Opinion ID: 2631321
Heading Depth: 1
Heading Rank: 2

Heading: facts

Text: [¶ 3] Before their divorce in 2004, Mr. Wunsch and Ms. Pickering owned and operated a financial services business, helping to invest their clients' funds in a wide variety of financial products, including mutual funds, stocks, bonds, annuities, and life insurance. The two were affiliated with LPL Financial Corporation, a financial investment company. During the divorce, the couple entered into a property settlement agreement that was later approved by the district court and incorporated into the divorce decree. The agreement provided generally that Mr. Wunsch would continue operating most of the financial services, while Ms. Pickering would receive payments to compensate for her share of the former business. The agreement, referring to Mr. Wunsch as JIM and to Ms. Pickering as KELLY, included this fee-splitting provision: The parties will share equally any fees earned on joint client accounts.... If JIM replaces any of the above joint client accounts, JIM and KELLY will share equally the fees on the replaced account ... until such time as KELLY has received in fees an amount equal to two times the annual earnings on the amount replaced, based on the fee charged before the replacement. At such time, KELLY shall no longer receive any fees on the replaced account. [¶ 4] Not long after the divorce, disputes developed between the parties about the interpretation and administration of this agreement. The disputes were mediated, and many of them settled. In this mediation, the parties agreed to appoint an accountant as Administrator to perform the accounting required under the settlement agreement. The mediation did not resolve the parties' disagreement about the meaning of the phrase two times the annual earnings on the amount replaced. That dispute was ultimately resolved in Wunsch v. Pickering, 2008 WY 131, 195 P.3d 1032 (Wyo.2008). [¶ 5] The Administrator developed a list of approximately 165 joint accounts held by the parties as of the date of divorce. As long as clients' funds remained in the parties' joint account, the accounting was relatively simple. The financial services company could split the fees, and send one half directly to Mr. Wunsch and one half directly to Ms. Pickering. Both parties had access to information about the accounts and the fees received. The Administrator could use this information to reconcile the accounts and, when some adjustment was necessary because of medical expenses for the children, for example, the Administrator would facilitate payments from one party to the other to balance the accounts. [¶ 6] The accounting was more difficult when clients removed their funds from the parties' joint accounts. A client might take the funds and reinvest in another financial product offered by Mr. Wunsch, such as insurance or annuities. In their settlement agreement, the parties referred to this as a replaced account. For a replaced account, Mr. Wunsch would continue to receive fees, and under the agreement, Ms. Pickering remained entitled to half of those fees. Because a replaced account was held by Mr. Wunsch individually, however, Ms. Pickering did not have the same access to information about it, and the fees would not be paid directly to her. She and the Administrator had to rely on information provided by Mr. Wunsch to determine what amount Ms. Pickering should receive pursuant to the settlement agreement. [¶ 7] However, a client might instead remove funds from the parties' joint account and, for example, keep the cash or reinvest through a different financial services company unrelated to Mr. Wunsch. For a non-replaced or closed account such as this, Mr. Wunsch would no longer earn any fees. According to Mr. Wunsch, he would, in turn, not owe Ms. Pickering any fee split under the terms of the settlement agreement. [¶ 8] As noted above, the Administrator originally listed approximately 165 joint accounts held by the parties. By the time the current dispute arose, the Administrator had listed approximately 50 of those as inactive accounts that were no longer held in the parties' joint accounts. A dispute developed concerning these inactive accounts. Ms. Pickering pointed out that, if the accounts had been replaced and Mr. Wunsch was still earning fees on them, then she was still owed half of those fees. Mr. Wunsch claimed, to the contrary, that these accounts had not been replaced and he owed Ms. Pickering no fees relating to these accounts. The Administrator could tell that the clients' funds had been removed from the parties' joint accounts, but did not have adequate information to tell if the accounts had been replaced. He continued to calculate the projected amount Ms. Pickering would be owed if these accounts had been replaced, but he could not determine whether Ms. Pickering was actually owed these amounts. [¶ 9] In 2009, Mr. Wunsch filed a motion asking the district court to clarify what, if anything, he owed Ms. Pickering on certain accounts. Ms. Pickering filed a response asserting that Mr. Wunsch had replaced these accounts, but had breached the settlement agreement by failing to disclose sufficient information to [allow her or the Administrator] to follow the replaced accounts. Based on this alleged breach, she asked the district court to order Mr. Wunsch to pay the entire projected amount. The district court set a hearing on these issues for May 8, 2009. [¶ 10] On March 24, 2009, Ms. Pickering served discovery requests on Mr. Wunsch. These included requests for admissions, interrogatories, and requests for production of documents. Among the documents requested were those referring to or relating to the inactive accounts, the tax returns and forms for Mr. Wunsch individually and for Wunsch Financial Services, Inc., and the commission statements Mr. Wunsch had received since August of 2005. Mr. Wunsch's response, delivered on April 28, 2009, was generally to object to the production of these documents, stating that the requests were irrelevant and not calculated to lead to the discovery of admissible evidence and ... propounded only to harass and intimidate. Ms. Pickering filed an Expedited Motion to Compel on April 29, 2009, arguing that the objections were both untimely and without merit. Responding to the motion to compel, Mr. Wunsch defended his objections, but further explained that he had requested