Snyder v. Lovercheck
992 P.2d 1079 (1999)
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Rule of Law:
A contractual clause disclaiming reliance on a seller's representations bars a claim for negligent misrepresentation because the parties have contractually allocated the risk of loss. However, such a clause does not bar a claim for fraudulent misrepresentation, as public policy dictates that fraud vitiates the entire contract.
Facts:
- In the fall of 1995, Loren Snyder hired real estate agent Jeremy Hayek to find a wheat farm.
- Hayek connected Snyder with Ron Lovercheck, the agent for a farm owned by O.W. and Margaret Lovercheck.
- During a tour, Ron Lovercheck stated that there had been some problems with rye on the farm in the past but expressed his belief that the problem was minor and confined to about 100 of the 1,960 acres.
- The next day, Ron told Snyder (via Hayek) that the farm's former owner confirmed the rye problem was limited to about 100 acres where rye could grow up to 20-25%.
- Snyder visited the property ten to twelve more times before entering into negotiations.
- On February 16, 1996, Snyder signed a contract to purchase the farm, which contained a clause stating, 'Purchaser is not relying upon any representations of the Seller or Seller’s agents'.
- Snyder later stated in a deposition that he read parts of the contract, but not the specific disclaimer clause.
- After the purchase, Snyder discovered a severe rye infestation across approximately 1,800 acres, which significantly reduced the farm's value.
Procedural Posture:
- Loren Snyder filed a lawsuit in a Wyoming district court against the Loverchecks (sellers), Ron Lovercheck (sellers' agent), Jeremy Hayek (buyer's agent), and The Property Exchange (agent's employer).
- Snyder's complaint alleged claims for breach of contract, fraudulent misrepresentation, negligent misrepresentation, and professional negligence.
- All defendants filed motions for summary judgment.
- The district court granted summary judgment in favor of all defendants on all claims.
- The district court also awarded attorney's fees to the Loverchecks and costs to all defendants.
- Snyder (appellant) appealed the summary judgment rulings and the awards of fees and costs to the Supreme Court of Wyoming.
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Issue:
Does a specific disclaimer of reliance in a real estate sales contract bar a buyer's claims against the seller for (1) fraudulent misrepresentation and (2) negligent misrepresentation regarding the condition of the property?
Opinions:
Majority - Taylor, Justice, Retired
No as to fraudulent misrepresentation; Yes as to negligent misrepresentation. A contractual disclaimer of reliance does not bar a claim for fraudulent inducement, but it does bar a claim for negligent misrepresentation where the parties have contractually allocated the risk of loss. For the fraudulent misrepresentation claim, the court follows its long-established precedent that fraud vitiates all contracts and a party cannot use a contract clause to shield itself from its own fraud. This aligns with the fraud exception to the parol evidence rule. However, the court ultimately holds that Snyder failed to produce clear and convincing evidence of fraud, and thus summary judgment was proper on other grounds. For the negligent misrepresentation claim, the court holds that the contract's terms must control. Allowing a tort claim for negligence would improperly circumvent the parties' bargained-for agreement, which explicitly allocated the risk of reliance to the buyer through the disclaimer clause. The court distinguishes this from fraud, as the public policy against enforcing contracts induced by mere negligence is not as strong. Because Snyder signed a contract with a clear and unambiguous disclaimer, he is barred from asserting a claim for negligent misrepresentation.
Analysis:
This decision reinforces a critical distinction in contract law between claims of fraud and claims of negligence when a contract contains a disclaimer of reliance (or 'non-reliance') clause. The court strongly affirms the public policy principle that one cannot contractually immunize oneself from liability for intentional deceit, preserving the viability of fraud claims regardless of contractual language. However, the ruling also champions the freedom of contract by holding that parties are free to allocate the risks of unintentional, negligent misstatements. This creates a clear doctrinal split, preventing parties from using tort law (negligence) to escape a bad bargain but ensuring that tort law (fraud) remains a remedy for intentional wrongdoing.
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