Case Title: SUNDOWN, INC. v. PEARSON REAL ESTATE CO.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 2000-07-05T00:00:00Z

Document:
SUNDOWN, INC. v. PEARSON REAL ESTATE CO.2000 WY 1428 P.3d 324Case Number: 99-43Decided: 07/05/2000Supreme Court of Wyoming
 
SUNDOWN, INC., a Wyoming 
corporation, Appellant (Plaintiff), v.PEARSON REAL 
ESTATE COMPANY, INC., a Wyoming corporation, JOHN D. PEARSON, Individually, GOLD 
STAR LAND, a Wyoming Limited Liability Company, and EDWARD W. KORNKVEN, 
Individually, Appellees (Defendants).

Appeal from the District 
Court of Natrona County, The Honorable Dan Spangler, Judge. 

Representing 
Appellant: John D. Whitaker, 
Casper, Wyoming.Representing Appellees Pearson Real Estate Company, Inc., 
and John D. Pearson: W. W. Reeves of Reeves & Miller, Casper, 
Wyoming.Representing Appellees Gold Star Land, LLC, and Edward W. 
Kornkven: Stephen K. Gerdes of White & Steele, P.C., Denver, 
Colorado.

Before 
LEHMAN, C.J., and THOMAS, MACY, GOLDEN, and HILL, JJ.

GOLDEN, 
Justice.

[¶1] Appellant 
Sundown, Inc. arbitrated a cancellation of its purchase contract of a ranch with 
seller after it discovered the extent to which two coal surface mining 
agreements encumbered the ranch. Contending that misrepresentations by the real 
estate brokers involved in the transaction, Appellees John D. Pearson, principal 
of Pearson Real Estate Company (Pearson), and Edward W. Kornkven, principal of 
Gold Star Land, LLC (Kornkven), induced it to execute the purchase contract and 
alter its existing ranching operations resulting in damages, Sundown brought 
suit on grounds of fraud and negligent misrepresentation. At the close of its 
case-in-chief, the trial judge directed a verdict in favor of Pearson and 
Kornkven. Sundown appeals.

[¶2] We affirm 
the trial court's ruling as applied to Pearson but reverse and remand for trial 
to determine whether Kornkven fraudulently concealed material title exceptions 
before execution of the contract and caused damages.

ISSUES

[¶3] Sundown 
presents these issues for our review:

1. Whether the District 
Court erred as a matter of law when it concluded that no reasonable jury could 
find that the Defendants committed fraud or negligent misrepresentation under 
the facts of this case.

2. Whether the District 
Court erred as a matter of law when it determined that there were no damages 
caused by the misrepresentations of the Brokers prior to the delivery of the 
Arch Agreements to the Buyer.

3. Whether the Defendants 
breached their duty to take reasonable steps to avoid misrepresenting the 
property.

4. Whether there was 
sufficient evidence for the jury to find that Appellee Kornkven owed Plaintiff a 
duty of utmost good faith, loyalty and confidence which he breached by failing 
to discover and disclose to the Plaintiff the effect of the Arch 
Agreements.

[¶4] Pearson 
presents these issues for our review:

A. Whether Appellant 
offered evidence of any misrepresentation from which a reasonable jury could 
find that Appellee Pearson misrepresented or failed to disclose any material 
fact under any of the theories plead or pursued by 
Appellant?

B. Whether Appellant's 
claims are barred by prior judgment on the same claims in arbitration with 
Appellee's principal.

Appellee Kornkven does 
not present separate issues.

