author: COOPER, Justice. JOHNSTONE, Justice,

text:
    Kevin Ray HILLARD, Appellant, v. COMMONWEALTH of Kentucky, Appellee.
    No. 2002-SC-0702-MR.
    Supreme Court of Kentucky.
    Feb. 17, 2005.
    As Modified April 22, 2005.

      Euva D. May, Assistant Public Advocate, Appellate Division, Department of Public Advocacy, Frankfort, Counsel for Appellant.
    Gregory D. Stumbo, Attorney General, Michael Harned, Brian T. Judy, Assistant Attorneys General, Office of Attorney General, Criminal Appellate Division, Frankfort, Counsel for Appellee.
   COOPER, Justice.

Appellant, Kevin Ray Hillard, was convicted by an Ohio Circuit Court jury of one count of unlawful transaction with a minor in the first degree, KRS 530.064(1), a Class B felony, for knowingly inducing A.W., age fifteen, to engage in illegal sexual activity; and one count of unlawful transaction with a minor in the third degree, KRS 530.070(1)(a), a Class A misdemeanor, for knowingly giving an alcoholic beverage to N.M., age seventeen. He was sentenced to twenty years in prison for the felony conviction and to twelve months in the Ohio County Detention Center and a $500.00 fine for the misdemeanor. He appeals to this Court as a matter of right, Ky. Const. § 110(2)(b), asserting reversible error in the following respects: (1) insufficiency of the evidence to sustain either conviction; (2) exclusion of evidence of the victim’s sexual history; (3) juror misconduct when a prospective juror failed to answer questions propounded during voir dire; and (4) prosecutorial misconduct consisting of (a) the issuance of extrajudicial subpoenas to require two witnesses to appear at the prosecutor’s office for ex parte interviews; (b) intimidation of a defense witness by threatening to charge the witness with perjury; (c) failure to provide discovery of notes taken during a witness interview that were used during cross-examination of the witness at trial; and (d) use of those notes to introduce into evidence the unsworn statements of the witness. The Commonwealth concedes that the evidence was insufficient to convict Appellant of the offense of unlawful transaction with a minor in the third degree. Thus, we vacate the conviction and sentences imposed for that offense. Finding no other reversible error, we affirm the conviction and sentence imposed for unlawful transaction with a minor in the first degree.

I. SUFFICIENCY OF THE EVIDENCE.

KRS 530.064(1) provides, inter alia:

A person is guilty of unlawful transaction with a minor in the first degree when he knowingly induces, assists, or causes a minor to engage in illegal sexual activity....

On the night of June 29-30, 2001, Appellant, who was then at least twenty-nine years of age, hosted a party at his residence in Beaver Dam, Ohio County, Kentucky, that was attended by A.W. and N.M., both minors, and four or five other persons who were adults. A.W. testified at trial that while he and Appellant were in a bathroom, Appellant offered to pay him twenty dollars if he would “fist” Appellant. A.W. agreed and removed a condom from his pocket and placed it over his fist. Appellant bent over the bathtub and pulled down his pants. A.W. then inserted his fist into Appellant’s anus. According to A.W., Appellant asked him to hit him and call him names while performing this act. Another witness testified that Appellant later boasted to her that A.W. had “fisted” him and that it “felt great.”

Since KRS 580.064(1) does not further identify “illegal sexual activity,” except to exclude offenses involving minors defined in KRS Chapter 581 (pornography) and KRS 529.030 (promoting prostitution in the first degree), inquiry into other sections of the penal code is required in order to determine whether “fisting,” as performed by A.W., was an “illegal sexual activity.” See Young v. Commonwealth, 968 S.W.2d 670, 672 (Ky.1998).

The Commonwealth posits that the conduct described by A.W. violated KRS 529.020 (prostitution), which proscribes “engag[ing] or agree[ing] or offer[ing] to engage in sexual conduct with another person in return for a fee.” However, for purposes of KRS Chapter 529, “sexual conduct” is defined as “sexual intercourse or any act of sexual gratification involving the sex organs.” Neither a fist nor an anus is a “sex organ.” See State v. Anthony, 179 Or. 282, 169 P.2d 587 (1946) (instruction properly differentiated between victim’s anus and sexual organ); cf. KRS 510.010(1) (differentiating between an anus and a sexual organ by defining deviate sexual intercourse as “any act of sexual gratification involving the sex organs of one person and the mouth or anus of another”). Nor was the conduct described by A.W. “sexual intercourse.” Although KRS 510.010(1) includes “penetration of the anus of one person by a foreign object manipulated by another person” within the definition of “deviate sexual intercourse,” and KRS 510.010(8) includes the “penetration of the sex organs of one person by a foreign object manipulated by another person,” within the definition of “sexual intercourse,” KRS 510.010(9) defines “foreign object” as “anything used in the commission of a sexual act other than the person of the actor.” (Emphasis added.) We further note that the jury instruction on unlawful transaction with a minor in the first degree did not include payment of a fee as an element of the offense but did include AW.’s age, which is an element of that offense but is not an element of the offense of prostitution. It is, however, an element of the offense of promoting prostitution in the first degree, which, as noted supra, is specifically excluded from illegal sexual activity constituting unlawful transaction with a minor in the first degree.

However, the conduct described by A.W. did violate KRS 510.130(1), which provides that a person commits the offense of sexual abuse in the third degree when:

(a) He subjects another person to sexual contact without the latter’s consent.
(b) In any prosecution under this section, it is a defense that:
1. The other person’s lack of consent was due solely to incapacity to consent by reason of being less than sixteen (16) years old; and
2. The other person was at least fourteen (14) years old; and
3. The actor was less than five (5) years older than the other person.

A.W. was fifteen years of age, thus statutorily incapable of consent, KRS 510.020(3)(a), and Appellant was more than five years older than A.W. Thus, the issue becomes whether “fisting” constitutes “sexual contact.”

KRS 510.010(7) defines “sexual contact” as “any touching of the sexual or other intimate parts of a person done for the purpose of gratifying the sexual desire of either party.” (Emphasis added.) As noted in Bills v. Commonwealth, 851 S.W.2d 466 (Ky.1993), the reference to “other intimate parts” is not a rephrasing of “sexual” but contemplates parts of the body “other than sexual organs alone.” Id. at 472.

Certainly a proper test to determine if the part of the body is “intimate” should revolve around an examination of three factors: 1) What area of the body is touched; 2) What is the manner of the touching, and 3) Under what circumstances did the touching occur.

Id. Professors Lawson and Fortune assert matter-of-factly that “[djigital penetration of the ... anus is sexual abuse.” Robert G. Lawson & William H. Fortune, Kentucky Criminal Law § 11—6(a)(1), at 437 (1998). Under the facts of this case, we have no difficulty concluding that A.W.’s “fisting” of Appellant was “sexual contact.” Appellant’s statement that it “felt great” sufficed to prove that Appellant solicited the conduct for the purpose of his own sexual gratification.

The 1974 Commentary to KRS 510.010 notes that the contact can be with either the victim or the actor. KRS 510.010 (1974 cmt.). Thus, it is immaterial to Appellant’s culpability that A.W. “fisted” him rather than vice versa. The definition of “sexual contact” in KRS 510.010(7) is almost identical to that contained in Section 213.4 of the Model Penal Code. The Commentary to that section states that “[t]he section expressly applies to the actor who causes another to have sexual contact with him.... ” Model Penal Code § 213.4, cmt. 2.

We conclude that the evidence was sufficient for a jury to believe beyond a reasonable doubt that Appellant committed the offense of unlawful transaction with a minor in the first degree. Commonwealth v. Benham, 816 S.W.2d 186, 187 (Ky.1991); cf. Young, 968 S.W.2d at 673 (“If Appellant had successfully persuaded P.C. to engage in any sexual activity with him ..., the offense described in KRS 530.064 would have been completed.”).

II. EXCLUSION OF EVIDENCE OF VICTIM’S SEXUAL HISTORY.

Appellant asserts that the trial court erred in sustaining the Commonwealth’s motion to exclude evidence of A.W.’s sexual history, correctly noting that the pre-2003 version of KRE 412 (rape shield law) applied only to criminal prosecutions under KRS 510 or KRS 530.020 (incest). However, to be admissible, evidence must still be relevant, KRE 402, and, even if so, may be excluded if cumulative. KRE 403. Obviously, the evidence was not relevant to prove consent since A.W. was statutorily incapable of consent because of his age. Appellant asserts that the evidence was relevant to prove A.W.’s sexual orientation and that he had a sexual relationship with another prosecution witness, J.S., which would tend to prove J.S.’s bias against Appellant. A.W.’s sexual orientation per se was irrelevant. J.S. admitted on cross-examination that he was homosexual, that he was living in Appellant’s home at the time of the conduct in question, and that Appellant ordered him to move out of the residence when he and Appellant became sexually involved with the same person (not further identified). Further, N.M., who testified for the defense, made the unsolicited statement that J.S. and A.W. were “lovers.” There was no objection or motion to strike this statement. Any further evidence related to A.W.’s relationship with J.S. or J.S.’s bias against Appellant would have been cumulative. Finally, no avowal was made of the excluded testimony; thus the issue was not preserved for appellate review. KRE 103(a)(2); Commonwealth v. Ferrell, 17 S.W.3d 520 (Ky.2000).

III. ALLEGED JUROR MISCONDUCT.

Juror No. 35 was the ex-brother-in-law of defense witness, Melissa Cline, and may or may not have been an acquaintance of Appellant. He was one of the twelve jurors who sat on the case and agreed to both verdicts. Appellant asserts that Juror No. 35 did not respond to voir dire questions as to whether any jurors knew Appellant or any witnesses for the defense. In claiming reversible error for this, Appellant relies on United States v. Colombo, 869 F.2d 149, 151 (2nd Cir.1989), for the proposition that deliberate concealment or purposely incorrect or misleading answers by a juror may impair a party’s right to meaningful exercise of causal or peremptory challenges; United States v. Perkins, 748 F.2d 1519, 1532 (11th Cir.1984), for the proposition that false answers give rise to a presumption of bias (“Goad’s dishonesty, in and of itself, is a strong indication that he was not impartial.”); and McDonough Power Equipment, Inc. v. Greenwood, 464 U.S. 548, 556, 104 S.Ct. 845, 850, 78 L.Ed.2d 663 (1984), for the proposition that a new trial may be obtained by demonstrating that a juror “failed to answer honestly a material question on voir dire,” and “that a correct response would have provided a valid basis for a challenge for cause.” See also Adkins v. Commonwealth, 96 S.W.3d 779, 796 (Ky.2003); Anderson v. Commonwealth, 864 S.W.2d 909, 911-12 (Ky.1993). However, we need not determine the applicability of these precedents to this case, because there is no evidence that Juror No. 35 failed to honestly answer a material question asked of him on voir dire.

