Zehm v. Associated Logging Contractors, Inc.

• Decision Date: 20 July 1988
• Docket Number: No. 17099,17099
• Citation: 775 P.2d 1191,116 Idaho 349
• Parties: Harley H. ZEHM and Dorothy L. Zehm, Plaintiffs-Appellants, v. ASSOCIATED LOGGING CONTRACTORS, INC., Defendant-Respondent, and California-Western States Life Insurance Company; Financial Marketing Services, Inc.; Does One through Ten, Defendants.
• Court: Idaho Supreme Court

Page 1191

775 P.2d 1191

116 Idaho 349

Harley H. ZEHM and Dorothy L. Zehm, Plaintiffs-Appellants, v. ASSOCIATED LOGGING CONTRACTORS, INC., Defendant-Respondent and California-Western States Life Insurance Company; Financial Marketing Services, Inc.; Does One through Ten, Defendants.

No. 17099.

Supreme Court of Idaho.

July 20, 1988.

On Rehearing June 13, 1989.

Scott F. Maricle, Sandpoint, for plaintiffs-appellants.

Connolly & Smyser, Ctd., Boise, for defendant-respondent. Charles A. Smyser (argued).

SHEPARD, Chief Justice.

This is an appeal by plaintiffs-appellants Zehm from a summary judgment entered in favor of defendant-respondent Associated Logging Contractors, Inc. in an action in which the Zehms sought damages for loss of group medical insurance benefits allegedly resulting from a change of insurance carriers. We affirm.

Associated Logging Contractors is a non-profit association composed of logging contractors and others in associated occupations. It acts as an information source for its members, lobbies for legislation beneficial to the logging industry, and provides its members with representation at federal and state administrative hearings. As a service to its members, Associated Logging provided in the past an optional group health insurance plan which at various times was administered by three different insurance carriers. As a result of increased costs to its members, Associated Logging terminated all such insurance in 1984.

Although not associated with the logging industry, the Zehm's daughter was an employee of Associated Logging, and the Zehms became members or associate members for the purpose of obtaining the group health insurance coverage then existing under the Great West plan. In August, 1983, Associated Logging decided to change insurance carriers, and in December, 1983, the new carrier, Cal-West, notified the Zehms that they had been denied group coverage due to their medical history. The Zehms were informed by Great-West that they could convert their group plan to an individual policy, but the Zehms did not so convert their plan because of the cost. Rather, the Zehms purchased health insurance coverage from Continental Insurance, but that policy ultimately lapsed due to failure to make premium payments.

At the trial court, and on this appeal, it is asserted that Associated Logging breached a fiduciary duty to the Zehms in failing to provide the members of Associated Logging with an insurance plan comparable to the then existing plan, by failing to adequately advise its membership of the change in carriers and coverage, and that such change in insurance carrier was motivated by Associated Logging's financial consideration and self-interest. The trial court expressed its doubt that any fiduciary relationship existed, however proceeded to assume arguendo that such a relationship did exist. For the purposes of this case only we make the same assumption.

Associated Logging, in affidavits in support of summary judgment, asserts that the change in insurance carriers was motivated solely by financial considerations to its members, and that it had no interest, financial or otherwise, in the change in carriers. Zehms, in their deposition or affidavit testimony, make no assertion to the contrary. The Zehms in their pleadings originally assert that oral representations were made by Associated Logging that the Zehms would be continued in the new insurance coverage and not excluded for preexisting medical conditions. The Zehms in their deposition testimony deny any such oral representations. It is undisputed that the Zehms received written notice of the change of insurance carriers. Two such notices were admittedly received, the earlier of which indicated members would not be excluded from the new coverage because of preexisting conditions, and the second of which indicated that members could be excluded because of previous medical conditions. The trial court correctly noted that the deposition testimony of the Zehms indicated that although they had received the notices, they had not read nor relied upon them. Hence, if any duty existed to notify the Zehms, and that duty was breached by inadequate or ambiguous notice, no causal connection existed since the Zehms did not read or rely upon any such notices.

It is axiomatic that upon a motion for summary judgment the non-moving party may not rely upon its pleadings, but must come forward with evidence by way of affidavit or otherwise which contradicts the evidence submitted by the moving party, and which establishes the existence of a material issue of disputed fact. Worthen v. State, 96 Idaho 175, 525 P.2d 957 (1974); Tri-State Nat. Bank v. Western Gateway Storage Co., 92 Idaho 543, 447 P.2d 409 (1968); I.R.C.P. 56(e). Herein the Zehms did not so come forward with evidence, but rather their deposition testimony indicated that many of the facts asserted by Associated Logging were correct.

