IN THE COURT OF APPEALS OF THE STATE OF IDAHO
Docket No. 36500
MEDICAL RECOVERY SERVICES, LLC, )
an Idaho limited liability company, ) 2010 Opinion No. 20
)
Plaintiff-Appellant, ) Filed: March 25, 2010
)
v. ) Stephen W. Kenyon, Clerk
)
BILLY M. CARNES, )
)
Defendant-Respondent. )
)
Appeal from the District Court of the Seventh Judicial District, State of Idaho,
Bannock County. Hon. Peter D. McDermott, District Judge; Hon. Steven A.
Thomsen, Magistrate
District court‟s appellate decision reversing magistrate court‟s order denying
motion for return of money, reversed, and case remanded.
Smith, Driscoll & Associates, PLLC, Idaho Falls, for appellant. Bryan N.
Zollinger argued.
Kenneth E. Lyon, Jr., Pocatello, for respondent.
________________________________________________
LANSING, Chief Judge
This appeal arises from Billy M. Carnes‟s motion to return the money that he gave,
during a judgment debtor examination, to Medical Recovery Services, LLC (MRS). The
magistrate denied Carnes‟s motion, but the district court reversed and remanded for further
factual determinations and awarded Carnes attorney fees. On appeal, MRS argues that the
district court erred in reversing the decision of the magistrate court because substantial and
competent evidence supports the magistrate‟s findings and the district court misapplied the law.
I.
BACKGROUND
MRS brought an action against Carnes to collect an unpaid bill for medical services.
After Carnes filed an answer pro se, MRS moved for summary judgment. Carnes did not
respond to the motion and, after a hearing at which Carnes did not appear, the magistrate court
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granted MRS‟s motion and awarded it attorney fees and costs. In MRS‟s subsequent attempt to
collect on this judgment, it obtained an order for a judgment debtor examination. Carnes
appeared for the examination, and at the outset of that proceeding the magistrate made the
following comments:
Mr. Carnes, apparently there‟s been a writ of execution served that came back
unsatisfied. And pursuant to the statute and rule, counsel for the plaintiff has the
opportunity today to examine you concerning your assets and that means
everything even the mint in your pockets. Okay? So he will ask you questions.
I‟m going to leave the courtroom and we‟ll leave the record running, so he will be
able to examine you; ask you about what you own; ask you about what you have
and if he wants to see what‟s in your wallet, you‟re going to show him. Okay?
In the course of the examination that followed, upon discovering that Carnes had money in his
wallet, MRS‟s attorney told Carnes:
I need to have you turn that over to me and we‟ll apply it to your judgment. If
you don‟t want to do that we can wait. The judge is in a hearing right now and
we‟ll ask him to order you to do it, so, the choice is yours.
After some discussion, Carnes gave the money to MRS‟s attorney.
Thereafter, MRS made a motion for supplemental attorney fees. Carnes, through a newly
acquired attorney, filed an “Objection to Application for Award of Supplemental Attorney Fees,
Motion for Trial, and Motion to Return Money Wrongfully Taken by Plaintiff‟s Attorney from
the Defendant.” Carnes subsequently withdrew the objection to the attorney fees and the motion
for trial, but pursued his motion to return the money given to MRS‟s attorney at the debtor
examination. Although Carnes did not dispute the validity of the underlying judgment, he
argued that because MRS‟s attorney knew or should have known that the money taken was
exempt from execution under several Idaho statutes, the attorney‟s instruction to Carnes to turn
over the money was wrongful. The magistrate court denied the motion for return of the funds,
holding that Carnes voluntarily gave the money to MRS‟s attorney.
Carnes appealed to the district court, which held that the magistrate‟s finding of voluntary
payment was not supported by substantial and competent evidence. The district court reasoned
that because neither the judge nor MRS‟s attorney had informed Carnes of his potential
exemption rights, Carnes‟s payment could not have been voluntary because he did not have
“knowledge of all the facts.” Additionally, the district court found that both the magistrate judge
and MRS‟s attorney intimidated and unduly influenced Carnes at the examination. Because of
this, the district court vacated the magistrate‟s order and remanded the case to the magistrate
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court to determine whether the money had been exempt from execution. The district court also
awarded attorney fees to Carnes as the prevailing party pursuant to Idaho Code § 12-120(3).
MRS appeals from the district court‟s decision. MRS argues that the district court erred
in reversing the magistrate‟s decision because substantial and competent evidence supports the
finding that Carnes‟s payment was voluntary. MRS also argues that the district court erred in
applying Idaho‟s exemption laws because they were not applicable where there had been no
court order to pay the money. MRS also seeks a reversal of the district court‟s award of attorney
fees to Carnes and requests an award of its attorney fees and costs incurred in both the
intermediate and present appeal.
