Case Title: SHELLY M. SHEPARD, MD V. DAVID A. BECK, MD

Citation: 

Docket Number: 06-98

State: wyoming

Court: Wyoming Supreme Court

Date: 2007-03-28T00:00:00Z

Document:
SHELLY M. SHEPARD, MD V. DAVID A. BECK, MD2007 WY 53154 P.3d 982Case Number: 06-98Decided: 03/28/2007
OCTOBER TERM, A.D. 2006

 
 
SHELLY 
M. SHEPARD, MD,

 
 
Appellant

(Plaintiff),

 
 
v.

 
 
DAVID A. 
BECK, MD,

 
 
Appellee

(Defendant).

 
 
Appeal from theDistrictCourtofCampbellCounty

 
 

Representing 
Appellant:

Patrick 
Dixon of Crowell, Chapin & Dixon, LLC, Casper, Wyoming.

 
 

Representing 
Appellee:

Paul J. 
Drew of Drew Law Office, P.C., Gillette, Wyoming.

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

 
 
VOIGT, 
Chief Justice.

 
 
[¶1]      Dr. Shelly 
Shepard ("the appellant") appeals a judgment and order of the district court 
finding that Dr. David Beck ("the appellee") did not breach an employment 
agreement with the professional corporation formed between the appellant and the 
appellee, Associates in Obstetrics/Gynecology, P.C. ("the corporation"), and 
ordering the corporation to dissolve.  
We affirm in part and reverse in part.

 
 
ISSUES

 
 
[¶2]     1.   Did the district court err when it 
concluded that the appellee did not breach his employment 
contract?

 
 
2.   Did the district court err when it 
split the costs of an accounting audit between the parties instead of placing 
liability for the costs of the audit on the appellee?

 
 
3.   Did the district court err when it 
declined to award attorney's fees to the appellant?

 
 
4.   Did the district court err in its 
order regarding the division of corporate equipment between the 
parties?

 
 
FACTS

 
 
[¶3]      The appellant and 
the appellee, who practice obstetrics and gynecology, formed a corporation as 
equal shareholders in 2002.  At that 
time, they also each entered into employment agreements with the corporation as 
its employees.  Problems soon arose 
regarding the bookkeeping for the corporation.  The appellee insisted that his mother, 
Carol Beck, handle the bookkeeping, though apparently she was not trained or 
experienced in such work.  The 
appellant, meanwhile, preferred that a professional billing service manage the 
books.  The parties ultimately 
agreed that Carol Beck would handle the appellee's bookkeeping while a 
professional service would keep the appellant's books.  The parties amicably coexisted in this 
fashion until they decided that the corporation would employ a third 
doctor.

 
 
[¶4]      Dr. Marshall was 
scheduled to begin working for the corporation in August 2003.  Initially, the parties agreed that the 
appellant's billing firm would handle Dr. Marshall's billing; however, the 
appellee subsequently changed his mind and insisted that Carol Beck handle the 
billing.  The parties finally agreed 
to resolve the dispute by allowing an outside auditing firm, Eide Bailly, to 
audit 100 charts billed by Carol Beck.  The agreement provided that if Eide 
Bailly determined that her "billing was appropriate," then she could handle Dr. 
Marshall's billing, but if not, then Dr. Marshall's billing would be outsourced 
like the appellant's.

 
 
[¶5]      When Eide Bailly 
performed its audit in July 2003, it found errors in a large majority of the 
charts selected for review.1  The appellee, however, insisted that Dr. 
Marshall utilize Carol Beck for his billing, contrary to his agreement with the 
appellant.  Ultimately, in July or 
August 2003, the appellee communicated to the appellant his desire to dissolve 
their practice and the parties began negotiating to effectuate such 
dissolution.

 
 
[¶6]      Subsequently, in 
the fall of 2003, problems arose at CampbellCountyMemorialHospital regarding the on-call schedules 
of the appellant, the appellee, and Dr. Marshall.  It appears that the staff at the 
hospital was given conflicting directions by the parties regarding whom to call 
when one of the doctors' patients was admitted to the hospital.  Despite a promise to "work it out," the 
appellee and Dr. Marshall unilaterally decided that the appellant would be 
solely responsible for her own patients, effectively requiring the appellant to 
stay on-call 24 hours a day.

