Security Financial Fund, LLC v. Thomason

IN THE SUPREME COURT OT'THE STATE OX'IDAHO
Docket No.37203
SECURITY FINANCIAL FUND, LLC, an
Idaho limited liability corporation,
Plaintiff-Counterdefendant-Respondent,
Boise, June 2012 Term
and
2012 Opinion No. 112
SECURITY FINANCIAL SERVICES. INC.
an Idaho corporation; STRONG PAW Filed: July 6,2012
FINANCIAL SERVICES, LLC; STRONG
PAW X'INANCIAL SERYICES. INC. an Stephen W. Kenyon, Clerk
Idaho corporation, NORTIfWEST
TRUSTEE SERVICES, INC., an Idaho
corloration,
Counterdefendants,
BYRON T. THOMASON and MARILYNN
THOMASON, husband and wife,
Defendants-Counterplaintiffs-Appellants,
Appeal from the District Court of the Seventh Judicial District of the State of
Idaho, Madison County. Hon. Gregory W. Moeller, District Judge.
The Final Judgment in favor of Security Financial is affrrmed. Attomey's
fees and costs are awarded to Respondent
Marilynn Thomason, Rexburg, pro se.
Merrill & Merrill, Pocatello, for Respondents.
W. JONES, Justice
I. NATURE OF THE CASE
Security Financial Fund, LLC, ("Security Financial") extended Byron Thomason and
Marilynn Thomason ("the Thomasons"), husband and wife, a series of loans evidenced by five
promissory notes, which were secured by three deeds of trust and two mortgages on real
property. As a result of the Thomasons' non-payment on the two prornissory notes secured by
the mortgages, Security Financial filed a Foreclosurc Complaint in Case No. CV-07-34. In that
case, the district court held that the Thomasons defaulted on the notes. While Case No. CV-07-
34 was still pending, the Thomasons filed a separate action against Security Financial and others,
assigned Case No. CV-07-461, which addressed all the promissory notes executed in favor of
Security Financial by the Thomasons. That action sought recovery for breach of contract and
fraud, among other theories. Both actions were later consolidated. The issue of default on the
notes asserted in Case No. CV -07 -34 has already been decided by the district court. The secured
real property in that action has already been foreclosed on and sold at sheriff auction in
accordance with the district court's Judgment. Furthermore, the issue of default with regard to
the notes that were secured by the deeds of trust has also been resolved and is not an issue in this
action. On appeal from the district court's decision to gant Security Financial's Motion for
Summary Judgment with regard to the claims that the Thomasons asserted in Case No. CV-07-
461, the Thomasons contend, among other things, that the district court lacked subject matter and
personal jurisdiction to foreclose on the secured property and abused its discretion.
II. FACTUAL AND PRoCEDURAL BACKGROUND
The Thomasons executed two promissory notes in July of 2005, which were secured by
two mortgages on 256 acres of land owned by the Thomasons located in Rexburg, Idaho. After
the Thomasons allegedly failed to make timely payments on those notes in the months of
September through December of 2006, Security Financial filed a Foreclosure Complaint on
Jaruary 12,2007 . The foreclosure action was assigned Case No. CV-07-34.
In their Answer, the Thomasons denied that they had defaulted on the notes, contending
that they did make timely payments during those months on both promissory notes and that
Security Financial fraudulently created the defaults in order to foreclose on the secured real
property. Furthermore, the Thomasons asserted that Security Financial agreed to exhaust certain
escrow firnds allegedly held by Security Financial or to sell real property that secured another
loan extended to the Thomasons by Security Financial prior to any default. Security Financial
filed its Motion for Summary Judgment on February 15,2007. On April 12,2007, the district
court provided the Thomasons with two weeks in which to produce evidence to establish that the
notes at issue were not in default. Thereafter, the district court filed its Order Denying Secwity
Financial's Summary Judgment Motion on June 21, 2007, holding that although the Thomasons
had not produced copies ofchecks or payment coupons for payments on the promissory notes for
September and October of 2006, there was an issue of fact as to whether the Thomasons'
accounts were properly credited.
