Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Valiant Idaho LLC v. VP Inc.

Supreme Court of Idaho

November 1, 2018

VALIANT IDAHO, LLC, an Idaho limited liability company, Third Party Plaintiff-Cross Claimant-Respondent,
v.
VP INCORPORATED, an Idaho corporation, Defendant-Cross Defendant-Appellant.

          Appeal from the district court of the First Judicial District of the State of Idaho, Bonner County. Hon. Barbara A. Buchanan, District Judge.

         The judgment of the district court is affirmed, except as to the issue of discretionary costs, which issue is vacated and remanded for further action consistent with this Opinion.

          James, Vernon & Weeks, P.A., Coeur d'Alene, attorneys for appellant. Susan P. Weeks argued.

          McConnell, Wagner, Sykes & Stacey, PLLC, Boise, attorneys for respondent. Richard L. Stacey argued.

          BEVAN, Justice.

         This is an appeal of a complex real estate foreclosure and lien priority lawsuit. The appellant VP Inc. ("VP") claims that the district court erred in multiple ways and that this case should be remanded for further proceedings. We affirm in part and vacate and remand in part.

         I. FACTS AND PROCEDURE

         This appeal arises from a failed golf course development project in Bonner County known as "The Idaho Club" undertaken by Pend Oreille Bonner Development, LLC ("POBD"). POBD took out several loans to finance the development of The Idaho Club and subsequently defaulted on them, failed to pay mechanics and materialmen for their services, and failed to pay Bonner County real property taxes.

         On October 13, 2009, Genesis Golf Builders, Inc. ("Genesis Golf") filed a complaint, in part alleging breach of contract and seeking to foreclose on its mechanic's and materialman's liens against POBD's property interest in The Idaho Club. In its complaint, Genesis Golf also named seventeen other individuals and entities as defendants that may have had property interests in The Idaho Club-which included VP. Cross-claims and counterclaims were alleged by several defendants.

         During this litigation, three lending companies, R.E. Loans, LLC ("REL"), Pensco Trust Co. ("Pensco") and Mortgage Fund '08 ("MF08") (the "three lenders") assigned and/or sold all of their right, title, and interest in their three loans with POBD to Valiant Idaho, LLC ("Valiant"). The loans were secured by three mortgages (collectively the "Valiant Mortgages") that provided parcels of The Idaho Club as collateral. VP had an interest in certain lots containing water and sewer infrastructure (the lagoon lots and the well lots) and it held utility easements for the same. VP obtained its interest in The Idaho Club from quitclaim deeds to four parcels and an alleged equitable servitude and prescriptive easements.

         When Valiant purchased the REL mortgage and the Pensco mortgage, property taxes for tax years 2008-2014 were unpaid and outstanding against the real property securing the loans. Valiant redeemed the real property subject to Bonner County's tax deeds by paying the outstanding property taxes on The Idaho Club, and in exchange received and recorded a redemption deed in Bonner County. Valiant subsequently filed motions for substitution, allowing it to be substituted as the real party in interest for the three lenders. Valiant later amended its answer and filed a counterclaim, cross-claims, and a third-party complaint for judicial foreclosure against POBD, VP, and others.

         On November 19, 2014, POBD stipulated to entry of judgment against itself. POBD stipulated that it owed certain balances on the REL debt, the Pensco debt, and the MF08 debt. It also stipulated that Valiant had paid property taxes.

         On January 20, 2015, Valiant filed its first motion for partial summary judgment against VP and two other defendants JV, LLC ("JV") and North Idaho Resorts, LLC ("NIR"), seeking a ruling that its assigned mortgages had priority over any other defendant's property interest in The Idaho Club and seeking "a judgment that Valiant's interest in a portion of the Idaho Club property described in a redemption deed is senior to any right, title and interest of" VP. In response, VP filed the affidavit of Richard Villelli, VP's president, along with a memorandum in opposition. VP claimed that summary judgment was not appropriate for three reasons: (1) one of its parcels was not encumbered by the MF08 mortgage; (2) VP had prescriptive easement rights stemming from its infrastructure for the prescriptive period; and (3) VP had an equitable servitude upon the lots where its sewer lagoon, water systems, and pumping stations were located.

