*1
Plaintiff-Appellant, McNICHOLS, individual;
Michael E. an McNichols,
Clements, P.A., & an Brown professional corporation; Jane I-V, individuals, unknown Defen-
Does
dants-Respondents. Taylor, Plaintiff-Appellant,
Reed J.
Gary Babbitt, individual, D. an D. John
Ashby, individual; an Patrick V. Col individual;
lins, Riley, Richard A.
individual; Hawley, Troxell, Ennis &
Hawley, LLP, liability an Idaho limited
partnership; I-X, Jane Does unknown Defendants-Respondents.
individuals.
Nos. 36131. Idaho,
Supreme
Lewiston, April 2010 Term.
Sept. *4 Chtd., Boise,
Hepworth, Brody, Janis & respondents Clements, McNichols and McNichols, Brown & P.A. John J. Janis argued. Burke, Boise, P.A.,
Elam & for respon- Babbitt, Ashby, Riley dents Collins and Haw- Troxell, ley, Hawley, Jeffrey Ennis & LLP. argued. A. Thomson BURDICK, Justice. case ap-
This comes before this Court on peal grant from the two Rule 12(b)(6) Procedure Civil motions to dismiss for failure to state a claim which relief granted. Appellant, Taylor alleges that deny- the district court erred *5 ing motions complaints, to amend his failing properly apply erred in applica- granting ble standards in motions 12(b)(6). dismiss I.R.C.P. We affirm. I. FACTUAL AND PROCEDURAL
BACKGROUND case separate This arises as a result of the AIA, al., Taylor case of et Nez Perce County Case (Underlying No. CV07-00208 Case), hearing now awaiting before on appeal. In properly order to un here, being derstand claims asserted cer aspects Underlying tain of the Case must be examined. The case at hand has been con appeal solidated on separate from two before court, the district number case CV-08-01763 and case number CV08-01765. Underlying A. Case (Reed) January Taylor On Reed against filed Corporation suit AIA Services (AIAS), Insurance, (AIAI)1, AIA Inc. John Taylor, Freeman, Taylor, Bryan Connie entity Duelos. JoLee AIAI ais business existing under the umbrella of AIAS. When Underlying began Taylor Case John was managing corporations director of both wife, Taylor, and his then Connie held community property corpora in the interest Freeman, Taylor, tions. John and Duelos Campbell, Kirby & Bissell and Michael S. corporations. were board members of both Bissell, Spokane, appellant. Case, for Roderick C. After Reed filed Underlying suit argued. Bond McNichols, Michael of the law firm Clem collectively, 1. When referred to AIAS and AIAI will referenced as the “AIA Entities.” (CBM), pur- McNichols, Respondents filed motions to dismiss P.A. was ents, & Brown AIAI, AIAS, 12(b)(6), argument and John oral represent to I.R.C.P. retained to suant Taylor. heard on these motions on October was day the same filed his mo- 2008. On pending, was the lawsuit still While complaints, at- for leave to amend his tions authority management to exercise attempted proposed complaints, taching his amended Entities, AIA and the over the hearing on was held on these motions granted temporary re- Underlying Case 4, 2008. December February straining Reed on order 8, 2007, in the March the court 2007.On 23, 2008, district court December On in- preliminary entered a Underlying Case opinions “Opinion and Order two titled issued from at- junction prohibited Reed which Preliminary In- Motion on Defendant’s as a board mem- manager to act tempting junction” (Opinions) granting Respondents’ AIAI, interfering harassing ber denying Reed’s mo- motions to dismiss and and AIAS. management of AIAI with the reaching complaints. amend his tions to 28, 2007, filed a mo- McNiehols On March judge, who was his decision district court AIAI and tion withdraw counsel Case, judge Underlying found also the AIAS, April granted on arguments by both Reed and that the made appearance May On notice of incorporated events and actions by Gary AIA Entities was filed behalf of the and, Underlying Case that occurred Ashby, law firm and John Babbitt therefore, Underly- judicial took notice of the Hawley, LLP Ennis Hawley Troxell & toto. court subse- ing Case in The district (HTEH). Respondents’ granted requests for quently attorney fees. *6 B. Case Current with this appeal filed Reed notice Underlying August after the On 30, January 2009, and the two cases Court on through of motions had been 21 months Case 18, February for appeal were consolidated on other motions hearings and numerous —while light Spokane Eq 2009. In Structures had been pending, and the trial date were Investment, LLC, uitable set, granted a the district court had but after (2010), recognized that no was P.3d Judgment Summary Partial Motion for judgment by had the dis final been issued being in Reed as to AIA Entities favor of court and case was remanded trict $6,000,000 promissory note is default on judgment final March 2010. entry of a on filed actions present Reed-—-Reed sued to Judgments received from the dis This Court CBM, against and were con McNichols who pre-consolidation both trict court for Taylor tinuing to serve counsel for John 24, 2010. on March cases (ease below), and no. CV08-01765 Babbitt, Collins, Ril Ashby, Patrick Richard II. ISSUES ON APPEAL HTEH, attorneys
ey,2 unspecified and other representation for HTEH on worked its who applied court 1. Whether district (case AIA Entities no. CV08-01763 12(b)(6) ruling correctly in on I.R.C.P. below).3 against Re Reed asserted claims Respondents’ motions to dismiss. (1) abetting or spondents aiding for: and privilege litigation a. Whether in the of tortious assisting others commission adopted be Idaho and should (2) Case; Underlying conversion acts have be whether Reed’s claims should Entities’ misappropriation the AIA accordingly. dismissed (3) assets; of Idaho’s corporate violations alternative, Whether, in the Reed’s Act, § et b. Protection I.C. 48-601 Consumer (4) facts to complaints alleged sufficient seq.; professional negligence and/or to dismiss. fiduciary duties. withstand motion breach of attorneys attorneys Riley the above mentioned law 2. were 3. All of Collins and also "Respon- collectively referred to as firms shall HTEH. dents”. 2. court reviewing Whether the district abused its an exercise of discretion court, denying part
