Top 10 Business Law Cases From the Past Year (2013)
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  • Derivative claim against GP of Ltd P’ship for breach of fiduciary duty, arising out of a the purchase of Teppco GP from DFI GP, at a price allegedly far below fair value.

Top 10 Business Law Cases From the Past Year (2013) Presentation Transcript

  • 1. “Top 10 Business Law Cases From the Past Year”Business & Corporate Law Section Annual CLEMay 17, 2013Wendy Gerwick Couture
  • 2. Gatz Props., LLC v. Auriga Capital Corp., 59 A.3d 1206(Del. Nov. 7, 2012).
  • 3. Gatz Props., LLC v. Auriga Capital Corp., 59 A.3d 1206(Del. Nov. 7, 2012).Section 15 of the LLC AgreementNeither the Manager nor any otherMember shall be entitled to causethe Company to . . . enter into anyadditional agreements withaffiliates on terms and conditionswhich are less favorable to theCompany than the terms andconditions of similar agreementswhich could then be entered intowith arms-length third parties,without consent of a majority of thenon-affiliated Members . . .
  • 4. Gatz Props., LLC v. Auriga Capital Corp., 59 A.3d 1206(Del. Nov. 7, 2012).Section 15 of the LLC AgreementNeither the Manager nor any otherMember shall be entitled to causethe Company to . . . enter into anyadditional agreements withaffiliates on terms and conditionswhich are less favorable to theCompany than the terms andconditions of similar agreementswhich could then be entered intowith arms-length third parties,without consent of a majority of thenon-affiliated Members . . .o No magic words arenecessaryo Viewed functionally,this is the contractualequivalent of theentire fairnessstandard of conductand judicial review
  • 5. Gatz Props., LLC v. Auriga Capital Corp., 59 A.3d 1206(Del. Nov. 7, 2012).Chancellor Strine: “Thus, because the LLC Act provides for principles of equity toapply, because LLC managers are clearly fiduciaries, and because fiduciaries owethe fiduciary duties of loyalty and care, the LLC Act starts with the default thatmanagers of LLCs owe enforceable fiduciary duties.”
  • 6. Gatz Props., LLC v. Auriga Capital Corp., 59 A.3d 1206(Del. Nov. 7, 2012).Chancellor Strine: “Thus, because the LLC Act provides for principles of equity toapply, because LLC managers are clearly fiduciaries, and because fiduciaries owethe fiduciary duties of loyalty and care, the LLC Act starts with the default thatmanagers of LLCs owe enforceable fiduciary duties.”Section 18-1101 (c) - To the extent that, at law orin equity, a member or manager or other personhas duties (including fiduciary duties) to a limitedliability company or to another member ormanager or to another person that is a party toor is otherwise bound by a limited liabilitycompany agreement, the members or managersor other persons duties may be expanded orrestricted or eliminated by provisions in thelimited liability company agreement; provided,that the limited liability company agreement maynot eliminate the implied contractual covenant ofgood faith and fair dealing.
  • 7. Gatz Props., LLC v. Auriga Capital Corp., 59 A.3d 1206(Del. Nov. 7, 2012).Chancellor Strine: “Thus, because the LLC Act provides for principles of equity toapply, because LLC managers are clearly fiduciaries, and because fiduciaries owethe fiduciary duties of loyalty and care, the LLC Act starts with the default thatmanagers of LLCs owe enforceable fiduciary duties.”Section 18-1101 (c) - To the extent that, at law orin equity, a member or manager or other personhas duties (including fiduciary duties) to a limitedliability company or to another member ormanager or to another person that is a party toor is otherwise bound by a limited liabilitycompany agreement, the members or managersor other persons duties may be expanded orrestricted or eliminated by provisions in thelimited liability company agreement; provided,that the limited liability company agreement maynot eliminate the implied contractual covenant ofgood faith and fair dealing.Section 1104 - In any casenot provided for in thischapter, the rules of law andequity, including the lawmerchant, shall govern.
  • 8. Gatz Props., LLC v. Auriga Capital Corp., 59 A.3d 1206(Del. Nov. 7, 2012).Chancellor Strine: “Thus, because the LLC Act provides for principles of equity toapply, because LLC managers are clearly fiduciaries, and because fiduciaries owethe fiduciary duties of loyalty and care, the LLC Act starts with the default thatmanagers of LLCs owe enforceable fiduciary duties.”XMere Dictum“*I+t was improvident and unnecessaryfor the trial court to reach out anddecide, sua sponte, the default fiduciaryduty issue as a matter of statutoryconstruction. . . . *T+hat court’spronouncements must be regarded asdictum without any precedential value.”
  • 9. Gatz Props., LLC v. Auriga Capital Corp., 59 A.3d 1206(Del. Nov. 7, 2012).Chancellor Strine: “Thus, because the LLC Act provides for principles of equity toapply, because LLC managers are clearly fiduciaries, and because fiduciaries owethe fiduciary duties of loyalty and care, the LLC Act starts with the default thatmanagers of LLCs owe enforceable fiduciary duties.”XLLC Act is Ambiguous“*T+he merits of the issue whether the LLC statutedoes—or does not—impose default fiduciary dutiesis one about which reasonable minds could differ.Indeed, reasonable minds arguably could concludethat the statute—which begins with the phrase,“* t ]o the extent that, at law or in equity, a memberor manager or other person has duties (includingfiduciary duties)”—is consciously ambiguous.”
  • 10. Gatz Props., LLC v. Auriga Capital Corp., 59 A.3d 1206(Del. Nov. 7, 2012).Chancellor Strine: “Thus, because the LLC Act provides for principles of equity toapply, because LLC managers are clearly fiduciaries, and because fiduciaries owethe fiduciary duties of loyalty and care, the LLC Act starts with the default thatmanagers of LLCs owe enforceable fiduciary duties.”XCall to Action“That possibility suggests that the‘organs of the Bar’ (to use the trialcourts phrase) may be well advisedto consider urging the GeneralAssembly to resolve any statutoryambiguity on this issue.”
  • 11. Gatz Props., LLC v. Auriga Capital Corp., 59 A.3d 1206(Del. Nov. 7, 2012).RESPONSESVice Chancellor Laster:“Until the Delaware Supreme Courtspeaks, the long line of Court ofChancery precedents and theChancellors dictum providepersuasive reasons to apply fiduciaryduties by default to the manager of aDelaware LLC. As the managingmember of Oculus, AK–Feel startsfrom a legal baseline of owingfiduciary duties.”Feeley v. NHAOCG, LLC, 62 A.3d 649,663 (Del. Ch. 2012).
