Rivermeadows, Inc. v. Zwaanshoek Holding and Financiering, B.V.

• Decision Date: 20 September 1988
• Docket Number: No. 86-278,86-278
• Citation: 761 P.2d 662
• Parties: RIVERMEADOWS, INC., a corporation, and Donald H. Albrecht, Appellants (Defendants), Security Pacific National Bank, a National Banking Association, (Defendant), v. ZWAANSHOEK HOLDING AND FINANCIERING, B.V., a Netherlands corporation, Appellee (Plaintiff), Meadowrivers Corp., a Wyoming corporation, Appellee (Defendant).
• Court: Wyoming Supreme Court

Page 662

761 P.2d 662

RIVERMEADOWS, INC., a corporation, and Donald H. Albrecht, Appellants (Defendants) Security Pacific National Bank, a National Banking Association, (Defendant), v. ZWAANSHOEK HOLDING AND FINANCIERING, B.V., a Netherlands corporation, Appellee (Plaintiff) Meadowrivers Corp., a Wyoming corporation, Appellee (Defendant).

No. 86-278.

Supreme Court of Wyoming.

Sept. 20, 1988. ^*

Rehearing Denied Oct. 24, 1988.

Frank Hess of Dill & Hess, Jackson, and Richard H. Floum and Greg David Derin of Derin, Mason & Floum, Los Angeles, Cal., for appellants.

Charles G. Kepler of Simpson & Kepler, Cody, Leo P. Larkin, Jr. of Rogers & Wells, New York City, and John A. Karaczynski of Rogers & Wells, Los Angeles, Cal., for appellee Zwaanshoek Holding and Financiering, B.V.

Ross D. Copenhaver of Copenhaver, Copenhaver & Kath, Powell, for appellee Meadowrivers Corp.

Before THOMAS, CARDINE, URBIGKIT and MACY, JJ., and O'BRIEN, District Judge.

MACY, Justice.

In this action, plaintiff-appellee Zwaanshoek Holding and Financiering, B.V. (Zwaanshoek) commenced a civil action against defendants-appellants Donald H. Albrecht (Albrecht) and Rivermeadows, Inc. (Rivermeadows), defendant-appellee Meadowrivers Corp. (Meadowrivers), and defendant Security Pacific National Bank (Bank) seeking judgment on a defaulted $1 million promissory note and foreclosure and sale of the property securing the payment of the promissory note. Albrecht and Rivermeadows answered the Zwaanshoek complaint, asserting numerous affirmative defenses and counterclaims as well as cross-claims against Meadowrivers. After the jury returned a special verdict, the court entered judgment in favor of Zwaanshoek and Meadowrivers.

We affirm.

Albrecht and Rivermeadows present the following issues on appeal:

A. Did the District Court commit reversible error in granting Zwaanshoek judgment notwithstanding the verdict (hereafter "nov"), vacating the special verdict (Issue No. 3) in which the jury found by a preponderance of the evidence that "there is such a unity of interest and ownership between defendant Meadowrivers Corp. and plaintiff Zwaanshoek that they should be treated as a single entity," on the presumed grounds that there purportedly was no substantial evidence in the trial record to support that special verdict?

B. Did the District Court abuse its discretion and commit reversible error in denying defendants' motion to stay this action in light of the pre-existing California action?

C. Did the District Court abuse its discretion and commit reversible error in denying defendants' motion to join MIG and MIG-U.S.A. as parties to this action?

D. Did the District Court commit prejudicial error in denying appellants' motion to realign parties so that they would have the same number of peremptory challenges as putative defendant Meadowrivers and plaintiff Zwaanshoek?

E. Did the District Court commit reversible error in failing to grant appellants' motion for judgment nov and for new trial based upon (1) the inconsistency of the jury's verdicts, (2) defendants' rights of offset (including utilization of accrued and payable interest and lot installment payments due to Albrecht under his $2.5 million promissory note, and reimbursement for expenses and compensation due Rivermeadows under the Development Agreement), and (3) prejudicial errors regarding jury instructions and various pre-trial rulings?

F. Did the District Court commit prejudicial error in refusing to give appellants' proposed jury Instructions Nos. 5A (dealing in part with their offset claims), 9A (dealing with Rivermeadows' claimed breach by Zwaanshoek of its loan agreement), and 22 (dealing with Meadowrivers' obligations to pay development costs outside the Development Agreement)?

G. Did the District Court commit prejudicial error in refusing to admit Exhibits A-38 and A-93 proffered by defendants?

H. Did the District Court commit prejudicial error in refusing to allow defendants to conform their pleadings to the proof regarding their entitlement to compensation for development services, including repairs to the water system, on a quantum meruit theory?

(Footnotes and record references omitted.)

