Case Title: Kaiser v. Farnsworth Drilling Co., Inc.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1993-05-11T00:00:00Z

Document:
Kaiser v. Farnsworth Drilling Co., Inc.1993 WY 69851 P.2d 1292Case Number: 92-189Decided: 05/11/1993Supreme Court of Wyoming
Peter A. KAISER, 
Sr.,

 Appellant 
(Plaintiff),

v. 

FARNSWORTH DRILLING, CO., 
INC., a Wyoming corporation, Michael Farnsworth, Gerald G. Farnsworth, and 
Thomas Farnsworth, William C. Naramore, Jack L. Bennick, Ronald J. Pasco, John 
C. Cromwell, Jessie E. Braley, David Clift, and various John Does, 

Appellees 
(Defendants).

Appeal from District 
Court of Weston County, Dan R. Price II, J.

Bernard E. Cole 
and Donald A. Cole, Cheyenne, for appellant.

Stanley S. 
Sheehan and Randall T. Cox of Sheehan & Cox, Gillette, for appellees 
Farnsworths.

Before 
THOMAS, CARDINE and TAYLOR, JJ., ROONEY, J. (RET.), and LANGDON, D.J. 
(RET.)

LANGDON, District Judge 
(Retired).

[¶1]      In this appeal, 
we determine whether the district court properly granted a motion to dismiss the 
appellant's complaint, as was provided for in WYO.R.CIV.P. 41(b) (now 
WYO.R.CIV.P. 52(c)), for the reason that, upon the facts and the law, the 
appellant demonstrated no right to relief. Associated issues of jurisdiction, 
res judicata, and statute of limitations are also posited before the Court, but, 
because we will hold that the district court properly dismissed the complaint, 
we find it unnecessary to address those questions.

[¶2]      The appellant, 
Peter A. Kaiser, Sr., states this issue:

Did the District Court 
err in holding that the Appellant's Complaint should be involuntarily dismissed 
pursuant to Rule 41(b) of the Wyoming Rules of Civil Procedure on the ground 
that upon the facts and the law the Appellant had shown no right to 
relief?

[¶3]      The appellees, 
Farnsworth Drilling Co., Inc., Michael Farnsworth, Gerald G. Farnsworth, and 
Thomas Farnsworth, provide this statement of the issues:

There are two issues 
presented in this case, one of which is appropriately stated by the Appellant. 
The second issue is stated as follows:

Whether the District 
Court had jurisdiction to hear a complaint seeking to modify a series of Probate 
Court Orders entered more than four years prior to the filing of the 
complaint.

[¶4]      This case really 
began on January 16, 1984, when the district court appointed a guardian for 
Kaiser, who was an incompetent because of advanced chemical dependency which 
rendered him incapable of caring for himself or his property. At the time the 
guardian was appointed, Kaiser's estate was valued at over $4.5 million, and his 
stock in Farnsworth and Kaiser Drilling Company, Inc. (F & K Drilling), 
which represented one-half of the stock of that corporation, was valued at $1.5 
million. The other one-half of the stock in F & K Drilling was owned by 
Gerald G. Farnsworth, and he and Kaiser jointly operated the company. In early 
1985, it became necessary to sell Kaiser's F & K Drilling stock in order to 
service a $1.5 million debt owed by Kaiser to the National Bank of Newcastle. 
David Clift,1 Vice-President and Trust Officer of 
the Stockmens Bank & Trust Company of Gillette, Wyoming, acting as the 
guardian for Kaiser, arranged for Nelson International to make an appraisal of 
the equipment owned by F & K Drilling and then advertised the stock for 
sale. Michael and Thomas Farnsworth, Gerald G. Farnsworth's sons, offered to buy 
the stock, and they arranged for their own independent appraisal to be made by 
Jim Davis Auctioneers.2 Kaiser was present at the sale and 
was represented by an attorney who was serving as his guardian ad litem as well 
as by his guardian. The guardian received no other offers to buy the stock, and 
he sold it to the Farnsworth brothers for $814,000, an average of the two 
appraisals, in a district court approved sale. On August 14, 1986, the 
guardianship was terminated. On August 7, 1989, Kaiser filed a complaint 
alleging that the Farnsworths conspired with each other to deprive Kaiser of his 
share of the true value of F & K Drilling. He maintained that they achieved 
this by concealing and/or undervaluing many corporation assets. Kaiser also 
alleged that the Farnsworths misrepresented and concealed F & K Drilling 
assets which enabled Michael and Thomas Farnsworth to obtain Kaiser's stock at 
an artificially low price. In addition, Kaiser alleged that Clift violated his 
fiduciary duties to Kaiser and sold assets from his estate at prices greatly 
less than they were worth.

