Furlev Sales v. North American Automotive

• Decision Date: 19 November 1982
• Docket Number: 81-1050.,No. 81-1025,81-1025
• Parties: FURLEV SALES AND ASSOCIATES, INC., Respondent, v. NORTH AMERICAN AUTOMOTIVE WAREHOUSE, INC., Defendant. Martin M. Fiterman, Appellant. C. Richard Brisbois, Appellant.
• Court: Minnesota Supreme Court

325 N.W.2d 20 (1982)

FURLEV SALES AND ASSOCIATES, INC., Respondent, v. NORTH AMERICAN AUTOMOTIVE WAREHOUSE, INC., Defendant Martin M. Fiterman, Appellant C. Richard Brisbois, Appellant.

Nos. 81-1025, 81-1050.

Supreme Court of Minnesota.

October 15, 1982.

Rehearing Denied November 19, 1982.

Dygert & Dygert, Robert W. Dygert and Gregory Collins, Hagerty, Candell, Lindberg, Milota & Butler, Charles J. Lindberg and David J. Butler, Minneapolis, for Brisbois.

Samuel D. Finkelstein, Golden Valley, for Fiterman.

Lindquist & Vennum, Edward M. Glennon, J. Michael Dady and Susan G. Loitz, Minneapolis, for Furlev Sales and Ass'n, Inc.

Heard, considered and decided by the court en banc.

KELLEY, Justice.

Appellants Martin M. Fiterman and C. Richard Brisbois appeal from a judgment holding them jointly and severally liable to pay respondent Furlev Sales and Associates, Inc. (Furlev) $125,000 in compensatory damages for wrongfully interfering with an employment contract Furlev had with North American Automotive Warehouse, Inc. (North American), and appellant Fiterman appeals from a judgment against him awarding Furlev $75,000 in punitive damages. Both appellants likewise appeal from denial of their motions for judgment notwithstanding the verdict or for a new trial. We are called upon to determine whether an officer and principal shareholder of a corporation is immune from personal liability for alleged wrongful interference with the contractual relationship between the corporation he heads and a third party; whether the evidence was sufficient to sustain findings awarding compensatory and punitive damages for wrongful interference with a contractual relationship between the corporation and the third party when a party was acting in various capacities as attorney for the corporate officer or for the corporation, and also for himself as a possible purchaser of the corporation; whether various evidentiary and other trial rulings made by the trial court were erroneous; and, finally, whether the damages awarded were sustained by the evidence. We hold that a corporate officer is immune from tort liability when acting for the corporation and, accordingly, we reverse the judgment against appellant Brisbois. We affirm the judgment against appellant Fiterman.

North American was in the business of selling fast-moving automobile replacement parts by telephone to dealers across the country. Appellant Brisbois owned 60% and his son owned the remaining 40% of the stock of North American. Brisbois was the chief executive officer of the corporation. James Levy and David Fursetzer were partners who had some sales experience in this type of business. They were hired by Brisbois as co-sales managers of the corporation on a commission basis. Within several months, the sales of the corporation began to dramatically increase — from pre-employment annual sales of approximately $370,000 to post-employment annual sales of $2,210,000. Because they wanted security, Levy and Fursetzer sought to obtain a share of the corporation. Negotiations with Brisbois in an attempt to acquire a share in North American in the summer of 1977 failed. Later that fall, Levy and Fursetzer sought a written employment contract. Negotiations led to a 2-year employment contract between Furlev¹ and North American. Brisbois signed on behalf of North American. The contract provided Furlev was to receive $8,000 per month flat fee, 2% override on monthly sales and 40% of North American's net profits.

Within 2 months after its execution, Brisbois began to complain about the contract. He felt the contract was responsible for some cash flow problems North American was experiencing, and, on behalf of North American, he wanted to "get out of it." Soon North American fell behind in its payments to Furlev. Furlev did receive its monthly fee through May 1978, but only received the 2% override through February of that year and never received 40% of the net profits of the corporation.

Brisbois consulted his attorney, Martin M. Fiterman, about the possibility of North American terminating the contract; he offered Levy individually a percentage of North American if the contract could be terminated; he complained to other company employees about the cash flow problem and his dissatisfaction with Fursetzer and Levy's performance, and made statements that he was either going to sell North American to Furlev or "get them out of the company."

