Opinion ID: 3166164
Heading Depth: 2
Heading Rank: 1

Heading: jurisdiction

Text: Wells Fargo argues that even though the district court did not consider the issue, this Court may affirm the district court’s rulings on the ground that Houpts lack standing as the real party of interest. Houpts contend that since this argument is raised for the first time on appeal it should not be considered. While it is true that “[g]enerally, issues raised for the first time on appeal will not be considered,” Arambarri v. Armstrong, 152 Idaho 734, 738, 274 P.3d 1249, 1253 (2012), issues of standing are jurisdictional, and “they can be raised at any time, including for the first time on appeal.” Id. Indeed, “this Court has a duty to raise the issue of standing sua sponte.” Campbell v. Parkway Surgery Center, LLC, 158 Idaho 957, 962, 354 P.3d 1172, 1177 (2015). Thus, we will consider the merits of Wells Fargo’s contention that Houpts lack standing as the real party in interest. Idaho’s real party in interest rule is found in the Idaho Rules of Civil Procedure and states in relevant part: Every action shall be prosecuted in the name of the real party in interest. . . . No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest. I.R.C.P. 17(a). The purpose of this rule is to “prevent forfeiture when determination of the proper party is difficult or when an understandable mistake has been made in selecting the party plaintiff.” Conda Partnership, Inc. v. M.D. Constr. Co., 115 Idaho 902, 904, 771 P.2d 920, 922 (Ct. App. 5 1989). Consequently, when interpreting this rule we have stated that “[l]iberal construction should be given to this rule and courts should ‘further the policy favoring the just resolution of actions— providing litigants their day in court.’ ” Hayward v. Valley Vista Care Corp., 136 Idaho 342, 348, 33 P.3d 816, 822 (2001) (quoting Conda, 115 Idaho at 904, 771 P.2d at 922). Wells Fargo contends that once Houpts filed their bankruptcy petition in 2011, any claim Houpts had automatically became an asset of the bankruptcy estate that only the trustee could assert. In support of their argument Wells Fargo relies on McCallister v. Dixon, 154 Idaho 891, 303 P.3d 578 (2013), and Mowrey v. Chevron Pipe Line Co., 155 Idaho 629, 315 P.3d 817 (2013). In McCallister and Mowrey, the plaintiffs did not list their claims for damages in their bankruptcy schedules and then later, after their bankruptcy proceedings closed, attempted to bring suit. This Court ruled that the plaintiffs in both cases were judicially estopped from bringing their undisclosed claims and that the bankruptcy trustees, and not the plaintiffs, were the real parties in interest. We noted in McCallister that “once [the plaintiff] filed for bankruptcy, the potential [] claim he had against Respondents was no longer [the plaintiff’s] to assert. It became an asset of the bankruptcy estate for the bankruptcy trustee to assert.” 154 Idaho at 898, 303 P.3d at 585. In Mowrey, we stated that when a plaintiff has knowledge of a claim during the pendency of his bankruptcy the claim becomes “an asset of the bankruptcy estate, and [] a claim for the bankruptcy trustee alone to assert.” 155 Idaho at 635, 315 P.3d at 823. Here, like the plaintiffs in McCallister and Mowrey, Houpts had knowledge of their claims against Wells Fargo during the pendency of their bankruptcy.4 Thus, Houpts were not the real party in interest at the time they filed their Complaint. But, because Wells Fargo has not objected to Houpts’ standing as the real party in interest until this time, under I.R.C.P. 17(a), the action cannot be dismissed until a reasonable time has been allowed for the Houpts to cure the defect through “ratification . . . by, or joinder or substitution of,” the real party in interest. Accordingly, under I.R.C.P. 17(a), Houpts must be allowed the opportunity to cure any defect in the real party of interest. Yet, here, unlike in McCallister and Mowrey, the bankruptcy trustee has, since the original filing of the Complaint, specifically abandoned his interest in the property. Consequently, Houpts, unlike the plaintiffs in McCallister and Mowrey where the bankruptcy estates did not abandon their 4 Wells Fargo initiated the nonjudicial foreclosure proceedings on October 18, 2010. Houpts filed their bankruptcy schedules and amended schedules on February 16, 2011, and April 1, 2011, respectively. Houpts filed their Complaint in this action on June 22, 2012. The bankruptcy case closed on September 25, 2013. Based on these facts, Houpts had knowledge of their claims against Wells Fargo during the pendency of the bankruptcy proceedings, and no later than June 22, 2012, when they filed their Complaint. 6 interests in the plaintiffs’ claims, are now, in fact, the real party in interest and any such attempted cure would only result in Houpts seeking “ratification . . . by, or joinder or substitution of,” themselves. Therefore, even though Houpts may not have been the real party in interest at the time of filing—they are now. Requiring Houpts to start over would only result in needless waste. See, e.g., Mullaney v. Anderson, 342 U.S. 415, 417 (1952) (“To dismiss the present petition and require the [] plaintiffs to start over in the District Court would entail needless waste and runs counter to effective judicial administration—the more so since, with the silent concurrence of the defendant, the original plaintiffs were deemed proper parties below.”); Newman–Green, Inc. v. Alfonzo– Larrain, 490 U.S. 826, 836–37 (1989) (“[R]equiring dismissal after years of litigation would impose unnecessary and wasteful burdens on the parties, judges, and other litigants waiting for judicial attention. Appellate-level amendments to correct jurisdictional defects may not be the most intellectually satisfying approach to the spoiler problem, but, as Judge Posner eloquently noted, because ‘law is an instrument of governance rather than a hymn to intellectual beauty, some consideration must be given to practicalities.’ ” (citation omitted) (quoting Newman–Green, Inc. v. Alfonzo–Larrain, 854 F.2d 916, 925 (7th Cir. 1988))). Accordingly, in the interest of judicial economy and our policy favoring “the just resolution of actions [by] providing litigants their day in court” we allow Houpts’ claims to proceed. 2. The District Court had Jurisdiction to Award Wells Fargo the Proceeds of the Stipulated Sale Houpts argue that under Idaho Code section 6-101 Wells Fargo should not have been allowed to collect on its lien without first “exhausting the security.” Further, Houpts argue that they did not give implied or express consent for the court to distribute the funds from the Stipulated Sale to Wells Fargo. The district court ruled that Idaho Code section 6-101 was inapplicable and that Houpts gave at least implied consent for the district court to distribute the proceeds of the Stipulated Sale. We agree with the district court.
Often referred to as the “one action” rule, Idaho Code section 6-101(1) states that “there can be but one action for the recovery of any debt, or the enforcement of any right secured by mortgage upon real estate . . . .” However, Idaho Code section 6-101(3) explicitly states that for the purposes of section 6-101: 7 [A]n “action” does not include any of the following acts or proceedings: .... (e) For the exercise, pursuant to section 45-1505, Idaho Code, of a power of sale conferred pursuant to section 45-1503, Idaho Code; .... (k) Relating to any proceeding in bankruptcy . . . ;