Belden v. Thorkildsen
| Decision Date | 26 April 2007 |
| Docket Number | No. 06-112.,06-112. |
| Citation | 156 P.3d 320,2007 WY 68 |
| Parties | Margot BELDEN and Fish Creek Design, LLC, Appellants (Plaintiffs), v. John THORKILDSEN and Stacy Thorkildsen, his wife, Appellees (Defendants). |
| Court | Wyoming Supreme Court |
Before VOIGT, C.J., and GOLDEN, HILL, KITE, and BURKE, JJ.
[¶ 1] Margot Belden and Fish Creek Design, LLC, appeal a judgment entered in favor of John Thorkildsen. They claim that the district court erred when it concluded that Mr. Thorkildsen was not liable to Ms. Belden, or the LLC, for debt incurred when he purchased his interest in the business. Because we find that the district court's decision was premised upon an improper application of the parol evidence rule, we reverse and remand.
[¶ 2] Although several issues were raised by the parties, we find one issue dispositive:
Did the district court err by refusing to consider evidence of an agreement between Ms. Belden and Mr. Thorkildsen concerning the indebtedness incurred for the purchase of Mr. Thorkildsen's partnership interest?
[¶ 3] Margot Belden and her son purchased an interior design business located in Wilson, Wyoming, in June 1999. They owned the business as common law partners with Ms. Belden owning a 70% interest and her son 30%. Mr. Thorkildsen was an employee of the business working as an interior designer for both the previous owner and subsequently for Ms. Belden and her son.
[¶ 4] In June 2000, Ms. Belden approached Mr. Thorkildsen, giving him the opportunity to purchase her son's interest in the business for $180,000. Mr. Thorkildsen and his wife signed a buyout agreement, which mentioned financing for the $180,000, stating:
It is hereby agreed that John and Stacy Thorkildsen will purchase the 30% ownership of Fish Creek Interiors & Gifts currently owned by Sean O'Brien for $180,000.00, cash. This is due and payable upon completion of the financing provided by Bank of Jackson Hole, but no later than July 1, 2000.
Ms. Belden and Mr. Thorkildsen subsequently signed a note with the bank pledging assets of the partnership, as well as some of Ms. Belden's property as collateral. The partnership paid every monthly payment to the bank for the remaining life of the partnership.
[¶ 5] Approximately one year later, in April 2001, Fish Creek Interiors and Gifts pooled assets with another design company, forming Fish Creek Design, LLC. The new LLC had four members: Ms. Belden, Mr. Thorkildsen, Cheryl Wery and Jacque Jenkins. The promissory note with the bank was paid off and the debt was retired. The funds to pay the note came from a new note taken in the name of the LLC and was signed by all of the members of the LLC.
[¶ 6] In May 2002, Mr. Thorkildsen was fired. Thereafter, he formed a new design company and store operating in Jackson. The remaining three members of the LLC sold the retail portion of Fish Creek Design, LLC in the summer of 2002. Eventually, under pressure from the bank, Ms. Belden was forced to pay off the remaining balance of the loan in order to protect her assets that had been pledged as security for the loan.
[¶ 7] Ms. Belden initiated litigation against Mr. Thorkildsen and his wife claiming that she was entitled to recover amounts that were never paid by Mr. Thorkildsen to purchase his interest in the business and damages resulting from Mr. Thorkildsen's appropriation of clients from the business.1 In response, the Thorkildsens argued that when the original promissory note was paid by the LLC, Mr. Thorkildsen was released from his obligation and was no longer personally liable because he signed the second note as a member of the LLC, and that Mrs. Thorkildsen should be dismissed because she was not involved other than signing the original purchase agreement. A bench trial was held and after Ms. Belden's case in chief, Mrs. Thorkildsen was dismissed as a party without objection from the plaintiff.
[¶ 8] At trial, Ms. Belden testified about the financing arrangements for Mr. Thorkildsen's purchase of her son's interest in the business. According to her testimony, Mr. Thorkildsen could not make the $3,870.16 monthly payment towards the note. She agreed that the business would make those payments and Mr. Thorkildsen would repay the debt with any future bonuses and commissions he received. She also testified that this debt was carried on the company's financial records as an account receivable due from Mr. Thorkildsen and that the loan for the $180,000 would not have been consummated by the Bank unless she personally guaranteed it.
