Hopkins v. Bank of the W.

311 P.3d 151

Gary L. HOPKINS and Mary Hopkins, Appellants (Plaintiffs),

v.BANK OF the WEST, Randal L. Burnett and G & R Enterprises, LLC, Appellees (Defendants).

No. S–13–0005.

Supreme Court of Wyoming.

Oct. 16, 2013.

Representing Appellants: A. Joe Hageman, Laramie Wyoming.

Representing Appellee Bank of the West: Terry W. Connolly, Patton & Davison, Cheyenne, Wyoming.

Representing Appellees Randal L. Burnett and G & R Enterprises, LLC: No appearance.

Before KITE, C.J., and HILL, VOIGT, BURKE, and DAVIS, JJ.

VOIGT, Justice.

[¶ 1] Gary L. Hopkins and Mary Hopkins appeal the district court's order granting summary judgment in favor of Bank of the West.¹ The Hopkins claim that material facts concerning a contract are in dispute, making summary judgment inappropriate. Specifically, they argue the contract's language is ambiguous and the district court should have considered extrinsic evidence of the parties' intent when interpreting the contract. We affirm the district court's order.

ISSUE

[¶ 2] Did the district court err when it granted summary judgment in favor of Bank of the West after finding that the contract between the parties was unambiguous after limiting its analysis to the four corners of the contract?

FACTS

[¶ 3] In 2001, Gary Hopkins and Randal Burnett formed a Wyoming limited liability company called G & R Enterprises, LLC, in which they each owned a 50 percent interest. Hopkins and Burnett formed the business for the purpose of constructing and operating a combined laundromat and carwash. The partners agreed they would finance the project with a United States Small Business Administration (SBA) loan. The logistics of the funding involved a pledge from the SBA, acting through Frontier Certified Development Company, Inc. (FCDC), who would loan 31 percent of the total project costs, and Community First National Bank (CFNB) loaning 50 percent of the total project costs.

[¶ 4] CFNB loaned G & R Enterprises $950,000, which included both the loan pledged by CFNB and the loan pledged by FCDC. G & R Enterprises signed a promissory note to CFNB in that amount. To secure the loan, G & R Enterprises executed a mortgage to CFNB on the laundromat and carwash property and Hopkins executed a second mortgage (subject to a first mortgage held by M & T Mortgage) on two rental properties he personally owned. CFNB also required personal guarantees from Hopkins and Burnett for the full amount of the loan.

[¶ 5] Thereafter, in order to arrange for the SBA/FCDC portion of the loan, Hopkins and Burnett individually and on behalf of G & R Enterprises signed an “Authorization for Debenture Guarantee.” That document set forth the conditions of the SBA loan, listed FCDC as the local company that would be issuing the SBA portion of the loan, and specified that this portion of the loan would be secured with: (1) a second mortgage in the laundromat and carwash property, equipment, and fixtures; (2) third mortgages in Hopkins' rental properties (subject to M & T Mortgage's first mortgages and CFNB's second mortgages); and (3) personal guarantees by Hopkins and Burnett.

[¶ 6] FCDC then provided the SBA's portion of the project loan by paying $380,000 to CFNB to pay down the debt G & R Enterprises owed to CFNB. Hopkins and Burnett signed a “Modification of Promissory Note” on behalf of G & R Enterprises to show that they now owed CFNB $608,406. The practical effect of these transactions resulted in G & R Enterprises owing $608,406 on a loan to CFNB, which was approximately 50 percent of the project costs, and owing $380,000 to FCDC for the SBA loan, which was 31 percent of the project costs.

[¶ 7] Approximately two years later, Burnett agreed to buy Hopkins' membership in G & R Enterprises. Burnett contacted the Laramie branch of Bank of the West, which had acquired CFNB and took over and became successor-in-interest to the CFNB loan, about removing the liens on Hopkins' rental properties. Bank of the West sent letters to Burnett and Hopkins' attorney, explaining what information Bank of the West would need before it would consider releasing Hopkins from liability on the Bank of the West (formerly CFNB) loan. After receiving the information, Bank of the West determined that it would release Hopkins from its loan, provided that Burnett and his wife pledged additional security to compensate for the loss of Hopkins' rentals as collateral. Burnett and his wife made a payment of $50,000 to Bank of the West, provided Bank of the West with a mortgage on their personal residence, and Mrs. Burnett provided a personal guarantee on the loan.

