Survival of Attorney-Fee Clauses Beyond Deed Merger & Limits on Fee Recovery:
A Comprehensive Commentary on McOmber v. Thompson (Idaho 2025)

1. Introduction

In McOmber v. Thompson, the Idaho Supreme Court faced a familiar but thorny post-closing dispute arising out of a residential real-estate sale. Jonathan and Angela McOmber alleged that Shane and Keri Thompson, the sellers of their Rexburg home, had concealed serious defects—dry rot, mold, water intrusion, and faulty wiring—by understating past moisture problems on the statutory Seller’s Property Condition Disclosure Form. Following remodeling expenses and roof leaks caused by ice dams, the buyers brought claims sounding in statutory nondisclosure, common-law fraud, and breach of the Real Estate Purchase and Sale Agreement (“REPSA”). They also sought to amend to add a constructive-trust claim.

The district court granted summary judgment to the Thompsons, dismissed the constructive-trust request, and awarded the Thompsons attorney fees under a fee-shifting clause in the REPSA. On appeal, the Supreme Court addressed five issues: (1) denial of leave to amend, (2) summary-judgment rulings, (3) denial of reconsideration, (4) fee award, and (5) appellate fees. Although the Court largely affirmed, it established two notable points of Idaho law:

1. An attorney-fee provision in a REPSA is a collateral covenant that survives the merger of the contract into the deed at closing, and may therefore support post-closing fee awards.
2. Even where such a clause survives, fees cannot be assessed against a litigant who never signed the underlying agreement; fee awards must be apportioned to contracting parties only.

2. Summary of the Judgment

• Constructive Trust: Leave to amend properly denied; the buyers were “one step removed” from the sellers’ purchase of a new residence and failed to allege fraud in that acquisition.
• Summary Judgment: (a) Sellers complied with Idaho’s Property Condition Disclosure Act by answering “Yes” to water-intrusion questions; (b) buyers lacked evidence of falsity to sustain common-law fraud; (c) breach-of-contract claim failed because buyers could not identify any breached REPSA provision.
• Motion for Reconsideration: Correction of an ice-dam fact did not create a genuine dispute; prior rulings stood.
• Attorney Fees Below: Clause in REPSA survived merger; district court had authority to award fees, but erred in awarding them against non-signatory Angela McOmber. Case remanded to strike that portion.
• Attorney Fees on Appeal: Neither side wholly prevailed; no fees awarded.

3. Analysis

3.1 Precedents Cited & Their Influence

• Kelso v. Applington, 173 Idaho 738 (2024) – Reaffirmed that summary-judgment courts apply traditional Rule 56 standards even when the ultimate trial burden is “clear and convincing.” Guided the Supreme Court to review de novo despite the district court’s higher evidentiary language.
• Snider v. Arnold, 153 Idaho 641 (2012) – Defined constructive trust. Court used it to show why the remedy did not fit the pleadings.
• Witt v. Jones, 111 Idaho 165 (1986) & Hettinga v. Sybrandy, 126 Idaho 467 (1994) – Earlier constructive-trust cases; provided the standard quoted by the district court.
• Watts v. Krebs, 131 Idaho 616 (1998) & Sowards v. Rathbun, 134 Idaho 702 (2000) – Addressed fiduciary-type duty to disclose; Court distinguished them because no fiduciary relationship existed between arm’s-length buyer and seller here.
• Tusch Enterprises v. Coffin, 113 Idaho 37 (1987) – Classic fraudulent-concealment real-estate case; contrasted with present facts where sellers affirmatively disclosed past water issues.
• Fuller v. Callister, 150 Idaho 848 (2011); Jolley v. Idaho Security, 90 Idaho 373 (1966) – Formulated merger doctrine and “collateral stipulation” exception. Groundwork for fee-clause survival.
• Yates v. Hull Farms, Inc. (Idaho Ct. App. 2025) – First Idaho appellate opinion declaring REPSA fee clauses collateral; Supreme Court expressly adopted its reasoning.

