My gosh, I love my job!
That intriguing question came to mind as I read the case of Baytree Natl Bank & Trust Co. v. Watring, an unpublished (can we please do away with that now that circuit courts are just letting lawyers argue unpublished cases anyway) decision just released by the Court of Appeals.
In a nutshell, here's what happened: The Watrings borrowed money for a construction project, and then didn't pay it back. So the Bank extended the loan and extended the loan and forbearanced the loan and then sued for foreclosure.
The Watrings then counterclaimed for breach of the good faith duty and negligent misrepresentation, both stemming from the Watrings' claims that the Bank refused to finance qualified buyers for their project.
Ultimately, the Court of Appeals upheld the circuit court's decision granting summary judgment and dismissing the counterclaims, ruling in part that guidelines the Bank gave for approving buyers could not have proven part of the breach of duty of good faith because the guidelines came out after the deal, a ruling I don't really understand. The Court decided that you had FIRST, contract, THEN promise to do certain things pursuant to the contract, and that because they came in that order, the THEN didn't modify, illuminate, or shape the FIRST, but that doesn't make any sense. Consider: I promise to sell you my car. You say "Okay, here's $1,000." I say "OK, I'll deliver it tomorrow once I get my CDs out of it" and then I don't.
Does my promise to deliver it tomorrow affect whether I have breached the contract to sell you my car? I think it does.
(As always, almost every problem in law can be seen clearly if you put it in the context of a car accident or car sale.)
Anyway, the really fascinating part of Baytree is that opening question. The Watrings, remember, signed a forbearance on the loan, one which resolved all outstanding claims they had at the time. So when they sued, Baytree could have simply said as an affirmative defense in reply "Nope: Waived those claims." BUT IT DIDN'T.
So: problem, right? Because waiver is an 802.06 defense which is waived if not raised in the first responsive pleading.
Baytree then could have moved for summary judgment on the forbearance. BUT IT DIDN'T.
Baytree didn't bring the forbearance up until it's REPLY on summary judgment, at which point the Watrings for some reason (apparently) thought "Hey, they've got that forbearance thing, we ought to ignore it," and didn't bother to respond, which didn't matter because the circuit court didn't rule on the forbearance at that summary judgment hearing, but did give judgment to Baytree, leaving the counterclaims alive.
Baytree then moved for summary judgment on the counterclaims, bringing up the forbearance AGAIN, and again the Watrings ignored it entirely, as did the circuit court, granting summary judgment on THOSE claims, too.
(May I point out that the very idea of two summary judgment motions belies the name summary judgment? Circuit courts: get a handle on summary judgment, which is often more expensive and time-consuming than a trial would be. I say: ONE summary judgment motion per case, tops.)
(And don't get me started on partial summary judgment.)
The Watrings then appealed, but didn't bother mentioning the forbearance at all until their reply brief, when they finally said something about it.
So that's the background: Baytree is required by statute to have raised the forbearance/waiver issue at the first pleading, but Watring never bothered pointing that out, and so ultimately, the Court of Appeals said that Watrings couldn't rely on the failure-to-plead defense, because they'd waived the claim that the waiver claim was waived.
I came up with that line, not the Court of Appeals.
Which on the one hand is an okay ruling because you shouldn't be allowed to get a benefit from waiving your claims and then suing on them anyway, having your cake and eating it too, but on the other hand, why have a statute at all if you're not going to follow it?
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