July 21 2011
DA 10-0603
IN THE SUPREME COURT OF THE STATE OF MONTANA
2011 MT 174
C.R. WEAVER,
Plaintiff and Appellant,
v.
ADVANCED REFRIGERATION, ADVANCED RESTAURANT
SUPPLY, DENNIS HECK, DUANE MARTIN, WILBUR
CURTIS MANUFACTURING, and JIM THRAMER,
Defendants and Appellees.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and For the County of Flathead, Cause No. DV-09-1151(A)
Honorable Ted O. Lympus, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
C.R. Weaver (self-represented), Kalispell, Montana
For Appellees:
Daniel W. Hileman, Kaufman, Vidal, Hileman, P.C., Kalispell, Montana
(Wilbur Curtis Manufacturing)
Paul D. Sullivan, Measure Law Office, P.C., Kalispell, Montana
(Advanced Refrigeration, Advanced Restaurant Supply, Dennis Heck,
Duane Martin, Jim Thramer)
Submitted on Briefs: June 15, 2011
Decided: July 21, 2011
Filed:
__________________________________________
Clerk
Justice Michael E Wheat delivered the Opinion of the Court.
¶1 C.R. Weaver (Weaver) appeals from two orders of the Eleventh Judicial District
Court, Flathead County, granting summary judgment to Defendants. We affirm.
BACKGROUND
¶2 This dispute centers around the purchase of an industrial coffee urn. Weaver,
“representing Glacier Kitchens,” ordered the coffee urn from Defendant, Advanced
Restaurant Supply, for use by Glacier Kitchens, Inc. (“Glacier Kitchens”). Glacier Kitchens
is a Montana corporation in which Weaver owns 90% of the shares. 1 Weaver sought a coffee
urn fitted for use with propane. Advanced Restaurant Supply did not have the coffee urn in
stock, so it ordered the coffee urn from Defendant, Wilbur Curtis Manufacturing (“Wilbur
Curtis”). When the coffee urn arrived, Weaver took possession of it. Glacier Kitchens used
the coffee urn in the process of providing food and drink for forest firefighters under its food
service contract with the United States Forest Service (USFS). Although the coffee urn
worked for a while, it ultimately malfunctioned because it was constructed for use with
natural gas rather than propane. Several attempts were made to repair the coffee urn, to no
avail. Glacier Kitchens’ contract with the USFS was subsequently terminated by USFS, and
Weaver alleges the termination was due to the malfunctioning coffee urn.2
¶3 On September 11, 2009, Weaver, as an individual, sued Advanced Restaurant Supply,
Advanced Refrigeration, Dennis Heck, Duane Martin, Jim Thramer (collectively “ARS”),
1
Glacier Kitchens was involuntarily dissolved on December 1, 2009.
2
The record indicates numerous issues with Glacier Kitchens’ performance of the contract,
2
and Wilbur Curtis for breach of contract. He alleged that a “contract attached” when he,
“representing Glacier Kitchens,” ordered the coffee urn from ARS. However, he sought
damages of nearly 1 million dollars not under the alleged contract between Glacier Kitchens
and ARS for the purchase of the coffee urn, but rather under the terminated food service
contract between Glacier Kitchens and the USFS.
¶4 ARS and Wilbur Curtis sought summary judgment. The District Court granted their
respective motions. First, regarding ARS, the District Court found that Weaver, as a
shareholder in Glacier Kitchens, lacked standing to bring a claim that belonged to the
corporation. It also found Weaver was warned more than once that he lacked standing to
bring claims on behalf of Glacier Kitchens, and it was too late to amend the complaint.
Regarding Wilbur Curtis, the District Court found that Weaver lacked standing, and that
neither Weaver nor Wilbur Curtis was a party to the Glacier Kitchens/USFS contract under
which Weaver was seeking damages, thus neither could have any obligations or liabilities via
the contract.
¶5 Judgment was entered on December 1, 2010, for Wilbur Curtis, and January 18, 2011,
for ARS. Both judgments included an award of costs in favor of the Defendants. Weaver
appeals the following issues:
¶6 Issue One: Did the District Court err in granting summary judgment to ARS and
Wilbur Curtis?
including “poor performance,” running “out of several food items,” “personal drama,” the
“coffee maker broke,” and the need for “better management and training.”
