John B. Kugler v. Ron Nelson ( 2014 )

IN THE COURT OF APPEALS OF THE STATE OF II}AHO
Docket No. 41039
JOHN B. KUGLER, ) 2014 Unpublished Opinion No.695
)
Plaintiff-Appellant, ) Filed: August 25,2014
)
v. ) Stephen W. Kenyon, Clerk
)
and )
RON NELSON, DAVID J. POWERS, THIS IS AN UNPUBLISHED
WILLIAMJ.ARMSTRONG, ) OPIM0NANDSIIALLNOT
) BECITEDASAUTHORITY
Defendants-Respondents, )
and l
)
EDWINF.PRATERandSTEVENL. )
KEI\NISON, )
)
Defendants. )
Appeal from the District Court of the Fifth Judicial District, State of ldaho. Twin
Falls County. Hon. G. Richard Bevan" District Jqdge.
Judgment dismissing action, affirmed.
John B. Kugler, Tacoma, Washingto4 pro se appellant.
Wright Brothers Law Office, PLLC; Brooke Baldwin Redmond. Twin Falls. for
respondent.
LANSING, Judge
John B. Kugler appeals from the involuntary dismissal of his civil complaint. We affpm.
L
BACKGROT]ND
Kugler and defendants Ron Nelson, Edwin Prater, David powers, william Armstrong,
and Steven Kennison were shareholders in H&M Distributing, Inc. and signatories to a stock
subscription and cross-purchase agreement (shareholders agreement). pursuant to the
shareholders agreement, each party subscribed to purchase a specific number of shares. The
shareholders agreement provided that if any shareholder intended to sell his shares, he would
provide written notice to each of the other shareholders who would then be given the opportunity
to purchase those shares, in proportion to his ownership intercst, at a subsequent corporate
meeting.
On May 6,2010, Kugler filed a complaint against the defendants alleging ttrat Prater had
sold his shares in H&M without notice to Kugler and that each of the defendants, save for
Kennison, had purchased Prater's shares. The complaint sought monetary damages for breach of
the shareholders agreement. Nelson filed an answer and a motion for summary judgment. The
district court granted the motion for summary judgmen! awarded attomey fees to Nelson, and
included an Idaho Rule of civil Procedure 54(b) certificate certiffing the judgment as final. ,See
r.R.c.P.540).
Kugler appealed from this summary judgment. In an unpublished decision, this Court
reversed, concluding that genuine issues of material fact existed concerning whether Nelson
breached the shareholders agreement when he purchased the Prater stock and conceming the date
of accrual of Kugler's cause of action for purposes of the statute of limitations. Kugler v.
Nelson, Docket No. 39060 (ct. App. Jtne 22,2012). Based upon these determinations, we also
vacated the district court's award of attomey fees to Nelson and remanded. In the opinion, we
mentioned that fraudulent concealment may play a part in the statute of limitations defense. We
also noted some confusion in multiple court discussions regarding Kugler's unresolved motion to
amend his complaint and stated that this matter could again be taken up on remand.
Kugler's motion to amend his complaint had been filed on December 20. 2010. In
December 2012, six months after the remand from this court, Kugler renewed the motion.
Following a January 22,2013, hearing, the district court denied the motion. The districr court
explained that it was denying the motion primarily because, as he had done prior to appeal,
Kugler failed to provide a proposed amended complaint or otherwise provide any specific
information about what additional claims he wished to assert. Kugler filed a motion for
reconsideration and, three weeks later in February 2013, he submitted a proposed amended
complaint for the first time since his initial motion to amend was filed in December 2010. The
district court apparently denied the motion.
A court trial was conducted on April 2,2013, to address Kugler's claims against Nelson,
Powers, and Armstrong.l Kugler represented himself. At the close of Kugler's presentation of
evidence, the district court granted the defendants' Idaho Rule of Civil Procedure 41(b) motion
for involuntary dismissal on the ground that Kugler's evidence had shown no right to relief.
