Philippe Lajaunie, individually and derivatively as a member of Beartooth Mountain Springs, LLC and American Summits, LLC , 339 P.3d 277 ( 2014 )

IN THE SUPREME COURT, STATE OF WYOMING
2014 WY 159OCTOBER TERM, A.D. 2014
December 10, 2014
DAREN SINGER, individually and in his capacity as
a manager of Beartooth Mountain Springs, LLC;
CLARK’S FORK CANYON SPRINGS, LLC; and
SUNLIGHT SPRINGS DISTRIBUTION, LLC,
Appellants
(Defendants),
S-14-0004
v.
PHILIPPE LAJAUNIE, individually and derivatively
as a member of Beartooth Mountain Springs, LLC
and AMERICAN SUMMITS, LLC,
Appellees
(Plaintiffs).
PHILIPPE LAJAUNIE, individually and derivatively
as a member of Beartooth Mountain Springs, LLC
and AMERICAN SUMMITS, LLC,
Appellants
(Plaintiffs),
v.
S-14-0005
DAREN SINGER, individually and in his capacity as
a manager of Beartooth Mountain Springs, LLC;
CLARK’S FORK CANYON SPRINGS, LLC; and
SUNLIGHT SPRINGS DISTRIBUTION, LLC,
Appellees
(Defendants).
Appeal from the District Court of Park County
The Honorable Steven R. Cranfill, Judge
Representing Daren Singer, Clark’s Fork Canyon Springs, LLC, and Sunlight Springs
Distribution, LLC:
Weston W. Reeves and Anna M. Reeves Olson, Park Street Law Offices, Casper,
Wyoming. Argument by Ms. Reeves Olson.
Representing Philippe Lajaunie and American Summits, LLC:
Larry B. Jones and Colin M. Simpson, Burg, Simpson, Eldredge, Hersh & Jardine,
PC, Cody, Wyoming; Brian K. Matise, Burg, Simpson, Eldredge, Hersh &
Jardine, PC, Englewood, Colorado. Argument by Mr. Matise.
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] This dispute arose from an unsuccessful business venture involving the bottling
and sale of “premium bottled mineral water” by Beartooth Mountain Springs, LLC.
Philippe Lajaunie and Daren Singer were owners and co-managers of Beartooth.
Mr. Singer ran the day to day aspects of the business. In 2011, Mr. Lajaunie1 filed suit
against Mr. Singer 2 claiming that Mr. Singer had breached his fiduciary duties as a
manager and member of Beartooth. Mr. Singer responded with a counterclaim based on
a theory of promissory estoppel. He subsequently sought to amend the counterclaim to
allege a cause of action based on fraud.
[¶2] The district court granted summary judgment in favor of Mr. Lajaunie on
Mr. Singer’s counterclaim, and denied Mr. Singer’s motion to amend his counterclaim to
add a claim of fraud. In Docket No. S-14-0004, Mr. Singer challenges the district court’s
decisions on these motions. In the trial on Mr. Lajaunie’s claims, the jury awarded
$14,604.63 in damages. In Docket No. S-14-0005, Mr. Lajaunie seeks a new trial
contending that the district court admitted irrelevant evidence which improperly
influenced the jury and negatively impacted the jury verdict. We reverse and remand for
further proceedings in both dockets.
ISSUES
[¶3] In Docket No. S-14-0004, Mr. Singer presents these issues:
1. Did the district court err by granting summary
judgment to Mr. Lajaunie on Mr. Singer’s promissory
estoppel counterclaim?
2. Did the district court err in finding that Mr. Singer’s
proposed amended counterclaim would not withstand a
motion to dismiss?
3. Did the district court abuse its discretion when it
denied Mr. Singer’s request to delay consideration of
1
Mr. Lajaunie sued both in his personal capacity and in his capacity as a member of Beartooth. Our
references to Mr. Lajaunie in this opinion include both capacities unless otherwise noted. The other
plaintiff, American Summits, LLC, is a limited liability company. Mr. Lajaunie is a member and chief
executive officer of American Summits.
2
Also sued as defendants were Clark’s Fork Canyon Springs, LLC, and Sunlight Springs Distribution,
LLC. Mr. Singer is a member and the manager of both companies.
1
Mr. Lajaunie’s motion for summary judgment until after
discovery was completed?
[¶4] In Docket No. S-14-0005, Mr. Lajaunie presents issues that we summarize as
follows:
1. Did the district court abuse its discretion by admitting
irrelevant evidence that prejudiced Mr. Lajaunie?