II.
ANALYSIS
A. Did the District Court Err by Reversing the Magistrate’s Finding that Carnes Paid
Voluntarily and by Utilizing Inapplicable Law in its Decision?
In an appeal from a decision of the district court rendered in its appellate capacity, we
review the decision of the district court directly. Losser v. Bradstreet, 145 Idaho 670, 672, 183
P.3d 758, 760 (2008); Nicholls v. Blaser, 102 Idaho 559, 561, 633 P.2d 1137, 1139 (1981). We
examine the record before the magistrate, however, 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. Id. Substantial and competent evidence is
relevant evidence that a reasonable mind might accept to support a conclusion. Bradford v.
Roche Moving & Storage, Inc., 147 Idaho 733, 736, 215 P.3d 453, 456 (2009); Carter v. Carter,
143 Idaho 373, 378, 146 P.3d 639, 644 (2006); Bouten Const. Co. v. H.F. Magnuson Co., 133
Idaho 756, 761, 992 P.2d 751, 756 (1999).
The questions presented here center on application of the voluntary payment rule. Under
that rule, a person may not--by way of set-off, counterclaim, or direct action--recover money that
he or she voluntarily paid with full knowledge of all the facts and without any fraud, duress or
extortion, although no obligation to make such payment existed. Breckenridge v. Johnston, 62
Idaho 121, 133, 108 P.2d 833, 838 (1940); Chinchurreta v. Evergreen Management Inc., 117
Idaho 591, 593, 790 P.2d 372, 374 (Ct. App. 1989); McEnroe v. Morgan, 106 Idaho 326, 335,
678 P.2d 595, 604 (Ct. App. 1984). Therefore, money voluntarily paid in satisfaction of an
unjust or illegal demand with full knowledge of the facts, and without any mistake, fraud, duress,
or extortion, cannot be recovered by the payor. Breckenridge, 62 Idaho at 133, 108 P.2d at 838.
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Carnes maintains that his payment was involuntary because he delivered the money to
MRS‟s attorney without knowing that it was exempt from execution under certain Idaho statutes.
He relies upon I.C. § 11-506, which provides, “The judge . . . may order any . . . property of a
judgment debtor not exempt from execution . . . to be applied toward the satisfaction of the
judgment,” and upon statutes exempting various categories of property from execution, I.C.
§§ 11-603(3) (exempting federal social security and veteran‟s benefits), 11-604A(3) (exempting
employee benefits such as pensions, retirement allowances, and disability allowances), and 11-
605(10) (exempting an interest in tangible personal property not to exceed $800). The district
court accepted Carnes‟s argument, holding that Carnes had shown his payment was involuntary.
We conclude that the district court erred. First, to the extent that the district court held
that MRS‟s attorney violated I.C. § 11-506 by demanding the cash in Carnes‟s pocket, the
court‟s interpretation of the statute was incorrect. Section 11-506 applies only to preclude a
judge from ordering payment from the protected classes of funds. It does not forbid a creditor
from requesting such payment. As the magistrate here did not order Carnes to pay, I.C. § 11-506
was not implicated and the exemption statutes were not violated.
Second, Carnes‟s unawareness of the exemption statutes did not render his payment
involuntary. As the Bradford, Carter, and Bouten Const. decisions indicate, the rule disallowing
recovery of voluntary payment does not operate if the payment was made without full knowledge
of all the facts; lack of knowledge concerning the law, however, does not render a payment
involuntary. Cf. Powers v. Canyon County, 108 Idaho 967, 970, 703 P.2d 1342, 1345 (1985)
(“Our entire legal system is based upon the principle that persons are charged with constructive
knowledge of the statutes and laws.”); Breckenridge, 62 Idaho at 127-34, 108 P.2d at 835-38
(holding that where a county paid interest on an overdue bond in reliance on a statute that did not
authorize such payment, the county could not recover the interest already paid because the
payment was voluntary even though the county was mistaken in its understanding of the law);
Indep. Sch. Dist. No. 6 of Caribou County v. Mittry, 39 Idaho 282, 285, 226 P. 1076, 1076 (1924)
(“The rule that voluntary payments made by reason of mistake of law cannot be recovered
applies to individuals . . .”). Carnes was aware of the relevant facts but claims to have been
unaware only of Idaho statutes exempting certain types of property from execution by judgment
creditors. Carnes has shown only a lack of knowledge concerning the law and its application,
which is insufficient to exclude his payment from the voluntary payment rule.
