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Kantor v. Kantor

Supreme Court of Idaho

September 13, 2016

ROBERT ARON KANTOR, Plaintiff-Counterdefendant-Respondent,
v.
SONDRA LOUISE KANTOR, Defendant-Counterclaimant-Appellant

         2016 Opinion No. 99

         Appeal from the District Court of the Fifth Judicial District of the State of Idaho, Blaine County. Hon. Robert J. Elgee, District Judge.

         The judgment of the district court is affirmed in part, reversed in part, and the case is remanded for further proceedings.

          Thompson Smith Woolf & Anderson, PLLC, Idaho Falls, for appellant Sondra Kantor. Marty R. Anderson argued.

          Ludwig Shoufler Miller Johnson, LLP, Boise, for respondent Robert Kantor. Scot M. Ludwig argued.

          HORTON, Justice.

         This is one of two consolidated cases that Robert and Sondra Kantor appealed to this Court; the other is Kantor v. Kantor, Docket No. 42980. This appeal is from the district court's dismissal of Sondra's claim that Robert breached a Property Settlement Agreement (PSA) as a sanction, its grant of summary judgment against her, and its award of attorney fees to Robert. We affirm in part, reverse in part, and remand the case for further proceedings.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Robert and Sondra were married for forty-three years before they divorced in 2012. As part of their divorce settlement, Robert and Sondra entered into the PSA on April 25, 2012. The PSA divided the parties' property, including their interests in a number of business entities. The PSA did not result in an entirely clean break between the parties, as a number of Robert and Sondra's joint business ventures remained intact. A judgment of divorce was entered on April 30, 2012. This judgment did not incorporate the PSA.

         Although this opinion will refer to other portions of the PSA, the following terms are of particular importance to this appeal:

5. REAL PROPERTY:

The parties own real property located at 265 Golden Eagle Drive, Hailey, Idaho.
5.01This real property shall be sold as soon as reasonably possible.
5.02 Pending the sale or disposition of this real property, Robert shall maintain the property and pay all utilities provided to the property....
5.03 Each party shall provide to the other any information either party receives that may be relevant to the ownership, sale, rental or other disposition of said property.

28. DEBTS AFTER SIGNING OF AGREEMENT:

… In the event Robert shall obtain refinancing of any debts for which Sondra has liability, Sondra shall co-operate in any manner needed to conclude such refinancing after review of the refinancing documents and terms by her attorney and/or accountant.

29. MISCELLANEOUS PROVISIONS: …

28.03 [sic] If action is instituted to enforce any of the terms of this Agreement, then the losing party agrees to pay to the prevailing party all costs and attorneys' fees incurred in that action.

         This case initially related to the parties' efforts to sell the community residence which was the subject of Section 5 of the PSA (the property). The parties owed Bank of America approximately $3.4 million on a note secured by the property and another bank $1 million on a home equity line of credit (HELOC), which was secured by a second priority interest in the property. At the time, Bank of America was subject to a consent judgment in an action brought by the Department of Justice. That consent judgment required Bank of America to provide relief to qualifying customers in the form of loan forgiveness and restructuring of debts. The other bank completely forgave the parties' debt on the HELOC. This litigation results from Robert's efforts to seek debt forgiveness and/or restructuring of the $3.4 million obligation to Bank of America which was secured by the property.

         In late September of 2012, the parties contracted to sell the property in a short sale for $2.4 million in a cash transaction scheduled to close within 30 days, contingent upon Bank of America's approval of the short sale. The parties were asked to sign a document that extended the period for the contingency to be satisfied to October 5, 2012. Sondra evidently perceived this as an opportunity to apply leverage to secure Robert's compliance with other terms of the PSA, and she sent him an email indicating that she would not extend the contingency until a number of demands were satisfied.

         On October 11, 2012, Robert responded to Sondra's demand by filing a complaint seeking contract damages and injunctive relief due to her failure to sign the extension agreement. Sondra signed the required document later the same day. In November of 2012, Sondra answered Robert's complaint and counterclaimed for breach of contract, an accounting relating to the parties' assets, and fraud. In that same month, the short sale fell through. This was through no fault of the parties; rather, Bank of America had failed to obtain a required appraisal.

