Abc Agra, LLC v. Critical Access Grp., Inc.
| Decision Date | 06 August 2014 |
| Docket Number | No. 40573.,40573. |
| Parties | ABC AGRA, LLC, an Idaho limited liability company, Plaintiff–Appellant, v. CRITICAL ACCESS GROUP, INC., a Minnesota non-profit corporation, Defendant–Respondent. |
| Court | Idaho Supreme Court |
ABC AGRA, LLC, an Idaho limited liability company, Plaintiff–Appellant,
v.
CRITICAL ACCESS GROUP, INC., a Minnesota non-profit corporation, Defendant–Respondent.
No. 40573.
Supreme Court of Idaho,
Twin Falls, June 2014 Term.
Aug. 6, 2014.
[331 P.3d 524]
Robertson & Slette, PLLC, Twin Falls, for appellant. Gary D. Slette argued.
Givens Pursley, LLP, Boise, for respondent. Martin C. Hendrickson argued.
BURDICK, Chief Justice.
This appeal arises out of ABC Agra, LLC's (“ABC”) action seeking a declaratory judgment against Critical Access Group, Inc. (“CAG”) regarding the enforceability of a real property use restriction. Because there were no existing or proposed uses that implicated the restriction, the district court determined that the claim was not ripe and granted CAG's 12(b)(6) motion to dismiss. We affirm this dismissal.
The facts of this case are not at issue because CAG accepts the facts ABC alleged in its complaint as true for the purposes of its 12(b)(6) motion and this appeal.
ABC is the developer of Crossroads Point Business Center PUD (the “PUD”), a large scale commercial planned unit development located at the intersection of Interstate 84 and Highway 93 in Jerome County, Idaho. In 2007, St. Benedict's, the local hospital in Jerome, concluded that its aging hospital facility required a replacement and so executed an option agreement to purchase property from ABC located within the PUD.1 The option agreement provided that St. Benedict's had an option to purchase Lot 6 in the PUD, and that if they elected to purchase that property, ABC would gift them Lots 7 and 8 to facilitate the construction of the new hospital campus. The option agreement included a covenant that restricted the three lots to use solely for the construction of healthcare facilities. By its terms, the option agreement was binding upon St. Benedict's successors and assigns. St. Benedict's also required ABC to execute a restrictive covenant as against all other property in the PUD prohibiting the provision of healthcare services. In addition, the option agreement gave ABC an option to repurchase the three lots if St. Benedict's “does not commence construction of a healthcare facility on the Real Property within three years of its exercise of the option” for the same price St. Benedict's originally purchased the property. ABC recorded a Memorandum of Option Agreement identifying ABC and St. Benedict's as the parties, and specifically acknowledging that the option agreement was binding on the parties with regard to all three lots.
On October 3, 2011, St. Benedict's conveyed its lots to CAG without notice to ABC. Upon learning of the conveyance, counsel for ABC sent CAG a letter dated January 30, 2012, informing CAG of the healthcare restriction contained in the option agreement. Counsel for CAG responded on February 9, 2012, as follows:
I was also asked to confirm that CAG is aware of the March 14, 2007 Option Agreement and does understand your client has taken certain positions with respect to that document. The fact that CAG is aware of your client's previous position should not be interpreted as a statement that CAG agrees with such positions.
Based on the uncertainty ABC perceived that CAG had created through the above correspondence, ABC filed a complaint for
[331 P.3d 525]
declaratory relief on May 11, 2012. ABC sought a declaration that under the restrictive covenant in the option agreement, only a “healthcare facility” could be constructed on the three lots CAG owns within the PUD.
CAG moved to dismiss the complaint on ripeness grounds. CAG's motion to dismiss argued that there was no present controversy for the Court to resolve, and therefore the case was not ripe. In support of its argument, CAG points to the lack of any allegation that it has used or even threatened to use the property for any purpose other than construction of a healthcare facility. In its reply brief, CAG raised the doctrine of merger as one potential defense to ABC's declaratory judgment to demonstrate the waste of time and money that would occur if the parties were forced to litigate issues based on hypothetical facts. Following briefing and oral argument, the district court took the matter under advisement on July 27, 2012.
