Tamra Acorn, Rebecca Shwen, in their capacity as managers of Federer Holding Company, a Wyoming closed limited liability company v. Lori Moncecchi and Dino Moncecchi , 397 P.3d 205 ( 2017 )

IN THE SUPREME COURT, STATE OF WYOMING
2017 WY 83
APRIL TERM, A.D. 2017
July 7, 2017
TAMRA ACORN, REBECCA SHWEN, in their
capacity as managers of FEDERER HOLDING
COMPANY, a Wyoming closed limited liability
company,
Appellants
(Defendants),
S-16-0259
v.
LORI MONCECCHI and DINO MONCECCHI,
Appellees
(Plaintiffs).
Appeal from the District Court of Laramie County
The Honorable Steven K. Sharpe, Judge
Representing Appellants:
John M. Walker and Robert J. Walker, Hickey & Evans, LLP, Cheyenne,
Wyoming.
Representing Appellees:
Anna M. Reeves Olson and Weston W. Reeves, Park Street Law Office, Casper,
Wyoming.
Before BURKE, C.J., and HILL, DAVIS, FOX, and KAUTZ, JJ.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers
are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming
82002, of any typographical or other formal errors so that correction may be made before final publication in
the permanent volume.
BURKE, Chief Justice.
[¶1] Appellants Tamra Acorn, Rebecca Shwen, and Federer Holding Company, LLC,
filed a motion to recover attorney fees and costs incurred in this litigation. The district
court denied the motion, and Appellants challenge that decision in this appeal. We
affirm.
ISSUES
[¶2] Appellants present two issues:
1. Did the district court err when it found that Appellants
Tamra Acorn and Rebecca Shwen were not entitled to
attorney fees under W.R.C.P. 54?
2. Did the district court err when it found that Appellants
Tamra Acorn and Rebecca Shwen, as managers of
Federer Holding Company, LLC, were not entitled to
costs under W.R.C.P. 54?
FACTS
[¶3] The background of this case is set forth in Acorn v. Moncecchi, 2016 WY 124, ¶ 1,
386 P.3d 739, 744 (Wyo. 2016) (“Acorn I”):
During the course of their marriage, M. W. “Bud”
Federer (Bud) and Margie Federer (Margie) amassed a
sizeable estate, predominantly comprised of apartment
complexes throughout Wyoming. The Federers formed
numerous entities to manage their holdings for their benefit
during their lives, and for the benefit of their three daughters.
As so often happens, the parents’ attempt to impose harmony
along with the assets they conveyed to the next generation
was unsuccessful. The sisters disagreed about money, and
those disagreements blossomed into accusations of
misconduct and breaches of the duties that attach to their
roles as trustees and LLC managers. The sisters filed claims,
counterclaims, and cross-claims, which the district court
sorted out after a bench trial.1
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The Federers’ three daughters are Rebecca Shwen, Lori Moncecchi, and Tamra Acorn. Acorn I, ¶ 3,
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[¶4] The claims sorted out by the district court, and their resolutions, were as follows:
1. Appellants asserted that the Federer Operating
Agreement allowed Appellants Rebecca Shwen and Tamra
Acorn to be added as co-managers of the company. Prior to
the bench trial, the district court granted summary judgment
on this claim in favor of Appellants. Appellees did not
pursue an appeal of this ruling, and the district court’s
summary judgment decision was not at issue in Acorn I.
2. Appellants claimed that Appellee Dino Moncecchi had
breached his duties to Federer. We affirmed the district
court’s ruling in favor of Appellees. Acorn I, ¶¶ 33-52, 386
P.3d at 750-55.
3. Appellees claimed that Appellant Rebecca Shwen had
breached her duties as trustee of the Trust, and sought her
removal as trustee. We affirmed the district court’s ruling in
favor of Appellees. Id., ¶¶ 53-73, 386 P.3d at 755-61.
4. Appellees claimed damages as a result of Ms. Shwen’s
breach of her fiduciary duties. The district court ruled that
Appellees had failed to prove their damages to a reasonable
degree of certainty. We reversed the district court’s ruling on
the basis that it had applied an incorrect burden of proof. We
remanded this claim for an award of damages to Appellees
consistent with our opinion. Id., ¶¶ 74-81, 386 P.3d at 761-
63.
5. Appellants sought judgment against Appellees on a
debt owed to the Trust. The district court found this claim to
be frivolous and brought in bad faith, and awarded attorney
fees to the Appellees. We affirmed the district court’s ruling.
Id., ¶¶ 82-87, 386 P.3d at 763-65.
386 P.3d at 744. This litigation began in 2013 when Lori Moncecchi and her husband Dino Moncecchi
filed suit against Tamra Acorn, Rebecca Shwen, Federer Holding Company, LLC, and the Margie Jean
Federer Revocable Trust. In this opinion, we will refer to Lori and Dino Moncecchi as “Appellees,” and
to Tamra Acorn, Rebecca Shwen, and Federer Holding Company, LLC, collectively, as “Appellants.”
The Margie Jean Federer Revocable Trust is not a party to this appeal, but when it appears in our
discussion we will refer to it as “the Trust.”
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[¶5] On March 3, 2016, Appellants filed a motion in the district court to recover costs
and attorney fees incurred in this litigation. The district court denied the motion.
Appellants filed this timely appeal.
DISCUSSION
[¶6] Wyoming subscribes to the American rule on recovery of attorney fees, under
which “each party is generally responsible for his own attorney fees.” Alexander v.
