Ticor Title Co. v. Stanion

• Decision Date: 21 March 2007
• Docket Number: No. 32649.,32649.
• Citation: 144 Idaho 119,157 P.3d 613
• Parties: TICOR TITLE COMPANY, Plaintiff-Appellant, v. Richard W. STANION, II, Defendant-Respondent.
• Court: Idaho Supreme Court

157 P.3d 613

144 Idaho 119

TICOR TITLE COMPANY, Plaintiff-Appellant, v. Richard W. STANION, II, Defendant-Respondent.

No. 32649.

Supreme Court of Idaho, Boise, February 2007 Term.

March 21, 2007.

Preston, Gates & Ellis, Coeur d'Alene, for appellant. Peter Guillum Scott argued.

Murphy Law Office, P.L.L.C., Meridian, for respondent. Michaelina B. Murphy argued.

BURDICK, Justice.

This case asks us to decide whether a title company that was the escrow agent for the sale of land pursuant to a bankruptcy court order is now prevented from bringing a claim against the bankrupt on grounds of res judicata. This case also asks us to determine whether there is an issue of material fact precluding summary judgment and whether either party is entitled to attorney fees.

I. FACTUAL AND PROCEDURAL BACKGROUND

Respondent, Richard W. Stanion II, filed a Chapter 13 bankruptcy petition in Nevada in October 2003. On June 17, 2004, Stanion entered into a contract with Tracy and Ryan Smith in which he promised to sell a piece of real estate. That agreement states the closing was to occur on August 16, 2004, and contains a receipt showing that the buyer paid $5,000 in earnest money to Ticor Title. On July 3, 2004, Stanion's real estate agent prepared a document showing that Stanion's estimated net proceeds of the sale would be $151,093.00.

On August 4, 2004, the bankruptcy court ordered the sale of Stanion's property. That order instructed the title company handling the sale, which was not named in the order, to pay $650.00 to Stanion's attorney, $36,438.62 to the trustee, and the remainder of the sale proceeds, estimated to be $151,093.00, to Stanion.¹ A loan settlement statement shows Stanion's actual net proceeds from the sale were $124,871.19. Ticor distributed the entire sale proceeds, $124,871.19, to Stanion, including the $36,438.62 that should have gone to the bankruptcy trustee.

On January 6, 2005, the bankruptcy trustee sent Stanion a notice of default for failure to make payments according to his Chapter 13 plan. As a result of receiving the notice of default, Stanion realized that Ticor did not pay the trustee the $36,438.62. Thus, in December 2004 Stanion sent Ticor a demand letter. Ticor responded by sending a fax stating that it would refer Stanion's claim to Ticor's claim department.

On February 1, 2005, Stanion moved the bankruptcy court to order Ticor to disburse the required amount to the bankruptcy trustee and to show cause why Ticor should not be subject to sanctions. A hearing on this motion was held March 11, 2005, which resulted in the court ordering Ticor to turn over funds to the trustee and setting a hearing for April 7, 2005, on the sanctions and attorney fees. On March 23, 2005, Stanion moved to show cause why Ticor should not be sanctioned for its failure to appear at the March 11, 2005, hearing. The hearing on the March 23, 2005 motion was also to take place on April 7, 2005. The hearing date was then amended to April 27, 2005. Ticor issued a check to the bankruptcy trustee for the required amount on April 21, 2005. Counsel for Ticor appeared at the final hearing on this matter on April 27, 2005, and the bankruptcy court then entered an order finding that Ticor was in compliance with the court order and that the matter was settled.

Ticor subsequently brought this suit against Stanion claiming Stanion was unjustly enriched by his retention of $36,438.62. The district court held that Ticor's claim is barred by res judicata. Ticor timely appeals the order.

II. STANDARD OF REVIEW

When reviewing a district court's grant of summary judgment, we use the same standard a district court uses when it rules on a summary judgment motion.² Jordan v. Beeks, 135 Idaho 586, 589, 21 P.3d 908, 912 (2001). Summary judgment shall be rendered when "the 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). All facts are viewed in the light most favorable to the nonmoving party. R.G. Nelson, A.I.A. v. Steer, 118 Idaho 409, 410, 797 P.2d 117, 118 (1990).

Whether claim preclusion or issue preclusion bars relitigation between the same parties of a prior litigation is a question of law upon which this Court exercises free review. Lohman v. Flynn, 139 Idaho 312, 319, 78 P.3d 379, 386 (2003). Res judicata is an affirmative defense and the party asserting it must prove all of the essential elements by a preponderance of the evidence. Foster v. City of St. Anthony, 122 Idaho 883, 890, 841 P.2d 413, 420 (1992).