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¶7 Issue Two: Did the District Court err in awarding costs to ARS and Wilbur Curtis?
STANDARD OF REVIEW
¶8 We review summary judgment rulings de novo. Goettel v. Estate of Ballard, 2010
MT 140, ¶ 10, 356 Mont. 527, 234 P.3d 99. Applying the same M. R. Civ. P. 56 criteria as
the district court, we determine whether the moving party has established both the absence of
any genuine issues of material fact and entitlement to judgment as a matter of law. Id. We
review a district court’s conclusions of law for correctness. Id. at ¶ 11. We review a district
court’s findings of fact to determine whether they are clearly erroneous. Id.
DISCUSSION
¶9 Weaver argues that the District Court erred in granting summary judgment to ARS
and Wilbur Curtis because he personally bought the coffee urn, not Glacier Kitchens, and he
was leasing the coffee urn to Glacier Kitchens. Weaver asserts the right to bring his claims
in his individual capacity because Glacier Kitchens is a “dissolved/defunct” corporation. He
also argues he should be allowed to amend his complaint at any time within the statute of
limitations. Finally, he argues he should not have to pay costs.
¶10 ARS argues that an individual shareholder of a corporation, even a defunct
corporation, cannot bring a claim belonging to the corporation. ARS also argues that the
District Court was within its authority to set deadlines for amending the complaint. Finally,
ARS argues the award of costs was proper and Weaver failed to raise a legitimate argument
as to why costs should not have been awarded.
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¶11 Wilbur Curtis also argues that Weaver, as an individual shareholder in Glacier
Kitchens, cannot bring a claim that belongs to the corporation. Further, Wilbur Curtis asserts
that because neither it nor Weaver was a party to the USFS contract with Glacier Kitchens,
neither can have any obligations or liabilities under the contract. Wilbur Curtis finally
argues that the award of costs was appropriate and Weaver has not shown otherwise.
¶12 Issue One: Did the District Court err in granting summary judgment to ARS and
Wilbur Curtis?
¶13 Summary judgment is appropriate when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving party is entitled to judgment as a
matter of law.” M. R. Civ. P. 56(c); Old Elk v. Healthy Mothers, Healthy Babies, Inc., 2003
MT 167, ¶ 15, 316 Mont. 320, 73 P.3d 795. The initial burden is on the moving party to
establish that no genuine issue of material fact exists. Old Elk, ¶ 15. The burden then shifts
to the non-moving party, who must “set forth specific facts showing that there is a genuine
issue for trial.” Id. To raise a genuine issue of material fact, the proffered evidence must be
“material and of a substantial nature, not fanciful, frivolous, gauzy or merely suspicious.”
Id. at ¶ 16. A party is bound by the admissions in its pleadings. Farm Credit Bank of
Spokane v. Hill, 266 Mont. 258, 264, 879 P.2d 1158, 1161 (1993).
A. Summary Judgment for ARS
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¶14 Generally, a shareholder may not bring a claim that belongs to their corporation.
Gullett v. Van Dyke Construction Co., 2005 MT 105, ¶ 14, 327 Mont. 30, 111 P.3d 220; Stott
v. Fox, 246 Mont. 301, 306, 805 P.2d 1305, 1308 (1990).
¶15 The District Court properly granted summary judgment to ARS. Weaver’s complaint
states he was “representing Glacier Kitchens” when he purchased the coffee urn from ARS.
Weaver is bound by his pleadings. Farm Credit Bank, 266 Mont. at 264, 879 P.2d at 1161.
Any claim against ARS for the defective coffee urn belongs to Glacier Kitchens, not to
Weaver personally. As a shareholder, Weaver cannot bring the claim on behalf of Glacier
Kitchens. Gullett, ¶ 14; Stott, 246 Mont. at 306, 805 P.2d at 1308.
¶16 Weaver was warned about this defect in his complaint. Lack of standing was one of
ARS’s affirmative defenses – “Weaver lacks standing to bring any of the claims arising from
the transactions giving rise to any of the claims alleged in the Complaint.” Additionally, in
response to Weaver’s first motion for sanctions, ARS stated “Weaver may believe that filing
his claims in his individual capacity is proper. Whether this is correct as a matter of law is
something he remains free to argue. Ultimately, it is for the Court to decide.” Weaver had
notice that he should at least consider amending his complaint to include Glacier Kitchens as
a plaintiff. Even after receiving notice, Weaver did not attempt to amend his complaint.
