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SIRIUS LC v. BRYCE H. ERICKSON

November 29, 2010

SIRIUS LC, A WYOMING LIMITED LIABILITY COMPANY, PLAINTIFF-RESPONDENT,
v.
BRYCE H. ERICKSON, AND ANY PERSON CLAIMING UNDER BY OR THROUGH BRYCE H. ERICKSON IN AND TO THE REAL PROPERTY DESCRIBED AS FOLLOWS: CARIBOU COUNTY, IDAHO: TOWNSHIP 5 SOUTH, RANGE 46 E.B.M., SECTION 27: LOTS 1 AND 2, N1/2 NW1/4 , EXCEPT THEREFROM THE S1/2 NE1/4 NW1/4 NW1/4 , DEFENDANT-APPELLANT.



Appeal from the District Court of the Sixth Judicial District of the State of Idaho, Caribou County. Honorable Mitchell W. Brown, District Judge. The judgment of the district court is affirmed.

The opinion of the court was delivered by: J. Jones, Justice.

Idaho Supreme Court

2010 Opinion No. 126

Stephen W. Kenyon, Clerk

Bryce H. Erickson appeals the foreclosure judgment against his real property located in Caribou County, Idaho, based on a note and mortgage he signed in favor of Sirius LC. We affirm.

I. Factual and Procedural History

In October of 1998, Appellant Bryce H. Erickson retained Wyoming attorney William D. Bagley to assist him in a Chapter 11 bankruptcy proceeding in the state of Wyoming. Both Erickson and Bagley lived in Wyoming at the time, although Erickson owned real property in Caribou County, Idaho. The Chapter 11 proceeding was dismissed by the bankruptcy court for procedural deficiencies in May of 1999. Nonetheless, Erickson again approached Bagley to represent him in a Chapter 12 bankruptcy proceeding several months later. Bagley agreed, on the condition that Erickson sign a promissory note in favor of Sirius LC, a Wyoming limited liability company wholly owned by Bagley and his wife. The note amount was said to equal the outstanding legal fees incurred by Erickson for the Chapter 11 proceeding.

The promissory note, which Erickson signed on November 13, 1999, states ―[f]or value received, the undersigned Bryce H. Erickson promises to pay Sirius LC...the sum of [$29,173.38] bearing 10% interest due and payable on June 1, 2001.‖ Erickson also signed a mortgage to secure the note. Both the mortgage and note contained a provision for reasonable attorney fees in the event of legal action to collect or foreclose.

Several days after signing the instruments, Bagley filed a Chapter 12 bankruptcy petition on behalf of Erickson. Bagley also assisted Erickson in filing a Chapter 12 plan, filing various motions with the bankruptcy court, and negotiating with his creditors. However, Bagley was dismissed as Erickson's counsel in June of 2000 when the bankruptcy court learned of Bagley's ownership interest in Sirius, a creditor of the estate.

Erickson's new attorney, Ms. Shively, moved to release the estate from the note and mortgage in 2003 based on alleged misconduct by Bagley. The bankruptcy court denied the motion, indicating Erickson should file an adversary proceeding if he wished to challenge the indebtedness. However, Erickson did not file an adversary proceeding and approximately one month after the motion to release was denied, Sirius filed this foreclosure action in Idaho.

Erickson raised several affirmative defenses in the foreclosure action, claiming the note was invalid and unreasonable because of Bagley's alleged misconduct during the bankruptcy proceedings. Erickson moved for summary judgment on the ground that Sirius failed to provide consideration for the note, and moved to compel production of documents relating to his affirmative defenses. The district court denied Erickson's motion for summary judgment but, without a motion by either party, granted summary judgment in favor of Sirius, dismissing Erickson's remaining affirmative defenses, as well as his motion to compel. These matters were appealed to this Court in Sirius LC v. Erickson, 144 Idaho 38, 156 P.3d 539 (2007) [hereinafter Sirius I]. In Sirius I, the Court held Bagley could provide the consideration to support the note in favor of Sirius, but we declined to ―opine as to the adequacy of the consideration.‖ The Court ruled, however, that the district court erred in granting summary judgment in favor of Sirius on the other defenses because no summary judgment motion had been presented to the court by either party. We therefore vacated both the dismissal of Erickson's remaining affirmative defenses and the ruling on his motion to compel.

Upon remand, the district court held a bench trial wherein Erickson admitted to the validity of the note and mortgage subject only to his affirmative defenses. The affirmative defenses included fraud, duress, mistake, violations of consumer protection statutes, inadequate consideration, and attorney malpractice. The district court found Erickson's affirmative defenses were either inapplicable to Sirius or unsupported by the evidence. The court further held the consideration given in exchange for the note and mortgage was adequate and found the amount of the note to be reasonable. The court entered judgment in favor of Sirius for the amount of the note, plus interest, and ordered foreclosure against the Caribou County real property. The court also awarded attorney fees and costs to Sirius, finding Erickson had waived any objection to the award because he failed to file a timely objection pursuant to Idaho Rule of Civil Procedure 54(d)(6). Erickson moved for reconsideration and for a new trial, but the district court denied both motions. Erickson timely appealed to this Court.

II. Issues on Appeal

I. Did the district court err in dismissing Erickson's ...


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