Case Title: American Bank v. BRN Dev.

Citation: 

Docket Number: 40625

State: idaho

Court: Idaho Supreme Court (civil)

Date: 2015-08-20T00:00:00Z

Document:
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IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 40625 
 
AMERICAN BANK, a Montana banking  
 corporation, 
 
       Plaintiff-Cross Defendant, 
 
v. 
 
BRN DEVELOPMENT, INC., 
 
       Defendant-Cross Defendant- 
       Cross Claimant-Appellant, 
 
and 
 
TAYLOR ENGINEERING, INC., 
 
       Defendant-Third Party Plaintiff- 
       Cross Defendant-Respondent, 
 
and 
 
BRN INVESTMENTS, LLC, an Idaho  
limited liability company; LAKE VIEW AG,  
a Liechtenstein company; BRN-LAKE VIEW  
JOINT VENTURE, an Idaho general  
partnership; ROBERT LEVIN Trustee for  
the ROLAND M. CASATI FAMILY  
TRUST, dated June 5, 2008; RYKER  
YOUNG, Trustee for the RYKER YOUNG  
REVOCABLE TRUST; MARSHALL  
CHESROWN, a single man; THORCO, INC., 
an Idaho corporation; CONSOLIDATED  
SUPPLY COMPANY, an Oregon  
corporation; WADSWORTH GOLF  
CONSTRUCTION COMPANY OF THE  
SOUTHWEST, a Delaware corporation; THE  
TURF CORPORATION, an Idaho  
corporation; POLIN & YOUNG  
CONSTRUCTION, INC., an Idaho  
corporation; PRECISION IRRIGATION,  
INC., an Arizona corporation; and  
SPOKANE WILBERT VAULT CO., a  
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Boise, November 2014 Term 
 
2015 Opinion No. 76 
 
Filed: August 20, 2015 
 
Stephen Kenyon, Clerk 
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Washington corporation, d/b/a WILBERT  
PRECAST, 
 
       Defendants-Cross Defendants, 
 
and 
 
IDAHO ROOFING SPECIALIST, LLC, an  
Idaho limited liability company;  
INTERSTATE CONCRETE & ASPHALT  
COMPANY, an Idaho corporation;  
CONCRETE FINISHING, INC., an Arizona 
corporation,  
 
       Cross Defendants, 
 
and 
 
STRATA, INC., an Idaho corporation; and  
SUNDANCE INVESTMENTS, LLP, a  
limited liability partnership, 
 
       Third-Party Defendants, 
 
and 
 
ACI NORTHWEST, INC., an Idaho  
corporation, 
 
       Third Party Defendant-Cross Claimant. 
_______________________________________ 
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Appeal from the District Court of the First Judicial District of the State of Idaho,   
Kootenai County.  Hon. John P. Luster, District Judge. 
 
The judgment of the district court is affirmed. 
 
 
Layman Law Firm, Spokane, Washington, for appellant.  Bradley C. Crockett  
  
argued. 
 
 
Witherspoon Kelley, Coeur d’Alene, for respondent.  Mark A. Ellingsen argued. 
 
                     _______________________________________________ 
 
HORTON, Justice. 
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In a foreclosure action brought against BRN Development, Inc. (BRN), BRN brought a 
cross-claim against Taylor Engineering, Inc. (Taylor), asserting negligence.  Following a court 
trial, the district court held that Taylor was not liable to BRN. BRN appeals from that decision. 
We affirm.   
I. FACTUAL AND PROCEDURAL BACKGROUND 
 
This case arises from the failed Black Rock North Development project undertaken by 
BRN in Coeur d’Alene. BRN was formed by Marshall Chesrown, who served as CEO, to 
develop a high-end 325-unit residential and golf course community on the west side of Lake 
Coeur d’Alene. The project was known as Black Rock North. American Bank was the lender for 
this project.  
 
The project required that BRN obtain a zone change and approval of a planned unit 
development (PUD) from Kootenai County. To that end, in 2005 BRN retained various entities 
to help secure approval for the development. BRN hired Kyle Capps as the project manager and 
vice-president of site development and maintenance. BRN hired the Layman Law Firm for legal 
services and the Design Workshop to design the master plan and lot layout. BRN entered into an 
oral contract with Taylor in the summer of 2005 to provide civil engineering services for the 
project.  
Taylor provides civil engineering and land-use planning services. Ron Pace is an 
engineer and part owner of Taylor, and served as the main contact with BRN on the Black Rock 
North project. Taylor, through Pace, prepared applications, attended hearings, and served with 
Capps as BRN’s contact with the county and various agencies involved in obtaining approval for 
the project. 
 
