Friday, May 6, 2011

Fuller v. Callister, May 6, 2011 Idaho Supreme Court

The Idaho Supreme Court issued a new opinion today in the case of Fuller v. Callister. The opinion is authored by Justice Burdick and is a 5-0 decision reversing the district court. The district court had entered summary judgment in favor of Callister, Confluence Management, LLC (CM), and Liberty Partners, Inc. (LP), and dismissed the Fullers' case. This decision remands for further proceedings.

The facts are pretty simple. Fullers contracted with CM to sell CM 12.73 acres in Meridian, Idaho. The Ada County Highway District (ACHD) had been trying to purchase part of the Fullers' property in order to expand Ten Mile Road. After entering into the initial Purchase Agreement, Fullers and CM entered into Addendum #1, which provided that CM would deed over a portion of the property to ACHD and transfer the proceeds to the Fullers. The Fullers retained the right to negotiate price with ACHD.

CM then assigned the Purchase Agreement to LP, with the Fullers' consent. Fullers then executed a warranty deed conveying the property to LP. The warranty deed did not mention Addendum #1 or the anticipated condemnation of the property by ACHD. LP subsequently sold the property to ACHD for #83,921 and refused to turn over the proceeds to the Fullers. The Fullers filed suit.

The district court granted summary judgment to Callister, CM, and LP on the basis that the Purchase Agreement had been merged into the warranty deed and that the assignment of the contract from CM to LP relieved CM from any obligations under the Purchase Agreement.

The Idaho Supreme Court reverses because the merger doctrine does not apply to the terms of Addendum #1. The general Idaho rule on the merger doctrine is that the acceptance of a deed to premises merges prior contract terms into the terms of the deed. All claims for relief have to be based on the terms of the warranty deed rather than the antecedent contract. The rule makes sense and has been followed consistently by Idaho courts.

Of course, there are exceptions to any general rule. One of the primary exceptions relied on by the Fullers is the exception that "collateral stipulations" are not merged into the deed. Addendum #1 applies special terms or stipulations to take place after the transfer of the property from Fullers to CM/LP. The terms of the Addendum made it clear that those terms were not intended to merge with the warrranty deed and when that intent is clear, then the merger doctrine does not apply. Justice Burdick notes that Addendum #1 clearly contemplated continuing in effect after the execution of a warranty deed. "Where the relevant conditions of a contract could not have been performed prior to execution of the warranty deed, merger is inappropriate."

The Court's ultimate conclusion is that Addendum #1 did not "implicate[] the alienation of property." The Court states that "[b]ased on the language of Addendum # 1 and the clear intent of the parties that the condition expressed in paragraph 3 would occur after the execution of the warranty deed, as well as the fact that the reservation of condemnation proceeds is properly viewed as part of the consideration for the sale, we find that the doctrine of merger does not apply here."

The Court rejects the district court's rationale that the assignment between CM and LP relieved CM of all obligations. The assignment never purports to release CM of its obligations under the Purchase Agreement.

The Court's decision moots consideration of the cross-appeal on attorney fees. The Court does state that the district court can consider the fees and costs associated with the appeal when it addresses fees and costs at the end of the case. There was no valid novation relieving CM from its obligations under the Purchase Agreement.

Overall, the decision seems to be a solid application of the law governing the merger doctrine. There are certain stipulations and conditions that are not part of the transfer of property that cannot and should not be extinguished based on the warranty deed. Idaho recognizes this and the decisions appears to be the right one.

Friday, April 8, 2011

Vanderford Company, Inc. v. Knudson and Greif - Idaho Supreme Court Decision

The Vanderford decision was issued on March 21, 2011 and is a unanimous decision by the Idaho Supreme Court. The Idaho Supreme Court reverses the district court's decision to grant summary judgment and enforce purported settlement agreements.

This Idaho Supreme Court decision is a follow up to previous appeal in Vanderford Co. v. Knudson, 144 Idaho 547, 165 P.3d 261 (2007) (known as Vanderford I). In Vanderford I, the Idaho Supreme Court remanded various issues and the district court ordered mediation among the parties. The parties mediated and the issue in the second appeal, which is this case, is whether the parties reached various settlement agreements resolving the case.

Vanderford and the Greifs argued before the district court that a settlement agreement had been reached in the case. The terms of the settlement included: Knudson agreed to let Vanderford negotiate on his behalf with the Greifs, Knudson agreed to join in any settlement reached by Vanderford and the Greifs, that because Knudson and Vanderford agreed, the Greifs settled with Vanderford settling all claims, and that all that remained was memorializing the agreement in written form. Vanderford and the Greifs maintained the position that Knudson failed to join and comply with the settlement agreement. Knudson disagreed and asked for a trial date. The district court then asked Knudson to submit and unsworn statement explaining the failure to reach a settlement agreement.

