Mantle v. N. Star Energy & Constr. LLC, S-18-0101
Court | United States State Supreme Court of Wyoming |
Writing for the Court | FOX, Justice. |
Citation | 437 P.3d 758 |
Decision Date | 12 March 2019 |
Docket Number | S-18-0101,S-18-0103,S-18-0102 |
Parties | Alexander Reed MANTLE and Marjorie M. Mantle, Appellants (Plaintiffs), v. NORTH STAR ENERGY & CONSTRUCTION LLC ; Gary W. Garland; Raymond W. Garland; Matt R. Garland; Three Way, Inc.; Hot Iron, Inc.; MGM Enterprises, Inc.; GT Investments, Inc.; and WyoDak Energy Services, LLC, Appellees (Defendants). Raymond W. Garland and Three Way, Inc., Appellants (Defendants), v. Alexander Reed Mantle and Marjorie M. Mantle, Appellees (Plaintiffs). Gary W. Garland, Appellant (Defendant), v. Alexander Reed Mantle and Marjorie M. Mantle, Appellees (Plaintiffs). |
437 P.3d 758
Alexander Reed MANTLE and Marjorie M. Mantle, Appellants (Plaintiffs),
v.
NORTH STAR ENERGY & CONSTRUCTION LLC ; Gary W. Garland; Raymond W. Garland; Matt R. Garland; Three Way, Inc.; Hot Iron, Inc.; MGM Enterprises, Inc.; GT Investments, Inc.; and WyoDak Energy Services, LLC, Appellees (Defendants).
Raymond W. Garland and Three Way, Inc., Appellants (Defendants),
v.
Alexander Reed Mantle and Marjorie M. Mantle, Appellees (Plaintiffs).
Gary W. Garland, Appellant (Defendant),
v.
Alexander Reed Mantle and Marjorie M. Mantle, Appellees (Plaintiffs).
S-18-0101
S-18-0102
S-18-0103
Supreme Court of Wyoming.
March 12, 2019
Representing Alexander Reed Mantle and Marjorie M. Mantle: Stephen R. Winship, Winship & Winship, PC, Casper, Wyoming. Argument by Mr. Winship.
Representing Gary W. Garland, Hot Iron, Inc., and GT Investments, Inc.: Kim D. Cannon & Codie D. Henderson, Davis & Cannon, LLP, Sheridan, Wyoming. Argument by Mr. Cannon.
Representing WyoDak Energy Services, LLC: Greg L. Goddard, Goddard and Vogel, P.C., Buffalo, Wyoming. Argument by Mr. Goddard.
Representing Raymond W. Garland, Matt R. Garland, Three Way, Inc., and MGM Enterprises, Inc.: Judith A. W. Studer, Schwartz, Bon, Walker & Studer, LLC, Casper, Wyoming. Argument by Ms. Studer.
Representing North Star Energy & Construction LLC: No Appearance.
Before DAVIS, C.J., and FOX, KAUTZ, BOOMGAARDEN, and GRAY, JJ.
FOX, Justice.
[¶2] In 2014, Mr. Killmer and Mr. Mantle proposed to buy North Star. In conjunction with obtaining the necessary financing, Mr. Killmer, Mr. Mantle, and the Garlands entered into a Memorandum of Understanding (MOU). Among other things, the MOU provided that Mr. Mantle and his wife, Marjorie Mantle, would personally guarantee payment of $6,110,000, part of the purchase price. As part of the buyout, North Star obtained a $3-million loan from First Northern Bank (FNB), secured by securities held by Mr. Mantle, Mrs. Mantle, and their trusts.
[¶3] Later in 2014, after the price of oil had dropped further, and after North Star had suffered significant losses as a result of some poor business practices, Mr. Mantle backed out of the deal. The Garlands took over management of North Star to complete pending jobs, auction equipment, and, by the spring of 2015, liquidate the company. While the wheels were falling off, the Mantles negotiated a new $3-million loan from FNB, and acquired the original North Star loan, stepping into FNB’s shoes with regard to its loan to North Star. The scenario gave rise to an assortment of claims and counterclaims, some of which the district court disposed of on summary judgment, with the remainder resolved after a bench trial.
