Case Title: Mortensen v. Stewart Title Guaranty Company Breach of Contract - SUBSTITUTE

Citation: 

Docket Number: 35949

State: idaho

Court: Idaho Supreme Court (civil)

Date: 2010-07-01T00:00:00Z

Document:
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IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 35949 
 
 
VERNON JERRY MORTENSEN, 
 
                                   Plaintiff/Appellant,                                                                                     
v.                                                       
                                                         
STEWART TITLE GUARANTY 
COMPANY,               
                   
                                     Defendant/Respondent. 
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Coeur d’Alene,  April 2010 Term 
 
2010 Opinion No.  77 
 
Filed:  July 1, 2010 
 
Stephen W. Kenyon, Clerk 
 
SUBSTITUTE OPINION.  THE  
COURT’S 
PRIOR 
OPINION 
DATED APRIL 26, 2010 IS 
HEREBY WITHDRAWN. 
 
Appeal from the District Court of the First Judicial District of the State of  
Idaho, Kootenai County.  Hon. Lansing L. Haynes, District Judge. 
 
The decision of the district court is affirmed. 
 
Johnson & Monteleone, LLP, Boise, for appellant.  Samuel Johnson argued. 
 
Kirkpatrick & Lockhart, Spokane, for respondent.  Joseph T. Reuter argued. 
 
 
 
W. JONES, Justice 
I.  NATURE OF THE CASE 
Vernon J. Mortensen appeals the district court’s decision granting summary judgment to 
Stewart Title Guaranty Company in his action for breach of contract and intentional infliction of 
emotional distress.  Mortensen claims that he is entitled to relief for Stewart Title Guaranty 
Company’s failure to defend the appeal in his suit to secure an easement running over an access 
road to his property. 
II.  FACTUAL AND PROCEDURAL BACKGROUND 
Vernon J. Mortensen, appellant, owns a parcel of land near Coeur d’Alene, Idaho, for 
which he purchased title insurance from Stewart Title Guaranty Company (“Stewart Title”), 
respondent.  The policy insured both title and access to the property.  Mortensen’s parcel 
 
 
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connects to a county highway via a primitive access road that runs over properties belonging to 
Dennis and Sherrie Akers.  When Mortensen acquired his land in 1994, part, but not all, of this 
access road was subject to an express easement in favor of Mortensen’s estate. 
In 1982, the Akerses built an improved curved driveway on their land from the county 
highway to the access road, shortcutting a preexisting sharp turn in the access road.  They had 
been permitting Mortensen to access his parcel via the curved driveway and the access road, but 
did not want the road to be widened or improved.  In November of 2001, Mortensen sent a letter 
to Stewart Title demanding that it act to ensure access to his property, as he was planning on 
selling a portion of his parcel to David L. White, a business partner, and his wife Michelle.  
White and Mortensen apparently sought to subdivide their parcels into a housing development 
and needed to widen the access road to do so.  Sometime thereafter in late 2001, a Stewart Title 
representative contacted the Akerses and requested that they quitclaim the portion of their 
property not subject to the express easement so that Mortensen could access his land.  The 
Akerses declined the request.  Nonetheless, on or about January 3, 2002, White and Mortensen 
entered onto the Akerses’ curved driveway, bulldozed a gate, and began excavating the road.  
Roughly a week later, the Akerses sued the Mortensens and the Whites for trespass, negligence, 
and to quiet title.  Stewart Title provided counsel to Mortensen during the ensuing bench trial 
and, due to the difficulty in separating all the causes of action, defended him not just in the quiet-
title claim, but on the tort claims as well.  After seven total days of trial, the district court found 
the Whites and Mortensens jointly liable for $10,000 in compensatory damages for emotional 
distress and treble trespass damages of $51,000.  It also found Mortensen individually liable for 
$150,000 in punitive damages. 
This Court has twice heard appeals in the Akers case.  Akers v. D.L. White Constr., 142 
Idaho 293, 127 P.3d 196 (2005) (“Akers I”); Akers v. Mortensen, 147 Idaho 39, 205 P.3d 1175 
(2009) (“Akers II”).  In the most recent ruling, this Court affirmed the trial court’s finding that a 
prescriptive easement 12.2 feet wide permits Mortensen to reach his property over the access 
road, but remanded for further fact finding on the exact location of the easement and for a 
redetermination of damages.  Akers II, 147 Idaho at 44, 48, 205 P.3d at 1180, 1184.  The lower 
court’s decision on remand is still pending. 
During Mrs. Akers’ testimony at trial, Mortensen learned for the first time that Stewart 
Title had requested the quitclaim deed from the Akerses without first notifying Mortensen.  
 
