Court Opinion

ID: 4117401
Source: CourtListenerOpinion
Date Created: 2017-01-20 18:06:04.341568+00
Date Added: 2024-06-11T07:45:46.605035
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF IDAHO
                                Docket No. 43554

GRANT LEE, JASON LEE, and SCOTT         )
MCNAB,                                  )                 Boise, December 2016 Term
                                        )
      Plaintiffs-Respondents,           )                 2017 Opinion No. 2
                                        )
 v.                                     )                 Filed: January 20, 2017
                                        )
 JEREMY LITSTER and JESSICA             )                 Stephen W. Kenyon, Clerk
 LITSTER, husband and wife,             )
                                        )
      Defendants-Appellants.            )
_________________________________________

       Appeal from the District Court of the Fourth Judicial District of the State
       of Idaho, Ada County. Hon. Samuel A. Hoagland, District Judge.

       The judgment of the district court is affirmed. Costs on appeal are awarded
       to respondents.

       Litster Frost Lawyers, Boise, attorneys for appellants. Seth H. Diviney argued.

       Stephen Beane, Boise, attorney for respondents.
                                  ____________________________

W. JONES, Justice
                                    I. NATURE OF THE CASE
       In a case arising out of Ada County, Jeremy and Jessica Litster (“Jeremy,” “Jessica,” and
collectively, the “Litsters”) appeal from a district court dismissal on summary judgment. The
case concerns the enforceability of three promissory notes, which were prepared and issued by
Jeremy to Jason Lee (“Jason”), Scott McNab (“McNab”), and a non-party, Rick Lee (“Rick”). In
January, February, April, and June 2011, Jeremy made payments on these promissory notes.
However, in July 2011, Jeremy stopped making payments because he learned that the Idaho
Department of Finance had been notified regarding his investment solicitation activity.

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          Grant Lee (“Grant”), Jason, and McNab (collectively, “Plaintiffs”) filed a complaint
against the Litsters on July 18, 2014, for breach of contract. On April 7, 2015, Plaintiffs filed a
motion for summary judgment, which was granted on July 24, 2015.
                            II. FACTUAL AND PROCEDURAL BACKGROUND
          This case concerns the enforceability of three promissory notes prepared and issued by
Jeremy. In February 2009, Jeremy learned of an “investment opportunity”1 that required a
minimum buy-in of $500,000. Jeremy and Jason solicited close friends and family to “invest” by
transferring money to them, which would later be transferred to Jeremy’s relative, Marc Jenson
(“Jenson”).
          The promissory notes at issue arise from three deposits: (1) McNab deposited $25,000
into Jeremy’s bank account on March 12, 2009; (2) Jason deposited a total of $8,000 between
February 28, 2009, and March 13, 2009; and (3) Scott Lee, who is not a party to this appeal,
deposited $10,000 into Jenson’s account on Rick’s behalf.2 In total, $900,000 was transferred to
Jenson for the “investment.” In return, Jenson issued four promissory notes to Jeremy, totaling
$900,000. Additionally, Doug Roberts (Jeremy’s former father-in-law) issued a personal
guarantee, dated April 10, 2009, guaranteeing payment for the four promissory notes issued by
Jenson.
          Ultimately, the “investment” failed, and Plaintiffs and other “investors” pursued
repayment from Jeremy. On December 14, 2010, a letter was delivered to Jeremy, which was
endorsed by Plaintiffs. The letter provided:
          This is a final attempt to collect all promissory notes for all who invested in Marc
          Jenson’s EB-5 project. Please send promissory notes to the following individuals
          that loaned you money for an EB-5 project, as promised. Of course per our
          original understanding and agreements, verbal or otherwise promised by you,
          these notes should have been issued the day our money was wired to Marc
          Jenson.
          ...
          Your excuses are exhausted, and quite frankly reporting you to the Department of
          Finance for securities fraud has become a VERY real possibility. Selling

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   Throughout its memorandum decision and order, the district court described the transfers of money as
“investments.” Such a description seems inaccurate because a promissory note is not ordinarily tendered in
exchange for an investment. Further, the facts surrounding the investment/promissory note exchange are puzzling.
The evidence submitted by the parties does little to clarify the circumstances.
2
  Rick sent a check for $10,000 to Grant. Instead of depositing the $10,000 with Jenson, Grant instructed Scott Lee
to pay Jenson $10,000. Scott Lee did so because he owed Grant money. The $10,000 was deducted from Scott Lee’s
debt to Grant.

