HomeMy WebLinkAbout958760IN THE DISTRICT COURT OF THE THIRD JUDICIAL DISTRICT 000046
IN AND FOR THE COUNTY OF LINCOLN, STATE OF WYOMING
ADVANTAGE REALTY OF WYOMING, LLC,
a Wyoming limited liability company d /b /a
REMAX ADVANTAGE HOMES AND LAND,
PNK INVESTMENTS, LLC, an Idaho limited
liability company, and MICHAEL P. SIMMONS,
VS-
-v
Plaintiffs,
STEPHANIE M. LOMELI, SUSAN and ARDEN
ANDERSON d.b.a. CENTURY 21 MOUNTAIN
VIEW REAL ESTATE, and
TERESA KATHRYN ANDERSON,
Defendants.
STEPHANIE M. LOMELI,
Defendant /Counterclaimant,
ADVANTAGE REALTY OF WYOMING, LLC, a
Wyoming limited liability company d /b /a
REMAX ADVANTAGE HOMES AND LAND,
PNK INVESTMENTS, LLC, an Idaho limited
liability company, and MICHAEL P. SIMMONS,
Plaintiffs /Counter- Defendants.
FILED
BY- W 1 c�j l`' l
JUDGMENT AND ORDER BASED ON
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1
MAR 2 8 2011
KENNETH D. ROBERTS
CLERK OF DIM F.iCT COURT
3rd JUDICIAL D1: TR CT
LINCOLN COUNTY, STATE OF WYOMING
Civil No. 2007 155 -DC
RECEIVED 4/6/2011 at 10:07 AM
RECEIVING 958760
BOOK: 765 PAGE: 46
JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
BACKGROUND
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This matter was set for a jury trial beginning August 9, 2010. Despite
assurances at Pretrial Conference that the parties wanted a jury trial in spite
of the complicated pleadings, Counsel for both parties informed the Court on
the first day of trial that they wished to try the case without a jury. The
Court was reluctant to proceed without a jury because (1) the jury panel was
in the courthouse in response to the summons and ready to proceed and (2)
the Plaintiff had eight causes of action and the Defendant had three
affirmative defenses and seven causes of action in her counterclaim. The
Court observed that having a jury would require the parties to simplify the
issues to make the case a manageable one for the jury (which was not done
before trial), to reduce the case to one or two specific theories, at most.
The Court told the parties that it would not be willing to grant the motion for
a non -jury trial unless the parties simplified the theories of recovery to no
more than three. As a result the Plaintiffs reduced their claims to breach of
contract, breach of the implied covenant of good faith and fair dealing and
tortious interference with business expectancy. The Defendants' claims
were breach of contract, tortious interference with economic relations, and
anticipatory repudiation. The Court granted the parties' motion, the jury
panel was excused, and the Court proceeded with a bench trial.
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The Court finds that both parties had ample opportunity in the five
days of trial to develop the underlying facts of this case. The causes of
action that they saw arising from those facts were adequate to provide
compensation for any damages, if they were present. Unfortunately, much
of the time was taken to "provide the whole story" and the evidence
establishing the elements of the causes of action, particularly damages, was
missing.
FINDINGS OF FACT
The Court, having considered the testimony given, the exhibits
received, and the Proposed Findings of Fact and Conclusions of Law, find
and concludes as follows:
1. Because there is a conflict in testimony regarding whether the
agreement to employ the Defendant was part of the sale of business, the
following statement of law given to juries in every jury trial is important. The
Court uses the same standard in determining what witnesses to believe and
what exhibits are persuasive.
You will decide which witnesses you believe and how much
weight you assign to testimony....In deciding what you believe,
you may consider anything about a witness which tends to prove
or disprove truthfulness, including the following:
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1. the conduct, attitude and manner of the witness while
testifying;
5. whether the witness has a bias, a prejudice, an interest in the
outcome of the trial, or any other motive for not telling the truth;
If you conclude that a witness has willfully Tied under oath about
any material fact in this case, you may distrust all of the
testimony of that witness.
2009 Wyoming Civil Pattern Jury Instruction 1.02A.
I listened to and observed the demeanor of Michael Simmons and find
that except as corroborated by other competent testimony or evidence, his
testimony is unreliable and unbelievable.
So that there is no mistake by either party or the Wyoming Supreme
Court, if there is any conflict between Mr. Michael Simmons' testimony and
the testimony of any other witness contrary to Mr. Simmons, the other
witness's testimony has been believed. If Mr. Simmons gave testimony that
was not refuted but is not corroborated, it has been rejected unless the
circumstances indicate that it could only have occurred the way he
described. Otherwise, Mr. Simmons' testimony was believable only if it was
corroborated by other credible testimony or by the stipulation of Counsel.
