Vreeken v. Lockwood Engineering, B.V.

• Decision Date: 19 October 2009
• Docket Number: No. 34817.,34817.
• Citation: 218 P.3d 1150
• Court: Idaho Supreme Court
• Parties: Christianne VREEKEN, Plaintiff, v. LOCKWOOD ENGINEERING, B.V., a Netherlands corporation; Gerbroeders Meijer Belegging, B.V., a Netherlands corporation; Jan Vreeken, an individual, and Thomas R. Gold, an individual, Defendants. Thomas R. Gold, an individual, Cross Claimant-Respondent, v. Lockwood Engineering, B.V., a Netherlands corporation, Gerbroeders Meijer Belegging, B.V., a Netherlands corporation, a/k/a Gerbroeders Meijer Belegging, B.V., and Jan Vreeken, an individual, Cross Defendants-Appellants. Thomas R. Gold, an individual, Richard L. Gold, an individual, and Tomac Packaging, Inc., a Massachusetts corporation, Cross Claimants-Third Party Plaintiffs-Respondents, v. Lockwood Packing Corporation, a Delaware corporation ("LPC"), and Lockwood Packing Corporation Idaho, an Idaho corporation ("LPC Idaho"), Third Party Defendants-Appellants.

218 P.3d 1150

Christianne VREEKEN, Plaintiff, v. LOCKWOOD ENGINEERING, B.V., a Netherlands corporation; Gerbroeders Meijer Belegging, B.V., a Netherlands corporation; Jan Vreeken, an individual, and Thomas R. Gold, an individual, Defendants.

Thomas R. Gold, an individual, Cross Claimant-Respondent, v. Lockwood Engineering, B.V., a Netherlands corporation, Gerbroeders Meijer Belegging, B.V., a Netherlands corporation, a/k/a Gerbroeders Meijer Belegging, B.V., and Jan Vreeken, an individual, Cross Defendants-Appellants.

Thomas R. Gold, an individual, Richard L. Gold, an individual, and Tomac Packaging, Inc., a Massachusetts corporation, Cross Claimants-Third Party Plaintiffs-Respondents, v. Lockwood Packing Corporation, a Delaware corporation ("LPC"), and Lockwood Packing Corporation Idaho, an Idaho corporation ("LPC Idaho"), Third Party Defendants-Appellants.

No. 34817.

Supreme Court of Idaho, Boise, May 2009 Term.

October 19, 2009.

Manwaring Law Office, Idaho Falls, for appellants. Judy Lea Geier argued.

Holden, Kidwell, Hahn & Crapo, Idaho Falls, for respondents. Charles A. Homer argued.

BURDICK, Justice.

This action involves a dispute over the parties' respective rights upon termination of a joint venture. Appellants Jan Vreeken (Vreeken); Gergbroeders Meijer Belegging, B.V., a Netherlands corporation (Gergbroeders); Lockwood Engineering, B.V., a Netherlands corporation (Lockwood); and Third-Party Appellants Lockwood Packaging Corporation (LP) and Lockwood Packaging Corporation Idaho (LPI) file this appeal on several grounds. We hold Vreeken, Gergbroeders, and Lockwood waived the argument that they should have been summonsed and subpoenaed in their native language of Dutch in accordance with the Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters, November 15, 1965, and that the district court was not required to sua sponte appoint a certified Dutch interpreter for Vreeken's depositions. We affirm the district court's award of summary judgment against LP and LPI's counterclaims for misrepresentation and breach of the covenant of good faith and fair dealing. We also affirm the district court's award of summary judgment in favor of Respondent Thomas Gold and Third-Party Respondents Richard Gold and Tomac Packaging, Inc. on their cross-claim for breach of contract. We reverse the district court's award of summary judgment on the Gold's cross-claim for indemnification, and remand the case for a determination of the amount of damages the Golds sustained from Vreeken's interference with the disposition of the assets intended to secure the Golds' releases from the two bank loans.

I. FACTUAL AND PROCEDURAL BACKGROUND

This case involves a complex factual and procedural history. Appellant Vreeken is a citizen of the Netherlands. Vreeken owns Appellant Gergbroeders, a Netherlands corporation. Gergbroeders is the parent corporation of Appellant Lockwood, also a Netherlands corporation. Third-Party Respondent Richard Gold and Respondent Thomas Gold (the Golds) are father and son respectively. The Golds own Third-Party Respondent Tomac Packaging, Inc., a Massachusetts corporation.

In 1995, Lockwood, represented by Vreeken, and Tomac, represented by the Golds, entered into an agreement to form a joint venture selling produce packaging equipment and machinery, manufactured by Lockwood, in the United States and internationally. In furtherance of the joint venture, LP was formed. LP was the master distributor of Lockwood equipment and machinery in the United States. Thomas Gold managed LP for the parties. Initially, LP was owned 50% by Lockwood and 50% by Tomac; however, Tomac's 50% interest was later transferred to Thomas Gold.

In 1997, the parties formed LPI as a wholly-owned subsidiary of LP. LPI primarily manufactured and distributed bags and other packaging materials for the potato industry. LPI also distributed Lockwood equipment in the Northwestern United States.

