Case Title: Reed J. Taylor v. Michael E. Mc Nichols, et al. Idaho Rule of Civil Procedure 12(b)(6) motion

Citation: 

Docket Number: 36131

State: idaho

Court: Idaho Supreme Court (civil)

Date: 2010-09-03T00:00:00Z

Document:
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IN THE SUPREME COURT OF THE STATE OF IDAHO   
 
REED J. TAYLOR, an individual, 
 
          Plaintiff-Appellant, 
 
v. 
 
MICHAEL E. MC NICHOLS, an individual; 
CLEMENTS, BROWN & MC NICHOLS, 
P.A., an Idaho professional corporation; 
JANE DOES I-V, unknown individuals, 
 
          Defendants-Respondents. 
_______________________________________ 
 
REED J. TAYLOR,  
 
          Plaintiff-Appellant, 
 
v. 
 
GARY D. BABBITT, an individual, D. JOHN 
ASHBY, 
an 
individual; 
PATRICK 
V. 
COLLINS, an individual; RICHARD A. 
RILEY, 
an 
individual; 
HAWLEY, 
TROXELL, ENNIS & HAWLEY, LLP, an 
Idaho limited liability partnership; JANE 
DOES I-X, unknown individuals. 
 
          Defendants-Respondents. 
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Docket  No. 36130 
 
 
 
 
 
Lewiston, April 2010  
 
2010 Opinion No. 95 
 
Filed:  September 3, 2010 
 
Stephen W. Kenyon, Clerk  
 
 
 
 
 
 
Docket No. 36131 
 
Appeal from the District Court of the Second Judicial District, State of Idaho, Nez 
Perce County.  Hon. Jeff M. Brudie, District Judge. 
District court decision, affirmed. 
Campbell, Bissell & Kirby and Michael S. Bissell, Spokane, for appellant.  
Roderick C. Bond argued. 
Hepworth, Janis & Brody, Chtd., Boise, for respondents McNichols and 
Clements, Brown & McNichols, P.A.  John J. Janis argued. 
Elam & Burke, P.A.,  Boise,  for respondents Babbit, Ashby, Collins Riley and 
Hawley, Troxell, Ennis & Hawley, LLP.  Jeffrey A. Thomson argued. 
 
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__________________________________ 
BURDICK, Justice 
 
This case comes before this Court on appeal from the grant of two Idaho Rule of Civil 
Procedure 12(b)(6) motions to dismiss for failure to state a claim upon which relief may be 
granted.  Appellant, Reed Taylor alleges that the district court erred in denying his motions to 
amend his complaints, and erred in failing to properly apply the applicable standards in granting 
the motions to dismiss under I.R.C.P. 12(b)(6).  We affirm. 
I.  FACTUAL AND PROCEDURAL BACKGROUND 
This case arises as a result of the separate case of Taylor v. AIA, et al., Nez Perce County 
Case No. CV07-00208 (Underlying Case), now awaiting hearing before this Court on appeal.  In 
order to properly understand the claims being asserted here, certain aspects of the Underlying 
Case must be examined.  The case at hand has been consolidated on appeal from two separate 
before the district court, case number CV-08-01763 and case number CV08-01765. 
A.  Underlying Case 
On January 29, 2007, Reed Taylor (Reed) filed suit against AIA Services Corporation 
(AIAS), AIA Insurance, Inc. (AIAI)1, John Taylor, Connie Taylor, Bryan Freeman, and JoLee 
Duclos.  AIAI is a business entity existing under the umbrella of AIAS.  When the Underlying 
Case began John Taylor was the managing director of both corporations and his then wife, 
Connie Taylor, held a community property interest in the corporations.  John Taylor, Freeman, 
and Duclos were board members of both corporations.  After Reed filed suit in the Underlying 
Case, Michael McNichols, of the law firm Clements, Brown & McNichols, P.A. (CBM), was 
retained to represent AIAS, AIAI, and John Taylor. 
While the lawsuit was still pending, Reed attempted to exercise management authority 
over the AIA Entities, and the court in the Underlying Case granted a temporary restraining order 
against Reed on February 27, 2007.  On March 8, 2007, the court in the Underlying Case entered 
a preliminary injunction which prohibited Reed from attempting to act as a manager or board 
member of AIAI, or from harassing or interfering with the management of AIAI and AIAS. 
On March 28, 2007, McNichols filed a motion to withdraw as counsel for AIAI and 
AIAS, which was granted on April 12, 2007.  On May 7, 2007, a notice of appearance on behalf 
                                                 
1 When referred to collectively, AIAS and AIAI will be referenced as the ―AIA Entities.‖ 
 
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of the AIA Entities was filed by Gary Babbitt and John Ashby, of the law firm Hawley Troxell 
Ennis & Hawley, LLP (HTEH). 
B.  Current Case 
On August 18, 2008, after the Underlying Case had been through 21 months of motions 
and hearings – while numerous other motions were pending, and the trial date had been set, but 
after the district court had granted a Motion for Partial Summary Judgment in favor of Reed as to 
the AIA Entities being in default on a $6,000,000 promissory note issued to Reed – Reed filed 
the present actions against McNichols and CBM, who were continuing to serve as counsel for 
John Taylor (case no. CV08-01765 below), and against Babbit, Ashby, Patrick Collins, Richard 
Riley,2 HTEH, and other unspecified attorneys who worked for HTEH on its representation of 
the AIA Entities (case no. CV08-01763 below).3  Reed asserted claims against Respondents for: 
(1) aiding and abetting or assisting others in the commission of tortious acts in the Underlying 
Case; (2) conversion and misappropriation of the AIA Entities‘ corporate assets; (3) violations of 
Idaho‘s Consumer Protection Act, I.C. § 48-601 et seq.; and (4) professional negligence and/or 
breach of fiduciary duties.   
Respondents filed motions to dismiss pursuant to I.R.C.P. 12(b)(6), and oral argument 
was heard on these motions on October 16, 2008.  On the same day Reed filed his motions for 
leave to amend his complaints, attaching his proposed amended complaints, and a hearing was 
held on these motions on December 4, 2008. 
On December 23, 2008, the district court issued two opinions titled ―Opinion and Order 
on Defendant‘s Motion for Preliminary Injunction‖ (Opinions) granting Respondents‘ motions to 
dismiss and denying Reed‘s motions to amend his complaints.  In reaching his decision the 
district court judge, who was also the judge in the Underlying Case, found that the arguments 
made by both Reed and Respondents incorporated events and actions that occurred in the 
Underlying Case and, therefore, took judicial notice of the Underlying Case in toto.  The district 
court subsequently granted Respondents‘ requests for attorney fees. 
Reed filed a notice of appeal with this Court on January 30, 2009, and the two cases were 
consolidated for appeal on February 18, 2009.  In light of Spokane Structures, 148 Idaho 616, 
226 P.3d 1263 (2010), it was recognized that no final judgment had been issued by the district 
                                                 
2 Collins and Riley were also attorneys with HTEH. 
3 All of the above mentioned attorneys and law firms shall be collectively referred to as ―Respondents‖. 
 
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court and the case was remanded for entry of a final judgment on March 16, 2010.  This Court 
received Judgments from the district court for both of the pre-consolidation cases on March 24, 
2010. 
II. ISSUES ON APPEAL 
1. Whether the district court applied I.R.C.P. 12(b)(6) correctly in ruling on Respondents‘ 
motions to dismiss. 
a. Whether the litigation privilege should be adopted in Idaho and whether Reed‘s 
claims should have be dismissed accordingly. 
b. Whether, in the alternative, Reed‘s complaints alleged sufficient facts to 
withstand a motion to dismiss. 
2. Whether the district court abused its discretion in denying Reed‘s motions for leave to 
amend his complaints. 
a. Whether Reed had standing to bring derivative claims against Respondents. 
b. Whether Reed pled additional facts in his amended complaints that would have 
altered the analysis as it applied to his original complaints. 
3. Whether the district court abused its discretion in awarding Respondents attorney fees 
pursuant to I.C. §§ 12-121, 30-1-746, 48-608. 
4. Whether Respondents are entitled to attorney fees on appeal. 
III. STANDARD OF REVIEW 
Our standard of review for a grant of dismissal under Idaho Rule of Civil Procedure 
12(b)(6) was concisely summarized by this Court in Losser v. Bradstreet: 
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. 
145 Idaho 670, 672-73, 183 P.3d 758, 760-61 (2008) (internal citations and quotations omitted).  
In addition, ―[t]his 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.‖  Curlee v. Kootenai Cnty. Fire & Rescue, 148 Idaho 391, __, 
224 P.3d 458, 461 (2008).  Ergo, a district court‘s dismissal of a complaint under I.R.C.P. 
12(b)(6) shall be reviewed de novo.   
 
This Court employs an abuse of discretion standard when reviewing a district court‘s 
denial of a motion to amend a complaint to add additional causes of action.  Spur Prod. Corp. v. 
 
