Title: Davis v. Blast

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

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IN THE SUPREME COURT OF THE STATE OF IDAHO 
Docket No. 50491 
 
In Re: Certification of Question of Law. 
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MYLES DAVIS, an individual, and 
JANELLE DAHL, an individual, 
 
     Plaintiffs-Appellants, 
 
v. 
 
BLAST PROPERTIES, INC., dba 
B&B CUSTOM HOMES, an Idaho 
corporation, and TYLER BOSIER, 
an individual; and DOES 1-50, inclusive, 
 
     Defendants-Respondents. 
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Boise, September 2023 Term 
 
Opinion Filed:  June 27, 2024 
 
Melanie Gagnepain, Clerk 
 
Certified question of law from the United States District Court for the District of 
Idaho. B. Lynn Winmill, U.S. District Court Judge.   
  
Certified question of law answered.  
 
Perkins Coie, LLP, Boise, and Singler Professional Law Corporation, Pro Hac Vice 
Windsor, California, for Appellants, Myles Davis and Janelle Dahl. Peter A. Singler 
submitted argument on the briefs. 
 
Johnson May, Boise, for Respondents Blast Properties and Tyler Bosier. Wyatt 
Johnson submitted argument on the briefs.  
_____________________ 
 
BRODY, Justice. 
This case involves a question of law certified by the United States District Court for the 
District of Idaho pertaining to punitive damages. The certified question tasks this Court with 
determining the proper means a trial court must apply when considering a motion to amend a 
pleading to include a prayer for relief seeking punitive damages pursuant to Idaho Code section 6-
1604(2).  
I. 
FACTUAL AND PROCEDURAL BACKGROUND 
This case involves a disputed real estate and construction contract. The plaintiffs have sued 
their homebuilder, alleging breach of contract, fraud, and violations of the Idaho Consumer 
Protection Act. The U.S. District Court granted plaintiffs’ motion to amend their complaint to 
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include a prayer for relief seeking punitive damages, but in doing so, explained that it was 
certifying a question to this Court because state and federal courts in Idaho have been inconsistent 
in their analysis of the requirements of Idaho Code section 6-1604(2), a statutory provision 
prohibiting claimants from including a prayer for relief seeking punitive damages in their initial 
pleading. Because of the lack of controlling precedent from this Court, the U.S. District Court 
certified the question presented below. 
II. 
CERTIFIED QUESTION 
The U.S. District Court certified the following question: 
Is the [Federal Rule of Civil Procedure] 50 approach, as described in this decision, 
the proper means for the trial court to comply with its obligations under Idaho Code 
§ 6-1604(2), to determine, “after weighing the evidence presented,” whether the 
plaintiff has established a “reasonable likelihood of proving facts at trial sufficient 
to support an award of punitive damages?” 
 
Given the need to provide guidance to both federal and state trial courts and the fact that they do 
not have the same rules of procedure, we rephrase the question as: 
What is the proper means for a trial court to comply with its obligations under Idaho 
Code section 6-1604(2) when ruling upon a motion to amend a complaint or 
counterclaim to include a prayer for relief seeking punitive damages? 
III. 
ANALYSIS 
This Court has long held that punitive damages are not favored in the law and that the 
authority to award such damages should be exercised with caution. Williams v. Bone, 74 Idaho 
185, 189, 259 P.2d 810, 812 (1953); Manning v. Twin Falls Clinic & Hosp., Inc., 122 Idaho 47, 
52, 830 P.2d 1185, 1190 (1992). Nearly 40 years ago, as part of broad-sweeping tort reform, the 
Idaho Legislature enacted Idaho Code section 6-1604 which sets constraints on punitive damages. 
In its present form, the law caps punitive damages, limits the types of misconduct which will 
support a punitive damages award, sets a “clear and convincing evidence” burden of proof at trial, 
and sets the standard to amend a pleading to include a prayer for relief seeking punitive damages: 
(1) In any action seeking recovery of punitive damages, the claimant must 
prove, by clear and convincing evidence, oppressive, fraudulent, malicious or 
outrageous conduct by the party against whom the claim for punitive damages is 
asserted. 
(2) In all civil actions in which punitive damages are permitted, no claim 
for damages shall be filed containing a prayer for relief seeking punitive damages. 
However, a party may, pursuant to a pretrial motion and after hearing before the 
court, amend the pleadings to include a prayer for relief seeking punitive damages. 
The court shall allow the motion to amend the pleadings if, after weighing the 
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evidence presented, the court concludes that, the moving party has established at 
such hearing a reasonable likelihood of proving facts at trial sufficient to support 
an award of punitive damages. A prayer for relief added pursuant to this section 
shall not be barred by lapse of time under any applicable limitation on the time in 
which an action may be brought or claim asserted, if the time prescribed or limited 
had not expired when the original pleading was filed. 
(3) No judgment for punitive damages shall exceed the greater of two 
hundred fifty thousand dollars ($250,000) or an amount which is three (3) times the 
compensatory damages contained in such judgment. If a case is tried to a jury, the 
jury shall not be informed of this limitation. The limitations on noneconomic 
damages contained in section 6-1603, Idaho Code, are not applicable to punitive 
damages. 
(4) Nothing in this section is intended to change the rules of evidence used 
by a trier of fact in finding punitive damages. 
 