Meduna, 2002 WY 83, ¶ 49, 47 P.3d 206, 220 (Wyo. 2002). “However, a prevailing
party may be reimbursed for his attorney fees when express statutory or contractual
authorization exists for such an award.” Id., ¶ 49, 47 P.3d at 220-21. Appellants contend
that they are entitled to recover attorney fees and costs pursuant to Section 15.9 of the
Federer Operating Agreement, which provides as follows:
If the Company resorts to litigation to remedy a breach of this
Agreement by a Manager or Member or former Manager or
Member and the Company prevails in the litigation, in
addition to any other remedies available to the Company
under this Agreement or by law, the Company shall collect its
reasonable attorney fees and other costs and expenses of
litigation.
[¶7] Our standard of review for this claim is explained in Thorkildsen v. Belden, 2011
WY 26, ¶ 8, 247 P.3d 60, 62 (Wyo. 2011):
Ordinarily, we review a district court’s denial of an
attorney fee award for abuse of discretion. Stafford v. JHL,
Inc., 2008 WY 128, ¶ 14, 194 P.3d 315, 318 (Wyo. 2008).
However, when the determination of whether a party is
entitled to attorney fees is based upon a contract providing for
such fees, our usual rules of contract interpretation apply.
When contractual language is clear and unambiguous, the
interpretation and construction of contracts is a matter of law
for the courts. Cheek v. Jackson Wax Museum, Inc., 2009
WY 151, ¶ 12, 220 P.3d 1288, 1290 (Wyo. 2009). We review
questions of law de novo without giving any deference to the
district court’s determinations. Id.
[¶8] Of the five claims listed in the Facts section above, Appellants prevailed only on
their claim that Appellants Rebecca Shwen and Tamra Acorn could be added as co-
managers of Federer. By its unambiguous language, Section 15.9 of the Operating
Agreement does not apply to this claim. The claim was not “litigation to remedy a
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breach of this Agreement by a Manager or Member or former Manager or Member.”
Appellants were not entitled under the Operating Agreement to recover attorney fees and
costs associated with this claim.
[¶9] In contrast, Section 15.9 of the Operating Agreement may have applied to
Appellants’ claim that Mr. Moncecchi violated his duties to the company. As set forth in
the Facts section above, however, we affirmed the district court’s ruling against
Appellants on this claim. Appellants were not entitled to recover attorney fees and costs
associated with this claim because they did not prevail.
[¶10] Appellants next contend that they are entitled to recover costs pursuant to
W.R.C.P. 54(d)(1), which generally provides that costs “should be allowed to the
prevailing party.” “We review a district court’s grant or denial of attorneys’ fees and
costs for abuse of discretion.” Elk Ridge Lodge, Inc. v. Sonnett, 2011 WY 106, ¶ 17, 254
P.3d 957, 962 (Wyo. 2011) (citing Mueller v. Zimmer, 2007 WY 195, ¶ 11, 173 P.3d 361,
364 (Wyo. 2007)).
A court abuses its discretion when it acts in a manner that
exceeds the bounds of reason under the circumstances.
Lykins v. Habitat for Humanity, 2010 WY 118, ¶ 9, 237 P.3d
405, 408 (Wyo. 2010); Snyder v. Lovercheck, 992 P.2d 1079,
1084 (Wyo. 1999). “The burden is placed upon the party who
is attacking the trial court’s ruling to establish an abuse of
discretion, and the ultimate issue is whether the court could
reasonably conclude as it did.” Nish v. Schaefer, 2006 WY
85, ¶ 6, 138 P.3d 1134, 1137 (Wyo. 2006); Snyder, 992 P.2d
at 1084.
Jones v. Artery, 2012 WY 63, ¶ 8, 275 P.3d 1244, 1247 (Wyo. 2012).
[¶11] The district court denied Appellants’ claim for costs because it did not consider
them “to be a ‘prevailing party’ as that term is used in Rule 54(d).” The trial court has
broad discretion to deny an award of costs in cases with “mixed outcomes.” See
Garrison v. CC Builders, Inc., 2008 WY 34, ¶ 46, 179 P.3d 867, 879 (Wyo. 2008). The
outcome obtained by Appellants in this litigation was mixed at best. They prevailed on a
single claim. Appellees prevailed on all four remaining claims. Given these results, the
district court could reasonably conclude that Appellants did not prevail in this litigation.
[¶12] Appellants point out that the costs they sought to recover were incurred only
“from the time of the filing of the initial lawsuit to the time of the receipt of the order
granting . . . the motion for partial summary judgment.” Appellants do not claim costs or
attorney fees for the claims decided against them subsequent to the district court’s
summary judgment decision. However, they assert that they are entitled to recover costs
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and fees incurred solely to obtain summary judgment in their favor on this initial claim.
We reject Appellants’ attempt to sever a single claim from the rest of the litigation. “The
case must be viewed as a whole to determine who was the ‘prevailing party.’” Fogleman
v. ARAMCO, 920 F.2d 278, 285 (5th Cir. 1991); Studiengesellschaft Kohle mbH v.
Eastman Kodak Co., 713 F.2d 128, 131 (5th Cir. 1983). When this case is viewed as a
whole, the district court could reasonably conclude that Appellants were not prevailing
parties. We find no abuse of discretion in the court’s decision denying Appellants’
motion to recover costs.
[¶13] Appellees seek an award of attorney fees under W.R.A.P. 10.05(b), asserting that
Appellants failed to present cogent argument in support of the relief requested. To award
fees under this rule, the Court must certify that “there was no reasonable cause for the
appeal.” We are unable to reach that conclusion in this case.
[¶14] Affirmed.
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