Title: Wadsworth Reese v. Siddoway & Co

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

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IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 46126 
 
 
WADSWORTH REESE, PLLC, an Idaho 
professional corporation; CLARK A. REESE 
CPA P.C., an Idaho professional corporation; 
and WADSWORTH ACCOUNTING CPA, 
an Idaho professional corporation, 
 
           Plaintiffs-Counterdefendants- 
           Respondents, 
v. 
 
SIDDOWAY & COMPANY, PC, an Idaho 
professional corporation; RANDY 
SIDDOWAY, an individual, 
 
           Defendants--Counterclaimants- 
           Appellants. 
_______________________________________ 
SIDDOWAY & COMPANY, PC, an Idaho 
professional corporation; RANDY 
SIDDOWAY, an individual, 
 
          Counterclaimants-Appellants, 
 
v. 
 
FREDERICK WADSWORTH, an individual; 
and CLARK A. REESE, an individual, 
 
           Counterdefendants-Respondents. 
_______________________________________ 
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Boise, May 2019 Term 
 
Filed: July 25, 2019 
 
Karel A. Lehrman, Clerk 
 
Appeal from the District Court of the Fourth Judicial District of the State of 
Idaho, Ada County. Jason D. Scott, District Judge. 
 
The district court’s judgment is affirmed.   
 
Hastings Law Group, LLC, Salt Lake City, for appellants. Brett W. Hastings argued.  
 
Fisher & Hudson, Boise, for respondents. Vaughn Fisher argued.  
_____________________ 
 
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BRODY, Justice. 
This appeal arises from the division of a three-member accounting firm, Siddoway, 
Wadsworth & Reese, PLLC. The three members of the firm were the personal professional 
corporations solely owned by each accountant. In early 2015, Reese PC signed a purchase 
agreement to buy a one-half interest in the client base of Siddoway PC for $200,000. This 
purchase agreement included an arbitration clause.  
In August of 2015, Siddoway left the accounting firm, taking several employees and the 
clients’ information with him. Following Siddoway’s departure, the firm (now named 
Wadsworth Reese, PLLC), along with its remaining members, filed a complaint in the district 
court against Siddoway and his personal professional corporation and two of the employees who 
followed him. Siddoway counterclaimed. The parties brought a range of claims.  
Reese PC and Siddoway PC also went to arbitration for claims related to their purchase 
agreement, but the arbitrator determined the purchase agreement was void for failure of a 
condition subsequent.  
The remaining claims between the parties were tried by the district court. The district 
court entered findings of fact and conclusions of law, ultimately deciding to “leave the parties 
where it found them.” This included the following final determinations pertinent to this appeal:  
the district court ordered dissociation of Siddoway’s personal professional corporation as a firm 
member; Siddoway and Siddoway PC were not entitled to attorney fees for compelling 
arbitration; Siddoway PC failed to show unjust enrichment from the void purchase agreement; 
and the firm could fund Reese’s personal professional corporation’s litigation and arbitration 
costs because resolving the purchase-agreement dispute served a legitimate business purpose. 
Siddoway and Siddoway PC timely appealed.  
We affirm the district court’s judgment. Siddoway and Siddoway PC were not entitled to 
attorney fees for compelling arbitration, nor did they show unjust enrichment or breach of 
membership duties.  
I. 
FACTUAL AND PROCEDURAL BACKGROUND 
Clark Reese, Frederick Wadsworth, and Randy Siddoway are each certified public 
accountants with their own professional corporation (respectively, Reese PC, Wadsworth PC, 
and Siddoway PC). In 2012, Reese became an employee of Siddoway PC. Following the death of 
Steve Harding, one of Siddoway’s former accounting partners, Siddoway and Reese began 
 
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discussing becoming partners on terms that Reese would purchase a one-half interest in 
Siddoway’s practice. This term was to balance out the client base each accountant would bring to 
the new firm—Siddoway brought about 450 clients while Reese brought less than ten clients 
from his previous positions.  
On December 20, 2013, Reese and Siddoway formed CRS Services, PLLC. A month 
later, they changed the accounting firm’s name to Siddoway, Wadsworth & Reese to reflect the 
addition of a third accountant, Frederick Wadsworth. About that same time, Siddoway, 
Wadsworth & Reese (hereinafter Wadsworth Reese PLLC to reflect its current title) obtained the 
Harding client base. That purchase agreement between Wadsworth Reese PLLC (then named 
CRS) and Harding & Co., P.A., contained a five-year non-competition provision.  
Siddoway PC, Reese PC, and Wadsworth PC signed the Siddoway Wadsworth Reese 
operating agreement on January 6, 2014, which gave each member a one-third membership 
interest in the firm. The operating agreement did not include a non-competition clause. However, 
the operating agreement appears to have been intended as a temporary document because the 
three members had yet to decide all the terms under which they would do business together.  
 
