Case Title: PBS ENTERPRIZES, INC. V. CWCAPITAL ASSET MANAGEMENT LLC AS SUCCESSOR TO CRIIMI MAE SERVICES LIMITED PARTNERSHIP, AS SPECIAL SERVICER FOR LASALLE BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR THE REGISTERED HOLDERS OF MERRILL LYNCH MORTGAGE INVESTORS, INC., MORTGAGE PASSTHROUGH CERTIFICATES, SERIES 1997-C1

Citation: 

Docket Number: S-07-0024

State: wyoming

Court: Wyoming Supreme Court

Date: 2008-05-09T00:00:00Z

Document:
PBS ENTERPRIZES, INC. V. CWCAPITAL ASSET MANAGEMENT LLC AS SUCCESSOR TO CRIIMI MAE SERVICES LIMITED PARTNERSHIP, AS SPECIAL SERVICER FOR LASALLE BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR THE REGISTERED HOLDERS OF MERRILL LYNCH MORTGAGE INVESTORS, INC., MORTGAGE PASSTHROUGH CERTIFICATES, SERIES 1997-C12008 WY 53183 P.3d 1140Case Number: S-07-0024, S-07-0251Decided: 05/09/2008
APRIL 
TERM, A.D. 2008

 
 
PBS ENTERPRIZES, 
INC.,

 
 
Appellant

(Defendant),

 
 
v.

 
 
CWCAPITAL ASSET 
MANAGEMENT LLC AS SUCCESSOR TO CRIIMI MAE SERVICES LIMITED PARTNERSHIP, AS 
SPECIAL SERVICER FOR LASALLE BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR THE 
REGISTERED HOLDERS OF MERRILL LYNCH MORTGAGE INVESTORS, INC., MORTGAGE 
PASSTHROUGH CERTIFICATES, SERIES 1997-C1,

 
 
Appellee

(Plaintiff).

 
 
Appeal 
from the DistrictCourtofParkCounty

The 
Honorable Dan Spangler, Judge

 
 
Representing 
Appellant:

Timothy 
Charles Kingston, Graves, Miller & Kingston, PC, Cheyenne, Wyoming.

 
 
Representing 
Appellee:

Colin 
MacKenzie Simpson, Burg, Simpson, Eldredge, Hersh & Jardine, PC, Cody, Wyoming.

 
 
Before VOIGT, C.J., and GOLDEN, 
HILL, KITE, and BURKE, JJ.

 
 
BURKE, 
Justice.

 
 

[¶1]           
In the 
first of these two consolidated cases, PBS Enterprizes, Inc., appeals the 
district court's entry of summary judgment in favor of CWCapital Asset 
Management, LLC, in CWC's foreclosure action against PBS.  In its second appeal, PBS challenges the 
district court's confirmation of the foreclosure sale, which took place while 
the first appeal was pending before this Court.  We will affirm the district court's 
actions in both cases.

 
 
ISSUES

 
 

[¶2]           
PBS lists 
four issues in its initial appeal.  
Slightly reworded, they are as follows:

 
 
1.         
Did PBS default on a promissory note given to CWC?

 
 
2.         
Was CWC prevented from claiming that PBS was in default because:  (a) CWC incorrectly applied PBS's 
payments under the promissory note, or (b) CWC agreed to a modification of PBS's 
payment obligations?

 
 

3.                  
Did CWC's 
failure to provide PBS a correct payoff amount under the promissory note 
constitute actionable negligent or intentional 
misrepresentation?

 
 

4.                  
When the 
district court considered CWC's motion for summary judgment, did it commit 
reversible error by not finding that there were genuine issues of material fact 
as to whether PBS was in default on the promissory note and whether CWC had 
committed negligent or intentional misrepresentation?

 
 
In its second appeal, PBS raises 
this issue, also reworded as follows:

 
 
5.         
Did PBS's first appeal deprive the district court of jurisdiction to 
consider and rule on CWC's post-appeal motion to confirm the foreclosure sale 
and enter a deficiency judgment?

 
 
CWC states the issues differently, 
but presents the same questions.

 
 
FACTS

 
 

[¶3]           
PBS owned 
and operated two hotels, one in Cody, Wyoming, and another in Norfolk, Nebraska.  The financial arrangements between PBS 
and CWC were complicated, and for our purposes, it is sufficient to summarize 
them briefly.  CWC held PBS's 
promissory note secured by the "Norfolk mortgage" 
on the Norfolk 
property.  CWC also held promissory 
notes secured by two "Cody mortgages" on the Cody property.  In addition, the Cody mortgages included 
cross-default provisions such that a default under the Norfolk mortgage was also 
a default under the Cody mortgages.  
One of the Cody mortgages, for example, specified that it "shall be an 
Event of Default hereunder and the debt secured hereby shall become immediately 
due, at the option of [CWC], upon the occurrence of . . . an Event of Default, 
as that term is or shall be defined in [the Norfolk] 
Mortgage."

