Stafford Health Services, Inc. v. The Estate Of Lawrence X. Sullivan ( 2020 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
In the Matter of the Estate of )
LAWRENCE X. SULLIVAN, ) No. 81206-8-I
)
Deceased. ) DIVISION ONE
)
STAFFORD HEALTH SERVICES, INC., ) UNPUBLISHED OPINION
a Washington corporation, d/b/a )
STAFFORD HEALTHCARE AT )
BELMONT, )
)
Respondent, )
)
v. )
)
THE ESTATE OF LAWRENCE X. )
SULLIVAN and THE LAWRENCE AND )
ARLENE SULLIVAN LIVING TRUST )
and DEANNA MERKATZ AND “JOHN )
DOE” MERKATZ, individually and the )
marital community comprised thereof, )
)
Appellants. )
SMITH, J. — The Estate of Lawrence X. Sullivan (Estate), the Lawrence
and Arlene Sullivan Living Trust (Trust), and Deanna Merkatz, the Estate’s
personal representative, challenge the trial court’s findings of fact and
conclusions of law supporting an award of attorney fees to Stafford Health
Services Inc. (SHS). We conclude that the record contains no admissible
evidence to support an award of attorney fees incurred by the law firm Gig
Harbor Law. We also conclude that the record does not contain sufficient
Citations and pin cites are based on the Westlaw online version of the cited material.
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evidence to support the reasonableness of fees billed for paralegal work.
Accordingly, we reverse in part and remand to the trial court to revise the
attorney fees award to exclude fees incurred by Gig Harbor Law and by
paralegals. Otherwise, we affirm.
FACTS
In 2015, SHS filed a creditor’s claim against the Estate for nursing
services and care provided to Lawrence Sullivan, the deceased, under an
“Admission and Financial Agreement” (Agreement) that had been executed by
Merkatz. After Merkatz rejected the claim, SHS filed a TEDRA1 petition against
the Estate, the Trust, and Merkatz (collectively Estate Parties). The Estate
Parties filed counterclaims against SHS, alleging, among other things, violation of
the Consumer Protection Act (CPA), chapter 19.86 RCW, and damages under
the abuse of vulnerable adults act (AVA), chapter 74.34 RCW.
In May 2017, the trial court dismissed the Estate Parties’ counterclaims.
Later, the trial court ruled on summary judgment that the Estate was liable to
SHS for payment under the Agreement and based on unjust enrichment. The
trial court also dismissed SHS’s claims against Merkatz individually.
After the trial court dismissed the Estate Parties’ counterclaims and ruled
on the Estate’s liability to SHS, SHS filed a petition for an award of attorney fees
and costs. In its petition, SHS requested a total of $44,426.94 in fees and costs
incurred by two law firms: (1) Andrews Skinner P.S. and (2) Gig Harbor Law.
SHS asserted that it was entitled to a fee award under TEDRA and under the
1 Trust and Estate Dispute Resolution Act, chapter 11.96A RCW.
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Agreement.
The only declaration submitted in support of the fee petition was from
attorney Pamela Andrews of the Andrews Skinner firm. Attached as exhibit 4 to
Andrews’ declaration were a number of Gig Harbor Law invoices, which Andrews
averred in her declaration were “true and correct copies of billings paid by [SHS]
to Gig Harbor Law to process both the creditor claim and TEDRA action.” Also
attached to Andrews’ declaration were a number of invoices from Andrews
Skinner to SHS. The Andrews Skinner invoices included billings for services
rendered by Heather Lanning and Jane Johnson, who were identified in the
invoices as an “RN Paralegal” and a “Sr. Paralegal,” respectively.
