Justia Business Law Opinion Summaries

This case concerned a commercial lease between Defendants-Appellants-Cross-Appellants Michael Storms and Kathy Burggraf and the Plaitniff-Respondent-Cross-Appellant Watkins Company, LLC’s predecessor in interest, Watkins and Watkins for a restaurant and microbrewery in Idaho Falls, Idaho. Watkins filed a lawsuit seeking to enforce the lease after Storms and Burggraf failed to timely pay the rent. The issues were tried to the district court, which found that Storms and Burggraf had materially breached the lease and that Watkins could regain possession of the property. The district court also found that Storms and Burggraf had been unjustly enriched by failing to pay rent for additional storage space. Further, the district court found that the lease's provision for accelerated rent was a liquidated damages clause and found it be unconscionable. Storms and Burggraf appealed the district court’s decision, arguing that an accord and satisfaction had been reached between the parties and that the court erred in its finding of the rent for the upstairs storage area above the restaurant. Watkins argued on cross-appeal that the district court based its finding regarding the accelerated rent on insufficient evidence. Because of an error in the district court's finding regarding the upstairs storage area, the Supreme Court vacated that part of the court's order but upheld the remaining issues.

Plaintiff-Appellant Alesha Ketterling alleged that she slipped on snow in the parking lot of the Burger King restaurant in Burley, Idaho, on December 22, 2006. BDSB of Western Idaho, L.C. had the contractual right to operate the restaurant under a franchise agreement with Burger King. HB Boys managed the Burley Burger King under a contract with BDSB. According to Plaintiff, her fall aggravated an existing knee injury. Plaintiff alleged that Burger King’s failure to make the premises safe was negligent and entitled her to damages for her injuries. HB Boys moved for summary judgment, contending that Plaintiff failed to timely join it as a defendant. The district court agreed and granted the motion. The court subsequently granted summary judgment to Burger King, holding that, as franchisor, it did not control the premises where Plaintiff fell and had no vicarious liability for her injuries. The issue before the Supreme Court was whether either Defendant was entitled to summary judgment. Finding no abuse of discretion, the Supreme Court affirmed the district court's grant of summary judgment in favor of Defendants.

This case arose from a district court's dismissal for failure to exhaust administrative remedies of Petitioner-Appellant Daniel Fuchs's petition for judicial review and complaint for declaratory and injunctive relief. Petitioner challenged the Alcohol Beverage Control's (ABC) removal of his name from liquor license priority waiting lists. He argued that the agency's action constituted an informal rule that was not promulgated in accordance with the Idaho Administrative Procedure Act (Idaho APA). In response, ABC argued that Petitioner failed to exhaust administrative remedies before bringing his action before the district court, and that the removal was done in accordance with Idaho APA. Upon review, the Supreme Court found that the district court erred in finding that Petitioner failed to exhaust administrative remedies, but that Petitioner did not have a property interest in his place on the priority list (since the legislature did not have the authority to create such an interest). Accordingly, the Court affirmed the district court's decision.

This case involved an ongoing dispute between brothers Ron McCann (Ron) and William McCann, Jr. (Bill) concerning the operation of McCann Ranch & Livestock Company, Inc. (Ranch), a closely-held corporation created by their father, William McCann, Sr. (William, Sr.). In 1997, William, Sr.'s shares passed to a trust set up to benefit his wife Gertrude, with Gary Meisner as trustee. In 2008, Ron filed suit against Bill, the Ranch and Meisner (Respondents) alleging a breach of fiduciary duties and seeking equitable relief or, the dissolution of the corporation. The district court granted summary judgment for the Respondents. Ron appealed, arguing that the district court erred in characterizing his claims as derivative and in finding that he failed to satisfy the elements of I.C. 30-1-1430(2)(b). Ron also argued that the court incorrectly limited the scope of discovery. Respondents cross-appealed, arguing that the district court erred in failing to award them attorney's fees. Upon review, the Supreme Court concluded the district court erred in granting summary judgment to Respondents as they failed to establish the necessary elements set forth in I.C. 30-1-1430(2)(b). Furthermore, the Court found that the district court did not err when it denied Respondents attorney fees. The case was remanded to the district court for further proceedings.

Appellants Kent Whiteman and Whitehorse Properties, LLC, (Whiteman), brought a second appeal of this case before the Supreme Court. In the original trial, Respondent Damian Farrell sued Whiteman for uncompensated architect services rendered for Whiteman's condominium project from 2003 to 2004. Whiteman counterclaimed arguing that Farrell was not entitled to compensation due to his failure to obtain a license to practice architecture in Idaho. Farrell is a resident of Michigan and was licensed as an architect in the states of Michigan, Texas, and New York when he began working with Whiteman. Farrell did not receive his architect's license in Idaho until 2004. The district court found that an implied in fact contract existed between the parties and awarded Farrell damages in quantum meruit for services rendered, expenses incurred, and attorney's fees and costs. Whiteman appealed and the Supreme Court vacated the district court's damage award and its award of attorney's fees, finding that any damages awarded to Farrell prior to being licensed in Idaho should be based on unjust enrichment, not quantum meruit. On remand, the district court heard new evidence and awarded Farrell damages for reimbursement of out of pocket expenses incurred prior to licensing under unjust enrichment, damages for architectural services rendered after Farrell obtained his license based on quantum meruit, and attorney's fees and costs. Upon re-review, the Supreme Court upheld the district court's award of damaged under unjust enrichment and quantum meruit, and upheld the award of attorney's fees and costs.

