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HomeMy WebLinkAbout873076IN THE DISTRICT COURT OF LINCOLN COUNTY, WYC THIRD JUDICIAL DISTRICT ROY O. RODWELL, ) Plaintiff, ) vs. ) BOOK AJ40 PR PAGES ) ~fZ ) BOOK_,____PR PAGE D ndant. ) Civil Action No. 1.1C~CCaL! CcUP~Y CLERK i3olG AN 31. ER `,'qy0%11NG FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JU4 This matter, having come before the Court for trial on October 3, 2000, and the Plaintiff Roy Rodwell, having appeared in person and through his counsel, Joseph F. Moore, Jr., and the Defendant Theodore A. Pierce having not appeared, and the Court having heard sworn testimony, received numerous exhibits and argument of Plaintiff's counsel, and the Defendant, having due notice of trial and having not appeared, either individually or through counsel; therefore, on the basis of the evidence, the Court makes the following findings and conclusions: 1. Plaintiff Roy O. Rodwell (hereinafter "Rodwell") testified in person at the trial. He was credible on each issue, and his testimony is accepted by the court. 2. Rodwell offered and the court received into evidence the following exhibits: a. Plaintiff's Exhibit A - duly authenticated records from the Sheriff of Teton County, Wyoming relating to the foreclosure and redemption and the sums due and owing from Defendant Theodore A. Pierce (hereinafter "Pierce") in connection therewith. b. Plaintiff's Exhibit B - certified copies of records from the Ninth Judicial District Court, Teton County, Wyoming, relating to the judicial foreclosure action instituted by the holders of the third mortgage on the Aspens condominium (Unit 13) and the judgment entered in connection therewith. C. Plaintiff's Exhibit C - duly authenticated records from Bank of Jackson Hole, Wyoming, including documents demonstrating Rodwell's transfer of V 8 73OT6 745 i,34 funds, Pierce's receipt of the funds, Pierce's loan application, and the title report and appraisal requested by Bank of Jackson Hole in connection therewith. d. Plaintiff's Exhibit D - records from First American Title Insurance Company, together with certified copies of all relevant documents from the land records of Teton County, Wyoming and relating to Unit 13, Jackson Hole Racquet Club Condominiums, Spruces Building (the property identified as the collateral for the Rodwell loan). e. Plaintiff's Exhibit E - Affidavit in Support of Attorneys Fees from Frank Hess. f. Plaintiff's Exhibit F - Affidavit in Support of Attorneys Fees from Joseph F. Moore, Jr. g. Plaintiff's Exhibit G - one-page excerpt from Pierce's bank statements demonstrating receipt of the $80,000.00. h. Plaintiff's Exhibit H - the promissory note dated July 14, 1999 from Pierce to Rodwell. 3. Rodwell is a citizen and resident of Lincoln County, Wyoming. 4. Pierce was, at the time relevant hereto, leasing property in and a resident of Lincoln County, Wyoming. 5. Pierce was, at all times relevant hereto, a Realtor who had handled various transactions for Rodwell and, in that capacity, a person who owed a general fiduciary duty to Rodwell. 6. At all times relevant hereto, Pierce, through an entity owned and controlled by him (Rocky Mountain Ranch Company), was engaged pursuant to an oral argument as ranch manager for Plaintiff Rodwell, and Pierce was actually working as manager of the Rodwell Ranch in Lincoln County, Wyoming. 7. In late May or early June of Pierce approached Rodwell and advised him of the following: FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT Rodwell v. Pierce; Civil Action No. 10446 Page 2 a. Pierce owned a condominium in the Aspens development in Jackson Hole, Wyoming. b. The condominium had a first mortgage which was in default and foreclosure was pending. C. Pierce had substantial equity in the condominium. d. Pierce then requested financial help from Rodwell to prevent the foreclosure or to exercise his redemption rights in conjunction with the foreclosure with regard to the condominium. e. The total amount of money required to redeem following the foreclosure was $80,000.00. 8. In response to Pierce's request and in reasonable reliance on Pierce's statements of fact, Rodwell orally agreed: a. That if Pierce applied to Bank of Jackson Hole (specifically with bank officer Phil Newcomb) for a loan to be secured by the subject real property at the Aspens; and b. That if approved, the proceeds of said loan would be used to exercise Pierce's redemption rights, thereby putting the bank in a first mortgage lien position; C. That Rodwell would co-sign and/or guarantee the secured loan with Bank of Jackson Hole to facilitate prompt response and to assure that Pierce received the money in time to protect his rights. d. Rodwell was comfortable doing this because the loan would be fully secured by the replacement first mortgage and Rodwell, as guarantor, would be secondarily liable on a fully-secured loan. 9. Following the discussions set forth above, on approximately July 2, 1999, Pierce actually submitted a loan application to Bank of Jackson Hole which: (a) showed only the first mortgage as a lien on the subject real property; (b) did not list any other significant debts; (c) specifically omitted the second and third mortgages on the subject FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT Rodwell v. Pierce; Civil Action No. 10446 Page 3 • 4 7 3.