Karl L. Roesch, 5% Interest & River Terrace Estates, Inc. v. Klemann

• Decision Date: 16 August 2013
• Docket Number: No. 39836.,39836.
• Citation: 155 Idaho 175,307 P.3d 192
• Court: Idaho Supreme Court
• Parties: Karl L. ROESCH, as to an undivided 77.5% interest and River Terrace Estates, Inc., as to an undivided 22.5% interest, Plaintiffs–Appellants, v. Daniel L. KLEMANN, an unmarried man, Defendant–Respondent, and Cornerstone Financial, Inc.; and Shea Realtors, PLLC, Defendants.

155 Idaho 175

307 P.3d 192

Karl L. ROESCH, as to an undivided 77.5% interest and River Terrace Estates, Inc., as to an undivided 22.5% interest, Plaintiffs–Appellants,

v.Daniel L. KLEMANN, an unmarried man, Defendant–Respondent,andCornerstone Financial, Inc.; and Shea Realtors, PLLC, Defendants.

No. 39836.

Supreme Court of Idaho, Boise, June 2013 Term.

Aug. 16, 2013.

Finney Finney & Finney, P.A., Sandpoint, for appellants. John Finney argued.

Daniel L. Klemann, Belgrade, Montana, pro se respondent.

HORTON, Justice.

This appeal arises out of a judicial foreclosure action brought by Karl L. Roesch and River Terrace Estates, Inc. (collectively, Roesch) against Daniel L. Klemann, Cornerstone Financial, Inc., and Shea Realtors, PLLC. Roesch obtained a foreclosure judgment and decree of sale against Klemann in the amount of $307,800.62. The judgment also provided that interest would accrue on the indebtedness through the date of the sheriff's sale at $82.92 per day. When the district court later learned that the rate used to calculate the interest was the rate set forth in the note, it ordered counsel to prepare another judgment calculating the interest based upon the statutory post-judgment rate defined in Idaho Code § 28–22–104(2). Roesch's attorney complied, and the district court entered an amended judgment and decree setting forth Klemann's total indebtedness as $307,800.62 plus $44. 27 per day in interest through the date of the sale. Roesch appeals from the amended judgment, arguing that he is entitled to interest at the note rate through the date of the sale. We affirm the amended judgment.

I. FACTUAL AND PROCEDURAL BACKGROUND

In May 2011, Roesch brought an action in Kootenai County against Klemann, seeking judicial foreclosure on a mortgage granted by Klemann as security for a promissory note. In its Judgment and Decree of Sale entered on August 30, 2011, the district court found that Klemann's total indebtedness to Roesch and River Terrace, as of the date of the judgment and decree, was $307,800.62. The judgment also set forth that interest on the indebtedness would accrue through the date of the sheriff's sale in the amount of $82.92 per day, based upon the rate set forth in the note. The Kootenai County Sheriff refused to conduct the sale because it believed that the statutory interest rate on judgments applied, not the rate on the note. Roesch petitioned the district court for a writ of mandamus to compel the sale, but prior to the scheduled hearing, Roesch withdrew the petition. However, the district court refused to vacate the hearing and, after argument, issued a memorandum decision and order denying the petition and ordering Roesch to prepare an amended judgment calculating interest based upon the statutory rate. Roesch complied, and the district court entered an amended judgment finding that Klemann's total indebtedness, as of August 19, 2011, is $307,800.62 plus $44.27 per day in interest through the date of the sale. Roesch timely appeals from the amended judgment and asks this Court to strike the Amended Judgment and Decree of Sale and order that the matter should proceed to sale on the judgment previously entered.

II. STANDARD OF REVIEW

"An interpretation of a statute is a question of law over which appellate courts exercise free review." Hayden Lake Fire Prot. Dist. v. Alcorn, 141 Idaho 307, 312, 109 P.3d 161, 166 (2005) (citing Kelso v. State Ins. Fund, 134 Idaho 130, 134, 997 P.2d 591, 595 (2000) ).

III. ANALYSIS

The district court issued an amended judgment setting forth Klemann's total mortgage indebtedness as the unpaid principal and interest through the date of the judgment, which it calculated as $307,800.62. It also determined that Roesch was entitled to interest on that total from the date of the original judgment at the judgment rate set forth in Idaho Code § 28–22–104(2). Roesch argues that in calculating the amount of mortgage indebtedness interest should continue to accrue on the $200,000 principal balance at the rate provided for in the promissory note from the date of the foreclosure judgment to the date of the sheriff's sale. He contends that the rate set forth in Idaho Code § 28–22–104(2) applies only after the sale and only if the proceeds are insufficient to satisfy the total amount of indebtedness and the district court enters a deficiency judgment against the debtor.

This Court applies the following standard when interpreting the language of a statute:

Interpretation of a statute begins with an examination of the statute's literal words. Where the language of a statute is plain and unambiguous, courts give effect to the statute as written, without engaging in statutory construction. Only where the language is ambiguous will this Court look to rules of construction for guidance and consider the reasonableness of proposed interpretations.

