Agrisource, Inc. v. Johnson

• Decision Date: 18 August 2014
• Docket Number: No. 40340.,40340.
• Citation: 156 Idaho 903,332 P.3d 815
• Court: Idaho Supreme Court
• Parties: AGRISOURCE, INC., an Idaho corporation, Plaintiff–Respondent, v. Robert JOHNSON, Defendant–Cross Defendant–Appellant, and Neil Brown, Inc., an administratively dissolved Idaho corporation, Neil Edwin Brown and Verlie Bond Brown, Defendants–Cross Claimants, and Kristine Johnson, individually, and d.b.a. Johnson Grain, and Johnson Grain, Inc., an Idaho corporation, Defendants–Cross Defendants.

156 Idaho 903

332 P.3d 815

AGRISOURCE, INC., an Idaho corporation, Plaintiff–Respondent,

v.Robert JOHNSON, Defendant–Cross Defendant–Appellant,andNeil Brown, Inc., an administratively dissolved Idaho corporation, Neil Edwin Brown and Verlie Bond Brown, Defendants–Cross Claimants,

and

Kristine Johnson, individually, and d.b.a. Johnson Grain, and Johnson Grain, Inc., an Idaho corporation, Defendants–Cross Defendants.

No. 40340.

Supreme Court of Idaho, Pocatello, May 2014 Term.

Aug. 18, 2014.

Manwaring Law office, Idaho Falls, for appellant. Kipp L. Manwaring argued.

Fletcher Law Office, Burley, for respondent. William Kent Fletcher argued.

BURDICK, Chief Justice.

Robert Johnson ("Johnson") appeals the district court's grant of summary judgment in favor of Agrisource, Inc. ("Agrisource") on Agrisource's breach of contract claim. The Bonneville County district court held that there was no genuine disputed issue of material fact as to Johnson's lack of disclosure of his agency and alleged principal. Johnson argues on appeal that Agrisource had notice that Johnson was the principal's agent because Agrisource should have known Johnson was an agent and disputed issues of fact existed. Johnson also appeals the district court's denial of his third motion for reconsideration and alternate motion for relief. We affirm in part, vacate in part, and remand.

I. FACTUAL AND PROCEDURAL BACKGROUND

This case arises from Agrisource's breach of contract claim against Robert Johnson. Johnson argued that he was not liable on the contract because he was an agent for a disclosed principal named "Johnson Grain Inc." which was owned by Neil Brown. Agrisource is an Idaho corporation that deals in agricultural commodities. Agrisource leased a grain elevator in Ririe, Idaho from Johnson's father, Wydell Johnson. For several years prior to 2006, Johnson was Agrisource's employee and managed the elevator. Agrisource terminated its elevator lease in summer 2006, and Johnson was then unemployed. Brown purchased the grain elevator in August 2006 from Wydell Johnson. After the purchase, Johnson went to work managing the elevator.

In August 2006, Brown owned Ririe Grower Supply & Service, Inc., and changed that corporation's name to "Johnson Grain Inc." Brown was Johnson Grain Inc.'s majority shareholder from August 2006 through December 2007. Johnson and Brown opened a business checking account under Johnson Grain Inc.'s name with both men as signatories. In September 2006, Brown applied with the Idaho Department of Agriculture for a commodity dealer license and a seed buyer license under Johnson Grain Inc.'s name.

After Johnson Grain Inc. received its commodity license, Johnson entered into two contracts to sell durum wheat to Agrisource. One contract was dated December 13, 2006, and the other was January 12, 2007. Both contracts were on Agrisource's commodity purchase form contracts. These forms listed "Johnson Grain" as the purchasing party. Johnson filled in "Johnson Grain" on the contract's seller line and signed his name below. Agrisource received the December contract's wheat. Agrisource paid for the delivered wheat with checks made out to "Johnson Grain," which were endorsed indicating deposit into an account for "Johnson Grain Inc." However, Agrisource did not receive 15,527.87 bushels of wheat promised in the January contract. Agrisource contacted both Johnson and Brown for two years about the undelivered wheat. Neither party delivered the wheat, so in March 2009 Agrisource purchased wheat elsewhere. This resulted in $51,241.97 in damages.

In February 2010, Agrisource filed a claim alleging breach of the January 2007 contract against Brown, Brown's wife, and Neil Brown, Inc. (collectively "the Browns").¹ Agrisource later filed an amended complaint adding Johnson, Johnson's wife, and Johnson's corporation as defendants. Agrisource alleged that Johnson was an individual doing business as Johnson Grain when he entered into the January 2007 contract.

Johnson filed his motion for summary judgment against Agrisource on February 1, 2012. Johnson argued that he was not personally liable because in January 2007 he was an agent for a disclosed principal. He submitted his own affidavit, testifying that Agrisource had notice that Brown planned to purchase the grain elevator. He also stated that he managed the elevator as Johnson Grain Inc.'s employee, and never as Johnson Grain or an individual.

