Court Opinion

ID: 874007
Source: CourtListenerOpinion
Date Created: 2013-06-03 23:38:14.679683+00
Date Added: 2024-06-11T11:17:14.391175
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF IDAHO

                                      Docket No. 37869

THOMAS O’SHEA and ANNE DONAHUE            )
O’SHEA, Trustees of the Thomas and Anne   )              Boise, February 2012 Term
O’Shea Trust u/d/t DATED NOVEMBER 2,      )
1998; GRANDVIEW CREDIT, LLC, a            )              2012 Opinion No. 67
California limited liability company; CALEB
                                          )
FOOTE, an individual; KATE LARKIN         )              Filed: April 26, 2012
DONAHUE, an individual; JOHN KEVIN        )
DONAHUE, an individual; and SAN           )              Stephen W. Kenyon, Clerk
FRANCISCO RESIDENCE CLUB, INC., a         )
California corporation;,                  )
                                          )
    Plaintiffs-Appellants,                )
                                          )
v.                                        )
                                          )
HIGH MARK DEVELOPMENT, LLC, an            )
Idaho limited liability company; GORDON   )
ARAVE, individually and as Member of High )
Mark Development, LLC; JARED ARAVE, )
individually and as Member of High Mark   )
Development, LLC; BENJAMIN ARAVE,         )
individually and as Member of High Mark   )
Development, LLC,                         )
                                          )
    Defendants-Respondents.               )
                                          )

      Appeal from the District Court of the Seventh Judicial District of the State of
      Idaho, in and for Bonneville County. The Hon. Joel E. Tingey, District Judge.

      The judgment of the district court is affirmed.

      C. Timothy Hopkins; Hopkins Roden Crockett Hansen & Hoopes, PLLC; Idaho
      Falls; argued for appellants.

      Richard J. Armstrong; Wood Jenkins LLC; Salt Lake City, Utah; argued for
      respondents.

EISMANN, Justice.
       This is an appeal from a judgment in favor of the defendants in an action alleging fraud
and breach of contract in connection with the sale of a commercial building. We affirm the
judgment of the district court.

                                                I.
                                      Factual Background
       High Mark Development, LLC, is an Idaho limited liability company whose members
include Gordon Arave, Mark Arave, and Jared Arave.             High Mark was the owner of a
commercial building located in the City of Ammon, a suburb of Idaho Falls. On June 20, 2006,
it had leased a portion of the building to The Children’s Center, Inc., for a period of ten years
commencing on June 19, 2006.
       In June 2007, High Mark listed the real property for sale through its realtor. Thomas
O’Shea, a resident of California, learned of the property through a realtor friend in Boise. Mr.
O’Shea and his wife, Anne, were trustees of the “Thomas and Anne O’Shea Trust u/d/t Dated
November 2, 1998,” which they had formed to protect their assets and provide for their children.
They decided to purchase the real property.
       On August 14, 2007, the Trust entered into a real estate contract agreeing to purchase the
property from Seller for $3,700,000.00. The remaining Plaintiffs, Grandview Credit, LLC, a
California limited liability company; San Francisco Residence Club, Inc., a California
corporation; Caleb Foote; Kate Donahue; and John Donahue, all agreed to invest in the property.
When the transaction closed, the deed listed the Trust and the investors as grantees, taking the
property as tenants in common with varying percentages of interest. The negotiations and
exchange of information were conducted primarily through the Plaintiff’s realtor and High
Mark’s realtor, with Mr. O’Shea being the spokesperson for the investors.
       The sale of the real property closed on December 10, 2007. The Children’s Center did
not make any payments to Plaintiffs after they acquired the property. On March 1, 2008, the
Children’s Center vacated the property, and shortly thereafter it went out of business.
       On July 8, 2008, Plaintiffs filed this action against High Mark and two of its principals,
Gordon Arave and Benjamin Arave. Plaintiffs later added Jared Arave as a defendant by filing
an amended complaint. The focus of the litigation was that the Defendants had induced the
Plaintiffs to acquire the property by providing false information that the Children’s Center was

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current in its payments of rent and/or concealing or failing to disclose that the Center had failed
to pay all rent due under the lease. The Plaintiffs alleged claims for breach of contract and fraud
by misrepresentation and nondisclosure against all of the Defendants, but the issues were
narrowed after cross motions for summary judgment. The case was tried to a jury on the issues
of: High Mark’s breach of contract; High Mark’s alleged fraud by misrepresentation and
nondisclosure; Gordon Arave’s alleged fraud by misrepresentation and nondisclosure; and
Benjamin Arave’s alleged fraud by nondisclosure. The jury returned verdicts in favor of all of
those Defendants. The Plaintiffs filed a motion for a judgment notwithstanding the verdict on
the issue of liability or, in the alternative, for a new trial, which the district court denied. The
Plaintiffs then timely appealed.

                                                II.
                 Did the District Court Err in Denying the Plaintiff’s Motion
                         for a Judgment Notwithstanding the Verdict?
       When a trial court decides a motion for a judgment notwithstanding the verdict, it cannot
weigh the evidence or pass on the credibility of witnesses. Weinstein v. Prudential Prop. and
Cas. Ins. Co., 149 Idaho 299, 327, 233 P.3d 1221, 1249 (2010). It must simply determine
whether reasonable minds could have reached the same conclusion as the jury when the evidence
and all reasonable inferences that can be drawn therefrom are considered in the light most
favorable to the nonmoving party. Id. We use that same standard when reviewing the trial
court’s ruling on the motion. Id. at 315, 233 P.3d at 1237.

                                                A.
                                        The Fraud Claim.
       1. False Statement. The jury was asked to decide whether the Plaintiffs had proved, by
clear and convincing evidence, that High Mark had committed fraud, either by misrepresentation
or by failure to disclose; that Gordon Arave had committed fraud, either by misrepresentation or
failure to disclose; and that Benjamin Arave had committed fraud by failure to disclose. The
jury found that the Plaintiffs had not proved those claims. In their motion for a judgment
notwithstanding the verdict, the Plaintiffs asked for a judgment establishing liability for fraud
against High Mark on the claim of fraud by both misrepresentation and nondisclosure and

                                                 3
against Gordon Arave on the claim of fraud by nondisclosure. The district court denied that
motion. In their initial brief on appeal, the Plaintiffs listed as an issue the district court’s denial
of that motion. However, they only addressed their claim that High Mark committed fraud by
making false representations. Therefore, we will not address the district court’s denial of the
motion with respect to High Mark’s and Mr. Arave’s alleged fraud by nondisclosure. Inama v.
Boise County ex rel. Bd. of Comm’rs, 138 Idaho 324, 330, 63 P.3d 450, 456 (2003) (“We will not
consider issues cited on appeal that are not supported by argument and propositions of law”).
       The only claim of fraud argued on appeal is High Mark’s alleged fraud in making a false
representation. Under the facts shown in the record, the Thomas and Anne O’Shea Trust u/d/t
Dated November 2, 1998, did not have a fraud claim based upon an alleged false representation.
There were no representations that could have fraudulently induced Mr. O’Shea on behalf of the
Trust to enter into the purchase contract. The only alleged misrepresentations that occurred prior
to the execution of the real estate contract were: (a) the internet posting advertising the property
for sale, which was created by High Mark’s realtor, and (b) a statement by the realtor to the
Plaintiffs’ realtor that, “as far as he knew,” the tenant had made all of the rental payments. In
connection with the Defendants’ motion for summary judgment, the district court determined
that the internet advertisement did not contain allegations of fact that could be the basis of a
fraud claim, and it so instructed the jury. The court also held that the statement by High Mark’s
realtor could not be a statement of fact that could be the basis of a fraud claim. The Plaintiffs
have not challenged those rulings on appeal. Therefore, there was no misrepresentation that
induced the Trust to enter into the real estate contract.
       Alleged false representations about the financial condition of the tenant made after the
Trust had entered into the contract could not form the basis of a fraud claim because the contract
did not provide that the Trust could terminate it if the Trust determined that the tenant was not
financially sound.    The buyer could only terminate the contract “[s]hould the information
provided on the estoppel differ from the information provided by Seller,” and there is no
contention that it did. The Trust was already bound to purchase the property before the alleged
false representations were made. “It is immaterial if one is induced by false representations to do
what one is bound to do . . . .” 37 Am. Jur. 2d Fraud and Deceit § 283 (2001). However, the
record does not reflect that the other Plaintiffs were contractually bound to invest in the property
until they executed the Tenancy in Common Agreement dated November 15, 2007, which

                                                  4
required them to contribute to the purchase price. That agreement was executed after an alleged
misrepresentation regarding the tenant’s payment of rent. Therefore, the other Plaintiffs would
have a cause of action for fraud based upon that alleged misrepresentation. However, for the
sake of simplicity, when addressing the fraud claim we will refer to the Plaintiffs, even though
the Trust does not have a claim of fraud based upon the making of a misrepresentation.
        The district court instructed the jury that two of the elements the Plaintiffs had to prove
by clear and convincing evidence in order to establish fraud were that “the defendant stated a fact
to the plaintiff” and that “[t]he statement was false.” The only alleged misrepresentations that
the Plaintiffs argue on appeal were included in the Income and Expense Statement faxed to their
realtor on August 27, 2007, and the Estoppel Certificate dated October 17, 2007. The Plaintiffs
contend that these documents “falsely represented that the Center had been paying all of its
monthly rent.”
        The Income and Expense Statement showed that from June 2006 through July 2007, the
rent received from the Children’s Center totaled $324,836.00. The Estoppel Certificate included
a statement that “[a]ll minimum monthly rent has been paid to the end of the current calendar
month, which is September 2007.” The Plaintiffs contend that these statements were false
because the Center’s records show that it did not make rental payments during the six-month
period from August 2006 through January 2007. From the evidence at trial, the jury could
reasonably have concluded that there was no false statement regarding the Center’s payment of
rent.
        In 2002, the Children’s Center began its business of providing psychiatric, psychological,
counseling, and therapy services to children and adolescents. It leased space in a building
located at 1615 Curlew Drive, Ammon, which was owned by Arave Brothers, LLC, a company
owned by Gordon Arave and his brother. Because the Center was a new business, Arave
Brothers agreed that it did not have to pay any rent for the first six months of the lease. Arave
Brothers later sold the building to a third party, subject to the Center’s lease, and the Center
continued occupying that building for the duration of the lease.
        The Children’s Center wanted to expand its business, and in 2004 it discussed with
Gordon Arave a proposal to have a new building constructed in Pocatello. Gordon Arave agreed
to do so, and Arave Construction, Inc., purchased a parcel of land near the hospital, built a
building, and sold it to Crestwood Enterprises, LLC, a company in which Gordon Arave is a part

