Griffith v. Clear Lakes Trout Co., Inc.

• Decision Date: 27 January 2009
• Docket Number: No. 34430.,34430.
• Citation: 200 P.3d 1162,146 Idaho 613
• Parties: Rodney GRIFFITH and Carla Griffith, husband and wife, individually and dba, Boswell Farms, Plaintiffs-Appellants-Cross Respondents, v. CLEAR LAKES TROUT CO., INC., An Idaho corporation, Defendant-Respondent-Cross Appellants. Clear Lakes Trout Co., Inc., an Idaho corporation, Counterclaimant-Respondent-Cross Appellants, v. Rodney Griffith And Carla Griffith, husband and wife, individually and dba Boswell Farms, Counterdefendants-Appellants-Cross Respondents.
• Court: Idaho Supreme Court

200 P.3d 1162

146 Idaho 613

Rodney GRIFFITH and Carla Griffith, husband and wife, individually and dba, Boswell Farms, Plaintiffs-Appellants-Cross Respondents, v. CLEAR LAKES TROUT CO., INC., An Idaho corporation, Defendant-Respondent-Cross Appellants.

Clear Lakes Trout Co., Inc., an Idaho corporation, Counterclaimant-Respondent-Cross Appellants, v. Rodney Griffith And Carla Griffith, husband and wife, individually and dba Boswell Farms, Counterdefendants-Appellants-Cross Respondents.

No. 34430.

Supreme Court of Idaho, Twin Falls, November 2008.

January 27, 2009.

Jeffrey J. Hepworth & Associates, Twin Falls, for appellants. Jeffrey James Hepworth argued.

Worst, Fitzgerald & Stover, Twin Falls, for appellants.

Ringert Law, Boise, for respondents. James G. Reid argued.

BURDICK, Justice.

This is the second appeal of a commercial sales contract dispute between Appellants/Cross-Respondents Rodney and Carla Griffith, individually and d/b/a Boswell Farms (collectively the Griffiths), and Respondent/Cross-Appellant Clear Lakes Trout Co., Inc. (Clear Lakes). At issue is whether the district court's award of damages to the Griffiths for contract years six and seven is sufficient, and whether the district court properly awarded attorney fees to the Griffiths after remand pursuant to their twenty-five percent (25%) contingency fee agreement. We vacate the district court's award of damages and remand with instructions for the district court to clarify whether it took mortality loss into consideration. We also hold the district court did not abuse its discretion in awarding the Griffiths attorney fees pursuant to their contingency fee agreement, but vacate the district court's award of attorney fees and remand subject to the district court's clarification of damages. We award the Griffiths attorney fees and costs on appeal.

I. FACTUAL AND PROCEDURAL BACKGROUND

In September 1998, Clear Lakes, which operates a fish hatchery, executed a six-year contract with the Griffiths, trout growers, under which Clear Lakes agreed to sell the Griffiths sufficient quantities of small trout to enable the Griffiths to grow "up to two million pounds live weight" each year, which then the Griffiths agreed to sell back to Clear Lakes once the trout grew to "market size." The parties performed satisfactorily under the agreement for the first three years; however, after September 11, 2001, the market for trout changed significantly as Clear Lakes's customers began to demand larger fish. As Clear Lakes's resale market began to dry up, it started taking trout deliveries from the Griffiths much later and in smaller loads, leaving the Griffiths with overcrowded ponds and a tightened cash flow.

By 2002, the Griffiths were experiencing financial difficulty due to the slowdown in volume. Clear Lakes promised to work better with the Griffiths in the future, and also agreed to extend the terms of the contract for one year to 2005. However, the contract was terminated near the end of the fifth year in August 2003.

In September 2003, the Griffiths filed suit, alleging Clear Lakes had breached the contract by refusing to accept and purchase back in a timely manner the trout that the Griffiths had grown to market size. The district court agreed with the Griffiths and found that Clear Lakes was in breach of the parties' output contract. The district court awarded the Griffiths $446,099.80 for increased costs and lost profits from years four and five of the contract; however, the court refused to grant lost profits for the remaining years six and seven, finding that the potential for raising additional fish was too speculative to support an award of damages.

As the prevailing party to a commercial contract dispute under I.C. § 12-120(3), the Griffiths were entitled to attorney fees. Despite the fact that the Griffiths had executed a 25% contingency fee agreement with their attorneys before trial, the Griffiths sought attorney fees based on an hourly rate. The district court granted the Griffiths' request and awarded the Griffiths $98,792.00 in hourly fees.

