Lavoie v. Safecare Health Service, Inc.
Annotate this Case
Lavoie v. Safecare Health Service, Inc.
1992 WY 125
840 P.2d 239
Case Number: 90-140
Decided: 10/02/1992
Supreme Court of Wyoming
Philip H. LAVOIE and Marilyn Lavoie, husband and wife, d/b/a Daisy Laundry, Appellants (Plaintiffs),
v.
SAFECARE
HEALTH SERVICE, INC., a Washington Corporation, d/b/a LanderValleyRegionalMedicalCenter, Appellee
(Defendant).
Appeal from District Court, FremontCounty, D. Terry Rogers,
J.
Glenn E.
Smith of Glenn E. Smith & Associates, Cheyenne, and John R. Vincent of Vincent &
Vincent, Riverton, for
appellants.
William
M. McKellar and Peter K. Michael of Lathrop, Rutledge & Michael, P.C.,
Cheyenne, for appellee.
Before
MACY, C.J., and THOMAS, CARDINE, URBIGKIT,*
and GOLDEN, JJ.
* Chief Justice at time of oral
argument.
GOLDEN, Justice.
[¶1.] Mr. and Mrs. Philip H.
Lavoie d/b/a Daisy Laundry (Lavoies) sued Safecare Health Services, Inc. d/b/a
LanderValleyRegionalMedicalCenter and PineRidgeHospital (Safecare) for
damages for Safecare's alleged breach of an oral contract under which Lavoies
would clean Safecare's laundry for three years. In their complaint, Lavoies
asserted claims of breach of contract, promissory estoppel, fraud, and breach of
an implied covenant of good faith and fair dealing. The trial court granted
summary judgment for Safecare and dismissed the complaint. This appeal presents
a classic legal problem of contract formation.
[¶2.] Lavoies raise these
issues:1
1. Did the
district court err in adjudicating material facts in a summary judgment
proceeding?
2. Did
the district court err in determining there were not genuine issues of material
fact in this case?
3. Did
the district court err in holding that the appellant's breach of contract claim
is barred by the statute of frauds?
4. Did
the district court err in holding that the claim for promissory estoppel is
barred by the statute of frauds?
5. Did
the district court err in granting summary judgment on the Lavoies' fraud
claim?
[¶3.] Safecare restates the
issues in this way:
I.
Whether the statute of frauds bars the Lavoies' claim for breach of
contract
II.
Whether the theory of promissory estoppel could circumvent the statute of frauds
under circumstances established by Mr. Lavoie's own testimony
III.
Whether the Lavoies' fraud claim was barred because they expected a written
contract
IV.
Whether the Lavoies' fraud claim was barred by their inability to offer any
clear and convincing evidence of intent to defraud
V.
Whether an independent claim for bad faith can survive the dismissal of the
underlying breach of contract claim in a case that does not involve an insurance
policy
[¶4.] We
affirm.
STANDARD
OF REVIEW IN SUMMARY JUDGMENT
[¶5.] This court's standard
of review of summary judgment is:
When a motion for
summary judgment is before the supreme court, we have exactly the same duty as
the district judge; and, if there is a complete record before us, we have
exactly the same material as did he. We must follow the same standards. The
propriety of granting a motion for summary judgment depends upon the correctness
of a court's dual findings that there is no genuine issue as to any material
fact and that the prevailing party is entitled to judgment as a matter of law.
This court looks at the record from the viewpoint most favorable to the party
opposing the motion, giving to him all favorable inferences to be drawn from the
facts contained in affidavits, depositions and other proper material appearing
in the record.
Roth v.
First Sec. Bank of Rock Springs, 684 P.2d 93, 95
(1984) (quoting Reno Livestock Corp. v. Sun Oil Co. (Delaware), 638 P.2d 147, 150 (Wyo.
1981)).
[¶6.] This court further
said:
A
summary judgment should only be granted where it is clear that there are no
issues of material facts involved and that an inquiry into the facts is
unnecessary to clarify the application of law. A material fact is one which has
legal significance. It is a fact which would establish a defense. After the
movant establishes a prima facie case the burden of proof shifts to the opposing
party who must show a genuine issue of material fact, or come forward with
competent evidence of specific facts countering the facts presented by the
movant. The burden is then on the nonmoving party to show specific facts as
opposed to general allegations. The material presented must be admissible
evidence at trial. Conclusory statements are not admissible. We give the party
defending the motion the benefit of any reasonable doubt. If the evidence is
subject to conflicting interpretations or if reasonable minds might differ,
summary judgment is improper.
Roth,
684 P.2d at 95 (citations omitted).
[¶7.] In a summary judgment
context, we will not disturb the trial court's judgment if it is sustainable on
any theory. DeWald v. State, 719 P.2d 643, 650-51 (Wyo.
1986).
FACTS
[¶8.] In keeping with our
standard of review, our statement of facts is drawn largely, if not exclusively,
from Mr. Lavoie's deposition transcript and his subsequent affidavit, together
with the various exhibits identified and discussed in his
deposition.
[¶9.] Safecare supported its
summary judgment motion with portions of the transcripts of the depositions of
Mr. Lavoie and exhibits from his deposition; Mike Ockinga, Safecare's
comptroller; and Don Pierson, Safecare's plant manager and head of maintenance.
Lavoies countered with the entire transcript of Mr. Lavoie's deposition and
exhibits; Mr. Lavoie's affidavit; and affidavits of Mike Kaker and Loretta
Rickey, former Safecare employees.
[¶10.] In 1988, Safecare, whose hospitals are in
FremontCounty, was in the final year of a written three year
laundry services contract with Steiner Corporation whose facility was in
Casper. In
casual conversation between Lavoie and David Elling, an insurance salesman whose
client was Safecare, Lavoie approved of Elling's asking Safecare whether it
would be interested in having the Lavoies do Safecare's laundry. Elling later
called Lavoie, telling him Safecare was interested and to call Ockinga.
[¶11.] In late April, 1988, Lavoie called
Ockinga to arrange a meeting. On April 29, 1988, the two met in Ockinga's
office. At that meeting Lavoie said he was interested in doing Safecare's
laundry and that could remodel his facility to handle the job. Ockinga expressed
interest and asked Lavoie to send a written proposal to Dave Brown,
administrator of Safecare's Lander Valley Regional Medical Center; Hugh Simcoe,
administrator of Safecare's Pine Ridge Hospital; and Ockinga. Lavoie submitted
his written proposal by identical cover letters dated May 3, 1988, addressed to
Brown and Ockinga. In his cover letter Lavoie said, "We now have the capability
to handle all of" Safecare's laundry and drycleaning needs. In the written
proposal itself, Lavoie said nothing about remodeling his facility, buying and
installing new equipment, and obtaining approval from the state health
department. Rather, Lavoie proposed, among other things,2 that he would meet and comply with
all state regulations and would do laundry for twenty-seven cents a pound for
three years.
[¶12.] On May 9, 1988, Lavoie met again with
Ockinga to discuss Lavoie's written proposal. Ockinga said he was pleased with
the proposal. Lavoie said he would meet with his banker to tell him what was
going on, meet with his accountant to do the proper paperwork, and meet again
with his banker to obtain a loan to remodel his facility, and then apprise
Ockinga of the outcome.
[¶13.] Upon leaving Ockinga's office, Lavoie
went to see his banker, Charles Krebs. Lavoie told him about his opportunity to
do Safecare's laundry and that he would be meeting with his accountant to
prepare the necessary documents to apply for a loan.
[¶14.] Next, Lavoie contacted equipment vendors
and obtained prices on the equipment he would need in his remodeled facility. He
then met with his accountant, Dave Prina, and they worked on a loan proposal
which culminated in a loan proposal letter dated May 20, 1988, which they
submitted to Lavoie's banker, Krebs.
[¶15.] In Lavoie's May 20 loan proposal letter
to Krebs, Lavoie set forth a proposal to expand his existing business. After
stating a history of his business, he recited his basic proposal underlying his
request for a $30,000 loan:
1.
First Wyoming Bank commit to Section I - costs to remodel existing building
(refer to Exhibit D) of approximately $3,900.00. Then the owner, Phil Lavoie,
will have the State of Wyoming issue a preliminary certification for
commercial laundry. This work needs to be completed by June 15,
1988.
2.
Owner, Phil Lavoie, then will go to Board of Lander Valley Regional Medial
Center to show state certification of facilities and ask for a signed contract.
The first Wyoming Bank will also need to commit to the balance of the costs of
approximately $27,000.00 (Total costs
$30,801.57
minus the $3,900.00 in number 1 above.)
3. If
contract is obtained and the balance of the project monies are received, then
the commercial laundry facilities should be operational by August 15,
1988.
The
first monthly payment on the new note at First Wyoming Bank should commence in
September, 1988. All other existing debt payments are made timely during the
construction phase. (Emphasis added).
[¶16.] Among the several reasons for the bank to
make the loan, in addition to the Safecare opportunity, the May 20 letter
included the reason that through this expansion Lavoie would be able to acquire
additional commercial laundry business from area motels and other
hospitals.
[¶17.] On May 20, 1988, Lavoie and his
accountant met with Krebs at his office to discuss the loan proposal letter.
