Fidelity Natl Title Ins. Co. v. Port Orchard First Ltd Partnership ( 2013 )

G00,T OF A' PPEALS
DMS0 j 11
2063 DEC = 3 API 9: 24
ST/j,- E OF WASH i11C 014
F
TY
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
FIDELITY NATIONAL TITLE INSURANCE No. 43873 -9 -II
COMPANY, a Washington insurance
company,
Appellant,
V.
PORT ORCHARD FIRST LIMITED UNPUBLISHED OPINION
PARTNERSHIP, a Washington limited
partnership; SUPPORT SERVICES
COMMERCIAL, LLC, a Washington limited
liability company,
QuiNN- BRINTNALL, P. J. — After a failed real estate transaction between Port Orchard
First Limited Partnership ( " Port Orchard First ") and Support Services Commercial, LLC
Support Services "), escrow agent Fidelity National Title Insurance Co. ( " Fidelity ") brought an
interpleader action to resolve which party was entitled to a $ 50, 000 earnest money deposit it
held. In response, Port Orchard First brought a counterclaim against Fidelity, alleging that it was
negligent in performing its fiduciary role as an escrow agent. Port Orchard First and Support
Services eventually dismissed all claims against each other and successfully moved the trial
court to ( 1) voluntarily dismiss Port Orchard First' s negligence counterclaim against Fidelity, ( 2)
disburse the escrow money to Support Services, and ( 3) dismiss the action on the pleadings
No. 43873 -9 -II
under CR 12( c) on the grounds that " all claims for relief [ had] been granted or dismissed by
agreement." Clerk' s Papers ( CP) at 297.
Fidelity now appeals, arguing that the trial court erred in dismissing the action because
the parties' escrow instructions provided that Port Orchard First and Support Services must pay
Fidelity' s costs and attorney fees for having to defend any action related to the real estate
transaction— including a permissive counterclaim for Fidelity' s own negligence. Port Orchard
First maintains that because Fidelity failed to timely plead a contractual indemnity claim, the
trial court did not err in dismissing the action on the pleadings.
We affirm the trial court and conclude that even assuming Fidelity properly pleaded a
contractual indemnity claim, it would not be entitled to an award of costs and fees for having to
defend a negligence action unrelated to the interpleader action because the parties' escrow
instructions do not expressly allow for an attorney fee award in such circumstances. In addition,
the escrow instructions do not " evidence a clear and unequivocal intention to indemnify" Fidelity
from its own negligence. Nw. Airlines v. Hughes Air Corp., 104 Wash. 2d 152, 155, 702 P.2d 1192
1985). Accordingly, the trial court properly concluded that no outstanding claims remained
when it dismissed the action on the pleadings.
FACTS
In May 2009, Support Services agreed to buy the Lund Pointe Apartments from Port
Orchard First. Support Services and Port Orchard First engaged escrow company Fidelity to
serve as the closing agent. Prior to the scheduled closing of the transaction, Support Services
deposited $ 50, 000 with Fidelity per the terms of the parties' purchase and sale agreement, signed
all of the closing documents required at escrow, and deposited all the necessary proceeds. to
execute the sale. Just prior to closing, Port Orchard First attempted to force Support Services to
2
No. 43873 -9 -II
sign an " affordability agreement," a situation not contemplated by the parties' purchase and sale
agreement. In an attempt to resolve the situation, Port Orchard First and Support Services
extended the closing date of the transaction to September 7, 2009.
The parties failed to resolve their dispute prior to the September 7 deadline. Port Orchard
First later notified Support Services that it would no longer require it to sign an affordability
agreement. However, at that point, the time to close the transaction had lapsed and Support
Services sought a return of the $ 50, 000 earnest money deposit. Port Orchard First refused to
sign a recission agreement allowing Fidelity to return the deposit to Support Services. In
October 2009, Fidelity notified Port Orchard First and Support Services that if the parties failed
to deliver mutually signed instructions regarding the earnest money deposit by October 23, it
would file an interpleader action. This letter specifically notified the parties that "[ i]n the event
this occurs, the court costs and attorney fees will be deducted from the funds prior to the
disbursement to the court designated recipient" of the earnest money deposit. CP at 46.