The Greifs filed a motion to enforce the settlement agreement, requiring Knudson to perform. Knudson responded with a brief and a sworn affidavit. Vanderford also submitted a brief and affidavit. Knudson then responded to Vanderford's filings with another brief and affidavit. The Court heard oral argument in March 2009 and granted the motion in April 2009, dismissing Knudson's claims and resolving the case.

The Idaho Supreme Court treated the motion to enforce as a motion for summary judgment because no evidentiary hearing was held and matters outside the pleadings were considered.

The Court finds triable issues of material fact as to whether the Vanderford-Knudson settlement agreement even exists. Settlement agreements are governed by the same contract principles that govern other agreements. The existence of settlement agreement has to satisfy the same requirements and standards of any other contract. Otherwise, a contract/settlement agreement cannot be said to exist.

The Court finds fault with the district court's methodology, primarily reliance by the district court on the unsworn explanation offered by Knudson. A district court should only considered evidence that would be admissible at trial. The unverified and unsworn nature of Knudson's statement was not "a proper source for facts on summary judgment" and did not rise to the level of a judicial admission. The Idaho Supreme Court notes that when the statements of the explanation are placed into context, they are ambiguous and "internally contradictory."

The affidavits submitted by the Greifs and Vanderford seem to establish the existence of a settlement agreement; however, Knudson also submitted an affidavit to the district court. In Knudson's affidavit he explained that he "never authorized anyone to negotiate a settlement with the Greifs on his behalf, that he never entered into any settlement with Vanderford and that the discussions he had with Vanderford never culminated in a meeting of the minds necessary to form a binding agreement." As the nonmoving party on a motion that should have been analyzed as a motion for summary judgment, Knudson's affidavit generates triable issues of material fact sufficient to defeat a summary judgment motion.

The Court also considers the Greif-Vanderford settlement agreement. Knudson argued that only a framework had been reached rather than a final agreement in connection with the Greifs. The Court finds triable issues that any agreement was merely "an agreement to agree" and was not yet an enforceable settlement agreement.

The Idaho Supreme Court also notes that the district court appears to have engaged in a credibility analysis as part of the summary judgment hearing. This was improper. The district court should not be concerned with credibility issues since its role is to give all favorable inferences to the nonmoving party, recognizing that a jury ultimately has to make the determination on credibility.

At the close of the decision, the Court footnotes something that confuses me. The Court admonishes practioners that they should be amending their pleadings when a settlement agreement is reached to include an alternative count for breach of contract. The Court advises, "The court can then hold an evidentiary hearing on the issues going to the formation of the new agreement and can decide credibility issues and disputed issues of fact." The reason I am confused is because contract formation is a fact intensive inquiry. Fact questions are reserved for jury adjudication not for judges. From what I understand of Idaho's jury system, if there are disputed issues of material fact, and there has been a jury demand, then juries get to decide the fact questions. Merely holding an evidentiary hearing attendant to a motion to enforce the settlement agreement does not obviate the Court's duty to refrain from resolving factual disputes and deferring to a jury. When there is no jury demand, then I understand the rationale by the Court. However, this case involves a jury demand under Rule 38, so I fail to see how an evidentiary hearing short of a jury trial could have helped things in this case or any other case when a jury has been demanded. Maybe I am missing something but I learned in law school that juries get to resolve factual disputes.

Overall an interesting decision and chalk one up for pro se appellants. I've rarely seen pro se appellants win on appeal. Though that's largely been a function of the pro se party not preserving issues for the appeal. It appears that Knudson was savvy enough to know how to submit potentially admissible evidence to the district court and preserve the issue for the appellate court. Once he got before the appellate court, it really appears to be a no brainer decision when decided under the summary judgment standard. I do not have the record in front of me, so maybe the district decided the case under a different standard, I don't know. But when the effect of the decision to summarily resolve the case without a jury trial, I imagine the district court applied the summary judgment standard but engaged in improper evidence weighing and credibility determinations.

Thursday, April 7, 2011

Stuard v. Jorgenson--Idaho Supreme Court

The Court decided Stuard v. Jorgenson on April 1, 2011. It is a 3-2 decision affirming the district court's decision to grant summary judgment in a medical malpractice action in favor of Dr. Jorgenson. The district court dismissed the action based on the expiration of the statute of limitations. The Court's discussion of the various arguments is quite interesting.

