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IN THE SUPREME COURT OF THE STATE OF IDAHO

Docket No. 37868

STONEBROOK CONSTRUCTION, LLC,

 Plaintiff-Appellant,

v.

CHASE HOME FINANCE, LLC,

 Defendant-Respondent,

and

JOSHUA ASHBY and KATRINA ASHBY,

husband and wife; ALLIANCE TITLE &

ESCROW CORP.

 Defendants. 

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Boise, January 2012 Term

2012 Opinion No. 68

Filed: April 26, 2012

Stephen Kenyon, Clerk

Appeal from the District Court of the Seventh Judicial District of the State of 

Idaho, Bonneville County. Hon. Joel E. Tingey, District Judge.

The district court’s grant of summary judgment is affirmed.

Smith, Driscoll & Associates, PLLC, Idaho Falls, for appellant. Buster J. Driscoll 

argued.

Hawley Troxell Ennis & Hawley LLP, Boise, for respondent. Steven F. 

Schossberger argued.

 _______________________________________________

HORTON, Justice.

This appeal arises from an action brought by Stonebrook Construction, LLC (Stonebrook 

or “the LLC”) against Chase Home Finance, LLC (Chase), seeking to foreclose a mechanic’s 

lien. The district court granted Chase’s motion for summary judgment, holding that Stonebrook 

was precluded from placing a lien against the subject property because it did not properly 

register under the Idaho Contractor Registration Act (ICRA or “the Act”).

Stonebrook appeals, arguing that Chase lacked standing to assert this defense and is not 

within the class intended to be protected by the ICRA. Alternatively, Stonebrook contends that 
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the good-faith registration of one member of the LLC constituted actual or substantial 

compliance with the requirements of the ICRA. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 2006, Tyler Schwendiman and Brandon Burton began operating a construction 

contracting business under the assumed business name “Stonebrook Construction.” At that time, 

Schwendiman also applied for and received a registered general contractor license. In 2007, 

Schwendiman and Burton filed a certificate of organization with the Idaho Secretary of State and 

continued operating their business as a limited liability company known as Stonebrook 

Construction, LLC. This entity did not apply for registration under the ICRA; rather, 

Stonebrook’s members believed that Schwendiman’s previous registration fulfilled the 

requirements of the Act. 

Stonebrook entered into a contract to build a home on property in Bonneville County 

owned by Joshua and Katrina Ashby (the Ashbys). Between November of 2007 and June of

2008, the LLC provided labor and materials for the construction work on the Ashbys’ home. The 

Ashbys executed a deed of trust against the property under which Chase is the successor 

beneficiary. The deed of trust was recorded on June 4, 2008. The Ashbys failed to pay

Stonebrook the amount owed for the work and the LLC recorded a claim of lien against the 

subject property on August 8, 2008. Stonebrook timely brought an action to foreclose its lien, 

and Chase moved for summary judgment on the ground that Stonebrook was precluded from 

placing a lien against the subject property because it failed to comply with the registration 

requirements of the ICRA. The district court granted Chase’s motion and dismissed 

Stonebrook’s claim of lien. Stonebrook appealed and now asks this Court to vacate the district 

court’s judgment and remand for further proceedings.

II. STANDARD OF REVIEW

This Court reviews appeals from an order of summary judgment de novo, and the 

“standard of review is the same as the standard used by the trial court in ruling on a motion for 

summary judgment.” Curlee v. Kootenai Cnty. Fire & Rescue, 148 Idaho 391, 394, 224 P.3d 

458, 461 (2008) (citations omitted). Thus, summary judgment is appropriate if “the pleadings, 

depositions, and admissions on file, together with the affidavits, if any, show that there is no 

genuine issue as to any material fact and that the moving party is entitled to a judgment as a 

matter of law.” I.R.C.P. 56(c). Under this standard, “disputed facts are construed in favor of the 
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non-moving party, and all reasonable inferences that can be drawn from the record are drawn in 

favor of the non-moving party.” Curlee, 148 Idaho at 394, 224 P.3d at 461. Where “the evidence 

reveals no disputed issues of material fact, then only a question of law remains, over which this 

Court exercises free review.” Lockheed Martin Corp. v. Idaho State Tax Comm’n, 142 Idaho 

790, 793, 134 P.3d 641, 644 (2006). This Court exercises “free review over interpreting a 

statute’s meaning and applying the facts to the law.” VFP VC v. Dakota Co., 141 Idaho 326, 331, 

109 P.3d 714, 719 (2005).

III. ANALYSIS

A. Chase properly raised Stonebrook’s ICRA registration status as a defense.

Stonebrook argues that the district court erred by permitting Chase to raise Stonebrook’s 

ICRA registration status as a defense and submits two arguments in support of its contention.

