                      IN THE SUPREME COURT OF THE STATE OF IDAHO
                                                    Docket No. 34817
CHRISTIANNE VREEKEN,                                            )
                                                                )
       Plaintiff,                                               )
v.                                                              )
                                                                )
LOCKWOOD                ENGINEERING,                B.V.,     a
                                                                )
Netherlands          corporation;         GERBROEDERS
MEIJER BELEGGING, B.V., a Netherlands )
corporation; JAN VREEKEN, an individual, and )
THOMAS R. GOLD, an individual,                                  )
                                                                )
        Defendants.                                             )
-------------------------------------------------------------   )
THOMAS R. GOLD, an individual,                                  )
                                                                )
        Cross Claimant-Respondent,                              )
v.                                                              )
                                                                )    Boise, May 2009 Term
LOCKWOOD                ENGINEERING,                B.V.,     a
Netherlands          corporation,         GERBROEDERS )
MEIJER BELEGGING, B.V., a Netherlands )                              2009 Opinion No. 127
corporation, a/k/a GERBROEDERS MEIJER )
BELEGGING, B.V., and JAN VREEKEN, an )                               Filed: October 19, 2009
individual,                                                     )
                                                                )    Stephen W. Kenyon, Clerk
        Cross Defendants-Appellants.                            )
------------------------------------------------------------    )
THOMAS R. GOLD, an individual, RICHARD L. )
GOLD,          an       individual,        and       TOMAC
                                                                )
PACKAGING,                INC.,        a      Massachusetts
                                                                )
corporation,
                                                                )
        Cross Claimants-Third Party                             )
       Plaintiffs-Respondents,                                  )
v.                                                              )
                                                                )
LOCKWOOD PACKING CORPORATION, a )
Delaware           corporation           ("LPC"),           and )
LOCKWOOD PACKING CORPORATION )
IDAHO, an Idaho corporation ("LPC Idaho"),                      )
                                                                )
        Third Party Defendants-Appellants.
                                                                )


       Appeal from the District Court of the Seventh Judicial District, State of Idaho,
       Bonneville County. Hon. Jon J. Shindurling, District Judge.

       Termination of joint venture, affirmed in part, reversed in part, and remanded.


                                                 1
       Manwaring Law Office, Idaho Falls, for appellants. Judy Lea Geier argued.

       Holden, Kidwell, Hahn & Crapo, Idaho Falls, for respondents. Charles A. Homer
       argued.
                             __________________________________

BURDICK, Justice
       This action involves a dispute over the parties‟ respective rights upon termination of a
joint venture. Appellants Jan Vreeken (Vreeken); Gergbroeders Meijer Belegging, B.V., a
Netherlands corporation (Gergbroeders); Lockwood Engineering, B.V., a Netherlands
corporation (Lockwood); and Third-Party Appellants Lockwood Packaging Corporation (LP)
and Lockwood Packaging Corporation Idaho (LPI) file this appeal on several grounds. We hold
Vreeken, Gergbroeders, and Lockwood waived the argument that they should have been
summonsed and subpoenaed in their native language of Dutch in accordance with the
Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial
Matters, November 15, 1965, and that the district court was not required to sua sponte appoint a
certified Dutch interpreter for Vreeken‟s depositions. We affirm the district court‟s award of
summary judgment against LP and LPI‟s counterclaims for misrepresentation and breach of the
covenant of good faith and fair dealing. We also affirm the district court‟s award of summary
judgment in favor of Respondent Thomas Gold and Third-Party Respondents Richard Gold and
Tomac Packaging, Inc. on their cross-claim for breach of contract. We reverse the district
court‟s award of summary judgment on the Gold‟s cross-claim for indemnification, and remand
the case for a determination of the amount of damages the Golds sustained from Vreeken‟s
interference with the disposition of the assets intended to secure the Golds‟ releases from the two
bank loans.
                    I. FACTUAL AND PROCEDURAL BACKGROUND
       This case involves a complex factual and procedural history. Appellant Vreeken is a
citizen of the Netherlands. Vreeken owns Appellant Gergbroeders, a Netherlands corporation.
Gergbroeders is the parent corporation of Appellant Lockwood, also a Netherlands corporation.
Third-Party Respondent Richard Gold and Respondent Thomas Gold (the Golds) are father and
son respectively.    The Golds own Third-Party Respondent Tomac Packaging, Inc., a
Massachusetts corporation.




                                                2
       In 1995, Lockwood, represented by Vreeken, and Tomac, represented by the Golds,
entered into an agreement to form a joint venture selling produce packaging equipment and
machinery, manufactured by Lockwood, in the United States and internationally. In furtherance
of the joint venture, LP was formed. LP was the master distributor of Lockwood equipment and
machinery in the United States. Thomas Gold managed LP for the parties. Initially, LP was
owned 50% by Lockwood and 50% by Tomac; however, Tomac‟s 50% interest was later
transferred to Thomas Gold.
       In 1997, the parties formed LPI as a wholly-owned subsidiary of LP. LPI primarily
manufactured and distributed bags and other packaging materials for the potato industry. LPI
also distributed Lockwood equipment in the Northwestern United States.
       LPI obtained various loans during the course of its business operations. In 1997, LPI
entered into loan transactions with the Bank of Idaho totaling $800,500. Through a succession
of guarantee agreements, Thomas Gold, Vreeken, Lockwood, LP, and LPI became jointly and
severally liable for LPI‟s obligations to the Bank of Idaho. That same year, LPI also obtained a
loan from the Eastern Idaho Economic Development Council (EIEDC). The obligation to repay
this loan was jointly and severally guaranteed by Thomas Gold, Vreeken, Lockwood, LP, and
LPI. LPI later defaulted under this loan and EIEDC obtained a judgment in the amount of
$253,331.95 against the EIEDC guarantors. In 2004, Richard Gold purchased EIEDC‟s interest
under the loan, which included the right to collect from the EIEDC guarantors.
       Prior to forming the joint venture, Tomac had entered into a loan transaction with
Citizens Bank of Massachusetts. Richard Gold personally guaranteed Tomac‟s obligations under
the loan and pledged certain marketable securities as collateral.
       Later in 1997, LP and LPI began experiencing accounting problems. In March of 1998,
Vreeken and Jan Postema, the Treasurer of LP and the Chief Financial Officer of Lockwood,
visited the LP offices in Woburn, Massachusetts. During their visit, Vreeken and Postema were
given access to LP‟s business and financial records as well as some of LPI‟s records located in
the Woburn offices. A few months later in August of 1999, Jerry Ceuppens, Vice President in
charge of Lockwood‟s North American activities, and Jack Schipper, Assistant Controller of
Lockwood, also visited the Woburn offices and were given access to LP and LPI‟s financial
records. As a result of their visit, Ceuppens and Schipper wrote a letter to Thomas Gold and
Vreeken detailing the problems with LP‟s accounting, sales, administration, and management.



