Enright v. Jonassen
| Decision Date | 03 February 1997 |
| Docket Number | No. 22032,22032 |
| Citation | 129 Idaho 694,931 P.2d 1212 |
| Parties | Lee P. ENRIGHT and Nancy K. Enright, husband and wife, Plaintiffs-Respondents, v. Harold F. JONASSEN, Flora S.W. Kung-Jonassen, Husband and Wife, McCann-Daech-Fenton Realtors, an Idaho Partnership; Richard Fenton, Individually, Defendants-Appellants. Boise, November 1996 Term |
| Court | Idaho Supreme Court |
Hawley, Troxell, Ennis & Hawley, Ketchum, for respondents. Edward A. Lawson argued.
This is a breach of fiduciary duty case that involves a real estate transaction in which, subsequent to the purchase, the real property was discovered to be located in a County Flood Plain Management District. After a six day court trial, the district court ruled in favor of the real estate purchasers, the respondents, Lee P. Enright (Lee) and Nancy K. Enright (Nancy) (collectively referred to as the Enrights).
On May 23, 1990, Harold Jonassen and Flora S.W. Kung-Jonassen (collectively referred to as Jonassen), entered into a listing agreement with Mike McCann (McCann) of McCann-Daech-Fenton Realtors (the Realtor), to sell twenty acres Jonassen owed on Eagle Creek in Blaine County, Idaho. The listing price was $4,000,000.
The listing agreement indicated that the listed property was zoned R-2 1/2. McCann determined the listed property was zoned R-2 1/2 based upon McCann's inspection of a Blaine County zoning map that was located in the Realtor's office.
The newspaper advertisements published by McCann did not indicate the listed property was in a floodplain or that the listed property was in an avalanche overlay district. The advertisements indicated the listed property was zoned R-2 1/2.
The Enrights first became aware of the listed property by seeing a newspaper advertisement for the listed property. The advertisement described the listed property as a twenty acre parcel of land with wonderful horse property and great development potential, both of which caught the Enrights' attention. 1
Lee called Mary Lou Mickelson, who had sold the Enrights a home on Fairway Road and Busterback Ranch, however, Mickelson was not available so Lee contacted the only other realtor Lee knew of in the area, Richard Fenton (Fenton). Fenton had contacted Lee previously regarding a prospective purchaser of the Enrights' Fairway Road home. Fenton was a real estate agent with the Realtor.
Fenton showed the Enrights the listed property. The Enrights liked the listed property, however, the Enrights ultimately realized they would only want 15 undeveloped acres, (lots 17, 18, and 19), and would not want the 5 developed acres on lot 16. Initially it appeared Jonassen would not split the 20 acres so that the Enrights could purchase only 15 of the 20 acres listed. However, after a third party made an offer on lot 16 and Jonassen made a counter offer for lot 16, the Enrights decided to make an offer on lots 17, 18 and 19.
Lee testified that:
You know, I was beginning to actively formulate in my own mind what this piece of property might be worth. And my remarks, I remember rather clearly actually saying to Dick, you know, almost seems too good to be true, that this is still sitting here in the Wood River Valley.
And I said: Are there any restrictions I don't know about? Are there any unusual building restrictions that would prohibit me from developing this property?
At which point he answered: No, just normal county building restrictions, which ...
And then I think, on the following day, which is usually my fashion, after reflecting on that comment, in a phone call to him, I said: What exactly are those normal county building restrictions?
And at which point he gave me a height restriction on the buildings, which I think was thirty feet, thirty-five, I forget which, and the forty-foot setback from the property, from the lines.
Fenton testified that while he did not recall the specific conversation in which Lee asked if there were unusual building restrictions on the listed property, such a conversation "may very well have taken place." Fenton testified that if Lee asked if there were unusual building restrictions on the listed property Fenton would have said there were no unusual building restrictions. Nancy testified that Lee had asked Fenton if there were unusual building restrictions on the listed property and that Fenton responded in the negative.
Lee informed Fenton he was very concerned about water rights on the listed property based upon Lee's experience with the Enrights' Busterback Ranch which involved controversy with government offices and the Enrights' use of their water rights. Fenton advised Lee to consult an attorney regarding the water rights issue. Lee hired an attorney who completed a water rights analysis for lots 17, 18, and 19.
