IN THE SUPREME COURT OF THE STATE OF IDAHO 

Docket No. 33348 

COBI STRAUB, 

 

 Plaintiff-Respondent, 

 

v. 

 

DONALD R. SMITH and LESLIE SMITH, 

husband and wife, 

 

 Defendants-Appellants. 

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Boise, April 2007 Term 

2007 Opinion No. 121 

Filed: November 27, 2007 

Stephen W. Kenyon, Clerk 

SUBSTITUTE OPINION. THE 

OPINION DATED 

JULY 31, 2007 IS HEREBY 

WITHDRAWN. 

Appeal from the District Court of the First Judicial District, State of Idaho, 

Kootenai County. Honorable John Thomas Mitchell, District Judge. 

District court denial of attorney fees and costs, reversed and remanded.

John Patrick Whelan, Coeur d’Alene, for appellants. 

Beck & Poorman, LLC, Hayden, for respondent. 

__________________________________ 

BURDICK, Justice 

Donald and Leslie Smith appeal from the district court’s denial of an award of attorney 

fees and costs. We reverse and remand. 

I. FACTUAL AND PROCEDURAL BACKGROUND 

Appellants, Donald Smith and Leslie Smith (the Smiths), sold a duplex located in Post 

Falls, Idaho to Respondent, Cori Straub. In relation to that transaction, Straub filed a complaint 

against the Smiths. The Smiths filed a pro se answer in which they did not plead costs or 

attorney fees. The Smiths retained counsel in November 2004. Then, in December 2004 Straub 

filed an amended complaint which contained a request for an award of punitive damages. The 

Smiths did not respond to the amended complaint. 

Six days before trial, Straub sent a fax to the Smiths stating she wished to dismiss the 

case and asking the Smiths to sign a stipulation to the dismissal. On that same day, a motion to 

dismiss the case with prejudice, signed by Straub’s attorney, and a stipulation to the dismissal 

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signed by the Smiths’ attorney, were filed with the court. Neither the motion to dismiss nor the 

stipulation mentioned costs or fees. Straub then prepared an order of dismissal for the district 

court, which the court accepted. The order dismissed the case with prejudice and stated there 

would be no award of fees or costs. Straub did not present the proposed order to the Smiths 

before submitting it to the district court. 

The Smiths then filed a motion for reconsideration of the court’s order of dismissal and a 

memorandum of costs with the district court. After a hearing on the motion, the district court 

denied the Smiths’ motion for reconsideration. The Idaho Court of Appeals reversed the denial 

of the motion for reconsideration and remanded to the district court. This Court, on its own 

motion, granted a review on the briefs. 

II. ANALYSIS 

The Smiths appeal the district court’s denial of their motion to reconsider the portion of 

the court’s order dismissing the case without an award of costs or attorney fees.1 Straub argues 

that the Smiths waived their right to claim costs and fees and that the Smiths would not be 

entitled to costs or fees because they did not request them in their pleading. The Smiths ask for 

attorney fees on appeal. We will address each issue below. 

A. The Smiths did not waive their right to claim costs or fees.

Straub argues that because this was an I.R.C.P. 41(a)(1) voluntary dismissal by 

stipulation of the parties and not an I.R.C.P. 41(a)(2) dismissal by court order, the Smiths waived 

their right to claim costs and fees when they did not expressly reserve the right in their 

stipulation. We will first determine the type of dismissal and then address Straub’s waiver 

argument. 

First, Straub argues that the dismissal was pursuant to I.R.C.P. 41(a)(1) and not I.R.C.P. 

41(a)(2). Under I.R.C.P. 41(a)(1) “an action may be dismissed by the plaintiff without order of 

 

1 The Smiths also appeal the district court’s grant of Straub’s motion to amend her complaint to include punitive 

damages. However, a decision on that issue will not affect the outcome of this case. The Smiths assert they appeal 

this issue to show that they did not fail in their duty to submit an amended answer and therefore, did not forego a 

second opportunity to plead costs and attorney fees. Regardless, our decision is not based upon the fact that the 

Smiths had a second opportunity to plead costs and fees but failed to do so. Furthermore, the Smiths have failed to 

cite any authority to support the proposition that because the court erroneously allowed the amended pleading, they 

are relieved of their I.R.C.P. 15(a) duty to respond. See Farber v. Howell, 105 Idaho 57, 59, 665 P.2d 1067, 1069 

(1983) (rejecting the argument that appellants were relieved of their responsibility to amend the pleading when the 

amendment went only to formal or immaterial matters and noting that I.R.C.P. 15(a) clearly requires a party to plead 

in response to an amended pleading). 

