Alpha Mortgage Fund v. Drinkard ( 2021 )

IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 48424
ALPHA MORTGAGE FUND II, an Idaho )
limited liability company, “as trustee for the
)
benefit, on a parity of all Variable Rate )
30-Year (Series "II-A") Debenture Holders,”
) Boise, August 2021 Term
)
Plaintiff-Respondent, )
v. ) Filed: October 13, 2021
)
ROBERT L. DRINKARD and NANCY A. )
DRINKARD, Husband and Wife, ) Melanie Gagnepain, Clerk
)
Defendants-Appellants, )
)
and )
)
PHEASANT RUN VI, LLC, an Idaho )
limited liability company, )
)
Defendant. )
__________________________________________)
Appeal from the District Court of the Third Judicial District of State
of Idaho, Canyon County. Thomas W. Whitney, District Judge.
The decision of the district court is affirmed.
Vernon K. Smith, Boise, attorney for Appellants.
Gery W. Edson, P.A., Boise, attorney for Respondents.
_________________________________
BEVAN, Chief Justice
This appeal challenges the propriety of an order renewing a judgment. Pheasant Run VI,
LLC, Robert Drinkard, and Nancy Drinkard (collectively, “the Drinkards”) appeal from the district
court’s order renewing a judgment for Alpha Mortgage Fund II (“Alpha”) in the amount of
$1,842,509.59. The Drinkards argue the district court erred when it granted Alpha’s motion to
renew because Alpha had not recorded its most recent judgment.
I. FACTUAL AND PROCEDURAL BACKGROUND
1
Pheasant Run VI, LLC, (“Pheasant Run”) is a limited liability company wholly owned by
Robert and Nancy Drinkard. In 2007, Pheasant Run obtained a loan from Alpha and, to secure the
loan, executed a deed of trust on property in Canyon County, Idaho. Robert and Nancy acted as
guarantors for the loan. Soon after, Pheasant Run defaulted on the loan and Alpha pursued a
foreclosure sale of the Canyon County property. Although Alpha recouped the property, a
significant deficiency existed between the amount Pheasant Run owed and the property’s fair
market value.
Based on the deficiency, Alpha sued Pheasant Run and Robert and Nancy, as guarantors.
Alpha sought a judgment against Pheasant Run, Robert and Nancy in the amount of the deficiency,
$1,056,912.53, plus interest. Ultimately, based on a stipulation among the parties, judgment was
entered for Alpha in the amount of $1,170,101.95, on February 23, 2010 (“Original Judgment”).
The Original Judgment was renewed on February 12, 2015, in the amount of $1,510,663.35 (“2015
Judgment”). The increase was due to accumulated interest. Alpha did not record the 2015
Judgment.
On February 10, 2020, Alpha moved the district court to again renew the Original
Judgment pursuant to Idaho Code section 10-1111, seeking $1,842.509.59, which included
accrued interest. The Drinkards objected. The Drinkards argued the Original Judgment had
expired, the 2015 Judgment served as the basis for renewal, and the 2015 Judgment could not be
renewed because Alpha had not recorded it. The district court, finding recording of the 2015
Judgment was unnecessary and that the motion to renew was made within the statutory timeframes
of Idaho Code section 10-1111, granted Alpha’s motion to renew. The renewed judgment was
entered on September 23, 2020, in the amount of $1,842,509.59. The Drinkards timely appealed.
II. ISSUES ON APPEAL
1. Did the district court err when it granted Alpha’s motion to renew the Original Judgment?
2. If so, is an inappropriate renewal of a money judgment a violation of the Takings Clause
of the United States Constitution?
3. Is either party entitled to attorney fees on appeal?
III. STANDARD OF REVIEW
“The interpretation of a statute is a question of law this Court reviews de novo.” State v.
Smalley, 164 Idaho 780, 783, 435 P.3d 1100, 1103 (2019). Similarly, “[c]onstitutional questions…
are questions of law over which this Court exercises free review.” Dep’t of Fin., Sec. Bureau v.
