Simmons v. Jenkins

• Decision Date: 29 February 1988
• Docket Number: No. 87-220,87-220
• Citation: 750 P.2d 1067,45 St.Rep. 328,230 Mont. 429
• Parties: Lee SIMMONS, Ken Simmons, and Colleen Simmons, Plaintiffs and Appellants, v. L.V. JENKINS, Jr., et al., Defendants and Respondents.
• Court: Montana Supreme Court

Page 1067

750 P.2d 1067

230 Mont. 429

Lee SIMMONS, Ken Simmons, and Colleen Simmons, Plaintiffs and Appellants, v.L.V. JENKINS, Jr., et al., Defendants and Respondents.

No. 87-220.

Supreme Court of Montana.

Submitted on Briefs Jan. 14, 1988.

Decided Feb. 29, 1988.

Stephens Law Firm, Robert L. Stephens, Jr., Billings, for plaintiffs and appellants.

Moulton, Bellingham, Longo & Mather; W.S. Mather, Billings, Lucas & Monaghan; Thomas M. Monaghan, Miles City, for defendants and respondents.

HUNT, Justice.

This is an appeal from the granting of two summary judgments by the District Court, Sixteenth Judicial District, County of Rosebud.We affirm.

Appellants raise three issues on appeal:

1.Did the District Court err in granting judgment in favor of the First State Bank of Forsyth even though there existed material issues of fact which could have allowed the jury to find in favor of Simmons?

2.Did the District Court err in granting summary judgment in favor of Connecticut Mutual Life Insurance Company even though there were material issues of fact that could have allowed the jury to find in favor of Simmons?

3.Should both summary judgments be reversed based upon the failure of the District Court to set forth any reasons or rationale for granting the summary judgments?

Following is a general overview of the relevant facts.More facts will be supplied as necessary throughout the opinion.

On October 29, 1982, the appellants, the Simmons, executed a contract for deed with defendantDunning Ranch Company(owned by James and Elsie Dunning) for the portion of the Dunning ranch in Rosebud and Custer Counties known as the home place or headquarters unit.The negotiations took place between the Dunnings and the Simmons directly and through a realtor, Ward Fenton.In 1979, the Dunning Ranch Company had mortgaged its entire land holdings to defendantConnecticut Mutual Life Ins. Co.(CML).Before the loan was made a local mortgage banking company, Hall & Hall, made an appraisal of two of the three units making up the Dunning properties.The home place was one of the units appraised.The appraisal showed that the two parcels examined would support a total of 331 cow and calf pairs (animal units).Hall & Hall is a correspondent mortgage banker for CML and originates its loans in the Rosebud area.In addition to the mortgage, the Dunning Ranch Co. had loans from the First State Bank of Forsyth(First Bank).On October 29, 1982, through a memorandum of agreement, First Bank agreed to lend the appellants money should the Dunning Ranch Co. default on the mortgage payments for the land being acquired by appellants.

Appellants have sued for fraud alleging that the Dunnings represented that the home place alone would carry 250 head of cattle when they knew in fact that it would not.They have named First Bank and CML as liable under the theory of constructive fraud.Both First Bank and CML made motions for summary judgment which the District Court granted.The Simmons appeal.

Issue I

As their first issue, appellants contend that the District Court committed error when it granted respondent First Bank's motion for summary judgment because there existed disputed issues of material fact.

On motions for summary judgment, pursuant to Rule 56, M.R.Civ.P., the party making the motion has the burden of showing lack of any genuine issue of material fact.The movant's burden is quite strict, requiring him to make a showing that

" '[it] is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact. * * * ' "Kober & Kyriss v. Stewart & Billings Deaconess Hospital, 148 Mont. 117, 122, 417 P.2d 476, 478.

Harland v. Anderson(1976), 169 Mont. 447, 450, 548 P.2d 613, 615.

The party opposing the motion then has a similar burden to show that an issue of material fact does exist.This party must set forth specific facts and cannot rely on speculative, fanciful, or conclusory statements.Kronen v. Richter(Mont.1984), 683 P.2d 1315, 1318, 41 St.Rep. 1312, 1315;National Gypsum Co. v. Johnson(1979), 182 Mont. 209, 212 & 213, 595 P.2d 1188, 1189 & 1190;Cheyenne Western Bank v. Young(1978), 179 Mont. 492, 497, 587 P.2d 401, 404;Barich v. Ottenstror(1976), 170 Mont. 38, 42, 550 P.2d 395, 397.However, the opposing party will be indulged to the extent of all inferences which may be reasonably drawn from the record.Jenkins v. Hillard(1982), 199 Mont. 1, 5, 647 P.2d 354, 356;Equity Cooperative Ass'n. v. Bechtold(1977), 173 Mont. 103, 105, 566 P.2d 793, 794.

