Taylor v. McNichols

IN THE SUPREME COURT OF THE STATE OF IDAHO

REED J. TAYLOR, an individual, )
)
Plaintiff-Appellant, )
)
v. )
) Docket No. 36130
MICHAEL E. MC NICHOLS, an individual; )
CLEMENTS, BROWN & MC NICHOLS, )
P.A., an Idaho professional corporation; )
JANE DOES I-V, unknown individuals, )
)
Defendants-Respondents. ) Lewiston, April 2010
_______________________________________ )
) 2010 Opinion No. 95
REED J. TAYLOR, )
) Filed: September 3, 2010
Plaintiff-Appellant, )
) Stephen W. Kenyon, Clerk
v. )
)
GARY D. BABBITT, an individual, D. JOHN )
ASHBY, an individual; PATRICK V. )
COLLINS, an individual; RICHARD A. )
RILEY, an individual; HAWLEY, )
TROXELL, ENNIS & HAWLEY, LLP, an ) Docket No. 36131
Idaho limited liability partnership; JANE )
DOES I-X, unknown individuals. )
)
Defendants-Respondents. )

Appeal from the District Court of the Second Judicial District, State of Idaho, Nez
Perce County. Hon. Jeff M. Brudie, District Judge.

District court decision, affirmed.

Campbell, Bissell & Kirby and Michael S. Bissell, Spokane, for appellant.
Roderick C. Bond argued.

Hepworth, Janis & Brody, Chtd., Boise, for respondents McNichols and
Clements, Brown & McNichols, P.A. John J. Janis argued.

Elam & Burke, P.A., Boise, for respondents Babbit, Ashby, Collins Riley and
Hawley, Troxell, Ennis & Hawley, LLP. Jeffrey A. Thomson argued.

1
 __________________________________
BURDICK, Justice
This case comes before this Court on appeal from the grant of two Idaho Rule of Civil
Procedure 12(b)(6) motions to dismiss for failure to state a claim upon which relief may be
granted. Appellant, Reed Taylor alleges that the district court erred in denying his motions to
amend his complaints, and erred in failing to properly apply the applicable standards in granting
the motions to dismiss under I.R.C.P. 12(b)(6). We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
This case arises as a result of the separate case of Taylor v. AIA, et al., Nez Perce County
Case No. CV07-00208 (Underlying Case), now awaiting hearing before this Court on appeal. In
order to properly understand the claims being asserted here, certain aspects of the Underlying
Case must be examined. The case at hand has been consolidated on appeal from two separate
before the district court, case number CV-08-01763 and case number CV08-01765.
A. Underlying Case
On January 29, 2007, Reed Taylor (Reed) filed suit against AIA Services Corporation
(AIAS), AIA Insurance, Inc. (AIAI)1, John Taylor, Connie Taylor, Bryan Freeman, and JoLee
Duclos. AIAI is a business entity existing under the umbrella of AIAS. When the Underlying
Case began John Taylor was the managing director of both corporations and his then wife,
Connie Taylor, held a community property interest in the corporations. John Taylor, Freeman,
and Duclos were board members of both corporations. After Reed filed suit in the Underlying
Case, Michael McNichols, of the law firm Clements, Brown & McNichols, P.A. (CBM), was
retained to represent AIAS, AIAI, and John Taylor.
While the lawsuit was still pending, Reed attempted to exercise management authority
over the AIA Entities, and the court in the Underlying Case granted a temporary restraining order
against Reed on February 27, 2007. On March 8, 2007, the court in the Underlying Case entered
a preliminary injunction which prohibited Reed from attempting to act as a manager or board
member of AIAI, or from harassing or interfering with the management of AIAI and AIAS.
On March 28, 2007, McNichols filed a motion to withdraw as counsel for AIAI and
AIAS, which was granted on April 12, 2007. On May 7, 2007, a notice of appearance on behalf

1
When referred to collectively, AIAS and AIAI will be referenced as the ―AIA Entities.‖

2
of the AIA Entities was filed by Gary Babbitt and John Ashby, of the law firm Hawley Troxell
Ennis & Hawley, LLP (HTEH).
B. Current Case
On August 18, 2008, after the Underlying Case had been through 21 months of motions
and hearings – while numerous other motions were pending, and the trial date had been set, but
after the district court had granted a Motion for Partial Summary Judgment in favor of Reed as to
the AIA Entities being in default on a $6,000,000 promissory note issued to Reed – Reed filed
the present actions against McNichols and CBM, who were continuing to serve as counsel for
John Taylor (case no. CV08-01765 below), and against Babbit, Ashby, Patrick Collins, Richard
Riley,2 HTEH, and other unspecified attorneys who worked for HTEH on its representation of
the AIA Entities (case no. CV08-01763 below).3 Reed asserted claims against Respondents for:
(1) aiding and abetting or assisting others in the commission of tortious acts in the Underlying
Case; (2) conversion and misappropriation of the AIA Entities‘ corporate assets; (3) violations of
Idaho‘s Consumer Protection Act, I.C. § 48-601 et seq.; and (4) professional negligence and/or
breach of fiduciary duties.
Respondents filed motions to dismiss pursuant to I.R.C.P. 12(b)(6), and oral argument
was heard on these motions on October 16, 2008. On the same day Reed filed his motions for
leave to amend his complaints, attaching his proposed amended complaints, and a hearing was
held on these motions on December 4, 2008.
On December 23, 2008, the district court issued two opinions titled ―Opinion and Order
on Defendant‘s Motion for Preliminary Injunction‖ (Opinions) granting Respondents‘ motions to
dismiss and denying Reed‘s motions to amend his complaints. In reaching his decision the
district court judge, who was also the judge in the Underlying Case, found that the arguments
made by both Reed and Respondents incorporated events and actions that occurred in the
Underlying Case and, therefore, took judicial notice of the Underlying Case in toto. The district
court subsequently granted Respondents‘ requests for attorney fees.
Reed filed a notice of appeal with this Court on January 30, 2009, and the two cases were
consolidated for appeal on February 18, 2009. In light of Spokane Structures, 148 Idaho 616,
226 P.3d 1263 (2010), it was recognized that no final judgment had been issued by the district

2
Collins and Riley were also attorneys with HTEH.
3
All of the above mentioned attorneys and law firms shall be collectively referred to as ―Respondents‖.

3
court and the case was remanded for entry of a final judgment on March 16, 2010. This Court
received Judgments from the district court for both of the pre-consolidation cases on March 24,
2010.
II. ISSUES ON APPEAL
1. Whether the district court applied I.R.C.P. 12(b)(6) correctly in ruling on Respondents‘
motions to dismiss.
a. Whether the litigation privilege should be adopted in Idaho and whether Reed‘s
claims should have be dismissed accordingly.
b. Whether, in the alternative, Reed‘s complaints alleged sufficient facts to
withstand a motion to dismiss.
2. Whether the district court abused its discretion in denying Reed‘s motions for leave to
amend his complaints.
a. Whether Reed had standing to bring derivative claims against Respondents.
b. Whether Reed pled additional facts in his amended complaints that would have
altered the analysis as it applied to his original complaints.
3. Whether the district court abused its discretion in awarding Respondents attorney fees
pursuant to I.C. §§ 12-121, 30-1-746, 48-608.
4. Whether Respondents are entitled to attorney fees on appeal.
III. STANDARD OF REVIEW
Our standard of review for a grant of dismissal under Idaho Rule of Civil Procedure
12(b)(6) was concisely summarized by this Court in Losser v. Bradstreet:
When this Court reviews an order dismissing an action pursuant to I.R.C.P.
12(b)(6), we apply the same standard of review we apply to a motion for
summary judgment. After viewing all facts and inferences from the record in
favor of the non-moving party, the Court will ask whether a claim for relief has
been stated. The issue is not whether the plaintiff will ultimately prevail, but
whether the party is entitled to offer evidence to support the claims.
145 Idaho 670, 672-73, 183 P.3d 758, 760-61 (2008) (internal citations and quotations omitted).
In addition, ―[t]his Court reviews an appeal from an order of summary judgment de novo, and
this Court‘s standard of review is the same as the standard used by the trial court in ruling on a
motion for summary judgment.‖ Curlee v. Kootenai Cnty. Fire & Rescue, 148 Idaho 391, __,
224 P.3d 458, 461 (2008). Ergo, a district court‘s dismissal of a complaint under I.R.C.P.
12(b)(6) shall be reviewed de novo.
This Court employs an abuse of discretion standard when reviewing a district court‘s
denial of a motion to amend a complaint to add additional causes of action. Spur Prod. Corp. v.