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Additionally, while the lawsuit was pending, Stewart Title conveyed to White and Mortensen a 
quitclaim deed from Kathryn Baker, the Akerses’ predecessor in interest, for the triangular piece 
of land containing both the access road’s entry point onto the highway and the Akerses’ curved 
driveway.  Mortensen and the Whites then apparently improved this parcel by attempting to 
develop the access road.  However, this Court has since upheld the district court’s ruling that the 
triangular parcel actually belongs to the Akerses.  Akers I, 142 Idaho at 203, 127 P.3d at 300.  
Last, again during trial, Stewart Title represented to Mortensen that it would pursue his appeal, 
but after Mortensen’s motion to reconsider was denied, Stewart Title opted instead to pay 
Mortensen the full limit of the title-insurance policy and terminate representation. 
On July 2, 2007, Mortensen sued Stewart Title for fraud, breach of contract, and 
emotional distress, among other claims.  Mortensen also raised a claim for quasi-estoppel during 
the hearing on Stewart Title’s motion for summary judgment.  The district court granted 
summary judgment to Stewart Title, finding that Stewart Title did not breach any of the contract 
terms, that there was no factual issue as to his quasi-estoppel claim, and that the emotional-
distress claim was time-barred under I.C. § 5-219.  The court also awarded $25,000 in attorney 
fees to Stewart Title.  Mortensen argues on appeal that Stewart Title breached its contractual 
duty to act diligently and in good faith by notifying the Akerses that they might have a valid 
quiet-title claim against Mortensen and by incorrectly representing to him that he owned the 
triangular piece of land containing the access road’s entry point onto the highway.  Mortensen 
also contends that Stewart Title breached its contract by refusing to provide counsel for him on 
appeal in the Akers litigation, and that even if it did not breach its contract, it was estopped from 
abandoning the appeal.  He last contends that his emotional-distress claim was not time-barred 
and that Stewart Title was not entitled to attorney fees.  Stewart Title responds that it was 
permitted under the contract to take any reasonable actions to ensure that Mortensen could access 
his land and that it was also permitted to terminate his representation by paying the limit of the 
insurance policy. 
III.  ISSUES ON APPEAL 
1. 
Whether Stewart Title breached the insurance policy by paying the limit of the policy 
rather than representing Mortensen on appeal in the Akers litigation. 
2. 
Whether Stewart Title could refuse to represent Mortensen on appeal in the Akers 
litigation under the doctrine of quasi-estoppel. 
 
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3. 
Whether Stewart Title was in breach for failing to act diligently when it attempted to 
obtain quitclaim deeds for portions of the access road. 
4. 
Whether the district court correctly granted summary judgment to Stewart Title on 
Mortensen’s claim for emotional distress. 
5. 
Whether the district court properly awarded attorney fees to Stewart Title. 
6. 
Whether Stewart Title is entitled to attorney fees on appeal. 
IV.  STANDARD OF REVIEW 
When reviewing a grant of summary judgment, this Court applies the same standard of 
review used by the district court in ruling on the motion.  Vreeken v. Lockwood Eng’g, 148 Idaho 
89, ---, 218 P.3d 1150, 1162 (2009).  Summary judgment is appropriate where “the pleadings, 
depositions, and admissions on file, together with the affidavits, if any, show that there is no 
genuine issue as to any material fact and that the moving party is entitled to a judgment as a 
matter of law.”  I.R.C.P. 56(c).  The movant carries the burden of showing that no genuine issues 
of material fact exist.  Losee v. Idaho Co., 148 Idaho 219, ---, 220 P.3d 575, 578 (2009).  “[A]ll 
allegations of fact in the record, and all reasonable inferences from the record are construed in 
the light most favorable to the party opposing the motion.”  Hei v. Holzer, 139 Idaho 81, 85, 73 
P.3d 94, 98 (2003).  However, when the moving party provides evidentiary support for its 
motion for summary judgment, “an adverse party may not rest upon the mere allegations or 
denials of that party’s pleadings.”  I.R.C.P. 56(e). 
V.  ANALYSIS 
A. 
Stewart Title Properly Exercised Its Contractual Right to Pay the Policy Limit 
Instead of Defending Mortensen’s Appeal 
Mortensen alleges that Stewart Title was contractually obligated to defend his Akers 
appeal and that Stewart Title also breached the contract by failing to deliver actual access to his 
property. 
First, Stewart Title did not breach its contract by failing to provide a usable route to 
Mortensen’s land.  An insured is entitled to recover only “up to the amount of insurance 
coverage under the policy.”  Anderson v. Title Ins. Co., 103 Idaho 875, 878, 655 P.2d 82, 85 
(1982).  There was doubt as to whether Mortensen had legal access to his land at the time 
Stewart Title withdrew representation.  There is no dispute, however, that Stewart Title tendered 
a check for $200,000 to Mortensen, representing the full value of the policy.  At that point, 
 
