Kerbs v. Kerbs

• Decision Date: 15 July 2020
• Docket Number: S-19-0266
• Citation: 467 P.3d 1015
• Parties: Kathleen KERBS, individually and as partner of the Four Bar Ranch Partnership, Appellant (Intervenor-Applicant), v. Kip D. KERBS, individually and as partner of the Four Bar Ranch Partnership; Carl D. Kerbs, individually and as partner of the Four Bar Ranch Partnership; and Nadene Kerbs, individually and as partner of the Four Bar Ranch Partnership, Appellees (Defendants), and Scott A. Kerbs, individually and as partner of the Four Bar Ranch Partnership, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

467 P.3d 1015

Kathleen KERBS, individually and as partner of the Four Bar Ranch Partnership, Appellant (Intervenor-Applicant),

v. Kip D. KERBS, individually and as partner of the Four Bar Ranch Partnership; Carl D. Kerbs, individually and as partner of the Four Bar Ranch Partnership; and Nadene Kerbs, individually and as partner of the Four Bar Ranch Partnership, Appellees (Defendants),andScott A. Kerbs, individually and as partner of the Four Bar Ranch Partnership, Appellee (Plaintiff).

S-19-0266

Supreme Court of Wyoming.

July 15, 2020

Representing Appellant: C.M. Aron, Aron Law, Laramie, Wyoming.

Representing Appellees Carl and Nadene Kerbs: William L. Hiser, Brown & Hiser LLC, Laramie, Wyoming.

Representing Appellee Kip D. Kerbs: Patrick J. Crank, Abbigail C. Forwood and Martha I. Tate, Crank Legal Group, P.C., Cheyenne, Wyoming.

Representing Appellee Scott Kerbs: Antonio E. Bendezu, Pelton Creek Law LLC, Fort Collins, Colorado.

Before DAVIS, C.J., and FOX, KAUTZ, BOOMGAARDEN, and GRAY, JJ.

KAUTZ, Justice.

[¶1] Kathleen Kerbs filed a motion to intervene in an action brought by her husband, Scott Kerbs, against Kip, Carl, and Nadene Kerbs for dissolution of the Kerbs Four Bar Ranch Partnership.¹ The district court denied Kathleen's motion as untimely. We conclude the district court did not abuse its discretion by denying the motion to intervene and affirm.

ISSUE

[¶2] Did the district court abuse its discretion by denying Kathleen's motion to intervene as untimely?

FACTS

[¶3] Carl and Nadene owned a ranch near Saratoga, Wyoming. In 1989, they formed the Kerbs Four Bar Ranch Partnership with Scott and Kip. Carl and Nadene contributed the ranch property to the partnership. Scott and Kathleen lived in a house on the ranch. Carl and Nadene gifted Scott and Kip each a 24% interest in the partnership.² They also gifted Kathleen and Kip's wife, Rebecca, each a 9% interest in the partnership. Over time, the relationship between Scott and Kip soured.

[¶4] In 2015, Scott filed an action against the partnership, Kip, Carl, and Nadene; he did not name Kathleen or Rebecca as defendants. In his complaint, Scott sought an accounting of the partnership interests, partition of partnership property, and dissolution of the partnership pursuant to the partnership agreement and Wyoming statutes. Paragraph 10 of the partnership agreement described the dissolution procedure:

Dissolution of Partnership. The partnership shall terminate and be dissolved upon the withdrawal, retirement, removal, dissolution, insolvency, legal incapacity, insanity, death, bankruptcy, or incompetency of any partner. At the time of dissolution of the partnership, the partners or their representatives may agree on such equitable division of the partnership assets, or purchase of the partnership assets as all partners or their representatives shall agree. In the absence of such an agreement, the partnership assets shall be appraised by three appraisers, selected by each of the partners[,] and the continuing partner or partners, if any, shall have the right to purchase the entirety of the assets of the partnership at a value determined by the appraisers. In the event there are no continuing partners, or the continuing partners choose not to purchase the assets, the assets shall be sold to the highest bidder.

[¶5] Over the next few years, the parties attempted to reach an agreement on how to divide the partnership assets. Scott's attorney sent an e-mail to the other attorneys in the case stating that Kathleen was "willing to participate" in settlement discussions and "join in any settlement, and [would] be represented" by him.

[¶6] On June 27, 2018, the parties attended a pretrial conference. During the conference, they agreed on a procedure to dissolve the partnership. Their agreement was memorialized in an Order to Dissolve Partnership and Establishing Distribution Procedure entered by the district court on July 26, 2018. Under the terms of the dissolution order, Scott's accounting and partition claims were dismissed. The order also stated Scott and Kip each owned a 33% interest in the partnership and Nadene and Carl owned the remaining 34%. The 33% interest allocated to Scott included his 24% interest and Kathleen's 9% interest. The 33% interest allocated to Kip included Rebecca's interest.³

[¶7] The dissolution order stated the partners could not agree on an equitable division of the partnership's assets; therefore, the appraisal and buyout process in Paragraph 10 of the partnership agreement would govern the dissolution. The order designated Scott as the withdrawing partner. Each partner was tasked with appointing one appraiser to value the partnership property, and the order outlined the timeline for the appraisal. The order stated Carl, Nadene, and Kip would have the opportunity to purchase Scott's interest in the partnership by paying him 33% of the appraised value of the partnership property. In exchange for payment, Scott agreed to execute deeds, assignments, and other transfer documents to convey his interest in the partnership to the purchasing partner or partners.

