source: Caselaw Access Project

author: STEGNER, Justice.

license: Public Domain

text:
    Brent H. GREENWALD dba, Greenwald Neurosurgical, P.C., an Idaho Corporation, Plaintiff-Respondent-Cross Appellant, v. WESTERN SURETY COMPANY, Defendant-Appellant-Cross Respondent.
    Docket No. 45404
    Supreme Court of Idaho, Boise, December 2018 Term.
    Filed: March 15, 2019
    Elam & Burke, P.A., Boise, for appellant. Joshua S. Evett argued.
    Swafford Law, P.C., Idaho Falls, for respondent. Larren K. Covert argued.
   STEGNER, Justice.

This appeal arises out of a Dishonesty Bond (the bond) issued by Western Surety Company (Western) that insured Greenwald Neurosurgical, P.C. (the P.C.), for up to $ 100,000 in losses caused by any fraudulent or dishonest act of any employee of the insured.

At the summary judgment stage, the district court found that an employee of the P.C. caused over $ 100,000 in losses to the P.C., while he was acting in the ordinary course of the P.C.'s business. The district court then issued a judgment to the P.C. for the policy amount of $ 100,000. Western appeals the district court's determinations that the employee caused the loss while acting in the ordinary course of business and that the P.C. actually suffered the loss. The P.C. cross-appeals from the district court's findings that it was the only entity insured under the bond and argues it was awarded too little by way of attorney's fees. For the reasons set out, we reverse the order granting summary judgment, vacate the judgment, and remand the case for further proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

Brent H. Greenwald, M.D. (Greenwald), is a neurosurgeon practicing in Idaho Falls, Idaho. Greenwald practices medicine under a professional corporation named Greenwald Neurosurgical, P.C. The P.C. was created in 2001. According to Greenwald, his medical office functioned as headquarters not only for the P.C., but also for his personal financial dealings and investments, as well as his real estate business.

The original bond application indicates that on November 5, 2002, Greenwald applied for a $ 100,000 Dishonesty Bond to insure "Greenwald Neurosurgical" from losses caused by its employees. On November 11, 2002, Western issued a $ 100,000 Dishonesty Bond insuring "Brent H. Greenwald dba Greenwald Neurosurgical" against the criminal acts of any employee as defined by the bond.

On December 8, 2009, the P.C. hired Matthew Udy (Udy) as a business and financial manager. According to Greenwald, Udy's responsibilities included receiving income from all sources, making payments on accounts payable, payments to credit card accounts, payments for other miscellaneous charges and services, and managing information technology issues at the medical office. Greenwald referred to Udy as his personal assistant and as a "financial manager of [the] medical practice." However, as evidenced by a 2012 W-2, the P.C. is the sole entity that employed Udy and paid for his services. (During the course of this litigation, Western conceded that the P.C. is an insured entity under the bond. However, it also maintained that only the P.C. was an insured because of language in the policy that limited coverage to fraudulent or dishonest acts of an employee of the insured.)

Also in 2009, Greenwald formed a real estate company, Allagash Realty, LLC (Allagash). According to Greenwald, Udy was responsible for managing Allagash, which included collecting Allagash's rents and other payments, as well as paying its creditors.

On September 11, 2013, Janeene Ditmore (Ditmore), the P.C.'s office manager, was notified that a questionable purchase had been made with one of Greenwald's credit cards. Udy was suspected of making the questionable purchase. Greenwald, along with Ditmore and Troy Clayton (Clayton), the CPA for the P.C., confronted Udy about the purchase. Udy confessed to wrongfully appropriating money and was fired that day. Due to the admitted wrongdoing, Clayton conducted an internal financial audit for the P.C. The audit consisted of an analysis of the P.C.'s financial records, Allagash's financial records, and Greenwald's personal credit card accounts. Greenwald reported Udy's financial embezzlement to the police. Ultimately, on November 10, 2014, Udy pleaded guilty to felony Unauthorized Use of an Access Device (in violation of 18 U.S.C. § 1029 ) in federal court. He was subsequently sentenced on March 17, 2015. As a result of pleading guilty to Unauthorized Use of an Access Device, Udy was ordered to pay $ 275,488.32 in restitution.

A. Prelitigation communication between Western and the P.C.

By letter dated October 10, 2013, Larren Covert, the lawyer for Greenwald and Greenwald Neurosurgical, notified Western of their claim pursuant to the bond, that an employee had "stolen funds from the business." As a result of this notification, Ginger Barnes (Barnes), Western's claim manager, alerted the firm representing Greenwald and the P.C. by letter dated October 17, 2013, that a sworn proof of loss form, along with other documentation, needed to be submitted to Western in order for her to process the claim.

Clayton responded to Western by letter dated January 19, 2014, with an attached sworn proof of loss form dated January 22, 2014. The proof of loss form identified the "approximate loss" in the amount of $ 347,395. Greenwald also submitted an affidavit dated January 15, 2014, with an attached, undated Summary Of Total Amounts Stolen (the prelitigation summary), in support of his claim. In his affidavit, Greenwald commented that Udy paid for the fraudulent credit card purchases "with stolen/embezzled funds from my checking accounts using a complex scheme of transfers between accounts."

Greenwald also broke down the estimated losses as follows: $ 32,000 in resulting legal fees and costs; $ 23,907.74 in "unauthorized charges, accounts, and expenses[;]" $ 161,396.52 embezzled from accounts; and $ 130,091.20 in "[f]raudulent use of business credit card accounts." Totaling these amounts equals $ 347,395.46, which is almost identical to the "approximate loss" identified in the proof of loss.

The undated prelitigation summary submitted to Western attempted to substantiate the amounts listed by Greenwald. Regarding the $ 161,396.52 embezzled from accounts, the prelitigation summary itemized that amount as follows: $ 140,095 stolen "from Allagash[;]" and $ 21,301.52 stolen from Idaho Spine & Brain. The latter amount (stolen from Idaho Spine & Brain) was further broken down into three separate checks from "ReHabAuthority." Those checks were made out to "Allagash," and each check's memo reads "Allagash c/o Idaho Spine & Brain 3155 Channing Way, Suite B Idaho Falls, ID 83404," which is also the address of the P.C.'s office. (The P.C.'s letterhead reads "The Spine & Brain Specialty Center;" however, the record does not explain the relationship between the Spine and Brain Specialty Center and the P.C.) The police report, submitted in support of the P.C.'s claim, indicated that the $ 140,095 "from Allagash" was an estimated amount of Allagash rents collected and stolen by Udy.

The prelitigation summary broke down the $ 130,091.20 in fraudulent charges to credit card accounts into five separate amounts specific to the following credit card accounts: Citibank, Chase Marriott, CapitalOne Visa, Amex Personal, and Zions. (This total is substantially different from the $ 25,102.10 found owed to the various credit card companies in the restitution order. See supra note 1.)

On January 27, 2014, Barnes spoke with Clayton on the phone about the claim. Western contends that Barnes told Clayton on the phone that if any losses were to be reimbursed, they had to be sustained by the P.C. The reason for Western's position was the language of the bond itself. The Bond only covers the fraudulent or dishonest "act of an employee of the Insured ...." Western contended that Udy was only an employee of the P.C. and consequently only the P.C. would be insured under the bond. A few months later, on March 21, 2014, Barnes once again informed Greenwald that Western was still awaiting documentation demonstrating that the P.C. incurred a loss caused by Udy.

On May 29, 2014, counsel for Greenwald and the P.C., Ronald Swafford (Swafford), wrote Western, requesting a response regarding the P.C.'s claim and attached Greenwald's previous January 15, 2014, affidavit with the prelitigation summary. Barnes responded by letter on June 3, 2014, outlining the previous communications and again noting that Western still required documentation of the P.C.'s actual losses. Barnes noted that the $ 21,301.52 loss in checks appeared to be a loss attributable to the P.C. but noted that it was unclear who suffered the $ 130.091.20 loss in credit card charges. Barnes concluded by again requesting documentation showing the P.C.'s actual losses.

Having received no response, Barnes again wrote Swafford on August 26, 2014, seeking the information and documentation previously requested. On December 17, 2014, Swafford responded to Western and attached Udy's Plea Agreement. It does not appear from the record that Swafford provided any documentation evidencing the P.C.'s direct loss in that correspondence. On January 5, 2015, Barnes again wrote Swafford and requested the necessary documentation. That letter reads in pertinent part:

This bond covers loss due to an employee of Brent H. Greenwald dba Greenwald Neurosurgical only. The application states it is to cover the business of "Neurosurgery ."
Losses incurred involving the Allugash [sic] properties are not covered by this bond. Losses incurred to Brent Greenwald personally are also not covered. The Restitution portion of the Plea Agreement shows a loss of "$ 250,386.22 payable to the doctor." There is nothing that sets out exactly what portion of the loss was caused to Greenwald Neurosurgical. It appears the credit card losses were resolved by each credit card company as restitution has been awarded five companies.
At this time, I request a break down as to what makes up the $ 250,386.22 payable to the doctor. It appears at least $ 140,095 is the loss regarding the Allugash [sic] properties. If the loss involves credit card companies other than the five who received restitution, please provide us with documentation showing whether those cards were personal accounts or business accounts and whether business funds were used to pay those personal charges by Mr. Udy. I requested this information from the accountant, Troy Clayton on January 27, 2013 [sic], but never received any documentation.
Once I receive this documentation, I will proceed accordingly.

(Italics added.)

