Title: SPEIGHT, McCUE & ASSOCIATES, P.C. V. FRENCH CARTER WALLOP and SCOTT M. GOODWYN; FRENCH CARTER WALLOP and SCOTT M. GOODWYN V. WYOMING STATE BAR COMMITTEE ON RESOLUTION OF FEE DISPUTES; and SPEIGHT, McCUE & ASSOCIATES, P.C.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

SPEIGHT, McCUE & ASSOCIATES, P.C. V. FRENCH CARTER WALLOP and SCOTT M. GOODWYN; FRENCH CARTER WALLOP and SCOTT M. GOODWYN V. WYOMING STATE BAR COMMITTEE ON RESOLUTION OF FEE DISPUTES; and SPEIGHT, McCUE & ASSOCIATES, P.C.2007 WY 36153 P.3d 250Case Number: 06-142, 06-143Decided: 03/05/2007
OCTOBER 
TERM, A.D. 2006

 
 
SPEIGHT, 
McCUE & ASSOCIATES, P.C.,

 
 
Appellant

(Respondent),

 
 
v.

 
 
FRENCH 
CARTER WALLOP and SCOTT M. GOODWYN,

 
 
Appellees

(Petitioners).

 
 
FRENCH 
CARTER WALLOP and SCOTT M. GOODWYN,

 
 
Appellants

(Petitioners),

 
 
v.

 
 
WYOMING 
STATE BAR COMMITTEE ON RESOLUTION OF FEE DISPUTES; and SPEIGHT, McCUE & 
ASSOCIATES, P.C.,

 
 
Appellees

(Respondents).

 
 

 
 

Representing 
Speight, McCue & Associates, P.C.:

            
William M. McKellar of Boley & McKellar, P.C., Cheyenne, Wyoming.

 
 

Representing 
French Carter Wallop and Scott M. Goodwyn:

            
Daniel B. Frank of Frank Law Office, P.C., Cheyenne, Wyoming.

 
 
Before 
VOIGT, C.J., and DONNELL, BROOKS, PARK and JAMES, 
D.JJ.

 
 
DONNELL, 
District Judge.

 
 
[¶1]      This matter 
concerns the application of certain payments to a guaranty agreement.  The Committee for Resolution of Fee 
Disputes held that payments made for legal fees were personal loans between the 
debtor and the guarantor and, thus, did not satisfy the guarantor's obligations 
under his Guaranty Agreement with the law firm.  The District Court ruled to the contrary 
with respect to all payments that occurred after the effective date of the 
agreement.  We affirm the decision 
of the District Court.

 
 
ISSUE

 
 
[¶2]      As to the initial 
appeal, Speight, McCue & Associates, P.C. (SMA)1 posits the following issue for 
review:

 
 
Did 
Petitioner Goodwyn's loans to his mother, French Wallop, to assist her in paying 
the Law Firm for her divorce legal bills discharge Goodwyn's obligations under a 
guaranty agreement between Goodwyn and the Law Firm guaranteeing the payment of 
those legal bills?

 
 
[¶3]      Wallop and 
Goodwyn frame the issue somewhat differently:

 
 
Did 
Scott Goodwyn's payment of over $100,000 to French Wallop's attorneys discharge 
his obligations under the Guaranty Agreement where the Guaranty Agreement 
specifically required "prompt payment when due" of all debts of French Wallop 
and where the Guaranty Agreement specifically limited Goodwyn's liability to 
$100,000?

 
 
[¶4]      As to the 
cross-appeal, Goodwyn and Wallop present the following issue on 
appeal:

 
 
Did the 
district court err when it determined that Scott Goodwyn's payment of $10,000 on 
the day before he executed the Guaranty Agreement should not apply toward his 
obligations under the Guaranty Agreement?

 
 
[¶5]      Succinctly 
summarized, the issue before this Court is whether the District Court correctly 
applied certain of Goodwyn's payments to SMA against Goodwyn's obligation under 
a guaranty agreement.

