Title: CAROL L. VROMAN V. TOWN & COUNTRY CREDIT CORP.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

CAROL L. VROMAN V. TOWN & COUNTRY CREDIT CORP.2007 WY 82158 P.3d 141Case Number: 06-170Decided: 05/15/2007
APRIL 
TERM, A.D. 2007

 
 
CAROL L. 
VROMAN,

 
 
Appellant

(Plaintiff),

 
 
v.

 
 
TOWN & COUNTRY CREDIT 
CORP.,

 
 
Appellee

(Defendant).

 
 
Appeal from the 
DistrictCourtofLaramieCounty

The Honorable Nicholas G. 
Kalokathis, Judge

 
 
Representing Appellant:

 
 
William D. Bagley, of Bagley, Karpan, Rose & 
White, Cheyenne, Wyoming.

 
 
Representing Appellee:

 
 
Dale W. Cottam and Billie L.M. Addleman, of Hirst 
& Applegate, PC, Cheyenne, Wyoming.  
Argument by Mr. Addleman.

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

 
 
BURKE, 
Justice.

 
 
[¶1]      Appellant Carol 
Vroman initiated this litigation seeking damages for a mortgage refinancing 
transaction that went awry.  
AppelleeTown and Country Credit 
Corp. ("Town and Country") admitted liability.  Following a bench trial, the district 
court entered its Judgment and Order in favor of Town and Country because it 
found that Ms. Vroman was not entitled to damages.  On appeal, Ms. Vroman challenges the 
district court's decision, claiming that she should have received punitive and 
compensatory damages.  We find no 
error in the district court's failure to award punitive damages.  However, we conclude that, in light of 
Town and Country's admission of liability, the district court erred in failing 
to award compensatory damages caused by the failure to obtain releases of all 
mortgages of record on Ms. Vroman's properties.  Accordingly, we affirm in part, reverse 
in part and remand. 

 
 
ISSUES

 
 
[¶2]      Ms. Vroman 
presents the following issues:

 
 

I.                    
Did the District Court 
err in failing to award damages for the injury resulting from the admitted 
negligence and admitted breach of contract of [Appellee] Town and 
Country?

 
 
II.         
Did the District Court err in failing to award punitive 
damages?

 
 
FACTS

 
 
[¶3]      Town and Country 
is in the mortgage lending business and, in 2003, identified Ms. Vroman as a 
potential customer.  Ms. Vroman 
owned two properties, each with two mortgages.  Her residence was encumbered by a first 
mortgage in favor of CitiFinancial with a balance of approximately $85,000 and a 
second mortgage held by Beneficial with a balance of approximately $46,000.  Ms. Vroman's rental property was 
encumbered by a CitiFinancial first mortgage of $55,000 and a second mortgage of 
$20,000 held by WyHy Federal Credit Union ("WyHy").

 
 
[¶4]      Jeremiah 
Jennings, a loan officer employed by Town and Country, initiated telephone 
contact with Ms. Vroman to solicit her business.  At the time, Ms. Vroman was behind in 
her payments on her second mortgage with Beneficial.  Her $20,000 WyHy mortgage debt had been 
discharged in bankruptcy but a lien remained on the property.  As a result of the discharge, Ms. Vroman 
had not made any payments on the WyHy debt for several years.  In addition to her mortgage debt, Ms. 
Vroman had personal consumer debt of $4,450, some of which was in 
collection.  She also owed $3,207.29 
in delinquent property taxes.

 
 
[¶5]      Due to Ms. 
Vroman's poor credit history, and the lack of equity in the properties, 
refinancing proved difficult.  From 
Town and Country's perspective, refinancing was not possible unless something 
could be worked out with Beneficial and WyHy.  Mr. Jennings testified that he 
negotiated a "short sale" with both companies.  According to Mr. Jennings, Beneficial 
agreed to accept $30,000 for release of its second mortgage on the residence and 
WyHy agreed to accept $10,000 for release of its second mortgage on the rental 
property.  