 
 
[¶7]      Finally, on 
January 1, 2004, the appellee informed the appellant that he had moved his 
practice out of the building that they previously occupied and he had taken with 
him such items as were necessary for his new practice.  The appellant filed the instant action on 
January 2, 2004.  The appellee filed 
his answer and counterclaim on March 29, 2005.  In April 2004, the appellant hired the 
Wipfli accounting firm to conduct an audit of the corporation as part of the 
litigation.  After a bench trial, 
the district court made findings of fact and conclusions of law, ultimately 
deciding: (1) that the appellee did not breach his employment contract; (2) that 
the appellee should not be enjoined from relocating his practice; (3) that the 
appellant was entitled to an accounting, but that the cost of the Wipfli audit 
should be considered a cost of winding up the corporation and, therefore, be 
shared equally between the parties; and (4) that the corporation should be 
dissolved and each party allowed to keep the assets currently in his or her 
possession.2  This appeal 
followed.

 
 
DISCUSSION

 
 
Whether 
the district court erred when

it 
concluded that the appellee did not

breach 
his employment contract.

 
 
[¶8]      The appellant 
argues that the district court's findings of fact are inconsistent with its 
ultimate finding that the appellee did not breach the employment contract.  She contends that the following factual 
findings regarding the appellee's conduct warrant the conclusion that the 
contract was breached:

 
 
1.    Reneging on the verbal 
agreement to have the new physician billed by an outside party if the Eide 
Bailey [sic] audit showed problems with his mother's billing.  Even after re-auditing the files and 
complaining that the audit was not random, there were still problems found in 
the [appellee's] mother's billing.  
The audit seemed random enough for the court and sufficiently appropriate 
to discover if there were billing problems. . . . 

 
 
2.    Decision letter to the chief 
of staff on the "call" problem.  
This was not discussed in advance with the [appellant] and only 
communicated to the [appellant] by the recipient of the letter.  This is hardly the mark of a 50  50 
partnership or professional corporation.

 
 
3.    [Appellee] decided to end the 
parties' practice together by moving out without notice.  This also seems to have been made while 
leading the [appellant] to believe that they were very near a final settlement 
on their dissolution discussions.

 
 
4.    When the [appellee] moved 
out, he decided what equipment he would take.  Of course his letter says that he would 
be taking with him "such equipment, supplies and inventory as will be necessary 
to continue" his practice.  He would 
"leave items . . . to enable [appellant] to continue (to) practice as 
well."

 
 
The 
district court further determined that the appellee "violated the duty of a 
director to the corporation and to its other director and employee."  The appellee responds that the appellant 
was not a party to his employment contract with the corporation and, therefore, 
she could not enforce it.  At oral 
argument, he alternatively argued that the appellant did not suffer damages 
resulting from any breach so the district court's decision was not 
erroneous.

 
 
[¶9]      Our oft-stated 
standard for reviewing a district court's findings of fact and conclusions of 
law is as follows:

 
 
"The 
factual findings of a judge are not entitled to the limited review afforded a 
jury verdict.  While the findings 
are presumptively correct, the appellate court may examine all of the properly 
admissible evidence in the record.  
Due regard is given to the opportunity of the trial judge to assess the 
credibility of the witnesses, and our review does not entail weighing disputed 
evidence.  Findings of fact will not 
be set aside unless the findings are clearly erroneous.  A finding is clearly erroneous when, 
although there is evidence to support it, the reviewing court on the entire 
evidence is left with the definite and firm conviction that a mistake has been 
committed."

 
 

Forshee 
v. Delaney, 2005 
WY 103, ¶ 6, 118 P.3d 445, 448 (Wyo. 2005) (quoting Springer v. Blue Cross & Blue 
Shield, 944 P.2d 1173, 1175-76 (Wyo. 1997)).  Of course, we review conclusions of law 
de novo.  E. Broadway Assocs. v. Dowell, 2002 WY 
106, ¶ 17, 49 P.3d 1004, 1007-08 (Wyo. 2002).

 
 
[¶10]   Though the appellant's reply brief 
argues that she is entitled to third-party beneficiary status to enforce the 
appellee's contract, we need not consider that issue because, based on our 
review of the record, the appellee's claim that the appellant is not a proper 
party is raised for the first time on appeal.  W.R.C.P. 17 provides, in pertinent 
part:

 
 
(a) Real party in interest  Every action 
shall be prosecuted in the name of the real party in interest. . . .  No action shall be dismissed on the 
ground that it is not prosecuted in the name of the real party in interest until 
a reasonable time has been allowed after objection for ratification of 
commencement of the action by, or joinder or substitution of, the real party in 
interest; and such ratification, joinder, or substitution shall have the same 
effect as if the action had been commenced in the name of the real party in 
interest.

