Thomas Grady Photography v. Amazing Vapor

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/09/2018 08:11 AM CST
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Nebraska Supreme Court A dvance Sheets
301 Nebraska R eports
THOMAS GRADY PHOTOGRAPHY v. AMAZING VAPOR
Cite as 301 Neb. 401
Thomas Grady Photography, Inc., appellee,
v. A mazing Vapor, Ltd., et al., appellees,
and Thomas J. A nderson, appellant.
___ N.W.2d ___
Filed October 26, 2018. No. S-17-818.
1. Appeal and Error. Where no timely statement of errors is filed in an
appeal from a county court to a district court, appellate review is limited
to plain error.
2. Corporations: Principal and Agent: Contracts: Liability: Proof. It is
the agent’s duty to disclose his or her capacity as an agent of a corpora-
tion if the agent is to escape personal liability for contracts made, and
in the absence of such disclosure, the agent bears the burden of proof
of showing that the contract was made while acting in a corporate, not
individual, capacity.
3. Courts: Jurisdiction: Equity. Save for county probate and trust powers
and county courts’ limited jurisdiction in granting temporary restraining
orders, jurisdiction in equity actions remains in district courts.
4. Courts: Jurisdiction: Equity: Statutes. Although by statute, county
courts have concurrent original jurisdiction with the district court in
all civil actions of any type when the amount in controversy is below a
certain amount, this does not include equity actions.
5. Corporations: Equity. Proceedings seeking to pierce the corporate veil
are equitable actions.
Appeal from the District Court for Douglas County, Gregory
M. Schatz, Judge, on appeal thereto from the County Court for
Douglas County, Stephanie R. H ansen, Judge. Judgment of
District Court affirmed.
Thomas J. Anderson, P.C., L.L.O., pro se.
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Nebraska Supreme Court A dvance Sheets
301 Nebraska R eports
THOMAS GRADY PHOTOGRAPHY v. AMAZING VAPOR
Cite as 301 Neb. 401
Justin A. Roberts, of Lustgarten & Roberts, P.C., L.L.O., for
appellee Thomas Grady Photography, Inc.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Miller-Lerman, J.
NATURE OF CASE
The appellee, Thomas Grady Photography, Inc. (Grady
Photography), sued Amazing Vapor, Ltd.; MCJC Companies,
Inc. (MCJC); Manuel Guillermo Calderon; and Thomas J.
Anderson for breach of contract for failing to pay on two oral
contracts for photography services. Although Calderon and
Anderson were directors of Amazing Vapor, in this appeal,
Anderson is the sole appellant and appears in his individ-
ual capacity and is self-represented. The county court for
Douglas County entered a default judgment in favor of Grady
Photography against Amazing Vapor, MCJC, and Calderon.
Thereafter, the county court held a trial solely on the con-
tract issue and whether Anderson was individually liable for
the debt. On February 7, 2017, the county court found that
Anderson owed Grady Photography $2,400 under two oral
contracts. Anderson appealed to the district court for Douglas
County, which affirmed the county court’s order. On appeal
from the district court, Anderson contends for a variety of rea-
sons that the district court erred when it affirmed the county
court’s order finding him liable. We affirm.
STATEMENT OF FACTS
In March 2014, Calderon and Anderson formed a corpo-
ration named “Amazing Vapor, Ltd.,” and registered it in
the State of Nebraska. The business wholesaled e-cigarette
hardware, supplies, and liquids. The county court found that
Grady Photography entered into two oral contracts during
the spring of 2014 for promotional photography of these
products, that Grady Photography was not paid for the work
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Nebraska Supreme Court A dvance Sheets
301 Nebraska R eports
THOMAS GRADY PHOTOGRAPHY v. AMAZING VAPOR
Cite as 301 Neb. 401
performed, and that Anderson received distributions from
Amazing Vapor during the period Grady Photography was
owed money. Amazing Vapor stopped operating in August or
September 2014, all of its assets were liquidated or removed
from the corporate entity, and the corporation was ulti-
mately dissolved.
The evidence supports the following facts: Anderson, a
practicing business attorney, and Thomas Grady, a commercial
photographer, met through a business networking group 2 or
3 years before the events giving rise to this case. Grady testi-
fied that sometime in the spring of 2014, Anderson approached
Grady to hire him to photograph electronic vapor products.
