Clarity Capital Management Corporation, V. Aretha Ryan ( 2021 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
CLARITY CAPITAL No. 82022-2-I
MANAGEMENT CORPORATION,
a Washington corporation, DIVISION ONE
Appellant, UNPUBLISHED OPINION
v.
ARETHA RYAN, an individual;
TEDDY J. NEWMAN, an
individual; and SALISH WEALTH
MANAGEMENT, INC., a
Washington corporation,
Respondents.
SMITH, J. — Clarity Capital Management Corporation appeals the trial
court’s order granting summary judgment in favor of Aretha Ryan, Teddy
Newman, and Salish Wealth Management Inc. Clarity claims that the court erred
by granting summary judgment on all of its claims, by denying its motion to
continue the summary judgment hearing, by denying its motion for
reconsideration, and in its award of attorney fees to the respondents. Finding no
error, we affirm.
FACTS
Multop Financial was a financial planning company in Bellingham,
Washington, owned by Phillip Multop. Matthew Bumstead is the president and
owner of Clarity, a financial services firm which sought to acquire Multop
Financial’s assets. In October 2019, Clarity and Phillip Multop executed a
Citations and pin cites are based on the Westlaw online version of the cited material.
No. 82022-2-I/2
purchase and sale agreement (PSA). The PSA sold Multop Financial’s client
accounts and related assets to Clarity and gave Clarity the right to use the name
“Multop Financial” for two years. It also assigned a contract between Multop
Financial and a separate consulting firm to Clarity.
Ryan and Newman were financial advisors at Multop Financial. As
employees, they each signed an employee manual that detailed employment
policies and benefits. On the first page of each manual, in a section labeled
“Introduction,” the manual stated, “The contents of this Manual shall not
constitute nor be construed as . . . a contract between Multop Financial and any
of its employees. The Manual is a summary of our policies, which are presented
here only as a matter of information.” The manuals contained provisions barring
employees from disclosing any information provided by clients and stating that an
employee’s obligation of confidentiality would continue for three years after
employment. Newman also signed a personnel policies document that contained
an agreement not to compete for financial work within 50 miles for three years
after his employment with Multop Financial. Throughout their time at Multop
Financial, Ryan and Newman each signed various other agreements, including
an agreement to sell Newman’s client interests to Multop and various
confidentiality agreements that contained similar provisions.
When Clarity bought Multop Financial, Newman and Ryan met with
Bumstead and expressed that they would continue to work for the firm. As part
of the transfer, Ryan signed a new employee manual with Clarity that contained
the same disclaimer that it was not a contract, as well as confidentiality and
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No. 82022-2-I/3
noncompete provisions. About a month later, on November 4, Ryan and
Newman gave notice of their resignation and quickly began working at Salish
Wealth Management, which is 0.1 miles away from Clarity’s Bellingham offices.
According to Bumstead, they immediately began contacting Clarity’s clients to
convince them to move to Salish and made false statements to convince them to
do so. These clients left Clarity for Salish and took with them assets worth over
$40,000,000.
Clarity sued Ryan, Newman, and Salish. It alleged that Ryan and
Newman had breached their contracts and alleged that Clarity had justifiably
relied on Ryan’s and Newman’s agreements to the employee manuals. It also
accused Ryan, Newman, and Salish of intentional interference with business
expectancy and defamation.
Salish, Ryan, and Newman moved for summary judgment, claiming that
Clarity’s claims failed because it was not a party to the majority of the contracts it
was seeking to enforce, that it was estopped from claiming the employee manual
was a contract because of the disclaimer that it was not a contract, and that
Washington law does not allow an employer to pursue a claim for a violation of
its own noncontractual employee handbook. The motion also challenged
Clarity’s defamation claim in passing, asserting that the claim was “derivative and
not supported.”
