Sunset Pools of St. Louis, Inc. v. Schaefer
869 S.W.2d 883, 1994 Mo. App. LEXIS 140, 1994 WL 27213 (1994)
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Rule of Law:
Under the Missouri Merchandising Practices Act, the proper measure of actual damages is the benefit of the bargain rule, which calculates damages as the difference between the actual value of the property at the time of purchase and the value it would have had if it had been as represented. Furthermore, a party who has not performed its own obligations under a contract cannot bring an action to enforce that contract.
Facts:
- Paul Schaefer went to Sunset Pools of St. Louis, Inc. to purchase a spa.
- Sunset Pools showed and sold Schaefer a three-year-old spa that had been used as a display model for $3,589.36.
- The purchase agreement included a one-year manufacturer's warranty.
- Upon delivery, the spa did not function properly due to sticking control buttons and leaking water.
- Schaefer made most payments but withheld the final $300 balance due to the spa's defects.
- Sunset Pools' policy was to withhold activation of the manufacturer's warranty until the product was paid for in full.
- Because Schaefer never paid the final balance, Sunset Pools never activated the warranty, and it subsequently expired.
- Sunset Pools made several unsuccessful attempts to repair the spa.
Procedural Posture:
- Sunset Pools of St. Louis, Inc. (seller) filed a petition in small claims court against Paul Schaefer (purchaser) to collect a $300 balance.
- Schaefer filed a counterclaim against Sunset Pools alleging breach of contract, fraudulent misrepresentation, and unlawful merchandising practice.
- The trial court entered judgment for Schaefer on Sunset Pools' petition.
- The trial court also found for Schaefer on his counterclaim, awarding him $3,289.36 in actual damages, $100 in punitive damages, and $2,356.50 in attorney's fees.
- Sunset Pools of St. Louis, Inc. (appellant) appealed the trial court's judgment to the Missouri Court of Appeals, with Schaefer as the appellee.
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Issue:
Under the Missouri Merchandising Practices Act, are actual damages for a defective product properly calculated as a refund of the total amount the purchaser paid, or must they be calculated using the 'benefit of the bargain' rule?
Opinions:
Majority - Ahrens, J.
No. The trial court erred by calculating damages as a refund of the purchase price; the proper measure is the benefit of the bargain. The court reasoned that because the Missouri Merchandising Practices Act is intended to supplement common law fraud, it should adopt fraud's remedy for damages. The well-established 'benefit of the bargain' rule awards the defrauded party the difference between the actual value of the property and the value it would have had if it had been as represented at the time of the transaction. The record contained no evidence of the spa's actual value, only the price paid, which is not the proper measure. Therefore, while there was sufficient evidence to support the finding that Sunset Pools engaged in unlawful merchandising practices by misrepresenting the spa's condition and failing to provide the warranty, the case must be remanded for a proper determination of damages under this rule.
Analysis:
This decision clarifies the evidentiary requirements for plaintiffs seeking damages under Missouri's consumer protection laws. By applying the 'benefit of the bargain' rule from common law fraud, the court establishes that a plaintiff cannot simply receive a refund of the purchase price. Instead, the plaintiff bears the burden of proving the difference in value between the product as promised and the product as delivered, which often requires appraisals or expert testimony. This raises the bar for consumers bringing such claims and prevents damage awards that are essentially a rescission of the contract when the plaintiff has not formally sought that remedy.
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