Mueller v. Zimmer

Decision Date05 December 2005
Docket NumberNo. 05-9.,No. 05-10.,05-9.,05-10.
PartiesRonald MUELLER, as an individual and Director of the Star Valley Ranch Association; and William L. Daley, an individual, Appellants (Plaintiffs), v. Vince ZIMMER, an individual; and Steve Crittenden, an individual, Appellees (Defendants). Ronald Mueller, as an individual and Director of the Star Valley Ranch Association; and William L. Daley, an individual, Appellants (Plaintiffs), v. Star Valley Ranch Association, a Wyoming non-profit corporation; Star Valley Ranch Association Board of Directors, in their official capacity; Roger Cox, an individual; and Cox, Ohman & Brandstetter, an Idaho chartered law firm, Appellees (Defendants).
CourtWyoming Supreme Court

Representing Appellees: John R. Hursh of Central Wyoming Law Associates, P.C., Riverton, Wyoming, for Appellees Zimmer and Crittenden; William K. Rounsborg of White and Steele, P.C., Denver, Colorado, for Appellees Star Valley Ranch Association and Star Valley Ranch Association Board of Directors; and Donald F. Carey of Quane Smith, LLP, Idaho Falls, Idaho, for Appellees Cox and Cox, Ohman & Brandstetter.

Before HILL, C.J., and GOLDEN, KITE, VOIGT, and BURKE, JJ.

HILL, Chief Justice.

[¶ 1] The Star Valley Ranch Association (the Association) is a nonprofit, mutual benefit corporation that manages a recreational residential subdivision in Lincoln County, Wyoming. The Association is incorporated under the Wyoming Nonprofit Corporation Act, Wyo. Stat. Ann. §§ 17-19-101, et seq. (LexisNexis 2005). A Board of Directors governs the Association with its members elected by the lot owners within the subdivision. The day-to-day operations of the Association are managed by a general manager, who is hired by and serves at the pleasure of the Board. Appellant Ronald D. Mueller (Mueller) is a lot owner and a member of the Association's Board of Directors. Appellant William L. Daley is a lot owner. Appellants filed a derivative action1 against the Association, its Board of Directors (the Board), and former directors and general managers of the Association. Appellants alleged that through fraud, misrepresentation, and conflict of interest transactions, the former directors and general managers deprived the Association of money to which it was entitled and that the Board breached its fiduciary duty to the Association members by failing to collect those funds. Appellants also filed a declaratory judgment action seeking to have an election to amend the Association bylaw setting the number of directors on the Board declared void. The district court granted summary judgment motions filed by the various defendants, and Appellants appeal. We affirm the summary judgments on the derivative action and finding that one of the Appellants' claims was frivolous, we award the defendants their costs, including attorneys' fees incurred in defending against that claim. We also affirm the district court's summary judgment on the declaratory judgment action.

ISSUES

[¶ 2] In Case No. 05-09, the Appellants set forth the following issues:

1. Did the District Court err in granting summary judgment to Steve Crittenden when there were material facts in dispute as to whether Crittenden and the Star Valley Ranch Association ever had an oral agreement settling the overpayment of Crittenden's salary and other alleged benefits?

2. Did the District Court err by granting summary judgment to Vince Zimmer when there were material facts in dispute and Zimmer failed to refute the allegation of fraud?

3. Was the settlement agreement between Vince Zimmer and the Star Valley Ranch Association void as a matter of public policy?

4. Was the hiring of Steve Crittenden and Vince Zimmer as general managers without a personal services contract an ultra vires act?

Defendants Vince Zimmer (Zimmer) and Steve Crittenden (Crittenden) responded with a statement of two issues:

1. With reference to Appellee Crittenden, was the District Court correct in granting Summary Judgment on the basis of a salary overpayment settlement ratified by the Board of Directors of Star Valley Ranch Association within which any and all prior antecedent salary and employment issues merged, which settlement has been fully performed absent the showing by pleading or otherwise of any fraud as required by Wyoming law?

2. With reference to Appellee Zimmer, was the District Court correct in granting Summary Judgment giving full effect to a written settlement agreement ratified by the Board of Directors of Star Valley Ranch Association within which all previous claims and disputes merged, which settlement agreement has been fully performed, absent a showing of a viable fraud claim?

