Title: Dupler v. Yates
Citation: 10 Utah 2d 251, 351 P.2d 624
Docket Number: 9048
State: Utah
Issuer: Utah Supreme Court
Date: April 25, 1960

10 Utah 2d 251 (1960) 351 P.2d 624 JOSEPH H. DUPLER, L. HOWARD MARCUS, B.M. ROE AND DAVID I. ZINIK, PLAINTIFFS AND APPELLANTS, v. MAURICE YATES, DEFENDANT AND RESPONDENT. No. 9048. Supreme Court of Utah. April 25, 1960. Rawlings, Wallace, Roberts &amp; Black, Samuel Bernstein, Salt Lake City, for appellants. Gustin, Richards &amp; Mattsson, Halliday &amp; Halliday, Salt Lake City, for respondent. CALLISTER, Justice. Plaintiffs filed this action on October 21, 1957, to recover damages from the defendant for alleged fraud and deceit and breach of a fiduciary relationship. Upon motion of the defendant, plaintiffs' original complaint was dismissed with leave to amend. An amended complaint was filed and defendant, without filing an answer, made motions to dismiss and for summary judgment. The latter motion was granted and judgment entered accordingly. Plaintiffs then made a motion to amend the judgment to permit an amendment to the amended complaint which was denied by the lower court and they appeal. The amended complaint contains five causes of action. The first three concern transactions involving the purchase of interests in oil wells from Joe and Leo Aimonetto. The fourth cause concerns the purchase of interests in an oil well from C.B. Simmons. The fifth cause of action combines all of the transactions as included within an alleged fraudulent scheme on the part of the defendant. In the first cause of action the only plaintiff involved is Dupler. It is alleged that defendant represented to Dupler that an undivided one-fourth interest in an oil and gas lease in Wyoming would cost $60,000.00; that defendant represented that he had paid $30,000.00 for a one-half of said one-fourth interest; and, that defendant further represented that he was acting for and on behalf of Dupler when, in fact, he was representing himself and the Aimonettos. It is then alleged that these representations were false, which defendant knew, and made for the purpose of inducing plaintiff to pay $30,000.00 to the Aimonettos for one-half of the one-fourth interest; that Dupler, in reliance upon the defendant's representations, paid the $30,000.00 for the one-half of the said one-fourth interest which is of no value; and, that Dupler suffered damage in the amount of $30,000.00. Finally, it is alleged that the defendant was an experienced and successful investor; that he had a fraudulent scheme to induce the public to invest in oil and gas leases wherein he would represent that he, himself, was investing and would fraudulently conceal the fact that he was to receive from the Aimonettos either an interest in the lease or a part of the money paid by the public for inducing them to invest; that Dupler relied upon these representations; and that Dupler would not have invested, without further extensive investigation, had he known defendant was to receive either money or an interest. Plaintiffs, Dupler, Roe and Zinik, are involved in the transaction set forth in the second cause of action. In this cause of action it is alleged that defendant represented that he had paid the Aimonettos $17,500.00 for an interest in an oil and gas lease, when, in fact, he had not; and that Dupler paid the sum of $17,500.00, Roe $10,500.00, and Zinik $10,500.00 to the Aimonettos and defendant for their interests. Except for the foregoing facts, the other allegations are the same as set forth in the first cause of action. The third cause of action is substantially the same as the first two. Here, the only plaintiff involved is Dupler. It is alleged that defendant represented he had purchased for Dupler a five per cent (5%) interest in an oil well from the Aimonettos and a five per cent (5%) interest for himself; that he had made the payments of $7,000.00 for both Dupler and himself; that the representations were false; and that Dupler, in reliance thereon, paid defendant $7,000.00. Further allegations are the same as those contained in the first and second causes of action. The fourth cause of action relates to a transaction with one C.B. Simmons and involves all of the plaintiffs. It is alleged that defendant represented that a fifty (50%) per cent working interest in an oil well could be purchased from Simmons; that defendant falsely represented that he had paid $15,500.00 for a ten per cent (10%) interest; and, that upon reliance thereon the plaintiffs paid to Simmons and defendant as follows: Dupler $15,500.00, Marcus $15,500.00, Zinik $11,625.00 and Roe $19,375.00. Again the allegations relating to defendant's representations, actions, and scheme are the same as those set forth in the first cause of action. In the fifth cause of action all of the foregoing transactions are alleged as part of an overall scheme on the part of the defendant to act as an agent, representative and partner for plaintiffs and then, in fact acting for himself and the sellers of the interests, thereby and thus by his representations inducing plaintiffs to spend money for valueless interests. In all causes of action it was alleged that the plaintiffs did not discover the facts constituting the frauds until June of 1956. The defendant, in support of his motion for summary judgment, filed numerous affidavits and exhibits. Several of the affidavits submitted by the defendant were to the effect that the plaintiffs knew of the alleged fraud more than three years prior to the commencement of this action, thus being barred by the statute of limitations.