In May or June 1978, Furlev offered to renegotiate the contract. Brisbois asked his son to negotiate with Furlev and its attorney. Negotiations to revise the contract arrived at an impasse. Meanwhile, some discussions took place concerning the possibility of Furlev purchasing North American. At this stage, Brisbois advised Furlev that Fiterman would be handling negotiations concerning the purchase of North American by Furlev. Furlev was represented by its attorney, Stephen Bard. At a meeting in Bard's office on June 13, 1978, at which neither Brisbois was present, the price and terms for payment were discussed among Bard, Fursetzer, Levy and Fiterman. Furlev thought Brisbois was asking too much for the company. Fiterman reported to Brisbois that Furlev would not pay the asking price but that he, Fiterman, would.

At a meeting on June 30, 1978 in Bard's office, Furlev made a counter-offer to purchase North American that was approximately $300,000 less than Brisbois' sale offer. At that point, Fiterman rejected the offer and informed Levy and Bard that he, Fiterman, was buying North American. Fiterman then made it clear to Levy that he, Fiterman, wanted the Furlev employment contract terminated.² Thereupon, Levy and Fiterman discussed the "settlement" of the contract, finally arriving at a figure of $125,000 payment to Furlev, but the settlement was not finalized because Levy wanted to talk with Fursetzer first. On July 5, 1978, Levy, Fursetzer, Bard and Fiterman met. The parties agreed on a termination payment of $125,000 to be comprised of $50,000 in cash and $75,000 in auto parts.³ The deal could not then be "closed" because Fiterman had not completed the purchase of North American from the Brisboises, and because Fiterman was going on a 2-week vacation both "deals" would have to await his return. Meanwhile, Bard was to reduce the Fiterman-Furlev agreement to writing. Fiterman asked Levy and Fursetzer to remain on the job until he returned from vacation to which they ultimately assented. The following morning Levy and Fursetzer reported for work as usual. They reported to Brisbois that Fiterman was buying the company and that they would be leaving within 2 weeks. Brisbois wanted them to leave at once. Ultimately, Fiterman arrived and, after discussing the matter with Bard, indicated to Levy and Fursetzer that "for everybody concerned we feel it is best that you leave." Before he would leave, Levy wanted to talk with Bard. Fiterman got on the telephone and advised Bard that "we had a deal," and that Bard should not require anything in writing from Fiterman. Relying on those assurances from a fellow lawyer, Bard told his clients they could leave.⁴

When Fiterman returned from vacation, he advised Bard there would have to be changes in the termination contract that Bard had drafted.⁵ At this meeting, Bard could not "pin Fiterman down" on whether or not Fiterman had completed the purchase from the Brisboises of North American.

After Fiterman had compiled a list of parts that would constitute $90,000 of the purchase price, Furlev rejected the list as unacceptable. When Bard advised Fiterman of this, Fiterman said he would "get back" to him but he did not do so. On August 7, 1978, Bard paid a surprise visit to Fiterman at North American at which time Fiterman said he was "not going to do the deal" with Brisbois. Bard tendered performance of the employment contract on behalf of his clients, but he was informed by Fiterman that the employment contract was breached when Levy and Fursetzer walked off the job on July 6, 1978. Subsequently, on September 8, 1978, Fiterman did buy Brisbois' interest in North American and Brisbois' stock certificate was signed over to Fiterman. Fiterman began borrowing money from North American. An audit by a bookkeeper hired by the Brisboises in 1979 determined that between $175,000 and $200,000 had been withdrawn from North American by Fiterman. Brisbois came back into North American in an attempt to save the company, but the company eventually went bankrupt.

Furlev commenced this action (1) against North American to recover damages for breach of the December 30, 1977 employment contract; (2) against North American and Fiterman for breach of contract of the alleged July 5, 1978 "settlement contract" which purported to settle and terminate the December 30, 1977 employment contract; and (3) against Brisbois and Fiterman in tort for alleged wrongful interference with the contractual relationship between Furlev and North American.⁶

The trial court submitted a seven-interrogatory special verdict to the jury. The jury found Furlev's loss of the benefits secured by its employment contract to be $125,000. It further found that both Fiterman and Brisbois wrongfully interfered with the December 30, 1977 employment contract and that Fiterman's interference showed, on clear and convincing evidence, a willful indifference to the rights of Furlev. Finally, the jury assessed $75,000 in punitive damages against Fiterman. The court made its findings based on the special verdict and subsequently entered judgment against Brisbois and Fiterman jointly and severally for $125,000 and against Fiterman for an additional sum of $75,000.

Both appellants challenge the sufficiency of the evidence to support the jury's finding of wrongful interference by Brisbois and Fiterman with the December 30, 1977 employment contract between Furlev and North American. The claim for wrongful interference with contractual relationships is a tort action....