Court Opinion

ID: 162282
Source: CourtListenerOpinion
Date Created: 2010-08-14 07:30:36+00
Date Added: 2024-06-11T17:24:39.501210
License: Public Domain

F I L E D
                                                                       United States Court of Appeals
                                                                               Tenth Circuit
                        UNITED STATES COURT OF APPEALS
                                                                              MAY 24 2002
                                      TENTH CIRCUIT
                                                                          PATRICK FISHER
                                                                                    Clerk

 LYNN GIBSON; JAMES SIMMONS
 d/b/a Simmons Logging; LANE PERRIN
 and KEVIN PERRIN d/b/a Perrin
 Logging; TRAVIS NEAL BUTLER;
 LYNN HARDAWAY d/b/a L & S
 Logging,
                                                            No. 01-7067
          Plaintiffs-Appellants,                      (D.C. No. 00-CV-474-S)
 v.                                                (Eastern District of Oklahoma)

 WEYERHAEUSER COMPANY, a
 Washington corporation,

          Defendant-Appellee.

                                   ORDER AND JUDGMENT*

Before SEYMOUR, Circuit Judge, McWIILLIAMS, Senior Circuit Judge, and
HENRY, Circuit Judge.

      Weyerhaeuser Company (“Weyerhaeuser”), a paper manufacturing company

incorporated in the State of Washington, operates a wood mill in Wright City, Oklahoma.

Weyerhaeuser obtained “timber rights” from nearby landowners, and then contracted

      *
         This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.
with “loggers” to harvest the timber in question and deliver the timber to its Wright City

facility.

        Lynn Gibson, and five other loggers (hereinafter referred to as “the plaintiffs”),

citizens and residents of Oklahoma and Arkansas, brought the present action in the United

States District Court for the Eastern District of Oklahoma against Weyerhaeuser for

fraud, jurisdiction being based on diversity of citizenship. 28 U.S.C. § 1332. The

charging part of plaintiffs’ complaint reads, in its entirety, as follows:

                      At various times beginning in the summer of 1995 and
               continuing until the summer of 1999, the Defendant,
               Weyerhaeuser Company, by and through its agents and
               employees intentionally, maliciously and fraudulently induced
               and persuaded the Plaintiffs to purchase new, different and/or
               additional equipment on financial credit for the purpose of
               conducting the business of logging timber for the benefit of
               Weyerhaeuser. Said inducements were verbal promises that
               Plaintiffs would be logging for Weyerhaeuser long as
               Plaintiffs so desired. Said inducements were made with the
               knowledge that Weyerhaeuser’s quality and quantity of timber
               products would increase as a result thereof; however, at such
               time as said promises and inducements were made,
               Weyerhaeuser had no intention of providing sufficient future
               work to the Plaintiffs to enable Plaintiffs to pay for the newly
               purchased equipment and with the further knowledge that
               Plaintiffs would rely on the inducement to their detriment and
               financial loss. As a result of these fraudulent inducements,
               each of the Plaintiffs relied upon the same to their detriment
               and purchased additional or different equipment spending
               amounts of money in excess of $75,000.00 each.
               Notwithstanding a bona fide good faith effort by each of these
               Plaintiffs to provide logging products and services for
               Weyerhaeuser, the company has excluded them from contract
               logging through no fault of Plaintiffs, causing each Plaintiff to
               be damaged in an amount in excess of $75,000.00. (Emphasis

                                             -2-
              added.)

       In the prayer of their complaint, each of the plaintiffs asked for judgment against

Weyerhaeuser in an amount of not less than $75,000.00 for deceit, actual damages, loss of

credit, loss of property, loss of anticipated profits, and punitive damages in an amount in

excess of actual damages.

       The gist of the plaintiffs’ complaint is that Weyerhaeuser, through its agents and

employees, fraudulently induced the plaintiffs to purchase new and additional equipment

for the purpose of logging timber for Weyerhaeuser with verbal promises that they

“would be logging for Weyerhaeuser long as plaintiffs so desired” and that when those

promises were made, “Weyerhaeuser had no intention of providing sufficient future work

to the plaintiffs to enable the plaintiffs to pay for the newly purchased equipment and

with the further knowledge that plaintiffs would rely on the inducement to their detriment

and financial loss.” By its answer, Weyerhaeuser denied all of those allegations.

       Discovery ensued and various depositions and affidavits were filed in the district

court. Weyerhaeuser then filed a motion for summary judgment and a brief in support

thereof, seeking, inter alia, summary judgment in its favor because there was “no

evidence of any fraudulent intent on the part of Weyerhaeuser.” Plaintiffs filed a

response and brief in opposition to the motion. After hearing, the district court granted

Weyerhaeuser’s motion for summary judgment and entered judgment in favor of

Weyerhaeuser, the district court holding that the “plaintiffs have absolutely no evidence

                                            -3-
that defendant made statements regarding future work with knowledge of its falsity or

recklessly without knowledge as to its truth or falsity. Further, there is absolutely no

evidence that the statements made were false.”1 Later, plaintiffs filed a motion to

reconsider, which the district court denied. Plaintiffs appeal, contending the district court

erred in granting Weyerhaeuser’s motion for summary judgment and in denying their

motion to reconsider. We affirm.

       In F.D.I.C. v. Hamilton, 122 F.3d 854, 858 (10th Cir. 1997), we spoke as follows:

              To establish fraud, Oklahoma law requires the proponent to
              show by clear and convincing evidence “a false material
              representation made as a positive assertion which is either
              known to be false, or made recklessly without knowledge of
              the truth, with the intention that it be acted upon by a party to
              his or her detriment.” Rainbow Travel Serv. v. Hilton Hotels
              Corp., 896 F.2d 1233, 1240 (10th Cir. 1990).

