Carla Maroun, as Executrix of the Estate of Tony Y. Maroun, appeals several orders entered in favor of Wyreless Systems, Inc., (Wyreless or WSI) and various officers and alleged shareholders of Wyreless arising out of an employment agreement and a shareholder liability action.
I.
FACTUAL AND PROCEDURAL BACKGROUND
Tony Y. Maroun (Maroun) was employed by Amkor when he accepted an offer to work for Wyreless, a start-up company. On November 20, 2000, a letter was sent from Bradley C. Robinson, president of Wyreless, to Maroun setting forth the terms of their employment agreement. The pertinent portions of the letter were as follows:
I would like to put forward for discussion and/or your acceptance a general outline of the terms of employment you and I have discussed if you chose to join our team. I have discussed the proposed terms with the Board of Directors of WSI and key shareholders and they are in agreement with the proposed terms you and I have discussed.
• Annual salary of $300,000.
• $300,000 bonus for successful organization of Wyreless Systems, Inc.
• 15% of the issued equity in Wyreless Systems, Inc.
OThe equity and “organization bonus” will need to be tied to agreeable milestones (e.g., acquisition of Matricus, organization of management team, etc).
• Full medical benefits.
• Position of Chief Executive Officer, President and a position on the Board.
• Bonuses and incentives will need to be determined by the Board and you after the business plan has been agreed by all parties.
I would like you to have an understanding of the fund raising status. I was able to get a commitment from two investors today for a minimum of $250,000 for arrival into the WSI bank account early next week. I believe we will be able to raise an additional $350,000 during the following week. I am processing the required paper work as fast as possible and expect the paperwork to allow for legal receipt of the investment funds in WSI to be available by Wednesday of the coming week.
The funds being raised will be deposited into an account to cover the salaries and operating expenses related only to yourself and Jen Gadelman (sic). If we are not successful in raising the required capital for the business the funds remaining in the account on May 1, 2001 will be release[d] to you and Jen Gadelman (sic) as compensation beyond salaries and expenses for your efforts in developing the business.
I anticipate a starting date of employment of December 1, 2000 or as soon you (sic) can reasonably and professional (sic) resolve your responsibilities with Amkor.
Thereafter, Maroun started working for Wyreless but his employment was terminated in February 2001. Maroun then filed suit (the Wyreless suit), alleging he had not received two salary payments totaling $23,077, had not received 15% of issued equity and had not received the remainder of the $600,000 in bank account funds, alleged to be a balance of $429,145. His complaint characterized the claim as a “wage claim” and sought treble damages under I.C. § 45-615(2). Maroun also claimed Wyreless’ corporate shell should be set aside and the shareholders of Wyreless should be jointly and severally liable for any damages Wyreless caused to him. The alleged shareholders included Robinson, Christopher Tucker, Deno G. Skouras, Jean Marie Rousseau and Christopher Dunhill. Finally, Maroun brought a claim of fraud against Robinson for inducing him to accept employment with Wyreless. After Maroun filed a motion for partial summary judgment against Wyreless on the basis that there was no dispute Maroun was owed $23,077 in unpaid wages, the parties stipulated to entry of a judgment in favor of Maroun in the amount of $23,077.
In the fall of 2002, Tony Y. Maroun died unexpectedly and his wife continued the lawsuit, acting as executrix of his estate. Wyreless filed a motion for summary judgment on the remaining portions of Maroun’s wage claim, which included the claim for 15% of Wyreless shares and the alleged $429,145 balance of the Wyreless fund account. The district court granted the motion. The fraud claim against Robinson was dismissed on summary judgment and the shareholder liability claim against Tucker and TKL was tried to a jury. The special verdict form submitted to the jury states:
(1) Was Defendant Christopher Tucker a shareholder of Wyreless?
(2) Was Wyreless the alter ego of Defendant Christopher Tucker?
(3) Was Wyreless the alter ego of Defendant TKL, LC?
(4) Would failure to disregard the corporation and hold the shareholder(s) liable result in an injustice?