4
Stoel Rives LLP, 142 Idaho 41, 43, 122 P.3d 300, 302 (2005). When reviewing an exercise of
discretion on the part of a district court, this Court considers:
―(1) whether the court correctly perceived that the issue was one of discretion; (2)
whether the court acted within the outer boundaries of its discretion and
consistently with the legal standards applicable to the specific choices available to
it; and (3) whether it reached its decision by an exercise of reason.‖
Id. (quoting Estate of Becker v. Callahan, 140 Idaho 522, 527, 96 P.3d 623, 628 (2004)).
IV. ANALYSIS
A. The district court erred in taking judicial notice of the Underlying Case when
considering the 12(b)(6) motions.
Reed alleges that the district court did not apply the correct legal standard when
considering Respondents‘ 12(b)(6) motions to dismiss. Specifically, Reed alleges that the
district court erred in taking judicial notice of the Underlying Case, when it should have limited
its review to the pleadings.
Idaho Rule of Civil Procedure 12(b) states, inter alia:
If, on a motion asserting the defense numbered (6) to dismiss for failure of the
pleading to state a claim upon which relief can be granted, matters outside the
pleading are presented to and not excluded by the court, the motion shall be
treated as one for summary judgment and disposed of as provided in Rule 56, and
all parties shall be given reasonable opportunity to present all material made
pertinent to such a motion by Rule 56.
(Emphasis added).
Respondents make two arguments why they believe the district court‘s 12(b)(6) ruling
should stand. First, the district court was acting within its permitted discretion in taking judicial
notice of the Underlying Case. Second, having requested that the district court take judicial
notice of the Underlying Case, Reed is barred under the invited error doctrine from raising this as
an error on appeal. These arguments shall be considered in turn.
1. The district court could not properly take judicial notice of the Underlying Case when
ruling on 12(b)(6) motions to dismiss.
―A 12(b)(6) motion looks only at the pleadings to determine whether a claim for relief
has been stated.‖ Young v. City of Ketchum, 137 Idaho 102, 104, 44 P.3d 1157, 1159 (2002). In
Hellickson v. Jenkins, the Idaho Court of Appeals discussed judicial notice in the context of a
12(b)(6) motion to dismiss, stating that:
[t]he only facts which a court may properly consider on a motion to dismiss for
failure to state a claim are those appearing in the complaint, supplemented by

5
 such facts as the court may properly judicially notice. Cohen v. United States,
129 F.2d 733 (8th Cir. 1942). However, a trial court, in considering a Rule
12(b)(6) motion to dismiss, has no right to hear evidence; and since judicial notice
is merely a substitute for the conventional method of taking evidence to establish
facts, the court has no right to take judicial notice of anything, with the possible
exception of facts of common knowledge which controvert averments of the
complaint. See Grand Opera Co. v. Twentieth Century-Fox Film Corp., 235 F.2d
303 (7th Cir. 1956); Sears, Roebuck & Co. v. [Metro] Engravers, Ltd., 245 F.2d
67 (9th Cir. 1956); Schwartz v. Commonwealth Land Title [Ins.] Co., 374 F.Supp.
564 (E.D.Pa. 1974), supp. op. (E.D.Pa.) 384 F.Supp. 302.
118 Idaho 273, 276, 796 P.2d 150, 153 (Ct. App. 1990) (emphasis in the original). See also
Fleming v. Lind-Waldock & Co., 922 F.2d 20, 23 (1st Cir. 1990) (comparing a 12(b)(6) motion
to a Rule 56 motion the Court and finding, ―[o]ne fundamental difference between the two
motions lies in the scope of the court‘s consideration. The grounds for a Rule 12(b)(6) dismissal
comprise only the pleadings and no more‖) (emphasis added).
In Hellickson, a magistrate judge took judicial notice of the proceedings in two other
cases. 118 Idaho at 275, 796 P.2d at 152. The Court of Appeals found this to be in error, and
remanded with instructions to either decide the 12(b)(6) Motion on the allegations contained in
the complaint alone, or to convert the 12(b)(6) motion to a Rule 56 summary judgment
proceeding and afford the parties reasonable opportunity to present materials pertinent to a
motion for summary judgment. Id. at 278, 796 P.2d at 155.
CBM ignores the direct Idaho precedent in Hellickson entirely, instead citing to the U.S.
Supreme Court case of Tellabs, Inc. v. Makor Issues & Rights, Ltd., which states: ―[C]ourts must
consider the complaint in its entirety, as well as other sources courts ordinarily examine when
ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the
complaint by reference, and matters of which a court may take judicial notice. See 5B Wright &
Miller § 1357 (3d ed.2004 and Supp.2007).‖ 551 U.S. 308, 322 (2007). Nothing in Tellabs is
inconsistent with what is written in Hellickson. HTEH cites to Hellickson for the proposition
that courts may take judicial notice when considering a 12(b)(6) motion, but does not address
Hellickson as it specifically applies to the issue of taking judicial notice of the proceedings in
other cases. The rule stated in Hellickson clearly applies here.
2. The doctrine of invited error does not preclude Reed from appealing the district
court‘s erroneous decision to take judicial notice of the Underlying Case in toto.
―It has long been the law in Idaho that one may not successfully complain of errors one
has acquiesced in or invited. Errors consented to, acquiesced in, or invited are not reversible.‖

6
State v. Owsley, 105 Idaho 836, 838, 673 P.2d 436, 438 (1983) (internal citation omitted).
―Invited error‖ is ―[a]n error that a party cannot complain of on appeal because the party, through
conduct, encouraged or prompted the trial court to make the erroneous ruling.‖ Black‘s Law
Dictionary 249 (3rd pocket ed. 2006).
At the hearing on Respondents‘ 12(b)(6) motions, on October 10, 2008, Reed‘s attorney,
Bissell, had the following exchange with the district court judge:
MR. BISSELL: Also, your Honor, I would - - I would ask the Court because we
obviously - - we have talked about a lot of information in the past in this case and
in the other cases and, you know, a lot of the information in the other cases kind
of has an impact on this case. So I would ask the Court to take judicial notice of
everything that’s been followed, argued in those previous cases - - or in the other
matter, the underlying matter we might call it . . .
THE COURT: Well, that was actually my intention, Mr. Bissell, that‘s part of
what I came to conclude is I really can‘t discuss this and rule on the pending
Motion to Dismiss without the consideration of the underlying case, so that was
actually my intention.
MR. BISSELL: Okay, thank you, your Honor.
Respondents aver that, under the doctrine of invited error as it is applied in cases such as
State v. Owsley, 105 Idaho 836, 838, 673 P.2d 436, 438 (1983), and Woodburn v. Manco, 137
Idaho 502, 505, 50 P.3d 997, 1000 (2002), Reed, having clearly requested that the district court
take judicial notice of the Underlying Case, may not argue on appeal that this was in error. ―The
purpose of the invited error doctrine is to prevent a party who caused or played an important role
in prompting a trial court to [take a certain action] from later challenging that [action] on
appeal.‖ Woodburn, 137 Idaho at 505, 50 P.3d at 1000. Reed offers five reasons why he does
not believe the doctrine of invited error should apply here, and these shall be addressed in turn.
First, Reed argues that ―it is irrelevant who requested judicial notice‖, as the district court
erred in failing to convert the motions to dismiss into motions for summary judgment when
considering evidence beyond the pleadings, in accordance with Hellikson, 118 Idaho at 276, 796
P.2d at 153. Reed offers no citation for this proposition, and it conflicts with the policy
underlying the invited error doctrine. The invited error doctrine presumes that the trial court
acted in error, otherwise there would be no reversible error in any event. The invited error
doctrine provides that where the error in question was encouraged or requested by a party then
that party is precluded from challenging on the basis of that error on appeal. Contrary to Reed‘s

7
contention, the issue of which party requested the court to take that action — such action
constituting error — is of great importance.
Second, Reed contends that the invited error doctrine does not apply because the district
court had already intended to take judicial notice, based upon the district judge‘s response to
Reed‘s counsel‘s request that the judge take judicial notice, that ―that was actually my intention.‖
Again, Reed offers no citation to any legal authority in support of this argument. This Court in
Owsley wrote, ―Errors consented to, acquiesced in, or invited are not reversible.‖ 105 Idaho at
838, 673 P.2d at 438. It is clear here that Reed consented to the district court‘s taking judicial
notice, as well as acquiescing to it and inviting it. This argument is without merit.
Third, Reed contends that the invited error doctrine does not apply because Reed‘s
counsel was not tactically or strategically requesting judicial notice. Reed cites to no Idaho law
in support of this contention, instead citing to People v. Guerrero, 66 Cal. Rptr. 3d 701 (Cal. Ct.
App. 2007), and Keller v. Columbus, 797 N.E.2d 964, (Ohio 2003).
The only relevance to this issue presented in Guerrero is a footnote citing to People v.
Coffman, 96 P.3d 30 (Cal. 2004). 66 Cal. Rptr. 3d at 703 n.3. In Coffman the Supreme Court of
California writes:
As articulated in People v. Wickersham [650 P.2d 311 (Cal. 1982)], disapproved
on other grounds in People v. Barton [906 P.2d 531 (Cal. 1995)]: ―The doctrine
of invited error is designed to prevent an accused from gaining a reversal on
appeal because of an error made by the trial court at his behest. If defense
counsel intentionally caused the trial court to err, the appellant cannot be heard to
complain on appeal. . . . [I]t also must be clear that counsel acted for tactical
reasons and not out of ignorance or mistake.‖ In cases involving an action
affirmatively taken by defense counsel, we have found a clearly implied tactical
purpose to be sufficient to invoke the invited error rule.
96 P.3d at 49 (emphasis added) (ellipses and third alteration in the original). It is unnecessary to
consider whether California‘s articulation on this issue is persuasive to Idaho, because even
under this analysis Reed‘s argument fails. Reed affirmatively acted in requesting the trial court
to take judicial notice of the Underlying Case, for the purpose of having the district court
consider the Underlying Case, a clearly implied tactical purpose.
In the other case Reed relies on – Keller – the Supreme Court of Ohio examined a
12(b)(6) dismissal, which had been granted by the district court and reversed by the Court of
Appeals, on the basis that the district court had considered evidence beyond the pleadings. The
Appellants (Defendants) argued that because the Respondents (Plaintiffs) had attached evidence

