Baker Boyer Nat'l Bank v. JPF Enters., LLC
Decision Date | 13 March 2019 |
Docket Number | No. 20180222,20180222 |
Citation | 924 N.W.2d 381 |
Parties | BAKER BOYER NATIONAL BANK, Plaintiff and Appellee v. JPF ENTERPRISES, LLC, Defendant and Appellant |
Court | North Dakota Supreme Court |
Trevor A. Hunter (argued), Williston, ND, and Todd Reuter (on brief), Spokane, WA, for plaintiff and appellee.
Steven J. Wild, Bowman, ND, for defendant and appellant.
[¶1] JPF Enterprises, LLC, appeals from a summary judgment awarding Baker Boyer National Bank $858,135.47 on its breach of contract claim and dismissing JPF’s counterclaim for fraud in the inducement. JPF argues the district court erred in granting summary judgment on the counterclaim for fraud in the inducement. We conclude JPF failed to raise a genuine issue of material fact about the existence of a fiduciary relationship, and affirm the summary judgment.
[¶2] Baker Boyer loaned money to JPF for the purchase of thirty mobile homes from Jason Sundseth and his company, Vindans LLC, for use as rental housing in western North Dakota. In 2013, Vindans owned the homes and rented them to oil field workers through Greenflex Housing, LLC, and Greenflex’s rental manager, Badlands, LLC. Vindans purchased the homes with financing from Baker Boyer.
[¶3] In the summer of 2013, James Foust, managing owner of JPF, and Sundseth began negotiations for JPF to purchase the homes from Vindans, and JPF sought financing for the purchase from Baker Boyer. According to Foust, Baker Boyer’s loan officer, Chris Sentz, obtained rental information from Greenflex Housing indicating the monthly rental proceeds from the thirty homes was $9,600 and would not service JPF’s anticipated monthly payments of about $15,000 for the loan. Foust also claimed Baker Boyer required JPF to contract with Greenflex Housing to rent the homes to oil field workers and informed him the arrangement would result in a return of $45,000 per month for the thirty homes. According to Foust, Vindans’ loan with Baker Boyer was near foreclosure and Baker Boyer failed to inform him that his purchase of the homes would not be profitable.
[¶4] On August 20, 2013, Sentz emailed Foust that the requested financing for the purchase was "no longer a viable possibility" and that he would be sending an "official declination letter in the mail." Foust testified in his deposition that the denial was because Sundseth "was absolutely impossible to deal with" and Foust told Sentz he was "out of the deal." Foust also testified the denial had nothing to do with the "soundness of [his] financials." Baker Boyer did not send Foust a declination letter in the mail. On August 26, 2013, Sentz emailed Foust that "things have occurred" to allow Baker Boyer to again consider financing JPF’s purchase of the homes. According to JPF, the subsequent development was the availability of Foust’s personal guaranty of JPF’s loan.
[¶5] On September 24, 2013, JPF and Vindans executed an asset purchase agreement for JPF to purchase the thirty homes contingent on JPF obtaining financing from Baker Boyer. The purchase agreement stated the purchase price for the homes was a $1,000,000 payoff of Baker Boyer’s loan to Vindans and a $245,000 payment to Vindans.
[¶6] In October 2013, Baker Boyer and JPF executed loan documents for JPF to borrow $1,077,600 from Baker Boyer to finance JPF’s purchase of the homes from Vindans. The loan documents included a promissory note, a business loan agreement, a commercial guaranty of JPF’s loan by Foust, a security agreement listing the mobile homes as collateral for the loan, and financing statements. Foust’s personal guaranty stated "that, absent a request for information, Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of its relationship with Borrower."
[¶7] In November 2015, JPF defaulted on its loan from Baker Boyer, and Baker Boyer sued JPF in North Dakota1 to enjoin JPF from transferring or disposing of the loan collateral, to take possession of the collateral, for appointment of a receiver, for sale of the collateral and for a money judgment. JPF answered and counterclaimed, admitting payments were not made as agreed and alleging fraud in the inducement. JPF claimed Baker Boyer acted as an intermediary for JPF’s purchase of the homes from Vindans and failed to disclose information to JPF about the physical condition of the homes, the financial condition of Vindans, and the uncertain financial viability of the home rentals. JPF sought an order requiring Baker Boyer to refund more than $600,000 that JPF paid to Baker Boyer in exchange for JPF transferring all right, title and interest in the homes to Baker Boyer.
[¶8] The district court granted Baker Boyer’s motion for summary judgment, ruling Baker Boyer was entitled to judgment as a matter of law on its claim for damages against JPF and awarding Baker Boyer $858,135.47. The court also concluded Baker Boyer was entitled to judgment as a matter of law on JPF’s counterclaim for fraud in the inducement, ruling JPF failed to provide competent admissible evidence establishing a genuine issue of material fact about the existence of a fiduciary relationship between Baker Boyer and JPF. The court said:
[¶9] We review the issues raised in this appeal in the posture of summary judgment. Under N.D.R.Civ.P. 56(c),2 summary judgment "shall be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Our standard for reviewing a summary judgment is well established:
Wenco v. EOG Res., Inc. , 2012 ND 219, ¶ 8, 822 N.W.2d 701 (quoting Arndt v. Maki , 2012 ND 55, ¶ 10, 813 N.W.2d 564 ).
[¶10] Summary judgment is appropriate when a party fails to establish the existence of a factual dispute on an essential element of that party’s claim on which the party will bear the burden of proof at trial. Mr. G’s Turtle Mountain Lodge v. Roland Twp ., 2002 ND 140, ¶ 23, 651 N.W.2d 625. When no pertinent evidence on an essential element is presented to the district court in opposition to a motion for summary judgment, it is presumed no such evidence exists. Id. Issues of fact become issues of law if reasonable persons could reach only one conclusion from the facts. Saltsman v. Sharp , 2011 ND 172, ¶ 5, 803 N.W.2d 553.
[¶11] JPF argues the district court erred in dismissing JPF’s counterclaim because genuine issues of material fact exist on its claim for fraud in the inducement. Relying on Am. Bank Ctr. v. Wiest , 2010 ND 251, ¶¶ 31-32, 793 N.W.2d 172, JPF argues that the existence of special circumstances beyond a normal banking relationship is a question of fact, and that correspondence from Baker Boyer’s loan officer, Sentz, shows this loan was not made in an ordinary lender-borrower relationship. JPF argues Baker Boyer breached a fiduciary duty to disclose information to Foust and JPF about the questionable financial viability of renting the homes....
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