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Kenworth Sales Co. v. Skinner Trucking, Inc.

Supreme Court of Idaho

December 11, 2019

KENWORTH SALES COMPANY, a Utah corporation, doing business in the State of Idaho, Plaintiff-Appellant,
v.
SKINNER TRUCKING, INC., an Idaho corporation; JAMES E. SKINNER, an individual; and DAVID C. SKINNER, an individual, Defendants-Respondents. KENWORTH SALES COMPANY, a Utah corporation, doing business in the State of Idaho, Plaintiff-Respondent,
v.
SKINNER TRUCKING, INC., an Idaho corporation; JAMES E. SKINNER, an individual; and DAVID C. SKINNER, an individual, Defendants-Appellants.

          Appeal from the District Court of the Fifth Judicial District of the State of Idaho, Twin Falls County. Randy J. Stoker, District Judge and Jon J. Shindurling, District Judge.

         The judgment and order of the district court are affirmed.

          Benoit, Alexander, Harwood, High & Mollerup, PLLC, Twin Falls, for appellant. Michael Danielson argued.

          Rockstahl Law Office, Chtd., Twin Falls, for respondents. Joseph R. Rockstahl argued.

          BRODY, JUSTICE.

         This appeal concerns an unjust enrichment claim brought by Kenworth, a commercial truck dealer, against Skinner Trucking, one of its customers. Kenworth claims Skinner was unjustly enriched when Kenworth paid past due lease payments and the residual balance owed on Skinner's lease with GE Transportation Finance. The district court entered judgment for Skinner on the grounds that, as to the residual value of the trucks, Kenworth had not conferred a benefit on Skinner, and that as to both the residual value of the trucks and the past due lease payments, Kenworth was an "officious intermeddler" because it had voluntarily paid GE without request by Skinner and without a valid reason. In a subsequent order, the district court denied Skinner's request for attorney fees under Idaho Code sections 12-120(3) and 12-121. Kenworth timely appealed from the district court's judgment. Skinner timely appealed from the district court's order regarding costs and fees. The parties' appeals have been consolidated.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Kenworth Sales Company ("Kenworth") is a commercial truck dealer. In August of 2011, Kenworth sold three trucks to GE Transportation Finance ("GE"), a financing company, for lease to Skinner Trucking. Kenworth negotiated Skinner's lease with GE on Skinner's behalf, but the lease was signed only by Skinner and GE.

         Skinner's lease with GE was known as a "TRAC" lease (terminal rental adjustment clause). In a TRAC lease, the vehicle's post-lease residual value is determined at the beginning of the lease. Once the lease ends, the lessee has three options: re-finance the vehicle based on its residual value, buy the vehicle by paying an amount equal to the vehicle's residual value, or return the vehicle to the lessor to be sold. If the lessee chooses the third option, and the vehicle is sold for less than its residual amount, the lessee will owe the lessor the difference. If the vehicle is sold for more than the residual amount, the lessor will owe the lessee the difference. In this case, the lease provided that the residual value for each truck was $58, 051.20 and that the monthly rental payment for each truck was $2, 357.72.

         Skinner turned in two of the trucks in October of 2015, and the third truck in December of 2015. The trucks were turned in to Kenworth, where Skinner typically turned in its trucks. (The lease provides that, at the end of the lease, Skinner would turn in the trucks at a location designated by GE.) Ultimately, Kenworth paid GE the total of the trucks' residual values ($174, 153.60) as well as back rent that Skinner owed for one of the trucks ($7, 073.17). As a result of the payments, Kenworth owned the trucks. Kenworth employees gave similar answers regarding why the decision was made to buy the trucks, stating that Kenworth had no profit motive; it merely hoped to break even. Kenworth employees testified, for example, that the Skinners "were long term customers," that they were "friends" and Kenworth "cared," and "[i]t had been a long relationship."

