Case Name: SPUR PRODUCTS CORPORATION, an Idaho corporation, Eagle Data Works, Inc., an Idaho corporation; and Talon Enterprises, Inc., an Idaho corporation, Plaintiffs-Appellants, v. STOEL RIVES LLP, Defendant-Respondent
Court: Idaho Supreme Court
Jurisdiction: Idaho
Decision Date: 2005-09-30
Citations: 142 Idaho 41
Docket Number: No. 30433
Parties: SPUR PRODUCTS CORPORATION, an Idaho corporation, Eagle Data Works, Inc., an Idaho corporation; and Talon Enterprises, Inc., an Idaho corporation, Plaintiffs-Appellants, v. STOEL RIVES LLP, Defendant-Respondent.
Judges: Justices TROUT, EISMANN and BURDICK concur.
Reporter: Idaho Reports
Volume: 142
Pages: 41–49

Head Matter:
122 P.3d 300
SPUR PRODUCTS CORPORATION, an Idaho corporation, Eagle Data Works, Inc., an Idaho corporation; and Talon Enterprises, Inc., an Idaho corporation, Plaintiffs-Appellants, v. STOEL RIVES LLP, Defendant-Respondent.
No. 30433.
Supreme Court of Idaho, Boise,
February 2005 Term.
Sept. 30, 2005.
Ellis, Brown & Sheils, Chartered, Boise and Strother Law Office, Boise for appellants. Jeffrey A. Strother argued.
Holland & Hart, LLP, Boise, for respondent. Amanda K. Brailsford argued.

Opinion:
SCHROEDER, Chief Justice.
This is an action brought by Spur Products Corp., Eagle Dataworks, Inc. and Talon Enterprises, Inc. (collectively Spur) against Stoel Rives, LLP (Stoel) for alleged improper conduct during Stoel's representation of Spur. The parties filed cross-motions for summary judgment. The district court denied Spur's motion and granted summary judgment for Stoel. Spur appealed.
I.
FACTUAL AND PROCEDURAL BACKGROUND
Stoel represented Spur in a dispute against IKON Office Solutions, Inc. (IKON). Spur sued IKON for alleged breach of an agreement to exclusively distribute and market its products and for misappropriation of proprietary, confidential and trade secret information. On August 24, 1999, Stoel and Spur entered into a Letter Agreement which was intended to memorialize an oral agreement made between Stoel and Spur in early August 1999 regarding outstanding debts that Spur owed Stoel, primarily fees and costs incurred during the course of Stoel's representation of Spur in the IKON dispute. The essence of the Letter Agreement was that Stoel would withdraw from representing Spur unless Spur accepted a settlement from IKON and paid all outstanding debts, by the completion of the IKON dispute mediation conference. Spur owed Stoel approximately $243,600.
Prior to offering the Letter Agreement, counsel for Spur in the IKON dispute consulted with Peter Jarvis (Jarvis), a Portland-based Stoel attorney, regarding Stoel's ethical obligations and potential withdrawal as counsel from the IKON dispute. Jarvis sent out two intra-firm memoranda related to Spur's failure to pay its outstanding legal debts and Stoel's potential withdrawal. The first was dated August 3, 1999, and the second, August 24, 1999. The memoranda were circulated to Stoel's Professional Response Practice Group. Brent Giauque (Giauque) was among the committee members to whom Jarvis sent the memoranda. Giauque was a Stoel attorney in the firm's Salt Lake City office, who at one time had represented IKON's wholly-owned subsidiary BCS Integration, Inc. (BCS). Giauque had previously signed an affidavit that he would not have any involvement with the Spur/IKON dispute as part of Stoel's traditional conflicts screening process. Both Spur and IKON were aware of Giauque's potential conflict and consented to Stoel's representation in the IKON dispute on the condition no confidential information would be passed to either party. Stoel did not inform Spur of the communication sent to Giauque prior to offering the Letter Agreement.
Stoel represented Spur during mediation, and on August 26, 1999, Spur accepted IKON's $3,500,000 settlement offer. Nearly eighteen months later, Spur Products Corp. filed suit against Stoel to recover damages for alleged improper conduct by Stoel in its representation of Spur. Spur Products Corp. alleged two negligence claims and requested an amount in excess of $6,300,000 in damages. Eagle Dataworks, Inc. and Talon Enterprises, Inc. subsequently filed identical complaints that were consolidated with Spur Products Corp.'s initial complaint.
