Jackson County jury awards $500K; arbitration claim lingers

Daily Record and the Kansas City Daily News-Press, Mar 16, 2009 by Scott Lauck

A $500,000 jury verdict returned recently in Jackson County might not be the last word in the case, pending the outcome of an appeal claiming some of the underlying issues should have been arbitrated first.

The verdict, though sizable, was far less than the $4 million that Perry Trout had sought from his former employer, Kansas City Life Insurance Co., when the suit was filed in February 2006.

Trout managed real estate developmental and investment activities for the firm. In 2002, the company and Trout entered into an incentive compensation agreement in which Trout was entitled to a bonus tied to the value of Kansas City Life's real estate portfolio.

Trout was terminated in 2006 and sought to claim his bonus. The two sides disagreed on the appropriate size of the payout. Trout sued for $4 million.

The jury found for Trout on one of the five counts in his lawsuit, a breach of contract claim, and returned a verdict of $500,000 on March 6.

Trout's attorney, Pat Stueve, of Stueve Siegel Hanson, could not be reached for comment. The lead attorney for Kansas City Life, Kelly Campbell, of Spencer Fane Britt & Browne, was out of the office.

The two-week trial began Feb. 23. Kansas City Life sought to compel arbitration in the case twice during the three-year lead-up to the trial. The latest motion was in December.

According to the company's briefs, the incentive compensation agreement required arbitration if the two sides "were unable to agree upon the market prices or associated expense of sale to be used for this certification." The company's valuation of the properties used to calculate the bonus was $2.3 million less than Trout's figure.

Judge John Torrence denied arbitration on Dec. 16, saying Kansas City Life "has waived any right to arbitration at this late stage of the litigation." Torrence had the case until early January, when it was transferred to Judge Peggy Stevens McGraw. She, too, declined to delay the trial.

Kansas City Life filed an interlocutory appeal in the Missouri Court of Appeals Western District, asking it to halt the trial and compel arbitration.

"These valuations are the central issue of damages disputed between the parties, and it would not be possible to render a jury verdict without the arbitrator first determining these values," Kansas City Life wrote in its appellate brief.

It also argued, so far unsuccessfully, that the filing of the appeal should have automatically divested the circuit court of jurisdiction to continue hearing the case. The appeals court also declined to stop the trial from occurring.

Nonetheless, the appeal is still active. Michael Delaney, also of Spencer Fane, is handling the issue on appeal. He said, depending on any post-trial motions in the circuit court, the valuation issue could still land before the Court of Appeals and could affect the jury verdict.

"At least theoretically, the appeal's not moot," Delaney said.

The case is Perry Trout v. Kansas City Life Insurance Co., 0616- CV04552. The appeal is Kansas City Life Insurance Co. v. Perry Trout, WD70468.