Title: Jackie Lee Page v. Pete Pasquali III Promissory note

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

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IN THE SUPREME COURT OF THE STATE OF IDAHO   
Docket No. 36429 
JACKIE LEE PAGE and TERESA 
JOLENE PAGE, 
 
       Plaintiffs-Appellants, 
 
v. 
 
PETE PASQUALI III; THE RUPE 
COMPANIES, INC., an Oregon 
corporation dba LANDAMERICA 
TRANSNATION; and DOES 1 through 10, 
 
       Defendants-Respondents, 
 
and 
 
FIRST AMERICAN TITLE COMPANY 
OF IDAHO, INC., an Idaho corporation, 
 
       Defendant. 
 
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Boise, December 2010 Term 
 
2010 Opinion No. 139 
 
Filed:  December 23, 2010 
 
Stephen W. Kenyon, Clerk 
 
Appeal from the District Court of the Fourth Judicial District, State of Idaho, Ada 
County.  Hon. Michael R. McLaughlin, District Judge.  
District court grant of summary judgment, affirmed. 
Mimura Law Offices, PLLC, Caldwell, for appellants.  Randall S. Grove argued. 
Deborah M. Nesset, Boise, argued for respondents.   
__________________________________ 
BURDICK, Justice 
 
 
The issue before this Court is the interpretation of a promissory note secured by a deed of 
trust.  The language of the promissory note and deed of trust is clear.  We affirm. 
I.  FACTUAL AND PROCEDURAL BACKGROUND 
 
Jackie and Teresa Page (the “Pages”) purchased property (the “Property”) in Placerville, 
Boise County, Idaho on October 18, 1995, and assumed an existing indebtedness in the principal 
amount of $48,919.61 under a promissory note (the “Note”) executed on August 10, 1994, in 
favor of Respondent Pete Pasquali III (Pasquali).  The Note was secured by a Deed of Trust on 
 
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the property.  The Note accrued interest at a rate of eight percent per annum and was to be paid 
in monthly installments of $366.88.  
 
In 2002, due to heavy snowfall and alterations that the Pages made to the Property, the 
Pages suffered roof damage and eventually received a settlement check under their insurance 
policy for $29,432.03.  Pasquali, who was listed as the loss payee on the insurance policy, sent 
$21,432.03 of the settlement check (the “Payment”) to Respondent Rupe Companies, Inc., dba 
LandAmerica Transnation (“Rupe”) to be applied to the Note and gave the remaining $8,000 to 
the Pages.  Rupe applied $201.80 from the Payment to the interest then owed on the Note and 
applied the rest of the Payment to pay down the principal debt. 
 
On October 6, 2004, Rupe, acting as servicing agent on the Note, sent notices of default 
to the Pages for failure to make monthly payments, failure to pay 2003 property taxes and failure 
to provide evidence of homeowner’s liability insurance as required by the terms of the note.  The 
Plaintiffs filed for bankruptcy in an effort to stop the sale of their home but the petition was 
dismissed.  On July 20, 2005, Respondent First American Title Company (First American), 
acting as successor trustee on the deed of trust, sold the Property at a trustee’s sale. 
 
The Pages filed a complaint on July 19, 2007, asserting the following causes of action: 
(1) negligence against Rupe in crediting and applying the payments; (2) breach of contract 
against Rupe for demanding payments that were not due; (3) breach of contract against Pasquali 
for sending the Notice of Default when all payments had been made; (4) conversion against First 
American for advertising and selling the Property; (5) breach of fiduciary duty against Rupe and 
First American for foreclosing on and selling the Property; (6) negligence against First American 
for not properly inquiring into the payments made on the Note or for misreading the Note’s 
terms; and (7) infliction of emotional distress against Pasquali, Rupe and/or First American for 
causing distress, betrayal, anxiety and anger that has significantly impacted the Pages.  
Underlying each claim, the Pages argued that they never defaulted, and that their home was 
wrongfully sold, because the Payment should have been credited as fifty-eight future monthly 
payments instead of paid on the principal debt. 
 
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First American filed a motion for summary judgment on October 17, 2008, which was 
denied in part and granted in part on October 28, 2008.1  Pasquali and Rupe filed a joint motion 
for summary judgment, which was granted on January 5, 2009.  On January 15, 2009, the district 
court entered a judgment in favor of Pasquali and Rupe, dismissing all claims against them.  On 
February 25, 2009, the district court denied the Pages’ motion for reconsideration.  On March 9, 
2009, the district court entered a I.R.C.P. 54(b) certificate of final judgment.  The Pages appeal 
from the district court’s grant of summary judgment in favor of Pasquali and Rupe and from the 
denial of their motion for reconsideration. 
II.  STANDARD OF REVIEW 
 
As noted in Vavold v. State: 
 
When reviewing an order for summary judgment, the standard of review 
for this Court is the same standard as that used by the district court in ruling on 
the motion.  Summary judgment is appropriate if “the pleadings, depositions, and 
admissions on file, together with the affidavits, if any, show that there is no 
genuine issue as to any material fact and that the moving party is entitled to a 
judgment as a matter of law.”  I.R.C.P. 56(c).  Disputed facts should be construed 
in favor of the non-moving party, and all reasonable inferences that can be drawn 
from the record are to be drawn in favor of the non-moving party.  This Court 
exercises free review over questions of law. 
148 Idaho 44, 45, 218 P.3d 388, 389 (2009) (quoting Armstrong v. Farmers Ins. Co., 147 Idaho 
67, 69, 205 P.3d 1203, 1205 (2009)). 
 