In its response to SHS’s fee petition, the Estate Parties argued that under
the Agreement, SHS was not entitled to recover fees and costs incurred in
defending the Estate Parties’ counterclaims. The Estate Parties also argued that
SHS “should . . . not be awarded any fees or costs under [TEDRA], as their
TEDRA Petition is essentially a suit on a rejected creditor’s claim.” The Estate
Parties further contended that the Gig Harbor Law invoices were inadmissible
hearsay and that a number of the services billed for in those invoices were
inadequately described. Additionally, the Estate Parties asserted that Andrews’
declaration failed to “establish that Heather Lanning and Jane Johnson’s
performance of the services they billed for were supervised by an attorney” or
“specify the qualifications of . . . Heather Lanning and Jane Johnson at all – let
alone in sufficient detail to demonstrate that they are qualified . . . to perform
substantive legal work.” Thus, the Estate Parties argued, the trial court “should
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not award any fees for services performed by Heather Lanning and Jane
Johnson.” Finally, the Estate Parties argued that the court “should not award any
fees for clerical services of non-lawyer personnel” and that Merkatz, individually,
should not be required to pay any fees or costs.
On August 22, 2017, the trial court granted SHS’s fee petition and
awarded the full amount of fees requested. The fee award was joint and several
against all defendants except Merkatz. The trial court did not enter findings of
fact with regard to the amount of the fee award.
The Estate Parties subsequently appealed the trial court’s dismissal of
their counterclaims, the ruling regarding the Estate’s liability to SHS, and the fee
award. In an unpublished opinion, we affirmed the trial court in all respects
except with regard to the reasonableness of the fee award. See In re Estate of
Sullivan (Sullivan I), No. 77166-3-I, slip op. at 2 (Wash. Ct. App. Nov. 26, 2018)
(unpublished), http://www.courts.wa.gov/opinions/pdf/771663.pdf. Specifically,
we concluded that SHS was entitled to an award of attorney fees under the
Agreement and that the trial court “had discretion to award attorney fees under
TEDRA.” Sullivan I, slip op. at 17. We also held that the court “did not abuse its
discretion by including fees and costs SHS incurred responding to the Estate
[Parties’] counterclaims.” Sullivan I, slip op. at 17. We concluded, however, that
the trial court “erred in failing to enter findings of fact and conclusions of
law . . . supporting the reasonableness of the award of attorney fees.” Sullivan I,
slip op. at 17. Accordingly, we affirmed the trial court but “remand[ed] to enter
findings of fact and conclusions of law on the reasonableness of the award of
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attorney fees and costs.” Sullivan I, slip op. at 18.
On remand, the trial court entered the following findings of fact and
conclusions of law:
I. FINDINGS OF FACT
1.1 On November 1, 2013 Lawrence Sullivan was
admitted to Stafford Health Services . . . for treatment and therapy.
1.2 Mr. Sullivan’s niece, Deanna Merkatz, signed his
“Admission and Financial Agreement” as his “POA (Power of
Attorney)” or “Responsible Party” and consented to nursing
services. . . .
....
1.3 Merkatz promised as the Responsible Party to pay for
services provided by SHS including charges not covered by
Medicare from . . . “the Resident’s income or resources legally
available for payment of such obligations.”
1.8[2] The amount due at the time of his transfer was
$19,025.
1.9 Ms. Merkatz did not pay the outstanding billing.
1.10 Mr. Sullivan passed in 2015.
1.11 On May 22, 2015, the Estate sent a “non-probate
Notice to Creditors” to SHS and SHS filed a creditor’s claim for
$19,025 against the Estate. On August 17, Ms. Merkatz, as the PR
for the Estate, rejected the claim.
1.12 On Sept[ember] 14, 2015, SHS filed a TEDRA petition
against the Estate of Lawrence X. Sullivan and the Lawrence and
Arlene Sullivan Living Trust (collectively “the Estate”) and Ms.
Merkatz, individually.
1.13 The Estate and Ms. Merkatz filed counterclaims
against SHS.
1.14 SHS sought dismissal of the counterclaims which was
granted through orders entered on a motion for CR 12(b)(6)
2 Proposed findings 1.4 through 1.7 were stricken by the trial court.
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dismissal and on summary judgment.
1.15 SHS sought an order for recovery of attorney fees
and costs under both TEDRA and the Admission and Financial
Agreement.