Stonebrook first argues that Chase cannot raise the issue of the LLC’s alleged failure to comply 

with the ICRA because Chase lacks “standing” to assert the statute as a defense. This argument 

is without merit. As we recently reiterated, “[s]tanding is a subcategory of justiciability, and the 

standing inquiry is focused on the party seeking relief.” Taylor v. AIA Servs. Corp., 151 Idaho 

552, ___, 261 P.3d 829, 841 (2011) (citing Martin v. Camas Cnty., 150 Idaho 508, 513, 248 P.3d 

1243, 1248 (2011)). Therefore, a defendant’s standing “is not at issue” when evaluating the 

merits of a defense. Id.

In this case, Chase was the defendant and invoked Stonebrook’s failure to comply with 

the ICRA as a defense. Chase’s standing is therefore not an issue because it is not the party 

seeking relief. We hold that a defendant is not required to prove standing before raising a 

contractor’s registration status as a defense in an action brought by the contractor.1

Stonebrook’s second argument relies on precedent addressing the standards for 

application of a statute to establish negligence per se:

 1 Indeed, Stonebrook’s complaint does not meet the pleading requirements imposed by the ICRA. Idaho Code § 54-

5217(2) provides: 

No person engaged in the business or acting in the capacity of a contractor, unless otherwise 

exempt, may bring or maintain any action in any court of this state for the collection of 

compensation for the performance of any act or contract for which registration is required by this 

chapter without alleging and proving that he was a duly registered contractor, or that he was 

otherwise exempt as provided for in this chapter, at all times during the performance of such act or 

contract.

(emphasis added). Although Stonebrook’s complaint clearly alleges that Stonebrook provided labor and materials 

for the construction of the Ashbys’ home and sought recovery therefor, the complaint does not allege that 

Stonebrook was a duly registered contractor nor does it allege that Stonebrook was exempt from the ICRA. 
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In order for the violation of a statute to be pertinent in a particular case, the statute 

must be applicable; that is, the statute must be designed to protect (1) the class of 

persons in which the plaintiff is included (2) against the type of harm which has in 

fact occurred as a result of its violation.

Kinney v. Smith, 95 Idaho 328, 331, 508 P.2d 1234, 1237 (1973) (citing Prosser on Torts 191-

202 (3d ed. 1964)). Stonebrook argues that in order for Chase to invoke the ICRA in its defense, 

Chase must demonstrate that it is within the class the ICRA was designed to protect and that its 

injury is the type of harm the Act was designed to prevent. We disagree.

When the Legislature enacted the ICRA, it took the extraordinary step of expressly

stripping the economic protections typically extended to contractors. First, the Act’s penalty 

section prohibits unregistered contractors from bringing or maintaining “any action in any court 

of this state for the collection of compensation for” any contracting work done. I.C. § 54-

5217(2). Second, the Act contains a separate provision expressly denying unregistered 

contractors the right to place a lien. I.C. § 54-5208.2 The Act contains no language limiting the

circumstances under which these penalties apply. In view of the unambiguous language 

specifying the significant penalties imposed upon unregistered contractors, the issue to be 

resolved is not whether Chase is entitled to invoke the Act for its benefit, but whether 

Stonebrook complied with the Act’s registration requirements. 

B. Stonebrook did not actually comply with the ICRA.

Chase argues that the Act specifically requires limited liability companies to register and 

contains no exception permitting a limited liability company to rely on the registration of one of 

its members. Stonebrook contends that it complied with the Act because Burton and 

Schwendiman were acting in combination as a unit known as Stonebrook Construction, first as 

partners under an assumed business name and later as a limited liability company. Thus, 

Stonebrook argues, Schwendiman’s personal registration satisfies the registration requirement 

because there is no requirement for every member of a unit to register separately. We hold that 

Schwendiman’s registration does not constitute actual compliance with the ICRA.

 2 Idaho Code § 54-5208 states, in relevant part: “A contractor who is not registered as set forth in this chapter, unless 

otherwise exempt, shall be denied and shall be deemed to have conclusively waived any right to place a lien upon 

real property as provided for in chapter 5, title 45, Idaho Code.”
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This Court exercises “free review over interpreting a statute’s meaning and applying the 

facts to the law.” VFP VC, 141 Idaho at 331, 109 P.3d at 719. The standard this Court applies 

when interpreting statutes is well established:

Interpretation of a statute begins with an examination of the statute’s literal 

words. Where the language of a statute is plain and unambiguous, courts give 

effect to the statute as written, without engaging in statutory construction. Only 

where the language is ambiguous will this Court look to rules of construction for 

guidance and consider the reasonableness of proposed interpretations.

