Opinion ID: 1579528
Heading Depth: 2
Heading Rank: 4

Heading: Negligence and/or Wantonness

Text: The Peoples Bank defendants allege that the trial court erred in not entering a summary judgment in their favor on the Jays' negligence and/or wantonness claim. In its order certifying its ruling on this issue as appropriate for permissive appeal under Rule 5, Ala. R.App. P., the trial court stated the controlling question of law as follows: Whether [the Peoples Bank defendants] can be liable to the Bank's customers for negligence or wantonness on the theory that the Bank loaned those customers money for use in their business when both the Bank and those customers appreciated that there was a substantial risk that revenues from the business would not be sufficient to repay the loans. This appears to be a question of first impression for this Court. We agree with the courts in other jurisdictions that have answered this question in the negative as to negligence. See FDIC v. Fordham (In re Fordham), 130 B.R. 632, 646 (Bankr. D.Mass.1991) (A lender, moreover, owes to its borrower or guarantor no duty to use reasonable care to determine that a project is sufficiently feasible to permit repayment of the loan.); see also Commercial Nat'l Bank in Shreveport v. Audubon Meadow P'ship, 566 So.2d 1136, 1140 (La.Ct.App.1990) (To impose such requirements would significantly alter the relationship between banks and those with whom they deal. In effect, it would impose liability upon banks for business failures arising through ventures they financed.); Wagner v. Benson, 101 Cal. App.3d 27, 35, 161 Cal.Rptr. 516, 521 (1980) ([T]he Wagners allege they suffered substantial foreseeable harm from the Bank's negligence in loaning money to them, as inexperienced investors, for a risky venture over which the Bank exercised influence and control. However, the Bank owes no duty of care to the Wagners in approving their loan.). The Jays made the decision to start a catfish-farming business; they applied for and received a loan with the anticipation that they stood to profit if the business succeeded and that they could be exposed to economic loss should the business fail. The Peoples Bank defendants should not now be made insurers of their business decisions. See Gries v. First Wisconsin Nat'l Bank of Milwaukee, 82 Wisc.2d 774, 780, 264 N.W.2d 254, 257 (1978) ([The plaintiffs] called the bank; they prepared a proposal; they applied for the loan; they invested the money in the business. Although the failure of the business is unfortunate for both the plaintiffs and the bank, it was a risk which the plaintiffs assumed, and which can not be shifted to the bank.). The Jays cite two cases in which this Court has held a bank liable under a negligence theory; however, both cases are distinguishable. In Schoen v. Gulledge, 481 So.2d 1094 (Ala.1985), this Court concluded that the loan officer had a duty to recommend only sound loans. The loan officer in Schoen held a one-half interest in the property Schoen wanted to purchase and allegedly purposely misstated Schoen's cash flow so that he would qualify for the loan. Schoen was unable to pay the first installment of his loan. Schoen, 481 So.2d at 1096. Thus, there was not just a risk that Schoen could not repay the loan; it was virtually certain that he could not. In this case, the evidence, if any, indicating that Coleman or Lawson purposely misstated the Jays' potential for success or that it was a near certainty that they could not repay their loan is not substantial. In fact, the Jays ran their business, with varying degrees of success, for nearly 10 years. In Patrick v. Union State Bank, 681 So.2d 1364 (Ala.1996), the other case the Jays cite, this Court held that a bank owed a customer a duty of due care in applying its procedures in opening checking accounts. In Patrick, an imposter opened a checking account in Patrick's name after the bank failed to follow its identification procedures and safeguards in opening the account. The imposter wrote several bad checks, causing arrest warrants to be issued for Patrick in 11 jurisdictions. In imposing a duty on the bank, this Court stated that the bank was in the best position to prevent the fraud that injured Patrick, that the nature of the harm  arrest for writing bad checks  was foreseeable, and that it was commercially reasonable for the bank to take steps to prevent the fraud. Patrick, 681 