Case Title: Barlage v. Key Bank of Wyoming

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1995-03-16T00:00:00Z

Document:
Barlage v. Key Bank of Wyoming1995 WY 40892 P.2d 124Case Number: 93-115Decided: 03/16/1995Supreme Court of Wyoming

Dale 
E. BARLAGE, Appellant (Plaintiff),

v.

KEY BANK OF WYOMING, a Wyoming corporation, f/k/a 
First Wyoming Banc Corporation, Appellee (Defendant).

 

Appeal 
from District Court of Teton County, D. Terry Rogers, 
J.

William R. Fix of Fix & 
Mulligan, Jackson, for 
appellant.

Rick A. Thompson of 
Hathaway, Speight, Kunz & Trautwein, Cheyenne, for appellee.

Before GOLDEN, C.J., and THOMAS, CARDINE,* 
MACY and TAYLOR, JJ.

* 
Retired July 6, 1994.

THOMAS, 
Justice.

[¶1]      The major 
question in this case is whether a warranty of habitability is extended in the 
sale of a house by a financial institution that acquired the property by 
foreclosure. Dale E. Barlage (Barlage) purchased the house from Key Bank of 
Wyoming (Key Bank) and later sued Key Bank to recover damages caused by water 
leaking into a crawl space under the house. Barlage's theories of recovery were 
breach of an implied warranty of habitability, breach of contract, negligent 
misrepresentation, fraudulent misrepresentation, and negligent and intentional 
infliction of emotional distress. The district court ruled there were no genuine 
issues of material fact, and it granted a summary judgment to Key Bank. The 
district court held the tort claims were barred by the statute of limitations; 
there had been no breach of any express contractual warranty; and the warranty 
of habitability was limited to the situation in which the seller is the builder. 
The district court correctly ruled there were no genuine issues of material fact 
with respect to the tort claims, the contract claim, and the warranty claim, and 
Key Bank was entitled to judgment as a matter of law. The summary judgment 
entered in the district court in favor of Key Bank is 
affirmed.

[¶2]      Barlage, in his 
Brief for Appellant, sets forth these issues:

A.        Whether the 
statute of limitations has expired on the Appellant's tort 
claims.

B.        
Whether the Appellant has stated a claim for breach of implied warranty 
of fitness for habitability.

C.        Whether the 
Appellant has stated a claim for breach of contract.

In the Brief of Appellee, 
presented on behalf of Key Bank, the issues are restated 
as:

1.         Did 
the trial court correctly rule that the Plaintiff's tort claims are barred by 
the statute of limitations?

2.         Did 
the trial court correctly rule that the implied warranty of fitness for 
habitability in the sale of housing only applies against the builder of the 
home?

3.         Did 
the trial court correctly rule that the Defendant is entitled to summary 
judgment on the Plaintiff's breach of contract claim?

[¶3]      Key Bank acquired 
the property involved in this case by purchase at a foreclosure sale in 1985. 
The actual foreclosure was conducted by owners of the second mortgage but, to 
protect its first and third mortgages, Key Bank purchased the property at the 
foreclosure sale. Key Bank proceeded to list the property for sale with local 
real estate firms. Barlage, however, learned from an employee of the Key Bank 
that the property was available as a potential investment 
opportunity.

[¶4]      After learning of 
the availability of the house, Barlage submitted an offer, which was 
substantially below the appraised value, in the fall of 1985. Barlage's offer 
was accepted by the Key Bank, and a contract for sale of the house was executed 
on December 20, 1985. All of the terms of the contract for sale were 
incorporated in that written contract. It provided that Barlage would make a 
down payment of $20,900, and Key Bank would finance the balance. The sale was 
closed on April 1, 1986, with Key Bank loaning $188,100 to Barlage to finance 
the balance.

[¶5]      Beginning in that 
year, Barlage proceeded with substantial renovations to both the interior and 
exterior of the house. His improvements included work on a trout pond 
approximately forty feet from the house which was cleaned and deepened to 
increase the flow. The renovations were so substantial that about a year later 
the home was appraised for $441,000.

[¶6]      In 1989 and the 
following years, Barlage suffered various financial problems, and he stopped 
making the mortgage payments to Key Bank. In 1991, he still was in default, and 
Key Bank initiated foreclosure proceedings. The foreclosure was resolved when 
the holder of a subsequent lien bought Key Bank's mortgage. On May 1, 1992, 
Barlage brought this action against Key Bank. He alleged the house was 
"improperly designed, engineered and built," and was not "structurally fit." His 
claims for relief included breach of implied warranty, breach of contract, 
negligent misrepresentation, fraudulent misrepresentation, and negligent and 
intentional infliction of emotional distress.

