Elworthy v. First Tenn. Bank, S-16-0165

CourtUnited States State Supreme Court of Wyoming
Writing for the CourtHILL, Justice.
Citation391 P.3d 1113
Parties Bruce R. ELWORTHY and Anne B. Marshall, Appellants (Plaintiffs), v. FIRST TENNESSEE BANK, First Horizon Loan Corporation, and RBS Citizens Bank, Appellees (Defendants).
Docket NumberS-16-0165
Decision Date17 March 2017

391 P.3d 1113

Bruce R. ELWORTHY and Anne B. Marshall, Appellants (Plaintiffs),
v.
FIRST TENNESSEE BANK, First Horizon Loan Corporation, and RBS Citizens Bank, Appellees (Defendants).

S-16-0165

Supreme Court of Wyoming.

March 17, 2017


Representing Appellants: Bruce R. Elworthy and Anne B. Marshall of Elworthy & Marshall, P.C., Sheridan, WY. Argument presented by Mr. Elworthy and Ms. Marshall.

Representing Appellees: Stephenson D. Emery of Williams, Porter, Day & Neville, P.C., Casper, WY; and Steven A. Ellis of Goodwin Proctor, LLP, Los Angeles, CA for Appellees First Tennessee Bank National Association and First Horizon Loan Corporation; and Rick A. Thompson and Lucas Buckley of Hathaway & Kunz, P.C., Cheyenne, WY for Appellee RBS Citizens Bank. Argument presented by Messer's Emery, Ellis, and Thompson.

Before BURKE, C.J., and HILL, DAVIS, FOX, and KAUTZ, JJ.

HILL, Justice.

¶1] Bruce Elworthy and Anne Marshall (collectively "Plaintiffs") filed an action against Defendants alleging claims for breach of contract, fraud in the inducement, and violation of a California law governing fraudulent business practices, all claims in relation to Defendants' financing of Plaintiffs' real property located in Wyoming and California. Plaintiffs filed their action in Wyoming and sought monetary and punitive damages, rescission and restitution, and an order declaring all encumbrances recorded against their Sheridan, Wyoming property void and expunged.

[¶2] The district court granted Defendants' Rule 12 motions to dismiss and for judgment on the pleadings. In so ruling, the court applied Wyoming law and found that Plaintiffs' breach of contract claims were barred by the statute of frauds and that Plaintiffs had failed to plead their fraud and fraud-based claims with the required particularity. We affirm.

ISSUES

[¶3] Plaintiffs failed to include in their brief a separate statement of issues presented for review, as required by W.R.A.P. 7.01(d).1 Within their statement of the case, Plaintiffs do, however, state as follows:

[391 P.3d 1116

Appellants respectfully submit that the findings by the District Court that: (1) the Procedural and Substantive Laws of the State of Wyoming controlled the litigation and (2) that the fraud counts were defective was reversible error and that the subsequent [dismissal] pursuant to Rule 12 of the Wyoming Rules of Civil Procedure that the District Court ordered was based upon an improper analysis of the applicable law[.]
¶4] Plaintiffs do not reference the district court's ruling on their breach of contract claim, but in the argument portion of their brief, they contend the court erred in that ruling. Given Plaintiffs' statement above and the arguments they make in their briefing, we summarize the issues on appeal as follows:
A. Did the district court err in ruling that Wyoming law should govern the parties' dispute?

B. Did the district court err in ruling that Plaintiffs' breach of contract claims were barred by the statute of frauds?

C. Did the district court err in ruling that Plaintiffs failed to plead their fraud-based claims with the particularity required by W.R.C.P. 9(b) ?

D. Did the district court abuse its discretion in ruling that it would not permit any further amendments to Plaintiffs' complaint?

FACTS

A. Events Leading to Wyoming Litigation

[¶5] Bruce Elworthy and Anne Marshall (collectively "Plaintiffs") are married and are both attorneys. In 1997, Plaintiffs bought a home in Sheridan, Wyoming, and in 2002, they began looking for a home in California, where they hoped to spend winters. In 2005, they found a home they wished to purchase in Monterey, California, priced at around $3,000,000.2 Along with the home purchase, Plaintiffs were also required to purchase the sellers' country club membership for $118,000.

