616 Inc. v. Mae Properties, LLC ( 2023 )

IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket. No. 49190
616 INC., an Idaho corporation, )
)
Plaintiff-Counterdefendant- )
Appellant-Cross Respondent, )
)
v. )
)
MAE PROPERTIES, LLC, an Idaho limited )
liability corporation; PULLOVER PRINTS )
CORPORATION, an Idaho corporation; and )
Boise, November 2022 Term
JAMES C. ELLIS, an individual, )
)
Opinion Filed: February 8, 2023
Defendants-Counterclaimants- )
Third Party Plaintiffs-Respondents- )
Melanie Gagnepain, Clerk
Cross Appellants, )
)
and )
)
RAYMOND SMITH, an individual, )
SHANNON SMITH, an individual, and )
DOES 1-100. )
)
Third Party Defendants. )
_______________________________________ )
Appeal from the District Court of the Fourth Judicial District of the State of Idaho,
Ada County. Jonathan Medema, District Judge.
The decisions and judgment of the district court are affirmed.
McConnell Wagner Sykes & Stacey, PLLC, Boise, for Appellant/Cross-
Respondent. Chad Nicholson argued.
Perkins Coie, LLP, Boise, for Respondents/Cross-Appellants. David Krueck
argued.
____________________________
BRODY, Justice.
This appeal addresses whether a contract for the sale of business assets also contained
language conveying an enforceable leasehold interest in real property in favor of the buyer. At
summary judgment, the district court determined that the Ellis Family Trust owned the real
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property underlying this leasehold dispute, and that the contract selling the assets of Pullover Prints
Corporation (“PPC”) to 616 Inc. (“616”) did not convey a leasehold interest to 616 because
material terms necessary to form a valid and enforceable lease were missing. Instead, the district
court concluded that the contract involving the sale of assets only contained an “agreement to
agree” on the terms of a written lease at a later date. Accordingly, the district court entered
judgment in favor of the Ellis Family Trust.
616 appeals and argues that all material terms necessary to form a valid and enforceable
lease can be found within the asset contract. Thus, 616 claims the district court erred when it
granted summary judgment in favor of the Ellis Family Trust. In addition, Respondents PPC, Mae
Properties, LLC (“Mae”), and Ellis in his individual capacity and in his capacity as trustee for the
Ellis Family Trust, cross-appeal the district court’s decision regarding their collective motion for
attorney fees. For the reasons discussed below, we affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Factual Background
Roughly three years before this lawsuit arose, James Ellis and Cherie Ellis formed the Ellis
Family Trust. The property placed into the trust includes the real property underlying this leasehold
dispute, i.e., a commercial parcel located at “9990 West State Street in the city of Boise, Idaho[.]”
The district court found, and no party disputes, that the Ellis Family Trust, with James Ellis as its
trustee, owns the underlying real property for purposes of this leasehold dispute.
In November 2018, roughly one year after the Ellis Family Trust was created, PPC—a
business operated by James Ellis on the commercial parcel at issue—sold its business assets and
personal property to another company—616. To memorialize the terms of the sale, the parties
executed an Agreement to Purchase Business Assets (“the APA”), and within it, incorporated a
separate list which would enumerate the personal property sold to 616 (“the Asset List”). Although
the exact date was disputed at oral argument, the Asset List was finalized no later than March
2019, roughly three months after the sale of assets was consummated.
The APA recites that it is an agreement between just two entities: PPC and 616. However,
paragraph six of the APA contains promises by: PPC, 616, and “Ellis [(individually)] or MAE
Properties [(Mae)][.]” See Section III.A, infra (quoting paragraph six in full). Paragraph six is the
“lease” provision at the center of this dispute wherein 616 maintains that the APA, when read
along with the incorporated Asset List, conveys to 616 a five-year leasehold interest in the
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commercial parcel with a “monthly” rent of $3,000 and an option to extend the lease term. The
APA is signed by Raymond Smith and Ellis; however, it is unclear whether “either person was
signing for themselves or in their capacity as an officer or employee of any of the corporations.”
Nevertheless, the district court found, and the parties do not dispute, that there were three
signatories to the APA: Smith in his capacity as an officer of 616, Ellis in his capacity as an officer
of PPC, and Ellis in his individual capacity. The same day the APA was executed, the parties also
signed a supplemental escrow instruction that “the creation and execution of the property lease
and or rent, security deposit or payments associated thereto, will not be addressed through the
escrow closing” for the APA.
At the time the APA was executed, nothing in the record indicates that PPC had “any
interests in the [underlying] real property (i.e., land or building), such as a leasehold.” Also,
“[t]here are at least two, but possibly more, buildings on the land that is the subject of this dispute.”
There is a building in which PPC was apparently conducting its business and storing its personal
property relevant to the APA. There were (are) also “additional tenants in the same building and
perhaps an attached but other-wise separate building (i.e., a second building sharing a common
wall with the first), and there was another entity, not named in this suit, using another smaller
building in a different area of the lot.”
After the APA was executed, 616 took actual possession of a unit that PPC was apparently
operating on the underlying property: Suite 100. Since that time, 616 has sent a $3,000 rental
payment to Mae each month. In the roughly 18 months between the execution of the APA and the
filing of 616’s complaint, the record reflects that the parties continued to negotiate the terms of a
lease for the underlying commercial parcel for 616.
B. Procedural Background
In June 2020, apparently under the belief that Mae owned the underlying commercial
parcel, 616 filed a complaint against PPC, Mae, and Ellis (individually) seeking a declaration that
the APA contained a valid and enforceable lease for a portion of the underlying commercial parcel.
616 also sought declaratory relief concerning the terms of building maintenance, electricity, and
access under the APA if it was declared a valid and enforceable lease. Roughly one month later,
PPC, Mae, and Ellis (individually) answered the complaint. PPC, Mae, and Ellis (individually)—
apparently also under the belief that Mae owed the underlying commercial parcel—denied that the
APA contained a valid and enforceable lease, and instead asserted that the APA was an agreement
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to agree on the terms of a future lease that was never successfully negotiated. According to PPC,
Mae, and Ellis (individually), 616 had a month-to-month tenancy which was terminable at will.
