*1 797 P.2d HUDSON, Wayne D.
Plaintiff-Appellant,
v. COBBS,
Lyle individually; and R. Jack Kennevick, individually; and
Cobbs/Kennevick, general partner a Defendants-Respondents,
ship,
and Sundell, Smith,
Larry Mark Baze Brian Kathy ghi, Kathy Bazeghi, a/k/a Sherwood, Hampson Doug all indi vidually; # and Webster Investments general partnership,
an Idaho Defen
dants. SUNDELL,
Larry
Defendant-Cross-Claimant,
v. BAZEGHI, Bazeghi, and
Abbass Mark
Kathy Bazeghi, Kathy a/k/a Hampson, Cross-Defendants. SMITH,
Brian
Defendant-Cross-Claimant,
v. Kathy Bazeghi,
Mark BAZEGHI Kathy Hampson,
a/k/a
Cross-Defendants. COBBS,
Lyle R. Kennevick Jack general partnership, Cobbs/Kennevick ndants-CounterclaimantsCr Defe oss-Claimants-Respondents, HUDSON,
Wayne D.
Counterdefendant-Appellant, Sundell, Larry Bazeghi, Brian
Abbass Kathy Bazeghi Smith, Bazeghi, individuals; Sherwood, Doug all # an Investments and Webster partnership, general Cross-Defendants.
No. 16783. of Idaho.
Supreme Court 19, 1990.
June Rehearing on Denial
Dissent Sept. Thomas, Boise, plaintiff-
Kennedy & Kennedy, argued. appellant. Fred *2 Elam, Boise, 17, 1981, Boyd, Burke & for defen- On March in an effort to fulfill Wilcox, dants-respondents. Todd J. ar- pre-lease requirements, #3’s Webster Ab- gued. Bazeghi, # managing bass Webster 3’s partner, procured agreements lease with UPON REHEARING 1989 OPINION Partnership the Cobbs/Kennevick for two 120, 11, 1989, NO. ISSUED AUGUST IS Contemporaneous office suites.1 to execu- HEREBY WITHDRAWN AND THIS leases, Bazeghi tion of and the OPINION IS SUBSTITUTED THERE- Partnership Cobbs/Kennevick entered FOR. agreements, “hold whereby harmless” Bazeghi agreed pay the rent on Cobbs’s McDEVITT, Justice. spaces Kennevick’s if Cobbs and Ken- occupy spaces nevick failed to or sublet the This case arose out of complex real by July provision 1981. This was de- estate agree- transaction and a series of signed to “save” Cobbs and Kennevick (1) (the Bazeghi ments between: Mark any payments from and other economic managing general partner acting on behalf detriments that could arise from exe- their general of the Webster Investments #3 cution of the leases. The hold-harmless (2) partnership); the Idaho First National agreements were not attached to the leas- Bank; (3) plaintiff Hudson; Wayne D. es, they provided were not to either the (4) Cobbs, Kennevick, defendants and the Hudson, Bank or to nor were either advised partnership. Cobbs/Kennevick of their Bazeghi, existence. Neither (“Webster # Partnership The Webster nor Kennevick informed Hudson of the 3”) # owned a tract of land Boise called agreements. hold harmless the Wildwood Center. This tract of land At trial Cobbs and Kennevick testified Apartments included the Wildwood and the that the leases were “straw” leases which Buildings. Wildwood August Office On they did not intend to by, be bound $580,000 Webster # 3 obtained a loan solely executed them to accommo- from Idaho First to finance construction of Bazeghi meeting date tenancy obli- buildings the office prop- on the Wildwood gations. Hudson testified that he was erty. payable 1,1981. Interest July aware that the leases were “accommoda- agreement, Under the terms of the loan tion purpose obtaining leases” for the long-term financing loan was convertible to long financing the desired term and he was only if building pre-leased the office aware that Cobbs/Kennevick would not oc- 12,210 square prior extent of feet cupy space, but he was not informed July 1981. payments that the lease would not be made 26, 1980, August days On six after enter- by Cobbs/Kennevick or sub-tenants who agreement into the loan with Idaho yet procured. were to be First, # 3 Webster entered into an earnest package Based on the lease submitted agreement money sell Wildwood to Bazeghi, approved long- the Bank 16, 1980, Wayne Hudson. On October one term financing July, day prior On June closing, to the date set for Web- 1981,Hudson and Webster # 3 entered into ster #3 and Hudson modified their con- agreement. an # additional The June 24 respon- tract. Webster 3 assumed direct agreement long financing recited that term sibility pre-leasing to meet the bank’s re- quirements was available but upon so that the loan could be con- was conditioned obtaining $9,983.83 long-term financing lease commitments of verted for Hudson. agreed per years. agree- Hudson month for three to assume the note with This Idaho First. ment stated that: Thus, agreements individually. 1. In the lease the lessee was denom- Cobbs and Jack Kennevick partnership; inated as the however, the indication is that Cobbs and Kennevick Cobbs/Kennevick were signature pages partners and an amend- bound as individuals and as 4, 1981, April signed by Lyle partnership. ment dated Cobbs/Kennevick financing alleged has Webster met condition rent. Hudson also breach obtaining signed guarantee full service leases pay contract for failure to rent 12,213 sq. ft. with total rental of against #3 its partners. Webster $9,983.83 per month. The lessees under A hearing writ of attachment was conduct *3 may may actually these leases or not 27, 1982, July ed on at which time Hudson space occupy for which are obli- first learned of the of the hold existence gated. guarantee pay- will rent Webster agreements. Subsequently, Hud- harmless 7/1/81, per ments as these leases from complaint by adding son an amended 6/30/84, occupied until or whichever Later, allegation again of fraud. Hudson first____ comes complaint alleging that Web- amended his 3, Ken- partners, # and Cobbs and ster its 1, 1981, (the July On date bank Act, Racketeering I.C. conversion), nevick violated deadline for the loan Webster trial, pro- At 18-7801 thru -05. Hudson (through Bazeghi) # 3 and Hudson entered §§ on four causes of action: agreement. into final Webster #3 ceeded basic their pre-leased space agreed pay to rent on Cobbs, against 1. Common fraud law actually occupied lessees or sub-les- Bazeghi. Kennevick and Mark among were sees. and Kennevick Cobbs Ken- Negligence against and 2. Cobbs occupied had not or subleased those who partner- and the Cobbs/Kennevick nevick 1, premises by July 1981. ship. agreement, to the June Pursuant against Invest- 3. Rescission Webster pro- managed building # and Webster partners, # and its individual ments monthly payments. rental vided Hudson upon a breach its obli- based material However, payments no or Hudson received pre-leasing require- gation to meet February, accountings January, for financing long term and its obli- ments result, March, As a Hudson fired 1982. pursu- gation guarantee payments to lease #3, rent, and de- sued for back Webster agreement on June ant to entered pay Kennevick and manded Cobbs 1981. July, In Hudson was in- rent. their #3 against contended and its 4. Fraud Webster formed Cobbs/Kennevick against partners. not enforceable as the leases were he also became aware At that time
them.
claims,
Racke-
based on the federal
Two
agreements, listed the
of the hold-harmless
Organizations
Corrupt
Influenced and
teer
sale,
making pay-
stopped
building for
Act,
Racketeering
and the
Act
long-term note.
ments on
prior
trial. The trial
dismissed
3, 1982,
August
Wayne
By
Racketeering
letter dated
Act
the Idaho
dismissed
building
office
back
tendered the
Judgment
Hudson
filed
Summary
Order
its
claim
restitution
# 3 and demanded
to Webster
29, 1985, prior
trial. While
October
paid by
He notified the
money
all
him.
claim survived
federal RICO
Hudson’s
Cobbs,
partners, Lyle
#3
Webster
prior to
summary
he dismissed it
judgment,
had defaulted on
that he
Jack Kennevick
trial.
property for
listed the
loan and had
jury
on Hudson’s
the close of the
trial
At
Brokerage Company.
with Commercial
sale
ac-
negligent misrepresentation
fraud
the Wildwood
to sell
Hudson was unable
tion,
moved for a
and Kennevick
Cobbs
Building although he made consider-
Office
mo-
The court denied
directed verdict.
17, 1983,
January
On
effort to do so.
able
jury
the case
tion and submitted
purchased the
National Bank
Idaho First
negligent mis-
theories of fraud and
both
sale. No defi-
the foreclosure
property at
jury found for
representation. The
sought.
ciency was
ac-
cause of
on the fraud
and Kennevick
However,
special
it found in
verdicts
tion.
complaint in
original
filed his
Hudson
misrepresenta-
for Hudson on
Cobbs,
Kennevick
May
alleging
Cobbs,
against
Kennev-
action
tion cause of
Partnership breached
the Cobbs/Kennevick
Partnership
Cobbs/Kennevick
failing
ick and the
pay
their
agreements
lease
Bazeghi.
jury
belong
per-
attributed
but who
to a limited class of
negligence
sons whose reliance on the accountant’s
25%
Partnership,
representations
specifically
Cobbs/Kennevick
the remain-
foreseen.”
#3,
being
attributed Webster
Finally,
significantly
75%
Id.
and most
negligence being
with zero
case,
attributed to
Supreme
for this
Court cited the
$513,-
Hudson.
awarded Hudson
Appeals opinion
New York
Court of
compensatory damages, $163,-
909.09 as
Corp.
Credit Alliance
Arthur Andersen
attorney
391.98 of which consisted of
Co.,
fees. &
65 N.Y.2d
493 N.Y.S.2d
judgment
notwithstanding
against
had denied their motion for a directed ver-
seven months after
dict,
Cobbs and Kennevick
it
the defendants
granted
n.o.v.
the verdict
the motion for
Although
entering judgment
timely
the trial court
approximately
moved for a
judgment
verdict.
from a lease contract. There- the fact that Hudson’s claim for fore, proper Hudson’s lay cause action was relief breach of contract rather than contract, for their not negligent misrepresentation breach rea- all the misrepresentation. Secondly, “pecuni- son that is needed to hold that the district ary negligent misrep- interest” element of judgment proper. court’s n.o.v. was (Sec- resentation under the Restatement This leads to the issue raised ond) Torts, present was not § rehearing; and Kenneviek on whether or this case. judgment not court’s n.o.v. district
We need
address whether the
ordering
opposed
should be
as
reinstated
of pecuniary
provided
issue
interest
a suffi
trial.
a new
judgment
for
cient basis
the court’s
n.o.v.
ruling
because the court was correct in
II. JUDGMENT N.O.V.—NEW TRIAL
that the facts of this case were not suffi
ruling
judgment
In
on motion for
duty necessary
cient to show the
to make
n.o.v.,
the trial court must view the facts
prima
negligent misrep
out a
facie
case
moving party
if the
has admitted the truth
Ken
resentation.
Cobbs and
*5
non-moving parties
of all the
evidence.
duty
a
allegedly
nevick
breached was
cre
Stores,
50(b);
Safeway
I.R.C.P.
Mann v.
In
ated
contract.
Carroll v. United
Inc.,
736,
732,
95 Idaho
Steelworkers of
Quick Crane,
759, 763,
(1974);
v.
111 Idaho
(1984),
Supreme
JJ., concur. Returning to the illumination shed Boyd, Peter Esq., on trial court’s rather
BISTLINE, Justice, dissenting:
(but certainly permissible
unusual
where
appropriate)
in reversing
action
itself
I.
the earlier
denial of
Cobbs/Kennevick
all
respect
With
due
to Justice Huntley
verdict,
motion for a
pointed
directed
he
light
Justice
for the
McDevitt
specific
eleven
occurring
errors
law
upon
able to
shed
facts and
trial, the
exploring.
first of which needs
case,3
circumstances of
highly
was a
say because,
This I
my
from reading of the
experienced
extremely
practicing
able
*6
comprehensive
district court’s
memoran
attorney
helpful
who shed
most
illumi-
decision, nothing
dum
therein showed me
nation on the
aspect
most troublesome
of
that the
properly
negli
court
instructed on
case.
embroiled,
When I became first
gent misrepresentation. The court was un
only
which was
after
Huntley
Justice
had
der
duty
to
on
plaintiff’s
instruct
resigned
Shepard
died,
and Justice
had
and
proffered theory of failure to make disclo
surviving justices
two of
after
awarded
sure and resultant constructive fraud. Ev
rehearing, my approach
was to first read
Blair,
14,
erton v.