  • 12. Gatz Props., LLC v. Auriga Capital Corp., 59 A.3d 1206(Del. Nov. 7, 2012).RESPONSESVice Chancellor Laster:“Until the Delaware Supreme Courtspeaks, the long line of Court ofChancery precedents and theChancellors dictum providepersuasive reasons to apply fiduciaryduties by default to the manager of aDelaware LLC. As the managingmember of Oculus, AK–Feel startsfrom a legal baseline of owingfiduciary duties.”Feeley v. NHAOCG, LLC, 62 A.3d 649,663 (Del. Ch. 2012).Amendment Proposed by theCorporation Law Section of theDelaware State Bar Association:Section 18-1104 would be amended toread:In any case not provided for in thechapter, the rules of law and equity,including the rules of law and equityrelating to fiduciary duties and the lawmerchant, shall govern.
  • 13. Paul v. Del. Coastal Anesthesia, LLC, No. 7084-VCG,2012 WL 1934469 (Del. Ch. May 29, 2012) (unpublished).
  • 14. Paul v. Del. Coastal Anesthesia, LLC, No. 7084-VCG,2012 WL 1934469 (Del. Ch. May 29, 2012) (unpublished).LLC OperatingAgreement“A member can beterminated withoutcause at any time uponninety (90) days writtennotice by . . . theCompany acting by voteof seventy-five percent(75%) of the holders ofthe Company’s shares.”
  • 15. LLC OperatingAgreement“A member can beterminated withoutcause at any time uponninety (90) days writtennotice by . . . theCompany acting by voteof seventy-five percent(75%) of the holders ofthe Company’s shares.”ISSUE: Could themembers act viawritten consentrather than at amember meeting?Paul v. Del. Coastal Anesthesia, LLC, No. 7084-VCG,2012 WL 1934469 (Del. Ch. May 29, 2012) (unpublished).
  • 16. LLC Act 18-302“Unless otherwise provided in a limitedliability company agreement, on any matterthat is to be voted on, consented to orapproved by members, the members maytake such action without a meeting,without prior notice and without a vote ifconsented to, in writing or by electronictransmission, by members having not lessthan the minimum number of votes thatwould be necessary to authorize or takesuch action at a meeting at which allmembers entitled to vote thereon werepresent and voted.”Paul v. Del. Coastal Anesthesia, LLC, No. 7084-VCG,2012 WL 1934469 (Del. Ch. May 29, 2012) (unpublished).
  • 17. LLC Act 18-302“Unless otherwise provided in a limitedliability company agreement, on any matterthat is to be voted on, consented to orapproved by members, the members maytake such action without a meeting,without prior notice and without a vote ifconsented to, in writing or by electronictransmission, by members having not lessthan the minimum number of votes thatwould be necessary to authorize or takesuch action at a meeting at which allmembers entitled to vote thereon werepresent and voted.”?Paul v. Del. Coastal Anesthesia, LLC, No. 7084-VCG,2012 WL 1934469 (Del. Ch. May 29, 2012) (unpublished).
  • 18. 7.8. Notice of meetingsmust be given to eachmember “not less thanseven (7) days before thedate of the meeting.” Thenotice must state the“place, date, and hour ofthe meeting, and in thecase of a special meeting,the purpose or purposesfor which the meeting iscalled.”Paul v. Del. Coastal Anesthesia, LLC, No. 7084-VCG,2012 WL 1934469 (Del. Ch. May 29, 2012) (unpublished).7.12. Members entitled to voteshall have voting power inproportion to their MembershipShares. At a meeting of Membersat which a quorum is present, theaffirmative vote of Membersholding a majority of theMembership Shares and entitledto vote on the matter shall be theact of the Members, unless agreater number is required by theAct.
  • 19. 7.8. Notice of meetingsmust be given to eachmember “not less thanseven (7) days before thedate of the meeting.” Thenotice must state the“place, date, and hour ofthe meeting, and in thecase of a special meeting,the purpose or purposesfor which the meeting iscalled.”Paul v. Del. Coastal Anesthesia, LLC, No. 7084-VCG,2012 WL 1934469 (Del. Ch. May 29, 2012) (unpublished).7.12. Members entitled to voteshall have voting power inproportion to their MembershipShares. At a meeting of Membersat which a quorum is present, theaffirmative vote of Membersholding a majority of theMembership Shares and entitledto vote on the matter shall be theact of the Members, unless agreater number is required by theAct.Operating Agreement does not “otherwise provide,” so as to preemptthe statutory default allowing actions by written consent.
  • 20. Ross Holding & Magmt Co. v. Advance Realty Group,LLC, No. 4113-VCN, 2013 WL 764688 (Del. Ch. March7, 2013) (unpublished).
  • 21. Ross Holding & Magmt Co. v. Advance Realty Group,LLC, No. 4113-VCN, 2013 WL 764688 (Del. Ch. March7, 2013) (unpublished).“Rayevich cannot avoid liability simply by pointing out that he had nodiscretion—as restricted by the ARG Operating Agreement—to vote as a boardmembers. He is correct that Cocoziello controlled his vote, but fiduciary dutiesextend beyond voting. They may involve, for example:• studying the proposed action,• determining the appropriateness of the proposed action,• setting forth a dissenting view to fellow board members, and• in the proper circumstances, informing unit holders about the potentialadverse affects of a proposed action.”
  • 22. Gerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).
  • 23. Gerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).“EPE”Enterprise GPHoldings, L.P.GENERAL PARTNEREPE Holdings, LLC
  • 24. Gerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).“EPE”Enterprise GPHoldings, L.P.GENERAL PARTNEREPE Holdings, LLCDFI GPTeppco GP$1.1 billion in EPElimitedpartnership units
  • 25. Gerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).“EPE”Enterprise GPHoldings, L.P.GENERAL PARTNEREPE Holdings, LLCDFI GPTeppco GP$1.1 billion in EPElimitedpartnership unitsCommonOwnership
  • 26. Gerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).DRULPA 17-1101(d) – “*T+he partners or other persons duties maybe expanded or restricted or eliminated by provisions in thepartnership agreement; provided that the partnership agreementmay not eliminate the implied contractual covenant of good faithand fair dealing.”
