Opinion
No. 57561-9-I.
October 1, 2007.
Appeal from a judgment of the Superior Court for King County, No. 05-2-17003-4, Jim Rogers, J., entered December 9, 2005.
Affirmed by unpublished per curiam opinion.
Old Country Bakery (Old Country) appeals the trial court's order and judgment awarding Gagik Vartanyan reasonable attorney fees. Old Country sued Vartanyan alleging breach of a purchase and sales agreement (PSA). On Vartanyan's motion for summary judgment, the court dismissed Old Country's breach of contract lawsuit but reserved ruling on Vartanyan's request for attorney fees and his counterclaims against Old Country. After additional briefing, the court ruled Vartanyan was the prevailing party, awarded him attorney fees under the PSA, and dismissed the counterclaims. On appeal, Old Country argues that because the court dismissed the counterclaims, Vartanyan is not entitled to attorney fees as the prevailing party. We affirm the trial court's decision to award attorney fees to Vartanyan as the prevailing party.
FACTS
In August 2004, Gagik Vartanyan purchased the Old Country Bakery from Roman Yesayan and Ofelia Nersisyan. Under the terms of the PSA, Vartanyan agreed to pay $60,000, assume Old Country's lease in the Crossroads East Shopping Center (Crossroads), and reimburse Old Country for the $2,000 security deposit for the lease. There is no dispute that Vartanyan made two payments to Old Country totaling $60,000. But because Crossroads required Vartanyan to enter into a new lease instead of assuming Old Country's existing lease, Vartanyan did not reimburse Old Country for the $2,000 security deposit.
Although Nersisyan did not sign the contract, Yesayan appears to have signed on behalf of the partnership registered under the name Yesayan, Nersisyan, and Yesayan.
Vartanyan wrote one check to "Old Country Bakery" for $20,000 and another to "Roman Yesayan" for $40,000.
Based on Vartanyan's failure to assume the lease and reimburse the security deposit, Old Country filed a complaint against Vartanyan in May 2005 for breach of the PSA. In the complaint, Old Country asked the court to restore possession of the bakery to Old Country, or in the alternative, to award damages.
In his answer, Vartanyan denied breach of the PSA and asserted several affirmative defenses, including that the landlord, Crossroads, was responsible for reimbursing the security deposit under the original lease. Vartanyan also filed a counterclaim against Old Country alleging trade name infringement of the name "Old Country Bakery" and breach of the duty of good faith and fair dealing.
Vartanyan filed a motion for summary judgment dismissal arguing that there was no breach because he paid the purchase price in full, he could not assume Old Country's lease, and, therefore, he was not responsible for reimbursing the $2,000 security deposit.
At some point thereafter, Old Country informed Vartanyan that Crossroads had returned the $2,000 security deposit and it wanted to voluntarily dismiss the lawsuit.
At the summary judgment hearing, the court granted Vartanyan's motion and dismissed Old Country's breach of contract lawsuit. But the court reserved ruling on Vartanyan's counterclaims and his request for attorney fees under the PSA.
Prior to the next hearing, Old Country filed a brief addressing Vartanyan's request for attorney fees. Old Country argued that if the court dismissed Vartanyan's counterclaims, Vartanyan would not be entitled to attorney fees as the prevailing party under the PSA. In the alternative, Old Country argued that the court should exercise its discretion to reduce the amount requested.
Old Country abandons this alternative argument on appeal.
In the order, the court ruled that Vartanyan is the prevailing party because the court granted his motion for summary judgment dismissal and Old Country later voluntarily dismissed its lawsuit. The order also states that, "[d]efendant's remaining claims are dismissed." The trial court entered judgment against Old Country for approximately $6,000 in attorney fees. Old Country appeals the order awarding attorney fees and the judgment.
ANALYSIS
Old Country argues that the trial court erred in awarding Vartanyan attorney fees because neither party was the prevailing party. Specifically, Old Country argues that neither party prevailed because the court dismissed both Old Country's complaint and Vartanyan's counterclaims.
Old Country also argues that Vartanyan did not prevail on the breach of contract claim due to the fact that the trial court dismissed the counterclaim sua sponte. But because Old Country cites no authority to support this argument, we will not consider it on appeal. Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 809, 828 P.2d 549 (1992).
There is no dispute that the PSA contains an attorney fee provision, which states:
Buyer, and its shareholders, directors, and officers hereby promises [sic] to pay all reasonable attorney's fees and costs incurred by the Seller in the enforcement of any provision of this Agreement.