On April 17, 2015, just over four months later, Swafford wrote back to Western. Swafford failed to provide the documentation requested (although he confirmed the information regarding Udy's criminal charges), and again requested payment from Western. Subsequently, on May 15, 2015, Swafford wrote to Western's counsel, replying to a "response and explanation" that was presumably from Western but has not been included in the record. Swafford's May 15, 2015, letter stated for the first time that the P.C. took the position that the bond covered all of Greenwald's businesses, not just the P.C. Given the position taken, the P.C. deemed it unnecessary to provide Western with documentation demonstrating direct loss to the P.C. Swafford did not attach any substantiation of the P.C.'s losses.

In sum, Western asked for documentation demonstrating the P.C.'s losses as contemplated by the bond at least four times (in the phone call on January 27, 2014, and in three letters dated March 21, 2014, June 3, 2014, and January 5, 2015), each time without success. As a result, Western denied the P.C.'s claim because the P.C. had never substantiated its losses to Western's satisfaction.

B. District court proceedings.

Due to Western's refusal to pay under the bond, Greenwald, doing business as the P.C., filed the complaint in this action on November 5, 2015, alleging breach of contract and unjust enrichment. The P.C. demanded a jury trial. On April 20, 2016, the P.C. answered Western's first set of interrogatories and requests for production of documents.

In answering discovery requests, the P.C. continued to avoid providing clear information on how the P.C. had been damaged. When asked to "itemize each element of damages ... and state in dollars and cents the amount of money you are suing for each[,]" the P.C. answered generally that Udy had converted $ 275,488.32 dollars from Greenwald and his various businesses. When asked to "provide an itemized list of amounts taken from accounts in the name of Greenwald's neurological practice[,]" the P.C. responded that "Udy did not withdraw any funds from any account. Matt Utdy [sic] created and submitted fraudulent invoices or charges for unauthorized payments." (While this does not appear wholly inconsistent with Ditmore's and Clayton's later accounts of Udy's actions, no invoices were produced.) Finally, when asked to produce all exhibits, the P.C. responded that "Clayton previously provided all documents and source information to Western Surety. The documents clearly verify the amounts stolen." (The district court later found that "there is nothing in the 214 pages [representing everything the P.C. provided Western in discovery] that clearly identifies any transfers wrongfully made from the P.C. account to either Allagash, Greenwald's credit accounts, or some other destination.")

On October 21, 2016, Western moved for summary judgment. Western argued that the P.C. could not recover because it failed to submit any evidence that the P.C. had sustained a direct loss, that Udy was not acting in the regular course of his employment at a neurology practice when the loss occurred, and that the bond application omitted material information, thus precluding the P.C. from recovering. (The last of these three arguments has not been appealed.) The P.C. contested these arguments, specifically maintaining that the bond covered all of Greenwald's businesses conducted at the office. On November 30, 2016, the district court denied Western's motion for summary judgment by finding the bond was ambiguous regarding who in fact was the "insured" party.

On December 15, 2016, Western filed a motion to reconsider the November 30, 2016, order. Western contended that even if Greenwald intended to have three "insured" parties, Greenwald personally, the P.C., and Allagash, only the P.C. employed and paid Udy; therefore, it was the only entity that could recover under the bond. On January 13, 2017, the district court adopted the reasoning set forth by Western and granted its motion for reconsideration. The district court ruled that because the bond only protected against losses caused by employees who were compensated or paid by the insured, and only the P.C. had paid Udy, that only the P.C. could recover under the bond. (The P.C. has appealed this ruling.) The district court concluded that the remaining issues were whether the P.C. sustained losses as a result of Udy's actions, and if so, the amount of those losses.

As a result of the district court's narrowing of the issues, the P.C. filed its motion for summary judgment on April 25, 2017. The P.C. argued that there was no genuine issue as to the amount of loss directly sustained by the P.C. In order to support its argument, the P.C. had to finally demonstrate how the P.C. suffered losses. The P.C. attempted to accomplish this by attaching the affidavits of Ditmore and Clayton. The two affidavits were both dated January 25, 2017, twelve days after the district court's ruling that only the P.C. could recover under the bond, but not served on Western until April 25, 2017, when the P.C. filed its motion for summary judgment.

According to both Ditmore and Clayton, Udy fraudulently induced Ditmore to transfer money from the P.C.'s accounts to pay for both credit card charges made by Udy and for fraudulent Allagash expenses and debts. Both affiants claimed that the P.C. suffered $ 291,487.72 in damages through this deceptive practice employed by Udy. The itemized amounts of losses established by both Ditmore's and Clayton's affidavits are identical as to the amounts claimed in the prelitigation summary.

Each affidavit claims that $ 140,095.00 in "Allagash expenses and debts" were caused to be fraudulently transferred from the P.C. This is the same amount of rents stolen "[f]rom Allagash." Clayton stated that Ditmore would transfer P.C. funds for Allagash expenses "into the fraudulent Allagash account" created by Udy. In contradiction to Clayton, Ditmore stated that "the office was unaware of" the second fraudulent Allagash account created by Udy, and that she would instead deposit P.C. funds into the "valid checking accounts." Ditmore continued stating that Udy would then transfer the recently deposited P.C.'s funds from the "valid Allagash or personal account for his own personal use ...."

Both affidavits claim that Udy fraudulently induced Ditmore to transfer $ 130,091.20 in P.C. funds for Udy's fraudulent credit card expenditures. This amount is identical to the amount claimed in the prelitigation summary. Additionally, the affidavits also state that Udy stole $ 21,301.52 in tax payments from tenants in the Allagash properties, which was later repaid by the P.C. This is the same amount that was allegedly stolen from Idaho Spine & Brain in the form of three RehabAuthority checks, and referenced in the prelitigation summary.

Attached to Ditmore's affidavit was a ledger account of transactions for the P.C. Regarding this ledger, Ditmore stated the following: "I have reviewed the various withdrawals I made at the direction of Mr. Udy, and have attached them to this affidavit. ... The highlighted items are the amounts Mr. Udy embezzled from Greenwald Neurosurgical, PC [sic] by his deceptive practices ...." However, the highlighted transactions in the ledger include only $ 89,000 in purportedly fraudulent transfers. No explanation is given in either affidavit as to why this amount is so much less than the $ 291,487.72 in purported losses incurred by the P.C. (In addition, neither affiant mentioned Udy's alleged fraudulent invoices that the P.C. claimed were "created and submitted ... for unauthorized payments.")

In response, Western submitted an affidavit of counsel and attached a number of exhibits in an attempt to establish genuine issues of fact.

On June 30, 2017, the district court ruled in favor of the P.C. and granted its motion for summary judgment. The district court found that Udy's fraudulent conduct was covered under the bond because "moving P.C. money out of the P.C. was part of the regular service he performed for the P.C. and was part of the P.C.'s regular business." Due to the new affidavits, the district court also found that, despite the discrepancy evidenced by the transaction ledger, there was no genuine issue as to whether the P.C. suffered the losses of $ 140,095.00 in "Allagash expenses and debts" and $ 130,091.20 in fraudulent credit card charges (totaling $ 270,186.20).

As a result, the district court granted the P.C.'s motion for summary judgment and found that the P.C. was entitled to recover the full $ 100,000 pursuant to the bond. On July 17, 2017, the district court entered a judgment against Western in the amount of $ 100,000 with interest accruing at the statutory rate. On August 29, 2017, the district court entered an amended judgment including an award of attorney's fees and costs to the P.C. Western timely appealed the district court's determination that Udy's fraudulent conduct was in the ordinary course of the P.C.'s business and the finding that no genuine issue of fact existed as to the amount of loss sustained by the P.C. The P.C. timely appealed the district court's determination that only the P.C. was covered under the bond and the award of attorney's fees it received, contending the award should have been greater.

II. QUESTIONS PRESENTED ON APPEAL

1. Did the district court err when it concluded only the P.C. could recover under the Dishonesty Bond?
2. Did the district court err in finding Udy was acting in the ordinary course of the P.C. business?
3. Did the district court err in granting summary judgment to the P.C.?
4. Did the district court err in awarding attorney's fees to the P.C.?
5. Is the P.C. entitled to attorney's fees on appeal?

III. STANDARD OF REVIEW

This Court employs the same standard as the district court when reviewing rulings on summary judgment motions. La Bella Vita, LLC v. Shuler , 158 Idaho 799, 805, 353 P.3d 420, 426 (2015) (citing Wesco Autobody Supply, Inc. v. Ernest, 149 Idaho 881, 890, 243 P.3d 1069, 1078 (2010) ). "The court must grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." I.R.C.P. 56(a). (The more specific standards are set out in each applicable section below.)

IV. ANALYSIS

In its cross-appeal, the P.C. disputes the district court's determination that the bond only covered losses to the P.C. Because the other issues could be rendered moot by resolution of this issue, it needs to be addressed at the outset.

A. The district court correctly concluded that only the P.C. was an insured and the only entity that could recover under the bond.

The district court originally denied Western's motion for summary judgment, concluding the bond was ambiguous as to the identity of the insured. Subsequently, the district court reversed that determination following Western's motion for reconsideration. The district court found that the P.C. was the only entity that could recover under the bond because it was the only entity that had employed Udy. In order for coverage to arise, Udy had to be an employee of the insured. Since the P.C. was the only employer of Udy, only the P.C. could recover under the bond.

In its cross-appeal, the P.C. argues that Greenwald was also personally insured under the bond. Greenwald contends that because the bond identified "Brent H. Greenwald dba Greenwald Neurosurgical" as the insured and the phrase "dba" does not connote a separate legal entity, they should both be named insureds. The P.C. maintains that the district court erred when it failed to construe the language of the bond against Western, the drafter of the insurance contract. This additional argument by the P.C. is based on the bond's language stating that the policy is "for any type of business[,]" and that Greenwald, a nonlawyer, relied on this language. Greenwald maintains he intended to insure all of his businesses and himself personally.

