Thomas Morris, et al. Appellants, vs. C. Stephen Trotter, et al., Respondents.

Thomas Morris, et al. Appellants, vs. C. Stephen Trotter, et al.,Respondents. A06-205, Court of Appeals Unpublished Decision, October 23, 2007.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2006).

 

STATE OF MINNESOTA

 IN COURT OF APPEALS
A06-2056
 

Thomas Morris, et al.
Appellants,

vs.

C. Stephen Trotter, et al.,
Respondents.

 

 

Filed October 23, 2007

Affirmed

Harten, Judge*

 

Dakota County District Court

File No. C7-04-9705

 

Michael D. Schwartz, Joseph Walsh, 455 Pond Promenade, Suite 210, P.O. Box 219, Chanhassen, MN 55317-0129 (for appellants)

 

Gary G. Fuchs, Elizabeth E. Rein, 3440 Federal Drive, Suite 250, Eagan, MN 55122 (for respondents)

 

            Considered and decided by Ross, Presiding Judge; Kalitowski, Judge; and Harten, Judge.

 

U N P U B L I S H E D   O P I N I O N

HARTEN, Judge

            Appellants Kathleen and Thomas Morris owned 40% of the stock of respondent Propack Sales, Inc. (Propack); respondents Judith and C. Stephen Trotter owned another 40%.   The Morrises brought this action against Propack and the Trotters, alleging that the Trotters breached the settlement agreement that had resolved the Morrises' previous lawsuit against them.  On appeal, the Morrises argue that the district court abused its discretion in dismissing the Trotters from the lawsuit and in granting judgment to Propack, following a bench trial, on the Morrises' claims for attorney fees and possession of a vehicle owned by Propack.  Because we see no abuse of discretion in the dismissal of the Trotters and no error in the district court's judgment, we affirm.

FACTS

 

            The Morrises brought their first action against the Trotters and Propack in July 2003, after Propack terminated Thomas Morris's employment.  In April 2004, the parties entered into a settlement agreement.  In relevant part, it reinstated Thomas Morris's employment, provided that he and Stephen Trotter would have identical employment agreements with Propack, and required all Propack shareholders to execute a buy-sell agreement.  The buy-sell agreement in turn provided that a shareholder could offer to sell all his stock or buy all another shareholder's stock for a specified price, that the offeree had 30 days to accept either the offer to buy or the offer to sell, and that, if the offeree did not reply in writing within 30 days, he would be deemed to have accepted the other shareholder's offer to buy. The buy-sell agreement also provided that an offer to buy the stock of either Stephen Trotter or Thomas Morris must include $300,000 for termination of the seller's employment agreement with Propack. 

            On 23 August 2004, the Trotters offered to buy the Morrises' shares of Propack stock for $60,000 and to pay Thomas Morris $300,000 to terminate his employment agreement.  The Morrises did not respond within 30 days, but in September 2004 they brought this action against the Trotters and Propack.  The Trotters moved the district court to enforce the settlement agreement.  Following a hearing, the district court on 15 March 2005 ordered the Morrises to transfer their stock to the Trotters and the Trotters to pay the Morrises $60,000 for the stock and Propack $300,000, which Propack would use to pay Thomas Morris for the termination of his employment agreement.  The district court then closed the file.

            In July 2005, the Morrises moved to reopen the case.  Following a hearing, another district court judge granted that motion.  The Trotters and Propack then moved for dismissal, for summary judgment, and for a protective order prohibiting the Morrises from conducting discovery on the value of Propack stock.  In June 2006, after a hearing on these motions, a third district court judge granted the Trotters' and Propack's motions to dismiss the Trotters from the lawsuit and for a protective order; the court also denied their summary judgment motion on the Morrises' claims for attorney fees and for possession of a motor vehicle owned by Propack.  In September 2006, following a bench trial, a fourth district court judge entered judgment for Propack on the attorney fees and motor vehicle issues. 

