OPPORTUNITY, LLC v. Ossewarde

• Decision Date: 04 January 2002
• Docket Number: No. 25519.,25519.
• Citation: 136 Idaho 602,38 P.3d 1258
• Parties: OPPORTUNITY, L.L.C., an Idaho limited liability company, Plaintiff-Appellant, v. Fred OSSEWARDE and Joanne Ossewarde, husband and wife, Defendants-Respondents. Fred Ossewarde and Joanne Ossewarde, husband and wife, Counterplaintiffs, v. Edward Stocklen, Counterdefendant.
• Court: Idaho Supreme Court

38 P.3d 1258

136 Idaho 602

OPPORTUNITY, L.L.C., an Idaho limited liability company, Plaintiff-Appellant, v. Fred OSSEWARDE and Joanne Ossewarde, husband and wife, Defendants-Respondents.

Fred Ossewarde and Joanne Ossewarde, husband and wife, Counterplaintiffs, v. Edward Stocklen, Counterdefendant.

No. 25519.

Supreme Court of Idaho, Cd'A, October 2001, Term.

January 4, 2002.

Edward W. Kok, Coeur d'Alene, for appellant.

Harvey Richman, Coeur d'Alene; Stephen B. McCrea, Coeur d'Alene, for respondents. Harvey Richman argued.

TROUT, Chief Justice.

Appellants Opportunity L.L.C. (Opportunity) and Edward Stocklen (Stocklen) appeal the district court's ruling at the conclusion of a court trial that Opportunity was liable to Respondents Fred and Joanne Ossewarde (Ossewardes) in the amount of $425,000 plus costs and interest.

I. FACTUAL AND PROCEDURAL HISTORY

In August 1995, Ossewardes, through their agent, William Stark (Stark) entered into a purchase agreement with Opportunity whereby Opportunity would purchase from Ossewardes forty-five lots of real property in the Blackwell Subdivision, Kootenai County, Idaho for $909,750.00. A promissory note was executed obligating Opportunity to make specified payments to Ossewardes at certain times, beginning on December 31, 1995. Ossewardes were apparently¹ obligated to complete the infrastructure on the premises in order for it to be accepted by the City of Spirit Lake (City). Three days after signing the agreements, Stark sent a letter, which he signed in his individual capacity, dated August 7, 1995, to Stocklen showing a breakdown of the purchase price of each individual lot. Opportunity began to market the property for resale of the individual lots and applied for building permits, which were denied by the City.

On October 3, 1995, prior to closing, the purchase agreement, promissory note, and deed of trust were amended to allow Opportunity additional time to make payments, the first payment of $400,000 being due on September 30, 1996. It also increased the purchase price to $950,000. The amended promissory note contained a clause setting forth an amended payment schedule and providing that payment for partial reconveyances shall remain due so long as the property was available for conveyance, but if it was not, no sums would be due. The amended promissory note also contained a clause obligating Stocklen, the managing member of Opportunity, to assume personal responsibility for the debt in the event that Opportunity was adjudged unable to make the required payments.

In February 1996, Ed Loshbaugh & Sons (Loshbaugh) filed a lien for $121,000.00 against Ossewardes, which was recorded on the property in question. Opportunity wrote a letter dated February 27, 1996, to Ossewardes notifying them of the lien and inquiring how the problem could be remedied. Ossewardes responded in a letter dated February 29, 1996, that they were working diligently to address the lien and asked Opportunity to provide specific notice of delayed sales or construction resulting from the lien so that they could remove the lien through bonding of individual lots. Opportunity did not respond and on August 7, 1996, the lien was removed. Opportunity did not lose any sales due to the lien, but rather struggled to make any sales of the lots, probably because of market factors.

On August 29, 1996, Opportunity filed a complaint in the district court seeking rescission of the contract, or in the alternative, damages. Opportunity failed to make any payment on the property, and on December 4, 1996, Ossewardes recorded a notice of default under the terms of the Deed of Trust. On January 13, 1997, Opportunity filed an amended complaint against Ossewardes, which included an additional claim for mutual mistake. On March 6, 1997, Ossewardes answered Opportunity's amended complaint and counterclaimed against Opportunity for a deficiency judgment for any deficiency that might result from a trustee's sale. On May 12, 1997, Ossewardes sold the property at a trustee's sale for a credit bid of $225,000.

On May 21, 1997, Ossewardes also filed a complaint against Stocklen with respect to his guarantee contained in the amended promissory note, which the district judge allowed over Opportunity's objection. On August 13, 1997, Stocklen answered averring that he was not liable because Opportunity had not been adjudged liable and unable to pay as required by the guarantee. He further argued impossibility, mutual mistake, joint venture, and violation of the implied covenant of good faith and fair dealing. On January 6, 1998, Opportunity answered the counterclaim and also alleged mutual mistake, and encumbrances on the property. On November 3, 1998, Ossewardes amended their counterclaim against Opportunity and Stocklen seeking a deficiency judgment for the specific deficiency amount they alleged they were due after the May 12, 1997, trustee's sale. Opportunity and Stocklen both separately answered the amended counterclaim on December 7, 1998.