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court . . . (ii) by filing a stipulation of dismissal signed by all parties who have appeared in the 

action.” If the defendant does not stipulate to the dismissal, I.R.C.P. 41(a)(2) provides that the 

“action shall not be dismissed at the plaintiff’s instance save upon order of the court and upon 

such terms and conditions as the court deems proper.” 

On April 15, 2005, “[b]ased upon the plaintiff’s motion to dismiss, the defendants’ 

stipulation and good cause appearing,” the district court entered an order of dismissal. That 

order dismissed the case with prejudice “and without an award of attorney fees or costs to either 

party.” Straub argues that this order has no effect because it came after the I.R.C.P. 41(a)(1)(ii) 

dismissal by stipulation of parties. Although the parties failed to sign the same document 

stipulating to the dismissal, two documents were filed on the same day stipulating to the 

dismissal of the case with prejudice. Straub filed a motion to dismiss the case with prejudice and 

the Smiths filed a document stipulating to the entry of an order granting the plaintiff’s motion to 

dismiss the case with prejudice. These documents were both filed on April 12, 2005; neither 

document mentioned costs or attorney fees. Even though the two documents filed by the parties 

use the phrasing “order to dismiss the case,” in substance these documents appear to constitute 

an I.R.C.P. 41(a)(1)(ii) dismissal. Therefore, because we look to substance over form, In re 

Weick, 142 Idaho 275, 279, 127 P.3d 178, 182 (2005), we will consider it a dismissal by 

stipulation of the parties. 

However, even if we treat this as an I.R.C.P. 41(a)(1)(ii) dismissal, there is no support for 

Straub’s argument that the Smiths waived their claim to costs or fees. First, there was no actual 

waiver in this case. A waiver is a voluntary, intentional relinquishment of a known right. 

Frontier Fed. Sav. & Loan Ass’n v. Douglass, 123 Idaho 808, 812, 853 P.2d 553, 557 (1993). 

There is no indication that the Smiths voluntarily gave up their right to seek costs and fees. 

Straub notified the Smiths by fax of the dismissal. The fax in its entirety states: 

My client has informed me that she no longer wishes to pursue this matter. Our 

motion to dismiss is attached. If you have no objection, please sign the attached 

stipulation and return to my office. Otherwise, I will schedule a hearing for the 

motion. 

I have notified the court. 

Neither the motion to dismiss nor the stipulation mentions costs or fees. Since in this case the 

Smiths were unaware that stipulating to dismissal of the case also meant they were agreeing to 

not pursue costs or fees, there was no voluntary, intentional relinquishment of a known right. 

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Second, Straub argues that there is an implicit waiver of costs and fees if a defendant 

signs a stipulation to dismiss a case pursuant to I.R.C.P. 41(a)(1)(ii), unless in the stipulation the 

parties expressly reserve the right to later determine an award of costs and fees, because a 

dismissal effectively ends the case for all purposes. We disagree. 

A stipulation is a contract, and we will apply contractual principles of interpretation when 

reviewing a stipulation. Maroun v. Wyreless Sys., Inc., 141 Idaho 604, 611, 114 P.3d 974, 981 

(2005); Win of Michigan, Inc. v. Yreka United, Inc., 137 Idaho 747, 750-51, 53 P.3d 330, 333-34 

(2002). “The determination and legal effect of a contractual provision is a question of law.” 

Maroun, 141 Idaho at 611, 114 P.3d at 981. Our primary objective when interpreting a contract 

is to discover the mutual intent of the parties at the time the contract is made. Opportunity, 

L.L.C. v. Ossewarde, 136 Idaho 602, 607, 38 P.3d 1258, 1263 (2002). “If possible, the intent of 

the parties should be ascertained from the language of the agreement as the best indication of 

their intent.” Id. We construe the contract against the person who prepared the contract. Win of 

Michigan, Inc., 137 Idaho at 751, 53 P.3d at 334. 

