Title: ORTHOPAEDICS OF JACKSON HOLE, P.C., d/b/a TETON ORTHOPAEDICS v. MICHAEL J. FORD, M.D.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

ORTHOPAEDICS OF JACKSON HOLE, P.C., d/b/a TETON ORTHOPAEDICS v. MICHAEL J. FORD, M.D.2011 WY 50Case Number: S-09-0136Decided: 03/21/2011NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so correction may be made before final publication in the permanent volume.
OCTOBER 
TERM, A.D. 2010

 

ORTHOPAEDICS 
OF JACKSON HOLE, P.C., d/b/a TETON 
ORTHOPAEDICS,Appellant(Defendant),v.MICHAEL J. FORD, 
M.D.,Appellee(Plaintiff).

 
 
Appeal 
from the District Court of Fremont County

 
 

Representing 
Appellant:

Gary 
R. Scott of Hirst Applegate, LLP, Cheyenne, Wyoming

 
 

Representing 
Appellee:

Paul 
J. Hickey and O'Kelley H. Pearson of Hickey & Evans, LLP, Cheyenne, Wyoming; 
and Joel M. Vincent of Vincent & Vincent, Riverton, Wyoming.  Argument by Mr. 
Vincent.

 
 

GOLDEN, 
Justice.

 
 
[¶1]      Orthopaedics of 
Jackson Hole, P.C., (hereinafter referred to as OJH) is a professional 
organization founded by five orthopedic surgeons in 1998.  Michael Ford is an orthopedic surgeon 
who joined OJH in 2000, at which time he received one share of stock in 
OJH.  In 2005, Dr. Ford left 
OJH.  The parties could not agree on 
the value of the one share of stock, prompting Dr. Ford to commence the instant 
legal action.  

 
 
[¶2]      Dr. Ford brought 
a petition for a declaratory judgment as to the value of the stock as well as 
other causes of action.  OJH 
counterclaimed that Dr. Ford, in leaving OJH at the time he did, breached his 
fiduciary duty to the organization.  
OJH also brought a promissory estoppel counterclaim against Dr. Ford, 
asserting it incurred extra costs based on an alleged promise by Dr. Ford, made 
in 2004, to continue working for OJH for five to ten 
years.

 
 
[¶3]      After a bench 
trial, the district court accepted the valuation of the stock as presented by 
Dr. Ford.  The district court also 
denied all OJH's counterclaims.  We 
reverse the district court's decision as to the valuation of the stock and 
remand for further proceedings on the issue.  We affirm the district court's denial of 
the counterclaims brought by OJH.

ISSUES

[¶4]      OJH presents 
multiple issues:

 
 
1.         
Did the trial court err when it found that [Ford] signed a 1998 OJH 
shareholder's agreement, and thus that it was that agreement that was the 
relevant agreement for purposes of valuing [Ford's] one share of OJH 
stock?

 
 
2.         
Did the trial court err when it then reformed the 1998 shareholder's 
agreement and failed to apply the valuation formula contained in that 
agreement?

 
 
3.         
Did the trial court err when it failed to apply the valuation formula 
agreed to by [Ford] in a shareholders' meeting in August 
2003?

 
 
4.         
Did the trial court err when it denied [OJH's] Motion in Limine, and 
allowed [Ford] on the eve of trial to change the theory of his case as to the 
relevant valuation formula?

 
 
5.         
Did the trial court err when it found that [OJH] failed to prove by a 
preponderance of the evidence its counterclaims for promissory estoppel and 
breach of fiduciary duty?

 
 
FACTS

 
 
[¶5]      OJH was formed in 
1998 by a group of five orthopedic surgeons.  They were each issued one share of 
stock.  The OJH Shareholder's 
Agreement (1998 Agreement) stated that the stock was not intended as an 
investment but rather was issued as evidence of ownership in OJH and consequent 
governing rights and obligations.  
In the event one of the shareholders wanted to sell his/her share, and in 
the absence of an agreement as to the value of the company, the value of the 
company would be determined by OJH's certified public accountant according to 
generally accepted accounting principles (GAAP).  The agreement provided that all future 
shares that might be issued would be subject to the agreement.  The agreement also provided it could 
only be amended by unanimous vote of all shareholders.

 
 
[¶6]      Shortly after OJH 
was established, OJH signed two contracts with a medical office management 
company, Ortholink Physicians Corporation (Ortholink).  One contract was an Asset Purchase 
Agreement, whereby Ortholink purchased all assets of OJH except the accounts 
receivable (AR).  The other contract 
was a Service Agreement.  Under the 
Service Agreement Ortholink essentially took over the business aspects of OJH, 
for instance assuming OJH building leases and providing OJH with equipment, 
supplies, support personnel, management and financial advisory services.  The Service Agreement also provided for 
Ortholink to monthly purchase OJH's AR for an amount it determined based on OJH 
billing and historical collection rates.  
Ortholink reduced the amount by its expenses on behalf of OJH and a 
fifteen percent service fee, then paid the remaining to OJH.  Ortholink was to maintain all financial 
records in accordance with GAAP.