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Stoel Rives LLP, 142 Idaho 41, 43, 122 P.3d 300, 302 (2005).  When reviewing an exercise of 
discretion on the part of a district court, this Court considers:  
―(1) whether the court correctly perceived that the issue was one of discretion; (2) 
whether the court acted within the outer boundaries of its discretion and 
consistently with the legal standards applicable to the specific choices available to 
it; and (3) whether it reached its decision by an exercise of reason.‖ 
Id. (quoting Estate of Becker v. Callahan, 140 Idaho 522, 527, 96 P.3d 623, 628 (2004)). 
IV. ANALYSIS 
A.  The district court erred in taking judicial notice of the Underlying Case when 
considering the 12(b)(6) motions. 
Reed alleges that the district court did not apply the correct legal standard when 
considering Respondents‘ 12(b)(6) motions to dismiss.  Specifically, Reed alleges that the 
district court erred in taking judicial notice of the Underlying Case, when it should have limited 
its review to the pleadings.   
Idaho Rule of Civil Procedure 12(b) states, inter alia: 
If, on a motion asserting the defense numbered (6) to dismiss for failure of the 
pleading to state a claim upon which relief can be granted, matters outside the 
pleading are presented to and not excluded by the court, the motion shall be 
treated as one for summary judgment and disposed of as provided in Rule 56, and 
all parties shall be given reasonable opportunity to present all material made 
pertinent to such a motion by Rule 56.  
(Emphasis added).   
Respondents make two arguments why they believe the district court‘s 12(b)(6) ruling 
should stand.  First, the district court was acting within its permitted discretion in taking judicial 
notice of the Underlying Case. Second, having requested that the district court take judicial 
notice of the Underlying Case, Reed is barred under the invited error doctrine from raising this as 
an error on appeal.  These arguments shall be considered in turn. 
1.  The district court could not properly take judicial notice of the Underlying Case when 
ruling on 12(b)(6) motions to dismiss.  
 ―A 12(b)(6) motion looks only at the pleadings to determine whether a claim for relief 
has been stated.‖  Young v. City of Ketchum, 137 Idaho 102, 104, 44 P.3d 1157, 1159 (2002).  In 
Hellickson v. Jenkins, the Idaho Court of Appeals discussed judicial notice in the context of a 
12(b)(6) motion to dismiss, stating that: 
[t]he only facts which a court may properly consider on a motion to dismiss for 
failure to state a claim are those appearing in the complaint, supplemented by 
 
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such facts as the court may properly judicially notice.  Cohen v. United States, 
129 F.2d 733 (8th Cir. 1942).  However, a trial court, in considering a Rule 
12(b)(6) motion to dismiss, has no right to hear evidence; and since judicial notice 
is merely a substitute for the conventional method of taking evidence to establish 
facts, the court has no right to take judicial notice of anything, with the possible 
exception of facts of common knowledge which controvert averments of the 
complaint.  See Grand Opera Co. v. Twentieth Century-Fox Film Corp., 235 F.2d 
303 (7th Cir. 1956); Sears, Roebuck & Co. v. [Metro] Engravers, Ltd., 245 F.2d 
67 (9th Cir. 1956); Schwartz v. Commonwealth Land Title [Ins.] Co., 374 F.Supp. 
564 (E.D.Pa. 1974), supp. op. (E.D.Pa.) 384 F.Supp. 302.  
118 Idaho 273, 276, 796 P.2d 150, 153 (Ct. App. 1990) (emphasis in the original).  See also 
Fleming v. Lind-Waldock & Co., 922 F.2d 20, 23 (1st Cir. 1990) (comparing a 12(b)(6) motion 
to a Rule 56 motion the Court and finding, ―[o]ne fundamental difference between the two 
motions lies in the scope of the court‘s consideration.  The grounds for a Rule 12(b)(6) dismissal 
comprise only the pleadings and no more‖) (emphasis added). 
In Hellickson, a magistrate judge took judicial notice of the proceedings in two other 
cases.  118 Idaho at 275, 796 P.2d at 152.  The Court of Appeals found this to be in error, and 
remanded with instructions to either decide the 12(b)(6) Motion on the allegations contained in 
the complaint alone, or to convert the 12(b)(6) motion to a Rule 56 summary judgment 
proceeding and afford the parties reasonable opportunity to present materials pertinent to a 
motion for summary judgment.  Id. at 278, 796 P.2d at 155. 
CBM ignores the direct Idaho precedent in Hellickson entirely, instead citing to the U.S. 
Supreme Court case of  Tellabs, Inc. v. Makor Issues & Rights, Ltd., which states: ―[C]ourts must 
consider the complaint in its entirety, as well as other sources courts ordinarily examine when 
ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the 
complaint by reference, and matters of which a court may take judicial notice.  See 5B Wright & 
Miller § 1357 (3d ed.2004 and Supp.2007).‖  551 U.S. 308, 322 (2007).  Nothing in Tellabs is 
inconsistent with what is written in Hellickson.  HTEH cites to Hellickson for the proposition 
that courts may take judicial notice when considering a 12(b)(6) motion, but does not address 
Hellickson as it specifically applies to the issue of taking judicial notice of the proceedings in 
other cases.  The rule stated in Hellickson clearly applies here. 
2.  The doctrine of invited error does not preclude Reed from appealing the district 
court‘s erroneous decision to take judicial notice of the Underlying Case in toto. 
―It has long been the law in Idaho that one may not successfully complain of errors one 
has acquiesced in or invited.  Errors consented to, acquiesced in, or invited are not reversible.‖  
 
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State v. Owsley, 105 Idaho 836, 838, 673 P.2d 436, 438 (1983) (internal citation omitted).  
―Invited error‖ is ―[a]n error that a party cannot complain of on appeal because the party, through 
conduct, encouraged or prompted the trial court to make the erroneous ruling.‖  Black‘s Law 
Dictionary 249 (3rd pocket ed. 2006).   
 
At the hearing on Respondents‘ 12(b)(6) motions, on October 10, 2008, Reed‘s attorney, 
Bissell, had the following exchange with the district court judge: 
MR. BISSELL:  Also, your Honor, I would - - I would ask the Court because we 
obviously - - we have talked about a lot of information in the past in this case and 
in the other cases and, you know, a lot of the information in the other cases kind 
of has an impact on this case.  So I would ask the Court to take judicial notice of 
everything that’s been followed, argued in those previous cases - -  or in the other 
matter, the underlying matter we might call it . . . 
THE COURT:  Well, that was actually my intention, Mr. Bissell, that‘s part of 
what I came to conclude is I really can‘t discuss this and rule on the pending 
Motion to Dismiss without the consideration of the underlying case, so that was 
actually my intention. 
MR. BISSELL:  Okay, thank you, your Honor. 
Respondents aver that, under the doctrine of invited error as it is applied in cases such as 
State v. Owsley, 105 Idaho 836, 838, 673 P.2d 436, 438 (1983), and Woodburn v. Manco, 137 
Idaho 502, 505, 50 P.3d 997, 1000 (2002), Reed, having clearly requested that the district court 
take judicial notice of the Underlying Case, may not argue on appeal that this was in error.  ―The 
purpose of the invited error doctrine is to prevent a party who caused or played an important role 
in prompting a trial court to [take a certain action] from later challenging that [action] on 
appeal.‖  Woodburn, 137 Idaho at 505, 50 P.3d at 1000.  Reed offers five reasons why he does 
not believe the doctrine of invited error should apply here, and these shall be addressed in turn. 
 
First, Reed argues that ―it is irrelevant who requested judicial notice‖, as the district court 
erred in failing to convert the motions to dismiss into motions for summary judgment when 
considering evidence beyond the pleadings, in accordance with Hellikson, 118 Idaho at 276, 796 
P.2d at 153.  Reed offers no citation for this proposition, and it conflicts with the policy 
underlying the invited error doctrine.  The invited error doctrine presumes that the trial court 
acted in error, otherwise there would be no reversible error in any event.  The invited error 
doctrine provides that where the error in question was encouraged or requested by a party then 
that party is precluded from challenging on the basis of that error on appeal.  Contrary to Reed‘s 
 
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contention, the issue of which party requested the court to take that action — such action 
constituting error — is of great importance. 
 
Second, Reed contends that the invited error doctrine does not apply because the district 
court had already intended to take judicial notice, based upon the district judge‘s response to 
Reed‘s counsel‘s request that the judge take judicial notice, that ―that was actually my intention.‖  
Again, Reed offers no citation to any legal authority in support of this argument.  This Court in 
Owsley wrote, ―Errors consented to, acquiesced in, or invited are not reversible.‖  105 Idaho at 
838, 673 P.2d at 438.  It is clear here that Reed consented to the district court‘s taking judicial 
notice, as well as acquiescing to it and inviting it.  This argument is without merit.  
 
Third, Reed contends that the invited error doctrine does not apply because Reed‘s 
counsel was not tactically or strategically requesting judicial notice.  Reed cites to no Idaho law 
in support of this contention, instead citing to People v. Guerrero, 66 Cal. Rptr. 3d 701 (Cal. Ct. 
App. 2007), and Keller v. Columbus, 797 N.E.2d 964, (Ohio 2003).   
The only relevance to this issue presented in Guerrero is a footnote citing to People v. 
Coffman, 96 P.3d 30 (Cal. 2004).  66 Cal. Rptr. 3d at 703 n.3.  In Coffman the Supreme Court of 
California writes: 
As articulated in People v. Wickersham [650 P.2d 311 (Cal. 1982)], disapproved 
on other grounds in People v. Barton [906 P.2d 531 (Cal. 1995)]:  ―The doctrine 
of invited error is designed to prevent an accused from gaining a reversal on 
appeal because of an error made by the trial court at his behest.  If defense 
counsel intentionally caused the trial court to err, the appellant cannot be heard to 
complain on appeal. . . . [I]t also must be clear that counsel acted for tactical 
reasons and not out of ignorance or mistake.‖  In cases involving an action 
affirmatively taken by defense counsel, we have found a clearly implied tactical 
purpose to be sufficient to invoke the invited error rule.  
96 P.3d at 49 (emphasis added) (ellipses and third alteration in the original).  It is unnecessary to 
consider whether California‘s articulation on this issue is persuasive to Idaho, because even 
under this analysis Reed‘s argument fails.  Reed affirmatively acted in requesting the trial court 
to take judicial notice of the Underlying Case, for the purpose of having the district court 
consider the Underlying Case, a clearly implied tactical purpose. 
In the other case Reed relies on – Keller – the Supreme Court of Ohio examined a 
12(b)(6) dismissal, which had been granted by the district court and reversed by the Court of 
Appeals, on the basis that the district court had considered evidence beyond the pleadings.  The 
Appellants (Defendants) argued that because the Respondents (Plaintiffs) had attached evidence 
 