Lee informed Fenton in general terms that the Enrights had a tax related time pressure and that the Enrights would have to begin construction immediately. Lee testified that the Enrights had to either purchase a new home or build a new home before the end of September 1991 or pay a tax bill in excess of $800,000.
Fenton prepared the Real Estate Purchase and Sale Agreement and Receipt for Earnest Money (Agreement) for the purchase of lots 17, 18, and 19. The Agreement conditioned the Enrights' purchase upon obtaining an acquisition and construction loan and an analysis of water rights, avalanche conditions, and sunlight conditions. Lee determined the $1,500,000 purchase price based upon Fenton's representation that there were no building restrictions on lots 17, 18, and 19. At the time of making the offer to Jonassen on September 4, 1990, the Enrights did not know that portions of lots 17, 18, and 19 were in a floodplain district and the Enrights thought that lots 17, 18, and 19 were zoned R-2 1/2.
On October 8, 1992, the Enrights filed a complaint in the Fifth Judicial District Court for the County of Blaine, against Jonassen, the Realtor, and Fenton, (collectively referred to as appellants). The complaint alleged that on or about September 4, 1990, the Enrights entered into the Agreement with Jonassen. Under the terms of the Agreement, Jonassen would sell and the Enrights would purchase lots 17, 18, and 19 (hereafter referred to as the Property).
The complaint alleged that the Realtor acted as both the listing and selling agency, representing both Jonassen and the Enrights in the transaction. Fenton acted as an individual agent representing the Enrights in the transaction. On October 9, 1990, the Agreement was executed and Jonassen transferred title to the Property to the Enrights in exchange for full payment by the Enrights. The complaint alleged that the Enrights entered into and executed the Agreement based upon representations and warranties made by appellants.
The complaint alleged that after October 9, 1990 2, the Enrights discovered the Property was located in a County Flood Plain Management District which required special permits and extraordinary costs, in order to improve and develop. The complaint alleged breach of contract, negligence, fraud, and negligent misrepresentation. The Enrights requested about $268,000 in special damages, costs, and attorney fees.
The Realtor and Fenton filed an answer on January 22, 1993, and an amended answer on March 30, 1993. Jonassen filed an answer on December 13, 1993. Jonassen admitted to entering into the Agreement under which Jonassen transferred the Property to the Enrights. The Realtor admitted the Realtor acted as both the listing and selling agency representing both the Enrights and Jonassen in the transaction. Fenton admitted acting as an individual agent representing the Enrights in the transaction.
On June 21, 1994, Jonassen filed a cross-complaint against the Realtor and Fenton alleging any award against Jonassen would be the direct and proximate result of the conduct of the Realtor and Fenton and requesting the Realtor and Fenton be ordered to satisfy any judgment that may be entered against Jonassen. The Realtor and Fenton denied the allegations in the Jonassen cross-complaint.
On November 30, 1994, the district court dismissed the third claim for relief, fraud, alleged in the Enrights' complaint.
On December 9, 1994, Jonassen entered into a stipulation with the Realtor and Fenton, stipulating that the Realtor and Fenton would appear for and defend Jonassen in the Enrights' action against Jonassen, the Realtor, and Fenton. Jonassen reserved all rights under its cross-complaint pending the outcome of the litigation.
A court trial was held from December 13, 1994 through December 16, 1994, December 27, 1994, and December 28, 1994. On December 13, 1994, the parties entered into a stipulation and order. On January 12, 1995, the district court entered its amended findings of facts and conclusions of law. The district court concluded that the Realtor and Fenton owed a duty of care as well as a fiduciary duty to the Enrights as the Enrights' real estate agent, that the Realtor and Fenton breached their duty to the Enrights, that the Realtor and Fenton's breach substantially caused the Enrights' harm, and that the Realtor and Fenton were liable for Enrights' damages caused by the Realtor and Fenton's breach. The district court found that as a direct and proximate result of the Realtor and Fenton's breach, the Enrights incurred costs and were entitled to an award in the amount of $376,337. The district court also awarded the Enrights $60,000 which was the amount of commission that was paid to the Realtor and Fenton.
On February 2, 1995, the appellants filed a number of post-trial motions, including a motion for a new trial. On April 13, 1995, the district court entered an order denying the appellants' post-trial motions. On May 31, 1995, the district court entered a judgment on cross-claim in favor of Jonassen and against the Realtor and...
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