Courtenay C. v. Colo. State Univ. Research Found.

• Decision Date: 04 March 2014
• Docket Number: No. S–13–0121.,S–13–0121.
• Citation: 320 P.3d 1115
• Parties: The COURTENAY C. AND LUCY PATTEN DAVIS FOUNDATION and Amy Davis, Individually, Appellants (Plaintiffs), v. COLORADO STATE UNIVERSITY RESEARCH FOUNDATION, University of Wyoming Foundation and C.C. Davis and Co., LLC, A Wyoming Limited Liability Company, and Gregory A. Phillips, Wyoming Attorney General, in his official capacity, Appellees (Defendants).
• Court: Wyoming Supreme Court

320 P.3d 1115

The COURTENAY C. AND LUCY PATTEN DAVIS FOUNDATION and Amy Davis, Individually, Appellants (Plaintiffs),

v.COLORADO STATE UNIVERSITY RESEARCH FOUNDATION, University of Wyoming Foundation and C.C. Davis and Co., LLC, A Wyoming Limited Liability Company, and Gregory A. Phillips, Wyoming Attorney General, in his official capacity, Appellees (Defendants).

No. S–13–0121.

Supreme Court of Wyoming.

March 4, 2014.

Representing Appellants: Steve Miller of Steve A. Miller, P.C., Denver, Colorado; Gay Woodhouse and Tara B. Nethercott of Woodhouse Roden Nethercott, LLC, Cheyenne, Wyoming. Argument by Mr. Miller.

Representing Appellees Colorado State University Research Foundation, University of Wyoming Foundation, and C.C. Davis And Co., LLC, a Wyoming Limited Liability Company: Michael J. Sullivan and Alaina M. Stedillie of Lewis Roca Rothgerber, LLP, Casper, Wyoming. Argument by Mr. Sullivan.

Representing Appellee Gregory A. Phillips, Wyoming Attorney General, In His Official Capacity: No Appearance.

Before HILL, VOIGT,^*BURKE, and DAVIS, JJ., and GOLDEN, J., (Ret.).

GOLDEN, Justice (Ret.).

[¶ 1] In 1997, the Courtenay C. Davis Foundation (“the Davis Foundation”) and Amy Davis (collectively “the Davis Interests”) entered into an agreement with the Colorado State University Research Foundation and the University of Wyoming Foundation (“the University Foundations”). Through that agreement, the Davis Interests gifted land and other interests to the University Foundations, subject to the terms of the agreement. In 2011, the University Foundations decided to sell the gifted property. The Davis Interests filed an action in district court seeking to enjoin the sale of the gifted property, and the district court dismissed the action after finding that the Davis Interests lacked standing to bring the action. We affirm.

ISSUES

[¶ 2] The Davis Interests state the issues on appeal as:

Issue 1

Did the district court err in finding [the Davis Interests] lacked standing?

Issue 2

[Do the Davis Interests] have standing as a management committee member?

[¶ 3] The University Foundations phrase the issues on appeal as:

1. Was the transaction between the Davis Interests (Appellants) and the University Foundations (Appellees) a gift, or, as claimed by the Appellants, did it create an implied trust?

2. In either event, do the Appellants have standing?

3. Is the issue raised by Appellants concerning the Davis Interests' entitlement to appoint a member to the five member Ranch Management committee and Amy Davis' role as an unpaid consultant a new argument that has been waived?

4. If it is not a new issue, do the Davis Interests' entitlement to appoint a member to the five member Ranch Management committee or Amy Davis' role as an unpaid consultant support Appellants' standing argument?

FACTS

[¶ 4] The Y Cross Ranch is a working cattle operation located in Laramie and Albany counties and is owned and operated by C.C. Davis and Co. L.L.C. (“LLC”). In 1997, the Davis Foundation owned a 99% membership interest in the LLC, and Amy Davis owned a 1% interest in the LLC. On August 25, 1997, the Davis Interests and the University Foundations entered into a Memorandum of Agreement (“MOA”) by which the Davis Interests agreed to donate the Ranch to the University Foundations, by transferring ownership in the LLC to the University Foundations, with each university's foundation receiving a 50% share in the LLC. Concurrent with the donation from the Davis Interests to the University Foundations, the LLC granted The Nature Conservancy a Deed of Conservation Easement.

[¶ 5] The donation to the University Foundations included the membership interests in the LLC; real property and improvements, subject to certain reservations and the conservation easement; $50,000.00 in the LLC's checking account; and equipment and supplies, among other items. The MOA provided that the purpose of the gift to the University Foundations was to:

A. generate scholarships and internships for CSU and UW students through net revenues generated from ranch operations, and

B. provide a “real world” working laboratory for observation and study by CSU and UW students of western ranching and resource management.