 
 
[¶7]      In 2001, the 
Service Agreement between OJH and Ortholink was amended to essentially return 
the day-to-day responsibilities of office management from Ortholink back to 
OJH.  In return, the service fee 
charged by Ortholink was reduced.  
In 2003, the Service Agreement was again amended.  The Second Amended Service Agreement 
provided that Ortholink would no longer handle OJH's AR.  OJH would repurchase its AR already 
purchased by Ortholink and the administration of all future AR would be OJH's 
responsibility.  It also provided 
that OJH would pay Ortholink a certain monthly amount for its use of capital 
assets owned by Ortholink.  As each 
capital asset used by OJH was depreciated off Ortholink's books, Ortholink would 
issue a bill of sale to OJH for the item for no further consideration.  In general, OJH would be responsible for 
purchasing all future capital assets for use in its practice.  For its part, Ortholink agreed to 
continue to provide limited financial services at an again reduced service 
fee.

 
 
[¶8]      In order to 
repurchase its AR from Ortholink, OJH borrowed approximately $1.13 million.  This and the fact that OJH would now be 
purchasing its own capital assets precipitated revisiting the terms of the 
Shareholders Agreement.  At a 
shareholders meeting in August 2003, the shareholders, by a vote of eight to 
one, approved a change to the language of the OJH Shareholders Agreement 
relating to the valuation of shares.  
The new language, as reported in the minutes, read:

 
 
For 
a Shareholder redemption in the event of death or termination, Shareholder's 
individual AR continues to pay the Shareholder less a 10% collection fee and any 
of the collection rate less any liability associated with acquiring the 
shareholder's AR from Ortholink in the 2003 restructuring.

 
 
Fixed 
assets less liabilities for fixed assets divided by the number of Shareholders 
will be the calculation for the balance of the valuation.

 
 
Further, 
the language addressing the value of patient records is to be deleted.  

 
 
(Hereinafter 
referred to as the 2003 Formula.)  

 
 
[¶9]      OJH did not 
formally execute a new Shareholders Agreement until March 2005.  At that time a document entitled 
"Amended and Restated Shareholders Agreement" was created and signed by all but 
one shareholder (hereinafter referred to as the 2005 Agreement).  The valuation formula contained in the 
2005 Agreement stated:

 
 
The 
Corporation's value as of the Valuation Date shall be equal to the Corporation's 
fixed assets less its liabilities for fixed assets divided by the number of 
shareholders, based upon the Corporation's most recent regularly prepared 
balance sheet.  The value of the 
Corporation as so determined shall then be divided by the number of shares of 
stock of the Corporation issued and outstanding and multiplied by the number of 
shares being transferred.  The 
result shall be the purchase price for the offered shares . . . . 

 
 
It 
is agreed that the lack of language referring to AR is a mistake.  Rather, the valuation language of the 
2005 Agreement was intended to correspond to the 2003 Formula.  

 
 
[¶10]   Dr. Ford is an orthopedic surgeon 
who had practiced in Riverton for approximately 26 years.   In 1998, Dr. Ford began attempts 
to build an outpatient surgical center, displeasing Riverton Memorial 
Hospital.  In response, the hospital 
actively recruited other orthopedic surgeons to open practices in Riverton, in 
direct competition with Dr. Ford.  
Among those contacted by the hospital was OJH.  OJH was interested in expanding its 
territory and referral base into Fremont County.  It felt it was in its best interest, 
however, to work with Dr. Ford, with his established client base, instead of 
against him.

 
 
[¶11]   To this end, negotiations began 
between Dr. Peter Rork, shareholder and then president of OJH, and Dr. Ford 
regarding the possibility of Dr. Ford joining OJH.  As part of the negotiations, Dr. Rork 
advised Dr. Ford that OJH would help recruit a second orthopedic surgeon to the 
Riverton office so Dr. Ford would not have to run a solo practice and also that 
some of the OJH subspecialists would establish limited clinic time at the 
Riverton office.  Of critical 
importance to Dr. Ford, Dr. Rork offered him an opportunity to become affiliated 
with Teton Outpatient Services ("TOPS"), an established outpatient surgery 
center in Jackson.  Dr. Ford 
insisted he be allowed to purchase an interest in TOPS as a prerequisite to 
joining OJH.

 
 
[¶12]   As a result of the negotiations, 
Dr. Ford was allowed to buy an interest in TOPS and subsequently, effective 
January 1, 2000, Dr. Ford joined OJH.  
Upon joining, Dr. Ford was issued one share of OJH stock.  He was given a packet of papers which 
contained the 1998 Agreement.  As it 
had with the other members of OJH, Ortholink purchased from Dr. Ford all assets 
related to Dr. Ford's practice.  
Ortholink paid Dr. Ford in cash and Ortholink stock.  As part of receiving the stock, Dr. Ford 
signed a shareholder agreement with Ortholink.  Dr. Ford sold his Ortholink shares back 
to Ortholink shortly thereafter.

 
 
[¶13]   As part of OJH's strategic plan to 
establish a presence in Fremont County, it employed another orthopedist, Dr. 
John Harp, to practice with Dr. Ford in Riverton and established a satellite 
office in Lander.  Subspecialists 
from OJH in Jackson would occasionally hold clinic hours in 
Riverton.

