IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 36128-2009
APPLE’S MOBILE CATERING, LLC, an )
Idaho limited liability company, ) Boise, May 2010 Term
)
Plaintiff-Respondent, ) 2010 Opinion No. 57
)
v. ) Filed: May 28, 2010
)
THOMAS O’DELL and SHEILA O’DELL, ) Stephen W. Kenyon, Clerk
husband and wife, )
)
Defendants-Appellants. )
Appeal from the District Court of the Seventh Judicial District of the State of
Idaho, in and for Custer County. The Hon. Brent J. Moss, District Judge.
The judgment of the district court is affirmed.
Thomas O‟Dell and Sheila O‟Dell, pro se appellants.
Anderson, Julian & Hull, LLP, Boise, for respondent.
EISMANN, Chief Justice.
This is an appeal from a judgment in favor of the purchaser of goods under a written
contract that the parties had orally modified. Because the contract, as orally modified, had been
fully performed, we hold that its enforcement was not barred by the statute of frauds and affirm
the judgment.
I. FACTS AND PROCEDURAL HISTORY
Thomas and Sheila O‟Dell (Sellers) owned a mobile catering business providing meals to
wildland firefighters. In July 2001, Sellers and Apple‟s Mobile Catering, LLC, (Buyer) entered
into a written contract entitled “Asset Purchase Agreement” under which Sellers agreed to sell
and Buyer agreed to purchase the assets of the mobile catering business, including vehicles,
tractors, trailers, and inventory, for the sum of $340,000. Buyer paid $65,000 as a down
payment and signed a promissory note for the balance. The note was payable at the rate of
$1,829.69 per month for sixty months, with a balloon payment in the amount of the remaining
balance payable on June 30, 2006. The unpaid balance of the promissory note was secured by
the equipment. The Sellers had new titles to the vehicles issued showing Buyer as owner and
Sellers as lienholders.
In the Asset Purchase Agreement, Sellers represented that “as of June 21, 2001, the
subject vehicles, equipment and other property have complied with the minimum standards,
regulations and/or requirements of the National Interagency Fire Center.” After the sale closed,
Buyer discovered that the equipment and vehicles did not comply with those standards,
regulations and/or requirements. In order to resolve the dispute regarding the condition of the
equipment and vehicles, Sellers and Buyer orally agreed in the summer of 2002 that Sellers
would reduce the purchase price to $130,000 and that Buyer would pay the reduced price at an
accelerated rate, making payments as requested by Sellers.
The parties fully performed the Asset Purchase Agreement as modified by their
settlement agreement. In June 2003, Buyer made the last payment. In May 2004, Sellers signed
the titles to the vehicles to release their liens and delivered the titles to Buyer. When Buyer later
took the titles to the Department of Transportation to have new titles issued, it discovered that
Sellers had obtained duplicate titles from the Department, contending that they had lost the
original titles. The duplicate titles still showed Sellers as lienholders, and the Department
refused to issue Buyer new titles that did not show Sellers as lienholders. Sellers refused to
allow such new titles to be issued.
On September 28, 2007, Buyer instituted this lawsuit seeking a declaratory judgment that
Buyer has paid Sellers all sums owing under the Asset Purchase Agreement, that Buyer owns the
vehicles free of any lien or other interest of Sellers, and that the financing statement signed by
Buyer is of no further effect. Both parties moved for summary judgment, and the district court
granted summary judgment in favor of Buyer. After the court denied Sellers‟ motion for
reconsideration, Sellers appealed.
II. ISSUES ON APPEAL
1. Did the district court err in granting summary judgment on the theory of accord and
satisfaction?
2. Is the oral settlement agreement unenforceable because of the statute of frauds?
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3. Is Buyer entitled to an award of attorney fees on appeal?
III. ANALYSIS
A. Did the District Court Err in Granting Summary Judgment on the Theory of Accord
and Satisfaction?
In its complaint, Buyer alleged as one theory of recovery that there was an accord and
satisfaction based upon the fact that the final check included the notation, “Final Payment.”
Sellers moved for summary judgment in their favor on that theory. They contended there was no
accord and satisfaction because they had not seen the final check. Buyer had deposited the check
into Sellers‟ account and had then mailed a copy of the check to Sellers, but had allegedly sent it
to the wrong address.
