Cox v. Mountain Vistas, Inc.

• Decision Date: 31 December 1981
• Docket Number: No. 13326,13326
• Citation: 639 P.2d 12,102 Idaho 714
• Parties: Don E. COX, Plaintiff-Appellant, v. MOUNTAIN VISTAS, INC., an Idaho Corporation, and George C. Crandlemire, Defendants-Respondents.
• Court: Idaho Supreme Court

Page 12

639 P.2d 12

102 Idaho 714

Don E. COX, Plaintiff-Appellant, v. MOUNTAIN VISTAS, INC., an Idaho Corporation, and George C. Crandlemire, Defendants-Respondents.

No. 13326.

Supreme Court of Idaho.

Dec. 31, 1981.

John F. Varin of James, Hobdey & Varin, Fairfield, for plaintiff-appellant.

Bert Larson of Larson, McIntyre & Coleman, Twin Falls, for defendants-respondents.

McFADDEN, Justice.

The instant appeal involves an action to rescind a contract for the purchase of real property located in Camas County, Idaho. Plaintiff-appellant, Don E. Cox, sought rescission of the contract on grounds of fraudulent misrepresentation. Defendants-respondents Mountain Vistas, Inc. and George C. Crandlemire, answered, denying the claims of Mr. Cox and subsequently filed a counterclaim shortly before trial, alleging that Mr. Cox had failed to make the required payments under the terms of the contract and sought judgment for the balance due of $12,500, plus interest, costs and attorney fees. The district court dismissed with prejudice Mr. Cox's complaint and entered judgment on the counterclaim of Mountain Vistas, Inc. and Mr. Crandlemire for the balance due, plus interest and costs. We affirm.

The record discloses the following facts pertinent to this appeal.

In early December 1972, George Crandlemire, president of Mountain Vistas, Inc., approached Don Cox about a real estate project Mountain Vistas was developing in Camas County, Idaho, i.e., the Smoky Dome Ranchos Subdivision. Mr. Crandlemire explained to Mr. Cox that Mountain Vista ¹ was developing a 160 acre tract of unimproved agricultural land ² into subdivision of sixteen ten acre lots, with each lot deeded and to be accessible by a common roadway and provided with underground utility service. During the discussion Mr. Cox was shown a plat of the subdivision and informed that it had been approved by and recorded with the appropriate governmental bodies. ³ Mr. Cox expressed interest in the development, and entered into negotiations that same day for the purchase of two lots, numbers 5 and 9. The parties agreed to enter into separate installment land sales contracts for each lot, the terms of the contracts being identical except that one would be for lot 5 and the other for lot 9.

During 1973, Mountain Vistas sent Mr. Cox letters and newspaper clippings extolling the "Phenomenal Development in Unspoiled Camas County." In early September 1973 Mr. Cox first saw the property. At that time, no observable development work had been undertaken. He contacted the Camas County Recorder's office and learned that no plat for the property had been recorded. He resolved to confront Mr. Crandlemire about the lack of progress in developing the subdivision.

Mr. Cox met with Mr. Crandlemire in December 1973 and they discussed the project, including Mr. Cox's concern over the lack of development. Mr. Cox was reassured that development was forthcoming, and that Mr. Crandlemire was "hopeful" of putting in the common roadway and utility service hookups in the summer of 1974. Mr. Cox was also informed that a final plat of the subdivision had been recorded with the Camas County Recorder on September 12, 1973, which the record shows was true. Based upon Mr. Crandlemire's assurances, Mr. Cox paid the next installment on the land sales contract plus prepaid interest for 1974.

Mr. Cox visited the subdivision in August 1974 with his family. He noticed no new work had been undertaken on the property. Shortly thereafter he notified Mr. Crandlemire that he considered the contract to be rescinded. Mr. Cox made no further payments on the contract.

After demand letters failed to effect a return of his payments, on March 10, 1975, Mr. Cox filed a suit for rescission of the contract. An answer was subsequently filed on behalf of the defendants by their first attorney. However, this attorney later withdrew on March 29, 1976, and another attorney was then retained by the defendants. A year later this attorney also withdrew. The matter was finally set for trial on August 22, 1978.

Shortly before the date set for trial, the defendants retained Mr. Larsen, their present attorney, to represent them. After reviewing the files and records in the matter, defendants' new attorney concluded that it would be necessary to file an amended answer and counterclaim. Upon defendants' motion, the trial date of August 22, 1978 was vacated and the court allowed the defendants leave to file an amended answer and the counterclaim.