Juror No. 35 was not one of the thirty-one persons initially seated as potential jurors for this case (enough for twelve jurors, one alternate, and nine peremptory strikes for each side, RCr 9.40(1) and (2)). The trial judge asked the initial thirty-one potential jurors whether any of them knew Appellant, the Commonwealth’s attorney, the assistant Commonwealth’s attorney who was prosecuting the case, or defense counsel. The judge then asked the prosecutor and defense counsel to read the names of their witnesses to the potential jurors. However, the witnesses were not brought into the courtroom for visual recognition. Defense counsel read the names of the potential defense witnesses, including Melissa Cline. When asked if they recognized any of those names or knew any of the potential witnesses for the defense, none of the potential jurors professed to know Cline or to recognize her name. As voir dire progressed, several prospective jurors were excused for cause and replaced. II Ad. Proc. § 10(3). In each instance, the judge asked the replacement juror if he or she would have responded affirmatively to any of the previous questions.

Approximately thirty minutes into voir dire, Juror No. 35 was called to replace a juror who was excused for cause. For some unknown reason, defense counsel’s microphone was on and Appellant can be clearly overheard stating, “I know him,” and identifying Juror No. 35 by name. Upon his arrival at the jury box, Juror No. 35 immediately volunteered that he knew the Commonwealth’s attorney because he (the juror) had been a crime victim and the Commonwealth’s attorney had prosecuted the case against the perpetrator of that crime. However, Juror No. 35 was not asked, as other potential jurors had been, whether he would have responded affirmatively to any of the other previous questions. During defense counsel’s voir dire, Juror No. 35 was questioned about his experience as a crime victim but was never asked if he knew Appellant or any of the potential witnesses. Since the juror was never asked those questions, he cannot be deemed to have failed to answer questions propounded to him.

At a hearing on Appellant’s post-trial motion for a new trial, a subpoena had been issued for Juror No. 35’s appearance but had not been served. The motion was continued until the next day. Again, Juror No. 35’s attendance had not been procured, but Appellant did not request another continuance. Melissa Cline testified at the post-trial hearing that Juror No. 35 was her ex-brother-in-law, but that she had divorced his brother six months before trial and changed her name from the juror’s last name back to her previous married name of “Cline,” perhaps explaining why Juror No. 35 did not recognize her name when it was read in open court. She also testified that Juror No. 35 was a “good man” and that she had never had any “trouble” with him. Finally, it could not have prejudiced Appellant that Juror No. 35 did not reveal his acquaintanceship with Appellant if Appellant, himself, recognized that acquaintanceship and never requested that the juror be excused for cause. Absent any evidence that Juror No. 35 deliberately -withheld information during voir dire or that any prejudice resulted to Appellant from the failure to acquire this information, no reversible error occurred.

IV. PROSECUTORIAL MISCONDUCT.

A. Abuse of subpoena power.

The prosecutor caused subpoenas to be served on N.M. and J.S. to appear at his office for ex parte interviews. Civil Rule (CR) 45.01 specifically provides that “[sjubpoenas shall not be used for any purpose except to command the attendance of the witness and production of documentary or other tangible evidence at a deposition, hearing or trial.” See Munroe v. Ky. Bar Ass’n, 927 S.W.2d 839, 840 (Ky.1996) (disciplining member of the Bar for using a subpoena to obtain ex parte information in a divorce case). Criminal Rule (RCr) 7.02 is not so explicit. It states- that a subpoena “shall command each person to whom it is directed to attend and give testimony at the time and place specified therein.” (Emphasis added.) There are no Kentucky cases interpreting this language. However, almost identical language in the corresponding Federal Criminal Rule, FRCrP 17(a), has been consistently interpreted to mean that subpoenas can be used to require a witness’s attendance only at formal judicial proceedings and that “[t]he government may not use trial subpoenas to compel prospective trial witnesses to attend pretrial interviews with government attorneys.” United States v. LaFuente, 991 F.2d 1406, 1411 (8th Cir.1993). See also United States v. Wadlington, 233 F.3d 1067, 1075 (8th Cir.2000); United States v. Villa-Chaparro, 115 F.3d 797, 804 (10th Cir.1997); United States v. Keen, 509 F.2d 1273, 1274-75 (6th Cir.1975); United States v. Hedge, 462 F.2d 220, 222-23 (5th Cir.1972); United States v. Standard Oil Co., 316 F.2d 884, 897 (7th Cir.1963). The Commonwealth concedes that use of subpoenas to compel N.M. and J.S. to attend a pretrial interview with the prosecutor was improper. We agree.

However, we also agree with the Commonwealth that this misconduct does not require either a dismissal of the indictment or a retrial. After all, the prosecutor may have been able to obtain the same information from the defense witnesses by voluntary interviews. Standard Oil Co., 316 F.2d at 897. The appropriate cure for such misconduct is to preclude the prosecutor from using any information obtained solely from the improper interview. Rita v. State, 674 N.E.2d 968, 971 (Ind.1996). Defense counsel, however, did not request that relief but only objected on grounds that the prosecutor had not permitted discovery of the notes he had taken during the interviews. Having failed to raise the issue before the trial court, Appellant has not preserved it for appellate review. RCr 9.22. Since the same information may have been obtained during voluntary interviews, we are unable to conclude that manifest injustice resulted from the improper interviews. KRE 103(e); RCr 10.26.

B. Threatening or intimidating witnesses.

The prosecutor revealed during his cross-examination of N.M. not only that he had issued a subpoena to compel N.M.’s attendance at an ex parte investigative interview, but also that, prior to the interview, he informed N.M. of the definition of perjury. N.M. testified that he believed the prosecutor was trying to intimidate him into agreeing with the prosecutor’s theory of the case. Nevertheless, N.M. testified that both his statements to the prosecutor during the interview and his testimony at trial were truthful.

Although no Kentucky cases have addressed the issue, federal courts have consistently held that a judge or prosecutor who threatens or intimidates a defense witness who is otherwise willing to testify into refusing to testify thereby denies a defendant his or her constitutional rights to due process and compulsory process. Webb v. Texas, 409 U.S. 95, 98, 93 S.Ct. 351, 353-54, 34 L.Ed.2d 330 (1972) (per curiam) (judge’s unnecessarily strong admonition against perjury aimed at discouraging defense witness from testifying and which caused witness not to testify violated defendant’s constitutional rights); United States v. Vavages, 151 F.3d 1185, 1188-93 (9th Cir.1998) (prosecutor’s thinly-veiled threat to prosecute defense witness for perjury and to withdraw plea agreement in witness’s own unrelated case if witness testified in support of defendant’s alibi required reversal of defendant’s conviction); United States v. Blackwell, 694 F.2d 1325, 1334 (D.C.Cir.1982) (“[Wjarnings concerning the dangers of perjury cannot be emphasized to the point where they threaten and intimidate the witness into refusing to testify.”); United States v. Morrison, 535 F.2d 223 (3d Cir.1976) (where witness was previously willing to testify for defense that she (when a juvenile) committed the offense with which Appellant was charged, but invoked her Fifth Amendment rights after prosecutor subpoenaed her to his office and threatened to prosecute her for both that offense and perjury, defendant was entitled to a new trial and, if witness refused to testify and government did not offer witness immunity, defendant would be entitled to judgment of acquittal).

However, “perjury warnings are not improper, per se.” Vavages, 151 F.3d at 1189. “[A defendant’s] rights are not trenched upon by mere information or advice about the possibility of a perjury prosecution, but by deliberate and badgering threats designed to quash significant testimony.” United States v. Davis, 974 F.2d 182, 187 (D.C.Cir.1992). Reversal is required only when the judge’s or prosecutor’s conduct interfered substantially with the witness’s free and unhampered choice to testify. United States v. Pinto, 850 F.2d 927, 932-33 (2nd Cir.1988). Thus,, if some other reason motivated the witness’s refusal to testify, the threats are deemed harmless. United States ex rel. Jones v. DeRobertis, 766 F.2d 270, 274-75 (7th Cir.1985)(state’s contact with inmate witnesses deemed harmless where evidence showed the witnesses may have believed defendant’s claim was meritless). And, if the witness did, in fact, testify favorably for the defendant, the threats are deemed harmless. Johnson v. Renico, 314 F.Supp.2d 700, 709-10 (E.D.Mich.2004). See also United States v. Thompson, 130 F.3d 676, 687 (5th Cir.1997); United States v. Stewart, 820 F.2d 370, 375-76 (11th Cir.1987). That is especially true here where N.M. not only testified favorably for the defense but also clearly indicated that he was not intimidated by the prosecutor’s reference to the perjury statute.

C. Failure to provide discovery of prosecutor’s notes.

The prosecutor did not purport to have taken a written or recorded statement from N.M. during the ex parte interview. RCr 7.26. Thus, the prosecutor’s notes were his own work product and, like memoranda prepared by police officers, were not discoverable under RCr 7.24. Cf. Cavender v. Miller, 984 S.W.2d 848, 849 (Ky.1998) (handwritten notes made by investigating officer during interview with defendant not discoverable).

D. Alleged unsworn statements.

During his cross-examination of N.M., the prosecutor brandished what were purported to be notes that he had taken during the ex parte interview, intimating that they reflected N.M.’s prior inconsistent statements. Appellant asserts that the prosecutor used these notes to introduce N.M.’s unsworn statements at trial. Of course, if the notes did reflect any prior inconsistent statements of N.M., those statements were a proper subject of cross-examination and admissible not only for impeachment but also for substantive purposes. KRE 801A(a)(1); Jett v. Commonwealth, 436 S.W.2d 788, 792 (Ky.1969). The prosecutor did not read any purported prior inconsistent statements contained in his notes but only asked N.M. whether he had made any such statements. N.M. denied having made any statements inconsistent with his trial testimony. When asked by the prosecutor whether N.M. had previously stated that he went into the bathroom and nobody was there, N.M. responded that he had not made that statement and had not been asked that question. The Commonwealth offered no extrinsic evidence to prove otherwise. (At trial, N.M. testified that when he went into the bathroom, someone was in the shower and another witness, J.R., was getting dressed. He also testified that on another occasion, he saw A.W. leave the bathroom and then saw Appellant leave the same bathroom fifteen to twenty minutes later.) We perceive no error in this attempted impeachment of N.M.