Idaho Development, LLC (Idaho Development) advanced $1,100,000.00 to Teton View Golf Estates, LLC (Teton View), a joint venture made up of Idaho Development as a 33.3% owner and Rothchild Properties, LLC as a 66.7% owner. Teton View granted Idaho Development a promissory note secured by a deed of trust that specified a set monthly payment and stated that the entire amount was to be paid off in ninety days. Idaho Development filed an action to foreclose on the deed of trust after Teton View failed to satisfy the promissory note. DePatco, Inc., another lienholder on the property, filed a motion for summary judgment to recharacterize Idaho Development’s advance as a capital contribution, which was granted. Idaho Development appealed, arguing that there was a genuine issue of fact as to whether the entire $1,100,000 advance was intended to be a capital contribution. Idaho Development also appealed a subsequent summary judgment brought by ZBS, LLC, which relied on the recharacterization determination in holding that ZBS’ lien on the property had priority over Idaho Development’s lien. Upon review of the trial court's recharacterization of Idaho Development's lien, the Supreme Court concluded that there was a genuine issue of fact as to whether the entire $1,100,000 was intended to be a capital contribution, the district court therefore improperly granted summary judgment. The case was remanded for further proceedings.

The issue on appeal before the Supreme Court was the grant of summary judgment against Landscapes Unlimited, LLC (LU) in which the district court: (1) applied I.C. 45-508 to postpone LU’s lien claim in golf course property to Hopkins Northwest Fund, LLC’s (Hopkins) deed of trust covering the same, and (2) alternatively apportioned LU’s lien amount. Hopkins filed a complaint in district court seeking to foreclose on its deeds of trust because the borrowers were in default on both promissory notes. Hopkins alleged in the complaint that its interest in the subject properties had priority over LU’s lien claim. LU cross-claimed, alleging that its lien claim was superior to Hopkins’ deeds of trust because LU began work on the project in June 2006 and Hopkins did not record its first deed of trust until August. Accordingly, LU sought to foreclose its lien with respect to the parcels identified in its lien claim. LU filed a motion for summary judgment in December 2008 regarding the validity, superiority, and amount of its lien claim. Hopkins responded that LU’s lien, even if valid, did not have priority over Hopkins’ interest because LU failed to designate what portions of its lien amount are attributed to each parcel or improvement pursuant to I.C. 45-508. LU countered that a single lien claim could be filed, without segregating the amount, when the labor is provided pursuant to a single contract and the work provided amounts to a single improvement. The district court orally ruled that LU’s lien claim on the four parcels at issue was superior to Hopkins’ interest pursuant to I.C. 45-506. Because the Supreme Court found that I.C. 45-508 was inapplicable to LU’s lien claim and that equitable apportionment was not an appropriate alternative remedy where I.C. 45-508 does not apply, the Court vacated the judgment and remanded the case for further proceedings.

Defendant AIA Services Corporation entered into a stock redemption agreement with Appellant Reed Taylor to purchase all of his shares in AIA Services for a $1.5 million down payment promissory note and a $6 million promissory note, plus other consideration. When AIA failed to pay the $1.5 million when it became due, Appellant and AIA agreed to modify the stock redemption agreement. AIA was a still unable to make payments under the new terms. Appellant then filed suit to recover the amounts owed on the two promissory notes. The district court granted partial summary judgment in favor of AIA and dismissed six of Appellant's causes of action after finding the revised stock redemption agreement was unenforceable. On appeal, Appellant argued the redemption agreement complied with state law and was still enforceable. Upon review, the Supreme Court affirmed the district court's holding that the agreement was illegal and unenforceable and affirmed the court's dismissal of Appellant's six causes of action.

Defendant Four Rivers Packing Company operated an onion packing plant and hired Plaintiff Stuart Mackay as the company's "field man." Plaintiff had been in the onion business for decades and knew many onion farmers. Four Rivers through its general manager Randy Smith (Smith) offered Plaintiff a job that involved purchasing enough onions to keep Four Rivers' packing shed stocked at a price that Smith would set. Plaintiff contended that Smith offered him a long-term employment contract. From 2000 to 2002, financial and managerial setbacks made it difficult for Four Rivers to operate its business, and for Plaintiff to acquire onions at prices set by Smith in order to keep the sheds stocked. In 2003, Four Rivers laid Plaintiff off. Plaintiff filed suit in 2004 alleging breach of the employment contract. At trial following a remand, Four Rivers contended that the parties had not entered into an employment contract for any specified term. A jury would return a verdict in favor of Plaintiff. In a special verdict form, the jury found that the parties had entered into a long term contract of "up to ten years, or such time as the Plaintiff retired." Four Rivers timely appealed, challenging jury instructions given at trial and the sufficiency of the evidence. Upon review of the trial record, the Supreme Court found that the trial court properly instructed the jury and that the evidence presented was sufficient to support the verdict. The Court affirmed the trial court's judgment against Four Rivers.

In 2001, Plaintiff Allied Bail Bonds, Inc. and Defendants the Kootenai County Sheriff and Board of Commissioners entered into a settlement agreement setting forth procedures for how inmates at the county jail would be informed of and obtain bail bonds. Allied brought suit alleging several claims including breach of the settlement agreement. The district court dismissed Allied's claims. Principal among them was Allied's contention that the Sheriff wrongfully diverted Allied's potential customers away from Allied, toward credit card companies, with the intent to harm Allied's business. Upon review, the Supreme Court found that Allied ran afoul of the technical pleading requirements of the legal authorities it used to support its claims. As such, the Court held that the district court properly dismissed Allied's claims against Defendants.