FACTS
[¶5] In the 1980s and 1990s, Mr. Singer spent considerable time and effort analyzing
the water from springs located on his family’s ranch near Clark, Wyoming, and learning
how to operate a premium bottled water business. In 2005, he and his brother, Steve
Singer, acquired ownership of the ranch and placed it in a limited liability company,
Clark’s Fork Canyon Springs, LLC. They also formed Yellowstone Headwaters, LLC, a
company that hand-bottled spring water for sale.
[¶6] In 2006, Mr. Lajaunie, a restaurateur from New York, ordered some Yellowstone
Headwaters spring water. He had been interested for some time in establishing his own
brand of premium-quality bottled spring water, and found the Yellowstone Headwaters
product promising. He contacted Mr. Singer, and the two agreed to form a new business
venture. The parties formed Beartooth Mountain Springs, LLC, in 2007. Mr. Lajaunie
owned 40% of the company, Mr. Singer 30%, Yellowstone Headwaters 20%, and
Mr. Singer’s brother 10%. In exchange for their ownership interests, Mr. Lajaunie
contributed $300,000, and Mr. Singer and his brother contributed “knowledge, know
how, contacts, relationships and business acumen.” Yellowstone Headwaters contributed
access to the spring water.
[¶7] Mr. Lajaunie and Mr. Singer served as co-managers for Beartooth, but Mr. Singer
was responsible for running its day-to-day operations, and had control of Beartooth’s
bank accounts and financial records. The Beartooth office was located in Mr. Singer’s
home, and Mr. Singer used some of his personal vehicles when conducting Beartooth
business. Mr. Lajaunie took a more passive role. Shortly after Beartooth was formed, it
entered into a distribution agreement with American Summits, LLC. American was to
purchase bottled water from Beartooth for retail distribution.
[¶8] In 2008, Beartooth purchased Edelweiss, Inc., a company that owned and operated
a bar, convenience store, and gas station located near the Beartooth bottling plant in
Clark, Wyoming. Beartooth purchased Edelweiss to promote the spring water and as a
staging area for future shipments by truck. There was a lease agreement between
Beartooth and Edelweiss, but according to Mr. Singer, Edelweiss could never afford to
pay Beartooth because it never made a profit.
2
[¶9] In May of 2009, Beartooth was in need of additional funds, and its members
agreed to contribute more capital. Mr. Lajaunie agreed to contribute $74,376, but when it
came time to make the payment, Mr. Lajaunie gave himself credit for a $54,768 loan he
had previously made to Beartooth. As a result, his cash contribution was in the amount
of $19, 608.
[¶10] Also in 2009, Beartooth applied for a bank loan to allow it to expand its
operations. The bank, in reviewing the loan, sought information on potential markets and
sales. Mr. Lajaunie sent an email message stating, “in terms of volume, I guarantee one
truck a day (14,400 bottles), 5 days a week. . . . I can sign a yearlong recurrent Purchase
Order with no problem.” The loan of $875,000 was finalized in August of 2009. The
bank required Mr. Lajaunie to execute an unlimited personal guarantee of the loan, and
his company, American Summits, placed a $46,000 certificate of deposit as collateral for
the loan. In addition, Mr. Singer and his brother agreed to pledge the Singer Ranch as
collateral.
[¶11] Although Mr. Singer had anticipated that Mr. Lajaunie, through American
Summits, would begin purchasing Beartooth water soon after the distribution agreement
was finalized in 2007, the first order was not made until January of 2010. When the
water was delivered to New York, however, several bottles were frozen, and American
Summits refused to pay for the shipment. In September of 2010, American Summits
ordered another truckload of Beartooth water. When it arrived, American Summits again
refused to pay for the shipment. Mr. Lajaunie complained that the water had a musty
smell, labels were off, water levels were inconsistent, and the carbonation was irregular.
[¶12] At some point, because Beartooth was not doing well financially, Mr. Singer
formed Sunlight Springs Distribution, LLC, and planned to sell Beartooth water through
that company. Mr. Singer also planned for Sunlight Springs to loan Beartooth money to
allow Beartooth to make loan payments to the bank. Mr. Singer did not inform
Mr. Lajaunie about the creation of Sunlight Springs until several months after it went into
business.
[¶13] As mentioned above, Mr. Singer ran Beartooth’s day-to-day operations, and he
had control of Beartooth’s bank accounts and financial records. In June of 2010,
Mr. Lajaunie came to Wyoming to review Beartooth’s financial documents.
Mr. Lajaunie became concerned that Mr. Singer had been using Beartooth funds to pay
personal expenses. After discussing these concerns with Mr. Singer, Mr. Lajaunie claims
that Mr. Singer cut off his access to Beartooth’s financial records. Mr. Singer’s version is
that he took that step because Mr. Lajaunie had unilaterally charged Beartooth $4,500
“for his unwanted ‘bookkeeping services.’”