LPI obtained various loans during the course of its business operations. In 1997, LPI entered into loan transactions with the Bank of Idaho totaling $800,500. Through a succession of guarantee agreements, Thomas Gold, Vreeken, Lockwood, LP, and LPI became jointly and severally liable for LPI's obligations to the Bank of Idaho. That same year, LPI also obtained a loan from the Eastern Idaho Economic Development Council (EIEDC). The obligation to repay this loan was jointly and severally guaranteed by Thomas Gold, Vreeken, Lockwood, LP, and LPI. LPI later defaulted under this loan and EIEDC obtained a judgment in the amount of $253,331.95 against the EIEDC guarantors. In 2004, Richard Gold purchased EIEDC's interest under the loan, which included the right to collect from the EIEDC guarantors.

Prior to forming the joint venture, Tomac had entered into a loan transaction with Citizens Bank of Massachusetts. Richard Gold personally guaranteed Tomac's obligations under the loan and pledged certain marketable securities as collateral.

Later in 1997, LP and LPI began experiencing accounting problems. In March of 1998, Vreeken and Jan Postema, the Treasurer of LP and the Chief Financial Officer of Lockwood, visited the LP offices in Woburn, Massachusetts. During their visit, Vreeken and Postema were given access to LP's business and financial records as well as some of LPI's records located in the Woburn offices. A few months later in August of 1999, Jerry Ceuppens, Vice President in charge of Lockwood's North American activities, and Jack Schipper, Assistant Controller of Lockwood, also visited the Woburn offices and were given access to LP and LPI's financial records. As a result of their visit, Ceuppens and Schipper wrote a letter to Thomas Gold and Vreeken detailing the problems with LP's accounting, sales, administration, and management.

By the end of 1999, the relationship between the parties had broken down. The parties began to negotiate a plan of reorganization whereby Vreeken would buy out the Golds' interests in the joint venture. On May 12, 2000, the parties entered into a settlement agreement entitled "Memorandum of Understanding" (MOU). Under the MOU, the Golds transferred their interests in LP and LPI to Vreeken. In consideration of the transfer, LP and LPI were to use their best efforts to release the Golds from their personal guarantees under the Bank of Idaho, EIEDC, and Citizens Bank loans. If necessary to effect such releases, Vreeken agreed to personally guarantee these loans. In addition, Lockwood, LP, and LPI agreed to pay Richard Gold $100,000 and Thomas Gold $450,000 under various payout notes. These amounts were to accelerate and become fully due after non-payment and receipt of a ten-day default letter, which undisputedly occurred in this case. The payout notes were to be secured by the assets of LP and LPI, with these security interests being subordinate to all current bank loans, all security positions on record at the time of the MOU, and any future refinancing of such bank loans. The parties mutually agreed to release all claims against each other, except for claims grounded in fraud or claims arising out of the MOU. The MOU contained an integration clause, which stated that the parties did not make any representations or warranties except those specifically contained therein.

On June 26, 2000, Lockwood filed UCC financing statements in the State of Idaho against LP and LPI's assets. These statements were filed by Vreeken's counsel and signed by Vreeken himself. Despite the fact that the MOU provided that the Golds' security interests in LP and LPI's assets were to be subordinate only to the banks' security interests, Lockwood filed its UCC financing statements before the Golds filed theirs. This hindered the Golds' ability to access their collateral under the MOU and to enforce their claims regarding the payout notes.

On April 27, 2001, the Bank of Idaho filed a complaint against the guarantors of the LPI loan seeking to enforce and satisfy the loan. On June 26, 2001, Thomas Gold filed an Answer, Cross-claim, and Third-Party Complaint, under which Richard Gold and Tomac were joined as third-party plaintiffs and LP and LPI were named as third-party defendants. On November 2, 2001, LP and LPI filed an answer to the Bank of Idaho's complaint. In their answer, LP and LPI made counterclaims against the Golds for misrepresentation and breach of the implied covenant of good faith and fair dealing.

Sometime prior to October 12, 2001, the Bank of Idaho agreed to accept $617,870.59 from Christianne Vreeken (Christianne), Vreeken's daughter, in full satisfaction of LPI's loan. Vreeken provided the funds Christianne used to pay off the loan. On October 21, 2001, the Bank of Idaho assigned its interests in the LPI loan to Christianne in consideration of her payment of $617,870.50. These interests included the Bank of Idaho's right to enforce the loan against the relevant guarantors and the bank's security interests in LPI's assets.

As a result of the assignment, Christianne was substituted as plaintiff for the Bank of Idaho. The respondents attempted to take Christianne's deposition five different times. On May 3, 2004, the district court ordered Christianne to personally appear for the taking of her deposition, but again, she did not appear. As a result, the respondents sought sanctions against Christianne. On December 1, 2004, the district court dismissed Christianne's complaint with prejudice against all named defendants as a sanction for her repeated failure to appear.

On February 14, 2005, the respondents filed a motion for summary judgment seeking dismissal of all claims brought against them; a declaratory judgment regarding the performance of, and the amount due, under the MOU; entry of a monetary judgment against Lockwood, LP, and LPI; and a writ of possession allowing the Golds to obtain possession of LP and LPI's assets in order to foreclose their security interests....