Riley v. W.R. Holdings, LLC
| Decision Date | 06 June 2006 |
| Docket Number | No. 31414.,31414. |
| Citation | 138 P.3d 316,143 Idaho 116 |
| Parties | Norman N. RILEY and Robin H. Riley, husband and wife, Plaintiffs-Respondents, v. W.R. HOLDINGS, LLC, an Idaho limited liability company, Defendant-Appellant. W.R. Holdings, LLC, an Idaho limited liability company, Plaintiff, v. Jim Horkley, an individual, and in his capacity as Agent for Norman N. Riley, and Robin H. Riley, husband and wife; Mark Jensen, an individual; and Rodney Jensen, an individual; and Rodney Jensen and Mark Jensen dba Jensen Brothers; and Roy C. Klinger, in his capacity as Madison County Sheriff, Defendants. |
| Court | Idaho Supreme Court |
Appeal from the District Court of the Seventh Judicial District, State of Idaho, Madison County. Hon. Brent J. Moss, District Judge.
District court order confirming redemption, affirmed.
Just Law Office, Idaho Falls, for appellant. Kipp L. Manwaring argued.
Forsberg & Dummar, Chtd., Rexburg, for respondents. William R. Forsberg argued.
This case involves a debtor's redemption of property that had been sold at a foreclosure sale. W.R. Holdings, a later purchaser of the subject property, appeals to this Court from a district court decision confirming the redemption. We affirm.
Respondents Norman and Robin Riley (the Rileys) owned and farmed a parcel of farmland (the farm) in Madison County for many years, but defaulted on their mortgage payments to Northwest Farm Credit Services (Farm Credit). Farm Credit filed an action for foreclosure in 2000. In 2001 the Rileys filed a petition for bankruptcy under Chapter 11. In January 2002, the farm was sold at a Sheriff's foreclosure sale and purchased by Farm Credit for $329,816.71. In May of that year, Farm Credit sold the farm to W.R. Holdings, the Appellant. W.R. Holding's ownership of the farm was subject to the Rileys' statutory right of redemption. I.C. § 11-402. On July 22, 2002, the Rileys' bankruptcy plan was approved.
Hoping to redeem the farm but unable to persuade traditional lenders to extend credit, the Rileys approached local businessman Jim Horkley (Horkley) for a loan. After several months of negotiations Horkley agreed to provide the money they needed to redeem the farm and to satisfy another creditor, but insisted on an elaborate financing arrangement rather than a traditional loan. Under this plan, the Rileys were to redeem the farm and deed the property to Spiral Butte, LLC, an Oregon corporation that they understood to be owned and controlled by Horkley. The Rileys also negotiated a Lease Option Agreement with Spiral Butte, under which the Rileys agreed to lease the farm from Spiral Butte and were granted an exclusive right and option to later buy the farm at a fixed price.
On September 19, the Rileys notified W.R. Holdings that they intended to redeem the farm, and requested information that would allow the Rileys to calculate the exact sum needed for the redemption. Through counsel, W.R. Holdings announced that it would promptly forward the necessary information, but later decided against actually doing so.
In attempting to begin implementation of the plan devised by Horkley, on October 25, the Rileys executed a warranty deed purporting to convey the farm to Spiral Butte. On the same day, the Rileys and Spiral Butte entered into the previously mentioned Lease Option Agreement, and Horkley and the Rileys entered into a Real Estate Purchase Agreement for the Rileys to sell the farm to Horkley for $950,000. Despite the Real Estate Purchase Agreement between the Rileys and Horkley, there is no deed in the record from the Rileys conveying the farm to Horkley personally.
Still lacking the information they requested from W.R. Holdings, the Rileys made their own calculation of the redemption amount. Using funds provided by Horkley on October 30 the Rileys tendered a cashier's check for $375,419.24 to the Madison County Sheriff to complete the redemption.1 W.R. Holdings refused the tendered redemption money. The Rileys then brought suit against W.R. Holdings, W.R. Holdings sued the Rileys, and the cases were consolidated. In district court W.R. Holdings contended the Rileys were not entitled to redeem, but if they were, the correct sum required to redeem the farm was $2,694,755.59 rather than the $375,419.24 tendered. Both parties moved for summary judgment, and the district court issued a memorandum opinion granting partial summary judgment to the Rileys and ruling they were entitled to redeem the property. The grant of summary judgment was partial because the district court determined that a question of fact remained as to the redemption amount. Following a report by a special master the district court issued a second memorandum opinion confirming the Rileys' redemption of the property and an order fixing the total needed for redemption at $369,298.74 — a figure more than satisfied by the Rileys' earlier tender of redemption money.
