Beyer et al v. Storey et al

Filing 24

MEMORANDUM DECISION AND ORDER granting 13 Motion for Partial Summary Judgment. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjm)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

ROBERT D. BEYER and CATHERINE F.
BEYER, husband and wife in their
individual capacity and as trustees of THE
BEYER REVOCABLE TRUST, a
revocable trust organized under the laws of
the state of California,

Case No. 1:12-cv-00231-BLW
MEMORANDUM DECISION AND
ORDER

Plaintiffs,
v.
GARY STOREY, an individual; STOREY
CONSTRUCTION INC., an Idaho
corporation; and ROBERTS ELECTRIC
INCORPORATED, an Idaho corporation,
Defendants.

INTRODUCTION
The Court has before it Plaintiff’s Motion for Partial Summary Judgment (Dkt.
13). For the reasons explained below, the Court will grant the motion.
BACKGROUND
Gary Storey formed Storey Construction Inc. (“SCI”) in 1987 in Ketchum, Idaho.
Def.’s Decl., Dkt. 17-2 at 2. Storey is the president of SCI and has held that position
since SCI’s inception twenty-five years ago. Id.

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In 2007, Robert Beyer and his wife entered into a contract with SCI to have SCI
build a new residence (“Residence”) at 125 Old Mill Road, Blaine County, Idaho. Pl.’s
Decl., Dkt. 13-3 at 2. The initial allowance to build the Residence was approximately
$9.4 million. Def.’s Decl., Dkt. 17-2 at 2. As construction progressed, however, and the
Beyers’ requested changes to the Residence, the cost increased substantially. Id. at 2-3.
As construction was nearing its end, Storey requested two loans from Beyer. Pl.’s
Decl., Dkt. 13-3 at 2. In January, Beyer wired $250,000 to SCI’s business account.
Def.’s Ex. A, Dkt. 17-2 at 7. About four months later, Beyer wired $400,000 to the same
account. Def.’s Ex. B, Dkt. 17-2 at 9. On May 10, 2010, Storey signed a promissory note
(“Note”) to pay Robert Beyer $650,000 within 120 days, with one percent interest. Pl.’s
Ex. C, Dkt. 6-5 at 1. The Note was executed by Storey individually. Def.’s Mem., Dkt. 17
at 8.
In count three of the Amended Complaint, Beyer alleges that Storey breached the
Note’s terms. Pl.’s Am. Compl., Dkt. 6-1 at 4. Accordingly, Beyer requests summary
judgment on count three of the Amended Complaint. Pl.’s Mot., Dkt. 13.
LEGAL STANDARD
The case is before the Court on diversity jurisdiction. The Erie Doctrine provides
that federal courts, hearing a diversity matter, must apply federal procedural law and state
substantive law. Snead v. Metropolitan Property & Cas. Ins. Co., 237 F.3d 1080, 1090
(9th Cir. 2001) (internal quotations omitted).

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Summary judgment is appropriate where a party can show that, as to any claim or
defense, “there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). One of the principal purposes of the
summary judgment “is to isolate and dispose of factually unsupported claims . . .”
Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). It is “not a disfavored procedural
shortcut,” but is instead the “principal tool[ ] by which factually insufficient claims or
defenses [can] be isolated and prevented from going to trial with the attendant
unwarranted consumption of public and private resources.” Id. at 327. “[T]he mere
existence of some alleged factual dispute between the parties will not defeat an otherwise
properly supported motion for summary judgment.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247-48 (1986). There must be a genuine dispute as to any material fact – a fact
“that may affect the outcome of the case.” Id. at 248.
The evidence must be viewed in the light most favorable to the non-moving party,
and the Court must not make credibility findings. Id. at 255. Direct testimony of the
non-movant must be believed, however implausible. Leslie v. Group ICA, 198 F.3d
1152, 1159 (9th Cir. 1999). On the other hand, the Court is not required to adopt
unreasonable inferences from circumstantial evidence. McLaughlin v. Liu, 849 F.2d
1205, 1208 (9th Cir. 1988).
The Court must be “guided by the substantive evidentiary standards that apply to
the case.” Liberty Lobby, 477 U.S. at 255. If a claim requires clear and convincing

