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.

Friday, February 18, 2011

Martin v. Camas County, Idaho--Idaho Supreme Court


The Court's February 17, 2011 decision in Martin v. Camas County, Idaho, is a 5-0 decision affirming the district court's finding that Martin lacked standing to sue for a declaratory judgment.

George Martin sued Camas County for declaratory relief seeking both preliminary and permanent injunctions against zoning amendments passed in 2008. The district court denied the preliminary injunction, finding the absence of irreparable harm. The district court then granted Camas' motion for summary judgment, finding that Martin lacked standing to bring the complaint for declaratory relief. Not surprisingly, Martin appeals. Standing is a legal question; so the Court exercises free review.

The first issue Martin asks the court to consider involves judicial notice of separate proceedings. In those proceedings the district court entered orders in favor of Martin, though standing was not directly addressed by the district court in the separate case. Martin urges the court that since the separate case preceded the current appeal, that the doctrine of collateral estoppel prevents the court from reaching the standing issue.

Martin is clearly wrong. Standing is jurisdictional and courts are always required to ensure their own jurisdiction. Notwithstanding the matter of judicial notice, district courts always have the right to ascertain and rule upon standing in each individual case. The Idaho Supreme Court rules that "the district court in the case at hand would have been free to reach its own independent determination" regarding standing. Therefore, any harm caused by the failure to take judicial notice is deemed harmless error because the court had to decide standing separate and apart from the other case.

The Idaho Supreme Court then affirms the district court's decision that Martin lacked standing. In order to bring a declaratory relief claim in this context, a party must have their "rights status or other legal relations" affected by a municipal ordinance. The Court first considers whether Martin has suffered, or will suffer, a distinct, palpable harm.

Martin claims that he has suffered two harms. First he argues that the upzoning of property in which he has no interest decreases the value of his property. Second, he argues that the zoning amendments prevent Martin from developing his own properties in the same way he had developed them prior to 2007 and 2008.

The Court rejects Martin's arguments. The court notes, "Martin cites no authority in support of his arguments that a comprehensive county-wide change in zoning designations . . . constitutes an injury to a property owner, absent some resultant and traceable harm." After distinguishing the present case from Ameritel Inns, Inc. v. Greater Boise Auditorium District, 119 P.3d 624 (2005), Martin argues, essentially, that increased competition will result because of the zoning amendments. The Court rejects the argument, stating that "[t]his Court has never held that increased competition alone is sufficient to confer standing." In Ameritel, the Court found that there was evidence of a negative impact as a result of increased competition and that Ameritel's taxes were being used to promote the passage of a bond. Martin has no such evidence in this case. His claim of harm through increased competition is "thoroughly speculative and cannot be said to be specific or distinct and palpable."

Martin next argues that "the proximity between the properties he holds an interest in and other parcels which were upzoned results in an injury." He relies on Butters v. Hauser, 960 P.2d 181 (Idaho 1998), for the argument. However, in Butters, the Butters showed a pecularized harm as a result of the conditional use permit. The Court never cites what that harm is but uses that language from the Butters decision to distinguish this case from Butters.

Here, Martin "has failed to show that he has suffered or is likely to suffer any injury; he merely speculates that increased competition will decrease the future value of his property." Martin also "fails to explain what that distinct injury is . . . ."

Martin next argues that a generalized injury is enough to bring this type of suit. He is wrong, yet again. The Court comments that "Martin has cited to no cases where taxpayer or ratepayer standing has been granted for a challenge grounded in statute rather than a constitutional provision." Since Martin's property is not directly or particularly affected by the rezoning amendments, he cannot have standing.

Martin's arguments about his inability to develop his properties as he had prior to the 2007 or 2008 amendments also lack merit. The Court finds that he has no authority for the proposition that "a residential density designation in a comprehensive plan creates a vested or enforceable property right."

The last issue is one that the Idaho Supreme Court has really started taking parties to task on: attorney fees. The Court reiterates that if a party seeking fees fails to discuss the basis for the attorney fees in the argument section of the brief, even though Rule 35(b)(5) provides a separate section for a discussion of attorney fees apart from the Argument portion of the brief, then the Court will not award fees. So for everyone drafting appellate briefing and claiming fees, pay heed to the Court's guidance.

