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City of Middleton v. Coleman Homes, LLC

Supreme Court of Idaho

May 18, 2018

THE CITY OF MIDDLETON, Plaintiff-Counterdefendant-Respondent-Cross Appellant,
v.
COLEMAN HOMES, LLC, an Idaho limited liability company; WEST HIGHLANDS, LLC, an Idaho limited liability company; WEST HIGHLANDS SUBDIVISION HOMEOWNERS ASSOCIATION, INC., an Idaho corporation; WEST HIGHLANDS LAND DEVELOPMENT, LLC, an Idaho limited liability company, Defendants-Counterclaimants-Appellants-Cross Respondents.

         2018 Opinion No. 48

          Appeal from the District Court of the Third Judicial District of the State of Idaho, Canyon County. Hon. Christopher S. Nye, District Judge.

         The judgment of the district court is affirmed.

          Givens Pursley LLP, Boise of Appellant. Bradley Dixon argued.

          Borton-Lakey Law Offices, Meridian, for Respondents. Joseph W. Borton argued.

          BURDICK, CHIEF JUSTICE.

         Coleman Homes, LLC, West Highlands, LLC, West Highlands Subdivision Homeowner's Association, Inc., and West Highlands Land, LLC (collectively, "Appellants") bring this appeal from the Canyon County district court. Appellants entered into two agreements with the City of Middleton (the "City") regarding impact fees and public access space for the West Highlands Ranch Subdivision (the "Project") located in Middleton, Idaho. Soon thereafter, Appellants asserted the agreements were invalid and unenforceable. In response, the City sought a judgment from the district court declaring the agreements valid and enforceable. The parties eventually stipulated to the validity of the agreements. Both sides filed motions for summary judgment asking the district court to interpret the agreements. The district court ultimately ordered Appellants to designate 12.8 acres of land within the Project as public access space and ruled that Appellants were obligated to provide a financial guarantee, if necessary. Based on the summary judgment order, the district court found the City to be the prevailing party and awarded the City attorney fees under Idaho Code section 12-120(3). Appellants appeal the district court's prevailing party determination. The City cross-appeals the district court's fee award and ruling that Appellants are obligated to provide a financial guarantee, if necessary.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         In 2006, the City approved the Project's annexation, zoning, and preliminary plat. Appellants are four entities involved with the Project. Coleman Homes, LLC ("Coleman") is the developer who constructs and markets new homes within the Project. West Highlands, LLC ("West Highlands") is part owner of the land within the Project. West Highlands Subdivision Homeowner's Association, Inc. ("West Highlands Association") is the active homeowners' association charged with maintaining and managing the Project. West Highlands Land Development, LLC ("West Highlands Land") is also part owner of the land within the Project.

         Due to economic conditions in January 2009, progress on the Project slowed, and Thomas Coleman, owner of Coleman, sent a subsequent application to the City requesting modifications to the Project. In this correspondence, Mr. Coleman proposed that Coleman make certain park improvements, including "approximately 15.1 acres of individual parks with amenities" that would remain open for public use but be owned and maintained by West Highlands Association. The City approved the subsequent application in May of 2009.

         When the City originally approved the Project in 2006, the City did not have an impact fee ordinance. When the City approved the modifications to the Project in May of 2009, the City still did not have an impact fee ordinance. The City first adopted an impact fee ordinance in July of 2009-Ordinance 447. However, Ordinance 447 was repealed in July 2012. In the years between Ordinance 447's adoption and repeal, the City and Appellants worked toward a resolution regarding impact fees. These negotiations eventually led to the executing and recording of two agreements: the West Highlands Impact Fee Agreement and the Parks Dedication Agreement (collectively, "Agreements").

          The West Highlands Impact Fee Agreement ("IFA") was executed between the City, West Highlands, and Coleman. For purposes of this appeal, the relevant language of the IFA states:

4.3 Notwithstanding the above, in accordance with Idaho Code Section 67-8215(2), Developer [Coleman] shall not be subject to development impact fees or credits thereof subsequently adopted by the City for portions of the development where construction has commenced and is pursued according to the terms of the permit or development approval. . . . .
3. Financial Guarantee. In the event that Developer applies for building permits before completion of the equivalent service level of Parks and Streets, Developer shall provide one or more financial guarantees, the form of which shall be approved by the City, for Parks and Streets yet to be completed. . . . .
6. Attorneys' Fees and Costs. . . . In the event a suit or action is filed by either party against the other to interpret or enforce this Agreement, the unsuccessful party to such litigation agrees to pay to the prevailing party all costs and expenses, including attorneys' fees incurred therein, including the same with respect to an appeal.