                                                 3
       By the end of 1999, the relationship between the parties had broken down. The parties
began to negotiate a plan of reorganization whereby Vreeken would buy out the Golds‟ interests
in the joint venture. On May 12, 2000, the parties entered into a settlement agreement entitled
“Memorandum of Understanding” (MOU). Under the MOU, the Golds transferred their interests
in LP and LPI to Vreeken. In consideration of the transfer, LP and LPI were to use their best
efforts to release the Golds from their personal guarantees under the Bank of Idaho, EIEDC, and
Citizens Bank loans. If necessary to effect such releases, Vreeken agreed to personally guarantee
these loans. In addition, Lockwood, LP, and LPI agreed to pay Richard Gold $100,000 and
Thomas Gold $450,000 under various payout notes. These amounts were to accelerate and
become fully due after non-payment and receipt of a ten-day default letter, which undisputedly
occurred in this case. The payout notes were to be secured by the assets of LP and LPI, with
these security interests being subordinate to all current bank loans, all security positions on
record at the time of the MOU, and any future refinancing of such bank loans. The parties
mutually agreed to release all claims against each other, except for claims grounded in fraud or
claims arising out of the MOU. The MOU contained an integration clause, which stated that the
parties did not make any representations or warranties except those specifically contained
therein.
       On June 26, 2000, Lockwood filed UCC financing statements in the State of Idaho
against LP and LPI‟s assets. These statements were filed by Vreeken‟s counsel and signed by
Vreeken himself. Despite the fact that the MOU provided that the Golds‟ security interests in LP
and LPI‟s assets were to be subordinate only to the banks‟ security interests, Lockwood filed its
UCC financing statements before the Golds filed theirs. This hindered the Golds‟ ability to
access their collateral under the MOU and to enforce their claims regarding the payout notes.
       On April 27, 2001, the Bank of Idaho filed a complaint against the guarantors of the LPI
loan seeking to enforce and satisfy the loan. On June 26, 2001, Thomas Gold filed an Answer,
Cross-claim, and Third-Party Complaint, under which Richard Gold and Tomac were joined as
third-party plaintiffs and LP and LPI were named as third-party defendants. On November 2,
2001, LP and LPI filed an answer to the Bank of Idaho‟s complaint. In their answer, LP and LPI
made counterclaims against the Golds for misrepresentation and breach of the implied covenant
of good faith and fair dealing.




                                                4
       Sometime prior to October 12, 2001, the Bank of Idaho agreed to accept $617,870.59
from Christianne Vreeken (Christianne), Vreeken‟s daughter, in full satisfaction of LPI‟s loan.
Vreeken provided the funds Christianne used to pay off the loan. On October 21, 2001, the Bank
of Idaho assigned its interests in the LPI loan to Christianne in consideration of her payment of
$617,870.50. These interests included the Bank of Idaho‟s right to enforce the loan against the
relevant guarantors and the bank‟s security interests in LPI‟s assets.
       As a result of the assignment, Christianne was substituted as plaintiff for the Bank of
Idaho. The respondents attempted to take Christianne‟s deposition five different times. On May
3, 2004, the district court ordered Christianne to personally appear for the taking of her
deposition, but again, she did not appear. As a result, the respondents sought sanctions against
Christianne. On December 1, 2004, the district court dismissed Christianne‟s complaint with
prejudice against all named defendants as a sanction for her repeated failure to appear.
       On February 14, 2005, the respondents filed a motion for summary judgment seeking
dismissal of all claims brought against them; a declaratory judgment regarding the performance
of, and the amount due, under the MOU; entry of a monetary judgment against Lockwood, LP,
and LPI; and a writ of possession allowing the Golds to obtain possession of LP and LPI‟s assets
in order to foreclose their security interests. On May 3, 2005, the district court issued its opinion
on the respondents‟ first motion for summary judgment. The district court dismissed LP and
LPI‟s counterclaim for misrepresentation. As for the remainder of LP and LPI‟s counterclaims,
including their counterclaim for breach of the covenant of good faith and fair dealing, the district
court dismissed these claims under section 2(h) of the MOU—the release of claims provision. In
addition, the district court granted summary judgment on the respondents‟ cross-claim for breach
of contract. The district court found that: (1) Vreeken, Lockwood, LP, and LPI were in default
under section 2(a) of the MOU and, therefore, liable on the payout note to Richard Gold in the
principal amount of $100,000 plus interest and liable on the payout note to Thomas Gold in the
principal amount of $450,000 plus interest. The district court found that these obligations were
secured by the assets of LP and LPI, and that LP and LPI were required to make annual
payments to Thomas Gold in an amount equal to 25% of their respective net profits until the
aggregate amount of such payments reaches $100,000.            The district court also found that,
pursuant to section 2(c) of the MOU, any damages the Golds incurred as a result of Vreeken,
Lockwood, LP, and LPI‟s failure to obtain releases of the loans specified therein were secured by



                                                 5
the assets of LP and LPI. The district court determined that Thomas Gold possessed a security
interest in LP and LPI‟s assets in the amount of $253,331.95 plus interest, but that issues of fact
precluded determination of the exact amount of Richard Gold‟s security interest in the assets.
       Both parties moved for reconsideration. On September 2, 2005, the district court issued
its opinion, clarifying that, pursuant to section 2(c) of the MOU, any damages incurred by the
Golds as a result of Lockwood, LP, and LPI‟s failure to obtain the releases of their personal
obligations under the loans were secured by the assets of LP and LPI. The district court also
held that as a result of Vreeken, Lockwood, LP, and LPI‟s failure to obtain releases of the
Citizens Bank and EIEDC loans, Richard Gold possessed a security interest in LP and LPI‟s
assets in the amount of $270,435.53 plus interest for damages. Finally, the district court ordered
Vreeken to effectuate a personal guarantee for the Citizens Bank loan.
       On August 21, 2006, the respondents filed another motion for summary judgment,
claiming Vreeken was personally liable on the payout notes, Vreeken was required to effectuate
a personal guarantee on the EIEDC loan, and Vreeken was required to indemnify the Golds on
the Citizens Bank and EIEDC loans. The respondents also filed a separate motion for entry of
summary judgment, requesting that the district court enter summary judgment pursuant to its
prior opinions on the respondents‟ first motion for summary judgment and the parties‟ motions
for reconsideration. On October 20, 2006, the district court granted in part and denied in part the
respondents‟ second motion for summary judgment. The district court found, among other
things, that: (1) genuine issues of material fact existed as to whether Vreeken intentionally
interfered with the obligations of LP and LPI under the MOU by filing the UCC statements, (2)
the respondents had failed to demonstrate sufficient evidence that Vreeken was personally liable
on the payout notes, (3) Vreeken was required to effectuate a personal guarantee on the EIEDC
loan as well, and (4) Vreeken was obligated to indemnify the Golds on the Citizens Bank and
EIEDC loans.
       The remaining issues were tried before the district court. On June 25, 2007, the district
court issued its opinion, finding Vreeken joint and severally liable on the payout notes as a result
of his wrongful conduct. This appeal was timely filed.
                                         II. ANALYSIS
       The appellants raise several issues on appeal. First, Vreeken, Gergbroeders, and
Lockwood argue that the district court did not have personal jurisdiction over them because they



