Case Title: MIKE SCHMID V. PAT SCHMID

Citation: 

Docket Number: 06-268

State: wyoming

Court: Wyoming Supreme Court

Date: 2007-09-18T00:00:00Z

Document:
MIKE SCHMID V. PAT SCHMID2007 WY 148166 P.3d 1285Case Number: 06-268, 06-270Decided: 09/18/2007
APRIL 
TERM, A.D. 2007

 
 
MIKE SCHMID,

 
 
Appellant

(Defendant),

 
 
v.

 
 
PAT SCHMID,

 
 
Appellee

(Plaintiff).

 
 
Appeal from the 
DistrictCourtofSweetwaterCounty

The Honorable Jere A. 
Ryckman, Judge

 
 
Representing Appellant:

 
 
Clark D. 
Stith, Rock Springs, 
Wyoming.

 
 
Representing Appellee:

 
 
P. Richard 
Meyer and Robert N. Williams, of Meyer and Williams, Jackson, Wyoming.  
Argument by Mr. Meyer.

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

 
 
BURKE, 
Justice.

 
 

[¶1]         
Mike Schmid appeals the 
judgment entered in favor of his brother, Pat Schmid.1  He contends that the trial court 
improperly excluded much of the evidence he offered in support of his version of 
the terms of an oral agreement between the two brothers.  We agree that the trial court abused its 
discretion in excluding the evidence, and so we reverse the judgment and remand 
the case for a new trial.

 
 
ISSUES

 
 

[¶2]         
These issues are 
presented for our review:

 
 

1.                  
Whether the district 
court abused its discretion in excluding evidence corroborating Mike's theory of 
the case;

 
 

2.                  
Whether the district 
court abused its discretion in refusing to allow Mike's counsel to cross-examine 
Pat concerning deposition and trial testimony that supported Mike's theory of 
the case;

 
 

3.                  
Whether the district 
court violated Mike's due process rights under article I, section 6 of 
the Wyoming Constitution;

 
 

4.                  
Whether the district 
court violated Mike's due process rights under the Fourteenth Amendment to the 
United States Constitution;

 
 

5.                  
Whether the district 
court erred by denying Mike's pretrial motion for summary judgment and motion 
for directed verdict at trial, both made on the grounds of the statute of frauds 
and the lack of any fiduciary duty from Mike to Pat; and

 
 

6.                  
Whether the district 
court abused its discretion in denying Mike's motion for a new 
trial.

 
 
FACTS

 
 

[¶3]         
Mike and Pat Schmid are 
brothers.  We will refer to them by 
their first names.  Mike owned an 
oilfield services company, Schmid Oilfield Services, Inc. ("SOS").  Pat was employed by SOS for many years, 
but was not an owner.  SOS was 
successful, and in 2000, First Energy Services Company ("FESCO") paid Mike a 
substantial sum to purchase SOS.  As 
part of the transaction, Mike went to work for FESCO, and continued to manage 
SOS for his new employer.  Also as 
part of the agreement, Mike was to receive a significant bonus from FESCO if SOS 
performed well during the two years following the transaction.  The formula for calculating the bonus 
was complex, and the details are not especially pertinent to this appeal.  It is sufficient for our purposes to 
note that, if SOS met certain performance targets in the two years after the 
sale, Mike would receive a bonus from FESCO based on SOS's average annual 
earnings over those two years.  

 
 

[¶4]         
Mike, in turn, offered to 
pay bonuses to his brother Pat and two other long-term SOS employees, Ted 
Olmsted and Mike Denison, hoping that the three men would stay on with the 
company and contribute to its continuing success.  The agreements were never put in 
writing, although Mike made some cryptic notes and gave them to 
Mr. Denison, and Pat kept notes during his meeting with Mike.  The two sets of notes were nearly 
identical.

 
 

[¶5]         
For various reasons, SOS 
did not perform as well as expected in the two years after its purchase by 
FESCO.  Mike and FESCO ended up 
disagreeing about the amount of bonus he should receive, a dispute that Mike 
eventually settled by accepting an amount less than he had originally 
expected.  Because his bonus from 
FESCO was so small, Mike claimed he did not owe any bonuses to Pat, 
Mr. Olmsted, or Mr. Denison.  
Pat disagreed.