Alleging 616 refused to enter into a commercial lease agreement after the APA was
executed, PPC, Mae, and Ellis (individually) also counterclaimed against 616 for breach of
contract, breach of the implied covenant of good faith and fair dealing, fraud in the inducement,
tortious interference with contract, interference with a prospective economic advantage, and
violation of the Idaho Consumer Protection Act (I.C. §§ 48-601 to -619). PPC, Mae, and Ellis
(individually) also filed a third-party complaint against Raymond Smith and Shannon Smith
alleging the same causes of action and adding a claim for violation of the Revised Uniform Law
on Notarial Acts (I.C. §§ 51-101 to -133). Under the Notarial Acts claim, PPC, Mae, and Ellis
(individually) alleged that Shannon Smith’s notarial act on the APA—later used to record the
APA—should be declared void because she was the spouse of a party to the APA with a direct
beneficial interest in it (i.e., Raymond Smith, President of 616). Ellis (individually) did not dispute
that it was his signature on the APA. In their prayer for relief, PPC, Mae, and Ellis (individually)
asked for, among other things, $1,650,000 in damages due to the alleged actions of 616 and the
Smiths that caused the loss of a sale of the underlying commercial parcel to another entity.
Two months later, PPC, Mae, and Ellis (individually) amended their pleadings (their
answer, counterclaim, and third-party complaint) to clarify the interests at stake and to add Ellis in
his capacity as trustee of the Ellis Family Trust. The amended pleading clarified that Mae is the
property manager for Suite 100 on the underlying commercial parcel; Ellis, in his individual
capacity, is an owner of Mae; Ellis is an officer of PPC; and Ellis is a trustee of the Ellis Family
Trust. More importantly, the amended pleading clarified that the Ellis Family Trust owned the
underlying commercial parcel—not Mae, PPC, or Ellis (individually).
One month later, in October 2020, after a motion by 616 and the Smiths, the district court
dismissed the following claims brought by Mae: breach of contract, breach of the implied covenant
of good faith and fair dealing, tortious interference with contract, and the Idaho Consumer
Protection Act claim. The district court granted the motion largely because, after taking the
pleadings as true, there were no facts alleged that would entitle Mae to relief since Mae did not
allege it was a party to the APA, or that it had any other agreement with 616 or the Smiths. After
the motion was granted, PPC, Mae, and Ellis (individually and as trustee) obtained new counsel,
and by way of a stipulation and order granting leave, amended their pleadings a second time.
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The original answer filed by PPC, Mae, and Ellis (individually) did not change. However,
PPC, Mae, and Ellis (trustee) amended their counterclaims and third-party complaint to plead only
a competing claim for a declaratory judgment seeking a ruling that the APA conveyed no interest
in the underlying commercial parcel to 616, a claim to quiet title to the underlying commercial
parcel in the Ellis Family Trust, and a Notarial Acts claim which had been pleaded previously.
Rather than designate only Ellis (as trustee) as the counterclaimant in the declaratory judgment
and quiet title claims, PPC and Mae added themselves as parties to those claims (while Ellis in his
individual capacity remained a party to the leasehold dispute by virtue of 616’s original complaint).
In addition, PPC, Mae, and Ellis (individually and as trustee—although it is unclear by the
pleadings) all appear to have jointly pleaded the Notarial Acts claim. Based on the record on
appeal, no party afterwards amended their pleadings or moved to dismiss any other party from any
of the competing claims for declaratory relief, the quiet title counterclaim, or the third-party
complaint against Shannon Smith for her allegedly improper notarial act.
Five months later, in May 2021, PPC, Mae, and Ellis (individually and as trustee) moved
for summary judgment on their claims. In response, 616, without filing a separate motion,
contended it was entitled to summary judgment and declaratory relief that the APA conveyed a
leasehold interest to it. At the summary judgment hearing, all parties agreed that as to the leasehold
dispute, the writings the district court was being asked to interpret (the APA and incorporated
Asset List) were unambiguous and that there were no disputed issues of material fact. Two months
after the hearing, the district court issued its written decision.
The district court determined that the APA and incorporated Asset List did not contain
language forming a valid and enforceable lease agreement. Instead, the writings contained only an
agreement to sell PPC’s business assets to 616 and for Ellis (individually) to work for 616 as a
consultant. Based on these conclusions, the district court quieted title to the underlying commercial
parcel in favor of the Ellis Family Trust and declared that 616 had no rights or responsibilities
under the writings as to the underlying property. Instead, the district court declared that 616 has,
at most, a tenancy at will in Suite 100 of the underlying commercial parcel. In other words, as to
the leasehold dispute, the district court granted summary judgment in favor of Ellis (as trustee) on
behalf of the Ellis Family Trust (not PPC, Mae, or Ellis in his individual capacity). The district
court also granted summary judgment in favor of PPC and Ellis (individually) on the Notarial Acts
claim (reasoning that Mae, and Ellis in his capacity as trustee were not signatories to the APA)
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and declared the notarial act by Shannon Smith on the APA void. As the writings did not form a
valid and enforceable lease, the district court did not reach 616’s ancillary claim for declaratory
relief over the purported terms of maintenance, electricity, and access.
Ten days after the district court entered final judgment, PPC, Mae, and Ellis (individually
and as trustee) (collectively “Defendants/Counterclaimants”), moved for attorney fees and costs
as the prevailing parties under Idaho Rule of Civil Procedure 54, Idaho Code sections 10-1210,
12-120(3), and 12-121, and the APA. Defendants’/Counterclaimants’ motion did not apportion the
attorney fees between the parties or the claims asserted and defended. Instead,
Defendants/Counterclaimants submitted a lump sum request in the amount of $68,346.47. In
support of their motion, Defendants/Counterclaimants attached invoices for the attorney fees
addressed to Mae—but not any of the other Defendants/Counterclaimants. Within these invoices
were charges related to all Defendants/Counterclaimants pertaining to, among other things,
discovery, depositions, demand letters, consultations, motions in the leasehold dispute, the
ongoing landlord-tenant problems between 616 and Mae, and the Notarial Acts claim.
