Title: Lonnie G. Partout v. Ron Harper and Adams County Real Estate Contract and tort claims against VA appointed appraiser

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

IN THE SUPREME COURT OF THE STATE OF IDAHO   
  Docket No. 33979 
LONNIE G. PARTOUT,                                
                                                  
          Plaintiff-Appellant,                    
                                                  
v.                                                
                                                  
RON HARPER,                                       
                                                  
          Defendant-Respondent,                   
                                                  
and                                               
                                                  
ADAMS COUNTY REAL ESTATE (ACRE), 
INC., an Idaho  corporation; F. FRED 
GLESMER; CLAUDIA J. THOMAS;  
and ERNEST BREUER,                                
                                                                   
Defendants.  
                          
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Boise, March 2008 
 
2008 Opinion No.  53 
 
Filed:  April 25, 2008 
 
Stephen W. Kenyon, Clerk 
 
Appeal from the District Court of the Third Judicial District, State of Idaho, 
Adams County.  Hon. Stephen W. Drescher, District Judge. 
District court grant of summary judgment, affirmed. 
Belnap, Curtis, Williams & Purnell, PLLC, Boise, for appellant.   Robert Wade 
Curtis argued. 
Howard, Lopez & Kelly PLLC, Boise, for respondent.  Louis Piccioni, Jr. argued. 
__________________________________ 
BURDICK, Justice 
 
A home buyer brought contract and tort claims against an appraiser appointed by the U.S. 
Department of Veterans Affairs.  The district court granted summary judgment in favor of the 
appraiser on all of the claims.  We affirm the grant of summary judgment. 
I. FACTUAL AND PROCEDURAL BACKGROUND 
Appellant Lonnie Partout purchased a home in 2001 in Council, Idaho.  The U.S. 
Department of Veterans Affairs (VA) guaranteed the loan financing Partout’s purchase of the 
 
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home.  Before the VA guaranteed the loan it requested that Respondent Ron Harper perform an 
appraisal of the property.  Harper identified several problems with the property and 
recommended a county building inspector examine the property so measures could be 
established to correct the defects.  A letter allegedly signed by Partout was sent to the VA stating 
Partout understood Harper “had issues with the foundation, venting of the foundations, as well as 
the crawl space,” that he and a county building inspector inspected the property, and that all of 
the issues had been addressed to his satisfaction.  Subsequent to his purchase of the property, 
Partout discovered the foundation was rotten, cracking, and not built to code or reasonable 
standards, and that the house had electrical and plumbing problems.   
Partout sued several people including Harper.  Partout first brought his claims against 
Harper and Ernest Breuer (former owner of the property) in federal court, but that case was 
dismissed in 2005 for lack of subject matter jurisdiction.  Partout then amended his state court 
complaint against Adams County Real Estate (ACRE), Inc. and two of its employees to include 
his claims against Harper and Breuer.   
As to Harper, Partout alleged breach of contract, breach of the Idaho Consumer 
Protection Act, and fraud/misrepresentation.  Harper moved for summary judgment, which the 
district court granted on the first claim only.  Harper then moved the court to reconsider and the 
district court granted summary judgment for Harper on all of the claims and awarded him 
attorney fees.  Partout brought this appeal.   
II. STANDARD OF REVIEW 
In an appeal from an order granting summary judgment, this Court’s standard of review 
is the same as the standard used by the district court in passing upon a motion for summary 
judgment.  Kolln v. Saint Luke’s Reg’l Med. Ctr., 130 Idaho 323, 327, 940 P.2d 1142, 1146 
(1997).  Summary judgment is appropriate if the pleadings, affidavits, and discovery documents 
on file with the court, read in a light most favorable to the nonmoving party, demonstrate no 
material issue of fact such that the moving party is entitled to a judgment as a matter of law.  See 
I.R.C.P. 56(c); Badell v. Beeks, 115 Idaho 101, 102, 765 P.2d 126, 127 (1988).  If the evidence 
reveals no genuine issue as to any material fact, then all that remains is a question of law over 
which this Court exercises free review.  Yoakum v. Hartford Fire Ins. Co., 129 Idaho 171, 175, 
923 P.2d 416, 420 (1996).   
 
