Allstate Property And Casualty Insurance Company v. Nicholas & Angela Xavier ( 2015 )

j;,L,iC uf li.-i-j. nr
iui \i f Uii 159 Wash. 2d 527, 538, 151 P.3d
976 (2007).
2 Clerk's Papers at 1940.
No. 71536-4-1/2
The Xaviers sued Allstate, alleging breach of contract, Consumer
Protection Act violations, and bad faith. They also sued RestorX, a contractor
who is not a party to this appeal.
Before trial, Allstate made a CR 68 offer of judgment, offering to settle the
case for $60,000. The offer stated, "[The Xaviers] shall be entitled to make a
claim for reasonable attorney fees and expenses incurred after the filing of the
lawsuit, which would be in addition to the $60,000.00 as set forth herein."3 The
Xaviers accepted the offer.
The parties then litigated the amount of reasonable attorney fees and
costs. After a hearing, the court determined the amount of fees and costs. The
court entered written findings of fact and conclusions of law with its order
determining fees. The court noted that it had carefully reviewed both the billing
records and Allstate's annotations on the billing records.
The court awarded the Xaviers $184,360 in attorney fees and $12,500 in
costs.4 The Xaviers had requested $220,655 in fees and $25,074 in costs.5 But
the court reduced both of these amounts based on its careful review of the
record. The court also awarded the Xaviers $4,375 in supplemental attorney
fees for their attorneys' work preparing the fee petition.6
3lcL
4 Id at 2483.
5 Id, at 2483, 3078.
6 Id. at 2537.
No. 71536-4-1/3
Allstate appeals both the initial award of fees and costs and the
supplemental award of fees for work on the fee petition.
After filing its notice of appeal, Allstate moved to supplement the trial court
record. Allstate asked the trial court to "supplement the record with materials that
[the Xaviers'] counsel should have been prompted to present to show the
reasonableness of their billing."7 The court denied the motion.
Allstate also appeals the denial of its motion to supplement the record.
REASONABLENESS OF ATTORNEY FEES
Allstate argues that the trial court abused its discretion by awarding the
Xaviers unreasonable attorney fees. We disagree.
Parties in Washington may recover attorney fees if a statute, contract, or
recognized ground of equity authorizes the award.8 "A CR 68 offer operates as a
contract, in that the terms of the offer control the extent to which attorney fees
and costs may be awarded."9
Washington courts determine whether attorney fees are reasonable with
the lodestar method.10 Under this method, the court multiplies a reasonable
7 Id at 2546-47.
8 LK Operating, LLC v. Collection Grp.. LLC, 181 Wash. 2d 117, 123, 330
P.3d 190(2014).
9 Johnson v. Dep't of Transp.. 177 Wash. App. 684, 694, 313 P.3d 1197
(2013), review denied, 179Wn.2d 1025(2014).
10 Mahler v.Szucs, 135 Wash. 2d 398, 433, 957 P.2d 632, 966 P.2d 305
(1998).
No. 71536-4-1/4
number of hours by a reasonable hourly rate to determine the lodestar.11 The
court should reduce the lodestar for "unsuccessful claims, duplicated or wasted
effort, or otherwise unproductive time."12 Reasonable fees include hours from
claims arising from a "'common core of facts and related legal theories.'"13
"In assessing the reasonableness of a fee request, a 'vital' consideration is
'the size of the amount in dispute in relation to the fees requested.'"14 But "the
court 'will not overturn a large attorney fee award in civil litigation merely because
the amount at stake in the case is small.'"15
"Courts must take an active role in assessing the reasonableness of fee
awards, rather than treating cost decisions as a litigation afterthought. Courts
should not simply accept unquestioningly fee affidavits from counsel."16 When
determining an award of attorney fees, the court must enter findings of fact and
11 Berrvman v. Metcalf, 177 Wash. App. 644, 660, 312 P.3d 745 (2013),
review denied, 179 Wash. 2d 1026 (2014).
12 Chuong Van Pham, 159 Wash. 2d at 538.
13 Id (quoting Martinez v. City of Tacoma, 81 Wash. App. 228, 242-43, 914
P.2d86(1996)).
