Title: Alsco v. Fatty's Bar

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

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IN THE SUPREME COURT OF THE STATE OF IDAHO 
Docket No. 46184 
 
ALSCO, INC., 
 
     Plaintiff-Counterdefendent- 
     Respondent, 
 
v. 
 
FATTY’S BAR, LLC, an Idaho limited 
liability company, 
 
     Defendant-Counterclaimant-Appellant, 
 
and  
 
CLAY ROMAN, an individual dba 
FATTY’S, 
 
     Defendant. 
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Boise, December 2019 Term 
 
Opinion Filed:  April 14, 2020 
 
Karel A. Lehrman, Clerk 
 
Appeal from the District Court of the Fourth Judicial District of the  
State of Idaho, Ada County.  Steven Hippler, District Judge. 
 
The ruling of the district court is affirmed. Costs and attorney fees 
on appeal are awarded to Alsco. 
 
Pare & Cozakos, PLLC, Boise, attorneys for Appellants. Shelly 
Cozakos argued. 
 
Jones Williams Fuhrman Gourley, P.A., Boise, attorneys for Respondent. 
Derrick J. O’Neill argued.  
 
 
BEVAN, Justice 
I. NATURE OF THE CASE 
This appeal concerns the doctrine of successor liability and its applicability to a business 
known as “Fatty’s Bar” (“Fatty’s”). Tons of Fun, LLC opened Fatty’s in October 2010 and a short 
time later its manager, Clay Roman, signed a textile services agreement (the “Agreement”) with 
Alsco, Inc. (“Alsco”). The Agreement contained an automatic renewal clause, by which the 
Agreement would renew automatically for a period of 60 months if neither party terminated it in 
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writing at least 90 days before its initial expiration. Fatty’s fell on difficult financial times, and 
closed for a period in January 2013. Soon after, Steven and Jennifer Masonheimer created a limited 
liability company called Fatty’s Bar, LLC, and re-opened Fatty’s in mid-February, 2013, 
continuing to receive textiles from Alsco. The Agreement automatically renewed in March 2016. 
In March 2017, Fatty’s Bar, LLC terminated the Agreement, well before the 60-month term was 
set to expire.  
Alsco then sued Fatty’s Bar, LLC and Clay Roman, seeking damages based on a liquidated 
damages provision in the Agreement. After a court trial, the district court held that both Fatty’s 
Bar, LLC and Roman, were jointly and severally liable to Alsco for damages under a liquidated 
damages clause that was also in the Agreement. Fatty’s Bar, LLC appealed. We affirm. 
II. FACTUAL AND PROCEDURAL BACKGROUND 
Alsco is a linen supply company headquartered in Salt Lake City, Utah, with a local office 
in Boise, Idaho. Alsco supplies textiles such as linens, uniforms, and cleaning supplies to various 
businesses. Alsco also services the businesses by picking up, laundering, and delivering the 
supplies on a regular (usually weekly) basis. 
On October 13, 2010, Justin Zora filed a certificate of organization with the Idaho Secretary 
of State for a limited liability company called Tons of Fun, LLC. Zora listed himself as a member 
or manager on the filing. Later, Tons of Fun, LLC opened a bar called “Fatty’s” located at 800 
West Idaho Street, Suite 200, Boise, Idaho. Zora did not register Fatty’s as a dba for Tons of Fun, 
LLC, but it was undisputed that Zora owned Tons of Fun, LLC, which, in turn, owned Fatty’s. 
Tons of Fun, LLC owned some equipment and Zora also leased a liquor license and some 
equipment from Colby Smith to operate Fatty’s. The equipment owned by Tons of Fun, LLC will 
be detailed below.  
On March 11, 2011, Roman executed the Agreement with Alsco. The customer name on 
the Agreement is “Fatty’s,” and under Roman’s signature is the title “Partner Owner.” Roman 
testified he did not recall executing the Agreement but did not dispute that he did so under the 
belief that he was accepting service for a delivery. The Agreement was an “exclusive” agreement, 
providing that Alsco “shall be the exclusive supplier to Customer of the services and goods listed 
on the Schedule attached hereto, as such Schedule may be amended from time to time.” The 
Agreement also contained the following relevant provisions: 
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Term. This Agreement shall remain in full force and effect for a period of 60 
months, commencing on the date of installation of the goods, and shall be 
automatically renewed for consecutive 60 month periods thereafter unless either 
party shall give to the other party written notice of termination by registered mail 
at least 90 days prior to the expiration of the term then in effect.  
. . . .  
Liquidated Damages. Customer acknowledges that since Supplier owns the goods 
covered hereby and that such goods may be unique to Customer’s requirements and 
that the value of such goods is depreciating with time, the damages which Supplier 
may sustain as a result of Customer’s breach or premature termination of this 
Agreement would be difficult, if not impossible, to determine. The parties therefore 
agree that in the event of Customer’s failure to timely pay the fees and charges 
provided for herein, or in the event of any other breach of premature termination of 
this Agreement by Customer, Customer shall pay to Supplier as liquidated 
damages, and not as a penalty, a sum equal to the number of unexpired weeks 
remaining in the term then in effect multiplied by fifty percent (50%) of the average 
weekly charge for goods and services during the 10 weeks immediately preceding 
such failure to pay, breach or premature termination. The parties further agree that 
this formula is reasonable.  
In December 2012, Tons of Fun, LLC began experiencing financial difficulties and had to 
shut Fatty’s down for a time due to a liquor license violation. Tons of Fun, LLC was also unable 
to secure a new lease for the space occupied by Fatty’s. Zora began searching for a financial partner 
and asked Steven Masonheimer (“Steven”) if he was interested in assisting. Steven and his wife 
Jennifer Masonheimer (“Jennifer”) owned a limited liability company called The Drink, LLC, 
which owned another local bar in Boise called “The Drink.” Zora and Roman both worked at The 
Drink. Notably, Alsco provided linen services to The Drink under a contract—also signed by 
Roman—identical to the Agreement at issue for Fatty’s. Even so, Steven testified that he never 
saw the agreement between The Drink and Alsco until the current lawsuit had been initiated.1  
Steven declined Zora’s offer to become a financial partner, but he and Zora did discuss 
opening what they called a new business at the same location of Fatty’s, with Zora as the manager. 
On January 3, 2013, the Masonheimers filed a certificate of organization with the Idaho Secretary 
of State for “Fatty’s Bar, LLC.” When the documents were filed, Jennifer claimed she accidentally 
listed Zora as a member of Fatty’s Bar, LLC after she misinterpreted the term “manager;” however, 
                                                 
1 Shortly after Alsco filed this action for breach of contract over Fatty’s, the Masonheimers closed The Drink. In 
October 2017, Alsco contacted the Masonheimers and informed them that The Drink had violated its contract with 
Alsco for premature termination. Upon reviewing the contract, the Masonheimers decided to make payments through 
the end of the contract term rather than risk a lawsuit for breach of contract. 
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on January 15, 2013, Jennifer amended the certificate of organization and removed Zora’s name 
as a member manager of Fatty’s Bar, LLC.  
Fatty’s Bar, LLC negotiated a new five-year lease for the space occupied by Fatty’s. Fatty’s 
Bar, LLC also purchased the liquor license and some equipment that Tons of Fun, LLC had been 
leasing from Colby Smith. In January 2013, Fatty’s Bar, LLC temporarily shut down Fatty’s for 
about two months to remodel the space. Upon reopening, Fatty’s Bar, LLC retained most of the 
employees but hired a new security team. Zora was hired back as the general manager. Fatty’s Bar, 
LLC kept the name, “Fatty’s,” used the same signage, equipment, and vendors that Tons of Fun, 
LLC had used while operating Fatty’s.  
Once Fatty’s Bar, LLC reopened Fatty’s, Alsco continued to perform under the Agreement, 
making weekly deliveries and pick-ups. At some point, Jennifer contacted Alsco to change the 
billing process under the Agreement from cash-on-delivery to monthly statements sent to Fatty’s 
Bar, LLC’s address. Jennifer was also listed as the customer representative for Fatty’s in Alsco’s 
system. Beginning in April 2013, Alsco sent billing statements for its services to Fatty’s Bar, 
LLC’s address and Fatty’s Bar, LLC paid those statements for nearly four years.  
The district court also found that each statement Alsco sent to Fatty’s Bar, LLC contained 
the total balance owing and the following language: “The services for which these charges are 
made are being furnished to you pursuant to a service agreement between our company as supplier 
and the above named customer.” In addition, after taking ownership of Fatty’s, Fatty’s Bar, LLC 
amended the schedules under the written Agreement on at least one occasion to request new items 
or add inventory.2 
In August 2013, Fatty’s Bar, LLC and Zora parted ways and Fatty’s Bar, LLC executed an 
asset purchase agreement with Tons of Fun, LLC/Justin Zora. Fatty’s Bar, LLC agreed to pay 
$10,000 for the following equipment owned by Tons of Fun, LLC, as set forth on the inventory 
                                                 