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Nor has Carnes shown that his payment was induced by duress. Although we
acknowledge that Carnes‟s payment may not seem “voluntary” in the common usage of the
word, “voluntary” for purposes of the voluntary payment rule has a narrower legal meaning. As
explained above, payment is voluntary unless there was mistake of fact, duress, fraud, or
extortion. Breckenridge, 62 Idaho at 133, 108 P.2d at 838; Chinchurreta, 117 Idaho at 593, 790
P.2d at 374; McEnroe, 106 Idaho at 335, 678 P.2d at 604. Duress, coercion, or compulsion has
been found when the payor made the payment on an unjust demand in order to prevent being
deprived of an immediate and extreme necessity. Gess v. Nampa & Meridian Irrigation Dist., 33
Idaho 189, 195, 192 P. 474, 476 (1920). Payment is also considered coerced “when it is made to
avoid the loss of a necessity or to prevent an injury to a person, business, or property that is
different from and disproportionately greater than the unlawful demand.” Randazzo v. Harris
Bank Palatine, N.A., 262 F.3d 663, 667 (7th Cir. 2001). Duress does not occur, however, merely
because a person declares an intent to use the courts to pursue a legal right to which he
reasonably believes he is entitled absent other oppressive circumstances. Thus, in McGill v.
Idaho Bank & Trust Co., 102 Idaho 494, 499, 632 P.2d 683, 688 (1981) the Idaho Supreme
Court held that the threat of civil proceedings does not constitute duress if made in good faith
and without other oppressive circumstances. Other states are in accord. See Adams v. Crater
Well Drilling, Inc., 556 P.2d 679, 681 n.6 (Or. 1976) (“It is the well-established general rule that
it is not duress to institute or threaten to institute civil suits, or take proceedings in court, or for
any person to declare that he intends to use the courts wherein to insist on what he believes to be
his legal rights.”); Hawkinson v. Conniff, 334 P.2d 540, 544 (Wash. 1959) (“[A] threat of civil
proceedings does not constitute duress if it is made in good faith and without coercion.”).
In this case, the district court held that Carnes‟s payment was involuntary because the
debtor examination had “an element of intimidation and undue influence” as Carnes was “subject
to intimidation by the judge‟s demands that he reveal the contents of his pockets and his wallet
and the insistence by the Plaintiff‟s attorney that the judge could „order‟ him to hand over all of
his money.” However, the fact that legal proceedings can be intimidating does not amount to
such coercion or duress as would render payment involuntary. The magistrate committed no
error and applied no duress by informing Carnes that he was required to answer all of MRS‟s
counsel‟s questions concerning his assets. Although the magistrate could have used more
friendly terminology, informing Carnes that he would need to answer questions concerning even
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“the mint in [his] pockets” is not duress or coercion. The magistrate never instructed Carnes that
he would need to deliver anything to MRS‟s attorney on that date and specifically told Carnes,
“[MRS‟s counsel‟s] job [is] to ask the questions and your job is to answer.” The magistrate‟s
comments were in the nature of an explanation of the debtor examination process and of the
judgment creditor‟s right to discover all of Carnes‟s assets. Any element of intimidation in the
magistrate‟s comments are attributable primarily to the nature of the proceeding itself, which was
an effort by a creditor to collect a valid judgment that had not been satisfied. Because threats to
use the courts to enforce a legal right do not amount to duress, there was no duress or coercion in
the statement of MRS‟s attorney that he would seek a court order if Carnes did not relinquish the
money. There is no meaningful distinction between this situation and one where a creditor‟s
attorney sends a demand letter to a debtor threatening to institute a collection action if a debt is
not paid. Although Carnes may have delivered the money reluctantly, the evidence does not
show that he did so involuntarily in the legal sense of the word.
The district court also erred in holding that MRS‟s attorney had a duty to advise Carnes
of his potential exemption rights.1 Neither the district court nor Carnes cite any authority for
recognition of such a duty.2 Indeed, such an advisement likely would have been a violation of
the attorney‟s professional and ethical obligations. Idaho Rule of Professional Conduct 4.3
directs that a “lawyer shall not give legal advice to an unrepresented person, other than the
advice to secure counsel, if the lawyer knows or reasonably should know that the interests of
such a person are or have a reasonable possibility of being in conflict with the interests of the
1
Carnes‟s argument, and the district court‟s assumption, that MRS‟s attorney knew or
should have known that the exemptions were applicable is not supported by the record.
