Title: BRENT ANDERSEN v. RAY CORBITT

State: wyoming

Issuer: Wyoming Supreme Court

Document:

BRENT ANDERSEN v. RAY CORBITT1989 WY 139777 P.2d 48Case Number: 88-176Decided: 06/27/1989Supreme Court of Wyoming
BRENT ANDERSEN, APPELLANT 
(DEFENDANT),

v.

RAY CORBITT, APPELLEE 
(DEFENDANT).

Appeal from the 
DistrictCourtofSweetwaterCounty, Kenneth G. Hamm, 
J.

Harley J. 
McKinney of Pickett & McKinney, Rock Springs, for appellant.

Robert H. 
Johnson, Rock 
Springs, for 
appellee.

Before THOMAS, URBIGKIT and MACY, JJ., BROWN, J., 
Retired, and LEIMBACK, District Judge.

URBIGKIT, 
Justice.

[¶1.]     We are provided a 
settlement agreement negotiated between law firms which did not stay settled 
resulting in a $20,000 interpleader suit and the involvement of two more law 
firms to decide who gets the deposited funds. The extreme hostility between the 
individual litigants is pervasive. Appeal is taken from a summary judgment 
disposition and we reverse to award the escrowed funds to appellant, Dr. Brent 
Andersen (Andersen).

[¶2.]     The facts are more 
complex than the agreement which was made for disposition of the money. All of 
this arises out of problems at the Southwest Counseling Service (SCS) of 
Rock Springs and 
its personnel problems.

[¶3.]     The actors included 
Andersen, a clinical psychologist and director of SCS, who came into conflict 
with appellee, Dr. Ray Corbitt (Corbitt), an experimental psychologist. 
Litigation started when Corbitt sued Andersen and SCS in federal court for "an 
abuse of public power in attempting to control competing private practitioners" 
under 42 U.S.C. § 1983 and common law tort. That suit resulted in a verdict in 
favor of SCS and against Andersen, assessing a total damage award of $111,843 
plus attorneys' fees and expenses of $46,471.11. Appeal was taken from this 
verdict to the Tenth Circuit Court of Appeals. The insurance carrier for SCS 
which had represented SCS and Andersen under reservation of right, continued 
representation after the unfavorable judgment on the same basis without posting 
any supersedeas bond to deter execution on the judgment entered against its 
insured, Andersen.

[¶4.]     While all of this was 
going on, SCS terminated Andersen's employment which caused him to institute an 
action in state court for wrongful discharge. In February 1984, with the appeal 
pending in federal court on the Corbitt/Andersen suit and immediate trial in 
Andersen/SCS pending, attorneys Roy Jacobson of the law firm of Vehar, Beppler, 
Jacobson, Lavery & Rose representing Andersen and Charles E. Graves and 
Associates representing Corbitt discussed an arrangement to protect Andersen 
from judgment execution. It is out of those discussions that an arrangement was 
derived as reflected in a letter dated February 17, 1984 which now provides the 
basis of continuing litigation after both the other cases have been resolved, 
claims paid, and funds disbursed.

[¶5.]     That letter, under 
Jacobson's letterhead, was addressed to Graves 
and stated:

Let this confirm our 
telephone agreement of this date as to granting a covenant not to execute in 
favor of Brent Andersen in the Corbitt action:

(a) Brent Andersen will 
pay the sum of $15,000 $20,000 to Corbitt and his attorneys from the 
settlement proceeds of Andersen v. Southwest Counseling Service, et al.; in the 
event Corbitt v. Andersen, et al. is reversed, Corbitt may retain the 
$15,000 $20,000;

(b) Corbitt will grant to 
Brent Andersen a covenant not to execute against him, personally, including 
settlement proceeds from Andersen v. Southwest Counseling Service, et 
al.;

(c) Brent Andersen will 
partially assign to Corbitt his bad faith claim against the insurance carrier(s) 
(Lexington/Glacier) in the sum of the outstanding amount of the judgment in 
Corbitt v. Andersen, et al. (less $25,000 $20,000) plus accrued interest, 
plus 10% of any additional monies received from settlement or verdict (i.e., 
punitive damages) of any kind - all to be paid to Corbitt only after reasonable costs of litigation 
are deducted, exclusive of attorney fees;