[¶ 6] The MOA directed that the University Foundations adopt an operating agreement for the LLC and establish a management committee consisting of five individuals: (1) a representative of the University of Wyoming Foundation; (2) a representative of the Colorado State University Research Foundation; (3) the dean of the University of Wyoming College of Agriculture (or his/her designee); (4) the dean of the Colorado State University College of Agriculture (or his/her designee); and (5) a person appointed by the Davis Foundation. The MOA further specifiedthat “Ms. Amy Davis will be engaged as a non-paid consultant to the Management Committee for a period of seven years after the date of the gift to ensure that the intent of the donors is met.”

[¶ 7] In addition to outlining the LLC organizational structure, the MOA established a “Prospective Business Plan” for the Ranch. The MOA described Phase 1 as a period not expected to exceed seven years during which the Ranch was to be stabilized and “some degree of predictability” brought to its operating requirements. The MOA described Phase 2 of the business plan as a period of an additional seven years, during which the management committee was to “concentrate on making funds available from ranching operations for transfer to the endowment funds in support of scholarship/internship support and the establishment and implementation of activities for observation, research and study laboratories/activities.”

[¶ 8] The MOA addressed the options available to the University Foundations at the conclusion of the fourteen-year span of phases one and two, providing, in part:

X. Duration of the CSU–UW Joint Ownership. It is the hope and expectation of the donors that the joint ownership of the ranch (through the structure of the LLC) will thrive and be a model of shared governance for a common interest....

At the conclusion of Phase 2, fourteen years after the date of the gift, the members are encouraged to continue the joint arrangement as originally contemplated for an indefinite term. However, in the event that either member wishes to dissolve the joint arrangement, the dissolution may be accomplished by one of the following alternatives:

A. The ranch and other assets of the LLC would be sold at market value, subject to the conservation easement, with all net proceeds divided equally between the members and to be deposited in the respective endowments to fund scholarship/internships as provided in this agreement; or

B. By mutual agreement, one member would become the sole owner of the ranch and other assets of the LLC. In that event, the acquiring member would purchase from the other member the assets of the LLC or the other member's interest in the LLC at the appraised value of the membership interest in the LLC at the time of the initial gift in 1997, immediately after the grant of conservation easement. (Purchase at the 1997 value would make it easier for the acquiring institution to continue stewardship and use of the ranch for the intended purposes.) The acquiring member would continue to operate the ranch in substantially the same manner as herein set forth and for the same purposes for a period of no less than ten (10) years.

C. Not earlier than the conclusion of Phase 2 under the business plan, in the event both members wish to acquire the ranch and other assets of the LLC to the exclusion of the other member, then the member which first wishes to acquire those interests shall determine a value and the other member will decide whether it wishes to buy or sell.

Dissolution of the LLC, transfer of the LLC membership interests, and liquidation of LLC assets shall be carried out as specified in the Operating Agreement of the C.C. Davis and Co. L.L.C.; provided, however, that no provision in this Memorandum of Agreement or the Operating Agreement shall replace or take priority over rights, duties or obligations arising under applicable laws of the state of Wyoming.

[¶ 9] In 2011, after fourteen years had elapsed following the donation from the Davis Interests, the University Foundations decided to sell the Ranch, and they listed it for sale through a sealed bid procedure to take place on November 13, 2012. On September 28, 2012, the Davis Interests filed an action in district court alleging breach of contract, unjust enrichment and breach of the covenant of good faith and fair dealing. The Davis Interests sought rescission of the MOA and establishment of a constructive trust in their favor. On that same date, the Davis Interests filed an application for preliminary injunction, seeking to enjoin sale of the property during the pendency of the action.

[¶ 10] On October 22, 2012, the University Foundations moved to dismiss the complaint for lack of standing.¹ Specifically, the University Foundations argued that the Ranch donation was a charitable gift and, by common law, the only party with standing to enforce a charitable gift is the attorney general. On November 13, 2012, the Davis Interests filed an amended complaint, which added allegations that the MOA created an implied charitable trust and that the University Foundations had breached their fiduciary duties. The Davis Interests also added the attorney general as a party but asserted no claims against him, and they requested only the relief they had originally requested—rescission of the MOA and establishment of a constructive trust. In opposition to the motion to dismiss, the Davis Interests argued that the donation created an implied charitable trust, that Wyoming's Uniform Trust Code governs the trust, and that the Code grants the Davis Interests, as the trust's settlor, standing to enforce the terms of the trust. The Davis Interests also argued that the MOA was...