ALAN GOLUB and MARILYN GOLUB, husband and wife, Plaintiffs-Respondents,
KIRK-HUGHES DEVELOPMENT, LLC, a Delaware limited liability company; KIRK-HUGHES & ASSOCIATES, INC., a Nevada corporation; GERALDINE KIRK-HUGHES and PETER SAMPSON, husband and wife, Defendants-Appellants, and KIRK-SCOTT, LTD., a Texas corporation; INTERNAL REVENUE SERVICE; TOMLINSON NORTH IDAHO, INC., an Idaho corporation; KELLY POLATIS, an individual; DELANO D. and LENORE J. PETERSON, husband and wife, Defendants.
2015 Opinion No. 14
Appeal from the District Court of the First Judicial District of the State of Idaho, Kootenai County. Hon. Lansing L. Haynes, District Judge.
The orders of the district court are affirmed.
Campbell & Bissell, PLLC, Spokane, Washington, for appellants. Michael S. Bissell argued.
Winston & Cashatt, Lawyers, Coeur d'Alene, for respondents. Michael T. Howard argued.
J. JONES, JUSTICE
The respondents, Alan and Marilyn Golub (Golubs), obtained a judgment in the amount of $941, 000 against the appellants and recorded the judgment in Kootenai County. Kirk-Hughes
Development, LLC (KHD), owned a parcel of real property in the county and therefore the judgment constituted a lien against its property. KHD now claims to have executed a deed of trust on the property in favor of Kirk-Scott, Ltd. (KS), several years before Golubs acquired their lien. Golubs filed an action for declaratory judgment, seeking a ruling that their judgment lien had priority over KS' unrecorded deed of trust. The district court granted summary judgment to Golubs, finding that their lien had priority. KHD and the other appellants filed a timely appeal.
FACTUAL AND PROCEDURAL BACKGROUND
In 2004, Alan Golub was the listing real estate agent for properties then owned by Sloan and Peterson, who each sought to sell their properties near Coeur d'Alene, Idaho. Golub worked with other real estate agents to persuade Geraldine Kirk-Hughes and Geraldine's sister, Balinda Antoine, to participate in a development project potentially involving the purchase of the Peterson and Sloan properties, among others. In July 2004, KS, a company owned by Balinda, purchased the Sloan property.
The Peterson property was the largest and most expensive of the properties, being 518 acres. Golub had an agreement with Peterson that would entitle Golub to a commission for the sale of the Peterson property if Peterson closed on the sale of his property with one of the potential buyers Golub had provided to Peterson by early November 2004. One of the potential buyers provided to Peterson by Golub was Geraldine. In July 2004, Geraldine became a party to a purchase and sale agreement to acquire the Peterson property for $6 million. However, this agreement lapsed in October or November 2004, and the sale was not closed.
In October 2004, Geraldine formed KHD to develop the real estate project. On November 18, 2004, KS granted the Sloan property to KHD by warranty deed. The same day, KHD purportedly executed a deed of trust in favor of KS, covering a portion of the Sloan property, though it is unclear from the record exactly what portion. KHD's warranty deed for the Sloan property was recorded on November 19, 2004, but the deed of trust in favor of KS was not recorded at that time.
In March 2005, Kelly Polatis, a business associate of Geraldine, purchased the Peterson property. Polatis then deeded the Peterson property to KHD either the same day he acquired it or very close in time. Golub believed these were straw-person transactions to deny him his commission on the sale of the Peterson property. In an attempt to recover the lost commission, Golubs sued Geraldine, KHD, Kirk-Hughes & Associates, Polatis, and Peterson in 2007. Geraldine, KHD, and Kirk-Hughes & Associates defended against the action for a year and a half, but on March 11, 2009, Golubs obtained a default judgment in the amount of $941, 000 against them. Golubs believed that they were unable to immediately record this judgment because Peterson remained in the action and that the judgment could not be considered final until there was a judgment against all defendants in the action or the court issued a Rule 54(b) certificate. For an unknown reason, when the court entered the default judgment, it did not sign the 54(b) certificate. Golub was in the process of seeking a Rule 54(b) certificate to pursue collection against the defaulted defendants when KHD filed for Chapter 11 bankruptcy on April 6, 2009.
Despite the purported deed of trust obligation from KHD to KS, KHD did not list on its bankruptcy forms any secured claims regarding the property allegedly covered by that instrument and did not list KS as a creditor. Additionally, KS did not file a creditor's claim in the bankruptcy proceeding. On September 17, 2010, while KHD's bankruptcy was pending, KS attempted for the first time to record its 2004 deed of trust. ...