¶17 Weaver’s argument that the statute of limitations controls when he can amend is
complaint is unavailing. The statute of limitations is a deadline by which an action must be
commenced. If an action is not commenced before the expiration of the statute of
limitations, the action is generally barred. Section 27-2-202, MCA (limitations period for an
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action based on contract). It is clear that Weaver commenced this action before the statute of
limitations expired. However, once Weaver commenced the action, the District Court had
the authority to set deadlines for amendments to the pleadings. M. R. Civ. P. 16(b)(1);
Textana, Inc. v. Klabzuba Oil & Gas, 2009 MT 401, ¶ 80, 353 Mont. 442, 222 P.3d 580.
According to the District Court’s scheduling order, Weaver had nearly one year to amend his
complaint. He did not do so. In fact, no motion to amend was ever filed by Weaver.
¶18 Finally, Weaver alleges for the first time on appeal that he has the right to bring this
action because Glacier Kitchens is a “dissolved/defunct” corporation. We do not consider
issues raised for the first time on appeal. State v. Belanus, 2010 MT 204, ¶ 17, 357 Mont.
463, 240 P.3d 1021. However, we note that dissolution does not prevent commencement of
a proceeding by or against the corporation in its corporate name. Section 35-1-935(2)(e),
MCA.
¶19 We affirm the grant of summary judgment to ARS.
B. Summary Judgment for Wilbur Curtis
¶20 The District Court properly granted summary judgment to Wilbur Curtis. First, as
stated above, Weaver, an individual shareholder, cannot maintain an action that belongs to
Glacier Kitchens. See ¶ 15 above.
¶21 Additionally, the District Court was correct in determining that Weaver, a stranger to
the contract under which he sought damages, lacked standing to bring an action for breach of
contract. Dick Anderson Construction, Inc. v. Monroe Construction Co., LLC, 2009 MT
416, ¶ 46, 353 Mont. 534, 221 P.3d 675. “The obligation of the contract is limited to the
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contracting parties, and ordinarily only those who are parties to the contract are liable for
their breach.” Fordyce v. Musick, 245 Mont. 315, 319, 800 P.2d 1045, 1047 (1990). Weaver
sought damages under Glacier Kitchens’ contract with USFS. Undisputedly, neither Weaver
nor Wilbur Curtis was a party to that contract. Therefore, Weaver lacked standing to bring
his claim.
¶22 We affirm the grant of summary judgment to Wilbur Curtis.
¶23 Issue Two: Did the District Court err in awarding costs to ARS and Wilbur Curtis?
¶24 Weaver objects to costs being awarded to ARS and Wilbur Curtis in their respective
judgments. However, the case he relies upon, Thompkins v. Fuller, 205 Mont. 168, 667 P.2d
944 (1983), deals with attorney fees. Costs do not include attorney fees. See § 25-10-201,
MCA; Small v. Good, 284 Mont. 159, 164, 943 P.2d 1258, 1261 (1997) (citing Higgins v.
Montana Hotel Corp., 181 Mont. 149, 156, 592 P.2d 930, 934 (1979)). No attorney fees
were awarded to either ARS or Wilbur Curtis.
¶25 Weaver has not met his burden to establish error. Small, 284 Mont. at 163, 943 P.2d
at 1260 (appellant carries the burden of establishing error by the district court.). Weaver has
put forth no argument or authority regarding the award of costs. Therefore, we affirm the
award of costs to ARS and Wilbur Curtis.
CONCLUSION
¶26 For the reasons stated above, we affirm.
/S/ MICHAEL E WHEAT
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We Concur:
/S/ MIKE McGRATH
/S/ JAMES C. NELSON
/S/ JIM RICE
Justice Beth Baker, concurring in part and dissenting in part.
¶27 I concur with the Court’s holding that, as a shareholder of Glacier Kitchens, Weaver
may not assert claims on behalf of the corporate entity. The damages sought in Weaver’s
Complaint are damages suffered, if at all, by Glacier Kitchens, and may not be pursued by
Weaver personally. I would reverse, however, the District Court’s refusal to allow Weaver
the opportunity to amend his complaint to substitute Glacier Kitchens as the named plaintiff.
