Patrick Smith v. Congruent Software ( 2014 )

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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
PATRICK SMITH, a married man filing
individually, No. 69847-8-1
Respondent, DIVISION ONE
CONGRUENT SOFTWARE INC., a UNPUBLISHED OPINION
Washington corporation,
FILED: July 28, 2014
Appellant.
Becker, J. — Congruent Software Inc. appeals an order denying its
motion for attorney fees requested as a sanction against a former employee for
filing a five claim complaint including one frivolous claim. Because Congruent
fails to establish any abuse of discretion, we affirm.
FACTS
Patrick Smith worked as a business development manager for Congruent
Software from January 2007 until he resigned in September 2008. In July 2009,
Smith filed suit against Congruent, asserting claims for unpaid wages, breach of
contract, and constructive discharge. Congruent responded with counterclaims.
The court held a trial without a jury in March 2011.
On September 8, 2011, the court entered findings of fact and conclusions
of law determining Smith was entitled to a judgment for $277 in unpaid
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commissions. The court dismissed the other four of Smith's five claims and
dismissed Congruent's counterclaims. As to attorney fees, the court determined
that both parties "prevailed in part." The court found Smith was entitled to
attorney fees under RCW 49.48.030 for a successful wage claim and stated that
an award would be addressed in a separate order. The order states, "Therefore
it is ORDERED, ADJUDGED, and DECREED that judgment shall be entered
promptly in favor of Plaintiff and against Defendant consistent with the findings
and conclusions above."
On September 13, 2011, the court entered findings of fact and conclusions
of law on Smith's motion for an award of attorney fees and costs. The court
applied the lodestar method and awarded Smith $9,483.10 in attorney fees. The
order also provides, "The Clerk is further directed to enter judgment in this matter
consistent" with the findings and conclusions.
On October 11, 2011, Congruent filed a motion for an award of costs and
attorney fees, citing CR 11, CR 54 (d) and RCW 4.84.010. On October 24, 2011,
the court entered findings of fact and conclusions of law. The findings recite
certain evidence relevant to the constructive discharge claim and state that
Congruent prevailed on four of Smith's five causes ofaction and incurred
attorney fees and costs. The conclusions state:
1. The Constructive Discharge cause of action filed by the Plaintiff was
frivolous and advanced without reasonable cause.
2. Under CR 11 and RCW 4.84.185 this court will award an appropriate
sanction.
3. The sanction will be considered upon motion by the Defendant.
No. 69847-8-1/3
Nearly 14 months later, on December 12, 2012, Congruentfiled a motion
for an award ofsanctions under CR 11 and RCW 4.84.185. In an order signed
on December 21 and filed on December 24, the trial court (1) noted that neither
Smith nor his attorney had responded to Congruent's motion; (2) found that the
constructive discharge claim was not well grounded in fact or warranted by
existing law and "was interposed for an improper purpose—to threaten the
Defendant, because of the open ended exposure, into settling the case"; and (3)
ordered $14,475.60 in sanctions against Smith and his counsel, jointly and
severally. The superior court docket indicates that Smith filed a response to
Congruent's motion on December 27. On January 3, 2013, the court vacated its
December 2012 order and denied the motion for sanctions as untimely under CR
54(d) and RCW 4.84.185.
Congruent appeals.
ANALYSIS
We review the trial court's decision to grant or deny an award of attorney
fees under RCW 4.84.185 or CR 11 for an abuse of discretion. Skimming v.
Boxer, 119 Wn. App. 748, 754, 82 P.3d 707 (2004). We consider "whether the
court's conclusion was the product of an exercise of discretion that was
manifestly unreasonable or based on untenable grounds or reasons." Tiger Oil
Corp. v. Dep't of Licensing, 88 Wn. App. 925, 938, 946 P.2d 1235 (1997).
CR 54(d)(2) requires claims for attorney fees and expenses to be made by
motion "filed no later than 10 days after entry of judgment" unless otherwise
provided by statute or order of the court. RCW 4.84.185 requires a party
No. 69847-8-1/4
requesting reasonable expenses including attorney fees based on a finding that
an action was "frivolous and advanced without reasonable cause" to file a motion
within 30 days after the entry of a "final judgment after trial."
