The Vanderford Company, Inc. v. Richard I. Greif

IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 31047/31163
THE VANDERFORD COMPANY, INC., a )
Nevada corporation; and PRIMARY )
RESIDENTIAL MORTGAGE, INC., a )
Nevada corporation, fka VANDERFORD )
CENTER, INC., )
)
Plaintiffs-Counterdefendants- )
Appellants-Cross Respondents, )
)
v. )
)
PAUL KNUDSON, personally and )
individually, AUSTIN HOMES, LLC., a Utah ) Boise, March 2007 Term
limited liability company, J. R. )
DEVELOPMENT, LLC, a Utah limited ) 2007 Opinion No. 97
liability company, and JOHN DOES 1-20, )
) Filed: July 13, 2007
Defendants, )
) Stephen W. Kenyon, Clerk
and )
)
THE PINES TOWNHOMES, LLC, an Idaho )
liability, )
)
Defendant-Counterclaimant, )
)
and )
)
RICHARD I. GREIF and JODY L. GREIF, )
)
Defendants-Counterclaimants- )
Respondents-Cross Appellants. )
)
and )
)
STATE FARM FIRE AND CASUALTY )
COMPANY, )
)
Intervener. )
----------------------------------------------------------- )
RICHARD I. GREIF and JODY GREIF, )
husband and wife; THE PINES )
TOWNHOMES, LLC., an Idaho limited )
liability company, )
)
Cross-Claimants, )
)
v. )
)
PAUL KNUDSON, personally and )
individually, AUSTIN HOMES, LLC., a Utah )
limited liability company, J. R. )
DEVELOPMENT, LLC., a Utah limited )
liability company, )
)
Cross-Defendants. )
----------------------------------------------------------- )
PAUL KNUDSON, personally and )
individually, )
)
Cross Defendant-Counter Cross )
Claimant, )
)
v. )
)
RICHARD I. GREIF, JODY L. GREIF, THE )
PINES TOWNHOMES, LLC., an Idaho )
limited liability company, )
)
Counter-Cross Defendants. )
Appeal from the Third Judicial District of the State of Idaho, Payette County.
Honorable Stephen W. Drescher, District Judge.
The decision of the district court is vacated in part and remanded.
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Brassey, Wetherell, Crawford & McCurdy, LLP, Boise; Parry Anderson &
Gardiner, Salt Lake City, Utah, attorneys for appellants Vanderford. Douglas J.
Parry argued.
R. Brad Masingill, Weiser; Troupis Law Office, Meridian, attorneys for
respondents Greifs. Christ T. Troupis argued.
Elam & Burke, P.A., Boise for intervenor State Farm Fire and Casualty Company.
Jeffrey A. Thomson argued.
SCHROEDER, Chief Justice.
The Vanderford Co. (Vanderford) initially brought suit to recover loan funds and
foreclose on properties owned by the Pines Townhomes, LLC or Richard and Jody Greif
(collectively “the Greifs”). Each of the parties involved asserted numerous claims and defenses
during a ten day jury trial. This appeal followed.
I.
FACTUAL AND PROCEDURAL BACKGROUND
Paul Knudson and Richard Greif entered into a business arrangement for the development
of real estate in Payette called the Pines Townhomes, LLC (the LLC). They planned to receive
loans from Vanderford because one of Knudson’s brothers was the president and two of his
brothers were managers at Vanderford. Vanderford loaned several hundred thousand dollars in
short term loans for the construction and development of projects including the Pines
Townhomes (the Pines). Loans for the development of the Pines were financed through loan
number 482 (Loan 482) and secured by a deed of trust on the portion of the property to be
improved by the loan. The LLC was unable to sell the properties as planned in order to repay the
Vanderford short-term loans. The LLC’s operating agreement provided that either partner could
purchase the units. Greif and his wife Jody Greif claim they purchased all 35 town homes as
investment properties. However, Knudson claims that the properties were not purchased, but
that he and Richard Greif agreed that Greif would hold them in trust for the LLC to be used as
rental units. The Greifs signed two notes and trust deeds (the Greif Trust Deeds) in order to
make themselves personally liable for $180,000 of the LLC’s construction loan debt. The parties
dispute their reasons for signing the Greif Trust Deeds.