 
 
In Gifford-Hill-Western, Inc. v. Anderson, 
496 P.2d 501, 502 (Wyo. 1972), we said that a party's failure to 
object that its opponent was not the real party in interest until the close of 
the evidence "constituted a waiver of any objection on that ground."  In the instant case, the failure to 
object to the appellant's status as the real party in interest is even more 
egregious than in Gifford-Hill-Western because, as the 
record exists on appeal, the first time this issue was raised is in the instant 
appeal and it was, therefore, waived by the appellee.  Further, the appellee filed a 
counterclaim below alleging that the appellant was liable to him for "any 
amounts due the corporation which were improperly billed" by the appellant. 
 Judicial estoppel is 

 
 
sometimes 
referred to as a doctrine which estops a party to play fast and loose with the 
courts or to trifle with judicial proceedings. It is an expression of the maxim 
that one cannot blow hot and cold in the same breath.  A party will just not be allowed to 
maintain inconsistent positions in judicial proceedings, as here. 31 C.J.S. 
Estoppel § 117, pp. 624-625.

 
 

Wilson v. 
Lucerne Canal & Power Co., 2007 
WY 10, ¶ 26, 150 P.3d 653, 663 (Wyo. 2007).  Because the appellee individually sought 
a judgment from the appellant based on her status as an employee of the 
corporation below, he must now be estopped from claiming that the appellant is 
not a proper party to recover for any breaches of his similar employment 
contract.3

 
 
[¶11]   The appellee has not challenged the 
above-mentioned factual findings of the district court on appeal and those 
findings clearly indicate that the appellee's actions violated his employment 
contract.  That contract contained 
the following relevant provisions:

 
 
1.    Employment. . . . The [appellee] 
shall devote his full professional time and effort to the performance of service 
for the [corporation], which shall include but not be limited to the practice of 
the medical specialty of Obstetrics & Gynecology, and solely as an Employee 
of the [corporation].  The duties 
shall include, but not be limited to, keeping and maintaining, or causing to be 
kept and maintained, appropriate records relating to professional services 
rendered by him under this Agreement and preparing and tending to, in connection 
with such services, all reports, claims, and correspondence necessary and 
appropriate in the circumstances, all of which records, reports, claims, and 
correspondence shall belong to the [corporation].

 
 
. . . 
.

 
 
3.  Hours of Employment and Patient 
Care.  The [corporation] and 
the [appellee] shall determine a work schedule which is mutually agreeable 
between the Parties, taking into consideration the needs of the patients and the 
"call schedule" between all physicians employed by the 
[corporation].

 
 
[¶12]   The district court's findings 
indicate that the appellee was not ensuring that accurate records were being 
created and maintained by Carol Beck, that the appellee unilaterally altered the 
call schedule with the hospital to the appellant's detriment, and that he 
removed corporate assets and began practicing medicine in competition with the 
corporation.  The district court 
further found that the appellee had violated duties to the corporation and to 
the appellant.  These specific 
findings clearly constitute a breach of the express terms of his employment 
contract and are, therefore, inconsistent with the district court's general 
finding that the appellee did not breach the contract.  Long ago, we recognized that specific 
findings control when they conflict with a general finding.  School Dist. v. Wempen, 80 Wyo. 311, 342 P.2d 232, 235 (1959); Parker v. Meadows, 20 Wyo. 183, 122 P. 586, 588 
(1912).  Therefore, we are forced to 
conclude that the appellee did, in fact, breach the above-mentioned provisions 
of his employment contract and the district court's ruling in the appellee's 
favor on the breach of contract claim was clearly 
erroneous.

 
 
Whether 
the district court erred when it split 

the cost 
of the Wipfli audit between

the 
appellant and the appellee.

 
 
[¶13]   Having determined that the appellee 
breached his employment contract, we now turn to what costs the appellant may 
recover in the instant case.  The 
appellant first claims that the district court's order that the parties split 
the cost of the Wipfli audit was an abuse of discretion because it based that 
decision on a factual finding that "the accounting performed by Wipfli is a 
reasonable accounting necessitated by the violations of duty by the [appellee]." 
 The appellant argues that, in light 
of the attorney's fees and costs provision in the corporate contract, she was 
entitled to recover the full cost of the accounting.  The corporate agreement created by the 
appellant and the appellee states:

 
 
14.  Attorneys Fees And Costs.  In the event suit is brought to enforce 
the terms of this Agreement, the prevailing party shall be entitled to recover 
all attorneys fees and costs incurred relating to the enforcement of this 
Agreement.

