Opinion
No. 106,838.
2012-09-14
JACOBSON–CAMPBELL EXCAVATION, INC., Pate–Campbell Properties, Inc., Joseph W. Campbell, and Rockwood at Prairie Highlands, LLC, Appellants, v. M & I MARSHALL & ILSLEY BANK, Appellee.
Appeal from Johnson District Court; James F. Vano, Judge. Mark E. McFarland, of Wallace, Saunders, Austin, Brown & Enochs, Chartered, of Overland Park, for appellants. Robert D. Kroeker, and Desarae G. Harrah, of Martin, Leigh, Laws & Fritzlen, P.C., of Kansas City, Missouri, for appellee.
Appeal from Johnson District Court; James F. Vano, Judge.
Mark E. McFarland, of Wallace, Saunders, Austin, Brown & Enochs, Chartered, of Overland Park, for appellants. Robert D. Kroeker, and Desarae G. Harrah, of Martin, Leigh, Laws & Fritzlen, P.C., of Kansas City, Missouri, for appellee.
Before MALONE, P.J., MARQUARDT, J., and KNUDSON, S.J.
MEMORANDUM OPINION
PER CURIAM.
The appellants Jacobson–Campbell Excavation, Inc., Pate–Campbell Properties, Inc., Joseph W. Campbell, and Rockwood at Prairie Highlands, LLC appeal the decision of the Johnson County District Court granting Marshall & Ilsley Bank's summary judgment. The appellants contend: (1) summary judgment was inappropriate on the claims of negligence and fraudulent misrepresentation because the court, inferring that two mortgage releases were filed mistakenly, improperly failed to consider contrary factual inferences in a light most favorable to the appellants; (2) the district court erroneously concluded, as a matter of law, that Kansas does not recognize an independent cause of action for duress/economic coercion/business compulsion; (3) the district court improperly rejected the claim for breach of the implied covenant of good faith and fair dealing on the basis that the implied covenant only pertained to the performance of contract obligations; and (4) the district court erroneously concluded that no material facts supported claims for tortious interference with a prospective business expectation.
We affirm the district court's grant of summary judgment.
The Underlying Circumstances
Joseph Campbell is the sole owner, officer, and manager of several business entities created for the purpose of holding and developing real property, including but not limited to Jacobson–Campbell Excavation, Inc. (JCE), Pate–Campbell Properties, Inc. (PCP), and Rockwood at Prairie Highlands, LLC (Rockwood). While PCP is the primary legal owner of Rockwood, Campbell is the sole manager of Rockwood.
In April 2001, Campbell, through JCE, applied for a $1,900,000 loan from Gold Bank. JCE created two mortgages in favor of Gold Bank to secure the $1,900,000 loan and another loan of $700,000 from Gold Bank. The mortgages covered property at 159th Street and Ridgeview, commonly called the Asbury Centre property, and were duly recorded in the Johnson County Register of Deeds, Book 6950 at page 885 and Book 6963 at page 585, respectively. Thereafter, Gold Bank renewed its credit to JCE under various promissory notes and debt modification agreements extending the maturity dates of the original notes. Eventually, the two promissory notes were reduced to a single promissory note in the amount of $1,850,000, which was renewed on July 31, 2005.
On October 6, 2005, two satisfactions of the mortgages were filed by Gold Bank. A crucial issue giving rise to the pending litigation is whether the mortgages were mistakenly or intentionally released of record. In April 2006, Gold Bank was purchased by and merged into Marshall & Ilsley Bank (M & I). M & I continued to extend credit to JCE until October 31, 2007.
According to Campbell, he first discovered that Gold Bank had filed the satisfactions in late 2006 or early 2007. Campbell had sought additional financing from the Bank of Blue Valley, and the bank had agreed to accept a second priority on the Asbury Centre property as collateral for the loan. When the bank went to file its mortgage, however, it discovered no prior lien on the property and informed Campbell, who then discovered the satisfactions filed in 2005. Accordingly, before meeting with Kent Brown, M & I's loan officer, about additional credit in March 2007, Campbell had phone conversations with Brown and told him that satisfactions of the mortgages had been filed. Brown insisted that M & I still retained a security interest in the Asbury Centre property, even after Campbell provided copies of the satisfactions. Brown informed Campbell that M & I would only extend JCE's promissory note that matured on July 31, 2007, for an additional 90 days. On or before October 31, 2007, the principal and interest on the promissory note would become due.
