Opinion
No. 35536-1-II.
June 24, 2008.
Appeal from a judgment of the Superior Court for Ska-mania County, No. 01-2-00062-6, E. Thompson Reynolds, J., entered October 12, 2006.
Affirmed by unpublished opinion per Hunt, J., concurred in by Penoyar, A.C.J., and Houghton, J.
Alpine Quality Construction Services (Alpine), and Steven Weiss and Linda Miller (Weiss-Millers) appeal the trial court's bad faith attorney fee award to Brett and Teresa Johnson (Johnsons). Alpine and the Weiss-Millers argue that the trial court erred in awarding the Johnsons attorney fees because (1) the Johnsons failed to show that Alpine and the Weiss-Millers acted in bad faith, (2) the Johnsons' attorney did not sufficiently itemize his time spent on the case, and (3) the trial court failed to make the requisite findings of fact and conclusions of law. We affirm.
FACTS I. Modular Home Construction
On July 14, 2000, the Johnsons purchased a lot from Alpine in the Riverview Meadow subdivision near Stevenson, Washington. The Johnsons approached Terry Ryan, the subdivision developer, for approval to place a modular home on their lot. Ryan told the Johnsons that they could place a modular home on their lot if Ryan reviewed and approved their house plans. On February 12, 2001, the Johnsons had their modular home delivered to their lot. Sometime after the Johnsons' lot purchase, Steven Weiss and Linda Miller (Weiss-Millers) also purchased a lot in the Riverview Meadow subdivision.
Whether the Johnsons provided Ryan with plans for their modular home before it was delivered was in dispute at trial.
A. Covenants, Conditions, and Restrictions (CCRs)
The recorded CCRs for the Riverview Meadow subdivision provide in pertinent part:
5. Vehicles.
Parking of inoperable cars, junk cars, or other unsightly vehicles shall not be allowed on any lot or road or easement within the development except only within the confines of any enclosed garage.
. . . .
10. Prefabricated Homes.
The use, placement or storage of mobile homes, modular or prefabricated homes, or manufactured homes, or similar structures, which are largely constructed off sight as living units, are prohibited. An exception for prefabricated home[s] can be considered if they meet the construction standards, on an individual basis by the developer.
Clerk's Papers (CP) at 287-88. The CCRs also require that (1) "the dwelling shall be no less than 1,800 square feet"; (2) the dwelling's exterior shall be "channel or horizontal lap siding, brick, masonry, or Cedar as the preferred siding material"; (3) garage openings must not directly face the road; (4) erosion must "be controlled in all circumstances"; and (5) all dwellings must be set back 100 feet from all hillsides. CP at 288-93.
Article 4 of the CCRs provides in pertinent part:
3. Disclaimer of Liability: The Lot Owners shall not be liable to any person for act and omissions done in good faith in the interpretation, administration and enforcement of this Declaration.
. . . .
5. Attorney's Fees and Costs: In the event suit or action is instituted to enforce any terms of this Declaration or to collect unpaid assessments. The prevailing party shall be entitled to recover from the other party such sum as the court or tribunal may adjudge reasonable as attorney fees and costs incurred. This will include arbitration, trial or appeal, or in any proceeding in federal bankruptcy court under state receivership or insolvency statutes, in addition to all other sums provided by law.
CP at 291.
II. Procedure A. Mediation
In February 2001, Ryan delivered letters to the Johnsons, informing them that they needed (1) to provide plans for their home to Ryan, (2) to prevent further erosion, (3) to replace their home's siding with approved material, (4) to change their garage's position so that it did not face the street, and (5) to cease damaging the road. On March 14, Alpine and the Johnsons attempted to mediate their dispute with mediator and attorney Brad Andersen. After the mediation, Andersen sent the parties a letter formally confirming their mediation agreement and the issues that the parties had not resolved. In the mediation letter, Andersen stated, "The only two issues left to be resolved are: (1) the position of the garage (i.e., whether the garage door should face northeast or northwest); and (2) the material to be used for siding." CP at 42.
The Weiss-Millers were not involved in the mediation with Brad Andersen because they did not intervene as interested parties until after Alpine filed the complaint for damages.
