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IN THE SUPREME COURT OF THE STATE OF IDAHO

Docket No. 42065

GREG L. SKINNER and JESSICA L. 

SKINNER, husband and wife,

 Plaintiffs-Appellants,

v.

U.S. BANK HOME MORTGAGE, a United 

States corporation,

 Defendant-Cross Claimant-

 Respondent,

and

ALBERT D. PETERSON and BABETTE 

PETERSON, husband and wife, individually 

and d/b/a PCS COMPANY and PCS 

COMPANY, INC., 

 Defendants-Cross Defendants,

and

SAFEGUARD PROPERTIES, LLC, a 

Delaware corporation, JANE DOES and/or 

JOHN DOES I-X, who may be individuals 

employed by defendants,

 Defendants.

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Moscow, August 2015 Term

2016 Opinion No. 4

Filed: January 22, 2016

Stephen Kenyon, Clerk

Appeal from the District Court of the Second Judicial District of the State of 

Idaho, Nez Perce County. Hon. Jeff M. Brudie, District Judge.

The judgment of the district court is affirmed. 

Aherin, Rice & Anegon, Lewiston, for appellants. Darrel Aherin argued.

Bohrnsen Stocker Smith Luciani PLLC, Spokane, Washington, for respondent. 

Scott R. Smith argued.

 _______________________________________________
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HORTON, Justice.

Greg and Jessica Skinner (the Skinners) appeal from the judgment dismissing the 

Skinners’ claim of negligence against U.S. Bank Home Mortgage (U.S. Bank or the Bank). U.S. 

Bank retained insurance funds received after the Skinners’ home was destroyed by fire and 

released a portion of the funds as the home was rebuilt. There were serious defects in the new 

construction that ultimately culminated in the project being abandoned. The Skinners assert that 

the district court improperly granted summary judgment because U.S. Bank owed the Skinners a 

fiduciary duties regarding the disbursement of the insurance proceeds. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

On October 23, 2006, the Skinners’ home in Idaho County was destroyed by fire. The 

home was insured. At the time of the fire, U.S. Bank held a deed of trust on the Skinners’ home

which secured a $333,700 loan. Under the terms of the deed of trust:

In the event of loss . . . [,] [u]nless Lender and Borrower otherwise agree 

in writing, any insurance proceeds, whether or not the underlying insurance was 

required by Lender, shall be applied to restoration or repair of the Property, if the 

restoration or repairs is economically feasible and Lender’s security is not 

lessened. During such repair and restoration period, Lender shall have the right 

to hold such insurance proceeds until Lender has had an opportunity to inspect 

such Property to ensure the work has been completed to Lender’s satisfaction, 

provided that such inspection shall be undertaken promptly. Lender may disburse 

proceeds for the repairs and restoration in a single payment or in a series of 

progress payments as the work is completed . . . . If the restoration or repair is not 

economically feasible or Lender’s security would be lessened, the insurance 

proceeds shall be applied to the sums secured by this Security Instrument, 

whether or not then due, with the excess, if any, paid to Borrower. 

On October 31, 2006, U.S. Bank sent the Skinners a letter outlining U.S. Bank’s 

procedures for processing the insurance proceeds. The letter stated that, after the Skinners 

forwarded their endorsed insurance checks to the Bank, the funds would be placed in a 

“restricted escrow account.” Thereafter, one-third of the insurance proceeds were to be 

immediately disbursed to the Skinners and their general contractor, another one-third of the 

funds would be released to the Skinners and their contractor “upon notification from the

[Skinners] that 66% of the repairs have been completed and an inspection has been performed to 

verify the status of repairs,” and the final one-third would be released upon receipt of an 

inspection report verifying that the construction was completed and lien releases from the 

contractor and subcontractors. 
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On June 5, 2007, the Skinners executed an “Affidavit of Intention to Complete Repairs” 

which had been prepared by U.S. Bank. In pertinent part, the affidavit states:

The undersigned further states that the repairs in connection with the damage that 

occurred on 10/23/06 due to Fire will be completed and the property will be 

restored to as good a condition, or better than it was previous to loss. The claim 

proceeds in the amount of $358280.97 will be used for the restoration of the 

property. The undersigned also agrees to indemnify and hold U.S. Bank Home 

Mortgage harmless against any and all claims which may arise as a result of 

funds being paid in advance for the above work or claim. 

