Halling v. Yovanovich

         Appeal from the District Court of Lincoln County The Honorable Joseph Bluemel, Judge

          Representing Joyce Halling and MedCon, Inc.: Ray G. Martineau, Salt Lake City, Utah.

          Representing David A. Yovanovich and Ornella Dalla Bona: James K. Lubing and Laurie J. Stern, Lubing Law Group, LLC, Jackson, Wyoming.^[*]

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

          FOX, Justice.

         [¶1] David Halling, as manager of Professional Business Holdings, LP (PBH), and Joyce Halling, as president of MedCon, Inc. (MedCon), each purchased an undivided half interest in a parcel of land in Lincoln County, Wyoming, from Brandon Bentley. Mr. Halling, individually and as manager of PBH, executed a mortgage in favor of Mr. Bentley on PBH's half interest as security for the purchase price of 50 percent of the lot. Mrs. Halling, individually and as president of MedCon, also executed a promissory note and mortgage as security for the note in favor of Mr. Bentley for the purchase price of the other 50 percent of the lot. Mr. Bentley then separately assigned his rights and interests in the PBH Mortgage to 1st Bank of Afton, Wyoming (1st Bank), and his rights and interests in the MedCon Note and MedCon Mortgage to Yovanovich. Yovanovich sued MedCon, alleging it failed to pay the amount due under the note. The district court granted Yovanovich's motion for summary judgment and MedCon appeals. Yovanovich cross-appeals the award of damages. We affirm the district court's ruling in part, and reverse and remand in part.

         ISSUES

         [¶2] The parties raise numerous issues, which we consolidate and restate below:

1. Did the district court err as a matter of law when it held that Yovanovich had an enforceable contract right against MedCon?

2. Did the district court err as a matter of law when it found that the Yovanovich Assignment was not ambiguous?

3. Did the district court abuse its discretion when it denied MedCon's motion for leave to amend its answer?

4. Was the district court's damages calculation clearly erroneous? 5. Did the district court abuse its discretion when it failed to award prejudgment interest? 6. Did the district court err as a matter of law when it failed to award post-judgment interest?

         FACTS

         [¶3] David Halling was the manager of PBH. His wife, Joyce Halling, was the president of MedCon. In 2007, PBH and MedCon each purchased an undivided half interest in a parcel of land in Lincoln County, Wyoming, from Brandon Bentley.^[1] The Warranty Deed was recorded on September 17, 2007, and the same day Mr. Halling, individually and as manager of PBH, executed a mortgage (PBH Mortgage) of PBH's half interest in Lot 7 as security for PBH's indebtedness of the purchase price of 50 percent of the lot. (Although the PBH Mortgage referenced a promissory note, no promissory note by PBH appears in the record.) The PBH Mortgage was recorded on September 17, 2007.

         [¶4] In 2008, Mr. Bentley assigned all of his rights, title, and interest in PBH's half interest in Lot 7 to 1st Bank (1st Bank Assignment). The 1st Bank Assignment identified the PBH Mortgage and any property covered by the mortgage as the collateral, and referred to the book and page number where the PBH Mortgage was recorded. It did not reference MedCon's half interest in Lot 7. The 1st Bank Assignment was recorded on July 11, 2008. By December 2010, PBH and Mr. Halling had failed to make any payments to 1st Bank and entered into a deed in lieu of foreclosure, pursuant to which PBH and Mr. Halling conveyed PBH's half interest in Lot 7 to 1st Bank, in exchange for which 1st Bank released PBH and Mr. Halling from all obligations on the PBH Note and Mortgage. The deed in lieu of foreclosure was recorded on February 19, 2013.

         [¶5] When Mr. Halling and PBH executed the deed in lieu of foreclosure with 1st Bank in 2010, Mrs. Halling, individually and as the president of MedCon, also signed the deed, assigning any and all interests MedCon had in Lot 7 to 1st Bank:

That pursuant to that certain Warranty Deed dated September 11, 2007, and recorded in the office of the Lincoln County Clerk on September 17, 2007, in Book 672, page 342, Recording No. 933171, Med Con, Inc., a Utah corporation, may own or claim to own an interest in the Property. Med Con, Inc., whose president is Joyce L. Halling, the spouse of David F. Halling, is a related entity to Mortgagor herein. In consideration of the release from liability by 1ST Bank herein, Med Con., Inc., will join in this agreement and convey to 1ST Bank any and all interest it may have in the Property. Therefore, for purposes of this agreement, the conveyance of the Property to 1ST Bank and the release from liability of David F. Halling, individually, Professional Business Holdings, LP, Joyce L. Halling, individually, and Med Con, Inc., by 1ST Bank, the terms Mortgagor and Grantor as used herein shall be deemed to also include Joyce L. Halling, individually, and Med Con, Inc.