On December 11, 2009, Fidelity brought an interpleader action in Kitsap County Superior
Court pursuant to RCW 4. 08. 160 and CR 22, and deposited the $ 50, 000 earnest money deposit
with the court.' Fidelity sought a ruling from the trial court ( 1) declaring it discharged from its
obligations to Support Services and Port Orchard First, ( 2) requiring Support Services and Port
Orchard First to be interpleaded to settle their dispute over the earnest money deposit, ( 3)
RCW 4. 08. 160 allows "[ a] nyone having in his or her possession, or under his or her control,
any property or money ... where more than one person claims to be the owner of [or] entitled to
such property [ or] money" to " commence an action in the superior court against all or any of
such persons, and have their rights, claims, interest, or liens adjudged, determined, and adjusted
in such action." CR 22( a) allows a plaintiff to join as defendants "[
p] ersons having claims
against the when their claims are such that the plaintiff is or may be exposed to
plaintiff ...
double or multiple liability."
3
No. 43873 -9 -II
dismissing it from the interpleader action between Support Services and Port Orchard First, ( 4)
enjoining Port Orchard First and Support Services from legal proceedings against it concerning
the deposit, ( 5) awarding it reasonable costs and attorney fees " upon disposition of the
interpleader proceedings," and ( 6) awarding it " any additional or further relief which the court
finds appropriate, equitable or just." CP at 5. Fidelity included a copy of the purchase and sale
agreement with its interpleader complaint but did not include a copy of the parties' escrow
instructions or specifically allege that Support Services and Port Orchard First should be jointly
and severally liable for its costs and attorney fees accrued in defending any action related to the
real estate transaction pursuant to the terms of the parties' escrow instructions.
In its answer to the interpleader complaint, Support Services argued that it was entitled to
return of the earnest money deposit as " it was the actions of Port Orchard [ First] that caused the
transaction to fail." CP at 29. Support Services did not bring any counterclaims against Fidelity.
Port Orchard First failed to respond to the complaint and in April 2010, Fidelity moved the trial
court for the relief requested in its complaint. Fidelity specifically requested " an award of
reasonable attorneys' fees and costs incurred in having to file the interpleader action in the
2
amount of $1, 522. 96." CP at 37.
On May 11, Port Orchard First supplied its answer to the complaint and a motion
opposing Fidelity' s discharge from the interpleader action. In both the answer and its motion
opposing Fidelity' s discharge, Port Orchard First counterclaimed that Fidelity acted negligently
2
As with its complaint, Fidelity did not submit the escrow instructions for the trial court' s
review with this motion or argue that Port Orchard First and Support Services should be held
jointly and severally liable for its costs and attorney fees pursuant to the terms of the escrow
instructions. Instead, Fidelity argued that as a matter of law, it could not be held liable for any
costs accruing in the action pursuant to.RCW 4. 08. 170.
M
No. 43873 -9 -II
in failing to get extension agreements signed by the parties prior to the expiration of the parties'
purchase and sale agreement. Accordingly, it requested that the court deny Fidelity' s motion to
be discharged from the interpleader action. That same day, Fidelity responded to Port Orchard
First' s counterclaim, denying that it acted negligently. Fidelity requested "[ d] ismissal of Port
Orchard First[' s] claim against [ Fidelity] with prejudice and without award of any fees or costs."
CP at 48. Fidelity' s response again requested an award of its reasonable costs and attorney fees
upon disposition of the interpleader proceedings." CP at 48. But Fidelity did not request an
award of costs or attorney fees specifically related to defending Port Orchard First' s negligence
action.
