Opinion ID: 2628309
Heading Depth: 2
Heading Rank: 3

Heading: ockey's breach of fiduciary duty claim fails for lack of a remedy

Text: ¶ 40 In the district court, Ockey expressly waived the opportunity to prove damages and elected to proceed solely in equity, arguing that he had no adequate remedy at law for his breach of fiduciary duty and conversion claims. As an equitable remedy, he requested the return of the stock canceled in the 1993 stock transfers. ¶ 41 Ockey asserts that when Lehmer received the IMAI stock as payment for the developer's default, Lehmer should have distributed the stock to the family members in proportion to their ownership interest in the ranch. Lehmer's decision to cancel the stock and sell reissued stock in order to raise funds, according to Ockey, amounted to conversion and a breach of Lehmer's fiduciary duty. As an equitable remedy, Ockey requested the court to order that Lehmer convey to Ockey a portion of Lehmer's own stock in IMAI  in other words Ockey requested a return of the original IMAI stock. Because Ockey's conversion claim is barred by the statute of limitations, we address only his breach of fiduciary duty claim. We affirm the district court's conclusion that Ockey's breach of fiduciary duty claim fails for lack of a remedy. ¶ 42 The availability of a remedy is a legal conclusion that we review for correctness. [38] However, a trial court is accorded considerable latitude and discretion in applying and formulating an equitable remedy, and [it] will not be overturned unless it [has] abused its discretion. [39] Moreover, on appeal, we may affirm the district court on any legal ground or theory apparent on the record, even though such ground or theory differs from that stated by the [district] court. [40] ¶ 43 We affirm the district court's refusal to grant an equitable remedy for two reasons that differ from those relied on by the district court but that are, nevertheless, apparent from the record. First, an adequate remedy at law exists for the alleged breach of fiduciary duty, rendering an equitable remedy unavailable as a matter of law. Second, even if a legal remedy were unavailable, the remedy requested by Ockey would not be appropriate because it would overcompensate him  granting him a windfall at the expense of the defendants.
¶ 44 By waiving his legal claim for damages, Ockey chose to invoke only the equitable jurisdiction of the court. However, [t]he right to an equitable remedy is an exceptional one, and absent statutory mandate, equitable relief should be granted only when a court determines that damages are inadequate and that equitable relief will result in more perfect and complete justice. [41] The general rule regarding equitable jurisdiction is that equitable jurisdiction is precluded if the plaintiff has an adequate remedy at law and will not suffer substantial irreparable injury. [42] ¶ 45 In Buckner v. Kennard , deputy sheriffs in the Salt Lake County Sheriff's Office sought to invoke this court's equitable jurisdiction by requesting back pay as compensation for past pay inequity they suffered in violation of a state civil service statute. [43] We declined to treat their claim as an equitable claim because the deputies had an adequate remedy at law. Furthermore, they did not argue that their injury was substantial, irreparable, unconscionable, or caused by duress. [44] ¶ 46 Similarly, there is an adequate remedy at law for Ockey's claimed injury. In Broadwater v. Old Republic Surety, we acknowledged the difficulty of fashioning a remedy for conversion when the property converted, such as stock, fluctuates in value. [45] In light of this difficulty, we adopted the New York rule, which sets the measure of damages as the highest intermediate value of the stock between the time of conversion and a reasonable time after the owner receives notice of the conversion. [46] This rule provide[s] the fairest measure of damages to all involved by indemnifying the plaintiff, the rightful owner of the converted stock, for his loss without affording a windfall at the expense of the defendant. [47] An alternative rule, allowing the measure of damages to be calculated at the time of trial or at the highest value of the property between the date of conversion and the date of trial, would allow the plaintiff to ride the stock market at the defendant's risk and expense until trial. [48] ¶ 47 Although the New York rule was formulated in the context of a conversion claim, we find it to be applicable to Ockey's claim for breach of fiduciary duty because Ockey's breach of fiduciary duty claim arises from Lehmer's alleged conversion of the stock. Because the two claims share the same operative facts, we apply the same standard to Ockey's breach of fiduciary duty claim that we would apply to Ockey's conversion claim. ¶ 48 In summary, Ockey had an adequate remedy at law, and he waived the opportunity to pursue it because his preferred remedy would be far more lucrative. Because equitable relief is only available in those cases where legal relief is unavailable, we affirm the district court's refusal to fashion an equitable remedy for Ockey.
¶ 49 The district court's refusal to order the return of Ockey's IMAI stock is also supported on an independent basis. Requiring that Lehmer deliver IMAI stock to Ockey would be inequitable because it would overcompensate Ockey by awarding him almost fourteen percent of IMAI's stock, which is worth millions today but was of negligible worth at the time of the alleged conversion and breach of fiduciary duty. ¶ 50 When Lehmer took control of the IMAI stock after the developers defaulted, the stock had minimal value. IMAI's only asset was the State Lease, an asset requiring an immediate $6,000 payment in order to retain it. At that point, development of the ranch was not assured, and maintaining the State Lease was an integral part of the envisioned development. Even Ockey believed that the IMAI stock had only nominal value in 1993. The speculative investment in IMAI made by other family members enabled the family to keep the State Lease, which ultimately caused IMAI's value to skyrocket. Granting Ockey's request would allow Ockey to enjoy the benefits of his family members' speculative investment, while avoiding the risks that they all undertook in 1993. ¶ 51 This dynamic, where returning the allegedly converted stock would overcompensate the plaintiff, is the same dynamic that motivated our adoption of the New York rule. Under the New York rule, Ockey's damages would be the highest intermediate value between the time of Lehmer's alleged conversion and breach of fiduciary duty and a reasonable time after Ockey learned about the alleged conversion and breach. Because the district court concluded that Ockey learned about the conversion as early as 1993, his remedy for Lehmer's breach under the New York rule would be minimal because the value of the stock in 1993 was minimal. Had the district court granted Ockey's requested remedy, it would have allowed him to circumvent the New York rule, thereby reaping an unjustified windfall. Such a result would be inequitable because it would effectively allow Ockey to ride the stock market at the defendant[s'] risk and expense. [49] Accordingly, the district court appropriately refused to fashion an equitable remedy for Ockey that would allow him to receive a windfall at the expense of his family members.