Title: Monitor Finance v. Wildlife Ridge Estates

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

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IN THE SUPREME COURT OF THE STATE OF IDAHO 
Docket No. 45517 
 
MONITOR FINANCE, L.C., a Utah limited 
liability company; and FIRST CAPITAL 
FUNDING, L.C., a Utah limited liability 
company, 
 
          Plaintiffs/Respondents, 
 
v. 
 
WILDLIFE RIDGE ESTATES, LLC, an 
Idaho limited liability company, 
Defendant/Appellant; M&S 
DEVELOPMENT, LLC, an Idaho limited 
liability company,  
 
          Defendants. 
 
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Pocatello, September 2018 Term 
 
Filed: January 9, 2019 
 
Karel A. Lehrman, Clerk 
WILDLIFE RIDGE ESTATES, LLC, an 
Idaho limited liability company, 
 
 
Counter-Claimant/Appellant, 
 
v. 
 
MONITOR FINANCE, L.C., a Utah limited 
liability company; and FIRST CAPITAL 
FUNDING, L.C., a Utah limited liability 
company, 
 
       Counter-defendants/Respondents.   
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Appeal from the District Court of the Sixth Judicial District, State of Idaho, 
Bannock County. Robert C. Naftz, District Judge.  
 
The judgment of the district court is affirmed. 
 
Hearn Law PLC, Pocatello, for appellant. A. Bruce Larson argued. 
 
Cooper & Larsen, Chartered, Pocatello, for respondents. Ron Kerl argued. 
 
_____________________ 
2 
STEGNER, Justice.  
This case involves the judicial foreclosure of a deed of trust encumbering real property in 
Pocatello, Idaho. Monitor Finance, L.C., and First Capital Funding, L.C., (collectively referred to 
as the Beneficiaries) are the holders of a deed of trust, which encumbers the real property 
claimed to be owned in fee simple by Wildlife Ridge Estates, LLC (Wildlife LLC).  
Prior to this judicial foreclosure action being brought, Wildlife LLC filed suit against the 
Beneficiaries seeking to quiet title to the real property, which is subject to the Beneficiaries’ deed 
of trust. In that previous action, Wildlife LLC alleged that the Beneficiaries no longer retained an 
interest in the property because the debt underlying the promissory note had been paid in full. By 
stipulation of the parties, that quiet title action was ultimately dismissed with prejudice.  
Subsequently, the Beneficiaries initiated this action to foreclose the deed of trust based on 
their contention that the debt created by the promissory note had not been paid and was in 
default. The Beneficiaries moved the district court for summary judgment, contending that 
Wildlife LLC’s affirmative defenses and counterclaim were barred by res judicata because the 
previous quiet title action brought by Wildlife LLC had been dismissed on its merits. The district 
judge granted the Beneficiaries’ motion and denied Wildlife LLC’s motion to reconsider. In 
doing so, the district court summarily dismissed Wildlife LLC’s counterclaim and affirmative 
defenses. The district court ultimately entered summary judgment in favor of the Beneficiaries. 
Wildlife LLC now appeals that adverse summary judgment ruling, claiming, among other things, 
that the district court misapplied the doctrine of res judicata. For reasons set out in this opinion, 
we affirm the district court’s decisions.  
I. FACTUAL AND PROCEDURAL BACKGROUND 
On December 29, 2005, Michael Millward (Millward) and Michael Williams (Williams) 
entered into a written agreement.1 That agreement provided, among other things, that: M&S 
Development (M&S), a limited liability company wholly owned by Millward and his wife, 
would purchase real property (a forty lot subdivision in Pocatello) for $230,000. Following the 
payment, M&S would “own 55% of the development.”2 Millward and Williams would then each 
                                                 