14 Berrvman, 177 Wash. App. at 660 (quoting Scott Fetzer Co. v. Weeks.
122 Wash. 2d 141, 150, 859 P.2d 1210 (1993)).
15 jd (quoting Mahler, 135 Wash. 2d at 433).
16 Mahler, 135 Wash. 2d at 434-35 (emphasis omitted).
No. 71536-4-1/5
conclusion of law.17 These "findings must show how the court resolved disputed
issues of fact and the conclusions must explain the court's analysis."18
The party seeking the fees bears the burden of proving that the fees are
reasonable.19
Appellate courts review a court's determination about the reasonableness
of fees for abuse of discretion.20 The trial court abuses its discretion if it bases its
award "on untenable grounds or for untenable reasons."21
Here, the primary question is whether the trial court abused its discretion
when it determined the amount of reasonable fees. Because the trial court
actively assessed the fee award and followed applicable case law, it did not
abuse its discretion.
The court took "an active role in assessing the reasonableness of fee
awards."22 It "carefully" reviewed the billing records. It also reviewed Allstate's
detailed annotations on the records, which noted all of the alleged issues with the
requested fees. At the hearing, the court also mentioned reviewing the expert
witness declaration Allstate submitted.
17 Berrvman, 177 Wash. App. at 657-58.
18 id at 658.
19 Mahler, 135 Wash. 2d at 433-34.
20 Chuong Van Pham, 159 Wash. 2d at 538.
21 [d
22 Mahler, 135 Wash. 2d at 434-35.
No. 71536-4-1/6
The court also awarded the Xaviers substantially less in fees and costs
than they requested. The court considered each of Allstate's objections,
reviewed the records, and reduced the lodestar amount accordingly. For
example, Allstate claimed that the fees included hours spent on work that was
not related to the litigation. After "a specific review of the items," the court found
that some, but not all, of the challenged hours did not relate to the litigation. The
court then reduced the fee award accordingly.
The court similarly reduced the fee award based on Allstate's other
objections. In total, the court reduced the fee award by $36,295 in attorney fees
and by $12,574 in costs. Thus, the court did not unquestioningly accept the
Xaviers' fee determinations, as Allstate suggests.
In sum, the court's written order shows that the court carefully and
critically reviewed the billing records in this case. It also reduced the lodestar
amount accordingly. Thus, the court did not abuse its discretion in determining
the amount of reasonable fees in this case.
Allstate first argues that the court abused its discretion by awarding the
Xaviers attorney fees for all of their claims against Allstate. Specifically, Allstate
argues that the court should have limited the fees to the Xaviers' claim under the
Consumer Protection Act (CPA), which provides for fee awards. The chief
problem with this argument is that the offer of judgment that Allstate prepared
does not limit the recovery of fees to the CPA-based claims. Had Allstate sought
to so limit the fee award, it should have drafted its offer accordingly. But it did not
do so.
No. 71536-4-1/7
Here, the terms of the offer determine whether the Xaviers are entitled to
fees. The offer plainly states, "[The Xaviers] shall be entitled to make a claim for
reasonable attorney fees and expenses incurred after the filing of the lawsuit,
which would be in addition to the $60,000.00 as set forth herein."23 The court
properly relied on this language to award fees, noting that the offer "did not in any
way limit [the Xavier's] attorney fees to the CPA claim."24
Allstate next argues that "[t]here is no basis for a finding that this standard
language expanded [the Xaviers'] rights to fees beyond that which they would
have had if a judgment had been entered."25 But that is exactly what the
language, "standard" or not, does. The terms of the offer do not restrict the fees
to only the CPA claim. Instead, it includes all reasonable fees incurred "after the
filing of the lawsuit."26
Allstate also argues several different reasons why the court abused its
discretion by miscalculating the amount of fees. None is meritorious.
The trial court addressed many of Allstate's arguments below and reduced
the lodestar amount based on them after reviewing the record. But the court did
not reduce the award by the full amount that Allstate requested. Thus, many of
23 Clerk's Papers at 1940 (emphasis added).
24 Id at 2480-81.
25BriefofAppellantat31.
26 Clerk's Papers at 1940.
No. 71536-4-1/8
Allstate's arguments ask this court to reweigh the evidence and conclude that a
different amount of fees is reasonable. We decline to do so.
