Idaho Wool Growers v. State of Idaho Fish & Game

IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 38743
IDAHO WOOL GROWERS )
ASSOCIATION, INC., an Idaho corporation,)
individually and on behalf of its members;
)
FRANK SHIRTS, JR., individually and as a)
member of the Idaho Wool Growers )
Association; RONALD W. SHIRTS; LESLIE )
SHIRTS; JOHN T. SHIRTS, individually and)
dba SHIRTS BROTHERS SHEEP and as )
members of the IDAHO WOOL GROWERS ) Boise, August 2012 Term
ASSOCIATION, )
) 2012 Opinion No. 124
Plaintiffs-Appellants, )
) Filed: September 14, 2012
v. )
) Stephen W. Kenyon, Clerk
STATE OF IDAHO; IDAHO FISH & GAME )
COMMISSION; IDAHO DEPARTMENT )
OF FISH & GAME; CAL GROEN, Director )
of the IDAHO DEPARTMENT OF FISH & )
GAME, )
)
Defendants-Respondents. )
_______________________________________ )
Appeal from the District Court of the Third Judicial District of the State of Idaho,
Adams County. The Honorable Bradly S. Ford, District Judge.
The district court’s judgment, dismissing the complaint, is affirmed.
Eberle, Berlin, Kading, Turnbow & McKlveen, Chtd., Boise, for appellants.
Samuel A. Diddle argued.
Lawrence G. Wasden, Attorney General, Boise, for respondents. Steven W.
Strack argued.
_____________________
J. JONES, Justice.
The Idaho Wool Growers Association (IWGA) and several of its members brought suit
against the State of Idaho, claiming that the State failed to protect domestic sheep operators from
curtailment of their grazing allotments by the United States Forest Service. The curtailment of the
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allotments was designed to accommodate the reintroduction of bighorn sheep in the Hells Canyon
area. In their complaint, the Wool Growers alleged that the State was obligated to redress damage
caused to domestic sheep operations by virtue of the reintroduction. The district court dismissed
the Wool Growers’ complaint for failure to state a claim upon which relief can be granted. The
Wool Growers have appealed that dismissal, which we affirm.
I.
FACTUAL AND PROCEDURAL HISTORY
Frank Shirts, Jr. (Shirts) and Ronald, Leslie and John Shirts, who do business as Shirts
Brothers Sheep (Shirts Brothers), are holders of federal grazing permits allowing them to graze
allotments in the Payette National Forest and the Hells Canyon area. Shirts and Shirts Brothers are
members of the IWGA, an association of sheep ranch operators. 1 The Hells Canyon Bighorn Sheep
Restoration Committee (the Committee)—made up of various federal and state agencies, including
the Idaho Department of Fish and Game (IDFG)—began an effort in 1996 to reintroduce bighorn
sheep in the Hells Canyon area. 2
Allegedly in response to threats by IWGA members to oppose and lobby against the
reintroduction, the Committee sent the following letter to IWGA Executive Director Stan Boyd:
Dear Mr. Boyd:
The effort to transplant bighorn sheep into historic habitat in Hells Canyon is a
cooperative project involving the States of Idaho, Oregon, and Washington, The
Foundation for North American Wild Sheep, the Forest Service, and the Bureau of
Land Management. The Hells Canyon Bighorn Sheep Restoration Committee (the
committee) is interested in having the support of the woolgrowers industry for this
effort to repopulate parts of Hells Canyon with bighorn sheep.
The Committee understands that bighorns may occasionally migrate outside of their
designated range and come into contact with domestic sheep. These bighorns will
be considered “at risk” for potential disease transmission and death. There is also
the potential for an exposed bighorn to leave the area and spread disease to other
bighorn sheep. Under these conditions, the Idaho Department of Fish and Game,
the Oregon Department of Fish and Wildlife, and the Washington Department of
Wildlife will assume the responsibility for bighorn losses and further disease
transmission in their respective states. The three Departments will also take
whatever action is necessary to reduce further losses of bighorn sheep without
adversely impacting existing domestic sheep operators. The enclosed map clearly
delineates the project area within the Hells Canyon complex. Bighorns straying into
1
In this opinion, Shirts, Shirts Brothers, and IWGA will be collectively referred to as “the Wool Growers.”
