Court Opinion

ID: 2765305
Source: CourtListenerOpinion
Date Created: 2014-12-30 16:15:53.084528+00
Date Added: 2024-06-11T11:27:23.541182
License: Public Domain

IN THE SUPREME COURT, STATE OF WYOMING

                                             2014 WY 169

                                                                 OCTOBER TERM, A.D. 2014

                                                                         December 30, 2014

FERN CLARK and TRAVIS CLARK,

Appellants
(Petitioners),

v.
                                                                        S-14-0170
THE RYAN PARK PROPERTY AND
HOMEOWNERS ASSOCIATION,

Appellee
(Respondent).

                       Appeal from the District Court of Carbon County
                          The Honorable Wade E. Waldrip, Judge

Representing Appellants:

        Holli Austin-Belaski, Corthell and King, P.C., Laramie, Wyoming.

Representing Appellee:

        Douglas W. Bailey, Bailey, Stock and Harmon, P.C., Cheyenne, Wyoming.

Before BURKE, C.J., and HILL, KITE, DAVIS, and FOX, JJ.

NOTICE: 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 that correction may be made before final publication in
the permanent volume.
BURKE, Chief Justice.

[¶1] Appellants, Fern and Travis Clark, brought an action against the Ryan Park
Property and Homeowners Association seeking an order, pursuant to the Wyoming
Nonprofit Corporation Act, requiring the Association to allow the Clarks to inspect and
copy certain corporate records. The district court entered the order, but denied the
Clarks’ request to recover costs and attorney’s fees. On appeal, the Clarks contend that
the denial of attorney’s fees and costs is contrary to the provisions of the Act. We will
affirm.

                                         ISSUE

[¶2] The Clarks present this issue, which we reword slightly for the sake of
clarification:

             Whether the district court erred by failing to adhere to the
             mandatory language of Wyo. Stat. Ann. § 17-19-1604
             (LexisNexis 2011), when it ordered the Association to allow
             the Clarks to copy and inspect documents but denied the
             Clarks’ request for attorney’s fees and costs.

                                        FACTS

[¶3] The Clarks, property owners in Ryan Park, Wyoming, and members of the
Association, commenced an action in district court claiming that the Association had
unlawfully denied their repeated requests to inspect and copy certain Association records.
The Clarks claimed that the Association was required by statute to keep and maintain
these documents, that the Clarks had a statutory right to inspect and copy them, and that
the Clarks were entitled under the statutes to recover the costs and attorney’s fees they
had incurred in bringing the action. The Clarks moved for an order allowing them to
inspect and copy the documents, and also sought an award of costs and attorney’s fees.

[¶4] At the beginning of the hearing on the Clarks’ motion, counsel for the Association
told the district court that the Association had “no problem” with the court entering an
order requiring it to produce the records because the Association had already complied
with the Clarks’ request for documents. Counsel for the Clarks indicated that the Clarks
still wanted the district court to enter the order because they asserted they had not
received all of the documents they had requested. They also maintained that they were
entitled to recover costs and attorney’s fees. The district court proceeded with the
hearing.

[¶5] Soon after the hearing, the district court entered its order granting the Clarks’
motion. The district court noted that the Association had stipulated to the entry of the

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order, and stated that the court concurred with that stipulation. Accordingly, it ordered
that, “[a]s the parties have agreed, and as has already been done, the [Association] shall
make available for copying and inspection those records requested by the Clarks that are
in existence and in its possession or in the possession of its agents and which can be
reasonably obtained.” The district court declined to order the Association to pay the
Clarks’ attorney’s fees or costs. The Clarks appealed that part of the district court’s
decision.

                               STANDARD OF REVIEW

[¶6] “Following a bench trial, we review the trial court’s findings of fact for clear error,
and its conclusions of law de novo.” Fox v. Wheeler Elec., Inc., 2007 WY 171, ¶ 9, 169
P.3d 875, 878 (Wyo. 2007) (citing Pinther v. Ditzel, 2007 WY 116, ¶ 3, 163 P.3d 816,
816 (Wyo. 2007)).

              [W]e assume that the evidence of the prevailing party below
              is true and give that party every reasonable inference that can
              fairly and reasonably be drawn from it. We do not substitute
              ourselves for the trial court as a finder of facts; instead, we
              defer to those findings unless they are unsupported by the
              record or erroneous as a matter of law.

