Court Opinion

ID: 2643073
Source: CourtListenerOpinion
Date Created: 2013-11-20 01:03:12.363685+00
Date Added: 2024-06-11T09:01:23.334498
License: Public Domain

November 19 2013

                                         DA 13-0119

              IN THE SUPREME COURT OF THE STATE OF MONTANA
                                         2013 MT 348

ROBERT OWEN,

               Plaintiff, Appellee and Cross-Appellant,

         v.

DON SKRAMOVSKY,

               Defendant, Appellant and Cross-Appellee.

APPEAL FROM:           District Court of the Eleventh Judicial District,
                       In and For the County of Flathead, Cause No. DV 10-1308(B)
                       Honorable Robert B. Allison, Presiding Judge

COUNSEL OF RECORD:

                For Appellant:

                       Stephanie M. Breck, Justin G. Breck; Kaplan & Breck, PC; Columbia
                       Falls, Montana

                For Appellee:

                       Tammi E. Fisher, Noah H. Bodman; Fisher & Bodman, PC; Kalispell,
                       Montana

                                                  Submitted on Briefs: October 2, 2013
                                                             Decided: November 19, 2013

Filed:

                       __________________________________________
                                         Clerk
Justice Patricia O. Cotter delivered the Opinion of the Court.

¶1     Don Skramovsky purchased a Mission Foods distributorship from Robert Owen in

April 2010. While Skramovsky paid Owen $10,000 down to be applied to the full

purchase price of the distributorship, he took over operation of the distributorship without

paying Owen the remaining balance. Owen sued Skramovsky in the Eleventh Judicial

District Court of Montana for breach of contract and unjust enrichment. Skramovsky

counter-claimed that Owen had fraudulently and negligently misrepresented aspects of

the business to Skramovsky resulting in Skramovsky’s “uninformed” purchase.

Following a bench trial, the District Court determined Skramovsky had been unjustly

enriched by the transaction and awarded Owen $81,325 plus reasonable costs.

Skramovsky appeals and Owen cross-appeals. We affirm.

                                         ISSUES

¶2     Did the District Court err in finding that Skramovsky agreed to buy the

distributorship for $130,000?

¶3     Did the District Court err in finding that Skramovsky was unjustly enriched?

¶4     Did the District Court apply the proper measure of damages in awarding Owen

$81,325 plus costs for his unjust enrichment claim?

¶5     Did the District Court err in finding that Skramovsky had knowledge of the falsity

of Owen’s representations regarding commissions and the provision of profit and loss

statements?

¶6     Owen presents the following issue on cross-appeal:

                                             2
¶7    Did the District Court improperly apply the law to the facts underlying his unjust

enrichment/quantum meruit claim so as to misstate the damages due him?

                 FACTUAL AND PROCEDURAL BACKGROUND

¶8    Robert Owen owned a Mission Foods distributorship in Flathead County,

Montana, from 1999 until 2010. He purchased the business for $75,000 at a time when

the distributorship was making less than $2,000 per week in gross sales. By the spring of

2009, the distributorship was averaging approximately $8,000 per week in gross sales.

Owen testified that operation of the distributorship provided him with a comfortable

living without the need for additional employment.

¶9    In 2009, Owen decided to sell his business and met with Don and Tammy

Skramovsky in February 2010 to discuss their interest in purchasing the distributorship.

He told the Skramovskys that the business generated approximately $8,000 in weekly

sales and showed them a claim slip purportedly supporting that figure. Owen and the

Skramovskys also discussed the percentage of sales retained by the distributor. Owen

claims he told Skramovskys they would keep 15 – 20% depending on the type of

products sold, while Skramovsky insists Owen said it was a fixed 20 percent.

¶10   Skramovsky asserts that he requested profit and loss statements from Owen during

the February 2010 meeting and Owen agreed to provide them. Owen denies this, saying

he never kept such statements but that he agreed to “put together” some financial

information for Skramovsky’s review. It is undisputed that Owen did not provide any

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kind of financial documentation either before or after completion of the transfer of the

distributorship.

¶11      Owen alleges that the parties discussed a purchase price of $130,000 with $10,000

as a down payment. Skramovsky claims Owen requested $120,000 with a $10,000 down

payment. Owen asserts that at the close of the February 2010 meeting, he believed he

had a deal with the Skramovskys to purchase his business. He nonetheless subsequently

met with Don and Jan Keltner to explore their interest in purchasing the distributorship.

After the meeting to discuss the sale, the Keltners accompanied Owen on the distribution

route serviced by the distributorship. They later offered to purchase the distributorship

for $130,000.

