Opinion ID: 2518331
Heading Depth: 2
Heading Rank: 2

Heading: Did the District Court Err in Dismissing the Weicks' Claim for Rescission?

Text: In their counterclaim, the Weicks requested that the transaction be rescinded. The district court granted summary judgment dismissing that claim on the grounds that: (1) the dismissal of the fraud claim eliminated the claim for rescission; (2) the Weicks did not make an adequate tender; and (3) the Weicks did not seek rescission promptly. We need only address the second ground. A party seeking to rescind a transaction on the ground of fraud must restore or offer to restore the other party to the status quo before the contract was formed. White v. Mock, 140 Idaho 882, 104 P.3d 356 (2004); Haener v. Albro, 73 Idaho 250, 249 P.2d 919 (1952). In the letter seeking rescission, the Weicks' attorney made the following offer: My client seeks to rescind the contract of sale and promissory note and return the parties to their pre-sale status. To that end, we tender to you resignations from the Board of Directors, all stock in each of the companies which were subject to the purchase agreement referred to in the promissory note attached to your Complaint, to wit, The Watson Agency, Inc., Pacific Personnel, Inc., and Watson U.S. Phoenix Corporation, as well as deeds to the real property purchased concurrently. This tender shall be in full satisfaction of the provisions of the contract and promissory note and would affect total rescission between the parties. The tender made no mention of obligations incurred by the Watson Agency after the Weicks purchased it including a $150,000 liability to the IRS; 25 to 30 additional employees; a new office in Los Angeles; the purchase of 12 to 14 new vehicles; and the purchase of $10,000 to $15,000 in computers. Tendering back the corporation with those new liabilities did not constitute offering to restore the Watsons to the status quo before the Agreement was formed. The district court did not err in dismissing the claim for rescission.