Cda Dairy Queen, Inc. v. State Ins. Fund

• Decision Date: 23 January 2013
• Docket Number: No. 38492.,38492.
• Citation: 299 P.3d 186,154 Idaho 379
• Court: Idaho Supreme Court
• Parties: CDA DAIRY QUEEN, INC., and Discovery Care Centre, LLC Of Salmon, Plaintiffs–Appellants, v. STATE INSURANCE FUND, James M. Alcorn, in his official capacity as its manager, and William Deal, Wayne Meyer, Gerald Geddes, John Goedde, Elaine Martin, Mark Snodgrass, Rodney A. Higgins, Terry Gestrin, and Max Black, and Steve Landon, in their capacity as members of the Board of Directors of the State Insurance Fund, Defendants–Respondents.

154 Idaho 379

299 P.3d 186

CDA DAIRY QUEEN, INC., and Discovery Care Centre, LLC Of Salmon, Plaintiffs–Appellants,

v.STATE INSURANCE FUND, James M. Alcorn, in his official capacity as its manager, and William Deal, Wayne Meyer, Gerald Geddes, John Goedde, Elaine Martin, Mark Snodgrass, Rodney A. Higgins, Terry Gestrin, and Max Black, and Steve Landon, in their capacity as members of the Board of Directors of the State Insurance Fund, Defendants–Respondents.

No. 38492.

Supreme Court of Idaho, Boise, August 2012 Term.

Jan. 23, 2013.

As Modified on Denial of Rehearing April 9, 2013.

Lojek Law Offices, Chtd., Boise, and Gordon Law Offices, Chtd., Boise, for appellants. Bruce Bistline and Donald Lojek argued.

Duke Scanlan & Hall, PLLC, Boise, for respondents. Keely Duke argued.

HORTON, Justice.

CDA Dairy Queen, Inc. and Discovery Care Centre, LLC of Salmon (collectively, Dairy Queen) filed a class action against the Idaho State Insurance Fund (SIF) seeking a declaratory judgment that SIF violated Idaho Code § 72–915 by failing to distribute premium rate readjustments on a pro rata basis. The district court granted SIF's motion for summary judgment, finding that the Idaho Legislature's retroactive repeal of Idaho Code § 72–915 was constitutional and that Dairy Queen's action was thereby barred. Dairy Queen timely appeals and argues that the retroactive repeal violates article I, § 16 of the Idaho Constitution. Dairy Queen asks this Court to reverse the decision of the district court and remand for further proceedings consistent with the determination that the retroactive repeal is unconstitutional. We reverse.

I. FACTUAL AND PROCEDURAL BACKGROUND

In Farber v. Idaho State Insurance Fund, 147 Idaho 307, 311, 208 P.3d 289, 293 (2009) (Farber I ), this Court held that Idaho Code § 72–915 required SIF to distribute any refund of its policyholders' premiums on a pro rata basis, considering each policyholder's proportion of total premiums paid. In response, the Legislature repealed Idaho Code § 72–915 retroactively to January 1, 2003. The repeal provided that its purpose was to address the Farber decision and maintain the continued viability of SIF as an efficient insurance provider. The repeal legislation was signed on May 6, 2009, and the Farber I decision became final on May 27, 2009.

Dairy Queen filed a class action complaint against SIF, seeking declaratory relief and damages. Dairy Queen then moved for partial summary judgment on the grounds that, if applied retroactively, the repeal violates article I, § 16 of the Idaho Constitution. SIF also filed a motion for summary judgment on the ground that the retroactive repeal does not violate the constitution of either Idaho or the United States. The district court denied Dairy Queen's motion and granted SIF's motion. A judgment dismissing Dairy Queen's claims with prejudice was entered on January 4, 2011.

II. STANDARD OF REVIEW

"Both constitutional questions and questions of statutory interpretation are questions of law over which this Court exercises free review." Stuart v. State, 149 Idaho 35, 40, 232 P.3d 813, 818 (2010) (citing Federated Publ'ns, Inc. v. Idaho Bus. Rev., Inc., 146 Idaho 207, 210, 192 P.3d 1031, 1034 (2008) ). "The party challenging a statute or ordinance on constitutional grounds bears the burden of establishing that the statute or ordinance is unconstitutional and must overcome a strong presumption of validity." State v. Korn, 148 Idaho 413, 416, 224 P.3d 480, 483 (2009) (citing State v. Reyes, 146 Idaho 778, 203 P.3d 708 (Ct.App.2009) ). "The judicial power to declare legislative action unconstitutional should be exercised only in clear cases." Am. Falls Reservoir Dist. No. 2 v. Idaho Dep't Water Res., 143 Idaho 862, 869, 154 P.3d 433, 440 (2007) (citation omitted).

