Case Title: Robertson v. TWP, Inc.

Citation: 

Docket Number: 5716

State: wyoming

Court: Wyoming Supreme Court

Date: 1983-01-03T00:00:00Z

Document:
Robertson v. TWP, Inc.1983 WY 1656 P.2d 547Case Number: 5716Case Number: 5716Decided: 01/03/1983Supreme Court of Wyoming
KEN ROBERTSON AND NICK 
BERESKY DBA KOKO INTERNATIONAL PROPERTIES, APPELLANTS (THIRD-PARTY 
PLAINTIFFS),

v.

TWP, INC., APPELLEE 
(THIRD-PARTY DEFENDANT). No. 5716

Appeal from the District 
Court, NatronaCounty, Dan Spangler, 
J.

Warren R. Darrow 
and J.C.Brooks of Vlastos, Reeves & Murdock, P.C., 
Casper, for appellants.

H.B. Harden, 
Jr., Casper, for appellee.

Before ROSE, C.J., and RAPER, THOMAS, ROONEY and 
BROWN, JJ.

THOMAS, 
Justice.

[¶1.]     The most troublesome 
issue raised by this appeal involves the right of third-party plaintiffs to 
amend their third-party complaint to assert additional claims against a 
third-party defendant after the entry of a summary judgment in favor of the 
third-party defendant on the third-party plaintiffs' claim for indemnity, but 
before that summary judgment became final under our Wyoming Rules of Civil 
Procedure. The second question involves the liability of an intermediate seller 
of land to its purchaser for indemnity for tortious acts of the purchaser 
against neighboring landowners. The district court entered a summary judgment in 
favor of the third-party defendant (appellee) on the claim of the third-party 
plaintiffs (appellants) for indemnity. Subsequently the district court denied a 
motion to amend their third-party complaint, which was submitted before the 
summary judgment became final under Rule 54(b), W.R.C.P. We shall affirm the 
district court.

[¶2.]     The appellants 
purchased a tract of land in Natrona 
County, Wyoming, for the 
purpose of constructing a real estate development thereon. The purchase was 
accomplished by the assignment by TWP, Inc., of its rights as a purchaser under 
a contract for the sale of the land to the appellants. Paragraph 5 of the 
Contract for Deed which was assigned provided in part: 

"* * * [I]t is 
anticipated that sewer service for subject property will be provided by a new 
sewer plant to be constructed by Radix, Inc. Sellers shall provide Buyer with a 
Letter of Commitment to Buyer's satisfaction that Radix will service subject 
property with sewer service at Three Hundred Fifty Dollars ($350.00) each for at 
least one hundred fifty (150) single-family residences subject to Buyer 
installing mains, man-holes and the like."

The assignment 
of the Contract for Deed occurred about July 6, 1979, and thereafter the 
appellants proceeded to execute their plans for constructing a subdivision by 
accomplishing grading and excavating on the property. It is their position that 
the president of the appellee had on a number of occasions made specific 
representations that the sewer service would be supplied in accordance with the 
quoted language of the contract.

[¶3.]     In about October of 
1979 the development work on the subdivision project was stopped. It appears 
that this was because of advice by representatives of NatronaCounty that a final plat could not be 
obtained because adequate sewer facilities were not available for the 
subdivision. NatronaCounty also advised the appellants that no 
further development activities could be undertaken until such time as a final 
plat approval was obtained.

[¶4.]     During the balance of 
that fall and winter loose dirt from the land owned by the appellant was blown 
by the winds upon the property of their neighbors. On March 18, 1980, those 
neighbors sued the appellants, T.W. Pittman and Radix, Inc., for damages to 
their property. The claims of the neighbors were premised upon public nuisance, 
violation of zoning regulations, violation of statutes, and violation of 
Department of Environmental Quality regulations, and punitive damages were 
sought. The particular damages ran the complete gamut of possibilities of damage 
that can result from blowing dirt, including damages to the residences of the 
neighbors, damages to their personal property, and damages to their land, and 
the costs and expenses of cleaning up their residences, property and 
land.