1 The document evidencing the agreement between Millward and Williams is entitled “Proposal for Mike Williams.” 
The document was signed by Millward and Williams, and then notarized.  
2 While the agreement is silent regarding Williams’ ownership following M&S’s infusion of cash, Williams had 
been instrumental in the development of the property, both in arranging for its purchase and obtaining the platting of 
the property, which enabled it to be developed.  
3 
pay $25,000 to buy out a remaining third-party’s interest in the property, which would result in 
M&S then owning 62.5% of the property, and Williams owning the remaining 37.5%. M&S 
would form a limited liability company for the development of the project, with “each party” 
being a manager of the LLC. The LLC that resulted from this agreement was Wildlife LLC. 
Millward and Williams became the managing members of Wildlife LLC upon its creation.  
On December 30, 2005, (the next day) the Beneficiaries loaned Millward and M&S 
$244,000 to finance the purchase of the subject property.3 As evidence of the loan, Millward and 
M&S made and issued a Trust Deed Note to the Beneficiaries. Millward signed the Trust Deed4 
on behalf of M&S, the sole trustor. As a result of their actions, both Millward and M&S were 
contractually obligated to repay the loan described in the Trust Deed Note. Pioneer Title 
Company (Pioneer) became the trustee and holder of the deed. On June 13, 2006, M&S deeded 
the subject property to Wildlife LLC. 
On March 3, 2008, the  Trust Deed Note was modified to include additional amounts 
loaned which totaled $217,400 (the modification). This additional loan was made in a series of 
advances by the Beneficiaries to Millward and M&S. Millward signed the modification on behalf 
of himself and M&S. He also signed on behalf of Wildlife LLC to acknowledge the 
modification. Williams, the other manager of Wildlife LLC, did not sign the modification.  
On September 10, 2012, Millward filed for Chapter 7 Bankruptcy. Millward’s bankruptcy 
filing resulted in an automatic stay precluding the commencement or active pursuit of an action 
against him personally. See 11 U.S.C. § 362(a). M&S was listed as community property, 100% 
owned by Millward and his wife, in the bankruptcy schedule. As a result, any action against 
M&S was also stayed. See id.  
On March 12, 2015, Wildlife LLC filed an amended complaint in Bannock County 
district court to quiet title to the property (the first action). The suit named the Beneficiaries as 
defendants. That action did not include Millward or M&S as parties. In its amended complaint, 
Wildlife LLC alleged that the debt secured by the Trust Deed Note had been fully paid. As a 
result of the purportedly satisfied debt, Wildlife LLC requested that it be awarded a judgment 
quieting title in the property. Over a year later, Wildlife LLC stipulated to the dismissal of its 
                                                 
3 The record does not explain the reason for the difference between what Millward agreed to pay in his agreement 
with Williams ($230,000) and what he borrowed from the Beneficiaries the next day to purchase the subject 
property ($244,000).  
4 The deed of trust is titled “Trust Deed, Assignment of Rents, Security Agreement and Fixture Filing.”  
4 
amended complaint, with prejudice. On June 14, 2016, a judgment was entered dismissing 
Wildlife LLC’s action with prejudice. (Nine days later, on June 23, 2016, Millward’s bankruptcy 
case was closed.) 
On October 7, 2016, the Beneficiaries filed the underlying judicial foreclosure action, 
naming Wildlife LLC and M&S as defendants. In their complaint, the Beneficiaries requested a 
judicial foreclosure sale of the property in order to satisfy the remaining debt under the 
promissory note. Millward was not named as a defendant.5 Wildlife LLC answered on 
November 4, 2016, alleging a number of affirmative defenses, including a counterclaim asserting 
fraud, and requesting declaratory and injunctive relief. The Beneficiaries answered Wildlife 
LLC’s counterclaim and asserted that Wildlife LLC’s counterclaim and affirmative defenses 
were barred by res judicata, among other defenses. Subsequently, the Beneficiaries moved the 
district court for partial summary judgment, and on March 27, 2017, the district court issued its 
decision (first decision) granting that motion and dismissing Wildlife’s affirmative defenses and 
counterclaim based on res judicata.  
On March 30, 2017, the district court entered default against M&S for its failure to 
appear. On April 13, 2017, the Beneficiaries filed a second motion for summary judgment, 
requesting that the remaining issues be determined by the court. Those issues were whether an 
unpaid debt remained on the promissory note and the reasonable value of the property still 
encumbered by the deed of trust. Wildlife LLC opposed that motion and, in addition, submitted a 
motion for reconsideration in an attempt to reverse the district court’s first decision that 
dismissed its counterclaim and affirmative defenses.  
On June 14, 2017, the district court issued a Memorandum Decision and Order (second 
decision) denying Wildlife LLC’s request for reconsideration and finding that an unpaid debt 
remained on the promissory note in the amount of $6,814,076.41. The district court did not 
establish a value for the property at that time.  
The district court entered a Judgment, Decree of Foreclosure and Order of Sale. Wildlife 
LLC appeals from the district court’s decisions granting summary judgment, foreclosing it from 
making its case, and allowing judgment to be entered in favor of the Beneficiaries.  
II.  QUESTIONS PRESENTED ON APPEAL 
                                                 
