APPEAL FROM: District Court of the Fifteenth Judicial District, In and For the County of Roosevelt, Cause No. DV 09-44 Honorable David Cybulski, Presiding Judge
The opinion of the court was delivered by: Michael E Wheat
Submitted on Briefs: August 8, 2012
Justice Michael E Wheat delivered the Opinion of the Court.
¶1 Plaintiffs Johnson Farms, Inc. and Floyd Johnson (collectively "Johnson") appeal the judgment of the District Court for the Fifteenth Judicial District, Roosevelt County, granting Ethel Halland's (Ethel) motion for summary judgment. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
¶2 Dora Johnson (Dora) and her husband, G. Edward Johnson (Edward), operated a family farm together for many years near Froid, Montana. The family farm was operated as a corporation-Johnson Farms, Inc. Dora and Edward had five children: Phyllis Umolac (Phyllis), Kathy Warehime (Kathy), Ray Johnson (Ray), Floyd Johnson (Floyd) and Ethel. Following Edward's death in 1984, on March 30, 1989, Dora executed a trust agreement (Dora's Trust Agreement) wherein she designated herself as trustee and two of her children, Ethel and Floyd, as co-trustees. Dora's Trust Agreement provides that the trustee would deliver the net income of the trust to Dora until such time as she may become incapacitated. In the event that this were to occur, the trustee was responsible for distributing portions of the trust as deemed appropriate. In addition, Dora's Trust Agreement specifies that upon Dora's death all of her shares of stock in Johnson Farms, Inc. should be distributed equally to her two sons, Ray and Floyd, and certain sums of money to her three daughters, Ethel, Phyllis and Kathy.
¶3 Dora died on March 4, 2006. During the last years of her life Ethel was primarily responsible for her care and financial affairs. In addition to serving as co-trustee for Dora's Trust Agreement, Ethel was Dora's power of attorney beginning in 2003, and signed checks on Dora's behalf from 2003 through 2005. During this time, the assets of Johnson Farms, Inc. were Dora's sole source of income.
¶4 Ethel also served as secretary of Johnson Farms, Inc. for a period of time that ended in the summer of 2005, following the execution of a family agreement (Johnson Family Agreement). Johnson Family Agreement was signed by all five of Dora's children and was the result of a family meeting with Alan Nikolaisen, a Plentywood certified public accountant, held on July 7, 2005. Among other provisions, Johnson Family Agreement provides that upon its execution by all five children, the operation and management of Johnson Farms, Inc. would be turned over entirely to Floyd and Ray. In exchange for Floyd and Ray receiving Johnson Farms, Inc. stock and land, Ethel and her two sisters would receive cash. After this meeting, Ethel ceased serving as an officer of Johnson Farms, Inc. and delivered a money order to Floyd for $500.00, which represented the remaining funds in the Johnson Farms, Inc. account.
¶5 On June 11, 2009, Johnson Farms, Inc. and Floyd filed a complaint against Ethel in two counts. The first count alleged that in her capacity as secretary of Johnson Farms, Inc., Ethel breached her fiduciary duties by diverting corporate funds to herself and others, and sought an accounting of funds from Ethel during the time she served as secretary. The second count alleged that "[i]n contravention of the written trust agreement," Ethel conferred gifts to herself and other family members. It also sought an accounting of "all monies that should have been included in the trust but were diverted by Ethel Halland."
¶6 Ethel answered Johnson's complaint, denying all claims of wrongdoing. On September 3, 2009, she submitted written discovery requests to Johnson, seeking the factual background and documentation in support of the allegations contained in his complaint. After Ethel filed a motion to compel discovery approximately six months later, Johnson answered Ethel's discovery requests. His answer did not include much of the requested information, and he failed to produce supporting documents. Instead, he responded that "discovery [was] continuing" and "documents [ ] being subpoenaed." On November 16, 2010, Ethel sought supplementation of Johnson's discovery responses; Johnson did not respond.
¶7 Johnson also submitted discovery requests to Ethel, requesting she produce "all records in [her] possession pertaining to Johnson Farms, Incorporated." According to Johnson, on October 15, 2010, Ethel produced bank statements of Johnson Farms, Inc. from December 16, 2004 through September 21, 2005, as well as a check register from April 8, 2003 to September 1, 2005. Ethel maintained she also produced minutes from various corporate meetings, correspondence from previous family counsel regarding stock certificate transfers, an opinion letter from Mr. Nikolaisen regarding estate planning for Dora, and the Johnson Family Agreement.
¶8 On March 30, 2011, Ethel moved for summary judgment in the District Court, arguing that Johnson's complaint was barred by the statute of limitations and, further, that no genuine issues of material fact existed to preclude judgment in Ethel's favor. A hearing was set for September 14, 2011. Just prior to the hearing, Johnson filed two affidavits with the court. The first was an affidavit of Tami Maltese, a certified public accountant (CPA) who reconstructed the income and expense for Johnson Farms, Inc., as well as the shareholders' respective shares. According to her spreadsheets, the corporation earned $131,676.00 from 1996 through 2005, and Floyd's share of that net income was $47,101.38. Johnson also filed an affidavit of Floyd, in which he maintained that he never received a dividend or other payment from Johnson Farms, Inc. since 1997.
¶9 At the hearing, Johnson argued Ethel was equitably estopped from asserting a statute of limitations defense, a theory he had not yet raised in this case. The court gave the parties the opportunity for supplemental briefing on the point. In addition to arguing in his brief the doctrine of equitable estoppel, Johnson notably clarified that he was pleading a breach of contract claim, subject to an eight-year statute of limitations.
¶10 On November 14, 2011, the District Court granted Ethel's motion, finding that Ethel successfully established there were no material issues of fact and that the CPA only identified a profit dollar amount, but nothing further to establish any liability by Ethel. The District Court determined that equitable estoppel did not toll the statute of limitations; however, it did not discuss the ...