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Vanderford filed suit seeking to recover loan funds of approximately $500,000 and to
foreclose on the Greif Trust Deeds. A jury trial was held. The jury found: (1) a contract
between Vanderford and the Greifs which was not breached; (2) no unjust enrichment due to the
dealings between Vanderford and the Greifs; (3) a breached contract between the Pines and
Vanderford with damages of approximately $153,000; (4) no unjust enrichment due to the
dealings between the LLC and Vanderford; (5) no contract between Knudson and the Greifs; (6)
Greifs were unjustly enriched in the amount of $237,500 through their dealings with Knudson;
(7) no slander of title against the properties; and (8) Vanderford was not negligent when it did
not release liens against the properties. Based on the jury’s findings, the trial court did not allow
Vanderford to foreclose.
Knudson and Vanderford appealed and the two appeals were consolidated. Vanderford
claims that the court erred in its jury instructions, in not allowing Vanderford to foreclose and in
quieting title to the Greifs. Greif claims that there was no legal basis to award Knudson
additional compensation as unjust enrichment and that the court erred by failing to grant its
requested jury instructions. State Farm, as intervenor, claims that the district court abused its
discretion when it denied Greif’s motion for attorney fees. Knudson did not file a brief.
Vanderford, the Greifs, and State Farm seek attorney fees on appeal.
II.
STANDARD OF REVIEW
This Court will not overturn a jury verdict if it is supported by substantial and competent
evidence, VFP VC v. Dakota Co., 141 Idaho 326, 335, 109 P.3d 714, 723 (2005); however, this
Court will freely review the conclusions of law. Magic Valley Foods, Inc. v. Sun Valley Potatoes,
Inc., 134 Idaho 785, 788, 10 P.3d 734, 737 (2000); Great Plains Equip. v. N.W. Pipeline, 132
Idaho 754, 760, 979 P.2d 627, 633 (1999). When this Court reviews an alleged abuse of
discretion by the trial court, this Court must determine whether the trial court: (1) correctly
perceived the issue as one of discretion (2) acted within the boundaries of such discretion and
consistently with the legal standards applicable to the specific choices before it; and (3) reached
its decision by an exercise of reason. Athay v. Stacey, 142 Idaho 360, 366, 128 P.3d 897, 903
(2005).
“The correctness of jury instructions ‘is a question of law over which this Court exercises
free review, and the standard of review of whether a jury instruction should or should not have
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been given, is whether there is evidence at trial to support the instruction.’” Craig Johnson
Constr., L.L.C. v. Floyd Town Architects, P.A., 142 Idaho 797, 800, 134 P.3d 648, 651 (2006)
(quoting Bailey v. Sanford, 139 Idaho 744, 750, 86 P.3d 458, 464 (2004)). A jury verdict must
be upheld if there is evidence of sufficient quantity and probative value that reasonable minds
could have reached a similar conclusion to that of the jury. Horner v. Sani-Top, Inc., 143 Idaho
230, 233, 141 P.3d 1099, 1102 (2006) (citing Hudson v. Cobbs, 118 Idaho 474, 478, 797 P.2d
1322, 1326 (1990)). The awarding of attorney fees under I.C. 12-120(3) is reviewed for an abuse
of discretion. Fox v. Mountain West Elec., Inc., 137 Idaho 703, 711, 52 P.3d 848, 856 (2002).
To prove an abuse of discretion this Court looks to three factors: (1) whether the trial court
correctly perceived the issue as one of discretion; (2) whether the trial court acted within the
boundaries of its discretion and consistent with legal standards applicable to the specific choices
available to it; and (3) whether the trial court reached its decision by an exercise of reason. Id.However, whether a statute awarding attorney fees applies to a given set of facts is a question of
law and subject to free review. Ransom v. Topaz Marketing, L.P., 143 Idaho 641, 644, 152 P.3d
2, 5 (2006).
III.
THE TRIAL COURT DID NOT ERR WHEN IT DID NOT GRANT
VANDERFORD THE RIGHT TO FORECLOSE ON THE GREIF
TRUST DEEDS
Vanderford claims that the district court erred when it did not allow foreclosure on the
Greif Trust Deeds. Idaho Code § 6-101(2) provides that the section “must be construed in order
to permit a secured creditor to realize upon collateral for a debt or other obligation agreed upon
by the debtor and creditor.” In the present case, the parties’ arguments at trial disputed whether
collateral was agreed upon for a debt. Each side argues that the jury’s special verdict supports
their view.
