Sardam v. Morford , 51 Wash. App. 908 ( 1988 )

Thompson, J.

Mildred Morford obtained discretionary review of a district court's denial of attorney fees in this landlord/tenant dispute. We affirm.

Ms. Morford rented an apartment from Delores F. Sardam in 1982. Both parties signed a 1-year lease that provided for payment of attorney fees by the tenant to the landlord in any action arising out of the lease. After a year, Ms. Morford remained as a month-to-month tenant. In April 1986, she notified Ms. Sardam of her intent to terminate the tenancy on the last day of that month. Ms. Mor-ford then filed a small claims action seeking return of her $250 rent deposit, damages of $250 resulting from a fall on the property, and miscellaneous costs and expenses, for a total of $983.96. On June 13, 1986, Ms. Sardam filed this action in Spokane County District Court claiming damage to the apartment and cleanup costs of $1,925.74, offset by Ms. Morford's $250 deposit. The two cases were consolidated.

Ms. Morford answered and counterclaimed, alleging defects in the premises that caused flooding in the apartment and injury to Ms. Morford, retaliatory action by Ms. Sardam, trespass, failure to return the security deposit, and breach of the covenant of quiet enjoyment and of the implied warranty of habitability. Ms. Morford sought damages for emotional distress, personal injury and property damage. After trial, the court ruled Ms. Sardam had substantially complied with RCW 59.18.280 (regarding return of the security deposit); Ms. Sardam had not trespassed on the property; and Ms. Morford had failed to prove personal injury or emotional distress, and there was insufficient evidence of property damage. However, the court also ruled Ms. Sardam had failed to demonstrate damage to the apartment other than ordinary wear and tear. As a result, the court ruled Ms. Morford was entitled to return of her damage deposit, offset by $164, an amount provided in the lease for normal cleaning expenses. The court entered a judgment for Ms. Morford in the amount of $86, together with costs of $10. The court considered, but declined to award, attorney fees to Ms. Morford, holding that the award of attorney fees is discretionary.

Ms. Morford appealed the denial of attorney fees. The Superior Court concluded that, despite the language of its ruling, the District Court had ruled that neither party prevailed. We granted discretionary review.

The sole issue is whether Ms. Morford was improperly denied attorney fees. A party may recover attorney fees only if authorized by statute, contract, or recognized ground of equity. PUD 1 v. Kottsick, 86 Wn.2d 388, 545 P.2d 1 (1976). Here, Ms. Morford contends she is entitled to fees both by RCW 59.18.280, which provides:

In any action brought by the tenant to recover the deposit, the prevailing party shall additionally be entitled to the cost of suit or arbitration including a reasonable attorney's fee.

and by RCW 4.84.330, which provides:

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.

In either case, the inquiry is whether Ms. Morford is a "prevailing party". She first argues the court must accept the factual determinations of the trial court, RALJ 9.1(b), and thus is bound by the District Court's determination that Ms. Morford was the "prevailing party". However, the "prevailing party" determination is at best a mixed question of law and fact, which is reviewed under the error of law standard. See Renton Educ. Ass'n v. Public Employment Relations Comm’n, 101 Wn.2d 435, 441, 680 P.2d 40 (1984).

Ms. Morford also argues Ms. Sardam has failed to appeal the trial court's determination, and thus may not raise the issue here. However, RAP 2.4(b) provides for review of issues not designated ,ih the notice of appeal if the trial court's ruling prejudicially affects the decision designated in the notice. Here, the trial court's determination on the "prevailing party" is clearly decisive, and review of the issue is appropriate.¹

"In Washington, the prevailing party is the one who receives judgment in that party's favor." Blair v. WSU, 108 Wn.2d 558, 571, 740 P.2d 1379 (1987); see RCW 4.84.330. Blair cited Moritzky v. Heberlein, 40 Wn. App. 181, 697 P.2d 1023 (1985), obsérving that "Washington law is clear on which party prevails when money damages are involved . . ." Blair, at 571-72.

However, there is considerable authority that, where both parties prevail on major issues, neither is entitled to attorney fees. McGary v. Westlake Investors, 99 Wn.2d 280, 661 P.2d 971 (1983); Tallman v. Durussel, 44 Wn. App. 181, 721 P.2d 985, review denied, 106 Wn.2d 1013 (1986); Rowe v. Floyd, 29 Wn. App. 532, 629 P.2d 925 (1981). Here, each party successfully defended against a major claim by the other. It would be inequitable to award substantial fees in these circumstances, particularly where the money judgment involved actuálly was simply a recognition that Ms. Morford was owed a portion of her own deposit.

We conclude the trial court did not commit error in not allowing Ms. Morford her attorney fees. The trial court's judgment is affirmed.

McInturff, C.J., concurs.

1 Ms. Sardam argues the Superior Court was correct in concluding the trial court actually ruled there was no "prevailing party". The Superior Court's conclusion is incorrect for two reasons: First, a review of the record shows the trial court found Ms. Morford to be the "prevailing party". Second, the trial court awarded costs to Ms. Morford, presumably pursuant to RCW 4.84.030, which provides for costs to the "prevailing party". "The definition of who is a 'prevailing party' for an award of costs should be the same in determining the 'prevailing party' for an award of attorney's fees." Stott v. Cervantes, 23 Wn. App. 346, 348, 595 P.2d 563 (1979).