Albrecht v. Zwaanshoek Holding En Financiering, B.V.

Decision Date30 September 1988
Docket NumberNo. 87-136,87-136
PartiesDonald H. ALBRECHT and Jo Anne Albrecht, Appellants (Defendants), v. ZWAANSHOEK HOLDING EN FINANCIERING, B.V., a Netherlands corporation; and Zwaanshoek Bouw-En Exploitatiemaatschappij, B.V., a Netherlands corporation, Appellees (Plaintiffs).
CourtWyoming Supreme Court

Frank Hess of Dill & Hess, Jackson, and Richard H. Floum and Greg David Derin of Dern, Mason & Floum, Los Angeles, Cal., for appellants.

Charles G. Kepler of Simpson & Kepler, Cody, Leo P. Larkin, Jr. of Rogers & Wells, New York City, and John A. Karaczynski of Rogers & Wells, Los Angeles, Cal., for appellees.

Before THOMAS, CARDINE, URBIGKIT and MACY, JJ., and O'BRIEN, District Judge.

MACY, Justice.

This is an appeal from a summary judgment foreclosing the mortgage on lands owned by defendants-appellants Donald H. Albrecht and Jo Anne Albrecht (Albrechts) given to secure the payment of a $2 million promissory note held by plaintiffs-appellees Zwaanshoek Holding En Financiering, B.V. (Zwaanshoek) and Zwaanshoek Bouw-En Exploitatiemaatschappij, B.V. (ZBE).

We affirm in part, reverse in part, and remand.

The Albrechts present the following issues on appeal:

A. Did the District Court commit reversible error in granting summary judgment to plaintiffs herein?

B. Did the District Court commit reversible error in vacating its order staying the underlying action to permit the trial of the antecedent California action?

C. Did the District Court commit reversible error in failing to grant defendants' motion to join MIG and its subsidiary MIG-USA as parties herein?

D. Is the $1,069,725.90, awarded by the District Court in its judgment purportedly as interest, truly interest or rather is it an impermissible penalty or forfeiture?

E. Was the record before the District Court sufficient to permit it to award plaintiffs $89,000 in attorneys' fees?

Sometime in 1980, Donald H. Albrecht, through his involvement with two California limited partnerships, Continental Investors, Ltd. and Continental/Tarzana Development Co., became a promoter of the Tarzana project, a condominium development venture in Tarzana, California. In order to finance the development, Albrecht arranged for a $24 million loan from Citicorp Real Estate, Inc. and Citibank National Association (collectively Citibank). As a condition of the loan agreement, Citibank required Albrecht or the limited partnerships to contribute at least $3.5 million of their own funds toward the project. Albrecht, as a general partner for Continental Investors, Ltd., obtained an additional $3.5 million loan from Zwaanshoek and ZBE, which was evidenced by two non-recourse, interest bearing promissory notes--one for $3 million and the other for $500,000. Each of these promissory notes was secured by a deed of trust on the Tarzana project properties with Citibank, as the primary lender, holding a priority lien.

Albrecht and the limited partnerships defaulted on the Citibank loan, and Citibank instituted foreclosure proceedings. However, on April 29, 1982, Albrecht entered into an agreement with Zwaanshoek and ZBE that restructured the debt obligations on the Tarzana project and enabled Albrecht and the limited partnerships to achieve a settlement with Citibank. Under that agreement, Zwaanshoek and ZBE assigned to Albrecht their $3.5 million promissory notes and related deeds of trust and loaned Albrecht an additional $1 million. In return, Albrecht provided Zwaanshoek and ZBE with a $1 million promissory note, which was secured by an irrevocable letter of credit issued by the Bank of America, and Donald H. Albrecht and Jo Anne Albrecht gave Zwaanshoek and ZBE a $2 million promissory note, which was secured by a mortgage on the Arbardee Ranch located in Teton County, Wyoming. The Albrechts also agreed, inter alia, that, during the month of October 1982, they would secure the release of a first mortgage on the Arbardee Ranch given to secure the payment of a promissory note they executed and delivered to W.B. Wells and Gladys H. Wells.