discretion in of a motions for this Court considers: complaints. leave to amend his “(1) correctly perceived whether the discretion; standing bring a. had the issue was one of Whether Reed against Respondents. whether the court acted within derivative claims the outer boundaries of discretion and its consistent- pled b. Whether Reed additional facts ly with legal applicable standards complaints in his amended that would specific it; choices available to analysis applied as it have altered the whether it its reached decision an exer- original complaints. to his cise of reason.” 3. Whether the district court abused its Callahan, (quoting Id. Estate Becker v. awarding Respondents discretion at- (2004)). torney pursuant 12-121, §§ fees I.C. 30-1-746, 48-608. IV. ANALYSIS Whether entitled to appeal. fees on taking judi- A. The district court erred in Underlying
cial notice of Case 12(b)(6) considering when mo- III. STANDARD OF REVIEW tions. grant Our standard review for a alleges the district court did Rule dismissal under Idaho of Civil Proce apply legal the correct standard when consid- 12(b)(6) concisely dure summarized 12(b)(6) ering Respondents’ motions to dis- Court in Losser v. Bradstreet: Specifically, alleges miss. that the dis- When this Court reviews an order dismiss- taking judicial trict court erred notice of ing 12(b)(6), pursuant an action to I.R.C.P. Case, Underlying when it have should apply we the same standard of review we pleadings. limited its review the apply summary to a judgment. motion for 12(b) states, Idaho Rule of Civil Procedure viewing After all facts and inferences from inter alia: the record in non-moving favor of the par- ty, the Court will ask whether a claim for If, asserting on a motion num- defense *7 relief has been The stated. issue is not bered to dismiss for failure of plaintiff whether the will ultimately pre- pleading to a claim state which relief vail, but whether the is entitled to granted, can be matters plead- outside the offer support evidence to the claims. ing presented by to and not excluded court, the motion shall be treated 670, 672-73, 758, 145 Idaho 183 P.3d 760-61 judgment one for summary disposed and (internal quotations citations omit- 56, provided of as in Rule parties and all ted). addition, Court “[t]his reviews an given shall opportunity reasonable to appeal summary from an judgment order of present pertinent all material made novo, and de this Court’s standard of review such a motion Rule 56. same as the standard used the trial in ruling summary court on a motion for added). (Emphasis judgment.” Cnty. Curlee v. Kootenai Fire & arguments why make two Rescue, 394, 391, 458, 148 Idaho 224 P.3d 461 12(b)(6) they believe the rul- district court’s (2008). Ergo, a district court’s dismissal of a First, ing should stand. the district court 12(b)(6) complaint under I.R.C.P. shall be acting permitted within in its discretion reviewed de novo. taking judicial of the Underlying notice Case. employs Second,
This requested having abuse of the district reviewing discretion standard judicial when a district Underlying take notice of the Case, denial court’s of a motion to amend a com is barred the invited error plaint to add raising additional causes of action. doctrine from this as an on error Spur LLP, Corp. Prod. v. appeal. Stoel Rives 142 arguments These shall be consid- (2005). 41, 43, 122 300, Idaho P.3d 302 When ered in turn.
833
alone,
complaint
or to
properly
not
tions contained
court could
1. The district
12(b)(6)
to a
convert
motion
Rule 56
Underlying
judicial notice
take
12(b)(6)
judgment proceeding
afford
summary
ruling on
motions
Case when
parties
opportunity
present
reasonable
to dismiss.
pertinent
summary
a motion for
materials
12(b)(6)
only at the
“A
motion looks
278,
at
judgment.
Id. at
796 P.2d
155.
a claim for
whether
pleadings
determine
precedent
ignores
CBM
direct
City
Young v.
has been stated.”
relief
entirely,
citing
102,
Hellickson
instead
to the U.S.
Ketchum,
1157,
44 P.3d
137 Idaho
Tellabs,
Jenkins,
Supreme Court case
Inc. v. Ma-
In Hellickson v.
1159
Ltd.,
Rights,
kor Issues &
which states:
judicial
Appeals discussed
Idaho Court of
“[Cjourts
12(b)(6)
complaint in
must consider the
its
motion to
in the context of
notice
entirety,
as well
other sources courts ordi-
dismiss, stating that:
12(b)(6)
narily
ruling
when
examine
Rule
may properly
a court
facts which
[t]he
dismiss,
particular,
motions to
documents
on motion to
for failure
consider
dismiss
by reference,
incorporated
complaint
into the
appearing
a claim are those
to state
may
judi-
of which
matters
a court
take
by such facts as
complaint, supplemented
Wright
§
cial
5B
&
notice. See
Miller
1357
may properly judicially notice.
the court
(3d
551
Supp.2007).”
ed.2004 and
U.S.
States,
(8th
information
and,
know,
you
requested
court
that
a lot of
to take
action —such
other cases
constituting
great impor-
in
action
error —is of
the other cases kind of
information
I
tance.
impact
this case.
would
on
So
ask the
judicial
everything
Court to
notice
take
Second, Reed
contends
the invited
argued in
followed,
previ-
that’s been
those
apply
error doctrine does not
because the
matter,
ous cases —or
other
the un-
district
already
court had
intended to take
derlying
might
we
call it ...
matter
notice,
judicial
based
the district
Well,
actually my
THE
that was
COURT:
judge’s response to
request
Reed’s counsel’s
intention,
Bissell,
part
Mr.
that’s
of what I
notice,
judge
judicial
take
that “that
really
is I
can’t
came to conclude
discuss
my
actually
Again,
intention.”
Reed
pending
on
this and rule
Motion to
legal
any
authority
offers no citation to
in
Dismiss without the consideration of the
support
argument.
this
This
Court
case,
underlying
actually my
so that was
wrote,
to,
Owsley
“Errors consented
ac-
intention.
in,
quiesced
not
invited are
reversible.”