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to their pleading, Respondents were barred under the invited error doctrine from arguing that the 
district court erred in considering information beyond the pleadings.  Keller, 797 N.E.2d at 969.  
The Court found that, under the facts of Keller, the record showed that Defendants had attached 
evidence to their own pleading first, that it was in response to this that the Plaintiffs had attached 
evidence to their own pleading, and that, therefore, the invited error doctrine did not apply.  Id. at 
969-70.  Whatever persuasive authority Keller might offer to Idaho courts, it has no applicability 
here as neither Reed nor Respondents attached evidence to their pleadings.  Further, even if the 
rule to be extrapolated from Keller is that a party may not be barred under the invited error 
doctrine where the other party invites that error first (a dubious proposition), there is no 
allegation that Respondents requested that the district court take judicial notice of the Underlying 
Case. 
Fourth and fifth, Reed argues that the district court erred in taking judicial notice of the 
Underlying Case in toto without complying with I.R.E. 201.  Specifically, Reed alleges that the 
district court acted in violation of I.R.E. 201(c) & (d).  Idaho Rule of Evidence 201(c) outlines 
the rules for judicial notice where the court has discretion as to whether or not to take judicial 
notice, and I.R.E. 201(d) is for mandatory notice.  I.R.E. 201(c) reads:  ―When discretionary.  A 
court may take judicial notice, whether requested or not.  When a court takes judicial notice of 
records, exhibits, or transcripts from the court file in the same or a separate case, the court shall 
identify the specific documents or items that were so noticed.‖  I.R.E. 201(d) reads:   
―When mandatory.  When a party makes an oral or written request that a court 
take judicial notice of records, exhibits or transcripts from the court file in the 
same or a separate case, the party shall identify the specific documents or items 
for which the judicial notice is requested or shall proffer to the court and serve on 
all parties copies of such documents or items.  A court shall take judicial notice if 
requested by a party and supplied with the necessary information.‖ 
Reed alleges that, as Reed‘s counsel did not supply the court with the necessary 
information to take judicial notice under I.R.E. 201(d), the court erred and invited error is 
inapplicable.  Reed‘s argument concerning I.R.E. 201(d) is invalid; all this alleges is that the 
district court erred in taking judicial notice, not that this error was not invited by Reed‘s counsel.  
Reed‘s counsel failed to specify which materials from the Underlying Case he was requesting the 
court to take notice of, implicitly inviting the court to use its own discretion.  Reed is barred from 
alleging an I.R.E. 201(d) violation under the invited error doctrine.  Where an attorney is 
requesting that a court take judicial notice of a document or items, that attorney must state with 
 
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particularity what he is asking the Court to take notice of.  Where an attorney does not meet this 
requirement it is improper for a court to take judicial notice under I.R.E. 201(d).  Furthermore, 
where it was erroneous for the district court to take judicial notice it certainly cannot be said that 
such notice was mandatory; therefore I.R.E. 201(d) is inapplicable. 
Reed further alleges that, if I.R.E. 201(c) applies, the district court erred in not 
identifying the specific documents and files that it took judicial notice of, an error which may not 
be attributed to invited error as Reed neither asked nor encouraged the district court to take 
judicial notice under I.R.E. 201(c) in toto, without specifying which documents and exhibits it 
was taking notice of.  This argument has merit.  The court clearly failed to comply with the 
specificity requirement of I.R.E. 201(c).  Reed invited the court to take judicial notice, and the 
I.R.E. 201(c) error clearly occurred as a result of that invited error, but that violation cannot 
fairly be attributed to the error invited.  The court could have erroneously taken judicial notice of 
parts of the Underlying Case, as requested and encouraged by Reed, and still followed I.R.E. 
201(c) by identifying the particular evidence from the Underlying Case which it took notice of.   
The district court erred in taking judicial notice of the Underlying Case, and though Reed 
is generally precluded from raising this issue on appeal under the invited error doctrine, the 
district court erred beyond what was invited by Reed in failing to comply with the specificity 
requirements of I.R.E. 201(c).   
In spite of the district court‘s error, this error is harmless under I.R.C.P. 61.  See Banning 
v. Minidoka Irrigation Dist., 89 Idaho 506, 510, 406 P.2d 802, 803 (1965).  This Court applies a 
de novo standard of review to appeal from grants of 12(b)(6) motions, and shall look only to the 
pleadings without consideration to the record from the Underlying Case.4    Therefore, we shall 
consider the pleadings in this case under the standards applicable to a 12(b)(6) proceeding. 
B.  The Litigation Privilege 
 
The district judge‘s Opinions – granting Respondents‘ motions to dismiss and denying 
Reed‘s motions for leave to amend his complaints – relied strongly on the so-called ―litigation 
privilege,‖ or ―litigation immunity.‖   
                                                 
4 Even if the Court were inclined to consider the same materials that the district court judge erroneously considered 
from the Underlying Case it could not, as the district court failed to identify the specific materials that it considered 
in reaching its ruling. 
 
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The litigation privilege is deeply rooted in the common law doctrine that attorneys are 
immune from civil suits for defamation or libel when they arise out of communications made in 
the course of judicial proceedings.  In fact, ―[a]t common law, the litigation privilege blanketed 
all participants in the court system; private attorneys were treated no differently than judges, 
government lawyers, and witnesses.‖  Loigman v. Twp. Comm. of Middleton, 889 A.2d 426, 433, 
435 (N.J. 2006) (discussing, e.g., Cutler v. Dixon, 76 Eng. Rep. 886 (K.B. 1585); Hodgson v. 
Scarlett, 171 Eng.Rep. 362 (C.P. 1817); Hoar v. Wood, 44 Mass. 193 (1841)).  See also 
Carpenter v. Grimes Pass Placer Mining Co., 19 Idaho 384, 114 P. 42 (1911) (first application 
of what may be termed the ―defamation privilege‖ in Idaho, discussing the common law 
privilege and its application across American jurisdictions; noting that American Courts, unlike 
English Courts, generally require that communications must be pertinent and material to the 
matter before the judicial proceeding in order for the privilege to apply.)  This privilege is 
predicated on the long-established principle that the efficient pursuit of justice requires that 
attorneys and litigants must be permitted to speak and write freely in the course of litigation 
without the fear of reprisal through a civil suit for defamation or libel.  Loigman, 889 A.2d at 
434. 
Examining the two most recent cases where Idaho has applied this privilege (as it applies 
to attorneys) sheds some further light on the application of this privilege under Idaho law.  In 
Richeson v. Kessler, an attorney, Richeson, was acting as counsel for the Andersons. 73 Idaho 
548, 550, 255 P.2d 707, 707 (1953).  Another attorney, Kessler, applied with the district court to 
appear amicus curiae.  Id.  Richeson objected to this application to appear amicus curiae in his 
brief to the court.  Id.  The Andersons subsequently dismissed Richeson and retained Kessler.  Id.  
When Kessler learned of Richeson‘s brief objecting to Kessler‘s application he wrote a letter to 
the district judge asking that the judge withdraw the brief from consideration, specifically 
alleging that portions of said brief had been ―malicious, scurrilous, and definitely improper and 
unethical.‖  Id.  Richeson subsequently filed suit against Kessler, alleging that the letter was 
libelous.  Id. 
The Richeson Court held that ―[w]ith certain exceptions, unimportant here, defamatory 
matter published in the due course of a judicial proceeding, having some reasonable relation to 
the cause, is absolutely privileged and will not support a civil action for defamation although 
 
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made maliciously and with knowledge of its falsity.‖  73 Idaho at 551-52, 255 P.2d at 709.  In 
addition, this Court specified that: 
The term judicial proceeding is not restricted to trials, but includes every 
proceeding of a judicial nature before a court or official clothed with judicial or 
quasi judicial power, 53 C.J.S., Libel and Slander, § 104, page 169, and to be 
privileged it is not absolutely essential that the language be spoken in open court 
or contained in a pleading, brief or affidavit. 
Id. at 551, 255 P.2d at 709. 
 
More recently, in 1993, the Idaho Court of Appeals applied the privilege in Malmin v. 
Engler, wherein the court noted that this privilege ―‗is based upon a public policy of securing to 
attorneys and officers of the court the utmost freedom in their efforts to secure justice for their 
clients.‘‖ 124 Idaho 733, 735, 864 P.2d 179, 181 (Ct. App. 1993) (quoting Restatement (Second) 
of Torts § 586 cmt. a (1965)).  The court emphasized that statements made prior to, or in 
preparation of, a judicial proceeding are also protected under the privilege.  Id. at 737, 864 P.2d 
at 184. 
 