2 The district court originally found that Fatty’s Bar, LLC amended the schedules on at least three occasions. Fatty’s 
Bar, LLC challenged this finding in its motion to reconsider, arguing no evidence supported it. The district court cited 
several “Schedule As” in the record where new items were added to the inventory and held that it was reasonable to 
infer that after Fatty’s Bar, LLC assumed the Alsco Agreement, because it communicated with Alsco on at least three 
occasions, leading to a new Schedule A each time. Yet because the schedules were not dated, the court recognized 
they could have been executed before Fatty’s Bar, LLC took over. Still, there was at least one Schedule A dated March 
29, 2013, while Fatty’s Bar, LLC was operating Fatty’s. The district court found that even if this were the only schedule 
executed it would not have altered the district court’s holding that Fatty’s Bar, LLC exercised its power to amend the 
Agreement, whether it did it one time or three times.  
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list attached to the asset purchase agreement: “all televisions and brackets, beer pong tables, 
exterior and interior signage, lighting, sound equipment, decorations, electronic equipment, 
liquor/alcohol, fixtures (stationary or built in), glass wear [sic], and anything with the Fatty’s logo 
on it.” After Zora left, Roman returned to work as the manager for Fatty’s Bar, LLC.  
On March 11, 2016, the Agreement automatically renewed for another 60 months after no 
party gave written notice terminating it. Fatty’s Bar, LLC continued to accept and pay for services 
under the Agreement for another year, until Fatty’s Bar, LLC found another vendor that could 
provide the same goods and services at a lower price. Fatty’s Bar, LLC terminated the Agreement 
with Alsco at that time.  
On May 2, 2017, Alsco filed a verified complaint alleging breach of contract against Clay 
Roman, an individual d/b/a Fatty’s, and Fatty’s LLC, an Idaho Limited Liability Corporation. 
Alsco amended the complaint the next day, changing the names of the defendants to Clay Roman, 
an individual d/b/a Fatty’s, and Fatty’s Bar, LLC, an Idaho Limited Liability Corporation. In it, 
Alsco alleged “[u]pon information and belief, FATTY’S BAR, LLC became the successor to Clay 
Roman d/b/a Fatty’s in 2013.”  
The case proceeded to a bench trial on April 10 and 11, 2018. Following the close of 
Alsco’s case, Fatty’s Bar, LLC moved for a directed verdict3, which the district court denied. After 
the trial concluded the district court issued its findings of fact and conclusions of law. The court 
held that Fatty’s Bar, LLC was liable to Alsco for breach of contract under the theory of successor 
liability because it impliedly assumed the Agreement. Further, under the Agreement the district 
court held Fatty’s Bar, LLC and Roman, jointly and severally liable to pay liquidated damages of 
$23,206.46. Fatty’s Bar, LLC moved to reconsider, which the district court denied. The district 
court also awarded Alsco $1,513.37 in costs and $26,766.00 in attorney fees, apportioned 80% to 
Fatty’s Bar, LLC and 20% to Roman. Fatty’s Bar, LLC now appeals to this Court. 
III. ISSUES ON APPEAL 
1. 
Whether the district court erred in holding that Fatty’s Bar, LLC was a successor in interest 
to Tons of Fun, LLC when Alsco did not plead a successor liability claim naming Tons of 
Fun, LLC?. 
                                                 
3 Fatty’s Bar, LLC originally thought the case would be tried to a jury, and thus styled its motion as one for directed 
verdict. The district court noted that the proper motion in a court trial would be a motion for involuntary dismissal 
under I.R.C.P. 41(b)(2). Counsel for Fatty’s Bar, LLC recognized this and noted that they were making a “41(b) 
motion,” but that the “standard under 41(b) is similar to that of directed verdict.”  
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2. 
Whether the district court abused its discretion by concluding that Fatty’s Bar, LLC was a 
successor in interest to Tons of Fun, LLC? 
3. 
Whether the district court abused its discretion by holding that Fatty’s Bar, LLC impliedly 
assumed the Agreement? 
4. 
Whether the district court erred by holding the statute of frauds was satisfied for the 
Agreement? 
5. 
Whether the district court erred in determining Alsco met its burden for an award of 
liquidated damages? 
6. 
Whether the district court abused its discretion in awarding attorney fees and costs to 
Alsco? 
7. 
Whether Fatty’s Bar, LLC should be awarded attorney fees on remand? 
8. 
Whether either party is entitled to attorney fees on appeal?  
IV. STANDARD OF REVIEW 
“The review of a trial court’s decision after a court trial is limited to 
ascertaining ‘whether the evidence supports the findings of fact, and whether the 
findings of fact support the conclusions of law.’ ” Griffith v. Clear Lakes Trout Co., 
143 Idaho 733, 737, 152 P.3d 604, 608 (2007) (quoting Idaho Forest Indus., Inc. v. 
Hayden Lake Watershed Improvement Dist., 135 Idaho 316, 319, 17 P.3d 260, 263 
(2000)). This Court will affirm a trial court’s findings of fact unless those findings 
are clearly erroneous. Id.; I.R.C.P. 52(a)(7). Findings of fact that are supported by 
substantial and competent evidence are not clearly erroneous—even in the face of 
conflicting evidence in the record. Kelly v. Wagner, 161 Idaho 906, 910, 393 P.3d 
566, 570 (2017). “Substantial and competent evidence is relevant evidence which 
a reasonable mind might accept to support a conclusion.” Id. (quoting Lamar Corp. 
v. City of Twin Falls, 133 Idaho 36, 42–43, 981 P.2d 1146, 1152–53 (1999)). 
Finally, because of the trial court’s special role to weigh conflicting evidence and 
judge the credibility of witnesses, “[t]his Court will ‘liberally construe the trial 
court’s findings of fact in favor of the judgment entered. ...’ ” Id. (quoting Oregon 
Mut. Ins. Co. v. Farm Bureau Mut. Ins. Co. of Idaho, 148 Idaho 47, 50, 218 P.3d 
391, 394 (2009)). 
Lunneborg v. My Fun Life, 163 Idaho 856, 863, 421 P.3d 187, 194 (2018).  
On a motion for reconsideration, the district court “must consider any new admissible 
evidence or authority bearing on the correctness of an interlocutory order . . . . [But the motion] 
need not be supported by any new evidence or authority.” Jackson v. Crow, 164 Idaho 806, 811, 
436 P.3d 627, 632 (2019) (quoting Fragnella v. Petrovich, 153 Idaho 266, 276, 281 P.3d 103, 113 
(2012)). The district court must apply the same standard of review that the court applied when 
deciding the original order that is being reconsidered. Id. 
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Finally, the doctrine of successor liability stems from equitable principles, and fairness is 
the prime consideration in application of the doctrine. Rego v. ARC Water Treatment Co. of 
Pa., 181 F.3d 396, 401 (3rd Cir. 1999); Criswell v. Delta Air Lines, Inc., 868 F.2d 1093, 1094 (9th 
Cir. 1989). See also Celestica, LLC v. Commc’ns Acquisitions Corp., 126 A.3d 835, 838 (N.H. 
2015) (“Claims of successor liability . . . are equitable in nature.”). “When one party is seeking 
recovery in equity, the trial court is vested with [broad] discretion in determining the ‘equities’ 
between the parties.” Lunneborg, 163 Idaho at 867, 421 P.3d at 198 (internal quotations omitted). 
On appeal we must review whether the four-prong standard for discretionary review has been met. 
That is, whether the trial judge: 
(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. 
 