[1] On this issue the plaintiffs submitted counteraffidavits, but submitted nothing to refute or explain issues presented by the other affidavits and exhibits of the defendant. The major portion of defendant's affidavits and exhibits relates to four court proceedings in the District Court of the United States for the District of Wyoming. These cases were filed prior to the commencement of this action. The first of the Wyoming cases was filed February 7, 1955, (Civil No. 3851) by Dupler against Joe and Leo Aimonetto. It concerned the same interests purchased by Dupler as contained in the first three causes of the present action. Subsequently, on February 24, 1955, Roe and Zinik each filed a complaint (Civil Cases No. 3858 and 3859) against the Aimonettos concerning the same interests purchased by them as set forth in the instant second cause of action. Certified copies of the complaints in these three actions were made exhibits in support of the motion for summary judgment. These actions were based upon the Securities Act of 1933, as amended.[2] In each case the plaintiffs therein, Dupler, Roe and Zinik, elected to rescind the transactions, offered to reassign the interests to the Aimonettos, and prayed for a judgment entitling them to recover the moneys paid by them. Dupler, in his complaint, alleged in part as follows: In his complaint against the Aimonettos, Roe, among others, made the following allegations: Zinik's complaint contains substantially the same allegations as that of Roe's. As an exhibit, defendant submitted an agreement dated August 20, 1956, between the Aimonettos and Dupler, Roe and Zinik. This agreement, later ratified by Marcus, contained the following provision: Subsequently, on October 25, 1956, these three Wyoming actions were dismissed with prejudice upon written stipulation of the parties. On March 30, 1955, Dupler, Roe, Zinik, and Marcus filed an action in the District Court of the United States for the District of Wyoming against C.B. Simmons, individually, Edward Kellar, individually, and Simmons and Kellar, a partnership. This action was also brought under the Securities Act of 1933 and was similar to those brought against the Aimonettos. It concerned the same interests purchased by the plaintiffs as contained in the fourth cause of the instant action. Plaintiffs were awarded a judgment against the named defendants entitling them to rescind the transactions and for a recovery of the moneys paid.[3] An appeal by the defendants to the Tenth Circuit Court of Appeals was, upon stipulation of the parties, dismissed on February 26, 1959.[4] The complaint against Simmons et al. contained the following pertinent allegations: A certified copy of this complaint was submitted below in support of defendants' motion for summary judgment. Also submitted were portions of the deposition of Dupler and portions of the testimony given at the trial of the Simmons action by Dupler, Roe, Zinik and Marcus. In his deposition, Dupler testified in part as follows: At the trial of the Simmons action, Dupler testified in part as follows: At the same trial plaintiff Marcus testified in part as follows: Part of Zinik's testimony given in the Wyoming action is as follows: Plaintiff Roe also testified and stated in part as follows: In an action in deceit based upon misrepresentation the plaintiff must plead and prove, among other things, that he relied upon the representations and was thereby induced to act to his injury and damage.[5] Although these essential elements are alleged in the unverified amended complaint, the evidence submitted by the defendant controverts these allegations. The complaints in all four of the Wyoming cases allege in substance that the plaintiffs were induced to purchase their interests in reliance upon false representations made by the sellers. In each instance the plaintiffs alleged a direct contact with the sellers, and no mention was made of the defendant. Typical, is Dupler's complaint, wherein he alleged that "(a) On or about December 20, 1953, defendant Joe Aimonetto represented in person to plaintiff, * * * as an inducement to get plaintiff to purchase the securities described above, that Well No. 1 * * * had a greater prospective income producing power than it had in truth and fact." The pleadings and testimony show that plaintiffs relied on the Wyoming defendants in consummating the transaction that caused the damage