Montierth v. Dorssers-Thomsen
| Docket Number | 49419 |
| Decision Date | 29 November 2023 |
| Parties | RAY MONTIERTH and SUSAN MONTIERTH, husband and wife, Assignees of Centrum Financial Services, Inc., Plaintiffs-Third Party Defendants- Respondents, v. DINA M. DORSSERS-THOMSEN, as Personal Representative of the Estate of Hendrik Johannes Dorssers, deceased, Defendant-Appellant, and JUSTICE PREVAILS, LLC, a Washington limited liability company, Defendant-Third Party Plaintiff- Appellant, and JOHN L. TILFORD and ROSANNA TILFORD; NEWREZ LLC, a Delaware limited liability company; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS), a Delaware corporation; and JOHN H. AND ORAH I. BRANDT FOUNDATION, Third Party Defendants-Respondents, and L205-ID BEAR LANE, LLC, fka BTC VIII, LLC, a defunct Washington limited liability company; PATRICK L. MCCOURT, BINGO INVESTMENTS, LLC, a Washington limited liability company; AVATAR INCOME FUND I, LLC; a Washington limited liability company; and WELLS FARGO FOOTHILL, INC., a California corporation; Defendants-Third Party Defendants, and WILDER IRRIGATION DISTRICT and DOES 1-10, whose true names are unknown, who are unknown owners, heirs or devisees, Third Party Defendants, and DINA M. DORSSERS-THOMSEN, Defendant. |
| Court | Idaho Supreme Court |
Appeal from the District Court of the Third Judicial District of the State of Idaho, Canyon County. Thomas W. Whitney, District Judge.
The judgment of the district court is reversed and remanded.
Johnson May, Boise, for Appellants Dina M. Dorssers-Thomsen as personal representative of the Estate of Hendrik Dorssers and Justice Prevails, LLC. Wyatt Johnson argued.
Gery W. Edson, PA, Boise, for Respondents Ray Montierth and Susan L. Montierth. Gery W. Edson argued.
White Peterson, Gigray & Nichols, PA, Nampa, and Heidal Law Office, Kimberly, for Respondents John H. and Orah I. Brandt Foundation.
Akerman, LLP, Salt Lake City, Utah, and Jones Williams Fuhrman Gourley, PA, Boise, for Respondents Mortgage Electronic Registration Systems, Inc.; Newrez, LLC; John L. Tilford; and Rosanna Tilford.
This appeal concerns the priority of competing mortgages on a parcel of real property in Canyon County, Idaho. The holders of the second priority mortgage, Ray and Susan Montierth (the "Montierths"), brought a foreclosure action against the holders of the first priority mortgage, Hendrik Dorssers and Justice Prevails, LLC, (collectively "Dorssers"), and a variety of other parties with an interest in the real property. These parties are named in the caption, but they did not participate in the appeal.
Dorssers filed an initial answer and, upon leave of the district court, an amended answer, counterclaim, and third-party complaint. In their pleadings, Dorssers asserted that their priority interest as the holder of the first priority mortgage still prevailed over all other encumbrances. In Dorssers view, a payment made by the debtor-years after the statute of limitations had run on the mortgage-revived the previously stale claim to foreclose their first priority mortgage and reinitiated the statute of limitations under Idaho Code section 5-238. However, on summary judgment the district court concluded that Idaho Code section 5-238 only applied when the payment was made prior to the lapse of the statute of limitations. Accordingly, the district court granted summary judgment to the Montierths after finding that no payment had been made by the obligor prior to the lapse of the statute of limitations and concluding that Dorssers' mortgage was unenforceable as a matter of law. The district court subsequently denied Dorssers' motion for reconsideration and objection to the proposed judgment. Thereafter, the district court entered a judgment and decree of foreclosure in favor of the Montierths, which specifically stated: "[t]hat the [Montierths'] lien interest is superior in time to all other parties' liens, except the mortgage of Hendrik Dorssers and Justice Prevails, LLC, which is time barred and therefor [sic], unenforceable."
On appeal, Dorssers assign three points of error. First, Dorssers argue that the district court erred in concluding that the partial payments did not extend the statute of limitations for enforcement of the first priority mortgage under Idaho Code section 5-238. Second, in the alternative, Dorssers argue that the district court erred in concluding that a junior lien holder can quiet title to a senior lien holder. Third, Dorssers argue that the district court erred in issuing an order to quash the lis pendens they recorded after the appeal was filed. For the reasons discussed below, we reverse the grant of summary judgment and remand the matter to the district court.
This case concerns the enforceability of the first of four mortgages held on a property and the operation of the relevant statute of limitations. An entity formerly known as BTC VIII, LLC, originally owned the real property at issue (the "Property"), which is located in Canyon County, Idaho. In terms of value, as found by the district court, the Property has a current fair market value of less than $1 million even though it carries mortgage debt in excess of $8 million. As characterized by the district court, although the Property was subject to four mortgages, "it's really a competition between the one held by . . . the Montierths, and also the one held by . . . Justice Prevails and Hendrik Dorssers."
The district court determined that the first mortgage (hereinafter referred to as "Mortgage 1") was executed on April 7, 2006, and was due within a year. BTC VIII, LLC, The promissory note secured by the first mortgage contained a promise that BTC VIII, LLC, "would not encumber the property further" and that any further encumbrances would be a default on the promissory note. Mortgage 1 was recorded on April 10, 2006.
Three days later, on April 13, 2006, BTC VIII, LLC[,] changed its name to "L205-1 ID Bear Lane, LLC[,]" (hereinafter "Bear Lane"). As the district court explained:
Seven days after the name change, Bear Lane encumbered the Property again, this time with a $3 million second mortgage (hereinafter referred to as "Mortgage 2"). 1[] The district court noted:
Mortgage 1 was due within one year of execution; however, it was not paid. After two years of nonpayment, Bear Lane, the then title owner to the Property in default on Mortgage 1, executed a "Warranty Deed in Lieu of Foreclosure" on June 25, 2009, vesting title to the Property in Hendrik Dorssers. This deed is also described as a "non-merger deed in lieu of foreclosure" by Dorssers. [2]
Importantly, this "Warranty Deed in Lieu of Foreclosure" was executed by Patrick McCourt, who was listed as the CEO on the deed.[3] Though not a party to this case, McCourt is a key player at various stages of the relationship between Bear Lane and Dorssers. Beyond the "Warranty Deed in Lieu of Foreclosure," McCourt also executed the commercial promissory note and mortgage documents related to Mortgage 1. McCourt executed both of these documents as CEO of Barclays North, Inc., the sole member of the entity now known as Bear Lane. Beyond acting as CEO, McCourt also held some ownership stake in the entities in the corporate structure involved here.
Also in June 2009, McCourt personally executed a "confession of judgment," which allowed the Snohomish County Superior Court in the State of Washington to enter a $1.4 million judgment against him in favor of Hendrik Dorssers. Importantly, this judgment lists McCourt as the debtor and was executed by "Patrick L. McCourt, an individual." (Emphasis added). McCourt and his wife filed for Chapter 7 bankruptcy in September 2013 and the personal debt was discharged pursuant to 11 U.S.C. § 727. However, this personal discharge did not discharge Bear Lane's debt under the mortgage and there is nothing in the record indicating that Bear Lane had any of its debts discharged in any bankruptcy proceeding.
In March 2019, nearly...
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