HILL, Justice.
[¶ 1] Bruce Elworthy and Anne Marshall (collectively "Plaintiffs") filed an action against Defendants alleging claims for breach of contract, fraud in the inducement, and violation of a California law governing fraudulent business practices, all claims in relation to Defendants' financing of Plaintiffs' real property located in Wyoming and California. Plaintiffs filed their action in Wyoming and sought monetary and punitive damages, rescission and restitution, and an order declaring all encumbrances recorded against their Sheridan, Wyoming property void and expunged.
[¶ 2] The district court granted Defendants' Rule 12 motions to dismiss and for judgment on the pleadings. In so ruling, the court applied Wyoming law and found that Plaintiffs' breach of contract claims were barred by the statute of frauds and that Plaintiffs had failed to plead their fraud and fraud-based claims with the required particularity. We affirm.
[¶ 3] Plaintiffs failed to include in their brief a separate statement of issues presented for review, as required by W.R.A.P. 7.01(d).
[¶ 4] Plaintiffs do not reference the district court's ruling on their breach of contract claim, but in the argument portion of their brief, they contend the court erred in that ruling. Given Plaintiffs' statement above and the arguments they make in their briefing, we summarize the issues on appeal as follows:
[¶ 5] Bruce Elworthy and Anne Marshall (collectively "Plaintiffs") are married and are both attorneys. In 1997, Plaintiffs bought a home in Sheridan, Wyoming, and in 2002, they began looking for a home in California, where they hoped to spend winters. In 2005, they found a home they wished to purchase in Monterey, California, priced at around $3,000,000.
[¶ 6] To purchase the California property, Plaintiffs worked with a mortgage broker by the name of Sherri Wall. Ms. Wall originally recommended a mortgage that required only the California property as collateral, but before Plaintiffs closed on the property, Ms. Wall informed Plaintiffs that she had found a better mortgage deal. This deal, which Ms. Wall referred to as the "best financing deal by far," required that Plaintiffs take out four mortgages to secure financing on the California property. The mortgages were to be issued by First Horizon Home Loan Corporation, which subsequently merged into First Tennessee Bank National Association ("First Tennessee"), and consisted of: a $1,000,000 first mortgage on the Sheridan property; a $150,000 home equity line of credit (HELOC) on the Sheridan property; a $1,500,000 first mortgage on the California property; and a $282,000 HELOC on the California property. Plaintiffs agreed to this financing arrangement and closed on the California property.
[¶ 7] After Plaintiffs moved into the California property, they discovered numerous defects that had not been disclosed by the sellers, including flooding and failing windows and an insect and rodent infestation. Plaintiffs contacted the sellers, their real estate broker, and the contractor that built the home to have the undisclosed defects addressed. When no resolution had been reached by the spring of 2007, Plaintiffs demanded
[¶ 8] In December 2007, shortly after filing the California litigation, Mr. Elworthy was diagnosed with a brain tumor that required surgery. After Plaintiffs were advised this would affect Mr. Elworthy's ability to work for some time, they asked Ms. Wall for the name of someone with the lender who could discuss their situation. Ms. Wall referred Plaintiffs to John Harris, an attorney with First Tennessee in its Irving, Texas office.
[¶ 9] Plaintiffs thereafter contacted Mr. Harris and informed him of their situation. Mr. Harris offered a forbearance agreement on the California portion of the loans, by which payments would be deferred on those loans until the conclusion of the California litigation and then rolled into the principal balance. Plaintiffs agreed they would continue to prosecute the law suit and would pay the property taxes, homeowner assessments, insurance, maintenance, utilities and other such expenses on the property. Plaintiffs also agreed they would do as much "fix up" as was required to market the property and would move out over the coming months to enable the property to be marketed. In discussing the matter, Plaintiffs asked Mr. Harris if he wanted some form of written documentation of the forbearance and he stated that no writing was required for the action he was taking. Plaintiffs thereafter stopped making payments on the California property.
