Thursday, June 23, 2011

Summary 2011 WY 97

Summary of Decision June 23, 2011

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Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court

Case Name: Hunter v. Reece

Citation:  2011 WY 97

Docket Number: S-10-0195

Appeal from the District Court of Sheridan County, the Honorable John G. Fenn, Judge.

Representing Appellant (Defendant): Jeffrey J. Gonda and Amanda K. Roberts, Lonabaugh & Riggs, LLP, Sheridan, Wyoming.  Argument by Ms. Roberts.

Representing Appellee (Plaintiff): Vincent Schutte, Kinnaird Law Office, PC, Sheridan, Wyoming.

Date of Decision: June 23, 2011

Facts: Appellants owned and operated a construction business in Sheridan County, Wyoming.  In the fall of 2006, Appellee was doing renovation work at the home of Appellants.  He noticed Appellant watching a television program about “flipping” houses.  According to trial testimony from both parties, flipping a house generally involves purchasing a house that needs improvements, making those improvements, and selling the house, usually in a relatively short period of time, and preferably for a profit.  Appellee and Appellant both commented that they would be interested in flipping a house.

After further discussions among the Appellees and Appellants, the two couples agreed to flip a house located in Sheridan.  Later, they all met to put their agreement in writing, with Appellants typing up the document.  The contract was signed by the parties, and dated October 28, 2006.  Work on the project began in November of 2006.  At the end of January 2007, an arsonist set fire to the house, causing substantial damage. The parties then entered into a new “Fire Contract” in which they agreed to use the insurance proceeds to restore the house to the condition it was in before the fire. The parties further agreed that once the house was restored, they would revert back to their original agreement.   In August of 2007, the parties agreed that the house had been restored, and that the original agreement was again in effect. In October of 2007, the Appellants became dissatisfied with the slow progress on the project, and with what they perceived as the poor quality of some of Appellee’s work.  They confronted Appellee about their dissatisfactions, an argument ensued, and the Appellants eventually told Appellees to stop working on the project. 

On April 8, 2008, the Appellees filed suit against the Appellants.  The two-page complaint sought a declaratory judgment that the contract quoted above “is a valid and enforceable agreement,” and alleged that the Appellees were entitled to “receive 50% or ½ of net profit after payment of cost of renovation and purchase price.”  The Appellants answered, admitting the existence and validity of the contract, but generally denying the other allegations.  The Appellants also pleaded counterclaims, including breach of contract by the Appellees.

The parties engaged in discovery and other trial preparations until, on August 27, 2009, the Appellees moved the district court to order mediation of the dispute.  Mediation was ordered, but was apparently unsuccessful, because on September 29, 2009, the district court set a trial date in the matter.  Prior to trial, the parties stipulated to the existence and validity of their contract, although each asserted a different interpretation of that contract.  The Appellees contended that they were entitled to payment for their labor on the project, in addition to one half of the profits.  The Appellants contended that the Appellees were entitled only to one half of the profits, because the agreement did not provide that Appelles would be paid for labor. 

A two-day bench trial commenced on March 3, 2010.  At the close of trial, the district court announced judgment that the parties’ contract was not valid because there had been no meeting of the minds regarding an essential term of the agreement, that being whether Appellees were to be paid for their work on the project in addition to receiving one half of the profits.  The district court then invoked the theory of unjust enrichment to award all of the profits to Appellees, an amount the district court calculated as $21,989.07.  A written judgment embodying the district court’s decision was entered on March 26, 2010.

On April 8, 2010, the Appellants filed a motion for new trial or, in the alternative, to amend the judgment, asserting generally that the parties had stipulated to the validity of their contract, that it was improper to apply a theory of unjust enrichment when a valid contract existed, and that unjust enrichment had never been pleaded by the Appellees.  A hearing was held, and the district court entered an order denying the motion on July 2, 2010.  The Appellants appealed both the judgment and the district court’s denial of their motion for new trial or amended judgment.

Issues:  The Appellants present three issues: Whether the district court erred by disregarding the parties’ stipulation that a valid and enforceable contract existed and by raising a claim of unjust enrichment sua sponte.  Whether the district court erred in finding that Appellees proved the elements of unjust enrichment. Whether the district court erred in denying Appellants’ Rule 59 motion for new trial and alternative motion to amend the judgment.

Holdings: “Whether a contract has been entered into depends on the intent of the parties and is a question of fact.”  Throughout the litigation, the parties disagreed about the interpretation of their contract, but consistently agreed that they had entered into a contract.  The district court never reached a decision on the claim that the Appellees had breached the agreement, instead finding that no contract existed and awarding damages to the Appellees on an unjust enrichment theory.  It is up to the district court, in the first instance, to consider the conflicting evidence and decide whether the Appellees breached the contract, and if so, what damages were caused by the breach.  The Court returned this case to the district court to determine damages. Reversed and remanded for such additional proceedings as may be needed in accordance with this decision.

Justice Burke delivered the opinion for the court. 

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