Opinion ID: 874115
Heading Depth: 2
Heading Rank: 7

Heading: We affirm the district court's award of attorney fees.

Text: The district court awarded the respondents attorney fees based on a provision in the settlement agreement entitling the prevailing party in any dispute arising from the agreement to fees. We review a district court's award of attorney fees for an abuse of discretion. Appel v. LePage, 135 Idaho 133, 138, 15 P.3d 1141, 1146 (2000). A court does not abuse its discretion if it (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. Tex. Refinery Corp., 139 Idaho 761, 765, 86 P.3d 475, 479 (2004). Allied asserts that a case must be decided on the merits in order for there to be a prevailing party entitled to attorney fees. This is a question of law over which this Court exercises free review. Contreras v. Rubley, 142 Idaho 573, 576, 130 P.3d 1111, 1114 (2006). The authority cited by Allied does not support its contention. To the contrary, this Court held in Straub v. Smith, 145 Idaho 65, 69, 175 P.3d 754, 758 (2007), that attorney fees may be appropriate where the parties have voluntarily stipulated to dismissalone instance where a case is not decided on the merits. Attorney fee awards may also be appropriate where a case is dismissed on I.R.C.P. 12(b) grounds. E.g., Nampa Charter School, Inc. v. DeLaPaz, 140 Idaho 23, 29-30, 89 P.3d 863, 869-70 (2004); Losser v. Bradstreet, 145 Idaho 670, 676, 183 P.3d 758, 764 (2008). The lack of a decision on the merits does not provide grounds to vacate the district court's award of attorney fees to the respondents. Further, the district court's award of attorney fees was not an abuse of discretion. Where a court holds a contract is unenforceable, the prevailing party may nonetheless be entitled to an award of attorney fees under the contract. Garner v. Bartschi, 139 Idaho 430, 439, 80 P.3d 1031, 1040 (2003); Ayotte v. Redmon, 110 Idaho 726, 728-29, 718 P.2d 1164, 1166-67 (1986) (upholding district court's award of attorney fees to party successfully seeking rescission). `It is of no consequence that the underlying contractual obligation is unenforceable. A prevailing party may recover attorney fees even though no liability under a contract was established or where no contract was, in fact, ever formed.' Garner, 139 Idaho at 439, 80 P.3d at 1040 (quoting Hilbert v. Hough, 132 Idaho 203, 207, 969 P.2d 836, 840 (Ct.App. 1998)). In the present case, paragraph twelve of the settlement agreement entitled the prevailing party in any action to enforce the agreement to an award of reasonable attorney fees. The district court had broad discretion to find the respondents, as the parties that prevailed as to each of Allied's claims, were the prevailing parties. The court acted within the bounds of its discretion and the applicable law when it found that the respondents were entitled to attorney fees under the settlement agreement, and reached its decision by an exercise of reason. We hold the district court properly awarded attorney fees to the respondents as the parties prevailing below.