Silver Creek Computers, Inc. v. Petra, Inc.

Decision Date22 February 2002
Docket NumberNo. 26848.,26848.
Citation42 P.3d 672,136 Idaho 879
PartiesSILVER CREEK COMPUTERS, INC., an Idaho corporation, Plaintiff-Appellant, v. PETRA, INC., an Idaho corporation; and Sundance Investments Limited Partnership, an Idaho limited partnership, Defendants-Respondents.
CourtIdaho Supreme Court

Hawley, Troxell, Ennis & Hawley, Boise, for appellant. Steven F. Schossberger argued.

Saetrum Law Offices, Boise, for respondent Petra, Inc. Karyn Whychell argued.

Lynch & Associates, Boise, for respondent Sundance Investments Limited Partnership. Katherine M. Lynch argued.

EISMANN, Justice.

This is an appeal from a judgment entered in favor of the defendants following a jury trial. We uphold the district court's denial six weeks before trial of the plaintiff's motion to file an amended complaint adding additional causes of action against the defendant Petra, Inc., but we reverse the judgment in favor of the defendant Sundance Investments Limited Partnership because the district court erroneously instructed the jury regarding the plaintiff's claim based upon Idaho Code § 6-320.

I. FACTS AND PROCEDURAL HISTORY

On May 9, 1997, Silver Creek Computers, Inc., (Silver Creek) leased approximately 10,-165 square feet of business space from Sundance Investments Limited Partnership (Sundance Investments) in its Blackeagle Business Center. Silver Creek conducted a computer business in its leased premises, including sales, repairs, technical support, and education.

On August 7, 1997, Sundance leased the space adjacent to Silver Creek to a dental supply business and agreed to make various improvements to prepare that space for occupancy. Sundance Investments had contracted with Petra, Inc., (Petra) to serve as construction manager for the business center. As part of its duties as construction manager, Petra made the majority of the tenant improvements to prepare spaces for occupancy, including routinely applying a concrete sealant. On Sunday, December 14, 1997, Petra applied a sealant to the concrete floor in that portion of the space that the dental center intended to use as a shipping and receiving area. The following Monday, Silver Creek employees could smell an offensive odor in their workspace, and one employee telephoned Sundance Investments to complain. Later that day, a Sundance Investments employee walked through Silver Creek's space and then contacted Petra and told it to do whatever was necessary to solve the problem. That night, Petra applied more sealant to a 25 square foot section of concrete floor that had been damaged by rain when an overhead door was left open overnight to aid in ventilating the space.

On Tuesday, December 16, 1997, the owners of Silver Creek went to the Sundance Investments office to complain. A Sundance Investment representative again walked through the Silver Creek space, detected an odor, and then again told Petra to take whatever steps were necessary to resolve the problem. Petra then placed fans throughout the Silver Creek space in an attempt to remove the fumes, and it reset the heating system to bring in 100% fresh air.

On December 16, 1997, an employee of Silver Creek also contacted the Occupational Safety and Health Administration (OSHA), and it reacted by faxing a letter to Silver Creek informing it of the complaint and requiring proof of correction. Silver Creek hand delivered the OSHA letter to Sundance Investments the same day.

On December 18, 1997, Silver Creek had an industrial hygienist perform an air quality check in its space. He took air samples at six sites within the Silver Creek premises and sent them to a laboratory for analysis. On December 23, 1997, he issued a report in which he stated that ten volatile chemicals had been identified in the air samples and that all of them could cause eye and respiratory irritation, narcosis, gastro-intestinal disturbances, and headaches. In his report, he concluded that as of Thursday, December 18, 1997, the concentrations of air contaminants present in the Silver Creek space had decreased to acceptable levels and that it was safe for human occupancy.

On Tuesday, many of the Silver Creek employees left work because of the odor and symptoms such as coughing, burning eyes, and headaches caused by the fumes. The majority of the employees refused to return to work during the remainder of that week. Slightly over two years later on January 19, 1999, Silver Creek commenced this action seeking to recover damages for lost profits due to the sealant fumes.