By 2007, portions of the Black Rock North golf course were complete but the residential 
lots had not yet been developed. In the face of a deteriorating real estate market, BRN 
determined that it was necessary to mothball the project in order to save money. In order to 
preserve the sizeable investment that BRN had made in obtaining a zone change and preliminary 
approval for the PUD, BRN’s primary concern was securing the status of the PUD approval.  
 
In January of 2008, BRN held a meeting to discuss suspending the project. Chesrown 
requested that Taylor attend the meeting to discuss platting and the 2008 work schedule, with a 
focus on “cash flow considerations.” Pace attended this meeting at Capps’ request. After the 
meeting, BRN proceeded based upon its understanding that it was required to record a final plat 
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by May 29, 2009, in order to vest its rights in the PUD. To do so, BRN spent more than $7 
million on the construction of additional infrastructure that it believed had to be completed in 
order to record the final plat.  
 
The work continued through 2008 and BRN began to experience serious financial 
distress. By the spring of 2009, BRN owed Taylor $150,000. Taylor recorded a lien against the 
property in January of 2009. Despite this, Capps and Pace continued to work together on the 
project with BRN.  
 
By April of 2009, BRN had defaulted on the loan from American Bank, and American 
Bank initiated foreclosure proceedings. American Bank named BRN and Taylor, along with 
other entities claiming interests in the property, as defendants in the foreclosure action. The 
numerous claims relating to financing, materials, services and labor related to the Black Rock 
project spawned significant litigation. This Court has previously addressed one such dispute in 
American Bank v. Wadsworth Golf Construct. Co. of the Sw., 155 Idaho 186, 307 P.3d 1212 
(2013).  
On May 18, 2009, Taylor’s attorney sent a letter to BRN, demanding that BRN pay 
$177,247.08 for Taylor’s services. The letter stated that Taylor “has been very involved with the 
survey, design, and preliminary plat approval process for this property since 2005” and that upon 
payment of the amounts due, Taylor would “complete the necessary documents” and request the 
necessary signatures from the county and the districts involved to obtain the final PUD approval. 
The letter continued: “We are advised that if the final subdivision approval is not completed and 
recorded by May 29, 2009, the PUD and preliminary plat approval will expire, the PUD and plat 
will not vest in the recorded ownership to the real property involved, and the property will revert 
to its prior zoning and density.” This statement was erroneous; it is undisputed that the final plat 
did not need to be recorded by May 29 in order to vest the PUD.  
After receiving Taylor’s demand letter, BRN learned that it was not necessary to record 
the final plat. Chesrown’s attorney responded to Taylor and correctly observed that the PUD 
would remain vested and that the preliminary plat would not expire if the final plat was not 
recorded by May 29, 2009.  
As the American Bank litigation progressed, Taylor brought a cross-claim against BRN 
alleging breach of contract and unjust enrichment based on BRN’s failure to pay the sums that 
Taylor claimed were owed for its services. Taylor also sought to foreclose its lien on the BRN 
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property. BRN responded with a cross-claim against Taylor alleging professional negligence, 
negligent and intentional misrepresentation, and failure to disclose. The district court separated 
the claims between Taylor and BRN from the remainder of the American Bank litigation.  
After dismissing BRN’s negligent misrepresentation claim, the district court granted 
Taylor’s motion for partial summary judgment as to BRN’s claims for intentional 
misrepresentation and failure to disclose. The district court then granted Taylor’s motion for 
summary judgment on its breach of contract claim, awarding Taylor a judgment against BRN in 
the principal sum of $153,448.77 plus pre-judgment interest.  
BRN then moved for partial summary judgment, asking the district court to rule as a 
matter of law that if Taylor provided erroneous advice as to what needed to be done to vest the 
PUD, then the special relationship exception to the economic loss rule would apply. The district 
court denied this motion, explaining that the existence of a special relationship turned on factual 
questions that needed to be resolved at trial and that BRN’s request was “inappropriate” because 
BRN was “essentially seeking an advisory opinion. . . .”  
Taylor and BRN then reached a partial settlement and stipulated that the only issue to be 
decided by the court was BRN’s claim that Taylor was negligent in providing incorrect land-use 
planning and engineering services and advice related to the project’s PUD, plats, and other 
entitlements. 
The case proceeded to trial without a jury in May of 2012. There, BRN claimed that 
when Taylor undertook engineering responsibilities for the project, it took the lead role in 
providing planning services and that Taylor erroneously informed BRN that the final plat needed 
to be recorded in order to vest the PUD entitlement. As the district court had previously 
determined that BRN’s claimed damages were entirely economic losses, BRN contended that 
there was a special relationship between Taylor and BRN.  
Following the trial, the district court issued a memorandum decision on BRN’s cross-
claim. In that decision, the district court held that BRN’s claim was not an action for professional 
engineer malpractice. The district court reasoned that while engineering is a professional service, 
provision of land-use planning advice is not, as it does not require application of engineering 
principles. Thus, the district court determined that the general duty of care applied in negligence 
cases was the governing legal standard.  
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The district court noted that “[t]here was never any written agreement generated between 