Accordingly, Appellant’s conviction of unlawful transaction with a minor in the third degree and the sentences imposed therefor are VACATED, and his conviction of unlawful transaction with a minor in the first degree and the sentence imposed therefor are AFFIRMED.

LAMBERT, C.J.; GRAVES, KELLER, SCOTT, and WINTERSHEIMER, JJ., concur.

JOHNSTONE, J., dissents by separate opinion.

JOHNSTONE, Justice,

dissenting.

I respectfully dissent because the majority’s construction of KRS 530.064 violates two fundamental constitutional principles: (1) a criminal defendant’s right to sufficient notice of the charges against him or her, and (2) the requirement that the government must prove every element of the offense charged. These violations require reversal of this case. Besides these constitutional violations, an additional reversible error occurred when the Commonwealth’s Attorney used an unauthorized, extrajudicial subpoena to compel trial witnesses to give pre-trial statements.

I. Notice of Charges

On August 30, 2001, Hillard was indicted for the offenses of use of a minor in a sexual performance, unlawful transaction with a minor in the first degree, and three counts of unlawful transaction with a minor in the third degree. Later, he was convicted and sentenced. He appealed and the majority has reached a decision herein. But it is this decision — not the indictment, not the proof at trial, and not the jury instructions — that gives Hillard his first notice of the specific charges for which he now stands convicted. This is the untenable result reached by the majority today.

Hillard was convicted of first-degree unlawful transaction with a minor in connection with paying A.W. to “fist” him. KRS 530.064, which sets forth the elements of unlawful transaction with a minor in the first degree, provides in relevant part that “[a] person is guilty of unlawful transaction with a minor in the first degree when he knowingly induces, assists, or causes a minor to engage in illegal sexual activity _” As used in the statute, “illegal sexual activity” refers to sexual activity prohibited elsewhere in the penal code. Young v. Commonwealth, 968 S.W.2d 670 (Ky.1998). Hillard’s indictment failed to specify which statutorily prohibited sexual activity he was accused of inducing A.W. to engage in. Failure to specify the underlying illegal sexual offense renders the indictment and the conviction upon which it is based constitutionally infirm. This infirmity is evidenced by the arguments on appeal and the majority’s rejection of such.

Hillard contends that the jury’s findings do not support the conclusion that he committed any sexual act prohibited by statute. The Commonwealth responds that the underlying illegal sexual offense was prostitution. The majority disagrees with both parties. While it concludes that the definition of prostitution does not fit, the majority does not reverse Hillard’s conviction. Rather, the majority formulates its own theory of the case and retroactively applies this new theory to a trial that ended long ago. After carefully sifting through the evidence adduced at trial, the majority concludes that the evidence supports a finding that Hillard was guilty of third-degree sexual abuse. Of course, Hil-lard was never charged with the underlying offense of third-degree sexual abuse. And, the elements of third-degree sexual abuse were never submitted to the jury. Nonetheless, since the definition fits, the majority concludes that Hillard’s conviction for unlawful transaction with a minor in the first degree was supported by the evidence at trial.

The absurdity of the majority’s analysis can be further illustrated by a very slight alteration. Suppose the General Assembly enacted a statute that made “engaging in illegal sexual activity” a felony offense. Further, suppose the Commonwealth indicted someone for violation of this statute. After indictment, a trial was had, evidence adduced, a conviction obtained, a sentence rendered, and a subsequent appeal taken. In accordance with today’s opinion, our task on appeal would be to look at the evidence adduced at trial, and then determine whether the jury’s factual findings fit all of the elements of any sexual act banned by the statute. For all intents and purposes, the majority opinion does just that. This is justice in reverse. And it’s a serious violation of Hillard’s constitutional rights.

Hillard had the basic and fundamental constitutional right to be given notice of the specific charges against him before he was put on trial. See, e.g., Cole v. Arkansas, 333 U.S. 196, 201, 68 S.Ct. 514, 517, 92 L.Ed. 644 (1948); Malone v. Commonwealth, 30 S.W.3d 180, 183 (Ky.2000). Giving him notice only now is truly sentence first, verdict second. His conviction must be reversed.

II. Proof of Every Element of the Offense

The theory that Hillard’s conviction for unlawful transaction with a minor in the first degree is based on the underlying offense of third-degree sexual abuse did not exist until the majority opinion was drafted. While this new theory might conform to the evidence, it does not conform to the jury instructions. Apart from the lack of notice, this requires reversal of Hillard’s conviction.

In a criminal case, the government must prove every element of the offense charged beyond a reasonable doubt. In re Winship, 397 U.S. 358, 361, 90 S.Ct. 1068, 1070-71, 25 L.Ed.2d 368 (1970); Commonwealth v. Collins, 821 S.W.2d 488, 490 (Ky.1991). The jury instruction for unlawful transaction with a minor in the first degree violated this fundamental principle because it did not require the jury to find every element of the underlying illegal sexual offense. And, of course, we discovered for the first time in the majority’s opinion that the underlying offense is third-degree sexual abuse.

There are only two elements to third-degree sexual abuse: (1) subjecting another person to sexual contact (2) without the latter’s consent. KRS 510.130. The instructions given at trial allowed the jury to find that Hillard was guilty of unlawful transaction with a minor in the first degree if it found that Hillard “knowingly induced, assisted, or caused [A.W.] to place [A.W.’s] hand in the anus of Kevin Hil-lard.” Obviously, because A.W. was a minor, the consent element is not applicable. However, notably absent from the instruction was also any requirement that the jury had to find that Hillard subjected A.W. to “sexual contact.”

“Sexual contact” is defined as “any touching of the sexual or other intimate parts of a person done for the purpose of gratifying the sexual desire of either party.” KRS 510.010(7). Nothing in the jury instructions required the jury to find that Hillard’s purpose for inducing A.W. to “fist” him was to gratify his or A.W.’s sexual desire. Rather, the trial court’s instructions simply presumed that this was so. In other words, the trial court directed the jury to find against Hillard on one element of the offense. This was clear error.

Like the majority, I have “no difficulty concluding that A.W.’s ‘fisting’ of Appellant was ‘sexual contact.’ ” But unlike the majority, I believe that this was an issue for the jury to decide, not this Court or the trial court. As we recently stated, “[i]t is never pi'oper for a trial court to direct a verdict of guilty where there is a plea of not guilty, despite the fact that the evidence of his guilt may be convincing and wholly uncontradicted.” See Taylor v. Commonwealth, 125 S.W.3d 216, 219 (Ky.2003) (emphasis added). Of course, there is a simple explanation as to why the instructions did not require the jury to find that “fisting” constituted “sexual contact.” This theory of the case did not exist until today. Thus, the trial court certainly could not have known to include the element of sexual contact in the instructions.

Hillard admittedly did not preserve the error by objecting to the instructions. But, in his defense, the error did not exist at the time. Rather, it came into being with the majority’s retroactive theory of the case. As such, I simply cannot fault the defense for failing to object to an error that did not yet exist.

III. Abuse of Subpoena Power

The majority concedes that the prosecutor unlawfully subpoenaed two teenage witnesses to his office and unlawfully compelled them to give him a statement under the threat of perjury. But the majority deftly changes the issue from the Commonwealth’s violation of the law to one of trial error. This slight of hand permits the majority to characterize the Commonwealth’s blatant violation of the law as unpreserved error.

The prosecutor’s abuse of power first came to light at trial during the following exchange during the Commonwealth’s Attorney’s cross-examination of N.M., who was a defense witness:

CA: Can you tell the jury whether or not you have ever spoken to me before?
N.M.: Urn huh.
CA: And when I spoke to you, I let you know that anything you said was pretty serious. I mean this is a serious matter.
N.M.: Right.
CA: And I actually subpoenaed you to come to my office?
N.M.: Right, you brought me a subpoena at Dairy Queen.
CA.: And I also brought out there a subpoena for [J.S.], is that correct?
N.M.: Correct.
C.A.: Now, you showed up at my office?
N.M.: Correct.
C.A.: And I let you know right off the bat how serious a charge this man is facing, and I read you the definition of perjury?
N.M.: Right, every time ... before I spoke, you brought that up.
C.A.: So, that’s a yes or is that a—
N.M.: Right.
C.A.: So, I wanted you to know that this was serious?
N.M.: Right.
C.A.: Now—
N.M.: But ... I don’t feel that you wanted me to know it was serious. I feel [that] you were trying to intimidate me—
C.A.: O.K.
N.M.: —into saying what you thought was true.
C.A.: O.K., that’s your feeling and you’re entitled to that. Now, do you recall talking to me in that office with [J.S.]?
N.M.: Urn huh.
C.A.: And you noticed at that time I made a lot of notes? Do you remember me making a bunch of notes? In fact, I made them with a blue-colored pen—

When the prosecutor referenced the notes, defense counsel objected on the grounds it had not been provided these notes. The majority opinion chides defense counsel for not asking the trial court for appropriate relief to cure the error. But it is erroneous to characterize what happened as trial error that required an objection to be preserved for appellate review. There was a violation of the law and the controlling criminal rules that occurred before trial. The defense should not be punished simply because these violations first came to light during trial.

I would agree with the majority if the defense had learned of the Commonwealth’s Attorney’s unlawful actions prior to trial. In such instance, the defense would have had time to formulate a strategy and determine what relief was available. And in such a scenario, the defense fairly could be held accountable for failing to take appropriate action. But I cannot reward the Commonwealth, as the majority does herein, for successfully concealing its unlawful acts until trial. These are not mere technical violations of complicated rules. Rather, the Commonwealth’s unlawful acts remove any “justice” from the criminal justice system.

Relying on the color of his office, the Commonwealth’s Attorney used unlawful subpoenas to compel two witnesses to come to his office. Neither Hillard nor defense counsel was given notice of the subpoenas. So, of course, neither was present when the witnesses were compelled to give their statements. Once the witnesses were in his office, the Commonwealth’s Attorney further abused his office by falsely threatening the teenage witnesses with perjury. One of the teenagers testified that he felt intimidated and coerced by the Commonwealth’s Attorney’s unchecked and unrecorded show of force. While the Commonwealth has the authority to fully investigate its cases, it cannot compel a witness in a criminal case to make an extrajudicial, pre-trial statement without the presence of defense counsel or the defendant. The potential for abuse, e.g., witness intimidation, denial of the defendant’s constitutional rights, etc., is just too great.

The majority flippantly implies that these violations do not warrant reversal because the Commonwealth could have obtained the same information through voluntary interviews. I believe, however, that what the Commonwealth could have obtained through proper methods of discovery is entirely irrelevant. The end does not justify the means.