Later, Fidelity also submitted a reply to Port Orchard First' s motion opposing Fidelity' s
discharge from the interpleader action. In the reply, Fidelity argued that nothing in the escrow
instructions required it to " get closing extension agreements signed by the defendants" and,
accordingly, "[ a] failure to do something not required by the instructions is not a breach of the
escrow agreement or a breach of contract." CP at 86. Thus, Fidelity requested that the trial court
grant its motion to discharge it from the interpleader action and " award its reasonable attorney' s
fees and expenses." CP at 88. Fidelity included ( for the first time) the parties' escrow
instructions with this motion but failed to specifically argue that the parties should be liable for
its costs and attorney fees pursuant to the terms of the escrow instructions.
In June, Fidelity moved for entry of an order dismissing Port Orchard First' s
counterclaim pursuant to CR 12( b)( 6) and again asked that the trial court dismiss it from the
interpleader action. This motion requested an award of "reasonable attorney' s fees incurred in
having to defend Port Orchard [ First' s] unsupported Counterclaim, directly against Port Orchard
First]." CP at 102. Fidelity argued that Port Orchard First' s counterclaim was " entirely
5
No. 43873 -9 -II
unsupported by law" and, pursuant to CR 11, the trial court should " impose sanctions against
Port Orchard [ First], to include a reasonable attorney fee in the amount of $3, 725. 00." CP at
107 -08. Fidelity again requested attorney fees and costs incurred in having to file the
interpleader action in the amount of $ 1, 522. 96. Fidelity' s request for relief again failed to
contend that Support Services and Port Orchard First should be held jointly and severally liable
for its costs and attorney fees pursuant to the terms of the escrow instructions.
After considering the parties' pleadings, affidavits, and argument of counsel, the trial
court denied Fidelity' s motion to be dismissed from the lawsuit as it would not dismiss Port
Orchard First' s negligence counterclaim on a CR 12( b)( 6) motion. The trial court did; however,
award Fidelity $ 1, 652. 96, " which represents reasonable attorney fees and costs incurred in
bringing this action." CP at 133. Fidelity did not appeal this ruling.
In March 2011, the trial court denied a motion for summary judgment brought by Support
Services. Support Services sought to have all of Port Orchard First' s claims against it dismissed
with prejudice and to be awarded the remainder of the interpleaded funds. In denying the
motion, the trial court concluded that "[ g] enuine issues of material fact exist." CP at 183. The
trial court set the case for trial on June 25, 2012, and the parties began discovery.
On February 17,' 2012, Fidelity moved to amend its reply to Port Orchard First' s
negligence counterclaim after deposing Richard Brown, Port Orchard First' s general partner.
Fidelity sought to amend its reply to include as a defense to the negligence claim that " Port
Orchard [ First] lacked express authority to sell the property which is the subject of these
proceedings and therefore could not have closed the transaction regardless of any actions taken
by [ Fidelity]." CP at 199. In addition, Fidelity sought to amend its reply to include an express
claim that pursuant to the terms of the parties' escrow instructions, Port Orchard First and
10
No. 43873- 9- 11
Support Services should be held jointly and severally liable for Fidelity' s attorney fees and costs
in having to defend Port Orchard First' s counterclaim. This claim was based on the following
provision of the escrow instructions: " The parties jointly and severally agree to pay the Closing
Agent' s costs, expenses and reasonable attorney' s fees incurred in any legal action arising out of
or in connection with the Transaction." CP at 94.
That same day, Port Orchard First moved the trial court to voluntarily dismiss its
3
negligence counterclaim against Fidelity pursuant to CR 41( a)( 1)( 13). Fidelity opposed the
voluntary dismissal to the extent that it believed it had " a contractual right to recover attorney
fees under the Escrow Instructions" as explained in its motion to amend. CP at 206. On
February 23, Port Orchard First opposed Fidelity' s motion to amend its reply to Fidelity' s
negligence counterclaim, arguing that because the court " must dismiss Port Orchard First' s
counterclaim under CR 41, Fidelity' s motion is moot." CP at 238. Support Services joined Port
Orchard First' s motion to deny Fidelity' s motion to amend its reply. Support Services and Port
Orchard First also agreed to dismiss all actions against each other and requested that the earnest
money deposit be released to Support Services. On February 28, the trial court granted Port
Orchard First' s motion for voluntary dismissal and denied Fidelity' s motion to amend its reply to
the negligence counterclaim. Fidelity did not appeal this ruling.