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III. ANALYSIS 
Partout argues that he was a third-party beneficiary to the contract between Harper and 
the VA, and that there are issues of material fact precluding summary judgment on his 
fraud/misrepresentation claims.1  Additionally, Partout contends the district court erred in 
granting Harper attorney fees.  Both Partout and Harper request an award of attorney fees on 
appeal.  We will address each issue in turn. 
A. Summary Judgment on the Breach of Contract Claim 
Partout argues summary judgment on the breach of contract claim was improper because 
there are genuine issues of material fact regarding Partout’s status as a third-party beneficiary to 
the contract between Harper and the VA.2  Harper argues Partout only alleged a breach of 
contract claim based on I.C. § 55-2501 et seq. which deals with a seller’s disclosure form, and 
therefore, does not apply to Harper.  We will first address whether the third-party beneficiary 
claim is sufficiently pleaded and then whether there are issues of fact precluding summary 
judgment on the breach of contract claim. 
1. Breach of contract on the basis of third-party beneficiary theory was an issue for 
summary judgment. 
The district court granted summary judgment to Harper on Partout’s breach of contract 
claim.  The court noted Partout submitted argument on the issue of third-party beneficiary 
theory, however, it determined that argument was irrelevant because Partout’s pleading shows 
the claim was specifically brought under I.C. § 55-2501 et seq., the Idaho Property Condition 
Disclosure Act.  The district court further held that since I.C. § 55-2501 et seq. deals with the 
seller’s property disclosure form, to which Harper was not a party and with which Harper had no 
involvement, Harper was entitled to summary judgment on the breach of contract claim.   
“[I]ssues considered on summary judgment are those raised by the pleadings.”  Gardner 
v. Evans, 110 Idaho 925, 939, 719 P.2d 1185, 1199 (1986) (quoting Argyle v. Slemaker, 107 
Idaho 668, 669, 691 P.2d 1283, 1284 (Ct. App. 1984)).  Thus, this Court must determine whether 
                                                 
1 Partout does not appeal the dismissal of his second claim against Harper, violation of the Idaho Consumer 
Protection Act.  Below, Partout conceded this was not a valid claim.   
2 Partout also argues that even if he is not a third-party beneficiary, Harper owed Partout a duty “to perform his 
appraisal in an accurate manner” and that a breach of this duty gives rise to a tort.  Though Partout argued below that 
his complaint is sufficient to support a claim that Harper committed a tortious breach of his duty, he does not make 
that argument on appeal.  Therefore, we will not consider this issue on appeal.  See KEB Enters., L.P. v. Smedley, 
140 Idaho 746, 754, 101 P.3d 690, 698 (2004) (holding this Court does not consider issues not supported by 
propositions of law, authority, or argument).   
 
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the “pleadings . . . can fairly be viewed as adequately giving notice of the claim.”  O’Guin v. 
Bingham County, 139 Idaho 9, 15, 72 P.3d 849, 855 (2003). 
Idaho follows a system of notice pleading.  Cafferty v. State, Dept. of Transp., 144 Idaho 
324, __, 160 P.3d 763, 767 (2007).  “A complaint need only contain a concise statement of the 
facts constituting the cause of action and a demand for relief.”  Id. (citing I.R.C.P. 8(a)(1); Clark 
v. Olsen, 110 Idaho 323, 325, 715 P.2d 993, 995 (1986)). 
Partout’s complaint sets forth breach of contract as the first cause of action.  Partout 
indicates he is bringing that cause of action against Harper and the seller of the house, Breuer.  
That section of the complaint focuses on Breuer’s written disclosure statement and makes no 
mention of third-party beneficiary theory.  However, Partout does make the following factual 
allegations in his complaint: 
13.  Plaintiff is a third party beneficiary of the contract between Harper 
and the Lender, by which the Lender obtained an appraisal, which appraisal was a 
condition prerequisite to the lender financing the purchase of the house. 
. . . . 
16.  That as a condition of purchase, the home was appraised by a VA 
approved appraiser, Harper, who was hired and paid to inspect the home for 
compliance with VA standards and specification; local, state, and federal 
building, electrical, plumbing and well, and septic code requirements, and to 
determine the market value of the property for financing purposes. 
17.  The appraiser examined and made a report and appraisal to VA for 
financing. 
In the complaint Partout specifically alleges a breach of contract claim against Harper.  
This claim is supported by factual averments in the complaint alleging the existence of a contract 
between Harper and the VA, and that Partout is a third-party beneficiary to that contract.  
Additionally, in this case it is clear the complaint put Harper on notice since in his answer he 
explicitly alleges Partout is not a third-party beneficiary to his contract with the VA.  Therefore, 
we hold the complaint can be fairly viewed to have provided Harper adequate notice of Partout’s 
breach of contract claim based on third-party beneficiary theory, and thus, it was an issue to be 
considered on summary judgment. 
2. Partout failed to establish the essential elements of his third-party beneficiary claim. 
When a contract is made expressly for the benefit of a third person, the contract may be 
enforced by the third person at any time before the parties to the contract rescind it.  Blickenstaff 
v. Clegg, 140 Idaho 572, 579, 97 P.3d 439, 446 (2004); I.C. § 29-102.  “The test for determining 
 
