Post v. Idaho Farmway, Inc.
| Decision Date | 01 March 2001 |
| Docket Number | No. 25670.,25670. |
| Court | Idaho Supreme Court |
| Parties | Jack POST and Karla Post, husband and wife, Plaintiffs-Respondents, v. IDAHO FARMWAY, INC., an Idaho corporation: Weitz & Co., Inc., an Idaho corporation: Canyon Holding Co., an Idaho limited liability company, Defendants-Appellants, and Tim (Timothy) Corder, Sr., and Lavonne Corder, dba T & LC Farms: and Rick Layher, Sheriff of Elmore County, Idaho, Defendants-Respondents. |
Vernon K. Smith, Jr., Boise, for appellants.
Hall, Friedly & Ward, Boise, for respondents Jack and Karla Post, husband and wife. Jay R. Friedly argued.
Thompson and Ashcraft, L.L.P., Mountain Home, for respondents Tim Corder, Sr., and Lavonne Corder dba T & LC Farms. Larry C. Ashcraft argued.
Respondent Layher did not participate in this appeal.
This is an appeal from an order granting summary judgment to defendants Timothy Corder, Sr. and LaVonne Corder (Corders).
Jack and Karla Post (Posts) farmed land in Elmore County owned by Idaho Farmway, Inc. (Farmway). Under the terms of their lease, the Posts were obligated to make a $40,000 payment each January 10th and a $35,000 payment each August 1st to Farmway.
Pursuant to a lawsuit filed in 1995, the Corders obtained a judgment of $35,578.48 against Farmway on January 5, 1998. The Corders then obtained a supplemental judgment awarding them an additional $37,980.22 in costs and attorney fees. To collect on their judgment, the Corders attempted to garnish the lease payments being made by the Posts to Farmway. The Sheriff of Elmore County served the Posts with a notice of garnishment in June of 1998. In July of 1998, Farmway sent a letter to the Posts informing them the farm had been transferred by Farmway to Weitz & Co. on February 23, 1998. The transfer from Farmway (owned by the Weitz family) to Weitz & Co. (also owned by the Weitz family), was allegedly made to satisfy an obligation owed by Weitz & Co. to Key Bank on which Farmway was a guarantor. The letter informed the Posts they were to deposit their lease payments with Canyon Holding Co., LLC for the benefit of Weitz & Co.
Due to the conflicting demands for payment, the Posts filed this interpleader action and deposited the August 1998 lease payment with the district court. Despite Farmway's objection, the district court also allowed the Posts to deposit the January 1999 lease payment with the district court.
In the interpleader action, the Corders alleged that the transfer of the Farmway Elmore County farm to Weitz & Co. violated I.C. § 55-914(1), which prohibits transfers to defraud creditors. Farmway claimed the transfer was made so Weitz & Co. could sell the farm to satisfy the Key Bank loan Farmway had guaranteed for Weitz & Co. in 1994. Since the transfer was allegedly made to satisfy a preexisting creditor, Farmway claimed the transfer was not fraudulent. The Corders responded to these arguments by pointing out that Farmway received no consideration for the transfer and the lender has since foreclosed on Farmway and Weitz & Co.
The Corders moved for summary judgment, which was granted by the district court and an Amended Order Granting Summary Judgment was entered. The district court subsequently awarded the Posts costs and attorney fees, which were to be deducted from the money deposited with the district court. The district court also awarded the Corders attorney fees. Farmway appealed.
Summary judgment is proper when "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 judgment as a matter of law." I.R.C.P. 56(c). On review, this Court uses the same standard as the district court and "liberally construes the record in the light most favorable to the party opposing the motion, drawing all reasonable inferences and conclusions in that party's favor." Friel v. Boise City Hous. Auth., 126 Idaho 484, 485, 887 P.2d 29, 30 (1994). If the Court determines reasonable people could reach different conclusions or draw conflicting inferences from the evidence, the motion will be denied. Puckett v. Oakfabco, Inc., 132 Idaho 816, 820, 979 P.2d 1174, 1178 (1999). If the evidence reveals no disputed issues of material fact, only a question of law remains, and this Court exercises free review. Sun Valley Potatoes, Inc. v. Rosholt, Robertson, & Tucker, 133 Idaho 1, 4, 981 P.2d 236, 239 (1999).
