verdict in favor of Scanwell, assessing $54,000 in damages against Chan and $254,000 in damages against Dimerco. Chan and Dimerco raise seven allegations of error on appeal. However, we choose only to discuss the errors relating to the jury instructions because they present reversible error. Chan and Dimerco claim the trial court erred in instructing the jury by refusing to submit Instruction 9A, and in denying their motion for new trial. Chan and Dimerco believe the submitted jury instruction misstated Missouri law on the issue of fiduciary duty in that merely "reposing trust and confidence in another" does not create a fiduciary duty unless the person alleged to have breached the duty gains superiority and influence over the other. We agree. The trial court's failure to tender an instruction to the jury will not be disturbed on appeal unless the trial court abused its discretion. Hampton v. Jecman , 50 S.W.3d 897, 901 (Mo. App. W.D. 2001). In order for this Court to reverse a jury verdict on the grounds of instructional error, Chan and Dimerco must show the instruction: (1) misdirected, misled, or confused the jury; and (2) resulted in prejudice to them. Holder v. Schenherr , 55 S.W.3d 505, 507 (Mo. App. W.D. 2001). Both Chan and Dimerco, and Scanwell presented definitions of "fiduciary duty" to be included as an instruction to the jury as a non-MAI instruction. The trial court rejected Chan and Dimerco's submission and accepted Scanwell's. The submitted instruction stated, "A fiduciary relationship is established when one reposes trust and confidence in another in the handling of certain business affairs." In contrast, the proposed instruction read, "A fiduciary duty of

loyalty arises where one party places trust in another so that the latter gains superiority and influence over the former or, as pertains to confidential information, when an employee acquires confidential information of his [sic ] employer in such a way that he [sic ] must have know of its confidential nature." There are not universal definitions which apply to every situation; hence, ultimate facts are determined on an individual basis. Moore ex rel. Moore v. Bi-State Development Agency , 87 S.W.3d 279, 293 (Mo. App. E.D. 2002) (citing Stalcup v. Orthotic & Prosthetic Lab, Inc. , 989 S.W.2d 654, 658 (Mo. App. E.D. 1999)). "The test is whether the instruction follows the substantive law and can be readily understood by the jury." Moore, 87 S.W.3d at 293 (citing M.C. v. Yeargin , 11 S.W.3d 604, 616 (Mo. App. E.D.1999)). Scanwell argues its submitted definition was free from argument, easily understood, and taken directly from Lesh v. Lesh , 718 S.W.2d 529 (Mo. App. E.D. 1986) (requiring the jury to find the ultimate fact of whether the defendant gained superiority over the individual in an undue influence case). (FN1) However, "[w]hen breach of fiduciary duty is asserted as a tort claim, the proponent must establish that a fiduciary duty existed between it and the defending party, that the defending party breached the duty, and that the breach caused the proponent to suffer harm." Shervin v. Huntleigh Securities Corp. , 85 S.W.3d 737, 740 (Mo. App. E.D. 2002) (citing Zakibe v. Ahrens & McCarron, Inc. , 28 S.W.3d 373, 381 (Mo. App. E.D. 2000)). Some fiduciary relationships, like the attorney-client relationship, arise as a matter of law. Shervin , 85 S.W.3d at 740. Other fiduciary relationships may arise due to special circumstances when one party places trust in another party so that "the latter gains superiority and influence over the former." Id . at 741. Since Chan's relationship was not a fiduciary relationship as a matter of law, the jury needed to determine whether she gained some superiority and influence over Scanwell that created a fiduciary relationship due to special circumstances. It is clear the submitted instruction misled the jury as it did not establish the complete definition of the formation of a fiduciary duty. Without the proper definition, the jury could determine improperly a fiduciary relationship arose merely because Scanwell trusted Chan with its business affairs. This resulted in prejudice because the jury could impose a duty upon Chan which does not exist in law. By failing to fully instruct the jury on the definition of a fiduciary duty, the trial court abused its discretion in submitting Instruction 9 and refusing to submit the entire definition of fiduciary duty. (FN2) In another point on appeal, Chan and Dimerco aver the trial court erred by refusing to submit other proffered jury instructions and in denying their motion for new trial. Chan and Dimerco believe that the submitted Instructions 7(FN3) and 12, (FN4) the verdict directors, contained improper "roving commissions." A jury instruction becomes a "roving commission" when it assumes a disputed fact or proffers an abstract legal