5 In their brief, the Beneficiaries wrote: “[u]pon the closing of his bankruptcy case Millward’s discharge under 11 
U.S.C[.] 3727 [sic] became final and [the Beneficiaries] were prohibited from pursuing him in the present action.”  
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A. Were Wildlife LLC’s affirmative defenses and counterclaim properly barred by the 
district court under the doctrine of res judicata?  
B. Did the district court properly reject Wildlife LLC’s claim that the Beneficiaries’ 
foreclosure action was precluded by the applicable statute of limitations?  
 
C. Did the district court properly conclude that res judicata did not apply to the 
Beneficiaries’ foreclosure action? 
 
D. If the Beneficiaries are the prevailing parties, are they entitled to attorney’s fees under 
I.A.R. 41, Idaho Code section 12-120, or Idaho Code section 12-121? 
III. 
STANDARD OF REVIEW 
“This Court reviews a motion for summary judgment pursuant to the same standards as 
the district court.” Berkshire Invs., LLC v. Taylor, 153 Idaho 73, 80, 278 P.3d 943, 950 (2012). 
“The court must grant summary judgment if the movant shows that there is no genuine dispute as 
to any material fact and the movant is entitled to judgment as a matter of law.” I.R.C.P. 56(a). 
“All reasonable inferences that can be drawn from the record are to be drawn in favor of the 
nonmoving party, and disputed facts are liberally construed in the nonmoving party’s favor.” 
Marek v. Hecla, Ltd., 161 Idaho 211, 214, 384 P.3d 975, 978 (2016). Questions of law are 
reviewed de novo, and “[w]hether an action is barred by res judicata is a question of law.” 
Berkshire Invs., 153 Idaho at 80, 278 P.3d at 950. 
 “[W]hen reviewing a trial court’s decision to grant or deny a motion for reconsideration, 
this Court utilizes the same standard of review used by the lower court in deciding 
the motion for reconsideration.” Fragnella v. Petrovich, 153 Idaho 266, 276, 281 P.3d 103, 113 
(2012). “When deciding the motion for reconsideration, the district court must apply the 
same standard of review that the court applied when deciding the original order that is being 
reconsidered.” Id. As such, this Court reviews the district court’s denial of Wildlife LLC’s 
motion for reconsideration under the summary judgment standard. Id.  
 
 
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IV.   ANALYSIS 
A. 
Wildlife LLC’s affirmative defenses and counterclaim were correctly barred by the 
application of res judicata. 
In its initial assignment of error, Wildlife LLC contends the district court erred in 
granting the Beneficiaries’ motion for summary judgment and dismissing Wildlife LLC’s 
affirmative defenses and counterclaim. Wildlife LLC asserts that the Beneficiaries, Millward, 
and M&S engaged in fraud, which, if true, could preclude the Beneficiaries from recovering on 
their claims.6 The district judge granted the Beneficiaries’ motion for summary judgment as to 
Wildlife LLC’s affirmative defenses and counterclaim, finding that res judicata precluded 
Wildlife LLC from pursuing them.  
“The doctrine of res judicata covers both claim preclusion (true res judicata) and issue 
preclusion (collateral estoppel).” Ticor Title Co. v. Stanion, 144 Idaho 119, 123, 157 P.3d 613, 
617 (2007).  
Claim preclusion “bars a subsequent action between the same parties upon the 
same claim or upon claims ‘relating to the same cause of action.’” Under this 
doctrine, a claim is also precluded if it could have been brought in the previous 
action, regardless of whether it was actually brought, where: (1) the original 
action ended in final judgment on the merits, (2) the present claim involves the 
same parties as the original action, and (3) the present claim arises out of the same 
transaction or series of transactions as the original action. 
Berkshire Invs., 153 Idaho at 81, 278 P.3d at 951 (citation omitted). When the three elements are 
established, claim preclusion bars “every matter offered and received to sustain or defeat the 
claim but also as to every matter which might and should have been litigated in the first suit.” 
Magic Valley Radiology, P.A. v. Kolouch, 123 Idaho 434, 437, 849 P.2d 107, 110 (1993) 
(quoting Joyce v. Murphy Land & Irrigation Co., 35 Idaho 549, 553, 208 P. 241, 242–43 (1922)) 
(italics added). 
Whether claim preclusion or issue preclusion bars relitigation between the same 
parties of a prior litigation is a question of law upon which this Court exercises 
free review. Lohman v. Flynn, 139 Idaho 312, 319, 78 P.3d 379, 386 (2003). Res 
judicata is an affirmative defense and the party asserting it must prove all of the 
essential elements by a preponderance of the evidence. Foster v. City of St. 
Anthony, 122 Idaho 833, 890, 841 P.2d 413, 420 (1992). 
                                                 