[¶5.]     Answers and 
cross-claims were filed by the several defendants, and on August 25, 1980, 
pursuant to leave granted by the district court, the appellants filed a 
third-party complaint against the appellee. Pursuant to that third-party 
complaint the appellants sought indemnity from the appellee for any damages for 
which they might be found liable to the original plaintiffs. It was their theory 
that the appellee breached its agreement with them in that sewer service was not 
provided, and that the appellee impliedly warranted the property was suitable 
for residential subdividing; that if they had known that sewer service would not 
be provided they would not have begun the grading and excavating of the property 
and no erosion would have resulted; and that except for the failure to provide 
the sewer service the damages to the plaintiffs would not have 
resulted.

[¶6.]     After a good deal of 
discovery among the several parties the appellee filed a "Motion for Summary 
Judgment against Third-Party Complaint; Motion to Dismiss Third-Party Complaint 
for Failure to Join Indispensible [sic] Parties; Motion to Add Parties; Motion 
to Compel Answers to Interrogatories." On April 9, 1981, the district court 
entered a "Summary Judgment in Favor of T.W.P., Inc., Third-Party Defendant 
Against Ken Robertson and Nick Beresky dba KoKo International Properties 
Third-Party Plaintiffs on Third-Party Complaint." The summary judgment is silent 
with respect to the reasons for which the district court granted it. The entry 
of the summary judgment still left pending several claims by some parties 
against other parties.

[¶7.]     On September 23, 1981, 
the appellants filed a Motion for Modification Order or in the Alternative to 
Amend, pursuant to which they requested an order modifying the summary judgment 
entered against them and in favor of the appellee, "or, in the alternative, said 
defendants would request that they be permitted to amend their Third-Party 
Complaint against T.W.P., Inc." In a Memorandum in Support of Motion for 
Modification, or, in the Alternative, Motion to Amend, the appellants made it 
clear that they were concerned about the possible effect of res judicata upon 
their other claims against the appellee if the summary judgment were not 
modified or if they were not granted leave to amend. On November 30, 1981, the 
district court entered its order denying the Motion for Modification, or, in the 
Alternative, Motion to Amend. It does not appear that an amended third-party 
complaint was filed, even in connection with the motion, but it is clear that 
the claims which the appellants would have injected into the proceeding would 
relate to claims against the appellee for breach of contract, breach of 
warranty, or negligent misrepresentations resulting in damages for loss of use 
and loss of profits, diminution in value, and expenses incurred with respect to 
the development of the property in question.

[¶8.]     All claims ultimately 
were disposed of by the entry of an order based upon a stipulation of dismissal 
with respect to the appellants and another third-party defendant, which was 
entered on May 21, 1982. This appeal then followed, with the notice of appeal 
specifying that the appellants appeal from the summary judgment in favor of TWP, 
Inc., and from the order denying the appellants' motion to modify the summary 
judgment, or alternatively to modify their third-party 
complaint.

[¶9.]     As stated by the 
appellants in their brief, the issues in this case are as 
follows:

"A. IT APPEARING THAT THE 
DISTRICT COURT IMPLIEDLY FOUND THAT ANY ACTS OR OMISSIONS OF THE APPELLEE WERE 
NOT THE PROXIMATE CAUSE OF THE PLAINTIFFS' DAMAGES, DID THE DISTRICT COURT ERR 
IN CONCLUDING THAT THERE WAS NO GENUINE ISSUE AS TO ANY MATERIAL FACT RELATING 
TO PROXIMATE CAUSE IN GRANTING SUMMARY JUDGMENT IN FAVOR OF THE APPELLEE AND 
AGAINST THE APPELLANTS ON THEIR CLAIM FOR CONTRIBUTION AND 
INDEMNITY?

