Title: Clearwater REI v. Boling

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 40809-2013 
 
CLEARWATER REI, LLC, an Idaho 
limited liability company; BARTON 
COLE COCHRAN; CHAD JAMES 
HANSEN; RONALD D. MEYER; 
CHRISTOPHER J. BENAK; ROB 
RUEBEL; and RE CAPITAL 
INVESTMENTS, LLC, a Delaware limited 
liability company, 
 
Plaintiffs-Counterdefendants-
Respondents, 
 
v. 
 
MARK BOLING, 
 
Defendant-Counterclaimant-
Appellant. 
 
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Boise, December 2013 Term 
 
2014 Opinion No. 18   
 
Filed: February 11, 2014 
 
Stephen W. Kenyon, Clerk 
 
 
 
Appeal from the District Court of the Fourth Judicial District of the State of 
Idaho, in and for Ada County.  The Hon. Deborah A. Bail, District Judge. 
 
The order of the district court is affirmed. 
 
Mark A. Boling, Lake Forest, California, argued for himself. 
 
Rebecca A. Rainey, Boise, argued for respondents. 
 
 
 
EISMANN, Justice. 
 
This is an appeal out of Ada County from an order denying a motion to compel 
nonparties to a contract to arbitrate pursuant to an arbitration clause in the contract.  We affirm 
the order of the district court. 
 
I. 
Factual Background. 
 
 
2 
In February 2010, Mark Boling, an attorney residing in California, received a packet 
dated February 1, 2010, from Clearwater Real Estate Investments.  The packet included a cover 
letter with the letterhead of Clearwater Real Estate Investments, information about Clearwater 
Real Estate Investments, and information about Clearwater 2008 Note Program, LLC.  The cover 
letter stated that the note program paid “9% Annual Interest (paid monthly).”  The packet 
included an investment summary and a memorandum dated August 29, 2008, which described 
the note program in detail.  The notes were offered for sale in reliance upon an exemption from 
the registration requirements of the Securities Act of 1933.  In essence, the program offered 
persons to whom Clearwater 2008 Note Program, LLC, could sell its securities under that 
exemption the opportunity to purchase interests in promissory notes it issued.  It would use the 
proceeds from the notes to invest in real estate acquisition and development projects, and the 
revenues from the real estate investments would be used to pay the notes.  The notes were due on 
December 31, 2015, and RE Capital Investments, LLC, guaranteed the payment of the principal 
amount of the notes. 
On February 12, 2010, Mr. Boling signed a subscription agreement for the note program 
and submitted it with a check for $50,000 to invest in the program.  The subscription agreement 
stated that the offer to enter into the agreement was made by “Clearwater 2008 Note Program, 
LLC, an Idaho limited liability company.”  On February 26, 2010, Clearwater 2008 Note 
Program, LLC, signed the subscription agreement by its sole member, Clearwater REI, LLC.  
Bart Cochran signed on behalf of Clearwater REI, LLC, as its manager. 
By letter dated March 1, 2010, Clearwater Real Estate Investments sent Mr. Boling a 
letter addressed to “Dear Valued Customer” thanking him for choosing Clearwater Real Estate 
Investments and confirming that his subscription in Clearwater 2008 Note Program, LLC, in the 
principal amount of $50,000 had been accepted.  Enclosed with the letter were a certificate 
stating that Mr. Boling had invested $50,000 in Clearwater 2008 Note Program, LLC, and a copy 
of a note dated August 29, 2008, that was executed by Clearwater 2008 Note Program, LLC, as 
maker.  The note stated that the payees were listed in Exhibit A attached to the note. 
The subscription agreement contained a provision requiring binding arbitration to resolve 
any dispute, controversy, or other claim arising under, out of, or relating to the agreement.  Mr. 
Boling did not receive the payments anticipated, and on February 15, 2012, he filed a demand for 
commercial arbitration with the American Arbitration Association, seeking to arbitrate claims 
 