Clarity moved to continue the summary judgment hearing so that it could
depose Ryan, Newman, and a representative of Salish to learn more about their
intent and actions after leaving Clarity. It also responded to the motion for
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No. 82022-2-I/4
summary judgment, but it did not address the defamation claim except to assert
that respondents had not made any substantive reference to the claim beyond
stating that it was derivative.
The trial court denied the motion for a continuance and granted the motion
for summary judgment on all of Clarity’s claims. Clarity moved for
reconsideration, contending that the court had misapplied the law. The court
denied the motion for reconsideration and granted attorney fees to Ryan,
Newman, and Salish, based on attorney fee provisions in the employee manuals
and Multop Financial confidentiality agreements.
Clarity appeals.
ANALYSIS
Clarity challenges the trial court’s entry of summary judgment on its
breach of contract, equitable reliance, tortious interference with business
expectancy, and defamation claims. It also claims the trial court abused its
discretion by denying its motion for continuance and motion for reconsideration
and by awarding attorney fees to the respondents. We affirm on all counts.
Standard of Review
We review an order on summary judgment de novo. Strauss v. Premera
Blue Cross, 194 Wn.2d 296, 300, 449 P.3d 640 (2019). We consider “the
evidence and all reasonable inferences from the evidence in the light most
favorable to the nonmoving party.” Keck v. Collins, 184 Wn.2d 358, 370, 357
P.3d 1080 (2015). “Summary judgment is appropriate only when no genuine
issue exists as to any material fact and the moving party is entitled to judgment
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No. 82022-2-I/5
as a matter of law.” Keck, 184 Wn.2d at 370 (footnote omitted). A court’s
decision on a motion to continue or a motion for reconsideration is reviewed for
abuse of discretion. Tellevik v. 31641 W. Rutherford St., 120 Wn.2d 68, 90, 838
P.2d 111, 845 P.2d 1325 (1992) (motion to continue); Weems v. N. Franklin Sch.
Dist., 109 Wn. App. 767, 777, 37 P.3d 354 (2002) (motion for reconsideration),
abrogated on other grounds by Fed. Way Sch. Dist. No. 210 v. Vinson, 172
Wn.2d 756, 261 P.3d 145 (2011). The court abuses its discretion “if its decision
is based on untenable grounds or untenable reasons.” Briggs v. Nova Servs.,
135 Wn. App. 955, 961, 147 P.3d 616 (2006), aff’d, 166 Wn.2d 794, 213 P.3d
910 (2009).
Contract Claims
Clarity asserts that the court erred by dismissing its contract claims.
Because Clarity had no contract with Ryan or Newman to enforce, we disagree.
1. Multop Documents
First, Clarity is not a party to any contracts between Ryan or Newman and
Multop Financial, and therefore it may not seek to enforce them.1 Generally,
someone who is not a party to a contract cannot seek to enforce the contract.
Trane Co. v. Brown-Johnston, Inc., 48 Wn. App. 511, 520, 739 P.2d 737 (1987).
However, if an owner of contract rights assigns its rights to a third party, the
assignee “‘steps into the shoes of the assignor, and has all the rights of the
assignor.’” Carlile v. Harbour Homes, Inc., 147 Wn. App. 193, 208, 194 P.3d 2801For purposes of this section, we assume without deciding that Ryan and
Newman had entered into enforceable noncompete agreements with Multop
Financial.
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No. 82022-2-I/6
(2008) (quoting Puget Sound Nat’l Bank v. Dep’t of Revenue, 123 Wn.2d 284,
292, 868 P.2d 127 (1994)), review granted and dismissed, 166 Wn.2d 1015(2009). But contracts for professional services are personal and therefore not
assignable. Kim v. Moffett, 156 Wn. App. 689, 704, 234 P.3d 279 (2010).
