Vanderford Co., Inc. v. Knudson, 31047.

CourtUnited States State Supreme Court of Idaho
Citation165 P.3d 261,144 Idaho 547
Docket NumberNo. 31047.,No. 31163.,31047.,31163.
PartiesThe VANDERFORD COMPANY, INC., a Nevada corporation; and Primary Residential Mortgage, Inc., a Nevada corporation, fka Vanderford Center, Inc., Plaintiffs-Counterdefendants-Appellants-Cross Respondents, v. Paul KNUDSON, personally and individually, Austin Homes, LLC., a Utah limited liability company, J.R. Development, LLC, a Utah limited liability company, and John Does 1-20, Defendants, and The Pines Townhomes, LLC, an Idaho liability, Defendant-Counterclaimant, and Richard I. Greif and Jody L. Greif, Defendants-Counterclaimants-Respondents-Cross Appellants. and State Farm Fire and Casualty Company, Intervener. Richard I. Greif and Jody Greif, husband and wife; The Pines Townhomes, LLC., an Idaho limited liability company, Cross-Claimants, v. Paul Knudson, personally and individually, Austin Homes, LLC., a Utah limited liability company, J.R. Development, LLC., a Utah limited liability company, CrossDefendants. Paul Knudson, personally and individually, Cross Defendant-Counter Cross Claimant, v. Richard I. Greif, Jody L. Greif, The Pines Townhomes, LLC., an Idaho Limited liability company, Counter-Cross Defendants.
Decision Date13 July 2007
165 P.3d 261
144 Idaho 547
The VANDERFORD COMPANY, INC., a Nevada corporation; and Primary Residential Mortgage, Inc., a Nevada corporation, fka Vanderford Center, Inc., Plaintiffs-Counterdefendants-Appellants-Cross Respondents,
v.
Paul KNUDSON, personally and individually, Austin Homes, LLC., a Utah limited liability company, J.R. Development, LLC, a Utah limited liability company, and John Does 1-20, Defendants, and
The Pines Townhomes, LLC, an Idaho liability, Defendant-Counterclaimant, and
Richard I. Greif and Jody L. Greif, Defendants-Counterclaimants-Respondents-Cross Appellants. and
State Farm Fire and Casualty Company, Intervener.
Richard I. Greif and Jody Greif, husband and wife; The Pines Townhomes, LLC., an Idaho limited liability company, Cross-Claimants,
v.
Paul Knudson, personally and individually, Austin Homes, LLC., a Utah limited liability company, J.R. Development, LLC., a Utah limited liability company, CrossDefendants.
Paul Knudson, personally and individually, Cross Defendant-Counter Cross Claimant,
v.
Richard I. Greif, Jody L. Greif, The Pines Townhomes, LLC., an Idaho Limited liability company, Counter-Cross Defendants.
No. 31047.
No. 31163.
Supreme Court of Idaho, Boise, March 2007 Term.
July 13, 2007.

[165 P.3d 265]

Brassey, Wetherell, Crawford & McCurdy, LLP, Boise; Parry Anderson & Gardiner, Salt Lake City, Utah, attorneys for appellants Vanderford. Douglas J. Parry argued.

R. Brad Masingill, Weiser; Troupis Law Office, Meridian, attorneys for respondents Greifs. Christ T. Troupis argued.

Elam & Burke, P.A., Boise for intervenor State Farm Fire and Casualty Company. Jeffrey A. Thomson argued.

SCHROEDER, Chief Justice.


The Vanderford Co. (Vanderford) initially brought suit to recover loan funds and foreclose on properties owned by the Pines Townhomes, LLC or Richard and Jody Greif (collectively "the Greifs"). Each of the parties involved asserted numerous claims and defenses during a ten day jury trial. This appeal followed.

I.
FACTUAL AND PROCEDURAL BACKGROUND

Paul Knudson and Richard Greif entered into a business arrangement for the development of real estate in Payette called the Pines Townhomes, LLC (the LLC). They planned to receive loans from Vanderford because one of Knudson's brothers was the president and two of his brothers were managers at Vanderford. Vanderford loaned several hundred thousand dollars in short term loans for the construction and development of projects including the Pines Townhomes (the Pines). Loans for the development of the Pines were financed through loan number 482 (Loan 482) and secured by a deed of trust on the portion of the property to be improved by the loan. The LLC was unable to sell the properties as planned in order to repay the Vanderford short-term loans. The LLC's operating agreement provided that either partner could purchase the units. Greif and his wife Jody Greif claim they purchased all 35 town homes as investment properties. However, Knudson claims that the properties were not purchased, but that he and Richard Greif agreed that Greif would hold them in trust for the LLC to be used as rental units. The Greifs signed two notes and trust deeds (the Greif Trust Deeds) in order to make themselves personally liable for $180,000 of the LLC's construction loan debt. The parties dispute their reasons for signing the Greif Trust Deeds.

Vanderford filed suit seeking to recover loan funds of approximately $500,000 and to foreclose on the Greif Trust Deeds. A jury trial was held. The jury found: (1) a contract between Vanderford and the Greifs which was not breached; (2) no unjust enrichment due to the dealings between Vanderford and the Greifs; (3) a breached contract between the Pines and Vanderford with damages of approximately $153,000; (4) no unjust enrichment due to the dealings between the LLC and Vanderford; (5) no contract between Knudson and the Greifs; (6) Greifs were unjustly enriched in the amount of $237,500 through their dealings with Knudson; (7) no slander of title against the

165 P.3d 266

properties; and (8) Vanderford was not negligent when it did not release liens against the properties. Based on the jury's findings, the trial court did not allow Vanderford to foreclose.