(d) Brent Andersen will 
pay the costs of litigation of any bad faith claim on Corbitt; provided however, 
the law firm of his choice prosecutes the action in a timely manner. It is 
understood and agreed that a bad faith claim is not ripe until such time as the 
10th Circuit Court of Appeals affirms the Corbitt v. Andersen, et al. 
judgment;

(e) It is understood by 
you and Corbitt that under the terms of settlement in Andersen v. Southwest 
Counseling Service, et al., the amount of settlement is confidential and cannot, 
and has not, been released to you by Brent Andersen or his 
attorney;

(f) Brent Andersen, or 
his attorney, shall prosecute the bad faith claim, in their sole reasonable 
discretion; provided however, there will be no settlement of the claim without 
the prior written consent of Corbitt and his attorneys. Corbitt and his 
attorneys may reasonably demand a settlement for all, or part, of their interest 
in the bad faith claim; provided however, Brent Andersen may choose to continue 
the bad faith claim by paying Corbitt all, or part, of his interest therein 
demanded without settling the suit. Brent Andersen and his attorneys shall keep 
Corbitt and his attorneys advised of the progress of the bad faith claims at all 
times material. Further, Corbitt agrees to cooperate fully in the prosecution of 
the bad faith claims (including being a named party to the bad faith claim if 
deemed necessary); 

(g) All parties hereto 
(Brent Andersen and Corbitt) shall execute any and all documents necessary to 
fully effectuate the terms of this agreement; and

(h) The terms of this 
agreement are to be kept fully confidential by the parties, and their respective 
attorneys; provided however, the terms and conditions may be released to the 
extent necessary to properly prosecute the bad faith 
claim.

Chuck, if these 
conditions accurately reflect our agreement, please sign the acknowledgement 
portion below. [Emphasis in original.]

The letter 
(Exhibit A) was electronically transmitted from Kemmerer to Cheyenne, signed by Graves 
and then returned to Kemmerer.

[¶6.]     Benefits to be derived 
by Andersen were obvious including protection from execution levied on any 
settlement he might make in his wrongful discharge suit against SCS. Also, 
Corbitt was benefitted by having immediate funds to offset costs of litigation 
and appeal to the Tenth Circuit Court of Appeals should his judgment be 
reversed.

[¶7.]     The $20,000 was paid 
and apparently placed in some kind of an interest account under the control of 
the Graves' firm and the appeal to the Tenth 
Circuit Court of Appeals proceeded to affirm rendering a decision two years 
later in March 1986. With affirmed judgment, Jacobson immediately started action 
pursuant to the obligations of Exhibit A, as he testified, to "kick ass" to 
secure payment from Lexington/Glacier insurance carriers. For assistance, he 
employed an attorney with extensive practical experience in insurance bad faith 
litigation in this jurisdiction. At the same time, Graves, on behalf of Corbitt, the judgment creditor, made 
an offer of settlement by direct contact with representatives of 
Lexington/Glacier. The terms included payment in full of the judgment, 
attorneys' fees, and interest to date without the addition of any appellate 
attorneys' fees, which services basically had been rendered by counsel hired by 
the insurance carriers. It came to be, by agreement of all parties, that 
settlement was made with the insurance carriers which paid the amount demanded 
by Graves.1

[¶8.]     Both psychologists 
became adamant about their rights to the $20,000 and Graves filed an 
interpleader action to secure a court determination of whom should get the 
$20,000 plus accrued interest that he held in law firm escrow. After discovery, 
including depositions of prior counsel, the present proceedings proceeded with 
new attorneys for both Corbitt and Andersen, resulting in summary judgment 
granted to Graves for his attorneys' fees 
incurred in the interpleader action and the balance of funds granted to Corbitt. 
Andersen now appeals from the award to Corbitt of $18,261.13 ($20,000 less 
attorneys' fees of $1,738.87) plus accrued escrow fund 
interest.

