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Golub v. Kirk-Scott, Ltd.

Supreme Court of Idaho

January 30, 2015

ALAN GOLUB and MARILYN GOLUB, husband and wife, Plaintiffs-Respondents,
v.
KIRK-SCOTT, LTD., a Texas corporation, Defendant-Appellant, and KIRK-HUGHES DEVELOPMENT, LLC, a Delaware limited liability company; INTERNAL REVENUE SERVICE; TOMLINSON NORTH IDAHO, INC., an Idaho corporation; GERALDINE KIRK-HUGHES and PETER SAMPSON, husband and wife; KIRK-HUGHES & ASSOCIATES, INC., a Nevada corporation; KELLY POLATIS, an individual; DELANO D. and LENORE J. PETERSON, husband and wife, Defendants

Page 894

2015 Opinion No. 12

Appeal from the District Court of the First Judicial District of the State of Idaho, Kootenai County. Hon. Lansing L. Haynes, District Judge.

The district court's orders are affirmed.

Crotty & Son, PLLC, Spokane, Washington, for Appellant Kirk-Scott, Ltd. Matthew Z. Crotty argued.

Winston & Cashatt, Lawyers, Coeur d'Alene, for Respondents. Michael T. Howard argued.

J. JONES, Justice. Chief Justice BURDICK, and Justices EISMANN and HORTON, and Justice Pro Tem WALTERS CONCUR.

OPINION

Page 895

J. JONES, Justice

This case involves a dispute between two creditors as to whose claim against their debtor's property has priority. The respondents, Alan and Marilyn Golub (Golubs), recorded a judgment in the amount of $941,000 against their judgment debtor, Kirk-Hughes Development, LLC (KHD), giving Golubs a judgment lien on property owned by KHD in Kootenai County. KHD now claims to have executed a deed of trust on the property in question several years before Golubs acquired their lien. The beneficiary of the deed of trust is another defendant, Kirk-Scott, Ltd. (KS). The district court granted summary judgment to Golubs, finding that Golubs' duly recorded judgment lien had priority over KS' prior, unrecorded deed of trust. KS timely appealed.

I.

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

Page 896

to Peterson by early November 2004.[1] Geraldine was one of the potential buyers provided to Peterson by Golub. 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 this real estate project. KHD is owned: 7% by Kirk-Hughes & Associates; 51.5% by KS; 3% by Balinda Antoine; and 5% by Richard Polatis.[2] 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 order 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 an I.R.C.P. 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. Golubs recorded their judgment a few weeks later, after the bankruptcy case was dismissed without discharge.

In early 2013, after a second bankruptcy by KHD was dismissed without discharge, Golubs filed an action for declaratory judgment to establish the priority of their judgment lien over KS' purported prior, unrecorded deed of trust. In response, KS filed a motion to set aside the $941,000 default judgment entered in 2009 and a motion for summary judgment on the 2013 priority action. Golubs also moved for summary judgment on the issue of priority. The district court denied KS' motions and granted Golubs' motion for summary judgment. Following this order, KS moved under I.R.C.P. 59(a) to amend/alter the order. The district court denied the motion and ordered sanctions against KS. KS timely appealed.

II.

ISSUES ON APPEAL

1. Whether the district court erred in denying KS' motion to vacate the 2009 default judgment.

2. Whether the district court erred in granting Golubs' motion for summary judgment.

3. Whether the district court abused its discretion in ordering ...


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