The stipulation, which was prepared by Straub, is silent on the issue of costs and fees. 

There is nothing to indicate that when the Smiths signed the stipulation, the silence indicated an 

intent that the Smiths would forego the opportunity to pursue an award of costs and fees. 

Furthermore, we have said costs and attorney fees are collateral issues which do not go to the 

merits of an action and that a district court retains jurisdiction to make such an award after a suit 

has been terminated. Inland Group of Cos., Inc. v. Obendorff, 131 Idaho 473, 475, 959 P.2d 454, 

456 (1998). Thus, the stipulation to dismiss the case with prejudice must be interpreted not to 

include any agreement regarding costs and fees, which can be awarded after a suit is terminated. 

Hence, we hold that although the dismissal was pursuant to I.R.C.P. 41(a)(1), the Smiths did not 

waive their claim for fees and costs by failing to expressly reserve that issue in their stipulation. 

B. Costs and attorney fees need not be pleaded. 

The Smiths assert that their failure to plead costs is not fatal to their claim for costs. 

Straub argues that both attorney fees and costs must be pleaded in order to be recovered.2

 

 

2 Additionally, Straub argues that even if costs and fees need not be pleaded, the Smiths still would not be entitled to 

an award in this case. First, Straub asserts that the Smiths would not have been entitled to an award because they 

could not have been considered prevailing parties. In the hearing on the motion for reconsideration the district court 

found the Smiths were the prevailing parties. This finding was within the court’s discretion. We have held that a 

party dismissed before trial can be a prevailing party because it was the most favorable outcome that could have 

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First, I.R.C.P. 54(e)(4) and our decision in Eighteen Mile Ranch, LLC v. Nord Excavating 

& Paving, Inc., 141 Idaho 716, 117 P.3d 130 (2005), make it clear that generally it is not 

necessary to plead attorney fees. The appellants in Eighteen Mile appealed the district court’s 

denial of their post-trial request for attorney fees and costs based on its determination that they 

were not prevailing parties. Id. at 718, 117 P.3d at 132. The respondents argued that in order to 

be awarded attorney fees, the prevailing party must state in its pleadings the specific code section 

constituting the basis for the award. Id. at 720, 117 P.3d at 134. The Court disagreed, relying on 

I.R.C.P. 54(e)(4), which provides that generally, in a civil action, it is not necessary “for any 

party in a civil action to assert a claim for attorney fees in any pleading. . . .” Id. The exception 

to the general rule is that if the basis for attorney fees is something other than I.C. § 12-121, 

attorney fees must be pleaded to be recovered when the judgment is by default. Eighteen Mile, 

141 Idaho at 721, 117 P.3d at 135; I.R.C.P. 54(e)(4). The case before us does not involve a 

default judgment; thus, to require that attorney fees be pleaded in this case would be contrary to 

I.R.C.P. 54(e)(4). Hence, we hold it was not necessary for the Smiths to plead attorney fees in 

order to receive an award. 

Second, it is not necessary to plead costs. Straub argues that I.R.C.P. 8(a)(1) requires that 

costs be pleaded in order to be awarded because according to that rule a pleading shall contain a 

demand for judgment for the relief the pleader believes he is entitled to and because a party must 

be put on notice of the fees that will be claimed.3 I.R.C.P. 8(a)(1) states: 

A pleading which sets forth a claim for relief, whether an original claim, 

counterclaim, cross-claim, or third-party claim, shall contain (1) if the court be of 

limited jurisdiction, a short and plain statement of the grounds upon which the 

court’s jurisdiction depends, (2) a short and plain statement of the claim showing 

that the pleader is entitled to relief, and (3) a demand for judgment for the relief to 

which he deems himself entitled. Relief in the alternative or of several different 

types may be demanded. 

Nonetheless, the rules as a whole indicate that the type of relief contemplated by I.R.C.P. 

