Title: U.S. Bank National Association N.D. v. Citimortgage, Inc.

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

1 
 
IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 41252 
 
U.S. BANK NATIONAL ASSOCIATION  
N.D., 
 
       Plaintiff-Appellant-Cross Respondent, 
 
v. 
 
CITIMORTGAGE, INC., a savings bank  
organized and existing under the laws of New  
York, 
 
       Defendant-Respondent-Cross 
       Appellant, 
 
and 
 
HERBERT G. THOMAS; JULIE A.  
THOMAS; and DOES I-XX, 
 
       Defendants. 
)
)
)
)
)
)
)
)
) 
) 
) 
) 
) 
) 
) 
) 
) 
) 
) 
) 
 
 
 
 
Boise, June 2014 Term 
 
2014 Opinion No. 110 
 
Filed:  October 29, 2014 
 
Stephen Kenyon, Clerk 
 
Appeal from the District Court of the Fifth Judicial District of the State of Idaho,   
Blaine County.  Hon. Robert J. Elgee, District Judge. 
 
The judgment of the district court is vacated and the case is remanded for further 
proceedings consistent with this opinion. 
 
 
Davison, Copple, Copple & Copple, Boise, for appellant.  Michael E. Band  
  
argued. 
 
 
Pickens Law, P.A., Boise, for respondent.  Terri R. Pickens argued. 
                     _______________________________________________ 
 
HORTON, Justice.  
 
 This appeal arises from a lien priority dispute between U.S. Bank National Association 
(U.S. Bank) and CitiMortgage, Inc. (CitiMortgage) who each hold a deed of trust to real property 
owned by Herbert and Julie Thomas. The district court concluded that U.S. Bank lost its first 
priority position on the Thomas property after finding that CitiMortgage delivered a demand for 
reconveyance and U.S. Bank failed to release its deed of trust as required by Idaho Code section 
2 
 
45-1514. U.S. Bank appeals, contending that the district court misallocated the burden of proof, 
that testimony offered by CitiMortgage was inadmissible, and that CitiMortgage failed to prove 
delivery of the demand for reconveyance. CitiMortgage cross-appeals from the district court’s 
decision that CitiMortgage was not entitled to attorney fees and costs. We vacate the judgment of 
the district court and remand for further proceedings consistent with this opinion.  
I. FACTUAL AND PROCEDURAL BACKGROUND 
 
 On August 30, 2005, the Thomases opened a $2,000,000.00 home equity line of credit 
(the HELOC) with U.S. Bank. To secure the obligation, the Thomases executed a deed of trust in 
favor of U.S. Bank (the U.S. Bank Deed of Trust) to real property located at 104 Grey Eagle 
Road in Sun Valley (the Thomas Property). The U.S. Bank Deed of Trust was recorded in Blaine 
County on September 9, 2005. Under the terms of the HELOC, the debt secured by the Thomas 
Property was a revolving line of credit, thus, even if the debt was reduced to a zero balance, the 
U.S. Bank Deed of Trust would “remain in effect until released.”  
In November of 2005, the Thomases approached CitiMortgage seeking refinancing. As 
part of this transaction, CitiMortgage sought a title commitment for the Thomas Property from 
Blaine County Title Associates (BCT). BCT issued a Commitment for Title Insurance under 
which Stewart Title Guarantee Company agreed to issue a policy to CitiMortgage so long as all 
prior deeds of trust, including the U.S. Bank Deed of Trust, were released so that CitiMortgage 
would be in first lien position with regard to the Thomas Property.  
To that end, BCT contacted the local branch of U.S. Bank in Ketchum to determine the 
HELOC payoff amount. In response, U.S. Bank faxed BCT a screen shot of an account inquiry 
reflecting the balance owed on the HELOC with an interest calculation as of November 22, 
2005. The payoff amount was listed at $1,840,991.52, with interest accruing at a rate of 
$351.9752619 per day.  
On November 23, 2005, the Thomases closed with CitiMortgage and obtained a 
$4,990,000.00 loan (the CitiMortgage Loan). The CitiMortgage Loan was secured by a deed of 
trust on the Thomas Property (the CitiMortgage Deed of Trust). The Thomases also signed the 
loan commitment from BCT, indicating their understanding and intent that the HELOC would be 
closed and the property reconveyed. The CitiMortgage Deed of Trust was recorded in Blaine 
County on November 29, 2005.  
3 
 