            The Morrises appeal, arguing (1) that the third judge abused his discretion in dismissing the Trotters from the lawsuit after finding that the price of the Morrises' Propack stock was established in the district court's order of 15 March 2005, and (2) that the fourth judge erred in concluding that the Morrises were not entitled to judgment on their claims for attorney fees and ownership of Propack's vehicle.

D E C I S I O N

 1.        Motion to Dismiss

 

          The Trotters moved to be dismissed from the Morrises' action on the grounds that the fairness of the price they paid for the Morrises' stock had been resolved by the previous court's decision and because none of the Morrises' remaining claims pertained to them.  The district court granted their motion.  A district court's determination of who shall be a party to an action will not be reversed absent an abuse of discretion.  Flowers v. Germann, 211 Minn. 412, 419, 1 N.W.2d 424, 429 (1941).  The Morrises allege that the district court erred in not concluding that both the price the Trotters paid for the Morrises' stock and the timing of the Trotters' offer to buy the stock breached the Trotters' contractual duty of good faith and fair dealing.

            a.         Stock Price

            The third district court judge granted the Trotters' motion to be dismissed from the lawsuit on the ground that "[t]he issue of breach of good faith and fair dealing regarding the price to be paid to [the Morrises] for their stock was conclusively resolved [by the March 2005 order]."  The March 2005 order directed that "[the Trotters] pay the total sum of $60,000.00 as and for purchase of the stock of Propack Sales, Inc. owned by the Morris'[sic]." 

            The Morrises argue first that the March 2005 order is ambiguous because "total" refers only to "sum," not to "purchase," and the district court may have meant that the $60,000 payment was only part of the amount the Trotters were to pay for the stock.  While the Morrises' grammatical point has limited merit, the remainder of the order resolves the alleged ambiguity.  The order also directed (1) the Morrises to transfer their shares to the Trotters; (2) the Trotters to pay $300,000 to Propack for Morris's employment agreement; (3) Propack to transfer the $300,000 to Morris; and (4) all parties to comply with these orders on or before a specific date at a specific place.  The district court reserved no issues and made no provision for further actions.  Nothing in the order supports the assumption that the district court intended the Trotters to make an additional payment for the Morrises' stock. 

            Moreover, the March 2005 order ruled on a motion to enforce a buy-sell agreement providing that the amount a shareholder offered for the stock of another was the amount he was required to accept as the price of his own stock.  The court's order unambiguously provides that the offeror (the Trotters) pay and the offeree (the Morrises) accept the $60,000 the Trotters offered for the Morrises' shares.

            The Morrises also argue that the March 2005 order did not resolve whether $60,000 was a fair and equitable price for the Morrises' shares or whether the Trotters breached their duty of good faith and fair dealing by offering that amount.   But the Trotters actually gave the Morrises two optionsthey were free to buy the Trotters' stock for $60,000 or they could sell their own stock to the Trotters for $60,000.   The Trotters did not breach the duty of good faith and fair dealing by offering the same amount they would have been obliged to accept as the sale price of their own stock.  Finally, the district court's adoption of this price readily supports the inferences that it found $60,000 to be an equitable price that did not breach the Trotters' duty of good faith and fair dealing. 

            b.         Timing

            The Morrises also argue that the Trotters breached their duty of good faith and fair dealing by making their offer too soon after Morris was reinstated as a Propack employee.  But neither the settlement agreement nor the employment agreement nor the buy-sell agreement states or implies that an offer to buy or sell stock could be made only after a certain date.  The Morrises' argument that "[i]t was the intent of the reinstatement provisions to allow Mr. Morris adequate time to reestablish or create those [business] relationships so that he might be in a position to be an offeror or an offeree . . ." is supported only by transcript excerpts showing that their attorney made that argument to two district court judges; nothing else in the record provides independent evidence of this alleged intent.  The district court judges correctly concluded that neither the Trotters' timing of their offer nor the price offered to buy or sell stock violated their duty of good faith and fair dealing.  The district court did not abuse its discretion in granting the Trotters' motion to dismiss.