Thursday, February 17, 2011

Vickers v. Lowe--Idaho Supreme Court


The Idaho Supreme Court's decision in Vickers v. Lowe came out on February 8, 2011, and is a 5-0 decision. Vickers is an appeal from a petition for judicial review of agency action. In this case Idaho Department of Transportation (the Court shortens it to ITD), issued a conditional encroachment permit in Canyon County. The Court affirms the issuance of the permit.

Dr. Edward Savala (Savala) owns approximately 8 acres abutting an east-west stretch of Highway 55. Savala applied for a right of way encroachment in December 2005 to upgrade his residential approach to a commercial approach. Due to a preexisting ditch rider approach, Savala sought a variance from the spacing rules of ITD.

Vickers, Savala's neighbor, objected on the basis that a variance would negatively impact the safety of the road. Eventually, Savala got his conditional permit granted. The permit required Savala to submit final plans to ITD among other things. ITD issued a Final Order concluding that Savala's encroachment would not degrade safety or traffic flow. Vickers sought judicial review of the order. The district court affirmed the ITD and awarded attorney fees under Section 12-117.

The Court considered four separate questions in the appeal. First, the court considered whether ITD had authority to grant conditional permits without reviewing final plans. Second, the court reviewed whether ITD's grant of the conditional permit was based on substantial evidence. Third and Fourth, the court considered whether attorneys fees were appropriate below and on appeal.

Vickers argued that ITD lacked express authority to issue conditional permits because it had not reviewed final plans. The Court however states that administrative agencies have "implied" powers that are "reasonably necessary" to carry out the powers expressly granted by the Legislature. The Court states that ITD has the implied power to decide how and when a developer may build an encroachment. Vickers lacks any legal authority when ITD does not impliedly have the power to act in the manner in which it did. The Court finds ITD does have the implied power to conditionally approve encroachment applications despite the absence of final plans.

The Court next finds that ITD's affirmation of the conditional permit was based on substantial evidence. A lot of this has to do with the evidence adduced during the two-day hearing before ITD. ITD heard evidence regarding the safety of the proposed new encroachment. It heard evidence from engineers about the "intersection sight distance" necessary to comport with the guidelines and regulations for highway safety.

ITD also heard evidence about how Savala's variance would not worsen highway functionality. The concern here was about the ditch rider approach that was within 1000 feet of Savala's variance. Evidence was presented that ditch rider approaches generate "exceptionally" low volumes of traffic. The evidence presented to ITD supported the finding of non-degradation of the highway safety or operations.

The district court awarded fees to ITD based on Idaho Code Section 12-117. The Court vacates the award finding that "courts are no longer permitted to award fees in administrative judicial proceedings" under 12-117 based on an amendment to that statutory section. There's little explanation from the Court other than the conclusory statement that such an award is no longer allowed.

So, what's the lesson from this case? First, if you challenge an agency finding through a petition for judicial review, you better not count on getting your fees awarded. Second, the Court is going to apply a fairly lenient and deferential standard to agency findings. This is consistent with the U.S. Supreme Court ruling in Chevron, Third, the Court is willing to imply powers to state agencies when those powers are reasonably necessary to the agency's purpose. So just because the enabling statute doesn't say an agency can do something does not mean that the agency cannot do it anyway.

Wednesday, February 16, 2011

Statewide Construction v. Pietri et al--Idaho Supreme Court

Just over a week ago, the Idaho Supreme Court decided Statewide Construction, Inc. v. Pietri et al. The opinion is authored by Justice Burdick and it is a 5-0 decision. The case called upon the Court to construe Idaho Code Section 55-313.

The facts are straightforward enough. Statewide owned a parcel of property located in Valley County, Idaho. The appellants owned adjacent parcels of property, each of which hold express easements over Statewide's property for ingress and egress.