FACTS

[¶5] Marc Nogle, 
a Casper businessman, owns the Credit Bureau of Casper, its branch offices, and 
Sundown, Inc., a real estate and ranch holding company consisting of commercial 
real estate and two ranches with 700 and 2,300 deeded acres respectively. Both 
ranches have federal and state permits. One ranch is a 300 cow-calf operation, 
and the other ranch runs 2,800 head of sheep. Sundown was interested in 
purchasing another ranch in order to consolidate its operations and increase its 
livestock number. In 1996, Nogle received information from brokers Pearson and 
Kornkven that the Dana Meadows Ranch in Carbon County, Wyoming, was for sale. 
The ranch consists of 39,955 deeded acres and over 60,000 acres of non-owned 
access from government and railroad leases. Pearson provided to Nogle a brochure 
about the ranch stating that no known mineral rights remained with the seller 
and describing the grazing restrictions caused by coal mining operations on the 
ranch. It stated in part:

Over the years, there has 
been a considerable amount of open pit strip mining done on the Federal, deeded 
and U.P.R.R. lands in the southern area of the ranch. At the present time (as of 
December 1995), there are three active mining companies: 1) Arch Minerals; 2) 
Rosebud Coal Co.; and 3) Cyprus/Shoshone. The pastures where coal mining has 
occurred must all be reclaimed according to Wyoming Department of Environmental 
Quality. The reclamation areas must be totally restored to their original state 
and therefore it can take years (usually 6-8 years) before livestock are allowed 
to graze the reclaimed areas. Within the next 1-2 years, some of the reclaimed 
areas will become available to graze, which will allow the owner to carry more 
livestock.

[¶6] The coal 
being mined in this area is a very high grade coal, but has a lot of overburden 
(dirt) on top of the coal. Therefore, it is very expensive to mine the coal and 
the probability for these mines to stay open is not feasible. The coal mines 
have been beneficial to the ranch because of water development, fencing and 
improved roads.

[¶7] Regarding 
purchase price, the brochure stated that "[t]he seller reserves the right to 
effectuate a 1031 exchange for all or a portion of the final sales price of the 
ranch."

[¶8] The ranch 
is encumbered by two coal surface mining agreements known as the Arch Agreements 
executed in 1986 and 1993 for a term of thirty years. The agreements do not 
specify the number of acres encumbered but list over seven pages of legal 
descriptions of the affected property. Testimony at trial established that these 
agreements give Arch exclusive right of control of a majority of the 
ranch.

[¶9] 
Arrangements were made for Nogle to tour the ranch, and Pearson demanded that 
Kornkven sign a brokerage disclosure statement before the tour. Kornkven did not 
provide this statement, and Nogle toured the ranch on April 18 and April 21, 
1996. On the first trip, Pearson told Nogle that the coal mining operations had 
benefitted the ranch in a number of ways and were ending in the next couple of 
years. Nogle toured the ranch and noticed little activity from the coal mining 
operations. On the second visit, the ranch manager, Casey Palm, showed Nogle a 
map by Arch Mineral that indicated where the restricted grazing was on the 
ranch. That map showed that the majority of the mining operations was on 
adjacent property and indicated that a few isolated areas of the ranch were 
restricted to grazing. At that time, Nogle claims that the brokers told him that 
the purchase could be completed through a stock exchange 
purchase.

[¶10] A title 
commitment showing sixty-two title exceptions was delivered to Pearson on March 
20, 1996. On April 26, 1996, Pearson gave Kornkven a copy of the title 
commitment containing potential exceptions of records including the Arch 
Agreements. Kornkven did not give this information to 
Nogle.

[¶11] On April 
26, 1996, Kornkven prepared a written offer to purchase the ranch expressing 
that Sundown, Inc. was buying the property "subject to" title exceptions of 
record. Kornkven did not discuss this provision with Nogle and had not provided 
either Nogle or Pearson with a brokerage disclosure statement; however, Nogle 
claims that Kornkven represented to him that he was working as his agent. Nogle 
shared confidential information with Kornkven. Kornkven signed a second offer 
without Nogle's permission on July 29, 1996, and on August 5, 1996, Nogle signed 
that written offer for Sundown, Inc., to purchase the property subject to title 
exceptions of record and delivered $50,000.00 in earnest money to Pearson. The 
offer was rejected, further negotiations ensued, and Pearson faxed a 
counteroffer to Kornkven from the seller that included an addendum to the 
counteroffer titled Addendum B-1 which referred to the Arch 
agreements:

Purchaser is aware and 
acknowledges by signing this agreement that there is restricted livestock use of 
the two pastures known as (A) Headquarters Pasture (B) TV Hill Pasture. Due to 
active coal mining and related reclamation work in these two pastures, Dana 
Meadows Ranch has restricted livestock grazing use of these two pastures. The 
Seller shall provide to the Purchaser the written agreement between Dana Meadows 
Ranch and Arch Mineral stating the terms and conditions of said 
agreement.