Four days after the filing of Defendants’/Counterclaimants’ motion for fees and costs, 616
moved for reconsideration of the district court’s grant of summary judgment. Twenty-one days
after that, the district court denied 616’s motion for reconsideration and issued a separate written
decision on Defendants’/Counterclaimants’ motion for fees and costs. In its decision, the district
court determined that the only prevailing party in the dispute over the leasehold interest of 616
was the Ellis Family Trust (and Ellis as trustee). As to the Notarial Acts claim, the district court
concluded that only PPC and Ellis (individually) were prevailing parties. From this, the district
court granted in part and denied in part Defendants’/Counterclaimants’ motion for costs; denied
their motion for attorney fees under Idaho Code sections 12-120(3), 12-121, and 10-1210; denied
their motion for fees in the leasehold dispute under the APA; and awarded “$0” to PPC and Ellis
(individually) under the APA as the “reasonable amount of fees to which they are entitled” for
prevailing on the Notarial Acts claim.
616 timely appealed the grant of summary judgment regarding the leasehold dispute (and
on a right of first refusal issue that 616 has since withdrawn). Defendants/Counterclaimants timely
cross-appealed the district court’s decision on their joint motion for attorney fees under the APA
and Idaho Code section 12-120(3).
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II. STANDARD OF REVIEW
“In an appeal from an order of summary judgment, this Court’s standard of review is the
same as the standard used by the trial court in ruling on a motion for summary
judgment.” Holdaway v. Broulim’s Supermarket, 158 Idaho 606, 609, 349 P.3d 1197, 1200 (2015)
(internal quotations and citation omitted). Under Idaho Rule of Civil Procedure 56(a), a party is
entitled to summary judgment “if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Bedard & Musser v. City
of Boise City, 162 Idaho 688, 689, 403 P.3d 632, 633 (2017). “If there is no genuine issue of
material fact, only a question of law remains, over which this Court exercises free review.” Miller
v. Idaho State Patrol, 150 Idaho 856, 863, 252 P.3d 1274, 1281 (2011) (internal quotations and
citation omitted).
We review a district court’s decision on a motion for attorney fees for an abuse of
discretion. Caldwell Land & Cattle, LLC v. Johnson Thermal Sys., Inc., 165 Idaho 787, 795, 452
P.3d 809, 817 (2019). Under the abuse of discretion standard, this Court conducts a four-part
inquiry to determine whether the trial court: “(1) correctly perceived the issue as one of discretion;
(2) acted within the outer boundaries of its discretion; (3) acted consistently with the legal
standards applicable to the specific choices available to it; and (4) reached its decision by the
exercise of reason.” Lunneborg v. My Fun Life, 163 Idaho 856, 863, 421 P.3d 187, 194 (2018).
III. ANALYSIS
A. The APA and Asset List lack the material terms necessary to form a valid and
enforceable commercial lease agreement for a term exceeding one year.
In its summary judgment decision, the district court concluded that the APA (and
incorporated Asset List) are missing two of the material terms necessary to form a valid and
enforceable lease agreement: a sufficient description of the real property to be leased and the “time
and manner” for payment of rent. The district court acknowledged that even though the APA
referenced a lease, that language constituted an unenforceable “agreement to agree.” Accordingly,
the district court determined that the APA did not convey a leasehold interest to 616 and granted
declaratory relief in favor of, and quieted title in, the owner of the property underlying the
leasehold dispute—the Ellis Family Trust.
On appeal, 616 argues that the APA (and incorporated Asset List) sets forth all material
terms necessary to form and convey a valid and enforceable leasehold interest to 616 in Suite 100
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of the underlying commercial parcel. 616 further argues that the doctrine of part performance—
along with parol evidence of what unit 616 possessed and improved, and the practice of 616 paying
Mae rent at the beginning of each month—cures any deficiencies in the APA as to the material
terms necessary to form a lease agreement. In response, Defendants/Counterclaimants maintain
that the district court correctly concluded the APA omits material terms necessary to form a valid
lease agreement, and that the doctrine of part performance does not apply to supply the missing
terms. For the reasons discussed below, we affirm.
There are two steps to determining whether a party has a valid and enforceable leasehold
interest in real property for a term exceeding one year. First, the parties must form a lease contract
with all material terms. See Gaskill v. Jacobs, 38 Idaho 795, __, 225 P. 499, 500 (1924). There are
four necessary terms: (1) “a definite agreement as to the extent and bounds of the property leased”;
(2) “a definite and agreed term [(length of time)]”; (3) “a definite and agreed price of rental,” and
(4) “the time and manner of payment.” Id. (alteration added) (quoting Jones on Landlord and
Tenant, at 170, § 173a); see also Bennett v. Richards, 80 Idaho 140, 144, 326 P.2d 986, 988 (1958).
If any of these material terms are left for future negotiations, no lease contract comes into being,
leaving a mere “agreement to agree.” Syringa Networks, LLC v. Idaho Dep’t of Admin., 155 Idaho
55, 63, 305 P.3d 499, 507 (2013).
Second, because the term of the alleged lease at issue exceeds one year, the Statute of
Frauds requires that the contract be memorialized in writing and “subscribed by the party sought
to be charged[,]” or it is “invalid” and unenforceable, i.e., the contract does not convey the
leasehold interest. I.C. §§ 9-503, 9-505(4). To satisfy the Statute of Frauds, the “essential elements
of the agreement cannot rest in parol [evidence.]” Bennett, 80 Idaho at 145, 326 P.2d at 988(quoting Raff v. Baird, 76 Idaho 422, 427, 283 P.2d 927, 930 (1955)).
However, if a contract to lease real property for a term exceeding one year was formed
notwithstanding compliance with the Statute of Frauds (e.g., there is an oral contract that contains
all material terms), courts retain their equitable power to “compel the specific performance of [that]
agreement, in case of part performance thereof.” I.C. § 9-504. In other words, where there is
sufficient evidence of a lease contract for a term exceeding one year that is “definite and certain in
all of its material terms[,]” it may be specifically enforced—even if it is not memorialized in
writing—based on the doctrine of part performance. See Dante v. Golas, 121 Idaho 149, 152, 823
P.2d 183, 186 (Ct. App. 1992).
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Here, 616 argues that the APA (and the incorporated Asset List) evidences the complete
agreement necessary to both form a valid lease contract, and sufficiently memorialize that contract
in writing. In other words, 616 relies solely on written language to evidence both contract
formation and compliance with the Statute of Frauds. Thus, the two-step inquiry merges into one
in this dispute, with the central question being whether the written language contains the material
terms necessary to form a lease contract.