 
 

[¶4]           
In 2004, 
CWC foreclosed on the Norfolk mortgage in 
Nebraska state 
court.  PBS did not contest this 
foreclosure.  After the Nebraska foreclosure was 
completed, a deficiency remained.  

 
 

[¶5]           
In 2006, 
CWC filed in Wyoming state court to foreclose 
on the Cody mortgages and to recover the deficiency from the Norfolk mortgage.  PBS opposed this foreclosure, claiming 
that the parties' prior conduct had established a payment schedule different 
from that set forth in the Cody mortgages' documents.  Under the altered payment schedule, PBS 
asserted, it was not in default.  
PBS also raised two counterclaims, negligent and intentional 
misrepresentation, alleging that CWC had engaged in a pattern and practice of 
misrepresenting to PBS the correct amounts due under the mortgages.  

 
 

[¶6]           
The 
district court entered summary judgment, ruling in favor of CWC on the 
foreclosure of the Cody mortgages, and against PBS on its counterclaims.  PBS appealed the summary judgment 
order.  While that appeal was 
pending, CWC proceeded with the foreclosure, and eventually asked the district 
court to confirm the foreclosure sale and enter a deficiency judgment against 
PBS.  PBS's second appeal asserts 
that, because its first appeal was pending before this Court, the district court 
lacked jurisdiction to confirm the foreclosure sale.

 
 
STANDARD OF 
REVIEW

 
 

[¶7]           
Summary 
judgment is properly granted when there is no genuine issue as to any material 
fact, and the moving party is entitled to judgment as a matter of law.  W.R.C.P. 56(c).  Our standard when reviewing a district 
court's grant of summary judgment is familiar: 

 
 
[T]he 
propriety of a summary judgment [is evaluated] by employing the same standards 
and by examining the same material as the district court. We examine de novo the record, in the light most 
favorable  to the party opposing the motion, affording to that party the 
benefit of all favorable inferences that may be drawn from the record. If upon 
review of the record, doubt exists about the presence of issues of material 
fact, that doubt must be resolved against the party seeking summary judgment. We 
accord no deference to the district court's decisions on issues of 
law.

Linton v. E.C. Cates Agency, Inc., 2005 
WY 63, ¶ 7, 113 P.3d 26, 28 (Wyo. 2005) (internal citations omitted); Glenn v. Union Pac. R.R. Co., 2008 WY 
16, ¶ 6, 176 P.3d 640, 642 (Wyo. 2008).

 
 
DISCUSSION

 
 
Default

 
 

[¶8]           
In 
opposition to CWC's motion for summary judgment, PBS maintained that it was not 
in default under the Cody mortgages.  
It claimed that representatives of PBS and CWC had reached a mutual 
agreement to alter the payment schedule set forth in the Cody mortgages.  According to PBS, CWC "explicitly agreed 
that PBS did not have to make full monthly payments . . . during the non-peak 
months of the year," and that "PBS could make additional and lump sum payments 
during the peak summer months to make up for the prior period of each year when 
payments were reduced."  PBS further 
asserted that it had made payments on this seasonal schedule from 1997 through 
2003, and that CWC had always accepted such payments without imposing additional 
interest or penalties, and without declaring PBS in default.  PBS maintained that it continued making 
payments in accordance with the altered schedule, but that CWC, without notice 
or explanation, claimed that PBS was in default.

 
 

[¶9]           
There are 
two illustrative Wyoming cases dealing with mutual agreements 
to vary the terms of a written contract.  
Both rely on the concept that:

 
 
As a general rule, if the parties 
mutually adopt a mode of performing their contract differing from its strict 
terms or if they mutually relax its terms by adopting a loose mode of executing 
it, neither party can go back upon the past and insist upon a breach, because it 
was not fulfilled according to its letter.

 
 

Quin Blair Enterprises, Inc. v. 
Julien Construction Co., 597 P.2d 945, 951 n.6 (Wyo. 1979) (emphasis 
removed); Schuler v. Community First 
Nat'l Bank, 999 P.2d 1303, 1305 n.1 (Wyo. 2000).  Applying this general rule, however, the 
cases reached different results.  In 
the first, "there was never any mutual agreement" to change the 
contract, only "unilateral disregard" of certain contract terms.  Quin Blair, 597 P.2d  at 951 n.6 
(emphasis in original).  We 
therefore enforced the contract as written.  In the second, there was unchallenged 
evidence that the parties had made an oral agreement to change the contract 
terms, and they had taken actions consistent with the altered terms.  Schuler, 999 P.2d  at 1305.  We therefore affirmed the trial court's 
summary judgment enforcing the terms of the new oral 
agreement.