99 Idaho
sentation issue personal own Appendix avers is made of his as B are the salient which he 5. Attached hereto knowledge. the court His affidavit states that allegations plaintiffs com- of third amended the present- judgment Boyd accepted proposed form of a Mr. was plaint. be noted that It will it, counsel, trial modified one of Hudson's reminding to ed absolutely court as correct in the record, giving de- without entered it of all negligent misrep- theory being plaintiffs the any opportunity to review its con- 1-36,1-37, counsel allega- fense the and 1-38 are resentation. register objection. His an tent or form or tions of nondisclosure. solely jury's the it was based on lament was that squarely Boyd’s in line also 6. Mr. statement verdict, separate findings upon and not reporter’s transcript instructions of the the court, he, with Boyd, Mr. of whereas conclusions the conference, the Eismann for Mr. attended was: C, Appendix attached hereto. plaintiff. See belief, com- based on the court’s the [U]nder trial, during the that the the course of ments exactly squares the Boyd’s with 7. Mr. statement advisory only, jury rendered ... verdict B, Appendix at- complaint. See plaintiffs final having jurisdiction equity over the entire taken tached hereto. plaintiffs claim for dominant case because equity. relief sounded significance which is an affidavit 8. Of additional fil- contemporaneously with the Boyd filed Mr. objections court via to the entry judg- all of these I raised telephone for motion of his alternative trial, 'on December n.o.v., conference call the contents for new ment Exactly pears face-saving grant the district court made of of the mo- what be Boyd’s readily judgment Mr. motion is not discerni- tion n.o.v. on the that for basis having negligent misrepresentation prov- ble. It is seen that after declared was not submitting negli- premised grant the error in the issue of en. That was also on the slender, gent misrepresentation jury, only duty to the instead slender reed that the just dropping theory pay as a dead owed Kennevick was issue, application the court resorted rent. Better that court would “pecuniary simply instructing interest” mentioned in the in so admitted error over (Second) objections parties. Restatement of Torts con- of both The court § cluding proof that “the did not establish should have declared that the court’s error relationship justifies grant type required of a new trial as the imposition negli- only parties not to make a in which both could be manner gent misrepresentation.” was, evenly. R. 1866. fairly treated There course, paramount error inflicted on other knows, one as reader now When instructing plaintiff in not on failure to does, parties objected that both to the per disclose as its definition Idaho case instructing negligent misrepre- court’s on law. sentation, readily accept it is difficult to as premise granting judgment a valid Looking again at the trial court’s memo- court, acting n.o.v. that the district in retro- decision, randum which was first read at spect, slightest and without the mention involvement, my the outset of it is noted aforesaid, parties objected that both in- strangely that the district court made the making ruling proof on sisted that the statement that the time of the discus- “[a]t prove insufficient to mis- instructions, jury sion of the the defen- representation. It awas needless and fu- objected dants Kennevick in- Cobbs and tile exercise. When the court received Mr. structing negligent misrepre- on motion, brief, Boyd’s supporting and affi- sentation.” R. 1861. This concession was davit, good grace the court in should have court, pursued by although not further acknowledged objections to in- percent it bears out to a 50 extent what Mr. structing negligent misrepresentation Boyd urged post-judgment had in his alter- made, had the court had erred. But, having gone nate motions. that one Nevertheless, having determined sua step, appears why small no reason sponte theory negligent misrep- that the i'„ divulge court would not so instruct- given jury, should resentation objections parties.9 ed over of both This (and obdurate) district court’s erroneous interesting all more became when the reaction towas reexamine the evidence for stated, following the sentence *8 sufficiency prove negligent misrepresen- statement that the defendants did not want tation, theory preferred. the the court jury negligent the to be instructed on mis- expression representation, appellate that judicial regret
An of would “[n]o recognizes decision the of Respect not have been out of order. can tort two-way Why in misrepresentation.” be a street trial skirmishes be- R. 1861. this responded negatively tween court and counsel. is seen court to Mr. Eis- What appears cautionary Appendix here to be a district court rather mann’s remark [see C] stubbornly insisting instructing Why on so the is not understood. this case was se- then, being guinea pig making jury, directly and on later but lected to be the for new error, temperately ig- confronted the is not understood. The case was al- with law noring challenge ap- ready complexities parties, in the favor of what rife with of the- C, 1985, respectfully Appendix and for these reasons move 9. See which demonstrates that Mr. Eismann, judgment plaintiff, insisting giv- that the of the court entered Decem- on for was 17, 1985, ab initio. ber be declared void simple negligence instruction and did of added). (emphasis R. This motion and 1674-76 instructing negligent misrepresenta- object to on received no mention in the its sworn contents tion. It was an astute counselor who advised decision, court’s memorandum nor in district against pioneering. the court
today's majority opinion.
ones,
(failure
among
disclose)
and cross actions
the defen-
the leases were
Cobbs,
dants.
bogus
only
fact
known
Ken-
—a
nevick,
Bazeghi.
jury
and
saw it oth-
Incomprehensibly,
very
page,
on the
next
erwise.
page
after the balance of
1861 was con-
nonproductive
sumed in a
discussion of
II.
Stewart
Nampa
Title
Idaho v.
Land
of
Title,
330,
(1986),
After the
110 Idaho
district court concluded that
P.2d 1000
bogus
display
a
of
leases rendered
and Ken-
and
the contents of
Re-
Cobbs
(Second)
552,
rent,
that,
only
to pay
statement
of Torts
nevick liable
and
§
specifically
discussing
court stated that before
and
in an
“the
were not liable
action
revolving
negli-
issues
tort
around
tort
for
based on a breached contractual
gent misrepresentation,
duty,
it must first con-
it
a
digressed
then
into discussion of
permissible
sider whether it is even
negligent misrepresentation.
tort
A
not,
Certainly
case.
is
present,
it
a
applicability,
of the
discussion
better
recognized
stated,
cause
of action
Idaho.” R.
nonapplicability
of the Restate-
wonders,
Again
why
Torts,
1861-62.
one
force
apparent-
ment Second
§
why
that issue in this case? And
belabor
ly
as
intended
substantiation for what was
is
written,
after
in?
being
strangely
but
this discussion
pay
lip
even
did
service
Restate-
Pages
and 1863 of the
memoran-
Torts,
which this
ment Second
§
dum decision discuss the factual circum-
Bechtel,
upon in Bethlahmy
Court relied
v.
stances, one of which
Cobbs
(1966),
again
91 Idaho
P.2d 698
liability
escaped
Kennevick “could not have
Enterprises
Coffin,
113 Idaho
Tusch
obligations
the rental
under the leases
(1987),
being
Compounding the error in agreement? (By court’s choos- clear June 1981 convincing evidence) ing misrepresenta- instruct on wording giv- tion of the instructions
en to the jury special on the verdict form. QUESTION 4(a): Did NO. Defendant explained First the ques- that some Lyle fraudulently R. Cobbs Plain- induce fraud, tions dealt with issue of 24, entering tiff into into the June 1981 others did not: agreement?
In you this case return a special will QUESTION 4(b): verdict, Did consisting NO. Defendant ques- of a series of fraudulently Jack Kennevick induce you tions which should answer. There entering Plaintiff into into the June questions concerning are individual agreement? (By 1981 clear and convinc- parties contentions of the various in this evidence) case, of parties the conduct and other specific questions about the amount of
damages may QUESTION which awarded to the you be 5: If found Except questions fraudulently Plaintiff. for those Plaintiff was induced into dealing alleged entering agree- into specifically with the acts the June damage, part ment and that Plaintiff suffered of fraud on the of certain named part such on the Defendants, question, conduct answering each proximate Defendants a above-named you persuaded, considering must all (By damage cause of to the Plaintiff? case, your in the evidence choice evidence) convincing clear and probably of is more than answers true respect ques- not true. With to those alleged dealing specifically
tions with the QUESTION 6: Did Defendant Webster part on acts fraud certain Partnership, acting by Investments #3 defendants, named in order answer through managing partner, its Mark affirmative, question each such Bazeghi, fraudulently induce Plaintiff allegations you find that entering must into the June into defined, fraud, agreement? convincing as hereinafter have been ev- (By clear and convincing idence) established clear and evi-
dence. QUESTION you If have found NO. 7: examining as is R. But seen fraudulently Plaintiff induced questions in the inducement on the fraud entering into the June into issue, required some instructions clear agreement Plaintiff suffered and that evidence, convincing others did not: but part damage, was such conduct 1(a): QUESTION Did defendants NO. # 3 Webster Investments Defendant Cobbs, Lyle R. Jack Kennevick and Mark Partnership proximate cause of dam- plan Bazeghi enter into a common age (By con- the Plaintiff? clear and fraudulently induce Plaintiff scheme to evidence) vincing entering into into the June convincing agreement? (By clear and ev- QUESTION negli- 10: Was there NO. idence) Wayne Hudson gence part on the proximate cause the dam- was a QUESTION 2: Did Defendant Mark NO. ages by him? sustained Bazeghi induce Plaintiff fraudulently 24, 1981 entering into the June into negli- QUESTION 11: Was there NO. agreement? gent misrepresentation part on the Bazeghi which was
defendant damage claimed proximate cause of Did QUESTION NO. 3: Defendant by Wayne Hudson? Partnership fraudu- Cobbs/Kennevick entering into lently Plaintiff into induce
QUESTION negli- very theory 12: there Hudson NO. Was case which counsel for gent misrepresentation part on the of the pleaded only to have the district court — Lyle defendants Cobbs and Jack Kennev- discount and discard it in favor of the law partnership
ick and the Cobbs/Kennevick showing clerk’s research proximate which was a cause of the dam- misrepresentation suit Hud- would better ages by Wayne claimed Hudson? simple negligence son’s case than the much-esteemed, experienced capa- and R. 1506-13. questions ble As counsel had elected. to eight questions All of the first are 10, 11, verdict, special and the in couched terms of fraud in the induce- jury Wayne negli- absolved Hudson ment. Fraud the inducement is not gence, regard Bazeghi, but not so with proven, readily great and it is no wonder- Cobbs, Kennevick, the latter-named jury pause long ment that the did not on individually partnership. two both and as a all, the issue of fraud. First of it has to be assignment A valid of error is that the jury remembered that the did find for Hud- finding remiss in three was all negligent misrepresen- son on the issue co-conspirators jointly severally liable. jury very may tation. Where well have participated in Had not all the execu- thought achieving justice itself with that leases, verdict, tion of the there would have been naturally it would have a lessened deception practiced liability, espe- interest in other no on the bank or on theories of cially Wayne when it had found the same mone- Hudson. $513,909, tary liability, on the rescission The thrust of Hudson’s action was not likely probability issue. But a more is that piddling seeking judgment one of there was not evidence that Hudson accrued rent on the basis of a lease which directly exposed was ever to Cobbs and possibly obligation created a contractual Kennevick. Kennevick were pay rent. When the news was out that the him, positioned never to induce and there “purported” spurious, and lease was indeed suggest no
was evidence to that either of purpose had for its to deceive the bank into them in- fraudulently was the habit of approving long-term financing, there was ducing, or that either even knew what the ratifying no reason for Hudson to risk prior finding term meant themselves as by suing bogus. on a lease which was fraud named defendants in a sizeable lawsuit. learning spurious, On that the leases were problem questions A with the asked on little reason for there would have been verdict, fraud, special relative to actual do, than he did Hudson to do other what i.e., inducement, fraud in the fail- was the namely, timely legal rescind and commence it, give ure to define or to some action. Under the law as it has existed for understanding of what is meant “in- many, many years, Hudson could not do Dictionary suggests duce.” Black’s Law otherwise, specifically “seduce,” seeing helpful. which is attempting gather in inconsistent in may accomplish pur- as to words what leases, spurious and at the fruits of the two same, pose only practically are appear- eyes of the bank same time objectives Generally differ. one induces or Bazeghi, particeps to be criminis with influence, by persuasion seduces accord- Kennevick, and Cobbs. Webster, according ing to while to Black’s decision, Early in the memorandum R. meaning expressed bring- in terms of “[bjased court found that the district about, causing, leading by per- ing on or by Mark package on the lease submitted reasoning. Presently it seems suasion or long-term Bazeghi, approved bank inducing that no of fraud could be attrib- June, way financing 1981.” In no could Rather, per- or Kennevick. uted to Cobbs Hudson, ordinary in an exercise of Mr. haps they were as much the inducees banks, including persons, respect for other Hudson, Wayne perhaps culpably but whistle, blowing the idly by sit without willing Bazeghi. aid In that all too up until then he had he found out that strongly once respect, the evidence illustrates unwitting pawn in the an culpability negligence, been used as that their *12 Bazeghi coup agreements aimed at securing the all-im- less were entered into portant financing, long-term the absence of # they behalf of 3 nor that Webster even al., which have left Bazeghi, would et in knew of Webster 3. Bazeghi serious circumstances. Obviously accomplishing was intent on objectives: two 17, The leases were executed March (1) obtaining long-term financing not mat- 1981. Mr. Cobbs never discussed the else, (2) passing ter property what and arrangements Cobbs/Kennevick lease off to Hudson in return money. for his with Mr. Mr. Hudson. Cobbs testified alleged Cobbs and Kennevick were to have that he was aware that banks sometimes negligent affixing signatures their required leases to insure that there Bazeghi’s request. adequate would cash to be an flow meet very The district court was definite con- payments. the loan He also testified cerning the stance the bank take would Bazeghi that him Mark did tell that deception should it be made aware buyer. leases would be used to secure a
being practiced
by Bazeghi,
on it
Kennev-
7,
By
1981,
a letter dated March
Mr.
ick, and Cobbs:
Hudson
Bazeghi
was advised Mark
conclude,
I
on the testimony
based
Lyle
and Jack
Cobbs
Kennevick
Cunningham
William
and Richard
building.
space
would
At
lease
Brown,
Bank was
that the
never advised
point,
space
to be leased com-
the arrangement
the nature of
be-
prised
pre-leasing require-
of the
54%
partnership
tween
Cobbs/Kennevick
ment.
Mr.
Bazeghi
Mr.
also told
Hudson
that,
Kathy Bazeghi
and Mark and
that Mr.
Mr. Kennevick
Cobbs and
would
had the Bank been aware of the nature
space
lease
that Mr.
Cobbs would be
agreement,
ap-
of the
it would not have
helping
building.
active in
lease the
proved
long-term financing
because
condition
pre-leasing
would not be
added).
(emphasis
R. 1836-38
bymet
leases which
Bank was to
questions
Returning
special verdict
treat as invalid.
although
supra,
the district
added).
(emphasis
R. 1836
The court con-
post-trial
concede that
it had
very significant
made four
tinued on and
giving
theory
jury,
to the
erred
such a
numbered,
although not
are
findings, which
jury
answering
the fact remains that the
readily discernible as such:
that the
questions
those three
found
defen-
Bazeghi
agreement between Mark
The
gist
negligent,
was the
dants were
partnership
and the Cobbs/Kennevick
sought
present
theory
the main
Hudson
sign
was that Cobbs/Kennevick would
against
jury
Kennevick.
Cobbs and
appeared to be valid leases
leases which
answering special
also
verdict
found
fi-
approve
Bank would
so that the
questions
16 that the
con-
15 and
appear
it would
that the
nancing because
duct of
and Kennevick
an ex-
Cobbs
requirement
made.
pre-leasing
had been
reasonable standards
treme deviation from
Bazeghi
en-
Contemporaneously,
performed
with an
conduct and
agreements
into hold-harmless
be-
tered
disregard
likely
understanding or
himself and Cobbs/Kennevick
tween
consequences. R. 1516-17.
from
aris-
harmless
claims
hold them
circumstances, while
Under these
leases and
be liable
ing from the
perceived why
jury
chose to
readily
if
did not oc-
the rent Cobbs/Kennevick
against
damages
punitive
assess no
July
or sublet
cupy
premises
them
$50,-
Kennevick,
in turn assessed
Exh.
31.
hold-harmless
readily
against Bazeghi,
per-
it is also
to the
were not attached
agreements
requiring
that the court erred
ceived
provided
leases,
to either
they were
the culpable
assess
comparatively
plaintiff,
nor were
the Bank or
existence____
Kennevick,
Cobbs,
and Baze-
negligence of
At
of their
advised
either
the far more
ghi. Obviously the latter was
testi-
ever
point did Cobbs/Kennevick
no
a situation lend-
culpable, but this was not
that the hold-harm-
fy
believed
opinion. There
*13
negligence. The
turn to the district court’s
comparative
itself to
did,
learn,
as I
that the district
participated in a
would
individuals all
three named
submitting
in
to the
scheme, i.e.,
court declared error
produce
bogus
two
common
misrepresenta-
jury
negligent
the issue
leases,
“facially
the district
valid” as
but
theory
would render
tion as a viable
which
remarked,
also
so
and those leases
court
Kennevick,
Cobbs,
Bazeghi,
the defendants
causing
enter
played
part
in
Hudson to
lia-
partnership
and the Cobbs/Kennevick
building.
purchase of the office
into the
plaintiff, Wayne
the
Hudson. Where
ble to
negli-
I am not aware that such
Presently
appeared in the district court’s memo-
there
charged to
gent conduct as was
1860-61,
state-
randum decision at R.
the
Kennevick, combined with the fraudulent
had
prior
ment that defendants
to trial
scheming
Bazeghi by
the court
conduct
submitted and then at
the instructions
properly
principal,
to his
Web-
attributed
instructing
jury
objected to
the
#3,
anything
joint and
ster
can be
but
conference
on
negligent misrepresentation, Justices
is
case law
several.