Also on November 29, 2005, a check from BCT in the amount of $1,843,807.40 was 
hand delivered to the U.S. Bank branch in Ketchum. The check was made payable to U.S. Bank. 
Immediately below the payee line, was the notation: 
Loan No. 00003000398652 
Payoff Loan 
The loan number referenced was that of the HELOC. The amount of the check represented 
BCT’s calculation of the amount owed on the HELOC, including accrued interest. BCT’s policy 
was that checks were “always” stapled together with release demand letters prior to delivery. It is 
undisputed that BCT delivered the check, that the check was deposited by U.S. Bank, and that 
the HELOC balance was reduced to zero. U.S. Bank deposited the excess funds into another 
account the Thomases maintained with U.S. Bank. 
U.S. Bank contends that BCT did not deliver a written demand for release of the U.S. 
Bank Deed of Trust along with the check. CitiMortgage maintains that the demand letter was 
stapled to the check. The demand letter that CitiMortgage claims was delivered is undated, 
captioned “RELEASE DEMAND LETTER,” and states, in pertinent part: 
In connection with the above-referenced escrow, please find our check #13219 in 
the amount of $1,843,807.40. You are authorized to use said funds in connection 
with your Loan Number 00003000398652 when you are in a position to deliver a 
Deed of Reconveyance of a Deed of Trust or Release of Mortgage from the above 
referenced borrower, recorded as Instrument No. 526727. 
We demand that the Deed of Reconveyance or Release of Mortgage be delivered 
to the undersigned within 30 days, as provided by statute. 
The Thomases were identified as the borrowers in the Release Demand Letter. It is 
undisputed that U.S. Bank did not reconvey the U.S. Bank Deed of Trust and did not close the 
Thomases’ HELOC. 
 
It appears that the Thomases were initially unaware that the HELOC remained open. 
However, once they became aware of it, they took full advantage of their good fortune (or the 
misfortune of one of the parties to this appeal) and began borrowing against the HELOC in 
January of 2006. By June of 2011, the Thomases owed U.S. Bank over $2 million for draws on 
the HELOC. Predictably, the Thomases defaulted on both the HELOC and the CitiMortgage 
Loan. When preparing to foreclose on its deed of trust in 2011, U.S. Bank discovered the 
CitiMortgage Deed of Trust and this litigation ensued.  
4 
 
 
U.S. Bank filed a complaint against the Thomases and CitiMortgage to judicially 
foreclose on the U.S. Bank Deed of Trust and seeking a declaration that its deed of trust had 
priority over that of CitiMortgage. CitiMortgage raised the affirmative defense that it had priority 
due to U.S. Bank’s failure to comply with Idaho Code sections 45-915 and 45-1514 by failing to 
release the U.S. Bank Deed of Trust upon satisfaction of the obligation and receipt of the Release 
Demand Letter. 
 
In September of 2011, the parties filed cross-motions for summary judgment. The district 
court granted U.S. Bank’s motion for summary judgment in regard to the Thomases’ default. The 
district court concluded, however, that there were specific genuine issues of material fact 
regarding the priority between the U.S. Bank and CitiMortgage deeds of trust. The district court 
determined that the main contested issue of fact was whether BCT actually delivered the Release 
Demand Letter to U.S. Bank. If the letter was delivered, the district court found that U.S. Bank 
had a duty to release the U.S. Bank Deed of Trust upon satisfaction of the debt. Thus, the district 
court issued an order limiting the factual issues that remained for trial, including, among others, 
whether the $1.8 million check to U.S. Bank was stapled to the Release Demand Letter.   
 
CitiMortgage and U.S. Bank each filed second motions for partial summary judgment. 
The district court issued two additional orders limiting issues for trial. Prior to trial, the district 
court found that the Thomases intended to pay off and close the U.S. Bank HELOC as part of the 
CitiMortgage refinance. The district court also considered the manner in which U.S. Bank 
processed checks. The district court found that original checks are not preserved by U.S. Bank 
but that U.S. Bank retains digital images of the checks. Under U.S. Bank’s check-processing 
policy, any documents stapled to a check are removed from the check at the receiving branch and 
ancillary documents, such as a release demand letter, are sent to be imaged in one location and 
checks are sent to a different location to be scanned. In its final order prior to trial, the district 
court concluded that it still could not rule on the issue of priority between U.S. Bank and 
CitiMortgage because there still was a genuine issue of material fact regarding the existence or 
non-existence of staple holes in the check.  
 
