Weaver v. Refrigeration

• Decision Date: 21 July 2011
• Docket Number: No. DA 10–0603.,DA 10–0603.
• Citation: 257 P.3d 378,2011 MT 174,361 Mont. 233
• Parties: C.R. WEAVER, Plaintiff and Appellant,v.ADVANCED REFRIGERATION, Advanced Restaurant Supply, Dennis Heck, Duane Martin, Wilbur Curtis Manufacturing, and Jim Thramer, Defendants and Appellees.
• Court: Montana Supreme Court

361 Mont. 233

257 P.3d 378

2011 MT 174

C.R. WEAVER, Plaintiff and Appellant,

v.ADVANCED REFRIGERATION, Advanced Restaurant Supply, Dennis Heck, Duane Martin, Wilbur Curtis Manufacturing, and Jim Thramer, Defendants and Appellees.

No. DA 10–0603.

Supreme Court of Montana.

Submitted on Briefs June 15, 2011.Decided July 21, 2011.

For Appellant: C.R. Weaver (self-represented), Kalispell, Montana.For Appellees: Daniel W. Hileman, Kaufman, Vidal, Hileman, P.C., Kalispell, Montana (Wilbur Curtis Manufacturing). Paul D. Sullivan, Measure Law Office, P.C., Kalispell, Montana (Advanced Refrigeration, Advanced Restaurant Supply, Dennis Heck, Duane Martin, Jim Thramer).Justice MICHAEL E. WHEAT delivered the Opinion of the Court.

[361 Mont. 234] ¶ 1 C.R. Weaver (Weaver) appeals from two orders of the Eleventh Judicial District Court, Flathead County, granting summary judgment to Defendants. We affirm.

BACKGROUND

¶ 2 This dispute centers around the purchase of an industrial coffee urn. Weaver, “representing Glacier Kitchens,” ordered the coffee urn from Defendant, Advanced Restaurant Supply, for use by Glacier Kitchens, Inc. (“Glacier Kitchens”). Glacier Kitchens is a Montana corporation in which Weaver owns 90% of the shares.¹ Weaver sought a coffee urn fitted for use with propane. Advanced Restaurant Supply did not have the coffee urn in stock, so it ordered the coffee urn from Defendant, Wilbur Curtis Manufacturing (“Wilbur Curtis”). When the coffee urn arrived, Weaver took possession of it. Glacier Kitchens used the coffee urn in the process of providing food and drink for forest firefighters under its food service contract with the United States Forest Service (USFS). Although the coffee urn worked for a while, it ultimately malfunctioned because it was constructed for use with natural gas rather than propane. Several attempts were made to repair the coffee urn, to no avail. Glacier Kitchens' contract with the USFS was subsequently terminated by USFS, and Weaver alleges the termination was due to the malfunctioning coffee urn.²

¶ 3 On September 11, 2009, Weaver, as an individual, sued Advanced Restaurant Supply, Advanced Refrigeration, Dennis Heck, Duane Martin, Jim Thramer (collectively “ARS”), and Wilbur Curtis for breach of contract. He alleged that a “contract attached” when he, “representing Glacier Kitchens,” ordered the coffee urn from ARS. However, he sought damages of nearly 1 million dollars not under the alleged contract between Glacier Kitchens and ARS for the purchase of the coffee urn, but rather under the terminated food service contract between Glacier Kitchens and the USFS.

¶ 4 ARS and Wilbur Curtis sought summary judgment. The District Court granted their respective motions. First, regarding ARS, the District Court found that Weaver, as a shareholder in Glacier Kitchens, lacked standing to bring a claim that belonged to the corporation. It also found Weaver was warned more than once that he lacked standing to bring claims on behalf of Glacier Kitchens, and it was too late to amend the complaint. Regarding Wilbur Curtis, the District Court found that Weaver lacked standing, and that neither Weaver nor Wilbur Curtis was a party to the Glacier Kitchens/USFS contract under which Weaver was seeking damages, thus neither could have any obligations or liabilities via the contract.

¶ 5 Judgment was entered on December 1, 2010, for Wilbur Curtis, and January 18, 2011, for ARS. Both judgments included an award of costs in favor of the Defendants. Weaver appeals the following issues:

¶ 6 Issue One: Did the District Court err in granting summary judgment to ARS and Wilbur Curtis?

¶ 7 Issue Two: Did the District Court err in awarding costs to ARS and Wilbur Curtis?

STANDARD OF REVIEW

¶ 8 We review summary judgment rulings de novo. Goettel v. Estate of Ballard, 2010 MT 140, ¶ 10, 356 Mont. 527, 234 P.3d 99. Applying the same M.R. Civ. P. 56 criteria as the district court, we determine whether the moving party has established both the absence of any genuine issues of material fact and entitlement to judgment as a matter of law. Id. We review a district court's conclusions of law for correctness. Id. at ¶ 11. We review a district court's findings of fact to determine whether they are clearly erroneous. Id.