[¶7]      At his 
deposition, Barlage testified his complaints about improper design and 
structural unfitness of the house were based solely on the fact water seeped 
into the crawl space beneath the house. He stated he had first noticed water in 
the crawl space in the fall of 1986, approximately five and one-half years prior 
to the filing of his action. More specifically, he testified he noted the 
seepage because of problems with the furnace which was located in the crawl 
space. The furnace became water damaged and stopped working, and he had to 
replace it with a new furnace.

[¶8]      The district 
court concluded Barlage had notice of his tort claims for more than four years 
prior to the filing of his action and, consequently, his claims premised on tort 
theories were barred by the statute of limitations.1 With respect to the warranty of 
habitability, the trial court ruled the warranty of habitability was limited to 
situations in which the seller is a builder who has actual knowledge or a better 
opportunity to know of patent or latent defects of which the purchaser is 
unaware. With respect to the claim for breach of contract, the trial court ruled 
the contract did not encompass the express warranty Barlage relied 
upon.

[¶9]      Barlage appeals 
from a summary judgment entered by the trial court on all claims for relief. He 
challenges, by his articulated issues and his brief, each of the legal premises 
upon which the trial court relied in entering the summary judgment in favor of 
Key Bank.

[¶10]   With respect to the contention the 
implied warranty of habitability attached to this transaction, Wyoming has not 
extended the implied warranty of habitability beyond a sale of improved property 
by the builder. ABC Builders, Inc. v. Phillips, 632 P.2d 925 (Wyo. 1981); Moxley 
v. Laramie Builders, Inc., 600 P.2d 733 (Wyo. 1979); Tavares v. Horstman, 542 P.2d 1275 (Wyo. 1975). The implied warranty of habitability is premised upon the 
proposition that the builder is in a superior position to know of any defects in 
improved property whether they are patent or latent. We have required this 
warranty to be honored by the builder even as to remote purchasers, but we have 
refused to apply that doctrine to intermediate owners of the property who were 
not builders. As we said in ABC Builders, 632 P.2d at 932:

In private sales between vendor, not a 
builder-vendor, and a vendee, ordinarily the vendor has no greater skill in 
determining quality than has the vendee and they are in an equal bargaining 
position.

[¶11]   Sometimes, purchasers of improved 
real estate are unable to meet their obligations under a note and mortgage or 
under a conditional sales contract. When the property is foreclosed by the 
mortgagee, or the contract is forfeited with title remaining in the seller, 
there is no good policy reason for requiring that owner to insure the quality of 
the premises unless that mortgagee or that seller was the initial builder. When 
an implied warranty of habitability is claimed under facts such as these, we are 
satisfied, as we have indicated in previous cases, that the common law doctrine 
of caveat emptor is applicable.

[¶12]   We are in full accord with the 
determination by the trial court that the statute of limitations had run with 
respect to Barlage's tort claims. Wyoming is a discovery state in which the 
statute of limitations is triggered when the plaintiff knows or has reason to 
know of the existence of a cause of action. Mills v. Garlow, 768 P.2d 554 (Wyo. 
1989). That rule with respect to statutes of limitations for tort theories was 
articulated in Duke v. Housen, 589 P.2d 334, reh'g denied, 590 P.2d 1340 (Wyo. 
1979), cert. denied, 444 U.S. 863, 100 S. Ct. 132, 62 L. Ed. 2d 86 (1979), and it 
has been consistently followed. E.g., Anderson v. Bauer, 681 P.2d 1316 (Wyo. 
1984); Ogle v. Caterpillar Tractor Co., 716 P.2d 334 (Wyo. 
1986).

[¶13]   It is clear Barlage was first aware 
of water seepage into the crawl space in 1986. In endeavoring to avoid the 
statute of limitations, Barlage argues he was not aware he had a claim against 
Key Bank although he was aware of the invasion of the water. This contention is 
not consistent with Wyoming law which, in the area of tort injuries, can perhaps 
be summarized by the proposition that the occurrence of damage satisfies the 
requirement that the injured party knew or reasonably should have known of the 
potential of a wrongful act being the cause. Anderson; ABC Builders; Duke; 
Banner v. Town of Dayton, 474 P.2d 300 (Wyo. 1970); Town Counsel of Town of 
Hudson v. Ladd, 37 Wyo. 419, 263 P. 703 (1928). The application of this rule 
requires us to affirm the decision of the trial court to grant summary judgment 
because the statute of limitations had run with respect to the tort 
claims.