Prior to trial, based upon a stipulation of the parties, the district court entered summary 
judgment in U.S. Bank’s favor against the Thomases in the amount of $2,142,931.39, 
representing the balance they owed on the HELOC. The Thomases are not a party to this appeal.   
5 
 
 
The matter of priority proceeded to a court trial on July 10, 2012. The district court heard 
testimony from Keith Powers, U.S. Bank’s vice-president of strategy and planning for the 
transaction processing group, Shannon Pearson, a paralegal for Pickens Law, and Loren Madson, 
who worked in the default management division of U.S. Bank.  
Based on the evidence presented in the motions for summary judgment and at trial, the 
district court found it more probable than not that the check was stapled to the Release Demand 
Letter. As a result, the district court concluded that the Release Demand Letter was delivered to 
U.S. Bank, that this letter was sufficient to demand reconveyance of the U.S. Bank Deed of Trust 
under Idaho Code sections 45-1514 and 45-915, and that U.S. Bank had breached its duty to 
reconvey. Thus, the district court held that the CitiMortgage Deed of Trust was senior and 
superior to U.S. Bank’s Deed of Trust and had first priority.  
 
Following trial, CitiMortgage filed a motion seeking costs and attorney fees. 
CitiMortgage argued it was entitled to attorney fees under Idaho Code sections 45-915 and 45-
1514 due to U.S. Bank’s refusal to reconvey the U.S. Bank Deed of Trust. CitiMortgage also 
argued it was entitled to fees and costs under Idaho Code sections 12-121 and 10-1210. The 
district court ruled that CitiMortgage was not entitled to an award of attorney fees and denied 
CitiMortgage’s request for discretionary costs. The district court entered a judgment to this effect 
on December 4, 2012.  
 
U.S. Bank appealed and CitiMortgage cross-appealed from the denial of its request for 
attorney fees and discretionary costs. The district court entered an Amended Judgment and 
Decree of Foreclosure (Order of Sale) on August 6, 2013. The district court determined that the 
Thomases were jointly and severally liable for a total judgment of $2,222,458.47 together with 
interest, attorney fees, and costs. The district court also concluded that the U.S. Bank Deed of 
Trust was subject to the first position CitiMortgage Deed of Trust and ordered that the Thomas 
Property be sold at public auction. U.S. Bank timely appealed and CitiMortgage again cross-
appealed to this Court.  
II. STANDARD OF REVIEW 
Following a bench trial, this Court’s review “is limited to ascertaining 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). “[T]his Court will 
liberally construe the trial court's findings of fact in favor of the judgment entered” and “will not 
6 
 
set aside a trial court’s findings of fact unless the findings are clearly erroneous.” Id. However, 
this Court exercises free review over matters of law and is not “bound by the legal conclusions of 
the trial court, but may draw its own conclusions from the facts presented.” Credit Suisse AG v. 
Teufel Nursery, Inc., 156 Idaho 189, 194, 321 P.3d 739, 744 (2014) (quoting City of Meridian v. 
Petra Inc., 154 Idaho 425, 434–35, 299 P.3d 232, 241–42 (2013)).  
This Court reviews a trial court’s decision regarding the admission of evidence for an 
abuse of discretion. Hudelson v. Delta Int’l Mach. Corp., 142 Idaho 244, 249, 127 P.3d 147, 152 
(2005). When reviewing a trial court’s decision for an abuse of discretion, this Court considers: 
“(1) whether the lower court rightly perceived the issue as one of discretion; (2) whether the 
court acted within the outer boundaries of such discretion and consistently with any legal 
standards applicable to specific choices; and (3) whether the court reached its decision by an 
exercise of reason.” Akers v. D.L. White Const., Inc., 156 Idaho 37, 45, 320 P.3d 428, 436 (2014) 
(quoting Goodspeed v. Shippen, 154 Idaho 866, 869, 303 P.3d 225, 228 (2013)).  
III. ANALYSIS 
A. The district court misallocated the burden of proof.  
U.S. Bank argues that the district court did not properly allocate the burden of proof. U.S. 
Bank asserts that the district court placed the burden of proving non-delivery of the Release 
Demand Letter upon U.S. Bank when the burden of proof should have been placed on 
CitiMortgage to prove its delivery. U.S. Bank argues that CitiMortgage bore the burden of proof 
because delivery of the Release Demand Letter was CitiMortgage’s affirmative defense.  
In general, the party seeking foreclosure has the burden of establishing the existence of 
the debt and default on that debt. See I.C. § 45-1505. The burden of proving an affirmative 
defense, however, rests upon the party who advances the affirmative defense. Harman v. Nw. 
Mut. Life Ins. Co., 91 Idaho 719, 721, 429 P.2d 849, 851 (1967). When determining priority, 
“[g]enerally, the party demanding the subordination of a lien that is apparently superior to its 
own assumes the burden of proving the facts adduced to support relief.” 59 C.J.S. Mortgages § 
333.  
Here, the parties do not dispute the existence of the U.S. Bank Deed of Trust, nor the 
Thomases’ default on the obligation secured by the U.S. Bank Deed of Trust. At issue is the 
priority of the deed of trusts held by CitiMortgage and U.S. Bank. “According to Idaho’s 
recording statutes, a mortgage recorded first in time has priority against all other subsequent 
7 
 