Stonebrook Const., LLC v. Chase Home Fin., LLC, 152 Idaho 927, 931, 277 P.3d 374, 378 (2012) (quoting Curlee v. Kootenai Cnty. Fire & Rescue, 148 Idaho 391, 398, 224 P.3d 458, 465 (2008) ). Statutory language is not ambiguous "merely because the parties present differing interpretations to the court." Id. (quoting Payette River Prop. Owners Ass'n v. Bd. of Comm'rs of Valley Cnty., 132 Idaho 551, 557, 976 P.2d 477, 483 (1999) ). Rather, statutory language "is ambiguous where reasonable minds might differ or be uncertain as to its meaning." Id.

Where two or more statutes relate to the same subject, they are in pari materia. Paolini v. Albertson's Inc., 143 Idaho 547, 549, 149 P.3d 822, 824 (2006) (quoting City of Sandpoint v. Sandpoint Indep. Highway Dist., 139 Idaho 65, 69, 72 P.3d 905, 909 (2003) ). When considering statutes that are in pari materia, "[i]t is a fundamental law of statutory construction" that those statutes "are to be construed together, to the end that the legislative intent will be given effect." Rogers v. Household Life Ins. Co., 150 Idaho 735, 737, 250 P.3d 786, 788 (2011) (quoting State v. Yager, 139 Idaho 680, 689–90, 85 P.3d 656, 665–66 (2004) ). Additionally, this Court "will not construe a statute in a way which makes mere surplusage of provisions included therein."

Bradbury v. Idaho Judicial Council, 149 Idaho 107, 116, 233 P.3d 38, 47 (2009) (quoting Sweitzer v. Dean, 118 Idaho 568, 571–72, 798 P.2d 27, 30–31 (1990) ); See also Twin Lakes Canal Co. v. Choules, 151 Idaho 214, 218, 254 P.3d 1210, 1214 (2011) (holding that courts may not interpret a statute in a manner that would "render it a nullity").

A. The only rate at which an amount owed on a judgment accrues interest is the rate defined in Idaho Code § 28–22–104(2).

The plain language of Idaho Code § 28–22–104(2) indicates that interest on a judgment must accrue at the statutory rate and that the provision applies to all judgments. The statute sets forth the rate of interest that accrues on judgments as follows:

The legal rate of interest on money due on the judgment of any competent court or tribunal shall be the rate of five percent (5%) plus the base rate in effect at the time of entry of the judgment. The base rate shall be determined on July 1 of each year by the Idaho state treasurer and shall be the weekly average yield on United States treasury securities as adjusted to a constant maturity of one (1) year and rounded up to the nearest one-eighth percent (? %). The base rate shall be determined by the Idaho state treasurer utilizing the published interest rates during the second week in June of the year in which such interest is being calculated. The legal rate of interest as announced by the treasurer on July 1 of each year shall operate as the rate applying for the succeeding twelve (12) months to all judgments declared during such succeeding twelve (12) month period. The payment of interest and principal on each judgment shall be calculated according to a three hundred sixty-five (365) day year.

I.C. § 28–22–104(2) (emphases added). This Court has held that the words "must" and "shall," when used in a statute, indicate that the language is mandatory. Twin Falls Cnty. v. Idaho Comm'n on Redistricting, 152 Idaho 346, 349, 271 P.3d 1202, 1205 (2012) (citing Rife v. Long, 127 Idaho 841, 848, 908 P.2d 143, 150 (1995) ); Henry v. Ysursa, 148 Idaho 913, 916, 231 P.3d 1010, 1013 (2008) (quoting State v. Tribe, 123 Idaho 721, 726, 852 P.2d 87, 92 (1993) ) ("This Court repeatedly has construed the word ‘shall’ as being mandatory, not discretionary.").

Here, the statute provides that the defined rate "shall be" the rate applied to money due on a judgment and that it "shall operate" as the applicable rate for "all" judgments. Thus, the plain language of subsection (2) indicates that the mandatory interest rate on an amount due on a judgment is the rate provided in the statute, and further that the statutory rate applies to all judgments declared during the relevant time period.

Our decisions support this conclusion as well. In Idaho Gold Dredging Corp. v. Boise Payette Lumber Co., this Court held that "[i]nterest upon a judgment is not a matter of contract, but is wholly statutory." 54 Idaho 765, 777, 37 P.2d 407, 412 (1934). Consequently, "[a] judgment can bear interest at such a rate only as the law provides." Id. More recently, this Court has held that "interest is automatically allowed on judgments and is allowed at the statutory rate." Chenoweth v. Sanger, 123 Idaho 189, 191, 846 P.2d 191, 193 (1993) (quoted in Worthington v. Thomas, 134 Idaho 433, 437, 4 P.3d 545, 549 (2000) ). In that case, the Court explained that "because post-judgment interest is a statutory creation in Idaho, the court does not have discretion to determine the rate of interest to be awarded on a judgment." Id. (citing Rayl v. Shull Enters., Inc., 108 Idaho 524, 700 P.2d 567 (1985) ).

Finally, while subsection (1) does provide for interest at the contractual rate in some circumstances,¹ the text of the provision as a whole suggests that subsection (1) applies only to pre-judgment interest....