Keith Miller v. Paul M. Wolff ( 2014 )

FILED
JAN 16,2014
In the Office of the Clerk of Court
WA State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
KEITH MILLER, a married individual, ) No. 31445-6-111
)
Appellant, )
)
v. )
)
PAUL M. WOLFF CO., a foreign ) PUBLISHED OPINION
corporation; and CURTIS BEESLEY, an )
individual, )
)
Respondents. )
BROWN, J. - Paul M. Wolff Company (PMW) appeals the trial court's judgment
granted to Keith Miller following Mr. Miller's trial de novo following mandatory arbitration.
Mr. Miller worked for PMW as a commissioned sales representative. After he resigned
and unsuccessfully offered to complete unfinished jobs, he sued PMWand its president,
Curtis Beesley (collectively PMW) for unpaid commissions. An arbitrator sided with Mr.
Miller and awarded him wage damages, but denied attorney fees for unpaid wages.
Unsatisfied, Mr. Miller pursued a trial de novo where he was awarded slightly less wage
damages, but received his requested attorney fees. PMW contends the court erred in
finding Mr. Miller was entitled to commissions under the procuring cause doctrine, in
concluding Mr. Miller improved his position at trial, and in awarding attorney fees under
RCW 49.48.030. We find no error, and affirm.
No. 31445-6-111
Miller v. Paul M. Wolff Co.
FACTS
The facts are drawn largely from the trial court's unchallenged findings of fact.
PMW is a subcontractor, specializing in concrete finishing services. It employs field
sales representatives who are responsible for facilitating and overseeing projects within
their territories. If the project is awarded to PMW, the field sales representative is
responsible for managing the company's performance under the contract through
completion. Managing PMW's performance through completion of the project is
considered the final step in the sales representative's performance. PMW has
historically paid its sales representatives a 15 percent commission on projects that meet
a 35 percent gross profit threshold. Field sales representatives are paid commissions
after PMW completes its work and receives payment.
PMW employed Mr. Miller as a field sales representative for several years until
January 9, 2009. Then, Mr. Miller resigned to operate his own concrete company, Final
Concrete, LLC. PMW claims the purpose of Final Concrete was to compete with PMW;
however, PMW's unlawful competition claims were dismissed in summary judgment and
the one issue appealed was rejected by Division Two of this court in an unpublished
opinion. See Miller v. Paul M. Wolff Co., noted at 165 Wn. App. 1020,2011 WL
6916485, at *1.
When he resigned, Mr. Miller unsuccessfully offered to complete his unfinished
projects for PMW. The parties' employment contract does not address whether, and to
what extent, post-termination commissions would be paid. On January 12, 2009, Mr.
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Miller sought commissions on at least 14 at-issue projects listed in the court's findings of
fact. PMW assigned other employees to finish these projects, which took several
months to complete after Mr. Miller's resignation. The 35 percent gross profit threshold
was met in 10 of the unfinished projects. PMW paid $25,862.87 to another field sales
representative in commissions on eight of these projects. Mr. Miller had unsuccessfully
requested $27,036.21 for these projects when he sued PMW, pal11y requesting
equitable relief under the procuring cause doctrine. The parties proceeded to
mandatory arbitration.
The arbitrator concluded Mr. Miller was entitled to recovery under the procuring
cause doctrine and awarded him $22,802.84, but denied his request for attorney fees
and costs under RCW 49.48.030. The arbitrator concluded the award flowed from an
equitable remedy and was not for wages and salary owed. Mr. Miller requested a trial
de novo.
After trial, the court awarded Mr. Miller $21,628.97 for his procuring cause
doctrine claim, $897.95 in costs, and $74,662.00 in attorney fees. The court concluded
Mr. Miller improved his position on trial de novo because he was awarded attorney fees
at trial, but the court noted "even if only the fees incurred through arbitration, but not
those incurred thereafter, are used in making the comparison ... the difference
between the two actual damage awards is so small (Le., $1,173.87)." Clerk's Papers
(CP) at 494. PMW appealed.
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ANALYSIS
A. Procuring Cause
The issue is whether the trial court erred in concluding Mr. Miller was entitled to
damages under the procuring cause doctrine. PMW contends Mr. Miller's failure to
oversee the completion of the projects in question and his unclean hands preclude a
recovery in equity.
