Eliopulos v. Knox

• Decision Date: 04 November 1992
• Docket Number: No. 19233,19233
• Citation: 123 Idaho 400,848 P.2d 984
• Parties: Petro G. ELIOPULOS and Janet A. Eliopulos, individually and as husband and wife, Plaintiffs-Appellants, and Northwest Land Investment Company, Inc., an Idaho corporation, Plaintiff, v. Harry W. KNOX II, Ann K. Neavill, Rodney B. Spackman, James E. Kevan, Leonard N. Purdy, Marion Pugmire, H.E. Slade, Defendants-Respondents.
• Court: Idaho Court of Appeals

Page 984

848 P.2d 984

123 Idaho 400

Petro G. ELIOPULOS and Janet A. Eliopulos, individually and as husband and wife, Plaintiffs-Appellants and Northwest Land Investment Company, Inc., an Idaho corporation, Plaintiff, v. Harry W. KNOX II, Ann K. Neavill, Rodney B. Spackman, James E. Kevan, Leonard N. Purdy, Marion Pugmire, H.E. Slade, Defendants-Respondents.

No. 19233.

Court of Appeals of Idaho.

Nov. 4, 1992.

Rehearing Denied Feb. 4, 1993.

Petition for Review Denied April 13, 1993.

Petro G. Eliopulos and Janet A. Eliopulos, Boise, appearing pro se. Petro G. Eliopulos, argued.

Cosho, Humphrey, Greener & Welsh, Boise, for defendants-respondents. Howard Humphrey, argued.

WALTERS, Chief Judge.

This is an appeal from an order of summary judgment partially dismissing a third-party complaint against the individual directors of a bank. For the reasons below, we affirm.

Facts and Procedural Background

The relevant facts are as follows. Sometime in the mid-1980's, Petro Eliopulos founded Northwest Land Management, Inc., (Northwest), an Idaho corporation in the business of purchasing and selling orchards and other investment properties. Northwest took out several large loans with Idaho State Bank, (ISB), loans that Petro and his wife, Janet, personally guaranteed. In late 1986, Northwest failed to make payments on its loans. In December of that year, an ISB loan officer, Ann Neavill, contacted Petro Eliopulos regarding his guarantee of the approximately $500,000 debt owed by Northwest. Through Neavill and another bank employee, Harry Knox, the Eliopuloses negotiated an agreement to restructure the Northwest debt and to provide for future funding of the company's operations and expansion. Pursuant to the agreement, the Eliopuloses, in January, 1987, executed continuing personal guarantees in favor of ISB for all indebtedness owed or to be owed by Northwest. As an integral part of the agreement, ISB promised to fund additional loans to Northwest over the next two years, and to extend funding to the Eliopuloses' farming operations at Dry Lake Farm--a business begun years before, and unrelated to, the activities of Northwest. As an additional accommodation to the bank, the Eliopuloses agreed to place their personal accounts with ISB, including a $200,000 certificate of deposit (the Farm CD), the purpose of which was to make annual payments on the Dry Lake Farm real estate mortgage. In restructuring the loan, the parties attempted to avoid the statutory limitations on the loan amount by involving Alexis Eliopulos, Petro's sister, by transferring assets of Northwest to her and having her then pledge them to ISB.

In the meantime, ISB came under severe regulatory pressure from the Federal Reserve Bank and the Idaho Department of Finance. ISB's board of directors later informed Northwest and the Eliopuloses that it would not continue to fund the loans made, ¹ and that it would not extend the future funds that it had promised. Unable to keep current in its operations, Northwest soon defaulted on its loans. In turn, ISB demanded that the Eliopuloses repay Northwest's $1,300,000 indebtedness according to the terms of the continuing guarantees. The Eliopuloses refused. In the meantime, ISB employee Ann Neavill directed that the Eliopuloses' Farm CD be applied to offset debts owed the bank by Northwest.

In October, 1987, ISB sued the Eliopuloses to enforce the loan guarantees. The Eliopuloses denied liability, asserted numerous counterclaims against ISB, and filed a third-party complaint ² against ISB and the seven members of the bank's board of directors. Two of the directors, Harry Knox and Ann Neavill, were also employed with the bank as loan officers and were the only individuals directly involved with the Eliopuloses' loan negotiations and lending arrangements. The other five directors, Rodney Spackman, James Kevan, Leonard Purdy, Mirion Pugmire, and H.E. Slade, (collectively referred to as "the Spackman directors"), had little if any direct involvement with the Eliopuloses' loans.

