391 P.3d 1113
Wyo.2017Background
- Plaintiffs (Elworthy and Marshall), Wyoming residents, purchased a California home (Belavida) financed by a multi-loan package that included mortgages and HELOCs on both their California and Sheridan, Wyoming properties.
- Mortgage broker Sherri Wall recommended a four-loan financing plan; Plaintiffs later allege Wall misrepresented she was an independent broker when she was actually employed by First Tennessee.
- Plaintiffs allege an oral forbearance agreement with First Tennessee (negotiated in part in Wyoming and Texas) to defer payments on the California loans pending litigation over undisclosed defects in the California property.
- Foreclosure on the California property occurred in 2010; Plaintiffs litigated in California and then filed suit in Wyoming alleging breach of contract (oral forbearance), fraud in the inducement, California Business & Professions Code violations, and related equitable relief concerning the Wyoming encumbrances.
- The Wyoming district court, reviewing the second amended complaint, applied Wyoming law, dismissed the breach claim as barred by the statute of frauds (no pleaded exception), and dismissed fraud-based claims for failure to plead with the particularity required by W.R.C.P. 9(b); it denied leave to further amend.
- Plaintiffs appealed; the Wyoming Supreme Court affirmed on choice of law (Wyoming), statute of frauds application, Rule 9(b) deficiencies, and declined to review the denied-amendment ruling in detail.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| A. Choice of law governing claims | California law should govern because the underlying loan concerns California property | Wyoming law governs because contracting, negotiation, performance and plaintiffs’ residence have stronger Wyoming contacts | Wyoming law governs (contacts more significant in Wyoming) |
| B. Statute of Frauds as to oral forbearance | The oral forbearance is enforceable under equitable or promissory estoppel / detrimental reliance | Statute of frauds bars oral modification; plaintiffs failed to plead an applicable estoppel exception | Statute of frauds bars the breach claim; plaintiffs did not plead facts to invoke equitable estoppel or promissory estoppel in the complaint |
| C. Sufficiency of fraud pleadings under Rule 9(b) | Complaint adequately alleges Wall’s misrepresentations that induced loan selection | Allegations are too general; lack who/what/when/where/how required by Rule 9(b) | Fraud claims dismissed for failure to plead particularity under W.R.C.P. 9(b) |
| D. Denial of further leave to amend | Plaintiffs sought another opportunity to amend to cure defects | Court invoked prior amendment opportunities and discretion to deny further amendment | Court’s denial of a third amendment not reviewed further by the Supreme Court (no reversible abuse shown) |
Key Cases Cited
- Swinney v. Jones, 199 P.3d 512 (Wyo. 2008) (standard of review for Rule 12 dismissals)
- Boutelle v. Boutelle, 337 P.3d 1148 (Wyo. 2014) (Restatement (Second) approach to choice-of-law and depecage)
- Act I, LLC v. Davis, 60 P.3d 145 (Wyo. 2002) (choice-of-law methodology and characterization of issues)
- Parkhurst v. Boykin, 94 P.3d 450 (Wyo. 2004) (elements and scope of equitable estoppel in Wyoming)
- Redland v. Redland, 288 P.3d 1173 (Wyo. 2012) (statute of frauds exceptions and required change-in-position showing)
- Rogers v. Wright, 366 P.3d 1264 (Wyo. 2016) (Rule 9(b) particularity requirements for fraud pleadings)