2015 Opinion No. 21
Appeal from the District Court of the Third Judicial District of the State of Idaho, in and for Canyon County. Hon. George A. Southworth, District Judge.
The judgment of the district court is affirmed.
Kenneth F. Stringfield, Caldwell, argued for appellant.
David E. Kerrick, Caldwell, argued for respondent.
This is an appeal out of Canyon County from a judgment dismissing the plaintiff's claim seeking to recover the amount owing on a promissory note that the plaintiff inherited, where the decedent's estate was never probated. We affirm the judgment.
Sarah Chitwood was a retired school teacher and a long-time resident of McCall, Idaho. She had a very good friend, Marjorie Ellmaker, who resided in Notus, Idaho. In 2003, Ms. Chitwood contacted an attorney to draft a durable power of attorney, naming Ms. Ellmaker as her attorney-in-fact. Ms. Chitwood executed the power of attorney on August 15, 2003. She later had the attorney draft a will. At that time, Ms. Chitwood was 85 years old and a widow with no living children. On September 5, 2003, she executed the will, which left a cake plate and glass horse to a married couple who were her friends, her cats to another friend, and the remainder of her estate to Ms. Ellmaker.
In 2005, Ms. Chitwood desired to sell part of the real property she owned in McCall. She was introduced to Calvin Tabor, a member in A1 Real Estate LLC which was in the business of flipping houses and buying land to resell. He found a group of investors willing to purchase Ms. Chitwood's property for the sum of $927, 000. Ms. Chitwood entered into a written real estate contract dated May 4, 2005, to sell her property to "A1 REAL ESTATE LLC AND/OR AS ASSIGNED."
An addendum to the real estate contract stated that Ms. Chitwood would finance $227, 000 of the purchase price by two promissory notes from A1 Real Estate LLC, one for $150, 000 and the other for $77, 000. The addendum also stated that the notes would be secured by A1 Real Estate LLC and that upon default liens could be placed on the assets of that company.
The original note listed "A1 Real Estate LLC" as the borrower, and Mr. Tabor signed it "as member of A1 Real Estate." The due date on the note was May 1, 2006. In April 2006, the parties agreed to extend the due date to May 1, 2007, and a payment of $9, 000 was paid for interest due. The extension of the due date was written on the note, with Mr. Tabor signing "as member of A1 Real Estate LLC" and Ms. Ellmaker signing for Ms. Chitwood pursuant to the power of attorney. In 2007, the parties agreed again to extend the due date on the $150, 000 promissory note. A new note dated June 6, 2007, in the amount of $150, 000 was issued with a due date on or before December 25, 2007. The borrower was listed as "A1 Real Estate LLC, " Mr. Tabor signed it "as member of A1 Real Estate, " and Ms. Ellmaker signing it for Ms. Chitwood pursuant to the power of attorney.
On July 25, 2007, Ms. Chitwood died. The attorney who had drafted her will prepared two affidavits of "Non-Probate" for Ms. Ellmaker to sign. In one affidavit dated August 9, 2007, Ms. Ellmaker averred that Ms. Chitwood had died leaving a last will and testament; that Ms. Ellmaker was the sole heir; that all of Ms. Chitwood's debts, the expenses of her last illness, her funeral expenses, and the applicable estate and inheritance taxes had been fully paid; that upon her death Ms. Chitwood owned real property, which was described; and that the affidavit was made for the purpose of transferring the real property to Ms. Ellmaker. A metes-and-bounds legal description of the real property was attached to the affidavit. Ms. Ellmaker recorded that affidavit in the records of the Valley County recorder on August 14, 2007.
In the other affidavit dated July 17, 2013, Ms. Ellmaker averred that Ms. Chitwood had died; that she left a will which was not probated; that Ms. Ellmaker was the sole heir; that all of Ms. Chitwood's debts, the expenses of her last illness, her funeral expenses, and the applicable estate and inheritance taxes had been fully paid; and that the affidavit was made for the purpose of transferring Ms. Chitwood's interest in the real estate contract with A1 Real Estate LLC, the promissory note dated May 9, 2005, and "the Agreement dated 2007" to Ms. Ellmaker. On July 18, 2013, Ms. Ellmaker recorded this affidavit in the records of the Valley County recorder.
On April 21, 2010, Ms. Ellmaker filed this action against Mr. Tabor and A1 Real Estate LLC. She later filed an amended complaint to add as a defendant Keith Turner, the other member of the limited liability company. She alleged that Mr. Tabor breached an oral contract to pay the note and that all defendants breached the implied covenant of good faith and fair dealing, failed to pay the promissory note when due, and had been unjustly enriched. On November 12, 2012, Mr. Turner filed a Chapter 7 bankruptcy petition.
On June 7, 2013, Mr. Tabor filed a motion for summary judgment on the ground that he signed the promissory note as a member of A1 Real Estate LLC and that he is not personally liable on the notes and did not guarantee payment of the note. On the same date, he filed a motion to dismiss on the ground that Ms. Ellmaker lacked standing to bring this action because the estate of Ms. Chitwood had not been probated, no personal representative had been appointed, and the three-year statute of limitations for instituting probate proceedings had expired.
After briefing and argument, the district court granted the motion to dismiss and the motion for summary judgment. The court refused to admit Ms. Chitwood's will into evidence and therefore held that Ms. Ellmaker had no legal basis for enforcing the promissory note. The court also granted Mr. Tabor's motion for summary judgment on all of the claims asserted against him.
Did the District Court Err in Holding that Plaintiff Had No Legal Basis Upon Which to Seek Enforcement of the Promissory Note?
Mr. Tabor moved to dismiss the claim against him on the ground that Ms. Ellmaker was not the real party in interest, that she did not own "the alleged claim, " and that she lacked standing. The basis of the motion was that no probate proceedings had ever been instituted for Ms. Chitwood's estate, that there was no written assignment of the ...