Title: Lakeland True Value Hardware v. The Hartford Fire Insurance Co.

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

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IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 37987 
 
LAKELAND TRUE VALUE HARDWARE,  
LLC, 
 
       Plaintiff-Appellant, 
 
v. 
 
THE HARTFORD FIRE INSURANCE  
COMPANY, a Connecticut corporation, 
 
       Defendant-Appellant.                            
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Coeur d’Alene, April 2012 Term 
 
2012 Opinion No.  131  
 
Filed:  November 14, 2012 
 
Stephen Kenyon, Clerk 
 
Appeal from the District Court of the First Judicial District of the State of Idaho, 
Kootenai County.  Hon. John T. Mitchell, District Judge. 
 
The judgment of the district court and the district court’s award of discretionary 
costs are affirmed. 
 
Bistline Law, PLLC, Coeur d’Alene, for appellants.  Arthur M. Bistline argued. 
 
Duke Scanlan & Hall, PLLC, Boise, for respondent.  Keely E. Duke argued. 
 
                     _______________________________________________ 
 
HORTON, Justice. 
After the roof collapsed on Lakeland True Value Hardware, LLC’s (Lakeland) store, 
Lakeland sought payment for business personal property and business income losses from its 
insurer, The Hartford Fire Insurance Co. (Hartford). Lakeland filed suit, asserting bad faith and 
breach of contract. The district court granted summary judgment dismissing the bad faith claim 
for lack of evidence that Lakeland’s claim was not fairly debatable. The breach of contract claim 
proceeded to trial, and the jury returned a verdict in favor of Hartford. On appeal, Lakeland 
challenges the order granting summary judgment. Lakeland also asserts: (1) the jury was 
confused as to the period of coverage and the district court’s evidentiary rulings and jury 
instructions relevant to that issue were erroneous; (2) the jury verdict is not supported by 
substantial and competent evidence; and (3) that the district court erred by awarding 
discretionary costs to Hartford. We affirm. 
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I. FACTUAL AND PROCEDURAL BACKGROUND 
The Lakeland True Value Hardware store located in Rathdrum, Idaho, is owned by 
Lakeland, which is in turn owned by Mike and Kathy Fritz. Hartford insured Lakeland against 
business personal property and business income losses. On January 28, 2008, heavy snowfall 
caused the store’s roof to collapse. Shortly after Lakeland notified Hartford of the collapse, 
Hartford hired independent insurance adjuster Steve Bonanno to assess the claim. Bonanno met 
with Mike Fritz on February 4, 2008, and determined that approximately two-thirds of 
Lakeland’s inventory and some of Lakeland’s fixtures had been damaged or destroyed.  
That day, Fritz and Bonanno also met with a salvage company estimator. There is 
conflicting evidence as to the salvage plan the three of them reached. According to Bonanno, the 
salvage company was instructed to create three separate lists as it removed materials from the 
store: (1) undamaged materials removed and stored; (2) partially damaged but salvageable 
materials removed and separately stored; and (3) materials disposed of because they were 
destroyed. According to the salvage company representative, the salvage company was simply 
instructed to remove undamaged property from the areas unaffected by the roof collapse and 
store those materials, while discarding all materials buried by the collapse. Hartford contends 
that it was Lakeland’s obligation to separate the undamaged and salvageable goods in order to 
enable a valuation of the business personal property claim. Lakeland responds that it was not 
informed that this was Hartford’s position and that it would have objected that it was unable to 
pay for such a process.  
On the same day, Hartford advanced $50,000 toward Lakeland’s business personal 
property claim. Ultimately, the materials buried beneath the collapsed roof were discarded, and 
salvaged goods were placed into several storage trailers without any distinction made between 
those that were undamaged and those that were damaged but had limited retail value. These 
goods remained in storage for several months.  
Meanwhile, Hartford hired MD&D, a forensic accounting firm, to evaluate Lakeland’s 
business income claim. On several occasions, MD&D asked Lakeland to provide documentation 
regarding Lakeland’s business income loss, often reiterating previous requests that had gone 
unfulfilled. Hartford also repeatedly instructed Lakeland to provide that documentation. 
Lakeland contends on appeal that it provided sufficient documentation to support its business 
income claim.  
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On March 18, 2008, Hartford advanced Lakeland $50,000 toward its business income 
claim. According to Hartford’s claim notes, MD&D noted the business income loss schedule it 
had created in support of the advance payment was incomplete because MD&D lacked several 
items of requested documentation and MD&D was uncertain “about 1-the expense for the insds 
rental space during repairs 2-whether insd is paying his entire payroll.” Hartford made additional 
business income payments on May 23, 2008 ($73,951) and July 17, 2008 ($30,144).  
Ultimately, Hartford claims adjuster Melanie Copley determined that under the insurance 
policy, the Period of Restoration (the period during which Lakeland was entitled to payment for 
lost business income loss) ended on October 31, 2008. She reached this conclusion by taking into 
account the fact that Lakeland regained access to its retail space on September 1, 2008, then 
adding sufficient time for Lakeland to stock that space. Although she had been told that four to 
six weeks was sufficient to stock the store, Copley allowed eight weeks for Lakeland to restock. 
She thus determined that the Period of Restoration ended on October 31, 2008. Lakeland’s 
financial ability to reopen did not play into Copley’s assessment of the Period of Restoration.  
On September 4, 2008, Lakeland filed suit against Hartford, asserting bad faith and 
breach of contract claims. Hartford continued to request documentation after the suit was filed, 
and also made several payments to Lakeland. Hartford ultimately paid the policy limits of 
$370,000 for Lakeland’s business personal property loss and $266,407 for Lakeland’s business 
income loss.  
On November 14, 2009, the district court ruled from the bench and granted summary 
judgment dismissing Lakeland’s bad faith claim on the grounds that Lakeland had failed to 
provide evidence that its claim was not fairly debatable. Lakeland then filed a memorandum and 
affidavit of counsel in support of a motion to reconsider. The district court denied the motion, 
explaining:  
The dispute in the value of Plaintiff’s claim, that whole dispute was 
caused by the Plaintiff’s inconsistent amounts that they claimed was due. There 
were different figures at different times. And it was caused – that dispute in the 
value of the Plaintiff’s claim was also caused by the Plaintiffs not providing all 
the information the Defendant felt it needed, specifically, the inventory. And that 
is what led to the delay.  
 