[¶5]      A trial to the 
court was conducted on July 10, 1992. At that trial, Kaiser presented all his 
evidence in support of his various claims. That evidence primarily consisted of 
his own testimony and related documentary evidence. The district court also took 
judicial notice of the entirety of the proceedings in the matter of Kaiser's 
guardianship. At the close of Kaiser's presentation of evidence, the defendants 
moved for a dismissal in accordance with WYO.R.CIV.P. 41(b), asserting that, 
upon the facts and the law, Kaiser failed to show a right to relief. Kaiser's 
evidence consisted of a hypothesis not dissimilar to basing a claim on the 
theory of res ipsa loquitur. At the time Kaiser's guardianship was created, his 
estate was inventoried and appraised. One item in that inventory was his F & 
K Drilling stock, and it was valued at $1.5 million. Of course, that would mean 
all the stock in F & K Drilling had a total value of $3 million. At the time 
Kaiser's F & K Drilling stock was sold, just about one year later, the F 
& K Drilling stock was valued at just over $1 million. This figure is, 
however, somewhat deceptive. Kaiser received $523,000 for the stock itself, 
$291,000 in undistributed cash reserves, and forgiveness of debt of about 
$340,000. Gerald G. Farnsworth also received a cash distribution of $291,000 and 
forgiveness of debt of approximately $340,000, but he retained his stock. If 
these figures were added together, the total value of the F & K Drilling 
stock at that time would have been about $2,308,000, or $692,000 less than the 
$3 million value placed upon it at the time the guardianship commenced. Thus, it 
could be reasoned that Kaiser's stock deteriorated in value by about 
$346,000.

[¶6]      Kaiser's evidence 
of conspiracy and misrepresentation consisted of his assessment that the two 
appraisals were not congruous. Each contained items of property that the other 
did not, though each appraisal did contain general categories of "stuff." For 
instance, the Nelson International appraisal had this item: "Approximately 150 
Tons of Iron Including Engines, Pumps, Rig Parts & Masts," and the Jim Davis 
appraisal listed: "120-150 tons of scrap metal." Kaiser presented three lists to 
the district court. One list consisted of items appearing in the Nelson 
International appraisal which were not in the Jim Davis appraisal. The second 
list consisted of items which appeared in the Jim Davis appraisal, but not in 
the Nelson International appraisal. The third list consisted of items which did 
not appear in either appraisal but were in the F & K Drilling yard both 
before and after the appraisals were completed. The proceedings transcript 
establishes that these lists contained many inaccuracies. Kaiser also testified 
that he called this to Clift's attention at the time of the sale but that Clift 
went ahead with the sale anyway. He also stated that he called it to Gerald G. 
Farnsworth's attention and that Farnsworth wanted the sale to proceed and would 
pay Kaiser for the "missing equipment down the road." On the basis of this 
evidence, Kaiser contended it should be concluded that the Farnsworths conspired 
in such a way as to obtain his stock at a reduced price. Kaiser admitted quite 
frankly that he had no evidence of such a conspiracy other than his three lists. 
Kaiser also contended that it should be concluded that the Farnsworths had 
misrepresented and/or concealed the F & K Drilling assets so as to obtain 
his stock at a reduced price. Again, Kaiser candidly admitted that he had no 
evidence of such misrepresentations and/or concealments other than his three 
lists.

[¶7]      The standard of 
review to be applied in this case is:

Essentially, this court 
applies a directed verdict analysis, taking the plaintiff's evidence as true and 
affording it all favorable and reasonable inferences. "`A motion for judgment at 
the close of the plaintiff's case is in the nature of a demurrer to the 
evidence, and admits its truth.'" This court . . . clarified this issue of 
involuntary nonsuit:

"Where the plaintiff's 
proof has failed in some aspect, the motion should be granted - where the 
plaintiff's proof is overwhelming, the motion should be denied. Where the 
plaintiff has presented a prima facie case based on unimpeached evidence, the 
trial judge should not grant the motion even though the judge himself may feel 
that the plaintiff has not sustained his burden of proof."

