Court: Idaho Supreme Court; February 25, 2019; Idaho; State Supreme Court
The case involves SilverWing at Sandpoint, LLC ("SilverWing") appealing against Bonner County ("the County") concerning a promissory estoppel dispute. SilverWing aimed to develop residential hangars and a taxiway near Sandpoint Airport, relying on the County's 2007 Airport Layout Plan (ALP) that indicated no plans to relocate the airport's runway. After starting development based on these assurances, the County later required SilverWing to relocate the taxiway onto County-owned property, which was subsequently found to be unapproved by the FAA. Following a jury verdict in favor of SilverWing, the County filed a motion for judgment notwithstanding the verdict (JNOV), which was denied. The County's appeal included claims of error regarding the JNOV denial, attorney fees awarded to SilverWing, and a request for its own attorney fees. The appellate court reversed the JNOV ruling, vacated the attorney fee award to SilverWing, and remanded the case for further proceedings, declining to award attorney fees to either party.
The factual background details SilverWing's acquisition of 18.1 acres adjacent to the Airport in April 2006, intending to create a 45-unit Planned Unit Development (PUD) with direct access to the runway through a "Taxi Way Easement" from the County. An architectural design was developed for the PUD that included a taxiway for residents to access the runway directly from their hangar homes.
In summer 2006, following SilverWing's property purchase, the Airport Board, represented by vice-chair Sol Pusey, requested property plans and a construction schedule from SilverWing. Pusey indicated ongoing discussions with the FAA regarding a west-side taxiway. SilverWing's McKeown, initially unaware of the taxiway's required location, engaged in frequent communication with Airport Manager Jorge O'Leary, who encouraged direct contact on airport matters. McKeown shared an initial site plan, receiving positive feedback from both O'Leary and the Airport Board.
Later, O'Leary indicated urgency in discussing potential changes to SilverWing's project, involving land swaps with the County. McKeown sent an updated site plan that retained the taxiway entirely on SilverWing property. O'Leary subsequently provided a revised Airport Layout Plan (ALP 2(B)), showing the taxiway's relocation primarily onto Airport property. O'Leary mentioned plans to acquire additional land for the taxiway's extension.
Although McKeown was initially unclear about O'Leary's communication, he later recognized the significance of the west-side taxiway development but deemed it a minor concern at that stage. SilverWing engaged Clearwater Engineering, led by Debbie Van Dyk, to engineer the project, which included the taxiway connection to the Airport runway. Clearwater also enlisted ES Engineering, with expert Corrie Esvelt-Siegford, who verified the ALP with the FAA, receiving confirmation that the runway's position was stable.
The engineers requested an FAA-approved ALP from O'Leary, who provided a hard copy of ALP 2(B) and assured them they could build within the property line, ensuring FAA compliance. Van Dyk stated that a delay in ALP approval would have raised significant concerns. Relying on O'Leary's assurances, SilverWing's engineers proceeded with the taxiway design based on ALP 2(B), placing it predominantly on Airport property.
In December 2006, McKeown met with the Airport Board, Airport Engineer, and O'Leary to discuss SilverWing's final site plan, which indicated the taxiway's new location according to ALP 2(B). McKeown testified that the Board and O'Leary confirmed the taxiway's placement was correct and FAA-approved, allowing SilverWing to proceed with development. Following this, McKeown met with Bonner County Commissioner Lewis Rich, who expressed no concerns about the taxiway's location and, in fact, thanked McKeown for including it in SilverWing's plans. Rich committed to proceeding with the taxiway as shown on ALP 2(B).
Afterward, McKeown, O'Leary, and County Engineer Mark Napier discussed relocating Airport equipment and verified the taxiway's location using ALP 2(B). No objections to the taxiway's placement were raised at this meeting. In January 2007, SilverWing began formalizing its development intentions, submitting FAA Form 7480 (Notice of Landing Area Proposal) and FAA Form 7460 (Notice of Proposed Construction and Alteration) through the County, which was responsible for forwarding these forms to the FAA.
On February 14, 2007, the County submitted SilverWing's plans to the FAA. Following this, the Sandpoint Planning Commission and the City of Sandpoint approved SilverWing's Planned Unit Development (PUD). The FAA reviewed the submitted Form 7480 and indicated no objection to construction, contingent on compliance with FAA design standards. Subsequently, the FAA approved Form 7460 for the project. From September 2007, SilverWing initiated significant work on a 1,098-foot taxiway on Airport property, incurring $851,120.00 in construction costs, which were disputed.