Krebs told Lavoie he was proceeding in a proper manner. Lavoie said he needed a
small amount of the loan money to do the interior remodeling; then, in Lavoie's
words, "if we were able to get the certification from the state then I would
need the rest of the money in order to put the equipment in place." Krebs said
the bank's loan committee would meet on the loan proposal and "probably approve
the whole package." Krebs told Lavoie, in Lavoie's words, "You just take
whatever you want, the first part first, and let me know when you need the
second part * * *."
[¶18.] A day or so after this May 20 meeting,
Krebs called Lavoie informing him the whole loan package was approved and loan
proceeds would be disbursed upon Lavoie's request. Krebs also told him he
[Krebs] would notify Brown and Ockinga by letter that Lavoie had proper
financing.
[¶19.] On May 24, 1988, Lavoie met with Ockinga
and told him that he had obtained the loan. Ockinga said, in Lavoie's words, "if
we got certified by the State Department of Health we would do
business."
[¶20.] Lavoie then met with Krebs at the bank
and was told, in Lavoie's words, "to go ahead and get started." Lavoie began
remodeling his facility. Pierson, Safecare's plant manager and head of
maintenance, came by to see the remodeling work.
[¶21.] By letter dated June 8, 1988, addressed
to Ockinga, Krebs assured him that Lavoie had made the proper financial
arrangements with the bank to fund the remodeling and related costs necessary to
receive state certification. Lavoie approved of Krebs' sending that letter since
it was very important, before he had a contract with Safecare, to show Safecare
that he would be able to handle Safecare's laundry business in a satisfactory
manner. Lavoie believed that Krebs' letter enhanced his credibility with the
prospective client.
[¶22.] On June 16, 1988, in accordance with
arrangements previously made by Lavoie, Francis Reuer, a design engineering
consultant with the state health department, inspected Lavoie's facility. At
that time Reuer told Lavoie, in Lavoie's words, the facility "[w]as approved as
soon as we got [some conditions] done." In Lavoie's words, Reuer "thought all we
needed to do was to correct these areas and take care of those things and it
wouldn't be a problem." Following Reuer's inspection, Lavoie called Ockinga,
told him the result of Reuer's inspection, and arranged to meet with Ockinga the
next day.
[¶23.] Lavoie concedes, concerning the above and
foregoing activities and events, no contract, oral or written, existed between
Safecare and him. Concerning the meeting with Ockinga on June 17, 1988, however,
Lavoie contends that in that meeting Safecare and he made the oral contract on
which his suit is based. Consequently, we now focus our attention on the facts
of that allegedly significant meeting.
[¶24.] In both his deposition, taken on February
27, 1990, and his affidavit, executed on May 11, 1990, Lavoie describes the June
17 meeting. According to his affidavit, Lavoie met Ockinga to inform him that
Reuer "had inspected the laundry the day before and things were progressing
well; that at this time I explained to Mr. Ockinga I was going to get the
remainder of the loan proceeds and purchase the equipment necessary to complete
the laundry facility and Mr. Ockinga told me everything looked good and to go
for it * * *." On this same subject, Lavoie's deposition testimony was that he
told Ockinga that Reuer had approved the laundry facility the day before; he
gave Ockinga a copy of Krebs' June 8 letter and explained that he, in Lavoie's
words, "had just borrowed a pickup full of money to do the interior remodeling
to get the [state's] certificate, that if [he] was to proceed further [he] would
be borrowing a semi-truck full of money, and without his business [he] could not
service the debt, and [he] needed to know where [he] stood." According to
Lavoie, Ockinga then told him he had liked Lavoie's initial proposal that Lavoie
had sent to Brown and him and, in Lavoie's words, "we were in a positive mode;
`go for it.'" Ockinga also said, in Lavoie's words, "we were going to save him a
lot of money, we were closer, we were in the county * * * `go for it; we will do
business.'" According to Lavoie, Ockinga said Safecare would require Lavoie to
submit a policies and procedure manual with which Lavoie's operation would
comply; Ockinga suggested that Lavoies hire Jean Palladino, a former Safecare
employee, to prepare such a manual. Ockinga also told Lavoie to resubmit his
written proposal to Brown, Simcoe, and him, and he told Lavoie that Pierson had
earlier visited Lavoie's facility at Ockinga's direction. Lavoie asked Ockinga
if Steiner Corporation was going to submit a bid for another three years.
Ockinga told him he had contacted Steiner several weeks earlier, had not had
contact since, and "not to worry about it, period," in Lavoie's
words.
[¶25.] According to Lavoie, when he left the
June 17 meeting, he anticipated he would get a signed contract. In his words, he
"figured it was the normal course of business when we do business up here." He
thought that either Brown or Ockinga would sign the contract on Safecare's
behalf.
[¶26.] By identical cover letters dated June 27,
1988, Lavoie resubmitted his written proposal to Brown, Simcoe, and Ockinga. In
his cover letter Lavoie stated that Reuer had inspected and approved Lavoie's
facility on June 16 and Lavoie was working on the exceptions or conditions which
Reuer had listed. He referred to Reuer's letter dated June 20, a copy of which
was enclosed. Lavoie's cover letter further stated that Reuer's conditions would
be completed by July 27 and that Lavoie was, in Lavoie's words, "requesting a
meeting with you and your staff to discuss the possibility of entering
negotiations with your facility for the laundry business."
[¶27.] In addition to resubmitting to Safecare
his written laundry proposal, Lavoie called Jean Palladino to see if he could
hire her to prepare the policies and procedures manual. Lavoie and Palladino met
on July 11, but apparently did not sign the written agreement under which he
hired her until July 12 or shortly thereafter.
[¶28.] After Lavoie resubmitted his written
laundry proposal on June 27, he called Ockinga and arranged a meeting. According
to Lavoie, this meeting took place on or about July 7, 1988. Attending the
meeting were Lavoie, Brown, Pierson, Ockinga, and Safecare infection control
nurse Pat Moore. According to Lavoie, at this meeting he discussed the
possibility of entering negotiations with their facility for the laundry
business. Safecare representatives were to make an inspection of Lavoie's
facility the next day. That inspection was the first one made by Safecare since
discussions began in late April. Pierson and Moore made the inspection on July 8
and questioned Lavoie as to when various pieces of equipment would be installed
and certain conditions completed.
[¶29.] Several days later Lavoie tried,
unsuccessfully, to talk to Brown on the telephone. Finally, on July 12, while in
Lander, Lavoie called Brown and talked to him. Brown told Lavoie there was no
need to meet and Safecare was no longer interested. Brown told Lavoie he had a
bad site report. Despite Lavoie's request to meet and discuss the situation,
Brown told him he did not want to meet or talk. Brown told him he [Lavoie] might
talk to Ockinga; then Brown hung up.
[¶30.] Lavoie went to the LanderRegionalMedicalCenter and found Ockinga. Ockinga said
there was a bad site report from Pierson's and Moore's July 8 inspection. They discussed the
various site items raised by Ockinga, with Lavoie defending each one. Ockinga
said perhaps he and Brown should look at the facility.
[¶31.] Six days later, on July 18, Lavoie called
Reuer and asked him to again inspect the facility; he set it for July 22. Lavoie
then telephoned Ockinga and told him about Reuer's upcoming inspection. Ockinga
said he would talk to Brown and get back to him.
[¶32.] On July 22, Reuer inspected Lavoie's
facility and told Lavoie to let him know when, in Lavoie's words, "all these
things are done" and "there's no problem * * *." Lavoie concedes that the
air-exchange unit had not arrived yet. By letter dated July 26, Reuer confirmed
his inspection and listed three conditions: Lavoie had told him the air exchange
unit would be available the middle of August; the fluorescent light tubes
required protective sleeves; and the intersection of the outside walls with the
floors needed to be tightly sealed from a sanitation
standpoint.
[¶33.] In a telephone conversation on July 27,
Ockinga told Lavoie that Brown and Pierson would visit the facility the next
day. They visited the facility and discussed its clean appearance, the need for
a certain door, installation of the air-exchange unit, and the status of the
policies and procedures manual that Palladino was preparing for Lavoie. Lavoie
said he would deliver the manual the next day; he asked Brown if he could have a
decision to which Brown replied that he would meet with his staff and someone
would get back to him.
[¶34.] The next day Lavoie got the manual from
Palladino, took it to Ockinga, and talked to him. Ockinga told him Safecare's
decision to go again with Steiner was final.
[¶35.] By letter dated August 10, 1988, Lavoie
wrote Brown that he intended to sue Safecare for reneging on its promises.
According to Lavoie's affidavit, by August 28, 1988, all the remodeling and
equipment installation, including the air exchange unit, were
completed.
DISCUSSION
1. The Breach of Contract
Claim
A. The Complaint
[¶36.] We begin our analysis by parsing Lavoies'
complaint to identify what kind of contract they pleaded. See Davies v. Martel
Laboratory Services Inc., 189 Ill. App.3d 694, 136 Ill.Dec. 951, 545 N.E.2d 475 (1989). In paragraph 5, Lavoies allege that on May 3 they submitted "their
proposal and offer." This was the written laundry proposal which recited that
Lavoies proposed doing Safecare's laundry for three years at a price of
twenty-seven cents a pound. In this written proposal Lavoies said nothing about
remodeling their facility, buying and installing equipment, and obtaining state
approval in exchange for a Safecare promise to pay them for three years' laundry
service. In paragraph 7, Lavoies allege that Krebs' June 8 letter stated "the
bank was aware of the remodeling requirements of the contract and related
costs." However, the letter states the bank was aware of the remodeling
requirements "regarding" the contract about which there had been negotiations.
