Title: Doug Cannon v. Kendon H. Perry Appeal from district courts granting of summary judgment in favor of Perry in real estate property contract dispute

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 32847 
 
DOUG CANNON and CAREY CANNON, 
husband and wife, BEVERLY L. HINRICHS, 
and SONJA MORENO,                   
                                                         
                           Plaintiffs-Appellants-Cross 
                           Respondents.                   
v.                                                       
                                                         
KENDON H. PERRY and JUDY C. 
BROWN-PERRY, husband and  wife, and the 
unknown heirs and/or devisees of the       
above named parties, if deceased, and any 
and all  other unknown parties claiming an 
interest in and to the following described real 
property situated in Kootenai County, State 
of Idaho, to-wit: 4801Woodside Avenue, 
Coeur d'Alene, Idaho,                   
                                                         
                         Defendants-Respondents-Cross  
                         Appellants. 
          
                                                         
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Coeur d’Alene, September 2007 
 
2007 Opinion No.  106 
 
Filed: October 19, 2007 
 
Stephen W. Kenyon, Clerk 
 
 
 
Appeal from the District Court of the First Judicial District, State of Idaho, 
Kootenai County.  The Honorable John P. Luster, District Judge. 
 
The decision of the district court is vacated and this case is remanded. 
 
Greg D. Horne, Coeur d’Alene, for Appellant and Cross Respondents. 
 
Ramsden & Lyons, Coeur d’Alene, for Respondent and Cross Appellants, April 
Lindscott, argued. 
 
 
 
JONES, W., Justice. 
 
Plaintiffs Doug and Carey Cannon, Sonja Moreno, and Beverly Hinrichs filed suit against 
Kendon and Judy Perry seeking specific performance of a contract for the sale of real property.  
The district court granted summary judgment in favor of the Perrys, and Moreno and Hinrichs 
appealed. 
 
The Perrys owned a home at 4801 Woodside Lane, Coeur d’Alene, Idaho.  The Cannons 
signed a one-year lease on the property with an option to buy commencing on November 1, 
2003.  The written agreement provided that the Cannons could purchase the property for 
$165,500, less a credit for a percentage of rent paid, at any time prior to November 1, 2004.  The 
Cannons moved into the house and began paying rent. 
 
In September 2004 the Cannons informed the Perrys that they wanted to purchase the 
house but were having difficulty obtaining financing.  It was decided that Sonja Moreno, a friend 
of the Cannons, would purchase the property on their behalf.  The Cannons would continue 
renting from Moreno until they could purchase the property themselves.  In October 2004 
Moreno and the Perrys executed a written agreement under which Moreno would purchase the 
property for $163,295, the same price that the Cannons would have paid under their option.  The 
contract stated that the closing date should be November 1, 2004 or sooner. 
 
Moreno was unable to obtain financing before November 1.  The Perrys verbally agreed 
to extend the closing date to on or around November 30.  During that time, the parties also 
agreed that the buyer would change to Beverly Hinrichs, a friend of Moreno.  Moreno and 
Hinrichs intended to hold the property as partners.  Moreno and Hinrichs sent a note to the title 
company on November 8 informing them that the buyer would change from Moreno to Hinrichs, 
but no new written agreement was executed at that time. 
 
On December 5 the Perrys sent an email to the Cannons indicating that the delay was 
becoming excessive and requesting that a firm closing date be set by December 7.  On December 
7 Hinrichs and the Perrys executed an instrument entitled “Addendum #1” (the Addendum) 
claiming to be “an addendum to the sales contract dated 11/29/04 between Kendon H. Perry as 
Seller and Beverly Hinrichs as Buyer.”  [Underlining indicates handwritten portions].  The 
instrument, which was drafted by Kendon Perry, stated that the parties would “extend the 
deadline for closing to occur no later than the end of December 16th, 2004.” 
 
Closing did not occur on December 16 because Hinrichs’ financing was not yet finalized.  
Both parties were frustrated that the lender was moving so slowly.  However, on that day the 
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Perrys executed a written “Purchase and Sell Agreement” (the Agreement) and faxed it to 
Moreno, who was authorized to sign on behalf of Hinrichs.  The instrument named Hinrichs as 
the buyer and specified “Escrow to close on or before December 30, 2004.”  Although it was 
signed on December 16, the space next to each party’s signature bore the typewritten date 
“11/29/2004.”  Neither party drafted the document; apparently it was drafted by the lender.  The 
dates were inserted before either party received the document. 
 
The next day, December 17, the Perrys visited the house to collect the rent.  According to 
the Cannons, the Perrys entered the house and saw many of the improvements the Cannons had 
made.   
Later that day the Perrys sent a letter to Hinrichs and the Cannons rescinding all previous 
agreements to sell the property and expressing their intention to list the property for sale through 
a real estate broker.  The lender wrote the Perrys, reminding them that they were “under contract 
through the 30th of December” and urging them not to list the property.  The Cannons also wrote 
to assure the Perrys that the process was on track for closing to occur by December 30.  The 
Perrys, however, avoided contact with the title company and the lender and refused to take any 
further action towards closing.   
 