                                                 6
were not summonsed nor subpoenaed in their native language of Dutch in accordance with the
Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial
Matters, November 15, 1965. Vreeken also argues that the district court erred by failing to sua
sponte appoint a certified Dutch interpreter for his depositions.
       The appellants also appeal from the district court‟s awards of summary judgment. LP
and LPI argue that the district court erred by granting partial summary judgment against their
counterclaims for misrepresentation and breach of the covenant of good faith and fair dealing.
The appellants collectively argue that the district court erred in granting partial summary
judgment in favor of the respondents‟ cross-claim for breach of contract. Vreeken argues that
the district court erred in granting partial summary judgment on the respondents‟ cross-claim for
indemnification.
       Finally, Vreeken appeals from the district court‟s final judgment, whereby the court
found Vreeken personally liable on the payout notes as a result of his wrongful conduct.
Vreeken argues that the district court erred by failing to address his claim that the Golds
breached their fiduciary duty to him, which Vreeken asserts was added through a general motion
to amend the pleadings to conform to the evidence at the close of trial. In addition, Vreeken
assigns error to certain evidentiary rulings made by the district court, arguing the court abused its
discretion by admitting hearsay testimony from Thomas Gold regarding his telephone
conversation with Christianne, and by excluding certain documentary evidence. Lastly, Vreeken
argues that some of the district court‟s findings of fact, namely that Vreeken committed wrongful
conduct, Vreeken made capital contributions to LPI by way of equipment, and the Bank of
Idaho‟s assignment to Christianne was void, are not supported by substantial and competent
evidence. Each issue will be discussed in turn.
   A. Language Issues
           1. Under I.R.C.P. 12(g)(1), Vreeken, Gergbroeders, and Lockwood waived the
              affirmative defense that they were required to be summonsed and subpoenaed in
              their native language of Dutch.
       First, Vreeken, Gergbroeders, and Lockwood argue that the district court lacked personal
jurisdiction over them because they were not summonsed nor subpoenaed in their native
language of Dutch in accordance with the Convention on Service Abroad of Judicial and
Extrajudicial Documents in Civil and Commercial Matters, November 15, 1965 (Convention).
However, we find that even if the parties should have been served with a complaint in Dutch,


                                                  7
they waived this argument. Although Vreeken, Gergbroeders, and Lockwood argue that the
district court lacked personal jurisdiction over them because they were not summonsed nor
subpoenaed in accordance with the Convention, these parties are actually challenging the
sufficiency of the process with which they were served.1 The defense of insufficiency of process
challenges the contents of the summons. Heise v. Olympus Optical Co., 111 F.R.D. 1, 5 (N.D.
Ind. 1986). Whether or not the summons and subpoenas in this case should have been written in
Dutch is an issue that goes to the contents of the documents and, accordingly, questions the
sufficiency of the process.2 Furthermore, the Fifth Circuit Court of Appeals has implicitly found
that failure to comply with the Convention does not affect a court‟s jurisdiction. See Nuovo
Pignone, Spa v. Storman Asia M/V, 310 F.3d 374, 385 (5th Cir. 2002) (Fifth Circuit reversing the
district court‟s decision that service of process by mail was permissible under the Convention,
but remanding the case to allow Nuovo Pignone a reasonable time to effect service properly).
Idaho Rule of Civil Procedure 12(b)(4), which governs the defense of insufficiency of process,
requires that the defense be asserted by motion. Idaho Rule of Civil Procedure 12(g)(1) further
requires that the motion be made prior to filing a responsive pleading and prior to filing any
other motion, except a motion for an extension of time to answer or otherwise appear or a motion
under Rule 40(d)(1) or (2), or else the defense of insufficiency of process is waived. Because
Vreeken, Gergbroeders, and Lockwood waited to raise the defense of insufficiency of process
until appeal, they waived the defense under I.R.C.P. 12(g)(1). Therefore, we need not decide
whether the Convention applies in this case.
             2. The district court was not required to sua sponte appoint a certified Dutch
                interpreter for Vreeken‟s depositions.




1
  In their cross-claim and amended cross-claim, the respondents asserted the district court had personal jurisdiction
over the parties because: (1) Vreeken owned real property in Idaho, consisting of a residential dwelling house, and
that during all times relevant to the action, Vreeken was an officer, director, or shareholder of business entities that
conducted business within Idaho as defined under I.C. § 5-514(a); and (2) Gergbroeders and Lockwood conducted
business in Idaho as defined under I.C. § 5-514(a). Vreeken, Gergbroeders, and Lockwood do not challenge the
court‟s jurisdiction on these grounds.
2
  There is also an argument that Vreeken, Gergbroeders, and Lockwood are asserting insufficiency of service of
process. “The defense of insufficiency of process differs from insufficiency of service of process: the former
challenges the content of a summons; the latter challenges the manner or method of service.” Heise v. Olympus
Optical Co., 111 F.R.D. 1, 5 (N.D. Ind. 1986). By arguing that they should have been served in Dutch, the parties
may be challenging the method in which they were served. However, it seems more likely that they are challenging
insufficiency of process. Regardless, Vreeken, Gergbroeders, and Lockwood have waived both defenses under
I.R.C.P. 12(g)(1).


                                                           8
           In addition, Vreeken argues that he was denied the right to have a certified Dutch
interpreter present during his depositions.3 Although Vreeken admits he did not request an
interpreter, Vreeken argues the district court was required to provide him one under Idaho Court
Administrative Rule 52(a). That rule states in pertinent part:
           It is the policy of the Supreme Court and the intent of these rules to secure the
           rights, constitutional and otherwise, of persons who, because of a non-English-
           speaking cultural background or physical impairment, are unable to understand or
           communicate adequately in the English language when they appear in the courts
           or are involved in court proceedings.
I.C.A.R. 52(a). Vreeken argues the mandatory directive of this rule is that the court must sua
sponte appoint an interpreter to any person unable to understand or communicate adequately in
English in order to secure that person‟s rights. Vreeken argues that it is evident from his
deposition transcripts that he had difficulties understanding legal terminology and legal
consequences in English.               Vreeken argues that these difficulties led to the district court
misinterpreting his testimony, which prejudiced the appellants‟ position before the court on the
respondents‟ motions for summary judgment.
           Vreeken is correct that under I.C.A.R. 52(a), it is the policy of the Court to secure the
rights of those who are unable to understand or communicate adequately in English due in part to
language barriers.          In fact, I.C.A.R. 52(d)(1) further provides that “an interpreter shall be
appointed when an interpreter is requested or when the appointing authority determines that a
principal party in interest or witness does not communicate in or understand the English
language sufficiently to permit effective participation in a court proceeding.” (Emphasis added).
However, Vreeken did not request an interpreter for his depositions and the district court did not
have occasion to determine whether Vreeken was in need of one before he was deposed.
Therefore, contrary to Vreeken‟s assertion, the district court did not err in failing to sua sponte
appoint him an interpreter for his depositions.
       B. The District Court’s Awards of Summary Judgment
           Next, the appellants appeal from the district court‟s awards of summary judgment. We
affirm the district court‟s award of summary judgment against LP and LPI‟s counterclaims for
misrepresentation and breach of the implied covenant of good faith and fair dealing, and the
court‟s award of summary judgment in favor of the respondents‟ cross-claim for breach of


