Coones v. F.D.I.C.

Decision Date11 March 1993
Docket NumberNos. 91-265,92-90 and 92-136,s. 91-265
Citation848 P.2d 783
Parties21 UCC Rep.Serv.2d 414 James Albert COONES, Appellant (Defendant), v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Liquidator for the First National Bank of Sheridan, and as Receiver of the Stockmen's Bank and Trust Company, Appellee (Plaintiff). James Albert COONES, Appellant (Plaintiff), v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for Stockmen's Bank and Trust Company, Appellee (Defendant). James Albert COONES, Cindy Lee Coones, f/k/a Cindy Lee Jones, and Randy L. Royal, Bankruptcy Trustee for the estate of Cindy Coones, Appellants (Defendants), v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Liquidator for the First National Bank of Sheridan and as Receiver of the Stockman's Bank & Trust Company, Appellee (Plaintiff).
CourtWyoming Supreme Court

Stephen R. Winship of Donald R. Winship & Associates, P.C., Casper, for appellants.

Timothy C. Kingston and Jeanne R. Lee, Denver, CO, for appellee.

Before MACY, C.J., and THOMAS, CARDINE, URBIGKIT * and GOLDEN, JJ.

URBIGKIT, Justice, Retired.

These three commercial litigation appeals, consolidated for one decision, present creditors' rights, debtor protection and replevin issues. A convoluted course of litigation pursued through various state and federal courts has developed into a myriad of issues and proceedings, contesting jurisdiction, procedural matters and substantive decisions.

The dispute centers on the attempts of the creditors' successor, the Federal Deposit Insurance Corporation (FDIC), to collect after a debtor's default on three promissory notes. James A. Coones (Coones) is the remaining maker of the notes from whom recovery is sought. The three appeals before this court primarily challenge a summary judgment which was granted in favor of the FDIC. The summary judgment granted a personal judgment on the entire debt and possession of the collateral with writs of replevin issued both pre- and post-judgment. Also challenged are a post-judgment order permitting intervention of a third party and directing the sequestering and releasing of funds acquired as sales proceeds from items of collateral and a motion to dismiss sustained against Coones on an agister's lien action arising from his claim for maintenance of the livestock chattel security during litigation.

We affirm in part and reverse in part.

I. PROCEDURAL DISPOSITION AND ISSUES

With the complex issues presented and for the sake of some continuity, we find it necessary to begin with a description of the character of the individual actions from which the appeals before this court originated. We will follow each with an enumeration of the issues contended by the litigants.

On April 20, 1990, the FDIC filed Civil Action No. 17324, Federal Deposit Insurance Corp. v. Coones, in the Campbell County, Wyoming district court. Claiming that the makers, Coones and Cindy Lee Coones had defaulted on a total of four promissory notes, this action, although filed in Campbell County, was directed to both foreclose a real estate mortgage on property located in Sheridan County, Wyoming and to obtain judgment on chattel security which also secured some of the note balances. As the liquidator or receiver, the FDIC was the successor in interest to two failed Wyoming banks which were the original creditors. The complaint included a prayer requesting immediate possession and return of the collateral and for a judgment in replevin. The FDIC also sought to obtain personal judgment on the total balance owed on the promissory notes. It was not clear on the face of the complaint if these were alternative remedies.

After more than a year of motions, cross-motions, temporary and preliminary restraining orders and other proceedings, this increasingly complex litigation came to "resolution" by an order on summary judgment dated October 21, 1991. 1 The summary judgment, in favor of the FDIC, granted the FDIC possession of the collateral, a contingent personal judgment against Coones for the collateral's assessed value and a personal judgment against Coones for the total amount of all debt owed on three of the notes. The district court denied Coones' motion for partial summary judgment, denied the FDIC's motion to dismiss the counterclaim based primarily on a claimed livestock maintenance agister's lien and certified that no just cause for delay existed, permitting an immediate appeal. W.R.C.P. 54(b). 2 An interim decision of the district court had eliminated the issue of the simultaneous real estate foreclosure on the fourth note with a ruling that the proper venue for that proceeding was in Sheridan County where the real estate was situate. That litigation remains somewhere beyond our current purview.

