Alan GOLUB and Marilyn Golub, husband and wife, Plaintiffs-Respondents, v. KIRK-SCOTT, LTD., a Texas corporation, Defendant-Appellant, and Kirk-Hughes Development, LLC, a Delaware limited liability company; Internal Revenue Service; Tomlinson North Idaho, Inc., an Idaho corporation; Geraldine Kirk-Hughes and Peter Sampson, husband and wife; Kirk-Hughes & Associates, Inc., a Nevada corporation; Kelly Polatis, an individual; Delano D. and Lenore J. Peterson, husband and wife, Defendants.
No. 41505.
Supreme Court of Idaho
Jan. 30, 2015.
342 P.3d 893
Boise, December 2014 Term.
Winston & Cashatt, Lawyers, Coeur d‘Alene, for Respondents. Michael T. Howard argued.
J. JONES, Justice.
This case involves a dispute between two creditors as to whose claim against their debtor‘s property has priority. The respondents, Alan and Marilyn Golub (Golubs), recorded a judgment in the amount of $941,000 against their judgment debtor, Kirk-Hughes Development, LLC (KHD), giving Golubs a judgment lien on property owned by KHD in Kootenai County. KHD now claims to have executed a deed of trust on the property in question several years before Golubs acquired their lien. The beneficiary of the deed of trust is another defendant, Kirk-Scott, Ltd. (KS). The district court granted summary judgment to Golubs, finding that Golubs’ duly recorded judgment lien had priority over KS’ prior, unrecorded deed of trust. KS timely appealed.
I. FACTUAL AND PROCEDURAL BACKGROUND
In 2004, Alan Golub was the listing real estate agent for properties then owned by Sloan and Peterson, who each sought to sell their properties near Coeur d‘Alene, Idaho. Golub worked with other real estate agents to persuade Geraldine Kirk-Hughes and Geraldine‘s sister, Balinda Antoine, to participate in a development project potentially involving the purchase of the Peterson and Sloan properties, among others. In July 2004, KS, a company owned by Balinda, purchased the Sloan property.
The Peterson property was the largest and most expensive of the properties, being 518 acres. Golub had an agreement with Peterson that would entitle Golub to a commission for the sale of the Peterson property if Peterson closed on the sale of his property with one of the potential buyers Golub had provided
In October 2004, Geraldine formed KHD to develop this real estate project. KHD is owned: 7% by Kirk-Hughes & Associates; 51.5% by KS; 3% by Balinda Antoine; and 5% by Richard Polatis.2 On November 18, 2004, KS granted the Sloan property to KHD by warranty deed. The same day, KHD purportedly executed a deed of trust in favor of KS, covering a portion of the Sloan property, though it is unclear from the record exactly what portion. KHD‘s warranty deed for the Sloan property was recorded on November 19, 2004, but the deed of trust in favor of KS was not recorded at that time.
In March 2005, Kelly Polatis, a business associate of Geraldine, purchased the Peterson property. Polatis then deeded the Peterson property to KHD, either the same day he acquired it or very close in time. Golub believed these were straw-person transactions to deny him his commission on the sale of the Peterson property. In order to recover the lost commission, Golubs sued Geraldine, KHD, Kirk-Hughes & Associates, Polatis, and Peterson in 2007. Geraldine, KHD, and Kirk-Hughes & Associates defended against the action for a year and a half, but on March 11, 2009, Golubs obtained a default judgment in the amount of $941,000 against them. Golubs believed that they were unable to immediately record this judgment because Peterson remained in the action and that the judgment could not be considered final until there was a judgment against all defendants in the action or the court issued an
Despite the purported deed of trust obligation from KHD to KS, KHD did not list on its bankruptcy forms any secured claims regarding the property allegedly covered by that instrument and did not list KS as a creditor. Additionally, KS did not file a creditor‘s claim in the bankruptcy proceeding. On September 17, 2010, while KHD‘s bankruptcy was pending, KS attempted for the first time to record its 2004 deed of trust. Golubs recorded their judgment a few weeks later, after the bankruptcy case was dismissed without discharge.