6 While Wildlife LLC alleged fraudulent behavior on the part of Millward and M&S, the two do not appear in the 
caption relating to its counterclaim. Likewise, even though M&S was named as a defendant in the caption and 
pleadings by the Beneficiaries, Wildlife LLC did not assert a crossclaim against M&S.  
7 
Ticor Title, 144 Idaho at 122, 157 P.3d at 616.  
The first issue regarding the applicability of res judicata is whether the “original action 
ended in final judgment on the merits.” In this case, it did. On June 8, 2016, a Stipulation for 
Dismissal With Prejudice between Wildlife LLC and the Beneficiaries was filed in the quiet title 
action brought by Wildlife LLC. On June 14, 2016, Wildlife LLC’s suit was dismissed, with 
prejudice, with each party bearing its own attorney’s fees and costs. Because the case was 
dismissed with prejudice, the dismissal constituted a final judgment on the merits. Maravilla v. J. 
R. Simplot Co., 161 Idaho 455, 458–59, 387 P.3d 123, 126–27 (2016). 
The next issue regarding the applicability of res judicata is whether “the present claim 
involves the same parties as the original action.” In the prior lawsuit, Wildlife LLC brought suit 
against First Capital Funding, L.C., and Monitor Finance, L.C. The present claim involves the 
same parties as the first action. As a result, this second element of the res judicata test has also 
been met.  
The third element of res judicata is whether “the present claim arises out of the same 
transaction or series of transactions as the original action.” In the original action, Wildlife LLC 
sought to quiet title to the identical property encumbered by the deed of trust given by M&S to 
the Beneficiaries. Hence, the present claim arises out of the same transaction as the original 
action. Consequently, all three elements necessary for res judicata to apply have been met.  
Wildlife LLC next argues that res judicata does not apply to its counterclaim because 
fraud was never asserted in the first action, and a fraud claim could not have been asserted 
because Millward and M&S would have been “necessary parties” to it.7 Wildlife LLC contends 
because Millward was in bankruptcy and M&S was an asset of Millward, neither could be joined 
due to the automatic stay. Wildlife LLC argues that without their participation, relief could not 
                                                 
