author: JAMES M. SMART, JR., Judge.

text:
    STATE of Missouri ex rel., Acting Public Counsel John COFFMAN, Appellant-Respondent, Missouri Independent Telephone Group, Plaintiff, Southwestern Bell Telephone L.P., Respondent-Appellant, Brooks Fiber Communications of Missouri, Inc., MCI Metro Access Transmission Services, LLC., and MCI Worldcom Communications, Inc., Defendants, and Nu Vox Communications of Missouri, Inc., Respondent, v. PUBLIC SERVICE COMMISSION of the State of Missouri, a State Agency and its Members Kelvin Simmons, Connie Murray, Sheila Lumpe, Steve Gaw, and Bryan Forbis in their Official Capacity, Respondent-Appellants.
    Nos. WD 63075, WD 63092, WD 63096.
    Missouri Court of Appeals, Western District.
    Sept. 28, 2004.
    Motion for Rehearing and/or Transfer to Supreme Court Denied Nov. 23, 2004.
    Application for Transfer Denied March 1, 2005.

      Michael Francis Dandino, Jefferson City, for Appellant.
    Carl James Lumley, Clayton, for Nu Vox, Brooks Fiber, MCI Metro, MCI WorldCom.
    Paul Gerard Lane, St. Louis, for SWB Telephone.
    William Keith Haas, Jefferson City, for PSC.
    Craig Steven Johnson, Jefferson City, for Independent.
    Before RONALD R. HOLLIGER, ROBERT G. ULRICH and JAMES M. SMART, JR., JJ.
   JAMES M. SMART, JR., Judge.

The Office of Public Counsel appeals the circuit court’s affirmance of a Public Service Commission decision that reclassified certain Southwestern Bell services in specific exchanges as “competitive,” thereby decreasing regulation over their pricing. The Office of Public Counsel is joined in the appeal by several private telecommunications companies who intervened below. The Public Service Commission and Southwestern Bell appeal the circuit court’s reversal of the Commission’s decision that other Southwestern Bell services converted to “competitive” status by operation of law in 1999. We affirm the Commission’s decision as to question one and reverse and remand as to question two.

Factual and Procedural Background

In 1996, the Missouri Legislature passed Senate Bill 507 authorizing “alternative local exchange telecommunications companies” to begin providing basic local telecommunications service in competition with “incumbent local exchange telecommunications companies,” such as Southwestern Bell. That bill included provisions to ensure a level playing field for all providers by allowing incumbent local exchange companies the opportunity to gain freedom from traditional rate-of-return regulation. The intent of the legislation was to “bring the benefits of competition to all customers[,] to ensure that incumbent and alternative local exchange telecommunications companies have the opportunity to price and market [their] services to all prospective customers in any geographic area in which they compete[, and to] promote the goals of the federal Telecommunications Act of 1996....” § 392.200.4(2), RSMo.2000. The stated goal of the federal Telecommunications Act of 1996 is “to promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies.” Public Law 104-104 (S.652), 110 Stat. 56, February 8, 1996.

Senate Bill 507 first introduced the classifications of “alternative local exchange telecommunications companies” (ALECs) and “incumbent local exchange telecommunications companies” (ILECs) in Missouri. Those classifications were adapted from the federal Telecommunications Act of 1996. Southwestern Bell Telephone (SWB) qualifies as a “large incumbent local exchange company,” whereas the newer companies are classified as “alternative local exchange companies” (also sometimes referred to as competitive local exchange companies or CLECs). As part of that bill, section 392.245 allows the Public Service Commission to reclassify an incumbent local exchange telephone company as “price-cap regulated” under specific conditions.

In 1997, SWB sought and, following a hearing, was granted reclassification as a “price-cap” regulated company. It had previously been regulated as a “rate-of-return” company under section 392.240. Being reclassified as price-cap regulated reduced the amount of regulation over SWB’s prices. Additionally, the price-cap statute, section 392.245, includes a procedure whereby the individual services of a price-cap regulated company can achieve “competitive” status on an exchange-by-exchange basis. “Competitive” services are subject to the lowest degree of price regulation.

This case arose in March 2001, when the Commission opened an investigation into whether any of SWB’s services in any of its exchanges could be reclassified as “competitive” based on a finding of “effective competition” from the alternative companies. Under section 392.245.5, the Commission is required to make such a review no later than five years following the first certification of an alternative provider in any specific exchange. In addition to SWB, the Office of Public Counsel participated in the case. Also, several alternative local exchange telecommunications companies intervened in the case. The Commission held an evidentiary hearing beginning in September 2001.

Following the hearing, the Commission issued its Report and Order on December 27, 2001, in which it found that certain SWB services in certain SWB exchanges should be reclassified as “competitive” based on a finding that there is “effective competition” from the alternative companies in those exchanges for those services. Those services are SWB’s core business services and related services in the Kansas City and St. Louis exchanges; SWB’s core residential services and related services in the Harvester and St. Charles exchanges; and Common Channel Signaling/Signaling System 7 (“SS7”) and Line Information Database (“LIDB”) services in all of SWB’s Missouri exchanges.

The Commission also found that other SWB services that had earlier been classified as “transitionally competitive” had converted to “competitive” status in 1999 by operation of law. Those services consist of intraLATA private line/dedicated services, intraLATA toll services, Wide Area Telecommunications Services (“WATS”) and 800 services, special access services, and certain operator services. The competitive classification applied to these specific services in all exchanges. SWB’s other services in the vast majority of its exchanges throughout Missouri were found not to be subject to “effective competition” and remain price-cap regulated.

The Office of Public Counsel and the intervenors appealed the Commission’s decision to the Cole County Circuit Court. The circuit court affirmed the finding of “effective competition” and the reclassification of those specific services, but reversed the Commission’s determination that the old “transitionally competitive” services became “competitive” by operation of law. The court reasoned that those services fell under the new “price-cap” regulations when SWB became a “price-cap regulated” company in 1997, and that an “effective competition” analysis was necessary before those services could be reclassified as “competitive.” The court specifically found that the two statutory schemes are “directly inconsistent.”

Public Counsel and the intervenors now appeal the circuit court’s affirmance of the Commission’s reclassification (pursuant to section 392.245) of certain SWB services as “competitive” based upon a finding of “effective competition.” SWB and the Commission appeal the circuit court’s reversal of the Commission’s ruling that certain other services of SWB (as to all exchanges) were automatically reclassified from “transitionally competitive” to “competitive” by operation of law in 1999.

Standard of Review

On appeal, this court reviews the Commission’s decision, not that of the circuit court. State ex rel. GS Tech. Operating Co., Inc. v. The Pub. Serv. Comm’n, 116 S.W.3d 680, 687 (Mo.App.2003). Our function is two-fold: we must first determine whether the decision is lawful and then whether it is reasonable. Mo. Const, art. V, § 18; AT&T Communications of Southwest, Inc. v. Public Serv. Comm’n, 62 S.W.3d 545, 548 (Mo.App.2001). The appellants bear the burden of showing that the decision is either unreasonable or unlawful. See § 386.430.

In determining whether the order is lawful, we exercise unrestricted, independent judgment and correct any erroneous interpretations of law. State ex rel. Sprint Spectrum L.P. v. Mo. Pub. Serv. Comm’n, 112 S.W.3d 20, 24 (Mo.App.2003); GS Tech., 116 S.W.3d at 687. Lawfulness is determined by whether statutory authority for the order exists, and all legal issues are reviewed de novo. State ex rel. AG Processing, Inc. v. Pub. Serv. Comm’n, 120 S.W.3d 732, 734 (Mo. banc 2003).

If the order is lawful, we must then determine whether it is reasonable. Sprint Spectrum, 112 S.W.3d at 24. Reasonableness depends on whether the order is supported by competent and substantial evidence on the whole record; whether the decision was arbitrary, capricious, or unreasonable; or whether the Commission abused its discretion. Id. “The decision of the Commission on factual issues is presumed to be correct until the contrary is shown and we are obliged to sustain the Commission’s order if it is supported by substantial evidence on the record as a whole.” State ex rel. Atmos Energy Corp. v. Pub. Serv. Comm’n, 103 S.W.3d 753, 759 (Mo. banc 2003). See Lagud v. Kansas City Bd. of Police Comm’rs, 136 S.W.3d 786, 791 (Mo. banc 2004) (holding that the standard of review set forth in Hampton v. Big Boy Steel Erection, 121 S.W.3d 220 (Mo. banc 2003), a workers’ compensation review, is applicable to other administrative proceedings, as well).

“Effective Competition”

Appellants Office of Public Counsel and the intervenors (hereafter collectively referred to as “Public Counsel” for convenience)' argue on appeal that the Commission’s decision to reclassify certain SWB services (business and related services in Kansas City and St. Louis; residential and related services in Harvester and St. Charles; and SS7 and LIDB in all exchanges ) from price-cap regulated to “competitive,” based on a finding of “effective competition,” is unlawful and unreasonable. Public Counsel contends that such a finding is not supported by substantial or competent evidence in the record and, therefore, it is against the overwhelming weight of the evidence.

Pursuant to section 392.245, before reclassifying those services as “competitive” and releasing them from price-cap regulation, the Commission was required to find that the services were subject to “effective competition.” That statute reads in relevant part:

The commission shall, from time to time ... investigate the state of competition in each exchange where an alternative local exchange telecommunication company has been certified to provide local exchange telecommunications service and shall determine .... whether effective competition exists in the exchange for the various services of the incumbent local exchange telecommunications company. If the commission determines that effective competition exists ..., the local exchange telecommunications company may thereafter adjust its rates for such competitive services upward or downward as it determines appropriate in its competitive environment.

