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IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 32690
                                                                                       LOEL FENWICK, M.D. and CHRISTY             )
                                                                                       OLSON FENWICK, husband and wife, and       )   Coeur d’Alene, April 2007 Term
                                                                                       TANGLEFOOT WILDLIFE REFUGE,                )
                                                                                                                                  )   2007 Opinion No.   87
                                                                                       Plaintiffs-Appellants,                     )
                                                                                                                                  )   Filed: May 29, 2007
v.                                                                                                                                )
                                                                                                                                  )   Stephen W. Kenyon, Clerk
                                                                                       IDAHO DEPARTMENT OF LANDS, an              )
                                                                                       agency of the State of Idaho and WINSTON   )
                                                                                       WIGGINS, in his official capacity and      )
                                                                                       GEORGE and CAROLYN DESHLER                 )
                                                                                       FAMILY TRUST, CAROLYN DESHLER,             )
                                                                                       d/b/a BLUE DIAMOND MARINA AND              )
RESORT,                                                                                                                           )
)
Defendants-Respondents.                                                                )
)
Appeal from the District Court of the First Judicial District of the State of Idaho,
in and for Bonner County.  The Hon. Steven C. Verby, District Judge.
The judgment of the district court is affirmed.
Scott W. Reed, Coeur d’Alene, for appellants.
Hon. Lawrence G. Wasden, Attorney General, Boise, for respondents Department
of Lands and Winston Wiggins.   C. Nicholas Krema, Deputy Attorney General,
argued.
Finney, Finney & Finney, Sandpoint, for respondents Carolyn Deshler Family
Trust and Carolyn Deshler.  John Finney argued.
EISMANN, Justice.
This is an appeal from a judgment holding that activities conducted on state public
endowment land did not have to comply with the county zoning ordinance.  We affirm.




I.  FACTS AND PROCEDURAL HISTORY
The State of Idaho, acting by and through the State Board of Land Commissioners (Land
Board), leased to Carolyn Deshler 3.75 acres of public school endowment land located on the
shore of Priest Lake and 2.5 acres of submerged land.   The term of the written lease commenced
on January 1, 1994, and ended on December 31, 2003.   Deshler operated a marina on the leased
property.
On October 4, 1996, the Idaho Department of Lands (Lands Department) acting on behalf
of Carolyn Deshler applied to Bonner County for a zoning change regarding the leased property
and a conditional use permit to allow for the expansion of the marina’s facilities.  Bonner County
denied both requests, and the denials were affirmed on appeal.   In 1997, the Lands Department
authorized Carolyn Deshler to proceed with the marina expansion, and she did.
On June 17, 2004, the State of Idaho, acting by and through the Land Board, entered into
a lease with the George and Carolyn Deshler Family Trust and Carolyn Deshler (Deshlers) for
the same land.  The term of the lease was from January 1, 2004, through December 31, 2013.
Loel  and  Christy  Fenwick  (Fenwicks)  own  the  Tanglefoot  Wildlife  Refuge,  which
adjoins approximately 380 acres of state land.  That state land includes the property leased to the
Deshlers.    On  December                                                                               10,   2004,  the  Fenwicks  brought  this  action  against  the  Lands
Department, and in an amended complaint they added the Deshlers as defendants.  The Fenwicks
sought to enjoin any construction on or use of the leased premises that violates the Bonner
County zoning ordinance; to obtain permission to narrow that portion of the access road to the
marina that crosses their property; and to enjoin activities upon the leased premises that they
contend constitute a nuisance.   The district court granted a partial summary judgment dismissing
all of the Fenwicks’ claims except their nuisance claim.  The district court certified that judgment
as final pursuant to Rule 54(b) of the Idaho Rules of Civil Procedure, and the Fenwicks timely
appealed.
II.  ISSUES ON APPEAL
1.   Did the district court err in holding that the Deshlers’ use of the state endowment lands leased
to them did not have to comply with the Bonner County zoning ordinance?
2.   Did the district court err in holding that the Fenwicks lacked standing to enforce a provision
in the Deshlers’ lease?
