Case Title: JOHN THORKILDSEN v. MARGOT BELDEN, and FISH CREEK DESGIN, LLC

Citation: 

Docket Number: S-10-0154

State: wyoming

Court: Wyoming Supreme Court

Date: 2011-02-17T00:00:00Z

Document:
JOHN THORKILDSEN v. MARGOT BELDEN, and FISH CREEK DESGIN, LLC2011 WY 26Case Number: No. S-10-0154Decided: 02/17/2011NOTICE: 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 correction may be made before final publication in the permanent volume.
OCTOBER 
TERM, A.D. 2010

 
 
 
 

JOHN 
THORKILDSEN,Appellant (Defendant),v.MARGOT BELDEN, and FISH 
CREEK DESIGN, LLC,Appellees (Plaintiffs).

 
 
 
 

Appeal 
from the District Court of Teton County

The 
Honorable Nancy J. Guthrie, Judge

 
 
Representing 
Appellant:

David 
G. Lewis, Jackson, Wyoming.

 
 
Representing 
Appellees:

Richard 
J. Mulligan of Mulligan Law Office, Jackson, Wyoming; Heather Noble, Jackson, 
Wyoming.

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

 
 
KITE, 
Chief Justice.

 
 
[¶1]  After this Court affirmed judgment in 
his favor in an action filed against him for payment on a loan, Belden v. Thorkildsen, 2008 WY 145, 197 P.3d 148 (Wyo. 2008) (Belden II), 
John Thorkildsen filed a motion for attorney fees.  The district court ultimately denied the 
motion and Mr. Thorkildsen appealed.  
We reverse. 

 
 
 
 
ISSUE

 
 
[¶2]   The issue for this Court's 
determination is whether the district court erred when it denied Mr. 
Thorkildsen's motion for attorney fees.

 
 
 
 
FACTS

 
 
[¶3]  This case is before us for the fourth 
time.  Margot Belden and her son 
were partners in a business, Fish Creek Interiors & Gifts, in Teton County, 
Wyoming.  Mr. Thorkildsen worked for 
the business.  In 2000, Ms. Belden 
approached Mr. Thorkildsen about whether he would be interested in purchasing 
her son's 30% interest in the business.  
To accomplish that result, the business borrowed money from the Bank of 
Jackson Hole.  Ms. Belden and Mr. 
Thorkildsen signed the note.  

 
 
[¶4]  In 2001, Mr. Thorkildsen, Ms. Belden and 
others formed Fish Creek Designs, LLC.  
In the process, the LLC obtained a loan which was used to pay off the 
earlier partnership loan.  The LLC 
ultimately fired Mr. Thorkildsen and went out of business.  Ms. Belden paid the balance left on the 
LLC's loan.  She and the LLC filed 
an action against Mr. Thorkildsen claiming he was obligated to repay the amounts 
they had paid on the loan.1 

 
 
[¶5]  The matter went to trial, and the 
district court entered judgment for Mr. Thorkildsen.  Ms. Belden and the LLC appealed, and 
this Court reversed the judgment and remanded the case to the district 
court.  Belden v. Thorkildsen, 2007 WY 68, 156 P.3d 320 (Wyo. 2007) (Belden I).  After further proceedings, the district 
court again entered judgment for Mr. Thorkildsen.  Ms. Belden and the LLC again appealed 
and we affirmed the judgment.  Belden II, ¶ 25, 197 P.3d  at 156.  Mr. Thorkildsen then filed a motion for 
costs and attorney fees in district court.  

 
 
[¶6]  After a hearing, the district court 
entered an order granting the motion for costs and awarding Mr. Thorkildsen 
$2,070.90.  The order was silent as 
to attorney fees.  Mr. Thorkildsen 
appealed to this Court and, in Thorkildsen v. Belden, 2010 WY 17, 223 P.3d 1291 (Wyo. 2010) (Thorkildsen 
I), we remanded the case to the district court with instructions to make 
findings of fact and conclusions of law on the attorney fees motion.   

 
 
[¶7]  Back in district court, Ms. Belden and 
the LLC submitted proposed findings of fact and conclusions of law.  Mr. Thorkildsen did not submit proposed 
findings and conclusions.  Neither 
party requested a hearing.  The 
district court entered an order denying attorney fees, concluding that the 
dispute involved events and agreements predating the LLC operating agreement and 
Mr. Thorkildsen did not segregate or identify the attorney fees incurred on the 
claim for breach of the LLC operating agreement.  Mr. Thorkildsen again appealed to this 
Court from the district court's order.   

