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Candee v. Candee

Supreme Court of North Dakota

April 11, 2019

Douglas Candee and Lyla Candee, Plaintiffs and Appellees
v.
Keith Candee, Defendant and Appellant

          Appeal from the District Court of Stark County, Southwest Judicial District, the Honorable Rhonda R. Ehlis, Judge.

          Nathan M. Bouray, Dickinson, ND, for plaintiffs and appellees.

          Monte L. Rogneby, Bismarck, ND, for defendant and appellant.

          OPINION

          CROTHERS, JUSTICE.

         [¶1] Keith Candee appeals from an order entered on remand denying his motion for contractual attorney fees and costs. Because the parties' settlement agreement and mutual release of claims is not "evidence of debt" under N.D.C.C. § 28-26-04, the district court misapplied the law in holding the parties' contractual provision providing for attorney fees was against public policy and void. The court abused its discretion in its decision denying his motion for attorney fees and we reverse and remand for further proceedings.

         I

         [¶2] This appeal involves the continued litigation between Keith Candee and his parents, Douglas and Lyla Candee. Relevant facts are set forth in Candee v. Candee, 2017 ND 259, 903 N.W.2d 514, and we will not repeat them except as necessary to assist in resolving the issues in this appeal.

         [¶3] In Candee, 2017 ND 259, ¶¶ 15, 18, 903 N.W.2d 514, this Court held that California law applied to the dispute under the parties' 2013 settlement agreement and mutual release of claims (collectively referred to as the settlement agreement) and that Douglas and Lyla Candee were not entitled to a deficiency judgment against Keith Candee after the foreclosure of California and North Dakota properties. We reversed and remanded for the district court to enter a judgment dismissing Lyla and Douglas Candee's complaint. Id. at ¶¶ 18-19.

         [¶4] On remand, the district court entered judgment in Keith Candee's favor, dismissing Douglas and Lyla Candee's complaint. The court also considered Keith Candee's motion seeking attorney fees under the parties' settlement agreement. Paragraph 15 of the settlement agreement states:

"Attorneys' Fees. In the event of any litigation between the Parties hereto, including any appeals arising out of, in connection with or in any way related to this Agreement, the prevailing party shall recover all of its costs in connection therewith, including, without limitation, its attorneys' fees, consultant and expert witness fees, court costs, and any other related expenses."

         [¶5] Douglas and Lyla Candee responded and objected to Keith Candee's attorney fee request. After a hearing, the district court entered its order denying his motion. The court refused to award attorney fees under the settlement agreement, holding the agreement's provision allowing for recovery of attorney fees was against public policy and void under N.D.C.C. § 28-26-04.

         II

         [¶6] The dispositive issue is whether the parties' settlement agreement constitutes "evidence of debt," precluding enforcement of the agreement's attorney fee provision. See N.D.C.C. § 28-26-04.

         [¶7] "Absent statutory or contractual authority, the American Rule assumes parties to a lawsuit bear their own attorney fees." Cheetah Props. 1, LLC v. Panther Pressure Testers, Inc., 2016 ND 102, ¶ 19, 879 N.W.2d 423 (quoting H-T Enters. v. Antelope Creek Bison Ranch, 2005 ND 71, ¶ 15, 694 N.W.2d 691). Parties generally are free to enter into an agreement for payment of attorney fees in a civil action. See N.D.C.C. § 28-26-01(1). Notwithstanding a contractual provision allowing recovery, attorney fee provisions in debt instruments are void under N.D.C.C. § 28-26-04. That section provides:

"Any provision contained in any note, bond, mortgage, security agreement, or other evidence of debt for the payment of an attorney's fee in case of default in payment or in proceedings had to collect such note, bond, or evidence of debt, or to foreclose such mortgage or security agreement, is against public policy and void."

N.D.C.C. § 28-26-04 (emphasis added); see also Farmers Union Oil Co. v. Maixner, 376 N.W.2d 43, 48 (N.D. 1985) (stating "attorneys' fees can be awarded if agreed by the parties, either expressly or impliedly, [but] such an ...


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