the parties, nor was there offered into evidence any specific oral terms that clearly defined 
Taylor’s roles and responsibilities on the project.” Further, “a number of individuals and entities 
have done planning work on the BRN project” making it unclear “who, if anyone, was engaged 
to take the lead in providing land-use planning on the project.” The district court found that 
“[t]he evidence does not establish that Taylor entered into an oral agreement with BRN to 
perform land-use planning services on the project.” The district court concluded that the “role of 
lead land-use planner was never clearly defined by the parties” and the course of conduct 
between the parties showed “that land planning was a team effort.” Significantly, the district 
court found that although BRN may have been under the impression that Taylor was providing 
advice on the subject, BRN failed to prove that Taylor advised BRN that it was necessary to 
record the final plat in order to vest the PUD entitlement.  
The district court further concluded that there was no special relationship between Taylor 
and BRN. This finding, coupled with application of the economic loss rule, meant that Taylor 
owed no duty to protect BRN from purely economic losses. Based upon its twin conclusions that 
Taylor did not breach a duty to BRN and that BRN’s claims were barred by the economic loss 
rule, the district court determined that Taylor was entitled to judgment in its favor on BRN’s 
cross-claim. The district court entered its final judgment on November 20, 2012. BRN timely 
appealed.  
II. STANDARD OF REVIEW 
This Court reviews a district court’s conclusions following a bench trial to ascertain 
“whether the evidence supports the findings of fact, and whether the findings of fact support the 
conclusions of law.” Borah v. McCandless, 147 Idaho 73, 77, 205 P.3d 1209, 1213 (2009); 
Stephen v. Sallaz & Gatewood, Chtd., 150 Idaho 521, 525, 248 P.3d 1256, 1260 (2011). “Since it 
is the province of the trial court to weigh conflicting evidence and testimony and to judge the 
credibility of witnesses, this Court will liberally construe the trial court’s findings of fact in favor 
of the judgment entered” and “will not set aside a trial court’s findings of fact unless the findings 
are clearly erroneous.” Borah, 147 Idaho at 77, 205 P.3d at 1213; I.R.C.P. 52(a).  
“This Court exercises free review over matters of law.” Id.  
III. ANALYSIS 
A. This Court will not review the district court’s denial of BRN’s motion for partial 
summary judgment.  
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BRN asks this Court to review the district court’s denial of its partial summary judgment 
motion concerning the applicability of the special relationship exception to the economic loss 
rule. BRN moved for summary judgment asking the district court “to rule as a matter of law that 
if Taylor provided the disputed advice concerning what was necessary to vest the PUD, the 
services involved in rendering such advice come within the special relationship exception to the 
economic loss rule.”  
“It is well settled in Idaho that ‘[a]n order denying a motion for summary judgment is an 
interlocutory order from which no direct appeal may be taken.’ ” Garcia v. Windley, 144 Idaho 
539, 542, 164 P.3d 819, 822 (2007) (alteration in original) (quoting Dominguez v. Evergreen 
Res., Inc., 142 Idaho 7, 13, 121 P.3d 938, 944 (2005)); see I.A.R. 11. “[A]n order denying a 
motion for summary judgment is not subject to review—even after the entry of an appealable 
final judgment.” Dominguez, 142 Idaho at 13, 121 P.3d at 944; see also Lewiston Indep. Sch. 
Dist. No. 1 v. City of Lewiston, 151 Idaho 800, 808, 264 P.3d 907, 915 (2011) (explaining that 
this Court does not review denials of summary judgment after judgment is rendered on the 
merits); Hunter v. State, Dep’t of Corr., 138 Idaho 44, 46, 57 P.3d 755, 757 (2002) (“An order 
denying a motion for summary judgment is not an appealable order itself, nor is it reviewable on 
appeal from a final judgment.”). 
We have consistently explained the rationale for this rule:  
[B]y entering an order denying summary judgment, the trial court merely 
indicates that the matter should proceed to trial on its merits. The final judgment 
in a case can be tested upon the record made at trial, not the record made at the 
time summary judgment was denied. Any legal rulings made by the trial court 
affecting that final judgment can be reviewed at that time in light of the full 
record. This will prevent a litigant who loses a case, after a full and fair trial, from 
having an appellate court go back to the time when the litigant had moved for 
summary judgment to view the relative strengths and weaknesses of the litigants 
at that earlier stage. Were we to hold otherwise, one who had sustained his 
position after a fair hearing of the whole case might nevertheless lose, because he 
had failed to prove his case fully on the interlocutory motion.  
Garcia, 144 Idaho at 542, 164 P.3d at 822 (alternation in original) (quoting Miller v. Estate of 
Prater, 141 Idaho 208, 211, 108 P.3d 355, 358 (2005)). We are not convinced that we should 
abandon this rule. To the contrary, we deem it prudent to continue to “strictly adhere” to our rule 
precluding appellate review of the denial of summary judgment when the case has subsequently 
gone to the finder of fact. Hennefer v. Blaine Cnty. Sch. Dist., 158 Idaho 242, 249, 346 P.3d 259, 
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266 (2015). We therefore decline to review the district court’s denial of BRN’s motion for partial 
summary judgment.  
B. The district court did not err by concluding that BRN failed to meet its burden of 
proving its claims against Taylor. 
The district court’s decision did not explicitly state that it found that Taylor had not 
breached its duty of care to BRN. However, a careful reading of that decision leads us to the 
inescapable conclusion that this is precisely what the district court found. In its decision, the 
district court stated: 
 
