Case Title: CASTLEBERRY v. PHELAN

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 2004-12-01T00:00:00Z

Document:
CASTLEBERRY v. PHELAN2004 WY 151101 P.3d 460Case Number: 03-218Decided: 12/01/2004Notice:  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.
OCTOBER 
TERM, A.D. 2004

 

                                                                                                            

 

CHERYL 
CASTLEBERRY, as personal

representative 
of the ESTATE OF BILLIE GARNER,

 

Appellant(Defendant/Counter-Claimant/

Third-Party 
Plaintiff),

 

v.

 

TOM 
PHELAN and YVONNE PHELAN,

 

Appellees(Plaintiffs),

 

and

                                                                                                

KATHLEEN 
MORDHORST and

RANDY 
MORDHORST,

 

Appellees(Third-Party 
Defendants).

 

 

Appeal 
from the District Court of Laramie County

The 
Honorable E. James Burke, Judge 

 

Representing 
Appellant Cheryl Castleberry:

Kate 
M. Fox and Clint A. Langer of Davis & Cannon, Cheyenne, Wyoming 

 

Representing 
Appellees Tom Phelan and Yvonne Phelan:

James 
R. Salisbury of Riske & Arnold, P.C., Cheyenne, 
Wyoming

 

Representing 
Appellees Kathleen Mordhorst and Randy Mordhorst:

            
No appearance

 

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

 

 

GOLDEN, 
Justice.

 

[¶1]           
Appellant 
Cheryl Castleberry, as personal representative of the Estate of Billie Garner, 
appeals from the district court's order denying her claim for attorneys' 
fees.  We conclude that Castleberry 
is entitled to attorneys' fees under the relevant contractual language and, 
therefore, reverse and remand.  

 

            

ISSUE

 

[¶2]           
Castleberry 
articulates a single issue on appeal: 

 

1.  When a contract provides for recovery of 
attorney's fees to the successful party, and the defending party has 
successfully contended that the other party's rights under the contract have 
been terminated by reason of the other party's default, should the successful 
party be awarded its fees?

 

Appellees 
Tom and Yvonne Phelan phrase the issue as follows:

 

I.  Whether the District Court properly 
determined that the contractual provision providing for an award of attorneys' 
fees did not survive the voluntary termination of the Contract for 
Deed.

 

FACTS

 

[¶3]           
The 
underlying facts of this case are undisputed.  In 1992, Charles and Billie Garner and 
Randy and Kathleen Mordhorst entered into a contract for deed on real property 
in Cheyenne.1   The parties referred to the 
contract for deed as the "Garner Contract."  The Mordhorsts made payments for the 
first several years of the Garner Contract, but in 1998 and 1999 their payments 
became intermittent and finally ceased altogether after September 1999. 

 

[¶4]           
Both 
of the Garners passed away, and Castleberry was appointed as the personal 
representative of the Estate of Billie Garner.  Castleberry discovered that the 
Mordhorsts were not making payments on the Garner Contract and notified them of 
their default on January 23 and 24, 2002. In accordance with the terms of the 
Garner Contract, Castleberry informed the Mordhorsts that they had thirty days 
to cure the default. On January 28, 2002, the Mordhorsts entered into a contract 
to sell the property to Yvonne Phelan. 

 

[¶5]           
On 
February 29, 2002, more than thirty days after the default notice, the 
Mordhorsts tendered a $13,680.46 payment to Castleberry.  This payment was $7,117.10 less than the 
amount required to cure the default.  
Castleberry rejected the Mordhorsts' attempt to cure, took possession of 
the property, and recorded a quitclaim deed conveying the property back to the 
estate.  On November 25, 2002, the 
Mordhorsts attempted to assign their interests in the Garner Contract to the 
Phelans.  They did not, however, 
obtain Castleberry's consent for the assignment as required by the Garner 
Contract. 

  

[¶6]           
The 
Phelans then initiated a lawsuit against Castleberry, alleging breach of the 
Garner Contract and seeking specific performance of the contract and attorneys' 
fees.  Castleberry filed a 
counterclaim against the Phelans and a third-party complaint against the 
Mordhorsts, seeking to quiet title to the real property and requesting 
attorneys' fees.  The district court 
granted a summary judgment in favor of Castleberry on her quiet title claim. The 
district court specifically found that the Mordhorsts breached the Garner 
Contract by failing to make the payments in a timely manner and failing to cure 
their default after notice.  The 
district court held, however, that Castleberry was not entitled to attorneys' 
fees because she terminated the Garner Contract after the Mordhorsts defaulted 
and "[t]he provision for attorney's fees does not survive the termination of the 
Garner Contract."

 

[¶7]           
The 
Phelans initially appealed the district court's decision but later voluntarily 
dismissed their appeal.  Castleberry 
filed a cross-appeal of the district court's ruling on the attorneys' fees 
issue, and that appeal is still pending before this Court. 

