GREG HERRICK; RICHARD SUGDEN, M.D.; CHRISTIAN ANDERSEN; BRENT BLUE, M.D.; TETON AVJET, LLC and WYOMING JET CENTER, LLC v. JACKSON HOLE AIRPORT BOARD and JACKSON HOLE AVIATION
S-19-0073
IN THE SUPREME COURT, STATE OF WYOMING
November 26, 2019
2019 WY 118
OCTOBER TERM, A.D. 2019
Appellants (Petitioners/Counterclaim Defendants),
v.
JACKSON HOLE AIRPORT BOARD, Appellee (Respondent/Counterclaimant)
and
JACKSON HOLE AVIATION, Appellee (Intervenor).
Appeal from the District Court of Teton County
The Honorable Timothy C. Day, Judge
Representing Greg Herrick; Richard Sugden, M.D.; Christian Andersen; Brent Blue, M.D.; Teton Avjet, LLC and Wyoming Jet Center, LLC:
Bruce T. Moats, Law Office of Bruce T. Moats, P.C., Cheyenne, Wyoming. Argument by Mr. Moats.
Representing Jackson Hole Airport Board:
Paula A. Fleck, P.C., Holland & Hart LLP, Jackson, Wyoming. Argument by Ms. Fleck.
Representing Jackson Hole Aviation:
Billie LM Addleman and Erin E. Berry, Hirst Applegate, LLP, Cheyenne, Wyoming. Argument by Mr. Addleman.
Before DAVIS, C.J., and FOX, KAUTZ, BOOMGAARDEN, and GRAY, 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
GRAY, Justice.
[¶1] The Appellants are Wyoming Jet Center, LLC and Teton Avjet, LLC (two entities interested in providing services at Jackson Hole Airport (Airport)), and Greg Herrick, Richard Sugden, Christian Andersen, and Brent Blue (individuals dissatisfied with the Airport‘s current services). The Appellants filed a petition for declaratory judgment challenging the validity of an Asset Purchase Agreement (Purchase Agreement) between the Jackson Hole Airport Board (Board) and Jackson Hole Aviation, the current service provider at the Airport. Appellants claimed the Purchase Agreement exceeded the Board‘s statutory authority because the Board could not acquire intangible assets1 using revenue bond funding. The district court granted summary judgment in favor of the Board, concluding the authorizing statutes permit the Board to use revenue bonds to acquire both tangible and intangible assets. We affirm.
ISSUES
[¶2] We rephrase the issues:
- Did the district court abuse its discretion in denying Appellants’ motions to compel production of documents prior to ruling on the motion for summary judgment?
- Do airport boards have the statutory authority to issue revenue bonds to fund the purchase of intangible property including goodwill?
FACTS AND PROCEDURAL HISTORY
[¶3] In 1968, the Town of Jackson (Town) and Teton County (County) jointly formed
[¶4] The Federal Aviation Administration also requires every airport to employ more than one FBO where more than one FBO is available. The requirement does not apply, however, when a qualified airport takes on the role of FBO itself. In May 2017, Appellant Wyoming Jet Center applied to be a second FBO for private jet service at the Airport. After receiving this application, the Board issued a request for proposals in the event others were interested in providing FBO services.
[¶5] In July 2017, the Board withdrew the request for proposals in order to consider whether the Airport itself should assume the role of FBO. In November 2017, the Board decided the Airport would assume the role of FBO. It issued a resolution authorizing the acquisition of Jackson Hole Aviation‘s assets through a $26 million Purchase Agreement to be funded by revenue bonds. These bonds were to be repaid from the FBO profit.