In September 2007, Campbell sought and obtained an $11,000,000 line of credit with Columbian Bank and Trust for use of his various corporations. Subsequently, various promissory notes were executed (referred to by the parties in their appellate briefs as the “Rockwood loan”). Electronic mail sent contemporaneously with the Rockwood loan indicated that the proceeds of the loan would be used in part to pay M & I $1,860,000 in satisfaction of JCE's debt to M & I and noting that the mortgage held by M & I had been released in error. After being paid, M & I executed two satisfactions of mortgage, which corresponded to the mortgages previously released by Gold Bank.
In August 2008, Columbian Bank and Trust entered receivership under the direction of the Federal Deposit Insurance Corporation (FDIC). There were no payments on the Rockwood loan after the FDIC took control of the bank. The FDIC sold the Rockwood loan to Rialto Capital Corporation, otherwise known as Multibank. Multibank sent a notice of default to Rockwood, PCP, and Campbell on September 30, 2010. The record contains no indication whether Multibank has brought suit for payment of the debt.
The lawsuit is filed against M & I
The appellants filed suit against M & I on September 28, 2009, and ultimately alleged that M & I committed breach of contract, breach of the implied covenant of good faith and fair dealing, negligent misrepresentation, breach of a fiduciary duty, duress/economic coercion/business compulsion, tortious interference with a prospective business advantage, and fraud. The appellants sought $22,030,010 in damages. However, in his deposition, Campbell claimed there had been damages of $48,778,790.79. M & I entered a general denial but also presented specific defenses to each claim.
The appellants and M & I filed competing motions for summary judgment. On July 1, 2011, the district court granted summary judgment to M & I on all claims. The appellants filed a notice of appeal and simultaneously filed a motion to alter or amend the judgment. On August 23, 2011, the district court denied the motion to alter or amend the judgment, affirming its previous ruling. The appellants filed another notice of appeal on September 22, 2011. We conclude the appeal is timely.
The district court did not err in granting summary judgment on all claims
Summary judgment is only appropriate when the pleadings and any available depositions, answers to interrogatories, admissions, and/or affidavits demonstrate a lack of dispute regarding the material facts, entitling the moving party to judgment as a matter of law. In assessing a motion for summary judgment, a court must resolve any inferences to be drawn from the evidence in a light most favorable to the nonmoving party. Nevertheless, a party opposing summary judgment has the obligation to direct the court to disputed facts, which, if interpreted favorably to the nonmoving party, could support a cause of action. See Kansas One–Call System v. State, 294 Kan. 220, 225, 274 P.3d 625 (2012).
On appeal, the appellants challenge the district court's summary judgment ruling as to 6 of the 10 claims subject to summary judgment. The district court's ruling as to the remaining claims are not challenged and therefore remain undisturbed on appeal. See Marinhagen v. Boster, Inc., 17 Kan.App.2d 532, 542, 840 P.2d 534 (1992), rev. denied 252 Kan. 1092 (1993); see also Friends University v. W.R. Grace & Co., 227 Kan. 559, 561, 608 P.2d 936 (1980) (finding abandonment of challenges to summary judgment with respect to claims that were not briefed on appeal). The appellants organize the arguments into four issues: (1) whether the district court improperly granted summary judgment on the negligent and fraudulent misrepresentation claims by erroneously inferring that the mortgage releases were a mistake rather than allowing a jury to make the factual determination; (2) whether the district court erred in ruling as a matter of law that Kansas does not recognize a tort claim for duress, economic coercion, or business compulsion; (3) whether the district court erroneously concluded that the record contained no facts supporting a claim for a breach of the implied duty of good faith and fair dealing; and (4) whether the district court erred in concluding that the appellants had failed to establish evidence supporting its claims for tortious interference with a prospective business advantage.