alleged in the fourth cause of action. Portions of the testimony indicate exclusive reliance on others than the present defendant Yates. In attempting to show lack of reliance, defendant has the difficult task of proving the negative of facts that plaintiffs have an affirmative burden to prove at trial. The quantum of proof to show nonexistence of a material fact is of necessity less than that required to prove a matter of affirmative defense. In contrast to self-serving declarations usually proffered by movants for summary judgment, these statements are made by the opposing parties themselves. Presenting at most improbable questions of credibility, these documentary statements have a high degree of probative value. Furthermore, knowledge of reliance or lack of it is within the peculiar province of the plaintiffs. It is not practicable to expect the defendant to present more convincing proof than these contradictory assertions by those who know the most concerning the question of reliance. As a matter of law, it is conceivable that a person might simultaneously rely on misrepresentations of divergent defendants. However, standing alone, admissions by plaintiffs that they relied on others is sufficient proof to negative reliance on the present defendant. Furthermore, the record contains the agreement of August 20, 1956, between the plaintiffs and the Aimonettos. This agreement provided for a settlement and release of all existing claims and for a dismissal with prejudice of the pending civil cases. These cases were dismissed with prejudice, by written stipulation of the parties on October 25, 1956. Plaintiffs secured a judgment in the Wyoming case against Simmons, et al. An appeal from this judgment was subsequently, upon written stipulation, dismissed with prejudice. The settlement agreement, the judgment against Simmons, and the subsequent dismissals with prejudice of both of those actions raise the inference that plaintiffs are fully compensated for the damages they now seek to recover from defendant Yates. Plaintiffs elected to make no affirmative showing with respect to this issue, although they did file counteraffidavits on the matter of the statute of limitations. Thus, from anything that appears in this record, it must be assumed that the claims for damages which they now assert against Yates were satisfied in those Wyoming actions. We have then an unverified amended complaint aligned against admissible evidence in support of a motion for summary judgment and which if uncontroverted, would entitle the defendant to a judgment as a matter of law. Under such circumstances, is there a genuine, material issue of fact presented to preclude the granting of the motion? Rule 56(c) of the Utah Rules of Civil Procedure is identical with the same numbered rule of the Federal Rules of Civil Procedure. It provides, in part, as follows: The primary purpose of the summary judgment procedure is to pierce the allegations of the pleadings, show that there is no genuine issue of material fact, although an issue may be raised by the pleadings, and that the moving party is entitled to judgment as a matter of law.[6] It is apparent here that the defendant has produced evidence that pierces the allegations of the complaint. The plaintiffs have not controverted, explained or destroyed that evidence by counteraffidavit or otherwise. They have relied upon their amended complaint and their proposed amendment to the amended complaint. Certainly, if the summary judgment procedure is to be effective, it must be held that when adequate proof is submitted in support of the motion, the pleadings are not sufficient to raise an issue of fact.[7] Rule 56 U.R.C.P. is not intended to provide a substitute for the regular trial of cases in which there are disputed issues of fact upon which the outcome of the litigation depends. And it should be invoked with caution to the end that litigants may be afforded a trial where there exists between them a bona fide dispute of material fact.[8] However, where the moving party's evidentiary material is in itself sufficient and the opposing party fails to proffer any evidentiary matter when he is presumably in a position to do so, the courts should be justified in concluding that no genuine issue of fact is present, nor would one be present at the trial.[9] Upon a motion for summary judgment, the courts ought to recognize, as a minimum, that the opposing party produce some evidentiary matter in contradiction of the movant's case or specify in an affidavit the reason why he cannot do so.[10] Where, as in the instant case, the materials presented by the moving party are sufficient to entitle him to a directed verdict and the opposing party fails either to offer counteraffidavits or other materials that raise a credible issue or to show that he has evidence not then available, summary judgment may be rendered for the moving party.