[¶6] To purchase the California property, Plaintiffs worked with a mortgage broker by the name of Sherri Wall. Ms. Wall originally recommended a mortgage that required only the California property as collateral, but before Plaintiffs closed on the property, Ms. Wall informed Plaintiffs that she had found a better mortgage deal. This deal, which Ms. Wall referred to as the "best financing deal by far," required that Plaintiffs take out four mortgages to secure financing on the California property. The mortgages were to be issued by First Horizon Home Loan Corporation, which subsequently merged into First Tennessee Bank National Association ("First Tennessee"), and consisted of: a $1,000,000 first mortgage on the Sheridan property; a $150,000 home equity line of credit (HELOC) on the Sheridan property; a $1,500,000 first mortgage on the California property; and a $282,000 HELOC on the California property. Plaintiffs agreed to this financing arrangement and closed on the California property.

[¶7] After Plaintiffs moved into the California property, they discovered numerous defects that had not been disclosed by the sellers, including flooding and failing windows and an insect and rodent infestation. Plaintiffs contacted the sellers, their real estate broker, and the contractor that built the home to have the undisclosed defects addressed. When no resolution had been reached by the spring of 2007, Plaintiffs demanded

[391 P.3d 1117

rescission of the sales agreement. After that demand was rejected, Plaintiffs, in November 2007, filed litigation in California against the sellers, the contractor, and the real estate brokers, seeking damages and rescission of the sales agreement on the California property.

¶8] In December 2007, shortly after filing the California litigation, Mr. Elworthy was diagnosed with a brain tumor that required surgery. After Plaintiffs were advised this would affect Mr. Elworthy's ability to work for some time, they asked Ms. Wall for the name of someone with the lender who could discuss their situation. Ms. Wall referred Plaintiffs to John Harris, an attorney with First Tennessee in its Irving, Texas office.

[¶9] Plaintiffs thereafter contacted Mr. Harris and informed him of their situation. Mr. Harris offered a forbearance agreement on the California portion of the loans, by which payments would be deferred on those loans until the conclusion of the California litigation and then rolled into the principal balance. Plaintiffs agreed they would continue to prosecute the law suit and would pay the property taxes, homeowner assessments, insurance, maintenance, utilities and other such expenses on the property. Plaintiffs also agreed they would do as much "fix up" as was required to market the property and would move out over the coming months to enable the property to be marketed. In discussing the matter, Plaintiffs asked Mr. Harris if he wanted some form of written documentation of the forbearance and he stated that no writing was required for the action he was taking. Plaintiffs thereafter stopped making payments on the California property.

[¶10] Mr. Harris contacted Plaintiffs in the spring of 2008 and informed them that he was leaving First Tennessee but that the oral forbearance agreement would remain in place. Shortly thereafter, however, Plaintiffs learned that a MetLife entity was servicing the loans, and they began receiving late notices from MetLife. Plaintiffs then contacted an attorney with MetLife, who denied the existence of a forbearance agreement and informed Plaintiffs that if they did not bring the mortgages on the California property current, MetLife would issue a notice of default. Plaintiffs were unable to bring the mortgages current, and in June 2008, MetLife issued a notice of default. Foreclosure proceedings on the California property began in 2009.

[¶11] While the foreclosure was pending, Plaintiffs settled with some of the defendants in the California litigation. In April 2010, Plaintiffs contacted First Tennessee in an effort to delay foreclosure proceedings on the California property and find out what type of payment would be required to stop the foreclosure proceedings. First Tennessee would not consent to a delay and would not allow Plaintiffs to cure the default by making a payment on the mortgage. First Tennessee informed Plaintiffs that the only way they could avoid foreclosure was to immediately pay the primary mortgage and HELOC on the California property. Plaintiffs could not do that, and on April 23, 2010, First Tennessee foreclosed on the property.

[¶12] The suit against the sellers of the California property went to trial in March 2011. The California court found negligent misrepresentations by the sellers but denied the rescission remedy that Plaintiffs sought on two grounds: 1) the property had already been foreclosed on so it could not be returned to the sellers; and 2) Plaintiffs delayed bringing the litigation for two years and the doctrine of laches therefore barred the remedy of rescission. By a decision issued in November 2013, a California appellate court affirmed, agreeing with the trial court that the remedy of rescission was no longer available because of the foreclosure.

B. Proceedings in Wyoming District Court

[¶13] On April 16, 2012, while Plaintiffs' California appeal was still pending, Plaintiffs filed a complaint in district court in Sheridan County. The complaint named First Tennessee and First Horizon Loan Corporation (collectively "First Tennessee") as well as other financial institutions as defendants and asserted three counts: 1) breach of contract relating to the oral forbearance agreement; 2) interference with...

