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Lincoln Land Co., LLC v. LP Broadband, Inc.

Supreme Court of Idaho

December 26, 2017

LINCOLN LAND COMPANY, LLC, an Idaho limited liability company, Plaintiff-Appellant-Cross Respondent,
LP BROADBAND, INC., a Colorado corporation, successor by merger to MicroServ, Inc., an Idaho corporation, Defendant-Respondent-Cross Appellant. LP BROADBAND, INC., Third Party Plaintiff-Respondent,
GENERAL MILLS, INC. and GENERAL MILLS OPERATIONS, LLC, Third Party Defendants-Respondents.

         2017 Opinion No. 135

         Appeal from the District Court of the Seventh Judicial District of the State of Idaho, Bonneville County. Hon. Dane H. Watkins, Jr., District Judge.

         The district court's judgment is affirmed. Costs on appeal are awarded to respondent.

          Fuller & Beck Law Offices, PLLC, Idaho Falls, for appellant Lincoln Land Company, LLC. Mark R. Fuller argued.

          Swafford Law, P.C., Idaho Falls for respondent/cross-appellant LP Broadband. Larren K. Covert argued.

          Givens Pursley, LLP, Boise, for respondents/cross-appellants General Mills. Alexander P. McLaughlin argued.

          JONES, J.

         I. Nature of the Case

         In a case arising out of Bonneville County, Lincoln Land Company, LLC ("Lincoln Land"), appeals a district court's judgment, which dismissed Lincoln Land's complaint. LP Broadband cross-appeals the district court's denial of LP Broadband's motion for attorney fees.

         The dispute arose over LP Broadband's placement and use of antenna equipment on the rooftop of a grain silo that is owned by Lincoln Land, but leased to General Mills. General Mills had allowed MicroServ Computer Technologies, Inc., ("MicroServ") (which merged with LP Broadband in 2013) to utilize the rooftop space on the property since March 2000, in exchange for $50 per month. Lincoln Land subsequently purchased the grain silos and, in 2010, executed a lease agreement with General Mills, which specifically prohibited a sublease of the property without prior written consent from Lincoln Land. Notwithstanding the lease provision, General Mills continued to sublease the rooftop space to LP Broadband. Upon discovering that LP Broadband was using the rooftop space, Lincoln Land filed a complaint against LP Broadband for unjust enrichment. Therein, Lincoln Land argued that it had conferred a benefit to LP Broadband and that it would be inequitable for LP Broadband to retain such a benefit without compensating Lincoln Land. The district court dismissed the complaint after concluding that Lincoln Land failed to establish that it-not General Mills-had conferred the benefit to LP Broadband.

         II. Factual and Procedural Background

         In March 2000, MicroServ and General Mills entered into an agreement that permitted MicroServ to utilize grain silo rooftop space for $50 per month (the "Rooftop Agreement"). At the time, the grain silos were owned by Evan's Grain and Elevator Company but leased to General Mills. The Rooftop Agreement allowed MicroServ to use the rooftop of the grain elevators for a period of no less than three years, and up to five years with annual renewals after the first three years.

         In March 2006, Lincoln Land purchased the property from Evan's Grain and Elevator Company. In June 2010, Lincoln Land leased the property and elevators to General Mills. The lease agreement prohibited General Mills from subletting the property without prior written consent from Lincoln Land. Despite the lease provision, MicroServ, and subsequently LP Broadband, [1] utilized the rooftops between July 2010 and April 2014 without Lincoln Land's knowledge or consent. LP Broadband made monthly rental payments to General Mills.

         After learning of LP Broadband's use of the rooftops, Lincoln Land filed a complaint alleging that LP Broadband had been unjustly enriched through its use of Lincoln Land's property. LP Broadband filed a third-party complaint against General Mills seeking indemnification.

         Subsequently, Lincoln Land moved for partial summary judgment on its unjust enrichment claim with the amount of unjust enrichment to be determined at trial. LP Broadband filed its own motion for summary judgment arguing that Lincoln Land could not make out a prima facie case for unjust enrichment because it was General Mills-not Lincoln Land- that conferred the benefit.

         After a hearing, the district court entered its memorandum decision and order wherein it: (1) granted LP Broadband's motion for summary judgment; and (2) dismissed Lincoln Land's complaint. The district court concluded that it was General Mills-not Lincoln Land-that conferred the benefit by granting LP Broadband permission to use the rooftop. The district court reasoned that "[i]f, as Lincoln Land argues, General Mills' decision to permit LP Broadband to use the rooftop was in violation of the Lease Agreement . . . . Such a mistake or alleged breach of contract does not alter the fact that it was General Mills, not Lincoln Land, which conferred the benefit." The district court acknowledged that Lincoln Land supported the allegation that the lease between General Mills and LP Broadband was below market value, but ultimately held that "[b]ecause the benefit was conferred by General Mills and not by Lincoln Land, this [c]ourt need not consider whether the lease payment was below market value." Further, the district court held that, because it granted summary judgment dismissing Lincoln Land's complaint, it did not need to consider LP Broadband's request for indemnification.[2]

         LP Broadband then filed a motion requesting attorney fees, which the district court denied. First, the district court held that attorney fees pursuant to Idaho Code section 12-120(3) were not appropriate because a commercial transaction never occurred between Lincoln Land and LP Broadband (the district court found that the commercial transaction actually occurred between General Mills and LP Broadband). Second, the district court held that attorney fees were not appropriate under Idaho Code section 12-121 because Lincoln Land's claim was not frivolous, unreasonable, or without foundation, i.e., General Mills did not have the authority to sublease the rooftop space to LP Broadband, and Lincoln Land provided evidence that supported its claim that the sublease was below market value. Third, the district court held that LP Broadband could not recover attorney fees under Idaho Code section 12-123 because Lincoln Land's arguments were supported by a good faith argument for an extension of existing law. The district court awarded LP Broadband $136.00 in costs for its initial appearance fee, but declined to award any discretionary costs pursuant to Idaho Rule of Civil Procedure 54(d)(1)(D).

         Lincoln Land timely appealed the district court's dismissal of its complaint. LP Broadband filed a timely cross-appeal of the district court's denial of attorney fees.

         III. Issues on Appeal

         1. Whether the district court erred by finding that Lincoln Land did not ...

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