Campbell v. Kildew

Decision Date17 June 2005
Docket NumberNo. 29717.,29717.
Citation141 Idaho 640,115 P.3d 731
PartiesGary W. CAMPBELL, Plaintiff-Appellant, v. Kim KILDEW, Defendant-Appellant, and Joseph M. Daltoso and Martha Corry Daltoso, husband and wife, and Bow Lake, LLC, an Idaho Limited Liability Company, Intervenors-Respondents.
CourtIdaho Supreme Court

Ellis, Brown & Sheils, Chtd., Boise, for appellant Kim Kildew. Allen B. Ellis argued.

Greener Banducci Shoemaker, PA, Boise, for respondents. Thomas A. Banducci argued.

SCHROEDER, Chief Justice.

Gary W. Campbell (Campbell) and Kim Kildew (Kildew) appeal from an order setting aside a judgment and decree that confirmed an arbitration award they had obtained. Joseph M. Daltoso, Martha Corry Daltoso, and Bow Lake, L.L.C. (the Daltosos) intervened and were granted a motion for relief from judgment pursuant to Idaho Rules of Civil Procedure, Rule 60(b), setting aside the confirmed award on the basis that Campbell and Kildew had committed a "fraud upon the court." Campbell and Kildew also appeal the district court's decision to sanction them under Idaho Rules of Civil Procedure, Rule 11(a)(1). The Daltosos ask the Court to affirm the district court's decisions and seek an award of attorney fees and/or sanctions on appeal.

I. FACTUAL AND PROCEDURAL BACKGROUND

Ada County Code (ACC) § 8-6-2(B) states that "[i]t shall be unlawful to a make a subdivision of property until the requirements of this chapter are satisfied." ACC § 8-6-2(B). Generally, Title 8 requires landowners to engage in a lengthy process involving a pre-application conference, neighborhood meetings, platting, a natural features analysis and obtaining approvals from various agencies prior to accomplishing a subdivision of property. ACC § 8-6-3 (2004). However, at the time of the events in this case, the ACC provided several exceptions to the subdivision process, including an exception for property subdivided by court order (the court decree exception). ACC § 8-6-2(C)(3).1 Property subdivided under the court decree exception was required to be at least 40 acres with 100 feet of frontage.

Joseph M. Daltoso (Daltoso) and Gary W. Campbell (Campbell) are former owners of a development company, Table Rock Ranch, L.L.C. (Table Rock). After years of a souring business relationship, they entered into arbitration in October of 2001 to dissolve Table Rock and distribute its assets. During arbitration, Daltosos' attorney informed the parties about the ACC's court decree exception and advised them that a confirmed arbitration award would qualify for this exception. Daltoso and Campbell agreed to distribute Table Rock's real property assets in such a way as to create several new subdivisions between the parties. The arbitration award was later confirmed by a district court and qualified for the court decree exception.

Immediately following the Table Rock arbitration, Campbell partnered with Kim Kildew (Kildew), a neighboring large-scale Boise foothills developer, to form Wildhorse Ranch, L.L.C. The parties executed a Real Estate Development Operating Agreement (the Operating Agreement) for the alleged purpose of transferring development rights to Sun Mountain Limited (Sun Mountain) via density bonus transfers. Density bonus transfers allow parties to transfer development rights between different landowners so long as the properties are contiguous with one another. Campbell owned approximately 147 acres and Kildew owned approximately 160 acres (the Subject Property) of Boise foothills property. The Operating Agreement included these properties as part of its assets, although the property had not yet been conveyed to the company. Not all of the Subject Property was contiguous with the Sun Mountain property. The Operating Agreement also provided that disputes between the parties would be resolved in arbitration pursuant to the Idaho Uniform Arbitration Act (UAA). An arbitrator was required to take into consideration the maximum economic benefit of the property in making any award. The parties were also obligated to have any arbitration award judicially confirmed.

On November 16, 2001, Campbell arranged for an engineer to prepare metes and bounds legal descriptions of the Subject Property. The descriptions split the Subject Property into 40-acre parcels with 100 feet of frontage. In late January or February of 2002, Campbell and Kildew asked attorney Andrew Hawes (Hawes) to serve as an arbitrator in the dissolution of Wildhorse and distribution of its property. Hawes accepted the offer although it was his first arbitration. The parties had three brief meetings, none of which were reflected in Hawes' billing records. Hawes later maintained that these meetings consisted of pre-arranged presentations from Campbell and Kildew as to how Wildhorse's property would be distributed. Following the hiring of Hawes, negotiations with Sun Mountain broke down due to an alleged conflict with the Boise Fire Department to provide fire services to the future development.