Here, while the PSA explicitly assigned Multop’s consulting contract with a
nonparty to Clarity, it did not attempt to assign or even make reference to any
employee contracts. The only evidence that Clarity cites to support its claim that
Multop’s noncompete agreements were assigned to Clarity is an excerpt from
Phillip Multop’s declaration, which provides:
I am informed that Aretha Ryan and Teddy Newman have alleged
that it was not part of [the sale of assets to Clarity] that their
agreements with my firm would transfer to Clarity as part of this
transaction.
. . . That is not true. They both understood that their
agreements were transferring to Clarity as part of our transaction. In
fact, they requested that specifically of me, to make sure they had
job security after a new owner took over. They clearly understood
that Matt Bumstead’s purchase of the assets under management
was intended with them to continue as part of the team; hence
Matt’s multiple meetings with them prior to the sale. . . .
....
. . . It would make no sense for me to not transfer my
agreements with my staff as part of the deal. That was intended all
along. In fact, that is a main reason as to why I chose Matt
Bumstead as the successor—because he fully intended to keep all
staff in place.
This declaration focuses on the parties’ intention that Ryan’s and Newman’s
employment would continue with Clarity but fails to establish that any
confidentiality or noncompete agreements were assigned or even discussed.
Furthermore, Multop’s claim that Ryan’s and Newman’s noncompete agreements
were assigned to Clarity “as part of” the sale of Multop Financial’s assets to
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No. 82022-2-I/7
Clarity is contradicted by the plain language of the PSA, which explicitly states:
“This Agreement . . . constitute[s] the sole and entire agreement of the parties to
this Agreement with respect to the subject matter contained herein, and
supersede[s] all prior and contemporaneous understandings and agreements.”
The PSA does not purport to assign any agreements with Ryan or Newman to
Clarity. Even if it did, such agreements for Ryan’s and Newman’s professional
financial services would not be assignable. Kim, 156 Wn. App. at 704-05. The
court therefore did not err by concluding that Clarity could not sue on the basis of
Multop Financial’s agreements with Ryan or Newman.
2. Clarity Handbook
Furthermore, the Clarity employee manual signed by Ryan does not form
the basis for a breach of contract cause of action. Under Washington’s objective
theory of contract interpretation, we attempt to “ascertain the intent of the parties
from the ordinary meaning of the words within the contract.” Nye v. Univ. of
Wash., 163 Wn. App. 875, 882-83, 260 P.3d 1000 (2011). Although the manual
contained confidentiality and noncompete provisions, the first page contained an
explicit statement that the manual “shall not constitute nor be construed as . . . a
contract between Clarity Capital and any of its employees.” Given this plain
disclaimer, the Clarity manual cannot be considered a contract.2
Clarity objects that the court was not permitted to rule that the handbook
did not constitute a contract because there was insufficient discussion of this
2
Because we conclude that Clarity was not a party to any enforceable
noncompete contract in this case, we do not address its argument that the
manuals were sufficiently specific to constitute contracts.
7
No. 82022-2-I/8
issue in the summary judgment briefing. It is incorrect. The respondents’
summary judgment briefing contended that Clarity was estopped from claiming
breach of contract because of its disclaimer that the document “shall not
constitute . . . a contract.” This put Clarity’s contract claims at issue, and we may
uphold summary judgment on any grounds that are established by the pleadings
and supported by the record. LaMon v. Butler, 112 Wn.2d 193, 200-01, 770 P.2d
1027 (1989) (affirming summary judgment on basis of plaintiff’s failure to meet its
burden of proof even where this was not discussed below).3
3. Justifiable Reliance
Clarity next contends that even if its employment manual did not constitute
a contract, it “justifiably relied on the representations” of Ryan and Newman that
they agreed to the noncompetition and confidentiality clauses in the Clarity
manual and various Multop Financial documents. Clarity’s allegations under this
claim precisely tracked the test from Thompson v. St. Regis Paper Co., 102
Wn.2d 219, 230, 685 P.2d 1081 (1984), which requires an employee seeking to
enforce promises in an employee handbook to prove “(1) whether any
statements therein amounted to promises of specific treatment in specific
situations; (2) if so, whether the employee justifiably relied on any of these
promises; and, finally, (3) whether any promises of specific treatment were
breached.”4 Bulman v. Safeway, Inc., 144 Wn.2d 335, 340-41, 27 P.3d 11723 This reasoning also applies to Clarity’s justifiable reliance and implied
contract claims.