  • 27. Gerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).DRULPA 17-1101(d) – “*T+he partners or other persons duties maybe expanded or restricted or eliminated by provisions in thepartnership agreement; provided that the partnership agreementmay not eliminate the implied contractual covenant of good faithand fair dealing.”LPA 7.9(c) – “Except as set forth in this Agreement,neither the General Partner nor any other Indemniteeshall have any duties or liabilities, including fiduciaryduties, to the Partnership or any Limited Partner . . .”
  • 28. Gerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).DRULPA 17-1101(d) – “*T+he partners or other persons duties maybe expanded or restricted or eliminated by provisions in thepartnership agreement; provided that the partnership agreementmay not eliminate the implied contractual covenant of good faithand fair dealing.”LPA 7.9(c) – “Except as set forth in this Agreement,neither the General Partner nor any other Indemniteeshall have any duties or liabilities, including fiduciaryduties, to the Partnership or any Limited Partner.”Duties imposedby LPAImplied covenant ofgood faith & fairdealing
  • 29. Gerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).LPA 7.6(e) – Transactions involving the sale or purchase of partnership propertymust be “fair and reasonable” to EPE.
  • 30. Gerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).LPA 7.6(e) – Transactions involving the sale or purchase of partnership propertymust be “fair and reasonable” to EPE.LPA 7.9(a) – “*W+henever a potential conflict of interest exists or arises betweenthe General Partner or any of its Affiliates, on the one hand, and the Partnershipor any Partner, on the other hand, any resolution or course of action by theGeneral Partner or its Affiliates . . . shall not constitute a breach of thisAgreement . . . or of any duty stated or implied by law or equity, if the resolutionor course of action in respect of such conflict of interest is . . . approved bySpecial Approval.”
  • 31. Gerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).LPA 7.6(e) – Transactions involving the sale or purchase of partnership propertymust be “fair and reasonable” to EPE.LPA 7.9(a) – “*W+henever a potential conflict of interest exists or arises betweenthe General Partner or any of its Affiliates, on the one hand, and the Partnershipor any Partner, on the other hand, any resolution or course of action by theGeneral Partner or its Affiliates . . . shall not constitute a breach of thisAgreement . . . or of any duty stated or implied by law or equity, if the resolutionor course of action in respect of such conflict of interest is . . . approved bySpecial Approval.”Approval by amajority of themembers of theConflicts Committee.
  • 32. Gerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).LPA 7.6(e) – Transactions involving the sale or purchase of partnership propertymust be “fair and reasonable” to EPE.LPA 7.9(a) – “*W+henever a potential conflict of interest exists or arises betweenthe General Partner or any of its Affiliates, on the one hand, and the Partnershipor any Partner, on the other hand, any resolution or course of action by theGeneral Partner or its Affiliates . . . shall not constitute a breach of thisAgreement . . . or of any duty stated or implied by law or equity, if the resolutionor course of action in respect of such conflict of interest is . . . approved bySpecial Approval.”Approval by amajority of themembers of theConflicts Committee.Is there a “goodfaith” overlay on theSpecial Approval?
  • 33. Gerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).LPA 7.9(b) – “Whenever the GeneralPartner . . . takes any other action, or anyof its Affiliates causes it to do so, in itscapacity as the general partner of thePartnership . . . then, . . . the GeneralPartner, or such Affiliates causing it to doso, shall . . . take such other action ingood faith.”Is there a “goodfaith” overlay on theSpecial Approval?
  • 34. Gerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).LPA 7.9(b) – “Whenever the GeneralPartner . . . takes any other action, or anyof its Affiliates causes it to do so, in itscapacity as the general partner of thePartnership . . . then, . . . the GeneralPartner, or such Affiliates causing it to doso, shall . . . take such other action ingood faith.”Is there a “goodfaith” overlay on theSpecial Approval?Definition: “must believe that thedetermination or other action is inthe best interests of the Partnership”
  • 35. SubjectivestandardGerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).LPA 7.9(b) – “Whenever the GeneralPartner . . . takes any other action, or anyof its Affiliates causes it to do so, in itscapacity as the general partner of thePartnership . . . then, . . . the GeneralPartner, or such Affiliates causing it to doso, shall . . . take such other action ingood faith.”Is there a “goodfaith” overlay on theSpecial Approval?Definition: “must believe that thedetermination or other action is inthe best interests of the Partnership”
  • 36. SubjectivestandardGerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).LPA 7.9(b) – “Whenever the GeneralPartner . . . takes any other action, or anyof its Affiliates causes it to do so, in itscapacity as the general partner of thePartnership . . . then, . . . the GeneralPartner, or such Affiliates causing it to doso, shall . . . take such other action ingood faith.”Is there a “goodfaith” overlay on theSpecial Approval?Definition: “must believe that thedetermination or other action is inthe best interests of the Partnership”Implied contractual duty of goodfaith and fair dealing
  • 37. SubjectivestandardGerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).LPA 7.9(b) – “Whenever the GeneralPartner . . . takes any other action, or anyof its Affiliates causes it to do so, in itscapacity as the general partner of thePartnership . . . then, . . . the GeneralPartner, or such Affiliates causing it to doso, shall . . . take such other action ingood faith.”Is there a “goodfaith” overlay on theSpecial Approval?Definition: “must believe that thedetermination or other action is inthe best interests of the Partnership”Implied contractual duty of goodfaith and fair dealing• Discretion must be exercisedreasonably• Limited gap-filling tool thatallows court to imposecontractual terms to whichparties would have agreed hadthey anticipated a situation thatthey failed to address
  • 38. SubjectivestandardGerber v. EPE Holdings, LLC, No. 3543-VCN, 2013 WL209658 (Del. Ch. Jan. 18, 2013) (unpublished).LPA 7.9(b) – “Whenever the GeneralPartner . . . takes any other action, or anyof its Affiliates causes it to do so, in itscapacity as the general partner of thePartnership . . . then, . . . the GeneralPartner, or such Affiliates causing it to doso, shall . . . take such other action ingood faith.”Is there a “goodfaith” overlay on theSpecial Approval?Definition: “must believe that thedetermination or other action is inthe best interests of the Partnership”Implied contractual duty of goodfaith and fair dealing• Discretion must be exercisedreasonably• Limited gap-filling tool thatallows court to imposecontractual terms to whichparties would have agreed hadthey anticipated a situation thatthey failed to addressGood faith requirementdoesn’t impose an impliedcondition of objectivelyfair value
  • 39. DelJack, Inc. v. U.S. Bank Nat’l Ass’n, No. 1:11-CV-65,2012 WL 4482049 (D. Idaho Sept. 26, 2012).
