Credit Suisse AG v. Teufel Nursery, Inc.

Decision Date19 March 2014
Docket NumberNo. 40234.,40234.
Citation156 Idaho 189,321 P.3d 739
CourtIdaho Supreme Court
Parties CREDIT SUISSE AG, Cayman Islands Branch, fka Credit Suisse, Cayman Islands Branch, Plaintiff–Respondent, v. TEUFEL NURSERY, INC., Defendant–Appellant, and Action Garage Door, Inc., et al, Defendants.

Pickens Law, P.A., Boise, for appellant. Terri R. Pickens argued.

Moffatt, Thomas, Barrett, Rock & Fields, Chartered, Boise, Sidley Austin LLP, Los Angeles, California, and Fabian & Clendenin, Salt Lake City, Utah, for respondent. P. Bruce Badger argued.

J. JONES, Justice.

This appeal concerns the priority of liens as between Teufel Nursery's mechanics lien and Credit Suisse's mortgages. The district court held that while Teufel had a valid and enforceable lien, it was inferior to Credit Suisse's mortgages. On appeal, Teufel argues that such holding was in error and that the district court also erred in calculating Teufel's lien amount, interest, and attorney fees. We affirm.

I.FACTUAL AND PROCEDURAL HISTORY

This appeal stems from the failure of Tamarack Resort ("Resort"), which was owned, developed, and operated by Tamarack Resort, LLC ("Tamarack"). The Resort was slated as a year-round community, complete with cross-country and downhill skiing, a championship golf course, hotel and conference facilities, retail shopping, restaurants, and lounges. Tamarack planned to offer a panoply of real estate options, including custom homes, condominiums, townhomes, chalets, and cottages. In 2003, construction at the Resort began. Housing units were built and sold, hotel facilities were developed, and by 2006, the ski areas, golf course, retail shops, and restaurants were up and running. In 2004, Tamarack hired Teufel Nursery as its landscape developer. Teufel provided landscaping services at the Resort from 2004 until early 2008.

On May 19, 2006, Tamarack obtained a loan in the amount of $250,000,000.00 from a group of lenders, one of which was Credit Suisse. The loan allowed Tamarack to refinance its existing debt, pay accounts receivable, and continue developing the Resort. The loan was secured by two mortgages, which were recorded in Valley County on May 19, 2006. In 2007, Tamarack began to experience significant financial difficulties. Soon thereafter, it defaulted on its loan from Credit Suisse.

In August of 2007, Tamarack also fell behind on its payments to Teufel. At this time, Tamarack approached Teufel about modifying their existing 2007 agreement. Tamarack presented Teufel with a Master Construction Services Agreement ("Master Agreement") that would constitute their sole agreement. However, the Master Agreement was never accepted or executed by Teufel. As Teufel explained, its extant "2007 Landscape Construction Agreement [with Tamarack] already established the material unit prices and hourly rates so Teufel did not feel it was necessary to modify its agreement with Tamarack." Teufel continued working at the Resort until early 2008, even though by that time it had not been paid for several months. On March 21, 2008, Teufel recorded its Claim of Lien against certain Resort properties in the amount of $564,560.23. The lien amount was adjusted to $406,199.07 at trial because, according to Teufel, when its former counsel filed a complaint to foreclose, he failed to name certain property owners in the lawsuit. As a result of such omissions, "many of the parcels in Teufel's Claim of Lien were subsequently released without payment to Teufel."

Credit Suisse filed its complaint for foreclosure of mortgages in Valley County on March 11, 2008. Teufel was named as a defendant when Credit Suisse filed its amended complaint in the action on August 28, 2008. Shortly thereafter, Teufel filed its own complaint for foreclosure on its lien, naming Credit Suisse as a defendant. On October 17, 2008, the district court entered an order consolidating the Credit Suisse and Teufel lawsuits, along with other pending mechanics lien suits. On February 10, 2009, the district court entered an order requiring all of the mechanics lien claimants to file a disclosure form within twenty-one days. The disclosures were to include the claimant's controlling contract(s), as well as the date on which the claimant first provided labor and material to the property, and each claimant's purported priority date. That same day, Teufel's former counsel of record filed Teufel's disclosure form in which he listed various dates in 2007 as its lien priority dates. At that time, Teufel also identified twenty-seven recorded partial releases of its lien claim. On March 3, 2009, Teufel filed an amended disclosure form, which again listed various dates in 2007 as its lien priority dates. This amended disclosure form utilized an alphabetized parcel system to identify those properties upon which it sought to foreclose, and it allocated the alleged amounts owing on each parcel. In June of 2009, Teufel then filed a supplemental disclosure form and attached the Master Agreement as the controlling contract between Teufel and Tamarack.1