The only authorized, lawful means for securing a prospective witness’s statement before a criminal trial is by deposition, and then, only upon a showing of the witness’s unavailability at trial. RCr 7.10. When taking depositions, “[t]he order authorizing the taking of a deposition shall contain such specification as will fully protect the rights of personal confrontation and cross-examination of the witness by the defendant.” RCr 7.12. The methods used by the Commonwealth’s Attorney in this case ran completely roughshod over the important constitutional rights zealously protected by RCr 7.12. As a direct result of the Commonwealth’s violations of the law, Hil-lard was deprived of the most basic and rudimentary protections of due process of law.

“As applied to a criminal trial, denial of due process is the failure to observe that fundamental fairness essential to the very concept of justice. In order to declare a denial of it, we must find that the absence of that fairness fatally infected the trial; the acts complained of must be of such quality as necessarily prevents a fair trial.” Lisenba v. People of State of California, 314 U.S. 219, 236, 62 S.Ct. 280, 290, 86 L.Ed. 166 (1941). The Commonwealth’s Attorney in this case acted outside of the law and beyond the powers of his office in direct contravention of his sworn duty to enforce and to uphold the law. This gross distortion of the judicial process is utterly incompatible with basic notions of fairness and justice. And no matter what the majority calls it, it stinks. To paraphrase Gertrude Stein, “a skunk is a skunk is a skunk.”

While the usually able members of the majority may be able to hold their collective noses to affirm this case, I cannot. Therefore, I dissent.

      . Appellant concedes in his brief that he was twenty-nine years old when the conduct in question occurred. Other documents in the record list his date of birth as July 21, 1969.

      . Contrary to the accusation leveled by the dissenting opinion, post at-, this issue was not "formulate[d]” by this Court and "retroactively applie[d]” to this case without notice to Appellant. Appellant, himself, posits that proof of the illegal sexual activity described in KRS 510.130(1) would satisfy that element of the offense described in KRS 530.064(1). Appellant’s brief, p. 31. His only claim in that respect is that inducing A.W. to "fist” him was not an activity proscribed by KRS 510.130(1). Further, Appellant has never asserted any defect in the indictment or in the jury instructions either in the circuit court or on this appeal.

      . Effective July 1, 2003, KRE 412 was amended so that it now applies to "any civil or criminal proceeding involving alleged sexual misconduct.” This case was tried prior to the effective date of the amendment.

      . The elements of perjury could not be met in connection with the witnesses’ oral statements made in the Commonwealth’s Attorney’s office. The elements of first-degree perjury were not present because the statements were not made in an official proceeding. KRS 523.020. The elements of second-degree peijury were not present because the statements were not made in a ''subscribed instrument.” KRS 523.030. Additionally, even the elements of false swearing were not present because the statements were not made under oath or required by law. KRS 523.040.


source: Caselaw Access Project

author: LAURA DENVIR STITH, Judge.

license: Public Domain

text:
    TRIARCH INDUSTRIES, INC., Appellant, v. Paul A. CRABTREE, d/b/a Crabtree Painting, Inc., Respondent.
    No. SC 86107.
    Supreme Court of Missouri, En Banc.
    April 5, 2005.

      Susan Eisenbraun, David A. Kraft, Art J. Neuhedel, Ronald S. Weiss, Kansas City, for Appellant.
    Martin M. Meyers, James L. Baker, Kansas City, for Respondent.
   LAURA DENVIR STITH, Judge.

Triarch Industries, Inc., appeals the trial court’s denial of its motion to compel Paul Crabtree to arbitrate the parties’ contract dispute. The trial court’s judgment is affirmed. The contract gave Triarch the option of choosing either to litigate or to arbitrate any dispute. Triarch chose to litigate and filed suit in the Jackson County Circuit Court. The contract did not give it a right to change its mind and compel arbitration once it had first chosen to litigate its dispute with Crabtree. Having made its choice, it was bound by it. Because of its resolution of this issue, the Court does not reach Crabtree’s arguments that the arbitration provision is unenforceable because it lacks mutuality and is unduly vague because it permits Triarch to unilaterally set all rules governing arbitration.

I. FACTUAL AND PROCEDURAL BACKGROUND

In June of 2000, Triarch Industries, Inc., a Texas-based corporation, entered into a “Qualified Applicator Agreement” with Paul Crabtree, doing business as Crabtree Painting, Inc., in Kansas City, Missouri. The contract, drafted by Triarch, appointed Crabtree as a “Factory Qualified Applicator” of Triarch’s paint products and stated that Crabtree would pay Triarch for materials purchased “in accordance with Triarch’s written conditions of sale and credit terms by check or credit card.”

Triarch filed a petition in the Circuit Court of Jackson County in August 2001, alleging that Crabtree failed to pay money owed on an open account for merchandise supplied by Triarch under the contract. Crabtree filed an answer in October 2001, alleging that Triarch had sent defective and non-conforming goods that were unusable for their intended purpose. In April 2002, Crabtree filed a counterclaim in which it sought reimbursement for the allegedly non-conforming goods that Triarch had supplied. With its counterclaim, Crabtree served requests for admissions, followed shortly by Crabtree’s first set of interrogatories and first request for production of documents.

In May 2002, after receipt of Crabtree’s discovery requests, Triarch filed a motion to compel arbitration and to stay the litigation. It based the motion to compel on an arbitration clause contained within the “Conditions of Sale” attached to the parties’ “Qualified Applicator Agreement.” The arbitration clause states in full:

ARBITRATION OF DISPUTES: Any controversy or claim arising out of this contract or the breach thereof may, at Seller’s option, be referred to non-binding mediation under rules of Seller’s choice. If mediation does not result in settlement of the dispute, (or if Seller does not elect to pursue mediation), Seller shall have the right to refer the dispute to binding arbitration under rules of its choice, or to commence litigation.

Crabtree opposed the motion to compel arbitration. It argued that the arbitration clause was not enforceable because it was too one-sided to constitute an agreement to arbitrate and that the provision permitting Triarch to set all rules governing arbitration made the clause too vague and unconscionable to be enforced. Crabtree alternatively argued that the final part of the arbitration clause merely gave Triarch the right to make an initial choice whether to seek arbitration or to commence litigation and that, having chosen to commence litigation, it was bound by its election.

The trial court held that Triarch was not entitled to compel arbitration and overruled its motion. Triarch appealed. Following a decision by the Court of Appeals, Western District, this Court granted transfer. Mo. Const, art. V, sec. 10.

II. ANALYSIS OF ARBITRABILITY OF DISPUTE

A. Appealability of Denial of Motion to Compel Arbitration.

The question of whether Triarch’s motion to compel arbitration should have been granted is one of law, to be decided by this Court de novo. Dunn Indus. Group, Inc. v. City of Sugar Creek, 112 S.W.3d 421, 428 (Mo. banc 2003), citing, Drake Bakeries, Inc. v. Local 50, 370 U.S. 254, 256, 82 S.Ct. 1346, 8 L.Ed.2d 474 (1962). The Federal Arbitration Act (the FAA) requires courts to enforce a valid contractual agreement to arbitrate if it is contained in a contract that comes within the FAA’s purview. 9 U.S.C. sec. 2 (1999). The FAA also provides that an order denying a motion to compel arbitration under such a contract is subject to immediate appellate review. 9 U.S.C. sec. 16(a)(1)(B). There is no dispute that the contract between Triarch and Crabtree is governed by the FAA, or that Triarch was entitled to appeal the trial court’s denial of its motion to compel arbitration.

B. Enforceability of Arbitration Clause Providing Only Seller with Right to Choose and Set all Rules of Arbitration.

Crabtree attacks the existence of an agreement to arbitrate in the first instance, arguing that the purported arbitration clause is invalid because it is unilateral rather than mutual, giving sole authority to Triarch to decide to arbitrate and set the rules for arbitration. The courts of other jurisdictions have come to varying conclusions as to the validity of such non-mutual agreements to arbitrate. This results from the fact that the question whether the agreement to arbitrate must be mutual or can be unilateral is determined by application of state contract principles rather than as a matter of federal statutory law. Robert Hollis et al., Is State Law Looking for Trouble ? The Federal Arbitration Act Flexes its Preemptive Muscle, 2003 J. Disp. Resol. 483-89.

As Crabtree notes, many state courts, and federal courts applying state law, have invalidated similar non-mutual arbitration provisions because they are so one-sided as to be illusory or unconscionable and, therefore, are unenforceable under applicable state law. See, e.g., Dumais v. Am. Golf Corp., 299 F.3d 1216, 1219 (10th Cir.2002), and other cases cited in Hollis et al., State Law, 2003 J. Disp. Resol, at 483-89. Other courts have upheld such clauses on the basis that the particular state’s law does not require mutuality if there is otherwise sufficient consideration for the agreement considered as a whole. Id. Missouri has not addressed this issue in the context of an arbitration clause.

Crabtree also argues that the clause is so vague that it is unenforceable even if mutuality were not required under Missouri law, noting that the clause is just that, a single clause. None of the rules governing arbitration are set forth. Instead, the contract simply provides that Triarch has the unilateral right to “refer the dispute to binding arbitration under rules of its choice ” (emphasis added). In support, Crabtree cites to cases such as Harold Allen’s Mobile Home Factory Outlet, Inc. v. Butler, 825 So.2d 779, 785 (Ala.2002), and Burch v. Second Judicial District Court, 118 Nev. 438, 49 P.3d 647, 650-51 (2002), which invalidated arbitration clauses allowing one party sole power to appoint arbitrators or to decide rules of arbitration.

In Missouri, where an agreement is silent as to certain necessary matters concerning the arbitration, such as how arbitrators will be appointed, arbitrators’ right to exercise authority, notification of their award, and payment of fees and expenses, Missouri will imply such terms. See, e.g., secs. 435.360 to 435.395, RSMo 2000. The applicability of these provisions is not clear, however, where, as here, the contract is not completely silent as to the missing terms, but rather purports to give one party sole authority to set whatever terms it wishes.

While these and related issues raise serious concerns about the enforceability and conscionability of the arbitration clause in the parties’ agreement, this Court need not resolve those issues here. For, whether or not this Court were to hold that the arbitration clause was enforceable and was not unconscionable, the trial court did not err in denying Triarch’s motion to compel arbitration because the contract did not give Triarch the right to demand arbitration.

