Sandra J. Archdale, App/cross-resp. v. Sharyl L. O'danne, Resp/cross-app. ( 2015 )

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IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
SANDRA J. ARCHDALE,
No. 71905-0-1
Appellant,
DIVISION ONE
v.
SHARYL L. O'DANNE, UNPUBLISHED OPINION
Respondent. FILED: July 6. 2015
Spearman, C.J. — This action arises from a dispute over the ownership of
a condominium. Appellant Sandra Archdale appeals the trial court's decision
denying her request for quiet title and imposing a constructive trust for the benefit
of both appellant and respondent, Sharyl O'Danne. Archdale also appeals the
trial court's award of attorney fees and costs to O'Danne. Finding no error, we
affirm.
FACTS
Sandra Archdale and Sharyl O'Danne are sisters. In 2004, Archdale told
O'Danne that her marriage was failing and she desired to move out of her marital
home. But, according to Archdale, no lender would finance her purchase of a
new home in her individual capacity without a quitclaim deed signed by her
husband. Because she did not want to involve her husband in the purchase of a
property, Archdale asked O'Danne to obtain financing for a condo where she
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could live during the separation from her husband and for which she could
eventually take title in her own name. Archdale agreed that she would be solely
responsible for all costs associated with the purchase of the condo, including the
down payment, closing costs, mortgage and other related payments. O'Danne
agreed to the request and in August 2004, closed sale on a condo of her sister's
choosing. Archdale moved into the condo in October 2004 and continued to live
there for the next six years, even though she and her husband eventually
reconciled.
Beginning in 2005, Archdale made several requests that O'Danne convey
legal title to the condo, which O'Danne refused without a simultaneous pay off or
assumption of the underlying mortgage. On June 4, 2010, Archdale initiated this
action seeking quiet title to the condo or, in the alternative, a constructive trust
requiring O'Danne to immediately convey legal title to her via quitclaim deed,
without any further conditions. Archdale also sought money damages, attorney
fees and costs. The case proceeded to trial on October 10, 2013.
At trial, it was undisputed that O'Danne was obliged to transfer title to the
condo to Archdale. At issue, was whether, under the agreement, O'Danne was
obligated to immediately transfer title to the condo to Archdale regardless of the
status of the underlying mortgage, as Archdale contended, or whether transfer of
the title was contingent on Archdale assuming or paying off the mortgage, as
O'Danne asserted.
In her testimony, Archdale conceded that she had assured O'Danne that
she would pay offthe condo with funds from their mother's estate, which was in
No. 71905-0-1/3
probate at the time of the sisters' agreement in 2004. She admitted sending an
email regarding the condo to O'Danne on March 26, 2004, in which she promised
to "pay it off with the inheritance." Verbatim Report of Proceedings (11/13/13)
(VRP) at 144; Exhibit (Ex.) 29. Archdale also acknowledged that her former
lawyer had advised her in a letter dated December 3, 2008,1 that no court would
order O'Danne to transfer title until Archdale assumed or paid off the existing
mortgage. In the letter, a copy of which was admitted into evidence, Archdale's
attorney also noted that O'Danne was holding title for Archdale's benefit, pending
payment or satisfaction of the underlying mortgage.
O'Danne testified that there was no specific agreement as to how
long she would hold title. She further testified, however, that based on
Archdale's March 26, 2004 promise to "pay it off with her inheritance," she
understood that she would hold title until the their mother's estate was
probated, at which point Archdale would pay off the mortgage on the
condo and O'Danne would convey title. O'Danne's deposition testimony,
which was consistent with her testimony at trial, was published at trial at
Archdale's request.
The trial court found that Archdale "promised to pay off the underlying
mortgage with inheritance funds from their mother's pending estate" but
"[inexplicably, when Archdale received the inheritance funds, she refused to pay
off the mortgage. . . ." CP at 5. The court also found that O'Danne "agreed to
1At trial, defense counsel apparently misspoke and stated the letter was dated
November 3, 2008. Review of the record reveals that this letter from Archdale's attorney was
dated December 3, 2008.