838,
First,
argues
that “it is irrelevant
in People
As articulated
v. Wickersham [32
judicial notice”,
requested
who
as the district
185 Cal.Rptr.
Cal.3d
neither asked
system; private attorneys were treated no
judicial notice under I.R.E.
court to take
differently
judges, government lawyers,
than
201(c)
toto,
specifying
docu-
in
without
which
Loigman
Twp.
v.
and witnesses.”
Comm.
taking
of.
and
it was
notice
ments
exhibits
Middleton,
566,
N.J.
A.2d
185
889
clearly
argument
This
has merit. The court
Dixon,
(discussing,
g.,
435
e. Cutler v.
specificity require-
with
comply
failed to
(K.B.1585);
Eng. Rep.
Hodgson
76
886
v.
201(c). Reed
ment of I.R.E.
invited
Scarlett,
(C.P.1817);
Eng.Rep.
Hoar
notice,
judicial
I.R.E.
court to take
Wood,
(1841)).
837 widely in expanded order to address creative “[w]ith held that cer- The Richeson Court here, 566, 426, A.2d unimportant pleading. defamato- 185 N.J. 889 435 exceptions, tain (2006). that, noting a Specifically, the due course of New ry published “[i]n matter having Jersey, litigation protects reasonable judicial proceeding, privilege some the attor cause, absolutely privileged actions, neys to the not defamation but relation claims,” a civil support action defama- also of tort-related and will from host other maliciously and made with although Loigman tion to Dair the Court cited Rainier’s falsity.” Farms, Idaho at 551- knowledge 552, 117 its 73 Valley of v. 19 ies Raritan N.J. addition, 52, In this 709. Court 889, 255 P.2d at A.2d at 436. Id. specified that: Rainier’s, In considering was Court judicial proceeding is not re- The term protections litigation privilege which the trials, every pro- but includes stricted to provided litigant, rather than attor- to judicial ceeding nature before court of above, However, ney. privi- as noted these judicial quasi with or official clothed leges public policies arose from same at C.J.S., and judicial Libel power, Slan- law, has common and the decision been ex- 169, der, 104, privileged § page and to be litigation privilege per- tended to the as it absolutely that the lan- it is not essential attorneys. tains to The Rainier’s Court held open court or con- guage spoken protection that in to addition the traditional affidavit. pleading, tained in a brief or defamation, litigation suits P.2d at 709. Id. at protected against privilege also claims for recently, in the Idaho Court of opera-
More malicious interference with business tions, privilege in Malmin v. Appeals applied reasoning policy, “[i]f Engler, the court noted privi- wherein defamation actions affords an absolute “ public policy privilege lege immunity judi- ‘is based statements made securing attorneys officers of the really quasi-judicial proceedings cial and permit freedom in their efforts to anything utmost mean then must not its we ” justice for their clients.’ affording equally secure circumvention almost (Ct.App.1993) P.2d action a different label.” unrestricted under (Second) of Torts (quoting Restatement Id. at 895. (1965)). emphasized § 586 cmt. a The court The court in the case at hand found district to, prior in prepara- made
that statements Appeals the Texas Court of case of, judicial protect- also proceeding tion James, Crain, P.C., Alpert Caton & 737, 864 privilege. Id. at ed (Tex.App.2005), particularly was S.W.3d at 184. instructive, having many similarities to Appellate Courts have never con- Idaho’s present Alpert, Appellants In action. propriety expanding this sidered the attorney, Riley, had their first sued own conduct, encompass as well as privilege to against the subsequently Respon filed suit statements, during the which occur course dent, Riley in that representing the law firm privilege litigation, nor whether action, claiming Respondent “conspired beyond of action should extend causes Riley Appellants], and to defraud [the this oppor- and libel. We take defamation of, both in the breach aided abetted tunity to do so. with, Riley’s fiduciary tortiously interfered duty Appellants].” Id. at [the litigation privilege
1. Examination
had
Alpert
district court
dismissed
jurisdictions.
various
across
case,
finding
Appellants
that the
had failed
recognized by Texas
plead a cause of action
Loigman
Township
In
Committee of
and, consequently,
Texas
Middleton,
law
Court
Supreme
of New Jer-
that,
Appeals
appeal in circum
although
litigation
heard the ease on
sey
privi-
noted
protect
analogous
presented
in the
only to
stances
those
lege
originally
used
affirming
the dismissal
present case.
arising from com-
against defamation suits
court,
Appeals
the Texas Court of
ments which were made
course
explained that:
proceedings,
privilege
judicial
been
*12
privity
as an
of its
Perhaps
offshoot
whether the conduct was meritorious in
law
jurisprudence, Texas case
has discour-
the context
underlying
of the
lawsuit.
opposing
aged
against an
counsel
lawsuits
(internal
omitted) (em-
Id. at 405-06
citations
if
on the fact that
the lawsuit is based
added).
phases
represented
opposing party in a
counsel
an
Druckman,
Supreme
In Clark v.
the
Court
judicial
attorney has
proceeding. An
a
alia,
Virginia considered,
of West
inter
the
duty
zealously represent his clients
following question,
by
certified
a
to it
fulfilling
law. In
within the bounds of the
court:
duty,
attorney
right
an
has the
barred,
party
Is
to a civil action
virtue
pursue rights that
interpose defenses and
litigation privilege,
of the
bringing
from
necessary
proper,
he deems
without
damages against
oppos-
claims for civil
liability
subject
or
If
being
damages.
party’s attorney
ing
alleged
if the
act of
attorney
an
an
could be held liable to
attorney
attorney’s
in the course of the
party
opposing
for statements made or
representation of the opposing party is
representing
in
of
actions taken
the course
conduct and not written
oral
state-
client,
constantly
he would be forced
ment which
in
arose
the civil action and
potential exposure against
his own
balance
relationship
which has some
to the civil
his client’s best interest. Such a conflict
action?
hampers
disputes through
of
resolution
W.Va.
