VFP VC v. Dakota Co.
| Decision Date | 26 January 2005 |
| Docket Number | No. 29436.,29436. |
| Citation | 109 P.3d 714,141 Idaho 326 |
| Parties | VFP VC, a Washington limited partnership and Nick S. Vidalakis, Plaintiffs-Respondents, v. DAKOTA COMPANY, an Idaho corporation, Defendant, and Larry Durkin, an individual, Defendant-Appellant, and Fred Meyer Stores, Inc., a Delaware corporation, Defendant-Respondent. Dakota Company, an Idaho corporation, Counterclaimant, v. VFP VD, a Washington limited partnership, Counterclaimant-Respondent. Fred Meyer Stores, Inc., a Delaware corporation, Cross Claimant-Respondent, v. Dakota Company, an Idaho corporation, Cross Defendant, and Larry Durkin, an individual, Cross Defendant-Appellant. |
| Court | Idaho Supreme Court |
Marcus, Merrick, Montgomery, Christian & Hardee, LLP, Boise, for appellants. Gale M. Merrick argued.
Davison, Copple, Copple & Cox, Boise, for respondents. Heather A. Cunningham argued.
This case arises from a breach of a promissory note and fraudulent acts committed by the Appellant, Larry Durkin (Durkin). A jury found Durkin to be personally liable and the district court entered a judgment against him in the amount of $903,637.77. Durkin timely appealed. We affirm.
Dr. Nick Vidalakis (Vidalakis), Plaintiff/Respondent, met Durkin approximately twenty years ago, when Durkin worked for ShopKo Corporation locating new stores. Vidalakis and his family owed a company called Hermes Associates (Hermes), which developed shopping centers. Because Vidalakis was impressed with Durkin's work, Vidalakis asked Durkin to work with him. Durkin owned a development company called Dakota Company (Dakota), consisting of only Durkin and his wife. Durkin also was the president and shareholder of two other companies called LJD Holdings, Inc. and B & D Foods.
In the December of 1997, Hermes contacted Durkin to assist in the acquisition of land in Meridian, Idaho for the purpose of developing a shopping center. Hermes and LJD Holdings, Inc. entered into an agreement, entitled "Consulting Agreement." Although the named parties to the Consulting Agreement were Hermes and LJD Holdings, Inc., the Dakota Company, not LJD Holdings, Inc., was the company that performed the development and acquisition services under that Consulting Agreement with Hermes. Hermes purchased property located at the southest corner of the Eagle Road and Fairview Avenue intersection (hereinafter, Meridian project).
Vidalakis also believed a location on Federal Way in Boise would be a good location for a shopping center. The parties entered into a similar "Consulting Agreement" for the Federal Way development. Hermes purchased property located on Federal Way (hereinafter, Federal Way project).
After the agreement to develop the two shopping centers, Durkin began suffering financial difficulties and requested a $150,000 loan from Vidalakis. Vidalakis agreed. Durkin signed a promissory note dated March 1, 1998. The promissory note required Durkin to repay the three-year loan beginning July 15, 1998. Any leasing fees, development fees, or acquisition fees owed by Hermes payable to Durkin or his companies were to be applied towards the outstanding balance until fully paid.
In 1998, Hermes marketed to sell its shopping centers. Durkin assisted by accompanying Hermes' personnel and potential buyers on tours of the property in Meridian and Boise. In June 1998, Hermes finalized an agreement, via a Financial Instrument Transaction (FIT) with Developers Diversified Realty to purchase Hermes and most of its shopping centers and land holdings, including the Meridian project. However, Developers Diversified Realty did not want the Federal Way project because it was too far from completion and therefore was not included in the sale.
Durkin asserts he is entitled to a million dollar bonus for the sale of the Meridian project. Durkin claims Vidalakis promised Dakota the bonus if Hermes successfully sold its undeveloped property and the bulk of its shopping centers, including the Meridian project. Durkin continued to work on the Meridian project for Developers Diversified Realty as their consultant.