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evidence, the question on summary judgment is whether a reasonable jury could conclude
that clear and convincing evidence supports the claim. Id.
The moving party bears the initial burden of demonstrating the absence of a
genuine dispute as to material fact. Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir.
2001) (en banc). To carry this burden, the moving party need not introduce any
affirmative evidence (such as affidavits or deposition excerpts) but may simply point out
the absence of evidence to support the nonmoving party’s case. Fairbank v. Wunderman
Cato Johnson, 212 F.3d 528, 532 (9th Cir.2000).
This shifts the burden to the non-moving party to produce evidence sufficient to
support a jury verdict in her favor. Devereaux, at 1076. The non-moving party must go
beyond the pleadings and show “by her affidavits, or by the depositions, answers to
interrogatories, or admissions on file” that a genuine dispute of material fact exists.
Celotex, 477 U.S. at 324.
Statements in a brief, unsupported by the record, cannot be used to create a factual
dispute. Barnes v. Independent Auto. Dealers, 64 F.3d 1389, 1396 n.3 (9th Cir. 1995).
The Circuit “has repeatedly held that documents which have not had a proper foundation
laid to authenticate them cannot support a motion for summary judgment.” Beyene v.
Coleman Sec. Services, Inc., 854 F.2d 1179, 1182 (9th Cir.1988). Authentication,
required by Federal Rule of Evidence 901(a), is not satisfied simply by attaching a
document to an affidavit. Id. The affidavit must contain testimony of a witness with

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personal knowledge of the facts who attests to the identity and due execution of the
document. Id.
ANALYSIS
Beyer asserts that the undisputed facts show a breach of the promissory note. The
record before the Court supports that assertion. The promissory note is governed by
contract law. Sirius LC v. Erickson, 156 P.3d 539 543 (Idaho 2007). It is undisputed that
on May 10, 2010, Gary Storey executed the Note in the amount of $650,000.00, with one
percent interest per annum on the unpaid balance, in favor of Beyer. It is also undisputed
that Beyer transferred $650,000.00 to SCI’s business account in reliance on the Note.
Finally, it is undisputed that the Note required Storey to repay the loan within 120 days,
and that Storey has not repaid the loan more than two years later. Thus, Beyer has met his
initial burden of demonstrating a breach of the promissory note. Devereaux v. Abbey, 263
F.3d 1070, 1076 (9th Cir. 2001) (en banc).
The burden therefore shifts to Story to produce evidence sufficient to support a
jury verdict in his favor. Devereaux, at 1076. Only if he meets this burden may he
successfully overcome Beyer’s motion for partial summary judgment. Storey attempts to
meet his burden by arguing the following: (1) Beyer did not give consideration for the
Note to Story in his individual capacity; (2) genuine issues of material fact exist as to
whether the parties’ course of conduct modified the terms of the Note; (3) genuine issues
of material fact exist as to whether Beyer waived his ability to collect or is estopped from

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collecting on the Note; and (4) SCI’s counterclaim is factually intertwined with Beyer’s
claim for breach of the Note. The Court will address each argument below.
I.

Consideration
Storey first contends that there is a genuine issue of material fact as to whether he,

as an individual, received bargained for consideration in connection with the Note. Def.’s
Mem., Dkt. 17 at 8. However, Storey cites no authority for the proposition that the maker
of a promissory note must individually receive bargained for consideration.
Consideration includes “action by the promisee which is bargained for and given in
exchange for the promise.” Lettunich v. Key Bank Nat. Ass’n, 109 P.3d 1104, 1110
(Idaho 2005). Consideration may “consist of a detriment to the promisee or a benefit to
the promisor.” Id. The Idaho Supreme Court has even gone so far as to state that a
“detriment to the promisee . . . is adequate consideration for the execution of a
promissory note.” Hallowell v. Turner, 496 P.2d 955, 957-58 (Idaho 1972).
Accordingly, Storey need not receive an individual benefit for there to be
consideration for the Note. According to Hallowell, it is sufficient that Beyer incurred a
detriment by loaning SCI $650,000.00. Consideration is not destroyed simply because the
money went to SCI’s business account instead of Storey’s personal account. Storey’s
promise to repay Beyer induced Beyer to loan the money, and there is no dispute that
Beyer did just that.

