Case Title: LEWIS v. COMMUNITY FIRST NATIONAL BANK, N.A.

Citation: 

Docket Number: 04-20

State: wyoming

Court: Wyoming Supreme Court

Date: 2004-12-01T00:00:00Z

Document:
LEWIS v. COMMUNITY FIRST NATIONAL BANK, N.A.2004 WY 152101 P.3d 457Case Number: 04-20Decided: 12/01/2004Notice:  This opinion is subject to formal revision before publication in Pacific Reporter Third.  Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so that correction may be made before final publication in the permanent volume.
OCTOBER 
TERM, A.D. 2004

 

                                                                                                            

 

PAUL 
R. LEWIS and LEWIS HOLDING

COMPANY, 
INC., a Wyoming Corporation,

 

Appellants(Plaintiffs) 
,

 

v.

 

COMMUNITY 
FIRST NATIONAL BANK, N.A.,

a 
National Banking Association,

 

Appellee(Defendant) 
.

 

 

Appeal 
from the District Court of Big Horn County

The 
Honorable Hunter Patrick, Judge

 

Representing 
Appellants:

            
James P. Castberg, Sheridan, Wyoming. 

 

Representing 
Appellee:

            
Bradley D. Bonner of Bonner Stinson, P.C., Powell, Wyoming. 

 

 

Before 
HILL, C.J., and GOLDEN, KITE, and VOIGT, JJ., and STEBNER, DJ 
RETIRED.

 

 

KITE, 
Justice.

 

[¶1]      After Paul R. 
Lewis defaulted on his personal commercial loan, Community First National Bank, 
N.A. (the bank) transferred funds from an account maintained by Lewis Holding 
Company, Inc. (the company) to cover the past due loan payments.  When Mr. Lewis, president of the 
company, discovered the transfers and complained, the bank offered to reverse 
the set-off payments.  Mr. Lewis 
declined the offer.  He and the 
company then brought an action against the bank for breach of good faith.  The district court dismissed the entire 
action on the bank's partial motion for summary judgment, holding that Mr. Lewis 
and the company failed to show they suffered any damages attributable to the 
bank's actions.  We affirm.      

 

 

ISSUES

 

[¶2]      Mr. Lewis and the 
company present the following issue:

 

It was 
arbitrary and capricious and an abuse of judicial discretion for the trial judge 
to grant the defendant's/counter plaintiff's motion for partial summary judgment 
dismissing the plaintiffs' complaints, after the court had granted the motion 
for joinder.

 

The 
bank phrases the issue as follows:

 

Whether 
the district court properly granted summary judgment because there were no 
genuine issues of material fact that Appellants suffered damages and because 
Appellee was entitled to judgment as a matter of law.

 

 

FACTS

 

[¶3]      On May 21, 1997, 
Mr. Lewis, d/b/a Cowley Mercantile, obtained a personal commercial loan for 
$240,216.00 from the bank's branch in Powell, Wyoming.  Lewis Holding Company, of which Mr. 
Lewis was president, was not a party to the loan transaction.  According to the loan payment schedule, 
Mr. Lewis was required to repay the loan in fifty-nine (59) installment payments 
of $2,450.00 beginning June 20, 1997, and continuing monthly thereafter with a 
final payment of the unpaid principal balance plus interest on May 20, 
2002.  In late July 2000, the bank 
received two loan payment checks from Mr. Lewis that were returned for 
insufficient funds.  When Mr. Lewis 
did not bring his loan payments current by September 21, 2000, the bank debited 
a checking account maintained by the company with Mr. Lewis as a signatory at 
the bank's Sheridan branch and transferred the funds to Mr. Lewis' loan account 
in Powell to cover the past due loan amounts.  The bank performed the same sort of 
transfer from the company's account on three other occasions when Mr. Lewis 
defaulted again in 2000 and 2001.  
The total amount of the four debits was $14,700.00.

 

[¶4]      On March 2, 2001, 
Mr. Lewis called the bank to complain about the transfers.  After reviewing the bank's file, a bank 
representative offered to return the $14,700.00 to the company's Sheridan 
account.  Mr. Lewis refused the 
offer and, on April 30, 2002, he and the company filed complaints against the 
bank, one in the Fourth Judicial District, Sheridan County, and the other in the 
Fifth Judicial District, Park County.  
Both complaints alleged that the bank negligently breached its duty of 
good faith by debiting the company's account and transferring the funds to cover 
Mr. Lewis' personal loan payments.  
Mr. Lewis and the company sought general and punitive 
damages.

 

[¶5]      The bank answered 
the complaints and filed a counterclaim and third party complaint in the Park 
County action seeking foreclosure of the mortgage and repossession of the 
property pledged as collateral for the loan.  The bank also moved to consolidate the 
two cases into one action in the Fifth Judicial District.  The Fourth Judicial District court made 
a limited assignment of the Sheridan County case to the Fifth Judicial District 
court for hearing and deciding the motion to consolidate.  Following the hearing, the Fifth 
Judicial District court granted the motion and consolidated the claims. 

 

[¶6]      On December 12, 
2002, the bank filed a motion to dismiss the claims on the ground that the 
bank's relationship with Mr. Lewis and the company was contractual and all of 
Mr. Lewis' and the company's claims sounded in negligence.  Citing the rule that tort liability 
cannot be premised solely upon contractual duties, the bank asserted the 
complaint failed to state a claim under W.R.C.P. 12(b)(6).  The district court entered an order 
granting the motion but allowing Mr. Lewis and the company to file an amended 
complaint.  Mr. Lewis and the 
company did so, with Mr. Lewis alleging two counts of "breach of duty of good 
faith" and requesting an accounting, and the company alleging five counts of 
"breach of duty of good faith".1  Mr. Lewis sought unspecified general and 
special damages.  The company sought 
unspecified general damages and special damages in the amount of $13,900.00. 

