Maria Hedger v. Lisa Groeschell And John Doe Groeschell ( 2017 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
MARIA HEDGER, a single person, )
) No. 74149-7-1
Respondent, )
) DIVISION ONE
v. ) •
) PUBLISHED OPINION
LISA GROESCHELL and JOHN DOE )
GROESCHELL, wife and husband, and )
the marital community composed )
thereof, )
) ••••••
Appellant. ) FILED: May 15, 2017
TRICKEY, J. — Maria Hedger sued Lisa Groeschell for personal injuries
sustained in an automobile accident. After Hedger prevailed at mandatory
arbitration, Groeschell sought a jury trial de novo. During the litigation, the court
imposed several thousand dollars in sanctions against Groeschell.
The jury awarded Hedger less in damages than the arbitrator had awarded.
The trial court then determined that Groeschell had not improved her position from
the arbitration because the amount of sanctions ordered against her, combined
with Hedger's damages, were greater than the arbitration award. Accordingly, the
court awarded Hedger attorney fees.
Groeschell appeals the trial court's award of attorney fees to Hedger.
Because the trial court should not have considered the sanctions it imposed
against Groeschell when comparing her postarbitration and posttrial positions, we
reverse the award of attorney fees.
Groeschell also appeals the trial court's decision to sanction her for raising
the deception doctrine defense on the eve of trial. Because we agree with the trial
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court that Groeschell's actions constituted procedural bad faith, we affirm the
imposition of sanctions.
FACTS
Hedger and Groeschell were in a car accident in September 2013. Hedger
proceeded straight through an intersection as Groeschell started to make a left
turn. The two vehicles collided.
Hedger sued Groeschell for negligence. The case proceeded to mandatory
arbitration. Hedger prevailed at arbitration. The arbitrator found Groeschell to be
entirely at fault and awarded Hedger $17,880.10 in damages. The arbitrator later
amended that award to include $931.76 in statutory costs and fees, for a total
award of $18,811.86.
Groeschell requested a trial de novo. Prior to trial, the court sanctioned
Groeschell for failing to participate in good faith in the mediation and failing to
timely disclose expert witness reports.
A few days before trial, Groeschell asserted a deception doctrine defense.
Groeschell withdrew the defense when she could not produce written documents
showing she had raised it at arbitration. The court sanctioned her $3,125 for
procedural bad faith.
The jury returned a verdict for Hedger but found her to be five percent at
fault. It also found that her combined economic and general damages totaled only
$11,200. Thus, Hedger's total damage award at trial was $10,640. The court
awarded $2,162.15 in statutory costs.1 The three sanctions the court imposed on
1 That amount represents the cost of deposition transcripts for Dr. Steven Watson and
Groeschell. It does not appear to include the $835.76 in other statutory costs that the
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Groeschell totaled $6,147.49. The total judgment after the trial de novo was
$18,949.64.
Hedger moved for attorney fees under MAR 7.3 on the ground that
Groeschell had not improved her position after the trial de novo. The court agreed
with Hedger and awarded her over $60,000 in attorney fees.
Groeschell appeals the award of sanctions based on the deception doctrine
defense and the trial court's award of attorney fees under MAR 7.3.
ANALYSIS
Sanctions
Groeschell argues that the trial court abused its discretion in sanctioning
her for raising the deception defense on the eve of trial. Specifically, she argues
that pleading a contributory negligence defense satisfies any need to plead the
deception doctrine defense and that, regardless, Hedger had sufficient notice that
Groeschell intended to rely on the deception doctrine. Because the deception
doctrine raises different issues than a general contributory negligence defense,
and Groeschell did not otherwise provide adequate notice, we disagree.
The trial court has the inherent authority to sanction a party for "bad faith."
State v. S.H., 102 Wash. App. 468, 475, 8 P.3d 1058 (2000). "Procedural bad faith
is unrelated to the merits of the case and refers to 'vexatious conduct during the
court determined it should award for statutory attorney fees, reports and records, filing
fees, and service of process fees. Added with the deposition costs, the statutory costs
award should have been $2,997.91, which was the amount Hedger's attorney indicated
she was going to record. The parties included only $2,162.15 in statutory costs when they
calculated the total judgment. The parties or trial court may wish to address this issue on
remand. If failing to include that $835.76 was an error, the total judgment after the trial de
novo should be $19,785.40. The failure to include the $835.76 in costs does not affect
our decision.
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course of litigation.'" Rogerson Hiller Corp. v. Port of Port Angeles, 96 Wash. App.