information about the 50 inactive accounts from LPL. LPL did not respond until April 28, 2009, when it informed Mr. Wunsch that it could not provide the requested information without a court order. Mr. Wunsch had obtained the court order and sent it to LPL, but had not yet received the documents. [¶ 11] The district court held a brief hearing on the motion to compel on May 4, 2009. Both sides presented argument, with Ms. Pickering contending that she needed the requested documents in order to present her case at the May 8 hearing, and Mr. Wunsch contending that the documents were irrelevant, unnecessary, and unavailable. Mr. Wunsch also indicated that the documents requested from LPL should be delivered soon, and near the end of this hearing, the parties suggested that they could meet on the evening of May 7, just prior to the hearing, and attempt to work out their differences. Encouraging the parties to meet as scheduled, the district court took the motion to compel under advisement. [¶ 12] The record does not explicitly reflect the parties' meeting on May 7, but their comments at the May 8 hearing suggest that they had met. They indicated that some documents had been received from LPL and delivered to Ms. Pickering. Based on information from the LPL documents, Mr. Wunsch had prepared a summary of the 50 inactive accounts, indicating the date the funds had been transferred from the joint account, the amount transferred, and to whom the funds were paid. When Mr. Wunsch attempted to introduce this summary as a hearing exhibit, Ms. Pickering objected to the lack of foundation, stating that this is exactly the type of material which we were not allowed discovery on. She argued that the underlying information had been compiled by an LPL employee who was not present to testify or be cross-examined, using documents that were not identified or produced. She objected that the exhibit was only a summary, and because it lacked any foundation or backup material to support it, it was inadmissible. Emphasizing that the backup materials were the same documents Mr. Wunsch had failed to produce in response to her discovery requests, Ms. Pickering offered a continuing objection to the summary document. [¶ 13] Although the district court neither admitted nor excluded the disputed document, the hearing continued, with both parties questioning the Administrator. The district court then announced a short recess. Following the recess, the parties informed the court that they had reached some agreements about certain interim payments Mr. Wunsch would make to Ms. Pickering. They also informed the court that the parties may still have discovery problems, but could perhaps resolve them ... in time for another hearing. The district court agreed to continue the hearing, and scheduled the next round for September 30, 2009. [¶ 14] Efforts to resolve the discovery dispute were apparently fruitless, as the next document in the record is Ms. Pickering's Renewed Expedited Motion to Compel, filed September 2, 2009. This motion stated that Ms. Pickering had served additional discovery requests on July 29, 2009, and that Mr. Wunsch had responded on August 25, 2009. He objected to nearly every request as overbroad, unduly burdensome and time consuming, irrelevant, not calculated to lead to the discovery of admissible evidence, [and] propounded only to harass and intimidate [Mr. Wunsch]. To the request for his commission statements, Mr. Wunsch also objected that the request sought confidential, proprietary and privileged information, and claimed that he did not have any of this information, he is not required to maintain this information and he no longer has access to the LPL system to obtain the information. In her renewed motion to compel, Ms. Pickering presented arguments similar to those made regarding the previous motion to compel. Mr. Wunsch's response likewise presented arguments similar to those previously employed. [¶ 15] On September 17, 2009, the district court issued an order granting Ms. Pickering's renewed expedited motion to compel. Without further explanation, the district court concluded that Ms. Pickering's discovery requests were proper and necessary. It ordered Mr. Wunsch to make full and complete responses to the discovery served on him on July 29, 2009, and to serve the responses no later than September 25, 2009. [¶ 16] Mr. Wunsch provided a response by the court's deadline, but Ms. Pickering remained unsatisfied with the production. On September 28, 2009, she filed an Expedited Motion for Sanctions; Motion for Entry of Default Judgment, Attorney's Fees and Costs, asserting that Mr. Wunsch's responses to her discovery request and the court's order remained deficient. She asserted that sanctions were appropriate, and suggested that default should be entered against Mr. Wunsch. [¶ 17] The district court convened the hearing as scheduled on September 30, 2009, and proceeded to consider Ms. Pickering's motion for sanctions. Ms. Pickering reasserted that Mr. Wunsch's failure to provide the requested documents left her unable to make her case that the 50 inactive accounts had been replaced. Mr. Wunsch asserted that he had provided adequate responses to the discovery requests, in compliance with both the Wyoming Rules of Civil Procedure and the district court's order to compel. After taking a brief recess, the district court granted Ms. Pickering's motion for sanctionsI feel I have no other choiceand stated that a default would be entered against Mr. Wunsch. The district court then heard the parties' evidence and arguments concerning the amount of damages that should be awarded. Ms. Pickering asserted that she should receive over $195,000, which included the amount calculated by the Administrator as the projected amount she was entitled to if all of the 50 inactive accounts had been replaced by Mr. Wunsch. After considering the parties' positions, the district court awarded damages in the amount requested by Ms. Pickering. [¶ 18] Mr. Wunsch appealed from two of the district court's rulings in this matter. He challenges the grant of Ms. Pickering's motion to compel discovery, and he appeals the district court's award of damages on the bases that he was not allowed to participate fully in the damages hearing, and that there was insufficient evidence to support the district court's award. He has not appealed the entry of default.