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ORDER – 1

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

CITICAPITAL COMMERCIAL

CORPORATION,

Plaintiff,

v.

BB ACQUISITION LLC, et al.,

Defendants.

CASE NO. C05-2033JLR

ORDER

I. INTRODUCTION

This matter comes before the court on cross-motions for summary judgment (Dkt.

## 30, 36). The court has considered the parties’ briefing and accompanying declarations

and finds the matter appropriate for disposition without oral argument. For the reasons

stated below, the court GRANTS the motion from Defendant Raine Simplot and DENIES

the motion from Plaintiff CitiCapital Commercial Corporation (“CitiCapital”).

II. BACKGROUND

The central facts of this lawsuit are not in dispute. CitiCapital wishes to collect on

a debt. In June 2004, CitiCapital loaned a Washington company, EEX Acquisition LLC

(“EEX”), over four million dollars to purchase and refurbish a boat, docked in Seattle. 

Case 2:05-cv-02033-JLR Document 38 Filed 12/04/2006 Page 1 of 6

Citicapital Commercial Corporation v. BB Acquisition LLC et al Doc. 38

Dockets.Justia.com
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ORDER – 2

CitiCapital secured the loan through a guaranty agreement, which Defendants Douglas

Toms, Donald Simplot, and BB Acquisition LLC signed. Douglas Toms and Donald

Simplot signed the agreement above text that reads: “individually, and on behalf of his

marital community, if any.” Campanella Decl., Ex. 1 at 3. At the time he executed the

contract, Donald Simplot was married to Raine Simplot. The agreement requires the

guarantors to “perform, pay, and discharge” EEX’s liabilities and obligations to

CitiCapital. Id. at 1. EEX failed to repay the loan and in October 2005, filed for

bankruptcy. 

In December 2005, CitiCapital filed this lawsuit to collect against the guarantors. 

Soon thereafter, Donald Simplot and Raine Simplot finalized their divorce. On January

3, 2006, Donald Simplot filed for bankruptcy protection in Idaho, triggering an automatic

stay of the current proceedings against him under 11 U.S.C. § 362.

CitiCapital now moves for partial summary judgment on grounds that Raine

Simplot, Donald Simplot’s now ex-wife, is liable under the guaranty agreement by virtue

of her membership in the marital community. Raine Simplot cross-moves for summary

judgment on the same question. She also challenges the basis for this court’s personal

jurisdiction over her. 

III. DISCUSSION

On a motion for summary judgment, the court is constrained to draw all inferences

from the admissible evidence in the light most favorable to the non-moving party. Addisu

v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). Summary judgment is

appropriate where there is no genuine issue of material fact and the moving party is

entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(c). The moving party bears

the initial burden of showing the absence of a genuine issue of material fact. Celotex

Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met its burden,

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1

The parties do not dispute that the court applies Idaho law in examining the authority of

each spouse to encumber community property. See G.W. Equip. Leasing, Inc. v. Mt. McKinley

Fence Co., 982 P.2d 114, 117-118 (Wash. Ct. App. 1999) (applying law of the state where

couple resides).

ORDER – 3

the opposing party must show that there is a genuine issue of fact for trial. Matsushita

Elect. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The opposing party

must present significant and probative evidence to support its claim or defense. Intel

Corp. v. Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 (9th Cir. 1991). When

confronted with purely legal questions, the court does not defer to the non-moving party.

A. Liability of Raine Simplot and the Simplot Marital Community

As the outset, the court concludes that the debt on the guaranty agreement is a

community debt. See Smith v. Smith, 860 P.2d 634, 639 (Idaho 1993) (applying

presumption that debt incurred during marriage is a community debt). Under Idaho law1

either spouse may enter into contracts that bind community assets, other than real

property. Idaho Code § 32-912. There is no dispute that Donald Simplot signed the

agreement during the couple’s marriage. Nevertheless, Raine Simplot argues that Donald

Simplot could not have entered into a contract to benefit the community because the

couple did not maintain a marital community “as such.” Opp’n at 3. She cites the

couple’s prenuptial agreement, which purports to keep the parties’ assets separate and

requires both spouses to sign all debt instruments. Lederman Decl., Ex. 8 at ¶ 6. In

doing so, Raine Simplot fails to provide any legal authority nor is the court aware of any

that stands for the proposition that a couple’s private contractual arrangement somehow

binds third-party creditors. In the event that a creditor looks to Raine Simplot’s assets to

satisfy an unpaid debt, her remedy would be to seek indemnity from her ex-husband; the

prenuptial agreement does not otherwise alter the status of the community in relation to

third-parties.