mortgagees.” Estate of Skvorak v. Sec. Union Title Ins. Co., 140 Idaho 16, 23, 89 P.3d 856, 863 
(2004). This rule applies equally to deeds of trust. See Kalange v. Rencher, 136 Idaho 192, 195, 
30 P.3d 970, 973 (2001). Here, U.S. Bank recorded its Deed of Trust on September 29, 2005, 
and this lien was never released. CitiMortgage recorded its Deed of Trust on November 29, 
2005. Thus, because U.S. Bank’s Deed of Trust was recorded prior to CitiMortgage’s Deed of 
Trust, CitiMortgage was asserting subordination of a lien that was superior to its own. As such, 
CitiMortgage bore the burden of proving facts sufficient to show that U.S. Bank’s Deed of Trust 
no longer had priority over CitiMortgage’s Deed of Trust.  
The next issue is whether the district court misapplied the burden of proof. “The question 
of where a burden of proof lies is a question of law.” Robinson v. State Farm Mut. Auto. Ins. Co., 
137 Idaho 173, 176, 45 P.3d 829, 832 (2002). This Court has remanded for application of the 
correct burden of proof when a district court placed the burden of proof on the wrong party and 
in contradiction of well-established law. Robinson, 137 Idaho at 178, 45 P.3d at 834. In Robinson 
this Court found reversible error when the district court misapplied the burden of proof and the 
plaintiff “was excused from proving an essential element of the bad faith claim . . . .” Id.  
In its findings of fact and conclusions of law, the district court did not explicitly address 
which party bore the burden of proof as to whether the Release Demand Letter was delivered to 
U.S. Bank. Therefore, we have carefully reviewed the district court’s findings of fact in order to 
determine the district court’s approach to the burden of proof. We note that the district court 
consistently referred to U.S Bank’s failure to present evidence regarding delivery of the Release 
Demand Letter. The district court noted that, “U.S. Bank did not present evidence” regarding the 
visibility of staple holes, and that “no visual evidence of the difference [between staple holes and 
dust specks] was presented to the Court by U.S. Bank.” The district court also stated that U.S. 
Bank’s evidence “fails to explain how checks are physically moved.” Proper application of the 
burden of proof would have directed attention to CitiMortgage’s evidence that a demand for 
reconveyance was delivered rather than focusing on U.S. Bank’s failure to present evidence on 
this issue. We conclude that the district court’s findings of fact reflect that it erroneously placed 
the burden of proof on U.S. Bank.   
B. U.S. Bank has failed to demonstrate that the district court committed reversible error 
by admitting the testimony of Shannon Pearson.  
 
CitiMortgage presented testimony from Pearson, a paralegal in CitiMortgage’s attorney’s 
office. Pearson conducted a “low-tech experiment” by scanning an image of a check using the 
8 
 
office copy machine to determine whether staple holes were visible in the scanned image. U.S. 
Bank objected to the admissibility of her testimony and the results of her experiment. The district 
court overruled U.S. Bank’s objection, concluding that Pearson was testifying to her own 
experiment which required no technical or special expertise and concluded that Pearson could 
testify as a lay witness regarding her opinion regarding the visibility of staple holes. The district 
court noted that Keith Powers had been permitted to present his lay opinion that staple holes 
were not visible in the digital images of the BCT check created by U.S. Bank and First Bank of 
Idaho.1 
U.S. Bank argues that the district court abused its discretion by admitting Pearson’s 
experiment because the experiment was not conducted under substantially similar conditions to 
its check-imaging process. U.S. Bank also argues that Pearson improperly testified as a lay 
witness by offering an opinion based on scientific or other specialized knowledge.  
 