[¶ 10] Mr. Harris contacted Plaintiffs in the spring of 2008 and informed them that he was leaving First Tennessee but that the oral forbearance agreement would remain in place. Shortly thereafter, however, Plaintiffs learned that a MetLife entity was servicing the loans, and they began receiving late notices from MetLife. Plaintiffs then contacted an attorney with MetLife, who denied the existence of a forbearance agreement and informed Plaintiffs that if they did not bring the mortgages on the California property current, MetLife would issue a notice of default. Plaintiffs were unable to bring the mortgages current, and in June 2008, Met-Life issued a notice of default. Foreclosure proceedings on the California property began in 2009.
[¶ 11] While the foreclosure was pending, Plaintiffs settled with some of the defendants in the California litigation. In April 2010, Plaintiffs contacted First Tennessee in an effort to delay foreclosure proceedings on the California property and find out what type of payment would be required to stop the foreclosure proceedings. First Tennessee would not consent to a delay and would not allow Plaintiffs to cure the default by making a payment on the mortgage. First Tennessee informed Plaintiffs that the only way they could avoid foreclosure was to immediately pay the primary mortgage and HELOC on the California property. Plaintiffs could not do that, and on April 23, 2010, First Tennessee foreclosed on the property.
[¶ 12] The suit against the sellers of the California property went to trial in March 2011. The California court found negligent misrepresentations by the sellers but denied the rescission remedy that Plaintiffs sought on two grounds: 1) the property had already been foreclosed on so it could not be returned to the sellers; and 2) Plaintiffs delayed bringing the litigation for two years and the doctrine of laches therefore barred the remedy of rescission. By a decision issued in November 2013, a California appellate court affirmed, agreeing with the trial court that the remedy of rescission was no longer available because of the foreclosure.
[¶ 13] On April 16, 2012, while Plaintiffs' California appeal was still pending, Plaintiffs filed a complaint in district court in Sheridan County. The complaint named First Tennessee and First Horizon Loan Corporation (collectively "First Tennessee") as well as other financial institutions as defendants and asserted three counts: 1) breach of contract relating to the oral forbearance agreement; 2) interference with prospective economic advantage, relating to Plaintiffs' loss of the rescission remedy following the foreclosure
[¶ 14] On September 6, 2012, Plaintiffs filed their first amended complaint, which added two new defendants and two new claims. The new claims were for: 1) misrepresentation related to foreign bank manipulation of the London Interbank Offered Rate ("LIBOR") and First Tennessee's issuance of mortgages, including those on Plaintiffs' California property, pegged to the LIBOR rate; and 2) reformation and restitution related to First Tennessee's use of mortgages tied to the LIBOR rate.
[¶ 15] All defendants named in the first amended complaint filed motions to dismiss or for judgment on the pleadings. The district court dismissed all claims against some of the named defendants. The court denied First Tennessee's motion to dismiss except for the claim against it for interference with a prospective economic advantage. The court denied in its entirety the motion for judgment on the pleadings filed by RBS Citizens Bank ("RBS"), the entity that now owns the HELOC on the Sheridan, Wyoming property. With respect to Plaintiffs' misrepresentation claim against First Tennessee, the court ruled:
[¶ 16] On February 27, 2015, Plaintiffs filed their second amended complaint against First Tennessee and RBS. The second amended complaint asserted claims for breach of contract, fraud in the inducement, violation of the California Business and Professions Code, and violation of the Truth in Lending Act ("TILA"), and sought monetary and punitive damages, rescission and restitution in relation to the TILA and fraud claims, and a declaration that all encumbrances on Plaintiffs' Wyoming property are void.
[¶ 17] RBS answered the second amended complaint and filed a Rule 12(c) motion for judgment on the pleadings. First Tennessee also filed an answer, which it followed with a combined Rule 12(b)(6) motion to dismiss and 12(c) motion for judgment on the pleadings. On May 20, 2016, the district court issued its Second Order on Motions to Dismiss and for Judgment on the Pleadings. In ruling on the dispositive motions, the court judged the sufficiency of the second amended complaint based solely on facts and allegations contained therein, and it ruled that Wyoming law governed the parties' dispute.