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a party’s status as a third-party beneficiary . . . is whether the agreement reflects an intent to 
benefit the third party.”  Idaho Power Co. v. Hulet, 140 Idaho 110, 112, 90 P.3d 335, 337 (2004).  
The third party must show the contract was made primarily for his benefit; it is not sufficient that 
the third party is a mere incidental beneficiary to the contract.  Id. (quoting Adkison Corp. v. Am. 
Bldg. Co., 107 Idaho 406, 409, 690 P.2d 341, 344 (1984)); Fenwick v. Idaho Dep’t of Lands, 144 
Idaho 318, __, 160 P.3d 757, 762 (2007) (quoting Dawson v. Eldredge, 84 Idaho 331, 337, 372 
P.2d 414, 418 (1962) (quoting Sachs v. Ohio Nat’l Life Ins. Co., 148 F.2d 128, 131 (7th Cir. 
1945))).  The intent to benefit the third party must be expressed in the contract itself.  Idaho 
Power Co., 140 Idaho at 112, 90 P.3d at 337 (quoting Adkison Corp., 107 Idaho at 409, 690 P.2d 
at 344; Fenwick, 144 Idaho at __, 160 P.3d at 762 (quoting Adkison Corp., 107 Idaho at 409, 690 
P.2d at 344).   
In his appellate brief, Partout fails to point to any specific written contract or to set forth 
the terms of an oral contract showing an intent that the contract benefit Partout.  Partout states 
that in support of his third-party beneficiary claim he submitted portions of the VA’s Lender’s 
Handbook and portions of the Uniform Standards of Professional Appraisal Practice which 
“establishes a material issue of fact as to his status as a third party beneficiary.”  However 
Partout does not show that these documents comprise part of the contract, and Idaho law requires 
that the intent to benefit the third party be expressed in the contract itself.3   
The assignment letter requesting Harper appraise the property appears in the record, but 
does not express any intent to benefit Partout.  Partout’s name does not appear in the letter, the 
appraisal requestor is Washington Mutual Home Loans, and the letter requests the appraisal 
report be sent to the VA office.  The letter also requests the assignment be completed “according 
to current VA instructions.”  A VA appraisal must conform to the Uniform Standards of 
Professional Appraisal Practice (USPAP) and meet the requirements outlined in chapter 11 of the 
                                                 
3 Partout argues that “[p]roof of the ‘intent to benefit’ Mr. Partout, and the status of the contract as being made for 
his direct benefit involves not only the examination of the contract, but the underlying rules and requirements of the 
VA.”  However, this argument fails to acknowledge the rule that the intent to benefit the third party be expressed in 
the contract itself. 
 
Partout additionally argues that the circumstances surrounding the formation of the contract must be considered 
when determining the parties’ intent and relies on Just’s Inc. v. Arrington Constr. Co., 99 Idaho 462, 583 P.2d 997 
(1978), to support his contention that the circumstances show he is a member of a limited class of people for whose 
benefit the contract was made.  However, Just’s Inc. relies on Stewart v. Arrington Constr. Co., 92 Idaho 526, 446 
P.2d 895 (1968).  Stewart is clear that circumstances surrounding the contract’s formation are only considered when 
the contract is ambiguous as to the intent to benefit a third party.  Id. at 532, 446 P.2d at 901.   
 