    

 
 
STANDARD 
OF REVIEW

 
 
[¶8]  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. 

 
 
 
 
DISCUSSION

 
 
[¶9]  Mr. Thorkildsen contends he was the 
prevailing party in this action and is entitled to attorney fees under the terms 
of the operating agreement, which contained the following 
provision:

 
 
13.12  Attorneys' Fees.  Should the Company or any party to this 
Agreement reasonably retain counsel for the purpose of enforcing or preventing 
breach of any provision of this Agreement, including instituting any action or 
proceeding to enforce any provision of this Agreement, for damages by reason of 
any alleged breach of any provision of this Agreement,  for a declaration of 
such party's rights or obligations under this Agreement, or for any judicial 
remedy, then, if the matter is settled by judicial determination or arbitration, 
the prevailing party (whether at trial, on appeal, or arbitration) shall be 
entitled, in addition to such other relief as may be granted, to be reimbursed 
by the losing party for all costs and expenses incurred, including reasonable 
attorneys' fees and costs for services rendered to the prevailing party or 
parties.

 
 
Mr. 
Thorkildsen asserts the district court misinterpreted this provision when it 
concluded recovery was limited to fees incurred directly in defending the breach 
of contract claim and not the other claims.  He contends the attorney fee provision 
is broader, and entitles him to recover his fees because he, a party to the 
operating agreement, reasonably retained counsel for the purpose of enforcing 
his right not to be held liable for payment of an LLC debt and to prevent the 
LLC from wrongfully using the operating agreement to hold him 
liable.

 
 
[¶10]  Ms. Belden and the LLC assert the 
attorney fee provision in the LLC operating agreement does not apply because 
most of the issues in this case had nothing to do with the operating 
agreement.  They contend Mr. 
Thorkildsen's claim that he was upholding his rights under the operating 
agreement or preventing them from violating the agreement is without merit.  They assert the district court properly 
denied attorney fees.

 
 
[¶11]  Generally, Wyoming subscribes to the 
American rule regarding recovery of attorney fees, making each party responsible 
for its own attorney fees, unless an award of fees is permitted by contract or 
statute.  Garwood v. Garwood,   2010 WY 91, ¶ 32, 233 P.3d 977, 984 
(Wyo. 2010).  In the present case, 
there is a contract permitting the award of attorney fees.  The question is whether that provision 
applies in the context of the district court's judgment.  To answer that question we look first to 
the language of the attorney fee provision.  An LLC operating agreement is a 
contract, which we interpret according to well-established standards of 
review.

 
 
            
The primary purpose in interpreting or construing a contract is to 
determine the intent and understanding of the parties, and our initial inquiry 
centers on whether the language of the contract is clear and unambiguous.  The interpretation and construction of a 
contract are done by the court as a matter of law.  Where an agreement is in writing and the 
language is clear and unambiguous, the parties' intent is to be secured from the 
four corners of the contract.  

 
 

Lieberman 
v. Wyoming.com LLC, 
2004 WY 1, ¶ 14, 82 P.3d 274, 281 (Wyo. 2004) (citations 
omitted).

 
 

[¶12]  As reflected in paragraph 9 above, the 
attorney fee provision states in relevant part that when the LLC or any party to 
the operating agreement "reasonably retain[s] counsel for the purpose of 
enforcing or preventing breach of any provision of this agreement . . . 
then, 
if the matter is settled by judicial determination . . . , the prevailing party 
. . . shall be entitled . . . to be reimbursed by the losing party for all costs 
and expenses incurred, including reasonable attorneys' fees . . . ."  Ms. Belden and the LLC retained counsel 
to enforce or prevent breach of the operating agreement.  Specifically, they filed a complaint 
against Mr. Thorkildsen alleging that he breached the non-competition provision 
of the agreement by involving himself with a competitive business, interfered 
with the LLC's business expectancies, breached the fiduciary duty he owed to the 
LLC as a managing member and failed to pay money he owed to Ms. Belden and the 
LLC.  They also alleged in their 
complaint that they were entitled to attorney fees and costs under paragraph 
13.12 of the operating agreement.  

 
 
[¶13]  Mr. Thorkildsen answered and filed a 
counterclaim against Ms. Belden and the LLC alleging that their attempt to 
collect the alleged indebtedness was a breach of the operating agreement 
provisions defining the rights and obligations of the members and managers.  He also alleged that he was entitled to 
costs and attorney fees for having to enforce and prevent breach of the 
operating agreement.  