[¶ 18] Applying Wyoming law, the district court ruled that Plaintiffs' breach of contract claim was barred by the statute of frauds and that no exception to the statute applied. Turning to Plaintiffs' fraud claims, the court found that Plaintiffs failed to plead the claims with the particularity required by W.R.C.P. 9(b) and thus dismissed those claims. The court likewise dismissed Plaintiffs' fraudulent business practices claim under the California Business and Professions Code for failing to plead that claim with the specificity required for a fraud claim. In ruling on Plaintiffs' claims for restitution and rescission and declaratory relief, the court found the claims derivative of the other defective claims and ruled that those must likewise be dismissed.
[¶ 19] Plaintiffs filed a timely notice of appeal to this Court.
[¶ 20] In dismissing Plaintiffs' complaint, the district court ruled pursuant to W.R.C.P. 12(b)(6), which governs motions to dismiss for failure to state a claim, and W.R.C.P. 12(c), which governs motions for judgment on the pleadings. Our review of a dismissal under either rule is de novo. Swinney v. Jones, 2008 WY 150, ¶ 6, 199 P.3d 512, 515 (Wyo. 2008). Concerning our review of a Rule 12(b)(6) dismissal, we have said:
Stroth v. North Lincoln County Hosp. Dist., 2014 WY 81, ¶ 6, 327 P.3d 121, 125 (Wyo. 2014).
[¶ 21] Concerning Rule 12(c) motions for judgment on the pleadings, we have said:
Inman v. Boykin, 2014 WY 94, ¶ 13, 330 P.3d 275, 279 (Wyo. 2014) (quoting Newport Int'l Univ. v. Wyo. Dep't of Educ., 2008 WY 72, ¶ 12, 186 P.3d 382, 386 (Wyo. 2008)).
[¶ 22] The district court reviewed the allegations in Plaintiffs' second amended complaint and concluded that based on those allegations, the relevant transactions occurred in Wyoming and Wyoming law therefore governed the dispute. Plaintiffs contend that the court's analysis was flawed and that California law should govern. We find no error in the district court's conclusion.
Boutelle, ¶ 20, 337 P.3d at 1155 (quoting Act I, LLC v. Davis, 2002 WY 183, ¶ 10, 60 P.3d 145 at 149 (Wyo. 2002)).
[¶ 24] The district court based its choice of law determination solely on the allegations in Plaintiffs' second amended complaint, and we do likewise. In doing so, we will first set forth the relevant allegations from the second amended complaint, and we will then consider each claim individually in relation to the state contacts alleged.
[¶ 25] The second amended complaint alleged:
[¶ 26] The Second Restatement identifies several factors to be considered in determining which state has the most significant relationship to the contracting transaction and the parties to the contract. They include: a) the place of contracting; b) the place of the contract's negotiation; c) the place of performance; d) the location of the contract's subject matter; and e) the residence or place of business of the parties. Restatement (Second) of Conflict of Laws § 188 (1971) (October 2016 update).
[¶ 27] Plaintiffs' breach of contract claim relates to the forbearance agreement. According to the allegations in the second amended complaint, the forbearance agreement was negotiated in Wyoming and Texas. This presumably means Wyoming and Texas were also the places of contracting, a fact reinforced by ¶ 2 of the second amended complaint ("[A]ll agreements entered into that are the subject of this litigation were made or to be performed, in part or in whole, in the County of Sheridan and the State of Wyoming."). The second amended complaint further alleges that the contract was performed in part in Wyoming and California, and related to property in California. Finally, the second amended complaint alleges that First Tennessee was operating out of its Irving, Texas office when it entered into the forbearance agreement, and, given that they negotiated from Wyoming, Plaintiffs presumably were residing in their Wyoming property.
