DiPietro v. Boynton

• Citation: 628 A.2d 1019
• Parties: Lawrence C. DiPIETRO et al. v. David J. BOYNTON et al.
• Decision Date: 20 July 1993
• Court: Supreme Judicial Court of Maine (US)

Page 1019

628 A.2d 1019

Lawrence C. DiPIETRO et al. v. David J. BOYNTON et al.

Supreme Judicial Court of Maine.

Argued June 17, 1993.

Decided July 20, 1993.

John S. Campbell (orally), Poulos & Campbell, P.A., Portland, for plaintiffs.

Paul K. Marshall (orally), Kingfield, for defendants.

Before WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, COLLINS, RUDMAN and DANA, JJ.

GLASSMAN, Justice.

The defendant David J. Boynton appeals from the judgments entered in the Superior Court (Cumberland County, Cole, J.) on jury verdicts awarding compensatory and punitive damages to plaintiffs Jamestown Post and Beam, Inc. (Post) and Jamestown Lumber and Supply, Inc. (Lumber) on their claims against Boynton for breach of contract and conversion and compensatory damages to plaintiff Samson Construction Corp. (Samson) on its claim against Boynton for conversion. Post, Lumber, and Samson cross-appeal, challenging the court's order granting Paul K. Marshall's motion for a summary judgment on plaintiffs' breach of contract and fraud claims against Marshall and from the court's order granting Boynton's motion for a directed verdict in his favor on the plaintiffs' claim of fraud. DiPietro cross-appeals from the court's order granting Boynton's motion to vacate the judgment notwithstanding the jury's verdict awarding DiPietro punitive damages. ¹ Finding no error in the record, we affirm the judgments.

Post, Lumber, and Samson were construction-related corporate businesses owned and operated by DiPietro. On May 4, 1984, Boynton contracted with DiPietro personally and with Post for the lease of Boynton's property containing a sawmill. At the same time, Boynton entered in a separate contract with Post giving it a one-year option to purchase the millsite for $60,000, providing that on payment of $6,000 to Boynton at the time of exercising the option, Boynton would transfer title to the premises. The balance of the purchase price would be seller financed through a promissory note for $54,000 secured by a mortgage on the premises. Lumber and Samson utilized the millsite along with Post in related businesses. On October 10, 1984, Post assigned its rights pursuant to the option agreement to Lumber. On January 21, 1985, Lumber attempted to exercise the option by sending a $6,000 check to Boynton with a letter expressing its readiness to execute the promissory note and mortgage pursuant to the agreement, seeking delivery of the millsite deed, and advising that payment of rent would be discontinued. Boynton cashed Lumber's check but did not respond to the letter. Lumber sent Boynton two more letters seeking to exercise the option before it lapsed, but Boynton did not respond.

In December 1985, Boynton instituted a suit against DiPietro and Post for their alleged breach of the lease agreement and was awarded minimal damages on December 8, 1987. On December 3, 1986, Boynton secured a writ of possession for the mill by a default judgment on a complaint for a forcible entry and detainer. In April 1987, Boynton removed the plaintiffs' equipment, inventory, and vehicles from the mill without notice to those parties.

The plaintiffs instituted the present action in December 1987. By their multi-count complaint, the plaintiffs sought, inter alia, damages from Boynton for his breach of the option contract, conversion of their property, and fraud, and from his attorney, Paul K. Marshall, for Marshall's collusion in the alleged breach of contract and fraud. After a hearing, the court granted Marshall's motion for a summary judgment on the plaintiffs' claims against him.

At the trial of this case and after the close of the plaintiffs' evidence, the court granted Boynton's motion for a directed verdict on the plaintiffs' fraud claim against him. The jury returned verdicts in favor of the plaintiffs, awarding Post compensatory damages for the breach of contract and conversion in the respective amounts of $64,000 and $2,000; awarding Lumber compensatory damages for the breach of contract and conversion in the respective amounts of $56,000 and $1,000; and awarding Samson compensatory damages in the amount of $5,600 for conversion. In addition, Post, Lumber, and DiPietro were each awarded punitive damages in the amount of $10,000. The trial court granted Boynton's subsequent motion for a judgment notwithstanding the verdict and vacated the punitive damage award to DiPietro.