"B. IN DENYING THE 
APPELLEES' MOTION TO MODIFY THE ORDER GRANTING SUMMARY JUDGMENT DURING [sic] THE 
ALTERNATIVE TO AMEND THEIR THIRD PARTY COMPLAINT, DID THE DISTRICT COURT ERR IN 
THAT IT MAY HAVE FORECLOSED THE APPELLANTS FROM PURSUING ANY OTHER CLAIMS FOR 
DAMAGE THEY MAY HAVE HAD ARISING OUT OF THE PURCHASE OF THE PROPERTY AND THE 
APPELLEES' MISREPRESENTATIONS RELATIVE TO THE AVAILABILITY OF SEWER 
FACILITIES?"

The appellee 
does not resist the statement of issues by the appellants, but in its brief it 
specifically takes the position that the effect of the issue identified as "B" 
is to induce this court to make a determination that the theories sought to be 
injected by amendment into the third-party complaint would not be barred by the 
entry of the summary judgment on the third-party complaint under the doctrine of 
res judicata. The appellee's position unequivocally is that this court should 
not decide that question but should await the ripening of the issue before 
reviewing it.

[¶10.]  The summary judgment entered in the 
district court in favor of appellee and against appellants is not definitive as 
to the basis for which it was entered. In this court, however, the parties are 
in agreement that the ground upon which the district court granted the summary 
judgment was that of proximate cause. Succinctly stated, the district court held 
that no action on the part of appellee was a proximate cause of the injuries to 
the plaintiffs with respect to whose claims indemnity was sought by the 
appellants; that there was no genuine issue of fact with respect to that legal 
ground; and for that reason there was no genuine issue as to any other material 
facts. We affirm the entry of the summary judgment by the district court. The 
right of the appellants to seek indemnity from the appellee in this instance is 
controlled by what this court said in Kopriva v. Union Pacific Railroad Company, 
Wyo., 592 P.2d 711 (1979). Paraphrasing what we there said, assuming that TWP, 
Inc., was guilty of a breach of contract with respect to the agreement assigning 
the Contract for Deed, the question is whether that breach of contract is a 
proximate cause of the injury to the plaintiffs.

"* * * We agree that but 
for the act of the defendant the accident might not have occurred, but this fact 
does not determine the question of liability. The law does not charge a person 
with all the consequences of a wrongful act but ignores remote causes and looks 
only to the proximate cause. In Lemos v. Madden, 28 Wyo. 1, 10, 200 P. 791, 
793 (1921) Justice Blume defined the issue as follows:

"`The proximate cause of 
an injury is that cause which in natural and continuous sequence, unbroken by an 
efficient intervening cause, produces the injury, and without which the result 
would not have occurred.'

"Later in the case, 28 
Wyo. at 12, 
200 P.  at 794, Justice Blume rejected the notion of `but for' causation and 
stated:

"`But if the original 
wrong furnished only the condition or occasion, then it is the remote and not 
the proximate cause, notwithstanding the fact that there would have been no loss 
or injury but for such condition or occasion.'" Kopriva v. Union Pacific 
Railroad Company, supra, at 712-713.

[¶11.]  As was true in Kopriva, the asserted 
wrongful act of the appellee in this instance provided "only the condition or 
occasion" for the wrong to the plaintiffs, and hence was only the remote cause 
and not the proximate cause, and no liability for indemnity can be imposed. We 
add only that it would be difficult to conceive of a more clear example of an 
efficient intervening cause than that portrayed by the facts here. Until the 
ground was broken by the initiation of the excavating and grading for the 
subdivision development, there was no potential for harm to the plaintiffs. The 
activities of the appellants, concededly accomplished through agents of the 
appellants, were in this instance the sole proximate cause of the injuries to 
the neighbors' homes, possessions and land.

[¶12.]  We turn then to the complaint of the 
appellants that the district court erred in denying their motion to amend their 
third-party complaint. We are cognizant of the position of the appellee to the 
effect that whether the additional claims which appellants sought to include by 
amendment might be barred by res judicata is not before the court in this case. 
We find that we are not in accord with that position.