[¶8] The appraisal valued the partnership assets at $4,635,000. Kip elected to purchase Scott's interest and closing was set for June 10, 2019. Scott objected to Kip's election to purchase his interest and filed a motion to stay and enjoin the closing. He claimed he should not have been deemed the withdrawing partner and should have the opportunity to elect to buyout the others. Scott asserted the principal remedy he sought when he filed his complaint was partition of the ranch.

[¶9] Kip filed a motion to enforce the Order to Dissolve Partnership and Establishing Distribution Procedure and requested relief under Wyoming Rule of Civil Procedure 70.⁴ On July 1, 2019, the district court granted Kip's Rule 70 motion, concluding the dissolution order was binding on all parties and Scott's interest in the partnership property would immediately vest in Kip on the date Kip transferred payment to the clerk of the district court. Kip tendered payment for Scott's interest.

[¶10] Kathleen then filed a motion to intervene. She claimed a right to intervene because she owned a 9% interest in the partnership. She attached to her motion IRS K-1 forms showing her partnership interest. Kathleen swore in an affidavit she was not represented by Scott's attorney in the settlement negotiations and she had just recently become aware of the court's order divesting her of her interest in the partnership. She also filed a motion under Wyoming Rule of Civil Procedure 60 to set aside the dissolution order and all subsequent orders.

[¶11] The district court held a hearing on Kathleen's motions. The court apparently took evidence at the hearing; however, the transcript was not designated as part of the record on appeal. At the conclusion of the hearing, the district court denied Kathleen's motion to intervene as untimely. Because it denied her motion to intervene, it also denied her motion to set aside the orders. This appeal followed.

DISCUSSION

[¶12] Intervention is governed by Wyoming Rule of Civil Procedure 24.

(a) Intervention of Right . – On timely motion, the court must permit anyone to intervene who:

(1) is given an unconditional right to intervene by statute; or

(2) claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest.

(b) Permissive Intervention . –

(1) In General. – On timely motion, the court may permit anyone to intervene who:

(A) is given a conditional right to intervene by statute; or

(B) has a claim or defense that shares with the main action a common question of law or fact.

[¶13] Irrespective of whether the applicant requests intervention of right or permissive intervention, the motion must be timely. Rule 24(a) & (b) (requiring a "timely motion" to intervene); Hirshberg v. Coon, 2012 WY 5, ¶ 14, 268 P.3d 258, 262 (Wyo. 2012) (citing Samuel Adams, Michael S. Greco, and Ryan M. Tosi, 2 Bus. & Com. Litig. Fed. Cts. § 18:56 (3d ed.) ). Thus, regardless of the strength of the interest asserted by the applicant, a motion to intervene can be denied solely because it is untimely. In the Int. of EHD, 2017 WY 134, ¶ 14, 405 P.3d 222, 226 (Wyo. 2017) (citing Masinter v. Markstein, 2002 WY 64, ¶ 12, 45 P.3d 237, 242 (Wyo. 2002) ). See also, Platte Cnty. Sch. Dist. No. 1 v. Basin Elec. Power Co-op., 638 P.2d 1276, 1278 (Wyo. 1982) (the timeliness of an application to intervene is a threshold question).

[¶14] The district court has discretion in determining the timeliness of an application to intervene. Hirshberg, ¶ 13, 268 P.3d at 262 ; Concerned Citizens of Spring Creek Ranch v. Tips Up, LLC, 2008 WY 64, ¶ 11, 185 P.3d 34, 38 (Wyo. 2008). The court is "permitted to weigh the timeliness of an application to intervene in light of the circumstances of the particular case, including whether the applicant may have sought intervention earlier. Therefore, to prevail on an appeal from a finding that an application to intervene is untimely, an abuse of discretion must be demonstrated." Hirshberg, ¶ 9, 268 P.3d at 261 (quoting Masinter, ¶ 7, 45 P.3d at 240-41 ).

A court abuses its discretion when it acts in a manner which exceeds the bounds of reason under the circumstances. The party who is attacking the trial court's ruling has the burden to establish an abuse of discretion, and the ultimate issue is whether the court could reasonably conclude as it did.

Three Way, Inc. v. Burton Enterprises, Inc. , 2008 WY 18, ¶ 16, 177 P.3d 219, 225 (Wyo. 2008) (quoting Doenz v. Sheridan Cnty. Bd. of Cnty. Comm'rs , 949 P.2d 464, 465 (Wyo. 1997) (other citation and quotation marks omitted)). See also, McBride-Kramer v. Kramer, 2019 WY 10, ¶ 11, 433 P.3d 529, 532 (Wyo. 2019).

[¶15] In determining whether an application to...