On February 14, 2010, Lakeland filed a second motion for reconsideration, supported by 
the affidavit of a certified public accountant, Dan Harper. The district court received argument 
on the motion on February 22, 2010, and again ruled from the bench, denying the motion for 
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reconsideration for lack of proof that the claim was not fairly debatable. On March 9, 2010, 
Lakeland filed another motion for reconsideration of the grant of summary judgment dismissing 
its bad faith claims, which was denied on March 13, 2010, evidently due to the district court’s 
scheduling order. On April 6, 2010, Lakeland filed its final motion for reconsideration of the 
grant of summary judgment as to its bad faith claims and a supporting memorandum. After a 
hearing, the district court took the motion under advisement and on May 17, 2010, the district 
court issued a memorandum opinion and order denying the motion.  
The district court’s opinion focused on the first two elements of a bad faith claim as 
articulated in this Court’s decision in Robinson v. State Farm Mut. Auto. Ins. Co., 137 Idaho 173, 
45 P.3d 829 (2002): 
In an insurance claim, the ball starts rolling with the insured making a claim upon 
the insurer, putting the insurer on notice of the claim. Then the insurer must 
evaluate that claim and act in good faith. But to prove bad faith, the insured must 
prove that: 1) the insurer denied a claim in which coverage was not fairly 
debatable, and 2) that the insured had proven coverage to the point that based o 
the evidence the insurer had before it, the insurer inetnionally and unreasonably 
withheld the insured’s benefits. Robinson v. State Farm Mut. Auto. Ins. Co., 137 
Idaho 173, 178, 45 P.3d 829, 834 (2002). … At summary judgment on Lakeland’s 
bad faith claim, fault upon Lakeland is wholly irrelevant. However, proving the 
claim was not fairly debatable and proving coverage to the point that based on the 
evidence before the insurer, the insurer then intentionally and unreasonably 
withheld benefits is not only relevant, it is dispositive, and, most importantly, it is 
Lakeland’s burden to prove at summary judgment. Because Lakeland made 
unsupported, inconsistent and changing claim demands upon Hartford, at 
summary judgment Lakeland could not prove its own claim was not fairly 
debatable, and Lakeland could not prove coverage to the point[,] based on the 
evidence Lakeland had given to Hartford[,] that Hartford then intentionally and 
unreasonably withheld benefits.  
 
(Emphasis original).  
After the jury began its deliberations, in response to a question from the jury, the parties 
agreed that the district court should submit a substitute special verdict form. The jury returned a 
verdict in Hartford’s favor, finding that Hartford had complied with the Period of Restoration 
term of the insurance policy. Over Lakeland’s objection, the district court subsequently awarded 
Hartford some of its requested discretionary costs. 
Lakeland appeals and challenges the district court’s grant of summary judgment, as well 
as the sufficiency of the evidence supporting the jury verdict. Lakeland also challenges several 
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evidentiary rulings made by the district court, the propriety of certain jury instructions, and the 
district court’s order awarding discretionary costs. Lakeland requests attorney fees on appeal. 
II. ANALYSIS 
A. The district court’s grant of summary judgment dismissing Lakeland’s bad faith claim 
is affirmed. 
 
