Michaelson v. Michaelson

• Decision Date: 07 December 1995
• Docket Number: No. 92CA0052,92CA0052
• Citation: 923 P.2d 237
• Parties: Ruth MICHAELSON, Plaintiff-Appellee and Cross-Appellant, v. Ervin I. MICHAELSON, Defendant-Appellant and Cross-Appellee. . IV
• Court: Colorado Court of Appeals

Page 237

923 P.2d 237

Ruth MICHAELSON, Plaintiff-Appellee and Cross-Appellant, v. Ervin I. MICHAELSON, Defendant-Appellant and Cross-Appellee.

No. 92CA0052.

Colorado Court of Appeals Div. IV.

Dec. 7, 1995 As Modified on Denial of Petition for Rehearing of Defendant-Appellant and Cross-Appellee Feb. 8, 1996 Petition for Rehearing of Plaintiff-Appellee and Cross-Appellant Denied Feb. 8, 1996 Certiorari Granted Sept. 3, 1996. Cross-Petition for Certiorari Denied (Husband) Sept. 3, 1996.

Timothy J. Lamb, P.C., Timothy J. Lamb, Denver, for Plaintiff-Appellee and Cross-Appellant.

Mitchem and Mitchem, P.C. Allen P. Mitchem, James E. Mitchem, Denver, for Defendant-Appellant and Cross-Appellee.

Opinion by Judge JONES.

Defendant, Ervin Michaelson, appeals a judgment entered in favor of plaintiff, Ruth Michaelson, after a court trial, on plaintiff's claim of breach of fiduciary duty. Plaintiff cross-appeals the dismissal of her civil theft claim. We affirm in part, reverse in part, and remand with directions.

The parties were married in 1946 and formed a family corporation known as Michaelson's Originals, Inc., in 1952. Plaintiff and defendant were, respectively, 50 percent shareholders in the corporation, each owning 2500 shares of stock.

On November 10, 1965, the Michaelsons were divorced and the divorce decree was affirmed on appeal. See Michaelson v. Michaelson, 167 Colo. 58, 445 P.2d 211 (1968). However, permanent orders dividing marital property were not entered until 1989, at which time, the marital property was valued as of 1965 and divided under the law in effect in 1965 at the time of the divorce.

Prior to those orders, in December 1987, defendant dissolved the corporation without notifying or receiving consent from plaintiff. Upon dissolution of the corporation, defendant received distribution of all the corporate assets, which totalled in excess of one million dollars, without making any distribution to plaintiff.

In February 1988, plaintiff discovered that the corporation had been dissolved with no notice or distribution to her. She initiated a proceeding for division of the marital property. Properties owned by the parties and the corporation as of 1965 were valued as of that date and divided equally between them. Plaintiff received a lump sum of $800,000 which included $258,959 as one-half of the value of certain property, plus what was described as statutory or moratory interest for defendant's wrongful withholding and delay in distribution. The court did not address disposition of the shares of stock of the corporation. Upon payment of the sum awarded to plaintiff by defendant, plaintiff quitclaimed all of her interest in real property owned by the corporation to defendant, but did not tender her shares of stock in the corporation, nor did defendant demand such tender.

On December 13, 1990, plaintiff initiated the action at issue here alleging breach of fiduciary duty, fraud, theft, and requesting an accounting. Plaintiff filed this suit as a 50 percent shareholder in the corporation to recover money she alleged she was entitled to as a result of the 1987 corporate dissolution. The court dismissed plaintiff's theft, fraud, and accounting claims, but found in her favor on her breach of fiduciary duty claim. It awarded plaintiff $401,008 plus pre-judgment interest from December of 1987 in the amount of $137,805, for a total judgment of $538,813, plus costs of $4,136.

On defendant's appeal, the judgment was reversed by a division of this court on the bases of collateral estoppel and res judicata. See Michaelson v. Michaelson, (Colo.App. No. 92CA0052, April 22, 1993) (not selected for official publication).

The Colorado Supreme Court granted certiorari and, in Michaelson v. Michaelson, 884 P.2d 695 (Colo.1994), reversed the judgment of this court, finding that the trial court had correctly entered judgment in favor of plaintiff on her breach of fiduciary claim. The case was remanded to this court for consideration of issues remaining that had not been reviewed by this court.

I.

Defendant first contends that plaintiff's claim of breach of fiduciary duty is time barred by the two-year statute of limitation contained in § 7-8-122(1), C.R.S. (1986 Repl.Vol. 3A) (repealed 1993). We disagree.

A.

