Powers v. Mjb Acquisition Corp., 97-CV-139-B.

• Decision Date: 03 February 1998
• Docket Number: No. 97-CV-139-B.,97-CV-139-B.
• Parties: Gary Michael POWERS and Kimberly Ann Powers, Plaintiffs, v. MJB ACQUISITION CORPORATION, d/b/a Wyoming Technical Institute, a Wyoming Corporation, and John Does I through X, Defendants.
• Court: U.S. District Court — District of Wyoming

Page 861

993 F.Supp. 861

Gary Michael POWERS and Kimberly Ann Powers, Plaintiffs, v. MJB ACQUISITION CORPORATION, d/b/a Wyoming Technical Institute, a Wyoming Corporation, and John Does I through X, Defendants.

No. 97-CV-139-B.

United States District Court, D. Wyoming.

February 3, 1998.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Richard Gage, Cheyenne, WY, John E. Stanfield, Clinton D. Summerfield, Jr, Laramie, WY, for Plaintiff.

David P. Hersh, Englewood, CO, for Defendant.

ORDER ON MOTIONS FOR SUMMARY JUDGMENT

BRIMMER, District Judge.

This matter is before the Court on the separate summary judgment motions of Defendant MJB Acquisition Corporation (the Institute) and Plaintiffs Gary and Kimberly Powers. The Court FINDS and ORDERS as follows:

Background

Plaintiff, Michael Powers, is an incomplete paraplegic. He requires braces on both legs and the aid of crutches to walk. In 1995, Powers moved his family to Laramie, Wyoming to attend classes at Defendant Wyoming Technical Institute (the Institute). Although the Institute was aware of Powers' disability even before he enrolled, it did not, according to Powers, make any effort to accommodate him. Powers specifically asserts the Institute did not provide him with sufficient handicapped parking, accessible restrooms, or the equipment necessary to safely perform his assigned tasks. As a result, Powers suffered various injuries while in attendance, including eye burns and a broken leg. The Institute submits in response that it made numerous and substantial accommodations. In any event, Powers withdrew from the Institute and informed it he would not return until his disability was accommodated.

Powers and his wife Kimberly brought this action, alleging that the school should have informed Powers prior to his attendance that it could not or would not accommodate him. Plaintiffs have pleaded the following nine causes of action: (1) negligence, landowner liability, loss of consortium; (2) fraud; (3) intentional infliction of emotional distress; (4) breach of duty of good faith and fair dealing; (5) discrimination in violation of the Rehabilitation Act of 1973, 29 U.S.C. § 701; (6) discrimination in violation of the Americans With Disabilities Act, 42 U.S.C. § 12101; (7) discrimination in violation of federal law, 20 U.S.C. § 1681; (8) discrimination in violation of federal regulations, 34 C.F.R. Pt. 104; and (9) punitive damages. Defendant Institute seeks the entry of summary judgment on Plaintiffs' fourth, fifth, sixth, seventh, and eighth causes of action. Plaintiffs, in a separate motion, seek the entry of summary judgment on their second claim (fraud) and fourth claim (breach of the duty of good faith and fair dealing).

Standard of Review

Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A fact is material if it might affect the outcome of the suit; an issue of material fact is genuine if a reasonable jury could return a verdict for the party opposing summary judgment. See Walker v. Toolpushers Supply Co., 955 F.Supp. 1377 (D.Wyo.1997). In determining whether to grant summary judgment, the Court must examine the factual record in the light most favorable to the nonmoving party. See Thomas v. IBM, 48 F.3d 478, 484 (10th Cir.1995).

Analysis

1. The Institute's Motion for Summary Judgment

As noted above, the Institute asserts numerous grounds in seeking the entry of summary judgment. The Court will consider the Institute's arguments in turn.

(a) Breach of Duty of Good Faith and Fair Dealing

Plaintiffs' fourth cause of action seeks to recover based on the Institute's alleged breach of an implied duty of good faith and fair dealing. Plaintiffs assert that Powers' enrollment at the Institute formed a contract between the parties that contained an implied covenant to act in fairness and good faith. The Institute does not dispute that Wyoming has recognized a cause of action for breach of such a duty, but claims that such actions are limited to the insurer-insured and employer-employee contexts.

The Wyoming Supreme Court has, in a series of cases, recognized that in limited circumstances a cause of action for breach of an implied covenant of good faith and fair dealing may be available to a plaintiff. See State Farm Mut. Auto. Ins. Co. v. Shrader, 882 P.2d 813 (Wyo.1994); Wilder v. Cody Country Chamber of Commerce, 868 P.2d 211 (Wyo.1994); McCullough v. Golden Rule Ins., Co., 789 P.2d 855 (Wyo.1990). In Wilder, generally recognized as the seminal case in Wyoming on the subject, the Wyoming Supreme Court stated as follows:

The Restatement (Second) of Contract § 205 at 99 (1981) recognizes an implied duty of every contract:

§ 205 Duty of Good Faith and Fair Dealing

Every Contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.