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000O5O
2. In June of 2006, Stephanie Lomeli (Lomeli) and one Kevin Nester
(Nester) formed a Wyoming limited liability company known as Advantage
Realty of Wyoming, LLC (one of the Defendants herein) that would be based
in Alpine, Wyoming. Advantage Realty's office space is located above the
Bull Moose Saloon. Each party owned 50% of the LLC. Re /Max
International granted a franchise to Nester and Lomeli as individuals with
Nester having a 51% interest and Lomeli a 49% interest. There is no
evidence that the franchise rights were transferred to Advantage Realty,
although Advantage did business under Re /Max Advantage Homes and Land.
3. Kevin Nester, who apparently was not a licensed realtor, owned
the Re /Max franchise in Thayne, Wyoming. Because Nester was already
qualified as a Re /Max franchisee, he applied for a Re /Max franchise in Alpine
in his and Lomeli's names.
4. Lomeli resided in Wyoming from the mid 1990's until 2007. She
was a realtor with Jackson Hole Real Estate Appraisal from 2004 until
2006 when she left to form Advantage Realty with Nester.
5. Michael Simmons became a licensed realtor in Wyoming in
March, 2006. He first went to work for Century 21 Mountain View Real
Estate in Thayne, Wyoming.
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6. From 2004 through 2006 the real estate market was very active
in the Star, Valley /Alpine area. It began to decline in 2007 and has been
depressed since with little real estate activity in the Star Valley /Alpine area.
7. Stephanie Lomeli and Mike Simmons knew one another because
they were members of the same church in Star Valley. In the summer of
2006, Ms. Lomeli first talked with Mike Simmons about coming to work at
Advantage Realty. Simmons declined the invitation at that time.
8. In late September 2006, Lomeli learned that Simmons was
actively seeking to purchase a real estate franchise in the Jackson, Wyoming
market. Lomeli and Nester invited Simmons to a lunch meeting in Alpine to
talk about becoming partners. At the meeting, Nester represented to Mike
Simmons that he had the right of first refusal for the Re /Max franchise in
Jackson.
9. On October 6, 2006 Simmons entered into an agreement with
Lomeli and Nester, effective as of October 20, 2006, whereby Simmons
purchased a 12.5 percent membership interest in Advantage Realty for
$25,000.00. The agreement gave Simmons the option of purchasing an
additional 12.5 percent membership interest for 25,000.00 prior to
December 31, 2006. (Exhibit 1).
10. The agreement also provided
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[T]hat any future expansion by or with any Re /Max franchise
shall be a joint venture licensed under the name of Advantage
Realty of Wyoming, with the exception of Thayne and Afton,
Wyoming. Ownership of any additional offices as well as
percentage of investment, percentage of voting rights and
location shall be as follows unless otherwise provided for in an
addendum to this contract signed by all members.
000052
Id., (emphasis in original).
Thereafter the agreement provided that Simmons would have 50% and
Lomeli and Nester 25% each in the Jackson area. All those would have
33.33% in the Pinedale area and the Teton County, Idaho, area. Id.
11. Shortly after joining Advantage, on October 27, 2006, Simmons
found out that Nester did not have a right of first refusal for a Re /Max
franchise in Jackson, Wyoming. Simmons confronted Nester and threatened
to have him prosecuted criminally unless Nester agreed to sell Simmons
Nester's one -half (1/2) interest in Advantage for the sum of $40,000. In
order to avoid criminal prosecution, Nester agreed that day to sell his interest
to Simmons.'
1 Simmons apparently did not understand on October 27, 2006, or when he testified at trial, the implications of
W.S. 6 -2 -402 (Lexis 2010), the statute making blackmail a crime, which states:
6 -2 -402. Blackmail; aggravated blackmail; penalties.
(a) A person commits blackmail if, with the intent to obtain property of another or to compel action or
inaction by any person against his will, the person...:
(ii) Accuses or threatens to accuse a person of a crime....
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12. Because Advantage had apparently not cashed Simmons'
membership purchase check of $25,000 for his 12.5% (one- eighth) interest
in Advantage, Simmons and Lomeli agreed to void the check and Simmons
and Lomeli each would own 50% of Advantage Realty. As a result of his
threat to prosecute Nester, Simmons obtained a 50% ownership of
Advantage for $40,000.00.
13. The Simmons /Nester membership sales agreement of October
27, 2006, did not obligate Nester to transfer his interest in the Alpine
Re /Max franchise to Simmons. Article II of the Agreement titled
"PURCHASE PRICE, TERMS OF SALE AND PURCHASE AND COMPLETION
OF TRANSACTION" provides in pertinent part:
2.1 The purchase price for the sale of the seller's membership
interest is Forty Thousand Dollars ($40,000).
