Opinion ID: 2453802
Heading Depth: 1
Heading Rank: 4

Heading: 1998 OJH Shareholders Agreement

Text: [¶ 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.