 
 

[¶6]         
While many details 
complicated their disagreement, the crux of the dispute involved the calculation 
of the amount of Pat's bonus.  Mike 
maintained that he had offered to pay Pat an amount that depended on what Mike 
received as a bonus from FESCO, which was based on SOS's average annual earnings in the two years 
after the sale.  Pat insisted that 
the amount of his bonus did not depend on what Mike received from FESCO, and 
that Mike had agreed to pay Pat based on SOS's total earnings over the two year 
period.2

 
 

[¶7]         
At trial, Mike was 
prepared to testify that he made the same offer to Pat that he made to 
Mr. Olmsted and Mr. Denison.  
Mike maintained that Mr. Olmsted and Mr. Denison would testify 
in support of his version of the agreements.  Mike also intended to enter into 
evidence the notes he had made and given to Mr. Denison, contending that the 
striking similarity between his notes and Pat's notes supported his assertion 
that he had made the same bonus offer to all three men.

 
 

[¶8]         
Pat, however, contended 
that the offer Mike made to him was different from his offer to Mr. Olmsted 
and Mr. Denison.  On that 
basis, he argued that evidence about Mike's agreements with Mr. Olmsted and Mr. 
Denison was not relevant to prove the terms of the agreement Mike had made with 
him.  Pat further contended that 
Mike's notes were irrelevant, because they related to Mike's agreement with 
Mr. Denison, not Mike's agreement with him.

 
 

[¶9]         
The trial court agreed 
with Pat, and deemed the evidence inadmissible.  Despite repeated efforts by Mike's 
counsel to change the trial court's decision, that ruling was maintained 
throughout the trial.  The jury 
returned a verdict in Pat's favor, and Mike filed this 
appeal.

 
 
DISCUSSION

 
 
First Issue:  Exclusion of 
Evidence

 
 

[¶10]    
We review a trial court's 
evidentiary decisions for an abuse of discretion. 

 
 
Rulings on the admission 
of evidence are placed within the sound discretion of the trial court and, in 
order to successfully challenge these rulings on appeal, an appellant must show 
that the trial court committed a clear abuse of discretion.  A trial court's rulings on the 
admissibility of evidence are entitled to considerable deference, and, as long 
as there exists a legitimate basis for the trial court's ruling, that ruling 
will not be disturbed on appeal.  
The appellant bears the burden of showing an abuse of 
discretion.

 
 

Sanchez v. 
State, 
2006 WY 116, ¶ 20, 142 P.3d 1134, 1140 (Wyo. 2006) (internal citations and 
quotation marks omitted).  Even when 
a trial court errs in an evidentiary ruling, we reverse only if the error was 
prejudicial.  The appellant must 
show a reasonable probability that, without the error, the verdict might have 
been different.  Smyth v. Kaufman, 2003 WY 52, ¶ 29, 
67 P.3d 1161, 1169-70 (Wyo. 2003).

 
 

[¶11]    
We begin our review of 
the parties' contentions at the time when the admissibility of the disputed 
evidence first became an issue.  In 
a pretrial conference held the Friday before trial started on Monday, the trial 
court considered Pat's motion in limine to exclude the testimony of 
Mr. Olmsted and Mr. Denison.  
Mike's counsel opposed the motion, explaining that the "heart of our 
defense" was that Mike's agreement with Pat was "the same agreement" he had with 
Mr. Olmsted and Mr. Denison.  
Testimony from Mr. Olmsted and Mr. Denison, he said, would 
support Mike's version of the agreement.  
Pat's counsel countered that any testimony from Mr. Olmsted and 
Mr. Denison would be "extraneous" because they did not know the terms of 
Mike's agreement with Pat.  Pat 
contended that his agreement with Mike was different from the agreements with 
Mr. Olmsted and Mr. Denison, and even if the agreements were similar, 
testimony from Mr. Olmsted and Mr. Denison was irrelevant in 
establishing the terms of Pat's agreement.  
Mike's counsel re-emphasized Mike's position "not [that] the agreements 
were similar," but that they were "mirror images, that they're identical 
agreements."