1. Negligent and Fraudulent Misrepresentation
Before the district court, the appellants alleged that M & I committed negligent and fraudulent misrepresentation by claiming a continued security interest in the Asbury Centre property after Gold Bank had released the mortgages on October 6, 2005. The district court concluded that there was no evidence demonstrating an intentional relinquishment of the mortgages and therefore no evidence of a misrepresentation because the mortgage remained enforceable between JCE and M & I. The appellants contend that the district court's judgment was flawed because the court made inferences in favor of M & I based upon the evidence when the court was obligated to make any reasonable inferences in favor of the appellants in deciding whether to grant summary judgment.
In order to establish a claim for negligent misrepresentation, the appellants were required to establish that M & I conveyed false information to Campbell without exercising reasonable care in determining the veracity of the information conveyed, that Campbell justifiably relied on the false information, and that the appellants suffered damages as the proximate cause of the false information. See Wilkinson v. Shoney's, Inc., 269 Kan. 194, 218, 4 P.3d 1149 (2000) (citing Mahler v. Keenan Real Estate, Inc., 255 Kan. 593, 604–05, 876 P.2d 609 [1994], and Restatement [Second] of Torts § 552 [1976] ). A claim for fraudulent misrepresentation requires the same proof except that the plaintiff must establish that the false information was intentionally or recklessly conveyed rather than merely conveyed without exercise of reasonable care. Wilkinson, 269 Kan. at 218. a. False Information
Essentially, the district court's reasoning in granting summary judgment on the negligent misrepresentation and fraud claims rested on the appellants' failure to present evidence or additional genuine issues of material fact to controvert M & I's claim that the mortgages were enforceable notwithstanding the mortgage releases. The district court noted that M & I's position had consistently been that the satisfactions were filed mistakenly. Kansas law clearly permits a mortgagee to enforce a mortgage against the mortgagor if a mortgage is cancelled or released by accident or mistake. See Loan Co. v. Garrity, 57 Kan. 805, 808, 48 P. 33 (1897).
“The receipt, or release, is not conclusive upon the parties, nor does it necessarily operate as a discharge of the mortgage. ‘It is well settled in this State that a receipt furnishes only prima facie evidence of the declarations and admissions which it contains, and that a party giving a receipt admitting payment in full has a right to show that it is untrue.’ [Citation omitted.] Neither is a release entered upon the records conclusive upon the parties where payment is not made and it appears to have been done by accident or mistake. In such a case, equity will intervene and grant relief. The cancellation of the mortgage is to be regarded as only prima facie evidence of its discharge, and the party asking relief may show that the release was made by fraud, accident, or mistake. When that is shown the mortgage will be held and enforced as a valid security.” Garrity, 57 Kan. at 808.
The appellants correctly assert that M & I bears the burden of establishing that the mortgage satisfaction was filed by accident or mistake. See Garrity, 57 Kan. at 808. The appellants further contend that whether the filing was done by mistake or with intention is a fact question reserved for the jury and not appropriate for summary judgment. We acknowledge that intent is generally a jury question. See Brown v. United Methodist Homes for the Aged, 249 Kan. 124, 133, 815 P.2d 72 (1991); Morriss v. Coleman Co., 241 Kan. 501, 512, 738 P.2d 841 (1987). But, the appellants' argument misses the point. In order to establish a claim for either negligent misrepresentation or fraud, the appellants were required to assert by a summary of evidence in opposing the motion for summary judgment, that M & I provided false information— i.e., the promissory note was secured by mortgages that did not exist. Because a mortgage satisfaction that is mistakenly filed does not affect the enforceability of the mortgage between the parties, M & I's statement to Campbell was false only if the satisfactions had not been filed by mistake. As noted by the district court, the appellants presented no evidence, other than the prima facie evidence of the filing itself to demonstrate that the satisfactions were filed intentionally. The appellants admit Campbell did not request the satisfactions to be filed and that the promissory note secured by the mortgages had not been paid at the time the satisfactions were filed. Under the reasoning in Garrity, this uncontroverted evidence was sufficient to rebut the presumption created by the mere filing of the satisfactions. 57 Kan. at 808. Therefore, according to the evidence in the record, M & I did not convey a false statement to Campbell when they asserted that they had an enforceable mortgage against the Asbury Centre properties. b. Justifiable Reliance
Alternatively, M & I contends that, even if the presence of mistake was a fact question properly reserved for the jury, the district court's summary judgment ruling may be upheld on alternate grounds. See Robbins v. City of Wichita, 285 Kan. 455, 472, 172 P.3d 1187 (2007) (“When the district court reaches the correct result, its decision will be upheld even though the district court relied on the wrong ground or assigned erroneous reasons for its decision.”). Specifically, M & I contends that the appellants cannot demonstrate justifiable reliance on M & I's statements to Campbell regarding the existence of a mortgage. M & I's alternative argument also supports summary judgment.