No. 71905-0-1/4
transfer the title to [Archdale] once the mortgage was paid off' and, "[f]or her
part[,]...O'Danne has repeatedly stated that she does not intend to retain the
subject property and will readily quitclaim it to [O'Danne] as soon as she is no
longer liable for the underlying mortgage." ]d. The court also found:
Archdale has paid the mortgage and property taxes on the unit for
the past nine years, except for two months during 2012, where she
withheld payment causing the bank to begin foreclosure
proceedings against her sister. . .. [O'Danne] was forced to pay a
total of $1,493.84 to stop the foreclosure proceedings. The
payment covered the cost of the two months of mortgage payments
and late fees. Archdale admits she has not repaid O'Danne for
making those payments.
CP at 5. Based on these findings, the trial court concluded that there was no
basis to quiet title in Archdale, but the action was not frivolous and there were
equitable grounds for imposing a constructive trust that benefitted both parties.
The trust terms set forth by the court required Archdale and O'Danne to
execute a Purchase and Sale Agreement, whereby O'Danne would transfer the
condo to Archdale via quitclaim deed, subject to all senior liens and
encumbrances, if she received full payment and/or notice of satisfaction of the
total outstanding mortgage on or before 5:00 p.m. on May 14, 2014. In the event
that Archdale failed to meet this deadline, the trial court granted O'Danne an
immediate right of reentry in the condo for purposes of placing it on the open
market for sale and ordered her to list the property for sale within thirty days.
Finally, the trust provided for the distribution of the proceeds of a sale to a third
party. The court ordered that proceeds would be applied first to the outstanding
mortgage balance and any remaining taxes, fees, assessments, costs and
commissions. Surplus proceeds would then be used to reimburse O'Danne for
No. 71905-0-1/5
$1,493.84 in mortgage payments and late fees she had paid on Archdale's
behalf. Any remaining funds would be allocated at 75 percent to Archdale and 25
percent to O'Danne, with O'Danne's share intended as compensation for the use
of her credit by Archdale.
On November 20, 2013, the court amended its decision and order, striking
its initial conclusion that the lawsuit was not frivolous or brought in violation of CR
11 and reserving ruling on the issue until after consideration of a timely motion
for such determination by O'Danne. Subsequently, O'Danne brought a motion for
attorney fees and costs pursuant to RCW 4.84.185, which permits such an award
to a party who prevails in an action that has been frivolously brought.
On April 4, 2014, the trial court entered findings that O'Danne was the
prevailing party in the lawsuit and that "Archdale had no need to resort to
litigation or to call upon the equitable powers of the Court because O'Danne was
willing without such a lawsuit to convey the condominium to Archdale upon a
simultaneous payoff by Archdale of the existing mortgage balance, but Archdale
needlessly declined to do so." CP at 16. The court concluded that the lawsuit was
frivolous within the meaning of RCW 4.84.185 and that O'Danne was entitled to
attorney fees and costs totaling $55,388.91.
On April 18, 2014, the trial court entered corrected findings, nunc pro tunc
to April 4, 2014, which added a judgment summary to the court's initial findings.
On May 5, 2014, the trial court entered a judgment confirming its April 4, 2014
decision and order, as amended, nunc pro tunc to April 4, 2014.
No. 71905-0-1/6
Archdale appeals the decision and order, as well as the award of attorney
fees and costs to O'Danne.
DISCUSSION
I.
Claims for quite title and imposition of a constructive trust are equitable in
nature. Durrah v. Wright. 115 Wn. App. 634, 649, 63 P.3d 184 (2003); In re
Marriage of Lutz. 74 Wn. App. 356, 366, 873 P.2d 566 (1994). Whether to grant
equitable relief is a question of law we review de novo. Niemann v. Vaughn
Comm'tv Church. 154 Wn.2d 365, 374, 113 P.3d 463 (2005). We review the
fashioning of an equitable remedy by the trial court for abuse of discretion.
Sorenson v. Pveatt. 158 Wn.2d 523, 531, 146 P.3d 1172 (2006). Here because it
is undisputed that the trial court's grant of equitable relief was proper and
Archdale challenges only the nature of the relief granted by the trial court, we
review for abuse of discretion. A trial court abuses its discretion when its decision
is manifestly unreasonable or based on untenable grounds or reasons. State v.
