Title: Dorsey v. Dorsey

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

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IN THE SUPREME COURT OF THE STATE OF IDAHO 
Docket Nos. 49342 & 49417 
 
THOMAS MATTHEW DORSEY, an 
individual, 
 
     Plaintiff-Counterdefendant- 
     Appellant, 
 
and 
 
SUNNYSLOPE LAND & LIVESTOCK, INC., 
an Idaho corporation, 
 
     Plaintiff-Appellant, 
 
v. 
 
THOMAS E. DORSEY, an individual, 
 
     Defendant-Counterclaimant- 
     Cross Defendant-Respondent, 
 
and 
 
DORSEY ORGANICS, LLC, an Idaho limited 
liability company, 
 
     Defendant-Counterclaimant- 
     Cross Claimant-Respondent, 
 
and 
 
DORSEY FARMS, INC., an Idaho 
corporation; THE DORSEY LIVING TRUST, 
an Idaho trust, 
 
     Defendants. 
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Boise, December 2022 Term 
 
Opinion Filed: August 30, 2023 
 
Melanie Gagnepain, Clerk 
 
THOMAS MATTHEW DORSEY, an 
individual, 
 
     Plaintiff-Counterdefendant- 
     Respondent, 
 
and 
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SUNNYSLOPE LAND & LIVESTOCK, INC., 
an Idaho corporation, 
 
     Plaintiff-Respondent, 
 
v. 
 
THOMAS E. DORSEY, an individual, 
 
     Defendant-Counterclaimant- 
     Cross Defendant-Appellant, 
 
and 
 
DORSEY ORGANICS, LLC, an Idaho limited 
liability company, 
 
     Defendant-Counterclaimant- 
     Cross Claimant, 
 
and 
 
DORSEY FARMS, INC., an Idaho 
corporation; THE DORSEY LIVING TRUST, 
an Idaho trust, 
 
     Defendants.  
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Appeal from the District Court of the Third Judicial District, State of Idaho, Canyon 
County. Thomas W. Whitney, District Judge.  
The judgment of the district court is vacated. The case is remanded for further 
proceedings. 
Arkoosh Law Offices, Boise, for Appellants/Respondents, Thomas Matthew 
Dorsey and Sunnyslope Land & Livestock, Inc. C. Tom Arkoosh argued.  
 
Dinius Law, Nampa, for Respondent/Cross-Appellant, Thomas Edwin Dorsey. 
Kevin Dinius argued. 
Kiiha and Associates PLLC, Nampa, for Respondent, Dorsey Organics, LLC. Jay 
Kiiha argued.  
 
_____________________ 
 
STEGNER, Justice. 
3 
In 2019, Matt Dorsey brought an action against his father, Tom Dorsey, seeking formal 
accounting, dissolution, and winding up of their joint dairy operation, Dorsey Organics, LLC. The 
district court appointed a Special Master to preside over the proceedings. The Special Master 
subsequently recommended to the district court that it grant partial summary judgment to Tom 
Dorsey on Counts Four (breach of contract) and Five (constructive fraud) of Matt Dorsey’s 
complaint. Without receiving a definitive ruling from the district court on the recommendations 
regarding the motions for summary judgment, the case then proceeded to a four-day hearing 
presided over by the Special Master, which resulted in the Special Master making Proposed 
Findings of Fact and Conclusions of Law. The district court adopted, with almost no changes, the 
Special Master’s Proposed Findings of Fact and Conclusions of Law, which relied upon the 
accounting of Tom Dorsey’s expert and rejected the opinions of Matt Dorsey’s expert. The district 
court then entered a judgment incorporating, with few changes, the Special Master’s Proposed 
Findings of Fact and Conclusions of Law. The district court also denied Tom Dorsey’s request for 
attorney fees under Idaho Code section 12-120(3).  
Matt Dorsey appeals, raising multiple issues, including: (1) whether the district court failed 
to properly review the evidence before accepting the findings of the Special Master; (2) whether a 
court may override the terms of a contract even though the contract’s terms arguably produce an 
inequitable result; (3) whether Tom Dorsey wrongfully dissociated from Dorsey Organics prior to 
its dissolution and the winding up of its affairs; and (4) whether summary judgment was properly 
granted on Counts Four and Five of the Third Amended Complaint. Tom Dorsey also appeals the 
district court’s denial of his request for attorney fees. This Court consolidated the two appeals.  
For the reasons discussed below, we vacate the judgment of the district court and remand 
the case for further proceedings consistent with this opinion.  
I. FACTUAL AND PROCEDURAL BACKGROUND 
Prior to this lawsuit, Thomas E. Dorsey (“Tom”) and his son, Thomas Matthew Dorsey 
(“Matt”), owned and managed separate, fully operational, dairy farms in Canyon County.1 Tom 
operated his dairy through his company, Dorsey Farms, Inc. (“Dorsey Farms”). The Dorsey Living 
Trust owned the real property on which Tom’s dairy was located. Tom and his wife, Dana, were 
 
1 Because the two principal parties share the surname Dorsey, Tom Dorsey and Matt Dorsey will be referred to by 
their first names. We will also refer to Tom’s and Matt’s wives (Dana and Krista, respectively) by their first names 
for the same reason. No disrespect is intended by doing so. 
4 
the trustees of The Dorsey Living Trust. Matt and his wife, Krista, conducted their dairy operations 
through their company, Sunnyslope Land & Livestock, Inc. (“Sunnyslope”).  
In 2014, Tom began to explore options for his retirement and asked Matt to come up with 
a plan for Matt to purchase Dorsey Farms, so Tom could retire. Matt retained the consulting and 
financial assistance of Lance Fenton, a Certified Public Accountant, with the accounting firm 
Cooper Norman, which specializes in accounting for dairies. The father and son held several 
meetings to discuss the best way to meet their mutual goals of transferring the real estate, 
ownership of the farming and dairy operations, as well as shifting management responsibility of 
Dorsey Farms from Tom to Matt. Tom and Dorsey Farms had outstanding bank loans that would 
need to be paid before Tom and Dana would have enough money to retire and complete the transfer 
of Dorsey Farms to Matt.  
The parties determined that the best way to achieve these goals would be to turn Dorsey 
Farms into an organic dairy. Because Tom had been operating a conventional dairy, the process to 
transition both his farm and his cows to a certified organic dairy would take several years. No 
written agreements describing the intent or purported agreements of the parties were prepared at 
that time. Discussions eventually faltered; however, Matt continued to explore the possibility of 
converting Dorsey Farms into an organic dairy. This process included not only acquiring and 
freshening2 new cows, but also converting and certifying the existing farmland to produce 
organic-qualified crops.  
The following year, the parties took some steps to convert Dorsey Farms into an organic 
dairy. This included both Tom and Matt acquiring organic feed, Tom preparing some of the fields 
that he farmed to be certified for raising organic crops, and Tom acquiring additional heifers to be 
freshened into organic cows. In April 2016, Matt organized Dorsey Organics, LLC (“Dorsey 
Organics”), with the knowledge and approval of Tom. There was no operating agreement in place 
at this time. However, Tom was aware that Matt had caused Dorsey Organics to be organized and 
gave his permission for Matt to begin operating the new company, with the assumption that Tom 
would also be a participating, minority member. Shortly thereafter, Matt entered into a supply 
 
2 As described in the Special Master’s Final Report, “ ‘[f]reshening’ is the process of breeding a heifer as soon as it is 
old enough, then caring for the animal through the birth of its first calf when it will begin producing milk. Once the 
animal drops a calf and begins producing milk, she is deemed ‘freshened.’ She is no longer a ‘heifer,’ but is a cow, 
ready to join a dairy’s production herd.”  
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agreement on behalf of Dorsey Organics with Sorrento Lactalis3 (“Sorrento”) to begin supplying 
it with organic milk produced by Dorsey Organics.  
Also in the spring of 2016, Tom sold his conventional dairy herd, and, with those proceeds, 
Matt purchased ninety head of organic dairy cows for Dorsey Organics. Tom’s conventional dairy 
herd had been previously encumbered with a loan from Columbia Bank. This existing 
encumbrance attached to the new organic herd. Matt was aware of the bank’s collateral interest in 
the new herd. Matt also independently purchased fifty-five head of organic dairy cows. Additional 
heifers were purchased to freshen, with Tom owning roughly 60% and Matt owning roughly 40% 
of the newly acquired heifers. These heifers were to be kept out of Dorsey Organics prior to 
freshening. Instead, each party was to bear the cost of feed and care until the freshened cows were 
transferred to Dorsey Organics’ operation. 
At this time, Tom verbally agreed to lease Dorsey Farms’ dairy facility to Matt, and the 
parties discussed a plan by which Tom would formally lease Dorsey Farms to Dorsey Organics. 
Then, once Tom and Dana were ready to retire, they would sell the real property to Matt and Krista. 
Yet again, the plan was not reduced to writing. Matt claimed before the Special Master, and again 
on appeal, that in January 2017, the parties reached a final agreement for Matt to acquire Tom’s 
farming interests and dairy facility. This purported agreement was reduced to writing and has been 
referred to as “Tom’s Option.” However, the parties never signed Tom’s Option. “Matt contends 
that Tom said his signature was not needed, as his word was his bond and if he said he would do 
something, he would do it.” Tom’s Option provided, in part, that ownership of Dorsey Organics 
would be distributed with 81.0% to Matt and 19.0% to Tom and that Matt and Tom would be 
compensated at $35 per hour for work performed for Dorsey Organics.  
In February 2017, the parties finally executed a written operating agreement for Dorsey 
Organics (“the Operating Agreement”). The Operating Agreement was backdated to 
January 1, 2016, “to cover the entire period from the time the parties actually began operations 
under the limited liability company.” However, a few months later, in the summer of 2017, the 
parties were unable to agree to the terms of Matt’s acquisition of Tom’s dairy facility. The primary 
stumbling block for Tom and Matt moving forward with their ultimate plan was the purchase price 
for the sale of Dorsey Farms to Matt. The appraised value of Tom’s real property came in lower 
 