3
    A certified Dutch interpreter was present throughout the trial.


                                                             9
contract. However, we reverse the district court‟s award of summary judgment against Vreeken
on the Golds‟ cross-claim for indemnification.
           1. Standard of Review
       When reviewing an order for summary judgment, this Court applies the same standard of
review that was used by the trial court in ruling on the motion for summary judgment. Cristo
Viene Pentecostal Church v. Paz, 144 Idaho 304, 307, 160 P.3d 743, 746 (2007). 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.” I.R.C.P. 56(c). The burden is on the moving
party to show that there are no genuine issues of material fact. Cafferty v. Dep’t of Transp., Div.
of Motor Vehicle Servs., 144 Idaho 324, 327, 160 P.3d 763, 766 (2007). “If there is no genuine
issue of material fact, only a question of law remains, over which this Court exercises free
review.” Cristo, 144 Idaho at 307, 160 P.3d at 746 (quoting Infanger v. City of Salmon, 137
Idaho 45, 47, 44 P.3d 1100, 1102 (2002)).
       When an action is tried before the court without a jury, which occurred in this case,
“resolution of the possible conflict between the inferences is within the responsibilities of the
trial court as fact finder.” Chapin v. Linden, 144 Idaho 393, 396, 162 P.3d 772, 775 (2007). The
trial judge is not constrained to draw inferences in favor of the non-moving party, but rather the
judge is free to arrive at the most probable inferences to be drawn from the uncontroverted
evidentiary facts, despite the possibility of conflicting inferences. Id.
           2. The district court properly granted summary judgment against LP and LPI‟s
              counterclaim for misrepresentation.
       LP and LPI argue the district court erred in granting partial summary judgment against
their counterclaim for misrepresentation. In ruling on the motion, the district court limited its
analysis to oral representations made by Thomas Gold, since Vreeken testified during his
deposition that he only relied upon verbal information received from Thomas Gold. The district
court went on to determine that LP and LPI had failed to establish that Thomas Gold made any
oral misrepresentations, and, more importantly, that any reliance placed on these alleged
misrepresentations could not have been justified. LP and LPI, however, argue there is evidence
in the record demonstrating the Golds made affirmative misrepresentations to Vreeken
concerning LP and LPI‟s operations, financial solvency, and customer base, and that Vreeken



                                                  10
justifiably relied on these misrepresentations. Accordingly, LP and LPI argue genuine issues of
material fact remain as to their counterclaim for misrepresentation.
       Pursuant to section 2(h) of the MOU, the parties agreed to release all claims against each
other except for claims grounded in fraud or claims related to the MOU. Since LP and LPI‟s
counterclaim for misrepresentation is grounded in fraud, this claim was not released under the
settlement agreement. The MOU provides that all claims allowed under the agreement are
governed by Massachusetts law. Thus, we must turn to Massachusetts law on misrepresentation.
       To sustain a claim for fraudulent or negligent misrepresentation in Massachusetts, the
plaintiff must show, at a minimum, that the defendant “made a false representation of a material
fact with knowledge of its falsity for the purpose of inducing the plaintiff to act thereon, and that
the plaintiff reasonably relied upon the representation as true and acted upon it to his damage.”
Russell v. Cooley Dickinson Hosp., Inc., 772 N.E.2d 1054, 1066 (Mass. 2002) (quoting Danca v.
Taunton Sav. Bank, 429 N.E.2d 1129, 1133 (Mass. 1982)). Such reliance must be justified.
Masingill v. EMC Corp., 870 N.E.2d 81, 88 (Mass. 2007).
       On appeal, LP and LPI argue there is evidence in the record showing that the Golds made
affirmative misrepresentations to Vreeken concerning LP and LPI‟s operations, financial
solvency, and customer base. In support of their argument, LP and LPI cite to various portions
of the record, including correspondence, various documents, as well as excerpts from the
deposition testimonies of Jan Vreeken, Melanie Harris, Lorna Schubert, and John Teti, but do not
specify what misrepresentations were made. This same evidence was presented before the
district court in support of the respondents‟ motions for summary judgment. Contrary to LP and
LPI‟s assertion, these portions of the record do not address any representations made by the
Golds concerning LP and LPI, much less misrepresentations.             The only evidence of any
misrepresentation is found in Vreeken‟s blanket assertion that he relied on Thomas Gold‟s oral
representations about LP and LPI. However, Vreeken also testified that he was unable to recall
what Thomas Gold said in these oral representations. Because LP and LPI failed to present
evidence on this essential element of their claim, summary judgment was proper.
       Furthermore, even if the Golds had misrepresented facts about LP and LPI, Vreeken
could not have justifiably relied on any such representations. There is evidence in the record
demonstrating that Vreeken was aware of the accounting issues with LP prior to entering into the
MOU. On August 10, 1999, Ceuppens and Schipper sent Vreeken a management letter detailing



                                                 11
the significant management and accounting issues with LP. A short time later, Vreeken sent
Thomas Gold a memorandum demonstrating that he was fully aware of the accounting problems
experienced by LP. In this memorandum, Vreeken stated: “[LP‟s] administrative and financial
organization is in shambles.” Vreeken also rejected Thomas Gold‟s valuation of LP in the
memorandum, stating “it puzzles me how you arrived at the amounts to buy you out.”
Therefore, we affirm the district court‟s award of partial summary judgment against LP and
LPI‟s counterclaim for misrepresentation.
            3. The district court properly granted summary judgment against LP and LPI‟s
               counterclaim for breach of the covenant of good faith and fair dealing.
        In addition, LP and LPI argue that the district court erred in granting partial summary
judgment against their counterclaim for breach of the implied covenant of good faith and fair
dealing. They assert that the Golds breached the covenant by conducting inaccurate inventory
and accounting methods, which resulted in Vreeken paying an overvalued amount for the Golds‟
portion of LP and LPI under the MOU. The district court determined that even if the Golds
engaged in inaccurate inventory and accounting practices, this conduct occurred prior to the
execution of the MOU and, therefore, was not subject to the implied covenant of good faith and
fair dealing.
        Under Massachusetts law, every contract “is subject to an implied covenant of good faith
and fair dealing.” Anthony’s Pier Four, Inc. v. HBC Assocs., 583 N.E.2d 806, 821 (Mass. 1991).
This means “that neither party shall do anything that will have the effect of destroying or injuring
the right of the other party to receive the fruits of the contract . . . .” Id. at 820 (quoting Drucker
v. Roland Wm. Jutras Assocs., 348 N.E.2d 763, 765 (1976)). Because the MOU is governed by
Massachusetts law, the parties are subject to the implied covenant of good faith and fair dealing.
        We find the district court properly granted summary judgment against LP and LPI on
their counterclaim for breach of the implied covenant of good faith and fair dealing. Until the
parties signed the MOU, their rights were not established under the agreement. Thus, any
alleged misconduct that occurred prior to the execution of the MOU was not subject to the
implied covenant of good faith and fair dealing, as it would not “have the effect of destroying or
injuring the right of the other party to receive the fruits of the contract.” Id. This includes the
Golds‟ allegedly inaccurate inventory and accounting methods. Therefore, we affirm the district
court‟s award of partial summary judgment against LP and LPI on their counterclaim.



