Title: BENDER v. PHILLIPS

State: wyoming

Issuer: Wyoming Supreme Court

Document:

BENDER v. PHILLIPS2000 WY 1578 P.3d 1074Case Number: 99-229, 99-232Decided: 07/25/2000Supreme Court of Wyoming
 
DONALD E. BENDER, Appellant (Plaintiff),

v.

JAMES E. PHILLIPS and 
JOHN A. THOMAS, Appellees (Defendants).

 JAMES E. PHILLIPS, Appellant 
(Defendant),

 v.

 DONALD E. BENDER, Appellee 
(Plaintiff).

Appeal from the District 
Court of Uinta County, The Honorable Jere Ryckman, 
Judge.

Representing 
Donald E. Bender: Timothy C. Kingston of 
Graves, Miller & Kingston, P.C., Cheyenne, Wyoming.Representing James 
E. Phillips : Gary B. Ferguson, Evanston, Wyoming; Williams & Hunt, Salt 
Lake City, Utah.Representing John A. Thomas: Matthew L. Lalli and 
Daniel E. Garrison of Snell & Wilmer, L.L.P., Salt Lake City, Utah; V. 
Anthony Vehar of Evanston, Wyoming.

Before 
LEHMAN, C.J., and THOMAS, MACY,* GOLDEN, and HILL, 
JJ.

* Retired June 2, 
2000.

GOLDEN, 
Justice.

[¶1] These 
consolidated appeals involve issues arising after Appellant Donald E. Bender 
(Bender) and his wife reconciled and dismissed their divorce action. Bender 
brought suit against the two attorneys who had represented them, Appellees James 
E. Phillips (Phillips) and John A. Thomas (Thomas). Summary judgment was granted 
to both Phillips and Thomas on Bender's claims, and Bender was ordered to pay 
sanctions to Thomas in the amount of $48,864.99. Phillips also sought sanctions 
against Bender, but the district court denied him that relief. Bender appeals 
the district court's order, contending that his claims of fraud and collusion 
were properly pleaded and supported by sufficient evidence to survive summary 
judgment. He further contends that the order of sanctions in Thomas' favor, 
granted under Wyo. Stat. Ann. § 1-14-128, must be reversed to comply with our 
recent decision finding the statute unconstitutional. In a separate appeal, 
Phillips contends that the district court's order denying his motion for 
sanctions should be reversed.

[¶2] We affirm 
the district court's order granting summary judgment on Bender's claims, reverse 
the order for sanctions against Bender, and remand for further consideration in 
light of our decision in Squillace v. Kelley, 990 P.2d 457 (Wyo. 1999). We also 
reverse the denial of Phillips' motion for sanctions and remand for further 
consideration.

ISSUES

[¶3] In Case 

[¶4] No. 99-229, 
Bender presents these issues for our review:

1. Did the District Court 
commit reversible error by failing to consider the Appellant's collusion claim 
against Appellee Phillips?

2. Did the District Court 
commit reversible error when it found that the Appellant did not adequately 
plead his fraud claim against Appellee Phillips?

3. Should Appellee 
Phillips have been granted summary judgment on the Appellant's fraud claim on 
the sole basis that Phillips was not required to reveal his former partnership 
with Appellee Thomas?

4. Did the District Court 
commit reversible error when it found that all of the Appellant's claims against 
Appellee Thomas were legal malpractice claims?

5. Did the District Court 
commit reversible error when it found that the Appellant's claims accrued as of 
the date his attorney quit representing him?

6. Did the District Court 
abuse its discretion in awarding attorney's fees and costs to Appellee 
Thomas?

[¶5] Phillips 
states that the issue for our review in Case No. 99-229 is solely whether 
summary judgment in favor of him on all of Bender's claims was properly 
granted.

[¶6] Thomas 
phrases the issues in Case No. 99-229 as:

1. Did the District Court 
properly find that there were no disputed issues of material fact in this case 
and that Appellee and Defendant Thomas was entitled to judgment as a matter of 
law on all of Appellant and Plaintiff Bender's claims?

2. Alternatively, are 
there legal grounds not relied upon by the trial court that would entitle Thomas 
to judgment on the undisputed facts and upon which this Court may affirm the 
trial court's grant of summary judgment?

3. Was the District Court 
within its discretion to award Thomas his fees and costs under Section 1-14-128 
of the Wyoming Revised Statutes?

[¶7] In Case No. 
99-232, Phillips presents this issue for our review:

[¶8] Whether the 
trial court erred in denying defendant Phillips' Motion for Sanctions for filing 
a baseless and frivolous Complaint given that the trial court thereafter granted 
codefendant Thomas' Motion for Sanctions on the same bases in the amount of 
$48,864.99.