2
Bighorn sheep were historically abundant in the area but were extirpated by around 1945.
2
currently active sheep allotments will be considered “at risk” by all of the
Committee entities. This means that the Committee recognizes the existing
domestic sheep operations in or adjacent to the Hells Canyon complex, on both
National Forest and private lands, and accepts the potential risk of disease
transmission and loss of bighorn sheep when bighorns invade domestic sheep
operations.
The Committee will make every effort to keep interested parties informed about
actions being considered by the Committee in its effort to repopulate Hells Canyon
with bighorn sheep. We will provide all health information gathered on bighorn
sheep to the woolgrowers industry and other interested parties.
The letter was signed by representatives of IDFG and other members of the Committee. The letter
is dated January 16, 1997, and was received by the Wool Growers on March 11, 1997.
Shortly after the 1997 letter was executed, the Idaho Legislature amended I.C. § 36-
106(e)(5) to include a new subsection (D), providing that the director of IDFG shall not “undertake
actual transplants of bighorn sheep into areas they do not now inhabit or to augment the number of
bighorn sheep in existing herds” until notice is given to affected boards of county commissioners,
land owners, and grazing permit holders. 1997 Idaho Sess. Laws 863, 864–65. The new subsection
also required the director to grant a hearing to “any affected individual or entity [who] expresses
written concern.” Id. Further, it provided:
Upon any transplant of bighorn sheep into areas they do not now inhabit or a
transplant to augment existing populations, the department shall provide for any
affected federal or state land grazing permittees or owners or leaseholders of
private land a written letter signed by all federal, state and private entities
responsible for the transplant stating that the existing sheep or livestock
operations in the area of any such bighorn sheep transplant are recognized and
that the potential risk, if any, of disease transmission and loss of bighorn sheep
when the same invade domestic livestock or sheep operations is accepted.
Id. at 865.
Bighorn sheep were subsequently reintroduced into Hells Canyon. Years later, beginning in
April 2007, the U.S. Forest Service began to modify various grazing permits, including those of
Shirts and Shirts Brothers. The permit modifications were the result of an administrative appeal, in
which the Western Watersheds Project sought to enjoin sheep grazing on six allotments held by
Shirts and Shirts Brothers based on a high risk of disease transmission from domestic sheep to
bighorns. Watersheds Project v. U.S. Forest Serv., No. CV-07-151-E-BLW, 2007 WL 1430734, at
1–2 (D. Idaho 2007). The Forest Service agreed to impose grazing restrictions on most of the
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allotments and eventually modified several additional allotments held by Shirts and Shirts
Brothers. Id. at 1; Watersheds Project v. U.S. Forest Serv., Nos. CV-07-151-E-BLW, CV-07-241-
E-BLW, 2007 WL 1729734 (D. Idaho 2007); Watersheds Project v. U.S. Forest Serv., No. CV-07-
151-E-BLW, 2007 WL 3407679, at 1 (D. Idaho 2007).
In April 2010, the Wool Growers sued the State of Idaho, the Idaho Fish and Game
Commission, IDFG, and IDFG Director Cal Groen (collectively “IDFG”). In their First Amended
Complaint, the Wool Growers claimed “significant economic losses” resulting from the Forest
Service’s modification of their grazing permits, alleging that IDFG “took no action to block the
Forest Service from modifying the grazing allotments for Shirts and Shirts Brothers and took
insufficient action to prevent Shirts and Shirts Brothers from being harmed from these decisions.”
They listed several claims for relief, including: (1) breach of contract, based on the allegation that
the 1997 letter constituted an contract obligating IDFG to protect them from adverse effects of the
bighorn reintroduction; (2) violation of I.C. § 36-106(e)(5)(D), alleging that the statute also
obligated IDFG to protect them from adverse effects of the reintroduction; and (3) promissory,
equitable, and quasi-estoppel, based on the allegation that the 1997 letter contained representations
that induced them to withdraw their opposition to the reintroduction. IDFG moved to dismiss based
in part on I.R.C.P. 12(b)(6) for failure to state a claim.
