Nw Cascade Inc., V William And Suzanne Rehe ( 2015 )

FILED
COURT OF APPEALS
DIVISION r1
2D 15 NNA Y 19
MI 014
STA
IN THE COURT OF APPEALS OF THE STATE OF WASHI SH1NG10N
BY
DIVISION II
NORTHWEST CASCADE, INC., a No. 45312 -6 -II
Washington corporation,
Respondents /Cross -Appellants,
v.
UNIQUE CONSTRUCTION, INC., a
Washington corporation; TEMPORAL
FUNDING, LLC, a Washington Limited
Liability Company; the WILLIAM K. and
MARION L. LLLP; and SAHARA
ENTERPRISES, LLC,
Defendants,
WILLIAM REHE and SUZANNE REHE, PUBLISHED OPINION
Appellants /Cross -Respondents.
WoRSwIcK, J. — Northwest Cascade, Inc. (NWC) secured a judgment against Unique
Construction, Inc. ( Unique), a corporation owned by William and Suzanne Rehe. In an earlier
appeal, Division One of this court held that Unique' s corporate veil could be pierced, paving the
way for NWC to collect its judgment against the Rehes. The Rehes filed a homestead
declaration on Unique' s" 89th Street Property," which the trial court quashed.
The Rehes now appeal the trial court' s order quashing the homestead declaration, arguing
that ( 1) the trial court lacked personal jurisdiction over them, ( 2) the trial court violated RAP 7. 2
by considering NWC' s motion to quash while the appeal was pending in Division One of this
court, ( 3) a claimant is an owner of a property under the homestead statutes if they possess and
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use that property, even if they have no legal or equitable interest in it, and (4) they have a legal or
equitable interest in the 89th Street Property because either their contributions and residence at
the property give them a legal or equitable interest or piercing the corporate veil gave them
Unique' s interest in the property.
NWC cross -appeals the trial court' s denial of its request for attorney fees and costs
incurred to litigate its motion to quash, arguing that it is entitled to attorney fees and costs as the
prevailing party because litigating its motion to quash was a " collection proceeding" that fell
within the attorney fees and costs provision of NWC' s contract with Unique.
We affirm the trial court' s order quashing the homestead declaration, holding that ( 1) the
Rehes waived personal jurisdiction by failing to timely raise it, (2) the trial court had authority
under RAP 7. 2 to consider NWC' s motion to quash, ( 3) a claimant must have either a legal or an
equitable interest in a property to be an owner of it under the homestead statutes, ( 4) Unique held
all legal and equitable interest in the 89th Street Property, and ( 5) piercing of the corporate veil
does not allow the Rehes to claim a homestead exemption in Unique' s property. However, we
reverse the trial court' s denial of NWC' s attorney fees and costs by holding that litigating
NWC' s motion to quash falls within the contract' s attorney fees and costs provision. We remand
for a determination of NWC' s reasonable attorney fees consistent with this opinion.
FACTS
A. Background
The Rehes are Unique' s sole shareholders. William Rehe is Unique' s president. In 2004
and 2005, Unique began acquiring lots for the development of a 34 -lot residential real estate
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project in Tacoma.' On March 27, 2006, Unique entered into a contract with NWC to build the
plat' s infrastructure. The contract contained an attorney fees and costs provision that stated:
If the contract price is not paid as agreed and if collection proceedings or a suit is
started, then [ Unique] agree[ s] to pay all costs incurred
by [ NWC], including all
costs of suit and a reasonable attorneys' fee as determined by the court.
Clerk' s Papers ( CP) at 302.
In 2006, the Rehes moved into Unique' s 89th Street Property, which was a lot with a
house built by Unique. Without paying Unique rent, the Rehes continued to reside at the 89th
Street Property through this litigation except for an 18 -month period when they temporarily
moved out.
B. Unique 's Breach of Contract, NWC' s Suit, and Unique 's Transfer ofthe 89th Street
Property
Unique stopped paying NWC on the contract. On July 7, 2008, NWC sued Unique for
breach of contract.
On July 29, 2009, Unique recorded a quitclaim deed transferring the 89th Street Property
to a Nevada limited liability company ( LLC) named Black Point Management. On December
16, 2010, Black Point transferred the 89th Street Property by quitclaim deed to an LLC
controlled by a limited liability limited partnership that was formed at the Rehes' direction. The
transfers of the 89th Street Property were identified as tax exempt and no consideration was paid
for them. The transfers of the 89th Street Property left Unique insolvent.