2.3 Upon signing the Agreement Seller will deliver certificates,
if such certificates physically exist, representing all of the shares
of Seller's membership interest, duly endorsed, free and clear of
all encumbrances. Seller appoints Buyer as Seller's agent and
attorney -in -fact to execute and deliver all documents needed to
convey his shares of the Stock. By signing this Agreement,
Seller shall be deemed to have duly endorsed and delivered all
2 The recital in Article 1 states: "1.2 Buyer desires to purchase seller's membership interest in Advantage (the
membership interest) on the terms and conditions contained herein." The membership interest is not defined as
an interest in the franchise.
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Id.
000054
shares of Seller's membership interest, whether or not such
shares physically exist.
Exhibit 2.
In Article III of the agreement titled "SELLER'S REPRESENTATIONS,
WARRANTIES, AND COVENANTS" in paragraph 3.4, the agreement states:
Seller represents that Seller will cooperate as needed to
execute any documents that may be required for the effective
operation of Advantage as a result of seller's sale of seller's
membership interest in Advantage, including, but not limited to,
any documents as may be required by Re /Max International and
any Wyoming, Idaho, Federal or other governmental authorities
to remove or transfer seller's name or rights, if any, that might
have attached to seller as a result of his membership in
Advantage.
It therefore appears that Nester was only agreeing to execute any
documents that might be required by Re /Max International to remove or
transfer the seller's name or rights, if any, that might have attached as a
result of his membership interest in Advantage.
14. On April 4, 2007, Kevin Nester apparently signed an addendum
to the Franchise Agreement with Re /Max Mountain States Region
s I have said "apparently" because the signature of Kevin Nester appears to be the same as the signature appearing
on Exhibit No. 1 which was notarized. However, Stephanie Lomeli appears to have signed the "By" line for the
"Former Franchisee" indicating she signed on Nester's behalf on March 1, 2007. She also signed the "Franchisee"
line On March 1, 2007. See Ex. 38.
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transferring his 51% interest in Franchise 11-466 commencing June 5,
2006, to Lomeli, thus making her a 100% owner of the franchise. Ex. 38.
15. In February, 2006, prior to the formation of Advantage Realty,
Lomeli obtained a domain name for a Website named
"westernwyomingrealestate.com." This domain name was used by
Advantage until approximately June 1, 2007. On October 27, 2006,
Simmons became the managing member of Advantage Realty. Between
November 2006 and May 2007, Advantage paid the domain name renewal
fees and any other advertising expenses associated with it. It does not
appear that any attempt to make the domain name an asset of Advantage
was ever made.
16. In December 2006, Lomeli left Wyoming to spend the winter in
Maui, Hawaii. In March of 2007, Lomeli stated to Simmons that she and her
husband were tired of the Wyoming winters and wanted to start a family.
She asked Simmons if he was interested in buying her interest in the
company. Lomeli mentioned a figure of 100,000.00.
17. Simmons called his father, Paul Simmons, who resides in the
Portland, Oregon area, and asked him if he was interested in purchasing
Lomeli's interest in Advantage Realty. Paul Simmons and his wife owned a
company called PNK Investments.
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18. Paul Simmons owned a property in Star Valley Ranch, Lot 122.
Paul Simmons testified that he had about $50,000.00 invested in Lot 122
and thought it was worth between $90,000.00 and $100,000.00. Paul
Simmons told Mike Simmons that he was interested in purchasing Lomeli's
interest in the business and suggested that Mike Simmons offer the Lot to
her rather than cash.
19. Before the sales agreement was signed, Lomeli told Simmons
that she wanted additional compensation for two years. In essence,
Simmons, on behalf of Advantage agreed: (1) to pay 10% of all net income
of Advantage for two years; (2) to provide commission split on all of
Lomeli's sales with Lomeli getting 80% and Advantage 20 (3) on real
estate sold that is "in Lomeli's name," Lomeli would receive 85%. Lomeli
agreed to sell real estate and provide periodic consulting.
20. Michael Simmons drafted an "AGREEMENT FOR SALE AND
PURCHASE OF MEMBERSHIP INTEREST IN ADVANTAGE REALTY OF
WYOMING, L.L.C." Ex. 3. On April 3 or 4, 2007, Paul Simmons, on behalf
of PNK, and Lomeli signed the sales agreement wherein Lomeli sold her 50%
interest to PNK. Id.
21. The April 3, 2007 agreement between the parties, "Exhibit 3,"
states at paragraph 6.2 that "No change, modification, or waiver of any
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provision of this agreement shall be valid or binding unless it is in writing,
dated subsequent to the date hereof, and signed by seller and buyer. No
waiver of any breach, terms, or condition of this agreement by any party
shall be effective unless in writing and signed by all parties." Ex. 3, p. 4.
22. April 4, 2007 Lomeli typed and signed an agreement reflecting
the additional compensation (profit sharing and commission split) she had
discuseed with Michael Simmons. Michael Simmons agreed to it but did not
sign it on April 4, 2007, claiming he did not have a pen and would sign it
later. He eventually signed it on April 13, 2007. See Ex. 26 Additional
Compensation Agreement.