Lakeland asserts that the district court improperly acted as factfinder at the summary 
judgment phase. Specifically, Lakeland contends that the court impermissibly found that 
Lakeland’s conduct caused the very delays in payment which formed the basis of Lakeland’s bad 
faith claim. Although the district court did make the statement to which Lakeland objects when it  
ruled from the bench, the judge explained “the primary reason for my decision as to dismissing 
all bad faith claims is the lack of proof that this claim is not fairly debatable.” Thus, the issue 
before the Court is whether Lakeland provided the district court with sufficient evidence to 
demonstrate the existence of a genuine issue of material fact as to whether its claim was not 
fairly debatable.  
When this Court reviews an order granting summary judgment, we apply the same 
standard used by the trial court. Partout v. Harper, 145 Idaho 683, 685, 183 P.3d 771, 773 
(2008). All disputed facts and reasonable inferences are construed in favor of the nonmoving 
party. Id. A plaintiff may only avoid summary judgment if it provides proof of each element of 
its claim. Zollinger v. Carrol, 137 Idaho 397, 399, 49 P.3d 402, 404 (2002). A party that merely 
pleads an allegation or provides a scintilla of evidence does not introduce a genuine issue of 
material fact. Petricevich v. Salmon River Canal Co., 92 Idaho 865, 871, 452 P.2d 362, 368 
(1969) (citing 3 Barron & Holtzoff, Federal Practice and Procedure § 1234 (Rules ed. 1958)). 
Rather, “there must be evidence on which a jury might rely.” Id. 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,” this Court will affirm the trial court’s grant of summary judgment. I.R.C.P. 56(c).  
A claim for bad faith exists where “(1) the insurer intentionally and unreasonably denied 
or withheld payment, (2) the claim was not fairly debatable, (3) the denial or failure to pay was 
not the result of a good faith mistake, and (4) the resulting harm is not fully compensable by 
contract damages.” Anderson v. Farmers Ins. Co. of Idaho, 130 Idaho 755, 759, 947 P.2d 1003, 
1007 (1997) (citing White v. Unigard Mut. Ins. Co., 112 Idaho 94, 98-100, 730 P.2d 1014, 1018-
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20 (1986)). As the second element indicates, an insurer does not act in bad faith if it declines to 
pay sums that are reasonably in dispute. Lucas v. State Farm Fire & Cas. Co., 131 Idaho 674, 
677, 963 P.2d 357, 360 (1998). Rather, a claim for bad faith arises only where an insurer 
intentionally denies or delays payment, even though the insured’s claim is not fairly debatable. 
Robinson, 137 Idaho at 176-77, 45 P.3d at 832-33 (citing Anderson, 130 Idaho at 759, 947 P.2d 
at 1007). Whether a genuine issue of material fact exists as to whether a claim was fairly 
debatable is a question of law subject to de novo review. Lucas, 131 Idaho at 677, 963 P.2d at 
360 (citing State v. Larios, 125 Idaho 727, 728, 874 P.2d 538, 539 (1994)). 
We affirm the district court’s grant of summary judgment. However, we do not do so 
based on the narrow ground that Lakeland made “inconsistent and changing claim demands upon 
Hartford.” We decline to follow this line of reasoning because, even though an insured may 
make differing requests for compensation, the claim may be not fairly debatable if the insurer 
possesses sufficient information to make a reasonably certain valuation of the claim.  
Thus, we have closely examined the evidence identified by Lakeland in support of its 
contention that its claim was not fairly debatable.1 This has been difficult, because Lakeland’s 
citations to the record have been largely unhelpful. Lakeland repeatedly cites trial testimony and 
exhibits which, of course, were not before the district court at the time of its decision on 
Hartford’s motion for summary judgment and the subsequent motions for reconsideration. 
Lakeland’s citation to Hartford’s memorandum in support of its motion for summary judgment is 
similarly unhelpful, as Hartford’s observation that “[i]t is remarkable to note that the report of 
Lakeland’s own expert, when appropriately adjusted to reflect the value of surviving inventory 
and the actual historical gross profit margin, establishes a claim value of less than what Hartford 
has already paid” has no bearing upon whether Lakeland’s claim was fairly debatable.  
A review of the record reveals that Hartford repeatedly requested information from 
Lakeland relating to both Lakeland’s business personal property claim and its claim for lost 
business income, which information was not provided prior to the lawsuit. The record further 
reveals that the delay in payment of Lakeland’s claims was directly related to the absence of the 
requested information. The district court’s observation as to the constantly changing claims 
                                                 
1 Although the district court expressly based its decision upon a lack of evidence in support of this element of the 
bad faith prima facie case, the bulk of Lakeland’s argument on appeal is that summary judgment was inappropriate 
because a disputed issue of material fact existed as to whether Hartford intentionally and unreasonably delayed 
payment.  
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advanced by Lakeland reflects the reasonableness of Hartford’s requests for information. Indeed, 
the varying demands demonstrate the necessity for Lakeland to fulfill its obligation to provide 
necessary information so that Hartford could evaluate whether the claims were properly payable.  
As the district court correctly noted, the record is devoid of evidence that Lakeland’s 
claim was not fairly debatable, i.e., that Hartford actually possessed the necessary information to 
determine that Lakeland’s business income and personal property claims were properly payable 
and thereafter failed to timely pay those claims. Therefore, we affirm the district court’s grant of 
summary judgment.  
B. We affirm the district court’s evidentiary rulings, jury instructions, and special verdict. 
On appeal, Lakeland challenges a number of the district court’s rulings at trial. First, 
Lakeland appeals the district court’s decision to exclude Lakeland’s proposed bad faith expert 
witness, Robert Underdown. Second, Lakeland contends that the district court erred by not 
excluding parol evidence that confused the jury by conflating policy terms. Third, Lakeland 
appeals several of the jury instructions submitted to the jury, as well as the special verdict form. 
We address these issues in turn.  
1. The district court properly excluded Lakeland’s proposed bad faith expert witness.  
Lakeland acknowledges that the testimony and opinions of expert witness Underdown are 
only relevant to the issue of bad faith. Since we affirm the district court’s order dismissing 
Lakeland’s bad faith claim on summary judgment, we likewise affirm the court’s order excluding 
Underwood.  
2. Even if admission of Copley’s testimony had the potential to confuse the jury, the 
admission did not affect Lakeland’s substantial rights because it was cured by the jury 
instructions. 
 