3.2 Legal Reasoning

A. Seller Disclosure & Fraud Claims

Under Idaho’s Property Condition Disclosure Act (PCDA), sellers must disclose known defects. The Thompsons marked “Yes” to water-intrusion questions and noted a “drainage problem that was fixed.” The Court held:

1. Answering “Yes” satisfied PCDA; further details, while desirable, are not statutorily mandated.
2. Because buyers had notice of prior intrusion, reliance and falsity elements of common-law fraud could not be proven.
3. No evidence existed that sellers knew of an ongoing roof leak; one historical ice dam is not tantamount to present defect knowledge.

B. Constructive-Trust Amendment

A constructive trust requires that the defendant acquire the very property sought to be impressed through wrongful means. Here, buyers sought a trust over the sellers’ new residence purchased with sale proceeds, not the subject property itself. Lacking allegations of fraud in that acquisition, and given their “one-step-removed” status, equity did not apply. Therefore, denying leave to amend was within the district court’s discretion.

C. Breach of Contract & Covenant of Good Faith

Jonathan could not point to any REPSA clause breached. Where PCDA compliance was established, no independent contractual duty remained. Consequently, breach and covenant claims necessarily fell.

D. Attorney-Fee Provision & Merger Doctrine

The key doctrinal development. Traditional merger absorbs covenants concerning title, possession, quantity, or emblements into the deed. The Court held:

• Fee-shifting clauses are collateral stipulations—they do not relate to land quantity/title and thus survive closing.
• Accordingly, courts retain authority to award fees for disputes “in any way connected with” the REPSA, even when claims arise after closing.
• But fee exposure is limited to signatories; non-signatory spouse Angela could not be assessed.

3.3 Impact of the Decision

1. Real-Estate Litigation: Plaintiffs must marshal concrete evidence of falsehood, not merely incompleteness, when sellers have answered PCDA questions affirmatively.
2. Due-Diligence Practice: Buyers relying solely on statutory disclosures proceed at their peril; the Court implicitly underscores the prudence of independent inspections.
3. Contract Drafting & Closing Practice: Idaho practitioners should assume fee clauses in REPSAs remain enforceable post-closing unless expressly extinguished. Sellers and buyers need to budget for potential fee exposure long after delivery of deed.
4. Fee Apportionment: Trial courts must scrutinize fee awards where some defendants (or plaintiffs) are non-signatories or only partially involved. Counsel should segregate time or risk partial denial on appeal.
5. Merger Doctrine Clarified: The opinion furnishes a bright-line example of what is “collateral,” giving guidance well beyond fee clauses (e.g., indemnity, mediation, or forum-selection terms).

4. Complex Concepts Simplified

• Merger Doctrine: Think of the deed as the “final draft” of a sale. Anything about the land itself merges into that final draft. Side promises—like who pays attorney fees in a later dispute—ride alongside and stay enforceable.
• Collateral Stipulations: Contract promises not about the dirt (title, acres, crops) are collateral. They survive closing unless expressly released.
• Constructive Trust: An equity tool letting courts transfer property wrongfully obtained. It sticks only if the property (or its direct proceeds) was acquired through fraud or similar misconduct.
• Duty to Disclose vs. Fraud by Omission: Absent a fiduciary relationship, silence ≠ fraud unless the seller has hidden a known defect after giving partial information that would mislead.
• Summary-Judgment Standard: At this stage courts ask: “Could any reasonable juror find for the non-movant?” They do not weigh the clear-and-convincing burden; that is for trial.

5. Conclusion

McOmber v. Thompson brings two salient clarifications to Idaho real-property jurisprudence. First, the Court firmly aligns fee-shifting provisions in REPSAs with the collateral-stipulation exception, ensuring their enforceability after the deed is delivered. Second, it cautions courts to apportion contractual fee awards only against signatories, protecting peripheral parties. Substantively, the opinion reiterates that statutory seller disclosures require only truthfulness about known defects, not exhaustive detail, and that buyers bear the risk of declining independent inspections.

Practitioners should adjust drafting, litigation strategy, and settlement calculations accordingly, keeping in mind that post-closing disputes can still trigger fee liability—yet only for those who actually agreed to pay.