[¶9] Bender 
notes that there are two issues in Case No. 99-232 presented for our 
review:

1. Should the District 
Court's denial of sanctions be upheld because Wyo. Rev. Stat. § 1-14-128 is 
unconstitutional?

2. Did the District Court 
abuse its discretion when it denied the Appellant's motion for 
sanctions?

FACTS

[¶10] Phillips 
represented Bender's wife in her divorce action against Bender, and Thomas 
represented Bender. The parties eventually reconciled and remain married today; 
however, while the action was pending, the parties primarily disputed the value 
of the couple's Evanston, Wyoming, home and the value of Bender's deceased 
mother's home in California. Phillips filed a motion for sanctions against 
Thomas, requested a hearing and, shortly thereafter, Thomas and Phillips 
negotiated a settlement offer to Bender. The hearing was canceled. The 
settlement offer was presented to Bender. He rejected the settlement offer and 
requested that Thomas present a counteroffer. Thomas refused to do so. Thomas 
withdrew as Bender's lawyer after that rejection, and the divorce proceeding 
endured another eight acrimonious months as Bender represented himself for a 
period of time.

[¶11] In 
February of 1996, Bender learned that Thomas and Phillips had been former 
partners. However, Bender claims that it was not until the summer of 1996, that 
he learned that the circumstances of Thomas' and Phillips' prior dissolution of 
their partnership allegedly caused Phillips to unduly influence Thomas in his 
representation of certain clients and gave rise to his claims against 
both.

[¶12] Bender 
alleges that Thomas and Phillips "colluded" to force Bender to accept an 
unfavorable settlement that he rejected on its face. Bender claims damages from 
that alleged "collusion." On March 11, 1998, he filed his original pro se 
complaint against both lawyers, claiming that after Thomas ceased 
representation, Bender learned that as a former partner Phillips had the ability 
to control and malevolently influence Thomas; and that these two lawyers 
colluded in the settlement scheme to defraud Bender. Bender amended this 
complaint with additional facts supporting claims of negligence, breach of 
contract, legal malpractice, fraud, emotional distress, libel, and collusion 
under Wyo. Stat. Ann. § 33-5- 114.1

[¶13] Phillips' 
motion to dismiss was treated by the district court as a motion for summary 
judgment, and a hearing was held. The district court granted the motion for 
summary judgment, ruling that Bender's negligence, breach of contract, and legal 
malpractice claims were unsustainable because Phillips had no attorney-client 
relationship with Bender. The district court determined that the fraud claim had 
not been plead with particularity as required under W.R.C.P. 9(b) and, in any 
event, Phillips had made no actionable misrepresentation to Bender; Phillips' 
alleged conduct did not rise to the level of atrocious, utterly intolerable 
behavior as required to sustain an infliction of emotional distress claim; the 
libel claim required a showing of a written document containing a defamatory 
statement, and none had been produced. There was no ruling specifically 
referencing the collusion claim or Wyo. Stat. Ann. § 
33-5-114.

[¶14] Phillips 
moved for sanctions against Bender under W.R.C.P. 11 and Wyo. Stat. Ann. § 
1-14-128, seeking attorney's fees, costs, and expenses against Bender for 
bringing a frivolous and baseless complaint. The district court denied his 
motion. Bender continued to file motions seeking discovery in order to pursue 
further litigation against Phillips, and Phillips again filed a motion for 
sanctions. That motion was granted in the amount of 
$500.00.

[¶15] Thomas 
also moved for summary judgment, and the district court granted the motion on 
the grounds that all claims were legal malpractice claims that had not been 
filed within two years as required by Wyo. Stat. Ann. § 1-3-107(a)(i). Thomas 
then moved for sanctions against Bender under Wyo. Stat. Ann. § 1-14-128, and a 
hearing was held. The district court orally granted the motion at the hearing 
and subsequently entered a written order awarding attorney's fees, costs, and 
expenses to Thomas in the amount of $48,864.99.

[¶16] These 
appeals followed.

DISCUSSION

[¶17] This 
Court's standard of review of summary judgment is:

When a motion for summary 
judgment is before the supreme court, we have exactly the same duty as the 
district judge; and, if there is a complete record before us, we have exactly 
the same material as did he. We must follow the same standards. The propriety of 
granting a motion for summary judgment depends upon the correctness of a court's 
dual findings that there is no genuine issue as to any material fact and that 
the prevailing party is entitled to judgment as a matter of law. This court 
looks at the record from the viewpoint most favorable to the party opposing the 
motion, giving to him all favorable inferences to be drawn from the facts 
contained in affidavits, depositions and other proper material appearing in the 
record.

[¶18] Lavoie v. 
Safecare Health Service, Inc., 840 P.2d 239, 241 (Wyo. 1992) (quoting Roth v. 
First Sec. Bank of Rock Springs, 684 P.2d 93, 95 (Wyo. 
1984)).