[¶ 28] Plaintiffs contend that because the forbearance agreement concerns the California property and the loan on that property, California is the state with the most significant contacts to the parties and the transaction. We disagree. While the location of the contract's subject matter is one factor to consider, we have rejected it as the controlling factor. BHP Petroleum (Americas), Inc. v. Texaco Expl. and Prod., Inc., 1 P.3d 1253, 1258 (Wyo. 2000) ("The location of the mineral production in Wyoming, the subject matter of the contract, is only one factor not the paramount factor that demonstrates the most significant relationship of the parties."). The forbearance agreement was negotiated, in part, in Wyoming, was entered into with Wyoming residents, and was performed, in part, in Wyoming. Wyoming's contact with the transaction and the parties to the contract is more significant than California's contact, and we thus agree with the district court's conclusion that Wyoming law should govern the breach of contract claim.
[¶ 29] Plaintiffs allege that Sherri Wall misrepresented to Plaintiffs that she was an independent mortgage broker and this misrepresentation induced them to accept her recommendations on which loan package to accept in purchasing their California property. Both of Plaintiffs' fraud-based claims stem from this alleged misrepresentation.
[¶ 30] The choice of law approach prescribed by the Second Restatement depends on whether the representation and the reliance on that representation were made in the same state or different states. Here, Plaintiffs received and acted in reliance on the representations in Wyoming, as noted by paragraph 26 of the second amended complaint ("All of these loans were arranged in the State of Wyoming, [and] the papers were signed and notarized in Wyoming[.]"). Ms. Wall's location when she made the representation is not as clear. The second amended complaint does not allege Ms. Wall's place of business or residence, and the only indication of her location is a reference in ¶ 13 to advice Plaintiffs provided her in forming an independent brokerage when GMAC closed its Spokane office. Plaintiffs do allege Ms. Wall was an employee of First Tennessee, and the second amended complaint's only allegation concerning First Tennessee's place of business is a reference to its Irving, Texas office. We presume then that Ms. Wall's representation was made in either Washington or Texas while Plaintiffs' reliance took place in Wyoming.
[¶ 31] When a defendant's representations and a plaintiff's reliance take place in different
Restatement (Second) of Conflict of Laws § 148 (1971) (October 2016 Update).
[¶ 32] Ms. Wall's representations were made to Plaintiffs who are, and were at the time of the representations, residents of Wyoming. Plaintiffs acted in reliance on the representations in Wyoming by accepting the terms of the mortgages and executing the loan documents in Wyoming. The loans encumbered property in both Wyoming and California, and the continuing performance required by Plaintiffs is to make payments in Wyoming on the Wyoming mortgage and HELOC. Applying the Second Restatement choice of law factors, we again affirm the district court's conclusion that Wyoming law should govern the fraud-based claims.
[¶ 33] Plaintiffs' remaining claims for rescission and restitution, and for declaratory relief, are derivative of their fraud claims and are thus likewise governed by Wyoming law.
[¶ 34] The district court found that the oral forbearance agreement was an amendment to the mortgage loans on the California property and was thus barred by the statute of frauds. Plaintiffs do not take issue with the district court's ruling that the forbearance agreement was subject to the statute of frauds. They instead contend that their second amended complaint adequately pled an equitable exception to the statute of frauds and the court therefore erred in dismissing the breach of contract claim. We again find no error in the district court's ruling.
[¶ 35] Plaintiffs argued to the district court that under California law, the statute of frauds would not bar their contract claim because they had relied to their detriment on the forbearance agreement. The district court, having found that Wyoming law should govern, did not consider the California detrimental reliance doctrine and instead looked to Wyoming's equitable estoppel exception to the statute of frauds. The Wyoming doctrine operates as follows:
Parkhurst v. Boykin, 2004 WY 90, ¶ 21, 94 P.3d 450, 460 (Wyo. 2004). For equitable estoppel to operate as an exception to the statute of frauds, the change in position in reliance on the oral agreement must be "of such character and to such an extent that the interposing of the defense of the statute would be a fraud." Redland v. Redland, 2012 WY 148, ¶ 92, 288 P.3d 1173, 1194 (Wyo. 2012) (quoting Davis v. Davis, 855 P.2d 342, 349 (Wyo. 1993)).
