Mona v. Mona Electric
|13 September 2007
|No. 2609, Sept. Term, 2005.,2609, Sept. Term, 2005.
|176 Md. App. 672,934 A.2d 450
|Mark Andrew MONA v. MONA ELECTRIC GROUP, INC., et al.
|Court of Special Appeals of Maryland
Timothy F. Maloney (Veronica Byam Nannis, Kevin S. Dale, on the brief), Greenbelt, for appellant.
Steven M. Schneebaum (Davis S. Panzer, on the brief), Washington, DC, for appellee.
Panel: MURPHY, C.J., SALMON, DEBORAH S. EYLER, JJ.
In the Circuit Court for Prince George's County, Mark Mona ("Mark") brought suit for declaratory and injunctive relief and damages against his father, Vincent Patrick "Cap" Mona ("Cap"); Mona Electric Group, Inc. ("MEG" or "the company"); and five former and present directors of MEG and one employee, all of whom were voluntarily dismissed before trial. The complaint stated eleven counts. In the year and a half between the initial filing date and trial, it was amended three times, adding and deleting various claims and defendants. Before trial, all of the counts in the third amended complaint were disposed of by motion, except: 1) breach of fiduciary duty against Cap; 2) fraud against Cap; 3) unjust enrichment against MEG; 4) a derivative action against MEG; and 5) a declaratory judgment action.1
The case was tried to a jury for six days. At the conclusion of Mark's case-in-chief, the court granted Cap's motion for judgment on the breach of fiduciary duty and fraud counts and MEG's motion for judgment on the derivative action.2 The claims against MEG for unjust enrichment and declaratory judgment survived. Over MEG's objection, the unjust enrichment claim was submitted to the jury for decision. The jury returned a verdict in favor of Mark and against MEG for $1,241,000. Thereafter, the court dismissed the declaratory judgment claim as moot.3
In a timely filed motion for judgment notwithstanding the verdict ("JNOV"), MEG argued that the unjust enrichment claim should have been decided by the court, not by a jury, and was barred by the doctrine of judicial estoppel in any event. In support of its estoppel argument, it pointed out that Mark had admitted in his testimony at trial to conduct that was an offense under the federal tax laws. Specifically, Mark had testified that he had taken a tax write-off on his individual federal return based upon his personal guarantee of advances MEG had made to Mona Energy, Inc. ("Mona Energy"), a subsidiary wholly owned by Mark; but he also testified that he had never personally guaranteed those advances. The advances only could be used by Mark to support the tax write-off if he had personally guaranteed them.
Of the damages awarded by the jury, $581,789 was to compensate Mark for MEG's having deducted, from his share of a dividend the company declared in March 2005, sums the company had advanced to Mona Energy and, according to the company, that Mark had guaranteed. During the hearing on MEG's JNOV motion, the court, following up on MEG's assertion that Mark had admitted to tax fraud, asked whether the "clean hands" doctrine should preclude Mark from recovering the $581,789. The court decided to continue the hearing and give the parties an opportunity to brief the clean hands issue, which they did.
At the continued hearing, the trial judge entertained argument of counsel and then ruled that Mark had not come to court with clean hands with respect to the $581,789 he had sued to recover as having been wrongly deducted from his share of the March 2005 dividend. On that ground, the court reduced the judgment by $581,789. Judgment in favor of Mark for $659,211 was entered on December 7, 2005.
Immediately after entry of the December 7, 2005 judgment, Mark demanded that the full amount of the judgment, plus postjudgment interest, be paid. On December 19, 2005, MEG paid the judgment and a sum of money representing postjudgment interest from December 7 to December 19. Mark insisted that he was owed postjudgment interest from the date of the jury verdict to December 19, and refused to file an order of satisfaction. Ultimately, the trial court ruled that MEG was responsible for paying postjudgment interest beginning from the date of the verdict. MEG then paid that amount, and Mark filed an order of satisfaction.
Mark and MEG each noted timely appeals. Because Mark's notice of appeal was filed first, his appeal was designated as such and MEG's was designated as a cross-appeal.
In his appeal, Mark poses two questions for review, which we have reordered and reworded:4
I. Was the evidence in Mark's case-in-chief legally sufficient to support a verdict in his favor for breach of fiduciary duty against Cap?