 
 
[¶6]      Based on these 
arrangements, Ms. Vroman and Town and Country entered into a refinancing 
agreement.  The total amount loaned 
by Town and Country was agreed to be $207,500.  For this amount, all existing mortgages 
were to be satisfied, closing costs paid, and certain personal debt and property 
taxes would be paid.  The settlement 
statement Ms. Vroman signed reflected that additional funds would be disbursed 
to her for personal use.

 
 
[¶7]      Closing of the 
Town and Country loan occurred in December 2003.  In January 2004, the title company, 
relying on a payoff statement provided by Town and Country, issued a check to 
Beneficial in the amount of $30,433.18 for release of its mortgage on the 
Vroman residence.  Beneficial returned the check asserting that the amount 
was insufficient to satisfy the underlying debt.  Beneficial refused to 
release its mortgage until the debt was paid in full.  As a result, the 
Town and Country mortgage on the Vroman residence property was subordinate to 
the Beneficial mortgage and Ms. Vroman remained liable for monthly payments on 
the Beneficial mortgage in addition to her payment obligations resulting from 
the new Town and Country loan.  

 
 
[¶8]      The title company 
also issued a $10,000 check to WyHy for release of its mortgage on the rental 
property pursuant to the payoff statement provided by Town and Country.  WyHy cashed the check, but did not 
release its mortgage.  Instead, WyHy 
subordinated its mortgage to the Town and Country 
mortgage.

 
 
[¶9]      Ms. Vroman was 
not advised that the Beneficial and WyHy mortgages had not been satisfied and 
released.  She learned of the 
continued existence of Beneficial's mortgage when Beneficial initiated 
foreclosure proceedings.  In order 
to forestall foreclosure by Beneficial, Ms. Vroman was forced to make an 
additional mortgage payment to Beneficial in the amount of $1,001.  In April 2004, Town and Country paid 
Beneficial $46,631.10 for release of the Beneficial mortgage.1  Ms. Vroman learned of the continued 
existence of the WyHy mortgage when she sold her rental property in May 
2005.  In order to provide clear 
title to the purchaser, Ms. Vroman paid the balance of $12,968.93 on the WyHy 
mortgage. 

 
 
[¶10]   Ms. Vroman filed suit in the 
district court for LaramieCounty against Town and Country and others 
associated with the refinancing.  
She alleged various causes of action against some or all of the 
defendants.  The claims against Town 
and Country relevant to this appeal include Ms. Vroman's claim for compensatory 
damages predicated upon Town and Country's negligence, breach of 
contract, fraud, and her claim for punitive damages.

 
 

[¶11]   Prior to trial, Town and Country 
admitted that it was negligent in the refinancing of Ms. Vroman's properties and 
admitted that it had breached its contracts with Ms. Vroman.  Town and 
Country conceded that it "was the sole cause of [Ms. Vroman's] alleged damages," 
but continued to deny that she had suffered any damages.  Town and Country also asserted a 
counterclaim against Ms. Vroman for the additional $16,197.92 it had paid Beneficial 
for release of its mortgage.

 
 
[¶12]   A two day bench trial was held in 
March 2006.   During trial, the district court granted judgment 
as a matter of law in favor of Town and Country on Ms. Vroman's fraud 
claim, and dismissed Town and Country's counterclaim against Ms. Vroman for the 
$16,197.92.2  At the conclusion of the trial, the 
district court determined Ms. Vroman was not entitled to damages despite Town 
and Country's admission of liability.  
The district court reasoned that any such damages would be offset by the 
additional amount that Town and Country paid to release the Beneficial 
mortgage.  As a result, the district 
court entered judgment in favor of Town and Country.  Ms. Vroman 
appealed.

 
 
STANDARD OF 
REVIEW

 
 
[¶13]   We review a district court's 
findings of fact under a clearly erroneous standard.  

