Taggart v. Ford Motor Credit Co.
| Decision Date | 31 October 1990 |
| Docket Number | No. 16857,16857 |
| Citation | 462 N.W.2d 493 |
| Parties | Charles L. TAGGART and Charlotte M. Taggart, Plaintiffs and Appellants, v. FORD MOTOR CREDIT COMPANY, and Ford Motor Company, Defendants and Appellees. |
| Court | South Dakota Supreme Court |
Rick Johnson of Johnson, Eklund & Davis, Gregory, for plaintiffs and appellants.
Steven W. Sanford of Cadwell, Sanford & Deibert, Sioux Falls, for appellee Ford Motor Credit Co.
Edward J. Pluimer and Edmund J. Kelley of Dorsey & Whitney, Minneapolis, Minn., for appellee Ford Motor Co.
This appeal arises from an action commenced by Charles L. Taggart (Taggart) and Charlotte M. Taggart (collectively referred to as Taggarts) against Ford Motor Company (Ford) and Ford Motor Credit Company (Ford Credit) following the financial failure of Sioux Falls Ford Tractor, Inc. (SFFT), a farm machinery and implement dealership, franchisee of Ford and debtor to Ford Credit. The action was commenced on two counts, one of intentional concealment and the other for negligent failure to disclose. The trial court granted summary judgment on both counts and this appeal followed. We affirm.
The focus of this lawsuit is an agreement designated a "Stock Redemption Agreement," guaranteed by Taggart, whereby SFFT purchased its corporate stock then owned by Vertus Rohrer (Rohrer), president and majority shareholder, coupled with Taggarts' agreement to purchase sufficient stock in SFFT to acquire an equal interest in the corporation with Gerald Bertsch (Bertsch), secretary, treasurer and minority stockholder. 1 Negotiations on this transaction commenced in late 1979. At that time, SFFT was solely owned by Rohrer and Bertsch and had been since 1974.
The negotiations between Bertsch and Taggart and their attorney, Vance Goldammer (Goldammer), and Rohrer and his attorney, Richard Cutler (Cutler), planned that the corporation would purchase Rohrer's stock and Taggarts would buy sufficient shares to match those already held by Bertsch. The "Stock Redemption Agreement" released Rohrer from all corporate liability as well as all personal guarantees to insure payment of the corporation's debts. As one of the conditions precedent to the closing, the agreement required approval by Ford and Ford Credit, and the renewal of SFFT's franchises. Neither Ford nor Ford Credit were signatories to the "Stock Redemption Agreement" or participated in the negotiations. The transaction, negotiated between Taggarts, Rohrer and Bertsch, and their respective counsel, came to fruition and the agreement was signed on February 1, 1980. Since what was known and communicated by the parties about the financial condition of SFFT is the key to whether a material issue of fact exists, it is useful to recount how and when Taggarts came to the decision to sign the "Stock Redemption Agreement."
The record reflects in deposition testimony that as early as December 13, 1979, at a meeting between Bertsch, Taggart and Goldammer regarding the structure of the stock transaction, Goldammer observed that his client Taggart had already decided to invest in SFFT. Even Taggart himself conceded that by January 5, 1980, the date that Goldammer sent a letter to Rohrer's attorney proposing the terms of the "Stock Redemption Agreement," Taggart had made up his mind to purchase the SFFT stock and that the deal was set. At the time of Taggart's decision, neither he nor Goldammer made any effort to contact or to seek any information from Ford or Ford Credit regarding SFFT.
While Ford and Ford Credit did not supply Taggarts with financial information about SFFT before their decision to complete the deal, many other people did. During the course of the stock negotiations, Taggart met with Rohrer and Bertsch on numerous occasions. At all of these meetings, Taggart and the others discussed SFFT's business, its financial state, its inventory, and its cash-flow situation. In addition, Taggart received financial statements of SFFT, which he reviewed with both Bertsch and Goldammer. Of particular importance, Taggart received a financial report regarding SFFT, prepared by the accounting firm of McGladrey Hendrickson and Co., showing contingent liabilities of more than $1 million.