As to material terms, the only dispute is whether the language in the APA (and incorporated
Asset List) contain (1) “a definite agreement as to the extent and bounds of the property leased”;
and (2) “the time and manner of payment” for the agreed rental price. The language relevant to the
leasehold dispute is found in the following provisions of the APA:
THIS AGREEMENT TO PURCHASE BUSINESS ASSETS
(“Agreement”) is made Effective as of the last date set forth on the signature page
below (“Effective Date”) by and between PULLOVER PRINTS
CORPORATION, an Idaho General Business Corporation (“Seller”) and 616 INC.
(RAYMOND SMITH, PRESIDENT) or his assigns, (“Buyer”). Seller agrees to
sell, and Buyer agrees to buy, all of the business assets of Pullover Prints
Corporation (“Business”) located at 9990 W. State Street[,] Boise, Idaho 83714
(“Business Premises”), subject to the terms and conditions of this Agreement.
Buyer and Seller may be referred to in this Agreement individually as a “Party” or
collectively as the “Parties”.
[. . . .]
2. ASSETS INCLUDED: All Assets of the Business located on the
Business Premises or otherwise utilized in the operation of the Business (“Assets”)
shall be included in the purchase contemplated by this Agreement, except cash of
the Business and minor personal items. Assets include, but are not limited to, all
shop equipment, manufacturing jigs, raw materials, finished goods, computers,
office equipment, fixtures, email accounts, email addresses, website and domain
name­www.pulloverprints.com, the name of the Business-Pullover Prints, all phone
and fax numbers associated with the Business and/or the Business Premises,
maintenance equipment, customer lists, files, vendor information, necessary
licensing of hardware and software, or other required business operation licensing.
A complete list of Assets shall be provided by Seller within 10 days of the Effective
Date (“Asset List”), which shall be attached and incorporated into this Agreement
as Exhibit B upon receipt by Buyer from Seller. (i) One-Hundred Fifty Thousand
Dollars ($150,000.00) of the Purchase Price shall be allocated to the portion of the
Assets· included in Exhibit B. (ii) One-Hundred Fifty Thousand Dollars
($150,000.00) of the Purchase Price shall be allocated to the portion of Goodwill
value.
[. . . .]
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5. CONTINGENCIES: This agreement is subject to the contingencies
noted below. All contingencies shall be deemed removed, unless written notice of
inability to remove contingencies is received within thirty days (15 days) [sic] of
acceptance, or Closing, whichever comes first. [sic]:
[. . . .]
(d) Buyer will have thirty (30) days from the date of acceptance of this
agreement to obtain financing, review Seller's documents, evaluate the
Business, establish a written Consulting Agreement with Seller, and
establish a written Property Lease.
In the event that any of the forgoing contingencies are not satisfied, in
Buyer’s sole discretion and for any reason, by the Closing Date, Buyer may
elect to terminate this Agreement and will be of no further force or effect.
[. . . .]
6. LEASE OF BUSINESS PREMISES: Seller represents and warrants
that Seller and/or Seller’s sole member, Jim Ellis, owns and/or has the authority to
lease the Business Premises to Buyer. Seller and/or Jim Ellis or MAE Properties
hereby agrees to lease the Business Premises to Buyer for a term of five (5) years,
commencing on the Closing Date, with a monthly rental payment of Three-thousand
[sic] Dollars ($3,000.00) per month, terminable at Buyer’s will with a 60 day
written notice (“Lease Agreement”). First month rent shall be at no charge. Such
Lease Agreement shall also give Buyer the option to extend the term of the Lease
Agreement for an additional period of monthly, three (3) or five (5) years. Rent for
each such additional month after the initial five (5) year term shall be Three-
Thousand Five-Hundred Dollars ($3,500.00) per month. Landlord shall pay all real
property taxes, building maintenance, natural gas, water, sewer, garbage. Landlord
shall grant Buyer first right of refusal should Seller decide to sell property. Buyer
(Tenant) shall pay for insurance on equipment, general business liability, umbrella
policy and utilities not included above.
[. . . .]
17. SURVIVABILITY OF CONTRACT: This contract shall survive the
Closing as to the terms and conditions so specified herein.
(Bold in original and italics added.)
The other relevant language relied upon by 616 is found in the Asset List which was
expressly incorporated by reference into the APA. The Asset List was organized into eight
different work areas (e.g., “Front Showroom,” “Vinyl Area,” “Embroidery Area”) with a list of
property found in each area. There were also several groups of supplies (e.g., “Embroidery Area –
Supplies” and “Screen Print Area – Supplies”) and some miscellaneous property (e.g., “Digital
Printing Equipment” and “Inventory”), see, infra. For the reasons discussed below, even when the
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APA and Asset List are taken together, the language between the two writings does not contain all
material terms necessary to form a lease contract.
1. The APA and Asset List do not contain a definite and certain agreement as to the
general “extent and bounds” of the real property to be leased.
When it comes to the sale of real property, the Statute of Frauds applies, Lexington Heights
Dev., LLC v. Crandlemire, 140 Idaho 276, 283, 92 P.3d 526, 533 (2004), and the “written
instrument purporting to convey real property must contain a sufficient description of the
property.” City of Kellogg, 135 Idaho at 244, 16 P.3d at 920. “A description contained in a deed
will be sufficient so long as quantity, identity or boundaries of property can be determined from
the face of the instrument, or by reference to extrinsic evidence to which it refers.” Lexington
Heights Dev., LLC, 140 Idaho at 281–82, 92 P.3d at 531–32 (quoting City of Kellogg, 135 Idaho
at 244, 16 P.3d at 920). The writing memorializing the agreement must “contain a description of
the property, either in terms or by reference, so that the property can be identified without resort
to parol evidence.” Ray v. Frasure, 146 Idaho 625, 628, 200 P.3d 1174, 1177 (2009).
Importantly, “reasonable certainty” is not enough. Id. at 629–30, 200 P.3d at 1178–79.
Instead, the writing must contain a property description that designates “exactly” what property is
being conveyed. Id.; see, e.g., Lexington Heights Dev., LLC, 140 Idaho at 281–82, 92 P.3d at 531–
32 (holding that a writing inadequately described the exact property to be sold when it did not
identify the boundaries of the five acre parcel that was to be reserved from the sale of a ninety-five
acre parcel). Along these lines, we have said that a physical address alone is insufficient to describe
the exact property to be sold because “[t]he physical address gives no indication of the quantity,
identity, or boundaries of the real property.” Ray, 146 Idaho at 630, 200 P.3d at 1179.
