IN THE SUPREME COURT OF THE STATE OF IDAHO

Docket No. 39198-2011

MICHAEL STAPLETON,

Plaintiff-Appellant,

v.

JACK CUSHMAN DRILLING AND PUMP

COMPANY INCORPORATED, and BOB

CUSHMAN,

Defendants-Respondents.

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Rexburg, November 2012 Term

2012 Opinion No. 145

Filed: December 20, 2012

Stephen W. Kenyon, Clerk

Appeal from the District Court of the Seventh Judicial District of the State of 

Idaho, in and for Bingham County. The Hon. Darren B. Simpson, District Judge.

The judgment of the district court is affirmed.

Joshua L. Smith; Pendlebury Law Office, P.A.; Idaho Falls; argued for appellant.

Dina L. Sallak, Carey Perkins LLP, Idaho Falls, argued for respondents.

EISMANN, Justice.

This is an action out of Bingham County to recover damages from a well driller who 

drilled a well that later caved in. The district court granted the well driller’s motion for summary 

judgment on the ground that the alleged claims of negligence and breach of contract were barred 

by the applicable statutes of limitations, and the court dismissed the action. We hold that the 

breach of contract claim was barred by the statute of limitations and that the negligence claim 

was barred by the economic loss rule, and so affirm the judgment of dismissal.

I.

Factual Background.

In August 2006, Michael Stapleton orally contracted with Jack Cushman Drilling and 

Pump Company, Incorporated, (“Cushman Drilling”) to drill a well on certain residential real 
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property located in Mackay, Idaho. Mr. Stapleton spoke with Bob Cushman, who was the vice 

president and an employee of the company, and it was Mr. Cushman who actually drilled the 

well. There were no structures on the land at that time. Cushman Drilling completed the well in 

August 2006 and capped it.

The following year, Mr. Stapleton constructed a house on the property and connected the 

well to the house. He lived in Pennsylvania and only stayed at the house several times a year, 

but he had the property landscaped with trees, bushes, grass, and shrubs. In January 2007, Mr. 

Stapleton noticed that there was green sediment in the water and that the water pressure was low. 

He contacted Mr. Cushman, who, after looking at the well, stated that it was an electrical 

problem. Mr. Stapleton then contacted an electrician, who stated that there were no electrical 

problems with the well.

In the fall of 2010, the well stopped producing water altogether. After Mr. Cushman

refused to look at it, Mr. Stapleton contacted another well driller, who inspected the well and 

determined that the walls of the well had caved in and that it was beyond repair. Mr. Stapleton

had that well driller drill a second well on the property, which necessitated tearing out 

landscaping that had been planted.

On April 6, 2011, Mr. Stapleton filed this action against Cushman Drilling and Mr. 

Cushman, alleging claims of negligence and breach of contract. The Defendants moved for 

summary judgment on the grounds that the claims were barred by the applicable statutes of 

limitations, by the economic loss rule, and by the failure to comply with the Notice and 

Opportunity to Repair Act.1

 They also contended that Mr. Cushman could not be personally 

liable because he had been acting as an agent of the corporation. The district court held that Mr. 

Stapleton’s causes of action for negligence and breach of contract accrued by at least January 

2007 when he noticed the green sediment in the water and low water pressure; that the claim for 

negligence was barred by the four-year statute of limitations set forth in Idaho Code section 5-

224; and that the claim for breach of contract was barred by the four-year statute of limitations 

set forth in Idaho Code section 5-217. Because it held that the claims were barred by the 

applicable statutes of limitations, the district court did not address the economic loss rule. The 

court ruled that the action should be dismissed as to Mr. Cushman because Mr. Stapleton had not 

 

1 During oral argument on the Defendants’ motion for summary judgment, they conceded that the Notice and 

Opportunity to Repair Act did not apply to this case.
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presented any argument or authority to the contrary. The court entered a judgment dismissing 

the complaint, and Mr. Stapleton timely appealed.

II.

Did the District Court Err in Holding that the Claim for Breach of Contract

Was Barred by Idaho Code Section 5-217?

The Defendants alleged as an affirmative defense in their answer that “Plaintiff’s 

Complaint is barred under the statute of limitations.” One of the statute of limitations cited was 

Idaho Code section 5-217, which is the four-year statute of limitations for an action upon an oral 

contract. The issue was when the statute of limitations began to run.