In response, Western argues that Greenwald's subjective belief regarding who was covered is immaterial. Western continues that if the P.C.'s analysis of the bond's use of "dba" is correct, then only Greenwald, personally, would be covered and because Greenwald did not employ Udy, there could be no recovery under the bond. Western, for its part, has conceded that the entity insured by the bond was the P.C. in apparent acknowledgment that if the P.C. were not the insured under the bond then there would be no coverage since Udy was only employed by the P.C. Western also argues that the district court correctly determined that the P.C. was the only entity able to recover under the bond because it is uncontested that only the P.C. employed Udy; therefore, Udy could not meet the bond's definition of an employee of either Allagash or Greenwald personally.

"[W]hen reviewing a trial court's decision to grant or deny a motion for reconsideration, this Court utilizes the same standard of review used by the lower court in deciding the motion for reconsideration." Fragnella v. Petrovich , 153 Idaho 266, 276, 281 P.3d 103, 113 (2012). "When deciding the motion for reconsideration, the district court must apply the same standard of review that the court applied when deciding the original order that is being reconsidered." Id.

Here, like Fragnella , "the trial court was asked to reconsider the granting of a motion for summary judgment, so the summary judgment standard applied both to the trial court deciding the motion for reconsideration and to our review of that decision on appeal." Id. As such, "this Court must determine whether the evidence presented a genuine issue of material fact to defeat summary judgment." Id.

This Court interprets insurance policies using "the general rules of contract law subject to certain special canons of construction." Armstrong v. Farmers Ins. Co. of Idaho , 147 Idaho 67, 69, 205 P.3d 1203, 1205 (2009) (quoting Arreguin v. Farmers Ins. Co. of Idaho, 145 Idaho 459, 461, 180 P.3d 498, 500 (2008) ). "Whether an insurance policy is ambiguous is a question of law over which this Court exercises free review." Id. (citing Purvis v. Progressive Cas. Ins. Co., 142 Idaho 213, 216, 127 P.3d 116, 119 (2005) ).

Interpretation of a contract begins with the document's language. Potlatch Educ. Ass'n v. Potlatch Sch. Dist. No. 285 , 148 Idaho 630, 633, 226 P.3d 1277, 1280 (2010) (citing Cristo Viene Pentecostal Church v. Paz, 144 Idaho 304, 308, 160 P.3d 743, 747 (2007) ). "The parties' intent should be ascertained from the contract's language." Hap Taylor & Sons, Inc. v. Summerwind Partners, LLC , 157 Idaho 600, 610, 338 P.3d 1204, 1214 (2014) (citation omitted). "If there are two different reasonable interpretations of the contract's language, a contract is ambiguous." Id. "[I]nterpreting an ambiguous term is an issue of fact." Potlatch Educ. Ass'n , 148 Idaho at 633, 226 P.3d at 1280 (citation omitted). However, if this Court finds an ambiguity in an insurance policy, that ambiguity "must be construed most strongly against the insurer." Armstrong , 147 Idaho at 70, 205 P.3d at 1206 (citation omitted).

"Interpreting an unambiguous contract ... is an issue of law subject to free review." Potlatch Educ. Ass'n , 148 Idaho at 633, 226 P.3d at 1280 (citation omitted).

Where policy language is found to be unambiguous, this Court is to construe the [insurance] policy as written, and the Court by construction cannot create a liability not assumed by the insurer nor make a new contract for the parties, or one different from that plainly intended, nor add words to the contract of insurance to either create or avoid liability. Unless contrary intent is shown, common, non-technical words are given the meaning applied by laymen in daily usage-as opposed to the meaning derived from legal usage-in order to effectuate the intent of the parties.

Armstrong , 147 Idaho at 69, 205 P.3d at 1205 (quotations and citations omitted). "A party's subjective, undisclosed intent is immaterial to the interpretation of a contract." J.R. Simplot Co. v. Bosen , 144 Idaho 611, 614, 167 P.3d 748, 751 (2006).

[S]ummary judgment is appropriate only when the district court finds the contract language unambiguous as a matter of law. Campagna v. Parker, 116 Idaho 734, 737, 779 P.2d 409, 412 (1989). If relevant terms are ambiguous, it is the finder of fact's role to determine the meaning of those ambiguous terms, and summary judgment must be denied if there are disputed issues of fact regarding the meaning of the ambiguous contract language. Id.

Hap Taylor & Sons, Inc. , 157 Idaho at 610, 338 P.3d at 1214.

Here, the bond unambiguously defines "employee," and, in turn, that definition clearly establishes the P.C. as the "Insured" under the bond as a matter of law. The bond defines "employee" as follows:

[O]ne or more of the natural persons ... while in the regular service of the Insured in the ordinary course of the Insured's business during the term of this bond, and who the Insured compensates by salary, or wages and has the right to govern and direct in the performance of such service ....

The bond further indemnifies the "Insured" "against any loss of money or other property which the Insured shall sustain ... through any fraudulent or dishonest act or acts committed by any Employee or Employees of the Insured ...." There is no ambiguity regarding the policy's requirement that for coverage to arise, the employee must be paid by the insured. Therefore, only an entity injured by someone who is paid by that entity may recover under the bond. It is undisputed that the P.C. is the only entity to have compensated Udy. Thus, Udy was an employee of the P.C. As a result, only the P.C. may recover under the bond. Consequently, the district court did not err in concluding that "only the P.C. would be entitled to recover under the Bond."

Thus, there is no need to analyze the use of the phrase "dba," nor is there any relevant ambiguity that must be construed against the insurer as the P.C. contends. Greenwald has attempted to inject his thought process into his purchase of insurance. In so doing, however, he wants to procure insurance for himself, personally, and other businesses he owns, including the P.C. and Allagash. As the standard above makes clear, Greenwald's subjective intent is immaterial. As a result, the district court correctly determined that only the P.C. can recover under the bond as a matter of law.

B. The P.C. may only recover losses it sustained that were caused by Udy while he was acting in the ordinary course of the P.C.'s business.

Western appeals from the district court's decision that Udy was acting within the "ordinary course of business" for the P.C. Because Western's argument regarding this issue is potentially dispositive, it will also be dealt with at an early juncture. The district court rejected Western's argument that Udy did not fit the bond's definition of an employee because his fraudulent actions were not in the ordinary course of the P.C.'s business. The district court reasoned that Udy's employment as a financial manager included moving money from the P.C. to various accounts and paying creditors; therefore, by directing money out of the P.C., Udy was acting within the scope of his employment. As a result of this conclusion, the district court ruled the P.C. could recover losses it sustained because of Udy's actions.

On appeal, Western contends that there are disputed issues of fact regarding whether Udy's fraudulent actions were performed "in the ordinary course of the Insured's business." Western posits it did not insure a hybrid employee who actually performed duties for three separate and distinct entities. Western further maintains that the business of "a neurosurgical practice is not to provide a 'personal assistant' to its owner, or to provide employees to a separate real estate company." Thus, Western argues that any acts undertaken by Udy in his capacity as an employee for the other entities would not be covered by the bond.

Western admits that businesses of all kinds transfer money to other parties but argues that there are two factors which distinguish this case from a normal case where an employee might transfer money. Western argues that Udy's conduct directing money out of the P.C. was, contrary to what the district court held, not part of the regular service performed for an employer because of the following reasons: First, the third parties were not simple creditors but instead supervising entities of Udy. As such, Udy was purportedly inducing Ditmore to transfer money for the benefit of Allagash and Greenwald personally, not for the benefit of the P.C. Second, Western contends that Udy had no direct authorization to transfer the P.C.'s funds; he had to induce Ditmore to transfer the funds. Thus, such transfers were arguably outside the "ordinary course" of his employment. Western asserts that the act of directing such transfers was actually in the course of his employment for Greenwald and Allagash, not the P.C. It was Ditmore, not Udy, who could transfer the P.C.'s funds in the ordinary course of her employment with the P.C.

In response, the P.C. states that Ditmore's affidavit shows Udy's responsibilities included directing the P.C.'s funds. The P.C. concedes that Udy did not have the actual ability to transfer the P.C.'s funds but contends that he had the authority to request the transfers of the P.C.'s funds, which he did through Ditmore.

The P.C. also argues that Western admitted that Udy was an employee of the P.C. and judicial estoppel bars Western from now contending otherwise. The P.C. next argues that it is undisputed that Udy was an employee of the P.C., as it is uncontested that the P.C. paid Udy.

The P.C. further maintains that the district court correctly determined that Udy was acting in the ordinary course of the P.C.'s business when he defrauded it. Udy's responsibilities included the ability to direct the transfer of money. Consequently, what happened after the money was transferred and to whom the money was transferred is immaterial. The P.C. concludes by arguing that Western's interpretation would render an illogical result by barring recovery from an employee's fraudulent actions who was engaged in "secretarial work, client interaction, phone calls or other actions ... [outside the scope of] direct neurosurgical medical actions."

These arguments will be addressed in turn.

1. Judicial estoppel does not apply under these circumstances.

Preliminarily, judicial estoppel does not bar this issue. "Judicial estoppel is applied when a litigant obtains a judgment, advantage, or consideration from one party, through means of sworn statements, and subsequently adopts inconsistent and contrary allegations or testimony to obtain a recovery or a right against another party, arising out of the same transaction or subject matter." Heinze v. Bauer , 145 Idaho 232, 240, 178 P.3d 597, 605 (2008) (citation omitted).

In this case, Western argued, "Mr. Udy does not meet the bond's definition of an employee for any entity other than the neurosurgical practice, because only the neurosurgical practice paid him a salary or wages[;]" this argument regards the compensation element of "employee" under the bond. Western never admitted or conceded that Udy acted in "the ordinary course of the insured's business," a separate element of "employee" under the bond. Thus, Western's later position claiming Udy did not act in the ordinary course of the P.C.'s business is not inconsistent. As a result, judicial estoppel does not bar Western from arguing that Udy was not acting in the ordinary course of the P.C.'s business.