         In February of 2013, the Kantors entered into a second agreement with the prospective purchasers to sell the property for $2.4 million. Although Bank of America initially approved this short sale in late March, whereby it would have waived a deficiency in excess of $1.4 million, on April 3, 2013, it revoked that approval because Robert was pursuing a loan modification that had potential to result in even more of the parties' debt being forgiven.[1]

         In March, Robert moved for partial summary judgment, seeking a declaration that Sondra had breached the PSA by failing to timely sign the extension document and dismissal of Sondra's counterclaims for breach of contract and fraud. Robert's motion was heard on June 24, 2013. The district court granted summary judgment dismissing Sondra's breach of contract (Count I) and fraud (Count III) counterclaims and held that Sondra was obligated to sign the short sale extension document. Robert had argued that the attorney fees he had incurred were damages resulting from Sondra's failure to sign the short sale extension. The district court then ruled:

So her not signing did not cause the contract -- and I want that underlined, did not cause contract damages. It did provoke a claim for fees, I'll rule on that, but that's a judge issue, it's not a jury issue, so this issue won't go to the jury. That's an issue for the Court to determine who the prevailing party is and whether someone gets fees under a contract, under the divorce contract, or by statute or for some other reason.

         On July 18, 2013, Robert moved for an award of attorney fees and costs totaling $19, 334.53 based upon the attorney fees provision of the PSA.

         This action then morphed into a dispute over Robert's efforts to obtain a loan modification from Bank of America. On August 7, 2013, the district court entered its order permitting Sondra to amend her counterclaim. On August 9, 2013, Sondra filed an amended answer and counterclaim alleging that, among other things, Sondra had been damaged by Robert's attempts to obtain a loan modification. The same day, both parties sought injunctive relief. Sondra asked the district court to prohibit Robert from further pursuit of the loan modification and to require him to participate in the short sale of the property. Robert asked that Sondra be prohibited "from contacting Bank of America regarding the current financing" of the property.

         The parties' respective motions for injunctive relief came before the court on September 12, 2013. There, Robert contended that a loan modification could reduce the parties' $3.4 million debt to $1.5 million. Three witnesses testified, including Sondra. She testified to her trepidation about pursuing the loan modification, expressing concern about letting Robert stay in the property indefinitely and the potential tax consequences of debt forgiveness. Following a recess, the parties announced a stipulation withdrawing their respective motions. Sondra agreed not to contact Bank of America in the four-month period before the scheduled trial, and Robert agreed to diligently pursue a loan modification from Bank of America. The Court entered an order consistent with the parties' stipulation on October 16, 2013.

         On October 9, 2013, Robert filed a Motion to Compel Recording of Quitclaim Deed in which he asked that Sondra be required to quitclaim her interest in the property to him. In his supporting affidavit, Robert asserted that Bank of America required that Sondra quitclaim her interest in the property "to complete their loan modification review." Sondra took prompt action to defeat the district court's ability to grant such relief. The next day, Sondra quitclaimed her interest in the property to her boyfriend, Al LaPeter, in exchange for $100 "subject to" the obligation to Bank of America.[2]

         On October 17, 2013, Sondra submitted the PSA to the magistrate court in the parties' divorce action and requested that it be incorporated in a supplemental judgment. Proceedings related to this motion gave rise to the companion case in Docket No. 42980.

         Robert's motion came before the district court for hearing on November 15, 2013. The district court stated: "What appears to me to be evident is that she has moved her interest away from herself in order to prevent the Court from ordering a transfer of the property to Mr. Kantor." The court then made it clear that it intended to exercise control over the parties to achieve an end that it perceived to be in the parties' best interests:

I've got a lot of cards that I can play in this. I can say that people that want to play, I can see how this works, and I can impose sanctions. I can throw out people's defenses. I can throw out their cases. I can award attorney's fees. I've got a lot of arrows, and I don't want to sling them at anyone. I want to try and get what's best for both parties.
I told [Sondra's attorney] in chambers, I said if this goes forward, because the parties were having a discussion about it, it is absolutely not going to harm --to the extent I can prevent it, it's not going to harm Mrs. Kantor. Any benefit that would flow to Mr. Kantor is going to flow half to her because that's the purpose of the order. Whether you call it an order of sale or a contract agreement to sell the property, whatever you call it, that's the purpose of it is to benefit both parties and to benefit them equally.

         The district court then observed: "I can't order Mr. LaPeter to quitclaim the property back to Mrs. Kantor, but I can order that to the extent possible she has to obtain the property from Mr. LaPeter, obtain a quitclaim deed, and record a quitclaim deed to Mr. Kantor." The district court entered an order to this effect on November 20, 2013.

         On November 18, 2013, Sondra delivered a quitclaim deed to Robert's attorney. This document was of little practical value in light of her earlier quitclaim deed to LaPeter. The same day, LaPeter sent an email to the parties' attorneys notifying them that he would not sign a deed to the property.