Lakeland contends that the district court erred by admitting parol evidence that varied the 
terms of the insurance contract’s definition of the Period of Restoration. Because we hold that 
the admitted evidence did not prejudice Lakeland’s substantial rights, we do not reach the 
question of whether the district court’s admission of the evidence was an abuse of discretion. 
This decision is based upon I.R.C.P. 61, which provides: 
No error in either the admission or the exclusion of evidence and no error 
or defect in any ruling or order or in anything done or omitted by the court or by 
any of the parties is ground for granting a new trial or for setting aside a verdict or 
for vacating, modifying, or otherwise disturbing a judgment or order, unless 
refusal to take such action appears to the court inconsistent with substantial 
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justice. The court at every stage of the proceeding must disregard any error or 
defect in the proceeding which does not affect the substantial rights of the parties. 
 
We initially note that the testimony to which Lakeland objects references express 
language within the insurance contract and therefore is not parol evidence, otherwise known as 
“extrinsic evidence of prior contemporaneous negotiations or conversations . . . .” Lindberg v. 
Roseth, 137 Idaho 222, 228, 46 P.3d 518, 524 (2002). We nonetheless look to the substance of 
the objection and consider whether the testimony confused the jury by erroneously merging the 
language of two distinct provisions of the insurance policy.  
When the language of a contract is clear and unambiguous, its interpretation and 
legal effect are questions of law. An unambiguous contract will be given its plain 
meaning. The purpose of interpreting a contract is to determine the intent of the 
contracting parties at the time the contract was entered. In determining the intent 
of the parties, this Court must view the contract as a whole. . . . Whether a 
contract is ambiguous is a question of law. A contract is ambiguous if it is 
reasonably subject to conflicting interpretations. 
 
Bakker v. Thunder Spring-Wareham, LLC, 141 Idaho 185, 190, 108 P.3d 332, 337 (2005) (citing 
Lamprecht v. Jordan, LLC, 139 Idaho 182, 185–86, 75 P.3d 743, 746–47 (2003)).  
The insurance policy in the present case is unambiguous. Pursuant to the policy, Hartford 
is obligated to pay for Lakeland’s “actual loss of Business Income . . . sustain[ed] due to the 
necessary suspension of your ‘operations’ during the ‘period of restoration.’” Within the section 
titled “Property Definitions” is the definition of Period of Restoration: 
“Period of Restoration” means the period of time that: 
a. Begins with the date of direct physical loss or physical damage caused by or 
resulting from a Covered Cause of Loss, at the “scheduled premises”, and 
b. Ends on the date when: 
(1) The property at the “scheduled premises” should be repaired, rebuilt or 
replaced with reasonable speed and similar quality; 
(2) The date when your business is resumed at a new, permanent location. 
. . .  
 
The language that Lakeland contends was improperly admitted appears in a separate section that 
expressly provides a number of the insured’s rights and obligations, entitled “Property Loss 
Conditions.” This includes the insured’s obligation to mitigate, described as: 
In the event of physical loss or physical damage at the “scheduled premises” you 
must resume all or part of your “operations” as quickly as possible. 
We will reduce the amount of your: 
a. Business Income loss, other than Extra Expense, to the extent you can resume 
your “operations”, in whole or in part, by using damaged or undamaged 
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property (including merchandise or stock) at the “scheduled premises” or 
elsewhere.  
b.  Extra Expenses loss to the extent you can return “operations” to normal and 
discontinue such Extra Expense.  
 
Read together, these sections provide that the insured is entitled to recover actual 
business income losses from the date it suffers a covered loss until either the insured’s business 
property “should be repaired, rebuilt or replaced with reasonable speed and similar quality,” or 
its business is permanently resumed in a new location. In addition, the insured owes a duty to 
mitigate its damages and thus must resume at least part of its operations, even with damaged 
property, as quickly as possible. Thus, while the contract entitles the insured to recover business 
income losses up until the expiration of the Period of Restoration, the insurer may reduce its 
payment to the extent which the insured could have used damaged and undamaged property to 
resume at least part of its operations.  
Lakeland contends that the district court erred by admitting the testimony of claims 
examiner Melanie Copley because her testimony conflated these two distinct but related periods 
and thereby confused the jury as to the means by which to calculate the Period of Restoration. At 
one point in her testimony, Copley did affirm that she was the person who decided that 
“Lakeland should have been able to resume some of its operations by November 1st of 2008.” 
She later explained that in determining the Period of Restoration, “the policy specifically says 
you look at the time from when the loss occurred or when the collapse occurred until they could 
resume part of the operations.”  
Nonetheless, we hold that even if admission of Copley’s testimony may have confused 
the jury, the district court’s denial of Lakeland’s objection is harmless error. “The court at every 
stage of the proceeding must disregard any error or defect in the proceeding which does not 
affect the substantial rights of the parties.” I.R.C.P. 61. Here, Jury Instruction No. 11a instructed 
the jury that Hartford bore the burden of proving that Lakeland breached its duty to timely 
resume operations, and quoted the policy’s precise language regarding that duty. Jury Instruction 
No. 12 instructed that Lakeland bore the burden of proving that Hartford breached its obligation 
to pay business income losses during the Period of Restoration. Again, the instruction quoted the 
relevant policy language.  
We hold that the jury instructions, with their separate presentation of these distinct 
concepts and quotation of the policy’s precise language with regard to each, cured any prejudice 
10 
 