A year later, on January 28, 2015, Siddoway PC and Reese PC signed “the Reese 
Agreement” in which Reese PC promised to pay Siddoway PC $200,000 for a one-half interest 
in Siddoway’s client base. Reese PC signed an associated promissory note for $200,000, while 
Reese signed guaranties to both the Reese Agreement and promissory note. Reese PC agreed to 
pay the $200,000 in monthly payments over the next four years. The Reese Agreement contained 
a non-competition clause, an agreement to arbitrate, and a provision that awarded “the prevailing 
party” attorney fees following legal action.  
Right on the heels of Siddoway PC and Reese PC signing the Reese Agreement, the three 
individual accountants all signed a modification of the Reese Agreement that required the three 
members of Wadsworth Reese PLLC to agree to amend the operating agreement to finally settle 
the terms under which they would do business together by February 15, 2015, or else the Reese 
Agreement would be void. Despite the three members’ failure to reach an agreement by the 
February 15 deadline, Reese PC continued to make payments to Siddoway PC under the Reese 
Agreement. Ultimately, Reese PC paid approximately $28,000 to Siddoway PC. Siddoway PC 
had transferred numerous clients to Wadsworth Reese PLLC, and Reese became the accountant 
 
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for hundreds of those clients, based both on his capacity to take on the work as well as 
Siddoway’s referrals to Reese.  
In 2015, Siddoway’s relationship with both Reese and Wadsworth broke down, causing 
the parties to discuss buyout options and begin negotiations on how Siddoway PC would exit 
Wadsworth Reese PLLC. The parties never agreed upon terms. On August 21, 2015, Siddoway 
announced he was leaving the firm. As Siddoway left Wadsworth Reese PLLC he took several 
employees with him, including his nephew Dustin Siddoway and administrative employee 
Jeanine Barkan. On the day he announced his departure, Siddoway also downloaded Wadsworth 
Reese PLLC’s UltraTax files, which contained the firm’s clients’ names, addresses, tax 
information, and any work in progress. Siddoway then sent a list of Wadsworth Reese PLLC’s 
clients to Dustin Siddoway.  
Immediately after leaving Wadsworth Reese PLLC, Dustin Siddoway formed the 
accounting firm AnchorPoint, PLLC, while Barkan formed an LLC now called PoleStar 
Entrepreneurial Group. Their goal was to create complementary businesses with an overlapping 
clientele. Siddoway’s departure ultimately resulted in a “mass migration” of over 200 clients to 
AnchorPoint. About 60 percent of the Harding client base remained at Wadsworth Reese PLLC. 
During this time, Dustin Siddoway also met twice with Reese and Wadsworth “to resolve 
difficulties arising from the company’s breakup” and to obtain tax data for certain clients. 
Siddoway PC and AnchorPoint seem to have remained separated due to concerns over a non-
competition provision in the agreement Wadsworth Reese PLLC used to purchase the Harding 
client base. AnchorPoint and Siddoway PC remain separate entities.  
On December 14, 2015, Wadsworth Reese PLLC, Reese PC, and Wadsworth PC, 
collectively sued Siddoway and Siddoway PC, alleging trade secrets violations, breach of the 
operating agreement, breach of fiduciary duties, and interference with prospective business 
advantage, amongst other claims. In addition, the plaintiffs requested a judicial order to 
dissociate Siddoway from Wadsworth Reese PLLC. Reese PC also sought $28,000 in damages, 
plus interest, for the amount paid to Siddoway PC under the Reese Agreement. Siddoway and 
Siddoway PC counterclaimed, alleging breach of the operating agreement, violations of Idaho 
Code section 30-6-404 for failing to make distributions in equal shares, and misappropriated 
funds, as well as other business-related claims. Siddoway also requested a judicial dissolution of 
Wadsworth Reese PLLC.  
 
