United States District Court, D. Idaho
PINNACLE GREAT PLAINS OPERATING COMPANY, LLC., an Arkansas Limited Company, Plaintiff,
1 STOP REALTY, INC., a Minnesota corporation, Defendant.
MEMORANDUM DECISION AND ORDER
J. Lodge United States District Judge.
before the Court in the above entitled matter is Defendant 1
Stop Realty, Inc.'s (1 Stop Realty) Motion for Summary
Judgment. (Dkt. 81.) The matter is fully briefed and ripe for
this Court's consideration.
fully reviewed the record, the Court finds that the facts and
legal arguments are adequately presented in the briefs and
record. Accordingly, in the interest of avoiding further
delay, and because the Court conclusively finds that the
decisional process would not be significantly aided by oral
argument, this matter shall be decided on the record before
this Court without oral argument.
Court generally restates the factual background from the
Report and Recommendations, Dkts, 54 and 75. The Court notes
that based on settlement agreements that have been entered,
the only remaining claims are those between Plaintiff
Pinnacle Great Plains Operating Company, LLC (Pinnacle) and
Defendant 1 Stop Realty
litigation arises from Defendants Wynn Dewsnup Revocable
Trust and Wynn Dewsnup's (collectively referred to as
“Dewsnups”) October 2011 sale to Pinnacle of a 5,
487-acre parcel of agricultural land near Malta, Idaho, known
as “Bridge Farm.” Specifically, Pinnacle claims
the Dewsnups and Pinnacle's purported broker, 1 Stop
Realty, misrepresented the quality of the groundwater supply
for Bridge Farm's irrigation system.
Realty is a Minnesota corporation which holds brokerage
licenses and sells and purchases agricultural property. (Dkt.
62-2 at 8, 12.) 1 Stop Realty's officers include
President Kirk Swenson, and Vice President Roger Heller. In
addition to its officers, 1 Stop Realty employs an office
manager, an assistant, and a website technician. It has also
three sales associates who work as independent contractors. 1
Stop Realty operates out of two locations. The main office is
located in Kasson, Minnesota, and the other office is located
in Olivia, Minnesota. Swenson works from the Kasson office;
Heller works out of the Olivia office.
early 2010, 1 Stop Realty's client, Teays River
Investments, LLC, expressed interest in expanding into the
northwest United States and sought 1 Stop Realty's
services in its search for farmland in which to invest. (Dkt.
62-2 at 20.) Heller discovered Bridge Farm and began
preparing paperwork on the property to present to Teays.
of 2010, Heller and Swenson travelled to Idaho to tour Bridge
Farm. Afterward, Swenson sent an email informing Teays he had
visited Bridge Farm, and recommending moving forward by
submitting a letter of intent to purchase the property to the
Dewsnups. (Dkt. 64-2 at 16.) In the email, Swenson stated,
among other things: Bridge Farm “has really good water
with inexpensive pumping cost….Nice deal, good
water.” Id. Despite making this statement in
his email, Swenson clarified during his recent deposition
that, at the time he sent the email, 1 Stop Realty had not
yet investigated Bridge Farm's water quality. (Dkt. 62-2
2010, 1 Stop Realty continued to collect more information on
Bridge Farm for Teays. In late May of 2010, Garrett Dewsnup
emailed Pat Kelgen, Heller's assistant, five pages of
Bridge Farm water analysis lab results from the year 2003.
(Dkt. 64-2 at 2-7.) Kelgen forwarded the results to Heller
who then forwarded them to Swenson. The lab results indicate
“possible” and “significant” problems
with Bridge Farm's water. Id. Swenson admitted
in his deposition that he and Heller had discussed the 2003
lab results in 2010, and concluded that, given the out-dated
nature of the reports, Bridge Farm's water quality would
need to be re-tested during the due-diligence period prior to
Teays' purchase of the farm. (Dkt. 62-2 at 56.)
this same time period, Heller had been in communication with
Dewsnup's agronomist, Kyle Carpenter, who had worked on
Bridge Farm for several years, to discuss Bridge Farm's
soil and water quality. On June 28, 2010, Heller emailed
Swenson to inform him about his discussion with Carpenter.
