Court Opinion

ID: 2754048
Source: CourtListenerOpinion
Date Created: 2014-11-21 16:08:40.554106+00
Date Added: 2024-06-11T12:18:42.476628
License: Public Domain

$44,897.23 for breach of the real property sale agreement, and (3)
                $33,340.82 for unpaid wages and unused vacation time. The district court
                denied Maese's request for attorney fees, finding that his offers of
                judgment failed to comply with NRS 17.115 and NRCP 68. This appeal
                and cross-appeal followed.
                             Maese and Ben Kulick were investment partners in a biodiesel
                enterprise. Paulk was chief executive officer of New-Cora and controlled a
                majority of its shares. Around January 1, 2007, New-Corn exchanged
                some of its own shares for shares that Maese and Kulick held in the
                biodiesel enterprise, making Maese and Kulick New-Com shareholders.
                Additionally, Kulick negotiated employment with New-Com for himself
                and Maese.
                             In mid-2007, Paulk and Kulickl negotiated selling Paulk's
                shares back to New-Corn with the expectation that New-Com would be
                sold to a third party. Paulk and Kulick also executed an MOU providing
                that if the envisioned sale did not occur, Paulk would elect to either sell
                his shares to New-Com or purchase the shares owned by Kulick and
                Maese. Further, if Paulk opted to purchase Maese's and Kulick's shares,
                both Maese and Kulick would be given employment contracts.
                             The third-party sale did not materialize, so on October 1,
                2007, Paulk exercised his option to purchase the shares owned by Maese

                       'Here and in regard to the subsequent MOU, Paulk was acting as an
                individual and trustee controlling a substantial portion of New-Corn's
                shares, while Kulick acted on behalf of New-Com as its chief operating
                officer.

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                   and Kulick. Paulk provided promissory notes reflecting the sale, but he
                   never produced employment agreements.
                               In the fall of 2007, Maese contracted to purchase a second
                   home in Idaho, intending to pay for it with the proceeds from the sale of
                   his New-Corn shares. Since the sale had not yet occurred, Paulk agreed to
                   have New-Corn purchase the home and allow Maese to repay New-Corn
                   with the proceeds from selling his shares. New-Corn did in fact purchase
                   the house, and Maese signed a written contract memorializing the
                   agreement. In June 2008, Paulk fired Maese. Paulk and New-Corn never
                   purchased Maese's shares; as a result, Maese was never able to purchase
                   the Idaho property from New-Corn with the proceeds from his shares.
                               On appeal, we are asked to determine whether (1) the district
                   court findings of fact and conclusions of law are irreconcilably
                   inconsistent, (2) Maese can enforce the MOU Kulick and Paulk signed,
                   and (3) sufficient evidence supports the district court award for unpaid
                   wages and unused vacation time. On cross-appeal, we are asked to
                   determine whether the district court abused its discretion in denying
                   Maese's request for attorney fees. We affirm in part because we conclude
                   that (1) no irreconcilable inconsistency exists in the district court's
                   findings, (2) Maese can enforce the MOU, (3) sufficient evidence supports
                   the award for unpaid wages, and (4) the district court did not abuse its
                   discretion in denying Maese's request for attorney fees. We reverse in
                   part because there is insufficient evidence to support the district court's
                   award for unused vacation time.
                   The district court's findings of fact and conclusions of law are not
                   irreconcilably inconsistent
                               First, appellants claim that the district court's findings are
                   inconsistent because the district court found both that none of the

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                appellants made an intentional or negligent misrepresentation or omission
                to Maese and that New-Corn and Paulk never disclosed to Maese that they
                did not plan to buy out his New-Corn shares in accordance with the MOU.
                The first finding was related to Maese's tortious misrepresentation claims
                on which appellants prevailed. The second finding relates to appellants'
                defense that the MOU could not be enforced without a signed agreement
                between Maese and New-Corn. In light of the district court's finding that
                Maese was a third-party beneficiary to the MOU, these findings are not
                irreconcilably inconsistent. Even if a contradiction resulted from the
                district court's finding that no misrepresentation occurred, that finding
                benefited appellant. Thus, the alleged error, if any, was harmless and
                would not justify reversal. See Sheraden v. Black, 752 P.2d 791, 795 (N.M.
                Ct. App. 1988).
                            Second, appellants argue that there is a contradiction between
                the district court's findings that Paulk and New-Corn entered the MOU
                and that Paulk and New-Com did not intend to follow the MOU in
                accomplishing the New-Com share buyout. Appellants contend that these
                findings show that the district court found a contract existed even though
                there was no mutual intent to perform under the terms of the agreement.
                Although mutual assent is required to form a valid contract, May v.
                Anderson, 121 Nev. 668, 672, 119 P.3d 1254, 1257 (2005), appellants'
                argument lacks merit because a party's undisclosed, subjective intent is
                immaterial when determining the existence of a contract.    James Hardie
                Gypsum (Nevada) Inc. v. Inquipco, 112 Nev. 1397, 1402, 929 P.2d 903, 906
                (1996), overruled on other grounds by Sandy Valley Assocs. v. Sky Ranch
                Estates Owners Ass'n, 117 Nev. 948, 955 n.6, 35 P.3d 964, 968-69 n.6
                (2001). "'[S]elf-serving testimony of the parties as to their subjective