In its complaint, Buyer also alleged as another theory of recovery that the parties had
resolved their dispute regarding the condition of the vehicles and equipment by an oral
settlement agreement under which the parties modified the Asset Purchase Agreement by Sellers
agreeing to decrease the purchase price and Buyer agreeing to pay the decreased purchase price
at an accelerated rate. Buyer filed a motion for summary judgment asserting that the undisputed
facts showed either that the parties had reached an agreement to compromise and settle their
dispute regarding the condition of the equipment and vehicles or that they had an accord and
satisfaction. The district court granted summary judgment on the ground that the parties had
orally modified the Asset Purchase Agreement.
On appeal, Sellers state as their first assignment of error, “Did the district court properly
grant summary judgment to the respondent, when in fact from the face of the decision, the court
denied the plaintiff‟s theory of an accord and satisfaction, appearing to grant appellant‟s motion
for summary judgment?” They argue that in its decision on the motions for summary judgment,
“the court relies exclusively upon the Affidavit of David Orr [Buyer‟s owner] for it‟s [sic]
decision, and completely fails to address the Affidavit of Thomas O‟Dell, flatly denying he
personally received check No. 469 from David W. Orr, listing a „Final Payment.‟”
The district court did not grant summary judgment on the theory of accord and
satisfaction. In fact, the court concluded its analysis of the summary judgment motions by
writing, “In this case, accord and satisfaction is irrelevant—this is a case about contract
modification; it does not matter how the O‟Dells received their final payment.” Because the
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district court did not grant Buyer‟s motion for summary judgment on the theory of accord and
satisfaction, there is no merit to Sellers‟ argument that the court erred in granting Buyer‟s
summary judgment motion on that theory.
B. Is the Oral Settlement Agreement Unenforceable Because of the Statute of Frauds?
On June 30, 2008, Sellers moved for summary judgment “for the reasons set forth in the
Affidavits and attached Exhibits and on the Memorandum in Support of Motion for Summary
Judgment filed herewith.” There were no affidavits or exhibits attached to the motion. The
memorandum sought a summary judgment dismissing Buyer‟s theory of accord and satisfaction.
In response, Buyer moved for summary judgment on the declaratory judgment count in
its complaint. It supported the motion with an affidavit of its owner in which he recounted in
detail the facts regarding the parties‟ settlement agreement modifying the Asset Purchase
Agreement; the Buyer‟s full performance by making the accelerated payments as requested by
Sellers; and the Sellers‟ actions of signing the vehicle titles to release Sellers‟ liens, of delivering
those titles to Buyer, and of then obtaining duplicate titles showing that Sellers still have liens on
the vehicles.
Buyer also filed the affidavit of the broker who represented Sellers in the transaction. He
stated that he was aware of Buyer‟s contention that Sellers had misrepresented the condition of
the equipment sold, that after that dispute arose Sellers asked the broker to see if Buyer would
make accelerated payments for a discount of the remaining balance on the note, that the parties
reached an agreement regarding the accelerated payments, and that Sellers stated that the
payment in June 2003 “would put an end to the promissory note and Apple‟s would not owe any
additional sums.”
Finally, Buyer filed a supporting memorandum arguing that Buyer was entitled to
summary judgment because the undisputed facts showed that the parties either reached a
settlement agreement to resolve the dispute over the condition of the vehicles and equipment or
an accord and satisfaction. Sellers did not respond to the affidavits or memorandum filed by
Buyer.
At the hearing on the motion for summary judgment, the district court gave Sellers
additional time to file anything Sellers wished regarding the summary judgment. Sellers filed an
affidavit stating that they had neither seen nor personally received the check with the notation
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“Final Payment” on it. They also filed a memorandum in which they made reference to the
statute of frauds. They asserted that by alleging accord and satisfaction, Buyer “has attempted to
circumnavigate the requirement [of a writing] in the law and under the Uniform Commercial
Code‟s Statute of Frauds at 28-2-201, Idaho Code.” They also argued that “the law, including
the Statute of Frauds and the Parole [sic] Evidence Rule clearly back up the intentions of the
parties to have a document, signed by the Defendant Thomas O‟Dell, to materially alter, change,
or modify the original agreement of the parties therein.”
The district court issued a decision in which it granted Buyer‟s motion for summary
judgment and denied Sellers‟ motion. The court held that the undisputed facts showed that the
parties had reached an oral settlement agreement to resolve the dispute regarding the condition of
the equipment and that Buyer had satisfied the terms of the Asset Purchase Agreement as
modified by the settlement agreement. In its decision, the court did not mention the statute of
frauds.