As above noted, Zehms also asserted in their complaint that when Associated Logging changed insurance carriers, Associated Logging was under a duty to provide continued coverage with the same benefits contained in the Cal-West policy. As correctly noted by the trial judge, said assertion is unsupported by any evidence of the Zehms, and directly contrary to the uncontradicted testimony of Associated Logging. Associated Logging received no financial benefits from the various health insurance plans, but rather it offered such insurance to its members solely as a gratuity. Nothing in the association bylaws required Associated Logging to offer any insurance plan to its members, and there is no showing of any representation by Associated Logging to its members that it would provide continuous coverage to its members. The change in insurance carriers was motivated solely by financial considerations to the membership. As noted, Associated Logging, approximately one year later, discontinued any insurance plan for its members. The result of the Zehm's theory, if adopted, would require any nonprofit trade association who offered insurance coverage to its members to continue such insurance coverage forever. We will not so hold.

At the district court level the Zehms argued for relief against defendant Cal-West, but summary judgment was also issued thereon, and Cal-West is not a party to this appeal. We note further that on appeal the Zehms have attempted to raise new issues not presented at the district court level, i.e., that Associated Logging's insurance plans were made as agents for its membership, and hence fell under the strictures of ERISA (The Employee Retirement Income Security Act of 1974), 29 U.S.C. § 1001 et seq. No facts supporting such argument were presented to the district court, nor was any such theory or argument advanced to the district court in opposition to summary judgment. Hence, such assertions will not be heard for the first time on appeal. State v. Campbell, 114 Idaho 367, 757 P.2d 230 (App.1988); Gardner v. Evans, 110 Idaho 925, 719 P.2d 1185 (1986); Baldner v. Bennett's, Inc., 103 Idaho 458, 649 P.2d 1214 (1982); State v. Sharp, 101 Idaho 498, 616 P.2d 1034 (1980).

Following the district court's order for summary judgment the Zehms moved to amend the summary judgment. Following briefing and hearing, that motion to amend the summary judgment was denied, and the district court awarded attorney fees to Associated Logging for its defense of the original summary judgment. In connection with their motion to review the original summary judgment, the Zehms offered no additional authority, theory, or reason for amending the original summary judgment, nor did they cite any error in the district court's original ruling. Hence, the district court exercised its discretion to award reasonable attorney fees to the prevailing party "when it finds from the facts presented to it that the case was brought, pursued or defended frivolously, unreasonably or without foundation." NBC Leasing Company and Lease Northwest, Inc. v. R & T Farms, Inc., 114 Idaho 141, 754 P.2d 454 (App.1988); I.R.C.P. 54(e)(1); I.C. § 12-121.

The decision and orders of the district court granting summary judgment to Associated Logging are affirmed. The order of the district court awarding attorney fees to Associated Logging is affirmed. Costs to respondent.

BAKES, BISTLINE, HUNTLEY and JOHNSON, JJ. concur.

ON REHEARING

A rehearing was granted, briefing received, and oral argument submitted to the Court. A majority of the Court continues to adhere to the original opinion. Therefore, the decision and orders of the district court are affirmed. The district court's award of attorney fees is affirmed. No attorney fees on appeal; costs on appeal and on rehearing to respondent.

BAKES, C.J., and SHEPARD ^*, HUNTLEY and JOHNSON, JJ. concur.

BISTLINE, Justice, dissenting.

The majority turns a blind eye to controverted issues of material fact, documented in the record, in continuing to affirm this summary judgment after rehearing. In fact, today's majority notwithstanding the benefit of second briefing and oral argument, lets stand the state of the record. In particular we know now, or should, that the majority opinion continues to twice misrepresent the state of the appeal record:

Associated Logging, in affidavits in support of summary judgment, asserts that the change in insurance carriers was motivated solely by financial considerations to its members, and that it had no interest, financial or otherwise, in the change in carriers. Zehms, in their deposition or affidavit testimony, make no assertion to the contrary.

Majority Opinion, p. 350, 775 P.2d p. 1192 (emphasis added).

We note further that on appeal the Zehms have attempted to raise new issues not presented at the district court level, i.e., that Associated Logging's insurance plans were made as agents for its membership, and hence fell under the strictures of ERISA (The Employee Retirement Income Security Act of 1974), ...