Wilcox v. Sec. State Bank
| Decision Date | 19 January 2023 |
| Docket Number | S-22-0062 |
| Citation | 523 P.3d 277 |
| Parties | Kelly WILCOX, Appellant (Plaintiff), v. SECURITY STATE BANK, Appellee (Defendant). |
| Court | Wyoming Supreme Court |
Representing Appellant: Mark D. Sullivan of Mark D. Sullivan, P.C., Wilson, Wyoming. Argument by Mr. Sullivan.
Representing Appellee: Megan O. Goetz and Crystal D. Stewart of Pence and Macmillan, LLC, Laramie, Wyoming. Argument by Ms. Goetz.
Before FOX, C.J., and KAUTZ, BOOMGAARDEN, GRAY and FENN, JJ.
[¶1] This case arises out of several agricultural loans Kelly Wilcox obtained from Security State Bank (SSB). When she defaulted on the loans, SSB foreclosed on some of the collateral Mrs. Wilcox pledged to secure these loans. Mrs. Wilcox filed suit against SSB alleging negligent lending and negligent advising, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, negligent misrepresentation, intentional misrepresentation, and fraud. SSB counterclaimed for breach of contract, unjust enrichment, promissory estoppel, negligent misrepresentation, intentional misrepresentation, fraud, and breach of the covenant of good faith and fair dealing. The district court granted summary judgment in favor of SSB on Mrs. Wilcox's claims and on SSB's breach of contract counterclaim. Mrs. Wilcox appeals. We affirm.
[¶2] We rephase the issues as follows:
[¶3] Kelly and James (Jim) Wilcox1 are cattle ranchers with more than 40 years of experience. In 2006, Kelly began suffering from severe health issues, so the Wilcoxes took a hiatus from running their own ranching business while Kelly was ill. They started raising cattle again in 2011 or 2012. Kelly's father purchased 48 heifers as a gift to the Wilcoxes. By 2017, the Wilcoxes had grown their herd to between 160 and 200 cattle. The Wilcoxes did not own enough land to graze their cattle, so they secured a lease for a summer pasture in Jeffrey City, Wyoming, and a winter pasture in Meeteetse, Wyoming. When necessary, the Wilcoxes also utilized a local feedlot called TD Farms.
[¶4] By early 2017, the Wilcoxes had accumulated accounts payable of between $60,000 and $70,000, including a $40,000 bill to TD Farms. The owner of TD Farms recommended the Wilcoxes approach SSB to obtain a loan to pay their accounts payable. In the spring of 2017, the Wilcoxes met with Matthew Schneider, who was then the Senior Vice President of SSB, to discuss obtaining a loan to pay their accounts payable, increase the size of their herd, and provide some operating capital. Their goal was to build their herd up to 500–600 head of cattle. When the Wilcoxes met with Mr. Schneider, they told him about Kelly's health issues and the financial difficulties it caused. Because of Jim's credit issues and criminal probation conditions that prohibited him from owning animals, the loan application was made solely in Kelly's name.
[¶5] SSB initially declined to loan Kelly any money. SSB was concerned about Kelly only having cattle as collateral, given the volatility of the cattle market. A few days after SSB notified Kelly she had not been approved for any loans, Jim called Mr. Schneider and offered to pledge Kelly's father's house in Thermopolis, Wyoming, as additional collateral. With this additional collateral, SSB approved Kelly's request for a loan to purchase additional cattle and an operating loan.
[¶6] In June 2017, after Kelly applied for the cattle purchase and operating loans, but before the loans had been processed, the Wilcoxes approached Mr. Schneider with what they called the Heiferette Proposal. Their leased summer pasture had more than enough grass to serve their existing herd, and the Wilcoxes had the opportunity to purchase 200 additional heifers. They intended to breed these heifers to their bulls and sell them as bred cows a few months later, quickly generating approximately $130,000 of income. Mr. Schneider told the Wilcoxes he would present the Heiferette Proposal to the loan committee. Ultimately, SSB did not finance the Heiferette Proposal, and the Wilcoxes were unable to avail themselves of the opportunity to quickly generate income.