In 2005, Unique transferred the lots to a single purpose limited liability company wholly owned
by the Rehes.
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On October 30, 2009, NWC amended its complaint to add the Rehes as defendants and to
add two additional claims: a claim seeking to pierce Unique' s corporate veil to hold the Rehes
personally liable and a claim under the Uniform Fraudulent Transfer Act2 ( UFTA) for fraudulent
conveyance of the 89th Street Property.
C. Bifurcated Trial
The breach of contract and UFTA claims were tried to a jury. The jury returned a verdict
in favor of NWC on both claims, and made a special finding that Unique transferred the 89th
Street Property with the actual intent to hinder, delay, or defraud creditors. The veil piercing
claim then went to a bench trial after which the trial court ruled that Unique' s corporate veil
could not be pierced.
The trial court entered a judgment against Unique for $216, 505. 46. The trial court also
voided the transfer of the 89th Street Property and quieted title to Unique. The trial court
awarded attorney fees and costs to NWC for the breach of contract and UFTA claims, and
awarded attorney fees to the Rehes for the veil piercing claim. The trial court dismissed the
Rehes with prejudice.
D. First Appeal
NWC appealed the trial court' s denial of the veil piercing claim and its award of attorney
fees to the Rehes. Unique cross -appealed the attorney fees and costs award. This appeal was
heard by Division One of this court. See Nw. Cascade, Inc. v. Unique Const., Inc., noted at 180
Wash. App. 1017, 2014 WL 1289586, review denied, 181 Wash. 2d 1009, 335 P.3d 941 ( 2014).
2
Chapter 19. 40 RCW.
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E Writ ofExecution on the 89th Street Property and NWC' s Motion To Quash
While the appeal was pending, the trial court entered a writ of execution against the 89th
Street Property. Prior to the 89th Street Property' s sale, the Rehes filed a homestead declaration,
claiming to have lived at the property since 2002.
NWC filed a motion to quash the Rehes' homestead declaration. The Rehes filed a
memorandum opposing NWC' s motion. After a hearing on NWC' s motion to quash, where the
Rehes presented argument, the trial court entered an order quashing the Rehes' homestead
declaration. The trial court ruled that the Rehes could not claim a homestead exemption in the
89th Street Property because they lacked a sufficient interest in that property to be owners of it
under the homestead statutes and because NWC executed against the 89th Street Property to
recover Unique' s debt ( rather than the Rehes' debt). The trial court denied NWC' s request for
attorney fees and costs for litigating its motion to quash.
The Rehes filed a motion for reconsideration, arguing for the first time that the trial court
lacked personal jurisdiction over them. The trial court denied the motion for reconsideration.
The trial court also denied NWC' s request for attorney fees and costs to defend against the
Rehes' motion for reconsideration.
F. Division One' s Reversal ofthe Trial Court' s Veil Piercing Ruling
On March 31, 2014, Division One reversed the trial court' s veil piercing ruling and held
that Unique' s corporate veil could be pierced. Nw. Cascade, Inc., 2014 WL 1289586, at * 6.
Division One remanded the issues of attorney fees and costs for the trial court' s determination
consistent with the reversal. 2014 WL 1289586, at * 6.
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The Rehes appeal the order quashing the Rehes' homestead declaration. NWC cross -
appeals the trial court' s, denial of attorney fees and costs for litigating its motion to quash.
ANALYSIS
I. PERSONAL JURISDICTION
The Rehes argue the trial court lacked personal jurisdiction over them because the trial .
court had previously dismissed them with prejudice when it entered its judgment. NWC argues
the Rehes waived their personal jurisdiction defense by failing to timely raise it. We agree with
NWC.