B. Complaint for Injunctive Relief and Damages; Trial
On May 4, Alpine filed a complaint in superior court for injunctive relief and damages, alleging that the Johnsons had violated the CCRs. Alpine alleged that the Johnsons' modular home violated the (1) pre-approval requirement for "modular or prefabricated homes or manufactured homes on any of the lots"; (2) minimum floor space requirement of 1,800 square feet; (3) structure siding requirement, which did not list vinyl siding; and (4) set back requirement of 100 feet from hillsides. CP at 284-85.
On October 17, Alpine moved for summary judgment. Alpine submitted a June 11, 2001 letter from William Weyrauch, an engineer, stating that (1) the Johnsons' property risked "slope failure" due to the stockpiling of excavated materials; (2) the property needed further measures to prevent erosion; and (3) the property did not have any silt or erosion control measures at that time. The trial court denied summary judgment.
Sometime before the trial began, the trial court granted the Weiss-Millers' intervener petition. After a six-day bench trial, the trial court ruled that the Johnsons had not violated any of the CCRs and awarded the Johnsons attorney fees. The trial court denied the Weiss-Millers' CR 60 Motion for Relief from Judgment.
Neither the date the Weiss-Millers filed the intervener petition, nor the petition itself is in the record.
C. First Appeal
Alpine and the Weiss-Millers appealed. We affirmed the trial court's ruling that the Johnsons' modular home did not violate the CCRs, reversed the trial court's holding that the Johnsons' bulldozer did not violate the vehicles covenant, and remanded the case to allow the trial court to make findings of fact and conclusions of law on whether the parties had acted in bad faith.
On September 7, 2006, the Johnsons petitioned the Supreme Court for review. They argued that bad faith was not necessary to award attorney fees and that remand to the trial court was unnecessary. The Supreme Court denied review.
D. Remand Hearing
In anticipation of the attorney fees remand hearing, Alpine's previous attorney, Timothy Dack, submitted a declaration to the trial court (1) that he had filed the original complaint on behalf of Alpine; and (2) that:
Prior to filing the complaint, I performed the necessary due diligence by reviewing the facts of the case and making reasonable inquiry into the law. In particular, I reviewed both the initial [CCRs] and the amended CCRs applicable to the subdivision. I also drove to the subdivision shortly after the Johnsons' home had been delivered to take a look at the house for myself.
4. After reviewing the CCRs, viewing the Johnsons' home, and researching the applicable law, I believed that by any reasonable interpretation the Johnsons were violating several of the recorded CCRs. . . .
5. When the mediation proved unsuccessful, I filed the complaint because I reasonably believed Alpine had a claim.
CP at 18-19.
The Weiss-Millers' previous attorney, Anthony Connors, filed a similar declaration with the trial court that (1) he had filed the initial complaint on behalf of the Weiss-Millers; and (2) "[p]rior to filing the complaint, [he had] performed the necessary due diligence by reviewing the facts of the case and making a reasonable inquiry into the law." CP at 21.
At the remand hearing, the attorney for Alpine and the Weiss-Millers argued:
We would ask the Court to make a finding that there was no bad faith within the meaning of CR 11 and 4.84.185 in this case as the terms of the CCRs themselves require. That means the Court doesn't need to go to the reasonableness of the fee issue at all. If the Court does go there, the fees that [the Johnsons' attorney] has requested on behalf of the Johnsons are not reasonable because they don't exclude a series of hours that clearly have nothing to do with the result that he achieved before this Court and that was affirmed by the Court of Appeals.
Report of Proceedings (RP) (Oct. 12, 2006) at 39-40.
The Johnsons argued that they were entitled to attorney fees because Alpine and the Weiss-Millers had "acted in bad faith in the enforcement of the CCRs against [the Johnsons]. . . ." CP at 44. The Johnsons' attorney also told the trial court that his time spent "on the bulldozer issue" was a "minimis [sic] amount." RP (Oct. 12, 2006) at 42.
The trial court ruled that Alpine and the Weiss-Millers' claims were in bad faith because they had made their claims (1) despite no "actual violations of the CCRs"; (2) "too late" to allow the Johnsons reasonable time to respond "without incurring substantial damages"; (3) without sufficient investigation; (4) "without sufficient notice, or without any notice before trial"; and (5) "after having specifically approved the construction done by the Johnsons." CP at 269.