Idaho Code section 5-421 specifies when a cause of action accrues and the statute of 

limitations begins to run “as to actions against any person by reason of his having performed or 

furnished the design, planning, supervision or construction of an improvement to real property.” 

I.C. § 5-241. With respect to such actions for breach of contract, the cause of action “shall 

accrue and the applicable limitation statute shall begin to run at the time of final completion of 

construction of such an improvement.” I.C. § 5-241(b).

“[T]he question of whether something is an ‘improvement to real property’ is a question 

of law for the court.” West v. El Paso Products Co., 122 Idaho 133, 136, 832 P.2d 306, 309

(1992). An improvement is something that enhances or augments the value or quality of the real 

property. Id. A well is an improvement to real property. That the well at issue in this case was 

allegedly not completed in a workmanlike manner is irrelevant to the application of the statute. 

In contract actions, the statute provides that the statute of limitations begins to run when the 

improvement is completed. It does not provide that the cause of action accrues upon the 

discovery of a defect in workmanship, or upon a breach of an express provision in the contract, 

or upon the occurrence of damage as a result of the breach. If the quality of workmanship 

determined whether something was an improvement, then the statute of limitations would 

commence running when the improvement was completed and then retroactively not commence 

running upon the discovery that the improvement was ultimately of little or no value due to 

defects in material or workmanship. That would be inconsistent with the obvious purpose of the 

statute. Mr. Stapleton does not assert that the well did not constitute the construction of an 

improvement to his real property.
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In their opening brief in support of their motion for summary judgment, the Defendants 

did not cite Idaho Code section 5-241. They argued that the statutes of limitations for the 

contract and negligence claims began to run in January 2007 when Mr. Stapleton had Mr. 

Cushman and then an electrician look at the well to determine the cause of the sediment in the 

water and the low water pressure. In his brief opposing summary judgment, Mr. Stapleton 

argued that the applicable statutes of limitations did not begin to run until some damage 

occurred, which was on November 11, 2010, when the well caved in. In their reply 

memorandum in support of their motion for summary judgment, the Defendants raised the issue 

that pursuant to Idaho Code section 5-241, the statute of limitations for breach of contract began 

to run when the well was completed in August 2006.

In its decision granting summary judgment, the district court did not mention section 5-

241, but it did state that the statute of limitations on the contract claim could have commenced 

running in August 2006 when the well was completed (which may have been based upon section 

5-241) or in January 2007 when Mr. Stapleton noticed low water pressure and sediment in the 

water. It concluded that in either case, the contract claim was barred by the statute of limitations. 

The court wrote, “Thus, even upon the most liberal interpretation of the accrual of a cause of 

action renders Stapleton’s breach of contract claim barred by the four-year deadline imposed.”

In his opening brief on appeal, Mr. Stapleton did not address when the statute of 

limitations on the contract claim would begin to run under Idaho Code section 5-241. He argued 

that “the oral contract was for the provision of water to Mr. Stapleton’s residence” and “[t]he 

contract could not have been breached until the home was completed.” Alternatively, he argued: 

“Cushman Drilling did not breach its agreement with Mr. Stapleton until the well completely 

failed in October 2010. Prior to complete failure of the well, Cushman Drilling did provide 

water to the residence, though the water had green sediment and the water pressure was low.” In 

response, the Defendants countered that pursuant to section 5-241, the statute of limitations 

began to run in August 2006 when the well was completed. In his reply brief, Mr. Stapleton 

argued for the first time that the well was not finally completed in August 2006. He asserted, “In 

this case, there are genuine issues of material fact as to when the construction of the well was

finally completed.” 

This contention is inconsistent with Mr. Stapleton’s prior assertions of what the evidence 

showed. In his brief opposing summary judgment, he stated, “The residence on Mr. Stapleton’s 
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property was completed after Defendants completed the water well.” (Emphasis added.) In his 

opening brief on appeal, Mr. Stapleton stated, “The well was completed in August 2006.” Even 

in his reply brief on appeal, Mr. Stapleton asserts, “Mr. Stapleton’s affidavit states, ‘About a year 

later [after the well’s construction], I finally built a house on my property and water from the 

well was connected to my house in Mackay.” (Bracketed material his.)