4 Clarity’s complaint under its equitable reliance claim alleged that (1) “The
statements in the Employee Manual and its associated documents regarding
confidentiality of client information and non-solicitation amount to promises of
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No. 82022-2-I/9
(2001). In Thompson, our Supreme Court noted after setting forth this cause of
action that “employers will not always be bound by statements in employment
manuals. They can specifically state in a conspicuous manner that nothing
contained therein is intended to be part of the employment relationship and are
simply general statements of company policy.” 102 Wn.2d at 230.
Thompson’s reasoning relied on the employer’s “substantial control over
both the working relationship and his employees.” 102 Wn.2d at 229. We
therefore decline to extend it to an employer seeking to enforce a manual against
its employees, especially where, as here, the employer took advantage of the
exception in Thompson and conspicuously noted that the manual was not a
contract and was only an informational summary of Clarity’s policies.
Clarity objects that it was not relying on Thompson but instead was
making a generic claim that it justifiably relied on Ryan’s and Newman’s
representations.5 We reject its assertion that it could justifiably rely on Ryan’s
assent to a document drafted by Clarity, where Clarity specifically indicated that
the contents “shall not constitute nor be construed as a promise of employment
or as a contract between Clarity Capital and any of its employees.” Clarity also
specific treatment in specific situations,” (2) “[Clarity] justifiably relied on the
representations of Ryan and Newman,” and (3) “Ryan and Newman breached
the promises.”
5 This appears to be a claim based on promissory estoppel, although
Clarity does not characterize it as such. Promissory estoppel permits a party to
enforce a noncontractual promise if it can establish “(1) A promise that (2) the
promisor should reasonably expect to cause the promisee to change his position
and (3) that does cause the promisee to change his position (4) justifiably relying
upon the promise, in such a manner that (5) injustice can be avoided only by
enforcement of the promise.” Kim v. Dean, 133 Wn. App. 338, 348, 135 P.3d
978 (2006).
9
No. 82022-2-I/10
could not justifiably rely on Ryan’s or Newman’s promises to Multop Financial
when those promises were specific to their employment with Multop Financial.
Clarity also disagrees on the grounds that the court should not have
granted summary judgment because whether an employee manual creates a
contract is an issue of fact. While this is generally true, “if reasonable minds
cannot differ as to whether language sufficiently constitutes an offer or a promise
of specific treatment in specific circumstances, as a matter of law the claimed
promise cannot be part of the employment relationship.” Swanson v. Liquid Air
Corp., 118 Wn.2d 512, 522, 826 P.2d 664 (1992); Quedado v. Boeing Co., 168
Wn. App. 363, 373-75, 276 P.3d 365 (2012) (as a matter of law, employee
documents that contained disclaimer of contractual rights on first page did not
create binding promise). Similarly, though “justifiable reliance is normally a
question of fact, summary judgment is appropriate if reasonable minds could
reach but one conclusion.” Cornerstone Equip. Leasing, Inc. v. MacLeod, 159
Wn. App. 899, 905, 247 P.3d 790 (2011). Because the facts here can only lead
to the conclusion that Clarity did not justifiably rely on a promise, summary
judgment on this issue was proper.