[¶12] Nogle 
claims that Kornkven did not show him the Addendum. His claim is supported by 
the lack of his signature on the Addendum and counteroffer although each had 
signature lines for Nogle to sign acknowledging that he had seen them. More 
counteroffers were exchanged in which Nogle stated that he was seeking a stock 
exchange purchase, and offering $1,700,000.00 for the ranch. These terms were 
accepted by the seller on August 19, 1996.

[¶13] Nogle 
signed the real estate contract for the ranch which contained the following 
provisions:

X. Condition of 
Property.

* * 
*

B. Buyer acknowledges and 
agrees that, upon execution of this Contract:

1. Buyer is not relying 
upon any representations of Seller or Seller's Agents or representatives as to 
any condition which Buyer deems to be material to Buyer's decision to purchase 
this property;

* * 
*

XI. 
Inspections.

* * 
*

D. Waiver of 
Defects.

Buyer acknowledges that 
he has not been denied any opportunity to inspect property. Other than repairs 
or defects submitted to the Seller in writing pursuant to XI (A), (B), or (C) 
above, or in the event no repairs or inspections are required by Buyer, Buyer 
accepts the property in its entirety in "as is, where is" condition without any 
implied or express warranty by Seller or by any Broker. 

* * 
*

XV. Consents and 
Acknowledgments.

[¶15] D. E.W. 
Kornkven (Broker working with the Buyer) hereby discloses that it is working 
with the Buyer as Seller's Subagent and will be compensated by Seller. Buyer and 
Seller consent to that arrangement. Broker has previously delivered to (Buyer) 
(Seller) a written Real Estate Brokerage Disclosure.1

[¶16] After the 
contract was signed, the seller sent the Arch Agreements to Pearson who 
forwarded them to Kornkven. Pearson attached a cover letter dated August 26, 
1996, and a copy of the map that Palm had shown to Nogle on April 18. The cover 
letter was entitled "Copy of Agreement between Arch of Wyoming, Inc. and Dana 
Meadows Ranches/Reclamation Map" and stated:

[¶17] As you 
know, Arch Minerals has two operating coal mines on the Dana Meadows Ranch known 
as the Medicine Bow and the Seminoe II Mines. I am forwarding to you . . . the 
original . . . Agreement . . . [and] another agreement [that] was completed that 
avoided litigation . . . dated November 10, 1993 . . . . As you know Marc, Casey 
Palm and Lois Palm McCalla now work hand in hand with Arch Mineral to coordinate 
any grazing on the two pastures at the southern end of the ranch. The large map 
that I am forwarding to you shows where coal mining has occurred and where the 
various reclamation projects have been finished.

[¶18] Large 
areas of the Dana Meadows Ranch, particularly in the southern end of the ranch 
have been mined and reclaimed. Those areas have been in a set-aside reclamation 
project anywhere from 7-10 years and it is my understanding that most of these 
reclaimed areas are about to be released out of the reclamation set-aside period 
by the Department of Environmental Quality, State of Wyoming. As you know, many 
of the reclaimed areas have had no livestock grazing on them for years and in 
the near future, as these reclaimed areas are released out of the reclamation 
set-aside, livestock grazing will be allowed.

[¶19] As you 
probably know, it appears that the three mines operating on the ranch at the 
present time will be winding down their operations these next 4-6 years. I have 
also enclosed an article that was published on June 25, 1996, stating that more 
than likely, Arch Mineral is going to wind down their operations in the Hanna 
Area . . . .

[¶20] On 
September 7, 1996, the title company issued a title commitment listing Sundown, 
Inc., as the buyer and listing sixty-seven exceptions to title. On September 12, 
1996, all parties met at the ranch and reviewed the document, and Nogle asked 
Pearson to provide him with copies of certain exceptions. Pearson did not tell 
him that he had previously provided documents to Kornkven. Pearson provided 
Nogle with a property condition statement that did not refer to the Arch 
Agreements. At trial, Sundown's expert witness testified that the property 
condition statement should have reflected the Arch 
Agreements.

