J. JONES, Justice.
Gary Duspiva, a well driller, initiated this suit against Clyde and John Fillmore to recover money that he claimed to be owing for well drilling services. The Fillmores counterclaimed, alleging Duspiva violated the Idaho Consumer Protection Act
Duspiva is the owner of Gary Duspiva Well Drilling & Development. Clyde Fillmore met with Duspiva on June 11, 2007, to discuss drilling a well. At the June 11 meeting between Duspiva and Clyde, the parties discussed the well location and the conditions of the drilling services. Clyde decided where the well would be located. Duspiva informed Clyde that the well would cost $32.50 per foot of drilling, plus all incidental costs. Duspiva told Clyde that his allowance for sand in the well water was one pinch of sand per five gallons of water. Duspiva advised Clyde that he did not use sand screens in his wells, but he did not provide any explanation for his practice of not using screens. The parties did not execute a writing to memorialize this discussion.
On the same day, Duspiva met with John Fillmore to execute a Start Card Permit, an Idaho Department of Water Resources (IDWR) form that authorizes a well driller to commence drilling. The Start Card was filled out by Duspiva, signed by John, and submitted to IDWR by Duspiva. The Start Card permitted Duspiva to drill a "domestic well for a single-family residence." Further, the Start Card proposed a maximum well depth of 200 feet and required Duspiva to cease drilling and contact IDWR "if a bottom hole temperature of 85 F. or greater [is] encountered."
Duspiva began drilling on June 12, 2007. The district court described Duspiva's progress as follows:
Upon encountering the 85 degree water at 600 feet, Duspiva did not cease drilling or contact IDWR.
On August 9, 2007, Duspiva informed Clyde that, while drilling, he encountered low temperature geothermal (LTG)
On August 16, 2007, Duspiva presented John with an Application for Drilling Permit, which proposed a new well with a maximum depth of 1000 feet and an anticipated bottom hole temperature of 85 degrees to 212 degrees. The application was approved by IDWR on August 20, 2007, and Duspiva re-commenced drilling. On September 26, 2007, when Duspiva completed drilling, the well was 1130 feet deep and the water was 102 degrees.
On October 23, 2007, at a joint meeting with IDWR and Duspiva, the Fillmores first became aware of the ramifications of having an LTG well. Subsequently, the parties were unable to reach a resolution regarding completion of the well. Duspiva billed a total of $50,665 for his drilling and construction services. Clyde made two payments in the amount of $10,000, the first on August 3, 2007, and the second on September 13, 2007. On October 3, 2008, Duspiva filed suit against the Fillmores to recover the claimed balance of $30,665. The Fillmores filed a counterclaim with their Answer, seeking recovery for breach of contract/unjust enrichment and for violation of the ICPA.
While the case was awaiting trial, IDWR conducted an administrative proceeding to determine what course of action should be taken to address the Fillmores' unwanted LTG well. On November 6, 2008, IDWR issued a memorandum concluding that the well should be abandoned. That conclusion was reached due to the expiration of the drilling permit, the deteriorated relationship of the parties, and the unwillingness of Duspiva to provide any additional work to complete or abandon the well until he was paid in full. IDWR solicited bids from licensed well drillers to complete the closure of the well. Down Rite Well Drilling was selected to oversee the closure of the well. The Fillmores and Duspiva split the closure fee, approximately $13,000.
The Fillmores then hired Down Rite to drill a new domestic well on John's property. Down Rite drilled a productive domestic cold-water well forty feet from the original well site to a depth of 320 feet, using a filter pack and a screen, for approximately $18,000.
Prior to trial, the court addressed a Motion in Limine filed by Duspiva seeking to exclude the Fillmores' expert witness, Ed Squires,
On August 23, 2010, the court trial commenced. The district court issued its Findings of Fact and Conclusions of Law on October 18, holding that Duspiva violated the ICPA and awarding the Fillmores actual damages in the amount of $27,500.
"In all actions tried upon the facts without a jury ... the court shall find the facts specially and state separately its conclusions of law thereon and direct the entry of the appropriate judgment." I.R.C.P. 52(a). When reviewing a district court's decision after a trial without a jury:
Machado v. Ryan, 153 Idaho 212, 217, 280 P.3d 715, 720 (2012) (citations omitted).