Since Campbell was aware of the mortgage satisfactions no later than March 2007 when he confronted Brown about them, the appellants cannot have justifiably relied on M & I's assertion that a valid mortgage on the Asbury Centre property secured the loan obligations of JCE. See Sippy v. Cristich, 4 Kan.App.2d 511, 515, 609 P.2d 204 (1980).
“ “ ‘A recipient of a fraudulent misrepresentation is justified in relying upon its truth without investigation, unless he [or she] knows or has reason to know of facts which make his [or her] reliance unreasonable.” ... [T]he test is whether the recipient has “information which would serve as a danger signal and a red light to any normal person of his [or her] intelligence and experience.’ “ “ Sippy, 4 Kan.App.2d at 515 (quoting Goff v. American Savings Association, 1 Kan.App.2d 75, 82, 561 P.2d 897 [1977] ).
The Restatement (Second) of Torts creates a slightly different standard for justifiable reliance. Section 540 states that a party is justified in relying on a false statement even if an investigation would have revealed the falsity of that statement. Section 541 curtails the reliance somewhat by holding that reliance on a false statement is not justified if the party knows that the statement is false or if the falsity of the statement is obvious to him or her. Restatement (Second) of Torts §§ 540, 541, p. 88 (1977). Comment a to Section 541 provides:
“Although the recipient of a fraudulent misrepresentation is not barred from recovery because he [or she] could have discovered its falsity if he [or she] had shown his [or her] distrust of the maker's honesty by investigating its truth, he [or she] is nonetheless required to use his [or her] senses, and cannot recover if he [or she] blindly relies upon a misrepresentation the falsity of which would be patent to him [or her] if he [or she] had utilized his [or her] opportunity to make a cursory examination or investigation.”
Under the facts of the present case, both standards establish that Campbell could not justifiably rely upon M & I's allegedly false assertion that it held a mortgage to the Asbury Centre property to secure the JCE promissory note. The appellants, through Campbell, knew how many mortgages had been executed in favor of Gold Bank/M & I. Campbell also knew that the satisfactions of the mortgages securing the loans of $1,900,000 and $700,000 from Gold Bank had been filed. He had all of the information necessary to determine whether the mortgages claimed to be held by M & I were valid and enforceable. In fact, Campbell continued to insist that M & I's loans to JCE were unsecured when he secured financing from Columbian Bank and Trust and directed that the M & I loans be paid.
The appellants in a reply brief raise the argument that M & I fails to differentiate between recorded mortgages and unrecorded mortgages, intimating that M & I represented the existence of an unrecorded mortgage that did not actually exist. As the sole owner and manager of the business entities that held the property subject to the mortgages, Campbell was aware or should have been aware of the extant mortgages, whether recorded or unrecorded. He could not justifiably rely on a statement suggesting the existence of some mortgage he never executed. Therefore, Campbell knew or should have known that the only mortgage on the Asbury Centre property used to secure a loan from M & I to JCE were the two mortgages purportedly released by the filing of the satisfactions in 2005. The appellants cannot demonstrate justifiable reliance on M & I's assertion under the facts of this case. The district court's summary judgment ruling may be properly upheld on this alternative ground. c. Damages
M & I also contends that the district court's grant of summary judgment on the negligent and fraudulent misrepresentation claims may also be supported by the lack of evidence demonstrating injury to the appellants as a result of any reliance on M & I's assertion that they possessed an enforceable mortgage. The appellants contend that absent M & I's misrepresentation of valid mortgages, the Columbian Bank and Trust loan would not have been directed to pay the JCE promissory note.