Early in 1981, Albrecht sold unimproved real property to Meadowrivers, a Wyoming corporation, and Albrecht's Wyoming corporation, Rivermeadows, entered into an agreement with Meadowrivers to develop that property. On February 19, 1981, Rivermeadows borrowed approximately $828,000 from Zwaanshoek in exchange for a $1 million promissory note and Meadowrivers' agreement to mortgage its unimproved property to secure the payment of the promissory note. Albrecht then unconditionally guaranteed the payment of Rivermeadows' $1 million promissory note to Zwaanshoek.

Meadowrivers also executed and delivered to Albrecht a promissory note in the amount of $2.5 million. To secure the promissory note, Meadowrivers mortgaged the same unimproved real property which was subject to the $1 million promissory note. In turn, Albrecht delivered a subordination agreement to Zwaanshoek, subordinating the $2.5 million promissory note and mortgage to the $1 million promissory note. Albrecht also sent a letter to Zwaanshoek stating that, in the event of default by Meadowrivers on its $2.5 million promissory note and mortgage, he would look solely to the mortgaged property and would not hold Meadowrivers liable. Albrecht then assigned the $2.5 million promissory note and mortgage to the Bank for security purposes.

Both Rivermeadows and Albrecht defaulted on the $1 million promissory note with Zwaanshoek, and Zwaanshoek filed suit against them and Meadowrivers claiming breach of the promissory note and seeking to foreclose on the Meadowrivers' property used as collateral. In their answer, Albrecht and Rivermeadows asserted affirmative defenses and counterclaims against Zwaanshoek and cross-claims against Meadowrivers, contending fraudulent misrepresentation, breach of contract, quantum meruit, acceleration of promissory note, foreclosure of mortgage, maintenance of action without a certificate of authority, lack of accounting, merger of mortgage, failure of consideration, violation of the "Alien Land Act," and unenforceable guaranty and asserting that the damages resulting from their counterclaims should be offset against the damages found pursuant to the claims made by Zwaanshoek.

On April 1, 1985, Albrecht and Rivermeadows filed a motion to stay the case until an earlier California action was concluded among Rivermeadows, Albrecht, Arab Investors Group, S.A. a.k.a. Mediterranee Investors Group, S.A. (AIG (MIG)), Mediterranee Investors Group-U.S.A., Inc. (MIG-U.S.A.), Zwaanshoek, Meadowrivers, and others alleging fraud, rescission, and breach of contract relating to a complex series of transactions among the parties, including the $1 million promissory note involved in this action. The motion was denied by the trial court in a summary order without a hearing or the filing of briefs in opposition.

Albrecht and Rivermeadows also filed a motion with supporting brief to join AIG (MIG) and MIG-U.S.A., alleging that these entities along with Zwaanshoek and Meadowrivers were each the alter ego of the other and hence necessary parties in the action. Without holding a hearing but after allowing Zwaanshoek to file a brief in opposition, the trial court denied the motion. The trial court further denied Rivermeadows' and Albrecht's motion for reconsideration on the matter without a hearing.

At a prehearing conference, the trial court assigned three peremptory challenges each to Zwaanshoek, Meadowrivers, and the Bank, and it assigned three peremptory challenges combined to Albrecht and Rivermeadows. In light of the trial court's actions, Albrecht and Rivermeadows filed a motion for realignment of peremptory challenges. After selection of the jury had been completed, the motion for realignment of peremptory challenges was denied. Additional argument ensued upon the matter, and the trial court reaffirmed its prior ruling.

At the conclusion of the trial which began on July 7, 1986, the jury returned a special verdict. Albrecht and Rivermeadows brought a motion for a judgment notwithstanding the verdict and a new trial, and Zwaanshoek brought its own countermotion for a judgment notwithstanding the verdict. In response to these motions, the trial court entered a nunc pro tunc judgment in favor of Zwaanshoek and Meadowrivers. In that judgment the trial court ruled, contrary to the jury's finding of a unity of interest in ownership, that Zwaanshoek and Meadowrivers were to be treated as separate entities apart from one another for the purposes of the transaction which was the subject of the suit on the basis of the intent of the parties as clearly shown by the evidence. Albrecht and Rivermeadows noticed this appeal.

I

In Albrecht's and Rivermeadows' first issue, they contend that the trial court improperly overruled the jury's special verdict which found that Zwaanshoek and Meadowrivers were one entity. They argue that the judgment rendered by the trial court through the jury's interpretation by special verdict is inconsistent with the evidence presented at trial showing that Zwaanshoek and Meadowrivers were involved in an alter ego relationship. They claim the trial court improperly placed itself in a role of trier-of-fact which was in excess of the trial court's jurisdiction.

The standards we employ when reviewing the sufficiency of evidence to support a jury verdict are well stated in Crown Cork & Seal Company, Inc. v. Admiral Beverage Corporation, Wyo., 638 P.2d 1272, 1274-1275 (1982):

"[W]e assume the evidence in favor of the successful party to be true, leaving out of consideration entirely the evidence in conflict, and assigning every favorable inference to the evidence of the successful party that can be reasonably and fairly drawn from it. In addition, when reviewing a jury verdict, we leave to the jury the...