DAR, INC. v. Sheffer

• Decision Date: 23 March 2000
• Docket Number: No. 24732.,24732.
• Parties: D.A.R., INC., an Idaho corporation, attorney in fact for Dale Rudzik, a partner in Expressions in Gold, Plaintiff-Appellant, v. Rosemary SHEFFER and Michael Sheffer, Defendants-Respondents.
• Court: Idaho Supreme Court

997 P.2d 602

134 Idaho 141

D.A.R., INC., an Idaho corporation, attorney in fact for Dale Rudzik, a partner in Expressions in Gold, Plaintiff-Appellant, v. Rosemary SHEFFER and Michael Sheffer, Defendants-Respondents.

No. 24732.

Supreme Court of Idaho, Boise, November 1999 Term.

March 23, 2000.

A.L. Lyon, Boise, argued for appellant.

Hawley, Troxell, Ennis & Hawley, Ketchum, for respondents. Edward A. Lawson argued.

WALTERS, Justice.

This is an appeal from an order dismissing the plaintiff's complaint for a partnership accounting. The order was based on the defendants' assertion that the action was commenced beyond the applicable statute of limitation. We agree and affirm the dismissal order.

FACTS AND PROCEDURAL BACKGROUND

On April 14, 1997, D.A.R., Inc., an Idaho corporation and attorney in fact for Dale Rudzik, filed a complaint seeking an accounting relating to a business in which he, his sister, Rosemary Rudzik Sheffer, and their mother, Anne Rudzik, were partners. The partnership, formed in 1983, was operated in Ketchum, Idaho, under the trade name "Expressions in Gold."

The complaint alleged that each partner originally owned a one-third interest in Expressions in Gold. The complaint also alleged that three months before her death in June of 1993, Anne Rudzik may have conveyed her interest to Rosemary Sheffer who subsequently gave her entire interest to her husband, Michael. It was asserted that the transfer to Michael Sheffer had been made without the approval of the partnership, as required by I.C. § 53-327. It was also asserted that because Dale's prior requests for an accounting from Rosemary had been ignored, he began this action for an accounting to ascertain whether any amounts from the partnership were due and payable to him. Dale's complaint sought the accounting as its sole relief; he did not request a determination of any other property rights or interests of the parties.

The Sheffers did not answer the complaint but instead filed a motion under Idaho Rule of Civil Procedure (I.R.C.P.) 12(b)(6) to dismiss the complaint on the ground that it failed to assert a claim for which relief could be granted. In particular, the Sheffers alleged that the action was barred by the statute of limitation. The Sheffers contended that the applicable period began to run as of the date of the dissolution of the partnership which occurred either on December 31, 1990, when Rosemary allegedly notified Dale in writing that his interest in the partnership would be terminated as of December 31, 1990, and his original investment repaid along with forgiveness of his share of the partnership losses for the year,¹ or on March 1, 1993, when Anne Rudzik transferred her interest in the partnership to Rosemary.

Dale maintained that no dissolution had been effectuated. In support of his position, he submitted a copy of an order of the probate court in a proceeding involving the estate of Anne Rudzik in California² and a settlement agreement in the probate action dated June 20, 1997, which was signed by Anne Rudzik's three children. Dale asserted in this case that the order and the settlement agreement expressly acknowledged that Rosemary owned a two-thirds interest and Dale owned a one-third interest in the partnership known as Expressions in Gold.

The district court determined that Dale in fact owned a one-third interest in the Expressions in Gold partnership, but that the partnership had been dissolved. Finding that the plaintiff's action for a partnership accounting was filed beyond the four-year period of limitation set out in either I.C. § 5-217 or I.C. § 5-224, the district court held that the action was time barred and dismissed the complaint with prejudice.

On appeal, Dale claims that the district court erred in granting the defendants' motion for dismissal, arguing that the court was precluded from finding that the partnership had been dissolved because that issue had been conclusively settled by the decision of the California court. Dale argues that judgment in favor of the defendants should not have been granted because the order from the California court created a genuine issue of material fact as to the adequacy of the notice he received from Rosemary purporting to terminate his interest in the partnership. Dale also argues that summary judgment was improperly granted in that discovery had not yet been completed. Lastly, he contests the award of attorney fees to the Sheffers who had never made a request for fees to the district court.

