Dahn v. Dahn

• Decision Date: 30 June 2011
• Docket Number: No. WD 71626.,WD 71626.
• Citation: 346 S.W.3d 325
• Parties: Susan Beth DAHN, Appellant,v.Marcus Dewitt DAHN, A–1 Alarms, Inc. and First Community Bank, Respondents.
• Court: Missouri Court of Appeals

346 S.W.3d 325

Susan Beth DAHN, Appellant,

v.Marcus Dewitt DAHN, A–1 Alarms, Inc. and First Community Bank, Respondents.

No. WD 71626.

Missouri Court of Appeals, Western District.

June 30, 2011.

Patrick R. Miller, Overland Park, KS, for appellant.Anita I. Rodarte, Kansas City, MO, Rebecca L. Leonard, Lee's Summit, MO, Kelly H. Rose, Odessa, MO, and Gary Steinman, Gladstone, MO, for respondent.Before: ALOK AHUJA, P.J., and VICTOR C. HOWARD and GARY D. WITT, JJ.ALOK AHUJA, Judge.

The marriage of Susan and Marcus Dahn was dissolved in December 2006. Ten months later, in October 2007, Susan Dahn (“Wife”) commenced this action in the circuit court, alleging that prior to the dissolution Marcus Dahn (“Husband”) had misappropriated certain checks made payable solely to Wife, which constituted her shareholder distributions from their closely-held corporation, A–1 Alarms, Inc. In the present action Wife asserts claims for conversion and breach of fiduciary duty against Husband, claims for negligence and breach of fiduciary duty against A–1, and a claim for conversion against First Community Bank (the “Bank”), the financial institution at which Husband deposited Wife's distribution checks. The circuit court granted summary judgment to all of the defendants. Because we conclude that the claims against Husband and A–1 are barred by res judicata, and that Wife cannot claim conversion against the Bank because she did not receive delivery of the checks Husband allegedly misappropriated, we affirm.

Factual Background

Husband and Wife were married from July 1, 1977 until the dissolution of their marriage on December 19, 2006. During their marriage Husband and Wife were the sole shareholders of A–1, a subchapter S corporation, with Husband owning 65% of A–1's stock and Wife the remaining 35%. Husband was President of A–1 and managed the business.

Based on her ownership interest Wife was entitled to 35% of all distributions made by A–1. Between July 22, 2000 and January 17, 2003, Husband caused A–1 to issue twenty-three distribution checks made payable to Wife, totaling $235,200. Husband executed each of the checks on A–1's behalf. Although the checks were made payable solely to Wife, they were never delivered to her. Instead, Husband admits that he endorsed each of the checks with Wife's signature (placing his own signature below hers), and deposited them into personal accounts he maintained at the Bank.

Wife initially separated from Husband and filed for dissolution of marriage in 2002. Husband and Wife reconciled during the summer of 2003, and Wife dismissed the original dissolution action in October 2003. On September 23, 2005, however, Wife again filed for dissolution.

Wife alleges that she first learned of the existence of the twenty-three distribution checks during discovery in the second dissolution action, when Husband was required by the court to produce copies of the cancelled checks and account statements. Wife deposed Husband in the dissolution action concerning the distribution checks, and also took a deposition of a Bank employee concerning the checks.

Following her discovery of the twenty-three checks, Wife filed a Second Amended Petition for Dissolution of Marriage on October 26, 2006. The Second Amended Petition named A–1, as well as two other closely-held entities, as Third–Party Respondents, alleging that the Third–Party Respondents “are necessary parties to this action for complete relief to be granted.”

Wife's Second Amended Petition contained detailed allegations concerning Husband's alleged misconduct in connection with A–1's affairs and assets. Thus, the Second Amended Petition alleged that Husband had “seized complete control of A–1,” “frozen Petitioner from all corporate and business activities, operations and assets” of A–1, “deprived Petitioner of access to the income generated by [A–1's] business operations,” and had failed to provide Wife with access to A–1's books and records, or to full information concerning its operations. The Petition also alleged that “Respondent and [A–1] have engaged in ultra vires acts that are in violation of the Bylaws of ... A–1 Alarms, Inc., ... and in violation of the laws of the State of Missouri[,] which have improperly and illegally diverted corporate assets for the sole benefit of Respondent.”