[¶21] In late 
August or early September, Nogle discovered that the stock exchange purchase 
that Sundown, Inc. had planned was not viable and began seeking cash financing. 
He instructed Kornkven to obtain and review all relevant documents. Kornkven did 
not tell him of the effect of the Arch Agreements. Nogle testified that he first 
received the Arch Agreements in September or October but did not read them. He 
testified that the representations of Pearson's cover letter and Palm's map in 
combination with previous representations caused him to believe that none of the 
title exceptions would effect ranching operations.

[¶22] Nogle 
testified that in November of 1996 he began planning to transfer his livestock 
to Dana Meadows Ranch, and in December he bred his sheep flock to "range lamb" 
in the spring at the Dana Meadows Ranch. Nogle took the title exception 
documents including the Arch Agreements to his attorney for review. After his 
attorney advised him of the effect of the Arch Agreements, Nogle mapped the 
legal descriptions contained in the agreements and discovered the extent of 
acreage covered. He decided that the agreements did have a significant impact on 
ranching operations, and a meeting with Arch Mineral Company to determine its 
position on the agreements confirmed this belief.

[¶23] Nogle 
claimed that the brokers had concealed and misrepresented the scope of the Arch 
Agreements and demanded the seller reduce the purchase price or return his 
earnest money. The seller refused, and the parties went to arbitration. Early in 
this process, the seller sold the ranch for $1.9 million. A three-arbitrator 
panel determined that because of the numerous title exceptions, the seller had 
not conveyed merchantable title as required under the contract and ordered that 
Sundown's earnest money deposit be returned. The order denied all other claims 
of damages.

[¶24] Sundown, 
Inc. brought suit against the two brokers, and the parties went to trial. At the 
close of Sundown's evidence, the judge directed a verdict for both brokers, 
ruling that Sundown, Inc. had not shown any breach of duty and had not shown 
that Sundown, Inc. had suffered any damages before it was given the Arch 
Agreements. This appeal followed.

DISCUSSION

Standard of 
Review

[¶25] W.R.C.P. 
50(a)(1) provides:

(a) Judgment as a matter 
of law. -

(1) If during a trial by 
jury a party has been fully heard on an issue and there is no legally sufficient 
evidentiary basis for a reasonable jury to find for that party on that issue, 
the court may determine the issue against that party and may grant a motion for 
judgment as a matter of law against that party with respect to a claim or 
defense that cannot under the controlling law be maintained or defeated without 
a favorable finding on that issue.

"Despite the fact that 
judgment as a matter of law should be granted cautiously and sparingly, the 
district court has an obligation to direct entry of such a judgment where there 
is legally insufficient evidence to support a verdict on a particular issue. The 
decision to grant or deny a motion for a judgment as a matter of law is reviewed 
de novo." Sayer v. Williams, 962 P.2d 165, 167 (Wyo. 
1998).

[¶26] We 
undertake a full review of the record without deference to the views of the 
trial court. The test to be applied is whether the evidence is such that, 
without weighing the credibility of the witnesses or otherwise considering the 
weight of the evidence, there can be but one conclusion as to the verdict that 
reasonable persons could have reached. We view the evidence in the light most 
favorable to the nonmoving party, and give that party the benefit of all 
reasonable inferences that may be drawn from the evidence. When the facts permit 
the drawing of more than one inference, it is for the jury to choose which will 
be utilized.

[¶27] John Q. 
Hammons Inc. v. Poletis, 954 P.2d 1353, 1356 (Wyo. 1998) (citations omitted). If 
the inferences favorable to the movant are subject to doubt, or if parallel 
inferences can be drawn, the motion appropriately is denied. Stauffer Chemical 
Co. v. Curry, 778 P.2d 1083, 1103 (Wyo. 1989); Ramirez v. Metropolitan Life 
Insurance Company, 580 P.2d 1136, 1138 (Wyo. 1978).