The district court thereafter awarded attomey fees to the defendants pursuant to Idaho
code $ 12-120(3), holding that the case arose from a commercial transaction. Kugler appeals.
II.
AI\ALYSIS
Kugler lists ten2 issues in his opening brief that can be categorized as follows: (l) claims
that the district court ened by setting a trial date before sorne defendants had frled an answer and
by refusing to postpone the trial; (2) enor in denlng Kugler's motion to amend the complaint;
(3) error in the court's findings of fact and conclusions of law; and (4) enor in awarding anomey
fees to the defendants. The defendants raise as an additional issue on appeal a request for an
award of attomey fees incurred on appeal.
of Kugler's claims of enor is made difiicult by the deficiencies in
Reasoned review
Kugler's appellate briefs and in the record on appeal. Kugler's appellate briefs contain no
citations to the parts of the record relied upon, and the argument section of his brief contains no
citations to authorities, both of which are required by ldaho Appellate Rule 35(a)(6). The only
authorities included within his briefs are in a separate table of "Points and Authorities,' (a
component of appellate briefs that has not been required by the Idaho Appellate Rules for more
than two decades). The argument section of his brief contains no further reference to these
authorities, leaving it to this court and the defendants to decipher which issue, if any, the cited
authority applies to. Further, the argument sections of Kugler's brief do not address each issue in
a separate section. lnstead, they present one undifferentiated argument. This court would be
well justified in simply affirming tlle judgnrent below on the basis of this noncompliance with
briefing standards and because some of the assignments of enor are too vague and indefinite to
I Kugler voluntarily dismissed the claims against defendant Prater with prejudice on
July 18, 2011, and the claims against defendant Kennison were dismissed by stipulation on
November 27. 2012.
' Kugler lists nine issues in the "Issues Presented on Al'peal" section of his opening brief
and one issue in the "Points and Authorities" section.
beaddressed. SeeBachv.Bagley, 148 Idaho784,790,229P.3d,1146,1152(2010). Thatbeing
said, we will nevertheless discuss some ofthe issues for which we can discem the presentation of
some argument. "That does not necessarily mean that the arguments we address were presented
in a cogent manner but merely that they were asserted to the extent that the Court deemed them
to have been marginally raised." Id. at791,229 P.3d at I 153.
A. Complaints Concerning the District Court's Setting of a Trial Date and Other
Pretrial Matters
Kugler contends that the district court ened by setting a trial date before defendants
Powers and Armstrong had filed an answer. He also contends that he made numerous motions to
vacate and continue that trial date because he did not have enough time to adequately prepare.
Kugler also complains that the district court erred by not requiring Nelson to timely refirnd the
attomey fees that Kugler had paid Nelson on the fee award predating the first appeal in this case.
Kugler contends that he was prejudiced by this last error because he needed that money to hire
an attomey to represent him at trial. None of these issues has been preserved for appellate
review.
An issue that was not presented to the court may not be raised for the first time on appeal.
Bank of Commerce v. Jefferson Enterprises, LLC, ls4 Idaho 824, 828-29, 30i p.3d I g3, l g7-gg
(2013); Garner v. Bartschi, 139 Idaho 430, 436,80 p.3d 1031, 1037 (2003). It is well
established that in order for an issue to be raised on appeal the record must reveal an adverse
ruling which forms the basis for an assignment of enor. Idaho power co. v. Idaho Dep,t of
water Res., 151 Idaho 266,279,255 P.3d, 1152, tt6s (2011); Montalbano v. saint Alphonsus
Reg'l Med. Ctr.,l5l Idaho 837, 943,264 p.3d944,950 (2011); Krempasky v. Nez perce Cnty.
Planning & Zoning, 150 Idaho 231,236,245 P.3d 983, 988 (2010); state v. Barnes,133 Idaho
378, 384, 987 P.2d 290,296 (1999). The record brought before this Court does not include any
motions raising any of these issues or any district court orders addressing any ofthese issues. If
motions or objections were made and ruled upon at a hearing, the record on appeal contains no
transcripts of any hearing in the time frame involved. It is the responsibility of the appellant to
provide a sufficient record to substantiate his or her claims on appeal. In the absence of an
adequate record on appeal to support the appellant's claims, we will not presum e enor. Belk v.
