Delaware v. K-Decorators, Inc.

Citation1999 MT 13,973 P.2d 818,293 Mont. 97
Decision Date28 January 1999
Docket NumberK-D,No. 97-448,K-DECORATOR,INC,97-448
Parties5 Wage & Hour Cas.2d (BNA) 216, 1999 MT 13 Frank DELAWARE, Plaintiff and Appellant, v., a Montana Corporation, d/b/aesigners and Lee A. Judson, Individually, Defendant, Respondent and Cross-Appellant.
CourtMontana Supreme Court

Craig W. Holt, Billings, Montana, for Appellant.

Michael K. Rapkoch, Felt, Martin & Frazier, Billings, Montana, for Respondent.

Justice JAMES C. NELSON, delivered the Opinion of the Court.

¶1 Frank Delaware (Delaware) appeals from a ruling made by the Thirteenth Judicial District Court, Yellowstone County, on the penalty provision of the Montana Wage Protection Act, from the court's order denying Delaware's Motion for a New Trial, and from the court's order granting summary judgment to K-Decorators, Inc. (K-Decorators) on Delaware's wrongful discharge claim. K-Decorators cross-appeals from the District Court's order awarding attorney fees to Delaware, from the court's order denying Lee Judson's (Judson) motion to dismiss Delaware's claims against him, and from the court's order imposing discovery sanctions on K-Decorators. We affirm in part, reverse in part, and remand for proceedings consistent with this opinion.

¶2 Delaware raises three issues on appeal, which we restate as follows:

¶3 1. Did the District Court err in ruling that Delaware could only recover a penalty pursuant to Montana's Wage Protection Act for wages which K-Decorators owed Delaware on his last day of employment which K-Decorators did not pay within three days thereafter?

¶4 2. Did the District Court err in denying Delaware's Motion for a New Trial?

¶5 3. Did the District Court err in granting summary judgment to K-Decorators on Delaware's wrongful discharge claim?

¶6 K-Decorators raises three issues on cross-appeal, which we restate as follows:

¶7 4. Did the District Court err in awarding attorney fees and costs to Delaware?

¶8 5. Did the District Court err in refusing to dismiss Delaware's claims against Judson, individually?

¶9 6. Did the District Court err in imposing discovery sanctions on K-Decorators?

Factual and Procedural Background

¶10 K-Decorators hired Delaware in the mid-1980s to sell home improvement construction projects. After Delaware worked for the company for approximately one year, K-Decorators fired him. Judson, K-Decorators' president, rehired Delaware in the fall of 1990 to manage the company's sales staff. Delaware began working for K-Decorators for the second time on September 30, 1990. Delaware sold for K-Decorators and was responsible for generating and training a sales staff. K-Decorators paid Delaware commissions based on his sales and on the sales which his sales staff made. Delaware was entitled to his commission when K-Decorators completed a project and received payment for its work.

¶11 Delaware worked full-time as K-Decorators' sales manager for approximately three years. Judson testified that K-Decorators' sales volume "substantially increased" during Delaware's tenure as sales manager. Similarly, Delaware estimated that he increased K-Decorators' sales volume by 80 percent.

¶12 On September 20, 1993, Judson removed Delaware from the sales manager position but offered to keep Delaware on as a salesman. Judson wrote Delaware a letter the following day which explained that Judson was reorganizing K-Decorators to "improve [the] bottom line results for the company." Judson's letter also explained that the sales manager position and the general manager position were being consolidated and that Judson's brother Al was going to take over the new position. The letter also reiterated Judson's offer to keep Delaware on as a salesman. Delaware declined Judson's offer.

¶13 On September 7, 1994, Delaware filed a complaint which included claims against Judson individually. Count I of Delaware's Complaint alleged that he had been discharged in violation of Montana's Wrongful Discharge from Employment Act. Count II of Delaware's Complaint alleged that K-Decorators owed him $146,271.99 for unpaid wages.

¶14 On September 30, 1994, K-Decorators filed a motion to dismiss pursuant to Rule 12(b)(6), M.R.Civ.P. K-Decorators, however, did not file a supporting brief with this motion. Consequently, the District Court denied this motion to dismiss on October 18, 1994, pursuant to Rule 2(b), Unif.Dist.Ct.R ., which provides that a motion is to be deemed without merit if the moving party does not file a supporting brief within five days after filing the motion. On October 28, 1994, K-Decorators filed a second motion to dismiss pursuant to Rule 12(b)(6), M.R.Civ.P., and a supporting brief, which asserted that Judson was not a proper defendant since corporate officers cannot be held individually liable for acts taken on behalf of a corporation in furtherance of corporate goals, policies and business interests. The District Court denied this motion reasoning that Judson conceded that a motion to dismiss for failure to state a claim for which relief can be granted on his behalf was without merit when he failed to file a supporting brief within five days after the first motion for failure to state a claim was filed.