Moreover, Lavoies admit there was no contract in existence on or around June 8.
Indeed, Lavoies claim unequivocally in their appellate argument that it was not
until June 17, when Ockinga uttered the words, "Go for it; we will do business,"
that an oral contract was formed. And at no time have the Lavoies claimed that a
written contract ever existed.
[¶37.] In paragraph 8, Lavoies alleged that at a
meeting during the week of May 24, Ockinga informed Lavoie that state
certification approving Lavoies' remodeled facility "would also be a
prerequisite to a contract between the parties for laundry services." As Mr.
Lavoie's deposition testimony revealed, however, the only meeting that week
between Lavoie and Ockinga was on May 24, and at that meeting Ockinga simply
said, in Lavoie's words, "if we got certified * * * we would do business."
[¶38.] In paragraph 11, Lavoies alleged their
facility received "a favorable rating and approval" from the state on June 16.
In paragraph 12, Lavoies alleged that "Ockinga expressed satisfaction with [Lavoies'] proposal * * * [and]
accepted [Lavoies'] offer and at that time the parties verbally and mutually
agreed to do business together according to the terms discussed." (emphasis
added).
[¶39.] In paragraph 20, Lavoies alleged that on
May 3, pursuant to Safecare's request they "tendered an offer by proposal for
health care institution linen and laundry services to [Safecare]." In paragraph
21, Lavoies alleged that on June 17 they "demonstrated that all conditions
imposed by [Safecare] had been or could be met or surpassed by August 15, 1988,
the date stipulated by [Safecare]"; Lavoies further alleged that at that
meeting, "the parties agreed on all terms and conditions of a contract."
Continuing this theme in paragraph 22, Lavoies alleged that at the June 17
meeting:
[Safecare]
promised to purchase its * * * laundry services at a mutually agreed upon price
per pound exclusively from [Lavoies] commencing on August 15, 1988, for a three
(3) years period until August 14, 1991. In exchange [Lavoies] agreed to a
certain schedule of delivery, and pick-up, certain policies and procedures in
processing [Safecare's] linen and laundry, remodeling and refitting [their
facility] to process [Safecare's volume], meeting the requirements and achieving
certification from the [state] and to service all [Safecare's] laundry and dry
cleaning needs during the stipulated period.
[¶40.] In paragraph 23, Lavoies alleged that before August 15, 1988, they incurred
substantial expense and obligations by performing these conditions: obtaining
financing, remodeling and refitting their facility, achieving state
certification and commissioning a policies and procedures manual. In paragraph
24, Lavoies alleged that on July 29, 1988, Safecare repudiated the contract
unequivocally. We find these allegations in paragraphs 23 and 24 rather curious
in light of the undisputed facts from Mr. Lavoies' own testimony. He applied for
and obtained financing voluntarily, not in exchange for or in reliance on
Safecare's demand or promise, and he did so before his meetings with Ockinga on
May 24 and June 17. Similarly, he began remodeling before his June 17 meeting at which he
claims the oral contract was formed. Likewise, he testified that he received
state approval on Reuer's inspection on June 16, the day before the parties
allegedly formed the oral contract. Concerning the allegation that Safecare
unequivocally repudiated the June 17 oral contract on July 29, Lavoie testified
Safecare's Brown told him unequivocally on July 12 that Safecare was no longer
interested. Also on July 12 or shortly thereafter, Lavoie signed a written
contract with Jean Palladino to prepare the manual, but Lavoie failed to tell
her to stop work even after Brown had told him that very day that Safecare was
not interested.
B. The Summary
Judgment
[¶41.] After reading the parties' memoranda and
hearing their arguments at a hearing and after considering the evidence in light
of the Lavoies' complaint, the trial court concluded that no genuine issue of
material fact existed about the contract which the Lavoies sought to enforce.
The court found that the Lavoies were alleging the formation of an oral contract
to be performed over a period greater than a year, namely three years. The court
also found that when Mr. Lavoie left the June 17 meeting he anticipated there
would be a signed contract.
[¶42.] In granting summary judgment for
Safecare, the trial court held that the alleged oral three-year contract was
void under Wyo. Stat. § 1-23-105 (1988), the statute of frauds, because there
was no writing signed by Safecare, the party to be charged. The trial court also
held that the Lavoies demonstrated no proof that Safecare perpetrated fraud on
the Lavoies which would have estopped Safecare from invoking the statute of
frauds.
C. Our Analysis
[¶43.] In their appellate argument, both oral
and written, the Lavoies contend, contrary to their complaint allegations, that
their May 3 written proposal was an "offer" with which Ockinga expressed
satisfaction and which Ockinga accepted, and that on June 17 the parties formed
an oral unilateral contract. As explained by the Lavoies, this oral unilateral
contract consisted of Ockinga's "promise" to buy Lavoies' laundry services for
three years if Lavoies would remodel and refit their facility and obtain state
approval of it. In the Lavoies' view of this unilateral contract, by their
performance of these conditions (remodeling and refitting their facility and
obtaining state approval) within one year's time, and arguably by August 15,
1988, as allegedly required by Safecare, they accepted Safecare's "offer" and
had fully performed the oral contract. Since they had fully performed, they
claim Safecare was bound to fulfill its promise to pay for three years' laundry
service.
[¶44.] The Lavoies' oral unilateral contract
theory is directly at odds with the type of contract they pleaded in their
complaint. In paragraph 22, they alleged that in exchange for Safecare's promise
to buy its laundry services for three years from the Lavoies, Lavoies "agreed"
[promised] to adhere to a pick-up and delivery schedule, abide by policies and
procedures, remodel and refit their facility, achieve state approval, and
service Safecare's laundry and dry cleaning needs for three years. Indeed, as
Safecare points out, Lavoies appear to have pleaded a bilateral contract, that
is, a promise for a promise.3 Safecare also points out that
Lavoies did not fully perform their promise as pleaded since they have never
done one day's worth of Safecare's laundry.
[¶45.] The Lavoies concede that if in fact the
alleged contract were bilateral, as Safecare maintains, then it would be within
the statute of frauds and, to be valid, have to be in writing and signed by
Safecare, the party to be bound. Under a bilateral contract theory, the alleged
oral contract would be invalid and, legally, no contract would
exist.
[¶46.] We are inclined to conclude that the
Lavoies' complaint pleaded the formation of an oral bilateral three-year
contract for laundry services. We shall analyze the propriety of the summary
judgment under the Lavoies' oral unilateral contract position, however, because
that is the position they have presented to us. See 1 E. Allen Farnsworth,
Farnsworth on Contracts § 2.3, at 65 (1990). Let us be clear about that
position. Lavoies claim the contract was this: Safecare, as the
promisor/offeror, promised or made the "offer" to pay Lavoies to do Safecare's
laundry for three years if Lavoies accepted that "offer" by performing the
conditions of: 1) remodeling their facility, 2) purchasing and installing
laundry equipment, and 3) obtaining state approval to operate a commercial
laundry handling health care institution laundry. They claim that Safecare,
through its agent Ockinga, made that promise or "offer" at the June 17 meeting
when he uttered the words, "We will do business; go for it," in response to
Lavoie's inquiry about needing to know where he stood before he requested a
"semi-truck full of loan proceeds" to purchase laundry equipment. They claim
that in exchange for and reliance on that "offer," they accepted that "offer" by
performing, i.e., remodeling, requesting additional loan proceeds, buying and
installing equipment, obtaining state approval, and commissioning Jean Palladino
to prepare the manual.
[¶47.] The Lavoies' unilateral contract position
is untenable for a variety of reasons. To explain, we return to fundamental
principles of contract and agency law. Whether an oral contract exists "depends
on the intent of the parties and is a question of fact." Wyoming Sawmills, Inc. v. Morris, 756 P.2d 774, 775
(Wyo. 1988).
See also Miller v. Miller, 664 P.2d 39, 41 (Wyo. 1983); and Jim's Water Service, Inc. v. Alinen, 608 P.2d 667, 669-70 (Wyo. 1980).
It is well established
that an offer, acceptance, and consideration are the basic elements of a
contract. The burden of proving a contract is on the one seeking to recover on
it. Black & Yates, Inc. v. Negros-Philippine Lumber Company, 32 Wyo. 248, 231 P. 398
(1924). This includes the burden of proving consideration.
Miller,
664 P.2d at 40 (citation omitted).
[¶48.] In Continental Ins. v. Page Engineering
Co., 783 P.2d 641, 651 (Wyo. 1989) (citations omitted), this court
observed:
It is
an axiom of the law of contracts that, in the absence of a meeting of the minds,
there is no contract. Thus, in an instance in which the terms of the contract
are so uncertain that mutuality of agreement cannot be discerned, the contract
is unenforceable because of uncertainty. Certainly, parties can create an
implied contract by their conduct, but the conduct from which that inference is
drawn must be sufficient to support the conclusion that the parties expressed a
mutual manifestation of an intent to enter into an agreement. Although the
question of whether particular conduct is sufficient to support a finding that
an implied contract exists is generally submitted to a trier of fact, the
question may be resolved by summary judgment if reasonable minds could not
differ.