Appellant argues that there was a breach of the fiduciary duty or at least the duty of good faith and fair dealing between the Simmons and First Bank and that said breach constitutes constructive fraud pursuant to Sec. 28-2-406, MCA.The statute reads as follows:

Constructive fraud consists in:

(1) any breach of duty which, without an actually fraudulent intent, gains an advantage to the person in fault or anyone claiming under him by misleading another to his prejudice or to the prejudice of anyone claiming under him; or

(2) any such act or omission as the law especially declares to be fraudulent, without respect to actual fraud.

The appellant bases his argument on several allegations: that First Bank was aware of the sale and had advised the Dunnings to sell; that First Bank knew liquidation of the farm corporation was near and even suggested the terms of sale; that the Bank had a loan commitment to the appellants which was an inducement to buy the farm; and that the Bank would benefit from the sale by a reduction in the Dunning's loan.

The relationship between a bank and its customer usually does not give rise to a fiduciary duty.Deist v. Wachholz(Mont.1984), 678 P.2d 188, 193, 41 St.Rep. 286, 290.There is an exception, however, when the Bank is thrust beyond the simple role of creditor and into the role of an advisor.In Deist, we held that a bank officer is vested with a fiduciary duty were there is a long history of dealing with the bank and evidence of the bank acting as financial advisor in some past capacity.This duty extended to all bank officers but was limited to the scope of the bank's and individual officer's association with any particular transaction.

More recently, however, we encountered a situation where a bank had no fiduciary duty.In Pulse v. North American Land Title Co.(Mont.1985), 707 P.2d 1105, 42 St.Rep. 1578, the appellants, the Pulses, were involved in a land purchase which their bank financed through a mortgage.When problems arose, the Pulses sued for breach of fiduciary duty.We held that because the special circumstances that existed in Deist were not present, the bank had no fiduciary duty to the Pulses.Unlike Deist, the bank had not located buyers for the Pulses; the bank was not a party to the transaction beyond its role as the buyer's lender; the sale was not a product of the bank's advice; and the Pulses had not dealt with the bank extensively or exclusively.

Pulse controls in this case.The facts here show that the connection between First Bank and the Simmons is even more tenuous than that between the Pulses and their bank.There is no evidence that the First Bank ever advised the Simmons.There is no evidence that the Simmons ever asked for advice from anyone at the Bank.There is no evidence of a long history of dealings with or reliance upon the Bank by the Simmons.There is evidence from bank manager Robert Thiesen's deposition that he did suggest terms of sale to real estate agent Fenton but that is relevant more to the bank's relationship to the sellers, the Dunnings, than to its relationship to the Simmons.In cases where the bank has been held to a fiduciary duty because of its advisory role the duty benefited the party being advised and not some third party.SeeDeist, 678 P.2d 188.The facts, as presented by appellants, do not support the existence of a fiduciary duty.

Appellants also contend that the breach of the separate duty of good faith and fair dealing constitutes constructive fraud.Specifically, they argue that the question of whether this duty exists is one of fact and not susceptible to summary judgment determination.

We have recognized that the duty required by subsection (1) need not rise to that of a fiduciary to satisfy the requirements of Sec. 28-2-406, MCA.McJunkin v. Kaufman(Mont.1987), 748 P.2d 910, 914, 44 St.Rep. 2111, 2116.This Court discussed a bank's duty of good faith and fair dealing in Noonan v. First Bank Butte(Mont.1987), 740 P.2d 631, 44 St.Rep. 1124.Where we stated In the past, the Court has extended the implied duty of good faith and fair dealing to cases involving banks dealing with their customers.In Tribby v. Northwestern Bank of Great Falls(Mont.1985), 704 P.2d 409, 419, 42 St.Rep. 1133, 1142, we extended the implied covenant of good faith and fair dealing to the commercial area of bank-customer relations.In Nicholson v. United Pacific Ins. Co.(Mont.1985), 710 P.2d 1342, 1347, 42 St.Rep. 1822, 1828, we noted the extension of the tort theory to banks dealing with customers and cited Tribby and First National Bank of Libby v. Twombly(Mont.1984), 689 P.2d 1226, 41 St.Rep. 1948.In Northwestern Nat. Bank v. Weaver-Maxwell(Mont.1986), 729 P.2d 1258, 43 St.Rep. 1995, we allowed a case of a bank-customer dispute to be remanded for retrial on a bad faith theory.

Noonan, 740 P.2d at 634.The duty of good faith and fair dealing between a bank and its customer is alive and well in Montana law but as we indicated in Tribby not every contract or statutorily imposed obligation carries such a duty.704 P.2d at 419.The appellants cannot refer to a contract between the Simmons and First Bank existing at the time of the misrepresentations.Nor do they cite any statutory duty.The record shows no customer-bank relationship between the Simmons and First Bank at the time of the alleged misrepresentations by the...