The facts are simple and simultaneously unique. Patrick Stuard saw Dr. Samuel Jorgenson for back pain. Jorgenson performed spinal surgery on Stuard in July 2004. Jorgenson mistakenly operated on the wrong spinal level during the surgery. Jorgenson cut open Stuard's back, removed tissue, and installed a plate to stabilize the spine. Jorgenson apparently did not notice that he was operating on the wrong spinal level throughout the surgery and during the post-operative treatment.

In August 2006, Stuard was injured at work and experienced spinal pain. He went back to Jorgenson, who then discovered that he had operated on the wrong spinal level back in 2004. Stuard arranged for a different doctor to perform a second surgery, including correcting the original mistake by Jorgenson from 2004.

Stuard sued Jorgenson and Jorgenson moved for summary judgment based on the statute of limitations. Stuard argued that the injuries he suffered were not objectively ascertainable at the time of the surgery and alternatively that the placement of the plate in his back invoked the foreign-object exception to the statute of limitations. The court discusses each of these arguments in affirming the district court.

The statute of limitations for medical malpractice, as every Idaho lawyer knows, is two years after accrual, unless the foreign-object exception applies. Idaho recognizes that malpractice actions only accrue when there has been "some damage" caused by the malpractice. There has to be objectively ascertainable evidence of some damage having been caused. To be considered "objectively ascertainable" there has to be objective medical proof that supports the existence of actual injuries.

In this case, Stuard argued that he did not suffer any damage until August 2006, when he suffered a workplace injury. His rationale is that since he did not have symptoms or knowledge of the negligence, then there could not have been injury. The Court finds Stuard's arguments infirm.

In rejecting Stuard's arguments the Court reiterates that a patient's knowledge of the damage is irrelevant to deciding whether there is an objectively ascertainable injury. A patient's knowledge is subjective and symptoms are not equivalent to there being damage. Relying on a patient's knowledge of damage, according to the majority, essentially invokes the discovery rule for medical malpractice cases, a rule that the Idaho legislature has explicitly rejected.

Stuard also argues that the paucity of medical records in evidence made it unclear whether damage was objectively ascertainable. The Court, however, rejects that argument because it again implicates the discovery rule. Stuard's failing, according to the majority, is that he never provided a conflicting expert witness to "state that the injury was not objectively ascertainable . . . ." Nor was there an expert testifying that an MRI taken immediately after surgery would not have revealed the negligence, i.e., that Jorgenson had operated on the wrong spinal level. The majority states that the evidence in the record established that had an MRI been ordered, it would have revealed the negligence by Jorgenson.

Stuard also argues that the plate installed by Jorgenson in 2004 constituted a foreign object that would impart protection to his claim under the foreign object exception to the statute of limitations. The foreign object exception, essentially, applies to "the placement and inadvertent, accidental or unintentional leaving of any foreign object in the body of any person." The Court finds that the plate was not a foreign object for purposes of the excpetion because the plate was intentionally left in Stuard's body. Jorgenson intended to leave the plate in Stuard and Stuard consented to Jorgenson doing so. Stuard might not have consented to the location but he consented to Jorgenson's "installation" of the plate. The new rule as stated by the Court is "that a medical device which is placed in the body intentionally for the purpose of medical treatment is not a 'foreign object' under the statute." The statute requires inadvertent leaving of an object not the deliberate and intentional placement of a device.

Therefore, the majority affirms the district court's decision to grant summary judgment to Jorgenson.

The dissent, authored by Jim Jones and joined in by Justice Burdick, takes no issue with the majority's ruling on the foreign object exception. The issue where Jones and Burdick dissent is the conclusive finding of some damage by the majority. Justice Jones argues that the record is insufficient to establish, without dispute, that Stuard suffered any injuries in 2004. Jones posits that since Stuard saw Jorgenson to relieve pain, and since that was inexplicably accomplished not withstanding the surgery on the wrong spinal level, there might not have been any damage in 2004. Justice Jones argues that it is inappropriate for the majority to simply assume that some damage was done at the time of the operation.

Justice Jones also discounts the self-serving and conclusory testimony in Jorgenson's own affidavit. The problem with Jorgenson's testimony, according to Jones, is that it never explains how or what injury was caused by the surgery. Jones goes on to state that there is no credible evidence in the record suggesting that any injury caused by Jorgenson was objectively ascertainable during 2004, which is the requirement of the statute of limitations. Since Jorgenson was clearly self-interested in his testimony, and since the testimony could have been construed as such, Jones reasons that a jury should have decided the issue.