- property; and (d) although referencing a federal tax lien, did not list the federal IRS liens which by that time totaled almost $300,000. 10. In his discussions with Rodwell, Pierce specifically misled Rodwell by affirmatively overstating the amount required to satisfy the first mortgage lien. Pierce stated the amount due to be $80,000.00, whereas it was actually approximately $62,000.00. 11. Pierce affirmatively misled Rodwell by failing to inform Rodwell of material facts which, if revealed, would have led Rodwell to a different course of action; specifically, Rodwell would not have made the loan. The omitted material facts are: a. The existence of a $5,000.00 second mortgage. b. The existence of a $26,500.00 third mortgage. C. The existence of a first IRS lien in the amount of $208,886.09, d. The existence of a second IRS lien in the amount of $14,936.95.: e. The existence of a third IRS lien in the amount of $25,943.62. 12. In addition, the record leads to the conclusion that Pierce had actual knowledge of the fourth IRS lien in the amount of $21,864.83 which was recorded against the subject property on October 21, 1999, some three months after the loan was made. 13. Bank of Jackson Hole received a credit report on Pierce and a title report on the subject property which showed all of the debts listed above and specifically the IRS liens. Bank of Jackson Hole never approved Pierce for a loan or mortgage. Neither the bank nor Pierce ever informed Rodwell of any of the above facts. 14. Sometime in early July 1999 (shortly before July 14, 1999), Pierce contacted Rodwell and told him that he was almost out of time, told him that he had applied for the loan but hadn't heard anything from the bank, and asked Rodwell if he could provide the funds directly. FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT Rodwell v. Pierce; Civil Action No. 10446 Page 4 748 1 63 15. Rodwell restated his desire to have any loan be a secure investment and told Pierce that if did make a direct loan, he would expect a promissory note and first mortgage upon Pierce's exercise of redemption rights and clearing title. 16. Again, Pierce specifically failed to inform Rodwell of the relevant facts outlined above and specifically misinformed Rodwell as to the amount of money required to redeem the property. 17. On July 14, 1999, in actual and reasonable reliance upon the misstatements and omissions from Pierce, Rodwell wire transferred $80,000.00 from Rodwell's bank in North Carolina to Rodwell's account at Bank of Jackson Hole. 18. On that same date, Bank of Jackson Hole, in an internal bookkeeping entry, transferred those funds from Rodwell's account to the account of Defendant Pierce, as a loan. 19. On that same date, Pierce caused a cashier's check in the amount of $62,270.71 to be issued by Bank of Jackson Hole, payable to Brenda Visani, which funds were tendered to the Sheriff of Teton County and/or Brenda Visani in Pierce's exercise of his redemption rights. 20. The balance of the funds received from Rodwell (in excess of $17,000.00) was used by Pierce for personal purposes, and the bank records introduced into evidence conclusively demonstrate that the funds on deposit were used to make payments in excess of $13,500.00 from Pierce's personal checking account to his business account in the name of Rocky Mountain Ranch Company and to pay other miscellaneous personal expenses. 21. Pierce intentionally and actively misled.Rodwell as to the amount of money required and as to the intended application of the proceeds of the Rodwell loan. 22. Thereafter, Rodwell repeatedly requested a promissory note and first mortgage from Pierce as agreed prior to the transfer of funds to Pierce. 23. Pierce, in his conversations with Rodwell, consciously misled him regarding the reasons for not providing the note and mortgage, including: FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT Rodwell v. Pierce; Civil Action No. 10446 Page 5 7 4 9 a. Untrue statements about a binding contract for the sale of a $25 million ranch which would result in a substantial commission and immediate repayment from Pierce to Rodwell. b. Misstatements of fact relating the existence of only one IRS lien and stating the total sum due to be about $13-14,000.00, as opposed to nearly $300,000.00 which the IRS had assessed by that time. 24. In actual and reasonable reliance on the misstatements of fact and material omissions by Pierce, Rodwell exercised forbearance by not immediately demanding execution of the note, delivery of a mortgage, or repayment. 25. After several months of excuses, Rodwell prepared the promissory note, which was attached to the complaint and introduced into evidence as Exhibit H, which Pierce voluntarily executed. 