Id. 
V. ANALYSIS 
At the outset we recognize that the application of successor liability to a given set of facts 
is a fact-intensive exercise in a legal field nearly uncharted by this Court. That said, it is also an 
area of law fraught with potential pitfalls. As one commentator recognized: 
 Successor liability law is mostly composed of state common law case-by-
case decisions. These decisions fundamentally seek to balance two competing, and 
often conflicting, policy goals: to provide a necessary remedy to injured parties, 
often tort claimants, and to provide transactional clarity and certainty for business 
parties engaged in fundamental corporate transactions. As it has developed to date, 
however, successor liability law is so varied and unpredictable that it is not only a 
trap for the unwary, but a trap for the very wary, as well.  
John H. Matheson, Successor Liability, 96 Minn. L. Rev. 371, 372–73 (2011). 
Such a trap may have caught the appellants here. Even so, we recognize and emphasize 
that this is an area of the law in which the trial court has broad discretion, and in which we are 
making a narrow decision based on (1) the record before us, and (2) the deferential standard of 
review that applies to such equitable results. 
A. 
Fatty’s Bar, LLC was put on notice that Alsco was pleading a claim of successor 
liability. 
Fatty’s Bar, LLC first argues that the district court erred in concluding that it could be liable 
under a theory of successor liability because Alsco never pled or argued that Fatty’s Bar, LLC was 
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a successor in interest to Tons of Fun, LLC, the owner of Fatty’s when the Agreement was 
executed. Instead, Alsco consistently argued that Fatty’s Bar, LLC became a successor to Clay 
Roman d/b/a Fatty’s in 2013. Fatty’s Bar, LLC argues that Alsco carried the burden of proof at 
trial and needed to name the correct predecessor corporation in its pleadings to sustain a successor 
liability claim. Thus, Fatty’s Bar, LLC argues Alsco waived any claim that Fatty’s Bar, LLC was 
liable for breach of contract as successor in interest to Tons of Fun, LLC.  
In general, a complaint must state claims upon which relief may be granted, and pleadings 
should be liberally construed in the interest of securing “a just, speedy and inexpensive resolution 
of the case.” Brown v. City of Pocatello, 148 Idaho 802, 807, 229 P.3d 1164, 1169 (2010); see also 
I.R.C.P. 1(b). The emphasis is to ensure that a just result is accomplished, rather than requiring 
strict adherence to rigid forms of pleading. Seiniger Law Office, P.A. v. N. Pac. Ins. Co., 145 Idaho 
241, 246, 178 P.3d 606, 611 (2008) (internal citation omitted). “Though this Court will make every 
intendment to sustain a complaint that is defective, e.g., wrongly captioned or inartful, a complaint 
cannot be sustained if it fails to make a short and plain statement of a claim upon which relief may 
be granted.” Brown, 148 Idaho at 807, 229 P.3d at 1169 (quoting Gibson v. Ada Cnty. Sheriff’s 
Dep’t, 139 Idaho 5, 9, 72 P.3d 845, 849 (2003)). “The key issue in determining the validity of a 
complaint is whether the adverse party is put on notice of the claims brought against it.” Id. Thus, 
so long as a complaint makes a short and plain statement of a claim upon which relief may be 
granted, this Court has recognized that the “complaint can be sustained despite its defect in 
misnaming a party.” Youngblood v. Higbee, 145 Idaho 665, 669, 182 P.3d 1199, 1203 (2008). 
First, Alsco claims that Fatty’s Bar, LLC’s argument is procedurally deficient because it 
was raised for the first time in its motion for reconsideration. “[A]n issue may be considered 
waived if raised for the first time in a motion for reconsideration.” AIA Servs. Corp. v. Idaho State 
Tax Comm’n, 136 Idaho 184, 188, 30 P.3d 962, 966 (2001) (citing State v. Rubbermaid, Inc., 129 
Idaho 353, 357, 924 P.2d 615, 619 (1996)). Still, when an issue has been directly addressed by the 
court below the merits may be reached on appeal. State v. DuValt, 131 Idaho 550, 553, 961 P.2d 
641, 644 (1998). In denying Fatty’s Bar, LLC’s motion for reconsideration, the district court 
rejected the argument that is now being raised on appeal: 
In its pleadings, ALSCO sought to hold Fatty’s Bar, LLC liable under the contract 
under a successor liability theory, although it asserted the predecessor Clay Roman, 
d/b/a Fatty’s. As is often the case following discovery, ALSCO later took the 
position that Fatty’s Bar, LLC became a successor in interest to whatever entity ran 
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Fatty’s prior [sic] the formation of Fatty’s Bar, LLC, whether it be Justin Zora 
and/or Tons of Fun and/or Clay Roman d/b/a Fatty’s. This argument was revealed 
in its opposition memorandum to Fatty’s Bar, LLC’s motion for summary 
judgment, its pre-trial brief, its jury instructions and its opening statement. This 
argument was consistent with Steven Masonheimer’s own understanding, as 
expressed in his December 21, 2017 declaration: “I was not sure exactly who the 
owner of the business was, but later believed it to be Clay Roman or an entity called 
Tons of Fun, LLC that I believed Mr. Roman was part owner in.” Going into trial, 
Fatty’s Bar, LLC’s predecessor was a disputed fact for the [c]ourt to determine, and 
the [c]ourt concluded—based on the evidence and testimony presented—that it was 
Tons of Fun, LLC. 
Ultimately, the district court determined that Fatty’s Bar, LLC was put on notice by the pleadings 
that Alsco sought to hold it liable under the Agreement based on a theory of successor liability, 
even if Alsco first guessed wrong on the predecessor’s identity.  
We hold that the district court properly concluded that Fatty’s Bar, LLC was on notice that 
Alsco was pleading a claim of successor liability implicating Fatty’s Bar, LLC for succeeding 
whoever the previous owner of Fatty’s was. Under Idaho’s liberal notice pleading standard, “[t]he 
key issue in determining the validity of a complaint is whether the adverse party is put on notice 
of the claims brought against it.” Brown, 148 Idaho at 807, 229 P.3d at 1169. The distinction that 
Fatty’s Bar, LLC is trying to make on appeal—that Alsco was required to name the correct 
predecessor when pleading a successor liability claim—does not alter the fact that Fatty’s Bar, 
LLC was on notice that a claim of successor liability was pled against it, even if it was inartfully 
asserted in the original pleadings. Indeed, Fatty’s Bar, LLC responded to the amended complaint 
and asserted the affirmative defense that “it was not a party to the contract at issue in this case, and 
does not meet the definition of a successor to any party to the contract.” “[W]here a defendant’s 
answer includes a defense to an alleged claim, that answer may be deemed sufficient evidence that 
a plaintiff’s complaint placed the defendant on notice of that pleading.” Brown, 148 Idaho at 810, 
229 P.3d at 1172. We hold that Fatty’s Bar, LLC was on notice that Alsco pled a claim of successor 
liability against it. 
B. 
The district court’s factual finding that Fatty’s Bar, LLC was a successor in 
interest to Tons of Fun, LLC is supported by substantial evidence  
Fatty’s Bar, LLC next contends that the district court erred when it found Fatty’s Bar, LLC 
to be a successor in interest to Tons of Fun, LLC because Fatty’s Bar, LLC was not a purchasing 
corporation of Tons of Fun, LLC. That said, resolving this question is not governed solely by the 
legal point that Fatty’s Bar, LLC makes.  
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As noted above, successor liability is generally considered an equitable doctrine. Criswell, 
868 F.2d at 1094; Rego, 181 F.3d at 401 (observing that successor liability “is derived from 
equitable principles”); Ed Peters Jewelry Co., Inc. v. C & J Jewelry Co., Inc., 124 F.3d 252, 267 
(1st Cir. 1997) (“successor liability is an equitable doctrine, both in origin and nature”); Uni-Com 
Nw., Ltd. v. Argus Pub. Co., 737 P.2d 304, 314 (Wash. Ct. App. 1987). “[A] trial court’s exercise 
in applying equitable principles requires recourse to principles of justice to correct or supplement 
the law as applied to particular circumstances, including the judicial prevention of hardship that 
would otherwise ensue from the literal interpretation of a fair-minded application of a trial court’s 
discretion.” Lunneborg, 163 Idaho at 867, 421 P.3d at 198 (internal quotations and brackets 
omitted). Cases involving claims of successor liability thus require a trial judge to weigh the 
competing equities of the case and make a reasoned and informed decision. As a result, appellate 
courts are deferential in reviewing a trial court’s equitable decisions such as those made by the 
district court here. See id. at 863, 421 P.3d at 194 (“In these cases, the trial court is responsible for 
determining factual issues that exist with respect to this equitable remedy and for fashioning the 
equitable remedy.”).  
To determine whether the district court abused its discretion, this Court applies the four-
part Lunneborg test set forth above. We review whether the district court acted consistently with 
the legal standards applicable to the specific choices available to it – and whether the district 
court’s decision falls within the outer boundaries of that discretion. Lunneborg, 163 Idaho at 863, 
421 P.3d at 194.  
Fatty’s Bar, LLC argues in multiple ways that the district court erroneously assumed that 
Fatty’s Bar, LLC bought all or substantially all the assets of Tons of Fun, LLC, and thereby 
erroneously concluded that Fatty’s Bar, LLC was a successor of Tons of Fun, LLC. First, Fatty’s 
Bar, LLC argues that it bought “all” assets for Fatty’s from Colby Smith, not from Tons of Fun, 
LLC, because it paid Smith $130,000 to lease the liquor license and $40,000 for other assets at 
Fatty’s location; as such, it argues that Fatty’s Bar, LLC could not have purchased all or 
substantially all the assets from Tons of Fun, LLC. This same contention was made to the district 
court below, but the court properly rejected it, recognizing that any assets Fatty’s Bar, LLC 
purchased from Colby Smith for the operations of Fatty’s do not relate to those assets that Fatty’s 
Bar, LLC purchased from Tons of Fun, LLC. The district court properly noted that the focus of 
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the analysis must remain on the interconnectedness between Fatty’s Bar, LLC and Tons of Fun, 
LLC. 
“Substantial evidence is more than a scintilla of proof, but less than a preponderance. It is 
relevant evidence that a reasonable mind might accept to support a conclusion.” Kelly v. Kelly, 165 
Idaho 716, 730, 451 P.3d 429, 443 (2019) (quoting Ehrlich v. DelRay Maughan, M.D., 
P.L.L.C., 165 Idaho 80, 83, 438 P.3d 777, 780 (2019)). Substantial evidence does not require that 
the evidence be uncontradicted. SilverWing at Sandpoint, LLC v. Bonner Cnty., 164 Idaho 786, 
794, 435 P.3d 1106, 1114 (2019) (citation omitted). Rather, the evidence need only be of sufficient 
quantity and probative value that reasonable minds could conclude that the fact finder’s conclusion 
was proper. Id. 
The substantial evidence found by the district court is that in August 2013, Fatty’s Bar, 
LLC executed an asset purchase agreement directly with Tons of Fun, LLC. Under the agreement, 
Fatty’s Bar, LLC agreed to pay $10,000 for the equipment owned by Tons of Fun, LLC that was 
connected to its operation of Fatty’s. The purchase included all the assets of the business, as 
itemized in the inventory list attached to the asset purchase agreement. Thus, despite Fatty’s Bar, 
LLC’s efforts to claim this agreement did not involve “all or substantially all” of the assets of Tons 
of Fun, LLC, it was reasonable for the district court to conclude that an agreement specifying “all 
televisions and brackets, all beer pong tables, all exterior and interior signage, all lighting, all 
sound equipment, all decorations, all electronic equipment, all liquor/alcohol, all fixtures 
(stationary or built in), all glass wear, and anything with the Fatty’s logo on it” constituted 
substantially all of Tons of Fun, LLC’s assets. (Emphasis added).  
Still, Fatty’s Bar, LLC argues that its agreement with Tons of Fun, LLC was only executed 
to settle any ownership Zora was claiming to the “Fatty’s sign” and to make sure Zora could “not 
come back against Fatty’s [Bar], LLC.” However, this view was rejected by the district court in 
favor of Alsco based on the substantial evidence in the record. This Court cannot reweigh that 
evidence on appeal. Thurston Enterprises, Inc. v. Safeguard Bus. Sys., Inc., 164 Idaho 709, 721, 
435 P.3d 489, 501 (2019). The question is whether Fatty’s Bar, LLC, purchased all or substantially 
all of Tons of Fun, LLC’s assets. There is no evidence in the record that any assets held by Tons 
of Fun, LLC were not transferred to Fatty’s Bar, LLC. The district court was “responsible for 
determining factual issues that exist with respect to [successor liability] and for fashioning the 
equitable remedy.” Lunneborg, 163 Idaho at 863, 421 P.3d at 194. Based on the evidence, the 
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district court did not abuse its discretion when it held that Fatty’s Bar, LLC purchased or was the 
transferee of all or substantially all of Tons of Fun’s assets. Thus, we affirm the district court’s 
conclusion that Fatty’s Bar, LLC was a successor in interest to Tons of Fun, LLC.  
C. 
The district court did not abuse its discretion when it held that Fatty’s Bar, LLC 
impliedly assumed the Agreement.  
Having concluded that substantial evidence supports the district court’s conclusion that 
Fatty’s Bar, LLC was a successor in interest to Tons of Fun, LLC, we must now assess the district 
court’s legal conclusion in holding that Fatty’s Bar, LLC is obligated under the written Agreement 
between Tons of Fun, LLC and Alsco.   
The general rule, which is well settled in other jurisdictions, is that where one company 
sells or otherwise transfers all its assets to another company, the latter is not liable for the debts 
and liabilities of the transferor. 15 William Meade Fletcher, Cyclopedia of the Law of 
Corporations, § 7122 (Perm. ed. 2008) (collecting cases); Cayne v. Washington Tr. Bank, 125 F. 
Supp. 3d 1128, 1145 (D. Idaho 2015) (citing Uni-Com., 737 P.2d at 311) (“a corporation 
purchasing the assets of another corporation does not, by reason of the purchase of assets, become 
liable for the debts and liabilities of the selling corporation.”). We recognize this general principle 
and adopt it in a general sense in Idaho. However, the trap for the unwary in these cases is that 
successor liability also depends on the particular facts and legal duties at stake in each case; as a 
result, a buyer of assets “may be a successor for some purposes and not for others.” Indiana Elec. 
Workers Pension Benefit Fund v. ManWeb Servs., Inc., 884 F.3d 770, 776 (7th Cir. 2018); Howard 
Johnson Co., Inc. v. Detroit Local Joint Exec. Bd., Hotel & Rest. Emp. & Bartenders Int’l Union, 
AFL-CIO, 417 U.S. 249, 262, n. 9 (1974) (noting “[t]here is, and can be, no single definition of 
‘successor’ which is applicable in every legal context.”). Thus, a court acting in equity may make 
a discretionary decision that is within the outer limits of its discretion, but that goes against the 
general rule cited by Fatty’s Bar, LLC.  
There are four recognized exceptions which may require a successor entity to be liable as 
a successor: (1) the purchaser expressly or impliedly agrees to assume the liability; (2) the purchase 
is a de facto merger or consolidation; (3) the purchaser is a mere continuation of the seller; or (4) 
the asset transfer is for the fraudulent purpose of escaping liability. Cayne, 125 F. Supp. 3d at 
1145–46. Here, the district court held that Fatty’s Bar, LLC impliedly assumed liability for the 
Alsco Agreement, so the focus of our review is on that exception alone.  
13 
 