There is also no dispute that RCW 4.84.330 applies here.
In any action on a contract or lease . . . where such contract or lease specifically provides that attorney's fees and costs, which are incurred to enforce the provisions of such contract or lease, shall be awarded to one of the parties, the prevailing party, whether he is the party specified in the contract or lease or not, shall be entitled to reasonable attorney's fees in addition to costs and necessary disbursements.
. . . .
As used in this section "prevailing party" means the party in whose favor final judgment is rendered.
The only issue on appeal is whether Vartanyan was the prevailing party under RCW 4.84.330.
An award of attorney fees to a prevailing party under RCW 4.84.330 is mandatory. Marassi v. Lau, 71 Wn. App. 912, 914, 859 P.2d 605 (1993) (citing Singleton v. Frost, 108 Wn.2d 723, 729, 742 P.2d 1224 (1987)). A contract clause allowing a successful plaintiff to recover attorney fees applies bilaterally under RCW 4.84.330 and allows a successful defendant to recover. Marine Enterprises, Inc., v. Security Pacific Trading Co., 50 Wn. App. 768, 750 P.2d 1290 (1988).
Whether a party is a "prevailing party" is a mixed question of law and fact that we review under an error of law standard. Eagle Point Condo. Owners Ass'n v. Coy, 102 Wn. App. 697, 713, 9 P.3d 898 (2000). This court reviews claimed errors of law de novo. Dep't of Ecology v. Campbell § Gwinn, LLC., 146 Wn.2d 1, 9, 43 P.3d 4 (2002). The prevailing party is the one who receives an affirmative judgment in its favor. Riss v. Angel, 131 Wn.2d 612, 633, 934 P.2d 669 (1997). If neither party wholly prevails, the prevailing party is the one who substantially prevails and that determination depends on the relief afforded. Rowe v. Floyd, 29 Wn. App. 532, 535 n. 4, 629 P.2d 925 (1981); Mike's Painting, Inc. v. Carter Welsh, Inc., 95 Wn. App. 64, 68, 975 P.2d 532 (1999). Where distinct and severable contract claims are involved, an order leaving both parties to bear their own costs is improper absent a detailed "consideration of what actually happened in the litigation." Transpac Development, Inc. v. Oh, 132 Wn. App. 212, 219, 130 P.3d 892 (2006).
First, Old Country argues that neither party prevailed because it filed a motion to voluntarily dismiss its lawsuit. But a voluntary dismissal would still render Vartanyan the prevailing party. Wachovia SBA Lending v. Kraft, 138 Wn. App. 854, 859, 158 P.3d 1271 (2007) ("The defendant . . . prevails where the plaintiff voluntarily dismisses its action").
Second, Old Country argues that neither party prevailed because the trial court dismissed Vartanyan's counterclaims. Specifically, Old Country contends that because Vartanyan was not afforded affirmative relief for his counterclaims, he is not the substantially prevailing party. But Old Country agrees that under Rowe, whether a party substantially prevails depends on the relief afforded. Here, consideration of what actually happened in the litigation and the relief afforded to the parties supports the conclusion that Vartanyan is the prevailing party. Old Country did not obtain any measure of relief that it sought in its lawsuit against Vartanyan. By contrast, Vartanyan successfully resisted Old Country's action to rescind the PSA and divest him of $60,000 worth of business assets and obtained summary judgment dismissal of the lawsuit.
Old Country's argument is similar to an argument this court recently rejected in Transpac. In Transpac, the trial court refused to award attorney fees to the defendant tenant under the terms of a lease agreement and RCW 4.84.330. The court reasoned that neither party was the prevailing party, because although the landlord did not prevail on any of its claims, the tenant also did not prevail on any of its counterclaims.
We remanded, holding that where distinct and severable contract claims are involved, the court cannot refuse to award attorney fees to a prevailing party without a detailed consideration of what actually happened in the litigation. Transpac, 132 Wn. App. at 219 ("an order that leaves both parties to bear their own costs is not adequately supported by a bare conclusion that each party recovered on a substantial theory.") Here, consistent with our ruling in Transpac, Vartanyan's counterclaims were distinct and severable from Old Country's complaint, and the trial court awarded attorney fees to Vartanyan based on what actually happened in the litigation and the relief afforded to the parties. Because Old Country did not prevail on any claim and Vartanyan prevailed on summary judgment, we conclude the trial court did not err in awarding Vartanyan reasonable attorney fees.
We affirm.