Jury’s Findings. The jury found that there was a contract between Vanderford and the
Greifs. The jury found that this contract was not breached and that the Greifs were not unjustly
enriched through their dealings with Vanderford. The Greifs assert that due to these findings,
Vanderford cannot foreclose on the Greif Trust Deeds. The jury also found that Vanderford and
the LLC had a contract that the LLC breached and that Vanderford’s damages due to the LLC’s
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breach were $153,177.49. Vanderford claims that the Greif Trust Deeds are security on the
contract breached with the LLC and it can foreclose.
In construing the findings of a verdict, a court has a duty to reconcile the jury’s answers
based on the evidence and instructions given. Basterrechea Distrib., Inc. v. Idaho State Bank,
122 Idaho 572, 575, 836 P.2d 518, 521 (1992). The verdict should be read in a manner which
makes it consistent when read as a whole. Id. The special verdict form had questions pertaining
to a contract between the LLC and Vanderford as well as a contract between the Greifs and
Vanderford. Instruction 32, regarding the contract between the Greifs and Vanderford begins,
“The terms of the contract between The Vanderford Co. and the Greifs (Deeds of Trust and
Notes in the amounts of $100,000 & $80,000) are in dispute as to the following provisions.”
This instruction makes it clear that when the jury decided that there was no breach of the contract
between the Greifs and Vanderford, the contracts referred to were the Greif Trust Deeds and
Notes. The jury was presented with the arguments that Vanderford now makes and it determined
that the Greifs had no liability to Vanderford.
Vanderford claims that because the jury found that it had a valid contract with the Greifs
and that the LLC breached its agreement with Vanderford, the Greif Trust Deeds can now be
foreclosed upon. Vanderford alleges that by signing the Greif Trust Deeds and Notes, the
Greifs’ personally guaranteed the LLC’s Loan 482. Vanderford bases this argument upon
“additional collateral” and “cross-collateralization” clauses within the Notes. The cross-
collateralization clauses state that the security interest granted in the note also collateralizes with
any other indebtedness the borrower may have with the lender. Vanderford’s interpretation of
the cross-collateralization clause erroneously assumes that the Greifs are the same borrower as
the LCC while they are two different entities. See I.C. § 30-1-140(13), (21).
The additional collateral clauses state that “this Note is additional collateral for an
existing loan on The Pines Townhomes Subdivision… and constitutes an amendment to and an
addition of collateral under the terms of… Loan No. 482.” This is the specific language which
Vanderford asserts allows them to foreclose on the properties within the Trust Deeds. However,
the Notes do not incorporate the real property in the Trust Deed as collateral on the prior loan.
The Notes only grant Vanderford the Note as collateral which merely grants them the loan
document as security for the loan. This language conveys a useless security to Vanderford.
Idaho law states that language in a guaranty agreement that is clear and unambiguous must be
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interpreted according to the language employed. McGill v. Idaho Bank & Trust Co., 102 Idaho
494, 497-98, 632 P.2d 683, 686-87 (1981). If the Court engages in construction of the
agreement, it must be interpreted in favor of the guarantor. Id.The language in the Greif notes fails to confer any real property as collateral. The
language grants the notes as collateral rather than the trust deeds. Additionally, it appears that
the jury considered the Vanderford argument and found that the Greifs were not liable to
Vanderford.
Court’s Findings. Vanderford next argues that the district court failed to make the
required findings of fact and conclusions of law under I.R.C.P. 52(a). A foreclosure proceeding
is an equitable proceeding where the jury’s verdict is only advisory. Idaho First Nat’l Bank v.