The matter was tried without a jury on December 21, 1998. On March 30, 1999, the district judge entered a "Memorandum Opinion, Findings of Fact, Conclusions of Law and Order," finding in favor of Ossewardes against Opportunity on the deficiency judgment in the amount of $425,000.00, and final judgment was entered in the matter on April 6, 1999. The district judge did not rule with respect to Stocklen, but rather reserved jurisdiction pending further proceedings to determine any obligation Stocklen might have on his guarantee. On April 8, 1999, the district judge issued an I.R.C.P. 54(b) certificate with respect solely to Opportunity. Opportunity and Stocklen filed this appeal on April 21, 1999.

II. NO FINAL ORDER FOR STOCKLEN

The preliminary issue that must be determined is whether there was a final order against Stocklen allowing him to appeal at this time. "[I]f an order or judgment ends the suit, adjudicates the subject matter of the controversy, and represents a final determination of the rights of the parties, the instrument constitutes a final judgment." Davis v. Peacock, 133 Idaho 637, 641, 991 P.2d 362, 366 (1999). The judgment, certified under I.R.C.P. 54(b), however, can be final with respect to one party to a suit, but not with respect to another party. I.R.C.P. 54(b); Rife v. Long, 127 Idaho 841, 844-45, 908 P.2d 143, 146-47 (1995).

In the instant case, the district judge reserved jurisdiction regarding Stocklen's liability. Opportunity has filed chapter 11 bankruptcy proceedings, but no evidence was presented at trial whether it was unable to pay the judgment, which was a condition precedent to Stocklen's liability on his guarantee. The district judge reserved jurisdiction in order to further determine whether the condition precedent was met and thus whether Stocklen had any liability on his guarantee.

We only decide today the issues raised by Opportunity, not Stocklen, because no final order has been issued with respect to Stocklen's liability, nor did the Rule 54(b) certificate include Stocklen.

III. STANDARDS OF REVIEW

"[T]his Court exercises free review over the district court's conclusions of law." J.R. Simplot Co. v. Western Heritage Ins. Co., 132 Idaho 582, 584, 977 P.2d 196 (1999). The standard of review of a non-jury trial court's findings of fact is set forth in Idaho Rule of Civil Procedure 52(a). Williamson v. City of McCall, 135 Idaho 452, 19 P.3d 766, 769 (citing I.R.C.P. 52(a)). I.R.C.P. 52(a) provides in pertinent part:

In all actions tried upon the facts without a jury . . . the court shall find the facts specifically and state separately its conclusions of law thereon and direct the entry of the appropriate judgment. Findings of fact shall not be set aside unless clearly erroneous. In application of this principle regard shall be given to the special opportunity of the trial court to judge the credibility of those witnesses that appear before it.

Id. (quoting I.R.C.P. 52(a)). "In determining whether a finding is clearly erroneous this Court does not weigh the evidence as the district court did. The Court inquires whether the findings of fact are supported by substantial and competent evidence." Id. (citation omitted). "This Court will not substitute its view of the facts for the view of the district judge." Id. (citation omitted). "Evidence is regarded as substantial if a reasonable trier of fact would accept it and rely upon it in determining whether a disputed point of fact had been proven." Id.

IV. BREACH OF CONTRACT

If the terms of a contract are clear and unambiguous, the interpretation of their meaning and legal effect are questions of law. Idaho v. Hosey, 134 Idaho 883, 886, 11 P.3d 1101, 1104 (2000) (citations omitted). The meaning of an unambiguous contract must be determined from the plain meaning of the words. Id. Where, however, the contract is deemed to be ambiguous, "interpretation of the contract is a question of fact that focuses on the intent of the parties." Id. "Whether the facts establish a violation of the contract is a question of law over which this Court exercises free review." Id.

In the present case, the contractual terms of the original agreements and the amended agreements when construed together are ambiguous, making their interpretation a question of fact and entitling the trial court's findings to the substantial and competent evidence standard of review. See id. The original purchase agreement, entered into on August 4, 1995, to be effective beginning August 8, 1995, provided in part:

4. Deeds: Closing. Three deeds to the Property will be a good and sufficient Warranty-Deeds in the form approved by OPPORTUNITY'S attorney. Each deed will convey good and clear title to the Property, subject solely to (a) provisions of existing zoning laws, (b) real estate taxes for the current tax year that are not yet due when the deed is delivered, (c) other exceptions accepted by OPPORTUNITY. In reliance upon

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