2. Whether Udy was acting in the "ordinary course of [the P.C.'s] business" is a jury question.

The standards regarding insurance policies, contracts, and summary judgment also apply to this issue. However, a few standards warrant repeating. When an insurance policy is found to be unambiguous, courts cannot by construction "create a liability not assumed by the insurer ...." Armstrong , 147 Idaho at 69, 205 P.3d at 1206 (citation omitted).

This Court exercises free review over whether an insurance policy is ambiguous. Armstrong , 147 Idaho at 69, 205 P.3d at 1206. "An insurance policy will be found ambiguous if it is reasonably subject to conflicting interpretations." Howard v. Oregon Mut. Ins. Co. , 137 Idaho 214, 218, 46 P.3d 510, 514 (2002).

"In determining whether a particular provision is ambiguous, the provision must be read within the context in which it occurs in the policy." Armstrong , 147 Idaho at 69-70, 205 P.3d at 1205-06. Here, the context demonstrates that the definition of employee is designed to limit the scope of the insurer's liability. As such, "[a] provision that seeks to exclude the insurer's coverage must be strictly construed in favor of the insured. ... The burden is on the insurer to use clear and precise language if it wishes to restrict the scope of its coverage." Arreguin , 145 Idaho at 461, 180 P.3d at 500.

The outcome of this issue depends on whether or not the bond's language requiring an employee to be "in the regular service of the Insured in the ordinary course of the Insured's business " is ambiguous. (Italics added.) As established, the P.C. is the only insured entity that can recover under the bond. The P.C.'s articles of incorporation establish it as a for-profit company with the purpose of "conduct[ing] a medical practice of neurosurgery." As a starting point, Black's Law Dictionary defines "course of business" ("also termed ordinary course of business ") as "[t]he normal routine in managing a trade or business." Black's Law Dictionary (10th ed. 2014) (italics in original). Given this, the ordinary course of the P.C.'s business includes all the activities needed to operate and maintain a profitable medical practice.

We do not find the phrase "in the ordinary course of the insured's business" to be ambiguous. We think a jury is capable of applying this phrase in the context of this litigation.

As will be discussed, there is a genuine issue of material fact regarding the amount of losses actually sustained by the P.C. as a result of Udy's actions. In addition, we think the district court erred when it concluded, "[t]here is no reason why losses once accurately attributable to Allagash and/or Dr. Greenwald personally cannot be traced to losses originally sustained by the P.C." For instance, it does not appear that Udy's theft of rent checks and property taxes for Allagash rental property had anything to do with the P.C. If the P.C. later decided to reimburse Allagash for those losses, that would not be a loss attributable to the P.C. absent additional facts not evident in this record. Consequently, a determination that the $ 140,095 loss "From Allagash" was either sustained by the P.C. or that it was traceable to the P.C. is not supported by the record. The P.C. cannot unilaterally decide to reimburse losses to other entities, which in turn transmogrifies those losses into losses of the P.C. Whether this occurred or to what extent it occurred is a question of fact for the factfinder to resolve.

To recap, the P.C. is the only employer of Udy and therefore the only entity that can recover under the policy. To the extent Udy was acting in the ordinary course of business for the P.C., Western has an obligation to indemnify the P.C. for those losses. However, for that contractual obligation to indemnify to arise, the P.C. must prove Udy's actions were within the ordinary course of the P.C.'s business. Neither Greenwald personally nor Allagash may recover under the bond for Udy's conduct.

C. A genuine issue of fact exists regarding the amount of losses sustained by the P.C.

Western next contends that there is a genuine issue of fact regarding the amount of losses the P.C. sustained. Western further argues that the P.C. failed to shift the burden of proof in the summary judgment stage because the later affidavits still contained disputed issues of fact. In response, the P.C. maintains that Ditmore's and Clayton's affidavits foreclose any genuine issue of material fact and properly allowed the district court to grant summary judgment.

We begin our analysis by being mindful of the proposition that "[a]ll reasonable inferences that can be drawn from the record are to be drawn in favor of the nonmoving party, and disputed facts are liberally construed in the nonmoving party's favor." Marek v. Hecla, Ltd. , 161 Idaho 211, 214, 384 P.3d 975, 978 (2016) (citing Mackay v. Four Rivers Packing Co. , 145 Idaho 408, 410, 179 P.3d 1064, 1066 (2008) ). "All doubts are to be resolved against the moving party." Callies v. O'Neal , 147 Idaho 841, 846, 216 P.3d 130, 135 (2009) (citing Collord v. Cooley, 92 Idaho 789, 795, 451 P.2d 535, 541 (1969) ).

The burden of proving the absence of material facts is upon the moving party. Once the moving party establishes the absence of a genuine issue, the burden shifts to the nonmoving party to show that a genuine issue of material fact on the challenged element of the claim does exist.

Venable v. Internet Auto Rent & Sales, Inc. , 156 Idaho 574, 581, 329 P.3d 356, 363 (2014) (quoting Hei v. Holzer, 139 Idaho 81, 85, 73 P.3d 94, 98 (2003) (internal citations omitted) ).

"A party asserting that a fact ... is genuinely disputed must support the assertion by ... citing to particular parts of materials in the record, ... or [by] showing that the materials cited do not establish the absence ... of a genuine dispute ...." I.R.C.P. 56(c)(1). Thus, "the party opposing summary judgment must bring to the trial court's attention evidence that may create a genuine issue of material fact ...." Beus v. Beus , 151 Idaho 235, 239, 254 P.3d 1231, 1235 (2011) (citing Esser Electric v. Lost River Ballistics Tech., Inc., 145 Idaho 912, 919, 188 P.3d 854, 861 (2008) ). "When considering evidence presented in support of or opposition to a motion for summary judgment, a court can only consider material which would be admissible at trial." Venable , 156 Idaho at 580, 329 P.3d at 362 (quoting Gem State Ins. Co. v. Hutchison, 145 Idaho 10, 14, 175 P.3d 172, 176 (2007) ).

Given these standards, summary judgment is improper "if reasonable persons could reach differing conclusions or draw conflicting inferences from the evidence presented." McPheters v. Maile, 138 Idaho 391, 394, 64 P.3d 317, 320 (2003). However, a "mere scintilla of evidence or only slight doubt as to the facts is not sufficient to create a genuine issue of material fact for the purposes of summary judgment." Van v. Portneuf Med. Ctr., 147 Idaho 552, 556, 212 P.3d 982, 986 (2009).

La Bella Vita, LLC v. Shuler , 158 Idaho 799, 805, 353 P.3d 420, 426 (2015).

Given the standards set out above and construing the inferences in favor of Western, as we are obliged to do, we conclude that genuine issues of material fact exist regarding the amount of losses sustained by the P.C.

A review of the record discloses a litany of unresolved questions of fact remaining.

First, during discovery, the P.C. claimed that Udy created and submitted fraudulent invoices. However, no invoices were ever produced, and Ditmore, who claims Udy induced her to transfer money, gave a detailed account of Udy's actions which did not include any mention of fraudulent invoices.

Second, no explanation was given by Ditmore or Clayton as to why Ditmore's attached ledger only accounts for $ 89,000 dollars in losses, instead of the $ 291,487.72 both affidavits state was taken from the P.C. (In order to issue a judgment for $ 100,000, the P.C. had to clearly establish a loss of at least that sum. This affidavit does not support entry of a judgment for $ 100,000.)

Third, Clayton's and Ditmore's stories differ regarding how Ditmore transferred money at Udy's request. Clayton stated that Ditmore would transfer P.C. funds for Allagash expenses "into the fraudulent Allagash account" created by Udy. While Ditmore stated that "the office was unaware of" the fraudulent Allagash account created by Udy, and that she would instead deposit P.C. funds into the "valid checking accounts." While this discrepancy may have an explanation, it is relevant to Udy's fraudulent scheme of transferring money, which Clayton claims to have investigated and deciphered, and is relevant to the affiants' credibility, especially considering the other discrepancies.

Fourth, Greenwald stated in his earlier affidavit that the credit card charges were paid from "my checking accounts ...." This contradicts the explanation proffered by Ditmore and Clayton, that the charges were paid with the P.C.'s money. Two inferences can be drawn from this: one, that Greenwald conflated his personal accounts and the P.C.'s checking accounts; or two, that Greenwald used money from his personal accounts to reimburse the losses due to the credit card charges. Either way, the uncertainty injected does not support the decision to grant summary judgment.

Fifth, Western repeatedly asked for substantiation of the proof of loss without success. It was only after the district court decided the P.C. was the only entity that could recover under the bond that the affidavits of Ditmore and Clayton suggested that it was the P.C. that lost money as a result of Udy's fraudulent activity. At a minimum, the credibility of both Ditmore and Clayton have been brought into question. In a case such as this, where credibility has been brought into question, such determinations are to be made by the factfinder at trial. See Hilliard v. Murphy Land Co., LLC , 158 Idaho 737, 742, 351 P.3d 1195, 1200 (2015) ("Even when an action will be tried to the court rather than to a jury, the court cannot assess credibility at the summary judgment stage when credibility can be tested in court during the trial.").

Sixth, the restitution order, entered into by Udy in his federal prosecution, obligates him to pay $ 250,386.22 to the doctor (not the P.C.) and $ 25,102.10 to various credit card companies. Given the restitution agreed to by Udy, it does not appear any is due the P.C., Udy's employer. If the P.C. is not entitled to any restitution, Western would not be obligated to indemnify the P.C., since it seemingly has not sustained a loss.

