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The Vanderford Company, Inc., A v. Paul Knudson

March 21, 2011

THE VANDERFORD COMPANY, INC., A NEVADA CORPORATION; AND PRIMARY RESIDENTIAL MORTGAGE, INC., A NEVADA CORPORATION F/K/A VANDERFORD CENTER, INC. PLAINTIFFS-COUNTERDEFENDANTS-RESPONDENTS,
v.
PAUL KNUDSON, PERSONALLY AND INDIVIDUALLY, DEFENDANT-CROSSDEFENDANT-COUNTER CROSSCLAIMANT-APPELLANT, AND 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 LIMITED LIABILITY COMPANY, DEFENDANT-COUNTERCLAIMANT, AND RICHARD L. GREIF AND JODY L. GREIF, DEFENDANTS-COUNTERCLAIMANTS-CROSSCLAIMANTS-COUNTER CROSSDEFENDANTS-RESPONDENTS, AND STATE FARM FIRE AND CASUALTY COMPANY,
INTERVENOR.



Appeal from the District Court of the Third Judicial District, State of Idaho, Payette County. Hon. Thomas J. Ryan, District Judge.

The opinion of the court was delivered by: Burdick, Justice

2011 Opinion No. 42

Stephen W. Kenyon, Clerk

Order granting motion to enforce settlement and dismiss Knudson's claims, reversed.

In Vanderford Co. v. Knudson, 144 Idaho 547, 165 P.3d 261 (2007) (Vanderford I), we remanded various issues in this lawsuit to the district court, and upon remand, the district court ordered the parties to mediation. At issue in this appeal is the existence of two settlement agreements which purportedly settle the entire lawsuit: (1) an agreement between Appellant Paul Knudson (Knudson) and Respondent The Vanderford Company, Inc. (Vanderford), whereby Knudson allegedly promised to join in any settlement that Vanderford might reach with the Respondents Richard and Jody Greif (the Greifs); and (2) an agreement between Vanderford and the Greifs reached at the court-ordered mediation settling all remaining claims. The Greifs, who claim that both settlement agreements exist, moved to enforce Knudson's agreement with Vanderford and moved to dismiss all of Knudson's claims. The district court granted the Greifs' motion and dismissed all of Knudson's claims. Knudson appeals on multiple grounds, generally arguing that he never entered into the agreement with Vanderford and that no agreement was reached between the parties at the mediation. We hold that issues of material fact precluded the district court from granting the Greifs' motion, and therefore, we reverse.

I. FACTUAL AND PROCEDURAL BACKGROUND

The settlement agreement at issue in this case arose out of negotiations that took place after this Court's decision in Vanderford I. In that case, we set forth the following underlying facts:

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). . . . 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.

[On December 28, 2001] 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 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.

144 Idaho at 551-52, 165 P.3d at 265-66.

In Vandeford I, we concluded:

Vanderford cannot foreclose on the Greif Trust Deeds because the language in the Notes fails to confer any real property as collateral. The trial court's findings articulated in its order were sufficient to meet the purpose of 52(a) requiring separate findings of fact and conclusions of law. The Court declines to reach the issue of whether the trial court erred when it quashed the lien of the Greif Trust Deeds because Vanderford failed to support its argument with any legal authority. The case is remanded for new trial on those matters determined by the jury, the trial to include jury instructions regarding fraudulent conveyance, oral agreement, and breach of contract because the requested instructions were a correct statement of the law, supported by a reasonable view of the evidence, and not adequately covered by the other instructions. The alter ego issue is equitable in nature to be determined by the trial court. The district court did not abuse its discretion in failing to give the slander of title jury instruction because no reasonable view of the evidence could support the instruction. There was no contract to bar Knudson's award on the theory of unjust enrichment, and sufficient evidence supported the jury's award. However, the verdict on this issue is vacated so it may be considered together with the other jury issues. The determination of a prevailing party is dependent upon the outcome of issues on remand. The Court declines to award attorneys fees for the appeal to any party. The trial court may make an award of attorney fees for this appeal dependent upon the final outcome of the case.

Id. at 559, 165 P.3d at 273.