On March 20, Port Orchard First moved the trial court to release the earnest money
deposit to Support Services. Fidelity opposed this motion, arguing that prior to release of the
funds, the court should conduct a hearing to determine whether, pursuant to the terms of the
parties' escrow instructions, Fidelity' s costs and attorney fees related to defending Port Orchard
3
CR 41( a)( 1)( B) makes voluntary dismissal mandatory when "[ u] pon motion of the plaintiff at
any time before plaintiff rests at the conclusion of his opening case."
7
No. 43873 -9 -II
First' s negligence counterclaim should be paid out of the earnest money deposit. In reply, Port
Orchard First argued that Fidelity had specifically disclaimed any interest in the earnest money
in its complaint and, second, it " did not plead a contractual indemnity claim." CP at 254. On
March 30, the trial court granted Port Orchard First' s motion to disburse the earnest money
deposit to Support Services ( less the $ 1, 652. 96 previously awarded to Fidelity for having to
bring the interpleader action). Fidelity did not appeal this ruling.
On June 22, Port Orchard First and Support Services jointly moved to dismiss the " action
on the pleadings under CR 12( c) as all claims for relief have been granted or dismissed by
agreement." CP at 297. Port Orchard First and Support Services argued that prior to Fidelity' s
unsuccessful motion to amend its reply to Port Orchard First' s negligence counterclaim, Fidelity
never argued that it was entitled to costs and attorney fees based on language in the escrow
instructions. In addition, Port Orchard First and Support Services argued that all the relief
requested in Fidelity' s complaint had been granted: Port Orchard First and Support Services
agreed to discharge Fidelity from its obligations in regard to the earnest money deposit, they
were interpleaded and settled their dispute over the earnest money deposit, they agreed that
Fidelity should be dismissed as a party to the interpleader action, they agreed to be enjoined from
further legal action against Fidelity concerning the earnest money deposit, and the trial court
already awarded Fidelity its reasonable costs and attorney fees for bringing the interpleader
action.
Fidelity responded to the motion for judgment on the pleadings and moved for partial
summary judgment on the issue of costs and attorney fees related to defending against Port
Orchard First' s negligence counterclaim. Fidelity argued that the
No. 43873- 9- 11
defendants' promise to indemnify Fidelity for fees and costs is clearly not
predicated on a judicial determination or finding that Fidelity is the prevailing
party in this lawsuit. Rather, the escrow instructions created an indemnification
obligation designed to prevent a situation where the escrow agent would be
required to bear the costs, expenses and attorney' s fees incurred in connection
with litigation over the transaction.
CP at 314 -15.
On August 1, the trial court denied Fidelity' s motion for partial summary judgment and
granted Port Orchard First and Support Services' motion for judgment on the pleadings. On
August 31, the trial court amended this order to reflect that in granting the motion for judgment
on the pleadings, it considered argument of counsel, a number of pleadings, declarations, and
transcripts from prior hearings that occurred in the case. Fidelity appeals this amended dismissal
order.
DISCUSSION
STANDARD OF REVIEW
We review a CR 12( c) dismissal on the pleadings de novo. Burton v. Lehman, 153
Wash. 2d 416, 422, 103 P.3d 1230 ( 2005). A dismissal under CR 12( c) is appropriate only if "it is
beyond doubt that the plaintiff can prove no facts that would justify recovery, considering even
hypothetical facts outside the record." In re Wash. Builders Benefit Trust, 173 Wash. App. 34, 80,
293 P.3d 1206, review denied, 177 Wash. 2d 1018 ( 2013). " Like a CR 12( b)( 6) motion, the
purpose [ of a CR 12( c) motion] is to determine if a plaintiff can prove any set of facts that would
justify relief." P.E. Systems, LLC v. CPI Corp., 176 Wash. 2d 198, 203, 289 P.3d 638 ( 2012). As
is the case with a CR 12( b)( 6) motion, we " must take the facts alleged in the complaint, as well
as hypothetical facts consistent therewith, in the light most favorable to the nonmoving party."