[¶ 37] Plaintiffs are correct that promissory estoppel operates as an exception to the statute of frauds. (Redland, ¶ 91, 288 P.3d at 1193-94 (citing Davis, 855 P.2d at 349)). The district court recognized this exception, just as it did the equitable estoppel exception, but it rejected Plaintiffs' promissory estoppel argument because Plaintiffs did not assert a claim for promissory estoppel in their second amended complaint. The court explained:
[¶ 38] We agree with the district court's reasoning. We have held that "[w]hen the complaint shows the existence of a built-in defense, a notice to dismiss lies." Weber v. Johnston Fuel Liners, Inc., 540 P.2d 535, 540 (Wyo. 1975) (citing Vossler v. Peterson, 480 P.2d 393, 394 (Wyo. 1971)). In such circumstances, a plaintiff is required to plead the factual allegations that would prevent operation of the built-in defense.
5 Charles Alan Wright, Arthur R. Miller, et al., Federal Practice and Procedure § 1226 (3d ed. Jan. 2017 Update) (footnotes omitted).
[¶ 39] In their second amended complaint, Plaintiffs alleged the breach of an oral agreement to amend the mortgage loans on their California property. In so pleading, Plaintiffs alleged facts that created a prima facie statute
[¶ 40] The district court dismissed Plaintiffs' fraud-based claims because they were not pled with the particularity required by Rule 9(b) of the Wyoming Rules of Civil Procedure. There is no question that the Rule 9(b) pleading requirements had to be met, and we find no error in the district court's conclusion that the second amended complaint failed in that regard. Smithco Eng'g, Inc. v. Internat'l Fabricators, Inc., 775 P.2d 1011, 1018 (Wyo. 1989) ("Clearly, the law of the forum controls procedural matters.").
[¶ 41] Plaintiffs' fraud-based claims include a claim for fraud in the inducement and a claim for violation of the California Business and Professions Code. Both claims, however, rely on the alleged misrepresentations by Sherri Wall that she was an independent mortgage broker, which Plaintiffs claim induced them to enter into mortgages to their detriment. Because the claims are for fraud in the inducement, the elements that must be alleged to support the claims are: "1) the defendant made a false representation intending to induce action by the plaintiff; 2) the plaintiff reasonably believed the representation to be true; and 3) the plaintiff suffered damages in relying on the false representation." Claman v. Popp, 2012 WY 92, ¶ 43, 279 P.3d 1003, 1016 (Wyo. 2012).
[¶ 42] Rule 9(b) provides that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally." W.R.C.P. 9(b) (LexisNexis 2015). We have said:
Rogers v. Wright, 2016 WY 10, ¶ 21, 366 P.3d 1264, 1273 (Wyo. 2016); see also White v. Shane Edeburn Constr., LLC, 2012 WY 118, ¶ 26, 285 P.3d 949, 957 (Wyo. 2012) (facts supporting elements of fraud must be alleged clearly and distinctly); Lee v. LPP Mortg. Ltd., 2003 WY 92, ¶ 11, 74 P.3d 152, 158
[¶ 43] In support of their fraud claims, Plaintiffs alleged as follows in their second amended complaint:
[¶ 44] We agree with the district court that these allegations lack the particularity required by Rule 9(b). First, as the district court observed, the second amended complaint alleged only in general terms that Ms. Wall represented that she was an independent broker. The second amended complaint alleged that Plaintiffs "understood based on affirmative representations made on several occasions" that Ms. Wall "was an independent broker," and it alleged that "Wall continually assured Plaintiffs that she was an independent broker." The second amended complaint failed, however, to allege with any type of clarity and specificity the contents of Ms. Wall's alleged representations. See Lee, ¶ 11, 74 P.3d at 158 (Rule 9(b) "requires reference to matters such as the * * * contents of false representations."); see also Phillips v. Toner, 2006 WY 59, ¶¶ 8, 24, 133 P.3d 987, 990, 996 (allegation that defendant met with plaintiff "to induce him to perform the work and gave repeated assurances that he would be paid for his services" failed to allege fraud with required particularity); Mueller v. Zimmer, 2005 WY 156, ¶ ¶ 14, 17, 124 P.3d 340, 349, 350 (Wyo. 2005) (allegation that defendant made "unjustified and false" claim for unpaid overtime failed to allege fraud with required particularity).