¶28 Under M. R. Civ. P. 15(a), “ ‘leave [to amend] shall be freely given when justice so
requires.’ ” Farmers Coop. Assn. v. Amsden, LLC, 2007 MT 286, ¶ 12, 339 Mont. 445, 171
P.3d 690 (quoting M. R. Civ. P. 15(a)). The decision to grant or deny a motion to amend is
within the district court’s discretion. Id. “[T]his does not mean that a court must
automatically grant a motion to amend.” Allison v. Town of Clyde Park, 2000 MT 267, ¶ 20,
302 Mont. 55, 11 P.3d 544 (citation omitted). We have, however, long recognized the liberal
allowance for amendment of pleadings, and generally “it is the rule to allow amendments
and the exception to deny them.” Lien v. Murphy Corp., 201 Mont. 488, 492, 656 P.2d 804,
806 (1982) (quoting Union Interchange, Inc. v. Parker, 138 Mont. 348, 354, 357 P.2d 339,
342 (1960)).
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¶29 We have observed that leave to amend may be denied on the basis of several factors,
including “undue delay, bad faith, and dilatory motive,” as well as “ ‘repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the opposing party by
allowance of the amendment, futility of amendment, etc.’ ” Farmers Coop. Assn., ¶ 13
(citations omitted). We also have upheld denial of a motion to amend where a party
withheld its claims for strategic reasons until after a summary judgment ruling on other
claims. Kershaw v. Mont. Dept. of Transportation, 2011 MT 170, ¶ 28, ___ Mont. ___, ___
P.3d ___.
¶30 In this case, upon concluding Weaver lacked standing to bring claims on behalf of
Glacier Kitchens, the District Court denied him an opportunity to amend because the time for
amendment set by the court’s scheduling order had expired. While this Court affords broad
discretion to a trial court’s rulings on amendments to pleadings, expiration of a scheduling
deadline is but one factor in the analysis. Lindey’s v. Professional Consultants, 244 Mont.
238, 242-43, 797 P.2d 920, 923-24 (1990) (upholding denial where amendment already had
been allowed once, amendment would have caused substantial prejudice to the opposing
parties, additional discovery would have been required, and the trial would have been unduly
delayed); Textana, Inc. v. Klabzuba Oil & Gas, 2009 MT 401, ¶ 80, 353 Mont. 442, 222 P.3d
580 (amendment properly denied after repeated failures to meet pleading deadlines). We
have noted the importance of balancing the justification for amendment against
considerations of prejudice to the opposing party. Farmers Coop. Assn., ¶ 14; Textana, ¶ 79.
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¶31 While the defendants present the indisputable proposition that the District Court has
the right to set and enforce scheduling deadlines, neither defendant even claims prejudice
from allowing substitution of the proper party plaintiff. In my view, without any showing of
prejudice by the defendants or balancing of the parties’ interests, it was an abuse of
discretion for the court to summarily refuse amendment.
¶32 The record reflects exchange of extensive written discovery and it is not argued that
substantial additional discovery would be required. Nor would amendment necessarily be
futile. A party who proves breach of contract is entitled to compensation equal to what that
party would receive if the contract were performed. Bradley v. Crow Tribe of Indians, 2005
MT 309, ¶ 29, 329 Mont. 448, 124 P.3d 1143; § 27-1-311, MCA. Contract damages may
include lost profits, if the plaintiff can prove that “the loss of profits is the result” of the
breach and that such profit in fact would have been derived. Lee v. Kane, 270 Mont. 505,
511, 893 P.2d 854, 857 (1995).
¶33 Certainly, Weaver may not be allowed to continue in a self-represented capacity to
advance claims on behalf of Glacier Kitchens. As we noted in Zempel v. Liberty, 2006 MT
220, ¶ 18, 333 Mont. 417, 143 P.3d 123, a non-lawyer may not represent the interests of a
third party in district court proceedings. Weaver has been informed in prior litigation that he
may not represent other individuals or entities in court. Weaver v. Law Firm of Graybill, 246
Mont. 175, 178, 803 P.2d 1089, 1091 (1990). With proper representation, however, he
should be given the opportunity to substitute the real party in interest.
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/S/ BETH BAKER
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