8
to their pleading, Respondents were barred under the invited error doctrine from arguing that the
district court erred in considering information beyond the pleadings. Keller, 797 N.E.2d at 969.
The Court found that, under the facts of Keller, the record showed that Defendants had attached
evidence to their own pleading first, that it was in response to this that the Plaintiffs had attached
evidence to their own pleading, and that, therefore, the invited error doctrine did not apply. Id. at
969-70. Whatever persuasive authority Keller might offer to Idaho courts, it has no applicability
here as neither Reed nor Respondents attached evidence to their pleadings. Further, even if the
rule to be extrapolated from Keller is that a party may not be barred under the invited error
doctrine where the other party invites that error first (a dubious proposition), there is no
allegation that Respondents requested that the district court take judicial notice of the Underlying
Case.
Fourth and fifth, Reed argues that the district court erred in taking judicial notice of the
Underlying Case in toto without complying with I.R.E. 201. Specifically, Reed alleges that the
district court acted in violation of I.R.E. 201(c) & (d). Idaho Rule of Evidence 201(c) outlines
the rules for judicial notice where the court has discretion as to whether or not to take judicial
notice, and I.R.E. 201(d) is for mandatory notice. I.R.E. 201(c) reads: ―When discretionary. A
court may take judicial notice, whether requested or not. When a court takes judicial notice of
records, exhibits, or transcripts from the court file in the same or a separate case, the court shall
identify the specific documents or items that were so noticed.‖ I.R.E. 201(d) reads:
―When mandatory. When a party makes an oral or written request that a court
take judicial notice of records, exhibits or transcripts from the court file in the
same or a separate case, the party shall identify the specific documents or items
for which the judicial notice is requested or shall proffer to the court and serve on
all parties copies of such documents or items. A court shall take judicial notice if
requested by a party and supplied with the necessary information.‖
Reed alleges that, as Reed‘s counsel did not supply the court with the necessary
information to take judicial notice under I.R.E. 201(d), the court erred and invited error is
inapplicable. Reed‘s argument concerning I.R.E. 201(d) is invalid; all this alleges is that the
district court erred in taking judicial notice, not that this error was not invited by Reed‘s counsel.
Reed‘s counsel failed to specify which materials from the Underlying Case he was requesting the
court to take notice of, implicitly inviting the court to use its own discretion. Reed is barred from
alleging an I.R.E. 201(d) violation under the invited error doctrine. Where an attorney is
requesting that a court take judicial notice of a document or items, that attorney must state with

9
particularity what he is asking the Court to take notice of. Where an attorney does not meet this
requirement it is improper for a court to take judicial notice under I.R.E. 201(d). Furthermore,
where it was erroneous for the district court to take judicial notice it certainly cannot be said that
such notice was mandatory; therefore I.R.E. 201(d) is inapplicable.
Reed further alleges that, if I.R.E. 201(c) applies, the district court erred in not
identifying the specific documents and files that it took judicial notice of, an error which may not
be attributed to invited error as Reed neither asked nor encouraged the district court to take
judicial notice under I.R.E. 201(c) in toto, without specifying which documents and exhibits it
was taking notice of. This argument has merit. The court clearly failed to comply with the
specificity requirement of I.R.E. 201(c). Reed invited the court to take judicial notice, and the
I.R.E. 201(c) error clearly occurred as a result of that invited error, but that violation cannot
fairly be attributed to the error invited. The court could have erroneously taken judicial notice of
parts of the Underlying Case, as requested and encouraged by Reed, and still followed I.R.E.
201(c) by identifying the particular evidence from the Underlying Case which it took notice of.
The district court erred in taking judicial notice of the Underlying Case, and though Reed
is generally precluded from raising this issue on appeal under the invited error doctrine, the
district court erred beyond what was invited by Reed in failing to comply with the specificity
requirements of I.R.E. 201(c).
In spite of the district court‘s error, this error is harmless under I.R.C.P. 61. See Banning
v. Minidoka Irrigation Dist., 89 Idaho 506, 510, 406 P.2d 802, 803 (1965). This Court applies a
de novo standard of review to appeal from grants of 12(b)(6) motions, and shall look only to the
pleadings without consideration to the record from the Underlying Case.4 Therefore, we shall
consider the pleadings in this case under the standards applicable to a 12(b)(6) proceeding.
B. The Litigation Privilege
The district judge‘s Opinions – granting Respondents‘ motions to dismiss and denying
Reed‘s motions for leave to amend his complaints – relied strongly on the so-called ―litigation
privilege,‖ or ―litigation immunity.‖

4
Even if the Court were inclined to consider the same materials that the district court judge erroneously considered
from the Underlying Case it could not, as the district court failed to identify the specific materials that it considered
in reaching its ruling.

10
 The litigation privilege is deeply rooted in the common law doctrine that attorneys are
immune from civil suits for defamation or libel when they arise out of communications made in
the course of judicial proceedings. In fact, ―[a]t common law, the litigation privilege blanketed
all participants in the court system; private attorneys were treated no differently than judges,
government lawyers, and witnesses.‖ Loigman v. Twp. Comm. of Middleton, 889 A.2d 426, 433,
435 (N.J. 2006) (discussing, e.g., Cutler v. Dixon, 76 Eng. Rep. 886 (K.B. 1585); Hodgson v.
Scarlett, 171 Eng.Rep. 362 (C.P. 1817); Hoar v. Wood, 44 Mass. 193 (1841)). See also
Carpenter v. Grimes Pass Placer Mining Co., 19 Idaho 384, 114 P. 42 (1911) (first application
of what may be termed the ―defamation privilege‖ in Idaho, discussing the common law
privilege and its application across American jurisdictions; noting that American Courts, unlike
English Courts, generally require that communications must be pertinent and material to the
matter before the judicial proceeding in order for the privilege to apply.) This privilege is
predicated on the long-established principle that the efficient pursuit of justice requires that
attorneys and litigants must be permitted to speak and write freely in the course of litigation
without the fear of reprisal through a civil suit for defamation or libel. Loigman, 889 A.2d at
434.
Examining the two most recent cases where Idaho has applied this privilege (as it applies
to attorneys) sheds some further light on the application of this privilege under Idaho law. In
Richeson v. Kessler, an attorney, Richeson, was acting as counsel for the Andersons. 73 Idaho
548, 550, 255 P.2d 707, 707 (1953). Another attorney, Kessler, applied with the district court to
appear amicus curiae. Id. Richeson objected to this application to appear amicus curiae in his
brief to the court. Id. The Andersons subsequently dismissed Richeson and retained Kessler. Id.
When Kessler learned of Richeson‘s brief objecting to Kessler‘s application he wrote a letter to
the district judge asking that the judge withdraw the brief from consideration, specifically
alleging that portions of said brief had been ―malicious, scurrilous, and definitely improper and
unethical.‖ Id. Richeson subsequently filed suit against Kessler, alleging that the letter was
libelous. Id.
The Richeson Court held that ―[w]ith certain exceptions, unimportant here, defamatory
matter published in the due course of a judicial proceeding, having some reasonable relation to
the cause, is absolutely privileged and will not support a civil action for defamation although

11
made maliciously and with knowledge of its falsity.‖ 73 Idaho at 551-52, 255 P.2d at 709. In
addition, this Court specified that:
The term judicial proceeding is not restricted to trials, but includes every
proceeding of a judicial nature before a court or official clothed with judicial or
quasi judicial power, 53 C.J.S., Libel and Slander, § 104, page 169, and to be
privileged it is not absolutely essential that the language be spoken in open court
or contained in a pleading, brief or affidavit.
Id. at 551, 255 P.2d at 709.
More recently, in 1993, the Idaho Court of Appeals applied the privilege in Malmin v.
Engler, wherein the court noted that this privilege ―‗is based upon a public policy of securing to
attorneys and officers of the court the utmost freedom in their efforts to secure justice for their
clients.‘‖ 124 Idaho 733, 735, 864 P.2d 179, 181 (Ct. App. 1993) (quoting Restatement (Second)
of Torts § 586 cmt. a (1965)). The court emphasized that statements made prior to, or in
preparation of, a judicial proceeding are also protected under the privilege. Id. at 737, 864 P.2d
at 184.
Idaho‘s Appellate Courts have never considered the propriety of expanding this privilege
to encompass conduct, as well as statements, which occur during the course of litigation, nor
whether the privilege should extend to causes of action beyond defamation and libel. We take
this opportunity to do so.
1. Examination of the litigation privilege across various jurisdictions.
In Loigman v. Township Committee of Middleton, the Supreme Court of New Jersey
noted that, although the litigation privilege was originally used only to protect against
defamation suits arising from comments which were made in the course of judicial proceedings,
the privilege has been widely expanded in order to address creative pleading. 889 A.2d 426, 435
(N.J. 2006). Specifically, in noting that, ―[i]n New Jersey, the litigation privilege protects
attorneys not only from defamation actions, but also from a host of other tort-related claims,‖ the
Loigman Court cited to Rainier’s Dairies v. Raritan Valley Farms, 117 A.2d 889, 895 (N.J.
1955). Id. at 436.
In Rainier, the Court was considering the protections which the litigation privilege
provided to a litigant, rather than an attorney. However, as noted above, these privileges arose
from the same public policies at common law, and the decision has been extended to the
litigation privilege as it pertains to attorneys. The Rainier Court held that in addition to the
traditional protection against suits for defamation, the litigation privilege also protected against

