Liberty Bankers Life Ins. Co. v. Witherspoon, Kelley, etc.
Annotate this CaseThis appeal centered the competing security interests of appellant Liberty Bankers Life Insurance Company and respondent Witherspoon, Kelley, Davenport, & Toole, P.S. in real and personal property located in Post Falls, “Post Falls Landing” and the “Marina.” These properties were formerly owned by the Point at Post Falls, LLC and Post Falls Landing Marina, LLC (collectively, “The Point”). Witherspoon provided legal representation to The Point during the purchase. In 2005, The Point granted Witherspoon a promissory note, secured by a deed of trust to Post Falls Landing. Liberty and The Point entered into an agreement by which Liberty would loan The Point money in exchange for a promissory note in the amount of the loan, which was secured by a deed of trust to Post Falls Landing. As a condition to the Original Loan Agreement, Witherspoon entered into an agreement subordinating its Original Deed of Trust to Liberty’s Original Deed of Trust. Later on, Liberty agreed to extend additional funds to The Point. These funds were used to construct the Marina. By 2010, Witherspoon entered into the last of multiple amended subordination agreements with The Point. Unlike the prior subordination agreements, the Final Subordination Agreement did not include the “and any renewals or extensions thereof” language. The Final Subordination Agreement was recorded on September 3, 2010. Liberty foreclosed on The Point in August 2011 after The Point defaulted on one of the many loans. The trustee’s sale took place in November 2012, which resulted in the conveyance of the real property of Post Falls Landing to Liberty in exchange for a credit bid of $3,404,000.00. A few months later, Liberty filed an action against Witherspoon seeking a judicial declaration that the Marina was a fixture on Post Falls Landing real property, a judicial declaration that the trustee’s deed conveyed to Liberty all interest in the Marina, and entry of a decree quieting title to the Marina in Liberty’s name. Liberty’s appeal challenged five rulings by the district court: one at the summary judgment stage and four after the bench trial. The single issue from the summary judgment stage was whether the district court properly invoked judicial estoppel against Liberty. Of the four bench trial issues, three involved Liberty’s and Witherspoon’s competing security interests in Post Falls Landing and the effect of the Eighth LMA on those interests. The fifth issue was whether the Marina was personal property or a real property fixture to Post Falls Landing. Ultimately, the judgments of the district court were vacated by the Supreme Court and the case was remanded for further proceedings.
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