Summary 2007 WY 36

Summary of Decision issued March 5, 2007

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Case Names: Speight, McCue & Assoc., PC, v. Wallop and Goodwyn
Wallop and Goodwyn v. WY State Bar Comm. on Resolution of Fee Disputes and Speight, McCue & Assoc., PC

Citation: 2007 WY 36

Docket Numbers: 06-142 and 06-143

Appeal from the District Court of Sheridan County, the Honorable John C. Brackley, Judge

Representing Speight, McCue & Associates (SMA): William M. McKellar of Boley & McKellar, PC, Cheyenne, Wyoming.

Representing Wallop and Goodwyn: Daniel B. Frank of Frank Law Office, PC, Cheyenne, Wyoming.

Issue: Whether the district court correctly applied certain of Goodwyn’s payments to SMA against Goodwyn’s obligation under a guaranty agreement.

Facts/Discussion: The case concerns the application of certain payments to a guaranty agreement. The Committee for Resolution of Fee Disputes held that payments made for legal fees were personal loans between the debtor and the guarantor and thus did not satisfy the guarantor’s obligations under his Guaranty Agreement with the law firm. The district court ruled to the contrary with respect to all payments that occurred after the effective date of the agreement.
Standard of Review: Judicial review of the fee dispute committee’s decision was conducted in accordance with Fee Dispute Rule 14 by employing standards provided in W.R.A.P. 12. The Court scrutinized the fee dispute committee’s decision in accordance with the procedures for judicial review of administrative decisions as set forth in W.R.A.P. 12.01 et seq and § 16-3-114(c).
The Plain Language of the Guaranty Agreement: Wyoming law strictly limits a guaranty agreement to its terms. Pursuant to the agreement, Goodwyn absolutely and unconditionally guaranteed prompt payment of Wallop’s legal fees whenever they came due up to a total obligation of $100,000. Goodwyn made prompt periodic payments to SMA. No reason existed for the payment of those fees other than Goodwyn’s obligation under the agreement. Goodwyn’s acts comport with the plain and unambiguous language of the Guaranty Agreement that reflected the parties’ intent and Goodwyn’s obligation to “promptly pay.” SMA argued that the district court confused the roles of a guarantor and a surety by making Wallop’s and Goodwyn’s obligations coextensive. The Guaranty Agreement unambiguously required Goodwyn to make prompt payment of attorney’s fees when due. It did not require demand on Wallop; notice of Wallop’s default; or SMA’s specific demand of payment from Goodwyn before any payments were considered guaranty payments. Both parties conceded that even a continuing guaranty may be limited as to the amount guaranteed. It was thus limited in the instant case so the Court did not consider it further. The Guaranty Agreement referenced an effective date of October 12, 2000. The Court construed the agreement to mean exactly what it said. Goodwyn’s October 11, 2000 payment did not fall under the terms of the agreement because it was made prior to the effective date thereof.
Dual Role as Personal Loans and Guaranty Payments: SMA argues and the Committee concluded that by characterizing Goodwyn’s payments to SMA as “personal loans” those monies forfeited their status as guaranty payments. Neither party presented any law that supported that conclusion. Guarantors often expect recoupment and reimbursement of the funds they have paid pursuant to a guaranty. The recovery by a guarantor is based on the doctrine of equity against unjust enrichment and not on contractual relationship.

Holding: The mere fact that Goodwyn’s payments to SMA also might be characterized as personal loans to Wallop did not negate their status as guaranty payments. Goodwyn is entitled to credit against his obligations under the Guaranty Agreement in the amount of $93,226. The District Court’s Order After Appeal of Second Committee Decision was affirmed in its entirety.

Affirmed.

District Judge Donnell delivered the decision.

Link: http://tinyurl.com/yw4evm .