“[P]roof of an implied assumption of contractual liabilities is a heavily fact-intensive 
exercise.” Cayne, 125 F. Supp. 3d at 1148. “An implied assumption requires consideration of all 
the circumstances, such as the subject matter of the contract, the assignee’s acts and words, and 
whether he acquiesced in the terms of the contract, performed its obligations, or accepted its 
benefits.” Id. at 1148–49. “In order for a promise to be implied, the conduct or representations 
relied upon must evidence an intention on the part of the purchasing company to assume the old 
corporation’s liabilities in whole or in part.” Fletcher, supra, § 7124.  
That said, Fatty’s Bar, LLC rightly points out that an agreement will not be implied merely 
from the fact that a new corporation has voluntarily paid some debts of the old corporation, without 
further manifestation of an intent to pay all of its debts. Uni-Com., 737 P.2d at 311–12.  
“[I]n order that a promise may be implied, on the part of a corporation, to pay the 
debts of another corporation, to the property and franchises of which it has 
succeeded by a valid purchase, the conduct or representations relied upon must 
show such an intention. The presence of such an intention depends on the facts and 
circumstances of each case. . . . However, the mere fact that the new corporation 
has voluntarily paid some of the debts of the old corporation is no ground for 
inferring that it assumed the latter’s debts . . . .”  
 
