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CSC Group Holdings, LLC v. Automation & Electronics, Inc.

Supreme Court of Wyoming

February 24, 2016

CSC GROUP HOLDINGS, LLC, a Delaware Limited Liability Company, Appellant (Defendant),
v.
AUTOMATION & ELECTRONICS, INC., Appellee (Plaintiff). CATE STREET CAPITAL, INC., a Delaware Corporation and RED DESERT RECLAMATION, LLC, a Wyoming Limited Liability Company, Appellants (Defendants),
v.
AUTOMATION & ELECTRONICS, INC. Appellee (Plaintiff).

Appeal from the District Court of Sweetwater County The Honorable Richard L. Lavery, Judge

Representing Appellants: Danielle M. Mathey and Sage Hilstad of Mathey Law Office, P.C., Green River, Wyoming. Argument by Ms. Mathey.

Representing Appellee: Stephen Winship of Winship & Winship, P.C., Casper, Wyoming

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

DAVIS, Justice.

[¶1] CSC Group Holdings, LLC (CSC), Cate Street Capital, Inc. (Cate Street), and Red Desert Reclamation, LLC (Red Desert) appeal from two default judgments in favor of Automation & Electronics, Inc. (A&E). Those judgments made the three Appellants jointly and severally liable on a debt owed by Red Desert to A&E, and set aside as fraudulent a mortgage granted by Red Desert to CSC, thereby allowing A&E to execute on real property to recover on a judgment against Red Desert. We affirm.

ISSUE

[¶2] The three Appellants raise a single issue, which we restate as follows:

In a multiple-plaintiff, multiple-claim suit, did a judgment not certified under W.R.C.P. 54(b) in favor of only plaintiff A&E deprive the district court of subject matter jurisdiction to allow A&E to amend its complaint so as to add alter ego and fraudulent conveyance claims against Red Desert, CSC, and Cate Street?

FACTS

[¶3] Red Desert owned and operated a Sweetwater County facility for treatment and reclamation of water used for hydraulic fracturing in the petrochemical industry. In 2012, it engaged A&E to perform electrical work at the facility through an oral contract, and it also entered into a written credit agreement for materials with Consolidated Electric Distributors, Inc. (CE). All materials were delivered and all work was completed between mid-May and mid-September of 2012. Three months later Red Desert still owed A&E more than fifty-nine thousand dollars, and CE more than twenty-five thousand dollars. In early January of 2013, A&E and CE sued Red Desert in separate actions for the amounts due on their respective contracts, and also sought to establish contractor and materialman liens.[1] The district court consolidated those actions on May 8, 2013.

[¶4] In its answer to both complaints, and in summary judgment motions, Red Desert argued that A&E and CE did not properly perfect contractor or materialman liens because they both failed to provide timely written notice of their right to assert such a lien and of Red Desert's right to obtain a lien waiver relating to any payments it had made to them.[2]Nevertheless, in early March of 2014, Red Desert filed a confession of judgment in favor of CE and A&E in the respective amounts of $31, 413.97 and $77, 401.96, both of which included principal of the respective debt and accrued interest.

[¶5] On June 3, 2014, pursuant to a stipulation between A&E and Red Desert, the district court entered judgment against Red Desert in favor of A&E. The judgment declared the latter's contractor's lien statement void but awarded $85, 470.29, which included prejudgment interest, attorney fees and costs, with post-judgment interest of 18% per annum. At that point, CE still remained in the action, but the judgment for A&E was not certified as immediately appealable under Rule 54(b).

[¶6] On June 16, 2014, A&E filed that judgment as a lien against the treatment plant and associated lands.[3] Three days later it filed a motion for leave to amend its complaint to join CSC and Cate Street as defendants and to add additional allegations that related to Red Desert. A&E alleged that CSC and Cates Street were two closely related entities that used a captive Red Desert as their alter ego to insulate themselves from creditors, and that the mortgage granted by Red Desert to CSC was a fraudulent conveyance designed to serve the same purpose. It asked that CSC and Cate Street be deemed jointly and severally liable with Red Desert on the stipulated judgment recently entered in its favor, that the mortgage be set aside, and that it be permitted to sell Red Desert's real property to satisfy its judgment. The district court granted the motion to amend, the ...


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