A party who fails to raise the personal jurisdiction defense in any entry of appearance,
pleadings, or answers waives that defense and " submits himself or herself to the jurisdiction of
the court." In re Marriage of Steele, 90 Wn. App. 992, 997, 957 P.2d 247 ( 1998); see State ex
rel. Coughlin v. Jenkins, 102 Wn. App. 60, 63, 7 P.3d 818 ( 2000). " Even informal acts, such as
written or oral statements to the plaintiff in the action can constitute an appearance." Coughlin,
102 Wash. App. at 63.
Here, NWC filed a motion to quash. The Rehes filed a memorandum in opposition to
NWC' s motion to quash and appeared at the hearing, but did not raise a personal jurisdiction
defense until its motion for reconsideration of the trial court' s order quashing the Rehes'
homestead declaration. Thus, by failing to raise the personal jurisdiction defense in their answer
and in their appearance at the hearing, the Rehes waived that defense and submitted themselves
to the trial court' s jurisdiction.
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II. VIOLATION OF RAP 7. 2
The Rehes argue the trial court violated RAP 7. 2 by ruling on NWC' s motion to quash
while the Division One appeal was pending. We disagree.
After review is accepted, the trial court has authority to act in a case only to the extent
provided by RAP 7. 2. RAP 7. 2( e) states in part:
Postjudgment Motions and Actions to Modify Decision. The trial court has
authority to hear and determine ( 1) postjudgment motions authorized by the civil
rules, the criminal rules, or statutes .... If the trial court determination will change
a decision then being reviewed by the appellate court, the permission of the
appellate court must be obtained prior to the formal entry of the trial court decision.
RCW 6. 32.270 authorizes subsequent proceedings regarding real property, and states in part:
In any supplemental proceeding, where it appears to the court that a judgment
debtor may have an interest in or title to any real property, and such interest or title
is disclaimed by the judgment debtor or disputed by another person or it appears
that the judgment debtor may own or have a right of possession to any personal
property, and such ownership or right of possession is substantially disputed by
another person, the court may, if the person or persons claiming adversely be a
party to the proceeding, adjudicate the respective interests of the parties in such real
or personal property .... Any person so made a party, or any party to the original
proceeding, may have such issue determined by a jury upon demand therefor.
A] n interested litigant whose name appears of record ... and over whom ... the court has
acquired jurisdiction" is a party to the proceedings. Junkin v. Anderson, 12 Wash. 2d 58, 72, 120
P.2d 548, 123 P.2d 759 ( 1941).
Here, the trial court quieted title to the 89th Street Property in the judgment debtor,
Unique. By subsequently filing a homestead declaration, the Rehes disputed Unique' s interest in
the property. NWC' s postjudgment motion to quash requested the very thing RCW 6. 32. 270
authorized: a supplemental proceeding to adjudicate the parties' respective interests in the 89th
Street Property. Because the Rehes are interested litigants whose names appear of record and
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over whom the trial court had acquired personal jurisdiction by waiver, they were parties to the
proceeding. Thus, by authorizing consideration of NWC' s postjudgment motion, RCW 6. 32.270
gave the trial court authority to hear that motion under RAP 7.2( e). 3
Any determination the trial court made on NWC' s motion to quash the Rehes'
declaration of homestead would not change Division One' s veil piercing ruling or the related
attorney fee requests. Thus, the trial court did not need appellate court permission to enter its
judgment under RAP 7. 2( e), and the trial court did not err by ruling on NWC' s motion to quash
while the Division One appeal was pending.
III. HOMESTEAD
The Rehes further argue they are entitled to a homestead exemption because they are
owners of the 89th Street Property under the homestead statutes.4 Again, we disagree.
We review statutory interpretation de novo. Dep' t of Ecology v. Campbell & Gwinn,
LLC, 146 Wash. 2d 1, 9, 43 P.3d 4 ( 2002). If a statute' s meaning is plain on its face, we must
follow that plain meaning. 146 Wash. 2d at 9 -10. A statute' s plain meaning is discerned from the
ordinary meaning of the language, the context of the statute, related provisions, and the statutory
3 The Rehes argue RCW 6. 32.270 did not give the trial court authority to consider NWC' s
motion to quash because RCW 6. 32. 270 gave the Rehes the right to demand a jury trial. But
RCW 6. 32.270 requires a jury trial only if a party requests it. The Rehes do not assert, and the
record does not support, that the Rehes requested a jury trial. Thus, because the Rehes did not
request a jury trial under RCW 6. 32.270, that statute could not prevent the trial court from
considering NWC' s motion to quash.