Whether a sales person's activities were the procuring cause of the sale is fact
specific. Zelensky v. Viking Equip. Co., 70 Wn.2d 78,91,422 P.2d 293 (1966). We
review a conclusion of law based on findings of fact to determine whether the trial
court's 'findings are supported by substantial evidence, and if so, whether those findings
support the conclusions of law. Cantu v. Dep't of Labor & Indus., 168 Wn. App. 14,21,
277 P.3d 685 (2012). Substantial evidence is evidence of sufficient quantity to
persuade a fair-minded, rational person of the truth of the declared premise. Bering v.
SHARE, 106 Wash. 2d 212, 220, 721 P.2d 918 (1986).
"The procuring cause rule states that when a party is employed to procure a
purchaser ... to whom a sale is eventually made, he is entitled to a commission .. '. if
he was the procuring cause of the sale." Willis v. Champlain Cable Corp., 109 Wn.2d
747,754,748 P.2d 621 (1998). A broker is the procuring cause or agent when he or
she sets in motion the series of events culminating in a sale. Roger Crane &Assoc.,
Inc. v. Felice, 74 Wash. App. 769, 776, 875 P.2d 705 (1994) (citing Bonanza Real Estate,
Inc. v. CrOUCh, 10 Wash. App. 380, 385, 517 P.2d 1371 (1974». When an employment
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relationship ends, the employer "cannot terminate an agent's right to compensation if he
or she caused the sale." Syputa v. Druck Inc., 90 Wash. App. 638, 645,954 P.2d 279
(1998).
The procuring cause doctrine "is essentially an equitable doctrine." Id. at 649. It
is based upon the equitable maxim that the principal shall not be pennitted to enrich
.Il
himself at the expense of the agent or broker, whose services have inured to his
benefit.'" Feeley v. Mullikin, 44 Wash. 2d 680, 687, 269 P.2d 828 (1954) (quoting Grace
Realty Co. v. Peytavin Planting Co., 156 La. 93, 100 So. 62 (1924». Trial courts have
broad discretion to fashion an equitable remecty, reviewable for abuse of discretion.
Ehsani v. McCullough Family P'ship, 160 Wash. 2d 586, 589,159 P.3d 407 (2007).
If a written contract expressly provides "how commissions will be awarded when
an employee or agent is terminated," the procuring cause rule is inapplicable. Willis,
109 Wash. 2d at 755. In the absence of a contractual provision specifying otherwise, the
procuring cause doctrine acts as a gap filler. Indus. Representatives, Inc. v. CP Clare
Corp.,74 F.3d 128 (7th Cir. 1996). Here, in finding of fact 3, which is unchallenged and
therefore a verity on appeal, 1 the court found that the parties' contract does not specify
whether commissions would be paid for projects that were still in progress when
employmerit ended. Thus, the procuring cause doctrine applies.
PMW argues to prove procuring cause in this situation, Mr. Miller must show he
completed five steps that begins with securing the contract and ends with final payment.
1 Jensen V. Lake Jane Estates, 165 Wash. App. 100, 105,267 P.3d 435 (2011).
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But, "[t]he standard for the procuring cause doctrine is activity that sets in motion
the chain of events or negotiations culminating in a sale." Syputa, 90 Wash. App. at 646.
"Thus, an agent receives commissions on sales when the sales 'resulted from the
agent's efforts.'" Id. (quoting Willis, 109 Wn.2d at 754). In Syputa, a former sales agent
sued an aerospace firm to recover post termination commissions. 90 Wash. App. at 638.
The trial court dismissed the claim in summary judgment. Id. Division One of this court
reversed and remanded, holding issues of material fact existed as to whether the sales
agent was the procuring cause of the company's contracts with an airplane
manufacturer. Id. at 649-50.
Here, based on the unchallenged findings of fact, Mr. Miller "located the at-issue
jobs, submitted bids thereon, and secured binding contracts with the customers." CP at
443 (finding offact 10). Ten of the 14 at-issue jobs met the 35 percent gross profit
threshold. Commissions on these 10 jobs totaled approximately $27,000. The trial
court discounted the total commissions by 20 percent when making its award to Mr.