The trial court again awarded the Johnsons attorney fees against Alpine and the Weiss-Millers. In ruling that the attorney fee amount was reasonable, the trial court found that:
(a) the hourly rate charged of $150.00 was under the norm for this area,
(b) the amount of time spent in defending the case was reasonable considering the complexity of the case and how it was prosecuted by Alpine and Weiss-Millers,
(c) that no duplicate fees were charged,
(d) that the fees were sufficiently itemized for the work performed.
CP at 269-70.
Alpine and the Weiss-Millers again appeal.
ANALYSIS
In Washington, absent a contract, statute, or recognized ground of equity, courts will not award attorney fees as part of the litigation's costs. Tradewell Group, Inc. v. Mavis, 71 Wn. App. 120, 126, 857 P.2d 1053 (1993) (citing Pennsylvania Life Ins. Co. v. Dep't of Empl. Sec., 97 Wn.2d 412, 413, 645 P.2d 693 (1982)). During the prior appeal, we held that the CCRs entitled the Johnsons, as the prevailing party, to reasonable attorney fees if the trial court found that Alpine and the Weiss-Millers acted in bad faith at trial. We now address whether the trial court erred in ruling that Alpine and the Weiss-Millers acted in bad faith and whether the trial court's attorney fee award amount was reasonable.
I. Bad Faith Attorney Fees
Alpine and the Weiss-Millers argue that (1) we should adopt a bad faith standard based on CR 11 and RCW 4.84.185 to supplement the CCRs, which do not define "bad faith"; and (2) the record lacks evidence that Alpine and the Weiss-Millers brought the claims in bad faith. The Johnsons respond that (1) CR 11 and RCW 4.84.185 are inapplicable, (2) we should look to analogous case law to define "bad faith," and (3) ample evidence in the record supports the trial court's bad faith finding. We hold that, under either of the proposed bad faith standards, there is substantial evidence in the record to support the trial court's bad faith finding.
A. Standard of Review
We review de novo the interpretation of the CCRs' attorney fee "bad faith" requirement, which is a question of law. Health Ins. Pool v. Health Care Auth., 129 Wn.2d 504, 507, 919 P.2d 62 (1996); Day v. Santorsola, 118 Wn. App. 746, 756, 76 P.3d 1190 (2003), review denied, 151 Wn.2d 1018 (2004). In interpreting the CCRs' "bad faith" provision, we give the undefined phrase its "plain, ordinary, and popular meaning." Boeing Co. v. Aetna Cas. Sur. Co., 113 Wn.2d 869, 877, 784 P.2d 507 (1990) (internal quotation marks omitted).
We engage in a two-step process when reviewing an attorney fee award. Pub. Util. Dist. No. 1 of Klickitat County v. Int'l Ins. Co., 124 Wn.2d 789, 814, 881 P.2d 1020 (1994). We first determine whether the party is entitled to attorney fees and then whether the award of fees was reasonable. Pub. Util. Dist. No. 1, 124 Wn.2d at 814.
Where a legal basis exists for an attorney fee award, we review the trial court's factual findings to determine "whether substantial evidence supports the findings and, if so, whether the findings in turn support the trial court's conclusions of law and judgment. Substantial evidence is evidence in sufficient quantum to persuade a fair-minded person of the truth of the declared premise." Ridgeview Props. v. Starbuck, 96 Wn.2d 716, 719, 638 P.2d 1231 (1982) (citation omitted).
B. Black's Law Dictionary Definition
Alpine and the Weiss-Millers argue that (1) the standard dictionary does not define "bad faith," and (2) we should not look to Black's Law Dictionary definition of "bad faith" because it is not a standard English dictionary. We hold that we may look to a technical dictionary when there is no standard English dictionary definition.
When an otherwise common word is given a distinct meaning in a technical dictionary or other technical reference and has a well-accepted meaning with the industry, courts turn to the technical, rather than general purpose, dictionary to resolve the word's definition. See City of Spokane v. Dep't of Revenue, 145 Wn.2d 445, 454, 38 P.3d 1010 (2002). Thus, we consider Black's Law Dictionary definition, which defines "bad faith" as "[d]ishonesty of belief or purpose." Black's Law Dictionary 149 (8th ed. 2004). This Black's Law Dictionary definition supports Alpine and the Weiss-Millers' argument that "bad faith" is dishonesty of belief or purpose.