The district court held that Duspiva violated I.C. § 48-603(16)-(18) by recommending and providing services not needed, engaging in misleading or deceptive acts, and engaging in an unconscionable act. According to the court, "[t]he Fillmores had no reason to expect that they were bargaining for anything other than a cold water domestic well." The court noted that the Start Card initially allowed for a well which would not exceed 200 feet in depth and observed that "the greater the depth of the well, the greater the price that would be billed by Duspiva." The district court found there was no legitimate basis for Duspiva to drill the well to a depth reaching LTG conditions and that Duspiva nonetheless recommended that the well be drilled deeper "under the guise that there was too much sand in the water." The court noted that on two prior occasions — one in 2001, and the other in 2005 — Duspiva had received verbal warnings from IDWR regarding violations concerning LTG wells, one of which was located only a few miles from the Fillmore well site. Additionally, just prior to commencing the Fillmore well, IDWR sent Duspiva a written warning for drilling an LTG well without prior authorization. Furthermore, the court found that uncontroverted evidence presented at trial illustrated that the use of screening techniques to filter sand were common practice in the industry and could have been employed at depths much shallower than Duspiva drilled to address the sand in the water.
The Fillmores argue that the district court correctly found that Duspiva violated the ICPA because Duspiva hid critical information in order to drill deeper and charge more money. The Fillmores contend that Duspiva violated the ICPA by failing to inform them of the industry standard regarding the use of sand screens and by continuing to drill deeper even after he encountered cold water at shallower depths. The Fillmores acknowledge that they never told Duspiva to stop drilling, but claim they only authorized continued drilling based on Duspiva's professional recommendations.
The ICPA was enacted to protect consumers from "deceptive acts and practices in the conduct of trade or commerce." I.C. § 48-601. "[T]he ICPA defines what constitutes an unfair method of competition." State ex rel. Wasden v. Daicel Chem. Indus., Ltd., 141 Idaho 102, 107, 106 P.3d 428, 433 (2005). Under I.C. § 48-603, deceptive acts or practices in the conduct of any trade or commerce are unlawful where a person knows, or in the exercise of due care should know, that he has in the past, or is:
I.C. § 48-603(16)-(18). Beyond these legislative definitions of unfair competition, I.C. § 48-604 instructs that:
Section 5(a)(1) of the FTCA provides that "[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful." 15 U.S.C. § 45(a)(1). "Federal case law as it has developed under this provision of the [FTCA], although not binding is persuasive in application of the [ICPA]." State ex rel. Kidwell v. Master Distribs., Inc., 101 Idaho 447, 453, 615 P.2d 116, 122 (1980). In Master Distributors, this Court relied on federal law from multiple circuits to define "unfair practice" under the FTCA. The standard adopted was as follows:
Id. at 453-54, 615 P.2d at 122-23 (citations omitted).
Duspiva contends that federal law has shifted since this Court addressed 15 U.S.C. § 45(a)(1) in Master Distributors. According to Duspiva, under the current deception standard the Federal Trade Commission will only find deception "if there is a representation, omission or practice that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer's detriment."
Duspiva has not shown this finding to be unsupported by the evidence. The record before us discloses that Duspiva's conduct was likely to mislead the Fillmores, that they were acting reasonably in reliance upon Duspiva, and that they thereby suffered detriment.
In this case, the district court's conclusion that Duspiva violated the ICPA was proper. Based on the court's findings of fact, which are supported by substantial and competent evidence, it appears that Duspiva violated both subsections (16) and (17) of I.C. § 48-603 by misleading the Fillmores and providing the Fillmores with unneeded drilling services.
Subsection (16) makes it unlawful to represent that services are needed if they are not. The court found that the Fillmores had bargained for a cold water domestic well. After Duspiva reached LTG conditions, it should have been clear to him that the Fillmores' objective could not be attained by drilling deeper. Nevertheless, he recommended that they continue drilling. The record indicates that no legitimate reason existed for doing so. Uncontroverted evidence was presented at trial that the use of screens was common industry practice to minimize sand in well water and that the use of a screen would have allowed Duspiva to drill a much shallower well at a lower cost while still producing water with minimal sand. The court below indicated that Duspiva's recommendation to drill deeper to limit sand was merely a "guise" to allow Duspiva to collect more money on the $32.50 per foot pricing scheme, which increased by $2.00 per foot after reaching a depth of 400 feet. The record illustrates that drilling the well to a depth of 1130 feet was unnecessary and could have easily been avoided through the common and low cost use of a screen. Thus, Duspiva unlawfully represented that additional drilling services were needed, when in fact they were not.
Subsection (17) of I.C. § 48-603 makes it unlawful to engage in any act or practice that is misleading or deceptive to the consumer. Duspiva's conduct misled the Fillmores in two respects. First, the court found that Duspiva was substantially sure that drilling to depths of 1,000 feet would result in reaching LTG conditions. Duspiva nonetheless proceeded to drill to a depth of 1130 feet and did in fact reach LTG conditions along the way. During the drilling process, Duspiva continually misled and deceived the Fillmores by failing to communicate the likelihood of reaching LTG conditions, and the consequences, both monetary and regulatory, of drilling and owning an LTG well. The Fillmores only became aware of the regulatory consequences of maintaining an LTG well once Duspiva had completed the well. Further, the district court found that water at "LTG levels is not desirable for potable water supplies because the warm water promotes chemical reactions in groundwater,
On August 19, 2010, the district court held a hearing to address Duspiva's Motion in Limine to Exclude Defendant's Expert Witness. At the hearing, the Fillmores' counsel indicated that Squires would testify about certain well drilling techniques and standards in the drilling industry, and would opine that the use of a screen and a filter pack in this case would have prevented the need to drill into an LTG region while still producing a cold water domestic well.