RCW 4.84.185 authorizes an award of attorney fees based on written
findings that a lawsuit is frivolous in its entirety. Biggs v. Vail, 119 Wn.2d 129,
136-37, 830 P.2d 350 (1992); Forster v. Pierce County, 99 Wn. App. 168, 183-84,
991 P.2d 687 (2000). "Under RCW 4.84.185, the trial court is not empowered to
sort through the lawsuit, search for abandoned frivolous claims and then award
fees based solely on such isolated claims." Biggs, 119 Wn.2d at 136.
"The purpose behind CR 11 is to deter baseless filings and to curb abuses
of the judicial system." Bryant v. Joseph Tree, Inc., 119 Wn.2d 210, 219, 829
P.2d 1099 (1992) (emphasis omitted). Sanctions may be imposed under CR 11
ifa pleading lacks a factual or legal basis and the attorney or party who signed it
failed to conduct a reasonable inquiry into the factual or legal basis of the action
or the paper was filed for an improper purpose. Bryant, 119 Wn.2d at 220; Biggs
v. Vail, 124 Wn.2d 193, 201, 876 P.2d 448 (1994). "The fact that a complaint
does not prevail on its merits is by no means dispositive of the question of CR 11
sanctions. CR 11 is not a mechanism for providing attorneys fees to a prevailing
party where such fees would be otherwise unavailable." Bryant. 119 Wn.2d at
220.
Although CR 11 authorizes an award of reasonable attorney fees, such an
award is not automatic and the trial court retains broad discretion regarding the
nature and scope of sanctions. Miller v. Badglev, 51 Wn. App. 285, 303, 753
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P.2d 530 (1988). A court need not enter findings when rejecting a request for CR
11 sanctions. Skimming, 119 Wn. App. at 755.
"Sanctions, including attorney fees, may also be imposed under the
court's inherent equitable powers to manage its own proceedings." State v.
Gassman. 175 Wn.2d 208, 210-11, 283 P.3d 1113(2012). The trial courts'
"inherent authority to control and manage their calendars, proceedings, and
parties" allows attorney fees sanctions based on a finding of bad faith. Gassman,
175 Wn.2d at 211. In the absence of an express finding of bad faith, appellate
courts will uphold sanctions where the record establishes that the court found
some conduct equivalent to bad faith. Gassman, 175 Wn.2d at 211 (reversing
sanction where trial court found State's conduct careless and not purposeful).
Without relevant authority and without acknowledging the discretion
generally exercised by the trial court in determining the basis for fees under RCW
4.84.185 and the basis, nature, and scope of sanctions under CR 11 and its
inherent authority, Congruent argues only that it was error for the court to rely on
CR 54(d) and RCW 4.84.185 to determine that its motion was untimely. Claiming
that the timeliness of its original motion is undisputed, Congruent argues that the
trial court "ordered briefing to quantify the sanctions" in the October 24, 2011,
order as an exercise of its inherent authority which was "not subject to any
specific time limit."
But even if the trial court misstated the particular basis for its
determination that the motion was untimely, Congruent has not shown any abuse
of discretion. Congruent fails to identify any authority requiring the trial court to
No. 69847-8-1/6
consider a motion for attorney fees and expenses filed over 15 months after entry
of a judgment. And nothing in the October 24, 2011, order indicates that the trial
court would not consider the timeliness of a motion filed 14 months later.
Moreover, the language of the October 24, 2011, order still left open the
possibility that the trial court could determine in its discretion that no sanction
was warranted or that an appropriate sanction did not involve attorney fees or
any other monetary award. The conclusion that the constructive discharge
claims was "frivolous and advanced without reasonable cause" is consistent with
the requirements of RCW 4.84.185. However, the trial court did not find that
Smith's entire lawsuit was frivolous and advanced without reasonable cause.
And the record does not support such a finding given Smith's success on one of
his wage claims. On this record, Congruent cannot demonstrate any abuse of
discretion in the trial court's decision to deny any award under RCW 4.84.185.
Biggs, 119 Wn.2d at 136.
As to CR 11, the trial court chose not to enter findings as to the
reasonableness of Smith's attorney's investigation of the constructive discharge
claim and decided to vacate its previous finding that the claim was interposed for
an improper purpose. CR 11 requires more than a finding that a single
unsuccessful claim was frivolous. Biggs, 124 Wn.2d at 201. Similarly, the trial
court chose not to make a finding of bad faith or equivalent conduct justifying a
sanction under its inherent authority. Under these circumstances, Congruent
fails to establish that the trial court's decision to deny his motion for sanctions
falls outside its broad discretion.
6
No. 69847-8-1/7
Affirmed.
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WE CONCUR:
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