Bliss Valley Foods, Inc., 121 Idaho 266, 274, 824 P.2d 841, 849 (1991). In such proceedings,
I.R.C.P. 52(a) requires that a court make findings of fact and conclusions of law. Rule 52(a)
states:
In all actions tried upon the facts without a jury or with an advisory jury, the court
shall find the facts specially and state separately its conclusions of law thereon
and direct the entry of the appropriate judgment; .… Requests for findings are not
necessary for the purposes of review. Findings of fact shall not be set aside unless
clearly erroneous. In the application of this principle regard shall be given to the
special opportunity of the trial court to judge the credibility of those witnesses
who appear personally before it. … If an opinion or memorandum decision is
filed, it will be sufficient if the findings of fact and conclusions of law appear
therein. Findings of fact and conclusions of law are unnecessary in support of a
judgment by default, or an interlocutory order made pursuant to a show cause
hearing or on decisions of motions under Rules 12 or 56 or any other motion
except as provided in Rule 41(b); in all instances findings of fact and conclusions
of law may be waived by stipulation of all parties upon approval by the court. A
written memorandum decision issued by the court may constitute the findings of
fact and conclusions of law only if the decision expressly so states or if it is
thereafter adopted as the findings of fact and conclusions of law by order of the
court.
Findings required by Rule 52(a) should be clear, coherent, and complete while avoiding an
unnecessary review of the evidence. Browning v. Ringel, 134 Idaho 6, 14, 995 P.2d 351, 359
(2000). In Bliss Valley Foods, a trial judge did not make any findings of fact in a post-trial
foreclosure motion and based his decisions solely on the jury verdict. Bliss Valley Foods, 121
Idaho at 274, 824 P.2d at 849. The trial court stated that “[i]f this had been a court trial, I would
have found for ‘the Bank’ based upon my own findings of fact from my own observation of the
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evidence and my determination of credibility of witnesses.” Id. This Court held that the trial
court erred when it failed to make its own findings. Due to other issues in the case a new trial
was necessary and the Court held that the trial court’s findings of facts and conclusions of law
should be based upon the evidence at the new trial.
The absence of findings may be disregarded by an appellate court where the record is
clear and yields an obvious answer to the relevant question. Pope v. Intermountain Gas Co., 103
Idaho 217, 225, 646 P.2d 988, 996 (1982). The purpose of the underlying rule is to “afford the
appellate court a clear understanding of the basis of the trial court’s decision, so that it might be
determined whether the trial court applied the proper law to the appropriate facts in reaching its
ultimate judgment.” Id. In Pope the Court was not able to determine whether the trial court
recognized or properly applied the law in its decision concerning an attempted monopoly, but the
Court did not remand the case for further findings because its review of the record led to the
conclusion that no attempted monopoly existed.
In the present case the trial court did not make separate findings of fact and conclusions
of law in a motion or memorandum, but it did discuss its decision in an order. The district court
cited the jury’s findings, including the finding that the Greifs and Vanderford had a valid
contract. It determined that such a jury finding did not necessarily mean that the liens are valid
and enforceable. The court, basing its findings upon the special verdict, concluded that
Vanderford could not foreclose and that the liens should be quashed and title quieted in the
Greifs’ names. The order is not detailed, but it does cite to findings of fact made by the jury and
makes further findings. The order does not state the basis of the decision. However, the
transcript of the hearing makes it clear that the decision denying foreclosure was based on the
jury’s findings. The trial court stated that “the LLC alone is the judgment debtor” and that
Vanderford can foreclose against the LLC, but not against Greif personally.
The findings of fact and conclusions of law are sufficient to meet the purpose of the rule.
The trial court did not rule contrary to its findings due to a jury verdict as was the case in Bliss
Valley Foods. The court used the jury’s verdict to draw further conclusions which it articulated
in its order and when the parties presented their post-trial motions.
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IV.
THE COURT WILL NOT CONSIDER WHETHER THE TRIAL COURT
ERRED WHEN IT QUASHED THE LIEN ON THE GREIF TRUST
DEEDS AND QUIETED TITLE TO THE PROPERTIES IN THE GREIFS
Vanderford argues that the plain language of the Notes shows that they are additional
collateral for Loan 482. The jury found that there is a binding contract between Vanderford and
the Greifs. Consequently, argues Vanderford, the trial court ignored the evidence and misapplied
the jury’s findings.
Vanderford fails to support its argument with any legal authority. See Huff v. Singleton,
143 Idaho 498, 500, 148 P.3d 1244, 1246 (2006) (issues not supported by legal argument or
authority will not be considered by this Court). Vanderford argues this point solely on the facts
and provides no reference to law. While Vanderford claims that it cannot find any case law on
the subject because the trial court’s decision is inconsistent with any legal principle, it does not
provide any reference to the legal standard a court should apply when quashing a lien and
quieting title to a property. The Court will not consider the argument.