3 Sorrento Lactalis is an international “dairy company” with branches in several countries. Our History, LACTALIS: 
AM. GRP., https://lactalisamericangroup.com/history/ (last visited August 14, 2023).   
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than Tom expected, and he was unwilling to sell to Matt based on the price arrived at by the 
appraiser. Matt was not willing to pay anything more than the appraised value of the property. The 
lack of a written agreement between Tom and Matt was problematic because Sorrento required 
Dorsey Organics to have a formal, written lease for a dairy facility for Sorrento to continue to 
contract with Dorsey Organics.  
Throughout the summer of 2017, Matt and Tom continued to discuss the sale of Tom’s real 
estate, but the terms of an agreement were never finalized or reduced to a writing. Tensions 
continued to escalate regarding the transition. The strain apparently came to a head in 2018 when 
Tom gave Matt a written demand which read: “PAY DORSEY FARMS $541000.00 [sic] ON 
CATTLE OR CATTLE WILL BE REMOVED AND I WILL NO LONGER BE PART OF 
DORSEY ORGANIC [sic][.]” (Capitalization in original.) Neither Matt nor Dorsey Organics paid 
Tom the $541,000 he demanded. Unable to reach a deal with Tom to purchase Dorsey Farms or to 
achieve a long-term agreement with Sorrento, Matt arranged for the sale of the entire herd of 
organic cows in March 2018. Matt claims that this sale required the dissolution and winding up of 
Dorsey Organics, a process in which Tom purportedly refused to participate. The sale of the 
organic herd precipitated this litigation.  
Matt filed a complaint against Tom and Dorsey Organics in August 2019, alleging that 
Tom had failed to cooperate in the winding up of Dorsey Organics despite the Operating 
Agreement’s requirement to do so. Matt is the principal plaintiff in this case, but his farming 
operation, Sunnyslope, is also a named plaintiff. In addition to Tom, other defendants include Tom 
and Dana’s family trust and their farming operation, Dorsey Farms. Dorsey Organics, the LLC 
created by Matt and Tom, is also listed as a separate defendant. 
Matt amended his complaint several times. By the time of the hearing before the Special 
Master, Matt had asserted claims against Tom and the other defendants for: 
1) Accounting and dissolution of Dorsey Organics; 
2) Breach of contract against Tom for failing to comply with the winding-up agreement; 
3) Breach of contract against Tom for breaching the Operating Agreement of Dorsey 
Organics;  
4) Breach of contract against Tom, Dana, and their trust for their refusal to sell their real 
property (i.e., Dorsey Farms); 
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5) Constructive fraud and breach of fiduciary duty against Tom for failing to sell Dorsey 
Farms after saying he would; 
6) Wrongful dissociation against Tom;  
7) Breaches of fiduciary duty and the duty of loyalty against Tom by Matt, “alleging that 
Tom Dorsey owed a ‘fiduciary duty and duty of loyalty’ to Matt Dorsey as the 
managing member of Dorsey Organics”; 
8) A judgment declaring that Matt acted pursuant to Idaho Code section 10-1201 as a 
managing member of Dorsey Organics; 
9) Breach of contract and non-payment of goods by Sunnyslope against Dorsey Organics 
for agricultural commodities sold and delivered; and 
10)  Attorney fees under Idaho Code sections 10-1210, 12-120, and 12-131.4  
In response, Tom generally denied the allegations Matt brought in his amended complaint 
but also brought six counterclaims, as follows: 
1) Damages for Matt’s breach of the Dorsey Organics’ Operating Agreement; 
2) Damages for Matt’s breach of the implied covenant of good faith and fair dealing; 
3) Damages for Matt’s breach of fiduciary duty;  
4) Damages for Matt’s conversion;  
5) Partition of a parcel alleged to be jointly owned by Tom and Matt; and  
6) Declaration that Matt’s withdrawals of Dorsey Organics’ capital violated Idaho Code 
sections 30-25-405 and 30-25-406. 
 
Given the complexities of the case and the need for a detailed and specialized accounting 
to wind up the affairs of Dorsey Organics, the district court appointed D. Duff McKee, a retired 
Idaho district judge, as special master (“the Special Master”). The Special Master first heard 
arguments on Tom’s motion for partial summary judgment in August 2020 involving Matt’s fourth 
and fifth causes of action—whether Tom breached a contract for the sale of real property and, in 
so doing, whether he committed constructive fraud. The Special Master recommended that the 
district court grant partial summary judgment in Tom’s favor on both counts.  
 
4 Matt requested attorney fees pursuant to Idaho Code section 12-131. However, section 12-131 does not exist in 
Title 12. As a result, it appears that Matt intended to request attorney fees under a general provision provided in Idaho 
Code section 12-121. 
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While the record does not include any analysis by the district court regarding the Special 
Master’s recommendations involving partial summary judgment, the district court’s Conclusions 
of Law referred to the summary judgment issues as follows: 
8. Summary judgment having been granted [by the Special Master] to the 
defendants on the issue of the breach of contract on sale of real estate, and for any 
claim of fraud thereunder, it was not a breach of any agreement nor was it wrongful 
conduct for Tom to fail to agree to enter into a real estate contract [sic] any person 
or entity. 
. . . . 
10. The plaintiffs have failed to prove that any defendant owed a fiduciary duty to 
any plaintiff. Tom Dorsey did not owe any fiduciary duty to anyone under the 
operating agreement of Dorsey Organics.  
The district court’s Judgment also dismissed “Plaintiffs’ Fourth and Fifth Claims for Relief in the 
Third Amended Complaint” with prejudice; however, it did so without any substantive analysis. 
Following a four-day hearing, the Special Master issued his Final Report With Findings of 
Fact, Conclusions of Law and Recommendations for Entry of Judgment, (“the Special Master’s 
Final Report”), in which the Special Master recommended a resolution of the remaining claims. 
Much of the Special Master’s Proposed Findings of Fact and Conclusions of Law, and the nearly 
identical findings which were adopted by the district court, concern substantive variations in the 
accounting approaches of Tom’s and Matt’s expert accountants (Trevor Gunstream and Lance 
Fenton, respectively) involving dissolution and winding up of Dorsey Organics. The Special 
Master relied almost exclusively on the accounting opinions and methodology of Gunstream. The 
district court concluded that the Special Master’s Proposed Findings of Fact and Conclusions of 
Law were not clearly erroneous and adopted virtually all of the Proposed Findings of Fact and 
Conclusions of Law of the Special Master, with only one alteration regarding the sale of the Holton 
Place, after Tom’s counterclaim for partition had apparently been dismissed.5 As a result, the 
district court ordered Tom and Matt to pay their respective debts to Dorsey Organics, Dorsey 
Organics to settle its liabilities, and for the remaining claims to be dismissed. The district court 
also denied Tom’s request for attorney fees. Matt and Tom each appealed.  
 
 
5 The Holton Place is a parcel of real property located in Canyon County that was owned equally by Tom and Matt 
and was farmed exclusively by Matt. The parcel was sold by stipulation of Tom and Matt during the litigation; 
however, the parties never provided the stipulation to the district court. Accordingly, the district court considered 
Tom’s counterclaim to partition the Holton Place to be dismissed without prejudice.  
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II. ISSUES ON APPEAL 
1. Whether the district court erred in its method of adopting the Special Master’s Proposed 
Findings of Fact and Conclusions of Law. 
2. Whether the district court erred by failing to follow the terms of the Operating Agreement 
and Tom’s Option.  
3. Whether the district court erred when it required Matt to prove fraud regarding Tom’s 
proffered weight tickets.  
4. Whether the district court erred when it concluded that Tom was entitled to credit for half 
of the crops grown on the Holton Place. 
5. Whether the district court erred when it concluded that Dorsey Farms did not owe 
additional money to Sunnyslope for goods sold and delivered.  
6. Whether the district court erred when it applied Idaho Code section 30-25-405 to its 
analysis of Matt’s draws from Dorsey Organics.  
7. Whether the district court erred when it concluded that Tom had not wrongfully dissociated 
from Dorsey Organics.  
8. Whether the district court erred when it denied attorney fees to Tom.  
9. Whether either party is entitled to attorney fees on appeal. 
III. STANDARDS OF REVIEW 
The district court may appoint a special master in any general adjudication 
and shall specify the special master’s powers and duties in the order of reference. 
Subcases referred to a special master are governed by the [Idaho Rules of Civil 
Procedure] and the Idaho Rules of Evidence . . . . 
The special master’s findings which the court adopts are considered to be 
the findings of the court. The special master’s conclusions of law are not binding 
upon the district court, although they are expected to be persuasive. To the degree 
that the district court adopts the special master’s conclusions of law, they are also 
the conclusions of the court. 
The question of compliance with the rules of procedure and evidence is one 
of law. This Court freely reviews conclusions of law. 
In re: SRBA Case No. 39576 Subcase Nos. 65-23531 and 65-23532, 163 Idaho 144, 149, 408 P.3d 
899, 904 (2017) (internal citation omitted). 
The district court [is] required to accept the master’s findings of fact unless they 
[are] clearly erroneous. . . . A trial court’s findings of fact will not be set aside on 
appeal unless they are clearly erroneous. On appeal, we do not judge the credibility 
of the witnesses or the weight of the evidence. We only examine the record to 
determine if the factual findings are supported by evidence that a reasonable trier 
of fact would accept and rely upon in determining whether a disputed issue of fact 
has been proved.  
10 
City of Pocatello v. Idaho, 152 Idaho 830, 840, 275 P.3d 845, 855 (2012) (internal citations 
omitted). 
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). 
Partout v. Harper, 145 Idaho 683, 685–86, 183 P.3d 771, 773–74 (2008). 
This [C]ourt uses an abuse of discretion standard to review a district court’s 
decision to award attorney’s fees. Yet, “when an award of attorney fees depends on 
the interpretation of a statute, the standard of review for statutory interpretation 
applies,” which is “a question of law over which this Court exercises free review.”  
Knudsen v. J.R. Simplot Co., 168 Idaho 256, 265, 483 P.3d 313, 322 (2021) (internal citations 
omitted). 
IV. ANALYSIS 
A. The district court erred in its method of adopting the Special Master’s Proposed 
Findings of Fact and Conclusions of Law.  
Matt first challenges the district court’s wholesale adoption of the Special Master’s 
Proposed Findings of Fact and Conclusions of Law. Matt argues that the district court, not the 
parties, has the obligation to determine whether any of the Special Master’s Proposed Factual 
Findings were clearly erroneous. Tom argues the opposite—that “the district court’s review is 
focused on the findings of fact the objecting party identifies and/or raises[.]” (Italics added.)  
The district court explained that it interpreted Idaho Rule of Civil Procedure 53 to impose 
an obligation to adopt the Special Master’s Proposed Findings of Fact unless those findings were 
clearly erroneous. However, the district court continued: 
So[,] what I did not do was re-read the entire transcript of the four-day 
proceedings and look for errors by the special master. And I didn’t do that for a 
couple of reasons. One is that generally in our law, in Idaho law, reviewing courts 
don’t simply take it upon itself, the court—the reviewing court doesn’t take it upon 
itself to review the record, reconsider the record as a whole searching for error by 
a lower court or in this case searching for error by the special master. So[,] I did not 
do that. I did not reread the transcript in an effort to myself find what I think might 
11 
have been clearly erroneous by the special master. And I did not for that reason. I 
do not believe that’s the function—that’s the basic function of our system of juris 
prudence [sic] in the State of Idaho.  
Additionally, and related and way more importantly, if I were to do that—
if I were to say, okay, I see the special master’s report, and I will reread it start to 
finish, or I will read it rather start to finish and re-weigh the evidence on the whole 
transcripts that I have and look for what I think is clearly erroneous, if I were to do 
that I would in essence be taking sides. Because here we have one party who has 
said under the rule I get to object to the special master’s findings of fact. And 
certainly Mr. Arkoosh and Ms. Dresslar have done that on behalf of the plaintiff 
Matt. So[,] they have decided what on behalf of Matt are they [sic] going to make 
objections to, and then it’s the court’s obligation to rule on that.  
Mr. Dinius has not done that. Mr. Kiiha has not done that either. But if I 
were to undertake the task of reviewing the record on my own to decide what I 
think is clearly erroneous, then I would in essence be deciding for the parties this 
is the objection I think your lawyer should have made, and I will now grant it. It 
would be taking sides in the litigation. And so[,] I don’t view the rule as requiring 
or even allowing the district court to do that. Rather, I read the rule taking the 
entirety of Rule 53(j) as requiring the parties to state their objections and then the 
court to rule on those objections. And so that is what I have done here. I have 
considered the objections filed by Mr. Arkoosh and Ms. Dresslar on behalf of Matt, 
and then I will rule on those objections.  
 