On May 29,2007, the Thomasons filed a Complaint against Security Financial and
others, which was assigned Case No. CV -07 -461. The Complaint contained allegations that
Security Financial engaged in improper accounting and breached its contractual obligations to
the Thomasons by failing to properly credit their accounts for payments made in escrow and by
failing to sell a 70 acre parcel described by the Thomasons as the 'Nelson Property" in order to
satisft five loans evidenced by five promissory notes executed by the Thomasons in favor of
Security Financial, two of those notes included the notes addressed in Case No. CV-07-34. The
five notes were secured by the two mortgages addressed in CV-07-34 and three deeds of trust.
The Complaint as originally filed and later amended on May 12, 2008, raises issues of fraud,
breach of contract, lack of standing, among other issues. Case No. CV-07-461 and Case No.
CV -07 -34 were consolidated by stipulation of the parties on O ctober 22, 2007 .
On February 22, 2008, the district court ganted partial summary judgment to Security
Financial on the issue of default on the two notes secured by the mortgages, but held that
material issues of fact still remained conceming the amount owed by the Thomasons. The
district court also held that it would appoint a special master to determine whether certain
payments made by the Thomasons were properly credited to them from the escrow account or
otherwise. Thereafter, on May 20, 2008, the district court appointed the accounting firm of
Smith, Kunz & Associates to serve as a special master to compile an account of all amounts paid
to Secudty Financial by the Thomasons. The special master filed its report on October 29, 2008.
On February 20,2009, the Court issued its Order Adopting the Special Master's Finding ofFact
and Judgment upon the Thomasons making no objections to the special master's factual findings.
Thereafter, on March 9,2009, the district court entered a Decree of Foreclosure and Order of
Sale in favor of Security Financial, holding that the amount of indebtedness on Promissory Note
I is $423,927.53 on account number THOBYR3 and Promissory Note 2 is $80,636.25 on
account number THOBY5. The Decree of Foreclosure and Order of Sale also foreclosed on the
liens and ordered that the secured real property be sold at sheriff auction in Madison County,
Idaho.
Thereafter, on August 17,2009, with the issues of default and foreclosure resolved with
regard to all of the mortgages and deeds of trust, Security Financial filed ic Motion for Summary
Judgment on the remaining issues raised by the Thomasons in Case No. CV-07-461. The district
court granted Security Financial's Motion for Summary Judgrnent and denied the Thomasons'
Motion to Dismiss for Lack of Standing. The district court then issued a Renewed Order of Sale
on October 27,2009. The secured property was sold at sheriff auction. The Thomasons filed
their Notice of Appeal on November 23,2009. The Thomasons also filed a Second Amended
Notice of Appeal on January 12, 2010, prior to the entry ofa final judgrnent. This Court initially
suspended the Thomasons' appeal for lack of a final appealable judgnent. The district court
then filed its Order of Final Judgrnent on April 9,2010. Thereafter, the Thomasons timely filed
their Third Amended Notice of Appeal on May 5, 2010.
III. IssuES oN APPEAL
1. Whether the Thomasons waived the majority of their clairns on appeal?
2, Whether the district court lacked subject matter and personal jurisdiction?
3. Whether the district court erred when it granted Security Financial's Motion for
Summary Judgment?
4. Whether the district court abused its discretion by awarding Security Financial attomey's
fees pursuant to l.C. S 12-l2l?
5. Whether Security Financial is entitled to attomey's fees on appeal?
IV. STANDARD OF REVIEW
"When reviewing a grant of summary judgment, this Court applies the same standard of
review used by the district court in ruling on the motion." Mortensen v. Stewart Title Guar.
Co.,l4g Idaho 437, 441,235 P.3d 387, 391 (2010). A grant of summary judgment is wananted
where "the pleadings, depositions, and admissions on file, together with the affrdavits, if any,
show that there is no genuine issue as to any material fact and that the moving party is entitled to
a judgnent as a matter of law." I.R.C.P. 56(c). The moving party bears the burden of proving
the absence of an issue as to any material fact. Blickenstaff v. Clegg,l40 Idaho 572, 577,97
P.3d 439,444 (2004). The facts must be liberally construed in favor ofthe non-moving party.
Reraov. Idaho State Dep't of Agric.,l49 Idaho 777,779,241P.3d95O,952(2010).