[¶19] This Court 
further maintains:

A summary judgment should 
only be granted where it is clear that there are no issues of material facts 
involved and that an inquiry into the facts is unnecessary to clarify the 
application of law. A material fact is one which has legal significance. It is a 
fact which would establish a defense. After the movant establishes a prima facie 
case the burden of proof shifts to the opposing party who must show a genuine 
issue of material fact, or come forward with competent evidence of specific 
facts countering the facts presented by the movant. The burden is then on the 
nonmoving party to show specific facts as opposed to general allegations. The 
material presented must be admissible evidence at trial. Conclusory statements 
are not admissible. We give the party defending the motion the benefit of any 
reasonable doubt. If the evidence is subject to conflicting interpretations or 
if reasonable minds might differ, summary judgment is 
improper.

[¶20] Id. "In a 
summary judgment context, we will not disturb the trial court's judgment if it 
is sustainable on any theory." Id. (citing DeWald v. State, 719 P.2d 643, 650-51 
(Wyo. 1986)).

[¶21] We apply 
an abuse of discretion standard in reviewing an award of sanctions. Meyer v. 
Mulligan, 889 P.2d 509, 517 (Wyo. 1995). We recently defined discretion 
as:

[¶22] Judicial 
discretion is a composite of many things, among which are conclusions drawn from 
objective criteria; it means a sound judgment exercised with regard to what is 
right under the circumstances and without doing so arbitrarily or 
capriciously.

[¶23] Vaughn v. 
State, 962 P.2d 149, 151 (Wyo. 1998) (quoting Martin v. State, 720 P.2d 894, 897 
(Wyo. 1986)).

Case No. 99-229 - Fraud 
and Collusion.

[¶24] Bender 
limits his challenge of the summary judgment to the district court's disposal of 
his fraud and collusion claims. He submits that the gravaman of his collusion 
claim was that Phillips and Thomas conspired to present Bender with a 
disadvantageous financial settlement in his divorce proceedings. Bender's 
complaint alleged that 1) on February 13, 1996, Phillips and Thomas, as 
undisclosed law partners, met secretly and willfully to develop a plan to force 
Bender into an economically disadvantageous settlement agreement; 2) on February 
20, 1996, Thomas, acting on the basis of the secret plan with Phillips, 
presented the disadvantageous settlement agreement to Bender; 3) when Bender 
refused to accept the settlement agreement as proposed to him and insisted on a 
counteroffer Thomas threatened to withdraw; 4) Thomas did in fact withdraw two 
days later; 5) prior to the secret negotiations Phillips filed a frivolous 
sanctions motion against his former partner which further served to provide 
Phillips the leverage to induce Thomas to engage in the alleged collusive 
conduct; and 6) the defendants are therefore liable under the collusion statute, 
Wyo. Stat. Ann. § 33-5- 114.

[¶25] Bender 
contends that the district court's failure to address the collusion claim 
requires reversal as no other grounds support it and he submitted sufficient 
evidence to survive summary judgment. Phillips contends that "collusion" is not 
a recognized cause of action in Wyoming, but if considered, argues that there is 
no evidence in the record, by affidavit or otherwise, that there was ever any 
agreement between Phillips and Thomas for any purpose, including to defraud 
Bender.

[¶26] Our review 
of the district court's decision letter indicates that it considered the fraud 
and collusion claims as one actionable claim. Whether this is proper need not be 
decided because our review does not indicate that Bender has submitted 
sufficient evidence that the two attorneys agreed to defraud him2 to survive summary judgment. He 
claims that he "showed the Court the reasons why his attorney might be unduly 
influenced by his adversary; he showed the circumstances of their collusion; he 
showed how the collusion produced the disadvantageous settlement agreement; and 
he showed the effects of his rejection of the agreement on his attorney and on 
the progress of his divorce case."

[¶27] Bender's 
summary judgment materials showed that Phillips and Thomas had a previous 
partnership, Phillips filed a sanctions motion against Thomas that was 
withdrawn, the two attorneys negotiated a settlement agreement that Bender 
rejected, and Thomas withdrew his representation of Bender. Bender characterizes 
these facts as "collusion" that destroyed his reputation in the community; 
however, his characterization is a conclusive allegation unsupported by the 
specific facts required to survive summary judgment. Brooks v. Zebre, 792 P.2d 196, 202 (Wyo. 1990). Bender could survive summary judgment if these facts 
logically and reasonably lead to the conclusion that an agreement must have 
existed. Under our applicable standard of review, we are required to view the 
record from the perspective most favorable to the party opposing the motion, 
giving to him all favorable inferences to be drawn from the facts. This review, 
however, is limited by the substantive law that actions sounding in fraud, 
whatever the basis, must be plead with particularity and proved by clear and 
convincing evidence. See Sundown, Inc. v. Pearson Real Estate Co., No. 99-43, 
slip op. at 8-9, 11 (Wyo. July 5, 2000); Snyder v. Lovercheck, 992 P.2d 1079, 
1089 (Wyo. 1999); Richey v. Patrick, 904 P.2d 798, 801-02 (Wyo. 1995). An action 
for fraud is not sustainable on the basis of what you believe you know, but by 
what you can prove.