[¶7] On July 3, 2017, SSB made two loans to Kelly, a $140,000 term loan to purchase cattle (Cattle Purchase Loan) and a $125,000 operating line of credit (First Operating Loan). Kelly and Jim believed their existing accounts payable would be added to the term loan for the cattle purchase. However, SSB did not structure the loans that way. Instead, the accounts payable were paid from the First Operating Loan. This left the Wilcoxes with only about $55,000 for operating capital for the rest of the 2017–2018 business year. Mr. Schneider also informed Kelly she had been approved for an additional $50,000 short-term operating loan (Second Operating Loan) in case she needed it. Over the next two days, the Wilcoxes used the Cattle Purchase Loan to buy 109 heifers and 11 bulls. The Wilcoxes and SSB knew these new heifers would not produce a calf crop to service the debt to SSB until October 2018.
[¶8] Also in July 2017, Kelly and Mr. Schneider discussed the possibility of purchasing a camper for the Wilcoxes to live in during the summer so they could be closer to their livestock at the Jeffrey City pasture. SSB loaned Kelly $27,215 to purchase a new Winnebago (the Winnebago Loan). The Wilcoxes spent most of the First Operating Loan by October 2017. Kelly signed additional loan documents and received the $50,000 Second Operating Loan. This loan was set to mature on December 31, 2017.
[¶9] In the fall of 2017, the Wilcoxes discussed with Mr. Schneider the possibility of building their own feedlot on their leased winter pasture in Meeteetse so they could avoid paying the high costs of using a commercial feedlot. This project became known as the Winter Camp. The project required the Wilcoxes to drill a water well and build corrals on the leased land. The owner of the leased pasture verbally approved the construction of the Winter Camp on his property. The Wilcoxes initially estimated the cost of building the Winter Camp to be $23,517. Mr. Schneider believed the Winter Camp was a good idea because it would ultimately reduce the Wilcoxes’ expenses. Mr. Schneider took the matter of the Winter Camp to the loan committee, and they approved it.
[¶10] In the fall of 2017, the Wilcoxes were able to gather all their cattle from the summer pasture, which meant they were within $1,000 of the projections they had presented to SSB that spring. Mr. Schneider was very pleased. Kelly and Jim were concerned about servicing their debt with only 300 cows. The Wilcoxes asked Mr. Schneider if they could keep 40 heifer calves that had been produced by their existing herd. The Wilcoxes testified Mr. Schneider gave them permission to keep the heifers. The Wilcoxes cut out 40 heifer calves and sold the rest. In December 2017, Kelly provided SSB with a check for $61,961.07 derived from the sale of the calves.
[¶11] The Wilcoxes met with Mr. Schneider in December 2017. The parties disagree about what occurred at this meeting. Kelly testified Mr. Schneider told them the loan documents for their 2018 operating loan would be ready in two weeks, although he did not promise the loan would be for a certain amount of money. Kelly also testified Mr. Schneider gave her permission to start construction of the Winter Camp, and he told them he was going to set up a new term loan to cover the costs of constructing the Winter Camp. The Wilcoxes testified Kelly brought checks with her to this meeting that were to pay their feed bills to TD Farms and Wyoming Sugar Beet Company. According to the Wilcoxes, Mr. Schneider told Kelly not to pay the feed bills until their 2018 operating budget was complete, but he authorized her to pay the contractor who had drilled the water well at the Winter Camp. Kelly only had $11,000 available from the Second Operating Loan at this time, so the checks to TD Farms and Wyoming Sugar Beet Company would not have cleared unless SSB lent her additional funds.
[¶12] Mr. Schneider testified he did not remember Kelly bringing any checks to the December meeting. He also testified they did not discuss the Wilcoxes’ need for additional operating capital or their outstanding debt to TD Farms. Mr. Schneider also testified he told the Wilcoxes they could keep the 40 heifers if they provided SSB a revised plan showing they could service their debt without selling those calves. Mr. Schneider denied telling the Wilcoxes he would start preparing loan documents for a 2018 operating loan at that meeting. However, he admitted SSB verbally committed to lend the Wilcoxes $23,517 for the construction of the Winter Camp.
[¶13] Mr. Schneider was promoted to president of SSB's Worland branch in January 2018. The Wilcoxes allege Mr. Schneider became extremely difficult to contact after his promotion. Kelly became increasingly concerned about the status of their new loans, and she repeatedly contacted SSB. When she was unable to reach Mr. Schneider, she would ask his assistant about writing checks to cover Winter Camp or 2018 operating expenses, and she was told to "[j]ust do what [she] need[ed] to do." When the Wilcoxes were still unable to reach Mr. Schneider, Jim started showing up at the bank unannounced asking to see him. It took several tries, but Jim was ultimately able to meet with Mr. Schneider. One of the objectives of Jim's unannounced visits was to make Mr. Schneider aware that the costs for the...
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