Curlee, 148 Idaho at 398, 224 P.3d at 465 (citing Idaho Conservation League, Inc. v. Idaho State 

Dep’t of Agric., 143 Idaho 366, 368, 146 P.3d 632, 634 (2006) (internal citations omitted)). A 

statute “is ambiguous where reasonable minds might differ or be uncertain as to its meaning.” 

Payette River Prop. Owners Ass’n v. Bd. of Comm’rs of Valley Cnty., 132 Idaho 551, 557, 976 

P.2d 477, 483 (1999) (citing Ada Cnty. v. Gibson, 126 Idaho 854, 856, 893 P.2d 801, 803 (Ct.

App. 1995)). “However, ambiguity is not established merely because the parties present differing 

interpretations to the court.” Id.

Under the ICRA, it is “unlawful for any person to engage in the business of, or hold 

himself out as, a contractor within this state without being registered” according to the provisions 

of the Act. I.C. § 54-5204(1). Further, a contractor that does not register as required by the Act 

“shall be denied and shall be deemed to have conclusively waived any right to place a lien upon 

real property as provided for in chapter 5, title 45, Idaho Code.” I.C. § 54-5208. The Act defines

a contractor as “[a]ny person who in any capacity undertakes, offers to undertake, purports to 

have the capacity to undertake, or submits a bid to, or does himself or by or through others, 

perform construction.” I.C. § 54-5203(4)(a). A “person” is “any individual, . . . limited liability 

company, . . . or other entity or organization capable of conducting business, or any combination

thereof acting as a unit.” I.C. § 54-5203(6). Thus, the literal words of the statute unambiguously 

indicate that the Legislature intended to require limited liability companies engaged in the 

business of construction to register as contractors.

Stonebrook argues that Schwendiman and the LLC were a combination acting as a unit. 

The text of the statute does not support this interpretation. The Act lists a number of entities that 

are considered “persons” under the Act, and must therefore register, including combinations of 

those entities when they are “acting as a unit.” I.C. § 54-5203(6). Stonebrook suggests that this 

language means that if entities otherwise required to register are acting together, only one 
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registration is required. While it may be possible to construct an interpretation that supports this 

contention, a plain reading of the statute leads us to conclude that the Act requires the listed 

entities, including combinations of those entities, to register.

In this case, Stonebrook took no affirmative steps to obtain registration as an LLC. 

Instead, after its compliance with the ICRA was challenged, it applied for registration while 

simultaneously arguing that it had already complied with the Act because Schwendiman was

somehow acting in combination with the limited liability company he formed with Burton.

Presumably, Schwendiman and Burton formed the LLC to legally separate themselves from their 

business and to insulate themselves from personal liability.3 Nevertheless, Stonebrook invites 

this Court to accept the proposition that Schwendiman and Burton formed a limited liability 

company and then worked as individuals in combination with their own limited liability 

company to perform the very services the LLC was created to do. We are unable to accept this 

proposition. 

The LLC is the entity that entered into the contract, provided the labor and materials, 

brought the legal action, and filed the claim of lien. The plain language of the Act provides that 

the LLC was also the entity required to register. Therefore, we affirm the district court’s 

judgment that Stonebrook did not comply with the ICRA.

C. We do not address Stonebrook’s claim of substantial compliance with the ICRA.

Stonebrook, as its alternative argument, asks this Court to apply the doctrine of 

substantial compliance to the ICRA and argues that Schwendiman’s registration constitutes 

substantial compliance. Although the Act does not specifically provide that substantial 

compliance will insulate a contractor from the penalties prescribed by I.C. §§ 54-5208 and 54-

5217, we can envision circumstances4 that might lend support to such a claim. However, the 

facts of this case do not demonstrate that Stonebrook substantially complied with the Act’s 

registration requirement.

The record demonstrates that Stonebrook undertook no effort to comply with the Act 

prior to or during the performance of the Ashby contract. Indeed, Stonebrook made no effort to 

comply with the Act’s registration requirements until after this lawsuit was filed. As Stonebrook 

 3 See I.C. §§ 30-6-104(1); 30-6-304. 4 For example: situations where a contractor’s attempted registration fails because of either an unintentional error in 

the application, an administrative error by the Idaho contractor’s board, or a temporary lapse in a previously 

registered contractor’s registration.
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did not comply with the Act at all, it cannot be said to have substantially complied. Accordingly, 

we do not decide whether substantial compliance with the Act’s requirements will permit an 

unregistered contractor to avoid the consequences provided by statute. 

D. The district court’s decision does not lead to an unreasonably harsh result.

Stonebrook contends that this Court should recognize Schwendiman’s personal

compliance with the ICRA in order to avoid an unreasonably harsh result. We disagree. Statutory 

constructions “that would lead to absurd or unreasonably harsh results are disfavored.” State v. 