As stated in Elliot v. Darwin Neibaur Farms: 
 
Construction of the meaning of a contract begins with the language of the 
contract.  If the contract's terms are clear and unambiguous, the determination of 
the contract's meaning and legal effect are questions of law and the meaning of 
the contract and intent of the parties must be determined from the plain meaning 
of the contract's own words.  If, however, the contract is determined to be 
ambiguous, the interpretation of the document is a question of fact which focuses 
upon the intent of the parties. 
 
In determining whether a contract is ambiguous, this Court ascertains 
whether the contract is reasonably subject to conflicting interpretation.  The 
determination and legal effect of a contractual provision is a question of law 
where the contract is clear and unambiguous, and courts cannot revise the contract 
in order to change or make a better agreement for the parties. 
138 Idaho 774, 779, 69 P.3d 1035, 1040 (2003) (internal citations and quotations omitted). 
                                                 
1 Of the five claims against First American, the district court granted summary judgment in favor of First American 
on the claims of conversion, breach of fiduciary duty and negligent infliction of emotional distress but not on the 
claims of negligence and intentional infliction of emotional distress.     
 
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III.  ANALYSIS 
A.  The Pages defaulted on the Note. 
 
Pasquali, as beneficiary of the insurance policy, was free to determine how much of the 
insurance settlement to apply to the indebtedness remaining on the Note and how much to give to 
the Pages.  The Deed of Trust, dated August 10, 1994, states in paragraph two: 
To protect the security of this Deed of Trust, Grantor Agrees: . . . To provide, 
maintain and deliver to Beneficiary [Pasquali] fire insurance satisfactory to and 
with loss payable to Beneficiary.  The amount collected under any fire or other 
insurance policy may be applied by Beneficiary upon any indebtedness secured 
hereby and in such order as Beneficiary may determine, or at option of 
Beneficiary the entire amount so collected or any part thereof may be released to 
Grantor.  Such application or release shall not cure or waive any default or notice 
of default hereunder or invalidate any act done pursuant to such notice. 
(Emphasis added).  Pasquali gave $8,000 of the insurance settlement to the Pages and gave the 
Payment (the remaining $21,432.03) to the escrow holder, Rupe, to be applied to the Note.  The 
Note permits prepayments, as it refers to “permitted prepayments.”  The Note also provides: 
“Unless otherwise specified hereinabove; each payment shall be credited first on interest then 
due and the remainder on principal, and interest shall thereupon cease upon the principal so 
credited.”  (Emphasis added).  Rupe applied the Payment to the interest then due on the Note, 
$201.80, and applied the remainder of the Payment, $21,228.32, to the principal debt.  There was 
no evidence of an agreement to treat the insurance proceeds any differently than the plain 
language of the Note and Deed of Trust instructed, and Pasquali and Rupe acted within the terms 
of the agreement.   
The Pages argue that the Payment, after being applied to pay the interest then due, should 
have been credited to fifty-eight future monthly payments on the Note.  The loan documents do 
not support this interpretation.  Monthly payments consist of both interest and principal.  The 
payment provision of the Note provides that each payment is to be credited first on interest then 
due and the remainder is to be applied to principal.  When the Payment was made, only $201.80 
in interest was then due.  The remainder of the Payment, $21,228.32, therefore, had to be applied 
to principal, which is what Rupe did by applying $21,228.32 to the principal debt balance.  Had 
Rupe instead credited $21,228.32 to future monthly payments, as the Pages argue should have 
been done, then the remainder would have been applied to both principal and interest, which 
conflicts with the terms of the Note. 
 
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Furthermore, even if we were to accept the Pages’ argument, the Pages would still be in 
default.  The failure to make monthly payments is only one of three grounds upon which the 
district court found the Pages were in default.  The district court found that the Pages were also 
in default for failing to pay taxes and for failing to maintain insurance, but the Pages did not 
appeal these alternate grounds for summary judgment. 
B.  Respondents are awarded attorney fees on appeal. 
Respondents request attorney fees pursuant to I.C. §§ 12-117, 12-121 and 12-123.  
Attorney fees pursuant to I.C. § 12-121 are “appropriate when this Court is left with an abiding 
belief that the appeal has been brought or defended frivolously, unreasonably, or without 
foundation.”  Karlson v. Harris, 140 Idaho 561, 571, 97 P.3d 428, 438 (2004).  Since the Pages 
failed to argue that the alternative grounds for summary judgment were in error, we award 
attorney fees to Respondents pursuant to I.C. § 12-121.  See Andersen v. Professional Escrow 
Services, Inc., 141 Idaho 743, 746, 118 P.3d 75, 78 (2005) (awarding attorney fees pursuant to 
I.C. § 12-121 where appellants “failed to argue that the alternative grounds for granting the 
summary judgment were in error”). 
IV.  CONCLUSION 
The summary judgment is upheld.  Attorney fees and costs to respondents. 
Chief Justice EISMANN and Justices J. JONES, W. JONES and HORTON, CONCUR.