4. Implied Contract
Finally, the trial court properly granted summary judgment on Clarity’s
implied contract claim. Clarity claimed that even if the employment documents
discussed above were not contracts, the “actions of the parties constitute an
implied contract.” Both implied contracts and express contracts “grow out of the
intentions of the parties to the transaction, and there must be a meeting of minds
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No. 82022-2-I/11
whether the contract be express or implied.” Troyer v. Fox, 162 Wash. 537, 554,
298 P. 733 (1931) (emphasis omitted). Here, viewed in the light most favorable
to Clarity, Ryan and Newman’s actions consist of working for Clarity for a month,
expressing an intent to stay there, and abiding by corporate policies while they
worked there. Nothing in these actions establishes an intent to be bound by a
covenant not to compete after leaving Clarity. We would be especially wary to
find such an agreement through the actions of the parties, given that “public
policy requires us to carefully examine covenants not to compete, even when
protection of a legitimate business interest is demonstrated, because of equally
competing concerns of freedom of employment and free access of the public to
professional services.” Knight, Vale & Gregory v. McDaniel, 37 Wn. App. 366,
370, 680 P.2d 448 (1984). We therefore affirm the court’s grant of summary
judgment on Clarity’s breach of contract claims.
Tortious Interference with Business or Contractual Expectancy
Clarity challenges the court’s entry of summary judgment on its claim of
tortious interference with business expectancies or contractual expectancies.
“The elements of tortious interference are: (1) The existence of a valid business
expectancy; (2) defendant's knowledge of that expectancy; (3) defendant's
intentional interference with that expectancy; (4) defendant's improper purpose or
use of improper means in so interfering; and (5) the plaintiff's resultant damages.”
Goodyear Tire & Rubber Co. v. Whiteman Tire, Inc., 86 Wn. App. 732, 745, 935
P.2d 628 (1997). Here, any interference with Clarity’s business expectancies
was not improper because Salish, Ryan, and Newman retained the right to
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No. 82022-2-I/12
compete with Clarity for business. Goodyear, 86 Wn. App. at 746. Therefore,
the court did not err by entering summary judgment on this issue.
Defamation Claim
Clarity next challenges the court’s grant of summary judgment on its
defamation claim, contending that the respondents did not meet their burden to
show the absence of an issue of material fact. We disagree.
The purpose of summary judgment is to “avoid an unnecessary trial when
there is no genuine issue of material fact.” Jacobsen v. State, 89 Wn.2d 104,
108, 569 P.2d 1152 (1977). When a defendant brings a motion for summary
judgment, “the moving party bears the initial burden of showing the absence of
an issue of material fact.” Young v. Key Pharm., Inc., 112 Wn.2d 216, 225, 770
P.2d 182 (1989). If the moving party does so, then burden shifts to the plaintiff.
Young, 112 Wn.2d at 225. “If, at this point, the plaintiff ‘fails to make a showing
sufficient to establish the existence of an element essential to that party’s case,
and on which that party will bear the burden of proof at trial,’” then summary
judgment is proper. Young, 112 Wn.2d at 225 (quoting Celotex Corp. v. Catrett,
477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)).
The moving defendant can meet their burden by showing that there is an
absence of evidence to support the plaintiff’s case. Young, 112 Wn.2d at 225
n.1. In such a case, the moving party does not need to support the motion with
affidavits but must still identify the portions of the record which demonstrate the
absence of a genuine issue of material fact. White v. Kent Med. Ctr., Inc., 61
Wn. App. 163, 170, 810 P.2d 4 (1991). In White, White sued for medical
12
No. 82022-2-I/13
malpractice and the defendants moved for summary judgment, in part on the
grounds that White “lacked any admissible expert testimony regarding the
[defendants’] standard of care.” 61 Wn. App. at 165-66. White responded by
pointing to excerpts of depositions that she claimed did establish the standard of
care, and it was not until their reply that the defendants pointed to evidence
supporting their claim. White, 61 Wn. App. at 166-67, 170. We noted that the
defendants “only marginally complied” with their initial burden, but did not reverse
on those grounds and instead acknowledged that “[i]t is difficult to prove a
negative, and in some circumstances the only way that the moving party will be
able to show that there is no material issue of fact is by way of reply to the
responding party’s citations to the record.” White, 61 Wn. App. at 170-71. We
concluded by emphasizing “that only rarely will a moving party comply with the
strict requirements [of the initial burden] without having made specific citations to
the record in its opening materials.” White, 61 Wn. App. at 171.