  • 40. DelJack, Inc. v. U.S. Bank Nat’l Ass’n, No. 1:11-CV-65,2012 WL 4482049 (D. Idaho Sept. 26, 2012).For Deposit Only/s/ DelJack, Inc.
  • 41. DelJack, Inc. v. U.S. Bank Nat’l Ass’n, No. 1:11-CV-65,2012 WL 4482049 (D. Idaho Sept. 26, 2012).For Deposit Only/s/ DelJack, Inc.I.C. 28-3-206(3)(c) – “A payorbank . . . that takes theinstrument for immediatepayment over the counterfrom a person other than acollecting bank converts theinstrument unless theproceeds of the instrument arereceived by the indorser orapplied consistently with theindorsement.”
  • 42. DelJack, Inc. v. U.S. Bank Nat’l Ass’n, No. 1:11-CV-65,2012 WL 4482049 (D. Idaho Sept. 26, 2012).I.C. 28-3-118(7) –“*A+n action (i) forconversion of aninstrument . . . mustbe commencedwithin three (3) yearsafter the cause ofaction accrues.”
  • 43. DelJack, Inc. v. U.S. Bank Nat’l Ass’n, No. 1:11-CV-65,2012 WL 4482049 (D. Idaho Sept. 26, 2012).“You may not start a legalaction against us becauseof any problem unless (a)you have given us theabove notice [within 30days after receipt ofaccount statements] and(b) the legal action beginswithin 1 year after wesend or make yourstatement available toyou.”I.C. 28-3-118(7) –“*A+n action (i) forconversion of aninstrument . . . mustbe commencedwithin three (3) yearsafter the cause ofaction accrues.”
  • 44. DelJack, Inc. v. U.S. Bank Nat’l Ass’n, No. 1:11-CV-65,2012 WL 4482049 (D. Idaho Sept. 26, 2012).I.C. 28-1-302(a) – “Except asotherwise provided insubsection (b) of this sectionor elsewhere in the uniformcommercial code, the effect ofprovisions of the uniformcommercial code may bevaried by agreement.”
  • 45. DelJack, Inc. v. U.S. Bank Nat’l Ass’n, No. 1:11-CV-65,2012 WL 4482049 (D. Idaho Sept. 26, 2012).I.C. 28-1-302(a) – “Except asotherwise provided insubsection (b) of this sectionor elsewhere in the uniformcommercial code, the effect ofprovisions of the uniformcommercial code may bevaried by agreement.”I.C. 29-110(1) – “Everystipulation or conditionin a contract . . . whichlimits the time withinwhich he may thusenforce his rights, is voidas it is against the publicpolicy of Idaho.
  • 46. DelJack, Inc. v. U.S. Bank Nat’l Ass’n, No. 1:11-CV-65,2012 WL 4482049 (D. Idaho Sept. 26, 2012).I.C. 28-1-302(a) – “Except asotherwise provided insubsection (b) of this sectionor elsewhere in the uniformcommercial code, the effect ofprovisions of the uniformcommercial code may bevaried by agreement.”I.C. 29-110(1) – “Everystipulation or conditionin a contract . . . whichlimits the time withinwhich he may thusenforce his rights, is voidas it is against the publicpolicy of Idaho.“The Court will resolve the issue by relying on the more specificstatute. Idaho Code 29-110 speaks specifically to the issue presentedhere—the ability to contractually shorten limitations period. IdahoCode 28-1-302 speaks more generally to the ability to modify‘provisions of the uniform commercial code.’”
  • 47. DelJack, Inc. v. U.S. Bank Nat’l Ass’n, No. 1:11-CV-65,2012 WL 4482049 (D. Idaho Sept. 26, 2012).For Deposit Only/s/ DelJack, Inc.I.C. 28-3-206(3)(c) – “A payorbank . . . that takes theinstrument for immediatepayment over the counterfrom a person other than acollecting bank converts theinstrument unless theproceeds of the instrument arereceived by the indorser orapplied consistently with theindorsement.”
  • 48. DelJack, Inc. v. U.S. Bank Nat’l Ass’n, No. 1:11-CV-65,2012 WL 4482049 (D. Idaho Sept. 26, 2012).Actual Authority?• “can be created by written orspoken words or otherconduct of the principalwhich, reasonableinterpreted, causes the agentto believe that the principaldesires him so to act on theprincipal’s account”
  • 49. DelJack, Inc. v. U.S. Bank Nat’l Ass’n, No. 1:11-CV-65,2012 WL 4482049 (D. Idaho Sept. 26, 2012).Actual Authority?• “can be created by written orspoken words or otherconduct of the principalwhich, reasonableinterpreted, causes the agentto believe that the principaldesires him so to act on theprincipal’s account”FACT ISSUE
  • 50. DelJack, Inc. v. U.S. Bank Nat’l Ass’n, No. 1:11-CV-65,2012 WL 4482049 (D. Idaho Sept. 26, 2012).Actual Authority?• “can be created by written orspoken words or otherconduct of the principalwhich, reasonableinterpreted, causes the agentto believe that the principaldesires him so to act on theprincipal’s account”FACT ISSUEApparent Authority?• “exists when the principalvoluntarily places an agent insuch a position that a personof ordinary prudence,conversant with the businessusages and the nature of aparticular business, isjustified in believing that theagent is acting pursuant toexisting authority”
  • 51. DelJack, Inc. v. U.S. Bank Nat’l Ass’n, No. 1:11-CV-65,2012 WL 4482049 (D. Idaho Sept. 26, 2012).Actual Authority?• “can be created by written orspoken words or otherconduct of the principalwhich, reasonableinterpreted, causes the agentto believe that the principaldesires him so to act on theprincipal’s account”FACT ISSUEApparent Authority?• “exists when the principalvoluntarily places an agent insuch a position that a personof ordinary prudence,conversant with the businessusages and the nature of aparticular business, isjustified in believing that theagent is acting pursuant toexisting authority”NO TRIABLE ISSUE
  • 52. DelJack, Inc. v. U.S. Bank Nat’l Ass’n, No. 1:11-CV-65,2012 WL 4482049 (D. Idaho Sept. 26, 2012).