V. ANALYSIS
A. The Thomasons Waived the Majority of Their Claims on Appeal
The majority of the Thomasons' claims are "so lacking in coherence, citations to the
record, citations of applicable authority, or comprehensible argument" that they are difftcult, if
not impossible, to understand. See Bach v. Bagley, 148 Idaho 784,791,229P.3d 1146, ll53
(2010). This Court will not consider an issue "not supported by argument and authority in the
opening bief;' Id. at 79O,229 P.3d at 1152 (quoting Jorgensen v. Coppedge,l45 Idaho 524,
528, l8l P.3d 450, 454 (2008). Furthermore, this Court will not consider "general attack[s] on
the findings and conclusions of the district court, without specific reference to evidentiary or
legal errors ...;' Bach, 148 Idaho at790,229 P.3d at 1152. This Court declines to search the
record on appeal for unspecified error. Szits v. Idaho Bd of Profl Discipline,l38 Idaho 397,
400, 64 P.3d 323, 326 (2003).
Furthermore, the Thomasons present many new issues on appeal that lack argument or
authority. This Court will not consider arguments raised for the first time on appeal. Johannsen
v.Utterbeck,146 Idaho 423,429, 196P.3d341,347 (2008). Forthesereasons,theThomasons
have waived the majority of their claims on appeal.
B. The District Court Had Subject Matter and Personal Jurisdiction
The Thomasons contend that Security Financial did not have standing to bring its
foreclosure action and that the district court lacked personal jurisdiction in that action because
Security Financial assigred all the loans to Zions Bank in order to secure a line of credit before
the pendency of the foreclosure action. Security Financial contends that the Thomasons'
jwisdiction claim lacks merit because Zions Bank reconveyed all of its interest in the assignment
to Security Financial before the pendency ofthe foreclosure action.
To satisff the requirement of standing, a litigant must allege an injury in fact, a fairly
faceable causal connection between the claimed injury and the challenged conduct, and a
substantial likelihood that the judicial relief requested will prevent or redress the claimed injury.
Troutner v. Kempthorne,l42 Idaho 389, 391, 128 P.3d 926,928 (2006). Before a suit can
proceed, it must be "prosecuted in the name of the real party in interest." I.R.C.P. l7(a). A real
party in interest is "one who has a real, actual, material or substantial interest in the
subject matter of the action . . . )' Caughey v. George Jensen & Sons,T{Idaho 132, 134-35,258
P.2d357,359 (r9s3).
The Thomasons rely on a document entitled, Assignment of Beneficial Interest rurder
Deed of Trust, dated September 29,2005, to assert that Security Financial did not have standing
to file its foreclosure action. That document assigned the "Deed of Trust executed by Byron T
and Marilynn T Thomason grantor, in favor of Assignor, as beneficiary, and recorded on . . .
January 24,2005 . . . as Instrument No. 317314;' The district court held that Exhibits I tlrough
l1 establish that Zions Bank reconveyed all the interest in the assignment back to Security
Financial between January 24,2005, and February 10, 2006, before Security Financial filed its
Foreclosure Complaint and before the district court entered its Order of Final Judgment. The
Thomasons do not offer evidence to contradict this holding. What the Thomasons do offer is a
wide anay of new issues on appeal coupled with incoherent argument and authority. The
Thomasons also provided this Court with unsupported accusations of fi:aud on the part of
Security Financial, Zions Bank, and the district court. Therefore, this Court holds that the
district court had personal jurisdiction in the underlying foreclosure action, and that Security
Financial had standing and was at all times during the pendency of this action the real party in
interest.
C. The District Court Did Not Err When It Granted Securitv Financial's Motion for
Sumnary Judgment
The Thomasons contend that the district court abused its discretion by granting Security
Financial's Modon for Summary Judgnr.ent because Security Financial produced only
inadmissible hearsay evidence and legal conclusions not based on personal knowledge to
establish that Zions Bank reconveyed all ofthe interest in the notes to Security Financial before
the pendency of this action. The Thomasons further assert that the district court abused its
discretion by admitting evidence that allegedly consisted of inadmissible declarations ofan agent
made outside the presence ofa principal to establish that Zions Bank reconveyed all the interest
in the loans to Security Financial before the pendency of this action. The Thomasons finally
state that the district court abused its discretion because Securitv Financial and the district court
engaged in fraud.