                                                  12
           4. The district court properly granted summary judgment on the respondents‟ cross-
              claim for breach of contract.
       The appellants collectively argue the district court erred in granting summary judgment
on the respondents‟ cross-claim for breach of contract. The appellants admittedly failed to
contest the respondents‟ motion for summary judgment regarding this claim but argue the record
before the district court contained genuine issues of material fact surrounding the alleged breach
of the MOU.      Specifically, the appellants assert that the respondents‟ evidence contained
inconsistencies, unexplained expenses, and unrelated charges. The appellants argue the district
court should have searched the record to discover these genuine issues of material fact.
       The respondents argue that because the appellants did not object to their motion for
summary judgment, the appellants “are several years too late with their objection.” Therefore,
we must first determine whether the appellants may appeal the district court‟s award of summary
judgment in the absence of an objection below. For purposes of summary judgment, the moving
party bears the initial burden of proving the absence of a genuine issue of material fact. Sherer v.
Pocatello Sch. Dist. No. 25, 143 Idaho 486, 489, 148 P.3d 1232, 1235 (2006). Only then does
the burden shift to the non-moving party to come forward with sufficient evidence to create a
genuine issue of material fact. Id. When reviewing an order for summary judgment, we apply
this same standard of review. P.O. Ventures, Inc. v. Loucks Family Irrevocable Trust, 144 Idaho
233, 237, 159 P.3d 870, 874 (2007).        Accordingly, the appellants are not precluded from
appealing the district court‟s award of summary judgment just because they failed to object to
the respondents‟ claim for breach of contract below.
       However, contrary to the appellants‟ assertion, the district court was not required to
search the record looking for evidence to create a genuine issue of material fact. In Esser
Electric v. Lost River Ballistics Technologies, Inc., 145 Idaho 912, 919, 188 P.3d 854, 861
(2008), this Court recently held that “the trial court is not required to search the record looking
for evidence that may create a genuine issue of material fact; the party opposing the summary
judgment is required to bring that evidence to the court's attention.” Based on the evidence
before the district court, we find the respondents met their burden of proving the absence of a
genuine issue of material fact. Therefore, we affirm the district court‟s award of summary
judgment on the respondents‟ breach of contract claim.
           5. The district court erred by granting summary judgment on the Golds‟ cross-claim
              for indemnification.


                                                13
       Finally, Vreeken argues that the district court erred in granting summary judgment on the
Golds‟ claim for indemnification. The district court determined that the drafters of the MOU
intended for Vreeken to indemnify Richard Gold on the Citizens Bank loan and to indemnify
Thomas Gold on the EIEDC loan. Vreeken asserts that the district court wrongly determined
that the Golds had an unqualified right of indemnification, rather than a limited one.
       As set forth above, the MOU is governed by Massachusetts law. The principal guide to
contract interpretation under Massachusetts law is the contract itself.         Where there is no
ambiguity in the contract language, the contract must be enforced according to its terms.
Freelander v. G. & K. Realty Corp., 258 N.E.2d 786, 788 (Mass. 1970). In this case, the parties
do not argue that the language under section 2(c) of the contract is ambiguous. Therefore, the
Court must enforce section 2(c) in accordance with the express terms.
       In Massachusetts, a right to indemnification may either be express or implied. See Fall
River Hous. Auth. v. H.V. Collins Co., 604 N.E.2d 1310, 1312-13 (Mass. 1992). An implied
right to contractual indemnity is only recognized where there are “special factors” surrounding
the contractual relationship that indicate an intention by one party to indemnify another in a
particular situation. Id. at 1313.
       Section 2(c) of the MOU states in pertinent part:
       The Lockwood Entities will use their best efforts to effect the release of: (i)
       [Thomas Gold] and [Richard Gold] from certain personal guarantees they have
       made with regard to the following loans and (ii) certain securities pledged by
       [Richard Gold] which is being held as collateral for the Citizen’s Loan, as
       defined below. If necessary to effect such releases, Vreeken agrees to personally
       guarantee such loans. If the Lockwood Entities fail to provide such release by
       the earlier of: (w) three (3) months after all audited financials for fiscal years 1999
       and 2000 are completed or (x) March 1, 2001, then [the Golds] shall have the
       option of terminating this Agreement as provided in Section 11 hereof, unless
       Vreeken shall expressly opt to indemnify [the Golds] from any damages they may
       incur as a result of such personal guarantees. Until the earlier of: (y) the releases
       pursuant to this Section 2(c) are effected or (z) this Agreement is terminated as
       provided herein, any damage [the Golds] may incur as a result of such personal
       guarantees not being released shall be secured by the assets of [LP] and [LPI].
(Emphasis added). The loans listed in section 2(c) included the Citizen‟s Bank loan in the
principal amount of $225,000, and the EIEDC loan in the principal amount of $262,500. There
are only two other references to indemnity in the agreement.              Under Section 1(c), the
respondents agreed not to compete, directly or indirectly, with LP or LPI for a period of three
years, unless “[the Golds] are not being indemnified by Vreeken with regard to their personal


                                                 14
guarantees as specified in Section 2(c).” (Emphasis added). The MOU also provides that “[t]he
Lockwood entities will indemnify [the Golds] against suits from third parties.” (Emphasis
added).
          Based on the plain language of section 2(c), and the other references to indemnification
in the MOU, Vreeken is correct that the Golds do not have an unqualified right to
indemnification for the Citizens Bank and EIEDC loans. Section 2(c) states that if Lockwood,
LP, and LPI fail to release the Golds from their personal obligations under the loans, and
Vreeken does not personally effectuate such releases, then the Golds have the option to terminate
the contract unless Vreeken expressly opts to indemnify the Golds from any damages they may
incur as a result of their personal guarantees. It is undisputed that Lockwood, LP, and LPI did
not obtain the releases and that Vreeken was ordered to effectuate personal guarantees on the
Citizens Bank and EIEDC loans; however, there is no evidence in the record that Vreeken
expressly opted to indemnify the Golds. The district court found “[i]mplicit in the agreement to
use best efforts [was] the undertaking that Vreeken and the Lockwood [E]ntities [would] hold the
Golds harmless in the agreement.” In other words, the district court found that an implied right
to indemnification existed under the contract. This finding was in error as section 2(c) had
already provided an express right to indemnification. The express right was subject to the
condition that Vreeken elect to indemnify the Golds.
          In essence, the district court awarded indemnification as an equitable remedy. “In order
for the doctrine of equitable indemnity to apply, there must be some basis for tort liability against
the proposed indemnitor.” 41 Am. Jur. 2d Indemnity § 20 (2005). “[An] implied contractual
indemnity between the indemnitor and the indemnitee can provide a basis for equitable
indemnity.” Id. Here, the district court erred in granting equitable indemnification for two
reasons. First, there was no basis for tort liability in this case since the Golds did not have an
implied contractual right to indemnification. In addition, the Golds had an adequate remedy at
law. Lockwood, LP, and LPI‟s failure to use their “best efforts” to release the Golds from their
obligations under the bank loans interfered with the Golds‟ rights under the contract. Their
conduct was attributable to Vreeken as the individual in control of the entities. Thus, the Golds
had an adequate remedy available to them under the contract for breach of the implied covenant
of good faith and fair dealing. It is well-established that equitable remedies will not be allowed
if adequate remedies are available at law. Meikle v. Watson, 138 Idaho 680, 683, 69 P.3d 100,