¶12      In March 2010, Owen notified Skramovsky that the Keltners wished to purchase

the business for more money than the Skramovsky had offered. He told Skramovsky that

if he and his wife wished to purchase the distributorship, the price was now $140,000. It

appears that Skramovsky offered $130,000 and Owen accepted.1 Owen informed the

Keltners that the business had been sold. In April and May 2010, Skramovsky gave

Owen two checks for $5,000 each. These checks constituted the $10,000 down payment

discussed in the February meeting.

¶13       Skramovsky applied with Mission Foods for approval to assume control over the

distributorship and signed a distributor agreement with Mission Foods on April 30, 2010.

During May 2010, Skramovsky accompanied Owen on at least six occasions along the

1
    Owen testified to both a $130,000 and a $140,000 sales price. See ¶ 21.
                                              4
distribution route during which Owen instructed Skramovsky in the operation of the

route. Additionally, Owen notified Mission Foods that Skramovsky would be assuming

control. These events took place despite the absence of any written sales contract or

agreement.

¶14    On June 1, 2010, Owen relinquished control and Skramovsky assumed control

over the distributorship. Owen transferred the distributorship’s inventory to Skramovsky

at that time.   On June 7, 2010, Owen presented a proposed written asset purchase

agreement to Skramovsky but Skramovsky refused to sign it because it contained terms

he claims were never discussed. Owen amended the proposed agreement and presented

the amended document to Skramovsky on July 3, 2010. Skramovsky again refused to

sign claiming Owen had not completed Skramovsky’s training.          Owen denies that

Skramovsky requested additional training. Ultimately, the parties never entered into a

written purchase contract, nor did Skramovsky pay Owen any more money toward the

purchase of the distributorship.

¶15    In September 2010, Owen filed a Complaint alleging breach of contract and unjust

enrichment.     Skramovsky answered the Complaint, presented numerous affirmative

defenses and counter-claimed for fraud and negligent misrepresentation.      He sought

punitive damages as well. The District Court conducted a bench trial in late October and

November 2012. The court issued its Findings of Fact, Conclusions of Law, and Order

on December 19, 2012. It concluded Skramovsky had been unjustly enriched by his

acquisition of the distributorship for a $10,000 payment and, as a result, the court

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awarded damages to Owen. It calculated these damages based upon “the value of the

enhancement to Skramovsky’s property as a result of his acquiring the distributorship.”

Skramovsky was ordered to pay Owen $81,325. The court also dismissed Skramovsky’s

counter-claims.

¶16    Skramovsky appeals and Owen cross-appeals.

                              STANDARD OF REVIEW

¶17    We review the factual findings of a district court sitting without a jury to

determine whether they are clearly erroneous. A district court’s findings are clearly

erroneous if they are not supported by substantial evidence, if the court has

misapprehended the effect of the evidence, or if a review of the record leaves this Court

with the definite and firm conviction that a mistake has been committed. We review for

correctness a district court’s conclusions of law. AAA Constr. of Missoula, LLC v.

Choice Land Corp., 2011 MT 262, ¶ 17, 362 Mont. 264, 264 P.3d 709.

¶18    A district court’s determination of damages is also a factual finding which will be

upheld if supported by substantial evidence. We will not overturn such a determination

unless it is clearly erroneous. Watson v. West, 2011 MT 57, ¶ 16, 360 Mont. 9, 250 P.3d

845.

                                     DISCUSSION

¶19    Did the District Court err in finding that Skramovsky agreed to buy the
       distributorship for $130,000?

¶20    Skramovsky denies having agreed to buy Owen’s Mission Foods distributorship

for $130,000 or, for that matter, any other price. He claims that he told Owen he would
                                         6
“consider” paying $130,000 “but only if Owen produced the financial documentation”

requested by Skramovsky, which Owen did not do. Skramovsky further argues in the

alternative that “[e]ven if [he] did agree to purchase the [d]istributorship for $120,000 or

$130,000, he was an uniformed [sic] buyer and therefore, the price is not a ‘fair market

value’ and should not be utilized for any calculation of damages.”

¶21    Owen testified that at the end of the February 2010 meeting with Skramovsky, he

concluded Skramovsky had agreed to purchase the distributorship for the asking price of

$130,000. After being approached by the Keltners, Owen went back to Skramovsky and

told him the Keltners had offered a higher price for the distributorship. After discussing

this with Skramovsky, Owen concluded that Skramovsky had agreed to purchase the

distributorship for the higher price of $140,000. Owen therefore told the Keltners the

distributorship had been sold and was no longer available. Subsequently, Owen began

training Skramovsky on the route, Skramovsky paid $10,000 down, sought and received

approval from Mission Foods to take over Owen’s distributorship and began operating

the business.

¶22    It is well established that it is exclusively within the province of the trier of fact,

and not this Court, to weigh evidence, including conflicting evidence, and judge the

credibility of the witnesses. We have repeatedly held that we will not second-guess a

district court’s determinations regarding the strength and weight of conflicting testimony.