Belden v. Thorkildsen, 2007 WY 68, ¶ 11, 156 P.3d 320, 323 (Wyo. 2007) (quoting
Harber v. Jensen, 2004 WY 104, ¶ 7, 97 P.3d 57, 60 (Wyo. 2004)). “A finding is clearly
erroneous when, although there is evidence to support it, the reviewing court on the entire
evidence is left with the definite and firm conviction that a mistake has been committed.”
Id.

                                      DISCUSSION

[¶7] Wyo. Stat. Ann. § 17-19-1601, part of the Wyoming Nonprofit Corporation Act,
requires nonprofit corporations to retain specified documents, including meeting minutes,
accounting information, and membership lists. Wyo. Stat. Ann. §§ 17-19-1602 and
-1603 provide, with certain conditions, that a member of a nonprofit corporation is
entitled to inspect and copy those records. Wyo. Stat. Ann. § 17-19-1604, the statute
directly at issue in this case, provides a judicial remedy when a nonprofit corporation
does not allow a member to inspect and copy such records:

              § 17-19-1604. Court-ordered inspection.

              (a) If a corporation does not allow a member who complies
              with W.S. 17-19-1602(a) to inspect and copy any records
              required by that subsection to be available for inspection, the

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              district court in the county where the corporations’ [sic]
              principal office, or, if none in this state, its registered office,
              is located may summarily order inspection and copying of the
              records demanded at the corporation’s expense upon
              application of the member.

              (b) If a corporation does not within a reasonable time allow a
              member to inspect and copy any other record, the member
              who complies with W.S. 17-19-1602(b) and (c) may apply to
              the district court in the county where the corporation’s
              principal office, or, if none in this state, its registered office,
              is located for an order to permit inspection and copying of the
              records demanded. The court shall dispose of an application
              under this subsection on an expedited basis.

              (c) If the court orders inspection and copying of the records
              demanded, it shall also order the corporation to pay the
              member’s costs, including reasonable counsel fees, incurred
              to obtain the order unless the corporation proves that it
              refused inspection in good faith because it had a
              reasonable basis for doubt about the right of the member
              to inspect the records demanded.

              (d) If the court orders inspection and copying of the records
              demanded, it may impose reasonable restrictions on the use or
              distribution of the records by the demanding member.

(Emphasis added.)

[¶8] In its order, the district court quoted subsection (c) of this statute, with the same
added emphasis as in the quotation above. It restated that this statute “requires the award
of costs and fees . . . unless the corporation proves that it refused inspection in good faith
because it had a reasonable basis for doubt about the right of the member to inspect the
records demanded.” It then set forth these findings and conclusions:

              7.     At the April 23, 2014 hearing on this matter, this Court
              heard evidence regarding the Clarks’ requests to obtain
              certain documents from the [Association], and the
              [Association’s] attempts to satisfy those requests. At the
              conclusion of the presentation of evidence, it was apparent to
              this Court that: (a) the [Association] has made reasonable
              efforts to meet the demands imposed upon it by the Clarks
              and (b) the [Association] had a reasonable basis for its doubt

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              of the Clark[s’] right to inspect certain documents, namely its
              concerns about the privacy interests of other individual
              members.

              8.     In this Court’s experience, the [Association] has kept
              as good a set of records as most nonprofit, volunteer
              organizations and has done its best to respond to the Clarks’
              request, considering the fact that some of those records were
              in the possession of other individuals or entities and
              considering the [Association’s] concerns about protecting its
              members[’] privacy interests. In any event, this Court cannot
              conclude that the [Association] has acted in bad faith or that
              attorney’s fees and costs are warranted.

[¶9] The Clarks first contend that the district court’s factual finding that the
Association had made reasonable efforts to satisfy their requests is clearly erroneous.
They claim that the Association “took nearly eight months to disclose, on a piecemeal
basis, only partial responses” to their requests. The evidence, they contend, shows that
they did not receive certain bank records until after the lawsuit had commenced.

[¶10] At the hearing, the president of the Association, Donald Brinkman, testified that
the Association did not have the requested bank statements, so he asked the Association’s
bank to provide copies. The statements produced by the bank did not include copies of
cancelled checks or deposit slips, which the Clarks had requested. Mr. Brinkman asked
the bank, and was told that it could provide copies of cancelled checks and deposit slips
at an additional cost. After confirming that the Clarks were willing to pay the additional
cost, he asked the bank for the documents. According to Mr. Brinkman, the bank had to
retrieve some of the cancelled checks and deposit slips from records stored in California,
and it “took a while” to get them. After the bank provided him with the documents, he
gave them to the Clarks.