2
Zarinegar, 167 Idaho 611, 622, 474 P.3d 683, 694 (2020) (quoting Nye v. Katsilometes, 165 Idaho
455, 458, 447 P.3d 903, 906 (2019)).
IV. ANALYSIS
First, the Drinkards assert a constitutional claim and a judicial extinguishment claim based
on theories first raised on appeal. Second, Alpha moves this Court to strike background facts from
the Drinkards’ opening brief. Finally, the district court granted Alpha’s motion to renew the
Original Judgment after finding the judgment remained unsatisfied and Alpha’s motion to renew
was filed within five years of the 2015 Judgment. The Drinkards argue the district court erred
when it granted Alpha’s motion to renew because Idaho Code section 10-1111(1) requires a
renewed judgment to be recorded to seek a subsequent renewal within the statutory timeframe. For
the reasons below, we affirm the district court’s decision.
A. The Drinkards’ constitutional and judicial extinguishment arguments will not be
addressed because they were not preserved below.
“This Court will not consider issues raised for the first time on appeal.” ABK, LLC v. Mid-
Century Ins. Co., 166 Idaho 92, 101, 454 P.3d 1175, 1184 (2019) (quoting Mickelsen Constr., Inc.
v. Horrocks, 154 Idaho 396, 405, 299 P.3d 203, 212 (2013)). “[P]arties will be held to the theory
upon which the case was presented to the lower court.” Id. (quoting State v. Garcia-Rodriguez,
162 Idaho 271, 275, 396 P.3d 700, 704 (2017)). Moreover, an issue first raised in oral argument
before this Court is untimely and will not be considered. Robbins v. County of Blaine, 134 Idaho
113, 115 n. 1, 996 P.2d 813, 815 n. 1 (2000) (citing Mac Tools, Inc. v. Griffin, 126 Idaho 193, 198,
879 P.2d 1126, 1131 (1994)).
The Drinkards raise two issues for the first time on appeal. First, the Drinkards allege that
the district court’s renewal of the Original Judgment was error. Based on this allegation, the
Drinkards further contend the district court’s renewal constitutes an unlawful taking under the
United States Constitution. According to the Drinkards,
[b]y virtue of the procedural aspect of the renewal [s]tatute which Alpha’s
“Renewed Judgment” has failed to meet, the Drinkards are being denied equal
protection under the law and denied due process, significant constitutional issues
raised when substantive due process procedures are ignored by the lower court, and
the court exceed [sic] the statutory authority by renewing an expired [j]udgment.
The wrongful taking of property, in violation of the United States Constitution, is
an issue arising from this controversial disposition.
3
Second, the Drinkards argue for the first time in their reply brief that, had Alpha sought
and received a deficiency judgment against the Drinkards after this Court rendered its decision in
AgStar Financial Services, ACA v. Gordon Paving Co. Inc., 161 Idaho 817, 391 P.3d 1287 (2017),
no deficiency judgment would exist because the underlying debt would be judicially extinguished.
The record is completely devoid of either the Drinkards’ takings argument or their judicial
extinguishment argument based on AgStar. The takings issue was not raised in the Drinkards’
memorandum opposing Alpha’s motion to renew the judgment. The issue was also not raised in
the Drinkards’ reply memorandum in opposition to the motion to renew. Moreover, the district
court made no ruling on the Drinkards’ takings assertions. Likewise, nowhere in the record do the
Drinkards rely on this Court’s holding in AgStar.
Thus, this Court concludes the Drinkards’ takings argument and judicial extinguishment
argument will not be addressed because of the failure to raise the issues below.
B. Alpha’s motion to strike is denied.
Alpha moves this Court to strike background facts from the Drinkards’ opening brief under
Idaho Rule of Civil Procedure 12(f)(2). Alpha asserts the facts are repetitive, scandalous, and imply
Alpha improperly obtained the Original Judgment. In response, the Drinkards argue the facts at
issue are necessary to reflect the origins of this case.