                                                 5
owner. The Center began leasing space in that building on May 1, 2005, and Crestwood
Enterprises agreed that the Center would not have to pay rent for the first six months because it
was expanding into a new market.
        On June 1, 2005, Gordon Arave loaned M. Smith Enterprises, LLC, a company owned by
the Center’s CEO, the sum of $100,000, in exchange for a promissory note payable in monthly
interest-only payments until June 1, 2010, when the balance was to be paid. On October 1, 2005,
Mr. Arave made another $100,000 loan to Smith Enterprises on like terms in exchange for a
promissory note with the balloon payment being due on October 1, 2010.
        In 2005, the Children’s Center was nearing the end of its five-year lease on the building
in Ammon. It discussed with Gordon Arave about constructing a new building for it to lease.
Arave Construction agreed to construct a building on adjoining property at 1675 Curlew Drive.
When the building was completed, it sold the property to High Mark Development, LLC.
        The Children’s Center began leasing the building on June 19, 2006. After it had moved
in, it contacted Mr. Arave in July or August 20061 and asked if it could have the same concession
as the other two leases—six months of free rent. Mr. Arave and his accountant then met with the
Center to discuss the request and to review some of its financial information. The accountant
was impressed with the Center’s business model and felt its business was growing. Mr. Arave
stated that he would not agree to six months of free rent because High Mark did not have enough
money on hand to do that. High Mark needed to make the mortgage payments on the property.
The Center then asked if six-month’s rent could be deferred and paid over a period of seven
years. Within a few days, Gordon Arave and Jared Arave agreed to loan the Center money for
six month’s rent plus an additional $49,975.00 from a business they had together, which was
apparently Arave Livestock. As Gordon Arave testified:
        And ultimately we did have some money in another company, meaning Jared and
        I. We opted to loan that money to Matt Smith or to The Children’s Center, I
        guess is the appropriate answer, to The Children’s Center so that they could meet
        their rental obligations. Same thing as borrowing from a bank, I guess, the Bank
        of Commerce. We made a loan to them to do that with.

1
  There is also evidence that the agreement was not made until early 2007, but the jury had the right to resolve
conflicts in the evidence. The accountant testified he thought it was in July or August, and Mr. Arave testified that
he thought it was August, but it may have been September or October of 2006. Even if it were September or
October, the rent would have been paid with the loan proceeds prior to 2007.

                                                         6
       It appears that the loan proceeds for the rent were remitted directly to Seller rather than to
Tenant. When called as a witness by Plaintiffs, Gordon Arave testified:
              A. High Mark Development did not accept a promissory note. Gordon
       and Jared Arave accepted a promissory note after having made a loan to The
       Children’s Center to make those payments; that’s correct.
              Q. Well, the payments weren’t made.
              A. Well, do you suppose that High Mark Development could make their
       payments without any money?
              Q. Well, I’m asking you—
              A. Someone had to give them that money.

       The Children’s Center was to prepare and sign the promissory note, but it did not provide
the signed note until April 18, 2007. The note was made payable to Gordon Arave and Jared
Arave, not to High Mark. If the note was simply to evidence the debt for the unpaid rent and to
establish terms for the payment of that rent, it would have been made payable to High Mark
because it was High Mark that was owed the rental payments. Thus, the jury could have found
that the Center did not fail to pay six month’s rent. It borrowed money from Gordon Arave and
Jared Arave to pay that rent. That the money for the rent was not paid to the Center so it could
pay High Mark does not mean that the transaction was not a loan. When one borrows money to
pay a specific obligation, it is common for a lender to remit the loan proceeds directly to the
creditor rather than to the borrower.
       The Income and Expense Statement stated that “Rent Received from 6/2006 through
7/2007” was $324,836.00. It did not make any representation as to the source of the funds used
to pay the rent. The Estoppel Certificate stated that “[t]he Lease . . . has not been . . . altered or
amended in any respect (except as indicated in the following sentence) . . . .” and that “[a]ll
minimum monthly rent has been paid to the end of the current calendar month, which is
September 2007 . . . .” It also did not represent the source of the funds used to pay the rent, and
Gordon and Jared Arave’s agreement to loan the Children’s Center the funds to pay the rent did
not constitute an alteration or amendment of the lease. Thus, there was sufficient evidence from
which reasonable jurors could have concluded that the statements in the Income and Expense
Statement and the Estoppel Certificate were truthful.
       The Defendants’ attorney did not argue to the jury the significance of Gordon Arave’s
testimony regarding him and Jared Arave making a loan to the Children’s Center so it could meet
its rental obligations. However, a jury is not bound to consider only the arguments made by

                                                  7
counsel. The district court instructed the jury at the beginning of the trial, “Your duties are to
determine the facts, to apply the law set forth in these instructions to those facts, and in this way
decide the case.” The jury is not limited by counsel’s understanding of the case, of the evidence,
or of the law. It can determine the facts for itself and then apply them to the law as stated in the
court’s jury instructions in order to reach its verdict.2
         2. Causation. The Defendants’ counsel did not argue that the statements concerning the
payment of rent were accurate. However, he did argue that under the evidence presented a
reasonable jury could have found that the alleged misrepresentations did not cause the Plaintiffs
any damages, and the district court agreed. The court had instructed the jury that the Plaintiffs
were required to prove by clear and convincing evidence that they “suffered damages
proximately caused by reliance on the false statement.” Based upon the evidence in the record,
the jury could reasonably have found that the Plaintiffs failed to prove that their damages were
caused by any representations in the Income and Expense Statement or the Estoppel Certificate,
even if they were false.
         The jury could reasonably have concluded that the Plaintiffs’ actions showed that they
would have purchased the property even had they known that the tenant did not pay rent from
August 2006 through January 2007, assuming that it had not. After Mr. O’Shea learned that the
property was for sale, he saw the internet advertisement and the website of the tenant. On
August 7, 2007, Mr. O’Shea’s realtor friend e-mailed High Mark’s realtor stating that the trust
would like to make an offer on the property. He stated in the email, “The family trust will be an
all cash purchase and can close in 30 days.”
         On August 14, 2007, Mr. O’Shea signed the contract for the trust to purchase the property
without ever having seen the property or having made an investigation into the financial
condition of the tenant. There was no provision in the contract making the buyer’s obligation to
purchase contingent upon the buyer being satisfied with the financial condition of the tenant.
During trial, Mr. O’Shea testified that he would have liked to ask the tenant some questions such
as “how long he’s been in business and how his operation was doing and how he saw the future

2
  When instructing the jury on the breach of contract claim, the district court informed them that it “previously
found that the Lease Estoppel Certificate did not contain accurate information, that is, representations that the Lease
had not been modified, supplemented, altered or amended, and representations that all minimum monthly rent had
been paid, were not accurate.” It did not include a similar instruction when instructing the jury on fraud.

                                                          8
of the operation,” but he made no attempt to contact the tenant to obtain that information, even
though he had the tenant’s telephone number from the tenant’s website.
       The contract provided that High Mark was to provide “2005 and 2006 federal tax returns
of tenant and a current balance sheet showing assets and liabilities.” In late August 2007, the
Plaintiffs’ realtor was provided with copies of the Children’s Center’s 2005 and 2006 federal and
state income tax returns and a profit and loss statement for the Center covering the period from
January 1 through June 7, 2007. The realtor only forwarded to Mr. O’Shea copies of two pages
of each year’s tax returns. They were the page showing total income and the page showing
expenses, which was probably the schedule of “Other Deductions.” Those documents showed
that in 2005, the Center had total income of $4,228,949 and total deductions (excluding
depreciation) of $3,938,412, for a net gain of $290,537. It was then able to take a net operating
loss carried forward from a prior year in the sum of $165,908. In 2006, the Center had total
income of $5,817,303 and total deductions (excluding depreciation) of $6,183,462, for a net loss
of $366,159. The profit and loss statement for the first six months of 2007 showed total income
of $2,643,751.34, total expenses of $2,654,572.04, for a net loss of $10,820.70.
       Mr. O’Shea testified that there was “some concerns” about the loss in 2006, but their
realtor informed them that the Children’s Center was expanding its business, it had moved into a
new building, and it was hiring additional doctors and staff.       They considered these very
legitimate reasons for the high expenses in 2006. Mr. O’Shea also testified that he did not
consider the loss in 2006 significant, but he put great significance upon the fact that during the
first six months of 2007 the Center’s loss had dropped to only about $10,000.
       The Plaintiffs did not make any inquiry about the Children’s Center’s long-term debt, nor
did they inquire as to its sources of income. They did not inquire as to how in 2006 it was able
to pay out $366,159 more in expenses than it received in income.
        Jack Chillemi, the manager of Grandview, LLC, testified that the Plaintiffs thought the
Center had “got over the expense hump,” and the Plaintiffs’ realtor, who consulted with the
Plaintiffs, stated that they saw that the Center had “righted the ship.” Mr. O’Shea also testified
that the income tax returns showed that the Center was a growing business because its gross
income had grown by almost forty percent from 2005 to 2006.
       The jury could have concluded from the evidence that the other Plaintiffs relied heavily
upon Mr. O’Shea in deciding to invest in the property. The O’Sheas were experienced in buying