The jury answered “yes” to the first three questions and “no” to the fourth question. The district court then entered a judgment dismissing the claims against Tucker and TKL with prejudice. Maroun filed a motion for judgment notwithstanding the verdict and the district court denied the motion. Maroun appealed.
While the Wyreless suit was progressing and after the district court refused to allow Maroun to amend the complaint to add Robinson, Skouras, Evans, Dunhill and Rousseau as defendants for the shareholder liability claim, Maroun filed a separate lawsuit against Robinson, Skouras, Evans, Dunhill and Rousseau (the Robinson suit). This suit was assigned to the Honorable Deborah Bail. The defendants moved for summary judgment, arguing Maroun’s claims were barred by the doctrine of collateral estoppel. The district court granted the motion dismissing the Robinson suit and Maroun appealed. This Court entered an order consolidating both appeals for purposes of oral argument and opinion.
II.
ANALYSIS
A. Motion to Treble the Stipulated Judgment
Maroun argues on appeal that because judgment was entered for past due unpaid wages, that judgment should have been trebled pursuant to I.C. § 45-615(2). The answer lies in how we characterize the stipulation entered into between the parties which provided for entry of judgment on the wage claim because Maroun and Wyreless disagree on whether their stipulation precluded an award of treble damages. The statute provides that in an action to collect unpaid wages:
Any judgment rendered by a court of competent jurisdiction for the plaintiff in a suit filed pursuant to this section may include all costs and attorney’s fees reasonably incurred in connection with the proceedings and the plaintiff shall be entitled to recover from the defendant either the unpaid wages plus the penalties provided for in section 45-607, Idaho Code; or damages in the amount of three (3) times the unpaid wages found due and owing, whichever is greater.
I.C. § 45-615(2). The stipulation of the parties provides:
Tony Y. Maroun, by and through his counsel of record, Meuleman & Miller, LLP, and Wyreless Systems, Inc., a Delaware corporation, by and through its counsel of record, Anderson & Karrenberg, hereby stipulate to the entry of a judgment for Tony Y. Maroun and against Wyreless Systems, Inc., a Delaware corporation, in the amount of $23,077.
Based upon the stipulation between Plaintiff Tony Y. Maroun and Wyreless Systems, Inc., judgment is hereby entered for Tony Y. Maroun and against Wyreless
Systems, Inc. in the amount of $23,077. After the stipulated judgment was entered, Maroun filed a motion seeking to triple the stipulated amount. The district court denied Maroun’s request for treble damages, holding “the parties stipulated to the entry of judgment on the wage claim in the amount of $23,077.00. They did not stipulate only that the amount of the wage claim was [$23,-077.00].” Maroun immediately filed a “motion to clarify memorandum decision and order or, alternatively, to set aside the stipulated judgment” and requested the district court modify or set aside the stipulated judgment. After entering several additional orders, the district court held the stipulation precluded an award of treble damages, but did not affect the other amounts Maroun claimed were due pursuant to his employment letter.
A stipulation is a contract and its enforceability is determined by contract principles.
Olson v. Idaho Dept. of Water Resources,
The district court erred by not trebling the $23,077 stipulated judgment. The stipulation addressed the unpaid wages for the specified pay periods as alleged in the complaint; it did not constitute an agreement on treble damages. The amount pled as unpaid wages in Maroun’s complaint is exactly the same amount in the stipulated judgment. Furthermore, a letter from Wyreless’ attorney indicates the stipulation was for the payment of wages upon separation of employment and that ‘Wyreless does not dispute that it did not pay Mr. Maroun the amount of $23,077 upon his termination or following his demand for payment of alleged unpaid compensation.” Idaho Code Section 45-615(2) “requires that treble damages be awarded whenever unpaid wages are found to be due and owing----”
Goff v. H.J.H. Co.,
[A]lthough the award of treble damages does tend to penalize the employer, it also serves to fully compensate the wage earning employee for the injury caused him by the delay he experiences in recovering his withheld wage in a court of law and the expenses connected with the recovery.