  • 53. MWI Veterinary Supply Co. v. Wotton, No. 1:12-CV-55,896 F. Supp. 2d 905 (D. Idaho Sept. 14, 2012).
  • 54. MWI Veterinary Supply Co. v. Wotton, No. 1:12-CV-55,896 F. Supp. 2d 905 (D. Idaho Sept. 14, 2012).Asset PurchaseAgreement• 5-year non-compete,beginning on the day ofclosing – June 8, 2007 –and ending on June 8,2012Key Employee EmploymentAgreement• 2-year non-compete, beginning on thedate that employment ceased
  • 55. MWI Veterinary Supply Co. v. Wotton, No. 1:12-CV-55,896 F. Supp. 2d 905 (D. Idaho Sept. 14, 2012).Asset PurchaseAgreement• 5-year non-compete,beginning on the day ofclosing – June 8, 2007 –and ending on June 8,2012Equitablyextended for 1yearKey Employee EmploymentAgreement• 2-year non-compete, beginning on thedate that employment ceased
  • 56. MWI Veterinary Supply Co. v. Wotton, No. 1:12-CV-55,896 F. Supp. 2d 905 (D. Idaho Sept. 14, 2012).Asset PurchaseAgreement• 5-year non-compete,beginning on the day ofclosing – June 8, 2007 –and ending on June 8,2012Key Employee EmploymentAgreement• 2-year non-compete, beginning on thedate that employment ceased• Banned engaging in “the business ofveterinary orthopedic equipmentdesign, manufacture . . . *or+ selling”Equitablyextended for 1year
  • 57. MWI Veterinary Supply Co. v. Wotton, No. 1:12-CV-55,896 F. Supp. 2d 905 (D. Idaho Sept. 14, 2012).Asset PurchaseAgreement• 5-year non-compete,beginning on the day ofclosing – June 8, 2007 –and ending on June 8,2012Key Employee EmploymentAgreement• 2-year non-compete, beginning on thedate that employment ceased• Banned engaging in “the business ofveterinary orthopedic equipmentdesign, manufacture . . . *or+ selling”Equitablyextended for 1year• Phrase has an unambiguous meaning: “implementsused on animals to correct or prevent injuries ordisorders of their bones or associated structures liketendons and ligaments.” Therefore, under Idahocontract law, cannot consider trade usage.
  • 58. MWI Veterinary Supply Co. v. Wotton, No. 1:12-CV-55,896 F. Supp. 2d 905 (D. Idaho Sept. 14, 2012).Asset PurchaseAgreement• 5-year non-compete,beginning on the day ofclosing – June 8, 2007 –and ending on June 8,2012Key Employee EmploymentAgreement• 2-year non-compete, beginning on thedate that employment ceased• Banned engaging in “the business ofveterinary orthopedic equipmentdesign, manufacture . . . *or+ selling”Equitablyextended for 1year• Phrase has an unambiguous meaning: “implementsused on animals to correct or prevent injuries ordisorders of their bones or associated structures liketendons and ligaments.” Therefore, under Idahocontract law, cannot consider trade usage.• Even when considered together with the APA, doesnot predominantly involve the sale of goods. So, I.C.28-2-202 does not allow trade usage to be used tointerpret this contract.
  • 59. St. Luke’s Magic Valley Reg’l Med. Ctr. v. Luciani, 293P.3d 661 (Idaho 2013).
  • 60. St. Luke’s Magic Valley Reg’l Med. Ctr. v. Luciani, 293P.3d 661 (Idaho 2013).Magic ValleyRegionalMedical CenterAttorney A representedit in litigation
  • 61. St. Luke’s Magic Valley Reg’l Med. Ctr. v. Luciani, 293P.3d 661 (Idaho 2013).Magic ValleyRegionalMedical CenterAttorney A representedit in litigationSt. Luke’sMagic ValleyRegionalMedical CenterEffectively anasset & liabilitytransferSale and Lease Agreement“*I+t is the intent of the Parties that all property andinterests of the Hospital whether real or personal,tangible or intangible, be leased, sold, assigned,licensed or transferred by [Twin Falls] County and the[Magic Valley] Subsidiaries, as applicable, to [St.Luke’s+, . . . whether or not reflected on the Hospital’sBalance Sheet and whether known or unknown,contingent or otherwise.”
  • 62. St. Luke’s Magic Valley Reg’l Med. Ctr. v. Luciani, 293P.3d 661 (Idaho 2013).Magic ValleyRegionalMedical CenterAttorney A representedit in litigationSt. Luke’sMagic ValleyRegionalMedical CenterEffectively anasset & liabilitytransferAttorney AAssertedclaim forlegalmalpractice
  • 63. St. Luke’s Magic Valley Reg’l Med. Ctr. v. Luciani, 293P.3d 661 (Idaho 2013).Magic ValleyRegionalMedical CenterAttorney A representedit in litigationSt. Luke’sMagic ValleyRegionalMedical CenterEffectively anasset & liabilitytransferAttorney AAssertedclaim forlegalmalpracticeCERTIFIED QUESTION: Is a legal malpractice claim that istransferred to an assignee in a commercial transaction, along withother business assets and liabilities, assignable?
  • 64. St. Luke’s Magic Valley Reg’l Med. Ctr. v. Luciani, 293P.3d 661 (Idaho 2013).YESCERTIFIED QUESTION: Is a legal malpractice claim that istransferred to an assignee in a commercial transaction, along withother business assets and liabilities, assignable?
  • 65. St. Luke’s Magic Valley Reg’l Med. Ctr. v. Luciani, 293P.3d 661 (Idaho 2013).YESCERTIFIED QUESTION: Is a legal malpractice claim that istransferred to an assignee in a commercial transaction, along withother business assets and liabilities, assignable?Generally, claims areassignable, but notlegal malpracticeclaims for policyreasons.
  • 66. St. Luke’s Magic Valley Reg’l Med. Ctr. v. Luciani, 293P.3d 661 (Idaho 2013).YESCERTIFIED QUESTION: Is a legal malpractice claim that istransferred to an assignee in a commercial transaction, along withother business assets and liabilities, assignable?Policy reasons notimplicated here.Generally, claims areassignable, but notlegal malpracticeclaims for policyreasons.