                                                9
and selling commercial real estate. Kate Donahue and Mrs. O’Shea are sisters. Ms. Donahue’s
personal investment was to complete a Section 1031 exchange. She and her brother, John Kevin
Donahue, were also officers of the San Francisco Residence Club, Inc. She testified that she
relied upon Mr. O’Shea in making her investment decision. Mr. Donahue testified that he did
not review many of the documents provided and was not involved in the transaction. Caleb
Foote testified that Mr. and Mrs. O’Shea were very good friends of his, that he was not involved
with a lot of the specifics, and that he trusted the O’Sheas implicitly, which was a huge factor in
his decision to join the investment group. Jack Chillemi, the manager of Grandview Credit,
testified that Mr. O’Shea was one of his closest friends, that he relied upon Mr. O’Shea to
accumulate a lot of the information, and that it was a group decision to go ahead with the
investment. Kate Donahue also testified that it was a group decision to go ahead with the
investment. Mr. O’Shea did not provide the other Plaintiffs with all of the documents he
obtained, but only gave them the documents he believed they needed.
       The jury could reasonably have concluded that the O’Sheas had an incentive to use their
influence to convince the other Plaintiffs to invest in the property so that this transaction could be
completed. They had sold some commercial properties in 2007 and wanted to complete a
Section 1031 exchange in order to avoid paying about $400,000 in income taxes. To do so, they
were required to identify like-kind property to purchase within forty-five days and to complete
the purchase within the following 180 days. Thomas O’Shea was looking for commercial
property to purchase in Idaho, when his realtor friend informed him of the High Mark property
that was for sale. The real estate contract stated that the buyer “intends to use the purchase and
sale of the Premises as an integral part of a tax deferred like-kind exchange as allowed under
Section 1031 of the Internal Revenue Code.”           The closing date was to be “no later than
September 15, 2007.”
       The contract also provided that the purchase price would be paid in cash, and it was not
contingent upon the buyer obtaining financing. The evidence indicates that the O’Sheas needed
the investors in order to obtain the financing to complete the purchase. Without them, they
would not have been able to do so.
       The closing date was later extended several times. There were two main issues raised by
the Plaintiffs regarding the estoppel certificates. There were several versions of the certificates

                                                 10
before the one dated October 17, 2007, and Gordon Arave did not see any of them, including the
final one. They were drafted by the Plaintiffs’ lawyer and by High Mark’s lawyer.
       Mr. O’Shea was concerned that the lease was ambiguous as to the property management
expenses to be borne by the Children’s Center.          Mr. O’Shea demanded that the estoppel
certificate specifically include certain expenses that the Center was to pay, and the Center
objected that doing so was modifying the lease. The Plaintiffs, through their realtor, also
expressed concern over the Center’s option to purchase the property contained in the lease. The
purchase price was to be determined by an appraisal, and the Plaintiffs were concerned that if the
Center exercised the option, the Plaintiffs could be required to sell the property for less than they
had paid for it. In an addendum to the real estate contract, High Mark and Gordon Arave agreed
to indemnify the Plaintiffs from any loss if the Center attempted to exercise its option. On
September 19, 2007, Mr. O’Shea accepted the terms of that indemnification, but by letter dated
October 12, 2007, the Plaintiffs’ realtor informed High Mark’s realtor: “[O]ne of the parties that
agreed to partner with Tom O’Shea pulled out. The reason stated was that they could not
reconcile the issue with the Tenant’s option to purchase the building.” During the trial, the
realtor conceded the statement was false and stated that he was just trying to get the process
moving. However, High Mark did not know it was a false statement. The realtor also informed
High Mark’s realtor that Mr. O’Shea was still attempting to arrange financing, and that one
financing option may require Gordon Arave to loan Mr. O’Shea $300,000 on a short-term note.
The letter added that “this is a 1031 Exchange for Tom and the clock is ticking.”
       On October 18, 2007, the Children’s Center and High Mark agreed to resolve these
issues. The Center also had an option to purchase the Pocatello property that it was leasing. The
expansion into Pocatello had not been successful and it was centralizing its business in the
Ammon facility. High Mark wanted the Center to relinquish both options to purchase. The
Center agreed that it would release both options, that it would sign the estoppel certificate that
included the language required by Mr. O’Shea concerning the payment of specified expenses,
and that it would sign a new promissory note to change the payment schedule of the October 1,
2005, promissory note. In exchange, Gordon Arave and Jared Arave agreed to release the Center
from its obligation to pay the promissory note dated April 18, 2007, in the sum of $199,900.00.
       The relevance of the nonpayment of rent was what it indicated about the Center’s
financial condition. A reasonable jury could have concluded that had the Plaintiffs been told that

                                                 11
the Center was unable to pay rent from August 2006 through January 2007, they would still have
purchased the property. The Plaintiffs were not concerned about the Center’s inability to pay
over $366,000 of its operating expenses in 2006 because it appeared that the Center was now
doing well financially. Their concern was not whether the Center had paid its debts in the past,
but whether it appeared it could pay them in the future, and they concluded that it did. Because
its financial difficulties were sufficiently explained, it now appeared that the Center would be
earning a profit. The jury could reasonably conclude that Plaintiffs failed to prove by clear and
convincing evidence that they would not have purchased the property had they known of the
nonpayment of the rent (assuming it occurred).
       The jury could also have found that the Children’s Center’s ultimate failure was not due
to any financial condition that existed when Mr. O’Shea signed the contract. The Center ceased
operations in August or September 2008, about a year after Mr. O’Shea signed the contract. The
cause was twofold: a decision made by the Idaho Board of Medicine that the Center could not
employ physicians and a reduction in Medicaid funding.
       The Center had employed psychiatrists and a pediatric neurologist, and a significant
portion of its profit was the amount by which the Medicaid reimbursement received for their
services exceeded what it had to pay those physicians. Eventually, the Idaho Board of Medicine
investigated and informed the Center that it could not employ physicians. Only hospitals or
managed care facilities could do so. The physicians would have to be independent contractors,
which meant that they would bill Medicaid and receive the Medicaid monies, not the Center.
The person who was the Center’s attorney when this occurred testified that it was “a big
precipitating factor” in the Center going out of business.
       The other factor was a reduction in Medicaid funding that began sometime in 2007.
Medicaid began reducing the number of hours it would pay for services provided by the
psychological rehabilitation workers, and it also reduced payments for intensive behavioral
intervention (IBI). The Medicaid reimbursement was eventually reduced to the point that the
Center had to close its IBI Department and lay off the IBI workers. A large number of the
parents whose children were seen at the Center could not pay for the treatment themselves, and
they did not have private health insurance that would pay. The Medicaid cutbacks significantly
reduced the Center’s revenues.

                                                 12
           Thus, assuming that the jury found that High Mark had misrepresented the lease
payments made by the Children’s Center, it could reasonably have concluded that such
misrepresentations did not cause the Plaintiffs’ damages. Even had they known of the missed
payments, they would have still purchased the property because it appeared to them that the
Center had overcome its financial difficulties. Ultimately, the Center’s closing was caused by
two unanticipated events: the decision by the Idaho Board of Medicine that it could not employ
physicians and a cutback in Medicaid reimbursements.
           In summary, the jury could reasonably have found that there was no misrepresentation or
that the Plaintiffs failed to prove that they had been damaged by the misrepresentations.
Therefore, the district court did not err in denying the motion for a judgment notwithstanding the
verdict on the fraud claim.
           The dissent contends that the Plaintiffs raised the issue of fraud by failing to disclose that
the Children’s Center did not pay its rent in October, November, and December 2007. In doing
so, the dissent fails to disclose certain material facts. First, it quotes from pages 22-23 of the
Plaintiffs’ opening brief. That argument was in support of the Plaintiffs assertion, “Even if
Appellants had conducted their own investigation, the Court erred because it did not determine
whether the records, had they been reviewed, actually disclosed the inaccuracy of the
representations.” (Appellants’ Opening Brief, p. 20.) The first sentence of the quoted argument
states, “None of these documents ‘disclose[d] the inaccuracy of the representation[s]’ that the
Center had regularly paid its rent and was current.” The documents to which the Plaintiffs
referred were “a copy of the Center’s current balance sheet [dated August 28, 2007] showing an
outstanding loan obligation of Gordon Arave, as well as other liabilities” and “the Center’s 2005
and 2006 tax returns and a 2007 profit and loss statement, showing ‘financial trouble.’ ”
(Appellants’ Opening Brief, p. 22.) Those documents were all sent to the Plaintiffs in August
2007,3 and they did not purport to represent whether the Center had paid rent in October,
November, or December 2007. The argument being made was that the documents did not
disclose the Center’s alleged nonpayment of rent during the period from August 2006 through
January 2007. During this portion of the argument, there was no mention of the failure to
disclose nonpayment of rent in October, November, or December 2007.

3
    The Plaintiffs deny receiving the August 28, 2007, balance sheet.

                                                           13
       The dissent then refers to pages 28 and 33 of the Plaintiffs’ opening brief. In that portion
of the Plaintiffs’ brief, they were arguing, “The District Court erred as a matter of law by
denying the Appellants’ Motion for Partial Summary Judgment.” (Appellants’ Opening Brief, p.
28.) After first arguing that this Court should overrule its prior decisions and review on appeal
the denial of a motion for summary judgment, the Plaintiffs stated that the district court erred in
denying the Plaintiffs’ motion for partial summary judgment because “[a]t summary judgment,
the District Court erred in its analysis of fraud by nondisclosure by failing to look at every
circumstance under which a duty to disclose exists.” (Appellants’ Opening Brief, p. 33.) In this
portion of its argument as to why the district court erred in failing to grant partial summary
judgment, the Plaintiffs stated that the duty to disclose included “the November 7, 2007
promissory note, signed after the Estoppel Certificate had been provided to Appellants.”
(Appellants’ Opening Brief, p. 34.) The Center gave the November 7, 2007, promissory note for
the October and November 2007 rent. This reference was to support the Plaintiffs’ assertion that
the district court erred in not granting their motion for partial summary judgment, not that it
erred in failing to grant a judgment notwithstanding the verdict or a new trial. This is the only
portion of their brief in which the Plaintiffs argue any error based upon the November 7, 2007,
promissory note or the nonpayment of rent in October, November, or December 2007.
       Even if we considered that the argument in this portion of the brief regarding the district
court’s denial of their motion for summary judgment should be considered as an argument in
support of their motion for a judgment notwithstanding the verdict or a new trial, their argument
would still fail. Their argument was:       “This ‘subsequent information’ made High Mark’s
previous representation ‘untrue or misleading.’ High Mark also had a duty to disclose that ‘all
minimum monthly rent’ had in fact not been paid, in order ‘to prevent a partial or ambiguous
statement of fact from becoming misleading.’ ” (Appellants’ Opening Brief, p. 34.) The
previous representation to which Plaintiffs referred was the Estoppel Certificate dated October
17, 2007, in which the Children’s Center stated, “All minimum monthly rent has been paid to the
end of the current calendar month, which is September 2007.” The Center’s nonpayment of rent
in October, November, or December 2007, was not subsequent information showing false or
misleading the Center’s statement that all monthly rent had been paid through September 2007.
Thus, even if we restructured the Plaintiffs’ brief to change their argument in support of the
alleged error in denying their motion for partial summary judgment so that it was in support of