[11] The record made by the defendant, in support of his motion for summary judgment, controverted the unverified allegations in the plaintiffs' amended complaint and therefore, in the absence of counteraffidavits, no genuine issues of material fact were created.[12] Plaintiffs complain that the lower court erred in denying their motion to amend the judgment to allow an amendment to the amended complaint. The proposed unverified amendment does not present a new theory, nor does it contradict or explain the materials in support of the defendant's motion for summary judgment. It merely sets forth in greater detail the alleged fraud and deceit. While Rule 15(a) U.R.C.P. provides that leave to amend "shall be freely given when justice so requires," the liberality of the rule is not without limit, particularly when nothing new or of substance is contained in the proposed amendment.[13] The permitting of amendments to pleadings rests in the sound discretion of the trial court and we find no abuse of that discretion in this case. Furthermore, an unverified amendment of a pleading should not be allowed to defeat a motion for summary judgment if the amendment does not effect any substantial change in the issues as they were originally formulated in the pleadings.[14] Judgment affirmed. Costs to respondents. CROCKETT, C.J., and HENRIOD and McDONOUGH, JJ., concur. WADE, Justice (dissenting). I dissent. Under Rule 56 of Utah Rules of Civil Procedure, Subdivision (c) a summary judgment should be rendered forthwith only "if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." This rule should be kept in mind in passing on this kind of a motion. Otherwise, trial courts will be deciding cases on affidavits and depositions when there should be a regular trial. (Emphasis ours) As I understand the prevailing opinion it concedes that the plaintiffs' complaint states a claim upon which relief could be granted. It, however, seems to conclude that because of the pleadings and depositions, from other actions by plaintiffs against other defendants, in the absence of contradictory affidavits of plaintiff, that defendant has shown as a matter of law that they were entitled to a summary judgment. With this conclusion I do not agree. I think that all the depositions and pleadings from the other cases show is that plaintiffs relied on and were induced to make these investments by fraudulent misrepresentation of the defendants in the other actions. However, that does not prove that plaintiffs did not rely on and were not induced by the fraudulent misrepresentations of defendant Yates in this action to make these investments. A party may be induced by and rely on the fraudulent misrepresentation of many different persons. I find nothing in the depositions or pleadings which shows as a matter of law or even indicates strongly that plaintiffs did not rely on and were not induced by the fraudulent misrepresentations of defendant to make these investments. Nor does the fact that plaintiffs made compromise settlements with the defendants in the other action preclude plaintiffs from recovering against this defendant. Just as in a negligence action, the negligence of more than one person may proximately cause an injury so in an action for damages from fraudulent misrepresentation a person may be induced to make an investment by fraudulent misrepresentations of more than one person. A compromise settlement of the claim of a plaintiff in a fraudulent misrepresentation case does not preclude his recovery from defendants in other cases. Such a settlement by a plaintiff merely means that he has obtained at least part of the damage which he claimed from the persons with whom he makes the compromise. And, of course, as to such persons, it precludes him from further recovery. However, recovery from one defendant for fraudulent misrepresentation does not preclude the plaintiff in such action from recovering any unpaid portion of the damage which he suffered from another defendant in another action. However, the amount which he recovered in the other action would have to be taken into consideration and applied as a part payment of the damages which he sustained.[1] [1] 78-12-26(3) U.C.A. 1953. [2] 15 U.S.C.A. § 77a et seq. [3] Dupler v. Simmons, D.C., 163 F. Supp. 535. [4] 268 F.2d 217. [5] Pace v. Parrish, 122 Utah 141, 247 P.2d 273. [6] 6 Moore, Federal Practice (2d Ed.) p. 2066; Engl v. Aetna Life Ins. Co., 139 F.2d 469. [7] Asbill &amp; Snell, Summary Judgment Under the Federal Rules, 51 Mich.L.Rev. 1143, 1155 (1953); 3 Barron &amp; Holtzoff, Federal Practice and Procedure 82. [8] James v. Honaker Drilling, Inc., 10 Cir., 254 F.2d 702, 706. [9] 99 Univ.Pa.L.Rev. 212, 223 (1950). [10] Id. at page 228. [11] 6 Moore, Federal Practice (2d Ed.) p. 2067; James v. Honaker Drilling, Inc., supra, note 8. [12] Geller v. Transamerica Corp., D.C.Del. 1943, 53 F. Supp. 625, 629; Leonardi v. Furman, 83 Ariz. 61, 316 P.2d 487, 491. [13] Davis Stock Co. v. Hill, 2 Utah 2d 20, 268 P.2d 988. [14] 6 Moore, Federal Practice (2d Ed.) p. 2016. [1] Green v. Lang Co., 115 Utah 528, 206 P.2d 626.