Guenther v. Ryerson
| Decision Date | 18 February 2020 |
| Docket Number | Docket No. 46258 |
| Citation | 166 Idaho 315,458 P.3d 184 |
| Court | Idaho Supreme Court |
| Parties | Joseph GUENTHER, an individual, Plaintiff-Counterdefendant-Respondent-Cross Appellant, v. Michelle RYERSON, an individual, Defendant-Counterclaimant-Appellant-Cross Respondent. |
Sasser & Jacobson, PLLC, Boise, for Appellant/Cross Respondent. James. F. Jacobson argued.
Givens Pursley, LLP, Boise, for Respondent/Cross Appellant. Amber N. Dina argued.
Michelle Ryerson appeals multiple decisions of the district court entered during the dissolution and winding up of West Foothills TIC, a partnership in which she was a partner. Specifically, Ryerson argues the district court misapplied the Idaho Uniform Partnership Act by entering an order requiring liquidation of the partnership's real property by sale at a fixed price, and by allowing her former partner the opportunity to purchase the property from the partnership. Ryerson also argues the district court erred in granting summary judgment on the issue of the real property's value as of the date of dissolution because, as the real property's owner, she is presumed competent to testify about its value. Finally, Ryerson argues the district court erred in dismissing her counterclaim seeking a determination that she is entitled to 50 percent of the partnership's profits upon dissolution.
Joseph Guenther, the other partner in West Foothills TIC, also cross-appeals several decisions from the same proceedings. First, Guenther argues the district court misapplied a provision of the Idaho Uniform Partnership Act by determining that it could not allow Guenther to purchase the partnership's real property without the consent of the partnership's creditors. Guenther also argues the district court erred in declining to award him attorney's fees in the action below because he was the prevailing party and the gravamen of his claims was a commercial transaction.
Prior to June 2009, Joseph Guenther and Michelle Ryerson were in a relationship as an unmarried couple. Initially, they were not business partners; however, in June 2009, the couple purchased real property at 8571 N. Lost Sage Lane, Boise, Idaho 83714 and formed a partnership, West Foothills TIC (notwithstanding the use of TIC in the name of the entity, the parties do not assert that they intended to hold the property as tenants in common). There was no written partnership agreement. There also was no clear agreement between the parties allocating contributions of labor or partnership expenses to either partner. Nor was there an agreement clearly delineating which partner was responsible for which partnership liability. However, both parties agreed that the purpose of the partnership was to purchase the property and develop it into a vineyard for profit. Both parties also agreed the property would be used to provide housing for Guenther, Ryerson, and Ryerson's two children. The parties commingled their personal funds with partnership funds, paying for the partnership's liabilities using funds from individual checking accounts, personal credit cards, a joint checking account, and a credit card they held together.
To build their home on the property, Guenther and Ryerson obtained a $528,600 construction loan from Zions Bank, which eventually was converted into a 30-year mortgage. Construction began in August 2015 and the house was completed in January 2016. Ryerson and her two children moved into the house in January 2016, followed by Guenther in May 2016. Both parties invested a considerable amount of personal funds and labor into development of the vineyard and construction of the house.
On March 26, 2017, Guenther and Ryerson ended their relationship and decided they could not continue to operate the business as partners. Guenther initiated the present action in June 2017 when he filed a complaint and then an amended complaint alleging four causes of action: (1) dissolution of the partnership; (2) unjust enrichment; (3) promissory estoppel; and (4) a request for declaratory judgment quieting title to the property. About a week later, Ryerson filed an answer and counterclaim against Guenther for judicial dissolution of the partnership and a determination that she had a 50 percent ownership stake in the partnership. Both parties agreed that the end of their personal and business relationship on March 26, 2017, was a dissociative act requiring dissolution and winding up of the partnership.