If there
some Idaho
naturally
Huntley and McDevitt would
take
precedent
apportions
partic-
for
which
fault
granted
negligent misrepresenta-
that
sort,
ipating
conspiracy
I should
in
of this
by
theory of the case
tion was a
advanced
brought
pleased
be
to have it
forth.
plaintiff,
upon
plaintiff
the
which
Earlier it
The record is rife with error.
requested
jury
that the
instructed.
had
suggested that the district court’s er-
Inadvertently,
forty-five page monu-
that
refusing
plaintiff’s
on
ror
to instruct
opinion
failed to
mental
of the district court
requested theory
negligence
was cor-
suggest
the court had
intimate or
Here,
rectable.
where the district
theory
simple
plaintiff’s
turned down the
jury
multiple
instructed the
as to
theories
theory
negligence in favor of the
which
damages
liability,
on two of which
advanced,
negli-
sponte
that of
court sua
(rescission
jury
negli-
awarded
objec-
gent misrepresentation.
Boyd’s
Mr.
gent misrepresentation),
jury’s
var-
pur-
seemingly
particular
tion
served no
questions propounded
ious answers to
impossible
pose
It is not
whatever.
have
the same on
the court would
also been
upon
clerical mistake or inadvertence
simple negligence
theory
which
—the
responsible for the
part of the court was
precluded
jury
district court
from utiliz-
noting
district court's omission
ing,
remedy
could
one
which this Court
Only
exam-
parties
objected.
had
on
both
consider would be to remand to the district
papers
defen-
ining
moving
for the
apply
court with directions to
those an-
it discover-
dants’ alternative motions was
proper theory
plaintiff
swers to
which
plaintiff
objected, futilely, to
ed that
also
alleged,
doing
and determine if
so estab-
instructing
theory
negligent
mis-
on the
liability
lished the
of the Cobbs/Kennevick
resisted, futilely,
representation, and also
Cobbs,
partnership,
Bazeghi,
and Ken-
plain-
the court’s refusal to instruct as
nevick,
#
If
individually, and Webster
negligence
requested
simple
on his
the-
tiff
not,
retried to
all
issues should be
F
ory.
Appendix
hereto as
are
Attached
still,
jury, or
this Court
another
better
requested
on the
plaintiff’s
instructions
give
should
directions.
misrep-
preferred
negligent
over
theory he
conclusion, it
remiss of me
In
would be
resentation, and, indeed,
theory
a viable
acknowledge
to not
tremendous
knowledge
counsel’s
of the case.
based on
expended
and effort
amount of time
memorandum
With the district court’s
portraying
court in
the evidence
district
was, and with 31
drafted as it
decision
thereby
developed
Only
at trial.
reporter’s
record and
volumes of clerk’s
gaining
understanding of the volumi-
some
transcript, it
no wonder that both Justice
I
delved
appeal
nous
record could
did not be-
Huntley and Justice McDevitt
deeper.
negligent misrepresen-
that a
come aware
theory
liability was
Huntley and Justice McDev-
tation
of defendant’s
Both Justice
solely
court’s de-
respective opinions given
on the
authoring
their
itt
so. As has been dis-
naturally
termination to do
case would
for the Court
cussed,
bility
doing,
where the district court conceded it
was of its own
and at the same
error to
all on
instruct at
mentioning
time
that the
abstract
misrepresentation,
absolutely
there was
no
objected
instructing
defendants had
so
indulge
valid reason
the exercise of
jury,
Huntley,
and now in turn
Justice
assuming
was such a
the-
that there
viable
McDevitt,
Justice
into
were misdirected
be
Idaho,
ory in
declaring,
and then
absent
lieving
plaintiff’s theory,
that was
reasons,
reasoning, or ratio decidendi
fall,
which he
either stand
and the
*14
sort,
any
plaintiffs
of
that
the
evidence
already
district court had
ruled the evi
up
proof,
paving
came
thus
the
short
dence
otherwise is
insufficient.
truth
way
judgment
for the
as to
entry of
n.o.v.
out,
now
the
trial
as is also
fact that the
theory
parties
neither of
a
which
the
plaintiff’s
on
court did not
instruct
the
though proper.
theory
All
negligence.
of
that remains to
giv-
Where the court committed error in
any
seen
of the
is whether
member
theory
negligent
ing
misrepresenta-
the
of
profited by the
now
Court has
illumination
belonged
error
100
jury,
tion to the
that
shed on
court’s
and whol
the trial
unusual
percent to
the
alone.
the court and
court
(1)
ly unprecedented conduct
instruct
in:
of that
to Mr.
None
error was attributable
ing
theory
the
a
defendants’
jury on
of
clients;
error
at-
Boyd’s
none of that
was
(2)
parties
liability
opposed;
both
which
Mr.
clients of
Eismann
tributable
the
that
error to
conceding post-trial
it was
Kennedy.
and Mr.
Under those circum-
negligent misrepresentation,
instruct on
anything
do
else
stances a court does not
(3)
trial;13
weigh
granting
not
a new
but
and
the case
but confess its own error
set
trial,
produced
the evidence
without
retrial.
for
doing
it was
so under
that
reference
Boyd alternatively
It is true that Mr.
Quick Crane,
guidelines
v.
111 Ida
the
n.o.v.,
judgment
which under the
moved for
759,
(1986),
ho
Justice
it was not the
anyone
inform
served to
opinion
Justice Bakes
the 1989 Chief
wise
theory of de-
such a
plaintiff who selected
*15
Huntley
criticized the
analyzed and
court
liability,
it was the trial
fendants’
but
are,
pertinent part, at-
in
opinion, both
theory in
insisting on such a
sponte
sua
Appendix
as
G.15
tached hereto
pleaded theory
plaintiff’s
preference to the
failing
that the
negligence in
to disclose
in of
Bakes first concurred
Chief Justice
bogus. The
leases were
opinion: “I concur Cobbs/Kennevick
Huntley’s
part in Justice
theory of defen-
itself chose its own
opinion which court
part
in that
of the Court’s
that,
liability.
just
More than
Jus-
dants’
‘the trial court was correct
concludes that
from
Huntley
not have known
establishing
tice
could
ruling
in
that the elements for
that
memorandum decision
the trial court’s
negligent misrepresentations were
jury to con-
therefore,
had forced the
and,
jury
for
the trial court
proved
verdict
misrepresen-
theory
negligent
sider the
plaintiff
stand and must be vacat-
cannot
”
objections
plaintiff
Hud-
tation over the
Slip Op. at 21. Thus we have
ed.’
Kennevick,
Cobbs,
and defendants
agreeing with Justice
son
Justice Bakes
Chief
partnership. Once the trial court was
agreed
the trial
their
Huntley, who in turn
with
mo-
attorney Boyd’s alternate
for
faced with
had ruled “that the elements
who
n.o.v.,
new
judgment
and/or a
establishing negligent misrepresentation
tions for
trial,
ruled that
and, therefore,
after the trial court
proved
jury
were not
misrepresentation was not a the-
plaintiff] cannot stand and
verdict [for
Idaho,
remedy available
it was
ory
21.
Justice
must be vacated.”
Id. at
futility
go through
opin-
indeed an exercise
Huntley had also noted earlier in his
determining
9,
the motions of
whether
page
that: “The court ruled that
ion at
the verdict
allowing
negligent misrep- proof was sufficient to sustain
had erred in
conclude,
of such re-examina-
prior opinion
the Court
We
tion,
result
stand whether a
for
appealed
in the case
example
decree
from
superseded.
Felton
that the
or is
One
is
stands
be,
hereby,
381,
(1949).
and it is
reversed
at bar should
Finley, 69 Idaho
491
Andrews, 94
concluding
theory
title insurance. Blinzler v.
give
that
was
(1971).
485 P.2d
Idaho
objections
plain-
of both the
jury over
Here,
fact
is star-
tiff and the defendants.
There is an
case which
In
tlingly
with is
similar to the one before us.
majority
will have to live
which
Bechtel,
Bethlahmy v.
it erred
absolutely
that the court
ruled that
(1966),
recognized
P.2d 698
Court
submitting
theory.
As to the ratio
implied warranty of fit-
‘the doctrine
basis, i.e.,
judg-
that
other
decidendi
a house
insofar as construction of
ness
negligent misrepre-
ment n.o.v. as
Major
concerned.
defects
theory
Hud-
proper
sentation
because
habitation,
house unfit for
render the
proper cause
was not
son’s
of action
remediable,
readily
are not
and which
tort,
sub-
totally
but in contract is
without
and resti-
buyer
rescission
entitle
Unless,
repetition
stance.
that
sheer
Idaho at
P.2d at
tution.’ 91
court,
makes it so—first said
the district
Here,
noted,
testi-
as has been
Powell’s
Factually
repeated
majority.
property
mony was that without
stated,
ratify a
simply
Hudson
declined to
septic
sewage
qualifying
system
for a
by suing on it.
fraudulent “straw” lease
property
disposal, the
was ‘unbuildable.’
in as-
necessarily
correct
One
clearly
on that basis
he was
It was
suming
majority opin-
from tenor of the
in Beth-
entitled to rescission. Just as
parcel of
anyone desiring
to sell a
ion
evidence
mount to the
lahmy the
did not
go
an
property at
inflated value could
real
fraud, so here
even short-
level of
it falls
reputable
economically
to two or three
case,
that,
in this
there is
er. But
as
facially valid
acquaintances,
sound
obtain
defect, namely
is not
major
that the lot
for,
day
purchase
irrevocable
offers
adaptable
septic
to a
in this case
system;
$750,000,
$625,000, and
say one at
one at
that,
readily
problem
$1,000,000,
persons
the other at
with the
remediable;
that,
in this
as in
there
case
knowing
it was an
signing those offers
*17
warranty of
implied
is a breach of the
accommodating thing
do for the owner
to
fitness, and,
no
ipso facto,
there was
only
at
property actually appraised
of a
defending
claiming
for
an action
basis
$450,000. The three
would be
confederates
right to rescind.
writing
in
person,
assured
that the
named
Bethlahmy opinion
unani-
“one,”
solely
and
to
above as
all was done
Taylor it
Authored
Justice
mous.
price.
helpful
produce a better
It would be
thorough
comprehensive.
was also
to see how a
can
drawn be-
distinction
giving recognition to the
In addition to
of
in the
tween that set
facts and the facts
implied
opinion
warranty,
doctrine of
In
instant case.
either scenario the confed-
duty
length
also dwelt at some
on the
grossly
affixing
in
erates are
disclose,
pointed
as
which
has been
signatures
bogus paper,
and are
their
herein, was not fulfilled when Niet-
out
guilty of constructive fraud in not disclos-
Reynolds
property
listed the
with
mann
they have
what
done.
found,
and,
Judge
Nietmann
as
Prather
concerning
Reynolds nothing
told
sewage problem.
Taylor wrote:
Justice
APPENDIX A
Restate-
In the tentative draft of the
Bistline,
separate opinion
Portions of the
Torts,
Second,
the Law
con-
ment of
590,
J.,
Nietmann,
in Powell v.
by The
Law Institute
sidered
American
(1989):
also be considered whether
the facts
category
here
within the
cases
fall
represented the nonexistence
finding misrepresentation
ba-
matter which he has
to dis-
failed
meaning
sis
nondisclosure’
silence
if,
close,
if,
only
duty
but
he is under a
misrepresentation.