In May 2005, Statewide applied for a permit to develop its parcel into a subdivision. The permit was issued and required Statewide to provide a new roadway for access to the lots in the proposed subdivision. So, Statewide dedicated a 70 foot easement and built a new road. The new road was located over 300 feet away from the original easement but was intended to replace the original easement for the adjacent properties. The appellants never consented to the relocation of the easement. Statewide filed a declaratory relief action and requested summary judgment. The district court granted Statewide's motion, finding that Idaho Code 55-313 allowed for relocation of an easement without the dominant owner's consent.

The Court considered three questions on appeal:
  1. Whether Idaho Code 55-313 prohibits a landowner from relocating a private access road where the private access road enters onto a public roadway.
  2. Whether Idaho Code 55-313 permits a servient estate holder to unilaterally move an expressly granted easement without the consent of the dominant holder (when the easement is for motor vehicle use), and if so whether the statute violates the federal and state constitutions, respectively.
  3. Whether there are genuine issues of material fact as to the appellants injury under 55-313
Question 1 is an issue of statutory construction. The Court follows the longstanding rule of construing statutes to effectuate the expressed intent of the legislature. Section 55-313's language allows for the relocation of an easement when the access "is less than a public dedication." The Court finds that the phrase "less than a public dedication" is unambiguous. The appellants fail to argue that the original easement has been dedicated to the public. Therefore, the easement is within the scope of Idaho Code 55-313.

The Court next finds that if the legislature intended for unilateral relocation to constitute per se injury, it would have required consent by the dominant holder, as it had done in other statutory provisions (Idaho Code Section 42-1207 and 18-4308). The Court finds that the statute contains an "obvious" implication that consent is not required for relocation of an easement. The Court states that "there would be no reason for that statute to have been enacted" if it required consent from all interested parties. So long as the relocation does not injure the interested parties, relocation is acceptable without the consent of the dominant estate holder.

The Court next considers the argument that the relocation is effectively a taking under the Fifth Amendment of the United States Constitution and Article I, Section 14 of the Idaho Constitution. The Court notes that relocation provides the same benefit as the original easement, therefore no easement has been vacated. The Court also finds that the appellants lack authority for the proposition and decline to engage in a takings analysis.

Finally, the Court rules that there are no material issues of fact as to whether the appellants have been injured by the relocation of the easement. There is no evidence of an impediment to use, no safety hazard, and only a minor, incidental economic loss to an easement holder that is not associated with the purpose for which the easement is held.

The lesson here is that there has to be some sort of substantive injury other than inconvenience in order to recover as a dominant estate holder of an easement for motor vehicle access. The case is fairly narrow in its application but every time the Court engages in statutory construction, it's important to pay heed.

Monday, February 14, 2011

City of Eagle v. Idaho Department of Water Resources--Idaho Supreme Court


The decision of City of Eagle v. Idaho Department of Water Resources (IDWR) came down on February 7, 2011. It's a 5-0 decision affirming the district court's dismissal of Eagle's petition for judicial review.

In 2005, Eagle applied to appropriate water for municipal use. IDWR eventually approved the appropriation but placed "certain limitations and conditions" on it. Those limitations and conditions are never described in the decision. The order confirming the appropriation, but imposing the limitations, was issued on July 3, 2008. It was not served on Eagle or another party to the proceedings. IDWR reserved the order on July 16, 2008, and properly served all parties. IDWR sent a letter along with the order and informed Eagle that "for purpose of filing an appeal, the date of service referred to in the enclosed order is now July 16, 2008." On August 11, 2008, Eagle filed a petition for judicial review of the IDWR order but the district court dismissed the petition as untimely, "holding that the [28] day appeal period began to run on July 3, 2008." The Idaho Supreme Court affirms the district court.

The Court's reasoning is based on the applicable statutory language in effect at the time. Idaho Code Section 67-5273(2) provided, in part, that "[a] petition for judicial review of a final order . . . must be filed within twenty-eight (28) days of the issuance of the final order . . . or, if reconsideration is sought, within twenty-eight (28) days after the decision thereon." Since the order was issued on July 3, 2008, even though it was not properly served, the time period began to run on July 3rd rather than July 16th, which was the date of service.