7 Wildlife LLC appears to argue that Millward and M&S would have been “required” and “indispensable” to a fraud 
claim being pursued during the pendency of its previous action under Rule 19 of the Idaho Rules of Civil Procedure. 
The current Rule 19 no longer employs the word “indispensable.” This is due to Idaho’s amendment mirroring the 
2007 amendment of the federal rule that removed the word “indispensable” to make the rules “more easily 
understood . . . .” FED. R. CIV. P. 19 advisory committee’s note to 2007 amendment. These alterations were 
“intended to be stylistic only.” Id. The “indispensable” language is still routinely used by federal courts to mean a 
required party that could not be joined, and, after an application of Rule 19(b), its absence would bar further 
proceedings. E.g., Alabama-Quassarte Tribal Town v. United States, 899 F.3d 1121, 1123 (10th Cir. 2018); Fla. 
Wildlife Fed’n Inc. v. United States Army Corps of Engineers, 859 F.3d 1306, 1316 (11th Cir. 2017). This use was 
contemplated by the rule itself. FED. R. CIV. P. 19 advisory committee’s note to 2007 amendment (“‘Indispensable’ 
was used only to express a conclusion reached by applying the tests of Rule 19(b).”). Therefore, this Court will 
continue to use the “indispensable” party language as contemplated by the prior iterations of Rule 19 and the 
continued use of the word by the federal courts. 
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be attained. If Millward and M&S were indispensable parties necessary for Wildlife LLC to join, 
then res judicata would not apply. See Bauscher Grain v. Nat’l Sur. Corp., 92 Idaho 229, 231, 
440 P.2d, 349, 351 (1968) (citing Costello v. United States, 365 U.S. 265 (1961)). 
Whether a party is “required” and subsequently “indispensable” is governed by I.R.C.P. 
19. Under that Rule, a party is required to be joined if, the party is subject to service and 
(A)   in that person’s absence, the court cannot accord complete relief 
among existing parties; or 
 (B)   that person claims an interest relating to the subject of the action and 
is so situated that disposing of the action in the person’s absence may: 
 (i)   as a practical matter impair or impede the person’s ability to 
protect the interest; or 
 (ii)  leave an existing party subject to a substantial risk of incurring 
double, multiple, or otherwise inconsistent obligations because of the 
interest. 
Contrary to Wildlife LLC’s argument, Millward and M&S were not required to be joined 
in the first action brought by Wildlife LLC even if it had asserted a fraud claim against the 
Beneficiaries at that time. Wildlife LLC now claims that it had been defrauded by Millward, 
M&S, and the Beneficiaries. While neither Millward nor M&S could have been joined as a party 
in the first action due to the stay in effect, it was not necessary to join them. Fraud is an action 
sounding in tort. Hegg v. I.R.S., 136 Idaho 61, 62, 28 P.3d 1004, 1005 (2001) (“Fraud is a form 
of intentional tort.”). “A victim of wrongdoing is not generally required to sue all the 
wrongdoers. Certainly not in a tort case, where the rule of joint and several liability reigns . . . .” 
Rhone-Poulenc Inc. v. Int’l Ins. Co., 71 F.3d 1299, 1301 (7th Cir. 1995).  
Because Wildlife LLC’s fraud action could have proceeded against the Beneficiaries in 
the first action, despite the absence of Millward and M&S, res judicata applies in this action. 
Wildlife LLC’s argument that the district court erred in finding res judicata applied is not 
correct. The district court properly concluded res judicata applied and therefore summary 
judgment regarding Wildlife LLC’s affirmative defenses and counterclaim was correct.  
B. 
The district court properly rejected Wildlife LLC’s statute of limitations defense. 
Wildlife LLC next argues that the five-year statute of limitations precludes the 
Beneficiaries’ claim. Idaho Code section 5-214A provides a five-year statute of limitations for 
the commencement of an action for the foreclosure of a mortgage. That statute reads:  
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An action for the foreclosure of a mortgage on real property must be 
commenced within five (5) years from the maturity date of the obligation or 
indebtedness secured by such mortgage. If the obligation or indebtedness secured 
by such mortgage does not state a maturity date, then the date of the accrual of the 
cause of action giving rise to the right to foreclose shall be deemed the date of 
maturity of such obligation or indebtedness. 
Idaho Code section 45-1515 adopts the same statute of limitations that applies to a mortgage 
foreclosure to the foreclosure of a deed of trust. That statute reads:  
The foreclosure of a trust deed by advertisement and sale shall be made 
and the foreclosure of a trust deed by judicial procedure shall be commenced 
within the time limited by the same period and according to the same provisions 
including extensions as provided by law for the foreclosure of a mortgage on real 
property. 
The deed of trust bore a maturity date of June 28, 2006. However, the Trust Deed Note 
was modified by Millward and M&S on March 3, 2008. More importantly, the applicable statute 