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                 intentions or understandings is not probative evidence of whether the
                 parties entered into a contract.'" Id. (quoting Mullen v. Christiansen, 642
                 P.2d 1345, 1350 (Alaska 1982)). There is no inconsistency in these
                 findings because Paulk's and New-Corn's subjective intent not to perform
                 under the contract is irrelevant to whether a contract was formed. 2
                                Finally, appellants argue that the district court's findings are
                 inconsistent in that the court found an enforceable contract while also
                 finding that eventually Paulk and New-Com no longer intended to perform
                 under the MOU. Appellants contend that this is an implied finding that
                 the parties abandoned the contract. As detailed below, although parties
                 can abandon a contract "when both parties depart from the terms of the
                 contract by mutual consent,"      J.A. Jones Constr. Co. v. Lehrer McGovern
                 Bovis, Inc.,     120 Nev. 277, 292, 89 P.3d 1009, 1019 (2004), such
                 abandonment is not always a defense to a third-party beneficiary's claim.
                 Maese was entitled to enforce the MOU as a third-party beneficiary
                                Appellants first argue that Maese cannot enforce the MOU
                 because he was not a third-party beneficiary. Whether a claimant is an
                 intended third-party beneficiary is reviewed de novo. See Benchmark Ins.
                 Co. v. Sparks, 127 Nev. , , 254 P.3d 617, 620 (2011). To obtain
                 third-party beneficiary status, "there must clearly appear a promissory
                 intent to benefit the third party, and ultimately it must be shown that the
                 third party's reliance thereon is foreseeable." Lipshie v. Tracy Inv. Co., 93
                 Nev. 370, 379, 566 P.2d 819, 824-25 (1977) (citations omitted).

                       2Appellants   make similar arguments regarding their intent to make
                 Maese a third-party beneficiary to the MOU. As above, the subjective
                 intent of the parties is irrelevant.

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                               Maese was a third-party beneficiary here. First, there was
                 clearly a promissory intent to benefit Maese. The MOU states that "Paulk
                 agrees to buyout [sic] Kulick's and Maese's shares of New-Corn, Inc.,
                 12.9777% and 5.18% respectively, for a total consideration of $7,786,000
                 and $3,108,000 respectively." This demonstrates New-Com's and Paulk's
                 intent that their promises benefit Maese. Second, Maese demonstrated
                 actual reliance and that the reliance was foreseeable. Maese actually
                 relied on the agreement by purchasing property in Idaho, intending to use
                 proceeds from the sale of his New-Corn shares. That reliance was
                 foreseeable because New-Com agreed to buy the property for Maese and
                 agreed that Maese could use the proceeds from the sale of his shares to
                 buy the Idaho property from New-Com. Therefore, Maese was a third-
                 party beneficiary.
                               Appellants further contend that the MOU is unenforceable
                 because no consideration was given to Paulk in exchange for him
                 exercising the option to buy out Kulick and Maese. We conclude that the
                 option was enforceable and that there is substantial evidence that Paulk
                 received consideration.
                               An enforceable contract requires "an offer and acceptance
                 meeting of the minds, and consideration."        Certified Fire Prot., Inc. v.
                 Precision Constr., Inc., 128 Nev.              , 283 P.3d 250, 255 (2012)
                 (internal quotation marks omitted). "[W]hether a contract exists is [a
                 question] of fact."   Id. (alterations in original) (internal quotation marks
                 omitted). An option becomes irrevocable, and thus fully enforceable, after
                 acceptance.    Mohr Park Manor, Inc. v. Mohr, 83 Nev. 107, 111-13, 424
                 P.2d 101, 105 (1967). Paulk had the option of purchasing Kulick's and
                 Maese's shares or having New-Com purchase his own shares. That option

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                 became irrevocable and thus enforceable upon his election to purchase
                 Kulick's and Maese's shares in the October 1 letter. Further, the district
                 court determined that the terms of the MOU and the October 1 letter
                 formed an enforceable agreement, necessarily supported by consideration.
                 That finding is supported by substantial evidence because the terms
                 allowed Paulk himself to choose whichever option he preferred, and
                 depending on his choice, he would receive either money from New-Corn or
                 New-Com shares from Kulick and Maese. Therefore, the option here was
                 enforceable because it became irrevocable after the October 1 letter and
                 there is substantial evidence that it was supported by consideration.
                             Finally, appellants argue that Maese cannot enforce the MOU
                 because Paulk and New-Corn abandoned the agreement. We conclude that
                 abandonment is not a valid defense against Maese.
                             Parties may abandon a contract's terms by mutual consent,
                 either express or implied. JA. Jones Constr. Co., 120 Nev. at 292, 89 P.3d
                 at 1019. Parties to a contract benefitting a third party may modify their
                 duties to an intended beneficiary, but "[s]uch a power terminates when the
                 beneficiary, before he receives notification of the discharge or modification,
                 materially changes his position in justifiable reliance on the promise"
                 Restatement (Second) of Contracts § 311(3) (1981). Here, Maese arranged
                 to buy the Idaho property in reliance on the promises contained in the
                 MOU and the October 1 letter without knowledge that Paulk and New-
                 Com had abandoned the MOU terms. As such, appellants cannot use
                 abandonment as a defense to Maese's claims as a third-party beneficiary.
                 There is substantial evidence to support the district court's award for
                 unpaid wages but not its award for unused vacation time
                            Appellants argue that substantial evidence does not support
                 the district court's award of unpaid wages and unused vacation time