Allstate argues that the court improperly awarded fees for "interoffice
communication."27 At the hearing on the fee award, the Xaviers' attorneys noted
that they took a "team" approach to litigation, which necessarily requires
communication.28 Allstate claims that this court rejected fee awards for "team
approach" litigation in Berrvman v. Metcalf.29 But that case rejects overstaffing
that results in duplicated efforts.30 It does not categorically reject attorneys
working as a team.
Importantly, the trial court addressed this issue in its order. It noted that it
"reviewed each of the entries annotated by [Allstate] as inappropriate interoffice
meeting and instruction."31 It found that some of these billings were unnecessary
while others were proper. Thus, it reduced the fee award for these hours from
$19,290 to $8,175. Accordingly, Allstate's arguments are not persuasive.
Allstate also argues that the trial court abused its discretion by awarding
fees for block billed entries—entries that describe more than one activity. But
Allstate does not provide any Washington authority that prohibits such billing.
27 Brief of Appellant at 33-34.
28 Report of Proceedings (Jan. 22, 2014) at 21-22.
29177 Wash. App. 644, 312 P.3d 745 (2013), review denied, 179 Wash. 2d
1026(2014).
30 Id at 662.
31 Clerk's Papers at 2482.
8
No. 71536-4-1/9
In any event, the trial court addressed block billing. It "reviewed each of
the [229] claimed block billing entries." It then reduced the lodestar by $1,500.
Additionally, Allstate's main objection to the block billed entries is that they
allegedly include both billable and non-billable activities. Here, the trial court had
already addressed Allstate's claims about non-billable activities and reduced the
lodestar accordingly.
Allstate argues that the trial court did not express its reasoning for
reducing the lodestar by less than the full amount of block billed entries. The
court's findings and conclusions should "show how the court resolved disputed
issues of fact and . . . explain the court's analysis."32
While the court could have provided more explanation in its order, there is
no requirement for it to have done more in this case. Given the court's careful
review of the record, and the fact that the block billing issue overlapped with
other issues Allstate identified, Allstate fails to show an abuse of discretion for
the reasons already discussed.
Allstate argues that the court abused its discretion by awarding fees for
"billing with inadequate description."33 Allstate argues that the court "wholly failed
to address this category of questionable billing."34
32 Berrvman, 177 Wash. App. at 658.
33 Brief of Appellant at 35-37.
34 Id. at 37.
No. 71536-4-1/10
The court did not directly address this argument in its written order. But it
appears to this court that Allstate did not adequately preserve this issue below.
"Inadequate description" is not a category in Allstate's color-coded annotations of
the billing records. And while Allstate's expert claimed to have identified 11.8
hours that were inadequately described, her report does not provide any specific
examples.
Additionally, Allstate's expert noted that she also "assigned some of [the
inadequately described] entries to other deduction categories." Thus, Allstate
fails to show any error in this respect by the trial court.
Allstate argues that some of the hours the Xaviers' attorneys claimed
related to claims against RestorX. The court found that billing related to RestorX
should not be included in the reasonable fee award. The court then examined
the entries that allegedly involved RestorX, and found that some of them also
related to claims against Allstate. The trial court then reduced the fee award by
$1,200. Allstate argues that the court should have reduced the lodestar by an
additional $760. But the court reviewed the record and explained why it reduced
the award by $1,200. Thus, the court did not abuse its discretion.
Allstate next argues that the fee award included hours spent on work that
was not related to the litigation, such as managing the repairs on the Xaviers'
home. As discussed earlier, after "a specific review of the items," the court found
that some, but not all, of the challenged hours did not relate to the litigation. The
court then reduced the fee award accordingly.
10
No. 71536-4-1/11
Allstate argues that the court should have specifically identified which
entries it found were related to the litigation. But the court's order is detailed
enough to allow this court "to ensure that discretion is exercised on articulable
grounds."35
Finally, Allstate argues that the award should be vacated because
Olympic Steamship Co. v. Centennial Insurance Co.36 fees are not applicable.
This argument makes no sense. The only basis for the fee award was the
contract formed by the offer of judgment that Allstate prepared and the Xaviers
accepted. The Olympic Steamship case has no bearing on this case.