Powell, 126 Wn.2d 244, 258, 893 P.2d 615 (1995). To the extent discretion is
exercised in reliance upon factual findings, the findings must be supported by
substantial evidence. In re Lutz, 74 Wn. App. at 370. "Substantial evidence is
'evidence of a sufficient quantity to persuade a fair-minded rational person of the
truth of the declared premise. . . . Even though there may be conflicting evidence
on the record, [a reviewing court] will not disturb findings based on substantial
evidence." \± (quoting Henervv. Robinson, 67 Wn. App. 277, 289, 834 P.2d
1091 (1992)).
No. 71905-0-1/7
Archdale contends the trial court abused this discretion when it refused to
quiet title in her and, instead, established a constructive trust. We disagree.
The trial court found, on undisputed evidence, that while O'Danne was the
"legal owner," of the condo, Archdale had an "equitable interest" therein. The
court also found, in paragraph 3 of its decision and order, that:
The Plaintiff promised to pay off the underlying mortgage with
inheritance funds from their mother's pending estate. The
Defendant agreed to transfer title to the Plaintiff once the mortgage
was paid off. Inexplicably, when Archdale received the inheritance
funds, she refused to pay off the mortgage on the subject
property...
CP at 5. Although Archdale disputes this finding, it is supported by substantial
evidence, including testimony from both parties and written communications
between the parties and their attorneys regarding the condo dispute.
The trial court's conclusion that "it was reasonable for the Defendant to
refuse to transfer title to the subject property to Archdale, given Archdale's lack of
performance in paying off the underlying mortgage as soon as she received her
inheritance, as promised," flows logically from its findings in paragraph 3.
Likewise, the trial court's conclusion that "title should not be quieted in the
Plaintiff' flows from these findings because they establish that Archdale did not
have superior title to her sister. CP at 4; see also Finch v. Matthews, 74 Wn.2d
161, 166, 443 P.2d 833 (1968) (explaining that a plaintiff seeking quiet title bears
the burden of establishing superior title to his or her opponents). The trial court's
refusal to quiet title in Archdale was not an abuse of discretion.
We also find no abuse of discretion with respect to the constructive
trust terms imposed by the trial court. Sitting in equity, a court may fashion
No. 71905-0-1/8
broad remedies to do substantial justice to the parties and put an end to
litigation. Hough v. Stockbridge. 150 Wn.2d 234, 76 P.3d 216 (2003). In
this case, the terms of the constructive trust accomplished both ends.
The trial court imposed three material trust terms:
1. If Archdale tendered full payment and/or notice of satisfaction of the
total outstanding mortgage amount within six months of the decision
and order, O'Danne was required to transfer legal title to the condo
to Archdale via quitclaim deed.
2. In the event that Archdale failed to tender full payment and/or notice
of satisfaction of the total outstanding mortgage amount within six
months of the decision and order, O'Danne's duty to transfer title
would cease, she would gain immediate right of re-entry in the
condo for the purpose of placing it on the open market, and she
would have 30 days to place the condo up for sale.
3. Upon sale of the condo to a third party, the proceeds would be
applied first to the outstanding mortgage balance and related costs.
Ifthe sale yielded any surplus proceeds, the first $1,493.84 would
go to O'Danne "in repayment of late mortgage payments and late
fees owed by [Archdale]." CP at 6. After that, 25 percent of the
remaining balance would go to O'Danne "as compensation for the
use of her credit by [Archdale]" for nine years. Id. The remaining
proceeds would go to Archdale.
These terms protected Archdale's equitable interest in the condo by formalizing
O'Danne's duty to convey title to Archdale via quitclaim deed. And, although
Archdale expressly objected to terms setting a time limit for Archdale's
requirement to satisfy the underlying mortgage, authorizing O'Danne to sell the
condo while Archdale continued making timely mortgage payments, or
apportioning any proceeds of a third party sale to O'Danne, such terms were
necessary to protect O'Danne's pecuniary interest as the holder of legal title to
the condo. Moreover, by clarifying the parties' respective duties and establishing
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No. 71905-0-1/9
enforceable time limits for the parties' fulfillment of these duties, the trust terms
ensured the parties would go their separate ways without endless litigation.
We conclude that the equitable remedy fashioned by the trial court was a
reasonable exercise of its discretion.
II.