 
 
[¶14]   At the time he joined OJH, Dr. 
Ford's office was in a building commonly referred to as the 12th Street Medical Building.  New owners bought the building in 2000 
and OJH entered into a five year lease with them.  Although Dr. Ford had maintained an 
office in the building for many years, the situation had become less than 
ideal.  Originally, the building was 
situated next to the county hospital but the hospital had abandoned that 
building.  The neighborhood had 
changed, and the 12th Street Medical 
Building was no longer in a high visibility area.  In addition to these drawbacks, the new 
owners were not properly maintaining the building.  

 
 
[¶15]   In the spring of 2003, Dr. Ford 
learned that the building owners were attempting to sell the building.  The OJH lease provided that a new owner 
could cancel the lease with six months notice.   Dr. Ford also learned that another 
tenant with which his practice had ties, Fremont Therapy Group, a group of 
physical therapists, was not renewing its lease.  

 
 
[¶16]   Around the same time, Dr. Ford was 
approached by a construction and building management company known as P&K 
Development. P&K was in the process of designing a new medical office 
building near Riverton Memorial Hospital and suggested that it could add space 
to the design to suit OJH in exchange for a long term lease.  As of May 2003, protracted negotiations 
began between P&K and OJH.  OJH 
was primarily represented in the discussions by the Riverton office manager, 
Connie Nyberg, and OJH's administrator, Brian Smith.  After much internal informal discussion, 
in November 2003 a formal proposal for a ten year lease with P&K, prepared 
by Nyberg and Smith, was presented by Dr. Ford and Dr. Harp to the OJH 
shareholders, complete with square footage and cost numbers.  At the meeting the shareholders 
determined: "Next critical step is to cost out build-to-suit as comparison to 
P&K proposal."  At the December 
shareholders meeting, a proposal for a fifteen year lease was presented.  The price per square foot was reduced to 
reflect the longer lease. 

 
 
[¶17]   The shareholders of OJH determined 
they did not want to move forward with the project unless the accounting was 
changed to make the Fremont County offices responsible for certain individual 
Fremont County costs, including lease payments.  Cost projections were prepared by Nyberg 
and Smith and shown to Dr. Ford.  
Dr. Ford was willing to accept the accounting change based on those cost 
projections.  At a shareholders 
meeting in April 2004, a corresponding change in accounting was adopted.  It stated in the minutes that the 
accounting change was made in order to approve and execute a lease for the new 
Riverton building.    

 
 
[¶18]   Also discussed in the context of 
the new lease was the amount of time Dr. Ford planned to continue to 
practice.  Dr. Ford indicated to the 
shareholders he anticipated practicing at least five years, maybe ten if the 
conditions were right.  No 
indication of this discussion occurs in any shareholders meeting minutes.  The lease was eventually signed in May 
2004.  With the lease in place, 
construction began and Dr. Ford moved into the new office space in the beginning 
of July 2005.

 
 
[¶19]   Over the course of time, Dr. Ford 
became increasingly unhappy with the management of OJH.  Dr. Harp was asked by OJH to spend more 
time at the Lander clinic, leaving Dr. Ford to cover the expenses of the new 
Riverton office.  In May 2005, Dr. 
Ford was told he would have to sell his interest in TOPS.  Dr. Ford resisted this because he still 
considered participation in TOPS a critically important benefit of membership in 
OJH.  Finally, in September 2005, 
citing personal reasons, Dr. Ford submitted a letter of resignation as a 
shareholder, effective December 31, 2005.  
Dr. Ford proposed that he continue with OJH as an employee, at a 
guaranteed salary.  In the 
alternative, Dr. Ford offered to stay on until a replacement doctor could be 
hired.  The parties were unable to 
reach agreement on employment terms.  
OJH also was not interested in Dr. Ford's offer to stay until it could 
recruit another doctor.  
Consequently, Dr. Ford severed professional ties with OJH on December 31, 
2005.

 
 
[¶20]   Dr. Ford and OJH were unable to 
agree on the value of Dr. Ford's one share of OJH stock, resulting in the 
current litigation.  When Dr. Ford 
filed for a declaratory judgment against OJH for the valuation of the stock, his 
petition stated the share should be valued either by the 2003 Formula or the 
2005 Agreement.  OJH answered that, 
in light of the mistaken language in the 2005 Agreement, the share should be 
valued according the 2003 Formula.  
Throughout pretrial procedures both parties relied exclusively on the 
2003 Formula.  

 
 
[¶21]   In response to Dr. Ford's 
complaint, OJH counterclaimed for breach of fiduciary duty and promissory 
estoppel, both based on Dr. Ford's resignation. It claimed Dr. Ford was liable 
under both theories to OJH because he resigned after OJH had signed the fifteen 
year lease on the new Riverton location based on his assurances that he would 
continue to practice for OJH in Riverton for five to ten years.  OJH claimed it suffered damages when it 
was forced to abandon the space and could not fully sublease 
it.

 
 
[¶22]   A bench trial was held after which 
the district court entered a judgment including findings of fact and conclusions 
of law.  The language of the 
judgment was virtually identical to the language of the proposed findings of 
fact and conclusions of law submitted by Dr. Ford's counsel.  The district court accepted Dr. Ford's 
stock valuation calculations and rejected OJH's 
counterclaims.