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Stewart Title had fulfilled its duties as insurer, regardless of whether Mortensen actually 
acquired access to his property. 
Second, the plain text of the insurance policy also permitted Stewart Title to pay the limit 
of the policy instead of pursuing Mortensen’s appeal.  Insurance policies are a contract between 
the insurer and the insured.  Hall v. Farmers Alliance Mut. Ins. Co., 145 Idaho 313, 318, 179 
P.3d 276, 280 (2008).  “If the policy at issue does not appear ambiguous on its face, and if 
neither party asserts that it contains an ambiguity, then this Court exercises free review over its 
interpretation,” and applies the plain meaning of the words used.  Idaho Counties Risk Mgmt. 
Prog. Underwriters v. Northland Ins. Cos., 147 Idaho 84, 86, 205 P.3d 1220, 1222 (2009).  The 
generally accepted rule is that express terms in the policy can specifically enable the insurer to 
abandon an appeal.  E.g. Sanchez v. Kirby, 40 P.3d 1009, 1011–12 (N.M. Ct. App. 2001); 
Schneider v. Commonwealth Land Title Ins. Co., 844 N.Y.S.2d 657, 661 (N.Y. Sup. Ct. 2007); 
Truck Ins. Exch. of Farmers Ins. Group v. Century Indem. Co., 887 P.2d 455, 459 (Wash. Ct. 
App. 1995); see also Smith v. Zale Indem. Co., 538 So. 2d 1142, 1144 (1989) (holding that 
express language in the policy permitted the insurer to avoid paying costs on appeal).  Since 
ambiguous language is construed in favor of the insured, “the burden is on the insurer to use 
clear and precise language if it wishes to restrict the scope of its coverage.”  Arreguin v. Farmers 
Ins. Co., 145 Idaho 459, 461, 180 P.3d 498, 500 (2008) (quotation omitted).  The issue therefore 
is whether Stewart Title used language clearly reserving the right to abandon the appeal in favor 
of paying Mortensen the benefits under the insurance policy. 
The policy language regarding Stewart Title’s duty to defend is not ambiguous, nor do 
the parties claim it is.  Section 4(c) of the policy permits Stewart Title to decide whether it will 
appeal an unfavorable court decision.  It provides in relevant part: 
Whenever the Company shall have brought an action or interposed a 
defense as required or permitted by the provisions of this policy, the Company 
may pursue any litigation to final determination by a court of competent 
jurisdiction and expressly reserves the right, in its sole discretion, to appeal from 
any adverse judgment or order. 
Section 6 empowers Stewart Title to terminate its obligations, including the duty to defend, if it 
pays the policy limit to the insured: 
In case of a claim under this policy, the Company shall have the following 
additional options: 
. . . . 
 