[¶14] The bank eventually foreclosed on Beartooth’s assets and collateral. Mr. Lajaunie
3
purchased the Beartooth assets from the bank, along with the Singer Ranch. As of the
date of trial, he was the owner of both.
[¶15] In his complaint, filed in March of 2011, Mr. Lajaunie claimed that Mr. Singer
breached his fiduciary duties by using Beartooth company funds to pay for insurance on
his personal vehicles, insurance and utilities for his home, and accounting services for
Clark’s Fork Canyon Springs. Mr. Lajaunie further contended that Mr. Singer had failed
to collect rent from Edelweiss, and that his creation of Sunlight Springs led to lost income
and business opportunities for Beartooth.
[¶16] As part of his counterclaim, Mr. Singer contended that Mr. Lajaunie’s statement,
“I guarantee one truck a day,” was a promise that induced Mr. Singer to take out the bank
loan and pledge the ranch as collateral. Mr. Singer asserted that Mr. Lajaunie had
breached the promise by failing to buy the water, ultimately causing Beartooth to default
on the bank loan and fail as a business. In September of 2012, Mr. Lajaunie moved for
summary judgment on Mr. Singer’s counterclaim, arguing that his “guarantee” was not a
promise, but only his prediction of the potential market for Beartooth water. He also
asserted that Mr. Singer could not have relied on his statement because it was made after
the loan application had been submitted. Mr. Singer opposed summary judgment on his
promissory estoppel claim, and also moved to amend his counterclaim to add a claim of
fraud and to include his brother as a counterclaimant.
[¶17] The district court held a hearing on the motions in January of 2013. Less than a
month later, Mr. Singer supplemented his opposition to summary judgment and motion to
amend the counterclaim with evidence purporting to show that although Mr. Lajaunie had
refused to pay for the two shipments of Beartooth water, he had actually sold that water
in his restaurants. Mr. Singer asserted that this provided further support for his
promissory estoppel and fraud counterclaims. In February of 2013, the district court
issued a ruling granting summary judgment in favor of Mr. Lajaunie on Mr. Singer’s
promissory estoppel counterclaim, and denying Mr. Singer’s motion to amend the
counterclaim.
[¶18] A three-day jury trial was held in May of 2013 on Mr. Lajaunie’s claims against
Mr. Singer. The district court had previously ruled on summary judgment that
Mr. Singer had breached his fiduciary duties by using Beartooth funds to pay for
accounting services for Clark’s Fork Canyon Springs, LLC. On this claim, the jury
awarded damages of $1,604.63 to Beartooth, but no damages to Mr. Lajaunie personally.
The district court had also ruled that Mr. Singer had breached his fiduciary duties by
interfering with Beartooth’s business opportunities when he formed Sunlight Springs
Distribution, LLC. On this claim, the jury awarded no damages. The jury found that
Mr. Singer had breached his fiduciary duties by using Beartooth assets to benefit
Edelweiss, Inc. It awarded $13,000 in damages to Beartooth, but no damages to
Mr. Lajaunie. The jury found that Mr. Singer had not breached his fiduciary duties by
4
using Beartooth assets to pay for home utility expenses or personal automobile expenses,
and it found that Clark’s Fork Canyon Springs and Sunlight Springs Distribution had not
been unjustly enriched by Mr. Singer’s conduct. The district court entered judgment in
accordance with the jury’s verdict. Both parties filed timely appeals.
DISCUSSION
A. Docket No. S-14-0004
1. Promissory Estoppel
[¶19] In his first issue, Mr. Singer challenges the district court’s grant of summary
judgment against him on his promissory estoppel claim. We review a district court’s
summary judgment decision using the following standard of review:
Summary judgment is appropriate when there are no
genuine issues of material fact and the moving party is
entitled to judgment as a matter of law. W.R.C.P. 56(c); Metz
Beverage Co. v. Wyoming Beverages, Inc., 2002 WY 21, ¶ 9,
39 P.3d 1051, 1055 (Wyo. 2002). “A genuine issue of
material fact exists when a disputed fact, if it were proven,
would establish or refute an essential element of a cause of
action or a defense that the parties have asserted.” Id.Because summary judgment involves a purely legal
determination, we undertake de novo review of a trial court’s
summary judgment decision. Glenn v. Union Pacific R.R.
Co., 2008 WY 16, ¶ 6, 176 P.3d 640, 642 (Wyo. 2008).