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against Clearwater 2008 Note Program, LLC; Clearwater REI, LLC; Clearwater Real Estate 
Investments; RE Capital Investments, LLC; Barton Cole Cochran; Chad James Hansen; Ronald 
D. Meyer; Christopher J. Benak; and Rob Ruebel.  The alleged claims were violations of the 
Idaho Consumer Protection Act against all of the respondents; breach of contract against 
Clearwater 2008 Note Program, LLC; and breach of the guaranty agreement against RE Capital 
Investments, LLC, a Delaware limited liability company. 
Clearwater REI, LLC, was the sole member of Clearwater 2008 Note Program, LLC.  
Messrs. Meyer and Benak each owned a limited liability company, and each of those two 
companies owned a 50% interest in RE Capital Investments, LLC, which owned 55.84% of 
Clearwater Real Estate Investments, LLC.  Messrs. Cochran and Hansen each owned a limited 
liability company, each of which owned a 19.58% interest in Clearwater Real Estate 
Investments, LLC.   Messrs. Meyer, Benak, Cochran, and Hansen were officers of Clearwater 
2008 Note Program, LLC, and they were also key management of Clearwater REI, LLC.  Mr. 
Ruebel was a regional vice president of sales for Clearwater Real Estate Investments, LLC.  
On May 14, 2012, Clearwater REI, LLC; Barton Cole Cochran; Chad James Hansen; 
Ronald D. Meyer; Christopher J. Benak; Ron Ruebel; and RE Capital Investments, LLC, filed 
this action seeking a stay of the arbitration proceedings on the ground that none of them were 
parties to the subscription agreement.  On June 28, 2012, Mr. Boling filed an answer asking that 
they be denied any relief.  On the same day, Mr. Boling also filed a counterclaim against them 
and a third-party complaint against Clearwater Real Estate Investments, LLC, seeking to recover 
damages for alleged breaches of the Idaho Consumer Protection Act and a counterclaim against 
RE Capital Investments, LLC, seeking to recover damages for breach of the guaranty.  On July 6, 
2012, RE Capital Investments had filed a petition under Chapter 7 of the Bankruptcy Code.  
Because the issue on appeal concerns Mr. Boling’s contention that the Counterdefendants are 
required to arbitrate his counterclaims against them, for simplicity we will refer to them as the 
Counterdefendants. 
On July 16, 2012, the Counterdefendants filed a motion to dismiss the counterclaims on 
the ground that they could not be asserted in response to a petition to stay arbitration.  On August 
17, 2012, they also filed a motion to stay arbitration on the ground that they had not agreed to 
arbitration.  In his written response, Mr. Boling stated that he would not seek arbitration if he 
could pursue his claims in this lawsuit.  He wrote that “he does not intend to [compel 
 
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arbitration] if the Court allows Boling’s counterclaims to be prosecuted in this lawsuit.”  He also 
stated that he preferred to pursue his claims in this litigation and that he would accept the 
Counterdefendants’ objection to arbitration if he was allowed to do so.  He wrote: 
If the Court allows Boling’s counterclaims to be prosecuted in this lawsuit, 
which all Plaintiffs/Counter-Defendants have been served with the counterclaims 
and discovery is pending, then Defendant Boling accepts Plaintiffs’ objection to 
arbitrate and decision not to arbitrate claims against Plaintiffs/Counter-
Defendants.  Judicial intervention in this lawsuit is Boling’s preferred method to 
resolve his ICPA claims because 1) it allows Boling the right to judicial discovery 
of information exclusively in Plaintiffs/Counter-Defendants’ possession, which is 
denied by arbitration, 2) none of the proposed arbitrators have any experience in 
handling unique ICPA claims or issues, and 3) for judicial economy, the 
prosecution of the counterclaims is significantly advance [sic] at this time. 
 
On October 16, 2012, the district court entered an order granting the motion to stay 
arbitration as to the Counterdefendants and denying their motion to dismiss the counterclaim.  
The basis for the order granting the stay was that these parties had not agreed to arbitration. 
On December 10, 2012, Mr. Boling filed a motion seeking to compel the 
Counterdefendants to arbitrate.  In his affidavit supporting that motion, he admitted that he had 
previously lied to the district court when he represented that he preferred to litigate his claims in 
this lawsuit and would not pursue arbitration if he was permitted to do so.  He had wanted to 
conduct discovery in this lawsuit in the hope of obtaining evidence to support a motion to 
compel arbitration.  In his affidavit, he stated, “I intended that the substantive responses to the 
pending discovery and production of documents would support the Motion to Compel 
Arbitration.”  Thus, he admitted that once he had conducted discovery, he intended to seek a 
court order to compel arbitration.  On February 7, 2013, the district court entered an order 
granting the Counterdefendants’ motion to stay arbitration.1  Mr. Boling then timely appealed. 
 