Knudson and Vanderford appealed and the two appeals were consolidated. Vanderford claims that the court erred in its jury instructions, in not allowing Vanderford to foreclose and in quieting title to the Greifs. Greif claims that there was no legal basis to award Knudson additional compensation as unjust enrichment and that the court erred by failing to grant its requested jury instructions. State Farm, as intervenor, claims that the district court abused its discretion when it denied Greif's motion for attorney fees. Knudson did not file a brief. Vanderford, the Greifs, and State Farm seek attorney fees on appeal.

II.
STANDARD OF REVIEW

This Court will not overturn a jury verdict if it is supported by substantial and competent evidence, VFP VC v. Dakota Co., 141 Idaho 326, 335, 109 P.3d 714, 723 (2005); however, this Court will freely review the conclusions of law. Magic Valley Foods, Inc. v. Sun Valley Potatoes, Inc., 134 Idaho 785, 788, 10 P.3d 734, 737 (2000); Great Plains Equip. v. N.W. Pipeline, 132 Idaho 754, 760, 979 P.2d 627, 633 (1999). When this Court reviews an alleged abuse of discretion by the trial court, this Court must determine whether the trial court: (1) correctly perceived the issue as one of discretion (2) acted within the boundaries of such discretion and consistently with the legal standards applicable to the specific choices before it; and (3) reached its decision by an exercise of reason. Athay v. Stacey, 142 Idaho 360, 366, 128 P.3d 897, 903 (2005).

"The correctness of jury instructions `is a question of law over which this Court exercises free review, and the standard of review of whether a jury instruction should or should not have been given, is whether there is evidence at trial to support the instruction.'" Craig Johnson Constr., L.L.C. v. Floyd Town Architects, P.A., 142 Idaho 797, 800, 134 P.3d 648, 651 (2006) (quoting Bailey v. Sanford, 139 Idaho 744, 750, 86 P.3d 458, 464 (2004)). A jury verdict must be upheld if there is evidence of sufficient quantity and probative value that reasonable minds could have reached a similar conclusion to that of the jury. Horner v. Sani-Top, Inc., 143 Idaho 230, 233, 141 P.3d 1099, 1102 (2006) (citing Hudson v. Cobbs, 118 Idaho 474, 478, 797 P.2d 1322, 1326 (1990)). The awarding of attorney fees under I.C. 12-120(3) is reviewed for an abuse of discretion. Fox v. Mountain West Elec., Inc., 137 Idaho 703, 711, 52 P.3d 848, 856 (2002). To prove an abuse of discretion this Court looks to three factors: (1) whether the trial court correctly perceived the issue as one of discretion; (2) whether the trial court acted within the boundaries of its discretion and consistent with legal standards applicable to the specific choices available to it; and (3) whether the trial court reached its decision by an exercise of reason. Id. However, whether a statute awarding attorney fees applies to a given set of facts is a question of law and subject to free review. Ransom v. Topaz Marketing, L.P., 143 Idaho 641, 644, 152 P.3d 2, 5 (2006).

III.

THE TRIAL COURT DID NOT ERR WHEN IT DID NOT GRANT VANDERFORD THE RIGHT TO FORECLOSE ON THE GREIF TRUST DEEDS

Vanderford claims that the district court erred when it did not allow foreclosure on the Greif Trust Deeds. Idaho Code § 6-101(2) provides that the section "must be construed in order to permit a secured creditor to realize upon collateral for a debt or other obligation agreed upon by the debtor and creditor." In the present case, the parties' arguments at trial disputed whether collateral was agreed upon for a debt. Each side argues that the jury's special verdict supports their view.

Jury's Findings. The jury found that there was a contract between Vanderford and the Greifs. The jury found that this contract was not breached and that the

165 P.3d 267

Greifs were not unjustly enriched through their dealings with Vanderford. The Greifs assert that due to these findings, Vanderford cannot foreclose on the Greif Trust Deeds. The jury also found that Vanderford and the LLC had a contract that the LLC breached and that Vanderford's damages due to the LLC's breach were $153,177.49. Vanderford claims that the Greif Trust Deeds are security on the contract breached with the LLC and it can foreclose.

In construing the findings of a verdict, a court has a duty to reconcile the jury's answers based on the evidence and instructions given. Basterrechea Distrib., Inc. v. Idaho State Bank, 122 Idaho 572, 575, 836 P.2d 518, 521 (1992). The verdict should be read in a manner which makes it consistent when read as a whole. Id. The special verdict form had questions pertaining to a contract between the LLC and Vanderford as well as a contract between the Greifs and Vanderford. Instruction 32, regarding the contract between the Greifs and Vanderford begins, "The terms of the contract between The Vanderford Co. and the Greifs (Deeds of Trust and Notes in the amounts of $100,000 & $80,000) are in dispute as to the following provisions." This instruction makes it clear that when the jury decided that there was no breach of the contract between the Greifs and Vanderford, the contracts referred to were the Greif Trust Deeds and Notes. The jury was presented with the arguments that Vanderford now makes and it determined that the Greifs had no liability to Vanderford.

Vanderford claims that because the jury found that it had a valid contract with the Greifs and that the LLC breached its agreement with Vanderford, the Greif Trust Deeds can now be foreclosed upon. Vanderford alleges that by signing the Greif Trust Deeds and Notes, the Greifs' personally guaranteed the LLC's Loan 482. Vanderford bases this argument upon "additional collateral" and...

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