The evidence does not establish that Taylor entered into an oral agreement 
with BRN to perform land-use planning services on the project. This is 
demonstrated by a lack of a clear understanding between the parties regarding this 
responsibility. BRN may have been under the impression that land-use planning 
was part of Taylor’s role, however, such an impression does not give rise to an 
obligation under the contract.  
. . . . 
Taylor owed a duty of reasonable care in providing non engineering services in its 
work with BRN regardless of whether those services were provided under the 
contract or they were services assumed by Taylor. While it is clear that Taylor 
took on certain planning-related duties[,] it has not been established from the 
evidence that Taylor specifically advised BRN that a final plat had to be recorded 
to vest the PUD entitlement. 
 
The district court further explained that because BRN sought purely economic damages, 
Taylor would not be entitled to recover unless it proved the existence of an exception to the 
economic loss rule.  
 
BRN contends that the district court erred in these decisions. We find that substantial 
evidence supports the district court’s conclusion that Taylor did not breach its duty of care to 
BRN. As this is fatal to BRN’s claim, we do not reach BRN’s arguments regarding the special 
relationship exception to the economic loss rule.   
To establish a cause of action for negligence, the plaintiff must demonstrate:  
(1) a duty, recognized by law, requiring the defendant to conform to a certain 
standard of conduct; (2) a breach of that duty; (3) a causal connection between the 
defendant’s conduct and the resulting injury; and (4) actual loss or damage.” 
Nation v. State, Dep’t of Corr., 144 Idaho 177, 189, 158 P.3d 953, 965 (2007) 
(quoting O’Guin v. Bingham Cnty., 142 Idaho 49, 52, 122 P.3d 308, 311 (2005)). 
“Whether a duty exists is a question of law over which this Court exercises free 
review.” Id. at 189, 158 P.3d at 965. 
Cumis Ins. Soc’y, Inc. v. Massey, 155 Idaho 942, 947–48, 318 P.3d 932, 937–38 (2014). “[O]ne 
owes the duty to every person in our society to use reasonable care to avoid injury to the other 
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person in any situation in which it could be reasonably anticipated or foreseen that a failure to 
use such care might result in injury.” Baccus v. Ameripride Servs. Inc., 145 Idaho 346, 349, 179 
P.3d 309, 312 (2008) (alternation in original) (quoting Coghlan v. Beta Theta Pi Fraternity, 133 
Idaho 388, 399, 987 P.2d 300, 311 (1999)). This Court has explained that “a contract may create 
the circumstances for the commission of a tort.” Id. at 350, 179 P.3d at 313 (quoting Just’s Inc. v. 
Arrington Constr. Co., 99 Idaho 462, 468, 583 P.2d 997, 1003 (1978)). However, “the mere 
negligent breach or non-performance of a contract will not sustain an action sounding in tort, in 
the absence of a liability imposed by law independent of that arising out of the contract itself.” 
Gagnon v. Western Bldg. Maint., Inc., 155 Idaho 112, 115, 306 P.3d 197, 200 (2013) (quoting 
Baccus, 145 Idaho at 350, 179 P.3d at 313).  
Although it is undisputed that Taylor undertook to perform a number of engineering tasks 
associated with the project, including utility design, boundary surveying, topographical 
surveying, construction staking, and construction observation, Taylor consistently maintained 
that it did not agree or undertake to provide land-use planning advice relating to the vesting of 
the PUD. BRN did not provide evidence that there was an express agreement, oral or written, 
that Taylor would provide land-use planning advice.  
The district court found that Taylor had voluntarily undertaken to perform certain land-