as a
form of
other
exercise reasonable care
42,
Idaho at
1-1. Under the sales Wildwood he had an ties completed and Center was to be Office Bazeghi Mark stated I—11. Defendant 1981, 1, pre-leased March delivered Plaintiff Hudson that all of Defendant 12,213 approximately extent Bazeghi’s real estate business had Mark square feet. promised to the Defendant Cobbs been 1, 1981, Properties, of Idaho 1-2. As of March the Wildwood who was the owner firm, complete brokerage and that nearly but a real estate Office Center was open a requirements of the loan Defendant Cobbs would branch pre-leasing fulfilled. at Wildwood Office Center. commitment had not been sales office Bazeghi Mark stated pre-leasing require- 1-12. Defendant Without 1-3. met, Hudson that Defendant Jack long term to Plaintiff having been ments aforesaid, By deception
1-23. De- Bazeghi fendant Mark was enabled to Kennevick had the insurance business procure signa- and did Plaintiff Hudson’s Bazeghi’s for all of Mark investment on the ture lease of Suite 101 and on the partnerships, which Plaintiff Hudson lease of Suite 103. theretofore had reason to believe. Cobbs, subsequent 1-13. Defendant 17, 1981, 1-24. On or about June Plain- 7, 1981, acknowledged March to Plaintiff Hudson, Lessor, tiff executed the space Hudson his commitment to lease agreement lease with Defendant the WildwoodOffice Center and to act as Partnership, Cobbs/Kennevick as Les- agent in leasing space to others. see, providing for the lease of Suite 17, 1981, 1-14. On March Defendant of Wildwood Office Center. Partnership, part- Cobbs/Kennevick both signing, ners executed a lease of Suite bringing leasing In 1-28. about the
101 of Wildwood Office Center. 101, Cobbs, Defendants Suite Kennevick 17, 1981, Concurrently, 1-15. on March Bazeghi and Mark acted in concert. Defendant Cobbs Defendant Ken- Bazeghi nevick and Defendant Mark (herein signed agreement a secret called bringing leasing In 1-33. about the agreement) Suite 101 hold harmless recit- 103, Cobbs, Suite Defendants Kennevick signing that in consideration for the Bazeghi Mark acted concert. of the lease of Suite Defendant Bazeghi
Mark would hold Defendant signatures 1-34. The of Defendant Cobbs and Defendant Kennevick harm- Cobbs and of Defendant Kennevick arising any less ‘from claims out of his agreements sepa- such lease constituted Agreement____’ execution of said Lease representations by rate them that pay intended to rent in accordance with 1-17. March Defendant On agreement. the terms of such lease Partnership, part- Cobbs/Kennevick both Neither Defendant nor De- 1-35. signing, ners executed a lease of Suite perform fendant Kennevick intended to 103 of Wildwood Office Center. bound the lease of 101 or or be Suite 17, 1981, Concurrently, 1-18. on March having the lease of Suite and Defendant Ken- Defendant Cobbs Cobbs, agreed among Defendants Ken- Bazeghi nevick and Defendant Mark Bazeghi nevick and Mark that the ex- signed separate another and secret press implied representations con- (herein agreement called Suite 103 hold agreements tained in such lease reciting in con- agreement) harmless false. signing sideration for the of the lease of Bazeghi Defendant Mark Suite prior 1-36. None of the Defendants and Defen- would hold Defendant Cobbs 1, 1981, July notified the Bank nor on Kennevick harmless ‘from dant and Defendant of Defendant Cobbs’ arising his execution of said claims out of bound Kennevick’s intention not to be Agreement____’ Lease perform the leases of Suite 101 or to Suite 17, in- 1-22. Between June 9 and June of the Defendants notified 1-37. None clusive, Bazeghi repre- Defendant the Defendant Plaintiff Hudson *20 to Plaintiff Hudson that the lease sented and Defendant Kennevick inten- commitments for Suite 101 and 103 were perform by or to tion not to be bound sound, long obligations of two indi- term leases of Suite 101 and Suite financial net worth viduals of extensive Hudson did not know 1-38. Plaintiff security adding substantial for Plaintiff and Defendant that Defendants Cobbs completing purchase Hudson to be bound Office Center. Kennevick intended not the Wildwood Defendant from Office Center wood Plaintiff Hudson No. 3 had the Webster perform the leases Suite and not Defen- Cobbs and that Defendant known and Suite 103. intend to be did not dant Kennevick added). (emphasis R. 790-802 leases. subject bound and Defendant Cobbs When the R-9. 826-27. R. de- signed and Kennevick the Defendant the Defen- subject leases to livered the C APPENDIX knew, they or in the Bazeghi, dant Mark re- the trial court portions from Pertinent ordinary care should have exercise instructions con- transcript of the porter’s Baze- known, Defendant Mark that the Plaintiff are as follows: represent ference ghi intended to buyer prospective other Hudson or some moved We have EISMANN:] [MR. that such Office Center of the Wildwood instruc- and Instruction No. enforceable leases valid and leases were it, obvi- tion, the instruction as we view inducing Plaintiff purpose with negligent misrepresenta- ously relates prospective buyer or some other Hudson requested Instruc- tion. The Plaintiff’s to com- Wildwood Office Center of the simply a statement 58 is tion Number purchase or to plete purchase negligence. Center. Wildwood Office to an instruc- think we are entitled We person that a negligence, and tion on R-12. While the Defendant Cobbs or in- a blank places circulation who knew, Kennevick or the Defendant completed or even a complete document care should have exercise of reasonable responsibility and has some document known, situa- desperate financial havoc that it doesn’t wreak duty to see Bazeghi and the Defendant Mark tion of come across people with those who 3, meeting in. No. the Defendant Webster document. con- preleasing requirements of the well, give Okay, I will THE COURT: purchase, the Defendant Cobbs tract reasoning my decision on my you signed and Defendant Kennevick and the well, this if I that now so that later am— subject leases to the Defen- delivered the negligence I read all the is how I see it. disregard Bazeghi in wanton dant Mark cases, through my Clerk checked Bazeghi the Defendant Mark of what substantially. this issue dates, changing do in terms of would loss, pecuniary the sole loss is When signatures, before signing initials and no case that has found there’s presenting leases to the Bank or to such except in those circumstances owed Hudson or to others. the Plaintiff negligent misrepre- where it falls within The Defendant Cobbs and R-13. sentation. signed negligently Defendant Kennevick doing duty to avoid generalized subject negligently delivered exists with might harm another what Bazeghi to the Defendant Mark leases you cited and respect in all cases in what disregard as to how or wanton find re- we could with Bazeghi every case that Defendant Mark manner the damage. physical property spect to present such leases to use or would they saying is gist you of what are or to the Plaintiff Hudson Bank or to negligent misrepresentation. made a others. negligence than dismiss Rather negligent mis- entirely, I it as view Hudson re- count the Plaintiff R-16. When negligently representation, which presented to subject leases as viewed the is, neg- misrepresentation. That Defendant made Hudson the Plaintiff [sic, leases in action ligently placed these Hudson Bazeghi, the Plaintiff I circulation], and think signed subject leases not have truly accu- more misrepresentation purchase of the Wild- completed the *21 496
fact that the basement was not of wa-
construction,
terproof
constituted ma-
rately states the true nature of the cause
defects,
defendants,
jor
known to
of action.
plaintiffs,
unknown to
and not dis-
no case that —that
I have
There’s
upon
inspection.
coverable
reasonable
impose duty,
gen-
that would
found
defects
Failure to disclose such
you
urged
eralized
with
Id.,
59,
support
finding of fraud.
respect
negligence
to a
count and there-
We
misrepresenta-
quality
would be a
home.
may
disclosure
amount to
house
Bechtel,
finding of construc
Bethlahmy
facts essential to a
tion
Id.,
(1966).
dispute.
Bethlahmy,
In
fraud ... are not
Plaintiffs commenced
cumstances there
restitution, mainly
during
transaction.
rescission and
disclose
If
accomplished,
ground
deception
of defendants’ failure
form
And the
of the
is immaterial.
the defective condition
the deceit
disclose
by the
question
unsealed
is not
presence
legal
house.
affected
deceive, for
an intent
through the lot and
absence
irrigation ditch
intent,
good or
whether
the element
garage, coupled with the
beneath
*22
operates as
fraud
a virtual
on an individ-
ual,
which,
or
generally permitted,
if
bad,
only important
may
is
as it
affect
prejudicial
public
would be
to the
wel-
the moral
of
representa-
character
fare,
yet may
and
have been unconnected
Bethlahmy, supra,
tion.
Idaho
Or,
any
design.
with
evil
or
con-
selfish
60,
498
prove
other
claimant must
party
an
case
had
intent
to deceive. In a
IDAHO
THE LAW
STATEMENT OF
fraud,
of constructive
that element is not
From Rawson v. United Steelworkers of
required.
Bechtel,
Bethlahmy v.
91 Idaho
America,
680,
111 Idaho
Rawson, McGhee at P.2d omitted). (1960) (citations fraud, P.2d prove actual 744-45. In an action to APPENDIX F *24 ^ REQUESTED
PLAINTIFF'S JURY INSTRUCTION NO. summary. as
In brief Plaintiff claims follows: building purchase In 1980 he contracted an office subject purchase delivery by was under construction. to the plaintiff long seller term loan. The Idaho First National of Bank, long only approximately had committed term loan but if (84%) eighty-four percent preleased. building the obligation prelease, It was Webster Investments #3's which leases, ultimately by submitting signed by did two fictitious each Kennevick, Lyle by Defendants R. Cobbs and Jack and one lease to a Cobbs, corporation sham known to Defendants Kennevick Mark Bazeghi to be without Mr. substance. Neither Cobbs nor Mr. Kennevick was, however, signed intended to be bound the leases them. It rely intended them that Bank the on such leases and fund long rely accept term loan and that Plaintiff would also building responsibility for loan. 24, 1981, agreement part
In an of June which is contract, represented preleasing requirement sales it was leases, Relying representation, had been met. on the and other representations. accept performance Plaintiff did seller's responsibility approval leasing for loan. The Bank's arrangement was. also an element Plaintiff's reliance. 24, 1981, agreement of June also committed quaranty covering space
seller to a leases more than 65% of building. up guarantee. The seller failed to live to this representations The leases above mentioned and other false llazcglii, wore known Uio Dol'emlaiiUs makers. Jiick together foregoing Lyle which R. acted
Kennevick on the conspiracy and an fraud to defraud actual constituted conspirator liable for acts other. Each is Plaintiff. #3, building was Webster Investments The seller such, partner partnership. general each is liable As *25 Bazeghi. managing partner, is Mark acts of who its damages compensatory each of several Plaintiff seeks making on each a determination alternative claims. You will . but, coursej may only separate once. collect claim the Plaintiff of are: causes action The different Breach
1. of contract: (a) leases Webster Investments fictitious Because prelease. obligation its to meet failed
#3 (b) pay rent under failed Webster Investments #3 guaranty. 2. Fraud:
(a) responsible Webster Investments #3 Bazeghi managing partner, Mark and its
fraud co-conspirators. — Conspiracy: 3. Fraud Kennevick,
(a) Bazeghi Lyle Mark R. Cobbs and Jack to defraud a scheme in concert acted did the Plaintiff. defraud Act.
4.- Violation eer/ng Idaho/Racket (a) injur/ pattern has Plaintiff susta/ned
racketeering law. defined acti/ity Negligence: / (a) signing delivering incomplete thorn to Tn leases Bazeghi, was negligence there on the Cobbs, part Lyle Jack and the Kennevick R. Partnership.
Cobbs/Kennevick
(b) failing to Plaintiff disclose In Lyle R. Cobbs Bank that First National Partner-
Jack and the Kennevick Cobbs/Kennevick leases, by the ship be bound intend did Cobbs, Lyle part R. negligence on the there Partnership. Jack Kennevick Cobbs/Kennevick (c) First failing and Idaho Plaintiff In to tell *26 of' substance lack
National Bank of mentioned, negligence corporate there was lessor part Lyle R. Cobbs. on
(d) gross. negligence
BISTLINE, J. comments. Every sentence in the first six paragraphs plaintiff tne s requested Instruction No. 1 will be found almost identically stated district post-trial court's (cid:127) memorandum decision. Moreover, is not seen that setting forth theories argumentative contended facts ~~ -- — —:--— - REQUESTED PLAINTIFF'S
JURY INSTRUCTION NO. Lyle plaintiff R. Cobbs claims that defendants also Partnership negligent were Jack Kennevick and the Cobbs/Kennevick signing covering incomplete Suites and 103 leases delivering same defendant the Wildwood Center Office present such Bazeghi, knowing Bazeghi intended Mark knew, they plaintiff when leases bank to Idaho First National known, rely plaintiff Bank said should leases, failing notify negligent said to be plaintiff intention National their First Bank leases, Lyle bound R. said and that defendant plaintiff notify and Idaho in the manner he failed *27 in connection with First essential information National Bank of Professionals, leasing Inc. Plaintiff to The of Suite the Lyle part defendants R. that on the of also claims such conduct Cobbs, Partnership and the Jack Kennevick Cobbs/Kennevick disregard rights First National of Bank wanton the of alleges plaintiff gross negligence. Plaintiff and constituted negligence damaged proximate such on result of he was part the of said defendants.
BISTLINE, J. Comment: (after That initially the court submission trial) the court Given, before marked instruction it, yet give did not in accord /X/ with the later statement the court's instructions the and the conference researching court's law were clerk indeed thought law with in mind to instruct negligent misrepresentation of instead plaintiff's theory negligence of nondisclosure. REQUESTED PLAINTIFF’S
JURY INSTRUCTION NO. 58 For Plaintiff Hudson to establish Defendants Cobbs, Lyle R. Partnership Jack Kennevick the Cobbs/Kennevick negligent, proving of the Plaintiff Hudson has the burden following propositions preponderance each evidence: Cobbs, Kennevick, Lyle 1. That R. Jack defendants Partnership in connection and/or Cobbs/Kennevick leasing participation, with their conduct or omissions space office in the Wildwood Office Center. damaged. plaintiff
2. That Hudson was Cobbs, negligence Lyle 3. That the defendants R. Partnership proximate Jack Kennevick was a and/or Cobbs/Kennevick plaintiff damages. cause Hudson's plaintiff's damages, The nature and extent damage,
elements amount thereof. you your find from of all If consideration evidence *28 propositions proved preponderance each has been a evidence, your plaintiff; then verdict should be for but, you your if find from all consideration evidence propositions proved, your these has not been then verdict should be for defendant. 270-1,
IDJI as modified BISTLINE, J. Comment: See comment to Instruction No. 57. REQUESTED PLAINTIFF'S NO. 59
JURY INSTRUCTION instructions, "negligence" in these I word I use When management ordinary of one's care to use mean failure reasonably "ordinary care a careful person. care" mean words to those shown person similar under circumstances would use something failure to do may Negligence thus consist evidence. do, doing something reasonably person would careful do, person under circumstances similar reasonably would not careful say reasonably does how The law to those shown evidence. you That person those circumstances. under act careful decide. IDJI As Modified *29 REQUESTED
PLAINTIFF'S
JURY NO. INSTRUCTION amount, required person of caution of a (cid:127) ordinary depends upon exercise apparent care conditions apparent reasonably prudent him person should to a under circumstances those similar shown evidence. Instructions, Jury
California Edition, Sixth No. 3.12 BISTLINE, J. comment: Presently instruction sound. I have found its content was covered elsewhere. *30 506 REQUESTED
PLAINTIFF'S NO. 61
JURY INSTRUCTION society to use every person in our duty One owes person damage other to avoid reasonable care anticipated reasonably foreseen could situation damage. might In result care to use such a failure allegedly by the breached has been determining such whether against of an party, is measured conduct circumstances acting all person under ordinarily prudent existing. then conditions 1289; p. Sept. 1985 ICAR 85 Payonk,
Alegria Id. 619 v. Hammond, (1980); Nogel P.2d (1965). P.2d 90 Id. BISTLINE, J. comment: The instruction sound.' The district s comment is not understood. All even, damages, pain and suffering, are
assessed a pecuniary (monetary) award. *31 REQUESTED PLAINTIFF'S
JURY INSTRUCTION NO. Cobbs, Lyle require R. The law does that defendants partnership must have Jack Kennevick. the Cobbs/Kennevick precise damage in fact resulted able foresee the- which alleged injurious negligence, particular result from the or person might upon thereof result be inflicted requires negligence. only reason defendants The law Cobbs, partnership Lyle R. Jack Kennevick Cobbs/Kennevick appreciate results some should be able understand anticipated injurious may reasonably from kind in nature act omission commission. Oregon Burkland Shortline R.R. - Co., BISTLINE, J. comment: appears There to be no conceivable reason for not giving instruction, other than the district court would
ultimately refuse plaintiff's instruct theory of negligence and failure disclose. *32 REQUESTED PLAINTIFF'S
JURY INSTRUCTION NO. 63 helpful determining or test that is whether not One not, person if is to ask and answer whether or a person ordinary prudence had been in the same situation possessed knowledge, foreseen or same he have anticipated might injured been or as result someone have question is of his If answer action or inaction. avoided,
"yes," been inaction could and if action negligence. then to avoid it would be Instructions, Jury
California Edition, 3.11 No. Sixth BISTLINE, J. comment: This instruction proper, 'but apparently refused same reason requested Instruction We answer jury. presented G APPENDIX and re- affirmative question HUNTLEY, J. trial. new for a and remand verse issue of wheth- presents case This grant- a verdict renders er, when FACTS theo- alternative on one of two ing relief a series around case revolves This court, a byit law submitted ries of Bazeghi (1) Mark between: agreements granted when trial should new acting on partner (the managing general mo- post-trial determines trial # Part- 3 General Webster not have behalf theory tions, should
509
therefore,
and,
case within that doctrine
affirm on this issue.