Jacobs Ranch Coal Co. v. Thunder Basin Coal Co., LLC, 2008 WY 101, ¶ 8, 191 P.3d
125, 128-129 (Wyo. 2008). We consider the record from a viewpoint most favorable to
the party opposing summary judgment, giving to him all favorable inferences that can be
drawn reasonably from the facts set forth in the affidavits, depositions, and other material
properly appearing in the record. Lever v. Community First Bancshares, Inc., 989 P.2d
634, 637 (Wyo. 1999).
[¶20] Promissory estoppel is an equitable remedy for detrimental reliance upon a
promise that does not rise to the level of a formal contract. Michie v. Board of Trustees
of Carbon County School Dist. No. 1, 847 P.2d 1006, 1009 (Wyo. 1993).
“Promissory estoppel is a doctrine incorporated in the law of
contracts.” B & W Glass, Inc. v. Weather Shield Mfg., Inc.,
829 P.2d 809, 813 (Wyo. 1992). Its general theory is that,
“‘[i]f an unambiguous promise is made in circumstances
5
calculated to induce reliance, and it does so, the promisee if
hurt as a result can recover damages.’” Id. (quoting Goldstick
v. ICM Realty, 788 F.2d 456, 462 (7th Cir. 1986)). . . . The
elements of promissory estoppel are:
“(1) the existence of a clear and definite promise
which the promisor should reasonably expect to induce
action by the promisee; (2) proof that the promisee
acted to its detriment in reasonable reliance on the
promise; and (3) a finding that injustice can be avoided
only if the court enforces the promise.”
City of Powell v. Busboom, 2002 WY 58, ¶ 8, 44 P.3d 63, 66
(Wyo. 2002) (quoting Roussalis[ v. Wyoming Med. Ctr., Inc.],
4 P.3d [209,] 253 [(Wyo. 2000)]). The party asserting
promissory estoppel has the burden of establishing each
element under a burden of strict proof. Busboom, 2002 WY
58, ¶ 8, 44 P.3d at 66. The first two elements are questions of
fact for the fact-finder; the third element is a question of law
for the court. Id.; Loya v. Wyoming Partners of Jackson
Hole, Inc., 2001 WY 124, ¶ 22, 35 P.3d 1246, 1254 (Wyo.
2001).
Birt v. Wells Fargo Home Mortg., Inc., 2003 WY 102, ¶ 26, 75 P.3d 640, 651 (Wyo.
2003).
[¶21] Mr. Singer contends that Mr. Lajaunie made a clear and definite promise when he
informed the bank, in connection with the loan, that “in terms of volume, I guarantee one
truck a day (14,400 bottles), 5 days a week. . . . I can sign a yearlong recurrent Purchase
Order with no problem.” Mr. Lajaunie insists that the statement was not a promise, but
“only a prediction of what the market fortunes might bring when the facility was
operating and able to sell product to the nationwide market.”
[¶22] The district court ruled that, whether or not this statement and others constituted
clear and definite promises, Mr. Singer could not have relied upon them:
The evidence on this issue is scarce. An email from
Mr. Lajaunie to Mr. Singer . . . dated January 8, 2009 states,
“I guarantee one truck a day (14,400 bottles), 5 days a week,
with no distributor involved.” However, an email dated
February 24, 2009 from Mr. Lajaunie to Mr. Singer and [the
bank] states[,] “it is immensely helpful to know that the loan
6
was approved in principle, with an amount ($850K) that will
enable us to produce and ship a profitable flow of water.” . . .
From the dates of these emails, the Court will have to
agree with [Mr. Lajaunie] that the guarantee of one truckload
of water per day was made while the application for the loan
was already pending. [Mr. Singer] does not refute or clarify
timing in his brief, and consequently has not met his burden
of proof. Mr. Singer cannot claim he relied on this guarantee
after he already agreed to the [bank] loan.
We would agree with the district court that the evidence on this issue is “scarce.” There
is no question that a loan application was submitted by Beartooth, but the specific date of
that application has not been identified by the parties. Our review of the record has failed
to disclose the date of the application. While it appears that the email messages were sent
after the loan application process had begun, we are unable to ascertain the status of the
loan at the time the email messages were sent. It is undisputed that Mr. Singer agreed to
pledge the ranch as collateral, but from this record, we are unable to determine when that
decision was made.
[¶23] Mr. Singer ultimately must prove reliance if he is to succeed in his promissory
estoppel claim. However, it was Mr. Lajaunie who moved for summary judgment, and at
that point, he had the burden to prove that there were no genuine issues of material fact
regarding Mr. Singer’s reliance. Verschoor v. Mountain West Farm Bureau Mut. Ins.