Goff v. H.J.H. Co.,
B. Motions to Amend the Complaint
During the course of this litigation, Maroun attempted on several occasions to amend the complaint to add allegations against Robinson or against alleged shareholders. Maroun argues the district court erred in not allowing those amendments. In denying the motions to amend the complaint, the district court found that in the absence of any evidence that Robinson, Skouras, Rousseau, Dunhill or Evans were actually shareholders, the proposed amendments did not state a
The denial of a motion to amend a complaint after a responsive pleading has been served is governed by an abuse of discretion standard of review.
Hines v. Hines,
The test for determining whether the district court abused its discretion is: (1) whether the court correctly perceived that the issue was one of discretion; (2) whether the court acted within the outer boundaries of its discretion and consistently with the legal standards applicable to the specific choices available to it; and (3) whether it reached its decision by an exercise of reason.
Thomas v. Medical Center Physicians, P.A.,
As to the second requirement, “[i]n determining whether an amended complaint should be allowed, where leave of court is required under Rule 15(a), the court may consider whether the new claims proposed to be inserted into the action by the amended complaint state a valid claim.”
Black Canyon Racquetball Club, Inc., v. Idaho First Nat’l Bank N.A.,
The district court’s alternative basis for denying Maroun’s motions to amend was because they were untimely. This Court has held the following factors are controlling when a district court considers the timeliness of a motion for leave to amend a complaint:
In the absence of any apparent or declared reason — such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendment previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. — the leave sought should, as the rules require, be freely given.
Carl H. Christensen Family Trust v. Christensen,
In this case, the district court entered a scheduling order
C. Motion to Strike
In March 2003, Robinson moved to strike the portion of Maroun’s third amended complaint that alleged Robinson was a shareholder or owner of Wyreless. The district court granted the motion, noting the original complaint alleged that Robinson was a shareholder, but the first and second amended complaints deleted that allegation. When the third amended complaint was filed, it added the word “shareholder” as to Robinson, but nowhere in Maroun’s briefing or affidavit in support of the third motion to amend did Maroun mention adding a shareholder liability claim against Robinson. “[E]arly ease law has established in Idaho that a court may, in its discretion, permit an amended pleading to remain on file even though it was filed without leave.”
Southern Idaho Production Credit Ass’n v. Gneiting,
“To warrant casting aside the legal fiction of distinct corporate existence ... it must ... be shown that there is such a unity of interest and ownership that the individuality of such corporation and such person has ceased; and it must further appear from the facts that the observance of the fiction of separate existence would, under the circumstances, sanction a fraud or promote injustice.”
Hayhurst v. Boyd,
D. Partial Summary Judgment on the Other Payment Claims
Organizational Bonus
“A cause of action not raised in a party’s pleadings may not be considered on summary judgment nor may it be considered for the first time on appeal.”
Edmondson v. Shearer Lumber Products,
Maroun never mentioned the organization bonus in his pleadings or discovery responses during at least two years of litigation, which have included a vacated trial setting and several amended complaints.Maroun’s first mention of the organization bonus was in his opposition brief to [Wyreless’] current motion for summary judgment____It would be prejudicial for Maroun to claim new damages at this point.
Because Maroun never included his claim for an organizational bonus in any pleadings, the district court did not err in refusing to consider it.
15% of Issued Equity
Maroun’s compensation package included 15% of Wyreless’ issued equity but the letter outlining the compensation package also stated the equity “will need to be tied to agreeable milestones (e.g., acquisition of Matricus, organization of management team, etc.).” “Where a contract is clear and unambiguous, the determination and legal effect of a contractual provision is a question of law to be decided by the court.”
Terteling v. Payne,
Although it may be unclear what the “agreeable milestones” would be, the agreement in this case is not ambiguous as to when payments for equity would be considered. The provision requiring the equity be “tied to agreeable milestones” is merely an agreement to agree in the future on a condition precedent to any obligation to pay. “Generally, an agreement to agree is unenforceable, as its terms are so indefinite that it fails to show a mutual intent to create an enforceable obligation____ No enforceable contract comes into being when parties leave a material term for future negotiations, creating a mere agreement to agree.” 17A Am. Jur.2d
Contracts
§ 181 (2004). “A condition precedent is an event not certain to occur, but which must occur, before performance under a contract becomes due.”