In contrast, what counts as a sufficient description of real property to be leased is less
onerous than what is required for a sale. To lease real property, the parties must “expressly or
impliedly agree” on the “general[,]” Wing v. Munns, 123 Idaho 493, 499, 849 P.2d 954, 960 (Ct.
App. 1992), “extent and bounds of the property to be leased[,]” Gaskill, 38 Idaho at __, 225 P. at
500. See, e.g., Wing, 123 Idaho at 499, 849 P.2d at 960 (holding that there was insufficient evidence
that the parties ever agreed on the general “extent and bounds” of the property to be leased where
there was no discussion over whether the lease included three or four acres, the mobile home, a
well, and an additional acre for machinery on a 320 acre farm), aff’d 123 Idaho 463, 463, 849 P.2d
924, 924 (1993) (reaching the same conclusion); Gaskill, 38 Idaho at __, 225 P. at 500 (holding
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that a writing’s reference to an unidentified “storeroom” then “occup[ied]” was too “indefinite and
uncertain” to sufficiently describe the general “extent and bounds of the property to be leased”).
The district court correctly concluded that the physical address referenced in paragraph six
of the APA (“Business Premises”), does not provide a sufficient description of the general “extent
and bounds” of the property to be leased. Although the property description required for a lease of
real property is less demanding than that required for a sale, a physical address alone “gives no
indication of the quantity, identity, or boundaries of the real property” to be leased. See Ray, 146
Idaho at 630, 200 P.3d at 1179. Thus, we move to 616’s central argument: Whether the
incorporated Asset List—along with the physical address—provides a sufficient description of the
general “extent and bounds” of the property to be leased. We conclude that it does not.
The Asset List described the personal property PPC conveyed to 616, and relevant to 616’s
argument here, the Asset List used the following headings to indicate where those items were
apparently located at the underlying property (i.e., what rooms or areas PPC allegedly occupied at
the physical address): “Front Showroom”; “Vinyl Area”; “Embroidery Area”; “Artwork Room –
Jaymee’s Office”; “General Office Area”; “Office Area Storage/Break Room”; “Screen Print
Area”; and “Screen Development Room.” In pointing to these rooms, 616 argues that the Asset
List supplies a sufficient description of the property to be leased because “there is no other unit”
at the physical address provided in the APA “that contains these areas.” However, 616’s argument
fails for two reasons.
First, 616 improperly relies on extrinsic evidence that is not referenced in, or on the face
of, the APA or the incorporated Asset List. Whether “no other unit” at the physical address has the
rooms named in the Asset List—and whether those rooms were in fact those occupied by PPC to
then be occupied by 616 after the consummation of the APA—is not answered by the APA or
Asset List. Instead, those questions are answered by a declaration from Raymond Smith (President
of 616). This is extrinsic evidence that 616 cannot use to supply the “extent and bounds” of the
property to be leased when 616 does not contend that any language in the APA or incorporated
Asset List is ambiguous. See Bennett, 80 Idaho at 145, 326 P.2d at 988 (explaining that to satisfy
the Statute of Frauds, the “essential elements of the agreement cannot rest in parol [evidence.]”).
Thus, the contents of Smith’s declaration cannot be considered.
Second, with that extrinsic evidence set aside, the language in the APA and Asset List does
not contain a sufficient description of the general “extent and bounds” of the property to be leased.
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This is because the APA and Asset List do not identify, locate, or explain what property, and to
what extent (or with what boundaries) is to be leased to 616. And even when the physical address
is considered alongside the rooms’ headings mentioned in the Asset List, nothing in the writings
identifies the mentioned rooms as being within any particular location, building(s), or otherwise
at the physical address. Instead, the mentioning of rooms in the Asset List—without more—is just
as “indefinite and uncertain” as naming an unidentified “storeroom” in Gaskill, 38 Idaho at __,
225 P. at 500.
More importantly, nothing in the writings reflects that those rooms form the general extent
and bounds of the property to be leased. Instead, when the physical address and the mentioned
rooms are taken together, these writings could be leasing the entire parcel, a particular portion(s)
of the parcel, a particular building(s) on the parcel, or a particular room(s) within one or more
buildings on the parcel at the underlying physical address. There is no way to determine which
combination is the purported “agreement” from face of the APA and Asset List. Without this, the
writings fail to reflect a definite and certain agreement on the general “extent and bounds” of what
will be leased no different than the lack of a definite agreement in Wing, 123 Idaho at 499, 849
P.2d at 960.
In sum, we agree with the district court that the APA and Asset List do not contain a
sufficient description of the real property to be leased. Thus, a material element required to form
a lease contract is missing and the Statute of Frauds is not satisfied.
2. The APA does not contain a definite and certain agreement as to the “time and manner
of payment” for the agreed rental price.
616 also challenges the district court’s conclusion that the APA is missing a second
material term necessary to form a lease contract: a definite and certain agreement on the “time and
manner of payment” for the agreed rental price. 616 asserts that the district court erred in two
ways: (1) the word “monthly” in the APA is definite enough to set the “time and manner of
payment” as the first of the month; and (2) the parties’ practice (after the APA was executed) of
treating rent as due on the first of each month cures any uncertainty over the agreed “time and
manner of payment.” For the reasons below, 616’s points are unpersuasive.
In the APA, the word “monthly”—standing alone—does not reflect a definite and certain
agreement on the “time and manner of payment” for the agreed rent. The APA provides that 616 is to
pay a “monthly rental payment of Three-thousand Dollars ($3,000.00) per month[.]” This is more
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definite than the writing at issue in Gaskill which included the overall term but omitted any
reference to the “time and manner of payment” for the agreed rent. See 38 Idaho at __, 225 P. at499–500 (providing “for a term of two years at a rental of $100 in advance”). Nevertheless, the
APA does not state what day rent is due each month (time), how rent is to be paid or applied (manner),
or to whom rent is due (manner). Without these details, the APA, on its face, does not include a definite
and certain agreement on the “time and manner of payment” for the agreed rental price.
616 attempts to cure this facial defect by pointing to evidence in the record that the parties
adopted the practice of treating the rent as due to Mae on the first of each month. However, this practice
was adopted after the APA was executed and is nowhere referenced in the APA. As noted above, 616
cannot use extrinsic evidence to supply a missing material term from a writing 616 also contends is
unambiguous. Instead, as the district court pointed out, the mutual practice of treating rent as due to
Mae on the first of the month—after 616 took physical possession and made improvements—is entirely
consistent with a tenancy at will in the absence of a lease contract. Thus, as the district court concluded,
a second material element required to form a lease contract is missing from the APA which also means
it does not satisfy the requirements of the Statute of Frauds.
