Wald, Inc. v. Stanley

• Citation: 706 N.W.2d 626,2005 SD 112
• Decision Date: 22 December 2005
• Docket Number: No. 23583.,23583.
• Parties: WALD, INCORPORATED, Plaintiff and Appellee, v. Richard STANLEY and Arvidene Stanley, Defendants and Appellants.
• Court: Supreme Court of South Dakota

Page 626

706 N.W.2d 626

2005 SD 112

WALD, INCORPORATED, Plaintiff and Appellee, v. Richard STANLEY and Arvidene Stanley, Defendants and Appellants.

No. 23583.

Supreme Court of South Dakota.

Considered on Briefs August 30, 2005.

Decided November 16, 2005.

Rehearing Denied December 22, 2005.

James E. Carlon of Carlon Law Office, Pierre, South Dakota, Attorney for plaintiff and appellee.

George F. Johnson of Johnson, Eklund Law Offices, Gregory, South Dakota, Attorney for defendants and appellants.

KONENKAMP, Justice.

[¶ 1.] Appellants challenge the award of attorney's fees in this mechanic's lien foreclosure. They contend that the award was not "warranted and necessary" under SDCL 44-9-42. We find no abuse of discretion in the court's award and affirm.

Background

[¶ 2.] Richard and Arvidene Stanley contracted with Wald, Inc. to remodel the Stanleys' home. During the course of construction, the parties orally modified their written agreement on several occasions. These oral modifications were never reduced to writing and differing interpretations eventually followed. "Some things were assumed to be extra by Wald. Other things were assumed to be part of the contract by the Stanleys." At some point, the disagreements could not be resolved, and the Stanleys stopped paying Wald. The Stanleys declared that "they would make no further payments unless Wald complied with certain requirements...." Wald walked off the job and filed a mechanic's lien on the property. A month later, the Stanleys made a written demand under SDCL 44-9-26 that Wald foreclose on the lien. Wald then brought a foreclosure action against the Stanleys.

[¶ 3.] When the matter came to trial, the circuit court heard from litigants who each insisted that the other breached the contract. Even though the parties agreed on the original contract price, the contract provided little guidance because the parties had "numerous discussions [that] resulted in `extras' which involved extra work, materials and costs [and] none of the extras were reduced to writing." Consequently, the court had to determine which work was "extra," and which work was part of the original contract.

[¶ 4.] In what the court described as a "twenty-six day trial," it weighed the evidence and the credibility of the litigants, and then ruled that the Stanleys breached the contract and entered judgment in favor of Wald. Wald's lien originally sought $46,186.30, but the actual claim was reduced to $30,000 after it was discovered that credit had not been given to the Stanleys for a $16,000 payment. At the conclusion of the trial, the court awarded Wald $5,736.07.¹ When Wald's attorney sought an award of attorney's fees, the Stanleys objected claiming that such award was not warranted and necessary. The circuit court considered the objections and issued an order awarding Wald's attorney's fees. In its decision, the court made detailed factual findings and legal conclusions and issued a five-page memorandum opinion. The court also outlined the facts to support its findings, including a review of the various factors required by this Court. But the court did not specifically state why it awarded the attorney's fees. As a result, the Stanleys sought reconsideration.

[¶ 5.] The Stanleys argued to the circuit court that these circumstances warrant no award of attorney's fees. They based their claim, in part, on their interpretation of the words "warranted and necessary" in SDCL 44-9-42, which authorizes the award of attorney's fees in mechanic's lien foreclosure actions. Specifically, the Stanleys asserted that "warranted and necessary" requires the court to issue specific findings stating why the circumstances support the allowance of an award. The Stanleys also contended that Wald inflated the amount of his lien and the attorney's fees were not warranted as a result.

[¶ 6.] The Stanleys maintained that the ultimate award recovered by Wald in the underlying dispute in comparison to the $30,000 Wald claimed indicated that "there was no factual basis to conclude that an award of attorney's fees was warranted and necessary." Moreover, the Stanleys argued that because Wald rejected their offer to settle the case for $5,000 and then ultimately recovered only $5,736.07 in the trial, the court should have taken that into account and not awarded attorney's fees.

[¶ 7.] In response to the Stanleys' objections, the circuit court held a special hearing to consider whether the award was warranted and necessary. After the hearing, the court issued supplemental findings of fact and conclusions of law stating that, "[b]y filing the demand that [Wald] foreclose on its lien, [the Stanleys] rendered the incurrence of attorney's fees necessary and warranted by [Wald]." (emphasis added). Still believing the circuit court failed to state why the fees were warranted and necessary, the Stanleys now appeal raising the following issue: whether the trial court's failure to specifically state why the award was "warranted and necessary" is an error under SDCL 44-9-42.