[¶49.] In their complaint the Lavoies alleged
that Safecare through its agent Ockinga made the "offer" and that they accepted
that "offer" by performance. Implicit in this allegation is the claim that
Ockinga had authority to bind Safecare to a contract. A party claiming an agency
relationship, such as the Lavoies here, has the burden of proof on that issue as
well as on the issue of the scope of the agent's authority. Stone v. First
Wyoming Bank N.A., Lusk, 625 F.2d 332, 343 (10th Cir. 1980); Czapla v. Grieves,
549 P.2d 650, 653-54 (Wyo. 1976).
[¶50.] In support of Safecare's summary judgment
motion, Safecare submitted Ockinga's deposition testimony that he had no
authority to bind Safecare, a corporation. In the face of Safecare's summary
judgment evidence that its agent, Ockinga, had no authority to contract with the
Lavoies, the burden on that issue of fact shifted to the Lavoies. They failed to
counter with any evidence that Ockinga possessed such authority. In regard to
this matter, a brief review of their knowledge is revealing. In both the April
29 and June 17 meetings between Lavoie and Ockinga, the latter asked the former
to send his written proposals to both Brown and Simcoe, the chief administrators
of Safecare's health care facilities. The Lavoies did so. In Lavoies' May 20
loan proposal to the bank, Lavoie expressly stated he would show the state's
certification to Safecare's board and ask for a signed contract. This is strong
evidence the Lavoies knew that only Safecare's board had authority to contract.
They knew they were dealing with a corporation. A corporation's comptroller,
like Ockinga, generally has no authority to contract on behalf of the
corporation. Harry G. Henn and John R. Alexander, Laws of Corporations § 225, at
595-99 (3d ed. 1983). Under Wyoming statutory law, a corporate officer,
such as comptroller, has only such authority and duties as set forth in the
corporate bylaws or as prescribed by the board of directors. Wyo. Stat. § 17-16-841
(1989). Cf.,
United States v.
Marin, 651 F.2d 24, 28-29 (1st Cir. 1981). Also under Wyoming law, a third
person, such as the Lavoies, has a duty to exercise reasonable diligence to
determine the scope of an agent's authority. Trails Motors, Inc. v. First Nat'l
Bank of Laramie, 76 Wyo. 152, 175, 301 P.2d 775, 784 (1956). Having examined the summary judgment evidence in a light most
favorable to the Lavoies, we find that no genuine issue of material fact exists
about the scope of Ockinga's authority. We hold as a matter of law that he had
no authority to contract on Safecare's behalf and, consequently, no oral
contract came into being at the June 17 meeting.
[¶51.] Another reason exists to explain why the
Lavoies' unilateral contract position is untenable. There was no consideration
between Safecare and the Lavoies. As Restatement (Second) of Contracts § 75
(1981) provides, the consideration must both be sought by the promisor
(Safecare) in exchange for its promise and be given by the promisee (Lavoies) in
exchange for its promise. Under the undisputed facts, Lavoies' actions of
seeking and obtaining the loan from Krebs, undertaking remodeling, and seeking
and obtaining state approval on June 16 were not induced by Ockinga's alleged
promise uttered on June 17. As explained in Farnsworth, supra, § 2.7 at
73:
Only if
[performance] has not yet been taken when the promise is made can the promisor
be bargaining for it when making the promise. If the [performance] has already
been taken, the promisor cannot be seeking to induce it. Such "past
consideration" - [performance] already taken before a promise is made - cannot
be consideration for the promise.
[¶52.] The facts clearly show that both Lavoies
and Safecare intended that the purpose of negotiations was to achieve a written
contract, not an oral one. Lavoies knew that Safecare's existing contract with
Steiner Corporation was in writing. Lavoies' loan proposal to Krebs expressly
stated they envisioned a written contract signed by Safecare's board. Ockinga
told Lavoies to resubmit a written proposal to Brown and Simcoe. When Lavoie
left the June 17 meeting he contemplated a written contract. In Lavoie's June 27
cover letter he expressly stated he was requesting a meeting "to discuss the
possibility of entering negotiations * * *." Reasonable minds cannot differ on
the conclusion to be drawn from this undisputed evidence. No contract came into
being on June 17.
2. Promissory
Estoppel
A. The Complaint
[¶53.] In their complaint the Lavoies assert a
promissory estoppel claim based on the following allegations. They allege that
at the June 17 meeting Safecare, by agent Ockinga's conduct, accepted their
offer and promised to use Lavoies' laundry service for a three-year period.
Lavoies allege that Safecare reasonably expected its promise to induce Lavoies'
action. In that regard, the Lavoies contend that inducements were manifested by
the following Safecare acts: at the June 17 meeting agent Ockinga asked Lavoies
to obtain the remainder of available financing and complete the remodeling and
refitting of their laundry; at that meeting agent Ockinga voiced the expectation
that Lavoies would prepare a policy and procedure manual and recommended Jean
Palladino to prepare it; and on July 8, Pierson and Moore inspected the laundry
facility, making explicit Safecare's continuing supervision and expectation of
the Lavoies. The Lavoies claim that they incurred indebtedness, undertook
construction on and equipped their facility, hired Ms. Palladino, and obtained
state certification because of Safecare's inducements. They conclude by alleging
they substantially changed their position and relied, to their detriment, on
Safecare's promise and misleading declarations.
B. Promissory Estoppel
Law
[¶54.] Recently, this court reviewed and applied
its promissory estoppel jurisprudence in a similar case. The elements of
promissory estoppel are:
(1) a
clear and definite agreement; (2) proof that the party urging the doctrine acted
to its detriment in reasonable reliance on the agreement; and (3) a finding that
the equities support the enforcement of the agreement.
Inter-Mountain
Threading, Inc. v. Baker Hughes Tubular Services, Inc., 812 P.2d 555, 559
(Wyo. 1991) (quoting Provence v. Hilltop Nat'l Bank, 780 P.2d 990, 993
(Wyo.
1989)).
[In
Provence], we looked to National Bank of
Waterloo v. Moeller, 434 N.W.2d 887 (Iowa 1989). Moeller
correctly informs us that, with respect to the first element, a clear and
definite agreement, the "dual emphasis on clarity and inducement parallels the
Restatement (Second) definition of an agreement for purposes of promissory
estoppel as `[a] promise which the promisor should reasonably expect to induce
action * * * on the part of the promisee.' Restatement (Second) of Contracts §
90 (1981)."
Inter-Mountain
Threading, 812 P.2d at 559 (quoting Nat'l Bank of Waterloo v. Moeller, 434 N.W.2d 887, 889 (Iowa
1989)).
[¶55.] Measuring Ockinga's June 17 oral
statements against the first element, we cannot conclude they are promises clear
and unambiguous in their terms. His conversational remarks are, at best, mere
expressions of hope and opinion in an obviously preliminary negotiation context.
In somewhat analogous preliminary negotiation contexts, we have viewed similar
remarks as mere expressions of opinion and agreements to agree. For instance, in
Inter-Mountain Threading, 812 P.2d at 558, we held that the manager's oral
statement "we can do a deal" was not a clear and definite promise, but rather a
mere expression of hope and opinion in an obviously preliminary negotiation
context. See also Czapla, 549 P.2d at 653 (owner's agent made such remarks as
"This was as good as sold, that the deal would be final"); Roth, 684 P.2d at 95
(bank director made such remarks a "Things look very good at this time" and "You
don't have any * * * problems as long as I own the bank"); and Doud v. First
Interstate Bank of Gillette, 769 P.2d 927, 928 (Wyo. 1989) (bank president told loan applicant
that proposed line of credit was "not any problem"). See also Rialto Theatre v.
Commonwealth Theatres, Inc., 714 P.2d 328, 334 (Wyo. 1986) (portion of lease agreement "is
merely an agreement to agree in the future"). In similar cases other courts have
likewise found such expressions made in the course of preliminary negotiations
not to be promises. See e.g., Jungmann v. St. Regis Paper Co., 682 F.2d 195, 197
(8th Cir. 1982); Blanton Enterprises, Inc. v. Burger King Corp., 680 F. Supp. 753 (D.S.C. 1988); Tull v. Mr. Donut Dev. Corp., 7 Mass. App. 626, 389 N.E.2d 447, 449-50 (1979); Pacific Cascade Corp. v. Nimmer, 25 Wn. App. 552, 608 P.2d 266 (1980).
[¶56.] With respect to the second element of
promissory estoppel, that the Lavoies acted to their detriment in reasonable
reliance on Ockinga's oral remarks on June 17, the uncontroverted evidence, most
of which is taken from Lavoie's own deposition and affidavit, shows that Lavoies
had acted and incurred most of their obligations before the June 17 meeting at
which Ockinga made his remarks. Lavoies cannot rely upon statements not yet made
when they took action and incurred legal obligations. We hold they did not
change their position or suffer damages in reliance upon Ockinga's
statements.