Steiner v. Ziegler-Tamura Ltd.,
Balance of Funds in Account
Maroun argues the language in Robinson’s letter regarding the funds being raised provided a right to $600,000 minus wages and operating expenses. Maroun also asserts evidence was presented to the district court to show money had been raised but not deposited into the account. Wyreless responds by arguing that it never made any representation as to the amount that would be remaining in the account on May 1, 2001.
The district court found the language was not ambiguous and held it gave Maroun and Gabelman (incorrectly shown as “Gadelman” in the letter) the right to funds in the account on May 1, 2001. Although there may be ambiguity as to the amount of money that would be remaining in the account on May 1, 2001, the language providing the right to that amount is not ambiguous. Contrary to Maroun’s assertions, the language does not create an absolute right to $600,000. Robinson’s representations are hedged and relate to future events. Robinson stated he had a “commitment” for the money, not that he had the money. In addition, he stated “I believe” we will be able to raise $350,000, not that he had actually done so.
On appeal, Maroun argues there is a genuine issue of material fact as to what happened to the money that was raised. The language of the letter states “[t]he funds being raised will be deposited into an account____” There is no genuine issue as to whether the funds being raised were ever deposited into the account because the record clearly shows no funds were ever deposited. Maroun’s complaint simply asserts an entitlement to the balance of the account on
E. Partial Summary Judgment as to Fraud
Maroun argues the district court erred in granting summary judgment in favor of Robinson on the fraud claim. Fraud requires: (1) a statement or a representation of fact; (2) its falsity; (3) its materiality; (4) the speaker’s knowledge of its falsity; (5) the speaker’s intent that there be reliance; (6) the hearer’s ignorance of the falsity of the statement; (7) reliance by the hearer; (8) justifiable reliance; and (9) resultant injury.
Lindberg v. Roseth,
(1) That Wyreless was to be a corporation of considerable size, with initial net revenues in excess of several hundred million dollars.
(2) That Robinson would soon acquire one and one-half million dollars in personal assets, which Robinson would make available to personally guaranty payment of my compensation from Wyreless.
(3) That he would have no difficulty in obtaining the initial investments required to capitalize Wyreless as a large, world leading corporation with initial net revenues in excess of several hundred million dollars.
(4) That he had obtained firm commitments from several investors and that investment funds would be received in Wyreless’ bank account in the near future.
“An action for fraud or misrepresentation will not lie for statements of future events.”
Thomas v. Medical Center Physicians, P.A.,
“Opinions or predictions about the anticipated profitability of a business are usually not actionable as fraud.”
Sharp,
F. Excluding Eric Larson Testimony
At trial, Maroun sought to introduce testimony from Eric Larson, his supervisor at Amkor. The propose of the testimony was to show what Maroun gave up by going to work for Wyreless. Larson was going to testify about Maroun’s work at Amkor — his abilities, expertise, projects, salary and bene
fits.
“Relevancy rulings of the trial court are questions of law that are given free review on appeal.”
Opportunity, L.L.C. v. Ossewarde,
The “injustice” element of an alter ego claim relates to whether Maroun might have a judgment against a corporation and be unable to collect on that judgment because of the financial situation of the corporation and the informality of the corporate structure. The question of whether Maroun left a good job in order to join Wyreless has absolutely nothing to do with whether he can pierce the corporate veil. Therefore, the district court did not err in refusing to allow Larson to testify.
G. Special Verdict for Tucker and TKL
Maroun argues the jury’s responses to the special verdict should have resulted in a judgment in his favor. He asserts the jury’s answers in the affirmative to questions one, two and three are inconsistent with the entry of judgment by the district court in favor of Tucker and TKL. “To make a special verdict consistent, a court must look at the evidence and the instructions given and see if there is a view of the case that makes the jury’s answers consistent. If there is this consistent view, the court must resolve the case in that way.”