Id. (internal citations omitted). 
The district court found that this exception applied, and required Fatty’s Bar, LLC to be 
responsible for the debt under the Agreement because the subject matter of the agreement, and 
Fatty’s Bar, LLC’s acts and words showed “there was acquiescence in the terms of the contract . . 
. .” Cayne, 125 F. Supp. 3d at 1148.   
Fatty’s Bar, LLC argues that the district court erred when it determined Fatty’s Bar, LLC 
impliedly assumed the Agreement with Alsco for four reasons. First, Fatty’s Bar, LLC alleges that 
Alsco needed to present some evidence showing an intent by Fatty’s Bar, LLC to pay the debts of 
Tons of Fun, LLC and that a “fortuitous debt payment is not enough.” Yet Fatty’s Bar, LLC’s 
continuous acceptance of and payment for Alsco’s services for years after Tons of Fun, LLC 
ceased to exist can hardly be considered a “fortuitous debt payment.” Fatty’s Bar, LLC, cites Uni-
Com., 737 P.2d at 312, to support its position, but that case is inapt. The debt at issue there was 
avoided by the successor company because while it paid “some of the debts of the old corporation,” 
after it took over, the successor company made no “further manifestation of an intent to pay all of 
[the old corporation’s] debts.” Id. Here, as the district court again found in its factual findings, 
14 
 
Fatty’s Bar, LLC continued to use and pay for all of Alsco’s services under the Agreement for four 
years before it decided to terminate Alsco’s services due to finding a cheaper option.  
Second, Fatty’s Bar, LLC claims that the district court incorrectly focused on the actions 
and relationship between Fatty’s Bar, LLC and Alsco instead of the relationship between Fatty’s 
Bar, LLC and Tons of Fun, LLC4. Fatty’s Bar, LLC argues that it was a new entity with minimal 
connections to Tons of Fun, LLC. Yet this argument is again belied by the factual findings of the 
district court that Tons of Fun, LLC and Fatty’s Bar, LLC had material connections before and 
after Fatty’s Bar, LLC took over the operation, not the least of which were the ongoing operation 
of the bar in the identical leased space Fatty’s used, using the same liquor license and equipment 
that Fatty’s used, and using the identical name for the bar.   
Third, Fatty’s Bar, LLC claims that the district court erred because if it did assume any 
debt from Tons of Fun, LLC, it was only the initial 60-month contract, and that the auto-renewal 
clause was not a debt that could be passed on to Fatty’s Bar, LLC. The district court rejected this 
argument, holding that Fatty’s Bar, LLC impliedly assumed the entire Agreement, not just the term 
remaining until March 2016. We agree. To hold otherwise would undermine the basis of successor 
liability law. For successor liability, “liabilities” assumed include not only outstanding debts, but 
obligations arising under contracts assumed, including a contingent future liability on a contract. 
Fletcher, supra, § 7115.  
Last, Fatty’s Bar, LLC argues that even if it were a successor to Tons of Fun, LLC, Fatty’s 
Bar, LLC could not be liable for more than the amount of assets it bought from Tons of Fun, LLC; 
as such, it argues the district court erred in holding Fatty’s Bar, LLC liable for liquidated damages 
under the Agreement. In support, Fatty’s Bar, LLC cites Radermacher v. Daniels, where this Court 
stated, “[t]he law seems to be well settled, that those who take over the business and assets of a 
dissolved corporation, take it subject to the debts and liabilities of the corporation, to the full extent 
of the value of the property taken over.” 64 Idaho 376, 378, 133 P.2d 713, 715 (1943). The district 
court rejected Fatty’s Bar, LLC’s argument as “antiquated and factually distinguishable,” noting 
                                                 
4 Fatty’s Bar, LLC relies upon Zantel Marketing Agency v. Whitesell Corporation, 696 N.W.2d 735 (Mich. Ct. App. 
2005) to support its argument as to this point, but in that case the succeeding entity “expressly limited its liabilities in 
the asset agreement.” Id. at 741. This holding does not apply to this case because there was no express agreement to 
limit liabilities between Fatty’s Bar, LLC and Tons of Fun, LLC.   
 
15 
 
there was never a claim from Alsco against Tons of Fun, LLC on the Agreement prior to the asset 
sale. Rather, the breach occurred after Fatty’s Bar, LLC terminated the Agreement years after the 
asset sale. As the party breaching the Agreement, which was valid when impliedly assumed, 
Fatty’s Bar, LLC cannot reasonably limit its damages because the rationale behind this rule simply 
does not apply here. There is no need to look at what Tons of Fun, LLC would have had to pay 
due to the breach because the liability belongs to Fatty’s Bar, LLC alone. Indeed, the more current 
and appropriate rule is that 
[a] surviving or consolidated company is liable on the claims against the constituent 
companies without regard to the amount of assets received from them. This is 
undoubtedly the rule, although the language used in some older decisions might be 
construed to indicate a limitation of liability to the property received.  
Fletcher, supra, § 7119. 
Ultimately, we hold that the district court applied appropriate legal standards and acted 
within the boundaries of its discretion in concluding that Fatty’s Bar, LLC impliedly assumed the 
liabilities under the Agreement. Again, “proof of an implied assumption of contractual liabilities 
is a heavily fact-intensive exercise.” Cayne, 125 F. Supp. 3d at 1148. Reviewing the record here, 
once Fatty’s Bar, LLC reopened Fatty’s in March 2013, Alsco continued to perform under the 
Agreement, making weekly deliveries and pick-ups at Fatty’s. Fatty’s Bar, LLC accepted and paid 
for these services until March 2017. Fatty’s Bar, LLC showed its ability to contact Alsco and 
modify the Agreement by: (1) notifying Alsco that Fatty’s ownership had changed; (2) changing 
the billing process; and (3) amending the schedules under the Agreement to request new items or 
add inventory. Fatty’s Bar, LLC’s acceptance of benefits and performance of obligations under the 
Agreement, as well as its affirmative acts in alerting Alsco to the existence of a new owner and 
changing the Agreement, all support the district court’s application of legal principles that Fatty’s 
Bar, LLC impliedly assumed the liabilities under the Agreement. The bottom line is that Fatty’s 
Bar, LLC “acquiesce[d] in the terms of the contract” by receiving benefits from Alsco and paying 
for those benefits for years. Cayne, 125 F. Supp. 3d at 1148. The district court did not abuse its 
discretion in holding that Fatty’s Bar, LLC impliedly assumed the Agreement. 
D. 
The district court did not err when it determined that the statute of frauds was 
satisfied for the entire Agreement, including the auto-renewal provision. 
Fatty’s Bar, LLC argues that the successor liability claims asserted by Alsco are barred by 
the statute of frauds. In Idaho, the statute of frauds requires “[a]n agreement that by its terms is not 
16 
 
to be performed within a year from the making thereof” to be in writing and subscribed by the 
party charged with performance of the contract. I.C. § 9-505(1). Below, the district court held that 
the statute of frauds was satisfied as to Tons of Fun, LLC and Roman, and under the doctrine of 
successor liability, that satisfaction was imputed to Fatty’s Bar, LLC. The court reasoned that to 
find otherwise would undercut the entire basis of successor liability on contracts, which is 
grounded on the lack of a written contract signed by the successor entity. The district court also 
relied on Lehman Brothers Holdings, Inc., v. Gateway Funding Diversified Mortgage Services, 
L.P., as discussed below, for its conclusion that if the contract satisfied the statute of frauds vis-à-
vis the predecessor company, then it can be enforced against a successor in interest and does not 
pose a statute of frauds problem. We agree with the district court’s reasoning as applied to the facts 
here. 
In Lehman Brothers, the United States District Court for the Eastern District of 
Pennsylvania considered whether a cause of action for breach of contract could proceed against a 
purported successor in interest. 942 F. Supp. 2d 516 (E.D. Pa. 2013). Arlington Capital Mortgage 
Corporation (“Arlington”), a mortgage origination company, entered into a loan purchase 
agreement with Lehman Brothers Bank (“Lehman”). Id. at 520. Under the agreement Lehman 
agreed to buy mortgage loans “from time to time” from Arlington and Arlington made several 
representations and warranties. Id. Lehman later claimed that several mortgage loans it purchased 
from Arlington contained various errors and misrepresentations, breaching their agreement. Id. 
Years later, Arlington and Gateway Funding Diversified Mortgage Services, L.P. (“Gateway”) 
entered into an asset purchase agreement, under which Gateway agreed to purchase and assume 
certain specified liabilities of Arlington. Id. Lehman argued that Gateway was liable as Arlington’s 
successor under the de facto merger doctrine. Id. at 523. On appeal, the Pennsylvania Court 
recognized that the purpose behind the de facto merger doctrine is to “avoid the patent injustice 
which might befall a party simply because a merger has been called something else.” Id. at 525 
(internal citation omitted). The Pennsylvania Court held there was a genuine dispute of material 
fact about whether the asset purchase agreement led to a continuity of ownership and ultimately a 
de facto merger. However, the court clarified that if the jury found a de facto merger on remand 
there would be no statute of frauds problem because by definition Gateway would assume 
Arlington’s written liabilities, even though there was no written agreement between Lehman and 
Gateway. Id. at 533. 
17 
 
