Background
The Wyoming Supreme Court affirmed an injunction that prevents Ryan Clement from acting or presenting himself as a manager of Cowboy Racing, LLC, now known as CR-GTD, while litigation over the company continues. The decision gives Wyoming courts and business litigators useful guidance on how far a judge may go when interpreting an operating agreement at the preliminary-injunction stage. A court may decide whether one side is likely to prevail under the agreement, but it may not convert that provisional assessment into a final merits ruling unless the parties receive notice that the injunction hearing will be consolidated with a trial.
Clement’s company, Dillinger’s LLC, owned 49% of Cowboy Racing, while EFTI, LLC owned 51%. The operating agreement named Clement and William Edwards as initial managers and included two provisions addressing removal. Section 5.11 permitted removal for gross negligence, fraud, deceit, or intentional misconduct at a meeting called for that purpose. Section 5.4 barred a manager from causing Clement’s removal without cause unless members holding a majority interest gave express written consent. EFTI voted at a special meeting to remove Clement and later signed a resolution confirming that action. After Clement continued communicating with third parties as though he could act for Cowboy Racing, the company and EFTI sued and obtained a preliminary injunction.
The district court found a high probability that the plaintiffs would succeed on their declaratory-judgment claim and stated that Clement had been lawfully removed under the agreement. Clement appealed, arguing that the court had effectively decided a central contract issue without notice, discovery, or a trial. He did not challenge the findings of possible irreparable harm or probable success as such.
The Court’s Holding
Justice Fenn, writing for a unanimous court, agreed that the district court used language that was too final. Wyoming Rule of Civil Procedure 65(a)(2) allows a court to consolidate a preliminary-injunction hearing with a trial on the merits, but the parties must receive notice sufficient to let them fully present their cases. No such notice was given here. Because a preliminary injunction tests only the movant’s likelihood of success, the district court should not have declared definitively that Clement’s removal was lawful.
That error did not require reversal. The Supreme Court treated the ruling as preliminary and asked whether the record reasonably supported the likelihood-of-success determination. It held that the operating agreement was unambiguous when read as a whole. Section 5.11 supplied one route for removing a manager for specified misconduct. Section 5.4 supplied another route for removing Clement for other reasons when members holding a majority interest gave express written consent. Reading the provisions as alternatives preserved both rather than placing them in irreconcilable conflict.
EFTI held 51% of the company, voted at a specially called meeting to remove Clement, and documented its decision in signed meeting minutes and a later resolution. Those writings supported a preliminary finding that the majority-interest member had expressly consented as Section 5.4 required. The district court therefore could reasonably find that Cowboy Racing and EFTI were likely to prove Clement had been lawfully removed. The injunction remained in force, but the Supreme Court emphasized that the parties may conduct discovery, offer additional evidence, and advance alternative contract interpretations at trial.
Key Takeaways
- A Wyoming court may interpret disputed contract language when deciding probable success on a preliminary-injunction motion; doing so does not itself prematurely decide the merits.
- Without notice of consolidation under Rule 65(a)(2), an injunction order must remain provisional and should not phrase a likelihood determination as a final declaration of contractual rights.
- Operating-agreement provisions that appear to overlap are read together where a reasonable interpretation gives each provision effect. Here, removal for enumerated cause and removal with majority written consent were alternative procedures.
- Signed meeting minutes and a confirming resolution can support a finding of express written member consent, an important drafting and recordkeeping point for Wyoming LLC governance disputes.
Why It Matters
The decision draws a practical line for Wyoming litigators seeking or opposing emergency business relief. A party requesting an injunction may need the court to interpret an operating agreement to establish likely success, but counsel should ensure the resulting order preserves the merits for later adjudication unless the court has clearly consolidated the proceedings. An opponent should distinguish between an impermissibly final formulation and a supportable preliminary determination; wording alone may not produce reversal when the record sustains the injunction.
For Wyoming LLCs, the case also underscores the value of precise removal provisions and contemporaneous written corporate records. Majority owners should document the authority, vote, and consent supporting management changes. Minority owners should recognize that a cause-based removal clause may not be exclusive if another clause expressly permits removal through majority consent. The ultimate contract dispute in this case remains open, but the injunction governs the parties while that dispute proceeds.