[¶ 9] Mr. Thorkildsen also testified about the financing arrangements for his purchase of Ms. Belden's son's interest in the company. He testified that he agreed he would apply any future commissions and bonuses towards the note. He admitted that even though he may have received a commission in 2000, he has not repaid any portion of the loan. To explain his failure to make any payments, Mr. Thorkildsen claimed that Ms. Belden gifted the 30% interest in the partnership to him.
[¶ 10] The district court found that Mr. Thorkildsen was not personally liable for the original $180,000 debt without resolving the dispute of whether the ownership interest was a gift. The court relied upon the parol evidence rule in rejecting Ms. Belden's contention that Mr. Thorkildsen orally agreed to repay the debt with commissions and bonuses. The court found in favor of Mr. Thorkildsen on all counts and awarded him attorney's fees. This appeal followed.
[¶ 11] Following a bench trial, this court reviews a district court's findings and conclusions using a clearly erroneous standard for the factual findings and a de novo standard for the conclusions of law. Piroschak v. Whelan, 2005 WY 26, ¶ 7, 106 P.3d 887, 890 (Wyo.2005) ().
The factual findings of a judge are not entitled to the limited review afforded a jury verdict. While the findings are presumptively correct, the appellate court may examine all of the properly admissible evidence in the record. Due regard is given to the opportunity of the trial judge to assess the credibility of the witnesses, and our review does not entail re-weighing disputed evidence. Findings of fact will not be set aside unless they are clearly erroneous. A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.
Piroschak, ¶ 7, 106 P.3d at 890. Findings may not be set aside because we would have reached a different result. Harber v. Jensen, 2004 WY 104, ¶ 7, 97 P.3d 57, 60 (Wyo. 2004). Further,
we assume that the evidence of the prevailing party below is true and give that party every reasonable inference that can fairly and reasonably be drawn from it. We do not substitute ourselves for the trial court as a finder of facts; instead, we defer to those findings unless they are unsupported by the record or erroneous as a matter of law.
Id. (quotation marks omitted).
[¶ 12] After trial, the parties submitted proposed findings of fact and conclusions of law. In her proposed findings, Ms. Belden claimed that her signature and pledge of collateral for the $180,000 note was only to facilitate the financing of the buyout agreement signed by the Thorkildsens. She asserted that Mr. Thorkildsen was to repay the loan from future bonuses, commissions, and profit sharing distributions paid to him, pointing to his testimony to that effect. She also requested that the district court find that neither she nor the partnership made a gift to Mr. Thorkildsen.
[¶ 13] Mr. Thorkildsen argued that he was not personally liable for any of the debt satisfied by Ms. Belden. He urged the district court to find that his liability on the $180,000 note was extinguished when it was paid, via refinancing and assumption by the LLC. As to that subsequent debt, he relied upon his signature as a member of the LLC to disclaim personal liability for any of the underlying debt. Mr. Thorkildsen asked the district court to disregard any promise he may have made to repay the $180,000 debt, relying upon the parol evidence rule. He proposed the following conclusion of law:
The Court will not consider a contrived ambiguity in a written instrument such as the modification added to Exhibit C, that this was a "John Thorkildsen Loan," as grounds to considering parol evidence. Moreover, Plaintiff Margot Belden's testimony that she had a side-deal with John Thorkildsen, which contradicted the unambiguous terms of the notes, cannot be considered by the Court ....
The district court essentially adopted this conclusion of law proposed by Mr. Thorkildsen.
[¶ 14] In reliance upon the parol evidence rule, the district court disregarded Ms. Belden's testimony concerning a separate agreement for repayment of the debt and did not determine whether the partnership interest was a gift. Ms. Belden contends that the district court misapplied the parol evidence rule. She claims that there was no contradiction between the notes and the separate agreement she had with Mr. Thorkildsen. In essence, Ms. Belden claims that the first note was to pay for Mr. Thorkildsen's purchase of her son's partnership interest, the second note was to pay off the balance of the first note, and the separate agreement was to reimburse Ms. Belden and/or the business for repayment of the loans.
[¶ 15] Mr. Thorkildsen's position is that because the first note was discharged by the second note and because the second note was signed by the managers of the LLC in their managerial capacities,...
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