Fatty’s Bar, LLC argues that the district court erred in applying Lehman Brothers here 
because that case turned on the de facto merger exception to successor liability, not the implied 
assumption of the contract exception – and the district court held that the de facto merger doctrine 
did not apply in this case.  
Fatty’s Bar, LLC is correct, Lehman Brothers hinges on another exception (the doctrine of 
de facto merger5) to the general rule regarding successor liability, and the district court found that 
the de facto merger doctrine was not established in this case. Even so, the court in its discretion 
applied the Lehman Brothers rationale as it relates to the statute of frauds in an effort to reach an 
equitably fair decision.  
The dissent likewise opposes the district court’s reliance on Lehman Brothers. We 
recognize those concerns, but reiterate that the “fact-intensive exercise” undertaken by the district 
court lead the court to conclude as a matter of fact and law that the implied agreement exception 
was warranted and sustained by the facts here. The trial court’s conclusion was based not on 
Lehman Brothers, but was informed by the Lehman Brothers’ underlying rationale in addressing 
the statute of frauds question here – when the foundation for Fatty’s Bar, LLC’s liability is implied.  
Thus, this case hinges on the exception to the general rule based on an implied agreement. 
That exception to the general rule is widely accepted, and when properly applied, as the district 
court did here, provides foundation for the conclusion that Fatty’s Bar, LLC impliedly assumed 
the Alsco agreement with all of its provisions. It thus naturally flows from that conclusion that the 
statute of frauds is not implicated because (1) there was a writing between Alsco and Tons of Fun, 
                                                 
5 The doctrine of de facto merger is an equitable doctrine that recognizes successor liability may attach “where one 
corporation is absorbed by another, but without compliance with the statutory requirements for a merger.” U.S. v. 
Sterling Centrecorp Inc., 960 F. Supp. 2d 1025, 1041 (E.D. Cal. 2013). Courts have considered these factors to 
determine whether an asset purchase should be characterized as a de facto merger:  
(1) There is a continuation of the enterprise of the seller corporation, so that there is continuity of 
management, personnel, physical location, assets, and general business operations; (2) There is a 
continuity of shareholders which results from the purchasing corporation paying for the acquired 
assets with shares of its own stock, this stock ultimately coming to be held by the shareholders of 
the seller corporation so that they become a constituent part of the purchasing corporation; (3) The 
seller corporation ceases its ordinary business operations, liquidates, and dissolves as soon as legally 
and practically possible; (4) The purchasing corporation assumes those obligations of the seller 
ordinarily necessary for the uninterrupted continuation of normal business operations of the seller 
corporation. 
Id. at 1041–42. 
 
18 
 
LLC, which Fatty’s Bar, LLC assumed; and (2) as the district court found, “[s]ince the parties 
already expressly agreed in writing to an automatic renewal of the contractual term, the risk of 
fraud that the signed writing [requirement] is designed to prevent is alleviated.” The district court 
reinforced its decision with the following citation to authorities other than Lehman Brothers, which 
gives added weight to its discretionary reasoning process: 
Although not yet addressed in Idaho, the predominant approach under this 
circumstance is to hold that the ‘renewal’ is not within the statute of frauds. See, 
Signal Mgmt. Corp. v. Lamb, 541 N.W.2d 449, 454 (N.D. 1995) (collecting cases). 
In fact, Ripani v. Liberty Loan Corp. – cited by Fatty’s Bar LLC for the proposition 
that renewal of a lease in excess of one year is subject to the statute of frauds – held 
just the opposite. 157 Cal. Rptr. 272 (Cal. Ct. App. 1979). It found that the exercise 
of an option to renew a lease does not violate the statute of frauds where the original 
written lease satisfied the statute of frauds. Id. This result [is] only logical given the 
purpose underpinning the statute of frauds. Since the parties already expressly 
agreed in writing to an automatic renewal of the contractual term, the risk of fraud 
that the signed writing [requirement] is designed to prevent is alleviated.    
We recognize that these cases are distinguishable because they deal with a tenant’s ability 
to exercise an option to extend a lease, while here, the Agreement involved an automatic 60-month 
extension of linen service. That is a distinction without a difference. Either way, the rationale 
underscores whether the original agreement satisfies the statute of frauds. The agreement that the 
trial court found Fatty’s Bar, LLC impliedly assumed included multiple provisions binding on 
Fatty’s Bar, LLC, including the auto-renewal provision. Indeed, in denying Fatty’s Bar, LLC’s 
motion for reconsideration, the district court held: “[i]f anything, the rule cited in Lehman 
Bro[thers] is even more applicable in an implied assumption situation, where—by definition—the 
assumption is based on words and conduct, not a writing.” We agree with this rationale on these 
facts, and therefore affirm the district court’s exercise of discretion as it applies to the statute of 
frauds. 
E. Fatty’s Bar, LLC’s remaining arguments about the Agreement lack merit. 
Fatty’s Bar, LLC makes three other arguments in support of its position it should not be 
liable to Alsco under the Agreement: (1) that Fatty’s Bar, LLC is not liable on the renewed 
Agreement because there was no “meeting of the minds” with Alsco on the material terms; (2) the 
Agreement was not assignable because it was a personal services contract; and (3) the Agreement 
was subject to a part-performance exception to the statute of frauds. Fatty’s Bar, LLC’s arguments 
19 
 
overlook the foundational conclusion that undergirds Alsco’s claims here – there was no new 
contract created between Alsco and Fatty’s Bar, LLC when Fatty’s reopened in March 2013; 
instead, the written Agreement was already signed and in place when Fatty’s Bar, LLC impliedly 
assumed it. Fatty’s thus also accepted all of the Agreement’s terms, including its auto-renewal 
provision.  
Thus, these claims that hinge on the failure to form a “new” agreement do not apply here 
based on the findings of the district court. Fatty’s Bar, LLC impliedly assumed the prior, written 
agreement, based on its words and actions as set forth above. To find otherwise would require us 
to reweigh the evidence and contravene the district court’s factual findings – which we cannot do.  
F. 
The district court properly awarded Alsco liquidated damages under the Agreement. 
Fatty’s Bar, LLC briefly argues that the district court should not have awarded liquidated 
damages here because Alsco did not try to introduce any evidence regarding its actual damages, 
and failed to show that Fatty’s Bar LLC’s liquidated damages (which it claims were $21,0006) 
bore any reasonable relationship to Alsco’s actual damages.  
Liquidated damages clauses are enforceable in Idaho so long as two requirements are 
satisfied: “First, an accurate determination of the actual damages that might be incurred upon 
breach must be difficult or impossible to determine. Second, the amount of the liquidated damages 
must bear a reasonable relationship to the actual damages anticipated to be incurred.” Margaret 
H. Wayne Tr. v. Lipsky, 123 Idaho 253, 258–59, 846 P.2d 904, 909–10 (1993). That said, a 
liquidated damage clause will not be enforced if it is found to be a penalty. Id. at 259, 846 P.2d at 
910.  
“The party asserting that a liquidated damages clause is unenforceable bears the burden of 
proving that the liquidated damages are not reasonably related to actual damages, and/or are 
exorbitant and unconscionable.” Schroeder v. Partin, 151 Idaho 471, 476, 259 P.3d 617, 622 
(2011) (citing Howard v. Bar Bell Land & Cattle Co., 81 Idaho 189, 197, 340 P.2d 103, 107 
(1959)). If a liquidated damages clause is unenforceable, the non-breaching party is entitled to 
compensation for its actual damages. Id. (citing City of Idaho Falls v. Beco Const. Co., Inc., 123 
Idaho 516, 522, 850 P.2d 165, 171 (1993)). 
                                                 