The closing documents were prepared by December 30.  Moreno signed on Hinrichs’ 
behalf.1  The Perrys never signed the closing documents.  Instead, on approximately January 1, 
2005, the Perrys listed the property for sale with a broker, and within two days accepted an offer 
for $194,500.   
 
The Cannons, Moreno and Hinrichs filed a complaint alleging breach of contract and 
wrongful eviction.  The Perrys counterclaimed for damages.  Both sides moved for summary 
judgment with respect to the breach of contract claim.  The district court granted partial summary 
judgment in favor of the Perrys, concluding that the time for performance under the contract, as 
modified by the Addendum, unambiguously expired on December 16, and that the Perrys were 
therefore free to rescind on December 17.  The district court awarded the Perrys attorney fees as 
to Moreno and Hinrichs but not as to the Cannons.  Moreno and Hinrichs appealed.  The Perrys 
cross appealed with respect to the district court’s refusal to award attorney fees against the 
Cannons. 
                                                 
1 Due to problems with Moreno’s signature the closing documents were not properly executed on 
Hinrichs’ behalf until January 3.  Neither party has raised any issues relating to Hinrichs’ failure 
to timely execute the documents. 
3 
 
On appeal from a grant of summary judgment, this Court employs the same standard as 
that used by the trial court originally ruling on the motion.  Shawver v. Huckleberry Estates, 
LLC, 140 Idaho 354, 360, 93 P.3d 685, 691 (2004).  Summary judgment is proper “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).   
 
The fact that both parties moved for summary judgment does not change the applicable 
standard of review, nor does it necessarily establish that there is no genuine issue of material 
fact.  Shawver, 140 Idaho at 360, 93 P.3d at 691.  Each party’s motion must be evaluated on its 
own merits.  Id.  The evidence is construed and all reasonable inferences are drawn in favor of 
the non-moving party with respect to each motion.  Garner v. Bartschi, 139 Idaho 430, 433, 80 
P.3d 1031, 1034 (2003). 
 
 
The motions for partial summary judgment related only to the breach of contract 
claims.  The district court correctly determined that the Cannons were not in a contractual 
relationship with the Perrys at the time of the alleged breach because the Cannons’ option was 
either discharged or surrendered when they agreed to have Moreno purchase the property in their 
stead.  Although the contract with Moreno was rescinded when the parties agreed to substitute 
Hinrichs as the purchaser, the record reflects that Moreno and Hinrichs had entered into a 
partnership to purchase the property to rent to the Cannons with the intent of eventually selling to 
the Cannons.  Hinrichs and Moreno were, therefore, in a contractual relationship with the Perrys 
by virtue of their partnership.   
 
For purposes of this appeal it is undisputed that Hinrichs and the Perrys formed a valid 
contract.2  The dispute involves one of its terms, namely, when performance must occur.  The 
Agreement states that closing must occur by December 30.  The Addendum purports to “extend” 
that date to December 16.  The issue is whether the Addendum is ambiguous on its face so that 
the court may look to extrinsic evidence under the parol evidence rule.   
                                                 
2 The Perrys contended below that the contract was unenforceable under I.C. § 32-912 because it 
was not signed by Judy Perry.  The statute requires that an agreement for the sale of community 
real property be signed by both husband and wife.  The district court found that the issue 
involved a material question of fact.  Neither party has challenged this determination on appeal. 
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Interpretation of unambiguous language in a contract is a question of law.  Shawver, 140 
Idaho at 361, 93 P.3d at 692.  Interpretation of an ambiguous contract is a question of fact.  Id.  
Whether a contract is ambiguous is a question of law.  Id. 
 
The district court concluded that it was not entitled to look at extrinsic evidence because 
the documents were not ambiguous in any way.  The documents suggest on their face that the 
parties on November 29 set a closing deadline of December 30, then on December 7 “extended” 
that deadline to December 16.  Although the parties could have changed the closing deadline by 
use of an addendum, the use of the word “extended” in the December 7 Addendum creates an 
ambiguity as to what the parties actually intended.  The district court incorrectly concluded that 
there was no facial ambiguity.  Clearly, the Addendum is in direct contrast to the Agreement 
dated November 29.   
 
