Title: Turner House v. Treasure Valley Area of Narcotics Anonymous

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

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IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 43191 
 
DONNA SIMONO, 
  
          Plaintiff, 
 
v. 
 
TURNER HOUSE, LARRY J. ROGERS, 
CHERYL BARKER, 
  
          Defendants-Third Party 
          Plaintiffs-Respondents, 
 
v. 
 
TREASURE VALLEY AREA OF 
NARCOTICS ANONYMOUS, and 
NARCOTICS ANONYMOUS 
LITERATURE, 
  
          Third Party Defendants-Appellants. 
_______________________________________ 
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Boise, August 2016 Term 
 
2016 Opinion No. 91 
 
Filed: September 9, 2016 
 
Stephen W. Kenyon, Clerk 
 
Appeal from the District Court of the Fourth Judicial District of the State of 
Idaho, Elmore County.  Hon. Lynn G. Norton, District Judge. 
 
The order of the district court is reversed and the case is remanded. 
 
Saetrum Law Offices, Boise, for appellant. Rodney R. Saetrum argued.  
 
Eberle, Berlin, Kading, Turnbow & McKlveen, Chtd., Boise, for respondent. 
Stanley J. Tharp argued. 
 
_____________________ 
 
J. JONES, Chief Justice 
Donna Simono attended a meeting hosted by Treasure Valley Area of Narcotics 
Anonymous (“TVNA”) at the Turner House in Mountain Home. When leaving the meeting, she 
fell down the stairs and injured her ankles. Simono brought a negligence action against Turner 
House, Larry Rodgers, and Cheryl Baker (collectively “Turner House”). Turner House filed a 
 
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third-party complaint against TVNA, alleging that TVNA was responsible for maintaining the 
area where Simono fell. Turner House also sought indemnification for Simono’s claims. The jury 
returned a verdict finding neither Turner House nor TVNA negligent, and the district court 
entered judgment dismissing Simono’s complaint and Turner House’s third-party complaint. 
TVNA filed a motion seeking attorney fees against Turner House under Idaho Code section 12-
120(3). The district court denied the motion for fees, concluding that the lawsuit was not based 
on a commercial transaction. TVNA appealed the district court’s denial of its motion for fees. 
Both TVNA and Turner House seek attorney fees on appeal.  
I. 
FACTUAL AND PROCEDURAL BACKGROUND 
On January 1, 2012, Bob Foss, on behalf of TVNA, entered into a one-year lease with 
Larry Rodgers to rent a third-floor room of the Turner House in Mountain Home, Idaho. TVNA 
rented the space to hold daily Narcotics Anonymous meetings. The lease agreement provided in 
relevant part: 
Tenant will replace ALL inoperative lightbulbs or tubes, as needed. 
. . . . 
Tenant agrees to maintain premises in neat and clean condition. Maintain all 
furnishings in good condition, allowing for reasonable wear. 
. . . . 
Tenant shall hold owner, owner’s agents, employees, heirs or assigns blameless 
and harmless for any loss, damage or liability caused by tenant(s), children, 
agents, employees, guests or others. 
In January 2013, the lease was extended for another year under the same terms. On January 7, 
2013, Simono attended a Narcotics Anonymous meeting at the Turner House. When Simono left 
the meeting, she fell down the stairs between the second and third floor and broke her right ankle 
and sprained her left ankle.  
On March 5, 2013, Simono sued Turner House, alleging that it was negligent in failing to 
properly light the second floor, which caused her to fall down the stairs. On November 4, 2013, 
Turner House filed a third-party complaint against TVNA. Turner House’s third-party complaint 
alleged claims for breach of contract, breach of the implied covenant of good faith and fair 
dealing, indemnification, and negligence. The third-party complaint alleged that “Turner House 
is a commercial building,” TVNA “is a business registered with the State of Idaho,” and “at all 
relevant times was a tenant in Turner House.” The third-party complaint further alleged that 
TVNA “was responsible pursuant to the Rental Agreement for the maintenance of the area of 
 