Sellers filed a motion for reconsideration asserting that the court “can not rule, by clear
and convincing evidence, that the plaintiff has met his burden of proving that the doctrine of part
performance provides an exception to the Statute of Frauds.” The district court denied Sellers‟
motion for reconsideration, holding that the statute of frauds did not apply. Relying upon Rule
Sales and Service, Inc. v. U.S. Bank Natl. Ass’n., 133 Idaho 669, 991 P.2d 857 (1999), the court
reasoned, “In that case, the court found that „it is only the lender’s promise or commitment to
lend that must be in writing for enforceability.‟ Here, the O‟Dells‟ original agreement to lend
was in writing.” (Footnote omitted; italics in original).
On appeal, Sellers list as an assignment of error, “Do sufficient facts exist for which a
reasonable jury could find by a preponderance of the evidence, that there was a course of
performance exception to the statute of frauds.” Sellers argue that Idaho courts require clear and
convincing evidence of part performance. They also contend that the district court erred in
failing to consider the statute of frauds (I.C. § 28-2-201), including the requirement that the
statute of frauds must be satisfied if a contract as modified is within its provisions (I.C. § 28-2-
209(3)).
We need not address the Sellers‟ arguments regarding part performance because the
Asset Purchase Agreement as orally modified is enforceable under the applicable statute of
frauds. The district court‟s reasoning was faulty as to the applicable statute of frauds, but it
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reached the right result. “Where the lower court reaches the correct result by an erroneous
theory, this Court will affirm the order on the correct theory.” Nampa & Meridian Irr. Dist. v.
Mussell, 139 Idaho 28, 33, 72 P.3d 868, 873 (2003).
The statute of frauds held applicable by the district court was Idaho Code § 9-505(5),
which requires a writing subscribed by the party charged for an agreement that is “[a] promise or
commitment to lend money or to grant or extend credit in an original principal amount of fifty
thousand dollars ($50,000) or more, made by a person or entity engaged in the business of
lending money or extending credit.” There are two reasons why this statute does not apply.
First, there is no evidence that Sellers were “engaged in the business of lending money or
extending credit,” nor did the district court even mention that requirement. The Asset Purchase
Agreement recited that Sellers were “in the business of providing mobile catering services.”
Second, the Asset Purchase Agreement was not an agreement “to lend money or to grant or
extend credit.” It was a contract for the sale of goods.
There is no dispute that the underlying transaction in this case was for the sale of goods.
On page one of its verified complaint, Buyer alleged, “In July of 2001 the parties entered into an
asset purchase agreement in which Plaintiff agreed to purchase from Defendants certain personal
property used in a mobile catering business.” Although in their answer Sellers only admitted
“that the parties entered into a purchase agreement in July of 2001,” in their initial brief on
appeal they stated, “This case gravitates around an undisputed Contract wherein Apple‟s agreed
to buy O‟Dell‟s catering equipment in July, 2001, with the purchase price of $340,000.00
secured by the equipment.” To support that statement, Sellers cited to page one of Buyer‟s
verified complaint. In its brief on appeal, Buyer states that it “agreed to purchase mobile
catering equipment from Appellants for a purchase price of $340,000.” The Asset Purchase
Agreement recited, “Seller agrees to sell, and at the Closing to cause to be transferred, assigned
and delivered to Buyer, and Buyer agrees to purchase the following assets of Seller („Assets‟).”
The assets being sold included “Seller‟s inventory of merchandise which is on hand” and “[a]ll
fixed assets, rolling stock, machinery, equipment, office supplies, tools, communication gear and
equipment, medical kits, fire extinguishing equipment, furniture and other personal property used
in the conduct of Seller‟s business and owned by Seller . . . .” Although the assets sold included
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some items that were not goods,1 the predominate factor of the transaction was the sale of goods,
and therefore it is controlled by the Uniform Commercial Code. Fox v. Mountain West Elec.,
Inc., 137 Idaho 703, 709-10, 52 P.3d 848, 854-55 (2002).
To resolve the dispute regarding the condition of the vehicles and equipment sold, the
parties entered into a settlement agreement to modify the terms of the Asset Purchase
Agreement. “[S]ettlement agreements must comply with the requirements for contracts and must
not be within the proscription of the statute of frauds.” McColm-Traska v. Baker, 139 Idaho 948,
951, 88 P.3d 767, 770 (2004). Idaho Code § 28-2-209(3) states, “The requirements of the statute
of frauds section of this chapter (section 28-2-201) must be satisfied if the contract as modified is
within its provisions.” The Asset Purchase Agreement, as modified by the settlement agreement,
is within the provisions of section 28-2-201 because it is “a contract for the sale of goods for the
price of $500 or more.”