We are inclined to the view that the substantial differences between the manner in which 
the BCT check was imaged by U.S. Bank2 and Pearson’s “low-tech experiment” are such that 
evidence of the latter would not be admissible.3 However, U.S. Bank did not object to the 
admission of Pearson’s testimony based upon the absence of similarity of circumstances. Rather, 
U.S. Bank argued that Pearson’s testimony was inadmissible because she was not an expert in 
                                                 
1 U.S. Bank created a digital image of the BCT check after receiving it. It then used an intermediary for presentment 
of the check to First Bank of Idaho, the drawee. First Bank of Idaho then caused its own digital image of the check 
to be created. The original check was then apparently destroyed after the two banks were satisfied with the quality of 
their digital imagery.   
2 Apart from Powers’ testimony that the First Bank of Idaho image appeared to be of a higher resolution quality than 
that of U.S. Bank, there was no testimony as to the process or circumstances by which it was created. 
3 “ ‘[E]vidence of an extrajudicial experiment will be excluded unless the conditions under which the experiment 
was conducted are shown to be substantially similar’ ” to the conditions existing at the time of the event which is the 
subject of the experiment. Lopez v. Allen, 96 Idaho 866, 871, 538 P.2d 1170, 1175 (1975) (quoting Hansen v. 
Howard O. Miller Inc., 93 Idaho 314, 318, 460 P.2d 739, 743 (1969)). If the conditions of the event at issue and the 
experiment are substantially similar, minor deviations in the conditions will go to the weight of the evidence, not its 
admissibility. Hansen, 93 Idaho at 318, 460 P.2d at 743. However, when the conditions are so dissimilar that 
presentation of the evidence may mislead, rather than assist the trier of fact, it should not be admitted. Lopez, 96 
Idaho at 871, 538 P.2d at 1175.  
   U.S. Bank initially processed the check by applying magnetic ink in the familiar check encoding font on the lower 
right hand of the face of the check to reflect the amount of the check (0184380740). The check was then forwarded 
to the image capturing room, which has a “limited access, humidity-controlled, dust-controlled” environment. Once 
there, the check was run through an IBM 3890/97 sorter camera, which processes checks at the rate of 2,000 per 
minute. The check was transported by means of belts and rollers into a “coffin” where both sides were imaged by a 
high speed camera. The environment inside the coffin was controlled for humidity, dust and light intensity. The 
camera captured a black and white image with a resolution of 200 dots per square inch (dpsi). 
   Pearson performed her experiment by stapling a blank check to a piece of paper, removing the staple using a 
“claw-like staple remover.” She fed the check into a scanner feeder on a Sharp photocopier in her employer’s law 
office and scanned the front and back of the check at a resolution of 400 dpsi. She forwarded the digital files to her 
computer and then printed the image from her computer. 
 
9 
 
the field of document imaging and because she was employed by counsel. “If a person objecting 
to the admission of evidence states one ground for objection in the trial court, which is overruled, 
we will not consider on appeal whether a different objection would have been sustained.” 
Thomson v. Olsen, 147 Idaho 99, 105, 205 P.3d 1235, 1241 (2009). 
 
The circumstances under which Pearson performed her experiment were the subject of 
her own personal knowledge. The only opinion that she expressed related to the results of her 
experiment. She testified that she was able to discern staple holes on the scanned image of the 
face of the check but that she was unable to locate staple holes on the scanned image of the rear 
check. “So long as a lay witness does not testify on the basis of specialized knowledge, [her] 
opinions or inferences are admissible testimony if they are rationally based on [her] own 
perceptions and helpful to the trier of fact. I.R.E. 701.” Carrillo v. Boise Tire Co., 152 Idaho 741, 
750, 274 P.3d 1256, 1265 (2012). The district court clearly viewed lay testimony as to the 
visibility of staple holes in images as being helpful, as he permitted Powers to offer his lay 
opinion as to whether staple holes were visible in the images of the BCT check created by U.S. 
Bank and First Bank of Idaho. Accordingly, we hold that U.S. Bank has not demonstrated 
reversible error in the admission of Pearson’s testimony.4 
C. We are unable to determine whether the district court’s findings of fact are supported 
by substantial and competent evidence because the district court failed to evaluate 
relevant evidence.  
Idaho Code section 45-1514 spells out the procedure for causing a deed of trust to be 
reconveyed upon satisfaction of the underlying obligation. The statute provides:  
Upon performance of the obligation secured by the deed of trust, the trustee upon 
written request of the beneficiary shall reconvey the estate of real property 
described in the deed of trust to the grantor; providing that in the event of such 
performance and the refusal of any beneficiary to so request or the trustee to so 
reconvey, as above provided, such beneficiary or trustee shall be liable as 
provided by law in the case of refusal to execute a discharge or satisfaction of a 
mortgage on real property. 
                                                 