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        unregistered securities, which is what this ultimately is, and across state lines
        without a license would involve the FBI for investigation and discovery, and this
        would be very unfavorable for you.
        ...
        Collectively, this letter has been drafted by those who loaned you money based on
        the story that it would be used as capital to solicit Chinese investors for EB-5
        projects in the United States. So, collectively as investors we are demanding that
        you start fulfilling your legal obligations with what you promised. . . . Every
        investor on this list has read and endorsed this as their own.
        ...
        This is not a threat; this is sound advice from the few who are currently keeping
        you from being investigated, pending that you begin demonstrating good faith to
        repay the loans.
        ...
        Failure to complete these requests will only further confirm your integrity and
        intentions moving forward and will most likely result in turning your name over
        to the Department of Finance for investigation.
A list of the sixteen “investors” to whom promissory notes were to be made was also on the
letter. Rick, Jason, and McNab were listed as “investors.”
        About a month later, Jeremy prepared, signed, and issued promissory notes to Jason for
$8,000, McNab for $25,000, and Rick for $10,000. The promissory notes issued to Jason and
McNab were back-dated to March 12, 2009. Rick’s promissory note was back-dated to March 5,
2009.
        On January 13, 2011, Jeremy emailed Rick, stating: “Thank you for your patience with
me in repaying the loan that Scott Lee made to me on your behalf. . . . [Y]ou didn’t invest in
Marc Jenson’s EB-5 project. You made me a personal loan.” Thereafter, Jeremy made payments
pursuant to the promissory notes to Jason, Rick, and McNab. These payments were made in
January, February, April, and June 2011. However, Jeremy ceased making payments in July
2011, because he learned that the Idaho Department of Finance had been notified regarding his
investment solicitation activity. On June 20, 2014, Rick assigned his promissory note to Grant.
        Plaintiffs filed a complaint against the Litsters on July 18, 2014. The complaint alleged
three counts of breach of contract for failure to pay the amounts due according to the promissory
notes. The Litsters answered on August 19, 2014, asserting, inter alia, the affirmative defense
that the notes were issued under duress. On April 7, 2015, Plaintiffs filed a motion for summary
judgment of the issues of breach of contract and duress.

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       On July 24, 2015, the district court issued its memorandum decision and order granting
Plaintiffs’ motion for summary judgment. On the issue of duress, the district court found in
Plaintiffs’ favor under two different legal theories. First, it found that the Litsters failed to
provide sufficient evidence of their claim for duress to create a genuine issue of material fact.
Second, the district court noted that the undisputed evidence demonstrated that Jeremy ratified
the promissory notes by making payments thereon. It concluded that, in addition to the absence
of a genuine issue of material fact, the Litsters’ “claim for duress fails because [Jeremy ] ratified
the contracts by making payments on the [n]otes.”
       The district court also analyzed whether a genuine issue of fact was raised as to whether
the contracts were breached. The district court noted that Plaintiffs’ affidavits, which asserted
Jeremy’s nonpayment per the terms of the promissory notes, satisfied the initial burden of
proving breach. The Litsters, on the other hand “failed to set forth any evidence creating a
genuine issue of material fact regarding [Jeremy’s] breach of the Promissory Notes.” (Emphasis
in original). Accordingly, the district court found that there was no genuine issue of material fact,
and that Jeremy had breached the terms of the promissory notes in the amount listed in Plaintiffs’
affidavits. The district court entered Judgment consistent with its memorandum decision, and the
Litsters appealed.
                                      III. ISSUES ON APPEAL
1.     Whether the district court erred in granting summary judgment.
2.     Whether Plaintiffs are entitled to attorney’s fees on appeal.
                                    IV. STANDARD OF REVIEW
               On appeal from the grant of a motion for summary judgment, this Court
       utilizes the same standard of review used by the district court originally ruling on
       the motion.” Arregui v. Gallegos-Main, 153 Idaho 801, 804, 291 P.3d 1000, 1003
       (2012). Summary judgment is proper “if the pleadings, depositions, and
       admissions on file, together with the affidavits, if any, show that there is no
       genuine issue as to any material fact and that the moving party is entitled to a
       judgment as a matter of law.” Idaho Rule of Civil Procedure 56(c). “When
       considering whether the evidence in the record shows that there is no genuine
       issue of material fact, the trial court must liberally construe the facts, and draw all
       reasonable inferences, in favor of the nonmoving party.” Dulaney v. St. Alphonsus
       Reg’l Med. Ctr., 137 Idaho 160, 163, 45 P.3d 816, 819 (2002). “If the evidence
       reveals no disputed issues of material fact, then only a question of law remains,
       over which this Court exercises free review.” Lapham v. Stewart, 137 Idaho 582,
       585, 51 P.3d 396, 399 (2002).