On June 18, 2007, U.S. Bank provided the first one-third draw ($119,426.99) by way of a check 

made jointly payable to the Skinners and their contractor. In an accompanying letter, U.S. Bank 

explained:

The next draw will be released once the repairs are 66% complete. Please contact 

our office to request an inspection once your repairs are to this point. The 

inspection performed is a visual inspection to confirm the work is completed; it 

does not verify that building codes are met.

The contractor began construction of the Skinners’ new home in June of 2007.

As construction progressed, the Skinners requested that U.S. Bank perform an inspection 

required for the release of the second one-third of the insurance proceeds. On September 25, 

2007, the Bank contracted with Safeguard Properties, Inc. (Safeguard), to inspect the home to 

determine the percentage of completion. Safeguard assigned Karen Smith to conduct the 

inspection. Smith met with the general contractor at the construction site, and the Skinners 

indicated that they were satisfied with the work performed up until that time. Smith then reported 

to U.S. Bank that the project was 65% completed. After receiving Smith’s report, the Bank

issued a check for $139,400.62, made jointly payable to the Skinners and their contractor.

On November 1, 2007, although construction of the home was not yet complete, the 

contractor walked off the job and informed the Skinners they had to pay the subcontractors. The 

Skinners contacted U.S. Bank about the problem, and the Bank issued checks made jointly 

payable to the Skinners and the subcontractors. In a letter dated August 22, 2008, the Skinners 

notified U.S. Bank that the contractor had failed to install foundation drains and had not sealed 

the basement walls. Consequently, water seeped into the basement during the winter and spring

months and caused significant damage. The Skinners informed U.S. Bank that they could not

complete construction of the home because of the problems with the foundation and that they 

believed the best course was to demolish the partially constructed home and begin anew.
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Because the construction was not completed, the Bank continued to hold the remaining insurance 

proceeds.

In September of 2008, after construction had ceased, Smith performed another inspection 

for Safeguard and determined that her earlier report had overstated the degree of completion and 

that the home was only 40% completed.1

On March 28, 2008, the Skinners brought suit against the contractor, Albert D. Peterson 

and Babette Peterson (the Petersons), doing business as PCS Company, Inc., for breach of 

contract. On October 19, 2008, the Skinners amended their complaint to add U.S. Bank as a 

defendant. The Skinners’ amended complaint asserted a claim of negligence against U.S. Bank, 

alleging the Bank was negligent in its handling of the insurance proceeds by paying the 

Petersons for work that was not properly performed. The Skinners also alleged that U.S. Bank 

improperly administered the funds and that the Bank owed a fiduciary duty to the Skinners to 

“not overpay the contractor.”

On February 12, 2010, U.S. Bank moved for summary judgment. Following oral 

arguments, on May 24, 2010, the district court issued its memorandum opinion and order 

granting U.S. Bank’s motion for summary judgment. The district court reasoned that U.S. Bank 

did not owe the Skinners a fiduciary duty because the Bank did not retain exclusive control over 

the insurance proceeds. The district court also concluded that the language in the deed of trust 

providing for an inspection to determine the degree of completion of repairs was for the benefit 

of U.S. Bank and that the inspection called for by the deed of trust was not for the benefit or 

protection of the Skinners. Thus, the district court concluded that U.S. Bank did not owe a duty 

to the Skinners.

On June 23, 2010, the district court granted the Skinners’ motion to amend their 

complaint. The Skinners filed their Third Amended Complaint on June 28, 2010, naming

Safeguard as an additional defendant and alleging a breach of contract based on Safeguard’s 

failure to hire a qualified home inspector. Safeguard moved for summary judgment, which the 

district court initially denied because it could not determine whether the Skinners were thirdparty beneficiaries of the contract between U.S. Bank and Safeguard without reviewing the 

 

1 Explaining the discrepancy between these two values, Smith stated that she had not received training for 

determining the degree of completion for a construction repair project prior to her first inspection in 2007. Between 

the first and second inspections, Smith had learned of the guidelines for determining the degree of completion from 

another general contractor.
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contract. The parties then stipulated that the contract between the Bank and Safeguard was

confidential and that the contract could be provided to the district court under seal. The Skinners

once again moved to amend their complaint, this time to add a claim against Safeguard for 

negligence. Safeguard objected and moved for reconsideration of the denial of its motion for 

summary judgment.

