MEMORANDUM OF DECISION
JIM D. PAPPAS, Bankruptcy Judge.
Introduction
After entry of a summary judgment in their favor in this consolidated adversary proceeding,1 Plaintiffs Old Cutters, Inc. ("Old Cutters") and Mountain West Bank ("MWB") each filed a motion seeking an award of attorneys fees and costs from Defendant City of Hailey ("Hailey"). Dkt. Nos. 82 and 93. Hailey objected to both motions. Dkt. No. 106; No. 108. The Court conducted a hearing on the motions on March 19, 2013, at which the parties appeared and presented arguments. For the following reasons, the Court concludes that Old Cutters' motion should be granted, and MWB's motion should be denied.
Facts
The underlying facts giving rise to this litigation are set forth at length in the Court's December 31, 2012, Memorandum of Decision granting summary judgment in this adversary proceeding in favor of Old Cutters, and, in part, in favor of MWB. Dkt. No. 77. An order and judgment were entered memorializing the Court's decision on January 23, 2013. Dkt. Nos. 78, 79. The judgment is currently on appeal to the U. S. District Court.
In its motion, Old Cutters seeks an award of $95,131 in attorneys fees, and costs of $2,047, as a prevailing party in the adversary proceeding. Dkt. No. 82. Old Cutters argues it is entitled to recover the attorneys fees and costs pursuant to the terms of the Annexation Agreement it executed with Hailey. Paragraph 16 of the Annexation Agreement provides: "If a suit, action, or other proceeding arising out of or related to this Agreement is instituted by any party to this Agreement, the prevailing party shall be entitled to recover its reasonable attorney fees . . . ." Dkt. No. 82, Exh. A at 7-8. In addition, Old Cutters contends it may recover the fees and costs under Idaho Code § 12-120(3) because the dispute with Hailey involves a commercial transaction. Finally, relying on the prayer for relief of its complaint, Old Cutters requests an award of attorneys fees from Hailey pursuant to Idaho Code § 12-117. Dkt. No. 1.2
MWB's motion for attorneys fees seeks $90,062. Dkt. No. 93. In the prayer of its complaint, MWB requested attorneys fees under Idaho Code § 12-117. Adv. No. 11-8106, Dkt. No. 1. In its motion, MWB now argues it is entitled to recover attorneys fees under both Idaho Code §§ 12-117 and 12-120(3). However, at the hearing on the motion, counsel for MWB appropriately conceded that Idaho Code § 12-120 is not applicable because it was not engaged in any commercial transaction with Hailey. See Printcraft Press, Inc. v. Sunnyside Park Utilities, Inc., 283 P.3d. 757, 778 (Idaho 2012) (holding, "the Third Party Beneficiary Agreement was not an agreement between [the party asserting the right under Idaho Code § 12-120(3)] and the defendants, but rather an agreement between [another party] and the defendants. Thus . . . there was no commercial transaction between the parties that gave rise to this litigation.").
Analysis and Disposition
I. Applicable Law
In litigation in the bankruptcy court, "state law governs an award of attorney fees if `state law and not federal bankruptcy law provides the rule of decision in a contested matter.'" Krommenhoek v. A-Mark Precious Metals, Inc. (In re Bybee), 945 F.2d 309, 315 (9th Cir. 1991) (quoting Holiday Mobile Home Resorts v. Wood, 803 F.2d 977, 979 (9th Cir. 1986)).
At bottom, this was a contest over whether Hailey's claim in the Old Cutters bankruptcy case should be allowed. However, in connection with that dispute, the Court applied solely Idaho law to determine whether specific provisions of the Annexation Agreement between Old Cutters and Hailey, the contract giving rise to Hailey's claim, were unenforceable. Therefore, the Court concludes that Idaho law controls whether attorneys fees are recoverable here.
Idaho Rule of Civil Procedure 54(e)(1)3 provides that a trial court may award reasonable attorney fees to a prevailing party in a civil action where a statute or contract provide for such relief. Whether a party has prevailed is determined by the trial court in the exercise of its discretion by considering "the final judgment or result of the action in relation to the relief sought by the respective parties." Idaho Rule of Civil Procedure 54(d)(1)(B). The Rule also specifies the factors the trial court must consider in determining the reasonableness of an award of attorneys fees:
Amount of Attorney Fees. In the event the court grants attorney fees to a party or parties in a civil action it shall consider the following factors in determining the amount of such fees:
(A) The time and labor required.