[¶6] Appellants filed a petition for declaratory judgment on January 29, 2018, seeking declaration that
[¶7] Appellants moved for an extension of time to complete discovery and filed a motion to compel production of the consultant reports to the Board containing the valuation of each specific asset included in the purchase. They claimed that, despite their requests for production, the Board had failed to provide the reports. Appellants argued these documents were necessary to determine if the $26 million was for the purchase of assets, or if instead the Board was buying a private business including its goodwill.2 The Board objected to this discovery, claiming the information was not relevant to the question of whether the governing statutes authorized the use of revenue bonds to purchase intangible assets. The Board also asserted the requested documents included financial information of a third party subject to a confidentiality and nondisclosure agreement.3
[¶8] Appellants filed a second motion to compel production of two legal opinion letters authored by the Board‘s attorneys. These letters addressed: (1) whether the Board could use revenue bonds to purchase Jackson Hole Aviation‘s assets; and (2) whether the Board could act as its own FBO. Appellants argued the opinion letters were not subject to attorney-client privilege because the Board had shared them with the Town and County. The Board opposed the motion, asserting the Board, Town, and County had identical legal interests in the attorneys’ opinions and, therefore, the letters continued to be privileged under the “common interest doctrine.”4
[¶10] After briefing, the district court issued an order granting summary judgment. The order held that
DISCUSSION
I. Did the district court abuse its discretion in denying Appellants’ motions to compel production of documents prior to ruling on the motion for summary judgment?
A. Standard of Review
[¶11] This Court reviews discovery rulings under the abuse of discretion standard. Washington v. State, 2011 WY 132, ¶ 11, 261 P.3d 717, 721 (Wyo. 2011); Ceja v. State, 2009 WY 71, ¶ 11, 208 P.3d 66, 68 (Wyo. 2009); Almada v. State, 994 P.2d 299, 303 (Wyo. 1999); Dodge v. State, 562 P.2d 303, 307 (Wyo. 1977). “On review, our primary consideration is the reasonableness of the trial court‘s decision.” Nelson v. State, 2009 WY 37, ¶ 12, 202 P.3d 1072, 1075 (Wyo. 2009) (citing Proffit v. State, 2008 WY 103, ¶ 12, 191 P.3d 974, 977 (Wyo. 2008)). The party challenging the district court‘s decision has the burden to prove an abuse of discretion. Nelson, ¶ 12, 202 P.3d at 1075; Person v. State, 2004 WY 149, ¶ 11, 100 P.3d 1270, 1275 (Wyo. 2004).
B. Analysis
[¶12] Appellants argue the district court‘s denial of their motion to compel production of reports, showing how specific assets were valued, denied them discovery relevant to whether the Board purchased Jackson Hole Aviation‘s goodwill. “Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party‘s claim or defense and proportional to the needs of the case . . . .”
[¶13] Here, Appellants’ Petition for Declaratory Judgment requested an order “[d]eclaring that the pending sale of revenue bonds by the Jackson Hole Airport Board exceeds the authority granted by statute” because “[t]he bond issue [would] fund the purchase of a great deal more than simply the physical assets of the FBO.” They argued
[¶15] Similarly, the district court determined the legal opinion letters were not relevant. It held:
[T]he information requested does not appear to be relevant to the question to be decided in the declaratory judgment action. Rather, the two letters as described are legal opinions and legal advice informing the respective agency decisions. Those agency decisions are not on appeal in this matter. To the extent the legal opinions expressed in those two letters are pertinent, they are not facts relevant to determining the question presented for a declaratory judgment. The question for a declaratory judgment is a question of law. Certainly, counsel for Petitioners shall have the opportunity to respond to the legal opinions and argument presented at summary judgment. Any preceding legal opinions are not before the [c]ourt, ... [as] this is not an administrative appeal . . . .
[¶16] We agree with the district court. The first letter addresses the Board‘s right to operate as an FBO under the Federal Aviation Administration‘s rules. This question is not at issue here. The second letter discusses the statutory authority for the Board‘s purchase. The issue of the Board‘s statutory authority was for the court to determine as a matter of law. A private attorney‘s preliminary legal analysis is not a fact pertinent to the district court‘s statutory interpretation. See Bd. of Prof‘l Responsibility, Wyo. State Bar v. Stinson, 2014 WY 134, ¶ 65, 337 P.3d 401, 419 (Wyo. 2014) (“The expert opinions . . . are not opinions that assist the trier of fact in understanding the evidence or determining a fact in issue. They instead offer a legal conclusion, which is the province of . . . this Court.“). The district court did not abuse its discretion in denying Appellants’ motion to compel production of the legal opinion letters.
II. Do airport boards have the statutory authority to issue revenue bonds to fund the purchase of intangible property including goodwill?