§ 392.245.5 (emphasis added). Although the term “effective competition” is not defined in the statutes, section 386.020(13) sets forth the factors the Commission must consider in making such a determination:

(a) The extent to which services are available from alternative providers in the relevant market;
(b) The extent to which the services of alternative providers are functionally equivalent or substitutable at comparable rates, terms and conditions;
(c) The extent to which the purposes and policies of chapter 392, RSMo., including the reasonableness of rates, as set out in section 392.185, RSMo., are being advanced;
(d) Existing economic or regulatory barriers to entry; and
(e) Any other factors deemed relevant by the commission and necessary to implement the purposes and policies of chapter 392, RSMo.

At the hearing, the Commission was presented with exhibits and extensive testimony from numerous witnesses, including telephone company employees, Commission staff, economists, and other experts. The Commission received substantial evidence that there are numerous alternative providers who have for several years been providing functionally equivalent or substitutable services throughout SWB’s Missouri exchanges at comparable rates, terms, and conditions; that competitors can enter the market with little capital investment; that local market share gained by the alternative companies throughout the state was significant; that competition is greatest in the urban areas; that the market share for business services gained by competitors statewide exceeded twenty percent and was even greater in urban areas; and that SWB had experienced a declining trend for retail access lines, while at the same time the number of CLEC lines continued to grow.

On December 27, 2001, the Commission issued its Report and Order, in which it made extensive findings (both general and specific) with regard to the status of competition between SWB and its competitors for seventeen categories of services in all of SWB’s 160 Missouri exchanges. The Commission considered substantial evidence relating to each of the five “effective competition” factors and engaged in a detailed analysis of each factor as applied to the specific services and exchanges in question. The Commission considered evidence about the number of carriers certified to provide service in each exchange; the number of carriers actually providing both resale and facilities-based service in the exchanges; the relative longevity of the those alternative carriers; the presence of CLEC-owned facilities; SWB’s loss of market share in the various exchanges; and the degree to which competitors had utilized pricing strategies to obtain substantial market share. The Commission also considered the impact of alternative, non-regulated providers and services, such as internet, wireless, cable TV, and satellite providers, but determined that the evidence was not sufficiently specific to establish “effective competition” from these services. The Commission looked at the specific Chapter 392 purposes “that customers pay only reasonable charges” and that “full and fair competition function as a substitute for regulation” by exerting discipline on prices. The Commission determined that the purposes and policies of Chapter 392 are advanced by the existence of effective competition and that effective competition can be seen in SWB’s loss of substantial market share; the increasing number of carriers; the longevity of those carriers; and the presence of CLEC-owned facilities in the exchanges. The Commission stated that the availability of resale and unbundled network elements in every SWB exchange provides an effective way for competitors to enter the market with little capital investment and noted that the regulatory barriers that once prevented competition clearly are disappearing. In its analysis of the relevant factors, the Commission also considered the additional factors: “customer benefits of additional pricing flexibility” and “presence of alternative non-regulated communications” (i.e., e-mail, cable broadband, and mobile phones). Finally, the Commission determined that its earlier findings in Case No. TO-99-227 — that SWB has fully complied with the requirements of section 271 of the federal Telecommunications Act of 1996 and that SWB’s local markets are “open to competition” — were relevant to its analysis here.

The Commission explained that in an “effective competition” analysis, no single factor is determinative, but that the analysis must include “all relevant factors.” The Commission found that “effective competition” (when considered in the full context of sections 392.245.5 and 386.020(13)) “refers to” competition

adequate to accomplish the purposes that were previously to have been accomplished by the cost floors and maximum prices and to produce the intended or expected results, namely accomplishing the “purposes and policies of chapter 392 ... as set out in section 392.185” over a sustained period running up to five years in the future.

Quoting SWB’s witness, Economist Dr. Debra Aron, the Commission continued, “this means that ‘effective competition’ is competition that exerts sustainable discipline on prices and moves them to the competitive level of true economic cost” (emphasis added).

Public Counsel attacks the Commission’s findings, arguing that the evidence presented with regard to the section 386.020(13) factors was insufficient to support the reclassification of any of SWB’s services as competitive. Public Counsel’s argument focuses primarily on the Commission’s statement that “effective competition” means: “competition that exerts sustainable discipline on pnces.” Public Counsel complains that after the Commission established this as its definition of “effective competition,” it proceeded to abandon that definition in making the determination as to whether effective competition exists. Instead, they argue, the Commission erroneously based its decision upon the mere existence of competition, evidence of SWB’s loss of “market share,” and other unrelated factors. Public Counsel contends that the ultimate purpose of the relevant factors analysis is to determine whether actual, not just potential, discipline on prices has been shown.

According to Public Counsel, the record lacks evidence of sustainable discipline on SWB’s pricing due to competition. Public Counsel says, in fact, that the evidence shows that competition from the alternative providers has had no effect on SWB’s prices. Public Counsel points to testimony from a SWB witness that SWB “has had only limited price changes for most of its services since 1984” and that SWB “has no current plans to change its rates.” Public Counsel contends the Commission’s observation that “[SWBj’s witnesses provided very little evidence that competition has had any specific impact on [SWB]’s prices” is conclusive that competition from the alternative companies has exerted no “sustainable discipline” on SWB’s pricing. The evidence is therefore insufficient, according to Public Counsel, to establish that “effective competition” existed for the services and exchanges in question, and the order must be set aside.

SWB and the Commission (hereafter referred to as “Respondents”) argue that SWB needed only to establish sufficient evidence to support the factors for “effective competition” in section 386.020(13) and that it did so. Respondents point out that the legislature did not enumerate pricing discipline as a factor to be considered. Also, the legislature did not attach disposi-tive weight to any one factor that it enumerated. The Commission may consider additional factors, but only if these factors are both relevant and necessary to implement the purposes and policies of Chapter 392, they say. They argue that the Commission should not consider an additional factor to the exclusion of the four listed factors. We agree.

Despite Public Counsel’s complaints that the Commission’s findings focused too much on the “mere existence” of competition and SWB’s market share losses, this information was in fact relevant to the measurement of the “effective competition” factors. If SWB is losing market share on specific services in specific exchanges, that fact is evidence that those services are extensively available from alternative providers in those exchanges, that the alternative companies’ services are functionally equivalent or substitutable, and that economic or regulatory barriers to entry are not preventing the alternatives from competing. Contrary to Public Counsel’s complaints, the Commission did not limit its analysis to this evidence, but properly considered it in conjunction with all the evidence relating to the applicable factors.

Public Counsel also contends that section 392.245.5 requires evidence that effective competition has caused price reductions prior to ending price-cap regulation over a service in an exchange. It is not a matter of projection, they say, but a matter of determining existing conditions by looking at what has happened so far. They point to no specific statutory language supporting their view. The Respondents point out that whether price discipline is “sustainable” (as opposed to “sustained”) and acts to move prices to the competitive level often can be determined only after the price-cap constraints on both SWB and its competitors are lifted and full and fair competition is allowed to exist for an extended period of time. Or, as the Circuit Court reasoned:

The existence of price discipline is necessarily a predictive future judgment, as it is not until competitive status is found that a price cap company even has the full ability to change its rates as dictated by the competitive environment.

In light of the statutory requirement that specific factors be considered in an “effective competition” analysis, we reject Public Counsel’s basic premise with regard to this point. We do not believe that the Commission was bound by its “price discipline” statement to find that competition necessarily has already caused a decline in SWB’s prices. As noted by the circuit court, the legislature has determined what factors the Commission must consider, and the Commission properly considered and applied those factors here. Demonstrated previous price reduction is not a legislative directive, and rejection of the Commission’s determination of “effective competition” and “competitive” reclassification of SWB’s services on this basis would be inconsistent with legislative intent. We believe it is sufficient that there was substantial evidence of the specified “effective competition” factors.

The Commission is vested with broad discretion to weigh the factors and to assess their relative importance; It specifically stated that none of its findings as to the factors, standing alone, was sufficient for a finding of “effective competition.” Rather, the decision was based on the totality of its findings as to each of the factors, some of which included competition’s effect on pricing.

The Commission’s decision, therefore, that certain SWB services are subject to effective competition in specific exchanges is both lawful and reasonable in that it is supported by substantial competent evidence in the record. Point denied.

“Competitive” by “Operation of Law”?

In 1992, SWB filed a petition seeking classification of certain services as “transitionally competitive,” averring that the services met the requirements of section 392.370.1, in that they were “the same as, substitutable for, or equivalent to” competitive services provided by another carrier within its service territory. In 1993, following a hearing, the Commission granted a “transitionally competitive” classification. Three years later, in January 1996 (prior to the effective date of Senate Bill 507), the Commission — following a complaint filed by the Office of Public Counsel — extended the transitionally competitive status for an additional three-year period. The Commission did not further extend the transitionally competitive status in January 1999.

Under section 392.870, a service classified as transitionally competitive automatically becomes classified as competitive three years after such designation unless the Commission extends the transitionally competitive status for an additional three-year period (for a maximum of two three-year extensions). See §§ 392.370.1 & .2. Thus, the Commission ruled in this case that those services automatically converted to competitive upon the expiration of the initial extension period in January 1999. Services that are classified as “competitive” are subject to a lower degree of price regulation than those that are “transitionally competitive.” See, e.g., §§ 392.370.4, .5, .6, and .7; 392.500; and 392.510.