         In January 2016, Kenworth appraised one of the trucks and determined that the trucks were each worth $42, 000at the time Skinner turned them in. Two days later, Kenworth invoiced Skinner for $55, 226.77: the difference between the three trucks' combined residual value and what Kenworth estimated the trucks were worth ($174, 153.60 - $126, 000.00), plus the back rent owed on one of the trucks ($7, 073.17). Neither party disputes that there is no writing showing an agreement between Skinner and Kenworth that Kenworth would pay Skinner's "obligation" to GE or that Skinner would pay Kenworth back.

         About six months later, Kenworth filed a complaint in district court claiming that Skinner was unjustly enriched by Kenworth's payments to GE, and requested a judgment against Skinner in the amount of $55, 226.77. After a bench trial, the district court entered judgment in favor of Skinner, denying Kenworth's unjust enrichment claim and dismissing it with prejudice. In its findings of fact, the district court found that Skinner owed approximately $7, 000 in back rent and that Kenworth made the payments to GE because "Kenworth was sympathetic to Skinner's position and did not wish to see Skinner get into a worse financial position by having the trucks sold at auction." And that "[t]he most substantial evidence supporting the reason for [Kenworth's decision to make the payments to GE] was that Skinner was a good customer and they wanted to help them." Additionally, the district court found that there was no agreement between Skinner and Kenworth about what would happen if the trucks could not be sold for enough money to repay Kenworth. The court reasoned that while the trial record was not clear about the discussions between Skinner and Kenworth, Skinner had never asked Kenworth to pay off its debt. The most substantial evidence supporting Kenworth's decision to make the payments was that "Skinner was a good customer and they wanted to help them."

         As to payment for the trucks' residual lease values, the court concluded that Kenworth had not satisfied the first element of its unjust enrichment claim-showing that it had conferred a benefit on Skinner-because Kenworth had paid GE an amount equal to the residual value of the trucks. Under the terms of the lease, Skinner would not owe anything to GE unless GE sold the trucks for less than their residual value. Therefore, there was no benefit, in the form of debt repayment, for Kenworth to confer on Skinner. As to the payment for back rent, the court concluded that Kenworth had satisfied the first element of its claim (conferring a benefit), but decided it was unnecessary to analyze the remaining elements because Kenworth was an officious intermeddler as to both the residual value payment and back rent payment. The district court explained that under the officious intermeddler doctrine, "if a plaintiff has volunteered to confer a benefit on another person, there can be no unjust enrichment claim." However, a "valid reason to give such a benefit, such as protecting an interest, will prevent the plaintiff from being an officious intermeddler." Kenworth was an officious intermeddler, the court reasoned, because it had "voluntarily purchased the vehicles, voluntarily paid the past due lease amounts, both without request from Skinner." Furthermore, Kenworth had no valid reason to make the payment to GE because there was no testimony indicating that Kenworth had an interest in the trucks or an expectation that Skinner would continue to do business with Kenworth. Kenworth filed a timely appeal.

         Following entry of judgment in its favor, Skinner filed a motion for fees and costs and a motion for reconsideration, asking the district court to reconsider its order that each party bear its costs and asking it to award Skinner attorney fees, citing Idaho Rules of Civil Procedure 54 and 68 and Idaho Code sections 12-120(3) and 12-121. The district court denied Skinner's motion to reconsider. It rejected Skinner's request for attorney fees under section 12-120(3), reasoning that there was no commercial transaction between Kenworth and Skinner because there was no contract or agreement between them, and Kenworth paid GE of its own volition. It denied Skinner's request for attorney fees under section 12-121 because Kenworth had presented evidence supporting its allegation that such an agreement did exist. So Kenworth had a good faith basis to proceed with its claim, even though it ultimately lost. On March 14, 2018, the district court entered a corrected order, which added a discussion of attorney fees under Rule 68 and costs under Rule 54(d)(1). Though Skinner initially raised the issue of costs as one of the issues on appeal before this Court, the parties later stipulated to the amount of Skinner's costs. Therefore, the issue of costs is now moot.

         II. ...


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