Idaho‘s Appellate Courts have never considered the propriety of expanding this privilege 
to encompass conduct, as well as statements, which occur during the course of litigation, nor 
whether the privilege should extend to causes of action beyond defamation and libel. We take 
this opportunity to do so. 
1.  Examination of the litigation privilege across various jurisdictions. 
In Loigman v. Township Committee of Middleton, the Supreme Court of New Jersey 
noted that, although the litigation privilege was originally used only to protect against 
defamation suits arising from comments which were made in the course of judicial proceedings, 
the privilege has been widely expanded in order to address creative pleading.  889 A.2d 426, 435 
(N.J. 2006).  Specifically, in noting that, ―[i]n New Jersey, the litigation privilege protects 
attorneys not only from defamation actions, but also from a host of other tort-related claims,‖ the 
Loigman Court cited to Rainier’s Dairies v. Raritan Valley Farms, 117 A.2d 889, 895 (N.J. 
1955).  Id. at 436. 
In Rainier, the Court was considering the protections which the litigation privilege 
provided to a litigant, rather than an attorney.  However, as noted above, these privileges arose 
from the same public policies at common law, and the decision has been extended to the 
litigation privilege as it pertains to attorneys.  The Rainier Court held that in addition to the 
traditional protection against suits for defamation, the litigation privilege also protected against 
 
13 
claims for malicious interference with business operations, reasoning that ―[i]f the policy, which 
in defamation actions affords an absolute privilege or immunity to statements made in judicial 
and quasi-judicial proceedings is really to mean anything then we must not permit its 
circumvention by affording an almost equally unrestricted action under a different label.‖  Id. at 
895. 
The district court in the case at hand found that the Texas Court of Appeals case of Alpert 
v. Crain, Caton & James, P.C., 178 S.W.3d 398 (Tex. App. 2005), was particularly instructive, 
having many similarities to the present action.  In Alpert, the Appellants had first sued their own 
attorney, Riley, and subsequently filed suit against the Respondent, the law firm representing 
Riley in that action, claiming that Respondent ―conspired with Riley to defraud [the Appellants], 
and both aided and abetted in the breach of, and tortiously interfered with, Riley‘s fiduciary duty 
to [the Appellants].‖  Id. at 402.  The district court in Alpert had dismissed the case, finding that 
the Appellants had failed to plead a cause of action recognized by Texas law and, consequently, 
the Texas Court of Appeals heard the case on appeal in circumstances analogous to those 
presented in the present case.  In affirming the dismissal by the district court, the Texas Court of 
Appeals explained that:   
Perhaps as an offshoot of its privity jurisprudence, Texas case law has 
discouraged lawsuits against an opposing counsel if the lawsuit is based on the 
fact that counsel represented an opposing party in a judicial proceeding.  An 
attorney has a duty to zealously represent his clients within the bounds of the law.  
In fulfilling this duty, an attorney has the right to interpose defenses and pursue 
rights that he deems necessary and proper, without being subject to liability or 
damages.  If an attorney could be held liable to an opposing party for statements 
made or actions taken in the course of representing his client, he would be forced 
constantly to balance his own potential exposure against his client‘s best interest.  
Such a conflict hampers the resolution of disputes through the court system and 
the attainment of justice.  Thus, to promote zealous representation, courts have 
held that an attorney is “qualifiedly immune” from civil liability, with respect to 
non-clients, for actions taken in connection with representing a client in litigation. 
This qualified immunity generally applies even if conduct is wrongful in 
the context of the underlying lawsuit.  For example, a third party has no 
independent right of recovery against an attorney for filing motions in a lawsuit, 
even if frivolous or without merit, although such conduct is sanctionable or 
contemptible as enforced by the statutory or inherent powers of the court.  Courts 
have refused to acknowledge an independent cause of action in such instances 
―because making motions is conduct an attorney engages in as part of the 
discharge of his duties in representing a party in a lawsuit.‖ [Bradt v. West, 392 
S.W.2d 56, 72 (Tex. App. Ct. 1994)] . . . Thus, an attorney‘s conduct, even if 
 
14 
frivolous or without merit, is not independently actionable if the conduct is part of 
the discharge of the lawyer‘s duties in representing his or her client.  The 
immunity focuses on the type of conduct, not on whether the conduct was 
meritorious in the context of the underlying lawsuit. 
Id. at 405-06 (internal citations omitted) (emphases added). 
 
In Clark v. Druckman, the Supreme Court of West Virginia considered, inter alia, the 
following question, certified to it by a district court: 
Is a party to a civil action barred, by virtue of the litigation privilege, from 
bringing claims for civil damages against the opposing party‘s attorney if the 
alleged act of the attorney in the course of the attorney‘s representation of the 
opposing party is conduct and not a written or oral statement which arose in the 
civil action and which has some relationship to the civil action? 
624 S.E.2d 864, 871 (W. Va. 2005). The Court answered this question in the affirmative, after 
considering the policy considerations underlying the litigation privilege, specifically:  
(1) promoting the candid, objective, and undistorted disclosure of evidence; (2) 
placing the burden of testing the evidence upon the litigants during trial; (3) 
avoiding the chilling effect resulting from the threat of subsequent litigation; (4) 
reinforcing the finality of judgments; (5) limiting collateral attacks upon 
judgments; (6) promoting zealous advocacy; (7) discouraging abusive litigation 
practices; and (8) encouraging settlement. 
Id. at 870 (quoting Matsuura v. E.I. du Pont de Nemours & Co., 73 P.3d 687, 693 (Haw. 2003)).  
The Clark Court found that, in light of these policy considerations, ―we see no reason to 
distinguish between communications made during the litigation process and conduct occurring 
during the litigation process.‖  Id. (emphasis in the original).  The Court noted that the Supreme 
Court of Florida had reached a similar conclusion, in holding that: 
absolute immunity[5] must be afforded to any act occurring during the course of a 
judicial proceeding, regardless of whether the act involves a defamatory statement 
or other tortious behavior . . . , so long as the act has some relation to the 
proceeding.  The rationale behind the immunity afforded to defamatory 
statements is equally applicable to other misconduct occurring during the course 
of a judicial proceeding.  Just as participants in litigation must be free to engage in 
unhindered communication, so too must those participants be free to use their best 
                                                 
5 The difference between an absolute privilege and a qualified privilege is that:   
the absolute privilege affords complete protection whereas the qualified privilege affords 
protection only if there is no ill motive or malice in fact.  The most noteworthy illustration of the 
absolute privilege or immunity is that afforded in judicial proceedings where judges, attorneys, 
witnesses, parties and jurors are fully protected against defamation actions based on utterances 
made in the course of the judicial proceedings and having some relation thereto. 
Rainier’s Dairies v. Raritan Valley Farms, 117 A.2d 889, 891-82 (N.J. 1955) (internal citations omitted). 
 
15 
judgment in prosecuting or defending a lawsuit without fear of having to defend 
their actions in a subsequent civil action for misconduct. 
Id. (emphases added) (quoting Levin, Middlebrooks, Mabie, Thomas, Mayers & Mitchell, P.A. v. 
U.S. Fire Ins. Co., 639 So.2d 606, 608 (Fla. 1994)).  See also, Maness v. Star-Kist Foods, Inc., 7 
F.3d 704, 709 (8th Cir. 1993) (applying Minnesota law) (―[A]n attorney who acts within the 
scope of the attorney-client relationship will not be liable to third persons for actions arising out 
of his professional relationship unless the attorney exceeds the scope of his employment or acts 
for personal gain.‖); Reynolds v. Schrock, 142 P.3d 1062, 1069 (Or. 2006) (en banc) (―[F]or a 
third party to hold a lawyer liable for substantially assisting in a client‘s breach of fiduciary duty, 
the third party must prove that the lawyer acted outside the scope of the lawyer-client 
relationship.‖); Kahala Royal Corp. v. Goodsill Anderson Quinn & Stifel, LLP, 151 P.3d 732 
(Haw. 2007) (taking an exhaustive look at the litigation privilege in multiple jurisdictions, and 
concluding that public policy supports applying the privilege to conduct as well as 
communications).   
 
In line with the foregoing, we find that the litigation privilege shall be found to protect 
attorneys against civil actions which arise as a result of their conduct or communications in the 
representation of a client, related to a judicial proceeding.   
2.  When the litigation privilege applies. 
Reed correctly contends that the litigation privilege does not provide attorneys with 
blanket immunity against all claims raised against them, merely because they are acting as an 
attorney in litigation.  However, where attorneys are being sued by the opponent of their client in 
a current or former lawsuit, and that suit arises out of the attorneys‘ legitimate representation of 
that client pursuant to that litigation, the privilege does apply. 
 
The Supreme Court of West Virginia, in Clark v. Druckman, wrote: 
In Collins [v. Red Roof Inns, Inc.,] we recognized that absolute privileges, 
such as the litigation privilege, should only be permitted in limited circumstances. 
[566 S.E.2d 595, 598 (W. Va. 2002)].  Thus, we do not believe that a litigation 
privilege should apply to bar liability of an attorney in all circumstances.  In 
Mehaffy, Rider, Windholz & Wilson v. Central Bank Denver, N.A., 892 P.2d. 230, 
235 (Colo. 1995), the Colorado Supreme court noted that ―an attorney is not liable 
to a non-client absent a finding of fraud or malicious conduct by the attorney.‖ 
See also Baglini v. Lauletta, [768 A.2d 825, 833-34 (2001)] (―The one tort 
excepted from the reach of the litigation privilege is malicious prosecution, or 
malicious use of process.‖).  We believe such exceptions to an absolute litigation 
privilege arising from conduct occurring during the litigation process are 
 
16 
reasonable accommodations which preserve an attorney's duty of zealous 
advocacy while providing a deterrent to intentional conduct which is unrelated to 
legitimate litigation tactics and which harms an opposing party. As recently noted 
by a California court: 
[a] fraud claim against a lawyer is no different from a fraud claim 
against anyone else. If an attorney commits actual fraud in his 
dealings with a third party, the fact he did so in the capacity of 
attorney for a client does not relieve him of liability. While an 
attorney's professional duty of care extends only to his own client 
and intended beneficiaries of his legal work, the limitations on 
liability for negligence do not apply to liability for fraud. 
Vega v. Jones, Day, Reavis & Pogue, [17 Cal.Rptr.3d 26, 31-2] (Cal. Ct. App. 
2004) (internal citations and quotations omitted). . . . 
Where an attorney files suit without reasonable or probable cause with the 
intent to harm a defendant, we do not believe the litigation privilege should 
insulate him or her from liability for malicious prosecution. 
624 S.E.2d at 870-71 (first emphasis in the original).  See also Restatement (Third) of The Law 
Governing Lawyers § 57(2) (2000)  
(A lawyer representing a client in a civil proceeding or procuring the institution of 
criminal proceedings by a client is not liable to a nonclient for wrongful use of 
civil proceedings or for malicious prosecution if the lawyer has probable cause for 
acting, or if the lawyer acts primarily to help the client obtain a proper 
adjudication of the client‘s claim in that proceeding.) 
 