Claims against 
Pearson

[¶28] Fraud is 
established when a plaintiff demonstrates, by clear and convincing evidence, 
that (1) the defendant made a false representation intended to induce action by 
the plaintiff; (2) the plaintiff reasonably believed the representation to be 
true; and (3) the plaintiff relied on the false representation and suffered 
damages. Jurkovich v. Tomlinson, 905 P.2d 409, 411 (Wyo. 1995); Lavoie v. 
Safecare Health Service, Inc., 840 P.2d 239, 252 (Wyo. 1992); Husman, Inc. v. 
Triton Coal Co., 809 P.2d 796, 799 (Wyo. 1991). See also Britton v. Bill Anselmi 
Pontiac-Buick-GMC, Inc., 786 P.2d 855, 860 (Wyo. 1990); Rocky Mountain 
Helicopters, Inc. v. Air Freight, Inc., 773 P.2d 911, 919 (Wyo. 1989). Conduct 
or words which tend to produce an erroneous impression may satisfy the 
plaintiff's burden. Britton, 786 P.2d  at 860. In addition, even if someone is 
not under a duty to speak, if he does speak, he is under a duty to speak 
truthfully and to make a full and fair disclosure. Id.; Meeker v. Lanham, 604 P.2d 556, 558 (Wyo. 1979). Reliance is reasonable when false representations 
have occurred prior to the execution of the contract which is sought to be 
avoided or for which damages are sought to be recovered. Schepps v. Howe, 665 P.2d 504, 508 (Wyo. 1983).

[¶29] Sundown 
contends that Pearson's fraudulent representations before the contract was 
executed appeared in the brochure statements and the map of restricted grazing, 
both of which failed to disclose the Arch Agreements and the significant impact 
of the Arch Agreements on the use of the land. Pearson contends that the map 
represented present grazing restrictions, not future, and represented proposed 
areas for coal mining and not all areas subject to the Arch Agreements. He 
contends that the brochure statements were opinions that are not subject to a 
fraud action, pointing to the rule that in order for the brochure statements to 
be actionable, any false representation must relate to a matter of fact rather 
than of opinion. Twing v. Schott, 80 Wyo. 100, 113-14, 338 P.2d 839, 843-44 
(Wyo. 1959). He contends that the existence of the Arch Agreements was properly 
disclosed before the contract was signed in the Addendum B-1, that he had no 
duty to read the agreements before the purchase contract was signed, and the 
agreements were properly disclosed after signing. He claims, further, that he 
owed no other duty to a non-client buyer.

[¶30] The duty 
of care owed by real estate brokers and salespersons to a non-client buyer is: 
(1) to not perpetuate a material representation of the seller which the 
broker/salesperson knows or should know is false, and (2) to take reasonable 
steps to avoid giving the buyer false information. Hagar v. Mobley, 638 P.2d 127, 137-38 (Wyo. 1981). Nogle's testimony at trial establishes that the map 
purported to show areas of restricted grazing. He testified that it confirmed 
his understanding that the mining activity was limited and would not affect 
ranching operations. Nogle did not testify that Pearson or the sellers 
represented that the map reflected future restrictions. The brochure statements 
are opinions that are not actionable under the law. The failure to disclose the 
existence and the effect of the Arch Agreements in the brochure and the map are 
not fraudulent unless the statements violate the accepted standards in the real 
estate field as provided by Wyoming statute. Snyder v. Lovercheck, 992 P.2d 1079, 1090 (Wyo. 1999) (citing Hagar, 638 P.2d at 138). When the contract was 
executed in 1996, Wyoming statute made general prohibitions against 
substantially misrepresenting facts and making false promises in order to induce 
action. Wyo. Stat. Ann. § 33-28-111(a)(i) (Lexis 1999). Under this general fraud 
standard, we do not find that failing to disclose the existence and the effect 
of the Arch agreements in the brochure and map are fraudulent 
misrepresentations.