                                                14
the alleged error in denying their motion for a judgment notwithstanding the verdict or a new
trial, the argument would fail. The Estoppel Certificate did not purport to represent the future
conduct of the Center.
         Finally, the dissent states that “on pages 35-37 of their opening brief, Plaintiffs engage in
a discussion of fraud by nondisclosure, the duty to disclose, and why they believe the instruction
given by the district court on this issue was inadequate under the circumstances of their case.” In
this portion of the Plaintiffs’ brief, they were asserting that Instruction No. 34 given by the
district court was inadequate. The Plaintiffs’ quoted the jury instruction given by the district
court, referred to an earlier quotation from Watts v. Krebs,4 and then stated that “the Instruction
did not completely discuss every situation in which a duty to disclose exists, as set forth in Watts
v. Krebs, 131 Idaho 616, 962 P.2d 387 (1998) and Sowards v. Rathbun, 134 Idaho 702, 8 P.3d
1245 (2000),” without identifying any of those situations. More importantly, the Plaintiffs did
not mention any of the facts in this case, nor do they even mention a single fact that any the
Defendants allegedly failed to disclose. Simply quoting general statements of the law and
hoping the Court will search the record for facts that may be applicable to those general
statements could hardly be considered an argument as to why the facts were insufficient to
support the jury verdict.
         The dissent does not apply the correct standard of review. The issue is whether there is
substantial and competent evidence to support the jury’s verdict. Pines Grazing Ass’n, Inc. v.
Flying Joseph Ranch, LLC, 151 Idaho 924, ____, 265 P.3d 1136, 1143 (2011). It is not whether

4
  The Plaintiffs stated, “The Instruction is inconsistent with the simple elements of fraud by nondisclosure as stated
in Watts v. Krebs, and quoted above.” The preceding quotation from Watts occurred in the Plaintiffs’ argument that
the district court erred in failing to grant the Plaintiffs’ motion for summary judgment, wherein they quoted from
Watts v. Krebs, 131 Idaho 616, 620, 962 P.2d 387, 391 (1998), as follows:

         "A duty to speak arises in situations where the parties do not deal on equal terms or where
         information to be conveyed is not already in possession of the other party." The Court of Appeals
         has summarized the elements:
                  A duty to disclose may arise when (a) a party to a business transaction is in a
                  fiduciary relationship [or other similar relationship of trust and confidence] with
                  the other party; or (b) disclosure would be necessary to prevent a partial or
                  ambiguous statement of fact from becoming misleading; or (c) subsequent
                  information has been acquired which a party knows will make a previous
                  representation untrue or misleading; or (d) a party knows a false representation
                  is about to be relied upon; or (e) a party knows the opposing party is about to
                  enter into the transaction under a mistake of fact and because of the relationship
                  between them or the customs of trade or other objective circumstances would
                  reasonably expect a disclosure of the facts.

                                                         15
there was substantial and competent evidence for the jury to return a different verdict, or what
verdict the dissent would have reached as the trier of fact. The evidence must be construed in a
light most favorable to the party who prevailed at the trial, not the losing party. Id.

                                                 B.
                                    Breach of Contract Claim.
       The district court granted partial summary judgment on the breach of contract claim,
based upon the implied covenant of good faith and fair dealing.              The contract provided:
“Estoppels: Seller shall deliver to Buyer and [sic] estoppel for the Tenant 10 days prior to
Closing. Should the information provided on the estoppel differ from the information provided
by Seller, Buyer shall have the option to terminate the Agreement and receive full refund of
Earnest Money.” The court found, based upon the evidence presented in connection with the
summary judgment proceedings, that “representations in the Certificate to the effect that there
had been no modifications to the Lease and that all rent had been paid were inaccurate,” which
constituted a breach of the implied covenant of good faith and fair dealing. However, it held that
the jury must decide whether such breach was a proximate cause of any damages.
       The court’s finding of breach of contract was not based upon the same evidence
presented at trial. In defense to the Plaintiffs’ motion for summary judgment, the Defendants’
counsel did not present to the district court the evidence set forth above regarding the loan from
Gordon and Jared Arave to the Children’s Center for the rental payments. The Defendants’
counsel also did not argue the doctrine of merger as a bar to a breach of contract claim. See
Estes v. Barry, 132 Idaho 82, 967 P.2d 284 (1998). There is also no indication in the record that
the O’Sheas assigned any breach of contract claim to the other Plaintiffs.
       With respect to the breach of contract claim, the district court instructed the jury as
follows:
              Plaintiffs have alleged breach of contract against Defendant High Mark
       Development, LLC.           The Court has previously found that the
       Commercial/Investment Real Estate Purchase and Sale Agreement was a contract
       between Defendant High Mark Development, LLC and Plaintiff O’Shea Family
       Trust. The Court also previously found that the Lease Estoppel Certificate did not
       contain accurate information, that is, representations that the Lease had not been
       modified, supplemented, altered or amended, and representations that all
       minimum monthly rent had been paid, were not accurate and were therefore a

                                                 16
       breach of the implied covenant of good faith and fair dealing and breach of
       contract.

It also instructed the jury that the Plaintiffs have the burden of proving that they “have been
damaged on account of the breach” and “[t]he amount of the damages.”
       The district court held that the jury could reasonably have determined that the Plaintiffs
failed to prove that they were damaged by the breach. For the same reasons set forth above
regarding the fraud claim, the jury could also reasonably have found that the Plaintiffs failed to
prove that the breach of contract caused any damages. In addition, the jury could have found
that the breach did not cause any damages because the Plaintiffs did not have the right to
terminate the contract for the misrepresentation in the estoppel certificate. They could only
terminate the contract “[s]hould the information provided on the estoppel differ from the
information provided by Seller,” and it did not. Therefore, the district court did not err in
denying the motion for a judgment notwithstanding the verdict on the breach of contract claim.

                                                III.
           Did the District Court Err in Denying Buyer’s Motion for a New Trial?
       The Plaintiffs moved for a new trial on both the breach of contract claim and the fraud
claims on the ground of insufficiency of the evidence to justify the verdict. I.R.C.P. 59(a)(7).
The district court denied the motion.
       After making an assessment of the credibility of the witnesses and weighing the evidence,
a trial court may grant a new trial on the ground of insufficiency of the evidence if the judge
determines that the verdict is not in accord with the clear weight of the evidence and that a
different result would follow a retrial. Hudelson v. Delta Int’l Mach. Corp., 142 Idaho 244, 248,
127 P.3d 147, 151 (2005).
       The standard we apply when reviewing a trial court’s decision on a motion for a new trial
is as follows:
               When reviewing a trial judge’s grant of a new trial on appeal, this Court
       applies the abuse of discretion standard. A trial judge has wide discretion to grant
       or deny a request for a new trial, and we will not overturn the judge’s decision
       absent a showing of a manifest abuse of discretion. Although we will review the
       evidence, we primarily focus upon the process used by the trial judge in reaching
       his or her decision, not upon the result of that decision. The trial judge is in a far
       better position than we to weigh the demeanor, credibility and testimony of

                                                17
        witnesses and the persuasiveness of all the evidence. Therefore, we do not weigh
        the evidence. Our inquiry is: (1) whether the trial judge correctly perceived the
        issue as one of discretion; (2) whether the trial judge acted within the outer
        boundaries of his or her discretion and consistently with the legal standards
        applicable to the specific available choices; and (3) whether the trial judge
        reached his or her decision by an exercise of reason.

Id. (citations omitted).
        The Plaintiffs contend that “the District Court did not actually weigh the evidence and
determine whether the verdict was against the Court’s view of the clear weight of the evidence,
and whether a new trial would produce a different result.” The district court commenced its
analysis by quoting the applicable standard of review from Karlson v. Harris, 140 Idaho 561, 97
P.3d 428 (2004). That quotation included the statement that “ ‘[i]f . . . the judge on the entire
evidence is left with the definite and firm conviction that a mistake has been committed, it is to
be expected that he will grant a new trial.’ ” Id. at 568, 97 P.3d at 435 (quoting from Quick v.
Crane, 111 Idaho 759, 768, 727 P.2d 1187, 1196 (1986)). The Court first addressed the breach
of contract claim. After discussing the evidence, the court stated that the jury could reasonably
have concluded that the statements made in the Estoppel Certificate were not the proximate
cause of any damages. It wrote, “The jury could likewise have concluded that, by ignoring other
disclosures showing financial difficulty, Plaintiffs were going to proceed with the purchase
regardless of the information provided in the Estoppel in order to realize the tax benefits from a §
1031 like-kind exchange.” The court concluded its analysis by stating, “While the Court may
not necessarily agree with the jury verdict, the Court does not have a ‘definite and firm
conviction’ that a mistake has been made.” This statement was the equivalent to stating that the
verdict was not against the clear weight of the evidence, and was so used in Quick v. Crane, 111
Idaho 759, 768, 727 P.2d 1187, 1196 (1986). The court then addressed the fraud claims and
concluded that there was substantial evidence supporting the jury’s decision that the false
statements did not cause injury. It is obvious that the court’s analysis of causation under the
breach of contract claim would also apply to the fraud claim. Having determined that the verdict
was not against the clear weight of the evidence, it was not necessary to also determine whether a
different result would follow a retrial. The Plaintiffs have not shown that the district court
manifestly abused its discretion by denying their motion for a new trial.