6 The district court actually awarded Alsco $23,206.46 in liquidated damages.  
20 
 
Fatty’s Bar, LLC argues that liquidated damages were not appropriate based on Alsco’s 
failure to introduce any evidence of its actual damages. First, we note that it was Fatty’s Bar, LLC, 
not Alsco, that bore the burden of proving that the liquidated damages were not reasonably related 
to Alsco’s actual damages. Schroeder, 151 Idaho at 476, 259 P.3d at 622. The district court rejected 
Fatty’s Bar, LLC’s argument, holding this is the very purpose of a liquidated damages provision – 
to fix the amount of damages that are anticipated but difficult to establish. Indeed, in evaluating 
the validity of a liquidated damages clause the focus is on whether the provision bears a reasonable 
relation to the anticipated damages occasioned by a breach, not that a party must prove the precise 
amount of its actual damages. Such a requirement would do away with the function of liquidated 
damages clauses. 
Under the Agreement, Alsco was responsible for supplying exclusive goods and services 
that could be changed depending on Fatty’s Bar, LLC’s needs. The district court held this led to 
fluctuating invoice amounts, making actual damages difficult to prove, and a liquidated damages 
provision appropriate. An accurate determination of damages caused by early termination would 
be fraught with speculation on what Fatty’s Bar LLC’s future needs would be under the remaining 
life of the Agreement and how well Alsco could mitigate damages by locating a new customer in 
Fatty’s Bar, LLC’s place. 
We agree with the district court’s application of these legal principles, concluding that 
damages would be difficult to calculate based on Fatty’s Bar, LLC’s ability to amend the goods 
and services received under the Agreement. Further, the liquidated damages provision under the 
Agreement bore a reasonable relation to the actual damages because it was calculated based on the 
actual amounts charged for the previous ten weeks. Under the Agreement, early termination 
constitutes a breach, and that the breaching party is liable to pay “a sum equal to the number of 
unexpired weeks remaining in the term then in effect multiplied by fifty percent (50%) of the 
average weekly charge for goods and services during the 10 weeks immediately preceding such 
failure to pay, breach or premature termination.” When Fatty’s Bar, LLC discontinued Alsco’s 
services, there were 207 weeks left under the Agreement. Alsco presented evidence that the 
average weekly invoice was $224.22, thus, if the Agreement was paid through the full term Alsco 
would have received $46,412.92. Under the Agreement, the liquidated damages constituted half 
of that amount—$23,206.46. The figures establish the reasonable relationship between actual and 
liquidated damages. Thus, we affirm the district court’s award.  
21 
 
G. 
The district court did not abuse its discretion when it awarded Alsco costs and 
attorney fees as the prevailing party.  
Fatty’s Bar, LLC argues the district court erred in awarding Alsco attorney fees on its 
successor liability claim because Alsco should not have been the prevailing party. Fatty’s Bar, 
LLC also challenges the district court’s apportionment of fees, 80% to Fatty’s Bar, LLC and 20% 
to Roman, because Alsco did not show how fees were incurred with respect to each defendant.  
“[A] trial court is vested with broad discretion to determine the prevailing party in a 
multiple claim action.” Int’l Eng’g Co., Inc. v. Daum Indus., Inc., 102 Idaho 363, 366, 630 P.2d 
155, 158 (1981). “The trial court may determine that a party to an action prevailed in part and did 
not prevail in part, and on so finding may apportion the costs between and among the parties in a 
fair and equitable manner after considering all of the issues and claims involved in the action and 
the resulting judgment or judgments obtained.” I.R.C.P. 54(d)(1)(B). 
This Court reviews a district court’s award of attorney fees for an abuse of discretion. 
SilverWing at Sandpoint, LLC v. Bonner Cnty., 164 Idaho 786, 794, 435 P.3d 1106, 1114 (2019). 
To determine whether an abuse of discretion occurred, this Court applies the four-part Lunneborg 
test, 163 Idaho at 863, 421 P.3d at 194, stated earlier. “A party claiming attorney’s fees must assert 
the specific statute, rule, or case authority for its claim.” Eighteen Mile Ranch, LLC v. Nord 
Excavating & Paving, Inc., 141 Idaho 716, 720, 117 P.3d 130, 134 (2005) (quoting MDS Invs., 
L.L.C. v. State, 138 Idaho 456, 465, 65 P.3d 197, 206 (2003)). Idaho Code section 12-120(3) 
provides that “[i]n any civil action . . . 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). Attorney fees also may be awarded to the 
prevailing party when the parties contemplated such fees in the contract. Zenner v. Holcomb, 147 
Idaho 444, 452, 210 P.3d 552, 560 (2009). 
Alsco requested attorney fees under the Agreement as well Idaho Code sections 12-120(1), 
12-120(3), and/or 12-121. The district court declined to award attorney fees under Idaho Code 
section 12-120(1) or section 12-121, but held that Alsco was entitled to attorney fees under the 
Agreement and under section 12-120(3).  
The district court held that because Fatty’s Bar, LLC impliedly assumed the Agreement 
with Alsco it was bound by the following attorney fee provision in the Agreement: 
22 
 
15. Enforcement of Agreement. In the event Supplier is required to enforce, 
defend and/or protect its rights under the Agreement, Customer agrees that in 
addition to all other amounts which it might be required to pay, it will pay 
Supplier’s costs of enforcing, defending and/or protecting its rights under this 
Agreement, including reasonable collection fees, attorney’s fees and costs.  
 
The district court also held attorney fees were appropriate under Idaho Code section 12-
120(3) and I.R.C.P. 54(e)(1) because Alsco delivered goods to Fatty’s Bar, LLC for use in its 
business and Fatty’s Bar, LLC paid for such goods, which constituted the very definition of a 
commercial transaction under section 12-120(3).  
Fatty’s Bar, LLC’s challenge on appeal is that the district court should not have awarded 
any damages to Alsco under its successor liability claim, and therefore Alsco should not have been 
entitled to prevailing party fees under the contract or under section 12-120(3). Because we have 
affirmed the district court holding that Fatty’s Bar, LLC impliedly assumed the Agreement, we 
likewise affirm the district court’s award of attorney fees under the Agreement and/or section 12-
120(3).   
Fatty’s Bar, LLC also disputes how the district court apportioned fees between Fatty’s Bar, 
LLC and Roman. After concluding that Alsco was entitled to an award of attorney fees as the 
prevailing party, the district court apportioned 80% of the attorney fees to Fatty’s Bar, LLC and 
20% to Roman. On appeal, the LLC argues that the district court abused its discretion and did not 
act reasonably because Alsco did not apportion its billing entries by defendant. Even so, the district 
court apportioned the attorney fees as it did after concluding that the trial was focused largely on 
Fatty’s Bar, LLC’s liability and, as a result, most of Alsco’s work was dedicated to Fatty’s Bar, 
LLC, not Roman. For example: Fatty’s Bar, LLC first asserted counterclaims and demanded a jury 
trial against Alsco, requiring Alsco to respond to the counterclaims and prepare jury instructions; 
Fatty’s Bar, LLC issued discovery requests to Alsco; Fatty’s Bar, LLC moved for summary 
judgment on Alsco’s breach of contract claim against it; and Fatty’s Bar, LLC moved for 
reconsideration and objected to Alsco’s request for attorney fees and costs.  
Roman took no similar countermeasures to defend against Alsco’s claims. He did not assert 
counterclaims, demand a jury trial, issue discovery or move for summary judgment. The district 
court recognized that Roman conceded early that he signed the Agreement as an employee of 
“Fatty’s,” he just did not realize that he was signing a contract. The record supports the district 
court’s conclusion that most of the work Alsco’s attorneys did pertained to Fatty’s Bar, LLC. The 
23 
 