[¶9.]     The argument of 
litigants presented a dispute whether the confirming letter, Exhibit A, 
unambiguously determines that Corbitt should return the money. Andersen contends 
that Exhibit A is ambiguous, requiring extrinsic evidence for interpretation 
which prohibits entry of summary judgment. Conversely, Corbitt looks at the same 
information and finds that Exhibit A is clear and, if not clear, any extrinsic 
evidence "supports the judgment entered by the trial 
court."

[¶10.]  Factually, Andersen finds the right for 
his refund when Corbitt was paid in full by the insurance carriers which 
included the $20,000 which he had prepaid. He contends when Corbitt was paid in 
full with interest and attorneys' fees, that a "settlement" of the bad faith 
claim had in fact, or at least in part, occurred. Conversely, Corbitt considers 
the $20,000 to be consideration for hedging against reversal and insurance 
carrier nonpayment. Also, Corbitt argues it did not constitute a prepayment on 
the rendered judgment since in the event that the federal court judgment was 
reversed, the $20,000 would be the total that Corbitt would have been entitled 
to receive.

[¶11.]  A settlement agreement is a contract 
which is subject to the same legal principles applicable to construing 
contracts. Folsom v. ButteCounty Ass'n of Governments, 32 Cal. 3d 668, 186 Cal. Rptr. 589, 652 P.2d 437 (1982); Riley Pleas, Inc. v. State, 88 Wn.2d 933, 568 P.2d 780 (1977); Stottlemyre v. Reed, 35 Wn. App. 169, 665 P.2d 1383 (1983). The 
mutual intent of the parties at the time of making the agreement must be 
ascertained and given effect. Washburn v. Washburn, 204 Kan. 160, 460 P.2d 503 (1969); Matter of Estate of Engels, 
10 Kan. App. 
2d 103, 692 P.2d 400 (1984); Matter of Estate of Hollingsworth, 88 Wn.2d 322, 
560 P.2d 348 (1977). A settlement agreement must be construed in light of the 
language used and the circumstances surrounding its creation. Matter of Estate 
of Engels, 692 P.2d  at 404; Riley Pleas, Inc., 568 P.2d  at 783; Stottlemyre, 665 P.2d  at 1385. If a settlement agreement is unambiguous, a court is bound by the 
agreement's language which is controlling. Burden v. Colonial Homes, Inc., 79 
N.M. 170, 441 P.2d 210 (1968). "Contract construction and interpretation are 
done by the court as a matter of law." True Oil Co. v. Sinclair Oil Corp., 771 P.2d 781, 790 (Wyo. 1989). See also Amoco Production Co. v. 
Stauffer Chemical Co. of Wyoming, 612 P.2d 463 (Wyo. 1980) and Bulis v. Wells, 565 P.2d 487 (Wyo. 1977). "The 
existence of ambiguity is a question of law." True Oil Co., 771 P.2d  at 790. See 
also Hensley v. Williams, 726 P.2d 90 (Wyo. 1986) and Amoco Production Co., 612 P.2d  
at 465.

[¶12.]  As unfortunately now exists, the two 
lawyers who negotiated and signed Exhibit A do not agree on what was intended or 
on what it says. Consequently, with a clear conflict within extrinsic evidence, 
this court must first determine whether Exhibit A is unambiguous and, if not, 
whether the extrinsic evidence is such that summary judgment was improper. See 
Cordova v. Gosar, 719 P.2d 625 (Wyo. 1986).

[¶13.]  First, apparently the psychologist 
litigants, as confirmed in oral argument, are more interested in litigation than 
economic realism, whether available with a jury trial or not. The record 
communicates an impression that the participants were not satisfied with their 
prior compliment of litigation. In appellate review, this court finds no 
persuasive thesis justifying the litigation to continue if an end can be found. 
On that basis, we examine the details of the confirmatory agreement to determine 
whether mutual intent as defined in express terms is to be 
found.

[¶14.]  Second, if interest on the $20,000 was 
the fuel for litigation, that was an unfortunate development since it was not 
defined in agreement details. However, clearly, the $20,000 was a payment and 
not an escrow against contingency. As such, interest belonged to the recipient, 
Corbitt, who owned the money during the period burdened only by a deduction 
factor from a contingent future recovery. Consequently, any interest earned on 
the payment belongs to Corbitt and/or his attorney as a question between them as 
client and attorney.

