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Bridge Tower Dental, P.A v. Meridian Computer Center

March 5, 2012

BRIDGE TOWER DENTAL, P.A., PLAINTIFF-APPELLANT,
v.
MERIDIAN COMPUTER CENTER, INC.,
DEFENDANT-RESPONDENT.



Appeal from the District Court of the Fourth Judicial District of the State of Idaho, Ada County. Hon. D. Duff McKee, District Judge.

The opinion of the court was delivered by: W. Jones, Justice

2012 Opinion No. 46

Stephen W. Kenyon, Clerk

The decision of the district court regarding appellant's Motion for Judgment Notwithstanding the Verdict is reversed. The award of attorney's fees is vacated. This case is remanded for further action consistent with this Opinion. Costs are awarded to appellants.

I. NATURE OF THE CASE

In 2003, Appellant, Bridge Tower Dental, hired Respondent, Meridian Computer Center, to provide the dental practice with a computer hardware system subject to a warranty contract. In June of 2005, Bridge Tower Dental began experiencing problems with its server. Bridge Tower Dental entrusted its computer server, including both of its hard drives, to Meridian Computer Center in order to repair or restore the failing hard drive. While attempting to restore the failing hard drive, Respondent mistakenly confused the source and destination locations on the motherboard and inadvertently erased all of Bridge Tower Dental's data, including the practice's patient records, from the working hard drive. Bridge Tower Dental filed suit against Meridian Computer Center for breach of contract and negligence under the law of bailment.

At trial, the district court denied Bridge Tower Dental's request to submit different jury instructions for the separate claims, and instead combined the contract claim with the negligent bailment claim in the final jury instructions. On April 27, 2010, the jury entered a general verdict in favor of Meridian Computer Center. Bridge Tower Dental filed a Motion for Judgment Notwithstanding the Verdict, or alternatively, a Motion for New Trial, both of which were denied by the district court. The court entered an order awarding attorney's fees and costs to Meridian Computer Center under I.C. § 12-120(3). Bridge Tower Dental now appeals to this Court, arguing that the district court erred in denying its Motion for Judgment Notwithstanding the Verdict because Meridian Computer Center failed to prove that it was not negligent in erasing the data contained on the working hard drive, that the court erred in denying the Motion for New Trial because the jury instructions were improper, and that the district court erred in awarding attorney's fees and costs.

II. FACTUAL AND PROCEDURAL BACKGROUND

Appellant, Bridge Tower Dental ("Bridge Tower"), is a dental practice located in Meridian, Idaho. In March of 2003, Bridge Tower contacted Al Colson, a computer consultant, about purchasing a custom computer system to store its patient files and records electronically. Colson provided Bridge Tower with a bid from Respondent, Meridian Computer Center ("Meridian Computer"), for $14,659.00 to build and assemble a computer system which included several computers, monitors, printers, and a server. The server contained two separate hard drives designed to mirror each other so that if one hard drive failed, the data would remain intact on the mirrored drive. Meridian Computer also provided Bridge Tower with a Sony DAT tape system to back up its data. The computer system was sold with a three year warranty. Colson installed the computer system for $1600 and entered into a service contract with Bridge Tower to provide monthly maintenance and support for the computer system.

Under the terms of the service contract, Colson was responsible for "[i]nsuring that system backups are completed successfully." Colson was paid $500 dollars a month for providing maintenance support and backup services to Bridge Tower. In 2004, the DAT tape system was no longer capable of backing up new data because Bridge Tower's data exceeded the tape's capacity. Colson informed Bridge Tower that it either needed to have someone manually feed multiple tapes or replace the tape system with an external USB drive. Colson estimated that the cost of a new external backup system would be approximately $1000 to $1200. Bridge Tower expressed to Colson that it wanted to purchase a new backup system but that it did not have the funds to do so at the time. Bridge Tower opted not to use multiple tapes because it would require someone to stay on-site for up to four hours waiting to manually feed new tapes into the computer. Unfortunately, when the tape exceeded its capacity and began failing, it destroyed the data on the tape over a period of time, leaving the mirrored hard drive as Bridge Tower's only form of backup.

In June of 2005, Colson noticed some problems with Bridge Tower's server after performing a software update. After running some tests, Colson suspected that one of the hard drives was failing, but that the mirrored drive was fully functional. Colson informed Bridge Tower of the suspected problem and immediately took the computer, including the server and both hard drives, to Meridian Computer for repair under the warranty. Colson delivered the server to the owner of Meridian Computer, Jason Patten, who agreed to diagnose and replace the failing hard drive pursuant to the warranty. At trial, Colson testified that he also asked Patten to perform a backup of the data before doing anything destructive to the hard drives. Patten denied that Colson ever requested him to perform a backup of the data and further explained that his standard practice is not to backup data because "it's usually the customer's responsibility." Patten acknowledged that one hard drive was failing, but that the mirrored drive remained intact and functional. After taking possession of the server and hard drives containing data, Patten attempted to recover the failed hard drive by performing a low level format which destroys all data on the hard drive. Then, Patten installed a new hard drive with no existing data, just lines of zeros, and intended to copy the data from the functional mirrored drive onto the new drive. However, Patten inadvertently mixed up the source drive with the destination drive, consequently erasing all the data on the mirrored hard drive and replacing it with lines of zeros. Patten explained the error in a letter stating "[t]he problem occurred when this new hard drive was used as the source drive to re-create the broken mirror, erasing then the only copy of the data, since there were no backups created by Bridge Tower Dental." Patten did not perform a backup of the functional mirrored drive prior to servicing the hard drives, and as a result, Bridge Tower was left with no way to access the data that was on the mirrored drive, containing all of its patients' records and contact information.

On December 31, 2007 Bridge Tower filed an Amended Complaint against Meridian Computer and Al Colson, alleging breach of contract and negligence. Prior to trial, Bridge Tower agreed to dismiss Colson as a defendant. After a four day jury trial, on April 27, 2010, the jury returned a general verdict in favor of Meridian Computer. Bridge Tower filed a Motion for Judgment Notwithstanding the Verdict, or alternatively, a Motion for a New Trial. Both of Bridge Tower's post-trial motions were denied by the district court. Meridian Computer then filed a motion for attorney's fees and costs, which was granted by the court. Bridge Tower timely appealed from the Final Judgment on July 8, 2010. On appeal, Bridge Tower argues that the district court erred in denying its Motion for Judgment Notwithstanding the Verdict because Meridian Computer failed to present any evidence that Patten was exercising due care when he erased the data from the functioning hard drive. Bridge Tower also argues that the district court erred in denying its Motion for a New Trial because Jury Instruction Numbers 8 and 9 did not accurately reflect bailment law under Idaho law. Lastly, Bridge Tower argues that the court erred in awarding Meridian Computer attorney's fees under Idaho Code section 12-120(3) because the gravamen of the lawsuit was based on negligence and not a commercial transaction.

III. ISSUES ON APPEAL

1. Whether the district court erred in denying Bridge Tower's ...


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