4 NWC argues for the first time on appeal that res judicata precludes the Rehes' homestead
defense. We do not consider this argument because we do not consider a res judicata claim
raised for the first time on appeal. Jumamil v. Lakeside Casino, LLC, 179 Wash. App. 665, 680,
319 P.3d 868 ( 2014).
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scheme as a whole. Udall v. T.D. Escrow Servs., Inc., 159 Wash. 2d 903, 909, 154 P.3d 882
2007). If a term is defined in a statute, we use that definition. Pac. Indus. Inc. v. Singh, 120
Wn. App. 1, 6, 86 P.3d 778 ( 2003). " Homestead and exemption laws are favored in law and are
to be liberally construed." Sweet v. O' Leary, 88 Wash. App. 199, 204, 944 P.2d 414 ( 1997).
Article 19, section 1 of the Washington State Constitution states, " The legislature shall
protect by law from forced sale a certain portion of the homestead and other property of all heads
of families." In 1895, the legislature responded to this directive by passing the homestead
statutes, former chapter 6. 12 RCW.5
RCW 6. 13. 010 defines " homestead" and " owner ":
1) The homestead consists of real or personal property that the owner uses as a
residence. In the case of a dwelling house or mobile home, the homestead consists
of the dwelling house or the mobile home in which the owner resides or intends to
reside, with appurtenant buildings, and the land on which the same are situated and
by which the same are surrounded .... Property included in the homestead must
be actually intended or used as the principal home for the owner.
2) As used in this chapter, the term. "owner" includes but is not limited to
a purchaser under a deed of trust, mortgage, or real estate contract.
Emphasis added). RCW 6. 13. 070 states in part:
T] he homestead is exempt from attachment and from execution or forced sale for
the debts of the owner up to [$ 125, 000].
Emphasis added); see RCW 6. 13. 030. RCW 6. 13. 040( 1) states in part:
A] homestead ... is automatically by the exemption ... from and after
protected
the time the real or personal property is occupied as a principal residence by the
owner or, if the homestead is unimproved or unproved land that is not yet occupied
as a homestead, from and after the declaration or declarations required by the
following subsections are filed for record.
5 Former chapter 6. 12 RCW was recodified as chapter 6. 13 RCW in 1981 ( LAws OF 1981, ch.
329, § 22). Former chapter 6. 12 RCW was amended numerous times prior to its 1981
recodification. These pre -1981 amendments do not affect our analysis.
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Under this plain language, only the owner of a property may claim a homestead exemption in
that property.
To claim a homestead exemption in a property, the owner must either occupy the
property as a principal residence or intend to do so. RCW 6. 13. 040( 1). Once the owner
occupies the property as a principal residence, a homestead exemption is established
automatically without a declaration. RCW 6. 13. 040( 1). An owner who intends to occupy a
property as a principal residence in the future may file a declaration of homestead to establish the
exemption from the date the declaration is filed.6 See RCW 6. 13. 040( 1).
A. Meaning of the Term " Owner" in the Homestead Statutes
The Rehes argue that under the homestead statutes, they need to show only possession
and use of a property to be the owner of that property. NWC argues the Rehes must show either '
a legal or an equitable interest in a property to be the owner of that property. We agree with
NWC.
Prior to 1981, the homestead statutes used the term " claimant" instead of "owner."
Former RCW 6. 12. 040 ( 1977). Four key cases from the Supreme Court interpreted the
homestead statutes as they existed prior to the 1981 recodification that added the term " owner."
6 The Rehes correctly assert that the lack of a valid homestead declaration does not prevent them
from having an automatic homestead exemption in the 89th Street Property. See RCW
6. 13. 040( 1). But because the trial court' s order quashing the Rehes' homestead declaration
concluded the Rehes had no homestead exemption in the 89th Street Property because they lack
a sufficient interest in the property, we interpret the trial court' s order quashing the Rehes'
homestead declaration as precluding the Rehes from claiming an automatic homestead
exemption in the 89th Street Property.
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First, in Downey v. Wilber, a claimant owned a dwelling house on land he leased. 117
Wash. 660, 661, 202 P. 256 ( 1921). The claimant claimed a homestead exemption to the land
and dwelling house. 117 Wash. at 661. The Court agreed, holding that title in fee to a property
is not necessary for a homestead exemption because the only interest required is " a sufficient
interest in real property to entitle him to maintain a home thereon." 117 Wash. at 661.