To manage the increased costs associated with on-Airport construction, SilverWing negotiated a Through the Fence Airport Access Agreement (TTFA), granting it a perpetual right to access the Airport's runway from its property in exchange for an annual fee. The Airport Board unanimously adopted the TTFA, which was executed by Lewis Rich and acknowledged the construction of 44 residential airplane hangars by SilverWing.
The County submitted a partially executed Through-the-Fence Agreement (TTFA) to the FAA, which responded on May 3, 2007, deeming residential use near a public airport incompatible and advising against access to hangars with residences. Despite not approving the TTFA, the County sent two copies to McKeown, omitting the FAA's disapproval. On June 6, 2007, SilverWing executed the TTFA and returned a copy to the County. In December 2008, the FAA designated the Airport as "non-compliant" due to three issues: an easement granted without FAA approval prior to SilverWing's ownership, the execution of the TTFA allowing access to the runway, and mid-field access points for private property owners. This non-compliance status would last for three years or until the issues were resolved.
To address the compliance issues, the County developed a Corrective Action Plan (CAP) aimed at extinguishing SilverWing's TTFA easement and amending it to limit access to the runway's end, emphasizing that mid-field access posed safety risks. On March 25, 2009, the FAA informed the County that SilverWing's taxiway was incorrectly located, and SilverWing should plan for its relocation if necessary. McKeown learned that the Airport Layout Plan (ALP) had not been FAA-approved, yet SilverWing relied on County assurances regarding the taxiway. From March 2009 to 2011, SilverWing advanced its development while collaborating with the County and FAA for compliance.
In March 2011, the FAA enacted a policy permitting existing residential developments with through-the-fence access. On October 11, 2011, the County approved an amended ALP requiring the relocation of the runway and taxiway, impacting SilverWing's development. This amended ALP was approved by the FAA on October 24, 2011. In December 2011, the County submitted an amended CAP to the FAA incorporating the revised ALP.
In 2012, Congress passed the FAA Modernization and Reform Act, which allowed residential through-the-fence access agreements, making SilverWing's TTFA compliant with FAA regulations. SilverWing filed a complaint against the County on May 11, 2012, with three initial claims: breach of covenant of good faith and fair dealing, taking without compensation under 42 U.S.C. § 1983, and violation of equal protection under 42 U.S.C. § 1983. The County removed the case to the U.S. District Court for Idaho on June 6, 2012, due to federal claims. SilverWing amended its complaint on October 16, 2013, adding a fourth claim for promissory estoppel. The court granted summary judgment for the County on the first three claims but denied it for the promissory estoppel claim. On January 21, 2015, the court remanded the surviving claim to state court. The County then filed motions for judgment on the pleadings and summary judgment on May 1, 2015, both of which were denied on April 13, 2016.
On March 3, 2016, the County added counterclaims for breach of contract and breach of the covenant of good faith and fair dealing regarding the TTFA. SilverWing moved for summary judgment against these counterclaims, which led to the court dismissing one claim and granting judgment on three of the County's five breach of contract theories. A jury trial commenced on November 15, 2016, resulting in a verdict favoring SilverWing on its promissory estoppel claim and awarding $250,000 in damages while denying the County's counterclaim. The County's motion for judgment notwithstanding the verdict (JNOV) was denied on March 17, 2017. The County appealed on April 14, 2017. After the appeal, the court awarded SilverWing $704,024.63 in attorney fees and $48,883.19 in costs, which were then included in the County's amended notice of appeal. The issues on appeal include whether the district court erred in denying the JNOV motion, in awarding attorney fees to SilverWing, and whether the County could receive attorney fees if the judgment were reversed.
The denial of a Judgment Notwithstanding the Verdict (JNOV) is reviewed by the Court using the same standard applied by the district court, as established in Olson v. EG&G Idaho, Inc. A JNOV motion under I.R.C.P. 50(b) is treated as a delayed directed verdict motion, requiring the defendants to accept the truth of the plaintiffs' evidence and any reasonable inferences drawn in favor of the plaintiffs. The key legal question is whether substantial evidence exists to support a jury verdict, rather than the absence of any evidence against the moving party. Substantial evidence must be sufficient for reasonable minds to conclude that the jury's verdict was appropriate, but the Court cannot weigh evidence or assess witness credibility. A JNOV should only be granted if one conclusion that reasonable minds could reach contradicts the jury verdict. Furthermore, the awarding of attorney fees and costs is at the district court's discretion, reviewed under the abuse of discretion standard. This involves a four-part test assessing the court's perception of discretion, adherence to legal standards, and reasoned decision-making. The nature of an action as based on a commercial transaction is a question of law, reviewed under a standard of free review.