[¶ 8] The Burnetts, Hopkins, and G & R Enterprises signed a “Change in Terms Agreement,” which reflected Hopkins' departure from the company, his release from the personal guarantee on the Bank of the West loan, the addition of Mrs. Burnett as a member of the company and a personal guarantor on the Bank of the West loan, and Bank of the West's release of the second mortgages on Hopkins' rental properties. As agreed, Bank of the West released the second mortgages on the properties. However, the third mortgages on the property that were held by SBA were not mentioned in the agreement or released.

[¶ 9] The Burnetts stopped making payments on the Bank of the West and SBA loans in 2009; consequently G & R Enterprises and the Burnetts defaulted on their obligations under both loans. Bank of the West foreclosed on the mortgage covering the business property, although it allowed Burnett to remain in possession of and continue to operate the business. Because the third mortgages on his rental properties were not released by SBA, Hopkins has been forced to continue to make the payments on the SBA loan to avoid having the third mortgages on those properties foreclosed.

[¶ 10] Hopkins and his wife filed a complaint against Bank of the West, Burnett, and G & R Enterprises for breach of contract, default of the promissory note and members' agreement, failure to release the third mortgages, and statutory damages. Burnett and G & R Enterprises filed a cross-complaint against Bank of the West for breach of contract, which was then assigned to the Hopkins after Burnett and G & R Enterprises requested that an entry of confessed judgment be entered against themselves. The crux of all the claims against Bank of the West was that, pursuant to the agreement between the parties, Bank of the West was supposed to remove Hopkins' liability and the mortgages held on his property pursuant to the Bank of the West and the SBA loans. Bank of the West moved for summary judgment, which the district court granted. The district court found the contract between Hopkins, Burnett, G & R Enterprises, and Bank of the West was not ambiguous and that Bank of the West had abided by the terms of the contract. The Hopkins now appeal that decision.

STANDARD OF REVIEW

[¶ 11] This Court has a well-established standard of review when reviewing a district court's decision to grant a motion for summary judgment:

We review a summary judgment in the same light as the district court, using the same materials and following the same standards. We examine the record from the vantage point most favorable to the party opposing the motion, and we give that party the benefit of all favorable inferences that may fairly be drawn from the record. A material fact is one which, if proved, would have the effect of establishing or refuting an essential element of the cause of action or defense asserted by the parties. If the moving party presents supporting summary judgment materials demonstrating no genuine issue of material fact exists, the burden is shifted to the non-moving party to present appropriate supporting materials posing a genuine issue of material fact for trial. We review a grant of summary judgment deciding a question of law de novo and afford no deference to the district court's ruling.

Herling v. Wyo. Mach. Co., 2013 WY 82, ¶ 24, 304 P.3d 951, 957–58 (Wyo.2013) (quoting Redland v. Redland, 2012 WY 148, ¶ 47, 288 P.3d 1173, 1185 (Wyo.2012)) (citations omitted).

DISCUSSION

[¶ 12] The Hopkins contend the district court improperly granted summary judgment because there were material issues of fact in dispute between the parties. Specifically, they argue that the contract between Hopkins, Burnett, G & R Enterprises, and Bank of the West was ambiguous and that, even if it was unambiguous, the district court should have considered extrinsic evidence in determining the intent of the parties. We will address these assertions individually.

Ambiguity of the Contract

[¶ 13] According to the Hopkins, the district court incorrectly found that the contract removing Hopkins as a guarantor on the loan and to remove the mortgages on his properties was unambiguous. Whether a contract is ambiguous is a question of law for the court to decide. Cathcart v. State Farm Mut. Auto. Ins. Co., 2005 WY 154, ¶ 18, 123 P.3d 579, 587 (Wyo.2005). “An ambiguous contract is one which either contains a double meaning or is obscure in its meaning because of indefiniteness of expression.” McNeiley v. Ayres Jewelry Co., 855 P.2d 1242, 1244 (Wyo.1993). A difference in interpretation alone, however, does not render a contract ambiguous. Hickman v. Groves, 2003 WY 76, ¶ 6, 71 P.3d 256, 258 (Wyo.2003). If the contractual language is clear and unambiguous, the court may interpret the contract as a matter of law and summary judgment is appropriate. Fayard v. Design Comm. of Homestead Subdivision, 2010 WY 51, ¶ 12, 230 P.3d 299, 303 (Wyo.2010). However, if the contractual language is ambiguous, “a question of fact is presented and summary judgment typically is not warranted.” Id.

[¶ 14] The contract at issue here arose out of a letter sent by Apollo Gucake of Bank of the West to the Burnetts, detailing what would be required in order for Bank of the West to approve removing Hopkins as a loan guarantor and removing the second mortgages on Hopkins' rental properties. The Hopkins argue...