The Skinners moved for reconsideration of the district court’s grant of summary 

judgment in U.S. Bank’s favor, arguing that the Bank had a fiduciary duty to sue Safeguard. The 

district court found that there was no basis for this claim and denied the motion. The district 

court also denied the Skinners’ motion to amend their complaint, concluding that the statute of 

limitations had run on their negligence claim against Safeguard and that the notice requirements 

of Idaho Rule of Civil Procedure 15(c) had not been satisfied, resulting in the Skinners’ 

negligence claim against Safeguard being barred by the statute of limitations. The district court 

granted Safeguard’s motion for reconsideration and granted summary judgment in Safeguard’s 

favor because its review of the contract showed that the Skinners were not third-party 

beneficiaries of the contact between U.S. Bank and Safeguard.

The Skinners timely appealed. In this appeal, the Skinners only challenge the district 

court’s dismissal of their claims against U.S. Bank. They do not appeal from the dismissal of 

their claim against Safeguard or the district court’s denial of their motion to amend their 

complaint to include a claim of negligence against Safeguard.

II. STANDARD OF REVIEW

“This Court reviews appeals from an order of summary judgment de novo, and the 

‘standard of review is the same as the standard used by the trial court in ruling on a motion for 

summary judgment.’ ” Stonebrook Const., LLC v. Chase Home Fin., LLC, 152 Idaho 927, 929, 

277 P.3d 374, 376 (2012) (quoting Curlee v. Kootenai Cnty. Fire & Rescue, 148 Idaho 391, 394, 

224 P.3d 458, 461 (2008)). “Summary judgment is appropriate if ‘the pleadings, depositions, and 

admissions on file, together with the affidavits, if any, show that there is no genuine issue as to 

any material fact and that the moving party is entitled to a judgment as a matter of law.’ ” Id.

(quoting I.R.C.P. 56(c)). “Where ‘the evidence reveals no disputed issues of material fact, then 

only a question of law remains, over which this Court exercises free review.’ ” Id. at 930, 277 

P.3d at 377 (quoting Lockheed Martin Corp. v. Idaho State Tax Comm’n, 142 Idaho 790, 793, 

134 P.3d 641, 644 (2006)). Further, “[u]nder this standard, ‘disputed facts are construed in favor 
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of the non-moving party, and all reasonable inferences that can be drawn from the record are 

drawn in favor of the non-moving party.’ ” Id. at 929–30, 277 P.3d at 376–77 (quoting Curlee, 

148 Idaho at 394, 224 P.3d at 461).

III. ANALYSIS

The district court described the legal theories underlying the Skinners’ negligence claim 

against U.S. Bank as follows:

Plaintiffs contend the creditor/debtor relationship they had with U.S. Bank 

morphed into a fiduciary relationship based on two theories: (1) U.S. Bank took 

possession and sole control of the insurance funds, and (2) U.S. Bank was to 

inspect the construction of the home for the protection of Plaintiffs. Plaintiffs 

contend U.S. Bank breached its fiduciary duties owed to them when the Bank 

negligently inspected the home construction, which resulted in U.S. Bank 

releasing insurance funds to the contractor, thereby damaging Plaintiffs.

The district court found that the Skinners’ claim that U.S. Bank had sole control of the funds was 

without support, noting that the funds that U.S. Bank disbursed were by way of checks made 

jointly payable to the Skinners and their contractor and subcontractors. The district court further 

found that there was no evidence supporting the Skinners’ claim that U.S. Bank owed them a 

duty of care in the inspection of the construction of their home. Based upon the absence of duties 

from U.S. Bank to the Skinners regarding the construction of their home, the district court 

granted the Bank’s motion for summary judgment and dismissed the Skinners’ complaint against 

the Bank. 

The Skinners’ appeal challenges the district court’s determination that U.S. Bank did not 

owe them fiduciary duties regarding the disbursement of the insurance proceeds. Although it was 

not a basis for the district court’s decision, the Skinners further contend the indemnification

clause contained in the Affidavit of Intention to Complete Repairs is invalid. Finally, the 

Skinners assert that U.S. Bank has a duty to bring suit against Safeguard on their behalf. We 

address these claims in turn.

A. U.S. Bank did not owe the Skinners the fiduciary duty to inspect the property for the 

Skinners’ benefit.