V.
THE TRIAL COURT DID NOT PROPERLY INSTRUCT THE JURY
A party is entitled to have its theory of the case included in the instructions given to the
jury if that theory is supported by any reasonable view of the evidence. Doty v. Bishara, 123
Idaho 329, 334, 848 P.2d 387, 392 (1992). Vanderford argues that the trial court’s instructions
were inconsistent with Vanderford’s theory of the case that Richard Greif and Knudson were
parties to the agreement. Further, Vanderford maintains that the trial court erred when it failed to
instruct on alternative theories of liability against Greif including fraudulent transfer and alter
ego.
This Court reviews jury instructions to determine whether the instructions, as a whole,
fairly and adequately present the issues and state the law. Newberry v. Martens, 142 Idaho 284,
287, 127 P.3d 187, 190 (2005). A requested jury instruction must be given when it is supported
by any reasonable view of the evidence. Craig Johnson Constr., L.L.C. v. Floyd Town
Architects, P.A., 142 Idaho 797, 800, 134 P.3d 648, 651 (2006) (citing Bailey v. Sanford, 139
Idaho 744, 750, 86 P.3d 458, 464 (2004)). An instruction is not to be given if it is an erroneous
statement of the law, not supported by the facts, or adequately covered by the other instructions.
Id. Jury instructions are to be viewed as a whole in determining whether the jury was properly
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and adequately instructed on the applicable law. Alderson v. Bonner, 142 Idaho 733, 744, 132
P.3d 1261, 1272 (Ct. App. 2006). An erroneous instruction does not constitute reversible error
when the instructions taken as a whole do not mislead or prejudice a party. Craig Johnson
Constr., L.L.C., 142 Idaho at 800, 134 P.3d at 651. Reversible error occurs when an instruction
misleads the jury or prejudices a party. Perry v. Magic Valley Reg’l Med. Ctr., 134 Idaho 46, 51,
995 P.2d 816, 821 (2000) (citing Lawton v. City of Pocatello, 126 Idaho 454, 462, 886 P.2d 330,
338 (1994)). However, the determination of whether the instruction is supported by the facts is
committed to the discretion of the district court. Craig Johnson Constr., L.L.C., 142 Idaho at
800, 134 P.3d at 651 (citing State v. Elison, 135 Idaho 546, 552, 21 P.3d 483, 489 (2001)).
The trial court determined that due to the parties’ tendency to file lengthy pleadings and
response pleadings and assert innumerable causes of action, it was necessary to reduce the case
to its essentials, those being breach of contract and unjust enrichment claims. The trial court also
thought there may be negligence, failure to reconvey and slander of title claims and instructed on
these issues. The trial court stated that its decision was made in an effort to make the two-week
trial seem more comprehensible to the jury so that the significant issues would be decided. Five
issues are raised as to jury instructions: (1) that Vanderford failed to adequately object through a
blanket objection; (2) that the court erred by instructing the jury on its own theory of the case
regarding Richard Greif and Knudson’s oral agreement; (3) that the court abused its discretion by
its implicit finding that the evidence does not support the fraudulent conveyance and alter ego
instructions; (4) that the court erred by failing to give a slander of title instruction; and (5) that
the court erred by failing to give a breach of contract instruction. Blanket Objection. Rule
51(b) currently requires a specific objection to an instruction. The version of Rule 51(b) in effect
at the time of trial did not:
The court may give instructions to the jury at any time, and at various
times, during the trial, all of which shall be made written instructions and
constitute part of the record. After the court makes all rulings on requested
instructions and objections, and advises the parties of the final instructions to be
given, the court shall read to the jury the written instructions before the final
arguments of the parties are given. …
In the older rule there is no requirement of a specific objection stating the grounds distinctly.
Vanderford complied with the requirements of the rule in effect at the time of trial.
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Oral Agreement (Rental Pool). Vanderford argues that the district court erred by
presenting its own theory of the case in jury instructions. Vanderford claims that the instruction
which included Jody Greif as a party to the alleged contract between Knudson and Richard Greif
put forth the court’s theory of the case. Vanderford was attempting to prove Richard Greif and
Knudson had an oral rental pool agreement that Greif would hold the town homes in trust for the
LLC as beneficial owner because such an agreement would make the properties available to
Vanderford when trying to satisfy judgment against the LLC. Greif argues that the jury correctly
found that there was no rental pool agreement. However, that is not the point of Vanderford’s
claim. While there may be substantial evidence to support the verdict that there was no rental
pool, the issue at hand involves the misleading instruction regarding the parties to that
agreement.
