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.