Howard v. Perry, 141 Idaho 139

Summary

The Idaho Supreme Court reviewed litigation arising from the dissolution of a professional limited liability law firm. It held that the operating agreement's merger clause made the agreement integrated, rendering parol evidence inadmissible to vary its terms, but affirmed the agreement's interpretation concerning asset distribution and the denial of treating one member's personal attorney fees as a firm debt. The court vacated the judgment and remanded for further proceedings, awarding no costs or attorney fees on appeal.

Holdings

1. A written contract that is complete on its face, unambiguous, and contains a merger clause is integrated; absent allegations of fraud or mistake, extrinsic evidence of prior or contemporaneous agreements may not be admitted to contradict, vary, alter, add to, or detract from its terms. The district court therefore erred in admitting parol evidence to establish that the firm orally assumed the Wells Fargo loan.
2. The operating agreement unambiguously provided that liabilities for distributions under Article 5 were determined as of the date of dissolution and concerned money actually collected, not earned but uncollected accounts receivable. Accordingly, receivables generated by the plaintiffs were to be distributed among all members under the agreement rather than solely to the members who generated them.
3. Perry's attorney fees were not a debt of the limited liability company because Idaho Code § 53-644(2) applies only to defense of suits undertaken in the name of and for and on behalf of the company, and no attorney appeared or defended the action on behalf of the firm.
4. The court did not decide whether attorney fees were awardable under Idaho Code §§ 12-120(3) or 12-121 because vacatur of the judgment meant that there was presently no prevailing party. Perry was likewise not entitled to fees on appeal because he prevailed in part and did not prevail in part.

Questions Presented

1. Whether the district court erred by finding that the written operating agreement was not integrated and admitting parol evidence to vary its terms.
2. Whether the district court correctly interpreted the operating agreement's asset-distribution provisions.
3. Whether Perry's attorney fees incurred in defending the litigation were a debt of the limited liability company under Idaho Code § 53-644(2).
4. Whether Perry was entitled to attorney fees under Idaho Code §§ 12-120(3) and 12-121 in the trial court or on appeal.

Disposition

vacated