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Security Investor Fund LLC v. Crumb

Supreme Court of Idaho

May 23, 2019

SECURITY INVESTOR FUND LLC and SECURITY FINANCIAL FUND LLC, Plaintiffs-Appellants-Cross Respondents,
v.
BRIAN CRUMB, Defendant-Respondent-Cross-Appellant, and JENNIFER O'CALLAGHAN, BRIAN O'CALLAGHAN, JITINVEST LLC, SPIRIT ELEMENTS, INC., AND TODD A. REEVE, Defendants.

          Appeal from the District Court of the First Judicial District, State of Idaho, Kootenai County. Richard S. Christensen, District Judge.

         The judgment of the district court is affirmed in part, vacated and remanded in part.

          Bistline Law, PLLC, Coeur d'Alene, for appellant. Arthur M. Bistline argued.

          Murphey Law Office, PLLC, Coeur d'Alene, for respondent. Darrin L. Murphey argued.

          STEGNER, JUSTICE.

         In 2005, Brian Crumb, Frankie McFeron-Crumb, and Marian Crumb joined together with Richard Abbey and Keri Ann Abbey to form Abbey & Crumb Developments, LLC, for the purpose of developing an eighteen-lot subdivision near Post Falls, Idaho. Sometime in 2006, the LLC caused a road to be constructed, which was to serve as the entrance for the subdivision (the entrance road). The road was built on Brian and Frankie Crumb's land abutting the subdivision and, once constructed, was the only drivable road in and out of the subdivision.

         In September 2006, the Crumbs withdrew from the LLC. Shortly thereafter, the LLC defaulted on a loan from Security Investor Fund, LLC, and Security Financial Fund, LLC (collectively "Security"). Security then accepted deeds in lieu of foreclosure from the LLC and became an owner of certain lots within the subdivision. At some point in 2017, Brian Crumb took the position that certain subdivision lot owners did not have a right to use the entrance road on his adjoining property, as no applicable easements had ever been recorded. Security then initiated the underlying lawsuit in an effort to establish an easement to use the entrance road. The district court granted summary judgment to Brian Crumb and entered judgment in his favor dismissing Security's complaint. Security appeals from that judgment. Brian Crumb also appeals the district court's denial of his request for attorney fees and costs below and requests attorney fees on appeal.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         In 2003, Brian Crumb (Crumb) and his wife, Frankie McFeron-Crumb (Frankie), purchased a parcel of real property in Kootenai County (the adjacent Crumb property).[1] A few years later, on July 25, 2005, Crumb, Frankie, Crumb's mother, Marian Crumb (Marian), and Richard Abbey and Keri Ann Abbey (collectively "Abbeys"; the singular "Abbey" refers to Richard Abbey)[2] formed an LLC named Abbey & Crumb Developments, LLC (the LLC). The purpose of the LLC was to develop an eighteen-lot subdivision on 200 acres as depicted in the Second Amended Plat of Fritz Heath Forest Tracts (the subdivision).[3] The adjacent Crumb property is not located within the subdivision. However, the adjacent property adjoins the subdivision by sharing a common boundary. The Second Amended Plat depicts an access road through the subdivision that does not travel into the adjacent Crumb property.

         On September 23, 2005, Crumb met with the engineering firm Inland Northwest Consultants (INC) to discuss the design and construction of an access road into and through the subdivision. INC supplied a proposal for the job on September 26, 2005.

         On January 6, 2006, the LLC approved a Declaration of Covenants, Conditions and Restrictions for the subdivision (the CC&Rs), which were signed by Crumb, Frankie, Marian, and the Abbeys. (The CC&Rs was not recorded in Kootenai County until January 5, 2016, almost exactly ten years later.) The CC&Rs state the following: "The declarant[4] hereby reserves an easement for a private road through each lot to service continued lots in Fritz Heath Second Amended Forest tracts. The road easement on each lot is shown in Exhibit 'A' which is attached and incorporated herein." Although the nature and content of Exhibit "A" is contested, there is no dispute that it was not attached to nor was it recorded with the CC&Rs. Crumb contends the map that should have been attached to the CC&Rs would have shown the original road as depicted on the plat maps-a road not traveling through his property. In contrast, Abbey attached a dark and nearly unrecognizable map to his affidavit, claiming it is what should have been attached and recorded with the CC&Rs. Upon closer inspection, it can be seen that Abbey's map depicts the road later contemplated by INC that does run through the adjacent Crumb property. Abbey's map is undated.

         Also in 2006, INC advised the LLC that, due to the steep topography of the subdivision, it would be cheaper to construct a roadway through the adjacent Crumb property than to build it where originally depicted in the Second Amended Plat. As a result, INC designed a road to that effect called Monument Ridge Drive (the entrance road). Two maps of the entrance road are dated July 14, 2006, and were stamped for approval by the Kootenai County Building and Planning Department on July 21, 2006.[5] With the entrance road designed, the LLC applied for a building permit to construct it through the adjoining Crumb property. The application was apparently approved by Kootenai County on July 21, 2006.