8(a)(1) does not appear to include costs of bringing or defending the lawsuit. The rules explicitly 

 

been achieved. Eighteen Mile Ranch, LLC v. Nord Excavating & Paving, Inc., 141 Idaho 716, 719, 117 P.3d 130, 

133 (2005). Likewise, in this case, Straub’s voluntary dismissal of her case before trial is the most favorable 

outcome the Smiths could have achieved. Second, Straub argues that the Smiths would not be entitled to fees on the 

basis of their contract with Straub because that contract was merged into the warranty deed. However, according to 

the record before us, this issue was not raised below. Generally, we do not consider issues raised for the first time 

on appeal, Murray v. Spalding, 141 Idaho 99, 101, 106 P.3d 425, 427 (2005), and we decline to do so now. 

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state that attorney fees generally need not be included in the pleading. There is no similar rule 

stating costs need not be asserted in a pleading, but I.R.C.P. 54(d)(1) provides that “[e]xcept 

when otherwise limited by these rules, costs shall be allowed as a matter of right to the prevailing 

party or parties, unless otherwise ordered by the court.” Thus, all parties are on notice that costs 

shall be allowed as a matter of right to the prevailing party. The rule setting out the procedure 

for a party who “claims costs,” I.R.C.P. 54(d)(5), does not require that costs be pleaded and only 

requires that a party claiming costs serve a memorandum of costs on adverse parties within 

fourteen days after the entry of judgment. These rules taken together lead us to conclude that the 

“relief” discussed in I.R.C.P. 8(a)(1) does not include costs. Hence, we hold that the failure to 

plead costs will not preclude an award of costs. 

Therefore, we hold the Idaho Rules of Civil Procedure do not require that a party must 

plead attorney fees, unless the I.R.C.P. 54(e)(4) exception regarding default judgments applies, 

or costs. 

C. The district court abused its discretion by denying the motion for reconsideration. 

The Smiths argue that the district court erred when it denied their motion for 

reconsideration. A decision to grant or deny a motion for reconsideration generally rests in the 

sound discretion of the trial court. Jordan v. Beeks, 135 Idaho 586, 592, 21 P.3d 908, 914 

(2001). Abuse of discretion is determined by a three part test which asks whether the district 

court “(1) correctly perceived the issue as one of discretion; (2) acted within the outer boundaries 

of its discretion and consistently with the legal standards applicable to the specific choices 

available to it; and (3) reached its decision by an exercise of reason.” Sun Valley Potato 

Growers, Inc. v. Texas Refinery Corp., 139 Idaho 761, 765, 86 P.3d 475, 479 (2004) (citations 

omitted). 

The district court abused its discretion because its decision was not consistent with legal 

standards. The district court stated it was denying the motion for reconsideration because 

I.R.C.P. 8(a)(1) required that costs and fees be included in the pleading to be recovered and for 

the alternative reason that the Smiths “failed to cite any rule or basis for the Motion for 

Reconsideration.” First, as discussed above, I.R.C.P. 8(a)(1) does not require that costs or fees 

 

3 Straub also argues that I.R.C.P. 8(a)(1) requires that attorney fees be pleaded as a precursor to an award; however, 

that is contrary to I.R.C.P. 54(e)(4) which states that generally attorney fees need not be pleaded.

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be pleaded in order to be recovered. Hence, to deny the motion on those grounds was 

inconsistent with legal standards. 

As to the second reason for the denial, we disagree that the Smiths failed to cite a rule or 

basis for the motion. The Smiths made a motion to reconsider pursuant to I.R.C.P. 11(a). 

However, a party may only make a motion to reconsider interlocutory orders or orders entered 

after the entry of final judgment. I.R.C.P. 11(a)(2). The dismissal was a final judgment and 

thus, the Smiths’ motion to reconsider should be treated as a motion to modify or amend the 

order of dismissal. The Court reviews an order denying a motion to alter or amend judgment for 

abuse of discretion. Slaathaug v. Allstate Ins. Co., 132 Idaho 705, 707, 979 P.2d 107, 109 

(1999). Pursuant to I.R.C.P. 59(e), a district court can correct legal and factual errors occurring 

in proceedings before it. Id. In this case, the Smiths supported their motion with an affidavit 

alerting the court to the fact that though the Smiths stipulated to dismissal with prejudice, they 

did not agree to waive costs. Thus, if the court entered the order denying costs and fees because 

it understood that to be part of the stipulation terms, the Smiths’ motion alerted it to the factual 

error and the motion gave it the opportunity to correct that error. Hence, the Smiths specified a 

sufficient basis for the motion and relief sought. Therefore, because neither of the reasons given 

by the district court supports a denial of the Smiths’ motion for reconsideration, we hold the 

denial of that motion was an abuse of discretion, and we reverse and remand the matter to the 

district court for further proceedings consistent with this opinion. 