 
 
[¶14]   We review awards of costs and 
attorney's fees in order to determine if the district court abused its 
discretion.  Snyder v. Lovercheck, 992 P.2d 1079, 
1084 (Wyo. 
1999).  

 
 
"A court 
abuses its discretion only when it acts in a manner which exceeds the bounds of 
reason under the circumstances." . . . "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."

 
 

Id. 
(quoting Johnston v. Stephenson, 938 P.2d 861, 862 (Wyo. 1997)).

 
 
[¶15]   The cases cited by the appellant in 
her argument demonstrate the point that an accounting may be considered part of the costs of 
litigation and, therefore, be awarded to the prevailing party.  See Lasich v. Wimpenney, 73 Wyo. 345, 278 P.2d 807, 813 (1955); Sauceda v. Kerlin, 164 S.W.3d 892, 927 
(Tex. App. 2005); Andrikopoulos v. Broadmoor Mgmt. Co., 
670 P.2d 435, 440 (Colo. App. 1983); and Johnson v. Taylor, 116 So. 2d 480, 481-82 (Fla. Dist. 
Ct. App. 1959).  The touchstone of 
those cases, however, is not that an accounting must be taxed as a cost, but that it is 
an equitable remedy and, therefore, within the trial court's broad discretion to 
treat it as a cost of litigation, if warranted.  In the instant case, the district court 
determined that, while the appellee's actions precipitated the need for the 
accounting, it was more properly considered necessary to the mutually beneficial 
winding up of corporate affairs and not a cost incurred in enforcement of the 
corporate agreement.  We do not find 
that the district court abused its discretion in this regard.  Wyo. Stat. Ann. § 1-14-126(a) 
(LexisNexis 2005) states that "the court may award and tax costs and apportion 
them between the parties on the same or adverse sides as it deems right and 
equitable."  While the district 
court stated that the need for the audit was precipitated by the appellee's 
breaches of his duty to the corporation, it also noted in its decision letter 
that the appellant had obtained a separate business phone number and deposited 
business receipts in a separate bank account for "about a month."  The district court further determined 
that this litigation became more difficult and complex because of a lack of 
communication and cooperation from both parties.  Under these circumstances it was within 
the district court's broad discretionary power to find that the accounting was 
necessary in order to wind up the corporation's business and that the appellant 
was not entitled to be reimbursed for the full cost of the audit.  In coming to this conclusion, we note 
that the district court granted the appellant her other costs as the prevailing 
party below.

 
 
Whether 
the district court erred when

it 
declined to award the appellant her attorney's 
fees.

 
 
[¶16]   The appellant next claims that she 
is entitled to attorney's fees under the fee shifting provision in the 
appellee's contract.  The attorney's 
fee provision in the appellee's employment contract reads:

 
 
13.  Costs and Attorneys Fees.  In the event suit is brought or an 
attorney is retained to enforce the terms of this Agreement, the prevailing 
party shall be entitled to recover all reasonable attorney's fees, costs, costs 
of investigation and other expenses incurred in connection 
therewith.

 
 
The 
appellee again responds that the appellant is not entitled to enforce the 
contract, therefore, each party was properly required to pay its own 
fees.

 
 
[¶17]   As discussed more fully above, the 
appellee waived his right to object that the appellant is not a proper party to 
enforce his employment contract by not raising the defense below.  See Gifford-Hill-Western, 496 P.2d  at 
502.  Therefore, as the prevailing 
party on the breach of contract claim, the appellant may collect her attorney's 
fees as provided for by the contract.  
That fact is not, however, fully dispositive of this issue.  The district court order in the instant 
case merely said that each party should pay his or her own attorney fees.  It did not specify whether it did so 
under the default "American Rule" regarding attorney's fees,4 or whether it recognized that 
appellant was entitled to fees under the contract, but determined under its 
equitable powers that each party should pay his or her own.5  On remand, the district court is 
instructed that the appellant is contractually entitled to attorney fees, but 
such may be adjusted as appropriate under the federal lodestar test.  "The two factors which are examined 
under the lodestar test are: (1) whether the fee charged represents the product 
of reasonable hours times a reasonable rate; and (2) whether other factors of 
discretionary application should be considered to adjust the fee either upward 
or downward.'"  Cline, 998 P.2d  at 951 (quoting Johnston v. Stephenson, 938 P.2d 861, 
862-63 (Wyo. 
1997)).

