Summary 2011 WY 26

Summary of Decision February 17, 2011

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Case Name: Thorkildsen v. Belden

Citation: 2011 WY 26

Docket Number: S-10-0154

URL: http://wyomcases.courts.state.wy.us/applications/oscn/DeliverDocument.asp?CiteID=461765

Appeal from the District Court of Teton County, Honorable Nancy J. Guthrie, Judge

Representing Appellant (Defendant): David G. Lewis, Jackson, Wyoming.

Representing Appellee (Plaintiff): Richard J. Mulligan of Mulligan Law Office, Jackson, Wyoming; Heather Noble, Jackson, Wyoming.


Date of Decision: February 17, 2011

Facts: After the Supreme Court affirmed judgment in his favor in an action filed against him for payment on a loan, Appellant filed a motion for attorney fees. The district court ultimately denied the motion and Appellant appealed.

Issues: Whether the district court erred when it denied Appellant’s motion for attorney fees under the terms of an LLC operating agreement as the prevailing party in a legal action.

Holdings: Generally, Wyoming subscribes to the American rule regarding recovery of attorney fees, making each party responsible for its own attorney fees, unless an award of fees is permitted by contract or statute. In the present case, there is a contract permitting the award of attorney fees. Despite the clear language of the operating agreement authorizing reimbursement to the prevailing party in an action to enforce or prevent breach of the agreement, Appellees argued Appellant was not entitled to such reimbursement since many of the claims did not arise out of or involve the operating agreement but turned on side agreements or other legal theories independent of the operating agreement.

The rule in Wyoming is that segregation of fees between multiple clients and/or multiple claims is required when it is possible. To avoid application of this rule, the party seeking a fee award must clearly establish that the claims arose out of the same transaction or were so interrelated that segregation of the resulting attorney fees is not possible. In the present case, despite the last minute efforts by Appellees to broaden the scope of their claims in order to take them outside the parameters of the operating agreement, it is clear that the LLC operating agreement was the basis of the case from the beginning. Four of the five claims alleged in the complaint arose directly out of the LLC operating agreement. The only claim arguably not based upon the operating agreement was a claim for money owed to the Appellees on a note the LLC assumed at the time the company was formed. Once Appellant filed his answer, alleging that he had no personal liability for the debt, and his counterclaim, alleging the efforts to collect the debt from him breached the operating agreement, the claim for money owed became inextricably intertwined with the operating agreement. His liability for the debt could not be determined without reference to the operating agreement provisions precluding the imposition of personal liability on members or managers for LLC debts. Segregation of his counsel’s fees for time spent defending against the claims brought by Appellees was not required.

Appellant’s attorney fee request included the affidavit of counsel, which contained six pages itemizing the time he spent in representing his client between May of 2002, when the dispute arose, and June of 2008, when he appeared before the Supreme Court. It does not include the time spent preparing for and appearing at the two subsequent district court hearings, one in which the court awarded costs and no fees, and a second in which the district court denied the motion for fees. It also does not include the time counsel spent preparing and appearing for argument in the Supreme Court in two subsequent appeals. Although Appellees complain the fee is unreasonable because it includes travel time charged at counsel’s usual hourly rate for the first two appeals and more time for research and brief writing than their counsel spent on those activities, any excess is more than balanced out by the time spent on later proceedings that is not included in the billing statement. It should also be noted that Appellees supported their claim that the fees were unreasonable not with the affidavit of an uninvolved third party but only with their own attorney’s self-serving affidavit.

Litigation must come to an end. After four district court proceedings, the retirement of the district judge who presided over the proceedings and four appeals, it is time for this matter to come to an end. While it is true that when the Court reverses a ruling on an issue of law, it is typically remanded for a factual determination by the district court. W.R.Civ.P. 1 provides that the rules of civil procedure, which govern procedure in all courts of record in Wyoming, “shall be construed and administered to secure the just, speedy, and inexpensive determination of every action.” There may be no more important provision in the rules of procedure than the provision in Rule 1 for a just and speedy determination of every action. Contrary to the rule, this case has been unnecessarily protracted, causing Appellant’s counsel to expend numerous hours attempting to obtain for his client the fees to which he was entitled as the prevailing party. Under these particular circumstances, his request for attorney fees is fair and reasonable and another remand is unnecessary.

The matter is reversed and remanded to the district court for entry of an order awarding Appellant attorney fees in the amount of $77,475.00 as requested in his January 2009 motion.

C.J. Kite delivered the opinion for the court.