3. The doctrine of part performance does not apply to supply the missing material terms
necessary to form a complete lease contract.
Finally, 616 argues that its “part performance” in possessing and improving Suite 100 at
the underlying property cures any uncertainty or indefiniteness in the APA and Asset List such
that a complete lease contract was formed and can be specifically enforced regardless of the Statute
of Frauds. In other words, 616 argues that where the writings are missing a sufficient description
of the “extent and bounds” of the property to be leased, and definite and certain agreement on the
“time and manner of payment” for the agreed rent, 616’s unilateral actions after the writings were
executed cures any defects in the writings to both form a complete lease agreement and negate the
Statute of Frauds. 616’s argument misapplies the doctrine of part performance.
“The doctrine of part performance provides that when the parties to an agreement fail to
reduce the agreement to writing, or otherwise fail to satisfy the [S]tatute of [F]rauds, the agreement
‘may nevertheless be specifically enforced when the purchaser [or lessee] has partly performed the
agreement.’ ” Chapin v. Linden, 144 Idaho 393, 396, 162 P.3d 773, 775 (2007) (alterations added)
(quoting Bear Island Water Ass’n, Inc. v. Brown, 125 Idaho 717, 722, 874 P.2d 528, 533 (1994)).
In other words, the part performance doctrine is an exception to the Statute of Frauds and can allow
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for specific enforcement of a formed contract (not reduced to writing) in equity. See I.C. § 9-504;
Dante, 121 Idaho at 152, 823 P.2d at 186.
However, “ ‘[u]nder Idaho law, part performance per se does not remove a contract from
operation of the [S]tatute of [F]rauds. Rather, the doctrine of part performance is best understood
as a specific form of the more general principle of equitable estoppel.’ ” Chapin, 144 Idaho at 396,
162 P.3d at 775 (quoting Lettunich v. Key Bank Nat. Ass’n, 141 Idaho 362, 367, 109 P.3d 1104,
1109 (2005)). More importantly, “[i]t is well recognized that specific performance will not be
granted unless the contract is complete, definite[,] and certain in all its material terms, or contains
provisions which are capable in themselves of being reduced to certainty.” Locklear v. Tucker, 69
Idaho 84, 90, 203 P.2d 380, 383–84 (1949). “Equitable estoppel generally, and the doctrine of part
performance specifically, assume the existence of a complete agreement.” Chapin, 144 Idaho at
396, 162 P.3d at 775 (emphasis added).
In its decision below, the district court rejected 616’s part performance argument because
it determined the APA and incorporated Asset List omitted two material terms necessary to form
a lease agreement—and without all material terms—there was not a complete lease agreement
which could be specifically enforced by way of part performance. The district court’s analysis is
correct. As discussed above, the writings 616 points to do not form a complete lease contract
because two material terms are missing. At no point has 616 argued, or provided evidence of, a
lease contract—complete, definite, and certain in all its material terms—that was agreed on orally
or through a composite of oral and written language. Thus, the doctrine of part performance simply
does not apply because before it can, there must be a complete lease contract between the parties
that could be specifically enforced in equity. As noted above, in the absence of a lease contract,
when 616 took actual possession of, and made improvements to, Suite 100 at the underlying
property—and 616 was not treated as a trespasser—616 gained, at most, the right to a tenancy at
will. See Lewiston Pre-Mix Concrete, Inc. v. Rohde, 110 Idaho 640, 644–45, 718 P.2d 551, 555–
56 (Ct. App. 1985).
In summary, and for the reasons above, we affirm the district court’s decision to grant
summary judgment because the APA and Asset List did not convey to 616 a leasehold interest in
any part of the underlying commercial parcel. As the district court concluded, the writings are
missing two material terms necessary to form a lease contract and do not satisfy the Statute of
Frauds.
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B. The district court did not err in its decision on PPC’s, Mae’s, and Ellis’ (individually
and as trustee) joint motion for attorney fees under the APA and Idaho Code section
12-120(3).
Turning now to the cross-appeal, PPC, Mae, and Ellis (individually and as trustee) jointly
appeal the district court’s decision on their motion for attorney fees under the APA and Idaho Code
section 12-120(3). Although it is unclear whether each Defendant/Counterclaimant is cross-
appealing under both potential bases for attorney fees, we need not address that problem because
Defendants/Counterclaimants have not shown the district court abused its discretion in ruling on
their motion. Thus, the district court’s decision is affirmed.
1. PPC, Mae, and Ellis (individually and as trustee) have not shown that the district court
abused its discretion in denying attorney fees under the APA regarding the leasehold
dispute or in awarding “$0” in “reasonable” attorney fees on the Notarial Acts claim.
First, we address the district court’s decision regarding PPC’s, Mae’s, and Ellis’
(individually and as trustee) joint request for attorney fees under the APA. Paragraph nineteen in
the APA provides for attorney fees to a “party” to the APA if they are required to, or do, maintain,
or defend any claim or cause of action “against the other arising out of or relating to” the APA and
if they are the “prevailing party”:
19. ATTORNEY’S FEES AND COSTS: In the event either party to this
Agreement is required to, or does, maintain or defend any claim or cause of action
against the other arising out of or relating to this Agreement, then the prevailing
party in any such action or arbitration shall be entitled to recover from the other
party all reasonable attorney’s fees incurred, including pre-litigation attorney’s
fees and costs, as well as attorney’s fees and costs on appeal, in addition to all
reasonable costs and expenses associated with the enforcement of this Agreement.
(Bold in original and italics added.)
As to the leasehold dispute, the district court denied attorney fees under the APA to PPC,
Mae, and Ellis (individually and as trustee). The district court first explained that based on the
terms of the APA, the only parties that could qualify for fees under it were the parties to it: 616,
PPC, and Ellis (individually). The district court then explained that the leasehold dispute was not
between 616, PPC, and Ellis (individually). Instead, the dispute was between 616 and the only
party who could convey to 616 a leasehold interest in the underlying property—the Ellis Family
Trust. Ellis did not sign the APA in his capacity as trustee of the Ellis Family Trust, thus, the Ellis
Family Trust was not a “party” to the APA and could not collect fees under it. The district court
further reasoned that it would be inappropriate to allow the other Defendants/Counterclaimants to
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stand in the shoes of the only party who prevailed in the leasehold dispute—the Ellis Family
Trust—to then collect fees under the APA related to that dispute.