In addition, it appears that at first, the P.C. recognized it needed to demonstrate it had sustained direct losses, when it stated that "an employee, Matt Udy, has stolen funds from the business ," and when it wrote "[p]lease find attached the documentation for the fraud and embezzlement perpetrated by Matthew Udy against our company. " Then, it seems the P.C. altered its position to instead argue that Allagash and Greenwald personally were covered under the bond, once it realized it lacked evidence that the P.C. had sustained losses caused by Udy. This shift in position can be noticed in the May 15, 2015, letter, after many attempts by Western to secure evidence that the P.C. lost money-evidence the P.C. quickly produced after the ruling in which it was determined only the P.C. could recover. This multiplicity of explanations does not support the district court's conclusion that no genuine issue of material fact remained.

In conclusion, the discrepancies above demonstrate genuine issues of material fact regarding the amount of losses, sustained by the P.C., that should be determined by a jury. See La Bella Vita , 158 Idaho at 805, 353 P.3d at 426.

D. The district court erred in awarding attorney's fees to the P.C.

After judgment was entered in favor of the P.C., the P.C. requested $ 38,170 in attorney's fees pursuant to Idaho Code section 41-1839. However, the district court, in its discretion, only awarded $ 15,360. The P.C. argues in its cross-appeal that the district court abused its discretion when it failed to award the P.C. all of its requested attorney's fees.

Because we vacate the judgment entered, we likewise vacate the award of attorney's fees to the P.C. The district court's determination that the P.C. was the prevailing party was premature, and consequently the award of attorney's fees predicated on that finding is vacated. Arreguin , 145 Idaho at 464, 180 P.3d at 503 ("To be entitled to an award of attorney fees under [ Idaho Code section 41-1839 ], the insured must prevail.").

E. The P.C. is not entitled to attorney's fees on appeal.

The P.C. requests attorney's fees on appeal based on Idaho Code section 12-121 and section 41-1839. Section 41-1839 provides that it and "section 12-123, Idaho Code, shall provide the exclusive remedy for the award of statutory attorney's fees in all actions or arbitrations between insureds and insurers involving disputes arising under policies of insurance." As a result, awarding attorney's fees under Section 12-121 would be improper. In addition, in order for the P.C. to recover under Idaho Code section 41-1839 the insured must prevail. Arreguin , 145 Idaho at 464, 180 P.3d at 503. The P.C. did not prevail on appeal. Consequently, it is not entitled to attorney's fees.

V. CONCLUSION

For the foregoing reasons, the district court's order granting summary judgment is reversed and the judgment issued is vacated. The district court's award of attorney's fees to the P.C. is likewise vacated. The P.C.'s request for attorney's fees on appeal is denied. Western is awarded its costs on appeal. This case is remanded for further proceedings consistent with this decision.

Chief Justice BURDICK, Justices HORTON, BRODY, and BEVAN concur.

      The restitution order obligates Udy to pay $ 250,386.22 to Greenwald personally, and separate amounts payable to five credit card companies through which Udy made fraudulent charges: $ 7,522.30 (Citibank, opened by Udy without Greenwald's knowledge), $ 8,841.50 (Chase Marriott), $ 141.72 (CapitalOne Visa), $ 4,732.54 (Amex Personal), $ 3,864.04 (Zions, opened by Udy without Greenwald's knowledge). The restitution owed by Udy to the credit card companies equals $ 25,102.10.

      This notice was required by Section 13 of the bond.

      Barnes also requested proof of Udy's conviction. On April 2, 2014, Clayton responded to Barnes that the criminal case had been postponed but that he would update Barnes as the case moved forward. The proof of criminal conviction is not an issue in this appeal. However, when Clayton responded to Western, he failed to comply with the request for documentation of the P.C.'s direct losses.

      The complaint listed the plaintiff as "BRENT H. GREENWALD dba, GREENWALD NEUROSURGICAL, P.C., An Idaho Corporation." The complaint referred to a singular plaintiff. The district court was unsure if both Greenwald and the P.C. were separate plaintiffs. Regardless, the district court ultimately found that only the P.C. was entitled to recover under the bond and noted that the parties then treated the P.C. as the only plaintiff.

      Coincidentally, this figure is exactly the amount of restitution ordered in Udy's criminal case; however, the amount stipulated to by Udy is owed to Greenwald personally and five credit card companies.

      In his affidavit dated November 11, 2016, Greenwald stated:
      I did not purchase a dishonesty policy through the business corporate name, Greenwald Neurosurgical P.A., [sic] The policy was intended to be purchased in my name personally for all of my professional and business activities. The policy was not purchased under the corporate name. ...
      Greenwald continues to object to the district court's determination that only the P.C. has coverage under the bond because that was the only entity that employed Udy.

      As an aside, the district court identified an incorrect standard that "[a] decision to grant or deny a motion for reconsideration generally rests in the sound discretion of the trial court." (citing Spur Prods. Corp. v. Stoel Rives LLP , 143 Idaho 812, 153 P.3d 1158 (2007) ). This incorrect standard does not alter the fact that the district court correctly determined that only the P.C. could recover under the bond.

      The P.C. also argues that Western failed to appeal and seek review of the district court's January 13, 2017, order granting the motion for reconsideration that found Udy was an employee of the P.C. This argument is misplaced. Although the district court concluded that "Udy was an employee of the P.C.," this refers to the issue regarding the P.C. compensating Udy, a separate element of the definition of employee. In the district court's later order, it recognized three separate elements of the definition of employee, and directly ruled on the element of whether Udy's conduct was in the ordinary course of the P.C.'s business-the element now being appealed.


author: BRODY, Justice.

text:
    Michael CLARKE and Sue Clarke, Individually and as husband and wife, Plaintiffs-Appellants, v. Holly LATIMER, Defendant-Respondent.
    Docket No. 45012
    Supreme Court of Idaho, Boise, May 2018 Term.
    Filed: June 26, 2018
    Eric R. Clark, Clark & Associates, Boise, for appellants.
    Holly Latimer, Ewa Beach, Hawaii, respondent pro se.
   BRODY, Justice.

This appeal arises from Michael and Sue Clarke's attempted recovery of earlier financial losses sustained due to the fraudulent investment practices of Zach Latimer. After obtaining a judgment against Latimer, the Clarkes filed a separate action against his wife, Holly Latimer, alleging that the Latimers engaged in transfers of funds that violated the Uniform Fraudulent Transfer Act, I.C. §§ 55-910 to 55-921. The district court found in favor of the Clarkes' claim after a bench trial but ruled that there was no prevailing party and denied the Clarkes' request for attorney's fees and costs. The court also ordered the Clarkes to file a partial satisfaction of judgment in their separate action against Zach and denied their post-trial motion for prejudgment interest. The Clarkes now challenge each of these determinations, and seek additional fees and costs for their appeal.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 2012, the Clarkes obtained a judgment against Zach Latimer for $7,405,256.44 in a lawsuit stemming from Latimer's loss of the Clarkes' retirement savings in a fraudulent investment scheme. The Clarkes recorded the judgment in Utah in an effort to garnish wages from Latimer's employer. Thereafter, Latimer's wages were continuously garnished other than during a period in 2014 when garnishment was stayed while Latimer's bankruptcy proceedings were pending. Garnishment continued after Latimer's attempt to discharge his debt to the Clarkes through the bankruptcy action was denied.

At some point, Latimer formed two companies-ZV Latimer Investments, Inc., and VVL, LLC-for which he opened Wells Fargo bank accounts. As the sole shareholder, officer, director, manager, and member, Latimer exercised exclusive control over each company. There is no evidence that either entity actually engaged in any legitimate business. Latimer did however have his employer directly deposit his wages into the companies' bank accounts after 25% was garnished. Through all of this, Latimer would periodically transfer various funds from the companies' bank accounts to his wife's personal bank account. The transfers arose from Holly Latimer's requests for money for household and family purposes on an as-needed basis. The district court found that Holly remained in a state of "deliberate ignorance" regarding the precise nature of the transfers. The court also found that notwithstanding some extravagant spending of the money on her part, the transferred funds were used for legitimate household and family purposes.

In December 2015, the Clarkes filed their complaint against Holly seeking a judgment in the total amount of the transfers plus prejudgment interest, attorney's fees, and costs. On March 17, 2017, following a bench trial, the district court ruled in favor of the Clarkes. In a written Findings of Fact and Conclusions of Law, the court awarded a judgment of $252,868.41, which was the specific amount sought by the Clarkes at trial. The court did not award fees or costs after concluding that there was no prevailing party in the action. The court also ordered the Clarkes to file a partial satisfaction of judgment in their separate case against Zach for the amount of the new judgment against Holly.

Thereafter the Clarkes filed a motion for prejudgment interest pursuant to Idaho Code sections 55-916 and 28-22-104, seeking $81,619.32. The motion was denied from the bench. On April 27, 2017, the Clarkes filed a partial satisfaction of judgment in their case against Zach, as well as their objection to the district court's order. At that time, the Clarkes also appealed.

II. STANDARD OF REVIEW

Determinations as to prevailing party, prejudgment interest, and attorney's fees and costs are committed to the sound discretion of the trial court and will not be altered absent an abuse of that discretion. Jorgensen v. Coppedge , 148 Idaho 536, 538, 224 P.3d 1125, 1127 (2010) ; Dillon v. Montgomery , 138 Idaho 614, 617, 67 P.3d 93, 96 (2003) ; Bingham v. Montane Res. Assocs. , 133 Idaho 420, 427, 987 P.2d 1035, 1042 (1999). To determine if a trial court abused its discretion, this Court considers whether the trial court perceived the issue as one of discretion, acted within the outer boundaries of that discretion, acted consistently with the applicable legal standards, and reached its decision by an exercise of reason. Jorgensen , 148 Idaho at 538, 224 P.3d at 1127.