624 S.E.2d
system
the court
and the
of
attainment
The Court
question
answered this
in the
justice. Thus,
repre-
promote
zealous
affirmative,
considering
policy
after
con-
sentation,
held
courts have
that an attor-
underlying
siderations
litigation privilege,
ney
“qualifiedly
immune”
civil
specifically:
non-clients,
liability,
respect
(1)
candid,
promoting
objective,
with represent-
actions taken
connection
evidence;
(2)
undistorted disclosure of
ing
in litigation.
a client
placing
of testing
the burden
the evidence
immunity
qualified
generally ap-
This
(3)
litigants during trial;
avoiding
plies
wrongful
if
even
conduct is
chilling
resulting
effect
from the threat
underlying
context
of
lawsuit. For
(4)
subsequent litigation;
of
reinforcing the
example,
party
independent
a third
has no
(5)
finality
judgments;
limiting
of
collater-
right
recovery
against
of
an
(6)
upon judgments;
al attacks
promoting
lawsuit,
filing
motions
even if frivolous
advocacy;
zealous
discouraging abusive
merit, although
or without
such conduct is
litigation practices;
encouraging
contemptible
sanctionable or
as enforced
settlement.
statutory
powers
inherent
870 (quoting
Id. at
Matsuura v. E.I. du Pont
court. Courts have refused to acknowl-
Co.,
de Nemours &
edge
Hawaii
independent
cause of action in
(2003)).
687, 693
The Clark Court
such
found
making
instances “because
motions is
that, in light
policy considerations,
of these
conduct an
engages
part of
“we see no
discharge
distinguish
reason
between
representing
his duties
West,
during
litigation
communications made
in lawsuit.”
[Bradt
process
and conduct occurring during
(Tex.App.Ct.1994)]
S.W.2d
...
litigation process.”
Id.
Thus,
conduct,
(emphasis in
attorney’s
even if frivo-
original). The
merit,
Supreme
Court noted that the
lous or
independently
without
Florida had reached a similar
if the
con
part
actionable
conduct is
clusion, in holding that:
discharge
lawyer’s
repre-
duties
senting his or her
immunity
immunity[5]
client. The
absolute
must be afforded to
conduct,
type
focuses on the
any
occurring
not on
act
during the course of a
privilege
The
noteworthy
difference between an absolute
malice in fact.
most
illustra-
qualified privilege
and a
is that:
privilege
immunity
tion
absolute
privilege
judicial
complete protec-
proceedings
absolute
afforded
affords
where
witnesses,
qualified privilege
judges,
tion
attorneys,
parties
jurors
whereas the
affords
protection only
fully protected against
if there is no ill motive or
are
defamation actions
immunity
all
against
blanket
claims raised
regardless
whether
judicial proceeding,
them,
defamatory
merely
they
statement or
acting
because
the act involves
*13
...,
long
However,
behavior
so
as
attorney
other tortious
where
litigation.
as an
proceeding.
relation to
act
some
being
by the
attorneys
opponent of
sued
immunity afford-
behind the
The rationale
lawsuit,
in a
former
their
current or
client
defamatory
equally
is
ed to
statements
attorneys’
out of
that suit arises
occurring
to other misconduct
applicable
legitimate representation
pur-
of that client
judicial proceeding.
of a
during the course
litigation,
privilege
suant
does
to
litigation
must be
participants
Just
apply.
communica-
engage
to
in unhindered
free
Supreme
Virginia,
Court of West
tion,
participants
must those
be free
so too
Druckman,
Clark v.
wrote:
judgment
prosecuting
to use their best
of
defending a lawsuit
fear
hav-
without
Inns, Inc.,] we
[v.
In Collins
Red Roof
subsequent
their
in a
ing to defend
actions
recognized
privileges,
such as
absolute
civil action for misconduct.
litigation privilege,
per-
only
should
added)
Levin,
(quoting
(emphases
Middle
Id.
mitted in limited circumstances.
[211
Thomas,
Mitchell,
brooks, Mabie,
Mayes &
(W.Va.
458,
595,
566
W.Va.
S.E.2d
598
Co.,
606,
Fire Ins.
639 So.2d
608
P.A. v. U.S.
2002)]. Thus, we do not
that a
believe
(Fla.1994)).
also,
v. Star-Kist
See
Maness
litigation privilege
apply
lia-
should
to bar
(8th Cir.1993)
704,
Foods, Inc., 7 F.3d
709
attorney
all
bility of an
circumstances.
(“[A]n
law)
attorney
(applying Minnesota
Rider,
In Mehaffy,
Windholz & Wilson v.
attorney-
scope
acts within the
who
A.,
Denver,
230,
Bank
N.
892 P.2d
Central
relationship will not be liable
third
client
(Colo.1995),
Supreme
the Colorado
profes
his
arising
for actions
out of
persons
attorney is
court noted that “an
not liable
relationship
attorney
unless the
ex
sional
finding
to a non-client absent a
of fraud
scope
employment
of his
acts for
ceeds
attorney.”
malicious conduct
See
Schrock,
Reynolds
gain.”);
v.
personal
Lauletta,
825,
Baglini
[768
also
A.2d
(2006) (en banc)
1062,
338, 142 P.3d
Or.
(“The
excepted
tort
]
one
833-34
(“[F]or
lawyer
party
hold a
liable
third
litigation privilege
from the reach of the
substantially assisting in client’s
breach
prosecution, or
use of
malicious
malicious
fiduciary duty,
prove
must
third
process.”).
exceptions
We
such
believe
lawyer
scope
acted
that the
outside
litigation
arising
privilege
an
absolute
lawyer-client relationship.”);
Royal
Kahala
occurring during
pro-
the litigation
conduct
Quinn
Stifel,
Corp. v.