Co., 907 P.2d 1293, 1297 (Wyo. 1995). As we have explained before, on a summary
judgment motion, the movant has the burden of establishing his prima facie case. Only
then does the burden shift to the opposing party to establish through “specific facts” that
a material question of fact remains. Sierra Club v. Wyo. Dep’t of Environmental Quality,
2011 WY 42, ¶ 25, 251 P.3d 310, 317 (Wyo. 2011).
[¶24] Mr. Lajaunie did not carry that burden. Mr. Singer contended that he relied on
Mr. Lajaunie’s January 8, 2009 email message when he agreed to pledge the Singer
Ranch as collateral for the Beartooth loan. In order to establish that there was no genuine
issue regarding detrimental reliance, it was incumbent upon Mr. Lajaunie to establish the
date of the loan application, and when Mr. Singer agreed to pledge his ranch as collateral.
The email messages relied upon by the district court are conclusive only if the terms of
the loan had been agreed to prior to the emails. Mr. Lajaunie did not produce any
evidence establishing the date of the loan application, whether any loan agreement had
been reached at the time of the emails, or when Mr. Singer made the decision to pledge
the ranch as collateral. It may be that Mr. Lajaunie can supply the missing dates and
establish that he is entitled to summary judgment in this case. On the record before us
now, however, we must conclude that the district court erred in granting summary
judgment on the promissory estoppel claim.
7
2. Motion to Amend Counterclaim
[¶25] As his second issue, Mr. Singer contends that the district court erred when it
denied his motion to amend the counterclaim to add a claim of fraud and to add
Mr. Singer’s brother as a counterclaimant.
The law in Wyoming is well settled that the decision to
allow amendment to pleadings is vested within the
sound discretion of the district court. That decision
will be reversed only for an abuse of discretion shown
by clear evidence.
Ekberg v. Sharp, 2003 WY 123, ¶ 9, 76 P.3d 1250, 1253
(Wyo. 2003). Leave to amend pleadings “shall be freely
given when justice so requires.” W.R.C.P. 15(a). We have
identified the “proper test as to what the trial court should
consider when an amendment is proffered” to be the
following:
“*** If the underlying facts or circumstances relied
upon by a plaintiff may be a proper subject of relief, he
ought to be afforded an opportunity to test his claim on
the merits. In the absence of any apparent or declared
reason – such as undue delay, bad faith or dilatory
motive on the part of the movant, repeated failure to
cure deficiencies by amendments previously allowed,
undue prejudice to the opposing party by virtue of
allowance of the amendment, futility of amendment,
etc. – the leave sought should, as the rules require, be
‘freely given.’ ***”
Beaudoin v. Taylor, 492 P.2d 966, 970 (Wyo. 1972) (quoting
Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9
L.Ed.2d 222 (1962)).
Armstrong v. Hrabal, 2004 WY 39, ¶ 11, 87 P.3d 1226, 1230-1231 (Wyo. 2004). The
same standard applies when a counterclaimant seeks to amend a counterclaim. See
Hawkeye-Security Ins. Co. v. Apodaca, 524 P.2d 874, 879 (Wyo. 1974) (A counterclaim,
“because it asks for affirmative relief, casts plaintiff-type burdens upon the
counterclaimant.”).
[¶26] The elements of fraud are:
8
(1) the defendant made a false representation intended
to induce action by the plaintiff; (2) the plaintiff
reasonably believed the representation to be true; and
(3) the plaintiff relied on the false representation and
suffered damages.
Birt, ¶ 42, 75 P.3d at 656. In order to prove intentional
misrepresentation, the plaintiff must show that the
misrepresentation was made intentionally, with knowledge of
its falsity, or that the maker of the misrepresentation was at
least aware that he did not have a basis for making the
statement. Id.; Restatement (Second) of Torts § 526 (1977).
Fraud must be proven by clear and convincing evidence, as
opposed to by a preponderance of the evidence for negligent
misrepresentation claims. Birt, ¶ 42, 75 P.3d at 656. Fraud
must be pled with particularity. W.R.C.P. 9(b).
Excel Construction, Inc. v. HKM Engineering, Inc., 2010 WY 34, ¶ 33, 228 P.3d 40, 48-
49 (Wyo. 2010).
[¶27] The proposed fraud counterclaim rested on essentially the same statements that
were at issue in the promissory estoppel counterclaim, including Mr. Lajaunie’s
“guarantee” of purchasing a truckload of water per day. Mr. Singer also alleged that
Mr. Lajaunie planned to take over Beartooth from the very beginning of their
relationship, and took actions intended to force Beartooth to default on its bank loan,
ultimately leading to Mr. Lajaunie’s purchase of the Beartooth assets and the Singer
Ranch.
[¶28] The district court’s decision to deny the motion to amend the counterclaim was, in
large measure, tied to its grant of summary judgment on the promissory estoppel claim.