 
 

[¶12]    
The trial court ruled 
that the evidence should be excluded.  
It explained that "each agreement has to stand on its own, and somebody 
else's interpretation of their agreement with Mike Schmid is  is not going to 
be allowed."  The trial court later 
excluded Mike's notes he had given to Mr. Denison on the basis that those notes 
related to Mike's agreement with Mr. Denison, not his agreement with 
Pat.

 
 

[¶13]    
On the morning before 
trial started, Mike followed up with a written offer of proof.  At a hearing shortly before jury 
selection began, Mike's counsel renewed his argument that Mike's agreements with 
Mr. Olmsted and Mr. Denison were "mirror images" of his agreement with Pat, 
and that testimony from Mr. Olmsted and Mr. Denison would support Mike's 
version of the terms of the agreements.  
The court maintained its prior ruling, excluding the offered evidence, 
because the trial was about Mike's agreement with Pat, "not his agreement with 
the other two."

 
 

[¶14]    
In considering this case, 
it is important to keep in mind that the parties were attempting to establish 
the terms of their oral agreement.  
There was no written contract with definite and unambiguous terms.  Where the language of a contract is 
indefinite or ambiguous, all the surrounding circumstances must be considered in 
order to ascertain its terms.  Mountain Fuel Supply Co. v. Central 
Engineering and Equipment Co., 611 P.2d 863, 868 (Wyo. 1980).  To establish the terms of an oral 
agreement, a broad range of evidence may be taken into consideration.  For example, the parties' "conduct 
before and after making the alleged contract may shed light on their 
intent.'"  Linton v. E. C. Cates Agency, Inc., 2005 
WY 63, ¶ 16, 113 P.3d 26, 30 (Wyo. 2005).  

 
 

[¶15]    
As a general proposition, 
all relevant evidence is admissible.  
W.R.E. 402.  Evidence is 
relevant if it has any tendency to make the existence of a fact of consequence 
more or less probable than it would be without the evidence. W.R.E. 401.  Testimony from Mr. Olmsted and 
Mr. Denison about the terms of their oral agreements with Mike, coupled 
with Mike's testimony that those agreements were identical to his agreement with 
Pat, would tend to make Mike's version of his agreement with Pat more 
probable.  The key to this analysis 
is that Mike was prepared to testify that the three agreements were 
identical.  Absent that connection, 
evidence about the terms of his other agreements might not be relevant in 
establishing the terms of his agreement with Pat.  With that connection, the evidence is 
relevant.  We conclude that, to 
establish the terms of an oral agreement, evidence about the terms of other, 
identical agreements is relevant, probative, and generally admissible.  

 
 

[¶16]    
Even relevant and 
probative evidence may be inadmissible for other reasons.   

 
 
Although relevant, 
evidence may be excluded if its probative value is substantially outweighed by 
the danger of unfair prejudice, confusion of the issues, or misleading the jury, 
or by considerations of undue delay, waste of time, or needless presentation of 
cumulative evidence.

 
 
W.R.E. 403.  The issue of whether the evidence was 
unfairly prejudicial was not discussed at the pretrial stage.  Later, after the trial began, Mike's 
counsel renewed his request to admit the evidence.  At that point, the trial court concluded 
that it would be unfairly prejudicial to change its ruling and admit the 
evidence, because opening statements had been made, and testimony taken, based 
on the trial court's earlier decision to exclude the evidence.  While it might have been prejudicial at 
that point, when considered at the pretrial stage, the relatively simple 
testimony from Mike, Mr. Olmsted, and Mr. Denison would seem to 
present little danger of unfair prejudice, confusion, or misleading the 
jury.  Nor was the testimony 
needlessly cumulative.

  

[A]t times it is entirely 
reasonable for a party to insist, "One witness is good, but two or three will 
make my case much stronger, even though all will testify in a similar 
vein."  In short, the discretion of 
the trial judge to exclude cumulative evidence must be exercised in a 
discriminating fashion, and with wisdom, particularly where the evidence in 
question goes to issues of central importance in the case.   . . .  Thus, evidence which in the context of 
the litigation is merely repetitious or time consuming may be excluded, but only 
if time consideration substantially outweighs the incremental probative value of 
the proffered evidence. 

