Thomas v. Ronald O. Thomas, Elaine K. Thomas & Thomas Motors, Inc.

• Decision Date: 18 March 2011
• Docket Number: No. 36857.,36857.
• Citation: 249 P.3d 829,150 Idaho 636
• Court: Idaho Supreme Court
• Parties: R. Drew THOMAS, Plaintiff–Appellant, v. Ronald O. THOMAS, Elaine K. Thomas and Thomas Motors, Inc., an Idaho corporation, Defendants–Respondents.

150 Idaho 636

249 P.3d 829

R. Drew THOMAS, Plaintiff–Appellant,

v.Ronald O. THOMAS, Elaine K. Thomas and Thomas Motors, Inc., an Idaho corporation, Defendants–Respondents.

No. 36857.

Supreme Court of Idaho, Boise, February 2011 Term.

March 18, 2011.

Morrow & Fischer, PLLC, Nampa, for appellant.

H. Ronald Bjorkman, Emmett, for respondent Ronald O. Thomas.

Hepworth, Janis & Brody, Boise, for respondents Elaine K. Thomas and Thomas Motors, Inc.

W. JONES, Justice.

I. NATURE OF THE CASE

This case revolves around an alleged agreement between R. Drew Thomas (Drew) and his father, Ron Thomas. Drew alleges that he left his job as a sales manager at another car dealership to work for Thomas Motors, Ron's newly-purchased car dealership, at a lesser salary because Ron orally promised Drew that Ron would give Thomas Motors to Drew upon Ron's retirement. Drew filed suit in the district court against Ron, Ron's wife Elaine, and Thomas Motors (Respondents) alleging five different counts including breach of the oral contract and unjust enrichment. The district court granted summary judgment on the unjust-enrichment claim because it determined that an express enforceable employment contract covered the same subject matter. Upon a second motion for summary judgment, the court dismissed the oral contract claim, holding that there was a material price term in the oral contract which was never agreed upon and therefore the contract was not enforceable.

Drew argues on appeal that the district court erred in granting the first motion for summary judgment on the unjust-enrichment claim for two reasons: (1) it erred in determining there was an express oral employment contract separate and apart from the promise to convey Thomas Motors; and (2) it prematurely dismissed the unjust-enrichment claim considering the court's later determination that the oral contract to transfer Thomas Motors was not enforceable. We hold that although the district court prematurely dismissed the unjust-enrichment claim because it had not yet determined that any contract was enforceable, as a matter of law the subsequent written contracts entered into by the parties were enforceable, superceded the oral contract and covered the same subject matter as the unjust enrichment claim, and thus we affirm the ruling of the district court dismissing the unjust-enrichment claim.

II. FACTUAL AND PROCEDURAL BACKGROUND

In the fall of 1997, Drew began working at Thomas Motors in Emmett, Idaho. For approximately eight years prior, Drew had been employed as a salesperson of new and used cars at Lanny Berg Chevrolet in Caldwell, Idaho, the last six months of which he was employed as a manager of new-car sales. Drew states that during the summer of 1997, his father Ron approached Drew about the prospect of coming to work at Ron's newly-purchased car dealership. Drew states that Ron requested Drew leave his job at Lanny Berg and apply his knowledge and experience to establish Ron's dealership, in exchange for a salary and a promise to give Thomas Motors to Drew upon Ron's retirement. Drew stated that he "undertook operation and management of Thomas Motors because my father promised that if I did so, the business would be mine." This agreement was not reduced to writing.

It seems that both parties agree that there was discussion regarding payment of some amount of money by Drew to Ron and Elaine once Drew was to take over the dealership. Drew understood that he would "have to pay something for it." Drew contended that this payment was essentially a retirement payout so that his parents would have enough to live on, and that the transfer of Thomas Motors was not contingent upon it; however, Respondents claimed that this payment was a price term included in the contract to transfer Thomas Motors which was never agreed upon.¹

From the time Drew began his employment with Thomas Motors, in Fall 1997, until Summer 2000, Drew spent twelve- to fourteen-hour days, six or seven days a week, working at the dealership. He and his co-workers state that he filled several roles in the dealership, as general manager, sales manager, inventory manager, finance manager, and insurance manager, which normally would have been performed by separate full-time employees. Drew contends that the salary he received was well below the market rate paid to other general managers.² His starting salary at Thomas Motors, of $2,500 a month, was less than he was making at Lanny Berg, but Drew did receive incremental raises after he had been employed at Thomas Motors for a year. By 1999, Drew testified that he was receiving "close" to what his previous salary at Lanny Berg had been.