Mr. Stapleton’s argument is that the statute of limitations would not begin to run until the 

contract was finally completed, not when the improvement was finally completed, and the

evidence shows that the contract required Cushman Drilling to connect the well to the house, 

once the house was eventually built.

In support of this assertion, he points to the statement in Mr. Cushman’s affidavit that “in 

or about August 2006 Jack Cushman Drilling and Plaintiff orally contracted for the drilling of a 

well for a residential property in Mackay, Idaho.” Contracting to drill a well on a vacant piece of 

residential property could hardly be construed as also contracting to connect the well to whatever 

structure was later erected on the property.

Mr. Stapleton also contends that statements in his affidavit support the contention that 

Cushman Drilling contracted to connect the well to the house once it was eventually built. He 

relies upon his following statements:

5. In the summer of 2006, I called Bob Cushman and told him I needed 

water for my property and asked him to drill a well and to provide the water for 

my property in Mackay.

6. I am not a geologist or a well driller. I needed water for my property, 

and I asked Bob Cushman to do everything necessary to have water on the 

property.

7. When Bob Cushman constructed a well, there was nothing else on the 

property but an empty land. I did intend, however, to build a house on the 

property.

8. About a year later, I finally built a house on my property and water 

from the well was connected to my house in Mackay.

Asking Mr. Cushman to drill a well to provide water “for my property” and to do 

everything necessary to have water “on the property,” which was a vacant residential lot, could 

not reasonably be construed as an agreement that Cushman Drilling would connect the well to 

whatever structure may later be built on the property. Likewise, there is absolutely nothing in 

the record indicating that the Defendants were involved in connecting the well to the house once 

it was built.
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However, even assuming that Cushman Drilling agreed to connect the well to the house 

once the house was built, the construction project at issue in this case is the construction of the 

well. As Mr. Stapleton stated in his brief opposing summary judgment, “[T]his claim deals with 

construction of a water well, not with construction of a residence.” The record is clear that 

construction of the well was finally completed in August, 2006. On that date, the four-year 

statute of limitations began to run. Because this action was not commenced until April 6, 2011, 

Mr. Stapleton’s claim for the breach of the oral contract is barred by the statute of limitations. 

When the trial court reaches the correct result by an erroneous theory, we will affirm the 

result on the correct theory. Nampa & Meridian Irr. Dist. v. Mussell, 139 Idaho 28, 33, 72 P.3d 

868, 873 (2003). Therefore, we affirm the district court’s conclusion that the breach of contract 

claim was barred by the statute of limitations.

III.

Did the District Court Err in Holding that the Claim of Negligence

Was Barred by the Statute of Limitations?

The district court held that the four-year statute of limitations set forth in Idaho Code 

section 5-224 was applicable to the claim for negligence, that the negligence cause of action 

accrued in January 2007, and that the negligence claim was therefore barred by the statute of 

limitations. As stated above, the accrual of the cause of action in this case is governed by Idaho 

Code section 5-241. That section provides with respect to tort actions that the cause of action “if 

not previously accrued, shall accrue and the applicable limitation statute shall begin to run six (6) 

years after the final completion of construction of such an improvement.” I.C. § 5-241(a).

Under the statute, there are two times when a tort action could accrue. Prior to six years 

after the final completion of construction of the improvement, the tort action will accrue when 

there is some damage caused by the tortious conduct. Stephens v. Stearns, 106 Idaho 249, 254, 

678 P.2d 41, 46 (1984). If the tort action does not accrue earlier, it will then accrue six years 

after the final completion of construction of the improvement even if no damage has yet been 

caused by the tortious conduct. West v. El Paso Products Co., 122 Idaho 133, 137, 832 P.2d 

306, 310 (1992). Section 5-241 does not specify the length of the applicable statute of 

limitations. Twin Falls Clinic & Hosp. Bldg. Corp. v. Hamill, 103 Idaho 19, 24, 644 P.2d 341, 

346 (1982). “Because there is no statute of limitations specifically governing negligence actions 

that do not involve personal injury or malpractice, we apply the four-year statute of limitations 
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found in I.C. § 5-224.” Jones v. Runft, Leroy, Coffin & Matthews, Chartered, 125 Idaho 607, 

613, 873 P.2d 861, 867 (1994).