While it is true that the JCE promissory note with M & I did not mature until October 31, 2007, and the Columbian Bank and Trust loan closed on September 28, 2007, these facts have no relationship to M & I's assertion that it possessed mortgages securing the JCE promissory note. It is uncontroverted that the note was due on October 31, 2007, and would not be renewed. This was true irrespective of whether the debt was secured by two mortgages. JCE could have waited until October 31, 2007, to pay the loan. Instead, Campbell directed that Columbian Bank and Trust pay the note at closing on September 28, 2007. As a result, the appellants are not able to explain how the decision to pay the JCE promissory note was influenced by M & I's assertion that valid, enforceable mortgages were extant. The failure to establish any damages arising from reliance upon M & I's allegedly false information about the mortgage also provides a basis for affirming the district court's summary judgment ruling on the negligent and fraudulent misrepresentation claims.
2. Claim for Duress/Economic Coercion/Business Compulsion
The appellants claim that the district court erroneously dismissed the claim for duress/economic coercion/business compulsion on the grounds that Kansas did not recognize such an independent tort cause of action but recognized it only as a defense to contract. Citing Western Paving Co. v. Sifers, 126 Kan. 460, 268 P. 803 (1928), the district court concluded that the claim is not recognized in Kansas to support an independent tort act. Whether a claim is actionable in law is a question of law, over which this court possesses unlimited review. Wilkinson, 269 Kan. at 203.
The appellants cite one Kansas case to support the argument that Kansas law recognizes an independent tort action for duress/economic coercion/business compulsion. In Milling Co. v. Gas & Electric Co ., 115 Kan. 712, 225 P. 86 (1924), the Kansas Supreme Court recognized a common-law action for duress and expanded the action to include economic coercion in addition to physical threats.
“We have traveled far from the common law duress of bodily imprisonment or fear of loss of life or member or of imprisonment, to the modern doctrine of involuntary payment. There must be unlawful coercion; but we are no longer restricted to goose flesh producing agencies, and the mythical man of ordinary courage and firmness is no longer invoked as a standard. It is sufficient that the constraint, in the particular instance, destroy free agency to pay or not to pay according to one's own will, whether relief were formerly obtainable by common law action for duress, or by suit in equity for wrongful compulsion. [Citation omitted.] Although the old definition of duress has been referred to occasionally since the decision of the Williamson–Ackerman case, it is clear no fixed or serviceable standard of courage and firmness can be derived from common experience, and timid persons of weak resistance are entitled to redress if their free agency has been wrongfully destroyed, to their detriment.” Milling Co., 115 Kan. at 715.
Nevertheless, although Milling Co. clearly recognized the doctrine of duress, its foundation is in equity, and the remedy is generally rescission or cancellation of the agreed action or payment. See Hastain v. Greenbaum, 205 Kan. 475, 484, 470 P.2d 741 (1970) (citing 1 Black on Rescission and Cancellation, 2d ed., § 223, p. 630–31); Black's Law Dictionary 504 (6th ed. 1990) (“Duress may be a defense to a criminal act, breach of contract, or tort because an act to be criminal or one which constitutes a breach of contract or a tort must be voluntary to create liability or responsibility.”).
“ ‘Duress is a form of coercion, physical or moral, and is said to exist where one person, by the unlawful act of another, is induced to make or discharge a contract, or to perform or forego some other act affecting his rights of person or property, under circumstances which deprive him of the exercise of his free will, subject him to the will of that other, and constrain him to act contrary to his wishes and inclination.’ “ Hastain, 205 Kan. at 481–82 (quoting 1 Black on Rescission and Cancellation, 2d ed., § 221, p. 626).