In early 2013, after a second bankruptcy by KHD was dismissed without discharge, Golubs filed an action for declaratory judgment to establish the priority of their judgment lien over KS’ purported prior, unrecorded deed of trust. In response, KS filed a motion to set aside the $941,000 default judgment entered in 2009 and a motion for summary judgment on the 2013 priority action. Golubs also moved for summary judgment on the issue of priority. The district court denied KS’ motions and granted Golubs’ motion for summary judgment. Following this order, KS moved under
II. ISSUES ON APPEAL
- Whether the district court erred in denying KS’ motion to vacate the 2009 default judgment.
- Whether the district court erred in granting Golubs’ motion for summary judgment.
- Whether the district court abused its discretion in ordering sanctions
against KS. - Whether KS is entitled to attorney fees.
III. ANALYSIS
A. Standard of review.
The standard of review on appeal from the district court‘s grant of summary judgment is well-settled.
On appeal from the grant of a motion for summary judgment, this Court utilizes the same standard of review used by the district court originally ruling on the motion. Summary judgment is proper “if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”
Conner v. Hodges, 157 Idaho 19, 23, 333 P.3d 130, 134 (2014) (internal case citations omitted). “Statutory interpretation is a question of law subject to free review.” J & M Cattle Co., LLC v. Farmers Nat‘l Bank, 156 Idaho 690, 692, 330 P.3d 1048, 1050 (2014). On discretionary matters, “[a] district court does not abuse its discretion when it (1) correctly perceives the issue as discretionary, (2) acts within the bounds of discretion and applies the correct legal standards, and (3) reaches the decision through an exercise of reason.” Agrisource, Inc. v. Johnson, 156 Idaho 903, 914, 332 P.3d 815, 826 (2014) (internal citations omitted).
B. The district court did not err in denying KS’ I.R.C.P. 60(b) motion to vacate Golubs’ 2009 default judgment.
1. Motion under I.R.C.P. 54(c) and 60(b)(4).
In the 2013 action for declaratory judgment of priority, KS brought a motion to vacate Golubs’ 2009 default judgment against KHD and other defendants, arguing that the judgment was void under
It is within the discretion of the district court to decide whether to grant or deny a motion under
... (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, ... or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be brought within a reasonable time.
Notwithstanding the timeliness requirements of
Here, the district court determined that when considered in its entirety, the 2007 complaint shows Golubs claimed they were wrongfully and unlawfully deprived of $941,000 in commission, plus interest, and therefore the default judgment did not differ from the relief sought in the complaint. KS argues the default judgment is void under
The complaint gave sufficient notice to the defendants that Golubs sought the $941,000 commission owing on the sale of the Peterson property. Golubs’ 2007 complaint states that Golub was not paid “the $941,000 commission under the Listing Agreement.” Although Golubs stated that “Peterson did not pay Golub the $941,000 commission,” they did not limit their prayer for relief for that amount to payment from Peterson. (Emphasis added). Golubs assert that each named defendant was responsible for the loss of that commission. They stated “Defendants were aware of the Listing Agreement between Petersons and Golub” and that “Defendants intentionally interfered with the contractual relationships and expectations of Golub when they acted to frustrate and circumvent the purpose of the Listing Agreement.” In addition to the preceding statement, there are several other statements in the complaint showing that Golubs claimed each named defendant to be responsible for the lost commission. Indeed, Golubs’ complaint alleges that Polatis represented to Peterson that the Golub listing agreement was illegal, that Peterson would benefit by selling the property to him, that Peterson was aware Polatis would ultimately transfer the property to Geraldine Kirk-Hughes, that Polatis entered into a written agreement with Peterson to purchase the property on March 1, 2005, and took title three days later, and that Polatis transferred title to KHD on March 11, 2005.
Notably, this was not a case where the defendants never appeared to defend. There was discovery in this case and a great deal of litigation among the parties before entry of the default judgment. Throughout that litigation, Golubs always maintained entitlement to at least the $941,000 lost commission. Ultimately, when considered in its entirety, the complaint put each defendant on notice that Golubs were claiming the $941,000 lost commission and that each defendant was liable for that amount.
KS’ interest arguments make little sense. Golubs’ complaint specifically prayed for pre-judgment interest on the commission. The district court granted pre-judgment interest on the $941,000 commission beginning March 11, 2005, the date that KHD acquired title from Polatis, which would likely be the date the commission became payable. The court acted reasonably in doing so.