1.16 SHS submitted itemized and detailed time records
and documented expenses evidencing attorney fees and costs as
follows:
Andrews Skinner, P.S: $41,557.94
Gig Harbor Law: $2,869.00
1.17 The trial court found the number of hours and hourly
rates of the defense attorneys to be reasonable based upon the
record and therefore entered its August 21, 2017 order in favor of
plaintiffs and jointly and severally against all defendants except
Deanna Merkatz personally.
1.18 The trial court found the expenses incurred by the
defense attorneys to be reasonable based upon the record and
therefore entered its August 21, 2017 order.
1.19 The trial court entered Judgment in the amount of
$63,451.94 accruing interest at a rate of 12% on September 11,
2017.
II. CONCLUSIONS OF LAW
2.1 RCW 11.96A.150, the TEDRA statute, grants broad
discretion to courts to award attorney fees in such manner as the
court deems equitable and in “all proceedings governed by this
title.” In re Estate of Berry, 189 Wn. App[.] 368,[ ]379[, 358 P.3d
426] (2015).
2.2 The authority to award attorney fees and costs under
RCW 11.96A.150 “is not limited to actions initiated under Chapter
11.96A RCW[.]” Id. at 379.
2.3 Under RCW 11.96A.150(1) the court may consider
“any and all factors that it deems to be relevant and appropriate.”
Id.
2.4 SHS is entitled to an award of attorney fees and costs
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under TEDRA.
2.5 The terms of the contract entered into between
Lawrence X. Sullivan and SHS allowed for recovery of attorney
fees and costs to the substantially prevailing party in any dispute
arising out of the payment or non-payment of any funds due and
owing pursuant to the Agreement.
2.6 King County Cause No. 15-4-05356-3 SEA
constitutes a dispute arising out of the payment or non-payment of
any funds due and owing pursuant to the Agreement.
2.7 SHS is the prevailing party in King County Cause No.
15-4-05356-3 SEA.
2.8 The number of hours and hourly rates of the defense
attorneys are reasonable.
2.9 The expenses incurred by the defense attorneys were
reasonable.
2.10 SHS is entitled to an award of attorney fees and costs
under the terms of the Admission and Financial Agreement in the
amount of $44,426.94 against all defendants jointly and severally,
except Deanna Merkatz personally.
2.11 These Findings of Fact and Conclusion of Law are
consistent with the trial court’s determination reached when the trial
court entered its order dated August 21, 2017.
3.0 These Findings of Fact and Conclusions of Law are
hereby entered Nunc Pro Tunc dating back to the date of entry of
Judgment on September 11, 2017.
After the trial court entered its findings of fact and conclusions of law, the
Estate Parties filed a “Notice of Discretionary Review to Supreme Court” in which
they designated for review both: (1) our decision in Sullivan I and (2) the trial
court’s findings of fact and conclusions of law on remand. In a ruling entered on
June 3, 2019, a commissioner of the Supreme Court denied review of Sullivan I
as procedurally improper. Additionally, at the commissioner’s direction, the
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Supreme Court clerk redesignated the Estate Parties’ challenge to the trial
court’s findings and conclusions as a notice of appeal. Our Supreme Court
subsequently transferred that appeal to this court.
ANALYSIS
Reasonableness of Attorney Fees Award
“Whether [a] fee award is reasonable is a matter of discretion for the trial
court, which we will alter only if we find an abuse of discretion.” Bloor v. Fritz,
143 Wn. App. 718, 747, 180 P.3d 805 (2008). A trial court abuses its discretion if
it bases its decision on untenable grounds or reasons. West v. Seattle Port
Comm’n, 194 Wn. App. 821, 834, 380 P.3d 82 (2016).
Here, the Estate Parties advance a number of contentions to support their
proposition that the fee award was unreasonable. We address each contention
below.
Gig Harbor Law Invoices
The Estate Parties contend that because the Gig Harbor Law invoices
constituted inadmissible hearsay, the trial court should have excluded them.
SHS does not dispute that the invoices are hearsay but contends that they were
nonetheless admissible under the Uniform Business Records as Evidence Act
and, specifically, RCW 5.45.020. We agree with the Estate Parties.