                                                 15
103 (2003). Therefore, we reverse the district court‟s award of summary judgment on the Golds‟
claim for indemnification. Because the issue of indemnification was not related to the issues
presented at trial, we will consider Vreeken‟s arguments regarding the district court‟s judgment
after trial before remanding the case.
   C. District Court’s Judgment after Trial
       Finally, Vreeken appeals from the district court‟s final judgment, under which the court
found Vreeken personally liable on the payout notes as a result of his wrongful conduct.
Vreeken argues: (1) the district court erred by failing to find the Golds breached their fiduciary
duty to him, (2) the district court abused its discretion under certain evidentiary rulings, and (3)
some of the district court‟s findings of fact are not supported by substantial and competent
evidence. We affirm the district court‟s final judgment.
           1. Breach of Fiduciary Duty
       First, Vreeken argues the district court erred by failing to find that the Golds breached
their fiduciary duty to him.      Vreeken argues there was evidence produced at trial that
demonstrated that the Golds breached their fiduciary duty to Vreeken, causing him to incur over
$2,000,000 in monetary damages and to lose critical security interests. Vreeken claims that his
counsel made a motion to amend the pleadings to conform to the evidence at the close of trial,
which included evidence of breach of fiduciary duty, and also argues the district court granted
this motion. Accordingly, Vreeken assigns as error the district court‟s failure to rule on his claim
for breach of fiduciary duty.
       A motion to amend the pleadings to conform to the evidence is governed by I.R.C.P.
15(b). The rule provides, inter alia:
       When issues not raised by the pleading are tried by express or implied consent of
       the parties, they shall be treated in all respects as if they had been raised in the
       pleadings. Such amendment of the pleadings as may be necessary to cause them
       to conform to the evidence and to raise these issues may be made upon motion of
       any party at any time, even after judgment; but failure so to amend does not affect
       the result of the trial of these issues.
I.R.C.P. 15(b). “The requirement that the unpleaded issues be tried by at least the implied
consent of the parties assures that the parties have notice of the issues before the court and an
opportunity to address those issues with evidence and argument.” M.K. Transp., Inc. v. Grover,
101 Idaho 345, 349, 612 P.2d 1192, 1196 (1980). “The determination whether an issue has been
tried with the consent of the parties is within the trial court‟s discretion, and such determination


                                                16
will only be reversed when that discretion has been abused.” Lindberg v. Roseth, 137 Idaho 222,
226, 46 P.3d 518, 522 (2002).
        Vreeken argues that his counsel moved to amend the pleadings to add a claim for breach
of fiduciary duty through the following language: “Prior to resting, we‟d simply make a motion
to conform the pleadings to the evidence presented.” Vreeken further asserts that the district
court granted their motion by responding as follows: “Thank you. All right. That completes the
evidentiary portion of the trial.”
        Without a specific motion indicating what cause of action is to be added and evidence in
the trial record supporting the amendment, the trial court cannot make a reasoned analysis to
guide its discretionary act. Nor does this Court have grounds upon which to review the trial
court‟s discretionary decision. Therefore, we hold that the district court was not required to
make any findings as to whether the Golds breached their fiduciary duty to Vreeken.
            2. The District Court‟s Evidentiary Rulings
        Next, Vreeken assigns error to some of the district court‟s evidentiary rulings.
Specifically, Vreeken argues that the district court abused its discretion by excluding certain
documentary evidence before trial, and by admitting Thomas Gold‟s testimony regarding his
telephone conversation with Christianne under I.R.E. 801(d)(2)(D). We hold that the district
court did not abuse its discretion in making these evidentiary rulings.
                      a. Standard of Review
        “This Court reviews challenges to a trial court's evidentiary rulings under the abuse of
discretion standard.” Perry v. Magic Valley Reg’l Med. Ctr., 134 Idaho 46, 50, 995 P.2d 816,
820 (2000). These include challenges to a trial court‟s decision to admit or exclude documentary
and/or testimonial evidence. “Error is disregarded unless the ruling is a manifest abuse of the
trial court's discretion and affects a substantial right of the party.” Id. at 51, 995 P.2d at 821. To
determine if there has been an abuse of discretion, this Court applies the following three factors:
(1) whether the trial court correctly perceived the issue as one of discretion; (2) whether the trial
court acted within the boundaries of this discretion and consistent with the legal standards
applicable to the specific choices available to it; and (3) whether the trial court reached its
decision by an exercise of reason. City of McCall v. Seubert, 142 Idaho 580, 586, 130 P.3d
1118, 1124 (2006).




                                                 17
                     b. The district court did not abuse its discretion in excluding certain
                        documentary evidence before trial.
       Vreeken argues that the district court abused its discretion in excluding certain
documentary evidence before trial, specifically, the written lease agreement for an item of
disputed equipment. Vreeken disclosed this documentary evidence five days before trial, which
violated the district court‟s pre-trial order that each party‟s list of proposed exhibits be submitted
no later than fourteen days before trial. Vreeken claims he did not submit these documents
earlier because he was unaware of their importance until the months leading up to trial.
However, this excuse does not justify the late disclosure. Vreeken was notified approximately
one year in advance of the fourteen day deadline for exhibits. As the district court noted, “This
case ha[d] been pending nearly six years. There [was] plenty of opportunity to dig out this
material and get it submitted timely in discovery and have it be part of the ongoing case. It‟s
simply not excusable to [reveal this evidence] the week before trial and [have it be] included in a
late filed exhibit list without [the evidence] being disclosed as part of the normal discovery
procedure.” We hold the district court did not abuse its discretion in excluding the documentary
evidence as being untimely.
                     c. The district court did not abuse its discretion by admitting Thomas
                        Gold’s testimony regarding a telephone conversation he had with
                        Christianne under I.R.E. 801(d)(2)(D).
       Vreeken also asserts that the district court erred by admitting hearsay evidence that the
court determined was supportive of the finding that Christianne was Vreeken‟s agent. During
trial, Thomas Gold testified that Christianne disclosed to him over the phone that the funds used
to procure her assignment from the Bank of Idaho were from her father, she had only done what
her father told her to do regarding the assignment, and she did not want any part of the
transaction. Vreeken objected to this testimony. The district court determined these statements
fell under I.R.E. 801(d)(2)(D) as statements made by a party‟s agent concerning a matter within
the scope of an agency made during the existence of the relationship, and accordingly admitted
the testimony as non-hearsay. On appeal, Vreeken argues that there is no independent evidence
in the record indicating that Christianne was Vreeken‟s agent.
       Under Idaho Rule of Evidence 802, hearsay is generally not admissible. However, I.R.E.
801(d)(2)(D) provides that a statement is not hearsay if it is “offered against a party and is . . . a
statement by a party's agent or servant concerning a matter within the scope of the agency or



                                                 18
employment of the servant or agent, made during the existence of the relationship.” The Idaho
Court of Appeals has held that a foundational requirement of this rule is that “independent
evidence of the agency relationship, i.e., evidence apart from the alleged agent‟s own statements,
are necessary before the alleged agent‟s out-of-court declarations may be admitted.” R Homes
Corp. v. Herr, 142 Idaho 87, 92, 123 P.3d 720, 725 (Ct. App. 2005). This holding was based on
precedent developed prior to the adoption of the Idaho Rules of Evidence, in which the Court
determined that independent evidence of an agency relationship is required. Id.
       We find that the record in this case contains independent evidence of an agency
relationship between Christianne and Vreeken. During his previously published deposition,
Vreeken testified that Christianne helped him manage Lockwood, thereby acting as his agent in
the day-to-day function of the company. Vreeken also stated that he asked Christianne to pay off
the Bank of Idaho loan with the money he gave her. Based on this evidence, we find that the
district court did not abuse its discretion in determining that Christianne was acting as an agent at
the time of the transfer, and that her comments to Thomas Gold concerning the transfer were
admissible as a statement by a party‟s agent under I.R.E. 801(d)(2)(D). As such, we affirm the
district court‟s ruling to admit Thomas Gold‟s testimony under I.R.E. 801(d)(2)(D).
           3. The District Court‟s Findings of Fact
       Finally, Vreeken argues that some of the district court‟s findings of fact are not supported
by substantial, competent evidence.      These include findings that: (1) Vreeken engaged in
wrongful conduct by filing UCC statements against LP and LPI‟s assets, and by orchestrating
Christianne‟s procurement of the Bank of Idaho‟s interest in the LPI loan; (2) certain LPI assets
that Vreeken purchased were capital contributions; and (3) Christianne‟s assignment from the
Bank of Idaho was void. We hold that these findings are supported by substantial, competent
evidence and, therefore, we affirm.
                     a. Standard of Review
       When reviewing a trial court‟s conclusions following a bench trial, our review is limited
to ascertaining whether the evidence supports the findings of fact, and whether the findings
support the conclusions of law. Borah v. McCandless, 147 Idaho 73, __, 205 P.3d 1209, 1213
(2009). “Since it is the province of the trial court to weigh conflicting evidence and testimony
and to judge the credibility of witnesses, this Court will liberally construe the trial court's
findings of fact in favor of the judgment entered.” Id. These findings of fact will not be set aside