(The statute has since been amended to state that an appeal must be filed within 28-days of the service date rather than the issuance date of the order.)

Eagle argued that IDWR re-issued the order on July 16, 2008, when it properly served the order. The Idaho Supreme Court rejects the argument on the basis that the order that was served on July 16, 2008, contains no language that would give rise to the conclusion that the order had been re-issued. The Court also dismisses Eagle's argument that IDWR's own letter suggested that the order had been reissued because the letter said that Eagle should use July 16, 2008 as the starting date for calculating the deadline for any appeal. The Court states "IDWR's statement in the ltter concerning the appeal period appears to be nothing more than the result of IDWR's erroneous belief that the appeal period begins when an order is served." The Court, relying on the statutory language, notes that it is issuance of the order and not service that triggers the appellate timeline.

The Idaho Supreme Court also rejects Eagle's argument that IDWR "misled" Eagle about the appeal time period. The Court distinguishes the cases relied upon by Eagle (Petersen v. Franklin County, 938 P.2d 1214 (Idaho 1997) and In re Quesnell Dairy, 152 P.3d 562 (Idaho 2007)) because the agencies in those cases failed to clarify that their orders were final and therefore appealable. In this case, there was no dispute that the order was final, appealable, and issued on July 3, 2008, which is the triggering date under the applicable statute.

Eagle raised a final issue of estoppel. The Court holds that "[e]stoppel is not appropriate where jurisdiction is at issue." Since the district court lacked jurisdiction over the petition to review, estoppel is not a proper defense.

The decision is the right one but it's pretty harsh given the conflicting statements provided by IDWR, who as an agency of the state should have things worked out to the point that it knows and strictly follows the law. However, that's probably the idealist in me. Clearly, Eagle's attorneys should have read the statute and known that the statute that applied required a petition to be filed within 28-days of the issuance date. Eagle had ample time to put a petition together and to have it filed. Eagle just waited too long.

The lesson from the appeal is simply to file the notice of appeal or petition for review as soon as possible and not to wait until the last minute. The Court has really muddied the waters lately on what is actually an appealable order, a final judgment, and when a party's appellate time truly begins. I have heard justices say that the Court is trying to clarify things for the local bar but the decisions use ambiguous language to the point where it's difficult to know exactly when and what the Court means.

Setting aside the issues about what is a final, appealable order, file the notices and petitions as soon as possible. If they're premature, then that means they're on time once a final order is entered. Then, at the very least, you've preserved the appeal and avoided malpractice.

Wednesday, February 9, 2011

The Litigation Privilege


So, please forgive a minor deviation from the routine here. A partner at my firm, Lance Schuster, recently published an article in the Idaho State Bar Magazine. Here is a link to the magazine. Lance's article starts on page 38. The article discusses the Idaho Supreme Court Case of Taylor v. McNichols, which addresses the litigation privilege and expands it. It's a nice little write up and it's always good to be published. Nice job, Lance.

Monday, February 7, 2011

Adams v. Aspen Water, Inc.--Idaho Supreme Court


Adams v. Aspen Water, Inc. is an appeal from the Industrial Commission, which is reviewed under a free review standard for issues of law. Factual determinations won't be disturbed by the Court if they are supported by substantial and competent evidence.

The case involves Matthew Adams, an employee of Aspen Water. As part of Adams' employment he'd install, service, and maintain water softening systems. On November 3, 2008, Adams took an early lunch and then after lunch, he went to the local DMV to renew his driver's license. Adams waited for a long time at the DMV, a not too surprising turn of events, and then left work at 2 pm that afternoon. Adams never received permission from Aspen Water to visit the DMV at either time during the day. Aspen Water then fired him the next day for employment-related misconduct.

Adams applied for unemployment benefits. The Department of Labor found that he was not eligible because he was terminated for misconduct. The Appeals examiner concluded that Adams had been terminated for reasons unrelated to employee misconduct. Adams had presented evidence of Aspen Water's financial distress and that Aspen Water had allowed its employees to run personal errands without prior approval. Aspen Water then appealed to the Industrial Commission which found that Adams was terminated for employment-related misconduct. Adams then appealed to the Idaho Supreme Court.