Thomas Motors lost money seven of the nine years that Drew worked there. Drew attributes these losses to Ron's mismanagement of the company's finances, and Respondents attribute them to Drew's management. Drew states that he became dissatisfied with the financial state of Thomas Motors in 2000. He testified that he agreed to proceed with management of Thomas Motors based on Ron's promise to convey the dealership to him, and in August 2000, Ron assembled the staff and notified them that Drew would be making the management decisions from that time forward. At this time, Drew requested written contracts to be drawn up to "memorialize" Drew's agreement with Ron to transfer the business. Three separate contracts were drafted together: a Management Contract, an Agreement for Purchase and Sale of Business, and a Commercial Lease and Purchase Agreement. These contracts were attached as exhibits to both Drew's Deposition and Ron's Affidavit in Support of Summary Judgment. Drew alleges the contracts were not signed by Ron and his wife Elaine because he did not see a copy of them signed until after this litigation began, offering these allegations as circumstantial evidence that the contracts were never executed. Drew further contends that the terms of the written contracts were never followed by the parties and that his father made representations to Drew that he would not sign or follow the contracts as additional circumstantial evidence that the contracts were not entered into. He also contends that he was not given all the responsibilities he was promised under the Management Contract. Drew states that his efforts in hiring full-time employees after this time, including a finance and insurance manager, allowed Thomas Motors to avoid foreclosure and increase revenue, culminating in Chrysler awarding Thomas Motors a "five-star" rating normally awarded to only larger dealerships.

In 2006, Thomas Motors was sold to a group of investors headed by Mr. Bill Buckner. The deal included both the sale of some surrounding real property owned personally by Ron and his wife Elaine, as well as Thomas Motors itself, with a closing price of $2,900,000. At that time, Drew states that Thomas Motors owed $200,000 on a flooring line of credit that had been obtained through Key Bank. Drew was not notified of the sale of Thomas Motors.

Drew filed a Verified Complaint and Demand for Jury Trial against Ron, Ron's wife Elaine, and Thomas Motors on June 21, 2006, alleging five counts: (1) breach of (oral) contract, (2) breach of the covenant of good faith and fair dealing, (3) quasi-contract, (4) breach of (written) contract (in the alternative), and (5) fraud. Drew's quasi-contract claim rested on the same oral contract as the first count, but relied on the benefit Drew's employment conferred on Ron. On July 24, 2007, the Respondents filed a motion for summary judgment on all five counts. In its Order on that motion, the district court denied summary judgment on the first two counts of breach of oral contract and breach of the covenant of good faith and fair dealing, but granted summary judgment on the remaining three counts of quasi-contract, breach of written contract (in the alternative) and fraud. The court rejected the Respondents' argument that the oral contract lacked definite material terms at that time, finding:

the agreement as alleged by Plaintiff in Paragraph 12 of his Affidavit in Opposition to the Motion for Summary Judgment—in consideration of Plaintiff leaving his employment at Lanny Berg and contributing his efforts and experience to building Thomas Motors, Defendants promise to transfer Thomas Motors upon the retirement of Ronald Thomas—is supported by sufficient evidence in the record to preclude summary judgment dismissing the claim for breach of that contract.

The court also rejected the Respondents' argument that the oral contract was invalid under the statute of frauds. It found first that the contract could have been performed within a year because Ron could have retired within one year from when the contract was entered into, and second that the contract did not involve real property, and therefore the statute of frauds was not implicated as a matter of law. In granting summary judgment on the quasi-contract claim at issue in this appeal, the court found that unjust enrichment could not apply because an express contract governed the agreement. It stated:

Here, Plaintiff essentially seeks additional compensation for the services he performed for Thomas Motors while employed there based on the assertion that, pursuant to another agreement, he agreed to accept less compensation for his services. Since the uncontroverted evidence establishes that the parties had an express employment agreement pursuant to which Plaintiff was paid a salary, including one or more raises during his employment, the Court finds that it would be improper to change the terms of that employment agreement by application of the doctrine of quasi-contract. Plaintiff's assertion that he agreed to go to work for Thomas Motors at a reduced salary in consideration for Defendants' promise to transfer the business should stand or fall based upon the jury's determination of his express contract claim in Count I.

In granting summary judgment on the written contract claim, the court found...