                                                18
                                                IV.
                     Did the District Court Err in Instructing the Jury on
                             the Issue of Fraud by Nondisclosure?
       In their amended complaint, the Plaintiffs alleged a claim of fraud by failing to disclose a
material fact. Prior to trial, they submitted a jury instruction on the duty to speak, which stated
as follows:
              Fraud may also be established by silence where the Defendants or any one
       of them had a duty to speak. A duty to speak arises in situations where the parties
       do not deal on equal terms or where information to be conveyed is not already in
       possession of the other party. A duty to speak may also arise in any one of the
       following instances:
              (a) disclosure would be necessary to prevent a partial or ambiguous
              statement of fact from becoming misleading; or
              (b) subsequent information has been acquired which a party knows will
              make a previous representation untrue or misleading; or
              (c) a party knows a false representation is about to be relied upon; or
              (d) a party knows the opposing party is about to enter into the transaction
              under a mistake of fact and because of the relationship between them or
              the customs of the trade or other objective circumstances would
              reasonably expect a disclosure of the facts.

       The trial court did not give that instruction on the ground that it was covered by its other
jury instruction. The court’s instruction on fraud by nondisclosure began with the following
statement: “Silence may constitute fraud when a duty to disclose exists. A party is under a duty
to disclose if a fact known by one party and not the other is a vital fact upon which the bargain is
based.” The court also instructed the jury that nondisclosure of the vital fact had to be material,
which the court defined as follows:
              “Materiality” refers to the importance of the alleged disclosure or
       nondisclosure in determining the party’s course of action. A disclosure or
       nondisclosure is material if (a) a reasonable person would attach importance to its
       existence or nonexistence in determining a choice of action in the transaction in
       question, or (b) the person making the disclosure or failing to disclose knows or
       has reason to know that the recipient is likely to regard the matter as important in
       determining the choice of action, whether or not a reasonable person would so
       consider.

       The Plaintiffs objected on the ground that the Court should list the instances in which a
duty to disclose arises. He described them as follows:

                                                19
              And that would include duties where information to be conveyed is not
       already in possession of the other party, disclosure is necessary to prevent a
       partial or ambiguous statement from becoming misleading, subsequent
       information has been acquired which will make previous representation untrue or
       misleading, and a fact known by one party and not the other is so vital that if the
       mistake were mutual, contract—the contract would be avoidable—would be
       voidable and the party knowing that fact also knows that the other does not know
       it.

       On appeal, the Plaintiffs contend that the instruction was erroneous because it does not
completely discuss every situation in which a duty to disclose exists, as set forth in Watts v.
Krebs, 131 Idaho 616, 962 P.2d 387 (1998) and Sowards v. Rathbun, 134 Idaho 702, 8 P.3d 1245
(2000). Other than making this statement, the Plaintiffs do not present any argument as to why
the instruction given would not adequately cover the subject. Therefore, we will not consider the
alleged error. Inama v. Boise County ex rel. Bd. of Comm’rs, 138 Idaho 324, 330, 63 P.3d 450,
456 (2003) (“We will not consider issues cited on appeal that are not supported by argument and
propositions of law”).
       The Appellants also contend that the court’s instruction was “overbroad, complicated,
and confusing” and that “the instruction required the jury to find that a fact was ‘vital,’ that the
bargain was ‘based’ upon that fact, and also that the nondisclosure was ‘material.’ ” Rule 51(b)
of the Idaho Rules of Civil Procedure states, “No party may assign as error the giving of or
failure to give an instruction unless the party objects thereto before the jury retires to consider its
verdict, stating distinctly the instruction to which that party objects and the grounds of the
objection.” We need not consider these objections to the jury instruction because the Plaintiffs
did not object on these grounds before the district court.

                                                  V.
                 Did the District Court Err in Denying the Plaintiffs’ Motion
                    for Partial Summary Judgment Establishing Liability?
       The Plaintiffs ask us to reverse the district court’s denial of their motion for partial
summary judgment. “An order denying a motion for summary judgment is not reviewable on
appeal from a final judgment.” Watson v. Idaho Falls Consol. Hosps., Inc., 111 Idaho 44, 46,
720 P.2d 632, 634 (1986).

                                                  20
                                                 VI.
                Is Either Party Entitled to an Award of Attorney Fees on Appeal?
          The Plaintiffs seek an award of attorney fees on appeal pursuant to Idaho Code section
12-120(3) and the real estate contract. They both require that the party be the prevailing party in
order to be awarded attorney fees. Because the Plaintiffs have not prevailed on appeal, they are
not entitled to an award of attorney fees.
          The Defendants also seek an award of attorney fees on appeal pursuant to the contract
and to Idaho Code section 12-120(3). We need only address the statutory basis for an award of
attorney fees. It grants the prevailing party the right to recover attorney fees in any action to
recover in a commercial transaction. It defines a commercial transaction as “all transactions
except transactions for personal or household purposes.” I.C. § 12-120(3). The district court
awarded High Mark attorney fees under this statute on the ground that the real estate contract
was a commercial transaction, and the Plaintiffs have not challenged that determination on
appeal.
          In their amended complaint, the Plaintiffs alleged that all of the Defendants participated
in the transaction and were liable for fraud. On appeal, they ask us to set aside the verdicts in
favor of the Defendants who participated in the trial and to direct the district court to enter
judgments against them on liability. The prevailing party is entitled to an award of attorney fees
under this statute “where the action is one to recover in a commercial transaction, regardless of
the proof that the commercial transaction alleged did, in fact, occur.” Garner v. Povey, 151
Idaho 462, ___, 259 P.3d 608, 615 (2011)(Citations omitted). Therefore, the Defendants are
entitled to an award of attorney fees on appeal pursuant to Idaho Code section 12-120(3).

                                                 VII.
                                             Conclusion.
          We affirm the judgment of the district court. We award respondents costs on appeal,
including attorney fees.

          Chief Justice BURDICK and Justice HORTON CONCUR.

                                                 21
        J. JONES, Justice, concurring in part and dissenting in part.
        I dissent from Part II.A of the Court’s opinion, particularly from the conclusion that the
Plaintiffs did not effectively raise the nondisclosure aspect of their fraud claim on appeal. Not
only did the Plaintiffs effectively raise the issue on appeal, they established a right to relief on
that ground. I dissent with respect to Part II.B and Part III. Although I dissent from the Court’s
conclusion that the Plaintiffs did not raise the issue of nondisclosure in their appeal and believe
the given jury instruction on the issue was inadequate, I concur with the result reached by the
Court in Part IV, regarding the Plaintiffs’ claim of error with respect to the jury instruction on the
nondisclosure issue. I concur in Part V of the opinion. I dissent from the Court’s holding in Part
VI that Defendants are entitled to an attorney fee award.
        With regard to the issue of whether the Plaintiffs adequately addressed their
nondisclosure claim, it certainly appears from their opening brief that the Plaintiffs were raising
a fuss that the Defendants failed to disclose a very material fact―that the Children’s Center had
not been making rental payments required under the lease―a transgression that went to the very
heart of the transaction. While it can be said that the Plaintiffs intermixed their misrepresentation
and nondisclosure claims, it cannot be said that the nondisclosure issue was not addressed in
their opening brief. The brief intermingled the two varieties of misrepresentation, outlining first
the false statements allegedly made to them and then highlighting the material facts that should
have been disclosed to them but which were deliberately withheld.5 It might have been more
effective, both below and on appeal, to treat the two issues separately, but the Plaintiffs were not
obligated to do so.
        Fraud is fraud, and this Court has not previously drawn a clear distinction between fraud
involving nondisclosure of a material fact and fraud involving an affirmative misrepresentation.
The two are often interrelated. In G&M Farms v. Funk Irr. Co., 119 Idaho 514, 808 P.2d 851
(1991) the plaintiff/appellant alleged intentional misrepresentation in its complaint. Id. at 518,

5
  Plaintiffs’ argument on appeal essentially mirrored their argument to the jury in this regard. In their closing
argument the Plaintiffs first told the jury of false statements that were made to them and then immediately turned to
matters of nondisclosure. Their counsel argued:

        Now I want to talk about the nondisclosure part of this because, you’ll recall, the Court has
        instructed us that one of the claims we seek is fraud by silence, by nondisclosure, not only what
        did you tell us that was untrue that we relied on and had a right to rely on but what was material,
        what was material to the transaction, that wasn’t disclosed.

                                                         22
808 P.2d at 855. The district court granted summary judgment to the defendant/respondent,
determining that the alleged misrepresentations did not support a fraud claim. Id. This Court
reversed the summary judgment because the district court had failed to consider nondisclosure of
a material fact as an intentional misrepresentation. Id. at 526, 808 P.2d at 863. We said:
       In Tusch Enters. v. Coffin, 113 Idaho 37, 41, 740 P.2d 1022, 1026 (1987), this
       Court held that an intentional misrepresentation or fraud claim should not be
       analyzed only with reference to the [nine] elements recited in Faw v. Greenwood,
       101 Idaho 387, [389,] 613 P.2d 1338 [,1340] (1980). We stated in Tusch that the
       facts of that case fell within the category of misrepresentation on the basis of
       nondisclosure. 113 Idaho at 41−42, 740 P.2d at 1026−27.

Id. at 520, 808 P.2d at 857.
       The plaintiff in Watts v. Krebs, 131 Idaho 616, 962 P.2d 387 (1998) alleged that she was
fraudulently induced to enter into an agreement to partition real property based on the
defendant’s failure to disclose that he had removed the timber from the property. Id. at 619, 962
P.2d at 390. The defendant claimed “that he had to make some affirmative allegation before [the
plaintiff] had a right to rely on his nondisclosure and, because he made no such allegation, [the
[plaintiff] had no right to rely on his failure to disclose the fact of harvesting.” Id. at 620, 962
P.2d at 391. Nevertheless, we stated, “this case did not involve an allegation of fraud by
nondisclosure; it involves a claim for intentional misrepresentation.” Id. The Court went on to
note the holding in G&M Farms that fraud “may be established by silence where the defendant
had a duty to speak” and that a duty to speak arises in situations “where information to be
conveyed is not already in possession of the other party.” Id. The interrelationship between the
two varieties of fraud is rather apparent.
       The Watts Court then approvingly cited to St. Alphonsus Reg’l Med. Ctr., Inc. v. Krueger,
124 Idaho 501, 508, 861 P.2d 71, 78 (Ct. App. 1992) to outline several instances where a duty to
disclose may arise, including several pertinent to this case:
       (b) disclosure would be necessary to prevent a partial or ambiguous statement of
       fact from becoming misleading; or (c) subsequent information has been acquired
       which a party knows will make a previous representation untrue or misleading; or
       (d) a party knows a false representation is about to be relied upon; or (e) a party

                                                 23
         knows the opposing party is about to enter into the transaction under a mistake of
         fact and because of . . . objective circumstances would reasonably expect a
         disclosure of the facts.