On June 30, 2009, new counsel entered an appearance on Teufel's behalf. After Credit Suisse filed a motion for summary judgment based on the lien priority dates in Teufel's disclosure forms, but prior to the time set for argument, Teufel's new counsel filed a second amended lien disclosure form wherein the priority dates were amended from the 2007 dates to June 14, 2004. It was via this second amended lien disclosure form, filed on September 25, 2009, that Teufel first asserted that it provided labor and materials for the Resort beginning in 2004. In conjunction with its opposition to Credit Suisse's summary judgment motion, Teufel submitted the affidavit of Rick Christensen, Teufel's Landscape Division Manager. In his affidavit, Christensen identified four separate Landscape Construction Agreements—dated in 2004, 2005, 2006, and 2007—as the contracts that governed the relationship between Teufel and Tamarack. The district court ultimately denied Credit Suisse's motion for summary judgment finding there was a genuine issue of material fact regarding Teufel's priority date.

Teufel filed its own motion for summary judgment on April 29, 2010, asserting that based on its priority date of June 14, 2004, it had priority over the Credit Suisse mortgages. The district court denied Teufel's motion for the same reason it had denied Credit Suisse's there was a genuine issue of material fact as to Teufel's priority date.

A court trial regarding the validity, priority, and amount of Teufel's lien was held on October 5 and 6, 2010. On May 11, 2011, the district court entered its Omnibus Findings and Conclusions Re: Validity, Priority and Amount of Various Lien and Mortgage Claims ("Omnibus Order"). In the Omnibus Order, the district court determined that: (1) Teufel's claim of lien is valid and enforceable; (2) Teufel's lien claim is inferior to the Credit Suisse mortgages; and (3) Teufel's claim of lien amounts to $122,066.98. Subsequently, Teufel filed a motion to clarify, followed by a motion to reconsider. Credit Suisse filed its own motion to clarify. On July 28, 2011, the district court entered orders granting the motions to clarify but denying Teufel's motion to reconsider. As a result of granting the motions to clarify, and to correct certain clerical errors and omissions, the district court entered its Substitute Omnibus Findings and Conclusions Re: Validity, Priority and Amount of Various Lien and Mortgage Claims ("Substitute Omnibus Order").

With regard to the subject matter of this appeal, the only substantive change reflected in the Substitute Omnibus Order was the district court's calculation of Teufel's lien amount. In its Substitute Omnibus Order, the district court increased Teufel's lien amount to $306,543.30, or $184,476.32 more than the original $122,066.98 awarded in the Omnibus Order. This increase was based on Teufel's argument in support of its motion to clarify that it had an additional $184,476.32 lien on a certain parcel that the district court had failed to take into account in its Omnibus Order.

On September 27, 2011, Teufel filed a motion seeking prejudgment interest in the amount of $99,911.62, as well as a default judgment against Tamarack for the full amount of the claim of lien, plus interest, costs, and attorney fees. On December 12, 2011, the district court entered default judgment against Tamarack and in favor of Teufel in the amount of $993,686.17—the full amount of Teufel's original claim of lien, prejudgment interest, costs, and attorney fees. Subsequently, on February 3, 2012, the district court entered its Memorandum Decision and Order Re: Various Requests for Awards of Attorneys' Fees, Costs and Prejudgment Interest ("Order Re: Attorney Fees"). Therein, the district court found that Teufel had only partially prevailed as against Credit Suisse, and thus apportioned its attorney fees and costs "by subtracting forty percent ... from the overall amount." After subtracting forty percent, the district court ended up awarding attorney fees to Teufel in the amount of $162,775.20, costs as a matter of right in the amount of $4,329.23, discretionary costs in the amount of $4,865.56, and prejudgment interest calculated at a variable rate in the amount of $63,153.30.

On June 18, 2012, the district court entered its Memorandum Decision and Order: Re: Proposed Judgments and Decrees of Foreclosure and Orders for Sale, as well as its Second Amended Second Revised Judgment and Decree of Foreclosure and Order of Sale ("Second Amended Order"). The Second Amended Order contained a certificate of final judgment consistent with I.R.C.P. 54(b). Teufel filed a timely notice of appeal, which indicated that it was appealing both the Substitute Omnibus Order and the Second Amended Order. Its briefing reflects that it is also appealing findings made by the district court in its Order Re: Attorney Fees.

II.ISSUES ON APPEAL
I. Whether the district court
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