COSTS
Allstate also argues that the court should have awarded the Xaviers less
in costs. We disagree.
Under RCW 4.84.010, a prevailing party may recover certain expenses.
When parties enter into an agreement about costs, the terms of that agreement
control.37 This court reviews an award of costs for abuse of discretion.38
Here, the court did not abuse its discretion when it awarded the Xaviers
$12,500 out of $25,074 requested in costs.
35 Mahler, 135 Wash. 2d at 435.
36117Wn.2d37, 811 P.2d 673 (1991).
37 Ernst Home Ctr.. Inc. v. Sato, 80 Wash. App. 473, 491, 910 P.2d 486
(1996).
38 Durland v. San Juan County, 174 Wash. App. 1, 25, 298 P.3d 757 (2012).
11
No. 71536-4-1/12
At trial, Allstate asked for the court to reduce $3,590 in costs for clerical
work to $359, and then reduce the remaining costs by 50 percent.
The court generally agreed with Allstate. It awarded the Xaviers $12,500
out of $25,074 claimed costs, roughly 50 percent. The court noted that while it
agreed that the Xaviers' costs for clerical work were too high, "[Allstate]'s
assessment of the value of that work contains no citation or support."39
Reviewing Allstate's Response in Opposition to Motion for Fees confirms this
lack of support. Accordingly, the court did not abuse its discretion by not further
reducing the costs requested.
SUPPLEMENTAL FEE AWARD
Allstate argues that the Xaviers were not entitled to receive attorney fees
for the time their attorneys spent litigating the reasonableness of the fees. We
disagree.
"The general rule is that time spent on establishing entitlement to, and
amount of, a court awarded attorney fee is compensable where the fee shifts to
the opponent under fee shifting statutes."40 There is no reason to apply a
different rule here, where a contract, rather than a statute, provides the basis for
fees.
Here, the Xaviers were entitled to an award of fees for the time they spent
litigating the amount of the fee award. Under the plain terms of the CR 68 offer,
39
Clerk's Papers at 2483.
40 Fisher Props., Inc. v. Arden-Mavfair, Inc., 115 Wash. 2d 364, 378, 798
P.2d 799 (1990).
12
No. 71536-4-1/13
the Xaviers are "entitled to make a claim for reasonable attorney fees and
expenses incurred after the filing of the lawsuit."4^ The fees incurred while
determining the initial fee award were after the filing of the lawsuit. Thus, they
fall within the plain language of the offer that Allstate prepared and the Xaviers
accepted.
Allstate argues that it disputed only the amount of fees, not whether the
Xaviers were entitled to fees. Thus, it argues that the Xaviers should not receive
attorney fees for litigating the fee award. But "[t]he general rule is that time spent
on establishing entitlement to, and amount of, a court awarded attorney fee is
compensable."42
Additionally, despite the general rule, the court reduced the amount of
fees on that basis. It ruled: "Given that [Allstate] did not object to fees, but only
disputed reasonableness of fees, & given that [Allstate] only 'lost' the motion by
approximately 29%, the court will limit additional fees by approximately that
percentage."43
Allstate also argues that the amount of supplemental fees was
unreasonable. The Xaviers requested $20,840.00 in attorney fees for briefing
and arguing the initial fee petition. But the court awarded the Xaviers only
$4,375 in supplemental fees and articulated its reasons for doing so.
41 Clerk's Papers at 1940 (emphasis added).
42 Fisher Props., 115 Wash. 2d at 378 (emphasis added).
43 Clerk's Papers at 2524.
13
No. 71536-4-1/14
When reviewing the amount of a fee award, this court "ensure[s] that
discretion is exercised on articulable grounds."44 Because the trial court
articulated its reasons for determining the amount of the award, its decision was
not an abuse of discretion.
Allstate asks this court to further reduce the supplemental award on
several bases. Allstate objects on essentially the same grounds that it objected
to the initial fee award, including block billing and unrelated or duplicative work.
This argument is unpersuasive. As discussed above, the Xaviers are
entitled to a supplemental award of attorney fees. Thus, the only remaining
question is whether the court abused its discretion by determining that $4,375
was a reasonable amount of fees. Based on allegedly improper billing, Allstate
asks this court to reduce the fee award by removing 19.4 hours of attorney work
and 19.5 hours of paralegal work.