 
 
DISCUSSION

 
 
[¶23]   The issues overlap.  We therefore will depart from the issues 
as framed by Dr. Ford and treat the issues by general 
category.

 
 
1998 
OJH Shareholders Agreement

 
 
[¶24]   Much confusion was generated by Dr. 
Ford's counsel when, a few days before trial, he contacted OJH's counsel and 
stated he would proceed using a valuation formula different from the 2003 
Formula that had been agreed to by the parties.  OJH's counsel understood Dr. Ford's 
counsel to be indicating he would use the language in the original 1998 
Agreement as his new valuation basis.  
Consequently, OJH's counsel filed a motion in limine to exclude all 
references to the 1998 Agreement, arguing it was tantamount to amending the 
complaint.  During the course of 
argument on the motion, Dr. Ford's counsel expressly disavowed the application 
of the 1998 Agreement and clarified that he was actually intending to refer to 
language of the 2000 shareholder agreement between Ortholink and Dr. Ford.  The district court denied the motion in 
limine subject to reconsideration as the trial progressed.  

 
 
[¶25]   The only trial testimony that 
referred to the original 1998 Agreement came from Dr. Ford.  Dr. Ford testified that, based on his 
discussions with counsel, he was unsure of whether the valuation of his one 
share of OJH stock should be based on the original 1998 Agreement or the 2003 
Formula.  The matter was 
conclusively resolved, however, when Dr. Ford's expert who testified as to the 
value of the stock expressly confirmed his calculations were based on the 2003 
Formula. 

 
 
[¶26]   This matter arises on appeal 
because the Judgment, as composed by Dr. Ford's counsel and adopted by the 
district court, includes a conclusion of law that the original 1998 Agreement 
was the applicable agreement.  It 
reasoned that neither the 2003 Formula nor the 2005 Agreement applied because 
they were not unanimously adopted, as required by the terms of the original 1998 
Agreement.  

 
 
[¶27]   As always, we review conclusions of 
law de novo.  Helm v. Clark, 2010 WY 168, ¶ 6, 244 P.3d 1052, 1056 (Wyo. 2010); Bellis v. 
Kersey, 2010 WY 138, ¶ 10, 241 P.3d 818, 822 (Wyo. 2010).  Although legally technically correct, 
the conclusion is improper because it goes beyond the issues presented by the 
parties.1  Triable issues are governed by the pleadings or a pretrial order.  The parties, in their pleadings and all 
pretrial proceedings, agreed the language of the 2003 Formula would govern the 
valuation in the context of this litigation.  There was no attempt to amend the 
pleadings.  No evidence of the value 
of the stock under the 1998 Agreement was presented either pretrial or during 
trial.  At trial, the experts for 
both sides based their respective valuations on the 2003 Formula.  Under the circumstances, the ruling of 
the district court that 1998 Agreement applied was error.

 
 
[¶28]   Dr. Ford seemingly agrees with this 
conclusion.  On appeal, Dr. Ford 
argues that, even though the 1998 Agreement was never properly amended, the 
issue of the applicability of the 1998 Agreement is irrelevant.  He concurs that the parties agreed the 
2003 Formula was the applicable valuation formula.  He confirms that his expert used the 
2003 Formula as the basis for his calculations.  Then he completely bypasses the district 
court's finding that the 1998 Agreement contained the applicable language and 
instead rationalizes that the district court adopted the 2003 Formula as the 
basis for valuation when it adopted his valuation.    

 
 
[¶29]   Unfortunately, Dr. Ford is 
incorrect about how the district court proceeded.  By determining the 1998 Agreement was 
the applicable agreement, the district court implicitly rejected the methodology 
used by the experts to determine a value for the stock.  Instead, focusing on the language of the 
1998 Agreement, the district court determined "no evidence was adduced" that a 
forensic expert would be able to ascertain a value for the stock using the 1998 
Agreement valuation language.  The 
resultant action taken by the district court was to resort to equity to award 
Dr. Ford the amount presented by Dr. Ford's expert witness.  Thus, far from being an irrelevant 
finding by the district court, the finding that the 1998 Agreement contains the 
applicable valuation formula is the basis for the district court's ultimate 
decision regarding the value of the stock.  
Because of this, we must reverse the district court's decision.  

 
 
[¶30]   As a general rule, this Court would 
return the case to the district court for further consideration on the issue of 
valuation.  Under the precise 
circumstances of this case, however, we find the legal and factual evidence in 
the record is sufficient for us to determine the proper value of the 
stock.

 
 

Stock 
Valuation

 
 
[¶31]   This Court typically reviews a 
district court's findings of fact after a bench trial to determine if they are 
clearly erroneous.   The 
factual findings of a trial 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 reweighing disputed evidence.  A finding is clearly erroneous when, 
although there is evidence to support it, this Court on the entire evidence is 
left with the definite and firm conviction that a mistake has been 
committed.  Helm, ¶ 6, 244 P.3d  at 1056; Hofstad v. Christie, 2010 WY 134, ¶ 7, 
240 P.3d 816, 818 (Wyo. 2010); Mullinnix LLC v. HKB Royalty Trust, 2006 
WY 14, ¶ 12, 126 P.3d 909, 916 (Wyo. 2006).  

