Opinion
No. 55900-1-I.
November 6, 2006.
Appeal from judgments of the Superior Court for Snohomish County, Nos. 01-2-01965-0 and 01-2-02386-0, Larry E. McKeeman, J., entered February 7, 2005.
Counsel for Appellant(s), Howard Mark Goodfriend, Edwards Sieh Smith Goodfriend PS, 1109 1st Ave Ste 500, Seattle, WA 98101-2988.
Robert Erling Ordal, Attorney at Law, 1000 2nd Ave Ste 1750, Seattle, WA 98104-3620.
Counsel for Respondent(s), Dan Sheldon Lossing, Inslee Best Doezie Ryder, Po Box C-90016, 777 108th Ave Ne Ste 1900, Bellevue, WA 98009-9016.
Affirmed in part, reversed in part, and remanded by unpublished opinion per Dwyer, J., concurred in by Coleman and Ellington, JJ.
This case arises out of a real property transfer from Danny and Margaret Kirkpatrick to Arthur and Joyce Cheff. On prior appeal to this court, we held that the purchase and sale agreement between the parties was invalid. On remand, the trial court restored possession of the property to the Kirkpatricks and made various restitutionary awards to each party. The Kirkpatricks once again appeal, assigning error both to an order awarding prejudgment interest to the Cheffs and to a decision by the trial court not to award prejudgment interest to the Kirkpatricks. The Cheffs cross-appeal, assigning error to an award of attorney fees to the Kirkpatricks. We affirm in part and reverse in part.
FACTS
In 1997, the Cheffs agreed to purchase real property from the Kirkpatricks, pursuant to a purchase and sale agreement. At the same time, they agreed to purchase a seller's contractual interest in the realty from Mr. Kirkpatrick's brother. After paying the agreed-upon amounts, the Cheffs took possession of the property. Kirkpatrick v. Cheff, 118 Wn. App. 772, 774, 76 P.3d 1211 (2003).
The Kirkpatricks were engaged in bankruptcy proceedings at the time of transfer. Accordingly, the purchase and sale agreement was conditioned on the Kirkpatricks obtaining an order from the bankruptcy court authorizing the transfer. The Kirkpatricks never obtained such an order.
The bankruptcy court's reorganization plan for the Kirkpatricks, confirmed in 1997, listed the Cheffs as creditors pursuant to their ownership of the seller's interest in the property. The plan also required the Kirkpatricks to make monthly payments to the Cheffs for that seller's interest. As of December 2000, the Kirkpatricks had not made any such payments.
In December 2000, the Cheffs demanded the accrued amount then owing under the bankruptcy plan. In March 2001, the Kirkpatricks tendered payment of the full amount owing through May 2001 pursuant to the bankruptcy plan. The Cheffs refused the tender.
Later in 2001, the Kirpatricks filed an unlawful detainer action seeking to evict the Cheffs from the property. The Cheffs counterclaimed for specific performance of the purchase and sale agreement. The trial court found in favor of the Cheffs, ordering specific performance of the agreement. Kirkpatrick, 118 Wn. App at 775.
On appeal, we reversed the trial court decision, concluding that the Cheffs' claim to the property was barred because the purchase and sale agreement had been discharged in the Kirkpatricks' bankruptcy proceeding. Kirkpatrick, 118 Wn. App. at 779.
On remand, the trial court ordered the Cheffs to restore possession of the property to the Kirkpatricks. The trial court also awarded each party various monetary compensation, including (1) an award to the Cheffs for the full value of the seller's interest, including prejudgment interest; (2) an award to the Kirkpatricks for the reasonable rental value of the property during the time the Cheffs held possession, not including prejudgment interest; and (3) an award of attorney fees to the Kirkpatricks.
DISCUSSION
We review an award of prejudgment interest under an abuse of discretion standard. Crest Inc. v. Costco Wholesale Corp., 128 Wn. App. 760, 775, 115 P.3d 349 (2005). We also review the reasonableness of an attorney fee award under an abuse of discretion standard. Crest, 128 Wn. App. at 773. A trial court abuses its discretion when its decision is manifestly unreasonable or exercised on untenable grounds, or for untenable reasons. State ex rel. Carroll v. Junker, 79 Wn.2d 12, 26, 482 P.2d 775 (1971).
I. Prejudgment Interest: Seller's Interest
The trial court awarded the Cheffs the full value of the seller's interest, including prejudgment interest. The Kirkpatricks contend that the trial court erred by including prejudgment interest for the time period from 1997 through May 2001 in the amount awarded. The Kirkpatricks argue that their tender of the full amount owed through May 2001 pursuant to the bankruptcy court's reorganization plan, coupled with the Cheffs' refusal of that tender, terminated the Cheffs right to collect interest for the time period prior to June 2001. We agree.
