Title: Martinez v. Associates Financial Services Co. of Colorado, Inc.,

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Martinez v. Associates Financial Services Co. of Colorado, Inc.,1995 WY 37891 P.2d 785Case Number: 94-102Decided: 03/13/1995Supreme Court of Wyoming

Bonnie I. MARTINEZ, Appellant (Defendant),

v.

ASSOCIATES FINANCIAL SERVICES COMPANY OF COLORADO, 
INC., Appellee (Plaintiff).

 

Appeal 
from District Court, Albany County, Arthur T. Hanscum, 
J.

Jo Ann Fulton, Laramie, for appellant.

Michele K. McKellar of 
Moore, Smith & Williams, P.C., Fort Collins, for appellee.

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

TAYLOR, 
Justice.

[¶1]      Appellee brought 
an action to recover from appellant on a promissory note. Appellant 
counterclaimed, alleging negligent lending. The district court denied the 
counterclaim and entered partial summary judgment in favor of appellee. Having 
received scarcely a nibble from the district court, appellant casts the same 
bait into appellate waters. Sharing the district court's measured distaste for 
red herring, we affirm in all respects.

I. 
ISSUES

[¶2]      Appellant, Bonnie 
Martinez (Martinez), states her issues:

I.          
Did the district court err in dismissing defendant's [Martinez's] 
counterclaim?

II.          
Did the district court err in adjudicating material facts concerning 
appellant's default on the promissory note and finding no issues of material 
fact regarding the terms and conditions of the promissory note and mortgage and 
remedy provision contained therein?

[¶3]      Appellee, 
Associates Financial Services Company of Colorado, Inc. (Associates), restates 
the issues with a prefatory query:

I.          
Whether the appellant has filed a brief containing cogent argument and 
citations of authority sufficient to support reversal?

II.          
Whether the district court erred in dismissing defendant's/appellant's 
counterclaim?

III.         
Whether the district court erred in granting plaintiff's/appellee's 
motion for summary judgment?

Definitive answers to the 
two shared issues should satisfy the curiosity articulated in Associates' first 
issue.

II. 
FACTS

[¶4]      Martinez feels 
aggrieved by the district court's dismissal of her negligent lending 
counterclaim, pursuant to W.R.C.P. 12(b)(6), for failure to state a claim upon 
which relief could be granted, and attacks the summary judgment subsequently 
entered against her. On the W.R.C.P. 12(b)(6) dismissal, we divine the "facts" 
by viewing Martinez's pleadings with a liberality verging on charity, resolving 
any doubt in favor of her contentions. Osborn v. Emporium Videos, 848 P.2d 237, 
239-40 (Wyo. 1993). Our factual perspective on summary judgments is not markedly 
different; although, like the district court, we have the additional benefit of 
peripheral vision afforded by the capacity to consider matters outside the 
pleadings. Davis v. Davis, 855 P.2d 342, 345 (Wyo. 1993). In May of 1990, 
Martinez executed a promissory note to Associates for the principal sum of 
$9,314.22, secured by a home mortgage. When she defaulted on a $202.36 note 
payment in late 1990, Associates served Martinez with a notice of right to cure 
default on December 31, 1990. Disregarding a murky record on this point, we will 
assume, as did the district court, that Martinez dutifully cured the default 
which was the subject of that notice.

[¶5]      Thereafter, 
however, Martinez admits that she refused to make further payment on her note 
over the succeeding sixteen months. On May 26, 1992, Associates sued for the 
principal amount, interest, collection costs and legal fees. Martinez 
counterclaimed, alleging that Associates was impermissibly diffident in 
conducting its business with her by mail but, because of superior knowledge and 
unequal bargaining power, knew or should have known that they had thereby 
established a fiduciary relationship with her.

III. 
STANDARD OF REVIEW

[¶6]      Little additional 
ink need be spilled here about the jealousy with which we dispense approval of 
W.R.C.P. 12(b)(6) dismissals, past the declaration that dismissal of any claim 
is a "drastic" remedy which will only be sustained on appeal if "there is no 
doubt that the [appellant] cannot prove any set of facts that would entitle 
[her] to relief." Johnson v. Aetna Cas. & Sur. Co. of Hartford, Conn., 608 P.2d 1299, 1302 (Wyo. 1980). W.R.C.P. 8 adopts the common sense approach of 
notice pleading. Jackson State Bank v. Homar, 837 P.2d 1081, 1085 (Wyo. 1992). 
The theory is that if the underlying allegations admit of any possibility that 
they may be the "proper subject of relief," we ought not deprive Martinez of the 
opportunity to test her counterclaim on its merits. Beaudoin v. Taylor, 492 P.2d 966, 970 (Wyo. 1972) (quoting Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 
230, 9 L. Ed. 2d 222, 226 (1962)).

