## Facts

- Warnick Ranches was a family ranch partnership involving Wilbur K. Warnick, Dee J. Warnick, and Randall M. Warnick.
- Randall became a dissociated partner effective April 14, 1999, and sought payment for his partnership interest.
- The partnership agreement did not specify a valuation method or withdrawal buyout formula, requiring application of Wyo. Stat. Ann. § 17-21-701(b).
- In a prior appeal, the Wyoming Supreme Court held Randall was entitled to a dissociated-partner remedy and remanded because the buyout calculation failed to account properly for partner advances.
- On remand, the district court valued partnership assets using a professional appraisal reflecting liquidation value.
- For the first time on remand, the remaining partners and the partnership argued the appraisal should be reduced by about $50,000 for hypothetical costs of selling assets (commissions and other sale expenses).
- The district court excluded the proposed evidence on hypothetical liquidation costs and calculated the buyout without deducting those expenses.
- The remaining partners and the partnership appealed the evidentiary ruling and the resulting buyout valuation.

## Issues

1. Whether, under Wyo. Stat. Ann. § 17-21-701(b), a dissociated partner’s buyout price must be reduced by hypothetical liquidation or sales expenses when the partnership is not actually liquidating.
2. Whether the district court abused its discretion by excluding evidence offered to prove estimated liquidation costs and refusing to deduct them from appraised liquidation value.

## Decision

- The Wyoming Supreme Court affirmed the judgment.
- The court held § 17-21-701(b) did not require deducting speculative, unincurred liquidation expenses from the valuation used to compute the buyout price in a continuing partnership.
- The court concluded the district court acted within its discretion in excluding expert testimony about hypothetical liquidation costs.

## Legal Principles

- Under Wyo. Stat. Ann. § 17-21-701(b), the buyout price for a dissociated partner is determined by an objective valuation measure (the greater of liquidation value or going-concern sale value) rather than by reconstructing a non-occurring liquidation transaction.
- “Liquidation value” in the buyout statute functions as a valuation concept and does not compel subtraction of projected sale expenses absent an actual liquidation.
- Trial courts may exclude evidence of estimated liquidation costs when the partnership continues operating and the asserted costs depend on uncertain future events.
- Statutory interpretation of § 17-21-701(b) is reviewed as a question of law, while evidentiary exclusions are reviewed for abuse of discretion.

## Conclusion

The court upheld a dissociated partner buyout calculated from appraised liquidation value without deducting hypothetical sales expenses, ruling that the buyout statute does not require speculative liquidation-cost adjustments where the partnership continues as a going concern and the trial court reasonably excluded such evidence.


Warnick v. Warnick, 133 P.3d 997 (Wyo. 2006)