That decision was based on the district court’s conclusion that Mr. Singer could not
establish detrimental reliance on Mr. Lajaunie’s statements. The district court concluded
that the fraud claim would fail for the same reason, and, in part, denied the motion to
amend on the basis of futility. As previously discussed, however, the district court erred
in concluding that there was no genuine issue of material fact with regard to Mr. Singer’s
reliance on the statements. Accordingly, the district court’s decision denying the motion
to amend the counterclaim must also be reversed.
[¶29] We also note that Mr. Singer sought to add his brother as a counterclaimant
because, like Mr. Singer, the brother held a 50% ownership interest in the Singer Ranch
and allegedly agreed to pledge his 50% interest as collateral for Beartooth’s bank loan in
reliance upon the statements by Mr. Lajaunie. This issue became moot when the district
9
court granted summary judgment on the promissory estoppel claim and denied the motion
to amend the complaint. In light of our decision, this issue is no longer moot and must be
addressed by the district court on remand.
3. Premature Summary Judgment
[¶30] Mr. Singer’s final claim is that the district court erred by granting summary
judgment before the completion of discovery. Because we have determined that the
summary judgment order must be reversed on other grounds, we do not consider this
third issue. We assume that on remand the district court will permit such discovery as is
reasonably necessary to address the fraud and promissory estoppel claims.
B. Docket No. S-14-0005
1. Inadmissible Evidence
[¶31] Mr. Lajaunie contends that the district court allowed Mr. Singer to introduce
irrelevant and prejudicial evidence at trial.
Generally, decisions regarding the admissibility of
evidence are entrusted to the sound discretion of the
district court. We afford considerable deference to the
district court’s decision and, as long as a legitimate
basis exists for the district court’s ruling, it will not be
reversed on appeal. Under the abuse of discretion
standard, our primary consideration is the
reasonableness of the district court’s decision. The
burden of establishing an abuse of discretion rests with
the appellant.
If we find that the district court erred in
admitting the evidence, we must then determine
whether or not the error affected [the appellant’s]
substantial rights, providing grounds for reversal, or
whether the error was harmless. The error is harmful
if there is a reasonable possibility that the verdict
might have been more favorable to [the appellant] if
the error had never occurred. To demonstrate harmful
error, [the appellant] must prove prejudice under
circumstances which manifest inherent unfairness and
injustice, or conduct which offends the public sense of
fair play.
10
Proffit v. State, 2008 WY 103, ¶ 12, 191 P.3d 974, 977-978 (Wyo. 2008) (internal
citations and quotation marks omitted).
[¶32] Before trial, the district court granted summary judgment in favor of Mr. Lajaunie
on his claims that Mr. Singer had breached his fiduciary duties by his use of Beartooth
funds to pay accounting expenses for Clark’s Fork Canyon Springs, LLC, and by creating
Sunlight Springs Distribution, LLC, without notice to Mr. Lajaunie. The district court
did not decide damages for these breaches, and did not decide whether Mr. Singer had
breached fiduciary duties by other actions. Consequently, as Mr. Lajaunie explains in his
brief, the issues remaining at trial were these:
1. [T]he amount of damages, if any, resulting from
[Mr.] Singer’s breach of his fiduciary duty by using
[Beartooth] funds to pay accounting expenses of his business,
[Clark’s Fork Canyon Springs, LLC];
2. [T]he amount of damages, if any, resulting from
[Mr.] Singer’s breach of his fiduciary duties by taking
advantage of business opportunities by creating [Sunlight
Springs Distribution, LLC,] without disclosure to [Mr.]
Lajaunie, and using the [Beartooth] trademark, “Sunlight
Springs,” for his new business;
3. Whether [Mr.] Singer breached his fiduciary duties by
using [Beartooth] funds to pay for his utilities, auto expenses,
insurance expenses, and similar personal expenses and if so,
the amount of damages;
4. Whether [Mr.] Singer breached his fiduciary duty by using
[Beartooth] property rent-free to operate a gas station, bar,
and convenience store that he owned know[n] as “Edelweiss,”
and if so, the amount of damages;
5. Whether [Mr.] Singer breached his fiduciary duty by using
[Beartooth] funds to pay for a trip to Mexico over
Thanksgiving, 2009, and if so, the amount of damages; and
6. Whether [Clark’s Fork Canyon Springs, LLC] or [Sunlight
Springs Distribution, LLC], or both, were unjustly enriched as
a result of Mr. Singer’s breach of fiduciary duty, and if so, the
amount of restitution that each should pay to [Beartooth].
