A judge in U.S. Bankruptcy Court in Boise has ordered the city of Hailey to pay Old Cutters Inc. $99,178 in attorney fees and costs following a ruling against the city in December.
Old Cutters had challenged the city’s effort to collect an additional $2.5 million in annexation fees—beyond $1.3 million already paid—as well as the city’s requirement that the subdivision build 20 affordable-housing units. The court ruled that the annexation fee far exceeded the city’s costs to annex the property and that no state law granted the city the authority to require the affordable-housing units.
On April 18, U.S. Bankruptcy Judge Jim Pappas ruled that Old Cutters was entitled to attorney fees due to a provision in its annexation agreement with the city requiring the losing party in any lawsuit regarding the agreement to pay such fees. Pappas rejected the city’s argument that if portions of the agreement were ruled void, then the entire agreement is void.
According to the ruling, $2,000 of the attorney fees related to Old Cutters’ motion, contested by the city, to obtain the fees.
The court denied a motion for an award of attorney fees to Mountain West Bank on the grounds that it was not a party to the annexation agreement and the Idaho statute allowing award of attorney fees does not apply to its situation. The bank had become involved in the suit when it sought, and was granted, first lien status over the city regarding Old Cutters property.
The city has appealed the December court ruling, and City Attorney Ned Williamson said the attorney fees ruling will be added to the appeal.
“Hailey will not be paying the attorney’s fee bill until there’s a final judgment in court,” Williamson said.
The city approved annexation of the 143-acre Old Cutters property northeast of downtown in 2006, after years of negotiations.