Frontier Development Group, LLC v. Caravella, 338 P.3d 1193

Background

Myers hired Horn/FDG to build a house; construction stopped ~50% complete after a lender rescinded financing and the unfinished structure sat exposed for 14 months. Substantial latent defects existed and FDG previously billed for materials not found on the property.
The Caravellas (Ohio residents) negotiated purchase of the unfinished property from Myers in 2008 after communications with Horn (who used an Open Range Homes email and ran FDG as d/b/a Open Range). They inspected the property but declined a professional inspection and closed on the purchase for $799,000.
After closing, the Caravellas contracted with Horn/FDG to complete a first phase (structural repairs and enclosure). Contract price authorized was $88,500 but they paid FDG $138,097.24 and later hired a second builder to remediate defective or unauthorized work, incurring additional repair costs.
FDG sued to foreclose a lien; the Caravellas counterclaimed alleging breach of contract, fraud, negligent workmanship, consumer-protection violations, slander of title, conspiracy, and breach of implied warranty. The district court found FDG breached the contract and awarded contract damages to the Caravellas but dismissed their fraud claim and found Horn not personally liable.
On appeal the Idaho Supreme Court affirmed dismissal of the fraud claim, reversed the no-personal-liability ruling as to Horn (holding Horn failed to prove disclosure of his principal before contracting), and remanded for entry of judgment against Horn personally for the contract damages; no appellate attorney fees were awarded.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Caravellas proved fraud	Caravellas: statements about condition, value, workmanship were false and made knowingly or recklessly to induce purchase; thus fraud by clear and convincing evidence	FDG/Horn: Caravellas failed to prove Horn knew statements were false	Court: Affirmed dismissal — appellate court will not reweigh facts; district court erred in applying preponderance standard but error harmless; trial trier’s finding that knowledge was not proved stands
Proper evidentiary standard for fraud	Caravellas: elements must be proved by clear and convincing evidence	FDG/Horn: relied on district court’s preponderance finding	Court: Clear-and-convincing is correct standard; district court used preponderance in analysis, but error harmless because district court still found no knowledge
Whether Horn was agent of an undisclosed principal (personal liability)	Caravellas: Horn failed to disclose he acted for FDG before contract, so he is personally liable	Horn/FDG: communications and later invoices/letterhead/sign indicate entity identity; Caravellas knew or should have known they dealt with FDG	Court: Reversed — district court misallocated burden and relied on post-contract evidence and non-dispositive signs (email domain, signage); Horn failed to show he disclosed his principal at or before contracting, so he is personally liable
Whether corporate veil/alter ego should impose liability on Horn	Caravellas: alternatively, FDG is Horn’s alter ego so veil should be pierced	Horn: corporation maintained separateness; evidence insufficient for unity/inequity	Court: Did not reach alter ego because personal liability on agency/disclosure ground resolved the appeal

Key Cases Cited

Lindberg v. Roseth, 137 Idaho 222, 46 P.3d 518 (Idaho 2002) (elements of fraud and requirement that each element be proved by clear and convincing evidence)
Faw v. Greenwood, 101 Idaho 387, 613 P.2d 1338 (Idaho 1980) (determination whether fraud is proven by clear and convincing evidence is for the trier of fact)
Agrisource, Inc. v. Johnson, 332 P.3d 815 (Idaho 2014) (agent must affirmatively disclose principal and identity at or before contracting; third party need not investigate)
Marco Distributing, Inc. v. Biehl, 97 Idaho 853, 555 P.2d 393 (Idaho 1976) (agent bears burden to prove disclosure of agency/principal)
McCluskey Commissary, Inc. v. Sullivan, 96 Idaho 91, 524 P.2d 1063 (Idaho 1974) (undisclosed agent is personally liable on the contract)