131 Idaho at 620, 962 P.2d at 391.
         Although this is primarily a nondisclosure case, it also involves misrepresentations.6 The
principal misrepresentation made by High Mark―the assertion contained in the lease estoppel
certificate (Estoppel Certificate) that all rent had been paid and was current―placed a
heightened duty on High Mark to disclose what it never did disclose―that the Children’s Center
had failed to make numerous rent payments. The Defendants not only withheld this critical
information, they appear to have made every effort to conceal it.
         Thomas O’Shea became interested in purchasing the property based upon the real estate
listing, which stated, “[h]ere is a great investment property with that hard to find 10 year, Triple
Net Lease.” The listing stated that the “Scheduled Gross Income” and “Net Operating Income”
was $299,850, annually, or $24,987.50, monthly.7 It is obvious the property was being marketed
as an income-producing property. The most reliable method for valuing such a property is the
income approach “because that type of property is sold and purchased based upon actual
income.” The Senator, Inc. v. Ada Co., Bd. of Equalization, 138 Idaho 566, 573, 67 P.3d 45, 52
(2003). A reliable stream of income is necessary in order to support the value of a property under
the income approach appraisal method. Thus, the existence of the lease was the heart of the
$3,700,000 purchase price. Without the income stream, the value of the property would take a
nosedive.

6
   In their amended complaint, the Plaintiffs allege about an equal mix of false statements and material
nondisclosures in the third count, titled “Negligent and/or fraudulent misrepresentation.” They focus on the
representation that the Children’s Center lease was in good standing and the failure of Defendants to inform them
that many rental payments had not, indeed, been made or had been made by way of promissory notes, the purpose of
which was not disclosed.
7
  In ruling on the Plaintiffs’ motion for summary judgment, the district court said that language in the listing could
not be used to support a claim for fraud because the language was “sales talk or puffing.” The district court was
incorrect in that regard, but the ruling has no real bearing on the nondisclosure claim. See G&M Farms, 119 Idaho at
522, 808 P.2d at 859 (The general rule that seller’s talk or puffing do not amount to actionable misrepresentation “is
not applicable where the parties to the transaction do not . . . have equal means of knowing the truth”). The
relevance of the listing is that it helps to set the predicate for the nondisclosure claim―the fact that the property was
being sold upon the strength of the lease, a fact that was fairly obvious throughout the transaction.

                                                          24
         During discussions about the property, High Mark’s broker, Paul Fife, was advised by
Gordon Arave that the Children’s Center “had always paid rent on time and he hadn’t had any
real problems” with the Center. Fife passed that information on to Jeff Needs, O’Shea’s broker.8
At no time during the course of the transaction did High Mark or any of its principals, agents or
representatives advise any of the Plaintiffs that rent was not being paid or that the Children’s
Center had given two promissory notes in lieu of rent. The impression that rent was being paid
and was current was reinforced by a fax from High Mark’s broker to O’Shea’s broker containing
information of “Rent Received from 6/2006 through 7/2007…$324,836.00” and by the Estoppel
Certificate, which unequivocally stated that the $24,987.50 monthly rent was current, as well as
any taxes, utilities or any other charges required under the lease, and that no default or any
condition that could result in default currently existed. High Mark attempts to sidestep
responsibility for these false representations, asserting in its brief that it did not contribute to the
drafting of the several versions of the Estoppel Certificate “as they related to the payment of
rents.”9 What High Mark overlooks is that it was not the tenant’s obligation under the real estate
contract to furnish the certificate. Rather, it was specifically agreed that High Mark would
furnish the certificate and High Mark had an absolute obligation to ensure that the
representations were correct. High Mark knew at the time the certificate was furnished that much
of the rent had not been paid, that this information was very material to the transaction, and that
this information was not disclosed to the Plaintiffs.10

8
   In its ruling on Plaintiffs’ motion for summary judgment, the district court indicated that when the information was
passed from High Mark’s broker to O’Shea’s broker, it may have been qualified by the statement that “as far as he
knew” the rent was being paid. Again, this is not particularly relevant to the nondisclosure claim. A number of
documents purported to show that rent was being or had been paid.
9
   Defendants’ counsel fails to note that, although he did not draft the initial version of the Estoppel Certificate, he
did draft a subsequent version of the certificate, which did contain all of the representations regarding the payment
of rents. Counsel disingenuously told the jury, “We weren’t responsible for misrepresentations in the estoppel
certificate,” and “The tenant was the real party here who misrepresented facts, not my clients.” This, despite the fact
that the district court, in its summary judgment ruling, stated, “To the extent a contact requires one party to provide
information to the other party in anticipation of completing the agreement, it is at least implicit in the agreement that
the information will be accurate and reliable,” referring to the rental and default representations in the Estoppel
Certificate.
10
    The Estoppel Certificate is dated October 17, 2007. At that time the October rental payment was due and had not
been paid. On November 7, 2007, Defendants’ counsel drafted another promissory note, this one in the principal
amount of $57,975, representing rental due for October and November of 2007. This was apparently for the purpose
of deferring rent until the transaction was closed in December 2007. This note was never disclosed to the Plaintiffs.
At trial, when asked if the November promissory note should have been disclosed, Gordon Arave testified, “When I
looked back at that situation, that is perhaps correct. At that time it was not preeminent in my mind at all.”

                                                          25
       A promissory note, dated April 18, 2007, payable by the Children’s Center to Gordon and
Jared Arave, was unquestionably given in lieu of payment of $149,925 in rent that was owing for
six months (August 2006−January 2007). Had the note been made payable directly to High
Mark, this fact might have been more apparent. The note may have been written to the Araves to
disguise the fact that rent was not being paid. The timing of the note is also of interest. The note
represented six months of delinquent rent, going back as far as August 2006. Apparently, it did
not occur to anyone to prepare a note until three months after the January payment became
delinquent and just before the property was put on the market. A month and a half after the date
of the note, the real property was listed for sale. After the real estate contract was signed, the
Araves, with the concurrence of High Mark, agreed to cancel the note, on the condition that the
Children’s Center sign the Estoppel Certificate, which unequivocally stated that all rent had been
paid. High Mark and the Children’s Center entered into an agreement on October 18, 2007, to
cancel the note in consideration for Children’s Center’s agreement to “immediately sign the
estoppel certificate.” The agreement was made specifically contingent upon the closing of the
sale to the Plaintiffs. Rather than being told that the note was canceled as an inducement for the
Children’s Center to sign the false certificate, Defendants represented to the Plaintiffs that the
cancellation of the note was in consideration of the Children’s Center dropping its option to
purchase the property. The Defendants well knew that the option to purchase was essentially
worthless because they knew the Children’s Center was in precarious financial condition and had
questionable prospects for improving that condition. Again, Defendants absolutely failed to
disclose to Plaintiffs that the Children’s Center had not made those rent payments. When asked
at trial whether he had ever told the O’Sheas about the existence of the April 18 note, Gordon
Arave replied, “Never crossed my mind not one single time. Never thought about it.”
       After the Estoppel Certificate was signed on October 18, 2007, the Children’s Center
defaulted in payment of rent for October and November. Three days prior to that, the Children’s
Center’s lawyer advised Scott Williams, a High Mark representative, that “We [Children’s
Center] are unable to pay High Mark today, and we will advise when those monies may be
available.” In the same time frame, the attorney and a Children’s Center representative met with
Williams and both “indicated to him that The Children’s Center was having some severe
financial difficulties and that we were not going to be able to make the [rent] payment and that
we actually had a consultation with a bankruptcy attorney previously a couple of times and that it

                                                26
was very likely that the company would be headed towards bankruptcy.” On November 7, High
Mark’s counsel emailed the Children’s Center’s counsel to inquire about rent payment and to
suggest that the two defaulted months be paid by virtue of a promissory note made payable to
High Mark. The rent deferral note, dated November 7, 2007, was thereupon signed by the
Children’s Center. None of this was ever disclosed to the Plaintiffs.
         The district court and the parties seem to have gotten overly concerned about the
Estoppel Certificate and whether or not it was the principal source of information upon which the
Plaintiffs relied to conclude the purchase. In its attempt to downplay the significance of the
certificate, the Defendants, perhaps inadvertently, highlighted in their brief what was really
important. They stated:
         [Jeff] Needs [Plaintiffs’ realtor] testified during cross examination he “relied
         mostly on the lease” and “on the fact that the tenant we had been told was a strong
         tenant, had been paying every monthly rent on time, in a timely manner, had been
         a great tenant,” in purchasing the property. Needs did not include the estoppel
         certificate in this list of what he, and by imputation, the buyers relied on for
         purchasing the property.11

(Emphasis in original.) The value of the property was clearly dependent upon the existence of the
ten-year, $24,987.50-per-month lease. The Plaintiffs were relying on that strength in acquiring

11
   High Mark’s counsel made a similar statement to the jury in attempting to absolve Gordon and Scott Arave from
liability, saying:

         Let’s turn to the question of what the buyers actually relied on in this case. And I think the best
         testimony was from Jeff Needs [O’Shea’s realtor] as to what was relied on. Remember the
         questions that I asked Mr. Needs? I asked him “What was it that you mostly relied on in this
         case―rely on in this case?” And he testified that it was the lease agreement. And then he said,
         well, it also included statements that were made to him and to Tom O’Shea by Paul Fife [High
         Mark’s broker].