A. Standard of Review
[¶17] “Statutory interpretation is a question of law that we review de novo.” Wyo. Jet Ctr., LLC v. Jackson Hole Airport Bd., 2019 WY 6, ¶ 11, 432 P.3d 910, 915 (Wyo. 2019). We afford no deference to the district court‘s determinations. Alpine Lumber Co. v. Capital W. Nat‘l Bank, 2010 WY 62, ¶ 6, 231 P.3d 869, 871 (Wyo. 2010).
[¶18] A district court‘s grant of summary judgment is reviewed as follows:
We review a district court‘s order granting summary judgment de novo and afford no deference to the district court‘s ruling. This Court reviews the same materials and uses the same legal standard as the district court. The record is assessed from the vantage point most favorable to the party opposing the motion . . . and we give a party opposing summary judgment the benefit of all favorable inferences that may
fairly be drawn from the record. A material fact is one that would have the effect of establishing or refuting an essential element of the cause of action or defense asserted by the parties.
Wyo. Jet Ctr., ¶ 10, 432 P.3d at 914–15 (citations omitted).
B. Analysis
[¶19] Appellants argue the controlling statutes limit the Board‘s use of revenue bonds to the purchase of physical assets. “State agencies can exercise only those powers authorized by statute.” Horse Creek Conservation Dist. v. State ex rel. Wyo. Attorney Gen., 2009 WY 143, ¶ 30, 221 P.3d 306, 316 (Wyo. 2009) (citations omitted). “A corollary of the rule is that, when a statute provides a particular manner in which a power may be executed, the agency may not exercise its power in a different way. Any action taken by an agency without authority is ultra vires and void.” Solvay Chems., Inc. v. Dep‘t of Revenue, 2018 WY 124, ¶ 13, 430 P.3d 295, 299 (Wyo. 2018) (citations omitted).
[¶20] When determining the meaning of a statute, we apply our well-known rules of statutory construction:
[O]ur goal is to give effect to the intent of the legislature, and we “attempt to determine the legislature‘s intent based primarily on the plain and ordinary meaning of the words used in the statute.” Where legislative intent is discernible a court should give effect to the “most likely, most reasonable, interpretation of the statute, given its design and purpose.”
We therefore construe each statutory provision in pari materia, giving effect to every word, clause, and sentence according to their arrangement and connection. To ascertain the meaning of a given law, we also consider all statutes relating to the same subject or having the same general purpose and strive to interpret them harmoniously. We presume that the legislature has acted in a thoughtful and rational manner with full knowledge of existing law, and that it intended new statutory provisions to be read in harmony with existing law and as part of an overall and uniform system of jurisprudence. When the words used convey a specific and obvious meaning, we need not go farther and engage in statutory construction.
Wyo. Jet Ctr., ¶ 12, 432 P.3d at 915 (citations omitted).
[¶21] The Board‘s authority to issue revenue bonds is found in
(a) The authority and powers granted in W.S. 10-5-101 through 10-5-204 and the control of funds named may be under the control of an airport board. Upon majority vote of board members the board may issue revenue bonds, notes, warrants and other revenue securities in the same manner provided by W.S. 35-2-424 through 35-2-435 for trustees of hospital districts for the purposes of W.S. 10-5-101 through 10-5-204.
(a) The trustees of a hospital district established pursuant to W.S. 35-2-401, are hereby authorized to issue revenue bonds, notes and warrants or other revenue securities, hereinafter referred to as securities, for the purpose of acquiring, erecting, constructing, reconstructing, improving, remodeling, furnishing and equipping hospitals and related facilities, and acquiring a site or sites therefor, from time to time hereafter as the trustees may determine.
[¶22] Appellants argued that
[¶24] We agree with the district court‘s interpretation of these statutes. The reference to a series of statutes addressing the procedures for issuing revenue bonds makes clear the legislature‘s intent to have airport boards follow these procedures. The controlling statute as to what may be purchased is
(a) Municipal corporations and counties within the state are authorized at the discretion of their governing boards, acting either singly or jointly to:
(i) Acquire, by lease, purchase, or otherwise, lands and other property for airport purposes, and to construct, maintain and operate these facilities for the landing, housing, care and departure of air-borne craft; . . . .
[¶25] Appellants argue
[¶26] The district court found no ambiguity in
[¶27] The district court also rejected Appellants’ interpretation of the word “facilities.” It reasoned “facilities” for “airport purposes” would include physical assets, but would also “necessarily include certain intangible assets such as software, computer licenses, vendor lists, warranties, existing leases, etc.” The district court concluded that “it [would] be impractical to read the revenue bond statute to limit airport boards to [the purchase of] only physical assets.” We agree with the district court‘s analysis.
