Opinion
No. 64837-3-I.
Filed: September 19, 2011. UNPUBLISHED OPINION.
Appeal from a judgment of the Superior Court for King County, No. 07-3-08390-5, Douglass A. North, J., entered November 24, 2009.
Remanded by unpublished opinion per Leach, A.C.J., concurred in by Ellington and Lau, JJ.
Gordon Lotzkar appeals four trial court orders imposing sanctions against him. The trial court failed to enter findings of fact for any of the orders sufficient to allow for a meaningful review. Therefore, we remand to the trial court to enter the requisite findings.
FACTS
In 2007, Kristi Kelley filed for dissolution of her marriage to Jeffrey Kelley, with whom she had two children. A court commissioner entered temporary orders removing Jeffrey from the home and ordering him to pay $1,500 in monthly maintenance and $1,332 in monthly child support. The commissioner also appointed a guardian ad litem (GAL) for the two teenage boys.
The Kelleys' first names are used throughout this opinion to avoid confusion. No disrespect is intended.
Apparently, the GAL recommended both parents undergo a psychological evaluation. Jeffrey's attorney, Gordon Lotzkar, filed a motion to compel production of the evaluation report, which Kristi opposed. Kristi argued that the report was privileged information, that the motion to compel failed to comply with King County Local Rule (KCLR) 7(b)(4)(B), CR 26(i), and CR 34, and that a release of the report should not be ordered without a protective order. She also requested attorney fees and sanctions under CR 11 and RCW 4.84.185. Lotzkar filed a reply, arguing that Kristi waived any privilege when she delivered the psychological report to the GAL. Lotzkar also made statements calling into question Kristi's mental stability and ability to care for the two children. Kristi filed another objection, alleging that Lotzkar violated RPC 3.7 and that the memorandum contained information not in strict reply. She again asked for an award of attorney fees.
The trial court entered an order striking portions of Jeffrey's response, denying his motion to compel, and awarding Kristi fees and sanctions (order 1). This order stated,
1. Respondent's reply submittal contains inadmissible testimony from his counsel in violation of RPC 3.7. In addition, it contains information not in strict reply. The following paragraphs of Respondent's reply submittal are stricken and shall not be considered by the Court: Paragraphs 4, 5, 7, 8, 10, 13, 14 and 16.
Due to the unfair litigation tactics by Respondent, an award of $500 in attorney fees is GRANTED and included in the judgment herein.
2. Respondent's motion to compel production of Petitioner's psychological evaluation is DENIED. His motion fails to comply with the requirements of KCLR 7 and has no legal authority or basis. In addition, Respondent failed to comply with the discovery rules, specifically CR 26(i), CR 34, and KCLR 37. Respondent's demand for release of privileged medical records is improper without the entry of an appropriate protective order.
. . . .
5. Petitioner is awarded judgment against Respondent and his counsel, Gordon Lotzkar, as follows: $500 in attorney fees for improper motion; $500 for attorney fees related to objection, as set forth above.
Both Jeffrey and Lotzkar are listed in the judgment summary as judgment debtors.
Kristi later moved to compel more complete answers to her interrogatories, for production of requested documents, and for fees and costs incurred bringing the motion. Lotzkar submitted a memorandum in response, arguing that Kristi already had the documents she was requesting. In Kristi's reply, she asserted that Lotzkar testified on Jeffrey's behalf in violation of RPC 3.7, violated CR 26(g), was willfully attempting to conceal necessary financial information from her, and sought sanctions under CR 11.
The trial court ordered Jeffrey to supply the answers and the requested documents within eight days (order 2). The court also awarded Kristi $1,000 in attorney fees and costs to be paid by Jeffrey within seven days. The order stated, Respondent's responsive submittal contains inadmissible testimony from his counsel in violation of RPC 3.7. In addition, the evidence of Respondent's intransigence and willful violation of the rules of discovery, including CR 26-37 and KCLR 26-37, is overwhelming. Respondent's counsel certified that the responses to the discovery were in compliance with CR 26(g). By doing so, Respondent's counsel has violated CR 11 and caused Petitioner to incur unnecessary fees and costs. Due to the unfair litigation tactics by Respondent, sanctions of $1500 is GRANTED and included in the judgment herein.
The judgment summary lists Jeffrey and Lotzkar as judgment debtors.