                                                 19
unless the trial court‟s findings are clearly erroneous. Ransom v. Topaz Mktg., L.P., 143 Idaho
641, 643, 152 P.3d 2, 4 (2006). “If the trial court based its findings on substantial evidence, even
if the evidence is conflicting, this Court will not overturn those findings on appeal.” Borah, 147
Idaho at __, 205 P.3d at 1213. Furthermore, this Court will not substitute its view of the facts for
that of the trial court. Ransom, 143 Idaho at 643, 152 P.3d at 4. However, we exercise free
review over matters of law. Borah, 147 Idaho at __, 205 P.3d at 1213.
                               i. The district court‟s findings that Vreeken engaged in wrongful
                                  conduct by filing UCC statements against LP and LPI‟s assets and
                                  by orchestrating Christianne‟s procurement of the Bank of Idaho‟s
                                  interest in the LPI loan are supported by substantial, competent
                                  evidence.
                                        1. Vreeken’s UCC filings
         First, Vreeken argues that the district court erred by finding that he engaged in wrongful
conduct by filing UCC financing statements in Idaho against LP and LPI‟s assets. After trial, the
district court found that Vreeken knowingly filed UCC financing statements for Gergbroeders
and Lockwood in an attempt to create security interests in the assets of LP and LPI superior to
those held by the Golds. The district court found that Vreeken‟s intent in filing the financing
statements was to interfere with the Golds‟ ability to act on those assets as security for the debt
owed to them under the MOU. Based in part on these improper UCC filings, the court found that
Vreeken had breached the implied covenant of good faith and fair dealing under the MOU and,
therefore, was jointly and severally liable with Lockwood, LP, and, LPI on the payout notes.4
         Vreeken assigns error to the district court‟s finding for two reasons. First, Vreeken
argues that he testified at trial that he did not know what UCC security interests were or how
they operated and accordingly his conduct in connection with the UCC filings was not wrongful.
However, Vreeken only testified that he did not know what the acronym UCC meant, and that he
relied on counsel‟s advice in signing the UCC statements. The district court determined that
Vreeken‟s primary intent in filing the UCC statements was to interfere with the Golds‟ ability to
act on the assets securing the debt owed to them. It is the province of the trial court to judge the
credibility of witnesses, and this Court will liberally construe the trial court‟s findings of fact in



4
  The district court determined that pursuant to Community Builders, Inc. v. Indian Motocycle Assocs., Inc., 692
N.E.2d 964, 975-76 (Mass. App. Ct. 1998), an individual with control over an entity can be held personally
responsible for those obligations for which he deliberately causes the entity to fail to comply with. Accordingly, the


                                                         20
favor of the judgment entered. Rowley v. Fuhrman, 133 Idaho 105, 107, 982 P.2d 940, 942
(1999). The evidence demonstrates that Vreeken owns and manages multiple companies and is a
sophisticated businessman. Based on his business experience, the district court must have
implicitly determined that Vreeken knew what he was doing when he filed the UCC statements,
despite his Dutch background. Because this finding is not clearly erroneous, it will not be set
aside. Ransom v. Topaz Mktg., L.P., 143 Idaho 641, 643, 152 P.3d 2, 4 (2006).
        In addition, Vreeken asserts that because his counsel made the UCC filings, and not him,
Vreeken‟s limited part in connection with the filings was not wrongful. However, it is generally
accepted that the relationship between an attorney and client is one of agency in which the client
is the principal and the attorney is the agent. Caballero v. Wikse, 140 Idaho 329, 332, 92 P.3d
1076, 1079 (2004); Burt v. Gahan, 220 N.E.2d 817, 818 (Mass. 1966) (noting that, in a broad
sense, counsel may be an agent and his client a principal). An agent may bind a principal if the
agent has actual authority or apparent authority. See Caballero, 140 Idaho at 332, 92 P.3d at
1079. “Actual authority is that authority a principal expressly grants to an agent or impliedly
confers on an agent because it is usual, necessary, and proper to achieve the object of the express
authority granted to the agent.” Id. Here, Vreeken‟s counsel was his agent. By signing the
documents, Vreeken gave counsel the express authority to file the UCC statements. As a result,
Vreeken is bound by counsel‟s actions.
        Based on the evidence in the record, we hold that the district court‟s finding that Vreeken
engaged in wrongful conduct by filing UCC statements with security interests senior to the
Golds‟ statements is supported by substantial, competent evidence. Accordingly, we affirm this
finding.
                                       2. Vreeken’s part in the Bank of Idaho’s assignment of the
                                          LPI loan constituted wrongful conduct.
        Vreeken also argues that the district court erred by finding that his part in Christianne‟s
procurement of the Bank of Idaho‟s interest in the LPI loan constituted wrongful conduct.
Vreeken argues the assignment of interest from the Bank of Idaho to Christianne was merely an
“arms-length transaction,” and that Vreeken advanced Christianne the funds in order to balance
out gifts amongst his children. However, the evidence in the record demonstrates otherwise.



district court attributed liability to Vreeken based on the UCC statements he filed on behalf of Gergbroeders and
Lockwood.


                                                       21
First, Vreeken testified during his deposition that he provided Christianne with the funds used to
pay off LPI‟s Bank of Idaho loan and that he asked her to apply the funds toward procuring an
assignment of the bank‟s interest. In addition, Melanie Harris, a former controller for LPI,
testified that: (1) the transfer of assets from LPI to Telford, Christianne‟s company, was for
Christianne‟s satisfaction of the Bank of Idaho loan; (2) any outstanding obligations due from
LPI to Gergbroeders or Lockwood were not reduced on LPI‟s books as a result of the transfer;
(3) the assets transferred constituted virtually all of LPI‟s capital assets with value and the
transfer consequently reduced LPI‟s balance sheet to zero; (4) all the assets transferred were
shown on LPI‟s books and records as assets owned by LPI, and (5) the amount due on the Bank
of Idaho debt was reduced on LPI‟s books. Ms. Harris also testified that all of her discussions
involving Telford, with respect to the assets transfer and the ongoing business operations of the
company, were with Vreeken. Lorna Schubert, a former employee of LPI who also testified
during trial, verified that the asset transfer was conducted in the manner described by Ms. Harris.
Furthermore, Thomas Gold testified that Christianne admitted to him during a phone
conversation that when she purchased the Bank of Idaho debt, the money was from her father,
she signed the documents without knowing what they were because her father told her to, and
she did not want any part of the transaction. Therefore, we find that there is substantial,
competent evidence to support the district court‟s finding that Vreeken‟s part in procuring
Christianne‟s assignment of the Bank of Idaho‟s interest in the LPI loan constituted wrongful
conduct. As such, we affirm the district court‟s finding.
                           ii. The district court‟s finding that certain assets of LPI, which were
                               originally purchased by Vreeken, constituted capital contributions
                               is supported by substantial, competent evidence.
       Next, Vreeken argues that the district court erred by finding that certain LPI assets, which
were originally purchased by Vreeken, constituted capital contributions. These assets were listed
in Plaintiffs‟ Exhibit 3, which was an invoice documenting the value of the assets transferred
from LPI to Telford.     Instead, Vreeken asserts that the equipment listed in the invoice was
provided to LPI as loans or leases. In support of his assertion, Vreeken directs this Court‟s
attention to the following evidence or lack thereof: (1) Vreeken testified that he did not intend for
the purchases to be capital contributions, and his testimony was corroborated by others; (2) LPI
had been in operation for several years prior to the purchase of the equipment and there was no




