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Hopkins Northwest Fund, LLC, An v. Landscapes Unlimited

November 1, 2011

HOPKINS NORTHWEST FUND, LLC, AN IDAHO LIMITED LIABILITY COMPANY, PLAINTIFF-RESPONDENT,
v.
LANDSCAPES UNLIMITED, LLC, A NEBRASKA LIMITED LIABILITY COMPANY, DEFENDANT-APPELLANT, AND GREGORY O. BULLOCK AND JEANETTE E. BULLOCK, HUSBAND AND WIFE; HUNTER'S POINT DEVELOPMENT CORPORATION, AN IDAHO CORPORATION; HUNTER'S POINT GOLF COMMUNITY, LLC, AN IDAHO LIMITED LIABILITY COMPANY; LANCO, INC., AN IDAHO CORPORATION; BEUS EXCAVATION, LLC, AN IDAHO LIMITED LIABILITY COMPANY, ADVANCED CONCRETE, INC., AN IDAHO CORPORATION; BUILD 4 U, INC., AN IDAHO CORPORATION; KMO, INC., AN IDAHO CORPORATION; MATZDORFF RESOURCES, LLC, AN IDAHO LIMITED LIABILITY COMPANY, D/B/A MIKE'S SAND & GRAVEL; AND THE CITY OF NAMPA, IDAHO, AN IDAHO MUNICIPALITY, DEFENDANTS.



Appeal from the District Court of the Third Judicial District of the State of Idaho, Canyon County. Honorable Gregory M. Culet, District Judge.

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

2011 Opinion No. 103

Stephen W. Kenyon, Clerk

The judgment of the district court is vacated and the case is remanded.

This is an appeal from a summary judgment against Landscapes Unlimited, LLC (LU) in which the district court: (1) applied I.C. § 45-508 to postpone LU's lien claim in golf course property to Hopkins Northwest Fund, LLC's (Hopkins) deed of trust covering the same, and (2) alternatively apportioned LU's lien amount. Because we find that I.C. § 45-508 is inapplicable to LU's lien claim and that equitable apportionment is not an appropriate alternative remedy where I.C. § 45-508 does not apply, we vacate the judgment and remand for further proceedings.

I.

FACTUAL AND PROCEDURAL HISTORY

Hunter's Point Development is a two-part development, consisting of a residential community and a golf course, located within the city limits of Nampa, Idaho. The residential portion of the development is owned by Hunter's Point Development Corporation (HPDC), whereas Hunter's Point Golf Course is owned by Hunter's Point Golf Community, LLC (HPGC). Gregory Bullock is the managing member of HPGC and the president of HPDC.

Hopkins entered into a master credit agreement with HPGC, HPDC, and Gregory and Jeanette Bullock in August 2006. Pursuant to the agreement, Hopkins was to provide financing to HPDC and the Bullocks for the acquisition of real property and construction of a golf course. HPGC, HPDC, and the Bullocks executed a promissory note on August 14, 2006, in the amount of $12,430,000, and the note was secured by a deed of trust, recorded on August 14, 2006. A second note was executed by HPGC, HPDC, and the Bullocks in May 2007 for the principal sum of $407,500, and this note was secured by a separate deed of trust, recorded in June 2007.

Several months prior to entering the master credit agreement with Hopkins, HPGC executed a contract with LU for the "[c]onstruction of all project components for an eighteen hole golf course and practice range." Under the contract, LU would be responsible for thirteen components, including: (1) mobilization ($46,000); (2) layout and staking ($30,500); (3) erosion control ($18,500); (4) clearing ($0); (5) earthwork ($235,000); (6) shaping ($335,000); (7) drainage ($217,227); (8) features construction, such as tees, greens, sand, piping, irrigation, and bunkers ($813,331); (9) seedbed preparation ($321,080); (10) grassing ($303,564); (11) hardscape ($839,365); (12) irrigation ($1,237,000); and (13) other/contingency items ($265,000). In all, the total budget for the project was $4,661,567.

In accordance with the contract, LU began work on the project on June 1, 2006, and continued until August 30, 2007. In response to unpaid billings, LU filed a claim of lien on September 26, 2007, for the principal sum of $1,337,637,*fn1 plus interest in the amount of $18,143.75. The claim provided, "said amounts are due, and owing . . . for golf course construction labor and work done, supervision supplied, and/or materials furnished, in and for that certain improvements of said land located at Hunter's Point Golf Course, Nampa, Canyon County, Idaho, and owned by Hunter's Point Golf Community, LLC, an Idaho limited liability company."

On February 1, 2008, Hopkins filed a complaint in district court seeking to foreclose on its deeds of trust because the borrowers were in default on both promissory notes. Hopkins alleged in the complaint that its interest in the subject properties had priority over LU's lien claim. LU cross-claimed, alleging that its lien claim was superior to Hopkins' deeds of trust because LU began work on the project in June 2006 and Hopkins did not record its first deed of trust until August 14, 2006. Accordingly, LU sought to foreclose its lien with respect to the parcels identified in its lien claim.*fn2

LU filed a motion for summary judgment in December 2008 regarding the validity, superiority, and amount of its lien claim. Hopkins responded that LU's lien, even if valid, did not have priority over Hopkins' interest because LU failed to designate what portions of its lien amount are attributed to each parcel or improvement pursuant to I.C. § 45-508. LU countered that a single lien claim could be filed, without segregating the amount, when the labor is provided pursuant to a single contract and the work provided amounts to a single improvement. The district court orally ruled on March 12, 2009, that LU's lien claim on the four parcels at issue was superior to Hopkins' interest pursuant to I.C. § 45-506 (the March 2009 Order).

However, the court reserved the issue of apportionment, which was separately raised in Hopkins' summary judgment briefing, for a later ruling.

At the subsequent apportionment hearing on July 7, 2009, the court rescinded its March 2009 Order and determined that LU was not exempt from meeting the requirements of I.C. § 45- 508 (the July 2009 Order). The court interpreted I.C. § 45-508 as requiring LU to designate its lien amount as to each parcel encumbered by the lien, and its failure to do so resulted in its lien being postponed to Hopkins' deed of trust. Alternatively, the district court held that if it misapplied I.C. § 45-508, LU's lien would be equitably apportioned by acreage among the parcels covering the golf course. Specifically, the court endorsed Hopkins' apportionment theory, which provided: (1) 29.99% of LU's lien, in the amount of $401,206.91, for parcel 3; (2) 16.72% of LU's lien, in the amount of $223,717.63, for parcel 1; (3) 13.21% of LU's lien, in the amount of $176,647.38, for parcel 16; and (4) 11.34% of LU's lien, in the amount of $151,696.32, for parcel 10.

LU filed a motion for reconsideration regarding (1) the postponement of its lien pursuant to I.C. § 45-508, and (2) the alternative ruling of apportionment by acreage. With its motion, LU submitted an additional affidavit to support its theory that genuine issues of material fact exist as to the apportionment issue. The court determined there was no new evidence presented regarding the arguments before it and denied LU's motion. Consequently, LU appealed to this Court seeking a reversal of the July 2009 Order, a reinstatement of the March 2009 Order, and a remand for trial to determine the breakdown of its lien on each golf course parcel.

II.

ISSUES ON APPEAL

I. Does I.C. ยง 45-508 apply to LU's lien such that its failure to designate the amount of its lien as to each parcel results in the lien ...


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