 
 
[¶32]   The Judgment in this case, however, 
is not typical.  As already noted, 
the Judgment entered by the district court is in effect identical to the 
proposed findings of fact and conclusions of law presented to the district court 
by Dr. Ford.  Not even typographical 
errors were corrected.  More 
egregiously, substantive errors also exist.  For instance, the Judgment refers to 
exhibits that were never admitted and incorrect transcript 
cites.

 
 
[¶33]   Although proposed findings of fact 
and conclusions of law submitted by the parties are helpful to a court, the 
court must exercise its independent analysis in reaching the final 
judgment.  This does not mean that 
it is per se improper for a court to adopt, in toto, the proposed findings and 
conclusions of a party, but a judgment should reflect the studied decision of 
the court.  This Court has 
stated:

 
 
Speaking 
first to the degree of inquiry called for in this case, we note that findings 
and conclusions prepared by counsel and adopted, more or less verbatim, by the 
trial court may be less helpful on review than findings and conclusions drawn by 
a disinterested person. See, Edward B. 
Marks Music Corp. v. Colorado Magnetics, Inc., 10 Cir., 497 F.2d 285, 287 
(1974). Nevertheless, findings rendered under such circumstances will stand if 
supported by the evidence. United States 
v. El Paso Natural Gas Co., 376 U.S. 651, 656, 84 S. Ct. 1044, 12 L. Ed. 2d 12 
(1964). In appropriate cases, the circumstances may lead to a more searching 
inquiry for error, In re Las Colinas, 
Inc., 1 Cir., 426 F.2d 1005, 1010 (1970)[.]

 
 

First 
Nat'l Bank of Lander v. First Wyo. Sav. & Loan Ass'n, 
592 P.2d 697, 702-03 (Wyo. 1979).  
In First National Bank, the 
Court found that a more searching inquiry was not necessary because the record 
reflected that the trial court gave the parties a great deal of preliminary 
guidance in drafting the proposed findings and conclusions.  Unfortunately, the record before us 
contains no such indicia of involvement by the district court.  Under the circumstances, we lack 
confidence that the judgment adequately reflects thorough consideration by the 
district court.  As such, we will 
review the evidence behind the findings of fact more thoroughly than is 
customary.

 
 
[¶34]   Under the 2003 Formula, there are 
two components to valuing OJH stock.  
The first component is accounts receivable.  The second is fixed assets.  As a reminder, the 2003 Formula 
states:

 
 
For 
a Shareholder redemption in the event of death or termination, Shareholder's 
individual AR continues to pay the Shareholder less a 10% collection fee and any 
of the collection rate less any liability associated with acquiring the 
shareholder's AR from Ortholink in the 2003 restructuring.

 
 
Fixed 
assets less liabilities for fixed assets divided by the number of Shareholders 
will be the calculation for the balance of the valuation.

 
 
Further, 
the language addressing the value of patient records is to be deleted. 

 
 
[¶35]   We turn our attention first to 
fixed assets because this is the biggest point of contention between the 
parties.  OJH claims that, as of 
December 31, 2005, the net value of any fixed assets it owned was zero.  Dr. Ford, on the other hand, calculates 
several hundred thousand dollars worth of fixed assets.  Part of the discrepancy arises because 
the parties do not agree on the definition of "fixed assets."  OJH's expert defined "fixed assets" 
essentially as tangible items that could be depreciated, such as equipment, 
chairs, tables, computer systems, etc.  
Dr. Ford's expert gave it a much broader meaning.  He testified the term "fixed assets" was 
an acronym for "total assets."  

 
 
[¶36]   The resolution of the issue of the 
definition of "fixed assets" requires us to construe the language of the 2003 
Formula.  Construction of the 
language of a written agreement being an issue of law, we engage in our review 
of the language of the 2003 Formula de novo.  Our goal is to discern, and give effect 
to, the intent of the contracting shareholders.  In order to determine the intent, we 
look first to the plain language of the contract.  Terris v. Kimmel, 2010 WY 110, ¶ 
7, 236 P.3d 1022, 1025 (Wyo. 2010); Double Eagle Petroleum & Mining Corp. 
v. Questar Exploration & Production Co., 2003 WY 139, ¶¶ 7-8, 78 P.3d 679, 681-82 (Wyo. 2003).

 
 
[¶37]   The term "fixed asset" has a 
generally accepted definition.  The 
following definitions for a "fixed asset" are representative: "An asset not 
readily convertible to cash that is used in the normal course of business.  Examples of fixed assets include 
machinery, buildings, and fixtures."  
David L. Scott, Wall Street Words: 
An A to Z Guide to Investment Terms for Today's Investor (Houghton Mifflin 
Harcourt Publishing Co. 2010), found at 
http://invest.yourdictionary.com/fixed-asset; "[a] long-term tangible piece 
of property that a firm owns and uses in the production of its 
income and is not expected to be consumed or converted into cash any 
sooner than at least one year's time.  
Fixed assets are sometimes collectively referred to as plant'."  
http://www.investopedia.com/terms/f/fixedasset.asp; "capital asset [also termed fixed 
asset]:  a long-term asset used in 
the operation of a business or used to produce goods or services, such as 
equipment, land, or an industrial plant."  
Black's Law Dictionary 134 (9th ed. 2009). 

