Forum non conveniens dismissal reversed by Court of Appeals

Summary

• Missouri Court of Appeals reversed a circuit court’s forum non conveniens dismissal.
• Defendants failed to present sufficient evidence showing Missouri was a seriously inconvenient forum.
• The dispute involves ownership and control of Missouri and Texas commercial properties.
• The appellate court held that forum non conveniens factors did not strongly favor dismissal.

Where the defendants failed to carry their burden of presenting evidence demonstrating the forum non conveniens factors their motion should have been denied, the Missouri Court of Appeals Eastern District ruled on May 19, reversing dismissal.

James B. Smith held the majority ownership (51 percent) of Miramar Financial Holdings, a Delaware limited liability company, with the remaining ownership held by Brent Kreke, Michael Hall and Jason Schmuck.

The company owned several subsidiaries that conduct business throughout the United States, including Missouri, Illinois and Texas.

Hall presented to the principals an opportunity to buy a property in Wentzville. Smith formed RBCD Ventures, a Texas limited liability company in which he was the sole member, and proposed that RBCD purchase the Wentzville property.

Smith explained that after the purchase, RBCD would transfer the ownership to the Miramar principals and management company. Hall, Kreke and Schmuck agreed and RBCD acquired the Wentzville property in December 2020 with Smith using his personal line of credit.

Afterward, Smith informed Miramar it needed to secure above-market leases on the Wentzville property to meet the building’s appraised value so he could secure a mortgage loan; he emailed to say, “As soon as I get my money back I promise to change the ownership!”

Smith’s line of credit was repaid and he emailed the principals again about changing the ownership. The parties engaged in a similar deal for a property in Texas, with Smith forming another Texas LLC, WBB.

In 2024, Miramar and Smith entered into a purchase agreement to acquire Smith’s ownership interest in Miramar. The buyout stated it was governed by Delaware law and included promissory notes stating that Texas law governed.

Miramar, the subsidiaries, Hall, Kreke and Schmuck then sued Smith, RBCD and WBB in Missouri state court, alleging breach of fiduciary duty, fraud and declaratory judgment or quiet title as to the two properties.

The defendants moved to dismiss the action for forum non conveniens and the circuit court granted the motion. The plaintiffs appealed.

Joined by Judges Michael S. Wright and Virginia W. Lay, Judge Philip M. Hess reversed. Although the circuit court appropriately identified and applied the burden of proof when examining the forum non conveniens factors, the court held that the defendants failed to carry their burden of presenting evidence demonstrating the factors strongly favored dismissal.

The defendant has the burden of establishing all factors supporting a claim that a Missouri court is an inconvenient forum, the court explained, and must present evidence, not mere assertions, regarding the relevant factors.

Although the list is non-exclusive, the six factors that must be weighed are the place of accrual of the cause of action; location of witnesses; the residence of the parties; any nexus with the place of suit; the public factor of the convenience to and burden upon the court; and the availability to plaintiff of another court with jurisdiction of the cause of action which affords him a forum for his remedy.

The court addressed each factor in turn.

Disagreement existed between the parties about where the causes of action accrued, as well as whether Smith ever traveled to Wentzville and if the Miramar board meetings occurred in Texas. The circuit court misapplied the law when considering this factor and finding it weighed in favor of dismissal, the court found, as this stage of proceedings compelled the court to resolve the conflicts in Miramar’s favor.

Turning to the location of witnesses, the court noted they were located in Florida, Illinois, Missouri, Texas and Vermont, requiring travel wherever the action was brought, so this factor did not weigh heavily in favor of dismissal.

The court reached a similar conclusion with the residence of parties factor, despite the defendants’ argument that none of the parties resided in Missouri. The record reflected the subsidiaries conduct business in Missouri and all but one are registered as foreign corporations to do business in Missouri.

“Defendants have not presented substantial evidence clearly demonstrating they, Miramar, or the subsidiaries have ‘so limited their Missouri operations that they may not be considered Missouri residents,’” the court said.

As for a nexus with Missouri, the plaintiffs did not challenge this factor on appeal, leaving the circuit court’s holding that it weighed in favor of dismissal in place.

The public factor of convenience to and burden upon the court factor did not weigh heavily in favor of dismissal, the court said, unpersuaded by the defendants’ contention that the circuit court would be burdened by having to conduct numerous conflicts of law analyses and forced to apply the law of multiple jurisdictions.

“‘Missouri courts are capable of applying the laws of other states without creating an undue burden on the court system,’” the court said, further holding that “the circuit court’s conclusory finding regarding Missouri litigants waiting for an opportunity to be heard lacks evidentiary support from Defendants or judicial notice of a heavily congested docket.”

Finally, while the defendants pushed Texas as an available alternative forum, particularly as a related cause of action had already been filed there, the court pointed out that discovery has yet to be conducted.

“Even with related litigation pending in Texas — which notably was filed after Plaintiffs brought this action in Missouri — the circuit court could not predict which location would be more accessible or convenient for Miramar, the subsidiaries, Hall, Kreke, Schmuck, and the potential witnesses with these causes of action or if these claims could be adjudicated in the pending Texas litigation,” the court wrote. “The record does not support weighing this factor heavily in favor of dismissal.”

After reviewing the record and considering all relevant factors, the court held that the evidence presented did not establish Missouri was a seriously inconvenient forum for the defendants.

“[T]he evidence presented does not firmly convince this Court the relevant factors weigh heavily in favor of dismissing for forum non conveniens,” the court concluded. “Defendants have not shown this case imposes an oppressive inconvenience on them or an undue burden on the circuit court. Finally, Defendants have not shown Plaintiffs’ ‘filing and maintenance of the suit in Missouri was for the purpose of vexing, oppressing, or harassing’ them, ‘which the doctrine of forum non conveniens was intended to prevent.’”

The court reversed dismissal.

Neither Timothy P. Philipp of Philipp Law Firm in Bridgeton, who represented the plaintiffs, nor St. Louis attorney Tyler C. Schaeffer of Carmody MacDonald, who represented the defendants, responded to a request for comment.

The case is Miramar Financial Holdings, LLC v. RBCD Ventures, LLC, No. ED113698.