In Kahala Royal Corp. v. Goodsill Anderson Quinn & Stifel, LLP, the Supreme Court of 
Hawai‘i took an extensive look at the litigation privilege, and how different jurisdictions have 
applied the privilege as it pertains to claims of tortious interference.  151 P.3d 732 (Haw. 2007).  
The Court noted that generally for a claim of tortious interference to be brought against an 
attorney, where such claim arises out of his performance as an attorney, it must be established 
that the attorney acted in a manner demonstrating personal malice or a desire to harm, not 
springing from his desire to protect his client.  Id. at 750.  (discussing Schott v. Glover, 440 
N.E.2d 376, 380 (Ill. App. Ct. 1982) (―A plaintiff can state a cause of action for tortious 
interference with a contract against a third party who is conditionally privileged if the plaintiff 
can set forth factual allegations from which actual malice may reasonably be said to exist.‖  
(Emphasis added).  However, these allegations ―would necessarily include a desire to harm, 
which is independent of and unrelated to the attorney’s desire to protect his client.‖) (Emphases 
added)).  See also Fraidin v. Weitzman, 611 A.2d 1046, 1080 (Md. Ct. Spec. App. 1992) (―To 
remove the qualified privilege, the attorney must possess a desire to harm which is independent 
 
17 
of the desire to protect his client.  This would constitute actual malice and therefore substantiate 
a tortious interference with contract claim.‖) (emphases added) (holding that, where the 
Appellant failed to allege facts constituting actual malice on behalf of the attorney, a motion for 
summary judgment was appropriately granted); Macke Laundry Serv. Ltd. P’ship v. Jetz Serv. 
Co., 931 S.W.2d 166, 182 (Mo. Ct. App. 1996) (―This court recognizes a privilege for attorneys, 
when acting within the scope of the attorney-client relationship, to advise and act for a client 
even though that advice, if wrong, may cause a client to tortiously interfere with another‘s 
business relationship or expectancy, so long as the attorney does not employ wrongful means and 
acts with good faith to protect the interests of the client and not for the attorney‘s self interest.‖); 
Restatement (Third) of The Law Governing Lawyers § 57(3) (2000) (―A lawyer who advises or 
assists a client to make or break a contract, to enter or dissolve a legal relationship, or to enter or 
not enter a contractual relation, is not liable to a nonclient for interference with contract or with 
prospective contractual relations or with a legal relationship, if the lawyer acts to advance the 
client‘s objectives without using wrongful means.‖). 
 
Application of the litigation privilege varies across jurisdictions, but the common thread 
found throughout is the idea that an attorney acting within the law, in a legitimate effort to 
zealously advance the interests of his client, shall be protected from civil claims arising due to 
that zealous representation.  An attorney engaging in malicious prosecution, which is necessarily 
pursued in bad faith, is not acting in a manner reasonably calculated to advance his client‘s 
interests, and an attorney engaging in fraud is likewise acting in a manner foreign to his duties as 
an attorney.  If an attorney engages in tortious interference with a third-party‘s interest out of a 
personal desire to harm, separate entirely from his desire to advance his client‘s interests, that 
attorney‘s conduct is not properly adjudged as occurring in the course of his representation of his 
client‘s interests.    
It should be noted that although some courts, like the West Virginia Supreme Court in 
Clark, refer to the litigation privilege as an absolute privilege and others, like the Maryland 
Court of Special Appeals in Fraidin, refer to it as a qualified privilege, this is really just a 
difference in framing the privilege, not a difference in how the privilege is applied.  Some courts 
consider it an absolute privilege where it applies, but say that it does not apply where the 
attorney is acting outside the scope of representation of his client‘s interests.  Other courts 
consider it a qualified privilege which does not apply where an attorney is shown to be acting for 
 
18 
his own interests.  In either event, these courts have come to a general agreement that the 
litigation privilege protects attorneys from all civil suits which are raised against them by a party 
adverse to their clients, as a result of their representation of their clients, provided attorneys do 
not act beyond the scope of that representation for their own purposes.  For Idaho, the litigation 
privilege is an absolute privilege, which only applies when a specific condition precedent is met, 
namely, that an attorney is acting within the scope of his employment, and not solely for his 
personal interests. 
It is presumed that an attorney who is acting or communicating in relation to his 
representation of a client is acting on behalf of that client and for that client‘s interests.  See 
Greenberg v. Aetna Ins. Co., 235 A.2d 576, 577-78 (Pa. 1976) (holding that ―all reasonable 
doubts (if any) should be resolved in favor of relevancy and pertinency and materiality‖); Singh 
v. HSBC Bank USA, 200 F.Supp.2d 338, 340 (S.D.N.Y. 2002) (holding that if any circumstances 
would support a finding that attorney actions are pertinent to litigation then absolute immunity 
should protect the attorney).  To find otherwise would invite attorneys to divide their interest 
between advocating for their client and protecting themselves from a retributive suit.  Allowing 
such a divided interest would run contrary to the Idaho Rules of Professional Conduct, because, 
as noted by the district court judge below: 
[w]hile attorneys must not knowingly counsel or assist a client in committing a 
crime or fraud, Idaho‘s Rules of Professional Conduct require an attorney to 
pursue matters on behalf of a client despite opposition, obstruction or personal 
inconvenience to the attorney, and require an attorney to take whatever lawful and 
ethical measures are required to vindicate a client‘s cause or endeavor. 
(Citing I.R.C.P. 1.3(1)). 
 
Therefore, this Court holds that, as a general rule, where an attorney is sued by the 
current or former adversary of his client, as a result of actions or communications that the 
attorney has taken or made in the course of his representation of his client in the course of 
litigation, the action is presumed to be barred by the litigation privilege.  An exception to this 
general rule would occur where the plaintiff pleads facts sufficient to show that the attorney has 
engaged in independent acts, that is to say acts outside the scope of his representation of his 
client‘s interests, or has acted solely for his own interests and not his client‘s. 
 
It is true that such an approach means there is a risk that a wronged party may be denied 
civil relief under the law, but as Judge Learned Hand stated, in justifying absolute immunity for 
federal prosecutors: 
 
19 
It does indeed go without saying that an official, who is in fact guilty of 
using his powers to vent his spleen upon others, or for any other personal motive 
not connected with the public good, should not escape liability for the injuries he 
may so cause; and, if it were possible in practice to confine such complaints to the 
guilty, it would be monstrous to deny recovery. The justification for doing so is 
that it is impossible to know whether the claim is well founded until the case has 
been tried, and that to submit all officials, the innocent as well as the guilty, to the 
burden of a trial and to the inevitable danger of its outcome, would dampen the 
ardor of all but the most resolute, or the most irresponsible, in the unflinching 
discharge of their duties. Again and again the public interest calls for action which 
may turn out to be founded on a mistake, in the face of which an official may later 
find himself hard put to it to satisfy a jury of his good faith. There must indeed be 
means of punishing public officers who have been truant to their duties; but that is 
quite another matter from exposing such as have been honestly mistaken to suit 
by anyone who has suffered from their errors. As is so often the case, the answer 
must be found in a balance between the evils inevitable in either alternative. In 
this instance it has been thought in the end better to leave unredressed the wrongs 
done by dishonest officers than to subject those who try to do their duty to the 
constant dread of retaliation.  
Gregoire v. Biddle, 177 F.2d 579, 581 (2nd Cir. 1949) (emphasis added).  See also, Briscoe v. 
LaHue, 460 U.S. 325, 345 (1983) (quoting Judge Hand in justifying absolute witness immunity).  
This statement has clear applicability to the litigation privilege as it applies to attorneys.  Finally, 
a lack of civil redress does not mean immunity from consequence and punishment.  As the West 
Virginia Supreme Court wrote in Clark v. Druckman, ―[W]e believe our Rules of Civil 
Procedure, our Rules of Professional Conduct, and the court‘s inherent authority provide 
adequate safeguards to protect against abusive and frivolous litigation tactics.‖  624 S.E. 2d 864, 
871 (W. Va. 2005).  We concur with the Clark Court in this regard. 
We find that when an attorney is acting in his representative capacity pursuant to 
litigation, and not solely for his own interests, he shall enjoy the litigation privilege and shall not 
be subject to suit by an opponent of his client, arising out of his representative conduct and 
communications.  We now proceed to consider Reed‘s argument that the litigation privilege 
should not apply here due to the specific and unique circumstances of this case. 
 
i.  Timing 
 
The district court below summarized Reed‘s argument – that the litigation privilege did 
not apply because Respondents were never lawfully hired as counsel by the AIA Entities – in the 
following manner: 
In the instant matter, Plaintiff has argued that his is a unique situation because he 
has filed suit against the AIA corporations and its board members, that the 
 
