Opinion
ORDER DENYING EXLINE DEFENDANTS' MOTION FOR ATTORNEY'S FEES AND COSTS
WILLIAM HASKELL ALSUP, District Judge.
This motion is a classic attempt to have it both ways. Defendants William A. Exline, Inc., and its vice president W. Dean LeGras ("the Exline defendants") obtained a complete win on summary judgment and defeated plaintiffs' lawsuit. Defendants successfully persuaded the Court that any possible agreement at issue would have been an oral one rather than a written one. This led to victory under the statute of limitations. Now the same defendants seek to reverse field. They now want an award of attorney's fees and costs based on a written agreement. This motion is DENIED because the written agreement containing the fee provision was not central to the present litigation.
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Because jurisdiction in this case is based on diversity, recovery of attorney's fees is determined under state law. Diamond v. John Martin Co., 753 F.2d 1465, 1467 (9th Cir. 1985). In the order granting summary judgment in favor of all defendants, the Court determined that Washington law governed all of plaintiffs' claims against the Exline defendants. Under Washington law, a prevailing party may recover attorney's fees in an action "on a contract" where such a contract specifically provided for attorney's fees and costs. Wash. Rev. Ann. Code § 4.84.330 (2004). "[A]n action is on a contract if the action arose out of the contract and if the contract is central to the dispute." CPL (Delaware) LLC v. Conley, 40 P.3d 679, 685 (Wash.Ct.App. 2002). If an action, however, was not pursued to enforce a contract containing the fee provision, then no attorney's fee can be awarded. Id. at 685-86.
The summary-judgment order explicitly held that Washington law governed plaintiffs' contract claims as well as all fraud-based tort claims. With respect to other tort claims, it was determined that both Washington and California law governed.
In Conley, CPL had agreed to pay $48 million plus an additional payment based on the 1998 earnings for skilled nursing facilities. The parties had agreed upon a formula to calculate the earnings. This original agreement had contained an attorney's fee provision. The parties later entered into a separate agreement in which CPL had agreed to pay approximately two million dollars in earnings based on the formula. The second agreement had no attorney's fee provision. CPL sued to recover an alleged overpayment of earnings based on the formula. The Washington appellate court found that CPL instituted the action in order to void the second agreement, the agreement without an attorney's fee provision. Id. at 686. Hence, the court held that neither party could recover attorney's fees since CPL's action was not instituted to enforce or interpret the purchase agreement which contained the attorney's fee provision.
So too here. As in Conley, there were apparently two different agreements in play: (1) a purported oral agreement for exclusive brokerage that occurred sometime between 1996 and 1997; and (2) a written agreement executed in 1998 that did not refer to exclusive brokerage. The instant order finds that the purported oral agreement was central and necessary to all of plaintiffs' claims, especially the breach-of-contract claim. This finding is supported by plaintiffs' first amended complaint and both sides' position throughout this litigation.
In the first amended complaint, plaintiffs alleged that "[i]n 1996 or 1997, plaintiffs engaged Exline as their exclusive broker" (First Am. Compl. ¶ 17). Then, plaintiffs alleged that they entered into a "new Brokerage Agreement Limited Listing contracts" with Exline on November 23, 1998, without a reference to exclusive brokerage ( id. ¶ 34). The 1998 agreement did not contain any such reference. In a subsequent paragraph, plaintiffs alleged that they entered into agreements "including without limitation on the Brokerage Agreements and an ongoing course of dealing, with Exline whereby Exline agreed to act as plaintiff's [sic] exclusive broker" ( id. ¶ 48). Despite such an agreement, plaintiffs alleged that the Exline defendants double-crossed them and became brokers for the buyer AGM in flipping the radio stations ( id. ¶¶ 27-28, 41-42, 48-49, 63, 66, 70, 78). Based on this contention on an exclusive-brokerage agreement, plaintiffs asserted numerous tort and contract claims against the Exline defendants.
In their motion for summary judgment, the Exline defendants argued that "[a]ny such agreement was, as plaintiffs recognize, at best an oral one" (Exline Def. Br. 10-11). Moreover, they argued that there was no written agreement that could be the basis for plaintiffs' breach-of-contract claim based on exclusive brokerage (Exline Def. Reply Br. 2-3, 9 & n. 5).