23. On May 7, 2007 Paul Simmons and Michael Simmons prepared
and signed an "Addendum to Purchase and Sale Agreement." Lomeli signed
this addendum on May 14, 2007. This addendum waives the requirement
set forth in section 7.2 of the sale agreement that the sale agreement was
subject to the approval of Re /Max International, Inc., and stated that "closing
shall occur on the recording of a 'Quit Claim Deed' from buyer for Plat 18,
Lot 122 of Star Valley Ranch." Ex. T.
24. On May 10, 2007, Paul Simmons prepared a "Limited Power of
Attorney" for the purpose of allowing his son, Michael, to sign certain
documents because he would not be available to sign them the following
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week when the final closing of the sale of membership interest would occur.
This "Power of Attorney" stated, "There exists several documents to this
agreement that have been duly agreed to and signed by the parties to date."
Exhibit 150 (emphasis added).
The Limited Power of Attorney authorized Michael P. Simmons to sign
on behalf of PNK (1) "any and all last minute addendums necessary to
finalize the sale, only after discussing them with me..." and (2) "the Quit
Claim Warranty Deed." Ex. 150
25. A question arises, then, just what documents or addendums had
been duly signed on May 10, 2007? The first is Exhibit 26, the agreement
to pay Lomeli a percentage of Advantage income and commissions for two
years, which was signed on April 4, and April 13, 2007, by the parties.
26. Because the agreement to pay Lomeli a percentage of
Advantage's sales and commissions for property she sold for two years was
discussed and agreed to prior to April 3, 2007, and it was agreed by Michael
Simmons to be part of the sale of assets and it was signed by Michael
Simmons on April 13, 2007, and because Paul Simmons, on May 10, 2007,
referred to several addendums to the April 3, 2007, agreement as having
been signed in the power of attorney agreement, the Court concludes that
4 It is curious that this power of attorney agreement was "produced" for the first time on the last day of trial, and
only after some of Paul Simmons' signatures were called into question.
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the parties intended that the profit sharing agreement was an integral part of
the sale of Lomeli's membership to PNK.
27. On May 14, 2007, Lomeli and Simmons, acting on behalf of both
Advantage and PNK, signed a reciprocal hold harmless agreement and Lomeli
signed an agreement cancelling her listings.
28. On May 17, 2007, the deed on the Star Valley Ranch lot was
executed. Ex. 50(a).
29. On May 18, 2007, Michael Simmons cancelled Lomeli from the
Teton Board of Realtors because Advantage had been "fined" $100 after
Lomeli had listed three lots for sale before she had a signed brokerage
agreement.
30. On May 20, 2007, Simmons met with Lomeli at the Alpine office
and cancelled the additional compensation agreement and terminated her
from any further involvement with Advantage.
In this meeting, Simmons told Lomeli he was terminating her
certification with Advantage and the obligation under the Profit Sharing
Agreement for four reasons: (1) that in September, 2006, Lomeli had told
the sellers of a lot that the buyer had waived an easement to the property.
Simmons claimed that Lomeli had intentionally misrepresented that the buyer
was waiving the easement. (It was not established that the buyer waived it,
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only that the sellers were worried about being sued). (2) That Lomeli listed
three lots before having a signed agreement and Advantage was fined $100.
See 28, supra. (3) That the owner of the Bull Moose Saloon, Mr.
Blittersdorf, was permitting exotic dancers to perform in the saloon and this
reflected badly on Advantage. Advantage was leasing its office space from
Blittersdorf above the Bull Moose Saloon. Simmons claimed that Lomeli had
told him that Blittersdorf had promised not to have exotic dancers to induce
Advantage to rent from him. (4) The Salt River Cove Problem. On May 16,
2007, a mortgage broker in Afton contacted Simmons and told him that
Lomeli had listed a home for sale that was subject to a construction loan
which prohibited the home being sold or used as a "spec Home."
31. At the conclusion of this meeting, Simmons told Lomeli that her
affiliation with Advantage was terminated and he handed her several
documents that had been prepared prior to the meeting. These included a
notice of termination (Exhibit 70), a letter warning her not to contact any of
the clients of the firm, and a letter releasing to her two listings of her own
property that she had with the firm.
32. The timing of and circumstances surrounding the chain of events
described above are circumstantial evidence proving that Mike Simmons
never intended to fulfill Advantage's compensation agreement when he
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signed it on April 13, 2007. He delayed signing it until he had a plan to
avoid paying Lomeli what he promised Advantage would do. The reasons for
the termination of the agreement were pretexts to justify a decision that was
already made. While I am not condoning the practices that Ms. Lomeli was
accused of, they were not in violation of any of the terms of the Profit
Sharing Agreement and with the exception of the Salt River Cove matter,
were known by Simmons prior to April 13, 2007, the date he signed the
Profit Sharing Agreement. Given the methods used by Mike Simmons in the
conduct of his business, i.e., threats of prosecution to coerce the sale of the
business interest, causing documents to be signed by the notary as original
and attested to as such by the notary, the reasons given to terminate Lomeli
must have been a shocking irony to her.