[¶13.]  Amendments of the pleadings are governed 
by Rule 15, W.R.C.P., and this court has held that the allowance or disallowance 
of an amendment to the pleadings is a matter within the sound discretion of the 
district court, and can only be reversed on appeal if an abuse of discretion is 
present. Johnson v. Aetna Casualty & Surety Co. of Hartford, Conn., Wyo., 608 P.2d 1299 (1980) reh. denied 454 U.S. 1118, 102 S. Ct. 961, 71 L. Ed. 2d 105 (1981); Rose v. Rose, Wyo., 576 P.2d 458 (1978); and Breazeale v. Radich, Wyo., 500 P.2d 74 (1972). Rule 15(a), 
W.R.C.P., specifically provides that:

"* * * leave shall be 
freely given when justice so requires. * * *."

In Rose v. Rose, 
supra, which involved the applicability of Rule 15(b), W.R.C.P., the court 
connected the exercise of the trial court's discretion with justice requiring 
the amendment, and indicated that the basic guideline to be followed is whether 
the allowance of the amendment would prejudice the adverse 
party.

[¶14.]  Both parties are concerned with respect 
to the rule of res judicata in an instance such as this. In our judgment if the 
claims which the appellants sought to inject by the amendment of their 
third-party complaint would be lost, because of the application of the doctrine 
of res judicata, if the amendment were not allowed we then are confronted with a 
situation in which justice would require that leave be granted to amend. We 
would in such an instance hold that the failure to grant leave to amend would 
constitute an abuse of discretion on the part of the trial court. Conversely, if 
those claims would not be lost because of the doctrine of res judicata, we then 
could find no abuse of discretion on the part of the district judge because the 
only burden upon the appellants in such an instance would be that of instituting 
another action. The basis of our decision requires that we consider the 
application of the rule of res judicata to the claims which the appellants 
sought to inject by amendment.

[¶15.]  With respect to this matter we hold that 
those claims would not be lost because of the application of the doctrine of res 
judicata. Consequently there is no abuse of discretion on the part of the 
district court in refusing to grant leave to the appellants to amend their 
third-party complaint, and the action of the district court in this respect also 
is affirmed.

[¶16.]  We first would note the adoption of Rule 
14, W.R.C.P., from the Federal Rules of Civil Procedure. We have said that this 
factor makes federal authorities which interpret the federal rule highly 
persuasive. Olson v. Campbell County Memorial 
Hospital, Wyo., 652 P.2d 1365 
(1982); Weaver v. Blue Cross-Blue Shield of Wyoming, Wyo., 609 P.2d 984 (1980); and Whitefoot v. Hanover Insurance Company, Wyo., 561 P.2d 717 
(1977).

[¶17.]  We then note that under Rule 14, 
F.R.C.P., whether a third-party complaint will be permitted when leave of court 
is sought to file it, or alternatively whether it may be stricken if filed 
without leave of court is a matter within the discretion of the trial court. 6 
Wright & Miller, Federal Practice and Procedure, § 1443, p. 207 (1971), and 
authorities cited therein. The United States Court of Appeals for the Tenth 
Circuit has held in this regard that if the third-party complaint would require 
the trial of issues not involved in the controversy between the original 
parties, without serving any convenience, there is no good reason to permit the 
third-party complaint to be filed. United States Fidelity & Guaranty Co. v. 
Perkins, 388 F.2d 771 (10th Cir. 1968). At this juncture we note only the 
possibility that such a proposition might well pertain in this case, but we do 
call attention to the difficulty of applying the extension of the rule of res 
judicata to matters which a trial court in its discretion may or may not permit 
to be injected into the initial lawsuit. In such circumstances the invocation of 
the rule of res judicata as a future bar to those matters which might have been 
litigated is suspect. We also point out that what in effect occurred in this 
instance was that the appellants sought leave of court to file a third-party 
complaint presented beyond the ten-day period in which it could be filed as a 
matter of right.