Next, Archdale challenges the trial court's award of attorney fees and
costs to O'Danne pursuant to RCW 4.84.185. We review an award of attorney
fees under RCW 4.84.185 for abuse of discretion. Alexander v. Sanford, 181 Wn.
App. 135, 184, 325 P.3d 341, review denied, _ Wn.2d _, 339 P.3d 634 (2014).
Because the trial court has weighed the evidence on this issue, our review is,
once again, limited to determining whether the trial court's findings of fact are
supported by substantial evidence and, if so, whether the findings support the
conclusions of law and the judgment. Sac Downtown Ltd. Partnership v. Kahn,
123 Wn.2d 197, 202, 867 P.2d 605 (1994).
RCW 4.84.185 provides in relevant part:
In any civil action, the court having jurisdiction may, upon written
findings by the judge that the action, counterclaim, cross-claim,
third party claim, or defense was frivolous and advanced without
reasonable cause, require the nonprevailing party to pay the
prevailing party the reasonable expenses, including fees of
attorneys, incurred in opposing such action, counterclaim, cross-
claim, third party claim, or defense. This determination shall be
made upon motion by the prevailing party after a voluntary or
involuntary order of dismissal, order on summary judgment, final
judgment after trial, or other final order terminating the action as to
the prevailing party. The judge shall consider all evidence
presented at the time of the motion to determine whether the
position of the nonprevailing party was frivolous and advanced
without reasonable cause. In no event may such motion be filed
more than thirty days after entry of the order.
No. 71905-0-1/10
The statute was adopted "to discourage frivolous lawsuits and to compensate the
targets of frivolous lawsuits for their fees and costs incurred in defending
meritless cases." Timson v. Pierce County Fire Dist. No. 15, 136 Wn. App. 376,
386, 149 P.3d 427 (2006) (citing Kearney v. Kearney, 95 Wn. App. 405, 416, 974
P.2d 872 (1999)). In order for the court to award attorney fees under the statute,
three elements must be present: (1) each of the claims or defenses asserted by
the opponent of fees must be frivolous, i.e., without basis in fact or law; (2) the
claims or defenses must have been advanced without reasonable cause; and (3)
the proponent of fees must have prevailed at trial. Alexander, 181 Wn. App. at
184. Each is present in this case.
The Lawsuit Was Frivolous in its Entirety
In support of the fee award, the trial court found, based on the substantial
evidence discussed previously, that Archdale failed to pay off the mortgage on
the condo with her inheritance, as promised, and that O'Danne was willing,
without a court order, to transfer title upon Archdale's assumption or satisfaction
of the underlying mortgage. CP at 13. These findings establish that Archdale had
no factual or legal basis for her claim, as stated in her complaint, of an immediate
and unconditional right to legal title to the condo. The court's conclusion that
Archdale's claims for equitable relief "were frivolous within the meaning of RCW
4.84.185 in that they were advanced without a rational basis in law or fact" flows
logically from these findings. ]d_,
The trial court made no specific findings to justify its conclusion that
Archdale's claim for damages was also frivolous. Nevertheless, review of the
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No. 71905-0-1/11
record reveals that the conclusion is supported by substantial evidence, as
Archdale offered no evidence in support of the claim for damages at trial.
Archdale's Claims Were Advanced Without Reasonable Cause
Because each of Archdale's claims was frivolous, our inquiry turns to
whether they were advanced without reasonable cause. Under Archdale's
interpretation of the parties' verbal agreement, she was legally entitled title to the
condo, subject to encumbrances of record but without further conditions.
Generally, a party may initiate a lawsuit to vindicate reasonably perceived legal
rights without fear of adverse consequences under RCW 4.84.185. See, State ex
rel. Quick-Ruben v. Verharen, 136 Wn.2d 888, 906-07, 969 P.2d 64 (1998)
("litigants should not fear adverse consequences for reasonably seeking to
judicially vindicate their perceived legal entitlements. . . . Just because underlying
claims are weak is not to say they are frivolous."). However, in this case,
Archdale's repeated concessions throughout the trial court proceedings
undermined her claim of an immediately enforceable right2 and none of the non-
testamentary evidence supported it.3 Furthermore, as noted previously, it was
never disputed that O'Danne would transfer legal title to Archdale upon
Archdale's satisfaction or assumption of the underlying mortgage. Accordingly,
2 In her complaint, Archdale asserted superior title to O'Danne and claimed that, pursuant
to RCW 7.28.120, title to the condo should be quieted in her, subject to encumbrances of record
but without further conditions. However, at several instances throughout trial and on appeal,
Archdale has acknowledged that her right to legal title to the condo was contingenton her
assumption or satisfaction of the underlying mortgage.