II. 
Did the District Court Err in Granting the Counterdefendants’ Motion to Stay 
Arbitration? 
 
                                                 
1 In its order, the district court stated that “[t]he motion to stay arbitration as to Barton Cole Cochran, Chad James 
Hansen, Ronald D. Meyer, Christopher Benak, and Ron Ruebel and Clearwater Real Estates Investments LLC is 
granted” rather than that Mr. Boling’s motion to compel arbitration was denied. 
 
 
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Any order appealable under the Uniform Arbitration Act is appealable as a matter of 
right.  I.A.R. 11(a)(8).  The Act provides that an appeal may be taken from “[a]n order granting 
an application to stay arbitration made under section 7-902(b), Idaho Code.”  I.C. § 7-919(a)(2) 
Therefore, the order granting the Counterdefendants’ motion to stay arbitration was appealable 
as a matter of right.2 
 
The subscription agreement that was executed by Mr. Boling and Clearwater 2008 Note 
Program, LLC, provided that the agreement “shall be construed in accordance with and governed 
by the laws of the State of Idaho without regard to its choice of law provisions.”  Therefore, the 
Idaho Uniform Arbitration Act, I.C. §§ 7-901 through 7-922, applies as the substantive law in 
this case, including substantive issues regarding arbitration.  Moore v. Omnicare, Inc., 141 Idaho 
809, 815, 118 P.3d 141, 147 (2005). 
 
Idaho Code section 7-901 provides, “A written agreement to submit any existing 
controversy to arbitration or a provision in a written contract to submit to arbitration any 
controversy thereafter arising between the parties is valid, enforceable and irrevocable, save 
upon such grounds as exist at law or in equity for the revocation of any contract.”  In this case, 
Mr. Boling and Clearwater 2008 Note Program, LLC, entered into a written agreement that 
included a clause requiring that “any dispute, controversy or other claim arising under, out of or 
relating to this Agreement or any of the transactions contemplated hereby, or any amendment 
thereof, or the breach or interpretation hereof or thereof,” be resolved by binding arbitration.  
The Counterdefendants were not parties to that contract.  The issue is therefore whether there is a 
legal basis under Idaho law for compelling them to arbitrate Mr. Boling’s counterclaims against 
them.3  Mr. Boling raises four arguments that he contends entitle him to compel arbitration as to 
the Counterdefendants. 
 
(1) The Counterdefendants are within the scope of the arbitration clause.  Mr. 
Boling argues that there is no dispute that there is an arbitration clause in the contract between 
                                                 
2 For some reason, the district court included a Rule 54(b) certificate in its order.  Under Rule 54(b) of the Idaho 
Rules of Civil Procedure, a partial judgment can be certified as final by the inclusion of a certificate as specified in 
the rule.  The court’s order did not constitute a judgment because it did not meet the definition of a judgment under 
Rule 54(a) of the Idaho Rules of Civil Procedure.  Because the order did not constitute a judgment, including a Rule 
54(b) certificate in it was meaningless. 
 
3 The Counterdefendants did not request a jury trial regarding the counterclaims, so we need not address the impact 
of the right to a jury trial under Article I, § 7, of the Constitution of the State of Idaho. 
 
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him and Clearwater 2008 Note Program, LLC; that the issue of who is bound by that agreement 
is simply a matter of the scope of the arbitration clause; and that doubts about the scope are to be 
resolved in favor of coverage.  That argument misstates the meaning of the scope of an 
arbitration clause.  The scope of an arbitration clause refers to the issues or claims that are 
subject to arbitration under the clause, not the persons who are bound by the clause.  Mason v. 
State Farm Mut. Auto. Ins. Co., 145 Idaho 197, 200 n.1, 177 P.3d 944, 947 n.1 (2007) (“[S]tates 
apply general state law principles of contract interpretation to resolve the issue whether the 
parties entered into a valid and enforceable written agreement to arbitrate, and to determine the 
scope of the arbitration provision.”); Lovey v. Regence BlueShield of Idaho, 139 Idaho 37, 47, 72 
P.3d 877, 887 (2003) (“Other courts have generally agreed that whether a claim falls within the 
scope of an arbitration clause depends not on the characterization of the claim as tort or contract, 
but on the relationship of the claim to the subject matter of the arbitration clause.”); Lewis v. 
CEDU Educ. Servs., Inc., 135 Idaho 139, 145, 15 P.3d 1147, 1153 (2000) (even though the 
claims alleged by the Counterdefendants were referable to arbitration under the arbitration 
clause, there was no basis to compel arbitration against a defendant who did not have a written 
agreement to arbitrate with either plaintiff); Rath v. Managed Health Network, Inc., 123 Idaho 
30, 31, 844 P.2d 12, 13 (1992) (a covered enrollee under a health plan provided by his employer 
was not required to arbitrate where the contract between the employer and the insurer only 
required arbitration regarding “[a]ny Controversy between the parties to this Agreement”).  The 
fact that the claims alleged against the Counterdefendants would be within the scope of the 
arbitration clause is irrelevant unless the Counterdefendants are bound by the agreement to 
arbitrate.  The policy favoring arbitration does not justify compelling arbitration by those who 
have not consented to it. 
 