Black's Law Dictionary further explains:
A complete catalogue of types of bad faith is impossible, but the following types are among those which have been recognized in judicial decisions: evasion of the spirit of the bargain, lack of diligence and slacking off, willful rendering of imperfect performance, abuse of power to specify terms, and interference with or failure to cooperate in the other party's performance.
Black's Law Dictionary 149 (8th ed. 2004) (quoting Restatement (Second) of Contracts § 205 cmt. d, (1979)). This expanded definition supports the Johnsons' argument that "bad faith" includes evasion of the spirit of the bargain. Because Black's Law Dictionary gives a well accepted meaning of "bad faith" within the legal industry, we adopt its definition for the purposes of the undefined CCRs' "bad faith" phrase. City of Spokane, 145 Wn.2d at 454.
Because we adopt Black's Law Dictionary definition of "bad faith," we do not further address the parties' arguments on the appropriate "bad faith" standard. We do note that the cases the parties cite support the Black's Law Dictionary definition of "bad faith."
C. Substantial Evidence
Alpine and the Weiss-Millers argue that they did not act in bad faith, within the meaning of the CCRs, because (1) there was a legitimate basis in law and fact for their claims; (2) they prevailed on more than one issue; and (3) "there was evidence the Johnsons were prompted to comply with the CCRs by filing of the underlying complaints." Br. of Appellants at 27. The Johnsons respond that substantial evidence supports the trial court's finding of bad faith. The Johnsons point to Alpine and the Weiss-Millers' (1) pursuing claims that Alpine had approved, (2) contradicting their formerly stated positions and prior sworn testimony on the CCRs' requirements, (3) attempting to redefine the CCRs terms, (4) inadequately investigating the CCRs' requirements, and (5) failing to give adequate notice about the claims as evidence of Alpine and the Weiss-Millers bad faith.
We agree with the Johnsons and the trial court, which found that Alpine and Weiss-Miller acted in bad faith because they filed claims against the Johnsons "after having specifically approved the construction done by the Johnsons." CP at 269.
During trial, the parties disputed whether Alpine, through Ryan, had approved the Johnsons' modular home before its delivery to the site. We defer to the fact finder's resolution of conflicting testimony, witness credibility, and persuasiveness of the evidence. Morse v. Antonellis, 149 Wn.2d 572, 574, 70 P.3d 125 (2003); State v. Camarillo, 115 Wn.2d 60, 71, 794 P.2d 850 (1990). The Johnsons' and Andersen's testimonies support the trial court's finding that Alpine approved the Johnsons' modular home before filing a claim against them. Under Black's Law Dictionary definition, "bad faith" includes both "[d]ishonesty of belief or purpose" and "evasion of the spirit of the bargain." Black's Law Dictionary 149 (8th ed. 2004). The record supports the trial court's finding that Alpine and the Weiss-Millers' filing a claim against the Johnsons' modular home after Alpine had approved the modular home's plans constitutes bad faith as an "evasion of the spirit of the bargain."
Accordingly, we hold that substantial evidence supports the trial court's finding that Alpine and the Weiss-Millers acted in bad faith by bringing a claim against the Johnsons' modular home when Alpine had approved the modular home construction.
Because we hold that Alpine and the Weiss-Millers acted in bad faith in bringing their claim against the Johnsons' modular home, we do not address Alpine and the Weiss-Millers' argument that (1) the CCRs limited the trial court to considering only Alpine and the Weiss-Millers' actions in instituting their claim, and (2) the trial court should not have looked at their actions during pretrial hearings and trial. Nor do we further address the trial court's ruling that Alpine and the Weiss-Millers acted in bad faith because they made their claims without sufficient notice and without sufficient investigation.
II. Reasonable Attorney Fees at Trial
Alpine and the Weiss Millers next argue that the trial court abused its discretion when it awarded the Johnsons allegedly unreasonable and excessive attorney fees without first requiring the Johnsons' attorney to provide (1) actual invoices; or (2) sufficiently itemized work documenting "precisely how the time the Johnsons' attorney spent on the case secured his clients' successful recovery" or "how his time was actually spent." Br. of Appellants at 30. We disagree.
