Opinion ID: 2521371
Heading Depth: 1
Heading Rank: 3

Heading: the district court properly granted this motion for summary judgment

Text: The issues in this case are whether or not: (1) the Agreement is unambiguous, (2) whether the Agreement and the Consent should be read together; (3) whether testimony by the spouse of another shareholder should be admissible as evidence of the parties' intentions; (4) whether language in the Divorce Settlement Agreement acknowledges that the Agreement intended that Marsha receive payment in the event of divorce; and (5) whether THI breached its fiduciary duty to Marsha by failing to state clearly their position that no obligation to Marsha was created in the Agreement in the event of divorce. A. The Agreement is unambiguous with regard to payment to a non-shareholder spouse in the event of divorce, and the parties' intentions can be determined from the plain language of the Agreement. Marsha argues that the Agreement is silent on the subject of payment for a non-shareholder spouse's community property interest in the stock of THI. Consequently, she argues that the Agreement must be read together with the Consent and in light of representations made to the non-shareholder spouses at the time the Agreement was signed to clarify this ambiguity. THI maintains that the Agreement clearly provides for such a circumstance and is unambiguous. As the district court pointed out: The objective in interpreting contracts is to ascertain and give effect to the intent of the parties. The intent of the parties should, if possible, be ascertained from the language of the documents. The determination of a contract's meaning and legal effect is a question of law when the contract is clear and unambiguous. Furthermore, the district court stated: Where a contract is clear and unambiguous, the determination and effect of a contractual provision is a question of law to be decided by the court. Interpretation of an ambiguous document presents a question of fact. The determination of whether a document is ambiguous is itself a question of law, which we resolve by examining the document's relevant provisions to determine whether the contract is reasonably subject to conflicting interpretations. (Internal citations omitted). Section 1.2 of the Agreement states that any transfer or disposition of shares under judicial order, legal process, execution, attachment or enforcement of a pledge, trust or other security interest shall be deemed an involuntary transfer. In addition, Section 11.2 of the Agreement states that in the event that the death of a Shareholder's spouse or the divorce of a Shareholder would result in any shares of the corporation being transferred to someone not a party to this Agreement, then the contemplated transfer of shares will be considered an involuntary transfer and subject to the provisions of this Agreement covering involuntary transfers of shares. A transfer of Lee's 80 shares in THI in divorce proceedings through the Property Settlement Agreement fits the definition of an involuntary transfer since it is a transfer under judicial order and legal process. Additionally, Section 11.2 of the Agreement states specifically that in the event of divorce, the transference of shares will be treated as an involuntary transfer. As such, Section 3.1 of the agreement directs that any purported involuntary transfer of shares shall be treated as an offer to transfer or encumber under this Section 3. In essence, in the event of an involuntary transfer resulting from the divorce of a shareholder, THI has the option to purchase the shares, but is not required to do so. See Sections 3.3 and 3.8 of the Agreement. The Agreement is not ambiguous, nor is it missing terms. The parties' intent can be clearly ascertained from the language of the Agreement. B. Marsha does not have a claim for breach of contract because she is not a party to the Agreement. Marsha argues that the Consent is an integral part of the Agreement, and as a signatory to the Consent she became a party to the Agreement, citing Charpentier v. Welch, 74 Idaho 242, 259 P.2d 814 (1953). The district court differentiated the current case from Charpentier, reasoning that unlike Charpentier, the parties to the various documents are not the same. The parties to the Agreement are the sons and daughter of Garry and Darlene, while the signors of the Consent are their spouses. Although the shareholders' spouses signed the Consent, this does not make them parties to the Agreement. By signing the Consent, Marsha merely acknowledged that in the event of Lee's death or divorce, she agreed to be bound by the terms of the Agreement. There is no language beyond this which would give her rights similar to those she would receive had she been a signatory of the Agreement. Marsha does not have a claim for breach of contract because she is not a party to the Agreement. C. Testimony and evidence offered by Marsha supporting the contention that the parties intended that upon divorce, a monetary value would be given to the non-shareholder spouse cannot be used to vary the terms of an unambiguous document. Marsha offered testimony of RaeAnn Tolley, the spouse of one of the shareholders, as well as the Property Settlement Agreement to support the proposition that it was the intention of the parties at the time the documents were signed that in the event of divorce, payment would be made under the provisions of the Agreement regarding death. THI argues that RaeAnn's testimony is not admissible to vary the terms of an unambiguous document. The parol evidence rule has been applied as follows: If the written agreement is complete upon its face and unambiguous, no fraud or mistake being alleged, extrinsic evidence of prior or contemporaneous negotiations or conversations is not admissible to contradict, vary, alter, add to or detract from the terms of the contract. Belk v. Martin, 136 Idaho 652, 657, 39 P.3d 592, 597 (2001). The Agreement is unambiguous. It cannot be changed or interpreted by reference to matters outside the text. Conversations and comments made leading up to the signing of the Agreement cannot be used to change the plain language of the Agreement. Regarding the statements made in the Property Settlement Agreement, the district court correctly concluded that the Property Settlement Agreement is not binding on THI which was not a party to that Agreement. D. THI did not enter into any agreement, or make any representation to pay plaintiff her community property interest in Lee's shares in the event of divorce. Based upon Marsha's own testimony, neither THI nor any of its shareholders made any representations or entered into any agreement with her that in the event that she and Lee divorced, that she would be paid for her community interest in the THI shares held in Lee's name. E. The district court properly ruled that plaintiff's breach of the covenant of good faith and fair dealing claim should be dismissed as a matter of law. The implied-in-law covenant of good faith and fair dealing operates to protect the right of the parties to an agreement to receive the benefits of the agreement that they entered into. Metcalf v. Intermountain Gas Co., 116 Idaho 622, 627, 778 P.2d 744, 749 (1989). If a party is denied the right to the benefits of the agreement they entered into, then the covenant of good faith and fair dealing, which is implicit in the agreement, is breached. Id. Marsha was not a party to the Agreement. The district court correctly ruled that her claim of breach of covenant of good faith and fair dealing claim should be dismissed. F. The district court appropriately ruled that Marsha's breach of fiduciary duty claim should be dismissed as a matter of law. To establish a claim for breach of fiduciary duty, plaintiff must establish that defendants owed plaintiff a fiduciary duty and that the fiduciary duty was breached. Mitchell v. Barendregt, 120 Idaho 837, 820 P.2d 707 (1991). Marsha argues that as members of the same family, the shareholders of THI were required to clearly state to her that no payment obligation was created in the Agreement in the event of her divorce from Lee. Although, as Marsha states, no one explicitly explained to her that a payment would not necessarily be made in the event of her divorce, by signing the Consent, she explicitly agreed that the provisions of said Agreement are fair and reasonable, and that he/she agrees to accept payments provided therein in lieu of and as consideration for any community interest in such shares .... and agreed to be bound thereby. The Agreement is unambiguous with regard to the options given to THI in the event of divorce, and a careful reading of the Agreement by Marsha would have revealed this. There is no evidence or allegation by Marsha of misrepresentations, concealment of facts, or fraud. Any misunderstanding of the payment provisions of the Agreement were due to a misunderstanding of the Agreement's provisions rather than any breach of fiduciary duty on the part of THI.