The Idaho Supreme Court announced on Tuesday that it granted the owners of the Captain's Wheel Resort in Bayview a new trial against a former partial owner of the business.

The Supreme Court's decision upholds a 1st District Court ruling, which said a 2010 jury should not have awarded damages of $380,000 against owners Michael B. McFarland, a Coeur d'Alene attorney, and Karen Zimmerman.

The jury also found McFarland and Zimmerman weren't entitled to repayment of loans they made to the business.

The jury found McFarland had breached attorney-client duties to former client Jerry Berry, who is now deceased. Berry's wife, Karletta Berry, also was a shareholder in the corporation that owned and operated the Captain's Wheel.

Jerry Berry had asked McFarland for legal advice about bankruptcy and considered him to be his attorney. The Supreme Court's decision said there is no evidence that McFarland agreed to a continuing attorney-client relationship. The Berrys didn't contend that McFarland was paid a retainer.

The District Court said there was insufficient evidence to justify the jury's verdict. Karletta Berry appealed the District Court's decision to grant a new trial.

The Captain's Wheel Resort Inc. was incorporated in 1996 with 400 shares of stock. The assets consisted of property and the restaurant and bar.

In June 2000, Jerry Berry purchased half the stock for $50,000.

In 2003, Berry borrowed $100,000 to purchase the remainder of the stock. The money was borrowed from McFarland and Zimmerman.

When they made the loan, McFarland and Zimmerman thought the resort would sell in a few years and they would be repaid, but that didn't happen.

In 2006, Jerry Berry was diagnosed with cancer. Later that year, he sold 200 shares to McFarland and Zimmerman for $100,000.

Karletta Berry was made a shareholder, sharing her husband's remaining 200 shares.

Jerry Berry died in November 2006, and within months the relationship between Karletta Berry and the other two shareholders deteriorated.

The lawsuit filed by Karletta Berry alleged multiple attorney-client relationship breakdowns.

Rex Finney, a Sandpoint attorney who represented Karletta Berry, didn't immediately return a call seeking comment.

McFarland didn't return a call seeking comment.