RCW 5.45.020 “‘makes evidence that would otherwise be hearsay
competent testimony.’” Bavand v. OneWest Bank, 196 Wn. App. 813, 826, 385
P.3d 233 (2016) (quoting State v. Fleming, 155 Wn. App. 489, 499, 228 P.3d 804(2010)). Under that statute,
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[a] record of an act, condition or event, shall . . . be
competent evidence if the custodian or other qualified witness
testifies to its identity and the mode of its preparation, and if it was
made in the regular course of business, at or near the time of the
act, condition or event, and if, in the opinion of the court, the
sources of information, method and time of preparation were such
as to justify its admission.
RCW 5.45.020.
But although we broadly interpret the terms “custodian” and “other
qualified witness” as used in RCW 5.45.020, Bavand, 196 Wn. App. at 826,
Andrews’ declaration did not meet the requirements of the statute. Specifically,
even assuming that Andrews was a “custodian or other qualified witness” with
regard to the Gig Harbor Law invoices, she did not testify as to the mode of
preparation of the invoices, and SHS points to no competent evidence—such as
a declaration from Gig Harbor or SHS—from which the court could have found
that the invoices were “made in the regular course of business, at or near the
time of the act, condition or event.” RCW 5.45.020. Accordingly, the Gig Harbor
Law invoices were not admissible under RCW 5.45.020. Cf. Bavand, 196 Wn.
App. at 829 (corporate counsel’s declaration satisfied RCW 5.45.020 where
counsel’s testimony “establishe[d] that he ha[d] ‘personal knowledge of the
ordinary and customary method and manner of the preparation and maintenance
of [the relevant] records’ due to his general duties”). And because SHS points to
no other basis to admit the Gig Harbor Law invoices and does not point to any
other competent evidence of fees and costs incurred by Gig Harbor Law, there
was no tenable basis to include those fees and costs in the fee award.
Therefore, the trial court abused its discretion by including any fees and costs
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incurred by Gig Harbor Law in the fee award.3
Paralegal Services
The Estate Parties next contend that the trial court abused its discretion by
including paralegal fees in the fee award without considering the factors set forth
in Absher Construction Co. v. Kent School District No. 415, 79 Wn. App. 841,
917 P.2d 1086 (1995). Because SHS failed to present evidence to the trial court
to facilitate consideration of the Absher criteria, we agree.
In Absher, we listed six criteria as relevant to determining whether
nonlawyer fees are compensable:
(1) the services performed by the non-lawyer personnel must be
legal in nature; (2) the performance of these services must be
supervised by an attorney; (3) the qualifications of the person
performing the services must be specified in the request for fees in
sufficient detail to demonstrate that the person is qualified by virtue
of education, training, or work experience to perform substantive
legal work; (4) the nature of the services performed must be
specified in the request for fees in order to allow the reviewing court
to determine that the services performed were legal rather than
clerical; (5) as with attorney time, the amount of time expended
must be set forth and must be reasonable; and (6) the amount
charged must reflect reasonable community standards for charges
by that category of personnel.
Absher, 79 Wn. App. at 845.
Here, SHS points to no evidence in the record from which the trial court
could even have considered the Absher criteria or that would have supported a
finding that the paralegal fees were reasonable. For example, Lanning and
3Because we conclude that the trial court abused its discretion by
including any of Gig Harbor Law’s fees and costs in the amount of the fee award,
we do not address the Estate Parties’ contention that certain services billed for in
the Gig Harbor Law invoices were inadequately described.
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Johnston are identified in invoices only as an “RN Paralegal” and a “Sr.
Paralegal.” And Andrews’ declaration makes no mention whatsoever of Lanning
and Johnston, much less whether they were supervised by an attorney or
qualified to perform substantive legal work. Indeed, Andrews’ declaration does
not even state how long Lanning and Johnston had been employed as paralegals
with Andrews’ firm. For these reasons, the trial court abused its discretion
inasmuch as it concluded that SHS satisfied its burden to establish the
reasonableness of paralegal fees. Cf. In re Settlement/Guardianship of AGM,
154 Wn. App. 58, 74, 223 P.3d 1276 (2010) (“The attorney requesting fees bears
the burden of proving the reasonableness of the fees.”); TJ Landco, LLC v.