(B) The novelty and difficulty of the questions.
(C) The skill requisite to perform the legal service properly and the experience and ability of the attorney in the particular field of law.
(D) The prevailing charges for like work.
(E) Whether the fee is fixed or contingent.
(F) The time limitations imposed by the client or the circumstances of the case.
(G) The amount involved and the results obtained.
(H) The undesirability of the case.
(I) The nature and length of the professional relationship with the client.
(J) Awards in similar cases.
(K) The reasonable cost of automated legal research (Computer Assisted Legal Research), if the court finds it was reasonably necessary in preparing a party's case.
(L) Any other factor which the court deems appropriate in the particular case.
Idaho Rule of Civil Procedure 54(e)(3).
In relevant part Idaho Code § 12-117 provides:
(1) Unless otherwise provided by statute, in any proceeding involving as adverse parties a state agency or a political subdivision and a person, the state agency, political subdivision or the court hearing the proceeding, including on appeal, shall award the prevailing party reasonable attorney's fees, witness fees and other reasonable expenses, if it finds that the nonprevailing party acted without a reasonable basis in fact or law.
(2) If a party to a proceeding prevails on a portion of the case, and the state agency or political subdivision or the court hearing the proceeding, including on appeal, finds that the nonprevailing party acted without a reasonable basis in fact or law with respect to that portion of the case, it shall award the partially prevailing party reasonable attorney's fees, witness fees and other reasonable expenses with respect to that portion of the case on which it prevailed.
There is some confusion over whether Idaho Code § 12-117 is the exclusive statute in Idaho allowing recovery of attorneys fees to a party that prevails in a civil action against an Idaho political subdivision, or whether the prevailing party may also rely on other statutes.4 Given this uncertainty, the Court will also examine Plaintiffs' entitlement to an award under the other statute cited to support their motions, Idaho Code § 12-120(3), which provides:
In any civil action to recover on an open account, account stated, note, bill, negotiable instrument, guaranty, or contract relating to the purchase or sale of goods, wares, merchandise, or services and in any commercial transaction unless otherwise provided by law, the prevailing party shall be allowed a reasonable attorney's fee to be set by the court, to be taxed and collected as costs.
The term "commercial transaction" is defined to mean all transactions except transactions for personal or household purposes. The term "party" is defined to mean any person, partnership, corporation, association, private organization, the state of Idaho or political subdivision thereof.
Concerning the "commercial transaction" requirement in this statute, the Idaho Supreme Court has instructed that "the test is whether the commercial transaction comprises the gravamen of the lawsuit. Attorney's fees are not appropriate under Idaho Code § 12-120(3) unless the commercial transaction is integral to the claim, and constitutes the basis upon which the party is attempting to recover." Brower v. E.I. DuPont De Nemours and Co., 792 P.2d 345, 349 (Idaho 1990).
II. Application of Law to the Facts
A. Old Cutters
For the purposes of Idaho Rule of Civil Procedure 54(d)(1)(B), Old Cutters was a prevailing party in this action because the relief granted by this Court to Old Cutters is the same relief it sought in its complaint. Old Cutters sought to invalidate multiple provisions of the Annexation Agreement with Hailey on several theories. The Court agreed with one of the theories and granted the relief requested by Old Cutters by declining to enforce the provisions of the Annexation Agreement under which Hailey claimed Old Cutters was indebted to Hailey. In short, as a result of Old Cutters' efforts in this action, the Court disallowed Hailey's claim in the bankruptcy case. Therefore, Old Cutters is the prevailing party in this adversary proceeding.
As a prevailing party, pursuant to Idaho Rule of Civil Procedure 54(e)(1), Old Cutters is entitled to recover attorneys fees from Hailey because such an award is provided for in the parties' contract. In the Annexation Agreement, the parties agreed that reasonable attorneys fees may be recovered by the prevailing party in any action concerning the agreement. Hailey's argument, advanced in its brief, that the Court's conclusion that discreet components of the Annexation Agreement are unenforceable renders the entire agreement, including the attorneys fees clause, void is not persuasive.5 In particular, the Court held in its Memorandum of Decision that only certain provisions of the Annexation Agreement were void as an ultra vires act by Hailey. Dkt. No. 77 at 44. However, as noted in the Court's Memorandum of Decision, the parties expressly agreed to a severability clause in the Annexation Agreement in paragraph 23.6 In addition, the attorneys fees provision, paragraph 16, states, "[t]his section shall survive and remain enforceable notwithstanding any rescission of this Agreement or a determination by a court of competent jurisdiction that all or any portion of the remainder of this Agreement is void, illegal, or against public policy." Dkt. No. 82, Exh. A at 7-8.