C. The Contract Did Not Entitle Triarch to Compel Arbitration.

The trial court denied Triarch’s motion to compel arbitration on the basis that the arbitration clause did not give Triarch the right to compel arbitration once it chose to file suit. Triarch argues that this was error, noting that the FAA represents a strong federal policy in favor of arbitration and requires that any doubts regarding arbitration should be resolved in its favor. Dunn, 112 S.W.3d at 427, 429. See also Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).

Although there is a policy favoring arbitration, “it does not disregard the intent of the contracting parties as evidenced by their agreement.” Keymer v. Mgmt. Recruiters Int’l, Inc., 169 F.3d 501, 505 (8th Cir.1999). The FAA places arbitration agreements on an equal footing with other contracts, and courts will examine arbitration agreements in the same light as they would examine any contractual agreement. Id. at 504. See also Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991); Perry v. Thomas, 482 U.S. 483, 492 n. 9, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987).

This means that, in determining whether the parties have entered into a valid agreement to arbitrate, the usual rules of state contract law and canons of contract interpretation apply. Dunn, 112 S.W.3d at 428. The guiding principle of contract interpretation under Missouri law is that a court will seek to ascertain the intent of the parties and to give effect to that intent. Butler v. Mitchell-Hugeback, Inc., 895 S.W.2d 15, 21 (Mo. banc 1995). The intent of the parties to a contract is presumed to be expressed by the ordinary meaning of the contract’s terms. See J.E. Hathman, Inc. v. Sigma Alpha Epsilon Club, 491 S.W.2d 261, 264 (Mo. banc 1973). If the contract is unambiguous, it will be enforced according to its terms. If ambiguous, it will be construed against the drafter, as is the case with other contracts under Missouri law. Keymer, 169 F.3d at 504.

Triarch claims that it retained the right under the contract to compel arbitration even after it chose to commence litigation in Jackson County Circuit Court. In support, it cites cases holding that a party will not be held to have waived its right to arbitrate unless the party opposing arbitration shows that the one seeking arbitration: “1) had knowledge of the existing right to arbitrate, 2) acted inconsistently with that right, and 3) prejudiced the party opposing arbitration.” Getz Recycling, Inc. v. Watts, 71 S.W.3d 224, 229 (Mo.App. W.D.2002). Here, Triarch argues, Crab-tree failed to show any prejudice resulted to it from the fact that Triarch did not file its motion to compel arbitration until a few months after it filed suit.

Triarch’s arguments might be well-taken if Crabtree’s argument were that Triarch waived an existing contract right to arbitrate by failing to assert that right in a timely manner. This is not Crabtree’s argument. Crabtree’s argument is one of contract construction, not waiver. It argues that the contract itself provides that once Triarch chooses to file suit, it has no further right to arbitrate. It is not a matter of waiver of a right to arbitrate, but of lack of a contractual right to arbitrate in this circumstance. Thus, the facts that Triarch knew of the right to arbitrate and acted inconsistently with it, and the question whether any prejudice resulted to Crabtree from Triarch’s decision to commence litigation rather than arbitrate initially, are irrelevant if the contract did not give Triarch the right to compel arbitration in the first place.

These principles are directly applicable here. Looking to the plain terms of the contract, Triarch did not have a right to compel arbitration at the time it filed its motion to compel. The arbitration clause states in relevant part:

If mediation does not result in settlement of the dispute, (or if Seller does not elect to pursue mediation), Seller shall have the right to refer the dispute to binding arbitration under rules of its choice, or to commence litigation.

(emphasis added). Triarch did not elect to pursue mediation. The contract plainly states that in such a case, Triarch has the right to refer the dispute to binding arbitration or to commence litigation. Triarch chose to exercise its contractual right to commence litigation. Once faced with Crabtree’s counterclaim and discovery requests, it apparently regretted that choice and wanted to refer the dispute to binding arbitration instead. The contract did not so permit, however. While courts look favorably upon clauses entitling a party to arbitration, this does not mean that a court will create ambiguity where, as here, none exists, or that it will read a right to arbitrate into a contract where, as here, the contract does not provide such a right. AJM Packaging Corp. v. Crossland Const. Co., Inc., 962 S.W.2d 906, 911 (Mo.App. S.D.1998). “[T]he FAA’s pro-arbitration policy does not operate with out regard to the intent of the contracting parties, for arbitration is a matter of consent, not of coercion.... [A] party cannot be forced to submit to arbitration any dispute he has not agreed to submit.” Keymer, 169 F.3d at 504.

The contract at issue plainly states that the SeUer-Triarch-has the right to refer the matter to arbitration or to commence litigation, not that it can do one and then the other, seriatim. Having elected to commence litigation, Triarch no longer had a contractual right to compel arbitration.

III. CONCLUSION

For the reasons set out above, the trial court’s judgment overruling Triarch’s motion to compel arbitration is affirmed, and the case is remanded for further proceedings.

All concur.

      . All federal statutory references are to the United States Code 1999, unless otherwise indicated. Section 2 of the FAA specifically provides that an arbitration agreement contained in a contract involving commerce shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or equity for the revocation of any contract. The remaining provisions of the FAA are set out in 9 U.S.C. sec. 1 et seq.

      . Section 435.440.1, RSMo 2000, a part of the Missouri Uniform Arbitration Act (MUAA), provides for immediate appeal from an order denying a motion to compel arbitration. Because the contract falls within the FAA, Triarch did not rely on the MUAA, however. See Mueller v. Hopkins & Howard, P.C., 5 S.W.3d 182, 187 (Mo.App. E.D.1999).

      . See, e.g., Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1173 (9th Cir.2003) (one-sided arbitration agreement is unconscionable and unenforceable); Iberia Credit Bureau v. Cingular Wireless LLC, et al., 379 F.3d 159, 169-70 (5th Cir.2004) (one-sided arbitration clause unenforceable due to unconscionability); Floss v. Ryan’s Family Steak Houses, Inc., 211 F.3d 306, 315-16 (6th Cir.2000) (arbitration agreement lacked mutuality and was therefore illusory and enforceable); Simpson v. Grimes, 849 So.2d 740, 749, (3d Cir.2003) (accord).

      . See, e.g., Doctor’s Assocs., Inc. v. Distajo, 66 F.3d 438, 453 (2d Cir.1995) (one-sided arbitration clause is not invalid for lack of mutuality if there is consideration for the entire agreement); Harris v. Green Tree Fin. Corp., 183 F.3d 173, 181 (3d Cir.1999) (applying Pennsylvania law and enforcing a one-sided arbitration clause because there was adequate consideration by both parties in underlying contract).

      . See also State ex rel. PaineWebber, Inc. v. Voorhees, 891 S.W.2d 126, 128 (Mo. banc 1995); Missouri & Northern Arkansas R.R. Co. Inc. v. Branson Scenic Ry., Inc., 3 S.W.3d 869, 871 (Mo.App. S.D.1999).

      . See, e.g., Stifel, Nicolaus & Co., Inc. v. Freeman, 924 F.2d 157, 158 (8th Cir.1991); Brookfield v. Tognascioli, et al., 845 S.W.2d 103, 106 (Mo.App. W.D.1993); McCarney v. Nearing, 866 S.W.2d 881, 890 (Mo.App. W.D.1993) (sufficient prejudice to the party opposing arbitration must be shown before arbitration will be deemed to have been waived).

      . Although Crabtree and Triarch disagree as to the meaning of the arbitration clause, this does not make the clause ambiguous. See Needles v. Kansas City, 371 S.W.2d 300, 304 (Mo. banc 1963). A contract is ambiguous only if it is reasonably susceptible of differing constructions. Hathman, 491 S.W.2d at 264. Where, as here, the contract is not ambiguous, the court will determine the parties’ intent from the four corners of the contract. Eisenberg v. Redd, 38 S.W.3d 409, 411 (Mo. banc 2001). Even if there were an ambiguity in the terms of the agreement, ambiguities in contracts should be construed against the drafter. Transit Cas. Co. in Receivership v. Certain Underwriters at Lloyd’s of London, 963 S.W.2d 392, 398 (Mo.App. W.D.1998); Marion v. Hazelwood Farms Bakeries, Inc., 969 F.Supp. 540, 543 (E.D.Mo.1997). Despite the FAA's policy favoring arbitration, the FAA does not preempt this rule because the validity of an arbitration clause is governed by the usual rules and canons of contract interpretation. See Village of Cairo v. Bodine Contracting Co., 685 S.W.2d 253, 258 (Mo.App. W.D.1985).


author: JAMES K. PREWITT, Judge.

text:
    Mark DOSS and Kathy Doss, Plaintiffs-Respondents, v. HOWELL-OREGON ELECTRIC COOPERATIVE, INC., Defendant, and Missouri Employers Mutual Insurance Co., Appellant.
    No. 26270.
    Missouri Court of Appeals, Southern District, Division One.
    Feb. 2, 2005.
    Petition for Rehearing and Transfer Denied Feb. 24, 2005.

      David A. Childers, Whiteaker & Wilson, P.C., Springfield, Mo., for appellant.
    Mathew W. Placzek and Angela Desanc-tis Myers, Placzek & Francis, Springfield, Mo., for respondents.
   JAMES K. PREWITT, Judge.

Missouri Employers Mutual Insurance Company (“Insurance Company”) appeals from the judgment of the trial court sustaining a Motion to Determine Workers’ Compensation Lien filed by Mark Doss and Kathy Doss. Insurance Company raises two points of error; first, that the trial court erred in ruling on the motion because the court lacked both personal and subject matter jurisdiction in the matter, and second, that the trial court erred in ruling that the workers’ compensation lien held by Insurance Company should be reduced by fifty percent, due to Mark’s alleged comparative fault.

Facts

On October 4, 1999, while responding to a fire as a volunteer member of the Howell County Fire Department (“Employer”), Mark Doss suffered a severe electric shock and burns. Mark filed a workers’ compensation claim against Employer; Insurance Company was Employer’s insurer. A stipulation for compromise settlement resulted in a workers’ compensation lien in the amount of $40,233.35.

On July 19, 2001, the Dosses filed a petition alleging a cause of action against Howell-Oregon Electric Cooperative, Inc. (“Electric Co-op”), which, according to the Dosses, had sole control and management of a fallen power line that allegedly led to Mark’s electric shock. A Second Amended Petition was filed on April 15, 2002, and contained four counts alleging damages due to Electric Co-op’s negligence, including a loss-of-consortium claim brought by Kathy. In its answer, Electric Co-op alleged that any damages the Dosses “sustained were directly caused or contributed to be caused by the negligence and fault of plaintiff, Mark Doss[.]”