The prevailing party in a lawsuit is generally entitled to an award of prejudgment interest on liquidated damages. Hadley v. Maxwell, 120 Wn. App. 137, 141, 84 P.3d 286 (2004). Prejudgment interest is generally favored because the law assumes that one who retains money owed to another should be charged interest thereon. Lakes v. von der Mehden, 117 Wn. App. 212, 217, 70 P.3d 154 (2003). It follows, however, that a party who unwillingly retains money owed to another, such as when valid tender is made and refused, should not be required to pay prejudgment interest on the tendered sum. Brewster Coop. Growers v. Brewster Orchards Corp., 21 Wn.2d 288, 306, 150 P.2d 847 (1944); Richter v. Trimberger, 50 Wn. App. 780, 785, 750 P.2d 1279 (1988).
In ruling that the Cheffs were entitled to prejudgment interest on the seller's interest award for the time period prior to June 2001, the trial court reasoned that the Kirkpatricks' tender was ineffective because the purchase and sale agreement between the Kirkpatricks and the Cheffs was invalid. In so ruling, the trial court erred. The Kirkpatricks' tender was made pursuant to the bankruptcy court's reorganization plan, not the purchase and sale agreement. At the time of tender, both the Kirkpatricks, as debtors, and the Cheffs, as creditors, were bound by the terms of that plan. Therefore, the Kirkpatricks' tender was effective. The Cheffs' refusal of that tender was wrongful. Accordingly, the Cheffs are not entitled to recover prejudgment interest on the seller's interest award for the time period prior to June 2001. Brewster Coop. Growers, 21 Wn.2d at 306; Richter, 50 Wn. App. at 785.
We reverse that portion of the trial court's judgment awarding the Cheffs the full value of the seller's interest including prejudgment interest and remand to the trial court for a recalculation of the seller's interest award amount. That calculation shall include an award of prejudgment interest only for the applicable period of time after May 31, 2001.
II. Prejudgment Interest: Reasonable Rental Value
The trial court awarded the Kirkpatricks the "reasonable rental value" of the property while it was held by the Cheffs. The Kirkpatricks contend that the trial court erred by not including prejudgment interest in that award amount. We disagree.
The trial court ordered the award of reasonable rental value as a restitutionary remedy. Restitution is an equitable remedy. In re Proceedings of King County for Foreclosure of Liens, 123 Wn.2d 197, 205, 867 P.2d 605 (1994). Trial courts have broad discretionary power to fashion equitable remedies. In re King County, 123 Wn.2d at 204. We review the decisions of a trial court in fashioning such remedies under an abuse of discretion standard. Rupert v. Gunter, 31 Wn. App. 27, 30, 640 P.2d 36 (1982).
Restitution encompasses a very broad scope of remedies fashioned to fit a variety of circumstances. State v. A.N.W. Seed Corp., 116 Wn.2d 39, 45, 802 P.2d 1353 (1991). Restitution can mean either disgorgement of something that has been taken or compensation for injury done. Black's Law Dictionary 1339-40 (8th ed. 2004). Accordingly, the measure of restitution is not always or necessarily determined by the amount of the benefit conferred on the unjustly enriched party. Restatement of Restitution § 1 cmt. a (1937) ("[I]f the loss suffered differs from the amount of the benefit received, the measure of restitution may be more or less than the loss suffered or more or less than the enrichment.").
Compare Restatement of Restitution § 1 cmt. d (1937) (where loss and benefit coincide, the ordinary remedy is to "compel the one to surrender the benefit which he has received") with Restatement of Restitution § 1 cmt. e (1937) (where loss and benefit do not coincide, a person who has been unjustly deprived "may be entitled to maintain an action for restitution against another although the other has not in fact been enriched thereby").
Here, the Kirkpatricks urged the trial court to award in restitution both the "reasonable rental value" of the property during the time the Cheffs held possession of the property without renting it out, as well as disgorgement of those rents actually received by the Cheffs during the time period that the property was occupied by a renter.
The trial court determined that the Kirkpatricks were entitled, under equitable principles, to the "reasonable rental value" of the property during the entirety of the Cheffs' possession. Accordingly, the trial court ordered an award of the reasonable rental value both for the time period during which the property was not rented and for the time period during which the property was rented. The trial court decided not to order disgorgement of the rental amounts actually received. The trial court's decisions in this regard were not manifestly unreasonable and were not, therefore, an abuse of discretion. In re King County, 123 Wn.2d at 204.
Had the trial court only ordered disgorgement of all rents received by the Cheffs as a measure of resitutitonary compensation, the Kirkpatricks recovery would have been less. Obviously realizing this, the Kirkpatricks urged the trial court to "mix and match" the measures of recovery according to whether rent was actually assessed and collected for a particular month. The trial court was not obliged to adopt this hybrid method of analysis and was free to impose a single method of determining equitable compensation over the entirety of the Cheffs' possession.