Counsel for Duspiva objected to Squires' testimony because the substance of his testimony was not timely disclosed. Responding to Duspiva's interrogatories, the Fillmores timely indicated that Squires would testify but did not indicate what he would testify about or the basis of his testimony until the morning of the hearing, three days before trial.
In ruling on the motion, the district judge found merit in Duspiva's late disclosure argument, especially regarding Squires' opinion testimony addressing Duspiva's potential negligence. However, the district judge also felt that "Squires [had] the ability to give the court an education, not only that would benefit the defendants but also the plaintiff." Ultimately, the court held that Squires would be allowed to testify about the scientific and technical aspects of drilling, but that Duspiva could object at trial if Squires' testimony directly addressed Duspiva's conduct.
At trial, counsel for Duspiva again generally objected to Squires' testimony on the grounds that his opinions were not timely disclosed. The court overruled the objection and ruled that:
On appeal, Duspiva argues that Squires' testimony should have been excluded by the district court and that allowing Squires to testify constitutes reversible error. Duspiva argues that the Fillmores' counsel did not comply with I.R.C.P. 26(e) by failing to amend interrogatory responses to include the subject matter of Squires' testimony, and thus, he should not have been allowed to testify. In addition, Duspiva argues that even if the court properly allowed Squires to testify, his testimony did not conform to the limited scope the judge authorized. The Fillmores argue that Squires' testimony was consistent with the district court's pre-trial ruling and was properly admitted because it was helpful to the court in understanding issues related to well drilling.
Rule 26 requires that parties seasonably supplement their discovery responses to any question directly addressed to "the identity of each person expected to be called as an expert witness at trial, the subject matter on which the person is expected to testify, and the substance of the person's testimony." I.C.R.P. 26(e)(1)(B). "If a party fails to seasonably supplement the responses as required in this Rule 26(e), the trial court may exclude the testimony of witnesses or the admission of evidence not disclosed by a required supplementation of the responses of the party." I.R.C.P. 26(e)(4). Rule 26 "unambiguously
Sirius LC v. Erickson, 150 Idaho 80, 87, 244 P.3d 224, 231 (2010) (quotations omitted).
Here, the district judge did not abuse his discretion by allowing Squires to testify about scientific and technical information in order to educate the court. First, the district court recognized that the decision whether to allow Squires to testify was discretionary. The transcript of the pre-trial hearing is replete with statements from the judge indicating that he perceived that the scope of Squires' testimony, if any, was committed to the court's discretion. On multiple occasions, the court recognized the merits of Duspiva's late disclosure argument but ultimately decided that limiting Squires' opinion testimony would cure any potential prejudice. Second, the trial court acted within the boundaries of its discretion. Rule 26 states that "the trial court may exclude the testimony" of an expert not properly disclosed. I.R.C.P. 26(e)(4). The "may" in Rule 26 gives the trial court the ability to weigh the prejudice of undisclosed testimony versus the value of the testimony, but does not require exclusion of testimony not properly disclosed. Thus, the trial court acted within the bounds of its discretion. Third, the court carefully tailored its decision to allow Squires to testify. The judge, having looked at the pre-trial motions and briefing, realized that the technical aspects of well drilling would play a major role in the trial and that he needed "an education" in order to make an informed decision. Thus, the district court did not abuse its discretion by allowing Squires to testify and the court's pre-trial ruling was in conformity with I.R.C.P. 26.
Duspiva's argument that Squires' testimony was outside the scope allowed by the court is without merit. In his briefing to this Court, Duspiva has not produced a single example from the trial court transcript that he identifies as improper "opinion testimony." Rather, the opinions that Duspiva is objecting to are those of the district court, which he claims were "inferred" from Squires' testimony. Essentially, Duspiva's argument is that by drawing conclusions from Squires' testimony, the court formed improper opinions — not that Squires ever offered any improper opinion testimony. However, drawing inferences from facts is precisely the duty that the district court is charged with.
The trial testimony not only indicates that Squires stayed within the confines of the judge's pre-trial ruling, but it also indicates that the district judge and counsel for the Fillmores reminded Squires not to give his opinion regarding Duspiva's conduct in this particular case. For instance, shortly after Squires took the stand, the Fillmores' counsel stated:
Moreover, Duspiva's counsel only objected to a single statement made by Squires in over 60 pages of trial testimony, and that objection was overruled. Thus, the trial transcript indicates that Squires stayed within the confines of the court's pretrial order.