In a letter to the court dated May 1, 2003, counsel for the Dosses informed the court that the case had been settled. On May 9, 2003, the Dosses filed a Motion to Determine Workers’ Compensation Lien, which indicated that the case had been settled for $180,000.00. Within the motion, the Dosses stated that they and Insurance Company had “attempted to negotiate a settlement with respect to the satisfaction of the [workers’ compensation] lien, but have been unable to do so because there is a dispute between the parties as to what sum, if any, should be deducted for plaintiff Mark Doss’ alleged contributory negligence.” The Dosses asked that the court determine the amount owed to Insurance Company on the workers’ compensation lien.

On May 29, 2003, the Dosses filed a Dismissal with Prejudice indicating their intention to “dismiss all pending claims against [Electric Co-op].” On June 13, 2003, the trial court entered an order holding the dismissal of the case in abeyance pending the court’s decision on the Dosses’ Motion to Determine Workers’ Compensation Lien.

A hearing was held on the Dosses’ motion on September 16, 2003. Counsel for Insurance Company indicated that Insurance Company was “not technically a party to this action ... [and that] no personal jurisdiction’s really ever been asserted over [it].” He agreed that the hearing held that day was on the Dosses’ motion “to have the subrogation proceeds from the settlement between [the Dosses and Electric Co-op] divided.” All parties, including Insurance Company, agreed at the hearing that if the workers’ compensation payment was fully subrogated, i.e., no comparative fault on Mark’s part, the amount subrogated to Insurance Company would be $23,574.70.

The Dosses’ position was that the settlement between them and Electric Co-op for $180,000.00 “presupposed a contributory negligence of fifty percent.” Therefore, according to the Dosses, the total damages reflected in the settlement were actually $360,000.00, which would result in a reduction in the subrogation amount due to Insurance Company on the workers’ compensation hen.

Counsel for Insurance Company argued that the trial court lacked subject matter jurisdiction to make a determination regarding any adjustment to the subrogation amount for the workers’ compensation lien. Counsel did, however, acknowledge that it was correct for the court to state that neither Kathy’s share for her loss-of-consortium claim nor the issue of comparative fault had been addressed in the negotiation and settlement between the Dosses and Electric Co-op or by a trier-of-fact in the determination of that case. Therefore, according to the court, “there is no ... preclusion” with regard to those issues. Although counsel for Insurance Company agreed with the court’s statements, he noted that neither Insurance Company nor Employer “were a party to those negotiations or to that settlement.”

The court proceeded, pursuant to discussions in chambers, to receive “a proffer in lieu of live testimony!.]” Counsel for the Dosses then offered that the attorney for Electric Co-op would testify that he was present at the mediation between the Dosses and Electric Co-op, that the mediation led to a negotiated settlement, and that Electric-Co-op “discounted the settlement value of the case fifty percent because of plaintiff Mark Doss’s contributory negligence.” The Dosses’ counsel also noted that he “would take the stand and testify to the same effect.”

In addition, counsel for the Dosses stated that if the fire chief was called to testify, he would state that prior to Mark arriving at the scene, there were radio communications available for Mark to hear indicating that “a live power line [was] down and that people should be careful.” Further, counsel stated that a neighboring homeowner, if called to testify, would state that he spoke with Mark and two other firefighters at the scene and told them “that there was a hot line.”

Counsel for the Dosses also stated that there would be testimony either from Mark and Kathy, or counsel himself, “that there was no apportionment of the settlement proceeds between Mark and Kathy Doss because [the Dosses and their counsel] have always taken the position that this is a matter exclusively for the trier of fact.” When asked by the court to provide further explanation of the facts related to the consortium claim, counsel for the Doss-es indicated that he would describe Mark’s injuries, the lengthy hospital stay, necessary grafts, and substantial time off work. There would also be testimony regarding the effects on Mark, Kathy, and their children due to Mark’s injuries. Counsel for the Dosses stated that they would “ask the court to allocate the settlement seventy-five percent to [Mark] and twenty-five percent to [Kathy].”

At the end of the hearing, Exhibits 1, 2, and 3 were received into evidence by the court. These documents included the Stipulation for Compromise Settlement in the workers’ compensation case; a letter from the Dosses’ counsel to the Dosses outlining attorney fees and expenses and the total calculated sum remaining on the workers’ compensation lien ($23,640.12); and a letter from the Dosses’ counsel to counsel for Insurance Company noting that if fifty percent was deducted for Mark’s contributory negligence, $11,820.06 would be owed to Insurance Company.

The letter to counsel for Insurance Company included an offer to settle the case of the workers’ compensation lien amount for $12,319.95. The letter also included a note that the computations did “not account for Kathy Doss’ consortium claim which will also dimmish the amount the comp carrier is entitled to receive.” The note further stated that the Dosses would “ask for that offset at the hearing.”

On March 30, 2004, the court entered its judgment on the Dosses’ Motion to Determine Workers’ Compensation Lien. The court found that of the $180,000.00 settlement amount, seventy-five percent was attributable to Mark’s claims, and thus subject to the workers’ compensation lien, and that twenty-five percent was attributable to Kathy’s loss-of-consortium claim. The court also apportioned fifty percent fault to Mark and fifty percent fault to Electric Co-op. Therefore, according to the findings of the court, the total of damages sustained by Mark was $270,000.00 and the total of damages sustained by Kathy was $70,000.00.

Regarding the workers’ compensation lien, the court noted that the parties stipulated that the amount of the hen, after deducting for attorney fees and expenses, was $23,574.70. Therefore, according to the court, since Mark only recovered fifty percent of the total damages sustained, the workers’ compensation hen should also be reduced by fifty percent, resulting in a hen of $11,787.35. The Dosses were ordered to pay the $11,787.35 to Insurance Company to satisfy the workers’ compensation hen. This appeal followed.

Discussion

Insurance Company raises two points on appeal. We find the first point dispositive. Point I — Trial court lacked both personal and subject matter jurisdiction to rule on motion

In its first point, Insurance Company contends that the trial court erred in ruling on the Dosses’ Motion to Determine Workers’ Compensation Lien because the court was without either personal or subject matter jurisdiction in the matter. According to Insurance Company, the court lacked such jurisdiction because the Doss-es had voluntarily dismissed their claim with prejudice.

The term jurisdiction is often somewhat loosely employed but generahy refers to three kinds of authority of a court: over the person; over the subject matter; and to render the judgment or order given. Scott County Reorganized R-6 School Dist. v. Mo. Comm’n on Human Rights, 872 S.W.2d 892, 893 (Mo.App.1994). In the strict sense, jurisdiction refers to judicial authority over the subject matter and the parties. Id. In a broader sense, the jurisdiction of a court includes the power to grant specific relief in cases in which it has judicial authority over the subject matter and parties. Id.

If a trial court enters a judgment that was beyond its jurisdiction, that judgment is void. Cramer v. Carver, 125 S.W.3d 373, 375 (Mo.App.2004). Even if jurisdictional issues are not raised, we are obligated to consider whether a trial court had the jurisdiction to enter the judgment. In re Marriage of McIntosh, 126 S.W.3d 407, 418 (Mo.App.2004).

Within Point I, Insurance Company focuses on the trial court’s apparent lack of jurisdiction due to the Dosses’ voluntary dismissal of their claims against Electric Co-op with prejudice. We need not address whether that argument has merit because we find that the trial court lacked jurisdiction to enter the judgment sustaining the Dosses’ Motion to Determine Workers’ Compensation Lien for other reasons, primarily because Insurance Company was not a party to the Dosses’ case against Electric Co-op.

To show how we arrive at that finding, we first consider some background. Under the workers’ compensation law, specifically § 287.150, RSMo 2000, Mark, as the employee, and Employer are considered real parties in interest, and either could bring a suit against Electric Co-op as a third-party tortfeasor stemming from the incident in which Mark was injured. Brookshire ex rel. Brookshire v. Retz, 111 S.W.3d 920, 923 (Mo.App.2003). The claims of Employer and Insurance Company under the statute include the right to proceed against a third-party tortfeasor (Electric Co-op) to recover any payments Employer or Insurance Company made to Mark as employee. Id.

Section 287.150.3, RSMo 2000, which is applicable to this case, reads in pertinent part as follows:

Whenever recovery against the third person is effected by the employee or his dependents, the employer shall pay from his share of the recovery a proportionate share of the expenses of the recovery, including a reasonable attorney fee. After the expenses and attorney fee have been paid, the balance of the recovery shall be apportioned between the employer and the employee or his dependents in the same ratio that the amount due the employer bears to the total amount recovered if there is no finding of comparative fault on the part of the employee, or the total damages determined by the trier of fact if there is a finding of comparative fault on the part of the employee.

The manner in which rights under § 287.150, RSMo 2000 may be invoked, which may lead to a workers’ compensation insurance carrier who paid workers’ compensation benefits to an employee recouping those payments from the third-party tortfeasor, need not take a singular form. The insurance carrier may intervene in the suit brought by the employee (or the employee’s representatives) against the third-party tortfeasor. See Brookshire, 111 S.W.3d at 923; Barker v. H & J Transporters, Inc., 837 S.W.2d 537, 538 (Mo.App.1992). The insurance carrier may file a separate suit against the third-party tortfeasor after a cause of action between the employee and third person has been settled or arrived at a verdict. See Home Ins. Co. v. Carmar Group, Inc., 926 S.W.2d 564, 565 (Mo.App.1996).

Other options include the insurance carrier filing a declaratory judgment action against the employee after the employee’s suit against the third-party tortfeasor has been resolved. See Liberty Mut. Ins. Co. v. Garffie, 939 S.W.2d 484, 485 (Mo.App.1997). Yet another method is for the employee to file a declaratory judgment action against the insurance carrier when the parties are unable to agree on the application of § 287.150.3, RSMo 2000. Kerperien v. Lumberman’s Mut. Cas. Co., 100 S.W.3d 778, 780 (Mo.banc 2003); Yaakub v. Aetna Cas. & Sur. Co., 882 S.W.2d 743, 743-44 (Mo.App.1994). We also find cases in which an employee’s attorney or an attorney for one of the employee’s dependents files an interpleader action to determine the appropriate distribution of settlement proceeds. See William H. Pickett, P.C. v. American States Family Ins. Co., 857 S.W.2d 309, 310 (Mo.App.1993); Menees v. Nat’l Super Mkts., Inc., 863 S.W.2d 378, 379 (Mo.App.1993).