33. While the meeting to close the transfer of Lomeli's membership
interest took place on May 17, 2007, with a deed being delivered to her
then, a new deed was prepared and "signed" by Lomeli on May 21, 2007,
the day following her termination. Because the deeds are identical, the Court
infers and concludes that Michael Simmons became concerned that Lomeli
might not record the deed delivered to her on May 17, 2007. The
Addendum to Purchase and Sale Agreement signed on May 14, 2007 by
Lomeli, and on May 7, 2007 by Michael Simmons or Tiffany Hancock for
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Paul Simmons (Exhibit T) states "and closing shall occur upon the recording
of a "Quit Claim Deed" from buyer for Plat No. 18, Lot 122 of Star Valley
Ranch, Wyoming. (Ex. T, 1) [Emphasis added} As a precaution, Simmons
had another deed prepared on May 21 and recorded it on May 31.
34. This is one of the surprising details of this trial, especially in light
of Michael Simmons' pious condemnation of Lomeli's activities as noted
before. It was not the only time that Ms. Hancock put a false jurat on a
document under the direction of Michael Simmons. These include:
(a) Defendant's Exhibit T, the May 7, 2007 Addendum to Purchase
Agreement.
(b) Defendant's Exhibit E, the May 7, 2007 Hold Harmless
Agreement.
(c) Defendant's Exhibit U, signing Lomeli's name and notarizing it in
a letter to Thomas Reid Investigation for the Wyoming Real Estate
Commission regarding an investigation into Michael Simmons' conduct. Ms.
Lomeli was in Hawaii on December 20, 2008. Ms. Hancock and Mr.
Simmons testified that those persons all signed the documents and she
notarized them.
35. Lomeli went to work for Century 21 about one week after the
May 20, 2007 meeting. On June 1, 2007 Lomeli directed her website to her
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new place of employment, Century 21. Later, Lomeli assigned the Re /Max
franchise in Alpine back to Mike Nester.
36. Neither the subsequent purchase agreement between Lomeli and
PNK and the employment agreement between Lomeli and Advantage
mentions the transfer of the domain name. Nor is there any evidence that
the domain name was transferred to Advantage when Lomeli and Nester
formed Advantage in June of 2006. However, Simmons, as managing
member of Advantage undertook an aggressive advertising campaign using
Lomeli's domain name. Apparently, he believed, without checking, that
Advantage, not Lomeli, owned the domain name.'
37. The Plaintiffs contend that Lomeli's retention of her website was
in violation of the sale of her membership interest in Advantage Realty. They
claim that because Advantage used the website in its advertising and paid
the renewal fees and that the website was crucial to the success of its
operation, that Advantage owned it. This argument is contrary to several
basic facts. First, there is no indication that Ms. Lomeli's website was ever
s Plaintiffs introduced Exhibit No. 24 which is an email dated January 16, 2007, to Tiffany Hancock, the office
secretary for Advantage Realty. "Attached are the renewal notices. Will you please make sure these get reviewed
before the due date. One of them is our website address and it would be a nightmare if someone swiped it." The
Plaintiff used this to show that the website address belonged to Advantage. It shows that Lomeli was allowing
Advantage to use her website. It also shows that Lomeli was receiving the removal notice, not Advantage, and that
she may have been allowing Advantage to use it. Simmons knew or should have known by this that Advantage did
not own the website.
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intended or agreed to be transferred to Advantage. To the contrary, Lomeli
acquired it in February of 2006, some four months before Advantage was
formed. She apparently used it in the operation of the Advantage office in
Alpine, but there is no evidence of a transfer. If the website was so crucial
to the operation of Advantage's business, Michael Simmons should have
conducted proper due diligence and made sure that Advantage owned it.
This was not done. Advantage probably suffered a Toss of business because
of this oversight, but the failure to assign the website to Advantage was not
in breach of any agreement and Advantage had no reasonable expectation to
receive it.
38. The Court finds that the repudiation and termination of the Profit
Sharing Agreement terminated Lomeli's obligation to further perform any
other obligations in the sale of membership interest.
39. The Plaintiffs claim that they are entitled to damages from Lomeli
because she refused to sign the Re /Max franchise to Advantage and she did
not transfer the "domain name called westernwyomingrealestate.com.
40. The Court finds that Lomeli personally owned the domain name
prior to the formation of Advantage and there is no evidence that it was ever
transferred, or agreed to be transferred to Advantage. The use of the name
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would have continued if Simmons had not terminated Lomeli's affiliation with
Advantage.
41. As to Lomeli's failure to assign the Re /Max franchise to the
Alpine area, the Court finds that Advantage's repudiation of the Profit
Sharing Agreement and breach of the parties' agreement relieved her of any
obligation to cooperate in that regard. Moreover, whether or not the
franchise was assignable appears to be subject to the approval of Re /Max
International. The Plaintiffs have not shown that Re /Max would have
continued the franchise without Lomeli being affiliated with the business.
