Weitz v. Weitz, 122220 IDSCCI, 47483

Docket Nº47483
Opinion JudgeBURDICK, CHIEF JUSTICE.
Party NameDAVID M. WEITZ and JOHN R. TAVARES, Plaintiffs-Respondents, v. DANIEL P. WEITZ, Defendant-Appellant, and JOHN WENDELL WEITZ, Defendant.
AttorneyLaw Office of Vernon K. Smith, Boise, for Appellant. Vernon K. Smith argued. Givens Pursley, LLC, Boise, for Respondents. Michael O. Roe argued.
Judge PanelJustices BRODY, BEVAN, STEGNER, and MOELLER CONCUR.
Case DateDecember 22, 2020
CourtSupreme Court of Idaho

DAVID M. WEITZ and JOHN R. TAVARES, Plaintiffs-Respondents,

v.

DANIEL P. WEITZ, Defendant-Appellant,

and

JOHN WENDELL WEITZ, Defendant.

No. 47483

Supreme Court of Idaho

December 22, 2020

Appeal from the District Court of the Third Judicial District, State of Idaho, Canyon County. George A. Southworth, District Judge.

The decision of the district court is affirmed.

Law Office of Vernon K. Smith, Boise, for Appellant. Vernon K. Smith argued.

Givens Pursley, LLC, Boise, for Respondents. Michael O. Roe argued.

BURDICK, CHIEF JUSTICE.

This case arises from a dispute over the ownership of Treasure Valley Manufacturing & Recycling, Inc., ("TVM"). Daniel P. Weitz appeals an order and judgment entered in the Canyon County district court granting summary judgment in favor of David M. Weitz and John R. Tavares and declaring them the exclusive owners of TVM. The district court granted summary judgment in favor of David M. Weitz and John R. Tavares after determining that Daniel P. Weitz had failed to produce any evidence demonstrating a genuine dispute of material fact and that they were entitled to judgment as a matter of law.

I.

FACTUAL AND PROCEDURAL BACKGROUND

TVM is a closely held family corporation started by Phil Weitz and his three sons- Daniel, David, and John Weitz[1]-in 1987. TVM's primary business is scrap metal recycling. TVM's articles of incorporation authorize the issuance of 100 shares of common stock and list Daniel, David, and John as the original incorporators. The parties do not dispute that from 1987 until approximately 1995, Daniel, David, and John each had an ownership interest in TVM.

David and longtime family friend John Tavares ("Tavares") began working full-time at TVM in 1987. John also worked part-time sporadically for TVM in its early years. TVM was not very profitable at first. According to David and Tavares, working at TVM involved long, physical hours crushing cars and cutting up large pieces of steel and other scrap metal. The work was greasy, loud, and sometimes dangerous. Daniel did not work for TVM at any point, focusing his time on other ventures. TVM has grown substantially in value since its inception.

TVM was not the only business owned and operated by the Weitz family. They also owned Idaho Farmway, which was a large farming operation, as well as various other ventures such as Weitz & Company, Inc., and TVM Development. At the center of each family business was Phil. One thing all parties agree on is that, regardless of formal documentation, Phil was in charge. Phil financed, managed, and kept the records for all the family businesses. He moved assets, funds, ownership interests, and personnel between the brothers and entities as he saw fit. He is described consistently throughout each brother's testimony as the family's "patriarch," commander, and decision-maker. When it came to the family businesses, "[w]hat Phil said was the law."

Over the years, Daniel and John started several businesses of their own. Daniel's businesses included Sprinkler Irrigation Co., Mountain Home Development Co., Fabco Fireplaces and Stoves, Investment Recovery, Inc., Superior Manufacturing Co., Inc., Ace Agricultural Equipment Co., Canyon Holding Co., Irsco Steel Co., and others. John had TVM Auto Sales, John Weitz Motorsports, Inc., and Rocky Mountain Motors. Phil provided financing for many of Daniel and John's business ventures. David, on the other hand, put all his attention and time towards the success of TVM.

Tavares, who worked for Idaho Farmway from 1983 to 1987, began working for TVM with David in 1987 and has worked there full-time ever since. In 1989, Tavares asked Phil and David for an equity stake in TVM, pointing to his continued dedication to the company and the fact that he was starting a family. Phil granted his request, giving Tavares twenty-five shares in TVM.