ISSUES
[¶4] The parties raise numerous procedural and substantive issues on appeal, which we rephrase:
1. Did the Garlands and their associated entities abandon their counterclaims when they did not refile them after the amended complaint?
2. Was the Memorandum of Understanding an enforceable contract?
3. Did the district court err when it concluded that the Garlands’ negligent misrepresentation claim against Mr. Mantle would entitle them to no additional damages?
4. Did the district court err when it found no disputed issues of material fact to support Mantles’ claim of actual fraud?
5. Did the district court correctly decide that certain North Star conveyances were fraudulent?
6. Are the Garlands entitled to equitable affirmative defenses?
7. Did the district court correctly conclude that the elements necessary for LLC veil-piercing were absent?
[437 P.3d 769
8. Did North Star’s members have a fiduciary duty to its creditors?
9. Did the Garlands owe the Mantles a duty of good faith?
10. Should the Garlands’ breach of fiduciary duty claim have been brought as a derivative action?
11. Did the district court abuse its discretion when it denied Mantles’ attorney fees?
FACTS2
[¶6] Karl Killmer, a Casper CPA, started doing the accounting for Matt in 2004; for Gary and Hot Iron in 2006; and for Ray and Three Way in 2008. Beginning in 2000, Alex Mantle was employed by Three Way. Over time, Mr. Killmer and Mr. Mantle developed a close friendship. In the summer of 2010, the two began to discuss the formation of a company called North Star. When it became operational November 1, 2011, Mr. Mantle was appointed its President; he remained President until December 2014.
[¶7] North Star offered pipeline construction, roustabout, trucking, material hauling, road building, and underground utility services. Its members were Hot Iron, Three Way, and MGM. Ray and Gary were the initial managers, with Matt added as manager on December 31, 2011. Mr. Killmer was North Star’s accountant. He calculated each member’s capital contribution and determined each member’s equity in North Star: 50% owned by Three Way, 30% by Hot Iron, and 20% by MGM. Mr. Killmer testified North Star had an initial capitalization of $11 million, and he did not consider this to be undercapitalized.
[¶8] North Star did not immediately generate money. However, North Star’s operations in 2012 and 2013 were profitable, with a net income of $2,063,086 and $1,082,017, respectively. North Star had more than 300 employees during its three years of operations. Up until early 2014, Mr. Killmer prepared monthly financial statements based on the numbers Mr. Mantle supplied, which were provided to the members and reviewed at the company’s regular monthly meetings.
[¶9] The North Star Operating Agreement expressly allowed members and managers to make loans to North Star if revenues were insufficient to pay the company’s operating expenses. It also stated that loans would be "repayable by the Company to such Member ... at such date or dates as the Managers shall determine in his discretion[.]" Mr. Mantle and North Star’s managers and members provided occasional short-term loans, and North Star obtained a line of credit from American National Bank (ANB). ANB dealt primarily with Mr. Mantle in its transactions with North Star. ANB and North Star entered into a Commercial Loan Agreement, signed by Mr. Mantle as North Star’s managing member, on December 24, 2012. The loan agreement contained several covenants that would become significant: North Star would maintain a Debt/Worth Ratio not to exceed 1.25/1; any ownership changes must be pre-approved by ANB; and no additional debt could be incurred without prior approval by ANB. The 2013 amended agreement contained the same covenants and was also signed and initialed on each page by Alex Mantle.
[¶10] In January 2014, Mr. Mantle requested greater control of North Star, pronouncing, "the days of the ‘round table’ are over and we will move forward with the
[437 P.3d 770
‘oblong table’ that has a President at the head." He also wanted "to know that I don’t have to seek approval for decisions before I make them." He promised to make $5,000,000 in profit on $77,000,000 of gross revenue in 2014. The Garland brothers agreed to Mr. Mantle’s offer "to step back and let him run the company."