  • 67. St. Luke’s Magic Valley Reg’l Med. Ctr. v. Luciani, 293P.3d 661 (Idaho 2013).YESCERTIFIED QUESTION: Is a legal malpractice claim that istransferred to an assignee in a commercial transaction, along withother business assets and liabilities, assignable?Policy reasons notimplicated here.In Bishop v. Owens, 272 P.3d1247 (Idaho 2012), the Courtheld that a legal malpracticeclaim sounding in tort does notsurvive the death of an injuredparty.Generally, claims areassignable, but notlegal malpracticeclaims for policyreasons.
  • 68. St. Luke’s Magic Valley Reg’l Med. Ctr. v. Luciani, 293P.3d 661 (Idaho 2013).YESCERTIFIED QUESTION: Is a legal malpractice claim that istransferred to an assignee in a commercial transaction, along withother business assets and liabilities, assignable?Policy reasons notimplicated here.In Bishop v. Owens, 272 P.3d1247 (Idaho 2012), the Courtheld that, at common law, a legalmalpractice claim sounding intort does not survive the deathof an injured party.Survival and assignability aredifferent.Generally, claims areassignable, but notlegal malpracticeclaims for policyreasons.
  • 69. St. Luke’s Magic Valley Reg’l Med. Ctr. v. Luciani, 293P.3d 661 (Idaho 2013).YESCERTIFIED QUESTION: Is a legal malpractice claim that istransferred to an assignee in a commercial transaction, along withother business assets and liabilities, assignable?Policy reasons notimplicated here.In Bishop v. Owens, 272 P.3d1247 (Idaho 2012), the Courtheld that, at common law, a legalmalpractice claim sounding intort does not survive the deathof an injured party.Survival and assignability aredifferent.In MacLeod v. Stelle, 249 P.254 (Idaho 1936), the Courtheld that actions of a personalnature are not assignable, butan injury that “lessens theestate of the injured partydoes survive and . . . isassignable.”Generally, claims areassignable, but notlegal malpracticeclaims for policyreasons.
  • 70. St. Luke’s Magic Valley Reg’l Med. Ctr. v. Luciani, 293P.3d 661 (Idaho 2013).YESCERTIFIED QUESTION: Is a legal malpractice claim that istransferred to an assignee in a commercial transaction, along withother business assets and liabilities, assignable?Policy reasons notimplicated here.In Bishop v. Owens, 272 P.3d1247 (Idaho 2012), the Courtheld that, at common law, a legalmalpractice claim sounding intort does not survive the deathof an injured party.Survival and assignability aredifferent.In MacLeod v. Stelle, 249 P.254 (Idaho 1936), the Courtheld that actions of a personalnature are not assignable, butan injury that “lessens theestate of the injured partydoes survive and . . . isassignable.”The alleged malpracticesubstantially impacted thevalue of the assets acquired.Generally, claims areassignable, but notlegal malpracticeclaims for policyreasons.
  • 71. Mickelsen Construction, Inc. v. Horrocks, No. 38634-2011, 2013 WL 1276523 (Idaho March 29, 2013).
  • 72. Mickelsen Construction, Inc. v. Horrocks, No. 38634-2011, 2013 WL 1276523 (Idaho March 29, 2013).AcceleratedPaving, Inc.MickelsenConstructionOwed$35K
  • 73. Mickelsen Construction, Inc. v. Horrocks, No. 38634-2011, 2013 WL 1276523 (Idaho March 29, 2013).AcceleratedPaving, Inc.MickelsenConstructionOwed$35KMs.HorrocksAgreed not to filematerialmen’s lienGave check, payable for$35K, drawn on account of herbusiness, Sunshine Secretarial
  • 74. Mickelsen Construction, Inc. v. Horrocks, No. 38634-2011, 2013 WL 1276523 (Idaho March 29, 2013).AcceleratedPaving, Inc.MickelsenConstructionOwed$35KMs.HorrocksGave check, payable for$35K, drawn on account of herbusiness, Sunshine SecretarialAgreed not to filematerialmen’s lien
  • 75. Mickelsen Construction, Inc. v. Horrocks, No. 38634-2011, 2013 WL 1276523 (Idaho March 29, 2013).I.C. 9-505(2) - In the following cases the agreement is invalid, unless the same or somenote or memorandum thereof, be in writing and subscribed by the party charged, or byhis agent. . . . : … A special promise to answer for the debt, default or miscarriage ofanother, except in the cases provided for in section 9-506, Idaho Code.
  • 76. Mickelsen Construction, Inc. v. Horrocks, No. 38634-2011, 2013 WL 1276523 (Idaho March 29, 2013).Sunshine Secretarial Services, Inc. Jan. 8, 2009Pay to the order of ____Mickelsen Construction_______$34,980.00.DRAWEE BANKFor Accel. Lesa D. HorrocksI.C. 9-505(2) - In the following cases the agreement is invalid, unless the same or somenote or memorandum thereof, be in writing and subscribed by the party charged, or byhis agent. . . . : … A special promise to answer for the debt, default or miscarriage ofanother, except in the cases provided for in section 9-506, Idaho Code.
  • 77. Mickelsen Construction, Inc. v. Horrocks, No. 38634-2011, 2013 WL 1276523 (Idaho March 29, 2013).Sunshine Secretarial Services, Inc. Jan. 8, 2009Pay to the order of ____Mickelsen Construction_______$34,980.00.DRAWEE BANKFor Accel. Lesa D. HorrocksCourt: “There is nothing on the check indicating that either Ms.Horrocks or Sunshine Secretarial agreed to guaranty anyobligation of Accelerated Paving to Mickelsen Construction.”I.C. 9-505(2) - In the following cases the agreement is invalid, unless the same or somenote or memorandum thereof, be in writing and subscribed by the party charged, or byhis agent. . . . : … A special promise to answer for the debt, default or miscarriage ofanother, except in the cases provided for in section 9-506, Idaho Code.
  • 78. Mickelsen Construction, Inc. v. Horrocks, No. 38634-2011, 2013 WL 1276523 (Idaho March 29, 2013).I.C. 9-505(2) - In the following cases the agreement is invalid, unless the same or somenote or memorandum thereof, be in writing and subscribed by the party charged, or byhis agent. . . . : … A special promise to answer for the debt, default or miscarriage ofanother, except in the cases provided for in section 9-506, Idaho Code.I.C. 9-506(2) - A promise to answer forthe obligation of another, in any ofthe following cases, is deemed anoriginal obligation of the promisor,and need not be in writing: . . .Where the creditor parts with value,or enters into an obligation, inconsideration of the obligations inrespect to which the promise is made,in terms or under circumstances suchas to render the party making thepromise the principal debtor, and theperson in whose behalf it is made, hissurety.