STANDARD OF REVIEW

If, on a motion asserting failure to state a claim upon which relief can be granted, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given a reasonable opportunity to present all material made pertinent to such a motion by Rule 56. I.R.C.P. 12(b), (c); Boesiger v. DeModena, 88 Idaho 337, 399 P.2d 635 (1965); Hellickson v. Jenkins, 118 Idaho 273, 796 P.2d 150 (Ct. App.1990).

Summary judgment should be granted if no genuine issue as to any material fact is found to exist after the pleadings, depositions, admissions and affidavits have been construed in a light most favorable to the party opposing the summary judgment. Moss v. Mid-American Fire & Marine Ins. Co., 103 Idaho 298, 647 P.2d 754 (1982). The burden is on the moving party to prove the absence of a genuine issue of material fact. I.R.C.P. 56(c). The party opposing the motion may not merely rest on the allegations contained in the pleadings; rather, evidence by way of affidavit or deposition must be produced to contradict the assertions of the moving party. Ambrose ex rel. Ambrose v. Buhl Joint School Dist. No. 412, 126 Idaho 581, 887 P.2d 1088 (Ct.App.1995).

ANALYSIS

In Ramseyer v. Ramseyer, 98 Idaho 47, 558 P.2d 76 (1976), this Court held that an action for an accounting that was filed more than four years after the date of dissolution of the partnership was barred by the statute of limitation governing actions on oral contracts, under I.C. § 5-217, or actions for relief not covered by any specific statute, under I.C. § 5-224. Relying on these same statutes and after determining that the Expressions in Gold partnership was dissolved, the district court in this case found that the action was time-barred and dismissed the complaint seeking an accounting of Dale Rudzik's interest in the partnership.

Dale claims the dismissal was in error. He argues that the district court was precluded by principles of res judicata and collateral estoppel, from concluding that the Expressions in Gold partnership was dissolved because that issue had been previously decided in the probate action in California. The order from the California court, dated August 1996, specifically stated that the facts upon which Rosemary relied in claiming that she had dissolved the partnership in 1990/1991 were insufficient to accomplish that purpose. Dale contends that the Idaho district court was bound by the finding of the California court, leading to the inevitable conclusion that no dissolution of the partnership had occurred to trigger the statute of limitation asserted as the basis of the defendants' motion to dismiss.

Res Judicata

Under the principle of res judicata or claim preclusion, judgment on the merits in a prior proceeding generally bars relitigation between the same parties or their privies on the same cause of action. Yoakum v. Hartford Fire Ins., 129 Idaho 171, 923 P.2d 416 (1996). The test of res judicata is the identity of the rights sued for, identity of the cause of action, and identity of the parties. Branson v. Firemen's Retirement Fund of State of Idaho, 79 Idaho 167, 312 P.2d 1037 (1957). Although the respective plaintiffs in the California case and in the Idaho action were both seeking accountings, the subject to be examined was not the same entity. The probate action arose out of Rosemary's petition for an order requiring an accounting of the Anne Rudzik Intervivos Trust of February 7, 1990, and a determination of the assets and liabilities of the trust. Dale brought suit in Idaho to obtain an accounting of the Expressions in Gold partnership as a result of an alleged unauthorized transfer to Michael Sheffer of Rosemary's two-thirds interest in the partnership. Clearly, the subject-matter of the suits is not the same, thus rendering inadequate as a matter of law the appellant's plea of res judicata.

Collateral Estoppel

Collateral estoppel applies to protect litigants from the burden of relitigating an identical issue with the same party or its privy. Anderson v. City of Pocatello, 112 Idaho 176, 731 P.2d 171 (1987), citing Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 326, 99 S.Ct. 645, 649, 58 L.Ed.2d 552, 559 (1979)

. In order for collateral estoppel to bar the relitigation of an issue determined in a prior proceeding, five factors must be evident: 1) the party against whom the earlier decision was asserted had a full and fair opportunity to litigate the issue decided in the earlier case; 2) the issue decided in the prior litigation was identical to the issue presented in the present action; 3) the issue sought to be precluded was actually decided in the prior litigation; 4) there was a final judgment on the merits in the prior litigation; and 5) the party against whom the issue is asserted was a party or in privity with a party to the litigation. Western Industrial and Environmental Services, Inc. v. Kaldveer Associates, Inc., 126 Idaho 541, 544, 887 P.2d 1048, 1051 (1994); Anderson v. City of Pocatello, supra.

A copy of the transcript of proceedings in the California court held April 3, 1996, was attached to the second affidavit of Rosemary Sheffer in support of the motion to dismiss. The California court unequivocally stated for the record that it refused to take jurisdiction of the issue of the dissolution of the Expressions in...