. . . . 
But I understand that in any way that I’m adopting the master’s findings I 
understand that they are the court’s findings once adopted. I understand that. But, 
again, in terms of determining what are the findings I think it’s only fair to both 
sides, and I think it’s the best thing for the court to do, to layout [sic] exactly what 
I have done in terms of considering that.  
The district court then went on to address Matt’s specific objections to the Special Master’s 
Proposed Factual Findings, but it went no further.  
 
We find Matt’s argument more persuasive. “The district court may appoint a special master 
in any general adjudication and shall specify the special master’s powers and duties in the order of 
reference.” United States v. Black Canyon Irrigation Dist., 163 Idaho 54, 59, 408 P.3d 52, 57 
(2017) (internal citation omitted). “The purpose of a master is to assist the district court in 
obtaining facts where complicated issues or exceptional conditions require it. The appointment of 
a master does not displace the district court’s role as the ultimate trier of fact.” Seccombe v. Weeks, 
115 Idaho 433, 435, 767 P.2d 276, 278 (Ct. App. 1989), overruled on other grounds by Rodriguez 
v. Oakley Valley Stone, Inc., 120 Idaho 370, 378, 816 P.2d 326, 334 (1991) (internal citations 
omitted).  
12 
The district court’s review of the record requires more demanding scrutiny of the special 
master’s findings than was employed to determine whether the special master’s recommendations 
are supported by substantial and competent evidence.  
The appointment of a master does not displace the district court’s role as the 
ultimate trier of fact. Under I.R.C.P. 53(e)(2), the district court is mandated to 
accept the master’s findings of fact unless clearly erroneous; consequently, the trial 
court must independently review the evidence to determine whether the findings 
were supported by substantial evidence.  
Seccombe, 115 Idaho at 435, 767 P.2d at 278 (italics added). The law requires a trial court to 
conduct a more “careful review” of the record when evaluating the recommendations of a special 
master because “the trial court must independently review the evidence to determine whether the 
findings were supported by substantial evidence.” McCray v. Rosenkrance, 135 Idaho 509, 515, 
20 P.3d 693, 699 (2001) (quoting Seccombe, 115 Idaho at 435, 767 P.2d at 278) (internal quotation 
marks omitted). 
 
Idaho Rule of Civil Procedure 53(j) states: 
[T]he court must accept the master’s findings of fact unless clearly erroneous. 
Within 14 days after being served with notice of the filing of the report[,] any party 
may file and serve on the other parties written objections to the report. Any party 
may file a motion for action on the report. The court, after hearing, may adopt, 
modify or reject the report in whole or in part, may receive further evidence, or may 
resubmit the matter to the master with instructions. 
 
Though the rule does not specify how a district court must review the Special Master’s 
findings, other cases have considered similar issues. Both parties here rely on Rodriguez v. Oakley 
Valley Stone, Inc., 120 Idaho 370, 816 P.2d 326 (1991). In Oakley Valley, a special master was 
appointed and his “findings and conclusions were substantially adopted by the court with some 
alterations.” Id. at 374, 816 P.2d at 330. On appeal, Oakley Valley Stone argued that the district 
court’s adoption of the special master’s findings and conclusions constituted reversible error 
because “there was insufficient evidence that the court independently reviewed the record” prior 
to adopting the special master’s report. Id. at 378, 816 P.2d at 334. This Court disagreed with 
Oakley Valley Stone and found the district court had met its obligation “to determine if the findings 
of fact are clearly erroneous” because the district court had reviewed “the documents, affidavits 
and other papers” and “heard objections to the findings and made a number of corrections” to the 
special master’s report. Id. (internal quotation marks omitted).  
13 
 
This Court affirmed a similar procedure used by a district court for adopting a special 
master’s report in McCray. 135 Idaho at 515–16, 20 P.3d at 699–700. There, this Court held that 
even if the district court did not provide a detailed explanation of its adoptions of the special 
master’s report, its decision would not be overturned if it explained that it had reviewed the record 
and found the special master’s findings to be supported by substantial and competent evidence. Id.  
 
At first blush, McCray appears to conflate the obligations of the district court in reviewing 
the report of a special master, as articulated in Oakley Valley, with the duties of the district court 
when it acts in its appellate capacity reviewing a magistrate court’s decision. However, McCray 
still requires a district court to “make its own careful review [of the record] to determine if the 
findings of fact are clearly erroneous[.]” 135 Idaho at 515, 20 P.3d at 699 (internal citation 
omitted). This procedure comports with the interpretation of the federal counterpart of Idaho Rule 
of Civil Procedure 53: “The Advisory Committee [for the Federal Rules of Civil Procedure] stated 
in 2003 that a Rule 53(f) review may be more searching than the review that an appellate court 
makes of a trial court.” 9C CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE 
AND PROCEDURE § 2612 (3d ed. 2023) (internal quotation marks and citation omitted).  
 
By its own admission, the district court acknowledged that it had not reviewed the 
transcript of the proceedings before the Special Master. The district court is required to “make its 
own careful review” of the record to determine whether the recommendations of a special master 
are clearly erroneous. McCray, 135 Idaho at 515, 20 P.3d at 699; see also Seccombe, 115 Idaho at 
435, 767 P.2d at 278. The district court’s review is not limited to the parties’ objections to the 
special master’s report. The district court has a heightened obligation to review a special master’s 
report as compared to its review of a magistrate court’s findings of fact on an appeal. “The 
appointment of a master does not displace the district court’s role as the ultimate trier of fact.” 
Seccombe, 115 Idaho at 435, 767 P.2d at 278. As a result, we evaluate the findings of fact and 
conclusions of law adopted by the district court. 
In this case, the district court erred when it limited its review to the objections filed by the 
parties. “Because the trial court is the final arbiter of all the issues, the master’s report does not 
stand automatically approved in the absence of an objection. Thus, objections to findings and 
conclusions of the master are not required to preserve an issue for appeal.” Seccombe, 115 Idaho 
at 435, 767 P.2d at 278 (internal citation omitted). We hold that the district court in this case erred 
in three ways: first, in its failure to meet the heightened obligation when reviewing the record; 
14 
second, in its conclusion that the Special Master’s Proposed Factual Findings were not clearly 
erroneous; and third, in its wholesale adoption of them. 
 
In this case, the district court appeared to take the role of an appellate court when it said: 
“[T]he reviewing court doesn’t take it upon itself to review the record or re-scrutinize the record, 
reconsider the record as a whole . . . searching for error by the special master.” However, as 
explained by Wright and Miller and Idaho’s jurisprudence, the district court does not act as an 
appellate court when reviewing the record to determine whether the recommendations of a special 
master are clearly erroneous. 9C CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL 
PRACTICE AND PROCEDURE § 2612 (3d ed. 2023); Seccombe, 115 Idaho at 435, 767 P.2d at 978.  
We recognize that the language of Idaho Rule of Civil Procedure 53(f) can be confusing 
when interpreted in this manner because it requires affirmation of the special master’s factual 
findings unless clearly erroneous—arguably the same standard of review used for appellate review 
of factual findings. Compare I.R.C.P. 52(a)(7) (“Findings of fact . . . must not be set aside unless 
clearly erroneous.”), with I.R.C.P. 53(j) (“[T]he court must accept the master’s findings of fact 
unless clearly erroneous.”). However, given our jurisprudence, along with guidance from the 
analogous federal procedure, we draw a distinction between Idaho Rules of Civil Procedure 52 
and 53.    
A district court’s obligation upon review of a special master’s recommendations is to 
conduct an “independent” and “careful review” of the record in addition to objections brought to 
its attention by counsel. Here, the district court erred when it believed its role to be that of an 
appellate court. The district court’s method of adopting the Special Master’s Proposed Findings of 
Fact and Conclusions of Law was incorrect and inadequate. Nevertheless, we now turn to the 
additional purported errors made by the district court in its adoption of the Special Master’s 
Proposed Findings of Fact and Conclusions of Law that Matt argues were clearly erroneous. When 
necessary, this Court may give additional direction to the district court to assist it on remand. 
Urrutia v. Blaine County, 134 Idaho 353, 359, 2 P.3d 738, 744 (2000). In Urrutia, this Court found 
one issue raised on appeal to be dispositive, yet “address[ed] the remainder of the arguments 
presented . . . for the purpose of providing guidance on remand.” Id. We find it necessary to do the 
same here to assist the district court upon remand. 
 