that may have been caused by Copley’s testimony. Since the admitted evidence did not affect 
Lakeland’s substantial rights, we affirm the district court. 
3. The district court properly instructed the jury. 
Lakeland asserts that the district court erred in several of its instructions to the jury. 
When reviewing jury instructions on appeal, the Court is guided by several well-
established general rules of construction. On appeal, the review of jury 
instructions is generally limited to a determination of whether the instructions, 
when considered as a whole and not individually, fairly and adequately present 
the issues and state the applicable law. If the instructions fairly and adequately 
present the issues and state the law, no reversible error is committed. An 
erroneous instruction does not constitute reversible error where the instruction 
taken as whole neither misleads nor prejudices a party. Only instructions which 
are pertinent to the pleadings and the evidence should be given, but where it 
appears that the giving of the instruction did not result in any substantial injury, 
though not founded on the issues, the case will not be reversed. Additionally, the 
giving of an erroneous jury instruction does not generally justify granting a new 
trial unless the appellant can establish that he or she was prejudiced thereby, and 
that the error affected the jury's conclusion.  
 
Robinson v. State Farm Mut. Auto. Ins. Co., 137 Idaho 173, 176, 45 P.3d 829, 832 (2002) 
(citations omitted). 
a. The court properly instructed the jury that Lakeland bore the burden of proving 
the length of the Period of Restoration. 
 
  
Lakeland contends that Hartford bore the burden of proving any contractual condition 
subsequent that reduced the amount of Lakeland’s coverage, and therefore the district court erred 
by instructing the jury that Lakeland bore the burden of proof with regard to the Period of 
Restoration. However, we hold that the court merely instructed the jury that Lakeland bore the 
burden of proving its prima facie case, and therefore its instruction was proper.  
Lakeland’s contention that the parties intended the language of the Period of Restoration 
provision to create a condition subsequent is groundless.  
 
A condition subsequent is a condition that, if performed or violated, as the case 
may be, defeats the contract, or one that, if not met by one party, abrogates the 
other party’s obligation to perform. A condition subsequent presumes a valid 
contract and refers to a future event, which divests a preexisting contractual 
liability. Thus, a contract that is conditioned to become void on a specified event 
is one subject to a condition subsequent. 
 
17A C.J.S. Contracts § 451 (2012). In the present case, the occurrence of the circumstances that 
triggered the expiration of the Period of Restoration did not void Hartford’s obligation to pay 
11 
 
Lakeland for lost business income. Rather, their occurrence simply triggered the end of 
Lakeland’s entitlement to payment for lost business income.  
A plaintiff bears the burden of proving his right to recover by a preponderance of the 
evidence. Miller v. Belknap, 75 Idaho 46, 52, 266 P.2d 662, 665 (1954). Once “the plaintiff has 
made a prima facie case, the defendant must meet it with countervailing proof or suffer whatever 
judgment the prima facie proof will support.” Id. at 51, 266 P.2d at 665. Thus, Lakeland bore the 
burden of proving that Hartford failed to pay sums which it was entitled to recover. We conclude 
that the district court properly instructed the jury. 
b. Lakeland waived its objection to the instruction that summarized the parties’ 
arguments. 
 
Lakeland contends that the trial court erred by instructing the jury that Hartford’s position 
at trial was that “Lakeland should have been able to resume some of its operations following the 
9-month Business Income period.” However, as Hartford correctly observes, Lakeland failed to 
object to this instruction. Since “[n]o party may assign as error the giving of or failure to give an 
instruction unless the party objects thereto before the jury retires to consider its verdict, stating 
distinctly the instruction to which that party objects and the grounds of the objection,” the issue 
is waived on appeal. I.R.C.P. 51(b).  
c. The jury did not reach the issue of mitigation, and therefore Jury Instruction No. 
11a did not affect Lakeland’s substantial rights. 
 
Lakeland contends that the district court erred in giving Instruction No. 11a, which in part 
concerns Hartford’s affirmative defense that Lakeland failed to mitigate by failing to resume its 
operations as required by the insurance contract. Lakeland asserts that the date by which 
Lakeland could have resumed some of its operations was not at issue and that the record contains 
no evidence of how to calculate a reduction of the amount of Lakeland’s Business Income 
coverage. Hartford responds that the issue is waived for lack of any objection before the district 
court.  
Lakeland in fact did object to the mitigation instruction. However, submission of 
Instruction 11a to the jury did not affect Lakeland’s substantial rights because the jury found that 
Hartford correctly determined the end date of the Period of Restoration and therefore the jury did 
not reach the issue of mitigation. Since the Court “must disregard any error or defect in the 
proceeding which does not affect the substantial rights of the parties,” I.R.C.P. 61, and since the 
12 
 
jury’s findings precluded it from addressing the issue of mitigation, Lakeland was not prejudiced 
by Instruction No. 11a.  
4. Lakeland’s appeal with regard to the content of the special verdict form is waived 
because Lakeland did not object to its content before the district court. 
 