Harley C. Douglass, Inc., 186 Wn. App. 249, 262-63, 346 P.3d 777 (2015)
(remanding to trial court to revisit fee award for law student interns where the
record was not clear whether the interns were qualified to perform substantive
legal work under APR 9 and noting that if not, “the trial court should strike the fee
award”).
SHS disagrees and contends that “[a]lthough the Absher court identified
criteria that would be relevant in determining whether nonlawyer services should
be compensated, it did not indicate that the criteria [are] mandatory or must be
reflected in the trial court’s findings.” But we have explained that “[f]or the
recovery of fees of nonlawyers, the court must consider [the] six factors identified
in Absher.” State v. Mandatory Poster Agency, Inc., 199 Wn. App. 506, 531, 398
P.3d 1271 (2017) (emphasis added). Therefore, SHS’s contention fails. For the
same reason, we are unpersuaded by SHS’s attempt to distinguish Absher on
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the basis that it involved an award of attorney fees on appeal.4
Substantive Challenges
The Estate Parties also contend that the fee award was unreasonable
because (1) the Agreement, under which they were awarded, was unlawful, (2)
they were not authorized under TEDRA because TEDRA does not apply, and (3)
the law does not allow an award of fees for the time spent defending the Estate
Parties’ CPA, AVA, and tort-based counterclaims. But although couched in
terms of reasonableness, these arguments in fact attack SHS’s entitlement to
fees. We previously determined in Sullivan I that SHS is entitled to fees under
both the agreement and TEDRA, including fees incurred to defend against the
Estate Parties’ counterclaims. Accordingly, that determination is the law of the
case, and the Estate Parties do not persuade us that we should revisit it. Cf.
Bank of Am., N.A. v. Owens, 177 Wn. App. 181, 190, 311 P.3d 594 (2013) (“The
law of the case doctrine binds the parties, the trial court, and subsequent
appellate courts to the holdings of an appellate court in a prior appeal until such
holdings are authoritatively overruled.”). We thus adhere to our earlier
determination that SHS is entitled to fees and reject the Estate Parties’ attempts
to circumvent that determination under the guise of a reasonableness challenge.
Scope of Remand
As a final matter, the Estate Parties contend that a number of the trial
court’s findings and conclusions exceeded the scope of the remand. The trial
4
Because we conclude that the trial court abused its discretion by
awarding paralegal fees, we need not consider whether the trial court also erred
by awarding fees for clerical work performed by those same paralegals.
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court did enter a number of findings and conclusions that were relevant to SHS’s
entitlement to fees but not to the reasonableness of the fee award. And because
we remanded solely with regard to the reasonableness of the award, we agree
that some of the trial court’s findings and conclusions exceeded the scope of the
remand. Nevertheless, the Estate Parties do not explain why those findings and
conclusions warrant reversal, and we therefore conclude that reversal on this
basis is not required.
Fees on Appeal
SHS requests fees on appeal, arguing, “Pursuant to RAP 18.1, [SHS is]
entitled to an award of reasonable attorney fees and costs incurred on appeal.”
The Estate Parties counter that SHS’s request is no more than a bald request
and does not include the requisite argument and citation to authority.
We agree with the Estate Parties. See Osborne v. Seymour, 164 Wn.
App. 820, 866, 265 P.3d 917 (2011) (explaining that RAP 18.1(b) requires
argument and citation and “demands more than a bald request for attorney fees
on appeal”). We also conclude that there is no substantially prevailing party in
this appeal. Therefore, we deny SHS’s request for fees and costs on appeal.
Conclusion
We reverse the trial court’s award of fees incurred by Gig Harbor Law and
by paralegals and remand to the trial court to revise the fee award to exclude
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those fees. Otherwise, we affirm.
WE CONCUR:
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