Summary 2007 WY 53

Summary of Decision issued March 28, 2007

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Case Name: Shepard v. Beck

Citation: 2007 WY 53

Docket Number: 06-98

Appeal from the District Court of Campbell County, the Honorable Dan R. Price II, Judge

Representing Appellant (Plaintiff): Patrick Dixon of Crowell, Chapin & Dixon, LLC, Casper, Wyoming.

Representing Appellee (Defendant): Paul J. Drew of Drew Law Office, PC, Gillette, Wyoming.

Issues: Whether the district court erred when it concluded that Beck did not breach his employment contract. Whether the district court erred when it split the costs of an accounting audit between the parties instead of placing liability for the costs of the audit on Beck. Whether the district court erred when it declined to award attorney’s fees to Shepard. Whether the district court erred in its order regarding the division of corporate equipment between the parties.

Facts/Discussion: Shepard appeals a judgment and order of the district court finding that Beck did not breach an employment agreement with the professional corporation formed between Shepard, Beck and the corporation and ordering the corporation to dissolve.
Employment contract breach: Shepard argued that the district court’s findings of fact were inconsistent with their ultimate finding that Beck did not breach the employment contract. The Court’s standard for reviewing a district court’s findings of fact and conclusions of law is that while the findings are presumptively correct, the appellate court may examine all of the properly admissible evidence in the record. Findings of fact will not be set aside unless clearly erroneous.
The Court’s review of the record showed that Beck’s claim that Shepard was not a proper party was raised for the first time on appeal. Based on W.R.C.P. 17 and their decision in Gifford-Hill-Western, Inc. v. Anderson, the Court stated that a party’s failure to object that its opponent was not the real party in interest until the close of the evidence constituted a waiver of any objection on that ground. In addition, in the instant case, Beck individually sought a judgment from Shepard based on her status as an employee of the corporation, so he was estopped from claiming that Shepard was not a proper party to recover for any breaches of his similar employment contract.
Beck did not challenge the above-mentioned factual findings of the district court on appeal and those findings clearly indicated that the Beck’s actions violated his employment contract. The district court’s findings indicated that Beck’s actions constituted a breach of the express terms of the employment contract which was inconsistent with the district court’s general finding that Beck did not breach the contract. The Court stated that long ago they recognized that specific findings control when they conflict with a general finding. Therefore, they concluded that Beck did in fact breach the employment contract and the district court’s ruling in Beck’s favor was clearly erroneous.
Wipfli audit: Having determined that Beck breached his employment contract, the Court then addressed the costs Shepard could recover. The Court reviews awards of costs and attorney’s fees to determine if the district court abused its discretion. The cases cited by Shepard demonstrated the point that an accounting may be considered part of the costs of litigation and therefore may be awarded to the prevailing party. However, the district court determined that while Beck’s actions precipitated the need for the accounting, it was more properly considered a necessity to the mutually beneficial winding up of corporate affairs and not a cost incurred in enforcement of the corporate agreement. Under the circumstances outlined in the record, the Court stated it was within the district court’s broad discretionary powers to find the accounting was necessary in order to wind up the corporation’s business and that Shepard was not entitled to be reimbursed. The Court also noted Shepard was granted her other costs as the prevailing party below.
Award of attorney fees: Shepard claimed she was entitled to attorney fees under the fee shifting provision in the contract. Beck waived his right to object that Shepard was not a proper party to enforce the employment contract by not raising the defense below. Therefore, as prevailing party on the breach of contract claim, Shepard may collect her attorney’s fees as provided for by the contract. However, the district court order in the instant case did not specify whether it ordered each party to pay their own attorney fees under the “American Rule” or under its equitable powers. On remand, the district court was instructed that Shepard was contractually entitled to attorney fees, but such may be adjusted as appropriate under the federal lodestar test.
Division of corporate equipment: Shepard’s argument did not allege any dispute with the nature of the property taken by Beck. Shepard disagreed with the value attached to that property by the district court. On factual issues, the Court affirms the findings of the district court unless they are clearly erroneous. The Court stated the value of the property was supported by the appraisal found in the record and the Court therefore affirmed the distribution of corporate assets ordered by the district court.

Holding: While Beck may have breached his employment contract with the corporation, the district court did not abuse its discretion when it ordered the parties to split the cost of the Wipfli audit evenly between them as part of the dissolution process. Further, Shepard failed to show error in the division of the corporate property. The district court should have ordered Beck to pay Shepard’s reasonable attorney’s fees due to his breach of the contract. The Court affirmed in part, reversed in part and remanded for entry of an order finding Beck in breach and awarding Shepard reasonable attorney fees.

Affirmed in part, reversed in part and remanded for entry of an order awarding reasonable attorney’s fees.

C.J. Voigt delivered the decision.

Link: http://tinyurl.com/3xllbc .