Public Counsel argues that the Commission erred as a matter of law in so finding, in that it erroneously applied the old statutes governing a “rate-of-return company” instead of applying the newer statutory rules for a “price-cap regulated company,” which is what SWB became after 1997. Those “price-cap” rules require a finding, pursuant to section 392.245, that SWB’s services are subject to “effective competition” based upon an analysis of the factors enumerated in section 386.020(13). Public Counsel claims that the two systems of regulation are not compatible and cannot be intermixed.

The circuit court agreed with Public Counsel and reversed the Commission’s order as to these services. The court found the statutory schemes to be “directly inconsistent” and determined that the legislature “intended” the new statutory scheme to “supplant” the old. The court concluded that although the legislature, when it enacted section 392.245, did not expressly repeal sections 392.361 and .370 or explicitly limit their applicability to non-price-cap regulated companies, the two regimes are “directly inconsistent” with one another. The circuit court held that the Commission’s findings to the contrary violated its duty to make specific findings of effective competition for those services pri- or to reclassification and were, thus, unlawful. The court reversed and remanded as to those specific services.

Respondents assert that the Commission was correct in finding that the services classified in 1993 as “transitionally competitive” automatically converted to “competitive” in 1999, despite SWB’s reclassification as a price-cap regulated company in 1997. Respondents contend that the two statutory schemes are not inconsistent, but that Senate Bill 507 merely introduced another means, or an “alternate path,” for a price-cap regulated ILEC to achieve competitive classification. According to Respondents, “[a] price cap regulated ILEC can proceed under the statewide mechanism available under Section 392.361, or it can proceed on an exchange by exchange basis pursuant to the mechanism contained in Section 392.245.” They also argue that Public Counsel’s position is inconsistent with applicable canons of statutory construction, in that the legislature did not explicitly repeal these older statutes and there is no evidence that the legislature intended an “implied repeal” of them. Finally, they contend that the standard -for finding a service “transitionally competitive” is so similar to the standard for a finding of “effective competition” that a new hearing to make the same findings is unnecessary.

I. Statutory Analysis

Are the statutes “directly inconsistent”? Where the resolution of a point turns on statutory construction, the primary role of this court is to ascertain the intent of the legislature from the language used and, if possible, give effect to that intent. State ex rel. Competitive Telecomm. v. Mo. Pub. Serv. Comm’n, 886 S.W.2d 34, 39 (Mo.App.1994) (citing Abrams v. Ohio Pac. Exp., 819 S.W.2d 338, 340 (Mo. banc 1991)). Effect must be given to the legislative intent based on what the legislature said, not on what the legislature might have intended to say or inadvertently failed to say. Id. “When there is doubt and ambiguity as to the meaning of a statute, the courts give consideration to the practical construction placed upon the act by the agency charged with its administration, although such construction is not binding on the judiciary.” Id.

Public Counsel contends that because SWB became subject to price-cap regulation under section 392.245 in November 1997, the Commission could no longer apply the classification process for rate-of-return companies under sections 392.361 and .370 to any of SWB’s services after that date. Public Counsel says that when SWB became price-cap regulated, all its services, including those that previously had been classified as “transitionally competitive,” converted to “price-cap regulated,” and an “effective competition” determination was thereafter required for each of those services. Thus, the January 1999 date was irrelevant. The price-cap statute clearly establishes a single process for lifting price caps under section 392.245.5, they say, and the statute provides no exception for any such services, but rather applies on its face to all of SWB’s services from the onset of price cap regulation. Public Counsel suggests that a simple reading of the statutes under both statutory regimes makes this readily apparent. We agree.

Senate Bill 507, the Act that introduced price-cap regulation in 1996, contemplates that once a large incumbent local exchange company becomes price-cap regulated, it will be regulated exclusively by price-cap regulations. As noted above, the Act first introduced and defined the classifications of “alternative local exchange telecommunications companies” and “incumbent local exchange telecommunications companies” in section 386.020. That statute also defined a “large local exchange telecommunications company.” § 386.020(30). SWB is both a “large incumbent exchange telecommunications company” and a “large local exchange telecommunications company.” See Case No. TO-97-397, In the Matter of the Petition of Southwestern Bell Telephone Company for a Determinar tion that it is Subject to Price Cap Regular tion Under Section 392M5, RSMo Supp. 1996, 6 Mo. P.S.C.3d 493, 508 (Sept. 16, 1997).

In 1997, SWB sought and was granted status as a price-cap regulated company, pursuant to section 392.245. See id. at 509. Although SWB purportedly “sought” such status, the plain language of section 392.245 makes it clear that SWB, as a large ILEC, was mandated to be so regulated once the Commission made the required determination. See § 392.245.2. As explained by the circuit court, a large ILEC does not “elect” to become subject to price cap regulation. Section 392.245.2 provides that a large ILEC “shall be subject to” price-cap regulation once the Commission determines than an ALEC has been certified to provide basic local service and is providing such service in any part of the large ILEC’s service area. In Case No. TO-97-397, the Commission found that SWB had met these prerequisites and converted it from rate base/rate of return regulation to price cap regulation, effective September 26,1997. The Commission also ordered, pursuant to section 392.245, that “the maximum allowable prices which may be charged by [SWB] are the prices which were in effect on December 31, 1996.” TO-97-397, 6 Mo. P.S.C.3d at 510.

When SWB converted to price-cap regulation, it became subject to all price-cap regulations contained in Senate Bill 507. Section 392.245.1 of that Act specifically provides that the maximum allowable prices for the telecommunications services offered by a price-cap regulated ILEC shall be established pursuant to the price-cap regulations and those “maximum allowable prices shall not be subject to increase except as otherwise provided in this section ” (emphasis added). Sections 392.361 and .370 are not referred to in that section. Those sections are not, in fact, included in Senate Bill 507. The language of section 392.245.1 clearly restricts the ability of a large ILEC, subject to price-cap regulation, to increase its prices. Once the services of a price-cap regulated company are declared “competitive,” however, it is then entitled to adjust its prices upward or downward as it sees fit, pursuant to section 392.245.5. Section 392.245 provides a method by which to achieve “competitive” status under the price-cap statutes. For SWB to have these services declared to be competitive in some other way would clearly violate the mandate of that statute in that it would allow SWB to increase its prices in a way other than pursuant to the provisions of the statute.

Thus, we reject SWB’s argument that the two statutory schemes can be used inter-changeably, i.e., “[a] price cap regulated ILEC can proceed under the statewide mechanism available under Section 392.361, or it can proceed on an exchange by exchange basis pursuant to the mechanism contained in Section 392.245.” We agree with the circuit court’s analysis that the two statutory schemes are “directly inconsistent” and that the provisions of the older statutes no longer apply to the services of a company that becomes subject to price-cap regulation prior to the expiration of their “transitionally competitive” status.

II. Implied Repeal Argument

Respondents contend that Public Counsel’s position necessarily rests on the premise that section 392.245’s enactment somehow effected an “implied repeal” of the earlier statutes. Respondents assert that there is no evidence to support the notion that the legislature intended an implied repeal and note that Missouri courts have long disfavored “repeal by implication,” citing, e.g., St. Charles County v. Director of Revenue, 961 S.W.2d 44, 47 (Mo. banc 1998).

Respondents point out that Senate Bill 507 explicitly repealed eight sections and enacted seventeen sections in their, place and that section 392.245.7 specifically provides that any “company regulated under this section shall not be subject to regulation under subsection 1 of section 392.240 [rate-of-retum regulation].” In light of these facts, they argue, a finding that the legislature intended to repeal sections 392.361 and .370 when it did not explicitly do so is not logical. Had the legislature deemed it necessary to repeal these sections or limit their application to non-price-cap regulated companies, SWB' says, it obviously knew how to do so.

Public Counsel protests that it does not argue that Senate Bill 507 effected an “implied repeal” of sections 392.361 and .370. Rather, says Public Counsel, the older statutes are still applicable, but not to any service of a large ILEC (such as SWB) that has been reclassified as price-cap regulated. Public Counsel says that sections 392.361 and .370 remain valid parts of a regulatory system that still exists (the rate-of-return system); it just does not apply to SWB or to any price-cap regulated company.

The applicable statutes confirm Public Counsel’s position. Under section 392.245.2, a small incumbent local exchange telecommunications company has the option of electing to be regulated as a price-cap company or not. Since a small ILEC has the option of being regulated under the Act, it follows that if it chooses not to do so, it would continue to rely on the procedures found in sections 392.361 and .370 to seek “transitionally competitive” and then “competitive” classifications. Those statutes, therefore, could not be repealed by Senate Bill 507.

, III. “Transitionally Competitive” v. “Effective Competition” Standards

Finally, Respondents suggest- that the requirements for a finding of “transitionally competitive” or “competitive” under the older statutes are so similar to the new “effective competition” factors that the Commission’s previous findings effectively negate the need for additional findings as to the new factors. In other words, if a service qualifies under one, it necessarily would also qualify under the other.