4 Presumably because it would call into question the admissibility of Power’s opinion that staple holes were not 
visible in the two sets of images of the BCT check, U.S. Bank has not identified one potential ground for exclusion 
of Pearson’s testimony that holes were not visible in the image of the back of the check resulting from her 
experiment. Lay opinion is inadmissible as to questions that can be resolved by “persons of ordinary experience and 
knowledge.” In such circumstances, the question is left to the trier of fact to decide. State v. Turner, 136 Idaho 629, 
632-33, 38 P.3d 1285, 1288-89 (Ct. App. 2001); State v. Pugsley, 128 Idaho 168, 175, 911 P.2d 761, 768 
(Ct.App.1995); State v. Johnson, 119 Idaho 852, 855, 810 P.2d 1138, 1141 (Ct. App. 1991). Whether an image 
appears to depict staple holes is likely a matter best left to the trier of fact.   
 
 
10 
 
I.C. § 45-1514 (emphasis added).  
The district court correctly observed that additional guidance as to the duty to reconvey 
can be obtained from Idaho Code section 45-915. Idaho Code section 45-915 addresses the 
reconveyance of mortgages and is identical in purpose to Idaho Code section 45-1514. See 
Brinton v. Haight, 125 Idaho 324, 332, 870 P. 2d 668, 685 (Ct. App. 1994). Thus, Idaho Code 
sections 45-1514 and 45-915 may be read in pari materia. Idaho Code section 45-915 provides: 
When any mortgage, affecting the title to real property, has been satisfied, 
the holder thereof or his assignee must immediately, on the demand of the 
mortgagor, purchaser, or the successor in interest of either, execute, acknowledge, 
and deliver to him a certificate of the discharge thereof so as to entitle it to be 
recorded . . . . 
Reading Idaho Code section 45-1514 in concert with Idaho Code section 45-915, the district 
court correctly concluded that Idaho Code section 45-1514 places the duty of reconveyance on 
the trustee once the underlying obligation has been satisfied and upon receipt of a written request 
for reconveyance of the property. See Brinton, 125 Idaho at 330, 870 P. 2d at 683.  
The district court found that it was more probable than not that the Release Demand 
Letter was stapled to the check. U.S. Bank argues that this finding of fact is clearly erroneous.5 
Because it is undisputed that U.S. Bank received the check, the district court found that U.S. 
Bank also received the Release Demand Letter. 
The district court stated that “U.S. Bank did not present evidence of any comparisons, 
independent testing, or analysis on their imaging equipment to determine the extent to which 
staple holes are, or are not, visible in processed checks, or what staple holes might look like on 
processed checks.”  
The record shows that U.S. Bank did present evidence at the summary judgment stage 
showing images of checks with the pertinent characteristics. Exhibits C and D attached to 
Powers’ affidavit in support of U.S. Bank’s second motion for summary judgment depicted two 
checks that had been scanned by U.S. Bank and which appear to show the presence of staple 
                                                 
5 U.S. Bank also claims that there was no evidence supporting the district court’s finding that U.S. Bank’s 
machinery might have operated such that staple holes would not be visible in the digital images. This claim is 
without merit. Although the district court erroneously stated that “the evidence fails to explain how checks are 
physically moved through the ‘coffin,’”, there was, in fact, evidence introduced supporting the district court’s 
finding that when a check is moved through the U.S. Bank imaging machine staple holes could be filled in. Mr. 
Powers testified that checks are transported by belts and rollers into the coffin. On cross-examination, he conceded 
that it was possible that paper displaced by a staple could fold back over and cover the hole when being transported 
by the belts and rollers.  
11 
 
marks. At the beginning of the court trial, the parties and the district court agreed that the district 
court would consider “all of those affidavits and documents that have been submitted, along with 
the affidavits at the motion for summary judgment stage of the case” so that the parties did “not 
need to reintroduce or reoffer exhibits that are already in the record simply to complete it for 
trial.” Thus, the district court’s statement that U.S. Bank failed to offer evidence for purpose of 
comparing images of a stapled check verses an unstapled check is not correct.  
It is an understatement to say that the evidence of delivery of the Release Demand Letter 
was highly conflicting. CitiMortgage’s claim that the demand for reconveyance was delivered 
rested largely on BCT’s practice of “always” stapling such a demand to the payoff check (which 
included the notation “payoff” of the Thomases’ loan and the loan number), an email in which a 
U.S. Bank officer acknowledged some degree of absence of controls relating to HELOCS, and 
the results of Pearson’s experiment. In turn, U.S. Bank primarily relied on the absence of a 
record of receiving the demand letter, the inability of any witness to testify that the letter had 
actually been delivered, and the two sets of digital images which, in Powers’ lay opinion, did not 
show the holes that would have been created by the staples.  
The district court’s explicit failure to consider the two exemplars of digital images of 
checks with staple holes, coupled with its misallocation of the burden of proof, lead us to the 
conclusion that we must remand this matter to the district court for consideration of all the 
evidence in light of the applicable burden of proof. 
D. If the Release Demand Letter was delivered, U.S. Bank had a duty to reconvey the 
Thomases’ property.  
Although this case must be remanded, we will address a legal issue that is presented by 
this appeal and which, depending upon whether the district court finds that the Release Demand 
Letter was delivered, must be answered. U.S. Bank argues that even if the demand was delivered, 
it was ineffective because it did not comply with Idaho Code section 45-1203. CitiMortgage 
responds that Idaho Code section 45-1203 does not apply to this case. We agree.  
 
