Rolfe v. Varley, 92-60
| Decision Date | 04 October 1993 |
| Docket Number | No. 92-60,92-60 |
| Citation | 860 P.2d 1152 |
| Parties | Harley F. ROLFE and Pauline G. Rolfe, Appellants (Defendants), v. John S. VARLEY, Jr., Appellee (Plaintiff). |
| Court | Wyoming Supreme Court |
Lawrence B. Hartnett, Jackson, for appellants.
Joseph F. Moore, argued and Glenn W. Myers of Moore & Myers, Jackson, for appellee.
Before MACY, C.J., and THOMAS, CARDINE, GOLDEN and TAYLOR, JJ.
Harley and Pauline Rolfe, husband and wife, appeal from a judgment, awarding Jay Varley approximately $900,000.00, an equitable lien on all of the Rolfes' real estate holdings, and terminating the alleged partnership between the Rolfes and Varley. Underlying this controversy is a written document, signed by the parties, which was to formalize their agreement to develop a resort hotel facility in Jackson, Wyoming; but instead the agreement created a tangled web of rights and duties. After a four-day bench trial, the district court issued findings of fact and conclusions of law and a judgment in favor of Varley.
We affirm.
The Rolfes raise a number of issues:
ISSUE I. The trial court erred in finding from the facts of record in the action below and concluding as a matter of law that Appellant Pauline Rolfe was jointly and severally liable for any judgment against or obligation of her husband, Appellant Harley Rolfe, arising out of Appellant Harley Rolfe's relationship with the Appellee, Jay Varley the April 7, 1987 agreement.
ISSUE II. The court erred as a matter of law and of fact in awarding an equitable lien against the sole and separate property of Appellant Pauline Rolfe.
ISSUE III. The court erred as a matter of law in awarding an equitable lien against the property of Appellant Harley Rolfe.
ISSUE IV. The court erred as a matter of law in the manner in its construction and interpretation of the April 6, 1987 Agreement.
ISSUE V. The Appellee breached the partnership agreement by refusing to provide the means to satisfy the obligations set forth on Exhibit A to the Agreement; by wrongfully dissolving the partnership prior to the completion of its stated purpose; and, by breaching his fiduciary duty to the Appellee Harley Rolfe in the conduct of the partnership purpose which caused the failure of the project.
ISSUE VI. The trial court erred by failing to award Appellant damages for Appellee's breach of contract and fiduciary duty.
ISSUE VII. The trial court erred as a matter of law in the manner in which it terminated the partnership.
Appellant, Harley Rolfe (Harley), moved to Jackson, Wyoming in 1976, where he purchased the Western Motel. Before moving to Jackson, Harley worked in sales and marketing for several large communications corporations. Harley has a masters degree in business administration, with a concentration in marketing.
In 1979, Harley married appellant, Pauline Rolfe. It was his second marriage. When Harley and Pauline married, they each owned real estate in Jackson. Harley held title to the Western Motel complex which included eight lots. Pauline owned four properties, also located in Jackson, which were leased to local business professionals.
Since purchasing the Western Motel, Harley had wanted to develop it into a resort complex. Before enlisting the help of appellee, John Varley (Varley), Harley had contact with three other groups or individuals concerning the potential development of his Western Motel property. One of those individuals, Gary Smith (Smith), an attorney from Kentucky, acted as an intermediary between Harley and potential investors in the proposed resort project. These individual investors would advance Harley money, in anticipation of forming a business relationship with Harley for the development of the Western Motel. Harley used the money advanced by these potential investors to service the growing debt he and Pauline had accrued on their properties.
Then along came appellee John Varley. He is from Chicago and has a masters degree in business administration. He worked as a mortgage banker and then became self-employed, managing his own properties in the Chicago area. Varley first contacted Harley and Pauline in 1983 when he stayed at the Western Motel during a ski vacation in Jackson. Harley and Varley met again in Jackson in 1985, and in 1987 they engaged in their first serious discussions about developing the Western Motel property. After their meeting in 1987, Harley and Varley corresponded by mail and phone. These meetings and contacts culminated in the drafting and signing of a document titled, Agreement, on April 6, 1987.