Under section 392.361, the requirements for obtaining a classification of “transitionally competitive” or “competitive” are (1) the existence of “sufficient competition” to justify lesser regulation; (2) the lesser regulation must be consistent with the protection of ratepayers; and (3) the lesser regulation must promote the public interest. See §§ 392.361.2 and .4. Under section 392.370.1, a company must show that the service it seeks to reclassify is the same as, substitutable for, or equivalent to a service already classified under section 392.361 as either “transitionally competitive” or “competitive” in the same service area. These particular services were reclassified as “transitionally competitive” pursuant to section 392.370.1.

For a “competitive” classification under price-cap regulation, section 392.245.5 requires the Commission to determine whether “effective competition” exists in each exchange for the various services of the ILEC. The Commission must consider: (1) the extent to which the services are available from alternative providers; (2) the extent to which the services of alternative providers are functionally equivalent or substitutable; (3) the extent to which the purposes and policies of chapter 392 are being advanced; (4) existing economic or regulatory barriers to entry; and (5) any other factors deemed relevant by the Commission and necessary to implement the Chapter’s purposes and policies. § 386.020(13).

Respondents say Public Counsel ignores the fact that before reclassifying these specific services as transitionally competitive, the Commission already had to determine that they were subject to sufficient competition to justify a lesser degree of regulation, that such lesser degree of regulation is consistent with the protection of the rate payers, and that it promotes the public interest. These determinations actually were made only indirectly because SWB sought “transitionally competitive” status pursuant to section 392.370.

Although we find that all SWB’s services became subject, exclusively, to price-cap regulation in 1997, we acknowledge that the state of competition with regard to these specific services was examined before they were classified as transitionally competitive in Case No. TO-93-116, 1 P.S.C.3d 479. That analysis took into consideration the purposes and policies of Chapter 392 as well. See id. The state of competition with regard to these services was again examined to some extent at the hearing in this case, Case No. TO-2001-467. In its Report and Order, the Commission made limited findings with regard to the state of competition for each of these services before declaring them automatically converted to “competitive” by operation of law in 1999.

In remanding, we ask the Commission to re-examine the competitive status of these particular services by applying the “effective competition” factors to the evidence the Commission has already accumulated with regard to these services both from the 1993 “transitionally competitive” hearing in Case No. TO-93-116 as well as from the hearing in this underlying case. Consistent with the requirements of section 392.245.5, it will be necessary for the Commission to determine whether these services are effectively competitive on an exchange-by-exchange basis. Since the original finding of transitionally competitive applied to the entire service area, we assume sufficient evidence for such a finding is available.

For the foregoing reasons, we hold that the Commission erred in finding that the services in question converted to competitive status in 1999. When SWB became subject to price-cap regulation in 1997, all its services became subject to price-cap regulation at that time, and the Commission erred in finding competitive status under the old statutes. We reverse the Commission’s findings to the contrary, and we remand for the Commission to analyze the evidence it already has available in order to determine whether “effective competition” for these services currently exists. If the Commission deems it necessary, the Commission may receive additional evidence to determine the issues in question.

Conclusion

For the foregoing reasons, the judgment of the Commission is affirmed as to Point I and reversed and remanded as to Point II.

HOLLIGER and ULRICH, JJ., concur.

      . An "alternative local exchange telecommunications company” is one that has been certified by the Commission to provide services in a specific geographic area subsequent to December 31, 1995. § 386.020(1). An "incumbent local exchange telecommunications company” is one that was authorized to provide basic local telecommunications service in a specific geographic area as of December 31, 1995. § 386.020(22).

      . Public Service Commission Case No. TO-2001-467, In the Matter of the Investigation of the State of Competition in the Exchanges of Southwestern Bell Telephone Co.

      .Communications Cable-Laying Company, d/b/a Dial US, became the first alternative company certified in Missouri in January 1997, and it began providing service in Springfield immediately thereafter. Competition in most other major exchanges began shortly after January 1997, and now extends to all SWB Missouri exchanges.

      . The Office of Public Counsel, authorized by section 386.700, has a duty to represent and protect the interests of the public in any proceeding before or appeal from the Commission. See § 386.710. For convenience, the Office of Public Counsel is sometimes hereafter referred to as "Public Counsel.”

      . IntraLATA service, commonly known as "local long distance” service, refers to telecommunications service between points within the same LATA (local access and transportation area). A "LATA" is defined as a federally approved contiguous geographic area that defines a permissible area of operations for the Bell Operating companies. § 386.020(29).

      . Citing section 386.500.2, SWB and the Commission assert that Public Counsel is precluded from contesting the Commission’s decision as to the SS7 and LIDB services because they failed to raise this claim in their motions for rehearing with the Commission. Public Counsel does not respond to this assertion in their briefs, and we see nothing indicating that it was raised; we therefore deem the argument with regard to these specific services abandoned and decline to address it.

      . The Chapter 392 purposes and policies, as set out in section 392.185, are:
      (1) Promote universally available and widely affordable telecommunications services;
      (2) Maintain and advance the efficiency and availability of telecommunications services;
      (3) Promote diversity in the supply of telecommunications services and products throughout the state of Missouri;
      (4) Ensure that customers pay only reasonable charges for telecommunications service;
      (5) Permit flexible regulation of competitive telecommunications companies and competitive telecommunications services;
      (6) Allow full and fair competition to function as a substitute for regulation when consistent with the protection of ratepayers and otherwise consistent with the public interest;
      (7) Promote parity of urban and rural telecommunications services;
      (8) Promote economic, educational, health care and cultural enhancements; and
      (9) Protect consumer privacy.

      . SWB presented evidence that over 600 inter-exchange carriers were providing inter-exchange service in Missouri and over sixty CLEC’s were providing basic local services.

      . In the Matter of the Application of Southwestern Bell Telephone Co. to Provide Notice of Intent to File an Application for Authorization to Provide in-region InterLATA Services Originating in Mo. Pursuant to Section 271 of the Telecommunications Act of 1996, 9 Mo. P.S.C.3d 181 (2000).

      . IntraLATA private line/dedicated services, intraLATA toll services, Wide Area Telecommunications Services (“WATS”) and 800 services, special access services, and certain operator services.

      . Section 392.370.1 states in relevant part:
      After the effective date of an order ... which finds, pursuant to section 392.361, that a ... service is sufficiently competitive to justify a lesser degree of regulation, the same, substitutable, or equivalent service offered by a transitionally competitive or noncompetitive telecommunications company [such as SWB] shall be classified as transitionally competitive ... if the telecommunications service granted a lesser degree of regulation is authorized ... anywhere within the ... service area of the transitionally competitive or noncompetitive telecommunications company.

      . Public Service Commission Case No. TO-93-116, In the Matter of Southwestern Bell Telephone Company’s Application for Classification of Certain Services as Transitionally Competitive, 1 P.S.C.3d 479 (Dec. 21, 1992). The finding of "transitionally competitive” as to four of these services was affirmed by this court in State ex rel. Competitive Telecomm. v. Mo. Pub. Serv. Comm’n, 886 S.W.2d 34 (Mo.App.1994). The findings as to the WATS and 800 services were not appealed.

      . The court held:
      ... this Court concludes, as a matter of law, that the Missouri legislature intended to restrict the application of [these specific provisions of) Section 392.361 ... and Section 392.370.... The Court also concludes that even where the Commission had already determined, prior to the enactment of Section 392.245 ..., that certain services offered by a noncompetitive telecommunications company should be classified as "transitionally competitive,” the legislature intended that the enactment of Section 392.245 ... supplants that determination, and determinations made by the Commission under the provisions of [the older statutes] no longer apply to a telecommunications company that becomes subject to price cap regulation ... prior to the expiration of "transitionally competitive” status.

      . We acknowledge that the Act does provide for some exceptions from the stringent regulation of section 392.245, but those exceptions are specifically delineated and clearly contemplate that they are exceptions to the rule. See, e.g., §§ 392.245.4(5); 392.245.11; 392.246. The Act does not reference sections 392.361 or .370 as exceptions to the requirements of section 392.245.

      . Section 386.020(30) defines a "large local exchange telecommunications company” as a local exchange company that has at least one hundred thousand access lines in Missouri.

      . The statutes are referred to only to the extent that a portion of § 392.530, which, in part, explained why sections 392.361 to 392.520 were originally enacted in 1987, was left in as part of Senate Bill 507.

      . Section 392.245.5 provides:
      If the commission determines that effective competition exists in the exchange, the local exchange telecommunications company may thereafter adjust its rates for such competitive services upward or downward as it determines appropriate in its competitive environment.

      . Section 392.245.2 provides in relevant part:
      A small incumbent local exchange telecommunications company may elect to be regulated under this section upon providing written notice to the commission if an alternative local exchange telecommunications company has been certified to provide basic local telecommunications service and is providing such service in any part of the small incumbent company's service area, and the incumbent company shall remain subject to regulation under this section after such election.

      . Those purposes and policies are listed, supra, at p. 7, n. 7.


source: Caselaw Access Project

author: SHERRI B. SULLIVAN, J.

license: Public Domain

text:
    The FRU-CON/FLUOR DANIEL JOINT VENTURE, et al., Appellants/Cross-Respondents, v. CORRIGAN BROTHERS, INC., Respondent/Cross-Appellant.
    No. ED 82587.
    Missouri Court of Appeals, Eastern District, Division One.
    Oct. 19, 2004.
    Application for Transfer to Supreme Court Denied Jan. 26, 2005.
    Application for Transfer Denied March 1, 2005.