[¶57.] With respect to Lavoies' incurring
damages after Ockinga's statements on June 17, Lavoies have failed to show that
their reliance on those statements was reasonable. The ingredients of Lavoie's
own loan proposal to his bank, as well as his deposition, reveal him to be an
experienced business person. For example, he knew that:
·
Safecare
had a written three-year laundry service contract with Steiner
Corporation;
·
written
contracts were the norm in business dealings of this
nature;
·
his
written proposals were being reviewed by Safecare's hospital administrators
Brown and Simcoe;
·
at the
June 17 meeting Ockinga told him to resubmit his written proposal to those
administrators and on leaving that meeting he anticipated there would be a
written contract; and
·
Safecare
acted through a board of directors (Lavoie's own loan proposal proposed
obtaining a signed contract from that board).
[¶58.] Finally, when Lavoie resubmitted his
written proposal on June 27, he stated in his cover letter that he was
requesting a meeting for the purpose of entering into negotiations. He knew that
Ockinga was only a financial officer of a corporation, and he did nothing to
determine the nature and extent of Ockinga's authority to act on Safecare's
behalf.
[¶59.] Lavoie did not contract with Jean
Palladino to prepare the policy and procedures manual until July 12 or a few
days later; it was on July 12 that Brown told him there would be no contract.
And, yet, Lavoie took no action to stop Palladino's preparation work after
that.
[¶60.] In many respects the Lavoies' claim is
reminiscent of the land developer's (Roth) claim in Roth, 684 P.2d at 93. There,
this court upheld a summary judgment in favor of the alleged promisor. Roth had
entered into extensive negotiations with the bank for a loan in order to develop
a subdivision. He had numerous conversations with the bank's loan officer, other
bank officials, and Keith West, a bank director. One evening Roth hosted a
dinner party in order to show an official from the Federal National Mortgage
Association (FNMA) that the development was a good project to finance. Bank
director West attended at Roth's invitation. Before dinner a guest asked West
about the status of Roth's loan, to which West replied, "Things look good at
this time." At dinner West was asked when Roth could start writing checks on the
loan, to which West replied, "We'll be ready before [FNMA] will." Roth asked
West about the loan's status, saying, "If I didn't have that loan I was in real
trouble." West replied, "You don't have any * * * problems as long as I own the
bank."
[¶61.] Roth immediately ordered a deed to the
land and ordered contractors to start turning the dirt. Two months later the
bank denied the loan. Roth contended that the course of negotiations, capped by
West's remarks at the dinner party, induced him to incur substantial expense; he
asserted that both West and the bank were estopped from asserting the
nonexistence of the construction loan.
[¶62.] In affirming the summary judgment against
Roth, this court found that the uncontroverted evidence, most of which was taken
from Roth's deposition, showed that Roth had entered into most of his contracts
before the dinner party and West's remarks. This court held that Roth could not
rely upon a statement not yet made when he entered into these contracts and
incurred legal obligations. This court found Roth did not change his position or
suffer damages in reliance upon West's statements. Id. at
97.
[¶63.] With respect to Roth's incurring damages
after West's representations, this court said Roth had to show that his reliance
on those representations was reasonable. On this point the court noted that Roth
was an experienced business person with a wide background of obtaining loans,
that bank representatives had informed Roth in various conversations that they
needed more information, that Roth should have known that he did not have a loan
or even a loan commitment from the bank until a bank official or loan officer
told him the loan was approved. In view of this evidence, this court held that
Roth's reliance upon West's statements at the dinner party was unreasonable as a
matter of law. This court further observed Roth knew that West did not own the
bank, did not make loans, and was a member of a board that makes decisions as a
board. Roth, 684 P.2d at 97.
[¶64.] We find our analysis in Roth compelling
here. In the face of undisputed evidence, we hold that Lavoie's reliance upon
Ockinga's remarks on June 17 was unreasonable as a matter of
law.
[¶65.] With respect to the final element of
promissory estoppel, whether the equities support enforcement of the alleged
promise, we treat that as a question of law. Inter-Mountain Threading, Inc., 812 P.2d at 560. On the record before us there is no showing that Lavoies are unable
to use their remodeled laundry facility and additional equipment to good
advantage, and no showing they are unable to obtain laundry contracts. To the
contrary, the undisputed evidence reveals they enjoy increased business and have
been moderately successful in developing and retaining new business. Their
success in this regard conforms to some of the expectations expressed in their
May 20, 1988, loan proposal to their banker. We hold that the equities do not
support enforcement of the alleged promise.
[¶66.] We note in conclusion that since the
Lavoies have failed to create a genuine issue of material fact relating to
Ockinga's authority to bind Safecare, the lack of that authority is also fatal
to Lavoies' claim of estoppel against Safecare as principal. United States v. Certain Parcels of Land in the
City of Cheyenne, 141 F. Supp. 300, 309. (D.Wyo.
1956).
3. Fraud
A. The Complaint
[¶67.] In their fraud claim the Lavoies alleged
that Safecare agent Ockinga at the June 17 meeting made the material
representation that the parties would "do business." Lavoies alleged that
representation was false when made and Safecare at that time knew it was false.
As proof of Safecare's intention on June 17 not to form an exclusive
relationship with the Lavoies, Lavoies point to Safecare's contemporaneous
negotiations with Steiner Corporation on a renewal of the existing written
laundry services contract.
B. The Elements of a Fraud
Claim
[¶68.] In Duffy v. Brown, 708 P.2d 433, 437
(Wyo. 1985)
(citations omitted), this court stated:
The elements of a
claim for relief for fraud are a false representation made by the defendant
which is relied upon by the plaintiff to his damage, the asserted false
representation must be made to induce action, and the plaintiff must reasonably
believe the representation to be true. A plaintiff who alleges fraud must do so
clearly and distinctly, and fraud will not be imputed to any party when the
facts and circumstances out of which it is alleged to arise are consistent with
honesty and purity of intention. Fraud must be established by clear, unequivocal
and convincing evidence, and will never be presumed.
[¶69.] The Lavoies' fraud claim fails for
several reasons. First, as with the promissory estoppel claim, Ockinga's lack of
authority is fatal to the fraud claim against Safecare as principal. Certain
Parcels, 141 F. Supp. at 309. Second, it is clear from the record that a showing
of fraud was not made by clear and convincing evidence. The uncontroverted facts
show that Lavoie did not rely on Ockinga's June 17 statement in submitting the
May 3 written proposal in which they agreed to meet or exceed all state
regulations pertaining to health care institutional type laundry and stated in
their cover letter that "we now have the capability to handle all of your health
care institutional laundry * * * needs." Nor may Ockinga's statement be claimed
as the reason for arranging Reuer's visit to secure state approval of their
facility or to meet with their accountant and prepare a loan proposal which was
subsequently submitted to their bank on May 20 and approved on May 21. Likewise,
it cannot be seriously argued that Ockinga's statement induced Lavoies to
initiate the remodeling of their facility which encouraged their banker to write
his June 8 letter enhancing their credibility with Safecare as a prospective
client, or to meet with Reuer on June 16 to obtain state approval of their
facility.
[¶70.] Moreover, in his deposition Lavoie could
not designate the factual basis for their fraud claim. When asked what facts he
relied on for the allegation that Ockinga knew his statement was false and was
intentionally misleading Lavoie, Lavoie replied, not with facts, but with only
conclusions and opinions, such as "we don't have the contract. We're in
financial straits because we did what he told us to do." In Duffy, faced with a
similar response to a similar question, this court found no basis for a fraud
claim. Duffy, 708 P.2d at 438.
[¶71.] The Lavoies claim Ockinga's testimony,
viz., that the purpose of his negotiations with them was to provide Safecare
with an option to Steiner Corporation, creates a genuine issue of material fact
as to whether on June 17 he knew his statement was false. We disagree. It is not
uncommon in business dealings for the parties to seek the best terms possible,
to engage in similar negotiations with two or more parties in order to determine
where the best deal is. Businesses are presumed to act in their own
self-interest. The facts and circumstances surrounding Ockinga's seeking laundry
service options for Safecare are consistent with honesty and purity of
intention. Duffy, 708 P.2d at 437. We hold there is no genuine issue of material
fact about Safecare's intention. Lavoies' fraud claim
fails.
[¶72.] In summary, we affirm the trial court's
summary judgment against Lavoies on their claims of breach of an oral contract,
promissory estoppel and fraud.
FOOTNOTES
1 Lavoies have not
appealed the issue of breach of an implied covenant of good faith and fair
dealing.
2
Laundry Proposal
3 1 E. Allen Farnsworth, Farnsworth
on Contracts § 2.3 at 64-65 (1990).
THOMAS, Justice,
dissenting.
[¶73.] I, too, must dissent from the holding of
the majority that the summary judgment in this case should be affirmed. I agree
with much of what is said in the separate dissent of Justice Urbigkit, but I
acknowledge that the issue of apparent authority may not be one of material fact
if the Lavoies are foreclosed by the statute of frauds or other legal theories.
Furthermore, I do not see the theory of part performance in the same light as
Justice Urbigkit. For these reasons, I do not join in Justice Urbigkit's
opinion. Instead, my concern is with the disposition of the theory of promissory
estoppel. In my view, the majority has treated a question of fact as a question
of law and has applied the standard for reviewing a judgment notwithstanding a
verdict to justify the summary judgment.
[¶74.] I do note, with respect to apparent
authority, a contradiction on of the slip opinion, where the majority first says
that the comptroller generally has no authority to contract on behalf of the
corporation, but then includes the comptroller among the corporate officers with
such authority pursuant to Wyoming statutes. Actually the statutes make
the issue depend upon the corporate bylaws and the authority of an officer
described in the bylaws who can assign the duties of others. The record in this
case does not foreclose Ockinga's authority to contract, and there are ample
indications of his apparent authority.