We conclude that this is one of those rare instances. The respondents’
motion asked the court to dismiss Clarity’s entire lawsuit and stated in particular
that Clarity’s defamation claim was “derivative and not supported.” While the
respondents’ discussion of the defamation claim was notably cursory, there was
a similarly marked lack of evidence to support defamation in the record. In fact,
the only evidence in support of this claim was a declaration from Bumstead which
stated:
Ryan, Newman, and Salish have engaged in a systematic
campaign of false statements to Clarity clients with the goal of
misleading Clarity clients and taking them . . . .
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No. 82022-2-I/14
. . . The false statements . . . have included statements
about the following:
 That Multop is no longer in business.
 That Clarity’s owner and main producer does not work in
the business.
 That the remaining advisors at Clarity have no
experience.
 That the previous owner of Multop Financial, Phil Multop,
is not working in the business any longer.[6]
These statements are a virtually verbatim repetition of Clarity’s allegations in its
complaint.7 See LaPlante v. State, 85 Wn.2d 154, 158, 531 P.2d 299 (1975)
(adverse party in summary judgment “may not rest on mere allegations in the
pleadings but must set forth specific facts showing that there is a genuine issue
for trial”). They are also woefully inadequate as evidence, given their lack of
foundation and the fact that they appear to be hearsay. Dunlap v. Wayne, 105
Wn.2d 529, 535-36, 716 P.2d 842 (1986) (summary judgment dismissal of
defamation claim was proper where only evidence of false statements was based
on inadmissible hearsay). We have noted that it is “difficult to prove a negative”
and conclude that in this case, the respondents met their burden by pointing out
that Clarity had failed to provide support for its defamation claim. White, 61 Wn.
App. 170-71. Clarity subsequently failed to point to any evidence of defamation
in its responsive pleading, apparently because of its belief that the respondents
6 The respondents note that in our review of a summary judgment order,
we “‘consider only evidence and issues called to the attention of the trial court.’”
Mithoug v. Apollo Radio of Spokane, 128 Wn.2d 460, 462, 909 P.2d 291 (1996)
(emphasis omitted) (quoting RAP 9.12). This declaration was not called to the
attention of the trial court by any party at summary judgment, and we discuss it
only to the extent that it bears on whether the respondents met their burden.
7 The only alteration is that Bumstead’s declaration also attributes the
“systematic campaign” to Salish, not just Ryan and Newman.
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No. 82022-2-I/15
had a burden to “go forward with some measure of affirmative evidence.” This
belief was incorrect. Respondents met their burden for summary judgment by
pointing out Clarity’s failure to offer any support for its defamation claim.
Accordingly, we conclude that the trial court did not err by granting summary
judgment on the defamation claim.
Motion for Continuance
Clarity also claims that the court abused its discretion by denying its
motion for continuance. We disagree.8
If a party shows that they cannot present facts essential to justify their
opposition to a motion for summary judgment, the court “may order a
continuance to permit affidavits to be obtained or depositions to be taken.”
CR 56(f). The court may deny a motion to continue a motion for summary
judgment if “1) the moving party does not offer a good reason for the delay in
obtaining the evidence; 2) the moving party does not state what evidence would
be established through the additional discovery; or 3) the evidence sought will
not raise a genuine issue of fact.” Coggle v. Snow, 56 Wn. App. 499, 507, 784
P.2d 554 (1990).