D. The Smiths are entitled to attorney fees on appeal. 

 The Smiths request an award of attorney fees on appeal pursuant to I.C. § 12-120(3) 

which states that in any commercial transaction “the prevailing party shall be allowed a 

reasonable attorney’s fee. . . .” The mandatory provisions of this statute govern on appeal when 

the appeal of an order on attorney fees concerns entitlement to them and not the amount of an 

award. Eighteen Mile Ranch, LLC, 141 Idaho at 721, 117 P.3d at 135. The Smiths were found 

to be the prevailing party below, have prevailed on appeal and this appeal concerns entitlement 

to an award of fees; therefore, we award the Smiths attorney fees on appeal. 

III. CONCLUSION 

We hold the Smiths did not waive their right to claim costs and fees by signing the 

stipulation to dismiss and that the Smiths’ claim is not defeated by their failure to plead costs or 

attorney fees. We also hold the district court abused its discretion by denying the Smiths’ 

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motion for reconsideration and remand to the district court. Finally, we award attorney fees on 

appeal to the Smiths. Costs to Appellants. 

Justices W. JONES and HORTON, CONCUR. 

Chief Justice EISMANN, specially concurring. 

 I concur in the majority opinion, but write simply to add the following. 

This case is directly controlled by our recent unanimous opinion in Eighteen Mile Ranch, 

LLC v. Nord Excavating & Paving, Inc., 141 Idaho 716, 117 P.3d 130 (2005). In that case, 

“[t]he parties stipulated to dismiss Casey [Nord] from the suit a few days before trial began.” Id. 

at 718, 117 P.3d at 132. The stipulation did not mention costs and attorney fees. The trial court 

refused to award attorney fees and costs to Casey Nord and the other defendants on the ground 

that they were not prevailing parties, and they appealed. On appeal, we noted, “In litigation, 

avoiding liability is as good for a defendant as winning a money judgment is for a plaintiff.” Id. 

at 719, 117 P.3d at 133. We unanimously held that Casey Nord was a prevailing party and was 

entitled to an award of attorney fees. We stated: 

The individual Nords were also prevailing parties. Darrin left the suit 

upon a motion for directed verdict. He incurred no liability. For him that was 

“the most favorable outcome that could possibly be achieved.” Also, Reed 

defended himself through the entire trial and escaped all liability—again, 

achieving the most favorable outcome that could possibly be achieved. The same 

must be said for Casey, who was dismissed a few days before trial. Darrin, 

Reed, and Casey are clearly prevailing parties.

Id. at 719-20, 117 P.3d at 133-34 (emphasis added). This Court concluded, “The individual 

Nords and Nord Excavating were prevailing parties below and they adequately supported their 

request for fees and costs. The district court’s order denying their request is therefore reversed 

and the case is remanded for determination of an appropriate award.” Id. at 721, 117 P.3d at 

135. The Eighteen Mile Ranch case is indistinguishable from the present case. 

 The Eighteen Mile Ranch opinion also answers the question of whether a stipulation to 

dismiss a case with prejudice includes dismissal of any right to recover court costs or attorney 

fees. “A civil action is commenced by the filing of a complaint with the court.” I.R.C.P. 3(a); 

accord Sanchez v. State, Dept. of Correction, 143 Idaho 239, 141 P.3d 1108 (2006). The 

complaint, and any other pleading that sets forth a claim for relief, must contain “a short and 

plain statement of the claim showing that the pleader is entitled to relief.” I.R.C.P. 8(a)(1); 

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accord Idaho Dept. of Labor v. Sunset Marts, Inc., 140 Idaho 207, 91 P.3d 1111 (2004). For the 

right to recover attorney fees to be included in the dismissal of an action, the right to attorney 

fees must be a “claim for relief” that is required to be included in the pleadings. 