12
claims for malicious interference with business operations, reasoning that ―[i]f the policy, which
in defamation actions affords an absolute privilege or immunity to statements made in judicial
and quasi-judicial proceedings is really to mean anything then we must not permit its
circumvention by affording an almost equally unrestricted action under a different label.‖ Id. at
895.
The district court in the case at hand found that the Texas Court of Appeals case of Alpert
v. Crain, Caton & James, P.C., 178 S.W.3d 398 (Tex. App. 2005), was particularly instructive,
having many similarities to the present action. In Alpert, the Appellants had first sued their own
attorney, Riley, and subsequently filed suit against the Respondent, the law firm representing
Riley in that action, claiming that Respondent ―conspired with Riley to defraud [the Appellants],
and both aided and abetted in the breach of, and tortiously interfered with, Riley‘s fiduciary duty
to [the Appellants].‖ Id. at 402. The district court in Alpert had dismissed the case, finding that
the Appellants had failed to plead a cause of action recognized by Texas law and, consequently,
the Texas Court of Appeals heard the case on appeal in circumstances analogous to those
presented in the present case. In affirming the dismissal by the district court, the Texas Court of
Appeals explained that:
Perhaps as an offshoot of its privity jurisprudence, Texas case law has
discouraged lawsuits against an opposing counsel if the lawsuit is based on the
fact that counsel represented an opposing party in a judicial proceeding. An
attorney has a duty to zealously represent his clients within the bounds of the law.
In fulfilling this duty, an attorney has the right to interpose defenses and pursue
rights that he deems necessary and proper, without being subject to liability or
damages. If an attorney could be held liable to an opposing party for statements
made or actions taken in the course of representing his client, he would be forced
constantly to balance his own potential exposure against his client‘s best interest.
Such a conflict hampers the resolution of disputes through the court system and
the attainment of justice. Thus, to promote zealous representation, courts have
held that an attorney is “qualifiedly immune” from civil liability, with respect to
non-clients, for actions taken in connection with representing a client in litigation.
This qualified immunity generally applies even if conduct is wrongful in
the context of the underlying lawsuit. For example, a third party has no
independent right of recovery against an attorney for filing motions in a lawsuit,
even if frivolous or without merit, although such conduct is sanctionable or
contemptible as enforced by the statutory or inherent powers of the court. Courts
have refused to acknowledge an independent cause of action in such instances
―because making motions is conduct an attorney engages in as part of the
discharge of his duties in representing a party in a lawsuit.‖ [Bradt v. West, 392
S.W.2d 56, 72 (Tex. App. Ct. 1994)] . . . Thus, an attorney‘s conduct, even if

13
 frivolous or without merit, is not independently actionable if the conduct is part of
the discharge of the lawyer‘s duties in representing his or her client. The
immunity focuses on the type of conduct, not on whether the conduct was
meritorious in the context of the underlying lawsuit.
Id. at 405-06 (internal citations omitted) (emphases added).
In Clark v. Druckman, the Supreme Court of West Virginia considered, inter alia, the
following question, certified to it by a district court:
Is a party to a civil action barred, by virtue of the litigation privilege, from
bringing claims for civil damages against the opposing party‘s attorney if the
alleged act of the attorney in the course of the attorney‘s representation of the
opposing party is conduct and not a written or oral statement which arose in the
civil action and which has some relationship to the civil action?
624 S.E.2d 864, 871 (W. Va. 2005). The Court answered this question in the affirmative, after
considering the policy considerations underlying the litigation privilege, specifically:
(1) promoting the candid, objective, and undistorted disclosure of evidence; (2)
placing the burden of testing the evidence upon the litigants during trial; (3)
avoiding the chilling effect resulting from the threat of subsequent litigation; (4)
reinforcing the finality of judgments; (5) limiting collateral attacks upon
judgments; (6) promoting zealous advocacy; (7) discouraging abusive litigation
practices; and (8) encouraging settlement.
Id. at 870 (quoting Matsuura v. E.I. du Pont de Nemours & Co., 73 P.3d 687, 693 (Haw. 2003)).
The Clark Court found that, in light of these policy considerations, ―we see no reason to
distinguish between communications made during the litigation process and conduct occurring
during the litigation process.‖ Id. (emphasis in the original). The Court noted that the Supreme
Court of Florida had reached a similar conclusion, in holding that:
absolute immunity[5] must be afforded to any act occurring during the course of a
judicial proceeding, regardless of whether the act involves a defamatory statement
or other tortious behavior . . . , so long as the act has some relation to the
proceeding. The rationale behind the immunity afforded to defamatory
statements is equally applicable to other misconduct occurring during the course
of a judicial proceeding. Just as participants in litigation must be free to engage in
unhindered communication, so too must those participants be free to use their best

5
The difference between an absolute privilege and a qualified privilege is that:
the absolute privilege affords complete protection whereas the qualified privilege affords
protection only if there is no ill motive or malice in fact. The most noteworthy illustration of the
absolute privilege or immunity is that afforded in judicial proceedings where judges, attorneys,
witnesses, parties and jurors are fully protected against defamation actions based on utterances
made in the course of the judicial proceedings and having some relation thereto.
Rainier’s Dairies v. Raritan Valley Farms, 117 A.2d 889, 891-82 (N.J. 1955) (internal citations omitted).

14
 judgment in prosecuting or defending a lawsuit without fear of having to defend
their actions in a subsequent civil action for misconduct.
Id. (emphases added) (quoting Levin, Middlebrooks, Mabie, Thomas, Mayers & Mitchell, P.A. v.
U.S. Fire Ins. Co., 639 So.2d 606, 608 (Fla. 1994)). See also, Maness v. Star-Kist Foods, Inc., 7
F.3d 704, 709 (8th Cir. 1993) (applying Minnesota law) (―[A]n attorney who acts within the
scope of the attorney-client relationship will not be liable to third persons for actions arising out
of his professional relationship unless the attorney exceeds the scope of his employment or acts
for personal gain.‖); Reynolds v. Schrock, 142 P.3d 1062, 1069 (Or. 2006) (en banc) (―[F]or a
third party to hold a lawyer liable for substantially assisting in a client‘s breach of fiduciary duty,
the third party must prove that the lawyer acted outside the scope of the lawyer-client
relationship.‖); Kahala Royal Corp. v. Goodsill Anderson Quinn & Stifel, LLP, 151 P.3d 732
(Haw. 2007) (taking an exhaustive look at the litigation privilege in multiple jurisdictions, and
concluding that public policy supports applying the privilege to conduct as well as
communications).
In line with the foregoing, we find that the litigation privilege shall be found to protect
attorneys against civil actions which arise as a result of their conduct or communications in the
representation of a client, related to a judicial proceeding.
2. When the litigation privilege applies.
Reed correctly contends that the litigation privilege does not provide attorneys with
blanket immunity against all claims raised against them, merely because they are acting as an
attorney in litigation. However, where attorneys are being sued by the opponent of their client in
a current or former lawsuit, and that suit arises out of the attorneys‘ legitimate representation of
that client pursuant to that litigation, the privilege does apply.
The Supreme Court of West Virginia, in Clark v. Druckman, wrote:
In Collins [v. Red Roof Inns, Inc.,] we recognized that absolute privileges,
such as the litigation privilege, should only be permitted in limited circumstances.
[566 S.E.2d 595, 598 (W. Va. 2002)]. Thus, we do not believe that a litigation
privilege should apply to bar liability of an attorney in all circumstances. In
Mehaffy, Rider, Windholz & Wilson v. Central Bank Denver, N.A., 892 P.2d. 230,
235 (Colo. 1995), the Colorado Supreme court noted that ―an attorney is not liable
to a non-client absent a finding of fraud or malicious conduct by the attorney.‖
See also Baglini v. Lauletta, [768 A.2d 825, 833-34 (2001)] (―The one tort
excepted from the reach of the litigation privilege is malicious prosecution, or
malicious use of process.‖). We believe such exceptions to an absolute litigation
privilege arising from conduct occurring during the litigation process are

