Fox v. Tanner
| Decision Date | 08 December 2004 |
| Docket Number | No. 04-19,04-19 |
| Citation | 101 P.3d 939,2004 WY 157 |
| Parties | DORIAN FOX and THE INVESTMENT CENTER, INC., a New Jersey Corporation, Appellants (Defendants), v. FRANK and MAUREEN TANNER; PATSY CLARK O'HEARN; and BARRY FITZGERALD, Appellees (Defendants). |
| Court | Wyoming Supreme Court |
Representing Appellants: Keith R. Nachbar, Casper, WY, and Craig S. Hilliard of Stark & Stark, P.C., Princeton, NJ. Argument by Mr. Hilliard.
Representing Appellees: Thomas R. Smith and Frank R. Chapman of Beech Street Law Office, Casper, WY. Argument by Mr. Smith.
Before HILL, C.J., and GOLDEN, LEHMAN, KITE, and VOIGT, JJ.
[¶1] Dorian Fox (Fox) and The Investment Center, Inc. (TIC) appeal the district court's denial of their motion to dismiss Frank and Maureen Tanner's (the Tanners) allegations contained within the complaint.1 The district court concluded that 1) a court, rather than an arbitrator, should decide the threshold question of fraudulent inducement, and 2) the underlying contracts, which included arbitration agreements, were obtained through fraud. Upon our review, we affirm.
[¶3] On April 16, 2001, the Tanners, Patricia Clark O'Hearn, and Barry Fitzgerald filed a complaint against Jeffrey Barber (Barber), Fox, and TIC alleging fraud, breach of contract, and negligence.2 In essence, the appellees allege they gave monies to Barber for investment purposes while Barber was employed as a stockbroker at TIC's Casper, Wyoming office, which Fox supervised. After they did so, Barber converted the monies for his own purposes. Fox and TIC denied they had any relationship with the Tanners whatsoever.
[¶4] Nevertheless, on June 25, 1999, Barber pled guilty to four counts of fraud, including that he had unlawfully obtained property from the Tanners. In 1999, the Wyoming Secretary of State launched an investigation into TIC's activities. Ultimately, the Secretary of State entered a Final Order including factual findings that TIC had failed to reasonably supervise Barber in its Casper office. During this proceeding, TIC also entered into an Offer of Settlement admitting that it had failed to reasonably supervise Barber in its Casper office. However, in both these documents, TIC explicitly neither admitted nor denied any liability for Barber's actions.
[¶5] During discovery in this action, the Tanners produced four separate Cash Account Agreement forms, which they had signed apparently at Barber's request in February of 1998. Each of these forms contain the following language:
In addition, just before the signature blocks on each of the forms, the following language appeared: "This agreement contains a pre-dispute arbitration clause at page 1 at paragraph 10."
[¶6] The forms were not signed by anyone other than the Tanners, although "The Investment Center, Inc." was printed at the top of each form next to a logo. TIC's name and its New Jersey address also appeared on the forms immediately following the signature lines. However, boxes on the forms designated for "Branch," "Account No.," and "For Office Use Only" were left blank.
[¶7] On September 23, 2002, Fox and TIC filed their motion arguing that, based upon the arbitration language contained within the Cash Account Agreement forms, the Tanners' claims should be dismissed. The Tanners responded to the motion with arguments that 1) dismissal was not a proper remedy, 2) Fox and TIC had previously denied the existence of any contracts between the parties, and 3) under Wyoming law any contract that may exist between the parties may be revoked on the basis of fraud. In reply, Fox and TIC, in part, asserted that the Tanners had failed to raise a claim that they were fraudulently induced to agree to the arbitration provision. Finally, the Tanners submitted additional materials to the district court, including 1) a letter from TIC, enclosing a copy of the Secretary of State's Final Order, and advising the plaintiffs that they could make a claim for arbitration and a demand for settlement, 2) TIC's response to a subpoena in the Wyoming Secretary of State proceeding, and 3) responses of Fox and TIC to the plaintiffs' interrogatories. Generally, the Tanners argued that the additional documentation showed that TIC had admitted to not properly supervising Barber, including his dealings with the Tanners, but that TIC still denied a formal customer relationship with the Tanners.
[¶8] On March 20, 2003, the district court sent its initial decision letter to the parties. The letter indicated that after substantial review and analysis, the district court could not decide whether the Tanners' claims were arbitrable without holding a hearing to receive additional evidence concerning the agreements. Therefore, a hearing on the matter was set for July 18, 2003.
[¶9] Prior to hearing, the Tanners filed a brief partially arguing that Barber, Fox, and TIC were precluded from denying liability to the Tanners by the doctrine of collateral estoppel. The Tanners' arguments were based on Barber's guilty plea to criminal charges involving the Tanners and the Secretary of State's conclusions that TIC failed to properly supervise Barber. In response, Fox and Ralph J. DeVito, President of TIC, filed certified statements stating that neither Fox nor TIC had admitted to any liability in reaching settlement in the Secretary of State proceeding. In addition, Fox and TIC filed a memorandum opposing the Tanners' collateral estoppel arguments and submitted the deposition transcripts of both the Tanners whereby the Tanners indicated that they had not been fraudulently induced to execute the agreements. The Tanners then filed their reply and asserted for the first time that no consideration existed for the agreements.
[¶10] Following the evidentiary hearing, the district court issued another lengthy decision letter. After noting the unsettled and conflicting state of the law in the area, the district court concluded that the trend was toward requiring arbitration only when the parties clearly agreed to do so. The district court then ruled that because Barber had admitted that he obtained money from the Tanners fraudulently, it strained credulity that the Tanners would have contemplated or agreed to arbitrate any dispute that arose under the agreements. Later, in another decision letter, the district court clarified that it found that paragraph 9 of the Settlement Offer in the Secretary of State proceeding admitting that TIC failed to reasonably supervise Barber in its Casper office was not only binding on TIC but also on Fox. Therefore, the district court denied the motion of Fox and TIC. This appeal followed.
[¶11] When a matter has been the subject of an evidentiary hearing before the district court, we review the factual determinations under a clearly erroneous standard and the legal conclusions de novo. Odhinn v. State, 2003 WY 169, ¶13, 82 P.3d 715, ¶13 (Wyo. 2003) (citing Union Pacific Railroad v. Trona Valley Fed. Credit Union, 2002 WY 165, ¶7, 57 P.3d 1203, ¶7 (Wyo. 2002)).
[¶12] During the appeal process, the Tanners filed a motion to dismiss with this court. This court denied the motion, without prejudice, allowing the Tanners to again address the issue in their appellate brief. The Tanners now assert that, pursuant to W.R.A.P. 1.05, Fox and TIC have failed to appeal from a final appealable order. The Tanners argue that the order appealed is an interlocutory order to which an application for a petition for writ of review under W.R.A.P. 13 applies. Hence, the Tanners claim that because Fox and TIC failed to follow the procedural rules and requirements for a petition for a writ of review, this appeal should be dismissed.
[¶13] Wyo. Stat. Ann. § 1-36-119 (LexisNexis 2003) (emphasis added), which is a part of Wyoming's Uniform Arbitration Act, specifies:
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