Counsel’s assertion that the Plaintiffs did not rely on the Estoppel Certificate is not supported by the record or by the
fact that Needs did not specifically reference it in his testimony. The certificate itself stated, “This certification is
made with the knowledge that it will be relied upon by Purchaser, Purchaser’s lender and any successor or assignee
of Purchaser’s right to purchase the Property. . . .” The Estoppel Certificate was important in another regard because
Addendum 1 to the real estate contract provided, “Should the information provided on the estoppel differ from the
information provided by Seller, Buyer shall have the option to terminate the Agreement and receive full refund of
Earnest Money.” In other words, the Plaintiffs had an out, in the event that information in the certificate was false.
Unfortunately, the Defendants did not provide the buyer the critical information that would have disclosed the falsity
of the representations regarding rental and allowed the buyer to terminate the transaction.

                                                          27
the property. The Estoppel Certificate played a supporting role in reinforcing their belief that the
property was worth what it was priced at, but it was not the only factor.
         In January of 2008, a month after the closing, the Plaintiffs received word that the
Children’s Center could not pay its rent and that it would be vacating the property. Plaintiffs
never received any rent from the Children’s Center.12
         The sum and substance of this case is that rent on the Children’s Center was not being
paid, that the Defendants appear to have taken pains to disguise such fact and keep it from
becoming known to the Plaintiffs, and that the Plaintiffs obviously suffered substantial damages.
It is no wonder that the Plaintiffs testified at trial that they would not have decided to purchase
the property if they had known about the nonpayment of rent. O’Shea testified, “There is no way
that we would have gone ahead with that deal had we known [the Children’s Center had not paid
rent for October, November and December of 2007].” This almost goes without saying.
         All of the foregoing facts were presented in the Plaintiffs’ opening brief, although not,
perhaps, organized in the optimum order. At one point, after referencing the Children’s Center
balance sheet, the promissory note forgiven in exchange for the Estoppel Certificate, and the
Children’s Center’s tax returns and profit and loss statement, Plaintiffs state:
         None of these documents “disclose[d] the inaccuracy of the representation[s]” that
         the Center had regularly paid its rent and was current. First, the August 28, 2007
         balance sheet showed no more than that the Center owed a debt to Gordon and
         Jared Arave, but did not disclose that the debt was for unpaid rent. Second, Fife’s
         statement to Needs did not disclose that rent had not been paid by the Center, or
         that the promissory note was for unpaid rent. Fife did not even know this fact.
         Third, the tax returns and profit and loss statement did not disclose that the Lease
         had been modified or that all monthly rent had not been paid. No other evidence
         was presented which “disclose[d] the inaccuracy of the representation[s]” made
         by High Mark.

12
  Although it does not appear in the trial record, in its decision on the Plaintiffs’ motion for summary judgment, the
district court noted:

         On October 3, 2008, Plaintiffs’ counsel wrote a letter to Defendants offering to tender the Property
         back to Defendants in an attempt to rescind the purchase of the Property and return the Parties to
         their pre-contract positions. Defendants refused to rescind the purchase of the Property.

The Plaintiffs thereafter filed this suit seeking damages.

                                                             28
       Likewise with respect to the allegations of actual fraud or fraud by nondisclosure,
       the District Court’s failure to look at the evidence again affected its decision. The
       elements of materiality, knowledge of falsity, justifiable reliance, and resultant
       injury are all connected to whether or not the information made available to the
       Appellants actually disclosed the inaccuracy of the representations. A proper
       review of the documents by the District Court . . . would have revealed that the
       misrepresentations had not been disclosed.

The above wording is somewhat awkward, but it does address the fact that the Defendants failed
to disclose the critical fact that rent was not being paid by the Children’s Center. The Plaintiffs
then say, “The verdict in favor of the Respondent High Mark Development, LLC, on the issues
of breach of contract, fraud and fraud by nondisclosure, and against Gordon Arave on the issue
of fraud by nondisclosure was not supported by substantial evidence and the District Court did
not make the required inquiry into the matter.” Further on, the Plaintiffs say, “the Court should
have found Respondents High Mark and Gordon Arave liable for their fraudulent statements and
failure to disclose the truth to the Appellants.” They later state, “[a]t summary judgment, the
District Court erred in its analysis of fraud by nondisclosure by failing to look at every
circumstance under which a duty to disclose exists,” and that:
       High Mark had an affirmative duty to disclose the existence of promissory notes
       which materially altered the rent payment responsibilities of the Center, as stated
       in the Lease Agreement. These included not only the April 18, 2007 promissory
       note, but also the November 7, 2007 promissory note, signed after the Estoppel
       Certificate had been provided to Appellants. This “subsequent information” made
       High Mark’s previous representation “untrue or misleading.” High Mark also had
       a duty to disclose that “all minimum monthly rent” had in fact not been paid, in
       order “to prevent a partial or ambiguous statement of fact from becoming
       misleading.” As previously stated, this “information . . . [was] not already in
       possession of the other party.” High Mark knew, or should have known, that the
       false statements made in the Estoppel Certificate were “about to be relied upon,”
       as the Certificate itself stated, “This certification is made with the knowledge that

                                                29
       it will be relied upon by Purchaser . . . in connection with financing and sales of
       the Property and the purchase of the Property by Purchaser.” Due to these
       “objective circumstances,” High Mark knew, or should have known, that the
       Appellants “would reasonably expect a disclosure of the facts.”

       Then, Plaintiffs devote almost three pages of their brief to a discussion of the elements of
fraudulent nondisclosure, the duty to disclose, and why they believe the instruction given by the
district court on this issue was inadequate under the circumstances of their case. Thus, it
certainly appears that the Plaintiffs adequately raised the nondisclosure issue to the extent that it
must be addressed by this Court.
       The Defendants worked hard at trial to deflect attention from their failure to advise
Plaintiffs of the important fact that the Children’s Center had not paid rent to High Mark for
August through December of 2006, or for the months of January, October and November of
2007, or that two promissory notes had been issued by the Children’s Center in lieu of rent, or
that the Children’s Center had been induced to sign the false Estoppel Certificate in exchange for
cancellation of the first rent-related note. Instead, the Defendants contend that the Plaintiffs
received adequate information about the precarious financial condition of the Children’s Center
and that they should have been on notice that they could not count on receiving rental payments
under the lease. However, when asked during oral argument before this Court why the
Defendants had not advised Plaintiffs that the lessee was a deadbeat, Defendants’ counsel pushed
back, stating, in effect, that it was not a deadbeat, and that the Children’s Center had made some
rental payments, was consolidating its operations in the leased premises, growing its business,
and ramping up operations. Counsel made this assertion twice during oral argument. In their
brief, Defendants assert that “the rent concessions and resulting promissory notes were used to
assist the Center in ramping up its operations or to assist it with cash flow,” that the Center “was
still growing its business at the [property] and had high expenses in 2006 as a result of growing
its business,” and that the Plaintiffs “clearly had this information.” The Defendants can’t have it
both ways. Either the Children’s Center was in such precarious financial difficulty that it likely
could not pay rent or the business was merely experiencing growing pains and had no cause for
concern. What is clear is that the Plaintiffs were never told about the nonpayment of rent. Indeed,
in his closing argument to the jury, Defendants’ counsel stated, “[Gordon] Arave did not feel it

                                                 30
was important―or High Mark did not feel it was important to disclose to the buyers that rent had
not been paid in October and November. Why? It’s because the Children’s Center had told High
Mark on multiple occasions that they were centralizing their operations in Idaho Falls.” Perhaps
it might have been appropriate to inform the Plaintiffs of the non-payment of rent and let them
judge whether or not it was important to know of this critical defalcation.
        Turning to the district court’s decision on the Defendants’ motion for JNOV or new trial,
there are simply too many infirmities to justify affirmance. The manner in which the district
court reached its conclusion and the evidence relied upon by the court in reaching the conclusion
are troublesome.
        On the issue of process, the district court did state the standards applicable to both JNOV
and new trial. However, the analysis of the breach of contract issue mixed the two together,
disregarding this Court’s directive in Quick v. Crane, 111 Idaho 759, 767, 727 P.2d 1187, 1195
(1986), that “it is essential that if an alternative motion for a new trial is made with the motion
for judgment n.o.v., the trial court must rule on both motions separately.” Here, the district court
referred to some evidence it thought might justify the jury verdict, observed that the court “may
not necessarily agree with the jury verdict,” and then concluded that “Plaintiffs are not entitled to
JNOV or new trial on their breach of contract claim.” This is not the type of analysis envisioned
by the Court in Quick v. Crane.
        Furthermore, several of the Court’s findings were incorrect. The court incorrectly stated
that the Defendants “put on evidence showing that they informed Plaintiffs prior to closing of the
existence and purpose of the promissory notes,” because, although the April 18, 2007 note was
disclosed, the November 7, 2007 note was not, and there is no evidence in the record that the true
purpose of either note was ever disclosed to Plaintiffs. Nor was the district court entirely correct
in stating, “Fife also testified that he told Needs that a promissory note had been forgiven in
exchange for the Center signing the Estoppel and releasing the Option.” Fife did not know what
the promissory note was for and was not aware that it was for nonpayment of rent or rent
deferral.
        The district court makes several references to the fact that the Plaintiffs had been given
access to documents showing that the Children’s Center was in precarious financial condition.
That may be true but, as indicated above, the evidence was conflicting as to whether the financial
stress was severe enough to impact the Children’s Center’s ability to continue paying rent. What

                                                 31
was never disclosed to the Plaintiffs, more importantly, is that the Children’s Center had failed to
pay numerous monthly rental payments and that two promissory notes had been given in lieu of
eight month’s rent. The true purpose of those notes was never disclosed to the Plaintiffs.
Financial statements, tax returns, and other types of financial documents can be subject to
manipulation and varying interpretations. The fact that rent is not being paid is a fairly clear-cut
fact that cannot necessarily be manipulated, although, as shown here, it can be disguised. This
real estate was being sold as income-producing property, it was purchased as income-producing
property, and the value of the property was based on the ability of the property to produce
income, but the income, i.e. the rent, was simply not being paid and received.
        The district court speculates that the Defendants may have pursued the purchase despite
the unfavorable financial condition of the Children’s Center because of the potential benefits of a
tax-deferred, like-kind exchange under 26 U.S.C. § 1031.13 However, any evidence in this regard
was equivocal in nature and it appeared during oral argument before this Court that counsel for
neither party seemed to have a clear understanding of the requirements of such an exchange.
What we do know for certain is that there was no disclosure by Defendants that eight months of
rent had not actually been paid, as required by the lease, and that the Plaintiffs unequivocally
stated that they would not have proceeded with the purchase if this fact had been disclosed. The
Plaintiffs were never given the opportunity to take this important fact into account in making
their decision as to whether to close the transaction. This case has similarity to Watts v. Krebs
where we said, “a reasonable person under the circumstances would find the existence or
nonexistence of standing timber with a worth in excess of $28,000 on rural property an important
fact in determining whether to enter into an agreement to acquire the property.” 131 Idaho at
620, 962 P.2d at 391. Here, any reasonable buyer would want to know, before concluding the
purchase, whether property being sold and purchased as income-producing property was actually
producing the income represented. Even viewing the evidence in the record in the light most
favorable to the Defendants, I can only conclude that the trial court erred in failing to grant the
JNOV motion.14 The failure of the jury to award damages is virtually inexplicable.