Most of the soils are Genola which is Class IIe irrigated and
a good one. Some of the others take more careful management
as per the consultant.
(Dkt. 64-2 at 26.)
around July of 2010, Swenson gained the impression from Teays
that they did not want to move forward with the Bridge Farm
purchase for “scalability” reasons (i.e., Teays
was interested in a farm bigger than Bridge Farm). (Dkt. 64-2
at 27.) Once Teays lost interest in Bridge Farm, 1 Stop
Realty maintains its agents set aside and forgot about the
paperwork they had gathered on Bridge Farm.
December 29, 2010, Howard Halderman, the President and CEO of
Halderman Farm Management Services, emailed several real
estate brokers, including 1 Stop Realty's President
Swenson, about an investment opportunity for one of its
institutional clients- Pinnacle. Specifically, Pinnacle was
seeking farmland. The email addressed to Swenson did not
directly solicit him or 1 Stop Realty to act as
Pinnacle's broker in the potential acquisition of the
January 17, 2011, Swenson emailed Halderman to inform him
about the Bridge Farm property. In the email, Swenson
specified the price of the property and that Teays originally
passed on its purchase. On June 16, 2011, Garrett Dewsnup
sent 1 Stop Realty a lease proposal from one of the
Dewsnup's Bridge Farm tenants. The proposal noted:
“the farm has both soil and water borne salt
challenges.” (Dkt. 62-2 at 104.) When 1 Stop Realty
later forwarded this information to Pinnacle, two pages,
including the page which referenced Bridge Farm's
“salt challenges, ” were omitted.
is no dispute that 1 Stop Realty did not disclose the 2003
water analysis lab results to Pinnacle prior to
Pinnacle's purchase of Bridge Farm. Swenson explained
during his deposition that Pinnacle did not ask him or anyone
else from 1 Stop Realty to verify and reconcile the water
rights on Bridge Farm in 2011. (Dkt. 62-2 at 66.) He
indicated no advance funds were provided to 1 Stop Realty by
Pinnacle to pay for any due diligence items. Id.
October 14, 2011, Pinnacle purchased Bridge Farm from the
Dewsnups. The Dewsnups' broker in the sale was Robert
Jones Realty, Inc. It is unclear from the record who the real
estate brokerage representing Pinnacle was at closing on
Bridge Farm as the Court could not find the closing
statements in the record which would indicate which
brokerages received monies from the sale of Bridge Farm from
the Dewsnups and Pinnacle.
undisputed that Pinnacle paid a commission or some form of
compensation to 1 Stop Realty for its services related to
Bridge Farm. Pinnacle claims in this litigation that 1 Stop
Realty acted as its broker on the purchase. 1 Stop Realty
claims it was not Pinnacle's broker on the purchase but
acknowledges it was involved in the Bridge Farm transaction.
Swenson testified in his deposition 1 Stop Realty was more of
a “facilitator.” It is unclear from the record
before the Court exactly what Halderman Farm Management
Service's role was in the purchase or if another
brokerage was also involved in representing Pinnacle.
Second Amended Complaint alleges 1 Stop Realty was its real
estate broker in the transaction and it failed to disclose
“its knowledge of significant water quality issues on
the property.” (Dkt. 35 p.7). The Second Amended
Complaint alleges three specific causes of action against 1
Stop Realty. Count IV alleges 1 Stop Realty violated its
statutory duties as its real estate broker under the Idaho
Real Estate Brokerage Representation Act (Brokerage Act) by
failing to disclose and actively concealing adverse material
facts. Count 5 alleges 1 Stop Realty's alleged violation
of the Brokerage Act was negligence per se. Count VI
alleges 1 Stop Realty committed fraud when it allegedly
violated the Brokerage Act.
Realty argues that summary judgment should be granted in its
favor as the Brokerage Act is unenforceable against 1 Stop
Realty because: (1) 1 Stop Realty is not a brokerage as
defined in the statute; (2) there is no written broker's
agreement as required by the statute creating the requisite
relationship; (3) payment of a commission does not create the
requisite broker relationship; and (4) no duties were owed to