Miller.
PMW argues the procuring cause doctrine does not apply when an employee
resigns. While Washington courts have not specifically addressed this issue, courts in
Illinois and Florida have allowed damages under the procuring cause doctrine for
employees who have resigned from their sales positions. See Scheduling Corp. of Am.
v. MasseI/o, 456 N.E.2d 298, 305 (III. 1983); United Farm Agency of Fla., Inc. v. DKLS,
Inc., 560 SO.2d 1212, 1213 (Fla. 1990). Because Washington courts have not
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expressly required an employee to be terminated to be eligible for relief under the
procuring cause doctrine and because the Illinois and Florida cases are persuasive, we
hold that resignation is not a precluding factor for recovery under the procuring cause
doctrine in Washington.
PMW next argues recovery is precluded because Mr. Miller has unclean hands.
It is well settled that a party with unclean hands cannot recover in equity. J.L. Cooper &
Co. v. Anchor Sec. Co., 9 Wn.2d 45,73,113 P.2d 845 (1941). PMW complains Mr.
Miller'S conduct in forming another concrete company was unjust and in bad faith, but
PMW's wrongful competition claims were summarily dismissed and the one issue
appealed was rejected by Division Two of this court. See Miller, 2011 WL 6916485, at
*1.
In sum, based on the Syputa and Willis standard, Mr. Miller was the procuring
cause of the at-issue PMW contracts. Thus, the trial court had tenable grounds to apply
the procuring cause doctrine in fashioning an equitable remedy. Therefore, we
conclude the trial court did not abuse its discretion.
B. Attorney Fees
The issue is whether the trial court erred in denying PMW's request for attorney
fees, but granting Mr. Miller's request after trial. PMW contends fees were unwarranted
because Mr. Miller did not improve his position on trial de novo. PMW argues RCW
49.48.030 does not provide a basis for Mr. Miller's recovery.
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We review the trial court's application of court rules and statutes authorizing
attorney fee awards de novo as a question of law. Niccum v. Enquist, 175 Wash. 2d 441,
446,286 P.3d 966 (2012). In Washington, a party may recover attorney fees solely
when authorized by statute, a recognized ground of equity, or party agreement. Id.
RCW 7.06.060(1) and SUPERIOR COURT MANDATORY ARBITRATION RULES (MAR)
7.3 direct courts to assess costs and reasonable attorney fees "against a party who
appeals the [arbitrator's] award and fails to improve" the party's position at the trial de
novo. RCW 7.06.060(1) provides, "The superior court shall assess costs and
reasonable attorneys' fees against a party who appeals the award and fails to improve
his or her position on the trial de novo." Likewise, MAR 7.3 states, "The court shall
assess costs and reasonable attorney fees against a party who appeals the award and
fails to improve the party's position on the trial de novo." "RCW 7.06.060(1) and MAR
7.3's purposes are to ease court congestion, encourage settlement, and discourage
meritless appeals." Huntington v. Mueller, 175 Wash. App. 77, 81.302 P.3d 530 (2013)
(citing Niccum. 175 Wash. 2d at 451).
Here, the trial court's award of wage damages was less than the arbitrator's
award, but the court awarded Mr. Miller attorney fees and costs for a total award
substantially more than the arbitration award. PMW contends attorney fees cannot be
considered in assessing an improvement in position. We disagree.
In Mei Tran v. Yu Han Yu, 118 Wash. App. 607, 612, 75 P.3d 970 (2003). the court
considered whether a party appealing an arbitration award failed to improve her position
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at a trial de novo when the compensatory damages awarded at trial were less than
those awarded at arbitration, but the judgment was higher because of the court's award
of statutory costs and CR 37 sanctions. The court held that a court should "compare
cornparables" to determine whether a party failed to improve its position. Mei Tran, 118
Wash. App. at 612. Accordingly, a court would compare the compensatory damages
awarded by the arbitrator with the compensatory damages awarded at trial. Id. The
court would not include awards for statutory costs and sanctions because those costs
were not before the arbitrator and were not "comparable" to the compensatory damages
awarded by the arbitrator. Id. at 615-16. Indeed, the court noted, a party would
invariably improve his or her position if costs such as "attomey fees" and interest were
taken into account. Id. at 612.
