Benz v. D.L. Evans Bank, 152 Idaho 215

Benz purchased a townhouse to be built in Ketchum under a June 7, 2007 real estate contract, with three earnest money payments totaling $750,000; the first two were paid to Sun Valley Brokers for deposit, and a $250,000 third payment was due by November 1, 2007.
East Avenue Bluff, LLC (seller) and the Rutherford defendants' ownership and agency roles created related conflicts of interest in the transaction.
Bank granted a $2,650,000 construction loan secured by a deed of trust on the property and an adjacent lot, with the Rutherfords guaranteeing the loan.
Buyer later rescinded the contract for failure of consideration, lack of marketable title, and failure to timely close; she demanded return of the earnest money.
Numerous mechanics’ and materialmen’s liens were filed; the district court held the vendee’s lien had priority over Bank’s deed of trust and awarded Buyer the lien amount equal to her total payments plus interest and costs.
Bank purchased the property at trustee’s sale after the district court’s rulings and Bank’s appeal followed on multiple issues, including prejudgment interest and Rule 37(c) attorney fees.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does the vendee’s lien have priority over the bank’s deed of trust?	Benz asserts the statutory vendee’s lien (IC 45-803, 45-804) attaches to the property and precedes the bank’s interest.	Bank contends priority should be limited or unclear based on historical common-law notions and lack of notice.	Yes; vendee’s lien has priority over the deed of trust.
Should prejudgment interest be included in the vendee’s lien amount?	Graves and McMahon support including interest.	The statute 45-804 does not authorize including interest beyond the payments recovered.	No; the lien secures only the amount paid recoverable back, excluding prejudgment interest.
Was the attorney-fee award under Rule 37(c) proper for Bank’s failure to admit?	Bank’s denial of admission required fees for proving the truth of the matter.	Bank contends denial was reasonable and not subject to Rule 37(c) fees.	Yes; district court properly awarded Rule 37(c) attorney fees.
Should the appeal incur Idaho Code §12-121 attorney-fee sanctions?	Buyer sought §12-121 fees for frivolous appeal.	Bank contends appeal had merit in light of overruling precedents.	No; the appeal was not frivolous or solely without foundation.

McMahon v. Cooper, 70 Idaho 139 (1949) (vendee's lien exist prior to final judicial determination; amount determined on remand)
Graves v. Cupic, 75 Idaho 451 (1954) (lien includes interest, though not analyzed under statute wording)
Smith v. Schultz, 23 Idaho 144 (1912) (notice and good faith affect lien validity and priority)
Froman v. Madden, 13 Idaho 138 (1907) (good faith includes actual or constructive knowledge under recording statute)