Idaho Code section 45-1203 provides a procedure for unilateral reconveyance of a deed 
of trust by a title insurer or title agent when a beneficiary fails to fulfill its duty to reconvey a 
deed of trust. Idaho Code section 45-1203(1) requires that a notice of intent to reconvey the deed 
of trust be delivered to the beneficiary and that it be accompanied by a copy of the reconveyance 
to be recorded. U.S. Bank argues that because the letter from BCT was undated and did not 
contain a copy of the reconveyance to be recorded, the Release Demand Letter from BCT was 
12 
 
insufficient. This case does not present the situation governed by the statute. BCT did not 
attempt to effectuate a unilateral reconveyance. Thus, the statute is inapplicable and the Release 
Demand Letter was sufficient under Idaho Code section 45-1514 to impose a duty upon U.S. 
Bank to reconvey the Thomases’ property.   
E. We provide guidance as to CitiMortgage’s request for attorney fees before the trial 
court. 
CitiMortgage cross-appeals from the district court’s refusal to award it attorney fees. 
Although this issue may become moot, depending upon whether the district court’s finds that the 
Release Demand Letter was delivered, we address this issue for guidance on remand. 
CitiMortgage argues that the district court erred by not awarding fees under Idaho Code sections 
45-915, 45-1514 and 12-121. CitiMortgage also argues that the district court erred by failing to 
address its request for costs under Idaho Code section 10-1210. We address each issue in turn.  
1. Attorney fees under Idaho Code sections 45-915 and 45-1514. 
The district court concluded that Idaho Code sections 45-915 and 45-1514 are to be 
construed in pari materia because the grantor of a deed of trust and a mortgagor are generally in 
the same position. In doing so, the district court determined that CitiMortgage “can claim 
damages under Idaho Code § 45-915” because CitiMortgage (via BCT) was demanding 
reconveyance through the Thomases as the grantors. However, the district court declined to 
award fees because it concluded that CitiMortgage was required to plead and prove attorney fees 
as an element of damages, which it failed to do.  
Idaho Code section 45-1514 states:  
Upon performance of the obligation secured by the deed of trust, the trustee 
upon written request of the beneficiary shall reconvey the estate of real property 
described in the deed of trust to the grantor; providing that in the event of such 
performance and the refusal of any beneficiary to so request or the trustee to so 
reconvey, as above provided, such beneficiary or trustee shall be liable as 
provided by law in the case of refusal to execute a discharge or satisfaction of a 
mortgage on real property. 
Thus, Idaho Code section 45-1514 indicates that liability for refusal to reconvey a deed of trust is 
determined under Idaho Code section 45-915. Idaho Code section 45-915 states in pertinent part: 
[A]ny holder, or assignee of such holder, who refuses to execute, acknowledge, 
and deliver to the mortgagor, purchaser, or the successor in interest of either, the 
certificate of discharge, or to enter satisfaction, or cause satisfaction of the 
mortgage to be entered, as provided in this chapter, is liable to the mortgagor, 
13 
 