[¶15.]  The construction of Exhibit A to 
determine whether repayment obligation accrued after the judgment was paid in 
full by the insurance carriers is more difficult. To construe the document, we 
inquire whether realistically these parties did or did not settle "the bad faith 
claim" at least in part when Corbitt was paid in full with accrued interest and 
all attorneys' fees. Differing in some regard from litigants' arguments, we rely 
on common sense, reason, and specific terminology of the unambiguous agreement 
to reach our decision. Exhibit A expressly provided that "Brent Andersen will 
partially assign to Corbitt his bad faith claim against the insurance carrier(s) 
(Lexington/Glacier) in the sum of the outstanding amount of the judgment * * * 
(less $25,000 $20,000)." 
(Emphasis added.) We conclude that against the backdrop of the bad faith claim 
that was settled by mutual agreement of both parties, Corbitt was entitled to 
everything on his judgment but the $20,000. The $20,000 had never been assigned 
to him within the bad faith claim and which amount, incidentally, otherwise 
reduced the judgment obligation of the insurance carriers to pay him as the third party claimant. Since the 
entire judgment was to be paid with accrued interest and attorneys' fees, the 
insurance carriers were not liable for the entire judgment plus the $20,000 that 
Corbitt had already received from Andersen.

[¶16.]  A judgment is a confirmation and 
formalization of a party's damage award indicating how much a person has been 
injured.

It is a fundamental 
principle that underlies the damage assessment that a person injured shall only 
receive compensation commensurate with his loss, and no more. Rocky Mountain 
Packing Co. v. Branney, Wyo., 393 P.2d 131, 135 (1964); Hunt v. Thompson, 19 
Wyo. 523, 120 P. 181, 184 (1912).

Willmschen v. 
Meeker, 750 P.2d 669, 673 (Wyo. 1988). Damages are to compensate for 
loss. Douglas Reservoirs Water Users Ass'n v. Cross, 569 P.2d 1280 (Wyo. 1977); Walton v. Atlantic Richfield Co., 501 P.2d 802 
(Wyo. 1972). A 
plaintiff is only entitled to be made whole, but not to be compensated more than 
his damage. Brown v. Valley Nat. Bank of Arizona, 26 Ariz. App. 538, 549 P.2d 1056 (1976). The 
allowance of double recovery through the use of "double damages" is not favored. 
See Reynolds v. Tice, 595 P.2d 1318 (Wyo. 
1979); Western Nat. Bank of Casper v. Harrison, 
577 P.2d 635 (Wyo. 1978); and Kammerer v. Western Gear 
Corp., 27 Wn. App. 512, 618 P.2d 1330 (1980), aff'd 96 Wn.2d 416, 635 P.2d 708 
(1981).

[¶17.]  Cogently stated, either the money was 
refundable to Andersen or a fraud was perpetuated on the carriers since, in the 
absence of a bad faith claim assignment, the maximum obligation of the insurance 
company was the judgment and not the judgment plus $20,000 which the insured 
advanced.2 It follows that the propriety of 
the collection of the $20,000 by Corbitt could only be justified as part of the 
bad faith claim in which event the refund provision of the agreement was 
effectuated.

[¶18.]  Realistically, Corbitt settled with the 
carriers for an amount of money of which $20,000 was an unassigned right for 
repayment to Andersen. The same result would have applied if Andersen had 
advanced $100,000 for the covenant not to execute or had actually paid the 
entire judgment.

[¶19.]  Within this concept, we are troubled by 
the argument of Corbitt that a bad faith claim still lurks out there somewhere 
and that the repayment right matures only after that opportunity is exhausted. 
This argument is presented both in brief and oral argument by Corbitt that the 
effectuated terms of Exhibit A have not yet and cannot be achieved until 
litigation is instituted, since what Andersen did through his attorneys did not 
constitute compliance with the requirements of paragraph (f) in Exhibit A to 
"prosecute the bad faith claim."

