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Michael Stapleton v. Jack Cushman Drilling and Pump Company Incorporated

December 20, 2012

MICHAEL STAPLETON, PLAINTIFF-APPELLANT,
v.
JACK CUSHMAN DRILLING AND PUMP COMPANY INCORPORATED, AND BOB CUSHMAN, DEFENDANTS-RESPONDENTS.



Appeal from the District Court of the Seventh Judicial District of the State of Idaho, in and for Bingham County. The Hon. Darren B. Simpson, District Judge.

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

2012 Opinion No. 145

Stephen W. Kenyon, Clerk

The judgment of the district court is affirmed.

This is an action out of Bingham County to recover damages from a well driller who drilled a well that later caved in. The district court granted the well driller's motion for summary judgment on the ground that the alleged claims of negligence and breach of contract were barred by the applicable statutes of limitations, and the court dismissed the action. We hold that the breach of contract claim was barred by the statute of limitations and that the negligence claim was barred by the economic loss rule, and so affirm the judgment of dismissal.

I. Factual Background.

In August 2006, Michael Stapleton orally contracted with Jack Cushman Drilling and Pump Company, Incorporated, ("Cushman Drilling") to drill a well on certain residential real property located in Mackay, Idaho. Mr. Stapleton spoke with Bob Cushman, who was the vice president and an employee of the company, and it was Mr. Cushman who actually drilled the well. There were no structures on the land at that time. Cushman Drilling completed the well in August 2006 and capped it.

The following year, Mr. Stapleton constructed a house on the property and connected the well to the house. He lived in Pennsylvania and only stayed at the house several times a year, but he had the property landscaped with trees, bushes, grass, and shrubs. In January 2007, Mr. Stapleton noticed that there was green sediment in the water and that the water pressure was low. He contacted Mr. Cushman, who, after looking at the well, stated that it was an electrical problem. Mr. Stapleton then contacted an electrician, who stated that there were no electrical problems with the well.

In the fall of 2010, the well stopped producing water altogether. After Mr. Cushman refused to look at it, Mr. Stapleton contacted another well driller, who inspected the well and determined that the walls of the well had caved in and that it was beyond repair. Mr. Stapleton had that well driller drill a second well on the property, which necessitated tearing out landscaping that had been planted.

On April 6, 2011, Mr. Stapleton filed this action against Cushman Drilling and Mr. Cushman, alleging claims of negligence and breach of contract. The Defendants moved for summary judgment on the grounds that the claims were barred by the applicable statutes of limitations, by the economic loss rule, and by the failure to comply with the Notice and Opportunity to Repair Act.*fn1 They also contended that Mr. Cushman could not be personally liable because he had been acting as an agent of the corporation. The district court held that Mr. Stapleton's causes of action for negligence and breach of contract accrued by at least January 2007 when he noticed the green sediment in the water and low water pressure; that the claim for negligence was barred by the four-year statute of limitations set forth in Idaho Code section 5- 224; and that the claim for breach of contract was barred by the four-year statute of limitations set forth in Idaho Code section 5-217. Because it held that the claims were barred by the applicable statutes of limitations, the district court did not address the economic loss rule. The court ruled that the action should be dismissed as to Mr. Cushman because Mr. Stapleton had not presented any argument or authority to the contrary. The court entered a judgment dismissing the complaint, and Mr. Stapleton timely appealed.

II.

Did the District Court Err in Holding that the Claim for Breach of Contract Was Barred by Idaho Code Section 5-217?

The Defendants alleged as an affirmative defense in their answer that "Plaintiff's

Complaint is barred under the statute of limitations." One of the statute of limitations cited was Idaho Code section 5-217, which is the four-year statute of limitations for an action upon an oral contract. The issue was when the statute of limitations began to run.

Idaho Code section 5-421 specifies when a cause of action accrues and the statute of limitations begins to run "as to actions against any person by reason of his having performed or furnished the design, planning, supervision or construction of an improvement to real property."

I.C. § 5-241. With respect to such actions for breach of contract, the cause of action "shall accrue and the applicable limitation statute shall begin to run at the time of final completion of construction of such an improvement." I.C. § 5-241(b).

"[T]he question of whether something is an 'improvement to real property' is a question of law for the court." West v. El Paso Products Co., 122 Idaho 133, 136, 832 P.2d 306, 309 (1992). An improvement is something that enhances or augments the value or quality of the real property. Id. A well is an improvement to real property. That the well at issue in this case was allegedly not completed in a workmanlike manner is irrelevant to the application of the statute. In contract actions, the statute provides that the statute of limitations begins to run when the improvement is completed. It does not provide that the cause of action accrues upon the discovery of a defect in workmanship, or upon a breach of an express provision in the contract, or upon the occurrence of damage as a result of the breach. If the quality of workmanship determined whether something was an improvement, then the statute of limitations would commence running when the improvement was completed and then retroactively not commence running upon the discovery that the improvement was ultimately of little or no value due to defects in material or workmanship. That would be inconsistent with the obvious purpose of the statute. Mr. Stapleton does not assert that the well did not constitute the construction of an improvement to his real property.

In their opening brief in support of their motion for summary judgment, the Defendants did not cite Idaho Code section 5-241. They argued that the statutes of limitations for the contract and negligence claims began to run in January 2007 when Mr. Stapleton had Mr. Cushman and then an electrician look at the well to determine the cause of the sediment in the water and the low water pressure. In his brief opposing summary judgment, Mr. Stapleton argued that the applicable statutes of limitations did not begin to run until some damage occurred, which was on November 11, 2010, when the well caved in. In their reply memorandum in support of their motion for summary judgment, the ...


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