In or around April 2001 Spur sought to have Jarvis deposed. Stoel objected on the basis that Jarvis' testimony was privileged as attorney-client communications. Stoel persisted in this objection until November 2002 when it agreed to allow Jarvis to be deposed. Jarvis was deposed on February 4, 2003. Two weeks prior to his deposition Stoel sent copies of Jarvis' two August memoranda to Spur. Subsequent to receiving these documents and taking Jarvis' deposition, Spur filed a second motion to amend its complaint, alleging additional claims for negligence on the basis that Jarvis had revealed confidential client information, namely, Spur's settlement posture to Giauque and had failed to inform Spur of this breach. The district court denied Spur's second motion to amend its complaint.
The district court denied Spur's motion for partial summary judgment and granted Stoel's cross-motion for summary judgment. Spur appeals, arguing that it was error to deny its motion to file a second amended complaint and to grant Stoel's motion for summary judgment.
II.
STANDARD OF REVIEW
"The denial of a plaintiffs motion to amend a complaint to add another cause of action is governed by an abuse of discretion standard of review." Estate of Becker v. Callahan, 140 Idaho 522, 527, 96 P.3d 623, 628 (2004) (quoting Thomas v. Med. Ctr. Physicians, P.A., 138 Idaho 200, 210, 61 P.3d 557, 567 (2002)). In reviewing an exercise of discretion, this Court must consider: "(1) whether the court correctly perceived that the issue was one of discretion; (2) whether the court acted within the outer boundaries of its discretion and consistently with the legal standards applicable to the specific choices available to it; and (3) whether it reached its decision by an exercise of reason." Id.
Review by the Supreme Court of an entry of summary judgment is the same as that required by the district court when ruling on the motion. Friel v. Boise City Hous. Auth., 126 Idaho 484, 485, 887 P.2d 29, 30 (1994). A district court determines a motion for summary judgment based on whether there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. I.R.C.P. 56(c)(2004); id. In determining whether there are genuine issues of material fact the court reviews all evidence in the light most favorable to the non-moving party. Id. (citations omitted). If the evidence shows no disputed issues of material fact, what remains is a question of law over which the appellate court exercises free review. Id. (citation omitted).
III.
THE DISTRICT COURT ABUSED ITS DISCRETION WHEN IT DENIED SPUR'S MOTION TO FILE A SECOND AMENDED COMPLAINT
The district court denied Spur's motion on the grounds that there was insufficient evidence to support the additional claim, the added claim would change the focus of the lawsuit, and Stoel would suffer undue prejudice in the amendment.
I.R.C.P. 15(a) provides:
A party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, the party may so amend it at any time within twenty (20) days after it is served. Otherwise a party may amend a pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires, and the court may make such order for the payment of costs as it deems proper. A party shall plead in response to an amended pleading within the time remaining for response to the original pleading or within ten (10) days after service of the amended pleading, whichever period may be the longer, unless the court otherwise orders.
I.R.C.P. 15(a)(2004)(emphasis added).
In considering whether to grant a motion for leave to amend, a trial court may consider whether the amended pleading sets out a valid claim, whether the opposing party would be prejudiced by any undue delay, or whether the opposing party has an available defense to the newly added claim. Black Canyon Racquetball Club, Inc. v. Idaho First Nat'l Bank, N.A., 119 Idaho 171, 175, 804 P.2d 900, 904 (1991) (citation omitted). The court may not, however, weigh the sufficiency of the evidence related to the additional claim. Becker, 140 Idaho at 528, 96 P.3d at 628; Thomas v. Med. Ctr. Physicians, P.A., 138 Idaho 200, 210, 61 P.3d 557, 567 (2002); Carl H. Christensen Family Trust v. Christensen, 133 Idaho 866, 871, 993 P.2d 1197, 1202 (1999) (court may not consider the sufficiency of evidence in determining whether to allow a party to amend because that is more properly an issue for summary judgment state). Timeliness of a motion for leave to amend is not decisive, but it "is important in view of . factors such as undue delay, bad faith, and prejudice to the opponent." Christensen, 133 Idaho at 871, 993 P.2d at 1202 (citation omitted).