The Court found that the Commission properly applied the standard of behavior test for employment cases. The test requires the employer to prove by a preponderance of the evidence that (1) the employee's conduct fell below the standard of behavior expected by the employer and (2) that the employer's expectations were objectively reasonable under the circumstances.

Aspen met the first prong before the Commission because it presented evidence that it subjectively expected its employees to seek permission to run errands on company time. Adams had taken three hours for his visits to the DMV. This was abnormal. An employer has an objective and reasonable expectation that its employees will show up for work and stay at work. The Court found that the expectation "is a fundamental expectation shared by employers in every field of work." The expectation was reasonable and the Court found that Aspen had not altered this expectation by its course of conduct, i.e., it did not allow errands of the duration taken by Adams in this case. Short, personal errands had been permitted; long, personal errands had not been permitted without prior approval.

Adams also argues that Aspen should have given him a warning rather than terminating him given the progressive disciplinary procedures outlined in the employee handbook. The Court refuses the argument on the basis that choosing a different disciplinary hierarchy is irrelevant to the consideration of whether an employee's action is employment-related misconduct.

Three of the justices concur with Justice Jim Jones. Justice Burdick, interestingly, dissents without opinion. I'd personally be interested in what Justice Burdick's rationale is for dissenting. It appears that Adams made some compelling arguments about Aspen not always expecting its employees to acquire prior approval to run personal errands. I'd have liked to know Justice Burdick's thoughts on those arguments and whether he felt like the Industrial Commission was going out of its way to avoid giving Adams unemployment benefits.

Thursday, February 3, 2011

Curtis-Klure, PLLC v. Ada County Highway District--Idaho Supreme Court Decision

The Idaho Supreme Court issued several decisions yesterday. The first one that i am going to tackle is Curtis-Klure, PLLC v. Ada County Highway District. The Idaho Supreme Court unanimously affirms the district court's grant of summary judgment.

The facts are simple. Thomas Curtis and Jack Klure practiced dentistry together as Curtis-Klure, PLLC dba Maple Grove Dentistry. The practice leased a property for its practice from Dr. Curtis, who owned the property along with his wife. Dr. Klure owned no interests in the property where the practice was located. Dr. Curtis also owned interests in two other lots (Lots 16 and 17) near the location of the practice (Lot 19).

The practice was located on the northeast quadrant of the intersection of Maple Grover Road and Ustick Road. ACHD sought to widen the roads in 2005. ACHD contacted Dr. Curtis to try and negotiate the purchase of portions of 16 and 17. Dr. Curtis countered and offered to sell ACHD all of his interests in Lots 16, 17, and 19. ACHD then offered to purchase those lots at a certain price.

In 2007, Dr. Klure moved his practice from Lot 19 to a new location. Dr. Curtis and Curtis-Klure then entered into a settlement agreement with ACHD, settling all claims against ACHD and in which ACHD purchased the property. In June 2007, Dr. Curtis moved his practice from Lot 19. The lawsuit by Dr. Klure and Curtis-Klure (collectively Klure) followed.

Klure sued for business damages under Idaho Code Section 7-711(2). The statute provides for damages only if the state condemns property. The Idaho Supreme Court affirms the district court's finding that no condemnation took place. To condemn property, the state has to show (1) that the proposed use is authorized by law and (2) that the taking is necessary for such use. The purchase of the properties was never found to be necessary for the construction project. Thus, no condemnation.

Klure argued that a "purchase under threat of condemnation" is the same as judicial condemnation. However, the purchase of the property was a legitimate deal and was not purchased under threat of condemnation. No order of condemnation had been issued by the County Commissioners. The Court concludes, "The mere fact that ACHD had the power of condemnation did not transform its offer to purchase into either a threat of condemnation or an attempted condemnation."

ACHD sought fees under 12-121. The Court rejects ACHD's request because ACHD failed to support its claim with any argument in the briefing.