The Johnsons respond that (1) Alpine and the Weiss-Millers are barred from raising these issues on appeal because they failed to object to the reasonableness and itemizing of the attorney fees at the remand hearing; and (2) the trial court did not abuse its discretion because it relied on their attorney's "detailed, itemized account showing the actual time, the dates, the type of services, and the hourly rates charged for those services." Br. of Resp't at 42.
A. Standard of Review
We review the reasonableness of a trial court's attorney fee award for an abuse of discretion. Boeing Co. v. Heidy, 147 Wn.2d 78, 90, 51 P.3d 793 (2002). A trial court abuses its discretion when its decision is manifestly unreasonable or based on untenable grounds. Boeing Co., 147 Wn.2d at 90. We find no such abuse of discretion.
B. Issue Raised Below
The Johnsons assert that Alpine and the Weiss-Millers are barred from raising the reasonableness and sufficient-itemizing attorney fee issues on appeal because they did not raise these issues at the remand hearing. The Johnsons are correct that a party's failure to raise an issue at the trial level generally waives the party's right to challenge the issue on appeal. See State v. Branch, 129 Wn.2d 635, 651, 919 P.2d 1228 (1996); Bentzen v. Demmons, 68 Wn. App. 339, 349, 842 P.2d 1015 (1993).
But Alpine and the Weiss-Millers did raise the reasonableness attorney fee issue at the trial level. At the remand hearing, their attorney argued, "[T]he fees that [the Johnsons' attorney] has requested on behalf of the Johnsons are not reasonable because they don't exclude a series of hours that clearly have nothing to do with the result that he achieved before this Court and that was affirmed by the Court of Appeals." RP (Oct. 12, 2006) at 39-40. Thus, we now consider whether the attorney fee award was reasonable.
C. Lodestar Approach
Alpine and the Weiss-Millers argue that the trial court abused its discretion in awarding attorney fees because the record does not contain evidence establishing the time spent and work done by the Johnsons' attorney as required by the lodestar approach. We disagree.
Washington courts have adopted the lodestar approach when calculating reasonable attorney fees. Bowers v. Transamerica Title Ins. Co., 100 Wn.2d 581, 587-98, 675 P.2d 193 (1983). To calculate a lodestar amount, a court multiplies the number of hours the attorney reasonably expended by the attorney's reasonable hourly rate. Van Pham v. Seattle City Light, 159 Wn.2d 527, 538, 151 P.3d 976 (2007). The attorney's reasonably expended hours "must be spent on claims having a common core of facts and related legal theories." Van Pham, 159 Wn.2d at 538 (internal quotation marks omitted). The court should discount the attorney's hours spent on unsuccessful claims, duplicated or wasted effort, or otherwise unproductive time. Id.
Alpine and the Weiss-Millers argue that the Johnsons' attorney's document itemizing his attorney fee hours is inadequate because it does not provide enough detail "to verify the fee request was based on contemporaneous time records or to determine whether duplicative hours incurred in preparing for multiple trial dates or hours spent pursuing unsuccessful claims were excluded." Br. of Appellant at 30. Again, we disagree.
Relying on Bowers, Alpine and the Weiss-Millers assert that "[c]ounsel must provide contemporaneous records documenting the hours worked." Br. of Appellants at 28. Alpine and the Weiss-Millers misconstrue the Bowers holding. Contrary to their argument, Bowers does not require "contemporaneous" records documenting the attorney's hours. See Bowers, 100 Wn.2d at 597. The attorney requesting attorney fees must provide only "reasonable documentation of the work performed" and the "documentation need not be exhaustive or in minute detail." Id.
Bowers, 100 Wn.2d at 587-98.
In Bowers, our Supreme Court held that the reasonable documentation "must inform the court, in addition to the number of hours worked, of the type of work performed and the category of attorney who performed the work (i.e. senior partner, associate, etc)." Bowers, 100 Wn.2d at 597. The Johnsons' attorney fee document informs the court of the number of hours worked and the type of work performed. The document details the attorney's hours he spent on this case in increments as small as ".1" of an hour and informs the court of the type of work performed by labeling his time with descriptions such as "Review plaintiff's Requests for Production/Interrogatories" and "Send Notice of Weiss deposition; receive and review Weiss answers to Interrogs and Request for Production; call to [Alpine and Weiss-Millers'] attorneys." CP at 607-08. Thus, the Johnsons' attorney sufficiently itemized his work hours and the type of work he performed.
