Zakibe v. Ahrens & Mccarron Inc.
| Decision Date | 15 August 2000 |
| Citation | 28 S.W.3d 373 |
| Parties | (Mo.App. E.D. 2000) . Thomas Zakibe, Plaintiff/Appellant/Cross-Respondent v. Ahrens & Mccarron, Inc., Defendant/Respondent/Cross-Appellant. v. Barbara Zakibe, Third-Party Defendant/Cross-Respondent, and Robert Noble, Third-Party Defendant. Case Number: ED76080 & ED76081 Missouri Court of Appeals Eastern District Handdown Date: 0 |
| Court | Missouri Court of Appeals |
Appeal From: Circuit Court of the City of St. Louis, Hon. Floyd McBride
Counsel for Appellant: Francis E. Pennington, III, and Francis X. Neuner, Jr.
Counsel for Respondent: Michael A. Fisher and Henry F. Luepke
Opinion Summary: This consolidated appeal arises from a lawsuit brought by a former corporate officer and director against the corporation which employed him. The officer sought to recover bonuses, severance pay, and other compensation which he claimed were due him under his employment contract upon termination. The corporation contended that the officer's breaches of his employment contract and of his fiduciary duty precluded his recovery. The corporation also sought damages for the officer's breach of fiduciary duty. The jury returned a verdict in the corporation's favor on both the petition and the counterclaim and awarded it damages in the amount of $150,000. The corporation also filed third-party claims, including a conspiracy claim against the officer's wife, on which the court directed a verdict. Both parties appeal.
AFFIRMED.
Division Two holds: (1) For a corporation to recover damages in tort against its former officer and director for breach of fiduciary duty, the corporation did not have to show that the former officer and director had profited from his breach. (2) In order to avoid the conflict of interest that would otherwise be created by self-dealing, a corporate officer and director must disclose his interest in and relationship with any business with which the corporation transacts business and such transactions must be authorized by the board of directors or shareholders as circumstances direct. (3) A corporate officer and director's breach of fiduciary duty is a defense to that officer and director's claim for compensation, including bonuses and severance pay, under an employment contract. (4) Instruction defining fiduciary duty was an unnecessary abstract statement of law, but was not plainly erroneous as roving commission. (5) Where verdict on counterclaim showed that jury had found all the elements of a breach of fiduciary duty, those findings also required a verdict in defendant's favor on its affirmative defense of breach of fiduciary duty. Accordingly, the issue of whether another affirmative defense was properly submitted was moot. (6) Point is deemed abandoned where point wholly fails to comply with Rule 84.04(d) and argument thereunder fails to provide the relevant legal and evidentiary analysis.
This consolidated appeal arises from a lawsuit brought by a former corporate officer and director against the corporation which employed him. The officer sought to recover bonuses, severance pay, and other compensation which he claimed were due him under his employment contract upon termination. The corporation contended that the officer's breaches of his employment contract and of his fiduciary duty precluded his recovery. The corporation also sought damages for the officer's breach of fiduciary duty. The jury returned a verdict in the corporation's favor on both the petition and the counterclaim and awarded it damages in the amount of $150,000. The corporation also filed third-party claims, including a conspiracy claim against the officer's wife, on which the court directed a verdict.
Both parties appeal. The officer challenges the submissibility of the corporation's case and affirmative defenses and certain jury instructions. The corporation contends that the trial court erred in directing a verdict on its claim of civil conspiracy. We affirm.
We recite the facts in the light most favorable to the jury's verdict. Defendant, Ahrens & McCarron, Inc. is a building products wholesaler, principally engaged in the business of selling plumbing supplies in the City of St. Louis, Missouri. Prior to 1986 the corporation was owned and managed by Donald Ahrens, the husband of Shirley Ahrens. Mrs. Ahrens became the sole shareholder of the corporation following her husband's death in April, 1986.
Because Mrs. Ahrens had no experience running a business, she approached her father-in-law, who had sold the business to her husband, for advice. Mrs. Ahrens' father-in-law contacted plaintiff Thomas Zakibe, his son-in-law and Mr. Ahrens' sister's husband. Mr. Zakibe agreed to run Ahrens & McCarron. Mr. Zakibe has a bachelor's degree in business administration and a master's degree in finance. He had worked as an executive for the Sverdrup Corporation for 15 years before accepting the position with Ahrens & McCarron. Mrs. Ahrens hired Mr. Zakibe because of his expertise.