         The dispute in this case regards a potential easement over the entrance road constructed on the adjoining Crumb property. It appears that sometime in 2006 there was, at least initially, an oral agreement allowing the road to be built and people to drive over it: Abbey claimed that the Crumbs "expressly agreed" that the entrance road would be constructed on the adjoining Crumb property and that the road would be used by all the subdivision lot owners as the permanent, perpetual access to all of the subdivision lots. Crumb claimed that he made an offer to Abbey and the LLC that he would grant easements over the adjacent Crumb property to all of the lot owners within the subdivision for the payment of $200, 000 from the LLC. (There is nothing in this record to suggest Abbey rejected Crumb's offer; however, Security challenges Crumb's claim and therefore the underlying offer.) Crumb contends the offer was accepted by the LLC and stated that the LLC and he "verbally agreed that upon the receipt of payment in the amount of $200, 000" he "would grant easements to the lots in the" subdivision. It is undisputed that the LLC has not paid Crumb for any easements.

         Construction of the road on the adjacent Crumb property began while Crumb, his wife, and his mother were still members of the LLC. Abbey claimed that he and Crumb personally worked on clearing trees for the entrance road on the adjacent Crumb property.

         On September 26, 2006, after the alleged, initial oral agreement, all three Crumbs withdrew from the LLC. For their stake in the LLC, the LLC reconveyed certain lots from the subdivisions to the Crumbs. All five members of the LLC signed a withdrawal agreement to that effect. The withdrawal agreement also stated,

ROADS AND UTILITIES T0 FRITZ FOREST: The parties agree that it will be the obligation and responsibility of the LLC to complete the road building work and to provide ingress and egress . . . to each lot . . .
ENTIRE AGREEMENT OF THE PARTIES: It is agreed, this is the entire agreement of the parties, and any amendment or additions to the Agreement must be in written form similar in form to this Agreement, with all parties signing said Amendment.

         The entrance road was not finished or drivable when the Crumbs withdrew from the LLC. Sometime thereafter, however, the first section of the entrance road was completed and made passable into the subdivision through the adjoining Crumb property. Construction of the entrance road completely destroyed the old road depicted on the plats. The entrance road has been completed through the adjacent Crumb property and through at least the five northern lots of the subdivision. The LLC spent approximately $45, 000 constructing the entrance road.

         Sometime after the Crumbs withdrew from the LLC, the LLC defaulted on a debt owed to Security Financial Fund, LLC, and Security Investor Fund, LLC. Eventually, Security accepted deeds in lieu of foreclosure rather than foreclosing on the LLC's property that was held as collateral. Although the specific details are not in the record, Security then became an owner of certain lots in the subdivision. No easements on Crumb's property were recorded when Security lent money to the LLC or when Security accepted the deeds. Nevertheless, Security claimed it reasonably believed it had legal access to its lots through the entrance road over the adjacent Crumb property.

         In 2017, Crumb informed Kootenai County that certain subdivision lot owners did not have easements to cross his property. Consequently, Security filed its lawsuit on July 19, 2017.

         In its verified complaint, Security alleged that Crumb committed a breach of contract and fraud, and asked for a declaratory judgment establishing an easement over Crumb's property. Security's complaint listed four additional subdivision lot owners as defendants (as they own the four lots between Security's lots and the adjoining Crumb property, upon which the entrance road travels) and requested a declaratory judgment establishing an easement over those properties as well. Crumb was the only defendant to answer and requested Security's complaint against Crumb be dismissed with prejudice. (Likewise, Crumb is the only named defendant involved in this appeal.) Neither party demanded a jury trial.

         After cross motions for summary judgment, the district court issued a memorandum decision denying Security's motion and granting Crumb's. On January 19, 2018, the district court entered a judgment dismissing Security's complaint with prejudice. On February 1, 2018, Security moved the court to reconsider its summary judgment decision. On February 22, 2018, the court filed a memorandum decision denying Security's motion to reconsider (reconsideration decision). Security timely appealed.

         II. STANDARD OF REVIEW

         This Court employs the same standard as the district court when reviewing rulings on summary judgment motions. La Bella Vita, LLC v. Shuler, 158 Idaho 799, 805, 353 P.3d 420, 426 (2015) (citing Wesco Autobody Supply, Inc. v. Ernest,149 Idaho 881, 890, 243 P.3d 1069, 1078 (2010)). "The fact that the parties have filed cross-motions for summary judgment does not change the applicable standard of review." Tiller White, LLC v. Canyon Outdoor Media, LLC, 160 Idaho 417, 419, 374 P.3d 580, 582 (2016) (quoting Shawver v. Huckleberry Estates, L.L.C., 140 Idaho 354, 360, 93 P.3d 685, 691 (2004)). "The court must grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." I.R.C.P. 56(a). "The fact that both parties move for summary judgment does ...


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