Taylor v. Mcnichols
| Decision Date | 03 September 2010 |
| Docket Number | Nos. 36130, 36131.,s. 36130, 36131. |
| Citation | 243 P.3d 642,149 Idaho 826 |
| Court | Idaho Supreme Court |
| Parties | Reed J. TAYLOR, an individual, Plaintiff-Appellant, v. Michael E. McNICHOLS, an individual; Clements, Brown & McNichols, P.A., an Idaho professional corporation; Jane Does I-V, unknown individuals, Defendants-Respondents. Reed J. Taylor, Plaintiff-Appellant, v. Gary D. Babbitt, an individual, D. John Ashby, an individual; Patrick V. Collins, an individual; Richard A. Riley, an individual; Hawley, Troxell, Ennis & Hawley, LLP, an Idaho limited liability partnership; Jane Does I-X, unknown individuals. Defendants-Respondents. |
Campbell, Bissell & Kirby and Michael S. Bissell, Spokane, for appellant. Roderick C. Bond argued.
Hepworth, Janis & Brody, Chtd., Boise, for respondents McNichols and Clements, Brown & McNichols, P.A. John J. Janis argued.
Elam & Burke, P.A., Boise, for respondents Babbitt, Ashby, Collins Riley and Hawley, Troxell, Ennis & Hawley, LLP. Jeffrey A. Thomson argued.
This case comes before this Court on appeal from the grant of two Idaho Rule of Civil Procedure 12(b)(6) motions to dismiss for failure to state a claim upon which relief may be granted. Appellant, Reed Taylor alleges that the district court erred in denying his motions to amend his complaints, and erred in failing to properly apply the applicable standards in granting the motions to dismiss under I.R.C.P. 12(b)(6). We affirm.
This case arises as a result of the separate case of Taylor v. AIA, et al., Nez Perce County Case No. CV07-00208 (Underlying Case), now awaiting hearing before this Court on appeal. In order to properly understand the claims being asserted here, certain aspects of the Underlying Case must be examined. The case at hand has been consolidated on appeal from two separate before the district court, case number CV-08-01763 and case number CV08-01765.
On January 29, 2007, Reed Taylor (Reed) filed suit against AIA Services Corporation (AIAS), AIA Insurance, Inc. (AIAI) 1, John Taylor, Connie Taylor, Bryan Freeman, and JoLee Duclos. AIAI is a business entity existing under the umbrella of AIAS. When the Underlying Case began John Taylor was the managing director of both corporations and his then wife, Connie Taylor, held a community property interest in the corporations. John Taylor, Freeman, and Duclos were board members of both corporations. After Reed filed suit in the Underlying Case, Michael McNichols, of the law firm Clements,
Brown & McNichols, P.A. (CBM), was retained to represent AIAS, AIAI, and John Taylor.
While the lawsuit was still pending, Reed attempted to exercise management authority over the AIA Entities, and the court in the Underlying Case granted a temporary restraining order against Reed on February 27, 2007. On March 8, 2007, the court in the Underlying Case entered a preliminary injunction which prohibited Reed from attempting to act as a manager or board member of AIAI, or from harassing or interfering with the management of AIAI and AIAS.
On March 28, 2007, McNichols filed a motion to withdraw as counsel for AIAI and AIAS, which was granted on April 12, 2007. On May 7, 2007, a notice of appearance on behalf of the AIA Entities was filed by Gary Babbitt and John Ashby, of the law firm Hawley Troxell Ennis & Hawley, LLP (HTEH).
On August 18, 2008, after the Underlying Case had been through 21 months of motions and hearings—while numerous other motions were pending, and the trial date had been set, but after the district court had granted a Motion for Partial Summary Judgment in favor of Reed as to the AIA Entities being in default on a $6,000,000 promissory note issued to Reed—Reed filed the present actions against McNichols and CBM, who were continuing to serve as counsel for John Taylor (case no. CV08-01765 below), and against Babbitt, Ashby, Patrick Collins, Richard Riley,2 HTEH, and other unspecified attorneys who worked for HTEH on its representation of the AIA Entities (case no. CV08-01763 below).3 Reed asserted claims against Respondents for: (1) aiding and abetting or assisting others in the commission of tortious acts in the Underlying Case; (2) conversion and misappropriation of the AIA Entities' corporate assets; (3) violations of Idaho's Consumer Protection Act, I.C. § 48-601 et seq.; and (4) professional negligence and/or breach of fiduciary duties.