Mr. Zakibe entered into an employment agreement on June 19, 1986 under which he agreed to work full-time for Ahrens & McCarron for seven years from June 16, 1986 until June 15, 1993. The employment agreement provided that Mr. Zakibe would serve as Executive Vice President and General Manager and as a member of the Board of Directors and would provide "financial and general operational management of the company within the scope of authority specifically delegated to him by Company." The agreement also specified under Terms and Duties:
E. Zakibe shall render service to Company on a full-time basis. However, nothing contained herein shall prevent Zakibe from managing his personal investments, provided that such investments do not create a conflict of interest between Zakibe in his capacity as a corporate officer, and employee of the Company and further provided that the time expended for such personal investment does not interfere with Zakibe's performance of his duties to Company under this Agreement.
The compensation section of the agreement provided for an annual base salary and for annual incentive bonuses to be made no later than April 1 of the year immediately following the close of defendant's calendar year. The termination section provided in part A: "If this Agreement is terminated by Company, Company hereby agrees that it will pay in an amount equal to one hundred percent (100%) of the then current base annual salary of Zakibe, during the year of termination."
Mr. Zakibe assumed the duties of Executive Vice President and General Manager until 1991 when he became President of the corporation. In June, 1993 Mr. Zakibe and Mrs. Ahrens orally agreed that Mr. Zakibe's employment contract would continue on a year-to-year basis. Mr. Zakibe held these offices and served as a director until his termination in 1996. During this time Mr. Zakibe had the primary responsibility for managing the business of Ahrens & McCarron. Mr. Zakibe understood that he "had a duty to provide the utmost good faith and loyalty" to Ahrens & McCarron. Mr. Zakibe understood that a conflict of interest could arise where he would have an incentive to act against the best interests of someone he had a duty to serve.
Mrs. Ahrens served as a director and corporate officer during this time period, but did not actively manage the company. She relied on Mr. Zakibe to run the business.
In November, 1993 Robert Noble, an Ahrens & McCarron employee, learned of an opportunity to buy the inventory of Showcase Kitchen and Bath. He spoke about it with Mr. Zakibe and decided to create a separate corporation, American Showcase, to buy the inventory and operate it as a wholesaler of kitchen and bath cabinets. Mr. Zakibe attempted to get Mrs. Ahrens to invest in American Showcase along with his wife, Barbara Zakibe. He told Mrs. Ahrens that Mrs. Zakibe would not invest unless she did. In March, 1994 Mr. Noble left his employment at Ahrens & McCarron to start American Showcase without giving advance notice to Mrs. Ahrens.
Without Mrs. Ahrens' knowledge, Mr. Zakibe contacted Mrs. Ahrens' personal attorneys and asked them to prepare shareholder documents for American Showcase that listed Mrs. Ahrens as a shareholder. In March or April, 1994 Mr. Zakibe gave the documents to Mrs. Ahrens, but she never signed these documents. Mr. Zakibe urged Mrs. Ahrens to invest in American Showcase on several occasions. Mrs. Ahrens was upset by Mr. Noble's departure and did not want to invest in American Showcase. She never invested any money in American Showcase and never became a shareholder.
On April 29, 1994 Mr. Zakibe invested $50,000 in American Showcase by means of a $50,000 check drawn on Mr. and Mrs. Zakibe's joint bank account and signed by himself. The check bore the annotation "25% of total shares." Mr. Zakibe did not obtain Mrs. Ahrens' permission to make the investment. However, he considered that his investment in American Showcase might constitute a conflict of interest.
In June, 1994, Mrs. Ahrens heard from an employee that Mrs. Zakibe had invested in American Showcase. She asked Mr. Zakibe whether the investment presented him with a conflict of interest. Mr. Zakibe indicated that he had no conflict of interest because the money invested in American Showcase belonged to his wife and not to himself. Mrs. Ahrens accepted this explanation.
Mr. Zakibe never disclosed to Mrs. Ahrens that he had his own interest in American Showcase. Further, on different occasions between 1994 and 1996 Mr. Zakibe represented to Mr. Noble, as well as to Ahrens & McCarron's comptroller, and Ahrens & McCarron's accountant, that Mrs. Zakibe was the source of the investment and owned American Showcase. In addition, Mr. Zakibe testified in his deposition and in response to written...
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