On appeal, the Skinners advance three arguments as to why U.S. Bank owed them a 

fiduciary duty: (1) the Skinners placed the funds for the reconstruction of their home in the hands 

of the Bank; (2) the Skinners placed their trust and confidence in U.S. Bank and the Bank was in 

a superior position over them; and (3) U.S. Bank exercised complete control over the funds.
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“In order ‘[t]o establish a claim for breach of fiduciary duty, [a] plaintiff must establish 

that defendants owed plaintiff a fiduciary duty and that the fiduciary duty was breached.’ ” Bushi 

v. Sage Health Care, PLLC, 146 Idaho 764, 769, 203 P.3d 694, 699 (2009) (alterations original) 

(quoting Tolley v. THI Co., 140 Idaho 253, 261, 92 P.3d 503, 511 (2004)). “[A] claim for a 

breach of a fiduciary duty is a negligence action in which the duty to act is created by the 

relationship between the parties.” Jones v. Runft, Leroy, Coffin & Matthews, Chtd., 125 Idaho 

607, 614, 873 P.2d 861, 868 (1994). However, “[a] fiduciary duty is distinct from a simple tort 

duty in the negligence context, and finding an assumed fiduciary duty requires more than a mere 

voluntary undertaking.” Beaudoin v. Davidson Trust Co., 151 Idaho 701, 706, 263 P.3d 755, 760 

(2011). “Whether a fiduciary relationship exists is a question of law.” Id. at 705, 263 P.3d at 759.

“Fiduciary relationships are commonly characterized by one party placing property or 

authority in the hands of another, or being authorized to act on behalf of the other.” Country 

Cove Dev., Inc. v. May, 143 Idaho 595, 603, 150 P.3d 288, 296 (2006); see also High Valley 

Concrete, L.L.C. v. Sargent, 149 Idaho 423, 428, 234 P.3d 747, 752 (2010). In Jones, we stated: 

A fiduciary relationship does not depend upon some technical relation created by 

or defined in law, but it exists in cases where there has been a special confidence 

imposed in another who, in equity and good conscience, is bound to act in good 

faith and with due regard to the interest of one reposing the confidence.

125 Idaho at 614, 873 P.2d at 868 (quoting Stearns v. Williams, 72 Idaho 276, 288, 240 P.2d 833, 

840–41 (1952)).

The term fiduciary implies that one party is in a superior position to the other and 

that such a position enables him to exercise influence over one who reposes 

special trust and confidence in him . . . As a general rule, mere respect for 

another’s judgment or trust in this character is usually not sufficient to establish 

such a relationship. The facts and circumstances must indicate that the one 

reposing the trust has foundation for his belief that the one giving advice or 

presenting arguments is acting not in his own behalf, but in the interests of the 

other party.

High Valley Concrete, 149 Idaho at 428, 234 P.3d at 752 (alteration and emphasis in original) 

(quoting Idaho First Nat’l Bank v. Bliss Valley Foods, Inc., 121 Idaho 266, 278, 824 P.2d 841, 

853 (1991)).

Thus, “[e]xamples of relationships from which the law will impose fiduciary obligations 

on the parties include when the parties are: members of the same family, partners, attorney and 

client, executor and beneficiary of an estate, principal and agent, insurer and insured, or close 

friends.” Id. (quoting Wade Baker & Sons Farms v. Corp. of Presiding Bishop of Church of 
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Jesus Christ of Latter-Day Saints, 136 Idaho 922, 928, 42 P.3d 715, 721 (Ct. App. 2002)). In 

contrast to these relationships, we have long held that there is no fiduciary duty created solely by 

the relationship between a bank and its customer. See Black Canyon Racquetball Club, Inc. v. 

Idaho First Nat’l Bank, 119 Idaho 171, 176, 804 P.2d 900, 905 (1991). Rather, the relationship

between lender and the borrower is that of creditor and debtor. “At common law, a mortgagee 

was generally not obligated to protect the interest of a mortgagor.” Wooden v. First Sec. Bank of 

Idaho, 121 Idaho 98, 100, 822 P.2d 995, 997 (1991). 

Of more immediate application to this case, the appellate courts of this state have 

addressed claims of fiduciary relationships between mortgagees and mortgagors, or lenders and 

borrowers, in the analogous context of construction loan agreements. See id.; see also Laight v. 

Idaho First Nat’l Bank, 108 Idaho 211, 212, 697 P.2d 1225, 1226 (Ct. App. 1985); Madrid v. 