15 
B. The district court erred when it failed to follow the terms of the Operating 
Agreement and to adequately address Tom’s Option.  
In their briefing before this Court, both Matt and Tom make several arguments that can be 
summarized as contending the district court erred in its interpretation of the Operating Agreement 
and Tom’s Option.6 The district court couched its adoption of the Special Master’s Proposed 
Findings of Fact and Conclusions of Law in terms of an attempt to follow the Operating Agreement 
and Tom’s Option. However, the district court never analyzed whether the agreements in question 
were ambiguous or whether the parties intended to be bound by the documents. Further, neither 
party specifically argues whether the Operating Agreement or Tom’s Option are ambiguous.  
In order to resolve the dispute between Matt and Tom, we must decide whether these 
documents are ambiguous. Kunz v. Nield, Inc., 162 Idaho 432, 438–39, 398 P.3d 165, 171–72 
(2017). If a contract is unambiguous, i.e., its interpretation is not subject to two different reasonable 
constructions, its interpretation presents a question of law for the court to enforce. Id. A 
determination of ambiguity is a question of law, while the interpretation of an ambiguous term is 
a question of fact which must be resolved by the finder of fact. Id.  
We conclude the district court erred when it failed to first analyze whether the contracts 
were ambiguous before it engaged in the process of delving into the experts’ interpretation of the 
documents. We exercise free review over this question of law. Rhead v. Hartford Ins. Co. of the 
Midwest, 135 Idaho 446, 448, 19 P.3d 760, 762 (2001). We must make this determination in order 
to resolve the appeal challenging the district court’s analysis of the terms within the contracts. 
Kunz, 162 Idaho at 439, 398 P.3d at 172. Therefore, we will first determine whether the Operating 
Agreement and Tom’s Option are ambiguous.   
1. The Operating Agreement is unambiguous.  
Matt argues on appeal that the district court erred when it adopted the accounting 
methodology of Gunstream because Gunstream’s accounting deviated from the express terms of 
the Operating Agreement. Matt contends that the language of the Operating Agreement is 
unambiguous, and the district court erred in deviating from its language. Tom argues that the 
 
6 Throughout the briefing, the parties have presented arguments challenging and endorsing the Special Master’s 
Proposed Findings of Fact and Conclusions of Law, as opposed to those made by the district court, even though the 
district court adopted virtually all the findings of fact and conclusions of law proposed by the Special Master. 
However, as described above, our standard of review requires us to review the findings of the district court, even if 
the findings are exactly as proposed by the Special Master, because the district court remains the ultimate finder of 
fact even when a special master has been employed.  
16 
district court’s adoption of Gunstream’s methodology was not clearly erroneous because Matt 
accepted the need for detailed accounting experts when he stipulated to the appointment of a 
Special Master. 
Ambiguity of the Operating Agreement was not briefed on appeal. Instead, the parties 
dispute the district court’s interpretation of the terms within the Operating Agreement. As noted, 
the district court largely adopted the accounting methodology of Gunstream, Tom’s expert 
accountant. In doing so, the district court explained that it was attempting to “interpret[] [the 
Operating Agreement] as a whole[,]” rather than adopting the accounting that followed 
Section IX.4, which details the accounting procedures in the event of a dissolution, and 
Section II.1.2, which explains how capital contributions are to be calculated. The district court 
explained that the purpose of this approach was to reach a more equitable result.  
“Operating agreements are contracts.” Nelsen v. Nelsen, 170 Idaho 102, 134, 508 P.3d 301, 
333 (2022) (internal citation omitted). A contract “is ambiguous when there are two different, 
reasonable interpretations of the language.” Id. (internal quotation marks and citation omitted). “In 
the absence of ambiguity, the document must be construed in its plain, ordinary and proper 
sense[.]” Knipe Land Co. v. Robertson, 151 Idaho 449, 454, 259 P.3d 595, 600 (2011) (internal 
citation omitted).  
The Operating Agreement is unambiguous, and, as a result, the district court should have 
enforced its terms. In the presence of an operating agreement, neither members nor special 
masters are permitted to substitute their preferences for the agreed-upon terms in the 
agreement, nor do “[c]ourts . . . possess the roving power to rewrite contracts in order to make 
them more equitable.” Shawver v. Huckleberry Estates, LLC, 140 Idaho 354, 362, 93 P.3d 685, 
693 (2004) (internal quotation marks and citation omitted). Unfortunately, that is what 
happened here. 
We hold that the district court erred in two respects. First, as discussed above, the district 
court had an initial obligation to determine whether the Operating Agreement was ambiguous. It 
failed to undertake that analysis. Without an initial determination that the Operating Agreement is 
ambiguous, it was improper for the district court to deviate from the terms used within it or to 
justify its ultimate failure to apply the Operating Agreement. Second, the district court erred when 
it adopted Gunstream’s accounting methodology, which failed to follow Sections IX.4 and II.1.2 
of the Operating Agreement.  
17 
In this case, the district court’s adoption of Gunstream’s methodology ran counter to 
the explicit, unambiguous terms of the Operating Agreement. Matt and Tom agreed that they 
would comply with the specific provisions of the Operating Agreement for the dissolution 
accounting and procedures involving additional capital contributions. Section IX.4 details the 
accounting timelines necessary for the dissolution of Dorsey Organics, and Section II.1.2 covers 
the steps the Members of Dorsey Organics were required to take before being credited with 
additional capital contributions. When Matt and Tom signed the Operating Agreement, they agreed 
to its terms and became obligated to comply with its provisions. The district court rejected the 
plain language of the Operating Agreement when it adopted Gunstream’s accounting methodology 
and, in effect, rewrote the Operating Agreement in what was described as an attempt to achieve a 
more equitable result. The district court concluded that Gunstream’s methodology was preferable 
to resolve the problems created by inconsistent or nonexistent recordkeeping by Dorsey Organics. 
However, the district court erred when it failed to follow the plain language of the Operating 
Agreement. Because the Operating Agreement is unambiguous, we need not analyze the parties’ 
intent; we simply apply the Operating Agreement as written. Kunz, 162 Idaho at 439, 398 P.3d at 
172. 
There are two substantive issues on appeal that involve a plain reading of the Operating 
Agreement: heifer ownership and startup costs. Each is discussed in turn. 
a. Heifer Ownership 
The accounting disputes in this case relate primarily to whether Dorsey Organics owned, 
and was, therefore, financially responsible for, certain heifers prior to their freshening, which 
would result in a much different cost attributable to Tom and Matt. The district court concluded 
that there “was [not] an agreement between the parties on how the heifers were to be accounted 
for[,]” and the different proposals of Tom and Matt resulted in large discrepancies in how each 
party was treated. In adopting Gunstream’s opinions, the district court concluded that “the heifers 
acquired by the parties should be taken onto the company books at acquisition cost, with care and 
feeding of the heifer being the responsibility of Dorsey Organics[,]” as opposed to being attributed 
individually to Tom and Matt with each bearing the cost of care and feeding of their own heifers 
until those heifers were freshened and then transferred to Dorsey Organics.  
Matt and Dorsey Organics argue that this accounting was improper because previous 
accounting done by Dorsey Organics had treated heifers as the responsibility of Dorsey Organics 
18 
only after their freshening. Section IX.4 of the Operating Agreement requires the dissolution 
accounting to be made from “the last previous accounting[,]” which occurred in December 2017 
during the preparation of Dorsey Organics’ tax returns. Matt and Dorsey Organics argue that this 
“last previous accounting” is the one that should be used for dissolution and winding up affairs, 
not the new methodology provided by Gunstream. Matt and Dorsey Organics contend that this 
improper accounting treats Matt’s and Tom’s respective heifer contributions incorrectly and in 
Tom’s favor. Matt maintains Gunstream’s accounting treated the freshening of heifers differently 
than what was called for in the Operating Agreement. Tom argues in response that it is 
unreasonable to limit the district court to the accounting performed by Cooper Norman prior to the 
current litigation based on the complex and multi-faceted expenses in running not only a single 
conventional dairy, but also in transitioning to the joint, organic operation.  
Section IX.4 reads in full: 
IX.4 Winding Up, Liquidation and Distribution of Assets.  
Upon dissolution, an accounting shall be made of the accounts of the 
Company and of the Company’s assets, liabilities and operations, from the date of 
the last previous accounting until the date of dissolution. Subject to the provisions 
of the next section below, the Manager shall immediately proceed to wind up the 
affairs of the Company. Distribution of assets and allocation of profits and losses 
shall be in accordance with Article VII hereof. 
Nothing in this section of the Operating Agreement suggests that the parties intended for 
the accounting to occur in the way suggested by Gunstream, in which the heifers would be the 
financial responsibility of Dorsey Organics prior to their freshening. The district court’s refusal to 
follow the explicit language “from the date of the last previous accounting until the date of 
dissolution” stands in direct contradiction to the plain language of the Operating Agreement. 
Further, prior accountings completed for Dorsey Organics had treated heifers as the responsibility 
of Dorsey Organics only after their freshening. Cooper Norman, Dorsey Organics’ accounting 
firm, prepared the last previous accounting prior to dissolution in December 2017 when it prepared 
an accounting that appeared to have been used by all parties for their respective tax returns for the 
2017 tax year. Based on the plain language of the Operating Agreement, Cooper Norman’s 
accounting from December 2017 should have been used as the basis for the dissolution accounting. 
Both Tom and Matt agreed to go into business together under the name Dorsey Organics, 
LLC, and mutually approved the LLC’s Operating Agreement. As explained above, the district 
court erred when it did not follow the plain language of the Operating Agreement. Tom has not 
19 
provided any reasonable argument that justifies rejection of the parties’ agreement in the way it 
was rejected by Gunstream and adopted by the district court. As a result, the district court erred 
when it failed to enforce the Operating Agreement and reached a result at odds with it.  
b. Startup Costs 
Matt next argues that, when the district court adopted Gunstream’s accounting, it 
incorrectly apportioned startup costs to Tom, which benefited Tom financially and which were 
purportedly incurred from April through December 2016. The district court concluded that 
Gunstream’s methodology provided the best summation of the reimbursements owed to Tom. 
According to Matt, attributing these startup costs to Tom was inappropriate for several 
reasons. First, the parties’ initial capital contributions were established and memorialized in the 
capitalization recognition made effective as of January 1, 2016, the date on which the Operating 
Agreement retroactively came into effect. Matt relies on Section II.1.2 of the Operating 
Agreement, which does not allow additional capital contributions absent “approval by the holder 
or holders of a majority of Ownership Percentage Interests[.]” As pointed out by Matt, the 
Operating Agreement prevents Tom from obtaining reimbursement for contributions to the LLC’s 
capital account that predated the creation of the LLC and the Operating Agreement absent Matt’s 
approval. Matt also contends the additional expenses claimed by Tom were all associated with 
Tom’s farming, an activity in which Dorsey Organics did not participate. Tom again asserts that 
the district court was well within its bounds to review the accounting methodologies from both 
parties’ experts to determine what were and were not proper awards.  
We conclude the district court erred in awarding Tom startup costs that were added to his 
capital contributions account in a way that was contrary to the plain language of the Operating 
Agreement. The district court erred when it adopted Gunstream’s methodology, which awarded 
Tom an improper capital contribution. As explained above, the district court was not at liberty to 
rewrite the Operating Agreement. In addition to ignoring the Operating Agreement, the district 
court’s credit to Tom for these additional startup costs was unsupported by the record. Fenton, 
Matt’s expert, testified as follows: 
We[7] have gone through Tom’s new claimed startup costs several times since he 
left the company and have identified those costs as either accounted for, paid to 
Tom, or as expenses that were spent for Tom personally. For instance, he claims 
 
7 It is unclear from the record whether Fenton’s use of the pronoun “we” in his testimony refers to Matt and himself, 
other members of the Cooper Norman staff, or all of the above. However, since Fenton and Matt went over the startup 
costs after Tom left Dorsey Organics, it can be assumed that “we” likely refers to, at a minimum, Fenton and Matt. 
20 
the expense of irrigation equipment. He kept and sold that irrigation equipment with 
his real estate. The same goes for his farming expenses, for which he would have 
been paid when Dorsey Organics bought his feed. For the most part, it was quite 
clear Tom was claiming nearly every business expense that passed through his 
hands whether it was for Dorsey Organics, or he had already been repaid for the 
expense, or whether it was for his personal farming. 
The district court did not make any explicit findings questioning Fenton’s testimony, other than to 
reject it outright without comment or analysis. However, the district court adopted Gunstream’s 
methodology on this matter in the same fashion that it used Gunstream’s methodology to determine 
the parties’ ownership interests in the heifers, which resulted in a rejection of the Operating 
Agreement in order to reach a result that was perceived as “fair” to the parties.  
The district court reached its decision to increase Tom’s capital account despite the 
Operating Agreement, which provided specific procedures for altering one’s capital contributions. 
These additional contributions claimed by Tom were not reported until after January 1, 2016, the 
retroactive effective date of the Operating Agreement. As a result, these contributions cannot be 
credited to Tom absent approval by the holders of a majority of the Ownership Percentage 
Interests, i.e., Matt. In sum, the district court erred when it credited additional capital contributions 
to Tom in the manner that it did. 
2. While Tom’s Option may appear unambiguous on its face, it nevertheless contains 
several latent ambiguities. 
 