In Griffith v. Clear Lakes Trout Co., Inc. (Griffith I), 143 Idaho 733, 152 P.3d 604 (2007), the Griffiths cross-appealed from the district court's denial of damages for contract years six and seven. This Court held that although damages would be difficult to ascertain, the Griffiths were entitled to damages for the remaining two years of the contract. As such, the court remanded the case to the district court with instructions to calculate damages for contract years six and seven. This Court awarded the Griffiths, as the prevailing party on appeal, attorney fees pursuant to I.C. § 12-120(3). Once again, the Griffiths sought attorney fees on an hourly basis and the district court awarded them $15,000.00 in attorney fees for the first appeal.

On remand, the district court relied upon the evidence presented at trial regarding damages for years six and seven. Rather than using the Griffiths' output figures from years two and three of the contract as the Griffiths requested, the district court used the Griffiths' average output from years four and five to determine what the Griffiths' output would have been during years six and seven had the contract been carried out in its entirety. Although the district court considered the fact that Clear Lakes's breach had decreased the Griffiths' production during years four and five, the court did not specifically state in its opinion if those numbers were used in its calculation of damages. Based on the court's calculation table, it determined that the Griffiths were entitled to an additional $266,294.24 in damages for contract years six and seven.

As the prevailing party on remand, the Griffiths sought attorney fees. However, this time the Griffiths requested attorney fees pursuant to their 25% contingency fee agreement. Even though the Griffiths' attorneys had spent thirty-eight additional hours on remand, amounting to $7,386.50 in hourly fees, the Griffiths sought an award of $66,573.56. The district court noted that it could only speculate as to why the Griffiths sought attorney fees on an hourly basis for their previous two requests, but that after considering the total number of hours and years it took the Griffiths' attorneys to try the entire case, an award based on the Griffiths' contingency fee agreement was reasonable. As such, the district court awarded the Griffiths' $66,573.00 in attorney fees after remand.

The Griffiths appeal the amount of damages awarded to them by the district court for contract years six and seven, arguing their average output figure from years two and three, rather than years four and five, was the proper measure of damage. Clear Lakes cross-appeals, arguing the district court erred in awarding the Griffiths attorney fees after remand pursuant to their contingency fee agreement, rather than on an hourly basis. Both parties seek attorney fees on appeal.

II. DISCUSSION

A. Damages for contract years six and seven

1. Standard of Review

"A district court's award of damages will be upheld on appeal where there is sufficient evidence supporting the award." Griffith I, 143 Idaho 733, 740, 152 P.3d 604, 611 (2007) (quoting Sells v. Robinson, 141 Idaho 767, 774, 118 P.3d 99, 106 (2005)). This Court has held that evidence is sufficient if it proves the damages with reasonable certainty. Griffith I, 143 Idaho at 740, 152 P.3d at 611. "Reasonable certainty requires neither absolute assurance nor mathematical exactitude; rather, the evidence need only be sufficient to remove the existence of damages from the realm of speculation." Id. Ultimately however, it is for the trier of fact to fix the amount after determining the credibility of the witnesses, resolving conflicts in the evidence, and drawing reasonable inferences therefrom. See id.

2. Clear Lakes's failure to contest the district court's conclusion that the parties entered into an output contract does not prevent this Court from considering whether the parties entered into an output contract on appeal.

First, the Griffiths argue the district court's ruling that the parties entered into an output contract is binding. After trial, the district court concluded, as a matter of law, that the parties entered into an output contract. Although Clear Lakes initially disputed that the agreement was an output contract at the trial court level, it failed to challenge the district court's ruling on either appeal. As such, the Griffiths argue that the district court's ruling is final and cannot be considered by this Court on appeal. We disagree.

Pursuant to Idaho Appellate Rule 35(a)(4), an issue that neither party has raised or argued in their briefs will generally not be considered on appeal. See also Rhead v. Hartford Ins. Co. of the Midwest, 135 Idaho 446, 452, 19 P.3d 760, 766 (2001); Hei v. Holzer, 139 Idaho 81, 86, 73 P.3d 94, 99 (2003). However, I.A.R. 35(a)(4) also provides that an appellant's statement of the issues "will be deemed to include every subsidiary issue fairly comprised therein." I.A.R. 35(a)(4). Here, the Griffiths assert that one of the issues surrounding contract damages is whether the district court erred as a matter of law in reducing the Griffiths' output based on Clear Lakes's market decline.¹ In order to address this issue, we must first determine what type of contract is involved. For example, Clear Lakes's market decline would be irrelevant to the district court's determination of damages if the agreement were strictly an output contract, whereas the market decline would be a relevant consideration in an output/requirements contract.² Therefore, we conclude that whether an output contract is involved to be a subsidiary issue in the case. See I.A.R. 35(a)(4).

3. This Court did not state that the parties entered into an output contract in Griffith I.

In addition, the Griffiths argue that this Court already acknowledged that the parties entered into...