      Phillip George Greenfield, Daniel E. Ble-gen, Kansas City, MO, J. Roger Edgar, Mark A. Menghini, Christopher John Daus, St. Louis, MO, for appellant.
    James R. Dowd, Michael A. Gross, Joseph Fredric Yeckel, St. Louis, MO, for respondent.
   SHERRI B. SULLIVAN, J.

Introduction

The Fru-Con/Fluor Daniel Joint Venture (“the Joint Venture”) appeals from the trial court’s Amended Judgment entered after a bench trial awarding a net judgment in favor of Corrigan Brothers, Inc., d/b/a Corrigan Company Mechanical Contractors (“Corrigan”) in the amount of $2,497,063.50. Corrigan cross-appeals.

Factual and Procedural Background

The Procter and Gamble Paper Products Company (“Procter and Gamble”) hired the Joint Venture as the general contractor to build a $485 million paper products manufacturing facility in Cape Girardeau County, Missouri (the “Project”). During the latter half of 1998, the Joint Venture, as general contractor, and Corrigan, as subcontractor, entered into two contracts, the “Papermaking contract” and the “Balance of Plant contract,” both of which called for Corrigan to perform certain pipe fabrication and mechanical work in the construction of the Project.

Throughout the course of the Project, the Joint Venture made substantial modifications to the scope of Corrigan’s work. These modifications came in the form of change orders. A change order is an agreement between parties that modifies or changes the original contract terms. Nicholson Const. Co. v. Missouri Highway and Transp. Com’n, 112 S.W.3d 6, 11 (Mo.App. W.D.2003). The parties had significant disputes over the pricing of these change orders. As a result of their disputes over how much and when Corri-gan would get paid for the change orders, Corrigan quit working on the Project in mid-September, 1999.

The Joint Venture filed suit against Cor-rigan, alleging that Corrigan breached the contracts by not completing the required scope of work. The Joint Venture sought damages for completion of the work by replacement contractors, back charges, and attorney’s fees and costs. Corrigan counterclaimed for breach of contract, cardinal change and/or abandonment, quantum meruit and intentional or negligent misrepresentation, and sought damages for unpaid work that was performed, prejudgment interest, attorney’s fees and costs.

The trial court found that as to the Papermaking contract, Corrigan breached the contract by walking off the job. At the time Corrigan left, the Joint Venture’s expert witness Brad Bright estimated that about 70% of the base work and change work in the Papermaking contract had been completed. The trial court accepted this estimate and used it for its damage calculations, also using a reasonable labor modifier of 43% on top of Corrigan’s base rate, to find that Corrigan had been underpaid by $345,152.74 on the Papermaking contract. The trial court did not award the Joint Venture any damages from Cor-rigan’s breach, because it found the Joint Venture failed to distinguish between work remaining to be performed under Corri-gan’s base contract and unresolved PCA work. The trial court found that Corrigan was not responsible for the unresolved PCA work, and since the Joint Venture did not allocate these costs, it was impossible for the trial court to assess the Joint Venture’s damages for Corrigan’s breach of contract.

As for the Balance of Plant contract, the trial court found that the parties mutually abandoned their agreement for the following reasons. The Balance of Plant contract called for Corrigan’s work to be completed by February 1, 1999, but Corrigan could not even start until approximately that date. The contract required Corrigan to perform its work in accordance with ISOs, or drawings, to which the Joint Venture had made “a multitude of changes.” Specifically, the Joint Venture issued 258 revised ISOs amounting to 132% of the initial drawings. The contract required Corrigan to work four 10-hour shifts, but significantly more hours were required from the Joint Venture’s schedule changes and ISO revisions. The trial court held that because the Balance of Plant contract was abandoned, Corrigan was entitled to recover in quantum meruit. The trial court awarded Corrigan a net subtotal of $1,925,624.60, a figure which the trial court arrived at by taking $5,781,032.00, for the reasonable value of Corrigan’s services performed, and subtracting $3,638,388.00, which had already been paid to Corrigan and subtracting $195,273.08 in back charges against Corri-gan.

Both parties appeal from the trial court’s judgment.

Standard of Review

In a court-tried case, the decree or judgment of the trial court will be sustained by the appellate court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.banc 1976). Appellate courts should exercise the power to set aside a decree or judgment on the ground that it is against the weight of the evidence with caution and with a firm belief that the decree or judgment is wrong. Id.

Discussion

In its first point, the Joint Venture alleges that the trial court erred in failing to award the Joint Venture, as damages for Corrigan’s breach and failure to complete the Papermaking contract, its cost of completing Corrigan’s remaining work under the Papermaking contract. This point assumes Corrigan’s breach of contract and only challenges the trial court’s award of damages to the Joint Venture for the breach. However, Corrigan’s first three points on cross-appeal dispute the trial court’s finding that it breached the Paper-making contract at all. Therefore, we shall address Corrigan’s first three points on cross-appeal prior to addressing whether the amount of damages awarded for such breach were appropriate.

Corrigan’s First Three Points on Cross-Appeal

In its first point, Corrigan claims that the trial court erred in concluding that Corrigan breached the Papermaking contract because the Joint Venture, and not Corrigan, breached the contract, in that the Joint Venture (1) rejected Corrigan’s reasonable pricing proposals, which denied Corrigan compensation for change work and forced Corrigan to subsidize change work; and (2) wrongfully terminated the Papermaking contract after Corrigan justifiably suspended performance pending resolution of payment for change work.

In its second point, Corrigan contends that the trial court erred in concluding that Corrigan breached the Papermaking contract because the parties abandoned the contract prior to the time that Corri-gan suspended work, in that (1) the Joint Venture substantially delayed the start-up and the performance of Corrigan’s work on the contract, (2) the Joint Venture ordered sweeping and continuous changes that significantly changed the cost of the contract from the price initially agreed upon by the parties, (3) the contractual procedure for determining and paying for change costs proved incapable of resolving change payment issues, (4) the Joint Venture pursued a strategy of delaying payment for extra work performed by Corri-gan, and (5) the Joint Venture’s “advance” payment to Corrigan and Corrigan’s stated desire to convert to a time-and-material contract or some other replacement of the original lump sum contract demonstrated the parties’ acknowledgment that the original contract was abandoned.

In its third point, Corrigan asserts that the trial court erred in concluding that Corrigan breached the Papermaking contract because the Joint Venture effected a cardinal change and thereby breached the contract, in that (1) after providing Corri-gan with a complete set of isometric drawings for its bidding and building, the Joint Venture changed or revised approximately 2,500 of the 3,600 drawings, (2) the Joint Venture abused its authority under the contractual provisions for ordering changes and making payment for change orders, and (3) the combination of continuous changes to and revisions of isometric drawings and withholding of reasonable contract modifications fundamentally altered Corrigan’s work under the contract.

Condensed, Corrigan’s first three points assert that the parties abandoned the contract prior to the time that Corrigan suspended work (Pt. 2); or that the Joint Venture breached the Papermaking contract because it rejected Corrigan’s reasonable pricing proposals and wrongfully terminated the Papermaking contract after Corrigan justifiably suspended performance (Pt. 1); and/or that the Joint Venture effected a cardinal change and thereby breached the contract (Pt. 3).

Abandonment

Corrigan cannot be guilty of a breach of the Papermaking contract if it has been mutually abandoned by the parties. Schwartz v. Shelby Const. Co., 338 S.W.2d 781, 788 (Mo.1960). An abandonment may be accomplished by express mutual consent or by implied consent through the actions of the parties. Id. Where acts and conduct are relied on to constitute an abandonment, they must be positive, unequivocal and inconsistent with an intent to be further bound by the contract. Id. The question of abandonment is essentially one of fact. Id. at 787. Our State Supreme Court perspicaciously noted in Schwartz that “The law is not complicated, though the facts may be.” Id. at 788.

In the instant case, there was no express consent to abandon the contract, so we focus on whether there was implied consent consisting of positive and unequivocal acts and conduct inconsistent with an intent to be further bound by the contract. We find that there was not. Rather, the parties engaged in extensive negotiations and amendments to the Papermaking contract. As changes to the contract became necessary, the Joint Venture assigned a “PCA” number for purposes of pricing the changes. The contract provided that the Joint Venture could require Corrigan to begin change work before the parties had agreed on the price for the work. The price for the change work would be negotiated at a later date. Despite the large number of changes, they were allowed by the contract itself, and did not excuse Cor-rigan’s performance under the contract. The breakdown in negotiations as to the price and payment for these changes ultimately led Corrigan to walk off the project, but did not constitute a mutual abandonment of the contract. Point denied.

Did the Joint Venture Breach the Papermaking Contract?

Corrigan also maintains that the Joint Venture breached the Papermaking contract because it rejected Corrigan’s reasonable pricing proposals and wrongfully terminated the Papermaking contract after Corrigan justifiably suspended performance, and/or that the Joint Venture effected a cardinal change and thereby breached the contract.

Once Corrigan walked off the project, or “suspended its performance,” as Corrigan phrases it, the Joint Venture had every right to terminate the contract. Corrigan had already breached it. Corri-gan maintains that walking off the job is not a breach of contract as a matter of law.

Merely walking off a job is not a breach of contract as a matter of law. When the owner, or someone standing in his stead, prevents a contractor from completing performance, the contractor’s failure to complete his work is excused, and he is not regarded as having breached the contract.