We now turn to the district court’s interpretation of Tom’s Option. The district court’s 
analysis of Tom’s Option suffers from the same flaw as did its analysis of the Operating 
Agreement: There was no resolution of whether the document was ambiguous. 
“Interpreting an unambiguous contract and determining whether there has been a violation 
of that contract is an issue of law subject to free review. . . . [I]nterpreting an ambiguous term is 
an issue of fact.” Knipe Land Co., 151 Idaho at 454–55, 259 P.3d at 600–01 (internal citation 
omitted). Latent ambiguities arise “where an instrument is clear on its face, but loses that clarity 
when applied to the facts as they exist.” Id. at 455, 259 P.3d at 601. When a latent ambiguity has 
been discovered, the next step is to determine the intent of the parties. Id.  
As an initial point, the district court erred when it failed to first analyze and decide whether 
Tom’s Option was ambiguous. Id. at 454–55, 259 P.3d at 600–01. We hold that Tom’s Option has 
several latent ambiguities. Tom’s Option is a document with a bulleted list of items that were 
discussed at a family meeting between Matt and Tom and their wives and reduced to a sheet of 
21 
notes by Fenton, Dorsey Organics’ accountant, who was present and acting as a scrivener at the 
meeting. Despite the terms in Tom’s Option appearing to be unambiguous, the vague nature of 
Tom’s Option, particularly with respect to the question of whether the parties intended for Tom’s 
Option to supplement the Operating Agreement, along with the parties’ differing interpretations 
of the applicability of Tom’s Option, point to latent ambiguities within the document. As this Court 
has previously described, “there are two points of analysis when determining whether an 
instrument contains a latent ambiguity: first, we examine the language of the instrument, including 
other writings incorporated into the instrument; and second, we examine the reasonable alternative 
meanings suggested by the parties as to language within the instrument.” Sommer v. Misty Valley, 
LLC, 170 Idaho 413, 425, 511 P.3d 833, 845 (2021) (quoting Porcello v. Estate of Porcello, 167 
Idaho 412, 424, 470 P.3d 1221, 1233 (2020)) (italics in original).  
a. The wage provision in Tom’s Option is ambiguous, so we remand this issue to the 
district court for it to determine the parties’ intent. 
Matt and Dorsey Organics argue that the district court failed to enforce Tom’s Option and 
instead substituted its own judgment in place of the agreement of the parties. Dorsey Organics also 
argues that the Operating Agreement gave Matt, as manager, the full “discretion to determine how 
much he and other members of the company would be compensated[.]”  
Tom responds by attacking the credibility of Fenton and his opinions. Tom argues that, as 
a result of purported inconsistencies in Fenton’s testimony, the district court properly relied on 
Gunstream’s expert testimony regarding Matt’s claim for wages. Regarding Tom’s Option, Tom’s 
only defense on appeal is that Tom’s Option was void for its failure to comply with the Statute of 
Frauds, in reference to the land sale portion of the agreement. He did not argue that the remaining 
portions were void, unenforceable, or severable or that Tom’s Option was not a valid exercise of 
Matt’s discretion to determine compensation. 
The district court concluded Matt’s claim for roughly $200,000 in wages was not 
“reasonable” under the Operating Agreement. The district court further noted that, based on Tom’s 
Option, the members agreed that the managing member should be paid $35 per hour but only “if 
there is money to pay it.” The district court found, based on the losses from 2016–2018, that there 
was insufficient money to pay the full wages claimed by Matt. Instead, the district court awarded 
a significantly discounted amount as wages for Matt. The district court also eliminated all wages 
claimed by Matt for work performed after the organic herd was sold, concluding that he was not 
entitled to wages for work performed during the winding up and dissolution of Dorsey Organics. 
22 
To make Matt’s prior wage claims “reasonable” within the confines of the Operating Agreement, 
the district court held that a “salary” would have been more appropriate than hourly wages given 
the number of hours Matt worked for the dairy operation. The district court never determined 
whether the $35 per hour provision in Tom’s Option should impact the “reasonable” compensation 
provision in the Operating Agreement. 
We hold the district court erred when it concluded that a salary instead of an hourly wage 
was the more “reasonable” form of compensation. See Article VIII, Section VIII.1 (“Each Manager 
shall be entitled to reasonable compensation[.]”). The parties never agreed that Matt and Krista 
would be paid a salary. There is nothing in the record to suggest that the parties agreed that a salary 
would be the more reasonable way to compensate the parties. Certainly, it was cheaper for Dorsey 
Organics to pay Matt a salary as opposed to paying him an hourly wage; however, the operative 
question is not what would be cheaper, but rather what the agreement of the parties was. We have 
frequently noted that we “will not substitute our view of the facts for the view of the district court.” 
Wilson v. Mocabee, 167 Idaho 59, 64, 467 P.3d 423, 428 (2020) (internal citation omitted). 
Nevertheless, the district court is not entitled to make factual findings that lack any evidentiary 
support in the record. Id. In concluding that a salary would be more appropriate for a manager of 
a new company, the district court intuited additional terms that are not in the Operating Agreement. 
The terms of the Operating Agreement explain that the parties had agreed to a definition 
of “reasonable” compensation, and Tom’s Option suggests that they believed a reasonable 
compensation to be $35 per hour. On the other hand, Tom’s Option was never signed by Tom or 
Matt even though they appeared to agree to it. Further, there is no other evidence in the record that 
would suggest the parties had intended for Tom’s Option to constitute the “reasonable” 
compensation provision in the Operating Agreement. These differing interpretations must be 
resolved upon remand.  
After identifying differing interpretations in the document, the next question is whether the 
parties intended to be bound by the wage provision in Tom’s Option. Knipe Land Co., 151 Idaho 
at 455, 259 P.3d at 601. Determining intent is a question for the factfinder, yet the district court 
never found what the parties meant by “reasonable” compensation. See Kunz, 162 Idaho at 439, 
398 P.3d at 172. Accordingly, we deem it necessary to remand this question to the district court 
for its determination of what the parties intended as far as “reasonable” compensation in the 
Operating Agreement.  
23 
In addition to resolving the meaning of “reasonable” compensation, the district court must 
also consider Matt’s claim for compensation while he wound up the affairs of Dorsey Organics. 
The district court previously erred when it failed to do so. The Operating Agreement plainly 
contemplated ongoing oversight by the Manager of the winding up of the LLC’s affairs prior to 
and including dissolution: 
IX.4 Winding Up, Liquidation and Distribution of Assets. 
Upon dissolution, an accounting shall be made of the accounts of the 
Company and of the Company’s assets, liabilities and operations, from the date of 
the last previous accounting until the date of dissolution. Subject to the provisions 
of the next section below, the Manager shall immediately proceed to wind up the 
affairs of the Company. Distribution of assets and allocation of profits and losses 
shall be in accordance with Article VII hereof. 
IX.5 Articles of Dissolution. 
As soon as the Company is dissolved, articles of dissolution shall promptly 
be executed and verified by the Manager. Such articles of dissolution shall be filed 
as soon as possible with the Idaho Secretary of State.  
(Italics added.) Further, the Operating Agreement suggests that Matt is entitled to be compensated 
for the time that he worked for the company. 
VIII.1 General Management 
. . . Each Manager shall be entitled to reasonable compensation for services 
in that capacity and to reimbursement for reasonable and necessary costs and 
expenses incurred on behalf of the Company. 
(Italics added.) 
The Operating Agreement controls the obligations of the parties, and its provisions may 
not simply be disregarded. Shawver, 140 Idaho at 362, 93 P.3d at 693. Concluding that Matt 
cannot claim wages for the work he performed throughout the winding up and dissolution of the 
LLC is not only unsupported by the record, but it is also contrary to the express provisions of the 
Operating Agreement. Accordingly, the district court must also assess Matt’s claim for 
compensation while he wound up the affairs of Dorsey Organics in its calculation of Matt’s overall 
compensation.  
b. We also vacate the judgment dismissing Matt’s fourth and fifth claims for relief because 
the record contains no analysis for the district court’s decision.  
In addition to the issues described above, Tom’s Option apparently contemplated the sale 
of Dorsey Farms by Tom to Matt. The enforceability of this sale provision was the subject of 
Matt’s fourth and fifth claims for relief. Count Four alleged breach of contract against Tom, Dana, 
24 
and the couple’s trust for Tom’s failure to follow through on the sale of Dorsey Farms. Count Five 
alleged constructive fraud against Tom for failing to sell the real property to Matt after saying he 
would. Tom moved for partial summary judgment on Counts Four and Five of Matt’s third 
amended complaint.  
The Special Master recommended that the district court grant summary judgment to Tom 
on Count Four of Matt’s Third Amended Complaint because the land sale provision in Tom’s 
Option could not be enforced because it did not comply with the Statute of Frauds. The Special 
Master further recommended that summary judgment be granted on Count Five of Matt’s Third 
Amended Complaint because none of Matt’s proffered defenses to the Statute of Frauds—fraud, 
equitable estoppel, or quasi-estoppel—applied because Matt was unable to prove “any false 
statement of fact on a material issue.” 
The district court’s Judgment dismissed Counts Four and Five with prejudice, implying 
that Tom had prevailed on summary judgment. The record before us, however, does not contain 
any analysis by the district court regarding what it did or why it did it concerning the Special 
Master’s recommendation to grant summary judgment. The district court referenced its purported 
grant of partial summary judgment in paragraphs eight and ten of its Conclusions of Law, but the 
paragraphs do not contain any substantive analysis of Tom’s motion. The language in paragraphs 
eight and ten implies that Matt was allowed to put on evidence regarding the claims, even though 
they had been previously rejected by the Special Master on legal grounds. The two paragraphs 
read as follows:  
8. Summary judgment having been granted to the defendants on the issue of the 
breach of contract on sale of real estate, and for any claim of fraud thereunder, it 
was not a breach of any agreement nor was it wrongful conduct for Tom to fail to 
agree to enter into a real estate contract [sic] any person or entity. 
. . . . 
10. The plaintiffs have failed to prove that any defendant owed a fiduciary duty to 
any plaintiff. Tom Dorsey did not owe any fiduciary duty to anyone under the 
operating agreement of Dorsey Organics.  
Apart from these brief references to summary judgment (and to a “fail[ure] to prove”), the 
only document that provides any insight as to how the district court may have analyzed Tom’s 
partial summary judgment motion is the Special Master’s Final Report. Our standard of review 
precludes us from affirming the district court’s decision implicitly granting summary judgment to 
Tom on Matt’s Counts Four and Five without any analysis. Seccombe, 115 Idaho at 435, 767 P.2d 
25 
at 278 (“The appointment of a master does not displace the district court’s role as the ultimate trier 
of fact.”). Without any analysis from the district court, we are unable to determine why it made 
the choices it did, much less review its decision for purported error. 
When the record is otherwise clear, “[t]he absence of findings and conclusions may be 
disregarded by the appellate court[.]” Pope v. Intermountain Gas Co., 103 Idaho 217, 225, 646 
P.2d 988, 996 (1982). However, in reviewing issues decided on summary judgment, “[t]his Court 
exercises free review over . . . the inferences drawn by the district judge to determine whether the 
record reasonably supports those inferences.” Intermountain Forest Mgmt., Inc. v. La. Pac. Corp., 
136 Idaho 233, 236, 31 P.3d 921, 924 (2001).  
Our review of the record, including the district court’s Findings of Fact and Conclusions 
of Law, does not present a clear resolution of the issues presented at summary judgment. 
Accordingly, we are unable to ignore the lack of analysis by the district court. Pope, 103 Idaho at 
225, 646 P.2d at 996. As a result, we find it necessary to remand this issue to the district court to 
determine whether summary judgment should have been granted to Tom on Matt’s Fourth and 
Fifth Claims and if it was not, to conduct a trial to resolve the issues. 
C. The district court erred when it required Matt to prove fraud regarding Tom’s 
weight tickets, rather than placing the burden of proof on Tom to show that he 
was entitled to his requested payment for feed.  
During the winding up accounting, Tom claimed that Dorsey Organics owed him additional 
payment for feed that he had purportedly provided to Dorsey Organics. In support of his claim, 
Tom produced several weight tickets from “months after the feed was allegedly sold.” Matt and 
Dorsey Organics both argued that the weight tickets had been “fabricated” and that the district 
court should not rely on the tickets in reviewing the final accounting. 
The district court concluded that the weight tickets had not been obviously tampered with 
and were instead in an imperfect condition given the “rough field conditions with several 
individuals having access to the tickets and being involved with entries[.]” The district court then 
placed the burden of proof on Matt to prove fraud by clear and convincing evidence. The district 
court found that Matt had failed to prove fraud, finding that any purported inconsistencies in the 
weight tickets appear to be “a normal occurrence.”  
Matt and Dorsey Organics argue that the district court erred as a matter of law because “[it] 
placed the burden of proof on [Matt] to prove fraud [regarding the weight tickets], rather than 
placing the burden of proof on Tom to prove he was entitled to additional payment for feed from 
26 
Dorsey Organics.” Tom argues that any disagreements with the accounting results are 
unpersuasive because Matt has not shown that the district court’s decision is clearly erroneous.  
The determination of where a burden of proof lies is a question of law, over which we 
exercise free review. U.S. Bank Nat’l Ass’n N.D. v. CitiMortgage, Inc., 157 Idaho 446, 452, 337 
P.3d 605, 611 (2014) (internal citation omitted) (holding that a determination of the burden of 
proof is a question of law). This Court has previously explained that “[t]he party called upon to 
render an accounting bears the burdens of production and persuasion.” Watson v. Watson, 144 
Idaho 214, 219, 159 P.3d 851, 856 (2007).  
Here, contrary to the conclusion of the district court, Matt was not required to prove fraud. 
Tom, as the person claiming entitlement to a credit in an accounting, was the person who bore the 
burden to prove entitlement to that credit. It was not Matt’s obligation to prove the weight tickets 
were fraudulent. Matt argued at trial that Tom’s proffered evidence was insufficient to support his 
request for additional feed credits in the final accounting. The district court apparently 
misunderstood who bore the burden of proof during the process of winding up and accounting. In 
essence, the district court concluded that Tom succeeded in proving his entitlement to the weight 
tickets only because Matt had failed to prove that the weight tickets had been fraudulently 
produced, not because Tom had initially satisfied his burden of proof.  
We hold that the district court erred as a matter of law when it did not appropriately apply 
the burden of proof. Tom initially bore the burden of proving entitlement to payment for having 
provided feed to Dorsey Organics. As an affirmative defense to Tom’s claim, Matt did not have 
the burden to prove the weight tickets were fraudulent unless and until Tom established an 
entitlement to his claim. As a result, the district court erred when it improperly placed the burden 
of proof on Matt to initially demonstrate fraud regarding the weight tickets. Because the district 
court applied the incorrect burden of proof, the district court erred as a matter of law. This issue is 
remanded to the district court. The burden to prove entitlement to the credit is Tom’s and he will 
need to prove that entitlement by a preponderance of the evidence. Only if Tom can do so does 
Matt’s allegation of fraud arise. See, e.g., Kelley v. Wheyland, 93 Idaho 735, 738, 471 P.2d 590, 
593 (1970). 
 