&
Goodsill Anderson
cess are reasonable accommodations which
LLP,
We an attorney acting find that when in arguments rely upon presumption his his representative capacity pursuant his litiga- Underlying that the will tion, interests, Case be decided in solely and not for his own he (1) public policies protect- his favor. The of: litigation enjoy privilege shall the shall and ing attorneys retaliatory from the threat of subject by not be opponent to suit of his litigation, in client, they may order to ensure of arising representative out con- zealously advocate for client their without proceed and duct communications. We now (2) reprisal; judicial fear protecting of and argument to consider litiga- Reed’s that the economy, magnified are when confronted privilege apply tion due should here only retaliatory with not the litiga- threat of specific unique and of circumstances this tion, reality underlying but of it while the case. ongoing.
suit is Timing i. The this circumstances of case raise an question. court below important summarized Where conduct of argument privi- Reed’s litigation opposing protection counsel falls outside the —that lege apply did not Respondents litigation because were privilege, when a cause lawfully never AIA attorney? hired counsel action instituted following Entities —in apply litigation manner: privilege As we the modern litigation, of that even where we have no the resolution time this case first for the point, aggrieved party con- believes that directly allegedly and instead precedent legal mal- question acting for analogous actions —those has been sider prosecution. legitimate scope representa- malicious practice and outside solely for his Under tion and own benefit. indicated, in a case previously have We aiding reasoning, allegations of same that, objec- legal malpractice, dealing with abetting in the of tortious commission damages is support of actual proof tive acts, although marginally pled, must await limita- recovery, statute of required Underlying Until the Case. resolution does not legal malpractice claim for a tions cannot Underlying Case resolved a court forming the litigation run until the begin to any act com- whether tortious determine City concluded. of that claim has basis mitted, aiding constituting let alone acts Buxton, 656, 661, 201 McCall abetting alleged of those tortious acts. reasoning The clear P.3d the cause of this decision was behind argument, quoted As for Reed’s above damages are in- arise until action cannot summary, is the the district court’s that he curred, attorney’s conduct can be and the authorized for the one to hire counsel totality the ease. See under the reviewed Entities, AIA this inference does not flow id. allegations complaints. in Reed’s to recov- that must be shown The elements complaints are on the largely focused prosecution on the basis malicious er Respondents Idaho’s argument violated “(1) Beeks, specifically: in Badell v. found Rules of Professional Conduct or breached (2) prosecution; That it there was That Entities, fiduciary duty AIA their toward the (3) plaintiff; That in favor of the terminated dependent upon claims are Re- and these (4) prosecutor; Mal- the defendant was being counsel for the spondents retained as (6) cause; ice; probable Lack of Entities, fiduciary holding AIA duties Damages plaintiff.” sustained plead them. Reed has failed to facts toward accept allege that did not added). legal (emphases As cases good employment with AIA Entities *17 occurring dur- malpractice based conduct faith. trial, bring a of a in order to ing the course must be prosecution malicious claim there 12(b)(6) Analysis. C. damages it must that the and be determined stated, previously this reviews As Court pos- groundless, neither of which is suit was 12(b)(6) grant of a motion de novo. See prior to resolution of the case. sible Bradstreet, 670, 672-73, v. 145 Idaho Losser analyses in in these The theme our 758, (2008); 760-61 v. Koote- 183 P.3d Curlee that Ida comparative causes of action is two Rescue, 391, 394, Cnty. Fire & 148 Idaho nai signifi into ho courts take consideration (2008). 458, 224 P.3d 461 complexities application in of cant involved law, negotiation strategies as trial and such conspiracy and with Civil interference tactics, complexities and wait until all those a contract. hearing a prior to have resolved themselves Young- in As Court wrote Only when a has been concluded claim. case Higbee: blood v. truly identify whether or not may one malicious, every we “will intendment whether While make prosecution has been defective, or, complaint that malpractice, to sustain has committed inartful, hand, wrongly captioned a com- e.g., the case at whether cannot be if it fails fraudulently solely plaint for his own bene sustained acted of a Therefore, plain a short and statement we conclude that a cause make fit. may granted.” attor which relief against party’s opponent’s one claim action Dep’t, [Cnty.] Ada the attor ney litigation, based on conduct Gibson Sheriffs (2003). 5, 9, We litiga 72 P.3d of that Idaho ney committed course puts the tion, prior complaint at whether the properly instituted look not be spondents engaged of the in tortious party on notice claims interference adverse rights. it. with brought against contractual 665, 668, 182 P.3d 22, 2007, February Taylor On Reed J. (2008). Insurance, AIA voted the stock of Inc. and complaints alleges Reed attempted pursuant to take control of have into a civil entered rights provided his contractual under others, including conspiracy with their law, documents, the contract and I.C. clients. As this noted Mannos v. However, § 30-1-722. the interested di- Moss: Insurance, AIA Inc. (including rectors of conspiracy gives legal
A civil
rise to
Taylor) by
through
R.
[Respon-
John
agree-
if there is an
remedies exists
intentionally
in breaching
dents]
assisted
accomplish
two or more to
ment between
terms of
Amended
Restated
objective
accomplish
an unlawful
or to
Agreement
Pledge
Stock
and refused to
objective
lawful
in an unlawful manner.
acknowledge
Taylor’s
Plaintiff
J.
Reed
val-
not,
itself,
conspiracy
Civil
a claim for
Insurance,
id vote of the stock of AIA
Inc.
relief. The essence of a cause
action for
refused
surrender control as re-
conspiracy
wrong
civil
is the civil
commit-
quired.
[Respondents]
engaged
further
objective
conspiracy,
ted as
not
inappropriate
assisting
conduct in
interest-
conspiracy
itself.
parties (including
Taylor)
ed
R.
John
927, 935,
143 Idaho
155 P.3d
obtaining
maintaining
restraining
and/or
Maile,
(quoting McPheters v.
138 Ida
injunction
preliminary
order and
(2003)).