[¶11] In applying our standard of review, we assume that the Association’s evidence is
true, and give the Association every reasonable inference that can reasonably be drawn
from it. Belden, ¶ 11, 156 P.3d at 323. Mr. Brinkman provided a reasonable explanation
for the delay, and his testimony supports the district court’s finding that the Association
made reasonable efforts to satisfy the Clarks’ requests. We are not convinced that a
mistake has been committed, and accordingly, we conclude that the district court’s
finding is not clearly erroneous.

[¶12] The Clarks’ second argument is that the district court applied an incorrect legal
standard with regard to the Association’s reluctance to provide the requested documents.
The district court said it could not “conclude that the [Association] has acted in bad
faith.” The Clarks assert that the statute requires “good faith,” and a lack of bad faith is

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not sufficient. They contend that the Association did not meet the “good faith” standard,
but instead refused to provide certain documents based on “an unsupported claim of
privacy concerns.”

[¶13] The documents at issue here were called “lien letters.” They were sent to
Association members requesting payment of past-due road assessment fees. At the
hearing, Mr. Brinkman was asked why the Association was “hesitant” to turn these letters
over to the Clarks. He responded:

              Everything that you read on the Privacy Act, everything I
              learned with the American Red Cross is you cannot divulge
              anything of a personal nature about anybody, that they are
              expected to have privacy on that issue, and, you know, you’re
              liable if you do that. So, in turn, it will make the board liable
              if it discloses information that is not public record.

He further testified that he believed the letters were confidential, and that he was worried
that they might be used to embarrass or harass the recipients. After the district court had
entered a stipulated protective order covering the lien letters, however, the documents
were given to the Clarks. Based on this evidence, the district court ruled that the
Association “had a reasonable basis for its doubt of the Clark[s’] right to inspect certain
documents, namely its concerns about the privacy interests of other individual members.”
It stated that it could not conclude that the Association had “acted in bad faith or that
attorney’s fees and costs are warranted.”

[¶14] The Clarks are correct that the statute requires “good faith,” while the court
concluded that the Association had not acted in “bad faith.” Strictly speaking, acting in
good faith may not be precisely the same as not acting in bad faith. However, the order
as a whole demonstrates that the district court was aware of, and applied, the correct
standard.

[¶15] In a case in which the buyers of a house alleged the sellers had committed fraud,
we noted that, in order to recover, the buyers had to prove the sellers “had to know of the
defects they failed to disclose or misrepresented.” The district court found instead that
the sellers “were aware or reasonably should have been aware” of the defects. Alexander
v. Meduna, 2002 WY 83, ¶ 34, 47 P.3d 206, 217 (Wyo. 2002). We said that,

              At first glance, the language appears to apply an incorrect
              standard. . . . In light of the record as a whole, we believe the
              language “were aware or reasonably should have been aware”
              was responsive to the sellers’ implausible explanations. We
              conclude the trial court was endeavoring in a diplomatic
              manner to address the untruthful nature of the sellers’

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              testimony. The trial court unquestionably determined there
              was clear and convincing evidence of fraud because the
              sellers knew of the defects and purposely made
              misrepresentations regarding the property condition to induce
              the buyers, to their significant detriment, to make a purchase
              offer and enter into a purchase contract.

Id.

[¶16] Similarly, in the case before us now, the district court’s order as a whole
demonstrates that it applied the correct standard. The order quoted Wyo. Stat. Ann. § 17-
19-1604(c), with emphasis on the language concerning good faith. It then restated the
substance of the statute, again indicating that it required the award of attorney’s fees and
costs unless the Association proved it acted in good faith. Using language taken directly
from the statutory standard, the court found that the Association “had a reasonable basis
for its doubt of the Clark[s’] right to inspect certain documents, namely its concerns
about the privacy interests of other individual members.” Clearly, the district court was
aware of the correct legal standard.

[¶17] It may have been more precise for the court to echo the statutory language. In
context, however, its determination that the Association had not acted in bad faith is
equivalent to a conclusion that the Association had acted in good faith. Reading the order
as a whole leaves no doubt that the district court applied the correct legal standard.

[¶18] The district court’s decision is affirmed.

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