 
 
[¶14]  After a trial, the district court 
entered a judgment finding there was little or no evidence that Mr. Thorkildsen 
breached the non-competition provision, intentionally interfered with the LLC's 
business expectancies or breached his fiduciary duties.  The district court further found there 
was no evidence presented that Mr. Thorkildsen personally undertook to pay 
either the first or second note.  
The district court concluded Mr. Thorkildsen was discharged from any 
obligation on the first note when the LLC paid the balance due in full.  The district court concluded Mr. 
Thorkildsen was not personally liable on the second note because he, like the 
others, signed it in his capacity as an LLC representative.  The district court entered judgment in 
Mr. Thorkildsen's favor.  After Ms. 
Belden and the LLC appealed the judgment and this Court reversed and remanded 
the matter, the district court held a hearing and entered a second judgment in 
Mr. Thorkildsen's favor.  

 
 

[¶15]  As the foregoing discussion reflects, 
Ms. Belden and the LLC as parties to the operating agreement "reasonably 
retain[ed] counsel for the purpose of enforcing or preventing breach of . . . 
[the] agreement . . . , the 
matter [was] settled by judicial determination . . . , [and Mr. Thorkildsen, as] 
the prevailing party . . . [is] entitled . . . to be reimbursed by [Ms. Belden 
and the LLC] for all costs and expenses incurred, including reasonable 
attorneys' fees . . . ."  The 
language is clear and unambiguous.  
As a matter of law, Mr. Thorkildsen was entitled to an attorney fee 
award.

 
 
[¶16]  Despite the clear language of the 
operating agreement authorizing reimbursement to the prevailing party in an 
action to enforce or prevent breach of the agreement, Ms. Belden and the LLC 
argued, and the district court ultimately concluded, that Mr. Thorkildsen was 
not entitled to such reimbursement.  
Specifically, Ms. Belden and the LLC argued that Mr. Thorkildsen was not 
entitled to recover attorney fees incurred in defending any claim other than 
their claim for breach of the operating agreement.  They asserted their breach of contract 
claim was only one of several claims alleged, much of this case concerned events 
predating the LLC's existence, and many of the claims did not arise out of or 
involve the operating agreement but turned on side agreements or other legal 
theories independent of the operating agreement.  

 
 

[¶17]  In considering these assertions, 
presented for the first time after two trials and four appeals, it is of some 
interest that in their complaint Ms. Belden and the LLC asked 
for an award of attorney fees and cited the operating agreement as support for 
that request.  It is also of 
interest that their attorney filed an affidavit for legal fees in which he 
sought over $25,000 in fees for all of the work done up to that point before 
trial without segregating his fees by claim, date, party or legal theory.  It also is of interest that in two 
judgments after a trial, an appeal and a hearing, the district court 
concluded:

 
 
As 
a party to the Operating Agreement, and as the prevailing party to this 
litigation, [Mr.] Thorkildsen is entitled to reimbursement for costs and 
expenses incurred as a result of defending against [the] 
Complaint.

 
 
Consistent 
with this conclusion, the district court twice ordered Mr. Thorkildsen to submit 
an affidavit of counsel setting forth the fees, costs and expenses 
incurred.    

 
 
[¶18]  The rule in Wyoming is that segregation 
of fees between multiple clients and/or multiple claims is required when it is 
possible.  Cline v. Rocky Mountain, Inc., 998 P.2d 946, 952 (Wyo. 2000).  To avoid 
application of this rule, the party seeking a fee award must clearly establish 
that the claims arose out of the same transaction or were so interrelated that 
segregation of the resulting attorney fees is not possible.  Id.  
In State Surety Co. v. Lamb 
Constr. Co., 625 P.2d 184 (Wyo. 1981) we addressed the issue of segregation 
of attorney fees where there were two suits, one between a subcontractor and an 
owner and another between a general contractor and the owner.  We concluded segregation was necessary 
because counsel for the owner was involved in distinct activities in each 
suit.  In Forshee v. Delaney, 2005 WY 103, ¶ 16, 
118 P.3d 445, 450 (Wyo. 2005), we found the activities of counsel were not so 
distinct that counsel for Delaney could divide his activities.  We concluded instead that the defense of 
Forshee's counterclaim was inextricable from pursuing Delaney's claim for breach 
of contract and payment of the invoices related to that contract.  