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                 because there was no express employment agreement. In regard to wages,
                 Maese alleged that Paulk promised to pay him for 6 weeks after his
                 termination. Paulk argues that there was no employment agreement, and
                 absent such an agreement Maese is not entitled to payment for hours not
                 actually worked.
                             An employee seeking to enforce an employment agreement has
                 the burden of showing that an express or implied employment agreement
                 exists. Am. Bank Stationery v. Farmer, 106 Nev. 698, 701, 799 P.2d 1100,
                 1101-02 (1990). The existence of a contract is a factual finding reviewed
                 for clear error and substantial evidence.   May, 121 Nev. at 672-73, 119
                 P.3d at 1257. Here, Maese testified that he and Paulk agreed that
                 Maese's wages would continue. Paulk admitted at trial that he agreed
                 that Maese's wages would continue to be paid for a reasonable time until
                 Maese found a new job. This is sufficient evidence to support the district
                 court's finding that there was an agreement to pay Maese for 6 weeks
                 following his termination. Therefore, we affirm the district court's $10,692
                 award for unpaid wages.
                             Conversely, there is no evidence in the record regarding any
                 agreement that Maese would be paid for unused vacation time, and Maese
                 cites no authority for the proposition that an employee is entitled to
                 payment for unused vacation time upon termination absent an express
                 agreement. Further, this court has indicated that an employment
                 agreement dictates the terms of payment for unused sick leave upon a
                 public employee's termination.    Pressler v. Reno, 118 Nev. 506, 512, 50
                 P.3d 1096, 1100 (2002). We are presented with no reason to treat unused
                 vacation time differently. Based on the foregoing, the district court's
                 award of $22,648.82 for unused vacation time is not supported by

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                 substantial evidence. The portion of the judgment awarding Maese
                 unused vacation time is reversed, and the case is remanded to the district
                 court to recalculate interest for the remaining award.
                 The district court did not abuse its discretion in denying Maese's request
                 for attorney fees
                               On cross-appeal, Maese argues that the district court erred by
                 denying his motion for attorney fees.
                             This court reviews a district court's decision to grant or deny
                 attorney fees for an abuse of discretion.   Albios v. Horizon Cmtys., Inc.,
                 122 Nev. 409, 417, 132 P.3d 1022, 1027-28(2006). This court reviews the
                 interpretation of statutes authorizing attorney fees de novo. Id. at 417,
                 132 P.3d at 1028. NRCP 68 and NRS 17.115 allow litigants to make an
                 offer of judgment. The offeror can recover post-offer costs and fees if the
                 offeree rejects an offer of judgment and subsequently fails to obtain a more
                 favorable judgment. NRS 17.115; NRCP 68. An offeror may make
                 apportioned offers to multiple parties and may require acceptance by all
                 parties before the offer becomes binding. NRS 17.115(7); NRCP 68(b).
                             Here, Maese made separate offers to Paulk, the Trusts, and
                 New-Com in the amount of $3,100,000 each. According to the district
                 court, Maese's offers did not comply with NRCP 68 and NRS 17.115.
                 Maese argues that the district court erred by reading NRCP 68 and NRS
                 17.115 to require that the offers be apportioned between the offerees and
                 be contingent on acceptance by all offerees. Maese is incorrect. The
                 district court concluded that Maese's failure to apportion and require
                 acceptance by all offerees effectively made his offer of judgment $9.3
                 million because $3.1 million was required from each defendant to settle all
                 claims. Even if such an approach is permissible, the $9.3 million offer to
                 settle was not surpassed by the $4,323,277 judgment in Maese's favor.

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                Therefore, the district court did not abuse its discretion in denying
                Maese's request for attorney fees.
                            Accordingly we
                            ORDER the judgment of the district court AFFIRMED IN
                PART, REVERSED IN PART, AND REMANDED.

                                                                              J.
                                                     Pickering

                                                                          ,   J.
                                                     Parraguirre

                                                     Saitta

                cc: Hon. Elizabeth Goff Gonzalez, District Judge
                     Greenberg Traurig, LLP/Las Vegas
                     Jolley Urga Wirth Woodbury & Little
                     Eighth District Court Clerk

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