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On February 12, 2016, Siddoway and Siddoway PC filed a motion to compel arbitration 
on claims relating to the Reese Agreement, and the district court granted the motion. Reese and 
Reese PC asked the district court to stay the arbitration, but the district court denied and granted 
the stay in part: it found that the claims against Reese were not arbitrable while the claims 
against Reese PC were. At arbitration, the arbitrator ruled that the Reese Agreement was void for 
failure of a condition subsequent. Following both of the court rulings to compel arbitration and 
stay the proceedings, Siddoway and Siddoway PC requested attorney fees incurred in compelling 
the arbitration. The district court denied those motions, finding them premature because the 
prevailing party could not yet be determined. The court then dismissed Siddoway’s claim for 
breach of the Reese Agreement, with prejudice, and deferred ruling on fees and costs consequent 
to this ruling until after judgment was rendered on the remaining claims.  
After arbitration, Reese PC and Wadsworth PC voted in October 2015 for Wadsworth 
Reese PLLC to pay for Reese’s separate legal representation in the litigation and arbitration over 
the Reese Agreement. Both Reese and Wadsworth later testified that their respective PCs voted 
this way because they were concerned about settling ownership of the firm. They were especially 
concerned about Siddoway claiming a majority interest if the Reese Agreement failed. Both 
Reese and Wadsworth were also concerned about the firm’s potential liability for debts and the 
obligations to creditors as the firm struggled to maintain revenue. Siddoway and Siddoway PC 
opposed this expenditure, arguing it was inappropriate.  
The district court held a five-day bench trial. Following the trial, the district court 
dissociated Siddoway PC as a member of Wadsworth Reese PLLC and did not award further 
relief to any party. The district court also determined that Siddoway PC failed to show unjust 
enrichment from the void purchase agreement. In summary, the district court decided to “leave 
the parties where it found them.” Two weeks later, Siddoway and Siddoway PC filed a motion to 
alter or amend the judgment, arguing that Wadsworth Reese PLLC did not have a legitimate 
business purpose to pay for Reese PC’s litigation and arbitration expenses against Siddoway. 
Siddoway also revived its previous requests for attorney fees incurred in compelling arbitration 
under the Reese Agreement. The district court denied all requested relief, finding Siddoway’s 
arguments lacked merit and that it was not the prevailing party. Siddoway and Siddoway PC 
timely appealed.  
 
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II. 
ANALYSIS 
Siddoway and Siddoway PC challenge several of the district court’s conclusions of law. 
We will address each issue and its applicable standard of review in turn.  
A. The district court did not abuse its discretion by declining to award Siddoway 
fees and costs related to the arbitration litigation.   
Siddoway and Siddoway PC contend that the district court committed reversible error in 
deciding that Siddoway was not the “prevailing party” entitled to attorney fees where they 
successfully compelled arbitration for claims under the Reese Agreement. The Siddoway parties’ 
contention breaks into two distinct arguments: (1) that they were the prevailing parties and are 
entitled attorney fees under the contractual language; and (2) that the district court lacked 
jurisdiction to consider the Reese parties’ motion to stay arbitration. We reject these arguments.  
1. Attorney fees  
The determination of whether a party prevailed for purposes of an attorney fee award is a 
discretionary decision of the trial court. See Israel v. Leachman, 139 Idaho 24, 26, 72 P.3d 864, 
866 (2003). Accordingly, this Court reviews the district court’s determination to deny attorney 
fees for an abuse of discretion. Id. As long as the court correctly perceived the issue as one of 
discretion, acted within the outer boundaries of its discretion, acted consistently with the legal 
standards applicable to the specific choices available to it, and reached its decision by the 
exercise of reason, we will not disturb the decision on appeal. Lunneborg v. My Fun Life, 163 
Idaho 856, 863, 421 P.3d 187, 194 (2018). 
The arbitrator ruled that the Reese Agreement was void. Void contracts “are deemed 
never to have existed in the eyes of the law.” Syringa Networks, LLC v. Idaho Dep’t of Admin., 
159 Idaho 813, 367 P.3d 208, 222 (2016). Thus, parties generally cannot benefit from a 
contractual attorney fees provision or statute where the contract is illegal or void. Kosmann v. 
Gilbride, 161 Idaho 363, 367, 386 P.3d 504, 508 (2016); Trees v. Kersey, 138 Idaho 3, 12, 56 
P.3d 765, 774 (2002). The limited exception to this rule lies in O’Connor v. Harger 
Construction, Inc., where we stated that “[a] party may be entitled to attorney’s fees under 
a contract even if it is established that no contract between the parties ever existed.” 145 Idaho 
904, 912, 188 P.3d 846, 854 (2008). O’Connor, however, made that determination when 
examining a contract containing a severability clause that allowed the unenforceable provisions 
to be severed from the remainder of the contract which contained an attorney fee provision. Id. 
 
