VOROS, Judge
Opinion Fourth District Court, Provo Department
The Honorable Darold J. McDade
No. 139403292
Linda M. Jones, Troy L. Booher, and Erin B. Hull, Attorneys for Appellant Lester A. Perry, Attorney for Appellee JUDGE J. FREDERIC VOROS JR. authored this Opinion, in which JUDGES GREGORY K. ORME and JOHN A. PEARCE concurred. VOROS, Judge: ¶1 This appeal involves the award of attorney fees pursuant to Utah's reciprocal attorney fee statute. We hold that fees should be awarded under that statute on the same basis that they would be awarded under the applicable contract provision. In particular, a court should not withhold fees in reliance on disputed allegations in the pleadings or on the ground that the prevailing party succeeded on a procedural defense without litigating the merits of the underlying claim. Applying these principles, we reverse the district court's denial of attorney fees and remand for the district court to award reasonable reciprocal attorney fees incurred in the district court and on appeal.
BACKGROUND
¶2 Appellant Cheryl Haner allegedly applied for and received a business credit card (the Credit Card Account) from Advanta Bank Corporation. As the Credit Card Account holder, Haner consented to the Advanta Business Card Agreement (the Agreement), which stated the terms of the Credit Card Account. The Agreement included a provision allowing Advanta to assign its rights under the Agreement, a choice-of-law and forum-selection clause designating Utah for both purposes, and an attorney-fee provision. The attorney-fee provision required the account holder to pay fees and costs associated with any collection action:
To the extent not prohibited by applicable law, you agree to pay all collections costs, including (but not limited to) attorneys fees of 25% of any amount we bring a legal claim to collect. You will pay a smaller amount if a smaller amount is ruled appropriate or is provided for by applicable law.
¶3 At some point Haner stopped making payments on the Credit Card Account. Advanta charged off the Credit Card
¶6 After learning of the default judgment, Haner retained Utah counsel and moved the court to set aside the default judgment. Federated stipulated to the motion, and the court granted it. After filing her answer, Haner moved for summary judgment on multiple grounds, including that the statute of limitations barred the complaint. She also requested attorney fees under Utah's reciprocal attorney fee statute,
Utah Code section 78B-5-826. ¶7 Following a 14-minute hearing, the district court granted Haner's motion for summary judgment on statute of limitations grounds. Federated does not challenge this judgment on appeal. While granting Haner's motion for summary judgment, the district court nevertheless denied Haner's request for attorney fees. The district court ruled that she "would be unjustly enriched if she were awarded her attorney's fees incurred in this lawsuit under Utah's reciprocal attorney's fee statute,
Utah Code Ann. § 78B-5-826. Therefore, no attorney's fees are awarded to her." ¶8 Haner contends that the district court erred in denying her request for attorney fees. She also seeks her attorney fees incurred on appeal.
The record does not establish whether Haner held the Credit Card Account in her individual capacity or whether her company, Haner Interprises, held the Credit Card Account as a limited liability company. The district court resolved the case at summary judgment on statute of limitations grounds and did not reach this factual issue. For purposes of clarity, we refer to Haner individually throughout this opinion while recognizing that she may not have individually been a party to the Credit Card Account.
"Charge off" means "[t]o treat (an account receivable) as a loss or expense because payment is unlikely; to treat as a bad debt." Black's Law Dictionary 266 (9th ed. 2009).
Not long after Advanta sold tranches of its charged-off accounts to Federated, Advanta entered into a consent decree with the FDIC. In re Advanta Bank Corp., FDIC-08-259b, FDIC-08-403k (Federal Deposit Insurance Corp. June 30, 2009) (Stipulated Orders). The consent decree resolved allegations that Advanta's marketing and repricing of its credit card accounts violated the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1) (2006); that Advanta operated "without effective oversight and supervision" of its credit card products; that Advanta's violations of law unjustly enriched it; and that Advanta should make restitution to remedy the injuries its violations caused.
--------
ISSUE AND STANDARD OF REVIEW
¶9 The sole issue on appeal is whether the district court erred in denying Haner's request for attorney fees. Generally speaking, "[w]hether attorney fees are recoverable in an action is a question of law, which we review for correctness." Fericks v. Lucy Ann Soffe Trust, 2004 UT 85, ¶ 22, 100 P.3d 1200 (citation and internal quotation marks omitted). However, we review certain related issues for an abuse of discretion. For example, the determination of which party prevailed in a civil action—and thus may be entitled to attorney fees—is reviewed for an abuse of discretion. See Anderson & Karrenberg v. Warnick, 2012 UT App 275, ¶ 8, 289 P.3d 600 (citing Reighard v. Yates, 2012 UT 45, ¶ 12, 285 P.3d 1168). And we review the calculation of reasonable attorney fees for an abuse of discretion. See Dixie State Bank v. Bracken, 764 P.2d 985, 988 (Utah 1988). ¶10 Here, had the district court determined as a matter of law that the reciprocal attorney fee statute did not allow Haner to recover fees, we would review its decision for correctness. See Hooban v. Unicity Int'l, Inc., 2009 UT App 287, ¶¶ 6-7, 220 P.3d 485, aff'd, 2012 UT 40, 285 P.3d 766. Instead, the district court exercised the discretion our supreme court said the reciprocal attorney fee statute allows. See Bilanzich v. Lonetti, 2007 UT 26, ¶ 17, 160 P.3d 1041 ("[T]he language of the statute is not mandatory but allows courts to exercise discretion in awarding attorney fees and costs."). Because Haner challenges the district court's exercise of discretion, we review its decision for an abuse of that discretion. See id.; see also Dillon v. Southern Mgmt. Corp. Ret. Trust, 2014 UT 14, ¶ 48, 326 P.3d 656 (holding that "the district court did not abuse its discretion in awarding" the prevailing party attorney fees under the statute).
ANALYSIS
¶11 "In Utah, attorney fees are awardable only if authorized by statute or by contract." Dixie State Bank, 764 P.2d at 988. Under Utah's reciprocal attorney fee statute, courts may award attorney fees to the prevailing party of a contract dispute so long as the contract provided for the award of attorney fees to at least one of the parties:
A court may award costs and attorney fees to either party that prevails in a civil action based upon any promissory note, written contract, or other writing executed after April 28, 1986, when the provisions of the promissory note, written contract, or other writing allow at least one party to recover attorney fees.
prevailing party won on statute of limitations grounds. The reciprocal attorney fee statute dictates a like result here. ¶19 Accordingly, we reverse the district court's denial of Haner's request for attorney fees and remand with directions to award Haner reasonable attorney fees in accordance with the terms of the Agreement and the reciprocal attorney fee statute. In addition, a party entitled by contract or statute to "attorney fees below" and that "prevails on appeal is entitled to fees reasonably incurred on appeal."
Giles v. Mineral Res. Int'l, Inc.,
2014 UT App 259, ¶ 25,
338 P.3d 825. We therefore direct the district court to award Haner her reasonable fees incurred on appeal as well.
See id.
CONCLUSION
¶20 The order of the district court denying Haner's request for attorney fees is reversed and the matter remanded for the district court to award Haner her reasonable attorney fees incurred in the district court and on appeal.