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Department of Veterans Affairs, Veterans Benefits Administration Lender’s Handbook VA 
Pamphlet 26-7.  We have not discovered anything in Chapter 11 of the VA Pamphlet or the 
USPAP that expresses an intent that the appraisal primarily benefit the home buyer.4     
At summary judgment the burden of proving the absence of material facts is upon the 
moving party.  Thomson v. City of Lewiston, 137 Idaho 473, 476, 50 P.3d 488, 491 (2002).  The 
adverse party, however, “may not rest upon the mere allegations or denials of that party’s 
pleadings, but that party’s response, by affidavits or as otherwise provided in this rule, must set 
forth specific facts showing that there is a genuine issue for trial.”  I.R.C.P. 56(e); see also 
Edmunds v. Kraner, 142 Idaho 867, 876, 136 P.3d 338, 347 (2006).  “The nonmoving party must 
submit more than just conclusory assertions that an issue of material fact exists to establish a 
genuine issue.”   Northwest Bec-Corp v. Home Living Serv., 136 Idaho 835, 839, 41 P.3d 263, 
267 (2002).  Therefore, “[t]he moving party is entitled to judgment when the nonmoving party 
fails to make a showing sufficient to establish the existence of an element essential to that party’s 
case on which that party will bear the burden of proof at trial.”  Badell, 115 Idaho at 102, 765 
P.2d at 127. 
At trial Partout would have the burden of proving he is a third-party beneficiary to the 
contract between Harper and the VA, and Idaho law requires that the contract itself reflect an 
intent to benefit the third party.  See Idaho Power Co., 140 Idaho at 112, 90 P.3d at 337.  Partout 
has failed to show the agreement between Harper and the VA expressed an intent to benefit him.  
Therefore, we affirm the grant of summary judgment to Harper on the breach of contract claim 
because Partout failed to establish an essential element to his claim. 
B. Summary Judgment on the Tort Claims 
Partout asserts the district court erred in granting summary judgment on his fraud claims.  
The district court granted summary judgment based on Partout’s failure to establish the essential 
elements of fraud. 
Fraud requires: (1) a statement or a representation of fact; (2) its falsity; (3) its 
materiality; (4) the speaker’s knowledge of its falsity; (5) the speaker’s intent that there be 
                                                 
4 In his brief Partout quotes USPAP SMT-9 which defines “intended user” as “the client and any other party as 
identified, by name or type, as users of the appraisal . . . by the appraiser on the basis of communication with the 
client at the time of the assignment.”  However, the comment explicitly states that the appraiser’s obligation to other 
intended users is limited to requirements identified by the client at the time the appraiser accepts the assignment; we 
have no information concerning requirements imposed by the client on Harper at the time Harper accepted the 
assignment.  Furthermore, the comment states that “[a] party receiving a report copy from the client does not, as a 
consequence, become a party to the appraiser-client relationship.”   
 
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reliance; (6) the hearer’s ignorance of the falsity of the statement; (7) reliance by the hearer; (8) 
justifiable reliance; and (9) resultant injury.  Maroun v. Wyreless Sys., Inc., 141 Idaho 604, 615, 
114 P.3d 974, 985 (2005) (citing Lindberg v. Roseth, 137 Idaho 222, 226, 46 P.3d 518, 522 
(2002)).   
In this case, Partout failed to produce sufficient evidence to survive summary judgment 
on his fraud claims against Harper.  Fraud requires that a representation is made and that the 
“hearer” relies on the representation.  Id.  Yet, Partout fails to produce any evidence or make any 
allegation that Harper made any representation to him prior to his purchase of the property.5   
In his opposition to summary judgment, Partout supported the representation element of 
fraud by citing to Harper’s appraisal report.  However, Harper submitted an excerpt from 
Partout’s deposition wherein Partout admits he never received his own copy of the appraisal and 
that no one showed him a copy of the appraisal prior to purchasing the house.  Partout has failed 
to produce any contrary evidence.  Therefore, because Partout has failed to show Harper made 
him any representation which he relied upon, he has failed to establish an essential element to his 
case.  Thus, we affirm the dismissal of Partout’s fraud claims against Harper.6 
C. Attorney Fees 
Partout argues Harper was not entitled to an award of attorney fees below.  Both Partout 
and Harper request an award of attorney fees on appeal.  We will address each issue in turn. 
1. We affirm the award of attorney fees below. 
Partout argues the district erred in awarding Harper attorney fees pursuant to I.C. § 12-
121.  “An award of attorney fees under Idaho Code § 12-121 is discretionary; but it must be 
supported by findings and those findings, in turn, must be supported by the record.”  Wait v. 
Leavell Cattle, Inc., 136 Idaho 792, 799, 41 P.3d 220, 227 (2001).  To determine whether the 
findings are supported by the record, “we look to see if there is substantial evidence to support 
the finding[s].”  Sun Valley Shopping Ctr., Inc. v. Idaho Power Co., 119 Idaho 87, 92, 803 P.2d 
993, 998 (1991).   Abuse of discretion is determined by a three part test which asks whether the 
district court “(1) correctly perceived the issue as one of discretion; (2) acted within the outer 
boundaries of its discretion and consistently with the legal standards applicable to the specific 
                                                 
5 Partout argues that because he was a third-party beneficiary, “the reliance of the VA [on Harper’s appraisal report 
prior to closing] is transferred to Mr. Partout.”  First, there is no support for this argument.  Second, Partout has not 
established he is a third-party beneficiary. 
6 Consequently, it is unnecessary for this Court to consider Harper’s arguments on alternate grounds for affirming 
summary judgment: judicial admission, judicial estoppel, and the statute of limitations.   
 