Because the amount of the default judgment was not more than was prayed for in the complaint, and because both pre-judgment and post-judgment interest are warranted under the circumstances, we hold that the default judgment complied with
2. Motion under Rule 60(b)(6).
KS also argues under
[w]hen the plaintiff‘s claim against a defendant is for a sum certain or for a sum which can by computation be made certain, the court or the clerk thereof, upon request of the plaintiff, and upon the filing of an affidavit of the amount due showing the method of computation, together with any original instrument evidencing the claim unless otherwise permitted by the court, shall enter judgment for that amount and costs against the defendant.
First, although the affidavit Golubs submitted with their motion for default judgment is titled “Affidavit of Alan Golub in Support of Motion for Default Judgment Against Kelly Polatis,” the substance of the affidavit concerns all the defendants, and the title of a document does not rigidly control its effect. (Emphasis added). In the affidavit, Golub states the circumstances establishing liability of multiple defendants, finishing by swearing that “[n]either Peterson nor Kirk-Hughes paid my realtor fees.” In fact, with the exception of the title of the document, the affidavit is without reference to Kelly Polatis. It appears the title of the affidavit is simply a shorthand way of referring to the actual motion for default judgment, which is titled “Plaintiffs’ Motion and Memorandum for Default Judgment Re: Defendants Polatis and Kirk-Hughes et al.” In the body of the motion for default judgment, the first sentence reads: “Pursuant to
Second, the affidavit sets out exactly how Golubs arrived at the $941,000 figure they sought. Golub swears that, under his agreement, he was entitled to 100% of the amount of the sale of the property between $4 million and $4.4 million. This means if the property sold for more than $4.4 million, Golub was entitled to $400,000. He also swears he was entitled to 50% of the sale price that exceeded $4.4 million. The amount by which the actual sale price of $5,482,000 exceeded $4.4 million is $1,082,000. So, Golub was entitled to an additional $541,000 (50% of the $1,082,000 amount over $4.4 million). The $541,000 and the $400,000 he was owed under the agreement combine to equal the $941,000 amount Golub sought. Therefore, KS fails in its argument that the affidavit does not set out the means by which the $941,000 was computed.
Third, KS argues “Golub‘s affidavit does not contain a document ‘evidencing a claim,’ it contains a hand-written document that does not even contain the $941,000 figure.” Despite this argument, the document attached by Golub was the listing agreement between Peterson and Golub, and the terms of that agreement provide the method of calculating the $941,000 amount Golub sought. It would be impossible for the writing to have contained the $941,000 figure since the parties’ method of calculating the commission was based on the sale price of the property, an amount that could not be known until the sale was closed. KS fails to explain why this document does not meet the requirements of
C. The district court did not err in granting the Golubs’ motion for summary judgment.
1. The requirements of good faith and giving of valuable consideration do not apply to judgment lienholders under Idaho Code section 55-606.
KS claims it has a priority claim to the property in question because Golubs perfected their encumbrance while having actual and/or constructive knowledge of KS’ prior interest, meaning Golubs could not take as good faith encumbrancers under
Every grant or conveyance of an estate in real property is conclusive against the grantor, also against every one subsequently claiming under him, except a purchaser or encumbrancer, who in good faith, and for a valuable consideration, acquires a title or lien by an instrument or valid judgment lien that is first duly recorded.
KS argues the plain reading of this statute means that one who is conveyed an interest in real property (whether or not he/she records that interest) has priority against anyone else with a subsequent claim to that property except one who, in good faith and for valuable consideration, subsequently acquires an interest in that property by either an instrument or a valid judgment and records before the first interest is recorded.
The district court stated that ”
Prior to 1989, the statute read exactly the same except the phrase “or valid judgment lien,” emphasized above, did not appear. 1989 Idaho Sess. Laws ch. 107, § 1, pp. 247-48. The question of whether a judgment lienholder must acquire his/her interest in good faith and for valuable consideration in order to have priority under
In State v. Yzaguirre we stated the law regarding interpretation of statutes applicable to this case:
The objective of statutory interpretation is to give effect to legislative intent. Because the best guide to legislative intent is the words of the statute itself, the interpretation of a statute must begin with the literal words of the statute. Where the statutory language is unambiguous, the Court does not construe it but simply follows the law as written.... In determining its ordinary meaning effect must be given to all the words of the statute if possible, so that none will be void, superfluous, or redundant.