 
 
The factual findings of a 
judge are not entitled to the limited review afforded a jury verdict.  While the findings are presumptively 
correct, the appellate court may examine all of the properly admissible evidence 
in the record.  Due regard is given 
to the opportunity of the trial judge to assess the credibility of the 
witnesses, and our review does not entail weighing disputed evidence.  Findings of fact will not be set aside 
unless the findings are clearly erroneous.  
A finding is clearly erroneous when, although there is evidence to 
support it, the reviewing court on the entire evidence is left with the definite 
and firm conviction that a mistake has been committed.

 
 

Forshee v. Delaney, 
2005 WY 
103, ¶ 6, 118 P.3d 445, 448 (Wyo. 2005) (quoting Springer v. Blue Cross and Blue Shield of 
Wyoming, 944 P.2d 1173, 1175-76 (Wyo. 1997)).

 
 
DISCUSSION

 
 
[¶14]   As a result of the "botched" 
refinancing plan arranged by Town and Country, Ms. Vroman claimed damages, inter alia, for the additional sums she 
was forced to pay to clear the second mortgages on her properties.  Those damages consisted of the extra 
mortgage payment she was required to pay to Beneficial and the additional 
$12,968.93 she was required to pay to WyHy upon selling her rental 
property.  

 
 
[¶15]   Prior to trial, Town and Country 
filed a pleading entitled "Defendant Town & Country Credit Corp.'s Admission 
of Negligence and Breach of Contract," stating:

 
 

1.      
Town & Country Credit 
Corp. hereby admits that it was negligent in the refinancing of Plaintiff's 
residential and rental properties and was the sole cause of Plaintiff's alleged 
damages, if any.

 
 

2.      
Town & Country hereby 
admits that it breached its contracts with Plaintiff in the refinancing of her 
residential and rental properties and was the sole cause of Plaintiff's alleged 
damages, if any.

 
 
[¶16]   At trial, the district court took 
note of Town and Country's admission and correctly observed that its only task 
was "to determine which elements of damage [resulted] from the admitted breach 
of duty."  After hearing testimony 
and receiving documentary evidence, the district court issued its decision 
letter containing its findings of fact and conclusions of law.  The district court found that Town and 
Country "failed in its duty to see that the prior second mortgages were 
removed."  Despite this finding, the 
district court ultimately concluded that Ms. Vroman was not entitled to 
damages.  

 
 
[¶17]   The purpose of compensatory damages 
is to place the injured party in the position he or she would have been in had 
the wrongful conduct not occurred.  
As we have explained:  

 
 
Compensatory damages are 
awarded to reimburse an individual for losses suffered as a result of another's 
failure to perform some duty. They are designed to make the individual whole; 
that is, to place him in the condition he would have been in if the other 
party had adequately performed the duty owed. 

 
 

Alexander v. Meduna, 
2002 WY 
83, ¶ 36, 47 P.3d 206, 217-18 (Wyo. 2002) (internal citations omitted).  

 
 
[¶18]   We find that the district court's 
decision in this matter does not leave Ms. Vroman in the position she would have 
been in if Town and Country had adequately performed its duty. At the beginning 
of the refinancing process, Ms. Vroman owed $46,000 to Beneficial for its second 
mortgage and a lien existed on the rental property for a second mortgage of 
$20,000 to WyHy.  By admitting 
liability, Town and Country conceded that it was responsible for the failure to 
obtain releases of the mortgages.

 
 
[¶19]   The district court denied Ms. 
Vroman's claim for damages associated with payment of the WyHy mortgage because 
"these amounts would be subject to Ms. Vroman's obligation to Town and Country 
to repay."  We find no evidence in 
the record supporting this determination and conclude it is clearly 
erroneous.  It is undisputed that 
the amount loaned by Town and Country to Ms. Vroman was the maximum authorized 
by Town and Country's lending policies.  
As the district court noted, "Remember, because of the bad credit rating, 
[Ms. Vroman] had reached her borrowing limit with Town and Country; otherwise 
additional funding would have been available."  This "borrowing limit" was predicated 
upon the understanding that after refinancing, preexisting loans secured by the 
properties, including the Beneficial mortgage and the WyHy mortgage, would be 
released.  Town and Country admitted 
liability for failing to obtain releases of those mortgages.  It was never contemplated by either Town 
and Country or Ms. Vroman that Ms. Vroman would remain liable for the Beneficial 
or WyHy mortgage after the Town and Country loan had been 
finalized.