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II.

Modification of the Note
Storey next contends that there is a genuine issue of material fact regarding

whether the parties modified the terms of the Note after it was executed. Def.’s Mem.,
Dkt. 17 at 9. More specifically, Storey claims that the Note was modified to be a partial
pre-payment for construction of the Residence. Id. at 10-11.
In Idaho, “parties to a written contract may modify its terms by subsequent oral
agreement or may contract further with respect to its subject matter.” Scott v. Castle, 662
P.2d 1163, 1168 (Idaho 1983) (internal quotations omitted). One party, however, cannot
unilaterally alter the contract’s terms. Id. Instead, modification requires assent and a
meeting of the minds by both parties. Id. Assent and a meeting of the minds may be
implied by the parties’ actions or course of conduct. Id. The party asserting modification
bears the burden of proving the modification by clear and convincing evidence. Id. When
a claim requires clear and convincing evidence, the question on summary judgment is
whether a reasonable jury could conclude that clear and convincing evidence supports the
claim. Liberty Lobby, 477 U.S. at 255.
The only evidence offered by Storey that the contract was modified is his assertion
that SCI “applied the $650,000 advance to the receivables associated with the
construction of the Beyer vacation home and accounted for those payments in statements
that were sent to the Beyers.” Def.’s Decl., Dkt. 17-2 at 4. Even assuming that is true for
purposes of this motion, Storey fails to provide any evidence that Beyer agreed to the

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modification. Thus, there is only evidence that Storey unilaterally modified the contract,
which is insufficient for the Court to conclude that the contract was legally modified.
III.

Waiver

“Waiver is a voluntary, intentional relinquishment of a known right or advantage.”
Brand S Corp. v. King, 639 P.2d 429, (Idaho 1981) (internal citations omitted). A waiver
may be found through conduct or agreement. Lewis v. Cont’l Life & Acc. Co., 461 P.2d
243, 249 (Idaho 1969).
Storey makes essentially the same argument in support of his waiver argument as
he made for his modification argument – that Beyer waived his right to collect on the
loan when Storey applied the loan amount to the receivables for the Residence. However,
there is no evidence that Beyer voluntarily or intentionally – through conduct or
agreement – agreed to apply the loan amount to the receivables. Accordingly, there is no
evidence of waiver.
IV.

Estoppel
In Idaho, the doctrine of quasi-estoppel “prevents a party from asserting a right, to

the detriment of another party, which is inconsistent with a position previously taken.”
Atwood v. Smith, 138 P.3d 310, 314 (Idaho 2006) (internal quotations omitted).
Detrimental reliance is not required to prove quasi-estoppel. Id. Rather, the Court must
find that it would be unconscionable to allow an offending party to take allegedly
contrary positions. Id.

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Here, Storey once again relies on the suggestion that the parties agreed to change
the terms of the contract by allowing Storey to apply the loan amount to the receivables.
This argument falls with the rest of Storey’s arguments. There is no evidence that Beyer
agreed to the change, and there is no evidence of inconsistent positions by Beyer. To the
contrary, the record suggests that Beyer has always considered the Note legally binding
as written. Pl.’s Decl., Dkt. 13-3 at 3-4.
V.

Factually Intertwined
Finally, Storey contends that partial summary judgment is inappropriate because

SCI’s counterclaim is factually intertwined with Beyer’s claim for breach of the Note.
Def.’s Mem., Dkt. 17 at 12. Nothing in the record supports such a contention. The Note
appears to be a separate document, with separate consideration, a clear due date, and a
clear breach by Storey. Accordingly, the claims are not factually intertwined.
However, as the Court stated during oral argument, a motion for partial summary
judgment this early in a case does give the Court reason to pause. It is difficult, at this
early stage, for the Court to have a good understanding of all the facts and claims.
Therefore, as the Court also suggested at oral argument, the Court is disinclined to grant
any request that the Court enter final judgment on this claim pursuant to Rule 54(b). This
will allow the Court, if necessary, to reconsider its ruling prior to the issuance of a final
judgment.

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ORDER
IT IS ORDERED:
1. Plaintiff’s Motion for Partial Summary Judgment (Dkt. 13) is GRANTED.

DATED: October 24, 2012

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

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