From the Kansas caselaw provided by the parties, duress appears to be a defense in equity to an obligation or liability the law would otherwise enforce. We conclude the caselaw does not appear to support an independent cause of action for damages, though a party may recover wrongful payments under a theory of duress. See Bank of America v. Narula, 46 Kan.App.2d 142, 163, 261 P.3d 898 (2011) (refusing to enforce contract modification that was the product of economic duress); Milling Co., 115 Kan. at 721. Accordingly, the district court properly determined that the equitable doctrine of duress, as recognized in Kansas, did not create a cause of action for Campbell's recovery of damages.
Moreover, this is not a case in which the appellants seek to recover wrongful payments to M & I under a theory of duress. Instead, the appellants seek to recover for economic loss under a theory that M & I coerced the appellants into the Columbian Bank and Trust transaction. We conclude this argument is without merit.
“It is elementary that the law does not recognize privilege to pay an illegal demand and then to sue for the money. It is only when, in an emergency for which he [or she] is not responsible, a person finds he [or she] has no choice except to pay in order to protect his [or her] business interests, that he [or she] may recover. If, with knowledge of the facts, he [or she] voluntarily takes the risk of encountering the emergency, the payment is voluntary.” Milling Co., 115 Kan. at 721–22.
Here, the appellants' “emergency” was created by M & I's lawful demand for payment under a promissory note executed by JCE. No contract provision or any other legal duty required M & I to renew the note and, therefore, M & I was justified in its refusal to extend or renew the promissory note.
Though there are factual similarities between this case and Narula, Narula is distinguishable. In Narula, a business owned by the Narulas executed a loan agreement with the bank for the construction of an office building. The agreement contained a provision for a permanent loan at a fixed rate once construction was completed. During the course of the construction, however, the bank wished to implement a loan modification and informed the Narulas that modification of the loan was required or the entire balance would become immediately due and payable and that the bank would be authorized to implement foreclosure proceedings. This court found the bank's conduct sufficient to constitute duress because the bank was not authorized to bring the loan immediately due or foreclose on their property and because the bank created the financial situation that forced the Narulas to extend and modify their loan agreement with the bank at disadvantageous terms. 46 Kan.App.2d at 165–66.
In the present case by contrast, M & I did not misrepresent that the promissory note would be due and owing on October 31, 2007. The threat of instituting legal proceedings upon default in payment under the terms of the promissory does not constitute duress. See Campbell–Leonard Realtors v. El Matador Apartment Co., 220 Kan. 659, 665, 556 P.2d 459 (1976) (quoting Riney v. Doll, 116 Kan. 26, Syl. ¶ 2, 225 P. 1059 [1924] ) (“ ‘It is not duress for one to threaten to take such legal proceedings as the law affords to recover damages for claimed injuries.’ ”). We conclude the district court did not err in its ruling.
3. Breach of Implied Covenant of Good Faith and Fair Dealing
After Columbian Bank and Trust went into receivership, Campbell approached the FDIC in an effort to resolve the debt crisis. According to Campbell, the FDIC was receptive to negotiations but wanted to examine loan documents from the various banks from whom the appellants had previously obtained loans. The appellants contend that M & I refused to provide the pertinent loan information for FDIC review and, consequently, negotiations were stymied and the FDIC ultimately sold the loans to Rialto Capital Corporation.
Based on the above circumstances, the appellants argue that the district court erroneously issued summary judgment on its claim against M & I for breach of implied covenant of good faith and fair dealing. The appellants contend that the duty of good faith and fair dealing accompanies every banking relationship. The district court rejected the appellants' claim based on a breach of the implied covenant of good faith and fair dealing, concluding that the implied duty pertained to a party's performance of specific contractual provisions and did not afford an independent cause of action.