20 
contractual terms at the core of his underlying suit make him the sole shareholder 
of the AIA corporations and, therefore, there is a conflict between the AIA 
corporations and the board members that makes it inappropriate, even fraudulent, 
for the board, or more particularly for managing board member John Taylor, to 
retain counsel for the corporations, to direct counsel for the corporations in any 
way, or for there to be any cooperation between counsel for the corporations and 
counsel for John Taylor.  Bottom line, Reed Taylor contends he is the only person 
with authority to determine who should serve as counsel for the corporations he is 
suing. 
Although Reed argues that the circumstances of this case are unique, they are not.  This is 
a mere contract-interpretation case.  However, there is one unusual aspect of this case which, far 
from taking this case outside the scope of the litigation privilege, cries out for application of that 
doctrine with particular urgency – the timing of this suit.  In most cases dealing with the 
litigation privilege, a third-party – who had been the opponent to an attorney‘s client in a 
previous lawsuit – is suing that attorney after their litigation against the client has been resolved.  
In this case Reed sued Respondents while the Underlying Case was ongoing, and yet many of his 
arguments rely upon his presumption that the Underlying Case will be decided in his favor.  The 
public policies of: (1) protecting attorneys from the threat of retaliatory litigation, in order to 
ensure that they may zealously advocate for their client without fear of reprisal; and (2) 
protecting judicial economy, are magnified when confronted with not only the threat of 
retaliatory litigation, but the reality of it while the underlying suit is ongoing.   
The circumstances of this case raise an important question.  Where the conduct of 
opposing counsel falls outside the protection of the litigation privilege, when may a cause of 
action be instituted against that attorney?  As we apply the modern litigation privilege for the 
first time in this case we have no precedent directly on point, and instead consider analogous 
actions – those for legal malpractice and malicious prosecution.   
We have previously indicated, in a case dealing with legal malpractice, that, as objective 
proof in support of actual damages is required for recovery, the statute of limitations for a legal 
malpractice claim does not begin to run until the litigation forming the basis of that claim has 
concluded.  City of McCall v. Buxton, 146 Idaho 656, 661, 201 P.3d 629, 634 (2009).  The clear 
reasoning behind this decision was that the cause of action cannot arise until damages are 
incurred, and the attorney‘s conduct can be reviewed under the totality of the case.  See id.   
The elements that must be shown to recover on the basis of malicious prosecution are 
found in Badell v. Beeks, specifically: ―(1) That there was a prosecution; (2) That it terminated in 
 
21 
favor of the plaintiff; (3) That the defendant was the prosecutor; (4) Malice; (5) Lack of probable 
cause; and (6) Damages sustained by the plaintiff.‖  115 Idaho 101, 102, 765 P.2d 126, 127 
(1988) (emphases added).  As in cases for legal malpractice based on conduct occurring during 
the course of a trial, in order to bring a malicious prosecution claim there must be damages and it 
must be determined that the suit was groundless, neither of which is possible prior to resolution 
of the case.   
The theme in our analyses in these two comparative causes of action is that Idaho courts 
take into consideration the significant complexities involved in application of law, such as trial 
strategies and negotiation tactics, and wait until all those complexities have resolved themselves 
prior to hearing a claim.  Only when a case has been concluded may one truly identify whether 
or not a prosecution has been malicious, whether an attorney has committed malpractice, or, in 
the case at hand, whether an attorney has acted fraudulently or solely for his own benefit.  
Therefore, we conclude that a cause of action against one party‘s opponent‘s attorney in 
litigation, based on conduct the attorney committed in the course of that litigation, may not be 
properly instituted prior to the resolution of that litigation, even where the allegedly aggrieved 
party believes that the attorney in question has been acting outside the legitimate scope of 
representation and solely for his own benefit.  Under this same reasoning, the allegations of 
aiding and abetting in the commission of tortious acts, although marginally pled, must await 
resolution of the Underlying Case.  Until the Underlying Case is resolved a court cannot 
determine whether any tortious act was committed, let alone acts constituting the aiding and 
abetting of those alleged tortious acts. 
As for Reed‘s argument, quoted above in the district court‘s summary, that he is the only 
one authorized to hire counsel for the AIA Entities, this inference does not flow from the 
allegations in Reed‘s complaints.  Reed‘s complaints are largely focused on the argument that 
Respondents violated Idaho‘s Rules of Professional Conduct or breached their fiduciary duty 
toward the AIA Entities, and these claims are dependent upon Respondents being retained as 
counsel for the AIA Entities, and holding fiduciary duties toward them.  Reed has failed to plead 
facts which allege that Respondents did not accept employment with the AIA Entities in good 
faith. 
 
 
 
22 
C.  12(b)(6) Analysis. 
As previously stated, this Court reviews the grant of a 12(b)(6) motion de novo.  
See Losser v. Bradstreet, 145 Idaho 670, 672-73, 183 P.3d 758, 760-61 (2008); Curlee v. 
Kootenai Cnty. Fire & Rescue, 148 Idaho 391, __, 224 P.3d 458, 461 (2008). 
1.  Civil conspiracy and interference with a contract. 
As this Court wrote in Youngblood v. Higbee: 
While we ―will make every intendment to sustain a complaint that is 
defective, e.g., wrongly captioned or inartful, a complaint cannot be sustained if it 
fails to make a short and plain statement of a claim upon which relief may be 
granted.‖  Gibson v. Ada [Cnty.] Sheriff’s Dep’t, 139 Idaho 5, 9, 72 P.3d 845, 849 
(2003).  We look at whether the complaint puts the adverse party on notice of the 
claims brought against it. 
145 Idaho 665, 668, 182 P.3d 1199, 1202 (2008).  
 
Reed alleges in his complaints that Respondents have entered into a civil conspiracy with 
others, including their clients.  As this Court noted in Mannos v. Moss: 
A civil conspiracy that gives rise to legal remedies exists only if there is an 
agreement between two or more to accomplish an unlawful objective or to 
accomplish a lawful objective in an unlawful manner.  Civil conspiracy is not, by 
itself, a claim for relief.  The essence of a cause of action for civil conspiracy is 
the civil wrong committed as the objective of the conspiracy, not the conspiracy 
itself. 
143 Idaho 927, 935, 155 P.3d 1166, 1174 (2007) (quoting McPheters v. Maile, 138 Idaho 391, 
395, 64 P.3d 317, 321 (2003)).  In addition, ―[a]n agreement is the foundation of a conspiracy 
charge and there must be some showing of specific evidence of a plan or agreement to defraud to 
demonstrate the pendency of the conspiracy at the time the alleged fraud occurred.‖  Id.  Reed‘s 
failure to make specific factual pleadings is particularly fatal here.  It appears most likely that 
Reed is alleging that the goal of the conspiracy was fraudulent, and civil conspiracy must 
therefore be pled with particularity under Wasco Prods., Inc. v. Southwall Techs, Inc., 435 F.3d 
989, 990-92 (9th Cir. 2006).   Furthermore, it is axiomatic that an agent acting within the scope 
of his representation cannot conspire with his principal, Afton Energy, Inc. v. Idaho Power Co., 
122 Idaho 333, 340, 834 P.2d 850, 857 (1992), and ―‗[t]he relationship between an attorney and 
client is one of agency‘ in which the client is the principle and the attorney is the agent.‖  
Caballero v. Wikse, 140 Idaho 329, 332, 92 P.3d 1076, 1079 (2004) (quoting Muncey v. 
Children’s Home Finding and Aid Soc. of Lewiston, 84 Idaho 147, 151, 369 P.2d 586, 588 
 
23 
(1962).  Even if Reed prevails in the Underlying Case, a relationship of agency still existed 
between the Respondents and their clients. 
 
Finally, Reed alleges in the ―Facts‖ section of his complaints that Respondents engaged 
in tortious interference with contractual rights.   
 
On February 22, 2007, Reed J. Taylor voted the stock of AIA Insurance, 
Inc. and attempted to take control of it pursuant to his contractual rights as 
provided under the law, the contract documents, and I.C. § 30-1-722.  However, 
the interested directors of AIA Insurance, Inc. (including R. John Taylor) by and 
through [Respondents] intentionally assisted in breaching the terms of the 
Amended and Restated Stock Pledge Agreement and refused to acknowledge 
Plaintiff Reed J. Taylor‘s valid vote of the stock of AIA Insurance, Inc. and 
refused to surrender control as required.  [Respondents] further engaged in 
inappropriate conduct in assisting interested parties (including R. John Taylor) in 
obtaining and/or maintaining a restraining order and preliminary injunction 
against Plaintiff Reed J. Taylor, when [Respondents] knew there was no 
legitimate legal basis to do so, that doing so was an intentional violation and 
tortious interference with Reed J. Taylor‘s contractual rights, and that the assets 
and funds of AIA Insurance, Inc. were being misappropriated and/or not 
safeguarded. 
Under Idaho law it is factually impossible for a party to tortiously interfere with that party‘s own 
contract.  Ostrander v. Farm Bureau Mut’l Ins. Co. of Idaho, Inc. 123 Idaho 650, 654, 851 P.2d 
946, 950 (1993).  As noted above, the client-attorney relationship is one of agency, and in line 
with this Court‘s decision in Beco Const. Co, Inc. v. J-U-B Engineers, Inc., 145 Idaho 719, 184 
P.3d 844 (2008), where an agent is acting within the scope of his representation he shall be 
treated the same as his principal for purposes of tortious interference with a contract.   
Reed‘s complaints fail to allege sufficient facts to make out causes of action for civil 
conspiracy, or tortious interference with a contract.  In addition, other than an attempt to claim 
that Respondents were never properly employed by the AIA Entities - a claim dealt with above - 
Reed fails to allege that Respondents were acting outside the scope of their employment or solely 
for their own benefit.  Therefore, these claims are also barred by the litigation privilege. 
2.  Legal malpractice and breach of fiduciary duty. 
 
This Court considered a claim of legal malpractice in Harrigfeld v. Hancock, finding: 
―The elements of a legal malpractice actions are: (a) the existence 
of an attorney-client relationship; (b) the existence of a duty on the 
part of the lawyer; (c) failure to perform the duty; and (d) the 
negligence of the lawyer must have been a proximate cause of the 
damages to the client . . . 
 
24 
As to the burdens of proof in such cases . . . ‗[t]he burden 
of proving that an attorney has been negligent or failed to act with 
proper skill and that damages resulted therefrom is on the plaintiff 
client‘ and . . . ‗[l]ikewise the burden is on the plaintiff to show 
that the negligence of the attorney was a proximate cause of the 
client‘s damage.‘‖ Sherry v. Diercks, 29 Wash. App. 433, 628 P.2s 
1336, 1338 (1981) (citations omitted). 
We agree with the Washington court as to the elements of a cause of 
action for legal malpractice and to allocation of the burden of proof in such cases. 
140 Idaho 134, 136, 90 P.3d 884, 886 (2004) (quoting Johnson v. Jones, 103 Idaho 702, 706-07, 
652 P.2d 650, 654-55 (1982)). 
 