Martin, 136Idaho 652, 660, 39 P.3d, 592, 600 (2001); State v. Murptry,l33 Idaho 489, 491, 988
P.2d 715,717 (ct. App. 1999). Absent an adequate record, Kugler has neither shown that the
issues were raised below or that the district court erred in addressing them.
B. Motion to Amend the Complaint
Kugler next contends that the dishict court abused its discretion in denying his motion to
amend the complaint. Under I.R.C.P. 15(a), once an answer has been filed a party may amend a
pleading only by leave of court. Whether to grant leave to amend is a matter that is within the
discretion of the trial court and is subject to reversal on appeal only for an abuse of that
discretion. Black canyon Racquetball club, Inc. v. Idaho First Nat'l Banls N.A., ll9 Idaho l7l,
175,804 P.2d 900,904 (1991). Reasons for which leave to amend may be denied include 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 virnre of allowance
of the amendment, and futility of amendment. Mccann v. Mccann, I3 8 Idaho 228, 237 , 6l p .3d
585, 594 (2002); Smith v. Great Basin Grain Co., 98 ldaho 266,272,561 p.2d 1299, 1305
(1977) (quoting Foman v. Dnis,37l u.s. 178, 182 (1962\). when reviewing for an abuse of
discretion, we examine: (l) wherher the trial court conectly perceived the issue as one of
discretion; (2) whether the nial 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 the trial court reached its decision by an exercise of reason. Burgess v. Salmon River
canal Co., Ltd., 127 Idaho 565, 573,903 p.2d 730,738 (1995).
In the January 22, 2013, order denying the motion to amend, the court observed that the
motion had been filed on December 20,2010, and that a hearing on the motion had been set for
January 3, 2011, but that hearing was continued. Thereafter, Kugler did not again notice the
motion for hearing for over twenty-three months. The court held that there had been undue delay
in presenting the motion to the prejudice of the defendants because, were the motion granted, it
would necessarily compromise the April 2, 2013, hial date. Although we recognize that the
motion could not have been heard by the trial court during the period from August 2011 to June
2012 wfule the first appeal in this case was pending, we also recognize that Kugler waited until
half a year after the remand, and less than four months before the trial date, before scheduling the
motion for hearing. The district court's denial of the motion to prevent prejudice to the
defendants is not an abuse of discretion. our Supreme Court has held that ..if the opposing party
would be prejudiced by the delay in adding the new claim . . . it is not an abuse of discretion for
the trial court to deny the motion to file the amended complaint." Black Canyon,l lg Idaho at
175' 804 P.2d' at 904. on appeal, Kugler has not discussed nor specifically challenged the
district court's determination that the defendants would have been prejudiced by Kugler's delay
in presenting the motion.
The dishict court also denied the motion because Kugler had not submitted a proposed
amended complaint or any description of the additional claims that an amended pleading would
presenl. The court held that the defendants were prejudiced by these shortcomings because
without this basic informatioq they could not address the motion on the merits. Again, the
district court was correct. In addressing a motion to amend, "the court may consider whether the
new claims proposed to be inserted into the action by the amended complaint state a valid
claim;'Id.;seealsoBissettv.State, 1llIdaho865,869,727p.Zd1293,1296(Ct.App. 1986).
ln Black canyon, our supreme court further stated: "If the amended pleading does not set out a
valid claim . . . or ifthe opposing party has an available defense such as a statute of limitations, it
is not an abuse of discretion for the trial court to deny the motion to file the amended complaint.
Black canyon, 119 Idaho il. 175, E04 P.2d at 904. These holdings presuppose that a party
seeking to amend a pleading must, at a minimum, reveal what new claims the proposed amended
pleading will contain.
ln this appeal, Kugler has not challenged this altemative rationale of the distict court.
