Lawrence-Allison and Associates West, Inc. v. Archer

Decision Date13 January 1989
Docket NumberLAWRENCE-ALLISON,No. 87-184,87-184
Citation767 P.2d 989
PartiesAND ASSOCIATES WEST, INC., Appellant (Defendant), v. John ARCHER, Clint Edwards, and Fred Noll, Defendants, v. Brian LORENSEN, Appellee (Plaintiff).
CourtWyoming Supreme Court

Harry G. Bondi of Harry G. Bondi, P.C., Casper, for appellant.

Frank R. Chapman of Beech Street Law Office, Casper, and Dwight F. Hurich of Preuit, Sowada & Hurich, Gillette, for appellee.

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

BROWN, Chief Justice, Retired.

Appellant Lawrence-Allison & Associates West, Inc., appeals a judgment awarding damages and costs to appellee Brian Lorensen. Underlying this dispute is a tort action based on the termination of appellee's employment contract with appellant. This appeal addresses the propriety of the trial court's entry of default on liability against appellant for failure to appear at trial with counsel. Appellant also challenges an order of partial summary judgment collaterally estopping it from litigating certain factual issues raised in an April 1984 administrative decision concerning appellee's eligibility for unemployment compensation benefits. Appellant frames the issues as:

1. Were the issues decided at the administrative hearing identical to the issues to be decided by the trial court in order for the trial court to properly apply collateral estoppel to prevent Appellant from defending the allegations?

2. Did the burden of proof in the two proceedings remain the same; or was the burden of proof upon the Appellant at the administrative proceeding and upon the Appellee, as a party Plaintiff, in his civil lawsuit? If so, does such shift in burden of proof prevent application of principles of collateral estoppel?

3. Was it error for trial court to permit withdrawal of counsel and then hold Appellant in default?

4. Was it abuse of discretion in refusing to set aside the default?

5. Are the awards for past lost wages, future lost wages, and loss on annuity supported by the evidence?

Appellee frames the issues in this way:

1. Did the Trial Court Err in Failing to set aside the Default Entered against Appellant?

2. Did the Trial Court Erroneously Apply Collateral Estoppel to the Employment Security Commission Administrative Hearing?

3. Is the Judgment Supported by the Competent Evidence?

While we seriously question the trial court's application of collateral estoppel in this case, we reverse on the issue of entry of default and remand the case for further proceedings.

FACTS

Appellant was the prime contractor with the United States Department of Energy for management of certain activities on the United States Petroleum Reserve No. 3, north of Casper, Wyoming. Appellant subcontracted work projects on the Reserve to oil field service companies, including a subcontract under which appellee was employed as a tool pusher. The subcontract specified that all employees on the Reserve would use Government Service Administration (GSA) vehicles, and that the vehicles would be used only for business purposes. Hunting on the Reserve was also prohibited.

During the 1983 antelope hunting season, appellee allegedly violated these terms of his employment contract by shooting an antelope on the Reserve and transporting it to Casper in a GSA pickup. After an investigation into the matter, appellee was terminated on October 20, 1983.

Appellee then applied for unemployment benefits, and appellant protested. After an April 3, 1984, hearing, the Wyoming Employment Security Commission (ESC) granted benefits. In an April 18 decision letter, the ESC found no evidence supporting the hunting violation and further found that transporting the antelope carcass in the GSA pickup was not "misconduct" under ESC regulations sufficient to justify a denial of unemployment benefits. Appellant did not appeal from the ESC decision.

Appellee filed a complaint in district court on December 26, 1985, naming appellant and three individuals as defendants in an action for wrongful termination. The complaint included a jury demand. Appellant answered and also demanded a jury trial. Appellee moved for partial summary judgment on the issue of liability on the contract. A hearing was held on February 27, 1987. On March 2, the trial court issued an order finding the parties to be collaterally estopped from litigating issues determined in the ESC decision and denying appellee's motion for partial summary judgment.

On March 1, 1987, appellant had a meeting with its counsel during which appellant apparently complained about the way its case was being prepared for trial, which was to begin March 2. The record is unclear concerning the outcome of this meeting; however, defense counsel apparently left the meeting with the initial impression that his attorney-client relationship with appellant had been terminated.