district court did not abuse its discretion in the way it chose to equitably apportion attorney fees 
between the two defendants.  
H. 
Fatty’s Bar, LLC’s request for attorney fees on remand is moot. 
Fatty’s Bar, LLC argues that this Court should vacate the award of damages to Alsco on 
its successor liability claim and award Fatty’s Bar, LLC its costs and attorney fees as the prevailing 
party under Idaho Code section 12-120(3). Because we have affirmed the district court’s holding 
that Fatty’s Bar, LLC was a successor in interest to Tons of Fun, LLC, and liable on the Agreement, 
this issue is moot.  
I. 
Alsco is awarded attorney fees on appeal. 
Both parties request attorney fees on appeal. Fatty’s Bar, LLC requests attorney fees under 
Idaho Code section 12-120(3) because of the commercial transactions between the parties, and 
argues section 12-120(3) is appropriate even if the Court finds that the Agreement with Alsco is 
not enforceable. Additionally, Fatty’s Bar, LLC requests an award of attorney fees under Idaho 
Code section 12-121 for any frivolous, unreasonable, or unfounded arguments by Alsco on appeal. 
Fatty’s Bar, LLC is not the prevailing party; thus, it has no right to attorney fees on appeal.  
Alsco argues that it is entitled to attorney fees on appeal under the Agreement which 
provides: “In the event Supplier is required to enforce, defend and/or protect its rights under the 
Agreement, Customer agrees that in addition to all other amounts which it might be required to 
pay, it will pay supplier’s costs of enforcing, defending and/or protecting its rights under this 
Agreement, including reasonable collection fees, attorneys’ fees and costs.” Alsco also argues that 
the dispute between the parties falls under section 12-120(3) because the case specifically arose 
out of a contract for the supply of goods and services, and was a commercial transaction as the 
Code defined.  
Attorney fees under Idaho Code section 12-120(3) are appropriately awarded to the 
prevailing party “[i]n any civil action . . . in any commercial transaction. The term “commercial 
transaction” is defined to mean all transactions except transactions for personal or household 
purposes. Id. “The test for determining whether this provision authorizes an award of attorney fees 
is ‘whether the commercial transaction comprises the gravamen of the lawsuit.’” Erickson v. 
Flynn, 138 Idaho 430, 436, 64 P.3d 959, 965 (Ct. App. 2002) (quoting Brower v. E.I. DuPont 
Nemours and Co., 117 Idaho 780, 784, 792 P.2d 345, 349 (1990).  
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Alsco is entitled to attorney fees on appeal under the Agreement and Idaho Code section 
12-120(3) for the same reasons identified by the district court in awarding fees below. Because 
Fatty’s Bar, LLC impliedly assumed the Agreement with Alsco, it is bound by the attorney fee 
provision in it. Attorney fees under section 12-120(3) are also appropriate because Alsco delivered 
goods to Fatty’s Bar, LLC for use in its business, and Fatty’s Bar, LLC paid for such goods, which 
constitutes a commercial transaction.  
VI. CONCLUSION 
As noted at the start of this Opinion, we address broad legal principles in a narrow way. 
On the facts of this record, the district judge did not abuse its discretion. We therefore affirm the 
judgment and award Alsco attorney fees and costs as the prevailing party in this appeal.  
Justices BRODY and MOELLER, CONCUR. 
STEGNER, J., dissenting. 
 
I respectfully dissent. I believe that “successor liability” does not remove this contract from 
the applicability of Idaho’s statute of frauds. Consequently, Fatty’s Bar has a bona fide legal 
defense to Alsco’s suit. In particular, I believe that the district court erred as a matter of law in 
applying Pennsylvania law to this case while at the same time ignoring extant Idaho law. 
The district court’s analysis of the statute of frauds is sparse, but what is there is faulty. 
The district court wrote that “[t]he issue is whether, in cases of successor liability, an assumed 
agreement falling within the statute of frauds must be separately subscribed by the successor 
business to be enforceable. Logically, the answer must be no. To find otherwise would undercut 
the entire concept of successor liability on contracts.” This is the extent of the district court’s 
analysis. While the district court finds this “logical,” it is anything but. It does not explain how 
this is “logical” other than to say that application of the statute of frauds “would undercut the entire 
concept of successor liability.” While I agree the application of the statute of frauds undercuts 
successor liability, I think this is precisely its intended effect. This is not the application of logic. 
It is simply arriving at a predetermined result and calling it “logical.”  
The district court went on to cite Lehman Brothers Holdings, Inc. v. Gateway Funding 
Diversified Mortgage Services, L.P., 942 F. Supp. 2d 516, 533 (E.D. Pa. 2013), for the proposition 
that “if the contract satisfied the statute of frauds vis-à-vis the predecessor company, then it can be 
enforced against a successor in interest and does not pose a statute of frauds problem.” First, the 
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case relied upon, Lehman Brothers, is not binding authority in Idaho. (It is noteworthy that it would 
not even be binding authority in Pennsylvania state court.) Second, the facts in Lehman Brothers 
are readily distinguishable from the facts in this case. There, the parties agreed that Pennsylvania 
law applied. Lehman Bros., 942 F. Supp. 2d at 523 n.4. The liability rejected by the defendant was 
the obligation to purchase, “from time to time,” mortgage loans from a third party. Id. at 520. The 
predecessor and successor entities had entered into an asset purchase agreement in which the 
successor had explicitly agreed to assume certain specified liabilities of its predecessor. Id. at 521. 
Lehman Brothers also involved a de facto merger. Id. at 523. None of these facts are comparable 
to this case. I accordingly cannot agree with the district court’s application—and the majority’s 
acceptance—of the holding in Lehman Brothers. 
The majority suggests that the district court was merely “informed” by Lehman Brothers, 
stating that the district court engaged in a “fact-intensive exercise” to conclude that the statute of 
frauds did not apply in this context. I do not agree this is what the district court did or in how it is 
described by the majority. The district court first concluded that applying the statute of frauds in 
the context of successor liability did not make logical sense, citing Lehman Brothers. To be clear, 
this particular conclusion of law has nothing to do with a “fact-intensive exercise.” It is a 
conclusion of law, plain and simple. The legal question presented is quite straightforward: either 
the statute of frauds applies when a party seeks to impose successor liability or it does not. Without 
this legal conclusion, the district court’s factual findings are immaterial. The district court’s legal 
conclusion lacks any support of Idaho case law. I would not affirm the district court’s summary 
conclusion that the statute of frauds does not apply in the context of successor liability. 
 
This analysis continues with a review of the law of Idaho. The applicable statute, Idaho 
Code section 9-505(1), states that “[a]n agreement that by its terms is not to be performed within 
a year from the making thereof” must be “in writing and subscribed by the party charged[.]” I.C. 
§ 9-505(1). I have already acknowledged that if Idaho’s statute of frauds applies “it would undercut 
the entire concept of successor liability.” However, I do not think that is a principled reason to 
ignore an applicable Idaho statute. If statutes could be blithely ignored when they impair new 
theories of liability (sought to be created by courts), there is little to prevent our overruling any 
statute. 
 
There is also no question that Idaho’s statute of frauds applies to the kind of contract in this 
case. In Allen v. Moyle, 84 Idaho 18, 23, 367 P.2d 579, 582 (1961), we stated, “[t]he rule is firmly 
26 
 
established by the great weight of authority that a contract for personal services which by its terms 
are to be rendered for a period in excess of one year is within” the statute of frauds. This is not a 
contract for goods to which the UCC applies. See I.C. § 28-2-105(1). Title to the items provided 
by Alsco never passed to Fatty’s Bar. This is a contract for services that cannot be performed 
within a year. It is uncontroverted that no one representing Fatty’s Bar signed this contract. I 
concede a representative of Fatty’s Bar signed a similar contract relating to a different bar; 
however, the statute of frauds does not have an exception that allows notice of a similar provision 
to suffice. If all that must be shown to avoid the statute of frauds is notice of a similar provision, 
the statute of frauds would not mean what it says: If you want to enforce a contract that cannot be 
performed within one year, it has to be in writing and signed by the party against whom 
enforcement is sought. I.C. § 9-505. That simply did not happen here. 
If the statute of frauds does apply, Alsco argues, the contract is taken outside its reach by 
part performance by the successor entity. This is not the law. In Allen, we observed: 
As a general principle, the equitable doctrine of part performance is not applicable 
to a contract which is within the statute of frauds as one not to be performed within 
a year. The mere part performance of such a contract does not take it out of the 
operation of the statute or permit a recovery under the contract for any part of the 
contract remaining executory. In support of the general rule, it is said that to hold 
that part performance is performance would be a nullification of the statute. 
Allen, 84 Idaho at 23, 367 P.2d at 582 (italics added) (quoting 49 Am. Jur. Statute of Frauds § 497 
(1943)). We also held in Allen that the equitable doctrine of part performance does not apply where 
only money damages are sought. Id. Only money damages are being sought by Alsco. Alsco has 
invoked the equitable doctrine of part performance in precisely the contexts we have specifically 
rejected it in the past: (1) in a contract for personal services that cannot be performed within a year; 
and (2) only money damages are being sought. 
 
For these reasons, I would hold that the statute of frauds applies to this contract, 
notwithstanding the claimed applicability of the “successor liability” doctrine. Further, Alsco has 
not shown that the statute of frauds was in any way satisfied. I cannot concur in the majority’s 
analysis and result; consequently, I respectfully dissent. 
 
Chief Justice BURDICK, CONCURS.