[¶75.] The thrust of the majority opinion is
that there is no genuine issue of material fact with respect to the reliance
element of promissory estoppel because that is a question of law. As I analyze
the majority opinion, the first fallacy presented in resolving the case is
contained in that thesis. I don't agree. Whether the Lavoies reasonably relied
upon the conduct of Ockinga and other representatives of Safecare is a question
of fact, not of law. I am satisfied that, as is generally true of subjective
factors, the reasonableness of the conduct of a party is a question for the
trier of fact to resolve. The majority attaches no significance to the various
ways in which Lavoie said he had relied upon the conduct of Safecare and its
representatives. Instead, the majority says he could not have relied upon that
conduct because, as a matter of law, it was not reasonable for him to rely upon
such conduct.
[¶76.] I am inclined to relate this situation
very directly to our case of Inter-Mountain Threading, Inc. v. Baker Hughes
Tubular Services, Inc., 812 P.2d 555 (Wyo. 1991). The majority rely
substantially on that case, but it is important to recall that there we were
reviewing an order granting a judgment notwithstanding a verdict. Therein lies
the second fallacy; the majority treats this case like one in which a directed
verdict should be granted in affirming the summary
judgment.
[¶77.] In Western Surety Co. v. Town of
Evansville, 675 P.2d 258, 264 (Wyo. 1984), we adopted
the following language quoted in Hughes v. American Jawa, Ltd., 529 F.2d 21, 25
(8th Cir. 1976):
It is only where it is
perfectly clear that there are no issues in the case that a summary judgment is
proper. Even in cases where the judge is of opinion that he will have to direct
a verdict for one party or the other on the issues that have been raised, he
should ordinarily hear the evidence and direct the verdict rather than attempt
to try the case in advance on a motion for summary judgment, which was never
intended to enable parties to evade jury trials or have the judge weigh evidence
in advance of its being presented. Pierce v. Ford Motor Co., 190 F.2d 910, 915
(4th Cir), cert. denied, 342 U.S. 887, 72 S. Ct. 178, 96 L. Ed. 666
(1951); accord, Williams v. Chick, 373 F.2d 330, 331 (8th Cir. 1967).1
I am
satisfied that, at least subliminally, the majority was sensitive to this rule,
but still it substituted the standard for reviewing a judgment notwithstanding
the verdict into this summary judgment case. That standard is summarized in
Inter-Mountain, 812 P.2d at 558-59:
When
this appellate court is faced with a JNOV question, we undertake a full review
of the record without deference to the views of the trial court. Cody v. Atkins,
658 P.2d 59, 61-62 (Wyo. 1983). In determining whether a JNOV
motion should be granted, we consider "whether the evidence is such that without
weighing the credibility of the witnesses, or otherwise considering the weight
of the evidence, there can be but one conclusion reasonable persons could have
reached * * *." Erickson v. Magill, 713 P.2d 1182, 1186 (Wyo. 1986). In our review
we consider the evidence favorable to the nonmoving party, giving it all
reasonable inferences. Carey v. Jackson, 603 P.2d 868, 877 (Wyo.
1979). A court should cautiously and sparingly grant JNOV motions. Erickson, 713 P.2d at 1186.
Read
carefully, it is apparent the majority is saying that reasonable persons could
reach only one conclusion from the facts incorporated in this record. That is
not the standard for summary judgment review, however, where we look only for
issues of fact, not resolutions. In order to avoid that hurdle, the majority has
described the question of reasonable reliance as one of law rather than
acknowledging it is a question of fact as to which there is a genuine issue in
this instance.
[¶78.] I would hold that there is a genuine
issue of material fact in this case with respect to the elements of promissory
estoppel as articulated in Inter-Mountain. I would, therefore, reverse the
summary judgment in favor of Safecare, and I would remand the case for trial on
that theory, as pleaded by the Lavoies.
FOOTNOTES
1In Cody v. Atkins, 658 P.2d 59, 61 (Wyo. 1983), we quoted from Town of Jackson v. Shaw, 569 P.2d 1246,
1250 (Wyo. 1977), to reaffirm the standard for reviewing a directed verdict, and
went on to hold that "[t]he test then for granting a J.N.O.V. is virtually the
same as that employed in determining whether a motion for directed verdict
should be granted or denied." Cody, 658 P.2d at 62.
URBIGKIT, Justice,
dissenting.
[¶79.] In dissenting to the present decision, I
object to a very serious procedural appellate review misdirection now utilized.
This error is found in the substantive factual decision the majority now makes
on a nonlitigated issue not previously considered by the trial court, counsel or
presented by appellate briefing. In result, the majority makes a first time
considered factual determination in the appellate decision. We eliminate
participation of counsel in the decisional process and combine the trial court
nisi prius fact finding with appellate review to approve summary judgment on a
concept completely not argued and factually undeveloped by
anyone.
[¶80.] This case, previously non-litigated, is
now decided on the question of the actual or ostensible authority of the
negotiating comptroller to make a binding laundry service contract while acting
and negotiating within his duties as the chief financial officer of the
hospital.
[¶81.] To understand the structure of this
appeal, we must recognize that the trial court applied the statute of frauds to
grant summary judgment disposition as a matter of law, Cordova v. Gosar, 719 P.2d 625, 636 (Wyo. 1986) (stage five), for all elements of
the claim except fraud. In adversely determining the fraud allegation, the trial
court found there were insufficient grounds in pleading or evidence to sustain
the claim against a summary judgment disposition. Id. at 635-36 (stages one
and four). The trial court was neither presented with a contested claim nor
thereafter made a finding that Mike Ockinga, "Chief Financial Officer of
Defendant," lacked authority to negotiate or make the deal which is the subject
matter of this litigation. The majority now extracts from the evidence a factual
conclusion which was not developed by assertion of affirmative defense or
briefing argument. This result is achieved without citation of authority
demonstrating why Ockinga, as the comptroller and chief financial officer of the
hospital, would not have authority to negotiate a relatively modest laundry
contract.
[¶82.] Within the broad sweep of summary
judgment application, the majority has consequently shifted its review from
considering the matter of law resolution to now addressing a factual concern by
decision that there is no conflict in the evidence. Compare Cordova summary
judgment (stage five) with the Cordova controlling legal principle ratio
decidendi that no factual issue exists (stage six). The difference in
application of principles of appellate review is divided by a gap figuratively
as wide as the Grand Canyon. If the statute of
frauds applies, issues of authority are not involved. Any decision where the
title and character of the officer of negotiation is similar to what is found
here overtly presents actual and apparent authority concepts of factual
conflict. Affirming the fact finding by the trial court even with a grant of
summary judgment might be one thing, a nisi prius fact finding function by this
court is quite another.
[¶83.] Considering we are deciding an issue that
was never litigated, I am forced to conclude on this record that the majority is
entirely wrong in its decision to justify the summary judgment that was granted
by the trial court based on statute of frauds. Since ostensible authority has
never been in question by pleading, argument, evidence or briefing, we now
embark on this fact finding exhibition with a very cloudy
record.
[¶84.] In initial complaint, Lavoie claimed
negotiatory sessions with "Mike Ockinga, Comptroller for and agent of defendant
LVRMC, in Ockinga's business office in the LVRMC to discuss a relationship which
would involve the plaintiffs providing laundry services to defendant Safecare."
Lavoie also alleged negotiations during an extended course of meetings,
including the exchange of correspondence, and then stated:
Mr.
Ockinga expressed satisfaction with plaintiffs' proposal, location, and their
price for laundry services, which amounted to a $10,000.00 savings to the
defendant per year. Mr. Ockinga accepted plaintiffs' offer and at that time the
parties verbally and mutually agreed to do business together according to the
terms discussed. Mr. Ockinga encouraged Mr. Lavoie to obtain the remaining
financing and complete the remodeling and refitting required by
defendant.
Further,
Lavoie contended:
17. On July 29, 1988, plaintiffs had met
or surpassed all the conditions mandated by defendant and notified defendant
thereof. * * *
* * * *
* *
21. On June 17, 1988,
plaintiffs demonstrated that all conditions imposed by the defendant had been or
could be met or surpassed by August 15, 1988, the date stipulated by defendant.
During the June 17th meeting between Mr. Lavoie and Mr. Ockinga, the parties
agreed on all terms and conditions of a contract.
22. On that occasion
defendant promised to purchase its health care institution linen and laundry
services at a mutually agreed upon price per pound exclusively from plaintiffs
commencing on August 15, 1988, for a three (3) year period until August 14,
1991. In exchange plaintiffs agreed to a certain schedule of delivery, and
pick-up, certain policies and procedures in processing defendant's linen and
laundry, a particular price per pound for processing defendant's linen and
laundry, remodeling and refitting Daisy Cleaners to process the volume of linen
and laundry generated by defendant, meeting the requirements and achieving
certification from the Wyoming Department of Health and Social Services and to
service all defendant's laundry and dry cleaning needs during the stipulated
period.
[¶85.] In answer, Safecare Health Service stated
in part:
Defendants
admit that certain meetings between Mike Ockinga and Plaintiffs occurred wherein
Plaintiffs and Mr. Ockinga discussed a potential business relationship in which
Plaintiffs' cleaning establishment might be utilized to process hospital
laundry. Defendants, however, deny all other allegations contained in paragraph
4 of Plaintiffs' Complaint.