26. The promissory note is in the amount of $80,000.00, with interest at the rate of eight and one-half percent (8-1/2%) per annum, with a provision for the award of attorneys fees up to a stated maximum of fifteen percent (15%) of the total due. The effective date of the note is July 14, 1999, the date of that the funds were advanced and loaned to Pierce. 27. Rodwell, personally and through counsel, made repeated demands for payment of the demand promissory note after it was duly executed by Pierce. 28. Pierce refused, even after institution of suit, to make payments on the note, and no payments have been made on the promissory note up until the date of trial. 29. In his answer to the complaint, Pierce raised certain affirmative defenses, claiming among other things credits and offsets on the sum due on the promissory note. 30. None of the credits and offsets allegedly due to Pierce were obligations of Rodwell. None of the credits or obligations claimed by Pierce were due or payable to Pierce individually, and the only such obligations were between the limited liability company owned by Rodwell which operated the Rodwell Ranch and the limited liability company owned by Pierce, Rocky Mountain Ranch Co. FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT Rodwell v. Pierce; Civil Action No. 10446 Page 6 CI U 61 30".6 135 31, As a matter of law, none of the offsets are legitimate credits or offsets to Rodwell's claim in this case. 32. Rodwell was required, by the actions of Pierce, to obtain the services of counsel to pursue collection of the note. Rodwell initially retained Frank Hess, who instituted the lawsuit, and subsequently retained Joseph F. Moore, Jr. of Moore & Myers. The affidavit in support of attorneys fees submitted by Mr. Hess demonstrates that the fees and costs incurred were fair, reasonable and appropriate under the circumstances. The affidavit submitted by Joseph F. Moore, Jr. of Moore & Myers and all of the evidence presented at trial demonstrates that substantial work and effort was required to identify and deal with the fraudulent acts of Pierce and in order to develop evidence of the true facts that existed at the time of the loan. 33. The court specifically finds that the fees incurred by Frank Hess and by Moore & Myers were fair and reasonable and appropriate under the circumstances and required by the actions of Pierce. 34. At the conclusion of the evidence, Rodwell moved under Rule 15(b), Wyoming Rules of Civil Procedure, to conform the pleadings to the evidence presented at trial. The court, in its exercise of its discretion, granted that motion, and allowed the complaint to be amended to specifically allege and aver fraud. 35. The court specifically finds that Rodwell has, both in the oral motion and in the evidence, with substantial particularity and more than sufficient detail, demonstrated fraud by Pierce in inducing Rodwell to make the loan and in inducing forbearance by Rodwell. 36. The court specifically finds that Rodwell has demonstrated and proven fraud in the inducement and post-loan fraud by Pierce, by clear and convincing evidence. 37. The court specifically granted the motion to amend at trial and made a specific finding of fraud by Pierce. 38. The court specifically finds that all of Rodwell's damages were caused by the fraudulent conduct of Pierce, as described above. FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT Rodwell v. Pierce; Civil Action No. 10446 Page 7 751 39. The court finds that Rodwell incurred damages as follows: a. In the amount of $80,000.00, representing the gross proceeds transferred from Rodwell to Pierce on July 14, 1999. b. Interest from the period July 14, 1999 through July 13, 2000 at the rate of eight and one-half percent (8-1/2%) per annum, in the total amount of $6,800.00. C. The per diem interest rate applicable is $18.63, and there are 81 calendar days from July 14, 2000 to the date of trial. The accrual of interest on the principal sum (not compounded) is $1,509.03. date of trial. d. The principal and accrued interest total $88,309.03 through to the e. In addition, Plaintiff was damaged and is entitled to recover his attorneys fees in the total amount of $6,160.95. f. Plaintiff's total damages through to the date of trial are $94,469.98. g. Plaintiff is entitled to additional interest on the total amount of $94,469.98 from the date of trial at the statutory judgment rate of ten percent (10%) per annum. Jud ment On the basis of the foregoing findings of fact and conclusions of law, IT IS HEREBY ORDERED that JUDGMENT be and hereby is entered in favor of Plaintiff Roy O. Rodwell and against Defendant Theodore A. Pierce in the amount of $94,469.98, together with interest from October 3, 2000 at the rate applicable to judgments in the State of Wyoming. DATED this day of October, 2000. AL_\E~ John D. Troughton District Judge FINDINGS OF FACT, CONCLUSIONS OF LAW, AND Rodwell v. Pierce; Civil Action No. 10446 Page 8 r