Tuesday, January 25, 2011

Idaho Supreme Court February Docket

The Idaho Supreme Court released its February docket today. The Court will hear 14 appeals over five days at the Supreme Court building in Boise. The Court will take up a handful of criminal appeals in the next month. However, on the civil side, there are several cases that could be quite interesting.

For example Hoover v. Hunter et al is medical malpractice claim that was dismissed on summary judgment. The district court dismissed the case because the plaintiff had not generated triable issues of material fact as to whether the community standard of care had been breached by the medical practitioners. The appeal could potentially have far reaching consequences for medical malpractice plaintiffs. The appeal is even more interesting because the appellant/plaintiff is proceeding pro se.

Other cases involve the alleged breach of settlement agreements, which is an area of the law that Idaho could use more guidance on from the Idaho Supreme Court. One case will involve the Notice and Opportunity to Repair Act, a fairly new piece of Idaho legislation. In fact, an attorney with my firm handled an appeal that provided the Idaho Supreme Court with its first chance to interpret NORA. So the outcome of Perception Construction Management, Inc. v. Bell is one to watch for.

Overall, it looks like a busy month for the Court.

Tuesday, January 18, 2011

Idaho Supreme Court--Chief Justice Eismann speaks on steps of Idaho State Capitol


Since this blog is about the goings on with the Idaho Supreme Court, it's not always just about the Court's opinions. Of course, being in Idaho Falls, and not Boise, makes it a bit more difficult to follow the public appearances or speaking engagements the justices may have. However, The Post Register reported today that the Chief Justice of the Idaho Supreme Court spoke to a large rally on the steps if the Idaho Capitol. Among the Chief's comments was a statement that, according to The Post Register, "the greatest threat to liberty is a strong national government."

According to the paper, Eismann's speech concerned 16 specific principles of liberty that he believes are encompassed in the government established by the founders. Notwithstanding the statement about a strong national government constituting a threat to liberty, the Chief Justice's speech did acknowledge that government is essential to the enjoyment of liberties while warning against the curtailing of liberty in the aftermaths of crises.

While I don't try to wax political on the blog, it is interesting to get some insight into the philosophical and political beliefs the various justices have about the constitution, the role of federalism in governing the populace, and how the two systems (federal and state) interact. The insight into the justices provides argumentative angles that attorneys can use in appellate briefing or during oral argument. Of course, the danger is that if you play to one particular justice's sensitivities you might alienate 2 or 3 other justices who have different beliefs about the role of government. It's a delicate balance and issue. However, I think it's rare to receive this kind of insight into the psyche of the sitting Chief Justice of the Idaho Supreme Court.

Monday, January 17, 2011

Idaho Supreme Court -- Page v. Pasquali et al

This one goes back a month. On December 23, 2010, the Idaho Supreme Court decided Page v. Pasquali. It's a brief 5-0 decision affirming the district court's grant of summary judgment.

The facts are pretty simple. The Pages bought property in 1995 and assumed an existing debt for almost $50,000. They assumed a promissory note in favor of Pasquali. The Note was secured by a Deed of Trust. In 2002, the home was damaged by heavy snowfall and the Pages received a settlement check for approximately $29,000. Pasquali was the loss payee of the insurance policy. Pasquali sent approximately $21,000 to the lending company and sent $8,000 to the Pages. The Pages subsequently stopped paying the Note, filed bankruptcy, had their petition dismissed, and then the home was sold at a Trustee's sale. The Pages filed suit against Pasquali and Rupe claiming that they never defaulted and that the $21,000 payment should have counted as fifty-eight future monthly payments instead of being applies to the principal debt owed at the time of payment.

The Idaho Supreme Court affirms the district court's dismissal of the Pages of the complaint, finding that the Deed of Trust and Note are unambiguous. The Court finds that the Note clearly states that any prepayments made "shall be credited first on interest then due and the remainder on principal." The Note does not contemplate prepayments acting as future payments in any equivalent amount. Since the documents and their requirements are unambiguous, the Court finds that the district court properly found the Pages to be in default.

