## Facts

- Harley F. Rolfe and Pauline G. Rolfe owned the Western Motel in Jackson, Wyoming, along with other real estate; the motel property was heavily encumbered by existing debts.
- The Rolfes sought to redevelop the Western Motel into a resort complex and entered a written agreement with John S. (“Jay”) Varley, Jr., dated April 6–7, 1987.
- Under the agreement, Varley was to provide funds to satisfy the motel’s listed debts and obligations (including those identified on an exhibit to the agreement), while the parties pursued the development plan.
- The agreement and the parties’ conduct contemplated that Varley’s advances would be protected by security arrangements (including a note and a “wrap” mortgage concept), alongside a business relationship directed toward development.
- For about two years, Varley paid substantial sums toward the motel’s obligations and related costs while the parties worked on the development.
- Over time, projected development costs rose sharply and the project became financially impractical.
- Varley requested that the Rolfes execute the contemplated note and mortgage to secure the amounts he had advanced; the Rolfes refused to sign the security documents.
- Varley stopped making further payments and sued for repayment, an equitable lien against the Rolfes’ real estate to secure reimbursement (plus interest), and termination of the parties’ business relationship.
- After a four-day bench trial, the district court entered a money judgment for Varley of approximately $900,000 plus interest, imposed an equitable lien on all of the Rolfes’ real estate holdings (including property titled in Pauline’s name), and terminated the partnership/joint venture.
- The Rolfes appealed, challenging Pauline’s personal liability and the liens, the trial court’s interpretation of the agreement, the findings that Varley did not breach, the denial of the Rolfes’ damages claims, and the manner of termination.

## Issues

1. Whether Pauline Rolfe could be held jointly and severally liable for obligations arising from the April 1987 agreement and Varley’s advances.
2. Whether the district court could impose an equitable lien on real property owned solely by Pauline Rolfe.
3. Whether the district court could impose an equitable lien on Harley Rolfe’s real property.
4. Whether the April 1987 agreement was properly construed as creating both a joint venture/partnership relationship and a secured repayment (creditor-debtor) obligation for Varley’s advances.
5. Whether Varley breached the agreement or partnership duties by stopping payments and seeking termination, and whether the Rolfes were entitled to damages.
6. Whether the district court properly terminated the partnership/joint venture.

## Decision

- The Wyoming Supreme Court affirmed the district court’s judgment in all material respects.
- The court upheld the money judgment in Varley’s favor for the sums advanced (plus interest).
- The court held that an equitable lien was properly imposed on the Rolfes’ real estate to secure repayment because the agreement and the parties’ course of performance showed an intent that the property stand as security for Varley’s payments, and equity required that result to avoid unjust enrichment.
- The court affirmed imposing the equitable lien on property titled in Pauline’s name and upheld the determination that Pauline could be jointly and severally liable, given her execution of the agreement and acceptance of the benefits of Varley’s payments.
- The court agreed that the April 1987 agreement, read as a whole and in light of performance, supported treating the relationship as having both a development partnership/joint venture component and a secured repayment component regarding Varley’s advances.
- The court rejected the Rolfes’ claims that Varley’s cessation of payments and pursuit of termination constituted breach under the circumstances, and it affirmed the denial of damages to the Rolfes.
- The court affirmed the district court’s termination of the partnership/joint venture as an appropriate equitable resolution after the project failed and the parties’ relationship broke down.

## Legal Principles

- A single written development agreement may create both (a) partnership/joint venture duties for pursuing a project and (b) creditor-debtor rights to repayment and security for advances, depending on the agreement’s language and the parties’ performance.
- An equitable lien may be imposed when the agreement and conduct show that specific, identifiable property was intended to serve as security for money advanced, even if the parties did not complete all contemplated formal security instruments.
- Equity may impose a lien to prevent unjust enrichment where one party pays debts tied to another’s property and the property owner accepts the benefit without providing the agreed security or repayment.
- A spouse who signs the agreement and knowingly accepts the benefits of another party’s payments may be held personally liable and may have separately titled property subject to equitable remedies consistent with the agreement and equitable principles.
- Appellate review after a bench trial gives deference to supported findings of fact and to discretionary equitable remedies; reversal is not warranted absent clear error or abuse of discretion.
- A party’s refusal to provide promised security and a substantial change in the project’s financial feasibility may justify stopping further advances without establishing breach or fiduciary-duty liability on the funding party’s part.

## Conclusion

Rolfe v. Varley affirms a judgment requiring the Rolfes to repay Varley’s development-related advances and upholds equitable liens on their real estate, including Pauline Rolfe’s separately titled property, because the agreement and performance indicated the property would stand as security and equity required protection against unjust enrichment; the court also upheld the trial court’s interpretation of the agreement as combining development venture obligations with secured repayment rights, found no actionable breach by Varley in stopping payments, and approved termination of the failed business relationship.


Rolfe v. Varley, 860 P.2d 1152 (1993)