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3.  Are the Fenwicks or the Deshlers entitled to an award of attorney fees on appeal?
III.  ANALYSIS
In an appeal from an order of summary judgment, 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.
Infanger v. City of Salmon, 137 Idaho 45, 44 P.3d 1100 (2002).   All disputed facts are to be
construed liberally in favor of the non-moving party, and all reasonable inferences that can be
drawn from the record are to be drawn in favor of the non-moving party.    Id.    Summary
judgment is appropriate if the pleadings, depositions, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.   Id.   If the evidence reveals no disputed issues
of material fact, then only a question of law remains, over which this Court exercises free
review.  Id.
A.   Did the District Court Err in Holding that the Deshlers’ Use of the State Endowment
Lands  Leased  to  Them  Did  Not  Have  to  Comply  with  the  Bonner  County  Zoning
Ordinance?
Based upon State ex rel. Kempthorne v. Blaine County, 139 Idaho 348, 79 P.3d 707
(2003), the district court held that the use of the state public endowment land leased by the
Deshlers did not have to comply with the Bonner County zoning ordinance.   The Fenwicks
contend that Idaho Code § 67-6528 requires such compliance.   That statute provides, “The state
of Idaho, and all its agencies, boards, departments, institutions, and local special purpose
districts, shall comply with all plans and ordinances adopted under this chapter unless otherwise
provided by law.”  At the time the Deshlers’ lease was signed on June 17, 2004, the 2003 version
of Idaho Code § 58-307 was in effect.   It provided certain exceptions to the requirements of
Idaho Code § 67-6528.   Insofar as this case is concerned, the 2003 version of Section 58-307
provided that if certain specified lands were leased for commercial purposes, “the use for which
the land is leased shall be consistent with the local planning and zoning ordinances insofar as is
reasonable and practicable.”    The land leased by the Deshlers was leased for commercial
purposes, but it was not one of the parcels specified in the 2003 version of Section 58-307.   The
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Fenwicks therefore argue that the use of the land must comply with the Bonner County zoning
ordinance.
The legislature amended Section  58-307 in  2004, and when the Fenwicks filed this
lawsuit the 2004 version of the statute1 was in effect.   Under the 2004 version of the statute, the
1
As amended effective July 1, 2004, Idaho Code § 58-307 provides:
(1) No lease of state public school endowment lands, other than those valuable for stone,
coal, oil, gas or other minerals, shall be for a longer term than ten (10) years.
(2) Notwithstanding any other provisions of law, all state lands may be leased for a
period of up to twenty-five  (25) years to the federal government, to federal agencies, state
agencies, counties, or cities, school districts or political subdivisions when leased for public
purposes. Such leases for public purposes may be entered into by negotiation and shall secure a
rental amount based on the fair market value of the state land.
(3) Notwithstanding any other provisions of law, all state endowment lands may be
leased for a period of up to forty-nine (49) years for commercial purposes, under such terms and
conditions as may be set by the board, provided that, for such leases in excess of ten (10) years,
the board consults with the county commissioners of the county in which the lands are located
before leasing the lands, and the use for which the land is leased shall be consistent with the local
planning and zoning ordinances insofar as is reasonable and practicable. For each lease in excess
of ten (10) years, the department shall hold a hearing in the county in which the parcel is located.
(4) The term “commercial purposes” means industrial enterprises, retail sales outlets,
business  and  professional  office  buildings,  hospitality  enterprises,  commercial  recreational
activities, multifamily residential developments and other similar businesses. For purposes of this
section, agricultural leases, grazing leases, oil and gas leases, mineral leases, geothermal leases,
communication site leases, single family, recreational cottage site and homesite leases, and leases
for other similar uses, are not considered leases for commercial purposes.
(5) The board may require that all fixed improvements constructed upon land leased for
commercial purposes be removed or become the property of the state upon termination of the
lease,  and  that  any  heirs,  encumbrances  or  claims  of  third  parties  with  respect  to  any
improvements shall be expressly subordinate and subject to the rights of the state under this
section.