         On April 14, 2015, the district court granted Valiant's motion for summary judgment, ruling that VP's interests were junior to the Valiant Mortgages as a matter of law and that the amount Valiant paid to redeem the property could be included with the amount due under the 2007 REL note. On April 29, 2015, VP filed its first motion for reconsideration without a supporting memorandum. This motion was never noticed for hearing. Valiant then filed what it deemed a "motion for entry of final judgment" on May 20, 2015, which requested that the district court: (1) make a determination of the real property described in the Valiant Mortgages and redemption deed; and (2) enter a judgment allowing foreclosure and sale of the encumbered property. This motion was filed and served more than 28 days before the hearing, so the court treated the motion as a second motion for summary judgment. The motion was accompanied by the declaration of C. Dean Shafer ("Shafer"), who was Valiant's title expert.

         On June 16, 2015, the day before the hearing on Valiant's motion for entry of final judgment, VP filed a second motion for reconsideration, entitled "renewed motion for reconsideration and clarification." VP's second motion to reconsider was unsupported by additional evidence or testimony. VP filed no opposition to the motion for entry of final judgment, nor did it dispute the accuracy of Mr. Shafer's declaration. Yet at the hearing on Valiant's motion, VP argued that the motion was unfairly prejudicial. VP argued that Valiant had not proved sufficient foundation to foreclose upon the real property described in Valiant's original motion for partial summary judgment. It also asserted that Valiant did not assert priority over VP's alleged prescriptive easements and equitable servitude.

         On June 23, 2015, the district court entered its memorandum decision and order granting Valiant's motion for entry of final judgment. The district court held that

VP failed to file any briefs or affidavits in opposition to Valiant's motion for entry of final judgment, as required by Rule 7(b)(3)(B) and (E). If the defendants wanted to dispute the legal description set forth in the Declaration of C. Dean Shafer, the proper mechanism was to file an opposing affidavit setting forth facts to the contrary. Having failed to do so, the Declaration of C. Dean Shafer stands on the record uncontroverted as to the issue of the proper legal description.

         On July 21, 2015, the district court entered a memorandum decision and order denying VP's two motions to reconsider. In that memorandum the district court held:

To date, Mr. Shafer's testimony in the Shafer Declaration establishing which properties Valiant has priority and seeks to foreclose still remains uncontroverted. This [c]ourt has not received any opposing affidavit specifically controverting the legal description put into evidence by the Shafer Declaration.

         The court also noted in a footnote that "[i]f the defendants wanted to dispute the legal description set forth in the Declaration of [Mr.] Shafer, the proper mechanism was to file an opposing affidavit setting forth facts to the contrary. Having failed to do so, the Declaration of [Mr.] Shafer stands on the record uncontroverted as to the issue of the proper legal description." The court also held that VP's claims for prescriptive easements and an equitable servitude did not survive summary judgment because VP failed to present sufficient evidence to establish a genuine issue of material fact as to those claims.

         On July 22, 2015, Valiant filed a motion for order of sale of real property seeking to have the parcels encumbered by the Valiant mortgages sold together at the foreclosure sale and asking the court to determine the order in which the lots/parcels should be sold. This motion included a second Shafer declaration. The court granted Valiant partial relief. Valiant then moved to alter or amend the district court's order for sale which included a third Shafer declaration. VP responded that Shafer's third declaration created issues of fact about which real property was encumbered by the Valiant Mortgages.

         On July 30, 2015, another defendant, JV, filed one more motion to reconsider the district court's order denying VP's second motion to reconsider. On August 4, 2015, VP introduced another declaration of Richard Villelli in opposition to the order of sale. On August 19, 2015, VP filed its third motion to reconsider, dubbed "North Idaho Resorts, LLC and VP, Inc.'s motion to reconsider and motion to alter and amend judgment." This motion argued that VP's alleged prescriptive easements and equitable servitude survived summary judgment because its opposition to the motion for partial summary judgment raised genuine issues for trial. The third motion to reconsider challenged no aspect of the final judgment order nor did it include any additional testimony.

         On September 4, 2015, the district court granted JV's motion to reconsider, which nullified the court's prior decisions respecting the description of the real property subject to the Valiant Mortgages. The court held there was "a genuine issue of material fact as to the legal description based upon Mr. Shafer's altered opinion. . . ." The court cautioned the defendants, however, that "if they will be disputing the accuracy of Mr. Shafer's legal description, they must comply fully with expert witness disclosure requirements." The court's order effectively nullified the district court's prior decisions respecting the description of the real property subject to the Valiant Mortgages. The court's order also specified that the "July 21st memorandum decision [is] affirmed in all other respects."

