Mechanic’s Liens, Contract Claims, and Attorney’s Fees for the Defense?
The Idaho Supreme Court recently provided some additional guidance on the recovery of attorney’s fees for the defense of contract claims.
In Intermountain Real Properties, LLC v. Draw, LLC, the Supreme Court examined a subject near to the hearts of Idaho Land Law blog readers… the validity of an Idaho mechanic’s lien. Look for a future post on the mechanic’s lien portion of this case but for today I want to discuss the Supreme Court’s view of recovering attorney’s fees under I.C. § 12-120(3) for the successful defense of a contract or an open account claim.
By way of background, Idaho Code section 12-120(3) states:
In any civil action to recover on an open account, account stated, note, bill, negotiable instrument, guaranty, or contract relating to the purchase or sale of goods, wares, merchandise, or services and in any commercial transaction unless otherwise provided by law, the prevailing party shall be allowed a reasonable attorney’s fee to be set by the court, to be taxed and collected as costs.
In this case, TMC Contractors, Inc. (“TMC”) filed a Complaint for Collection and Petition to Foreclose Materialman’s Lien against Draw and various other defendants. After filing its Petition, TMC assigned its lien to Intermountain Real Properties, LLC (“Intermountain”) and Intermountain proceeded with claims for breach of contract, open account, unjust enrichment, and lien foreclosure. The district court ruled against Intermountain on all counts and awarded attorney’s fees to Draw under I.C. § 12-120(3). Intermountain appealed.
The Supreme Court upheld the district court on all counts and stated that I.C. § 12–120(3) will apply when a party alleges the existence of a contractual relationship or open account. In other words, when a plaintiff alleges a commercial contract exists and the defendant successfully defends by showing that the commercial contract never existed, the court awards the defendant attorney fees. That is pretty strong medicine for any plaintiff and the potential risk associated with making a breach of contract or open account claim should be considered before filing any petition on those counts in Idaho.