In this case, the district court held that Mr. Stapleton’s negligence cause of action accrued 

in January 2007 when he noticed green sediment in the water and low water pressure. According 

to the district court, this was “clear signs of negligence.” It held: “Stapleton had grounds for a 

lawsuit against Cushman at the beginning of January, 2007. Thus, his cause of action against 

Cushman accrued at that time.”

The district court did not cite anything in the record as supporting its conclusion that the 

green sediment and low pressure were “clear signs of negligence.” There is no sworn testimony 

from anyone stating that those were signs that the well had been negligently constructed, much 

less that they constituted damage. However, unsworn statements can be considered if there is no 

objection. Heinze v. Bauer, 145 Idaho 232, 236, 178 P.3d 597, 601 (2008). Mr. Stapleton 

attached to his complaint a copy of a written report sent to his counsel by an expert who had 

been asked to render an opinion regarding the construction of the well. Both parties referred to 

that report in their briefing on summary judgment, and neither party objected to its consideration. 

The Defendants cited the report as support for their assertion that “Plaintiff made a statement to 

his retained expert that date [sic] the discovery of the alleged problems to no later than January 

2007.” Actually, the report stated that Mr. Stapleton’s counsel, not Mr. Stapleton, had reported

that “the owner contacted Cushman Drilling in January of 2007 and many other times to report 

that the #1 Well [drilled by the Defendants] was producing green water and his water system was 

operating at low pressure.” Although the expert stated that such well water was “unacceptable”

and that Cushman Drilling did not take any corrective action, the expert did not state that such 

condition was the result of the Defendants’ negligence.

Rather, the expert stated:

The major problem with water yield from the well was caused by 250 ft of 

open hole with no well liner or well screen to keep the geologic layers from 

caving into the open hole. This is exactly what happened as documented by the 

fill measured by Independent Well Drilling (Figure 3). When Independent 

measured the depth of the well, the bottom was found at 180 ft. In soft sediments 

and loose rock it is necessary to install pipe with slots in it or well screen to hold 

the well bore open.

The expert stated that the problem with water yield was the well caving in due to the lack of a 

well liner or well screen, which is “exactly what happened as documented by the fill measured 
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by Independent Well Drilling.” That was the company which Mr. Stapleton hired to examine the 

well when it ceased producing water in the fall of 2010. It is also the company that drilled the 

new well. The expert did not attribute the sediment and decreased water pressure noticed in 

January 2007 to the well caving in. The expert also stated that the well “was constructed in a 

manner that allowed inter-connecting of three water bearing aquifers in a single well” and it 

“was probably not properly developed to remove debris in the casing perforations.” However, he 

did not attribute either of those as a cause of the sediment and low pressure that occurred in 

January 2007.

For a cause of action to have accrued, the damage must have resulted from an act of 

negligence. Conway v. Sonntag, 141 Idaho 144, 147, 106 P.3d 470, 473 (2005). There is no 

evidence in the record that an act of negligence caused damage until the well caved in, which 

occurred in the fall of 2010. Therefore, the four year statute of limitations for negligence did not 

run prior to the filing of this action on April 6, 2011. The district court erred in holding that the 

negligence action was barred by the statute of limitations. However, as stated above, when the 

trial court reaches the correct result by an erroneous theory, we can affirm the result on the 

correct theory. Both parties have briefed the economic loss rule in the district court and on 

appeal, so we will consider that issue.

IV.

Is Mr. Stapleton’s Negligence Claim Barred by the Economic Loss Rule?