In the district court's Findings of Fact and Conclusions of Law, it expressly found that the Fillmores and Duspiva entered into an agreement whereby Duspiva would drill and develop a domestic well for the Fillmores at a cost of $32.50 per foot. The court also specifically addressed the available remedies under the ICPA. The court stated, "pursuant to I.C. 48-608, the Fillmores are entitled to consider their agreement with Duspiva to drill a well void. That code section also declares that they are entitled to an award of their actual damages." At no point did the district court void any agreement between Duspiva and the Fillmores, nor has Duspiva alleged that the Fillmores treated their agreement as void.
On appeal, Duspiva argues that the district court misapplied I.C. § 48-608 in two ways. First, Duspiva argues that the district court incorrectly found that the statutory option to void an agreement made it unnecessary for the court to determine whether there was an agreement at all. In support of this argument, Duspiva points to language from the court's Conclusions of Law where the court stated, "[t]hus, if the court finds a violation of the [ICPA], an analysis of whether or not a contract was formed between these parties is unnecessary as it may be treated as voidable." Second, Duspiva argues that the court incorrectly treated the alternative remedies provided in I.C. § 48-608 as cumulative.
The Fillmores argue that neither of Duspiva's arguments addressing the court's application of I.C. § 48-608 are tenable because they misconstrue the district court's actual findings. As to Duspiva's first argument, the Fillmores contend that the district court did find the existence of a contractual relationship between the Fillmores and Duspiva to drill a cold water, domestic well of 200 feet at $32.50 per foot. Addressing Duspiva's second argument, the Fillmores contend that the district court's ruling simply acknowledges that the Fillmores would be entitled under the statute to treat any agreement with Duspiva as void.
In order to have standing under the ICPA, "the aggrieved party must have been in a contractual relationship with the party alleged to have acted unfairly or deceptively." Taylor v. McNichols, 149 Idaho 826, 846, 243 P.3d 642, 662 (2010). In addition, "[t]he ICPA specifically provides that a person suffering an ascertainable loss as a result of a fraudulent, misleading or deceptive act under ICPA, `may treat any agreement incident thereto as voidable or, in the alternative, may bring an action to recover actual damages or one thousand dollars ($1,000), whichever is the greater.'" Knipe Land Co. v. Robertson, 151 Idaho 449, 460, 259 P.3d 595, 606 (2011) (quoting I.C. § 48-608(1)). Thus, if a plaintiff elects to treat the agreement upon which its ICPA claim is based as void, the plaintiff cannot then seek actual damages from the trial court as well. Id.
In this case, the district court properly invoked and applied the alternative damages provision of I.C. § 48-608(1). At the outset, it should be noted that the district court's statement that "if the court finds a violation of the [ICPA], an analysis of whether or not a contract was formed between these parties is unnecessary as it may be treated as voidable" is likely a misstatement of the law. However, the court's misstatement is irrelevant in this case because the court properly analyzed and applied I.C. § 48-608(1) in the remainder of its ruling.
In the district court's Conclusions of Law it expressly found that Duspiva and the Fillmores entered into an agreement for the drilling and development of a domestic well, giving the Fillmores standing under I.C. § 48-608. Moreover, the district court did not treat the alternative remedies of I.C. § 48-608 as cumulative. Although the court found that the Fillmores would be "entitled" to consider their agreement with Duspiva void, the court did not actually void any agreement. The court's ruling merely acknowledges that the Fillmores would be entitled, under the statute, to treat any agreement with Duspiva as void. In this case, the Fillmores did not treat the agreement as void, they sought their alternative remedy under I.C. § 48-608 for actual damages, which the court granted. Thus, the court below did not erroneously treat the remedies in I.C. § 48-608 as cumulative.
On appeal, the Fillmores request attorney fees and costs under I.C. § 48-608(5).
The Fillmores' argument for attorney fees is predicated on the ICPA, specifically I.C. § 48-608, which provides:
I.C. § 48-608(5).
Under I.C. § 48-608(5) a party who invokes the protection of the ICPA and prevails is entitled to reasonable attorney fees based on an application of the prevailing party analysis from I.R.C.P. 54(d)(1)(B). Israel v. Leachman, 139 Idaho 24, 27, 72 P.3d 864, 867 (2003).
In this case, the Fillmores raised a counterclaim against Duspiva predicated on the ICPA. The Fillmores prevailed on their claim both at the district court and on appeal to this Court. Thus, the Fillmores are entitled to an award of attorney fees under I.C. § 48-608(5).
The judgment of the district court is affirmed. The Fillmores are awarded their costs and attorney fees on appeal.
Chief Justice BURDICK, and Justices EISMANN, W. JONES, and HORTON concur.
I.C. § 42-233(3).