391, 395,
ho
64 P.3d
Taylor,
[Respon-
Plaintiff
J.
when
addition,
agreement
“[a]n
is the foundation of
legitimate legal
knew there was no
dents]
charge
a conspiracy
must be
there
some
so, that doing
basis to do
was an
so
inten-
showing
specific
plan
evidence
tional violation and tortious interference
agreement
to defraud to demonstrate the
Taylor’s
with
J.
rights,
contractual
pendency
conspiracy
at the time the
and that the assets and funds of AIA In-
alleged
occurred.”
fraud
Id.
failure
surance,
being misappropriated
Inc. were
particu
specific
pleadings
make
factual
safeguarded.
and/or
larly
It appears
likely
fatal here.
most
factually impossible
Under
it is
Idaho law
alleging
goal
conspira
Reed is
tortiously
par
interfere with that
fraudulent,
cy
conspiracy
and civil
must
ty’s own
contract. Ostrander
Farm Bu
pled
particularity
therefore be
Idaho,
reau Mut’l
Co.
Inc.
Ins.
Prods.,
Techs., Inc.,
Wasco
Inc. v. Southwall
851 P.2d
As noted
*18
989,
(9th Cir.2006).
435 F.3d
990-92
Fur
above,
client-attorney relationship
the
is one
thermore,
agent
acting
is axiomatic that an
in
agency,
of
line with
and
this Court’s deci
scope
within
representation
the
of his
cannot
Co.,
sion
BE
Const.
Inc. v.
CO
J-U-B
conspire
principal,
Energy,
with his
Afton
Inc.,
719,
Engineers,
145 Idaho
Finally, alleges in that Respondents acting Reed were outside scope employment solely “Facts” of his complaints section that Re- of their for their Maile, Therefore, party Taylor was a v. claims are Reed these own benefit. — (2005). 253, litigation privilege. P.3d also barred jurisdictions, ignoring cites to from other law malpractice breach Legal fidu- precedent, in ar- the well-established Idaho ciary duty. third-party at- guing that beneficiaries to an torney-client may standing relationship have a claim of le This considered pursue malpractice claims an at- Hancock, to malpractice Harrigfeld v. gal torney. compelling Reed offers no reason finding: why carefully expand should its this Court legal malpractice of a ac- “The elements Harrigfeld, analysis in and it is reasoned (a) an attor- tions the existence of are: attempt would to as- incredulous (b) relationship; ney-client the existence attorneys by the Enti- sert that hired AIA (c) lawyer; part duty on the of the ties, fight litigation against off Reed’s (d) duty; perform failure to entities, being those were retained for Reed’s lawyer have negligence of the must been plead As Reed failed to facts benefit. has proximate damages cause of to the find standing sufficient to that he has ... client bring against Respondents legal claims proof As to burdens of such malpractice, we find that Reed has failed proving ... ‘[t]he cases burden of grant- state a claim which relief attorney negligent been or failed has ed, malpractice. as to proper skill and that to act with dam plain therefrom on the ages resulted Respon As for Reed’s claim that ... the burden ‘[likewise
tiff client’ and fiduciary duties, their dents breached he has plaintiff negli on to show that the establishing allege failed exis facts proximate gence of the ” duty part Respondents tence of a damage.’ Sherry client’s cause held, has Diercks, 433, “[t]he toward Reed. As this Court Wash.App. 628 P.2d omitted). attorney’s (1981)(citations scope duty to a 1336, 1338 of an contractual purposes client is defined for which agree Washington court as with We Jones, is retained.” Johnson v. cause of action for elements 650, P.2d 103 Idaho malpractice and legal to allocation complaints allege that he been Reed’s has proof burden of such cases. acting Respondents a result of harmed as 134, 136, 90 140 Idaho Entities, AIA but interests of the best Jones, (quoting Johnson complaints specifically state that also (1982)). 706-07, 652 P.2d 654-55 suing cause of he is not under a derivative Reed, complaints, has It is clear that allege facts which action. Reed failed attorney-client allege that he is in an failed support finding can owed relationship Respondents, and therefore any fiduciary duty personally. to Reed privity necessary Respon- lacks the to sue malpractice. Harrigfeld legal dents Reed, com also claims that his has found ease which this Court complaints pled causes plaints and amended requirement; specifically exception to this *19 fraud. of action for fraud and constructive that the intended beneficia- this Court found Idaho Rule of Civil Procedure Pursuant testamentary would have ry of a instrument 9(b), particularity. be with pled fraud must standing bring malpractice claim Deffenbaugh: wrote in v. As this Court Glaze instrument. who drafted said 138, nine A must establish elements at P.3d at 888. This Court went Id. 90 “1) repre- that, attorney-client prove or a fraud: statement “[a] on to conclude direct 3) fact; 2) falsity; its mate- relationship required to sentation of its is exist between the 4) speaker’s its attorney-defendant riality; knowledge in a legal and plaintiff 5) speaker’s intent that there except very falsity; malpractice in this narrow action 6) reliance; ignorance of 139, hearer’s at P.3d at be Id. 90 889. circumstance.” 7) statement; falsity reliance principle was in a case to This reaffirmed 846 9) 8) reliance; hearer; justifiable and be decep- tions that are deemed to unfair or 48-603-48-603(E). § injury.”