Later, Kristi and Jeffrey attended a settlement conference and entered into a written CR 2A agreement. The agreement awarded two of the four family-owned apartment buildings and the family residence to Kristi. Jeffrey received the remaining two apartment buildings and assumed responsibility for the balances on their credit card accounts. To facilitate transfer of the apartment buildings to Kristi, Jeffrey agreed to bring the mortgages, taxes, insurance, rental deposits, escrow accounts, and any underlying obligations current as of January 31, 2009. Jeffrey also agreed to pay maintenance of $2,500 per month and child support of $800 per month beginning February 1, 2009.
Complications quickly arose with regard to the implementation of the CR 2A Agreement. Kristi and Jeffrey agreed to submit their dispute to binding arbitration. A hearing was held at the end of February, and the arbitrator issued her written ruling in April.
Meanwhile, the King County District Court issued a temporary no-contact order against Kristi, prohibiting her from having contact with her youngest son. According to Jeffrey's declaration, both boys lived with him full time after February 3, 2009. At the arbitration hearing, Jeffrey argued that because the boys lived with him full time, he should not have to pay child support. Kristi disagreed, arguing that Jeffrey's obligation to pay child support continued until a court order or agreement ended the obligation. Noting that Jeffrey was in arrears in his child support payments, the arbitrator ordered Jeffrey to continue paying child support until entry of a contrary court order. The arbitrator credited his past payments toward his support obligation, finding that he owed $2,443 in addition to an outstanding tuition obligation.
The arbitrator also determined that Jeffrey failed to comply with the terms of the CR 2A agreement. The arbitrator found that, contrary to Lotzkar's claims that the leases had been timely sent to Kristi's attorney, the documents were not sent to Kristi's attorney until days after the agreement deadline and that the copies sent did not include leases for all the apartments in the buildings awarded to Kristi. Lotzkar also stated his understanding that all the financial obligations for the three properties awarded to Kristi were current, but Jeffrey later admitted that that was not true.
The arbitrator ordered that Jeffrey pay the remainder of the arbitrator's fees and $25,000 toward Kristi's attorney fees. The arbitrator based this award on the following observations:
Judge North has found Mr. Kelley has engaged in unfair litigation tactics, has refused to comply with the Court's Orders, has been intransigent, has acted in a pattern of control and intimidation, and has attempted to circumvent the prior orders and the authority of the court.
In this Arbitration matter, Mr. Kelley was not forthright during the Settlement Conference about the outstanding payments on the buildings awarded to Ms. Kelley, did not fully disclose the conditions of the buildings, and did not fully disclose the circumstances of the tenants. Mr. Kelley has made it difficult for Ms. Kelley to assume ownership of the property awarded to her. Mr. Kelley has not performed even rudimentary acts such as providing an accurate list of the tenants and the apartments leased to each tenant. . . .
While Mr. Kelley may not consider his actions to be intransigent, he has exhibited bad faith by causing Ms. Kelley to unnecessarily incur fees due to his actions.
Jeffrey did not pay the arbitrator's fees as ordered. This caused the arbitrator to withhold the full arbitration decision. In May, Kristi sought an order from the trial court enforcing the arbitrator's decision and entering judgment against Jeffrey. In this motion, Kristi also asked the court to award attorney fees and sanctions against Jeffrey and Lotzkar for intransigence, bad faith, and willful violation of the CR 2A agreement and arbitration decision.
Jeffrey filed a declaration denying any willful violation. He asserted that as the only parties to the agreement, he and Kristi alone could be held responsible for any financial obligations that resulted from the arbitration. Lotzkar also submitted a declaration, asserting that because he was not a party to the arbitration, he could not be ordered to pay the arbitrator's fee.
In June, the court entered an order regarding the CR 2A agreement and the arbitration decision (order 3). The court awarded judgment against Jeffrey and Lotzkar for "immediate payment of the fees as ordered by the arbitrator to allow for release of the full arbitration decision." The court also awarded Kristi $3,200.00 for unpaid child support. The order recited that "[r]espondent and his counsel have demonstrated continued intransigence, unreasonable demands, bad faith actions and violations of the CR 2A Agreement, arbitration agreement and Rules of Professional Conduct. Petitioner shall receive an award of attorney fees and costs in the amount of $10,199.85." Again, both Jeffrey and Lotzkar are listed as judgment debtors in the judgment summary.
Later that month, Lotzkar filed a motion asking the court to reconsider its order making him personally liable for Jeffrey's back child support and attorney fees. The court denied that motion.
On June 25, Kristi agreed to the entry of an order prohibiting her from having contact with her youngest son while she underwent counseling and participated in a parenting program.