In opposing the Exline defendants' motion for summary judgment, plaintiffs in effect admitted - as the Exline defendants themselves urged - that there was no express written agreement that state Exline was to act as plaintiffs' exclusive broker. All of plaintiffs' arguments on exclusive brokerage hung on the oral discussions between Mr. Hochstadt and Mr. LeGras (Pl. Opp. 9-10). In their own motion for summary judgment and reply brief, plaintiffs admitted that was no express written agreement that provided for exclusive brokerage (Pl. Br. 1, 3; Pl. Reply Br. 2). The parties hotly debated whether there was any oral agreement for exclusive brokerage. Had there been one, the summary-judgment record demonstrated (consistent with allegations in the complaint) that an oral agreement would have occurred during the discussions between Mr. LeGras and Mr. Hochstadt sometime between 1996 and 1997 (Order 2-3, 18, 23).
Based on the foregoing, the summary-judgment order found that plaintiffs' claims rested solely on the alleged oral agreement and not the 1998 written brokerage agreement (Order 17, 23). This finding was central to granting the Exline defendants' motion for summary judgment.
Consequently, the only contract central to the dispute was the alleged oral agreement whereby Exline agreed to be plaintiffs' exclusive broker. The oral agreement did not provide for attorney's fees. No fees, therefore, can be awarded on the oral agreement.
The Exline defendants contend that plaintiffs pursued their action based on the 1998 brokerage agreement which provided for attorney's fees. This is a much different story from the story spun by them just one motion back. Even so, the new and different story has no bearing on the present motion. Washington law only allows recovery of attorney's fees for an action "on the contract." As stated above, this means an action arising out of a contract but only where the contract was central to the dispute. CPL (Delaware) LLC v. Conley, 40 P.3d 679, 685 (Wash.Ct.App. 2002). Even if plaintiffs pursued their action based allegedly in part on the 1998 agreement, the central tenet of plaintiffs' claims against the Exline defendants was the purported agreement for exclusive brokerage. All parties have agreed that the 1998 brokerage agreement did not contain any reference to exclusive brokerage. Hence, it could not have even supported plaintiffs' claims. The 1998 brokerage agreement was not and could not be central to the present litigation.
The Exline defendants also imply that a prevailing party may be awarded attorney's fees even if an oral agreement did not provide for such fees simply because they are the prevailing party. For support, they cite to Allahyari v. Doe, 897 P.2d 413 (Wash.Ct.App. 1995). This is incorrect. Allahyari affirmed a trial court's denial of attorney's fees to the prevailing party under the Washington statute that the Exline defendants rely upon - Section 4.84.330 which specifically allows for prevailing parties to recover under an action on a contract. Id. at 414. Allahyari noted that the oral contract central to the dispute did not contain any attorney's fee provision. Thus, the defendant was not allowed to recover under Section 4.84.330. Contrary to the Exline defendants' contention, a prevailing party cannot simply rest on its success to obtain attorney's fees under Section 4.84.330. There must be a contract central to the complaint that provides for recovery of attorney's fees.
It is true that a different Washington statute, Section 4.84.250, provides recovery of attorney's fees to a prevailing party regardless of whether there is a contract with an attorney's fee provision. Section 4.84.250, however, only applies in actions with damage claims less than $10,000. Allahyari, 897 P.2d at 414. That statute does not apply where, as here, millions were at issue. Accordingly, the Exline defendants' motion must be denied.
Had the Court ruled otherwise, the Exline defendants requested that Mr. Hochstadt and plaintiffs be ordered to pay the award because Mr. Hochstadt originally filed the complaint and is an alter ego of plaintiffs. The original complaint had been superseded by the first amended complaint, wherein Mr. Hochstadt was no longer a party. Thus, as defense counsel knows, the original complaint has no legal effect. Schwarzer, Tashima and Wagstaffe, Federal Civil Procedure Before Trial § 8:431 (2004). The Exline defendants did not object to the first amended complaint. They also did not allege an alter-ego theory against Mr. Hochstadt and plaintiffs in their answer. To raise it now for the first time is sandbagging. The Court will not entertain such a fact-intensive inquiry at this juncture.
CONCLUSION
The Court is disappointed in counsel for bringing this motion. It was without merit. The original action had more merit than this motion for fees. The motion is DENIED.
IT IS SO ORDERED.