Yager, 139 Idaho 680, 690, 85 P.3d 656, 666 (2004) (citing Payette River Prop. Owners Ass’n v. 

Bd. of Comm’rs of Valley Cnty., 132 Idaho 551, 976 P.2d 477 (1999)). However, the “public 

policy of legislative enactments cannot be questioned by the courts and avoided simply because 

the courts might not agree with the public policy so announced.” State v. Village of Garden City, 

74 Idaho 513, 525, 265 P.2d 328, 334 (1953). Therefore, this Court’s duty is “to interpret the 

meaning of legislative enactments without regard to possible results.” Id.

The solicitude toward contractors reflected in art. XIII, § 6 of the Idaho Constitution and 

the mechanics’ lien laws does not extend to unregistered contractors.5 When the Legislature 

enacted the ICRA, it made specific findings that construction “affects the public health, safety 

and welfare” of Idaho’s citizens and “that it is in the public interest to provide a mechanism to 

remove from practice incompetent, dishonest, or unprincipled practitioners of construction.” I.C. 

§ 54-5202. In order to advance these important public interests, the Legislature adopted harsh 

penalties for contractors that do not comply with the ICRA, providing that unregistered 

contractors “shall be denied and shall be deemed to have conclusively waived any right to place 

a lien upon real property.” I.C. § 54-5208. As we previously explained, the plain language of the

Act unambiguously indicates that the Legislature intended to require all limited liability 

companies engaged in the business of construction to register as contractors and to preclude 

those that do not register from enforcing mechanic’s liens. Although the result for Stonebrook is 

harsh, it is the result the Legislature intended. We are not at liberty to disregard this legislative 

determination as to the most effective means of protecting the public. Thus, we decline to vacate 

the district court’s decision.

 5 Stonebrook does not assert that the ICRA violates Idaho Const., art. XIII, § 6.
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E. Neither party is entitled to attorney fees on appeal.

Both parties request attorney fees on appeal. Stonebrook requests attorney fees on appeal 

based on I.C. §§ 12-120(3), 12-121, and 45-513. Under I.C. §§ 12-120(3) and 12-121, only the 

prevailing party is entitled to attorney fees on appeal. Because Stonebrook has not prevailed in 

this appeal, it is not entitled to attorney fees under either of these statutes. We have held that I.C. 

§ 45–513, “does not allow the award of attorney fees on appeal by materialman’s lien 

claimants.” Franklin Bldg. Supply Co. v. Sumpter, 139 Idaho 846, 852, 87 P.3d 955, 961 (2004) 

(citing Hendrix v. Gold Ridge Mines, 56 Idaho 326, 330, 54 P.2d 254, 258 (1936)). Therefore, 

Stonebrook is not entitled to attorney fees on appeal.

Chase seeks attorney fees pursuant to I.C. § 12-121. Attorney fees on appeal may be 

awarded under I.C. § 12-121 “only if the appeal was brought or defended frivolously, 

unreasonably, or without foundation. MBNA Am. Bank, N.A. v. McGoldrick, 148 Idaho 56, 60, 

218 P.3d 785, 789 (2008). Where there is “a legitimate, triable issue of fact or a legitimate issue 

of law, attorney fees may not be awarded.” Kiebert v. Goss, 144 Idaho 225, 228, 159 P.3d 862, 

865 (2007) (citing Thomas v. Madsen, 142 Idaho 635, 639, 132 P.3d 392, 396 (2006)). If there is 

“at least one legitimate issue presented, attorney fees may not be awarded” under I.C. § 12-121, 

even if the party that does not prevail on appeal “has asserted other factual or legal claims that 

are frivolous, unreasonable, or without foundation.” Michalk v. Michalk, 148 Idaho 224, 235, 

220 P.3d 580, 591 (2009) (citing McGrew v. McGrew, 139 Idaho 551, 562, 82 P.3d 833, 844 

(2003)). In this case, Stonebrook’s appeal was neither frivolous, unreasonable, nor without 

foundation. Based upon citations to authority in other jurisdictions, Stonebrook made a goodfaith argument asking this Court to determine whether substantial compliance applied in ICRA 

cases, which is a legitimate issue not previously addressed by the Court. Although we did not 

reach this issue, we are unable to find Stonebrook’s appeal to have been frivolous. Therefore, we 

do not award Chase attorney fees on appeal.

IV. CONCLUSION

We affirm the district court’s grant of summary judgment in favor of Chase. Costs, but 

not attorney fees, to Chase.

Chief Justice BURDICK and Justices EISMANN, J. JONES and W. JONES CONCUR.