At the beginning of the winding up process, Ryerson asked the court to liquidate the partnership's assets by sale, including the property on Lost Sage Lane. Guenther, on the other hand, asked the court to allow him to buy out Ryerson's interest in the property, so that he could continue to live there and work the vineyard. On January 5, 2018, the district court entered an order granting Ryerson's motion to liquidate the partnership's assets. In its decision, the district court explained that, under the Idaho Uniform Partnership Act, it did not have the power to release Ryerson from her mortgage liability without Zions Bank's consent.
Guenther subsequently filed a motion to reconsider the court's order granting Ryerson's motion to liquidate (Guenther's first motion for reconsideration). After a hearing, the district court granted Guenther's first motion for reconsideration and ruled that it would not require the property on Lost Sage Lane to be liquidated by sale on the open market. Instead, the court entered an order permitting Guenther to buy out Ryerson's interest in the property because Guenther had presented new evidence that Zions Bank was willing to refinance the property in Guenther's name alone and would release Ryerson of all liabilities on the original mortgage.
Around the same time that he filed his first motion for reconsideration, Guenther also filed a motion for summary judgment on the issues of the value of the Lost Sage Lane property and each party's total contributions to the partnership. The district court granted that motion in part and denied it in part. The district court granted summary judgment on the issue of property value as of the date of dissolution, but denied summary judgment as to the amount of each party's contributions.
On the issue of property value, Guenther provided an expert appraisal valuing the property at $600,000. Ryerson provided her own testimony that the property was worth "significantly more" than the amount stated in the appraisal obtained by Guenther, and that the "baseline asking price for the property should be no lower than $800,000." Acknowledging that Idaho law provides for a presumption that the owner of property is competent to testify as to its value, the district court determined that Ryerson had not stated an opinion as to the property's fair market or full cash value. Finding that Ryerson had not offered any admissible evidence as to the value of the property, the district court granted summary judgment determining the property to be worth $600,000 at the time of dissolution. Based on the $600,000 valuation, the district court also determined that the partnership had $144,789.92 of equity in the property as of the date of dissolution.
After those rulings, Ryerson filed a motion for reconsideration (Ryerson's first motion for reconsideration) seeking reconsideration of the February 16 decisions on Guenther's motions. At a March 29, 2018, hearing on Ryerson's first motion for reconsideration, the district court ruled from the bench in extensive detail, denying the motion in part and granting it in part. The district court denied the portion of Ryerson's motion that requested reconsideration of the order granting summary judgment as to the value of the Lost Sage Lane property. At the same time, the district court granted the portion of Ryerson's motion that requested reconsideration of the order allowing Guenther to buy out Ryerson's interest in the property. The district court reasoned that it could not enter an order allowing Guenther to buy out Ryerson's interest in the property under Idaho Code section 30-23-703(c) without the consent of the partnership. Because Ryerson did not consent to Guenther buying out her interest in the property, the district court determined that liquidation of the property by sale on the open market was the only option available, and entered an order to that effect.
A two-day court trial took place on April 2 and 3, 2018. Numerous exhibits were admitted, both parties and a number of witnesses testified, and counsel for both sides submitted written closing arguments to the court. The district court entered its Findings of Fact, Conclusions of Law under Idaho Rule of Civil Procedure 52 on May 14, 2018. The district court found by a preponderance of the evidence that the total amount of Ryerson's contributions to the partnership was $101,514.66. As for Guenther, the district court found by a preponderance of the evidence that the total amount of his contributions to the partnership was $330,163.22. The combined total contributions of Ryerson and Guenther were $431,677.88. Therefore, the district court determined that Guenther had made 76 percent of the total contributions to the partnership and Ryerson had made 24 percent of the total contributions. It also determined that any increase in equity in the Lost Sage Lane property was 100 percent attributable to Guenther.
The district court's findings and conclusions also ordered Guenther and Ryerson to make additional capital contributions to the partnership in cash to pay off the partnership's mortgage with Zions Bank. However, the partnership already had sufficient assets to satisfy its obligation to Zions Bank, so Guenther filed a motion to clarify, arguing that the district court's order was not consistent with the Idaho Uniform Partnership Act's winding up provisions. The district court treated the remainder of Guenther's motion, which argued again that he should...
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