Sheets v. BofA / Countrywide Home Loans, 371 P.3d 322

Background

In 2004 Ralph Sheets borrowed $65,250 from Countrywide (later Bank of America) secured by a deed of trust on his home; he timely paid through April 2009.
Sheets applied for a refinancing in 2009; closing did not occur and Sheets disputes the final terms and whether an agreed loan existed.
On November 9, 2009 ReconTrust (the trustee) mistakenly recorded a full reconveyance of the 2004 deed of trust, apparently believing the refinance had closed.
Bank of America sought judicial relief to rescind the erroneous reconveyance and reinstate the deed of trust; Sheets counterclaimed for breach of contract, specific performance, and other claims (many of which he did not appeal).
The district court granted Bank of America summary judgment rescinding the reconveyance on unjust enrichment/ equitable grounds and dismissed Sheets’ contract-based counterclaims for lack of a signed writing and lack of meeting of the minds.
The Idaho Supreme Court affirmed, rejecting Sheets’ unclean-hands defense and finding no enforceable written contract; it awarded appellate attorney fees to Bank of America under I.C. § 12-121.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the mistakenly recorded reconveyance must be rescinded	Sheets argued BofA acted improperly (unclean hands) and the reconveyance should stand	BofA argued rescission is required because retaining reconveyance would unjustly enrich Sheets	Court held rescission proper; unjust enrichment favored BofA and unclean-hands did not apply
Whether BofA is barred from equitable relief by unclean hands	Sheets relied on allegedly false internal documents (Beltran/Wigner) to show inequitable conduct	BofA said the documents showed negligence/corporate error, not intentional fraud	Court held district court did not abuse discretion; documents showed oversight, not intentional dishonesty
Whether a binding loan agreement existed for the 2009 refinancing	Sheets asserted a commitment to lend based on approved/scheduled closing and oral promises	BofA argued no signed writing as required by statute of frauds and no meeting of minds on material terms	Court held no enforceable contract: lacked required written commitment and no meeting of minds on principal/interest
Whether specific performance is available	Sheets sought specific performance to enforce the alleged refinance	BofA argued no contract to enforce	Court held specific performance denied because no valid contract existed

Key Cases Cited

Idaho Youth Ranch, Inc. v. Ada Cnty. Bd. of Equalization, 157 Idaho 180 (2014) (summary judgment standard)
Kepler-Fleenor v. Fremont Cnty., 152 Idaho 207 (2012) (summary judgment: view record in light most favorable to nonmovant)
Stonebrook Const., LLC v. Chase Home Fin., LLC, 152 Idaho 927 (2012) (when no disputed material facts remain, legal questions reviewed de novo)
Lockheed Martin Corp. v. Idaho State Tax Comm’n, 142 Idaho 790 (2006) (standards for appellate review of legal questions)
Vanderford Co. v. Knudson, 144 Idaho 547 (2007) (elements and theory of unjust enrichment)
Smith v. Smith, 95 Idaho 477 (1973) (unjust enrichment as promise implied by law)
Teton Peaks Inv. Co., LLC v. Ohme, 146 Idaho 394 (2008) (three elements of unjust enrichment)
Ada Cnty. Highway Dist. v. Total Success Investments, LLC, 145 Idaho 360 (2008) (unclean hands doctrine and equitable discretion)
Grazer v. Jones, 154 Idaho 58 (2013) (unclean hands requires intentional or willful misconduct)
Sun Valley Potato Growers, Inc. v. Texas Refinery Corp., 139 Idaho 761 (2004) (abuse-of-discretion test for equitable rulings)
Bajrektarevic v. Lighthouse Home Loans, Inc., 143 Idaho 890 (2007) (limitations on inferring loan commitments from conduct)
Justad v. Ward, 147 Idaho 509 (2009) (formation of contract requires meeting of the minds)
Wandering Trails, LLC v. Big Bite Excavation, Inc., 156 Idaho 586 (2014) (contracts must be complete and definite)
Baker v. Sullivan, 132 Idaho 746 (1999) (criteria for awarding attorney fees under Idaho statute)