True Oil Company 
v. Sinclair Oil Corporation, 771 P.2d 781, 795 (Wyo. 1989) (citations omitted). 
See also Charter Thrift and Loan v. Cooke, 766 P.2d 522 (Wyo. 1988), and 9 
CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE: 
CIVIL § 2371 (1971).

[¶8]      The district 
court issued findings of fact and, in our view, correctly determined that Kaiser 
presented no evidence of a conspiracy. While the existence of concerted action 
may not have made that much difference to the outcome of this case, we are 
nonetheless satisfied with the district court's conclusion that no evidence of 
concerted action was introduced before the trial court. See Jurkovich v. Estate 
of Tomlinson, 843 P.2d 1166 (Wyo. 1992); Barnhart Drilling Co., Inc. v. 
Petroleum Financing, Inc., 807 P.2d 411 (Wyo. 1991); and 16 AM.JUR.2D Conspiracy 
§§ 49-52 (1979).

[¶9]      We move on to 
Kaiser's evidence concerning misrepresentations and/or concealment of assets in 
furtherance of the Farnsworths' alleged attempt to obtain Kaiser's stock at a 
reduced price. The district court found that the Farnsworths did not conceal F 
& K Drilling assets nor did they misrepresent those assets to the appraisers 
or anyone else. We agree that Kaiser presented no evidence from which 
misrepresentation, concealment, or fraud might be inferred. The facts presented 
by Kaiser did not go beyond a demonstration that there was an apparent drop in 
the value of F & K Drilling stock between 1984 and 1985. The record suggests 
that the loss in value might have been the result of market conditions in the 
oil and gas drilling industry; that it might have been the result of Kaiser 
dropping out of the closely held corporation which depended upon Kaiser and 
Gerald G. Farnsworth for both management and actual operations; that it might 
have been because the 1984 appraisal of the F & K Drilling stock was more in 
the nature of a guesstimate than a studied appraisal as was made in 1985; or 
that it might have been that Kaiser had an inflated opinion of the value of F 
& K Drilling assets. There was insufficient evidence to establish any or all 
of these factors as being the cause of the stock's lower value, but more 
importantly there was no evidence whatsoever that misrepresentations concerning, 
or concealment of, assets was the cause. See Duffy v. Brown, 708 P.2d 433 (Wyo. 
1985); and Sullivan v. Sullivan, 506 P.2d 813 (Wyo. 1973).

[¶10]   Finally, we address Kaiser's 
evidence that Clift breached his fiduciary duties as a guardian of Kaiser's 
estate and sold assets from that estate for substantially less than their 
appraised value. The district court found no evidence of a breach of fiduciary 
duties or that Clift sold estate assets for substantially less than their 
appraised value. The duties owed Kaiser by Clift are dictated by statute. WYO. 
STAT. § 3-2-201 (1985). Clift had authority to sell his ward's personal 
property, and that sale had to be reasonable. The sale of the F & K Drilling 
stock was accomplished with district court authorization and approval. On its 
face, and that is the only real evidence we have to consider, the sale was 
proper. There simply is no evidence indicating that Clift breached his duties as 
a guardian or sold assets from Kaiser's estate in a manner inconsistent with 
those duties.

[¶11]   The appellees posit an argument 
that the district court lacked jurisdiction to entertain Kaiser's complaint. 
They contend that the issues were res judicata because of the guardianship 
proceedings and that there was no vehicle available, under either the rules of 
civil procedure or governing statutes, which permitted the court to entertain 
this collateral proceeding. We are satisfied that our disposition of the case 
settles this matter on its merits and that detailed consideration of these 
jurisdictional issues would not contribute to resolution of this matter or 
enhance the jurisprudence of this state. The district court had jurisdiction of 
the subject matter and the parties, and we, thus, find it unnecessary to comment 
further in this regard.

[¶12]   The district court's judgment is 
affirmed.

FOOTNOTES

1 Clift is an appellee in 
this appeal. He appeared pro se below but did not file a brief in this 
Court.

2 The real estate owned by 
F & K Drilling was separately appraised at approximately $200,000. There is 
no controversy concerning the appraised value of the real estate.