15
 reasonable accommodations which preserve an attorney's duty of zealous
advocacy while providing a deterrent to intentional conduct which is unrelated to
legitimate litigation tactics and which harms an opposing party. As recently noted
by a California court:
[a] fraud claim against a lawyer is no different from a fraud claim
against anyone else. If an attorney commits actual fraud in his
dealings with a third party, the fact he did so in the capacity of
attorney for a client does not relieve him of liability. While an
attorney's professional duty of care extends only to his own client
and intended beneficiaries of his legal work, the limitations on
liability for negligence do not apply to liability for fraud.
Vega v. Jones, Day, Reavis & Pogue, [17 Cal.Rptr.3d 26, 31-2] (Cal. Ct. App.
2004) (internal citations and quotations omitted). . . .
Where an attorney files suit without reasonable or probable cause with the
intent to harm a defendant, we do not believe the litigation privilege should
insulate him or her from liability for malicious prosecution.
624 S.E.2d at 870-71 (first emphasis in the original). See also Restatement (Third) of The Law
Governing Lawyers § 57(2) (2000)
(A lawyer representing a client in a civil proceeding or procuring the institution of
criminal proceedings by a client is not liable to a nonclient for wrongful use of
civil proceedings or for malicious prosecution if the lawyer has probable cause for
acting, or if the lawyer acts primarily to help the client obtain a proper
adjudication of the client‘s claim in that proceeding.)
In Kahala Royal Corp. v. Goodsill Anderson Quinn & Stifel, LLP, the Supreme Court of
Hawai‘i took an extensive look at the litigation privilege, and how different jurisdictions have
applied the privilege as it pertains to claims of tortious interference. 151 P.3d 732 (Haw. 2007).
The Court noted that generally for a claim of tortious interference to be brought against an
attorney, where such claim arises out of his performance as an attorney, it must be established
that the attorney acted in a manner demonstrating personal malice or a desire to harm, not
springing from his desire to protect his client. Id. at 750. (discussing Schott v. Glover, 440
N.E.2d 376, 380 (Ill. App. Ct. 1982) (―A plaintiff can state a cause of action for tortious
interference with a contract against a third party who is conditionally privileged if the plaintiff
can set forth factual allegations from which actual malice may reasonably be said to exist.‖
(Emphasis added). However, these allegations ―would necessarily include a desire to harm,
which is independent of and unrelated to the attorney’s desire to protect his client.‖) (Emphases
added)). See also Fraidin v. Weitzman, 611 A.2d 1046, 1080 (Md. Ct. Spec. App. 1992) (―To
remove the qualified privilege, the attorney must possess a desire to harm which is independent

16
of the desire to protect his client. This would constitute actual malice and therefore substantiate
a tortious interference with contract claim.‖) (emphases added) (holding that, where the
Appellant failed to allege facts constituting actual malice on behalf of the attorney, a motion for
summary judgment was appropriately granted); Macke Laundry Serv. Ltd. P’ship v. Jetz Serv.
Co., 931 S.W.2d 166, 182 (Mo. Ct. App. 1996) (―This court recognizes a privilege for attorneys,
when acting within the scope of the attorney-client relationship, to advise and act for a client
even though that advice, if wrong, may cause a client to tortiously interfere with another‘s
business relationship or expectancy, so long as the attorney does not employ wrongful means and
acts with good faith to protect the interests of the client and not for the attorney‘s self interest.‖);
Restatement (Third) of The Law Governing Lawyers § 57(3) (2000) (―A lawyer who advises or
assists a client to make or break a contract, to enter or dissolve a legal relationship, or to enter or
not enter a contractual relation, is not liable to a nonclient for interference with contract or with
prospective contractual relations or with a legal relationship, if the lawyer acts to advance the
client‘s objectives without using wrongful means.‖).
Application of the litigation privilege varies across jurisdictions, but the common thread
found throughout is the idea that an attorney acting within the law, in a legitimate effort to
zealously advance the interests of his client, shall be protected from civil claims arising due to
that zealous representation. An attorney engaging in malicious prosecution, which is necessarily
pursued in bad faith, is not acting in a manner reasonably calculated to advance his client‘s
interests, and an attorney engaging in fraud is likewise acting in a manner foreign to his duties as
an attorney. If an attorney engages in tortious interference with a third-party‘s interest out of a
personal desire to harm, separate entirely from his desire to advance his client‘s interests, that
attorney‘s conduct is not properly adjudged as occurring in the course of his representation of his
client‘s interests.
It should be noted that although some courts, like the West Virginia Supreme Court in
Clark, refer to the litigation privilege as an absolute privilege and others, like the Maryland
Court of Special Appeals in Fraidin, refer to it as a qualified privilege, this is really just a
difference in framing the privilege, not a difference in how the privilege is applied. Some courts
consider it an absolute privilege where it applies, but say that it does not apply where the
attorney is acting outside the scope of representation of his client‘s interests. Other courts
consider it a qualified privilege which does not apply where an attorney is shown to be acting for

17
his own interests. In either event, these courts have come to a general agreement that the
litigation privilege protects attorneys from all civil suits which are raised against them by a party
adverse to their clients, as a result of their representation of their clients, provided attorneys do
not act beyond the scope of that representation for their own purposes. For Idaho, the litigation
privilege is an absolute privilege, which only applies when a specific condition precedent is met,
namely, that an attorney is acting within the scope of his employment, and not solely for his
personal interests.
It is presumed that an attorney who is acting or communicating in relation to his
representation of a client is acting on behalf of that client and for that client‘s interests. See
Greenberg v. Aetna Ins. Co., 235 A.2d 576, 577-78 (Pa. 1976) (holding that ―all reasonable
doubts (if any) should be resolved in favor of relevancy and pertinency and materiality‖); Singh
v. HSBC Bank USA, 200 F.Supp.2d 338, 340 (S.D.N.Y. 2002) (holding that if any circumstances
would support a finding that attorney actions are pertinent to litigation then absolute immunity
should protect the attorney). To find otherwise would invite attorneys to divide their interest
between advocating for their client and protecting themselves from a retributive suit. Allowing
such a divided interest would run contrary to the Idaho Rules of Professional Conduct, because,
as noted by the district court judge below:
[w]hile attorneys must not knowingly counsel or assist a client in committing a
crime or fraud, Idaho‘s Rules of Professional Conduct require an attorney to
pursue matters on behalf of a client despite opposition, obstruction or personal
inconvenience to the attorney, and require an attorney to take whatever lawful and
ethical measures are required to vindicate a client‘s cause or endeavor.
(Citing I.R.C.P. 1.3(1)).
Therefore, this Court holds that, as a general rule, where an attorney is sued by the
current or former adversary of his client, as a result of actions or communications that the
attorney has taken or made in the course of his representation of his client in the course of
litigation, the action is presumed to be barred by the litigation privilege. An exception to this
general rule would occur where the plaintiff pleads facts sufficient to show that the attorney has
engaged in independent acts, that is to say acts outside the scope of his representation of his
client‘s interests, or has acted solely for his own interests and not his client‘s.
It is true that such an approach means there is a risk that a wronged party may be denied
civil relief under the law, but as Judge Learned Hand stated, in justifying absolute immunity for
federal prosecutors:

18
 It does indeed go without saying that an official, who is in fact guilty of
using his powers to vent his spleen upon others, or for any other personal motive
not connected with the public good, should not escape liability for the injuries he
may so cause; and, if it were possible in practice to confine such complaints to the
guilty, it would be monstrous to deny recovery. The justification for doing so is
that it is impossible to know whether the claim is well founded until the case has
been tried, and that to submit all officials, the innocent as well as the guilty, to the
burden of a trial and to the inevitable danger of its outcome, would dampen the
ardor of all but the most resolute, or the most irresponsible, in the unflinching
discharge of their duties. Again and again the public interest calls for action which
may turn out to be founded on a mistake, in the face of which an official may later
find himself hard put to it to satisfy a jury of his good faith. There must indeed be
means of punishing public officers who have been truant to their duties; but that is
quite another matter from exposing such as have been honestly mistaken to suit
by anyone who has suffered from their errors. As is so often the case, the answer
must be found in a balance between the evils inevitable in either alternative. In
this instance it has been thought in the end better to leave unredressed the wrongs
done by dishonest officers than to subject those who try to do their duty to the
constant dread of retaliation.
Gregoire v. Biddle, 177 F.2d 579, 581 (2nd Cir. 1949) (emphasis added). See also, Briscoe v.
LaHue, 460 U.S. 325, 345 (1983) (quoting Judge Hand in justifying absolute witness immunity).
This statement has clear applicability to the litigation privilege as it applies to attorneys. Finally,
a lack of civil redress does not mean immunity from consequence and punishment. As the West
Virginia Supreme Court wrote in Clark v. Druckman, ―[W]e believe our Rules of Civil
Procedure, our Rules of Professional Conduct, and the court‘s inherent authority provide
adequate safeguards to protect against abusive and frivolous litigation tactics.‖ 624 S.E. 2d 864,
871 (W. Va. 2005). We concur with the Clark Court in this regard.
We find that when an attorney is acting in his representative capacity pursuant to
litigation, and not solely for his own interests, he shall enjoy the litigation privilege and shall not
be subject to suit by an opponent of his client, arising out of his representative conduct and
communications. We now proceed to consider Reed‘s argument that the litigation privilege
should not apply here due to the specific and unique circumstances of this case.
i. Timing
The district court below summarized Reed‘s argument – that the litigation privilege did
not apply because Respondents were never lawfully hired as counsel by the AIA Entities – in the
following manner:
In the instant matter, Plaintiff has argued that his is a unique situation because he
has filed suit against the AIA corporations and its board members, that the