 
 
[¶20]   In an effort to meet its obligation 
to Ms. Vroman, Town and Country paid Beneficial the full amount owing on the 
Beneficial mortgage, $46,631.10.  At 
the time of making this payment, Town and Country did not seek reimbursement 
from Ms. Vroman, nor did Town and Country make any assertion that Ms. Vroman was 
obligated to pay this amount.  In 
responding to Ms. Vroman's complaint, however, Town and Country asserted a 
counterclaim against Ms. Vroman alleging a claim based upon unjust enrichment 
and seeking reimbursement of the $16,197.92 it had paid to satisfy the 
Beneficial mortgage.  The district 
court dismissed this claim and Town and Country has not appealed from that 
ruling.  The district court's 
rationale that the $16,197.92 payment somehow offsets Ms. Vroman's damages is 
flawed.

 
 
[¶21]   Ms. Vroman incurred damages because 
Beneficial's mortgage was not satisfied at closing.  After closing, Beneficial continued to 
assert its rights to monthly payments under the mortgage.  Ms. Vroman made an additional mortgage 
payment of $1,001 to Beneficial to hold off the foreclosure.  This payment would not have been 
necessary if the Beneficial mortgage had been satisfied and released at 
closing.  Similarly, Ms. Vroman was 
required to pay $12,968.93 to WyHy in order to provide clear title to the 
purchasers of her rental property.  
That payment would not have been necessary if, as agreed, the WyHy 
mortgage had been satisfied and released during the 
refinancing.

 
 
[¶22]   In light of Town and Country's 
admission of liability and the undisputed evidence relating to the additional 
mortgage payment on the Beneficial mortgage and Ms. Vroman's subsequent 
satisfaction of the WyHy second mortgage, we conclude that the district court 
erred in failing to award damages to Ms. Vroman.   She is entitled to recoup the $13,969.93 
she paid.

 
 
[¶23]   Ms. Vroman asserts that other 
damages were caused by the failure to obtain release of the Beneficial mortgage 
and the WyHy mortgage. She alleges error in the district court's failure to 
compensate her for closing costs on the house ($10,028.66) and the rental 
property ($4,416.07), and damage to her credit rating.  In addition, Ms. Vroman claims she did 
not receive any extra funds from the closing which were to be used to fix the 
roof on the rental property.  The 
district court declined to award any sums of money with respect to these claims. 

 

[¶24]   In denying the claim for closing 
costs, the district court recognized that Ms. Vroman could not accept the 
benefit of the bargain, i.e., release of the second mortgages without satisfying 
the obligation she incurred pursuant to the agreement, i.e., payment of closing 
costs.  Town and Country's 
negligence or breach did not cause Ms. Vroman to incur those costs, and the 
denial of those costs as damages was not clearly erroneous. 

 
 
[¶25]   Ms. Vroman also faults the district 
court for failing to award damages associated with her credit rating.  The district court explained that Ms. 
Vroman failed to carry her burden of quantifying the degree of the damage claim 
in a non-speculative way.  Although 
we could imagine that Beneficial's foreclosure proceedings may have negatively 
impacted Ms. Vroman's credit, such speculation does not suffice for an award of 
damages.  Ms. Vroman simply failed 
to prove that her credit rating suffered.3  We cannot say that the district court's 
decision to deny those damages was clearly erroneous.  