Davenport v. Wash. Educ. Ass' n, 147 Wn. App. 704, 715, 197 P.3d 686 ( 2008). Additionally,
9
No. 43873 -9 -II
we interpret contract provisions that do not require reference to extrinsic evidence de novo; they
present questions of law." Myers v. State, 152 Wn. App. 823, 827, 218 P.3d 241 ( 2009), review
denied, 168 Wash. 2d 1027 ( 2010).
ESCROW INSTRUCTIONS
Fidelity argues that it is entitled to reimbursement of its costs and attorney fees accrued in
defending Port Orchard First' s negligence counterclaim pursuant to the express terms of the
parties' escrow instructions. We disagree. Although Washington does allow " for parties to enter
into indemnity agreements . . . whereby one party contractually agrees to indemnify, to be
financially responsible for, the other party' s negligence," such an agreement must be clearly
spelled out. Nw. Airlines, 104 Wash. 2d at 154. Here, the provision at issue appears only to require
the parties to reimburse Fidelity for expenses related to interpleader actions and does not clearly
purport to indemnify Fidelity for its own negligence or guarantee its reimbursement for having to
defend actions unrelated to interpleader actions. Thus, the provision does not support Fidelity' s
argument that Port Orchard First and Support Services should be held liable for Fidelity' s costs
and fees accrued in defending the negligence action.
A. INDEMNITY CLAUSES
Indemnity clauses are. subject to fundamental rules of contractual construction, and are
to be construed reasonably so as to carry out, rather than defeat, their purpose. Any ambiguity is
to be resolved against the drafter." N. Pac. Ry. Co. v. Sunnyside Valley Irrigation Dist., 85
Wash. 2d 920, 922, 540 P.2d 1387 ( 1975). " An often -
repeated rule of construction for interpreting
indemnity clauses is that they are to be viewed realistically, recognizing the intent of the parties
to allocate as between them the cost or expense of the risk of losses or damages arising out of
10
No. 43873 -9 -II
performance of the contract." Dirk v. Amerco Mktg. Co. of Spokane, 88 Wash. 2d 607, 613, 565
P.2d 90 ( 1977).
C] lauses purporting to exculpate an indemnitee from liability for losses flowing from
his own acts or omissions are not favored as a matter of public policy and are to be clearly drawn
and strictly construed." Dirk, 88 Wash. 2d at 613. As our Supreme Court explained in Northwest
Airlines,
Washington initially found, and some state courts currently find, a clear
and unequivocal intention to indemnify for indemnitee' s own negligence by
looking at the entire contract or at the all- encompassing language of the
indemnification clause; the term negligence itself need not actually be used.
Washington currently requires, as do some other states, that more specific
language be used to evidence a clear and unequivocal intention to indemnify the
indemnitee' s own negligence.
104 Wash. 2d at 155 ( citations omitted).
B. " DISPUTES AND INTERPLEADER" CLAUSE
Fidelity argues that Port Orchard First and Support Services should be held jointly and
severally liable for costs and attorney fees it accrued in defending the negligence counterclaim
based on the following provision in the parties' escrow instructions:
Disputes and Interpleader. Should any dispute arise between the parties, and /or
any other party, concerning the Property or funds involved in the Transaction, the
Closing Agent may, in its sole discretion, hold all documents and funds in their
existing status pending resolution of the dispute, or join in or commence a court
action, deposit the money and documents held by it with the court, and require the
parties to answer and litigate their several claims and rights among themselves.
The parties jointly and severally agree to pay the Closing Agent' s costs, expenses
and reasonable attorney' s fees incurred in any legal action arising out of or in
connection with the Transaction or these instructions, whether such lawsuit is
instituted by the Closing Agent, the parties, or any other person. Upon
commencement of such interpleader action and the deposit of all funds and
documents of the parties, the Closing Agent shall be fully released and discharged
from all obligations to further perform any duties or obligations otherwise
imposed by the terms of this escrow.
11
No. 43873 -9 -II
CP at 94.