 

 

STANDARD 
OF REVIEW

 

[¶8]           
Summary 
judgment is appropriate when 
there are no genuine issues of material fact and the moving party is entitled to 
judgment as a matter of law.  Owsley v. Robinson, 2003 WY 33, ¶7, 65 P.3d 374, ¶7 (Wyo. 2003).  See 
also W.R.C.P. 56(c).  This Court considers the record in the 
perspective most favorable to the party opposing the motion and gives that party 
the benefit of all the favorable inferences which may be fairly drawn from the 
record.  Hasvold v. Park Cty. Sch. Dist. No. 
6, 2002 WY 65, ¶11, 45 P.3d 635, ¶11 (Wyo. 2002); Anderson v. Solvay Minerals, 
Inc., 3 P.3d 236, 238 (Wyo. 
2000).  We review questions 
of law de novo without giving any 
deference to the district court's determinations.  Hasvold, 
¶11.

 

 

DISCUSSION

 

[¶9]           
Castleberry 
claims that the district court erred as a matter of law in determining that she 
was not entitled to recover attorneys' fees under the fee-shifting provision of 
the Garner Contract.  Wyoming has 
consistently followed the American Rule regarding attorney's fees.  Under the American Rule, "each 
party is generally responsible for his own attorneys' fees.  A prevailing party may, however, be 
reimbursed for his attorneys' 
fees when express statutory or contractual authorization exists for 
such an award."  Cline v. Rocky Mountain, Inc., 998 P.2d 946, 949 (Wyo. 2000) (citation omitted).  
See also Dewey v. 
Wendtland, 2002 WY 2, ¶50, 38 P.3d 402, ¶50 (Wyo. 2002). 

 

[¶10]      
The 
Garner Contract offered the following remedies in the event of the buyers' 
default:

 

In 
case the BUYERS shall refuse, neglect, or fail to pay the said purchase money or 
interest or money advanced or to keep or perform any other agreement or 
provisions herein contained, the SELLERS may elect to terminate this CONTRACT 
and shall thereupon be released from all obligations in law or equity to convey 
said property and the BUYERS shall, in the event of such election by SELLERS, 
forfeit all right, title and interest and estate in and to any and all payments 
made by BUYERS pursuant to this CONTRACT, and to said land and all improvements 
now on said land and all such other improvements as may thereafter be placed on 
said land, including any structures, and fixtures . . . .  In the event of such election by 
SELLERS, BUYERS shall always remain liable to SELLERS for the reasona[bl]e 
rental value of the premises for any period during which BUYERS or its tenants 
occupy the premises after default.  
SELLERS may, however, in the event of default of BUYERS, elect to affirm 
this CONTRACT and pursue any remedy they may have at law or in equity by reason 
of such default.

 

The 
BUYERS shall be entitled to possession and use of said premises on the 11th day of February, 1992, and thereafter so long 
and only so long as the BUYERS shall perform and comply with the terms and 
conditions of this CONTRACT FOR DEED.  
However, in the event of the BUYERS' failure to perform and comply with 
the terms hereof and SELLERS' election to terminate, the BUYERS shall 
immediately surrender possession of said premises to SELLERS to whom in such 
event there is reserved the right to take immediate possession of said property, 
and to regard the person or persons in possession or occupancy at the time of 
such termination of this CONTRACT as tenant or tenants holding over without 
permission, and thereafter to receive rents arising from said premises and to 
recover any damages committed or suffered on said premises and to re-enter said 
premises or any part thereof, either with or without process of law or notice or 
demand, and repossess and enjoy the same as was their right prior to the 
execution of the CONTRACT. 

  

The 
attorney's fees provision of the Garner Contract stated:

 

It 
is further understood and agreed that in case of suit, foreclosure or other 
litigation arising out of any breach of this CONTRACT, the Court having 
jurisdiction thereof may award attorney's fees to the successful 
party.

  

[¶11]      
As 
with any contract, our objective in interpreting contractual fee-shifting 
provisions is to discern the intent of the contracting parties.  Cline, 998 P.2d  at 949; DeWitt v. Balben, 718 P.2d 854, 863 (Wyo. 1986).  In discerning the meaning of a contract, 
our initial inquiry focuses on whether the language of the contract is clear or 
ambiguous.   Wolter v. 
Equitable Resources Energy Co., 979 P.2d 948, 951 (Wyo. 1999); 
Treemont, Inc. v. Hawley, 886 P.2d 589, 592 (Wyo. 1994).  "Courts make 
that determination as a matter of law." Wolter, 979 P.2d  at 951; see 
also Svalina v. Split Rock Land & Cattle Co., 816 P.2d 878, 881 (Wyo. 
1991).  This Court looks at the 
plain meaning of the words expressed within the four corners of a clear and 
unambiguous contract to determine the parties' intent.  Wolter, 979 P.2d  at 951. 