The implied duty of good faith and fair dealing is part of a contract governing the parties' performance. See Bonanza, Inc. v. McLean, 242 Kan. 209, 222, 747 P.2d 792 (1987) (duty of good faith and fair dealing is an implied contract term governing parties' performance of contract); Guarantee Abstract & Title Co. v. Interstate Fire & Cas. Co., 232 Kan. 76, 79, 652 P.2d 665 (1982) (refusing to recognize independent tort of bad faith for purposes of determining availability of punitive damages); Pizza Management, Inc. v. Pizza Hut Inc., 737 F.Supp. 1154, 1167 (D.Kan.1990) (“[The duty of good faith and fair dealing] is implied in a contract, and conduct departing from that duty is a breach of a contractual obligation.”). The district court properly held that no cause of action of breach of an implied duty of good faith and fair dealing existed outside of a contractual relationship.
We acknowledge that one or more of Campbell's business entities had a continuing business relationship with M & I that was contractual. But, as M & I contends, the appellants have not presented any evidence of any contractual duty that M & I failed to perform in good faith.
Alternatively, because the measure of damages, if any, sound in contract and not in tort, only pecuniary damages, not punitive damages, are available. See Guarantee Abstract & Title Co., 232 Kan. at 78. Campbell cannot point to any contract damages arising from M & I's failure to provide documents to the FDIC. The appellants' ability to purchase the loan obligations held by the FDIC is conjectural and speculative, not the proper basis for contract damages. See McKissick v. Frye, 255 Kan. 566, 591, 876 P.2d 1371 (1994); Kendrick v. Manda, 38 Kan.App.2d 864, 871, 174 P.3d 432 (2008). Moreover, the appellants have not made a factual representation that the FDIC would have accepted the terms of an offer to purchase the loans and, if so, what terms would have been acceptable.
The district court did not err in granting summary judgment on the claim for breach of the implied covenant of good faith and fair dealing based on any failure by M & I to provide financial information to the FDIC.
4. Tortious Interference with a Prospective Business Expectation
Before the district court, the appellants raised two claims for tortious interference with a prospective business expectation: (1) M & I's assertion that it held a mortgage forced payment of the JCE promissory note, thus depriving JCE from monies it would have received as a result of the Rockwood loan with Columbian Bank and Trust; and (2) M & I's refusal to produce the loan documentation requested by Campbell undermined negotiation with the FDIC for a discounted purchase of the Columbian Bank and Trust loan. As a preliminary matter, it is questionable whether the claims have been properly presented to this court because the appellants have failed to cite any authority related to the claims, not even a case outlining the elements he is required to prove. See McCain Foods USA, Inc. v. Central Processors, Inc., 275 Kan. 1, 15, 61 P.3d 68 (2002) (“Simply pressing a point without pertinent authority, or without showing why it is sound despite a lack of supporting authority, is akin to failing to brief an issue. ‘Where the appellant fails to brief an issue, that issue is waived or abandoned .’ [Citations omitted.]”).
A claim for tortious interference with an existing or prospective business expectation requires the plaintiff to establish: (1) the existence of a business relationship or a reasonable expectation of a future economic benefit; (2) evidence of the defendant's knowledge of the business relationship or future economic benefit; (3) evidence that the defendant's conduct was the proximate cause of the disruption of the business relationship; (4) the defendant's conduct was intentional; and (5) damages caused by the disruption to the business relationship. Meyer Land & Cattle Co. v. Lincoln County Conservation Dist., 29 Kan.App.2d 746, 751, 31 P.3d 970 (2001), rev. denied 273 Kan. 1036 (2002). a. Claim of Extant Mortgage
With respect to the claim that M & I tortiously interfered with a prospective business expectation by claiming to possess mortgages, the previous analysis of the negligent and fraudulent misrepresentation claims adequately address the propriety of the district court's summary judgment ruling. Assuming, without holding, that M & I intentionally and wrongfully asserted that it held a mortgage against the Asbury Centre property, the appellants cannot establish that the wrongful representation had any effect on the decision to pay off the JCE promissory note, which M & I lawfully refused to renew when it matured on October 31, 2007. JCE would have been legally required to pay the outstanding $1,860,000 debt in some manner. The choice to accept a loan obligation of $11,000,000 to satisfy several loan obligations, including the JCE promissory note to M & I, cannot be proximately attributed to M & I's misrepresentation that it held a mortgage on the Asbury Centre property. Furthermore, as previously discussed, the appellants cannot demonstrate injury arising from this transaction because JCE was obligated to pay the promissory note regardless of whether it was secured by a mortgage. This allegation of tortious interference with a prospective business advantage is meritless. b. Failure to Provide Loan Documentation
For reasons previously discussed, the district court also did not err in granting summary judgment on the tortious interference allegation related to M & I's failure to produce the loan documentation requested by Campbell. The district court concluded that the tortious interference claim lacked legal merit for two reasons. First, the appellants provided no evidence that financial circumstances had changed from the position they were in at the time the loans were originally created. Second, the appellants provided no indication as to which documents the FDIC was missing and whether those documents affected the FDIC's decision-making process. When the appellants challenged these conclusions in its motion to alter or amend the judgment, the district court clarified its previous ruling.