 In the Eighteen Mile Ranch case, we addressed this issue as to whether a request for the 

award of attorney fees must be alleged in a pleading, whether a complaint or an answer. We held 

that it did not. “Thus, a party need not have listed a specific attorney fee provision in its 

pleading in order to obtain a fee award under that provision [I.R.C.P. 54(e)(4)] upon prevailing 

in the litigation.” 141 Idaho at 721, 117 P.3d at 135. Since a right to recover attorney fees is not 

a “claim for relief” included in a pleading, the dismissal of the pleading with prejudice does not 

constitute any determination of the prevailing party’s right to recover attorney fees.4

Indeed, there can be no prevailing party until the merits of the lawsuit have been decided 

and there is a final judgment. Howard v. Perry, 141 Idaho 139, 106 P.3d 465 (2005); I.R.C.P. 

54(d)(1)(B). A dismissal of an action “with prejudice” is simply an adjudication on the merits of 

the plaintiff’s claim. King v. Lang, 136 Idaho 905, 42 P.3d 698 (2002); Scott v. Agricultural 

Prods. Corp., Inc., 102 Idaho 147, 627 P.2d 326 (1981); Sullivan v. Allstate Ins. Co., 117 Idaho 

880, 792 P.2d 905 (1990). In the instant case, there was no final judgment until the action was 

dismissed with prejudice. The dismissal of Straub’s action with prejudice was a precondition to 

the Smiths’ right to recover court costs and attorney fees, not a denial of that right. 

The district court erred when it denied the Smiths their right to seek an award of attorney 

fees without giving them a hearing on the matter. The Smiths had the right to seek an award of 

attorney fees by filing a memorandum of costs within fourteen days after entry of the judgment. 

I.R.C.P. 54(d)(5) & (e)(5). If Straub objected to the allowance of attorney fees or the amount 

claimed, she was required to file a motion stating such objection within fourteen days after 

 

4 We have in many instances upheld, or even ordered, the award of attorney fees where a case was dismissed with 

prejudice. For example, in McCann v. McCann, 138 Idaho 228, 232, 61 P.3d 585, 589 (2002), the district court 

dismissed the plaintiff’s complaint “with prejudice” and awarded the defendants “attorney fees and costs.” We held 

on appeal that the district court did not abuse its discretion in awarding attorney fees. In Miller v. St. Alphonsus 

Regional Medical Center, Inc., 139 Idaho 825, 840, 87 P.3d 934, 949 (2004), we “affirm[ed] the judgment of the 

district court dismissing this action with prejudice and awarding attorney fees to the Hospital under Idaho Code § 

12-120(3).” In Taylor v. Just, 138 Idaho 137, 143, 59 P.3d 308, 314 (2002), we “reverse[d] the judgment of the 

district court and remand[ed] this case with instructions to enter a judgment dismissing the complaint with prejudice 

and to award the Trustee a reasonable attorney fee.” In Nampa Charter School, Inc. v. DeLaPaz, 140 Idaho 23, 26, 

89 P.3d 863, 866 (2004), “the district court granted DeLaPaz’s 12(b)(6) motion and dismissed NCS’s claims with 

prejudice.” It also “awarded DeLaPaz 20% of the attorney fees requested together with costs.” We affirmed on 

appeal. 

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service of the memorandum of costs. I.R.C.P. 54(d)(6) & (e)(6). The district court shortcircuited the process by entering a judgment denying the Smiths any right to recover attorney 

fees without giving them an opportunity to request attorney fees in their memorandum of costs or 

to be heard on that request. 

