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Smith v. Treasure Valley Seed Company, LLC

Supreme Court of Idaho

January 29, 2019

VICTORIA H. SMITH, by and through her attorney in fact, VERNON K. SMITH, by and through his Durable and Irrevocable Power of Attorney, Plaintiff-Appellant,
v.
TREASURE VALLEY SEED COMPANY, LLC, and DON TOLMIE, in is individual capacity, and as owner, representative and authorized agent of TREASURE VALLEY SEED COMPANY, LLC, Defendants-Respondents.

          Appeal from the District Court of the Fourth Judicial District of the State of Idaho, Ada County. Hon. Richard D. Greenwood, District Judge.

         The judgment of the district court is affirmed.

          Vernon K. Smith, Boise, attorney for appellant [1]

          BEVAN, Justice.

         I. Nature of the Case

         Vernon K. Smith appeals from the district court's award of sanctions. In a prior appeal in this case, we held that attorney fees could not be awarded against Smith under section 12-121 because Smith was counsel on the case, rather than a party to the case. We remanded this dispute for further proceedings to determine whether attorney fees should be awarded against Mr. Smith personally. On remand, the district court considered all options available to it and awarded attorney fees as a sanction under Idaho Rule of Civil Procedure 11, stating that the original case never should "have been brought in the fashion that it was," and that "the harm to be avoided . . . is the unnecessary expense and inconvenience of dealing with litigation [having] no legal basis." Thus, the district court found that the "conduct to be sanctioned was the fostering of litigation without legal grounds, by someone trained in the law." Smith now appeals and we affirm.

         II. Factual and Procedural Background

         This case originally arose from a contract for the sale of lima beans between Victoria H. Smith ("Victoria") and Treasure Valley Seed Company ("TVSC"). Smith by and through Smith v. Treasure Valley Seed Co., LLC, 161 Idaho 107, 108, 383 P.3d 1277, 1278 (2016) (Smith I). On December 13, 2013, Victoria's son, Vernon K. Smith ("Smith") filed a complaint against TVSC for breach of contract. Id. The original complaint named, as plaintiff, Victoria H. Smith, by and through her attorney in fact, Vernon K. Smith, by and through his "Durable and Irrevocable Power of Attorney." Id. at 108-09, 383 P.3d at 1278-79.

         On March 3, 2014, TVSC learned that Victoria had died on September 11, 2013, about three months before Smith's filing of the complaint. Id. at 109, 383 P.3d at 1279. Based on Victoria's death, TVSC moved to dismiss the complaint, arguing that there was no longer a real party in interest. Id. Smith argued that he was a real party in interest because the power of attorney he drafted was irrevocable. Id. The district court held that Smith's power of attorney terminated on Victoria's death and held that there was no real party in interest and thus granted TVSC's motion to dismiss. Id.

         TVSC then filed a timely memorandum of costs and requested attorney fees under Idaho Code section 12-120(3), Idaho Code section 12-121, and Idaho Rule of Civil Procedure 11(a)(1). Id. At the hearing for costs and fees, the district court reiterated that it granted TVSC's motion to dismiss because Smith's power of attorney terminated because of Victoria's death. Id. The court also stated that Victoria's estate should have brought the action, but because no probate had been filed, there was no real party in interest able to substitute or join. Smith I, 161 Idaho at 109, 383 P.3d at 1279. After ruling that the complaint was unreasonable and without foundation, the district court awarded attorney fees to TVSC under Idaho Code section 12-121, to be assessed jointly and severally against Victoria and Smith, as counsel. Id.

         Smith appealed both the dismissal of the case and the award of attorney fees, but his appeal of the dismissal was not filed timely, so this Court only addressed Smith's appeal of the attorney fees. Id. After upholding the district court because Smith's power of attorney for Victoria terminated upon her death, we determined that Smith was not authorized to sue on his mother's behalf, and as such he was not a party in interest for the issue of dismissal, even if Smith's appeal had been timely filed. Id. at 109-10, 383 P.3d at 1279-80. Even so, we held that since attorney fees had been awarded against Victoria and Smith jointly and severally, Smith was a "party aggrieved" by the judgment of the district court and was thus a real party in interest for the awarded attorney fees. Id. at 110, 383 P.3d at 1280. We then ruled that the district court erred in awarding attorney fees under Idaho Code section 12-121. Id. at 111, 383 P.3d at 1281. We so ruled because Smith was acting as counsel in pursuing the litigation; he was not a party to the case. Section 12-121 does "not authorize an award of attorney fees assessed against counsel." Id. We thus vacated the judgment for attorney fees, but we specifically noted that upon remand, the district court would not be limited in considering all legal bases for an award of attorney fees against Smith personally. Id. We even suggested that the trial court reconsider the avenues originally sought by TVSC, including Idaho Rule of Civil Procedure 11, or Idaho Code section 12-123(d). Id. at n.2.

         At the hearing on July 17, 2017, following remand, Smith argued that TVSC had to make a new request or motion for attorney fees, to which he could object before the matter moved forward. The district court disagreed, noting that requiring TVSC to file another motion seeking fees under the current iteration of Rule 11(a)(2) "would work an injustice." The district court noted that TVSC "made a proper request for attorney fees based on Rule 11 as it existed at the time the request was made. It was the legal error of the [c]ourt that led to the fees not being granted on the grounds that counsel violated Rule 11 in bringing the case." Thus, the district court decided the matter would go forward on the original motion and record, giving Smith fourteen days to file a brief setting forth any arguments he had regarding the request for fees as originally filed on April 17, 2014. Smith filed an untimely brief and affidavit on August 3, 2017. Even though the brief was untimely, the district court considered one of Smith's arguments about the requested attorney fees. Ultimately, the district court ruled that attorney fees would be awarded against Smith personally in the amount of $15, 826.50 (the amount awarded erroneously under section 12-121). The district court entered judgment accordingly on October 4, 2017. Smith timely filed an appeal on November 15, 2017.

         III. Issues on Appeal

         1. Did this Court establish the "law of the case" regarding the power of attorney which it stated in Smith I terminated upon the death of Victoria H. Smith?

         2. Did the lower court err in awarding attorney fees under Rule 11?

         IV. ...


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