[¶31] Sundown 
next contends that, after the contract was executed, Pearson drafted a seriously 
misleading cover letter to the Arch Agreements stressing the value the coal 
companies had added to the ranch but saying nothing about the burdens it imposed 
on the surface. It also claims that Pearson's property disclosure statement did 
not identify the Arch Agreements although the statement was prepared on August 
27, 1996, after Pearson claims to have first read and delivered the Arch 
Agreements to Kornkven. Sundown contends these misrepresentations induced it to 
rely on Pearson's representations that ranching operations were not affected by 
the agreements rather than closely reading the accompanying Arch Agreements, and 
his reliance caused him to decide to range lamb his sheep and thereby incur 
damages. Although the trial court determined that Sundown's possession of the 
agreements before damages were incurred precluded recovery, we find that the 
cover letter is not fraudulent, but expresses mere opinion about the future 
winding down of mining operations that is not actionable.

[¶32] Sundown's 
contentions amount to a claim of fraudulent nondisclosure and fraudulent 
concealment. See Richey v. Patrick, 904 P.2d 798, 801 (Wyo. 1995) (citing 
Restatement (Second) of Torts §§ 551, 550 (1977)). Before nondisclosure or 
fraudulent concealment can be considered, Sundown must show that Pearson had a 
duty to disclose the information. Burman v. Richmond Homes Ltd., 821 P.2d 913, 
918 (Colo. App. 1991). Sundown has made no such showing either in this appeal or 
at trial, and we find no error in entry of the directed verdict on the issue of 
fraud.

[¶33] Sundown 
next contends that Pearson's representations were negligent. The elements of 
negligent misrepresentation are false information supplied in the course of 
one's business for the guidance of others in their business; failure to exercise 
reasonable care in obtaining or relating the information; and pecuniary loss 
resulting from justifiable reliance thereon. Richey, 904 P.2d  at 802; 
Restatement (Second) of Torts § 552(1) (1977). In Snyder v. Lovercheck, however, 
we decided that where the contract includes a disclaimer provision, stating that 
the buyer is not relying upon any representation of seller or seller's agents, 
the buyer may not assert a claim for negligent misrepresentation. Snyder, 992 P.2d  at 1089. The real estate contract executed by Nogle for Sundown contained 
such a disclaimer provision, and a claim for negligent misrepresentation cannot 
be asserted.

[¶34] Sundown 
also argues that nondisclosure of the information discussed previously was 
negligent. We have previously determined that Wyoming does not recognize a cause 
of action for negligent nondisclosure, Sundown does not provide authority or 
argument that we should adopt that cause of action in this case, and the issue 
is not further considered. Givens v. Fowler, 984 P.2d 1092, 1097 (Wyo. 1999). In 
summary, we affirm the directed verdict for all claims against 
Pearson.

Claims against 
Kornkven

[¶35] Sundown 
contends that Kornkven misrepresented his agency relationship by telling the 
seller that he was working for it and telling the buyer that he was working for 
it; failed to disclose the title exceptions; drafted contracts waiving title 
exceptions without disclosing them to Nogle; accepted Nogle's request to review 
the title documents and disclose defects and then failed to disclose the effect 
of the Arch Agreements. Sundown contends these false representations were 
intended to and did induce it to sign the purchase contract and close the 
transaction, and its reliance reasonably caused it to decide to range lamb the 
sheep and thereby incur damages.

[¶36] Although 
Kornkven contends that the executed contract discloses that he was the seller's 
subagent, Nogle testified that Kornkven orally represented that he was acting as 
Sundown's agent and then assumed responsibilities to review the title exceptions 
for Sundown. We note that Kornkven's failure to provide a brokerage disclosure 
statement to the seller supports Sundown's claim. This Court has not addressed 
the issue of the duty owed by a broker who misrepresents his ability to 
represent purchaser's interest because he also represents seller. See Messler v. 
Phillips, 867 P.2d 128, 132 (Colo. App. 1993) (broker's negligent 
misrepresentation violated broker's duty of honesty and fair dealing). Sundown 
contends that if the jury found that Kornkven was acting as Sundown's agent, 
Kornkven owed it a fiduciary duty of good faith and undivided loyalty. Hagar, 
638 P.2d  at 137. Sundown contends that Kornkven breached this duty by failing to 
disclose the existence and effect of the Arch agreements.