Next, in Desmond v. Shotwell, a vendee purchased a property from a vendor pursuant to a
conditional contract under which the vendor kept title to the property until the vendee completed
payment. 142 Wash. 187, 188, 252 P. 692 ( 1927). The Court had ruled in a previous case that
such a contract deprived the vendee of any legal or equitable title in the property until he
completed payment. 142 Wash. at 188. Accordingly, the judgment creditor in Desmond argued
that because a vendee who had not completed payment had no legal or equitable title in the
property, such a vendee could not claim a homestead exemption in that property. 142 Wash. at
188. The court disagreed, holding that " nowhere in the statutes providing for homesteads is
there any requirement that the person asserting the right must own either a legal or an equitable
interest in the property claimed." 142 Wash. at 188.
In Security Savings & Loan Association v. Busch, the claimants attempted to claim a
homestead exemption to a property they had conveyed to another by quitclaim deed. 84 Wash. 2d
52, 52 -53, 55 -56, 523 P.2d 1188 ( 1974). The claimants argued that they did not need a legal title
to the residence, citing Downy and Desmond. Busch, 84 Wash. 2d at 55. The court disagreed,
holding that because the homestead declarants in both Downy and Desmond possessed a legal
interest in the property at issue, the language from Desmond suggesting that a legal or equitable
interest was not required was dicta. Busch, 84 Wash. 2d at 55. The Court held that either a legal or
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equitable interest is required because absent such an interest, " there was nothing left to which [ a]
homestead could ... attach." 84 Wash. 2d at 56.
In Felton v. Citizens Federal Savings & Loan Association ofSeattle, a claimant borrowed
money from a loan association, secured by a deed of trust against the claimant' s property, and
later claimed a homestead exemption in the property. 101 Wash. 2d 416, 417, 679 P.2d 928 ( 1984).
The loan association argued the claimant could not claim a homestead exemption in the property
because he needed a legal interest in the property, rather than the equitable interest he had under
the deed of trust. 101 Wash. 2d at 419. Our Supreme Court rejected the loan association' s
argument, holding that where an equitable interest exists, such equitable interest is sufficient to
claim a homestead exemption in a property. The court stated:
A] s we stated ( in dicta) in Desmond, " nowhere in the [ homestead] statutes ... is
there any requirement that the person asserting the right must own either a legal or
an equitable interest in the property claimed." What was required by [ the
homestead statutes] at all times relevant to this case was that homestead claimants
live on the property as their home, or intend to do so. Thus, possession was ( and
is) the key to the right to homestead.[7'
101 Wash. 2d at 419 -20 ( some alterations in original) ( internal citations omitted) ( quoting
Desmond, 142 Wash. at 188).
Interpreting the plain meaning of the word " owner" in tandem with the case law, owners
must have ownership of an interest " to which their homestead could .. attach." Busch, 84
7 While Felton used the word " owner" and referenced the post -1981 amendment version of the
homestead statutes, it was actually interpreting the statute as it existed prior to 1981 because the
homestead declaration in that case was filed prior to 1981. 101 Wash. 2d at 417 -18.
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Wn.2d at 56. Thus, to be an owner of a property one must have a legal or an equitable interest in
8
that property.
Each of the four cases discussed above turned on whether the claimant had at least a legal
or an equitable interest in the property. As explained in Busch, the claimant in Desmond and the
claimant in Downey both had legal interests in the property allowing them to claim a homestead
exemption. See Busch, 84 Wash. 2d at 55 -56; Downey, 117 Wash. at 661; Desmond, 142 Wash. at
188. In Felton, the deed of trust provided the claimant with an equitable interest in the property
that allowed him to claim a homestead exemption. 101 Wash. 2d at 419 -20. But in Busch, the
claimants who sacrificed their legal and equitable interest in the property by quitclaiming it to
another could not claim a homestead exemption. 84 Wash. 2d at 56. In these prior cases, the court
explained that the legislature intended to limit the term owner to parties that own a legal or an
equitable interest in the property " to which their homestead could ... attach." 84 Wash. 2d at 56.