Roth, 134 Idaho 802, 10 P.3d 751 (Ct. App. 2000). However, we have not previously considered 

the narrow issue of whether a fiduciary relationship exists regarding the disbursement of 

insurance proceeds in connection with the repair or replacement of damaged property.

The district court concluded that “insurance funds are no different than construction 

funds” in its analysis of the Skinners’ claim that U.S. Bank owed them fiduciary duties. The 

Skinners contend that the district court’s analogy was inapposite because the Bank held the 

insurance proceeds for their benefit.

We agree with the Skinners to the limited extent that we find the district court’s statement 

to be overbroad, as there is a difference between a lender’s disbursement of loan proceeds by 

way of construction progress payments and the disbursement of insurance proceeds held in 

escrow. Although both situations involve the lender holding funds to be used by the borrower for 

construction or repair, in the former instance the lender is holding its own funds to be distributed 

to the borrower and/or contractor. In contrast, here U.S. Bank was holding the insurance 

proceeds in a “”restricted escrow account” which does result in fiduciary duties. However, as we 

will explain, this distinction does not compel the conclusion that the Skinners ask us to reach. 

a. Fiduciary duty and U.S. Bank as Escrow Holder

This Court has addressed fiduciary relationships created by an escrow agreement:

Where a person assumes to and does act as the depositary in escrow, he is 

absolutely bound by the terms and conditions of the deposit and charged with a 

strict execution of the duties voluntarily assumed. He is held to strict compliance 

with the terms of the escrow agreement; and he may not perform any acts with 
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reference to handling the deposit, or its disposal, which are not authorized by the 

contract of deposit.

All Am. Realty, Inc. v. Sweet, 107 Idaho 229, 230, 687 P.2d 1356, 1357 (1984) (quoting 28 Am.

Jur. 2d Escrow § 16). Likewise in Jones, this Court discussed an escrow relationship. While we 

observed that a fiduciary duty could be established “from informal actions and agreements 

between the parties,” this Court looked to the agreement to determine the scope of the assumed 

duties. 125 Idaho at 613–14, 873 P.2d at 867–68.

Thus, we look to the nature of the agreement between the Skinners and U.S. Bank with 

regard to the Bank’s duties as escrow holder. The deed of trust provides that during the 

restoration of the property, U.S. Bank “shall have the right to hold such insurance proceeds until 

[the Bank] has had an opportunity to inspect . . . to ensure the work has been completed to the 

Lender’s satisfaction . . . .” Following the loss, the Skinners were instructed to forward the

insurance proceeds to U.S. Bank for deposit in a restricted escrow account. The agreement 

specified the manner of distribution of the escrowed funds: “One-third of the funds will be 

released payable to the mortgagor(s) and contractor immediately . . . . The second one-third will 

be released upon notification from the mortgagor that 66% of the repairs have been completed 

and an inspection has been performed to verify the status of repairs . . . .” “The final draw will be 

released once the following conditions have been satisfied: 100% inspection to verify completion 

of repairs . . . .” When the first draw was released, the Bank informed the Skinners that “[t]he 

next draw will be released once the repairs are 66% complete. Please contact our office to 

request an inspection once your repairs are to this point. The inspection performed is a visual 

inspection to confirm the work is completed; it does not verify that building codes are met.”

There is a fundamental difference between an inspection to determine the degree of a 

construction project’s completion and an inspection to determine whether the contractor has 

properly performed the construction. There is no evidence that the Bank undertook the duty of 

obtaining an inspection of the quality of construction in order to determine whether the Skinners’ 

contractor had properly performed its contractual obligation. U.S. Bank’s explicit disclaimer that 

the inspection would not verify that building codes had been satisfied reflects that any inspection 

was for the purpose of determining the quantity, not the quality, of the construction.

Although U.S. Bank acted as the depositary in escrow, and was absolutely bound by the 

terms and conditions of the deposit and charged with a strict execution of the duties it voluntarily 

assumed, we hold that the Bank did not assume a duty of inspecting the property for the 
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Skinners’ benefit to ensure that the contractor had properly performed or that the contractor was 

not overpaid for its services. Instead, U.S. Bank did what it agreed to do: it held the funds until 

the Skinners informed the Bank that repairs were 66% complete and the Bank satisfied itself that 

the Skinners’ representation was accurate. 

b. U.S. Bank did not have “Complete Control” over the funds

The district court’s decision rested largely on the Idaho precedent relating to claimed 

fiduciary relationships arising from lender-borrower relationships in the cases that we have 

previously mentioned. The Skinners rely on the same body of law, arguing that U.S. Bank had

complete control over the funds, giving rise to fiduciary duties. We disagree. Although the 

construction loan cases are not completely analogous to the relationship between U.S. Bank and 

the Skinners due to the Bank’s duties as escrow holder, the facts and analysis in those cases 

relating to the control of disbursed funds is instructive and guides our decision today. 