Generally,
Safecare Health Service answered by denial of separate paragraphs which in many
cases were obviously true or, if not true, could not have been known to be
untrue by them. Of importance, however, are the affirmative defenses which were
separately stated as the following:
First Affirmative
Defense
As a
further and separate defense, Defendants state that Plaintiffs' claims and
causes of action brought against them fail to state claims for which relief can
be granted.
Second Affirmative
Defense
As a
further and separate defense, Defendants state that Plaintiffs failed to comply
with the required prerequisites which were mandated before any contract could be
negotiated.
Third Affirmative
Defense
As a
further and separate defense, Defendants allege that there has been no
consideration given and/or that there has been a failure of consideration which
bars Plaintiffs' contract claims.
Fourth Affirmative
Defense
As a
further and separate defense, Defendants allege that Plaintiffs' claims are
barred by the statute of frauds.
Fifth Affirmative
Defense
As a
further and separate defense, Defendants allege that Plaintiffs' claims are
barred by the applicable statute of limitations.
[¶86.] A scheduling order (order for pretrial)
was entered by the trial court on November 15, 1989, which required the
following five identified items:
1. Each element of
each cause of action, and defense, and a reference to the witnesses, admissions
and documents and exhibits to prove the element.
2. The contested
issues of law, with a brief citation of authority for counsels'
position.
3. The facts
established by pleadings, admissions and stipulations.
4. The contested
issues of fact.
5. Each witness, with
a succinctly detailed summary of the testimony of each.
In
accord, Safecare Health Service's designation of expert witnesses
included:
Mike
Ockinga, Lander Valley Medical Center, Lander, WY, in addition to his fact
testimony, may testify regarding the proper financial management and contracting
policies and procedures of hospitals and other health care institutions; all
matters that may be raised in his deposition.
No
witness was listed to testify about ostensible or actual
authority.
[¶87.] Safecare Health Service filed extended
interrogatories which, in addition to the normal introduction and definitions,
included in part:
7. Identify all
persons present at the meeting between you and Mike Ockinga held on May 2, 1988,
and state the exact words spoken by each person at such meeting, if possible. If
it is not possible to state the exact words spoken, please state as specifically
as possible the substance of the words spoken by each person at the
meeting.
8. Identify all
persons present at the meeting between you and Mike Ockinga held on May 9, 1988,
and state the exact words spoken by each person at such meeting, if possible.
[I]f it is not possible to state the exact words spoken, please state as
specifically as possible the substance of the words spoken by each person at the
meeting.
9. Identify all
persons present at the meeting between you and Mike Ockinga held on May 24,
1988, and state the exact words spoken by each person at such meeting, if
possible. If it is not possible to state the exact words spoken, please state as
specifically as possible the substance of the words spoken by each person at the
meeting.
10. Identify all
persons present at the meeting between you and Mike Ockinga held on June 17,
1988, and state the exact words spoken by each person at such meeting, if
possible. If it is not possible to state the exact words spoken, please state as
specifically as possible the substance of the words spoken by each person at the
meeting.
11. Identify all
persons present at the meeting between you and Mike Ockinga held on July 29,
1988, and state the exact words spoken by each person at such meeting, if
possible. If it is not possible to state the exact words spoken, please state as
specifically as possible the substance of the words spoken by each person at the
meeting.
12. Identify all
persons participating in, or overhearing, the phone conversation between you and
Mike Ockinga held on June 16, 1988, and state the exact words spoken by each
person in that conversation, if possible. If it is not possible to state the
exact words spoken, please state as specifically as possible the substance of
the words spoken by each person at the meeting.
13. Identify all
persons present at the meeting between you and Mike Ockinga held on July 8, 1988
involving Don Pearson, Pat Moore and Mr. Lavoie, and state the exact words
spoken by each person at such meeting, if possible. If it is not possible to
state the exact words spoken, please state as specifically as possible the
substance of the words spoken by each person at the
meeting.
The
interrogatories totalled ten pages plus the signature and certification as the
eleventh page and addressed in no regard questions of authority of Ockinga to
negotiate and commit. Lavoie's first set of interrogatories to Safecare Health
Service of eight pages similarly did not include any questions relating to
Ockinga's authority as comptroller and chief financial
officer.
[¶88.] The litigation never reached the stage
where pretrial memoranda in response to the scheduling order and order for
pretrial were answered since the proceeding found an earlier end. The trial
court sustained Defendant's Motion to Dismiss the Plaintiffs' Third Claim for
Relief and for Summary Judgment on All Other Claims on the "grounds that there
are no genuine issues of material fact and Defendant is therefore entitled to
judgment as a matter of law." That final order came following exhaustive
briefing by Safecare Health Service which had first addressed the issue of duty
of good faith to be enforceable under Wyoming law as a separate claim and then that
"the breach of contract claim is barred by the statute of
frauds."
[¶89.] Safecare Health Service's posture was
summarized in its stated conclusion:
LanderValley is entitled to a dismissal of the
third claim for relief based on the covenant of good faith and fair dealing
because that covenant cannot form an independent basis for relief.
LanderValley is entitled to judgment as a matter of law on
the breach of contract claim because any oral contract is rendered void by the
Wyoming
statute of frauds. The Lavoies' claim for promissory estoppel is subject to
summary judgment on behalf of LanderValley under the Turner case because Mr.
Lavoie expected a written contract to be executed. Under these circumstances,
the statute of frauds cannot be overcome by the doctrine of promissory estoppel.
Finally, LanderValley is entitled to
summary judgment on the fraud claim for two reasons. First, Mr. Lavoie expected
a written contract and is therefore precluded from claiming reasonable reliance
on any oral understandings. Second, despite repeated questioning, Mr. Lavoie was
unable to offer any clear and convincing evidence that showed that Mr. Ockinga
had specific intent to defraud during the critical meeting of June 17,
1988.
[¶90.] In its decision, the trial court
initiated its factual review:
On
April 29, 1985, Plaintiff Philip H. Lavoie made an initial sales call on Mike
Ockinga, Chief Financial Officer of Defendant. Ockinga expressed interest in
Plaintiffs' business since it was more local than a Casper firm providing
laundry services to Defendant. Ockinga told Lavoie that the existing contract
would expire in August, 1988 and he asked Lavoie to submit a written proposal to
Dave Brown, Administrator of Defendant hospital and Hugh Simco, Administrator of
Defendant's sister facility, Pine Ridge Hospital.
After
detailing specifically the various meetings conducted between Ockinga and
Lavoie, the trial court held that the statute of frauds, Wyo. Stat. § 1-23-105,
precluded enforcement of any oral agreements and then stated:
The
supposed "contract" which Plaintiffs claim was entered into between them and
Defendant is in violation of the Wyoming Statute of Frauds and is therefore
void.
* * *
Defendant's Motion for Summary Judgment in this matter should be
granted.
[¶91.] Although the subject of actual or
ostensible authority was obviously never factually developed by either litigant
in interrogatory or deposition examination, the only place where something
appears which is the basis of the majority's decision, occurred during the
deposition examination of Ockinga, only part of which is found in the
record:
Q. Do you recall
telling Mr. Lavoie that the hospitals and him would do business, during this
meeting on June 17, 1988?
A. Would you repeat
that question, please?
Q. Do you recall
telling Mr. Lavoie at the end of the meeting on June 17, 1988, that the
hospitals and him would do business, or words to that
effect?
A. I deny saying that
because I was never in a position - it is not within the purview of my authority
to do that, and I've been in this business for long enough to know better than
to do that.
(Discussion
off the record.)
MR. MICHAEL: Had you
completed the * * * answer to that or do you know?
MR. OCKINGA: I believe
so.
Q. (MR. VINCENT) The
long and short of it - or maybe it's the short of it - is, you flatly deny ever
saying to Mr. Lavoie that the hospitals would do business with his cleaners, or
words to that effect?
A. I
categorically deny saying that the hospitals definitely, without question, would
do [page ended].
[The
next page is not included in the record now presented for review by this
court].
[¶92.] As previously stated, counsel has not
been permitted to fully develop and argue the factually dispositive issue. In
searching the record on this issue, we find the affidavit of Loretta Richey,
which states in part:
Loretta Richey, of
lawful age and being first duly sworn upon her oath, deposes and states as
follows:
1. That during the
summer of 1988 your Affiant was employed by defendant as the medical staff
coordinator; that Affiant's office was located in the administrative offices of
the Lander Valley Regional Medical Center; that your Affiant's office was
located approximately 10 feet from the desk of Cyd Freese;
2. That Affiant, Cyd
Freese, and Mike Ockinga had a conversation in the administrative offices of the
Lander Valley Regional Medical Center pertaining to Phil Lavoie and the Daisy
Laundry; that the conversation took place some time in late July or early August
1988 after Mr. Dave Brown had told Mr. Lavoie that Mr. Lavoie would not be
permitted to do the hospitals' laundry; that Mr. Ockinga said to Cyd Freese and
your Affiant that there was a verbal agreement with Mr. Lavoie which provided
generally that Mr. Lavoie was to complete the remodeling and, in return, be able
to do both the hospital and Pine Ridge hospital's laundry; that Mr. Ockinga said
generally that he knew all along this would turn into a bad thing; that even
though they didn't have a written contract at that point, there had been a
verbal agreement to give Mr. Lavoie the laundry contract when the remodeling was
completed; that Mr. Ockinga said that he and Dave Brown knew of and, in fact,
made this verbal agreement with Mr. Lavoie; that Cyd Freese, Mike Ockinga, and
your Affiant knew that Mr. Lavoie had borrowed money to complete the remodeling
required to do the hospital and Pine Ridge's laundry[.]