Five days later, Jeffrey filed another motion, asking the court to terminate his child support obligation but to reserve any issues regarding reimbursement or reallocation of back child support under the original temporary order or the CR 2A agreement. Kristi and her attorney responded by arguing that Jeffrey had failed to follow the agreed upon procedure for adjusting child support and was attempting to relitigate his back payment obligation. Kristi also asked for attorney fees due to Jeffrey's intransigence and for sanctions against Jeffrey and Lotzkar for "abusive litigation" and "willful actions in violation of CR 11" as well as an alleged failure to pay the $3,200 owed in back child support.
In July, the court entered an order (order 4) denying Jeffrey's motion to terminate child support and awarded Kristi $2,000 in attorney fees while imposing another $1,000 in sanctions against both Jeffrey and Lotzkar. Both Lotzkar and Jeffrey are listed as judgment debtors in the judgment summary. In November, the trial court entered a decree of dissolution.
Lotzkar appeals the court's imposition of sanctions against him.
ANALYSIS
As a threshold matter, the parties debate the standard of review. Lotzkar claims that we should review the trial court's sanction decisions de novo. Kristi disagrees. Citing several Washington cases, she argues that the standard of review is an abuse of discretion. Kristi is correct.
Our Supreme Court has determined that the proper standard to apply in reviewing sanctions decisions is the abuse of discretion standard. As the court explained,
Wash. State Physicians Ins. Exch. Ass'n v. Fisons Corp, 122 Wn.2d 299, 338. 858 P.2d 1054 (1993).
[T]he sanction rules are "designed to confer wide latitude and discretion upon the trial judge to determine what sanctions are proper in a given case and to reduce the reluctance of courts to impose sanctions. . . . If a review de novo was the proper standard of review, it could thwart these purposes; it could also have a chilling effect on the trial court's willingness to impose . . . sanctions."
Fisons, 122 Wn.2d at 339 (second and third alterations in original) (internal quotation marks omitted) (quoting Cooper v. Viking Ventures, 53 Wn. App. 739, 742-43, 770 P.2d 659 (1989)).
This standard "recognizes that deference is owed to the judicial actor who is 'better positioned than another to decide the issue in question.'" Several subsequent sanction cases have applied this standard of review.
Fisons, 122 Wn.2d at 339 (quoting Cooter Gell v. Hartmarx Corp., 496 U.S. 384, 403, 110 S. Ct. 2447, 110 L. Ed. 2d 359 (1990)).
See, e.g., Burnet v. Spokane Ambulance, 131 Wn.2d 484, 494, 933 P.2d 1036 (1997); Rivers v. Wash. State Conference of Mason Contractors, 145 Wn.2d 674, 684, 41 P.3d 1175 (2002); Just Dirt, Inc. v. Knight Excavating, Inc., 138 Wn. App. 409, 415, 157 P.3d 431 (2007); In re Marriage of Bobbitt, 135 Wn. App. 8, 29-30, 144 P.3d 306 (2006).
Here, however, none of the challenged orders contains factual findings sufficient to allow review. The trial court must create an adequate record, identifying any sanctionable actions and explaining its reasons for imposing sanctions. Absent an adequate record, we must remand for further proceedings. Lotzkar urges us to enter our own findings of fact and conclusions of law reversing all of the sanction orders. Lotzkar primarily relies on Bryant v. Joseph Tree, Inc., which stated that an appellate court "may" independently review written documents and make findings instead of remanding to the trial court when the trial court failed to enter them. In response, Kristi argues that each of the four orders provides an adequate record for review. According to Kristi, we should read the orders as making findings of fact and apply a substantial evidence standard to review those findings. On this point, neither party is entirely correct.
Just Dirt, Inc., 138 Wn. App. at 416.
Just Dirt, Inc., 138 Wn. App. at 416.
119 Wn.2d 210, 222, 829 P.2d 1099 (1992).
This court generally does not act as a fact finder. We decline the invitation to do so here. Bryant does not change our decision. There, the trial court imposed CR 11 sanctions against the plaintiffs' attorneys for filing a meritless complaint. The trial court, however, refused to enter a finding that the complaint lacked a factual or legal basis, a required finding under CR 11. On appeal, we observed that the attached affidavits and documents provided "unequivocal evidence" that the plaintiffs had in fact a proper basis for filing the complaint. We decided to reverse the sanction order instead of remanding for entry of supporting findings because the record contained no evidence that the complaint lacked a factual or legal basis. Our Supreme Court affirmed, noting that there was little to be gained by remanding under those circumstances.