The Defendants argue on appeal that Mr. Stapleton’s negligence claim was barred by the 

economic loss rule. They made that argument in the district court, but it did not address that 

issue because it incorrectly held that the negligence claim was barred by the statute of 

limitations. With respect to the application of the economic loss rule, Mr. Stapleton asserts on 

appeal, “That is not the decision the trial court reached, and that is not the issue Stapleton 

appealed.” A respondent on appeal is not necessarily limited to the issues decided by the trial 

court or the issues raised by the appellant. The respondent can seek to sustain a judgment for 

reasons that were presented to the trial court even though they were not addressed or relied upon 

by the trial court in its decision. Walker v. Shoshone County, 112 Idaho 991, 993, 739 P.2d 290, 

292 (1987); I.A.R. 11(g), 15(a), & 35(b)(4). Therefore, we will address the application of the 

economic loss rule.
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“Unless an exception applies, the economic loss rule prohibits recovery of purely 

economic losses in a negligence action because there is no duty to prevent economic loss to 

another.” Blahd v. Richard B. Smith, Inc., 141 Idaho 296, 300, 108 P.3d 996, 1000 (2005). 

Damages from harm to person or property are not purely economic losses. Brian and Christie, 

Inc. v. Leishman Elec., Inc., 150 Idaho 22, 28, 244 P.3d 166, 172 (2010). “[E]conomic loss is 

recoverable in tort as a loss parasitic to an injury to person or property.” Duffin v. Idaho Crop 

Imp. Ass’n, 126 Idaho 1002, 1007, 895 P.2d 1195, 1200 (1995). “Property damage encompasses 

damage to property other than that which is the subject of the transaction.” Salmon Rivers 

Sportsman Camps v. Cessna Aircraft Co., 97 Idaho 348, 351, 544 P.2d 306, 309 (1975). “It is 

the subject of the transaction that determines whether a loss is property damage or economic loss

. . . .” Id. at 301, 108 P.3d at 1001. This Court has defined the “subject of the transaction” by 

the subject matter of the contract. Aardema v. U.S. Dairy Systems, Inc., 147 Idaho 785, 791, 215 

P.3d 505, 511 (2009). The subject of the transaction in this case was the well that was 

constructed by the Defendants, which included drilling the well and installing casing, the pump, 

and related items necessary for the well to produce water. Therefore, Stapleton cannot recover in 

negligence for damage to the well when it caved in because that recovery is barred by the 

economic loss rule.

With respect to the application of the economic loss rule, Mr. Stapleton argues: “[T]here 

are genuine, material issues of fact as to the subject of the transaction of the parties’ oral 

contract. . . . The subject of the transaction was the well itself—as well as the provision of water 

to the home and landscaping.” Mr. Stapleton does not attempt to explain why the economic loss 

rule would not apply if the well was not the sole subject of the transaction. He simply makes the 

quoted statement. Because he admits that the subject of the transaction was “the well itself,” it is 

not clear why he would think that the economic loss rule did not apply to a claim that the well 

was negligently constructed. Mr. Stapleton also argues that his property was injured when the 

well caved in; that “there are genuine, material issues of fact as to the nature and extent of the 

damages resulting from that injury”; and that “the economic-loss rule may apply to some [sic] 

Stapleton’s damages, but there are genuine issues of material fact that preclude summary 

judgment on the issue.” In that respect, he asserts that he was denied the opportunity to conduct 

discovery in this action because he filed the lawsuit in April 2011, the Defendants moved for 

summary judgment in May 2011, and the district court granted summary judgment in August 
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2011. He asks this Court to “reverse the trial court’s summary judgment decision and remand 

this case so that he may conduct discovery.” He does not explain why he would need to conduct 

discovery to determine the property damage he allegedly suffered from the well caving in. 

Nevertheless, he did not ask the district court for a continuance under Rule 56(f) of the Idaho 

Rules of Civil Procedure, and it is therefore too late to assert that he needed more time to 

respond to the Defendant’s motion for summary judgment. Golay v. Loomis, 118 Idaho 387, 

391, 797 P.2d 95, 99 (1990).

The property damage that Mr. Stapleton contends he suffered is set forth in his affidavit 

as follows:

15. Independent Drilling had to drill a second well on my property. For that, I 

had to tear apart all the landscaping I had already there. After the new well was 

constructed, I had to have a new landscaping done.

16. I sustained economic damages above and beyond just drilling a new well. I 

had to buy water for consumption for the period when the old well became 

unusable and the new well was installed. I had to pay for the old landscaping, 

have it destroyed, and pay for the new landscaping. I had to stay longer time in 

Idaho to make sure everything was taken care of, and I had to make extra trips 

just to make sure there was water in the house.