On September 10, 2008, upon remand from this Court, the district court referred the case to mediation pursuant to I.R.C.P. 16(k). A mediation was held, and what took place between the parties before, during and after the mediation is the subject of dispute in this appeal.

On November 10, 2008, Knudson, acting pro se, filed the Notice of Mediation Failure and Motion to Set Jury Trial Date, asserting that no settlement had been reached at the mediation and requesting to proceed to trial. The Greifs responded, claiming: (1) they were under the belief that Knudson reached a settlement agreement with Vanderford prior to the mediation (the "Knudson-Vanderford Settlement") whereby Knudson agreed to let Vanderford negotiate a settlement with the Greifs and promised to join in that settlement; (2) in light of the Knudson- Vanderford Settlement, the Greifs were able to reach a settlement agreement with Vanderford (the "Greifs-Vanderford Settlement") at the mediation settling all disputes in the case; (3) all that remained was to memorialize the Greifs-Vanderford Settlement in a written agreement and to provide documentation to Vanderford regarding the real property owned by the Greifs; but (4) Knudson was not fulfilling his obligation from the Knudson-Vanderford Settlement to join in the Greifs-Vanderford Settlement. Vanderford responded, agreeing with the Greifs that the lawsuit was fully resolved based upon both the Knudson-Vanderford Settlement and the Greifs- Vanderford Settlement.*fn1 On December 1, 2008, the district court held a hearing on Knudson's motion and requested that Knudson submit an unsworn written explanation of his claims within thirty days. Accordingly, Knudson submitted Paul Knudson's Explanation of Failure to Reach Agreement at Mediation (hereinafter "Knudson's Explanation").

On January 8, 2009, the Greifs filed the Motion to Enforce Settlement and Dismiss Paul Knudson's Claims Under Rule 12(b)(6), I.R.C.P (the "Greifs' Motion"). The Greifs' Motion sought an order directing Knudson to comply with the terms of the Knudson-Vanderford Settlement whereby Knudson allegedly authorized Vanderford to negotiate with the Greifs at the mediation and promised to join in the resulting settlement. The Greifs submitted a memorandum in support of their motion as well as affidavits from their attorney Christ Troupis (the "Troupis Affidavit") and Richard Greif (the "Greif Affidavit"). Knudson submitted a memorandum and an affidavit in opposition to the Greifs' Motion. Vanderford submitted a memorandum in opposition to Knudson's memorandum and submitted an affidavit of its attorney, Douglas Perry (the "Perry Affidavit"). Knudson responded to Vanderford's memorandum by filing another memorandum and another affidavit (the "Knudson Affidavit").

The Troupis Affidavit set forth the following relevant facts:

3. My client's primary concern during the mediation was the resolution of Paul Knudson's claim. I advised Justice Trout that any settlement we reached had to include the elimination of all of Paul Knudson's claims and asked her to convey that to Vanderford and Knudson. During the day-long mediation, we received several offers of settlement from Vanderford. Each of these offers was presented by Justice Trout, who advised my clients and me that each of the offers of settlement we received from Vanderford included the elimination of all of Paul Knudson's claims as well.

4. At all times, I believed that Vanderford had authority to settle not only its own claims, but those of Paul Knudson . . .

6. When I met with Vanderford's counsel to discuss the final settlement offer, they advised me that this settlement would conclude the entire litigation, including all of Paul Knudson's claims. I was advised that Vanderford had reached a separate agreement with Paul Knudson and that the Greifs did not need to negotiate with him, but could rely on Vanderford's representation that they had resolved Paul Knudson's claims, and no further consideration of Paul Knudson's claims was necessary in the Vanderford-Greif settlement agreement. I indicated to Vanderford's counsel that my clients would only agree to a settlement if it meant that the entire case would be concluded and their assurance that Paul Knudson's claims were included was a central component to the settlement agreement. Vanderford's counsel reassured me that this was in fact the case and that they would deal exclusively with Paul Knudson thereafter.

7. Based upon these representations, I conveyed Vanderford's final settlement offer to my clients, the Greifs, and they accepted it.

8. [At the end of the mediation,] we were unable to memorialize the Vanderforford-Greif settlement agreement in writing. However, both

Vanderford and [the] Greifs are in agreement that the case has been settled and are in the process of finalizing the ...


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