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To pay or tender payment of the amount of insurance under this policy 
together with any costs, attorneys’ fees and expenses incurred by the insured 
claimant, which were authorized by the Company, up to the time of payment or 
tender of payment and which the Company is obligated to pay. 
Upon the exercise by the Company of this option, all liability and 
obligations to the insured under this policy, other than to make the payment 
required, shall terminate, including any liability or obligation to defend, 
prosecute, or continue any litigation, and the policy shall be surrendered to the 
Company for cancellation. 
Under the plain language in the insurance policy, Stewart Title had the contractual ability to 
abandon Mortensen’s appeal and to instead tender full payment of the policy to Mortensen.  
Stewart Title therefore did not breach the insurance policy by opting to pay the policy limit. 
B. 
Mortensen Failed to Plead a Quasi-Estoppel Claim for Stewart Title’s Decision to 
Abandon the Appeal 
Mortensen argues that Stewart Title was estopped from abandoning his appeal in the 
Akers litigation because it represented during the trial that it would provide his counsel on appeal 
and because it also allegedly never provided Mortensen with a copy of his policy.  To prevail on 
a quasi-estoppel theory, the claimant must show: 
(1) the offending party took a different position than his or her original position, 
and (2) either (a) the offending party gained an advantage or caused a 
disadvantage to the other party; (b) the other party was induced to change 
positions; or (c) it would be unconscionable to permit the offending party to 
maintain an inconsistent position from one he or she has already derived a benefit 
or acquiesced in. 
Terrazas v. Blaine County, 147 Idaho 193, 200 n.3, 207 P.3d 169, 176 n.3 (2009). 
The district court may only consider on summary judgment claims that were properly 
raised in the pleadings.  Gardner v. Evans, 110 Idaho 925, 939, 719 P.2d 1185, 1199 (1986).  “A 
complaint need only contain a concise statement of the facts constituting the cause of action and 
a demand for relief.”  Clark v. Olsen, 110 Idaho 323, 325, 715 P.2d 993, 995 (1986) (citing 
I.R.C.P. 8(a)(1)).  The key to a valid pleading is that it must put the opposing party on notice of 
the claims against it.  Youngblood v. Higbee, 145 Idaho 665, 668, 182 P.3d 1199, 1202 (2008).  
This Court has previously held that a complaint can still state a cause of action if the prayer for 
relief and alleged facts could put the defendant on notice of the claim and the defendant responds 
to the claim in its answer.  Seiniger Law Office, P.A. v. N. Pac. Ins. Co., 145 Idaho 241, 247, 178 
P.3d 606, 612 (2008) (discussing Vendelin v. Costco Wholesale Corp., 140 Idaho 416, 427–28, 
95 P.3d 34, 45–46 (2004)). Thus, even if a complaint does not specifically state a given cause of 
 
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action, it can satisfy the pleading requirement so long as the factual allegations themselves could 
fairly put the opposing party on notice of the claim against it.  See Gillespie v. Mountain Park 
Estates, L.L.C., 138 Idaho 27, 30, 56 P.3d 1277, 1280 (2002) (stating that specific factual 
assertions put the defendant on notice of a promissory-estoppel claim).   
This claim was improperly pled.  Here, no quasi-estoppel claim appears in the body of 
the complaint or the prayer for relief.  The complaint does state that Stewart Title had 
represented to Mortensen it would pursue his appeal but then abandoned the litigation.  However, 
there is no allegation that this change in position prejudiced Mortensen, was unconscionable, or 
that the second element of the quasi-estoppel test was otherwise met.  These alleged facts were 
also apparently part of Mortensen’s breach of contract claim, making it less likely that Stewart 
Title would also construe them as part of a quasi-estoppel claim.  Indeed, Stewart Title 
apparently was not on notice of a quasi-estoppel claim because it nowhere addresses any 
estoppel argument in its memorandum in support of its motion for summary judgment.  Cf. 
Vendelin v. Costco Wholesale Corp., 140 Idaho 416, 427–28, 95 P.3d 34, 45–46 (2004) (stating 
that the plaintiff had satisfied the pleading requirements because the defendant responded to the 
claim in its answer).  The pleadings therefore did not properly raise a quasi-estoppel claim. 
Despite the fact that Mortensen waived his quasi-estoppel claim, the district court 
addressed the cause of action on the merits both in its ruling on summary judgment and in its 
memorandum opinion on Mortensen’s motion for reconsideration.  Mortensen contends that his 
quasi-estoppel claim is now properly before the Idaho Supreme Court because the district court 
reached this issue in its rulings below.  
This Court has already expressly rejected the notion that an unpleaded claim can be 
preserved for appeal merely because the district court addressed the claim’s merits.  Pleading is 
necessary to put the opposing party on notice of the claims it is facing and thereby “insure that a 
just result is accomplished.”  Seiniger Law Office, 145 Idaho at 246–47, 178 P.3d at 611–12.  An 
unpleaded cause of action simply cannot be considered, whether on summary judgment or on 
appeal.  Estes v. Barry, 132 Idaho 82, 86, 967 P.2d 284, 288 (1998).  For example, in Beco v. 
City of Idaho Falls, 124 Idaho 859, 865 P.2d 950 (1993), this Court refused to consider the 
appellant’s unpleaded breach-of-contract claim despite the fact that the district court ruled on the 
claim’s merits.  Id. at 865, 967 P.2d at 956.  Mortensen therefore waived his quasi-estoppel claim 
regardless of whether the district court below reached the merits. 
 