 
 

[¶10]       
The facts 
presented by PBS in opposition to CWC's motion for summary judgment supported 
its contention that the parties had mutually agreed to vary the payment schedule 
under the Cody mortgages, and that they acted in conformity with the altered 
schedule.  Viewed favorably to PBS, 
these facts are more like those in Schuler, in which the altered terms of 
the oral agreement were enforced.  
By themselves, these facts would raise genuine issues of material fact 
sufficient to justify the denial of CWC's motion for summary judgment.  However, there are two additional facts 
that support the district court's decision to grant summary judgment to 
CWC.  

 
 

[¶11]       
First, 
the Cody mortgages provided that a default on the Norfolk mortgage also constituted a default 
under the Cody mortgages.  It is 
undisputed that PBS defaulted on the Norfolk mortgage.  PBS did not contest CWC's foreclosure on 
that mortgage in Nebraska state court.  Regardless of whether the parties agreed 
to change the payment schedule under the Cody mortgages, PBS's default under the 
Norfolk mortgage 
also put it in default under the Cody mortgages.

 
 

[¶12]       
Second, 
when the two parties engaged in negotiations in an effort to avoid foreclosure, 
they entered into a "Pre-Negotiation Agreement" that provided, in part, as 
follows:

 
 
[PBS] acknowledges that the loan is 
in monetary default under the Loan Documents and that the Norfolk Loan and the 
Cody Mortgage and Guaranty [are] in default.  [PBS] hereby acknowledges and agrees 
that there have been no modifications to the Loan Documents and the Cody 
Mortgage and Guaranty[,] and the Loan Documents and the Cody Mortgage and 
Guaranty constitute all of the agreements among [CWC and PBS,] and the Loan 
Documents and the Cody Mortgage and Guaranty continue to constitute [PBS's] 
legal and enforceable obligations.

 
 
In this document, PBS conceded that 
there were no modifications to the written agreement and affirmed that the 
written documents continued to define PBS's legal and enforceable 
obligations.  Moreover, PBS 
explicitly acknowledged that it was in default.  Given this admission by PBS, the 
district court did not err in ruling that PBS was in default under the Cody 
mortgages.

 
 
Negligent or Intentional 
Misrepresentation

 
 

[¶13]       
PBS also 
appeals the district court's grant of summary judgment against PBS's 
counterclaims of negligent and intentional misrepresentation.  Both claims, PBS asserts, are based on 
CWC's "persistent failure, either intentional or negligent, to provide [PBS] 
with a correct and accurate pay off amount" on the Cody mortgages.  PBS asserts that, because CWC provided 
"wildly inaccurate or greatly different pay off numbers," PBS lost opportunities 
to sell the Cody hotel at a price that would have allowed PBS to pay off all of 
its obligations to CWC.

 
 

[¶14]       
Both 
intentional misrepresentation and negligent misrepresentation are tort 
claims.  Birt v. Wells Fargo Home Mortgage, Inc., 
2003 WY 102, ¶ 42, 75 P.3d 640, 656 (Wyo. 2003); Pinther v. Ditzel, 2007 WY 116, 
¶ 11, 163 P.3d 816, 818 (Wyo. 2007).  
In contrast, the relationship between PBS and CWC, as borrower and 
lender, was contractual in nature.  
Martinez v. Associates Financial Services Co., 
891 P.2d 785, 788-89 (Wyo. 1995).  "We have been exceedingly reluctant to 
introduce tort principles into claims that are essentially contract 
actions."  Hulse v. First American Title Co., 2001 
WY 95, ¶ 55, 33 P.3d 122, 139 (Wyo. 2001).  More particularly, "we have been 
rightfully hesitant to find tort causes of action where a contract exists."  Lee v. LPP Mortgage Ltd., 2003 WY 92, 
¶ 27, 74 P.3d 152, 162 (Wyo. 2003).  
That is because "the contractual relationship controls, and parties are 
not permitted to assert actions in tort in an attempt to circumvent the bargain 
they agreed upon."  Snyder v. Lovercheck, 992 P.2d 1079, 
1087 (Wyo. 
1999).  

