Opinion
No. 25715-1-III.
October 23, 2007.
Appeal from a judgment of the Superior Court for Spokane County, No. 06-2-04475-9, Neal Q. Rielly, J., entered November 3, 2006.
Affirmed by unpublished opinion per Brown, J., concurred in by Sweeney, C.J., and Schultheis, J.
This is a mechanics lien attorney fee dispute between borrower, Curtis Price and Golden Homes and Development, LLC (Mr. Price), and lender, Richard Parrish and Preferred Secured Enterprises, Inc. (PSE). Mr. Parrish, pro se, filed the liens when Mr. Price failed to deliver promised security instruments and then immediately released the invalid liens after consulting counsel. In a summary trial by affidavits, the court decided the liens, although invalid, did not fit into the "frivolous and made without reasonable cause" attorney fee provisions of RCW 60.04.081(4).
Because substantial evidence in Mr. Parrish's affidavit supports the trial court's factual findings and the findings support its conclusions, and since we decline Mr. Price's invitation to declare public policy demands a different result, we affirm.
FACTS
In 2005, PSE arranged and made loans of $207,000 to Golden Homes and Mr. Price, the sole member of Golden Homes, to acquire land, build homes, and resell the improved property at a profit. The funds were provided in installments between June and September and were accompanied by promissory notes, specifying that Mr. Price would furnish deeds of trust in the land to secure the investment. The parties carried out their business dealings through a partnership, Swiftwind, LLC. PSE was a managing partner of Swiftwind, and no property transactions were to take place without its consent. However, as next noted, Mr. Price acted contrarily by removing the funds without PSE's consent, apparently to further his business interests.
On January 24, 2006, Mr. Parrish, acting as an agent for PSE, contacted Mr. Price and was told that Mr. Price's attorney was preparing the deeds of trust. Mr. Parrish contacted Mr. Price's attorney and learned he had received no such instruction. Mr. Price then told Mr. Parrish that one of the improved properties was in escrow, and the investors would receive payments from the sale in six weeks, but no payment was received. Mr. Parrish discovered Mr. Price quit claimed the properties purchased by Swiftwind to Golden Homes, and was selling the properties, all without the knowledge or consent of PSE. Mr. Parrish became alarmed about the security of the investments.
The record is unclear as to whether Mr. Parrish is acting as an agent for Frank Mason is not listed as a party here, who also loaned money to Mr. Price.
After unsuccessfully trying to contact Mr. Price, Mr. Parrish filed liens against the properties for which the deeds of trust were to have been provided, and against other properties owned by Golden Homes and Mr. Price, believing the investment money had been used to acquire additional properties. Mr. Parrish believed he was "only carrying out the original agreement" since the investments were to be secured by real property. Clerk's Papers (CP) at 70. Mr. Price moved to release the liens as frivolous.
After retaining an attorney, Mr. Parrish immediately agreed to release the liens. Mr. Parrish's affidavit provided he did not realize the forms he used "applied only to liens for materials or services provided." CP at 70-71. Further, he had previously filed a lien in a separate incident based on money loaned to purchase materials to improve property, and "believed in good faith [he] could do so for the money provided in this case." CP at 71. The court entered a stipulated order releasing the liens and reserved the attorney fees issue.
At the attorney fees hearing, the court ruled that although the liens were invalid, they were not frivolous in light of "all of the facts and circumstances." Report of Proceedings (RP) at 15. It stated: "[Mr. Parrish] contends that he filed liens on property previously based on furnishing money for materials to be used on the property. He believed he could do the same here. I find that [he] filed the liens in good faith and in a reasonable belief that he could file the liens." RP at 16. The court stated, "[u]pon consultation with an attorney, he agreed to release the liens. . . . [T]his is one of those cases in which I find the liens were invalid, but not frivolous." RP at 16. The court denied Mr. Price's attorney fees motion. Mr. Price appeals.
ANALYSIS
The issue is whether the trial court erred in denying attorney fees under RCW 60.04.081(4). Mr. Price contends the court erred in ruling liens filed by Mr. Parrish were not frivolous and without reasonable cause.
We review a trial court's frivolous lien ruling, "[t]o the extent . . . [it] is based upon a resolution of factual disputes," for substantial evidence and errors of law. W.R.P. Lake Union Ltd. P'ship v. Exterior Servs., Inc., 85 Wn. App. 744, 750, 934 P.2d 722 (1997); Intermountain Elec., Inc. v. G-A-T Bros. Constr., Inc., 115 Wn. App. 384, 390-91, 62 P.3d 548 (2003). We review the ruling de novo where no factual disputes are resolved. W.R.P., 85 Wn. App. at 750. Here the trial court resolved a factual dispute regarding Mr. Parrish's intent.
"[A]ny person furnishing labor, professional services, materials, or equipment for the improvement of real property shall have a [materialman's] lien" upon the property for the amount owed. RCW 60.04.021. A property owner may move to have the lien released as "frivolous and made without reasonable cause," and if he prevails, the court must release the lien and award attorney fees. RCW 60.04.081(1), (4). Although the court may determine the lien is invalid, it is not per se frivolous and without reasonable cause. Intermountain, 115 Wn. App. at 394. An issue may not be "so utterly devoid of merit as to be frivolous" where it is based on a debatable issue or a supported good faith argument. Id.; W.R.P., 85 Wn. App. at 753.
Here, the court ruled the liens were invalid but they were not frivolous based on "all of the facts and circumstances." RP at 15. The record supports the court's ruling. Mr. Parrish acted to protect the lenders' interests after Mr. Price failed to provide deeds of trust or payments, quit claimed the property to Golden Homes, and began selling the property. Mr. Parrish believed he could file liens for investment funds used directly for materials and improvements. After retaining counsel, he released the liens. Mr. Price agrees a debt is owed and that he failed to provide the security agreements. He argues Mr. Parrish's factual assertions as to his cause for filing the liens are unworthy of belief and that public policy demands reversal. But we will not substitute our judgment for the trial court's factual determinations. Further, we decline to create a public policy that would require attorney fees in all cases of invalid liens that ignores the "made without reasonable cause" language in RCW 60.04.081(4). Based on this record, the court did not err in denying Mr. Price's attorney fees motion. Mr. Price's request for attorney fees on appeal is denied.
Affirmed.
A majority of the panel has determined this opinion will not be printed in the Washington Appellate Reports, but it will be filed for public record pursuant to RCW 2.06.040.
SWEENEY, C.J. and SCHULTHEIS, J., concur.