In Wooden, the plaintiff entered into a construction loan agreement with First Security 

Bank (FSB). Wooden v. First Sec. Bank of Idaho, 121 Idaho 98, 99, 822 P.2d 995, 996 (1991). 

Under the agreement, FSB deposited loan proceeds directly into the plaintiff’s personal account 

so that the plaintiff could pay her contractor. Id. The contractor failed to pay several 

subcontractors, litigation ensued, and the plaintiff alleged that FSB owed her a fiduciary duty to 

properly monitor and control disbursement of construction funds. Id. at 100, 822 P.2d at 997. 

Specifically, plaintiff argued that FSB had a duty to obtain lien releases from subcontractors 

before disbursing the funds. Id.

This Court disagreed and, relying on the Court of Appeals’ decision in Laight, concluded 

that “[a] duty would only exist if there is an agreement creating a duty, or if the lender exercises 

complete control over the disbursement of funds.” Id. This Court concluded that the loan 

agreement did “not impose any duty, fiduciary or otherwise . . . .” Id. at 101, 822 P.2d at 998.

FSB deposited the loan proceeds directly into the plaintiff’s account, placing the plaintiff in 

control of the funds. Id. Thus, this Court concluded that FSB did not owe a fiduciary duty to the 

plaintiff. 

In Laight, the plaintiffs obtained a construction loan from Idaho First National Bank 

(IFNB). Laight v. Idaho First Nat’l Bank, 108 Idaho 211, 212, 697 P.2d 1225, 1226 (Ct. App. 

1985). Under the construction loan agreement, IFNB disbursed proceeds in the form of cashier’s 

checks made payable jointly to the Laights and the builder. Id. After the builder failed to pay a 
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subcontractor, litigation ensued, and the Laights sued IFNB after learning that IFNB made 

periodic disbursements without first obtaining receipts or lien waivers. Id. The Laights alleged

negligence and breach of fiduciary duty, arguing IFNB should have secured lien waivers before 

making the disbursements. Id.

The Court of Appeals recognized that a mortgagee may owe the mortgagor a fiduciary

duty if the mortgagee “exercises complete control over the disbursements of the funds . . . .” Id.

at 214, 697 P.2d at 1228. However, because the funds were periodically disbursed to the 

plaintiffs, “only at their request, and in the form of checks payable jointly to them and to the 

builder,” the Court of Appeals concluded that the plaintiffs “did control disbursement to a 

significant degree.” Id. at 214–15, 697 P.2d at 1228–29. “This degree of control, coupled with 

the language in the agreement explicitly relieving IFNB of any duty with regard to liens against 

the property, precludes a finding that IFNB owed a duty of care” to the plaintiffs. Id. at 215, 697 

P.2d at 1229. 

Here, the Skinners have failed to establish a genuine issue of material fact as to the 

degree of U.S. Bank’s control over the funds. The Skinners were responsible for initiating 

disbursements by requesting that the funds be released, thus controlling the timing of 

disbursements. All disbursements made by U.S. Bank were by way of checks made jointly 

payable to the Skinners and the contractors. Consequently, it was the Skinners—not U.S. Bank—

that had ultimate control over the disbursement of the funds. As in Laight, the Skinners had 

sufficient control of the funds to protect their interest in seeing that their contractor properly 

performed the construction. Based on the record before us, the district court properly concluded 

that U.S. Bank did not owe the Skinners a fiduciary duty to ensure the quality of construction or 

to ensure that the Petersons were not overpaid.

2. We will not decide the Skinners’ claim that the indemnification provision of the 

Affidavit of Intention to Complete Repairs is invalid. 