 
 

Winterholler v. 
Zolessi, 
989 P.2d 621, 629 (Wyo. 1999) (internal citations omitted) 
(citing 2 D. Louisell and C. Mueller, Federal Evidence § 128, at 74-75; M. 
Graham, Handbook of Federal Evidence 
§ 403.1, at 179 (2d ed. 1986)).  
Testimony from two witnesses supporting Mike's version of the agreement 
would have had considerable probative value, not outweighed by other 
consideration.

 
 

[¶17]    
On appeal, Pat asserts 
that Mike's offers of proof to the trial court were inadequate.  He points out that the offers did not 
quote testimony from the depositions of Mr. Olmsted or Mr. Denison, 
did not solicit actual testimony from the witnesses, and specified few details 
of their proposed testimony.  On 
this basis, Pat urges that Mike's offers of proof were defective, citing Skinner v. State, 2001 WY 102, 
¶ 39, 33 P.3d 758, 771 (Wyo. 2001).  
Skinner is distinguishable, 
because there, no offer of proof had been made.  Here, Mike's counsel did make offers of 
proof, and we may test them against the requirements of the Wyoming Rules of 
Evidence.  

 
 
Error may not be 
predicated upon a ruling which admits or excludes evidence unless a substantial 
right of the party is affected, and . . . [if] the ruling is one excluding 
evidence, the substance of the evidence was made known to the court by offer or 
was apparent from the context within which the questions were 
asked.

 
 

W.R.E. 103(a)(2).  We have stated that the "dual purpose of 
an offer of proof is to alert the trial court to the nature of the error in 
order to allow corrective action, and at the same time to create a sufficient 
record for appellate review."  Armstrong v. 
Hrabal, 
2004 WY 39, ¶ 16, 87 P.3d 1226, 1232 (Wyo. 2004).  

 
 

[¶18]    
Mike's oral and written 
offers of proof included representations that Mike would testify that his 
agreement with Pat was "the same agreement" he had with Mr. Olmsted and 
Mr. Denison, that the agreements were "mirror images," and that the three 
agreements were "identical."  With 
regard to the testimony of Mr. Olmsted and Mr. Denison, the offers of 
proof included the brief explanation that "both of [these] witnesses are 
expected to testify that they agree with Mike," and the request that 
Mr. Olmsted and Mr. Denison "be allowed to testify as to [their] 
understanding of the terms of the offer that Mike Schmid made to [them]."  These offers of proof were not lengthy, 
but because the proposed testimony was not complicated, the offers provided 
sufficient detail and explanation.  
They adequately informed the trial court about the nature of the proposed 
evidence, and provided adequate information for meaningful appellate 
review.  Because Mike's offers of 
proof accomplished their required purposes, they satisfied the mandate of W.R.E. 
103.

 
 

[¶19]    
Pat further asserts that 
the testimony of Mr. Olmsted and Mr. Denison would not have been as 
favorable to Mike's position as had been represented.  He quotes portions of their deposition 
testimony suggesting that they lacked understanding or recollection of details 
of the agreements.  Not 
surprisingly, Mike cites other portions of the depositions that support his 
position.  These arguments go to the 
weight of the evidence, not its admissibility.  See 5 Margaret N. Kniffen, Corbin on Contracts § 24.9, at 
60-61 (Joseph M. Perillo ed., rev. ed. 1998).

 
 

[¶20]    
We therefore determine 
that the trial court erred in excluding the evidence.  We are also persuaded that the error was 
prejudicial.  When the trial court 
excluded much of Mike's proposed evidence, the trial was essentially pared down 
to Mike's testimony about his version of the agreement versus Pat's testimony 
about his version.  Under these 
circumstances, the jury may have found the testimony of Mr. Olmsted and 
Mr. Denison particularly credible and persuasive.  Neither was a party to the suit.  Contrary to their own pecuniary 
interests, both were prepared to testify that, under the terms of their 
agreements, Mike owed them no bonus.  
The potential significance of their testimony generates a reasonable 
probability that the jury might have reached a different verdict if it had been 
allowed to consider the evidence.  

