Rightful LLC Expulsion Does Not Extinguish Transferable Ownership for Conversion; Defamation Per Se Damages May Exceed Nominal Amounts

Introduction

In John A. McCall, Jr. v. Best of the West Productions, LLC; Huskemaw Optics, LLC; Jack Peterson; and BOTW Holdings, LLC, 2026 WY 21 (Feb. 17, 2026), the Wyoming Supreme Court reviewed a district court’s post-judgment reduction of a jury’s damages award under W.R.C.P. 60(b). The plaintiff, John A. McCall, Jr. (a former member of two Wyoming LLCs), obtained a jury verdict awarding $1,784,640 on a conversion claim (conversion of his LLC membership units after they were sold to a third party despite an injunction) and $75,000 on a defamation per se claim against managing member Jack Peterson (statements that McCall hired or was associated with prostitutes).

After judgment entered, the district court reduced conversion damages to the special master’s “adjusted book value” figure ($293,017.57) and reduced defamation per se damages to nominal damages ($500), reasoning that (i) McCall’s rightful expulsion eliminated “title” to the units for conversion purposes, and (ii) absent proof of actual injury, presumed damages in defamation per se should be nominal. The Supreme Court reversed both reductions and reinstated the jury’s awards.

Summary of the Opinion

  • Conversion: The Court held that a member who is expelled (dissociated) from an LLC remains the owner of his transferable interest as a transferee under Wyo. Stat. Ann. § 17-29-603. Thus, a jury can find both “rightful expulsion” and conversion where the LLC later sells/assigns the expelled member’s units to a third party. Conversion damages are measured by fair market value at the time and place of conversion—not necessarily the operating-agreement/special-master “dissociated member” valuation used for contract-based buyout disputes.
  • Defamation per se: The Court expressly held that a trier of fact may award more than nominal damages in a defamation per se case. While special (pecuniary) damages are not required, presumed/general damages may be substantial, and the jury’s $75,000 award was supported by evidence of reputational harm, humiliation, and relationship damage.
  • Rule 60(b) limits: The Court held the district court abused its discretion by using Rule 60(b) to rework the jury’s damages based on legal errors and post-verdict reweighing inconsistent with the evidence and Wyoming law governing dissociation and presumed defamation damages.

Analysis

Precedents Cited

A. Rule 60(b), “mistake,” and post-judgment correction

The Court grounded its review in Wyoming’s Rule 60(b) framework, emphasizing that relief exists to prevent unfairly or mistakenly entered judgments, not to provide unlimited reconsideration.

  • Myers v. Myers and Painovich v. Painovich were cited for the proposition that Rule 60(b) permits relief from the “oppression” of an unfair or mistaken judgment.
  • Hale v. City of Laramie and Cornell v. Mecartney supplied the abuse-of-discretion definition: discretion must stay within “the bounds of reason under the circumstances.”
  • Gunsch v. State (relying on Mendez v. Republic Bank) was central to the Court’s acknowledgement that a district court may correct its own legal/factual errors under Rule 60(b)(1), even errors “that could be corrected on appeal,” but only where the motion is not a device to evade appellate deadlines and is not simply a “second bite at the apple.”
  • Kemp v. United States was cited as recent U.S. Supreme Court endorsement of the view that “mistake” can include a judge’s own legal errors (in the proper procedural setting).

Against that backdrop, the Court held there was no correctable “mistake” in the earlier denial of Rule 50(b) as to damages; rather, the district court’s later Rule 60(b) ruling itself rested on a legal error about LLC ownership after dissociation and an improper reduction of presumed defamation damages.

B. Deference to juries on damages; caution in disturbing verdicts

  • Vahai v. Gertsch and Wageman v. Harrell were used to reaffirm that a jury’s damages determination is “inviolate” unless so excessive/inadequate it “shock[s] the judicial conscience” and suggests passion, prejudice, or improper cause.
  • Dewey v. Wentland (citing Archuleta v. Valencia) supported the rule that courts may not substitute their judgment for the jury’s collective judgment on damages.
  • Union Pac. R. Co. v. Richards (quoting Town of Jackson v. Shaw) underscored heightened reluctance to interfere when the law provides no fixed standard for quantifying damages (notably reputational/noneconomic harms).
  • The Court also referenced Elsner v. Campbell Cnty. Hosp. Dist. to highlight the institutional concern that post-judgment interventions can deprive parties of a jury’s factfinding function.

C. Conversion elements and measure of damages

  • Lieberman (Lieberman IV) v. Mossbrook (citing Cross v. Berg Lumber Co.) supplied the governing definition and elements of conversion used in the jury instructions.
  • Campbell v. Davidson was cited as consistent Wyoming authority on conversion elements.
  • O's Gold Seed Co. v. United Agri-Products Fin. Servs., Inc. and Broyles v. Broyles supported the rule that conversion damages equal fair market value at the time of loss.
  • ANR Prod. Co. v. Kerr-McGee Corp. supported awarding interest as part of conversion damages (the equivalent of interest on converted value).