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ORDER – 4

Although the court concludes that the guaranty agreement is a community debt, 

CitiCapital may not pursue a breach of contract claim against Raine Simplot as the nonsignatory spouse. See Twin Falls Bank & Trust Co. v. Holley, 723 P.2d 893, 896 (Idaho

1986) (holding that wife was not contractually liable for debt on a promissory note that

only husband signed during the couple’s marriage). CitiCapital argues that Raine Simplot

is liable simply because she currently possesses traceable community assets. Reply at 6

(“Raine Simplot, as the possessor of marital community assets, is liable on the Guaranty

as a matter of law”). The Holley court rejected this cart-before-the-horse approach when

it clarified the distinct concepts of (a) liability, and (b) potentially liable assets, which

may include community property. 723 P.2d at 869. The court reasoned that the

community property system does not change the rights and obligations inherent in the

creditor-debtor relationship, it “merely affects the type and kinds of property to which the

creditor may look for satisfaction of his unpaid debt.” Id. The Holley court therefore

held that the ex-wife was not contractually liable on a promissory note that her husband

signed during marriage, even if he entered into the contract to benefit the marital

community. Applying similar logic, the court also rejected the creditor’s argument that

the “marital community” was a “debtor” for purposes of contractual liability. Id. (stating

that the phrase “community debtor” is “imprecise and misleading” because “[t]he marital

community is not a legal entity such as a business partnership or corporation.”). 

CitiCapital urges this court to confine the scope of the Holley decision to

questions of post-judgment collection and execution of unpaid debts. This court declines

to read such a limitation into the decision. Indeed, the Idaho court squarely confronted

the liability question when it stated: “[the wife], not having signed the note, was not

contractually liable for the debt . . . only [the husband] signed and is liable for the note.” 

Id. The court also rejects CitiCapital’s attempt to distinguish Holley on its facts. 

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ORDER – 5

CitiCapital correctly notes that the husband in Holley renewed and renegotiated the

promissory note after the couple divorced. Id. at 894-95. Indeed, the lower court

construed this post-dissolution act as creating a new contract that could only encumber

the husband’s assets. Id. at 895. Importantly, the Idaho Supreme Court rejected this

basis for absolving the wife’s liability and instead looked to the original promissory note

executed during marriage. Because she did not sign the note, the court held that the wife

was not liable. Id. at 896. 

The court therefore concludes that under Idaho law, Raine Simplot is not

contractually liable on the guaranty agreement that Donald Simplot signed during the

couple’s marriage. See Holley, 723 P.2d at 896. Moreover, the Simplot marital

community is not a legal entity that CitiCapital can stake its claim against. See id.

Instead, Donald Simplot is the contractually liable party. Accordingly, the court grants

Raine Simplot’s motion for summary judgment. 

The parties should not construe the court’s ruling as indicative of whether

CitiCapital can at some point in the future reach traceable community assets in Raine

Simplot’s possession. See id. at 897 (describing circumstances under which a creditor

can proceed against assets distributed to an ex-spouse). That question is simply not

before the court. 

B. Personal Jurisdiction

Finally, the court notes that it has personal jurisdiction over Raine Simplot by

virtue of her membership in the marital community with Donald Simplot. See Barer v.

Goldberg, 582 P.2d 868, 872-74 (Wash. Ct. App. 1978) (upholding exercise of personal

jurisdiction over ex-wife where husband entered into contract in the forum state during

the couple’s marriage in community property state). No party contests that the court

would have personal jurisdiction over Donald Simplot given his entry into a guaranty

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ORDER – 6

agreement with two Washington co-guarantors to purchase a boat berthed in Washington. 

His contacts with the forum state, in turn, subject Raine Simplot to this court’s

jurisdiction. See id. at 874 (“[W]e hold that the transaction by the husband as manager of

the community, is all that is necessary to subject the wife to jurisdiction . . . .”). Raine

Simplot does not dispute this legal principle, she simply reiterates that the prenuptial

agreement somehow negates the existence of a marital community. As stated, the court

rejects this unsupported theory, and therefore asserts personal jurisdiction over Raine

Simplot.

IV. CONCLUSION

 For the reasons stated above, the court GRANTS Raine Simplot’s summary

judgment motion (Dkt. # 36) and DENIES CitiCapital’s motion (Dkt. # 30). 

Dated this 4th day of December, 2006.

A JAMES L. ROBART

United States District Judge

Case 2:05-cv-02033-JLR Document 38 Filed 12/04/2006 Page 6 of 6