He instead rests his claim of error on the general assertion that motions to amend a complaint
should be "liberally granted" and asserts that an injustice has occurred. These assertions are
insuffrcient to establish district court enor.
Kugler also filed a motion to reconsider the disfiict court's denial and finally submitted a
proposed arnended complaint on February25, 2013, just five weeks before the trial date.
Although it is not clear from his briefing on appeal, Kugler may also be challenging the district
court's denial of this motion to reconsider. The record on appeal, however, contains no district
court order addressing the motion to reconsider, and if the motion was ruled upon at a hearing,
the record on appeal contains no transcript of that hearing. Again, we must affirm the trial court
in the absence ofan adequate record on appeal to support the appellant's claims.
C. Findings ofFact and Conclusions ofLaw
The district court ent€red findings of fact and conclusions of law supporting its
I.R.C.P.4l(b) involuntary dismissal of the complaint at the close of Kugler's case-in-chief. The
district court there stated three reasons for dismissal. Fin! the court found that although prater
(whom Kugler had dismissed from the lawsuit) had sold his shares without providing written
notice to Kugler, the remaining defendants, Nelsorl Powers, and Armstrong, had not breached
the contract because they did not purchase Prater's shares. Instead, the court found, the shares
were purchased by the corporation (which was not a party to the lawsuit), and the shares
purchased by Nelson, Powers, and Armstrong on May 2,2005, were acquired from reserved
shares held by the corporation. Second, the court held that even if Nelson, Powers, and
Armstrong had fieached the contract, Kugler's complaint filed on May 6,2010, was barred by
the five-year statute of limitations for contract actions. The district court held that even
assuming that fraudulent concealment would toll the statute, Kugler had presented no evidence
of fraudulent concealment. Third, the district court held that the complaint must be dismissed
because Kugler had not proven the monetary damages he sought in his complaint.
On appeal, Kugler makes various challenges to findings of fact concerning fraudulent
concealment and damages, contending that they are clearly eroneous. This court's review ofa
trial court's findings and conclusions after a bench trial is limited to whether the evidence
supports the findings of fact and whether the findings of fact support the conclusions of law.
Borah v. McCandless, 147 Idaho 73,77,205 P.3d 1209, l2l3 (2009). It is the trial court's
province to weigh conflicting evidence and testimony and to judge the credibility of witnesses,
so this Court liberally construes the trial court's findings of fact in favor ofthe judgment entered.
1d. This Court will not set aside these findings of fact unless the findings are clearly enoneous.
1d When the trial court based its findings on substantial evidence, this Court will not overtum
those findings on appeal even if the evidence is conflicting. 1d. Evidence is substantial if a
reasonable trier of fact would accept that evidence and rely on it to determine whether a disputed
point of fact was proven. Inre lhilliamson,l35 Idaho 452,454,19 p.3d 766,768 (2001).
Kugler's claims that the district court's findings of fact are erroneous cannot be reviewed
because he has not provided a trial transcript in the record on appeal. It is impossible to
determine whether the trial evidence supports the trial court's findings when that evidence is not
available to this court for review. As noted above, in the absence of an adequate record on
appeal to support the appellant's claims, we will not presume etot. Belk, 136 Idaho at 660-61,
39 P.3d at 600-01; Murphy, 133 Idaho at 491, 988 P.2d, at7l7. Therefore. the district court's
findings must be affirmed. Further, we can discem no argument by Kugler that the district court
made an incorrect application of the law to the facts as found. Thercfore, we find no error in the
district court's dismissal of Kueler's claims.
D. The District Court's Award of Attorney Fees to the Defendants
On the defendants' motion, the district court awarded attomey fees pursuant to Idaho
Code $ 12-120(3), which mandates attomey fees in favor of the prevailing party in an action
arising out of a commercial transaction. Kugler filed a motion for reconsideration, which the
district court denied.
