Liberty Bankers Life Insurance Company v. Witherspoon, Kelley, Davenport & Toole, P.S.

Summary

The Idaho Supreme Court reviewed competing security interests held by Liberty Bankers Life Insurance Company and Witherspoon, Kelley, Davenport & Toole, P.S., in Post Falls, Idaho property and a marina. The court held that the district court abused its discretion by applying judicial estoppel and erred in concluding that the Eighth Loan Modification Agreement released certain property from Liberty’s original deed of trust. The court vacated the relevant rulings and remanded for further proceedings, including reconsideration of the parties’ security interests and the marina’s status as real or personal property.

Holdings

1. The district court abused its discretion by applying judicial estoppel because it failed to find that Liberty obtained a judgment, advantage, or consideration from the inconsistent position on which the estoppel ruling was based.
2. The eighth loan modification agreement itself did not release Blocks A, D, and E from Liberty's original deed of trust; the contemplated partial release and related documentation were necessary.
3. Idaho Code section 45-108 does not apply to deeds of trust and therefore did not itself create Liberty's new deed of trust or release the blocks from the original deed of trust.
4. An unrecorded new deed of trust could not provide the basis for foreclosure by advertisement and sale.
5. Witherspoon was not an intended third-party beneficiary of the eighth loan modification agreement and had no right to enforce it on that theory.
6. The district court erred by relying improperly on the owner's subjective intent and must determine, separately for each marina structure, whether it is a fixture using objective circumstances.

Questions Presented

1. Whether the district court abused its discretion by applying judicial estoppel to bar Liberty from contesting the enforceability of the eighth loan modification agreement.
2. Whether the eighth loan modification agreement, without execution and recording of the contemplated additional documents, released Blocks A, D, and E from Liberty's original deed of trust.
3. Whether Idaho Code section 45-108 applies to deeds of trust.
4. Whether Liberty's unrecorded new deed of trust could provide the basis for a nonjudicial foreclosure.
5. Whether Witherspoon was an intended third-party beneficiary entitled to enforce the eighth loan modification agreement.
6. Whether the district court properly determined that the marina was entirely personal property rather than a fixture.

Disposition

reversed_and_remanded