Chadderdon v. King

• Decision Date: 22 February 1983
• Docket Number: No. 14060,14060
• Citation: 104 Idaho 406,659 P.2d 160
• Parties: Keith R. CHADDERDON and Marjorie Chadderdon, husband and wife, Plaintiffs-Appellants, v. Matthew T. KING and Janet F. King, husband and wife, Defendants-Respondents.
• Court: Idaho Court of Appeals

Page 160

659 P.2d 160

104 Idaho 406

Keith R. CHADDERDON and Marjorie Chadderdon, husband and wife, Plaintiffs-Appellants, v. Matthew T. KING and Janet F. King, husband and wife, Defendants-Respondents.

No. 14060.

Court of Appeals of Idaho.

Feb. 22, 1983.

Rehearing Denied Feb. 22, 1983.

Petition for Review Denied April 27, 1983.

David A. Frazier, Coeur d'Alene, for plaintiffs-appellants.

Scott W. Reed, Coeur d'Alene, for defendants-respondents.

WALTERS, Chief Judge.

This dispute arose following the completion of a commercial building that the contractor, King, had agreed to construct for the Chadderdons, the owners. The owners sued the contractor for alleged breach of the construction agreement, and the contractor counterclaimed to recover amounts expended over and above the price expressed in the construction agreement. A jury denied recovery to both parties, and judgment was entered accordingly.

Thereafter, the contractor applied for an award of attorney fees and costs. The owners filed an objection to such allowance, and also moved for a new trial. The trial court denied the motion for new trial, overruled the objection to costs and fees, and entered an order making an award to the contractor.

The owners appeal from the order denying the motion for new trial and from the order awarding costs and fees. They raise two issues: (1) Did the trial court abuse its discretion by permitting the contractor's counterclaim to be considered by the jury, thereby committing reversible error which would entitle the owners to a new trial? (2) Was it error for the trial court to award attorney fees to the contractor as a "prevailing party" in the suit? We answer the owners' questions in the negative. We uphold the orders denying a new trial and awarding costs and attorney fees at trial. The contractor has not cross-appealed but does request an award of attorney fees for responding to this appeal. ¹ We grant this request.

In 1975, the parties signed a contract to construct the building. After the construction was completed in 1976, a dispute arose between the parties due to claims of unsatisfactory workmanship, and alleged defects in the building. The owners filed suit for breach of the contract in January, 1977.

Having received no responsive pleading to their complaint within the period allowed by the Idaho Rules of Civil Procedure, see I.R.C.P. 12(a), the owners moved for default judgment in April, 1978. Within two days thereafter, the contractor filed an answer denying the claim.

In November, 1978, without first obtaining leave of the court, the contractor filed the counterclaim concerned in this appeal. He alleged in the counterclaim that he had been required, at the request and instance of the owners, to incur expenditures for extra labor and material during construction of the building. The contractor sought to recover the costs of the additional work and materials. An exhibit attached to the counterclaim specifically listed the items of additional work and materials and the cost of each item.

The owners did not reply, at that time, to the counterclaim; nor did they then object to the filing of the counterclaim. However, twenty-two months later, after the jury had been selected for trial but before any evidence was presented, the owners moved to strike the counterclaim. They argued that the counterclaim was a nullity because it had been filed without first obtaining leave of the court, and the owners had consciously chosen to disregard it at the time. The motion was denied by the court. After the court's ruling, the owners orally denied the allegations of the counterclaim, and, later that day, filed a written reply. The trial proceeded, with the result--as noted above--that judgment was entered denying the relief sought in both the complaint and the counterclaim.

I. Counterclaim Issue

The first issue we address is whether the trial court abused its discretion and committed reversible error by permitting the contractor's counterclaim to be litigated. Preliminarily, we note that a "counterclaim" is not a listed pleading under I.R.C.P. 7(a). Thus, a counterclaim cannot be asserted as an independent pleading. See I.R.C.P. 7(a); C. Lewis, Idaho Pre-Trial Civil Procedure VI-3 (1982). A counterclaim may only be raised as a part of one of the listed pleadings. See I.R.C.P. 13(a), 13(b). Here, the contractor originally filed the counterclaim independent of any listed pleading. As such, it was not properly pleaded and was functionally equivalent to an omitted counterclaim.