The Skinners characterize the indemnification provision in the Affidavit of Intention to 

Complete Repairs as an “exculpatory clause.” They contend that the exculpatory clause is invalid 

and cannot shield U.S. Bank from liability for the second disbursement. Presumably because 

U.S. Bank did not claim that the exculpatory clause barred the Skinners’ breach of fiduciary duty 

claim as a basis for its request for summary judgment, the Skinners did not advance this 

argument before the district court and the district court did not decide this issue sua sponte.
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“This Court has repeatedly held: ‘To properly raise an issue on appeal there must either 

be an adverse ruling by the court below or the issue must have been raised in the court below, an 

issue cannot be raised for the first time on appeal.’ ” Bank of Commerce v. Jefferson Enters., 

LLC, 154 Idaho 824, 828, 303 P.3d 183, 187 (2013) (quoting Garner v. Bartschi, 139 Idaho 430, 

436, 80 P.3d 1031, 1037 (2003)). Because this claim was neither advanced nor decided below, 

we do not decide the merits of this claim in this appeal.

3. U.S. Bank does not have a duty to bring suit against Safeguard. 

Finally, the Skinners argue that since they do not have standing to sue Safeguard for its 

negligent inspection, U.S. Bank has a duty to sue Safeguard based upon Smith’s negligent report 

that construction was 65% complete.

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The Skinners frankly concede that the district court 

correctly observed that “there is no case law” supporting their claim. Instead, the Skinners 

contend that “[a]ll [they] have to prove is an inference U.S. Bank conducted the inspection for 

their benefit.” Although we are skeptical of this proposition, there is simply no basis for drawing 

the inference that the Skinners advance. The terms of the deed of trust and the communications 

with the Skinners prior to the second disbursement only support the inference that U.S. Bank 

insisted on the right to demand an inspection for its own benefit rather than as a means of 

protecting the Skinners from the consequences of a false representation to the Bank as to the 

 

2 We note that the Skinners’ Second Amended Complaint (which is the last complaint in which the Skinners 

advanced claims against U.S. Bank) does not allege that U.S. Bank had not sued Safeguard, much less that the 

failure to initiate such litigation constituted a breach of any duty that U.S. Bank owed to the Skinners. However, in 

Sales v. Peabody, 157 Idaho 195, 335 P.3d 40 (2014), we recently found error in the district court’s rejection of a 

motion for reconsideration of a grant of summary judgment based upon the theories identified in the complaint:

The Court recently addressed this precise scenario in Massey v. ConAgra Foods, Inc.,

156 Idaho 476, 328 P.3d 456 (2014). There, we held that “a district court’s sua sponte dismissal of 

a claim based on an insufficient pleading is in error when neither party raised the issue and no 

opportunity was given to argue that, in fact, the claim was sufficiently pleaded.” Id. at 483, 328 

P.3d at 463. Also in Massey, we reaffirmed that the pleading standard under I.R.C.P. 8(a) is not an 

onerous obstacle to overcome. Id. It is well-established that “[a] complaint need only contain a 

concise statement of the facts constituting the cause of action and a demand for relief.” Clark v. 

Olsen, 110 Idaho 323, 325, 715 P.2d 993, 995 (1986). “The purpose of a complaint is to inform 

the defendant of the material facts upon which the plaintiff bases his action.” Id.

Sales, 157 Idaho at 200, 335 P.3d at 45. This holding is arguably at odds with our repeated statement that “[t]he only 

issues considered on summary judgment are those raised by the pleadings. Esser Elec. v. Lost River Ballistics 

Techs., Inc., 145 Idaho 912, 919, 188 P.3d 854, 861 (2008) (citing Vanvooren v. Astin, 141 Idaho 440, 111 P.3d 125 

(2005); Lexington Heights Dev., LLC v. Crandlemire, 140 Idaho 276, 92 P.3d 526 (2004); Beco Constr. Co. v. City 

of Idaho Falls, 124 Idaho 859, 865 P.2d 950 (1993); Gardner v. Evans, 110 Idaho 925, 719 P.2d 1185 (1986)).

Rather than rejecting the Skinners’ claim solely because there were no facts alleged in the complaint in support of 

this new theory, we decide this claim on the merits. 
13

degree of completed work. There is simply no evidence that U.S. Bank undertook any fiduciary 

duty to the Skinners in connection with the inspection. We hold that the district court correctly 

determined that U.S. Bank has no duty to bring suit against Safeguard.

IV. CONCLUSION

For the foregoing reasons, we affirm the district court’s judgment dismissing the 

Skinners’ claims against U.S. Bank. Neither party has requested attorney fees. Costs on appeal to 

U.S. Bank.

Chief Justice J. JONES and Justices EISMANN, BURDICK and W. JONES, CONCUR.