In Haley v. Highland, 142 Wash. 2d 135, 154,12 P.3d 119 (2000), our Supreme
Court stated, "We generally agree with the Court of Appeals' view that only
comparables are to be compared," but the court found it unnecessary in Haley to adopt
a bright-line rule that "attorney fee awards have no place in making an MAR 7.3
determination." Id. (emphasis added).
Later, in Niccum, 175 Wash. 2d at 448, our Supreme Court clarified, "[T]his court
has not adopted the doctrine of comparing com parables. " In Niccum, the issue was
whether costs could be considered in comparing a jury award (which included costs)
with an offer of compromise (which did not). The court found it would be unfair to
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compare the two because a party is not entitled to costs in connection with an offer of
compromise under RCW 7.06.060(1). Id. at 449.
If we were to compare solely the compensatory damages in this case, Mr. Miller
did not improve his position on trial de novo. But, Mr. Miller was awarded attorney fees
on trial de novo after the arbitrator denied attorney fees based on the exact argument
that was successful at trial. The situation may be different if attorney fees were not
requested at arbitration. Indeed, to truly compare the comparables, the success of
. aggregate claims asserted should be considered in deciding if Mr. Miller "improve[d] ...
[his] position." MAR 7.3; RCW 7.06.060(1).
Given our discussion so far, we conclude the trial court properly concluded Mr.
Miller improved his position and deny PMW's request for attorney fees.
Next, PMW argues RCW 49.48.030 applies to wages not damages in equity. As
previously disclJssed, we review a trial court's basis for awarding attorney fees de novo.
Niccum, 175 Wash. 2d at 446.
RCW 49.48.030 provides when "any person is successful in recovering judgment
for wages or salary owed to him or her, reasonable attorney's fees ... shall be
assessed against said employer or former employer." RCW 49.48.030 is a remedial
statute we must liberally construe in favor of the employee. Int'l Ass'n of Fire Fighters,
Local 46 v. City of Everett, 146 Wash. 2d 29, 34,42 P.3d 1265 (2002). While RCW
49.48.030 uses the term "wages," Division One of this court has held that wages include
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commissions. Oautel v. Heritage Home Ctr., Inc., 89 Wash. App. 148, 153,948 P.2d 397
(1997).
Equitable wage recoveries do not preclude an award of attorney fees under RCW
49.48.030, contrary to PMW's arguments. The legislature did not place that limit in
RCW 49.48.030. Our primary goal on review is to determine and give effect to the
legislature's intent and purpose in creating the statute. Woods v. Kittitas County, 162
Wash. 2d 597, 607,174 P.3d 25 (2007). If the statute's meaning is plain on its face, then
we must give effect to that plain meaning as an expression of legislative intent. Id. We
give meaning to every word and interpret the statute as written. Enter. Leasing, Inc. v.
City of Tacoma Fin. Oep't, 139 Wash. 2d 546, 552, 988 P.2d 961 (1999). RCW 49.48.030
plainly states if an employee recovers a judgment for wages owing then attorney fees
shall be assessed against the employer. Interpreting the statute as written, the trial
court did not err in awarding attorney fees to Mr. Miller.
Lastly, PMW requests attorney fees on appeal under MAR 7.3 and RCW
7.06.060(1). Both the rule and statute allow recovery on appeal if fees were justified
below. Yoon v. Keeling, 91 Wash. App. 302, 306, 956 P.2d 1116 (1998). Here, however,
no basis exists for an attorney fee award to PMW below and, thus, no basis exists on
appeal.
Mr. Miller requests fees for this appeal under RCW 49.48.030. In McGinnity v.
AutoNation, Inc., 149 Wn. App. 277,286,202 P.3d 1009 (2009), this court held, "a party
that is awarded fees in arbitration under RCW 49.48.030 may also recover fees for all
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I
I superior court and appellate court proceedings in the same matter." Mr. Miller is entitled
to his fees upon compliance with RAP 18.1. As the prevailing party, he is also entitled
to costs under RAP 14.2, subject to compliance with RAP 14.4.
Affirmed.
Brown, J.
WE CONCUR:
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