Griffith v. Latham Motors, Inc.,
The special verdict questions address the two elements of a claim to set aside the legal fiction of a corporation. Special verdict questions two and three address element one — whether there was such a unity of interest and ownership that the individuality of Wyreless and Tucker or TKL had ceased. In answering “yes” to questions two and three, the jury was simply determining that there was a unity of interest and ownership between Tucker, TKL and Wyreless. Special verdict question four addresses element two — whether observance of the fiction of separate existence would, under the circumstances, promote injustice. By answering “no” to question number four, the jury determined that it would not be unjust to Maroun if he (or his estate) were not allowed to disregard the corporation and hold Tucker and TKL liable. In essence, the jury determined element one of an alter ego claim was met but not element two. This is consistent with the other jury instructions. Jury instruction number ten paraphrases the two elements from Hayhurst, supra. Jury instruction number eleven states in part:
A corporation is responsible for its own debts and obligations unless it is determined that the corporation is an “alter ego” of the owners of the corporation. If it is determined that the corporation is an “alter ego” of the individual shareholders, the individual shareholders may be heldliable for the amounts owed by the corporation if failure to do so would result in an injustice.
Although this instruction misstates the law (because if one finds the corporation is an alter ego one has necessarily already decided elements one and two are met), this instruction is consistent with the special verdict because it demonstrates how the jury could find the corporation to be the “alter ego” of Tucker and TKL but also find that the required level of injustice to hold them liable was not present. Therefore, the district court’s judgment in favor of Tucker and TKL was consistent with the special verdict.
H.Motion for Judgment Notwithstanding the Verdict
Maroun argues his motion for judgment notwithstanding the verdict should have been granted because there was but one conclusion that could have been reached by reasonable minds and the jury did not reach that conclusion. “Motions for directed verdict or for judgment notwithstanding the verdict are properly denied when ... substantial competent evidence supports a jury’s findings.”
Griff, Inc. v. Curry Bean Co., Inc.,
I. Attorney Fees
Maroun requests attorney fees and costs on appeal under I.C. § 45-615(2). That section provides in a suit to collect unpaid wages “[a]ny judgment rendered by a court of competent jurisdiction for the plaintiff in a suit filed pursuant to this section may include all costs and attorney’s fees reasonably incurred in connection with the proceedings____” With respect to his claim for $23,077 of unpaid wages, Maroun is entitled to attorney fees incurred below and on appeal. This matter is remanded to the district court to determine a proper amount of fees incurred for the $23,077 unpaid wage claim, including amounts incurred on appeal. Maroun is not entitled to attorney fees for the remainder of the claims he has raised.
J. Collateral Estoppel as to the Robinson Suit
Maroun argues the district court in the Robinson suit erred in applying collateral estoppel to bar his claims because the issues decided by the district court in the Wyreless suit were not the same issues alleged in the Robinson suit. However, Maroun’s amended complaint alleges the same claims for non-payment of wages and compensation and the same shareholder liability claim as alleged in the Wyreless suit. The only difference is the addition of Skouras, Evans, Dunhill and Rousseau as defendants, which Maroun had been unable to do in the Wyreless suit. “Whether collateral estoppel bars the relitigation of issues adjudicated in prior litigation between the same parties is a question of law upon which we exercise free review.”
Rodriguez v. Dep’t of Corr.,
Collateral estoppel serves the purpose of protecting litigants from the burden of re-litigating an identical issue with the same party or his privy, of promoting judicial economy by preventing needless litigation, of preventing inconsistent decisions and of encouraging reliance on adjudications.
Anderson v. City of Pocatello,
(1) The party against whom the earlier decision was asserted had a full and fair opportunity to litigate the issue decided in the earlier case; (2) the issue decided in the prior litigation was identical to the issue presented in the present action; (3) the issue sought to be precluded was actually decided in the prior litigation; (4) there was a final judgment on the merits in the prior litigation; and (5) the party against whom the issue is asserted was a party or in privity with a party to the litigation.
Rodriguez v. Dep’t of Corr.,
III.
CONCLUSION
The district court erred by not trebling the $23,077 stipulated judgment. This matter is remanded to the district court to enter a judgment that includes treble damages pursuant to I.C. § 45-615(2) and to determine attorney fees below and on appeal that relate solely to the claim for $23,077 of unpaid wages. The remainder of the district courts’ rulings in the Wyreless suit and the Robinson suit are affirmed. Given the result, we do not award costs to either party on appeal.