Opinion
66547-2-I
05-29-2012
SEAWEST INVESTMENT ASSOCIATES, LLC, a Washington limited liability corporation, Plaintiff, v. LUIN LEISHER and SHIRLEY LEISHER, husband and wife, Appellants, v. COMMONWEALTH LAND TITLE COMPANY OF PUGET SOUND, LLC, Respondent.
UNPUBLISHED OPINION
Becker, J.
This case arises from a purchase and sale agreement that fell apart on the closing date when the title company did not have the deed ready for delivery. The seller, appellant Leisher, claims the title company should have been ordered to pay the attorney fees Leisher incurred in defending litigation brought by the buyer. He invokes the equitable indemnity doctrine, also known as the "ABC rule." When A becomes embroiled in litigation with C because of B's wrongful act, A can recover attorney fees for that litigation from B. This doctrine does not apply if B's wrongful act was not the only reason why A became involved in litigation with C. Here, the buyer sued the seller not only because the sale failed to close, but also because the seller failed to provide a statutorily required disclosure form. The seller's request for attorney fees was properly denied.
FACTS
Luin Leisher and his wife, Shirley Leisher, agreed in 2004 to sell their home to Seawest Investment Associates LLC. The closing date was set for early 2007 but was extended to October 2008 as the result of agreements by the parties.
Commonwealth Land Title Company of Puget Sound LLC was designated as the closing agent and escrow agent. On October 2, 2008, the day set for closing, Commonwealth did not provide the required statutory warranty deed. The transaction did not close.
Seawest sued Leisher on October 9, 2008, for breach of contract for failure to perform on the closing date. Seawest also sought rescission of the purchase and sale agreement under RCW chapter 64.06. In a transaction for the sale of residential real property, the seller must deliver to the buyer a completed seller statement that discloses the property's condition. RCW 64.06.020; Renfro v. Kaur, 156 Wn.App. 655, 658, 235 P.3d 800, review denied, 170 Wn.2d 1006 (2010). The statement is to be provided within five days of signing the agreement, and the buyer then may rescind the agreement within three business days. RCW 64.06.030. If the seller does not provide the disclosure statement, the buyer's right to the remedy of rescission may be exercised up until closing. RCW 64.06.040(3); Almanza v. Bowen, 155 Wn.App. 16, 18, 21, 230 P.3d 177 (2010).
Leisher brought Commonwealth into the action as a third party defendant on December 11, 2008, alleging that Commonwealth was responsible for all damages arising from the failure to close and should indemnify Leisher.
Seawest successfully moved for summary judgment against Leisher on the statutory rescission claim. At Seawest's request, the court rescinded the purchase and sale agreement and ordered Leisher to return Seawest's deposits and other considerations, totaling more than $800,000. Later, the court dismissed Seawest's breach of contract claim against Leisher.
Leisher's third party claim against Commonwealth went to trial in the summer of 2010. The jury found Leisher's damages were $1,400,000 and that Commonwealth was 85 percent responsible. The jury attributed the remaining 15 percent to nonparty Wolfstone, Panchot, & Bloch, Leisher's law firm at the time of closing. Leisher moved to hold Commonwealth liable for $311,306.57 in attorney fees and costs incurred in defending Seawest's lawsuit. The court denied the motion. The final judgment in the case was entered on December 15, 2010.
Where attorney fees are sought as consequential damages, the measure of these damages is ordinarily a jury question. Jacob's Meadow Owners Ass'n v. Plateau 44 II, LLC, 139 Wn.App. 743, 751, 162 P.3d 1153 (2007). The Leisher's motion below for attorney fees states that the parties agreed the court could decide the Leisher's claim for equitable indemnity through post-trial briefing.
Seawest was awarded judgment against Leisher in the amount of $945,272.99. Leisher was awarded judgment against Commonwealth in the amount of $1,190,000.
Leisher appeals, contending the $311,306.57 he incurred in defending Seawest's suit should have been added to the judgment he obtained against Commonwealth.
As an initial matter, Commonwealth asserts that Leisher has not provided an adequate record on review. See King County Dep't of Adult & Juvenile Det. v. Parmelee, 162 Wn.App. 337, 360, 254 P.3d 927 (2011). Commonwealth has a good point. Leisher's motion below recited that it was based on previously filed pleadings, previously filed orders, the jury verdict, declarations, and the trial record. Yet we do not have all the verbatim reports of proceedings from the trial. Nevertheless, those portions of the record Leisher did provide are sufficient to demonstrate that he is not entitled to relief. We therefore address his claim on the merits.
Clerk's Papers at 762.
Attorney fees may be allowed as damages under the equitable indemnity doctrine or "ABC rule." Wells v. Aetna Ins. Co., 60 Wn.2d 880, 376 P.2d 644 (1962); Manning v. Loidhamer, 13 Wn.App. 766, 769, 538 P.3d 136, review denied, 86 Wn.2d 1001 (1975). Attorney fees are a form of consequential damages where the natural and proximate consequences of a defendant's wrongful act put the plaintiff in litigation with others and the action generating the expense is instituted by a third party not connected with the original transaction. Tradewell Group, Inc. v. Mavis, 71 Wn.App. 120, 126, 857 P.2d 1053 (1993). In other words, there are three elements to the claim: (1) a wrongful act or omission by A toward B; (2) such act or omission exposes or involves B in litigation with C; and (3) C was not connected with the initial transaction or event, viz., the wrongful act or omission of A toward B. Woodley v. Benson & McLaughlin, P.S., 79 Wn.App. 242, 246, 901 P.2d 1070 (1995), review denied, 128 Wn.2d 1021 (1996).