of limitations was restarted by a partial payment made on November 8, 2012, which extended the 
maturity date of the obligations secured by the deed of trust and the right to foreclose that deed 
of trust, for an additional five years.  
Idaho Code section 5-238 addresses the effect of a partial payment. That statute provides:  
No acknowledgment or promise is sufficient evidence of a new or 
continuing contract by which to take the case out of the operation of this chapter, 
unless the same is contained in some writing, signed by the party to be charged 
thereby; but any payment of principal or interest is equivalent to a new promise in 
writing, duly signed, to pay the residue of the debt.  
 (Italics added.) 
Payments of interest or principal serve to restart the statute of limitations on all 
installments on the note pursuant to Idaho Code section 5-238. Horkley v. Horkley, 144 Idaho 
879, 881, 173 P.3d 1138, 1140 (2007).  
There is no dispute that on November 8, 2012, the Beneficiaries received a partial 
payment on the Trust Deed Note and modification in the amount of $38,472.24 and applied that 
payment to the debt. As such, this partial payment restarted the five-year statute of limitations. 
The Complaint was filed within the five-year statute of limitations. The Beneficiaries’ Complaint 
to enforce the Trust Deed Note and modification and to foreclose the deed of trust was therefore 
timely.  
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C. 
The doctrine of res judicata does not prevent the Beneficiaries from bringing this 
foreclosure action. 
Wildlife LLC next argues that if it is barred from asserting fraud as a defense by res 
judicata, the Beneficiaries are likewise barred by res judicata from bringing their foreclosure 
action (as well as any action to enforce the underlying debt). In response, the Beneficiaries 
counter that they were prevented from bringing a foreclosure action or an action to enforce the 
underlying debt previously, because Millward and M&S were indispensable parties. The 
Beneficiaries thus contend that Millward and M&S could not have been joined because all 
actions against them were stayed due to the bankruptcy proceedings. 
When a claim could not have been brought due to of the absence of an indispensable 
party, res judicata does not bar a subsequent action as the claim could not have ended in a final 
judgment on the merits. See Bauscher Grain, 92 Idaho at 231, 440 P.2d, at 351 (citing Costello, 
365 U.S. 265).  
Determining whether a case should be dismissed because a party is indispensable under 
Rule 19 is a three-step process. See I.R.C.P. 19. First, the trial court must determine if the party 
is a required party under Rule 19(a)(1); second, the court must determine if joinder is feasible; if 
joinder is feasible, the court must join the party under Rule 19(a)(2); and third, if the court has 
found that the party is required and joinder is not feasible, the court must determine if that party 
is indispensable under Rule 19(b). If the party is indispensable, further proceedings are barred. 
I.R.C.P. 19. 
The district court’s determination of whether a party is required is discretionary “so long 
as the determination rests on factual grounds.” Ulrich, 155 Idaho at 252–53, 308 P.3d at 1235–36. 
Likewise, the district court’s determination of whether a party is indispensable is also discretionary. 
Id. However, “[w]hether an action is barred by res judicata is a question of law[;]” therefore, this 
court reviews this issue de novo. Berkshire Invs., 153 Idaho at 80, 278 P.3d at 950. 
The first inquiry concerns whether Millward and M&S were required parties under Rule 
19(a)(1). That Rule lists three scenarios by which a party is determined to be “required.” A party is 
required and must be joined if: 
(A) in that [party]’s absence, the court cannot accord complete relief among existing 
parties; or 
(B)   that [party] claims an interest relating to the subject of the action and is so 
situated that disposing of the action in the [party]’s absence may: 
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(i)   as a practical matter impair or impede the [party]’s ability to protect the 
interest; or 
(ii)  leave an existing party subject to a substantial risk of incurring double, 
multiple, or otherwise inconsistent obligations because of the interest. 
I.R.C.P. 19(a)(1).  
Here, Millward and M&S are the only parties contractually liable for the debt under the 
promissory note and its modification. M&S is the sole trustor of the deed of trust. Given that this 
obligation and these documents are central to the Beneficiaries’ claims, and that Millward and 
M&S were obligated to repay the debt under those documents, the district court could not have 
granted complete relief without the participation of Millward and M&S. Therefore, Millward and 
M&S are required parties under Rule 19(a)(1).  
Second, there is no dispute that Millward was in bankruptcy during the time of the first 
action and that M&S was listed as Millward’s personal property in the bankruptcy schedule. As a 
result, 11 U.S.C. § 362 stayed all actions against both Millward and M&S. Therefore, joinder of 
Millward and M&S was not feasible under Rule 19(a)(2).  
 