Under the parol evidence rule, when a contract has been reduced to a writing that the 
parties intend to be a final statement of their agreement, evidence of any prior or 
contemporaneous agreements or understandings which relate to the same subject matter is not 
admissible to vary, contradict, or enlarge the terms of the written contract.  Simons v. Simons, 
134 Idaho 824, 828, 11 P.3d 20, 24 (2000).  Parol evidence, however, is admissible to establish 
“any fact that does not vary, alter, or contradict the terms of the instrument or the legal effect of 
the terms used.”  29A Am. Jur. 2d Evidence § 1106 (1994); accord Restatement (Second) of 
Contracts § 218 (1979).  An integrated writing proves the terms of the contract; it does not 
“establish fictitious events.”  Restatement (Second) of Contracts § 218 cmt. a.  As one court has 
noted,  
The authorities are practically unanimous to the effect that parol evidence is 
competent to establish the true date of execution and delivery of the contract 
regardless of the fact that it differs from the date shown in the body of the 
contract.  While the date shown in the contract may be presumed to be the date of 
execution, this presumption is rebuttable and parol evidence is acceptable for this 
purpose. 
Olsen v. Reese, 200 P.2d 733, 737 (Utah 1948); accord 29A Am. Jur. 2d Evidence § 1114 (1994) 
(allowing the use of parol evidence to contradict the stated date of execution “even as to 
instruments which are required by statute to be in writing,” unless the date is a “vital part of the 
instrument” the changing of which would change the rights of the parties to the instrument); cf. 
Rupert Nat’l Bank of Rupert v. Ins. Co. of N. Am. of Philadelphia, 40 Idaho 530, 535, 234 P. 465, 
467 (1925) (“[I]t is always competent to show by parol evidence that the date inserted in the 
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instrument was not the date of delivery.”).  Evidence that the Agreement was signed on 
December 16 rather than November 29 does not tend to vary any term of the contract; it merely 
establishes a fact.  The district court erred by failing to consider this evidence.  The grant of 
summary judgment in favor of the Perrys must be vacated.  
 
It is clear that the District Court’s conclusion with respect to I.C. § 32-912, as well as this 
Court’s previous holdings, precludes summary judgment for Hinrichs as well.  Neither party, 
therefore, is entitled to summary judgment.  The case must be remanded to the district court for 
further proceedings. 
 
The district court awarded the Perrys attorney fees against Hinrichs and Moreno under 
I.C. § 12-120(3), which provides for the prevailing party “in any commercial transaction” to 
recover reasonable attorney fees.  It refused to award attorney fees under the statute as against 
the Cannons because the transaction involving them was “clearly not a commercial transaction.”  
The district court apportioned the fees by allocating half against Hinrichs and half against 
Moreno.    
Hinrichs and Moreno appealed, arguing that the award of attorney’s fees was barred 
because the transaction was not a commercial transaction since the property was to be used for 
residential purposes and Hinrichs and Moreno entered the transaction, not as commercial 
investors, but as friends attempting to help the Cannons.  The Perrys filed a cross appeal arguing 
that attorney’s fees should have been awarded against the Cannons pursuant to a provision in the 
lease/option agreement. 
 
Since neither party is entitled to summary judgment, there is not yet a prevailing party.  
That determination will depend on the outcome on remand.  The grant of attorneys’ fees below is 
therefore vacated.  Bedke v. Pickett Ranch and Sheep Company, 143 Idaho 36, 41, 137 P.3d 423, 
428 (2006).  Since, however, the case is remanded for trial and presumably there will be a 
prevailing party at some point, this Court will consider the issues raised regarding attorneys fees. 
 
Commercial transactions are “all transactions except transactions for personal or 
household purposes.”  I.C. § 12-120(3).  The statute does not require that there be a contract.  
Blimka v. My Web Wholesaler, L.L.C., _____ Idaho _____ (2007, Opinion No. 17).  There is no 
dispute that the Cannons’ involvement in these transactions was for personal or household 
purposes.  Although Hinrichs and Moreno contend that they were acting only as friends of the 
Cannons, each of them testified in their depositions that they were buying the property for 
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investment purposes.  The arrangement was not a gift to the Cannons; Hinrichs and Moreno 
would collect rent and ultimately sell it to the Cannons at an appraised price.  The district court 
correctly found, therefore, that the transaction was a commercial transaction with respect to 
Hinrichs, Moreno and the Perrys.   
 
The lease/option agreement between the Cannons and the Perrys provided for attorneys 
fees as follows:   
 
Attorneys’ Fees.  In the event an attorney is employed to enforce the provisions of this 
Agreement, or there is any litigation arising out of any disagreement over the 
performance of this Agreement, the party found to be in default herein agrees to pay the 
prevailing party’s reasonable attorneys’ fees and costs of the enforcement of action in 
addition to any other award of the court. 
 
 
The contract awards attorneys fees against “a party found to be in default” of the contract.  
The district court correctly recognized that neither party was in default of the lease/option 
contract.  Therefore, no attorneys’ fees are authorized under the lease/option contract.   
 
The district court erred by failing to consider evidence that the Agreement was signed on 
December 16 even though it was dated November 29.  Since the Agreement and Addendum are 
ambiguous on their face, in that the Agreement establishes a closing date of December 30, 2004 
while the Addendum purports to “extend” that date to December 16, the case must be remanded 
to the district court for trial of the factual issue of the parties’ intent.  At trial the district court 
must consider extrinsic evidence of intent in order to resolve the ambiguity. 
 
The award of attorney fees is vacated since neither party is a prevailing party at this time.  
No attorney fees are awarded on appeal.  At the time any party becomes a prevailing party, 
attorney fees may be awarded under I.C. § 12-120(3) as between Hinrichs and Moreno and the 
Perrys, but not as to the Cannons.  Costs on appeal are awarded to Hinrichs and Moreno. 
 
 
   Chief Justice EISMANN, Justices BURDICK, J. JONES and TROUT, J. Pro Tem, CONCUR. 
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