I.C. § 6-1604. (emphasis added). 
Central to this matter, section 6-1604(2) prohibits parties in all civil actions from including 
a prayer for relief seeking punitive damages in their initial pleadings:  
In all civil actions in which punitive damages are permitted, no claim for damages 
shall be filed containing a prayer for relief seeking punitive damages. 
I.C. § 6-1604(2). Instead, a party seeking punitive damages must file a pretrial motion seeking 
permission to amend the initial pleading and a hearing on the motion must be held:  
[A] party may, pursuant to a pretrial motion and after hearing before the court, 
amend the pleadings to include a prayer for relief seeking punitive damages. 
Id.  
Traditionally, under both state and federal rules of civil procedure, motions to amend 
pleadings are liberally granted. See I.R.C.P. 15(a)(2) (“The court should freely give leave when 
justice so requires.”); Iron Eagle Dev., LLC v. Quality Design Sys., Inc., 138 Idaho 487, 492, 65 
P.3d 509, 514 (2003); see also Fed. R. Civ. .P. 15(a)(2) (“The court should freely give leave when 
justice so requires.”); Foman v. Davis, 371 U.S. 178, 182 (1962) (“Rule 15(a) [of the Federal Rules 
of Civil Procedure] declares that leave to amend ‘shall be freely given when justice so requires’; 
this mandate is to be heeded.”). This Court explained in Duffin v. Idaho Crop Improvement. 
Association, that it is “generally inappropriate to consider the substantive merits of the claim 
sought to be added when passing on a motion to amend.” 126 Idaho 1002, 1013, 895 P.2d 1195, 
1206 (1995) (citing 6 Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice 
and Procedure § 1487 (2d ed. 1990)).  
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Section 6-1604(2), however, sets a higher bar for parties seeking to amend their initial 
pleading to include a prayer for relief seeking punitive damages:  
The court shall allow the motion to amend the pleadings if, after weighing 
the evidence presented, the court concludes that, the moving party has established 
at such a hearing a reasonable likelihood of proving facts at trial sufficient to 
support an award of punitive damages.  
I.C. § 6-1604(2) (emphasis added). The question certified by the U.S. District Court tasks this 
Court with interpreting the emphasized language.  
“The objective of statutory interpretation is to derive the intent of the legislative body that 
adopted the act.” Darrow v. White, 172 Idaho 272, 280, 531 P.3d 1169, 1177 (2023) (quoting Est. 
of Stahl v. Idaho State Tax Comm’n, 162 Idaho 558, 562, 401 P.3d 136, 140 (2017)). “Statutory 
interpretation begins with the literal language of the statute.” Id. “The statute should be considered 
as a whole, and words should be given their plain, usual, and ordinary meanings.” Id. This Court 
gives effect to all the words and provisions of a statute so that none will be void, superfluous, or 
redundant. Id. “When the statutory language is unambiguous, the clearly expressed intent of the 
legislative body must be given effect, and the Court need not consider rules of statutory 
construction.” Id. 
The trial court plays a vital gatekeeping role under section 6-1604(2). Instead of simply 
examining the language of the proposed amended pleading when determining whether to grant a 
motion to amend, subsection (2) requires the trial court to “weigh” the evidence presented by the 
moving party in support of its motion and determine, after a hearing on the motion, whether there 
is a “reasonable probability” of “proving facts at trial” which are “sufficient” to support an award 
of punitive damages. The U.S. District Court considered whether the “weighing the evidence 
presented” language requires a trial court to conduct a full-blown evidentiary hearing prior to trial. 
We conclude that it does not. 
When used generally, the phrase “weighing the evidence” evinces a deliberative process 
where the factfinder determines whether witnesses are credible, assesses whether the testimony of 
one witness should be given greater consideration than another’s, and resolves disputes over 
questions of fact like whether the traffic light was green when the defendant drove into the 
intersection. The phrase “weighing the evidence presented” as used in section 6-1604(2), however, 
must be read in context. Under the statute the “weighing” of the evidence presented does not 
require an in-court presentation of evidence, but rather, requires a determination of whether there 
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is a “reasonable probability” of “proving facts at trial” that are “sufficient” to support an award of 
punitive damages. This means the trial court must assess whether the evidence submitted by the 
