Michael Klenc and Susan Klenc v. John Beal, Incorporated

In the Missouri Court of Appeals
Eastern District
DIVISION ONE

MICHAEL KLENC and SUSAN KLENC, ) No. ED102819
)
Appellants, ) Appeal from the Circuit Court
) of the City of St. Louis
vs. )
) Hon. Calea F. Stovall-Reid
JOHN BEAL, INCORPORATED, )
) Filed:
Respondent. ) December 8, 2015

Michael and Susan Klenc appeal from the summary judgment entered in favor of John

Beal, Inc. (“JBI”), in which the trial court found that the Klencs lacked standing to sue JBI for

breach of a contract. We affirm the judgment as modified.

The Klencs own one of three units at a condominium building; the other units are owned

by Eric Ausubel and Helen Becker. The condominium declarations and by-laws provide as

follows. Each unit owner is a member of the Raymon Condominium Association (“the

Association”), a nonprofit corporation that conducts no business. The Association is the

governing body for the maintenance, administration and operation of the condominium property.

It has a Board of Managers, which appears to consist of Ausubel as the president and Becker as

the secretary and treasurer.

All the unit owners own the common elements of the condominium—defined as any

property that is not part of one of the units—as tenants in common in accordance with their

respective percentages of ownership interests as set forth in the declarations. The Klencs have a
36% ownership interest in the common elements, and each other unit owner has a 32%

ownership interest therein. The unit owners pay for expenses associated with the common

elements—maintenance, repair, replacement, administration and operation—in proportion to

their percentage of ownership interest. These common expenses are paid to the Association.

Maintenance, repairs and replacement of the common elements are to be furnished by the

Association.

The Association contracted with JBI to provide brickwork on three of the building’s

exterior walls and the chimney, which are common elements. The contract is a two-sided form

proposal prepared and submitted by JBI to “Raymon Condo Assoc./ Helen Becker.” The front

side describes the work and the price. At the bottom is a place for the “Owner’s Acceptance of

Proposal,” which indicates that the terms and conditions “on the reverse side” are accepted.

Becker and Ausubel signed the proposal on behalf of the Association. On the reverse side, the

first listed paragraph states:

1. Hereafter, “Owner” and “Your” mean all Owners of the property. If less
than all the Owners sign this agreement, the person(s) signing this agreement
expressly represent that they are authorized by all Owners to sign on their
behalf and bind them to these terms.

After the work was completed and paid for, the Klencs filed a petition against JBI

alleging breach of contract. They alleged that the term “owner” in the contract meant all owners

of the property. They claimed that JBI failed to perform the work as specified in the contract or

in a workmanlike manner. According to their affidavits, Ausubel and Becker found JBI’s work

to be in compliance with the contract. The Klencs sought damages in the amount of $3,358

(which allegedly represented 36% of the amount the Association paid JBI) and $750 in costs the

Klencs incurred cleaning up mortar JBI had left behind. JBI moved to dismiss the petition on the

ground that the Klencs lacked standing to maintain this action and failed to join the Association

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as a necessary and indispensable party. In response, the Klencs were granted leave to file an

amended petition. Therein, they restated their status as an “owner” under the contract, made

similar allegations regarding breach and added a claim against the Association for breach of its

fiduciary duty to join the lawsuit as a plaintiff in order to protect the property rights of all the

unit owners. JBI then filed a motion for summary judgment, arguing again that the Klencs

lacked standing. This time, the court granted the motion. After the Klencs voluntarily dismissed

their claim against the Association, the court entered a final judgment, granting summary

judgment in JBI’s favor. This appeal follows.

First, we note that disposing of a case for lack of standing is not a disposition of the

merits of the case. Thus, it is not appropriate to enter summary judgment—an inherently merits-

based disposition—when the party seeking relief lacks standing. See Borges v. Missouri Public

Entity Risk Management Fund, 358 S.W.3d 177, 180 (Mo. App. W.D. 2012). “As a result, even

if the standing argument is raised in a motion for summary judgment or other motion in which

matters outside the pleadings are considered, the court must still enter dismissal as opposed to

summary judgment.” Id. Regardless of the procedural context, our review of the court’s

determination regarding standing is de novo, and the party seeking relief bears the burden to

establish standing. See id. at 181; see also Matter of Adoption of E.N.C., 458 S.W.3d 387, 398

(Mo. App. E.D. 2014). We determine standing as a matter of law on the basis of the petition and

the undisputed facts. Matter of Adoption of E.N.C., 458 S.W.3d at 398.