 
 
[¶38]   Along with this generally accepted 
definition, we can also look to the circumstances surrounding the execution of 
the document in determining if there is any ambiguity in the language.  Davidson Land Co., LLC v. Davidson, 2011 
WY 29, ¶ 14, 247 P.3d 67, 72 (Wyo. 2011); Ecosystem Res., L.C. v. Broadbent Land & 
Res., L.L.C., 2007 WY 87, ¶ 10, 158 P.3d 685, 688 (Wyo. 2007).  In the instant case, the 2003 Formula 
was instigated by the Second Amended Service Agreement with Ortholink that 
provided that Ortholink was no longer obligated to provide OJH with capital 
assets.  Thus, in the future, OJH 
would be acquiring fixed assets in its own name.  The shareholders of OJH wanted the stock 
valuation to reflect the value of those fixed assets.  Given the language and the 
circumstances, we find the intent of the shareholders is clear.  The term "fixed assets" was used by the 
shareholders in the 2003 Formula in its generally accepted definition as 
identified above. 

 
 
[¶39]   Dr. Ford itemized categories of 
assets he included in his calculation, making it simple to apply this 
definition.  Among the assets he 
listed cash in hand and the Ortholink Service Agreement.  These two assets plainly do not fit the 
definition of a fixed asset as used in the 2003 Formula.  They therefore must be removed from the 
calculation.  

 
 
[¶40]   The other major point of contention 
in determining the value of fixed assets concerns the capital assets owned by 
Ortholink and used by OJH in its practice.  
Pursuant to the Second Amended Service Agreement, OJH pays Ortholink a 
fee for the use of the assets.  The 
fee is set according to Ortholink's depreciation schedule.  After Ortholink fully depreciates a 
capital asset, it transfers ownership of that asset to OJH by means of a bill of 
sale for no further consideration.  

 
 
[¶41]   OJH looks solely to title to 
determine the ownership of the capital assets.  Ortholink has title until such time as 
Ortholink issues a bill of sale to OJH.  
Title is then transferred, but the purchase price is zero.  Dr. Ford, on the other hand, claims this 
procedure in reality is a lease-to-own arrangement.  Thus, Dr. Ford argues the value of the 
capital assets being used by OJH should be credited to OJH's books, with 
Ortholink having a security interest in the assets until full payment is 
received.  

 
 
[¶42]   We need not delve into the merits 
of Dr. Ford's contention because even if he is correct, there is a basic failure 
of proof.  The 2003 Formula calls 
for fixed assets minus liabilities for fixed assets.  The only evidence presented by Dr. Ford 
was what he contended was the actual amount paid by OJH to Ortholink for the use 
of certain capital assets since 2003 when the second amendment was signed.  He presented no evidence as to the 
actual value of the capital assets as of December 31, 2005.  No consideration was given to the fact 
that, if an item had been paid off, then it had probably been in use for many 
years and thus of considerably less value than what OJH had paid over time.  Also not taken into consideration is the 
fact that, if OJH was still paying for the use of an item, then under Dr. Ford's 
lease theory there was a corresponding liability.   This failure of proof requires we 
remove this category of assets from Dr. Ford's 
calculation.

 
 
[¶43]   There is one fixed asset both 
parties agree on.  OJH bought a 
computer hardware and software system in its own name.  This computer system does constitute a 
fixed asset and is properly included.  
Dr. Ford has it listed for the purchase price minus depreciation.  The evidence, however, discloses OJH 
borrowed the money to purchase the system and there is still outstanding 
debt.  Dr. Ford failed to present 
any evidence regarding the amount of this debt or apply such debt to the value 
of the computer system to determine if any equity remained in the computer 
system.  This failure of proof 
requires this asset be removed from Dr. Ford's 
calculation.

 
 
[¶44]   Dr. Ford listed no further 
categories of fixed assets.  Given 
our determination that all the assets presented by Dr. Ford either did not meet 
the definition of a fixed asset or were not properly proven, Dr. Ford is left 
with no evidence that OJH had fixed assets that exceeded liabilities.  Thus he is entitled to no recovery under 
the fixed assets portion of the 2003 Formula.

 
 
[¶45]   Turning to the AR component of the 
2003 Formula, the parties actually are in fairly close agreement as to the 
amount owed.  At trial, Dr. Ford was 
shown the calculations of this component prepared by OJH.  OJH had calculated his AR at 
$183,543.  Dr. Ford accepted the 
number as accurate.  OJH then 
subtracted the ten percent collection fee to arrive at the net AR.  From the net AR, OJH subtracted Dr. 
Ford's share of the liability associated with acquiring the shareholder's AR 
from Ortholink in the 2003 restructuring.  
OJH came up with what it termed "equity value" of $67,656.  Dr. Ford agreed with the calculations to 
this point.  From that number OJH 
deducted $4,749 for accumulated payroll deficit, leaving a net due to Dr. Ford 
of $62,907.  Dr. Ford disagreed with 
this deduction.  We agree with Dr. 
Ford that the accumulated payroll deficit should not be deducted from the amount 
owed.  The 2003 Formula speaks of AR 
minus certain specifically delineated liabilities.  The calculation of the value of Dr. 
Ford's share of stock ends at that point.  
We find the amount owed to Dr. Ford, as accepted by him at trial, is 
$67,656.