[¶7]      We are not 
appreciably more generous in granting approbation to summary judgments. Hozian 
v. Weathermon, 821 P.2d 1297, 1298-99 (Wyo. 1991). The odds favoring summary 
judgments do improve marginally insofar as the interpretation of unambiguous 
contracts remains solely a question of law, making disputes relating to such 
pacts proper grist for the mill of summary judgment. Sturman v. First Nat. Bank, 
729 P.2d 667, 677 (Wyo. 1986). Standing in the shoes of the district court, we 
must determine anew whether any genuine issue of material fact exists and, if 
not, whether the party prevailing below is entitled to judgment as a matter of 
law. Lincoln v. Wackenhut Corp., 867 P.2d 701, 702 (Wyo. 
1994).

IV. 
DISMISSAL OF THE COUNTERCLAIM

[¶8]      The district 
court's trenchant precis of Martinez's counterclaim leaves little room for 
improvement:

"You [Associates] should have known better than to 
loan me [appellant] the $9,314.22 that I requested to borrow; therefore, I don't 
need to pay you back and, instead, you can also give me all of the principal and 
interest (approximately $30,000) I've paid on my house 
mortgage."

As the district court 
observed, a certain generosity of spirit is requisite to characterize the 
foregoing as a "legal theory," although the words of the counterclaim suggest a 
putative issue of negligent lending. Martinez and Associates did business by 
mail and Martinez alleges that Associates, possessed of "superior knowledge," 
failed to properly investigate Martinez before granting the loan in question. 
Martinez alleges a "fiduciary relationship" of which Associates "[knew] or 
should have known * * *." The counterclaim portrays Martinez's loan applications 
as fraudulent in some fashion which, had Associates ferreted out, would have 
necessitated denial of the loan.

[¶9]      The extent of the 
relationship between Martinez and Associates, for purposes of this action, is 
defined and delimited by the promissory note. Such a contractual relationship 
between a lender and its customer traditionally imposes duties upon the lender 
"no higher than the morals of the market place." Rader v. Boyd, 252 F.2d 585, 
587 (10th Cir. 1957); In re M. Paolella & Sons, Inc., 161 B.R. 107, 118 
(E.D.Pa. 1993), aff'd, 37 F.3d 1487 (3rd Cir. 1994). In the absence of special 
circumstances, the legal relationship between a lending institution and its 
customer is that of debtor or creditor. Resolution Trust Corp. v. Wellington 
Development Group, 761 F. Supp. 731, 737 (D.Colo. 1991) (quoting Dolton v. 
Capitol Federal Sav. and Loan Ass'n, 642 P.2d 21, 23-24 (Colo. App. 1981)); 
Rivera v. Central Bank & Trust Co., 155 Colo. 383, 395 P.2d 11, 13 (1964). 
This notion is consistent with our refusal to rewrite unambiguous contracts 
under the guise of interpretation. Lawrence v. Farm Credit System Capital Corp., 
761 P.2d 640, 645 (Wyo. 1988); cf. A. Brooke Overby, Bondage, Domination, and 
the Art of the Deal: An Assessment of Judicial Strategies in Lender Liability 
Good Faith Litigation, 61 Fordham L.Rev. 963, 1024 (1993).

[¶10]   Theory, however, suggests that 
lenders may incur extra-contractual 
duties to customers through conduct which creates a special or fiduciary 
relationship. John M. Burman, Lender Liability in Wyoming, 26 Land and Water 
L.Rev. 707, 712 (1991). Although it freights some very specific kinds of legal 
rights and responsibilities, the concept of a fiduciary relationship is firmly 
grounded in equity. Denison State Bank v. Madeira, 230 Kan. 684, 640 P.2d 1235, 
1241 (1982). Successful establishment of such a relationship may open the door to pursuit of a wide 
array of common law theories of lender duty to borrower, depending upon the law 
of the forum. Andrea Bloom, Lender Liability: Practice and Prevention, ch. 3 
(1989 & Cum. Supp. 1994 No. 2).

[¶11]   If, as Professor Burman believes, 
"the lender liability pendulum may now be swinging back toward lenders," the 
instant case can do little to slow that momentum. Burman, supra, 26 Land & 
Water L.Rev. at 755. That does not necessarily reflect our lack of interest in 
the varied theories of lender liability. However, improvident pleadings run a 
close second to bad facts as leading makers of bad law and we refuse to be drawn 
down the garden path by the instant confluence of both.