 

[¶7]      The bank filed an 
amended answer and counterclaim followed by a partial motion for summary 
judgment in which it asserted that Mr. Lewis' and the company's claims were 
precluded because Mr. Lewis, not the bank, caused any damages he and the company 
suffered by his refusal to accept the bank's offer to return the funds.  The district court granted the motion, 
finding that no genuine issue of material fact existed on the issue of damages 
"because all of the damages claimed by [Mr. Lewis and the company] to have 
allegedly resulted from [the bank's] withdrawal of funds from the Sheridan 
checking account occurred after [the bank] offered to put the withdrawn funds 
back and [Mr. Lewis] refused to accept return of the funds."  The district court dismissed all of Mr. 
Lewis' and the company's claims.      

                        
 

 

STANDARD 
OF REVIEW

 

[¶8]      Our standard for 
reviewing summary judgments is well established:

            

In reviewing 
summary judgment orders, we have the same duty, review the same materials, and 
follow the same standards as the district court. The propriety of granting a 
motion for summary judgment depends upon the correctness of a court's dual 
findings that there is no genuine issue as to any material fact and that the 
prevailing party is entitled to judgment as a matter of law. A genuine issue of 
material fact exists when a disputed fact, if proven, would have the effect of 
establishing or refuting an essential element of an asserted cause of action or 
defense.  

 

We 
view the record from the standpoint most favorable to the party opposing the 
motion, giving to that party all favorable inferences that fairly may be drawn 
from the record. We will uphold summary judgment on the basis of any proper 
legal theory appearing in the record. 

Merrill 
v. Jansma, 
2004 WY 26, ¶¶6-7, 86 P.3d 270, ¶¶6-7 (Wyo. 2004) (citations 
omitted).

 

 

DISCUSSION

 

[¶9]      Mr. Lewis and the 
company claim the district court erred in granting summary judgment because a 
genuine issue of material fact existed for jury determination.  They cite Moore v. Continental 
Insurance Company, 813 P.2d 1296, 1300 (Wyo. 1991) and several other Wyoming 
cases for the rule that generally the question of whether a party exercised 
reasonable diligence in mitigating damages is for the fact finder.  They also cite Restatement (Second) 
of Contracts, § 350 (1981), which states:

 

(1)               
Except 
as provided in Subsection (2), damages are not recoverable for loss that the 
injured party could have avoided without undue risk, burden or humiliation. (2) 
The injured party is not precluded from recovery by the rule stated in 
subsection (1) to the extent that he has made reasonable but unsuccessful 
efforts to avoid the loss.

 

Based 
upon this provision, Mr. Lewis and the company argue that a question of fact 
existed as to whether Mr. Lewis could have mitigated the damages without "risk, 
burden or humiliation."  They assert 
he was "on the horns of a dilemma, . . . not of his own making," because 
accepting the bank's offer to return the funds to the Sheridan account would 
have left him in default on his loan payments. 

 

[¶10]   The bank responds that this case 
falls squarely within the rule that where reasonable minds could not differ that 
the injured party caused his own damages summary judgment is entirely 
appropriate.  It was Mr. Lewis' 
refusal to accept the bank's offer to return the funds, the bank argues, that 
caused the damages the company allegedly suffered.  The bank contends Mr. Lewis could have 
mitigated those damages by accepting its offer.  The resulting harm to him personally 
from having a delinquent loan, the bank asserts, was caused by his own actions 
and did not justify his failure to mitigate the company's damages nor does it 
create a genuine issue of material fact sufficient to defeat summary 
judgment.  

 

[¶11]   The parties correctly assert that 
the question of whether an injured party has exercised reasonable diligence and 
care in mitigating damages is generally for the fact finder to determine.  Moore, 813 P.2d  at 1300.  However, where reasonable minds could 
not differ concerning efforts to mitigate, summary judgment is appropriate.  Id.  Thus, in Moore, this Court 
affirmed a summary judgment where the facts clearly demonstrated the injured 
party, by his own avoidable action or inactions, caused the damages about which 
he complained.  We reached a similar 
result in Cordero Mining Co. v. United States Fidelity & Guarantee 
Ins. Co., 2003 WY 48, 67 P.3d 616 (Wyo. 2003).     

 

[¶12]   Application of this same reasoning 
to the present case leads us to affirm the order granting summary judgment.  The bank offered to return the 
transferred funds to the company's account in Sheridan.  Mr. Lewis, the president of the company, 
refused the offer.  Had he accepted 
the offer, the funds would have been returned to the account and the company 
would have suffered no damages.  Any 
damages suffered by Mr. Lewis personally upon return of the funds to the 
company's account were attributable not to the bank's actions but to his own 
failure to make his loan payments in a timely manner.  Any risk to him personally from 
accepting the bank's offer is irrelevant to the issue of whether he acted 
reasonably to mitigate the company's damages.  Reasonable minds could not differ 
concerning these conclusions.  
Therefore, summary judgment was proper. 

 

[¶13]   Affirmed.

  

 

 

 

FOOTNOTES

 

1Mr. 
Lewis alleged the bank owed a duty of acting in good faith under the terms of 
the commercial loan agreement. The company alleged the bank owed a duty of good 
faith under its account agreement.  
Wyoming recognizes a claim for breach of the implied covenant of good 
faith and fair dealing, however, Mr. Lewis and the company did not caption their 
claim as such nor did they allege the elements necessary to state a claim for 
breach of the implied covenant of good faith and fair dealing. While a 
substantial question exists as to whether the complaint states a claim for which 
relief can be granted, we confine our discussion to the issues raised and affirm 
on the same grounds relied upon by the district court.