Opinion ID: 1138511
Heading Depth: 1
Heading Rank: 3

Heading: I.R.C.P. 11 Attorney Fees.

Text: On cross-appeal, Christensen argues that she should have been awarded all of her attorney fees and costs pursuant to I.C. § 12-120(3) and I.R.C.P. 11. In certain civil actions, I.C. § 12-120 provides for an award of reasonable attorney fees to the prevailing party, and subsection (3) allows an award of fees in any commercial transaction. The rule defines commercial transaction as all transactions except transactions for personal or household purposes. Christensen maintains that this suit involves a commercial transaction because it does not relate to a personal or household purpose, and claims she is entitled to an award of fees pursuant to I.C. § 12-120. We disagree. This legal action did not pertain to a transaction, commercial or otherwise, and we affirm the district court's denial of costs and fees claimed under I.C. § 12-120(3). Christensen next asserts that the district court applied an incorrect legal standard of bad faith in denying defendant's motion for the imposition of sanctions under I.R.C.P. 11. We agree and remand to the district court for a determination of this issue pursuant to I.R.C.P. 11. Stevens v. Fleming, 116 Idaho 523, 777 P.2d 1196 (1989); State of Alaska ex rel. Sweat v. Hansen, ___ Idaho ___, 782 P.2d 50 (Ct.App. 1989). I.R.C.P. 11, as amended in 1985, is identical to the 1983 amendment of Fed.R.Civ.P. 11. Our adoption of amended Rule 11, containing language identical to the Federal Rule, presumably carries with it the interpretation placed upon that language by the federal courts. Chacon v. Sperry Corp., 111 Idaho 270, 723 P.2d 814 (1986). Both amended rules require that pleadings, motions and other papers meet certain criteria, and failure to comply may result in the imposition of sanctions. I.R.C.P. 11, as amended, provides in pertinent part: The signature of an attorney or party constitutes a certificate by him that he has read the pleading, motion or other paper; that to the best of his knowledge, information, and belief after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. If a pleading, motion or other paper is not signed, it shall be stricken unless it is signed promptly after the omission is called to the attention of the pleader or movant. If a pleading, motion or other paper is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney's fee. (Emphasis added.) Recent federal court decisions regarding Fed.R.Civ.P. 11 hold that the bad faith standard is no longer applicable. Rather, the federal courts apply an objective standard of reasonableness under the circumstances. Zaldivar v. City of Los Angeles, 780 F.2d 823, 829 (9th Cir.1986); Rodgers v. Lincoln Towing Serv., Inc., 771 F.2d 194, 205 (7th Cir.1985); Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 253 (2d Cir.1985). In Zaldivar, the Ninth Circuit Court of Appeals held that subjective bad faith is not an element to be proved under Rule 11, but sanctions shall be assessed if the pleading is frivolous, legally unreasonable, or without factual foundation. 780 F.2d at 829, 831. In Eastway Constr. Corp. v. City of New York, 762 F.2d 243 (2d Cir.1985) the circuit court of appeals held that the language of Rule 11 explicitly and unambiguously imposes an affirmative duty on each attorney to conduct a reasonable inquiry into the viability of a pleading before it is signed ... A showing of subjective bad faith is no longer required to trigger the sanctions imposed by the rule. 762 F.2d at 253. (Emphasis added.) In light of these federal decisions interpreting language that is identical to that contained in the Idaho version of I.R.C.P. 11, we hold that reasonableness under the circumstances, and a duty to make a reasonable inquiry prior to filing an action, is the appropriate standard to apply. A showing of subjective bad faith is no longer necessary for the imposition of sanctions, and we hold that the district court applied an incorrect legal standard when denying defendant's motion for Rule 11 sanctions. The trial court should examine Rule 11 sanctions in light of the foregoing authorities and determine whether the plaintiffs made a proper investigation upon reasonable inquiry. Accordingly, we remand for reconsideration the issue of Durrant and Sellers' compliance with amended Rule 11 and the possible imposition of sanctions to be determined after further evaluation of the facts by the district court.