 

[¶12]      
Under 
the plain language of the Garner Contract, the successful party in a suit, 
foreclosure, or other litigation arising out of any breach of the contract was 
entitled to request an award of attorney's fees. The Phelans' complaint alleged 
that Castleberry breached the Garner Contract by declaring it in default.  Castleberry counterclaimed, alleging 
that she was entitled to have title to the property quieted to her because the 
Mordhorsts had breached the Garner Contract.  The undisputed facts of the controversy 
showed that Castleberry followed the contractual requirements by declaring the 
contract in default and recording the quitclaim deed.  The district court agreed with 
Castleberry's position and ruled that the Mordhorsts had defaulted on their 
obligations to make timely payments under the contract and did not cure the 
default within thirty days.  The 
litigation, therefore, fell within the ambit of the Garner Contract, and 
Castleberry was unquestionably the successful party in that litigation.2

 

[¶13]      
Despite 
its ruling that the litigation pertained to the Garner Contract, the district 
court concluded, without any citation to authority, that the attorney's fees 
provision did not survive the termination of the Garner contract. In support of 
the district court's determination, the Phelans direct us to cases involving 
contractual rescission.  In Pickenpaugh v. Morton, 519 P.2d 91 (Or. 
1973) (en banc), the Oregon Supreme Court held that the 
plaintiffs were not entitled to attorney's fees under a contractual fee-shifting 
provision when they successfully sought rescission of the contract.  Id. at 94.  The Oregon Supreme Court noted that, 
when a contract is rescinded, the "terms of the abrogated contract have no 
influence whatever upon the subsequent determination of the rights of the 
parties . . . ." Id. at 95.  
Therefore, the "plaintiffs' election to rescind the purchase agreement 
cancelled all of plaintiffs' contractual rights to the benefits of the contract, 
including an award of attorney's fees in the event of litigation."  Id.; see also Kennedy v. Gillam Development 
Corp., 80 P.3d 927, 930 (Colo. App. 2003).   

 

[¶14]      
There 
is, however, a critical distinction between the case at bar and cases such as Pickenpaugh and Kennedy.  Unlike the parties in those cases, 
Castleberry did not seek rescission of the contract.  Instead, she simply availed herself of 
the default remedies available under the contract. In this respect, the case at 
bar is more akin to a later Oregon Supreme Court case entitled Usinger v. Campbell, 572 P.2d 1018 (Or. 
1977).  The Usinger case involved a suit for 
specific performance of an earnest money agreement.  Id. at 1019.  In that case, the plaintiffs had failed 
to make a payment in accordance with the parties' contract and the defendant, 
consequently, refused to convey the property.  Id. at 1020. The plaintiffs sought specific 
performance of the purchase contract, and the defendant was, therefore, required 
to defend by showing that the plaintiffs did not perform their contractual 
obligations. Id. at 1023. Since the defendant did not disaffirm 
the contract, but chose, instead, to rely on the terms of the contract, the 
Oregon Supreme Court ruled that the defendant was entitled to recover his 
attorneys' fees under the fee-shifting provision of the contract.  Id.  
See also Oral Roberts University v. Anderson, 11 F. Supp. 2d 1336 (N.D. Okla. 1997) (holding that prevailing party was entitled to 
attorneys' fees under an option contract, which had expired prior to litigation, 
because the parties were litigating their performance under the terms of the 
contract); Weter v. Archambault, 61 P.3d 771 (Mont. 2002) (holding that attorneys' fees were available to seller who 
elected to terminate a contract for deed in accordance with its default 
terms).      

 

[¶15]      
Finally, 
the Phelans claim that, under the doctrine of election of remedies, Castleberry 
is not entitled to recover attorneys' fees.  Specifically, the Phelans maintain that, 
because Castleberry elected to terminate the Garner Contract, she is precluded 
from claiming the alternative remedy of attorneys' fees.  In support of their election of remedies 
argument, the Phelans direct us to several Wyoming cases for the rule that a 
party may not seek rescission of a contract and then subsequently claim a breach 
of contract.  See, e.g., Walters v. Michel, 745 P.2d 913 (Wyo. 
1987); Barquin v. Hall Oil Co., 28 Wyo. 164, 201 P. 352, 355 
(1921).  These cases are, of course, 
inapposite.  As we have discussed at 
length, infra, Castleberry did not 
come to court requesting rescission of the Garner Contract.  Castleberry simply appeared to defend 
the Phelans' claims that the Mordhorsts had not breached the contract.     

 

[¶16]      
Reversed 
and remanded for further proceedings consistent with this decision.           
  

 FOOTNOTES

 

1The 
Mordhorsts did not participate in this litigation in the district court or upon 
appeal.

 

2Our 
holding in this case does not depart from prior cases in which we have stated 
that, "[e]ven in the face of a valid contractual provision for attorney's fees . . . a trial court 
has the discretion to exercise its equitable control to allow only such sum as 
is reasonable or the court may properly disallow attorney's fees altogether on 
the basis that such recovery would be inequitable."  
Dewey, ¶50.  The district court's decision indicates 
that its decision was based upon a legal conclusion that attorneys' fees were 
not available.  There is nothing in 
the decision to indicate that it was denying Castleberry attorneys' fees on the 
basis of equity.  Id.