19
 contractual terms at the core of his underlying suit make him the sole shareholder
of the AIA corporations and, therefore, there is a conflict between the AIA
corporations and the board members that makes it inappropriate, even fraudulent,
for the board, or more particularly for managing board member John Taylor, to
retain counsel for the corporations, to direct counsel for the corporations in any
way, or for there to be any cooperation between counsel for the corporations and
counsel for John Taylor. Bottom line, Reed Taylor contends he is the only person
with authority to determine who should serve as counsel for the corporations he is
suing.
Although Reed argues that the circumstances of this case are unique, they are not. This is
a mere contract-interpretation case. However, there is one unusual aspect of this case which, far
from taking this case outside the scope of the litigation privilege, cries out for application of that
doctrine with particular urgency – the timing of this suit. In most cases dealing with the
litigation privilege, a third-party – who had been the opponent to an attorney‘s client in a
previous lawsuit – is suing that attorney after their litigation against the client has been resolved.
In this case Reed sued Respondents while the Underlying Case was ongoing, and yet many of his
arguments rely upon his presumption that the Underlying Case will be decided in his favor. The
public policies of: (1) protecting attorneys from the threat of retaliatory litigation, in order to
ensure that they may zealously advocate for their client without fear of reprisal; and (2)
protecting judicial economy, are magnified when confronted with not only the threat of
retaliatory litigation, but the reality of it while the underlying suit is ongoing.
The circumstances of this case raise an important question. Where the conduct of
opposing counsel falls outside the protection of the litigation privilege, when may a cause of
action be instituted against that attorney? As we apply the modern litigation privilege for the
first time in this case we have no precedent directly on point, and instead consider analogous
actions – those for legal malpractice and malicious prosecution.
We have previously indicated, in a case dealing with legal malpractice, that, as objective
proof in support of actual damages is required for recovery, the statute of limitations for a legal
malpractice claim does not begin to run until the litigation forming the basis of that claim has
concluded. City of McCall v. Buxton, 146 Idaho 656, 661, 201 P.3d 629, 634 (2009). The clear
reasoning behind this decision was that the cause of action cannot arise until damages are
incurred, and the attorney‘s conduct can be reviewed under the totality of the case. See id.
The elements that must be shown to recover on the basis of malicious prosecution are
found in Badell v. Beeks, specifically: ―(1) That there was a prosecution; (2) That it terminated in

20
favor of the plaintiff; (3) That the defendant was the prosecutor; (4) Malice; (5) Lack of probable
cause; and (6) Damages sustained by the plaintiff.‖ 115 Idaho 101, 102, 765 P.2d 126, 127
(1988) (emphases added). As in cases for legal malpractice based on conduct occurring during
the course of a trial, in order to bring a malicious prosecution claim there must be damages and it
must be determined that the suit was groundless, neither of which is possible prior to resolution
of the case.
The theme in our analyses in these two comparative causes of action is that Idaho courts
take into consideration the significant complexities involved in application of law, such as trial
strategies and negotiation tactics, and wait until all those complexities have resolved themselves
prior to hearing a claim. Only when a case has been concluded may one truly identify whether
or not a prosecution has been malicious, whether an attorney has committed malpractice, or, in
the case at hand, whether an attorney has acted fraudulently or solely for his own benefit.
Therefore, we conclude that a cause of action against one party‘s opponent‘s attorney in
litigation, based on conduct the attorney committed in the course of that litigation, may not be
properly instituted prior to the resolution of that litigation, even where the allegedly aggrieved
party believes that the attorney in question has been acting outside the legitimate scope of
representation and solely for his own benefit. Under this same reasoning, the allegations of
aiding and abetting in the commission of tortious acts, although marginally pled, must await
resolution of the Underlying Case. Until the Underlying Case is resolved a court cannot
determine whether any tortious act was committed, let alone acts constituting the aiding and
abetting of those alleged tortious acts.
As for Reed‘s argument, quoted above in the district court‘s summary, that he is the only
one authorized to hire counsel for the AIA Entities, this inference does not flow from the
allegations in Reed‘s complaints. Reed‘s complaints are largely focused on the argument that
Respondents violated Idaho‘s Rules of Professional Conduct or breached their fiduciary duty
toward the AIA Entities, and these claims are dependent upon Respondents being retained as
counsel for the AIA Entities, and holding fiduciary duties toward them. Reed has failed to plead
facts which allege that Respondents did not accept employment with the AIA Entities in good
faith.

21
C. 12(b)(6) Analysis.
As previously stated, this Court reviews the grant of a 12(b)(6) motion de novo.
See Losser v. Bradstreet, 145 Idaho 670, 672-73, 183 P.3d 758, 760-61 (2008); Curlee v.
Kootenai Cnty. Fire & Rescue, 148 Idaho 391, __, 224 P.3d 458, 461 (2008).
1. Civil conspiracy and interference with a contract.
As this Court wrote in Youngblood v. Higbee:
While we ―will make every intendment to sustain a complaint that is
defective, e.g., wrongly captioned or inartful, a complaint cannot be sustained if it
fails to make a short and plain statement of a claim upon which relief may be
granted.‖ Gibson v. Ada [Cnty.] Sheriff’s Dep’t, 139 Idaho 5, 9, 72 P.3d 845, 849
(2003). We look at whether the complaint puts the adverse party on notice of the
claims brought against it.
145 Idaho 665, 668, 182 P.3d 1199, 1202 (2008).
Reed alleges in his complaints that Respondents have entered into a civil conspiracy with
others, including their clients. As this Court noted in Mannos v. Moss:
A civil conspiracy that gives rise to legal remedies exists only if there is an
agreement between two or more to accomplish an unlawful objective or to
accomplish a lawful objective in an unlawful manner. Civil conspiracy is not, by
itself, a claim for relief. The essence of a cause of action for civil conspiracy is
the civil wrong committed as the objective of the conspiracy, not the conspiracy
itself.
143 Idaho 927, 935, 155 P.3d 1166, 1174 (2007) (quoting McPheters v. Maile, 138 Idaho 391,
395, 64 P.3d 317, 321 (2003)). In addition, ―[a]n agreement is the foundation of a conspiracy
charge and there must be some showing of specific evidence of a plan or agreement to defraud to
demonstrate the pendency of the conspiracy at the time the alleged fraud occurred.‖ Id. Reed‘s
failure to make specific factual pleadings is particularly fatal here. It appears most likely that
Reed is alleging that the goal of the conspiracy was fraudulent, and civil conspiracy must
therefore be pled with particularity under Wasco Prods., Inc. v. Southwall Techs, Inc., 435 F.3d
989, 990-92 (9th Cir. 2006). Furthermore, it is axiomatic that an agent acting within the scope
of his representation cannot conspire with his principal, Afton Energy, Inc. v. Idaho Power Co.,
122 Idaho 333, 340, 834 P.2d 850, 857 (1992), and ―‗[t]he relationship between an attorney and
client is one of agency‘ in which the client is the principle and the attorney is the agent.‖
Caballero v. Wikse, 140 Idaho 329, 332, 92 P.3d 1076, 1079 (2004) (quoting Muncey v.
Children’s Home Finding and Aid Soc. of Lewiston, 84 Idaho 147, 151, 369 P.2d 586, 588

22
(1962). Even if Reed prevails in the Underlying Case, a relationship of agency still existed
between the Respondents and their clients.
Finally, Reed alleges in the ―Facts‖ section of his complaints that Respondents engaged
in tortious interference with contractual rights.
On February 22, 2007, Reed J. Taylor voted the stock of AIA Insurance,
Inc. and attempted to take control of it pursuant to his contractual rights as
provided under the law, the contract documents, and I.C. § 30-1-722. However,
the interested directors of AIA Insurance, Inc. (including R. John Taylor) by and
through [Respondents] intentionally assisted in breaching the terms of the
Amended and Restated Stock Pledge Agreement and refused to acknowledge
Plaintiff Reed J. Taylor‘s valid vote of the stock of AIA Insurance, Inc. and
refused to surrender control as required. [Respondents] further engaged in
inappropriate conduct in assisting interested parties (including R. John Taylor) in
obtaining and/or maintaining a restraining order and preliminary injunction
against Plaintiff Reed J. Taylor, when [Respondents] knew there was no
legitimate legal basis to do so, that doing so was an intentional violation and
tortious interference with Reed J. Taylor‘s contractual rights, and that the assets
and funds of AIA Insurance, Inc. were being misappropriated and/or not
safeguarded.
Under Idaho law it is factually impossible for a party to tortiously interfere with that party‘s own
contract. Ostrander v. Farm Bureau Mut’l Ins. Co. of Idaho, Inc. 123 Idaho 650, 654, 851 P.2d
946, 950 (1993). As noted above, the client-attorney relationship is one of agency, and in line
with this Court‘s decision in Beco Const. Co, Inc. v. J-U-B Engineers, Inc., 145 Idaho 719, 184
P.3d 844 (2008), where an agent is acting within the scope of his representation he shall be
treated the same as his principal for purposes of tortious interference with a contract.
Reed‘s complaints fail to allege sufficient facts to make out causes of action for civil
conspiracy, or tortious interference with a contract. In addition, other than an attempt to claim
that Respondents were never properly employed by the AIA Entities - a claim dealt with above -
Reed fails to allege that Respondents were acting outside the scope of their employment or solely
for their own benefit. Therefore, these claims are also barred by the litigation privilege.
2. Legal malpractice and breach of fiduciary duty.
This Court considered a claim of legal malpractice in Harrigfeld v. Hancock, finding:
―The elements of a legal malpractice actions are: (a) the existence
of an attorney-client relationship; (b) the existence of a duty on the
part of the lawyer; (c) failure to perform the duty; and (d) the
negligence of the lawyer must have been a proximate cause of the
damages to the client . . .

