Kenyon-Noble Lumber Co. v. Dependant Foundations, Inc.

2018 MT 308, 432 P.3d 133, 393 Mont. 518
CourtMontana Supreme Court
DecidedDecember 18, 2018
DocketDA 18-0175
StatusPublished
Cited by7 cases

This text of 2018 MT 308 (Kenyon-Noble Lumber Co. v. Dependant Foundations, Inc.) is published on Counsel Stack Legal Research, covering Montana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kenyon-Noble Lumber Co. v. Dependant Foundations, Inc., 2018 MT 308, 432 P.3d 133, 393 Mont. 518 (Mo. 2018).

Opinion

Justice Beth Baker delivered the Opinion of the Court.

***520¶1 Kenyon-Noble Lumber Company ("Kenyon Noble") appeals an order of the Eighteenth Judicial District Court, Gallatin County, holding that Kenyon Noble had breached its contract with Dependant Foundations, Inc. ("DF Inc.") by allowing a former authorized agent to charge on DF Inc.'s credit account after DF Inc. notified Kenyon Noble ***521that it had ceased operations. The court awarded DF Inc. attorney fees. Kenyon Noble argues that because it lacked notice of the agent's termination, it could not have breached the contract. Kenyon Noble also contests the award of attorney fees. We affirm and award the Defendants their attorney fees for this appeal.

PROCEDURAL AND FACTUAL BACKGROUND

¶2 Mark Markovich founded DF Inc. in Michigan. In 2007, Mark formed Dependant Foundations, LLC ("DF LLC") in Montana. At that time, Mark continued to operate DF Inc. in Michigan, and Shawn Karczewski operated DF LLC in Montana. Mark's son, Marco Markovich, worked for DF LLC.

¶3 Kenyon Noble operates a building supply store. It allows customers to establish credit accounts to purchase building materials and concrete on a credit basis.1 Kenyon Noble requires an individual personally to guarantee payment for the debts of companies that hold credit accounts. In 2007, DF LLC entered into a credit agreement with Kenyon Noble that allowed DF LLC to purchase building materials and concrete on credit. The contract included Mark's signed personal guaranty for the debts incurred.

*137¶4 When Karczewski left DF LLC in 2008, he removed himself as an authorized user on DF LLC's credit account and added Marco as a new authorized user. In 2011, when Mark relocated to Montana, he merged DF Inc. and DF LLC. DF Inc. became the successor-by-merger. Marco continued as an employee and authorized agent of DF Inc. DF Inc. did not notify Kenyon Noble that it merged with DF LLC, but continued to use DF LLC's credit account.

¶5 In 2012, Mark told Marco that he intended to wind down DF Inc. and that Marco would need to start his own company. Marco organized Dependant Foundations and Flatwork, LLC ("Foundations and Flatwork"). Mark decided to send a letter to DF Inc.'s Montana-based suppliers to ensure that they knew Foundations and Flatwork was a separate and distinct company from DF Inc. and that Mark was not responsible for Marco's debt. On September 20, 2012, JoEllen Markovich, Mark's wife and DF Inc.'s bookkeeper, sent a letter to DF Inc.'s suppliers stating that DF Inc. was no longer operating and that it was not responsible for Foundations and Flatwork's debts.

***522¶6 In fall 2013, Marco began to purchase concrete from Kenyon Noble on DF LLC's credit account. Marco charged the materials he purchased on behalf of "Dependant Foundations." He did not inform Kenyon Noble that he had started his own business, nor did he open a new credit account for Foundations and Flatwork. He did, however, change the address on the account. By late 2013, the outstanding principal balance on the account was $28,798.56. In January 2014, Marco sent Kenyon Noble a $15,000 check, but it was returned for insufficient funds. The check was written on the account of "Dependant Foundations & Flatwork, LLC." Kenyon Noble was unsuccessful in collecting payment on the account balance, and it filed suit against Mark and DF Inc. in March 2014.

¶7 Two months later, Kenyon Noble amended its complaint to add Marco and Foundations and Flatwork as defendants. Marco admitted that the debts belonged to him and agreed on a repayment schedule with Kenyon Noble. Consequently, Kenyon Noble dismissed Mark and DF Inc. from the case. Shortly thereafter, Kenyon Noble reinstated Mark and DF Inc. as defendants because the attempted settlement with Marco never materialized. The District Court entered default judgment against Marco. Kenyon Noble tried unsuccessfully to execute its judgment against Marco and continued the lawsuit against Mark and DF Inc.

¶8 Mark and DF Inc. brought five counterclaims against Kenyon Noble: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing, in violation of § 28-1-211, MCA ; (3) defamation-libel; (4) invasion of privacy-false light; and (5) abuse of the judicial process by claiming that Mark and DF Inc. were responsible for Marco's debts. The case was tried to the court without a jury.

¶9 At trial JoEllen testified that she sent the September 20, 2012 letter to Kenyon Noble in a properly addressed and stamped envelope, complete with a return address. Kenyon Noble denied receiving the letter from DF Inc. After three days of testimony, the District Court found that DF Inc. was entitled to the statutory presumption that Kenyon Noble received the letter. The court concluded that Kenyon Noble failed to successfully rebut the presumption. Because Kenyon Noble continued to allow Marco to charge on the account after it was notified that his authority was terminated, Kenyon Noble's claims failed. DF Inc.'s revocation of Marco's authority was valid pursuant to § 28-10-802(1), MCA, and the court ruled in favor of Mark and DF Inc. on their counterclaim for breach of contract. The court ruled against Mark and DF Inc. on their remaining counterclaims. It awarded Mark and DF Inc. attorney fees and costs as the prevailing parties.

***523STANDARDS OF REVIEW

¶10 On appeal from a bench trial, we review the district court's findings of fact for clear error. Roland v. Davis , 2013 MT 148, ¶ 21, 370 Mont. 327, 302 P.3d 91. Clear error exists if there is not substantial evidence to support the findings of fact, if the district court misapprehended the evidence, or if we have a definite and firm conviction *138that the district court made a mistake. Roland , ¶ 21. We review a district court's conclusions of law for correctness. Roland , ¶ 21.

¶11 If legal authority exists to award attorney fees, we review a district court's decision to grant or deny fees for abuse of discretion. James Talcott Const. Inc. v. P & D Land Enters. , 2006 MT 188, ¶ 27, 333 Mont. 107, 141 P.3d 1200. We review for abuse of discretion a district court's prevailing party determination. Wohl v. City of Missoula , 2014 MT 310

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Bluebook (online)
2018 MT 308, 432 P.3d 133, 393 Mont. 518, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kenyon-noble-lumber-co-v-dependant-foundations-inc-mont-2018.