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Turner House where Simono fell” and “had an obligation under the terms of the Rental 
Agreement and/or Idaho common law to indemnify [Turner House] for any costs or expenses 
they incurred in defending against [Simono’s] lawsuit.” Turner House’s third-party complaint 
also included a claim for attorney fees under Idaho Code sections 12-120 and 12-121.  
This case proceeded to a jury trial in December 2014. The jury was asked to determine 
whether there was a breach of duty on the part of Turner House and/or TVNA which was the 
proximate cause of Simono’s injuries. Additionally, the jury was asked to determine whether 
there was a breach of contract on the part of TVNA which was the proximate cause of Simono’s 
damages. The jury returned a verdict in favor of TVNA and Turner House on the above issues. 
During trial, Turner House agreed to have its indemnity claim against TVNA decided by the 
court if the jury found Turner House negligent. Because the jury found in favor of Turner House, 
the district court did not address Turner House’s indemnity claim. The district court entered a 
judgment dismissing Simono’s complaint and Turner House’s third-party complaint on 
December 16, 2014.  
On December 30, 2014, TVNA filed a motion for costs and fees, seeking in part an award 
of attorney fees under Idaho Code section 12-120(3). Turner House objected to TVNA’s motion 
for attorney fees, arguing that section 12-120(3) did not apply because the case was not based on 
a commercial transaction and that TVNA’s motion for fees did not comply with Idaho Rule of 
Civil Procedure 54(e). The district court issued an order denying TVNA’s request for fees on 
January 27, 2015. The district court held that TVNA was not entitled to attorney fees under 
section 12-120(3) because Turner House’s claims were not based on a commercial transaction. 
The district court reasoned that although Turner House’s third-party complaint alleged a breach 
of contract claim against TVNA, “the sole breach would be for damages or indemnification if the 
Defendant/Third Party Plaintiff was found negligent by the jury.” The district court then 
concluded that the crux of Turner House’s claims against TVNA was that TVNA’s negligence 
caused Simono’s injuries, and the rental agreement was not integral to Simono’s claim for 
negligence.  
TVNA filed a motion for reconsideration of the order denying fees, which the district 
court denied. TVNA timely appealed the district court’s denial of its motion for attorney fees.  
ISSUES ON APPEAL 
1. Whether the district court erred in denying TVNA’s motion for attorney fees. 
 
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2. Whether either TVNA or Turner House is entitled to attorney fees on appeal. 
II. 
STANDARD OF REVIEW 
“The district court’s decision to award attorney fees is reviewed under the abuse of 
discretion standard.” Stout v. Key Training Corp., 144 Idaho 195, 196, 158 P.3d 971, 972 (2007). 
“However, when an award of attorney fees depends on the interpretation of a statute, the 
standard of review for statutory interpretation applies.” Id. “The interpretation of a statute is a 
question of law over which this Court exercises free review.” Id. (quoting Carrier v. Lake Pend 
Oreille Sch. Dist. # 84, 142 Idaho 804, 807, 134 P.3d 655, 658 (2006)). Therefore, “[w]hether a 
district court has correctly determined that a case is based on a commercial transaction for the 
purpose of [Idaho Code section] 12–120(3) is a question of law over which this Court exercises 
free review.” Idaho Transp. Dep’t v. Ascorp, Inc., 159 Idaho 138, 141, 357 P.3d 863, 866 (2015) 
(quoting Garner v. Povey, 151 Idaho 462, 469, 259 P.3d 608, 615 (2011)). 
III. 
ANALYSIS 
1. The district court erred in concluding that TVNA was not entitled to attorney fees 
under Idaho Code section 12-120(3). 
 