918, 928, 982 P.2d 131 (1999)(quoting Jane P. Mallor, Punitive Attorneys' Fees
for Abuses of the Judicial System,61 N.C. L. Rev. 613,644 (1983)). The conduct
can include delaying or disrupting litigation. S.H., 102 Wn:App. at 475. To support
sanctions under this inherent power, the trial court must make a finding that the
litigant acted in bad faith. S.H., 102 Wash. App. at 475.
This court reviews a trial court's decision to award sanctions for an abuse
of discretion. S.H., 102 Wash. App. at 473.
Here, on August 27, 2015, during pretrial hearings, Hedger objected that
Groeschell had raised a deception defense for the first time in her report from
expert witness Bryan Jorgenson, which was filed on August 21, 2015. The court
asked Groeschell why she was raising the defense so late. Groeschell noted that
she had pleaded contributory negligence as an affirmative defense, and believed
that was enough to give Hedger notice of her intent to use the deception doctrine
as a defense.
Groeschell also said that she was not raising the defense late because she
had argued the deception doctrine defense at arbitration.2 The court asked if she
had referred to the defense in writing in any of her arbitration materials, to which
Groeschell responded, "That I'm going to have to look into, Your Honor."3 The
court asked, "And then, and you specifically made the argument, the deception
defense argument[,] to the arbitrator?," to which she replied, "Yes."4
2 Hedger retained new counsel for the trial de novo.
3 Report of Proceedings(RP)(Aug. 27, 2015) at 59.
4 RP (Aug. 27, 2015) at 59.
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The trial court deferred its ruling to give Groeschell an opportunity to
produce a writing showing that she had raised the deception defense at arbitration.
That afternoon, Groeschell informed the court that she could not find any mention
of the deception defense in her prehearing statement of proof or the arbitration
decision. She repeated that she still believed that she had argued the deception
doctrine defense at arbitration, but withdrew the deception doctrine defense for
trial.
After trial, Hedger moved for sanctions based on Groeschell's late
disclosure of the deception defense. The court accepted Groeschell's assertion
that she had not willfully misrepresented whether she had raised the defense at
arbitration, but found, in its oral ruling, that, before hiring an expert and asserting
this defense on the eve of trial, Groeschell should have assessed "whether it was
appropriate to inject it at such a late date before trial."5 In its written ruling, the trial
court found that Groeschell's actions were "unfair" to Hedger and caused her to
"divert her attention away from trial preparation to investigate th[at] particular
defense and prepare to address it at trial."6 The court awarded Hedger $3,125 in
sanctions, as attorney fees for the time Hedger's counsel, associate, and paralegal
spent addressing the deception doctrine defense and the motion for sanctions.
Groeschell's primary argument is that there was no procedural bad faith
because she raised contributory fault as an affirmative defense in her answer and
the deception doctrine is a component of that defense.7 Because the deception
5 RP (September 25, 2015) at 79.
6 Clerks Papers(CP) at 438-39.
7 In a footnote in her opening brief, Groeschell argues, in the alternative, that this court
should reverse the sanctions because the trial court did not make an explicit finding of bad
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defense raises factual issues that are distinct from those raised by contributory
fault, we disagree.
In order to "avoid surprise," defendants must affirmatively plead specific
defenses and "'any other matter constituting an avoidance or affirmative defense."
Mahoney v. Tingley, 85 Wash. 2d 95, 100, 529 P.2d 1068 (1975)(quoting CR 8(c)).
A general denial is appropriate if the defense does not raise any new issues. See
Shinn Irrigation Equip., Inc. v. Marchand, 1 Wash. App. 428, 430-31, 462 P.2d 571
(1969). "Denials must be definite enough to inform the adverse party of the issues
he must be prepared to meet." Shinn Irrigation, 1 Wash. App. at 430 (quoting 1A
Barron & Holtzoff, Federal Practice and Procedure,§ 277, at 147).
While a defendant may rely on both the contributory fault and deception
doctrines to allocate responsibility to a plaintiff for her injuries, the deception
doctrine applies only in specific circumstances. Under the doctrine of contributory
fault, the plaintiff is responsible for whatever portion of her injury is attributable to
her own fault. RCW 4.22.005. That fault includes all "acts or omissions, including
misuse of a product, that are in any measure negligent or reckless toward the
person or property of the actor or others." RCW 4.22.015. But the deception
doctrine applies only "where a favored party has somehow deceived a reasonably
faith. A finding that the party's behavior was "inappropriate and improper' is tantamount
to a finding of bad faith." S.H., 102 Wash. App. at 475 (quoting Wilson v. Henkle, 45 Wn.