144 Idaho 471, 475, 163 P.3d 1183, 1187 (2007) (internal citations omitted).
The issue in interpreting the statute is whether a “valid judgment lien” must have been acquired “in good faith, and for valuable consideration.” A judgment lien is obtained by the act of recording a judgment,5 not by the act of obtaining a judgment. Thus, there is no issue of whether one could or should give valuable consideration for obtaining the judgment. The issue is whether a judgment creditor must record a judgment “in good faith, and for valuable consideration” in order to take priority over a prior unrecorded grant or conveyance of real estate.
Because the good-faith and valuable-consideration requirements are connected by the conjunction “and,” either they both apply to acquiring a judgment lien or neither applies to acquiring the lien. There is no requirement that a judgment creditor give valuable consideration in order to obtain a judgment lien. Obtaining the lien by recording the judgment is simply a step in seeking to enforce payment of the judgment. Because the valuable-consideration requirement obviously does not apply to the recording of a judgment
If we were to accept KS’ interpretation of
KS contends that the district court‘s application of
Because we hold that the good-faith and valuable-consideration requirements of
2. Golubs’ default judgment did not require a Rule 54(b) certificate to be valid.
KS argues Golubs’ interest does not have priority because the recorded default judgment is not a “valid judgment lien” under
In this case, when the district court entered the default judgment in March 2009, the claims against all but one of the named defendants were resolved. Because Golubs’ claim against Peterson remained unresolved at the time, Golubs would have required a
3. The district court did not err in finding that KS’ deed of trust was not properly acknowledged.
The district court found that KS did not properly acknowledge its attempted recordation of its deed of trust. KS argues the district court erred in deciding the deed of trust was not validly recorded because: (1) the deed of trust was actually recorded by the Kootenai County Recorder‘s Office even if it contained defects under Idaho law; and (2) the deed of trust was properly acknowledged under Nevada law where the instrument was executed and Idaho law recognizes validly acknowledged foreign instruments. Neither of these arguments is persuasive.
KS first cites Mollendorf v. Derry, 95 Idaho 1, 501 P.2d 199 (1972), and states, “Under Mollendorf[,] deeds lacking both an acknowledgment and containing deficiencies in the legal description have not been voided... Thus, even if the Kirk-Scott Deed of Trust did not comply with Idaho law its supposed deficiencies do not render it void.” KS appears to misunderstand the district court‘s decision with respect to KS’ deed of trust. The district court did not hold that the deed of trust was void; it held that Golubs’ “judgment lien has priority over K-S‘s deed of trust[,] ... and K-S‘s September 17, 2010, recording of its deed of trust is void.” (Emphasis added). Additionally, Golubs do not appear to argue that the deed of trust was void, merely that the recording of that deed of trust was void, meaning it cannot impart constructive notice of the encumbrance. Mollendorf, which KS cites, does not involve an attempted recording being challenged. It involves a challenge to the validity of a deed based on a lack of acknowledgment, in response to which, this Court stated, Idaho law does “not require such an acknowledgment, except for the purpose of recording.” 95 Idaho at 4, 501 P.2d at 202 (emphasis added). Therefore, this case actually supports the fact that a valid recording needs a valid acknowledgment.
Finally, KS states that
Here, Golubs validly recorded their interest before KS. Therefore, Golubs simply have priority over any prior, unrecorded interests, including KS’ deed of trust. In light of our interpretation of
Following the district court‘s order granting summary judgment to Golubs and denying KS’ motion to dismiss and
Kirk-Scott‘s and Kirk-Hughes’ Motion to Amend/Alter Judgment and supporting briefing were not (1) grounded in fact, (2) warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, (3) were interposed for the improper purpose of unnecessary delay and (4) did cause needless increases in the cost of litigation.
KS argues the court erred in ordering sanctions against KS for three reasons: (1) KS’ assertion that a summary judgment motion is equivalent to a directed verdict is warranted by both existing law and a good faith argument for the extension thereof; (2) KS’ arguments in its motion fell within the scope of
Our standard when reviewing the trial court‘s imposition of sanctions pursuant to
[t]he signature of an attorney or party constitutes a certificate that the attorney or party has read the pleading, motion or other paper; that to the best of the signer‘s knowledge, information, and belief after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney‘s fee.