The total value of the amount of hours Allstate asks this court to subtract
from the award is $9,865. The supplemental award is only $4,375. Thus,
Allstate essentially argues that a reasonable attorney fee for the work preparing
the fee petition is $0. Accordingly, this argument is untenable. We reject it.
MOTION TO SUPPLEMENT THE RECORD
Allstate argues that the trial court abused its discretion when it denied its
motion to supplement the record pursuant to CR 60(a). We hold that the trial
court did not abuse its discretion in denying the motion.
44 224 Westlake. LLC v. Engstrom Props., LLC, 169 Wash. App. 700, 741,
281 P.3d 693 (2012).
14
No. 71536-4-1/15
CR 60(a) allows parties to fix clerical mistakes:
Clerical mistakes in judgments, orders or other parts of the record
and errors therein arising from oversight or omission may be
corrected by the court at any time of its own initiative or on the
motion of any party and after such notice, if any, as the court
orders. Such mistakes may be so corrected before review is
accepted by an appellate court, and thereafter may be corrected
pursuant to RAP 7.2(e).
Appellate courts review decisions on CR 60(a) motions for abuse of
discretion.45
Here, Allstate did not seek to remedy a clerical mistake. Rather, Allstate
sought to supplement the record with evidence that was not before the trial court
when it made its ruling. Allstate asked the trial court to "supplement the record
with materials that [the Xaviers'] counsel should have been prompted to present
to show the reasonableness of their billing."46 The court determined that neither
party had previously submitted these documents to the court and denied the
motion. That ruling was correct.
Allstate argues that using CR 60(a) to add documents to the record was
appropriate because the trial court erroneously shifted the burden of proofto
Allstate. Allstate argues that the court placed the burden on it to disprove the
reasonableness of the fees, rather than on the Xaviers to prove that the fees
were reasonable. Allstate argues that if the court had not shifted the burden, the
45 See Presidential Estates Apt. Assoc, v. Barrett, 129 Wash. 2d 320, 325-26,
917P.2d 100(1996).
46 Clerk's Papers at 2546-47.
15
No. 71536-4-1/16
Xaviers would have added these documents to the record. None of these points
is persuasive.
The trial court's order indicates that it appropriately placed the burden on
the Xaviers. The simple fact of the matter is that this scenario does not show any
clerical mistake, and Allstate must show such a mistake to use this rule. There is
simply no such showing here.
ATTORNEY FEES ON APPEAL
The Xaviers argue that this court should award them attorney fees on
appeal. We agree.
"'A contractual provision for an award of attorney's fees at trial supports an
award of attorney's fees on appeal under RAP 18.1 .'"47
Because the Xaviers received an award of attorney fees at trial, they are
also entitled to an award on appeal. Additionally, the fees on appeal are fees
"incurred after the filing of the lawsuit." Thus, they fall within the offer's plain
terms. Accordingly, we grant the Xaviers' request for attorney fees on appeal,
subject to their compliance with the requirements of RAP 18.1.
MOTION FOR SANCTIONS
The Xaviers argue that this court should sanction Allstate's counsel for
violating RPC 3.3. We decline to address this argument.
The state bar association's disciplinary process, not this court, should
initially handle alleged violations of the Rules of Professional Conduct. The
47 Thompson v. Lennox, 151 Wash. App. 479, 491, 212 P.3d 597 (2009)
(quoting W. Coast Stationary Eng'rs Welfare Fund v. City of Kennewick, 39 Wn.
App. 466, 477, 694 P.2d 1101(1985)).
16
No. 71536-4-1/17
proper "remedy for a claimed violation of the RPC is a request for discipline by
the bar association."48 Thus, we do not address this argument any further.
We affirm the trial court's judgment and its order denying Allstate's motion
to supplement the record. We grant the Xaviers' request for attorney fees on
appeal, subject to their compliance with RAP 18.1.
<^m-T-
WE CONCUR:
>,oK*v f ~J >gft A wAflflflk,
48 State v. Lord. 117 Wash. 2d 829, 887, 822 P.2d 177 (1991).
17