moving party is: (1) admissible at trial; and (2) “sufficient” to support an award of punitive 
damages.   
Assessing the admissibility of evidence is guided by rules of evidence and we need not say 
more on this point. The term “sufficient” as used in this provision means two things. First, it means 
the claim giving rise to the request for punitive damages must be legally cognizable. By way of 
example, this Court examined the legal sufficiency of evidence in the context of a motion to amend 
a complaint to include a prayer for relief seeking punitive damages in Duffin, 126 Idaho 1002, 895 
P.2d 1195. In Duffin, buyers of certified seed potatoes sued the sellers and the Idaho Crop 
Improvement Association after potatoes grown with the purchased seed were infected with 
bacterial ring rot. 126 Idaho at 1005, 895 P.2d at 1198. The Duffins claimed the seed was infected 
when they made the purchase, and they eventually filed a motion to amend their complaint to add 
claims for fraud and to include a request for punitive damages. Id. at 1013, 895 P.2d at 1206.  
The trial court denied the Duffins’ motion to amend, concluding there was no evidence of 
the bad state of mind necessary to support an award of punitive damages. Id. The Duffins 
challenged that decision on appeal, and this Court, looking only at traditional requirements under 
Rule 15 of the Idaho Rules of Civil Procedure, concluded that the trial court misapplied Rule 15 
by examining the substantive merits of the claim. Id. Nonetheless, this Court concluded that the 
denial of the motion to amend was proper because the allegations in the proposed amended 
complaint failed to support the claims asserted as a matter of law: 
The Duffins made no allegations which, if proven, would entitle them to 
recover for fraud. This claim was predicated on the fact that ICIA and CFI had 
represented that the seed was “certified.” The Duffins alleged that the subsequent 
discovery of [bacterial ring rot] rendered this representation false and misleading, 
thereby giving rise to a duty to disclose. As stated in our discussion concerning the 
existence of an express warranty, “certification” means the potatoes have been 
inspected and found to meet the requirements for certification at the time of 
inspection. Thus, the subsequent discovery of that disease did not render the 
representations that the seed sold to the Duffins was “certified” false or misleading. 
Since there are no allegations that CFI seed was not found to meet the requirements 
for certification prior to the sale to the Duffins, the order of the district court 
denying leave to amend was ultimately correct. 
With regard to punitive damages, I.C. § 6–1604(1) provides that to recover 
such damages, a claimant must prove the existence of oppressive, fraudulent, 
wanton, malicious, or outrageous conduct by the party against whom the claim is 
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asserted. Other than the allegation that CFI and ICIA failed to disclose the 
discovery of [bacterial ring rot], there are no allegations that either CFI or ICIA 
engaged in any outrageous conduct. As a matter of law, the failure to disclose a 
subsequently discovered fact, absent a duty to do so, is not such conduct that would 
support an award of punitive damages under I.C. § 6–1604. We therefore affirm the 
order of the district court denying the Duffins’ motion for leave to amend their 
complaint. 
Id. at 1013–14, 895 P.2d at 1206–07. 
Our point in discussing Duffin here is to provide an example of the circumstances under 
which a motion to amend to include a request for punitive damages should be denied because a 
claim is legally insufficient. Having said that, we acknowledge that our opinion in Duffin is an 
example of how this Court’s opinions have created uncertainty in this area of the law. In that 
portion of the opinion addressing the trial court’s decision on the Duffins’ motion to amend their 
complaint, we discuss the requirements of Idaho Code section 6-1604(1), but we do not mention 
or discuss the requirements of Idaho Code section 6-1604(2). Instead, this Court applied Rule 15 
of the Idaho Rules of Civil Procedure. We make it clear today that the application of Rule 15 in 
this context would be erroneous.  
Beyond examining legal sufficiency, the term “sufficient” as used in section 6-1604(2) also 
requires the trial court to weigh the quantum of evidence submitted. In other words, the trial court 
must determine whether there is a reasonable probability of having “enough” admissible evidence 
to support a claim requesting punitive damages. “Sufficient” evidence in this context means that 
there must be “substantial” evidence. 
