Herrick v. Jackson Hole Airport Bd.

452 P.3d 1276

Greg HERRICK ; Richard Sugden, M.D.; Christian Andersen; Brent Blue, M.D.; Teton Avjet, LLC And Wyoming Jet Center, LLC, Appellants (Petitioners/counterclaim Defendants),

v. JACKSON HOLE AIRPORT BOARD, Appellee (Respondent/Counterclaimant)andJackson Hole Aviation, Appellee (Intervenor).

S-19-0073

Supreme Court of Wyoming.

November 26, 2019

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.

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:

1. 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?

2. 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 the Board to own and operate the Airport as authorized by Wyo. Stat. Ann. § 10-5-101. The Federal Aviation Administration requires a fixed-base operator (FBO) at every airport. An FBO is usually a commercial entity that provides aeronautical services such as fueling, maintenance, storage, ground and flight instruction, and other like benefits to the public. The Board had a long-standing contract with Jackson Hole Aviation to provide FBO services to the Airport.

[¶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 Wyo. Stat. Ann. § 35-2-424(a) limits the use of revenue bonds to purchases of physical assets and that revenue bonds cannot be used to purchase "non-tangible assets." The Board counterclaimed seeking declaration that Wyo. Stat. Ann. § 10-5-101(a) governs the Board's authority to issue revenue bonds and that the Purchase Agreement complied with the statute. The Board then filed a motion for summary judgment.

[¶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

[¶9] The district court denied Appellants' motion to compel production of the consultant reports. It concluded the valuation information was not relevant to whether the statutes authorized the use of revenue bonds to purchase intangible assets, and Appellants' need for the information did not override its confidential and proprietary nature. The court also denied the motion to compel production of the legal opinion letters. It concluded the Board, Town and County had a common interest in whether the Airport could become the FBO and whether revenue bonds could be used to fund the Purchase Agreement. The attorney-client privilege was not waived. The district court further determined the opinion letters were not relevant to its legal interpretation of the statutory language.

[¶10] After briefing, the district court issued an order granting summary judgment. The order held that Wyo. Stat. Ann. §§ 35-2-424 through -435 addressed only the manner in which the revenue bonds must be issued, and the use of revenue bonds was governed by Wyo. Stat. Ann. § 10-5-101(a), which authorized purchases of both tangible and intangible property. Appellants filed a timely appeal.

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 ...." W.R.C.P. Rule 26(b)(1). " ‘Relevant evidence’ means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." W.R.E. Rule 401 ; Cramer v. Powder River Coal, LLC , 2009 WY 45, ¶ 23, 204 P.3d 974, 981 (Wyo. 2009) ; Evenson v. State , 2008 WY 24, ¶ 26, 177 P.3d 819, 827 (Wyo. 2008).

[¶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 Wyo. Stat. Ann. § 35-2-424(a) "limits [the use of] the bonds to the purchase of physical assets" and does not authorize the purchase of the goodwill of a business.

[¶14] The district court ruled that the value of specific assets was not relevant to the issue raised in the Petition for Declaratory Judgment. The question Appellants presented was whether the Board's purchase of intangible assets, including goodwill, was outside its statutory authority. The Board did not deny it was buying intangible assets. These assets were listed in the Purchase Agreement.⁵ The value of any intangible asset was not germane to the issue. The question was whether intangible assets, including goodwill, could be purchased with revenue bonds, not at what cost. We agree with the district court's analysis. Appellants fail to show that the district court's decision was unreasonable in any way. Nelson , ¶ 12, 202 P.3d at 1075. The district court did not abuse its discretion in denying Appellants' motion to compel the reports and, therefore, w...