Garner v. Hickman

Decision Date12 November 1985
Docket Number85-114,Nos. 85-27,s. 85-27
Citation709 P.2d 407
PartiesMary Janell GARNER and Charles Garner, Appellants (Plaintiffs), v. Gayle HICKMAN and Sundance State Bank, Appellees (Defendants). SUNDANCE STATE BANK, Appellant (Defendant), v. Charles E. GARNER and Mary Janell Garner as assignees of Gayle Hickman, Appellees (Plaintiffs), v. Gayle HICKMAN d/b/a Tower Homes Center, (Defendant).
CourtWyoming Supreme Court

Bernard Q. Phelan, Cheyenne, for Mary Janell Garner and Charles Garner, appellants in No. 85-27 and appellees in No. 85-114.

Rex O. Arney of Redle, Yonkee & Arney, Sheridan, for Sundance State Bank, appellant in No. 85-114, and appellee in No. 85-27.

Robert J. O'Neil, Gillette, for Gayle Hickman, appellee.

Before THOMAS, C.J., and ROSE, ROONEY, BROWN and CARDINE, JJ.

BROWN, Justice.

These appeals involve a breach of contract action for defective construction of a modular home. The appellants, Mary Janell Garner and her father, Charles Garner (hereinafter the Garners), brought a breach of contract action against appellee Gayle Hickman (hereinafter Hickman) in case No. 85-27. The Garners also brought an action alleging fraud, bad faith and unfair dealing against appellee Sundance State Bank (hereinafter the bank). The cases were consolidated below and on appeal. Trial was had to the court resulting in a $6,621 judgment for the Garners in their breach of contract action against Hickman. The trial court granted summary judgment in favor of the bank in the Garners' case of fraud against the bank. The court, however, found that the bank was liable for contribution to Hickman equal to two-thirds of the judgment against Hickman. In case No. 85-114, the bank appeals the court's ruling that it was liable to Hickman for contribution.

In Case No. 85-27, the Garners appeal the summary judgment granted in favor of the bank and raise the following issues:

"1. Was the defendant Bank entitled to Summary Judgment, as a matter of law, upon the issue as to whether or not it was liable to appellants, Garners, upon the issue of fraud.

"2. Was the defendant Bank entitled to Summary Judgment, as a matter of law, upon the issue of whether or not it was liable to appellants upon the issue of good faith."

In Case No. 85-114, the bank appeals that part of the district court's judgment finding the bank was liable for contribution to Hickman for the judgment rendered in favor of the Garners and against Hickman and states the issue thusly:

"Did the lower court err in awarding judgment for contribution in favor of Hickman and against Sundance State Bank?"

We will affirm the summary judgment granted in favor of the bank in Case No. 85-27, but reverse the court's finding of contribution by the bank to Hickman in Case No. 85-114.

The facts in these cases are complex. The Garners filed a complaint against Hickman alleging a breach of contract for negligent construction of a modular home. Hickman cross-claimed against the bank for contribution of any judgment rendered against him. Subsequently, the Garners filed a separate action against the bank, alleging fraudulent misrepresentation of Hickman's qualifications as the general contractor for the home, and breach of its duty of good faith and fair dealing. The two actions were consolidated and merged for trial.

The Garners and Hickman entered into an agreement whereby Hickman agreed to construct a modular home for the Garners. Hickman advised the Garners and helped them choose a plan for the modular home. Hickman, however, never told the Garners that he was the general contractor as well as the dealer, but the bank treated Hickman as if he was. This was evidenced in a number of ways. First, the construction debt notes were signed by both Hickman and Janell Garner. Second, the bank designated Hickman as the "builder" to the Federal Home Administration in support of the bank's application for an F.H.A. guarantee. Third, Hickman was described by the bank as "essentially" the general contractor. Fourth, the bank required Hickman to sign the required F.H.A. warranty. Apparently Hickman did not believe that he was the general contractor since he protested the bank's request that he execute the warranty. And finally, all funds from the bank were paid to Hickman who then paid the plumbers, carpenters, electricians and other needed contractors. Throughout this entire process the bank acted as if Hickman was the contractor and never said anything to the contrary. Subsequently, the Garners were damaged due to the negligent construction of the modular home.