Agrisource then moved for summary judgment, arguing that Johnson d/b/a Johnson Grain entered into the January 2007 contract with Agrisource. Agrisource supported its motion with affidavits from its employee and its President. The Agrisource employee stated that he was Agrisource's representative for contracts with Johnson Grain and that Johnson never notified him that Johnson Grain was a corporation or that Johnson was its agent.

The district court granted Agrisource summary judgment against Johnson on April 6, 2012. The district court held that there was no disputed issue of fact as to Johnson's lack of disclosure of Johnson Grain Inc. as a principal and that Agrisource had no notice of an agency relationship. Based on these conclusions, the court held Johnson was liable on the contract whether or not he later established an agency relationship with Johnson Grain Inc. The district court entered its judgment on April 17, 2012.

Johnson moved to reconsider on April 18, 2012, and submitted his second affidavit. He testified that he told Agrisource that Brown purchased the elevator, Johnson operated it for Brown, and the company had not yet received its commodity license. Johnson also stated that he told Agrisource to make the checks out to Brown's company, Johnson Grain, but he did not recall whether he specifically gave Johnson Grain Inc.'s full name. The district court denied the motion, holding that the record did not support a claim that Johnson adequately disclosed his principal. The court reasoned that Johnson's obligation to disclose agency included specificity as to his principal that he did not provide. The court held that at best Johnson's affidavits showed he disclosed that he was acting on behalf of Brown or Brown's company and not on Johnson Grain Inc.'s behalf. On June 14, 2012, the court entered a judgment with an I.R.C.P. 54(b) certificate. Johnson submitted his second motion for reconsideration on June 18, 2012, with an affidavit from Wydell Johnson. The district court denied that motion at an August 14, 2012 hearing.

The district court entered its amended judgment on August 21, 2012, adding costs and fees. On August 29, 2012, Johnson filed a third motion to reconsider and requested I.R.C.P. 60(b) relief. He amended that motion on September 10, 2012. He supported the motion with his own affidavit and an affidavit from Jeanne Harris, one of Brown's employees. The district court denied the third motion to reconsider under I.R.C.P. 11(a)(2) because the court had already entered a final judgment against Johnson and thus could not consider new evidence. The district court denied Johnson I.R.C.P. 60(b) relief because Harris's testimony was previously discoverable and Johnson did not show unique and compelling circumstances. Johnson timely filed his amended notice of appeal.

II. ISSUES ON APPEAL

1. Whether the district court erred in granting summary judgment.

2. Whether the district court abused its discretion in denying Johnson's third motion to reconsider and alternate motion for relief.

3. Whether either party is entitled to attorney fees on appeal.

III. ANALYSIS

A. The district court properly granted summary judgment to Agrisource.

We review an order for summary judgment using the same standard that the district court used in ruling on the motion. Intermountain Real Properties, LLC v. Draw, LLC, 155 Idaho 313, 316, 311 P.3d 734, 737 (2013). Summary judgment is appropriate if "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." I.R.C.P. 56(c). We construe disputed facts and draw all reasonable inferences from the record in the non-moving party's favor. Fuller v. Callister, 150 Idaho 848, 851, 252 P.3d 1266, 1269 (2011). "However, the nonmoving party cannot rely on mere speculation, and a scintilla of evidence is insufficient to create a genuine issue of material fact." Bollinger v. Fall River Rural Elec. Co-op., Inc., 152 Idaho 632, 637, 272 P.3d 1263, 1268 (2012).

The district court held that there was no genuine issue of fact that Johnson did not disclose Johnson Grain Inc. as an alleged principal and that Agrisource had no notice of Johnson's agency. The court therefore held Johnson was liable to Agrisource whether or not he proved he was Johnson Grain Inc.'s agent. The court concluded that Agrisource had no duty to investigate whether Johnson was an agent for a principal because the agent's burden is to disclose agency and the principal's identity to the other contracting party. The court noted that despite Johnson's affidavits, the evidence was clear that Agrisource became aware of Johnson's agency claim only after the breach occurred. Thus, the court found no issue of fact about whether Agrisource knew Johnson was an agent for Johnson Grain Inc. at the time of the contract. The court denied Johnson's first and second motion to reconsider on these same grounds.

Johnson argues that the district court misapplied agency law's disclosure rules because a principal is disclosed if the other party should know of the principal. Johnson contends that Agrisource should have known Johnson Grain Inc. was his principal because it regularly did business with Johnson and Johnson informed Agrisource that Brown's company did not have its commodity dealer license. Johnson also contends a party does not need to precisely disclose his principal's full name and exact nature to avoid personal liability....