(2)
nership);
the Idaho First National
Slip Op.
point
1989
3-10.
Justice
[At
Bank; (3)
Hudson;
Wayne
Plaintiff
D.
Huntley
provisions
set out the
of Restate-
(4)
Cobbs, Kennevick,
Defendants
Torts,
(Second)
552,
ment
after stat-
§
and the Cobbs/Kennevick partnership.
ing:
appellate
every
“The
in
courts
state in
Partnership
#
Webster
owned a
the Ninth Circuit area where
issue
has
tract of
land
Boise called the Wild-
presented,
recognized
the tort of
wood Center. This tract of land included
negligent misrepresentation as elucidated
apartments
the Wildwood
and the Wild-
Restatement,
being:
those states
1,
buildings.
August
wood office
On
Alaska,
Mexico,
Washington,
New
Mon-
$580,000
Webster #3 obtained a
Arizona,
Nevada,
tana,
Utah, Wyoming,
loan from Idaho First
to finance con-
Colorado,
Kansas,
Only
and Hawaii.
Okla-
buildings
struction
office
on the
homa, Oregon,
yet
speak
and Idaho have
to
property.
Wildwood
Interest was
set
Op.
to
Slip
the issue.” 1989
at 10-11. Jus-
payable
July
13%
1981. Under the
Huntley
tice
holdings
stated the
of these
agreement,
terms of the loan
loan
the.
ensuing pages
states over the
of 11-16 of
long-term financing
was convertible to
if
opinion.
opinion
His
continues]:
building
pre-leased
the office
to the
12,210
prior
extent of
to July
feet
II.
citing
In
to
addition
absence of
negligent misrepresen-
law on
Idaho case
Although the trial
a
court had denied
tation,
trial
court stated two other
motion
a
granted
for
directed
verdict
granting
j.n.
reasons for
motion
judgment
the defendants’ motion for
not-
First,
o.v.
Hudson’s action was
withstanding the verdict approximately
properly in contract not tort and second-
entering judgment
seven months after
ly,
requisite
negli-
elements of
against
the defendants on the
ver-
gent misrepresentation were not ful-
dict. The court
negligent
ruled that
mis-
reason,
Regarding
filled.
the first
representation
present
was not at
a via-
court wrote:
Idaho,
appellate
ble cause of action in
no
The threshold
before
is
issue
the court
having recognized
decision
It
the tort.
whether Idaho would allow this claim
further
if
ruled that even
such a tort
proceed in
to
tort
a
mis
Idaho,
recognized in
the evidence
representation
than
claim rather
as a
support
finding
did not
a
for Hudson on
Generally,
claim.
breach
contract
the requisite
all
elements of that
tort.
duty
perform
where a
arises from a
The court ruled that it had erred in allow-
contract, the
cause
action lies in
negligent misrepresentation
contract,
tort,
duty
not
when the
Thereafter,
proceed
jury.
claim to
Supreme
As
breached.
the Idaho
denied Hudson’s motion for
Court noted Carroll v. United Steel
trial,
new
and his motion to amend the
America, 107 Idaho
workers of
ruling
j.n.o.v.
j.n.o.v.
It is the court’s
(1984),
692 P.2d
it is well settled
grant
and refusal
new trial which
alleged
perform
that “an
failure to
gives
appeal
rise to Hudson’s
herein.
obligation is
contractual
not actionable
tort,
an
tort
...
found
action
I.
duty apart
be a
there must
breach
We
consider
first
whether
trial
nonperformance
from
of a contract”
ruling
post-trial
court erred
its
Herbold, 94
(quoting Taylor
Idaho
negligent misrepre-
cause
action in
(1971))
to
rents which was breached. No-
relationship
other
existed between the
ruling
necessary
In
that the
elements
plaintiff
the
defendants at the time
negligent misrepresentation
for
were not
entered____
agreements
the lease
were
proved, the trial court stated:
positive duty
No
outside the contract
Furthermore,
negligent
mis-
the tort
positive
imposed by law
A
exists.
representation requires the existence
duty imposed by
neg-
breach of
law or
present
certain elements not
the
ligence
performing
a contractual act
instant case. The “false information”
necessary
liability in
for
tort to ex-
supplied in the
of the
must be
course
Herbold,
Taylor
supra. Lyle
ist.
business, profession or em-
maker’s
Cobbs and
Kennevick breached
Jack
ployment
“any
or in
other transaction
obligations
pay
their
rent under the
pecuniary
he
a
interest.”
which
has
agreement
proven
No
two leases.
was
(Second)
Restatement
of Torts
§
would relieve them of the obli-
which
Jack Kennev-
Lyle
Neither
Cobbs nor
plaintiff
gation
pay rent to the
Hud-
ick
the leases in the course of
made
though
agreement
son even
the
en-
business, profession
employment
or
and Mark
tered into between them
partnership.
either of them or the
Bazeghi
re-
would entitled them be
alleged
While Mr. Hudson
that there
position
imbursed
him. Their
that
pecuniary
a
interest in the trans-
they
obligated
would not be
on the
action, none existed at the time of the
they
leases because
were either blank
Thus,
assuming
even
leases.
that
they did not notice
signed
when
Mr.
information,” the
leases were “false
would not relieve them
Hudson’s name
proof
type
not
of rela-
did
establish
obligation.
their
Cer-
contractual
tionship
justifies
imposition
unreasonable
tainly,
position
negligent
not make a
plaintiff
and caused the
additional
misrepresentation.
presents
This case
remedy
unreason-
costs. The
for their
that,
Kennev-
anomaly
while Jack
binding
perform
refusal
able
thought they
Lyle
ick and
Cobbs
were
against
agreement
is to award fees
non-binding agreements
entering into
reflecting
cost
plaintiff’s
full
them
actually
entering into
they
were
bind-
performance
obtaining
promise
they
ing agreements upon which
However, their unrea-
leases.
of the
However,
proof
because
liable.
perform contractu-
refusal to
sonable
any pecuniary inter-
established
never
obligation
give
rise to a
would
al
misrepresen-
est,
negligent
the tort of
right
in tort.
of action
lie
if the other
tation does not
even
passage,
foregoing
As is evident
present.
to be
elements are assumed
‘No
it ruled
erred when
the trial court
speculated
there
plaintiff
contract and
duty outside the
positive
interest
pecuniary
based
It is true
imposed by law exists.’
Bazeghi’s
to him that
statements
had
contractual
and Kennevick
Cobbs
would receive
and Kennevick
fulfill it and
obligation and failed to
him,
from
but
business
additional
con-
for breach of
have been sued
could
plaintiff’s
proof never sustained
However,
sepa-
is a matter
such
tract.
speculations.
of whether
apart from the issue
rate and
granted
the trial
mo-
defendant’s
judgment
grounds
tion for
on the
n.o.v.
Our
review
record establishes
negligent misrepresenta-
that the tort of
trial
in ruling
court was correct
recognized
yet
tion had not
establishing negligent
the elements for
Idaho,
state
and that even if it were
and,
misrepresentation
proved
were not
recognized, the facts herein would not
therefore,
plaintiff
verdict
misrepre-
establish a case
cannot stand and must be vacated. How-
*35
sentation,
in
it therefore erred
ever,
grant
judgment
the
of
n.o.v.
instructing
jury.
improper, the appropriate
defendant was
tendering
of
jury
inappli-
an
remedy
grant
being to
new trial
under
legal theory
certainly
irreg-
cable
an
IV,
in
authorities discussed
Part
ularity
proceedings,
in the
and an abuse
post.
prevented
which
of discretion
Hudson
having
from
a fair
trial.
incorrect
IV.
significant
instruction was also a
error
presented
The next issue
is whether
occurring
law
at the trial court level.
in refusing
the court erred
to order
long
holding
Idaho has a
line of cases
new trial.
jury
that where a
is instructed on theo-
ries of law
which
is
for
there
no substan-
59(a) pro-
Idaho Rule of Civil Procedure
support
theory,
tial evidence to
pertinent part:
vides
such
For
constitutes reversible error.
59(a).
Rule
New
of
trial —Amendment
250,
example,
Dell,
in Kuhn v.
89 Idaho
judgment
may
new trial
—Grounds.—A
(1965)
idence
this case within that doc-
for new trial.
tion
done had
lesser
native
question
the case on the alternative
vincing
of
of the evidence. That the
sentation
analogize
ment on the facts of this case. One
Accordingly, we
An instruction which
The submission of the incorrect alter-
son,
states the law
cretion which Hudson fair trial.’ Ante having a at 20. How V. upon ever, theory parties chose the re- appellant’s We have considered case, this Court they tried the which and find maining assignments error parties consistently ‘the has held that to be without merit. them theory on an bound action are for trial and remanded new Reversed Dredging Idaho Gold try it.’ they which appellants, herewith. Costs consistent Co., 52 Corp. Payette v. Boise Lumber attorney appeal. fees on no awarded (1933); P.2d 150 Idaho McFADDEN, J., JOHNSON, J. and Casualty Wedg Surety Co. v. Aetna & Tern., concur. Pro 128, 129 wood, 682, 687, 69 P.2d SHEPARD, partic- did not J. sat but (1937). me to under is difficult for It untimely death. ipate due to ‘irregularity’ or it can an stand how submit a case of discretion’ to ‘an abuse dis- BAKES, C.J., concurring part in upon theories which the jury senting in part: select, objection no to which parties hope I that the certainly And is made. part the Court’s
I in that concur not for today does stand majority opinion trial ‘the opinion which concludes every time a trial proposition ele- ruling that the in court was correct notwithstanding judgment misrep- grants establishing negligent for ments verdict, a new trial grant it must also and, there- proved were not resentation theory’ ‘inapplicable legal has an because plaintiff cannot fore, verdict for jury which, as tendered to Ante at 19. must be vacated.’ stand and law, ‘irregularity in the is an matter plaintiff concluded ‘that Having thus abuse of discretion proceedings, and an competent ev- present substantial did not beginning which had relied with the pleading. first litigant] having prevent from [the strange How did such a affair come a fair trial.’ Ante at Only about? because the district court Op. (emphasis original). Slip 16-22 abrupt change of mind decided that an recognized cause there was not Idaho a FROM THE DENIAL OF DISSENT negligent misrepresentation. of action for APPELLANT’S FOR PETITION So, court concedes there was the district REHEARING prejudicial error hav- defendants BISTLINE, Justice, dissenting from theory presented to be allowed that appellant’s denial of Petition jury. any lingering It would Rehearing. defendants, prejudicial effects on the how- ever, judg- jury’s because the verdict and Hopefully there will never be a case just thereon set aside as stated. ment litigant party where a has been treated to display judicial considered, such a error as has been All court was so district Hudson, upon Wayne plaintiff. visited diligent correcting the error which the it nutshell, destroyed In a the district court upon saw that it had visited the defen- by trying help dants, his case him—notwith- doing completely so the court standing represented by com- that he was always overlooked what has been done in *37 court, petent circumstances, counsel. The district of its apolo- namely, such tender by concerned, date, and aided a law clerk and gies own volition trial to all set a new certainly acting instigation by on no the try on the theories the case a second time counsel, defendants or their came to the for sides had that able counsel both conclusion that Mr. Hudson’s counsel was presented, the verdict of the and await pursuing court, redress on what the district history replete jury. Judicial is with cases clerk, help with the extensive of the law which have had to be tried more than once proper believed to be the better and the an error-free trial was had. before Some- wit, theory negligent theory, to the of mis- by times the error is caused or invited representation. objections counsel, Over the of all but not in this case. It was the counsel, representing plaintiff error, both the and plain simple, court’s and it was defendants, trial, the at the close of the the by the district court so conceded and admit- gave jury the the court’s instruction ted. necessary as to the elements to determine lurking If there is somewhere a valid liability negligent misrepresentation precedent, strange or even a reason for the damages. court, i.e., happenings in district the court plaintiff, giving jury jury utilizing found for the on its own initiative instruc- Thereafter, misrepresen- theory instruction. tions on a of the court’s court, reflection, that, well, tation, granting judgment a determined and thereafter all, shucks, simultaneously setting right counsel had been after without n.o.v. trial, I theory negligent misrepresenta- of case for a second am unaware of it. capable being erroneously to the District courts are of both tion had been submitted court, Accordingly, having jury right wrong. into A district which is jury. led the appellate error, protests judge in the form one unlike the courts which over well-voiced members, jury’s comprised are of three or five objections, of the court threw out the luxury input enjoy does not of of either judgment and entered a non ob- verdict view, points of which is a to the defen- three or five stante veredicto favorable case, advantage. particular In this great Mr. Thereafter the court denied dants. routine, trial, it is believed that for a new a new as a matter Hudson’s motion thousand attor- to one thousand out one jury which a would be allowed trial at appeal an neys expected would have that culpability defendants’ and liabil- decide the resulted in a routine reversal damages according to Mr. Hudson’s would have ity for court, and a remand with di- (and counsel’s) theory liability upon the district his rection for a new At ing. attempt trial. one time when paraphrasing Rather than content, the case first came a presently before Court an its labor for which time, opinion did is might issue reversed the dis- there no allottable and which injustice, append do that an I trict court and remanded brief it as the case back to A, hoping might give Attachment trial, that it the district court for a new a not the other members of Court some happenstance collegial a unusual where pause, enlighten but confident that it will court of five rulings members reviews the may trial bar who have doubted aof one-member trial court. Had the case my credulity in what I earlier wrote. gone again jury ever in an error-free trial, By jury all ended well. a is The issue not debatable. Error was done, justice verdict would have been such committed, chargeable to and it was not being prevailed. no true matter who How- Wayne Mr. Hudson. What more bother- ever, rehearing petitioned a was for and for perpetu- some is the Court’s insistence at granted. A reasons unknown was new ating miscarriage jus- this monumental opinion was issued the Court which it doing tice as has often done—sim- differently that time had ply remanding become constitut- district court with court, opinion request ed. The earlier was cancelled now or with- district three why, years experienced, re- explanation out as to or how error more wiser and part my consider. For is no doubt first there opinion’s was discovered state- op- that the district court would relish the application ment of facts law. portunity, especially against being for- a Court now concludes that new trial ever saddled as the author a most unfor- not merited. How the arrived at Court jury’s tunate which threw decision out not, I am unable to that conclusion know case, thereby spe- verdict and dismissed discern, and will never understand. What cifically precluding jury trial at second the law is known cannot be plaintiff jury which the could have the presents party to a who case *38 theory a on of the case reach decision his prevails, and then finds his success over- imposed theory on instead on the both by reason of the error committed thrown parties by the district court. court, certainly entitled to a district improp- free new trial of the district court’s A. Attachment
