City of Idaho Falls, an Idaho Mun. Corp. v. H-K Contractors, Inc.

163 Idaho 579

416 P.3d 951

CITY OF IDAHO FALLS, an Idaho municipal corporation, Plaintiff-Appellant,

v.H-K CONTRACTORS, INC., an Idaho corporation, Defendant-Respondent.

Docket No. 44886

Supreme Court of Idaho, Boise, February 2018 Term.

Filed: April 24, 2018

Randall D. Fife, Idaho Falls, for Appellant. Michael A. Kirkham and Randall D. Fife argued.

Smith, Driscoll & Associates, PLLC, Idaho Falls, for Respondent. B.J. Driscoll argued.

BEVAN, Justice.

The City of Idaho Falls ("Idaho Falls") appeals from an order dismissing its breach of contract and waste claims against H-K Contractors, Inc. ("H-K"). The district court found Idaho Falls’ claims were time barred under the statute of limitations regarding contract actions, pursuant to Idaho Code section 5-216. Idaho Falls appeals claiming the district court erred in applying the statute of limitations to its claims. We vacate the judgment of the district court.

I. FACTS AND PROCEDURE

On September 23, 2005, H-K entered into a written contract requiring it to convey a parcel of property to Idaho Falls. The contract required that H-K initially grant Idaho Falls a storm drainage easement "over and across" the parcel. H-K was also required to convey fee title to the parcel at a future date, in no event later than March 1, 2010. H-K failed to convey the property to Idaho Falls as required.

On March 9, 2016, Idaho Falls sent a letter to H-K requesting conveyance of title. On June 16, 2016, H-K responded by refusing to convey title to the property, claiming that in 2009 a city official had orally informed H-K that Idaho Falls was no longer interested in the property. Based on that alleged representation, H-K decided to invest in the property to make it profitable.

On November 22, 2016, Idaho Falls filed a complaint against H-K for breach of contract and waste. On December 19, 2016, H-K moved to dismiss the complaint based on the limitation found in Idaho Code section 5-216, alleging Idaho Falls’ claims were time barred because they were not brought within the five-year statute of limitations governing contract actions. Idaho Falls countered that the statute of limitations did not apply to it as a subdivision of the State of Idaho. On January 3, 2017, the district court dismissed Idaho Falls’ complaint as time barred. On February 16, 2016, Idaho Falls timely filed a notice of appeal, claiming the district court erred in enforcing the five-year limitation set forth in section 5-216.

II. STANDARD OF REVIEW

This case comes to the Court on review of an order granting H-K's motion to dismiss pursuant to Rule 12(b)(6), for failure to state a claim.

When this Court reviews an order dismissing an action pursuant to I.R.C.P. 12(b)(6) we apply the same standard of review we apply to a motion for summary judgment. After viewing all facts and inferences from the record in favor of the non-moving party, the Court will ask whether a claim for relief has been stated. The issue is not whether the plaintiff will ultimately prevail, but whether the party is entitled to offer evidence to support the claims.

Joki v. State , 162 Idaho 5, 8, 394 P.3d 48, 51 (2017) (quoting Coalition for Agriculture's Future v. Canyon County , 160 Idaho 142, 145, 369 P.3d 920, 923 (2016) ) (internal citations and quotation marks omitted). "In addition, this Court reviews an appeal from an order of summary judgment de novo , and this Court's standard of review is the same as the standard used by the trial court in ruling on a motion for summary judgment." Id.

"[T]he interpretation of a statute is a question of law over which this Court exercises free review." Regan v. Owen , 163 Idaho 359, 362, 413 P.3d 759, 762 (2018). In particular, "[t]he determination of the applicable statute of limitation is a question of law over which this Court has free review."

Guzman v. Piercy , 155 Idaho 928, 934, 318 P.3d 918, 924 (2014) (citations and quotation marks omitted).

III. ANALYSIS

A. The district court erred when it determined the term "state" in Idaho Code section 5-216 did not include Idaho's municipalities.

The standard this Court applies when interpreting statutes is well established:

Interpretation of a statute begins with an examination of the statute's literal words. Where the language of a statute is plain and unambiguous, courts give effect to the statute as written, without engaging in statutory construction. Only where the language is ambiguous will this Court look to rules of construction for guidance and consider the reasonableness of proposed interpretations.

Curlee v. Kootenai Cnty. Fire & Rescue , 148 Idaho 391, 398, 224 P.3d 458, 465 (2008) (quoting Idaho Conservation League, Inc. v. Idaho State Dep't of Agric. , 143 Idaho 366, 368, 146 P.3d 632, 634 (2006) (internal citations omitted) ). A statute "is ambiguous where reasonable minds might differ or be uncertain as to its meaning." Payette River Prop. Owners Ass'n v. Bd. of Comm'rs of Valley Cnty. , 132 Idaho 551, 557, 976 P.2d 477, 483 (1999) (citing Ada Cnty. v. Gibson, 126 Idaho 854, 856, 893 P.2d 801, 803 (Ct. App. 1995) ).

