Thomas Grady Photography v. Amazing Vapor , 301 Neb. 401 ( 2018 )


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  • Nebraska Supreme Court Online Library
    www.nebraska.gov/apps-courts-epub/
    11/16/2018 09:11 AM CST
    - 401 -
    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.
    

Document Info

Docket Number: S-17-818

Citation Numbers: 301 Neb. 401

Filed Date: 10/26/2018

Precedential Status: Precedential

Modified Date: 11/16/2018