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Schmidt v. Killmer

February 23, 2009

GERALD SCHMIDT AND CLAUDIA MELCHER, APPELLANTS (PLAINTIFFS),
v.
KARL KILLMER, TRUSTEE IN LIQUIDATION OF TRIPLE B LIMITED PARTNERSHIP 1998B; MACY & ASSOCIATES, LLC, F/K/A MACY & MCKEE, LLC, A WYOMING LIMITED LIABILITY COMPANY; TRIPLE B LIMITED PARTNERSHIP 1998B, A WYOMING LIMITED PARTNERSHIP; 06-38 BRAMMER PETROLEUM, INC., A TEXAS CORPORATION DOING BUSINESS IN WYOMING; CARPENTER & SONS, INC., A WYOMING CORPORATION; BTS LLC, A WYOMING LIMITED LIABILITY COMPANY; SILVER PETROLEUM CORPORATION, AN OKLAHOMA CORPORATION DOING BUSINESS IN WYOMING; SUN CEMENTING OF WYOMING, INC., A WYOMING CORPORATION; KENNETH D. WAGNER (XS ENERGY, INC.); AND WILLIAM R. BARTH, JR., APPELLEES (DEFENDANTS).



Appeal from the District Court of Campbell County The Honorable Dan R. Price II, Judge.

The opinion of the court was delivered by: Voigt, Chief Justice

Before VOIGT*fn1, C.J., and GOLDEN, HILL, KITE, and BURKE, JJ.

[¶1] The appellants, Gerald Schmidt and Hank Melcher, were general partners in Triple B Limited Partnership 1998B (Triple B).*fn2 The Triple B partners voted to dissolve and liquidate the partnership, and appointed appellee Karl Killmer to act as liquidating trustee to wind up the partnership‟s affairs. Following liquidation of the partnership and distribution of its assets, the appellants filed suit against Killmer, Macy & Associates, LLC (Killmer‟s accounting firm), and the remaining Triple B Partners (appellees). The appellees moved for and were eventually awarded summary judgment resulting in a dismissal of the suit. The appellants now appeal that ruling. We will affirm.

ISSUE

[¶2]The district court‟s primary rationale for granting summary judgment in favor of the appellees was a finding that the appellants had expressly consented to the liquidation and distribution plan. The appellants contend on appeal that genuine issues of material fact exist as to whether they had sufficient knowledge of the differences between the Partnership Agreement and the settlement plan to consent to the latter.

FACTS

[¶3] Triple B was formed in October of 1998. The purpose of Triple B was to "own, manage and develop oil and gas leases and interests therein, and to explore for, produce and sell hydrocarbons . . . ." Under the Partnership Agreement, the equity and ownership of the partnership was to be divided 25% to General Partners and 75% to Limited Partners. Triple B Energy, Inc. and its president, Joe Banks, held a 24.9% general partnership interest, with Vernon E. Neils holding the remaining 0.1% general partnership interest. On July 20, 1999, Mr. Banks transferred 15.225% of the partnership interest to other parties, including 5% to each of the appellants. A few days later, on July 28, 1999, Mr. Banks relinquished his remaining 9.675% interest to the Triple B partners, divided proportionately according to each partner‟s existing interest. Through this division, the appellants each acquired an additional .5417% interest, leaving each with a 5.5417% partnership interest.

[¶4] Differences arose among the Triple B partners as to the management and direction of the partnership, and in October of 2000, the decision was made to liquidate and wind up the affairs of the partnership. The partners voted unanimously to hire Killmer as liquidating trustee. On July 9, 2001, Killmer, through counsel, sent a letter to the partners detailing the plan for final liquidation and distribution of partnership assets. Enclosed with the letter was a ballot for each partner to indicate agreement to proceed with the liquidation as set forth in the letter. On July 13, 2001, appellant Schmidt returned the ballot expressly indicating his approval of the proposed distribution plan. Eventually, partners owning approximately 62% of the profit/loss interests in the partnership voted in favor of the proposed method of liquidation. Killmer therefore informed the partners that he would proceed with the liquidation as proposed.

[¶5] Appellant Melcher was involved in a pending collateral lawsuit against Triple B. On March 5, 2002, Melcher agreed to settle the lawsuit and entered into a settlement agreement with Killmer, who was acting as trustee for Triple B. Melcher‟s interest in the liquidation and distribution of Triple B was addressed as a term of the settlement. Specifically, the settlement agreement read, in pertinent part: "All distributions in liquidation of [Triple B] . . . shall be made to Melcher in the proportion reflected on the attached Exhibit A at the same time or times as distributions to other partners." Exhibit A to the settlement agreement was a "Capital Account Analysis" -- a spreadsheet illustrating all of the distributions as described by Killmer in the original proposal for liquidation and distribution of assets.

[¶6] In November of 2002, Killmer, through his attorney, sent a letter to the partners indicating that with the exception of a few final tasks, the liquidation and dissolution of Triple B was complete. In the letter, Killmer also noted that appellant Schmidt was claiming that the partnership assets had been improperly distributed. Schmidt brought his concerns to the attention of appellant Melcher, and when Melcher‟s attorney elected not to pursue the matter, Melcher contacted Schmidt‟s attorney and on July 8, 2003, Schmidt and Melcher filed a civil action against Killmer, his accounting firm, Triple B, and the individual partners.

[¶7] On August 18, 2003, Killmer and his accounting firm filed a motion for summary judgment arguing, inter alia, that the appellants were not entitled to any relief inasmuch as they had consented to and ratified Killmer‟s actions. The district court heard argument on the motion and on September 9, 2004, issued a decision letter denying the motion. The court addressed Killmer‟s arguments as follows:

As to the ratification and consent argument, the court is unable to find with the material submitted whether the distribution was made according to the representation. The representation was: "The assets will be distributed to partners holding positive capital accounts until all such accounts equal zero, and thereafter to partners at their profit and loss percentages." Exhibit 8 to Killmer Affidavit, page 4. Once all of the bills are paid and the capital accounts are reduced to zero, profits were to be divided 25% to the general partners and 75% to the limited partners. As I said above, I am unable to tell if that distribution has been made. Finally, with regard to plaintiff Melcher, Exhibit A to his settlement agreement is not self-explanatory such that he received the appropriate distribution.

[¶8] A year later, after further discovery, Killmer filed a renewed motion for summary judgment. In his brief in support of the motion, Killmer argued that further discovery had "fill[ed] in the holes" in the initial record by confirming that the appellants had consented to the terms of the settlement and received everything that Killmer told them they would get. A second hearing was held and on December 22, 2005, the district court issued a decision letter indicating that it would grant Killmer‟s renewed summary judgment motion. Specifically, the court stated:

With this motion, Defendant seeks summary judgment dismissing Plaintiff‟s claims against them. Defendants have seized upon language in the court‟s decision letter of September 9, 2004, which stated that "the court is unable to find with the material submitted whether the distribution was made according to the representation." Indeed, Defendants have provided more than enough evidence to the court, and Plaintiffs by stipulation in court and agreement have not contested, that the Plaintiffs did receive the distributions Mr. Killmer told them that they would get upon dissolution of the 1998B partnership. Plaintiffs continue to assert that the proposal was not in accordance ...


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