925 N.W.2d 423
N.D.2019Background
- Keith Candee and his parents, Douglas and Lyla Candee, entered a 2013 settlement agreement and mutual release resolving litigation; the agreement included a prevailing-party attorney fee clause.
- The Court previously held California law applied and reversed a deficiency judgment in Candee v. Candee, 2017 ND 259, 903 N.W.2d 514; the district court then dismissed the parents' complaint.
- After remand, Keith sought contractual attorney fees under paragraph 15 of the settlement agreement, which broadly awarded costs and attorneys' fees to the prevailing party.
- The parents opposed, arguing the settlement was an "evidence of debt" under N.D.C.C. § 28-26-04, which voids attorney-fee provisions in debt instruments.
- The district court denied fees, concluding the agreement qualified as "evidence of debt" and the fee clause was against public policy; the majority on appeal reverses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the settlement agreement is "evidence of debt" under N.D.C.C. § 28-26-04 | Candee: statute targets creditor-debtor instruments (notes, mortgages); settlement is not such an instrument, so fee clause is enforceable | Parents: settlement obligates Candee to pay specified sums in installments and thus is "other evidence of debt," voiding fee clause | Majority: settlement is not similar to instruments listed in § 28-26-04; fee clause enforceable; remand for award of fees |
| Whether district court abused discretion by denying contractual fees | Candee: court misapplied law by treating settlement as evidence of debt | Parents: statute applies regardless of which party prevailed; court correctly applied public policy bar | Court abused discretion by misinterpreting statute and denying fees; reversal and remand |
| Proper scope of "evidence of debt" under North Dakota precedent | Candee: Vakoch limits § 28-26-04 to instruments that on their face import debt, not to every money-owing contract | Parents: statutory phrase "other evidence of debt" shows broader reach; settlement functions like a debt instrument | Majority adopts Vakoch approach: limited to instruments like notes, bonds, mortgages; settlement does not fit |
| Choice of law for fee determination (dissent perspective) | Candee: (implicit) North Dakota law applies as majority used | Parents/dissent: California law should govern per earlier choice-of-law or, if ND law applies, statute bars fees | Majority applies North Dakota analysis and enforces fee provision; dissent would apply California law or affirm under ND law |
Key Cases Cited
- Candee v. Candee, 903 N.W.2d 514 (N.D. 2017) (prior appeal resolving choice-of-law and deficiency-judgment issues)
- T.F. James Co. v. Vakoch, 628 N.W.2d 298 (N.D. 2001) ("evidence of debt" limited to instruments that on their face import debt; commercial lease not an evidence of debt)
- Farmers Union Oil Co. v. Maixner, 376 N.W.2d 43 (N.D. 1985) (personal guarantee held to be "other evidence of debt" triggering § 28-26-04)
- Orion Fin. Corp. v. Am. Foods Grp., Inc., 281 F.3d 733 (8th Cir. 2002) (consulting agreement with payment obligations not an "evidence of debt" under similar statute)
- Cheetah Props. 1, LLC v. Panther Pressure Testers, Inc., 879 N.W.2d 423 (N.D. 2016) (reaffirming American Rule and that attorney fees require statutory or contractual authority)