Jones v. Runft, Leroy, Coffin & Matthews

873 P.2d 861, 125 Idaho 607, 1994 Ida. LEXIS 55
CourtIdaho Supreme Court
DecidedApril 20, 1994
Docket19336, 19741
StatusPublished
Cited by19 cases

This text of 873 P.2d 861 (Jones v. Runft, Leroy, Coffin & Matthews) is published on Counsel Stack Legal Research, covering Idaho Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jones v. Runft, Leroy, Coffin & Matthews, 873 P.2d 861, 125 Idaho 607, 1994 Ida. LEXIS 55 (Idaho 1994).

Opinion

THE PREVIOUS OPINION ISSUED SEPTEMBER 13, 1993 IS HEREBY WITHDRAWN AND THIS OPINION SUBSTITUTED THEREFOR.

JOHNSON, Justice.

This case concerns the liability of a law firm to a person who loaned money to a client of the law firm. In resolving the appeal, we address issues concerning assumed duty, fiduciary duty, fraud, interference with contract, and statutes of limitations.

We conclude that there are genuine issues of fact concerning the claims for breach of assumed duty and for breach of fiduciary duty. We also conclude that there is a genuine issue of material fact as to when the lender discovered the law firm’s alleged fraudulent conduct.

Finally, we conclude that there is no basis for an intentional interference with contract claim against the law firm.

*610 I.

THE BACKGROUND AND PRIOR PROCEEDINGS.

In the spring of 1983, John Runft, a principal in the law firm of Runft, Leroy, Coffin & Matthews, Chartered (the law firm), contacted Aaron U. Jones concerning potential investment and participation in a business venture called the North Idaho Jockey Club (NIJC). Richard Sigismonti and John Kundrat were principals in NIJC, which they formed for the purpose of building and operating a horse racing track in the Coeur d’Alene, Idaho area. Runft was NIJC’s attorney and knew Jones through prior legal representation and business dealings.

In June 1983, Jones met with Sigismonti and Runft to discuss Jones’s possible involvement with NIJC’s development of the race track and to view two parcels of property that NIJC wanted to purchase as a location for the track. After the meeting, Jones stated that he was unwilling to participate directly in NIJC but indicated that he would consider loaning NIJC money to purchase the properties, if the loan were adequately secured. Jones stated that he would consider a loan proposal put together by Runft, “if Runft thought it would fly,” but did not want' Runft to be his attorney in this matter. Sigismonti agreed to pay Runft’s fees for putting a loan proposal together.

On July 29,1983, Runft sent Jones a letter (the July 29 letter) outlining the terms and security for the proposed loan. According to the July 29 letter, Jones was to lend NIJC $420,000 for the purchase of two tracts of land to be used by NIJC for the construction of the race track. As security for the loan, NIJC was to give Jones a promissory note, a first mortgage on one of the parcels of land, a second mortgage on the other parcel of land, personal guarantees from Sigismonti and Kundrat, and an “assignment for security purposes” of Sigismonti’s and Kundrat’s partnership interests in the Pinecrest Hospital in Coeur d’Alene, Idaho (the Pinecrest assignment). The crux of this case is the closing of the purchase of the properties by NIJC (the real estate transaction), in which the money loaned to NIJC by Jones (the loan money) was disbursed without the Pinecrest assignment.

Sometime prior to the July 29 letter, Jones gave Sigismonti $100,000 “good faith” money. Sigismonti transferred this money to Kootenai County Title Insurance Company (the escrow company) along with escrow instructions directing the escrow company to hold the money pending the closing of the real estate transaction. The July 29 letter recognized this transfer and enclosed a copy of the escrow instructions. The escrow instructions were in the form of a letter addressed to the escrow company and signed by Sigismonti on behalf of NIJC. The escrow instructions directed the escrow company to hold the loan money until certain documents, including the Pinecrest assignment, were “executed and/or recorded.”

Runft sent a letter dated August 6, 1983 (the August 6 letter) to Bill Addison, Jones’s employee who was handling the loan for Jones. The August 6 letter purported to respond to phone conversations between Runft and Addison and instructed Jones to send Runft a check for $320,000, made payable to NIJC and Runft as attorney, along with instructions directing Runft to “transact the check and pay the proceeds thereof into the closing along with the $100,000 presently in trust with” the escrow company. The August 6 letter also stated that Runft was going to visit the escrow company on August 10, 1983, when he would place “all” documents in trust with thé escrow company “pending closing,” and that it appeared all matters set forth in the July 29 letter would be in place by August 10, 1983.

In a letter dated August 5, 1983 (the August 5 letter), Addison sent Runft a check for $320,000 made payable to NIJC and Runft, as attorney. The August 5 letter, which was addressed to Runft, stated: ‘Tour responsibility is to handle the transaction in the best interests of Aaron U. Jones.”

On August 10, 1983, Runft met with the escrow company concerning the closing of the real estate transaction and the disbursement of the loan money under the escrow instructions. Although the closing of the real estate transaction was originally scheduled to take place on this date, due to a delay *611 in procuring city approval for extending sewer lines to the properties, the closing did not take place until September 1, 1983. On September 1, 1983, NIJC gave the escrow company written acknowledgment that the city had accepted NIJC’s sewer proposal and that this acceptance fulfilled the directions in the escrow instructions. Runft dictated this letter at the escrow company and directed an officer of NIJC to sign it. The escrow company disbursed the loan money to close the real estate transaction without the Pinecrest assignment.

NIJC later defaulted on the loan. Jones foreclosed on the mortgages that were given as security for the loan. Sigismonti and Kundrat each declared bankruptcy as a result of NIJC’s failure and did not fulfill their personal guarantees to pay back the loan money.

In August 1986, Jones sued the escrow company, alleging that the escrow company improperly disbursed the loan proceeds. In his deposition taken in this case on August 11, 1988, Thomas S. Rogers, an officer at the escrow company, testified that sometime between the end of July and August 12, 1983, Runft told Rogers that the escrow company should disburse the loan proceeds held in trust without being concerned about the Pinecrest assignment. Rogers testified Runft told him that Runft was handling this portion of the transaction. On August 20, 1988, Jones joined the law firm as a defendant. The claims asserted by Jones against the law firm that are relevant to this appeal include: (1) breach of an assumed duty or contract in favor of Jones; (2) breach of a fiduciary duty to Jones; and (3) fraud.

The law firm filed a number of summary judgment motions. One sought dismissal of all Jones’s claims on statute of limitations grounds. The trial court denied this motion with regard to the assumed duty claim, the fiduciary duty claim, and the fraud claim.

The law firm then challenged the merits of the assumed duty and fiduciary duty claims; alleging that summary judgment was appropriate because Jones knew Runft was acting as NIJC’s attorney throughout the transaction. The law firm reasserted the challenge to the fraud claim on statute of limitations grounds. The trial court granted summary judgment in favor of the law firm on all of these issues. The trial court certified its order for appeal pursuant to I.R.C.P. 54(b), and Jones appealed.

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Cite This Page — Counsel Stack

Bluebook (online)
873 P.2d 861, 125 Idaho 607, 1994 Ida. LEXIS 55, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jones-v-runft-leroy-coffin-matthews-idaho-1994.