Grady orally agreed to work for one full day and explained
that the rates for his photography services were $800 per
day. Grady testified that he knew Anderson was the owner of
a “vape business” or had a partner, which made him “part-
owner.” In a text message to Grady dated March 22, 2014,
Anderson referred to Calderon as his “partner.” There was
evidence which the county court believed to the effect that
Anderson did not inform Grady of the corporate status of
Amazing Vapor.
Grady completed photography work in March 2014, and the
files were received by Calderon and Anderson and ultimately
utilized for promotional purposes. Grady testified that there
was a strict deadline on the photographs, because Calderon and
Anderson needed to use them in a trade show. Calderon and
Anderson liked the work and, the next day, brought more prod-
ucts to Grady’s house for him to photograph. Both Calderon
and Anderson were present during the second photography ses-
sion. Grady testified that between the two sets of products, he
worked 3 days. Therefore, as discussed, he invoiced Calderon
and Anderson on March 27, 2014, at his rate of $800 per day,
for a total of $2,400 for the two photography jobs.
The invoice was unpaid in its entirety. After receiving the
invoice, Anderson attempted to negotiate a reduction in the
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Nebraska Supreme Court A dvance Sheets
301 Nebraska R eports
THOMAS GRADY PHOTOGRAPHY v. AMAZING VAPOR
Cite as 301 Neb. 401
price. Anderson offered to pay $1,800 on the promise of other
work for Grady Photography in the future. Grady declined,
stating that he would rather give a discount for future work and
get paid what he was owed. Grady made numerous attempts
to settle the invoice with Calderon and Anderson before ulti-
mately filing suit in the county court for Douglas County.
Grady Photography initiated a breach of contract action
against Amazing Vapor, MCJC, Calderon, and Anderson.
Grady Photography alleged that it had not received pay-
ment due and owing from the named defendants after it fully
performed its obligations under the two oral contracts for
photography services. Grady Photography obtained a default
judgment of $2,400, attorney fees, and court costs against
Amazing Vapor, MCJC, and Calderon. Anderson, representing
himself individually, filed an answer which denied the allega-
tions against him. He further alleged that he was a minority
owner of Amazing Vapor and that “Calderon closed the busi-
ness, took the inventory and started his own business at an
undisclosed location.”
Following an unsuccessful motion to dismiss filed by
Anderson, the case went to a bench trial on November
21, 2016. The subjects of the trial were contract issues
and whether Anderson was personally liable for the debt.
On February 7, 2017, the county court filed an order in
which it found the existence of two oral contracts which
had been breached and entered judgment in favor of Grady
Photography and against Anderson, individually. The county
court offered several ration­ales pursuant to which Anderson
was found personally liable under the contracts. Using the
language of the equitable principles surrounding “piercing
the corporate veil,” see Christian v. Smith, 276 Neb. 867,
759 N.W.2d 447 (2008) (noting piercing corporate veil is
equitable principle), the county court stated: “Anderson shall
be held personally liable in order to prevent fraud and injus-
tice.” The county court further noted that Anderson had taken
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Nebraska Supreme Court A dvance Sheets
301 Nebraska R eports
THOMAS GRADY PHOTOGRAPHY v. AMAZING VAPOR
Cite as 301 Neb. 401
corporate distributions during the time that money was owed
to Grady Photography, see Neb. Rev. Stat. § 21-252(c) (Cum.
Supp. 2016).
Anderson appealed the county court’s decision to the district
court. Anderson failed to file a statement of errors. See Neb.
Ct. R. §§ 6-1452(A)(7) (rev. 2011) and 6-1518. The district
court decided to ignore Anderson’s failure to file a statement
of errors. The district court concluded that the county court
did not err in its decision that Anderson should be personally
liable under the contracts, because (1) Grady believed he was
contracting with Calderon and Anderson and, alternately, (2)
piercing the corporate veil would prevent fraud and injustice
to Grady Photography.
Anderson appeals the order of the district court sitting as an
appellate court which affirmed the county court’s order con-
cluding Anderson was personally liable to Grady Photography.
STANDARD OF REVIEW
[1] Where no timely statement of errors is filed in an appeal
from a county court to a district court, appellate review is
limited to plain error. State v. Nielsen, ante p. 88, 917 N.W.2d
159 (2018); §§ 6-1452(A)(7) and 6-1518.