In fairness to the district court, Straub’s counsel bears some responsibility for the shortcircuiting of the procedures. Every attorney worth his or her salt knows that if you want to 

dismiss your complaint just before trial and do not want your client to be liable for the 

defendant’s court costs and attorney fees, you had better seek a stipulation stating that each party 

will bear their own costs and attorney fees. Straub’s counsel did not do so in this case. Instead, 

he obtained the Smiths’ agreement “to the entry of an Order granting the plaintiff’s motion to 

dismiss this case with prejudice” and then submitted to the district court a proposed order adding 

the provision that the dismissal was “without an award of attorney fees of [sic] costs to either 

party.” Obviously, if the Smiths’ agreement that the case be dismissed with prejudice meant that 

each party would bear their own court costs and attorney fees, there would have been no need for 

Straub’s counsel to add that provision to the proposed order. It would have been unnecessary 

surplusage. Straub’s counsel obviously believed he needed to add that language to the proposed 

order in order to obtain the result he wanted. Notably, he submitted the proposed order to the 

district court but did not send a copy to the Smiths’ counsel. Smiths’ counsel did not learn of the 

added language until after the order had been signed by the district court. The district court may 

initially have assumed that the Smiths had agreed to the proposed order submitted by Straub’s 

counsel. However, upon being shown that such was not the case, the district court should have 

acted to correct the injustice. 

The Smiths have a statutory right to an award of attorney fees pursuant to Idaho Code § 

12-120(3). Straub agrees that “[t]he underlying transaction between the parties was clearly a 

commercial transaction under Idaho Code § 12-120(3).” The Smiths are also clearly the 

prevailing parties in this litigation. Eighteen Mile Ranch, LLC v. Nord Excavating & Paving, 

Inc., 141 Idaho 716, 117 P.3d 130 (2005). They could not have obtained a better outcome in the 

litigation. Therefore, they were entitled to an award of a reasonable attorney fee. 

W. JONES, J., concurs. 

 

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J. JONES, J., concurring in part and dissenting in part. 

 I concur in part II.B. of the Court’s opinion, but dissent with regard to the remainder 

thereof. I would affirm the district court’s denial of attorney fees and costs. 

 With regard to part II.A., I agree with the Court’s conclusion that the Smiths did not 

“waive” a claim for attorney fees. Rather, the Smiths entered into a stipulation with Straub 

wherein they contracted away any claim for fees. The parties stipulated to entry of an order 

dismissing the case with prejudice. The words “with prejudice” mean “[w]ith loss of all rights; 

in a way that finally disposes of a party’s claim and bars any future action on that claim.” 

Black’s Law Dictionary (7th Ed. 1999). 

Idaho Rule of Civil Procedure 41(a)(1)(ii) permits a plaintiff to dismiss his or her case 

upon filing a stipulation of dismissal signed by the parties. Given that dismissals under Rule 

41(a)(1)(ii) require a voluntary agreement of the parties, they are contractual in nature. See, e.g., 

Maroun v. Wyreless Systems, Inc., 141 Idaho 604, 611, 114 P.3d 974, 981 (2005) (“[a] 

stipulation is a contract.”). Thus, this Court should employ the same analysis it would if it were 

interpreting the terms of a contract, which “begins with the language of the contract itself.” 

Independence Lead Mines Co. v. Hecla Mining Co., 143 Idaho 22, 26, 137 P.3d 409, 413 (2006). 

For a contract to be enforceable there must be a “distinct understanding common to both parties,” 

as evidenced by a meeting of the minds between the parties. Potts Constr. Co. v. N. Kootenai 

Water Dist., 141 Idaho 678, 681, 116 P.3d 8, 11 (2005). “Proof of a meeting of the minds 

requires evidence of mutual understanding as to the terms of the agreement and the assent of 

both parties.” Id. 

 The stipulation in this case provides no evidence of a mutual understanding between the 

parties to exclude the Smiths’ claim for attorney fees from the purview of the stipulation of 

dismissal. On April 12, 2005, Straub’s counsel contacted the Smiths’ counsel via fax to inform 

him that Straub was interested in dismissing the case: 

My client has informed me that she no longer wishes to pursue this matter. Our 

motion to dismiss is attached. If you have no objection, please sign the attached 

stipulation and return to my office. Otherwise, I will schedule a hearing for the 

motion. 

I have notified the court. 

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Without objection, the Smiths’ counsel signed and returned the attached stipulation of dismissal, 

which provided that the “[d]efendants . . . hereby stipulate to the entry of an Order granting the 

plaintiff’s motion to dismiss this case with prejudice.” 