Fidelity' s argument hinges on the second sentence of this provision. It argues that this
sentence " allows Fidelity to receive its fees and costs for being pulled, into litigation for any
reason related to the real estate transaction, regardless of who brought the lawsuit, what the
issues were, or who prevails" because this " is a simple indemnity clause designed to insure that
Fidelity does not incur excess or unanticipated costs as the escrow agent." Br. of Appellant at
27 -28. This interpretation is unpersuasive for a number of reasons.
First, the provision' s opening sentence provides that should " any dispute arise between
the parties, and /or any other party, concerning the Property or funds involved in the Transaction,
the Closing Agent may ... commence a court action ... and require the parties to answer and
litigate their several claims and rights among themselves." CP at 94. This sentence
differentiates between " the parties" ( or " any other party ") and " the Closing Agent" ( Fidelity) and
clearly contemplates Fidelity bringing an interpleader action when a dispute arises between the
buyer and seller —as occurred here with Port Orchard First and Support Services —or when a
dispute involving a third party occurs, perhaps a third party with colorable claim to title of the
apartment complex. But this sentence does not address what should occur when a party has a
dispute with " the Closing Agent," Fidelity.
Second, Fidelity' s argument attempts to sever the second sentence from the rest of the
provision at issue. But it is a basic rule of contract interpretation that the parties' intent " must be
ascertained from reading the contract as a whole." Felton v. Menan Starch Co., 66 Wash. 2d 792,
797, 405 P.2d 585 ( 1965). Here, while the second sentence of the provision is broadly worded,
the first and third sentences clearly limit the language in the second sentence to situations where
Fidelity must be reimbursed for its costs and expenses related to interpleader actions. As
12
No. 43873 -9 -II
discussed above, the first sentence clearly refers to Fidelity' s right to bring an interpleader
action. And immediately following the " any legal action" language in the second sentence, the
third sentence begins with "[ u] pon commencement of such interpleader action." CP at 94
emphasis added). The " such" in the third sentence necessarily relates back to the sentences
immediately preceding it. Accordingly, the provision at issue provides that whenever Fidelity
becomes involved in an interpleader action ( whether. they have instituted such action or not), the
buyer and seller must reimburse it for its costs and attorney fees. 4 The title of this section of the
contract, " Disputes and Interpleader," reinforces this interpretation.
Finally, as previously mentioned, Washington law requires " that more specific language
be used to evidence a clear and unequivocal intention to indemnify the indemnitee' s own
negligence." Nw. Airlines, 104 Wash. 2d at 155. For instance, in Northwest Airlines, the
indemnification clause at issue stated that Northwest would be indemnified from all injuries
whether or not caused by [ its own] negligence." 104 Wash. 2d at 156. Thus, our Supreme Court
held that "[ e] ven under [ Washington' s] more stringent, requirement" for indemnifying an
indemnitee' s own negligence, " the involved indemnification clause clearly includes coverage for
the indemnitee' s negligence." Nw. Airlines, 104 Wash. 2d at 156. Here, even if the language in the
second sentence is read broadly ( i.e., read without the limiting language of the first and third
sentences), it does not unequivocally indemnify Fidelity from its own negligence. Accordingly,
Fidelity' s argument fails for this reason as well.
4
We note that in the case of construing ambiguous provisions in a contract, it has long been the
rule in Washington that where " language of a contract is susceptible of two constructions
courts] will adopt that interpretation which is unfavorable to the one who so drafts or supplies"
the contract. Clise Inv. Co. v. Stone, 168 Wash. 617, 620 - 21, 13 P.2d 9 ( 1932). Here, Fidelity
supplied the escrow instructions at issue and we must construe any ambiguities against Fidelity.