[¶28] 
Accordingly, in order to survive summary judgment on his collusion claim, Bender 
was required to submit evidence of an agreement between Phillips and Thomas to 
defraud him or injure his reputation or evidence from which one could logically 
and reasonably infer from the established facts that an agreement existed. No 
such showing has been made, either directly or by inference, and we affirm the 
district court's order granting summary judgment to 
Phillips.

[¶29] Next, 
Bender contends that the district court erred in applying the statute of 
limitations for legal malpractice claims to his fraud and collusion claims 
against Thomas. Again, we need not decide this precise issue because we affirm 
the district court's order granting summary judgment for the same reasons just 
advanced; Bender has failed to submit sufficient evidence of fraud or 
collusion.

Case No. 99-229 - Order 
Granting Thomas' Sanctions Against Bender.

[¶30] Thomas 
requested sanctions under Wyo. Stat. Ann. § 1-14-128, and the district court so 
ordered. In Squillace v. Kelley, 990 P.2d 497 (Wyo. 1999), this Court declared 
the statute unconstitutional as an invasion of the constitutional powers of the 
judicial branch of government. Id. at 501. Squillace reversed an order for 
sanctions and remanded for further proceedings in accordance with the opinion. 
Id. Bender contends that because the sanctions were issued in this case in 
reliance upon an unconstitutional statute, the order must be reversed. We 
reverse the order for sanctions and remand to the district court for further 
consideration in light of our decision in Squillace.

[¶31] The 
district court's order granting summary judgment in Case No. 99-229 is affirmed 
in part, reversed in part, and remanded.

Case No. 99-232 - Order 
denying Phillips' Sanctions Against Bender.

[¶32] In its 
decision letter, the district court stated that it was denying Phillips' motion 
for sanctions because Bender's complaint was without merit, but not baseless, 
frivolous, or brought for an improper purpose. During the hearing to consider 
Thomas' motions for sanctions against Bender, the district court 
stated:

[¶33] I was 
willing to give you the benefit of the doubt, I guess, earlier when this case 
was presented with sanctions, but you have persisted, and I can only believe 
that you do have an improper purpose here. The facts are not with you, the law 
is not with you. It seems that you are on this crusade to simply harass and 
punish Mr. Phillips and ~ and Mr. Thomas as we're discussing here today, and it 
seems to me that for entirely improper purposes.

[¶34] The 
district court then granted Thomas over $48,000 in attorney's fees, costs and 
expenses. Phillips contends that the two cases are indistinguishable and denying 
his motion for sanctions was arbitrary and capricious. He claims that the 
unconstitutionality of Wyo. Stat. Ann. § 1-14-128 is irrelevant because he also 
requested sanctions under W.R.C.P. 11. That rule, he contends, also permits 
sanctions for actions that are frivolous, oppressive, and without basis in law 
or fact.

[¶35] We are 
persuaded that Bender's actions against Phillips and Thomas are 
indistinguishable, as apparently the district court also found, and it was, 
therefore, inconsistent to find the action baseless and submitted for an 
improper purpose for one attorney and reach the opposite conclusion for the 
other attorney. We find the district court abused its discretion because its 
inconsistency is arbitrary and capricious. We reverse the order denying 
Phillips' motion and remand for further consideration.

FOOTNOTES

1 Wyo. Stat. 
Ann. § 33-5-114. Penalty for deceit or collusion.

An 
attorney and counselor who is guilty of deceit or collusion, or consents 
thereto, with intent to deceive a court or judge, or a party to an action or 
proceeding, or brings suit or commences proceedings without authority therefore, 
is liable to be disbarred, and shall forfeit to the injured party treble 
damages, to be recovered in a civil action.

2 Bender 
advises us that "Black's Law Dictionary, Fifth Edition, defines `collusion' as: 
`An agreement between two or more persons to defraud a person of his rights by 
the forms of law, or to obtain an object forbidden by law. It implies the 
existence of fraud of some kind, the employment of fraudulent means or of lawful 
means for the accomplishment of any unlawful purpose.§ (citing Tomiyosu v. 
Golden, 400 P.2d 415, 417 (Nev. 1965))." For purposes of this appeal, we accept 
his definition.