The district court agreed with CAG and granted its motion to dismiss on September 4, 2012. ABC timely appealed.
“This Court reviews de novo a district court's dismissal of a complaint under Idaho Rule of Civil Procedure 12(b)(6).” Brooksby v. Geico Gen. Ins. Co., 153 Idaho 546, 547, 286 P.3d 182, 183 (2012). After viewing all facts and inferences from the record in favor of the non-moving party, this Court then looks only at the pleadings to determine whether a claim for relief has been stated. Young v. City of Ketchum, 137 Idaho 102, 104, 44 P.3d 1157, 1159 (2002). “The issue is not whether the plaintiff will ultimately prevail, but whether the party is entitled to offer evidence to support the claims.” Id.
B. Ripeness of ABC's declaratory judgment claimABC's request for relief is in the form of a declaratory judgment. Idaho courts have the power to declare the rights, status and legal relations of persons affected by contracts.2I.C. §§ 10–1201 & 1202. Breach of a contract is not required for the issuance of a declaratory judgment regarding a contract dispute. I.C. § 10–1203; Utah Power & Light Co. v. Idaho Pub. Utils. Comm'n, 112 Idaho 10, 12, 730 P.2d 930, 932 (1986) (noting that Idaho Code section § 10–1203 “provides for the issuance of a declaratory judgment in a contract dispute ‘before or after there has been a breach.’ ”) However, an actual or justiciable controversy is still a prerequisite to a declaratory judgment action; thus, courts are precluded “from deciding cases which are purely hypothetical or advisory.” Bettwieser v. N.Y. Irrigation Dist., 154 Idaho 317, 326, 297 P.3d 1134, 1143 (2013) (quoting Wylie v. Idaho Transp. Bd., 151 Idaho 26, 31, 253 P.3d 700, 705 (2011)). Idaho has adopted the constitutionally based federal justiciability standard. Davidson v. Wright, 143 Idaho 616, 620, 151 P.3d 812, 816 (2006). Ripeness is that part of justiciability that “asks whether there is any need for court action at the present time.” Id. (quoting Gibbons v. Cenarrusa, 140 Idaho 316, 317, 92 P.3d 1063, 1064 (2002)). “The traditional ripeness doctrine requires a petitioner or plaintiff to prove 1) that the case presents definite and concrete issues, 2) that a real and substantial controversy exists, and 3) that there is a present need for adjudication.” Paddison Scenic Props., Family Trust, L.C. v. Idaho Cnty., 153 Idaho 1, 4, 278 P.3d 403, 406 (2012) (quoting Noh v. Cenarrusa, 137 Idaho 798, 801, 53 P.3d 1217, 1220 (2002)).
The district court held that ABC's declaratory judgment action was not ripe for adjudication because the controversy ABC alleged involves “uncertain or contingent future events that may not occur as anticipated or indeed may not occur at all.” The court
[331 P.3d 526]
noted that ABC's complaint was void of any “threat, evidence or allegation that the property will not be developed in accordance with the specified definition of a healthcare facility.”
On appeal, ABC argues that CAG's letter coupled with the arguments it put forward to the district court created a real and substantial controversy as to the validity of the restrictive covenant contained in the option agreement. ABC also claims that it is necessary to adjudicate this controversy now because the uncertainty caused by CAG's position as to the covenant's validity presently harms ABC's ability to market the remainder of its development property. Specifically, ABC can no longer make warranties of exclusivity, like the one made to CAG's predecessor, to future purchasers of property within the PUD because ABC is no longer sure what CAG will do with its property. In response, CAG argues that the district court correctly held that ABC's claim was not ripe because it is based on hypothetical facts that may never occur. CAG contends that because there are no allegations that CAG plans or ever planned to build anything other than a healthcare facility on its property, there is no real and substantial controversy, and so, no present need for adjudication. CAG also argues that...
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