“The essence of standing is that the party seeking relief has a personal interest at stake in

the dispute, even if that interest is attenuated, slight or remote.” Roberts v. BJC Health System,

391 S.W.3d 433, 438 (Mo. banc 2013). The party seeking relief must show some legally

protectable interest in the litigation so as to be directly and adversely affected by its outcome. Id.

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One is “interested” when he or she has a legal right or liability that will be directly affected by

the judgment. Matter of Adoption of E.N.C., 458 S.W.3d at 398.

The Klencs argue that the Condominium Property Act establishes their standing in this

lawsuit. That statute provides that “[w]ithout limiting the rights of any unit owner, actions may

be brought in the names of the members of the board of managers on behalf of two or more of

the unit owners, as their respective interests may appear, with respect to any cause of action

relating to the common elements or more than one unit.” Section 448.190.1 (applicable to

condominiums created before September 28, 1983); see also Uniform Condominium Act,

Section 448.3-102.1(4) (applicable to condominiums created after September 28, 1983) (unit

owners’ association has power to “institute, defend, or intervene in litigation . . . on behalf of

itself or two or more unit owners on matters affecting the condominium”). The parties argue

about which statute is applicable and dispute whether this condominium was created at the time

its declarations were made (September 19, 1983) or at the time of the Association’s

incorporation (January 6, 2011). We need not resolve this dispute however because these

statutes only address the standing of an association to sue on behalf of the unit owners, which is

not questioned in this case. And while the rights of unit owners are expressly preserved in

section 448.190, nothing in either statute actually confers standing on the unit owners. Rather,

standing in this breach of contract case is determined by whether the Klencs are a party to the

contract.1

Only a party or a third-party beneficiary of a contract may maintain a cause of action for

breach of that contract. Verni v. Cleveland Chiropractic College, 212 S.W.3d 150, 153 (Mo.
1
Similarly, the Klencs’ standing to bring this breach of contract claim does not depend on their status as tenants in
common of the common elements. The cases they cite in support of that basis for standing were not breach of
contract cases, in which standing depends on the plaintiff’s interest in the contract. See Poetz v. Klamberg, 781
S.W.2d 253, 256 (Mo. App. E.D. 1989) (co-owner of car not precluded from seeking recovery for damages to car
after collision with defendant); Winslow v. Sauerwein, 285 S.W.2d 21, 25 (Mo. App. 1955) (one owner of jointly
held easement could maintain action to enjoin interference therewith).

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banc 2007. To be bound as a third-party beneficiary, the terms of the contract must clearly and

directly express intent to benefit that party or an identifiable class of which the party is a

member. Id.; see also Drury Company v. Missouri United School Insurance Counsel, 455

S.W.3d 30, 34 (Mo. App. E.D. 2014). Where the contract lacks an express declaration of that

intent, there is a “strong presumption” that the third party is not a beneficiary. Verni, 212

S.W.3d at 153. “Third party beneficiary rights depend on, and are measured by, the terms of the

contract between the promisor and the promisee.” Drury Company, 455 S.W.3d at 34. We must

not speculate as to whether the contracting parties intended to benefit the third party. Bear Foot,

Inc. v. Chandler, 965 S.W.2d 386, 388 (Mo. App. E.D. 1998).

Here, the Klencs claim that paragraph one on the reverse side of the contract expresses

the intent that all the owners of the common elements were third party beneficiaries thereof. We

disagree. This preprinted form language in JBI’s proposal does not express anything clearly or

directly about these parties’ intent as to who benefits from the contract. Rather, in the context of

this case—where an entity is the party who entered the contract—the language in that paragraph

merely indicates that the individual who signed the contract (since an entity cannot sign a

document) represents that it had authority to sign for the Association. Moreover, nothing in the

contract indicates that JBI intended to assume a direct obligation to anyone other than the

Association. “Third party beneficiary status depends not so much on a desire or purpose to

confer a benefit on the third person, but rather on an intent that the promisor assume a direct

obligation to him.” Chesus v. Watts, 967 S.W.2d 97, 106 (Mo. App. W.D. 1998). Absent a clear

expression of such intentions, we cannot conclude that the Klencs were third party beneficiaries

for purposes of standing to sue for breach of this contract.

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 Therefore, we affirm the trial court’s conclusion that the Klencs lacked standing and enter

the order the circuit court should have entered, dismissing without prejudice the Klencs’ petition.

See Borges, 358 S.W.3d at 184.

ROBERT G. DOWD, JR., Presiding Judge

Mary K. Hoff, J. and
Roy L. Richter, J., concur.

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