 
 
FACTS

 
 
I.          
Substantive Facts

 
 
[¶6]      Pursuant to an 
engagement letter dated October 9, 2000 (and executed on October 10, 2000), 
French Carter Wallop (Wallop) hired SMA's predecessor firm to represent her in a 
divorce action.  At the time the 
parties entered into their agreement, SMA contemplated that Wallop's legal fees 
would total $100,000 to $150,000.

 
 
[¶7]      On October 11, 
2000, SMA received a $10,000 payment from Wallop's son, Scott Goodwyn 
(Goodwyn), toward an agreed-upon $15,000 retainer fee.  On October 12, 2000, SMA sent 
correspondence to Wallop as an addendum to the October 9, 2000 engagement 
agreement.  This addendum required 
Wallop's signature and referenced a Guaranty Agreement to be executed by 
Goodwyn.  SMA indicated that, once 
the October 12, 2000 addendum and the Guaranty Agreement were signed, SMA would enter an 
appearance on Wallop's behalf.

 
 
[¶8]      On October 13, 
2000, Goodwyn executed a Guaranty Agreement for the purpose of guaranteeing the 
payment of Wallop's legal bills up to $100,000.2  The Guaranty Agreement provided, in 
relevant part:

 
 
I.  OBLIGATIONS

 
 
This 
Guaranty is given by the Guarantor to induce the Creditor to perform legal 
services and advance legal fees and costs for the Debtor, and in consideration 
of the Creditor doing so, . . . the Guarantor absolutely and unconditionally 
guarantees prompt payment when due of all payments and liabilities of the Debtor 
to the Creditor, whether now existing or hereafter incurred (it being understood 
and agreed that this Guaranty is a continuing one, except as such duration is 
specifically limited elsewhere in this Guaranty), whether voluntary or 
involuntary and however arising, whether secured or unsecured, absolute or 
contingent, liquidated or unliquidated, and regardless of whether the Debtor may 
be liable individually or jointly with others, regardless of whether recovery 
upon any such obligation may be or hereafter become barred or otherwise 
unenforceable, including interest and charges, and to the extent not prohibited 
by law, all costs and attorneys' fees incurred in attempting to realize upon 
this Guaranty.

 
 
II.  LIMITATION OF 
AMOUNT

 
 
The 
liability of the Guarantor pursuant to this Guaranty (exclusive of any costs and 
expenses incurred by the Creditor to realize upon this Guaranty) shall not, at 
any time, exceed the sum of One Hundred Thousand Dollars 
($100,000.00).

 
 
III.  DURATION

 
 
This is 
a continuing Guaranty and shall not be revoked by the Guarantor.  This guaranty will remain effective 
until all obligations guaranteed by this Guaranty are completely 
discharged.

 
 
IV.  NOTICE OF DEFAULT

 
 
The 
Creditor shall not be required to notify the Guarantor of a default by the 
Debtor in the Debtor's commitments to the Creditor before proceeding against the 
Guarantor under this Guaranty.

 
 
V.  CREDITOR 
PROVISIONS

 
 
. . . 
The Guarantor waives presentment, protest, notice, demand, or action on 
delinquency in respect of any such indebtedness or liability, including any 
right to require the Creditor to sue or otherwise enforce payment thereof. . . 
.

 
 
(Emphasis 
added.)

 
 
[¶9]      Over the next 
twenty-two months, Goodwyn made the following payments to 
SMA:

 
 


Date

Payment

Form 
      of Payment

Notations 
      on Document

October 
      11, 2000

$10,000

Wire 
      transfer

N/A

October 
      31, 2000

$5,000

Check 
      #201

"balance 
      of retained fee"

November 
      15, 2000

$13,226

Check 
      #229

"divorce 
      legal fees"

July 
      30, 2001

$50,000

Wire 
      transfer

N/A

August 
      21, 2002

$25,000

Check 
      # 281

"payment 
      on divorce legal fees"

TOTAL

$103,2263

 
 
 
 
 
 
[¶10]   Goodwyn testified that all payments 
were specifically made as payments for Wallop's legal bills and pursuant to his 
agreement with SMA.  As between 
themselves, Wallop and Goodwyn agree that Wallop was to repay these funds to 
Goodwyn.4

 
 
[¶11]   After the divorce action was 
complete, Wallop had not paid all of the attorneys' fees and costs that had been 
billed to her, and SMA made specific demand upon Goodwyn under the Guaranty 
Agreement.  Goodwyn contended that 
he already fulfilled that obligation through his payments of $103,226 to 
SMA.