Spur sought to amend its complaint to include a claim for negligence based on Stoel's alleged breach of confidentiality in disclosing Spur's settlement posture to Giauque prior to mediation and prior to offering the Letter Agreement. Becker addressed the elements necessary to assert a claim for attorney malpractice or attorney negligence. A plaintiff must show:
(1) the creation of an attorney-client relationship; (2) the existence of a duty on the part of the lawyer; (3) the breach of the duty or the standard of care by the lawyer; and (4) that the failure to perform the duty .was a proximate cause of the damages suffered by-the client.
Becker, 140 Idaho at 526, 96 P.3d at 627. Spur alleged that the parties maintained an attorney-client relationship; Stoel had a duty to maintain all attorney-client communications as confidential;' Jarvis delivered a copy of Spur's Lettér Agreement to Giauque, a Stoel attorney who was representing a wholly owned subsidiary of IKON; Stoel did not disclose this communication to Spur; and, as a proximate result of this negligent action Spur was deprived of its opportunity to enter into arbitration and thereby incurred damages. In support of its motion Spur submitted copies of Giauque's affidavit, Jarvis' eir culated memoranda, and the testimony of Dennis Hicks, Spur's President, indicating he would not have agreed to the Letter Agreement had he known of Stoel's inadvertent disclosures. Spur adequately alleged each of the elements necessary to assert a claim of attorney malpractice. The only grounds on which the district court could properly deny Spur's motion were undue delay or the availability of a defense to Spur's new negligence claim.
The district court stated "the Court finds there is insufficient evidence to support the addition of this count." The district court weighed the sufficiency of the evidence. Under the standard established in Becker and Thomas this was improper. In its order on Spur's motion for reconsideration the district court asserted that it had taken into account the prejudice to Stoel that would result from Spur's added negligence claim and that it "would have the effect of changing the focus of [a] lawsuit that ha[d] been actively litigated for over two years." Undue delay and prejudice are proper standards on which to deny a motion to amend. However, Stoel significantly contributed to Spur's delay in moving to amend the complaint.
From approximately November 2001 to January 2003 Stoel refused to disclose internal memoranda regarding the sums Spur owed Stoel, including the two Jarvis memoranda circulated to Giauque. It was not until Spur deposed one of its former attorneys in August of 2002 that it became aware they had consulted with Jarvis prior to offering the Letter Agreement. Spur immediately sought to depose Jarvis, and his deposition was scheduled for February 4, 2003. Two weeks prior to this deposition, Stoel released to Spur copies of the August memoranda Jarvis circulated to Giauque. Following this production and the Jarvis deposition, Spur filed its second motion to amend. Stoel's claim of unjust prejudice by Spur's delay in filing its motion to amend the complaint falls short. It was Stoel's persistent objections to production of Jarvis' internal memoranda that contributed substantially to the delay. The district court erred in finding otherwise.
Stoel relied on the defense below that the Letter Agreement waived any liability related to its representation in the IKON dispute. However, this waiver may now be unenforceable if it was entered into without informed consent. This issue must be determined on remand.
Stoel also contends that Spur failed to adequately allege causation and harm because it failed to allege facts demonstrating Giauque received, read and communicated the information contained in Jarvis' memoranda to IKON. However, this is not essential to the claim presented by Spur's amended complaint. According to Spur, Stoel's failure to disclose the Jarvis communications to Giauque caused Spur to accept mediation as its final remedy and relinquish its right to arbitration, thereby causing Spur damages. Spur adequately alleged a viable claim for attorney malpractice. The motion to amend the complaint must be granted by the district court.
IV.
THE COURT WILL NOT DETERMINE OTHER ISSUES ON APPEAL IN LIGHT OF THE RULING ON THE MOTION TO AMEND
The district court granted summary judgment on the record then before it. Those are interlocutory rulings which were proper on the record as it existed but which may be re-examined by the district court in light of this Court's ruling on the motion to amend and discovery which may take place as a consequence of that ruling. The Court expresses no opinion on those rulings at this time.
V.
CONCLUSION
The district court's decision to deny Spur's second motion to amend its complaint is reversed. The case is remanded to the district court for further proceedings consistent with this opinion. Spur is awarded costs. Any award of attorney fees to either party is deferred until resolution of the case in district court. When a prevailing party is finally determined, the district court may consider the award of attorney fees for the proceedings before it and this appeal.
Justices TROUT, EISMANN and BURDICK concur.