III. ANALYSIS

Ticor argues that there are disputed issues of material fact, that its claim is not barred by res judicata and that it should be awarded attorney's fees. We will address each argument in turn.

A. Disputed Issues of Material Fact

Ticor asserts that the district court's holding assumes facts in dispute and thus cannot be upheld under the summary judgment standard. Specifically, Ticor argues that the district court's ruling assumes that when Ticor paid the $36,438.62 to the bankruptcy trustee it knew Stanion had managed to wrongfully obtain the settlement proceeds. However, the district court's opinion does not indicate it made any such assumption. Furthermore, whether or not Ticor realized it had already given the $36,438.62 to Stanion when it paid the bankruptcy trustee does not affect the outcome of this case. Res judicata will apply if Ticor's claim was or should have been litigated during the bankruptcy proceeding, see infra Part III.B.2.b; Ticor's claim is not affected by its failure to realize it had a claim or argument that should have been presented to the bankruptcy court.

Ticor also asserts that the district court independently investigated disputed issues of material fact. However, Ticor fails to point to any part of the opinion revealing the district court made such an investigation or that it based its opinion on such an investigation. Ticor's assertion is supported only by the district court's statement made in the hearing that it would look through the bankruptcy records attached to affidavits in order to determine when and if Ticor received notice of certain motions. Ticor has failed to point to any part of the district court's opinion which indicates it improperly relied on documents not in the record or stricken from the record. As the record shows no disputed issue of material fact, we will affirm if Stanion is entitled to summary judgment as a matter of law.

B. Res Judicata

The doctrine of res judicata covers both claim preclusion (true res judicata) and issue preclusion (collateral estoppel). Hindmarsh v. Mock, 138 Idaho 92, 94, 57 P.3d 803, 805 (2002). Claim preclusion bars a subsequent action between the same parties upon the same claim or upon claims "relating to the same cause of action . . . which might have been made." Id. Issue preclusion protects litigants from litigating an identical issue with the same party or its privy. Rodriguez v. Dep't of Corr., 136 Idaho 90, 92, 29 P.3d 401, 403 (2001). Separate tests are used to determine whether claim preclusion or issue preclusion applies. See D.A.R., Inc. v. Sheffer, 134 Idaho 141, 144, 997 P.2d 602, 605 (2000). Res judicata serves three fundamental purposes: (1) it preserves the acceptability of judicial dispute resolution against the corrosive disrespect that would follow if the same matter were twice litigated to inconsistent results; (2) it serves the public interest in protecting the courts against the burdens of repetitious litigation; and (3) it advances the private interest in repose from the harassment of repetitive claims. Hindmarsh, 138 Idaho at 94, 57 P.3d at 805 (quoting Aldape v. Akins, 105 Idaho 254, 257, 668 P.2d 130, 133 (Ct.App.1983)).

Ticor centers its original argument around the elements for issue preclusion. Stanion argues that it is not necessary to meet all of the elements for issue preclusion, since the case is barred by claim preclusion. Ticor responds that it does not matter because its case is not barred by either issue preclusion or claim preclusion.³

Ticor uses the issue preclusion elements for its discussion but fails to distinguish them as issue preclusion elements and assumes those elements apply to the doctrine of res judicata, which includes both claim preclusion and issue preclusion. However, the elements Ticor discussed are only used for issue preclusion and do not apply to claim preclusion.⁴ See D.A.R., Inc., 134 Idaho at 144, 997 P.2d at 605 (using different tests for issue preclusion and claim preclusion). Nonetheless, because Ticor argues that neither issue preclusion nor claim preclusion applies, we will analyze each theory as it applies to this case below.

1. Issue Preclusion

Ticor argues that its case is not barred by issue preclusion. Issue preclusion protects litigants from having to relitigate an identical issue in a subsequent action. Rodriguez, 136 Idaho at 92, 29 P.3d at 403. Five factors are required in order for issue preclusion to bar the relitigation of an issue determined in a prior proceeding: (1) the party against whom the earlier decision was asserted had a full and fair opportunity to litigate the issue decided in the earlier case; (2) the issue decided in the prior litigation was identical to the issue presented in the present action; (3) the issue sought to be precluded was actually decided in the prior litigation; (4) there was a final judgment on the merits in the prior litigation; and (5) the party against whom the issue is asserted was a party or in privity with a party to the litigation. Rodriguez, 136 Idaho at 93, 29 P.3d at 404.

Issue preclusion cannot be used to bar Ticor's suit in this case. The issue of whether Stanion was unjustly enriched by his receipt and retention of the trustee's share of the sale proceeds were not actually litigated nor decided by the...