Curators of University of Missouri ex rel. Shell-Con, Inc. v. Nebraska Prestressed Concrete Co., 526 S.W.2d 903, 911 (Mo.App.1975). In the instant case, however, the Joint Venture did not prevent Corri-gan from performance. Rather, the two parties could not come to an agreement on pricing, and Corrigan thus voluntarily ceased performance.

In its decision, the trial court adopted Corrigan’s proposed 43% labor modifier in determining the complete value of the unresolved change work. Corrigan argues that since, as the trial court found, Corri-gan’s pricing proposals were reasonable, and the Joint Venture had rejected them during negotiations, then consequently the Joint Venture breached the contract. We find this deduction is not necessarily true.

Although the trial court adopted Corri-gan’s proposed 43% labor modifier, it also found that the Joint Venture did not negotiate in bad faith regarding the pricing of the change work. Rather, it found that the inability of the parties to reach an agreement on the pricing proposals was a consequence of the nature and extent of the Project and the parties’ inability to communicate effectively throughout the duration of the Project. Therefore, even though Corrigan’s proposed 43% modifier was reasonable, it does not necessarily follow that the Joint Venture breached the contract by not accepting it. Rather, the Papermaking contract itself gave the Joint Venture the power to make changes and assumed that the parties would come to an agreement on the corresponding price for those changes. The Papermaking contract’s change order clause reads as follows:

[The Joint Venture] may, at any time, by written instructions ... direct [Corri-gan] to make changes, additions, deletions concerning the Subcontract Work, and [Corrigan] shall promptly proceed in compliance with such written instructions .... An increase or decrease in the Subcontract Price resulting from such changes shall be agreed upon in writing by the parties hereto.

Such an agreement never happened. As such, we agree with the trial court in finding that Corrigan, not the Joint Venture, breached the Papermaking contract when it walked off the job because the Joint Venture would not accept Corrigan’s proposed rates. Point denied.

Corrigan also theorizes that the Joint Venture effected a “cardinal change” and thereby breached the contract. The doctrine of cardinal change breach of contract is rooted in federal contract law. Beaubois v. Marous Brothers Construction, Inc., No, 02-CV-985, 2002 U.S. Dist. Lexis 26625 at *9 (N.D.Ohio Oct. 17, 2002). As a general rule, cardinal change cases have involved suits brought by contractors against the United States Government in the U.S. Court of Claims. Id. The Beaubois Court noted that “no court has limited the doctrine to cases brought against the United States and the recent trend is to analyze the concept of cardinal change even in the context of private construction contracts.” Id. Even so, the Court then went on to decline to adopt the cardinal change doctrine in Ohio, noting that neither Mississippi nor Illinois had adopted the doctrine. There are no Missouri cases addressing the cardinal change doctrine. Applying the cardinal change doctrine to the instant case has no support or precedent in Missouri law. Additionally, the arguments presented by Corrigan in support of its contention that the Joint Venture effected a cardinal change are essentially the same ones presented in support of its arguments that the Joint Venture breached and/or abandoned the contract. Therefore, any discussion would be redundant. Point denied.

The Joint Venture’s Appeal

Now we return to the Joint Venture’s first point on appeal, in which it argues that the trial court should have awarded it its cost of completing Corri-gan’s remaining work under the Paper-making contract. In support of its argument, the Joint Venture asserts that it sustained its burden of proving these damages in that (1) the Joint Venture’s takeover costs of completing the remaining work under the base subcontract, subcontract modifications and unresolved PCAs, which Corrigan was obligated to perform, exceeded the price for which Corrigan was bound to complete such work; and (2) the Joint Venture was not required to allocate its completion costs for the base subcontract, modifications and unresolved PCA work.

The trial court rejected the Joint Venture’s claim for damages from Corrigan’s failure to complete its work on the Paper-making contract because the Joint Venture’s evidence did not distinguish between work remaining to be performed under Corrigan’s base contract and unresolved PCA work.

The Joint Venture contends that the calculation of its damages under Missouri law is simple and straightforward, and may be expressed as the cost to the Joint Venture to complete Corrigan’s remaining scope of work, less the unpaid balance of the total price of Corrigan’s remaining work. The Joint Venture asserts that no allocation of takeover costs was necessary for the trial court to properly determine the Joint Venture’s damages based on the evidence before it.

The Papermaking contract provides for Corrigan’s failure to complete its work by authorizing the Joint Venture “to take over or cause others to take over any work being performed and to be performed under this Subcontract.” The Joint Venture contends that this provision makes Corri-gan responsible for the cost of every change order transmitted before Corrigan suspended its work. We disagree. We reject the Joint Venture’s contention that Corrigan would be responsible for the unresolved PCAs. We find that a more logical interpretation of the contract would be that the contract made Corrigan responsible for the cost of completing the work under its base contract, and that the cost of the Joint Venture’s change orders remained the responsibility of the Joint Venture. Because the Joint Venture did not distinguish between these two items, making it “impossible to know what portion of the takeover costs [were] Corrigan’s responsibility, and what portion would be the Joint Venture’s responsibility,” the trial court could not award the Joint Venture any damages for its takeover costs.

The Joint Venture argues that it was not required by the contract to allocate its takeover costs. Regardless of whether the contract did not require the Joint Venture to allocate its takeover costs, we do not find that Corrigan is obligated to pay for the unresolved change work in this case. Because the Joint Ventee did not separate those costs out, it is not entitled to any damages. Point denied.

In its second point, the Joint Venture contends that the trial court erred in awarding Corrigan penalty interest and litigation expenses pursuant to the Missouri Prompt Payment Act, Section 431.180, on Corrigan’s claims under the Balance of Plant contract because Corri-gan was not entitled to litigation expenses under the act in that the trial court’s damage award was in quantum meruit and not premised on a “scheduled payment” due under the Balance of Plant contract and, further, no “scheduled payment” was due under the Balance of Plant contract.

Under Section 431.180, the trial court may award litigation costs and interest upon a showing that the parties entered into a contract for construction work, and the Joint Venture failed to make payments in accordance with the contract. The trial court found that the parties entered into the Balance of Plant contract for construction work in late 1998, and that the Joint Venture withheld payment to Corrigan in the amount of $66,000.00. The trial court awarded Corrigan $918,910.24 in prejudgment interest (1 ½ % per month from March 8, 2000, the date of the lien filing, through January 6, 2003, the date of judgment), and $307,085.70 in attorney’s fees pursuant to Section 431.180.

The trial court’s award of damages in quantum meruit does not preclude the trial court from also awarding interest and attorney’s fees under the Prompt Payment Act, because the parties did enter into a contract, and the statute does not require the contract to be in existence throughout the duration of the project. Even if the trial court found that the Balance of Plant contract had been abandoned, the parties still entered into it, and the Joint Venture still withheld payment to Corrigan for its work done pursuant to the contract. Therefore, the statute’s requirements were met, and thus the trial court was well within its rights to award these additional damages. Further, the statute specifically provides for an independent cause of action to recover penalty interest and litigation expenses “in addition to any other award of damages.” Section 431.180.2 (Emphasis added).

The Joint Venture further argues that no “scheduled payment” was due under the Balance of Plant subcontract. On the contrary, the contract required “monthly or other periodic progress payments.” On August 31, 1999, Corrigan submitted pay application number 11 for $66,282.53. The Joint Venture refused to pay Corrigan’s pay application number 11. We find this is sufficient evidence that a scheduled payment was due, and the Joint Venture refused to pay it. Point denied.

Corrigan’s Last Two Points On Cross-Appeal

In its fourth point, Corrigan states that the trial court erred in assessing back charges against Corrigan on the Balance of Plant work because the Joint Venture breached the Balance of Plant contract in that the Joint Venture failed to give Corrigan seventy-two (72) hours to cure any defective work after a notice of default as required by the Balance of Plant contract.

The Balance of Plant contract provides: If Subcontractor for any reason fails or is unable to commence, prosecute and complete the Subcontract Work skillfully, promptly, and diligently ... [the Joint Venture] shall have the right, if it so elects and without prejudice to any other rights it may have, by giving seventy-two (72) hours written notice to Subcontractor, to take over or cause others to take over any work being performed and to be performed under this Subcontract, or any part thereof, ... and to complete such work for the account of Subcontractor by whatever method [the Joint Venture] deems reasonably practicable and expedient....

Corrigan maintains that by refusing to give Corrigan a chance to cure any defective work as required by the Balance of Plant contract, the Joint Venture waived any entitlement to back charges. We disagree. The trial court found that the parties had abandoned the contract. A contracting party cannot be guilty of a breach of a contract that has been mutually abandoned. Schwartz, 338 S.W.2d at 788. Thus, Corrigan’s claim that it was entitled under the contract to a 72-hour period to cure its defective work fails. The trial court assessed back charges to reduce Corrigan’s quantum meruit recovery by the amount needed to correct Corrigan’s defective work under the Balance of Plant contract, and thus was entirely proper. Point denied.

In its fifth and final point, Corri-gan maintains that the trial court erred in attempting to reduce the rate of post-judgment interest in the amended judgment because Corrigan was entitled to an award of penalty interest at the rate of one and one-half per cent (1 ½ %) per month under the Prompt Pay Act, in that: (1) the trial court lacked jurisdiction to reduce the award of penalty interest in the original judgment because the rate of post-judgment interest was not raised in a timely filed after-trial motion; or (2) assuming, arguendo, the court had jurisdiction to amend the rate of interest, the court erred in concluding that the Prompt Pay Act does not apply to post-judgment interest awards.