It is clear that Reed, in his complaints, has failed to allege that he is in an attorney-client 
relationship with Respondents, and therefore lacks the privity necessary to sue Respondents for 
legal malpractice.  Harrigfeld is the only case in which this Court has found an exception to this 
requirement; specifically this Court found that the intended beneficiary of a testamentary 
instrument would have standing to bring a malpractice claim against the attorney who drafted 
said instrument.  Id. at 138, 90 P.3d at 888.  This Court went on to conclude that, ―[a] direct 
attorney-client relationship is required to exist between the plaintiff and the attorney-defendant in 
a legal malpractice action except in this very narrow circumstance.‖  Id. at 139, 90 P.3d at 889.  
This principle was reaffirmed in a case to which Reed was a party – Taylor v. Maile, 142 Idaho 
253, 127 P.3d 156 (2005).  Reed cites to law from other jurisdictions, ignoring the well-
established Idaho precedent, in arguing that third-party beneficiaries to an attorney-client 
relationship may have standing to pursue malpractice claims against an attorney.  Reed offers no 
compelling reason why this Court should expand its carefully reasoned analysis in Harrigfeld, 
and it is incredulous that Reed would attempt to assert that attorneys hired by the AIA Entitites, 
to fight off Reed‘s litigation against those entities, were being retained for Reed‘s benefit.  As 
Reed has failed to plead facts sufficient to find that he has standing to bring claims against 
Respondents for legal malpractice, we find that Reed has failed to state a claim upon which relief 
may be granted, as to malpractice. 
 
As for Reed‘s claim that Respondents breached their fiduciary duties, he has failed to 
allege facts establishing the existence of a duty on the part of Respondents toward Reed.  As this 
Court has held, ―[t]he scope of an attorney‘s contractual duty to a client is defined by the 
purposes for which the attorney is retained.‖  Johnson v. Jones, 103 Idaho 702, 704, 652 P.2d 
650, 652 (1982).  Reed‘s complaints allege that he has been harmed as a result of Respondents 
 
25 
not acting in the best interests of the AIA Entities, but Reed‘s complaints also specifically state 
that he is not suing under a derivative cause of action.  Reed has failed to allege facts which can 
support a finding that Respondents owed any fiduciary duty to Reed personally. 
 
Reed, also claims that his complaints and amended complaints pled causes of action for 
fraud and constructive fraud.  Pursuant to Idaho Rule of Civil Procedure 9(b), fraud must be pled 
with particularity.  As this Court wrote in Glaze v. Deffenbaugh: 
A party must establish nine elements to prove fraud: ―1) a statement or a 
representation of fact; 2) its falsity; 3) its materiality; 4) the speaker‘s knowledge 
of its falsity; 5) the speaker‘s intent that there be reliance; 6) the hearer‘s 
ignorance of the falsity of the statement; 7) reliance by the hearer; 8) justifiable 
reliance; and 9) resultant injury.‖ 
144 Idaho 829, 833, 172 P.3d 1104, 1108 (2007) (quoting Mannos v.Moss, 143 Idaho 927, 931, 
155 P.3d 1166, 1170 (2007)).  Reed fails to plead these elements in a general sense, let alone 
with particularity and, as such, has failed to state a claim upon which relief may be granted as to 
fraud. 
 
―An action in constructive fraud exists when there has been a breach of a duty arising 
from a relationship of trust and confidence, as in a fiduciary duty.‖  Hines v. Hines, 129 Idaho 
847, 853, 934 P.2d 20, 26 (1997).  ―Examples of relationships from which the law will impose 
fiduciary obligations on the parties include when the parties are: members of the same family, 
partners, attorney and client, executor and beneficiary of an estate, principal and agent, insurer 
and insured, or close friends.‖  Mitchell v. Barendregt, 120 Idaho 837, 844, 820 P.2d 707, 714 
(Ct. App. 1991) (found to be in error on other grounds by Polk v. Larrabee, 135 Idaho 303, 314, 
17 P.3d 247, 258)).  It is clear that Reed has not alleged facts sufficient to support an inference 
that he is in an analogous relationship with Respondents, and has therefore not pled a claim upon 
which relief may be granted as to constructive fraud. 
 
3.  Violation of the Idaho Consumer Protection Act, I.C. § 48-601, et seq. 
 
In order to have standing under the Idaho Consumer Protection Act (ICPA), I.C. § 48-
601, et seq., the aggrieved party must have been in a contractual relationship with the party 
alleged to have acted unfairly or deceptively.  See I.C. 48-608(1) (―Any person who purchases or 
leases goods or services and thereby suffers . . .‖); Haskin v. Glass, 102 Idaho 785, 788, 640 P.2d 
1186, 1189 (Ct. App. 1982) (holding ―that a claim under the ICPA must be based upon a 
contract‖).  It is clear from Reed‘s complaints that he is not alleging that he entered into a 
contractual relationship with Respondents.  Therefore, Reed‘s complaints have failed to state 
 
26 
claims for relief under the ICPA.  Respondents further point out that the ICPA only permits 
recovery for certain specific prohibited actions that are deemed to be unfair or deceptive.  See 
I.C. §§ 48-603 – 48-603(E).  Reed‘s complaints fail to allege which specific prohibited unfair or 
deceptive practice they are meant to have engaged in.  Even assuming all facts pled by Reed to 
be true, he has failed to state a claim for which relief may be granted under the ICPA. 
4.  Conversion 
Reed alleges in his complaints that Respondents‘ acceptance of payment for their work as 
attorneys for the AIA Entities amounts to conversion.  Respondents argue that Reed‘s complaints 
fail to allege facts which, if true, would demonstrate that Respondents‘ conduct meets the three 
elements of conversion under Idaho law.  This Court defined conversion in Peasley Transfer & 
Storage Co. v. Smith, as ―a distinct act of dominion wrongfully asserted over another‘s personal 
property in denial of or inconsistent with rights therein.‖  132 Idaho 732, 743, 979 P.2d 605, 616 
(1999).  This definition can be broken down into three elements which are required for a claim of 
conversion to be valid:  (1) that the charged party wrongfully gained dominion of property; (2) 
that property is owned or possessed by plaintiff at the time of possession; and (3) the property in 
question is personal property. 
 
Here it is readily apparent that Reed‘s complaints failed to allege that the property that 
Respondents are meant to have converted was personal property and, therefore, analysis of the 
other elements is unnecessary.  Here Reed has alleged that Respondents converted a sum of 
money, and Idaho case law clearly states that ―[n]ormally, conversion for misappropriation of 
money does not lie unless it can be described or identified as a specific chattel.‖  Warm Springs 
Props., Inc. v. Andora Villa, Inc., 96 Idaho 270, 272, 526 P.2d 1106, 1108 (1974).  See also High 
View Fund, L.P. v. Hall, 27 F. Supp.2d 420, 429 (S.D.N.Y. 1994) (―More particularly, if the 
alleged converted money is incapable of being described or identified in the same manner as a 
specific chattel, it is not the proper subject of a conversion action.‖) (internal quotations and 
citations omitted).  Nothing in Reed‘s complaints suggests that the sums paid to Respondents for 
the services they rendered to their corporate clients could be described or identified as specific 
chattel.  As such, we affirm the district court‘s grant of Respondents‘ motions to dismiss as to 
this claim. 
 
 
 
27 
D.  The district court did not abuse its discretion in denying Reed’s motions to amend his 
complaints. 
 
The district court below denied Reed‘s motions for leave to file amended complaints, on 
the ground that granting these motions would be futile as the proposed amended complaints 
would not have withstood a motion to dismiss.   
 
Under Idaho law, motions for leave to amend pleadings are to be liberally granted, 
however, it is also the case that, as this Court said in Black Canyon Racquetball Club, Inc. v. 
Idaho First National Bank:   
[i]n determining whether an amended complaint should be allowed, where leave 
of the court is required under Rule 15(a), the court may consider whether the new 
claims proposed to be inserted into the action by the amended complaint state a 
valid claim.  If the amended pleading does not set out a valid claim, or if the 
opposing party would be prejudiced by the delay in adding the new claim, or if 
the opposing party has an available defense such as a statute of limitations, it is 
not an abuse of discretion for the trial court to deny the motion to file the 
amended complaint. 
119 Idaho 171, 175, 804 P.2d 900, 904 (1991) (internal citation omitted). 
 
As was acknowledged by the district court, Reed‘s proposed amended complaints set out 
the same causes of action as his original complaints while adding derivative causes of action.  
Having dealt with Reed‘s direct causes of action above, and finding no changes in his proposed 
amended complaint sufficient to alter our analyses, these issues shall not be re-examined.  We 
now consider Reed‘s proposed derivative causes of action. 
 