The district judge found that Farmway's transfer of the Elmore County farm to Weitz & Co. was a fraudulent transfer under I.C. § 55-914(1), which provides that:
A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.
Farmway argues the district judge erred in finding there was a transfer, the Corders' claim arose before the transfer, Farmway did not receive reasonably equivalent value for the property, and Farmway was insolvent at the time of the transfer. Farmway also contends material issues of fact exist as to whether Farmway received reasonably equivalent value and whether Farmway was insolvent, which should have precluded the grant of summary judgment. We will consider each of Farmway's arguments as they relate to a particular requirement for finding a fraudulent transfer.
Farmway contends that a transfer is only a transfer "if the debtor made the transfer without receiving a reasonably equivalent value in exchange for the transfer, and the debtor was insolvent as a result of the transfer." Farmway's position is not justified because the term being defined is included in the definition; thus, the definition is circular. Moreover, the Uniform Fraudulent Transfer Act specifically defines the term "transfer." Idaho Code § 55-910(12) defines transfer as "every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, and creation of a lien or other encumbrance." The definition makes no reference to value or insolvency.
Here, Farmway used a quitclaim deed to convey fee simple ownership of the Elmore County farm to Weitz & Co. The use of a quitclaim deed to convey fee simple ownership in real property is clearly a transfer as defined by I.C. § 55-910(12). Thus, the district judge properly found that there had been a transfer.
Farmway argues that because it guaranteed the Key Bank loan before the Corders' claim arose and the transfer to Weitz & Co. was made in an attempt to satisfy the loan, the Corders' claim did not arise before the transfer. Even if Farmway transferred an interest in the Elmore County farm when it guaranteed the loan, the quitclaim deed represents a new and separate transfer, just as the Post leasehold represents a separate transfer. The timing of each transfer is considered individually. The fact that the new transfer was allegedly made in an attempt to satisfy the pre-existing obligation goes to the question of value, not to the question of timing. Therefore, the district judge properly found that the Corders' claim which was reduced to judgment on January 5, 1998, arose before the Elmore County farm was transferred to Weitz & Co., on February 23, 1998.
Farmway contends that material issues of fact exist as to the value of the property and the value received in return for the property, which should have precluded the grant of summary judgment.
The Corders provided the district judge with an affidavit demonstrating the Elmore County farm was estimated by Philip Weitz to have a value of $1.5 million with only $500,000 still owing on the purchase price; Farmway received no cash for the transfer; Key Bank did not have a security interest in the Elmore County farm; and the Key Bank loan was not satisfied. This was sufficient evidence to support the Corders' allegation that a fraudulent transfer had occurred in that Farmway had not received equivalent value for the property.
Once the moving party has provided sufficient evidence to support the motion, the party against whom a motion for summary judgment is sought may not merely rest on allegations contained in the pleadings, but must come forward and produce evidence by way of deposition or affidavit to contradict the assertions of the moving party and establish a genuine issue of material fact. I.R.C.P. 56(e); McCoy v. Lyons, 120 Idaho 765, 770, 820 P.2d 360, 365 (1991). Such evidence must consist of specific facts, and cannot be conclusory or based on hearsay. State v. Shama Res., Ltd. P'ship, 127 Idaho 267, 271, 899 P.2d 977, 981 (1995).
The only relevant statements in the affidavit in opposition to the motion are Philip Weitz's assertions that the property was transferred so that it could be sold to satisfy the Key Bank debt and to shift any tax implications of the sale from Farmway to Weitz & Co. Although a transfer that satisfies an antecedent debt is value as defined by I.C. § 55-912, the debt must actually be satisfied and the value must be reasonably equivalent. Philip Weitz's affidavit admits Farmway did not receive any money for the property, the debt was not satisfied, and Key Bank reduced its loan to a judgment with a right to sell Farmway's real property located in...
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