Silver Creek initially named as defendants Petra and Sundance Company, a property management company which manages various properties on behalf of Sundance Investments. In Count One of its complaint, Silver Creek alleged a claim for negligence against Petra. In Count Two, it alleged that Petra was the agent of Sundance Company and that Sundance Company was therefore liable for Petra's negligence. In Count Three, it alleged that Sundance Company breached the implied warranty of habitability provided by Idaho Code § 6-320. In Count Four, it alleged that Sundance Company breached an indemnity clause in its lease with Silver Creek. On March 12, 1999, Silver Creek filed an amended complaint adding Sundance Investments as a defendant.

Sundance Company and Sundance Investments moved for summary judgment. At the hearing on that motion, Silver Creek stipulated to dismiss Sundance Company as a defendant and to dismiss Count Two, which alleged that Sundance Investments was liable for the negligence of Petra. The district court granted summary judgment dismissing Count Four of the amended complaint.

On June 8, 2000, Silver Creek moved to file a second amended complaint seeking to add a claim for breach of the covenant of quiet enjoyment against Sundance Investments and to add claims for trespass and nuisance against Petra. That motion was heard on June 22, 2000. The district court denied the motion on the grounds that it was untimely under the scheduling order and that granting it would be prejudicial to the defendants because trial was only six weeks away.

The negligence action against Petra and the statutory warranty of habitability action against Sundance Investments were tried to a jury commencing on July 31, 2000. On August 7, 2000, the jury returned a special verdict finding in favor of both the defendants. The district court then entered judgment in favor of the defendants, and Silver Creek appealed.

II. ANALYSIS
A. Did the district court err in denying Silver Creek's motion to file a second amended complaint?

Rule 15(a) of the Idaho Rules of Civil Procedure provides that leave to amend a pleading "shall be freely given when justice so requires." A trial court's decision to deny a motion to amend a pleading is reviewed by this Court under an abuse of discretion standard. Baxter v. Craney, 135 Idaho 166, 16 P.3d 263 (2000). In determining whether the trial court abused its discretion, this Court applies a three-factor test. Id. Those three factors are: (1) whether the trial court correctly perceived the issue as one of discretion; (2) whether the trial court acted within the boundaries of this discretion and consistent 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. In this case, the district court correctly perceived the issue as one of discretion. The court denied Silver Creek's motion to file a second amended complaint on the grounds that it was untimely under the scheduling order and would be prejudicial to the defendants.

Silver Creek filed this action on January 19, 1999. On April 29, 1999, the district court issued a scheduling order which, among other things, provided that all motions to amend the pleadings must be filed no later than December 31, 1999; that all discovery must be completed by May 31, 2000; and that the trial would commence on July 31, 2000. Silver Creek filed its motion to file a second amended complaint on June 8, 2000, over five months after the deadline set in the scheduling order. Silver Creek did not contend that it had good cause for failing to file its motion within the time period set in the scheduling order. The motion was not based upon newly discovered evidence. It was simply based upon counsel deciding to add additional causes of action based upon the facts known before this action was commenced.

Silver Creek argues that the defendants would not have been prejudiced because they could have defended the proposed new causes of action without conducting additional discovery. The motion hearing was held six weeks before trial. Granting the amendment would have required the defendants to research the new causes of action and to alter their trial strategies, and it would have disrupted their trial preparation. We hold that the district court did not abuse its discretion in denying Silver Creek's motion to file a second amended complaint.

B. Did the district court err in instructing the jury that Silver Creek had to prove negligence in order to recover on the implied warranty of habitability under Idaho Code § 6-320?

Silver Creek based its claim against Sundance Investments upon Idaho Code § 6-320, a statutory version of the implied warranty of habitability. Worden v. Ordway, 105 Idaho 719, 672 P.2d 1049 (1983). The statute provides insofar as is relevant:

(a) A tenant may file an action against a landlord for damages and specific performance for:
(1) Failure to provide reasonable waterproofing and weather protection of the premises;
(2) Failure to maintain in good working order electrical, plumbing, heating, ventilating, cooling, or sanitary facilities supplied by the landlord;
(3) Maintaining the premises in a manner hazardous to the health or safety of the tenant;
(4) Failure to return a security deposit as and when required by law;
(5) Breach of any term or provision of the lease or rental agreement materially
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