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Cda Dairy Queen, Inc., and v. State Insurance Fund

April 9, 2013

CDA DAIRY QUEEN, INC., AND DISCOVERY CARE CENTRE, LLC OF SALMON, PLAINTIFFS-APPELLANTS,
v.
STATE INSURANCE FUND, JAMES M. ALCORN, IN HIS OFFICIAL CAPACITY AS ITS MANAGER, AND WILLIAM DEAL, WAYNE MEYER, GERALD GEDDES, JOHN GOEDDE, ELAINE MARTIN, MARK SNODGRASS, RODNEY A. HIGGINS, TERRY GESTRIN, AND MAX BLACK, AND STEVE LANDON, IN THEIR CAPACITY AS MEMBERS OF THE BOARD OF DIRECTORS OF THE STATE INSURANCE FUND, DEFENDANTS-RESPONDENTS.



Appeal from the District Court of the Third Judicial District of the State of Idaho, Canyon County. Hon. Renae J. Hoff, District Judge.

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

2013 Opinion No. 44

SUBSTITUTE OPINION, THE COURT'S PRIOR OPINION DATED JANUARY 23, 2013 IS HEREBY WITHDRAWN.

The judgment of the district court is reversed and the case is remanded for proceedings consistent with this opinion.

CDA Dairy Queen, Inc. and Discovery Care Centre, LLC of Salmon (collectively, Dairy Queen) filed a class action against the Idaho State Insurance Fund (SIF) seeking a declaratory judgment that SIF violated Idaho Code § 72-915 by failing to distribute premium rate readjustments on a pro rata basis. The district court granted SIF's motion for summary judgment, finding that the Idaho Legislature's retroactive repeal of Idaho Code § 72-915 was constitutional and that Dairy Queen's action was thereby barred. Dairy Queen timely appeals and argues that the retroactive repeal violates article I, § 16 of the Idaho Constitution. Dairy Queen asks this Court to reverse the decision of the district court and remand for further proceedings consistent with the determination that the retroactive repeal is unconstitutional. We reverse.

I. FACTUAL AND PROCEDURAL BACKGROUND

In Farber v. Idaho State Insurance Fund, 147 Idaho 307, 311, 208 P.3d 289, 293 (2009) (Farber I), this Court held that Idaho Code § 72-915 required SIF to distribute any refund of its policyholders' premiums on a pro rata basis, considering each policyholder's proportion of total premiums paid. In response, the Legislature repealed Idaho Code § 72-915 retroactively to January 1, 2003. The repeal provided that its purpose was to address the Farber decision and maintain the continued viability of SIF as an efficient insurance provider. The repeal legislation was signed on May 6, 2009, and the Farber I decision became final on May 27, 2009.

Dairy Queen filed a class action complaint against SIF, seeking declaratory relief and damages. Dairy Queen then moved for partial summary judgment on the grounds that, if applied retroactively, the repeal violates article I, § 16 of the Idaho Constitution. SIF also filed a motion for summary judgment on the ground that the retroactive repeal does not violate the constitution of either Idaho or the United States. The district court denied Dairy Queen's motion and granted SIF's motion. A judgment dismissing Dairy Queen's claims with prejudice was entered on January 4, 2011.

II. STANDARD OF REVIEW

"Both constitutional questions and questions of statutory interpretation are questions of law over which this Court exercises free review." Stuart v. State, 149 Idaho 35, 40, 232 P.3d 813, 818 (2010) (citing Federated Publ'ns, Inc. v. Idaho Bus. Rev., Inc., 146 Idaho 207, 210, 192 P.3d 1031, 1034 (2008)). "The party challenging a statute or ordinance on constitutional grounds bears the burden of establishing that the statute or ordinance is unconstitutional and must overcome a strong presumption of validity." State v. Korn, 148 Idaho 413, 416, 224 P.3d 480, 483 (2009) (citing State v. Reyes, 146 Idaho 778, 203 P.3d 708 (Ct.App.2009)). "The judicial power to declare legislative action unconstitutional should be exercised only in clear cases." Am. Falls Reservoir Dist. No. 2 v. Idaho Dep't Water Res., 143 Idaho 862, 869, 154 P.3d 433, 440 (2007) (citation omitted).

III. ANALYSIS

As a preliminary matter, we note that SIF argues that this Court should affirm the district court's finding that the retroactive repeal of Idaho Code § 72-915 does not violate article I, § 10 of the United States Constitution. While neither party raised this as an issue on appeal, Dairy Queen appeals from both the district court's judgment in favor of SIF and from its order denying Dairy Queen's motion for summary judgment. In that order, the district court found the retroactive repeal constitutional under both the state and federal constitutions. Thus, it appears that SIF requests this relief to prevent Dairy Queen from raising the issue in a subsequent appeal on federal grounds. Although the district court's conclusion regarding the federal constitution is inconsistent with our holding today, we will not address this issue. Under the Idaho Appellate Rules, "an appellant's failure to include in his initial appellate brief a fair statement of an issue presented for review results in waiver of the issue." Weisel v. Beaver Springs Owners Ass'n, Inc., 152 Idaho 519, 525, 272 P.3d 491, 497 (2012); Rule 35(a)(4). Because Dairy Queen did not address this issue in its opening brief, the issue is waived.

A. This Court will apply federal contract clause principles when determining whether a statute violates article I, § 16 of the Idaho Constitution.

Dairy Queen argues that the retroactive repeal of Idaho Code § 72-915 to January 1, 2003, violates article I, § 16 of the Idaho Constitution because it impairs valid contracts that existed at the time the repeal was enacted. SIF responds that the retroactivity does not violate the Idaho Constitution because, even if some contract rights were affected, there was no substantial impairment of any right. However, before we can make ...


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