App. 162, 175, 724 P.2d 1069 (1986)). But, "in the absenee of an express finding,
appellate courts have upheld sanctions where an examination of the record establishes
that the court found some conduct equivalent to bad faith." State v. Gassman, 175 Wash. 2d
208, 211, 283 P.3d 1113 (2012). Here, the trial court said that it had "the authority to
assess attorney fees for bad faith conduct in litigation" and then awarded fees "on that
basis." RP (September 25, 2015) at 79. We conclude that the trial court's findings are
sufficient to establish a finding of bad faith.
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prudent disfavored driver so as to cause that driver to proceed on the assumption
that there was a fair margin of safety." Wood v. City of Bellindham, 62 Wash. App.
61, 66,813 P.2d 142(1991).
Unlike contributory fault, the deception defense always puts what the
defendant saw at issue because "[o]ne cannot be deceived by that which he does
not see." Tobias v. Rainwater, 71 Wash. 2d 845, 853, 431 P.2d 156 (1967).
Therefore, the deception defense raises an issue that a general contributory fault
defense does not. It is a separate affirmative defense that the defendant must
plead in order to comply with CR 8(c). Accordingly, the trial court did not abuse its
discretion by sanctioning Groeschell for raising the defense for the first time on the
eve of trial.
Groeschell argues that, regardless of any rigid pleading requirements,
sanctions were not appropriate because Hedger had sufficient notice of her
defense. We disagree. Groeschell included an instruction for the deception
defense in her proposed jury instructions, which she filed on August 17, 2015, nine
days before trial began. This was more than a month past the discovery cut-off.
Moreover, it was not until August 27, 2015, when Hedger received
Groeschell's trial brief, that Hedger would have been able to connect Groeschell's
legal argument to the factual basis for asserting it.8 In her trial brief, Groeschell
asserted that she "observed [Hedger's] vehicle slowing" as the "traffic light turned
from green to yellow."8 Then, according to Groeschell, Hedger accelerated into
8 Groeschell argues that her expert witness discussed the deception defense in his report,
but that report does not appear in the record. Regardless, Hedger did not receive that
report until August 21, 2015, still only a few days before trial.
9 CP at 1006.
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the intersection, after the light turned red.
Neither Groeschell's answer to Hedger's complaint nor her answers to
Hedger's interrogatories asserted that Groeschell observed Hedger slow down as
she approached the intersection. Hedger should not have had to address this new
factual assertion after the discovery cut-off and right before trial began. As the trial
court found, this was unfair to Hedger. It was not an abuse of discretion for the
trial court to sanction Groeschell and have her pay the attorney fees that Hedger
incurred in responding to the new defense and moving to sanction Groeschell for
raising the defense so late.
Improved Position
Groeschell argues that the trial court erred by awarding attorney fees to
Hedger under MAR 7.3. Specifically, she contends that she improved her position
at the trial de novo because the jury awarded Hedger less in damages than the
arbitrator had. Hedger responds that the trial court properly compared the total
judgment after arbitration with the total judgment after the trial de novo. We hold
that the trial court should not have considered the sanctions it imposed against
Groeschell in its determination of whether she improved her position and, that
without those sanctions, Groeschell did improve her position.
When a party seeks a trial de novo after mandatory arbitration and fails to
improve her position, she must pay the other party's reasonable attorney fees.
RCW 7.06.060(1); MAR 7.3. A party's "position prior to trial should be interpreted
as an ordinary person would." Nelson v. Erickson, 186 Wash. 2d 385, 387, 377 P.3d
196 (2016).
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Until recently, this court consistently held the court should assess a party's
position by comparing comparables. See, e.g., Wilkerson v. United Inv., Inc., 62
Wash. App. 712, 717, 815 P.2d 293(1991); Tran v. Yu, 118 Wash. App. 607, 615-16,
75 P.3d 970 (2003). But, in Bearden v. McGill, this court concluded that the trial
court should compare only the jury verdict and the arbitrator's initial award. 197
Wash. App. 852, 860-61, 391 P.3d 577 (2017). The court will not conclude that a
party has improved its position when the party did so only by prevailing on a claim
that was not arbitrated. See Christie-Lambert Van & Storage Co., Inc. v. McLeod,
39 Wash. App. 298, 304, 693 P.2d 161 (1984). Accordingly, the court should
consider only the portion of a jury's verdict attributable to claims that were
arbitrated.
In Tran, the only issue at arbitration was the plaintiffs damages. 118 Wn.