From the face of the Wool Growers’ complaint and their arguments before the district
court, it appears that the relief they seek from IDFG is indemnification against the economic
damages they sustained as a result of the Forest Service’s permit modifications. In argument to the
district court, the Wool Growers “concede[d] that IDFG probably has no legal power to block the
United States Forest Service from modifying federal grazing permits,” and “concede[d] that if their
claim against IDFG were solely that IDFG failed to ‘block’ the Forest Service from modifying the
Shirts’ grazing permits then their Complaint could be and should be dismissed.” The Wool
Growers’ complaint did not define what action would have been sufficient to satisfy IDFG’s
alleged contractual and statutory duties, but in argument they asserted that IDFG was obligated to
“protect and indemnify” them from loss by “providing alternative sources of feed; providing
alternative grazing lands; or providing monetary compensation for [their] economic losses.” The
district court found the Wool Growers to have conceded “they are not pursuing an action for
specific performance of some alternative means of mitigating the alleged damages caused to [the
Wool Growers] by the [Forest Service],” but rather, “monetary indemnification from the IDFG for
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the act of the [Forest Service] reducing [their] grazing allotment.” In sum, the Wool Growers’
allegation is that “IDFG through its Letter Agreement and the State through enactment of the 1997
statute . . . guaranteed that the Wool Growers members would be indemnified for any economic
loss they suffered because of the reintroduction of the bighorns.”
The district court held that the Wool Growers’ complaint failed to allege any claim upon
which relief could be granted and therefore dismissed the action pursuant to I.R.C.P. 12(b)(6). The
Wool Growers timely appealed to this Court.
II.
ISSUES ON APPEAL
I. Did the district court err in determining that the Wool Growers failed to state a claim
for indemnification based on the 1997 letter?
II. Did the district court err in determining that the Wool Growers failed to state a claim
for indemnification based on I.C. § 36-106(e)(5)(D)?
III. Did the district court err in determining that the Wool Growers failed to state a claim
for promissory estoppel, equitable estoppel, and quasi-estoppel?
IV. Is either party entitled to attorney fees under I.C. § 12-117?
III.
DISCUSSION
A. Standard of Review.
This Court reviews de novo a district court’s dismissal of a complaint under I.R.C.P.
12(b)(6) for failure to state a claim. Hoffer v. City of Boise, 151 Idaho 400, 402, 257 P.3d 1226,
1228 (2011). Rule 8 requires a complaint to contain a “short and plain statement of the claim
showing that the pleader is entitled to relief.” I.R.C.P. 8(a). Accordingly, on review of a
dismissal this Court determines “whether the non-movant has alleged sufficient facts in support
of his claim, which if true, would entitle him to relief.” Hoffer, 151 Idaho at 402, 257 P.3d at
1228 (quoting Orrock v. Appleton, 147 Idaho 613, 618, 213 P.3d 398, 403 (2009)). In doing so,
the Court draws all reasonable inferences in favor of the non-moving party. Id. The interpretation
of an unambiguous contract or statute is a question of law subject to free review. Bakker v.
Thunder Spring–Wareham, LLC, 141 Idaho 185, 190, 108 P.3d 332, 337 (2005); Kimbrough v.
Idaho Bd. of Tax Appeals, 150 Idaho 417, 420, 247 P.3d 644, 647 (2011).
B. The district court correctly determined that the Wool Growers failed to state a
claim for relief based on the 1997 letter because the letter plainly does not
contain a promise to indemnify.
