Merrill v. Gibson

• Decision Date: 27 February 2004
• Docket Number: No. 28542.,28542.
• Citation: 87 P.3d 949,139 Idaho 840
• Parties: Orson MERRILL and Lydia Merrill, husband and wife, Plaintiffs-Counterdefendants-Respondents-Cross Appellants, v. David GIBSON, an individual, and All Unknown Individuals who may claim any interest in the real property which is the subject of these proceedings, individually, jointly and severally, Defendants-Counterclaimants-Appellants-Cross Respondents.
• Court: Idaho Supreme Court

87 P.3d 949

139 Idaho 840

Orson MERRILL and Lydia Merrill, husband and wife, Plaintiffs-Counterdefendants-Respondents-Cross Appellants, v. David GIBSON, an individual, and All Unknown Individuals who may claim any interest in the real property which is the subject of these proceedings, individually, jointly and severally, Defendants-Counterclaimants-Appellants-Cross Respondents.

No. 28542.

Supreme Court of Idaho, Boise, December 2003 Term.

February 27, 2004.

Rehearing Denied April 12, 2004.

Vernon K. Smith, Jr., Boise, argued for appellants.

Thomas G. Maile, IV, Eagle, argued for respondents.

TROUT, Chief Justice.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 1991, David Gibson (Gibson) looked to relocate his tree and shrub nursery and negotiated to buy twenty acres south of Boise, Idaho (Twenty Acres). Gibson took possession of the Twenty Acres in June 1991, but did not enter into a purchase agreement until September 3, 1991. After taking possession, Gibson moved large amounts of compost onto the land to recondition the soil and also stored other items on the property.

Gibson informed his friend Orson Merrill he intended to purchase the Twenty Acres and, according to Gibson, Orson offered to loan Gibson $19,000 to finance the purchase. Further, Gibson asserts Orson agreed the interest on the loan would be the same rate received on funds he had in certificates of deposit.

Gibson claims he took a $5,000 check issued from his family trust to the November 7, 1991, closing and instructed the closing agent to issue the warranty deed to Orson and Lydia Merrill (the Merrills) so they could hold the deed as security for the $19,000 loan. Gibson asserts that in addition to providing the Merrills security for the loan, he wanted to protect the property as Gibson was involved in a dispute with the IRS.

On October 29, 1991, Ada County sought a permanent injunction against Gibson, alleging his activities on the Twenty Acres violated a county zoning ordinance prohibiting junkyards. Ada County v. Gibson, 126 Idaho 854, 893 P.2d 801 (1995). After the November 7th closing, the Merrills and Gibson met with Ada County officials to find a way to exclude the Merrills from the injunction action. To resolve the issue, the Merrills executed an option contract giving Gibson a lease and the option to purchase the Twenty Acres on or before January 1, 1997. Gibson asserts the option contract only served to exclude the Merrills from the lawsuit and allowed the warranty deed to remain as security for the $19,000 loan. Gibson also points out he gave no consideration and never exercised the option.

According to Gibson, between 1991 and 2000, he improved the Twenty Acres by adding a fence, building a road, and contracting for a well and a pump. In addition, Gibson claims he advanced or reimbursed the Merrills in cash the equivalent of any tax assessment the Merrills paid. It is undisputed Gibson remained in possession of the Twenty Acres during this period and that he paid property taxes on the Twenty Acres on August 25, 2000, and made a pre-payment of property taxes on September 13, 2000. Also, Gibson filed a notice of ownership with Ada County on September 28, 2000. In 1999, the Merrills discovered the property taxes on the Twenty Acres would increase. Lydia Merrill and her son realized they needed to generate income from the property and approached Gibson with a written offer to either purchase the property or continue to lease it at a monthly rate. According to the written offer, Lydia asked for $79,500, less than the appraised value. Gibson refused, but offered to repay the $19,000. Lydia refused.

On February 20, 2001, the Merrills filed a quiet title action in conjunction with a motion for a declaratory judgment in the trial court which was heard initially by Judge Williamson. The Merrills argued they owned the Twenty Acres and Gibson's interest was that of a tenant. The Merrills offered title insurance records, the warranty deed, closing instructions, and a cashier's check as evidence of ownership. The Merrills also asserted Gibson had not paid rent after December 1994, but conceded they did not request any because the land increased in value due to Gibson's improvements.

Gibson answered the complaint May 10, 2001, arguing he purchased the property September 3, 1991, and gave the Merrills the deed as security for the $19,000 loan which Orson Merrill intended to transfer back to Gibson. Gibson also claimed the Merrills could not enforce their security interest due to the running of adverse possession statutes. While this action was pending, the trial court recognized Orson Merrill as incompetent and appointed Lydia guardian ad litum.¹ The Merrills then filed a motion for summary judgment and Gibson filed an answer, counterclaim, and claim for damages September 14, 2001.

