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CarMath, Inc. v. FirstBank

United States District Court, E.D. Oklahoma

August 3, 2017

CARMATH, INC., Plaintiff,



         This matter comes before the Court on Defendants' Motion for Summary Judgment (Docket Entry #42). On March 6, 2011, Defendant David J. Burrage, President of FirstBank (“Burrage”), authored a letter which read:

         To Whom It May Concern:

Jim Berry, President of Berry Energy Services, Inc. has been a customer of FirstBank since 2009, prior to that time I personally loaned Mr. Berry over $550, 000. During the 2 years that Mr. Berry did business with me personally he paid as agreed. Currently, Mr. Berry is the guarantor or maker on loans totaling $589, 000 at FirstBank. All loans have paid as agreed. I have also followed Mr. Berry's progress in the energy business and have been impressed with his success.
Should you need anything further please don't hesitate to call me.

         At the time that these representations were made by Burrage: (1) Berry Energy Services, Inc. was not a customer of FirstBank and has never been a customer of the bank; (2) Jim Berry was a customer of FirstBank and had successfully paid off two loans and maintained two active loans with the bank; and (3) no negative credit reporting of Jim Berry had occurred.

         On October 25, 2011, Berry Energy Services, Inc. completed a document entitled “Credit Application” for TransMatrix, Inc. (“TransMatrix”), the broker providing credit verification services to Plaintiff CarMath, Inc. (“CarMath”) on the lease agreement. Among the information provided on the form was the identification of five credit references: FirstBank with Burrage as the contact, Red Flint Sand & Stone, Flash Trucking, American Express Trucking, and Union Pacific Railroad. The application was signed by Jim Berry. TransMatrix then sent representatives of American Express Trucking, Flash Trucking, and Red Flint Sand & Stone individual letters which indicated that it was “Requesting Credit Information on Berry Energy Services, Inc.” American Express Trucking rated Berry Energy Services, Inc.'s account with it as “excellent” noting “good customer, pays on time!” Flash Trucking also rated the account with the company as “excellent.” Red Flint Sand & Stone rated the account “good”, stating the company “always pays within 1-2 days of net 15.” The Burrage letter was sent by e-mail by Nicholas Berry, an employee of Berry Energy Services, Inc., to TransMatrix on October 25, 2011. After receiving the Burrage letter, neither TransMatrix nor CarMath attempted to contact Burrage to verify that the information contained in the letter pertained to Berry Energy Services, Inc. or whether the information had changed in the seven months since the letter was written.

         On November 3, 2011, CarMath entered into a five year lease agreement with Berry Energy. CarMath leased Berry Energy 22 rail cars for use in the transportation of frac sand. Jim Berry was not a party to the lease agreement and did not provide a guaranty for the obligation.

         Berry Energy subsequently defaulted on the lease obligation. On April 16, 2015, a default judgment was entered by the Circuit Court, Second Judicial Circuit, State of South Dakota, County of Minnehaha.

         On March 11, 2016, CarMath initiated this action alleging claims against Defendants arising from the letter proffered by Burrage for (1) fraudulent misrepresentation; (2) fraud in the inducement; and (3) negligent misrepresentation.

         Summary judgment is appropriate only if there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Henderson v. Inter-Chem Coal Co., Inc., 41 F.3d 567, 569-70 (10th Cir. 1994). Whether there is a genuine dispute as to a material fact depends upon whether the evidence presents a sufficient disagreement to require submission to a jury or is so one-sided that one party must prevail as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986); Stone v. Autoliv ASP, Inc., 210 F.3d 1132, 1136 (10th Cir. 2000). Once the moving party meets its initial burden of demonstrating an absence of a genuine dispute of material fact, the burden then shifts to the nonmoving party to demonstrate the existence of a genuine dispute of material fact to be resolved at trial. See 1-800-Contacts, Inc. v., Inc., 722 F.3d 1229, 1242 (10th Cir. 2013)(citation omitted). A fact is “material” if it pertains to an element of a claim or defense; a factual dispute is “genuine” if the evidence is so contradictory that if the matter went to trial, a reasonable jury could return a verdict for either party. Anderson, 477 U.S. at 248. The facts must be considered in the light most favorable to the nonmoving party. Cillo v. City of Greenwood Vill., 739 F.3d 451, 461 (10th Cir. 2013)(citations omitted).

         The Court will not consider statements of fact, or rebuttals thereto, which are not material or are not supported by competent evidence. Fed.R.Civ.P. 56(c)(1)(A), 56(e)(2), 56(e)(3). Only admissible evidence may be considered when ruling on a motion for summary judgment. Jaramillo v. Colorado Judicial Dep't, 427 F.3d 1303, 1314 (10th Cir. 2005)(citation omitted) (holding that hearsay evidence is not acceptable in opposing a summary judgment motion); World of Sleep, Inc. v. La-Z-Boy Chair Co., 756 F.2d 1467, 1474 (10th Cir. 1985). Affidavits must be based on personal knowledge and must set forth facts that would be admissible evidence at trial. Murray v. City of Sapulpa, 45 F.3d 1417, 1422 (10th Cir. 1995) (quotations and citation omitted). “Conclusory and self-serving affidavits are not sufficient.” Id.

         In order to prevail on a claim for fraudulent misrepresentation, CarMath must demonstrate that Defendants (1) made a material misrepresentation; (2) it was false; (3) made the representation knowing it was false or in reckless disregard of the truth; (4) made it with the intention that it should be acted upon by CarMath; (5) CarMath acted in reliance upon it; and (6) CarMath thereby suffered injury. Sturgeon v. Retherford Pubs., Inc., 987 P.2d 1218, 1228 (Okla.Civ.App. 1999). In analyzing CarMath's claim, this Court must necessarily examine the content of Burrage's letter and consider that which the letter stated not what it might have stated.

         The subject matter of the content of the letter was clearly Jim Berry. Despite attaching a title to Jim Berry's name, Burrage only references his dealings both personally and through FirstBank with Jim Berry individually. Moreover, no evidence has been presented in connection with the Motion which would indicate Burrage or FirstBank had ever had a credit relationship with Berry Energy ...

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