 
 

[¶21]    
Further, this Court has 
indicated that a litigant is usually entitled to a remand and a new trial if he 
was unfairly restricted in developing and presenting his theory of the 
case.  Capshaw v. WERCS, 2001 WY 68, ¶ 10, 
28 P.3d 855, 858 (Wyo. 2001); Stauffer 
Chem. Co. v. Curry, 778 P.2d 1083, 1100 (Wyo. 1989).  When the issue is the exclusion of 
evidence, we generally prefer to allow a party his "day in court" to resolve a 
controversy on its merits.  Winterholler, 989 P.2d  at 628.  The trial court's rulings unduly 
restricted the presentation of Mike's theory of his case, and largely denied 
Mike his day in court, further supporting the conclusion that the error was 
unfairly prejudicial.

 
 

[¶22]    
In sum, finding no legitimate basis for the trial court's exclusion of the 
evidence, we are compelled to rule it an abuse of discretion.  In reaching that conclusion, we 
determine that Mike's offers of proof were adequate to serve their 
purposes.  Mike was prejudiced by 
the trial court's decision, and so we reverse the judgment and remand the case 
for a new trial.

 
 

Remaining 
Issues

 
 

[¶23]    
Our resolution of the 
first issue resolves most of the remaining issues as well.  Mike's second issue, whether he should 
have been allowed to cross-examine Pat about his knowledge that the three 
agreements were identical, should be decided by the district court in the 
context of the new trial.  His third 
and fourth issues, constitutional due process claims, need not be addressed 
because we are reversing the judgment for other reasons.  We prefer not to decide constitutional 
issues when a case can be resolved on other grounds.  State ex rel.State 
Dep't of Revenue v. Union Pac. R.R., 2003 WY 54, ¶ 43, 67 P.3d 1176, 1191 (Wyo. 2003).  His sixth issue, 
asserting that the district court should have granted a motion for new trial, is 
also resolved as a practical matter by our remand for a new 
trial.

 
 

[¶24]    
Mike's fifth issue, 
however, remains unresolved.  Mike 
asserts that the district court erred in denying his pretrial motion for summary 
judgment, and his motion for directed verdict made near the close of trial.  These motions rested on two 
contentions.  One was that, as a 
matter of law, he owed no fiduciary duty to Pat.  We have previously observed that a 
fiduciary relationship is "extraordinary and not easily created."  Martinez v. Associates Fin. Servs. Co., 891 P.2d 785, 789 (Wyo. 
1995).  The record currently before 
us would not support Pat's claim of fiduciary duty, but because we cannot 
predict whether additional evidence might be presented at a new trial, it seems 
prudent to leave this claim for the trial court to consider in the context of 
the new trial. 

 

[¶25]    
Mike also contends that 
his agreement with Pat was unenforceable under the statute of frauds.  If Mike is correct, all of Pat's claims 
fail, and there would be no need for a new trial on remand.  We will therefore resolve this 
contention before remanding the case to the district 
court.

  

[¶26]    
We note first that the 
denial of a summary judgment motion is not an appealable order.  St. Paul Fire and Marine Ins. Co. v. Albany 
County Sch. Dist. No. 1, 763 P.2d 1255, 1257 (Wyo. 1988).  Reasons for this rule, and the policies 
behind it, were well explained in State 
Farm Mut. Auto. Ins. Co. v. Shrader, 882 P.2d 813, 820 (Wyo. 1994), and we will 
not consider Mike's fifth issue in the context of a denied motion for summary 
judgment.  However, the trial 
court's denial of Mike's motion for judgment as a matter of law, made at the 
close of trial, is an appealable order.  
The trial court's legal conclusions are reviewed de novo, Sayer v. Williams, 962 P.2d 165, 167 
(Wyo. 1998), 
while we view the facts in the light most favorable to the trial court's 
decision.

 
 
A judgment as a matter of 
law is appropriate when reasonable jurors could reach but one conclusion as to 
the verdict.  We regard the nonmoving party's evidence as being true, and 
we give that party the benefit of all reasonable inferences that may be drawn 
from the evidence.  Additionally, we 
do not weigh the evidence or assess the credibility of the witnesses.  A judgment as a matter of law deprives 
the opposing party of the opportunity to have the jury determine the facts, and 
the court should, therefore, use caution in granting such a 
judgment.