The trial court granted the bank's motion for summary judgment as to the Garners' complaint of fraud and unfair dealing against the bank. Additionally, as noted above, the court ruled the bank liable for contribution to Hickman equal to two-thirds of the judgment entered in favor of the Garners. Hickman conditionally assigned his rights under the judgment for contribution to the Garners, so now the Garners are the real parties in interest.

I

We will address both of the Garners' issues together regarding the propriety of granting the bank summary judgment on the Garners' allegations of fraud and bad faith. Specifically, the Garners alleged that the bank fraudulently induced them to contract with Hickman to build a modular home. Additionally, the Garners alleged the bank was guilty of bad faith by failing to advise them that Hickman was not qualified to act as a general contractor and for failing to advise the Garners that the bank was not treating Hickman as a general contractor.

When reviewing a summary judgment on appeal, we review the judgment in the same light as the district court, using the same information. Randolph v. Gilpatrick Construction Company, Inc., Wyo., 702 P.2d 142 (1985); and Lane Company v. Busch Development, Inc., Wyo., 662 P.2d 419 (1983). A party moving for summary judgment has the burden of proving the nonexistence of a genuine issue of material fact. Dudley v. East Ridge Development Company, Wyo., 694 P.2d 113 (1985). 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. Samuel Mares Post No. 8, American Legion, Department of Wyoming v. Board of County Commissioners of the County of Converse, Wyo., 697 P.2d 1040 (1985). 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. Bancroft v. Jagusch, Wyo., 611 P.2d 819 (1980).

The elements in a cause of action of fraud are false representation made by the defendant which the plaintiff relies upon to his detriment. Duffy v. Brown, Wyo., 708 P.2d 433 (1985); and Anderson v. Foothill Industrial Bank, Wyo., 674 P.2d 232 (1984). The false representation must be one which induces action and is reasonably believed by the plaintiff to be true. Johnson v. Soulis, Wyo., 542 P.2d 867 (1975). Therefore, in order for the Garners to make a prima facie case of fraud, they must show the bank made a material representation which was false, with intent to induce action by the Garners to their detriment. Schepps v. Howe, Wyo., 665 P.2d 504 (1983).

We have also stated that in order to establish fraud, the alleged false representations must be made before execution of the contract upon which the action is based:

" * * * In connection with the requirement of reasonable reliance we have recognized that false representations in order to constitute actionable fraud must occur prior to the execution of the contract which is sought to be avoided or for which damages are sought to be recovered. [Citations.]" Schepps v. Howe, supra, at 508.

The Schepps case involved an action by purchasers of real property against the sellers based upon fraudulent misrepresentation. The buyers complained that the house had not been built by qualified contractors and was incomplete, all contrary to the sellers' claims. However, the sellers did not make such representations until after the parties had already entered into their sales contract. This court affirmed the district court's finding that there could be no cause of action for fraudulent misrepresentation when the alleged misrepresentation occurred after the contract was executed.

Similarly, the alleged fraudulent misrepresentation by the bank in this case did not occur, if at all, until after Janell Garner and Hickman had already agreed that Hickman would construct the modular home. In her deposition, Janell Garner testified she worked out the agreement with Hickman before Jim Viergets of the Sundance State Bank ever became involved:

"Q. When was your first contact with Mr. Hickman?

"A. I'm not sure I can really give you an exact date. I know we started discussing around November and December of '79.

* * *

* * *

"Q. Okay. How many conversations did you have with Mr. Hickman regarding a home in '79?

"A. I can't really give you an exact amount. I know we've talked on several occasions and on the phone regarding the building of a modular home.

* * *

* * *

"Q. And about when would you say you really came up with the plans that you wanted to purchase from Rushmore Homes?

"A. In January of 1980.

"Q. And this was before you had met with Jim Viergets?

"A. We met with him that same month at the end of the month.

* * *

* * *

"Q. --but you'd made a decision who you were going to buy a home from, the kind of home you wanted?

"A. Yes.

* * *

* * *

"Q. Other than the order form I guess the Rushmore order form, was there anything else in writing describing your arrangement with Gayle Hickman?

"A. No.

"Q. It was all verbal?

"A. Yes.

* * *

* * *

"Q. Isn't it true that all of the arrangements, everything from purchasing of the home to the plumbers, electricians, all the finish people, the carpenters, all of that was arranged for between you and Mr. Hickman?

"A. Yes.

"Q. Mr. Viergets...

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