In regard to the Wool Growers’ breach of contract claim, the district court found that the
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plain language of the 1997 letter did not contain any promise that IDFG would indemnify the Wool
Growers against damage caused by actions of third parties. The court alternatively found that any
such promise by IDFG would be void for violating I.C. § 59-1015, which prohibits state entities
from incurring any liability of indebtedness without, or in excess of, a legislative appropriation. On
appeal, the Wool Growers argue that they alleged the elements of a claim for breach of contract,
which they assert is sufficient to survive IDFG’s Rule 12(b)(6) motion. Further, they point to
several statements in the 1997 letter that they allege guaranteed indemnification, including: (1) that
the Committee “recognizes the existing domestic sheep operations” and “accepts the potential risk
of disease transmission and loss of bighorn sheep”; and (2) that state wildlife agencies, including
IDFG, “assume the responsibility for bighorn losses” and will “take whatever action is necessary to
reduce further losses of bighorn sheep without adversely impacting existing domestic sheep
operators.” Finally, the Wool Growers argue that because there is no indication in the record as to
whether a legislative appropriation exists that would allow for compensation or indemnification of
their claim, the issue relating to I.C. § 59-1015 is inappropriate for determination upon a Rule
12(b)(6) motion. IDFG responds that dismissal was appropriate because the letter does not
constitute a contract, contains no promise of indemnification, and, even if it did, such a promise
would be void under I.C. § 59-1015.
In order to state a claim for breach of contract, the plaintiff must first allege that there was
an agreement creating a contractual duty that, if materially breached, would entitle the plaintiff to
the relief sought. Independence Lead Mines Co. v. Hecla Mining Co., 143 Idaho 22, 28, 137 P.3d
409, 415 (2006). Where a written agreement is alleged, a court must begin by examining the
language of the agreement itself. Id. at 26, 137 P.3d at 413. “If the terms of the contract are clear
and unambiguous, the meaning and legal effect of the contract are questions of law which must be
determined from the plain meaning of the words used.” Id. The language in a written agreement
imposing a duty to indemnify must be “clear, unequivocal, and certain.” 41 Am. Jur. 2d Indemnity
§ 7.
Here, based on the allegations in the Wool Growers’ complaint—which incorporates the
1997 letter—this Court assumes for purposes of a Rule 12(b)(6) motion that the letter constitutes a
contract. Shore v. Peterson, 146 Idaho 903, 913, 204 P.3d 1114, 1124 (2009) (“Whether a contract
. . . was formed is a question of fact.”). However, a review of the letter’s plain language reveals no
promise that would create a contractual duty to indemnify, a determination that the district court
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could properly make as a matter of law. Bakker, 141 Idaho at 190, 108 P.3d at 337 (interpretation
of an unambiguous contract is a question of law). Although the Wool Growers argue it was not
proper to look at the alleged contract’s substance upon a Rule 12(b)(6) motion, the entirety of the
letter was incorporated into and made a part of the complaint. Further, the letter was the sole basis
asserted by the Wool Growers to support their contract claim. Because the letter’s contents are
unambiguous, the district court was within its power to examine its language and decide as a
matter of law whether it created a duty to indemnify.
As the district court found, the several statements in the letter recognizing domestic sheep
operations and accepting the risk of disease transmission only obligate IDFG and the Committee to
hold the Wool Growers harmless for damage to bighorns resulting from the reintroduction. These
statements cannot be read to create an affirmative duty on the part of IDFG to protect the Wool
Growers from damage to their domestic sheep operations. As the district court stated, “[t]he focus
of the language is the acceptance of injury, loss or impact on the bighorn sheep”—not the domestic
sheep. Moreover, the language certainly does not obligate IDFG to prevent or indemnify against
damage to the Wool Growers caused by the independent actions of a third party, such as the Forest
Service.
The only statement that might possibly be read to require some protection of the Wool
Growers’ operations is, “[t]he three Departments will also take whatever action is necessary to
reduce further losses of bighorn sheep without adversely impacting existing domestic sheep
operators.” However, this language, too, is focused on the protection of the bighorns, and merely
restricts the manner in which IDFG may act to carry out that protection. Moreover, it is only a
restriction on actions taken by IDFG—not other agencies involved in the Committee, over which
IDFG has no control. Thus, while the 1997 letter could possibly be read for Rule 12(b)(6) purposes
to create a claim based on affirmative IDFG actions that result in damage to operators, it cannot by
any stretch be read to obligate IDFG to prevent or mitigate harm caused by the Forest Service’s
actions. As the district court found, the Wool Growers do not allege that IDFG caused the Forest
Service to modify their grazing rights or took any other action adversely affecting the Wool
Growers. Rather, they only allege that IDFG failed to prevent the Forest Service from making the
modifications and failed to mitigate the resulting harm. From the plain language of the letter, it is
clear that IDFG made no such commitment. Thus, the district court correctly dismissed the Wool
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Growers’ contract claim. 3
C. The district court correctly determined that the Wool Growers failed to state a
claim based on I.C. § 36-106(e)(5)(D) because that statute plainly does not
provide a right of indemnification.
