## Facts

- Anesthesiology Consultants of Cheyenne, LLC (ACC) was an anesthesiology practice whose members provided services at Cheyenne Regional Medical Center, a surgery center, and the Cheyenne Eye Surgery Center (Eye Center).
- Dr. Ronald E. Stevens was an ACC member/manager who provided services through his professional corporation, High Plains Anesthesia, P.C. (HPA).
- A certified registered nurse anesthetist, Cassie Rivers, worked at the Eye Center. After she married Stevens, she became an HPA employee, but continued providing anesthesia services for ACC’s overall coverage needs.
- After Rivers became an HPA employee, ACC paid HPA for Rivers’s hourly work, and ACC still received a share of income generated from her Eye Center work.
- Stevens also performed pain-management work that was less profitable than anesthesia work; ACC discussed a “carve-out” so that Stevens could separate pain-management billing from ACC.
- In December 2013, ACC’s billing provider emailed ACC managers (including Stevens and Drs. Dorrough and Skolnick) about carving out Stevens’s pain practice and suggested a January 1, 2014 transition.
- Stevens replied by email that he would continue working for ACC at the hospital and surgery center, but that HPA would take over and bill facilities directly for all other work he or his employees performed elsewhere, including pain-management work and Eye Center work, beginning January 1, 2014. He copied Dorrough and Skolnick.
- Dorrough and Skolnick did not read Stevens’s email at the time; when Stevens later asked about it, they told him they had received it and that everything was okay. They believed, however, that only the pain practice would be carved out.
- On January 1, 2014, the Eye Center stopped paying ACC and began paying HPA directly for anesthesia services.
- Rivers continued to work part-time at the hospital and invoice ACC for those hours, but her invoices did not include her Eye Center work on the other days of the week.
- In June 2014, Dorrough noticed the missing Eye Center revenue and confronted Stevens; Stevens referred to his December email and provided a copy.
- Dorrough told other ACC members that Stevens had diverted income without notice, and ACC expelled Stevens.
- In July 2014, Dorrough emailed Skolnick stating Stevens wanted to keep the Eye Center business and asking what ACC intended to do, noting that replacing Rivers at the Eye Center could cost more than the work generated. Skolnick responded that giving Stevens the Eye Center was okay.
- ACC sued Stevens and HPA for breach of fiduciary duty and breach of the covenant of good faith and fair dealing, among other claims, based on Stevens’s taking of Eye Center work and revenue.
- Stevens counterclaimed, including a defamation claim against Dorrough based on Dorrough’s statements to other ACC members about Stevens diverting income.
- The district court granted ACC summary judgment on its fiduciary-duty and good-faith claims, and granted Dorrough summary judgment on Stevens’s defamation claim; the court also excluded certain emails at trial, including Stevens’s December 2013 email and the July 2014 Dorrough–Skolnick email.

## Issues

1. Whether genuine disputes of material fact barred summary judgment on ACC’s claims that Stevens, as an LLC manager/member, breached the duty of loyalty by appropriating a company opportunity and competing with ACC through taking the Eye Center business.
2. Whether genuine disputes of material fact barred summary judgment on ACC’s claim that Stevens breached the covenant of good faith and fair dealing under ACC’s agreements.
3. Whether ACC’s knowledge, consent, ratification, or rejection of the Eye Center work, and ACC’s ability or incentive to keep the Eye Center arrangement, presented fact questions that precluded summary judgment.
4. Whether Dorrough was entitled to summary judgment on Stevens’s defamation claim because the alleged statements were privileged and/or substantially true, and whether there was evidence of malice or abuse of the privilege.
5. Whether the district court committed reversible error by excluding emails relevant to notice, ratification, and mitigation of damages.

## Decision

- The Wyoming Supreme Court reversed summary judgment for ACC on its breach of fiduciary duty claims and remanded because material fact disputes existed about whether the Eye Center was a company opportunity, whether ACC could or would have continued it, and whether ACC ratified or rejected Stevens’s conduct.
- The court reversed summary judgment for ACC on its covenant of good faith and fair dealing claim and remanded because the same disputed facts bearing on expectations, notice, and acceptance of the Eye Center work could not be resolved as a matter of law.
- The court affirmed summary judgment against Stevens on his defamation claim against Dorrough, holding the challenged statements were protected by a conditional common-interest privilege among business partners and were not shown to be malicious or false in a way that would defeat the privilege.
- The court held the district court abused its discretion by excluding the December 11, 2013 email and the July 2014 Dorrough–Skolnick email, which were relevant to ratification and mitigation of damages; the exclusion was prejudicial, supporting reversal in part and remand for further proceedings.

## Legal Principles

- Summary judgment is improper when reasonable factfinders could draw different inferences from the record on material questions such as notice, intent, consent, ratification, and the parties’ expectations.
- An LLC manager owes a duty of loyalty that includes duties not to compete with the LLC and not to appropriate a company opportunity for personal gain.
- A “company opportunity” exists when the company has an actual or expected interest in, and the ability to acquire or continue, the opportunity; whether those elements are met may present fact questions when the record is disputed.
- Evidence that the company knew of a member’s competing activity, accepted it, rejected the opportunity, or later ratified the conduct can defeat summary judgment on loyalty-based claims.
- The covenant of good faith and fair dealing is evaluated against the parties’ justified expectations under their agreements; where expectations, disclosures, and acceptance are disputed, the claim generally cannot be decided as a matter of law.
- Communications among business associates about the business’s affairs may be protected by a conditional common-interest privilege; to overcome the privilege, the plaintiff must show abuse of the privilege, such as malice.
- Trial courts have discretion over evidence, but excluding relevant evidence that bears on central issues such as ratification and mitigation may be an abuse of discretion requiring reversal if prejudicial.

## Conclusion

The Wyoming Supreme Court held that ACC was not entitled to summary judgment on its fiduciary-duty and good-faith claims because the record contained material disputes about whether the Eye Center work was a company opportunity, what Stevens disclosed, and whether ACC later accepted, rejected, or ratified Stevens keeping the Eye Center business, while it also affirmed summary judgment against Stevens on defamation due to conditional privilege and lack of evidence of malice, and remanded because key emails relevant to ratification and mitigation were wrongly excluded.


Stevens v. Anesthesiology Consultants of Cheyenne, LLC, 415 P.3d 1270 (2018)