On cross-appeal, PPC and Ellis (individually) maintain that the district court erred in
denying them fees under the APA because “the gravamen of the legal dispute” was between them
and 616 “as adverse parties seeking an interpretation of their contract, and that declaratory relief,
by itself, is a dispute between the parties to the contract at issue.” In other words, PPC and Ellis
(individually) argue that they did have a “dispute” with 616 under the APA as to whether it
conveyed a leasehold interest, and that PPC successfully defended “its” position that the APA did
not convey a lease interest to 616. Thus, according to PPC and Ellis (individually), they were
prevailing parties in the leasehold dispute and are entitled to fees under the APA. When the district
court did not award fees, PPC and Ellis (individually) argue the district court “failed to act
consistently with applicable legal standards and, therefore, abused its discretion.”
Attorney fees may be awarded to the prevailing party when provided for by contract. See
I.R.C.P. 54(e)(1). “Where a valid contract between the parties contains a provision for an award
of attorney fees, the terms of the contract establish a right to attorney fees.” Gangi v. Debolt, 168
Idaho 815, 819, 488 P.3d 483, 487 (2021). Here, the terms of the APA entitle 616, PPC, and Ellis
(individually) to reasonable attorney fees if they prevail in maintaining or defending a claim or
cause of action “against the other” arising out of or related to the APA. Consistent with the
contractual terms that define the scope of the right, the district court determined, in its discretion,
that PPC and Ellis (individually) did not prevail in a claim or cause of action “against” 616 in the
leasehold dispute because neither PPC nor Ellis (individually) had any interest in the real property
at issue. The district court reached this decision through an exercise of reason.
Nevertheless, PPC and Ellis (individually) cite Miles v. Idaho Power Co., 116 Idaho 635,
641, 778 P.2d 757, 763 (1989) for the proposition that they “must” be “adverse” to 616 in the
leasehold dispute because the Idaho Declaratory Judgment Act requires, as a foundation, the
parties to the action to be in an adversarial position, i.e., that the parties seeking declaratory relief
“have such a personal stake in the outcome of the controversy that a meaningful representation
and advocacy of the issues is ensured.” In other words, PPC and Ellis (individually) argue that
they are in fact “adverse” to 616 in the leasehold dispute because 616 made them both parties to
the leasehold dispute in 616’s complaint for declaratory relief—and PPC made itself a party to the
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same when Ellis (as trustee) counterclaimed to quiet title and for declaratory relief. This contention
is meritless.
The pleadings in the record reflect that both sides were initially mistaken about the true
owner of the underlying commercial parcel in which 616 claimed a leasehold interest.
Defendants/Counterclaimants eventually amended their pleadings and clarified that the Ellis
Family Trust was the owner. However, in doing so, PPC added itself to the counterclaims for
declaratory relief and to quiet title in the leasehold dispute made by Ellis (as trustee). Moreover,
based on the record, 616 apparently never amended its complaint to clarify that it claimed a
leasehold interest in property owned by the Ellis Family Trust—not PPC or Ellis (individually).
That the pleadings were not better tailored to identify the parties with interests at stake—through
an amendment or motion to dismiss—does not thereby endow PPC and Ellis (individually) with
an interest adverse to, or “against” 616 in the leasehold dispute that the district court was required
to blindly accept.
Instead, the district court was within its discretion to recognize that the only adverse parties
in the leasehold dispute were those parties that had “a personal stake” in its outcome: 616 and Ellis
in his capacity as trustee of the Ellis Family Trust. See Miles, 116 Idaho at 641, 778 P.2d at 763.
In addition, the district court acted consistently with the terms of the APA when it denied PCP and
Ellis (individually) fees under it (i.e., the standards applicable to the district court’s decision), and
it reached its decision through an exercise of reason. Thus, we conclude, the district court did not
abuse its discretion when it denied PPC and Ellis (individually) fees under the APA in the leasehold
dispute.
Next, PPC and Ellis (individually) also argue that they should, at a minimum, be awarded
attorney fees under the APA for pursuing and prevailing on their Notarial Acts claim. 616 responds
that PPC and Ellis (individually) failed to apportion the attorney fees incurred in connection with
that claim, thus, the district court properly declined to award them. See, e.g., Knudsen v. J.R.
Simplot Co., 168 Idaho 256, 273, 483 P.3d 313, 330 (2021) (requiring apportionment of fees
incurred in connection with claims falling under Idaho Code section 12-120(3)). 616 is correct that
PPC and Ellis (individually) did not apportion their request for attorney fees under their Notarial
Acts claim. However, we need not decide whether the failure to apportion here bars relief because
there is a more fundamental problem: PPC and Ellis (individually) have not challenged the district
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court’s calculation of what it found to be a “reasonable” attorney fee for prevailing on the Notarial
Acts claim.
The district court determined that PPC and Ellis (individually) prevailed on their Notarial
Acts claim because Shannon Smith’s notarial act on the APA was declared void. Contrary to the
suggestion of PPC and Ellis (individually), the district court did not “deny” that they were entitled
to “reasonable” attorney fees under the APA for prevailing on their claim. Instead, the district court
found, in its discretion, that the “reasonable” amount of fees to award PPC and Ellis (individually)
for prevailing on that claim was “$0.” The district court reached this decision by explaining that
neither PPC nor Ellis (individually) had any interests at stake—even under their Notarial Acts
claim—because they had completed the sale of PPC’s assets through the APA and PPC was no
longer a going concern.
“The calculation of reasonable attorney fees is within the discretion of the trial court.” Bott
v. Idaho State Bldg. Auth., 128 Idaho 580, 592, 917 P.2d 737, 749 (1996). “When awarding
attorney’s fees, a district court must consider the applicable factors set forth in I.R.C.P. 54(e)(3)
and may consider any other factor that the court deems appropriate.” Parsons v. Mut. of
Enumclaw Ins. Co., 143 Idaho 743, 747, 152 P.3d 614, 618 (2007) (emphasis added) (quoting
Hines v. Hines, 129 Idaho 847, 855, 934 P.2d 20, 28 (1997)); see I.R.C.P.5 54(e)(3)(L). Courts
need not address every factor under Rule 54(e)(3) in writing, Parsons, 143 Idaho at 747, 152 P.3d
at 618, but “it must appear that there is a reasoned application of those factors in the trial court’s
decision on the amount of attorney fees to be awarded.” Allen, 169 Idaho at 132, 492 P.3d at 1091.