Additionally, Alpine and the Weiss-Millers argue that the attorney fee document was not sufficiently detailed because they could not tell what amount of time the Johnsons' attorney spent on the "bulldozer" removal issue, which we ordered the Johnsons to remove from their property. This argument fails because courts do not make a deduction in the attorney fee award where the attorney fees for defending against successful and unsuccessful claims are inseparable and the Johnsons' attorney spent a de minimis amount of time on this issue. Kastanis v. Educ. Employees Credit Union, 122 Wn.2d 483, 502, 865 P.2d 507 (1994); RP (Oct. 12, 2006) at 42.
We hold, therefore, that the trial court did not abuse its discretion in ruling that the Johnsons' attorney sufficiently itemized his work for the attorney fee award.
D. Adequacy of Factual Findings
Alpine and the Weiss-Millers argue that the trial court failed to evaluate the required factors and make findings that (1) the fee request was reasonable, (2) the hourly rate was reasonable, (3) the number of hours was reasonable, (4) the time spent was on successful claims, and (5) the trial court considered the parties' challenges to the award. Their argument fails.
Alpine and the Weiss-Millers also argue that the trial court's attorney fee award was "presumptively unreasonable" because it reinstated the original fee award. This argument also fails. In Biggs, the case that Alpine and the Weiss-Millers' rely on, our Supreme Court cautioned that in that situation, if the trial court re-imposed its previous CR 11 sanction it was presumptively unreasonable. Biggs v. Vail, 124 Wn.2d 193, 202 n. 3, 876 P2d 448 (1994). But, Biggs does not state a blanket rule that re-imposing a previous sanction, after the court has remanded the case, is presumptively unreasonable. Because Biggs' holding is limited to its circumstances, we do not further consider this argument.
Alpine and the Weiss-Millers are correct that a trial court must make "an adequate record so the appellate court can review a fee award" and "must enter findings of fact and conclusions of law to support an attorney fee award." Just Dirt, Inc. v. Knight Excavating, Inc., 138 Wn. App. 409, 415, 157 P.3d 431 (2007) (citing Mahler v. Szucs, 135 Wn.2d 398, 435, 957 P.2d 632 (1998)). But Alpine and the Weiss-Millers incorrectly assert that there are specific findings and factors the trial court must consider. The record and findings of fact and conclusions of law must be adequate for review and must support the attorney fee award, but there are no particular factors or findings that either statutes or prior cases require the trial court to make. See Mahler, 135 Wn.2d at 435.
Here, the trial court ruled that the attorney fees award was reasonable based on the following factors:
(a) the hourly rate charged of $150.00 was under the norm for this area,
(b) the amount of time spent in defending the case was reasonable considering the complexity of the case and how it was prosecuted by Alpine and Weiss-Millers,
(c) that no duplicate fees were charged,
(d) that the fees were sufficiently itemized for the work performed.
CP at 269-70. Thus, contrary to Alpine and the Weiss-Millers' argument, the record shows that the trial considered whether (1) the fee request was reasonable; (2) the hourly rate was reasonable; and (3) the time was spent was on successful claims.
Alpine and the Weiss-Millers' other argument — that the trial court failed to consider the parties' challenges to the award — also fails. The findings of fact and conclusions of law show that the trial court considered all the arguments that Alpine and the Weiss-Millers made to the trial court. Accordingly, we hold that the trial court created an adequate record for our review and made sufficient factual findings to support its attorney fee award.
III. Attorney Fees on Appeal
The Johnsons request "reasonable attorney fees for both appeals, per the terms of the CCRs (article 4, ¶ 5), this Court's prior rulings and pursuant to RAP 18.1 (fees on appeal allowed to a party if authorized by applicable law)." Br. of Resp't at 49. Because Alpine and the Weiss-Millers acted in bad faith pursuing claims against the Johnsons, we award the Johnsons attorney fees on appeal under this provision of the CCRs.
We affirm.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
Houghton, J., Penoyar, A.C.J., concur: