Woodward v. Andersen
| Decision Date | 15 June 2001 |
| Docket Number | No. S-99-1430.,S-99-1430. |
| Citation | 627 N.W.2d 742,261 Neb. 980 |
| Parties | George W. WOODWARD III, individually and on behalf of all Shareholders of WE and NW, Inc., a Nebraska corporation, Appellant, v. Nancy K. ANDERSEN, formerly known as Nancy K. Woodward, and WE and NW, Inc., a Nebraska corporation, Appellees. |
| Court | Nebraska Supreme Court |
James D. Sherrets and Theodore R. Boecker, Jr., Omaha, of Sherrets & Boecker, for appellant.
Dennis E. Martin and Kevin J. McCoy, Omaha, of Martin & Martin, P.C., for appellees.
The appellant, George W. Woodward III, was married to the appellee Nancy K. Andersen. As part of a divorce settlement, Andersen gave Woodward 245 shares of a corporation and retained 255 shares. Woodward filed suit alleging that before the divorce, Andersen took excess funds from the corporation, and that after the divorce, Andersen mismanaged the corporation and oppressed the shareholders. Woodward sought an accounting, a return of money to the corporation, and dissolution of the corporation. The district court granted partial summary judgment in Andersen's favor for events occurring before the divorce. After a trial, the court denied Woodward relief on his other claims. Woodward appeals. We affirm in part, and in part reverse and remand for further proceedings.
Woodward and Andersen were married in 1980. In 1986, Andersen incorporated WE and NW, Inc., for the purpose of acquiring and developing a parcel of land along the Platte River for use as a private campground. Since that time, Andersen has served as president and director of the corporation. Initially, the corporation issued 500 shares of stock to G.W. Egermayer, Jr., and 500 shares to Andersen. The property was conveyed to the corporation in 1988. The campground was named "Woods Landing" and operated by selling memberships as part of a nationwide chain of campgrounds known as Coast-to-Coast.
In 1988, Egermayer redeemed his 500 shares in the corporation. This left Andersen as the sole shareholder in the corporation. Woodward did not own any shares in the corporation, but testified that he had an interest in the corporation due to his marriage to Andersen and has contended that Andersen held shares in trust for him. Both parties testified that they took active roles in the management and development of the campground.
Woodward testified that he never received a salary from the corporation and that when he wanted to be paid, he asked Andersen for money. In addition, the couple used revenue from the corporation to pay a majority of their bills and to purchase items. Woodward testified that "millions" were taken out of the corporation, stating that an average of $30,000 to $60,000 was taken out per month and that up to $300,000 might be taken out in a month in order to buy things such as a farmhouse, jewelry, or a Jaguar convertible. Andersen testified that she believed less than $20,000 per month was taken out and that there were probably instances where over $200,000 was taken out, but not over $250,000.
Andersen filed for divorce in June 1992. A temporary restraining order was issued precluding any transfers from the corporation outside of the ordinary course of business. Woodward then began to claim that Andersen was wrongfully withdrawing money from the corporation. At a deposition taken in November, Woodward stated that he was investigating amounts Andersen had received from the corporation and indicated that there were payments made outside of the ordinary course of business. In his deposition, Woodward also stated that he was concerned about where money from the corporation was going and that he wanted an accounting. The record contains evidence indicating that money withdrawn by Andersen in 1992 was used to finance purchases for Woodward and to pay to him $30,000 per month under a temporary support order in the divorce proceedings.
The record contains letters exchanged between Woodward's and Andersen's attorneys during the divorce proceedings. These letters indicate that there was considerable disagreement over the amount of information that was provided through discovery regarding the corporation. The record shows, however, that in response to a motion to compel, Andersen made the financial records of the corporation available for review and inspection by Woodward. A letter from Woodward's attorney dated February 1, 1993, states that he hired an accountant to perform a review of all corporate records at the campground office. The record indicates that Andersen did not allow such an audit to be performed. Instead, the record contains a letter dated March 8, 1993, stating that such a request was too broad and stating that a document request should be provided. A letter dated March 11, 1993, indicates that a settlement was then reached between the parties.
On March 29, 1993, a shareholder agreement was executed which was incorporated into the divorce decree. Under the decree, Andersen transferred 245 shares of her 500 shares to Woodward. The decree states that "[Woodward] acknowledges that [Andersen] is not indebted to W.E. & N.W., Inc. nor does W.E. & N.W., Inc. have any claims against [Andersen]." The agreement indemnifies both Woodward and Andersen for all liabilities asserted against them as past or present officers, directors, or employees of the corporation. The agreement provides that to the extent not indemnified by the corporation, the parties agreed to bear in equal shares any liabilities that arose by virtue of any distribution, compensation payment, cash transfer, or other property transfer from the corporation to any person at any time or any liabilities by virtue of Andersen's or Woodward's actions or admissions as a shareholder, officer, or director of the corporation. The parties also agreed to indemnify each other against liability transpiring after entry of the decree. The agreement also has provisions for indemnification between the parties. The record does not contain evidence of a resolution or provision allowing the corporation to indemnify Andersen for attorney fees.
The agreement states that it was designed in part to provide for past and future liabilities and to place certain restrictions on Andersen's control of the corporation. Woodward contends that he and Andersen agreed that he would be made an officer of the corporation. The agreement, however, does not include such a provision. After the divorce, Woodward was made an officer of the corporation, but was later removed.
As noted, the trial court granted summary judgment against Woodward's claims occurring before the divorce. At trial, on the claims after the divorce concerning the dissolution of the corporation and the accounting action, Woodward attempted to provide evidence of an oral agreement between himself and Andersen providing that he would be made an officer and director of the corporation after March 1993. Andersen's attorney objected on the basis that the parol evidence rule barred testimony of any agreements that were not ultimately included in the shareholder agreement. The trial court did not allow the testimony on the basis that Woodward did not plead that he was wrongfully induced to sign the shareholder agreement. Woodward then made a motion to amend his petition, which the district court denied. The articles of incorporation dealing with officers and directors state that when the shares of the corporation are owned by either one or two stockholders, the number of directors may be less than three but not less than the number of shareholders.
Andersen presented evidence that after the divorce, Woodward encouraged campground members to withhold their dues and he broke into the campground office and took some documents. Woodward denies these allegations and contends that an anonymous camper called him and told him that missing documents were on the clubhouse steps. Woodward states that he then picked up the documents and gave them to his attorney.
The record reflects a litany of charges and countercharges between the parties. Woodward testified that Andersen was not holding annual shareholders' meetings. Andersen testified that one meeting was held but that it "didn't work," that she and Woodward could not agree, and that they could not be in the same room together. At trial, Woodward testified that he believed the campground was being poorly run. Andersen disagrees.
In 1996, Woodward hired a certified fraud examiner to examine the books of the corporation. The examiner concluded that Andersen took $423,400 from the corporation in 1992, mostly through telephone transactions. The record contains a short affidavit from the examiner which does not provide any detailed information regarding the examiner's experience in conducting fraud examinations. The examiner did not testify at trial.
In December 1996, Woodward filed suit individually and on behalf of the shareholders alleging that Andersen received excessive compensation, withdrawals, and benefits from the corporation before the divorce. Woodward alleged that he was unable to discover the extent and nature of the excessive payments until November and December 1996. He also alleged that after the divorce, Andersen acted in an oppressive and fraudulent manner with respect to Woodward and the corporation in breach of her fiduciary duties to both. Woodward alleged that he was improperly ousted as an officer and director of the corporation, that Andersen allowed her mother and a sibling to run the corporation, and that he was denied access to records. Woodward further alleged that Andersen received excessive payments from the corporation and that the corporation's books show a loan made to Woodward and a dividend resolution that never occurred. Finally, under a section labeled "Dissolution," Woodward alleged...
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