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Nevertheless, the Siddoway parties maintain that they are the prevailing parties for 
attorney fee purposes because they compelled arbitration and the Reese Agreement provides a 
fee award for enforcing its terms even though the arbitrator determined the contract was void. 
We disagree. The exact language of the attorney fee provision in the Reese Agreement reads:  
“Should either party be required to commence legal action to enforce any of the terms of this 
Agreement, the prevailing party in such litigation shall be entitled to an award of reasonable 
attorneys fees and costs from the other party.” Idaho Rule of Civil Procedure 54(d)(1)(B) guides 
our “prevailing party” analysis. It states: “In determining which party to an action is a prevailing 
party and entitled to costs, the trial court must, in its sound discretion, consider the final 
judgment or result of the action in relation to the relief sought by the respective parties.” I.R.C.P. 
54(d)(1)(B).  
 
Siddoway’s argument that it is a prevailing party because it compelled arbitration rests 
almost entirely on our decision in Grease Spot, Inc. v. Harnes, 148 Idaho 582, 226 P.3d 524 
(2010). In that case, Grease Spot filed a complaint against the defendants, alleging violations of a 
purchase agreement. Id. at 583, 226 P.3d at 526. After the defendants won a motion to compel 
arbitration, the arbitrator dismissed all of Grease Spot’s claims against the defendants and they 
obtained an order confirming the arbitration award and judgment on the arbitration was entered 
in their favor. Id. at 583–84, 226 P.3d at 525–26.  
This Court affirmed the district court’s decision to award attorney fees for successfully 
compelling arbitration, noting the defendants were “the ‘prevailing party’ for purposes of 
receiving attorney fees once they prevailed in compelling arbitration, thereby terminating 
consideration of the merits of the action.” Id. at 586, 226 P.3d at 528. However, Siddoway’s 
circumstances differ greatly from the defendants in Grease Spot. The Grease Spot defendants 
were prevailing parties not simply because they compelled arbitration, but because they 
compelled arbitration on all claims and subsequently won at arbitration. This is an important 
distinction. Our decision in Grease Spot did not solely recognize the defendants’ victory of a 
motion to compel arbitration, but the defendants’ victory at “terminating consideration of the 
merits of the action.” Id. That is the opposite of Siddoway’s position. 
While the district court granted the Siddoway parties’ motion to compel, the arbitrator 
ultimately determined that the entire Reese Agreement was void for failure of a condition 
subsequent. The Siddoway parties subsequently lost their claims in arbitration as well as every 
 
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counterclaim before the district court. Their only success concerning the Reese Agreement was 
in arguing the arbitrability of claims against Reese PC.  The district court determined that one 
successful motion was “nowhere near enough success to make them prevailing parties.” We 
agree. The district court correctly focused on the final judgment and result of the action—
specifically in the arbitration proceedings—as required by Idaho Rule of Civil Procedure 
54(d)(1)(B). There was no abuse of discretion. 
2. Jurisdiction  
Next, Siddoway and Siddoway PC contend that the district court lacked jurisdiction to 
consider Reese PC’s motion to stay arbitration. There are two main arguments Siddoway raises 
within this procedural context: (a) the district court erred in considering Reese PC’s motion to 
stay arbitration because the court lacked jurisdiction at that time; and (b) the district court erred 
in granting Reese’s motion to stay arbitration because Reese, in his personal capacity, was bound 
to the arbitration agreement. Even if we were inclined to overlook the fact that these arguments 
were not raised in the district court and that Siddoway cites to no case law, statutes, or rules for 
the basis of his contentions (with the sole exception of a quick recap on the importance of res 
judicata), we will not take up the jurisdictional issues because they are moot.   
“An issue is moot if it ‘does not present a real and substantial controversy that is capable 
of being concluded through judicial decree of specific relief’ or if ‘a favorable judicial decision 
would not result in any relief or the party lacks a legally cognizable interest in the 
outcome.’” State v. Abdullah, 158 Idaho 386, 462, 348 P.3d 1, 77 (2015) (quoting Arambarri v. 
Armstrong, 152 Idaho 734, 739, 274 P.3d 1249, 1254 (2012) (citations omitted)). Analyzing now 
whether the district court had jurisdiction to take up the motions to stay arbitration is an 
academic exercise that fails to address a real controversy and cannot afford relief to either side. 
The arbitrator concluded that the Reese Agreement was void. This Court’s determination of 
either the lack of, or presence of, jurisdiction to stay the proceeding will not alter that conclusion, 
nor would it change the outcome on whether Siddoway and Siddoway PC were prevailing parties 
for an award of attorney fees.  
B. There was substantial and competent evidence that Wadsworth Reese PLLC had 
a legitimate business purpose to pay legal fees to dissociate Siddoway.   
The Siddoway parties next contend that Wadsworth Reese PLLC lacked a legitimate 
business purpose to pay plaintiffs’ legal fees, including Reese and Reese PC’s separate litigation 
 