 
 

Anderson v. 
Duncan, 
968 P.2d 440, 442 (Wyo. 1998) (internal citations 
omitted).

 
 

[¶27]    
The codified Wyoming statute of frauds 
provides in relevant part as follows:

 
 
In the following cases 
every agreement shall be void unless such agreement, or some note or memorandum 
thereof be in writing, and subscribed by the party to be charged therewith: 

 
 
(i)  Every 
agreement that by its terms is not to be performed within one (1) year from the 
making thereof.

 
 

Wyo. Stat. Ann. 
§ 1-23-105(a)(i) (LexisNexis 2007).  
Mike points out that he could not have paid the bonus to Pat within one 
year, because the amount of the bonus was based on the company's average 
earnings over two years (Mike's version), or gross earnings over two years 
(Pat's version).  Either way, the 
agreement could not be performed within one year, it was never put in writing, 
and was not subscribed by Mike.  
Therefore, he asserts, the agreement was void and unenforceable under the 
statute of frauds.

 
 

[¶28]    
The trial court rejected 
Mike's argument, ruling that Pat had performed his part of the agreement by 
remaining in the employ of SOS over the two year period.  An exception to the statute of frauds 
may apply when one party substantially performs his part of an oral 
agreement.  Linton, ¶ 27, 113 P.3d  at 32.  This exception helps prevent the 
injustice that would result if one party fully met his obligations under the 
agreement while the other party is allowed to avoid his corresponding 
obligations.  See, e.g., Wyoming Realty Co. v. Cook, 872 P.2d 551, 554 (Wyo. 
1994).  

 
 

[¶29]    
The trial court's 
application of the substantial performance exception in this case is supported 
by evidence in the record.  Pat 
testified that, at considerable inconvenience to himself and his family, he 
continued living and working for the company in Wamsutter.  He testified to a grueling schedule in 
which 90 hours at work was "a pretty routine week."  He also testified that he worked harder 
and got involved with additional projects because of the "extra motivation" of 
the bonus Mike offered him.  The 
latter is particularly significant, because it indicates that Pat's extra 
efforts were specifically attributable to his agreement with Mike, and not to 
his general obligations as an employee.  
Taken in the light most favorable to Pat, his testimony provided 
sufficient evidence to support a reasonable inference that he substantially 
performed his obligations under the agreement.  The trial court properly denied Mike's 
motion for judgment as a matter of law.

 
 

[¶30]    
This is true despite 
Mike's contention that the substantial performance exception to the statute of 
frauds does not apply to employment contracts.  For that proposition, he cites to a 
concurring opinion in WERCS v. 
Capshaw, 2004 WY 86, ¶¶ 26-28, 94 P.3d 421, 429 (Wyo. 2004).  However, the majority opinion does not 
hold or suggest that the substantial performance exception does not apply to 
employment contracts.  Even if we 
took the position of the concurring opinion, Pat was not Mike's employee.  Both were employees of FESCO.  The agreement between Mike and Pat had 
some characteristics of an employment contract, in that it offered Pat a bonus 
for continuing his employment and working hard.  It was not an employment contract, 
however, and the trial court properly applied the substantial performance 
exception to the statute of frauds.

 
 

CONCLUSION

 
 

[¶31]    
We hold that the district 
court abused its discretion in excluding Mike's evidence concerning other 
agreements that he asserted were identical to his oral agreement with Pat.  With regard to Mike's motion for 
judgment as a matter of law, we uphold the district court's denial on the 
statute of frauds issue.  We reverse 
the judgment on the evidentiary issue, and remand the case to the district court 
for a new trial.

 
 
FOOTNOTES

 
 

1Two separate 
appeals were filed, the first challenging the district court's judgment, and the 
second regarding the denial of a motion for new trial.  The two appeals 
were consolidated, and both are resolved by this 
opinion.

 
 

2The parties disputed many complicated 
details about the bonus calculation.  
For example, they disagreed about the definition of "earnings" under 
Mike's agreement with FESCO and under Mike's agreement with Pat.  These details were important at trial, 
because they helped determine whether Pat was entitled to the bonus, and if so, 
in what amount.  However, they are 
not significant to our decision, and need not be further considered 
here.