Gunter v. Murphy's Lounge, Docket No. 29721 (ID 1/14/2005)
| Decision Date | 14 January 2005 |
| Docket Number | Docket No. 29721. |
| Parties | SHANNON GUNTER, a married woman d/b/a MURPHY'S LOUNGE, Plaintiff-Respondent, v. MURPHY'S LOUNGE, LLC., an Idaho Limited Liability Company; MOUNTAIN WEST VENTURES, LLC, a Colorado Limited Liability Company; BEVERLY J. BERGMAN and WENDEL R. BERGMAN, husband and wife, Defendants-Appellants. |
| Court | Idaho Supreme Court |
Appeal from the District Court of the First Judicial District, State of Idaho, Bonner County. Hon. John Thomas Mitchell, District Judge.
Judgment of district court affirmed in part and vacated in part.
Law Offices of Janet Jenkins, Sandpoint, for appellants. Janet E. Jenkins argued.
Powell & Reed, Sandpoint, for respondent. Todd M. Reed argued.
This case arises from the termination of two commercial leases. The Plaintiff/Respondent, Shannon Gunter (Gunter) leased Murphy's Lounge from Defendant/Appellant, Mountain West Ventures, LLC, and leased the liquor license from Defendant/Appellant, Murphy's Lounge, LLC. When the managing member of each LLC attempted to terminate the lease Gunter brought suit. A jury awarded Gunter compensatory and punitive damages. We affirm all judgments, except the $18,000 compensatory damage award against Beverly Bergman and the award of attorney fees and costs against Beverly and Wendel Bergman.
Gunter signed two written leases. The first one, entitled "Lease Agreement," was with Mountain West Ventures, LLC, (Mountain West) and Murphy's Lounge, LLC (Murphy's Lounge). Under the Lease Agreement, Mountain West leased to Gunter the real property in which the business was operated and Murphy's Lounge leased to Gunter the business and certain personal property used in connection with the business. The second lease was entitled "Liquor License Lease." Under it, Murphy's Lounge leased the liquor license to Gunter. The defendant Wendel Bergman (Wendel) executed the Lease Agreement as an agent for Mountain West, and the defendant Beverly Bergman (Beverly) executed both leases as an agent for Murphy's Lounge. Wendel owned 60% of Mountain West, and Beverly owned the remaining 40%. She was also the sole owner of Murphy's Lounge. The lease period began January 1, 2002, and ended December 1, 2004.
The Murphy's Lounge lease agreement required Gunter to obtain and maintain reasonable fire and public liability insurance, including liquor liability insurance in a form and amount, and with a company, acceptable to Mountain West Ventures, LLC and Murphy's Lounge, LLC. The liquor license lease required Gunter to obtain and maintain reasonable and adequate liquor liability insurance with a company acceptable to Murphy's Lounge, LLC.
Gunter contacted her insurance agent Ladonna Roberts with Dickinson Insurance in December 2001. Roberts testified that Big Sky Underwriting was the only company willing to quote the policy because of the fire classification and Gunter being a new business owner. Roberts submitted the quote for a million-dollar liquor liability policy. Because Gunter no longer wanted to be the middleman between the insurance agency and the Bergmans, Roberts spoke directly with Wendel. The underwriters would not bind the policy for a million-dollar liquor liability, but instead bound the policy for $100,000. In addition to other coverage, Gunter carried a million-dollar general liability insurance policy. Roberts testified she mailed Mountain West notification of the change in coverage on the liquor liability policy in February 2002.
During the first few months of the lease, the Bergmans had amusement video machines in Murphy's Lounge. Gunter and the Bergmans would equally share the profits earned from the machines. The Bergmans instructed Gunter how to handle issuing the credits on the machines to patrons to avoid violating the gambling laws. When a patron retired from playing for the day the patron would tell a Murphy's Lounge employee how many credits were left on the machine. The employee would write down the name and the credit amount. Two days later, the credits were returned to the patron in a white envelope. Only patrons that Gunter knew were paid back their credits; if an unknown patron asked if they paid out on their machines, Gunter would state the machines were for amusement purposes only. Beverly played on the machines and received her credits earned on the machines. In June 2002, Gunter unplugged the machines. In August 2002, the Bergmans removed the machines from Murphy's Lounge.