The district court incorrectly denied the County's motion for judgment notwithstanding the verdict (JNOV) regarding the claim of promissory estoppel. The primary issue on appeal is whether SilverWing experienced a substantial economic detriment due to its reliance on the County's promises. A valid claim for promissory estoppel requires the plaintiff to demonstrate: (1) reliance on a specific promise; (2) substantial economic loss resulting from that reliance; (3) the loss was foreseeable by the promisor; and (4) the reliance was reasonable. The court acknowledged SilverWing as the prevailing party while noting that the jury's award of $250,000 in reliance damages was unjustified, as there was insufficient evidence of substantial economic detriment. Consequently, the judgment should favor the County.
The case involved SilverWing purchasing 18.1 acres for developing hangar residences. Initially, it planned to build a taxiway entirely on its property, but based on the County's assurances regarding ALP 2(B), it constructed part of the taxiway on airport property, incurring additional costs. After the taxiway was built in 2007, SilverWing learned in 2008 that ALP 2(B) had not received FAA approval. In 2009, the County unexpectedly demanded the removal of the taxiway due to the lack of approval, leading to prolonged negotiations. SilverWing filed the lawsuit in 2012 and added the promissory estoppel claim in 2013. Overall, the evidence did not substantiate SilverWing's claims, and the district court should have granted the County's motion for JNOV.
The federal government's change in position during litigation, including a new act of Congress, resolved FAA objections to the location of SilverWing's taxiway, allowing it to remain as built in 2007 without the expectation of relocation. SilverWing's counsel framed the case as one of "broken promises," arguing reliance on ALP 2(B). Despite an eight-year delay and legislative changes, SilverWing achieved an FAA-approved taxiway in its constructed location, enabling it to sell its development without regulatory uncertainty.
The district court instructed the jury that SilverWing had to demonstrate "substantial economic loss" due to the County's promise. SilverWing's damages case relied on two experts: a real estate appraiser and a forensic economist. The economist assessed "expectancy" damages from the eight-year delay in selling units, claiming over $11 million in losses, and "reliance" damages of $5,723,120 from out-of-pocket expenses after learning the taxiway was non-compliant.
The County sought to exclude the experts' testimony prior to trial, arguing about the recoverable damages, which was ultimately denied. However, after the evidence was presented, the district court partially granted the County's motion, dismissing expectancy damages as speculative, thus not presented to the jury. It allowed the jury to consider reliance damages, which resulted in a verdict of $250,000. The district court's decision to allow reliance damages was deemed legally flawed.
SilverWing defends the jury's award by asserting that it incurred higher costs to design and construct its taxiway on the County's property due to compliance with FAA guidelines. While McKeown's testimony supports this claim, the increased costs do not qualify as "reliance" damages. According to Section 344 of the Restatement (Second) of Contracts, damages are categorized into "expectancy," "reliance," and "restitution" interests. Reliance damages aim to reimburse losses incurred from reliance on a contract, positioning the injured party as if the contract had never been made. In this case, SilverWing was directed by the County to develop the taxiway on its property, and its hope to save costs by keeping it on its land does not constitute reliance damages. Despite a significant delay in the County's performance of its promises, those promises were ultimately fulfilled, meaning any damages from that delay are classified as expectancy damages, which SilverWing's economist attempted to quantify but were rejected by the district court. Furthermore, SilverWing has not appealed this decision and contends the district court dismissed its reliance damages analysis during consideration of the County's motion for judgment notwithstanding the verdict. The district court noted that while the expenses incurred by SilverWing for the taxiway cannot be considered damages because the development complied with the Airport Layout Plan, the relevant question is whether the evidence presented was sufficient for the jury to reach a proper verdict, despite contradictions. The FAA's approval and the funds expended by SilverWing are both critical in evaluating its economic loss.