However, an omitted counterclaim may be added, on leave of the court, when the omission is a result of oversight, inadvertence, or excusable neglect, or when justice otherwise requires addition of the counterclaim. I.R.C.P. 13(f). In Cox v. Mountain Vistas, Inc., 102 Idaho 714, 717, 639 P.2d 12, 15 (1981), our Supreme Court, quoting from 3 J. Moore, Moore's Federal Practice, § 13.13, at 13-846 (2d ed. 1982), stated the purpose of Rule 13(f) as follows:

[Rule 13(f) ] will find its most useful application in the case of compulsory counterclaims. Inasmuch as a party could later be met successfully with a plea of res judicata in a suit on a claim within [Rule 13(a) ] which he had failed to plead, the courts should be very liberal in allowing amendments to include compulsory counterclaims, and even permissive counterclaims where no prejudice would result, where the pleader has not been guilty of inexcusable neglect, or has not by reprehensible conduct deprived himself of any claim to special consideration by the court.

The court further said:

Consonant with the above statement concerning Rule 13(f), are this court's repeated statements that "great liberality should be exercised in permitting amendments to pleadings in furtherance of justice between the parties" ... and that this matter is entrusted to the sound discretion of the trial court [Citations omitted.].

In the treatise, C. Wright, Wright's Federal Practice and Procedure, § 1430, at page 155 (1971), the author notes that

[t]he clause in Rule 13(f) permitting amendments "when justice requires" is especially flexible and enables the court to exercise its discretion and permit amendments whenever it seems desirable to do so.

As with other discretionary functions of a trial court, the decision whether to allow an amendment can be reversed on appeal only if an aggrieved party can demonstrate that the court abused its discretion. Vollmer Clearwater Co., Ltd. v. Union Warehouse & Supply Co., 43 Idaho 37, 248 P. 865 (1926); Powers v. Security Savings & Trust Co., 38 Idaho 289, 222 P. 779 (1923).

The record here discloses that the contractor did not explicitly request leave to add the counterclaim because he felt his claim had already been filed and properly was before the court. However, the question of whether leave should be granted, to add the counterclaim, was not raised by the court sua sponte. The question, in effect, was presented to the court by the owners' motion to strike the counterclaim.

The trial court had two choices in dealing with this motion. The judge could have granted the motion, thereby removing the counterclaim from consideration by the jury. Or, he could have denied the motion, thus approving the filing of the counterclaim, after the fact. The latter choice constituted a grant of leave to file the counterclaim. In exercising his discretion, the judge chose the latter course. The court observed that the counterclaim had been filed about two years earlier; that it pertained to the transaction in litigation between the parties; that striking the counterclaim could put a burden on the contractor in regard to filing another lawsuit; and that the contractor's claim might otherwise have been barred by the statute of limitations. In his closing comments, the court said:

"I don't find there is strict prohibition if permission isn't gained from the Court that your counterclaim is waived or void, held for nought or anything of that nature.... I will grant permission to file a counterclaim, if you need it, because it looks like it pertains to this transaction between these parties and we might as well settle everything right here and now if it's going to be settled."

Although not explicit, the court's ruling is consistent with the provision of I.R.C.P. 13(f) which allows the filing of a previously omitted counterclaim when justice so requires.

The owners were unable to show that any prejudice, in the form of surprise or lack of time to prepare, would result from granting leave, after the fact, to file the counterclaim. Nothing in Rule 13(f) prohibits, and we are cited no authority disapproving, such a grant of leave after the counterclaim has been physically filed. Under these circumstances, we are not persuaded that the judge abused his discretion by denying the owner's motion to strike, thereby effectively granting leave to the filing of the counterclaim.

The owners argue that the contractor waived reliance on Rule 13 when he asserted, incorrectly, that leave was not required. This argument is not supported by the record. The record indicates only that counsel was not relying on oversight, inadvertence, or excusable neglect under Rule 13(f), in view of the fact that the counterclaim had been physically filed long before the issue of leave to file was raised. There is no indication of any waiver to rely on the ground that "when justice requires," a pleader may set up a counterclaim by amendment.

The owners cite several cases which, they argue, support their position that the district court erred in granting leave to file the counterclaim. The first is Cougar Bay Co., Inc. v. Bristol, 100 Idaho 380, 597 P.2d 1070 (1979). In that case the Idaho Supreme Court held that a district court did not abuse its discretion in refusing to permit amendment of an answer two days before trial to set forth a counterclaim in excess of $600,000. The district court there concluded that...