Standard of Review

[¶ 8.] When the court's authority to award attorney's fees "rest[s] upon a clear legislative grant of power[,]" we review the decision under the abuse of discretion standard. Hoffman v. Olsen, 2003 SD 26, ¶ 7, 658 N.W.2d 790, 792 (citing Estate of O'Keefe, 1998 SD 92, ¶ 17, 583 N.W.2d 138, 142). See Lakota Community Homes, Inc. v. Randall, 2004 SD 16, ¶ 9, 675 N.W.2d 437, 440. "Abuse of discretion is the most deferential standard of review available with the exception of no review at all." In re S.D. Microsoft Antitrust Litigation, 2003 SD 19, ¶ 27, 657 N.W.2d 668, 678 (citations omitted). "We determine that an abuse of discretion occurred only if no judicial mind, in view of the law and the circumstances of the particular case, could reasonably have reached such a conclusion." Lakota Community Homes, Inc., 2004 SD 16, ¶ 9, 675 N.W.2d at 440 (quoting City of Sioux Falls v. Johnson, 2003 SD 115, ¶ 6, 670 N.W.2d 360, 362 (citations omitted)). An abuse of discretion is "a fundamental error of judgment, a choice outside the reasonable range of permissible choices, a decision, which, on full consideration, is arbitrary or unreasonable." Arneson v. Arneson, 2003 SD 125, ¶ 14, 670 N.W.2d 904, 910.

Analysis and Decision

[¶ 9.] The Stanleys contend that "this is not a case where this Court must simply decide whether some facts exist to support the trial court's exercise of discretion. The real question ... is whether the trial court committed legal error in not weighing all the facts both for and against the award of attorney's fees." In particular, the Stanleys invite this Court to interpret "warranted and necessary" in SDCL 44-9-42 as words of limitation, restricting when a court may exercise its discretion to "only when it seems `warranted and necessary according to the circumstances of the case....'"² Under the Stanleys' definition, for an award of attorney's fees to be sustained, the terms "warranted and necessary" require a court to "first offer the unique factual findings which set the foundation for the decision."

[¶ 10.] However, the Stanleys fail to cite legal authority to support their claim. The only authority they cite as support for this particular argument is Hoffman, where we stated that a circuit court is required to "enter findings of fact and conclusions of law when ruling on a request for attorney's fees." 2003 SD 26, ¶ 10, 658 N.W.2d at 793 (citations omitted). Aside from the fact that Hoffman supports the requirement that a court issue factual findings, it does not provide a legal basis for the Stanleys' claim that it is error for a court to award attorney's fees without first stating why the award is granted. See id. Because we find no other authority cited to support the Stanleys' argument, we could rule that the matter is waived as a violation of SDCL 15-26A-60(6). We nevertheless choose to address it. See Apa v. Butler, 2001 SD 147, ¶ 34 n. 7, 638 N.W.2d 57, 70 n. 7 (choosing to address an issue that could have been deemed waived). See also Chem-Age Industries, Inc. v. Glover, 2002 SD 122, ¶ 22, 652 N.W.2d 756, 767 (citations omitted); First Nat'l Bank in Sioux Falls v. Drier, 1998 SD 1, ¶ 20, 574 N.W.2d 597, 601.

[¶ 11.] Under the abuse of discretion standard, we will not set aside an award of attorney's fees unless "`no judicial mind, in view of the law and the circumstances of the particular case, could reasonably have reached such a conclusion.'" Lakota Community Homes, 2004 SD 16, ¶ 9, 675 N.W.2d at 440 (quoting City of Sioux Falls, 2003 SD 115, ¶ 6, 670 N.W.2d at 362); Osgood v. Osgood, 2004 SD 22, ¶ 16, 676 N.W.2d 145, 150. More importantly, when reviewing a court's exercise of discretion, we have never specifically held that "warranted and necessary" in an attorney's fees statute limits the instances where a court may award fees. Instead, we have set forth several factors a court should consider when making an award. See Duffy v. Seventh Judicial Cir., 2004 SD 19, ¶¶ 15-16, 676 N.W.2d 126, 133-34; Atchison v. Seventh Judicial Cir., 2004 SD 20, ¶¶ 2-3, 676 N.W.2d 814, 816; Crisman v. Determan Chiropractic, Inc., 2004 SD 103, ¶¶ 26-29, 687 N.W.2d 507, 513-14; City of Sioux Falls v. Kelley, 513 N.W.2d 97, 111 (S.D.1994).³

[¶ 12.] Those same requirements have been applied to mechanic's lien cases under SDCL 44-9-42. See Duffield Constr., Inc. v. Baldwin, 2004 SD 51, ¶ 19, 679 N.W.2d 477, 483; Hoffman, 2003 SD 26, ¶ 10, 658 N.W.2d at 792-93; Larson Concrete Co., Inc. v. Stroschein, 353 N.W.2d 354, 357 (S.D.1984). A review of these cases does not indicate that the terms "warranted and necessary" limit the court's discretion to allow an award.

[¶ 13.] We addressed a challenge to the court's discretion under SDCL 44-9-42 in Duffield Construction, Inc., 2004 SD 51, 679 N.W.2d 477. In Duffield, Baldwin claimed that the circuit court's award of attorney's fees to the lienor was an error "because [the...