23
 As to the burdens of proof in such cases . . . ‗[t]he burden
of proving that an attorney has been negligent or failed to act with
proper skill and that damages resulted therefrom is on the plaintiff
client‘ and . . . ‗[l]ikewise the burden is on the plaintiff to show
that the negligence of the attorney was a proximate cause of the
client‘s damage.‘‖ Sherry v. Diercks, 29 Wash. App. 433, 628 P.2s
1336, 1338 (1981) (citations omitted).
We agree with the Washington court as to the elements of a cause of
action for legal malpractice and to allocation of the burden of proof in such cases.
140 Idaho 134, 136, 90 P.3d 884, 886 (2004) (quoting Johnson v. Jones, 103 Idaho 702, 706-07,
652 P.2d 650, 654-55 (1982)).
It is clear that Reed, in his complaints, has failed to allege that he is in an attorney-client
relationship with Respondents, and therefore lacks the privity necessary to sue Respondents for
legal malpractice. Harrigfeld is the only case in which this Court has found an exception to this
requirement; specifically this Court found that the intended beneficiary of a testamentary
instrument would have standing to bring a malpractice claim against the attorney who drafted
said instrument. Id. at 138, 90 P.3d at 888. This Court went on to conclude that, ―[a] direct
attorney-client relationship is required to exist between the plaintiff and the attorney-defendant in
a legal malpractice action except in this very narrow circumstance.‖ Id. at 139, 90 P.3d at 889.
This principle was reaffirmed in a case to which Reed was a party – Taylor v. Maile, 142 Idaho
253, 127 P.3d 156 (2005). Reed cites to law from other jurisdictions, ignoring the well-
established Idaho precedent, in arguing that third-party beneficiaries to an attorney-client
relationship may have standing to pursue malpractice claims against an attorney. Reed offers no
compelling reason why this Court should expand its carefully reasoned analysis in Harrigfeld,
and it is incredulous that Reed would attempt to assert that attorneys hired by the AIA Entitites,
to fight off Reed‘s litigation against those entities, were being retained for Reed‘s benefit. As
Reed has failed to plead facts sufficient to find that he has standing to bring claims against
Respondents for legal malpractice, we find that Reed has failed to state a claim upon which relief
may be granted, as to malpractice.
As for Reed‘s claim that Respondents breached their fiduciary duties, he has failed to
allege facts establishing the existence of a duty on the part of Respondents toward Reed. As this
Court has held, ―[t]he scope of an attorney‘s contractual duty to a client is defined by the
purposes for which the attorney is retained.‖ Johnson v. Jones, 103 Idaho 702, 704, 652 P.2d
650, 652 (1982). Reed‘s complaints allege that he has been harmed as a result of Respondents

24
not acting in the best interests of the AIA Entities, but Reed‘s complaints also specifically state
that he is not suing under a derivative cause of action. Reed has failed to allege facts which can
support a finding that Respondents owed any fiduciary duty to Reed personally.
Reed, also claims that his complaints and amended complaints pled causes of action for
fraud and constructive fraud. Pursuant to Idaho Rule of Civil Procedure 9(b), fraud must be pled
with particularity. As this Court wrote in Glaze v. Deffenbaugh:
A party must establish nine elements to prove fraud: ―1) a statement or a
representation of fact; 2) its falsity; 3) its materiality; 4) the speaker‘s knowledge
of its falsity; 5) the speaker‘s intent that there be reliance; 6) the hearer‘s
ignorance of the falsity of the statement; 7) reliance by the hearer; 8) justifiable
reliance; and 9) resultant injury.‖
144 Idaho 829, 833, 172 P.3d 1104, 1108 (2007) (quoting Mannos v.Moss, 143 Idaho 927, 931,
155 P.3d 1166, 1170 (2007)). Reed fails to plead these elements in a general sense, let alone
with particularity and, as such, has failed to state a claim upon which relief may be granted as to
fraud.
―An action in constructive fraud exists when there has been a breach of a duty arising
from a relationship of trust and confidence, as in a fiduciary duty.‖ Hines v. Hines, 129 Idaho
847, 853, 934 P.2d 20, 26 (1997). ―Examples of relationships from which the law will impose
fiduciary obligations on the parties include when the parties are: members of the same family,
partners, attorney and client, executor and beneficiary of an estate, principal and agent, insurer
and insured, or close friends.‖ Mitchell v. Barendregt, 120 Idaho 837, 844, 820 P.2d 707, 714
(Ct. App. 1991) (found to be in error on other grounds by Polk v. Larrabee, 135 Idaho 303, 314,
17 P.3d 247, 258)). It is clear that Reed has not alleged facts sufficient to support an inference
that he is in an analogous relationship with Respondents, and has therefore not pled a claim upon
which relief may be granted as to constructive fraud.
3. Violation of the Idaho Consumer Protection Act, I.C. § 48-601, et seq.
In order to have standing under the Idaho Consumer Protection Act (ICPA), I.C. § 48-
601, et seq., the aggrieved party must have been in a contractual relationship with the party
alleged to have acted unfairly or deceptively. See I.C. 48-608(1) (―Any person who purchases or
leases goods or services and thereby suffers . . .‖); Haskin v. Glass, 102 Idaho 785, 788, 640 P.2d
1186, 1189 (Ct. App. 1982) (holding ―that a claim under the ICPA must be based upon a
contract‖). It is clear from Reed‘s complaints that he is not alleging that he entered into a
contractual relationship with Respondents. Therefore, Reed‘s complaints have failed to state

25
claims for relief under the ICPA. Respondents further point out that the ICPA only permits
recovery for certain specific prohibited actions that are deemed to be unfair or deceptive. See
I.C. §§ 48-603 – 48-603(E). Reed‘s complaints fail to allege which specific prohibited unfair or
deceptive practice they are meant to have engaged in. Even assuming all facts pled by Reed to
be true, he has failed to state a claim for which relief may be granted under the ICPA.
4. Conversion
Reed alleges in his complaints that Respondents‘ acceptance of payment for their work as
attorneys for the AIA Entities amounts to conversion. Respondents argue that Reed‘s complaints
fail to allege facts which, if true, would demonstrate that Respondents‘ conduct meets the three
elements of conversion under Idaho law. This Court defined conversion in Peasley Transfer &
Storage Co. v. Smith, as ―a distinct act of dominion wrongfully asserted over another‘s personal
property in denial of or inconsistent with rights therein.‖ 132 Idaho 732, 743, 979 P.2d 605, 616
(1999). This definition can be broken down into three elements which are required for a claim of
conversion to be valid: (1) that the charged party wrongfully gained dominion of property; (2)
that property is owned or possessed by plaintiff at the time of possession; and (3) the property in
question is personal property.
Here it is readily apparent that Reed‘s complaints failed to allege that the property that
Respondents are meant to have converted was personal property and, therefore, analysis of the
other elements is unnecessary. Here Reed has alleged that Respondents converted a sum of
money, and Idaho case law clearly states that ―[n]ormally, conversion for misappropriation of
money does not lie unless it can be described or identified as a specific chattel.‖ Warm Springs
Props., Inc. v. Andora Villa, Inc., 96 Idaho 270, 272, 526 P.2d 1106, 1108 (1974). See also High
View Fund, L.P. v. Hall, 27 F. Supp.2d 420, 429 (S.D.N.Y. 1994) (―More particularly, if the
alleged converted money is incapable of being described or identified in the same manner as a
specific chattel, it is not the proper subject of a conversion action.‖) (internal quotations and
citations omitted). Nothing in Reed‘s complaints suggests that the sums paid to Respondents for
the services they rendered to their corporate clients could be described or identified as specific
chattel. As such, we affirm the district court‘s grant of Respondents‘ motions to dismiss as to
this claim.

26
D. The district court did not abuse its discretion in denying Reed’s motions to amend his
complaints.
The district court below denied Reed‘s motions for leave to file amended complaints, on
the ground that granting these motions would be futile as the proposed amended complaints
would not have withstood a motion to dismiss.
Under Idaho law, motions for leave to amend pleadings are to be liberally granted,
however, it is also the case that, as this Court said in Black Canyon Racquetball Club, Inc. v.
Idaho First National Bank:
[i]n determining whether an amended complaint should be allowed, where leave
of the court is required under Rule 15(a), the court may consider whether the new
claims proposed to be inserted into the action by the amended complaint state a
valid claim. If the amended pleading does not set out a valid claim, or if the
opposing party would be prejudiced by the delay in adding the new claim, or if
the opposing party has an available defense such as a statute of limitations, it is
not an abuse of discretion for the trial court to deny the motion to file the
amended complaint.
119 Idaho 171, 175, 804 P.2d 900, 904 (1991) (internal citation omitted).
As was acknowledged by the district court, Reed‘s proposed amended complaints set out
the same causes of action as his original complaints while adding derivative causes of action.
Having dealt with Reed‘s direct causes of action above, and finding no changes in his proposed
amended complaint sufficient to alter our analyses, these issues shall not be re-examined. We
now consider Reed‘s proposed derivative causes of action.
Idaho Code § 30-1-741 sets out the minimum requirements which must be met in order
for a derivative claim to be brought, stating:
Standing. A shareholder may not commence or maintain a derivative proceeding
unless the shareholder:
(1) Was a shareholder of the corporation at the time of the act or omission
complained of or became a shareholder through transfer by operation of law from
one (1) who was a shareholder at that time; and
(2) Fairly and adequately represents the interests of the corporation in enforcing
the right of the corporation.
Reed does not allege in either his original complaints or proposed amended complaints that he is
a shareholder of either AIA Entity. Rather, Reed claims the status of a former shareholder whose
stock was redeemed, seeking to recover the balance owing on that stock redemption. Even if
Reed‘s claims are true that his security interests entitle him to gain stock in the AIA Entities, he