(a) New Trial—Amendment of Judgment—Grounds. A new trial may be granted to all or any of the parties and on all or part of the issues in an action for any of the following reasons:
1. Irregularity in the proceedings of the court, jury or adverse party or any order of the court or abuse of discretion by which either party was prevented from having a fair trial.
...
6. Insufficiency of the evidence to justify the verdict or other decision, or that it is against the law.
7. Error in law, occurring at trial.
A motion for reconsideration of any order of the trial court made after entry of final judgment may be filed within fourteen (14) days from the entry of such order; provided,
there shall be no motion for reconsideration of an order of the trial court entered on any motion filed under ... 60(b).
Here, the district court ordered sanctions against KS under
The district court also acted within the scope of its discretion and consistently with the applicable legal principles. In its Decision and Order Re: Sanctions, the district court first concluded that there had been no trial in this case and that KS’ argument that a summary judgment determination is equivalent to a directed verdict at trial “is not warranted by existing law or a good faith argument for the extension of existing law.” By its plain language,
Mr. Crotty [(KS’ counsel)]: As to your question, your honor. No, I have not found any Idaho authority. I found analogous authority that I cited in the brief.
Court: The Southern District of Indiana case?
Mr. Crotty: Yes, your Honor. There‘s additional authority from Washington. But, no, I have not found any from Idaho.
In its Decision Re: Sanctions, the district court stated that of all the Idaho case law addressing
On appeal, KS cites several other cases from non-controlling jurisdictions. These sources were not provided to the district court to consider in making its decision, so we will not consider the applicability of those cases in reviewing whether the district court abused its discretion.
Additionally, for the first time on appeal, KS changes its position that there is no relevant Idaho authority on the matter, citing two Idaho cases on appeal. In the first, Straub v. Smith, 145 Idaho 65, 70-71, 175 P.3d 754, 759-60 (2007), the Court reversed the trial court‘s decision that
In addition to the fact that
this Court is left with the abiding belief that the defendants requested this Court to reconsider its August 9, 2013, order denying the defendants’ Rule 60(b) motions. Additionally this Court concludes that the defendants’ attempt to skirt around Rule 11(a)(2)(B)‘s prohibition against reconsideration of Rule 60(b) orders is the exact litigative misconduct that Rule 11 sanctions was intended to address.
As the district court found, a reasonable inquiry by KS would have revealed that it was prohibited from bringing such a motion for reconsideration of its
Finally, the district court also reached its decision by an exercise of reason. The court issued a well-reasoned, eight-page decision, concluding that it was ordering these sanctions upon its own initiative because it found:
Kirk-Scott‘s and Kirk-Hughes’ Motion to Amend/Alter Judgment and supporting briefing were not (1) grounded in fact, (2) warranted by existing law or a good faith argument for the extension, modification,
or reversal of existing law, (3) were interposed for the improper purpose of unnecessary delay and (4) did cause needless increases in the cost of litigation.
The court analyzed its power to order sanctions, the standard to apply when doing so, and the specific conduct that made sanctions appropriate here. Therefore, it reached its decision by an exercise of reason. Because the district court in this case (1) correctly recognized the order of sanctions as a matter within its discretion, (2) acted within the scope of the court‘s discretion and consistently with applicable legal theories, and (3) reached its decision by an exercise of reason, we hold that the district court did not abuse its discretion in ordering sanctions against KS.
KS’ contention that the district court was biased against KS is unwarranted and unsupported. KS does not provide any facts, authority or persuasive argument on this matter. It merely points out what it believes to be weaknesses in Golubs’ case and suggests that the court must not be impartial because it found in favor of Golubs despite these weaknesses. We will not entertain such a groundless argument.
E. KS is not entitled to attorney fees under Idaho Code section 12-120(3) or 12-121.
Both
IV. CONCLUSION
We affirm the district court in all respects. Costs to Golubs.
Chief Justice BURDICK, and Justices EISMANN and HORTON, and Justice Pro Tem WALTERS concur.