Bank of Commerce v. Jefferson Enterprises, LLC
154 Idaho 824
| Idaho | 2013Background
- Jefferson Enterprises sought financing in early May 2006 to acquire an adjacent "Wood Parcel" critical to its Southern Hills subdivision; D.L. Evans held an existing mortgage on the adjacent "Eighty Acre Parcel."
- Jefferson (through Dustin Morrison) applied to Bank of Commerce for about $2.8M proposing Bank take first lien on Wood Parcel and second lien on Eighty Acre; Bank approved $2,223,805 conditioned on Bank having first priority on both parcels.
- D.L. Evans would not subordinate; Jefferson paid off the D.L. Evans mortgage so the Bank could take first-priority liens and the loan closed May 10, 2006; a later note for accrued interest was executed and recorded in 2007/2009.
- Jefferson defaulted; Bank sued to foreclose. Jefferson counterclaimed for breach of agreement (priority), breach of implied covenant, intentional interference, fraud, promissory estoppel, and related theories.
- District court granted Bank summary judgment, dismissed Jefferson’s counterclaims, entered decree of foreclosure and attorney-fee award; Jefferson appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bank agreed to take second-priority lien on Eighty Acre | Jefferson: Bank orally pre-committed (and Mortgage reflects) second position; breach when Bank required payoff of D.L. Evans | Bank: No such written agreement; Mortgage language doesn’t create that obligation; Statute of Frauds bars oral loan commitment | No breach — any alleged oral commitment barred by I.C. §9-505 (Statute of Frauds); Bank took first lien after Jefferson paid off D.L. Evans |
| Breach of implied covenant of good faith and fair dealing | Jefferson: Bank acted in bad faith by changing position and forcing payoff | Bank: Acted pursuant to loan conditions; Jefferson voluntarily accepted loan terms | No breach — no valid contract term was denied; Jefferson chose to accept loan under those terms |
| Intentional interference with prospective economic advantage | Jefferson: Bank’s requirement to pay D.L. Evans intentionally destroyed expected economic benefit and foreseeably impaired cash flow | Bank: No intent to cause loss; no wrongful act beyond enforcing loan terms | No interference — plaintiff failed to prove intent; presenting loan terms is not wrongful interference |
| Fraud | Jefferson: Bank/agents falsely represented they would accept second lien and/or provide future financing | Bank: No false material representations; Jefferson did not justifiably rely | No fraud — insufficient evidence of false/intentional misrepresentation and justifiable reliance |
| Promissory estoppel | Jefferson: Should be estopped from denying pre-commitment | Bank: No enforceable promise; Statute of Frauds bars oral commitment | No estoppel — no sufficiently definite promise; Lettunich principle controls (promissory estoppel cannot replace Statute of Frauds writing requirement) |
| Novation / modification of prior agreements | Jefferson: Questions of fact whether novation occurred | Bank: Any alleged pre-loan oral agreement was extinguished by the written loan executed at closing | Novation irrelevant — no valid prior agreement existed to be novated; parties executed the written loan that governs |
| Foreclosure correctness | Jefferson: Summary judgment should not have allowed foreclosure due to disputed facts | Bank: Foreclosure proper after default on written notes/mortgages | Foreclosure affirmed — no genuine issue of material fact on enforceability of written loan documents |
| Appellate attorney fees entitlement | Bank: Notes/mortgages entitle Bank to fees on appeal | Jefferson: disputed | Bank awarded appellate attorney fees under the contractual fee provisions |
Key Cases Cited
- Lettunich v. Key Bank Nat. Ass’n, 141 Idaho 362 (statute of frauds bars oral bank loan commitment)
- Highland Enter., Inc. v. Barker, 133 Idaho 330 (intent requirement for interference — intent may be inferred where interference is substantially certain)
- Cantwell v. City of Boise, 146 Idaho 127 (elements for interference with prospective economic advantage)
- Chavez v. Barrus, 146 Idaho 212 (fraud requires particularized proof of false statement and justifiable reliance)
- Lamprecht v. Jordan, LLC, 139 Idaho 182 (contractual attorney-fee provisions enforce fee awards)