Acting on this belief, defense counsel participated in a telephone conference with plaintiff's counsel and the trial court on the afternoon of March 1, in which he moved to withdraw from the case. The trial court apparently questioned defense counsel about his motion, although no record of the conference was made, and then allowed the withdrawal. Defense counsel notified his client by telephone that afternoon, leaving appellant only Sunday evening to find new defense counsel for trial the next morning.

On the morning of March 2, a written motion to withdraw and a corresponding order were submitted to the court and filed. The motion to withdraw gave the following explanation of the circumstances leading up to the March 1 telephone conference:

2. On March 1, 1987 I came to Casper, Wyoming to prepare my client[']s testimony and arrived in the early afternoon. Upon arrival at the office of Lawrence-Allison and Associates, I was greeted by the general manager, Jim Watson, and after discussing the status of the case with Mr. Watson he informed me that as the representative of the corporate defendant and speaking on behalf of the individual defendants that my services as the attorney for all of the defendants were no longer desired and they wished to obtain other counsel to represent them in this matter.

Appellant's general manager, Mr. James Watson, appeared that morning for the beginning of trial without replacement counsel and unable to proceed. The trial began with the following colloquy:

THE COURT: As I understand it the corporate defendant here has discharged their attorney. Do you have another attorney to represent the company?

MR. WATSON: No, sir, I do not, and I would like to make a statement about discharging Mr. Horn. This is the first time I have seen the Motion here from Mr. Horn, and I really have to disagree with it, Your Honor.

We disagreed, expressed our lack of confidence in Mr. Horn in representing us, discussed the possibility of changing attorneys, the possibility of bringing in other attorneys, to give him additional support. Mr. Horn said, if you don't have confidence in me as your attorney, I don't want to represent you, got up, took his box of files and left. And he filed this motion, which I say, we had not seen until this morning. So I had assumed at this point his Motion to Withdraw was based upon the disagreement and not the fact that said we had discharged him, which is not the case, Sir.

I expressed a serious concern for his ability to represent us and have listed several reasons that were stated to him, if I may give them to you, Sir.

After Mr. Watson explained his impressions of the March 1 meeting with original defense counsel, the trial court gave the following reply:

THE COURT: From what you have said and from what Mr. Horn has told me, it appears to me, first, that this difference of opinion between the corporation and Mr. Horn as to his handling of the case is something that has been going on for quite some time, and should have been dealt with before the eve of trial. The problem is we have got a courtroom full of jurors, witnesses here for the other side, and as far as I know the other side is ready to go. This trial has been scheduled for quite some time. I think the differences between the corporation and Mr. Horn should have been resolved long before now. From what you have said and what he has said, it appears to me he was either discharged, as he claims, or else his position in the case was made untenable, and at the last minute by all the objections and criticisms of him. So I don't think that the fact that the corporation is without an attorney at this time is the fault of anyone but the corporation itself.

So, I won't grant a continuance to obtain further counsel at this stage then the corporation is in default, and judgment can be entered against it. (Emphasis added.)

The trial court allowed appellee to amend his complaint against the individual defendants, and granted those defendants a continuance so they could obtain independent counsel. The trial court then adjourned the proceedings without requiring appellee to prove his case. A default judgment for $1,437,063.44 plus $3,224.06 in costs was entered the next day, March 3, based solely on an affidavit of one of appellee's witnesses. Appellant went off in search of a new attorney, and appellee filed execution on the judgment on March 10.

On March 11, through new defense counsel, appellant moved the trial court to set aside entry of default and the default judgment, to grant a new trial and to alter or amend the judgment. Attached to this omnibus motion were a series of affidavits, including a supplemental affidavit from original defense counsel. This affidavit gave a softened version of the events and impressions that resulted from the March 1 meeting between appellant and its first attorney:

2. On Sunday, March 1, 1987, I visited with Jim Watson, the General Manager, for the Defendant Lawrence-Allison & Associates West, Inc., hereinafter "L.A.W.". Also present at the meeting, was Mr. Dave Kelly, an employee of L.A.W. The...

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