(6) Except for geothermal, oil and gas, mineral and commercial leases, the lease year
shall run from January 1 through December 31, and all leases shall expire on December 31 of the
year of expiration.
(7) All applications to lease or to renew an existing lease which expires December 31 of
any year, shall be filed in the office of the director of the department of lands by the thirtieth day
of April preceding the date of such expiration. Such applications will be considered by the state
land board and be disposed of in the manner provided by law; except that the board may reject
conflicting applications for a lease for commercial purposes if the lessee exercises the preference
right to renew clause.
(8) Where conflicts appear upon leases, except for mineral leases which, pursuant to
chapter 7, title 47, Idaho Code, contain a preferential right to renew clause, such applications shall
be considered as having been filed simultaneously. However, nothing herein shall be construed to
prevent the state board of land commissioners from accepting and considering applications for
new leases at any time.
(9) In case improvements have been made on land while under lease which is expiring,
and the former lessee is not the successful bidder, but the land is leased to another, the amount of
such  improvements  shall  be  paid  to  the  former  lessee.  The  following  shall  be  considered
improvements: plowing done within one (1) year, provided no crop has been raised on the plowed
land after such plowing, fencing, buildings, cisterns, wells, growing crops and any other asset
which shall be considered an improvement by the director.
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use of state lands leased for commercial purposes was required to comply with local planning
and zoning ordinances, insofar as is reasonable and practicable, only if the term of the lease
exceeded ten years.  Because the term of the Deshlers’ lease did not exceed ten years, they would
not be required to comply with the Bonner County zoning ordinance under the 2004 version of
Idaho Code § 58-307.
The parties assumed and the district court held that the 2004 version of Idaho Code § 58-
307 did not apply in this case because it was not in effect when the lease was signed on June 17,
2004.   The 2004 amendment was approved on March 23, 2004, and it took effect on July 1,
2004.   However, it was in effect on December 10, 2004, when the Fenwicks filed this action
seeking to limit the Deshlers’ use of the leased property.   The 2004 version of Section 58-307
applies to this action.
The Fenwicks do not contend that the lease is invalid because it violated a statute or
ordinance when executed, nor are they seeking to recover any damages for an alleged injury
arising from either the lease or the Deshlers’ use of the leased property.   They only seek to limit
the Deshlers’ future use of the leased property.   They are seeking an injunction requiring the
Lands Department to bring the activities, operations, and construction at the leased property into
compliance with the Bonner County zoning ordinance.   An injunction operates prospectively
only.   Curl v. Curl, 115 Idaho 997, 1008, 772 P.2d 204, 215 (1989).   Thus, the Fenwicks are
seeking to enjoin what they contend would be a continuing violation of the zoning ordinance.
The 2004 version of Idaho Code § 58-307 in effect at the time the Fenwicks filed their
lawsuit exempted the Deshlers from conforming their use of the land to the zoning ordinance.
Applying that version of the statute to this lawsuit does not constitute a retroactive application of
the statute.  The change in the statute did not affect any vested right of the Fenwicks.  They have
no vested right to prevent changes in the use of the state’s property.   Indeed, a landowner does
(10) Commercial leases of the state lands shall not be subject to the conflict auction
provisions of section 58-310, Idaho Code. The board may, at its discretion, call for proposals and
sealed bids by public advertisement, and may evaluate said proposals and award the lease to the
bidder whose proposal achieves the highest return over the term of the lease and who is capable of
meeting such terms and conditions as may be set by the board; in the alternative, the board may
call for lease applications by public advertisement and if more than one  (1) person files an
application to hold an auction in the same manner as provided in section 58-310, Idaho Code. In
either case, the board must obtain a reasonable rental, based upon fair market value of the state
land, throughout the duration of the lease. The board may reject any or all proposals and any or all
bids, and may reoffer the lease at a later date if the board determines that the proposals or bids do
not achieve the highest and best use of the land at market rental.
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not even have a vested right to prevent changes in the permissible use of his own property.