Among the various options available to apply the principles from § 287.150.3, RSMo 2000, we find no case in which a judgment was rendered affecting the workers’ compensation hen in which the party who paid the workers’ compensation benefits or held the workers’ compensation lien, either the insurance carrier or the employer, was not a party to the action at the time the judgment was rendered.

The situation we have here is one in which the employee (and his wife) filed suit against Electric Co-op, the third-party tortfeasor. Insurance Company was neither a plaintiff nor a defendant in that action brought by the Dosses. Insurance Company did not intervene in the action, and no one sought to add Insurance Company as a party. The Motion to Determine Workers’ Compensation Lien lists the Dosses as the only plaintiffs and Electric Co-op as the only defendant and carries the same ease number as the petition.

Although Insurance Company had a right to seek to intervene into the Dosses’ case against Electric Co-op, it is well established that “[jjoinder as a party, rather than knowledge of a lawsuit and an opportunity to intervene, is the method by which potential parties are subjected to the jurisdiction of the court and bound by a judgment or decree.” Wilkes v. St. Paul Fire & Marine Ins. Co., 92 S.W.3d 116, 123 (Mo.App.2002). Therefore, Insurance Company had no duty to intervene; the burden of joining additional parties, if indicated, is placed on the parties already in the lawsuit. Id. As well, in general terms, a failure to intervene by an insurance carrier does not waive its right to reimbursement or subrogation. See Buatte v. Gencare Health Systems, Inc., 939 S.W.2d 440, 442 (Mo.App.1996).

Missouri courts have consistently held that no judgment can be granted against someone who is not a party to the case. State ex rel. American Family Mut. Ins. Co. v. Scott, 988 S.W.2d 45, 47 (Mo.App.1998). The determination of whether someone is or becomes a party to the action takes into account whether the person or entity was designated as a party in the petition and whether the person or entity intervened. Id. at 48. If the person or entity was not a party to the action at the time of the judgment, a trial court acts in excess of its jurisdiction by entering a judgment against that person or entity. Id. at 48-49.

That was the situation here. The trial court entered a judgment that was beyond its jurisdiction; thus, that judgment is void. Cramer, 125 S.W.3d at 375. On this basis, the judgment must be reversed.

Conclusion

The trial court’s judgment sustaining the Dosses’ Motion to Determine Workers’ Compensation Lien and ordering the Doss-es’ to pay Insurance Company $11,787.35 to satisfy the workers’ compensation lien is reversed. The cause is remanded to the trial court with directions for it to deny the Motion to Determine Workers’ Compensation Lien and take no further action regarding said motion except as may be related to costs of this action.

GARRISON, P.J., and RAHMEYER, J., concur.

      . When referring to either Mark or Kathy Doss individually, we will use their first names. We mean no disrespect.

      . We note that $270,000.00 represents 75% of $360,000.00, but 25% of $360,000.00 is $90,000.00, rather than the $70,000.00 stated in the judgment. Based on an apportionment of 50% fault to each Mark and Electric Co-op, the total damages sustained would be $360,000.00 (twice the settlement amount of $180,000.00). The numbers in the judgment reflect an amount for total damages sustained of $340,000.00.


author: PER CURIAM.

text:
    Christine SCHINDLER, Personal Representative of the Estate of Robert J. Schindler, and William A. Schindler, Plaintiffs/Respondents/Cross-Appellants, v. Anne M. PEPPLE, individually, and as Trustee of the Margaret Mae McCluskey Revocable Trust Dated March 4th 1986, and as Trustee of the Gertrude C. McCluskey Revocable Trust Dated January 14th 1986, Daniel J. McCluskey, Patrick W. McCluskey, individually, and as Trustee of the Margaret Mae McCluskey Revocable Trust Dated March 4th 1986, and as Trustee of the Gertrude C. McCluskey Revocable Trust Dated January 14th 1986, The Margaret Mae McCluskey Revocable Trust Dated March 4th 1986, and The Gertrude C. McCluskey Revocable Trust Dated January 14th 1986, Defendants/Appellants/Cross-Respondents.
    Nos. ED 83340, ED 83401.
    Missouri Court of Appeals, Eastern District, Division Two.
    Feb. 8, 2005.
    Motion for Rehearing and/or Transfer to Supreme Court Denied March 30, 2005.

      Jack B. Spooner, Wittner, Poger, Spe-wak, Maylack & Spooner, P.C., St. Louis, MO, for appellants.
    Craig A. Smith, Polsinelli Shalton Welte Suelyhaus PC, St. Louis, MO, for respondents.
    Before PATRICIA L. COHEN, P.J., KATHIANNE KNAUP CRANE, J. and ROBERT G. DOWD, JR., J.
   PER CURIAM.

The individual plaintiffs and defendants in this case are the heirs of sisters Gertrude C. McCluskey and Margaret Mae McCluskey (collectively “the aunts”), who died intestate. The trustee defendants in this ease are the successor trustees of Gertrude C. McCluskey’s revocable trust dated March 4, 1986 and Margaret Mae McCluskey’s revocable trust dated March 4, 1986. The individual plaintiffs and defendants are also beneficiaries of these trusts.

A six-unit apartment complex in the City of St. Louis (the Property) had been conveyed to the aunts as tenants in common in 1974. The aunts executed separate revocable trusts during their lifetimes, into which they conveyed most of their property, but they failed to convey the Property into their trusts with a valid deed. As a result, the Property was still in the aunts’ names when they died and it passed to the heirs. The successor trastees, however, assumed that the Property was owned by the trusts and managed it as an asset of the trusts.

This litigation commenced when the trustees discovered that the trusts did not own the Property and requested that plaintiffs convey their shares of the Property to the trusts. Plaintiffs then filed a quiet title action and defendants filed a counterclaim seeking reformation of the invalid 1986 deed. The trial court entered a judgment in plaintiffs’ favor on plaintiffs’ quiet title claim and against defendants on their counterclaim seeking reformation of a deed. As part of its quiet title judgment, it awarded the heirs the net income of the Property, but deducted therefrom defendants’ attorney’s fees litigating this action. Both parties appeal. We modify the judgment so that the amount of defendants’ attorney’s fees is not subtracted from the award of net income. We affirm as so modified.

I. Defendants ’ Appeal

Defendants appeal that part of the judgment denying reformation of a deed and awarding the property owners’ heirs a share of the net income produced over the time period that the heirs were determined to have title. The trial court’s judgment denying reformation and awarding the heirs their shares of net income is supported by substantial evidence and is not against the weight of the evidence. With respect to defendants’ appeal, no error of law appears. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). An opinion reciting the detailed facts and restating the principles of law would have no prece-dential value. We have furnished the parties with a memorandum opinion, for their information only, setting forth the facts and reasons for this order. This part of the judgment is affirmed in accordance with Rule 84.16(b).

II. Plaintiffs’Appeal

In Count I of their amended petition, plaintiffs sought to quiet title to the Property, and also prayed for a “sum equal to back rents paid.” In their answer, defendants requested that any rents awarded be set off by the expenses they had incurred in administering, operating, and maintaining the Property. Likewise, in their counterclaim for contribution, defendants sought expenses for administration, operation, maintenance, taxes, and utilities of the Property. Defendants did not request attorney’s fees in litigating this action. The trial court quieted title in the heirs and awarded the heirs the net income from the Property. However, in calculating the major operating expenses of the Property, the trial court included defendants’ attorney’s fees in litigating the case in the sum of $42,891.95. It then deducted major operating expenses, including defendants’ attorney’s fees, from gross income to find net income of $77,286.66 to be divided among the heirs.

For their sole point on cross-appeal, plaintiffs assert that the trial court erred in subtracting defendants’ attorney’s fees from the net income of the Property. We agree.

The net income of the property is gross income less taxes, mortgage interest, and operating charges. Milton R. Friedman, Contracts and Conveyances of Real Property, Section 9.1 (3rd ed.1975). The trustees’ attorney’s fees are not operating expenses of the Property because they were not incurred to maintain or protect the Property or to enhance its value. The trial court erred in offsetting these fees against rents.

Defendants argue that the trial court did not err because defendants had an obligation to pursue this litigation as trustees of the two trusts and are therefore entitled to pay the legal expenses out of the trusts. It is beyond dispute that a trustee may recover from the trust estate all of its proper expenses, including reasonable attorney’s fees and fees incurred in preserving and protecting trust property. Anselmo v. Guasto, 13 S.W.3d 650, 653 (Mo.App.1999). However, in this case the court did not award the fees out of the trust estate. Rather, it included the fees in the operating expenses of the Property, which was not trust property.

Defendants also argue that the trial court did not err because a court of equity can award attorney’s fees to “balance the benefits.” We disagree. The trial court did not attempt to award attorney’s fees directly, and it could not have done so to “balance the benefits.”

The concept of balancing the benefits is found in an exception to the “American Rule.” This rule generally provides that, absent statutory authorization or contractual agreement, with few exceptions, each party must bear the expense of its own attorney’s fees. David Ranken, Jr. Tech. Inst. v. Boykins, 816 S.W.2d 189, 193 (Mo. banc 1991), overruled on other grounds by Alumax Foils, Inc. v. City of St. Louis, 939 S.W.2d 907, 911 (Mo. banc 1997); 66, Inc. v. Crestwood Commons Redev. Corp, 130 S.W.3d 573, 594 (Mo.App.2003); City of Cottleville v. St. Charles County, 91 S.W.3d 148, 150 (Mo.App.2002).

One of the exceptions to the “American Rule” is that attorney’s fees may, on rare occasions, be recovered when a court of equity finds it necessary to balance benefits where very unusual circumstances have been shown. Ranken, 816 S.W.2d at 193; 66, Inc., 130 S.W.3d at 594; Cottleville, 91 S.W.3d at 150; see also Mayor, Councilmen, & Citizens, Etc. v. Beard, 636 S.W.2d 330, 331 (Mo. banc 1982). A quiet title action is not the type of very unusual ease giving rise to an award of attorney’s fees under this exception. Chapman v. Lavy, 20 S.W.3d 610, 614-15 (Mo.App.2000). “Such fees have more often been approved where paid out of a res and the litigation was designed to benefit the res or give direction to the management or distribution thereof.” Ranken, 816 S.W.2d at 193 (citing Bernheimer v. First Nat. Bank of Kansas City, 359 Mo. 1119, 225 S.W.2d 745, 755 (1949)). This exception would have allowed an award of attorney’s fees from the estate trust for litigation designed to benefit the trust. See DCW Enterprises v. Terre du Lac Ass’n, 953 S.W.2d 127, 132 (Mo.App.1997); Coates v. Coates, 316 S.W.2d 875, 877-78 (Mo.App.1958). But, this exception would not have allowed an award to come from the rents that were not properly included in the trust assets.