[¶18.]  Appellants profess concern about language 
from Roush v. Roush, 
Wyo., 589 P.2d 841, 843 (1979). The 
language from that case engendering the appellants' concern reads in full as 
follows:

"A final, valid 
determination on the merits is conclusive on the parties and those privy with 
them as to the matters adjudged, or which should have been litigated, in another 
action or proceeding involving the same cause of action. Bard Ranch Company v. 
Weber, Wyo., 557 P.2d 722 (1976); Cook v. 
Elmore, 27 Wyo. 163, 192 P. 824 (1920). The doctrine of 
collateral estoppel is similar except that instead of involvement of the same 
causes of action, the involvement must be of identical issues which are 
necessary for the judgments. Willis v. Willis, 48 Wyo. 403, 49 P.2d 670 
(1935); Bard Ranch Company v. Weber, supra; Cook v. Elmore, 
supra."

In our judgment 
appellants read more into this language than actually is 
there.

[¶19.]  In the quoted language with respect to a 
determination on the merits, the limitation of the same cause of action is 
attached. That is sound in the light of what the court said with respect to the 
doctrine of res judicata in Bard Ranch Company v. Weber, Wyo., 557 P.2d 722 
(1976). If the second case is premised upon a different cause of action, even 
though between the same parties, res judicata will not serve to bar that action. 
We are satisfied, and hold, that any cause of action which these appellants 
sought to interject by amendment for damages arising out of the breach of the 
contract between them and the appellee based upon failure of performance or 
breach of contract, breach of warranty, or negligent misrepresentations 
resulting in damages for loss of use, loss of profits, diminution in value, and 
expenses incurred in connection with the development of the property in question 
is a different cause of action than the cause of action for indemnity for which 
the summary judgment was granted to the appellee. Consequently in accordance 
with the rules laid down in Bard Ranch Company v. Weber, supra, res judicata 
would not bar such cause of action.

[¶20.]  We then consider the potential impact of 
collateral estoppel. That question is easily disposed of because the parties 
agree that the basis for the grant of the summary judgment in favor of the 
appellee was that its conduct was not a proximate cause of the damages to the 
plaintiffs in the main action out of which these proceedings arose. That being 
the only matter actually litigated in this case, the impact of that holding as 
collateral estoppel in an action by the appellants against appellee for breach 
of contract or similar theories would not seem to be particularly material, and 
at least from this perspective would have a very limited impact upon the second 
action.

[¶21.]  An examination of the cases in which this 
court has considered the application of the doctrine of res judicata as that 
rule is precisely defined and its corollary collateral or judicial estoppel 
leads to the conclusion that the policy in Wyoming has been to apply those propositions 
rather narrowly. Barrett v. Town of Guernsey, 
Wyo., 652 P.2d 395 (1982); Roush v. Roush, 
supra; Bard Ranch Company v. Weber, supra; Willis v. Willis, 48 Wyo. 403, 49 P.2d 670 (1935); and Cook v. Elmore, 27 
Wyo. 163, 192 P. 824 (1920). While those concepts will be invoked when appropriate to avoid 
repetitious suits involving the same cause of action, and the relitigation of 
matters actually litigated and determined in the first proceeding, to the end 
that the concept of finality is honored in litigation in the State of Wyoming, 
still they are not to be applied in a highly technical manner which would in a 
context such as this prevent litigants from presenting their claims against 
others for determination on their merits.

[¶22.]  The judgment of the district court is 
affirmed.

ROONEY, Justice, specially 
concurring.

[¶23.]  I concur with the holding of the majority 
opinion. I also agree with that said therein down to the point whereat it 
reads:

"We turn then to the 
complaint of the appellants that the district court erred in denying their 
motion to amend their third-party complaint. * * *"

All that follows 
is dicta and unnecessary to the holding. I will wait until the issue is 
pertinent to that presented to us before considering or deciding my position 
relative thereto.