Phil passed away in 2013, naming David as the personal representative of his estate. The estate proceedings were both lengthy and contentious. After a dispute arose between David and his brothers concerning his handling of the estate, they sought to remove him as the personal representative. During the estate proceedings, Daniel and John also claimed they each had a one-third ownership interest in TVM.

In response to Daniel and John's ownership claim, David and Tavares filed the present action on October 11, 2018, requesting the district court enter a judgment declaring them 100% owners of TVM. David and Tavares alleged that Phil had given Tavares his 25% share of TVM in 1989, and that in 1995 Phil transferred Daniel and John's 25% ownership interests to David, giving him a 75% stake in the company. Daniel and John filed a response and counterclaim alleging they collectively owned two-thirds of TVM. The district court described their responsive document as a "rambling, 26-page answer . . . filled with derogatory insults, allegations of misconduct and fraud, non-specific questions, and accusations of theft and other conspiracies." David and Tavares filed a motion to strike and the district court struck the answer in its entirety, ordering Daniel and John to file an answer compliant with the Idaho Rules of Civil Procedure.

Daniel and John filed an amended answer and counterclaim. David and Tavares again moved to strike portions of the responsive pleading on the grounds that it contained inadequately pled affirmative defenses. The district court struck the defenses in part. The parties engaged in a protracted discovery dispute, culminating with the district court granting two motions to compel Daniel and John to supplement their discovery responses. David and Tavares requested attorney's fees and costs associated with the first motion to compel. They also requested an award of attorney's fees, but not costs, associated with their second motion to compel, which the court took under advisement.

On July 1, 2019, David and Tavares moved for summary judgment on their declaratory judgment claim as well as Daniel and John's counterclaim. David and Tavares supported their motion for summary judgment with over 1000 pages of documentation, including personal and corporate tax records, TVM's annual filings and corporate minutes, their own affidavits, and affidavits from numerous third parties familiar with the Weitz family businesses, including the Weitz family accountant.

Daniel filed his own motion for summary judgment on July 15, 2019. He supported his motion with his own forty-page affidavit and several exhibits. A few days later, John filed a notice of substitution of counsel with the district court, indicating that he had obtained a different lawyer. On July 22, 2019, having reached a settlement, John, David, and Tavares stipulated to the dismissal of their claims and counterclaims against each other. Three days later, the district court entered an order dismissing David and Tavares's claim against John and John's counterclaim, leaving Daniel as the sole defendant/counterclaimant in the action.

The district court held a hearing on the cross motions for summary judgment at which both parties argued.[2] On September 6, 2019, the district court entered an order granting the motion for summary judgment brought by David and Tavares and denying Daniel's motion for summary judgment. The district court entered a judgment declaring David and Tavares 100% owners (75% and 25% respectively) of TVM that same day.

Two weeks after the district court entered judgment, David and Tavares submitted a memorandum requesting fees and costs associated with the entire litigation. Daniel objected and the district court set the matter for a hearing. Before the hearing could be held, Daniel appealed the district court's summary judgment order and final judgment. The district court vacated the hearing pursuant to Idaho Appellate Rule 13(a). After determining that a hearing was unnecessary, the district court issued a decision awarding David and Tavares attorney's fees and costs associated with discovery sanctions imposed on Daniel, but denied their request for attorney's fees and costs associated with the rest of the litigation. Daniel also appeals from the district court's decision on attorney's fees and costs.

II.

ISSUES ON APPEAL

1. Did the district court err in granting summary judgment in favor of David and Tavares and entering a judgment declaring them the exclusive owners of TVM?

2. Did the district court abuse its discretion in granting attorney's fees and costs to David and Tavares in connection with the discovery disputes below?

3. Are David and Tavares entitled to attorney's fees on appeal?

III.

STANDARD OF REVIEW

This Court applies the same standard as the trial court when reviewing a ruling on a motion for summary judgment. Bliss v. Minidoka Irrigation Dist., 167 Idaho 141, 149, 468 P.3d 271, 279 (2020) (quoting Pioneer Irrigation Dist. v. City of Caldwell, 153 Idaho 593, 596, 288 P.3d 810, 813 (2012)). Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." I.R.C.P. 56(a)...

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