 
 
[¶26]   Ms. Vroman also claims damages for 
lost rental income.  She contends 
that after refinancing, she was not provided with sufficient funds to fix the 
roof on the rental property.  
Because the roof could not be fixed, she asserts that she was forced to 
sell the property and thus, lost potential rental income in the amount of $2,100 
per year.  The district court 
rejected her claim.  The evidence 
supports the district court's decision because, unlike the failure to obtain 
releases of the WyHy and Beneficial mortgages, the amount of cash that would be 
disbursed to Ms. Vroman was clearly identified on the settlement statements 
signed at closing.  We do not find 
the district court's decision to deny Ms. Vroman's claim for lost rental income 
clearly erroneous.

 
 
[¶27]   Additionally, Ms. Vroman requested 
punitive damages for Town and Country's conduct in this transaction.  She contends that punitive damages are 
proper to punish and discourage Town and Country's deceitful financing 
practices.  In its decision letter, 
the district court addressed this matter and stated:  "[s]ince the evidence does not support a 
finding of compensatory damage[s], punitive damages cannot be considered."  We affirm the district court's denial of 
punitive damages, but we base our decision upon other grounds evident from the 
record.

 
 
[¶28]   Punitive damages "are not 
appropriate in circumstances involving inattention, inadvertence, 
thoughtlessness, mistake, or even gross negligence."  Mayflower Restaurant Co. v. Griego, 741 P.2d 1106, 1115 (Wyo. 1987).  Ms. Vroman's claim for punitive damages 
was premised upon her claim for fraud.  
She identifies the following allegations asserted in her amended 
complaint which she contends provide a sufficient basis to award punitive 
damages:

 
 

21.             
Defendant Town & Country/Ameriquest 
represented to Plaintiff that her prior debt would be replaced by a single 
mortgage on each property; that the second mortgage debts had been negotiated 
down and would be satisfied at closing; and that as a result there would be 
funds remaining to repair the rental property roof and pay pressing 
debts.

 
 
22.       Defendant 
Town & Country/Ameriquest knew that negotiations with the second mortgage 
holders [were] not complete and binding and that releases had not been secured 
for filing by the title company upon closing, and knowingly induced Plaintiff to 
execute a mortgage to Town & Country/Ameriquest [on] her properties that did 
not cause the releases of the mortgage to Beneficial or WyHy (Exhibit "D" and 
Exhibit "E"- 5 pages).

 
 
23.       As a result 
Plaintiff was damaged and is entitled to exemplary damage.

 
 
[¶29]   Fraud must be established by clear 
and convincing evidence.  Alexander, ¶ 8, 47 P.3d  at 211.  While Town and Country admitted 
liability for negligence and breach of contract, it continued to deny Ms. 
Vroman's allegations of fraud and claim for punitive damages.  After Ms. Vroman presented her case, the 
district court found evidence of fraud lacking.  Judgment as a matter of law was granted 
in favor of Town and Country.  
Although on appeal Ms. Vroman restates the allegations in her complaint 
relating to punitive damages, she has failed to direct us to any evidence in the 
record supporting those allegations.  
As a result, we are unable to find that the district court erred in 
denying the claim for punitive damages.  

 
 

CONCLUSION

 
 
[¶30]   We affirm the district court's 
decision denying punitive damages.  
The district court's failure to award compensatory damages for the 
amounts Ms. Vroman incurred to satisfy her second mortgages was clearly 
erroneous.  We reverse the district 
court's decision denying compensatory damages and remand for entry of a judgment 
in Ms. Vroman's favor, consistent with this opinion.  

 
 
FOOTNOTES

 
 

1In addition 
to the $30,433.18 that was previously contemplated in the loan documents for the 
payoff of the second mortgage to Beneficial, Town and Country paid an additional 
$16,197.92 of its own funds to obtain a release of the Beneficial 
mortgage.

 
 

2The district 
court also granted judgment as a matter of law with respect to the other 
defendants on all claims against them.

 
 

3Interestingly, evidence was presented that Ms. Vroman's poor credit 
rating improved, albeit minimally, from December 2003, to April 2005, after the 
refinancing process.