Eduardo L. Sarria and Heather R. Sarria - Adversary Proceeding, 606 B.R. 854

Background:

Debtors Eduardo and Heather Sarria filed a joint Chapter 7 petition; JA, LLC d/b/a Leku Ona (Plaintiff) sued Eduardo under 11 U.S.C. § 523(a)(2)(A) for fraud involving unpaid food/wine deliveries.
Two‑day trial held May 15–16, 2019; court entered a nondischargeability judgment for Plaintiff for $2,490.
Plaintiff moved for fees and costs under Idaho Code § 12‑120(3) and Local Bankruptcy Rule 7054.1, initially seeking $233,076.50 in fees (later reduced by counsel to $175,000) and $7,981.31 in costs.
Litigation featured extensive discovery (many subpoenas, a motion for protective order), ACPO’s motion to quash a subpoena of a prosecutor, multiple dispositive/procedural motions, and vigorous pretrial practice.
Court found Plaintiff was the prevailing party and that the dispute was a commercial transaction under § 12‑120(3), but reduced the fee request for excessive discovery costs, duplicative trial attendance, and fees related to ACPO motions; awarded $125,153 in attorneys’ fees and $7,981.31 in costs.

Issues:

Issue	Plaintiff's Argument	Defendant's Argument	Held
1) Is Plaintiff a "prevailing party" entitled to fees under Idaho Code § 12‑120(3)?	Plaintiff obtained judgment on its only claim and thus prevailed.	Defendant argued Plaintiff only prevailed in part (co‑defendant dismissed; recovery small relative to amounts suggested).	Plaintiff was the prevailing party; recovery ($2,490) was more than nominal given single claim and proof difficulties.
2) Does the claim arise from a "commercial transaction" under § 12‑120(3)?	The dispute concerned commercial purchases/supplies for a restaurant; thus commercial.	Defendant did not seriously dispute commercial nature.	Held commercial: goods were for business, fraud claim arose from an oral commercial transaction.
3) Are the requested attorneys’ fees reasonable under Idaho R. Civ. P. 54(e)(3)?	Plaintiff asserted fees were reasonable given litigation intensity, discovery disputes, and skills required.	Defendant argued fees were excessive and disproportionate to recovery; many costs were unnecessary or duplicative.	Court reduced fees: disallowed $74,799.50 (excessive discovery), $8,421 (duplicative trial attendance), and $24,703 (ACPO motion-related); awarded $125,153 as reasonable.
4) Are costs taxable under Local Rule 7054.1 and may any costs be shifted under 28 U.S.C. § 1927?	Plaintiff sought $7,981.31 in costs as prevailing party.	Defendant objected generally, arguing costs could have been lower if damages had been disclosed; urged denial.	Court awarded the full $7,981.31 under Local Rule 7054.1; found Defendant did not show unreasonable/vexatious multiplication under § 1927.

Key Cases Cited

Cohen v. de la Cruz, 523 U.S. 213 (1998) (fraud debts under § 523(a)(2)(A) may include attorneys’ fees and costs)
In re Haun, 396 B.R. 522 (Bankr. D. Idaho 2008) (state law controls recoverability of fees in nondischargeability actions)
In re Bertola, 317 B.R. 95 (9th Cir. BAP 2004) (same principle that fees recoverable only if allowed under nonbankruptcy law)
Blimka v. My Web Wholesaler, LLC, 152 P.3d 594 (Idaho 2007) (§ 12‑120(3) applies to fraud claims arising from commercial transactions)
Eighteen Mile Ranch, LLC v. Nord Excavating & Paving Inc., 117 P.3d 130 (Idaho 2005) (overall‑view standard for determining prevailing party in actions with claims and counterclaims)
Johannsen v. Utterbeck, 196 P.3d 341 (Idaho 2008) (court must consider Idaho R. Civ. P. 54(e)(3) factors when setting fee amount)
H2O Envtl., Inc. v. Farm Supply Distribs., Inc., 429 P.3d 183 (Idaho 2018) (discussing required consideration of 54(e)(3) factors and appellate review)
Burns v. County of Boundary, 818 P.2d 327 (Idaho Ct. App. 1990) (discussing when recovery is too nominal to confer prevailing‑party status)
Gilbert v. City of Caldwell, 732 P.2d 355 (Idaho Ct. App. 1987) (awarding fees where recovery was a small percentage of original demand but not merely nominal)