Wood et al

Filing 132

MEMORANDUM DECISION AND ORDER Denying 127 MOTION for Limited Attorneys' Fees filed by Kinetic Systems, Inc.. Signed by Judge Candy W Dale. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by jm)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

RONALD WOOD,
Plaintiff,

Case No. 1:09-CV-579-CWD

vs.
KINETIC SYSTEMS, INC., a
California corporation,

MEMORANDUM DECISION AND
ORDER

Defendant.

INTRODUCTION
Pending before the Court is Defendant Kinetic Systems, Inc.’s Motion for Limited
Attorney Fees. (Dkt. 127.) In its motion, KSI seeks $237,344.25 in attorney fees under
Idaho Code § 12-120(3), incurred in defense of Ronald Wood’s state law claims for
breach of contract, defamation, and unpaid wages under the Idaho Wage Claim Act,
which claims were dismissed by the Court upon KSI’s Motion for Summary Judgment.
(Dkt. 52.) For the reasons explained below, KSI’s motion will be denied.1

1

Having fully reviewed the record herein, the Court finds that the facts and legal arguments are
adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and
because the Court conclusively finds that the decisional process would not be significantly aided by oral
argument, the motion will be decided on the record before this Court without oral argument. Dist. Idaho
L. Rule 7.1(d).
MEMORANDUM DECISION AND ORDER - 1

BACKGROUND
Wood filed his Complaint in this matter on October 8, 2009, in the Fourth Judicial
District of the State of Idaho, and the matter was subsequently removed to this Court. The
Complaint asserted a wage claim under Idaho Code§ 45-606 and a breach of contract
claim for unpaid wages owed as both overtime pay and vacation pay from January 1,
2000 through January 20, 2009. In addition, Wood asserted two claims under the Fair
Labor Standards Act (“FLSA”), both for failure to pay overtime during the two year
period immediately preceding the filing of the complaint, or alternatively during the three
year period immediately preceding the filing of the complaint. The fifth and final count in
the Complaint was for defamation.
KSI filed a motion for summary judgment on October 12, 2010. After considering
the written memoranda and the parties’ oral arguments, the Court issued a written
memorandum and order dismissing Wood’s claim under Idaho’s Wage Claim Act and his
breach of contract claim because the six month statute of limitations contained within
Idaho Code § 45-614 barred the claims for unpaid overtime and vacation pay in Counts I
and II of the Complaint. The Court dismissed the defamation claim based upon Wood’s
stipulation to dismiss that claim. (Dkt. 52.)
KSI argues that Idaho Code § 12-120(3), which mandates an award of attorney
fees to a prevailing party in a civil action involving a commercial transaction based upon
a contract, entitles it to fees considering it prevailed in its defense of the three state law
claims. KSI contends that the terms of the employment agreement between Wood and
KSI were central to the litigation, because Wood argued that, according to its terms, he
MEMORANDUM DECISION AND ORDER - 2

was an hourly non-exempt employee, not a salaried exempt employee, and was therefore
entitled to overtime pay.
Wood points out that the Court dismissed the breach of contract claim and the
wage claim under the Idaho Wage Claim Act, and therefore the Act is the exclusive
source of authority for an award of fees, not Idaho Code § 12-120(3). Wood argues that
Idaho Code § 45-612(2), the Act’s fee statute, was not pled as a basis for fees, nor would
KSI be entitled to fees had it been properly pled. As for the defamation claim, Wood
contends that Idaho law does not permit an award of fees when the claim is a tort claim.
KSI disagrees that Idaho Code § 45-612(2) is the exclusive basis for an award of
fees, arguing that the terms of the employment agreement constituted the “gravamen” of
this lawsuit from its inception through trial. Wood’s reliance upon the terms of agreement
concerning his job position, rate of pay, and expected hours, KSI contends, meant that the
contract was integral to the entire lawsuit and, therefore, Idaho Code § 12-120(3) is
properly invoked as a basis for an award of attorney fees.
ANALYSIS
In its memorandum decision and order, the Court held that Wood’s claim for
unpaid wages, asserted both under Idaho’s Wage Claim Act and alternatively under a
breach of contract theory, fell within the parameters of the Wage Claim Act. (Mem. at 8
Dkt. 52) (citing Johnson v. Allied Stores Co., 679 P.2d 640, 644 (Idaho 1984) (explaining
the application of the limitations period in Idaho Code § 45-614, and holding that a claim
for unpaid wages under a breach of contract theory falls within the parameters of Idaho
Code § 45-608)). The Court held that the six month limitations period contained in Idaho
MEMORANDUM DECISION AND ORDER - 3