13
   However, the district judge was aware that Plaintiffs had sought rescission of the contract ten months after
closing, which would have deprived them of the benefit of the section 1031 tax deferral.
14
   Although one might ponder whether a claim for breach of the covenant of good faith and fair dealing is the
appropriate mechanism for redress under the facts of this case, that issue was not brought to the Court on cross
appeal.

                                                      32
         After devoting about four pages of its decision to analysis of the breach of contract claim,
the court dispatched both the misrepresentation and nondisclosure claims in somewhat less than
one page, each. As with the contract claim, the district court failed to separately consider the
JNOV motion and the new trial motion for the fraud claims, conglomerating them together. With
regard to the new trial motion, the record does not disclose that the district court weighed the
evidence and determined “(1) whether the verdict is against his . . . view of the clear weight of
the evidence; and (2) whether a new trial would produce a different result.” Schwan’s Sales
Enters., Inc. v. Idaho Transp. Dept., 142 Idaho 826, 833, 136 P.3d 297, 304 (2006). The court
did not disclose the evidence it considered in reaching its conclusions and, unlike with the breach
of contract claim―where it stated, “[w]hile the Court may not necessarily agree with the jury
verdict, the Court does not have a ‘definite and firm conviction’ that a mistake has been
made”―it made no such observation with respect to either of the fraud claims. Since the
elements of the fraud claims differ substantially from the elements of a breach of contract claim,
one cannot necessarily import the required analysis for a contract claim into a fraud claim. The
court was required to analyze the different types of claims, separately, considering the different
elements involved.
         The district court’s analysis of the nondisclosure issue is somewhat confusing. It
mistakenly characterizes the claim as a “constructive fraud” claim. Constructive fraud occurs
when a party to a relationship of trust and confidence breaches a fiduciary duty. Gray v. Tri-Way
Const. Services, Inc., 147 Idaho 378, 386, 210 P.3d 63, 71 (2009). There is no claim of a
fiduciary relationship in this case. The court then cites Watts v. Krebs for an eight-element cause
of action, whereas Watts v. Krebs states the requirements of a fraud claim as: “That there was
nondisclosure, that [Watts] relied upon Krebs’ nondisclosure, that [Watts’] reliance was material
to the transaction, and that [Watts] was damaged as a proximate result of the nondisclosure.” 131
Idaho at 619, 962 P.2d at 390.
         The district court then does a nine-line analysis, stating that the promissory notes were
disclosed,15 that other documents showed the Children’s Center’s financial problems and that the

15
   Again, the April 18, 2007 note was disclosed, but the purpose of that note was certainly not. There was never any
disclosure to Defendants that the note was given in lieu of rent, a fact that Defendants’ counsel acknowledged in his
closing argument. He flatly stated that Gordon Arave talked to Paul Fife about the note but “he didn’t tell him it was
for rent deferral.” It must be kept in mind that the income stream for income-producing property is critical to
establish and maintain its value. There was no discussion of the fact that the fax from Paul Fife to Jeff Needs

                                                         33
jury could have concluded that the undisclosed information was not so vital that it should have
been timely disclosed. The district court completely missed the point. How can it be said that the
nonpayment of rent was not so vital that it need not have been disclosed? The court then found
that substantial evidence supported the jury’s decision. While that conclusion, if correct, might
be sufficient to uphold denial of a motion for JNOV, it is not sufficient, in and of itself, to
support the denial of a motion for a new trial. As we stated in Quick v. Crane, “the trial judge
may set aside the verdict even though there is substantial evidence to support it.” 111 Idaho at
767, 727 P.2d at 1195.
        The district court’s analysis of the misrepresentation claim is even more perfunctory, it is
conclusory, and it is defective. After stating the elements of a fraud claim, the court devotes a
total of six lines of analysis to the Plaintiffs’ fraud claim. According to the district court,
“Defendants presented evidence at trial wherefrom the jury could reasonably conclude that the
false statements were not material,16 that Plaintiffs knew about the falsity of the statements, that
Plaintiffs did not rely on the false statements, that any reliance was not justifiable, or that there
was no resultant injury.” Again, the court found the decision “was supported by substantial
evidence,” and therefore held that Plaintiffs are not entitled to JNOV or a new trial. With regard
to both fraud claims, the court clearly erred in finding that the Defendants had disclosed both
promissory notes to the Plaintiffs.17

showed rent had been received for the property from 6/2006 through 7/2007 in the sum of $324,836; nor that the
Araves had canceled the April 18, 2007 promissory note as an inducement to obtain the Children’s Center’s
signature on the false Estoppel Certificate; nor that rent was not paid in the two months leading up to closing but,
rather, put on to the November 7, 2007 promissory note, which was never disclosed.
16
    This conclusion seems to be at odds with the district court’s ruling on summary judgment, wherein it found the
statements in the Estoppel Certificate indicating that rent was current were “false” and that “[r]ent owed to High
Mark in fact remained unpaid.” The very premise of the contract claim was that these representations were material
to the contract and they could not have been any less material to a claim of fraud.
17
   The analysis of the fraud claims was complicated by the nature of the special verdict form. The two fraud
questions stated:

        Question No. 2: Did High Mark Development commit fraud, which was a proximate cause of
        damages to Plaintiffs?

        Answer: Yes____ No_____

        Question No. 3: Did High Mark Development commit fraud by nondisclosure, which was a
        proximate cause of damages to Plaintiffs?

        Answer: Yes____ No_____

                                                        34
         It can hardly be said that the trial court carried out his responsibilities with regard to
either the motion for JNOV or the motion for a new trial, a situation this Court can correct on
appeal. With regard to the JNOV, “the parties are entitled to full review by the appellate court
without special deference to the views of the trial court.” Quick v. Crane, 111 Idaho at 764, 727
P.2d at 1192. In my view, the record does not contain evidence to support the jury’s verdict on
the nondisclosure claim. Nor does it appear, for purposes of the new trial motion, that the district
judge “has actually given due consideration to the facts and circumstances of the case, and
correctly applied the law thereto.” Id. at 772, 727 P.2d at 1200. Furthermore, the district court
failed to “distinguish between the various motions and the grounds upon which they are based,”
and “simply lump[ed] them all together and issue[d] a general grant or denial.” Id. at 773, 727
P.2d at 1201.
         While the Plaintiffs may not have acted in an exemplary manner in this case, there is no
ground to excuse the fraud perpetrated against them.18 It is clear that the Plaintiffs could have
exercised more diligence in determining the financial strength of the Children’s Center, 19 in
presenting their case to the jury, and in articulating their case on appeal. O’Shea’s testimony

It is impossible to tell from these compound questions whether the jury might have concluded that High Mark did or
did not commit fraud or, if it did, whether fraud was a proximate cause of damages. Because of the multiple
possibilities, the district court should have devoted more than a total of 15 lines to analyzing both fraud claims under
both motions.
18
   Nor can the fraud be excused or mitigated by virtue of the Children’s Center’s undisclosed problems with the
Board of Medicine or Medicaid cutbacks.
19
   Even though the Plaintiffs could have exercised more diligence in determining the financial condition of the
Children’s Center, they were not obligated to do so. As the Court noted in Watts v. Krebs, citing Sorenson v. Adams,
98 Idaho 708, 571 P.2d 769 (1977), the “purchasers’ failure to investigate a misstatement of tillable acreage made in
a document given to them by the vendor did not negate their right to rely on the misstatement.” 131 Idaho at 621,
962 P.2d at 392. The Court continued:

         In noting that “silence, in circumstances where a prospective purchaser might be led to harmful
         conclusions, is a form ‘representation,’” the Court concluded that the vendor’s failure to say
         anything when he gave the purchasers the document containing the misstatement of tillable
         acreage amounted to a misrepresentation. The fact that the purchasers could have checked the
         accuracy of the figures by visiting the tax assessor’s office, did not negate the purchasers’ right to
         rely on the figures.

Id. Here, the Plaintiffs had the right to rely on the representations made in the Estoppel Certificate and other
documents, which purported to show the rent had been paid and was current. No warning or disclosure was provided
in any of these documents, indicating that promissory notes had been issued in lieu of rental payments.

                                                          35
regarding the financial documents was somewhat shaky and inconsistent in places, which may
have caused the jury to lose some confidence in him. However, the infirmities in his testimony
dealt with peripheral issues, such as when he received this or that document, the particulars of
the 1031 exchange possibility, and the like. They did not address the critical issues―was the
Children’s Center really paying its rent, had High Mark actually received $324,836 as rental for
the property from June 2006 through July 2007, what was the real purpose of the April 18
promissory note, and had the Children’s Center failed to pay rent following execution of the
Estoppel Certificate? It cannot be contended by the Defendants that they disclosed information
critical to the value of the property―the income stream being received by High Mark from the
Children’s Center. When one is selling income-producing property to a buyer wanting that kind
of property, it is critical that the seller disclose that rent is not being paid as required by the lease,
and it is more important that the buyer not take steps to conceal this critical fact. I simply cannot
find that incautiousness on the part of the Plaintiffs overrules the obvious fraudulent design of
the Defendants in this matter.
        The district court failed to carry out its responsibilities in analyzing the Plaintiffs’ claims,
either under a JNOV standard or a new trial standard. Thus, I would reverse and, at a minimum,
remand the case for a new trial.

        Justice W. JONES CONCURS.

                                                   36