Golub v. Kirk-Scott, Ltd.

• Court: Idaho Supreme Court
• Writing for the Court: J. JONES, Justice.
• Citation: Golub v. Kirk-Scott, Ltd., 342 P.3d 893, 157 Idaho 966 (Idaho 2015)
• Decision Date: 30 January 2015
• Docket Number: No. 41505.,41505.
• Parties: Alan GOLUB and Marilyn Golub, husband and wife, Plaintiffs–Respondents, v. KIRK–SCOTT, LTD., a Texas corporation, Defendant–Appellant, and Kirk–Hughes Development, LLC, a Delaware limited liability company; Internal Revenue Service; Tomlinson North Idaho, Inc., an Idaho corporation; Geraldine Kirk–Hughes and Peter Sampson, husband and wife; Kirk–Hughes & Associates, Inc., a Nevada corporation; Kelly Polatis, an individual; Delano D. and Lenore J. Peterson, husband and wife, Defendants.

157 Idaho 966

342 P.3d 893

Alan GOLUB and Marilyn Golub, husband and wife, Plaintiffs–Respondents,

v. KIRK–SCOTT, LTD., a Texas corporation, Defendant–Appellant,andKirk–Hughes Development, LLC, a Delaware limited liability company; Internal Revenue Service; Tomlinson North Idaho, Inc., an Idaho corporation; Geraldine Kirk–Hughes and Peter Sampson, husband and wife; Kirk–Hughes & Associates, Inc., a Nevada corporation; Kelly Polatis, an individual; Delano D. and Lenore J. Peterson, husband and wife, Defendants.

No. 41505.

Supreme Court of Idaho, Boise, December 2014 Term.

Jan. 30, 2015.

Crotty & Son, PLLC, Spokane, Washington, for Appellant Kirk–Scott, Ltd. Matthew Z. Crotty argued.

Winston & Cashatt, Lawyers, Coeur d'Alene, for Respondents. Michael T. Howard argued.

J. JONES, Justice.

This case involves a dispute between two creditors as to whose claim against their debtor's property has priority. The respondents, Alan and Marilyn Golub (Golubs), recorded a judgment in the amount of $941,000 against their judgment debtor, Kirk–Hughes Development, LLC (KHD), giving Golubs a judgment lien on property owned by KHD in Kootenai County. KHD now claims to have executed a deed of trust on the property in question several years before Golubs acquired their lien. The beneficiary of the deed of trust is another defendant, Kirk–Scott, Ltd. (KS). The district court granted summary judgment to Golubs, finding that Golubs' duly recorded judgment lien had priority over KS' prior, unrecorded deed of trust. KS timely appealed.

I.FACTUAL AND PROCEDURAL BACKGROUND

In 2004, Alan Golub was the listing real estate agent for properties then owned by Sloan and Peterson, who each sought to sell their properties near Coeur d'Alene, Idaho. Golub worked with other real estate agents to persuade Geraldine Kirk–Hughes and Geraldine's sister, Balinda Antoine, to participate in a development project potentially involving the purchase of the Peterson and Sloan properties, among others. In July 2004, KS, a company owned by Balinda, purchased the Sloan property.

The Peterson property was the largest and most expensive of the properties, being 518 acres. Golub had an agreement with Peterson that would entitle Golub to a commission for the sale of the Peterson property if Peterson closed on the sale of his property with one of the potential buyers Golub had provided to Peterson by early November 2004.¹ Geraldine was one of the potential buyers provided to Peterson by Golub. In July 2004, Geraldine became a party to a purchase and sale agreement to acquire the Peterson property for $6 million. However, this agreement lapsed in October or November 2004, and the sale was not closed.

In October 2004, Geraldine formed KHD to develop this real estate project. KHD is owned: 7% by Kirk–Hughes & Associates; 51.5% by KS; 3% by Balinda Antoine; and 5% by Richard Polatis.² On November 18, 2004, KS granted the Sloan property to KHD by warranty deed. The same day, KHD purportedly executed a deed of trust in favor of KS, covering a portion of the Sloan property, though it is unclear from the record exactly what portion. KHD's warranty deed for the Sloan property was recorded on November 19, 2004, but the deed of trust in favor of KS was not recorded at that time.

In March 2005, Kelly Polatis, a business associate of Geraldine, purchased the Peterson property. Polatis then deeded the Peterson property to KHD, either the same day he acquired it or very close in time. Golub believed these were straw-person transactions to deny him his commission on the sale of the Peterson property. In order to recover the lost commission, Golubs sued Geraldine, KHD, Kirk–Hughes & Associates, Polatis, and Peterson in 2007. Geraldine, KHD, and Kirk–Hughes & Associates defended against the action for a year and a half, but on March 11, 2009, Golubs obtained a default judgment in the amount of $941,000 against them. Golubs believed that they were unable to immediately record this judgment because Peterson remained in the action and that the judgment could not be considered final until there was a judgment against all defendants in the action or the court issued an I.R.C.P. 54(b) certificate. For an unknown reason, when the court entered the default judgment, it did not sign the 54(b) certificate. Golub was in the process of seeking a Rule 54(b) certificate to pursue collection against the defaulted defendants when KHD filed for Chapter 11 bankruptcy on April 6, 2009.