W.R. Holdings' appeal from that judgment is now before this Court.
In reviewing a ruling on a summary judgment motion, this Court employs the same standard as that used by the district court. Sprinkler Irrigation Co. v. John Deere Ins., 139 Idaho 691, 695, 85 P.3d 667, 671 (2004). Summary judgment is appropriate "if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." I.R.C.P. 56(c). This Court will not set aside findings of fact unless they are clearly erroneous, Weaver v. Stafford, 134 Idaho 691, 696, 8 P.3d 1234, 1239 (2000), but exercises free review over questions of law, State v. Stover, 140 Idaho 927, 929, 104 P.3d 969, 971 (2005).
Idaho provides a statutory framework permitting debtors or junior lienholders to redeem property after it has been auctioned at a foreclosure sale. I.C. § 11-401 et seq. Those seeking to redeem property must meet statutory requirements, including being a party entitled to redeem and making a timely payment of the redemption amount. Id. The effect of redemption by the judgment debtor is to set aside the sale and restore the debtor to the estate. Steinour v. Oakley State Bank, 45 Idaho 472, 480, 262 P. 1052, 1055 (1928).
In this instance, W.R. Holdings objects to the district court's determination that the Rileys properly redeemed the farm. W.R. Holdings contends the Rileys failed to comply with Idaho's redemption statutes, that the district court improperly calculated the redemption amount, that the Rileys should have been judicially estopped from redeeming the farm, and that the district court erred in ruling that a deed purporting to convey the Rileys' interest in the farm did not divest the Rileys of their redemption rights.
W.R. Holdings argues that the Rileys did not follow all the steps required by Idaho's redemption statutes. Absent a valid claim to equitable relief, one seeking to redeem foreclosed property must follow the statutory framework in order for that redemption to be effective. Williams v. McCallum, 128 Idaho 637, 638, 917 P.2d 794, 795 (1996).
Specifically, W.R. Holdings contends the Rileys' redemption of the farm was ineffective because they failed to provide the sheriff with written notice of their intent to redeem and to file a duplicate with the county recorder as required by I.C. § 11-403. In response, the Rileys point out they did provide the sheriff with written notice of their intent to redeem, and that the provisions of I.C. § 11-403 cited by W.R. Holdings applied only to subsequent redemptions by "redemptioners."
The Rileys are correct. Idaho's redemption statutes make a distinction between redemptions made by a "judgment debtor" such as the Rileys and those made by a "redemptioner" who is defined by statute as "[a] creditor having a lien by judgment or mortgage on the property sold, or some share or part thereof, subsequent to that on which the property was sold." See I.C. § 11-401. The language upon which W.R. Holdings relies is contained in a portion of I.C. § 11-403 concerned with subsequent redemptions by "redemptioners." Near the end of the section, I.C. § 11-403 provides a different set of steps to be followed if the contemplated subsequent redemption is to be made by the debtor. In this case, the Rileys were not "redemptioners" as defined by statute because they were not creditors holding a lien on the property. See I.C. § 11-401. Instead, the Rileys were the "judgment debtors" on whom the farm was originally foreclosed. As a result, the language cited by W.R. Holdings has no bearing under these circumstances. Moreover, I.C. § 11-403 provides only requirements for "subsequent redemptions." The redemption of the farm by the Rileys was not a "subsequent redemption" of the sort addressed by I.C. § 11-403, and therefore the statute is inapplicable to the present case.
W.R. Holdings has not identified any defect in the Rileys' compliance with Idaho's redemption statutes. We therefore affirm the district court's determination that the Rileys' redemption followed the steps required by law.
W.R. Holdings contends the district court erred in its calculation of the amount the Rileys were required to pay in order to redeem the farm. The original redemption amount tendered by the Rileys was an estimate necessitated by W.R. Holdings' refusal to provide information regarding its expenses and profits since coming into possession of the farm. The sum tendered by the Rileys was $375,419.24, which included the price at which the farm sold at foreclosure plus interest and taxes paid by W.R. Holdings. W.R. Holdings rejected the Rileys' tender, insisting the proper redemption amount was $2,694,755.59.
The district court appointed a special master to report on accounting issues related to the...
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