[¶12]   Extra-contractual lender duties, if 
there are any, must necessarily be predicated upon demonstration of a special or 
fiduciary relationship. Burman, supra, 26 Land & Water L.Rev. at 712-13, 718 
& 730. Such a relationship is extraordinary and not easily created. Gillum 
v. Republic Health Corp., 778 S.W.2d 558, 567 (Tex. App. 1989). Fiduciary 
relationships cannot be the product of mere wishful thinking, carrying as they 
do the most profound of legal consequences. State Farm Mut. Auto. Ins. Co. v. 
Shrader, 882 P.2d 813, 832-33 (Wyo. 1994).

[¶13]   At best, it is unseemly to beg for 
equitable relief based upon one's own wrongdoing. Wettlin v. Jones, 32 Wyo. 446, 
453, 234 P. 515, 517 (1925). Had Martinez succeeded in pleading breach of a 
fiduciary relationship by Associates, we would have remained "chary" of 
extending the helping hand of equity to a litigant who acts so as to hinder or 
defraud her creditors. Wantulok v. Wantulok, 67 Wyo. 22, 41, 214 P.2d 477, 484 
(1950). Since Martinez's pleadings betray no hint of a fiduciary relationship, 
we need not dwell upon equity's distaste for unclean hands in order to fully 
dispose of her counterclaim.

[¶14]   Of the two essential kinds of 
fiduciary relationships, the first arises from specific legal relationships. "In 
cases of trustee and beneficiary, principal and agent, and the like, the 
relations are essentially fiduciary, and the inference or presumption follows of 
course." Hoge v. George, 27 Wyo. 423, 442, 200 P. 96, 102 (1921). The second is 
less susceptible of exact definition, being "implied in law due to the factual 
situation surrounding the involved transactions and the relationship of the 
parties to each other and to the questioned transactions." Denison State Bank, 
640 P.2d  at 1241. See Binning v. Miller, 55 Wyo. 478, 497, 102 P.2d 64, 73-74 
(1940).

[¶15]   Courts of equity are not wont to 
artificially limit the factual scenarios which may give rise to those less 
clearly defined kinds of fiduciary relationships. Children's Home of Rockford v. 
Andress, 380 Ill. 452, 44 N.E.2d 437, 443 (1942). However, one asserting a 
fiduciary relationship bears the burden of establishing it by clear and 
convincing evidence, and we will not over reach ourselves to posit such a 
profound circumstance. Hoge, 200 P.  at 102; Appleman v. Kansas-Nebraska Natural 
Gas Co., 217 F.2d 843, 848 (10th Cir. 1954).

[¶16]   Few, if any, courts see prior 
dealings or a longstanding lender-borrower relationship, without more, as 
crossing the threshold for establishment of a fiduciary relationship, because 
the nexus "in a lender-borrower situation is a debtor-creditor relationship, and 
not a fiduciary relationship." Black Canyon Racquetball Club, Inc. v. Idaho 
First Nat. Bank, N.A., 119 Idaho 171, 804 P.2d 900, 905 (1991); cf. In re K 
Town, Inc., 171 B.R. 313, 319 (N.D.Ill. 1994); and see O'Donnell v. Western Nat. 
Bank of Casper, 705 P.2d 1242, 1244-45 (Wyo. 1985).

[¶17]   If the unilateral actions or 
beliefs of a party were sufficient to establish a fiduciary relationship, then 
Martinez should have been afforded the opportunity to try her case on the 
merits, no matter how far-fetched. What her pleadings lack, and what they make 
clear that no amendment can supply, is a knowing undertaking by Associates for 
the benefit of Martinez. Committee on Children's Television, Inc. v. General 
Foods Corp., 35 Cal. 3d 197, 197 Cal. Rptr. 783, 673 P.2d 660, 675-76 (1983). 
"Fiduciary duty is not created by a unilateral decision to repose trust and 
confidence; it derives from the conduct or undertaking of the purported 
fiduciary[.]" Farmers Ins. Co., Inc. v. McCarthy, 871 S.W.2d 82, 87 (Mo. App. 
1994). A fiduciary is defined as: "A person having duty, created by his own 
undertaking, to act primarily for another's benefit in matters connected with 
such undertaking." Black's Law Dictionary 625 (6th ed. 1990) (emphasis 
added).

[¶18]   The gravamen of Associates' 
offense, according to the counterclaim, was that they conducted business by mail 
and failed to undertake even a cursory investigation of the claims made by 
Martinez in her application. Such "facts," were they proven, would not admit of 
a fiduciary relationship so much as they would disprove any possibility thereof. 
One may not "unilaterally impose a fiduciary relationship on another without a 
conscious assumption of such duties by the one sought to be held liable as a 
fiduciary." Denison State Bank, 640 P.2d  at 1243-44. See, Hoge, 200 P.  at 
102.