Furthermore,
Lavoie stated in his affidavit:
2. That I did not intend,
nor did I say to any of defendant's employees, that a contract had to be reduced
to writing prior to the time or as a condition to me remodeling or purchasing
equipment for the Daisy Laundry;
3. That Mr. Ockinga
never, ever, told me that he did not have the authority to enter into a contract
on behalf of the hospital; that I deny such to be the case and state that from
the words, activities, and representations of Mr. Ockinga, he did have such
authority[.]
[¶93.] Procedurally, it is inappropriate to
affirm the summary judgment with this posture of the undeveloped trial court
record. It is bad enough if two bases were submitted to the trial court and the
decision was rendered on only one, but here it is even more unjustified where
the trial court was not provided the basis to even consider the decision this
majority now renders.
[¶94.] The authorities are extensive and
generally consistent. I would find from a recent Texas case an approach that we should follow
which, in itself, only addresses the more confined area where at least the issue
was presented first to the trial court. Carlisle v. Philip Morris, Inc., 805 S.W.2d 498 (Tex. App. 1991).
What, then, of a
summary judgment order that expressly states the ground on which it is granted,
when the underlying motion contained other independent grounds on which summary
judgment was sought? We conclude that the ground specified in the judgment is
the only one on which the summary judgment can be affirmed, for the following
reasons. First, where a party has sought summary judgment on grounds A and B, a
judgment expressly granting summary judgment on ground A, without mentioning
ground B, can only be construed to mean that the trial court did not consider
ground B. To construe it otherwise would be to permit and encourage an inference
that is neither warranted by the record nor in keeping with the spirit of Rule
166a(c). Accordingly, we conclude that the trial court in the present case did
not consider defendants' "substantive-law" argument in deciding to grant the
summary judgment. Having reached this conclusion, it appears obvious that a
ground not considered by the trial
court is functionally identical to one not presented to the trial court; we can
conceive of no reason to treat them differently.
* * * *
* *
* * * We hold that
where, as here, a summary judgment order specifies the ground or grounds on
which it is based, without expressly ruling on other independent grounds alleged
in the motion, such other grounds may not, on appeal, form the basis for
affirming the summary judgment. On the basis of that holding, we decline to
consider defendants' substantive-law arguments in this
appeal.
Id. at 518-19 (emphasis
in original and footnotes omitted). The cases are legion in which the appellate
court asserts that it will not consider issues not previously presented for
review by the trial court. R.O. Corp. v. John H. Bell Iron Mountain Ranch Co.,
781 P.2d 910 (Wyo. 1989); Demple v. Carroll, 21
Wyo. 447, 133 P. 137 (1913); Jones v. Kepford,
17 Wyo. 468,
100 P. 923 (1909).
[¶95.] At this juncture, little benefit to the
bar and bench will be served by my exhaustive review of the subject of actual
and ostensible authority since surely history will not reoccur where we make our
decision upon an equivalently insufficient record as is done here. May it
suffice that even if we now had a concluded trial with only the present evidence
available, I would not vote to sustain a directed verdict by conclusion that
actual or ostensible authority was not presented to be a question of fact.
Kure v. Chevrolet Motor Div., 581 P.2d 603
(Wyo. 1978); Waisner v. Hasbrouck, 34
Wyo. 61, 241 P. 703 (1925); Farmers' State Bank
of Riverton v. Haun, 30 Wyo. 322, 222 P. 45 (1924). It is a generally
accepted rule that actual or ostensible authority is a question for factual
resolution unless the facts do not provide any evidentiary conflict. Stone v.
First Wyoming Bank N.A., Lusk, 625 F.2d 332 (10th Cir.
1980).
[¶96.] If this dissent serves little benefit in
substantively discussing the issue of actual or ostensible authority which was
not considered by the litigants or the trial court during all times prior to
appeal submission, there is even less benefit, since that is not a basis now
considered in this majority, in now extensively discussing my disagreement with
the trial court in regard to the statute of frauds preclusion by which summary
judgment was granted. I do not, however, agree with the trial court decision as
a matter of law under the developed facts that the partial performance escape
from a statute of frauds preclusion might not be available for factual
determination by a trial jury. In this litigative event, it is apparent that
Safecare Health Service lead Lavoie far down the proverbial primrose path in
sharp business dealing. There is clear indication from the affidavits in the
record that the agent of negotiation, Ockinga, was following his orders in these
activities for the covert, but real, purpose of developing negotiative leverage
to reduce the price paid to a competitive source for the laundry services. From
this perspective of summary judgment disposition, the question is whether
Safecare Health Service went too far to escape the rainstorm of rejected
business with the appellant by now being given the benefit in use from the
umbrella of the statute of frauds.
[¶97.] Differing from the trial court, I would
find in analysis, at least within summary judgment concepts, that this
negotiated business deal went too far for Safecare Health Service to ignore what
Lavoie had done to handle the promised laundry business. I would clearly find
here a jury question of sufficient partial performance to deter pretrial
disposition by application of the statute of frauds as a matter of law. The real
question presented is how far into a transaction can a sharp-dealing business
retain protection under the statute of frauds? This is contended to occur while
the promise is clearly practicing a character of fraud on the negotiating party
to only obtain a reduced price from someone else and without any actual
intendment or commitment to do business. The partial performance feature of this
transaction is unquestioned since clearly in good faith and with knowledge and
encouragement of the negotiating party, Lavoie incurred substantial expenses by
reliance on advice about the expectancy of doing the laundry. I would follow
Lavoie's argument and authority to address this issue:
[T]he
"part performance" doctrine would apply to the facts of this case. That doctrine
has been articulated by [2 A.] Corbin, [Corbin on Contracts] § 459, at 583-84
[(1950)] as follows:
"The true rule is
believed to be that, wherever there has been a `part performance' that is [of]
such a character as to make the restitutionary remedy wholly inadequate, and the
facts are such that it is what the courts call a `virtual fraud' for the
defendant to refuse performance, equitable remedies are thereby made available
to the injured party on the same terms as in other cases. The proof of the oral
contract must be clear and convincing, the performance sought must be of a kind
that courts of equity ordinarily feel competent to compel, and other similar
conditions of the right to equitable relief must exist."
[¶98.] According to Corbin, supra, § 425 at 464,
the type of part performance which is sufficient to take an oral contract from
the Statute of Frauds is described below:
"In order that acts of
the plaintiff in reliance on the oral contract may make it specifically
enforceable, there are several requisites, each being somewhat variable in
character and enforced with varying degrees of strictness by the courts. (1) The
performance must be in pursuance of the contract and in reasonable reliance
thereon, without notice that the defendant has already repudiated the contract.
(2) The performance must be such that the remedy of restitution is not
reasonably adequate [* * *]. (3) The performance must be one that is in some
degree evidential of the existence of a contract and not readily explainable on
any other ground."
See
Butler v. McGee, 373 P.2d 595 (Wyo. 1962) and Vogel v. Shaw, 42 Wyo. 333, 294 P. 687
(1930). See also Allen v. Allen, 550 P.2d 1137 (Wyo. 1976).
[¶99.] In analysis of briefing before the trial
court and now here, it is not necessary to significantly disagree with much of
what is related to recognize that a statute of frauds issue is properly
presented which is to be weighed against a partial performance deterrence.1 The invitation by Safecare Health
Service for the bidding supplier to expend significant funds for contract
performance leads me to the conclusion that we have an issue of fact case. The
trial fact finder should be required to determine by trial whether or not a deal
was struck by the statements made and the urging to proceed which was provided
by Safecare Health Service. The substance of my disagreement with the trial
court is acceptance of a decision by summary judgment where a factual decision
was made.
[¶100.]
At the very minimum, I conclude that this appeal should have been
submitted to the litigants for re-briefing so that they would have had some
opportunity to examine and discuss the issue we now
decide.
[¶101.]
If issues of decision are not to be further developed or even briefed by
the litigants before we render a decision, I would reverse and remand for
trial.
FOOTNOTES
1 In answer to
suggestions that Safecare Health Service, as a bargaining party, never got to
the minister for the wedding, I would expound the idea that under the
circumstances, an advance non-commitment letter provided to Lavoie would have
served admirably to give warning and preclude damage to Lavoie. This would have
been true, although perhaps not providing the negotiative leverage with the
existent supplier, a Casper laundry, which was arguably Safecare
Health Service's negotiating factor in extending the original invitation to bid.
A non-commitment communication with an invitation to bid simply states that
written acceptance of a bid is required to create any obligation and that in
advance of the acceptance, no occurrence of expenses for anticipated performance
would be justified or recognized as a basis for obligation. This is the "when
you can perform, we may negotiate" message. In the analogy originally started in
this footnote, the subject can be addressed within the profundity of "Do not
listen to my words, my intentions are only dishonorable."
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