Watkins v. Watkins
2017 Ida. LEXIS 262
Idaho2017Background
- Father (Arthur Donald Watkins) sold a nursing home interest to his children in 1984; Son (Arnold Douglas Watkins) acquired a 13% interest and signed a real estate installment contract with monthly payments (later amended). Son defaulted by failing to make full payments beginning August 2, 2010; partial payments were accepted.
- Father sued (later substituted by his estate) for breach of the installment contract seeking damages; Son counterclaimed for breach of a compensation agreement that Brian (another son) signed for Father under a general power of attorney.
- Brian used a power of attorney in 2000 to execute lifetime $3,000/month compensation agreements for himself and his brothers without Father’s contemporaneous approval; Father revoked the POA in 2009.
- At bench trial the district court awarded Father $528,640.43 on the installment contract, rejected Son’s counterclaim (finding the compensation agreement unenforceable for lack of consideration and bad faith by Brian), dismissed other claims, and awarded attorney’s fees to Father. Son appealed.
- The Idaho Supreme Court affirmed some rulings, vacated the judgment on the installment-contract damages because Father’s complaint did not adequately plead or otherwise litigate an election to accelerate the entire debt, and affirmed that the compensation agreement was unenforceable for lack of consideration. The fee award was vacated because there was no prevailing party after vacation of the judgment.
Issues
| Issue | Plaintiff's Argument (Watkins) | Defendant's Argument (Arnold/Doug) | Held |
|---|---|---|---|
| Whether complaint gave adequate notice of election to accelerate the installment contract debt | Complaint and subsequent filings put defendant on notice and Father need not give separate notice to accelerate because contract allowed acceleration without notice | Complaint was too vague; acceleration requires affirmative action communicated to debtor and must be pleaded or tried by consent | Court: Complaint did not clearly state acceleration; no acceleration occurred; district court’s full-balance award vacated and case remanded |
| Whether Washington law requires notice to accelerate despite contract language allowing acceleration without demand | Contract and Jacobson support that notice of intent to accelerate is not required | Even if notice of intent not required, some affirmative action must be taken and communicated to debtor (per Washington law) | Court: Agrees notice of intent is not required, but some affirmative act clearly communicated is required; Father’s complaint failed to meet that standard |
| Enforceability of compensation agreement executed by attorney-in-fact (Brian) on Father’s behalf | Agreement valid; reflects prior promises and/or Father’s course of payments; Brian had POA authority to contract | Agreement lacks consideration (subsequent promise for past services) and Brian did not act in principal’s best interest; POA did not authorize gifts | Court: Affirmed district court — compensation agreement unenforceable for lack of consideration; therefore not binding on Father’s estate |
| Applicability of judicial estoppel to bar Father’s inconsistent positions | Not expressly argued by Father (Plaintiff) here | Son argued Father took inconsistent positions in divorce affidavit vs. current case and should be estopped | Court: District court did not abuse discretion; positions not sufficiently inconsistent to invoke judicial estoppel |
Key Cases Cited
- Jacobson v. McClanahan, 43 Wash.2d 751 (Washington Supreme Court) (holding notice of intent to accelerate a debt is not required)
- Weinberg v. Naher, 51 Wash. 591 (Washington Supreme Court) (affirming creditor must take some affirmative action and communicate acceleration to debtor)
- A. A. C. Corp. v. Reed, 73 Wash.2d 612 (Washington Supreme Court) (mere default alone will not accelerate an installment note)
- Collord v. Cooley, 92 Idaho 789 (Idaho Supreme Court) (a subsequent promise to pay for past services lacks consideration absent prior understanding)
- Loomis v. Church, 76 Idaho 87 (Idaho Supreme Court) (adoption of judicial estoppel in Idaho)
- Howard v. Perry, 141 Idaho 139 (Idaho Supreme Court) (attorney fees require a prevailing party)
- Portfolio Recovery Associates, LLC v. MacDonald, 162 Idaho 228 (Idaho Supreme Court) (no appellate fees when no prevailing party after remand)