Code § 45-614 applied to both claims, and Counts I and II were untimely filed some ten
months after KSI terminated Wood’s employment. Id.
Considering Idaho law requires analysis of a claim for wages under a breach of
contract theory to be made pursuant to the Wage Claim Act, it follows that the Wage
Claim Act provides the exclusive remedy for attorney fees when an employee files a
claim for wages. In Polk v. Larrabee, 17 P.3d 247, 259 (Idaho 2000), the Idaho Supreme
Court considered and rejected an argument similar to KSI’s argument in this case. The
plaintiffs brought a claim for unpaid wages against their employer, and the amount of
wages claimed was based upon the terms of the plaintiffs’ employment agreement
regarding compensation. The jury determined that the defendant employer had breached
the employment agreement, and awarded wages due and owing under the Wage Claim
Act. On appeal, both parties claimed attorney fees under Idaho Code § 12-120.
The court in Polk declined to consider an award of attorney fees under Idaho Code
§ 12-120, holding that Idaho Code § 45-612(2) was the exclusive remedy for attorney
fees available to an employer when an employee has brought a claim for wages. Polk, 17
P.3d at 259. The court so held even though the jury found also that the employer had
breached the employment contract.
Similarly, in Bilow v. Preco, Inc., 966 P.2d 23 (Idaho 1998), the Idaho Supreme
Court rejected a claim for attorney fees under Idaho Code § 12-120(3), because Idaho
Code §§ 45-615 and 45-617 were “the exclusive code sections under which an employee
can recover attorney fees when the employee brings a claim for wages and treble
damages.” Billow, 966 P.2d at 32. The court squarely rejected the plaintiff’s argument
MEMORANDUM DECISION AND ORDER - 4

that, because he also brought a claim for wages under a breach of contract theory, he
could seek attorney fees under Idaho Code § 12-120(3). The court explained Hutchison v.
Anderson, 950 P.2d 1275 (Idaho Ct. App. 1997), had considered and rejected the same
argument, and it adopted Hutchison’s reasoning. Bilow, 966 p.2d at 32—33. In sum, even
though the plaintiff brought a breach of contract claim, the remedy sought was a claim for
wages under the Idaho Wage Claim Act; therefore, the Wage Claim Act is the exclusive
source of any attorney fee award. Bilow, 966 P.2d at 33. See also Shay v. Cesler, 977
P.2d 199 (Idaho 1999) (holding that employer could not recover attorney fees under
Idaho Code § 12-120(2) when an employee brought a claim for wages).
KSI failed to adequately address any of the above cited cases,2 arguing instead
that, because it was forced to litigate the terms of the parties’ agreement throughout this
case, the employment agreement was the foundation of the lawsuit. It was. However, the
underlying terms of the parties’ employment agreement as it relates to compensation is
generally the basis upon which a claim for wages is based. See, e.g., Bilow, 966 P.2d at
27—28 (wherein the court construed the parties’ agreement to determine how
compensation was calculated). Idaho Code § 45-614 specifically mentions that an action
to collect wages is premised upon the terms of a contract of employment. But that does
not transform the employee’s claim for wages into a breach of contract action for which
fees are awarded under Idaho Code § 12-120(3), especially considering the weight of
authority to the contrary.
2

KSI attempted to distinguish Shay, arguing that Shay was a wage claim whereas this case was based upon breach
of contract. Shay is not distinguishable. Wood sought unpaid wages, in the form of overtime pay, both under the
Wage Claim Act and the FLSA.

MEMORANDUM DECISION AND ORDER - 5

Moreover, in support of its motion for summary judgment, KSI specifically argued
that Wood’s breach of contract action fell within the purview of the Wage Claim Act, and
it sought to apply the six month statute of limitations under Idaho Code § 45-614. KSI
cannot now claim that the breach of contract action stands apart from the claim for wages
and seek fees under Idaho Code § 12-120(3).
As for KSI’s other claim that fees are proper considering it prevailed in its defense
of the defamation claim, KSI failed to address Wood’s argument that fees are not
available to the prevailing party when the claim is premised in tort. Nor did KSI cite a
statutory basis for an award of fees other than Idaho Code § 12-120(3). Wood is correct
that attorney fees generally are not awarded for an action in tort. Student Loan Fund of
Idaho, Inc. v. Duerner, 951 P.3d 1272, 1282 (Idaho 1997) (denying attorney fees to the
prevailing party attributable to a defamation claim because “attorney’s fees are not
awarded for actions in tort”). Even if fees were properly awarded, KSI has not provided
the Court with a method of discerning, from the $237,344.25 claimed, the amount of fees
attributable to KSI’s defense of Wood’s defamation claim. Without any further guidance,
the Court is not inclined to undertake such an exercise.
CONCLUSION
Based upon the foregoing analysis and the weight of authority, attorney fees are
not properly claimed under Idaho Code § 12-120(3) in this case. KSI failed to plead fees
are proper under Idaho Code § 45-615, and therefore KSI’s request for fees will be
denied. In addition, as to the defamation claim, fees are not proper considering the claim
was a tort claim.
MEMORANDUM DECISION AND ORDER - 6

ORDER
NOW THEREFORE IT IS HEREBY ORDERED:
1)

Defendant’s Motion for Limited Attorneys’ Fees (Dkt. 127) is DENIED.

October 05, 2011

MEMORANDUM DECISION AND ORDER - 7