Jones also applies the legal standard for legal malpractice cases when analyzing the some damage standard. Jones would hold that "there must be some credible medical evidence demonstrating some damage of a monetary nature--in this case, an injury to Mr. Stuard's body that required the outlay of monetary resources to repair--occurred before I would find that the statute of limitations begins to run in a medical malpractice action."

So, here are my thoughts about the decision. First, just like all of the justices, I agree that the foreign object exception was a real reach by plaintiff's counsel and that the foreign object exception clearly does not apply. The statute establishing the exception clearly requires inadvertence or negligence in leaving an item in patient's body. The plate was installed as intended by both patient and doctor. Arguably, the plate accomplished its goal of alleviating pain. The location of the plate was not material in my estimation; rather, the purpose of relieving pain was the material reason for installing the plate. That makes the exception inapplicable in my opinion.

As for the some damage rule, I tend to side with Jim Jones on this one. Jim Jones' rule would certainly empower plaintiffs to seek redress through the courts, arguably the very reason for the establishment of a judicial system, without relying on technicalities, shrouded in mystery and wrapped in an enigma. The dissent's rule favors resolving cases on a complete record and moves away from resolving cases prematurely. As an attorney, I find that approach refreshing since I've seen far too many judges of the judicial philosophy of resolving cases on pretrial, dispositive motions.

The standard the dissent enunciates appears to be more of a bright-line rule that could be easier to objectively ascertain. The dissent makes a lot of good points about how some damage is determined in the context of a medical malpractice action. There seems to be a disconnect between the standard and the practicalities of proving some damage. The legal malpractice standard, in my opinion, seems like a better and easier standard to apply in all professional malpractice cases.

Tuesday, March 29, 2011

Harris FLP v. Brighton Investment LLC-- Idaho Supreme Court

The Harris FLP v. Brighton Investment LLC decision is pretty interesting. It's another unanimous decision affirming the district court's grant of a motion to dismiss and a motion for summary judgment.

The facts are pretty simple. Harris sold Brighton 44 acres in east Boise. Harris sold the property to Brighton subject to certain Restrictive Covenants. Meanwhile, Boise State University (BSU) was looking for additional property to buy in order to develop an athletic complex. BSU began negotiating with the Independent School District of Boise to acquire the property where the old East Junior High School was located. BSU and the School District negotiated with Harris but the negotiations fell apart without a consummated deal.

BSU eventually started negotiating with Brighton, who informed BSU that the property was subject to Restrictive Covenants. Undeterred, BSU purchased a substantial portion of the property from Brighton in May 2007. The School District subsequently exercised its power of eminent domain to condemn the Restrictive Covenants. The facts are not clear when the School District acquired title to the property but it appears that BSU "swapped" the Brighton property for the East Junior High Property almost contemporaneous with the Brighton acquisition. Harris named Brighton as a third-party defendant in the condemnation action, alleging breach of contract, covenant of good faith and fair dealing, and unjust enrichment. Harris and the School District eventually settled the condemnation case for $175,000.

Brighton filed a motion to dismiss and later a motion for summary judgment. The district court granted Brighton's motion to dismiss, reasoning that "knowledge of a likely breach in the future is not a breach that gives rise to a cause of action." The purchase and sale agreement between Harris and Brighton did not limit the third parties to whom Brighton could sell the property and the Restrictive Covenants were properly condemned and were unenforceable.

The Idaho Supreme Court affirms the district court on the basis that Brighton never breached the contract or the covenant of good faith and fair dealing while in possession of the property. All that Brighton did was facilitate a transaction with a party that had condemnation power. The purchase and sale agreement did not preclude Brighton from making that kind of sale. Any breach of the Restrictive Covenants would have been accomplished by a third party and not Brighton. The Court ruled that "[s]ince only a current owner may comply with restrictive covenants . . . only a current owner may be liable for their breach." The Court continued, "Brighton did not avoid its obligations under the Restrictive Covenants. It conveyed the Property to a party that took on the burden of the Covenants until they were properly condemned."

The Court relies on similar logic for affirming the dismissal of the covenant of good faith and fair dealing claim. The Restrictive Covenants were condemned after Brighton had sold the property. Therefore, Brighton was not liable for any post conveyance breach of the duty of good faith and fair dealing.

The Court also affirms the grant of summary judgment dismissing the unjust enrichment claim. The basis for affirming the district court is that Harris never presented evidence of a particularized benefit conferred on Brighton by Harris that "was inequitable for Brighton to retain." Harris sold the property at fair market value and received that value from Brighton. The purchase and sale agreement did not "place any conditions upon Brighton's ability to divide and resell the property." The Court does not find any unfairness in the transaction and therefore affirms the dismissal of the unjust enrichment claim.

