Ives v. McGannon

149 P.3d 880, 37 Kan. App. 2d 108, 2007 Kan. App. LEXIS 51
CourtCourt of Appeals of Kansas
DecidedJanuary 19, 2007
Docket93,978
StatusPublished
Cited by10 cases

This text of 149 P.3d 880 (Ives v. McGannon) is published on Counsel Stack Legal Research, covering Court of Appeals of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ives v. McGannon, 149 P.3d 880, 37 Kan. App. 2d 108, 2007 Kan. App. LEXIS 51 (kanctapp 2007).

Opinion

Marquardt, J.:

This case involves claims of breach of contract, fraud, negligence, and contribution among three former business partners. Robert McGannon appeals portions of the jury verdict. Bradley Ives and David Murrill cross-appeal other portions of that jury verdict. We affirm.

In March 1987, Ives and Murrill purchased Regional Holding Company, Inc. (Regional). In June 1994, McGannon approached Ives and Murrill and told them that he was thinking about taking a position outside of public accounting and asked their “good judgment” about an employment opportunity. It was then that Ives and Murrill extended McGannon an offer to join Regional as its chief financial officer.

In August 1994, after lengthy discussions about the terms of McGannon’s employment, McGannon drafted a letter of understanding to malee sure all of the parties were in agreement.

McGannon was allowed to purchase 10 percent of the company’s stock; however, his ownership interest was not to come into existence until Regional attained a value exceeding $8 million. Ives and Murrill represented that the company was worth $8 million at the time McGannon joined the company. McGannon was to receive the same salary as Ives and Murrill. In addition, McGannon was eligible to share in profits which occurred when tire company reached a value between $8 million and $10.4 million. As incentive, McGannon was offered the possibility of purchasing another 10 percent in Regional in the future. McGannon ultimately owned 20 percent of the Class B nonvoting stock.

The stock was transferred to McGannon in mid-May 1999, although the purchase agreements are dated December 24,1998. At the same time the stock purchases were made, the men signed a shareholder’s agreement. Murrill categorized the shareholder’s agreement as the final agreement between himself, Ives, and McGannon.

*111 Gold Banc contacted Ives in early May 1999 expressing an interest in acquiring or merging with Regional. Negotiations continued until July 1999, when Ives, Murrill, and McGannon (IM&M) signed a stock purchase agreement to sell all of their interest in Regional to Gold Banc.

Gold Banc’s purchase price was $13.2 million. IM&M were to continue as Gold Banc employees with reduced salaries in exchange for additional money at closing. There were other additions to the purchase price due to a delay in closing and IM&M foregoing bonuses. The amount paid at closing was $14.28 million because of these various adjustments. Each man received cash and a promissory note from Gold Banc.

Ives testified that after the sale was completed, Gold Banc had some concerns about the company. Article 9.6 of the stock purchase agreement allowed Gold Banc to arbitrate any concerns regarding setoffs. Article 10.11 of the agreement established a binding arbitration procedure. In the submission for arbitration, Gold Banc claimed that IM&M intentionally withheld information regarding a material adverse change in Regional’s financial condition.

In its August 2001 decision, the arbitration panel found in favor of Gold Banc and ordered IM&M to pay damages. The panel ordered cancellation of all the outstanding promissory notes. In addition, Ives and Murrill were to each pay $219,561 and McGannon was to pay $49,878. Ives believed that this order reset the purchase price of Regional’s stock and that the profits under the shareholder’s agreement needed to be adjusted. However, he acknowledged that was never explicitly set out in the arbitration panel’s award. An appeal of the arbitration award was not successful.

Ives testified that relations between himself and McGannon became tense after the arbitration award. McGannon’s separate appeal of the arbitration award was unsuccessful. Also, McGannon began questioning how the parties were going to allocate among themselves the setoffs awarded by the arbitration panel.

The parties were unable to reach any agreement on how the arbitration order should be settled. Ives and Murrill filed a petition against McGannon in January 2003 claiming causes of action for breach of contract, unjust enrichment, and contribution. Me *112 Gannon answered and filed a counterclaim against Ives and Murrill for fraud, negligent misrepresentation, breach of fiduciary duty, civil conspiracy, indemnity, contribution, and unjust enrichment.

Ives and Murrill answered McGannon s counterclaim and filed a motion for summary judgment claiming that Counts I through VII of McGannon’s counterclaim should be dismissed on statute of Hmitations grounds. That motion was granted by the trial court.

The remaining causes of action were tried to a jury. The jury found in favor of McGannon on Ives and MurrilTs breach of contract and unjust enrichment claims. The jury found in Ives and MurrilTs favor on the contribution claim but did not award monetary damages. The jury awarded McGannon $95,078 on his contribution claim. The trial court and counsel noted that it was inconsistent for the jury to find in Ives and MurrilTs favor on the contribution claim yet not award any damages. The jury retired with instructions to award damages and returned a verdict of $1.

The trial court denied McGannon’s request for prejudgment interest. McGannon appealed the grant of Ives and MurrilTs motion for summary judgment, as well as other rulings made during the trial. Ives and Murrill cross-appeal various rulings made by the trial court.

I. Statute of Limitations

McGannon’s first seven counts claimed that Ives and Murrill materially misrepresented the value of Regional to McGannon during the period prior to Gold Banc’s purchase of the company. McGannon also believed Ives and Murrill intentionally concealed marketing losses to Gold Banc, which directly resulted in the arbitration award in favor of Gold Banc. Finally, McGannon alleged that Ives and Murrill owed him a fiduciaiy duty, which was breached by these misrepresentations.

In their motion for summary judgment, Ives and Murrill claimed that McGannon’s claims violated the 2-year statute of limitations, which rested not only on when he discovered the alleged discrepancies, but when he could have discovered them through the exercise of reasonable diligence.

*113 In its memorandum decision, the trial court noted that Mc-Gannon served as Regional’s chief financial officer, with full access to all of the company’s financial and accounting records. The trial court also noted that McGannon was never prevented from accessing any financial records.

On appeal, McGannon claims there are genuine issues of material fact as to whether he knew or should have known of the financial misrepresentation within the limitations period.

Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, 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. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought.

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Cite This Page — Counsel Stack

Bluebook (online)
149 P.3d 880, 37 Kan. App. 2d 108, 2007 Kan. App. LEXIS 51, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ives-v-mcgannon-kanctapp-2007.