question allowing the jury "to roam freely through the evidence and choose any facts which suited its fancy or its perception of logic" and impose liability. Seitz v. Lemay Bank and Trust Co. , 959 S.W.2d 458, 463 (Mo. banc 1998). If an instruction fails to notify the jury of "what acts or omissions of the party, if any, found by them from the evidence, would constitute liability, then it may be considered a roving commission." Moore, 87 S.W.3d at 293. It is axiomatic these instructions did not assist the jury in making its decision because the underlying definition of "fiduciary duty" was incorrect. The instructions also seek a finding that Chan breached her "duty of loyalty" to Scanwell. There was no definition of "duty of loyalty" submitted to the jury. Further, by using the word "including" but not limiting it to a specific series of facts, the instructions allowed the jury to search the entire record for any fact, and it was not limited to the elements of the alleged tort. Therefore, by failing to instruct the jury on the proper definition upon which to impose liability and failing to present the specific facts which could constitute liability, these instructions allowed the jury to speculate regarding potential liability. These instructions constituted a roving commission and misdirected, misled, and confused the jury. The jury verdict is reversed, and the cause is remanded for a new trial. Footnotes: FN1. The language in Lesh is taken from Davis v. Pitti, 472 S.W.2d 382 (Mo. 1971). Pitti is an undue influence case. Under its factual scenario, Pitti resolved the initial inquiry of whether or not a confidential relationship existed between the parties stating, a "confidential relationship exists when one relies upon and trusts another in regard to the handling of property and business affairs, thus creating some fiduciary obligation." Pitti , 472 S.W.2d at 387. Similarly, Pitti relies on three additional undue influence cases which all attempt to answer whether a confidential relationship existed between a decedent and beneficiaries. See Flynn v. Union National Bank of Springfield , 378 S.W.2d 1 (Mo. Spring. Dist. 1964); Wilhoit v. Fite , 341 S.W.2d 806 (Mo. 1960); Walton v. Van Camp , 283 S.W.2d 493 (Mo. 1955). FN2. Our rejection of Scanwell's Instruction 9 should not be perceived as an implicit acceptance of Chan and Dimerco's proffered instruction on fiduciary duty. FN3. Instruction 7 states, "Your verdict must be for [Scanwell] on its claim against [Chan] for breach of fiduciary duties if you believe: First [Chan], the General Manager of [Scanwell], owed a duty of loyalty to [Scanwell], and Second, during her employment with [Scanwell], [Chan] made arrangements to have [Dimerco] take over [Scanwell's] business operation including securing [Scanwell's] business lease for [Dimerco], disclosing confidential information of [Scanwell] to [Dimerco], and Third, in so acting, [Chan] breached a duty of loyalty owed to [Scanwell], and Fourth, as a direct result of [Chan's] conduct [Scanwell] was harmed. FN4. Instruction 12 states, "Your verdict must be for [Scanwell] on its claim against [Dimerco] for conspiracy to breach fiduciary duties if you believe: First, [Dimerco] and [Chan] entered into an agreement for [Chan], while employed by [Scanwell], to make arrangements for Dimerco to take over [Scanwell's] business operation including securing [Scanwell's] business lease for [Dimerco], disclosing confidential information of [Scanwell] to [Dimerco], and Second, [Dimerco] and [Chan] entered into the agreement for the purpose of interfering with [Scanwell's] business operations or obtaining [Scanwell's] business for the use of [Dimerco], and Third, [Dimerco] and [Chan] carried out their agreement, and Fourth, as a direct result of [Dimerco and Chan] carrying out the agreement [Scanwell] was harmed. Separate Opinion:

None This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court.