To begin, we note that the proper authority for such a motion is I.A.R. 11.2(a) (if a motion
“is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose
upon the person who signed it, a represented party, or both, an appropriate sanction. . . .”). An
appropriate sanction could include striking portions of briefs which are allegedly signed in
contravention of the rule. Motions to strike under Idaho Rule of Civil Procedure 12(f) generally
focus on pleadings. “The court may strike from a pleading . . . .” I.R.C.P. 12(f); see also Hayden
Lake Recreational Water and Sewer Dist. v. Haydenview Cottage, LLC, 835 F. Supp. 2d 965, 984
(D. Idaho 2011) (“The [c]ourt has recognized in previous cases that motions to strike . . . are limited
to pleadings[.]”). In addition, motions to strike may also be addressed to the sufficiency of
affidavits on summary judgment. See generally Sales v. Peabody, 157 Idaho 195, 202, 335 P.3d
40, 47 (2014) (explaining that motions to strike are also permissible for affidavits at summary
judgment under I.R.C.P. 56(c) to preserve the right to challenge the admission of evidence on
appeal).
4
Since Alpha moved to strike the statements under a rule of civil procedure that is unsuited
to appellate proceedings, we will deny the motion. In addition, we also decline to take such action
on our own initiative under I.A.R. 11.2(a).
C. The district court did not err when it granted Alpha’s motion to renew the Original
Judgment even though Alpha did not record the 2015 Judgment.
The district court granted Alpha’s motion to renew the Original Judgment after finding the
judgment remained unsatisfied and that Alpha’s motion was filed within five years of the most
recently renewed 2015 Judgment. For the reasons below, we affirm.
The Drinkards assert the Original Judgment has expired and the only judgment subject to
renewal is the 2015 Judgment. Even so, the Drinkards maintain the 2015 Judgment cannot be
renewed because Alpha did not record it. According to the Drinkards, “[s]ince the adoption of
[Idaho Code section 10-1111(1)] . . . there has always been the requirement of a lien to be eligible
for renewal, and it must exist when the [m]otion to [r]enew is filed.” (Emphasis in original.) The
Drinkards argue the district court erred when it granted Alpha’s motion to renew because
[t]he February 12, 2015[,] [i]nstrument was the proper subject for reviewal [sic] by
the lower court—though never requested—but was considered, and the issue then
to be addressed was whether there was statutory compliance—was the February 12,
2015, [i]nstrument recorded to obtain a statutory lien—a requirement under every
version of the renewal [s]tatute. Since no statutory lien was ever created on the
renewed [i]nstrument, required under [Idaho Code section] 10-1110, that
[i]nstrument did not qualify for renewal by the lower court, and Alpha’s [m]otion
should have been denied.
(Emphasis in original).
In response, Alpha argues that a party may renew a judgment so long as renewal is sought
within the statutory timeframe provided by Idaho Code section 10-1111(1)—in this case, five
years. Alpha maintains its motion to renew the Original Judgment, which was made within five
years of the 2015 Judgment, complied with Idaho Code section 10-1111(1) and thus the district
court did not err when it granted Alpha’s motion to renew.
Idaho Code section 10-1111, at the commencement of this case in 2010, provided:
Unless the judgment has been satisfied, at any time prior to the expiration of the
lien created by section 10-1110, Idaho Code, or any renewal thereof, the court that
entered the judgment . . . may, upon motion, renew such judgment. The renewed
judgment may be recorded in the same manner as the original judgment, and the
lien established thereby shall continue for five (5) years from the date judgment.
5
I.C. § 10-1111(1) (1995) (amended 2018) (emphasis added).1
As referenced in Idaho Code section 10-1111(1), Idaho Code section 10-1110 provides that
“any judgment . . . may be recorded . . . and from the time of such recording, and not before, the
judgment so recorded becomes a lien upon all real property of the judgment debtor[.]”