CONCLUSIONS OF LAW
1. When two or more parties execute two contracts at substantially
the same time and the two contracts are part of the same exchange, they
are interdependent and form one agreement. See John D. Calamari
Joseph M. Perillo, The Law of Contracts 11.26, p. 284 85, (3 Ed.
1987) citing Restatement Contracts 231, cmt. d.
2. "The consideration given by the promisee need not move to the
promisor but may move to someone else at the request of the promisor."
Houghton v. Thompson, 157 Wyo. 196, 115 P.2d 654, 658 (Wyo. 1941)
citing Williston on Contracts, 102A.
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3. "[T]he real question is whether the parties intended that there be
a direct benefit for the third party." Cordero Mining Co. v. U.S. Fidelity and
Guar. Ins. Co., 2003 WY 48, 9, 67 P.3d 616, 621 (Wyo. 2003). If so, it
creates a direct action by one not a party to the contract to enforce the
contract. Id. at 15, 67 P.3d at 623.
4. The Wyoming Civil Pattern Jury Instructions provide the
following summary of the law on ambiguous contracts:
What the parties intended as to the essential terms and
conditions of an agreement can be determined from the language
used by the parties and from the surrounding circumstances of
the transaction. The words and acts of the parties are to be
given the meaning which they would convey to reasonable men
at the time and place of their use or commission. All the
surrounding circumstances must be considered in order to
ascertain the terms of the contract. These include [earlier
dealings between the parties...and the subsequent conduct of
the parties in carrying out the agreement in question. In this
regard, one indication of the true intent of the parties is their
conduct before any controversy arose between them. Where the
parties have placed a practical construction on the contract by
their conduct, it should be given great weight in determining the
meaning of the contract. This is especially true where the parties
have for a long time acquiesced in, and acted in good faith upon,
such practical construction.
2009 W.C.P.J.I. 15.08.
5. The Court concludes that there were two concurrent contracts
made in order to accomplish the transfer of Lomeli's membership interest to
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PNK and to transfer the Re /Max franchise to Advantage. Both agreements
were interdependent and both created third -party beneficiaries.
The membership sale agreement between Lomeli and PNK contained an
exchange of promises for consideration. Lomeli promised to transfer her
50% interest in Advantage to PNK and to sign other documents.
This agreement was not the "total package" needed to accomplish the
transfer of membership to PNK and the assignment of the franchise to
Advantage. This agreement was not sufficient to transfer the domain name
to Advantage. There needed to be an assignment of the domain name to
Advantage as an asset of Advantage.
6. The Wyoming Civil Pattern Jury Instructions provide the
following summary of the law on modification of contracts:
Parties to a binding contract may modify their rights and
obligations under the contract. However, the party claiming
there has been a written modification must prove there was an
offer to modify the contract, acceptance of that offer, and
consideration for the modification.
However, an agreement to do what one is already bound to do
cannot serve as consideration to support a modification.
2009 W.C.P.J.I. 15.10.
7. There was a second agreement between Lomeli and Advantage
which was agreed to and signed contemporaneously with the PNK
agreement. Advantage agreed to pay Lomeli 10% of its net income for two
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(2) years and to pay Lomeli an agreed upon commission for real estate she
sold for Advantage for the next two (2) years. Lomeli agreed (1) to assign
her membership in Advantage to PNK and to provide "consulting" and work
as a real estate expert for Advantage. Thus, PNK is a third -party beneficiary
of the Lomeli /Advantage agreement.
8. Breach and Anticipatory repudiation
a. Each party to a contract owes the other a duty of good faith
performance and one party is excused from performance by the unwarranted
interference of the other and the party preventing performance is in breach
of the contract. See E. g. Concrete Specialties v. H. C. Smith Const. Co.,
423 F2d 670, 672 (10 Cir. 1970); Alpine Climate Control Inc. v. D,J. Inc.,
2003 WY 138 13,78 P.3d 685, 689 (Wyo. 2003).
b. As noted in the findings of fact, the reasons given by Mike
Simmons to terminate Ms. Lomeli from the two -year profit sharing and
commission agreement were not unknown by Mr. Simmons before the
closing. They were either not serious enough to mention at the closing
meeting on May 17, 2007, or were deliberately withheld from Ms. Lomeli so
that the transfer of membership would go through.
9. The Court finds that both alternatives were present. The four
reasons for Advantage to terminate the profit sharing agreement were not
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sufficiently serious enough as a matter of law to provide good cause to
terminate the agreement with Lomeli. This is true, particularly in light of the
course of conduct of Simmons on having the office notary forge signatures
and notarize documents. Moreover, Mr. Simmons knew of three of the four
reasons for termination at the closing and failed to inform Lomeli that he was
considering (or had planned) not to perform the profit sharing /commission
agreement. Either was the termination of this agreement and was a breach
by Advantage.