[¶19]   The liberality with which we 
construe pleadings in favor of the party against whom a W.R.C.P. 12(b)(6) motion 
to dismiss has been granted "does not go so far as to excuse omission of that 
which is material and necessary in order to entitle [one to] relief." Sump v. 
City of Sheridan, 358 P.2d 637, 642 (Wyo. 1961). Here what is material and 
necessary to any finding of lender liability is not only omitted but excluded by 
that which is alleged. Furthermore, as the district court observed, there is 
nothing in the counterclaim which alleges that Associates did anything they were 
not entitled to do under the law. Mummery v. Polk, 770 P.2d 241, 243 (Wyo. 
1989).

[¶20]   Under such circumstances, the 
counterclaim is ripe for summary dismissal. Mellencamp v. Riva Music Ltd., 698 F. Supp. 1154, 1160 (S.D.N.Y. 1988). Sharing the reluctance of other courts "to 
draw a fiduciary rabbit from a commercial loan agreement hat," we affirm the 
district court's dismissal of Martinez's counterclaim. Washington Steel Corp. v. 
TW Corp., 602 F.2d 594, 600 (3rd Cir. 1979), overruled on other grounds sub nom. 
Clark v. K-Mart Corp., 979 F.2d 965, 967-68 (3rd Cir. 
1992).

V. SUMMARY 
JUDGMENT

[¶21]   Martinez's answers to Associates' 
amended complaint and first set of requests for admissions, read in concert with 
her sworn statements in deposition, fully inform the issue of summary judgment. 
She admits to having executed the promissory note in question and delivered that 
note to Associates with full knowledge of its default provisions. She admits to 
having received the proceeds of the loan reflected in that promissory note. 
Finally, she admits to having received a notice of right to cure default from 
Associates and, thereafter, refused "to make any additional payments on the 
alleged Promissory Note[.]"

[¶22]   When clear and unambiguous 
contracts are at issue, the question becomes whether the party seeking summary 
judgment is entitled to it as a matter of law. Treemont, Inc. v. Hawley, 886 P.2d 589, 592 (Wyo. 1994). Our inquiry parallels that of the district court in 
determining whether "(1) there are no genuine issues of material fact, and (2) 
based on those undisputed material facts the prevailing party is entitled to 
judgment as a matter of law. W.R.C.P. 56." Dubray v. Howshar, 884 P.2d 23, 25 
(Wyo. 1994).

[¶23]   Associates carried their burden of 
establishing the elements of a contract and Martinez raises no dispute in that 
regard. Prudential Preferred Properties v. J and J Ventures, Inc., 859 P.2d 1267, 1272 (Wyo. 1993). Examination of that contract, as evidenced by the 
promissory note, sustains the wisdom of the district court in terming it "a 
standard, unambiguous loan agreement."

[¶24]   Whether or not Martinez responded 
appropriately to Associates' notice of right to cure default, she admits to 
having received that notice and, thereafter, refused to make further monthly 
payments in the sixteen months between the notice and the filing of the original 
complaint. Finally, Martinez does not dispute the affidavit of indebtedness 
filed by Associates.

[¶25]   When a party moving for summary 
judgment provides competent factual underpinnings therefor, the other party is 
obliged to move beyond mere allegations or denials by coming forward with 
affidavits or other proof to create a genuine issue for the court. Dudley v. 
East Ridge Development Co., 694 P.2d 113, 117 (Wyo. 1985). Past unavailing 
efforts to transmogrify construction of the note from a legal to a factual 
question, Martinez renews colorable arguments concerning Associates' choice of 
remedies and refusal, as junior lienor, to participate in a previous foreclosure 
on the property which secured Martinez's note.

[¶26]   The opacity of Martinez's argument 
concerning Associates' non-participation in the prior foreclosure affords no 
impediment to resolution because her contentions do not "reach the dignity of 
proper citation of authority or cogent argument." Prazma v. Kaehne, 768 P.2d 586, 588 (Wyo. 1989). Although Martinez's choice of remedies argument is 
similarly deficient, Associates cites us to the correct rule, that a secured 
creditor may seek judgment on the note or pursue the remedy of foreclosure, 
among other options, provided the choice made is pursued "to fruition," before 
further consideration is given to any alternative. Coones v. F.D.I.C., 848 P.2d 783, 797 (Wyo. 1993). Martinez has raised no issue of material fact and 
Associates is entitled to judgment as a matter of law.

VI. 
CONCLUSION

[¶27]   We refuse to be drawn through the 
looking glass into a world where individual responsibility gives way to 
ill-conceived and poorly articulated notions of "victimization." Having made a 
contract with Associates and received consideration therefor, Martinez cannot 
escape the consequences of her subsequent willful default.

[¶28]   The district court's well reasoned 
dismissal of Martinez's counterclaim and entry of partial summary judgment in 
favor of Associates are affirmed.