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C. 
There Is No Genuine Issue of Material Fact to Support Mortensen’s Claim that 
Stewart Title Failed to Act Diligently Under the Terms of the Contract 
Mortensen argues that Stewart Title breached a term in his title-insurance policy 
requiring it to act diligently when it attempted unsuccessfully to obtain quitclaim deeds to 
different parts of the access road.  Stewart Title responds that this “diligence” claim was not 
properly pleaded in the claim for breach of contract in the Complaint. 
1. 
The Breach of Contract Claim for Lack of Diligence Was Properly Pled 
Although inartful, Mortensen’s complaint alleged facts sufficient to put Stewart Title on 
notice of a contractual claim for failing to handle his claim diligently.  Count 3 of the complaint 
is for breach of contract but only states that Stewart Title “failed to fully defend Mortensen” in 
the Akers appeal and other postjudgment proceedings.  This count does not state a specific 
factual theory regarding breach of the covenant of diligence or good faith, but “[n]otice pleading 
frees the parties from pleading particular issues or theories, and allows parties to get through the 
courthouse door merely by stating claims upon which relief can be granted.”1  Cook v. Skyline 
Corp. 135 Idaho 26, 33, 13 P.3d 857, 864 (2000).  In the body of factual allegations, the 
complaint states that Stewart Title had secretly offered to purchase the land underlying the access 
road, provoking the Akerses to file their lawsuit against Mortensen.  The complaint also alleges 
that Stewart Title obtained the triangular parcel containing the access-road entrance onto the 
highway and that Mortensen incurred expenses when he improved this parcel incorrectly 
believing he owned it.  Stewart Title subsequently signaled that it understood the claim to allege 
a breach of the covenant of good faith, arguing in the memorandum supporting its summary-
judgment motion that there could be no contractual cause of action for bad faith because Stewart 
Title had paid the limits on the insurance policy.2  Mortensen has therefore satisfied the pleading 
requirements for his bad-faith claim. 
                                                 
1 Count 4 of the complaint is entitled “Bad Faith,” and it alleges that Stewart Title “failed to perform the terms of the 
insurance contract in good faith.”  Of course, a claim for bad faith sounds in tort, not contract.  White v. Unigard 
Mut. Ins. Co., 112 Idaho 94, 97–98, 730 P.2d 1014, 1017–18 (1986). It was apparently unclear to Stewart Title 
whether Mortensen’s claim for lack of diligence was meant to sound in tort or in contract, but Stewart Title 
accounted for both theories.  It also addressed both possibilities in its brief on appeal.  Stewart Title was therefore on 
notice of this possible breach-of-contract theory. 
2 The record on appeal does not show that Stewart Title ever filed an answer.  This is likely because Mortensen 
initially filed his lawsuit pro se against Stewart Title Company of Coeur D’Alene, Inc., a different entity from the 
Stewart Title Guaranty Company that actually issued Mortensen’s title-insurance policy and is now properly 
defending this suit.  Although Mortensen refused at first to substitute the correct party, he relented and named 
Stewart Title as the defendant after he had obtained counsel and Stewart Title of Coeur D’Alene had filed an 
answer. 
 
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2. 
There Exists No Genuine Issue of Material Fact Supporting the Claim for Bad 
Faith Breach of Contract for Lack of Diligence 
Mortensen first contends that Stewart Title breached its contractual duty to act diligently 
and in good faith when it notified the Akerses that Mortensen lacked an express easement to use 
the whole access road that leads to his property, allegedly causing the Akerses to file their 
lawsuit.  He claims that Stewart Title acted in bad faith when it did not inform him that it would 
pass this information along to the Akerses.  Mortsensen also claims that Stewart Title failed to 
act diligently by obtaining a quitclaim deed from Kathryn Baker to the access road’s entry point 
onto the highway and misrepresenting that the quitclaim deed conveyed true ownership, inducing 
Mortensen to expend resources improving the property.   
Of course, Stewart Title had a duty to act in good faith when attempting to settle with a 
third party.  An implied duty of good faith and fair dealing exists between insurers and insureds 
in every insurance policy.  Simper v. Farm Bureau Mut. Ins. Co., 132 Idaho 471, 474, 974 P.2d 
1100, 1103 (1999). 
The insurance policy itself also required Stewart Title to proceed “diligently” when 
acting to protect Mortensen’s interests, but an insurance company can act diligently and in good 
faith but still be unsuccessful in its efforts to settle a dispute with a third party.  The relevant 
portion of the policy reads: 
The Company shall have the right, at its own cost, to institute and 
prosecute any action or proceeding or to do any other act which in its opinion may 
be necessary or desirable to establish the title to the estate or interest, as insured, 
or to prevent or reduce loss or damage to the insured.  The Company may take 
any appropriate action under the terms of this policy, whether or not it shall be 
liable hereunder, and shall not thereby concede liability or waive any provision of 
this policy.  If the Company shall exercise it [sic] rights under this paragraph, it 
shall do so diligently. 
The policy language permits Stewart Title to do whatever it deems necessary to protect 
Mortensen’s easement provided it acts diligently.  Acting diligently does not require infallibility.  
“Diligence” is defined as “[c]are; caution; the attention and care required from a person in a 
given situation.”  Black’s Law Dictionary 488 (7th ed. 1999).  “Diligent” is similarly defined as 
“[c]areful; attentive; persistent in doing something.”  Id. at 489.   
Stewart Title acted with acceptable diligence when it requested a quitclaim deed from the 
Akerses for the portion of the access road not subject to an express easement in favor of 
Mortensen’s estate.  On November 7, 2001, Mortensen sent a letter to Stewart Title stating that 
 