The Drinkards contend Idaho Code section 10-1111(1) requires a judgment be recorded to
be renewed. That contention, however, does not align with Idaho law. In Grazer v. Jones, 154
Idaho 58, 294 P.3d 184 (2013), this Court explained the difference between judgments and
judgment liens. “A judgment lien is distinct from the underlying judgment, and therefore the
judgment does not expire merely because the lien has expired.” Id. at 65, 294 P.3d at 191. Idaho
Code section 10-1110 permits the recording of a judgment, thus creating a lien on all the debtor’s
real property. Id. That lien expires five years after the underlying judgment is entered or, if the
judgment is renewed, five years after the underlying judgment is renewed. Id. (“Th[e] lien expires
five years after the underlying judgment’s entry. However, the judgment lienor may file a motion
to renew the judgment . . . and then file and record the renewed judgment[.]” (internal citations
omitted)). Under Idaho Code section 10-1111(1), a “motion to renew must be made within five
years of the date of the judgment, and renewal prolongs the lien for an additional five years from
the date of the renewed judgment.” Id.
In Grazer, clarifying the date from which to measure the five-year period of a judgment
lien’s existence, this Court overruled a prior case that stated Idaho Code section 10-1111 “provides
that a judgment lien may be renewed within five years after the judgment is recorded.” Id. at 66,
294 P.3d at 192 (quoting G & R Petroleum, Inc. v. Clements, 127 Idaho 119, 121 n. 2, 898 P.2d
50, 52 n. 2 (1995) (emphasis in original)). This Court explained the appropriate date is the date of
judgment. Id. (“Under the correct interpretation, the lien, and the right to renew it under our law,
expired . . . five years after the date the judgment was entered[.]”). Id. Accordingly, “the limitations
period begins to run ‘from the date the judgment is entered or last renewed in the rendering state.’”
Id. at 67, 294 P.3d at 193 (quoting Potomac Leasing Co. v. Dasco Tech. Corp., 10 P.3d 972, 975
(Utah 2000) (emphasis in original)).
1
The current renewal statute is nearly identical to the 1995 version except that the timeframe for renewal is every ten
years instead of every five. I.C. § 10-1111 (2018). Even so, the Original Judgment was entered in 2010 when the
statute required renewal every five years. Thus, Alpha is subject to the restraints of the 1995 version. See Nye, 165
Idaho at 460–62, 447 P.3d at 908–10 (applying version of a statute in effect at the time a case was filed despite the
statute being amended approximately six months later).
6
More recently, in a case involving Drinkards’ counsel Mr. Smith, this Court noted that a
judgment need not be recorded to be valid. See Smith v. Smith II, 164 Idaho 46, 52, 423 P.3d 998,
1004 (2018). In Smith II, this Court made clear, “[a]s an initial matter, there is no requirement that
a judgment be recorded at all, as [Idaho Code section 10-1110] provides that a ‘judgment or decree
. . . may be recorded[.]’ The statute does not mandate recording for a judgment to be valid.” Id.(citations omitted). Similarly, in 1998, the Idaho Court of Appeals rejected an appellant’s argument
that a money judgment could be renewed only if the judgment achieved lien status through
recordation. Smith v. Smith I, 131 Idaho 800, 801–02, 964 P.2d 667, 668–69 (Ct. App. 1998).
There, the court explained:
By its terms, [Idaho Code section] 10-1111 provides for the renewal of judgments,
not just judgment liens. In our view, the language in [section] 10-1111 upon which
[appellant] relies merely designates the time period within which a renewal motion
must be brought; it does not limit the statute’s application to those judgments that
are secured by an actual lien on real property then owned by the judgment debtor.
Id. at 802, 964 P.2d at 669.
In 2012, the Idaho Court of Appeals again explained that recording a judgment is
unnecessary to the renewal process. Bach v. Dawson, 152 Idaho 237, 239, 268 P.3d 1189, 1191
(Ct. App. 2012). There, the court provided “Idaho Code section 10-1111(1) allows a court to
renew, upon a motion, an unsatisfied judgment at any time prior to the expiration of the judgment
lien created by section 10-1110.” Id. The court continued: “[i]n short, a civil judgment—whether
or not a lien is actually recorded—will last for five years, at which time it expires, unless a party,
before that expiration, makes a motion to renew and such motion is granted by the court.” Id.(emphasis added) (citing Smith I, 131 Idaho at 802, 964 P.2d at 669).