Lakeland contends that the special verdict form that the district court submitted to the 
jury was in error because it confused the jury as to the Period of Restoration. A special verdict 
form is erroneous if it incorrectly instructs the jury as to the law or confuses the jury. VFP VC v. 
Dakota Co., 141 Idaho 326, 332, 109 P.3d 714, 720 (2005) (citing Le’Gall v. Lewis Cnty., 129 
Idaho 182, 185, 923 P.2d 427, 430 (1996)). Since Lakeland agreed to the content of the special 
verdict form that the jury ultimately considered, Lakeland has waived this issue on appeal.  
The district court initially provided the jury a special verdict form that began with the 
question: “Was Lakeland capable of resuming some of its operations by November 1st, 2008?” 
The court submitted this instruction to the jury over Lakeland’s objection that it erroneously 
conflated the policy’s Period of Restoration language with its language regarding the duty to 
resume operations. Soon after the jury retired for deliberations, it sent the court the following 
question: “In reference to question # 1 we want to know the actual language of the policy in 
regard to ‘was Lakeland capable’ or ‘should have been capable’ to resume some of its operations 
by November 1, 2008?”  
In response, Lakeland’s attorney stated “This question demonstrates what I’ve been 
talking about all along. They’re confused by this cross-referencing between resume some of its 
operations. That is not the period of restoration, and I knew that it would confuse them, and we 
allowed testimony to say that, and they want to know the actual language of the policy . . . .” He 
then suggested that the court submit a special verdict form that directly quoted the insurance 
policy language regarding Period of Restoration and asked the jury to determine whether 
Hartford had complied with that language. Hartford’s attorney ultimately suggested that since 
Jury Instruction No. 12 already defined the Period of Restoration, the court should submit a 
second special verdict form to the jury, with the first question simply requiring the jury to 
determine whether Hartford erred in determining the Period of Restoration. Counsel for 
Lakeland agreed to this change. The court thus submitted a substitute special verdict form to the 
jury in which the first question was modified to read: “Did Hartford correctly determine the end 
date of the period of restoration?”  
13 
 
Since Lakeland did not object to the language of the substitute special verdict form, and 
in fact expressly agreed thereto, we will not consider this issue on appeal. I.R.C.P. 51(b).  
C. The jury’s verdict was supported by substantial and competent evidence. 
Lakeland contends that no evidence supports the jury verdict because Hartford could not 
calculate the Period of Restoration without considering Lakeland’s financial ability to purchase 
items of similar quality. This Court must affirm the jury verdict if it is supported by substantial 
and competent evidence. Inland Group of Cos., Inc. v. Prov. Wash. Ins. Co., 133 Idaho 249, 253, 
985 P.2d 674, 678 (1999) (citing Quincy v. Joint Sch. Dist. No. 41, 102 Idaho 764, 768, 640 P.2d 
304, 308 (1982)).  
By substantial, it is not meant that the evidence need be uncontradicted. All that is 
required is that the evidence be of sufficient quantity and probative value that 
reasonable minds could conclude that the verdict of the jury was proper. It is not 
necessary that the evidence be of such quantity or quality that reasonable minds 
must conclude, only that they could conclude. 
 
Id. at 253-54, 985 P.2d at 678-79 (citing Quincy, 102 Idaho at 768, 640 P.2d at 308) (emphasis 
original).  
 
We affirm the jury verdict as supported by the following evidence. Claim notes in the 
record indicate that, as early as February 29, 2008, Hartford informed Lakeland that it required 
additional documentation before it could pay Lakeland’s business income loss claim. As of 
March 14, 2008, MD&D had created a schedule of Lakeland’s business income loss that was 
based on incomplete information and was only intended to calculate losses for four months. Just 
over one month later, MD&D continued to request that Lakeland provide documentation 
necessary to accurately calculate the business income loss claim. In response to a May 2, 2008 
request for funds from an independent adjuster hired by Lakeland that characterized Lakeland as 
“desperate for funds,” Hartford informed the adjuster that it required additional documentation.  
 
As of June 27, 2008, MD&D had not received “additional financial information from the 
insured regarding actual payments made during the month of June . . . .” Hartford communicated 
this to Lakeland’s new attorney on July 1, 2008. Lakeland responded with a demand for payment 
and threat of a bad faith lawsuit. Shortly after Lakeland provided additional documentation, 
MD&D informed Lakeland that the documentation was inadequate. The next day, MD&D 
informed Lakeland that it required additional payroll information because it understood that an 
14 
 
employee had left Lakeland’s employ. On September 3, 2008, MD&D informed Hartford that 
Lakeland still had not provided the necessary documentation for July.  
 
Lakeland filed suit on September 4, 2008. Hartford’s and MD&D’s documentation 
requests continued. As one Hartford agent noted in a September 10, 2008 letter to Lakeland’s 
counsel,  
. . . [Hartford has] requested as well as [MD&D] more times then [sic] I can count 
that you provide us with JULY documentation and documentation moving 
forward so that we can complete the schedules and thus issue payment for July 
and the months following. Payment has been made in a timely manner once we 
receive the documentation for our accountant to calculate up until July. 
 
We can NOT issue payments without documentation to support payment. We are 
not able to pull numbers from the sky to pay our insured. If you feel it is 
necessary to file suit w/o supplying us with all the documentation we have 
requested, then proceed with what you need to do. . . . 
I would think you would do well to supply us with the documentation we have 
requested and per our insured’s insurance policy agreement.  
 
In response to this wealth of evidence indicating that Hartford repeatedly requested the 
information necessary for it to assess Lakeland’s business income loss, Lakeland merely points 
to evidence that MD&D had prepared schedules that could estimate Lakeland’s losses. However, 
the claim notes state that those schedules were temporary and based on incomplete information.  
Thus, evidence in the record indicates that Lakeland failed to provide sufficient 
documentation of its actual losses, resulting in Hartford’s inability to value – and consequently 
pay – Lakeland’s claim. While it may be true that Lakeland lacked sufficient funds to restock 
and reopen as of November 1, 2008, Lakeland points to no evidence in the record that it provided 
documentation of its losses sufficient for Hartford to meaningfully assess its business income 
loss. The jury was free to consider Lakeland’s failure to fulfill its obligations under the insurance 
contract when determining the end date of the Period of Restoration. We affirm the jury verdict 
as supported by substantial and competent evidence. 
D. We affirm the district court’s denial of Lakeland’s request for consequential damages, 
as well as its award of Hartford’s discretionary costs. 
 