III. ANALYSIS

As a preliminary matter, we note that SIF argues that this Court should affirm the district court's finding that the retroactive repeal of Idaho Code § 72–915 does not violate article I, § 10 of the United States Constitution. While neither party raised this as an issue on appeal, Dairy Queen appeals from both the district court's judgment in favor of SIF and from its order denying Dairy Queen's motion for summary judgment. In that order, the district court found the retroactive repeal constitutional under both the state and federal constitutions. Thus, it appears that SIF requests this relief to prevent Dairy Queen from raising the issue in a subsequent appeal on federal grounds. Although the district court's conclusion regarding the federal constitution is inconsistent with our holding today, we will not address this issue. Under the Idaho Appellate Rules, "an appellant's failure to include in his initial appellate brief a fair statement of an issue presented for review results in waiver of the issue." Weisel v. Beaver Springs Owners Ass'n, Inc., 152 Idaho 519, 525, 272 P.3d 491, 497 (2012) ; Rule 35(a)(4). Because Dairy Queen did not address this issue in its opening brief, the issue is waived.

A. This Court will apply federal contract clause principles when determining whether a statute violates article I, § 16 of the Idaho Constitution.

Dairy Queen argues that the retroactive repeal of Idaho Code § 72–915 to January 1, 2003, violates article I, § 16 of the Idaho Constitution because it impairs valid contracts that existed at the time the repeal was enacted. SIF responds that the retroactivity does not violate the Idaho Constitution because, even if some contract rights were affected, there was no substantial impairment of any right. However, before we can make this determination, the threshold question of whether the federal contracts clause analysis applies must be decided.

SIF contends that the analytical framework federal courts use when deciding federal contracts clause cases is applicable in Idaho courts to determine whether a legislative act violates the contracts clause of the Idaho Constitution. Dairy Queen argues that the federal methodology is not relevant in challenges based upon the state constitution because Idaho precedent demonstrates that the Idaho Constitution provides greater protection than the United States Constitution. We hold that Idaho courts should apply federal analytical principles when deciding challenges under article I, § 16 of the Idaho Constitution because the state constitution is not more protective of contracts than the federal constitution.

1. This Court follows federal precedent and uses federal methodology when analyzing state constitutional issues unless the Idaho Constitution clearly provides greater protection than the United States Constitution.

Generally, the federal framework is appropriate for analysis of state constitutional questions unless the state constitution, the unique nature of the state, or Idaho precedent clearly indicates that a different analysis applies. We explained the policy basis for this Court's preference for consistent interpretations of the state and federal constitutions in State v. Donato:

Although the United States Supreme Court establishes no more than the floor of constitutional protection, this Court has found there is "merit in having the same rule of law applicable within the borders of our state, whether an interpretation of the Fourth Amendment or its counterpart— Article I, § 17 of the Idaho Constitution—is involved. Such consistency makes sense to the police and the public."

135 Idaho 469, 471, 20 P.3d 5, 7 (2001) (quoting State v. Charpentier, 131 Idaho 649, 653, 962 P.2d 1033, 1037 (1998) ). Thus, this Court will consider federal rules and methodology when interpreting parts of the Idaho Constitution that have an analogous federal provision.

However, it is clear that the state constitution sometimes provides greater protection than the federal constitution. In those cases, this Court does not "blindly apply United States Supreme Court interpretation and methodology" when interpreting the state constitution. State v. Newman, 108 Idaho 5, 11 n. 6, 696 P.2d 856, 862 n. 6 (1985) (citing Oregon v. Hass, 420 U.S. 714, 719, 95 S.Ct. 1215, 1219, 43 L.Ed.2d 570, 575–76 (1975) ), holding modified by State v. Bitt, 118 Idaho 584, 798 P.2d 43 (1990). For example, in Donato, the defendant admitted that the State's search of trash he placed on the curb for collection was valid under federal interpretation of the Fourth Amendment, but argued that the search violated the prohibition against unreasonable searches and seizures found in article I, § 17 of the Idaho Constitution because the state constitution provides greater protection against searches. 135 Idaho at 470–71, 20 P.3d at 6–7. In its analysis, this Court recognized that article I, § 17 of the Idaho Constitution "in some instances, provides greater protection than the parallel provision in the Fourth Amendment of the U.S. Constitution."

Id. at 472, 20 P.3d at 8 (citations omitted). However, we then limited the circumstances in which we would find this kind of greater protection. In examining the cases where this Court had found greater protection in article I, § 17, we explained that "in these cases, we provided greater protection to Idaho citizens based on the uniqueness of our state, our Constitution, and our long-standing jurisprudence." Id. The Court found that those factors did not apply in the context of searches of trash placed out in public, and adopted the federal rule as the proper interpretation of article I, § 17. Id. at 474, 20 P.3d at 10. Therefore, when interpreting the Idaho Constitution, this Court will use federal rules and methodology unless clear precedent or circumstances unique to the state of Idaho or its constitution indicates that Idaho's constitution provides greater protection than the analogous federal provision.

2. Idaho's contracts clause does not provide greater protection than the contracts clause in the United States Constitution.

There is no clear evidence that article I, § 16 of the Idaho Constitution provides greater...