Here, the district court decided in its discretion that the dispositive “factor” for awarding
“$0” as a “reasonable” fee for prevailing on the Notarial Acts claim was because PPC and Ellis
(individually) did not have a real stake in this lawsuit. On cross-appeal, PPC and Ellis
(individually) did not challenge the district court’s application of the factors under Rule 54(e)(3)
in reaching this finding—or the district court’s calculation of a “reasonable” attorney fee—with
anything more than a conclusory argument. Thus, we conclude that PPC and Ellis (individually)
have failed to carry their burden to demonstrate error and explain why the district court’s decision
on this issue was an abuse of discretion. See Owen v. Smith, 168 Idaho 633, 647, 485 P.3d 129,
143 (2021).
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2. PPC, Mae, and Ellis (individually and as trustee) were not entitled to attorney fees
below under Idaho Code section 12-120(3) because they failed to apportion their
request for fees based on claim or party.
Second, we address PPC’s, Mae’s, and Ellis’ (individually and as trustee) argument that
the district court erred in denying them attorney fees related to the leasehold dispute under Idaho
Code section 12-120(3) because—contrary to the district court’s reasoning—the “gravamen” of
the claims underlying that dispute involved a “commercial transaction,” i.e., a commercial lease
transaction. However, we need not reach the merits of this argument because even if it is correct,
the district court was not required to award Defendants/Counterclaimants attorney fees under
section 12-120(3) because Defendants/Counterclaimants failed to apportion their request below.
Thus, the district court’s denial of fees under section 12-120(3) is affirmed.
Idaho Code section 12-120(3) provides that the prevailing party “[i]n any civil action
to recover on . . . any commercial transaction . . . shall be allowed a reasonable attorney’s fee
to be set by the court, to be taxed and collected as costs.” See Knudsen, 168 Idaho at 272, 483
P.3d at 329. “[R]ecovery of attorney’s fees under section 12-120(3) hinges on ‘whether the
gravamen of a claim is a commercial transaction.’ ” Knudsen, 168 Idaho at 272, 483 P.3d at
329 (alteration added) (quoting Sims v. Jacobson, 157 Idaho 980, 985, 342 P.3d 907, 912
(2015)). However, we have long said that “[w]here fees were not apportioned between a claim
that qualifies under [Idaho Code section] 12-120(3) and one that does not, no fees are to be
awarded.” Rockefeller v. Grabow, 136 Idaho 637, 645, 39 P.3d 577, 585 (2001); see also Advanced
Med. Diagnostics, LLC v. Imaging Ctr. of Idaho, LLC, 154 Idaho 812, 815, 303 P.3d 171, 174
(2013); Knudsen, 168 Idaho at 273, 483 P.3d at 330.
Here, even if the competing claims underlying the leasehold dispute qualify for fees under
section 12-120(3), Defendants/Counterclaimants are not entitled to a reversal of the district court’s
denial of fees for a similar reason that we refused to reverse the denial of Simplot’s motion for
attorney fees under section 12-120(3) in Knudsen, 168 Idaho at 273–74, 483 P.3d at 330–31:
Defendants/Counterclaimants and Simplot both failed to apportion their fees so that the district
court could award attorney fees appropriately under section 12-120(3). In Knudsen, we declined
to reverse the district court’s denial of Simplot’s motion “because Simplot provided no basis on
which the fees between the various claims could be apportioned.” 168 Idaho at 273–74, 483 P.3d
at 330–31. And we explained that “[t]he district court was not required to sua sponte apportion
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fees” where Simplot made “no argument as to how or why the fees should be apportioned.” Id.
The same reasoning applies here.
When Defendants/Counterclaimants moved for attorney fees below, they did not apportion
their requested fees based on party or claim, and they did not make any argument for
apportionment. Instead, Defendants/Counterclaimants moved jointly, arguing that they were
collectively entitled to attorney fees under the APA, Idaho Code section 12-120(3), and other
statutes in a lump sum of “$68,346.47” for “successfully defending the claims asserted against
them and in pursuing their counterclaim[s].” However, a review of the record reflects that this
lump sum incorporated fees related to the Notarial Acts claim; sporadic landlord-tenant disputes
between Mae and 616 (under 616’s tenancy at will); and discovery, depositions, and various
demand letters in a manner that does not apportion fees based on claim or party as it relates to the
leasehold dispute. And without that apportionment—or any argument for it by
Defendants/Counterclaimants below—the district court was not required to sua sponte apportion
fees out of Defendants’/Counterclaimants’ lump sum request. See Knudsen, 168 Idaho at 274, 483
P.3d at 331. Thus, the district court’s decision to deny fees to Defendants/Counterclaimants under
section 12-120(3) is affirmed because there was no basis to appropriately award fees.
C. No party is entitled to attorney fees or costs on appeal.
616 requests attorney fees on appeal as the “prevailing” party pursuant to Idaho Code
section 12-120(3). In addition, Defendants/Counterclaimants collectively request attorney fees on
appeal and cross-appeal as “prevailing parties” pursuant to the APA and Idaho Code section 12-
120(3). However, “[g]iven the mixed results in this case,” Sommer v. Misty Valley, 170 Idaho 413,
__, 511 P.3d 833, 852 (2021), there is no overall “prevailing” party. Thus, no party is entitled to
attorney fees or costs on appeal. See Tapadeera v. Knowlton, 153 Idaho 182, 189, 280 P.3d 685,
692 (2012) (“[A] respondent should carefully consider whether to file a cross-appeal because
losing the cross-appeal may result in not being able to recover attorney fees incurred in defending
the appeal.”).
IV. CONCLUSION
For the reasons set out above, we affirm the district court’s decision to grant summary
judgment, the decision on Defendants’/Counterclaimants’ joint request for attorney fees, and the
judgment entered. Each party shall bear their own costs on appeal.
Chief Justice BEVAN, and Justices STEGNER, MOELLER, and ZAHN, CONCUR.
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