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Safaris Unlimited, LLC v. Von Jones, 158 Idaho 846, 850, 353 P.3d 1080, 1084 (2015) (quoting
Conner v. Hodges, 157 Idaho 19, 23, 333 P.3d 130, 134 (2014)).
                                           V. ANALYSIS
A.     We affirm the grant of summary judgment to Plaintiffs because the Litsters failed to
       contest the alternate ground upon which summary judgment was granted.
       The Litsters make the following three arguments on appeal, which all concern the
enforceability of the promissory notes: (1) “[t]here is a genuine dispute as to whether the money
transfers were personal loans[;]” (2) “[t]he evidence is sufficient to support [the Litsters’] claim
for duress to prevent enforceability of all the notes[;]” and (3) “[t]here is a genuine dispute as to
whether any consideration was given by any [Plaintiff] to [the Litsters] to form the basis of the
promissory notes.” Crucially, the Litsters do not challenge the district court’s conclusion that
Jeremy ratified the promissory notes.
               This Court has held that when a district court grants summary judgment on
       multiple independent grounds, the appellant must successfully challenge all of
       those grounds to prevail on appeal. For example, in Weisel v. Beaver Springs
       Owners Ass’n, Inc., the plaintiff sought to rescind a contract on the ground of
       mutual mistake. 152 Idaho 519, 524, 272 P.3d 491, 496 (2012). The district court
       granted summary judgment for the defendant on two alternative grounds; first,
       that no genuine issue of material fact existed and the claim was without merit, and
       second, that the mutual mistake claim was barred by the statute of
       limitations. Id. at 525, 272 P.3d at 497. We held that “an appellant’s failure to
       address an independent ground for a grant of summary judgment is fatal to the
       appeal,” and declined to consider the claim. Id. at 525–26, 272 P.3d at 497–
       98 (citing Andersen v. Prof’l Escrow Servs., Inc., 141 Idaho 743, 746, 118 P.3d
75, 78 (2005)). Even if the appellant shows that the district court erred in granting
       summary judgment on some of the grounds, the judgment must be affirmed on the
       grounds not properly appealed. Andersen, 141 Idaho at 746, 118 P.3d at
       78 (“[T]he fact that one of the grounds may be in error is of no consequence and
       may be disregarded if the judgment can be sustained upon one of the other
       grounds.”) (citation omitted). Thus, if an appellant fails to contest all of the
       grounds upon which a district court based its grant of summary judgment, the
       judgment must be affirmed.
AED, Inc. v. KDC Investments, LLC, 155 Idaho 159, 164, 307 P.3d 176, 181 (2013).
       The district court granted Plaintiffs’ summary judgment motion regarding the
enforceability of the promissory notes on two grounds: (1) the Litsters’ failure to establish a
prima facie claim for duress, and (2) Jeremy’s ratification of the promissory notes. The Litsters
assert error as to the first ground, arguing that “[t]he evidence is sufficient to support [a] claim
for duress to prevent enforceability of all notes.” The Litsters’ opening brief is devoid of a

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challenge to the second ground, upon which the district court granted summary judgment.
Consequently, we decline to address the Litsters’ argument regarding duress because the
summary judgment can be affirmed on the unchallenged alternative ground that Jeremy ratified
the promissory notes. Id. at 165, 307 P.3d at 182.
B.     Plaintiffs are not entitled to attorney’s fees on appeal.
       Plaintiffs’ argument regarding attorney’s fees on appeal—in its entirety—is as follows:
“[Plaintiffs] are entitled to attorney fees on appeal, pursuant to I.C. § 12-120(3) as this litigation
involves a commercial transaction.”
       Under the Idaho Appellate Rules, a party is required to include in its opening brief
       “the contentions of the party with respect to the issues presented on appeal, the
       reasons therefor, with citations to the authorities, statutes and parts of the
       transcript and record relied upon.” I.A.R. 35(a)(6) (requirements for appellant);
       35(b)(6) (requirements for respondent).
Marek v. Lawrence, 153 Idaho 50, 57, 278 P.3d 920, 927 (2012).
       Plaintiffs have not presented any argument or citation to facts in the record showing that
this is a commercial transaction. Therefore, they are not entitled to attorney’s fees on appeal
because they failed to comply with Idaho Appellate Rule 35(b)(6) in requesting attorney’s fees.
                                         VI. CONCLUSION
       The district court’s judgment is affirmed. Costs on appeal are awarded to Plaintiffs.
       Chief Justice J. JONES, Justices EISMANN, BURDICK and HORTON, CONCUR.

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