Good faith means faithfulness to an agreed common purpose and consistency with the justified expectations of the other party; it excludes a variety of types of conduct characterized as involving `bad faith' because [such conduct] violate[s] community standards of decency, fairness, and reasonableness.

* * *

When a special relationship of trust and reliance is demonstrated, a breach of the implied covenant is actionable as a tort.

Wilder, 868 P.2d at 220, 222.

While it is true that the tort has so far been applied only to employers and insurers, there is no overt indication from the Wyoming courts that it is limited to those contexts. Indeed, Wilder and Shrader, among other Wyoming cases, cite without reservation § 205 of the Restatement (Second) of Contracts, which unambiguously provides that a duty of good faith and fair dealing arises out of every contract. See Wilder, 868 P.2d at 220; Shrader, 882 P.2d at 825; see also McIlravy v. Kerr-McGee Corp., 119 F.3d 876, 882 (10th Cir.1997); Cenex, Inc. v. Arrow Gas Service, 896 F.Supp. 1574, 1581-82 (D.Wyo.1995); Duart v. FMC Wyoming Corp., 859 F.Supp. 1447, 1463 (D.Wyo.1994). Thus, the tort's parameters are defined not by its inclusion in or exclusion from random, predetermined categories of contracts, but by the existence or non-existence of a special relationship of trust and reliance between "the tort-victim and the tort-feasor." Wilder, 868 P.2d at 221. Such a relationship can be shown by the existence of separate consideration, common law or statutory rights, or rights accruing with longevity of service. See id.

The Court finds that a cause of action for breach of an implied duty of good faith and fair dealing exists not merely in employment and insurance contracts, but in every contract in which a special relationship of trust and reliance exists between the parties. See Restatement (Second) of Contracts § 205. The Court further finds that the evidence would permit a finding of a special relationship here. Powers had a statutory right, under the Rehabilitation Act and the ADA, not to be discriminated against or unlawfully precluded from participation in the Institute's programs based on his disability. As noted, a statutory right is sufficient to establish the requisite special relationship between Powers and the Institute. Hence, this is one of those "rare" cases in which the duty of good faith and fair dealing is sufficient to give rise to tort liability. That said, the actual determination of whether the Institute failed to act in good faith is an issue for the jury.

(b) Rehabilitation Act

Plaintiffs' fifth cause of action invokes section 504 of the Rehabilitation Act, found at 29 U.S.C. § 794(a):

No otherwise qualified individual with a disability in the United States, as defined in section 706(8) of this title, shall, solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance or under any program or activity conducted by any Executive agency or by the United States Postal Service.

The first of the Institute's numerous contentions as to this claim is that the Rehabilitation Act claim should be dismissed due to Plaintiffs' failure to exhaust administrative remedies. The law is unambiguous and well-settled that exhaustion is required in the Rehabilitation Act context only when a federal employee and federal employer are involved in the case. See Tuck v. HCA Health Services, 842 F.Supp. 988, 991 (M.D.Tenn.1992), aff'd, 7 F.3d 465, 471 (6th Cir.1993)(noting that every "court of appeals which has considered the issue whether to apply the exhaustion requirement to non-federal employees under the statute has decided not to apply the requirement"); see also Hawkins v. Defense Logistics Agency of the Dept. of Defense, 99 F.3d 1149 (10th Cir.1996)(unpublished). Exhaustion is not required when a private individual sues another private individual or entity. See Pushkin v. Regents of University of Colorado, 658 F.2d 1372, 1381-82 (10th Cir.1981); Davoll v. Webb, 943 F.Supp. 1289, 1297 (D.Colo.1996); Tuck, 842 F.Supp. at 991; Sanders v. Marquette Pub. Schs., 561 F.Supp. 1361, 1369 (W.D.Mich.1983); Anderson v. Banks, 520 F.Supp. 472, 509 (S.D.Ga.1981); Cain v. Archdiocese, 508 F.Supp. 1021, 1024 (D.Kan. 1981). Because Powers is not a federal employee, the exhaustion requirement does not apply.

The Institute asserts secondly that it never excluded Powers from a position or program, and thus that he cannot state a claim under § 504. This argument, however, ignores that § 504 by its very terms protects not only those excluded from a program or activity, but also those who are "denied the benefits of," or are "subject to discrimination under" such a program or activity. Powers does not deny that he was not, at least...