er interference. My swaying court humble efforts at I. proper a direction had little effect. in STATEMENT OF THE CASE my part must yet, Worse the effort on extremely shabby, as not one of the A. INTRODUCTION. majority obliged felt comprising four case, opinion its in this filed In second thereby response, in ac- write one word 19, 1990, summarily con- June this Court misguid- me wherein I was quainting with were not cluded that the facts this case Now, for Mr. ed or mistaken. counsel duty necessary to to establish a sufficient try causing their at Hudson have had so prima facie case in tort and make out a i.e., ordinary, recognize do Court in judgment entered affirmed the n.o.v. a dis- grossly inappropriate it was for how and Kennevick. favor of Defendants Cobbs grant judgment n.o.v. be- a trict for petitions this Court Hudson Plaintiff in court’s own error cause of the district this rehearing and submits that Court go on a parties to to trial forcing both The conclusionary opinion. in erred its theory liability was of defendants’ Cobbs, establish that facts this case wholly making the district court duty, Bazeghi a and Mark owed Kennevick itself. contract, to Hudson and independent of Bank”), (“the National Bank glance that considerable Idaho First One can tell at law of by the common Mr. Hudson’s defined gone and effort has into time This fraud. and constructive his rehear- nondisclosure supporting petition brief Professionals, used as Inc. Each was The in up deficiency ful- to make intended Kennev- duty and Cobbs and was breached preleasing requirement. filling the in be held liable tort. ick should Professionals, Inc. shows the lease to he denied also submits that Hudson aiding in purpose of Cobbs intent and trial, from right jury a fair free his covering The Bazeghi. See the discussion court, error, the trial prejudicial when Professionals, p. 29. Inc. at objec- motion and over Hudson’s her own tion, negligent misrepresen- submitted AND TUSCH—THE BETHLAHMY and then tation cause of action to LAW GOVERNING judgment n.o.v. as the result granted discussion of the has omitted The Court such submission and the verdict Bethlahmy in expressed governing law as jury. con- Tusch, involved a each of which found tort was B. AND SUPPLE- tract and each CLARIFICATION cannot be distin- OF THE STATEMENT to exist. These cases MENTATION lawyer case. No guished present from the FACTS. OF have advised Hudson keep worth disputes of Facts Hudson the Statement leases” on the “straw to sue contract opinion in the Court’s second be- set forth the discussion on and not tort. See glaring omission of relevant cause of point p. doctrine, legal as dis- facts and relevant cussed below. MISREPRESENTATION NEGLIGENT THE THE LEASE TO SIGNIFICANCE OF TORTS INSTRUCTION SUBSUMES PROFESSIONALS, IN CON- INC. NONDISCLOSURE OF NEGLIGENT JUNCTION WITH COBBS-KENNEV- FRAUD AND CONSTRUCTIVE LEASES. ICK ignored the fact Court This is made of The Profession- No mention instruction “negligent misrepresentation” Professionals, als, The lease to The Inc. Court, Instruction No. given by the Inc., conjunction with the two No. Instruction when considered with leases, composite awas Cobbs/Kennevick enough subsume the torts broad conclude plan to induce Hudson to constructive negligent nondisclosure and pre- # met the Bank’s that Webster 3 had point at discussion on this fraud. See the *39 three leases leasing requirements. These p. 23. of generated the sum were to have income, $4,784.14 in rental per month TORT-FEASORS JOINT month- represented of Hudson’s 72% The fact that Cobbs/Kennevick $6,645.83 Bank. payment to the ly loan Bazeghi joint tort-feasors were Mark submitting three (Exh. 89) these Prior to to to induce Hudson concerted effort their approval, Mark Hudson for his leases to the office build- complete purchase the of #3 proposed that Webster Bazeghi had in its ignored this Court ing has been space 12,200 feet of the office square lease complexionof this case entire opinion. The In the alterna- right to sublease. the with Surely the Court by this fact. is affected #3 tive, that Webster Bazeghi proposed of to extend the benefits not intend does $50,000.00 in if Hudson cash pay Hudson to litigants and not to some this doctrine requirement. leasing the would assume point on this the discussion others. See VII, 1833, 405-407; p. 3, (Tr.Vol. p. R.Vol. p. 25. 14-21; 9) rejected both Hudson Exh. L. likewise Bank would The alternatives. FINDINGS COURT’S TRIAL (Tr.Vol. rejected these alternatives. have BY COURT IGNORED 21-26) VII, 407-408; p. L. R.Vol. p. Bazeghi Mark found that The trial court cannot be leases to Cobbs/Kennevick The a construe- there was “that to advised Cobbs from the lease in isolation considered nonoccupying of
ments lessees. Webster agreed manage # 3 also to the office build- tion loan which to be to needed converted ing rent and collect the from the lessees. long financing term leases that the accounting In # for the Webster 3’s month (R.Vol. purpose.” be used for would that having July, of it shows rent VII, 1834) that, at p. Cobbs also testified paid and Kennevick in the Cobbs leases, the time he entered into the Mark $4,033.72. (Exh. 19) amount No. Hud- Bazeghi had told him that was a there agreed solely time look any son never at to purchaser buy building who to desired the Webster # but credit of instead (Bazeghi) trying get and that he was to primary obligors on relied the credit building long financing so leased that term jury under leases. The so found. knew could be consummatéd. Cobbs also important Kathy It is to Baze- note that leased, enough square footage that if were principal was ghi, attorney, an drafts- long financing approved term would be 24, 1981, implementing man of the June (R.Vol. VII, p. 1837) the Bank. Cobbs testified, agreement. he As Hudson was him Bazeghi also testified Mark told that during period substantially distracted that leases be used to secure would imperative it of his illness and felt was 1838) (R.Vol VII, buyer. p. people dealing. he was trust with whom addition, In the trial found 15-24; 3, 400-401, 404, (Tr.Vol. p. L. R.Vol. transaction, Hud- during the course of this VII, 7-13) p. L. diagnosed having malignant son was October, Surgery brain tumor ASSUMPTION COURT’S ERRONEOUS was Hudson performed late November. THAT HUDSON BROUGHT NEGLI- February, therapy in underwent radiation AC- GENT MISREPRESENTATION surgery additional on 1981. He underwent TION 6,1981, by more March which was followed “(a)t opinion This states Court Bazeghi was therapy. Mark radiation the close of the trial Hudson’s (R.Vol. Hudson’s cancer. aware of brain negligent misrepresentation ac- fraud and VII, 1833) Mark p. testified that Cobbs plead did a cause of tion ...” Hudson not potential Bazeghi had told him “that the negligent misrepresenta- upon action based ill buyer was and unable obtain tion, nor he consent to the trial did Barzeghi obtain- and that Mark leases objected Hudson also cause action. 1837) (R.Vol. VII, p. for him.” them giving jury, No. 40. of Instruction neither trial court concluded that Special Interrogatories, in answers was ever advised Hudson nor Bank negli- had and Kennevick found Cobbs arrangement between secret representations past false gently made that, Bazeghi Kennevick Hudson, existing that Hudson facts nature of Bank been aware “had the representations that such not aware approved agreement, false, on these that Hudson relied *40 financing ...” long term because damaged he was representations, that false have been condition would not preleasing of Cobbs and thereby and that acts 1836) (R.Vol. VII, p. met. an extreme deviation from Kennevick were conduct, and reasonable standards RENT # PAYMENT OF 3’S WEBSTER an by these individuals with performed opinion disregard likely that on of their understanding The Court states or VI, 1513-1517,Q. 1981, (R.Vol. # en- July 1, p. 3 and Hudson consequences. Webster part under agreement, 12-17) The failure on their final Nos. tered into to rent on to disclose their intent agreed pay # “Webster 3 Cobbs/Kennevick occupied leases and the actually under the space not not to be bound any preleased The Profession- condition of is incor- true financial by or sublessees.” This lessees Inc., nondisclo- als, negligent constituted agreement was on June The last rect. See the fraud. and/or constructive that Web- sure import which was óf point p. 32. pay- on this rent discussion agreed guarantee # ster not sufficient to show the this case were prima facie duty necessary to make out a II. negligent misrepresentation,” and case for PRESENTED ON REHEARING ISSUES sued that “while Hudson could have ruling presents the fol- A. This Court’s in contract for breach of Cobbs/Kennevick lowing issues: cause of agreement, their lease he had no conclusions were duty a in tort owed to action in tort.” These 1. Was there Kennevick, apart Hudson Cobbs and quotation from upon based an abbreviated duty performance from the contractual Amer Carroll v. United Steel Workers of so, agreements? If of the lease (1984): ica, 107 Idaho duty breached? alleged perform An failure to a contrac- 2. Were Cobbs/Kennevick and obligation not actionable tual Bazeghi joint tortfeasors? tort____” tort, there to found an action Cobbs, 3. Do the acts and omissions of duty apart from must a breach of Bazeghi Kennevick and Mark constitute [Quot- nonperformance of a contract.” nonfeasance, “mere which is insufficient Herbold, Taylor v. Cobbs, duty a in tort” Ken- establish when nonfeasance, (1971)]____ Mere P.2d 664 Bazeghi, acting jointly nevick and Mark neglect if it amounts to a willful even failed to disclose to the Bank and Hudson contract, perform is insufficient to the intent of and Kennevick not to duty Opinion in tort. 1990 establish be bound the Cobbs/Kennevick lease 90, pp. (Emphasis original) No. 8-9. agreements, the hold the existence of agreements relating and the facts harmless Hudson asserts that these conclusions are Professionals, to The Inc. following erroneous for the reasons: jury adequately 4. Was the instructed First, the facts establish that Cobbs negligent nondisclosure and construc- Kennevick owed a to Hudson and the tive fraud? Bank, per- separate apart from the right Hudson denied his to a fair B. Was obligations formance of the contractual un- trial, jury prejudicial free from error? agreements. jury der the lease ver- court, trial on its over the own motion and dict, light of Instruc- when considered Hudson, objection submitted to the No. 40 and establishes that Cobbs tions “negligent misrepresentation” cause of wrongfully invaded an in- Kennevick action, pleaded by Hud- which was neither law, protected by terest of Hudson as de- consent, then son nor tried with his fined the torts of nondisclo- grounds granted judgment n.o.v. on the fraud, negli- if not sure and constructive erred the Court when submitted “negligent misrepresentation” cause of ac- gent misrepresentation. jury? requested jury
tion to the Hudson’s Second, the facts of this case fall within covering negligent instructions nondisclo- exception general rule that mere refused. sure were is insufficient to establish a nonfeasance tort, made duty in as Cobbs and Kennevick
III. present intent representation without ARGUMENT failed disclose such perform and then THAT COURT’S RULING A. THIS agreements intent or the hold harmless COBBS, MARK KENNEVICK AND *41 Professionals, the true facts about The DID A DUTY BAZEGHI NOT OWE Inc., by thereby breaching duty the defined SUP- IN TORT TO HUDSON IS NOT fraud, negligent the torts of constructive BY THE FACTS EITHER PORTED nondisclosure, negligent misrepresentation ERRO- BY LAW AND IS OR CASE and fraud. NEOUS. Third, upon by major- the the cases relied should that this Court Hudson submits ity, including v. United Steel that “the facts of Carroll reconsider its conclusions 518
Prosser & Keeton characterize this re-
quirement as follows:
America,
(1984)
519 past existing statement of facts Wayne Hudson” and that “the statement posed representer stating on a for some- false” made. Instruction No. 43 was when thing proves to be false must be supplementary prescribed duty was and Keeton, supra, theory. based on a tort to disclose known material facts. Added). p. (Emphasis 92 § simply, if and Kennevick Stated Cobbs important, This distinction is since contract to disclose to and had failed Hudson protect actions “are created to the interest fact them Bank the neither of Just’s, having promises performed.” leases, obligated intended to be under the Arrington Company, Inc. v. Construction there would have been no leases entered (1978) quoting W. Pros- into between Hudson and Cobbs/Kennev- ser, Torts, Handbook of the Law of 92 at § ick. If Cobbs and Kennevick had not failed 1971). (4th Ed. to disclose to Hudson the true facts about Thus, action, in a contract a manifesta- Professionals, Inc., Hudson would not prerequisite tion of consent is a to the signed that lease. for But the tort But, bar, contract claim. in the case at negligent nondisclosure or constructive purported manifestation of consent fraud, there would have been no lease con- Cobbs and Kennevick was the tort itself. tracts for this Court to discuss. is, That the tort occurred when Cobbs agreements, Kennevick delivered the lease duty This case involves the breach lessee, signed by the yet signed by but not i.e., law, imposed by duty to disclose owner, Bazeghi, to Mark without dis- thereby known material facts avoid Hudson, closing to the Bank or or without injury duty This to others. is defined with disclose, causing Bazeghi to so particularity by the torts of constructive agreements, existence of the hold harmless nondisclosure, negligent fraud and as will delivery or that at the time of the of the below, leaving negligent be discussed mis- leases, Cobbs Kennevick considered representation If aside. the Bank had not not-intending them to be “straw leases” elected to bid the debt at the foreclosure Hudson, obligated under the leases to sale, too, Hudson, it as well as could have person. the Bank or other The tort brought a tort cause of action for breach of occurred not at time the contract was duty any damage it suffered. formed, i.e.,- signed when Hudson the leas- es, but when Cobbs and made Kennevick 2. THIS COURT ALSO ERRONEOUS- by signing the offer the leases and deliver- LY THAT CONCLUDED THIS Bazeghi. them to Mark The contracts CASE INVOLVES ONLY NONFEA- them, signed were formed when Hudson SANCE, I.E., THE FAILURE OR relying representations on the of Cobbs A NEGLECT TO PERFORM PROM- and Kennevick that the leases were valid ISE, AND A DOES NOT INVOLVE contracts under which intended to be INDEPENDENT BREACH OF AN obligated. The leases were the instrumen- DUTY. tality used Cobbs Kennevick leg supporting majority’s The second representation, make the but contract application principle conclusion is its of the liability. not the basis nonfeasance, if it “mere even amounts and Kennevick's decision to execute and contract, neglect perform to willful agreements deliver the lease created “a insufficient establish tort.” things state of the occa- furnish[ed] Court, however, This failed to consider the Herbold, Taylor sion for a tort.” longstanding exception to rule of nonli- (1971). to dis- The failure promise ability for nonfeasance—“that a known facts close the may perform made the intent to without constructively fraudulent. a tort action in deceit be fraud for which forth properly Instruction No. 40 did set Keeton, supra, p. 664. will lie.” § this distinction. The was instructed Idaho, defined as an signed by In this distinction is find “that the that it must leases exception general repre- rule that a constituted Lyle Cobbs and Jack Kennevick *43 520