In a footnote in its amended judgment, the trial court indicated that post-judgment interest was fixed at the nine percent (9%) per annum rate specified by Section 408.040.1. We find that the trial court was well within its discretion to set the interest rate in such fashion. The footnote in the amended judgment did not amend the original judgment, as there was nothing in the original judgment regarding post-judgment interest. As such, the rate was set under Missouri law; i.e., the 9% per an-num rate set forth in Section 408.040.1. We recognize that there was mention in the accompanying memorandum that post-judgment interest would be awarded at $949.62 per day, which reflected the Prompt Pay Act penalty interest rate. However, this mention was not part of the “judgment.”

Further, Corrigan was not, as it argues, “entitled” to an award of penalty interest at the rate of one and one-half per cent (1½ %) per month under the Prompt Pay Act, Section 481.180. Section 431.180.2 provides, in pertinent part, that the Court “may ... award interest at a rate of up to one and one-half percent per month .... ” (Emphasis supplied). The use of “may” indicates that the trial court’s decision to award interest is discretionary. City of Cottleville v. American Topsoil, Inc., 998 S.W.2d 114, 117 (Mo.App. E.D.1999).

As a side note, “where a judgment creditor appeals on the ground of inadequacy from a recovery in his favor, and the judgment is affirmed on appeal, the judgment creditor is not entitled to interest pending such appeal.” Investors Title Co. v. Chicago Title Ins. Co., 18 S.W.3d 70, 72 (Mo.App. E.D.2000). As such, Corrigan is not entitled to post-judgment interest pending this appeal. Corrigan’s last point on cross-appeal is denied.

The judgment of the trial court is affirmed.

GARY M. GAERTNER, P.J., and MARY K HOFF, J., concur.

      . At the trial court level, neither party requested findings of fact pursuant to Missouri Rule of Civil Procedure 73.01. However, the trial court believed that an explanation of its decision was appropriate and thus recited some factual background. In the same vein, this Court will attempt to glean and concisely recite from the voluminous factually detailed record only the facts pertinent to the points on appeal.

      . Change orders are sometimes referred to as potential change authorizations, or "PCA's” in this opinion

      . A labor modifier accounts for conditions under which the labor has to be performed, which is added to the base labor rate. Examples of such conditions would be working in cramped spaces, high temperatures, dangerous altitudes, and so on.

      . "ISOs” refer to Isometric Drawings, which are drawings reflecting the design and placement of mechanical piping and associated materials for the paper machines.

      . As provided by the contract, Corrigan submitted pricing proposals for the unresolved changes. For most changes that contained a labor component, Corrigan applied a 43% modifier to its base labor rate to account for conditions under which the work had to be performed. The Joint Venture favored a 10-15% labor modifier, which obviously resulted in a wide disparity in the parties’ proposed pricing for the changes.

      . All statutory references are to RSMo 2000, unless otherwise indicated.

      . Corrigan has filed a Motion for Award of Attorney’s Fees. This court has the authority to allow and fix the amount of attorney's fees on appeal. Dominion Home Owners Ass'n, Inc. v. Martin, 953 S.W.2d 178, 183 (Mo.App. W.D.1997). We determine that since each party respectively lost its own appeal and prevailed upon the other's appeal, that each party should bear its own attorney’s fees.


author: LAWRENCE E. MOONEY, J.

text:
    Betty DOWNEY, Appellant, v. UNIVERSITY INTERNISTS OF ST. LOUIS, INC. and Robert Brinkman, M.D., Respondents.
    No. ED 83231.
    Missouri Court of Appeals, Eastern District, Division Three.
    Oct. 26, 2004.
    Motion for Rehearing and/or Transfer to Supreme Court Denied Jan. 26, 2005.
    Application for Transfer Denied March 1, 2005.

      Mary Coffey, Philip E. Adams, St. Louis, MO, for appellant.
    J. Thaddeus Eckenrode, St. Louis, MO, for respondents.
   LAWRENCE E. MOONEY, J.

In this lost-chance-of-survival action, plaintiff Betty Downey appeals the judgment of the trial court entered upon a jury verdict in her favor, but awarding no damages. Mrs. Downey claims the trial court erred in entering its judgment because the verdict was inconsistent, was not supported by the evidence, and was grossly inadequate. Because we hold the verdict was inconsistent, we reverse and remand.

Factual Background

Mrs. Downey brought this action after her husband, Patrick Downey, died of lung cancer. Mr. Downey’s primary-care physician was Dr. Brinkman, an internist and cardiologist, and one of the defendants in this action. Mr. Downey entered the hospital in December of 1996 for heart-bypass surgery, to be performed by Dr. High-bloom, also a defendant in this action. Two chest x-rays were taken during this hospitalization. The x-rays were interpreted as showing a lesion in Mr. Dow-ney’s left lung. Specifically, the first x-ray was interpreted by a radiologist as showing a “1.5 cm nodular density at the left base which is, perhaps, minimally enlarged from prior studies. Neoplasm cannot be completely excluded. If clinically warranted, CT scanning could be performed.” The second x-ray was interpreted as showing a “persistent nodular density adjacent to the left heart border and malignancy cannot be excluded.” No further tests or evaluations were ordered in response to these reports.

Mr. Downey first learned of the abnormality on his chest x-rays in the fall of 1998, during a visit to Dr. Brinkman’s office. Mr. Downey was then referred to a lung specialist and, after further evaluation, the lesion was diagnosed as cancerous. As experts testified to at trial, the cancerous lesion was likely at an early stage — stage I or stage II — in December of 1996. And, had the cancer been detected and treated in late 1996 or early 1997, Mr. Downey would have had a 50 to 75% chance of survival. At the time Mr. Dow-ney’s cancer was diagnosed in November of 1998, the cancer had progressed to a more advanced stage — stage IV — and had metastasized to Mr. Downey’s spine. By this time, Mr. Downey had a 1% chance of survival; the cancer was virtually incurable. Mr. Downey died of lung cancer nine months later, in August of 1999.

Mrs. Downey brought an action against Dr. Brinkman, University Internists of St. Louis, Inc. (Dr. Brinkman’s employer), and Dr. Highbloom for lost chance of survival. Mrs. Downey alleged the defendants failed to inform her husband of the results of the December 1996 x-rays and failed to order any further testing in response to those chest x-rays. Mrs. Downey alleged these failures fell below defendants’ standard of care and caused her husband to lose a material chance of survival.

A verdict-director submitted in regards to plaintiffs claim against defendants Dr. Brinkman and University Internists read as follows:

Your verdict must be for plaintiff Betty Downey and against defendant University Internists of St. Louis, Inc. and defendant Robert Brinkman, M.D. if you believe:
First, Robert Brinkman, MD either
Failed to inform Patrick Downey of the results of the chest x-ray reports generated during the 12/96 hospitalization, or
Failed to do timely follow up testing in response to the results of the chest x-ray reports generated during the 12/96 hospitalization, and
Second, Patrick Downey then had a material chance of survival, and,
Third, defendant Robert Brinkman, MD, in any one or more of the respects submitted in Paragraph First, was thereby negligent,
and,
Fourth, such negligence directly caused or directly contributed to cause Patrick Downey to lose all or a material part of such chance of survival.

The jury was also instructed as follows:

If you find in favor of plaintiff Betty Downey, then you must determine the total amount that you believe will fairly and justly value any damages Patrick Downey sustained before death with the absence of recovery directly caused or directly contributed to cause, and any damages Betty Downey sustained after the death and is reasonably certain to sustain in the future which the death of Patrick Downey directly caused or directly contributed to cause. You must state such total amount in your verdict, and you must itemize that total amount by the categories of damages set forth in the verdict form.
In your verdict, you must also state, as a percentage, the chance of survival that you find Patrick Downey lost. In determining the total amount of damages, you must not reduce such damages by the percentage you assess as the lost chance of survival. The judge will compute the final award by multiplying the total amount you find as damages by the percentage you assess as the lost chance of survival.
You must not consider grief or bereavement suffered by reasons of the death.

The jury returned a verdict in favor of Mrs. Downey and against University Internists and Dr. Brinkman. The jury assessed damages in all categories at zero dollars, and found that there was no percentage of a chance of survival lost. The court did not accept this verdict, finding it inconsistent. The court further instructed the jury that the court could not accept the verdict as written, that the verdict was inconsistent, and that the jury should examine its verdict in light of all the instructions.

After further deliberations, the jury returned with a verdict. The jury again found in favor of Mrs. Downey on her claim against defendants University Internists and Dr. Brinkman. And, the jury again assessed all damages at zero dollars. This time, however, the jury found that Patrick Downey lost a 5% chance of survival. Plaintiffs attorney again requested that the jury be sent back because of an inconsistent verdict, arguing it was inconsistent to find the loss of a 5% chance of survival and then to award no damages. Finding the verdict consistent because the jury had found some percentage chance of survival lost, the court denied plaintiffs request and accepted the verdict. Plaintiff now appeals.