Defendants last argue that “the accounts analyzed by the trial court were trust accounts in which rents were deposited.” The fact that the rents were mistakenly deposited in the trust account does not mean that they are to be considered trust funds for the purpose of reimbursing the trustees for their attorney’s fees.

The trial court erred in deducting defendants’ attorney’s fees defending this action from the calculation of net income. Rule 84.14 allows us to give such judgment “as the court ought to give.” Accordingly, we modify the trial court’s judgment to remove the deduction of attorney’s fees from the calculation of net income, so that net income becomes $120,178.61 and that amount is the amount to be divided among the individual heirs according to their respective percentages. As so modified, the judgment of the trial court is affirmed.

Defendant’s motion to remand to the trial court to consider newly discovered evidence is denied.


author: GARY M. GAERTNER, SR., Presiding Judge.

text:
    James F. LOOMIS, Jr., Respondent, v. Susan Wolff LOOMIS, Appellant.
    No. ED 84388.
    Missouri Court of Appeals, Eastern District, Division One.
    Feb. 8, 2005.
    Motion for Rehearing and/or Transfer to Supreme Court Denied March 30, 2005.

      Martin M. Green, Joe D. Jacobson, Green Schaaf & Jacobson, P.C., Clayton, MO, for appellant.
    Richard J. Eisen, Lisa N. Adams, Husch & Eppenberger, LLC, St. Louis, MO, for respondent.
   GARY M. GAERTNER, SR., Presiding Judge.

Appellant, Susan Wolff Loomis (“Wife”), appeals from the judgment of the Circuit Court of St. Louis County dissolving her marriage to Respondent, James F. Loom-is, Jr. (“Husband”). We affirm in part and reverse in part.

Husband and Wife were married on March 27, 1993 in St. Louis County. They have three sons: James, William, and Robert. At the time of trial in July of 2003, James was eight-years old, William was six-years old, and Robert was three-years old. Husband is a physician who owns a small medical practice named Comprehensive Health Partners. He was imputed income of $165,000 per year by the court. Wife is an attorney who works for her family’s real estate business, Wolff Properties, and her gross annual earnings are $117,516.

The parties separated in June of 2001, and Husband filed his petition for dissolution on July 5, 2001. This case was tried before a Special Master (“the Master”). The Master found that a Northwestern Mutual Life Insurance policy (“the insurance policy”) acquired by Wife prior to the parties’ marriage was marital property. The marital property awarded to Wife had a total value of $98,194.04. The insurance policy made up $55,567.04 of the marital property awarded to Wife. The marital property awarded to Husband had a total value of $82,835.76. Additionally, Wife was ordered to pay Husband $6,576.18 for his share of 2001 tax refunds that Wife received. The court then entered a judgment adopting the Master’s findings of fact, conclusions of law, and decree of dissolution. Wife filed a motion to amend the judgment pursuant to Rule 78.04. The court denied the motion to amend. This appeal followed.

In reviewing this bench-tried case, we must affirm the judgment of the trial court unless there is no substantial evidence to support it, it is against the weight of the evidence, it erroneously declares the law, or it erroneously applies the law. McCallum v. McCallum, 128 S.W.3d 62, 65 (Mo.App. E.D.2003). We view the evidence and the reasonable inferences therefrom in the light most favorable to the prevailing party. Id. We recognize that the trial court is in a superior position than this court to judge factors such as the credibility, sincerity, and character of the witnesses. Id.

In her first point on appeal, Wife argues the trial court erred in holding the insurance policy to be marital property.

A trial court does not have jurisdiction to enter a decree dividing property not owned by either husband or wife. Bullard v. Bullard, 929 S.W.2d 942, 946 (Mo.App. E.D.1996). When a spouse has intentionally secreted or squandered an asset in anticipation of divorce, the court may hold that spouse liable for the value of the asset by awarding it to that spouse. McGowan v. McGowan, 43 S.W.3d 857, 866 (Mo.App. E.D.2001). An erroneous label of property as marital property only requires reversal of the order dividing marital property if the error materially impacts the overall distribution of the marital property. Halupa v. Halupa, 943 S.W.2d 272, 278 (Mo.App. E.D.1997).

Wife created the Susan W. Loomis Irrevocable Indenture of Trust (“the trust”) on August 9,1995. Wife is the grantor of the trust, but she is not a trustee or beneficiary of the trust. The insurance policy was transferred to the trust approximately two years and four and a half months after Husband and Wife were married and almost six years before they separated. The evidence indicates that, at the time of the marriage, the insurance policy had a cash value of $.09. The cash value of the insurance policy as of March 7, 2003, was determined by the court to be $55,567.04. Wife testified that the parties’ paid the premium on the insurance policy for one year during the marriage. In the remaining years the premium was paid by dividends generated by the insurance policy. The court found that Wife has an interest in the insurance policy, and that the policy is a marital asset. As a result of the court’s findings, it awarded the cash value of the insurance policy to Wife as marital property.

Wife argues that because she no longer has an ownership interest in the insurance policy the court erred in finding the insurance policy to be marital property. We agree. As the grantor of an irrevocable trust, who is not a trustee or beneficiary of the trust, Wife does not have an ownership interest in the insurance policy contained within the trust. Husband also does not have an ownership interest in the insurance policy, because, according to the terms of the trust, he lost any interest he had as a beneficiary of the trust when the parties separated. Furthermore, there is no evidence that Wife secreted or squandered the insurance policy in anticipation of divorce by placing the insurance policy in an irrevocable trust, six years prior to the parties’ separation, for the benefit of the parties’ children and Husband. Therefore, because neither party has an ownership interest in the insurance policy and the insurance policy was not secreted or squandered by Wife in anticipation of divorce, the court erred in classifying the insurance policy held in the trust as marital property. In light of the significant value of the insurance policy as compared to the entire marital estate, the error materially impacted the overall distribution of marital property and requires reversal. Point granted.-

In her second point on appeal, Wife contends the trial court erred in ordering Wife to pay Husband $6,576.18 for his share of the parties’ 2001 income tax refund that she received.

A court cannot include the value of a marital asset that no longer exists in its division of marital property where one spouse has used that asset for his or her living expenses following separation and prior to the dissolution hearing. Wright v. Wright, 1 S.W.3d 52, 62 (Mo.App. W.D.1999). However, where a spouse secretes or squanders marital property in anticipation of divorce, the court may order reimbursement. Calia v. Calia, 624 S.W.2d 870, 872 (Mo.App. W.D.1981). A trial court does not have to specifically find that it believes monies have been secreted or squandered in anticipation of divorce, because its actions can imply such a conclusion where sufficient evidence exists to support the conclusion. McGowan, 43 S.W.3d at 866. The court is free to disbelieve a witness’ testimony or vague accounting that she used expended money for living expenses. Schneider v. Schneider, 824 S.W.2d 942, 947 (Mo.App. E.D.1992).

The court found Wife received the 2001 federal tax refund check in the amount of $17,857 and the 2001 state tax refund check in the amount of $3,911, and then deposited this money into her checking account. Husband was awarded $6,576.18 for his share of the refund checks. This award amounted to a one-half share of the refund money after deductions for money spent by Wife on an appraisal, a tax preparation, photos of the children, children’s parties, uncovered medical expenses for the children, and “one-half of the Bank of America credit line outstanding balance at the date of separation.”

Wife argues she spent all of the tax refund money on living expenses, and thus this cannot be considered the squandering of marital resources. Wife testified that she lied to Husband when she told him that she gave the tax refunds to her attorney. Wife further testified at trial, when questioned about whether the parties’ anticipated 2002 tax refund should be split equally, that she thinks Husband “owes [her] a whole lot of money and until that’s paid [she] can’t see splitting any money with him.”

The court reduced the amount of 2001 tax refund money Wife owed to Husband by the amount Wife spent on living expenses. The court did not make a specific finding that Wife secreted or squandered the tax refund money, but it can be implied that by awarding Husband a portion of the tax refund, the court believed that Wife secreted or squandered a portion of the money. A finding of secretion or squandering of a portion of the tax refund money is reasonable in this case, especially considering Wife lied to Husband about what happened to the tax refund money and claimed at trial that he owed her a lot of money. The court was free to disbelieve Wife’s testimony that she spent all of the money on living expenses. Therefore, the court did not err in awarding Husband $6,576.18 for his share of the 2001 tax refund checks. Point denied.

In her final point on appeal, Wife asserts the trial court erred in not including any amount for the children’s health insurance expenses paid by Wife’s employer in the court’s calculation of child-rearing costs on its Form 14. Wife claims that due to this alleged error she will receive less in child support from Husband than she is entitled to under the law.

“An award of child support is within the sound discretion of the trial court.” Bauer v. Bauer, 28 S.W.3d 877, 884 (Mo.App. E.D.2000). If the trial court finds the Form 14 calculations provided by the parties to be inaccurate and rejects them, then the court has the duty to provide its own correct Form 14 calculation. Anderson v. Anderson, 4 S.W.3d 639, 640 (Mo.App. E.D.1999). Deference is given to the trial court’s ability to judge the credibility of witnesses. Bauer, 28 S.W.3d at 888.

The directions for line 6(c) of Form 14 provide for the entry of “the monthly amount of any premium paid or to be paid or deducted or to be deducted by an employer from gross monthly income for a health insurance policy for the children who are the subject of this proceeding.”

Wife’s Form 14 submitted at trial stated $275 was the monthly cost for health insurance for the parties’ children. Husband’s Form 14 stated that the monthly cost for the children’s health insurance was $149. Both Husband and Wife testified that Wife’s employer pays for health insurance for the parties’ children. The court found “[hjealth insurance for the minor children is provided through Wife’s company at no cost.”

Wife claimed at trial that her salary would be increased by the amount her employer expends on health insurance if her employer did not pay the health insurance. Nonetheless, the court was not required to accept this testimony. Furthermore, Wife did not present any evidence to support her testimony that her salary would be increased if her employer did not pay for the children’s health insurance premiums. Therefore, the court did not err in giving no credit to Wife for the cost of health insurance for the children in its Form 14. Point denied.

Based on the foregoing, we affirm the portions of the judgment pertaining to the calculation of child support and the reimbursement of $6,576.18 to Husband for his share of the parties’ 2001 tax refund, and reverse the portion of the judgment pertaining to the division of marital property. The cause is remanded to the trial court for further proceedings consistent with this opinion.

SHERRI B. SULLIVAN and BOOKER T. SHAW, JJ., concur.