Idaho Code § 30-1-741 sets out the minimum requirements which must be met in order 
for a derivative claim to be brought, stating: 
Standing.  A shareholder may not commence or maintain a derivative proceeding 
unless the shareholder: 
(1) Was a shareholder of the corporation at the time of the act or omission 
complained of or became a shareholder through transfer by operation of law from 
one (1) who was a shareholder at that time; and 
(2) Fairly and adequately represents the interests of the corporation in enforcing 
the right of the corporation. 
Reed does not allege in either his original complaints or proposed amended complaints that he is 
a shareholder of either AIA Entity.  Rather, Reed claims the status of a former shareholder whose 
stock was redeemed, seeking to recover the balance owing on that stock redemption.  Even if 
Reed‘s claims are true that his security interests entitle him to gain stock in the AIA Entities, he 
 
28 
did not hold stock when this lawsuit was commenced, and does not claim to.  Therefore, it is 
clear under I.C. § 30-1-741 that Reed was not a shareholder at the time he brought this suit, and 
has no standing to pursue a derivative claim on behalf of the corporation.6    
 
As Reed‘s proposed amended complaints did not add any facts in support of his direct 
causes of action raised in his original complaints, and as he clearly lacked standing under Idaho 
law to bring derivative claims, not being the shareholder of the corporation he wished to bring 
suit on behalf of, we find that the district court acted within its discretion in denying Reed‘s 
motions for leave to amend his complaints on the ground of futility. 
E.  Attorney fees below 
 
As this Court stated in Henderson v. Henderson Investment Properties, L.L.C.: 
When reviewing a trial court‘s award of attorney fees, this Court applies an abuse 
of discretion standard.  ―To determine whether there is an abuse of discretion this 
Court considers whether (1) the court correctly perceived the issue as one of 
discretion; (2) the court acted within the boundaries of such discretion and 
consistently with legal standards applicable to specific choices; and (3) the court 
reached its decision by an exercise of reason.‖ 
148 Idaho 638, __, 227 P.3d 568, 569-70 (2010) (quoting Lee v. Nickerson, 146 Idaho 5, 9, 189 
P.3d 467, 471 (2008) (internal citations omitted). 
 
It is clear from the district court‘s order granting attorney fees that it recognized the issue 
as one of discretion, and that it reached its decision through an exercise of reason, on all bases it 
considered.  The question therefore, is whether the court acted within the boundaries of 
discretion consistent with legal standards in reaching its determinations.  The district court 
awarded attorney fees under: (1) I.C. § 12-121 and I.R.C.P. 54(e)(1); (2) I.C. § 30-1-746(2)-(3); 
and (3) I.C. § 48-608(5).   We shall review each to determine whether the district court exceeded 
the boundaries of its discretion. 
 
1.  Idaho Code § 12-121 and I.R.C.P. 54(e)(1) 
 
Idaho Code § 12-121 states:  
In any civil action, the judge may award reasonable attorney‘s fees to the 
prevailing party or parties, provided that this section shall not alter, repeal or 
                                                 
6 Although Reed‘s lack of shareholder status is determinative, it is also unlikely that Reed could meet the second 
qualification, of fairly and adequately representing the interests of the corporation as he had filed suit in the 
Underlying Case seeking to recover corporate money and assets for his own individual benefit.  See New Crawford 
Valley, Ltd. v. Benedict, 847 P.2d 642 (Colo. App. 1993); Guenther v. Pacific Telecom, Inc., 123 F.R.D. 341 (D. 
Ore. 1987). 
 
29 
amend any statute which otherwise provides for the award of attorney fees.  The 
term ―party‖ or ―parties‖ is defined to include any person, partnership, 
corporation, association, private organization, the state of Idaho or political 
subdivision therefore. 
Idaho Rule of Civil Procedure 54(e)(1) reads as follows: 
Attorney Fees.  In any civil action the court may award reasonable attorney fees, 
which at the discretion of the court may include paralegal fees, to the prevailing 
party or parties as defined in Rule 54(d)(1)(B), when provided for by any statute 
or contract.  Provided, attorney fees under section 12-121, Idaho Code, may be 
awarded by the court only when it finds, from the facts presented to it, that the 
case was brought, pursued or defended frivolously, unreasonably or without 
foundation . . . 
 
In reaching his conclusion that all of Reed‘s claims were brought frivolously, 
unreasonably, and without foundation, the district court clearly considered each claim which had 
been brought by Reed against the Respondents, and clearly articulated why it felt each claim was 
brought frivolously, unreasonably and without foundation.  However, in its reasoning the district 
court applied the litigation privilege which, having never been addressed or applied previously 
by Idaho courts, is an issue of first impression.  As such, Reed argues that it was inappropriate to 
grant attorney fees under I.C. § 12-121.  See Campbell v. Kildew, 141 Idaho 640, 651, 115 P.3d 
731, 742 (2005) (―Where a case involves a novel legal question, attorney fees should not be 
granted under I.C. § 12-121.‖).   However, as may be seen from the foregoing analysis, even 
without taking the litigation privilege into consideration, the district court‘s decision to grant the 
12(b)(6) motions to dismiss would be affirmed.  This is because these claims were brought 
frivolously, unreasonably, and without foundation.  The complaints filed by Reed are overly 
conclusive in nature with insufficient factual allegations, even under Idaho‘s notice-pleading 
standard, and demonstrate an often-incorrect understanding of the law.  We therefore uphold the 
district court‘s grant of attorney fees under I.C. § 12-121 and I.R.C.P. 54(e)(1). 
2.  Idaho Code § 30-1-746(2)-(3) 
Idaho Code § 30-1-746(2)-(3) provides that upon the termination of a derivative 
proceeding acourt may: 
(2)  Order the plaintiff to pay any defendant‘s reasonable expenses, including 
counsel fees, incurred in defending the proceeding if it finds that the proceeding 
was commenced or maintained without reasonable cause or for an improper 
purpose; or 
(3)  Order a party to pay an opposing party‘s reasonable expenses, including 
counsel fees, incurred because of the filing of a pleading, motion or other paper, if 
 
30 
it finds that the pleading, motion or other paper was not well grounded in fact, 
after reasonable inquiry, or warranted by existing law or a good faith argument for 
the extension, modification or reversal of existing law and was interposed for an 
improper purpose, such as to harass or cause unnecessary delay or needless 
increase in the cost of litigation. 
―An award of attorney fees under [I.C. § 30-1-746] is discretionary and should be subject 
to review and vacated only upon a showing of an abuse of discretion.‖  McCann v. McCann, 138 
Idaho 228, 238, 61 P.3d 585, 595 (2002).  Reed attempted to plead derivative causes of action 
against Respondents, but as the district court denied Reed‘s motions for leave to amend his 
complaints, the claims were never before the court.  As the derivative causes of action were 
never a part of Reed‘s complaints the termination of this case cannot properly be characterized as 
the termination of a derivative proceeding.  We find that the district court abused its discretion in 
awarding attorney fees under this statute, but as we uphold attorney fees under I.C. § 12-121 and 
I.R.C.P. 54(e)(1) this error is harmless. 
3.  Idaho Code § 48-608(5) 
Under ICPA, I.C. § 48-608(5): 
Costs shall be allowed to the prevailing party unless the court otherwise directs.  
In any action brought by a person under this section, the court shall award, in 
addition to the relief provided in this section, reasonable attorney fees to the 
plaintiff if he prevails.  The court in its discretion may award attorney‘s fees to a 
prevailing defendant if it finds that the plaintiff‘s action is spurious or brought for 
harassment purposes only. 
 
As Reed never purchased or leased any goods or services from Respondents and clearly 
did not meet the threshold requirements of making a claim under ICPA, it cannot be said that the 
district court abused his discretion in finding that Reed brought this claim spuriously, for the 
harassment purposes only.  We therefore affirm the grant of attorney fees under the authority 
provided in I.C. § 48-608(5). 
F.  Attorney Fees 
 
Respondents request attorney fees on appeal pursuant to Idaho Appellate Rule 41, Idaho 
Code §§ 12-121, 30-1-746, and 48-608(5).  Consistent with the immediately preceding analysis, 
we deny attorney fees under I.C. § 30-1-746 for the same reason we find that they were 
improperly awarded on this basis below.  We find that Respondents are entitled to attorney fees 
under I.C. § 48-608(5), as Reed has appealed his ICPA claim despite the fact that the claim 
clearly failed as a matter of law, and was brought spuriously for harassment purposes only.  
 
31 
Additionally, Respondents are entitled to attorney fees under I.C. § 12-121 and I.A.R. 41 as this 
appeal was brought spuriously and without foundation, for harassment purposes only. 
V. CONCLUSION 
 
The district court erred in taking judicial notice of the Underlying Case when considering 
Respondents‘ motions to dismiss under 12(b)(6), but as this Court considers the grant of a 
motion to dismiss on a de novo basis and has not considered the Underlying Case in this 
determination, this error is found harmless.  We affirm the district court‘s grant of Respondents‘ 
12(b)(6) motions to dismiss.   
We hold that the litigation privilege applies in Idaho, and bars a litigant from bringing 
claims against the attorneys of his adversary in that litigation, where the claims are grounded in 
the attorneys‘ conduct or communications made in the course of representing their clients in that 
litigation, and the attorneys are acting within the scope of that representation and not solely for 
their own benefit.  We find that in all instances the claims brought by Reed against Respondents 
were: (1) barred by the litigation privilege; (2) supported by insufficiently pled facts; (3) 
insufficient as a matter of law; or (4) are not ripe for litigation. 
We affirm the district court‘s act of discretion in denying Reed‘s motions for leave to amend 
his complaints because (1) Reed was not a shareholder of the Corporations at the time of the 
alleged injury and therefore lacked standing to bring derivative actions, and (2) Reeds proposed 
alterations to his pleading regarding his direct causes of action did not alter the analyses, as 
applied to his original complaints. 
The district court abused its discretion in awarding attorney fees to Respondents pursuant to 
I.C. § 30-1-746, but properly awarded attorney fees under I.C. §§ 12-121 and 48-608(5).  Costs 
and attorney fees to Respondents. 
 
Chief Justice EISMANN and Justices J. JONES and TROUT, J., Pro Tem, CONCUR. 
HOSACK, J., Pro tem, specially concurring. 
 
I concur with both the analysis and the holding.  I only note that, in my opinion, the 
application of the litigation privilege is determinative as to the motion to dismiss.  Once the 
litigation privilege is determined to be the applicable law, the trial court‘s grant of the motion to 
dismiss and its denial of the motion to amend could be affirmed on those grounds alone.