Despite the purported deed of trust obligation from KHD to KS, KHD did not list on its bankruptcy forms any secured claims regarding the property allegedly covered by that instrument and did not list KS as a creditor. Additionally, KS did not file a creditor's claim in the bankruptcy proceeding. On September 17, 2010, while KHD's bankruptcy was pending, KS attempted for the first time to record its 2004 deed of trust. Golubs recorded their judgment a few weeks later, after the bankruptcy case was dismissed without discharge.

In early 2013, after a second bankruptcy by KHD was dismissed without discharge, Golubs filed an action for declaratory judgment to establish the priority of their judgment lien over KS' purported prior, unrecorded deed of trust. In response, KS filed a motion to set aside the $941,000 default judgment entered in 2009 and a motion for summary judgment on the 2013 priority action. Golubs also moved for summary judgment on the issue of priority. The district court denied KS' motions and granted Golubs' motion for summary judgment. Following this order, KS moved under I.R.C.P. 59(a) to amend/alter the order. The district court denied the motion and ordered sanctions against KS. KS timely appealed.

II.ISSUES ON APPEAL

1. Whether the district court erred in denying KS' motion to vacate the 2009 default judgment.

2. Whether the district court erred in granting Golubs' motion for summary judgment.

3. Whether the district court abused its discretion in ordering sanctions against KS. 4. Whether KS is entitled to attorney fees.

III.ANALYSIS

A. Standard of review.

The standard of review on appeal from the district court's grant of summary judgment is well-settled.

On appeal from the grant of a motion for summary judgment, this Court utilizes the same standard of review used by the district court originally ruling on the motion. Summary judgment is proper "if 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). When considering whether the evidence in the record shows that there is no genuine issue of material fact, the trial court must liberally construe the facts, and draw all reasonable inferences, in favor of the nonmoving party. If the evidence reveals no disputed issues of material fact, then only a question of law remains, over which this Court exercises free review.

Conner v. Hodges, 157 Idaho 19, 23, 333 P.3d 130, 134 (2014) (internal case citations omitted). "Statutory interpretation is a question of law subject to free review." J & M Cattle Co., LLC v. Farmers Nat'l Bank, 156 Idaho 690, 692, 330 P.3d 1048, 1050 (2014). On discretionary matters, "[a] district court does not abuse its discretion when it (1) correctly perceives the issue as discretionary, (2) acts within the bounds of discretion and applies the correct legal standards, and (3) reaches the decision through an exercise of reason." Agrisource, Inc. v. Johnson, 156 Idaho 903, 914, 332 P.3d 815, 826 (2014) (internal citations omitted).

B. The district court did not err in denying KS' I.R.C.P. 60(b) motion to vacate Golubs' 2009 default judgment.

1. Motion under I.R.C.P. 54(c) and 60(b)(4).

In the 2013 action for declaratory judgment of priority, KS brought a motion to vacate Golubs' 2009 default judgment against KHD and other defendants, arguing that the judgment was void under I.R.C.P. 54(c) and 60(b)(4) because the district court lacked jurisdiction to award more than the amount prayed for in the 2007 complaint. KS was not one of the named defendants in the 2007 action or a judgment debtor. The district court denied the motion, finding that KS failed to show the court lacked personal jurisdiction over KHD or that the court lacked subject matter jurisdiction to grant the judgment against KHD. We agree with the district court.

It is within the discretion of the district court to decide whether to grant or deny a motion under I.R.C.P. 60(b). Agrisource, 156 Idaho at 914, 332 P.3d at 826. Rule 60(b) allows a party to move the court for relief from a final judgment where:

... (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, ... or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be brought within a reasonable time.

Notwithstanding the timeliness requirements of Rule 60(b), void judgments can be attacked at any time. See Meyers v. Hansen, 148 Idaho 283, 291, 221 P.3d 81, 89 (2009). "Generally, the Court may declare a judgment void only for defects of personal jurisdiction or subject-matter jurisdiction," or where the "court's action amounts to a plain usurpation of power constituting a violation of due process." Id. Although if "a default judgment exceeds the demand of the complaint, the excess is void," Hayes v. Towles, 95 Idaho 208, 211, 506 P.2d 105, 108 (1973), we have previously stated that "[i]n the sound interest of finality, the concept of void judgment must be narrowly restricted." Gordon v. Gordon, 118 Idaho 804, 807, 800 P.2d 1018, 1021 (1990).

Rule 54(c) provides that "[a] judgment by default shall not be different in kind from or exceed in amount that prayed for in the demand for judgment." In Johnson v. Hartford,

we stated that one of the policy reasons for Rule 54(c) limiting the amount of the judgment...