1. The Standing of Post and Lumber to Sue.

By his appeal, Boynton first contends that the trial court erred as a matter of law when it denied his motion to dismiss the claims of both Post and Lumber. He argues that because the Secretary of State had suspended Post on June 6, 1986 for its failure to appoint a clerk in accordance with 13-A M.R.S.A. § 308 (Supp.1992) and Lumber on November 12, 1986 for its failure to file an annual report for 1986 in accordance with 13-A M.R.S.A. § 1302 (1981 & Supp.1992), the corporations were without standing to institute the present action. The corporate powers of both entities, however, had been reinstated by the time the trial court ruled on Boynton's motion to dismiss.

"[W]here a corporation has cured its default, whether due to pressure caused by inability to proceed with a lawsuit or by inability to exercise some other corporate power, the purposes of the statute have been fulfilled and no further sanction is necessary." Michigan Rural Dev., Inc. v. El Mac Hills Resort, Inc., 34 Mich.App. 505, 191 N.W.2d 733, 735 (Div. 1 1971) (holding that a corporation suspended for a failure to file an annual return "is entitled to proceed with a pending lawsuit if it cures its default at any time prior to actual dismissal of the suit"). Furthermore, when the state sanctions a corporation, it does not aim in so doing to protect those who have committed torts against or breached contracts with that corporation. See Hydrotech Systems v. Oasis Waterpark, 52 Cal.3d 988, 277 Cal.Rptr. 517, 803 P.2d 370, 378 n. 8 (1991) ("The [fictitious-name] statute's purpose is not served by extending its protection to one who committed a tort against a fictitiously named business"). Dismissal of the claims of Post and Lumber after their corporate powers had been reinstated would have served no statutory purpose, and the trial court properly denied Boynton's motion.

2. The Inapplicability of Claim Preclusion.

Boynton next contends that the trial court erred in denying his motion for a summary judgment on the ground that the plaintiffs are barred from instituting the present action against him. He argues that pursuant to M.R.Civ.P. 13(a)(1) any claim plaintiffs had against him arising out of his alleged breach of the option contract had to be stated as a counterclaim in his December 1985 action against DiPietro and Post for their alleged breach of the lease agreement and the failure to do so precludes the plaintiffs' present action.

M.R.Civ.P. 13(a)(1) provides in pertinent part that

a pleading shall state as a [compulsory] counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim....

Claim preclusion exists when the second claim arises out of the same transaction as the first, previously-litigated claim.

What factual grouping constitutes a 'transaction' [is] to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage.

Beegan v. Schmidt, 451 A.2d 642, 645 (Me.1982) (quoting Restatement (Second) of Judgments § 24 (1982)). Here, the breach of the lease complained of in Boynton's suit against DiPietro and Post is sufficiently separate in time and origin from the claimed breach of the option contract and conversion in the present action as to be considered a separate transaction. Accordingly, the trial court properly denied Boynton's motion for a summary judgment.

3. Boynton's Liability for Breach of the Option Contract.

Boynton further contends that the evidence is insufficient to support the finding that he breached the option contract. He first argues that it is DiPietro and Post, as opposed to himself, who should be liable for a breach of contract. He asserts that the lease and the option constituted a single agreement, as evidenced by their simultaneous execution and interrelated subject matter. Boynton asserts that this comprehensive agreement between the parties was first breached not by his failure to perform on the option, but rather by DiPietro's and Post's contravention of the terms of the lease.

"[W]here several instruments are made part of one transaction, they will be read together and each will be construed with reference to the others, although the instruments do not in terms refer to each other." Business Credit Leasing, Inc. v. City of Biddeford, 770 F.Supp. 35, 39 (D.Me.1991) (applying Minnesota law) (quoting Marso v. Mankato Clinic, Ltd., 278 Minn. 104, 153 N.W.2d 281, 289 (1967)). The "question of whether the documents are ... made part of the same transaction and should be read together ... 'is governed by the intent of the parties manifested at the time of contracting and viewed in light of the surrounding circumstances.' " Id. at 39 (quoting Farrell v. Johnson, 442 N.W.2d 805, 807 (Minn.Ct.App.1989)). Here, the record discloses that the lease and the option were separate, distinct agreements. The lease was between Boynton and DiPietro and Post. The option was between Boynton and Post. Each agreement was capable of independent enforcement. Neither the lease nor the option refer to the other agreement. Neither agreement contains an integration clause. At the time of the execution of the documents, Boynton assented to DiPietro's clearly expressed intention...