Judge Williamson denied the Merrills' summary judgment motion, except as to the issues of the validity and enforceability of the option contract and issues of adverse possession. Judge Williamson ruled the option contract void because it had expired and ruled that Gibson's adverse possession claim had no merit because Gibson did not file the notice of ownership until September 2000, and it is not until this date that the five year statutory period for adverse possession began to run. Judge Williamson scheduled trial to commence on the remaining issues March 25, 2002.

On March 21, 2002, Gibson was informed orally that retired Senior Judge D. Duff McKee would hear the case. Gibson claims he immediately inquired as to whether an official assignment of record existed and discovered there was no certified order of assignment. Gibson filed a motion to disqualify Judge McKee March 22, 2002, pursuant to I.R.C.P. 40(d)(1), claiming the Idaho Supreme Court did not appoint Judge McKee, Judge Williamson had not been disqualified, and Gibson had not received any written notice of the appointment. Several days after the trial had concluded, Vice Chief Justice Gerald Schroeder entered an order nunc pro tunc assigning Judge McKee to this case.

Trial commenced March 25, 2002, and Judge McKee denied Gibson's disqualification motion, ruling that I.R.C.P. 40(d)(1) was inapplicable to senior judges. After the trial, Judge McKee issued his judgment quieting title in the Merrills and ordering Gibson to pay costs. The Merrills then filed a motion for attorney fees under I.C. §§ 12-120(3) and 12-121, which Judge McKee denied. Gibson filed a timely notice of appeal from the judgment quieting title and the Merrills then cross-appealed the denial of attorney fees.

II. STANDARD OF REVIEW

This Court reviews the denial of an I.R.C.P. 40(d)(1) motion to disqualify and the award of attorney fees for an abuse of discretion, and the burden is on the person asserting error to show an abuse of discretion. Anderson v. Ethington, 103 Idaho 658, 651 P.2d 923 (1982). To determine whether the trial court abused its discretion, this Court considers: (1) whether the trial court correctly perceived the issue as one of discretion; (2) whether the trial 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 the trial court reached its decision by an exercise of reason. Sun Valley Shopping Ctr. v. Idaho Power Co., 119 Idaho 87, 94, 803 P.2d 993, 1000 (1991).

This Court will only set aside a trial court's findings of fact if they are clearly erroneous. I.R.C.P. 52(a); McCray v. Rosenkrance, 135 Idaho 509, 513, 20 P.3d 693, 697 (2001). Evidence is substantial and competent if a reasonable trier of fact would accept it and rely on it. Id. Findings based on substantial, competent evidence, although conflicting, will not be disturbed on appeal. Bolger v. Lance, 137 Idaho 792, 53 P.3d 1211 (2002). This Court exercises free review over the trial court's conclusions of law. Conley v. Whittlesey, 133 Idaho 265, 269, 985 P.2d 1127, 1131 (1999).

III. DISCUSSION

A. The trial court did not err in denying Gibson's I.R.C.P. 40(d)(1) motion to disqualify.

Before the trial commenced, Judge McKee denied Gibson's I.R.C.P. 40(d)(1) disqualification motion because it was untimely and the rule did not apply to senior judges.

According to the version of I.R.C.P. 40(d)(1) in effect at the time of this case, "the right to disqualification without cause shall not apply to ... (iv) Senior judges assigned pursuant to I.C. § 1-2005." A senior judge is a judge "who leaves office or retires from ... a trial court" and "may be designated a senior judge ... by the supreme court." I.C. § 1-2005(1). A senior judge "is eligible for temporary assignment by the supreme court to a state court ... whenever the supreme court determines that the assignment is reasonably necessary." I.C. § 1-2005(2). The assignment "shall be made by an order which shall designate the court ... to which the judge is assigned and the duration of the assignment. Promptly after assignment ... the supreme court shall cause a certified copy of the order to be sent to the senior judge and another certified copy to the court...." I.C. § 1-2005(3).

Gibson argues the assignment is inconsistent with Article V, § 12, of the Idaho Constitution, which provides "any retired district judge, may hold a district court in any county at the request of the judge of the district court thereof, and upon the request of ... the chief justice...." Gibson argues that because the Chief Justice of the Idaho Supreme Court did not appoint Judge McKee, then the assignment is unconstitutional. Gibson misreads this provision of the constitution because it clearly states that a district judge may ask a retired district judge to sit, which is the case here. Moreover, an assignment order was signed by the Vice Chief Justice of the Court.

There is no dispute Judge McKee is a senior judge appointed pursuant to I.C. § 1-2005(3), but Gibson argues that the statute is...