 
 
II.         
Procedural History

 
 
[¶12]   This appeal comes to this Court by 
way of a Petition for Resolution of Fee Dispute that Wallop and Goodwyn filed 
with the Wyoming State Bar on January 3, 2003.  Ultimately, the Committee on Resolution 
of Fee Disputes (the Committee) considered several issues, including the issue 
of whether $103,226 paid by Goodwyn to SMA for Wallop's legal bills fulfilled 
Goodwyn's obligations under the Guaranty Agreement.  As its decision relates to this appeal, 
the Committee concluded that the $103,226 paid by Goodwyn was made as a loan to 
Wallop to assist her in paying her legal fees and not as payments under the 
Guaranty Agreement.  The Committee 
concluded that Goodwyn remained obligated for the full amount of the Guaranty 
Agreement.

 
 
[¶13]   Thereafter, Goodwyn petitioned the 
District Court for review of the Committee's decision.  The District Court heard additional 
evidence and reversed the Committee's decision.  Both parties appealed.  In Speight, McCue & Assocs., P.C. v. 
Wallop, 2005 WY 75, 115 P.3d 39 (Wyo. 2005), this Court reversed and 
remanded the matter with instructions to the District Court to remand the matter 
to the Committee for the purpose of taking additional 
evidence.

 
 
[¶14]   On remand, the Committee held a 
subsequent hearing, at which it took additional evidence.  However, the Committee's ultimate 
conclusions remained the same.

 
 
[¶15]   Goodwyn again petitioned for review 
of the Committee's decision.  On May 
9, 2006, the District Court entered its Order After Appeal of Second Committee 
Decision, effectively reversing the Committee's decision.  The District Court would not allow 
Goodwyn a credit for the $10,000 payment made by Goodwyn to SMA prior to the 
October 12, 2000 date of the Guaranty Agreement.  However, the subsequent $93,226 in 
payments was determined to have been made in satisfaction of Goodwyn's 
obligation under the Guaranty Agreement.  
Accordingly, the District Court held that Goodwyn owed an additional 
$6,774 under the Guaranty Agreement.

 
 
[¶16]   On June 5, 2006, SMA filed its 
notice of appeal.  Thereafter, 
Goodwyn and Wallop filed their cross-appeal.

 
 
STANDARD 
OF REVIEW

 
 

[¶17]   This 
Court has previously considered the standard of review that applies to the 
appeal of a decision by the Committee on Resolution of Fee Disputes.  This Court 
concluded:

 
 

Judicial 
review of the fee dispute committee's decision, however, will be conducted in 
accordance with Fee Dispute Rule 14 by 
employing standards provided in W.R.A.P. 12.  This interpretation of the fee dispute rules allows the rule which 
specifically addresses judicial review (Fee Dispute Rule 14) to control over the 
rule which addresses the fee dispute 
process in general (Fee Dispute Rule 9). 
 Moreover, our decision gives effect 
to the language in Fee Dispute Rule 
14(d) which directs the appellate court to "review the 
record" of the fee dispute committee 
hearing.  Treating the fee dispute committee as an administrative 
agency for the purposes of appeal recognizes the importance of the fee dispute committee's function in 
resolving the factual issues involved in fee disputes.  By 
applying our standard of review for administrative 
decisions, we give deference to the fee dispute committee's findings of fact, while affording the 
parties the right to judicial review of the fee dispute committee's decision to ensure 
substantial evidence supports those factual findings.  See e.g., KG Construction, Inc. 
[v. Sherman, 2005 WY 
116], ¶ 9, 120 P.3d [145,] 147 [(Wyo. 2005)]; Newman v. State 
ex rel. Wyo. Workers' Safety and Comp. Div., 2002 WY 91, ¶ 12, 49 P.3d 163, 
168 (Wyo.2002).