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and arbitration costs. While unstated in these terms, the Siddoway parties seem to contest the 
competence of the evidence before the district court. In addition, the Siddoway parties argue that 
the district court failed to identify this case as a derivative action.  
The district court’s determination of a “legitimate business purpose” ties closely with 
questions of good faith, fiduciary duties, and members’ duties under the operating agreement, 
including the finding of whether the attorney fees were distributions or transfers to a non-
member third party. Because determining whether a fiduciary breached his duty is a question of 
fact, this Court will not disturb the district court’s findings as long as there was substantial and 
competent evidence supporting them. Prehn v. Hodge, 161 Idaho 321, 328, 385 P.3d 876, 883 
(2016). We conclude that there was substantial and competent evidence to support the district 
court’s findings.  
1. This litigation was not a derivative or a direct action.  
A derivative action occurs where a member of a limited liability company brings a claim 
to enforce the company’s rights, while a direct action is brought by a member to assert the 
member’s rights. I.C. §§ 30-25-801 to 802. Both of these actions are brought by a member of the 
LLC, rather than the LLC itself. See id. However, this action was brought by the firm, not a 
member asserting the member’s or the firm’s rights. As noted by the district court, the presence 
of Reese PC and Wadsworth PC on the plaintiff’s side was simply superfluous; the clear basis of 
the litigation has been Wadsworth Reese PLLC’s pursuit of its rights. Thus, this action does not 
fall into the definition of either a derivative or direct action as Siddoway contends.  
2. Payments to Wadsworth Reese PLLC’s legal counsel were not distributions.  
Siddoway and Siddoway PC contend that the payment of legal fees for this litigation and 
appeal constitute “disproportionate distributions to Reese and Wadsworth and a breach of the 
utmost fiduciary duties owed by Reese and Wadsworth to Siddoway.” The district court found 
that the payments were not a distribution under the operating agreement and that Siddoway was 
not entitled to a proportionate payment. Instead, paying the legal fees was a legitimate business 
purpose to solve the ownership disputes. We agree.  
The operating agreement defined “distribution” as “a transfer of property to a Member on 
account of a Membership Interest as described in Article IX herein.” In addition, under Idaho 
Code section 30-25-409, managing members of a limited liability company owe specific duties 
of loyalty and care to their company, including “refrain[ing] from engaging in grossly negligent 
 