See Quinn v. Cherry Lane Auto Plaza, Inc., 153 Wn. App. 710, 717, 225 P.3d 266 (2009).
Bryant, 119 Wn.2d at 214-15.
Bryant v. Joseph Tree, Inc., 57 Wn. App. 107, 115, 791 P.2d 537 (1990), aff'd, 119 Wn.2d 210, 829 P.2d 1099 (1992).
Bryant, 57 Wn. App. at 116-17.
Bryant, 57 Wn. App. at 115-16.
Bryant, 119 Wn.2d at 222-23.
Here, the record is not so clear. As explained below, some of the stated justifications for imposing sanctions lack legal support. However, a proper basis for others may exist. While the evidence in this case consists of pleadings, affidavits, and supporting documentation, the issues are inherently more factually intensive than those presented in Bryant. The trial court entered the sanction orders over a period of nearly 11 months, during which it reviewed numerous pleadings, considered alleged discovery violations, and dealt directly with counsel. The trial court, therefore, is better positioned to make the necessary factual determinations.
Nevertheless, the record affirmatively demonstrates that some sanctions were wrongly imposed or appear to have been imposed on improper grounds. Because these issues are likely to be present on remand, we address them here.
First, orders 1, 2, and 3 recite that Lotzkar violated the Rules of Professional Conduct. But RPC violations "cannot be proper grounds for the trial court to base a fee award because a 'breach of an ethics rule provides only a public, e.g., disciplinary, remedy and not a private remedy.'" Thus, Kristi is not entitled to an award of fees on that basis.
Just Dirt, Inc., 138 Wn. App. at 417 (quoting Hizey v. Carpenter, 119 Wn.2d 251, 259, 830 P.2d 646 (1992).
Next, order 2 listed Lotzkar as a judgment debtor in the judgment summary. The order itself, however, awards judgment only against Jeffrey. A similar error appears in order 3 — the judgment summary lists Lotzkar as a judgment debtor even though the order awards judgment against Jeffrey for $3,200 in back child support. Lotzkar contends that these discrepancies made him liable for the corresponding financial obligation.
Under RCW 4.64.030(1), the clerk is required to "enter all judgments in the execution docket . . . and shall specify clearly the amount to be recovered, the relief granted, or other determination of the action." RCW 4.64.030(2)(a) further provides that
[o]n the first page of each judgment . . . the following shall be succinctly summarized: The judgment creditor and the name of his or her attorney, the judgment debtor, the amount of the judgment, the interest owed to the date of the judgment, and the total of the taxable costs and attorney fees, if known at the time of the entry of the judgment, and in the entry of a foreign judgment, the filing and expiration dates of the judgment under the laws of the original jurisdiction.
To the extent that any judgment summary does not accurately summarize the judgment awarded, we direct the trial court to correct the judgment summary on remand.
But more importantly, no authority exists for imposing liability upon Lotzkar for Jeffrey's liability under the arbitration award for unpaid child support and arbitrator's fees. Generally, trial courts have limited power to confirm, vacate, modify, or correct arbitration awards. A trial court may modify or correct an arbitration award only when the face of the award shows an evident miscalculation, the award is imperfect as a matter of form, or the arbitrator acted upon a subject matter not submitted to arbitration.
Order 3 also states, "A judgment is entered against Respondent, Jeffrey Kelley, and his counsel, Gordon Lotzkar, for immediate payment of the fees as ordered by the arbitrator to allow for release of the full arbitration decision."
RCW 7.04A.240; Davidson v. Hensen, 85 Wn. App. 187, 192-93, 933 P.2d 1050 (1997), aff'd, 135 Wn.2d 112, 954 P.2d 1327 (1998).
Here, Lotzkar was not a party to the arbitration, nor did the arbitrator hold him personally responsible for Jeffrey's financial obligations. And because none of the prerequisites for modifying an arbitration award were present, the trial court lacked legal authority to impose that liability on Lotzkar. If the trial court believed that Lotzkar enabled Jeffrey's intransigence or had otherwise committed sanctionable behavior, it could sanction him on any number of legal theories. But any sanctions imposed upon Lotzkar should remain separate from Jeffrey's obligations under the arbitration award.
Finally, both parties request attorney fees on appeal. Because neither party is a prevailing party, the requests are denied.
We need not address Lotzkar's remaining arguments.
CONCLUSION
We remand to the trial court for further proceedings consistent with this opinion.