 
 

Thus, we 
will scrutinize the fee dispute 
committee's decision in this case in accordance with the procedures for judicial 
review of administrative decisions as set forth in W.R.A.P. 
12.01 et. seq. and § 
16-3-114(c).[5]  As we have discussed on innumerable 
occasions:

 
 
The 
substantial evidence test is the appropriate standard of review in appeals from contested case proceedings when factual 
findings are involved and both parties submit evidence.  Robbins v. State ex rel. Wyo. Worker's 
Safety & Comp. Div., 
2003 WY 29, ¶ 18, 64 P.3d 729, 732 (Wyo.2003).  Substantial evidence is relevant evidence 
which a reasonable mind might accept in support of the agency's conclusions. 
 It is more than a scintilla of 
evidence.  Even if the factual 
findings are found to be supported by substantial evidence, the ultimate agency 
decision may still be found to be arbitrary or capricious for other reasons. 
 An appellate court does not examine 
the record only to determine if there is substantial evidence to support the 
agency's decision, but it also must examine the conflicting evidence to 
determine if the hearing examiner could have reasonably made its finding and 
order upon all of the evidence before it.  Newman v. State ex rel. Wyo. Workers' 
Safety and Comp. Div., 2002 
WY 91, 49 P.3d 163, 172 (Wyo.2002).

 
 

KG 
Construction, Inc., ¶ 9, 
120 P.3d  at 147.  The fee dispute committee's conclusions of law, 
however, are not entitled to the same deference as its factual findings.  We review the fee dispute 
committee's conclusions of law de novo.  DC Production Service v. Dep't of 
Employment, 2002 WY 142, 
¶ 7, 54 P.3d 768, 771 (Wyo.2002).

 
 

Cotton 
v. McCulloh, 2005 
WY 159, ¶¶ 18-19, 125 P.3d 252, 259-60 (Wyo. 2005) (emphasis 
added).

 
 
DISCUSSION

 
 
[¶18]   Although this case returns with a 
complex procedural history, the heart of the matter is relatively 
straightforward:  Whether $103,226 
in payments that Goodwyn made to SMA for Wallop's legal fees should be credited 
against his obligation under the Guaranty Agreement in light of the fact that 
these payments also were determined to have been personal loans between Wallop 
and Goodwyn.

 
 
[¶19]   The Committee based its decision 
that Goodwyn was not entitled to a credit or offset of $103,226 on the evidence 
that the payments were a "loan" from Goodwyn to Wallop that Wallop was expected 
to repay.  The District Court 
disagreed, allowing the offset for all monies paid after the October 12, 2000 
effective date of the Guaranty Agreement.  
This Court agrees with the District Court.

 
 
I.          
The Plain Language of the Guaranty 
Agreement

 
 
[¶20]   Wyoming law strictly limits a guaranty 
agreement to its terms.  A 
guarantor's liability "cannot be extended by construction or by implication 
beyond the express terms of the guaranty."  
Sec. State Bank of Basin v. 
Newton, 707 P.2d 173, 175 (Wyo. 1985).  See also Flying J, Inc. v. Booth, 773 P.2d 144, 149 (Wyo. 
1989).  Accordingly, this Court 
turns its attention to the language of the Guaranty 
Agreement.

 
 
[¶21]   Pursuant to the agreement, Goodwyn 
absolutely and unconditionally guaranteed prompt payment of Wallop's legal fees, 
whenever they came due, up to a total obligation of $100,000.  SMA had no obligation to notify Goodwyn 
of Wallop's default before proceeding under the guaranty.  Further, Goodwyn waived "presentment, 
protest, notice, demand, or action on delinquency in respect of any such 
indebtedness or liability[.]"