[¶12] In May or June 2014, Mr. Mantle and Mr. Killmer proposed a buyout to the member entities of North Star. Mr. Mantle testified that he only became interested in acquiring North Star because he "believed in Karl Killmer’s fairy tale, drank too much of his Kool-Aid." He explained that Mr. Killmer took the lead in proposing the plan, and in the buyout discussions with the Garland brothers. While those discussions...
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...the burden of establishing it "with a reasonable degree of certainty." See Mantle v. North Star Energy & Constr. LLC, 2019 WY 29, ¶ 78, 437 P.3d 758, 786 (Wyo. 2019) ("A plaintiff 'has the burden of producing sufficient evidence to prove his damages' and those damages must be established 'w......
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Hanft v. City of Laramie, S-20-0068, S-20-0069
...the burden of establishing it "with a reasonable degree of certainty." See Mantle v. North Star Energy & Constr. LLC , 2019 WY 29, ¶ 78, 437 P.3d 758, 786 (Wyo. 2019) ("A plaintiff ‘has the burden of producing sufficient evidence to prove his damages’ and those damages must be established ‘......
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Peterson v. Meritain Health, Inc., S-21-0123
...268 P.3d 264, 268 (Wyo. 2012), as amended on reh'g (Feb. 7, 2012)); see also Mantle v. N. Star Energy & Constr. LLC , 2019 WY 29, ¶ 69, 437 P.3d 758, 784 (Wyo. 2019) ("elements of a contract are offer, acceptance and consideration" (quoting McLean v. Hyland Enterprises, Inc. , 2001 WY 111, ......
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...fact, and the prevailing party is entitled to judgment as a matter of law." Mantle v. N. Star Energy & Constr. LLC , 2019 WY 29, ¶ 110, 437 P.3d 758, 794–95 (Wyo. 2019) (quoting Bogdanski v. Budzik , 2018 WY 7, ¶ 18, 408 P.3d 1156, 1160 (Wyo. 2018) ). [¶18] "The party requesting summary jud......
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Hanft v. City of Laramie, S-20-0068
...the burden of establishing it "with a reasonable degree of certainty." See Mantle v. North Star Energy & Constr. LLC, 2019 WY 29, ¶ 78, 437 P.3d 758, 786 (Wyo. 2019) ("A plaintiff 'has the burden of producing sufficient evidence to prove his damages' and those damages must be established 'w......
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Hanft v. City of Laramie, S-20-0068, S-20-0069
...the burden of establishing it "with a reasonable degree of certainty." See Mantle v. North Star Energy & Constr. LLC , 2019 WY 29, ¶ 78, 437 P.3d 758, 786 (Wyo. 2019) ("A plaintiff ‘has the burden of producing sufficient evidence to prove his damages’ and those damages must be established ‘......
-
Peterson v. Meritain Health, Inc., S-21-0123
...268 P.3d 264, 268 (Wyo. 2012), as amended on reh'g (Feb. 7, 2012)); see also Mantle v. N. Star Energy & Constr. LLC , 2019 WY 29, ¶ 69, 437 P.3d 758, 784 (Wyo. 2019) ("elements of a contract are offer, acceptance and consideration" (quoting McLean v. Hyland Enterprises, Inc. , 2001 WY 111, ......
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Prancing Antelope I, LLC v. Saratoga Inn Overlook Homeowners Ass'n, Inc., S-20-0052
...fact, and the prevailing party is entitled to judgment as a matter of law." Mantle v. N. Star Energy & Constr. LLC , 2019 WY 29, ¶ 110, 437 P.3d 758, 794–95 (Wyo. 2019) (quoting Bogdanski v. Budzik , 2018 WY 7, ¶ 18, 408 P.3d 1156, 1160 (Wyo. 2018) ). [¶18] "The party requesting summary jud......