Jury instructions 21 and 31 were given stating that “Paul Knudson has the burden of
proving each of the following propositions: 1. A contract existed between Paul Knudson and
Richard and Jody Greif” and “[i]n this case, Richard and Jody Greif allege that all parties did not
agree to all essential terms of the alleged contract between Paul Knudson and Richard and Jody
Greif.” The trial court’s instruction did not reflect the parties’ arguments at trial that Knudson
and Richard Greif had an agreement. The instruction’s inclusion of Jody Greif as a party to the
oral agreement would mislead a jury and prejudice a party when the arguments and testimony
were based on an agreement between Knudson and Richard Greif only.
Fraudulent Conveyance and Alter Ego. Vanderford requested that the court give jury
instructions regarding these issues so that Vanderford could pierce the corporate veil and find the
Greifs liable for the LLC’s debts. The court refused to submit these instructions to the jury. The
statement of the law on these issues is correct and they are not adequately covered by any other
jury instructions. No instructions deal with Vanderford’s allegation that it can pierce the
corporate veil in order to find the Greifs liable for the LLC’s debts. Thus the trial court must
have concluded that a reasonable view of the evidence did not support this theory.
Fraudulent transfer is defined in I.C. § 55-913(1) as: (a) a transfer that is made with
“intent to hinder, delay, or defraud any creditor of the debtor;” or (b) a transfer “without
receiving a reasonably equivalent value in exchange for the transfer” when a debtor is engaged in
a transaction for which the assets of the debtor are unreasonably small in relation to the
transaction. Vanderford claims that the transfer of property from the LLC to Greif was
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fraudulent because the properties were essentially the only asset of the LLC. When the
properties were sold the LLC’s assets were unreasonably small in relation to the transactions
with Vanderford. Much of the evidence presented at trial went toward the fraudulent
conveyance issue. There was sufficient evidence to present fraudulent conveyance instructions
to the jury.
Vanderford also argued that the corporate veil should be pierced because the LLC was
Greif’s alter ego. In order for a corporation to be an alter ego of an individual, there must be (1)
a unity of interest and ownership to a degree that the separate personalities of the corporation and
individual no longer exist and (2) if the acts are treated as acts of the corporation an inequitable
result would follow. Surety Life Ins. Co. v. Rose Chapel Mortuary, 95 Idaho 599, 601, 514 P.2d
594, 596 (1973). Vanderford argued the issues at trial, and there was evidence to support the
claim. Greif was the managing member who paid himself, as manager of the LLC, to manage
his personal investment properties, the Pines Townhomes. Grief and his accountant testified that
the LLC’s checking account was so confusing that the accountant could not be sure whose
money was in the account at what times. The proposed jury instructions correctly stated the law
and were supported by a reasonable view of the facts.
Slander of Title. Greif claims that the trial court should have given the jury its proposed
slander of title instruction. The district court gave an instruction on slander of title as to
Knudson, but the Greifs allege that there should also have been an instruction as to Vanderford.
The district court did not give the instruction because it stated that failure to reconvey must be
framed as negligence not slander of title. See McPheters v. Maile, 138 Idaho 391, 395, 64 P.3d
317, 321 (2003) (where a defendant failed to record a satisfaction of judgment, the plaintiff’s
true cause of action was negligence because failure to record cannot meet the publication
requirement for slander of title).
Greif does not argue that the failure to reconvey alone amounts to slander of title, but that
the notice of lis pendens against the properties, coupled with failure to reconvey the deeds of
trust to the properties, amounts to Vanderford’s publication of false statements. While this detail
distinguishes the matter from prior case law, the publication of the notice of lis pendens is not
defamatory. It merely informs the public that the property is involved in litigation.
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Greif presented evidence on its slander of title claim against Vanderford, but the court
found that no reasonable view of the evidence could support the instruction. The district court
did not abuse its discretion with regard to this instruction.
