Court of Appeals hears dispute over deferred compensation, summary judgment and fee awards in CWS v. Montgomery

A three-judge panel of the Utah Court of Appeals heard argument in CWS v. Montgomery on whether the district court correctly entered summary judgment and an amended judgment after a jury verdict that split relief between the parties. Appellant CWS contends the district court mischaracterized its litigation position, overlooked disputed facts and incorrectly allowed Scott Montgomery to recover deferred compensation he allegedly accrued without required owner approval.

The dispute centers on an operating agreement for the business. CWS told the panel that the agreement’s reserved-actions provision —identified at oral argument as section 5.1 and Exhibit B to the operating agreement—limited a manager’s ability to change terms of employment or compensation without approval of a majority ownership interest, and that Montgomery never obtained that approval. "The operating agreement makes clear he was not allowed to change either the terms of employment or the terms of compensation," said Beth Ranshaw, counsel for CWS. Ranshaw told the panel Montgomery had only 45% ownership during the period at issue and had no contractual authority to unilaterally defer salary or bonuses; she argued the district court therefore erred in granting summary judgment to Montgomery on his counterclaim.

Montgomery’s counsel, Eric…