Respondents filed motions to dismiss pursuant to I.R.C.P. 12(b)(6), and oral argument was heard on these motions on October 16, 2008. On the same day Reed filed his motions for leave to amend his complaints, attaching his proposed amended complaints, and a hearing was held on these motions on December 4, 2008.
On December 23, 2008, the district court issued two opinions titled "Opinion and Order on Defendant's Motion for Preliminary Injunction" (Opinions) granting Respondents' motions to dismiss and denying Reed's motions to amend his complaints. In reaching his decision the district court judge, who was also the judge in the Underlying Case, found that the arguments made by both Reed and Respondents incorporated events and actions that occurred in the Underlying Case and, therefore, took judicial notice of the Underlying Case in toto. The district court subsequently granted Respondents' requests for attorney fees.
Reed filed a notice of appeal with this Court on January 30, 2009, and the two cases were consolidated for appeal on February 18, 2009. In light of Spokane Structures v. Equitable Investment, LLC, 148 Idaho 616, 226 P.3d 1263 (2010), it was recognized that no final judgment had been issued by the district court and the case was remanded for entry of a final judgment on March 16, 2010. This Court received Judgments from the district court for both of the pre-consolidation cases on March 24, 2010.
Our standard of review for a grant of dismissal under Idaho Rule of Civil Procedure 12(b)(6) was concisely summarized by this Court in Losser v. Bradstreet:
When this Court reviews an order dismissing an action pursuant to I.R.C.P. 12(b)(6), we apply the same standard of review we apply to a motion for summary judgment. After viewing all facts and inferences from the record in favor of the non-moving party, the Court will ask whether a claim for relief has been stated. The issue is not whether the plaintiff will ultimately prevail, but whether the party is entitled to offer evidence to support the claims.
145 Idaho 670, 672-73, 183 P.3d 758, 760-61 (2008) (internal citations and quotations omitted). In addition, "[t]his Court reviews an appeal from an order of summary judgment de novo, and this Court's standard of review is the same as the standard used by the trial court in ruling on a motion for summary judgment." Curlee v. Kootenai Cnty. Fire & Rescue, 148 Idaho 391, 394, 224 P.3d 458, 461 (2008). Ergo, a district court's dismissal of a complaint under I.R.C.P. 12(b)(6) shall be reviewed de novo.
This Court employs an abuse of discretion standard when reviewing a district court's denial of a motion to amend a complaint to add additional causes of action. Spur Prod. Corp. v. Stoel Rives LLP, 142 Idaho 41, 43, 122 P.3d 300, 302 (2005). When reviewing an exercise of discretion on the part of a district court, this Court considers:
"(1) whether the court correctly perceived that the issue was one of discretion; (2) whether the court acted within the outer boundaries of its discretion and consistently with the legal standards applicable to the specific choices available to it; and (3) whether it reached its decision by an exercise of reason."
Id. (quoting Estate of Becker v. Callahan, 140 Idaho 522, 527, 96 P.3d 623, 628 (2004)).
Reed alleges that the district court did not apply the correct legal standard when considering Respondents' 12(b)(6) motions to dismiss. Specifically, Reed alleges that the district court erred in taking judicial notice of the Underlying Case, when it should have limited its review to the pleadings.
Idaho Rule of Civil Procedure 12(b) states, inter alia:
If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.
(Emphasis added).
Respondents make two arguments why they believe the district court's 12(b)(6) ruling should stand. First, the district court was acting within its permitted discretion in taking judicial notice of the Underlying Case. Second, having requested that the district court take judicial notice of the Underlying Case, Reed is barred under the invited error...
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