During negotiations for the Agreement, Smith was also present. Smith and Harley drafted the Agreement using Harley's typewriter. The document was drawn as an agreement between the Rolfes (Harley and Pauline) and Varley. The Agreement provided that the Rolfes and Varley would enter into another agreement forming a partnership within thirty days of the execution of the Agreement. The Agreement stated that the future partnership must include the following "rights and obligations of the parties": (1) Harley must contribute the Western Motel property to the partnership, and (2) Varley must "provide the means to satisfy all current and existing debts and obligations encumbering or relating to the [Western Motel] property." The Agreement also stated that Varley, "for the benefit of the partnership and proposed development, shall use his best effort to purchase six lots" and that Varley will pay Harley and Pauline $10,000.00 for expenses already accrued. In addition, the Agreement described the possibility of a "wrap-mortgage" if Varley satisfied either part or all of the Western Motel debts; this section of the Agreement, however, was very ambiguous. The Rolfes and Varley never entered into the contemplated partnership agreement.
After the Agreement was signed, Harley and Varley vigorously pursued their dream of creating a resort complex on the Western Motel property. Using Varley's money, the parties hired a builder, an architect and several different consultants to assist in the development efforts. Originally, in 1987, the parties contemplated a $7,000,000.00 project; however, after several changes on advice from the consultants, the proposed cost of the project grew to an estimated cost of $30,000,000.00 in 1988. At this point, the project was in jeopardy, and the parties attempted to downsize the project to make it workable.
Over the two-year period, beginning in April of 1987 with the $10,000.00 described in the Agreement and ending in 1989 when the joint effort to develop collapsed, Varley advanced Harley and Pauline $397,316.45 for the payment of their debts on the Western Motel. During October 1989, after the $30,000,000.00 figure appeared and after attempts to downsize the project, Varley discontinued paying the Western Motel debts. Throughout this period of debt service by Varley, he made several demands from the Rolfes for a personal note and mortgage as security for the debt payments. The Rolfes, however, refused to execute a note and mortgage.
The debt, which the Rolfes had accrued on the Western Motel, was over $500,000.00. Several of these loans were secured, not only by the Western Motel property, but also by Pauline's property. When Varley signed the Agreement, it was his understanding that the payments he made for the Western Motel debt were to be secured by the same collateral as was securing the underlying debts.
In addition to the money Varley expended for servicing the Western Motel debt, he also spent $347,556.85 towards trying to develop the resort complex. These funds were payments made to the builder, the architect and the host of consultants the parties hired.
Finally, in September 1990, Varley filed this suit in district court. Following a four-day bench trial, the district court awarded judgment to Varley for his two years of Western Motel debt payment and for his expenditures in pursuit of the resort development. In addition, the district court granted Varley interest on those damages, an equitable lien on all of Harley's and Pauline's property, and terminated whatever formal relationship existed between the Rolfes and Varley. The Rolfes now appeal several aspects of the judgment and the district court's findings of fact and conclusions of law.
When reviewing civil judgments, accompanied by enumerated findings of fact and conclusions of law, this court affirms findings of fact unless proven to be clearly erroneous and reviews conclusions of law de novo. Hopper v. All Pet Animal Clinic, Inc., 861 P.2d 531, 538 (Wyo.1993). To declare a finding clearly erroneous, the appeals court must be " 'left with the definite and firm conviction that a mistake has been committed.' " Hopper, at 538 (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948)). Additionally, we defer to the trial court's assessment of witness credibility. Hopper, at 538 (citing Shores v. Lindsey, 591 P.2d 895, 899 (Wyo.1979)). In other words, when reviewing the record,
we must assume that evidence in favor of the successful party is true, leave out of consideration entirely evidence of the unsuccessful party in conflict therewith, and give to the evidence of the successful party every favorable inference which may reasonably and fairly be drawn from it.
The first three arguments raised by the Rolfes involve the same issue, whether the court erred in granting Varley an equitable lien against the properties of Pauline and Harley. In making this argument, the Rolfes claim that the equitable lien placed on Pauline's and Harley's property was error because the equitable lien doctrine does not apply to these facts. Additionally, they argue that the equitable lien placed on Pauline's property is error because she was not jointly and severally liable under the Agreement.
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