Opinion ID: 2520297
Heading Depth: 2
Heading Rank: 2

Heading: did the district court properly instruct the jury?

Text: The standard of review for issues concerning jury instructions is limited to a determination of whether the instructions, as a whole, fairly and adequately present the issues and state the law. Silver Creek Computers, Inc. v. Petra, Inc., 136 Idaho 879, 882, 42 P.3d 672, 675 (2002). If the jury instructions adequately present the issues and state the applicable law, no error is committed. Leazer v. Kiefer, 120 Idaho 902, 904, 821 P.2d 957, 959 (1991). However, reversible error occurs when an instruction misleads the jury or prejudices a party. Howell v. Eastern Idaho R.R., Inc., 135 Idaho 733, 740, 24 P.3d 50, 57 (2001). To show error in the special verdict form, Durkin must show the jury was incorrectly instructed on the law at issue or the special verdict form confused the jury. Le'Gall v. Lewis County, 129 Idaho 182, 185, 923 P.2d 427, 430 (1996).
Durkin argues the district court erred in instructing the jury on the issue that an agent forfeits his compensation in the event of a breach of fiduciary duty. He contends Instructions 23 and 24 were given in error. Durkin asserts the Respondents owed one million dollars to the bankrupt Dakota, but all other claims were not presented to the jury because of the automatic stay. Durkin asserts if any breach of fiduciary duty occurred, it occurred on the Federal Way project under a different contract and after the Meridian project bonus had been earned. Instruction 23 provided: It is general rule that an agent who breaches his fiduciary duties may forfeit his entire compensation. However, the rule is not inflexible. After considering the facts of this case, it is within your discretion to adjust the amount of the forfeiture. It making your determination you should consider such factors as the willfulness of the breach, the potential for or actual harm to the principal and whether the agent completed a divisible position [sic] of his contract duties before the breach occurred for which compensation can be determined. Instruction 24 provided: If you find from your consideration of all the evidence that Defendant Larry Durkin is entitled to be paid for his services rendered to the Plaintiff then you must determine whether or not Defendant Larry Durkin breached his fiduciary duty to the Plaintiff. If you find that Defendant Larry Durkin breached his fiduciary duty to the Plaintiff then you must determine whether or not Defendant should forfeit his entire compensation or to adjust the amount of the forfeiture taking into account the willfulness of the breach, the potential for or actual harm to the Plaintiff and whether Defendant, Larry Durkin, completed a devisible [sic] portion of his contract duties before the breach occurred for which compensation can be determined. As stated above, Dakota's counterclaims are not stayed by operation of filing for bankruptcy. Seiko Epson Corp., 190 F.3d at 1364; Orpheum Theater Company, Ltd., 151 B.R. at 563. More important, however, is Dakota's and Durkin's decision to pursue the bonus counterclaim on the first day of trial. On the opening day, the parties revisited the issue regarding the bankrupt Dakota's counterclaims. Counsel for Dakota stated: I intend[ ] to pursue the Meridian offset, which is the bonus that we have claimed in connection with the Meridian transaction. The district court accepted Dakota's and Durkin's request. We find the district court properly heard the Meridian project counterclaim. Durkin next asserts Instruction 24 was incorrect because the fraudulent activity and breach of fiduciary duty presented on appeal did not relate to the Meridian project. However, the jury found neither Dakota nor Durkin had proved they were entitled to any bonus claimed. Therefore, whether they should forfeit the bonus because of a breach of any fiduciary duty is superfluous. Any perceived mistake in the jury instruction does not necessarily require a new trial. Hook v. B.C. Inv., Inc., 125 Idaho 453, 455, 872 P.2d 716, 718 (1994). We find the error in giving Instructions 23 and 24 was harmless.
Durkin argues the district court erred in including the issue of leasing fees due Durkin or his companies in the special verdict form. He argues that this claim had not been pursued by the parties and had been stayed because of Dakota's bankruptcy. The parties agreed the only claim being pursued by Durkin and/or Dakota was the million dollar bonus from the Meridian project. None of the parties tried the leasing fee claims. We agree with Durkin that the issue should not have been included in the special verdict form because it was not an issue tried by the parties. However, Durkin fails to show how inclusion of the issue confused the jury. Because there is no evidence the jury was confused, we find the error to be harmless. See Le'Gall, 129 Idaho at 185, 923 P.2d at 430.
Durkin argues the district court confused the jury and prejudiced him by instructing the jury regarding payments due under the promissory note. Durkin asserts that Instruction 7 informed the jury there was ambiguity in the terms of the repayment under the promissory note, but then the court asked the jury in the special verdict form whether the agreed upon payments had been made. Instruction 7 provided: The Court has determined that the terms of the contract are unclear as to the exact meaning of the terms relating to repayment of the promissory note. You must resolve this ambiguity by determining what was intended by the language used. In seeking the intent, you should consider as a whole and the circumstances under which it was made. Language should be given its ordinary meaning, unless it is clear that a special meaning was intended. The intent may also be gathered from any conduct or course or dealings of the contracting persons showing that they construed the doubtful language in the same sense. The special verdict form asked the jury. Did Larry Durkin make payments as agreed on the promissory note? We find nothing confusing or prejudicial with the instruction or the special verdict form. The district court instructed the jury to first resolve the ambiguity as to how the promissory note should be repaid and then asked the jury in the special verdict form if Durkin complied with the agreement. There is nothing prejudicial or confusing about the instructions or the special verdict form on this issue.