DISCUSSION

¶ 9 Weaver argues that the District Court erred in granting summary judgment to ARS and Wilbur Curtis because he personally bought the coffee urn, not Glacier Kitchens, and he was leasing the coffee urn to Glacier Kitchens. Weaver asserts the right to bring his claims in his individual capacity because Glacier Kitchens is a “dissolved/defunct” corporation. He also argues he should be allowed to amend his complaint at any time within the statute of limitations. Finally, he argues he should not have to pay costs.

¶ 10 ARS argues that an individual shareholder of a corporation, even a defunct corporation, cannot bring a claim belonging to the corporation. ARS also argues that the District Court was within its authority to set deadlines for amending the complaint. Finally, ARS argues the award of costs was proper and Weaver failed to raise a legitimate argument as to why costs should not have been awarded.

¶ 11 Wilbur Curtis also argues that Weaver, as an individual shareholder in Glacier Kitchens, cannot bring a claim that belongs to the corporation. Further, Wilbur Curtis asserts that because neither it nor Weaver was a party to the USFS contract with Glacier Kitchens, neither can have any obligations or liabilities under the contract. Wilbur Curtis finally argues that the award of costs was appropriate and Weaver has not shown otherwise.

¶ 12 Issue One: Did the District Court err in granting summary judgment to ARS and Wilbur Curtis?

¶ 13 Summary judgment is appropriate when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” M.R. Civ. P. 56(c); Old Elk v. Healthy Mothers, Healthy Babies, Inc., 2003 MT 167, ¶ 15, 316 Mont. 320, 73 P.3d 795. The initial burden is on the moving party to establish that no genuine issue of material fact exists. Old Elk, ¶ 15. The burden then shifts to the non-moving party, who must “set forth specific facts showing that there is a genuine issue for trial.” Id. To raise a genuine issue of material fact, the proffered evidence must be “material and of a substantial nature, not fanciful, frivolous, gauzy or merely suspicious.” Id. at ¶ 16. A party is bound by the admissions in its pleadings. Farm Credit Bank of Spokane v. Hill, 266 Mont. 258, 264, 879 P.2d 1158, 1161 (1993).

A. Summary Judgment for ARS

¶ 14 Generally, a shareholder may not bring a claim that belongs to their corporation. Gullett v. Van Dyke Construction Co., 2005 MT 105, ¶ 14, 327 Mont. 30, 111 P.3d 220; Stott v. Fox, 246 Mont. 301, 306, 805 P.2d 1305, 1308 (1990).

¶ 15 The District Court properly granted summary judgment to ARS. Weaver's complaint states he was “representing Glacier Kitchens” when he purchased the coffee urn from ARS. Weaver is bound by his pleadings. Farm Credit Bank, 266 Mont. at 264, 879 P.2d at 1161. Any claim against ARS for the defective coffee urn belongs to Glacier Kitchens, not to Weaver personally. As a shareholder, Weaver cannot bring the claim on behalf of Glacier Kitchens. Gullett, ¶ 14; Stott, 246 Mont. at 306, 805 P.2d at 1308.

¶ 16 Weaver was warned about this defect in his complaint. Lack of standing was one of ARS's affirmative defenses—“Weaver lacks standing to bring any of the claims arising from the transactions giving rise to any of the claims alleged in the Complaint.” Additionally, in response to Weaver's first motion for sanctions, ARS stated “Weaver may believe that filing his claims in his individual capacity is proper. Whether this is correct as a matter of law is something he remains free to argue. Ultimately, it is for the Court to decide.” Weaver had notice that he should at least consider amending his complaint to include Glacier Kitchens as a plaintiff. Even after receiving notice, Weaver did not attempt to amend his complaint.

¶ 17 Weaver's argument that the statute of limitations controls when he can amend is complaint is unavailing. The statute of limitations is a deadline by which an action must be commenced. If an action is not commenced before the expiration of the statute of limitations, the action is generally barred. Section 27–2–202, MCA (limitations period for an action based on contract). It is clear that Weaver commenced this action before the statute of limitations expired. However, once Weaver commenced the action, the District Court had the authority to set deadlines for amendments to the pleadings. M.R. Civ. P. 16(b)(1); Textana, Inc. v. Klabzuba Oil & Gas, 2009 MT 401, ¶ 80, 353 Mont. 442, 222 P.3d 580. According to the District Court's scheduling order, Weaver had nearly one year to amend his complaint. He did not do so. In fact, no motion to amend was ever filed by Weaver.

¶ 18 Finally, Weaver alleges for the first time on appeal that he has the right to bring this action because Glacier Kitchens is a “dissolved/defunct” corporation. We do not consider issues raised for the first time on appeal. State v. Belanus, 2010 MT 204, ¶ 17, 357 Mont. 463, 240 P.3d 1021. However, we note that dissolution does not prevent commencement of a proceeding by or against the corporation in its corporate name. Section 35–1–935(2)(e), MCA.

¶ 19 We affirm the grant of summary judgment to ARS.

B. Summary Judgment for Wilbur Curtis

¶ 20 The District Court properly granted summary judgment to Wilbur Curtis. First, as stated above, Weaver, an individual shareholder, cannot maintain an action that belongs to Glacier Kitchens. See ¶ 15 above.

[361 Mont. 238] ¶ 21 Additionally, the District Court was correct in determining that Weaver, a stranger to...