 
 

[¶15]       
PBS 
complains that CWC misrepresented amounts due under the Cody mortgages, alleging 
in its Answer and Counterclaim that CWC "had a duty to provide information to 
[PBS] so that [PBS] might correctly determine the amount owed by [PBS]."  PBS has not identified the source of 
CWC's duty.  Our review of the 
record shows that, contrary to PBS's allegation, the Cody mortgages assign that 
duty to PBS, not CWC:

 
 
After request by Lender [CWC], 
Borrower [PBS], within fifteen (15) days and at its expense, will furnish Lender 
[CWC] with a statement, duly acknowledged and certified, setting forth (a) the 
amount of the original principal amount of the Note, and the unpaid principal 
amount of the Note, (b) the rate of interest of the Note, (c) the date 
payments of interest and/or principal were last paid, 
[etc.].

 
 
It is probably more common for the 
lender to perform accounting functions associated with a mortgage.  In this case, however, the amount owed 
under the Cody mortgages at any given time depended, in part, on a complicated 
formula involving PBS's net worth.  
Because PBS had better access to this financial information, the parties 
apparently agreed that PBS, not CWC, should determine the amount owed under the 
Cody mortgages.  

 
 

[¶16]       
Whatever 
the explanation for this provision of the Cody mortgages, it unambiguously 
places the duty on PBS, not CWC, to calculate the amount owed.  "It is well established in Wyoming that when parties 
reduce a contract to writing, they must abide by its plainly stated terms."  Snyder, 992 P.2d  at 1089.  Where the parties agreed by contract to 
allocate a specified duty to one party, that duty may not be shifted to the 
other party by asserting a tort claim.

 
 

[¶17]       
Because 
PBS failed to establish that CWC had any duty to provide it with figures for the 
amount owed under the Cody mortgages, PBS cannot sustain its intentional or 
negligent misrepresentation claims against CWC.  This does not mean that intentional or 
negligent misrepresentation claims may never be maintained by a borrower against 
a lender, or by others whose relationships are defined by contract.  Our precedent suggests circumstances in 
which such tort claims may be viable.  
See, e.g., Martinez, 891 P.2d  at 789 (Lender's extra-contractual duties might be predicated upon a 
special or fiduciary relationship.); Hulse, ¶ 57, 33 P.3d  at 139-40 
(Extra-contractual duties may arise when applicable statutes impose affirmative 
tort duties.).  In this case, 
however, the contract imposed the duty on PBS to provide figures on the amounts 
due under the Cody mortgages.  PBS 
may not reallocate that contractual duty to CWC in a tort claim.  On this basis, the district court 
correctly granted summary judgment against PBS's 
counterclaims.

 
 
Confirmation of Foreclosure 
Sale

 
 

[¶18]       
While 
PBS's initial appeal was pending before this Court, CWC proceeded with the 
foreclosure sale.  It then filed a 
motion asking the district court to confirm the foreclosure sale and enter a 
deficiency judgment against PBS.  
The district court granted the motion.  In PBS's second appeal, it asserts that 
the district court did not have jurisdiction over CWC's motion because of the 
pending appeal.  PBS refers to 
W.R.A.P. 6.01(b), which provides as follows:

 
 
The appellate court shall acquire 
jurisdiction over the matters appealed when the case is docketed.  In all cases, the trial court retains 
jurisdiction over all matters and proceedings not the subject of the 
appeal.

 
 

[¶19]       
Our cases 
applying this rule often involve domestic relations issues.  We have held that a district court 
retains jurisdiction to determine permanent guardianship even while its decision 
on temporary guardianship was under appeal, In re Guardianship of MEO, 2006 WY 87, ¶ 
13 n.6, 138 P.3d 1145, 1150 n.6 (Wyo. 2006), and that a district court retains 
jurisdiction to consider visitation and support even though its decision 
establishing paternity was under appeal.  
In re Paternity of IC, 941 P.2d 46, 50-51 (Wyo. 1997).  In Moore v. Moore, 809 P.2d 255, 258 
(Wyo. 1991), 
we stated that "a district court has the right and the power, during the 
pendency of an appeal, to enforce its decree and to protect the parties as to 
any rights which the decree gave to them."

 
 

[¶20]       
In this 
case, the district court retained the right and the power to enforce its decree 
that CWC was entitled to foreclose against PBS, even though that decision had 
been appealed.  Significantly, PBS 
did not seek to stay the district court's order, as it could have done pursuant 
to W.R.C.P. 62(d).  Absent such 
a stay, the district court did not exceed its authority to enforce the judgment 
by confirming the foreclosure sale and entering a deficiency judgment against 
PBS.

 
 
CONCLUSION

 
 

[¶21]       
The 
district court properly granted summary judgment to CWC in its foreclosure 
action against PBS, and properly granted summary judgment against PBS's 
counterclaims.  The district court 
also had jurisdiction to confirm the foreclosure sale.  We affirm the district court in all 
respects.