According to Gunter the relationship immediately began to deteriorate during the first months of the lease. Initially Wendel would consistently ask Gunter to stay and have drinks with him after her shift. Gunter would always decline. In March or April Wendel began to direct sexual innuendos towards Gunter. Wendel would comment on Gunter's clothing. For example, he would ask Gunter to wear a particular red shirt on a schedule so he could watch her do the dishes in the shirt. On another occasion he commented suggestively on the way Gunter ate an egg roll. On the same day he asked Gunter to take a ride with him in his "Hope Whoremobile." In July 2002, Wendel sent a business letter to Gunter wherein he wrote, " The comments made Gunter uncomfortable because of their business relationship and she felt he was in a position of power over her.
On May 7, 2002, the Defendants sent a letter to Gunter advising her that a patron had been over-served and that immediately after leaving the bar was involved in a serious injury accident resulting in a DUI citation. The letter warned Gunter that "[a]ny occurrence of intoxicated patrons leaving the premises and being involved in any accident or patrons engaging in fights or assaults on or near the premises will be grounds for termination of the Lease Agreements for Murphy's."
On June 8, 2002, Justin Jahn was the bartender on duty at Murphy's Lounge. The Bergmans were present and were talking with two other patrons, Mike and Angie. Wendel communicated to Jahn that he wanted to purchase a round of drinks. Jahn informed Wendel that Angie had had enough. Jahn did not give Angie any more drinks. Jahn believed Wendel slid his wine that he had ordered earlier over to Angie. Later, Angie fell and injured herself. The Bergmans took her to the hospital.
A few days later, on June 12, 2002, the Defendants sent a second letter to Gunter terminating the lease agreements effective July 15, 2002. The letter provided that "[o]n Saturday June 8, 2002 an obviously intoxicated patron was again over-served, resulting in an on-premises injury to the patron requiring emergency medical treatment." The obviously intoxicated person referred to in the letter was Angie.
On July 12, 2002, Gunter filed a complaint and demand for jury trial. Gunter alleged two claims in her complaint, breach of contract and tortious interference with contract. Defendants denied the allegations and counterclaimed for breach of contract, including violation of State liquor laws and inadequate insurance.
On July 15, 2002, the district court issued a temporary restraining order and notice of hearing for preliminary injunction. The hearing for a preliminary injunction was held on July 29, 2002. The Defendants' attorney did not appear and the district court granted the preliminary injunction, prohibiting the Defendants from proceeding to default or terminating the leases. On the same day Gunter presented a motion for reduction of bond, which was granted.
The following day, on July 30, 2002, the Defendants filed a motion to cancel the order on temporary injunction and bond. The district court denied the motion to cancel the preliminary injunction, but did modify the bond. The district court acknowledged that the Defendants were not given adequate notice regarding the bond issues for the July 29 hearing.
On October 11, 2002, Gunter filed a motion for clarification of the restraining order, seeking an additional restriction prohibiting the Defendants from entering Murphy's Lounge. On November 14, 2002, the court heard argument and added additional terms to the injunction. The Bergmans were still allowed to enter the premises, but were restrained from talking to Gunter, to any patron or to any employee while on the premises at Murphy's Lounge. Furthermore, they were restrained from engaging in any disruptive conduct of any sort while on the premises.
Approximately two weeks before trial, Gunter motioned the court for a continuance. Defendants alleged prejudice and requested that Gunter be required to carry additional insurance. The district court continued the trial to April and denied Defendants' request for additional insurance.
The Defendants moved for summary judgment. The day before the hearing Gunter requested a continuance because the birth of her attorney's baby. The district court continued the hearing although the Defendants argued they would be prejudiced by the continuance. The district court later denied the summary judgment motion.
Five days before trial the district court allowed the Defendants to amend their counterclaim. The Defendants asserted two new theories for their breach of contract claim. They contend Gunter breached the contract by failing to pay the utilities and sales tax associated with Murphy's Lounge operations.
After a five-day trial the jury returned a verdict in Gunter's favor. The jury awarded compensatory damages totaling $36,000 ($18,000 for each claim) and punitive damages totaling $75,000. Upon motion for new trial by the Defendants, the district court offered Gunter a choice to reduce the compensatory damages to $18,000 or have a new trial. Gunter agreed to the reduced award. The district court awarded attorney fees to Gunter pursuant to I.C. § 12-120(3). A judgment was entered against all four Defendants holding...
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