3This evidence included, among other items, an emailfrom Archdale in which she stated
she would "pay off with the inheritance" (Exhibit (Ex.) 29) and an email from Archdale's former
attorney to Archdale, dated December 3, 2008, which acknowledged that O'Danne was holding
title for Archdale's benefit, pending payment or satisfaction of the underlying mortgage. Ex. 32.
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No. 71905-0-1/12
we conclude that Archdale did not reasonably seek to vindicate a perceived legal
entitlement.
O'Danne Was the Prevailing Party at Trial
Archdale also asserts that O'Danne did not qualify as a "prevailing party"
under RCW 4.84.185. This argument lacks merit. Our Supreme Court has
explained that:
In general, a prevailing party is one who receives an affirmative
judgment in his or her favor. If neither wholly prevails, then the
determination of who is a prevailing party depends upon who is the
substantially prevailing party, and this question depends upon the
extent of the relief afforded the parties.
Riss v. Angel, 131 Wn.2d 612, 633-34, 934 P.2d 669 (1997) (citations omitted).
Applying this standard to the facts of the case, it is clear that O'Danne is the
prevailing party.
The trial court's decision and order was a judgment granting O'Danne the
right to sell the condo to a third party should Archdale fail to timely satisfy the
underlying mortgage, the right to reimbursement of $1,493.84 in late mortgage
payments and late fees owed by Archdale upon a third party sale, and the right to
25 percent of any surplus sale proceeds. Thus, contrary to Archdale's claims,
O'Danne received affirmative judgment in her favor.
And, although the constructive trust also benefitted Archdale, the relief
afforded by the trial court was entirely different from the relief requested in her
complaint, i.e., that title to the condo be quieted immediately in her name,
regardless of a simultaneous satisfaction of the mortgage. The relief granted was
also substantially different from that requested by Archdale at trial, i.e., that title
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No. 71905-0-1/13
to the condo be transferred to Archdale via quitclaim deed upon payment or
satisfaction of the underlying mortgage, with no further contingencies. Thus, to
the extent Archdale contends that she was the substantially prevailing party, she
is mistaken.
Conclusion
Because O'Danne was the prevailing party in this frivolous lawsuit, she
was entitled to an award of attorney fees and costs pursuant to RCW 4.84.185.
The trial court's entry of such an award was not error.4
III.
O'Danne requests an award of attorney fees and costs on appeal, citing
RAP 18.1 and RCW 4.84.185 as the basis for such an award. Because she was
entitled to an award of attorney fees and costs in the trial court pursuant to RCW
4.84.185, we conclude that, as the prevailing party on appeal, she is entitled to
recover reasonable attorney fees and costs, subject to compliance with RAP
18.1(d). See Xieng v. Peoples Nat. Bank of Washington, 63 Wn. App. 572, 587,
821 P.2d 520 (1991) (explaining the general principle in Washington that those
entitled to an award of attorney fees below are also entitled to attorney fees on
appeal).5
4 In a cross-appeal, O'Danne assigns error to the trial court's denial of her motion to
strike portions of Archdale's affidavit in opposition to O'Danne's motion for attorney fees and
costs. Because the trial court granted O'Danne's substantive motion for attorney fees and costs in
spite ofthe offending affidavit and because this award is affirmed on appeal, any error by the trial
court was harmless. See Diaz v. State, 175 Wn.2d 457, 472, 285 P.3d 873 (2012) (explaining that
an evidentiary ruling is not subjectto reversal on appeal unless the error was prejudicial, i.e., it
affected the outcome of trial).
5 Archdale also contends that she is entitled to an award of attorney fees based on (1)
RCW 4.84.330 and the attorney fees and costs provision of the deed of trust; (2) RAP 18.1 and
RCW 4.84.185; and (3) the court's equity powers. In light of our disposition of her claims on
appeal the request is denied.
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No. 71905-0-1/14
Affirm.
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WE CONCUR:
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