  • 79. Mickelsen Construction, Inc. v. Horrocks, No. 38634-2011, 2013 WL 1276523 (Idaho March 29, 2013).I.C. 9-505(2) - In the following cases the agreement is invalid, unless the same or somenote or memorandum thereof, be in writing and subscribed by the party charged, or byhis agent. . . . : … A special promise to answer for the debt, default or miscarriage ofanother, except in the cases provided for in section 9-506, Idaho Code.I.C. 9-506(2) - A promise to answer forthe obligation of another, in any ofthe following cases, is deemed anoriginal obligation of the promisor,and need not be in writing: . . .Where the creditor parts with value,or enters into an obligation, inconsideration of the obligations inrespect to which the promise is made,in terms or under circumstances suchas to render the party making thepromise the principal debtor, and theperson in whose behalf it is made, hissurety.Court: Overruling Reed v. Samuels, 249 P.893 (1926), the value is not required toinure to the benefit of the promisor, as longas the promisee parts with value.
  • 80. Court: Overruling Reed v. Samuels, 249 P.893 (1926), the value is not required toinure to the benefit of the promisor, as longas the promisee parts with value.Mickelsen Construction, Inc. v. Horrocks, No. 38634-2011, 2013 WL 1276523 (Idaho March 29, 2013).I.C. 9-505(2) - In the following cases the agreement is invalid, unless the same or somenote or memorandum thereof, be in writing and subscribed by the party charged, or byhis agent. . . . : … A special promise to answer for the debt, default or miscarriage ofanother, except in the cases provided for in section 9-506, Idaho Code.I.C. 9-506(2) - A promise to answer forthe obligation of another, in any ofthe following cases, is deemed anoriginal obligation of the promisor,and need not be in writing: . . .Where the creditor parts with value,or enters into an obligation, inconsideration of the obligations inrespect to which the promise is made,in terms or under circumstances suchas to render the party making thepromise the principal debtor, and theperson in whose behalf it is made, hissurety.Court: An agreement under I.C. 9-506(2)and a guaranty are mutually exclusivebecause a person cannot be both theprincipal debtor and the guarantor.
  • 81. Phillips v. Blazier-Henry, No.38666, 2013 WL 1458641(Idaho April 11, 2013).
  • 82. Complaint for Foreclosureof Deed of TrustPhillips v. Blazier-Henry, No.38666, 2013 WL 1458641(Idaho April 11, 2013).Phillips &ChanceBlazier-Henry
  • 83. Complaint for Foreclosureof Deed of TrustPhillips v. Blazier-Henry, No.38666, 2013 WL 1458641(Idaho April 11, 2013).Phillips &ChanceBlazier-HenryDefault JudgmentWrit of Execution, with $87K owing
  • 84. Complaint for Foreclosureof Deed of TrustPhillips v. Blazier-Henry, No.38666, 2013 WL 1458641(Idaho April 11, 2013).Phillips &ChanceBlazier-HenryDefault JudgmentWrit of Execution, with $87K owingSheriff’s Sale – sold lot 20 acres for $1,000
  • 85. Complaint for Foreclosureof Deed of TrustPhillips v. Blazier-Henry, No.38666, 2013 WL 1458641(Idaho April 11, 2013).Phillips &ChanceBlazier-HenryDefault JudgmentWrit of Execution, with $87K owingSheriff’s Sale – sold lot 20 acres for $1,000No creditbid
  • 86. Complaint for Foreclosureof Deed of TrustPhillips v. Blazier-Henry, No.38666, 2013 WL 1458641(Idaho April 11, 2013).Phillips &ChanceBlazier-HenryDefault JudgmentWrit of Execution, with $87K owingSheriff’s Sale – sold lot 20 acres for $1,000No creditbidDistrict Court Set Aside the Sale: “*T+his Court concludes that the disparity between thevalue of the real property sold and the successful $1,000.00 price paid is so grosslyinadequate as to shock the judicial conscience.”
  • 87. Complaint for Foreclosureof Deed of TrustPhillips v. Blazier-Henry, No.38666, 2013 WL 1458641(Idaho April 11, 2013).Phillips &ChanceBlazier-HenryDefault JudgmentWrit of Execution, with $87K owingSheriff’s Sale – sold lot 20 acres for $1,000No creditbidDistrict Court Set Aside the Sale: “*T+his Court concludes that the disparity between thevalue of the real property sold and the successful $1,000.00 price paid is so grosslyinadequate as to shock the judicial conscience.”Supreme Court reviewedfor abuse of discretion.
  • 88. Phillips v. Blazier-Henry, No.38666, 2013 WL 1458641(Idaho April 11, 2013).Court: The “shock the conscience” standard doesn’t apply in Idaho.
  • 89. Phillips v. Blazier-Henry, No.38666, 2013 WL 1458641(Idaho April 11, 2013).Court: The “shock the conscience” standard doesn’t apply in Idaho.Rather, the standard stated in Fed’lLand Bank of Spokane v. Curtis, 262 P.877 (1927), applies in Idaho:“As a general rule mere inadequacy ofconsideration is not sufficient groundfor setting aside a sheriff’s sale, but itis uniformly held thatgross inadequacy of consideration,coupled with very slight additionalcircumstance,is sufficient.”
  • 90. Phillips v. Blazier-Henry, No.38666, 2013 WL 1458641(Idaho April 11, 2013).Court: The “shock the conscience” standard doesn’t apply in Idaho.Rather, the standard stated in Fed’lLand Bank of Spokane v. Curtis, 262 P.877 (1927), applies in Idaho:“As a general rule mere inadequacy ofconsideration is not sufficient groundfor setting aside a sheriff’s sale, but itis uniformly held thatgross inadequacy of consideration,coupled with very slight additionalcircumstance,is sufficient.”“Chance offers noauthority for theproposition that anattorney’smisunderstanding of thelaw constitutes a slightadditional circumstancethat, when paired with aninadequate purchase price,warrants setting a sheriff’ssale aside.”