promise, by intending made one not to perform, misrepresentation is a mis-—a promise consisting sentation of a or a state- representation present the speaker’s ment as to a future event will not serve as is state mind—and actionable as a the basis for fraud: misrepresentation Harper, fact. cases, general As many the rule has Torts, James Gray, & Law of Vol. exception. Idaho almost become the rec- 7.10, Ed., (2d 1986). p. 447 § ognizes general exceptions two the to Accord, Keeton, supra, p. 763. § or promises rule about statements in fu- (1) tura; may predicated upon fraud Here, misrepresen- Cobbs and Kennevick non-performance of a promise the cer- existing ted Hudson to and the Bank their promise tain cases the is where the de- regarding present of mind state their intent accomplish to the vice Pocatello fraud. to by be bound the leases. Cobbs and v. Security Henry, supra; Trust Co. Kennevick, making by the to offer Hudson Wade, Miller-Cahoon v. 38 Idaho Co. leases, representa- to into enter the made (2) (1923); P. 221 1102 cases they tions to Hudson that intended to be promises where are blended or associated by agreements. They the bound failed to misrepresentations fact, is with there representa- the of these disclose falseness promise accompanied fraud if a is with tions. existing showing statements of facts the Moreover, the conduct of and Ken- Cobbs ability promisor perform the to negligence or nevick involves active misfea- promise without which would decided, of sance. Cobbs and Kennevick accepted upon. or acted Pocatello will, signed their free to own deliver Security Henry, supra; Trust Co. Bazeghi, knowing leases to Mark at the Allen, 202 Keane v. P.2d rely time that the Bank and Hudson would (1949). predictions Opinions 441 or about upon representation of Cobbs Ken- anticipated profitability of business they by intended bound nevick that to be usually as fraud. are not actionable time, leases, failing while at same However, is when there an affirmative to to Bank the hold disclose Hudson promise or that a certain act statement agreements harmless and their intent not undertaken, will be such a statement is to be The tort was committed be- bound. providing the elements actionable other formed, fore the lease contracts were when Sharp are v. Idaho shown. of fraud an and Kennevick undertook affirm- Corporation, 95 Investment Added). (1972). (Emphasis act, delivery signed 122-123 leases ative Bazeghi. This case involves not a Although exception frame this courts nonfeasance, question question of but a promise of a made without the terms misfeasance, act deliver- the affirmative actually is perform, what involved intent leases, knowing time that at the as that is defined representation, is term they to be and that intended not bound Keeton, supra, p. promise A 656. § rely hold upon the secret harm- perform present intent to made without the protect them from lia- agreements less actor, “as to actually statement bility. regarding existing of mind state present fact”—his of a ... existence UPON BY 3. THE CASES RELIED Keeton, supra, present perform. intent to MAJORITY, THE INCLUDING contrast, promises are p. 656. In § STEEL V. UNITED CARROLL present intent well manifestations of a AMERICA, 107 OF WORKERS Keeton, to the future. as a commitment (1984) IDAHO 717 AND TAYLOR V. supra, p. § (1971) HERBOLD, 94 IDAHO Gray in by Harper, James & As noted TO THIS ARE NOT APPLICABLE their treatise: CASE. generally re- promise itself is ... majori- of the cases cited Not one present of a garded representation as a involve the Hence, ty support conclusions its such a perform. intention
521
America,
buyer? upon which base action in an construc- supra, p. Bethlahmy, tive ...” fraud questions The answers to these appeared added) (Emphasis Instruction No. prior opinion be obvious latest supplemented by Instruction No. more It is case. submitted that no bank or adequately than instructed buyer in a fact involved situation as *47 negligent torts constructive fraud and presented elect above would to sue on the are, nondisclosure, of which as both this this opinion, “straw leases.” Until it is depicted opinion, Court in its first “lesser submitted, attorney practicing no in law included of fraud.” torts Restatement advise his client Idaho would to sue on the (Second) 551; Bethlahmy Torts and § advise his leases—much less client that no Tusch, supra. Jury See California Instruc- to duty in tort existed disclose such facts. Civil, ed., 12.36, 7th BAJI No. cover- tions— Negligent nondisclosure and constructive ing fraud and deceit—nondisclosure of fraud, as enunciated in and Bethlahmy (Copy Appendix) known facts. in Tusch, apply. obviously, Just as the same to, principles applicable are and should be considering After all of the extensive of, fact dispositive the situation in the during lasting evidence a trial introduced present case. month, considering over a after all of and Court, given by
the instructions the jury found Kennevick that Cobbs and were d. Instructions Given Subsumed failing grossly in to disclose to negligent Negligent Nondisclosure and Hudson facts which were material known Fraud. Constructive Hudson, to them but to and that unknown is submitted that what the It trial gross proximate negligence such designated “negligent misrepresen- as damages. jury The cause of Hudson’s hav- instruction, 40, Instruction No. tation” adequately instructed on the torts 43, with No. when considered Instruction negligent of constructive fraud and nondis- enough was broad to subsume the torts of closure, alleged by as Hudson in his Third and negligent nondisclosure constructive having Complaint, Amended and found 40 (copy Appen- Instruction No. fraud. and to have committed Cobbs Kennevick dix) imposes greater is more restrictive — manner, negligent grossly said torts prove Plaintiff to his case—than burden on this case concluded once for should be required negligent for should be nondisclo- reinstated. jury all and verdict Appen- (copy sure. Instruction No. 43 covering dix) 40, argument supplemented Instruction Hudson’s detailed No. and con- duty issue of nondisclosure jury party instructed the that has a pp. presented at 59-69 to material he structive fraud is disclose known facts when 69-77, Appellant’s of the respectively, are known and knows that such facts neither Brief, expanded on party. augmented readily accessible to the other nor Support pp. 13-16 of Memorandum also Instruction No. 43 instructed for Rehear- Appellant’s original Petition party is under to that “where one no so, ing. speak, he is but nevertheless does 1-4) unen-
1180, that invalid and L. “only to would useful leases be forceable DE- THIS COURT IMPROPERLY Mr. to let that it would be able extent APPLICA- NIED TO PLAINTIFF square get minimum Bazeghi able his TION OF THE LAW GOVERNING (Tr.Vol. p. paper.” footage rented TORT-FEASORS, WITHOUT JOINT 10-17) testified likewise L. Cobbs ANY EXPLANATION. him and signed by the leases that Decision trial court’s Memorandum The get Bazeghi could so that Mark Kennevick opinion are si- and this and Order Court’s loan, long term that Cobbs/Kennevick Bazeghi, joint Mark lent on the conduct of purpose “but property leased in concert and Kennevick. All acted the lease intent to be liable on with no leases,” each other deliver “straw with (Tr.Vol. (Mark anyone Bazeghi) or else.” Professionals, including the lease 1-5) 19-25, p. L. L. p. express Inc. Each was delivered for “no apparent there was seems It per- inducing grant purpose of the bank thought to be liable” because intent inducing manent, financing long-term agreements Bazeghi’s hold harmless complete purchase Hudson to he had Asked whether protect them. building. governing the lia- law office leases Bazeghi using the objection to Mark joint is so established bility of tort-feasors long financing, Kennevick term to obtain system nothing further judicial in our “No, really I I knew didn’t. testified However, since have to be said. should I very Abbass and Bazeghi well. knew has, for not dis- some reason Court people involved with that Webster other issue, closed, elected to discuss develop- to be 3. I knew them successful appropriate. elaboration *48 further seems 3-13) (Tr.Vol. 15, 2624, p. Cobbs ers.” L. is difficult to a factual situa- It conceive percep- obviously agreed with Kennevick’s that in which it would be more obvious tion Bazeghi’s capacity. financial tion of Mark governing joint should the law tort-feasors Bazeghi’s silver was shown Mark Cobbs Mark that he applied. Bazeghi testified be leas- gold holdings prior signing to and first then had advised Kennevick and (Mark Bazeghi) He testified “he es. Bazeghi’s help desperate need for Cobbs time, holdings I showed me his at that signing by Cobbs prior to the of the leases it personal his wealth. He showed know of “I that Bazeghi Kennevick. testified silver, gold, and me in cold as well as to him leases explained to that I needed some (Tr. of dollars.” hundreds of thousands comply requirement, with lender 7-16) to 8, 1272, that p. L. testified Vol. Cobbs short, seeking were the solution safety we Bazeghi opened up the Mark when and we had a on the conver- gold it ... deadline deposit box and showed Cobbs financing perma- to sion of the construction “(t)here hundreds were hundreds and financing” and the deadline “was nent that were Kruggerands, and that time 8-11, (Tr.Vol 2445, 14, recall, L. very p. figuring close.” out that selling, mentally I 15-19, 2446, 1-3) “so p. Bazeghi L. testified close to a million dollars represented it half (Cobbs) right help. I knew gold, Kruggerands, I for his I asked him asked ... man, know, up very you perhaps find tenants for me or come then that this 13-23) 16, 2749, (Tr.Vol. L. wealthy.” p. would some kind of straw lease so we with trial Mark Baze- ...” asked at whether comply requirements with the bank’s When 21-25) 14, 6-7, wealth Cobbs (Tr.Vol. 2246, ghi’s display of caused p. L. L. than risk in the transaction take more lease leases testified that Kennevick take, “I testified normally would Cobbs he “were signed by Cobbs and Kennevick 16, (Tr.Vol. p. part played in it.” think documents, signed straw, meaningless 2819, 14-19) L. help strictly Bazeghi Mr. to be able had assumed testified that he long-term financing and that would Kennevick get his selling the it,” 8, 1166, Bazeghi be (Tr.Vol. L. p. the end building and that he understood the start 9-14) never from office “were intended financing (Tr.Vol. 8, long to have term lease,” p. seller needed to be an enforceable grant permanent financing would be “at a gross negligence, put- minimum the kind of approved in order to make it a marketable ting light, gross it in its kindest the kind of (Tr.Vol. 8, 1179, project. p. 2-5, 13-16) L. negligence Cheney designed would be aware, Cobbs testified that he was when he (Tr.Vol. 11, 1722, 19-25, p. p. to deter.” L. leases, signed possible that there was a 1-5) L. purchaser building for the who had been ill. (Tr.Vol. 8, 6-12, 20-25) p. L. It seems inconceivable that this Court long also testified that he if knew that facts, can overlook these as well as the law financing term could be obtained on the governing tort-feasors, joint and fail to con- building, office help “it would be a to con- clude as a matter of law that the torts of summate the sale somewhere down the negligent nondisclosure and constructive (Tr.Vol. prospective buyer. line” to a p. fraud, negligent if misrepresentation, 11-24) L. Cobbs didn’t even recall were committed Cobbs and Kennevick signed whether he had leases for two or doing they acting and in so jointly three suites in building. the office He tes- Bazeghi. with Mark tified “I was request there at the of Mr. Bazeghi, I and would have at that time governing The law the commission of willing request- lease whatever he by joint pp. torts tortfeasors is discussed at (Tr.Vol. 16, 13-24) p. ed.” L. Appellant's pp. 56-58 of Brief and 16-20 of Appellant’s Reply Brief. did not find that Cobbs and Kennevick intended that Hudson would be deceived as a result of their “straw leases” DISREGARDED, 6. THIS COURT representations acting and their other EXPLANATION, WITHOUT THE Bazeghi. concert with Mark This is irrele- MATERIAL FACTS INVOLVING
vant to a determination they, as to whether PROFESSIONALS, THE INC. AND acting by jointly themselves or with Mark REAL ESTATE BROKER LYLE Bazeghi, committed the torts of COBBS. nondisclosure constructive fraud. *49 Neither the trial court’s Memorandum say, Bazeghi, Lyle Suffice it to Decision and Order nor this Court’s substi- jointly Cobbs and Jack Kennevick acted opinion tuted takes into consideration the present and in concert in their endeavors to following concerning procurement facts the Cobbs/Kennevick “straw leases” and Lyle Defendant Cobbs of the leases to Professionals, the worthless lease to The Professionals, Inc.: grant Inc. order to induce the Bank to permanent financing and to induce Hudson Bazeghi a. Mark advised Hudson that purchase to conclude the of the office procured had a lease from The Pro- Cobbs building. jury, finding The while fessionals, Inc., which was a substantial prove Plaintiff failed to the elements of long standing firm of with numerous part common law fraud on the of Mark clients. Kennevick, Bazeghi, and found that Kennevick, b. Cobbs and with Neil gross guilty all three of them were Langrill, forming had instrumental in negligence proximate which was the cause corporation. damages. In the of the Hudson’s words court, commenting trial on certain of It and Kennevick’s c. was Cobbs’ attor- evidence which had been introduced relat- corporation, ney who had formed the Kennevick, to the actions of Cobbs attorney’s expenses some of the therefor sign that for Cobbs and Kennevick to were billed to Cobbs’ real estate firm. leases, knowing they would be knew, at the d. Cobbs and Kennevick presented to a bank and that the bank obtained, corpo- deciding that the rely on them in whether to time the lease principles enunciated with the accordance and Tusch. Bethlahmy by the Court capital, or but had no assets ration to Hudson. disclose such facts failed to DENIED HIS RIGHT WAS B. HUDSON pro- received a commission e. Cobbs TRIAL, FREE A FAIR JURY TO
curing the lease. ERROR, PREJUDICIAL FROM Bazeghi paid Profession- f. Mark GRANT- THE TRIAL COURT WHEN $4,500.00 als, induce the sum of Inc. the THE N.O.V. ON ED A JUDGMENT amount corporation sign the lease—an THE NEGLIGENT THAT GROUNDS lease. equal months rent under the to six OF CAUSE MISREPRESENTATION at trial that he Although Cobbs testified BEEN HAVE SHOULD NOT ACTION payment, he later participate did not this THE TO THE JURY. SUBMITTED $4,500.00 check at trial that the admitted THE CAUSE COURT SUBMITTED payable jointly to his real had been made THE JURY OVER ACTION TO OF Inc., Professionals, estate firm and The HUDSON HUDSON’S OBJECTION. the check. personally that he had endorsed PLEAD NOR CONSENT DID NOT g. licensed real estate bro- Cobbs was a THE NEGLI- THE TRIAL OF TO be the ker and knew that Hudson would MISREPRESENTATION GENT preleasing building, of the once the owner ACTION. CAUSE OF requirements met. Cobbs testified upon litigants imposed trial broker, pro- only he that as a real estate case, negligent mis- theory its own of the is owner’s cures the tenant —that representation, objection over the of both responsibility to check on the credit jury upon its parties, and instructed the tenant, his. negligent misrepresentation with view of description A of the material detailed agree to Instruction No. 40. The Court did involving facts the lease to The Profession- Instruc- supplement this instruction with als, Inc., transcript, citations to the with duty prescribed the tion No. Brief, pp. Appellant’s set forth at 33-37 of jury material facts. The disclose known Appellant’s Reply Brief. pp. 23-24 of for Hudson. The trial rendered a verdict court, later, no doubt from seven months Again, it seems inconceivable that law, memory, concluded notes and faded can conclude as a matter of cold Court slightest do so without even the reference erred when it instructed that the trial court Kennevick, discussion, that Cobbs and misrepresentation, Cobbs, especially separate had no *50 granted judgment n.o.v. to Cobbs disclose these materials facts tort Kennevick. by known them and unknown which were preju- action resulted in The trial court’s to Hudson. There is no contract between to Hudson for two reasons: dicial error in connec- Hudson and Cobbs/Kennevick Professionals, The Inc. lease. tion with (1) right to have Hudson was denied his cannot relieve Cobbs and Ken- This Court jury upon theory instructed of the damage they responsibility nevick case, negligent nondisclosure and construc- Hudson, they induced him caused to when (See Requested Jury tive fraud. Plaintiff’s corpora- this sham rely on the lease to 58, Appendix.) 57 and Instructions Nos. tion, ruling only duty their to Hud- by (2) given a “false choice.” jury The was Instead, respect- it is son was contract. led, own jury by the trial court’s The submitted, must face the fully this Court instruction, believe that sponte sua Professionals, Inc. with The facts and deal theories, legal either of alternative had two the af- must discuss judicially. Court against liability could be the basis of known duty in tort to disclose firmative transaction, in Kennevick. Cobbs and facts in a business material 528
Litigants
right
jury
have a
to have the
every
theory
instructed on
reasonable
1. THIS COURT INCORRECTLY AS-
presenting
relief,
a basis of a claim or
or
THAT
SUMED
PLAINTIFF HAD
thereto,
theory
defense
where such
finds
REQUESTED THE TRIAL COURT
support
pleadings
and evidence.