The Court concludes that Old Cutters is entitled to recover attorneys fees pursuant to the terms of the Annexation Agreement. As a result, the Court need not address the other, statutory bases for recovery of attorneys fees advanced by Old Cutters.
1. Reasonableness of Attorneys fees
Old Cutters requests attorneys fees in the amount of $95,131 and costs in the amount of $2,047.02. Dkt. No. 82. The "Transactions Listing Report" supplied by Old Cutters' counsel contains detailed time entries describing the services provided by the attorneys to Old Cutters from February 28, 2011, through January 17, 2013. Dkt. No. 82, Exhs. B-C. The Court concludes that the factors articulated in Idaho Rule of Civil Procedure 54(e)(3) support an award of attorneys fees in the amount requested. In particular, the time spent by Old Cutters' counsel, the novelty of the issues presented in the case, and the skill exhibited by the attorneys providing the services, when coupled with the results they obtained for their client, all show the amount of fees requested is reasonable.
Hailey objects generally to the reasonableness of the attorneys fees "for the reasons set forth in the affidavit of Ned. C. Williamsen [sic]," which was attached to the brief objecting to the attorneys fees. Dkt. No. 106. In the affidavit, Mr. Williamson, the Hailey city attorney, opines that $8,317 in fees sought by Old Cutters, were "related to financing commitments and drafting financing documents [] not expenses incurred in settlement discussions with the City of Hailey." Dkt. No. 106-1 at ¶ 12. However, again, the provisions of paragraph 16 of the Annexation Agreement are broad, and the Court can not conclude that the services of Old Cutters' attorney criticized by Williamson did not arise out of, or were unrelated to, the Agreement. Therefore, Old Cutters is entitled to the full amount of its attorneys fees requested.
Old Cutters requested an additional $2,000 if its attorneys fees motion was contested by Hailey. Dkt. No. 82 at ¶ 9. Hailey has contested the motion, and the Court finds also Old Cutters' request to be a reasonable one for the services provided by its counsel in connection to defend its motion.
B. MWB
Assuming, without deciding, MWB also prevailed on its claims in this action, the Court concludes that it is not entitled to recover attorneys fees from Hailey.
Unlike Old Cutters, MWB had no agreement with Hailey upon which to base a request for attorneys fees. Instead, as required by the state rule, MWB must demonstrate some statutory basis to recover its fees. The statutes cited by MWB, however, do not support its position.
The Court noted in its Memorandum of Decision, in resolving the parties' challenge to Hailey's right to enforce the Annexation Agreement fee provisions, the Court was addressing statutory issues of first impression in Idaho. Dkt. No. 77 at 29 n.14. Given the novelty of the arguments and issues, the Court disagrees with MWB's suggestion that, in seeking to collect amounts owed by Old Cutters under the Annexation Agreement, Hailey acted "without a reasonable basis in fact or law," a condition to any award of fees under Idaho Code § 12-117. Therefore, MWB may not recover its attorneys fees under that statute.
As to MWB's request under Idaho Code § 12-120(3), the fact that MWB was not a party to the Annexation Agreement also ends that inquiry. As pointed out by the Idaho Supreme Court in Printcraft Press, Inc., supra, because MWB was not a party to this agreement, it is not entitled to recover attorneys fees under the statute as a "commercial transaction." Simply put, as interpreted by the Idaho courts, there was no "commercial transaction" between MWB and Hailey that gave rise to the litigation between these two litigants.
MWB's motion for attorneys fees will therefore be denied.
Conclusion
For the foregoing reasons, Old Cutters' motion for attorneys fees and costs will be granted in the amount of $97,131, plus costs in the amount of $2,047.02. MWB's motion for attorneys fees will be denied.
The Court will enter a separate order.