10. "Anticipatory Repudiation" or anticipatory breach is defined as a
party's repudiation of its duty under a contract before the time for
performance has arrived. E.g. Rousselis v. Wyoming Medical Center, 4 P.3d
209, 254 (Wyo. 2000). The breach must be serious enough that the injured
party could treat it as fatal if it occurred. Id. A party's good faith or claimed
good faith does not prevent a statement from being a repudiation. The party
acts at its own peril. Id.
Thus, a party's rejection or breach of an executory contract is an
anticipatory repudiation of the contract which relieves the other party of any
remaining performance. Id. Therefore, Advantage's affirmative acts, done
with the concurrence of Mike Simmons acting on behalf of PNK, of
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terminating Lomeli's contract, that rendered her unable to perform, was a
repudiation.
Under Wyoming law, if one party materially breaches the contract, the
injured party is not obligated to perform its promises under the contract. Id.
The non breaching party is also able to claim damages immediately. Id.
11. Here, the duties that Lomeli was to perform under the two
contracts comprising the whole membership sale agreement were: (1) to
transfer her 50% ownership in Advantage to PNK and (2) to work as a
consultant and realtor for Advantage for two years following the transfer of
her membership interest. When Mike Simmons told Lomeli, on behalf of
Advantage and PNK, that they were terminating the profit sharing,
consulting, and agency agreement with Advantage on May 20, 2007, they
materially breached the agreement. Lomeli was thus relieved of her
responsibility to work for Advantage and of any responsibility to assign the
franchise to Advantage.
12. The Wyoming Civil Pattern Jury Instructions provide the
following summary of the law on the implied covenant of good faith and fair
dealing:
Every contract includes an implied covenant of good faith and
fair dealing. The implied covenant of good faith and fair dealing
requires that neither party commit an act that would injure the
rights of the other party to receive the benefit of their
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agreement. Compliance with the obligation to perform a contract
in good faith requires that a party's actions be consistent with
the agreed common purpose and justified expectations of the
other party. A breach of the covenant of good faith and fair
dealing occurs when a party interferes or fails to cooperate in the
other party's performance. The purpose, intentions, and
expectations of the parties should be determined by considering
the contract language, the parties' course of conduct and
industry standards.
The implied covenant of good faith and fair dealing may not be
used to create new, independent rights or duties beyond those
agreed to by the parties. The concept of good faith and fair
dealing is not a limitless one. Rather, it must arise from the
language used or be indispensable to effectuate the intention of
the parties as determined by the contract language, the parties'
conduct and their course of dealing. In the absence of evidence
of self dealing or breach of community standards of decency,
fairness and reasonableness, the exercise of contractual rights
alone will not be considered a breach of the covenant.
2009 W.C.P.J.I. 15.06.
Lomeli's obligations under the contract terminated when Michael
Simmons fired her from Advantage. Up to that point, Lomeli had not
breached any part of their agreement.
13. Although the Defendant did not supply the Court with a listing of
elements of Tortious Interference With Business Relations, the Court does
find that the Plaintiff's tortiously filed a /is pendens which interfered with the
Defendant's ability to market the property. The elements of tortious
interference [See W.C.P.J.I. 21.02] are:
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(1) The existence of a valid contractual relationship or business
expectancy. The Defendant had a valid contract with the Plaintiff's to
transfer Lot 122 in consideration of Lomeli's 50% interest in Advantage.
(2) Knowledge of the relationship or expectancy by the Plaintiff's.
The Plaintiff's had received Lomeli's share in Advantage and knew Lomeli
was expecting the lot as value for her interest.
(3) Intentional and improper interference by Plaintiff's inducing or
causing a breach or termination of the relationship expectancy. PNK
received Lomeli's share of Advantage and had no reason to file the lis
pendens. Lomeli was unable to sell the property with the lis pendens
attached to it.
(4) Resultant damage to the party whose relationship or expectancy
has been disrupted. Lomeli testified that Lot 122 was worth $100,000.00
at the time of the transaction and it is presently worth $50,000 less because
of the lis pendens.
DAMAGES
1. A party to a contract has substantially performed their
obligations under the contract when there has "been no willful departure
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from the terms of a contract and no omission in essential points.
Substantial performance means that the contract has been honestly and
faithfully performed in its material and substantial parts...." 2009 W.C.P.J.I.
15.20. Stephanie Lomeli substantially performed her obligations under the
contract with PNK Investments and Michael Simmons By terminating the
employment agreement in the contract, Advantage did not substantially
perform its obligations under the contract.
2. The non breaching party is permitted to recover those reasonably
foreseeable damages that are a direct result of the breach. These damages
are "designed to put the [non- breaching party] in the same position as if the
contract had been performed, less proper deductions." JBC of Wyoming
Corp. City of Cheyenne, 843 P.2d 1190, 1195 (Wyo. 1992) (internal
citations omitted).