Additionally, the Court notes that the district court also relied on two other grounds for finding default: the failure to pay property taxes and the failure to maintain insurance. The Pages did not appeal from those two findings. So the Court reasons that even if the district court erred by finding that the $21,000 should have counted as future monthly payments, the Pages defaulted anyway.

The Idaho Supreme Court then awards attorney fees under 12-121 for a frivolous appeal by the Pages. The Pages' failure to argue the other grounds that the district court relied upon to find default justified the fees.

Wednesday, January 12, 2011

Idaho Supreme Court--Jones v. Starnes


On January 10, 2011, the Idaho Supreme Court decided Jones v. Starnes. The Court unanimously affirmed the district court's grant of summary judgment on several theories of liability brought by the Jones in the underlying lawsuit.

On December 17, 2005, the Jones' and their friends went to dinner and then stopped at a local bar, Boomers, in Lewiston, Idaho. Mr. Joshua Jones never entered Boomers but waited in his truck while his friend went into Boomers for some unstated purpose. While Jones waited outside the bar, the Boomers' bouncer escorted a Boomers' patron outside. The patron hit Jones' truck for some purpose and then a group of people spilled out of Boomers and onto the street and sidewalk outside the bar. Jones got out of the truck to "clear a path" for the truck and was struck in the face and knocked down by one of the individuals. Jones could never identify his assailant.

Jones subsequently sued Boomers and its owners for his injuries. Boomers filed a motion for summary judgment, which Judge Brudie granted as to all counts alleged by Jones.

Jones' first theory of liability was negligence. However, negligence requires a duty of care before liability can be imposed. The Idaho Supreme Court finds that Jones' assault was unforeseeable and that Jones had no evidence that Boomers' knew that Jones' assailant had any violent propensities. Jones also had no evidence that Boomers served any alcohol the group from which his assailant came nor that alcohol played any part in the assault. Additionally, the Court finds that Jones was never a patron of Boomers and that Boomers, at most, only owed a duty to its patrons.

A second theory of liability is that of premises liability. The Idaho Supreme Court rejects Jones' arguments because the assault occurred on a public sidewalk or street and not on Boomers' property. A second reason for denying Jones' theory is that any harms were caused by an activity and not a condition of the property itself, which is a prerequisite for premises liability. Since the fight that harmed Jones was not the result of a physical defect or condition of the property, premises liability was inappropriate.

The third theory is negligence per se, which provides that violation of a statute is conclusive proof of negligence. Jones argues that two Lewiston ordinances apply. The first states that sidewalks should be free of debris or obstructions/impediments of whatsoever kind. The second ordinance prohibits bars from selling alcohol to individuals already intoxicated. The Court deals with both.

The first ordinance is rejected as a basis for negligence per se because "there is no indication that a group of people that happen to be standing on the sidewalk was meant to be included as an 'obstruction' or 'impediment' under the ordinance" and that it would be "unreasonable" for the Idaho Supreme Court to conclude otherwise.

The second ordinance is also rejected because Jones presented no evidence that the unknown assailant was already intoxicated or that Boomers served him alcohol with the knowledge that the assailant was intoxicated. Therefore, there was no duty.

The final theory alleged by Jones is public nuisance. Jones claimed that the group of people, specifically the assailant, constituted an "offensive instrumentality" which Boomers had a duty to remove. The Court says no to this argument because there was no evidence that Boomers "had control of the people on the sidewalk or street where the incident occurred."

The appeal seemed to be a real stretch of legal principles governing negligence. Had Jones patronized Boomers, perhaps the result would have been different. However, he was part of a brawl on a public causeway and never established that Boomers had any real role in causing the brawl. Therefore, the Court's decision is right on point.

Friday, January 7, 2011

Idaho Supreme Court-- Hill v. American Family Mutual Insurance Company


Hill v. American Family Mutual Insurance Co. is a fairly landmark decision in the realm of Idaho insurance law. It is a 3-2 decision authored by Justice Warren Jones reversing the district judge.

The facts involve a car-wreck in November 2005. Hill was involved in a car accident with Andrea Hamilton. Andrea was 15 years old, talking on a cell phone and drifted into oncoming traffic, hitting Hill's car. Hill suffered some significant injuries.

