Husman, Inc. v. Triton Coal Co., 90-199

• Decision Date: 22 April 1991
• Docket Number: No. 90-199,90-199
• Citation: 809 P.2d 796
• Parties: HUSMAN, INC., a Wyoming corporation, Appellant (Plaintiff), v. TRITON COAL COMPANY, a Delaware corporation, Appellee (Defendant).
• Court: Wyoming Supreme Court

Page 796

809 P.2d 796

HUSMAN, INC., a Wyoming corporation, Appellant (Plaintiff), v. TRITON COAL COMPANY, a Delaware corporation, Appellee (Defendant).

No. 90-199.

Supreme Court of Wyoming.

April 22, 1991.

Rehearing Denied May 23, 1991.

Lawrence A. Yonkee and John A. Coppede of Redle, Yonkee & Toner, Sheridan, for appellant.

Patrick R. Day, Donald I. Schultz, and Mary J. Chinnock of Holland & Hart, Cheyenne, for appellee.

Before URBIGKIT, C.J., and THOMAS, CARDINE, MACY and GOLDEN, JJ.

MACY, Justice.

Appellant Husman, Inc. contracted with Appellee Triton Coal Company to remove overburden and topsoil from Triton Coal's mine site. After Husman began working on the project, it discovered that the material was saturated with water. When the contract was terminated, Triton Coal refused to pay the amount which Husman claimed was attributable to the soggy conditions. Husman filed suit against Triton Coal claiming breach of contract, misrepresentation, fraud, negligent misrepresentation, and breach of the covenant of good faith and fair dealing. Triton Coal filed a motion for summary judgment, which the district court granted.

We reverse and remand.

Husman postulates the following issues:

I.

Whether there were genuine issues of material fact concerning whether [Triton Coal] concealed or withheld material facts and made positive misrepresentations on matters to which the undisclosed facts related.

A. Whether a contract's exculpatory clause bars a recovery where the evidence shows that an owner has breached its duty to disclose material facts to the contractor[.]

II.

Whether genuine issues of material fact exist as to whether Triton [Coal] committed fraud by concealing or withholding material facts and making misrepresentations upon which Husman relied to its detriment.

A. Whether genuine issues of material fact exist[ ] as to whether [Husman] made a reasonable, diligent inquiry of the facts underlying its fraud claim.

B. Whether [Husman's] affirmance of the contract is a waiver of the fraud barring its right to recover damages.

III.

Whether genuine issues of material fact exist[ ] as to whether [Triton Coal] induced [Husman] to enter into a contract by negligent misrepresentation.

IV.

Whether genuine issues of material fact exist as to whether [Triton Coal] breached the contract and its covenant of good faith and fair dealing.

In March of 1988, Triton Coal invited Husman to submit a bid for the job of removing topsoil and overburden at a mine site in Campbell County. Triton Coal's business manager told Husman's vice president that the overburden was "an unconsolidated material and * * * it was probably a sandy clay type material." After two of its employees inspected the mine site and the material to be removed, Husman submitted a bid to Triton Coal. Triton Coal accepted the bid, and the parties entered into a contract on April 7, 1988, for the extraction of a minimum amount of overburden and topsoil. The contract contained a provision by which the parties could extend the terms of the contract for the removal of additional amounts of overburden and topsoil. The contract also included the following provision:

EXAMINATION OF PREMISES--Contractor expressly acknowledges that he has made a careful investigation of: The nature and location of the work to be performed hereunder; the character, quality, and quantity of materials and obstructions to be encountered; the character of equipment and facilities needed preliminary to and during the execution of the work; the general and local conditions and all matters which can in any way affect the work hereunder; and that he is fully informed with regard thereto.

After Husman began working, it discovered that the overburden was saturated with moisture and was more difficult to remove than it had anticipated. Husman continued to work on the project, however, and even agreed to extend the terms of the contract. The contract between Husman and Triton Coal was finally terminated on October 1, 1988, and Husman submitted invoices to Triton Coal for services rendered. Triton Coal disagreed with Husman's assessment, and Husman filed this suit.

In its complaint and amended complaint, Husman alleged, inter alia, that Triton Coal breached the parties' contract by failing to notify Husman that the overburden and topsoil were saturated with water and were unstable and by retaining part of Husman's payment; that Triton Coal willfully and intentionally misrepresented the subsoil conditions; that Triton Coal negligently misrepresented the subsoil conditions; and that Triton Coal, by concealing and misrepresenting the subsoil conditions, breached the covenant of good faith and fair dealing. Triton Coal answered Husman's complaint and filed a motion for summary judgment. The district court conducted two motion hearings, held that Husman was entitled to a payment subject to a final survey of the material it had removed, and granted Triton Coal's motion for summary judgment on the remainder of Husman's claims.