A copy of this summary judgment was not furnished to the debtor or his attorney. Coones and his counsel learned of the judgment's terms when the sheriff arrived with the writ of replevin, issued post-judgment, directing the officer to take possession of the livestock and equipment collateral. This is somewhat like the 4:00 a.m. no-knock search warrant execution in a drug raid case. The writ was one of four issued post-judgment which, in extended scope, addressed property found in Wyoming and in South Dakota. 3

Following that method of notice that a judgment had been entered, Coones filed a motion for relief on November 7, 1991. Coones argued that the order was not final since the counterclaim remained pending and no right to exemption, or a hearing thereon, had been given for any property which might be claimed to be exempt from replevin.

With various intermediate pleadings involving courts in both South Dakota and Wyoming, an order granting an amended order nunc pro tunc was entered December 9, 1991, which refused to stay the replevin action or chattel sale but did require the FDIC to immediately issue to Coones a notice of a right to claim exemptions and a hearing under Wyo.Stat. § 1-15-107 (1988). The district court also ordered the promissory notes be canceled as "merged in [the] judgment."

The amended order nunc pro tunc was itself amended by another order issued on March 9, 1992. This amendment acknowledged the now divorced Cindy Lee Coones' discharge in bankruptcy on August 22, 1990. In re Cindy Lee Coones, No. 90-00318-A Discharge of Debtor (Bankr.Wyo. Aug. 22, 1990). Under terms of the amended order of the state court, the judgment against Cindy Lee Coones extended only to the FDIC's "right to foreclose on the collateralized property listed in the December 9, 1991 Amended Order and on any other property given by Cindy Coones as collateral * * *." 4 As with the original judgment order, the order to amend order was not served on Coones. 5

A notice of appeal was filed by Coones which stated:

NOTICE is hereby given that James Albert Coones, one of the Defendants in the above-entitled civil action, hereby appeals to the Supreme Court of the State of Wyoming from the final judgment entitled "Order (1) Granting Plaintiff's Motion for Summary Judgment, (2) Denying Defendants' Motion for Partial Summary Judgment and (3) Denying Plaintiff's Motion to Dismiss" entered herein on October 22, 1991.

In his statement of the issues from this portion of the litigation, Appeal No. 91-265, Coones as appellant, debtor, questions:

1. Whether the Summary Judgment allows Plaintiff a double recovery.

2. Whether the District Court erred in denying Defendant's Motion for Partial Summary Judgment.

3. Whether there were material facts in dispute at the time that Plaintiff's Motion for Summary Judgment was granted.

4. Whether the District Court erred in granting Plaintiff's Motion for Summary Judgment.

5. Whether the Defendant should have been given a hearing on his exemption claims prior to the sale of his property.

6. Whether the Sixth Judicial District Court had jurisdiction over the subject matter of this case.

7. Whether the District Court erred in denying Defendant's Motion to Dismiss.

8. Whether the District Court erred in denying Defendant's Motion for Peremptory Disqualification.

Appellee, the FDIC, restates:

1. Did the district court's grant of summary judgment allow the FDIC double recovery?

2. Does this Court have appellate jurisdiction of the Appellant's claim that the FDIC's post-judgment disposition of collateral was wrongful?

3. Was there reversible error in the post-judgment disposition of collateral?

4. Did the district court err in granting the FDIC's Motion for Summary Judgment?

5. Did the FDIC have a security interest in the Appellant's after acquired cattle?

6. Did the Appellant's Counterclaim preclude summary judgment?

7. Should the district court have granted the Appellant's Motion for Partial Summary Judgment?

8. Did the district court err in granting the FDIC's request for attorney's fees and costs?

9. Was the Appellant denied his right to claim exemptions?

10. Did the district court err in denying the Appellant's Motion for Disqualification?

11. Did the FDIC fail to file the originals of the promissory notes with the district court?

12. Did the district court have jurisdiction of this case?

With Appeal No. 91-265 pending, this litigation continued in district court. Appeal No. 92-136 was filed in the aftermath of a consolidated hearing in the district court. The hearing considered four issues. First, a motion from the FDIC requesting the distribution of $231,933.89 in proceeds from a cattle sale which occurred in South Dakota; second, a motion for intervention from the Farmers Cooperative Association (Farmers) which was opposed by the FDIC; third, Coones' objections to the collateral sale; and, fourth, the FDIC's motion to compel a W.R.C.P. 69 deposition which was opposed by Coones. 6

The district court granted the FDIC's motion to distribute the proceeds of the South Dakota cattle sale. Farmers' intervention motion was granted and the district court directed Farmers to file a complaint asserting its claims to...

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