 
27 
D. The district court erred when it failed to analyze whether Matt’s contribution to 
the production of crops on the Holton Place altered the presumption of equal 
ownership in the crops produced on the Holton Place.  
The Holton Place was equally owned by Tom and Matt but farmed solely by Matt.8 Matt 
did not pay rent for the Holton Place (as a one-half owner) but did apparently pay for all the taxes 
and all the water used on the property. He also spent significant time farming the property by 
himself without any assistance from Tom. The district court first found that because Tom and Matt 
jointly owned the Holton Place both parties should be credited equally with the crops grown on 
the property. The district court found that Matt had offered no records in support of his claims that 
he had paid for the water and taxes, nor was there any evidence of an agreement regarding the 
farming of the Holton Place. Instead, the district court concluded the distribution of the crop should 
be fifty percent to each, in accordance with Tom’s and Matt’s equal ownership of the Holton Place.   
On appeal, Matt argues that the district court erred in crediting half the crop from the 
Holton Place to Tom and half to Matt. Matt contends that the cost of the water and taxes was 
greater than the fair market value of the rent for the property, so crediting half the crop to Tom 
essentially resulted in a windfall for Tom. Tom “received this award without a concurrent debit 
for expenses or improvements[;] all expenses were left with Matt.” Tom argues that Matt did not 
pay rent for the property, so he should not be credited for the crops it produced.  
The district court’s conclusion regarding the crops grown on the Holton Place is not only 
unsupported by the evidence in the record but also a misapplication of the law. First, it appears 
undisputed that Sunnyslope (Matt’s LLC) farmed the Holton Place without assistance from Tom 
during Matt’s and Tom’s involvement with Dorsey Organics and prior to Dorsey Organics’ 
creation. It had been previously farmed by Sunnyslope, which was operated by Matt. The district 
court gave little weight to Matt’s testimony because it was not supported by written documentation. 
However, in reaching its conclusion, the district court rejected Matt’s testimony even though it 
apparently was not contradicted.  
 
8 The partition of the Holton Place was at issue before the Special Master. However, during the litigation below, the 
parties apparently stipulated to the sale of the Holton Place, and neither party presented any evidence regarding the 
partition of this property. Because a signed stipulation was never presented, the claim for partition of the Holton Place 
was dismissed without prejudice. The only remaining dispute on appeal regarding the Holton Place pertains to the 
crops grown on it and the resulting feed credits.  
28 
This Court has previously explained that finders of fact are not at liberty to reject 
uncontradicted testimony unless the fact finder concludes that the witness lacks credibility, which 
the district court did not do here. See In re Doe, 142 Idaho 594, 598, 130 P.3d 1132, 1136 (2006).  
Second, the district court’s determination of ownership of the crops grown on the Holton 
Place was flawed. The district court reasoned that each party was entitled to fifty percent of the 
crops because they equally owned the Holton Place. However, this finding results in Tom receiving 
the benefit of half the value of the crops grown on the Holton Place without being apportioned “a 
concurrent debit for expenses or improvements[.]” In doing so, the district court failed to analyze 
whether Matt and Tom had intended for the parties to reap the benefits of Matt’s farming equally 
or whether Matt should be entitled to an increased credit for the expenses he undertook to produce 
the crops. This Court has previously held that when one joint tenant improves or makes some other 
benefit for the shared property, he is “entitled to contribution” by the cotenant when those expenses 
are “incurred fairly and in good faith for the benefit of the common property[.]” Keyser v. 
Morehead, 23 Idaho 501, 506, 130 P. 992, 994 (1913); see also Bahnmiller v. Bahnmiller, 145 
Idaho 517, 522, 181 P.3d 443, 448 (2008) (holding that a tenant in common “was entitled to 
contribution for the payments he made on the promissory note and the real estate taxes [for the 
equally owned property]”).  
The district court’s conclusion to award Tom credit for half the crops grown at the Holton 
Place is unsupported by and contrary to the record. It also fails to analyze whether Tom should 
have borne the responsibility for sharing the costs associated with Matt’s farming. This conclusion 
arguably unjustly enriched Tom and failed to credit Matt for his time and the expenses he incurred 
in farming the Holton Place. Without any analysis by the district court regarding how the parties 
intended to divide the proceeds or share the expenses created by farming the Holton Place, we find 
it necessary to remand this issue to the district court for a determination of whether Tom should 
have shared in the expenses in farming the Holton Place.  
E. We remand the question of whether Dorsey Farms owed money to Sunnyslope 
because the district court failed to consider all the evidence concerning this issue. 
Matt argues that the district court erred in seemingly disregarding “reciprocal claims of the 
farms [Dorsey Farms and Sunnyslope] against each other for monies owed.” The district court 
concluded that the Ninth Cause of Action in Matt’s third amended complaint had failed. (Matt’s 
Ninth Cause of Action involved a claim by Sunnyslope against Dorsey Farms for goods sold and 
delivered.) The district court’s findings on this matter were: 
29 
68. [Matt] offered Exhibits 49 through 52 upon testimony of Matt that the 
documents contained information pertaining to a claim by Sunnyslope against 
Dorsey Farms pertaining to the sale and delivery of silage by Dorsey Farms to 
“Lindley,” an unrelated third-party farming operation belonging to another that 
Sunnyslope assisted Dorsey Farms in completing. The claim is for $13,258.68.  
69. The offered exhibits do not track the proffer nor explain the claim in any 
understandable way[.] 
(Italics added.) 
 
