Opinion ID: 874184
Heading Depth: 1
Heading Rank: 14

Heading: Attorney Fees in District Court

Text: Finally, the Wattenbargers argue that the district court erred in awarding the respondents attorney fees. The Wattenbargers argue that the district court: (1) failed to adequately perceive the award of attorney fees as a matter of discretion; (2) erred in determining the respondents were prevailing parties; (3) incorrectly determined that there was a basis to award fees; and (4) awarded excessive fees. Respondents sought an award of attorney fees below based upon the custodial account agreement and Rule 54(e)(1) of the Idaho Rules of Civil Procedure. [5] The rule does not provide authority for awarding attorney fees. It merely states that the court may award reasonable attorney fees to the prevailing party when provided for by any statute or contract. I.R.C.P. 54(e)(1). Indeed, Attorney fees are awardable only where they are authorized by statute or contract.. . . If the party bases its claim for attorney fees upon a contract, then the party must likewise identify that portion of the contract upon which the party relies as authority for the awarding of attorney fees. The party must then provide a reasoned argument, supported by case law as necessary, explaining why that . . . contractual provision entitles the party to an award of attorney fees in this instance. Bream v. Benscoter, 139 Idaho 364, 369, 79 P.3d 723, 728 (2003). The district court found that the respondents were entitled to fees under the last sentence of article XII, paragraph 10 of the custodial account agreement. Paragraph 10 provides, in full: The Custodian shall not be liable for any act or omission made with respect to the account of the Depositor except for its intentional misconduct or gross negligence. Any expense, including attorney's fees, incurred by the Custodian in collection of a deficit from the Depositor shall be borne solely by the Depositor. Any expense, including attorney's fees, incurred by the Custodian in defense of any action brought against the Depositor and the Custodian shall be borne solely by the Depositor. Any expense, including attorney's fees, incurred by the Custodian in defense in an action brought by the Depositor seeking rescission of any agreement between the Depositor and the Custodian or to recover damages for the activities of the Custodian or its agents or employees in handling any account of the Depositor shall be borne solely by the account, or the Depositor as the case may be, should the Custodian prevail. The Wattenbargers argue that this clause only permits a fee award with regard to issues involving the handling of an account but not the establishment of an account. In other words, the broker may recover fees for successfully defending against a claim arising out of the handling or management of an account. The Wattenbargers assert that their claim related to the establishment of the account, i.e. the recommendation to use a particular type of account. They assert this type of claim does not fit within the terms of the fee provision and that, since respondents furnished the language for the provision, it should be strictly construed against them. The interpretation advanced by the Wattenbargers is correct. The thrust of the Wattenbargers' complaint is that respondents established accounts that were inappropriate for Mrs. Wattenbarger's children she had wanted accounts that would provide for their college education but instead received accounts designed for retirees, which could not be accessed without substantial penalties until long after the children were of college age. There is a substantial difference between the establishment of an account and the handling of an account. An account cannot be handled or managed until after it has been established, nor for that matter after it has been terminated. The custodial account agreement recognizes the difference between establishment of an account and the handling of that account. The second paragraph of the agreement refers to the Depositor's desire to establish an account. The attorney fee provision makes separate provision for fees incurred in seeking rescission or termination of an account agreement. The first sentence of the attorney fee provision likely delineates the type of handling covered by the fee provisionany act or omission made with respect to the account of the Depositor except for [the Custodian's] intentional misconduct or gross negligence. That is, the handling provision relates to alleged violations of the manner in which the account is to be handled under the terms and requirements of the custodial account agreement. Because this suit does not pertain to the handling of the Wattenbargers' accounts and since none of the other provisions of article XII, paragraph 10, appear to apply, the district court erred in awarding attorney fees to the respondents and we therefore vacate that award.