In April, 1990, ISB and the Eliopuloses entered a written settlement agreement and mutual release, resulting in the entry of a stipulation and order dismissing all claims between ISB, and any of its employees in their capacities as employees of the bank, and the Eliopuloses. The Eliopuloses later conceded that many of their third-party claims against the directors were subsumed by the settlement and release. However, they continued to maintain their claims for negligence, conversion, fraud, breach of fiduciary duty, bad faith tort, violation of state banking laws, violation of state and federal racketeering statutes, and punitive damages. Before trial, the individual directors moved for summary judgment on the third-party complaint. Ruling there was no evidence to establish liability on the part of any of the Spackman directors, the court granted summary judgment in their favor. Additionally, the court concluded that the Eliopuloses had failed to establish their claims of negligence, violations of state and federal racketeering statutes, bad faith tort, and breach of fiduciary duty, and dismissed those claims from the case. Knox and Neavill, the remaining defendants, maintained that the alleged acts of wrongdoing underlying these claims were committed within the scope of their agencies as bank employees, not as directors, and that as such they were released from liability under the terms of the settlement agreement. The court reserved its ruling on this part of the motion until after trial, concluding that the capacity in which the alleged acts were committed presented an issue of fact. Thus, the remaining claims--fraud, conversion, violations of state banking laws, and punitive damages--proceeded to trial against Knox and Neavill.

At the conclusion of the trial, the jury returned a special verdict finding Knox and Neavill liable for conversion and for violating the banking laws. It awarded damages to the Eliopuloses in the amount of $482,500 on those claims. However, the jury also found Knox and Neavill not liable for fraud and further found that their conduct did not warrant imposing punitive damages. Upon this verdict, the district judge entered judgment in the amount of $482,500 against Knox and Neavill. The judge then took up the question of the effect of the settlement agreement upon the liability of the directors. Based upon the evidence presented at trial, the court found that Knox's and Neavill's wrongful acts were committed in their capacities as bank employees, not as directors. Applying the language of the settlement agreement, which expressly released ISB and its employees in their capacities as employees, the court concluded that the Eliopuloses could not recover against Knox and Neavill. Accordingly, the court vacated the judgment and entered a j.n.o.v. in favor of Knox and Neavill.

The Eliopuloses do not challenge the district court's decision to enter a j.n.o.v. ³ Rather, they have chosen to appeal from the district court's pretrial order dismissing most of their third-party claims. They maintain that dismissal on summary judgment was improper, and that they are entitled to a trial on those claims.

Standard of Review

In an appeal from an order granting a motion for summary judgment, we will review the pleadings, depositions, and admissions on file, together with the affidavits, if any, to determine whether there is a genuine issue as to any material fact, and whether the moving party is entitled to judgment as a matter of law. I.R.C.P. 56(c); Ray v. Nampa School Dist. No. 131, 120 Idaho 117, 814 P.2d 17 (1991). This Court's standard of review is the same as the standard used by the district court in passing upon the motion. McDonald v. Paine, 119 Idaho 725, 810 P.2d 259 (1991). All facts in the record and all reasonable inferences drawn from those facts are viewed in favor of the party resisting the motion. Treasure Valley Bank v. Butcher, 117 Idaho 974, 793 P.2d 206 (1990). The burden of proving the absence of material facts is upon the moving party. Petricevich v. Salmon River Canal Co., 92 Idaho 865, 452 P.2d 362 (1969). However, the resisting party "may not rest upon the mere allegations or denials of his pleadings, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." I.R.C.P. 56(e); Anderson v. City of Pocatello, 112 Idaho 176, 731 P.2d 171 (1987). Affidavits containing general or conclusory allegations, unsupported by specific facts, are not sufficient to preclude entry of a summary judgment, if the opposing affidavits set forth specific and otherwise uncontroverted facts. Barlow's Inc. v. Bannock Cleaning Corp., 103 Idaho 310, 647 P.2d 766 (Ct.App.1982). However, a mere scintilla of evidence will not suffice to create a genuine issue of fact. Evans v. Twin Falls County, 118 Idaho 210, 796 P.2d 87 (1990); Johnson v. Gorton, 94 Idaho 595, 495 P.2d 1 (1972).

Furthermore, a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. Badell v. Beeks, 115 Idaho 101, 765 P.2d 126 (1988) (citing Celotex v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986)). In such a situation, the moving party is entitled to a judgment as a matter of law because the nonmoving party has failed to make a sufficient showing on an essential element of its case with respect to which that party bears the burden of proof at trial. Celotex, 477 U.S. at 322-23, 106 S.Ct. at 2552-53. This rule facilitates the dismissal of factually unsupported claims prior to trial. See Garzee v. Barkley, 121 Idaho 771, 828 P.2d 334 (Ct.App.1992); Bennett v. Parker, 898 F.2d 1530, 1532 (11th Cir.1990), cert. denied, 498 U.S. 1103, 111 S.Ct. 1003, 112 L.Ed.2d 1085 (1991). In considering the correctness of an order granting partial summary judgment, raised on...