The decision is a rational application of the law. In order to breach a contract you have to be subject to the contract's terms. At the time the Restrictive Covenants were condemned, Brighton didn't own the property. Brighton had sold the property and was well within its rights to do so. The sale of the property to BSU was entirely proper and did not breach Brighton's contractual arrangement with Harris. To me, this decision seems like a no-brainer.

Monday, March 28, 2011

Estate of Judy Dumoulin v. CUNA Mutual Group

So, it's been a while since I've updated the blog on the Supreme Court's decisions. There was a significant lag on the decisions and then 12 days ago, there was a deluge of decisions handed down from the Idaho Supreme Court. So, there's a lot of catching up to do and there are some interesting decisions to follow. The Estate of Judy Dumoulin v. CUNA Mutual Group is just such a decision. It's a 5-0 decision affirming the district court's order granting summary judgment to CUNA.

The facts are simple. Judy Dumoulin purchased an "accidental death and dismemberment" insurance policy from CUNA. Dumoulin was subsequently admitted to a hospital for shortness of breath. Dumoulin had a "variety of risk factors in her medical history that predisposed her to [shortness of breath]" and that she had pneumonia three weeks prior to admission from which she had not fully recovered. Dumoulin eventually died while in the hospital's care. The estate submitted a proof of loss claim to CUNA and CUNA denied the claim on the basis that Dumoulin's death "was not covered by the policy based on the illness and medical conditions exclusions." The estate subsequently sued CUNA for breach of contract and breach of the covenant of good faith and fair dealing, alleging that Dumoulin's condition was treatable and that the hospital was negligent in her treatment.

CUNA moved for summary judgment and the estate responded with affidavits, including an affidavit from Dr. Stephen Bekanich, who testified in the affidavit that the hospital had "breach applicable standards of care" in treating Dumoulin. The district court granted summary judgment finding that no triable issues surrounded the circumstances of Dumoulin's death and that her death was "not an accident under the policy."

The Idaho Supreme Court affirms on the basis that Dumoulin's death was not caused by an injury under the terms of the policy because it was "not effected solely through external means." The policy defined "accidental death" as "death resulting from injury, and occurring within 1 year of the date of the accident causing the injury." The term "injury" is defined as "bodily damage or harm which: (a) is caused directly by an accident and independently of all other causes; (b) is effected solely through external means; and (c) occurs while a covered person's insurance is in force. . . ."

The Court finds that death must be more than just accidental under the policy. The Court finds that the most relevant question under the facts of this case is whether the harm was effected solely through external means. The Court finds that the evidence adduced during the summary judgment proceedings, and before the Court on appeal, establish that Dumoulin's death "was the result of natural processes." Therefore, Dumoulin's death was not a result of an injury as defined by the policy.

The Court took an interesting approach to this case and parsed the insurance policy rather finely. I understand the result and it makes some sense from an insurance perspective but the troublesome thing about the opinion is the total lack of discussion regarding Dr. Bekanich's affidavit, which apparently remained in the record. From my perspective, Dr. Bekanich's affidavit testimony that the hospital breached the standard of care and that had the standard of care been complied with Dumoulin's status would have stabilized is enough to get past summary judgment on the grounds asserted by CUNA. All favorable inferences have to be given to the nonmoving party, in this case the estate. The Court just ignores the affidavit to reach its result. There might have been an alternative basis for affirming the district court but the grounds relied upon by the Court are, in my opinion, not enough.

Wednesday, March 9, 2011

Snyder v. Phelps--US Supreme Court

It's been fairly quiet for the blog lately. The Idaho Supreme Court is not holding oral argument this month so ideally there will be a cascade of opinions coming soon for analysis. In the meantime, I was keenly interested in the outcome of Snyder v. Phelps, a First Amendment case from the US Supreme Court. The Phelps group actually protested at my law school graduation back in 2006, which surprised me even though it shouldn't have. The opinion is, I think, the right result even though I find the actions of the Phelps group to be utterly despicable. One of the partners at my firm, upon reading the decision, emailed me a quote from Voltaire that I find quite appropriate: I loathe what you say, but I will defend to the death your right to say it.

I suppose the only thing I found surprising about the Snyder decision is the fact that it was not unanimous.

Tuesday, February 22, 2011

5 Year Anniversary

Today marks the 5 year anniversary of Justice Clarence Thomas last speaking during an oral argument at the U.S. Supreme Court. It's remarkable actually that a sitting just has gone this long without uttering a single word of record during the arguments.