Although at the debtor examination Carnes did indicate his only current source of income was
disability benefits, veteran‟s assistance, and social security, he also stated he had been saving the
money in his wallet for a year and that he had worked up until about four months prior to the
examination. Thus, the source of the savings could have been from wages earned while Carnes
was employed and not exempt under any of the statutes cited.
2
Carnes does cite to I.C. § 28-1-203, which is part of Idaho‟s Uniform Commercial Code,
to support an argument that MRS‟s attorney was under an obligation of good faith and fair
dealing to notify Carnes of any potential exemption rights. However, the Uniform Commercial
Code, which applies only to the sale of goods, negotiable instruments, bank deposits and
collections, letters of credit, documents of title, investment securities, secured transactions, and
leases, is inapplicable to either the underlying contract for medical services or the instant
proceeding to collect on a judgment. I.C. tit. 28, ch. 1-12.
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client.” To the extent that Carnes contends that the magistrate was obligated to inform Carnes of
his exemption rights, Carnes again cites no authority. A party waives an issue on appeal if either
argument or authority is lacking, Powell v. Sellers, 130 Idaho 122, 128, 937 P.2d 434, 440 (Ct.
App. 1997). The fact that Carnes was then acting pro se did not vest him with a right to receive
legal advice from either the opposing attorney or the magistrate court. In Idaho, pro se litigants
are held to the same standards as attorneys. Huff v. Singleton, 143 Idaho 498, 500, 148 P.3d
1244, 1246 (2006); Everhart v. Washington County Road & Bridge Dep’t, 130 Idaho 273, 275,
939 P.2d 849, 851 (1997); Schneider v. Curry, 106 Idaho 264, 267, 678 P.2d 56, 59 (Ct. App.
1984).
Accordingly, we conclude that the magistrate did not err in its determination that
Carnes‟s payment was unrecoverable under the voluntary payment rule, and we therefore reverse
the decision of the district court.
B. Attorney Fees and Costs for the Intermediate and Present Appeals
The district court awarded attorney fees and costs to Carnes on the intermediate appeal.
Because we have held that the district court erred in reversing the magistrate‟s decision, Carnes
is no longer the prevailing party and the district court‟s award of fees and costs must,
accordingly, be reversed.
MRS requests an award of attorney fees incurred for the intermediate appeal and the
present appeal pursuant to I.C. §§ 12-120(1), (3) and (5). We conclude that MRS is entitled to
such an award under I.C. §§ 12-120(3) and (5), and therefore we do not address its claim under
§ 12-120(1). Idaho Code § 12-120(3) mandates an award of reasonable attorney fees to the
prevailing party in any civil action to recover on a contract for services. Section 12-120(5) states
that “[i]n all instances where a party is entitled to reasonable attorney‟s fees and costs under
subsection (1), (2), (3) or (4) of this section, such party shall also be entitled to reasonable
postjudgment attorney‟s fees and costs incurred in attempting to collect on the judgment.” Here,
MRS is the prevailing party in an action to collect on a contract for provision of medical
services, so it was entitled to an award of attorney fees under I.C. § 12-120(3). By terms of I.C.
§ 12-120(5), that entitlement includes a right to attorney fees incurred in a reasonable attempt to
collect on the judgment. See Action Collection Servs., Inc. v. Bigham, 146 Idaho 286, 289, 192
P.3d 1110, 1113 (Ct. App. 2008). Thus, MRS is entitled to attorney fees for the intermediate
appeal and the present appeal, as well as costs on both levels of appeal pursuant to I.A.R. 40.
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Therefore, this matter must be remanded to the district court to determine an appropriate award
of costs and attorney fees incurred by MRS in the intermediate appeal.
III.
CONCLUSION
The district court‟s decision reversing the magistrate‟s order denying Carnes‟s motion for
return of his payment to MRS is reversed. Costs and attorney fees on this appeal are awarded to
MRS. The matter is remanded to the district court for determination of costs and attorney fees to
which MRS is entitled for the proceedings below.
Judge MELANSON CONCURS.
Judge GUTIERREZ, DISSENTING
I respectfully dissent. In my view the district court correctly determined that Carnes was
subjected to intimidation as a result of the actions by the magistrate and the plaintiff‟s attorney. I
would distinguish the cases that hold that a person merely declaring an intent to use the courts to
pursue a legal right does not constitute duress. Here, Carnes found himself in an actual court
proceeding being ordered to comply with the requests of plaintiff‟s attorney. Based on the
existence of duress I would affirm the district court‟s intermediate appellate decision.
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