Wife's Second Amended Petition enumerated numerous specific actions by Husband, “acting individually and as President and majority shareholder of [A–1],” which had misused or misappropriated company assets. In particular, the Second Amended Petition alleged that Husband “forged Petitioner's name on checks and retained funds in excess of $235,000.00 for his personal use.” In the current lawsuit Wife acknowledged that this allegation referred to the same checks that are at issue in this case.

Wife's Second Amended Petition further alleged that,

For a complete, fair and equitable division of the marital estate and for complete relief to be granted, justice requires that the funds improperly and illegally diverted from Petitioner be restored to her and that a full, complete and independent certified audit of the financial affairs of Respondent and Third–Party Respondents, the financial statements, income statements and the fees, expenses, compensation or other sums paid to Respondent from January 2000 through present be performed at the expense of Respondent, and for Respondent and Third–Party Respondents to be enjoined from converting, squandering, wasting, diverting, disposing of or otherwise interfering with property, monies, credits, choses [sic] in action or other such assets to which Petitioner is entitled.

Trial in the dissolution case was scheduled to begin on November 1, 2006. On the day of trial, however, the parties informed the court that they had reached a settlement. Both Husband and Wife provided sworn testimony on November 1 describing the terms of their agreement. Neither party's testimony refers explicitly to the allegations of the Second Amended Petition concerning Husband's alleged misappropriation of money and property from A–1 or the other Third–Party Respondents. However, in her testimony Wife acknowledged that under the terms of the settlement Husband was being awarded sole ownership of the bank accounts into which the distribution checks had been deposited, and that Husband “would no longer be prohibited from spending the monies in those accounts,” and that she was “waiving any claim that [she] previously had to those monies.” Wife also testified to her understanding that she would be receiving a total of $600,000 in exchange for her interest in A–1. Among the other features of the parties' settlement, Wife testified that she was waiving any claim for maintenance, and that she had agreed, for purposes of the Form 14 child-support calculation, to the imputation of income to her in excess of what she was actually earning.

At the conclusion of the testimony, the court made oral findings that the parties' marriage was irretrievably broken and therefore dissolved, and that the parties' proposed settlement terms were fair and reasonable, and in the best interests of their sole remaining unemancipated child. The court closed the hearing by observing that Husband and Wife had “been well represented by both attorneys,” and that the parties' attorneys had “managed to address all the issues in a very professional and complete way,” even though the court recognized that “[y]ou may not have gotten everything you want, I doubt you did, either one of you.”

The circuit court entered a Judgment of Dissolution of Marriage memorializing the parties' oral settlement agreement on December 19, 2006. The Judgment recited that, on November 1, 2006,

Petitioner and Respondent announced to the Court that they had entered into an oral agreement on all issues and that Petitioner's motion for restraining order, the appointment of a receiver, attorney fees and costs filed on October 6, 2006, was moot. Evidence was heard and this cause was submitted to the Court upon Petitioner's Second Amended Petition for Dissolution of Marriage filed on October 26, 2006....

The Judgment recited that the parties' filings had “fully set[ ] out all of the property owned by Petitioner and Respondent and all of the debts owed by Petitioner and Respondent,” and that “Petitioner and Respondent agreed to divide their marital property and marital debts in their oral Marital Settlement Agreement and the Court finds that said division of marital assets and marital debts is fair, reasonable and equitable and not unconscionable.” As recited by the parties in their testimony on November 1, 2006, the Judgment awarded to Husband the stock of A–1, and ownership of the bank accounts into which the twenty-three distribution checks had been deposited. The Judgment makes no explicit reference to Wife's claim that Husband had misappropriated her distribution checks from A–1.

The parties owned multiple pieces of real property, which were allocated between them in the Judgment. The Judgment specifies in detail the disposition of items of personal property located in the various pieces of real estate, and orders in one instance that personal property removed by Husband, from premises awarded to Wife, be returned.

Husband appealed the dissolution Judgment, arguing that in various respects it had failed to accurately reflect the parties' agreement. This Court affirmed the Judgment with limited modifications, and made the following observations concerning the existence of an enforceable settlement between the parties:

Husband does not contend that the parties were not in agreement at the time the record was made before the trial court. He does not contend that the agreement failed to dispose of all of the material assets and debts. In fact, the record would not support such claims. Husband testified that the agreement was complete and that he knew he could not come back later and change the...