                                                 22
evidence that LPI was in need of capitalization; and (3) Lockwood received no value for the
“capital contributions.”
       The respondents, however, argue that there is substantial, competent evidence in the
record to support the district court‟s finding, namely: (1) William Windels‟s testimony that all
the machinery and equipment on site at LPI was owned by LPI; (2) testimony from Melanie
Harris and Lorna Schubert that the assets belonged to LPI prior to them being transferred to
Telford, (3) Thomas Gold‟s testimony that the financial statements he received reflected that LPI
had substantial assets in equipment, (4) the documents transferring the assets from LPI to
Telford, (5) EIEDC‟s UCC statements describing LPI‟s equipment, and (6) Vreeken‟s UCC
statements describing specific LP and LPI equipment.
       We hold that the district court‟s finding that LPI‟s assets were capital contributions is
supported by substantial, competent evidence. These assets were listed on LPI‟s books as being
owned by LPI, see Lettunich v. Lettunich, 141 Idaho 425, 433, 111 P.3d 110, 118 (2005); and
were also used by LPI in the course of its normal business operations. See Weyerhaeuser Co. v.
Clark’s Material Supply Co., 90 Idaho 455, 461, 413 P.2d 180, 183 (1966). LPI sold the assets
to Telford, thereby acting as the owner.        Furthermore, there was no substantial evidence
presented at trial to indicate that Vreeken intended to lease the assets to LPI. See Lettunich, 141
Idaho at 432, 111 P.3d at 117; Weyerhaeuser, 90 Idaho at 461, 413 P.2d at 183. Most notably,
there is no lease agreement or evidence of lease payments in the record. Therefore, we affirm
the court‟s finding of fact that certain LPI‟s assets originally purchased by Vreeken were capital
contributions.
                           iii. The district court did not find that the Bank of Idaho‟s assignment
                                to Christianne was void.
       Lastly, Vreeken assigns error to the district court‟s finding that the Bank of Idaho‟s
assignment of its interest in the LPI loan to Christianne was void. Vreeken claims the district
court made this finding in its order after trial. However, the district court never determined that
the assignment was void. Rather, in regard to the assignment, the district court found as follows:
       Vreeken used his daughter, Christianne, through her apparently dummy
       corporation, Telford Co., to purchase the Bank of Idaho debt and to take
       possession of the assets of [LP] and [LPI] in an intentional attempt to circumvent
       the Golds‟ rightful security interest in those assets. The following sale of those
       assets to Volm Bag, Co. was done in furtherance of this attempt and the Golds‟
       not receiving any money from the proceeds of that sale serves as evidence that the
       alienation of the [LPI] assets to Telford did, in fact, impair those assets as security


                                                 23
       of the debt to the Golds. The assets are now all tied up in litigation as a direct
       result of these various claims.
Nowhere in its finding did the district court state that the assignment from the Bank of Idaho to
Christianne was void. Rather, the district court focused its attention on Vreeken‟s part in
Christianne‟s procurement of the assignment and his motive for helping her. “To raise an issue
on appeal, the record must contain an adverse ruling to form the basis for assignment of error and
this Court will not consider or review an issue raised for the first time on appeal.” Magnuson
Props. P’ship v. City of Coeur d’Alene, 138 Idaho 166, 170, 59 P.3d 971, 975 (2002). Because
the district court never found that the assignment was void, we therefore dismiss Vreeken‟s
argument on appeal.
       Accordingly, we affirm the district court‟s judgment after trial. Under this judgment, the
district court determined that Vreeken had hindered LP and LPI‟s ability to satisfy the payout
notes by interfering with the disposition of the assets intended to secure the payout notes. The
court found that Vreeken breached the implied covenant of good faith and fair dealing and was
personally liable to the Golds for the damages resulting from that breach. Likewise, section 2(c)
of the MOU provided that any damages the Golds incurred as a result of Vreeken, Lockwood,
LP, and LPI‟s failure to obtain the releases from the EIEDC and Citizens Bank loans were
secured by the assets of LP and LPI. Based on the district court‟s judgment, Vreeken would be
personally liable for these damages as well. Thus, even though we are reversing the district court
on the issue of indemnification, we direct the court to determine on remand the amount of
damages the Golds sustained from Vreeken‟s interference with the disposition of LP and LPI‟s
assets intended to secure their releases from the bank loans, and to enter judgment against
Vreeken for these damage amounts.
   D. Attorney Fees on Appeal
       The appellants collectively request attorney fees on appeal under I.C. § 12-120(3). Idaho
Code § 12-120(3) provides for an award of attorney fees to the prevailing party in a commercial
transaction. None of the appellants are prevailing parties and, therefore, are not entitled to
attorney fees on appeal.
       The respondents request attorney fees on appeal pursuant to I.C. §§ 12-120(3) and 12-
123. Idaho Code § 12-120(3) allows for an award of attorney fees to the prevailing party “[i]n
any civil action to recover on an open account, account stated, note, bill, negotiable instrument,
guaranty, . . . and in any commercial transaction.” “A „commercial transaction‟ is defined as any


                                               24
transaction, except transactions for personal household purposes.” Cramer v. Slater, 146 Idaho
868, 881, 204 P.3d 508, 521 (2009).        This appeal arises from a dispute over the parties‟
respective rights upon termination of a joint venture, which falls under the definition of a
“commercial transaction.” Furthermore, we find that the respondents are the prevailing party on
appeal.     Although we reversed the district court‟s award of summary judgment on the
respondents‟ indemnification claim, the respondents prevailed on the appellants‟ eleven
remaining claims on appeal. Therefore, the respondents, as the prevailing parties in this matter,
are entitled to an award of attorney fees on appeal under I.C. § 12-120(3). As such, there is no
need for us to consider the respondents‟ claim for fees under I.C. § 12-123.
                                      III. CONCLUSION
          For the reasons set forth above, we affirm the district court‟s award of summary
judgment against LP and LPI‟s counterclaims and the court‟s award of summary judgment in
favor of the respondents‟ cross-claim for breach of contract. Although we reverse the district
court‟s award of summary judgment on the Golds‟ cross-claim for indemnification, we instruct
the district court on remand to determine the amount of damages the Golds‟ sustained from
Vreeken‟s interference with the disposition of the assets intended to secure the Golds‟ releases
from the EIEDC and Citizens Bank loans, and to hold Vreeken personally liable for these
amounts. As the prevailing parties on appeal, we award the respondents attorney fees under I.C.
§ 12-120(3). Costs to the respondents.
          Chief Justice EISMANN and Justices J. JONES, W. JONES and HORTON, CONCUR.




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