2.         Attorney Fees

            The Morrises argued to the district court that they were entitled to attorney fees because language had been added to the "mutual releases" paragraph of the settlement agreement stating that their attorney fees "may be considered for payment by the parties."  They now agree with the district court's conclusion that this language does not entitle them to attorney fees, and they present a new theory as to why they are entitled to attorney fees.  But a party may not "obtain [appellate] review by raising the same general issue litigated below but under a different theory."  Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).  

            The Morrises now argue that Propack's corporate By-Laws provide indemnification of attorneys fees and costs for directors and employees of Propack and the provision obligates Propack to pay for the Morrises' attorneys' fees.  But the record contains no copy of Propack's by-laws, and this argument was never presented to the district court.  The Morrises also assert that they had no opportunity to present evidence that the by-laws entitled them to attorney fees, but the record refutes this assertion.  The district court identified as a remaining issue for summary judgment the question of "whether [the Morrises] have incurred and are entitled to unpaid attorneys fees"; nothing in the record indicates that the Morrises argued to the district court that Propack's by-laws entitled them to attorney fees or that they introduced the by-laws into evidence.

            There was no error in the district court's ruling that the language added to the settlement agreement did not entitle the Morrises to attorney fees, and they may not have the attorney fee issue revisited under a different theory on appeal.  See id.

3.         Company Vehicle

            The settlement agreement provided that "Thomas Morris will be allowed to keep the company vehicle, a [2002] Yukon.  Effective upon Mr. Morris' reinstatement, Propack will resume all business operation expenses associated with said company vehicle."  The Morrises argue that Thomas Morris is entitled to keep this vehicle although he has severed his connection with Propack.  The district court concluded that "[i]n viewing the Settlement Agreement in its entirety, the vehicle was for [Thomas Morris's] use as long as he worked for Propack" and ordered him to return it to Propack.  A settlement agreement is a contract, which a court interprets de novo.  In re Welfare of M.R.H., 716 N.W.2d 349, 352 (Minn. App. 2006), review denied (Minn. Aug. 15, 2006); see also Employers Mut. Cas. Co. v. A.C.C.T., Inc., 580 N.W.2d 490, 493 (Minn. 1998) ("[c]ontract interpretation . . . is . . . a question of law subject to de novo review.").

            Both Morris and Trotter testified that Propack holds title to the vehicle and that no one has ever considered transferring Propack's title to Morris.  Morris testified that Propack, not he, insured the vehicle and that he retained the vehicle after July 2003 (when he was terminated by Propack) because the first district court judge told him to retain the vehicle until the litigation was finished.  Morris thought the judge's statement  gave him "a legal right" to the vehicle. 

            Trotter testified that, when the initial settlement agreement was drawn up in January 2004, the phrase "Morris will be allowed to keep the company vehicle" meant that Morris, who was then working for a different company in another state, could retain the vehicle before his Propack employment was reinstated in April 2004.  It did not mean that Morris could keep the vehicle forever, regardless of his relationship with Propack. 

            When asked who held title to the vehicle, Morris answered, "It was held by Propack . . . .  I was an owner of Propack."   But Morris is no longer an owner of Propack; he was paid $60,000 for his Propack stock and $300,000 for his employment agreement.  The buy-sell agreement, which must be considered with the settlement agreement, was designed to make Morris's employment with Propack and his ownership of Propack terminate simultaneously.  Nothing in either document supports the view that anyone intended Morris to continue possessing and using Propack's property once he was neither an owner nor an employee.  The decision that Morris must return the vehicle to Propack was not erroneous.

            The district court did not abuse its discretion in dismissing the Trotters because the Morrises had no further claims against them and did not err in granting Propack judgment on the Morrises' claims for attorney fees and to Propack's vehicle.  

            Affirmed.

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.