Spence v. Howell

890 P.2d 714, 126 Idaho 763, 1995 Ida. LEXIS 8
Idaho Supreme Court·Decided February 1, 1995·No. 21355·Published·Cited by 50 cases

Opinion

TROUT, Justice.

This is an appeal arising from a failed venture to develop a Christian retreat near Riggins, Idaho. Suit was instituted with allegations of breach of contract, fraud, intentional infliction of emotional distress and violation of racketeering statutes. Ultimately, the jury awarded the plaintiffs $103,395 for the fraud and breach of contract claims, $200,000 for intentional infliction of emotional distress, and $300,000 in punitive damages. After the trial court ruled on post-trial motions for a new trial and JNOV, this appeal and cross-appeal were brought.

I.

BACKGROUND

Charles and Barbara Spence (the Spences) are ordained ministers of a church and had a dream to build a Christian retreat ranch. To achieve this goal they paid $125,000 for 550 *766 acres of land located near Riggins. The Spences put $25,000 down on the land and agreed to pay $10,000 a year on the balance until it was paid in full. The Spences purchased the property with the help of other family members.

In 1979, the Spences met James and Josephine Howell (all future references are solely to James Howell who will be referred to as “Howell”). The Spences claim that shortly after meeting Howell, he asked if the ranch was for sale and they informed him it was not. After Spences told Howell of their plans for the property, Howell indicated that he shared their vision for the retreat ranch and that he would help develop the ranch. Thereafter on March 6, 1980, Howell wrote the Spences a letter with his ideas for the development which read as follows:

Dear Charles and Barbara,
The enclosed map is drawn by the Safeco Title Co. They are the only Title Co. in Boise that are issuing Title Insurance in Idaho Cdunty.
I have been doing a lot of praying about this retreat grounds and I have a good witness about everything except the board of directors. I think the board should be made up of men who will and can stand behind us financially. Chuck and I and men like Cliff Powell, and Jerry Lausmann, etc.
I am trying to be as transparent as I can and I hope you will pray about this and let me know.
As the people who build on the lots are resilient, and the church attendance, with the retreat ministries, everyone of us who can minister will have all they can do I am sure.
I feel that the money you and your sons have paid on the property should be reimbursed to you so everyone envolved (sic) will share equally in this effort for the Lord.
When the lot sales come in so we can start the lodge Chuck should be put on a retainer salary to oversee the budding of the improvements.
I am sure God will bless you and Barbara’s ministry in a greater way than ever before, as I know what a sacrifice you and your family have made to hang on to this property for the last four years for the Lord. We love you both,
Jim & Jo Howell

Howell claims the Spences were having trouble meeting mortgage payments and that he was attempting to relieve them of the financial problems, and was simply doing them a favor by offering to help with the development of the ranch. It is undisputed that Howell drew up a subdivision plat and attempted to develop a subdivision on the ranch. The profits from the subdivision were to be used to fund the retreat. The plat was for a small portion of the Spences’ land and it listed JJ & H (James and Josephine Howell) Real Estate as the developer.

The subdivision did not happen according to plan, and the parties discussed other options to finance the development of the land. Howell then introduced the Spences to Clifton Powell (Powell) and Jerry Lausmann (Lausmann), people Howell was in business with acquiring and developing land. Howell represented that these men would like to contribute financially to the development of the ranch. Powell and Lausmann claim they never intended to contribute to the retreat and only agreed with Howell to purchase the property outright. Howell, Powell and Lausmann all agree that at least as of the time they signed the earnest money agreement, they were in a partnership together to purchase the ranch. The Spences also believed, based upon Howell’s representations, that they were part of the partnership. They also claim that Howell promised that the land would eventually be transferred into a charitable corporation, to be created later.

Howell testified he informed the Spences that Lausmann and Powell were no longer interested in investing in the property, but wished to purchase it outright. The. Spences disputed this claim and maintained that a total sale of the land was never discussed. Ultimately Howell was successful in convincing the Spences that they should deed the property to the partnership for tax reasons. The parties then entered into a written earnest money agreement on May 15, 1980, and a warranty deed was executed on September *767 12, 1980. According to those documents, the Spences retained title to fourteen acres of the property, and the partnership of Howell, Powell and Lausmann assumed the remaining $80,000 mortgage debt, and paid off $20,-000 owed on a separate loan. Howell, Powell and Lausmann contend that this was a legitimate outright purchase, while the Spences maintain the transfer was done on Howell’s advice for tax purposes and that they relied on his advice because he was a real estate agent.

Prior to the transfer of land, the Spences were aware of the hydroelectric potential of the property. They believed a hydroelectric project would be developed and the profits from the project would be used to develop the retreat ranch. The Spences were not made aware that the hydroelectric project was later estimated to make a very large profit.

In December 1983, Howell assigned the hydroelectric permit to the Idaho Environmental Development Corporation, an Idaho corporation owned by Howell, Powell, and Lausmann. The Spences were not told of the assignment, and the corporation later sold the hydro project to a French consortium for more than $400,000.

After signing the Earnest Money Agreement, the Spences moved to California to live. They continued to keep in contact with the property through information received from relatives still living in the Riggins area. In February 1986, Barbara Spence wrote a letter to Howell asking him to send her the deed to the ranch because she knew the hydroelectric project was nearing completion, and worried that the ranch retreat development was taking too long. Howell never answered the letter, title to the property was never returned to the Spences, and it was never transferred to any charitable corporation.

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Spence v. Howell, 890 P.2d 714, 126 Idaho 763, 1995 Ida. LEXIS 8 (Idaho 1995).

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