Andrea's insurance policy had a bodily-injury coverage limit of $25,000. Hill had a underinsured-motorist (UIM) policy of $100,000/person. Hill's policy with American Family included an "exhaustion" clause, requiring her to deplete the bodily-injury policy of a tortfeasor before being able to collect UIM benefits.

Hill filed suit against Hamilton and eventually settled for $24,000. She then went to American Family and sought $18,000, an amount crediting the difference between the settlement amount and Andrea's policy limit. American Family denied Hill's claim because she had not exhausted the bodily-injury policy of the tortfeasor. Hill then sued American Family.

American Family moved for summary judgment. Judge Stephen Dunn, of Bannock County, granted American Family's motion, finding that the exhaustion clause was unambiguous and barred recovery since Hill had not exhausted the bodily-injury policy of the tortfeasor.

The Idaho Supreme Court reverses Judge Dunn on the basis that exhaustion clauses violate Idaho public policy. This case constitutes a dramatic change. The Idaho Supreme Court bases its rationale on the fact that the Idaho legislature recently passed Idaho Code Section 41-2502, requiring insurance companies to offer UIM coverage with insurance policies. The Idaho Supreme Court finds that this enactment implements a public policy with regard to the exhaustion clauses and voids the clauses as against that new policy.

So, the realities of the Court's decision is that plaintiffs are no longer required to fully-exhaust the bodily-injury policies of the tortfeasor. Instead, plaintiffs can settle with the tortfeasors and then seek payment from their own UIM policy. Of course, the Idaho Supreme Court states that plaintiffs must "absorb the gap", if any, between the settlement with the tortfeasor and the recovery from the UIM policy. So, in the subject case, since Hill settled for $24,000 out of a $25,000 bodily-injury policy, her recovery from the UIM policy is going to be credited $1,000. She has to absorb the gap of her decision to settle for less than the full policy.

The Court also considers the "when" of public policy. Idaho has not clearly stated how a court should evaluate public policy in terms of timing. In this case, the accident happened in 2005. The new law governing UIM insurance was passed in 2008. The statute is not retroactive and it is widely held that contracts are interpreted based on the law at the time the contract is entered into. However, the Court clearly states that a contemporary change to public policy can have the effect of "eviscerating" a contract. The Court states that it will not enforce contracts "at any stage" of litigation in which it contravenes public policy.

This is a substantial decision for the Idaho Supreme Court because it does not just affect insurance contracts. For example, prior to 2008, the public policy in Idaho disfavored non-competition agreements. They were rarely enforced, if ever. In 2008, the legislature passed a new statute stating that non-competes are presumptively enforceable. This changed the public policy of the state. Under the logic in the Hill decision, non-competition agreements entered into before 2008 cannot be voided on the basis that they are against public policy. This is because the public policy changed in 2008. Even though the Court uses the public policy concept to void a contractual provision, the inverse should also be true in order for there to be any consistency to the Court's ruling. That is to say that contracts previously void for public policy reasons can now be found to be enforceable if there is a subsequent change in public policy.

Monday, January 3, 2011

Idaho Supreme Court--Wanner v. State/IDOT

The Idaho Supreme Court issued a decision today in Wanner v. State. Mr. Wanner had been arrested on suspicion of drunk driving and had his license suspended. He received a Notice of Suspension from the State but did not ask for an administrative review hearing within 7 days of receiving the Notice. So, the State denied his request. Wanner filed a petition for judicial review and Judge Nye, in Bannock County, agreed with Mr. Wanner. Judge Nye stayed the suspension pending an administrative review hearing and the State appealed Judge Nye's decision.

The Idaho Supreme Court unanimously reverses Judge Nye on the basis that Wanner never complied with the timeliness requirements of Idaho Code Section 18-8002A, seeking administrative review of the driver's license suspension ruling. This waived Wanner's right to seek judicial review. The Idaho Supreme Court remands with an order to the district court to vacate its decision and lift the stay of the suspension of Wanner's license.