B. Application to the Rehes' Homestead Exemption in the 89th Street Property
The Rehes argue they have a legal or equitable interest in the 89th Street Property
because the Rehes' contributions and residence at the property give them a legal or equitable
8 The Ninth Circuit Court of Appeals cited Felton to hold that under the Washington homestead
statutes, the owner needs an equitable interest in the property only where the owner cannot show
occupancy and use. In re Wilson, 341 B.R. 21, 25 ( B. A.P. 9th Cir. 2006). For the reasons set out
in this opinion, we hold that this is an inaccurate interpretation of the homestead statutes. See In
re Salvini' s Estate, 65 Wash. 2d 442, 446 -47, 397 P.2d 811 ( 1964) ( holding that federal courts'
interpretation of state statutes do not bind Washington state courts).
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interest and because piercing of the corporate veil gave them Unique' s interest in the property.
We disagree. 9
1. The Rehes' Interest in the Property after Quieting Title to Unique.
The Rehes argue they have an equitable interest in the 89th Street Property because they
possessed and used that property and because they, without consideration, transferred to Unique
the 89th Street land and the funds to build the house. We disagree because when the trial court
quieted title to the 89th Street Property in Unique in a ruling that was not appealed, it placed all
legal and equitable interest in the land in Unique.
Our Supreme Court has held that a corporation' s shareholders have no property interest
in that corporation' s physical assets because the corporations are separate organizations with
different privileges and liabilities from the shareholders. Christensen v. Skagit County, 66
Wash. 2d 95, 97, 401 P.2d 335 ( 1965). Moreover, living on a property, standing alone, does not
create a legal or equitable interest in the property sufficient to claim a homestead. See SSG
Corp. v. Cunningham, 74 Wash. App. 708, 714, 875 P.2d 16 ( 1994).
Here, the trial court quieted title to the 89th Street Property in Unique, and the Rehes did
not challenge this determination. The Rehes lost any interest in the land and money they
contributed to Unique when they contributed it. See Christensen, 66 Wash. 2d at 97. The mere fact
9 NWC argues the Rehes' corporate veil argument violates judicial estoppel by attempting to
pierce the corporate veil for the Rehes' benefit, when the Rehes argued at trial that NWC could
not pierce the corporate veil for NWC' s benefit. But "judicial estoppel may be applied only in
the event that a litigant' s prior inconsistent position benefited the litigant or was accepted by the
court." Taylor v. Bell, _ Wn. App. _, 340 P.3d 951, 958 ( 2014). Because Division One
reversed the trial court and held that the veil could be pierced for NWC' s benefit, the Rehes'
prior position that the veil could not be pierced did not benefit the Rehes and was not accepted
by the court. Thus, judicial estoppel does not apply.
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they live on the property does not give them a legal or equitable interest in the property to claim
a homestead exemption. See SSG Corp., 74 Wash. App. at 714. Thus, we hold that the trial
court' s unchallenged ruling quieting title in Unique gave all legal and equitable interest in the
89th Street Property to Unique, and that this deprived all other parties, including the Rehes, of
any legal or equitable interest in the 89th Street Property.
2. The Rehes' Interest in the 89th Street Property after Corporate Veil Piercing
The Rehes argue that because the corporate veil was pierced, the Rehes and Unique are
the same legal entity. Thus, the Rehes argue that because Unique is an owner of the 89th Street
Property, the Rehes are also owners of the 89th Street Property, thus allowing the Rehes to claim
a homestead exemption in Unique' s property. We disagree.
Veil piercing is an equitable remedy imposed to rectify an abuse of the corporate
privilege. Columbia Asset Recovery Grp., LLC v. Kelly, 177 Wash. App. 475, 488, 312 P.3d 687
2013). Where the corporate veil can be pierced, it can be pierced " not for all purposes, but only
for the purpose of adjusting the allocation of loss between the particular creditor and a person
who has, under all the circumstances, misused' the corporate form." EDWARD BRODSKY AND M.
PATRICIA ADAMSKI, Law of Corporate Officers and Directors: Rights, Duties and Liabilities
1414 ( 2011) ( citation omitted); see Garvin v. Matthews, 193 Wash. 152, 155 -57, 74 P.2d 990
1938); see also Rena -Ware Distrib., Inc. v. State, 77 Wash. 2d 514, 518, 463 P.2d 622 ( 1970).
Even where the veil can be pierced for one purpose, we continue to honor the corporation' s
separate identity except where doing so would perpetuate a fraud or injustice. See Garvin, 193
Wash. at 155 -57; Wash. Sav -Mor Oil Co. v. Tax Comm' n, 58 Wash. 2d 518, 523, 364 P.2d 440
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1961); Morgan v. Burks, 93 Wash. 2d 580, 587, 611 P.2d 751 ( 1980); Rena -Ware Distributors,
Inc., 77Wn.2dat518.
