Kary v. Prudential Ins. Co. of America

• Citation: 541 N.W.2d 703
• Decision Date: 05 January 1996
• Docket Number: No. 950160,950160
• Parties: 131 Lab.Cas. P 58,092, 11 IER Cases 530 James KARY, Plaintiff and Appellant, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, a corporation, Defendant and Appellee. Civ.
• Court: United States State Supreme Court of North Dakota

Page 703

541 N.W.2d 703

131 Lab.Cas. P 58,092, 11 IER Cases 530

James KARY, Plaintiff and Appellant, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, a corporation,

Defendant and Appellee.

Civ. No. 950160.

Supreme Court of North Dakota.

Jan. 5, 1996.

Rehearing Denied Jan. 30, 1996.

Daniel J. Chapman (argued) of Chapman and Chapman, Bismarck, for plaintiff and appellant.

Robert J. Udland (argued) of Fleck, Mather & Strutz, Bismarck, for defendant and appellee. Appearance by DeeNelle L. Ruud. Appearance also by Jarod Endersbe of The Prudential Insurance Company of America.

LEVINE, Justice.

James Kary appeals from a summary judgment dismissing his action against the Prudential Insurance Company (Prudential), for fraudulent inducement to enter an employment contract. We affirm.

Kary has an accounting degree. After moving to Bismarck in 1980, he accepted an accounting position with Super Valu and became the assistant manager of the accounting department before leaving. In 1988, Kary accepted an accounting job with the North Dakota Teacher's Fund for Retirement. He also operated an accounting business from his home, doing bookkeeping for various businesses.

In July of 1990, Kary responded to a Prudential advertisement in the Bismarck Tribune for a financial security planner:

"Financial Security Planner. The Prudential is looking for a successful individual in the Bismarck area to begin a career in financial security planning. Individual training. Base salary plus commission. Clerical reimbursement available after 1st year. Income potential $25,000-$35,000 first year. $50,000+ second year. Pleas[e] call or send resume to: Don Stevens, Manager, Prudential, PO Box 2766, Fargo, ND 58108. 701-232-7124."

Kary contacted Prudential manager, Don Stevens, about the position, but decided he was not interested because it was a full-time position. On Stevens' urging, Kary took a sales aptitude test administered by Prudential. Stevens told Kary that, based upon the results of the test, he would be foolish not to accept the position on a full-time basis. When Kary inquired about what earnings he could expect, Stevens replied:

" 'You could expect to make 40,000 the first year and by the third year you should be making 100,000.' "

Kary accepted the position on a commission basis, initially with a $400 per week guaranteed base salary, and he started work on August 29, 1990. Kary signed an agent's agreement, dated September 17, 1990, providing for scheduled commission payments, but not guaranteeing any specific salary:

"The Company agrees to compensate the Agent, for services performed under this Agreement, according to the terms of the 'Schedules of Compensation for District Agents' as they may be issued or amended by the Company from time to time.

* * *

"This agreement supersedes any previous agreement between the Agent and the Company...."

Kary claims that after he began working for Prudential, the Bismarck office manager, Jarod Endersbe, told him he was making over $100,000 a year and that another local agent, Rob Montgomery, "had made over $200,000 the year before." Kary earned only $22,000 in his first year as an agent with Prudential. He became so dissatisfied with his earnings and with the various company operating practices that he resigned on January 19, 1992.

Kary then sued Prudential, alleging that he was fraudulently induced to accept employment through Stevens' false statement about income potential and that he was also fraudulently induced to remain in Prudential's employ by Endersbe's later misrepresentations about what Endersbe and Montgomery were earning. The trial court granted Prudential's motion to dismiss the case, concluding that Stevens' statement was mere puffing, and not actionable, and that Endersbe's statements after Kary began working at Prudential were irrelevant to his claim of fraudulent inducement to contract. Kary appealed.

We summarized the standards governing summary judgment in Ellingson v. Knudson, 498 N.W.2d 814, 817 (N.D.1993):

"Under Rule 56, N.D.R.Civ.P., a summary judgment should be granted only if it appears that there are no issues of material fact or any conflicting inferences which may be drawn from those facts. See Production Credit Ass'n of Minot v. Klein, 385 N.W.2d 485 (N.D.1986). The party seeking summary judgment has the burden to clearly demonstrate that there is no genuine issue of material fact. Binstock v. Tschider, 374 N.W.2d 81, 83 (N.D.1985). In considering a motion for a summary judgment, the court may examine the pleadings, depositions, admissions, affidavits, interrogatories, and inferences to be drawn from the evidence to determine whether summary judgment is appropriate. Everett Drill. Vent. v. Knutson Flying Serv., 338 N.W.2d 662, 664 (N.D.1983). The court must view the evidence in a light most favorable to the party opposing the motion, and that party will be given the benefit of all favorable inferences which can reasonably be drawn from the evidence. See Stokka v. Cass Cty. Elec. Coop, Inc., 373 N.W.2d 911 (N.D.1985). Courts must also consider the substantive standard of proof at trial when ruling on a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); State Bank of Kenmare v. Lindberg, 471 N.W.2d 470, 474 (N.D.1991)."

Actionable fraud under Section 9-03-08, N.D.C.C., includes the making of an affirmative statement of fact, known to be untrue, with intent to deceive another or induce another to enter into a contract. Bourgois v. Montana-Dakota Utilities Co., 466 N.W.2d 813 (N.D.1991). Fraud is never presumed, but must be proved by evidence that is clear and convincing. Sargent County Bank v. Wentworth, 500 N.W.2d 862 (N.D.1993).

Kary asserts the trial court erred in concluding that Don Stevens' statement that Kary could expect to make $40,000 the first year and $100,000 by the third year was mere puffing and not actionable as fraud. He argues this court's decision in West v. Carlson, 454 N.W.2d 307 (N.D.1990) supports his claim that Stevens' statement constitutes actionable fraud.

The parties in West entered a property swap arrangement, with the Wests taking an assignment of a contract from the Carlsons, entitling the Wests to get monthly payments from Daniell Henderson for a house and property the Carlsons had sold to him. This court held the Carlsons committed fraud when, along with their failure to disclose other facts, they gave the Wests assurances that Henderson would not have any trouble making the contract payments. The statement was fraudulent, because the Carlsons knew, but failed to disclose to the Wests, important facts underlying the Henderson contract. The Carlsons knew Henderson had not made a down payment on the property and that, under Montana law, where the property was situated, Henderson could abandon the contract without liability for a deficiency judgment. The Carlsons also knew that a well on the property produced only two-thirds of a gallon of water per minute, but they had told Henderson the well produced six gallons of water per minute. Considering the Carlsons' failure to disclose this relevant information, we concluded their statement about Henderson making payments, "coupled with their failure to disclose other facts," id. at 311, was false and was made with an intent to deceive. The circumstances here are vastly different and clearly distinguishable. There was no failure here to disclose other material facts. Stevens' opinion on the single subject of what Kary might earn as a Prudential salesman, was merely an...