ANALYSIS
We note initially that the failure of Anderson to file a state-
ment of errors in his appeal from the county court to the dis-
trict court limited the district court’s and our review to plain
error. State v. Nielsen, supra. For the reasons discussed below,
we do not find plain error by the district court sitting as an
appellate court with regard to its order which affirmed the
county court’s decision finding Anderson liable under a breach
of contract theory.
This case was filed as a breach of contract action. We have
reviewed the record and determined that the record supports
the finding of two oral contracts between Grady and Anderson.
As the district court stated, the record showed that “[Grady
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Nebraska Supreme Court A dvance Sheets
301 Nebraska R eports
THOMAS GRADY PHOTOGRAPHY v. AMAZING VAPOR
Cite as 301 Neb. 401
Photography] had made [its] initial agreement with Defendant
Anderson, and had the right to rely on Defendant Anderson’s
personal liability, as well as that of his partner, for services
provided by [Grady Photography].”
[2] The cases provide that it is the agent’s duty to disclose
his or her capacity as an agent of a corporation if the agent
is to escape personal liability for contracts made, and in the
absence of such disclosure, the agent bears the burden of proof
of showing that the contract was made while acting in a corpo-
rate, not individual, capacity. See, Purbaugh v. Jurgensmeier,
240 Neb. 679, 483 N.W.2d 757 (1992); 3 C.J.S. Agency
§ 565 (2013). The uncontradicted testimony at trial was that
neither Calderon nor Anderson disclosed Amazing Vapor’s
incorporated status during discussions leading up to the agree-
ments. In text messages, Anderson referred to Calderon as
his “partner.” At Anderson’s request, Grady sent the March
27, 2014, invoice to Anderson’s personal or attorney email,
not an address associated with Amazing Vapor. The invoice
reads, “Art Buyer: Tom Anderson & Manny Calderon Client:
Amazing Vapor,” indicating that Grady believed the buyers
were Calderon and Anderson for their client, Amazing Vapor.
After the invoice remained unpaid after several attempts to
collect on the contract, Grady texted Anderson: “You are
also part owner. It’s time for you to pay and take it up with
[Calderon] on your own. . . . [Y]ou are responsible for hir-
ing me . . . and therefore you are responsible just as much as
[Calderon].” The series of communications between Grady
and Anderson leading up to and following the photography
services supports the county court’s finding of a breach of
two oral agreements for which Anderson was liable, and we
find no plain error with regard to the district court’s affirm­
ance thereof.
[3-5] For completeness, we note that our analysis is based
on contract jurisprudence, and to the extent the lower courts’
reasoning was based on equitable principles, it is disapproved.
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Nebraska Supreme Court A dvance Sheets
301 Nebraska R eports
THOMAS GRADY PHOTOGRAPHY v. AMAZING VAPOR
Cite as 301 Neb. 401
Within its reasoning, the county court relied on an equitable
principle of piercing the corporate veil. But, the county court
did not have equity jurisdiction. Save for county probate and
trust powers and county courts’ limited jurisdiction in grant-
ing temporary restraining orders, jurisdiction in equity actions
remains in district courts. Although by statute, county courts
have “[c]oncurrent original jurisdiction with the district court
in all civil actions of any type” when the amount in contro-
versy is below a certain amount, this does not include equity
actions. Neb. Rev. Stat. § 24-517(5) (Reissue 2016). See, Neb.
Rev. Stat. § 30-3814 (Reissue 2016); Iodence v. Potmesil, 239
Neb. 387, 476 N.W.2d 554 (1991) (discussing predecessor stat-
ute). As noted, proceedings seeking to pierce the corporate veil
are equitable actions. Christian v. Smith, 276 Neb. 867, 759
N.W.2d 447 (2008). Thus, the county court lacked authority to
consider equitable theories of recovery based on piercing the
corporate veil and the district court incorrectly approved of the
county court’s approach.
CONCLUSION
Although our reasoning differs somewhat from the lower
courts, we find no plain error in the determination and affirm­
ance thereof in which it was found that two oral contracts had
been breached by Anderson and held him individually liable
for $2,400 in damages.
A ffirmed.