         Valiant then filed a third motion for summary judgment on September 25, 2015, regarding the legal description of the property that secured its assigned mortgages. Valiant argued that Shafer's third declaration merely clarified his prior declarations regarding the legal description without altering it. VP responded that the motion for summary judgment should be denied because the Shafer declaration: (1) contradicted the prior declarations that had been made by Shafer; and (2) that Shafer's description did not match the legal description in the Valiant Mortgages.

         The hearings for VP's third motion for reconsideration and Valiant's third motion for summary judgment were held on October 23, 2015. The district court denied VP's third motion to reconsider and granted Valiant's third motion for summary judgment regarding the legal description of the property because Mr. Shafer's testimony remained uncontroverted. The court also affirmed the outcome of its July 21 ruling on grounds different than those originally stated in the July 21st memorandum decision and order. The court found no issue of fact and that VP's claims of equitable servitude and prescriptive easements were "junior to Valiant's interest in the subject properties."

         The only substantive issue that survived the district court's multiple summary judgment orders was whether POBD had satisfied the promissory notes secured by the Valiant Mortgages. After a four-day court trial on that issue, the district court found that the promissory notes were not satisfied. On July 20, 2016, the court entered its judgment awarding Valiant damages against POBD in the amount of $21, 485, 212.26, for the unpaid amount of the Valiant Mortgages. VP does not appeal this decision. The judgment also declared that the Valiant Mortgages were prior in right, title, and interest to any interest claimed by VP. Section 2(aa) of the court's foreclosure decree included the following language taken from the Valiant Mortgages:

Pursuant to the Valiant Mortgages, should POBD or its successor or assigns be in possession of or occupy any portion of the Idaho Club Property or improvements thereon at the time of the foreclosure sale, and should said occupant fail to deliver possession of said Parcel(s) to Valiant, said occupant shall immediately become the tenant of the purchaser at such sale, which tenancy shall be a tenancy from day-to-day, terminable at the will of the landlord, at a rental per day based upon the value of the Parcel and improvement, such rental to be due daily to the purchaser.

         VP was provided a copy of the foreclosure decree before its entry and it did not object to the language in it before its execution. Even so, VP now challenges the validity of Section (aa) of the decree of foreclosure on appeal.

         On August 22, 2016, Valiant was also awarded $15, 554.88 in costs against VP- $12, 174.26 of which were discretionary costs. VP appeals the award of costs on the same basis as its co-defendant NIR. See Valiant Idaho, LLC v. North Idaho Resorts, LLC, No. 44583, 2018 WL 4927560, at *1 (Idaho Oct. 11, 2018) ("North Idaho Resorts").

         VP did not post a supersedeas bond or other security to prevent Valiant from executing upon the judgment. Thus, the sheriff's sale took place on November 7, 2016. Valiant purchased 155 of the parcels by credit bid. A third party purchased one parcel. The parcels purchased by Valiant included "Parcel 1" and "Parcel 2," on which VP held junior claims that had been foreclosed. Valiant refers to these parcels as the "Water/Sewer parcels." Valiant presented certificates of sale for these parcels to VP and requested an inspection of the improvements and infrastructure affixed to these parcels, as they were under VP's operation and control at the time. VP responded that it was unaware of anything in the foreclosure decree entitling Valiant to an inspection, and otherwise ignored the request.

         In response, Valiant sent two letters to VP, demanding that VP vacate the premises in accordance with the foreclosure decree or Valiant would seek a writ of assistance from the court. Since this case was on appeal by then, Valiant moved to enforce judgment under Idaho Appellate Rule 13(b)(10) and 13(b)(13). The motion sought a writ of ejectment and/or assistance ejecting VP from the Water/Sewer parcels in accordance with the foreclosure decree. VP opposed the motion, asserting that Valiant had to bring a separate action to evict VP from the properties.

         On March 6, 2017, the district court granted Valiant's request. The writ of assistance ordered the Sheriff to eject and remove VP from using, holding, or detaining all fixtures, appurtenances, and improvements associated with the Water/Sewer parcels. VP did not appeal the writ of assistance.