8 We reject the respondents’ contention that Clarity waived this argument
by participating in the summary judgment hearing without objecting, even though
Clarity had already filed a motion to this effect. The respondents cite no
Washington law to support this contention. See DeHeer v. Seattle Post-
Intelligencer, 60 Wn.2d 122, 126, 372 P.2d 193 (1962) (“Where no authorities are
cited in support of a proposition, the court is not required to search out
authorities, but may assume that counsel, after diligent search, has found
none.”).
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No. 82022-2-I/16
Here, Clarity moved for a continuance in order to depose Ryan, Newman,
and a representative of Salish. Clarity claims this continuance was necessary in
order to ascertain Ryan’s and Newman’s intent and their reliance on the fact that
they did not have contracts with Clarity restricting their right to move to Salish.9
However, contrary to Clarity’s claim, information regarding Ryan’s and Newman’s
intent or their reliance on Clarity’s representation that the manual was not a
contract would have no impact on the court’s determinations that there was no
valid contract and that Clarity could not reasonably rely on Ryan’s and Newman’s
representations. Thus, because the information Clarity sought failed to raise a
genuine issue of material fact, the court did not abuse its discretion by denying
the motion to continue.
Motion for Reconsideration
Clarity moved for reconsideration after the court entered summary
judgment on the basis that the court made errors of law. Because we hold that
the court did not err by entering summary judgment, we also conclude that it did
not abuse its discretion by denying the motion for reconsideration.
Attorney Fees
Finally, Clarity challenges the trial court’s award of attorney fees to the
respondent. Clarity claims that (1) the court erred by awarding attorney fees
because there was no contract providing for attorney fees, (2) even if attorney
9Clarity also claims that it needed to “explor[e] . . . the role that Salish
played in encouraging these defections, as well as the specific contacts [Ryan
and Newman] made with Clarity clients.” However, Clarity did not identify this as
evidence it was seeking below, and so we decline to consider it in determining
whether the trial court abused its discretion.
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No. 82022-2-I/17
fees were justified, the court erred by awarding attorney fees for work on the
tortious interference claim, and (3) the court’s fee award was unreasonable. We
disagree.
1. Basis for Attorney Fee Award
Clarity first contends that the court erred by awarding attorney fees based
on the attorney fee provision in the employee manuals. We disagree.
Whether a party is entitled to attorney fees is an issue of law which we
review de novo. Ethridge v. Hwang, 105 Wn. App. 447, 460, 20 P.3d 958 (2001).
RCW 4.84.330 provides that, “[i]n any action on a contract” that provides for
attorney fees to a party seeking to enforce the contract, the prevailing party is
entitled to reasonable attorney fees. We have interpreted this language to
“encompass[ ] any action in which it is alleged that a person is liable on a
contract.” Herzog Alum., Inc. v. Gen. Am. Window Corp., 39 Wn. App. 188, 197,
692 P.2d 867 (1984). Our Supreme Court has affirmed that this is true “even
when the contract containing the attorneys fee provision is invalidated.” Labriola
v. Pollard Grp., Inc., 152 Wn.2d 828, 839, 100 P.3d 791 (2004). The attorney fee
provision also applies if an assignee seeks to enforce the agreement. See, e.g.,
Sunkidd Venture, Inc. v. Snyder-Entel, 87 Wn. App. 211, 212 n.1, 217, 941 P.2d
16 (1997) (assignee of lease would be entitled to attorney fees if it prevailed on
remand).
Here, Clarity sued for breach of contract based on the confidentiality and
noncompete policies contained in the employee manuals and Newman’s sale of
client account interests. Although the trial court concluded, and we agreed, that
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No. 82022-2-I/18
there was no assignment of contracts to Clarity and the manuals do not
constitute contracts, Ryan and Newman are entitled to attorney fees because
Clarity was suing for breach of contract based on these documents. If Clarity
had been successful in showing that there was an assignment or that the
manuals were contracts, it would be entitled to attorney fees for breach of
contract. Awarding fees to Ryan and Newman thus comports with the “remedial
purpose behind the enactment of RCW 4.84.330—that unilateral attorney’s fees
provisions be applied bilaterally.” Mut. Sec. Fin. v. Unite, 68 Wn. App. 636, 643,
847 P.2d 4 (1993) (holding that party was not entitled to attorney fees where
other party would not have been entitled to attorney fees if it had prevailed).