Notably, at trial, Mr. Lajaunie expressly disclaimed any attempt to prove that Beartooth
11
had failed as a result of Mr. Singer’s breaches of fiduciary duty, and did not seek
damages for the value of Mr. Lajaunie’s lost investments, lost future profits, or other
consequential damages. Instead, Mr. Lajaunie sought damages only for the specific
breaches he alleged, and in the discrete amounts caused by such breaches.
[¶33] Because the issues were so limited, Mr. Lajaunie filed a motion in limine seeking
to exclude evidence relating to Mr. Singer’s dismissed counterclaim. In particular, he
moved to exclude evidence that he purchased the assets of Beartooth and the Singer
Ranch from the bank after the bank had foreclosed on those assets. He sought to exclude
evidence of his alleged “guarantee” to purchase Beartooth water, and evidence suggesting
that he had long held a scheme to take over the Beartooth business to the exclusion of
Mr. Singer. The district court indicated that it would limit Mr. Singer’s ability to elicit
testimony about these topics, although it suggested that it might allow an instruction
informing the jury that Mr. Lajaunie eventually purchased the assets. Mr. Lajaunie
contends, however, that the district court failed to exclude such evidence during trial
despite Mr. Lajaunie’s objections.
[¶34] Our first step in evaluating Mr. Lajaunie’s claim is to consider whether the
evidence was relevant and properly admitted, or was irrelevant and should have been
excluded. W.R.E. 402 provides that evidence “which is not relevant is not admissible.”
W.R.E. 401 defines relevant evidence as “evidence having any tendency to make the
existence of any fact that is of consequence to the determination of the action more
probable or less probable than it would be without the evidence.”
[¶35] As mentioned above, the issues at trial related to Mr. Singer’s alleged breach of
his fiduciary duties as a member of Beartooth. Evidence of Mr. Singer’s actions was
obviously relevant, because it tended to make it more or less probable that those actions
breached his duties of loyalty and responsibility to Beartooth. However, we agree with
Mr. Lajaunie that evidence of his conduct was not relevant.
[¶36] In his counterclaim and proposed amended counterclaim, Mr. Singer asserted that
Mr. Lajaunie breached a promise to purchase a truckload of Beartooth water per day, had
a long-held scheme to take over the Beartooth business, and purchased the Beartooth
assets after foreclosure. Even if true, however, those facts have no relevance to the
question of whether Mr. Singer breached his fiduciary duties. They do not justify or
explain Mr. Singer’s conduct, or make it more or less likely that Mr. Singer was acting
with the required loyalty and responsibility toward Beartooth. They have no tendency to
increase or mitigate damages. They do not provide a defense to the claims that have been
asserted. In sum, such evidence is not relevant.
[¶37] Mr. Singer does not make a serious claim that the evidence is relevant for any
particular issue. He contends that it is properly received as “background” and was
properly admitted because Mr. Lajaunie “opened the door” to such evidence. Mr. Singer
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points out that, when one litigant offers evidence on an issue that is otherwise irrelevant
or inadmissible, he cannot complain on appeal “if the opposing party introduces evidence
on the same subject.” Francis v. Clark Equip. Co., 993 F.2d 545, 550 (6th Cir. 1993).
We have recognized that a litigant “may open the door to otherwise inadmissible
testimony when he inquires about a particular subject.” Roden v. State, 2010 WY 11,
¶ 14, 225 P.3d 497, 501 (Wyo. 2010). Mr. Singer maintains that Mr. Lajaunie opened the
door to evidence of his “guarantee” to purchase a truckload of Beartooth water per day
rendering such evidence relevant and admissible.
[¶38] At trial, counsel for Mr. Singer referred to Mr. Lajaunie’s email about the
guarantee, and asked Mr. Lajaunie, “Isn’t it true that you told [Mr. Singer] in terms of
volume you guaranteed a truck a day?” Counsel for Mr. Lajaunie objected, and the
district court excused the jury from the courtroom to allow argument on the objection.
The district court observed that “when we get into whether or not there was a particular
guarantee, then I think I need to know, before the jury can hear that, exactly how that
relates to the breach of fiduciary duties.”
[¶39] Counsel for Mr. Singer responded as follows:
We have heard from [Mr. Lajaunie] that he’s been
abused, that he’s been cheated, that he didn’t know what was
going on, he was apparently naïve, or distant; that this
program was hijacked from him, that he was cut off from
access to the company books. Because of his complaint about
[Mr. Singer’s] expenses and I think critical to the reasons for
. . . voting him out, the motivation for that, these clients’
thinking and response to his conduct relates directly to this
guarantee. . . .
What happened yesterday, I think, was really amazing.
We heard testimony that implies [Mr. Lajaunie] lost I don’t
know how many hundreds of thousands of dollars. It’s just
part of the general background.