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he was “quite certain” the Akerses would stop him from using the access road if they had “a 
legitimate reason to stop [him].”3  The letter threatened Stewart Title with legal action if it did 
not quickly ensure an easement to Mortensen’s property.  In response, a representative of Stewart 
Title contacted Mrs. Akers by telephone to request a quitclaim deed, but Mrs. Akers rejected the 
offer.  Although it might have been advantageous for Stewart Title to inform Mortensen that it 
intended to contact the Akerses about the easement, it had no obligation to do so under the 
contract, which permitted Stewart Title to take any actions it deemed necessary.  There is no 
reason to believe that contacting the Akerses to seek an amicable settlement was an inappropriate 
response to Mortensen’s demand that Stewart Title obtain access to his land. 
In any event, there is no genuine fact issue to support Mortensen’s contention that 
Stewart Title caused the Akerses to file their lawsuit against Mortensen in the first place.  When 
Mortensen purchased his land, he was aware that his predecessors in interest, Floyd and Stella 
Peplinski, were already involved in litigation against the Akerses over whether the access road 
was subject to an easement in favor of Mortensen’s current property.  Nonetheless, Mortensen 
and his business partner, White, entered onto the Akerses’ curved driveway on January 3, 2002, 
without permission.  They dumped dirt and gravel, damaged a gate, and began excavating the 
road in order to widen it to feed the subdivision they had planned on their parcels.4  This forcible 
trespass is what actually triggered the lawsuit.  The Akerses’ original complaint alleged that 
Mortensen began excavating the access road after they had warned him not to trespass on the 
portions not subject to an express easement.  The complaint then stated causes of action not only 
for quiet title, but also for trespass and negligence.  Thus, there is no factual issue as to whether 
Stewart Title failed to proceed diligently and, even if there were, Mortensen can show no 
damage thereby. 
Last, there is no evidence showing that Stewart Title ever represented that it had 
conveyed true ownership to Mortensen of the triangular parcel containing the Akerses’ curved 
driveway and access road entrance to the highway.  During the Akers trial, Stewart Title 
conveyed to Mortensen a quitclaim deed, not a warranty deed, that it obtained from Baker, a 
prior owner.  Mortensen admitted during the lawsuit he was aware that his ability to use and 
                                                 
3 The letter was addressed to North Idaho Title, a company in the Coeur d’Alene area that actually issued the 
Stewart Title policy. 
4 This excavating work was actually in violation of Kootenai County ordinances governing housing developments.  
The work ended when a county building inspector arrived and issued a stop-work order. 
 