         On March 7, 2017, VP filed a motion for an order allowing use and access to Parcels 1 and 2 and to stay the enforcement order. The motion sought to stay enforcement of the writ of assistance to allow VP limited use and access to the Water/Sewer parcels to maintain water and sewer services pending the outcome of the appeal. VP claimed that unless its motion was granted, "nearly two hundred (200) residents, as well as the patrons and employees of the golf course would be without water and sewer services, including fire protection." On March 17, 2017, the Bonner County Sheriff's Department ejected VP from all sewer facilities located on Parcels 1 and 2. However, Valiant did not eject VP from any of the water facilities, but it reserved its right to eject VP from the water facilities until certain construction was completed.

         Valiant formally responded to VP's motion on April 11, 2017. Valiant noted that it had already undertaken operation of the sewer system. Valiant's managing member testified that it had not and would not eject VP from the water facilities on Parcels 1 and 2 until it had drilled its own wells and constructed any infrastructure necessary to ensure VP's ejectment would not cause an interruption in essential water services.

         Despite Valiant's assurances, on April 12, 2017, VP shut off water services to The Idaho Club and to 40 third-party homeowners residing within it. Valiant responded with a motion for a temporary restraining order ("TRO") and preliminary injunction against VP the next day. The motion sought to require VP to continue providing water services until Valiant had drilled its own wells and could provide water services on its own. The district court immediately granted the TRO and set a hearing on the motion for a preliminary injunction.

         On April 13, 2017, VP moved to dissolve the TRO. On April 28, 2017, the district court entered its order granting an injunction. The injunction required VP to continue providing water services to all real property serviced thereby until Valiant had drilled its wells and constructed infrastructure necessary to provide water services without the use of the VP wells. The injunction also required Valiant to continue providing sewer services to all real property serviced thereby until VP had constructed infrastructure necessary to provide sewer services to a neighboring development without use of Valiant's sewer lagoon and associated infrastructure. The injunction remains in effect and VP appeals the district court's entry of the TRO and injunction.

         II. ISSUES ON APPEAL

         A. Did the district court err in granting summary judgment against VP and adjudging Valiant took free and clear of any right VP claimed for the right to maintain and operate its water and sewer system within the foreclosed lots in The Idaho Club?

         B. Did the district court err in declaring the rights and relationships of unknown purchasers at foreclosure without any case or controversy before the district court upon which to enter a declaratory judgment on these issues?

         C. Did the district court err by granting a post-judgment temporary restraining order followed by a preliminary injunction against VP?

         D. Did the district court err in its cost award against VP?

         III. STANDARD OF REVIEW

When this Court reviews a district court's ruling on a motion for summary judgment, it employs the same standard properly employed by the district court when originally ruling on the motion. Summary judgment is proper when there is no genuine issue of material fact and the only remaining questions are questions of law. This Court liberally construes all disputed facts in favor of the nonmoving party and draws all reasonable inferences and conclusions supported by the record in favor of the party opposing the motion.

Chandler v. Hayden, 147 Idaho 765, 768, 215 P.3d 485, 488 (2009) (citations omitted). "When an action will be tried before a court without a jury, the court may, in ruling on the motions for summary judgment, draw probable inferences arising from the undisputed evidentiary facts." Losee v. Idaho Co., 148 Idaho 219, 222, 220 P.3d 575, 578 (2009) (citations omitted). Only conflicting facts must be viewed in favor of a non-moving party. Id. "When this Court reviews the denial of a motion for reconsideration following the grant of summary judgment, this Court must determine whether the evidence presented a genuine issue of material fact to defeat summary judgment." Wickel v. Chamberlain, 159 Idaho 532, 537, 363 P.3d 854, 859 (2015) (citation and quotation marks omitted).

         Questions that are presented to the discretion of a trial court require application of the standard four-part test to this Court's analysis. That is, "whether the trial court: (1) correctly perceived the issue as one of discretion; (2) acted within the outer boundaries of its discretion; (3) acted consistently with the legal standards applicable to the specific choices available to it; and (4) reached its decision by the exercise of reason." Lunneborg v. My Fun Life, 163 Idaho 856, 863, 421 P.3d 187, 194 (2018).

         IV. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.