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Cumis Ins. Society, Inc. v. Massey

Supreme Court of Idaho, Boise

February 10, 2014

CUMIS INSURANCE SOCIETY, INC., Plaintiff-Appellant,
v.
Wade MASSEY and Capitol West Appraisals, Defendants-Respondents.

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[Copyrighted Material Omitted]

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Wilson & McColl, Boise and Collins & Coldwell, LLC, Denver, Colorado for appellant. Patrick Collins argued.

Kelly Talboy & Simmons, PA, Boise, for respondents. Michael E. Kelly argued.

HORTON, Justice.

This appeal arises from a negligence action filed by CUMIS Insurance Society (CUMIS), the subrogee of Icon Federal Credit Union (Icon), against Wade Massey and his business, Capitol West Appraisals (Capitol). All parties moved for summary judgment. The district court granted Massey's motion and dismissed CUMIS's claims after deciding CUMIS failed to establish that Massey owed a duty of care to Icon. CUMIS timely appealed. We vacate the judgment.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 2007, Steven and Valerie Hruza sought to obtain a loan from Clearwater Mortgage (Clearwater). Clearwater requested Massey to perform an appraisal of the Hruzas' real property located in Caldwell, Idaho. Massey is the owner of Capitol and is a professional appraiser licensed to practice in Idaho. Massey performed the appraisal and sent a Summary Appraisal Report (the Appraisal) to Clearwater indicating that market value of the property was $1,150,000 as of June 13, 2007. However, Clearwater decided to deny the Hruzas' loan application before considering the Appraisal. Massey admits that both he and Clearwater were aware that the Appraisal contained errors. The president of Clearwater, Ernie Menchaca, and Massey agreed that Massey would not fix the errors and Clearwater would not pay Massey for the appraisal.

Then, in September, 2007, the Hruzas submitted a loan application for $250,000 to

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Idahy Federal Credit Union, now known as Icon.[1] Icon approved the loan, secured by a deed of trust on the Hruza property, on or around September 13, 2007. Icon then sent an $800 check, dated September 18, 2007, to Capitol. Capitol accepted the payment.

A central point of dispute between the parties is how Icon obtained the Appraisal. CUMIS posits that the Hruzas included the Appraisal with their loan application, thus prompting Icon to pay Capitol for the Appraisal. Massey suggests that Icon improperly obtained the Appraisal, pointing to Icon's admission that it did not know how it obtained it and that Icon did not request a letter of assignment from Clearwater to use or rely on the Appraisal.

The Hruzas promptly defaulted on the Icon loan in November 2007. Subsequently, Icon had the Hruzas' property reappraised. The new appraisal valued the property at $535,000 as of August 2008. A subsequent appraisal concluded that the property was worth $652,000 at the date of the Appraisal in 2007, not $1,150,000 as the Appraisal stated.

CUMIS is the fidelity bond insurer for Icon and paid $247,474.90 to Icon as a result of the Hruzas' default. In April 2011, CUMIS, as Icon's subrogee, filed its complaint against Massey and Capitol alleging professional negligence, negligent misrepresentation, and breach of contract based on Massey's conduct in preparing the Appraisal. CUMIS requested a jury trial. In November, 2011, Massey and CUMIS filed cross-motions for summary judgment. Both motions came before the district court on February 9, 2012.

At the hearing, the district court noted that it had not received the affidavit of Ernie Menchaca, upon which Massey had relied heavily in the brief in support of his motion for summary judgment. Counsel for CUMIS stipulated to the untimely submission of Menchaca's affidavit. This stipulation was based upon counsel's erroneous belief that Massey had previously provided a copy to CUMIS. Massey filed the affidavit later that day and the district court considered it in reaching its decision. The district court concluded that CUMIS could not establish that Massey owed a legal duty to Icon, that Idaho does not recognize a cause of action for negligent misrepresentation against appraisers, and that CUMIS had no breach of contract claim. Therefore, the district court granted Massey's motion for summary judgment and dismissed all claims asserted by CUMIS, with prejudice. CUMIS timely appealed from the judgment.

II. STANDARD OF REVIEW

" In an appeal from an order granting summary judgment, this Court's standard of review is the same as the standard used by the district court in passing upon a motion for summary judgment." Partout v. Harper, 145 Idaho 683, 685, 183 P.3d 771, 773 (2008). " All disputed facts are to be construed liberally in favor of the non-moving party, and all reasonable inferences that can be drawn from the record are to be drawn in favor of the non-moving party." Estate of Becker v. Callahan, 140 Idaho 522, 525, 96 P.3d 623, 626 (2004). Summary judgment is proper if the " pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." I.R.C.P. 56(c).

The " fact that both parties move for summary judgment does not in and of itself establish that there is no genuine issue of material fact." Intermountain Forest Mgmt., Inc. v. Louisiana P. Corp., 136 Idaho 233, 235, 31 P.3d 921, 923 (2001). The moving party bears the burden of proving the absence of material facts but " is entitled to judgment when the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to that party's case on which that party will bear the burden of proof at trial." Partout, 145 Idaho at 688, 183 P.3d at 776 (quoting Badell v. Beeks, 115 Idaho 101, 102, 765 P.2d 126, 127 (1988)). In a case that would otherwise be decided by a jury, the trial court is not free to arrive at the most probable inferences that

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may be drawn, but is compelled to draw all inferences in favor of the non-moving party. Mastrangelo v. Sandstrom, Inc., 137 Idaho ...


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