In his affidavit, Mr. Stapleton does not identify any property that was damaged by the 

well caving in, other than the well itself. “Economic loss includes costs of repair and 

replacement of defective property which is the subject of the transaction, as well as commercial 

loss for inadequate value and consequent loss of profits or use.” Salmon Rivers Sportsman 

Camps, Inc., v. Cessna Aircraft Co., 97 Idaho 348, 351, 544 P.2d 306, 309 (1975). Thus, the 

cost to drill a new well in order to replace the one that caved in; the need to destroy his existing 

landscaping in order to drill the new well; the cost to purchase water due to the loss of use of the 

well; and the expenses incurred to travel to and stay at his property while the new well was being 

constructed were not damages resulting from property damage but were economic losses under

the economic loss rule.

Finally, he argues, “Additionally, the trial court never determined whether a special 

relationship or unique circumstances applied in this case.” We have recognized a “special 

relationship exception” and a “unique circumstances exception” to the economic loss rule. 

Blahd, 141 Idaho at 301-02, 108 P.3d at 1001-02. Although he states that “the trial court never 

determined whether a special relationship or unique circumstances applied in this case,” Mr. 
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Stapleton does not present any argument or authority on appeal regarding those exceptions. 

“When issues on appeal are not supported by propositions of law, authority, or argument, they 

will not be considered. . . . A party waives an issue cited on appeal if either authority or 

argument is lacking, not just if both are lacking.” State v. Zichko, 129 Idaho 259, 263, 923 P.2d 

966, 970 (1996). Because Mr. Stapleton has not presented either argument or authority 

regarding these exceptions, he has waived any issue regarding their application to this case.

V.

Is Either Party Entitled to an Award of Attorney Fees on Appeal?

Mr. Stapleton seeks an award of attorney fees on appeal pursuant to Idaho Code section 

12-120(3) on the ground that this is an action to recover on an open account. Attorney fees are 

awarded under that statute only to the prevailing party. Not only is Mr. Stapleton not the 

prevailing party, but this is not an action on an open account.2

The Defendants also seek an award of attorney fees on appeal pursuant to section 12-

120(3) on the ground that this is an action to recover in a commercial transaction. The statute 

defines a commercial transaction as “all transactions except transactions for personal or 

household purposes.” The Defendants do not present any argument as to why this was a 

commercial transaction as defined by the statute. They simply cite the district court’s order 

awarding attorney fees on that ground and point out that Mr. Stapleton did not appeal that award. 

The order states that the court’s reasons for concluding this was a commercial transaction were 

stated on the record, but a transcript of those statements is not in the record on appeal.

An action is not one to recover in a commercial transaction if the transaction was for 

personal or household purposes with respect to one of the parties. Mickelsen v. Broadway Ford, 

Inc., 153 Idaho 149, ___, 280 P.3d 176, 183 (2012) (action to recover regarding truck lease was 

not a commercial transaction where, although lessor was in the business of leasing vehicles, the 

lessee leased the truck for personal use). From Mr. Stapleton’s perspective, there is nothing in 

the record showing that this was a commercial transaction. He did not have the well drilled for a 

commercial purpose. It was drilled on a residential lot to provide water for a house ultimately to 

be built, and there is no evidence that he was going to build the house for sale. The evidence in 

 

2 In response to a question during oral argument, Mr. Stapleton’s attorney stated that he did not know what an open 

account was.
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the record is that he intended to live in the house, and did so. Thus, he entered into the 

transaction for personal or household purposes. PHH Mortgage Services Corp. v. Perreira, 146 

Idaho 631, 641, 200 P.3d 1180, 1190 (2009) (action to eject defendants from their residence after 

foreclosure sale and counterclaim to contest the sale was not an action to recover in a 

commercial transaction); Bajrektarevic v. Lighthouse Home Loans, Inc., 143 Idaho 890, 893, 155 

P.3d 691, 694 (2007) (action involving the refinancing of plaintiff's home was not a commercial 

transaction). Therefore, the Defendants are not entitled to an award of attorney fees on appeal.

VI.

Conclusion.

We affirm the judgment of the district court dismissing the complaint with prejudice. We 

award the respondents costs on appeal, but not attorney fees.

Chief Justice BURDICK, Justices J. JONES, W. JONES, and HORTON CONCUR.