You can’t, as a plaintiff, make po[t] shots like that and
say the business was hijacked. . . . You can’t do things like
that and then close the door.
Counsel for Mr. Lajaunie responded that the email “guarantee” was relevant only to the
dismissed counterclaim, and was irrelevant to the breach of fiduciary duty claims. He
continued:
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Now, with regard to [counsel’s] argument that we
opened the door by presenting background information . . .
about Mr. Lajaunie’s investment in the business, the sole
purpose for that was to, number one, provide the jury with
background that he was in fact a voting member, was in fact
[a] manager, and is able to assert these claims in a derivative
capacity on behalf of Beartooth Mountain Springs here.
That doesn’t open the door to whether or not, in 2009,
he guaranteed a truckload a day. [That c]an’t excuse the
breach of fiduciary duty. It’s irrelevant to the claims
remaining and it’s highly prejudicial, I think, and it’s
confusing to the jury.
The district court then ruled:
You may not have opened the door, but you cracked a
window and you were looking out. I think, just in order to be
fair and to allow [counsel for Mr. Singer] to examine the
areas that you brought up, he can go in some of these
areas. . . . I’m going to allow you to proceed when we come
back with that question.
After the jury returned, the email “guarantee” was admitted into evidence.
[¶40] We have reviewed the record, and question the characterization of this testimony
by Mr. Singer’s counsel. More significantly, we are at a loss to understand how any
“background” testimony opened the door for admission of the challenged evidence.
Mr. Lajaunie was entitled to present evidence of the damages caused by Mr. Singer’s
breaches of fiduciary duty. By providing such evidence, whether it is viewed as
“background” or otherwise, he did not open the door to the admission of otherwise
irrelevant evidence concerning Mr. Lajaunie’s “guarantee.” That evidence does not have
any tendency to make the existence of any fact that is of consequence to the
determination of the action more or less probable. Under the circumstances, it was not
reasonable to admit irrelevant evidence that might distract the jury from focusing on
Mr. Singer’s actions and allow Mr. Singer to try to shift blame onto Mr. Lajaunie. The
district court abused its discretion in admitting such evidence.3
[¶41] Having determined that the evidence was wrongly admitted, we must determine
3
We note that this evidence may be relevant and admissible if there is a new trial that includes
Mr. Singer’s promissory estoppel and fraud claims.
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whether the error was harmful. The error is harmful if there is a reasonable possibility
that the verdict might have been more favorable to Mr. Lajaunie if the error had not
occurred. Proffit, ¶ 12, 191 P.3d at 977. Demonstrating harm can be a difficult task, but
Mr. Lajaunie has done so in this case. He points out that counsel for Mr. Singer, in
closing argument, reminded the jury of the erroneously-admitted evidence of
Mr. Lajaunie’s “guarantee.” He told the jury that Mr. Lajaunie “breached the deal” by
“not buying water, not buying water, not buying water.” He characterized Mr. Lajaunie’s
actions as “deceit” and “chiseling.”
[¶42] This emphasis on the irrelevant evidence seems reasonably likely to have
influenced the jury. The district court ruled as a matter of law that Mr. Singer had
breached his fiduciary duties by using Beartooth assets to pay for accounting services for
Clark’s Fork Canyon Springs, LLC, and by creating Sunlight Springs Distribution, LLC,
to take advantage of Beartooth’s business opportunities. The only question before the
jury on these claims was the amount of damages. On the first claim, Mr. Lajaunie
provided evidence of approximately $3,200 in damages. The jury awarded only
$1,604.63. On the second claim, evidence presented by Mr. Lajaunie would have
supported damages ranging from $34,000 to $61,000. The jury awarded no damages on
this claim. The jury found that Mr. Singer had breached his fiduciary duties on the claim
that Edelweiss had not paid rent to Beartooth. The evidence presented by Mr. Lajaunie
was that the rent should have been $2,800 per month, and went unpaid for 36 months.
Using straightforward multiplication, the jury could have found damages of $100,800. It
awarded $13,000.
[¶43] Mr. Lajaunie’s evidence on damages was not undisputed. We cannot be certain
why the jury chose lesser damages on these three claims. We can say, however, that it is
reasonably likely that the irrelevant evidence, admitted by the district court and
emphasized by Mr. Singer’s counsel in closing, contributed to that result.
CONCLUSION
[¶44] In Docket No. S-14-0004, we reverse the district court’s grant of summary
judgment in favor of Mr. Lajaunie on Mr. Singer’s promissory estoppel claim, and its
denial of Mr. Singer’s motion to amend his counterclaim. In Docket No. S-14-0005, we
reverse the judgment entered by the district court. The case is remanded to the district
court for further proceedings consistent with this opinion.
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