On January 28, 2002, Campbell entered into a Purchase and Sale Agreement (PSA) with Michael and Julia McMillen (McMillen) for the sale of a lot allegedly committed to Wildhorse as part of the Subject Property. Campbell signed a deed conveying the lot to McMillen on March 11, 2002. At the time of the sale the lot was not legally subdivided.

On March 28, 2002, Campbell and Kildew signed deeds finally conveying their individual properties to Wildhorse. The conveyance did not include McMillen's lot or another lot later identified as South Parcel B. That same day, Campbell and Kildew presented Hawes with a proposed arbitration award dividing Wildhorse's property into eight separate lots. The lot descriptions were similar to the metes and bounds descriptions Campbell had obtained in November of 2001. Hawes signed the award and Campbell and Kildew filed a Petition for Confirmation of the award on April 8, 2002 in district court. Judge Bail issued a Judgment and Decree confirming the award on April 16, 2002.

On May 30, 2002, counsel for Joseph M. Daltoso, Martha Corry Daltoso, and Bow Lake L.L.C. (the Daltosos) sent a letter to the Ada County Department of Development Services (ACDDS) questioning the legality of Campbell and Kildew's proposed subdivision of Wildhorse's property. The Daltosos owned property neighboring the Subject Property subdivided by Campbell and Kildew's arbitration proceeding. ACDDS determined that Wildhorse's property had been divided pursuant to a court order but that none of the parcels qualified for the court decree exception and could not be further subdivided outside the ACC subdivision process. ACDDS eventually retracted this decision, finding that the properties qualified for the court decree exception but could not be issued building permits because the arbitration award had divided the properties into "lots" rather than "parcels." The department offered four suggestions, however, as to how to convert the deficient properties into "buildable" parcels. Both the Daltosos and Campbell appealed this decision.

On October 17, 2002, the Daltosos filed a motion for relief pursuant to Idaho Rule of Civil Procedure 60(b) from the district court's Judgment and Decree confirming Campbell and Kildew's arbitration award. The Daltosos alleged that Campbell and Kildew had used a sham arbitration proceeding to circumvent the procedures outlined by the ACC for lawful subdivision and that such conduct constituted a "fraud upon the court." Shortly following this motion, the Ada County Planning and Zoning Commission (ACPZ) denied the Daltosos and Campbell's appeals of the ACDDS's decision. The Daltosos appealed to the Ada County Board of Commissioners (ACBC). The outcome of that hearing is not shown in the Record. The Daltosos subsequently filed a motion to stay proceedings pending the outcome of county administrative hearings interpreting the ACC's court decree exception and deciding whether building permits would be issued for the Subject Property. Campbell and Kildew moved to strike and/or dismiss the Daltosos' motion for relief and motion to stay the district court proceedings. The district court ordered an evidentiary hearing into the matter.

Following an evidentiary hearing, the district court determined that the Daltosos had standing to challenge the judgment confirming the arbitration award. The district court also found by clear and convincing evidence that Campbell and Kildew had engaged in a sham arbitration for the sole purpose of subverting Ada County's zoning ordinances. The court additionally held that obtaining a judgment confirming the sham arbitration award constituted a fraud upon the court under Rule 60(b) of the Idaho Rules of Civil Procedure. The court ordered that the Judgment and Decree confirming Campbell and Kildew's arbitration award be set aside.

The Daltosos subsequently sought an award of attorney fees and costs under Idaho Code § 12-123 and moved for Rule 11 sanctions. The district court awarded the Daltosos their costs as a matter of right in the amount of $1,976.10 but did not award discretionary costs or attorney fees. The district court awarded sanctions against Campbell and Kildew in the amount of $15,000 under Rule 11.

Campbell and Kildew appealed. The Daltosos also appealed the award of sanctions and denial of their request for attorney fees. The appeals were consolidated. The Daltosos filed a motion for reconsideration with the district court. The district court granted the Daltosos' motion for reconsideration as to the sanctions amount, increasing sanctions to $60,000. The Daltosos then filed a notice of dismissal without prejudice as to their appeal. Kildew and Campbell each filed a second notice of appeal amending their claims to include an appeal of the district court's grant of the Daltosos' motion...

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    ...first impression. As such, Reed argues that it was inappropriate to grant attorney fees under I.C. § 12-121. See Campbell v. Kildew, 141 Idaho 640, 651, 115 P.3d 731, 742 (2005) ("Where a case involves a novel legal question, attorney fees should not be granted under I.C. § 12-121."). Howev......
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