After the sale, Vidalakis formed a new company, VFP VC (VFP). The Federal Way project was transferred to VFP. Dakota continued to work on the Federal Way development for VFP. VFP entered into an agreement with Fred Meyer, a large retailer and grocery store chain, to pay a portion of the project's development costs. Durkin, as VFP's agent, was to receive the funds, but checks were to be made payable to VFP. Although Fred Meyer submitted the first seven progress payments to Dakota, the checks were erroneously made payable to Dakota. Dakota properly turned over the first seven progress payments to VFP. However, VFP demanded Dakota immediately notify Fred Meyer, verbally and in writing, that future payments were to be made payable to VFP. In September and October 2000, while Vidalakis was out of the country, Dakota received three more checks from Fred Meyer. Fred Meyer again erroneously made the checks payable to Dakota for progress payments eight (8) and nine (9) in the amount of $272,367.33. Fred Meyer also paid $37,705.50 to reimburse VFP for its payment to Idaho Power for a power transformer to serve the Fred Meyer store. Contrary to VFP's instructions, Dakota deposited the checks into its own account, and did not inform VFP that it had received the funds, nor was the money forwarded to VFP. Durkin and Dakota proceeded to spend the money.
In March 2001, Vidalakis terminated the relationship with Durkin and his companies and filed this lawsuit. Vidalakis sued Durkin personally to recover on the promissory note; VFP and Vidalakis also sued Durkin and Dakota to recover for the various conversions and frauds against VFP. Because Fred Meyer made progress payments eight (8) and nine (9) payable to Dakota, it was named in the suit for breaching the agreement. Fred Meyer cross-claimed against Dakota and Durkin. Durkin and Dakota counter-claimed against VFP and Vidalakis alleging entitlement to unpaid bonuses, including the million-dollar bonus for his role in the FIT. Upon further discovery, VFP amended its complaint to add additional claims of fraud and conversion against Durkin and Dakota.
A week before trial, in a summary judgment motion the district court held Fred Meyer liable to VFP for progress payments eight (8) and nine (9) and the transformer check, for having paid Dakota contrary to VFP's directions. The district court also granted summary judgment in Fred Meyer's favor holding Dakota liable for intentional interference with a contract. The district court denied summary judgment as to Fred Meyer's claim that Durkin should be personally liable for conversion. Prior to trial Fred Meyer assigned its right to pursue Durkin personally to VFP and Vidalakis.
The Friday before trial, Dakota filed for bankruptcy protection under Chapter 11. After hearing motions by the parties regarding the bankruptcy, the district court allowed any and all claims to proceed forward against Durkin, personally. Therefore, when the trial began, the issues were whether Durkin was in default on the promissory note and whether Durkin would be held personally liable to Fred Meyer for failing to forward the progress payments and transformer reimbursement to VFP. Dakota and/or Durkin elected to pursue their rights and claims for the million dollar bonus for their role in the FIT. No other claims were to be litigated. However, during the course of the trial, two other issues were addressed. First, whether Durkin committed fraud when he represented that checks for $420,000 were sent to Boise City for impact fees and Durkin's receipt of a $12,000 bonus for his effort in reducing the impact fees from VFP. Second, whether Durkin committed fraud when he requested a $26,000 change order.
Durkin objected to several of the jury instructions and the special verdict form. The jury returned a verdict in VFP's favor. It awarded $135,564.94 on the promissory note. It found Durkin liable for conversion on progress payments eight (8) and nine (9) and the transformer payment for a total of $310,072.83. It also found Durkin liable for fraud in the amount of $458,000.00. The jury denied Dakota's and Durkin's claim for the million dollar bonus. The court entered a judgment for $903,637.77 in VFP's favor.
The district court denied Durkin's motion for new trial. It also awarded fees and costs to VFP and Fred Meyer. Durkin timely appealed. VFP attempted collection by way of certain levies and executions to which exemptions and third party claim issues arose, which Durkin also appeals.
We exercise free review over interpreting a statute's meaning and applying the facts to the law. Martel v. Bulotti, 138 Idaho 451, 453, 65 P.3d 192, 194 (2003). Durkin argues the district court erred in applying the automatic stay provisions of 11 U.S.C. § 362(a)(1). Durkin contends the district court wrongly allowed the trial to proceed with the inclusion of Dakota's claims and further erred when it asked the jury to determine Dakota's claims in the special verdict form and judgment.
United States Bankruptcy Code Section 362 (11 U.S.C. § 362) provides, in pertinent part:
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