[¶20.]  We recognize that the principal concern 
of both participants was to get the judgment paid by the insurance carriers. 
This happened. We do not perceive from Exhibit A that the parties intended a 
covenant to litigate, not just to settle, was created. Besides, if settlement of 
the judgment had occurred and Andersen were to sue the carriers for the $20,000, 
the carriers would be entitled to make a third-party claim against Corbitt who 
collected an amount in excess of his entitlement under a judgment; especially 
since the amount previously paid had been carefully hidden from the insurance 
carriers by agreement of the parties.3 

[¶21.]  Summary judgment is only proper where 
there are no genuine issues of material fact and the movant is entitled to 
judgment as a matter of law. Although Andersen urges on appeal that this court 
construe Exhibit A to be ambiguous, we hold that it is not. However, we do find 
that the district court erred as a matter of law in determining the parties' 
intent in Exhibit A.

[¶22.]  To clarify, since the issue of 
interpleader attorneys' fees is not at issue, any interest earned on the 
escrowed funds of $20,000 prior to the date of insurance carriers' settlement 
should be paid to Corbitt, and any balance, including interest earned since that 
date, should be paid by the present escrow holder, the Clerk of the District 
Court, Third Judicial District, to Andersen. Payments will be made in the 
following amounts: Charles E. Graves, if not heretofore paid pursuant to 
district court order of April 26, 1988 - $1,738.87; interest accrued on the 
$20,000 from date of original payment to April 16, 1986 to be paid to Corbitt; 
any amount remaining with currently accrued interest in the hands of the Clerk 
of the District Court will be paid to Andersen.4 However, if Charles E. Graves does 
not file a certificate stating the interest accrued to the date of the 
settlement of the Corbitt/Andersen judgment or if the parties desire to continue 
the controversy to contest any amount that may be certified, the case is 
remanded to the district court for such further action as may be required in 
conformity herewith.

[¶23.]  Reversed and 
remanded.

THOMAS, J., filed a dissenting 
opinion with whom BROWN, J., Ret., 
joined.

FOOTNOTES

1 The record rather 
positively suggests that the first disagreement thereafter occurred between 
Andersen and Corbitt as to the right to interest on the $20,000 during the prior 
two-year period. This was actually a reasonably insignificant amount. In 
thinking about the subject, Corbitt became convinced that not only was he 
entitled to the interest (with which we would now agree), but also the total sum 
since Andersen had not pursued a bad faith claim to successful 
conclusion.

2 The collateral source 
rule is inapplicable to the facts presented by this case because the $20,000 was 
advanced by Andersen. Thus, there was no collateral source. See 
Aragon v. Brown, 93 N.M. 646, 603 P.2d 1103, 1105 (1979). For a general discussion of the collateral source rule, 
see Wheatland Irrigation Dist. v. McGuire, 562 P.2d 287, 301-02 (Wyo. 
1977).

3 With settlement of their 
principal anxiety by judgment collection, it seems unlikely that the parties or 
their lawyers will desire to continue these battles on a most problematical and 
certainly ephemeral bad claim which had been "partially settled" by the 
insurance company's payment of about $211,000. We do not discern a basis for 
Corbitt to retain the $20,000 pending filing of an undeserved and probably 
economically unjustified "bad faith lawsuit."

4 We observe that earned 
interest to April 27, 1988 was $2,494.37, since the deposit to the Clerk of the 
District Court was by check in the amount of $22,494.37 which apparently 
constituted the $20,000 plus accrued interest on the fund.

THOMAS, Justice, dissenting, 
with whom BROWN, Justice, Retired, 
joins.

[¶24.]  I cannot agree with the disposition of 
this case according to the majority opinion, and I dissent. The majority is able 
to reach the result it has only by structuring a legal fiction.1 The fiction, in this instance, is 
that the payment by the insurance carrier to Ray Corbitt was a partial 
settlement of a bad faith claim owned by Brent Andersen.