 
 
Whether 
the district court erred in

its 
division of corporate equipment.

 
 
[¶18]   The appellant summarizes her final 
argument as follows:

 
 
Given 
such a variance in the testimony of the parties as to the amount and kind of 
property which they received, the trial court's finding No. 10 amounts to a 
non-finding.  The matter should be 
reversed for further findings in this regard.

 
 
The 
finding to which the appellant refers reads:

 
 
10.  For claim 4, the court will order the 
final winding-up of this corporation with each party taking the property that 
each has in their own possession at the value established by the appraisal by 
Kelly Kellebrew.  The only exception 
will be the phone system which from the evidence presented will be considered as 
part of the building.

 
 
A list 
of how the property was divided is contained in the record, as is the appraisal 
by Kelly Kellebrew which values the equipment owned by the corporation at nearly 
$45,000.

 
 
[¶19]   The appellant's argument does not 
allege any dispute with the nature of the property taken by the appellee.  Instead, she disagrees with the value 
attached to that property by the district court.  On factual issues, we affirm the 
findings of the district court unless they are clearly erroneous.  Forshee, 2005 WY 103, ¶ 6, 118 P.3d  at 
448.   The appellant's mere 
disagreement with the value placed on the property by the district court is 
insufficient for us to find that the district court clearly erred.  The value of the property found by the 
district court is supported by the Kelly Kellebrew appraisal and we will, 
therefore, affirm the distribution of corporate assets ordered by the district 
court.

 
 
CONCLUSION

 
 
[¶20]   While the appellee may have 
breached his employment contract with the corporation, the district court did 
not abuse its discretion when it ordered the parties to split the cost of the 
Wipfli audit evenly between them as part of the dissolution process. Further, 
the appellant has failed to show error in the division of the corporate 
property.  The district court 
should, however, have ordered the appellee to pay the appellant's reasonable 
attorney's fees due to his breach of the contract.  We, therefore, affirm in part, reverse 
in part, and remand for entry of an order finding the appellee in breach and 
awarding the appellant reasonable attorney's fees.

 
 
FOOTNOTES

 
 

1The 
agreement between the appellant and the appellee provided that the charts would 
be randomly selected; however, a great deal of testimony focused on the 
procedure used to select the charts and indicated that they might not actually 
have been randomly chosen.  
Regardless of the method used to select the charts, neither party 
disputes that Eide Bailly found a large number of errors 
therein.

 
 

2The 
district court noted that each party was entitled to the property currently in 
his or her possession "at the value established by Kelly Killebrew in his 
October 2003 appraisal."  As we will 
discuss below, the appellant argues that this division of corporate property 
left "considerable confusion as to what property went with which party, and at 
what value."

 
 

3Interestingly, 
the appellant argues that the appellee raised the issue below but the district 
court did not find the defense persuasive because the appellant was a 
third-party beneficiary to the contract.  
If this is the case, however, the appellee did not designate his argument 
below for transmission to this Court on appeal.  See W.R.A.P. 3.05(c) (Supp. 2006).  In any event, the appellee's defense on 
appeal must fail because if it was not raised below, it cannot be raised for the 
first time here; and if it was raised below but decided adversely to the 
appellee, then the fact that he did not appeal that decision prevents us from 
revisiting it and also raises concerns with this Court that the appellee did not 
acknowledge that the argument he raises on appeal was rejected by the district 
court below. 

 
 

4

            
Wyoming 
subscribes to the American rule regarding recovery of attorneys' fees.  Board of      County     Commissioners of      County of      Platte v. State ex rel. Yeadon, 971 P.2d 129, 132 (Wyo.1998).  Under the 
American rule, each party is generally responsible for his own attorneys' 
fees.  971 P.2d  at 132-33.  A prevailing party may, however, be 
reimbursed for his attorneys' fees when express statutory or contractual 
authorization exists for such an award.  
Id.

 
 

Cline v. 
Rocky Mountain, Inc., 998 P.2d 946, 949 (Wyo. 2000).

 
 

5In Castleberry v. Phelan, 2004 WY 151, n.2, 
101 P.3d 460, 464 n.2 (Wyo. 2004), we noted that

 
 
[o]ur 
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[ v. Wentland, 2002 WY 2], ¶ 50[, 38 P.3d 402, 420 (Wyo. 2002)].  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.