The problem with the district court’s analysis is that it failed to consider Exhibit 48. Matt 
argues that the district court erred because it failed to reach a conclusion regarding the evidentiary 
support from Exhibit 48, which detailed the offsets that he claimed Dorsey Farms owed to 
Sunnyslope. Since this exhibit supports Sunnyslope’s claim, Matt argues the district court erred in 
rejecting the claim as not having any evidentiary support. We agree.   
Matt and Tom both testified at the hearing that Exhibit 48 was a spreadsheet detailing the 
work that Dorsey Farms did for Sunnyslope and vice versa. Matt categorized these as 
“in[t]er-company transactions” that did not involve Dorsey Organics. The district court offered no 
explanation for why it chose to ignore Exhibit 48 despite the parties’ apparent agreement on its 
relevance and applicability.  
We hold that the district court erred when it failed to consider the effect of Exhibit 48. The 
district court has an obligation to consider relevant evidence. See I.R.E. 102, 402; cf. Doe v. Doe, 
150 Idaho 46, 244 P.3d 190 (2010) (reversing a magistrate court’s decision where “the magistrate 
court failed to adequately consider . . . evidence of just cause”).  
This Court’s review is limited in such a way that we are unable to draw our own factual 
determinations of evidence in the same manner that a trier-of-fact would. Without an explanation 
from the district court about what the result would have been if it had considered Exhibit 48, we 
cannot resolve this issue on appeal. As a result, we find it necessary to remand this issue to the 
district court for it to determine whether Exhibit 48 affects the analysis of whether Dorsey Farms 
owes money to Sunnyslope and, if it does, to explain its application and the amount ultimately 
owed.  
 
 
 
30 
F. The district court erred when it applied Idaho Code section 30-25-405 because its 
findings were internally contradictory on this issue.  
Next, Matt argues that the district court erred in concluding that he wrongly withdrew 
money from Dorsey Organics’ accounts in violation of Idaho Code section 30-25-405, which 
prohibits distributions when a draw would result in the company becoming insolvent:  
A limited liability company may not make a distribution, including a 
distribution under section 30-25-707, Idaho Code, if after the distribution: 
(1)  The company would not be able to pay its debts as they become due 
in the ordinary course of the company’s activities and affairs; or 
(2)  The company’s total assets would be less than the sum of its total 
liabilities plus the amount that would be needed, if the company were to 
be dissolved and wound up at the time of the distribution, to satisfy the 
preferential rights upon dissolution and winding up of members and 
transferees whose preferential rights are superior to the rights of persons 
receiving the distribution. 
I.C. § 30-25-405(a). Additionally, Idaho Code section 30-25-105(d)(1)(B) allows an operating 
agreement to amend this prohibition, “so that the prohibition requires only that the company’s total 
assets not be less than the sum of its total liabilities.”  
The district court concluded that Matt’s “$285,000 capital withdrawal took the resources 
of the company below that required to meet unpaid expenses, even after accounting for the 
proceed[s] of [the] sale of the dairy herd.” Further, the district court found that this withdrawal 
occurred in 2018, prior to the dissolution and winding up process, so it could not be said whether 
the withdrawal would impact Dorsey Organics’ creditors. “As such, the capital withdrawal should 
be included in the resources for adjustment in reconciling the accounts in the process of winding 
up.”  
Matt argues that, at the time of the draw, Dorsey Organics had sufficient funds to pay him, 
and that Idaho Code section 30-25-405 only prohibits distributions when a draw would prevent the 
company from otherwise being able to pay its debts. Tom argues that the district court properly 
considered evidence from both accounting experts and, after weighing the evidence, sided with 
Tom’s expert.  
Whether Dorsey Organics would have been unable to pay its debts if Matt had withdrawn 
$285,000 from the LLC’s members’ equity is a question of fact, while the district court’s 
application of Idaho Code section 30-25-405 is a question of law over which we exercise free 
review. “[T]his Court exercises free review over the district judge’s conclusions of law[,]” and 
31 
findings of fact will be reviewed for clear error. Frost v. Gilbert, 169 Idaho 250, 262–63, 494 P.3d 
798, 810–11 (2021) (internal quotation marks and citations omitted).  
As explained by Matt, at the time Dorsey Organics began to liquidate its assets in early 
2018, Tom had previously taken a total of $200,647 in draws as a 19% owner and Matt had 
previously taken only $62,331 as an 81% owner. Matt authorized and took an additional $285,000 
draw later in 2018. Dorsey Organics’ cattle were sold in 2018 for roughly $800,000. Matt testified 
at the hearing that, at the time he took the $285,000 draw, the members’ equity in Dorsey Organics 
was $663,524. The district court also found that the only remaining liabilities for Dorsey Organics 
in 2018 were unpaid wages due to Matt and Krista. Consequently, the district court’s conclusion 
that this 2018 draw violated section 30-25-405(a) contradicts Matt’s testimony and is not supported 
by substantial and competent evidence. In essence, the district court found that Matt’s draw would 
have prevented Dorsey Organics from paying its debts while it also concluded that Dorsey 
Organics’ only liabilities were those owed to Matt and Krista.  
Further, the district court made no attempt to reconcile or align the relative draws taken by 
Tom and Matt given their respective ownership in the LLC or to apply the specific language of the 
Operating Agreement to Matt’s draw. Idaho Code section 30-25-105(d)(1)(B) permits an operating 
agreement to “[a]lter” the prohibition against distributions described in section 30-25-405(a)(2). 
Section II.7 of the Operating Agreement alters this prohibition in the statute and requires draws to 
be distributed “pro rata according to the Member’s respective Ownership Percentage Interests to 
the extent of available funds as determined by the Manager in the Manager’s sole discretion, which 
determination shall take into account any projected operating expenses[.]” (Italics added.) As 
noted, the record does not support the district court’s apparent finding that Dorsey Organics was 
insolvent, or likely to become insolvent, at the time Matt took a draw from the company in 2018. 
It is difficult to understand why the district court disallowed the draw on the basis that it would 
render Dorsey Organics insolvent when the court also decided the only liabilities identified were 
monies owed to Matt and Krista. Finally, the district court’s conclusion failed to account for the 
discretion afforded to the Managing Member by the Operating Agreement.  
In sum, the district court erred when it concluded that Matt’s draw violated Idaho Code 
section 30-25-405(a). Section 30-25-405(a) only prevents an LLC from making a distribution if 
the LLC would be otherwise unable “to pay its debts[.]” Here, there was no evidence that Dorsey 
Organics had any outstanding liabilities other than to Matt and Krista, so the district court erred 
32 
when it applied Idaho Code section 30-25-405(a) to justify deducting the draw from Matt’s side 
of the ledger in the final accounting.  
G. The district court erred in concluding that Tom did not wrongfully dissociate from 
Dorsey Organics.  
Matt alleged in his complaint that Tom was liable for damages based on wrongful 
dissociation under Idaho Code section 30-25-602. The district court concluded that none of Tom’s 
actions could be construed as wrongful dissociation because “[i]t is not an act of dissociation to 
offer to sell one’s interest to another member, or to refuse to enter into a continuing contract with 
the company.” The district court explained that Tom had previously sold his conventional dairy 
herd “[i]n early spring of 2016[.]” With the proceeds from the sale of Tom’s conventional dairy 
herd, “Matt purchased 90 head of qualified organic dairy cows[.]” The district court found that 
“[t]hese organic dairy cows were the initial production animals used by Dorsey Organics, and 
provided the basis for the initial capital assigned to Matt and Tom.” Given this initial contribution, 
the district court found that both Tom and Matt continued to be members of Dorsey Organics until 
Matt sold the Dorsey Organics herd at auction in 2018 and only at that point did the LLC cease to 
exist. At no point did Tom or Matt agree that Tom was no longer a member of the LLC. In fact, 
both parties continued to list him as a member of Dorsey Organics on their tax returns. As a result, 
the district court concluded that, although neither party could come to an agreement on the winding 
up of Dorsey Organics, both Tom and Matt remained members of the LLC until the herd was sold 
in 2018.  
On appeal, Matt argues that the district court’s conclusion that Tom did not wrongfully 
dissociate from Dorsey Organics is incorrect because Tom’s refusal to participate in the winding 
up of Dorsey Organics after the sale of Dorsey Organics’ herd in 2018 constituted a wrongful 
dissociation. Matt relies on the proposal (“Tom’s Ultimatum”) from Tom to Dorsey Organics in 
support of his claim that Tom wrongfully dissociated. In that proposal, Tom wrote “PAY 
DORSEY FARMS $541000.00 [sic] ON CATTLE OR CATTLE WILL BE REMOVED AND I 
WILL NO LONGER BE PART OF DORSEY ORGANIC [sic][.]” (Capitalization in original.) 
According to Matt, Tom had already received a credit in Dorsey Organics’ accounts at the creation 
of the LLC for the value of Tom’s cattle, so he was not entitled to an additional $541,000. 
Additionally, Tom’s Ultimatum left Dorsey Organics with only a month-to-month rental 
agreement of the Dorsey Farms dairy facility, which was not acceptable to Sorrento and caused 
Sorrento to terminate its contract with Dorsey Organics to purchase organic milk. The inability to 
33 
contract with Sorrento forced Matt to sell the cows at auction, which triggered the dissolution of 
Dorsey Organics. In the alternative, Matt also argues that the district court erred in this respect 
because the dissolution could have occurred as early as when Tom brought forth his ultimatum. 
Matt argues that Tom’s Ultimatum constituted a communication of Tom’s express threat to 
dissociate, and when Dorsey Organics refused his ultimatum, Tom’s dissociation resulted. Matt 
contends that, under Idaho Code section 30-25-601, Tom wrongfully dissociated when he 
withdrew from Dorsey Organics as prohibited by the Operating Agreement.  
Tom argues that he never dissociated from Dorsey Organics because he never had any 
authority within the company. Instead, he argues, Matt repeatedly excluded him from business 
decisions related to Dorsey Organics, so to argue that Tom was responsible for his own lack of 
involvement within Dorsey Organics is inaccurate.  
We hold that the district court erred in concluding that Tom did not wrongfully 
dissociate from Dorsey Organics. Tom’s Ultimatum stated that, if Dorsey Organics refused his 
offer, then he would no longer be involved with Dorsey Organics. After Dorsey Organics 
refused his offer, Tom would only allow Dorsey Organics to lease Dorsey Farms on a 
month-to-month basis, which caused Sorrento to terminate its contract with Dorsey Organics. 
Without a facility in which to produce organic milk for Sorrento, the continuation of Dorsey 
Organics’ operations became untenable, so Matt had no other option but to sell Dorsey 
Organics’ herd at auction. Tom refused to participate in this process and in the subsequent 
winding up of Dorsey Organics.  
Tom’s acknowledgement that he refused to participate in the operation of Dorsey 
Organics prior to the completion of it winding up its affairs is sufficient evidence to meet the 
first prong of wrongful dissociation under section 30-25-601(b)(2). I.C. § 30-25-601(b)(2) 
(prohibiting dissociation prior to “the completion of the winding up”). However, the district 
court did not discuss this fact, nor did it decide whether Tom’s Ultimatum constituted an 
“express will” to withdraw as that term is used in the dissociation statute. Because the district 
court failed to consider evidence in the record of Tom’s dissociation, namely Tom’s 
Ultimatum, its conclusion that Tom remained a member of the LLC is unsupported by the 
record and as a result clearly erroneous.  
Idaho Code section 30-25-601(b) provides that a member’s dissociation is wrongful if the 
dissociation “[i]s in breach of an express provision of the operating agreement; or . . . [o]ccurs 
34 
before the completion of the winding up of the limited liability company and . . . [t]he person 
withdraws as a member by express will[.]” In this case, Dorsey Organics’ rejection of Tom’s 
Ultimatum  resulted in Tom’s refusal to allow a long-term lease of Dorsey Farms  that forced 
the sale of Dorsey Organics’ herd. Tom’s subsequent lack of participation in Dorsey Organics 
constituted both a breach of the Operating Agreement and a manifestation of Tom’s decision 
to withdraw from Dorsey Organics.  
It should be noted that the Operating Agreement does not authorize any right to 
withdraw for a member. The Operating Agreement states: “A Member shall have no right to 
withdraw from the Company, but in lieu thereof shall have the rights [to sell his interest in the 
Company to the Company].” Tom’s Ultimatum was not an offer to sell his interest in Dorsey 
Organics, but instead was a demand for payment on behalf of Dorsey Farms. Even if it were 
an offer to sell, Dorsey Organics was within its rights to decline such an “offer.” When Dorsey 
Organics refused Tom’s Ultimatum, Tom’s withdrawal and disallowance of the long-term use 
of Dorsey Farms’ facility, necessitating the sale of Dorsey Organics’ herd (which was contrary 
to the Operating Agreement) became a fait accompli for Matt. As a result, Tom’s dissociation 
was wrongful pursuant to the Operating Agreement and Idaho Code section 30-25-601(b)(1). 
The district court erred when it found otherwise since its decision is not supported by substantial 
and competent evidence. 
The district court further erred when it concluded only that “[n]o action by Tom was an 
act of dissociation[.]” The district court limited its analysis to the confines of the Operating 
Agreement and determined that because no agreements had been reached regarding buying out 
Tom’s interests, “[t]he limited liability company continued its existence with both members 
until the dairy herd was sold[.]” As noted, Tom had already received a credit in Dorsey 
Organics for his contribution to the LLC’s herd, and he would not be entitled to receive both 
the credit to LLC’s capital account and a forced buy out of the cattle that constituted his capital 
contribution to Dorsey Organics. Though it is true that no agreements were reached regarding 
a buyout, Tom’s other acts, i.e., communicating the ultimatum, and forcing Dorsey Organics 
to be limited to a month-to-month lease of Dorsey Farms, constituted a wrongful dissociation.  
Tom makes much of the fact that Matt made most of the decisions for Dorsey Organics 
and Tom claims he was excluded from any kind of participation in the LLC’s operation. 
Despite Tom’s argument, Matt’s conduct was consistent with his authority as spelled out in 
35 
the Operating Agreement and his status as the majority member of Dorsey Organics. Section 
VIII.1 of the Operating Agreement states “[t]he business of the Company shall be conducted 
under the management of one Manager, who shall have exclusive power to manage the 
business and affairs of the Company and authority to act for the Company in all matters.” 
(Italics added.) While it is true that Tom’s participation in Dorsey Organics was much less 
than Matt’s, Tom agreed to Matt’s authority as Manager when he signed the Operating 
Agreement. To the extent that “Tom was systematically excluded from all aspects of Dorsey 
Organics[,]” that exclusion was consistent with the terms of the Operating Agreement. In 
summary, the district court’s finding that Tom did not wrongfully dissociate from Dorsey 
Organics when he communicated his ultimatum is clearly erroneous as it is not supported by 
substantial and competent evidence.  
H. The district court did not err in denying an award of attorney fees to Tom because 
he was not the prevailing party.  
In the second of the consolidated cases before this Court (docket number 49417), Tom 
appeals the district court’s decision to deny his request for attorney fees and costs below. The 
district court granted Matt’s Motion to Disallow the Defendant’s Claim for Fees and Costs. The 
district court determined that, pursuant to Idaho Rule of Civil Procedure 54, costs would not be 
awarded to Tom or to Matt because each party prevailed in part and, therefore, neither was a 
prevailing party. The district court next determined that the “accounting and dissolution of Dorsey 
Organics . . . was the thrust of the case.” The district court then concluded that Tom was not entitled 
to attorney fees under Idaho Code section 12-120(3) because “the gravamen of this case doesn’t 
involve a financial – a commercial transaction. Rather the gravamen of this case is the dissolution 
and accounting for the dairy.” The district court further concluded that neither party was entitled 
to attorney fees under section 12-121 because there was no “frivolous conduct on the part of any 
party in this case.”  
On appeal, Tom argues that the district court erred when it failed to award attorney fees 
pursuant to section 12-120(3) because the primary issue in this case was “the attempted purchase 
and sale of Tom’s farm and dairy operation[.]” Tom continues and argues that a commercial 
transaction was involved because “[t]he purpose of Dorsey Organics, LLC[,] was, in part, an estate 
planning and asset transfer device for Thomas E. Dorsey.” Therefore, according to Tom, the 
district court erred when it concluded that the gravamen of the case was “the dissolution and 
accounting for [Dorsey Organics,]” rather than the transfer of the family farm.  
36 
Matt argues the opposite—that Dorsey Organics’ winding up is not a commercial 
transaction and, therefore, not a sufficient basis for an award of attorney fees. Because the district 
court dismissed all claims but the request for accounting, Matt contends that this case is purely a 
statutory proceeding pursuant to Idaho Code section 30-25-801 (authorizing direct action by 
members in limited liability companies).  
We affirm the district court’s denial of attorney fees because Tom was not the prevailing 
party before the district court. We review determinations of prevailing parties under an abuse of 
discretion standard. Eighteen Mile Ranch, LLC v. Nord Excavating & Paving, Inc., 141 Idaho 716, 
718–19, 117 P.3d 130, 132–33 (2005) (internal citation omitted). A prevailing party will be 
“examined and determined from an overall view, not a claim-by-claim analysis.” Id. at 719, 117 
P.3d at 133. For that reason, “when both parties are partially successful, it is within the district 
court’s discretion to decline an award of attorney fees to either side.” Jorgensen v. Coppedge, 148 
Idaho 536, 538, 224 P.3d 1125, 1127 (2010) (internal citation omitted).  
The district court concluded that this “was a very complicated case,” that Matt prevailed 
on some of his claims, Tom prevailed on some of his, and the remaining causes of action were 
dismissed or resolved by stipulation. In its decision denying fees, the district court went through 
each claim and stated on the record its resolution and found that, given the overall resolution of 
the case, neither party had prevailed. The district court stated on the record the applicable rules of 
procedure and case law and how it used those rules to guide its determination of a prevailing party 
for purposes of awarding attorney fees and costs.  
Tom has failed to provide any argument explaining how the district court abused its 
discretion in declining to find that he was the prevailing party. Accordingly, we affirm the district 
court’s denial of attorney fees to Tom.  
 