[¶14]   This leaves only the contention 
there was a breach of contract. When contract language is plain and unambiguous, 
the case may be disposed of by summary judgment, the construction of the 
contract being purely a question of law. Raymond v. Steen, 882 P.2d 852 (Wyo. 
1994); West Texas Utilities Co. v. Exxon Coal, USA, Inc., 807 P.2d 932 (Wyo. 
1991); Continental Ins. v. Page Engineering Co., 783 P.2d 641 (Wyo. 1989). See 
also Treemont, Inc. v. Hawley, 886 P.2d 589 (Wyo. 1994).

[¶15]   Our scrutiny of this contract leads 
us to the trial court's conclusion that there is no provision that Key Bank 
would guarantee a "fit and proper dwelling structure" or any similar language. 
Consequently, Barlage's claim for breach of contract based upon the presence of 
such language was appropriately disposed of by summary judgment in the trial 
court. We note the effort of Barlage to contend that integration should not 
pertain in this instance because he claims an employee of Key Bank made 
statements that the house was "structurally sound" and was a "great buy." 
Barlage also contends the statement was made that, "all it needed was some 
cosmetic work; everything else was fine with the house."

[¶16]   The factual debate about whether 
such statements were made or not simply demonstrates the wisdom of having 
available a statute of frauds requiring contracts for sale of real property be 
in writing.2 Davis v. Davis, 855 P.2d 342 (Wyo. 
1993); Bethurem v. Hammett, 736 P.2d 1128 (Wyo. 1987); Crosby v. Strahan's 
Estate, 78 Wyo. 302, 324 P.2d 492 (1958). We are satisfied the trial court 
correctly disposed of the claim of breach of contract even though the trial 
court did not invoke the statute of frauds with respect to its disposition of 
the case. Instead, the trial court assumed the integration of the agreement, and 
relied upon the parol evidence rule in refusing to consider any of the oral 
representations as sufficient to structure a genuine issue of material fact. 
This approach is justified. E.g., Bethurem; Busch Dev., Inc. v. City of 
Cheyenne, 645 P.2d 65 (Wyo. 1982); Hollabaugh v. Kolbet, 604 P.2d 1359 (Wyo. 
1980); Arch Sellery, Inc. v. Simpson, 346 P.2d 1068 (Wyo. 1959); Cary v. 
Manfull, 41 Wyo. 476, 287 P. 433 (1930). The material presented in connection 
with summary judgment proceedings must be of a character that would justify its 
admission into evidence at trial. E.g., Hronek v. St. Joseph's Children's Home, 
866 P.2d 1305 (Wyo. 1994); Lavoie v. Safecare Health Serv., Inc., 840 P.2d 239 
(Wyo. 1992); Equality Bank of Evansville, Wyo. v. Suomi, 836 P.2d 325 (Wyo. 
1992); Brooks v. Zebre, 792 P.2d 196 (Wyo. 1990); Keller v. Anderson, 554 P.2d 1253 (Wyo. 1976).

[¶17]   Essentially, Barlage's approach is 
to justify reliance upon parol evidence as evidencing fraud in the execution of 
the contract. We can see no resolution of that approach other than to conclude a 
claim for fraud also would be barred by the statute of 
limitations.

[¶18]   We are satisfied there are no 
genuine issues of material fact presented in this case, and the trial court 
correctly applied the law to the facts. The summary judgment is affirmed in all 
respects.

FOOTNOTES

1           
WYO. STAT. § 1-3-105 (1988) provides, in pertinent 
part:

(a) Civil actions other than for the 
recovery of real property can only be brought within the following periods after 
the cause of action accrues:

*          
*          
*           
*          
*          
*

(iv) Within four (4) years, an action 
for:

*          
*          
*           
*          
*          
*

(C) An injury to the rights of the 
plaintiff, not arising on contract and not herein enumerated * * 
*.

 

2           
WYO. STAT. § 1-23-105(a)(v) (1988) provides:

(a) In the following cases every 
agreement shall be void unless such agreement, or some note or memorandum 
thereof be in writing, and subscribed by the party to be charged 
therewith:

*          
*          
*          
*          
*          
*

(v) Every agreement or contract for the 
sale of real estate, or the lease thereof, for more than one (1) year * * 
*.