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15 practice notes
  • Mantle v. N. Star Energy & Constr. LLC, S-18-0101
    • United States
    • United States State Supreme Court of Wyoming
    • March 12, 2019
    ...complaint. The standard of review on dismissal under W.R.C.P. 12(c) is de novo. Elworthy v. First Tennessee Bank , 2017 WY 33, ¶ 20, 391 P.3d 1113, 1119 (Wyo. 2017). [¶52] Generally, parties must plead in response to an amended complaint. W.R.C.P. 15(a) (LexisNexis 2016) ("A party shall ple......
  • Allred v. Bebout, S-17-0078
    • United States
    • United States State Supreme Court of Wyoming
    • January 30, 2018
    ...Tavern, LLC v. Town of Alpine , 2017 WY 56, ¶ 21, 395 P.3d 167, 173 (Wyo. 2017) (quoting Elworthy v. First Tenn. Bank , 2017 WY 33, ¶ 20, 391 P.3d 1113, 1119 (Wyo. 2017) ). Further, we have not yet expressly recognized taxpayer standing in Wyoming,3 although we have suggested in dicta that ......
  • Skyco Res., LLP v. Family Tree Corp., S-21-0161
    • United States
    • United States State Supreme Court of Wyoming
    • June 16, 2022
    ...true; and 3) the plaintiff suffered damages in relying on the false representation." Elworthy v. First Tennessee Bank , 2017 WY 33, ¶ 41, 391 P.3d 1113, 1124 (Wyo. 2017) (quoting Claman v. Popp , 2012 WY 92, ¶ 43, 279 P.3d 1003, 1016 (Wyo. 2012) ). As the basis for its claim, Skyco asserted......
  • Interstate Fire & Cas. Co. v. Apartment Mgmt. Consultants LLC, Case No. 13-CV-278-J
    • United States
    • United States District Courts. 10th Circuit. District of Wyoming
    • July 13, 2018
    ...action or inaction that results in an injury. Mullinnix LLC v. HKB Royalty Trust , 126 P.3d at 923 ; Elworthy v. First Tennessee Bank , 391 P.3d 1113, 1122 (Wyo. 2017). Interstate made no representation to AMC or Sunridge regarding appeal bonds other than it would provide an appeal bond sol......
  • Request a trial to view additional results
15 cases
  • Mantle v. N. Star Energy & Constr. LLC, S-18-0101
    • United States
    • United States State Supreme Court of Wyoming
    • March 12, 2019
    ...complaint. The standard of review on dismissal under W.R.C.P. 12(c) is de novo. Elworthy v. First Tennessee Bank , 2017 WY 33, ¶ 20, 391 P.3d 1113, 1119 (Wyo. 2017). [¶52] Generally, parties must plead in response to an amended complaint. W.R.C.P. 15(a) (LexisNexis 2016) ("A party shall ple......
  • Allred v. Bebout, S-17-0078
    • United States
    • United States State Supreme Court of Wyoming
    • January 30, 2018
    ...Tavern, LLC v. Town of Alpine , 2017 WY 56, ¶ 21, 395 P.3d 167, 173 (Wyo. 2017) (quoting Elworthy v. First Tenn. Bank , 2017 WY 33, ¶ 20, 391 P.3d 1113, 1119 (Wyo. 2017) ). Further, we have not yet expressly recognized taxpayer standing in Wyoming,3 although we have suggested in dicta that ......
  • Skyco Res., LLP v. Family Tree Corp., S-21-0161
    • United States
    • United States State Supreme Court of Wyoming
    • June 16, 2022
    ...true; and 3) the plaintiff suffered damages in relying on the false representation." Elworthy v. First Tennessee Bank , 2017 WY 33, ¶ 41, 391 P.3d 1113, 1124 (Wyo. 2017) (quoting Claman v. Popp , 2012 WY 92, ¶ 43, 279 P.3d 1003, 1016 (Wyo. 2012) ). As the basis for its claim, Skyco asserted......
  • Interstate Fire & Cas. Co. v. Apartment Mgmt. Consultants LLC, Case No. 13-CV-278-J
    • United States
    • United States District Courts. 10th Circuit. District of Wyoming
    • July 13, 2018
    ...action or inaction that results in an injury. Mullinnix LLC v. HKB Royalty Trust , 126 P.3d at 923 ; Elworthy v. First Tennessee Bank , 391 P.3d 1113, 1122 (Wyo. 2017). Interstate made no representation to AMC or Sunridge regarding appeal bonds other than it would provide an appeal bond sol......
  • Request a trial to view additional results

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