Because we have affirmed the district court’s conclusion that Tom was not the prevailing 
party before the district court, we conclude he was not entitled to fees under Idaho Code section 
12-120(3) or 12-121. See Eighteen Mile Ranch, LLC, 141 Idaho at 721, 117 P.3d at 135. In sum, 
we find no error in the district court’s denial of Tom’s request for attorney fees following the case 
resolution in the district court. 
I. Neither party is entitled to attorney fees on appeal. 
Tom seeks attorney fees on appeal pursuant to Idaho Code sections 12-120(3) and 12-121. 
However, both code sections allow only the prevailing party to receive an award of attorney fees. 
37 
As described throughout this opinion, Matt successfully demonstrated several errors in the district 
court’s decision. In addition, Tom failed on his appeal of the district court’s decision not to award 
attorney fees. Accordingly, Tom is not the prevailing party on appeal. Because we conclude Tom 
is not the prevailing party on this appeal, he is not entitled to attorney fees under either provision.  
Matt also seeks attorney fees only under Idaho Code section 12-121. As a threshold matter, 
we find that Matt is the prevailing party on appeal because he demonstrated that many of the 
district court’s findings were clearly erroneous. Additionally, Matt prevailed on Tom’s appeal 
because we affirmed the district court’s decision to deny attorney fees to Tom. Having concluded 
that Matt is the prevailing party on appeal, we nevertheless deny his request for attorney fees 
pursuant to Idaho Code section 12-121. We cannot conclude that Tom brought, pursued, or 
defended this appeal frivolously, unreasonably, or without foundation. As a result, we decline to 
award attorney fees on appeal against him based on Idaho Code section 12-121. We award costs 
as a matter of right to Matt. I.A.R. 40. 
V. CONCLUSION 
For the foregoing reasons, we conclude that the district court erred in failing to 
independently review the record before adopting the Special Master’s Proposed Findings of Fact 
and Conclusions of Law. In addition, we vacate the district court’s conclusions regarding: 
- 
Its failure to apply Dorsey Organics’ Operating Agreement, including its adoption of 
an accounting methodology that failed to follow the Operating Agreement; 
- 
Its failure to analyze Tom’s Option, prior to considering whether to apply its terms. 
(We also remand the issue regarding partial summary judgment in favor of Tom on the 
claims of breach of contract and constructive fraud because the record is silent on 
whether the district court ever adequately analyzed this question); 
- 
Its requirement that Matt had to prove fraud regarding Tom’s weight tickets before 
deciding whether Tom had proven an entitlement to a credit for his weight tickets; 
- 
Its conclusion that Tom was entitled to fifty percent of the crops grown on the Holton 
Place;  
- 
Its decision regarding whether Dorsey Farms owed money to Sunnyslope; 
- 
Its application of Idaho Code section 30-25-405 as it applied to Matt’s draw; and  
- 
Its decision regarding Tom’s dissociation from Dorsey Organics. 
38 
Finally, we affirm the district court’s denial of attorney fees to Tom in the proceedings below and 
deny attorney fees to either party on this appeal, although we award costs as a matter of right to 
Matt.  
Chief Justice BEVAN, and Justices BRODY, MOELLER and ZAHN CONCUR.