ST. LOUIS — The Missouri Court of Appeals for the Eastern District has dismissed an appeal brought by AJO MO and Hi-Rise in a complex legal dispute concerning the ownership and management of several state-licensed medical marijuana dispensaries.
The court ruled that the appellants lacked standing to challenge a consent judgment entered between Delphi Management Solutions and multiple business entities operating under the Heya brand.
Delphi, which owns 40% of the Heya dispensaries, and Heya Retail, which owns the remaining 60% and manages dispensaries in St. Charles, Kirksville, Eldon and Park Hills.
In 2020, Delphi and Heya Retail formalized their business arrangement through amended and restated operating agreements (OAs) and identical management services agreements. Disputes later emerged between Delphi and Heya Retail regarding those agreements, prompting Delphi to file suit in early 2023.
As part of Delphi’s claims, it sought relief for breach of contract, breach of fiduciary duty, and other related matters. Heya Retail countered with its own claims, including a request for declaratory judgment on the parties’ respective rights under the OAs.
Meanwhile, a financial institution involved in the dispute, Triad Bank, filed an interpleader petition to determine proper ownership of funds it was holding. This action brought AJO and Hi-Rise into the lawsuit as third-party defendants.
A central complication arose from Delphi’s separate agreement with AJO and Hi-Rise, which gave them an option to purchase 95% of Delphi’s interests in the Heya dispensaries. However, that option has never been exercised.
When Delphi and Heya Retail decided to settle their dispute and submitted a consent judgment for court approval, AJO and Hi-Rise objected and filed a motion to intervene. They argued that the consent judgment would affect their option to purchase and sought to become parties to the case.
The trial court rejected their motion and entered the consent judgment on May 6, 2024. When AJO and Hi-Rise appealed, they asserted six points of error, contending that the court erred both in denying their motion to intervene and in entering the judgment without considering their interests.
The appellate court firmly disagreed, emphasizing that consent judgments are not typically appealable under Missouri law unless a party is directly aggrieved. Since AJO and Hi-Rise were not parties to the settlement and had not exercised their purchase option, they had no immediate or legally enforceable interest at stake.
“A judgment entered by consent of the parties cannot be appealed, for it is not a judicial determination of rights, but a recital of an agreement,” wrote Judge Michael S. Wright in the court’s opinion.
The panel found that the consent judgment only addressed disputes between Delphi and Heya Retail and explicitly stated it did not affect the option to purchase agreement involving AJO and Hi-Rise.
“An option is but a right of election to exercise a privilege,” the court noted, quoting earlier case law.
The judges also found procedural faults in AJO and Hi-Rise’s effort to challenge the trial court’s denial of their motion to intervene. The appellants failed to provide a hearing transcript or other evidentiary support necessary for appellate review. Although a hearing was held and briefs were submitted, the record lacked sufficient documentation to support their claims.
Ultimately, the court dismissed the appeal of the consent judgment and affirmed the denial of the motion to intervene.
Judge Robert M. Clayton III concurred, while Presiding Judge John P. Torbitzky concurred in the result only.
The appellate was represented by John D. Comerford, Matthew D. Ampleman, Carolina C. Kalberg and Jared D. Howell.
The respondent was represented by Jennifer A. Briner, Patrick T. Connor, Nathan J. Risch, Jill R. Rembusch and Grant J. Mabie.
The defendants represented themselves.
The third-party plaintiff was represented by Steven D. Hall and Rebecca L. James.
The third-party defendant was represented by Clifford Nichols Jr. and Patrick W. Stufflebeam.
Missouri Court of Appeals, Eastern District case number: ED11218