use planning services. Taylor prepared some applications, attended hearings, and prepared 
minutes in the PUD approval process. Clearly, to the extent Taylor undertook to perform land-
use services, it had a duty to perform those services in a non-negligent manner. However, 
Taylor’s duties were limited to those it actually assumed.  
There is substantial evidence to support the district court’s finding that Taylor did not 
provide land-use planning advice regarding the vesting of the PUD. Although Capps maintained 
that Taylor provided the erroneous advice regarding the necessity of recording a final plat at the 
2008 meeting, Pace maintained that Capps and other individuals from BRN told him that a final 
plat was required. Pace explained that the statement in the demand letter from Taylor’s attorney 
to the effect that final plat approval was required by May 29, 2009, was based upon what Capps 
had told him.  
This is simply a matter of conflicting testimony. It is the district court’s role, not ours, to 
weigh conflicting evidence and judge witness credibility. State, Dep’t of Transp. v. Grathol, 158 
Idaho 38, 45, 343 P.3d 480, 487 (2015). We will uphold the trial court’s factual findings if they 
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are based upon substantial evidence, even if the evidence is conflicting. Big Wood Ranch, LLC v. 
Water Users’ Ass’n of Broadford Slough & Rockwell Bypass Lateral Ditches, Inc., 158 Idaho 
225, 230, 345 P.3d 1015, 1020 (2015). Pace’s testimony constituted substantial evidence that 
Taylor was not the source of the erroneous information regarding the necessity of final plat 
approval.  
 “[A] legal duty may arise if ‘one voluntarily undertakes to perform an act, having no 
prior duty to do so.’” Baccus, 145 Idaho at 350, 179 P.3d at 313 (quoting Coghlan, 133 Idaho at 
400, 987 P.2d at 312). “In such a case, the acting party has a duty to perform that act in a non-
negligent manner.” Beers v. Corp. of President of Church of Jesus Christ of Latter-Day Saints, 
155 Idaho 680, 688, 316 P.3d 92, 100 (2013). The district court found there was no evidence that 
Taylor undertook to provide advice regarding the necessity of securing final plat approval. We 
can find no error in this decision.    
C. Taylor is entitled to attorney fees on appeal. 
Both parties request attorney fees on appeal pursuant to Idaho Code section 12-120. BRN 
also requests attorney fees on appeal under Idaho Code section 12-121. As BRN has not 
prevailed in this appeal, its request for an award of attorney fees is denied.  
Taylor requests attorney fees on appeal pursuant to Idaho Code section 12-120(3), 
contending that its provision of engineering services to BRN constitutes a commercial 
transaction. “The term ‘commercial transaction’ is defined to mean all transactions except 
transactions for personal or household purposes.” I.C. § 12-120(3). “[T]he commercial 
transaction must be integral to the claim and constitute a basis on which the party is attempting 
to recover.” Clayson v. Zebe, 153 Idaho 228, 236, 280 P.3d 731, 739 (2012) (quoting Great 
Plains Equip., Inc. v. Nw. Pipeline Corp., 136 Idaho 466, 471, 36 P.3d 218, 223 (2001)). Here, 
the parties’ claims against each other arose from Taylor’s provision of services in connection 
with the Black Rock North Development. These services were not for personal or household 
purposes. As Taylor has prevailed in this appeal, Taylor is entitled to an award of attorney fees 
pursuant to Idaho Code section 12-120(3).  
IV. CONCLUSION 
 
We affirm the judgment of the district court and award attorney fees and costs on appeal 
to Taylor.  
 
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Chief Justice J. JONES, Justices EISMANN, BURDICK and Justice Pro Tem 
WALTERS, CONCUR.