In Case No. 05-10, the Appellants set out these issues:

A. Re Appellees Roger Cox and Cox, Ohman & Brandstetter

1. As a matter of law, was the transaction between the Association, Cox and Cox, Ohman & Brandstetter a conflict of interest transaction and, if so, did Cox obtain specific board approval required by state law and the Association Bylaw regulating conflict of interest transactions?

2. Did the District Court err in precluding Appellants from inquiring into the early billings of Cox, Ohman & Brandstetter and then use information from those billings to conclude that all charges were in furtherance of corporation business and that there was only an 8% average markup on the bills?

3. Did the District Court err in precluding the claim of negligent misrepresentation and fraud against Roger Cox?

B. Re Appellees Star Valley Ranch Association and its Board of Directors

1. Did the District Court err in not applying the more specific bylaw in determining if the increase in the size of the board of directors received the necessary affirmative vote?

2. Did the District Court err in concluding that the Association was not required to maintain records of actions taken by the members and the board?

3. Did the District Court err in determining that the Board exercised good business judgment in its decision to not seek the return of overpayment of salaries and benefits from prior general managers and the return of monies earned from a conflict of interest transaction without specific board approval[?]

Defendant Roger Cox (Cox) and the law firm of Cox, Ohman & Brandstetter (the law firm) reply with these issues:

1. Does this Court lack subject matter jurisdiction?

2. Did the trial court properly grant Roger Cox and Cox, Ohman & Brandstetter's motion for summary judgment on the equitable defenses of estoppel by acquiescence, laches and promissory estoppel as against Appellants' shareholder derivative lawsuit?

The Association and the Board offer the following statements of the issues:

1. Was the District Court correct in concluding that Appellees' properly placed Motion for Summary Judgment with respect to the change in the number of members of the Board of Directors from five to seven ought to be granted when Appellants failed to come forward with any competent and admissible evidence to call into question the vote of the membership to effect such change?

2. Was the District Court correct in concluding that Appellees' properly placed Motion for Summary Judgment with respect to Appellants' derivative claims concerning expense reimbursements to Cox ought to be granted when Appellants failed to come forward with any competent and admissible evidence to call into question the validity of those reimbursements, or to identify any legal authority to allow Appellants to challenge the actions of the Board?

3. Was the District Court correct in concluding that Appellees' properly placed Motion for Summary Judgment with respect to Appellants' derivative claims concerning alleged salary overpayments to Crittenden and Zimmer ought to be granted when Appellants failed to come forward with any competent and admissible evidence to call into question the validity of the decision not to pursue recovery of those alleged overpayments, or to identify any legal authority to allow Appellants to challenge the actions of the Board?

STANDARD OF REVIEW

[¶ 3] Our oft reiterated and well established standard for reviewing appeals from a summary judgment order:

When we review a summary judgment, we have before us the same materials as did the district court, and we follow the same standards which applied to the proceedings below. The propriety of granting a motion for summary judgment depends upon the correctness of the dual findings that there is no genuine issue as to any material fact and that the prevailing party is entitled to judgment as a matter of law. Reed v. Miles Land and Livestock Company, 2001 WY 16, ¶ 9, 18 P.3d 1161, ¶ 9 (Wyo.2001). A genuine issue of material fact exists when a disputed fact, if proven, would have the effect of establishing or refuting an essential element of an asserted cause of action or defense. We, of course, examine the record from a vantage point most favorable to that party who opposed the motion, affording to that party the benefit of all favorable inferences that fairly may be drawn from the record. Scherer Construction, LLC v. Hedquist Construction, Inc., 2001 WY 23, ¶ 15, 18 P.3d 645, ¶ 15 (Wyo.2001); Central Wyoming Medical Laboratory, LLC v. Medical Testing Lab, Inc., 2002 WY 47, ¶ 15, 43 P.3d 121, ¶ 15 (Wyo.2002).

Burnham v. Coffinberry, 2003 WY 109, ¶ 9, 76 P.3d 296, ¶ 9 (Wyo.2003). Questions of law are reviewed de novo.

Martin v. Committee for Honesty and Justice at Star Valley Ranch, 2004 WY 128, ¶ 8, 101 P.3d 123, 127 (Wyo.2004). We may uphold the grant of summary judgment upon any proper legal ground finding support in the record. Coates v. Anderson, 2004 WY 11, ¶ 5, 84 P.3d 953, 956 (Wyo.2004).

DISCUSSION
Jurisdiction

[¶ 4] Before getting to the substance of the parties' arguments regarding the propriety of the district court's summary...

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