One of the cases cited by Mr. Boling expressly stated that the policy favoring arbitration 
agreements did not apply to determining whether a particular party was bound by an arbitration 
agreement.  In Goldman v. KPMG LLP, 173 Cal. App. 4th 209, 92 Cal. Rptr. 3d 534 (Cal. App. 
2009), the court stated that “where the question is whether a particular party is bound by the 
arbitration agreement, the liberal federal policy favoring arbitration agreements, which is ‘best 
understood as concerning “the scope of arbitrable issues,” [citation],’ is inapposite.”  Id. at 220, 
92 Cal. Rptr. 3d at 542. 
 
7 
 
(2) The Counterdefendants are agents of Clearwater 2008 Note Program, LLC.  
Under well-established agency principles, “an agent by making a contract only on behalf of a 
disclosed principal, whom he was power to bind, does not thereby become liable for its non 
performance.”  Gen. Motors Acceptance Corp. v. Turner Ins. Agency, Inc., 96 Idaho 691, 697, 
535 P.2d 664, 670 (1975).  By making a contract on behalf of the principal, the agent does not 
guarantee either the honesty or the solvency of the principal.  Id. 
With respect to an arbitration clause in a contract executed by an agent on behalf of the 
agent’s principal, it is recognized that “[a]n agent may invoke benefits of a principal’s arbitration 
agreement to arbitrate claims with the agreement’s counter party even where the agent is not a 
signatory.”  4 Am. Jur. 2d Alternative Dispute Resolution § 60 (2007).  In such circumstances, 
the agent, by seeking to enforce the arbitration clause, is consenting to arbitration, and the party 
whom the agent seeks to compel into arbitration was a signatory to the arbitration agreement.
 
In this case, no agent of Clearwater 2008 Note Program, LLC, is attempting to invoke the 
arbitration agreement against Mr. Boling.  Mr. Boling cites in a footnote two California cases 
holding that an agent of a party to a contract containing an arbitration clause can be required to 
arbitrate claims against the agent.4  However, the one Idaho case that has addressed the issue has 
held that the agent of a signatory to a contract containing an arbitration clause could not be 
compelled to arbitrate.    Lewis, 135 Idaho at 145, 15 P.3d at 1153.  In Lewis, this Court held:  
“There is no written agreement to arbitrate between CES [a signatory’s agent] and Dark or Lewis 
[the plaintiffs].  Consequently, there is no basis to compel arbitration as to the claims of Dark 
and Lewis and CES.”  Id.  Compelling a nonparty to a contract containing an arbitration clause to 
submit to arbitration because the nonparty is an agent of one of the parties to the contract would 
                                                 
4 The first case is Rowe v. Exline, 153 Cal. App. 4th 1276, 63 Cal. Rptr. 3d 787 (Cal. App. 2007).  It did not involve 
compelling an agent of a signatory to a contract containing an arbitration clause to arbitrate claims against the agent.  
The issue was whether two agents who signed the contract on behalf of their principal could compel arbitration of 
the claims against them when they were sued along with the principal.  However, the opinion in Rowe included a 
citation to the second case cited by Mr. Boling, which is Harris v. Superior Court, 188 Cal. App. 3d 475, 233 Cal. 
Rptr. 186 (Cal. App. 1986).  In Harris, the plaintiffs were a mother and daughter who were enrollees in a prepaid 
health services program as a benefit of the father’s employment.  He had signed an application which contained a 
clause requiring arbitration for any claims asserted against that program and against other specified entities, 
including a medical group.  Id. at 477, 233 Cal. Rptr. at 187.  The lawsuit alleged negligence by the physician during 
the daughter’s birth.  The court held that the physician could be required to join the arbitration against the hospital 
and its holding company because he was an employee of the medical group, which was a professional corporation, 
and he provided medical care to the medical group’s patients, including the plaintiffs.  The court held that that 
relationship was sufficient to bind the physician to the arbitration agreement which expressly named the medical 
group as being covered by the clause.  Id. at  478, 233 Cal. Rptr. at 188. 
 