[¶28] “We presume that the legislature has acted in a thoughtful and rational manner with full knowledge of existing law when it enacts a statute.” DiFelici v. City of Lander, 2013 WY 141, ¶ 31, 312 P.3d 816, 824 (Wyo. 2013). “[A] court cannot, under the guise of its powers of construction, rewrite a statute, supply omissions, or make other changes[.]” Triangle Cross Ranch, Inc. v. State, Wyo. Dep‘t of Family Servs., 2015 WY 47, ¶ 18, 345 P.3d 890, 894 (Wyo. 2015) (quoting In re Adoption of Voss, 550 P.2d 481, 484 (Wyo. 1976)).
[¶30] The district court‘s decision gave effect to the most likely and most reasonable interpretation of the statute, given its design and purpose. We agree that
[¶31] As a final proposition, Appellants argue that even if the statute allows the purchase of intangible property, “the general principle [is] that goodwill is not property.” Appellants cite no authority for this principal, but do refer to the property tax statute,
(b) The following shall be exempt from property taxation:
(i) Goodwill if established and separately identified on a company‘s books and records, or affirmed by generally accepted accounting, or appraisal, principles;
(ii) Any of the following intangible items:
[Listing items A–E].(iii) Any license, permit or other right granted by a person, or by a governmental unit or an agency or instrumentality thereof;
(iv) Any covenant not to compete, or other arrangement to the extent such arrangement has substantially the same effect as a covenant not to compete, entered into in connection with an acquisition directly or indirectly of an interest in a trade or business or substantial portion thereof;
(v) Any franchise, trademark or trade name;
(vi) Any of the following intangible items:
[Listing items A–G].
[¶32] Appellants argue this statute distinguishes “goodwill” from intangible property because, otherwise, there would be no need to list it separately from the list of items designated as intangible property. Appellants’ argument is unpersuasive. “Goodwill” is not the only intangible item separated from the “lists” of intangible property. The statute also separates any “license,” “permit,” “covenant not to compete,” “franchise,” and “trademark or trade name.” All of these terms have been recognized as intangible property. Airtouch Commc‘ns, Inc. v. Dep‘t of Revenue, State of Wyo., 2003 WY 114, ¶ 46, 76 P.3d 342, 359 (Wyo. 2003) (governmental licenses, franchises, and customer lists); Neuman v. Neuman, 842 P.2d 575, 581 (Wyo. 1992) (business goodwill for marital property valuation); Ritter v. Farrow, 933 N.W.2d 167, 174–75 (WI App. 2019) (trademark); Matter of Protest of Strayer, 716 P.2d 588, 593 (Kan. 1986) (goodwill, franchises, patents, copyrights, and trademarks).
CONCLUSION
[¶34] The district court did not abuse its discretion when it denied Appellants’ motions to compel production of documents. The district court correctly interpreted
Notes
“Intangible personal property” means personal property that lacks mass and cannot be seen, felt, weighed, measured or otherwise perceived by the senses; property that has no physical existence beyond merely representational. Intangible property‘s value lies chiefly in what it represents, and its existence may be evidenced by a document[.]
A business‘s reputation, patronage, and other intangible assets that are considered when appraising the business, esp. for purchase; the ability to earn income in excess of the income that would be expected from the business viewed as a mere collection of assets. Because an established business‘s trademark or servicemark is a symbol of goodwill, trademark infringement is a form of theft of goodwill. By the same token, when a trademark is assigned, the goodwill that it carries is also assigned.
Goodwill, Black‘s Law Dictionary (11th Edition 2019). “[Goodwill] is only another name for reputation, credit, honesty, fair name, reliability.” Harry D. Nims, The Law of Unfair Competition and Trade-Marks § 36 (1929).
When two or more persons, each having an interest in some problem, or situation, jointly consult an attorney, their confidential communications with the attorney, though known to each other, will of course be privileged in a controversy of either or both of the clients with the outside world, that is, with parties claiming adversely to both or either of those within the original charmed circle.
Id. at 290 (quoting McCormick, supra at 219).