3. The uncontroverted evidence presented at trial on damages was
that on the day Lomeli was terminated, her listings with Advantage Realty
were valued at $11,117,900.00. Ex. AAA. She took most of those listings
with her and either sold or did not sell the property as the market
determined. Lomeli did not present any evidence from what she made or lost
from those listings or from her employment at Century 21.
28
4. In a new business or an uncertain market it is difficult to
determine what the damages would be. Wyoming has adopted the
"reasonable certainty test" for determining these damages. See Landmark
Inc. v. Stockmen's Bank Trust Co., 680 P.2d 471, 476 (Wyo. 1984)
(plaintiff must show damages to new business with reasonable certainty
using best evidence available); see also 22 Am.Jur. 2nd Damages 445.
5. The employment agreement specified that Lomeli would receive
80% of the commissions she brought in, but there is no evidence of what
she was unable to. make in commissions at Century 21. This falls short of
the "reasonable certainty" requirement.
6. Lomeli also served as a buyer's agent. In past years, Lomeli had
higher income as a buyer's agent than as a listing agent. Again there is
insufficient evidence to show what was made or lost by being a buyer's
agent at Century 21.
7. The employment agreement specified that Lomeli would receive
10% of Advantage's profits for two years. Again Lomeli has not presented
evidence on what Advantage's profits were during this time period. The tax
returns indicate Advantage was operating at a Toss in 2007 and 2008. See
Ex's. 122 and 125.
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000075
8. The damages that are awarded a non breaching party should be
reduced by the amount the non breaching party could have avoided or
reduced by reasonable care and diligence. E.g. Lewis v. Community National
Bank, N.A., 2004 WY 152, 119 11, 101 P.3d 457, 459 460 (Wyo.
2004). Here, there was no evidence presented showing the exact damages
Lomeli was able to avoid or could have avoided by reasonable care and
diligence. However, there was uncontroverted evidence that Lomeli went to
work for Century 21 immediately after her termination and she was able to
take the majority of her listings with her.
There was no evidence presented at trial about what Lomeli's
commission rate was at Century 21 or whether it would have been as
lucrative as the 80/85% arrangement she had with Advantage. There was
no evidence about whether her opportunities to obtain additional listings
would have increased or decreased at Century 21 to what she would have
received at Advantage. There was no evidence presented at trial on how
Lomeli's expected income as a buyer's agent would have been impacted at
Century 21. The matter is further complicated because both the Wyoming
and national real estate markets experienced a significant decline during the
time frame of the agreement.
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9. The Court therefore finds that Lomeli may have suffered
damages as a result of Advantage's breach of the employment contract but
that the Court would have to speculate as to the amount.
10. When Lomeli accepted Lot 122 as part of the consideration for
her interest in Advantage, the parties agreed that it was valued at
approximately $100,000.00. Following the Plaintiff's breach of the
contract, the Plaintiff's filed a /is pendens on Lot 122 thus preventing its
sale. Lomeli has testified that the lot is now valued at $50,000.00. The
Court finds that she has been damaged for the amount of $50,000.00.
11. Lomeli's other claims: Lomeli also claims she is owed $4,900.00
from a commission she was never paid for selling the Rasmussen property
and $4,705.00 for a bill to Re /Max which was the Plaintiff's responsibility to
pay. The Court finds these damages are proven.
12. The total amount of damages that came as a direct result of the
Plaintiff's breach of contract is $59,605.00 ($50,000.00 $4,900.00
$4,705.00).
13. The attorney's fees provision was crossed out and initialed by
Paul Simmons but was not initialed by Stephanie Lomeli. There are three
possibilities for this "change" of the agreement that could have occurred: (1)
That the Plaintiffs crossed out the attorney's fees provision and initialed it
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000077
after it was signed; (2) That it was crossed out and initialed and Lomeli
accepted that deletion but did not initial it; or (3) That it was corssed out but
Lomeli did not notice it. Lomeli has not proven that the deletion of the
attorney's fees provision was not agreed to and her claim for attorney's fees
is denied.
CONCLUSION
Judgment is entered in favor of the Defendant against the Plaintiffs,
jointly and severally, in the amount of $59,605.00. Post judgment interest
shall accrue at the statutory rate of 10% per annum.
The lis pendens on Lot 122 is hereby ordered to be removed from the
property.
IT IS SO ORDERED.
DATED thi day of March, 201
ENNIS L.
4 9, 1
Z RSO
District Court Ju ge
STATE OF WYOMING SS.
COUNTY OF UNCOLN
I, Kenneth D. Roberts, Clerk of the Third
Judicial District Court within and foresaid
county and in the State of foresaid, do
hereby certify the foregoing to be a full,
32 true, and complete copy.
SIGNED'. 4V