¶15 On November 16, 1994, Delaware filed a Motion to Compel Discovery. In his supporting brief, Delaware stated that K-Decorators had not answered his first set of interrogatories, requested the court to compel K-Decorators to answer the interrogatories, and requested the court to award him his attorney fees and costs for filing the motion. In response, K-Decorators filed a brief on November 23, 1994, wherein it argued that Delaware's interrogatories violated Rule 33(a), M.R.Civ.P., and thus requested the District Court to deny Delaware's Motion to Compel Discovery.

¶16 On December 13, 1994, the District Court issued an Order which granted Delaware's Motion to Compel Discovery and ordered K-Decorators to answer Delaware's first set of interrogatories within fifteen days. One month later, on January 13, 1995, Delaware filed a motion for sanctions pursuant to Rule 37(b)(2), M.R.Civ.P., and a supporting brief wherein he requested the District Court to grant default judgment against K-Decorators because it did not comply with the District Court's order to answer his first set of interrogatories within fifteen days. In the alternative, Delaware requested the District Court to pierce the corporate veil so that all named defendants would be liable. Delaware also requested his attorney fees and costs for filing his motion for sanctions.

¶17 The District Court held a hearing on Delaware's motion for sanctions on March 1, 1995. Since K-Decorators' attorney acknowledged that Delaware's interrogatories were not answered within fifteen days of the court's order dated December 13, 1995, the District Court sanctioned K-Decorators by awarding Delaware his attorney fees and costs.

¶18 On May 3, 1995, K-Decorators filed an offer of judgment pursuant to Rule 68, M.R.Civ.P., for $32,500. Delaware rejected the offer.

¶19 Delaware filed a Motion for Partial Summary Judgment pursuant to Rule 56, M.R.Civ.P., on January 31, 1996. Delaware argued that no genuine issue of material fact existed as to whether K-Decorators owed Delaware unpaid wages nor whether K-Decorators discharged Delaware. On February 6, 1996, K-Decorators filed a Motion for Partial Summary Judgment pursuant to Rule 56, M.R.Civ.P. K-Decorators asserted that no genuine issue of material fact existed as to whether Delaware was constructively discharged nor whether K-Decorators had a legitimate business reason to restructure upper management and eliminate Delaware's sales manager position.

¶20 The District Court issued an Order on February 27, 1996, wherein it denied Delaware's Motion for Partial Summary Judgment and granted K-Decorators' Motion For Partial Summary Judgment. The court ruled that no issue of material fact existed as to whether K-Decorators had a legitimate business reason for discharging Delaware.

¶21 A jury trial was held April 1 through 4, 1996, on Delaware's claim for unpaid wages. At trial, both parties had accountants testify as expert witnesses as to the amount of commissions which K-Decorators owed Delaware based on the company's books. K-Decorators introduced testimony and evidence that it made payments on behalf of Delaware which Delaware did not pay back and that Judson paid Delaware commission out of his personal checking accounts which were not recorded in K-Decorators' books. K-Decorators argued that these amounts should be subtracted from the amount of commissions that K-Decorators' books showed that the company owed Delaware. The jury returned a verdict for Delaware in the amount of $1,185.14.

¶22 On August 5, 1996, Delaware filed a Motion for a New Trial pursuant to Rule 59, M.R.Civ.P., and § 25-11-102, MCA. In his supporting brief, Delaware argued that the evidence presented at trial was insufficient to justify the jury's verdict. On September 30, 1996, the District Court denied Delaware's Motion for New Trial. The court pointed out that Delaware, in his supporting brief, showed how the jury could have reached its verdict based on the testimony and evidence admitted at trial.

¶23 On April 9, 1996, K-Decorators filed a Memorandum of Costs pursuant to § 25-10-201, MCA, and attorney fees pursuant to § 39-3-214, MCA. Delaware filed his Memorandum of Costs pursuant to § 25-10-201, MCA, and attorney fees pursuant to § 39-3-214, MCA, on April 19, 1996. The District Court held a hearing on these motions on October 30, 1996. K-Decorators and Delaware each presented evidence and testimony as to reasonable attorney fees and costs. On December 26, 1996, the District Court issued Findings of Fact, Conclusions of Law and Order wherein it ruled that Delaware's Memorandum of Costs was timely filed, ordered that Delaware's costs be taxed at $165, ordered that K-Decorators' costs be taxed at $314.50,...

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