When a trial court's discretionary decision is reviewed on appeal, the appellate court
conducts a multi-tiered inquiry to determine: (1) whether the lower court conectly perceived the
issue as one of discretion; (2) whether the lower court acted within the boundaries of such
discretion and consistently with any legal standards applicable to the specific choices before it;
and (3) whether the court reached its decision by an exercise of reason. See Lee v.
Nickerson, 146 Idaho 5, 9, I 89 P.3d 467 ,471 (2008).
With regard to Security Financial's evidentiary claims, the district court only relied on
Exhibits I through ll when it held that Zions Bank reconveyed all of its interest in the
assignment back to Security Financial. Those exhibits do not contain any affidavits. The district
court did strike Exhibit 12 as hearsay, which consisted ofa letter from counsel for Zions Bank,
which explained that the assignment was "inadvertently not recorded in the records of Madison
County . . until on or about February 27, 2009, subsequent to the recording of the
Reconveyances." It is unclear just what affidavits the Thomasons are referring to in their
opening brief. To the extent that the Thomasons have addressed other documents with regard to
this issue, those arguments are waived because they are unsupported by argument and authority.
See Bach, 148 Idaho at 790,229 P.3d at 1152. The district court only relied on Exhibits 1
through 1l. Therefore, this Court holds that the claim lacks merit.
In addition, the Thomasons' fraud claims are waived because they are unsupported by
argument and authority. This Court declines to search the record to support such unsubstantiated
accusations of fraud on the part of Security Financial and the district court, among others. ,See
Szits, 138 Idaho at400, 64P.3dar326.
Although the Thomasons argue that the district court abused its discretion when it
granted Security Financial's Motion for Summary Judgment, abuse of discretion is not the
appropriate standard with regard to a district court's decision on whether to grant a motion for
summary judgnent. Instead, summary judgrnent is warranted where 'lhe pleadings, depositions,
and admissions on file, together with the affidavits, if any, show that there is no genuine issue as
to any material fact and that the moving party is entitled to a judgment as a matter of law."
I.R.C.P. 56(c). This Court therefore holds that the district court did not err in granting Security
Financial's Motion for Summary Judgment because there is no genuine issue of material fact
and Security Financial is entitled to judgment as a matter of law because all of the Thomasons'
claims on appeal are either waived or frivolous.
D. The District Court Did Not Err by Awarding Attorney's Fees Pursuant to I.C. $ 12-
t2l
The Thomasons contend that the district court abused its discretion and engaged in fraud
by awarding attomey's fees to Security Financial pursuant I.C. 5 12-121. Because of the reasons
mentioned in the previous sections and because the Thomasons do not provide argument or
authority with regard to this issue, this Court holds that the district court did not err when it
awarded Security Financial attomey's fees. See Bach,l48 Idaho at790,229 P.3d ar 1152-
E. Security Financial Is Entitled to Attorney's Fees on Appeal
Security Financial asserts that it is entitled to attomey's fees on appeal pursuant to I.C. $
12-121, aryung that the Thomasons brought their appeal frivolously, unreasonably, or without
foundation.
Idaho Code section 12-l2l provides in relevant part:
In any civil action, the judge may award reasonable attomey's fees to the
prevailing party or parties, provided that this section shall not alter, repeal
or amend any statut€ vvhich otherwise provides for the award of attomey's
fees.
Attom€y's fees are awarded under this statute only when "dre action was brought or pursued
frivolously, unreasonably or without foundation." Bakcr v. Sullivan,l32 Idaho 746,751,979
P.2d619,624 (1999).
This Court holds that Security Financial is entitled to attomey's fees on appeal pursuant
to I.C. $ l2-l2l because all of the Thomasons' claims on appeal were "brought or pursued
frivolously, unreasonably or without foundation." Id. Because Security Financial is entitled to
attomey's fees on appeal pursuant to I.C. $ 12-121, Security Financial's other claims for
attomey's fees will not be addressed.
YI. Conclusron
Because all of the Thomasons' claims are waived or frivolous, this Court affirms the
Final Judgnent in favor of Security Financial. Costs and attorney's fees are awarded to Security
Financial.
Chief Justice BURDICK- Justices EISMANN. J. JONES and HORTON CONCUR.