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choices available to it; and (3) reached its decision by an exercise of reason.”  Sun Valley Potato 
Growers, Inc. v. Texas Refinery Corp., 139 Idaho 761, 765, 86 P.3d 475, 479 (2004). 
In support of its award of attorney fees, the district court stated: 
In the Order on Motions for Summary Judgment entered on August 29, 
2006, this court found that there was no factual basis for Plaintiff’s breach of 
contract claim.  In the Order on Various Motions entered on January 8, 2007, this 
court further found that the Plaintiff admitted that the ICPA did not apply to 
Defendant Harper.  It was also found that Plaintiff could not establish the reliance 
element of its fraud claim.  Moreover, based on the Plaintiff’s admissions, they 
should have known that they could not prove an element of that claim.  
Considering that all of the Plaintiff’s claims against Harper were ultimately 
dismissed on summary judgment, Harper is clearly the prevailing party as 
between himself and the Plaintiff.  Further, the Plaintiff would have only had to 
do a modicum of investigation and consideration of the facts to conclude the 
causes of action against Harper were meritless and/or the evidence was clearly 
insufficient to proceed.  For these reasons, attorneys fees and costs will be 
awarded to Defendant Harper. 
Partout argues that because it is unsettled in Idaho whether a veteran is a third-party 
beneficiary to an appraiser’s contract, his claim is not without basis.  However, as discussed 
above, Idaho law clearly requires an intent to benefit a third party be found in the contract itself 
and Partout failed to provide this necessary evidence.  Therefore, we conclude the record 
supports the district court’s finding that Partout only needed “to do a modicum of investigation 
and consideration of the facts to conclude the causes of action against Harper were meritless 
and/or the evidence was clearly insufficient to proceed.”  The district court correctly perceived 
the issue as one of discretion, acted within the outer boundaries of its discretion, and reached its 
decision by an exercise of reason.  Furthermore, its award of attorney fees was supported by 
findings which were supported by the record.  Therefore, we affirm the award of attorney fees to 
Harper below.7 
2. Partout is not entitled to attorney fees on appeal. 
Partout requests attorney fees on appeal pursuant to I.C. §§ 12-120 and 12-121.  Idaho 
Code § 12-121 allows an award of reasonable attorney’s fees to the prevailing party.  Idaho Code 
                                                 
7 Additionally, we hold the amount of the district court’s award of attorney fees is reasonable.  Partout asserts 
Harper is trying to collect attorney fees for the federal court case and that Harper did not conduct a deposition in the 
state court action.  The calculation of reasonable fees is reviewed for an abuse of discretion.  Parsons v. Mut. of 
Enumclaw Ins. Co., 143 Idaho 743, 747, 152 P.3d 614, 618 (2007).  The billing invoices submitted by Harper begin 
with work done on February 6, 2006, which was after the case in federal court was dismissed, and the invoices do 
not contain any charge for a deposition.  Thus, Partout fails to show the district court abused its discretion in 
awarding reasonable attorney fees. 
 
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§ 12-120(3) allows an award of reasonable attorney’s fees to the prevailing party in a civil action 
to recover on any contract relating to the purchase or sale of services.  Since we affirm summary 
judgment in favor of Harper, Partout is not a prevailing party.  Hence, we decline to award 
Partout attorney’s fees on appeal. 
3. We decline to award Harper attorney fees on appeal. 
Harper requests attorney fees on appeal pursuant to I.C. § 12-121.  Attorney fees are 
awarded to the prevailing party only if “the Court determines that the action was brought or 
pursued frivolously, unreasonably or without foundation.”  Baker v. Sullivan, 132 Idaho 746, 
751, 979 P.2d 619, 624 (1999).  Though we affirm the grant of summary judgment, we disagree 
with the district court’s basis for summary judgment on the contract claim.  Thus, we cannot say 
this appeal was entirely frivolous, unreasonable, or without foundation.  Therefore, we decline to 
award Harper attorney fees on appeal.  
IV. CONCLUSION 
We affirm the grant of summary judgment to Harper on the breach of contract claim and 
on the fraud claims.  Additionally, we affirm the district court’s award of attorney fees to Harper 
below. We award no attorney fees on appeal.  Costs to Harper. 
Chief Justice EISMANN and Justices  J. JONES, W. JONES and HORTON, CONCUR.