Breach of Contract. Greif asserts that the court erred when it failed to grant a jury
instruction on breach of contract. Greif argued that Vanderford had a contractual duty to
reconvey deeds of trust to the town homes. The district court gave a negligence instruction on
the issue, but did not instruct the jury regarding breach of a contractual duty to reconvey the
properties. The trial court based its decision on its understanding that negligence is the only
cause of action for failure to reconvey. The district court’s interpretation mistakes this Court’s
holding. In McPheters v. Maile, this Court held that the plaintiff’s true cause of action was
negligence where the defendant failed to record a satisfaction of judgment. McPheters, 138
Idaho at 395, 64 P.3d at 321. The Court reasoned that failure to record a satisfaction of judgment
cannot meet the publication requirement for slander of title. Id. This Court has not held that
negligence is the only possible cause of action for failure to reconvey. Greif submitted a correct
statement of law, supported by the evidence, which was not adequately covered by the other
instructions.
In sum, it is necessary to remand for a new trial on the issues of alter ego, fraudulent
conveyance, oral agreement, and breach of contract because the requested jury instructions were
a correct statement of the law, supported by a reasonable view of the evidence, and not
adequately covered by the other instructions. The district court did not abuse its discretion in
failing to give the slander of title instruction.
VI.
KNUDSON’S UNJUST ENRICHMENT CLAIM WAS NOT BARRED
The jury found that the Greifs had been unjustly enriched through their dealings with
Knudson in the amount of $237,500. Unjust enrichment occurs where a defendant receives a
benefit which would be inequitable to retain without compensating the plaintiff to the extent that
retention is unjust. Beco Constr. Co. v. Bannock Paving Co., 118 Idaho 463, 466, 797 P.2d 863,
866 (1990) (quoting Hertz v. Fiscus, 98 Idaho 456, 457, 567 P.2d 1, 2 (1977)). A prima facie
case of unjust enrichment consists of three elements: (1) there was a benefit conferred upon the
defendant by the plaintiff; (2) appreciation by the defendant of such benefit; and (3) acceptance
of the benefit under circumstances that would be inequitable for the defendant to retain the
13
benefit without payment to the plaintiff for the value thereof. Aberdeen-Springfield Canal Co. v.
Peiper, 133 Idaho 82, 88, 982 P.2d 917, 923 (1999). The Greifs raise two issues on the matter of
unjust enrichment: (1) whether the claim was barred by the LLC’s operating agreement and real
estate contracts; and (2) in the event that the claim was not barred, whether there was sufficient
evidence to support the jury’s finding that Knudson was unjustly enriched.
The doctrine of unjust enrichment is not permissible where there is an enforceable
express contract between the parties which covers the same subject matter. Wilhelm v. Johnston,
136 Idaho 145, 152, 30 P.3d 300, 307 (Ct. App. 2001) (citing DBSI/TRI V v. Bender, 130 Idaho
796, 805, 948 P.2d 151, 160 (1997)). Equity does not intervene when an express contract
prescribes the right to compensation. Shacocass, Inc. v. Arrington Constr. Co., 116 Idaho 460,
464, 776 P.2d 469, 473 (Ct. App. 1989); see Wolford v. Tankersley, 107 Idaho 1062, 1064, 695
P.2d 1201, 1203 (1984).
In this case there are no enforceable express contracts between these three parties on this
particular subject. Knudson did have contracts with Richard and Jody Greif -- the Purchase and
Sale Agreements for some of the town homes. However, the LLC’s Operating Agreement was
only a contract between Knudson and Richard Greif. The only possible contracts which could
bar the unjust enrichment claim would be the Purchase and Sale Agreements. These real estate
contracts are express contracts dealing with the sale of properties from Knudson as manager of
Austin Homes to the Greifs. The Court does not have copies of other contracts, and Knudson
denies that additional contracts exist. Regardless, Knudson and the Greifs had many other
dealings from which the jury could have found a basis for unjust enrichment. Knudson testified
at trial that he had an oral agreement with the Greifs for landscaping services. Knudson and the
Greifs are also involved in business dealings involving the Quail Cove subdivision and Reyna
property which were discussed at trial. The transactions and dealings between Knudson and the
Greifs are numerous.
