Court Opinion

ID: 3029217
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:42:26.702371+00
Date Added: 2024-06-11T09:28:49.941070
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 01-3102
                                    ___________

Jerry’s Homes, Inc.,                *
                                    *
          Plaintiff-Appellant,      *
                                    * Appeal from the United States
    v.                              * District Court for the
                                    * Southern District of Iowa.
Tamko Roofing Products, Inc.,       *
                                    *     [UNPUBLISHED]
          Defendant-Appellee.       *
                               ___________

                              Submitted: April 18, 2002

                                   Filed: July 8, 2002
                                    ___________

Before BOWMAN, LAY, and JOHN R. GIBSON, Circuit Judges.
                           ___________

PER CURIAM.

       Jerry’s Homes, Inc., (Jerry’s) is a tract builder of single family homes. Jerry’s
filed a complaint alleging diversity of citizenship, alleging damages stemming from
defective shingles manufactured by Tamko Roofing Products, Inc. (Tamko) and
installed on homes built by Jerry’s. Jerry’s sought recovery based upon theories of
fraud and promissory estoppel. Tamko filed a summary judgment motion seeking
dismissal of Jerry’s complaint. The magistrate judge1 granted summary judgment on
the fraud claims.

       The promissory estoppel claim was tried to the jury, save for the fourth
element, “the prevention of injustice,” which was tried to the court. The jury found
in favor of Jerry’s and awarded $1.605 million in damages. The magistrate judge
granted Tamko’s post-trial motion vacating the jury verdict and ruled that Tamko had
failed, as a matter of law, to prove the fourth element of promissory estoppel.

      Jerry’s has appealed the magistrate judge’s ruling on two of the fraud claims
as well as the two instructions given to the jury as to the promissory estoppel claim.
This court reviews de novo the grant of summary judgment. Lynn v. Deaconess
Medical Center-West Campus, 160 F.3d 484, 486 (8th Cir. 1998).

I. Fraud

       Jerry’s alleged in its third amended complaint that Tamko engaged in fraud
when it represented that hand-sealing loose shingles was an effective method of repair
that would solve the problems experienced by homeowners. The magistrate judge
held this allegation of fraud failed because Jerry’s never believed the statement and
therefore could not have relied upon it. On appeal, Jerry’s contends the court failed
to recognize the true nature of Tamko’s representation and failed to give Jerry’s the
benefit of the favorable evidence in the record.

        Fraudulent misrepresentation requires “the party alleging fraud . . . prove that
it relied upon the defendant’s alleged fraudulent acts or statements.” IBP, Inc. v. FDL
Foods, Inc., 19 F. Supp. 2d 944, 949 (N.D. Iowa 1998); see also Magnusson Agency

      1
      The Honorable Ross A. Walters, United States Magistrate Judge for the
Southern District of Iowa, sitting by consent of the parties under 28 U.S.C. § 636(c).

                                          -2-
v. Public Entity Nat’l Co.-Midwest, 560 N.W.2d 20, 27-28 (Iowa 1997). In order to
prove reliance, Jerry’s had to establish that it changed its position in response to
Tamko’s selection of hand-sealing. See Sedco Int’l, S. A. v. Cory, 683 F.2d 1201,
1206 (8th Cir. 1982).

       Jerry’s contends that Tamko’s representations as to the efficacy of hand-sealing
“materially influenced Jerry’s decision as to whether, and to what degree, it should
act on its own opinion.” The facts of the case preclude such a holding. First, Jerry’s
was cognizant that, pursuant to the shingles limited warranty, it had no right
concerning Tamko’s selection of hand-sealing. Second, that Jerry’s forbore from
acting is inconsequential because Tamko owed its duty to the homeowners, not
Jerry’s.

        Moreover, “[i]n order to be influenced by the representation, the plaintiff must
of course have relied upon it, and believed it to be true.” Nader v. Allegheny
Airlines, Inc., 626 F.2d 1031, 1037 (D.C. Cir. 1980) (citing W. Prosser, Law of Torts,
§ 108 at 714 (4th ed. 1971)); see also Boyd v. Miller, 230 N.W. 851, 855 (Iowa 1930)
(“The one asserting fraud must not have known that the representation was
false. . . .”). Jerry’s did not believe hand-sealing would be effective as demonstrated
in the deposition of its representative:

      [T]hey kept promising and promising that they were going to take care
      of us, that they were going to service my customers, that there was not
      going to be a repercussion for the failure of their product, although we
      continued from December of ‘95 through the end of the hand sealing -
      told them that that would not work, that the manner in which they want
      the hand sealing done would not work, and the problem was going to
      continue.

      In conclusion, we hold the evidence does not support finding the alleged
fraudulent representation, that hand-sealing would be effective, “exerted a material

                                          -3-
influence” on Jerry’s. See Skeels v. Porter, 145 N.W. 332, 335 (Iowa 1914)
(quotation omitted). Thus, Jerry’s has failed to demonstrate reliance and the
magistrate judge properly granted Tamko summary judgment on Jerry’s fraud claims
arising out of hand-sealing.

      Jerry’s also alleged in its amended complaint that Tamko engaged in fraud
when it represented it would “take care of Jerry’s and its customers.” The magistrate
judge dismissed the claim because Jerry’s failed to demonstrate at the time the
statement was made that Tamko had no intention to perform.