Sprenger, Grubb & Assocs., Inc. v. City of Hailey, 127 Idaho 576, 903 P.2d 741 (1995).   Thus,
applying the 2004 amendment to this lawsuit does not constitute a retroactive application of the
statute to their claim.  Engen v. James, 92 Idaho 690, 448 P.2d 977 (1969).
B.   Did the District Court Err in Holding that the Fenwicks Lacked Standing to Enforce a
Provision in the Deshlers’ Lease?
Paragraph 8 of the current lease included a provision stating, “Lessee’s use of the leased
site and all improvements constructed thereon, shall fully comply with all statutes, ordinances,
rules, regulations and laws of applicable federal, state and local governmental authorities.”   The
Fenwicks contended that they are entitled to enforce this provision in the lease and that it
incorporated by reference the Bonner County zoning ordinance.   The district court held that the
Fenwicks lacked standing to raise this issue.  We agree.
The Fenwicks are not parties to the lease, and the district court held that they are not
third-party  beneficiaries  of  this  lease  provision.    The  Fenwicks  argue  that  as  adjoining
landowners, they are third-party beneficiaries of this lease provision.                                   “The test for determining a
party’s status as a third-party beneficiary . . . is whether the agreement reflects an intent to
benefit the third party.”  Idaho Power Co. v. Hulet, 140 Idaho 110, 112, 90 P.3d 335, 337 (2004).
The third party must show “that the contract was made for his direct benefit, or as sometimes
stated primarily for his benefit, and that it is not sufficient that he be a mere incidental
beneficiary.”   Dawson v. Eldredge, 84 Idaho 331, 337, 372 P.2d 414, 418 (1962) (quoting Sachs
v. Ohio Nat’l Life Ins. Co., 148 F.2d 128, 131 (7th Cir. 1945)).                                          “[T]he contract itself must
express an intent to benefit the third party.”   Adkinson Corp. v. American Bldg. Co., 107 Idaho
406, 409, 690 P.2d 341, 344 (1984).
The Fenwicks do not point to anything in the lease indicating that this provision was
included  primarily  for  their  benefit  as  adjoining  landowners.    In  Just’s  Inc.  v.  Arrington
Construction Co. Inc., 99 Idaho 462, 583 P.2d 997 (1978), the construction contract between the
city and the contractor expressly required the contractor to take specified measures to lessen the
disruption to businesses located in the construction area.   There is no similar provision in the
Deshlers’ lease with the Land Board.   The provision at issue makes no reference to adjoining
landowners, nor is there any indication it was included for their benefit.   The district court did
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not err in holding that the Fenwicks were not third-party beneficiaries of this provision and
therefore lacked standing to seek to enforce it.
The Fenwicks also argue that Paragraph 8 of the lease constitutes an admission under
Rule 803 of the Idaho Rules of Evidence.   That rule governs the admissibility of evidence; it has
no application to the issue of standing.
C.   Are Either the Fenwicks or the Deshlers Entitled to an Award of Attorney Fees on
Appeal?
The Fenwicks seek an award of attorney fees on appeal under Idaho Code § 12-117.
Because they have not prevailed on the appeal, they are not entitled to an award of attorney fees
based upon that statute.   Uhl v. Ballard Medical Prods., Inc., 138 Idaho 653, 67 P.3d 1265
(2003).
The Deshlers seek an award of attorney fees under Idaho Code § 12-121.   Attorney fees
can be awarded on appeal under that statute only if the appeal was brought or defended
frivolously, unreasonably, or without foundation.   Gustaves v. Gustaves, 138 Idaho 64, 57 P.3d
775 (2002).   We have decided this case based upon the 2004 version of Idaho Code § 58-307.
The Deshlers argued on appeal that the 2003 version of the statute was applicable.   Under the
circumstances,  we  conclude  that  the  Fenwicks  did  not  bring  their  appeal  frivolously,
unreasonably, or without foundation.   We therefore decline to award the Deshlers attorney fees
under Idaho Code § 12-121.
IV.  CONCLUSION
We affirm the partial summary judgment of the district court.   We award the respondents
costs on appeal, but not attorney fees.
Chief Justice SCHROEDER, and Justices TROUT, BURDICK and JONES CONCUR.
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