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improve that parcel was disputed.  Any expenses he incurred improving that land were not due to 
Stewart Title’s lack of diligence.  Accordingly, the district court correctly granted summary 
judgment to Stewart Title on Mortensen’s claim for breach of Stewart Title’s contractual duties 
to act diligently and in good faith. 
D. 
There Is No Genuine Issue of Material Fact to Support the Claim for Emotional 
Distress 
Mortensen asserts a cause of action for intentional infliction of emotional distress for the 
anguish he allegedly suffered as a result of Stewart Title’s refusal to provide legal counsel for his 
appeal in the Akers litigation.  The district court granted summary judgment to Stewart Title on 
this claim, finding that it was time-barred by I.C. § 5-219(4) because Mortensen did not file suit 
until three years after discovering that Stewart Title would not defend his appeal.  The parties 
disagree over whether Mortensen has alleged a continuing tort that would toll the statute of 
limitations until the Akers litigation is complete.  However, since there is no issue of material 
fact in support of Mortensen’s claim, this Court does not need to decide whether the failure to 
pursue an appeal is a continuing tort sufficient to toll § 5-219(4). 
Although the district court did not reach the merits of Mortensen’s cause of action for 
emotional distress, this court may nonetheless affirm its order granting summary judgment to 
Stewart Title on the grounds that Mortensen cannot show any genuine issue of material fact in 
favor of his claim.  “This [C]ourt must uphold the finding and judgment of the trial court if it is 
capable of being upheld on any theory.”  Fischer v. Fischer, 92 Idaho 379, 382, 443 P.2d 463, 
466 (1968).   
To prevail on a claim for intentional infliction of emotional distress: “(1) the conduct 
must be intentional or reckless; (2) the conduct must be extreme and outrageous; (3) there must 
be a causal connection between the wrongful conduct and the emotional distress; and (4) the 
emotional distress must be severe.”  Evans v. Twin Falls County, 118 Idaho 210, 220, 796 P.2d 
87, 97 (1990).   
Merely exercising a legal right does not satisfy the outrageousness element of an 
emotional-distress claim.  To be actionable, the conduct must be so extreme as to “arouse an 
average member of the community to resentment against the defendant,” and “must be more than 
unreasonable, unkind, or unfair.”  86 C.J.S. Torts § 74 (2009) (citations omitted).  This Court has 
held that a claim for intentional infliction of emotional distress could result from a bad-faith 
denial of insurance coverage.  Walston v. Monu. Life Ins. Co., 129 Idaho 211, 219–20, 923 P.2d 
 
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456, 464–65 (1996).  However, “[t]he actor is never liable . . . where he has done no more than to 
insist upon his legal rights in a permissible way, even though he is well aware that such 
insistence is certain to cause emotional distress.”  Restatement (Second) of Torts § 46 cmt. g 
(1965); see also Edmondson v. Shearer Lumber Prods., 139 Idaho 172, 180, 75 P.3d 733, 741 
(2003) (finding no outrageous conduct where an employer was exercising a legal right to 
terminate an employee).  “Courts generally agree that merely exercising a legal right cannot 
itself constitute a tort, but that the defendant may nevertheless engage in extreme and outrageous 
behavior in the context of exercising a legal right.” Restatement (Third) of Torts § 45 cmt. d 
(Tentative Draft No. 5, 2007).   
There is no genuine issue of fact that Stewart Title’s conduct was not outrageous or 
offensive.  As explained in Part V.A above, Stewart Title had the legal right to pay Mortensen 
the limit of his insurance policy instead of pursuing further litigation, which it did.  Stewart Title 
sent a letter to Mortensen along with a check for $200,000 notifying him that it was abandoning 
his appeal and did nothing more.  Mortensen does not allege, nor do there appear to be, any 
accompanying circumstances that could amount to extreme and outrageous conduct.  As a matter 
of law Stewart Title simply exercised a legal right and is not liable for causing emotional 
distress. 
E. 
The Award of Attorney Fees Below Is Affirmed 
Idaho Code §§ 41-1839 and 12-123 are the exclusive remedies for obtaining attorney fees 
in disputes arising out of insurance policies.  I.C. § 41-1839(4).  The district court awarded 
$25,000 in attorney fees to Stewart Title pursuant to § 41-1839(4), which permits such an award 
in suits over insurance policies when the court finds “that a case was brought, pursued or 
defended frivolously, unreasonably or without foundation.”  Although § 41-1839 does not clarify 
what cases would be unreasonable or frivolous, this Court has many times addressed I.C. § 12-
121, a similar provision that permits fee awards in frivolous or meritless cases.  Under I.C. § 12-
121, “[i]f there is a legitimate, triable issue of fact or a legitimate issue of law, attorney fees may 
not be awarded.”  Kiebert v. Goss, 144 Idaho 225, 228, 159 P.3d 862, 865 (2007).  “[W]hether a 
statute awarding attorney’s fees applies to a given set of facts is a question of law” subject to free 
review.  Ransom v. Topaz Mktg., 143 Idaho 641, 644, 152 P.3d 2, 5 (2006). 
The district court’s award was proper because Mortensen never raised any triable issues 
of fact.  Mortensen raised an emotional-distress claim and a claim for breach of contract for 
 