St. James Healthcare v. Cole, 2008 MT 44, ¶ 43, 341 Mont. 368, 178 P.3d 696, Varano v.

Hicks, 2012 MT 195, ¶ 9, 366 Mont. 171, 285 P.3d 592.

                                          7
¶23    The District Court was presented with conflicting evidence as to the purchase

price and the existence of an agreement between the parties. It was the District Court’s

responsibility to determine the credibility of the witnesses and weigh the evidence

presented.   As there was testimony supporting the District Court’s findings that

Skramovsky did agree to purchase the distributorship for $130,000, the findings are not

clearly erroneous nor are the court’s conclusions of law in this regard incorrect.

¶24    Did the District Court err in finding that Skramovsky was unjustly enriched?

¶25    Because the parties did not enter into a written contract, the District Court

concluded the doctrine of unjust enrichment applied. “The doctrine of unjust enrichment

is an equitable means of preventing one party from benefiting from his or her wrongful

acts.” In the absence of a contract between parties, the doctrine of unjust enrichment may

create an implied contract in law. Hinebauch v. McRae, 2011 MT 270, ¶ 29, 362 Mont.

358, 264 P.3d 1098 (citing Estate of Pruyn v. Axmen Propane, Inc., 2009 MT 448, ¶¶ 63-

64, 354 Mont. 208, 223 P.3d 845). Unjust enrichment is simply “[t]he retention of a

benefit conferred by another, without offering compensation, in circumstances where

compensation is reasonably expected.” Black’s Law Dictionary 1536 (Bryan A. Garner

ed., 7th ed., West 1999).

¶26    Skramovsky argues that he did not engage in any “wrongful acts” such as

misconduct or taking advantage of Owen. He maintains that at the time Mission Foods

transferred control of the distributorship to him, he and Owen were still engaged in

negotiations for the sale and that a price had not yet been established nor had Owen

                                          8
provided Skramovsky with requested financial documents. Skramovsky claims he felt

“obligated” under the April 2010 distribution agreement with Mission Foods to operate

the distributorship even though he had not yet purchased it. Therefore, he asserts there

was no “bad act,” nor was it misconduct for him to operate the distributorship despite not

owning it. Relying on the testimony of his expert witness, Donald Kisler, Skramovsky

further asserts that the distributorship had “no value” at the time Skramovsky assumed it

and his assumption of the distributorship “did not give him any ‘benefit’ or value.”

¶27    The District Court found that Owen agreed to sell and Skramovsky agreed to buy

the distributorship but that no “valid, enforceable agreement to this effect [was

consummated] between the parties.”        The court also found that the value of the

distributorship was clearly “above $10,000”—the amount Skramovsky paid to Owen.

¶28    During the three-day bench trial, substantial evidence was presented as to the

value of the distributorship. Some of the evidence indicated the distributorship had no

value while other evidence indicated a substantial and growing value. The court found

that “Skramovsky, by assuming control of the distributorship and deriving all benefit

therefrom without paying any further monies to [Owen] other than the previously

mentioned $10,000 down payment, has clearly taken advantage of Owen.” The District

Court continued that “[s]ince June 1, 2010, Skramovsky has been operating the

distributorship, which has yielded gross weekly sales in excess of $8,000.” Because the

value was greater than the amount paid, and Skramovsky was reaping the benefits of

                                         9
operating the distributorship, the District Court concluded Skramovsky was unjustly

enriched.

¶29   As addressed above, it is for the trier of fact to weigh the evidence and judge the

credibility of the witnesses.   St. James Healthcare, ¶ 43.     As the record contains

substantial credible evidence reflecting a value to the distributorship greater than the

$10,000 paid by Skramovsky, we conclude the District Court’s determination that

Skramovsky was unjustly enriched is not clearly erroneous.

¶30   Did the District Court apply the proper measure of damages in awarding Owen
      $81,325 plus costs for his unjust enrichment claim?

¶31   The District Court determined that the proper measure of damages for Owen’s

unjust enrichment claim was either the quantum meruit value of Owen’s labor and

materials or the value of the enhancement to Skramovsky’s property.           The court

concluded that because there was no evidentiary basis for measuring the quantum meruit

value, “the value of the distributorship, being the enhancement to Skramovsky’s property,

must be determined.”