[¶ 45] Additionally, Plaintiffs' second amended complaint failed to allege when Ms. Wall made the representations that she was an independent broker. The second amended complaint alleged that Ms. Wall became an employee of First Tennessee after Plaintiffs made their initial offer on the California property and it alleged that "Plaintiffs understood based on affirmative representations made on several occasions" that Ms. Wall was an independent broker when they accepted her recommendation on the revised loan deal. The second amended complaint did not, however, allege that Ms. Wall repeated her representation that she was an independent broker between her recommendation on the original mortgage proposal and her recommendation on the new loan recommendation. Accepting the allegations as true, Ms. Wall represented that she was an independent broker at a time when she was an independent broker. The allegations are silent as to whether Ms. Wall repeated the representation after she became a First Tennessee employee, and there is therefore no allegation to support a claim that a misrepresentation by Ms. Wall induced Plaintiffs to accept the second recommended loan package.
[¶ 46] Finally, we also agree with the district court that the second amended complaint failed to allege how Plaintiffs were harmed by the alleged misrepresentation concerning Ms. Wall's employment. The second amended complaint alleged that had Plaintiffs known Ms. Wall was employed by First Tennessee, they "would not have accepted Wall's advice and proposal without further examination." It further alleged that "[h]ad Plaintiffs known the true facts they would not have entered into the mortgage obligations[.]" The second amended complaint did not, however, allege what additional information would have been important to Plaintiffs or that Plaintiffs would not have gone through with the purchase of the California property had they known that Ms. Wall was a First Tennessee employee. Additionally, the second amended complaint did not allege: that Ms. Wall misrepresented the terms of the loan package or failed to disclose that the loan deal would encumber both
[¶ 47] In short, the second amended complaint failed to allege with any specificity that there were better loan options available to Plaintiffs, that Plaintiffs would have accepted those loan options, and that those loan options would have left Plaintiffs in a better position. Based on this failure and the failure of the second amended complaint to plead with particularity the content of the representations by Ms. Wall and when those misrepresentations were made, we conclude that the district court properly dismissed Plaintiffs' fraud-based claims for failure to plead the claims with the particularity required by Rule 9(b) of the Wyoming Rules of Civil Procedure.
[¶ 48] We generally review a district court's ruling on a motion to amend for an abuse of discretion. Dane v. Dane, 2016 WY 38, ¶ 17, 368 P.3d 914, 918 (Wyo. 2016). Plaintiffs did not, however, state an issue for our review with respect to the district court's ruling that no further amendments of Plaintiffs' complaint would be permitted, and Plaintiffs' first argument concerning the ruling appears in their reply brief. There, Plaintiffs simply point out that they amended their complaint only one time after responsive pleadings were filed and they request that this Court afford them an opportunity to again amend their complaint. Under these circumstances, we decline any further review of the district court's ruling on further amendments. See Golden v. Guion, 2016 WY 54, ¶ 31, 375 P.3d 719, 727 n.5 (Wyo. 2016) (Court does not consider issues not supported by cogent argument).
[¶ 49] Based on the allegations in Plaintiffs' second amended complaint, Plaintiffs' breach of contract claim was barred by the statute of frauds, and Plaintiffs failed to plead their fraud claims with the particularity required by Rule 9(b) of the Wyoming Rules of Civil Procedure. Affirmed.
Montoya v. Navarette-Montoya, 2005 WY 161, ¶ 4, 125 P.3d 265, 268 (Wyo. 2005) (quoting Cline, 614 P.2d at 1337).
Defendants do not appear to have been hampered in their ability to identify and argue the issues on appeal, and we will therefore proceed with our review despite Plaintiffs' failure to separately set forth a statement of issues presented for review.
