425 P.3d 572
Wyo.2018Background
- Dan James (Chief Development Officer) and Shawn Eby (VP Operations) signed employment agreements requiring them to "devote all" business-related time, attention, knowledge and skills solely to Taco John’s International (TJI). Agreements allowed immediate termination for any violation.
- In 2016 James, Eby and TJI CEO Jeff Linville formed Last Bite Jerky, LLC and pursued Beef Jerky Outlet (BJO) franchise opportunities: webinar calls, a business plan, an operating agreement, loan applications, site scouting, and meetings with BJO—some using TJI offices, emails, and during TJI travel.
- TJI’s general counsel and CFO investigated; the board terminated James and Eby for cause on August 12, 2016. James and Eby sued for breach of contract; TJI moved for summary judgment.
- The district court granted summary judgment for TJI, finding the agreements unambiguous and that undisputed facts showed breach; James and Eby appealed.
- The Wyoming Supreme Court reviewed contract interpretation de novo, rejected parol evidence, found no genuine factual disputes, and affirmed summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the employment agreements unambiguously barred outside business activity | James/Eby: Section V is ambiguous ("all" is overbroad) and conflicts with other provisions; parol evidence needed | TJI: Section V plainly requires devotion of all business-related time/skills to TJI; no exception was negotiated | Court: Agreements unambiguous; "all" read in context bars other business ventures unrelated to TJI |
| Whether genuine issues of material fact precluded summary judgment on breach | James/Eby: Disputed facts (Tennessee trip was TJI business; BJO never materialized; Linville approved project) create triable issues | TJI: Undisputed documentary and testimonial evidence shows James/Eby spent time/skills on BJO using TJI resources during employment | Court: No genuine dispute; the activities proved breach as a matter of law |
| Whether parol evidence may be used to interpret Section V | James/Eby: Surrounding circumstances and practices show parties did not intend such a restriction | TJI: Parol evidence inadmissible because contract is unambiguous and contains integration/modification clauses | Court: Parol evidence barred; subjective intent not relevant when contract is clear |
| Whether CEO Linville had apparent authority to authorize the BJO venture | James/Eby: CEO’s representations and conduct authorized participation; apparent authority binds TJI | TJI: Written agreements require modifications in writing; reliance on oral authorization is unreasonable as a matter of law | Court: Any oral authorization conflicted with express written terms; reliance was unreasonable; apparent authority fails |
Key Cases Cited
- Leeks Canyon Ranch, LLC v. Callahan River Ranch, LLC, 327 P.3d 732 (Wyo. 2014) (contract interpretation and summary-judgment standards)
- Bogdanski v. Budzik, 408 P.3d 1156 (Wyo. 2018) (party burden in summary judgment proceedings)
- Loghry v. Unicover Corp., 927 P.2d 706 (Wyo. 1996) (written contract disclaimers limit apparent authority and estoppel claims)
- Ultra Resources, Inc. v. Hartman, 226 P.3d 889 (Wyo. 2010) (use of surrounding circumstances vs. parol evidence rule)
- Comet Energy Servs., LLC v. Powder River Oil & Gas Ventures, LLC, 185 P.3d 1259 (Wyo. 2008) (ambiguity and contract interpretation principles)
- Cargill, Inc. v. Mountain Cement Co., 891 P.2d 57 (Wyo. 1995) (elements of apparent authority)