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McGimpsey v. D&L Ventures, Inc.

Supreme Court of Idaho

June 13, 2019

PHILIP P. MCGIMPSEY, Plaintiff-Counterdefendant-Appellant,
v.
D&L VENTURES, INC., a Nevada corporation, Defendant-Counterclaimant-Respondent, and DAVID B. ASHER, individually, Defendant-Respondent. D&L VENTURES, INC., a Nevada corporation, Third Party Plaintiff-Respondent,
v.
PHILIP P. MCGIMPSEY, as Trustee of JJM Special Needs Trust, Third Party Defendant-Appellant, and JOLENE MCGIMPSEY, Third Party Defendant. PHILIP P. MCGIMPSEY, Plaintiff-Counterdefendant,
v.
D&L VENTURES, INC., a Nevada corporation, Defendant-Counterclaimant, and DAVID B. ASHER, individually, Defendant-Respondent. D&L VENTURES, INC., a Nevada corporation, Third Party Plaintiff-Respondent,
v.
JOLENE MCGIMPSEY, Third Party Defendant-Appellant, and PHILIP P. MCGIMPSEY, as Trustee of JJM Special Needs Trust, Third Party Defendant.' PHILIP P. MCGIMPSEY, Plaintiff-Counterdefendant-Appellant,
v.
D&L VENTURES, INC., a Nevada corporation, Defendant-Counterclaimant-Respondent, and DAVID B. ASHER, individually, Defendant. D&L VENTURES, INC., a Nevada corporation, Third Party Plaintiff-Respondent,
v.
PHILIP P. MCGIMPSEY, as Trustee of JJM Special Needs Trust, Third Party Defendant-Appellant, and JOLENE MCGIMPSEY, Third Party Defendant.

          Appeal from the District Court of the Fourth Judicial District of the State of Idaho, Ada County. Steven Hippler, District Judge.

         The district court's order granting summary judgment is affirmed.

          Philip P. McGimpsey and Jolene McGimpsey, Eagle, appellants pro se. Philip P. McGimpsey argued.

          Jones Williams Fuhrman Gourley, P.A., Boise, for respondents. Kimbell D. Gourley argued.

          BRODY, JUSTICE

         This dispute arises from a breach of contract claim between the tenant McGimpsey and landlord D&L Ventures, Inc., who entered into a combined lease/Buy-Sell Agreement for a residential property in Eagle, Idaho. On discovering that D&L was an unregistered Nevada corporation conducting business in Ada County, McGimpsey failed to close on the purchase of the home on September 13, 2017, because he believed D&L to be in violation of Idaho Code section 30-21-502(a) which prohibits an unregistered foreign corporate entity from doing business in the state. After the closing date passed, D&L informed McGimpsey that the contractual provisions terminated upon his failure to close and reminded McGimpsey he had to vacate the property, pursuant to the Buy-Sell Agreement. About a month later, D&L registered with the Idaho Secretary of State as a Nevada corporation and filed all of its tax returns and paid its other obligations. McGimpsey subsequently filed a complaint against D&L, and the corporation counterclaimed against McGimpsey and third-party defendants. D&L filed a motion for summary judgment that was granted in part and denied in part. The district court ultimately concluded that D&L had the legal ability to convey the property via warranty deed and that McGimpsey breached the Buy-Sell Agreement by failing to close and failing to show that his breach was excused by D&L's alleged inability to convey marketable title. McGimpsey and third-party defendants timely appealed and their appeals have been consolidated in this case. We affirm the district court's award of summary judgment to D&L because Idaho Code section 30-21-502 does not impair the validity of contracts; therefore, D&L had the legal ability to convey the property via warranty deed.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Starting in February of 2014, Philip McGimpsey ("McGimpsey") and his wife Jolene McGimpsey leased a home from D&L Ventures, Inc. D&L is a Nevada corporation owned by David Asher and his wife Georgina Asher. The residential property McGimpsey leased from D&L is located in Eagle, Idaho (hereinafter "the Property"). D&L obtained the Property in a 2013 foreclosure sale and received a trustee's deed, which excluded any warranties.

         On June 26, 2017, McGimpsey and the JJM Special Needs Trust-of which McGimpsey is trustee-entered a Buy-Sell Agreement with D&L for the Property. The contract included the following pertinent provisions: (1) McGimpsey would pay $2, 400 per month in rent between July 1, 2017 and closing; (2) the parties agreed to a purchase price of $485, 000, with $5, 000 earnest money at closing; (3) if the parties failed to close, McGimpsey would vacate the Property; (4) the contract was contingent on McGimpsey's receipt and approval of the preliminary title commitment; and (5) at closing, D&L agreed to convey the Property by warranty deed "free of all liens and encumbrances except those described in the preliminary title commitment, as approved by Buyer." D&L also certified that it was "qualified to own or transfer real property in the State of Idaho." Closing was set for September 13, 2017.