Defendant notes that, under § 7-8-122(1), any remedy available to a shareholder for a claim against a corporation, which claim was incurred prior to dissolution of such corporation, cannot be impaired if an action is commenced within two years of the date of dissolution. And, citing Lucifer Coal Co. v. Buster, 64 Colo. 179, 171 P. 61 (1918), he asserts that plaintiff's action, initiated nearly three years after the corporate dissolution, was barred.

Here, however, the district court found, from the evidence presented, that the plaintiff's claim arose after dissolution of the corporation. Such findings must be accepted on review, unless clearly erroneous and without support in the record. Page v. Clark, 197 Colo. 306, 592 P.2d 792 (1979). The record reveals that there was no such error here and that § 7-8-122(1) is inapplicable.

B.

Defendant, alternatively, argues that, even if the claims arose after dissolution of the corporation, plaintiff's action for breach of fiduciary duty must, nevertheless, fail because the statute that authorizes the bringing of pre-dissolution claims must necessarily bar claims arising thereafter.

We conclude, contrary to this contention, that an action for breach of fiduciary duty between directors and stockholders falls within the three-year statute of limitations set forth at § 13-80-101(1)(f), C.R.S. (1986 Repl.Vol. 6A). Hall v. Swan, 117 Colo. 349, 188 P.2d 437 (1947).

Specific statutes control over general statutes. Climax Molybdenum Co. v. Walter, 812 P.2d 1168 (Colo.1991). And absent an expression to the contrary by the General Assembly, "a statute of limitations specifically addressing a particular class of cases controls over a more general or catch-all statute of limitations." Cox v. Jones, 802 P.2d 1125, 1126 (Colo.App.1990), aff'd, 828 P.2d 218 (Colo.1992).

Hence, § 13-80-101(1)(f), which specifically and explicitly addresses actions for breach of fiduciary duty, is the applicable statute of limitations, and not § 7-8-122(1), a broad limitation provision for any remedy sought against a corporation after dissolution.

Accordingly, a civil action for breach of fiduciary duty is valid if commenced within three years after the cause of action accrues. Plaintiff's action asserting breach of fiduciary duty, therefore, was timely filed.

II.

Defendant next contends that the trial court erred in entering an award of damages that, he asserts, provides double recovery to the plaintiff. He further contends that the court erred in not giving proper effect to plaintiff's quitclaim deed given in resolution of the divorce action. We disagree with the former contention, agree with the latter contention, and remand with directions.

A.

A party may not receive a double recovery for the same wrong. Lexton-Ancira Real Estate Fund v. Heller, 826 P.2d 819 (Colo.1992).

Here, defendant asserts that, by not reducing the damage award to plaintiff in this case by the amount of moratory or statutory interest plaintiff was paid on her share of the corporate assets in the property division proceeding of the divorce case, the trial court permitted plaintiff to obtain a double recovery. We disagree.

The supreme court implicitly found against defendant concerning this contention. It held that the divorce court awarded the value of assets plus a large sum representing moratory or statutory interest:

because [defendant] had enjoyed the sole benefit of the bulk of the marital estate for twenty-two years and had not given any ... of the income from the property to [plaintiff]. Such actions constituted wrongful withholding for purposes of the statutory interest award. All of the wrongful withholding of funds arose from unlawful retention of marital assets and income by [defendant] and not from mismanagement of the corporation.

Michaelson v. Michaelson, supra, 884 P.2d at 703.

Thus, the supreme court found the damages awarded for breach of fiduciary duty were different from those sums earlier associated with property division and concluded that the damages are supported by the record.

B.

We agree, however, with defendant's assertion that proper consideration was not given by the trial court to the effect of plaintiff's quitclaim deed in the assessment of damages against defendant.

In May and June 1989, the district court conducted proceedings which resulted in division of the marital estate, including property that had been in both parties' names and owned by the family corporation. Included in the property division were three parcels of real estate designated and valued, as of November 1965, as follows: Norwood Block 1, $112,901; Norwood Block 2, $68,660; and Sumners Block 6, $196,121, for a total of $377,682.

The court divided the value of these three properties, and others, equally, then awarded plaintiff money in the amount of that one-half value and awarded the real estate to defendant. Thus, as to the three enumerated parcels of real estate, plaintiff was awarded approximately $188,841. Additionally, the court awarded a large sum, constituting moratory or statutory interest, at a rate not clear in the record, to account for 23.58 years during which plaintiff had not had the benefit of sharing the returns or added values from the marital property.

Upon payment to plaintiff of all sums due to her after division of the marital property, up to and including November 17, 1989, plaintiff executed a quitclaim deed conveying all right, title, and interest in the three enumerated parcels to defendant, with acknowledgment of the receipt of consideration.

A quitclaim deed conveys a grantor's present interest in land when delivered to and accepted by the grantee. Tuttle v. Burrows, 852 P.2d...