purchaser, or his grantee or heirs, for all damages which he or they may sustain by 
reason of such refusal, and shall also forfeit to him or them the sum of $100. 
(emphasis added).  
This Court has already determined that under Idaho Code section 45-915 and therefore, 
under Idaho Code section 45-1514, attorney fees may be awarded as compensatory damages. See 
Cornelison v. U.S. Bldg. & Loan Ass’n, 50 Idaho 1, 8, 292 P. 243, 246 (1930) (“Attorney’s fees 
incurred as the result of necessity of bringing action to compel cancellation of the mortgage are 
recoverable as damages.”); see also Head v. Crone, 79 Idaho 544, 547, 324 P.2d 996, 998 (1958) 
(noting that attorney fees incurred in the release of chattel mortgages are recoverable as 
damages). As a result, the plaintiff has the burden to both plead these damages and to establish 
these compensatory damages with reasonable certainty. See Bratton v. Scott, 150 Idaho 530, 
535–36, 248 P.3d 1265, 1270–71 (2011); see also Trees v. Kersey, 138 Idaho 3, 11–12, 56 P.3d 
765, 773–74 (2002).  
Here, CitiMortgage did not present any evidence at trial regarding attorney fees as 
damages. Instead, CitiMortgage requested attorney fees under Idaho Code sections 45-915 and 
45-1514 pursuant to I.R.C.P. 54(e)(1) as the prevailing party. The district court correctly denied 
CitiMortgage’s request for attorney fees under Idaho Code sections 45-915 and 45-1514.  
2. Attorney fees under Idaho Code section 12-121. 
The district court also concluded that attorney fees were not warranted under Idaho Code 
section 12-121 because U.S. Bank did not defend6 the case frivolously, concluding that “U.S. 
Bank’s defense was very well taken under the circumstances.” CitiMortgage argues that it was 
entitled to fees because U.S. Bank pursued this action in bad faith for the singular and vexatious 
purpose of running up attorney fees.  
Pursuant to Idaho Code section 12-121: “In any civil action, the judge may award 
reasonable attorney’s fees to the prevailing party . . . .” An award of fees under Idaho Code 
section 12-121 may be awarded by the district court in its discretion “when it is left with the 
abiding belief that the action was pursued, defended, or brought frivolously, unreasonably, or 
without foundation.” Garner v. Povey, 151 Idaho 462, 468, 259 P.3d 608, 614 (2011) (quoting C 
                                                 
6 In its oral discussion of CitiMortgage’s request for attorney fees pursuant to Idaho Code section 12-121, the district 
court referred to U.S. Bank’s “defense” of the action on nine occasions. As U.S. Bank was the plaintiff in this 
action, this was clearly an erroneous characterization of U.S. Bank’s position in the litigation. Nevertheless, this 
error is of no significance as to CitiMortgage’s entitlement to attorney fees. We can only speculate as to whether this 
error contributed to the district court’s misallocation of the burden of proof. 
14 
 
& G, Inc. v. Rule, 135 Idaho 763, 769, 25 P.3d 76, 82 (2001)). “A district court’s denial of fees 
under I.C. § 12–121 will not be overturned absent an abuse of discretion.” Id. 
 Here, the district court correctly observed that the entire course of litigation needed to be 
taken into account but that it could, in its discretion, award fees if it found U.S. Bank pursued 
this action frivolously or unreasonably. This indicates the district court correctly perceived the 
issue as discretionary. The district court next considered the merits of U.S. Bank’s claims, noting 
that there was, “at a minimum, a fairly debatable issue as to whether the demand letter was ever 
delivered.” Thus, the district court acted consistently with the legal standards applicable to Idaho 
Code section 12-121, within the boundaries of its discretion, and through the exercise of reason. 
We conclude that the district court did not abuse its discretion by denying CitiMortgage’s request 
for fees under Idaho Code section 12-121. 
3. Costs under Idaho Code section 10-1210. 
Under Idaho Code section 10-1210, the district court may “make such award of costs as 
may seem equitable and just” in a proceeding for declaratory judgment. The district court did not 
explicitly address CitiMortgage’s requests for discretionary costs under Idaho Code section 10-
1210. On remand, the district court should consider all grounds upon which the prevailing party 
seeks an award of costs or fees.  
F. Neither party is entitled to attorney fees on appeal. 
CitiMortgage requests attorney fees and costs on appeal. Because CitiMortgage did not 
prevail in this appeal, it is not entitled to an award of attorney fees.  
U.S. Bank requests attorney fees in connection with the cross-appeal, arguing that 
CitiMortgage’s cross-appeal was brought unreasonably and without foundation. As CitiMortgage 
correctly pointed out, the district court failed to address its request for an award of costs pursuant 
to Idaho Code section 10-1210. Thus, we are unable to conclude that CitiMortgage’s cross-
appeal was frivolously pursued. 
IV. CONCLUSION 
 
We vacate the judgment of the district court and remand for proceedings consistent with 
this opinion. We do not award attorney fees or costs on appeal.   
 
 
Chief Justice BURDICK and Justices EISMANN, J. JONES and W. JONES CONCUR.