Under I.C. $ 12-120(3), a prevailing party is entitled to an award of attomey fees if a
commercial transaction is integral to the claim and constitutes the basis upon which the party is
attempting to recover. Carrillo v. Boise Tire Co., Inc., l52Idaho 741, 755-56,274 p.jd 1256,
1270-71 (2012); Blimka v. My llreb Wholesaler, LLC, 143 ldaho 723,728, 152 p.3d 594, 599
(2007). All transactions other than those for personal or household purposes are commercial
transactions. see I.c. $ 12-120(3). In order for a transaction to be commercial, each party to the
transaction must enter the hansaction for a commercial purpose. carrillo,l52 Idaho at756,274
P.3d, at l27l.
Kugler first contends that this case did not involve a commercial transaction because
"this was a personal matter" to Nelson and Powers and "nothing more than an accounting and
redivision of assets." The record on appeal does not show that Kugler preserved this issue by
objection before the district court. Even if he did, we have no hesitation in holding that this
lawsuit concerned a commercial transaction. Kugler and the defendants jointly entered into a
business venture by forming a for-profit corporation. Kugler sued his co-shareholders seeking
damages for breach of the shareholders agreement. The Idaho Supreme Court has recognized
that a lawsuit by a person to enforce the terms of a stock redemption agreement is a commercial
transaction. Ta-ylor v. AIA Servs. Corp., l5l Idaho 552, 574, 261 p.3d 829, g5l (201l). We
likewise hold that the gravamen of this lawsuit is a breach of contract claim arising from a
commercial transaction because Kugler brought suit based upon a stock subscription and cross-
purchase agreement. Kugler's argument to the contrary has no merit.
Kugler next argues that the defendants' attomey fee request was excessive. He asserts,
without citation to any information in the record, that Nelson's attomey charged for the work of
an additional attomey in the same firm whose assistance was unnecessary, that an attomey for
defendants Powers and Armstrong overcharged for simply "filing a notice of appeal and a notice
of withdrawal," and that the district court should have given Kugler an offset against the award
to Nelson for costs which this court awarded to Kugler as prevailing party in the prior appeal.
As stated above, an issue may not be raised on appeal unless it was preserved in the court
below. Here, the district court's order notes that Kugler's wriften objection to the defendants'
motion for fees did not contest the amount of the fees requested. Kugler has not included that
objection in the record of this appeal, and therefore has not shown error in the district court's
statement. The district court further noted that Kugler made some objections at a hearing on the
motion, but as we do not have a transcript of that hearing, and as neither the district court's initial
order on attorney fees nor its order denying Kugler's motion for reconsideration identifies these
issues, Kugler has failed to provide a record showing that he raised below the objections that he
now asserts on appeal. Additionally, the record contains no adverse district court rulings on
these issues. Lastly, the record on appeal includes no evidentiary support for Kugler's assertions
of fact. Accordingly, these claims of error will not be addressed in this appeal.
Finally, Kugler further alleges that defendant Powers claimed attomey fees for services
that Kugler "believes" were unrelated to this case and that Powers made a claim for attomey fees
that he did not pay but instead were paid by the corporation. Kugler has not identified, and we
have not found, anything in the record that substantiates these allegations. The district court's
order denying the motion for reconsideration held that "the court will not adjust the attomey's
fees awarded here based upon vague claims which lie, if at all, in an independent action."
Kugler has shown no abuse ofdiscretion in this detemrination.
As Kugler has shown no error, the district court's award of attomey fees is affirmed.
F. Attorney Fees on Appeal
The defendants contend that they should be awarded attomey fees incurred on this appeal
under Idaho code $ 12-120(3). we agree. The defendants are the overall prevailing party and,
as discussed above, the claims in this case arise from a commercial transaction. Therefore. as the
prevailing parties, the defendants are entitled to attomey fees on appeal.
ilI.
CONCLUSION
The district court's judgment and orders are affirmed. Attomey fees and costs on appeal
to the respondents.
Judge GRATTON and Judge MELANSON CONCUR