       A statement of intent to perform a future act is actionable as fraud if the
speaker had an existing intent not to perform. Robinson v. Perpetual Servs. Corp.,
412 N.W.2d 562, 565 (Iowa 1987). The relevant circumstances to examine include
the failure to perform, failure to attempt performance, repudiation of the promise soon
after making it and the speaker’s continued assurances after it is clear the speaker
does not intended to perform. Magnusson Agency, 560 N.W.2d at 28; Robinson, 412
N.W.2d at 565-66; Lamasters v. Springer, 99 N.W.2d 300, 303 (Iowa 1959).

      [I]n establishing intent, the fact that an agreement was not performed
      does not alone prove that the promisor did not intend to keep the
      promise when it was made. In other words, a false statement innocently
      but mistakenly made will not establish intent to defraud unless the
      statement was recklessly asserted.

Magnusson Agency, 560 N.W.2d at 28 (internal citation omitted). Reviewing the
adequacy of the performance of the promise–to take care of Jerry’s and its
customers–illustrates Tamko intended to perform and did perform to some degree.2

      2
       Tamko’s initial hand-sealing of thirty-six homes was effective on some,
although not all, of the homes that reported problems. Further, the homes in which
the hand-sealing was not effective and the additional homes with blow-off problems
were offered two settlement options: cash settlement or re-roofing. In addition,

                                         -4-
       To the extent Jerry’s argues it relied on the representations in deciding the
manner to deal with its own customers, we hold no jury could find such reliance to
be justified or reasonable. Reliance is justifiable if a person acting with reasonable
and ordinary prudence and caution would have a right to rely on the representations.
Kaiser Agr. Chemicals v. Ottumwa Prod. Credit Ass’n, 428 N.W.2d 681, 683 (Iowa
Ct. App. 1988). The Iowa Supreme Court has held that a plaintiff could not prevail
on a fraud claim “because [the] claimed reliance rests on what amounts to no more
than informal, nonbinding predictions of future . . . action.” City of McGregor v.
Janett, 546 N.W.2d 616, 620 (Iowa 1996). As previously stated, Jerry’s did not have
the authority to dictate Tamko’s response to warranty claims, therefore, the claimed
reliance rests only on non-binding predictions of future actions, which are not
actionable under a theory of fraud. See id.

II. Promissory Estoppel

       Jerry’s alleges the magistrate judge erred when it “adopted Tamko’s restrictive
view of Jerry’s [promissory estoppel] claim and allowed the jury to consider only two
narrow promises – (a) that Tamko in 1996 promised to repair or replace loose or
blown-off shingles; and (b) that Tamko in 1997 promised to make settlement offers
to homeowners.” The magistrate judge’s ruling was based upon finding that the more
general statements were not clear and definite promises as required to support a claim
for promissory estoppel.

      Tamko contends that the jury instruction is not properly reviewed by this court
because: (1) Jerry’s has not appealed the magistrate judge’s finding that Jerry’s failed
to prove the fourth element, which was reserved to the court: “injustice can be

thirty-five second owner’s had their roofs hand-sealed. Tamko’s performance on the
alleged promise, although not complete in its efficacy, precludes finding that at the
time of the utterance Tamko had an existing intent not to perform. See, e.g.,
Robinson, 412 N.W.2d at 565.

                                          -5-
avoided only by enforcement of the promise,” Schoff v. Combined Ins. Co. of Am.,
604 N.W.2d 43, 49 (Iowa 1999); (2) Jerry’s has not appealed the magistrate judge’s
post trial ruling that Tamko is entitled to judgment as a matter of law; and (3) Jerry’s
was not prejudiced by the instructions because the jury returned a verdict in its favor
on the instructions given. See Moore v. Robertson Fire Protection District, 249 F.3d
786, 791 (8th Cir. 2001). Tamko conflates the issues addressed by the magistrate
judge and the issue before this court. The claim Jerry’s presently pursues differs from
the claims that the magistrate judge addressed: Jerry’s is appealing the more general
“take care of Jerry’s” representation and not the more specific promise to repair or
make settlement offers, which were the subjects of the court’s ruling on the fourth
element, judgment as a matter of law and the jury’s findings.

      The magistrate judge ruled that as a matter of law the more general statements
were not clear and definite promises as required to support a claim for promissory
estoppel, thus, we exercise de novo review. See United States v. Booker, 269 F.3d
930, 931-32 (8th Cir. 2001); Simmons Poultry Farms, Inc. v. Dayton Road Dev. Co.,
82 F.3d 217, 220 (8th Cir. 1996); see also City of McGregor, 546 N.W.2d at 617.
We need not address whether the statements are promises or representations, see
Schoff, 604 N.W.2d at 51 (“Although we have serious reservations whether this
statement constitutes a promise, we need not resolve that issue because any such
‘promise’ was not clear and definite . . . .”), because they are commensurate to those
made in Schoff. See also Neely v. Am. Family Mut. Ins. Co., 930 F. Supp. 360, 373-
75 (N.D. Iowa 1996). The promises fail the clear and definite prong because they
could not be understood to be an unambiguous, explicit promise to pay the damage
incurred to Jerry’s reputation as alleged. See Schoff, 604 N.W.2d at 51; Neely, 930
F. Supp. at 375.

III. Conclusion

      We affirm the magistrate judge’s ruling.

                                          -6-
Judgment AFFIRMED.

A true copy.

      Attest:

         CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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