 
 
[¶19]  In City of Gillette v. Hladky Constr., 
Inc., 2008 WY 134, 196 P.3d 184 (Wyo. 2008), we concluded a contractor was 
not required to segregate time spent pursuing its unsuccessful breach of 
contract claim from time spent on its successful breach of the implied covenant 
claim.  We 
said:

 
 
[Contractor]'s 
breach of the implied covenant claim was inextricably intertwined with its 
breach of contract claim.  We cannot 
say, and neither could the district court, that counsel was engaged in distinct 
activities when pursuing one claim or the other.  The issue was whether there was a 
breach--of contract or the implied covenant--and, if so, how much HCI was 
damaged.   

 
 

Id., 
¶ 110, 196 P.3d  at 212-13.  Finally, 
in Ultra Resources, Inc. v. Hartman, 
2010 WY 36, 226 P.3d 889 (Wyo. 2010), we concluded segregation of fees was not 
required for claims brought under the Wyoming Royalty Payment Act (WRPA) and 
other common law claims.  We 
said:

 
 
[T]he 
attorney fees provision of the WRPA is broad and allows for fees to the party 
who improves his position as a result of the litigation in any proceedings under 
the act.  To the extent that the 
operator defendants claim that the plaintiffs were only entitled to fees for the 
discrete WRPA claims, we reject that argument.  Many of the claims that the defendants 
argue should have been segregated were intertwined with the WRPA claims and the 
breach of contract claim that had to be litigated in order to recover under the 
WRPA.  For example, the plaintiffs' 
conversion, rescission, slander of title, etc., causes of action were all based 
upon the underlying issue of whether the NPI continued to burden the 
leases.  Similarly, the breach of 
the covenant of good faith and fair dealing claim was "inextricably intertwined" 
with the breach of contract claim, which was the primary claim upon which the 
entire litigation was based.  

 
 

Id., 
¶ 157, 226 P.3d  at 937

 
 
[¶20]  In the present case, after twice ruling 
that Mr. Thorkildsen was entitled to fees, the district court ultimately 
concluded that the claim for breach of the operating agreement was resolved when 
Ms. Belden and the LLC did not appeal its ruling on that issue after trial in 
2006.  The district court further 
concluded that much of the case concerned events predating the LLC, many of the 
claims did not involve the operating agreement and the attorney fee provision 
did not apply.  Because Mr. 
Thorkildsen did not segregate the fees incurred in defending the breach of 
contract claim from those incurred defending against the other claims, the 
district court concluded he was entitled to no fees.

 
 
[¶21]  We disagree.  Despite the last minute efforts by Ms. 
Belden and the LLC to broaden the scope of their claims in order to take them 
outside the parameters of the operating agreement, it is clear that the LLC 
operating agreement was the basis of this case from the beginning.  Four of the five claims alleged in the 
complaint arose directly out of the LLC operating agreement.  The breach of contract claim was based 
upon the non-compete clause of the operating agreement; the intentional 
interference claim was likewise based upon Mr. Thorkildsen's duty as a manager 
of the LLC not to interfere with the LLC's economic relationship with its 
clients; the breach of fiduciary duty claim was based upon Mr. Thorkildsen's 
alleged breach of the non-compete clause of the operating agreement while he was 
still a member of the LLC;  the 
claim for attorney fees and costs was based upon paragraph 13.12 of the 
operating agreement.  

 
 
[¶22]  The only claim arguably not based upon 
the operating agreement was the claim for money owed to the LLC and Ms. Belden 
on the note the LLC assumed at the time the company was formed.  Once Mr. Thorkildsen filed his answer, 
alleging that he had no personal liability for the debt, and his counterclaim, 
alleging the efforts to collect the debt from him breached the operating 
agreement, the claim for money owed became inextricably intertwined with the 
operating agreement.  Mr. 
Thorkildsen's liability for the debt could not be determined without reference 
to the operating agreement provisions precluding the imposition of personal 
liability on members or managers for LLC debts.  Segregation of his counsel's fees for 
time spent defending against the claims brought by Ms. Belden and the LLC was 
not required.

 
 
[¶23]  Ordinarily, a determination by this 
Court that a party is entitled to attorney fees in accordance with the terms of 
a written agreement would require remand to the district court for determination 
of the fee amount.  This, however, 
is not an ordinary case.  What began 
in 2004 with the filing of Ms. Belden's and the LLC's complaint evolved into an 
unnecessarily complicated and protracted legal battle.  We are disinclined to send this back yet 
again for the district court to resolve.  
Compare Lieberman, ¶ 48, 208 P.3d  at 1310, in which this Court declined to remand for determination of 
damages after reversing the district court's judgment on 
liability.