The Idaho Supreme Court affirms the principle that it will not challenge jury determinations regarding evidence weight or witness credibility. However, the Court identifies the central issue as a legal question regarding the recoverability of expenses related to a taxiway, separate from factual disputes or witness evaluations. The district court's denial of the County's motion for judgment notwithstanding the verdict is deemed erroneous, leading to the vacating of the judgment and a remand for reassessment of costs and fees. Neither party is entitled to attorney fees, as the prior judgment and fees awarded to SilverWing are also vacated.
The Court agrees with the district court's finding that the Transportation and Taxiway Funding Agreement (TTFA) does not include the County's promises to SilverWing, meaning the TTFA cannot justify attorney fees in this case. The County acknowledges that the jury found it made sufficient promises to SilverWing but argues these promises were encompassed by the TTFA, thus negating promissory estoppel. SilverWing asserts that the TTFA merely guaranteed access between its hangar residences and the airport runway, independent of the taxiway's location. The inclusion of a map in the TTFA is interpreted as outlining the project's scope rather than dictating airport layout.
The Court emphasizes that if the TTFA covers the taxiway's location, SilverWing's claim for promissory estoppel would fail, as promissory estoppel cannot apply where a binding agreement already exists. The interpretation of contracts begins with the language of the document, which must be understood in its plain meaning unless ambiguous.
The TTFA (Taxiway Transfer and Funding Agreement) does not address the placement of a taxiway, and the County's prior promises regarding the taxiway are not referenced in the TTFA. These promises were made to SilverWing before the TTFA's execution in June 2007, and discussions about the taxiway occurred prior to this agreement. Therefore, the taxiway promises are considered independent of the TTFA. The County claims these promises were incorporated into the TTFA, citing a "no oral modifications" clause. However, this claim is rejected, as the TTFA does not contain provisions binding the parties to a specific layout plan. The jury determined that the taxiway representations were separate promises made to SilverWing.
The court concluded that the TTFA cannot be used as a basis for awarding attorney fees to the County since the litigation did not materially involve the TTFA. Additionally, the district court incorrectly applied Idaho Code section 12-120(3) to SilverWing's promissory estoppel claim. This section allows for attorney fees in civil actions involving a "commercial transaction," which the County contests, arguing that SilverWing's claim does not qualify. The County appeals the awarded attorney fees of $486,337.03 to SilverWing, asserting that the claim was not based on a commercial transaction, thus rendering the fee award erroneous.
SilverWing contends it relied on the County's promises regarding the development of its project, which were intended to boost tax revenue and job creation for the County. However, the court aligns with the County, emphasizing the need to assess the statutory definition of "commercial transaction" to determine eligibility for attorney fees under Idaho Code section 12-120(3). The gravamen, or significant part, of a claim is pivotal in this analysis, requiring evaluation of whether the claim is fundamentally a commercial transaction.
The court concludes that while the relationship between SilverWing and the County was commercial in nature, there was no formal transaction regarding the taxiway's placement. Promissory estoppel, an extension of contract law, dictates that promises must be upheld, functioning similarly to an implied-in-law contract. The County's promise related to the taxiway is characterized as commercial, aimed at achieving financial benefits for the County. Despite the commercial intent behind the relationship, the court diverges from the district court’s determination that the promises constituted a transaction, as defined by business dealings or contracts. Instead, it classifies promissory estoppel as an equitable cause of action, which does not meet the criteria of a transaction under the relevant definitions.
SilverWing's equitable claim is not considered a transaction under Idaho Code section 12-120(3) because it serves as a substitute for consideration rather than a transactional basis. The cited cases from both parties are inapplicable; they either did not involve a commercial relationship or clearly established a commercial transaction. Despite the parties having a commercial relationship, no commercial transaction was consummated. Consequently, SilverWing's promissory estoppel claim does not arise from a commercial transaction, leading to the improper award of attorney fees. The County is also denied attorney fees under Idaho Code section 12-117, as SilverWing's claims had reasonable support. The district court's ruling on the County's motion for judgment notwithstanding the verdict is reversed, and the judgment in favor of SilverWing is vacated, including the attorney fee award. Costs on appeal are awarded to the County, but no attorney fees are granted to either party. The jury was instructed on the elements of promissory estoppel, and while the instruction varied from established cases, it was deemed acceptable. The document refrains from addressing the debate over the calculation of damages in promissory estoppel cases, leaving that issue for future consideration.