 
 
COUNTERCLAIMS

 
 
Promissory 
Estoppel

 
 
[¶46]   Promissory estoppel exists in cases 
where an unambiguous promise is made in circumstances calculated to induce 
reliance, and does induce reliance to the detriment of the promisee.  B 
& W Glass v. Weather Shield Mfg., 829 P.2d 809, 813 (Wyo. 1992); Goldstick v. ICM Realty, 788 F.2d 456, 
462 (7th Cir. 1986).  Broken down, 
the elements of a promissory estoppel claim are: (1) the existence of a clear 
and definite promise which the promisor should reasonably expect to induce 
action by the promisee; (2) proof that the promisee acted to its detriment in 
reasonable reliance on the promise; and (3) a finding that injustice can be 
avoided only if the court enforces the promise.  Harper v. Fidelity & Guar. Life Ins. 
Co., 2010 WY 89, ¶ 26, 234 P.3d 1211, 1220 (Wyo. 2010); Parkhurst v. Boykin, 2004 WY 90, ¶ 21, 
94 P.3d 450, 460 (Wyo. 2004); City of 
Powell v. Busboom, 2002 WY 58, ¶ 8, 44 P.3d 63, 66 (Wyo. 2002).  The party asserting promissory estoppel 
is assigned the burden of establishing all of the elements of the doctrine with 
a standard of strict proof.  B & W Glass, 829 P.2d  at 
819.

 
 
[¶47]   OJH alleges it only entered into 
the fifteen year lease in the new Riverton building because Dr. Ford promised he 
would work for OJH in Riverton for another five to ten years.  After he resigned, OJH was left with 
leased office space it was unable to find new tenants for, thus suffering 
damages.  

 
 
[¶48]   As an initial consideration, we 
consider it doubtful that Dr. Ford's statement was a "clear and definite" 
promise to continue working for OJH in Riverton for five to ten years.  Further, whatever the exact words were, 
the statement was not made in a vacuum.  
Dr. Ford made the statement in light of his current working conditions 
and his current health status.  The 
fact that either one of these could change at any time makes it unreasonable for 
anyone to rely on such statement as a basis to enter into a fifteen year 
lease.  It also seems unreasonable 
to enter into a fifteen year lease on office space designed for two doctors and 
visiting subspecialists based on the alleged promise of one doctor to practice 
another five to ten years.  

 
 
[¶49]   Ultimately, however, the claim 
fails for a much more fundamental reason.  
OJH failed to meet its burden of proving, under the strict standard of 
proof required, that it acted in reliance on Dr. Ford's statement.  The decision to enter the lease was a 
group decision.  The decision 
required assent from a majority of OJH shareholders.  As of April 2004, there were ten 
shareholders.  At the shareholders 
meeting held that month, the shareholders approved the lease, after a change in 
the accounting to separate certain costs to Fremont County, by a vote of seven 
in favor, two abstaining, and one absent.  

 
 
[¶50]   OJH presented evidence from only 
two of those shareholders, Dr. Woodfin and Dr. Rork.  Dr. Woodfin testified uncategorically 
that he would not have voted to enter into the lease without the alleged promise 
from Dr. Ford as to his continued practice.  Dr. Rork testified entering into the 
lease fit within the strategic plan of OJH in Riverton and made sense in light 
of Dr. Ford's alleged promise.  On 
the other side, Dr. Guier, the only other shareholder to testify, testified he 
knew Dr. Ford had said he intended to continue another five to ten years, but he 
did not remember Dr. Ford making any promises. 

 
 
[¶51]   Missing is evidence from the other 
board members as to the effect Dr. Ford's intentions regarding his continuing to 
practice had on their individual votes.   The closest evidence is from Dr. 
Guier who testified he had no recollection of the concerns of other board 
members.  In short, there is no 
evidence that OJH, through the actions of its shareholders, entered into the 
fifteen year lease because of Dr. Ford's stated intention to continue practicing 
five to ten years. 

Breach of Fiduciary 
Duty

 
 
[¶52]   OJH argues Dr. Ford breached his 
fiduciary duty to OJH by resigning after inducing OJH into entering into a 
fifteen year lease by promising to practice another five to ten years and 
accepting the change in accounting structure to make Fremont County a separate 
cost center.  OJH frames the claim 
in the context of Wyo. Stat. Ann. § 17-16-830(a).  Section 17-16-830(a) embodies the 
principle that corporate officers and directors have a fundamental duty of 
loyalty and fiduciary responsibility to their corporation.  It begins:

 
 
General 
standards for directors.

 
 
(a)  A director shall discharge his duties as 
a director, including his duties as a member of a 
committee:

            
(i) In good faith; and

(ii) 
With the care an ordinarily prudent person in a like position would exercise 
under similar circumstances; and

(iii)  In a manner he reasonably believes to be 
in or at least not opposed to the best interests of the 
corporation.