         [¶6] Mr. Halling testified during his deposition that at the time he and Mrs. Halling signed the deed it "was my understanding and my understanding from the bank that [1st Bank] would release us from any and all liabilities relative to the total property." 1st Bank, however, had no interest in MedCon's undivided half interest to release.

         [¶7] When it purchased its half interest in Lot 7, MedCon executed a promissory note (MedCon Note), promising to pay Mr. Bentley the $124, 520.00 purchase price. The MedCon Note provided that full payment of the loan would be due on August 17, 2009, would "accrue @ 6% monthly, " and that no payments were required during the term of the loan. Mrs. Halling, individually and as president of MedCon, also executed a mortgage (MedCon Mortgage) of MedCon's half interest in Lot 7 as security for the MedCon Note. The MedCon Mortgage was recorded on September 17, 2007.

         [¶8] In October 2008, Mr. Bentley assigned all of his rights, title, and interest in the MedCon Note (Yovanovich Assignment) to David A. Yovanovich and Ornella Dalla Bona (collectively "Yovanovich"). Two years later, Mr. Bentley executed an Assignment of Mortgage, assigning Yovanovich all of his rights, title, and interest in the MedCon Mortgage. No payments were made on the MedCon Note.

         [¶9] In 2014, Yovanovich, as holder of the MedCon Note and MedCon Mortgage, attempted to collect on the indebtedness, and when the attempts were unsuccessful, sued for breach of contract seeking judgment on the MedCon Note. Yovanovich moved for summary judgment, and MedCon opposed the motion, arguing genuine issues of material fact existed as to: (1) whether the Yovanovich Assignment created a lawfully enforceable contract between Yovanovich and MedCon; (2) whether the Yovanovich Assignment was null and void because Mr. Bentley had previously assigned all of his rights in MedCon's half interest in Lot 7 to 1st Bank via the 1st Bank Assignment; (3) whether the deed in lieu of foreclosure released MedCon from any liability related to its half interest in Lot 7; and (4) whether Yovanovich was entitled to damages.

         [¶10] The district court found that: (1) the Yovanovich Assignment created a legally enforceable contract between Yovanovich and MedCon; (2) the 1st Bank Assignment only included Mr. Bentley's rights and interests in PBH's half interest in Lot 7; (3) although the Hallings believed the deed in lieu of foreclosure released MedCon from its payment obligations related to Lot 7, it only released PBH and Mr. Halling; and (4) MedCon breached the contract by failing to make any payments on the MedCon Note and therefore Yovanovich was entitled to damages. Based on these findings, the district court granted Yovanovich's motion and awarded damages in the amount of $140, 353.00, which represented the original loan amount, plus interest at an annual rate of 6 percent, accruing monthly for the two-year period of the MedCon Note.

         [¶11] After the district court granted summary judgment, MedCon moved to amend its answer pursuant to Rule 15 of the Wyoming Rules of Civil Procedure. MedCon contended that because the district court found that MedCon did not release its undivided half interest to 1st Bank when Mrs. Halling and MedCon signed the deed in lieu of foreclosure, it had a right to assert a counterclaim against Yovanovich, claiming a competing interest in Lot 7. The district court denied MedCon's motion to amend. MedCon timely appealed the grant of summary judgment and denial of its motion to amend and Yovanovich cross-appealed the district court's calculation of damages.

         STANDARD OF REVIEW

         [¶12] We review a grant of summary judgment deciding a question of law de novo. Sky Harbor Air Serv., Inc. v. Cheyenne Reg'l Airport Bd., 2016 WY 17, ¶ 40, 368 P.3d 264, 272 (Wyo. 2016). In doing so, "We review a summary judgment in the same light as the district court, using the same materials and following the same standards." Thornock v. PacifiCorp, 2016 WY 93, ¶ 10, 379 P.3d 175, 179 (Wyo. 2016) (quoting Rogers v. Wright, 2016 WY 10, ¶ 7, 366 P.3d 1264, 1269 (Wyo. 2016)). "No deference is accorded to the district court on issues of law, and we may affirm the summary judgment on any legal grounds appearing in the record." Cont'l Western Ins. Co. v. Black, 2015 WY 145, ¶ 13, 361 P.3d 841, 845 (Wyo. 2015). "The summary judgment can be sustained only when no genuine issues of material fact are present and the moving party is entitled to judgment as a matter of law." Id. To the extent the issues require us to use a different standard of review, we explain that in our discussion.

         DISCUSSION

         I. Did the district court err as a matter of law when it held that Yovanovich had an enforceable contract right against MedCon?

         [¶13] The district court ruled that there was an enforceable contract between Yovanovich and MedCon, and that MedCon breached the agreement by failing to pay Yovanovich the amount due under the MedCon Note. "The elements for a breach of contract claim consist of a lawfully enforceable contract, an unjustified failure to timely perform all or any part of what is promised therein, and entitlement of injured party to damages." Schlinger v. McGhee, 2012 WY 7, ¶ 12, 268 ...