Idaho Code section 12-120(3) provides: 
In any civil action to recover on an open account, account stated, note, 
bill, negotiable instrument, guaranty, or contract relating to the purchase or sale of 
goods, wares, merchandise, or services and in any commercial transaction unless 
otherwise provided by law, the prevailing party shall be allowed a reasonable 
attorney’s fee to be set by the court, to be taxed and collected as costs. 
In the present case, it is undisputed that TVNA was the prevailing party as to the third-party 
complaint. The only issue on appeal is whether Turner House’s claims were based on a 
commercial transaction. The term “commercial transaction” is defined as “all transactions except 
transactions for personal or household purposes.” I.C. § 12-120(3). “In order for a transaction to 
be commercial, each party to the transaction must enter the transaction for a commercial 
purpose.” Carrillo v. Boise Tire Co., Inc., 152 Idaho 741, 756, 274 P.3d 1256, 1271 (2012).  
In determining whether a party is entitled to attorney fees under section 12-120(3), “the 
test is whether the commercial transaction comprises the gravamen of the lawsuit.” Brower v. 
E.I. DuPont De Nemours & Co., 117 Idaho 780, 784, 792 P.2d 345, 349 (1990). To be the 
gravamen of a lawsuit, “(1) there must be a commercial transaction that is integral to the claim; 
and (2) the commercial transaction must be the basis upon which recovery is sought.” Garner, 
 
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151 Idaho at 469, 259 P.3d at 615 (quoting Great Plains Equip., Inc. v. Nw. Pipeline Corp., 136 
Idaho 466, 471, 36 P.3d 218, 223 (2001)). If a party asserts a claim allegedly based on a 
commercial transaction, the opposing party is entitled to fees under section 12-120(3) for 
successfully defending against the claim, even if it is later found that a commercial transaction 
never existed. Miller v. St. Alphonsus Reg’l Med. Ctr., Inc., 139 Idaho 825, 839, 87 P.3d 934, 
948 (2004).  
In its order denying fees, the district court concluded that TVNA was not entitled to 
attorney fees under 12-120(3) because “the main thrust of this lawsuit was clearly in tort.” The 
district court relied on J.R. Simplot, Co. v. Rycair, Inc., where this Court held that a party to a 
commercial lease may collect attorney fees under 12-120(3) for contract claims related to the 
lease but not for claims related to a negligence cause of action. 138 Idaho 557, 565, 67 P.3d 36, 
44 (2003). In its order denying reconsideration, the district court stated that Turner House’s 
third-party complaint alleged causes of action for breach of contract, breach of the covenant of 
good faith and fair dealing, and for indemnification. However, the court concluded that because 
this was a third-party complaint, Turner House’s only valid claim was for indemnification and 
that there was no contractual basis for indemnity.  
The district court erred in categorically ruling that TVNA is not entitled to fees because 
the underlying action sounded in tort. Until relatively recently this Court had declined to award 
attorney fees under section 12-120(3) in tort actions. See, e.g., Fuller v. Wolters, 119 Idaho 415, 
425, 807 P.2d 633, 643 (1991). However, this rule no longer applies in Idaho. Blimka v. My Web 
Wholesaler, LLC, 143 Idaho 723, 728–29, 152 P.3d 594, 599–600 (2007). “[A]s long as a 
commercial transaction is at the center of the lawsuit, the prevailing party may be entitled to 
attorney fees for claims that are fundamentally related to the commercial transaction yet sound in 
tort.” Carrillo, 152 Idaho at 756, 274 P.3d at 1271. The hard distinction between contract and 
negligence claims like that applied in J.R. Simplot, 138 Idaho 557, 67 P.3d 36, is no longer the 
law in Idaho. Additionally, the district court erred in concluding that TVNA was not entitled to 
fees because the rental agreement did not “in fact” provide a basis for indemnity. In the third-
party complaint, Turner House alleged that TVNA was obligated under the rental agreement to 
indemnify it for any costs incurred in defending against Simono’s claims. This is sufficient to 
trigger the application of section 12-120(3), even if the allegation was later disproven. Miller, 
139 Idaho at 839, 87 P.3d at 948.  
 