"Where a statute is clear and unambiguous, the expressed intent of the [L]egislature shall be given effect without engaging in statutory construction. The literal words of a statute are the best guide to determining legislative intent." I.C. § 73-113. "Only where the language is ambiguous will this Court look to rules of construction for guidance and consider the reasonableness of proposed interpretations." Stonebrook Const., LLC v. Chase Home Fin. , 152 Idaho 927, 931, 277 P.3d 374, 378 (2012) (citation omitted). Statutory language is not ambiguous "merely because the parties present differing interpretations to the court." Id . (quoting Payette River , 132 Idaho at 557, 976 P.2d at 483 ). Rather, statutory language "is ambiguous where reasonable minds might differ or be uncertain as to its meaning." Id.

Idaho Code section 5-216 provides a five-year statute of limitations for contract actions. However, the statute also provides that the limitation "shall never apply to actions in the name or for the benefit of the state and shall never be asserted nor interposed as a defense to any action in the name or for the benefit of the state. ..." I.C. § 5-216. Thus, whether the word "state" includes municipalities is the crux of the question presented in this appeal. The district court interpreted the term "state" to only apply to the State of Idaho and not its municipalities. Therefore, the court dismissed Idaho Falls’ contract claims as time barred under section 5-216. We hold the district court erred by not interpreting the term "state" in section 5-216 to include Idaho's municipalities.

1. The term "state" within Idaho Code section 5-216 is ambiguous because it is subject to reasonably differing interpretations.

The district court found that section 5-216 was unambiguous. In so doing, the court found it was unnecessary to apply any rules of statutory construction in interpreting the statute. We disagree.

There are at least two reasonable interpretations of the term "state" in section 5-216. See Hamilton ex rel. Hamilton v. Reeder Flying Serv. , 135 Idaho 568, 572, 21 P.3d 890, 894 (2001) (finding an ambiguity due to the existence of two reasonable interpretations of a statute). In legal parlance the term "state" is generally defined as "[t]he political system of a body of people who are politically organized; the system of rules by which jurisdiction and authority are exercised over such body of people. ..." Black's Law Dictionary 1627 (10th ed. 2014). Given this definition, it is reasonable the term "state" could encompass either just the State of Idaho or also include its municipalities. Alternatively, reasonable minds like H-K and the district court could interpret the word "state" to be a reference to the State of Idaho as a whole, thus excluding any political subdivisions from its reach. We view both definitions as reasonable. Thus, the statute is ambiguous.

2. Since the statute is ambiguous, rules of statutory construction must be utilized to determine the Legislature's intent in adopting Idaho Code section 5-216.

"If the statute is ambiguous, then it must be construed to mean what the [L]egislature intended for it to mean." In re Adoption of Doe , 156 Idaho 345, 349, 326 P.3d 347, 351 (2014) (citing City of Sandpoint v. Sandpoint Independent Highway Dist. , 139 Idaho 65, 69, 72 P.3d 905, 909 (2003) ). Legislative intent is determined by examining "the literal words of the statute, ... the reasonableness of proposed constructions, the public policy behind the statute, and its legislative history." Id. at 350, 326 P.3d at 352.

Because the term "state" is ambiguous, this Court must look to additional rules of construction for guidance in its interpretation. Stonebrook Const., LLC , 152 Idaho at 931, 277 P.3d at 378. A long-standing rule of construction that governs this case declares that terms within different sections of the same chapter of the Idaho Code are presumed to bear the same meaning, "unless there is something to show that there is a different meaning intended, such as a difference in subject-matter which might raise a different presumption." St. Luke's Magic Valley Reg. Med. Ctr. Ltd. v. Bd. of Cnty. Comm'rs of Gooding Cnty. , 149 Idaho 584, 589, 237 P.3d 1210, 1215 (2010) (citation omitted) ("We do not view the Legislature as having intended the word ‘resources’ to have different meanings within Chapter 35, Title 31."). Stated another way, "[s]tatutes pertaining to the same subject are construed, as far as reasonably possible, to be in harmony with one another." Regan v. Owen , 2017 WL 3927024, at *7 (2017) (citing Christensen v. West , 92 Idaho 87, 88, 437 P.2d 359, 360 (1968) ).

Another rule with similar import is that statutes which are in pari materia are to be "taken together and construed as one system, and the object is to carry into effect the intention. It is to be inferred that a code of statutes relating to one subject...