  • 91. District Court Set Aside the Sale: “*T+his Court concludes that the disparity between thevalue of the real property sold and the successful $1,000.00 price paid is so grosslyinadequate as to shock the judicial conscience.”Complaint for Foreclosureof Deed of TrustPhillips v. Blazier-Henry, No.38666, 2013 WL 1458641(Idaho April 11, 2013).Phillips &ChanceBlazier-HenryDefault JudgmentWrit of Execution, with $87K owingSheriff’s Sale – sold lot 20 acres for $1,000No creditbidSupreme Court reviewedfor abuse of discretion.Supreme Court: “The order setting aside the sheriff’s sale and the judgment arereversed.”
  • 92. Insight LLC v. Gunter, No.38158, 2013 WL 1730149(Idaho April 16, 2013).
  • 93. Insight LLC v. Gunter, No.38158, 2013 WL 1730149(Idaho April 16, 2013).6/19/06 – Summit executed IM (lender’s) mortgage
  • 94. Insight LLC v. Gunter, No.38158, 2013 WL 1730149(Idaho April 16, 2013).6/19/06 – Summit executed IM (lender’s) mortgage6/19/06 – Summit executed deed of trust in favor of Gunters (vendors)
  • 95. Insight LLC v. Gunter, No.38158, 2013 WL 1730149(Idaho April 16, 2013).6/19/06 – Summit executed IM (lender’s) mortgage6/19/06 – Summit executed deed of trust in favor of Gunters (vendors)6/20/06; 4:16 p.m. – deed from Gunters to Summit recorded
  • 96. Insight LLC v. Gunter, No.38158, 2013 WL 1730149(Idaho April 16, 2013).6/19/06 – Summit executed IM (lender’s) mortgage6/19/06 – Summit executed deed of trust in favor of Gunters (vendors)6/20/06; 4:16 p.m. – deed from Gunters to Summit recorded6/20/06; 4:17 p.m. – IM/Summit mortgage recorded
  • 97. Insight LLC v. Gunter, No.38158, 2013 WL 1730149(Idaho April 16, 2013).6/19/06 – Summit executed IM (lender’s) mortgage6/19/06 – Summit executed deed of trust in favor of Gunters (vendors)6/20/06; 4:16 p.m. – deed from Gunters to Summit recorded6/20/06; 4:17 p.m. – IM/Summit mortgage recorded6/20/06; 4:18 p.m. – Gunter/Summit deed of trust recorded
  • 98. Insight LLC v. Gunter, No.38158, 2013 WL 1730149(Idaho April 16, 2013).6/19/06 – Summit executed IM (lender’s) mortgage6/19/06 – Summit executed deed of trust in favor of Gunters (vendors)6/20/06; 4:16 p.m. – deed from Gunters to Summit recorded6/20/06; 4:17 p.m. – IM/Summit mortgage recorded6/20/06; 4:18 p.m. – Gunter/Summit deed of trust recordedI.C. 45-112 – A purchase money mortgage “has priority over all other lienscreated against the purchaser, subject to the operation of the recording laws.”
  • 99. Insight LLC v. Gunter, No.38158, 2013 WL 1730149(Idaho April 16, 2013).6/19/06 – Summit executed IM (lender’s) mortgage6/19/06 – Summit executed deed of trust in favor of Gunters (vendors)6/20/06; 4:16 p.m. – deed from Gunters to Summit recorded6/20/06; 4:17 p.m. – IM/Summit mortgage recorded6/20/06; 4:18 p.m. – Gunter/Summit deed of trust recordedI.C. 45-112 – A purchase money mortgage “has priority over all other lienscreated against the purchaser, subject to the operation of the recording laws.”As a matter of firstimpression, the taking ofadditional security on themortgage, beyond theland being purchased, didnot destroy the purchasemoney status of themortgage.
  • 100. Insight LLC v. Gunter, No.38158, 2013 WL 1730149(Idaho April 16, 2013).6/19/06 – Summit executed IM (lender’s) purchase money mortgage6/19/06 – Summit executed purchase money deed of trust in favor of Gunters (vendors)6/20/06; 4:16 p.m. – deed from Gunters to Summit recorded6/20/06; 4:17 p.m. – IM/Summit mortgage recorded6/20/06; 4:18 p.m. – Gunter/Summit deed of trust recordedI.C. 45-112 – A purchase money mortgage “has priority over all other lienscreated against the purchaser, subject to the operation of the recording laws.”PMMPMMI.C. 55-812 – “Every conveyance of real property . . . is void as against any subsequent purchaseror mortgagee of the same property, or any part thereof, in good faith and for a valuableconsideration, whose conveyance is first duly recorded.”
  • 101. Insight LLC v. Gunter, No.38158, 2013 WL 1730149(Idaho April 16, 2013).6/19/06 – Summit executed IM (lender’s) purchase money mortgage6/19/06 – Summit executed purchase money deed of trust in favor of Gunters (vendors)6/20/06; 4:16 p.m. – deed from Gunters to Summit recorded6/20/06; 4:17 p.m. – IM/Summit mortgage recorded6/20/06; 4:18 p.m. – Gunter/Summit deed of trust recordedI.C. 45-112 – A purchase money mortgage “has priority over all other lienscreated against the purchaser, subject to the operation of the recording laws.”PMMPMMI.C. 55-812 – “Every conveyance of real property . . . is void as against any subsequent purchaseror mortgagee of the same property, or any part thereof, in good faith and for a valuableconsideration, whose conveyance is first duly recorded.”PRIORCONVEYANCE
  • 102. Insight LLC v. Gunter, No.38158, 2013 WL 1730149(Idaho April 16, 2013).6/19/06 – Summit executed IM (lender’s) purchase money mortgage6/19/06 – Summit executed purchase money deed of trust in favor of Gunters (vendors)6/20/06; 4:16 p.m. – deed from Gunters to Summit recorded6/20/06; 4:17 p.m. – IM/Summit mortgage recorded6/20/06; 4:18 p.m. – Gunter/Summit deed of trust recordedPMMPMMCourt: “Since the Gunters’ deed of trust was a subsequentencumbrance, the only way it could take priority over the IMmortgage as the first encumbrance . . . is if the Gunters werethe first to record. The Gunters were not the first to record.Therefore, their deed of trust is junior to the IM mortgage.”PRIORCONVEYANCE
  • 103. Thank you!Wendy Gerwick Couturewgcouture@uidaho.edu