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or reckless conduct, willful or intentional misconduct, or knowing violation of law.” I.C. § 30-
25-409(c). Under the earlier version of the act, each member owed a duty of care to the firm “to 
act with the care that a person in a like position would reasonably exercise under similar 
circumstances and in a manner the member reasonably believes to be in the best interests of the 
company.” Law of January 6, 2014, I.C. § 30-6-409(3), repealed by S.L. 2015, ch. 243, § 2, as 
amended by S.L. 2015, ch. 337, §4.  
First, the district court determined that the payments to Wadsworth Reese PLLC’s legal 
counsel were not “distributions” under the operating agreement because the legal counsel was 
not a member of Wadsworth Reese PLLC and the payments were not made because of 
Wadsworth PC and Reese PC owning a membership interest. Instead, the payments were 
transfers of property to a non-member third party to resolve disputes amongst the firm’s 
members. The operating agreement plainly defines distribution as a payment “to a Member on 
account of a Membership Interest.” As the district court correctly concluded, the legal counsel 
was not a member nor did they receive payments on account of a membership interest. As such, 
Siddoway is not entitled to an equal distribution.  
Second, the district court concluded that the firm decided to pay Wadsworth Reese 
PLLC’s counsel because of the company’s perceived need to address and resolve disputes 
between the parties. While Siddoway argues that the district court relied only on Reese’s 
testimony at trial, the district court based its conclusion on a range of substantial and competent 
evidence, including testimony from Reese, Wadsworth, and Siddoway that Siddoway PC might 
assert a two-thirds interest in the firm if the Reese Agreement failed, as well as additional 
testimony that the firm was struggling with cash inflow and had growing concerns about 
obligations to creditors. In addition, the district court concluded that the plaintiffs’ vindicated 
claims demonstrate good faith. Wadsworth Reese PLLC won its claim in proving that Reese 
owned a one-third interest in the firm under the operating agreement and that the Reese 
Agreement was void overall. Altogether, the district court’s determination was based on relevant 
evidence that a reasonable mind would accept to support its conclusion.  
Undoubtedly, Reese PC’s vote for the firm to pay its attorney fees was laced with self-
interest. However, “[a] member does not violate a duty or obligation under this chapter or under 
the operating agreement solely because the member's conduct furthers the member’s own 
interest.” I.C. § 30-25-409(e). Likewise, the district court concluded that the evidence did not 
 
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indicate bad faith from Reese PC or Wadsworth PC in wanting to settle the questions of 
ownership. These were important issues for the firm to resolve for the owning members, clients, 
and creditors.  The firm’s vote to pay the litigation expenses—even for Reese and Reese PC in 
their separate arbitration and litigation proceedings—was an apposite decision in these 
circumstances and the district court reached that conclusion based on substantial and competent 
evidence.  
C. The district court did not abuse its discretion in determining that neither 
Siddoway PC nor Reese PC were unjustly enriched.  
The Siddoway parties’ final contention is that the district court erred in denying them 
recovery for unjust enrichment in the Reese Agreement, because Reese PC obtained the benefits 
of a one-third membership interest in Wadsworth Reese PLLC. The district court determined that 
neither Reese PC nor Siddoway PC were unjustly enriched. We agree.  
Unjust enrichment “is the measure of recovery under a contract implied in law.” Barry v. 
Pac. W. Const., Inc., 140 Idaho 827, 834, 103 P.3d 440, 447 (2004). This quasi-contract “is not a 
contract at all, but an obligation imposed by law for the purpose of bringing about justice and 
equity without reference to the intent of the agreement of the parties, and, in some cases, in spite 
of an agreement between the parties.” Continental Forest Prod., Inc. v. Chandler Supply Co., 95 
Idaho 739, 518 P.2d 1201 (1974). Unjust enrichment occurs where (1) the plaintiff confers a 
benefit on the defendant; (2) the defendant appreciates the benefit; and (3) the defendant’s 
acceptance of the benefit is inequitable without payment to the plaintiff for the benefit’s value. 
Countrywide Home Loans, Inc. v. Sheets, 160 Idaho 268, 272, 371 P.3d 322, 326 (2016). 
Because this Court reviews rulings on equitable remedies for an abuse of discretion, the four-part 
abuse of discretion analysis applies here:  
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, 163 Idaho at 863, 421 P.3d at 194. While Siddoway and Siddoway PC argue that the 
district court’s conclusion was arbitrary and unsupported, we conclude that the district court 
properly reached its decision by an exercise of reason.  
 
Both sides conferred a benefit on the other: Reese PC conferred a benefit of $28,000 to 
Siddoway PC, which conferred a benefit of one-half of Siddoway PC’s client base to Reese PC. 
 