D. Inconsistent verdicts must be raised before the jury is discharged

  • Anesthesiology Consultants of Cheyenne, LLC v. Stevens and Smyth v. Kaufman were applied to hold that any claim of irregularity/inconsistency in a verdict must be raised before the jury is discharged or it is waived. This undermined the district court’s later reliance on “inconsistency” as a post-judgment basis to reduce damages.

E. LLC membership interests after expulsion/dissociation

  • Statutory anchors: Wyo. Stat. Ann. § 17-29-602 (expulsion causes dissociation) and Wyo. Stat. Ann. § 17-29-603 (transferable interest owned immediately before dissociation remains owned “solely as a transferee”).
  • Lieberman (Lieberman I) v. Wyoming.com LLC and Mgmt. Nominees, Inc. v. Skowronska were cited as Wyoming authority recognizing LLC membership interests as property interests and distinguishing governance rights from ownership/transferable interests.

F. Defamation per se, presumed damages, and proof of harm

  • Hill v. Stubson and Lewis v. Francis were the key Wyoming cases: defamation per se is actionable without special (economic) damages; damages are presumed.
  • Thomas v. Sumner was cited (through Lewis v. Francis) to reaffirm that defamation per se does not require proof of pecuniary loss.
  • Bextel v. Fork Rd. LLC provided the definitional content of defamatory meaning (tending to injure reputation, subject to contempt, etc.).
  • The Court looked to the Restatement (Second) of Torts, especially § 621 Comment a and § 620, to explain that presumed general damages may be awarded even without direct proof of reputational harm, and that liability includes “at least nominal damages” (not “only” nominal damages).
  • It also drew from broader authority to explain general damages: F.A.A. v. Cooper (general damages include shame, mortification, injury to feelings and need no detailed allegation/proof); Innovative Block of S. Texas, Ltd. v. Valley Builders Supply, Inc. (general damages cover noneconomic reputational harm; special harm can substantiate reputation loss); and Cross v. Berg Lumber Co. (Wyoming definition of general damages as those that naturally flow from the wrong, implied by law).
  • In support of the jury’s broad role in setting general damages, the Court cited Getchell v. Auto Bar Sys. Nw., Inc. and Wyoming’s Landmark, Inc. v. Stockmen's Bank & Tr. Co. (quoting Chittim v. Armco Steel Corp.).
  • On the concept that presumed/general damages must still be real (not purely theoretical) while remaining difficult to quantify, the Court cited Amell v. Van Pelt (and its discussion of no-evidence review) and referenced Brady v. Klentzman.

Legal Reasoning

1. Conversion: dissociation changes governance rights, not ownership of the transferable interest

The district court’s reduction of the conversion award depended on the idea that a “rightful expulsion” extinguished McCall’s legal title and left him only a contractual right to payment at book value. The Supreme Court rejected this as a legal error for two independent reasons:

  1. Waiver of “inconsistent verdict” theory: If defendants believed the verdicts (rightful expulsion vs. conversion) were inconsistent, they had to object before the jury was discharged under Anesthesiology Consultants of Cheyenne, LLC v. Stevens and Smyth v. Kaufman. They did not.
  2. No inconsistency under Wyoming’s LLC Act: Under Wyo. Stat. Ann. § 17-29-603, dissociation does not eliminate ownership of the transferable interest; it reclassifies the person’s status to a transferee. Thus, McCall retained a property interest in the 41.25 units after expulsion. While his management/voting rights may have ceased, his ownership/transferable interest remained.

Once that statutory premise is accepted, the conversion analysis becomes straightforward: the LLCs were enjoined from harming McCall’s interests, yet sold/assigned the units to BOTW Holdings. A jury could therefore find “dominion” and “denial” of McCall’s rights in the property, satisfying the conversion elements drawn from Lieberman (Lieberman IV) v. Mossbrook.

The damages issue then followed the established rule: conversion damages are fair market value at the time and place of conversion (plus interest as appropriate), per Lieberman (Lieberman IV) v. Mossbrook, O's Gold Seed Co. v. United Agri-Products Fin. Servs., Inc., and ANR Prod. Co. v. Kerr-McGee Corp.. The special master’s figure—apparently based on operating-agreement “adjusted book value” for a dissociated member—could inform contract damages, but could not cap tort damages for conversion.

