Wednesday, January 18, 2012

Summary 2012 WY 7

Summary of Decision January 18, 2012

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

Case Name:  Schlinger v. McGhee

Citation:  2012 WY 7

Docket Number:  S-10-0185

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

Representing Appellants (Defendants):  Scott P. Klosterman and Patrick J. Murphy of Williams, Porter, Day & Neville, P.C., Casper, Wyoming.  Argument by Mr. Klosterman.

Representing Appellees (Plaintiffs):  J. Denny Moffett of Moffett & Associates, PC, Jackson, Wyoming; and Heather Noble, Jackson, Wyoming.  Argument by Ms. Noble.

Date of Decision: January 18, 2012

Facts:  Appellant, acting as President of his construction company, entered into an oral agreement to lease his business and all associated equipment and land to the appellees.  Appellees formed an LLC as the entity to lease and operate the business. After approximately eight months, Appellant determined the appellees were not properly managing the business and terminated the oral lease agreement.  The parties dispute the financial implications of the termination.  After a bench trial, the district court determined Appellants owed Appellees and their LLC $206,875.70. 

Issues:  I) Whether the district court erred when it found, based on incomplete and unreliable bookkeeping spreadsheets, that Appellants owed Appellees $206,875.70;  A)  Whether the district court erred in its judicial accounting when it failed to credit Appellants with $312,319.12 of business expenses Appellants paid for Appellees in March, April and May 2004 B) Whether the district court further erred when it accepted the bookkeeper’s unreliable and incomplete “tie out ending balance” number of $206,875.70 as its judicial accounting award;  II) Whether the district court erred when it awarded pre-judgment interest to Appellees where the underlying debt was unliquidated and Appellees provided no notice of that required sum to Appellants; III) Whether the district court abused its discretion when it denied Appellants’ unjust enrichment claims; A) Whether the district court incorrectly rejected Appellants’ $10,800 claim for reimbursement for Appellant’s individual time and help in running the business from March – August, 2004; B) Whether the district court incorrectly rejected Appellees’ $48,000 claim for reimbursement for bonding two projects for Appellants; C) Whether the district court erred when it rejected Appellees’ $26,475 claim for reimbursement of one-half of the salary and bonus paid to an employee; and lastly, IV) Whether the district court’s judgment for $206,875.70 for Appellees should be reversed, and judgment entered for Appellants in the amount of $190,718.42.

Holdings:  The Court affirmed in part and reversed in part. 

As to issues I and II, the Court concluded the district court made a mistake in awarding damages based on speculative and inaccurate accounting that lacked reasonable certainty.  The testimony of both employed accountants indicated likely gaps in the accounting that led to the ending balance.  The judgment in favor of the appellees on this claim was reversed, rendering issue II moot.

As to the unjust enrichment claims (issues III), the Court found that Appellants had the burden of presenting sufficient credible evidence to support a judicial determination in their favor, and they did not do so. No evidence was presented as to the salaried employee’s involvement with any particular project, and there was also no evidence as to the profit margin on any particular project.  The judgment on this claim was affirmed.

As to issue IV, The Court found Appellants conclusion was based on the arguments they made under Issues I and III regarding their contract and unjust enrichment claims. Given the Court rejected those arguments, the Court did not choose to further address this issue.
In conclusion, the Court reversed the district court’s judgment on the appellees’ breach of contract claim and rejected Appellants’ argument that they should be awarded breach of contract damages.  The district court judgment on the unjust enrichment claims was affirmed.
J. Golden delivered the opinion for the court.

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