Lakeland appeals the district court’s order excluding evidence of consequential damages. 
Lakeland also appeals the district court’s order awarding Hartford discretionary costs. 
1. The issue of consequential damages is moot. 
15 
 
Lakeland contends that the district court erred by excluding evidence of Lakeland’s 
consequential damages. However, since we affirm the jury verdict finding that Hartford did not 
breach its obligations to Lakeland, Lakeland is not entitled to any damages. The issue of 
consequential damages is therefore moot. “Mootness applies when a favorable judicial decision 
would not result in any relief.” Webb v. Webb, 143 Idaho 521, 524, 148 P.3d 1267, 1270 (2006) 
(citing State v. Rogers, 140 Idaho 223, 227, 91 P.3d 1127, 1131 (2004)). 
2. The district court properly exercised its discretion by awarding discretionary costs to 
Hartford. 
 
Lakeland contends that the district court erred by awarding Hartford discretionary costs, 
because the costs asserted by Hartford are typical. In response, Hartford first asserts that the 
issue is waived because Lakeland failed to timely object to Hartford’s memorandum of costs. 
Hartford next contends that the district court properly exercised its discretion in granting 
Hartford’s motion for costs.  
a. Lakeland timely objected.  
Hartford contends that Lakeland failed to timely object to its memorandum of costs as 
required by I.R.C.P. 54(d)(6). Lakeland responds that because Hartford served the memorandum 
by mail, Lakeland was entitled to an additional three days to object thereto. The district court 
held that because Hartford delivered the memorandum to Lakeland via overnight mail and 
provided the evidence that it was delivered to Lakeland on June 11, 2010, Lakeland’s June 28, 
2010 objections were untimely.  
Idaho Rule of Civil Procedure 54(d)(6) provides: 
Any party may object to the claimed costs of another party set forth in a 
memorandum of costs by filing and serving on adverse parties a motion to 
disallow part or all of such costs within fourteen (14) days of service of the 
memorandum of cost. . . . Failure to timely object to the items in the 
memorandum of costs shall constitute a waiver of all objections to the costs 
claimed. 
 
Rule 6(a) provides that:  
In computing any period of time prescribed or allowed by these rules, . . . the day 
of the act . . . after which the designated period of time begins to run is not to be 
included. The last day of the period so computed is to be included, unless it is a 
Saturday, a Sunday or a legal holiday, in which event the period runs until the end 
of the next day which is neither a Saturday, a Sunday nor a holiday.  
 
16 
 
Further, under I.R.C.P. 6(e)(1), “[w]henever a party has the right or is required to do some 
act . . . within a prescribed period after the service of a notice or other paper upon the party and 
the notice or paper is served upon the party by mail, three (3) days shall be added to the 
prescribed period.” Whether the time extension granted by I.R.C.P. 6(e) applies to notice or 
papers served by overnight mail is a question of first impression.  
We hold that the plain language of the Rule requires that an additional three days’ time be 
granted where mail, overnight or otherwise, is the means by which a document is served. Since 
Hartford served its memorandum of costs via overnight mail on June 10, 2010, the seventeen day 
window for Lakeland’s objection expired on June 27, 2010. However, since that date was a 
Sunday, Lakeland was entitled to object up until June 28, 2010. Thus, the district court erred in 
ruling that Lakeland’s objection was untimely.  
b. The district court did not abuse its discretion. 
Despite the district court’s determination that Lakeland’s objection was untimely, it 
nevertheless acknowledged its duty to independently evaluate Hartford’s request for an award of 
discretionary costs. We hold that the district court’s award of discretionary costs was not an 
abuse of discretion. The prevailing party in a civil action may seek reimbursement of some costs 
“upon a showing that said costs were necessary and exceptional costs reasonably incurred, and 
should in the interest of justice be assessed against the adverse party.” I.R.C.P. 54(d)(1)(A).  
The grant or denial of discretionary costs is committed to the sound discretion of 
the district court, and will only be reviewed by an appellate court for an abuse of 
that discretion. In considering whether the trial court abused its discretion in 
ruling on a request for discretionary costs, we make a three-step inquiry: (1) 
whether the trial court correctly perceived the issue as discretionary; (2) whether 
the trial court acted within the boundaries of its discretion and consistent with the 
applicable legal standards; and (3) whether the trial court reached its 
determination through an exercise of reason. 
 