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In determining whether TVNA is entitled to attorney fees under 12-120(3), we must look 
to the allegations in the third-party complaint and determine if the claims were allegedly based 
on a commercial transaction between TVNA and Turner House. We conclude that they were. As 
a preliminary matter, the third-party complaint alleged that Turner House was a commercial 
building, that TVNA was a business, and that TVNA rented the room in the Turner House to 
hold Narcotics Anonymous meetings. Under Turner House’s allegations, the rental agreement 
meets the definition of a commercial transaction, as it was not a lease for personal or household 
use.  
As discussed above, Turner House’s claim that the rental agreement provided a basis for 
indemnity was sufficient to trigger the application of 12-120(3). Additionally, Turner House’s 
claims for breach of contract and breach of the covenant of good faith and fair dealing were 
clearly based on the lease agreement. Turner House alleges that TVNA is not entitled to fees for 
these claims because Turner House never sought breach of contract damages. Turner House 
alleges that the only damages it sought for breach of contract were damages Simono would 
receive from Turner House if it were found negligent. No matter the amount of damages, Turner 
House alleged that TVNA would be liable because TVNA breached the lease agreement. 
Therefore, the agreement was integral to the claims and was the basis upon which relief was 
sought.  
Turner House argues extensively that the center of this lawsuit was based in negligence, 
and therefore, TVNA is not entitled to fees under 12-120(3). However, the basis of Turner 
House’s third-party complaint was that TVNA assumed the duty to maintain the stairway by 
entering into the lease agreement. In McDevitt v. Sportsman’s Warehouse, Inc., this Court 
addressed whether a tenant in a multi-unit shopping center had a duty to maintain the sidewalks 
adjacent to its storefront. 151 Idaho 280, 284, 255 P.3d 1166, 1170 (2011). There, we concluded 
that whether a tenant had a duty to maintain a particular area depended on the scope and terms of 
the lease agreement. Id. at 284–287, 255 P.3d at 1170–73. But for the lease agreement, Turner 
House would have no basis to shift liability to TVNA. As we recently concluded in H-D 
Transport v. Pogue, a party is entitled to attorney fees under section 12-120(3) where the claim 
“would not have arisen absent the claimed commercial transaction.” 160 Idaho 428, 436, 374 
P.3d 591, 599 (2016).  
 
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We hold that the rental agreement was the basis for all of Turner House’s claims, and 
TVNA is entitled to attorney fees under section 12-120(3) for defending against the third-party 
complaint. We decline to address Turner House’s arguments on appeal that TVNA’s motion for 
fees did not comply with I.R.C.P. 54(e) and that TVNA is not entitled to the total amount of fees 
requested. Because the district court concluded that TVNA was not entitled to fees under section 
12-120(3), it never reached these issues. “Even though an issue was argued to the court, to 
preserve an issue for appeal there must be a ruling by the court.” Saint Alphonsus Diversified 
Care, Inc. v. MRI Assocs., LLP, 148 Idaho 479, 491, 224 P.3d 1068, 1080 (2009). “This Court 
does not review an alleged error on appeal unless the record discloses an adverse ruling forming 
the basis for the assignment of error.” Id. (quoting Ada Cty. Highway Dist. v. Total Success Invs., 
LLC, 145 Idaho 360, 368, 179 P.3d 323, 331 (2008)). The district court is better positioned to 
address these issues and will have an opportunity to do so on remand.  
2. TVNA is awarded attorney fees on appeal. 
Turner House requests attorney fees on appeal under Idaho Code section 12-121 and 
TVNA requests attorney fees on appeal under section 12-120(3). Turner House has not prevailed 
and is not entitled to attorney fees. However, because TVNA has prevailed in this commercial 
dispute, TVNA is entitled to attorney fees on appeal pursuant to Idaho Code section 12-120(3).  
IV. 
CONCLUSION 
 
We reverse the district court’s denial of TVNA’s request for attorney fees and remand for 
further proceedings consistent with this opinion. We award attorney fees and costs on appeal to 
TVNA.  
 
 
Justices EISMANN, BURDICK, and HORTON, and Justice Pro Tem KIDWELL 
CONCUR.