Rockefeller v. Grabow, 24580.

Citation136 Idaho 637,39 P.3d 577
Decision Date20 August 2001
Docket NumberNo. 24580.,24580.
PartiesMark S. ROCKEFELLER, dba Rockefeller & Associates, Plaintiff-Respondent-Cross Appellant, v. John C. GRABOW and Laura M. Grabow, Defendants-Appellants-Cross Respondents.
CourtUnited States State Supreme Court of Idaho

Law Office of John C. Grabow, Ketchum, for appellant. John C. Grabow argued.

Thomsen & Stephens, P.A., Idaho Falls, for respondents. James D. Holman argued.

TROUT, Chief Justice.

This case involves the parties to a Property Development and Agency Agreement ("Agreement") to develop and market a residential development in Teton County. Mark Rockefeller ("Rockefeller") dba Rockefeller & Associates ("R & A"), a real estate broker, sued John and Laura Grabow (collectively "Grabows"), the property owners, for his commissions under the Agreement. The Grabows counterclaimed for damages based upon alleged breaches of the Agreement and fiduciary duties.

The Grabows appeal the district judge's determination that Rockefeller is entitled to his development commissions even though a jury found that he breached his fiduciary duties. The Grabows also claim the district judge violated the Seventh Amendment to the United States Constitution by determining the amount of commissions owed to Rockefeller and erred in refusing to award them their attorney fees even though they prevailed at trial. In his cross-appeal, Rockefeller claims the district judge erred in admitting the Grabows' evidence on lost profit damages, excluding expert testimony on realtor fiduciary duties and instructing the jury on punitive damages.

I. FACTUAL AND PROCEDURAL HISTORY

In 1991, Rockefeller helped the Grabows locate some property in Teton County to develop. In January 1992, the Grabows and Rockefeller entered into the written Agreement to develop the Shooting Star Ranch residential development. Paragraph 1 of the Agreement outlined Rockefeller's development duties, for which he was to receive two percent of the sale price of any subdivided property. As long as Rockefeller completed his Paragraph 1 duties, he was entitled to these commissions even if the Agreement was subsequently terminated. Paragraphs 2 and 3 of the Agreement appointed R & A as the exclusive listing broker and sales representative for eight years. On unassisted sales, R & A was to receive a six percent commission. On assisted sales, R & A would receive a three percent commission and the co-operating brokerage would receive a four percent commission. In Paragraph 6 Rockefeller and R & A agreed to use their best efforts to develop and market the property and the Grabows were given the right to terminate the Agreement with ten days notice.

On September 12, 1994, the Grabows sent Rockefeller a letter informing him the Agreement would be terminated at the end of sixty days. In the letter, and later at trial, the Grabows asserted numerous violations of the Agreement and fiduciary duties. The two main breaches alleged were Rockefeller's misrepresentation of the commission typical to the marketplace and taking the listing of an adjoining property whose owner had an access dispute with the Grabows.

The Grabows and Jerry Linn ("Linn") had an ongoing dispute over whether Linn had an easement across lot 44 of Shooting Star Ranch. The dispute was partly based upon an alleged representation by Rockefeller when the Grabows were first considering purchasing the Shooting Star Ranch property that the road across lot 44 had been used exclusively for logging. The termination letter was sent the day after Rockefeller refused to write down his recollection of what he had represented to the Grabows when showing them the property.

Through discovery, the Grabows also found out that R & A had drawn up a sales contract for Linn's property that conditioned closing with Ed and Judy Staten (collectively "Statens") upon "winning County level suit with John Grabow, or upon Grabow giving suitable access (to be recorded) across lot 44 Shooting Star." When Linn was unable to pay attorney fees, R & A assisted in creating an arrangement whereby bills from Linn's attorney were sent to R & A and paid out of the Statens' escrow account. Finally, Linn filed suit, but delayed service of the papers because negotiations between the Statens and the Grabows looked promising. Rockefeller allowed the Grabows to negotiate with the Statens over the access issue without informing the Grabows of any of these facts.