Discussion

We are confronted with a jury verdict finding for a plaintiff but assessing no damages. There are two lines of authorities in cases such as this, wherein recovery for an unliquidated amount is sought. One line of cases, which includes the federal courts and some state jurisdictions, considers such a verdict as a verdict for the defendant and enters judgment accordingly. See Haley v. Byers Transp. Co., 394 S.W.2d 412, 416 (Mo.1965); Porter v. Mallet, 596 S.W.2d 451, 452 (Mo.App. E.D.1980). The other line of cases holds that the verdict is inconsistent and self-contradictory, and therefore cannot stand. Porter, 596 S.W.2d at 452; Boone v. Richardson, 388 S.W.2d 68, 76 (Mo.App.1965)(overruled on other grounds). As recognized by this Court, Missouri appellate courts have generally treated a verdict that finds a defendant negligent but awards no damages as inconsistent and invalid. White v. Otten, 810 S.W.2d 704, 705 (Mo.App. E.D.1991); see also Boone, 388 S.W.2d at 76; Porter, 596 S.W.2d at 453. Our Supreme Court has recognized the existence of these two lines of cases, but has not resolved the split of authority. Haley, 394 S.W.2d at 416, White, 810 S.W.2d at 705.

Jury verdicts are inconsistent when they are so contradictory that they cannot be construed with certainty or when they cannot fairly be resolved as a definite finding in favor of either party. Franklin v. Allstate Ins. Co., 985 S.W.2d 893, 896 (Mo.App. W.D.1999). It is true we should consider a verdict in light of the entire record to see if we can ascertain the jury’s intent. White, 810 S.W.2d at 705. And, it is also true that we should construe the verdict liberally so that it may be given effect where possible. Id. However, even following these guiding principles, we are unable to give effect to the verdict in this case. Here, a jury found that Patrick Downey had a material chance of surviving his cancer and that his chance of survival was lost due to Dr. Brinkman’s negligence. But it awarded no damages. The jury’s award of no damages whatsoever starkly contradicts its finding of the issues for the plaintiff and that Mr. Downey had suffered harm — the loss of a material chance of survival. A patient does suffer a harm when a doctor fails to diagnose or adequately treat a disease. Wollen v. DePaul Health Center, 828 S.W.2d 681, 684 (Mo. banc 1992). The harm suffered is the loss of the chance of recovery. Id. Thus, logically, an award of damages must follow from a finding of liability to compensate for the harm the patient has suffered. To allow an award of no damages when a patient has lost a material chance of survival is to value his life at nothing.

The form of the instructions cannot save the defendants from the necessary inconsistency of the verdict in this case. Defendants argue that the verdict in this case is consistent because a finding of damage is not a required or essential element of the lost-ehance-of-survival verdict-director, nor does the word “damages” appear in the instructions, as it would be in a negligence verdict-director. They argue that because damages are considered by the jury independently of the “loss of chance” verdict-director, the jury was free to find damages were not warranted, even after rendering a plaintiffs verdict. We are unpersuaded. The last finding of the verdict-director does constitute a finding of “damages.” In order to find for plaintiff, the verdict-director required the jury to believe that the defendants’ “negligence directly caused or directly contributed to cause Patrick Dow-ney to lose all or a material part of such chance of survival.” And, our Supreme Court held in Wollen that a plaintiff who has lost a material chance of survival has necessarily suffered harm. We find no meaningful distinction between harm suffered and damage sustained.

Equally unavailing is the defendants’ argument that this verdict is not inconsistent because of evidence of Mr. Downey’s “co-morbidities.” Mr. Downey did have multiple health conditions, including coronary artery disease, congestive heart failure, diabetes, hypertension, hyperlipidemia (high cholesterol), and a moderate to moderately severe ejection fraction (a measure of heart pump function). He had a history of a heart attack and two heart-bypass surgeries. Defendants argue that the jury could have concluded that, because Mr. Downey suffered from these multiple illnesses, he did not suffer damages from the loss of chance of surviving the cancer because he died, or would have died, from these other conditions.

But here, Patrick Downey died from the cancer the defendants negligently failed to diagnose, not some other ailment. Further, there was no evidence that these other ailments would have necessarily taken his life. All experts agreed that Mr. Downey’s health conditions would reduce his life expectancy, but no one testified as to how much Mr. Downey’s life expectancy would have been reduced. A defense expert opined that in 1996, Patrick had a 30% chance of dying from his heart condition in three years — or by December of 1999. Yet, Mr. Downey lived until August of 1999, just four months shy of this three-year mark. And, the evidence showed that Mr. Downey had done well, and with regards to his heart, had become symptom-free after his heart-bypass surgery in 1996. Further, there was testimony that Mr. Downey’s other health conditions had not compromised him by the time of his death from cancer. It is true that a jury is free to believe or disbelieve the evidence presented. But, in the absence of evidence that Mr. Downey died, or would have died, from these other conditions in August of 1999, his other ailments cannot explain an award of no damages. Even if those other ailments did shorten Mr. Dow-ney’s life expectancy, they might operate to reduce his damages, but not to eliminate damages entirely.

In summary, a jury found that Patrick Downey had a material chance of surviving his cancer and that his chance of survival was lost due to Dr. Brinkman’s negligence. But it awarded no damages to compensate for the harm suffered. This verdict is inconsistent, and therefore it will not support the entry of any judgment. Boone, 388 S.W.2d at 76-77. Accordingly, we reverse and remand the cause for a new trial on all issues.

WILLIAM H. CRANDALL, JR., J., concurs.

CLIFFORD H. AHRENS, P.J., concurs in result.

      . Mrs. Downey brought the action individually and as plaintiff ad litem. Mrs. Downey also brought a wrongful-death action against the defendants, but this claim was not submitted to the jury.

      . This verdict-director was based on MAI 21.08; the same verdict-director was submitted in regards to plaintiff’s claim against defendant Dr. Highbloom.

      .The jury found in favor of defendant Dr. Highbloom on plaintiff’s claim for lost chance of survival against defendant Highbloom. Plaintiff does not appeal the judgment in favor of Dr. Highbloom.

      . Those categories are (1) past economic, including past medical; (2)past non-economic; and (3) future non-economic.

      . The jury was instructed in accordance with MAI 2.06: Explanatory — Inconsistent or Erroneous Verdict.

      . Because we find this verdict inconsistent, we do not address plaintiff's remaining points on appeal.


author: PER CURIAM.

text:
    STATE of Missouri, Respondent, v. Charles COOPER, Appellant.
    No. ED 82968.
    Missouri Court of Appeals, Eastern District, Division Four.
    Oct. 26, 2004.
    Motion for Rehearing and/or Transfer to Supreme Court Denied Jan. 5, 2005.
    Application for Transfer Denied March 1, 2005.
    Daniel L. Mohs, St. Louis, MO, for appellant.
    Jeremiah W. (Jay) Nixon, Atty. Gen., Daniel N. McPherson, Jefferson City, MO, for respondent.
    Before LAWRENCE E. MOONEY, P.J., LAWRENCE G. CRAHAN, J., and MARY K. HOFF, J.
   ORDER

PER CURIAM.

Charles Cooper appeals the judgment entered upon the jury’s verdict finding him guilty of trafficking in the second degree. We have reviewed the briefs of the parties and the record on appeal and find no error of law. An extended opinion would serve no jurisprudential purpose. We have, however, provided a memorandum opinion for the use of the parties only setting forth the reasons for our decision. The judgment is affirmed pursuant to Rule 30.25(b).


text:
    STATE of Missouri, Respondent, v. Larry D. IVY, Appellant.
    No. ED 83834.
    Missouri Court of Appeals, Eastern District, Division Four.
    Oct. 26, 2004.
    Motion for Rehearing and/or Transfer to Supreme Court Denied Jan. 5, 2005.
    Application for Transfer Denied March 1, 2005.
    Amanda R. Schehr, St. Louis, MO, for appellant.
    Jeremiah W. (Jay) Nixon, Atty. Gen., Richard A. Starnes, Jefferson City, MO, for respondent.
    Before LAWRENCE E. MOONEY, P.J., LAWRENCE G. CRAHAN, J., and MARY K. HOFF, J.
   ORDER

PER CURIAM.

Larry D. Ivy appeals the judgment entered pursuant to the jury’s verdict finding him guilty of one count of sale of a controlled substance. We have reviewed the briefs of the parties and the record on appeal and find no error of law. An extended opinion would serve no jurisprudential purpose. We have, however, provided a memorandum opinion for the use of the parties only setting forth the reasons for our decision. The judgment is affirmed pursuant to Rule 30.25(b).


text:
    STATE of Missouri, Respondent, v. Johnny HAMPTON, Appellant.
    No. ED 83785.
    Missouri Court of Appeals, Eastern District, Division Two.
    Oct. 26, 2004.
    Motion for Rehearing and/or Transfer to Supreme Court Denied Jan. 5, 2005.
    Application for Transfer Denied March 1, 2005.
    Amanda R. Schehr, Office of the Public Defender, St. Louis, MO, for appellant.
    Jeremiah W. (Jay) Nixon, Attorney General, Cheryl Caponegro Nield, Asst. Attorney General, Jefferson City, MO, for respondent.
    Before PATRICIA L. COHEN, P.J. and KATHIANNE KNAUP CRANE and ROBERT G. DOWD, JR., JJ.
   ORDER

PER CURIAM.

Johnny Hampton appeals from the judgment, following a jury trial, convicting him of second degree trafficking and unlawful use of a weapon, in violation of sections 195.223 and 571.030.1(1), RSMo 2000, respectively. He complains the trial court improperly limited his closing argument.

Having reviewed the briefs of the parties and the record on appeal, we conclude the trial did not abuse its discretion. An extended opinion would serve no jurisprudential purpose. We have, however, provided the parties a memorandum setting forth the reasons for our decision. We affirm the judgment pursuant to Rule 30.25(b).