 
 
[¶22]   Goodwyn promptly made periodic 
payments to SMA in order to satisfy Wallop's accrued legal fees.  He was paying these legal fees with his 
own money, not commingled or joint funds.  
Quite simply, no other reason existed for the payment of these fees than 
Goodwyn's obligation under the Guaranty Agreement.  This conclusion complements the District 
Court's conclusion that "the only reasonable inference regarding payments by 
[Goodwyn] to SMA after October 12, 2004 [sic] is that the payments were made 
pursuant to the [Guaranty Agreement]."  
Goodwyn's acts comport with the plain and unambiguous language of the 
Guaranty Agreement that reflected the parties' intent and Goodwyn's obligation 
to "promptly pay."

 
 
            
A.        
Guarantor versus Surety

 
 
[¶23]   SMA argues that the District Court 
confused the roles of a guarantor and a surety by making Wallop's and Goodwyn's 
obligations coextensive.  Of course, 
while a surety "becomes bound as the principal or original debtor is bound," a 
guarantor "is not bound to do what the principal has contracted to do . . . but 
only to answer for the consequences of the default of the principal."  State Bank of BurleighCounty v. Porter, 167 N.W.2d 527, 533 
(N.D. 1969).  Accordingly, SMA 
argues, by paying the legal bills before Wallop had the opportunity to default 
on her obligations, Goodwyn was not acting in his role as a guarantor but was, 
instead, simply making payments on Wallop's behalf.

 
 
[¶24]   The flaw with this argument is that 
the Guaranty Agreement unambiguously required Goodwyn to make prompt payment of attorney's fees when 
due.  Further, it did not require 
demand on Wallop; notice of Wallop's default;6 or SMA's specific demand of payment 
from Goodwyn before any payments were considered guaranty payments.  Any assertion that Wallop must have been 
given the opportunity to default is disingenuous for the simple reason that the 
Guaranty Agreement specifically 
stated otherwise.

 
 
B.        
Continuing Nature of the Guaranty

 
 
[¶25]   The parties also make much of the 
"continuing nature" of the guaranty.  
However, both concede that, even a continuing guaranty may be limited as 
to the amount guaranteed.  See 38 Am. Jur. 2d Guaranty § 22 (1999).  Such was the case here.  Accordingly, the Court need not consider 
this argument further.

 
 
            
C.        
Effective Date of the Guaranty Agreement

 
 
[¶26]   The Guaranty Agreement clearly 
references an effective date of October 12, 2000.  Goodwyn's first payment of $10,000 
occurred on October 11, 2000.  The 
parties were free to mention this initial $10,000 payment in their subsequently 
executed Guaranty Agreement and to credit it against Goodwyn's obligation.  They did not.  Goodwyn simply was not obligated to pay 
an amount that was not expressly guaranteed.  See Sec. State Bank of Basin, 707 P.2d  at 
175.

 
 
[¶27]   This Court has no alternative but 
to construe the agreement to mean exactly what it says.  Goodwyn's October 11, 2000 payment did 
not fall under the terms of the Guaranty Agreement because it was made prior to 
the effective date thereof.  As a 
result, Goodwyn is entitled to credit for $93,226 in payments made pursuant to 
his obligations under the Guaranty Agreement.  His other payment of $10,000 falls 
outside the agreement's terms.

 
 
II.         
Dual Role as Personal Loans and Guaranty 
Payments

 
 
[¶28]   SMA argues, and the Committee 
concluded, that, by characterizing Goodwyn's payments to SMA as "personal 
loans," those monies forfeited their status as guaranty payments.  Neither party presented any law that 
supported this conclusion.  Indeed, 
guarantors often expect recoupment and reimbursement of funds they have paid 
pursuant to a guaranty.  See 38 Am. Jur. 2d Guaranty § 120 (1999).  And, even a voluntary payment by a 
guarantor entitles him to proceed against the principal debtor.  See Fabian v. Dykes, 214 Ga. App. 792, 449 S.E.2d 305, 306 (1994), overruled in 
part, on other grounds, by Continental Ins. Co. v. State Farm Mut. Auto 
Ins. Co., 212 Ga. App. 839, 443 S.E.2d 509 (1994).  One court has summarized the 
relationship as follows:

 
 