       In granting Weyerhaeuser’s motion for summary judgment, the district court did

make reference to the “clear and convincing evidence” requirement involved in a claim of

fraud, and, on appeal, counsel argues that the district court erred in considering the “clear

and convincing evidence” requirement at the summary judgment stage of the proceedings.

In other words, the “clear and convincing evidence” requirement, according to counsel,

would properly be considered in, for example, a post-trial motion challenging the

sufficiency of the evidence to support a jury verdict in favor of a plaintiff in a fraud

       At the same time, the district court, for about the same reasons, dismissed any
       1

possible claim for “negligent misrepresentation.”

                                             -4-
action, but is not to be considered when a motion for summary judgment is under

consideration. In our view, that particular argument is disposed of in Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 252 (1986). There, in a libel case, the Supreme Court stated

that “we are convinced that the inquiry involved in a ruling on a motion for summary

judgment or for a directed verdict necessarily implicates the substantive evidentiary

standard of proof that would apply at the trial on the merits.” See also North Texas Prod.

Credit Assoc. v. McCurtain Cty. Nat’l. Bank, 222 F.3d 800, 813 (10th Cir. 2000), and

Applied Genetics v. First Affiliated Sec., 912 F.2d 1238, 1243 (10th. Cir. 1999), where we

followed Anderson v. Liberty Lobby, Inc. and held that the “clear and convincing

evidence” requirement in a fraud case applied on summary judgment.2

       The “loggers contracts” which plaintiffs had with Weyerhaeuser were only for a

comparatively short period of time, i.e., up to around 120 days. There is no suggestion by

any plaintiff that Weyerhaeuser terminated any of their short term contracts. Rather,

plaintiffs complain that they were not given additional 120 day contracts by

Weyerhaeuser. Weyerhaeuser’s position on this matter is that plaintiffs were not given

so-called “renewal” contracts because they failed to comply with its newly created

       2
        In support of his contention that the “clear and convincing evidence” requirement
should not be considered on summary judgment, counsel relies on Tenneco Oil Co. v.
Joiner, 696 F.2d 768 (10th Cir. 1982). That case involved a suit by a principal against his
agent for breach of a fiduciary duty and it was in that context that we held that the “clear
and convincing evidence” requirement did not apply. In the instant case, there is no
suggestion that there was a fiduciary relationship between the plaintiffs and
Weyerhaeuser. Plaintiffs were independent contractors.

                                            -5-
“contractor management system,” a system adopted by Weyerhaeuser at the government’s

insistence, designed to measure a contractor’s performance in various categories

including safety, the environment, truck weight, management and workmanship.

       Fraud is never presumed, and must be established by clear and convincing

evidence that the person charged with fraud had a specific intent to defraud. Barnett v.

Life Ins. Co. of the Southwest, 562 F.2d 15, 19 (10th Cir. 1977); followed in FDIC v.

Palermo, 815 F.2d 1329, 1335 (10th Cir. 1987). As indicated, the district court, in

granting Weyerhaeuser’s motion for summary judgment, concluded that the plaintiffs had

failed to show that any statements of Weyerhaeuser employees concerning “future work”

with Weyerhaeuser were made with knowledge of their falsity, or, indeed, that the

statements, when made, were in fact false. As indicated, there were numerous

depositions and affidavits before the district court, and we are in accord with the district

court’s analysis of the evidentiary matter then before it. The district court did not err in

granting Weyerhaeuser’s motion for summary judgment.

       As above stated, plaintiffs thereafter filed a motion to reconsider under Fed. R.

Civ. P. 60(b). In support of that motion, the plaintiffs, inter alia, submitted two affidavits

from loggers who said that they almost always received advance notice from

Weyerhaeuser that a “safety audit” was about to be conducted, which notice the plaintiffs

did not receive, and that such would somehow indicate that Weyerhaeuser knew when

statements were made by its employees regarding “future work” that such were false.

                                             -6-
The district court rejected that argument and denied plaintiffs’ motion to reconsider.

Again, we agree with the district court.

       This case involves a civil action charging fraud. It is not an action for breach of

contract, and, at best, is one based on an “unkept promise.” In this general connection,

see Roberts v. Wells Fargo AG Credit Corp., 990 F.2d 1169 (10th Cir. 1993). The action

in that case was based on an alleged oral promise by Wells Fargo to renew a line of credit

note. In that case we recognized that for a false representation to be the basis for a fraud

action the representation generally had to be of an existing fact and not one based on a

promise as to a future act. However, at the same time, we also recognized that a promise

to act in the future accompanied by a present intention not to perform was an exception to

the general rule. In Wells Fargo we affirmed the district court’s grant of summary

judgment in favor of Wells Fargo on plaintiff’s fraud claim and spoke as follows:

                       Here, although plaintiffs allege fraud, they have
               presented no evidence that Wells Fargo’s promise to perform
               was accompanied by an intent not to do so. Indeed, “[t]he
               only proof in this record upon which we can predicate an
               intent not to keep the promises made is the fact that such
               promises were not kept.” Dismissal of plaintiffs’ fraud claim
               was appropriate because breach of a contract alone is not
               proof of fraud. (Citations omitted.)

Id. at 1173.

                                            -7-
Judgment affirmed.

                           Entered for the court,

                           Robert H. McWilliams
                           Senior Circuit Judge

                     -8-