 
 
Wyo. 
Stat. Ann. § 17-16-830(a) (LexisNexis 2005) (amended 
2009).

 
 
[¶53]   We fail to see how this statute 
applies to the current situation.  
The statute imposes upon corporate directors the duty to manage the 
affairs of the corporation in the best interests of the corporation and its 
shareholders.  See, e.g., Squaw Mountain Cattle Co. v. Bowen, 804 P.2d 1292, 1297 (Wyo. 1991) (director breached fiduciary duty by failing to 
disclose noteworthy financial information to shareholders); Lynch v. Patterson, 701 P.2d 1126, 
1131-32 (Wyo. 1985) (directors breached fiduciary duty by diverting corporate 
assets to their benefit); Voss Oil 
Company v. Voss, 367 P.2d 977, 979 (Wyo. 1962), (interlocking directors 
breached fiduciary duty by entering transaction from which they profited to the 
disadvantage of the corporation).  
OJH does not allege Dr. Ford acted improperly in the management of the 
company, in "discharge[ing] his duties as a director."  On appeal, OJH simply alleges that 
"leaving OJH under the circumstances that he did was not an act of good faith on 
Ford's part, and was contrary to the interests of OJH and its 
shareholders."  

 
 
[¶54]   The argument presented by OJH on 
appeal for breach of fiduciary duty is the same argument it presents on its 
claim for promissory estoppel.  The 
damages claimed are those for expenses incurred in not being able to sublease 
the Riverton office space.  The real 
issue is not Dr. Ford resigning as a shareholder but rather his resigning as an 
employee.  This has nothing to do 
with his statutory corporate responsibilities.

 
 
[¶55]   Even so, we find Dr. Ford exercised 
good faith under the circumstances.  
He offered to remain as an employee or for as long as OJH needed in order 
to recruit another doctor.  His 
resignation was prompted in part by personal reasons, but also by conditions of 
employment.  Dr. Harp was working 
primarily out of Lander, leaving Dr. Ford essentially in a solo practice, and 
other OJH subspecialists were not willing to come to Riverton.  By the time of his resignation, Dr. Ford 
felt that he was no longer supported by the other OJH shareholders.  In a letter addressed to his fellow 
shareholders, Dr. Ford further explained his position:

 
 
It 
is my preference to work 5-10 years in Fremont County. . . .   However the current financial 
arrangement has changed to a degree that I find no longer acceptable . . . . 
  With the sale of my interest 
in TOPS the whole financial arrangement has been turned upside down with little 
upside and a lot of risk to be a partner in a one man 
office.

 
 
I 
had hoped that after our legal problems of the past years that we could focus on 
long term planning for Fremont County.  
I have been on the agenda for three months!  With the changes of May, 2005, i.e. 
TOPS, lack of overhead insurance for the group to cover us in illness or injury 
and the shortage of physicians to come to Fremont County, the whole image of 
[OJH] is different than Peter [Rork] and I envisioned in 1999.  This lack of presence of our group has 
not been unnoticed by the Fremont County medical staff, community and [OJH] 
staff based in Fremont County.  Our 
competitors certainly have noticed we seem to be a group in name only due to the 
lack of a visible presence in the past two years.  How many of you have presented a CME or 
traveled to see what has happened down here?

 
 
* 
* * *

 
 
I 
would find it preferable to continue working with my current partners long term 
with an equitable salary with bonus for a productive year.  A [OJH] presence in Fremont County 
protects [OJH] flanks and prevents outside groups from stepping into a void but 
the group obviously no longer supports this strategy.

 
 
Under 
the circumstances, we think Dr. Ford's actions, while not ideal from the 
standpoint of OJH, did not violate any possible duty of good 
faith.

 
 
[¶56]   OJH further complains that Dr. 
Ford's decision to continue his practice in Riverton made it more difficult to 
recruit a new doctor.  However, 
acting in his capacity as an employee, he complied with a non-compete clause in 
his employment contract by buying it out, the contractually agreed upon method 
of damage mitigation.  OJH cannot 
now ask for further damages under that theory.

 
 
CONCLUSION

 
 
[¶57]   The district court improperly 
determined the value of Dr. Ford's one share of OJH stock.  Because the record is clear, we have 
been able to calculate the value of Dr. Ford's share as $67,656.  The district court was correct in 
denying OJH's claims for promissory estoppel and breach of fiduciary duty.  That part of the judgment is affirmed. 
 The case is remanded for the entry 
of a new judgment consistent with this ruling.

 
 

FOOTNOTES

1OJH argues on appeal that, since Dr. Ford never signed the 1998 OJH 
shareholders agreement it does not apply to him.  The language of the agreement, however, 
shows that it automatically applies to all shares of stock to be issued in the 
future.  Dr. Ford was given a copy 
of the agreement when he joined OJH.  
If it did not apply, the one share of stock issued to Dr. Ford was truly 
worthless.  The argument is also 
inconsistent with the OJH's emphasis on the language in the 1998 Agreement that 
the stock was not intended as an investment.