It is true that section 6-1604(1) requires that a claimant seeking punitive damages prove 
the claim by “clear and convincing” evidence at trial. The clear and convincing evidentiary 
standard is the standard for a jury—not the trial court when it is ruling on a motion to amend a 
pleading to include a prayer for relief seeking punitive damages. In the motion to amend context, 
the standard to be applied is whether there is “substantial” evidence—the same standard used to 
determine whether a claim should be submitted to a jury at trial when a motion for directed verdict 
(or motion for judgment of law in a federal case) has been made.  
We recently addressed the standard for a directed verdict in a fraud case. Inv. Recovery 
Fund, LLC v. Hopkins, 167 Idaho 42, 467 P.3d 406 (2020). Clear and convincing evidence of 
fraudulent misconduct will support an award of punitive damages. I.C. § 6-1604(1). In Hopkins, 
individual investors formed a limited liability company for purposes of asserting a collective claim 
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against Hopkins Financial and the principals of Hopkins Northwest Fund, LLC, after the fund 
declared a moratorium on redemptions, preventing investors from taking their money out of the 
fund. Hopkins, 167 Idaho at 45, 467 P.3d at 409. The investors lost their investments when the 
fund declared bankruptcy six years after the moratorium, and Investor Recovery sued, asserting 
claims of fraud by nondisclosure. Id. After seven days of trial, the district court granted the 
principals’ motion for a directed verdict, concluding that Investor Recovery did not prove that the 
individual investors’ losses were causally connected to the principals’ alleged nondisclosures. Id. 
We reversed the district court’s directed verdict. Id. 
In our decision, we explained that the district court applied the wrong standard when 
deciding the motion for a directed verdict. Id. at 49, 467 P.3d at 413. The district court ruled that 
a jury could not reach a conclusion, by clear and convincing evidence, on one of the essential 
elements of a fraud claim:  
The essential element of the claim is that the nondisclosure be the cause of 
the loss, and here it is my finding that a jury could not conclude by clear and 
convincing evidence that the nondisclosure of the management’s ability to call a 
moratorium during the fall and winter of 2007 up through February of 2008 caused 
the loss. 
Id. (emphasis in original). We held this conclusion was error and that the district court 
should have applied a “substantial” evidence standard: 
To prevail at trial, Investor Recovery needed to prove all elements of its 
fraud claim by clear and convincing evidence. Watts, 131 Idaho at 619, 962 P.2d 
at 390. However, to survive a motion for a directed verdict, Investor Recovery 
needed to produce substantial evidence of the elements in dispute. Jordan v. 
Hunter, 124 Idaho 899, 907, 865 P.2d 990, 998 (Ct. App. 1993); see also April 
Beguesse, Inc. v. Rammell, 156 Idaho 500, 509-10, 328 P.3d 480, 489-90 (2014) 
(holding that when reviewing a directed verdict decision in a fraud claim, this Court 
determines whether there was sufficient evidence to submit the claim to the jury). 
Id. (emphasis in original). 
Beyond addressing the certified question, the parties in their briefing to this Court dispute 
whether the U.S. District Court erred in its application of Idaho Code section 6-1604(2). Any 
analysis as to whether the U.S. District Court erred exceeds the scope of the certified question, and 
we will not address those arguments. See United States v. Gutierrez (In re Order Certifying 
Question to Sup. Ct. of Idaho), 169 Idaho 135, 137, 492 P.3d 1094, 1096 (2021). (“This Court’s 
role is limited to answering the certified question when the question it presents is narrow.”) 
(internal quotation marks and citations omitted). The U.S. District court’s memorandum decision 
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certifying the question presented makes it clear that it may be amenable to reconsidering its 
decision depending on how this Court answers the question certified. 
V. 
CONCLUSION 
Section 6-1604(2) requires the trial court to do a careful examination of the evidence 
submitted by the moving party in support of its motion to amend and the arguments made to 
determine whether there is a “reasonable probability” that the evidence submitted is: (1) admissible 
at trial; and (2) “sufficient” to support an award of punitive damages. The word “sufficient” means 
that the claim giving rise to the request for punitive damages must be legally cognizable and the 
evidence presented must be substantial. 
 
 
Chief Justice BEVAN, and Justices MOELLER and ZAHN CONCUR.  
 
Justice Stegner did not participate.