 
 
[¶24]  The factors to be considered in awarding 
fees are set forth in Wyo. Stat. Ann. § 1-14-126(b) (LexisNexis 
2009):

 
 
            
(b) In civil actions for which an award of attorney's fees is authorized, 
the court in its discretion may award reasonable attorney's fees to the 
prevailing party without requiring expert testimony.  In exercising its discretion the court 
may consider the following factors:

     (i) The time and labor 
required, the novelty and difficulty of the questions involved, and the skill 
requisite to perform the legal service properly;

     (ii) The likelihood 
that the acceptance of the particular employment precluded other employment by 
the lawyer;

     (iii) The fee 
customarily charged in the locality for similar legal 
services;

     (iv) The amount 
involved and the results obtained;

     (v) The time 
limitations imposed by the client or by the circumstances;

     (vi) The nature and 
length of the professional relationship with the client;

     (vii) The experience, 
reputation and ability of the lawyer or lawyers performing the services;  and

     (viii) Whether the fee 
is fixed or contingent.

            

[¶25] 
Mr. Thorkildsen's attorney fee request included the affidavit of counsel, which 
contained six pages itemizing the time he spent in representing his client 
between May of 2002, when the dispute arose, and June of 2008, when he appeared 
before this Court.  It does not 
include the time spent preparing for and appearing at the two subsequent 
district court hearings, one in which the court awarded costs and no fees, and a 
second in which the district court denied the motion for fees.  It also does not include the time 
counsel spent preparing and appearing for argument in this Court in two 
subsequent appeals.  Although Ms. 
Belden and the LLC complain the fee is unreasonable because it includes travel 
time charged at counsel's usual hourly rate for the first two appeals and more 
time for research and brief writing than their counsel spent on those 
activities, we conclude any excess is more than balanced out by the time spent 
on later proceedings that is not included in Mr. Thorkildsen's counsel's billing 
statement.  We also note that Ms. 
Belden and the LLC supported their claim that the fees were unreasonable not 
with the affidavit of an uninvolved third party but only with their own 
attorney's self-serving affidavit.  
Finally, it is worth repeating that Ms. Belden's and the LLC's attorney 
sought fees in the amount of $25,000 even before this matter went to trial or 
was appealed.  By comparison, Mr. 
Thorkildsen's counsel's request for $77,470.00 after a trial, three evidentiary 
hearings and four appeals seems reasonable.    

 
 
[¶26]  Litigation must come to an end.  After four district court proceedings, 
the retirement of the district judge who presided over those proceedings and 
four appeals, it is time for this matter to come to an end. While it is true 
that when this Court reverses a ruling on an issue of law, we typically remand 
the matter for a factual determination by the district court, this case is 
anything but typical. W.R.C.P. 1 provides that the rules of civil procedure, 
which govern procedure in all courts of record in Wyoming, "shall be construed 
and administered to secure the just, speedy, and inexpensive determination of 
every action."  This Court has said 
there may be no more important provision in the rules of procedure than the 
provision in Rule 1 for a just and speedy determination of every action.  Weiss v. State ex. rel. Danigan, 434 P.2d 761, 763 (Wyo. 1967).  Contrary 
to the rule, this case has been unnecessarily protracted, causing Mr. 
Thorkildsen's counsel to expend numerous hours attempting to obtain for his 
client the fees to which he was entitled as the prevailing party in this 
case.  Under these particular 
circumstances, we conclude his request for attorney fees is fair and reasonable 
and another remand is unnecessary.  

 
 
[¶27]  We reverse and remand this matter to the 
district court for entry of an order awarding Mr. Thorkildsen attorney fees in 
the amount of $77,475.00 as requested in his January 2009 motion.   

 
 
            

 
 
FOOTNOTES

 
 

1 
The 
complaint also named Mr. Thorkildsen's wife as a defendant.  She filed a motion for summary judgment, 
asserting she had no involvement in the business transactions of her husband and 
Ms. Belden or the LLC. The district court did not rule on the motion.  However, in its final judgment, the 
district court concluded that Ms. Thorkildsen's only involvement was her 
agreement with her husband to purchase an interest in Ms. Belden's 
business.  Thereafter, she had no 
involvement in the business or the LLC.  
The district court entered judgment as a matter of law for Ms. 
Thorkildsen pursuant to W.R.C.P. 50.  
No appeal was taken from that ruling.