27
did not hold stock when this lawsuit was commenced, and does not claim to. Therefore, it is
clear under I.C. § 30-1-741 that Reed was not a shareholder at the time he brought this suit, and
has no standing to pursue a derivative claim on behalf of the corporation.6
As Reed‘s proposed amended complaints did not add any facts in support of his direct
causes of action raised in his original complaints, and as he clearly lacked standing under Idaho
law to bring derivative claims, not being the shareholder of the corporation he wished to bring
suit on behalf of, we find that the district court acted within its discretion in denying Reed‘s
motions for leave to amend his complaints on the ground of futility.
E. Attorney fees below

As this Court stated in Henderson v. Henderson Investment Properties, L.L.C.:
When reviewing a trial court‘s award of attorney fees, this Court applies an abuse
of discretion standard. ―To determine whether there is an abuse of discretion this
Court considers whether (1) the court correctly perceived the issue as one of
discretion; (2) the court acted within the boundaries of such discretion and
consistently with legal standards applicable to specific choices; and (3) the court
reached its decision by an exercise of reason.‖
148 Idaho 638, __, 227 P.3d 568, 569-70 (2010) (quoting Lee v. Nickerson, 146 Idaho 5, 9, 189
P.3d 467, 471 (2008) (internal citations omitted).
It is clear from the district court‘s order granting attorney fees that it recognized the issue
as one of discretion, and that it reached its decision through an exercise of reason, on all bases it
considered. The question therefore, is whether the court acted within the boundaries of
discretion consistent with legal standards in reaching its determinations. The district court
awarded attorney fees under: (1) I.C. § 12-121 and I.R.C.P. 54(e)(1); (2) I.C. § 30-1-746(2)-(3);
and (3) I.C. § 48-608(5). We shall review each to determine whether the district court exceeded
the boundaries of its discretion.
1. Idaho Code § 12-121 and I.R.C.P. 54(e)(1)
Idaho Code § 12-121 states:
In any civil action, the judge may award reasonable attorney‘s fees to the
prevailing party or parties, provided that this section shall not alter, repeal or

6
Although Reed‘s lack of shareholder status is determinative, it is also unlikely that Reed could meet the second
qualification, of fairly and adequately representing the interests of the corporation as he had filed suit in the
Underlying Case seeking to recover corporate money and assets for his own individual benefit. See New Crawford
Valley, Ltd. v. Benedict, 847 P.2d 642 (Colo. App. 1993); Guenther v. Pacific Telecom, Inc., 123 F.R.D. 341 (D.
Ore. 1987).

28
 amend any statute which otherwise provides for the award of attorney fees. The
term ―party‖ or ―parties‖ is defined to include any person, partnership,
corporation, association, private organization, the state of Idaho or political
subdivision therefore.
Idaho Rule of Civil Procedure 54(e)(1) reads as follows:
Attorney Fees. In any civil action the court may award reasonable attorney fees,
which at the discretion of the court may include paralegal fees, to the prevailing
party or parties as defined in Rule 54(d)(1)(B), when provided for by any statute
or contract. Provided, attorney fees under section 12-121, Idaho Code, may be
awarded by the court only when it finds, from the facts presented to it, that the
case was brought, pursued or defended frivolously, unreasonably or without
foundation . . .
In reaching his conclusion that all of Reed‘s claims were brought frivolously,
unreasonably, and without foundation, the district court clearly considered each claim which had
been brought by Reed against the Respondents, and clearly articulated why it felt each claim was
brought frivolously, unreasonably and without foundation. However, in its reasoning the district
court applied the litigation privilege which, having never been addressed or applied previously
by Idaho courts, is an issue of first impression. As such, Reed argues that it was inappropriate to
grant attorney fees under I.C. § 12-121. See Campbell v. Kildew, 141 Idaho 640, 651, 115 P.3d
731, 742 (2005) (―Where a case involves a novel legal question, attorney fees should not be
granted under I.C. § 12-121.‖). However, as may be seen from the foregoing analysis, even
without taking the litigation privilege into consideration, the district court‘s decision to grant the
12(b)(6) motions to dismiss would be affirmed. This is because these claims were brought
frivolously, unreasonably, and without foundation. The complaints filed by Reed are overly
conclusive in nature with insufficient factual allegations, even under Idaho‘s notice-pleading
standard, and demonstrate an often-incorrect understanding of the law. We therefore uphold the
district court‘s grant of attorney fees under I.C. § 12-121 and I.R.C.P. 54(e)(1).
2. Idaho Code § 30-1-746(2)-(3)
Idaho Code § 30-1-746(2)-(3) provides that upon the termination of a derivative
proceeding acourt may:
(2) Order the plaintiff to pay any defendant‘s reasonable expenses, including
counsel fees, incurred in defending the proceeding if it finds that the proceeding
was commenced or maintained without reasonable cause or for an improper
purpose; or
(3) Order a party to pay an opposing party‘s reasonable expenses, including
counsel fees, incurred because of the filing of a pleading, motion or other paper, if

29
 it finds that the pleading, motion or other paper was not well grounded in fact,
after reasonable inquiry, or warranted by existing law or a good faith argument for
the extension, modification or reversal of existing law and was interposed for an
improper purpose, such as to harass or cause unnecessary delay or needless
increase in the cost of litigation.
―An award of attorney fees under [I.C. § 30-1-746] is discretionary and should be subject
to review and vacated only upon a showing of an abuse of discretion.‖ McCann v. McCann, 138
Idaho 228, 238, 61 P.3d 585, 595 (2002). Reed attempted to plead derivative causes of action
against Respondents, but as the district court denied Reed‘s motions for leave to amend his
complaints, the claims were never before the court. As the derivative causes of action were
never a part of Reed‘s complaints the termination of this case cannot properly be characterized as
the termination of a derivative proceeding. We find that the district court abused its discretion in
awarding attorney fees under this statute, but as we uphold attorney fees under I.C. § 12-121 and
I.R.C.P. 54(e)(1) this error is harmless.
3. Idaho Code § 48-608(5)
Under ICPA, I.C. § 48-608(5):
Costs shall be allowed to the prevailing party unless the court otherwise directs.
In any action brought by a person under this section, the court shall award, in
addition to the relief provided in this section, reasonable attorney fees to the
plaintiff if he prevails. The court in its discretion may award attorney‘s fees to a
prevailing defendant if it finds that the plaintiff‘s action is spurious or brought for
harassment purposes only.
As Reed never purchased or leased any goods or services from Respondents and clearly
did not meet the threshold requirements of making a claim under ICPA, it cannot be said that the
district court abused his discretion in finding that Reed brought this claim spuriously, for the
harassment purposes only. We therefore affirm the grant of attorney fees under the authority
provided in I.C. § 48-608(5).
F. Attorney Fees
Respondents request attorney fees on appeal pursuant to Idaho Appellate Rule 41, Idaho
Code §§ 12-121, 30-1-746, and 48-608(5). Consistent with the immediately preceding analysis,
we deny attorney fees under I.C. § 30-1-746 for the same reason we find that they were
improperly awarded on this basis below. We find that Respondents are entitled to attorney fees
under I.C. § 48-608(5), as Reed has appealed his ICPA claim despite the fact that the claim
clearly failed as a matter of law, and was brought spuriously for harassment purposes only.

30
Additionally, Respondents are entitled to attorney fees under I.C. § 12-121 and I.A.R. 41 as this
appeal was brought spuriously and without foundation, for harassment purposes only.
V. CONCLUSION
The district court erred in taking judicial notice of the Underlying Case when considering
Respondents‘ motions to dismiss under 12(b)(6), but as this Court considers the grant of a
motion to dismiss on a de novo basis and has not considered the Underlying Case in this
determination, this error is found harmless. We affirm the district court‘s grant of Respondents‘
12(b)(6) motions to dismiss.
We hold that the litigation privilege applies in Idaho, and bars a litigant from bringing
claims against the attorneys of his adversary in that litigation, where the claims are grounded in
the attorneys‘ conduct or communications made in the course of representing their clients in that
litigation, and the attorneys are acting within the scope of that representation and not solely for
their own benefit. We find that in all instances the claims brought by Reed against Respondents
were: (1) barred by the litigation privilege; (2) supported by insufficiently pled facts; (3)
insufficient as a matter of law; or (4) are not ripe for litigation.
We affirm the district court‘s act of discretion in denying Reed‘s motions for leave to amend
his complaints because (1) Reed was not a shareholder of the Corporations at the time of the
alleged injury and therefore lacked standing to bring derivative actions, and (2) Reeds proposed
alterations to his pleading regarding his direct causes of action did not alter the analyses, as
applied to his original complaints.
The district court abused its discretion in awarding attorney fees to Respondents pursuant to
I.C. § 30-1-746, but properly awarded attorney fees under I.C. §§ 12-121 and 48-608(5). Costs
and attorney fees to Respondents.
Chief Justice EISMANN and Justices J. JONES and TROUT, J., Pro Tem, CONCUR.
HOSACK, J., Pro tem, specially concurring.
I concur with both the analysis and the holding. I only note that, in my opinion, the
application of the litigation privilege is determinative as to the motion to dismiss. Once the
litigation privilege is determined to be the applicable law, the trial court‘s grant of the motion to
dismiss and its denial of the motion to amend could be affirmed on those grounds alone.

31