After the Agreement was terminated, Rockefeller sued the Grabows for his development and sales commissions. The Grabows filed a counterclaim for damages arising from Rockefeller's breach of the Agreement and violation of his fiduciary duties. Both parties filed motions for summary judgment on their claims. A hearing was held on Rockefeller's motion first. On May 15, 1996, the district judge entered a decision granting Rockefeller's motion as to his development commissions because Rockefeller had substantially performed his development duties. The district judge did not address the claimed fiduciary breaches. On May 24, 1996, a hearing was held on the Grabows' motion for summary judgment on the breach of fiduciary duty claims, which motion was denied.

Shortly before trial, the district judge decided various motions. The district judge denied Rockefeller's motion to exclude the testimony of the Grabows' damages expert, granted the Grabows' motion to exclude the testimony of Rockefeller's standard of care experts, and granted the Grabows' motion to amend their claim to seek punitive damages.

At trial, the jury was instructed not to concern itself with the two percent development commission because Rockefeller was entitled to it as a matter of law and the court would "apportion that amount at another proceeding." After deliberating, the jury returned a verdict in favor of the Grabows. The jury determined the Grabows had not breached the terms of the Agreement by wrongfully terminating Rockefeller and that Rockefeller had breached his fiduciary duties. The jury awarded the Grabows $18,250 in damages and $36,500 in punitive damages.

The parties then made several post-trial motions. Rockefeller moved for a new trial, judgment notwithstanding the verdict, remittitur, attorney fees and costs, and the two percent development commission. The Grabows made motions for their attorney fees and disgorgement of any commissions paid to Rockefeller. The district judge granted Rockefeller $40,822 representing the present value of the development commissions on future lot sales at Shooting Star Ranch. The district judge also granted Rockefeller his attorney fees incurred in getting summary judgment on the two percent development commission. All other motions were denied. On September 10, 1997, the district judge amended the judgment to include $19,369 in development commissions on lots that had been sold up until February 14, 1997. Offsetting the jury award to the Grabows against the district judge's award to Rockefeller resulted in the Grabows owing Rockefeller $5,441 plus attorney fees and costs.

The Grabows then filed a motion to amend the judgment because the district judge had not deducted expenses that would have been incurred in earning the development commissions; the assumptions relied upon by the district judge in figuring the present value of sales were not supported by the evidence; and the district judge improperly denied the Grabows the right to a jury trial on the issue of the amount of the development commissions. The district judge denied the motion.

The Grabows appealed and Rockefeller cross-appealed.

II. THE DEVELOPMENT COMMISSION
A. The District Judge Erred In Granting Rockefeller Summary Judgment For His Development Commission.

On appeal from the grant of a motion for summary judgment, this Court employs the same standard as that used by the trial court originally ruling on the motion. Farmers Ins. Co. of Idaho v. Talbot, 133 Idaho 428, 431, 987 P.2d 1043, 1046 (1999). Summary judgment is proper if 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). This Court liberally construes all disputed facts in favor of the non-moving party and draws all reasonable inferences and conclusions supported by the record in favor of the party opposing the motion. Bonz v. Sudweeks, 119 Idaho 539, 541, 808 P.2d 876, 878 (1991). If reasonable people could reach different conclusions or draw conflicting inferences from the evidence the motion must be denied. Id. However, if the evidence reveals no disputed issues of material fact the trial court should grant the motion for summary judgment. Farm Credit Bank v. Stevenson, 125 Idaho 270, 272, 869 P.2d 1365, 1367 (1994). Rockefeller was the Grabows' development agent even before the parties entered into the Agreement. Rockefeller continued to act as the Grabows' development agent up until the time the Agreement was terminated, at which time he had only substantially performed his duties. As the Grabows' agent, Rockefeller was "a fiduciary with respect to matters within the scope of his agency." RESTATEMENT (SECOND) OF AGENCY § 13 (1958); see also Mallory v. Watt, 100 Idaho 119, 122, 594 P.2d 629, 632, (1979)

("A real estate broker is an agent standing in a fiduciary relation to his principal."); Jordan v. Hunter, 124 Idaho 899, 865 P.2d 990 (Ct.App.1993) (corporate officers are agents and subject to the fiduciary duties of agents).

It is the established law of this jurisdiction that an agent's right to compensation will be affected by a violation of his fiduciary duties. See, e.g., Cooke v. Iverson, 94 Idaho 929, 933, 500 P.2d 830, 835 (1972)

(real estate agents lose their commissions for failure to disclose material facts); Schroeder v. Rose, 108 Idaho 707, 710, 701 P.2d 327,...

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