Here, Division One held that the corporate veil could be pierced, allowing the Rehes to
be held liable for the debts of Unique. This does not mean, however, that the corporate veil can
be pierced for the purpose of allowing the Rehes to claim a homestead exemption in Unique' s
property. Allowing the Rehes to claim a homestead in Unique' s property would neither serve the
purpose of adjusting the allocation of loss between the particular creditor (NWC) and the persons
who have misused the corporate form (the Rehes) nor rectify the Rehes' abuse of the corporate
privilege. In fact, it would do the opposite and reward the Rehes' misuse of the corporate form
by allowing them to use corporate veil piercing to protect the corporate assets.
Allowing the Rehes to have a homestead exemption would neither serve the purpose of
adjusting the allocation of loss between the creditor and the persons who misused the corporate
form nor rectify an abuse of the corporate privilege. Thus, the corporate veil piercing does not
allow the Rehes to claim a homestead exemption in Unique' s property.
IV. CROSS- APPEAL: THE TRIAL COURT' S DENIAL OF ATTORNEY FEES TO NWC
On its cross -appeal, NWC argues the trial court erred by denying it reasonable attorney
fees and costs for litigating its motion to quash. NWC argues it is entitled to reasonable attorney
fees and costs as the prevailing party because litigating its motion to quash was a " collection
proceeding" that fell within the contract' s attorney fees and costs provision. We agree.
We review de novo whether a statute authorizes attorney fees and costs. Niccum v.
Enquist, 175 Wash. 2d 441, 446, 286 P.3d 966 ( 2012). RCW 4. 84. 330 provides that where a
contract or lease authorizes attorney fees and costs, the prevailing party is entitled to fees and
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costs. An award of attorney fees and costs under RCW 4. 84.330 is mandatory, with no
discretion except as to the amount. Singleton v. Frost, 108 Wash. 2d 723, 729, 742 P.2d 1224
1987); Kofmehl v. Steelman, 80 Wash. App. 279, 286, 908 P.2d 391 ( 1996).
Here, the contract' s attorney fees and costs provision stated:
If the contract price is not paid as agreed and if collection proceedings or a suit is
started, then [ Unique] agree[ s] to pay all costs incurred
by [NWC], including all
costs of suit and a reasonable attorneys' fee as determined by the court.
CPat302.
The contract price was not paid, and executing against the 89th Street Property to collect
the contract price required litigating the Rehes' homestead exemption in the 89th Street Property.
Thus, litigating NWC' s motion to quash was part of the " collection proceedings" that fell within
the contract' s attorney fees and costs provision. Because the corporate veil has been pierced, it is
irrelevant whether Unique or the Rehes signed the contract because Unique and the Rehes are
treated as a single legal entity for the purpose of adjusting the allocation of loss between NWC
and the Rehes. Thus, because NWC, is the prevailing party, it is entitled to attorney fees under
this contractual provision. RCW 4. 84. 330. Accordingly, we reverse the trial court' s ruling on
attorney fees and remand for a determination of attorney fees consistent with this opinion.
ATTORNEY FEES ON APPEAL
Both parties request reasonable attorney fees on appeal pursuant to the contract. A
contract provision that authorizes attorney fees below authorizes attorney fees on appeal.
Where a statute allows an award of attorney fees to the prevailing party at trial, the appellate
court has inherent authority to make such an award on appeal. "' Colwell v. Etzell, 119 Wash. App.
432, 442 -43, 81 P.3d 895 ( 2003) ( quoting Standing Rock Homeowners Ass 'n v. Misich, 106 Wash.
17
No. 45312 -6 -II
App. 231, 247, 23 P.3d 520 ( 2001)). Because NWC prevails on appeal, we grant NWC attorney
fees on appeal and deny the Rehes' attorney fees on appeal.
We affirm the trial court' s order quashing the Rehes' homestead declaration, but reverse
the trial court' s ruling on attorney fees and remand for a determination of NWC' s reasonable
attorney fees consistent with this opinion. We award NWC reasonable attorney fees on appeal.
We concur:
A,c. J,
4
B; A. C. J.
Sutton, J.
18