“Plaintiffs failed to set forth any evidence that Defendant's actions caused the FDIC to back out of the negotiations or that the FDIC agreement was reasonably certain to proceed if Defendant had come forward with specific documents.
“The record contains testimony from Joseph Campbell that he provided the FDIC with information regarding all of his loans from other banks for several previous years, his tax returns, an affidavit of assets, bank statements and a separate questionnaire form. The record contains a letter from an FDIC representative indicating that the FDIC needed ‘corporate and personal tax returns, corporate and personal financial statements, and any other documentation which evidences change in condition.’
“At no time have Plaintiffs described which of these documents Defendant failed to provide, and according to the record, the FDIC requested certain documents from Plaintiffs, not from Defendant. Plaintiffs fail to indicate that the documents requested were documents to which Plaintiff did not, or could not, have access. The record is void of reference to any other documents requested from and not provided by Defendant, and most of the documents specifically described in the FDIC letter were provided to the FDIC by Plaintiffs.
“Although Plaintiffs allege that the FDIC agreement was reasonably certain to proceed, all of the evidence presented by Plaintiffs indicates that negotiations were still ongoing. The FDIC had agreed to release the collateral securing the Rockwood loans; however, Plaintiffs allege that they wanted further consideration because the loan balance would simply be reduced to $10,000,000.00. Therefore, Plaintiffs asked the FDIC if it would accept a compromise on the balances of the Rockwood loans. According to evidence in the record, the FDIC responded that it ‘may be willing to accept’ such consideration, but required information regarding the ‘borrower's and guarantor's current financial condition’ and then requested ‘documentation which evidences change in condition.’
“This evidence clearly indicates that Plaintiffs and the FDIC had not reached a final agreement, and unless the FDIC was satisfied that Plaintiffs' financial situation had changed, the FDIC would be unwilling to accept the terms set forth by Plaintiffs. As a result, this Court ruled that Plaintiffs failed to make a sufficient showing that Plaintiffs' financial situation had changed such that the FDIC would have accepted their offer. Additionally, Plaintiffs failed to make a sufficient showing that the FDIC would have accepted the agreement only if Defendant produced the documents requested. Therefore, Defendant is entitled to judgment as a matter of law.”
The district court's summary of the pertinent facts and analysis of the tortious interference with a prospective business expectation issue accurately and adequately addresses the lack of merit in the appellants' position. The court appropriately granted summary judgment in favor of M & I on this claim.
Conclusion
We conclude the district court did not err in its grant of summary judgment in favor of M & I. There was no conflicting evidence or testimony to support a genuine issue of fact as to whether the two mortgages were released intentionally. The appellants cannot stand on a statutory presumption that was overcome by uncontroverted evidence that was substantial and credible. Moreover, as a matter of law, the district court did not err in its decision of the claims of negligence and fraudulent misrepresentation because there was no evidence presented to establish that M & I conveyed false information to the appellants, that there was any justifiable reliance on the assertions that were made by M & I, or that those assertions were the legal cause of any monetary loss. The balance of the appellants' claims either lack factual substance or legal support. The district court's well-reasoned memorandum decision granting summary judgment to M & I is affirmed.
Affirmed.