         In sum, the IFA was an agreement that the City would not impose impact fees adopted in the future against Coleman and West Highlands for the Project.

         The Parks Dedication Agreement ("PDA") was executed between the City and West Highlands Association. The PDA ensured that areas within the Project would remain open to the public but were to be maintained and managed by West Highlands Association. For purposes of this appeal, the relevant language of the PDA states: "[t]he park lands in the Community subject to this Agreement shall be those park lands, constituting approximately 12.80 acres . . . ." The PDA, like the IFA, also mentions attorney fees. In that regard, paragraph nine of the PDA states: "Any dispute pertaining to the performance, interpretation or enforcement of this Agreement shall be subject to mediation. . . . The Parties shall share the mediator's fee and other costs of the mediation fees equally; provided, however, each Party shall bear its own legal fees."

         After repealing Ordinance 447, the City adopted a new impact fee ordinance in 2015- Ordinance 541.[1] The validity of the Agreements came into question at that time and the City sought declaratory relief that the Agreements were, in fact, valid and enforceable. The City began collecting impact fees from Appellants after Appellants repeatedly denied the enforceability of the Agreements.[2] On March 1, 2016, Appellants amended their original answer and conceded the validity of the Agreements. The district court entered an order on April 21, 2016, declaring the Agreements were valid and enforceable. The City returned all fees collected during the course of this initial litigation to Appellants on April 22, 2016.

         The parties then filed cross-motions for summary judgment asking the district court to interpret the Agreements. Appellants argued the Project was responsible for 6.92 acres of public access space under the PDA. Conversely, the City argued the Project was responsible for 15.1 acres of public access space under the PDA. The district court found the terms of the PDA were plain and unambiguous; the Project was responsible for 12.8 acres of public access space. The district court ordered Coleman to develop and designate 12.8 acres of land within the Project as open space available to the public and such space was to be owned, maintained, and operated by West Highlands Association. Additionally, the court ordered that "Coleman must provide one or more financial guarantees if Coleman applie[d] for building permits before completi[ng] the equivalent service level of parks and streets."

         The judgment was signed by the district court judge on November 2, 2016, and filed by the clerk on November 7, 2016. Both sides filed petitions for attorney fees and costs. The City and Appellants both sought to enforce the IFA in regards to attorney fees, but neither cited the PDA. The City's attorney fees amounted to $37, 397.55. Appellants' attorney fees amounted to $120, 847.50. Appellants moved to strike the City's petition for attorney fees and costs alleging the petition was untimely filed and served, but that motion was denied.

         The district court ultimately found the City to be the prevailing party and awarded attorney fees, in the amount of $28, 048.17, under Idaho Code section 12-120(3). Appellants timely appealed the district court's prevailing party determination and the district court's finding that the City's petition for attorney fees was timely served and filed. The City cross-appealed the district court's attorney fees award and a purported clerical error in the second amended judgment listing West Highlands as the party obligated to provide a financial guarantee, as opposed to Coleman.

          II. ISSUES ON APPEAL

1. Whether the district court abused its discretion in declaring the City the prevailing party.
2. Whether the district court's finding that the City's petition for attorney fees and costs was timely filed and served is based on substantial and competent evidence.
3. Whether the district court abused its discretion in awarding the City attorney fees in the amount of $28, 048.17.
4. Whether the district court erred in the second amended judgment by ruling that West Highlands, LLC was obligated to provide the City a "financial guarantee."

         5. Whether Appellants or the City are entitled to attorney fees on appeal.

         III. ANALYSIS

         A. The district court did not abuse its discretion in declaring the City the prevailing party.

         The prevailing party determination is within the "sound discretion of the district court and will not be disturbed absent an abuse of discretion." Oakes v. Boise Heart Clinic Physicians, PLLC, 152 Idaho 540, 542, 272 P.3d 512, 514 (2012) (citing Jorgensen v. Coppedge, 148 Idaho 536, 538, 224 P.3d 1125, 1127 (2010)).

When examining whether a district court abused its discretion, this Court considers whether the district court: (1) perceived the issue as one of discretion; (2) acted within the outer boundaries of that discretion and consistently within the applicable legal ...

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