Appeal from the District Court of the Fifth Judicial District of the State of Idaho, Twin Falls County. Hon. Randy J. Stoker, District Judge.
The opinion of the court was delivered by: Horton, Justice.
The district court's grant of judgment notwithstanding the verdict and the award of attorney fees are vacated and the case is remanded for proceedings consistent with this opinion.
This case arises from a contract for services between Erik Partin (Partin) and Cody Schroeder (Schroeder) under which Partin assembled a specialty car engine for Schroeder. A jury returned a verdict finding that Partin assembled the engine improperly and breached a performance agreement containing a valid liquidated damages clause. The district court granted Partin's motion for judgment notwithstanding the verdict (JNOV), holding that no reasonable jury could find the liquidated damages clause to be valid. The court awarded all attorney fees incurred in the litigation to both Partin and Schroeder as prevailing parties. Schroeder appeals the district court's grant of JNOV and the award of attorney fees to Partin. Each party requests attorney fees on appeal. We vacate the district court's grant of JNOV and award of attorney fees and award attorney fees and costs on appeal to Schroeder.
I. FACTUAL AND PROCEDURAL BACKGROUND
Schroeder is a classic car enthusiast who lives in California. Schroeder invests in classic cars and hires professionals to refurbish them. In 2006, Schroeder purchased a 1970 Barracuda and wanted to install a specialty engine in it. That fall, in order to avoid an eighteen-month delay in orders for manufactured engines, Schroeder hired Partin to assemble the engine. The parties originally agreed Schroeder would provide parts and pay Partin $950 to assemble the engine. Although Schroeder hoped Partin would build and install the engine within four or five months, the parties did not originally set a performance deadline.
The parties repeatedly pushed back deadlines for completion of the engine, in part because as assembly progressed, Partin discovered that new parts needed to be ordered. As early as December 2007, Schroeder urged Partin to timely complete the engine. In February or March of 2008, Partin told Schroeder that he would finish work on the Barracuda within "the next few months." Schroeder planned to visit Idaho in September 2008 and asked Partin to install the engine before the visit so that the Barracuda could be moved to another site for painting and detailing. Upon Schroeder's September visit, Partin reported that the engine was not in the vehicle because a component had cracked when he tried to install the engine. Schroeder was visibly frustrated when he left Partin's shop.
In response to Schroeder's evident frustration, Partin drafted and delivered to Schroeder a cover letter and an enclosed document (the Performance Agreement). The cover letter stated that Partin "decided to write up this Performance Clause so that you will have some reassurance" that the work on the car would be completed by October 8, 2008. The Performance Agreement stated:
This is a binding performance contract stating that the delivery of [Schroeder's Barracuda] to Charlie's Auto [R]efinishing for painting, shall be no later than October 8, 2008. If delivery date is not met a penalty of $2,500.00 shall be incurred payable to owner of [the Barracuda]. Further penalty for non delivery by due date will be the sum of $100.00 a day for every day thereafter until said vehicle is delivered to Charlie's Auto Refinishing.
Partin signed the Performance Agreement on September 23, 2008. Schroeder signed the Agreement the next day and returned a copy to Partin. Although Schroeder had originally intended to recover the Barracuda from Partin in September, even if the engine work was incomplete, the Performance Agreement convinced Schroeder to allow Partin to finish the work.
Partin did not deliver the Barracuda to Schroeder on October 8, 2008. On November 21, 2008, Schroeder filed suit seeking damages for Partin's breach of contract. Partin delivered the Barracuda to Schroeder on December 23, 2008, seventy-five days after the date set forth in the Performance Agreement.*fn1 On February 3, 2009, Partin filed his answer and counterclaim.
Although the parties agreed Partin would perform the engine's crucial initial start-up, Schroeder hired a third party to perform the task, and almost immediately the engine demonstrated mechanical problems. Schroeder ultimately paid other mechanics to rebuild the Barracuda's engine. It took these professionals seven months to disassemble, reassemble, and install the engine. Partin asserted that he was not liable for the rebuild costs because he would have performed final tasks before the start-up that would have prevented the damage.
The case was tried to a jury, which received conflicting testimony on Schroeder's claim for damages due to Partin's delayed delivery of the Barracuda. Schroeder testified that he invested in the vehicle at a time of favorable market conditions, but that he became frustrated with Partin's delayed performance because market conditions began to deteriorate. Schroeder testified that the Performance Agreement: . is fair. The fact that this car had been in [Partin's] possession for two years already and the fact now again that it's late after the promised date as the market is dropping, you know, periodically it's still continuing to soften. I'm losing money every day that this car isn't getting done. That's why I was in - that's why it was so important for me to wrap this up and have some closure with this and get it into an autobody [sic] shop. A hundred dollars a day to me is a small price compared to, I mean, how much does it cost to rent a car for a day and he's had my car for two years.
However, on cross examination, Schroeder testified that the only damage he suffered was due to the need to rebuild the engine after the troubled start-up, and that he ...