Because Millward and M&S were required parties and could not be joined, the Rule 19(b) 
factors must be examined to determine whether they were indispensable parties. Rule 19(b) states: 
If a [party] who is required to be joined if feasible cannot be joined, the court 
must determine whether, in equity and good conscience, the action should proceed 
among the existing parties or should be dismissed. The factors for the court to 
consider include: 
 (1)   the extent to which a judgment rendered in the [party]’s absence might 
prejudice that [party] or the existing parties; 
(2)   the extent to which any prejudice could be lessened or avoided by: 
(A)   protective provisions in the judgment; 
(B)   shaping the relief; or 
(C)   other measures; 
(3)   whether a judgment rendered in the [party]’s absence would be 
adequate; and 
(4)   whether the plaintiff would have an adequate remedy if the action were 
dismissed for nonjoinder. 
 
Any judgment declaring the amount of debt owed or to foreclose the deed of trust would 
have certainly prejudiced Millward’s and M&S’s ability to contest the debt or the validity of the 
documents. I.R.C.P. 19(b)(1). It is unlikely that a protective provision or specially shaped relief 
could have avoided this prejudice. I.R.C.P. 19(b)(2). Moreover, the Beneficiaries would (and did) 
have an adequate remedy if the action were dismissed, as the Beneficiaries could (and did) bring a 
12 
foreclosure action once Millward’s bankruptcy proceeding was finalized. I.R.C.P. 19(b)(4). As 
such, it appears that under the Rule 19(b) factors, Millward and M&S were indispensable parties. 
Therefore, claim preclusion (true res judicata) cannot bar the Beneficiaries’ claim seeking payment 
for the debt owed in this action. See Bauscher Grain, 92 Idaho at 231, 440 P.2d at 351.  
Likewise, issue preclusion cannot bar the issue of the amount of debt because that issue was 
not “actually litigated [ ]or decided” by the district court. Ticor Title, 144 Idaho at 124, 157 P.3d at 
618. Accordingly, Wildlife LLC’s res judicata defense was properly rejected by the district court. 
D. 
Because the Beneficiaries are the prevailing party, they are entitled to their attorney’s 
fees.  
The Beneficiaries request attorney’s fees pursuant to I.A.R. 41 and Idaho Code section 
12-120(3). Rule 41 requires a party to identify attorney’s fees as an issue in the “first appellate 
brief filed by the party . . . .” The Beneficiaries asserted a claim for attorney’s fees in their first 
brief. 
Idaho Code section 12-120(3) authorizes an award of attorney’s fees in a “commercial 
transaction.”  
Idaho Code § 12-120(3) provides for an award of attorney fees to the 
prevailing party in a civil action to recover on any commercial transaction. 
“Commercial transactions,” as defined in I.C. § 12-120(3), include all transactions 
except transactions for personal or household purposes. “Attorney’s fees are not 
appropriate under I.C. § 12-120(3) unless the commercial transaction is integral to 
the claim, and constitutes the basis upon which the party is attempting to 
recover.” Brower v. E.I. DuPont De Nemours & Co., 117 Idaho 780, 784, 792 
P.2d 345, 349 (1990). 
 
Sun Valley Hot Springs Ranch, Inc. v. Kelsey, 131 Idaho 657, 663, 962 P.2d 1041, 1047 (1998).  
The Beneficiaries are the prevailing parties in this action and meet the requirements of 
both Rule and statute. The Beneficiaries’ claim is based on the deed of trust, promissory note, 
and modification; thus, the underlying commercial transaction is integral to the Beneficiaries’ 
claim and constitutes the basis for judicial foreclosure. Id. Therefore, the Beneficiaries are 
awarded reasonable attorney’s fees under Section 12-120(3).8  
 
                                                 
8 The Beneficiaries in their complaint contend they are entitled to recover attorney’s fees incurred in the first action. 
However, the Beneficiaries stipulated in the first action that the parties were “to bear their own attorney fees and 
costs of suit.” Consequently, it appears they would be judicially estopped from recovering attorney’s fees incurred in 
the first action. 
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V.   CONCLUSION 
The district court correctly concluded Wildlife LLC was foreclosed from claiming fraud 
in this action by the application of res judicata. The district court also correctly rejected Wildlife 
LLC’s contention that the Beneficiaries’ claim to foreclose the deed of trust was barred by the 
statute of limitations. Finally, the district court correctly rejected Wildlife LLC’s argument that 
the Beneficiaries’ claim was barred by the application of res judicata. The judgment of the 
district court is affirmed.  
The Beneficiaries are awarded their reasonable attorney’s fees on appeal. 
Chief Justice BURDICK, Justices HORTON, BRODY and BEVAN, CONCUR.