Furthermore, the trial court did not abuse its discretion in determining that the Kirkpatricks were not entitled to prejudgment interest on the amount awarded. Prejudgment interest is awardable when (1) the amount claimed is liquidated or (2) the amount due on an unliquidated claim is due on a specific contract for the payment of money, and can be determined by computation with reference to a fixed standard contained in the contract without reliance on opinion or discretion. Prier v. Refrigeration Eng'g Co., 74 Wn.2d 25, 32, 442 P.2d 621 (1968).
A liquidated claim is one where the evidence furnishes data that, if believed, makes it possible to compute the amount with exactness, without reliance on opinion or discretion. Prier, 74 Wn.2d at 32. An unliquidated claim, on the other hand, is one where the exact amount of the sum to be allowed cannot be definitely fixed from the facts proved, but must in the last analysis depend upon the opinion or discretion of the judge or jury. Prier, 74 Wn.2d at 33, quoting Charles T. McCormick, Handbook on the Law of Damages (Hornbook Series) § 54 (1935). Accord Hansen v. Rothaus, 107 Wn.2d 468, 477, 730 P.2d 662 (1986); Aker Verdal A/S v. Neil F. Lampson, Inc., 65 Wn. App. 177, 192, 828 P.2d 610 (1992).
The trial court determined separate reasonable monthly rental values for the period that the property was not rented (from 1997 to 2002) and the period that the property was rented (from 2002 to 2005). In so doing, the trial court announced its consideration of various factors, including (1) the rent paid before the Cheffs took possession, (2) the Kirkpatricks' false representations to the Cheffs concerning the condition of the property, which delayed rental of the property, (3) the testimony of at least one expert witness as to the reasonable monthly rental value, and (4) the actual rent paid by the Cheffs' tenant after April 2002.
In considering such factors, the trial court employed opinion and discretion in order to determine the reasonable monthly rental value of the property for each time period. Thus, the claim was an unliquidated one. Prier, 74 Wn.2d at 32. Accordingly, the trial court did not err by refusing to include prejudgment interest in the amount awarded.
The trial court's determination that the reasonable rental value during the time period the property was rented was the same as those rental amounts actually received does not compel a contrary result. In so determining, the trial court did not merely make reference to a fixed standard. Rather, it found that, when considered in light of all of the evidence presented, the actual rent paid was the "best evidence" of the reasonable monthly rental value of the property for that time period. In the last analysis, the trial court's determination depended on its exercise of opinion and discretion.
We affirm that portion of the trial court's judgment awarding the Kirkpatricks the reasonable rental value of the property while that property was held by the Cheffs.
III. Attorney Fee Award
The Cheffs cross-appeal, contending that the trial court erred in calculating the amount of the Kirkpatricks' attorney fee award. The Cheffs argue that the award, as iterated within the trial court's findings of fact and conclusions of law, differed from a prior oral pronouncement of the trial court and should be revised accordingly. We disagree.
The trial court acted within its authority in entering an award of attorney fees differing from that expressed in its oral opinion. An oral opinion has no final or binding effect unless formally incorporated into the findings of fact, conclusions of law, and judgment. State v. Head, 136 Wn.2d 619, 622, 964 P.2d 1187 (1998). Until final judgment is entered, the trial judge is not bound by a prior expressed intention to rule in a certain manner. DGHI Enters. v. Pac. Cities, Inc., 137 Wn.2d 933, 944, 977 P.2d 1231 (1999).
The award entered was amply supported by the trial court's findings of fact and conclusions of law. Mahler v. Szucs, 135 Wn.2d 398, 435, 957 P.2d 632 (1998) (an attorney fee award must be supported by findings of fact and conclusions of law sufficient to establish an adequate record for review). The fees were awarded pursuant to the attorney fee provision in the purchase and sale agreement, and calculated using the lodestar method. The findings of fact and conclusions of law set forth each element of the revised calculation, including those elements that were inadvertently omitted from the oral pronouncement. There was no error.
As determined in the prior appeal in this case, the attorney fee provision in the purchase and sale agreement is enforceable. Kirkpatrick, 118 Wn. App. at 780.
We affirm the award of attorney fees to the Kirkpatricks.
IV. Attorney Fees on Appeal
Both parties seek an award of attorney fees on appeal. RCW 4.84.330 permits an award of attorney fees on appeal in any action on a contract that provides for attorney fees and costs to the prevailing party. Thus, the purchase and sale agreement's attorney fee provision supports an award of attorney fees to the prevailing party on appeal.
Because the Kirkpatricks and the Cheffs each prevailed on different claims, a proportionality approach to the parties' attorney fees recovery is appropriate. Marassi v. Lau, 71 Wn. App. 912, 917, 859 P.2d 605 (1993). Each party is entitled to an award of reasonable fees incurred in connection with the appellate claims upon which it prevailed. Upon the parties' compliance with RAP 18.1, a commissioner of this court will make an appropriate determination.
Affirmed in part, reversed in part, and remanded.
ELLINGTON and COLEMAN, JJ., concur.