Clarity disagrees and contends that we should follow Wallace v. Kuehner,
111 Wn. App. 809, 820, 46 P.3d 823 (2002), in which Division Two declined to
apply the holding of Herzog to a case where the parties seeking fees did not
intend to form a contract. However, as the court noted in that case, “Division
One has firmly embraced the concept first presented in Herzog.” Wallace, 111
Wn. App. 821. Indeed, we have applied Herzog to cases like this one, where a
party prevailed on a breach of contract claim by showing that there was no
evidence it had ever entered into the contract that provided for attorney fees.
Bogle & Gates, P.L.L.C. v. Holly Mountain Res., 108 Wn. App. 557, 562-63, 32
P.3d 1002 (2001). We do so again here.
2. Attorney Fees for Tortious Interference
Clarity next contends that the trial court erred by awarding attorney fees to
Salish on the tortious interference claims. However, “[t]he court may award
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No. 82022-2-I/19
attorney fees for claims other than breach of contract when the contract is central
to the existence of the claims, i.e., when the dispute actually arose from the
agreements.” Deep Water Brewing, LLC v. Fairway Res. Ltd., 152 Wn. App.
229, 278, 215 P.3d 990 (2009). Here, Clarity alleged tortious interference on the
basis that it had contracts with Ryan and Newman, and that Ryan, Newman, or
Salish were wrongfully interfering with Clarity’s interests in those contracts.10
Thus, the agreements are central to Clarity’s tortious interference claims. We
have held that where a contract is central to a tortious interference claim against
a given party, attorney fees may be appropriate even if it was not a party to the
contract. Deep Water, 152 Wn. App. at 278-79. This is the case here.
Clarity’s reliance on Tradewell Grp., Inc. v. Mavis, 71 Wn. App. 120, 857
P.2d 1053 (1993), is not persuasive. In that case, we denied attorney fees on a
tortious interference claim because it did not arise out of a contract. Tradewell,
71 Wn. App. at 130. We therefore affirm the trial court’s award of attorney fees
for the tortious interference claims.
3. Reasonableness of Fee Award
Finally, Clarity contends that the amount of fees awarded was
unreasonable. “A trial judge is given broad discretion in determining the
reasonableness of an award, and in order to reverse that award, it must be
shown that the trial court manifestly abused its discretion.” Ethridge, 105 Wn.
10 Clarity’s complaint alleged specifically that “[t]he actions of Salish
constitute an intentional interference inducing a breach of Clarity’s reasonable
expectancy in compliance with the terms of the confidentiality and non-compete
provisions of the Employee Manual and other policy statements.”
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App. at 460. Here, the court found that “the fees requested by [the respondents]
are reasonable and reflect the time expended, the difficulty of the questions
involved, the skill required, the customary charges of other attorneys, and the
resulting benefit to the client.” It also found that, while the respondents were not
entitled to fees for Clarity’s defamation claim, the respondents “have
appropriately removed billing records referencing that claim, and have reduced
all entries following the summary judgment hearing by half. These reductions
appropriately reflect time reasonably spent on the defamation claim.” Clarity
does not challenge these findings, so they are verities on appeal. State v.
O’Neill, 148 Wn.2d 564, 571, 62 P.3d 489 (2003). We therefore reject Clarity’s
argument that the fee award is unreasonable. Furthermore, because Ryan,
Newman, and Salish have prevailed on appeal, they are entitled to reasonable
attorney fees for time spent on all issues other than the defamation claim.
Herzog, 39 Wn. App. at 197.
We affirm.
WE CONCUR:
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