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Regdab, Inc. v. Graybill

Supreme Court of Idaho

June 13, 2019

REGDAB, INC., an Idaho corporation, Plaintiff-Respondent,
v.
BUCK GRAYBILL and LAURIE GRAYBILL, husband and wife, and the marital community comprised thereof, Defendants-Appellants, and BORGES, LLC, an Idaho Limited Liability Company; CHRISTOPHER B. BORGES and ANNETTE E. BORGES, husband and wife, and the marital community comprised thereof; PATRICK N. FERRICK and NATALIA I. MAKEEVA, husband and wife, and the marital community comprised thereof; and QUICKEN LOANS, INC., a foreign corporation, Defendants.

          Appeal from the District Court of the First Judicial District of the State of Idaho, Bonner County. Barbara Buchanan, District Judge.

         The default judgment is vacated.

          Bistline Law, PLLC, Coeur d'Alene, for appellants.

          Stamper Rubens, P.S., Spokane, Washington, for respondent.

         SUBMITTED ON THE BRIEFS

          BRODY, JUSTICE

         Buck and Laurie Graybill (collectively, "Graybill") appeal an award of attorney fees to Regdab, Inc., following entry of a default judgment against them in an action to foreclose on a mechanic's lien. Graybill objected to the award of attorney fees and costs because Regdab failed to plead in its complaint a specific dollar amount for attorney fees in the event of default as required by Idaho Rule of Procedure 54(e)(4)(B). The district court ruled that the Rule 54(e)(4)(B) pleading requirement was inconsistent with Idaho Code section 45-513, the provision which mandates an award of certain costs and reasonable attorney fees in mechanic's lien foreclosure actions. The district court then granted Regdab's motion for default judgment and awarded the principal amount owed on the mechanic's lien plus $8, 134.62 in attorney fees and costs. Graybill timely appealed.

         We agree with Graybill that Regdab was required to plead a specific amount of attorney fees to be awarded in the event of default. Since Idaho Code section 45-513 does not contain any language specifying how fees are to be determined, imposing the Rule 54 pleading requirement is not inconsistent with the mandatory award language. We also reject Regdab's invitation to affirm the district court's decision on alternative grounds. Regdab contends that it filed a motion to amend its complaint to address the pleading deficiency and that the motion would have been granted by the district court if it had denied the award of fees. Regdab contends that Graybill would not have been prejudiced by an amendment. We disagree. Graybill relied on the complaint and its failure to contain a specific amount for attorney fees in making the decision not to defend the suit and actually tendered payment in full before the default judgment was entered. Accordingly, we vacate the default judgment and remand this case with instruction to enter a default judgment consistent with this opinion.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Regdab, Inc., operates a building supply business known as Badger Building Center. In the fall of 2016, Badger sold Borges, LLC, building materials to improve four residential properties in Sagle, Idaho, including materials valued at $5, 252.99 to improve the Graybill property. Regdab also recorded mechanic's liens against each property. After Borges failed to make payments as required, Regdab filed this action against Borges and the four property owners, alleging breach of contract, unjust enrichment, and lien foreclosure. In its prayer for relief, Regdab requested entry of a money judgment against each defendant, including the principal amount owed, interest, "and for attorneys' fees and costs incurred in this litigation pursuant to Idaho Code §12-120, Idaho Code §12-121, Idaho Code §45-513, and I.R.C.P. 54(e)." The complaint did not specify the amount of attorney fees to be awarded in the event of default.

         No party filed an answer and the district court granted Regdab's motion for default. Most of the defendants later settled with Regdab. When Regdab moved for entry of default judgment, Graybill responded by filing a motion to disallow the proposed award of attorney fees, arguing that Regdab failed to plead a specific dollar amount in its complaint as required by Idaho Rule of Procedure 54(e)(4)(B). Graybill also sent a check to Regdab for the principal amount owed plus costs (the filing fee, service of process, and the title report), to which no objection was made. Regdab refused payment and returned the check to Graybill's counsel.

         Regdab then filed a motion to amend its original complaint to include a specific dollar amount if a default judgment was entered. The district court denied this motion. It also denied Graybill's motion to disallow costs, ultimately concluding that Rule 54(e)(4)(B) was inconsistent with Idaho Code section 45-513, which mandates an award of certain costs and reasonable attorney fees in lien foreclosure actions. The district court granted Regdab's motion for default judgment and awarded a total of $8, 134.62 in attorney fees and costs. The total judgment award amounted to $13, 941.45. The district court also entered an order for the sale of the Graybill property. Graybill timely appealed to this Court, resulting in an Order for the Stay of Execution Pending Appeal that halted the sheriff's sale.

         II. STANDARD OF REVIEW

         This Court exercises free review over the application of procedural rules. Bailey v. Bailey, 153 Idaho 526, 529, 284 P.3d 970, 973 (2012). This Court also freely reviews questions of law. Campbell v. Parkway ...


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