Baker Boyer Nat'l Bank v. James Patterson Foust, Jr.
431 P.3d 131
| Wash. Ct. App. | 2018Background
- In 2013 JPF Enterprises (managed by James Foust Jr.) agreed to buy 30 modular housing units for $1,245,000; financing was provided by Baker Boyer Bank. Foust personally signed a $1,077,600 promissory note and a commercial guaranty.
- The guaranty included a warranty that the lender had no obligation to disclose information acquired in its relationship with the borrower.
- Foust alleged the bank failed to disclose problems between Greenflex (the expected manager/lessee) and Badlands LLC, and relied on omissions to plead fraud in the inducement and negligent misrepresentation.
- The bank sued to enforce the guaranty after JPF defaulted; the trial court granted summary judgment for the bank and entered judgment against Foust.
- Foust moved for reconsideration, raising for the first time an Equal Credit Opportunity Act (ECOA) theory and seeking to retract an admission that he signed the guaranty on behalf of his marital community; the trial court denied reconsideration.
- The Court of Appeals affirmed: summary dismissal of Foust’s fraud and negligent misrepresentation claims was proper, the trial court did not abuse its discretion on reconsideration, and the bank is entitled to attorney fees under the guaranty and RCW 4.84.330.
Issues
| Issue | Plaintiff's Argument (Foust) | Defendant's Argument (Bank) | Held |
|---|---|---|---|
| Whether fraud in the inducement claim survives where bank allegedly omitted material facts learned during underwriting | Bank had a duty to disclose special-circumstance information (Badlands dispute) and omissions induced Foust to sign the guaranty | No fiduciary/special relationship existed; Foust was experienced and disclaimed reliance; no admissible evidence of bank knowledge or causation | Dismissed — no duty to disclose; fraudulent inducement fails |
| Whether negligent misrepresentation claim survives based on alleged omissions | Omission of material facts during underwriting supports negligent misrepresentation | Negligent misrep requires a duty to disclose arising from special relationship; none here; omission alone insufficient | Dismissed — same rationale as fraud claim |
| Whether trial court abused discretion by refusing to reconsider based on newly raised ECOA claim and withdrawal of admission | August 2013 email was an "adverse action" under ECOA; Foust sought to retract admission re: marital community | New theories/facts raised on reconsideration not closely related to original opposition; ECOA claim meritless because the only applicant was JPF and bank acted favorably; no basis to retract admission | Denial affirmed — reconsideration properly refused; ECOA argument without merit |
| Entitlement to attorney fees on appeal | (Foust sought fees if prevailing) | Bank sought contractual and statutory fees as prevailing party | Bank entitled to fees under guaranty and RCW 4.84.330 (subject to compliance with RAP 18.1(d)) |
Key Cases Cited
- Korslund v. Dyncorp Tri-Cities Servs., Inc., 156 Wn.2d 168 (2005) (summary judgment reviewed de novo)
- Tokarz v. Frontier Fed. Sav. & Loan Ass'n, 33 Wn. App. 456 (1982) (bank-borrower special fiduciary duty requires special circumstances)
- Beckendorf v. Beckendorf, 76 Wn.2d 457 (1969) (elements of fraud)
- Pedersen v. Bibioff, 64 Wn. App. 710 (1992) (fraud-in-the-inducement requires material misrepresentation that induced transaction)
- Lawyers Title Ins. Corp. v. Baik, 147 Wn.2d 536 (2002) (elements of negligent misrepresentation)
- Colonial Imports, Inc. v. Carlton Nw., Inc., 121 Wn.2d 726 (1993) (duty to disclose arises from fiduciary or special relationship)