III. ANALYSIS

The district court found that the transfers between Zach and Holly Latimer were voidable under the Uniform Fraudulent Transfer Act, I.C. §§ 55-910 to 55-921 (2012). In 2015, the Act was amended, which included its renaming to the Uniform Voidable Transactions Act and some minor modifications to the substantive statutes. I.C. §§ 55-910 to 55-922 (2017). Because a majority of the relevant transfers occurred prior to the amendment, the earlier version of the Act is used here.

In particular, section 55-913 of the Act provides:

(1) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
(a) With actual intent to hinder, delay, or defraud any creditor of the debtor....

I.C. § 55-913(1)(a).

If a creditor establishes that a fraudulent transfer was made, the Act provides remedies including avoidance, attachment, injunction, receivership, and other relief. I.C. § 55-916(1). To the extent the transfer is voidable, the creditor is able to recover a money judgment for the lesser of the value of the asset transferred and the amount necessary to satisfy the creditor's claim. I.C. § 55-917(2). The judgment can be entered against the first transferee of the asset or the person for whose benefit the transfer was made. I.C. § 55-917(2)(a). Here, the Clarkes, as creditors of Zach Latimer, pursued a judgment against the first transferee, Holly Latimer, in the amount of the value of the transferred funds. To apply section 55-913, the district court considered whether a preponderance of the evidence established (1) Zach was indebted to the Clarkes, (2) the Clarkes' claim arose before or after the allegedly fraudulent transfers were made, (3) Zach made the transfers with the actual intent to hinder, delay, or defraud, and (4) the total amount Holly received from Zach.

The first two issues were not disputed. Before addressing the remaining two, the court found that Zach's post-garnishment wages lost their exempt status under Idaho Code section 11-207(1) when they were deposited into the companies' bank accounts. Because the companies (and thus their bank accounts) were under the exclusive ownership and control of Zach, the court found that the funds still remained his "assets" under the Act, i.e., "property of a debtor" not including that which "is generally exempt under nonbankruptcy law," I.C. § 55-910(2)(b). The court then found that multiple statutory factors under section 55-913(2) established that Zach transferred the assets with an actual intent to hinder, delay, or defraud the Clarkes. Given this, the court explained that the necessary elements of section 55-913(1)(a) were satisfied and the transfers were voidable to the Clarkes. From there, the court addressed the total amount of the voidable transfers and largely deferred to the undisputed amount claimed by the Clarkes. The court concluded that the Clarkes had proven their claim and were therefore entitled to recovery in the form of a judgment against Holly in that amount. The determinations that followed that decision are the subjects of this appeal.

A. The Clarkes should have been found to be the prevailing party below.

Reaching its conclusion of the Clarkes' entitlement to recovery, the district court explained that there was no prevailing party because the case was "largely inconsequential" as the judgment against Holly sought effectively the "same money" as the judgment against Zach. In its written decision, the court explained that

to the extent that the Clarkes obtain a judgment against Holly Latimer voiding the lawful transfers and awarding a money judgment against her, then the new judgment against her would effectively partially satisfy the original judgment against [Zach Latimer], to the extent and in the amount of the judgment against her. Since they both live off the same income and both are responsible (based on community property law) for both judgments, [ Haw. Rev. Stat. Ann. § 510-8 ] there seems to be no net gain or loss by either party, except in attorney fees and costs to argue a rather esoteric legal issue. The net effect is like rearranging the deck chairs on the Titanic. To that extent, there is no prevailing party and no costs or fees will be awarded.

The Clarkes dispute this conclusion, contending that they are now able to pursue and attach any separate, non-community property Holly owns or acquires in the future (e.g., inheritance). The Clarkes argue that, consistent with Idaho Rule of Civil Procedure 54(d)(1)(B), they should have been found as the prevailing party after the district court found in their favor on their only claim for the amount sought at trial. They contend that the court's consideration of the "effect" of the judgment against Holly was "pure speculation" and "not relevant" to the prevailing party determination. In light of the abuse of discretion standard, the Clarkes contend that the district court failed to act consistently with the applicable legal standards and failed to reach its decision by an exercise of reason.

Idaho Rule of Civil Procedure 54(d)(1)(B) provides:

In determining which party to an action is a prevailing party and entitled to costs, the trial court must, in its sound discretion, consider the final judgment or result of the action in relation to the relief sought by the respective parties. The trial court may determine that a party to an action prevailed in part and did not prevail in part, and on so finding may apportion the costs between and among the parties in a fair and equitable manner after considering all of the issues and claims involved in the action and the resulting judgment or judgments obtained.

" Rule 54(d)(1)(B) directs the court to consider, among other things, the extent to which each party prevailed relative to the 'final judgment or result.' " Hobson Fabricating Corp. v. SE/Z Constr., LLC , 154 Idaho 45, 49, 294 P.3d 171, 175 (2012). "[I]t may be appropriate for the trial court, in the right case, to consider the 'result' obtained by way of settlement reached by the parties." Bolger v. Lance , 137 Idaho 792, 797, 53 P.3d 1211, 1216 (2002). When multiple claims and counterclaims are at stake, "the prevailing party question is examined and determined from an overall view, not a claim-by-claim analysis." Eighteen Mile Ranch, LLC v. Nord Excavating & Paving, Inc. , 141 Idaho 716, 719, 117 P.3d 130, 133 (2005).

Taken together, the considerations raised by the rule lead to a conclusion that the district court should have determined that the Clarkes were the prevailing party. To start, the Clarkes raised a single claim, presenting a single issue and seeking compensation in the amount of the fraudulently transferred funds; there were no counterclaims. The court found that the Clarkes were entitled to relief on their claim. Specifically, under the Uniform Fraudulent Transfer Act, the court determined that a judgment should be entered against Holly in the amount of the transfers. I.C. §§ 55-916(1)(a), 55-917(2)(a). As such, the court's decision was the most favorable outcome that could have resulted from the Clarkes' claim. As the Clarkes point out on appeal, while their new judgment did not give rise to new damages, it did establish an additional avenue for recovery of a portion of the amount they are owed on their judgment against Zach. The court's analysis that followed its conclusion that the Clarkes were entitled to relief does not fall within the considerations required by Rule 54(d)(1)(B).

Prevailing party determinations are amongst the discretionary capacities of the trial courts; however, trial court discretion must be exercised consistently within the applicable legal standards. Jorgensen , 148 Idaho at 538, 224 P.3d at 1127. When the trial court incorrectly applies the appropriate legal standards regarding prevailing parties, this Court may correct the ruling as a matter of law. Eighteen Mile Ranch , 141 Idaho at 721, 117 P.3d at 135. Here, such was the case, and we therefore reverse the district court's determination and hold that the Clarkes were the prevailing party below.

B. The district court erred by ordering the Clarkes to file a partial satisfaction of judgment in their case against Zach Latimer.

After reaching its prevailing party conclusion, the district court ordered the Clarkes to file a partial satisfaction of judgment in their case against Zach for the same amount of the final judgment against Holly. The court's order was without any citation to legal authority. The court later explained that the satisfaction of judgment was necessary to ensure that the Clarkes did not receive an unjust windfall by obtaining two judgments against the same money. The Clarkes complied with the order while preserving their objection to the same.

On appeal, the Clarkes argue that there was no factual or legal basis for the district court's order. The Clarkes acknowledge that both Zach and Holly could be entitled to a setoff or contribution if and when payment is made on one of their respective judgments, but still contend that until such payment occurs the judgments are separate and distinct, and each should provide an uninhibited avenue for their recovery.

Idaho Rule of Civil Procedure 58.1 provides:

(a) Required on Full Payment.Upon full payment of a judgment , the party in whose favor the judgment was rendered must:
(1) file a satisfaction of judgment in the court in which the judgment was entered; and
(2) record it in every county where the judgment or abstract of the judgment is recorded.

I.R.C.P. 58.1(a) (emphasis added). The operative language of Rule 58.1 imposes a requirement upon a successful party to file a satisfaction of judgment; however, that obligation is conditioned on the full payment of the judgment. See McPheters v. Maile , 138 Idaho 391, 395, 64 P.3d 317, 321 (2003) ("Pursuant to [former] Rule 58(b), a judgment creditor has a duty to record a satisfaction of judgment upon full payment by the judgment debtor." (emphasis added) ); see also I.C. § 10-1115 (allowing parties against whom a monetary judgment exists to satisfy the judgment by "pay [ing ] the amount due on such judgment" to the clerk of the court (emphasis added) ); 47 Am. Jur. 2d Judgments § 765 ("A satisfaction of judgment is the discharge of an obligation under a judgment by payment of the amount due. That is, payment of a judgment in full acts as a satisfaction and discharge of the underlying claim." (emphasis added) ).

While the Clarkes' judgment against Holly could lead to future payment-which, in turn, would give rise to a setoff on the judgment against Zach in the form of the satisfaction entered here-this is not equivalent to actual payment. Instead, the district court's conclusion was based on events that had not yet occurred, and the resultant order and satisfaction of judgment must be vacated.

C. The district court did not abuse its discretion by denying the Clarkes' prejudgment interest.

After the trial, the Clarkes filed a motion asserting their entitlement to prejudgment interest on the amount of the judgment against Holly. Therein, the Clarkes argued that prejudgment interest should be awarded pursuant to the catchall remedy of the Uniform Fraudulent Transfer Act, I.C. § 55-916(1)(c)(3), and the statutory interest provision for money that has become due, I.C. § 28-22-104(1)(2). The district court denied the motion, determining that prejudgment interest should not be awarded because (1) it was not required by the Act, and (2) equity weighed in favor of foregoing an award.

On appeal, the Clarkes proffer the same arguments raised in their motion. The Clarkes recognize that the district court had discretion to award prejudgment interest, but argue that the remedial nature of the Act should have directed such discretion toward a finding in their favor.