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Stewart Title’s refusal to defend his appeal in the face of unambiguous contract language 
permitting Stewart Title to pay the limit on his policy instead of pursuing his appeal.  Mortensen 
also did not attempt to offer any factual evidence to support his claims that Stewart Title acted 
without diligence or in bad faith when it sought to obtain for him an ownership interest in the 
access road, even though he demanded that Stewart Title do something to ensure he had an 
easement there.  The award for attorney fees below pursuant to I.C. § 41-1839(4) is therefore 
affirmed. 
F. 
Stewart Title Is Entitled to Attorney Fees on Appeal 
This Court initially denied Stewart Title’s request for attorney fees on appeal because, 
rather than providing separate authority and argument in its request, Stewart Title only referred 
to another portion of its brief discussing attorney fees in the district court.  Stewart Title filed a 
petition for rehearing, asking this Court to revisit its ruling. 
Idaho follows the “American Rule” of attorney fees, which requires a party requesting 
attorney fees on appeal to cite either statutory or contractual authority in support.  PHH 
Mortgage Servs. Corp. v. Perreira, 146 Idaho 631, 641, 200 P.3d 1180, 1190 (2009).  “We have 
repeatedly held that simply requesting an award of attorney fees pursuant to Idaho Appellate 
Rule 41, without citing any statutory or contractual basis for the award, is insufficient to raise the 
issue of attorney fees on appeal.”  Athay v. Stacey, 142 Idaho 360, 371, 128 P.3d 897, 908 
(2005).  Like notice-pleading rules, however, the reason for this requirement is not strictly 
technical, but is “to allow the responding party a due process opportunity to challenge such 
claims.”  Curr v. Curr, 124 Idaho 686, 694, 864 P.2d 132, 140 (1993) (interpreting I.A.R. 
35(a)(5)); see also Fournier v. Fournier, 125 Idaho 789, 791, 874 P.2d 600, 602 (Ct. App. 1994) 
(“Without such a limitation, a party may be subject to an award against it while being given no 
opportunity to raise relevant facts or to argue applicable legal principles.”).  “Accordingly, a 
request for attorney fees should alert the other party to the basis upon which attorney fees are 
requested in order that the other party may have a sufficient opportunity to object.”  Bingham v. 
Montane Res. Assocs., 133 Idaho 420, 424, 987 P.2d 1035, 1039 (1999); see also Beco Constr. 
Co. v. J-U-B Eng’rs, Inc., 145 Idaho 719, 726, 184 P.3d 844, 851 (2008) (holding that the other 
party must have “adequate notice of [the] claim in order to defend against it”). 
Stewart Title requested attorney fees on appeal in its brief, but only cited to I.A.R. 35 and 
41.  It did, however, ask for fees “for the reasons set forth” in a different subsection of the brief 
 
14 
 
 
dealing with the attorney fees awarded by the district court.  In this separate subsection, Stewart 
Title relied on I.C. § 41-1839(4) in arguing that the district court’s attorney-fee award below 
should be affirmed.  Although Stewart Title has engaged here in a discouraged practice, upon 
reconsideration this Court finds that Stewart Title reasonably put Mortensen on notice that it was 
requesting fees under I.C. § 41-1839(4).  The better method, of course, is always to cite specific 
statutory provisions and to spell out pertinent arguments when requesting attorney fees on 
appeal, or, at a minimum, to expressly incorporate both authority and argument from other 
portions of a brief regarding attorney fees.  Nonetheless, here it was sufficient that Stewart Title 
provided a clear and express internal reference to another portion of its brief containing authority 
and argument on attorney fees.  Additionally, each party submitted briefing regarding this issue 
with respect to Stewart Title’s petition for rehearing. 
As stated above, I.C. § 41-1839(4) authorizes an award of attorney fees if an appeal is 
brought frivolously.  Again, Mortensen is merely asking this Court to second-guess the district 
court’s ruling despite unambiguous controlling language in the insurance policy.  After 
reviewing the briefing on the petition for rehearing, the Court awards attorney fees on appeal in 
this substitute opinion.  See Elec. Wholesale Supply Co. v. Nielson, 136 Idaho 814, 828, 41 P.3d 
242, 256 (2001) (awarding fees where the appellant “failed to present a meaningful issue on a 
question of law”).  Therefore, no rehearing is necessary. Stewart Title’s petition for rehearing is 
denied. 
VI.  CONCLUSION 
The district court’s grant of summary judgment and its award of attorney fees in favor of 
Stewart Title is affirmed because Mortensen raises no genuine issues of material fact in support 
of any of his causes of action.  Although Stewart Title’s petition for rehearing is denied, its 
request for attorney fees on appeal is granted.  Costs to Stewart Title. 
 
Chief Justice EISMANN, Justices BURDICK, J. JONES and HORTON CONCUR.