Opinion ID: 2630381
Heading Depth: 2
Heading Rank: 3

Heading: Did the District Court Err in Dismissing Sullivan Construction's Counterclaim Labeled Willful Misconduct?

Text: One of the claims that Sullivan Construction asserted in its counterclaim against Todd was labeled Willful Misconduct. In that claim, Sullivan Construction alleged: 21. On information and belief, Dave Todd actively solicited business away from Sullivan Construction or otherwise usurped opportunities of Sullivan Construction for his own personal benefit while he was still a member of Sullivan Construction. 22. Dave Todd's actions, as described above, constitute willful misconduct pursuant to I.C. § 53-622(1) because, among other things, they were a breach of his fiduciary duty to Sullivan Construction. At the conclusion of Sullivan Construction's case in chief, Todd and Petersen moved for a directed verdict as to all of Sullivan Construction's claims. The district court granted the motion with respect to the willful misconduct claim and the fraud claim. Sullivan Construction challenges only the directed verdict with respect to its willful misconduct claim. In determining whether a motion for a directed verdict ... should have been granted, this Court applies the same standard as the court that originally passed on the motion. Vendelin v. Costco Wholesale Corp., 140 Idaho 416, 430, 95 P.3d 34, 48 (2004). We exercise free review and do not defer to the findings of the trial court. Id. When doing so, we determine whether there was sufficient evidence to justify submitting the claim to the jury, viewing as true all adverse evidence and drawing every legitimate inference in favor of the party opposing the motion for a directed verdict. Id. A directed verdict is proper only where the evidence is so clear that all reasonable minds would reach only one conclusionthat the moving party should prevail. Gillingham Constr., Inc. v. Newby-Wiggins Constr., Inc., 136 Idaho 887, 892, 42 P.3d 680, 685 (2002). Idaho Code § 53-622(1) provides: A member or manager shall not be liable, responsible or accountable in damages or otherwise to the limited liability company or to the members of the limited liability company for any action taken or failure to act on behalf of the limited liability company unless the act or omission constitutes gross negligence or willful misconduct. The statute does not create a cause of action. It sets forth the burden of proof required for a limited liability company or its member(s) to hold another member or a manager liable for his or her acts or omissions on behalf of the company. Both parties have assumed that the statute applies to Sullivan Construction's willful misconduct counterclaim, and we therefore assume, but do not decide, that it does. [1] The district court gave three reasons for holding that Sullivan Construction had failed to show that Todd's conduct amounted to willful misconduct. First, the district court held that there's no proof of active willful misconduct. Idaho Code § 53-622(1) does not require proof of active willful misconduct. It only requires proof of willful misconduct. In its willful misconduct counterclaim, Sullivan Construction alleged that Todd had breached his fiduciary duty by soliciting business away from Sullivan Construction and by usurping business opportunities of the company to his own benefit. The issue is whether there was sufficient evidence showing that his conduct in doing so amounted to willful misconduct. In this case, that can be answered by comparing the district court's ruling regarding this claim with its ruling regarding the claim for intentional interference with a prospective business advantage. Todd's conduct as it relates to both claims is the same, at least with respect to the jobs performed for Petra, Inc., during the period from April 5 to 22, 2005. [2] After granting a directed verdict on the willful misconduct claim, the district court denied the motion for a directed verdict against Todd on the tort of intentional interference with prospective economic advantage. It held that there was sufficient evidence to submit the intentional interference claim to the jury. We need not recount that evidence because Todd has not challenged the jury's finding that he did commit that tort. In Highland Enterprises, Inc. v. Barker, 133 Idaho 330, 338, 986 P.2d 996, 1004 (1999), we listed the elements of that claim. Those elements are as follows: (1) The existence of a valid economic expectancy; (2) knowledge of the expectancy on the part of the interferer; (3) intentional interference inducing termination of the expectancy; (4) the interference was wrongful by some measure beyond the fact of the interference itself (i.e. that the defendant interfered for an improper purpose or improper means) and (5) resulting damage to the plaintiff whose expectancy has been disrupted. Considering the elements of the intentional interference claim, it was inconsistent for the district court to hold that there was sufficient evidence to prove that claim, but not sufficient evidence to show that Todd's actions constituted willful misconduct. Both claims were based upon the same conduct. Intentionally interfering with Sullivan Construction's prospective business advantage is willful misconduct. Second, the district court held that there was no proof that Todd himself usurped any business opportunities of Sullivan Todd Construction. As mentioned above, after the district court granted a directed verdict on the willful misconduct claim, it denied a directed verdict on the intentional interference claim. In doing so, the court held that there was sufficient evidence to show that Todd and Petersen were acting in concert to commit that tort. We need not recount the evidence showing they had acted in concert because the jury found that they had and its finding is not challenged on appeal. Again, the court's rulings were inconsistent. If there was sufficient evidence to show that Todd and Petersen were acting in concert to interfere with Sullivan Construction's prospective business advantage with respect to the jobs performed for Petra, Inc., then there was sufficient evidence to show that Todd usurped those business opportunities of Sullivan Construction. As we stated in Helgeson v. Powell, 54 Idaho 667, 682, 34 P.2d 957, 963 (1934): The law seems to be well settled that, where several people actively participate in any manner in the commission of a tort, not only the actual actor or assailant is liable but all others who aid, abet, counsel or encourage the wrongdoer by words, gestures, looks or signs are equally liable with him to the injured person. Finally, the district court held that there's no proof of damages. The damages that Sullivan Construction could recover would have included at least its lost profits from the Petra, Inc., jobs. As explained above, the district court wrongfully precluded Sullivan Construction from presenting evidence of those damages. The district court erred in granting a directed verdict with respect to Sullivan Construction's willful misconduct claim. We therefore vacate the directed verdict dismissing that claim and remand this case for a new trial on it.