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Phillips v. Gomez

Supreme Court of Idaho

November 8, 2017

TODD J. PHILLIPS, in his capacity as Trustee of Trust "A" of the Elliott Family Testamentary Trust, Plaintiff-Appellant,
v.
RICHARD D. GOMEZ, Defendant-Respondent.

         2017 Opinion No. 113

         Appeal from the District Court of the Fourth Judicial District, State of Idaho, Ada County. Hon. Deborah A. Bail, District Judge.

         District court denial of request to recover actual damages, affirmed.

          Nicholas Law Offices, Boise, for appellant. Charles J. Nicholas argued.

          Fisher Law Office, PLLC, Meridian, for respondent. Steven Fisher argued.

          BURDICK, Chief Justice.

         This case arises from Richard Gomez's breach of a real estate agreement for the sale and purchase of residential real estate from Todd Phillips in his capacity as Trustee of Trust "A" of the Elliott Family Trust. Phillips appeals the Ada County district court's denial of Phillips's request to recover actual damages. After a bench trial, the district court held that Phillips's claim for breach of contract had been fully satisfied by Phillips's retention of the non-refundable earnest money as liquidated damages as provided by the agreement. We affirm.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Todd J. Phillips, Appellant, is the trustee of Trust "A" of the Elliott Family Trust ("Trust"). In the spring of 2008, Phillips listed the Trust's real property (located at 1372 W. Wickshire Ct., Eagle, Idaho) for sale with a real estate agency. In the fall of 2008, Richard Gomez, Respondent, submitted several offers to purchase the property. The second offer, with amendments, was accepted on October 30, 2008.

         The agreement was set forth in several documents, [1] the first being the RE-21 Real Estate Purchase and Sale Agreement ("RE-21"), which provided for the deal to be as follows: The sale of the described real property was to be for $660, 000. With $66, 000 earnest money to be deposited into the listing broker's trust account to be applied to the purchase price at closing, or, in the event Gomez could not close, Phillips would have the option of accepting the earnest money as liquidated damages, which would be Phillips's sole and exclusive remedy, or pursuing any other legal right or remedy.

         The remaining documents in the agreement were amendments to RE-21. The amendments provided that the earnest money deposit of $66, 000 was to be non-refundable following the inspection of the property and Gomez's attorney's review and acceptance of the contract documents. Gomez was to take possession of the house promptly after the deal was accepted under the terms of a Residential Lease, but the sale was not required to close until December 15, 2009, about a year after Gomez took possession.

         When the agreement was accepted by both parties, Gomez paid the $66, 000 non-refundable earnest money into the broker's trust account, and Gomez moved into the property under the Residential Lease provisions. The entire $66, 000 was released from the broker's trust account and paid to Phillips, with a portion ($3, 960) going to the real estate agent's commission, and the balance ($62, 040) going to Phillips. The release of the earnest money was without restriction.

         Around December 1, 2009, Gomez advised Phillips that he would not be able to close on time, and the parties began negotiating. Those negotiations resulted in Addendum #2 under which Phillips agreed to carry a $100, 000 note from Gomez, with closing still set for December 15, 2009. On the day of closing, Gomez emailed Phillips explaining that due to the "drop in the value of the home, the real estate market and the lending crunch" he was unable to close on the loan for the property in time.

         In January 2010, an agreement was reached for Gomez to remain in possession of the property under a month-to-month rental agreement. Gomez remained in possession until approximately May 31, 2010, thirty days after Gomez gave written notice to Phillips that he would be vacating the property. Gomez vacated the premises in a timely manner without incident.

         On February 4, 2010, Phillips sent Gomez a letter demanding that Gomez perform under RE-21 or Phillips would pursue a claim against Gomez for any deficiency after the house re-sold. Gomez did not respond. Phillips relisted the property for sale in the spring of 2010. An appraisal was obtained indicating the value of the property in the spring of 2010 to be $540, 000. In June 2010, Phillips received and accepted an offer to sell the property to an unrelated third party for $530, 000. The sale closed on June 21, 2010, with a purchase price of $527, 500.

         On August 13, 2012, Phillips sent Gomez another letter demanding payment for the lost "benefit of the bargain" damages sustained as a result of Gomez's failure to purchase the property as agreed. Phillips sought the difference between the proceeds of the sale ($527, 500) and the price agreed upon by Gomez ($660, 000), less the earnest money received ($62, 040- $66, 000 minus the $3, 960 commission), for a total damage claim of $70, 460 plus interest. Gomez did not respond and did not pay any of the amounts claimed in the demand.

         On November 6, 2013, Phillips filed his complaint against Gomez for breach of contract. Phillips claimed damages in the amount of $60, 143.66 after giving Gomez credit for the $66, 000 earnest money.[2] The case was tried as a bench trial on September 1, 2015. On September 23, 2015, the district court entered its judgment in favor of Gomez and against Phillips.

         On September 6, 2016, this Court entered its order dismissing the appeal without prejudice because this Court did not timely receive a copy of a final judgment that conformed with Idaho Rule of Civil Procedure 54(a). On October 6, 2016, this Court dismissed Docket #43678 without prejudice because the conforming judgment was not timely entered. On October 7, 2016, Phillips filed his second notice of appeal, which initiated the instant appeal, and, pursuant to this Court's November 9, 2016, order augmenting the prior appeal, this matter came before the Court.

         II. ISSUES ON APPEAL

         1. Did Phillips pre-elect the earnest money as liquidated damages when the parties contracted to make the earnest money non-refundable and immediately transferrable to Phillips's account without restrictions?

         2. Did the language in the agreement give Phillips the option of accepting the non-refundable earnest money and pursuing actual damages?

         3. Is either party entitled to attorney fees on appeal?

         III. STANDARD OF REVIEW

         "[T]his Court exercises free review over the district court's conclusions of law." Opportunity, LLC v. Ossewarde, 136 Idaho 602, 605, 38 P.3d 1258, 1261 (2002) (citing J.R. Simplot Co. v. W. Heritage Ins. Co., 132 Idaho 582, 584, 977 P.2d 196, 198 (1999)). "The standard of review of a non-jury trial court's findings of fact is set forth in Idaho Rule of Civil Procedure 52(a)." Id. (citing I.R.C.P. 52(a)). Idaho Rule of Civil Procedure 52(a) provides in pertinent part:

In all actions tried upon the facts without a jury . . . the court shall find the facts specifically and state separately its conclusions of law thereon and direct the entry of the appropriate judgment. Findings of fact shall not be set aside unless clearly erroneous. In application of this principle regard shall be given to the special opportunity of ...

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