Generally, the Act is designed to return the creditor to his pre-transfer position. Section 55-917(3) provides that a creditor's judgment against the transferee of an asset must be for an amount equal to the value of the asset at the time of the transfer. I.C. § 55-917(3) ; see also Cadle Co. v. Woods & Erickson, LLP , --- Nev. ----, 345 P.3d 1049, 1053 (2015) ("[C]reditors have recourse in equitable proceedings in order to recover the property, or payment for its value, by which they are returned to their pre-transfer position.... '[T]he relief to which a defrauded creditor is entitled in an action to set aside a fraudulent conveyance is limited to setting aside the conveyance of the property.' " (quoting 37 C.J.S. Fraudulent Conveyances § 203 (2008) ) ). Thus, consistent with the district court's finding, nothing in the Act suggests that prejudgment interest should be afforded in addition to the value of the asset. The Clarkes' pre-transfer position entailed their judgment against Zach, which was accruing post-judgment interest. Neither that judgment nor the post-judgment interest accruing on that amount was altered by the transfers to Holly. Therefore, an award of prejudgment interest in relation to the new judgment against Holly would be improper because it would necessarily leave the Clarkes better off than their pre-transfer position.

The Clarkes cite to the Act's catchall remedy, which provides that creditors "may obtain ... [s]ubject to applicable principles of equity and in accordance with applicable rules of civil procedure ... any other relief the circumstances require." I.C. § 55-916(1)(c)(3). This alone does not overcome the analysis above. As such, the district court did not abuse its discretion by denying the Clarkes' motion because the Act does not require that prejudgment interest be granted. The Clarkes argument through section 28-22-104 is equally unavailing. The Clarkes identify the "money due" under the statute as the funds that were subject to Zach's fraudulent activities. The judgment against Zach and the amounts associated with that judgment are not at issue here, nor were they affected by the transfers to Holly. Thus, the district court also did not abuse its discretion by denying the motion in the face of section 28-22-104.

D. The district court did not abuse its discretion in denying the Clarkes attorney's fees; however, the Clarkes were entitled to costs.

Before the district court, the Clarkes requested attorney's fees pursuant to Idaho Code sections 12-120 and 12-121. Given its prevailing party ruling, the district court refused to award fees or costs, which the Clarkes now dispute. As discussed above, the district court's conclusion as to the prevailing party was incorrect. In reverse order, section 12-121 allows for awards of fees when an action is brought, pursued, or defended frivolously, unreasonably, or without foundation. I.C. § 12-121. Nothing in the record indicates that Holly defended the Clarkes' action frivolously, unreasonably, or without foundation.

Tellingly, on appeal, the Clarkes focus solely on section 12-120(3), which provides:

In any civil action to recover on an open account, account stated, note, bill, negotiable instrument, guaranty, or contract relating to the purchase or sale of goods, wares, merchandise, or services and in any commercial transaction unless otherwise provided by law, the prevailing party shall be allowed a reasonable attorney's fee to be set by the court, to be taxed and collected as costs.

"The term 'commercial transaction' is defined to mean all transactions except transactions for personal or household purposes." I.C. § 12-120(3). "[I]n order for a transaction to be commercial, each party to the transaction must enter the transaction for a commercial purpose." Carrillo v. Boise Tire Co. , 152 Idaho 741, 756, 274 P.3d 1256, 1271 (2012). For a party to recover under section 12-120(3), the commercial transaction must be between the parties to the lawsuit. Printcraft Press, Inc. v. Sunnyside Park Utils., Inc. , 153 Idaho 440, 461, 283 P.3d 757, 778 (2012).

The Clarkes argue that their lawsuit centered on "fraudulent commercial transactions" equivalent to those at issue in Meyers v. Hansen , 148 Idaho 283, 221 P.3d 81 (2009). The Clarkes correctly note that Meyers resulted in an award of attorney's fees for a fraudulent commercial transaction under section 12-120(3). 148 Idaho at 292-93, 221 P.3d at 90-91. The transaction at issue in that case was the plaintiffs' investment in a fraudulent scheme that had been orchestrated by the defendant. Id.

Unlike in Meyers , however, the Clarkes' lawsuit against Holly is not founded upon a commercial transaction, fraudulent or otherwise, nor is it even premised on a transaction between the parties to this case. Rather, their claim was based on noncommercial transfers of funds between Zach and Holly. Although the transaction at issue in Meyers is similar to the one underlying the Clarkes' separate judgment against Zach, the nature of that case is irrelevant here. Thus, even if the Clarkes were the prevailing party below, the district court's determination that they were not entitled to fees is affirmed. Because the Clarkes were the prevailing party, however, they were entitled to costs under Rule 54(d).

E. The Clarkes are entitled to costs on appeal.

Finally, for their appeal, the Clarkes seek costs and fees pursuant to section 12-120(3). The Clarkes qualify as the prevailing party on appeal and are therefore entitled to costs. I.A.R. 40(a). Our consideration of the issue of fees on appeal reaches the same conclusion as our consideration of the issue of fees below, and therefore no fees will be awarded.

IV. CONCLUSION

Based on the foregoing, we (1) reverse the district court's prevailing party ruling in favor of the Clarkes; (2) vacate the district court's order requiring the Clarkes to file a partial satisfaction of judgment in their case against Zach Latimer and the partial satisfaction of judgment that was filed; (3) affirm the district court's decision denying the Clarkes' motion for prejudgment interest; (4) affirm the district court's denial of attorney's fees; (5) reverse the district court's denial of costs; (6) deny the Clarkes' request for attorney's fees on appeal; and (7) grant the Clarkes costs on appeal.

Chief Justice BURDICK, and Justices HORTON, BEVAN, and Justice Pro Tem SCHROEDER concur.


author: HORTON, Justice.

text:
    STATE of Idaho, Plaintiff-Respondent, v. Nicholas Brian SUNSERI, Defendant-Appellant.
    Docket No. 45260
    Supreme Court of Idaho, Boise, June 2018 Term.
    Filed: October 31, 2018
    Bolton Law, PLLC, Coeur d'Alene, for Appellant. Katherine J. Bolton argued.
    Hon. Lawrence G. Wasden, Attorney General, Boise, for Respondent. Theodore S. Tollefson argued.
   HORTON, Justice.

Nicholas Brian Sunseri appeals from the decision of the district court affirming the magistrate court's order denying Sunseri's motion to withdraw his guilty plea. We reverse the decision of the district court and remand with instructions.

I. FACTUAL AND PROCEDURAL BACKGROUND

Sunseri was arrested on Friday, April 15, 2016, and charged by uniform citation with two misdemeanors: domestic violence committed in the presence of a child, a violation of Idaho Code section 19-918(4), and interfering with a 911 call, a violation of Idaho Code section 18-6810. On Monday, April 18, 2016, Sunseri was in custody when he made his first appearance before the magistrate court.

The magistrate court advised Sunseri of his rights and the potential penalties associated with the charges he faced.

The Coeur d'Alene City Attorney's Office had previously lodged with the magistrate court a document styled as "Waiver of Appearance," in which it waived the right to be present and advised the magistrate court of its plea offer to Sunseri. At his first appearance, the magistrate court advised Sunseri of the State's offer to dismiss the charge of interfering with a 911 call in exchange for his guilty plea to the charge of domestic battery in the presence of a child. The State further agreed to recommend that Sunseri receive a 180 day jail sentence, with 177 days suspended, a $300 fine, and that he be placed on unsupervised probation for two years, contingent on his compliance with the recommended treatment from a combined domestic violence/substance abuse evaluation. The Waiver of Appearance further recommended that bond be set at $3,000 and that Sunseri be ordered to have no contact with his alleged victim.

Although Sunseri had not met with an attorney to discuss the offer, the magistrate court advised Sunseri of the terms of the State's plea offer. Sunseri responded that he understood and accepted the offer. Sunseri then waived his right to counsel and entered a plea of guilty to domestic violence in the presence of a child. The magistrate court then entered a no contact order and released Sunseri on his own recognizance after Sunseri signed his acknowledgement of receipt of the no contact order. Three days later, the magistrate court entered an order scheduling sentencing for July 29, 2016.

Thereafter, Sunseri consulted with an attorney and learned that his guilty plea would result in a loss of his right to possess firearms and ammunition by operation of 18 U.S.C. section 922(g)(9). More than six weeks prior to his scheduled sentencing date, Sunseri moved to withdraw his guilty plea. He filed an affidavit in support of his motion in which he stated that he found the plea offer to be "very appealing because it made it likely I would be immediately released from jail and be able to return to my job." He indicated that he pled guilty because he "wanted to return to work and did not want to lose my job." Most pertinent to this appeal, he explained that he wished to withdraw his plea of guilty because: "I was not advised that a consequence of my guilty plea was a lifetime ban on my right to own and possess firearms and ammunition. This right is very important to me. Had I known I would lose this important right, I would not have pled guilty."

The magistrate court denied Sunseri's motion, finding that Sunseri had not shown just cause for withdrawal of his guilty plea. Specifically, the magistrate found that the loss of gun rights was a collateral consequence of the guilty plea and, because defendants are not required to be apprised of collateral consequences in order for their plea to be considered voluntarily, knowingly, and intelligently entered, held that Sunseri had not offered a just reason to withdraw his plea. The district court affirmed on the same basis. Sunseri timely appealed.

II. STANDARD OF REVIEW

When reviewing the decision of a district court sitting in its capacity as an appellate court:

The Supreme Court reviews the trial court (magistrate) record to determine whether there is substantial and competent evidence to support the magistrate's findings of fact and whether the magistrate's conclusions of law follow from those findings. If those findings are so supported and the conclusions follow therefrom and if the district court affirmed the magistrate's decision, we affirm the district court's decision as a matter of procedure.