Buyer argues on appeal that Idaho Code § 28-2-209 does not apply because “[t]he oral
modification at issue alters the parties‟ agreement with regard to financing and not the parties‟
agreement with regard to the purchase of goods, namely the mobile catering equipment.” The
record shows that the oral modification altered the purchase price of the goods.
In the Asset Purchase Agreement, Buyer agreed to purchase the assets being sold for the
sum of $340,000 payable by $65,000 in cash and by a promissory note for $275,000 secured by a
security agreement. In Buyer‟s complaint, which was verified by its owner, Buyer alleged that
pursuant to their settlement agreement, “Defendants agreed to reduce the purchase price for the
assets to $130,000.00 and as additional consideration for the reduction of the purchase price,
Plaintiff agreed to pay the renegotiated purchase price on an accelerated basis.” (Emphases
added.) In his affidavit in support of Buyer‟s motion for summary judgment, Buyer‟s owner
averred:
To resolve this dispute over the condition of the equipment, and rather than
rescind the contract to get back the purchase price, or refuse to pay any more
money, or file a lawsuit for damages, Mr. O‟Dell and I agreed in the summer of
2002 to the following: the balance owed on the purchase price would be reduced
to $130,000, to reflect Apple‟s contention that the equipment was not worth the
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The assets sold under the Asset Purchase Agreement included, “All other assets used in the conduct of Seller‟s
business or owned by Seller, including claims known or unknown, goodwill, whether tangible or intangible, not
hereinabove expressly mentioned.”
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purchase price, but in exchange Apple‟s would pay this reduced price at an
accelerated rate. (Emphases added.)
The Asset Purchase Agreement established the original purchase price of $340,000.
According to the statements under oath by Buyer‟s owner, the oral settlement agreement reduced
the purchase price of the goods to $130,000. Because the contract price for the goods still
exceeded $500, the Asset Purchase Agreement as modified was still within the Uniform
Commercial Code statute of frauds.
This Court has held that “the Statute of Frauds is a bar only to proof of executory, that is
unperformed, contracts and is not a bar to proof of executed contracts.” Aldape v. State, 98
Idaho 912, 913, 575 P.2d 891, 892 (1978). The Uniform Commercial Code statute of frauds
likewise only applies to executory contracts. Idaho Code § 28-2-201(3)(c) provides, “A contract
which does not satisfy the requirements of subsection (1) but which is valid in other respects is
enforceable . . . with respect to goods for which payment has been made and accepted or which
have been received and accepted (section 28-2-606).” As stated in 67 Am. Jur. 2d Sales § 170
(2003), “The Uniform Commercial Code provision prescribing a statute of frauds is applicable
only to executory contracts; fully executed contracts, where both the goods have been delivered
and accepted and payment has been made and accepted, are enforceable under other provisions
of the Uniform Commercial Code.”
In this case, the Asset Purchase Agreement, as modified by the parties‟ settlement
agreement, has been fully executed. Sellers delivered the equipment and vehicles to Buyer, and
Buyer accepted those goods. Buyer fully paid the sums due, and Sellers accepted the payment.
Sellers even signed the certificates of title, releasing their liens, and delivered those certificates to
Buyer. Therefore, the modified Agreement is enforceable and not barred by the statute of frauds.
C. Is Buyer Entitled to an Award of Attorney Fees on Appeal?
Buyer seeks an award of attorney fees on appeal pursuant to the Asset Purchase
Agreement, Idaho Code § 12-120(3), and Idaho Code § 12-121. Idaho Code § 12-120(3) “grants
the prevailing party the right to an award of a reasonable attorney‟s fee in „any civil action to
recover . . . in any commercial transaction.‟ The statute applies to declaratory judgment actions
if the gravamen of the action is a commercial transaction.” In re University Place/Idaho Water
Ctr. Project, 146 Idaho 527, 541, 199 P.3d 102, 116 (2008). The gravamen of this action was
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the parties‟ commercial transaction. Therefore, Buyer is entitled to an award of attorney fees on
appeal under Idaho Code § 12-120(3). Because we award attorney fees under this statute, we
need not address whether there is an additional basis for the award under the Asset Purchase
Agreement or Idaho Code § 12-121.
IV. CONCLUSION
The judgment of the district court is affirmed. We award costs on appeal, including a
reasonable attorney fee, to respondent.
Justices BURDICK, J. JONES, W. JONES and HORTON CONCUR.
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