Summary 2006 WY 161
Summary of Decision issued December 28, 2006
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Case Name: Morrison, Smith & Hansen v. Clay & Clay
Citation: 2006 WY 161
Docket Number: 05-281 & 06-21
Appeal from the
Representing Appellants (Plaintiffs): Judith Studer and Rick L. Koehmstedt of Schwartz, Bon, Walker & Studer, LLC,
Representing Appellees (Defendants/Counterclaimants): Patrick Murphy of Williams, Porter, Day & Neville, P.C.,
Issue: The Trust identified these issues for review: (1) Whether an unsigned arbitration award that violated Wyoming Statutes and the parties’ agreement be vacated. (2) Whether clear violations of the code of ethics governing the arbitration [constitute] “undue means” and/or “misconduct” that requires the arbitration award be vacated. (A) Whether the court applied an incorrect standard by requiring the plaintiffs show actual prejudice by clear and convincing evidence. (B) Whether the court abused its discretion in not allowing Professor Burman to opine the arbitrator’s failure to make the necessary disclosures as a violation of the code of ethics. (3) Whether the arbitrators exceeded their authority. And, if so, did such action require the award be vacated. (A) Whether the failure to conduct the arbitration in accordance with the American arbitration Association Rules, as agreed to by the parties, constituted a basis to vacate the award. (B) Whether the use of minority and marketing discounts to determine value of the stock, in violation of the stock purchase agreement, exceed the authority of the arbitrators, and therefore require the court to vacate the award. (4) Whether the court improperly awarded attorney fees. (A) Whether the limited provision in the settlement agreement that allowed for recovery of attorney fees applies. (B) Whether defendants’ failure to identify and segregate attorney fees and costs prohibited an award of fees.
Two issues from the Clays which the Court deemed pertinent to the resolution: (1) Whether the appeal was moot because Appellants failed to challenge the district court’s determination that they had contractually waived their right to appeal the arbitration award. (2) Whether, if the appeal is moot, Appellants’ waiver of any right to appeal the arbitration award nonetheless requires summary affirmation of the district court’s order.
Holding: Morrison, Smith and Hansen, in their representative capacities as Trustees of the Newell B. Sargent 1990 Living Trust, appealed a district court order confirming an arbitration award. The district court affirmed the award on its merits and ruled that the parties had agreed that the arbitration award would be final and binding. The court also determined that the parties had waived the right to challenge the selection and identity of the arbitrators and the arbitration process. On appeal, the Trust did not challenge those rulings. Because those rulings are dispositive, the issues raised concerning the arbitration award are moot. The Trust also appeals from the district court’s order granting attorneys’ fees to Appellees, the Clays. Finding no abuse of discretion, the Court affirmed the award of attorneys’ fees.
No. 05-281 Arbitration Award: The Court reviewed the Findings of Fact, Conclusions of Law, and Judgment from the district court and highlighted the language which made clear the parties agreed to conduct a final binding arbitration. The parties expressly waived and released any challenge to the enforceability of any arbitrators’ award or decision based on the arbitrator selection process or the identity of the arbitrators, or the submission of the matters to arbitration under the Stock Purchase Agreement. Further, any dispute arising out of or relating in any way to the Agreement would be resolved by a majority of the arbitrators agreed to in the Agreement through final, binding and non-appealable arbitration in accordance with the arbitration rules. The parties agreed the arbitration agreements were fully enforceable and binding, and that in the event of a dispute, all issues relating to the procedures for the arbitration, discovery, and management of the arbitration process would be resolved by the arbitrators. The Trust challenged the district court’s decision confirming the arbitration award. However, the Trust did not dispute the district court’s findings that the Trust breached the settlement agreement by refusing to comply with the provision providing that the decision before the arbitrators would be final and binding on all parties. Nor did the Trust contest the district court’s finding that it had waived the right to seek judicial review of the identity of and selection of the arbitrators or the arbitration process. Citing Ultra Resources, Inc. v. McMurry Energy Co., the Court agreed. The Court held that presenting the argument in a reply brief was not equivalent to framing the issues in an opening brief. In the instant case, the Trust failed to challenge dispositive rulings of the district court. As a result, all issues presented by the Trust concerning the arbitration award were moot and the appeal was dismissed.
No. 06-21 Attorney Fees: The Court reviews a district court’s decision awarding attorneys’ fees under an abuse of discretion standard. The Trust bore the burden of establishing that the trial court abused its discretion. The Trust reasoned that because the district court action was not arbitration, the agreement did not authorize an award of attorney fees. The Court rejected that reasoning because the obvious intent of the Settlement Agreement was to foreclose future litigation between the parties and to award attorney fees to the prevailing party in any dispute involving the Settlement Agreement. The Court reviewed the evidence provided by the Clays in segregating attorneys’ fees and establishing the reasonableness of those fees and determined the district court had ample evidence with which to make their decision.
Affirmed.
J. Burke delivered the decisions.
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