Idaho Trust Bank v. Christian
301 P.3d 1275
Idaho2013Background
- December 8, 2006 Trinity Investments LLC executed a promissory note to Idaho Trust Bank for $5,625,000 to develop property and construct townhomes.
- Note payments initially covered accrued interest with principal due Dec 8, 2007; terms were later modified to reduce principal and extend maturity.
- Note was secured by a construction deed of trust on the project property.
- Guarantor Michael R. Christian signed the note as Borrower’s member and also signed a guaranty.
- A receiver was appointed during litigation to market/sell collateral; receiver could sell units for 80% of appraisal value without court approval; Guarantor signed the stipulation appointing the receiver as attorney in fact; by June 2011, receiver sales did not fully satisfy the debt.
- On May 13, 2011 Lender sued Guarantor for the balance; district court granted summary judgment; March 7, 2012 judgment awarded Lender $1,743,448.01 plus $7,687.68 interest; Guarantor timely appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the guaranty ambiguous about the scope of Indebtedness? | Lender: Indebtedness includes all debts Borrower owes, as defined. | Christian: The definition creates ambiguity between two sentences. | No ambiguity; both sentences define Indebtedness together. |
| Does the guaranty cover sums recoverable from Guarantor given non-foreclosure sale? | Lender: Guaranty applies to all indebtedness regardless of method of sale. | Christian: Uncertainty about recoverability when property isn’t foreclosed. | Indebtedness covers recoverable sums; Guarantor liable under guaranty. |
| Are attorney fees awardable on appeal to the prevailing party? | Lender seeks fees under guaranty-related statute. | Guarantor seeks fees under commercial action statute. | Lender prevails on appeal; Guarantor not prevailing; fees awarded to Lender. |
Key Cases Cited
- McDevitt v. Sportsman’s Warehouse, Inc., 151 Idaho 280 (2011) (contract ambiguity and interpretation principles)
- Swanson v. Beco Constr. Co., 145 Idaho 59 (2007) (contract terms interpreted with defined terms)
- Harger v. Teton Springs Golf and Casting, LLC, 145 Idaho 716 (2008) (prevailing party fees standards on appeal)
- Washington Fed. Sav. v. Van Engelen, 153 Idaho 648 (2012) (fees on appeal to prevailing party under Idaho statute)