Put simply, a judgment may be renewed so long as it remains unsatisfied and the motion
to renew is made within the time enumerated by Idaho Code section 10-1111(1). Despite the
Drinkards’ argument to the contrary, Grazer does not stand for the proposition that Idaho Code
section 10-1111(1) requires a recording. Grazer stands for the proposition we articulated: “to
obtain a lien based on a renewed judgment, it must be re-filed and re-recorded.” Grazer, 154 Idaho
at 69, 294 P.3d at 195 (emphasis added). The Drinkards’ contention otherwise conflicts with
clearly existing case law.
Based on the statutory language in effect when this case commenced in 2010, the motion
to renew must have been made within five years. The district court entered the Original Judgment
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on February 23, 2010. The Original Judgment was renewed on February 12, 2015. Alpha’s motion
to renew was filed on February 10, 2020, less than five years after the 2015 Judgment was last
renewed. Consequently, the district court did not err when it granted Alpha’s motion to renew the
Original Judgment. We, therefore, affirm the decision of the district court.
D. Attorney fees and Rule 11.2 sanctions.
The Drinkards request an award of attorney fees and costs pursuant to Idaho Code sections
12-120(3), 12-121 and Idaho Appellate Rule 40. Alpha requests “an appropriate admonishment
and fees . . . based on [Drinkards’] mischaracterization” of Alpha in their briefing. Alpha also
requests “attorney fees as a matter of right.” Since Alpha prevailed in this matter, Drinkards are
not the prevailing party, and they are not entitled to an award of attorney fees or costs.
As to the request by Alpha, we note that while Alpha is the prevailing party in this appeal,
its general request is insufficient to merit an award of attorney fees under the authority of Idaho
Code 12-121 or any similar rule. Alpha fails to cite any legal authority to support the request for
attorney fees. This Court “will not consider a request for attorney fees on appeal that is not
supported by legal authority or argument.” Frank v. Bunker Hill Co. 150 Idaho 76, 80, 244 P.3d
220, 224 (2010) (quoting Bream v. Benscoter, 139 Idaho 364, 369, 79, P.3d 723, 728 (2003)). We
have consistently held that a party claiming attorney fees “must assert the specific statute, rule, or
case authority for its claim.” Regdab, Inc. v. Graybill, 165 Idaho 293, 297, 444 P.3d 323, 327
(2019). In addition, Alpha failed to assert a claim for attorney fees as an issue presented on appeal.
It has thus waived any right to seek attorney fees in this case. “Any party seeking attorney fees on
appeal must assert such a claim as an issue presented on appeal in the first appellate brief filed by
such party as provided by Rules 35(a)(5) and 35(b)(5) . . . .” I.A.R. 41(a).
Even so, this Court has the authority, on its own initiative, to award attorney fees as a
sanction when an appeal is pursued in violation of I.A.R. 11.2(a).
The Rule permits this Court, acting on its own motion, to impose “an appropriate
sanction, which may include an order to pay to the other party or parties the amount
of the reasonable expenses incurred because of the filing of the notice of appeal,
petition, motion, brief or other document including a reasonable attorney's fee.”
Sanctions imposed under the Rule may be imposed against a party, its attorney, or
both.
Bergeman v. Select Portfolio Servicing, 164 Idaho 498, 503, 432 P.3d 47, 52 (2018) (quoting
I.A.R. 11.2(a)); see also Valencia v. Saint Alphonsus Med. Ctr., 167 Idaho 397, 403, 470 P.3d
1206, 1212 (2020).
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We conclude that this case presents a textbook example of an appeal that was pursued in
violation of Rule 11.2, and that attorney fees should be awarded against appellant’s counsel
personally as a sanction. Vernon K. Smith, the Drinkards’ counsel, has shown a penchant for
disregarding Idaho Appellate Rules, and his failure to abide by this Court’s prior admonitions
warrants a sanction in this case.
Idaho’s Appellate Rules require an appellant’s brief contain argument including “the
contentions of the appellant with respect to the issues presented on appeal, the reasons therefor,
with citations to the authorities, statutes and parts of the transcript and record relied upon.”