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be inconsistent with Idaho Code section 7-901 which states that “a provision in a written contract 
to submit to arbitration any controversy thereafter arising between the parties is valid, 
enforceable and irrevocable.”  (Emphasis added.)  None of the Counterdefendants were parties to 
the subscription agreement. 
 
(3) The Counterdefendants are third-party beneficiaries of the subscription 
agreement.  Mr. Boling contends that the Counterdefendants are third-party beneficiaries to the 
subscription agreement because the proceeds received from investments in the promissory note 
issued by Clearwater 2008 Note Program, LLC, were used in part to operate the 
Counterdefendants’ related businesses and to pay compensation to the Counterdefendants.  The 
subscription agreement signed by Mr. Boling stated that it was “subject to the terms, conditions, 
acknowledgments, representations and warranties stated herein and in the Confidential Private 
Placement Memorandum.”  Included in the memorandum was a statement that “[t]he Manager 
[Clearwater REI, LLC] or its Affiliates will receive a fee equal to 2.55% of the Gross Proceeds 
[from the sale of the notes]” and that “[t]he Company [Clearwater 2008 Note Program, LLC] 
will receive up to 0.40% of the Gross Proceeds.”  According to Mr. Boling, this shows that the 
Counterdefendants were third party beneficiaries of the subscription agreement.  His argument is 
erroneous for two reasons. 
First, Idaho Code section 29-102 provides, “A contract, made expressly for the benefit of 
a third person, may be enforced by him at any time before the parties thereto rescind it.”  Idaho 
Code section 29-102 allows a contract that was made expressly for the benefit of a third person 
to be enforced by him.  “[A] third-party beneficiary must comply with all the terms and 
provisions of an agreement to the same extent as they apply to the beneficiary.”  Lewis, 135 
Idaho at 143, 15 P.3d at 1151.   If the third-party beneficiary seeks to enforce the contract, he is 
agreeing to be bound by its provisions.  Idaho Code section 29-102 does not give a party to a 
contract the right to enforce the contract against a nonparty on the ground that the nonparty is a 
third-party beneficiary to the contract.   In the instant case, the Counterdefendants did not seek to 
enforce the subscription agreement signed by Mr. Boling.  Therefore, Idaho Code section 29-102 
does not apply, and the arbitration clause in the subscription agreement cannot be enforced 
against them based upon the contention that they are third-party beneficiaries to the agreement. 
Second, “[t]he third party must show the contract was made primarily for his benefit; it is 
not sufficient that the third party is a mere incidental beneficiary to the contract.”  Partout v. 
 
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Harper, 145 Idaho 683, 687, 183 P.3d 771, 775 (2008).  A nonparty to a contract is not a third 
party beneficiary merely because the nonparty may receive a financial benefit from the contract.  
For example, in Idaho Power Co. v. Hulet, 140 Idaho 110, 90 P.3d 335 (2004), the lessor had 
purchased the lessee’s dairy farm and then leased the real property back to him.  Id. at 111, 90 
P.3d at 336.  In the lease agreement, the lessor agreed to pay the lessee’s past-due electric bills 
on his behalf.  Id..  The electric utility sued the lessor to collect the lessee’s past-due bills, and 
the district court granted summary judgment in favor of the utility company on the ground that it 
was a third-party beneficiary of the lease agreement.  Id. at 112, 90 P.3d at 337.  On appeal, we 
reversed because the lease agreement was not made primarily for the benefit of the utility.  We 
stated that the lessor’s agreement to pay the power bill was not intended to specifically benefit 
the utility “but as consideration of the agreement to benefit [the lessee] who sought a situation in 
which he would be able to continue to run his dairy business.”  Id. at 114, 90 P.3d at 339.  In the 
instant case, it is clear that Mr. Boling did not enter into the subscription agreement primarily to 
benefit any or all of the Counterdefendants.  In fact, he does not even contend that he did so.  
Rather, he obviously entered into the agreement in order to obtain a 9% return on his investment.  
There are simply no facts in the record indicating that Mr. Boling and Clearwater 2008 Note 
Program, LLC, entered into the subscription agreement primarily to benefit the 
Counterdefendants. 
  