II. Did the trial court err by sua sponte reducing the jury's damages award pursuant to a motion for JNOV?
In its cross-appeal, MEG poses six questions, two of which are essentially the same as Mark's questions. The four independent cross-appeal questions are:
I. Should Mark's appeal of the reduction of the damages award on the unjust enrichment claim be dismissed under the acquiescence doctrine?
II. Did the trial court err by submitting the unjust enrichment claim to the jury for decision, instead of deciding it itself?
III. Was Mark judicially estopped to bring his claim for unjust enrichment?
IV. Did the trial court err by awarding post-judgment interest from the date of the original judgment instead of from the date of the revised judgment?
For the reasons discussed below, we shall affirm the judgment of the circuit court.
MEG is an ordinary business corporation with its principal place of business in the Prince George's County town of Clinton. It is the current iteration of the business first organized and incorporated in 1966 as the Mona Electric Company, Inc., and later divided into Mona Electrical Construction, Inc., and Mona Electrical Service, Inc. MEG is a Subchapter S corporation under the Internal Revenue Code.
Cap Mona is the founder, President, and Chairman of the Board of Directors of MEG. During the time relevant to this case, he owned 50.6% of the shares of stock in MEG, including all of the voting shares.
Mark is one of five children of Cap and Susan Mona. Beginning in the 1980's, he was president of Mona Electrical Construction, Inc., and his older brother, Andy, was President of Mona Electrical Service, Inc. Cap was the chief executive officer ("CEO") of both companies. In November 1992, Andy died of melanoma. Thereafter, Mark became president of both companies. In the late 1990's, the companies were combined to form MEG.
From the mid-1990's until April 2002, Mark served as MEG's CEO. During that time, he ran the company's day-to-day operations while Cap served in an advisory role.
Cap and Susan were the original sole stockholders in the companies that later became MEG. Beginning in 1992, after Andy's death, Susan began making gifts of her stock to Mark. The gifts were made with Cap's knowledge and approval.
From 1997 through 2001, Cap and Mark tried to find an outside purchaser for MEG. When third-party sale negotiations proved unsuccessful, they explored the option of Mark's buying out Cap's shares in the company. Mark made various offers to purchase Cap's shares, which Cap rejected. As the negotiations continued, Cap and Mark's relationship grew increasingly hostile and deteriorated.
In February 2002, Cap, through counsel, informed Mark in writing that, if he could not meet the price Cap was demanding for his interest in MEG, Cap would "return to the business and exercise the rights he has as the owner of the voting stock of the business." Mark and Cap were not able to agree on a price. In April 2002, the Board of Directors fired Mark, removed him as a director, and elected Cap President and CEO of the company.
A few months later, Susan Mona was diagnosed with cancer.
In 2003, Susan still owned 25% of the stock in MEG. At some point before September of that year, she gave all her remaining stock to Mark, upon his promise that he and Cap would mend their relationship. With that gift, Mark became the only stockholder in MEG other than Cap, having acquired 49.4% of the stock in the company through the gifts from his mother. Susan Mona died in November 2003.
On February 26, 2004, in the Circuit Court for Prince George's County, Mark filed the instant suit. He alleged among other things that the company had failed, wrongly, to declare a dividend for three years, to his detriment as a shareholder and contrary to agreements that a dividend would be declared. Specifically, Mark alleged that on February 13, 2001, the shareholders agreed in writing to issue a "regular dividend" of $950,000, but the company reneged on that agreement; and that on December 27, 2001, the Board voted to issue a $210,000 dividend to Mark, which the company then failed to pay.
MEG filed a counterclaim that included counts for breach of contract and fiduciary duty. It alleged that Mark had improperly taken personal advances from the company that he had not repaid and had taken advances from the company on behalf of Mona Energy, which he also had failed to repay. In support, MEG alleged that the very documents Mark was relying upon in asking the court to order it to pay promised dividends contained promises by Mark that whatever dividends were issued would be used to repay the advances he had taken from the company, personally and on behalf of Mona Energy.
The case was specially assigned and designated a June 28, 2005 trial date.
Mark filed an amended complaint, and later a second amended complaint, by which he eliminated and added certain individual defendants, all of whom were no longer in the case by the time of trial and are not parties to this appeal. The appellees filed an amended counterclaim. In rulings on motions to dismiss, the court narrowed the scope of several of Mark's claims. As pertinent to the issues on appeal, on January 7, 2005, the court dismissed MEG from the...
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