Bergeman, 164 Idaho at 501, 432 P.3d at 50 (quoting I.A.R. 35(a)(6)). The brief must also contain
a concise and accurate statement of facts. I.A.R. 35(a)(3)(iii). To assure parties comply with the
briefing requirements, Rule 11.2 requires that each brief be signed by the attorney handling the
appeal. The attorney’s signature certifies:
to the best of the signer’s knowledge, information, and belief after reasonable
inquiry [the brief] is well grounded in fact and is warranted by existing law or a
good faith argument for the extension, modification, or reversal of existing law, and
that it is not interposed for any improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the cost of litigation.
I.A.R. 11.2(a).
The Drinkards’ claims are not well-grounded in fact, nor are they warranted by existing law or an
extension thereof. First, the Drinkards’ appeal contains little in the way of legal argument or
authority The Drinkards’ brief fails to include appropriate citations to the record or a
comprehensible argument. Large swaths of the Drinkards’ argument are merely block-quoted
statutes or lengthy sections of cases with little attempt at a cogent argument explaining the
applicability to the facts of the case. Second, Smith asks this Court to disregard existing law—not
based on a good faith argument to reverse that law—but because he disagrees with how this Court
applied the law in a case in which he was a party. Disagreeing with this Court is not a sufficient
reason to disregard precedent or to advocate that this Court do so. Appellate arguments must be
“warranted by existing law . . . .” Id. Smith pursued this appeal against Alpha even though he had
litigated the very case that decided principles of law against his position here. Smith II, 164 Idaho
at 53, 423 P.3d at 1005. He was thus aware that the issues on appeal have been settled directly
against his position in this case. Pursuing the appeal anyway is frivolous and a waste of time and
needlessly increased the cost of litigation for Smith’s clients and for Alpha.
9
This Court has, on multiple occasions, warned Smith to comply with Idaho Appellate Rule
35(a)(6), noting that the rule requires the argument section of an appellant's brief “contain the
contentions of the appellant with respect to the issues presented on appeal, the reasons therefor,
with citations to the authorities, statutes, and parts of the transcript and record relied upon.” See
Sprinkler Irrigation Co., Inc. v. John Deere Ins. Co., Inc., 139 Idaho 691, 698, 85 P.3d 667, 674
(2004) (holding sanctions were proper when Smith’s brief was “virtually void of any citation to
the transcript and record relied upon” and thus “failed to conduct a reasonable inquiry that the
appeal be well grounded in fact and warranted by existing law as required” by the appellate rules);
see also Smith By and Through Smith v. Treasure Valley Seed Co., LLC, 164 Idaho 654, 658, 434
P.3d 1260, 1264 (2019) (concluding “Smith's claims are merely a regurgitation of what was argued
and ruled upon by this Court previously. His attempts to relitigate this issue are therefore precluded
by the ‘law of the case’ doctrine.”); Smith II, 164 Idaho at 53, 423 P.3d at 1005 (explaining Smith
“has failed to show that the district court incorrectly applied well-established law” and failed to
provide “any cogent argument as to why his claims…are not clearly barred by res judicata.”). As
noted, these warnings included admonitions not to simply argue positions against what had been
decided by this Court previously.
Now, Smith appeals to this Court, representing the Drinkards, raising the exact issues on
which this Court has ruled against him before. Smith asks this Court, in effect, to second-guess the
holding we reached in Smith II, a case, as we have noted, in which he was a party. But the
Drinkards’ case by any other name is still the same argument. On our own motion, we may award
fees and costs against both the party and the party’s attorney who have violated Rule 11.2. We
have done this before in a case involving Smith. Still, Smith continues to flout Idaho Appellate
Rules and the standard for good faith appeals. As such, the Drinkards’ appeal was filed in direct
contravention of I.A.R. 11.2(a); it was frivolous, unreasonable, and without foundation. For these
reasons, the Court sanctions Smith by requiring him to personally pay Alpha’s attorney fees and
the costs Alpha incurred in defending its position in this appeal.
V. CONCLUSION
The district court’s judgment is affirmed. Costs and attorney fees are awarded to Alpha
against Vernon K. Smith personally, pursuant to I.A.R. 11.2(a).
JUSTICES BRODY, STEGNER, MOELLER, and ZAHN, CONCUR.
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