The express terms of the parties’ stipulation establishes a firm agreement to dismiss the 

case with prejudice. However, a review of the terms fails to disclose any language indicating 

that the parties wished to exclude the issue of fees and costs from the stipulation of dismissal. 

Although the Smiths, who admit to signing the stipulation without objection, now urge that they 

did not wish to subject their claim for fees and costs to the dismissal, this Court cannot divine 

from silence a mutual assent of the parties to that effect. Cf. Vogt v. Madden, 110 Idaho 6, 9, 713 

P.2d 442, 445 (Ct. App. 1986) (acceptance of an offer generally cannot be manifested through 

silence or inaction). Indeed, “a party’s subjective, undisclosed intent is immaterial to the 

interpretation of a contract.” J.R. Simplot Co. v. Bosen, 144 Idaho 611, _____, 167 P.3d 748, 

751 (2006), 2006 WL 3409103 at 2. Had the parties wished to reserve the issue of attorney fees 

from the purview of the stipulation of dismissal, they had ample opportunity to expressly agree 

to such a provision. See, e.g., Daisy Mfg. Co. v. Paintball Sports, Inc., 134 Idaho 259, 260, 999 

P.2d 914, 915 (Ct. App. 2000) (parties agreeing to stipulation of dismissal reserved the issue of 

attorney fees and costs); Barrios v. California Interscholastic Fed’n, 277 F.3d 1128, 1133 (9th 

Cir. 2002) (parties entering into a settlement agreement expressly reserved the issue of attorney 

fees and costs for future determination). 

Inland Group of Cos. v. Obendorff, 131 Idaho 473, 959 P.2d 454 (1998), provides no 

relief to the Smiths. In Obendorff, a special master appointed by the district court, Perry 

Obendorff, filed a motion for an order to show cause after Inland Group of Companies failed to 

pay its half of the special master fees.5

 131 Idaho at 474, 959 P.2d at 455. Obendorff’s motion 

was filed after the parties to the action (which did not include Obendorff) stipulated to a 

dismissal of the suit with prejudice. Id. Inland argued that once the case was dismissed, the 

order appointing Obendorff as special master was dissolved and with it Obendorff’s right to his 

fees. The Court disagreed because there was an outstanding district court order requiring Inland 

to pay one half of the special master fees, because the special master fees were costs, and 

because the final dismissal order incorporated the order dealing with fees in that it clearly stated 

 

5 When the district court appointed Obendorff, it ordered that the costs of the special master be borne equally by the 

parties. 131 Idaho at 474, 959 P.2d at 455. 

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that each side was to bear its own costs. Id. at 475, 959 P.2d at 456. It should be noted that 

Obendorff was not a party to a contract calling for dismissal of the action with prejudice, as is 

the case here. 

This Court has long recognized the strong public policy favoring the settlement of 

litigation. Quick v. Crane, 111 Idaho 759, 780, 727 P.2d 1187, 1208 (1986). At the time the 

parties executed the stipulation of dismissal, Straub had a justifiable expectation, given the 

encompassing language of the stipulation and the absence of any express reservations, that all 

rights and claims related to the case would be dismissed, including the Smiths’ claim for fees and 

costs. Public policy dictates that this Court protect expectations reasonably induced. In 

consideration of the Smiths’ agreement to dismiss the case, Straub agreed to forgo her right to 

pursue the suit and relinquished her ability to refile her suit in the future. To allow the Smiths to 

pursue attorney fees after stipulating to a general dismissal of the case would have the effect of 

discouraging stipulations and defeating Straub’s expectations. See K. Hefner, Inc. v. Caremark, 

Inc., 128 Idaho 726, 732, 918 P.2d 595, 601 (1996) (dismissing plaintiffs without adverse 

consequences is beneficial because “it would tend to encourage parties who do not ‘have the 

stomach’ for litigation to seek a dismissal”). 

 I would hold that the Smiths relinquished their claim for fees and costs when they 

stipulated to dismissal of the case with prejudice, and without expressly reserving the issue for 

future determination. While I agree with part II.B. of the Court’s opinion, I would hold it to be 

unnecessary to the decision of the case. 

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