App. at 616. After a trial de novo, the jury awarded the plaintiff less than the
arbitrator had awarded, but, because of CR 37 sanctions and statutory costs, the
plaintiff's total award at trial was higher than her award at arbitration. Tran, 118
Wash. App. at 616. The Court of Appeals held that the statutory costs and CR 37
sanctions "should not be considered in a MAR 7.3 determination" because they
had not been before the arbitrator. Tran, 118 Wash. App. at 616. Accordingly, the
defendant had improved her position and the plaintiff was not entitled to fees under
MAR 7.3. Tran, 118 Wash. App. at 616-17.
Initially, the Supreme Court "generally" agreed with the Court of Appeals'
comparing comparables doctrine. Haley v. Highland, 142 Wash. 2d 135, 154, 12 P.3d
119(2000). More recently, in Niccum v. Enguist, the Supreme Court clarified that
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it had not adopted the doctrine of comparing comparables—but it did not reject the
doctrine. 175 Wash. 2d 441, 448, 286 P.3d 966 (2012). The court noted that none
of the comparing comparables cases dealt with "postarbitration offers of
compromise." Niccum, 175 Wash. 2d at 448. Taking a "straightforward" approach to
the issue, the court compared the lump sum of the settlement offer to the total
judgment at the trial de novo. Niccum, 175 Wash. 2d at 452-53.
This court reviews de novo an award of attorney fees under MAR 7.3.
Bearden, 197 Wash. App. at 855.
Here, Hedger's initial award at arbitration was $17,880.10, which increased
to $18,811.86 with statutory costs. After the trial de novo,the jury awarded Hedger
only $10,640. Comparing only the initial arbitration award and the jury verdict,
Groeschell improved her position. Thus, we conclude that an award of attorney
fees under MAR 7.3 would be inappropriate. But the final judgment, which
included statutory costs and sanctions, was $18,949.64.1°
Hedger argues that this court must include the more than $6,000 in
sanctions in its MAR 7.3 determination or it will allow Groeschell to "game the
system."11 We disagree and adhere to this court's decision in Tran. The court
should not include sanctions in its MAR 7.3 determinations.12
w See footnote 1, explaining possible error in the trial court's calculation of final judgment.
For purposes of this analysis, we use the trial court's figures. The difference does not
impact our analysis.
11 Br. of Resp't at 1.
12 Moreover, trial courts follow certain principles when determining what sanctions to
impose. Wash. State Physicians Ins. Exch. & Ass'n v. Fisons Corp., 122 Wash. 2d 299, 355,
858 P.2d 1054(1993). Paramount among them is that the court should impose "the least
severe sanction that will be adequate." Fisons, 122 Wash. 2d at 355-56.
Each time Groeschell behaved improperly during the litigation, the trial court
carefully considered her behavior and imposed an appropriate sanction. If the court
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Here, the parties attended mediation in July 2015. Afterward, Hedger
moved for sanctions against Groeschell, arguing that she had refused to
meaningfully prepare for or participate in the mediation. The court awarded
Hedger $2,000 in attorney fees, $422.49 in costs and fees for the mediation, and
a $100 sanction, for a total of $2,522.49. The court also sanctioned Groeschell
$500 for failing to timely file the report of her expert witness. And, as discussed
thoroughly above, the trial court sanctioned Groeschell $3,125 for improperly
raising the deception doctrine defense right before trial.
None of the sanctions imposed here related to the merits of the case.
Furthermore, none of the sanctions were or could have been litigated before the
arbitrator, because each was based on Groeschell's conduct during the trial de
novo process. We will not consider them in the MAR 7.3 determination.
The purpose of MAR 7.3 is to discourage meritless appeals. Nelson, 186
Wash. 2d at 388. The jury reduced Hedger's damages by roughly 40 percent.
Clearly, Groeschell's appeal had merit. We reverse the award of attorney fees.
Attorney Fees on Appeal
Hedger requests attorney fees on appeal. A party who is entitled to attorney
fees under MAR 7.3 after a trial de novo because the opposing party failed to
improve its position, is entitled to attorney fees on appeal if that party appeals and,
once again, fails to improve its position. See Boyd v. Kulczyk, 115 Wash. App. 411,
includes sanction awards in its MAR 7.3 determination, it will essentially be imposing an
additional $60,000 sanction against Groeschell.
Including sanctions in a MAR 7.3 determination would also disregard the court's
warning that sanctions should not become a "fee shifting" mechanism or profitable
"cottage industry" for attorneys. See Fisons, 122 Wash. 2d at 356.
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417,63 P.3d 156 (2003). But Groeschell improved her position on appeal. Thus,
Hedger is not entitled to attorney fees.
We reverse the trial court's award of attorney fees under MAR 7.3, and
remand for entry of a new judgment consistent with this opinion.
WE CONCUR:
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