The Wyoming Supreme Court on Monday revived a $14 million lawsuit in which a locally grown gun manufacturer, Gunwerks, accuses Cody’s economic development group and two businesses of failing to build an adequate facility for its use with Wyoming Business Council money.
The controversy in this case involves a $6 million building the economic development group, Forward Cody, arranged to build with money from the Wyoming Business Council.
Gunwerks says the building is flawed and it’ll take $14 million in repairs, lost profits and other costs to fix it.
Forward Cody questions that figure and some of Gunwerks’ other claims.
Meanwhile, the Wyoming Business Council, which is not a party to the case but half-granted, half-loaned the $6 million for the project, is battling for its existence. Lawmakers are considering defunding and dismantling it.
But First, Building Guns In A Garage
Gunwerks LLC started making custom guns and optics in a garage in Otto, Wyoming, and soon grew to seek bigger buildings.
In 2017, the business decided to seek $6 million from the Wyoming Business Council’s Business Ready Communities (BRC) program, to build a facility in Cody.
But only a community could receive money through that program, so Gunwerks forged an agreement with Cody’s economic development group, Forward Cody.
Forward Cody agreed in 2018 to seek $3 million in loans and $3 million in grants for the building, from the Wyoming Business Council, while Gunwerks was required to furnish a $250,000 piece of land. After that, Forward Cody would lease the building to Gunwerks.
Forward Cody was obligated to send 25% of the lease money it received on the $3 million grant half of the project payout back to the Wyoming Business Council but was slated to keep the other 75%, court documents say.
“This was the largest development with State funds with which Forward Cody had ever been involved,” says Gunwerks’ appeal brief.
In the lease agreement is an option for Gunwerks to buy the building after five years for no less than $6 million.
Forward Cody chose Plan One to be the project architect; and hired its member Sletten Construction as contractor, the appeal brief says.
Two Roads Diverged
Here’s where the parties’ versions of this project’s history diverge.
In Gunwerks’ telling, Forward Cody wanted to hire a project manager with the state money, to deal with construction issues.
“Gunwerks expressed concerns and objections, about using State money from the project to pay a ‘clerk of the works,’ as it would reduce the funds available for the overall project,” says Gunwerks’ brief. The gunmaker questioned why Forward Cody didn’t “hire a more experienced party” to deal with project issues, and with its own money.
After that dispute, says Gunwerks’ brief, “Forward Cody stopped inviting Gunwerks’ representatives or informing them of owners meetings, meaning (they) made all decisions without Gunwerks’ input.”
Gunwerks alleges that the completed building was riddled with design and construction defects, including poor climate control, pervasive water leaks, a failing shooting tunnel and crumbling concrete work.
Forward Cody Says …
Forward Cody’s appeal brief questions why, if the building cost just over $6 million, Gunwerks is suing for $14 million.
That figure includes $7.44 million in what Forward Cody calls “speculative, future lost profits damages due to (Gunwerks’) conclusion that it must completely shut down its operations for six months” to fix the concrete problems. It also includes $2.2 million in loss of customer deposits over the shutdown and $431,795 in equipment; $263,700 for time Gunwerks personnel spent managing construction and $3.8 million in costs to fix the building.
Forward Cody questions whether the expert opinion Gunwerks invoked to justify these figures is sufficient, and the group casts its own witnesses as better informed.
“Appellant has failed to produce a qualified witness to opine that the facility needs to be shut down for six months,” says Forward Cody’s brief. The brief also accuses Gunwerks of trying to micromanage the project for a building it would not initially own.
“(Gunwerks) sought to wrest authority over the project and State funds from Forward Cody and exercise full control over the project,” says Forward Cody’s argument.
As for Plan One’s brief, it says it shouldn’t be included in this case at all and claims it didn’t have a contractual duty toward Gunwerks – since it contracted with Forward Cody.
Sletten’s brief could not be accessed Monday: its link is dysfunctional.
Forward Cody declined Monday to comment. Gunwerks and the two businesses it's suing did not immediately return comment requests.
Suing
Gunwerks sued Forward Cody in 2021 then added the architect and contractor to the case in 2022.
All three of the accused entities countered, saying Gunwerks was reading too many obligations into its contract with Forward Cody.
Forward Cody argued that it was just a money-manager, essentially.
It also pointed to the substantial savings Gunwerks enjoyed by leasing a government-funded building rather than a private-sector build.
Gunwerks was only to pay interest on $3 million of the build, at 1% - an interest rate well below anything that could be obtained through private financing,” says Forward Cody’s brief.
The group estimates that by going the government-funded route, Gunwerks saved $4.8 million of what it would have spent by using the private sector.
High Court Finds …
The Park County District Court had dismissed Gunwerks’ case, saying the architect and construction company don’t owe the gunmaker contractual duties. It also judged part of the case early in Forward Cody’s favor, saying Gunwerks didn’t have viable claims against the group.
The Wyoming Supreme Court reversed both of those decisions in a unanimous Monday opinion by Justice Bridget Hill.
Gunwerks had compiled 157 pages of alleged defects with the building, Hill noted in her opinion.
The gunmaker didn’t have a contract with either Plan One or Sletten. But it alleged it was a third-party beneficiary of both businesses’ contracts with Forward Cody.
Essentially, says Gunwerks’ argument, everyone understood that the building was for the gunmaker to use.
Hill agreed, citing “common sense.”
“The City and Forward Cody did not, one day, randomly decide to build a generic building to encourage general economic development in the area,” wrote Hill. “Instead, Gunwerks started negotiating with them to build Gunwerks a custom-designed manufacturing facility, using state (Wyoming Business Council) funds.”
As Gunwerks’ “community” funnel for the Business Ready Communities money that Gunwerks could not, as a private business, obtain itself, Forward Cody had more duties than just managing the $6 million, Hill added.
The opinion sends the case back to the Park County District Court for further litigation.
Clair McFarland can be reached at clair@cowboystatedaily.com.