Summary judgment is proper when no genuine issues of material fact exist and the prevailing party is entitled to judgment as a matter of law. Baros v. Wells, 780 P.2d 341 (Wyo.1989); Farr v. Link, 746 P.2d 431 (Wyo.1987).

We review a summary judgment in the same light as the district court, using the same materials and following the same standards. We examine the record from the vantage point most favorable to the party opposing the motion, and we give that party the benefit of all favorable inferences which may fairly be drawn from the record. A material fact is 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.

Wagner v. First Wyoming Bank, N.A. Laramie, 784 P.2d 224, 226 (Wyo.1989) (citations omitted).

Fraud

Husman argues that the district court improperly granted Triton Coal's motion for summary judgment because genuine issues of material fact exist as to whether Triton Coal committed fraud by misrepresenting or concealing the conditions of the overburden and topsoil.

The elements in a cause of action of fraud are false representation made by the defendant which the plaintiff relies upon to his detriment. The false representation must be one which induces action and is reasonably believed by the plaintiff to be true.

Garner v. Hickman, 709 P.2d 407, 410 (Wyo.1985) (citations omitted). See also Britton v. Bill Anselmi Pontiac-Buick-GMC, Inc., 786 P.2d 855 (Wyo.1990); Rocky Mountain Helicopters, Inc. v. Air Freight, Inc., 773 P.2d 911 (Wyo.1989); and Duffy v. Brown, 708 P.2d 433 (Wyo.1985). To prevail, a plaintiff must establish fraud by clear and convincing evidence. Duffy, 708 P.2d 433. Conduct or words which tend to produce an erroneous impression may satisfy the plaintiff's burden. Britton, 786 P.2d 855. In addition, even if someone is not under a duty to speak, if he does speak, he is under a duty to speak truthfully and to make a full and fair disclosure. Id.; Meeker v. Lanham, 604 P.2d 556 (Wyo.1979).

Husman asserts that genuine issues of material fact exist given the depositions of Husman's vice president and one of its job superintendents. The vice president testified that the following exchange occurred when he visited the mine prior to Husman submitting its bid for the project:

Q. Did you ask the Triton representatives about whether the material was wet or dry or about its moisture content?

A. No, I didn't.

Q. Did you consider it obvious that the material was dry?

A. I said it looked dry. I said it looked normal. And there wasn't a response.

Q. After approaching the material on the high wall and getting back in the van, you said that it looked normal compared to the type of material you'd encountered in the area previously?

A. Yes.

Q. Did you say that it looked dry to you?

A. I don't believe I said that it looked dry. I said--I can't remember exactly what I did say, but as I--as I recall, I made some remark that it looks like pretty standard material for the Powder River Basin. Those certainly weren't the exact words, but that's the gist of what I recall.

Q. At any time prior to signing the purchase order with Triton, did you have any specific conversation with Triton representatives about the moisture content or the wet or dry nature of the material?

A. No, I didn't. Looking at the material from the surface and in the exposed cut face, it looked like a number of jobs we'd looked at previously and bid on previously, and there was never any indication otherwise.

Q. Did you observe any freestanding water at any time during your site visit? And I should limit it to the proximity of the area where you were planning to work or bidding to work.

A. Not that I recall. There was certainly some water down in the bottom of the pit, but not up in the area where we'd be working.

The job superintendent made the following statements during his deposition:

Q. Now you mentioned that while you were on this initial visit to deliver the bid and look at the site there may have been some discussion about water, but you said it was a little vague. What's your best recollection about what was discussed?

A. I don't think we discussed too much at all except, you know, the fact that, "Is there water?" "No, there's not much water," and that was about the extent of it. We had the impression from Triton that there wasn't much water in that area of the pit.

Q. On what basis did you get that impression?

A. Just on the conversations that we had.

Q. So the conversations about, "Is there water?" "No, not much water," those involved the Triton people?

A. I believe so. You know, we were out in the pit and I think Steve showed us around and asked about the water that was standing at the toe of the high wall there. And, of course, the snow was dozed up in there and there was a little bit of mud. And, you know, "Is that water coming out of the dirt?" "No, that's pretty...