This is different from awarding attorney fees as part of the costs of suit. Jacob's Meadow, 139 Wn.App. at 758-60. The distinction may have been overlooked in Tradewell Group, Inc. v. Mavis, 71 Wn.App. 120, 126, 857 P.2d 1053 (1993), where the court seemed to assume the ABC rule was a basis for awarding attorney fees as costs. See Tradewell, 71 Wn.App. at 126 ("Absent a contract, statute, or recognized ground of equity, attorney fees will not be awarded as part of the costs of litigation"). However, the soundness of the analysis in Tradewell was not affected.
This court has "consistently held that a party may not recover attorney fees under the theory of equitable indemnity if, in addition to the wrongful act or omission of A, there are other reasons why B became involved in litigation with C." Tradewell, 71 Wn.App. at 128. Accord, Blueberry Place Homeowners Ass'n v. Northward Homes, Inc., 126 Wn.App. 352, 110 P.3d 1145 (2005).
As in Tradewell, Northward is not entitled to the attorneys' fees and costs it incurred in defending claims related to the defective heating system based on equitable indemnity because the homeowners sued Northward for independent and separate defective construction claims. Under Tradewell, even if it is possible to apportion attorneys' fees related to a particular claim, where there are additional reasons why the party seeking fees was sued, fees are not available under the theory of equitable indemnity.Blueberry Place, 126 Wn.App. at 361. This rule has generated the dispute in the present case. Commonwealth asserts that the trial court properly denied Leisher's motion for attorney fees because Commonwealth's own failure to deliver the deed was not the only reason Leisher became involved in litigation with Seawest.
Whether the ABC rule applies is a legal question subject to de novo review. Blueberry Place, 126 Wn.App. at 359.
According to a special jury verdict form, Commonwealth and Wolfstone were both negligent, and their negligence proximately caused damage to Leisher. The jury apportioned the liability 85 percent to Commonwealth and 15 percent to Wolfstone. The trial court ruled that the ABC rule was not met because one of the causes of Seawest's suit against Leisher was Wolfstone's failure to provide the disclosure statement, Form 17, a failure for which Commonwealth was not responsible:
Seawest's Complaint against Leisher and their successful motion for summary judgment included a claim for Leishers' failure to provide a Form 17 to Seawest, a claim which did not implicate Commonwealth. The jury also recognized the claim related to Form 17 by their allocation of a portion of the negligence that proximately caused damages to Leisher to the non-party that was responsible for failing to provide the Form 17 disclosure.
Clerk's Papers at 942-43.
Leisher argues that but for Commonwealth's failure to deliver the statutory warranty deed, Seawest would have gone through with the purchase and there would have been no litigation. The evidence he relies on is deposition testimony by Massoud M. Aatai, a principal in Seawest. Aatai admitted that on the day of closing, it did not occur to him that Leisher was obligated to provide a Form 17 and had failed to do so. He further admitted he was not aware of the consequences of failing to provide a disclosure statement. Leisher contends Aatai's admission proves as a matter of law that lack of a disclosure statement was not an actual cause of Seawest's lawsuit.
The deposition testimony is not dispositive. While evidence, it is not a finding of fact that might determine the issue of what caused Seawest's lawsuit. Seawest's complaint shows Leisher's failure to provide the disclosure form was one of the stated bases for the suit. And the jury's attribution of 15 percent of Leisher's damages to Wolfstone demonstrates that Commonwealth's negligence was not the only reason why Leisher became involved in Seawest's litigation.
Leisher contends Commonwealth's failure to deliver the deed does not need to be the sole proximate cause in order to satisfy the ABC rule. In view of Tradewell and Blueberry, we are not persuaded. In both cases, A's request for an award of attorney fees as damages against B was refused where B's conduct was not the only reason A became involved in litigation with C. Tradewell, 71 Wn.App. at 128; Blueberry, 126 Wn.App. at 361.
Leisher does not argue Tradewell or Blueberry were wrongly decided. Rather, he argues Tradewell and Blueberry do not apply because he and his wife personally did nothing wrong and were not responsible for the failure to provide the disclosure form. This argument fails for two reasons. First, it assumes fees will be awarded against B even if there was a reason for the lawsuit other than B's misconduct, so long as the other reason is not a wrongful act or omission by A. The cases do not say that. Even if the Leishers had done nothing to provoke the litigation, the fact remains that Commonwealth's negligence was not the only provocation. Second, it is not accurate to say that the Leishers were not responsible for failure to deliver the disclosure form. That statutory responsibility belongs to the seller. It is true the jury attributed that omission to Wolfstone, who was not a party, but Wolfstone was Leisher's agent.
If the Leishers had timely provided the form in 2006 when the parties signed the agreement and Seawest had not rescinded at that time, Seawest would not have had the remedy of rescission available in 2008 when the sale failed to close, and Commonwealth's failure would have been the sole reason for the litigation between Seawest and Leisher. Leisher's omission thus eliminated his opportunity to claim equitable indemnity.
Because Leisher's failure to provide the disclosure form was another reason Seawest sued Leisher, the ABC rule did not provide a basis for Leisher to recover from Commonwealth the attorney fees incurred in that litigation.
Commonwealth contends Leisher's appeal is frivolous and requests attorney fees on appeal under RAP 18.9(a). All doubts as to whether an appeal is frivolous are resolved in favor of the appellant. Kinney v. Cook, 150 Wn.App. 187, 195, 208 P.3d 1 (2009). Leisher's argument is not totally devoid of merit. The request is denied.
Affirmed.