The matter was tried on October 24, 1978. Subsequently, the district court issued a memorandum opinion, concluding that Mr. Cox's claim for relief was without merit, and that defendants Mr. Crandlemire and Mountain Vistas, Inc., were entitled to judgment on their counterclaim. Findings of fact and conclusions of law were thereafter made by the district court, and judgment accordingly entered. Plaintiff then perfected this appeal.

Appellant presents numerous issues on appeal, with primary emphasis being placed on several alleged decisional errors made by the district court in its memorandum opinion and subsequent findings of fact and conclusions of law, and secondary emphasis being placed on rulings made by the district court at the pretrial and trial stages of the instant case. This opinion will be subdivided according to the stages of the proceedings in which the challenged rulings and decisional errors were made by the district court.

PRE-TRIAL PROCEEDINGS: PROPRIETY OF VACATING TRIAL DATE OF AUGUST 22, 1978, AND ALLOWING AMENDED PLEADINGS.

In the proceedings below, respondents requested leave to amend their answer and set up a counterclaim over three years after the filing of the original answer. The request contained no allegations of oversight, inadvertance or excusable neglect. Appellant, relying principally on I.R.C.P. 13(f) argues that the failure to allege any of these grounds bars the respondents from seeking leave to amend their answer and set up a counterclaim. We disagree.

I.R.C.P. 13(f) provides:

"When a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, he may by leave of court set up the counterclaim by amendment." (Emphasis added.)

Thus, besides situations of oversight, inadvertence, or excusable neglect, a pleader may also seek leave of the court to amend an answer and set up a counterclaim "when justice requires" the amendment be allowed.

Furthermore, Moore, in his treatise, Moore's Federal Practice, § 13.13, at 13-846 (2d ed. 1980), states the purpose behind the identical federal rule as follows:

"Subdivision (f) will find its most useful application in the case of compulsory counterclaims. Inasmuch as a party could later be met successfully with a plea of res judicata in a suit on a claim within subdivision (a) which he had failed to plead, the courts should be very liberal in allowing amendments to include compulsory counterclaims, and even permissive counterclaims where no prejudice would result, where the pleader has not been guilty of inexcusable neglect, or has not by reprehensible conduct deprived himself of any claim to special consideration by the court."

Consonant with the above statement concerning Rule 13(f), are this court's repeated statements that "great liberality should be exercised in permitting amendments to pleadings in furtherance of justice between the parties." (Markstaller v. Markstaller, 80 Idaho 129, 134, 326 P.2d 994 (1958); cited with approval in Smith v. City of Preston, 99 Idaho 618, 620, 586 P.2d 1062 (1978) ), and that this matter is entrusted to the sound discretion of the trial court (Jones v. Watson, 98 Idaho 606, 570 P.2d 284 (1977); Fajen v. Powlus, 98 Idaho 246, 561 P.2d 388 (1977); Cady v. Keller, 28 Idaho 368, 154 P. 629 (1916) ).

In the instant case, the recently retained counsel for respondents sought leave to set up a counterclaim through an amended answer four days prior to the scheduled trial date. The motion for leave to amend was accompanied by an affidavit of the respondents' counsel detailing the factual circumstances surrounding the delay in seeking leave to amend, concluding that "justice may not be accomplished" without leave to amend. The pertinent language from that affidavit is as follows:

"1. Affiant is a duly licensed and qualified practicing attorney in the State of Idaho.

2. On or about July 25, 1978, a friend of defendant, George Crandlemire, contacted affiant's office, in affiant's absence, and inquired as to whether or not the firm with which affiant is associated would undertake the representation of defendants.

3. Shortly after July 25, 1978, after reviewing certain papers left with affiant, affiant advised George Crandlemire to attempt to work out a compromise of the case with plaintiff's counsel, but those negotiations were unsuccessful.

4. On August 14, 1978, George Crandlemire contacted affiant's office by telephone, advised affiant of the inability to compromise the case and urged affiant to represent him in the case which had been set for trial before the court in Camas County to begin on Tuesday, August 22, 1978.

5. Affiant again reviewed the files and records left with affiant's office by George Crandlemire and concluded it would be necessary to accomplish justice to file an Amended Answer and Counter-claim in the above-entitled action."

Additionally, a review of the proposed amended answer and counterclaim attached to the motion for leave to amend reveals that in no wise would it enlarge the issues already presented or precipitate the need for extended discovery.

In allowing the amended answer to be filed, the trial court impliedly ruled that no prejudice would result given the limited subject matter of the counterclaim so set up nor was there any reprehensible conduct on the part of the respondents given the factors underlying the delay in setting up the counterclaim. Under these circumstances, and the...