resultant tive. See I.C. Reed’s complaints allege specific fail to which pro- 1104, 833, 829, 172 144 Idaho P.3d 1108 practice unfair deceptive they hibited (2007) Moss, v. 143 Idaho (quoting Mannos engaged assuming to have in. meant Even (2007)). 927, 1166, 931, 155 1170 Reed P.3d true, pled by all facts Reed be he has general plead fails to elements in a these may to state a claim which failed for relief be sense, and, particularity with let alone as granted under the ICPA. such, upon has failed to state claim may granted relief as to fraud. be Conversion “An fraud ex action constructive alleges complaints duty ists when there has been a breach of Respondents’ acceptance payment that arising relationship and from a of trust con attorneys their AIA work for the Entities fidence, fiduciary duty.” as in a Hines v. argue amounts conversion. Hines, 847, 853, 20, 129 Idaho 934 P.2d 26 complaints that Reed’s allege fail to facts (1997). “Examples relationships from which, true, if would demonstrate that Re fiduciary impose which the obli law will spondents’ conduct meets three elements gations parties on the include when the of conversion under law. Idaho This Court family, parties are: members of the same Peasley defined conversion & Transfer client, partners, attorney and executor and Smith, Storage Co. v. “a distinct act of estate, beneficiary principal of an and wrongfully dominion asserted over another’s insured, agent, and insurer close personal property in of or denial inconsistent Barendregt, friends.” v. 120 Idaho Mitchell 732, 743, rights with therein.” Idaho 132 979 837, 844, 707, (Ct.App.1991) 820 P.2d 714 605, (1999). P.2d This definition can be (found grounds by to be in error on other broken down into three elements which are Larrabee, 303, 314, Polk v. 135 Idaho required claim of conversion to be valid: (2000)). 247, It is clear that Reed (1) charged party wrongfully gained that alleged support has not facts sufficient to property; that property dominion is an inference that he is in an analogous rela possessed by plaintiff owned or at the time of tionship Respondents, there has possession; property question pled upon fore not a claim which relief personal property. granted as to constructive fraud. readily apparent Here it that 3. Violation the Idaho Consumer Pro- complaints allege Reed’s failed Act, 18-601, § tection seq. I.C. et property Respondents are meant and, order to have standing under the personal property have converted was (ICPA), therefore, Idaho analysis Consumer Protection Act I.C. of the other elements 48-601, § seq., aggrieved unnecessary. et party must alleged Here have been in relationship a contractual with Respondents sum money, converted a party alleged unfairly to have acted clearly Idaho case law states “[n]ormal 48-608(1) deceptively. person I.C. (“Any ly, See misappropriation money conversion for purchases goods who or leases or services lie does not unless it can be described or ...”); Glass, thereby suffers Haskin specific identified as a chattel.” Warm (Ct. Villa, Inc., 640 P.2d Springs Props., Inc. v. Andora App.1982) (holding “that a claim under the 526 P.2d contract”). Fund, ICPA High Hall, must be based It is See L.P. also View (S.D.N.Y.1998) (“More complaints clear that he is not F.Supp.2d alleging that particularly, he entered into a if alleged contractual money converted *20 Therefore, relationship Respondents. incapable being described identified complaints Reed’s chattel, have failed specific to state claims in the manner same as a it is for relief under ICPA. Respondents proper subject fur not the conversion ac point tion.”) (internal ther only permits quotations out that the ICPA and citations omit ted). recovery specific prohibited for certain Nothing complaints ac- suggests Reed’s § the mini- to for the Idaho Code 30-1-741 sets out paid that the sums corporate requirements which must be met they their mum rendered to services brought, a derivative identified as order for claim to be could be described or clients such, stating: As affirm dis- chattel. we specific grant Respondents’ motions court’s
trict
Standing.
may
A
not
shareholder
com-
to this
claim.
dismiss
proceeding
maintain a
mence or
derivative
unless the shareholder:
not abuse its
The district court did
D.
(1)
corporation
Was
shareholder of
denying
Reed’s motions
discretion
time of the
omission com-
at the
act or
complaints.
to amend his
of or
a shareholder
plained
became
district
below denied
court
through
operation
transfer
of law from
to file amended
motions
leave
Reed’s
time;
who was
shareholder at that
one
granting
complaints,
ground
proposed
would
futile as the
motions
these
(2) Fairly
adequately represents
complaints
not have with
amended
would
corporation
enforcing
of the
interests
a motion
dismiss.
stood
right
corporation.
of the
law,
for leave
Idaho
motions
Under
allege
original
does not
in either his
liberally grant
pleadings are to be
to amend
proposed
complaints
complaints or
amended
that,
however,
ed,
also
as this
the case
Entity.
AIA
that he is
shareholder of either
Racquetball
Canyon
in Black
said
Rather,
claims
a former
the status of
Club,
Idaho
National Bank:
Inc. v.
First
redeemed,
whose
shareholder
stock was
com-
determining
an amended
whether
[i]n
seeking
owing
to recover the
on that
balance
allowed,
leave of
plaint should be
where
redemption.
if
claims are
stock
Even Reed’s
15(a),
required
court is
under Rule
security
him to
true that his
interests entitle
the new
consider whether
Entities,
AIA
he did not
gain stock
proposed to
into the
claims
be inserted
commenced,
when this
hold stock
lawsuit
complaint
state
action
amended
Therefore,
not claim to.
it is clear
and does
pleading
If the
does
valid claim.
amended
§
I.C.
30-1-741 that Reed was not
under
claim,
opposing
a valid
if the
not set out
suit,
brought
at the time
shareholder
he
delay in
prejudiced by the
party would be
standing
pursue
no
a derivative
and has
claim,
adding
opposing
new
if the
of the corporation.6
on behalf
claim
as a
has an
defense such
available
proposed
complaints
As Reed’s
amended
limitations,
not an abuse of
it is
statute
any
support
add
facts in
of his direct
did not
deny
discretion for
trial court
original
action raised in
com-
causes of
his
complaint.
motion to file the amended
standing
clearly
and as he
lacked
plaints,
claims,
to bring
Idaho law
derivative
(internal
omitted).
citation
corporation
being the
shareholder
court,
acknowledged by
As was
of,
find
bring
suit
we
he wished
on behalf
proposed
complaints set out
Reed’s
amended
the district court acted within its discre-
original
causes of
as his
the same
action
denying
Reed’s motions for leave
tion
complaints
adding
while
causes of
derivative
complaints
of futili-
ground
his
on the
amend
Having
Reed’s direct
action.
dealt with
ty
above,
finding
action
no
causes of
complaint
proposed
changes
amended
Attorney fees
E.
below
analyses,
alter our
these issues
sufficient to
in Henderson v.
consider
this Court stated
not be
We now
shall
re-examined.
As
Properties, L.L.C.:
action.
Investment
proposed
causes of
Henderson
derivative
seeking
corporate money
recover
and assets
Although
status is
Reed’s lack of shareholder
determinative,
New
unlikely
Reed could
his own individual benefit. See
it is also
Crawford
Benedict,
(Colo.App.