Where a 
guarantor pays the debt of the principal debtor the law implies a promise of 
reimbursement, and the action is based upon equitable principles.  In re Jamison's Estate, 202 S.W.2d 879, 883 (Mo.1947).  The recovery by the guarantor is based 
on the doctrine of equity against unjust enrichment, and not on contractual 
relationship.  It does not need the 
consent of the principal, but equity enforces the right to reimbursement by 
subrogation.  Id.  Thus, a guarantor who pays the debt or 
judgment of another, "at least as against the debtor primarily liable, [is] 
subrogated to all the rights and remedies of the creditor, and this even 
without formal assignment of the debt or judgment."  [emphasis added].  Phelps v. Scott, 325 Mo. 711, 30 S.W.2d 71, 75 
(1930); First State Bank v. Reorganized School Dist. R-3 Bunker, 495 S.W.2d 471, 484-85 
(Mo.App.1973).

 
 

Gibson 
v. Harl, 857 S.W.2d 260, 268 (Mo. Ct. App. 1993).

 
 
[¶29]   The mere fact that Goodwyn's 
payments to SMA also might be characterized as personal loans to Wallop does not 
negate their status as guaranty payments.7  

 
 
 
 
CONCLUSION

 
 
[¶30]   Goodwyn is entitled to credit 
against his obligations under the Guaranty Agreement in the amount of 
$93,226.  The District Court's Order 
After Appeal of Second Committee Decision is affirmed in its 
entirety.

 
 
FOOTNOTES

 
 

1SMA's 
predecessor firm was Hathaway, Speight & Kunz, LLC.  For ease, the Court will refer to the 
law firm as SMA.

 
 

2The 
Guaranty Agreement was "effective as of October 12, 2000[.]"  Under the agreement, Goodwyn was the 
guarantor; Wallop was the debtor; and SMA was the 
creditor.

 

3In 
addition to these payments to SMA, Goodwyn paid $3,895.71 directly to the court 
reporter for Wallop's trial transcripts.

 
 

4Further, 
in Wallop's subsequent bankruptcy filings, she lists Goodwyn as an unsecured 
creditor for a personal loan of $250,000.  
Goodwyn filed a claim against Wallop's bankruptcy estate for $356,618.37 
for loans made between 1995 and 2004.  
Of this amount, $249,409.37 represented other itemized loans and 
$107,209.00 represented expenses Goodwyn paid on the Wallop divorce case.  Goodwyn included, with his claim, copies 
of the wire transfer receipts and checks for payments made to 
SMA.

 
 

5Section 
16-3-114(c) of the Wyoming Administrative Procedure Act states, in pertinent 
part:

 
 
(c)  To the extent necessary to make a 
decision and when presented, the reviewing court shall decide all relevant 
questions of law, interpret constitutional and statutory provisions, and 
determine the meaning or applicability of the terms of an agency action.  In making the following determinations, 
the court shall review the whole record or those parts of it cited by a party 
and due account shall be taken of the rule of prejudicial error.  The reviewing court 
shall:

 
 
.

 
 
(ii)   Hold unlawful and set aside agency 
action, findings and conclusions found to be:

 
 
(A)   Arbitrary, capricious, an abuse of 
discretion or otherwise not in accordance with law;

 
 
.

 
 
(E)   Unsupported by substantial evidence 
in a case reviewed on the record of an agency hearing provided by 
statute.

 
 

Wyo. Stat. 
Ann.§ 16-3-114(c) (LexisNexis 2005).

 
 

6Because 
the guaranty was "absolute and unconditional", by its very terms, the "rule is 
that no demand on the principal debtor is necessary to render the guarantor 
liable in case of such a guaranty[.]"  
38A C.J.S. Guaranty § 73 
(1996).

 
 

7It would 
not be unusual for a guarantor to expect "repayment" of any guaranty monies by a 
debtor.  The difference being that, 
generally, the creditor would never know about this "side deal" between the 
guarantor and the debtor.  The Court 
is reminded of an analogy in which a college student buys a car, with his parent 
serving as a guarantor.  If the 
student defaults, the parent pays the obligation.  It generally would be expected, one 
dares to say, that the student would repay the parent when possible.  This expectation does not result in a 
negation of the fact that the parent satisfied his guarantor's 
obligation.