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Christopher J. and Jill Magleby v. Kevin and Tanya Garn; Idaho Trademark Properties

February 26, 2013

CHRISTOPHER J. AND JILL MAGLEBY, DBA SELECTIVE BUILDERS, PLAINTIFFS-APPELLANTS,
v.
KEVIN AND TANYA GARN; IDAHO TRADEMARK PROPERTIES, LLC.; JENKS BROTHERS, INC., DEFENDANTS-RESPONDENTS.



Appeal from the District Court of the Seventh Judicial District of the State of Idaho, Fremont County. Hon. Darren B. Simpson, District Judge.

The opinion of the court was delivered by: Horton, Justice.

2013 Opinion No. 29

Stephen Kenyon, Clerk

The judgments of the district court as they relate to attorney fees are vacated and the case is remanded to the district court for proceedings consistent with this opinion.

ON THE BRIEFS

This appeal relates to attorney fees incurred in litigation arising from a construction contract for a custom cabin in Island Park, Idaho. There are two issues in this case: first, whether the district court erred in holding that the Maglebys were entitled to recover only $2,500 from defaulting parties by operation of I.R.C.P. 54(e)(4); and second, whether the district court erred in its decision regarding the Maglebys' entitlement to post-judgment attorney fees. We vacate the judgments of the district court as they relate to attorney fees and remand for further proceedings consistent with this opinion.

I. FACTUAL AND PROCEDURAL BACKGROUND

Christopher and Jill Magleby entered into a contract with Idaho Trademark Properties, LLC (ITP) and Jenks Brothers, Inc. (Jenks) to manage the construction of a cabin that ITP and Jenks were building.*fn1 Jill Magleby was also hired to oversee the interior design of the cabin. Before its completion, the cabin was sold to Kevin and Tanya Garn. The Garns consulted with the Maglebys, ITP, and Jenks regarding the interior design as well as upgrading some of the materials used in the home. A dispute arose between the Maglebys and ITP/Jenks over how much the Maglebys were owed, and the Maglebys were not paid for their work. As a result, they filed a materialmen's lien against the cabin. They subsequently initiated the present action, asserting three causes of action: (1) lien foreclosure; (2) breach of contract against ITP and Jenks; and (3) unjust enrichment. In their complaint, the Maglebys specifically pled that "[t]he transaction between ITP, Jenks, and Maglebys was a commercial transaction." As to attorney fees, the Maglebys claimed they were entitled to "attorney's fees and Court costs of $2,500.00, pursuant to Idaho Code §§ 12-120 and 45-513, if uncontested further. If contested, the amount of attorney fees and Court costs awarded should be the actual cost of attorney fees and Court costs."

Each named defendant answered the complaint and denied that the Maglebys were entitled to relief. Almost two years of litigation ensued before the attorney for ITP and Jenks successfully moved to withdraw. After no new attorney appeared, the district court entered default judgment against ITP and Jenks. Despite the Maglebys' submission of a cost memorandum demonstrating that they had incurred $14,904 in attorney fees in connection with the litigation against ITP and Jenks, the district court entered judgment against ITP and Jenks for $34,342.00, which included court costs and only $2,500 in attorney fees.

The Maglebys filed a motion to reconsider or alter or amend the judgment, in which they argued that because substantial litigation had taken place and substantial attorney fees had been incurred, they were entitled to recover the attorney fees actually incurred in the litigation against ITP and Jenks, rather than the $2,500 pleaded in the event of an uncontested default judgment. This motion specifically identified I.C. §§ 12-120(1) and 12-120(3) as bases for the award of attorney fees. A new attorney appeared on behalf of ITP to contest the Maglebys' motion. After hearing, the district court determined that I.R.C.P. 54(e)(4) prohibited an award of attorney fees against ITP and Jenks in excess of $2,500 and denied the motion. The Maglebys then moved to have the default judgment set aside. This motion was also denied.

The Maglebys initiated proceedings to execute on their judgment by sale of the property. Shortly before the scheduled foreclosure sale, Wells Fargo -- a stranger to the litigation -- requested a temporary restraining order to stop the sale. The Garns subsequently tendered the amount of the default judgment, and the Maglebys cancelled the foreclosure sale. Pursuant to I.C. §§ 45-513 and 12-120(5), the Maglebys then brought a motion to collect post-judgment attorney fees of $6,802.69 they had incurred in their efforts to collect on the judgment. The district court concluded that the Maglebys were not entitled to recover attorney fees from ITP and Jenks under I.C. § 12-120(5), but that they were permitted to recover attorney fees from the Garns pursuant to I.C. § 45-513. The district court then awarded the Maglebys $990.00 in attorney fees, holding that the attorney fees incurred in response to Wells Fargo's efforts to derail the foreclosure proceedings could not be recovered, reasoning that the Maglebys were entitled to recover only those attorney fees incurred in collection efforts directly related to the Garns.

The Maglebys timely appealed. Both the Maglebys and the Garns request attorney fees on appeal.

II. STANDARD OF REVIEW

Awarding attorney fees and costs is within the discretion of the trial court and subject to review for an abuse of discretion. Smith v. Mitton, 140 Idaho 893, 897, 104 P.3d 367, 371 (2004). When this Court considers whether a trial court has abused its discretion, "the standard is 'whether the court perceived the issue as one of discretion, acted within the outer boundaries of its discretion and consistently with the legal standards applicable to the specific choices available to it, and reached its decision by an exercise of ...


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