Valley,
qualification,
fairly
ade-
cause these brought claims were frivolously, § 1. Idaho Code 12-121 and unreasonably, I.R.C.P. and without foundation. The 54(e)(1) complaints overly filed Reed are conclu- sive in nature with allega- insufficient factual § 12-121 states: Code tions, even under notice-pleading Idaho’s action, any civil judge may award standard, and demonstrate an often-incorrect attorney’s reasonable fees to prevailing understanding of the law. We up- therefore party parties, provided or that this section hold grant the district court’s alter, repeal shall not any or amend statute § fees under I.C. 12-121 and I.R.C.P. which provides otherwise for the award of 54(e)(1). attorney’s “party” fees. The term “par- ties” any is defined to person, include part- nership, corporation, association, private S0-1-U6(2)-(S) § Idaho Code organization, the state of political Idaho or 30-l-746(2)-(3) § Idaho Code pro subdivision therefore. < vides that the termination of a deriva 54(e)(1) Idaho Rule of Civil Procedure reads tive proceeding may: a court
as follows: Attorney any Fees. In plaintiff pay any civil Order the action the court defen- may fees, award reasonable dant’s expenses, reasonable including at fees, discretion of the court counsel in defending include incurred fees, paralegal prevailing to the proceeding if it proceeding finds that the parties 54(d)(1)(B), as defined in Rule was commenced or maintained without provided by any when statute or con- improper reasonable cause or for an pur- Provided, tract. attorney fees pose; under sec- *22 for the harassment spuriously, claim opposing par- this
(3) pay an party to Order affirm the only. We therefore including purposes counsel expenses, ty’s reasonable authority filing attorney of a fees under grant fees, incurred because 48-608(5). § if it finds in I.C. paper, provided or other pleading, motion paper or other motion pleading, that fact, after rea- in grounded not well was Attorney Fees F. existing by inquiry, or warranted sonable attorney request fees Respondents the exten- argument for good faith or a law Appellate Rule to Idaho appeal pursuant existing sion, or reversal modification 12-121, 30-1-746, and 48- §§ Idaho Code improper for an interposed and was law 608(5). immediately pre with the Consistent unnec- harass or cause as to purpose, such deny attorney fees under ceding analysis, we in the delay increase essary or needless § the same reason we find 30-1-746 for I.C. litigation. cost of improperly on this they were awarded attorney [I.C. fees under “An award Respondents are below. find basis We discretionary and should § 30-1-746] § attorney fees under I.C. 48- entitled to only upon a and vacated subject to review 608(5), claim appealed his ICPA as Reed McCann of discretion.” showing of an abuse clearly failed despite fact that the claim McCann, 61 P.3d law, brought spuri matter and was as a plead deriva- attempted to only. ously purposes Addi for harassment Respondents, against action tive causes of attorney tionally, Respondents are entitled to mo- court denied as the district but § I.A.R. 41 as under 12-121 and fees I.C. complaints, the to amend his for leave tions with appeal brought spuriously and this court. As the were never before claims foundation, purposes harassment out part action were never causes of derivative only. of this the termination complaints of Reed’s as the properly be characterized case cannot V. CONCLUSION proceeding. We a derivative
termination of its discre- taking judicial court abused find that the district court erred The district under this awarding fees Underlying tion in Case when consider- notice of the under statute, fees uphold as we to dismiss under ing Respondents’ but motions 54(e)(1) this error 12(b)(6), § 12-121 and I.R.C.P. considers the I.C. but as this Court novo harmless. on a de grant of a motion to dismiss Underlying and has not considered basis 48-608(5) § Idaho Code determination, this error in this Case the district harmless. We affirm 48-608(5): found ICPA, § I.C. Under 12(b)(6) Respondents’ mo- grant of court’s prevailing allowed to Costs shall be tions to dismiss. otherwise directs. party unless the court by person under any brought action applies litigation privilege that the We hold award, section, in addi- the court shall this bringing Idaho, litigant from and bars a section, provided tion to the relief adversary attorneys against the of his claims if attorney’s plaintiff to the fees reasonable the claims are litigation, in that where discretion its prevails. he attorneys’ or com- conduct grounded attorney’s prevailing to a fees may award represent- made in the course munications plaintiffs if it finds defendant and the litigation, in that ing their clients brought for harass- spurious or action is scope of that attorneys acting within the are only. purposes ment solely for their own representation and not all instances any We find leased benefit. purchased or As Reed never by brought Respondents and claims goods or services from (1) privilege; litigation barred require- were: the threshold clearly did not meet (3) facts; insufficiently pled ICPA, supported making a claim ments of law; a matter of insufficient as abused the district court be said that cannot litigation. brought ripe for finding that Reed his discretion affirm act We court’s of discre- *23 denying
tion in Reed’s motions for leave to complaints
amend his because Reed was Corporations
not a of the at shareholder injury alleged
time of the and therefore actions, standing bring
lacked derivative proposed Reeds alterations to his
pleading regarding direct causes of action analyses, applied
did not alter the to his
original complaints.
The district court abused its discretion
awarding attorney fees to pur- 30-1-746, §
suant properly to I.C. but §§
awarded fees under I.C. 12-121 48-608(5). Costs and fees to
Respondents.
Chief Justice EISMANN and Justices J. TROUT, J.,
JONES Pro Tem concur.
HOSACK, J., Tem, specially Pro
concurring.
I analysis concur with both the and the that,
holding. my I opinion, note
application litigation privilege is deter-
minative as to the motion to dismiss. Once litigation privilege is determined to be law, applicable grant the trial court’s
the motion to dismiss and its denial of the
motion to amend could be affirmed on those
grounds alone.
Robert A. MILLWORK, INC., Employer,
JOSLIN
Liberty Corpora Northwest Insurance
tion, Surety, Defendants-Respondents.
No. 37166.
Supreme Idaho, Court of
Boise, August 2010 Term.
Oct. 2010.
Rehearing Denied Dec.