Simek v. J.P. King Auction Co.

160 F. App'x 675
CourtCourt of Appeals for the Tenth Circuit
DecidedDecember 8, 2005
Docket04-8109
StatusUnpublished
Cited by3 cases

This text of 160 F. App'x 675 (Simek v. J.P. King Auction Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Simek v. J.P. King Auction Co., 160 F. App'x 675 (10th Cir. 2005).

Opinion

ORDER AND JUDGMENT *

STEPHEN H. ANDERSON, Circuit Judge.

Mr. Simek appeals the district court’s denial of his motion for a new trial after a jury held that when J.P. King Auction Co. auctioned off Mr. Simek’s Wyoming property for less than Mr. Simek thought it was worth, it did so in violation of Wyoming real estate statutes and in breach of its fiduciary duty to Mr. Simek, but that Mr. Simek incurred zero damages. Mr. Simek asserts five 1 grounds for error, each of which we address below. For the reasons stated, we affirm.

BACKGROUND

Mr. Simek, a successful businessman and original cofounder of Tombstone Pizza, first came into contact with J.P. King’s Executive Vice-President, Scott King, in October 2000 when Mr. Simek inquired about auctioning a property he owns in Nevada. At that time, Mr. Simek decided not to go forward with the auction. He contacted Scott King again in July 2002, this time concerning the auction of Mr. Simek’s custom-built log residence located on twenty acres of riverfront property in the vicinity of Cody, Wyoming. In August 2002, Mr. Simek and J.P. King entered into an Auction Marketing Agreement in regard to the Wyoming property.

Under the terms of the Agreement, the auction of Mr. Simek’s property would be conducted as an absolute auction, which requires the sale of the property “to the highest bidder(s) ... regardless of price,” *678 rather than a reserve auction, which allows a seller to reserve the right not to sell if the final bid does not exceed a certain amount. Agreement, Appellant’s App. Vol. Ill at 467. Scott King and J.P. King’s marketing materials had strongly recommended the absolute form of auction as the best method of obtaining the highest possible price for the property. After reviewing the Agreement, Mr. Simek’s attorney had questioned the use of the absolute auction method, but Mr. Simek agreed to proceed with that method.

The Agreement also provided that Mr. Simek would pay J.P. King $108,396.48 in advance for promotional and administrative expenses, and that, “[s]hould any items ultimately be more or less than the budget agreed upon, neither [Mr. Simek] nor [J.P.] K[ing] shall be entitled to a reimbursement.” Id. at 466-67. At the close of the sale of the property, Mr. Simek would also pay J.P. King ten percent of the total purchase price.

At the time this Agreement was negotiated and signed, a number of individuals at J.P. King had obtained Wyoming real estate licenses. However, Scott King, the person at J.P. King with whom Mr. Simek had the most extensive contact, did not have a Wyoming license, in violation of Wyo. Stat. Ann. § 33-28-101, although he obtained a license on October 1, 2002. In addition, J.P. King failed to obtain Mr. Simek’s signature on a written disclosure of applicable brokerage relationships that J.P. King was required to prepare under Wyo. Stat. Ann. § 33-28-306.

The auction of Mr. Simek’s property took place on October 26, 2002. J.P. King had imposed a $50,000 bid deposit requirement on qualified bidders. Six qualified bidders were present at the auction. One of the six, Phil Spano, was previously known to J.P. King, and J.P. King had waived the $50,000 bid deposit for him and also arranged for him to bid by telephone. Another of the bidders, Northeastern LLC, was an entity that Mr. Simek’s attorneys had created specifically to protect Mr. Simek’s interests at the auction.

Northeastern submitted an opening bid of $800,000. After the bidding went back and forth twice between Northeastern and Mr. Spano, Mr. Spano bought the property with a winning bid of $1,050,000. Including a buyer’s premium, the sale price for the property was $1,155,000. This amount was less than Mr. Simek’s mortgage on the property of $1,256,027.27, and was a disappointment to Mr. Simek, who believed the property was worth at least $3 million.

On September 26, 2003, approximately a year after the auction, Mr. Simek filed this diversity suit against J.P. King in Wyoming federal court. The complaint alleged, in relevant part, that, by failing to apprise Mr. Simek of the risks of absolute auction and failing to promote the auction of Mr. Simek’s property appropriately, among other things, J.P. King had breached the covenant of good faith and fair dealing as well as its fiduciary duty as Mr. Simek’s real estate broker. As a result of these alleged violations, Mr. Simek sought compensatory, consequential, and punitive damages. The complaint also alleged that J.P. King had acted in violation of the Wyoming Real Estate License Act, Wyo. Stat. Ann. §§ 33-28-101 to — 401. 2 In regard to this claim, the complaint indicated that, “[a]s a result of [J.P. King]’s actions ..., [Mr. Simek] ha[d] sustained significant losses and will continue to incur addi *679 tional damages until this matter is resolved.” Complaint, Appellant’s App. Vol. I at 24.

The case was tried to a jury over nine days. Mr. Simek testified to his belief that his property was worth $3 million. He also presented an expert witness’s appraisal of the property at $2.2 million. He further introduced witness testimony indicating that the absolute auction process had come under increasing scrutiny and that it was important for an auctioneer to make clients aware of the risks. Mr. Simek also presented an expert witness at trial to assess the “total amount received by J.P. King” as a result of its entering into the Auction Marketing Agreement with Mr. Simek. Trial Tr., Appellee’s SuppApp. Vol. I at 333. The expert testified that this amount was approximately $135,712, in addition to the $108,396.43 promotional fee.

Over Mr. Simek’s objection, J.P. King introduced into evidence the 2002 county tax assessment of Mr. Simek’s property which indicated its value was approximately $1.5 million. J.P. King also elicited testimony from Scott King and another individual engaged in auctions, again over Mr. Simek’s objection, in regard to the relationship between appraisers’ and tax assessors’ property valuations and the price that one might expect a property to be sold for at auction.

Following the close of evidence, Mr. Simek raised a number of objections in regard to the court’s proposed jury instructions, primarily arguing that the court was improperly including negligence principles — such as proximate causation and the duty to mitigate — in its instructions on damages for breach of fiduciary duty. The district court overruled these objections, holding that the concepts of causation and mitigation were common to all damages claims.

On August 27, 2004, the jury returned a verdict finding that J.P. King had breached its fiduciary duty to Mr. Simek and had violated Wyoming real estate laws but had not breached the implied covenant of good faith and fair dealing. The jury further found that the fair market value of Mr. Simek’s Cody property on the date of the auction was $1,050,000. The jury concluded that Mr. Simek had not sustained any damages as a result of J.P. King’s illegal conduct and that there were no damages that Mr. Simek could have “avoided or reduced by reasonable care and diligence without exposing him to undue risk, burden, or humiliation.” Verdict, Appellant’s App. Vol. II at 196. In addition, it found that J.P.

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Bluebook (online)
160 F. App'x 675, Counsel Stack Legal Research, https://law.counselstack.com/opinion/simek-v-jp-king-auction-co-ca10-2005.