Taggarts' only contact with Ford came on January 24, 1980, well after Charles Taggart had made his decision to become co-owner of SFFT. David Coady (Coady), a Ford sales manager, met with Taggarts in order to obtain their signatures on several documents necessary to the change in the franchise for SFFT. These included a Continuing Guaranty in which Taggarts, together with Bertsch and his wife, personally guaranteed to Ford Credit payment of all SFFT indebtedness. Additionally, Taggarts signed a Dealership Application transferring the franchise into the names of Bertsch and Taggarts. Though these documents contained some financial information about SFFT, all these documents were prepared by Taggarts and Bertsch, not by Ford or Ford Credit. This meeting held so little importance to Charles Taggart that he described it as follows:
I never dealt with any representatives of Ford Motor Company. I do recall Mr. [Coady] bringing some papers and asking for my signature and the signature of my wife out at the dealership. I heard his testimony in Sioux Falls and would agree that I do not think that I would have remembered Mr. [Coady] either. Our meeting was very brief. I think he just said he had documents that had to be signed to get the franchise changed over.
In 1986, some six years after the transaction, SFFT collapsed under the weight of financial problems, and Taggarts instituted a tidal wave of litigation. Taggarts first sued Gerald Bertsch for more than $597,000.00, asserting, inter alia, that Bertsch had diverted company funds and assets for personal use, defrauded Taggarts, and engaged in misconduct resulting in SFFT's business failure. Taggarts then instituted this suit with claims of fraud and nondisclosure against Rohrer (now deceased) and Ford Credit; Ford was later named as a defendant. Finally, when SFFT's bank, the First National Bank in Sioux Falls, brought suit against Taggarts on their guaranty of SFFT's debt to the Bank, Taggarts responded by suing the Bank, and the suit against the Bank was consolidated with this action. Bertsch ultimately consented to a judgment against himself and the claims against the Bank and the Rohrer estate have been settled and dismissed. The only defendants remaining are Ford and Ford Credit.
Taggarts' complaint asserted two causes of action against Ford and Ford Credit. The first count alleged intentional and bad faith concealment by Ford and Ford Credit of information that SFFT was in desperate financial condition at the time that Taggarts signed the guarantees of all indebtedness owed by SFFT to Ford Credit. They also sought exemplary damages on this count. The second count alleged negligent failure to disclose to Taggarts negative information concerning the SFFT financial condition, which omission they allege to be a representation on which Ford and Ford Credit knew that Taggarts would rely in making their decision to invest in SFFT. After the trial court granted Ford's and Ford Credit's respective motions for summary judgment, Taggarts appealed.
1. Did the trial court err in granting summary judgment in favor of Ford and Ford Credit on the claim of intentional concealment? We hold that it did not.
2. Did the trial court err in granting summary judgment in favor of Ford and Ford Credit on the claim of negligent concealment? We hold that it did not.
We first note our standard of review in review of orders granting summary judgment:
In reviewing a grant or a denial of summary judgment under SDCL 15-6-56(c), we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law. The evidence must be viewed most favorably to the non-moving party and reasonable doubts should be resolved against the moving party. The non-moving party, however, must present specific facts which demonstrate a genuine, material issue for trial. When no genuine issue of fact exists, summary judgment is looked upon with favor and is particularly adaptable to expose sham claims and defenses. Our task on appeal is to determine only whether a genuine issue of material fact exists and whether the law was correctly applied. If there exists any basis which supports the ruling of the trial court, affirmance of a summary judgment is proper.
Wang v. Wang, 447 N.W.2d 519, 521 (S.D.1989) (citations omitted). Further, we recognize that claims of fraud and deceit are usually jury questions. Tri-State Refining v. Apaloosa Company, 431 N.W.2d 311, 314 (S.D.1988). But, allegations of fraud and deceit without specific material facts to substantiate them will not prevent summary judgment. Western Cas. & Sur. Co. v. Gridley, 362 N.W.2d 100, 102 (S.D.1985). Summary judgment is Gasper v. Freidel, 450 N.W.2d 226, 229 (S.D.1990) (citations omitted).
We also note that SDCL 15-6-52(a) provides that findings of fact and conclusions of law are unnecessary when the trial court rules on a motion for summary judgment. "Since a summary judgment presupposes there is no genuine issue of fact, findings of fact and conclusions of law are unnecessary." Wilson v. Great N. Ry., 83 S.D. 207, 211, 157 N.W.2d 19, 21 (1968) (footnote omitted). Because the trial court made findings of fact and conclusions of law, Taggarts argue that there must have been genuine material facts in issue. We disagree. Occasionally, trial courts find it desirable to state briefly the basis for a summary judgment to provide part...
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