K & K LEASING, INC. , Plaintiff - Appell ant , vs. TECH LOGISTICS CORPORATION d/b/a SYSTEMS LOGISTICS SERVICES; LUNDVAL FAMILY TRUST, INC.; RICH STALEY; and BRAD JOHANSSON , Defendant s - Appell ees .
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IN THE COURT OF APPEALS OF IOWA
No. 8-454 / 07-1599
Filed October 29, 2008
K & K LEASING, INC.,
Plaintiff-Appellant,
vs.
TECH LOGISTICS CORPORATION
d/b/a SYSTEMS LOGISTICS SERVICES;
LUNDVAL FAMILY TRUST, INC.;
RICH STALEY; and BRAD JOHANSSON,
Defendants-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Webster County, Kurt L. Wilke,
Judge.
A company appeals the dismissal of its claims against certain defendants,
contending that these defendants took actions exposing them to liability during a
collapse of the primary defendant‟s corporate charter. AFFIRMED.
Robert Malloy and Ben Cook, Goldfield, for appellant.
Jeremy Feitelson, West Des Moines, and John Kiehlmeier, Corona Del
Mar, California, for appellee.
Heard by Huitink, P.J., and Vaitheswaran and Potterfield, JJ.
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VAITHESWARAN, J.
A company appeals the dismissal of its claims against certain defendants.
The company contends that these defendants took actions exposing them to
liability during a lapse of the primary defendant‟s corporate charter.
I.
Background Facts and Proceedings
Tech Logistics was a trucking company incorporated in Texas.
For
approximately seventeen months, the company forfeited its corporate charter.
K&K Leasing, Inc. leased truck tractors to Tech Logistics. When Tech
Logistics fell behind on its lease payments, K&K notified the company that it was
obligated to pay the appropriate installments or return the trucks to K&K. Tech
Logistics did not return several of the leased trucks.
K&K sued Tech Logistics and three affiliated defendants: Lundval Family
Trust, Inc., Rich Staley, and Brad Johansson. Lundval was the general partner
of an entity that owned Tech Logistics, Staley was a former president of Tech
Logistics, and Johansson was managing agent of the company after Staley‟s
resignation as president.
Following a bench trial, the district court entered
judgment against Tech Logistics but dismissed the claims against the remaining
defendants.
K&K moved for enlarged findings and conclusions. Citing Texas law, it
urged that Johansson and Lundval should be held liable on the breach of
contract claim for actions purportedly taken on behalf of the corporation when the
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corporate charter was forfeited and after the expiration of the leases. 1
The
district court summarily denied the motion. This appeal followed.
II.
Applicability of Texas Law
K&K raises the same argument it raised in its motion for enlarged findings
and conclusions. As noted, that argument is premised on Texas law, which K&K
maintains is controlling. The problem is that K&K neither pled nor proved Texas
law in the district court. See Pennsylvania Life Ins. Co. v. Simoni, 641 N.W.2d
807, 810 (Iowa 2002) (“A party relying on foreign law may ask the court to take
judicial notice of foreign statutory law and may introduce into evidence statutes or
cases to prove the foreign law.”) Therefore, that law is not applicable.
We recognize the defendants did not raise this issue.
However, it is
established that the appellate courts may address error preservation issues on
their own motion. Top of Iowa Coop. v. Sime Farms, Inc., 608 N.W.2d 454, 470
(Iowa 2000).
In reaching the conclusion that Texas law was not pled or proven, we
have considered the fact that Texas law was cited in one of the post-trial briefs.
That fact does not alter our conclusion, as “[c]itation to foreign opinions in a
party‟s brief is not adequate „because it is not the introduction of evidence.‟”
Simoni, 641 N.W.2d at 811 (quoting In re Estate of Allen, 239 N.W.2d 163, 169
(Iowa 1976)). Equally important, in our view, is the record made by the district
court on the submission of post-trial briefs. The court stated, “If I get [the ruling]
done before I get your briefs, too bad. If I get your briefs before I‟m done, fine.
But I‟m not going to slow down and wait for any post-trial briefs.” In response to
1
Staley does not appear to be the focus of this appeal.
4
the court‟s admonishment, K&K stated, “Understood, Your Honor.” K&K served
its post-trial brief on the day the court issued its ruling. The brief did not cite
Texas law. While Tech Logistics‟ brief did cite Texas law, that brief also was not
served until the day the court issued its ruling. Therefore, the post-trial briefs do
not assist K&K.
We have also considered K&K‟s post-trial motion for enlarged findings and
conclusions, a motion that cited Texas law. See Iowa R. Civ. P. 1.904(2). A
motion to enlarge is a proper mechanism to preserve error on issues presented
to the district court, but not decided by it. Meier v. Senecaut, 641 N.W.2d 532,
538–39 (Iowa 2002). As noted in Meier, a rule 1.904(2) motion may be used to
preserve error only on issues presented to the district court prior to its ruling. Id.
Here, the issue of whether liability could be imposed on Johansson and Lundval
under Texas law was not properly before the court prior to its ruling. Additionally,
citation to Texas law in the motion to enlarge is akin to citation of foreign law in a
brief, which is not an adequate means of introducing foreign law. See Simoni,
641 N.W.2d at 811. Therefore, K&K cannot now maintain the argument that
Texas law would impose liability.
Because Texas law was not pled or proven, we turn to K&K‟s arguments
under Iowa law. Id.
III.
Iowa Law
K&K concedes that “under Iowa law corporate officers would not be held
individually liable for actions taken on behalf of the corporation during the period
in which the corporate charter was forfeited if the charter is effectively reinstated
at a later date.” This should end our inquiry. However, K&K later cites Iowa case
5
law and asserts “Johansson and Lundval should be held liable for all damages
incurred by Plaintiff after the forfeiture of the corporation‟s charter.”
The Iowa opinions cited by K&K are inapposite.
See Adam v. Mt.
Pleasant Bank & Trust Co., 355 N.W.2d 868, 874 (Iowa 1984) (holding “limited
liability for . . . officers, agents, and shareholders does not exist for matters
occurring during suspension of the corporate charter”); Kessler Distrib. Co. v.
Neill, 317 N.W.2d 519, 522 (Iowa Ct. App. 1982) (agreeing with district court that
one who acts as president of the corporation that previously forfeited its charter
becomes personally liable for transactions). Both opinions were decided under a
previous statute that was silent on this question. As K&K correctly notes, the
current statute provides continuing protection for officers and directors of
corporations that have been administratively dissolved under section 490.1422.
See Iowa Code § 490.1422(3) (2007) (“When reinstatement is effective, it relates
back to and takes effect as of the effective date of the administrative dissolution
as if the administrative dissolution had never occurred.”). Therefore, assuming
without deciding that this statutory provision applies to a corporation that was not
administratively dissolved under Iowa law, the provision defeats K&K‟s argument.
IV.
Disposition
We affirm the dismissal of K&K‟s claim against Lundval Family Trust and
Johansson.
K&K summarily asserts that the district court should have pierced the
corporate veil to reach these defendants. Given the summary nature of this
argument, we decline to consider it. See Iowa R. App. P. 6.14(1)(c).
6
We also decline to consider Tech Logistics‟ argument that Lundval Family
Trust “was never a shareholder of or director of defendant Tech Logistics,” as
this argument was not presented to the district court prior to its final ruling.
DeVoss v. State, 648 N.W.2d 56, 63 (Iowa 2002).
AFFIRMED.
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