Wyoming’s new court is in business

The chancery court is in operation with a clerk, two judges and assorted staff, all located in the Wyoming Supreme Court quarters in Cheyenne.

At some point, a permanent judge will be appointed to oversee the system and the court will be moved into office space in the equally new Thyra Thomson state office building.

The clerk of the new court, Ben Burningham, who also is chief counsel and director, said last week in a phone interview that officials hope to get furniture for the new court quarters this month.

The judicial appointments for the new court, he said, will be handled the same way they are now for the district and circuit courts.

The Judicial Nominating Commission will present the names of three nominees to the governor who selects the new judge from that list.

Two Wyoming district court judges experienced in business litigation — Steven Sharpe in Cheyenne and Richard L. Lavery, Green River — are handling chancery court cases until a full time judge is installed. They are dealing with the cases remotely rather than in person.

The chancery court is designed to expedite business and commercial civil cases. They do not have jury trials, and they don’t handle criminal cases.

Their purpose is to help the business community and also lessen the burden of these cases on the district and circuit courts.

The legislative summary of the 2019 chancery court law said the new court is a court of limited jurisdiction “established for the expeditious resolution of disputes involving commercial, business, trust and similar issues.’’

Meanwhile, Wyoming’s new court is getting some national attention.

“Wyoming is one of the fastest-growing states for incorporation in the U.S.” reads an ad on the Lexis Nexis webpage.

“Now the first state in the nation to recognize Decentralized Autonomous Organizations (DAOs), and with a new Chancery Court created to streamline commercial, business and trust cases, that trend is certain to continue,” the Lexis Nexis article said.

The Legislature’s action in recognizing DAOs as a legal business entity was aimed at cryptocurrency collectives. DAOs are governed by smart contracts rather than the traditional hierarchy of a limited liability corporation (LLC).

In the latest legislative session, lawmakers passed a number of amendments to the laws concerning DAOs, primarily focused on establishing how individuals can join, leave and vote in the entities. For example, DAOs must now include a statement in their articles of organization establishing how the DAO will be managed by the members, including to what extent the management will be conducted algorithmically. The DAO’s articles of organization and smart contract must also govern procedures for updating, modifying or otherwise revising the entity’s smart contracts, as well as dispute resolution.

It’s interesting that the first opinion issued by the new court involves an investment in cryptocurrency.

The legal spat was between two officers of ITMO, a corporation incorporated in Wyoming in 2020 that has its principal office in Alabama.

Michael Terpin, the plaintiff, sued Jason Cooner for an accounting of investments. He also petitioned the chancery court for a temporary retraining order to prevent a meeting of the corporate shareholders and to prevent Cooner from identifying himself as a officer of ITMO.

According to the opinion Terpin claimed bank records showed Cooner spent $165,000 of a $740,000 investment income on business expenses and the rest on what appeared to be personal expenses.

He further alleged that Cooner accepted about $500,000 in investor funds in the form of cryptocurrency which was immediately transferred to Cooner’s personal control.

He wanted the shareholders’ meeting stopped before he and a second unidentified board member, a majority, could terminate Cooner so there could be an investigation of the investment money.

In retaliation Cooner terminated Terpin’s contracts and called a shareholder’s meeting. Noticed topics for the meeting included membership on the board and confirmation of Cooner’s authority and Terpins’ lack of authority.

Judge Lavery denied Terpins’ petition for a temporary injunction because of technical flaws and the failure to show any irreparable harm if the meeting went ahead.