Durkin argues the district court erred by asking the jury whether Durkin or Dakota were due any amounts. He asserts the only claim before the jury was the million dollar bonus on the Meridian project. Therefore, by asking whether any amounts were due led the jury to believe they were deciding other issues and thus prejudicing Durkin. The only counterclaim tried by the parties was whether Durkin and/or Dakota were entitled to a million dollar bonus on the Meridian project. The question in the special verdict form did not confuse the jury and therefore, we do not find any error on this issue. Le'Gall, 129 Idaho at 185, 923 P.2d at 430.
Durkin argues the district court erred by including B & D Foods and LJD Holdings in the jury instructions. Durkin asserts the reference to these other companies improperly suggested to the jury that these companies may also have been involved in tortious conduct against VFP. Durkin owned B & D Foods and LJD Holdings. The parties to the consulting agreement were Hermes and LJD Holdings. For some unknown reason Dakota was not the company used in signing the consulting agreement. All the parties understood that it was Dakota performing under the agreement. During the trial, Judi Higley testified that she worked for Durkin and his different companies. She explained that LJD Holdings operated as a food company known as B & D Foods. There was no objection made at trial regarding this testimony. Only Instruction 31 included any reference to LJD Holdings or B & D Foods. The instruction provided: It is an established principle of corporations [sic] law that corporate directors are not liable merely by virtue of their office for fraud or other tortious wrongdoing committed by the corporation or its officers. Instead, to be held liable a corporate director must specifically direct, actively participate in, or knowingly acquiesce in the fraud or other wrongdoing of the corporation or its officers. For Mr. Durkin to be held personally liable for any torts committed by Dakota Co. or LJD Holdings or B & D Foods, the evidence must establish that he specifically directed, actively participated in, or knowingly acquiesced in the fraudulent activities as president of Dakota Co. or LJD Holdings Inc. or B & D Foods. There is nothing confusing or prejudicial with this instruction. It does not state Dakota, LJD Holdings, or B & D Foods committed fraud. It explains to the jury how a corporate officer or director may be held personally liable for their actions. The reference to LJD Holdings is understandable in light of the fact it was the company that entered into the contract to perform on the Meridian and Federal Way projects, although all parties acknowledge it really was Dakota performing the work and with whom the agreement was made. The reference to the other companies in this instruction does nothing more than ensure that in order to find personal liability on Durkin's behalf, he must have specifically directed, actively participated in, or knowingly acquiesced in the fraudulent activity.
Durkin argues the trial court erred in submitting Instruction 17  piercing the corporate veil  to the jury. He contends because the instruction was included in the group of instructions for breach of contract on the promissory note and because the debt on the promissory note was Durkin's personally, there was no reason to give the instruction to the jury. [1] Durkin also argues that the instruction was inappropriate for the other various torts claimed by VFP because personal liability is predicated upon the participation in the wrongful conduct or knowingly approving the wrongful conduct. Durkin contends corporations do not commit torts and therefore piercing the corporate veil theory is inapplicable to holding officers personally responsible for the corporation's involvement in fraudulent activity. Finally, Durkin concludes that even if the jury did not need this instruction in deciding personal liability, its inclusion misled and confused the jury. We disagree. Instruction No. 17 provided: There are times when the form of a corporate entity is disregarded and liability is imposed on a corporation's sole shareholder and president of a corporation. This is called the doctrine of piercing the corporate veil. Two requirements must be met. First, there must be such a unity of interest and ownership that the separate personalities of the corporation and individual no longer exist. Second, there must be a showing that, if the acts are treated as those of the corporation, an inequitable result will follow or that it would sanction a fraud or promote injustice. There are several factors which may be reviewed when considering whether the corporate veil should be pierced. For example, was the sole shareholder acting as president of the corporation; was there a lack of corporate formalities, such as directors' meetings; did the shareholders fail to submit the corporate contract and inventory revisions to he board of directors; and were business transactions completed without approval by any director or officer of the corporation. These factors are not exclusive because the conditions under which corporate entity may be disregarded vary according to the circumstances to the case. Piercing the corporate veil is [t]he judicial act of imposing personal liability on otherwise immune corporate officers, directors, and shareholders for the corporation's wrongful acts. BLACK'S LAW DICTIONARY 1184 (8th ed.2004). The theory allows the fact finder to disregard the corporate form, thereby making individuals liable for corporate debts or making corporate assets reachable to satisfy obligations of the individual. Minich v. Gem State Developers, Inc., 99 Idaho 911, 917, 591 P.2d 1078, 1084 (1979). While Durkin is correct that there was no corporate responsibility involved with the promissory note, he is incorrect about the other claims asserted by VFP. VFP asserted two theories to hold Durkin personally liable for fraudulently depositing and spending two of Fred Meyer's progress payments and the power transformer check. Under the first theory VFP explained to the jury that Durkin should not be allowed to use Dakota's corporation status as a shield to escape liability. That even though the jury may find Dakota committed the fraudulent act they may still find Durkin personally liable if they believe Dakota and Durkin are the same entity as provided in their instructions. In other words, even though Durkin blames Dakota for taking and spending the money, Durkin should be held accountable. Under the second theory of personal liability VFP asked the jury to hold Durkin personally liable for tortiously interfering with a contract between VFP and Fred Meyer even though the checks were run through Dakota's accounts. We find the district court properly allowed VFP to assert its theory under piercing the corporate veil to the jury. Piercing the corporate veil theory allowed the jury to ignore the corporate form, thereby making Durkin personally liable for Dakota's acts. Minich, 99 Idaho at 917, 591 P.2d at 1084. The jury instruction submitted to the jury on this theory was necessary and relevant. The instruction did not prejudice or confuse the jury. The district court did not err in submitting this instruction to the jury.