Bailey v. Bailey , 153 Idaho 526, 529, 284 P.3d 970, 973 (2012) (quoting Losser v. Bradstreet , 145 Idaho 670, 672, 183 P.3d 758, 760 (2008) ).

We review "cases where a defendant has attempted to withdraw a guilty plea" for abuse of discretion. State v. Dopp , 124 Idaho 481, 483, 861 P.2d 51, 53 (1993). Under this standard, the Court examines whether the trial court:

(1) Correctly perceived the issue as one of discretion; (2) acted within the outer boundaries of its discretion; (3) acted consistently with the legal standards applicable to the specific choices available to it; and (4) reached its decision by the exercise of reason.

Lunneborg v. My Fun Life , 163 Idaho 856, 421 P.3d 187, 198 (2018).

III. ANALYSIS

As noted above, the magistrate court denied Sunseri's motion to withdraw his guilty plea because Sunseri had not shown just cause for withdrawal of his guilty plea. Specifically, the magistrate ruled that the loss of gun rights was a collateral consequence of the guilty plea. Because a defendant is not required to be apprised of collateral consequences in order for the guilty plea to be considered entered voluntarily, knowingly, and intelligently, the magistrate court determined that Sunseri had not offered a just reason to withdraw his plea. The district court affirmed on the same basis.

Sunseri's motion was based on Idaho Criminal Rule 33(c), which provides the mechanism for withdrawal of a guilty plea:

A motion to withdraw a plea of guilty may be made only before sentence is imposed or imposition of sentence is suspended; but to correct manifest injustice the court may set aside the judgment of conviction after sentence and may permit the defendant to withdraw a plea of guilty.

As the text of the Rule reflects, the timing of a motion to withdraw a guilty plea is critical to identifying the governing legal standard. "The rule distinguishes between [motions to withdraw a guilty plea] made prior to and after sentencing, exacting a less rigorous measure of proof for presentence motions." State v. Flowers , 150 Idaho 568, 571, 249 P.3d 367, 370 (2011) (quoting Dopp , 124 Idaho at 485, 861 P.2d at 55 ). "To withdraw a guilty plea prior to sentencing, the defendant must show a just reason for withdrawing the plea. If he does so, then the State may avoid the granting of the motion by showing that prejudice would result if the plea were withdrawn." Id. However, unlike a motion made prior to sentencing, a showing of manifest injustice is necessary in order to withdraw a guilty plea after sentencing. Id ."Manifest injustice will be found if the plea was not taken in compliance with the constitutional due process standards requiring that a guilty plea be entered into voluntarily, knowingly, and intelligently." State v. Heredia , 144 Idaho 95, 98, 156 P.3d 1193, 1196 (2007) (citing State v. Huffman , 137 Idaho 886, 887, 55 P.3d 879, 880 (Ct. App. 2002) ).

The decision in State v. Hanslovan , 147 Idaho 530, 211 P.3d 775 (Ct. App. 2008), demonstrates the proper analysis of a motion to withdraw a plea prior to sentencing. As the Court of Appeals explained: "The first step in analyzing a motion to withdraw a guilty plea is to determine whether the plea was knowingly, intelligently, and voluntarily made. If the plea is constitutionally valid, the court must then determine whether there are any other just reasons for withdrawal of the plea. " Id. at 536, 211 P.3d at 781 (emphasis added) (quoting State v. Rodriguez , 118 Idaho 957, 959, 801 P.2d 1308, 1310 (Ct. App. 1990) ). Both the district and magistrate courts ended their analysis after determining that Sunseri's plea was knowingly, intelligently, and voluntarily made. The district court failed to recognize that the magistrate court had not proceeded to the second step of determining whether there was any other just reason for withdrawal of his guilty plea. The result was to conflate the "manifest injustice" standard, which requires the trial court to grant a motion to withdraw a guilty plea, with the "just cause" standard, which confers discretionary authority upon the trial court to permit a defendant to withdraw a guilty plea. We therefore conclude that the district court erred when it affirmed the decision of the magistrate court.

On remand to the magistrate court, that court should apply the following analytical framework articulated by the Court of Appeals:

[W]ithdrawal of a guilty plea before sentence is imposed is not an automatic right. A defendant seeking to withdraw a guilty plea before sentencing must show a just reason for withdrawing the plea. The just reason standard does not require that the defendant establish a constitutional defect in his or her guilty plea. Once the defendant has met this burden, the state may avoid a withdrawal of the plea by demonstrating the existence of prejudice to the state. The defendant's failure to present and support a plausible reason will dictate against granting withdrawal, even absent prejudice to the prosecution.

State v. Hartsock , 160 Idaho 639, 641, 377 P.3d 1102, 1104 (Ct. App. 2016) (citations omitted).

The determination whether a defendant has shown a just reason for withdrawal of the plea is a factual decision committed to the discretion of the trial court. Given the fact-intensive nature of the inquiry, this Court has not previously attempted to define what constitutes a "just reason" for withdrawal of a guilty plea. Among other factors, the trial court should consider: (1) whether the defendant has credibly asserted his legal innocence; (2) the length of delay between the entry of the guilty plea and the filing of the motion; (3) whether the defendant had the assistance of competent counsel at the time of the guilty plea; and (4) whether withdrawal of the plea will inconvenience the court and waste judicial resources. "[T]he good faith, credibility, and weight of the defendant's assertions in support of his motion to withdraw his plea are matters for the trial court to decide." Hanslovan , 147 Idaho at 537, 211 P.3d at 782. The trial court is encouraged to liberally exercise its discretion in granting a motion to withdraw a guilty plea. State v. Wyatt , 131 Idaho 95, 97, 952 P.2d 910, 912 (Ct. App. 1998).

If the trial court determines that the defendant has shown a just reason for withdrawing his plea, it must then consider prejudice to the State. In this regard, the State bears the burden of showing substantial prejudice:

A showing of prejudice requires more than mere inconvenience to the state, such as the death of a principal witness, Dopp, 124 Idaho at 486, 861 P.2d at 56, the return of evidence to the victims rendering it unavailable to the state, Wyatt, 131 Idaho at 98-99, 952 P.2d at 913-14, or the passage of time that affects witness memory, especially the memory of a witness with limited mental abilities, State v. Hawkins, 115 Idaho 719, 722-23, 769 P.2d 596, 599-600 (Ct.App.1989).

Hanslovan , 147 Idaho at 538 n.9, 211 P.3d at 783 n.9.

IV. CONCLUSION

We reverse the decision of the district court with direction to reverse the decision of the magistrate court and to remand this matter for a determination of whether Sunseri had shown just cause to withdraw his guilty plea and, if so, whether the State can show prejudice to defeat the motion.

Chief Justice BURDICK, Justices BRODY, BEVAN and Justice Pro Tem GRATTON concur.

      The Waiver of Appearance and plea offer were not filed for more than three hours after Sunseri made his first appearance.

      Although not directly informing our decision in this appeal, we are deeply troubled by the trial court extending a plea offer to an uncounseled defendant on behalf of the State. In 2010, Idaho was the subject of a sharply critical report regarding the access to counsel for indigent defendants. That report appropriately observed:
      Any person charged with a crime, whether felony or misdemeanor, has the right to represent themselves if they so choose. When a person works out a plea agreement with the prosecutor and pleads guilty to the offense, they are choosing to represent themselves. And when this occurs at their arraignment date - the first time they go to court on a charge - a defendant is giving up all of their rights without ever having the opportunity to receive advice from an attorney, consider any factual or legal defense they may have to the charge, talk to a lawyer about the possible sentencing options that might be available to them, and learn from that lawyer about the collateral consequences that may ensue from their decision to plead guilty. ... [T]he volume of misdemeanor cases, far greater in number than felony prosecutions, may create an obsession for speedy dispositions, regardless of the fairness of the result. ... There is evidence of the prejudice which results to misdemeanor defendants from this "assembly line justice."
      ...
      Our courts are supposed to protect defendants by ensuring, before they waive their right to counsel and plead guilty, a judge confirms the defendant understands the rights he is giving up. ... Any waiver of the right to counsel must protect against the danger that "innocent men pitted against trained prosecutorial forces may waive counsel and plead guilty to crimes they have not committed, if they think that by doing so they will avoid the publicity of trial, secure a break at the sentencing stage, or simply get the whole thing over with." Moreover, taking the time to ensure a defendant actually knows what he is doing before accepting his waiver and allowing him to plead guilty without counsel protects the criminal justice system from unnecessary appeals, post-conviction and retrials.
      Nat'l Legal Aid & Defender Ass'n., The Guarantee of Counsel: Advocacy and Due Process in Idaho's Trial Courts iii (2010), 46-47, available at http://www.nlada.net/sites/default/files/id_guaranteeofcounseljseri01-2010_report.pdf (last accessed October 1, 2018) (citations and footnotes omitted).
      We are further troubled that the minutes from Sunseri's first appearance reflect that "PA" was the speaker extending the offer, notwithstanding the City Attorney's absence.

      Due to Sunseri's efforts to withdraw his guilty plea, this charge has not been dismissed.

      Both lower courts correctly noted that Idaho Criminal Rule 11(c)(2) requires a trial court to apprise the defendant only of "direct consequences that may apply" before accepting a guilty plea. "There is a prima facie showing that a plea was entered into knowingly and voluntarily when the minimum requirements of [Idaho Criminal Rule] 11 are met." Heredia , 144 Idaho at 97, 156 P.3d at 1195. Because the district court applied an erroneous standard when reviewing the decision of the magistrate court, we do not reach the question of whether the loss of gun rights is a collateral consequence of a plea of guilty to a violation of Idaho Code section 18-918.