¶32   To make such a determination, the District Court considered the value attributed to

the distributorship by Owen and Skramovsky when they were negotiating a sale of the

distributorship. Acknowledging that there was no enforceable agreement between the

parties, the court nonetheless found that Skramovsky had agreed to purchase the

distributorship for $130,000.     This “agreed price” was premised upon Owen’s

representation that the distributorship had weekly gross sales of $8,000 which was

subject to a 20% commission structure.       Such sales and commissions would yield
                                       10
Skramovsky a weekly income before expenses of $1,600. Discounting sales receipts

from the first six months of operations during which Skramovsky was learning how to

efficiently operate the distributorship, the District Court focused on testimony revealing

that during 2011, Skramovsky’s commissions averaged $1,124/week, or 70.25% of the

commissions Skramovsky expected to receive for his $130,000 investment. Applying

70.25% to the original purchase price of $130,000, the court concluded that a fair value

for the distributorship was $91,325. This sum was offset by the $10,000 down payment,

resulting in a balance of $81,325.

¶33    Skramovsky does not challenge the District Court’s conclusion that there was

insufficient evidence to determine a quantum meruit value. However he disagrees that a

determination of the enhancement to his property should have been based upon “Owen’s

desired selling price.”    Skramovsky opines that the benefit bestowed upon him has

nothing to do with the price he was originally willing to pay to purchase the

distributorship.

¶34    We conclude based upon the facts of this case that the District Court’s

determination of damages was based upon credible evidence and is not clearly erroneous.

The court crafted a reasonable method for determining the value of the distributorship

which represented the amount by which Skramovsky was unjustly enriched. We affirm

the court’s ruling on this issue.

                                        11
¶35   Did the District Court err in finding that Skramovsky had knowledge of the falsity
      of Owen’s representations regarding commissions and the provision of profit and
      loss statements?

¶36   Skramovsky alleged in his counter-claim that Owen misrepresented the

commission structure applied to the distributorship’s sales by Mission Foods and that

Owen falsely represented he would provide Skramovsky with profit and loss statements

reflecting the distributorship’s financial performance. Owen denies both allegations. To

prevail on a claim of actual fraud or negligent misrepresentation, Skramovsky must

establish, among other things, that he was unaware that Owen’s misrepresentations were

incorrect or untrue. McCulley v. Am. Land Title Co., 2013 MT 89, ¶ 19, 369 Mont. 433,

300 P.3d 679 (setting forth the nine elements of an actual fraud claim); Harpole v. Powell

Cty. Title Co., 2013 MT 257, ¶ 28, 371 Mont. 543, 309 P.3d 34 (setting forth the six

elements of a negligent misrepresentation claim).

¶37   The District Court dismissed Skramovsky’s counter-claim alleging that Owen

engaged in fraud and misrepresentation with respect to commissions. The court found

Skramovsky’s allegations incredible. It concluded that even if Owen did represent that

the commission return was 20%, Skramovsky knew this to be incorrect in light of the fact

that he signed the Mission Foods distributor agreement and initialed the page that set

forth the actual commission structure information. Further, the court found it significant

that Skramovsky was aware that Owen had not ever maintained profit and loss statements

over the years he operated the business. It therefore concluded that Skramovsky could

not satisfy the elements of a claim of actual fraud and negligent misrepresentation.

                                        12
Again, the court made its determination based upon its perception of the credibility of the

witnesses. Having reviewed the record, we cannot conclude that the court’s findings in

this regard are clearly erroneous or that its conclusions are incorrect. We therefore affirm

the court’s dismissal of Skramovsky’s counter-claims.

¶38    CROSS-APPEAL: Did the District Court improperly apply the law to the facts
       underlying his unjust enrichment/quantum meruit claim so as to misstate the
       damages due him?

¶39    Owen asserts the District Court erred in determining the amount by which

Skramovsky was unjustly enriched. He opines that Skramovsky was unjustly enriched by

$120,000—the amount of money the Keltners were willing to pay for the distributorship

($130,000 minus Skramovsky’s $10,000 down payment). Owen further argues, as noted

above, that Skramovsky signed the distribution agreement with Mission Foods and knew

exactly what the commission structure was because it was included in the agreement. For

this reason, Owen alleges the District Court erred in using a 20% commission factor in its

calculation of Skramovsky’s enhanced value.

¶40    While we acknowledge there may be multiple ways in which the court could have

determined the enhanced value enjoyed by Skramovsky, the method utilized by the court

was supported by facts presented to the District Court. And while other facts were also

presented that could have supported a different calculation, it was within the province of

the District Court to weigh the evidence presented and apply it accordingly. The District

Court’s determination is not clearly erroneous and we will not substitute our judgment for

its determinations.

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                                    CONCLUSION

¶41    For the foregoing reasons, we affirm the District Court’s rulings. The evidence

presented at trial supported the court’s findings and the court’s conclusions of law were

correct.

                                               /S/ PATRICIA COTTER

We concur:

/S/ BETH BAKER
/S/ MICHAEL E WHEAT
/S/ BRIAN MORRIS
/S/ JIM RICE

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