On November 1, 1985, Zwaanshoek and ZBE, believing that a breach of the agreement Initially, the court stayed the present action because of the prior order of the Superior Court of California, County of Los Angeles, enjoining Zwaanshoek and ZBE from foreclosing the promissory note and mortgage. However, after argument was heard, the court lifted that stay. Zwaanshoek and ZBE filed a motion for summary judgment, which was supported by a brief, affidavits, and exhibits. The Albrechts responded with a brief in opposition to the motion for summary judgment, supporting exhibits, and affidavits. After consideration, the court granted Zwaanshoek's and ZBE's motion for summary judgment, and Zwaanshoek and ZBE thereafter moved the court to enter an order awarding costs and attorney's fees. On May 4, 1987, a final judgment was entered, and this appeal was taken.

had occurred on the part of the Albrechts, advised the Albrechts that they were in default in the performance of their obligations under the agreement and gave them thirty-one days in which to cure such default by paying off the promissory note secured by the Wells mortgage. The Albrechts failed to cure the default, and this action was commenced to foreclose the mortgage on the property securing the payment of the $2 million promissory note, which was accelerated pursuant to the terms of the agreement and promissory note. The Albrechts responded by filing a combined answer, counterclaim, and motion. The answer alleged numerous affirmative defenses, including lack of consideration, and that Zwaanshoek and ZBE were enjoined by a California court from proceeding with this action. The counterclaim in substance alleged that Zwaanshoek, ZBE, and others, collectively called the "Arab Group," made a fraudulent oral promise to invest several million dollars in the Albrechts' real estate projects to induce the Albrechts to deliver their $2 million promissory note to Zwaanshoek and ZBE. The motion alleged that Mediterranee Investors Group S.A. (MIG) and Mediterranee Investors Group-USA, Inc. (MIG-USA) are the parent companies of Zwaanshoek and ZBE and prayed that they be joined as indispensable parties under W.R.C.P. 13(h) and 19.

SUMMARY JUDGMENT

The Albrechts contend that the court committed reversible error in granting summary judgment to Zwaanshoek and ZBE because genuine issues of material fact did exist.

In Fiedler v. Steger, 713 P.2d 773,774 (Wyo.1986), quoted in Walters v. Michel, 745 P.2d 913, 915 (Wyo.1987), we repeated our well-known general standards governing appellate review of summary judgments:

A succinct and conclusive critique of the Wyoming summary-judgment law is afforded by the court in Garner v. Hickman, 709 P.2d 407, 410 ( [Wyo.] 1985):

"When reviewing a summary judgment on appeal, we review the judgment in the same light as the district court, using the same information. A party moving for summary judgment has the burden of proving the nonexistence of a genuine issue of material fact. Material fact has been defined as one which, if proved, would have the effect of establishing or refuting an essential element of the cause of action or defense asserted by the parties. Upon examination of a summary judgment, we view the record from the vantage point most favorable to the party opposing the motion, giving him all favorable inferences which may be drawn from the facts."

(Citations omitted.)

The pleadings, affidavits, and exhibits of Zwaanshoek and ZBE clearly and unequivocally show that the Albrechts failed to timely secure the release of the Wells mortgage, that this failure triggered the acceleration of the payment of the $2 million promissory note pursuant to the terms of the promissory note and the agreement, 1 that the Albrechts failed to The pleadings, affidavits, and exhibits presented by the Albrechts to oppose the motion for summary judgment on the theory that the $2 million promissory note was not supported by consideration because of fraudulent misrepresentations merely contain general allegations and conclusory statements of fraud. This Court has held that:

pay the promissory note, and that there was no promise by anyone in the Arab Group to invest in any of the Albrechts' other real estate projects.

The initial burden is on the movant to show that there is no genuine issue of material fact. Once that showing is made, it is incumbent upon the party opposing the motion to come forward with specific facts to show that there is a genuine issue of material fact.

Stundon v. Sterling, 736 P.2d 317, 318 (Wyo.1987), quoted in Pace v. Hadley, 742 P.2d 1283, 1285 (Wyo.1987) (citation omitted). General allegations and conclusory statements are not enough. Jones Land and Livestock Co. v. Federal Land Bank of Omaha, 733 P.2d 258 (Wyo.1987). Fraud must be established by clear, unequivocal, and convincing evidence and will never be presumed. Duffy v. Brown, 708 P.2d433 (Wyo.1985).

The trial court correctly determined that there was no genuine issue of material fact and properly granted Zwaanshoek and ZBE summary judgment as a matter of law.

VACATING STAY

The Albrechts assert that the trial court abused its discretion and committed reversible error when it vacated its order staying this action and disregarded an injunction filed in a preexisting action in the State of California. They contend that, under the principles of comity and justice, the court should have stayed this case until the prior California case had been concluded. The Albrechts also allege that Zwaanshoek and ZBE are guilty of forum-shopping and misuse of jurisdictional resources.

In the most recent case of Rivermeadows, Inc. v. Zwaanshoek Holding and Financiering, B.V., 761 P.2d 662, 668 (Wyo.1988), a case involving some of these same parties, we stated, quoting Beach v. Youngblood, 215 Iowa 979, 247 N.W. 545, 549 (1933):

"It is a well and universally...

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