Holm v. Wells Fargo Home Mortgage, Inc.
2017 WL 770979, 514 S.W.3d 590, 2017 Mo. LEXIS 67 (2017)
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Rule of Law:
A party's constitutional right to a jury trial on the issue of damages in a civil action cannot be abrogated as a sanction for discovery abuses, even when those sanctions are severe enough to establish liability, unless the party waives that right through one of the exclusive statutory methods.
Facts:
- In 2001, David and Crystal Holm purchased a home, which was eventually serviced by Wells Fargo on behalf of Freddie Mac.
- In the spring of 2008, the Holms' house sustained storm damage, and an insurance check for $4,467.74 was issued jointly to them and Wells Fargo.
- The Holms sent the check to Wells Fargo for endorsement so they could make repairs, but Wells Fargo retained the funds and did not apply them to the Holms' account.
- In June 2008, Wells Fargo's attorneys, Kozeny, initiated foreclosure proceedings, alleging the Holms were in default.
- The Holms disputed the default, asserting they had a payment plan in place with Wells Fargo.
- On the night before the scheduled foreclosure, a Wells Fargo representative orally agreed to postpone the sale if the Holms paid a reinstatement amount of $10,306.94.
- The next morning, Kozeny's office confirmed the agreement and assured the Holms the sale would be postponed, instructing them on how to deliver a cashier's check.
- Despite these assurances and the Holms following the instructions, the foreclosure sale proceeded as scheduled, and Freddie Mac purchased the property.
Procedural Posture:
- David and Crystal Holm filed a lawsuit in a Missouri trial court against Wells Fargo for wrongful foreclosure and against Freddie Mac to quiet title.
- During pretrial proceedings, the trial court found that the mortgage companies engaged in a pattern of obstructive discovery tactics.
- As a sanction, the trial court struck the mortgage companies' pleadings and prohibited them from offering evidence, cross-examining witnesses, or objecting at trial.
- The day after the sanctions order, the Holms waived their right to a jury trial.
- On the day of trial, the mortgage companies demanded a jury trial.
- The trial court denied the request, ruling the mortgage companies had waived their right, and proceeded with a bench trial.
- The trial court entered judgment for the Holms, awarding them actual and punitive damages and quieting title to their home.
- The mortgage companies, as appellants, appealed the judgment to the Missouri Supreme Court.
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Issue:
Does a trial court violate a defendant's constitutional right to a jury trial by denying their request for a jury to determine damages, when the defendant's pleadings were struck as a sanction for discovery violations but they did not waive their jury right through any exclusive statutory method?
Opinions:
Majority - Russell, J.
Yes, a trial court violates a defendant's constitutional right to a jury trial under these circumstances. The right to a jury trial in a civil action for damages is a fundamental right under the Missouri Constitution that can only be waived through the exclusive methods prescribed by statute § 510.190.2. The mortgage companies did not waive their right through any of these methods: they did not fail to appear, file a written waiver, give oral consent in court, or proceed to trial without objection. Failing to affirmatively request a jury or submit jury instructions does not constitute a waiver in Missouri. While severe discovery sanctions are permissible and can effectively establish a party's liability, they cannot extinguish the separate and inviolate constitutional right to have a jury determine the amount of damages. To hold otherwise would allow a court rule to impermissibly alter a constitutional right.
Analysis:
This decision establishes a crucial limitation on the sanctioning power of trial courts in Missouri, drawing a clear line between establishing liability and determining damages. It solidifies the principle that the constitutional right to a jury trial is robust and cannot be implicitly waived or forfeited as a punitive measure for procedural misconduct. The ruling clarifies that a party's bad acts during discovery may cause them to lose the ability to contest fault, but it does not strip them of their right to have a jury of their peers assess the financial consequences. This will guide future cases involving default judgments or severe sanctions, ensuring that the core function of the jury in assessing damages is preserved.