In regard to the I.C. § 36-106(e)(5)(D) claim, the district court found that the provision was
unambiguous and that nothing in its plain language guaranteed protection from loss caused by the
bighorn reintroduction, “let alone an economic loss occasioned by the act of a Federal agency.”
Accordingly, the district court found no claim for indemnification could be stated under that
statute. On appeal, the Wool Growers point to language in the statute that mirrors the 1997 letter—
specifically that domestic sheep operators are “recognized,” the risk of disease transmission is
“accepted,” and that the statute obligates IDFG to provide a signed letter to any affected operator
indicating as much. They assert that the statute “should be read to authorize an award of damages
against the State in the amount of the economic harm sustained,” that the legislative history
supports this reading, and that they should be entitled to present further evidence of legislative
intent. IDFG supports the district court’s holding, arguing that the statute plainly does not mandate
the indemnification the Wool Growers seek.
Here again, we look no further than the plain language at issue. Just as the similar
statements in the 1997 letter cannot be read to grant the Wool Growers indemnification, neither can
the statute be read to provide for indemnification. Indeed, there are even fewer grounds for
indemnification under the statute, as it contains no similar “whatever action is necessary” statement
as in the letter. Just as the 1997 letter can—at most—be construed as a hold harmless agreement,
I.C. § 36-106(e)(5)(D) can only be construed as a mandate that domestic sheep operations be held
harmless for disease transmission to reintroduced bighorns. But the statute clearly does not obligate
IDFG to affirmatively protect domestic sheep operators from harm—and certainly not from harm
caused by the independent actions of the Forest Service. Further, as IDFG points out, this Court
has squarely rejected the argument that the Wool Growers should be allowed to establish a
contrary legislative intent through further presentation of evidence. Gillihan v. Gump, 140 Idaho
264, 268, 92 P.3d 514, 518 (2004), abrogated on other grounds by Gonzalez v. Thacker, 148 Idaho
879, 231 P.3d 524 (2009). Legislative intent is a clear question of law. Doe v. Boy Scouts of Am.,
3
Because the contract claim was properly dismissed based on the plain language of the 1997 letter, this Court need not
address the district court’s alternative holding that the agreement was void under I.C. § 59-1015.
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148 Idaho 427, 430, 224 P.3d 494, 497 (2009). Consequently, the district court was within its
power to dismiss the Wool Growers’ statutory claim under Rule 12(b)(6), based on the plain
language of I.C. § 36-106(e)(5)(D).
D. The district court correctly determined that the Wool Growers failed to state a
claim for equitable relief because they did not allege a promise or
representation of indemnification.
Finally, the district court found that the Wool Growers’ estoppel claims failed for the same
reason as the contract claim—because the letter did not contain any promise or representation that
the Wool Growers would be indemnified. On appeal, the Wool Growers argue that its estoppel
claims should not be dismissed on a Rule 12(b)(6) motion because they require further fact-
finding. In response, IDFG argues that estoppel generally cannot be applied against state agencies
acting in a sovereign or governmental capacity and that the creation of indebtedness in violation of
I.C. § 59-1015 cannot be disregarded by invoking estoppel.