[¶25.]  My objection to the disposition according 
to the majority opinion is that it simply flies in the face of our 
well-established rule that this court will not, nor is it free to, rewrite 
contracts because we are bound to apply a contract as it is written so long as 
there is no ambiguity. Arnold v. Mountain West Farm Bureau Mutual Insurance 
Company, Inc., 707 P.2d 161 (Wyo. 1985); Adobe Oil & Gas Corporation v. 
Getter Trucking Company, Inc., 676 P.2d 560 (Wyo. 1984); Rainbow Oil Company v. 
Christmann, 656 P.2d 538 (Wyo. 1982); McCartney v. Malm, 627 P.2d 1014 (Wyo. 
1981); Wyoming Machinery Company v. United States Fidelity & Guaranty 
Company, 614 P.2d 716 (Wyo. 1980); Quin Blair Enterprises, Inc. v. Julien 
Construction Company, 597 P.2d 945 (Wyo. 1979); Laird v. Laird, 597 P.2d 463 
(Wyo. 1979); Overcast v. Baldwin, 544 P.2d 464 (Wyo. 1976), cert. denied sub 
nom. Taylor v. Taylor, 429 U.S. 855, 97 S. Ct. 151, 50 L. Ed. 2d 131 (1976); 
Younglove v. Graham & Hill, 526 P.2d 689 (Wyo. 1974); Goodman v. Kelly, 390 P.2d 244 (Wyo. 1964); McGinnis v. General Petroleum Corporation, 385 P.2d 198 
(Wyo. 1963); Flora Construction Company v. Bridger Valley Electric Association, 
Inc., 355 P.2d 884 (Wyo. 1960); Casper National Bank v. Curry, 51 Wyo. 284, 65 P.2d 1116, 110 A.L.R. 360 (1937); Douglas Oil Fields v. Hamilton, 17 Wyo. 54, 95 P. 849 (1908); Phillips, et al. v. Hamilton, 17 Wyo. 41, 95 P. 846 (1908). In 
contravention of this painfully clear rule, the effect of the majority opinion, 
in this instance, is the same as if it were to rewrite the letter agreement 
between Andersen and Corbitt so that it addresses the ultimate payment of 
Corbitt's judgment against Andersen by Andersen's insurance company. That 
agreement is quoted in its entirety in the majority opinion, and I must agree 
with the conclusion of the majority that the agreement is unambiguous. It does 
not, in any way, approach terms which would resolve the disposition of the 
$20,000 in the event that Corbitt's judgment, in fact, was 
paid.

[¶26.]  Properly construed, that agreement 
provides for a payment of $20,000 by Andersen to Corbitt to secure from Corbitt 
a covenant not to execute against Andersen personally. After subparagraph (b) of 
its terms, the agreement goes on to discuss, apparently as additional 
consideration from Andersen to Corbitt, the assignment of Andersen's claim 
against his insurance carrier for its bad faith in not paying Corbitt's judgment 
and in not providing adequate representation to Andersen. So far as this record 
reveals, the insurance carrier, when it paid Corbitt's judgment, was not in any 
way advised of this assignment by Andersen to Corbitt. If it had known of that, 
the conclusion is ineluctable that it would have endeavored to secure a release 
of that claim rather than simply a satisfaction of Corbitt's judgment against 
Andersen. The fact is that Andersen's bad faith claim against his insurance 
carrier has not been resolved even in part.

[¶27.]  In structuring the legal fiction that the 
payment of Corbitt's judgment, in fact, was a partial resolution of Andersen's 
bad faith claim, the majority substitutes its superior legal acumen for that of 
counsel for Andersen and Corbitt. The majority knows that the matter should have 
been addressed in the agreement, but it was not. The visionary approach which is 
then pursued is not to rewrite the agreement, a course the majority recognizes 
is not available. Instead, the majority manufactures other facts to fit the 
unambiguous agreement of the parties. The net result, while the majority claims 
it is avoiding double payment to Corbitt, is to deprive Corbitt of $20,000 which 
he received in exchange for a covenant not to execute against Andersen, a 
promise which Corbitt faithfully performed.

[¶28.]  In my judgment, this majority opinion is 
such a severe departure from both fact and law that it ought not to be 
countenanced. I would affirm the summary judgment entered by the district 
court.

FOOTNOTES

1 A legal fiction is 
defined in Black's Law Dictionary (5th ed. 1979) at 804 as 
follows:

"Assumption of fact made 
by court as basis for deciding a legal question. A situation contrived by the 
law to permit a court to dispose of a matter, though it need not be created 
improperly; e.g. fiction of lost grant as basis for title by adverse 
possession."