There is no contract demonstrated between all of these parties which could act as a bar to
the theory of unjust enrichment. Sufficient evidence was produced at trial to support the jury’s
award of unjust enrichment. However, there are significant issues to be submitted to a jury on
retrial of this case which might have impacted the jury’s decision had they been submitted to the
jury. Consequently, the unjust enrichment verdict is vacated.
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VII.
ATTORNEY FEES
Idaho Code Section 12-120(3) states:
In any civil action to recover on an open account, account stated, note,
bill, negotiable instrument, guaranty, or contract relating to the purchase or sale of
goods, wares, merchandise, or services and in any commercial transaction unless
otherwise provided by law, the prevailing party shall be allowed a reasonable
attorney's fee to be set by the court, to be taxed and collected as costs.
The term "commercial transaction" is defined to mean all transactions except
transactions for personal or household purposes. The term "party" is defined to
mean any person, partnership, corporation, association, private organization, the
state of Idaho or political subdivision thereof.
The rule defines commercial transactions as “all transactions except transactions for personal or
household purposes.” I.C. § 12-120(3); Blimka v. My Web Wholesaler, LLC, 143 Idaho 723,
728, 152 P.3d 594, 599 (2007). An award of attorney fees is proper where the commercial
transaction is integral to the claim, and constitutes the basis upon which the party is attempting to
recover. Brower v. E.I. DuPont De Nemours & Co., 117 Idaho 780, 784, 792 P.2d 345, 349
(1990).
Some cases dealing primarily with property ownership and easement rights have not been
considered commercial transactions. See Baxter v. Craney, 135 Idaho 166, 174-75, 16 P.3d 263,
271-72 (2000) (boundary dispute is not commercial transaction because relationship between the
parties is not of a commercial nature where land owners are engaged in the businesses of
ranching and farming). Such decisions stem from the idea that an award of attorney fees under
I.C. § 12-120(3) is not appropriate every time a commercial transaction is remotely connected
with the case. Sun Valley Hot Springs Ranch, Inc. v. Kelsey, 131 Idaho 657, 663, 962 P.2d 1041,
1047 (1998). In this case the transactions involve accounts, notes, guarantees, and contracts for
real estate development and sales are commercial transactions which constitute the gravamen of
the lawsuit. The transactions in this case are dissimilar to land disputes between two neighboring
businesses which the Court has previously held are not commercial transactions.
A determination of who qualifies as a prevailing party is determined “from an overall
view, not a claim-by-claim analysis.” Eighteen Mile Ranch, L.L.C. v. Nord Excavating &
Paving, Inc., 141 Idaho 716, 719, 117 P.3d 130, 133 (2005). There is a commercial transaction
in this case. The trial court held that Vanderford and Knudson were prevailing parties.
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In this case a remand is necessary. Consequently a final outcome is unknown. The
award of attorney fees is vacated. A final award for trial and for this appeal is dependent upon
the result to come in the trial court. The case is remanded with an award of attorney fees for trial
and this appeal to be determined in the trial court.
VIII.
CONCLUSION
Vanderford cannot foreclose on the Greif Trust Deeds because the language in the Notes
fails to confer any real property as collateral. The trial court’s findings articulated in its order
were sufficient to meet the purpose of Rule 52(a) requiring separate findings of fact and
conclusions of law. The Court declines to reach the issue of whether the trial court erred when it
quashed the lien of the Greif Trust Deeds because Vanderford failed to support its argument with
any legal authority. The case is remanded for new trial on those matters determined by the jury,
the trial to include jury instructions regarding fraudulent conveyance, oral agreement, and breach
of contract because the requested instructions were a correct statement of the law, supported by a
reasonable view of the evidence, and not adequately covered by the other instructions. The alter
ego issue is equitable in nature to be determined by the trial court. The district court did not
abuse its discretion in failing to give the slander of title jury instruction because no reasonable
view of the evidence could support the instruction. There was no contract to bar Knudson’s
award on the theory of unjust enrichment, and sufficient evidence supported the jury’s award.
However, the verdict on this issue is vacated so it may be considered together with the other jury
issues. The determination of a prevailing party is dependent upon the outcome of issues on
remand. The Court declines to award attorneys fees for the appeal to any party. The trial court
may make an award of attorney fees for this appeal dependent upon the final outcome of the
case.
Justices TROUT, EISMANN, BURDICK and JONES CONCUR.
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