Fish v. Smith, 131 Idaho 492, 493, 960 P.2d 175, 176 (1998) (quotations and citations removed).  
In the present case, the district court expressly acknowledged that the award of 
discretionary costs was committed to its discretion. The court also exercised reason, as is 
demonstrated by the lengthy explanation it offered in support of its holding that Hartford was 
entitled to discretionary costs. Thus, the question is whether the district court “acted within the 
boundaries of its discretion and consistent with the applicable legal standards.”  
17 
 
In determining whether to grant Hartford’s request for discretionary costs, the court 
engaged in an extensive review of Idaho case law on the matter, explaining “. . . I think it’s an 
issue that really hasn’t been addressed squarely by any of these cases . . . .” The court explained, 
“I do feel that the plaintiff’s conduct in this case, especially plaintiff’s counsel’s conduct in this 
case has made this case, quote unquote, exceptional,” and cited Hayden Lake Fire Protection 
District v. Alcorn, 141 Idaho 307, 109 P.3d 161 (2005), as support for the proposition that “the 
case itself can be what’s exceptional.” The court reasoned “I do feel from a factual standpoint 
that the plaintiff and the plaintiff’s attorney have succeeded in making this lawsuit and the trial 
something that it really wasn’t and wasn’t supported by the evidence.” Further, the court 
explained, “. . . I think the plaintiff has determined the nature of the case obviously by filing the 
Complaint, and I do think that the Complaint was filed earlier than it needed to be, and I agree 
with Mr. Nickels’ assertion, and there’s argument that it was premature. It was the plaintiff that 
obviously pled bad faith and did not succeed on that, so in that regard the plaintiff made it more 
complex than it needed to be.”  
Based on its review of the case law, the district court concluded that “who drives the 
case, who drives the complexity, who drives the litigation is to be kept in mind in a court’s 
sorting through all of this and deciding who caused [the case] to become exceptional.” In support 
of this conclusion the district court cited Puckett v. Verska, 144 Idaho 161, 169, 158 P.3d 937, 
945 (2007), where this Court affirmed an award of discretionary costs to the plaintiff in a 
medical malpractice case based on the following rationales: (1) “that the costs were in the 
interests of justice because of the case’s length and complexity and that ‘the cost of obtaining 
such experts in order to prevail at trial should not prohibit legitimate claims from being 
pursued;’” and (2) “consider[ing] the exceptionality of the costs in light of the ‘long course of 
litigation and complexity of th[e] case.’” The district court here also looked to Beale v. Speck, 
127 Idaho 521, 537 n. 14, 903 P.2d 110, 126 n. 14 (Ct. App. 1995), where the Court of Appeals 
affirmed an award of discretionary costs to the defendants in a personal injury case where the 
plaintiffs had rejected an offer of judgment that was greater than the eventual jury verdict. The 
district court there reasoned “it was essential for the defendants to obtain an independent medical 
examination, depose plaintiffs’ expert witnesses and to present the testimony of medical experts 
to rebut the plaintiffs’ contentions regarding the extent of damages caused them as a result of the 
18 
 
accident. That was the primary focus of the case, and the costs incurred in obtaining such rebuttal 
evidence were reasonable and justified under the circumstances.” Id.  
Focusing on the present case, the district court explained that “[t]he nature of the case 
became exceptional because it started out as a bad faith case where I think at the inception . . . 
plaintiff’s sloppy accounting and inconsistent demands to the Hartford certainly led to summary 
judgment being rendered for bad faith for the Hartford on the plaintiff’s bad faith claims, so 
Hartford’s left defending a bad faith case, a breach of warranty case for things that it simply 
didn’t do.” Further, the court concluded that Lakeland made the case exceptional by refusing to 
produce the documentation necessary for Hartford to value its claim, and also because its 
“motions to reconsider were repetitive, frustrating and caused a lot of expense for everybody, 
and were unsuccessful, weren’t necessary . . . .”  
This Court has previously held that it “is within the district court’s discretion to grant or 
deny costs and attorney fees based on the ‘interests of justice.’ The inquiry is not whether this 
Court would have held differently, nor is it the standard of this Court’s review. . . . [W]hether the 
district court chooses to grant or deny costs to a party on equity grounds is within its discretion.” 
Great Plains Equip., Inc. v. Nw. Pipeline Corp., 136 Idaho 466, 475, 36 P.3d 218, 227 (2001) 
(citing Caldwell v. Idaho Youth Ranch, Inc., 132 Idaho 120, 128, 968 P.2d 215, 223 (1998)). 
This Court has expressly recognized that a party’s conduct may permit a trial court to award 
discretionary costs. Lettunich v. Lettunich, 145 Idaho 746, 753-54, 185 P.3d 258, 265-66 (2008).  
Given that the district court concluded in its discretion that Lakeland’s conduct made this case 
exceptional and that the interests of justice therefore required that Lakeland compensate Hartford 
for costs related thereto, we hold that the district court did not abuse its discretion by awarding 
Hartford a portion of its requested discretionary costs. We therefore affirm the award.  
E. Lakeland is not entitled to attorney fees on appeal.  
Lakeland requests attorney fees pursuant to I.C. § 41-1839(1), which provides: 
Any insurer issuing any policy, certificate or contract of insurance . . . , which 
shall fail for a period of thirty (30) days after proof of loss has been furnished as 
provided in such policy, certificate or contract, to pay to the person entitled 
thereto the amount justly due under such policy, certificate or contract, shall in 
any action thereafter brought against the insurer in any court in this state or in any 
arbitration for recovery under the terms of the policy, certificate or contract, pay 
such further amount as the court shall adjudge reasonable as attorney’s fees in 
such action or arbitration. 
 
19 
 
Since we affirm the district court’s grant of summary judgment and the jury’s verdict, Lakeland 
is not entitled to attorney fees on appeal.  
III. CONCLUSION 
We affirm the judgment of the district court and the district court’s award of discretionary 
costs. Costs to respondent.  
 
Chief Justice BURDICK and Justices EISMANN, J. JONES and W. JONES CONCUR.