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Gunn v. Gunn

Supreme Court of Alaska

February 5, 2016

NEIL D. GUNN, Appellant,
v.
NONA S. GUNN, Appellee.

Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, No. 3AN-09-10497 CI Mark Rindner, Judge.

Allison Mendel, Mendel & Associates, Inc., Anchorage, for Appellant.

Richard W. Maki, David H. Shoup, and Amy E. Kropp, Tindall Bennett & Shoup, P.C., Anchorage, for Appellee.

Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and Bolger, Justices.

OPINION

MAASSEN, Justice.

I. INTRODUCTION

A divorcing couple disputed the nature of their marital interest in a limited liability company. They eventually agreed that the husband would retain the ownership interest but the wife would receive 25% "of the net commission" from certain sales if they occurred within a limited time after the divorce. When a sale occurred the parties disagreed on how to define "net commission": the wife contended that it meant the commission received by the company, but the husband contended that it meant only his share of it. The wife sought discovery in support of her interpretation of the agreement. The husband moved for a protective order, and the parties' attorneys compromised on some limited production. Although the husband produced information that appeared to satisfy the compromise, the wife filed a motion to compel. The court granted the motion to compel and awarded the wife attorney's fees for having had to file it. Then, following an evidentiary hearing, the superior court agreed with the wife's interpretation of the settlement agreement.

The husband appeals both the decision on the merits and the award of attorney's fees on the motion to compel. Because the language of the agreement and relevant extrinsic evidence favor the wife's interpretation of "net commission, " we affirm the superior court's decision of that issue. But because we cannot see the rationale for the superior court's award of attorney's fees to the wife on her motion to compel, we remand that issue to the superior court for reconsideration.

II. FACTS AND PROCEEDINGS

A. The Property Agreement And The Post-Divorce Commission

Neil and Nona Gunn[1] were married in 2005. During the marriage, Neil and a company called Sun Consulting, LLC formed Venture North Group, LLC to broker mergers and acquisitions of other companies. Neil and Sun Consulting each held a 50% interest in Venture North. Neil worked part-time for the company during the marriage while also working for an unrelated corporation. Nona, a stay-at-home mother, also did some work for Venture North, though she was not named as a member on its company documents. At the time the parties separated in September 2009, Venture North had two clients for which it was attempting to broker deals: Brice, Inc., a construction company, and Great Northern Engineering.

In 2010 Neil and Nona divorced and divided their property through what the superior court termed an "amicable settlement" incorporated into the court's findings of fact and conclusions of law. The agreement noted the parties' "disagree[ment] as to whether they jointly ha[d] accrued a 50% marital interest, or whether [Neil] alone ha[d] accrued a 50% interest in the business operations and potential profits of Venture Group North [sic], LLC." And while the parties agreed that "the efforts invested in the business through the date of separation [were] marital earnings, " they disagreed on the extent of those efforts.

Nonetheless, Neil and Nona were able to agree on a division of the Venture North ownership interest. Neil would "retain sole ownership and control of" the interest. But if Venture North succeeded in selling either of its two clients, Brice and Great Northern, "on or prior to June 30, 2011, [Nona] shall be paid 25% of the net commission from each such sale and [Neil] shall ensure that such payment is timely made." If a sale occurred "on or after July 1, 2011 and before January 1, 2013, [Nona] shall be paid 20% of the net commission from each such sale." And for any sale after January 1, 2013, Nona would receive nothing. The agreement also required that Neil give Nona his personal tax returns and those for Venture North for the tax years 2010 through 2012.[2]

In July 2010 Venture North successfully brokered the sale of Brice and received a commission of $1, 875, 000. There is no dispute that Neil's membership interest entitled him to half this commission, and he wrote Nona a check for 25% of his half (that is, 12.5% of the commission earned by Venture North).[3] The check apparently contained a restrictive endorsement.[4]

Nona refused to accept the check; she contended that the agreement entitled her to 25% of Venture North's commission, not 25% of Neil's share of it. Neil provided another check without any restrictions, and Nona accepted it while continuing to maintain she was entitled to more. There followed several years' hiatus in the parties' communications on this issue; Nona then contacted Neil through her attorney in September 2013, reiterating her belief that Neil owed her 25% of Venture North's commission. She told Neil that unless he paid her the additional amount due she would commence discovery related to the dispute, then file a motion to enforce the parties' 2010 agreement. Neil responded that he had satisfied the agreement and that Nona had waived or abandoned any claim to the contrary.

B. The Discovery Dispute And Attorney's Fees Award

In November 2013 Nona served Neil with interrogatories seeking information about the sale of Brice and the commission Venture North received from the sale; asked that Neil produce a broad set of documents; and gave notice of the deposition of Venture North's accountant. Neil responded that "[Nona] ha[d] no right to discovery because the case is closed, and she does not have a judgment on which she is seeking execution."

In December 2013 Neil moved for a protective order. Shortly thereafter Nona's attorney wrote Neil's attorney, stating that the discovery dispute could be resolved if Neil provided "documentation that would show (1) whether [Great Northern] was sold and the timing of such a sale, (2) the actual amount actually received by Venture North for the Brice sale, and when, and (3) [Neil's] tax returns for the other two years in question." But the discovery dispute remained unresolved, and Nona filed an opposition to the motion for ...


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