         On November 20, 2013, Robert filed a motion asking for an order that Sondra be declared in contempt for her actions which frustrated his ability to secure a loan modification and imposing civil sanctions. This motion resulted in a bizarre and disturbing response from the district court. On the same date, the district court sent a lengthy email to the lawyers for the parties and the judge assigned to the Kantors' divorce action. This email stated, in part:

So with the consent and stipulation of Sondra, Mr. Kantor has pursued a loan modification, which, if successful, would result in B of A simply reducing the loan balance, and the information presented to the court is that it would be in the neighborhood of $1M or possibly more. … Mr. Kantor has argued he is on the brink of a successful loan modification arrangement with B of A, and has sought a Quitclaim Deed from Sondra in order to accomplish this goal, for the apparent benefit of both parties. After he filed a motion with this Court requesting the Court order Sondra to quitclaim the property to Bob, on October 10 of 2013, despite the contractual agreement to sell the house, Sondra deeded the house to a friend/confidant/person she apparently has a close relationship with, one Al LaPeter. This, obviously, frustrates the contractual obligation of Sondra to sell, which would ordinarily simply result in a cause of action for money damages; however, in this context it has also (arguably) frustrated Mr. Kantor's ability to lower the debt, and sell the house, and also provide both Bob and Sondra Kantor a significant monetary gain. …
On November 15, after quite a bit of discussion in chambers, and some argument on the record, the Court entered an order directing Sondra to use her best efforts to re-obtain title from Al LaPeter and Quit Claim her interest in the property to Bob Kantor by 10am Monday November 18 so that Bob could pursue a loan modification. By doing so, the Court was hopeful it could alleviate Sondra's concerns regarding "bank fraud", and, despite Sondra's efforts to the contrary, fulfill all of the contract objectives and allow Sondra to achieve some economic benefit in the process. … The Court notes from an exhibit C attached to Mr. Kantor's affidavit (a letter from [Sondra's attorney]-who now represents both Sondra and Al LaPeter) that Mr. LaPeter wishes to inspect the Kantor residence as a tenant in common, requests unqualified access to the property, and that he intends to use the property in accordance with his rights as a property owner. …
I will tell you right now that I will not be party to a contempt proceeding, and why I have, or will, choose an alternate process. [Sondra's lawyer] knows full well I cannot get at Mr. LaPeter by contempt proceedings. Mr. LaPeter is not a party to the case, and he has not been ordered to do, or not do, anything. Likewise, Sondra Kantor has a built-in defense. She can argue that she begged and pleaded for Mr. LaPeter to QuitClaim his interest back to her, and that he has refused, and there is nothing the Court can do about it. She is probably right. There is no reason to proceed along contempt lines. In addition, it is clear to me that I am probably operating at the outer limits of my authority by even ordering Sondra Kantor to execute a quitclaim deed to Bob Kantor for purposes of a loan modification when the Court's jurisdiction over the property is tenuous at best, particularly when the PSA is not merged into the decree, (at least not yet.) I tried to make the contract workable, but I cannot if one party chooses to deliberately frustrate its objectives. … I wish the parties to know, in advance, exactly what I intend to do if Sondra and Mr. LaPeter choose to continue on the present course. Sondra Kantor chose to quitclaim the property to Mr. LaPeter, for whatever reasons. She also has a pending counterclaim. If she chooses to resist the Court's current order, either because she is unable to obtain title from Mr. LaPeter, or because she chooses not to execute a satisfactory quitclaim deed to Bob Kantor immediately, I will summarily dismiss her counterclaim. Summarily. I will not even await nor require a motion from Bob Kantor. … She will not be allowed to ignore the Court's order, either explicitly or implicitly, and maintain a counterclaim. It will be dismissed with prejudice, as a sanction, for the reasons set forth in this email, and Bob Kantor may apply for attorney fees as the prevailing party in the pending case against Sondra, and the case will be over. OVER!! …
Mr. Kantor could apply to the magistrate court for an order merging and incorporating the PSA into the decree of divorce. If that is accomplished, that court unquestionably has jurisdiction over the property, and is probably well within its authority to compel deeds between parties, regulate negotiation of the secured debt on the property, hold parties in contempt as necessary in order to enforce its orders….[3]

         (bold, italics, capitalization, "QuitClaim" in original).

         In short, the district court recognized that it had issued an order of dubious legality that could not be enforced by way of contempt, yet insisted that if it were not honored the district court would ...


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