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Reese PC’s benefit also appreciated as he served the client base. Consequently, the key inquiry is 
whether the Siddoway parties proved that Reese PC’s acceptance of the client base was 
inequitable with the $28,000 benefit Reese PC paid to Siddoway PC. This they failed to do. Once 
again, Siddoway failed to state the correct standard of review but it appears to be arguing against 
the reasonableness of the district court’s decision in leaving the parties where it found them.  
First, Siddoway PC fails in its old argument that it bestowed a benefit of a one-third 
interest in the firm through the Reese Agreement rather than just an interest in the Siddoway PC 
client base. Reese PC obtained its one-third interest in Wadsworth Reese PLLC from the firm’s 
operating agreement, which was signed prior to the Reese Agreement and expressly gave Reese 
PC an equal membership interest alongside Siddoway PC and Wadsworth PC. Thus, Reese PC 
could not be unjustly enriched by its one-third membership interest.  
Second, the Siddoway parties’ main evidence of unjust enrichment stems from the 
assertion that Reese is enjoying the benefit of many clients that previously belonged to Siddoway 
PC. As for exact monetary calculations on the value of the client base, the district court 
calculated that Reese PC retained an excess benefit of about $21,358.50 in the following factual 
analysis:  
The total amount Wadsworth Reese collected from former Siddoway PC clients in 
2016 was $123,397 (rounded to the nearest dollar). This total includes payments 
for services rendered by Wadsworth Reese not only in 2016 but also in 2014 and 
2015, but the record doesn’t show the degree to which it is attributable to services 
rendered before the Siddoway Parties cut ties with Wadsworth Reese in August 
2015, or instead to services rendered after the cutting of ties. In any event, 
Siddoway PC contends Reese PC derived a benefit equal to 80% of $123,397, or 
$98,717.60, from this revenue. It isn’t clear what the 80% factor deducts for, but 
it is clear that it comes from the formula to which Reese PC and Siddoway PC 
agreed in setting the $200,000 price under the Reese Agreement for Reese PC to 
purchase a one-half interest in Siddoway PC’s established client base. That 
formula also contained a second adjustment, by which the result after application 
of the 80% factor was reduced by another 50%, given that Reese PC was buying 
only a one-half interest in Siddoway PC’s established client base. For reasons 
they don’t explain, the Siddoway Parties don’t apply this 50% factor here. 
Perhaps that’s because, by 2016, they had cut ties with Wadsworth Reese and 
were no longer benefiting from the revenue Wadsworth Reese generated by 
serving the Siddoway PC client base, to whatever extent those clients remained 
with Wadsworth Reese. But Reese PC undeniably shared the benefit of that 
revenue equally with Wadsworth PC—both received identical monthly 
management fees, and neither received any profit distributions—so Reese PC 
garnered no more than half the benefit. Consequently, the Siddoway Parties’ 
 
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$98,717.60 figure would have to be reduced by 50% to account for Wadsworth 
PC’s share of the benefit. This leaves $49,358.80—only $21,358.50 more than the 
$28,000 Reese PC paid to Siddoway PC under the Reese Agreement.  
Despite this excess amount, the district court found several factors significant to support 
its conclusion that Reese PC was not unjustly enriched. First, the evidence from trial suggested 
that while “Siddoway PC brought more clients into the venture, Reese PC likely performed much 
more of the work necessary to service them.” Second, the district court also found ample 
evidence that Reese PC’s contributions to the firm ensured the equal compensation of monthly 
management fees to each member—a contribution of efforts that Siddoway PC likely did not 
provide to the firm. Third, Siddoway PC’s early departure and efforts to send many clients to 
AnchorPoint deprived Reese PC of the full benefit of the bargain and made assessment of the 
clients’ value difficult. Ultimately, these factors combined to suggest Reese PC was not unjustly 
enriched. With both parties failing to perform their end of the Reese Agreement, depriving both 
sides of the full benefits of the bargain, neither Reese PC nor Siddoway PC was unjustly 
enriched. Leaving the parties to their pre-litigation position was reasonable, not unjust or an 
abuse of discretion.  
D. Wadsworth Reese PLLC is entitled to attorney fees on appeal.  
Both appellants and respondents request attorney fees on appeal under Idaho Code 
section 12-120(3). It 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. 
I.C. § 12-120(3). The gravamen of the underlying transaction was commercial in nature. Thus, 
because Wadsworth Reese PLLC is the prevailing party on this appeal, it is entitled to attorney 
fees.  
III. CONCLUSION 
We affirm the district court’s judgment and award attorney fees and costs on appeal to 
respondents.  
 
 
Chief Justice BURDICK, and Justices BEVAN, STEGNER, and MOELLER CONCUR.