Although estoppel is generally not applicable to state agencies acting in a sovereign or
governmental capacity, Sagewillow, Inc. v. Idaho Dep’t of Water Res., 138 Idaho 831, 845, 70 P.3d
669, 683 (2003), it may apply where required by notions of justice and fair play. Brandt v. State,
126 Idaho 101, 105, 878 P.2d 800, 805 (Ct. App. 1994). See also City of Sandpoint v. Sandpoint
Ind. Hwy. Dist., 126 Idaho 145, 151, 879 P.2d 1078, 1084 (1994) (holding that estoppel may apply
against a highway district “in order to prevent manifest injustice”). Still, in order to state a claim
for promissory, equitable, and quasi-estoppel, a plaintiff must at least allege, among other things, a
promise or representation by the party to be estopped. Brown v. City of Pocatello, 148 Idaho 802,
807–08, 229 P.3d 1164, 1169–70 (2010) (Promissory estoppel requires a promise inducing
reasonable and detrimental reliance.); Ogden v. Griffith, 149 Idaho 489, 495, 236 P.3d 1249, 1255
(2010) (Equitable estoppel requires “a false representation or concealment of a material fact.”);
Mortensen v. Stewart Title Guar. Co., 149 Idaho 437, 443, 235 P.3d 387, 393 (2010) (Quasi-
estoppel involves a party taking “a different position than his or her original position.”).
Here, regardless of issues of sovereignty, the district court was correct in dismissing the
Wool Growers’ estoppel claims because no promise to protect—and certainly not a promise to
indemnify—appears on the face of the 1997 letter. First, although the Wool Growers argue their
estoppel claims were inappropriate for dismissal under Rule 12(b)(6), they base those claims solely
on the representations in the 1997 letter. Because they hung their hat on the contents of the letter
alone—and incorporated it into the complaint—the district court could well determine whether the
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letter contained the promise or representation alleged without any further fact-finding. And, the
court correctly determined that it did not. The Wool Growers base their claims for relief on an
alleged promise of protection or indemnity, which they assert induced them to withdraw opposition
to the reintroduction plan and cease lobbying efforts. However, as discussed above, such a promise
appears nowhere on the face of the 1997 letter. Thus, in the absence of that crucial element of the
Wool Growers’ three estoppel claims, the district court was correct in dismissing those claims
under Rule 12(b)(6).
E. IDFG is entitled to attorney fees under I.C. § 12-117 because the Wool
Growers pursued this appeal without reasonable basis in fact or law.
Each party asserts entitlement to attorney fees under I.C. § 12-117, arguing that the other’s
position is without reasonable factual or legal basis. Idaho Code § 12-117(1) allows for an award
of attorney fees in any “proceeding involving as adverse parties a state agency or a political
subdivision and a person” if the court “finds that the nonprevailing party acted without a
reasonable basis in fact or law.” Here, this Court finds that the district court’s Rule 12(b)(6)
dismissal was proper, and also finds an award of attorney fees in favor of the respondents—the
prevailing party—is appropriate. As explained above, although the Wool Growers’ complaint
alleges that IDFG failed to “block” the Forest Service from modifying their grazing permits, they
later conceded that IDFG had no power to do so and that such a claim should be dismissed. Thus,
they not only made allegations without reasonable basis in law, but they did so knowingly.
Further, a look at the plain language of the 1997 letter and I.C. § 36-106(e)(5)(D) is all that
is needed to see that the Wool Growers’ claims for indemnity are neither factually nor legally
meritorious. As discussed above, assuming the letter is a contract, it is at most a hold harmless
agreement in which IDFG assumed the risk of loss to bighorns—not domestic sheep. It contains no
promise that IDFG would affirmatively act to protect the Wool Growers, much less a promise to
indemnify them against actions of an independent federal agency over which the Wool Growers
knew IDFG had no control. The statute contained even less language on which to base a claim for
indemnification, and the equitable claims appear to be nothing more than a final shot in the dark.
Because the weakness of the Wool Growers’ case was plain to see on the face of the letter and the
statute, they acted without a reasonable basis in law and fact in pursuing this appeal. Thus, IDFG is
awarded attorney fees under I.C. § 12-117.
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IV.
CONCLUSION
For the foregoing reasons, the district court correctly dismissed the Wool Growers’
complaint for failure to state a claim. We accordingly affirm and award costs and attorney fees to
respondents.
Chief Justice BURDICK, and Justices EISMANN and HORTON and Justice Pro Tem
KIDWELL CONCUR.
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