[¶37] Kornkven 
contends that this issue is being raised for the first time on appeal. W.R.C.P. 
9(b) provides that fraud must be pled with particularity. Our review of 
Sundown's complaint indicates that it identified Kornkven as the subagent of 
Pearson Real Estate Company, identified the duty owed as the duty a broker owes 
to a nonclient buyer and did not state any facts alleging that Kornkven acted as 
buyer's agent and acted fraudulently in that capacity. The record does not 
indicate that the complaint was amended to plead the fraud claim against 
Kornkven in any capacity other than as seller's subagent. We agree with Kornkven 
that at the time that the directed verdict was entered the issue before the 
trial court was Kornkven's breach of the duty owed by a broker to a nonclient. 
This claim that Kornkven was acting as Sundown's agent is raised improperly for 
the first time on appeal. 

[¶38] Limited to 
finding that Kornkven was acting as seller's agent and not acting as Sundown's 
agent, the applicable duty is the same as Pearson's, and we again find that 
Sundown has not properly established a negligent nondisclosure cause of action 
and cannot assert a claim for negligent misrepresentation because of the 
disclaimer provision. We do find, however, that the jury may consider whether 
Kornkven's failure to provide the title commitment listing and the Addendum B-1 
to Nogle before execution of the contract concealed material facts. Such 
conduct, if intentional, would constitute fraudulent concealment, and the party 
would be liable for pecuniary loss. Restatement (Second) of Torts § 550 (1977); 
see Richey, 904 P.2d  at 802. Whether the element of damages has been satisfied 
is next considered.

Damages

[¶39] Sundown 
has claimed it incurred attorney's fees and costs when it had to arbitrate to 
recover its earnest money. W.R.C.P. 54(d) provides in pertinent 
part:

(2) Attorney's 
Fees.

(A) When allowed by law, 
claims for attorney's fees and related nontaxable expenses shall be made by 
motion unless the substantive law governing the action provides for the recovery 
of such fees as an element of damages to be proved at 
trial.

[¶40] (emphasis 
added). Despite Wyoming's well-settled rule that generally attorney's fees are 
not recoverable in the absence of specific statutory or contract authority, 
Snyder, 992 P.2d  at 1091, Sundown contends that it is entitled to recover 
attorney's fees based on the "tort of another" exception to the general rule 
that each party must pay his own attorney fees, relying on Gray v. Don Miller 
& Assoc., 674 P.2d 253, 258-59 (Cal. 1984). Gray's rule permits this 
exception when the plaintiff is required to protect his interest by bringing an 
action as the result of another's wrongdoing. Id. This exception is recognized 
in Restatement (Second) of Torts § 914 (1979), which 
states:

(1) The damages in a tort 
action do not ordinarily include compensation for attorney fees or other 
expenses of the litigation.

(2) One who through the 
tort of another has been required to act in the protection of his interests by 
bringing or defending an action against a third person is entitled to recover 
reasonable compensation for loss of time, attorney fees and other expenditures 
thereby suffered or incurred in the earlier action.

[¶41] In another 
context, we have previously allowed recovery of attorney's fees incurred as the 
result of litigation against a third-party. Hoiness-LaBar Ins. v. Julien Const. 
Co., 743 P.2d 1262, 1273-74 (Wyo. 1987). We find that adoption of the 
Restatement exception is in accord with our law, and Sundown, if successful in 
proving its cause of action, will be allowed to recover those costs expended to 
protect its interests by engaging in the arbitration 
procedures.

CONCLUSION

[¶42] We affirm 
the trial court's grant of a directed verdict to Pearson. The evidence that he 
had fraudulently misrepresented the title exceptions to the ranch before and 
after execution of the contract was legally insufficient. We reverse the trial 
court's grant of a directed verdict to Kornkven on the sole issue of whether 
Kornkven fraudulently concealed title exceptions to Sundown before execution of 
the contract resulting in damages, and remand for trial.

Footnotes

1 Buyer 
should have been deleted but was not. Kornkven never provided the disclosure to 
Pearson.