Opinion ID: 884189
Heading Depth: 1
Heading Rank: 5

Heading: issues

Text: With respect to Mattingly's claim for constructive fraud, did the District Court err in finding that First Bank gained no advantage by failing to disclose the presence of contamination? The District Court granted First Bank's motion for summary judgment on the issue of constructive fraud on the additional basis that First Bank gained no advantage over Mattingly by failing to disclose the contamination. Pursuant to § 28-2-406, MCA, a necessary component of any claim for constructive fraud is that, in breaching a duty, one party gain an advantage over the other. Mattingly argues that First Bank was advantaged by its alleged decision to withhold information regarding the contamination in a number of respects. For instance, Mattingly points out that First Bank held the note on Habets' underlying loan, and that, upon closing the sale with Mattingly, First Bank was able to pay the balance remaining on Habets' loan. Thus, Mattingly argues, First Bank found in him a borrower who knew nothing of the contamination and who would accordingly be less likely to default on his loan than would a borrower, such as Habets, who knew the property to be seriously defective. Mattingly also argues that First Bank was advantaged by failing to disclose the contamination because, had Mattingly learned of the contamination, he would not have purchased the property and First Bank would not have been able to collect interest income on the loan. The District Court found that, even assuming First Bank knew of the contamination, it gained no advantage by failing to disclose its presence. Specifically, the court held that [i]f Mattingly had defaulted on the loan and the Bank foreclosed on its mortgage, the Bank might very well have ended up with a piece of property with little value, or which perhaps even constituted a financial liability. Notwithstanding this fact, this Court concludes that whether or not First Bank gained advantage over Mattingly by failing to disclose the contamination, as contemplated by the definition of constructive fraud, is a question of material fact for the trier of fact.