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Western Community Insurance Co. v. Burks Tractor Company, Inc.

Supreme Court of Idaho

September 6, 2018

WESTERN COMMUNITY INSURANCE COMPANY, Subrogee of DNJ, INC., Subrogor, and DNJ, INC., an Idaho Corporation, Plaintiffs-Appellants,
v.
BURKS TRACTOR COMPANY, INC., an Idaho Corporation, and KRONE NA, INC., a Delaware Corporation, Defendants-Respondents.

          Appeal from the District Court of the Fifth Judicial District of the State of Idaho, Twin Falls County. Hon. G. Richard Bevan, District Judge.

         The judgment of the district court is affirmed.

          Saetrum Law Offices, Boise, for appellants. Rodney Saetrum argued.

          Brady Law Chartered, Boise, for respondent Burks Tractor Company, Inc. Michael G. Brady argued.

          Coleman, Ritchie & Cluff, Twin Falls, for respondent Krone NA, Inc. Philip R. Dupont argued.

          HORTON, JUSTICE

         Western Community Insurance Company (Western Community) appeals the district court's decisions to dismiss Western Community's Idaho Consumer Protection Act (ICPA) claims as a subrogee of DNJ, Inc. (DNJ) and to deny Western Community's motion for a new trial against respondents Krone North America, Inc. (Krone) and Burks Tractor Company, Inc. (Burks). Western Community, as insurer of DNJ, compensated DNJ for the loss of a Krone X 1100 Forage Chopper (chopper) due to fire. After issuing a payment to DNJ, Western Community sought recovery from Krone and Burks on alternative theories of breach of express warranty, breach of the covenant of good faith, and violations of the ICPA. Western Community contends that the district court erred when it held that a subrogee cannot bring ICPA claims in the absence of an express contractual provision providing for subrogation of such claims. Western Community also argues that the district court erred in denying its motion for a new trial based upon Burks' assertion of new legal and factual defenses shortly before trial and by failing to instruct the jury on its theory of liability based on agency. We affirm.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         DNJ purchased the chopper from Burks. The chopper was manufactured by Krone and was the subject of two warranties, the New Equipment Limited Warranty and the Krone North America Crown Guarantee. On October 15, 2012, the chopper was completely destroyed by fire. Western Community, DNJ's insurer, paid DNJ $440, 779 for the loss of the chopper. Western Community then brought this subrogation action in which it advanced theories of breach of express warranties found in two separate warranties provided by Krone, breach of the covenant of good faith, and violations of the ICPA.

         In response to motions to dismiss from Krone and Burks, the district court dismissed Western Community's ICPA claims against each, holding that "a subrogee may not sue under the ICPA absent an express agreement . . . ." Although all parties' pleadings identified Burks as the owner of the chopper when it was sold to DNJ, shortly before trial Krone informed the district court and Western Community that the chopper actually had been owned by Krone. Western Community filed a Third Amended Complaint that reflected this new information. In response, Burks filed an answer that included several new affirmative defenses. Western Community filed a motion to strike the new defenses. The district court denied the motion to strike, finding that the amendments did not prejudice Western Community.

         The case proceeded to jury trial. Following Western Community's case-in-chief, the district court entered a directed verdict for Burks due to lack of privity. At the close of trial, the district court denied Western Community's request for a jury instruction on agency because this theory was not within the scope of the pleadings. The jury then found for Krone on all counts, answering four special interrogatories. The jury found: (1) Krone did not breach the express terms of the New Equipment Limited Warranty; (2) Krone did not breach the express terms of the Krone North America Crown Guarantee; (3) Krone did not violate a duty of good faith with respect to the New Equipment Limited Warranty; and (4) Krone did not violate a duty of good faith with respect to the Krone North America Crown Guarantee. Thereafter, Western Community filed motions for reconsideration and a new trial. The district court denied both motions in a memorandum decision filed June 24, 2016. Western Community timely appealed.

         II. STANDARD OF REVIEW

         This Court exercises free review over issues or questions of law and matters of statutory interpretation. Guzman v. Piercy, 155 Idaho 928, 934, 318 P.3d 918, 924 (2014). The same standard of review applies when this Court interprets the language of an unambiguous contract. Potlatch Educ. Ass'n v. Potlatch School Dist. No. 285, 148 Idaho 630, 633, 226 P.3d 1277, 1280 (2010).

         We review the discretionary decisions of a trial court for abuse of discretion.

When this Court reviews an alleged abuse of discretion by a trial court the sequence of inquiry requires consideration of four essentials. Whether the trial court: (1) correctly perceived the issue as one of discretion; (2) acted within the outer boundaries of its discretion; (3) acted consistently with the legal standards applicable to the ...

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