(4) The Counterdefendants are required to arbitrate under the doctrine of equitable 
estoppel.  Mr. Boling contends that the Counterdefendants are required to arbitrate under the 
doctrine of equitable estoppel.  Under Idaho law, the elements of equitable estoppel are: 
(1) a false representation or concealment of a material fact with actual or 
constructive knowledge of the truth; (2) that the party asserting estoppel did not 
know or could not discover the truth; (3) that the false representation or 
concealment was made with the intent that it be relied upon; and (4) that the 
person to whom the representation was made, or from whom the facts were 
concealed, relied and acted upon the representation or concealment to his 
prejudice. 
 
City of McCall v. Buxton, 146 Idaho 656, 664, 201 P.3d 629, 637 (2009).  There is no contention 
that the Counterdefendants, or any of them, made a false representation or concealed a material 
fact regarding their willingness to arbitrate Mr. Boling’s counterclaims.  In fact, the only 
misrepresentation regarding arbitration shown in the record is Mr. Boling’s false statement that 
he would not seek to compel arbitration if he could engage in discovery. 
 
10 
 
In support of his assertion that the Counterdefendants should be equitably estopped from 
refusing to arbitrate, Mr. Boling cites Sunkist Soft Drinks, Inc., v. Sunkist Growers, Inc. 10 F.3d 
753 (11th Cir. 1993), and Molecular Analytical Systems v. Ciphergen Biosystems, Inc., 186 Cal. 
App. 4th 696, 111 Cal. Rptr. 3d 876 (Cal. App. 2010).  In Sunkist, the court held under federal 
law that if a party to an agreement containing an arbitration clause asserts claims in litigation 
against a nonparty to the agreement, the party to the contract can be compelled by the nonparty 
to engage in arbitration when the contracting party’s claims are intimately founded in and 
intertwined with the underlying contract obligations.  10 F.3d at 757-58.5  Molecular Analytical 
held that “if a plaintiff relies on the terms of an agreement to assert his or her claims against a 
nonsignatory defendant, the plaintiff may be equitably estopped from repudiating the arbitration 
clause of that very agreement.”  186 Cal. App. 4th at 714, 111 Cal. Rptr. 3d at 893.  Even if we 
were to adopt the holdings in those cases, they would not require the Counterdefendants to 
arbitrate in this case.  As stated, in those cases the party equitably estopped was a signatory to a 
contract containing an arbitration clause that brought claims against a nonsignatory to the 
contract.  A nonsignatory to the contract is not equitably estopped from refusing to arbitrate.  
Applying those cases to this case would merely result in holding that if the Counterdefendants 
herein sought to arbitrate Mr. Boling’s counterclaims against them, Mr. Boling would be 
equitably estopped from refusing to arbitrate.  Mr. Boling does not cite any authority that would 
hold the Counterdefendants herein are equitably estopped from refusing to arbitrate. 
 
 
III. 
Are Counterdefendants Entitled to an Award of Attorney Fees on Appeal? 
 
The Counterdefendants seek an award of attorney fees on appeal under Idaho Code 
section 12-121.  We will not award attorney fees on appeal under that statute if the losing party 
brought the appeal in good faith and presented a genuine issue of law.  Minich v. Gem State 
Developers, Inc., 99 Idaho 911, 918, 591 P.2d 1078, 1085 (1979).  “In normal circumstances, 
attorney fees will only be awarded when this court is left with the abiding belief that the appeal 
was brought, pursued or defended frivolously, unreasonably or without foundation.”  Id.  This 
                                                 
5 The decision in Sunkist was abrogated by ArthurAndersen LLP v. Carlisle, 556 U.S. 624 (2009), which held that 
state law is controlling as to who is bound by an agreement to arbitrate.  Id. at 630-31. 
 
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appeal does not present a genuine issue of law.  We award the Counterdefendants attorney fees 
on appeal pursuant to Idaho Code section 12-121. 
 
IV. 
Conclusion. 
 
 
We affirm of order of the district court, and we award respondents costs and reasonable 
attorney fees on appeal. 
 
 
Chief Justice BURDICK, Justices J. JONES, HORTON, and Justice Pro Tem 
SCHROEDER CONCUR.