2. Defamation per se: presumed damages can be substantial; nominal is a floor, not a ceiling

The district court reduced defamation damages primarily because McCall did not testify to pecuniary loss or explicit reputational damage. The Supreme Court reframed the inquiry around Wyoming’s defamation-per-se doctrine:

  • Under Hill v. Stubson and Lewis v. Francis, defamation per se is actionable without proof of special damages.
  • Presumed damages exist because the nature of defamatory speech tends to cause reputational harm; the law allows jurors to infer that harm. The Restatement (Second) of Torts confirms that presumed general damages may be awarded even absent direct proof of reputation harm, and that liability includes “at least nominal damages” (§ 620)—implying the possibility of more than nominal.
  • The Court then announced a clear rule: a trier of fact may award more than nominal damages in defamation per se.

Applying Wyoming’s sufficiency-of-evidence framework (crediting the prevailing party’s evidence and reasonable inferences, see JTL Grp., Inc. v. Gray-Dockham), the Court found adequate support for $75,000 in presumed/general damages. The jury heard evidence of Peterson’s statements, the plaintiff’s professional standing, the change in relationships within the LLC community (including evidence that a close relationship materially changed after the accusation), and testimony from which humiliation, mortification, and fear for professional reputation could be inferred. Given the inherent imprecision of noneconomic valuation, the award did not “shock the judicial conscience” under Vahai v. Gertsch, and the district court’s reduction improperly substituted judicial judgment for the jury’s.

3. Rule 60(b) was misused to re-adjudicate fact and reframe controlling law

While acknowledging (via Gunsch v. State, Mendez v. Republic Bank, and Kemp v. United States) that Rule 60(b)(1) can correct a court’s own errors, the Supreme Court emphasized the limits: Rule 60(b) cannot become a vehicle to (i) relitigate issues already presented in Rule 50(b) practice, (ii) circumvent the strong deference owed to jury determinations of damages, or (iii) rest a damages reduction on an erroneous view of substantive law (here, the LLC dissociation statute and the law of presumed defamation damages).

Impact

1. LLC disputes: expelled members retain a property interest capable of being converted

The decision clarifies a critical distinction for Wyoming LLC litigation: expulsion/dissociation terminates membership governance rights, but not ownership of the transferable interest. This makes tort remedies (conversion) meaningfully available where an LLC wrongfully disposes of a dissociated member’s units—especially in violation of court orders.

Practically, litigants should expect more frequent framing of post-expulsion asset/unit disposition as tortious conversion (with potentially higher market-value damages) rather than solely as contract/buyout disputes governed by operating agreements and special-master valuations.

2. Defamation per se: Wyoming expressly rejects a “nominal-only” approach

Wyoming now has an explicit holding that presumed damages in defamation per se may be substantial. Plaintiffs need not prove special damages, and juries may award meaningful general damages based on the nature of the statement and evidence permitting inferences of reputational and emotional harm. Defendants, correspondingly, face increased damages exposure even where economic loss evidence is thin.

3. Post-judgment practice: reinforced constraints on using Rule 60(b) to rewrite jury awards

The opinion signals that Wyoming courts must be especially cautious when post-judgment motions would effectively displace the jury’s valuation of harms, and it reinforces the procedural discipline required for inconsistency challenges (raise before the jury is discharged).

Complex Concepts Simplified

  • Dissociation vs. ownership (LLCs): Being expelled can end your right to vote or manage, but you may still own the economic interest (the “transferable interest”)—you become a “transferee.”
  • Conversion: A tort (civil wrong) where someone treats your property as theirs and denies you the rights of ownership. Damages are typically the property’s fair market value at the time of the taking/transfer.
  • Special master valuation: A court-appointed neutral who values an interest under a specified framework (often contractual/book value). That valuation may not control a separate tort damages measure like market value for conversion.
  • Defamation per se: Certain accusations are considered so inherently harmful that the law presumes reputational injury, so the plaintiff does not need to prove economic loss to recover.
  • Nominal vs. presumed/general damages: Nominal damages are a small sum recognizing a legal wrong. Presumed/general damages aim to compensate for inherently hard-to-measure harms like reputation and humiliation and can be more than nominal.
  • Rule 50(b), 59, and 60(b): Rule 50(b) challenges legal sufficiency of evidence after trial; Rule 59 seeks a new trial or to alter/amend judgment; Rule 60(b) provides limited relief from a final judgment for specific reasons (including “mistake”), but is not meant for routine reconsideration of jury findings.

Conclusion

2026 WY 21 establishes two important clarifications in Wyoming law: (1) an expelled LLC member remains the owner of the transferable interest as a transferee under Wyo. Stat. Ann. § 17-29-603, permitting a conversion claim (and market-value conversion damages) when the LLC sells or assigns that interest; and (2) defamation per se damages in Wyoming are not capped at nominal amounts— juries may award substantial presumed/general damages supported by reasonable inferences of reputational and emotional harm. The Court also reinforces procedural rigor (waiver of inconsistent-verdict objections not raised before discharge) and constrains post-judgment use of W.R.C.P. 60(b) to rewrite jury damage awards.