So.2d at 1369-71. In this case, however, the Jays ran the day-to-day operations of their business; thus, they were in the best position to ensure its success. The failure of the business was at least equally foreseeable to the Jays as it was to Peoples Bank, Lawson, or Coleman. Moreover, unlike the identification procedures and other safeguards in place to prevent the fraud that would harm the bank customer at issue in Patrick, this Court has held that a bank's loan-approval policies are intended solely for the bank's benefit. We conclude that the record supplies no basis for a holding that AmSouth owed ABS a common-law duty that could support its claims of negligence or wantonness based on its loan-application policies. Unlike the policies employed by the defendants in Lance[, Inc. v. Ramanauskas, 731 So.2d 1204 (Ala. 1999)], Collins [v. Wilkerson, 679 So.2d 1100 (Ala.Civ.App.1996)], and [ Wal-Mart Stores, Inc. v.] Tuck, [671 So.2d 101 (Ala.Civ.App.1995)], all of which were policies intended to provide for public safety, the AmSouth policy that ABS references was solely for AmSouth's benefit. See Spriggs v. Compass Bank, 742 So.2d 178 (Ala.Civ.App. 1997) (holding that a bank's internal policy of notifying mortgagors of the cancellation of their property insurance was for the bank's benefit and did not imply a duty to the mortgagors). Armstrong Bus. Servs., Inc. v. AmSouth Bank, 817 So.2d 665, 681 (Ala.2001). Therefore, we hold that the Peoples Bank defendants do not owe the Jays a duty that would give rise to the Jays' negligence claim. To answer the trial court's question, the Peoples Bank defendants cannot be liable to [the Jays] for negligence ... on the theory that the Bank loaned [the Jays] money for use in their business when both the Bank and [the Jays] appreciated that there was a substantial risk that revenues from the business would not be sufficient to repay the loans. The Peoples Bank defendants also cite the above-quoted language in Armstrong to support their allegation that the trial court should have entered a summary judgment for them on Jays' wantonness claim. In response, the Jays merely quote the statutory definition of wantonness found at § 6-11-20(b)(3), Ala.Code 1975, [3] and say that [g]iven the clear conflict of interest, a jury could find that the defendants' actions constitute wantonness. Jays' reply brief, p. 36. Their argument thus consists of nothing more than an undelineated general legal proposition and does not meet the requirements of Rule 28, Ala. R.App. P. Such an argument is insufficient to invoke this Court's review. See Jimmy Day Plumbing & Heating, Inc. v. Smith, 964 So.2d 1 (Ala.2007) (holding that an appellant's argument citing a single case for a general proposition of law failed to comply with Rule 28, Ala. R.App. P.). Because the Jays have not presented substantial evidence either of a negligence claim or of a wantonness claim against the Peoples Bank defendants, we reverse the trial court's order denying a summary judgment on this claim and direct the trial court to enter a summary judgment for the Peoples Bank defendants on this claim. The Jays allege that the trial court erred in entering a summary judgment in favor of Alabama Catfish on the Jays' negligence and/or wantonness claim. The Jays allege that by virtue of their business relationship, the affirmative representations of George Smelley, and the involvement of the banking officers in the [Jays'] business, Alabama Catfish owed a duty of care to the [Jays] to act reasonably and to exercise reasonable care to avoid injury or damage to the [Jays]. Jays' brief, p. 76. The Jays then allege that Alabama Catfish breached this duty of care. The Jays do not cite any authority or make any additional argument in their principal brief with respect to this allegation. It is not the duty of this Court to make arguments or perform the legal research to supplement an inadequate brief. Dykes v. Lane Trucking, Inc., 652 So.2d 248, 251 (Ala. 1994) (We have unequivocally stated that it is not the function of this Court to do a party's legal research or to make and address legal arguments for a party based on undelineated general propositions not supported by sufficient authority or argument.); Harper v. Coats, 988 So.2d 501, 508 (Ala.2008). Therefore, the Jays' argument is not properly before this Court, and we affirm the summary judgment for Alabama Catfish on this claim.