THE
TO SUBMIT
“NEGLIGENT
Ker,
75, 524,
Messmer v.
96 Idaho
P.2d
MISREPRESENTATION” CAUSE
(1974); Rosenberg
Toetly,
v.
94 Ida
THE
OF ACTION TO
JURY.
413,
(1971);
ho
Hodge
P.2d 446
v.
page
opinion,
At
6 of its second
Borden,
125,
the Court
(1966);
91 Idaho
jury by instructions, the Court’s inher- are CONCLUSION ently intertwined and related. The trial applicable The facts of this case court, instructions, in its drew two subtle mandate, justice law and the interest distinctions between causes of action— require, that this Court reverse trial the burden proof and whether or not judgment court’s n.o.v. and determine the knew, Cobbs and Kennevick at the time the following as a matter of law: representation made, was that it was false. jury given a. Whether the instructions by adequately the Court covered the Court, A majority of this in the earlier of negligent torts nondisclosure opinion, accurately negli- characterized the and/or constructive fraud. gent action, misrepresentation cause of b. If this Court concludes that either jury, submitted to the as a “lesser included negligent jury tort of nondisclosure construc- fraud.” The verdict favor adequately fraud tive was covered Hudson on negligent misrepresentation given, issue, jury instructions then this against Hudson on the fraud jury’s determine count, Court whether easily could have accepted interrogatories answers set jurors those who also believed that special forth verdict establish fraud, finding evidence established as this that Defendants did commit the torts result, i.e., had the same liability on and/or nondisclosure part of proper Cobbs and Kennevick. The this constructive fraud. If Court so standard for Court is preju- whether such tort determines either occurred, dice reasonably could Defendants, jury committed prejudice actually whether Roll occurred. verdict should be reinstated. Middleton, City 833, (Idaho App.1989). prejudicial If “it error c. If this Court in- finds that *52 reasonably given could affected the out- adequately structions did not trial,” come of the then a new trial must be either cover the tort of non- granted. Brooks, Pierson v. disclosure or the tort of constructive (Idaho fraud, App.1989) 534 or that the did not find representation promise
3. That the or circumstances; was material under all the that either of such torts was commit- made the 4. That when the defendants Defendants, ted this should Court promise representation, they knew trial, or order a new on the common law false; fraud, negligent was nondisclosure and constructive fraud causes of action. That the defendants intended that 5. alternative, In the re- this Court should plaintiff should act on the basis foregoing mand to the trial court for the promise representation in or about determinations. act; manner in which he did day July, DATED 23rd 1990. plaintiff 6. That the did know that submitted, Respectfully false; promise representation or KENNETH & THOMAS rely on the plaintiff 7. That the did By FRED KENNEDY promise representation or truth of the Kennedy, Firm Fred Of the actions; subsequent his Attorneys Wayne for D. Hudson reasonably plaintiff 8. That the acted Appellant Plaintiff/ upon in relying under all the circumstances promise representation. or CERTIFICATE OF MAILING damages plaintiff suffered 9. That I HEREBY on the 23rd CERTIFY that proximately by his re- that were caused 1990,1 day July, served a caused promise represen- or liance on defendants’ foregoing copy true correct tation; AP- MEMORANDUM IN SUPPORT OF FOR REHEAR- PELLANT’S PETITION plain- and extent of the 10. The nature upon ING OF 1990 OPINION NO. damages tiff’s and the amount thereof. WILCOX, PETER J. and TODD J. BOYD R., V, p. Vol. Elam, Boyd, Box Burke & P.O. Boise, Attorneys Lyle for Instruction No. Cobbs, Jack Kennevick plaintiff proving has the burden Partnership, by depos- Cobbs/Kennevick on his following propositions all mail, iting same in the United States negligent misrepresentation claim envelope postage prepaid, in an ad- Kennevick: against Lyle Cobbs and Jack attorneys the fore- dressed to said going address. signed by Lyle Cobbs 1. That the leases
FRED KENNEDY a state- Jack Kennevick constituted Kennedy Fred Wayne existing or facts to past ment of Hudson. APPENDIX TO APPELLANT’S was false. 2. That the statement MEMORANDUM material un- 3. That the statement was IN- OF ELEMENTS OF COMPARISON circumstances. der all the 16a and 40 COV- STRUCTION NOS. Lyle Cobbs and Jack Ken- 4. That when ERING FRAUD AND NEGLIGENT statement, they neg- acted made the nevick MISREPRESENTATION ligently. Instruction No. 16a Lyle and Jack Kennevick 5. That prevail his plaintiff to In order for the should act on Wayne Hudson intended against defendants claim asserted
fraud statement about the basis of the Cobbs, Kennevick, Bazeghi, the did in which he act. manner proving each of plaintiff has the burden following propositions: Wayne Hudson did not know That 6. n the statement was false. plaintiff made That defendants fact; existing promise a statement rely on the Wayne Hudson did 7. That subsequent of the statement truth representation promise or 2.That false; actions. *53 but, plaintiff; you your the if find from of all consideration the evidence that Wayne That Hudson acted reason- 8. propositions proved by not these has in ably relying under all circumstances evidence, convincing your then clear upon the statement. be for verdict should the defendant. How- Wayne 9. That Hudson suffered dam- ever, plaintiff prove not does ages proximately by that were his caused damages by the amount of his clear and Lyle reliance on Cobbs’ and Jack Kennev- evidence; convincing plaintiff only need ick’s statement. prove damages by the amount of evidence The of Wayne 10. nature and amount probably that more true than not. damages, any, proxi- Hudson’s if that were you by convincing If find clear evi- mately by caused the statement. representation dence that a false was made V, p. R.Vol. plaintiff by to the one of these defendants action, you as a result a then concerted 16a INSTRUCTION NO. need not that all of find these defendants plaintiff prevail In order for the on his representation plaintiff. made false against fraud claim asserted Defendants you It is sufficient for to find clear and Cobbs, Kennevick, Bazeghi, convincing evidence one of least plaintiff proving has the burden each of representation defendants made false propositions: following part of plan a common or scheme to de- plaintiff 1. That the defendants made to who, plaintiff fraud the all since those fact; promise existing or statement pursuance plan aof common or scheme to defraud, actively part take in the scheme promise or or representation 2. That the false; plan are equally liable as the was defendant actually promise who made the false or promise 3. That representation or representation. circumstances; was material under all the 4. That when the made defendants INSTRUCTION NO. 40 promise representation, or they knew it plaintiff proving has the burden of false; following propositions all the on his claim 5. That the defendants intended that against misrepresentation plaintiff should on act the basis of the Lyle Cobbs and Jack Kennevick: promise representation or in about signed Lyle 1. That the leases act; manner which he did and Jack Kennevick constituted state- plaintiff That 6. did not know that past existing or Wayne ment facts to false; promise representation or Hudson. plaintiff rely 7. That the did on the 2. That the statement was false. promise representation truth of the or 3. That the statement was material un- actions; subsequent his der all the circumstances. plaintiff reasonably 8. That the acted Lyle 4. That Jack when Cobbs and Ken- relying upon under all the circumstances in statement, they neg- nevick made the acted promise representation; or ligently. plaintiff damages 9. That the suffered Lyle 5. That Cobbs and Jack Kennevick were proximately caused his re- Wayne intended that Hudson should act on promise represen- liance defendants’ the basis of the statement about the tation; manner in which he did act. plain- nature and extent of the Wayne 6. That Hudson did know damages tiff’s and the amount thereof. that the statement was false. you your If from find consideration of all Wayne rely 7. That Hudson did on the propositions evidence that each of these proved by convincing subsequent has been truth of the statement clear and evidence, your then verdict should be for actions. *54 notify plain- he by which failed to
manner First National Bank of es- tiff and Idaho Wayne 8. That Hudson acted reason- sential information in connection with the ably relying under all the circumstances Professionals, leasing of Suite to The upon the statement. that such conduct Inc. Plaintiff also claims dam- Wayne 9. That Hudson suffered Cobbs, part Lyle R. on the of defendants ages proximately that caused were Jack Kennevick and the Cobbs/Kennevick Lyle Kennev- reliance Cobbs’ and Jack Partnership disregard in wanton of the was ick’s statement. rights Bank and of Idaho First National gross plaintiff negligence. and constituted Wayne 10. The nature and amount of alleges damaged he as a Plaintiff that was damages, any, proxi- if that were Hudson’s proximate negligence of on the result such mately by the statement. caused part of said defendants. you all your If find from consideration of X GIVEN propositions the evidence of these that each _ proved preponderance has aby REFUSED evidence, then should be your verdict MODIFIED_ but, you your if find from plaintiff; for the _ COVERED all consideration of the evidence _ OTHER propositions proved by a these has not been evidence, your preponderance then REQUESTED JURY PLAINTIFF’S verdict should be for the defendants. INSTRUCTION NO. 58 to Hudson establish For the Plaintiff NO. 43 INSTRUCTION Cobbs, Lyle the Defendants R. Jack duty A known facts arises disclose Part- or the Cobbs/Kennevick Kennevick facts party knows of material where one nership Plaintiff Hud- negligent, the was such facts are neither and also knows that proving each of the son has the burden of readily the other known nor accessible to preponderance following propositions party. of the evidence: Moreover, no party one is under where Cobbs, Lyle R. 1. That the defendants so, he speak, nevertheless does but Kennevick, and/or the Cobbs/Kennev- Jack en- speak honestly is bound negligent in connec- Partnership ick misleading gage in half-truths. participation, conduct tion with their space in leasing of office in the omissions REQUESTED JURY PLAINTIFF’S Center. the Wildwood Office NO. 57 INSTRUCTION plaintiff Hudson was dam- 2. That claims that defendants plaintiff also aged. Cobbs, and the Lyle R. Jack Kennevick negligence of the defen- That negli- Partnership were Cobbs/Kennevick Cobbs, Kennevick Lyle dants R. Jack signing incomplete leases cover- gent in Partnership and/or the Cobbs/Kennevick the Wildwood 101 and Suites plaintiff Hud- proximate cause delivering the same to Center Office damages. son’s Bazeghi, knowing that Mark defendant plaintiff’s and extent 4. The nature Bazeghi present such intended to damage, damages, the elements Bank and First National leases to Idaho amount thereof. knew, plaintiff or should when your of all from consideration known, you If find plaintiff would that said Bank and propositions of the leases, negli- evidence that each they were rely on said by preponderance proved Nation- has been failing notify Idaho First gent in be for evidence, your verdict should then intention not plaintiff of their al Bank but, you your find from leases, if plaintiff; and that defen- by said to be bound any of the evidence that of all negligent consideration Lyle dant R. Cobbs *55 GIVEN X REFUSED propositions these proved, has not been your
then verdict should be for the defen- MODIFIED
dant. COVERED 270-1, as modified
IDJ[ OTHER 12.36 AND DECEIT FRAUD Part *56 12.36 BAJI AND FRAUD DECEIT —NONDISCLOSURE
OF FACTS KNOWN Except
you may otherwise instructed, party facts are known one material where
to there is some other, failure disclose them is not
fraud unless relation- actionable ship
gives parties to a rise between the
known facts. duty to disclose such
duty to known facts arises where A disclose
knowledge having party is in a facts
relationship. fiduciary or a confidential
relationship fiduciary confidential or a ex- A
and trust whenever under the circumstances ists
may reposed by reasonably be and is confidence one
integrity fidelity person anoth- er. [in known facts arises to disclose
[A
fiduciary relation- or a confidential absence of a
material facts ship] party knows of where one known facts are neither such and also knows that
party.] the other readily nor accessible NOTE USE para- the last enunciating rule stated The decisions Whether by the involving seller. nondisclosure graph in cases are buyer is by the a nondisclosure apply to same rule would uncertain. inner bracket. strike out only, given, paragraph
If last