         While examining the Property's title insurance commitment, McGimspsey discovered that D&L was an unregistered Nevada corporation. Because D&L was conducting business in Ada County as an unregistered entity, McGimspsey believed D&L was in violation of Idaho Code section 30-21-502(a), and, consequently, legally incapable of conveying the Property to McGimpsey "by warranty deed, free of all liens and encumbrances." D&L maintained on multiple occasions that it was ready, willing, and able to deliver the warranty deed at closing. Neither party, however, presented at the closing agent's office on September 13, 2017.

         In the days following the set closing date, McGimpsey and D&L exchanged emails wherein McGimpsey expressed his desire to still purchase the Property as well as his concern regarding D&L's "capacity" to sell. D&L informed McGimpsey that the contract's buy-sell provisions had terminated, reminded him that his September rent was due, and asked McGimpsey his intentions concerning rent and vacating the Property pursuant to the Buy-Sell Agreement. About two weeks after the designated closing date, McGimpsey demanded that D&L cure its unregistered status. The next day, D&L contacted the escrow officer to return McGimpsey's earnest money in full because closing never occurred. A few weeks later, on October 17, 2017, D&L registered with the Idaho Secretary of State as a Nevada corporation and filed all of its tax returns and paid its other obligations.

         On November 3, 2017, McGimpsey filed a complaint against both D&L and Asher for breach of contract, asking the court to find D&L breached the contract and was in violation of Idaho Code section 30-21-502(a). McGimpsey requested either specific performance of the original terms in the Buy-Sell Agreement or monetary damages for the breach. D&L filed a counterclaim against McGimpsey, specifically naming Jolene McGimpsey and the JJM Special Needs Trust as third-party defendants. The court set a date for a jury trial.

         On February 26, 2018, D&L filed a motion for summary judgment. D&L maintained that there was "nothing in the law providing that D&L Ventures could not transfer title to the [Property] as a Nevada corporation owning the real estate in Idaho." The court set a hearing for April 10, 2018. A month later, on March 26, McGimpsey filed an opposition brief as well a motion for summary judgment. At the April 10, 2018, hearing for D&L's motion, the district court asked D&L whether it was pursuing damages in the action. D&L stated: "Yes, your Honor, we are comfortable pursuing what I'll call the post-petition rent -- not post-petition, post-closing rent from October through the present date at the $2, 400 per month and comfortable not seeking monetary damages if the Court grants summary judgment."

         On April 25, 2018, the district court granted D&L's motion for summary judgment in part. The district court noted that "all the pending claims were effectively placed at issue for purposes of D&L's summary judgment motion." It determined that D&L had the legal ability to convey the Property via warranty deed and that McGimpsey breached the Buy-Sell Agreement by failing to close and failing to show that his breach was excused by D&L's alleged inability to convey marketable title. D&L's remaining claims-breach of implied covenant and a request to quiet title-were moot, so summary judgment was denied on these issues.

         McGimpsey then filed a "Supplemental Summary Judgment Supporting Brief" to explain why the district court's order failed to dispose of his complaint, arguing that D&L failed to properly deny allegations thereby creating a question of fact. The district court issued an additional order on May 7 (titled "Order Re: Judgment and Vacating Summary Judgment Hearing") to address McGimpsey's arguments.

         The district court issued its original final judgment for D&L on May 7, 2018, and two amended judgments thereafter. Ultimately, the district court concluded that D&L Ventures had the legal ability to convey the real property located in Eagle, Idaho, to McGimpsey and the JJM Special Needs Trust, and that D&L Ventures did not breach the Buy-Sell Agreement by failing to register with the Idaho Secretary of State. The district court also awarded D&L Ventures $21, 776.79 against McGimpsey, granted possession of the Property to D&L Ventures, and issued a writ of assistance directing the Ada County Sheriff to remove McGimpsey from the Property. It then dismissed McGimpsey's claims with prejudice. However, McGimpsey did not vacate the Property until June 29, 2018-two months after the entry of judgment-even though their last rent payment to D&L was in September of 2017. After McGimpsey vacated the Property on June 29, D&L retook possession of the Property.

         The district court's final judgment was timely appealed.

         II. ISSUES PRESENTED

         A. Whether the district court erred in granting summary judgment for D&L and in vacating McGimpsey's summary judgment hearing and the jury trial.

         B. Whether the district court erred in dismissing McGimpsey's complaint and thereby deprived McGimpsey of an inviolate right to a jury trial.

         C. Whether the district court's order was a valid judgment under Idaho Rules of Civil Procedure 54 and 58.

         D. Whether the district court erred in awarding restitution damages to D&L.

         E. Whether D&L is entitled to attorney fees and costs on appeal.

         III. ...


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