13
No. 43873 -9 -II
C. FEES INCURRED IN BRINGING INTERPLEADER ACTION
The provision at issue allows Fidelity to recover costs and attorney fees incurred in
bringing the interpleader action. It does not cover a situation, like this one, where a party brings
a negligence action against Fidelity. And, generally, " absent a contract, statute, or recognized
ground of equity," costs and attorney fees are not recoverable. Rorvig v. Douglas, 123 Wash. 2d
854, 861, 873 P.2d 492 ( 1994). However, this does not end the inquiry. Arguably, costs accrued
in defending a counterclaim filed in response to an interpleader action could be recoverable if the
counterclaim is intertwined with the interpleader action. In C -C Bottlers, Ltd. v. J.M. Leasing,
Inc., 78 Wn. App. 384, 896 P.2d 1309 ( 1995), Division Three of this court addressed a similar
situation and rejected this argument.
In that case, C -C Bottlers sued J.M. Leasing to collect on two promissory notes. Both
notes included a " garden variety attorney fees clause which provided for recovery of the costs
and expenses of collection, including suit." C - Bottlers, 78 Wash. App.
C at 386. In response to
the action, J.M. Leasing counterclaimed against C -C Bottlers, arguing that C -C Bottlers had
committed securities fraud. C - Bottlers, 78 Wash.
C App. at 386. The trial court granted C -C
Bottlers' motion for summary judgment " on the notes but delayed entry of the judgment until
J. M. Leasing' s] counterclaims could be tried." C - Bottlers, 78 Wash.
C App. at 386. After a
bench trial, the court dismissed the counterclaims and awarded " attorney fees and costs for the
entire ' litigation based on the attorney fees provision in the notes," believing that the
counterclaims were " substantially interwoven and inseparable" from C -C Bottlers' action to
obtain a judgment on the promissory notes. C -C Bottlers, 78 Wash. App. at 386 -87.
On appeal, Division Three disagreed. After determining that J. M. Leasing' s
counterclaims were permissive ( rather than compulsory), it held that "`` [ t] he prevailing party
14
No. 43873 -9 -II
should be awarded attorney fees only for the legal work completed on the portion of the claim
permitting such an award', because while collateral claims may well be related to the contract
claim and therefore conveniently tried together, they need not be resolved in order to decide the
primary claim." C -C Bottlers, 78. Wn. App. at 389 ( quoting King County v. Squire Inv. Co., 59
Wn. App. 888, 897, 801 P.2d 1022 ( 1990), review denied, 116 Wash. 2d 1021 ( 1991)).
Here, Fidelity' s negligence counterclaim was permissive as it could have been brought as
a separate action. See CR 13( b). " Permissive counterclaims `` do not affect, nor are they affected
by, the outcome' of the original claim." Atlas Supply, Inc. v. Realm, Inc., 170 Wash. App. 234,
238, 287 P.3d 606 ( 2012) ( quoting C -C Bottlers, 78 Wn. App. at 387). After Support Services
and Port Orchard First dismissed all claims against each other, the escrow money was released,
and Fidelity was reimbursed its costs for having to bring the interpleader action, Port Orchard
First' s negligence counterclaim could still have been litigated had it not requested that the claim
be voluntarily dismissed. Accordingly, as in C -C Bottlers, absent a contract provision or ground
in equity dictating a different result, Fidelity was only entitled to " attorney fees ... for the legal
work completed on the portion of the [ interpleader action] permitting such an award." King
5
Fidelity repeatedly stresses in its briefing the frivolous or meritless nature of Port Orchard
First' s negligence counterclaim. Fidelity, however, never moved the trial court to enter " written
findings ... that the action, counterclaim, cross -claim, third party claim, or defense was frivolous
and advanced without reasonable cause" pursuant to RCW 4. 84. 185. Case law explicitly holds
that a party can move, under RCW 4. 84. 185, to receive an attorney fee award in the event that a
frivolous lawsuit is voluntarily dismissed. See, e. g., Biggs v. Vail, 119 Wash. 2d 129, 136, 830 P.2d
350 ( 1992); Eller v. E. Sprague Motors & R. V' s, Inc., 159 Wash. App. 180, 193 -94, 244 P.3d 447
2010). But because Fidelity never moved the court to enter findings on whether Port Orchard
First' s counterclaim was frivolous, we cannot decide that issue: under RCW 4. 84. 185, this court
reviews a trial court' s denial of a request for reasonable attorney fees for an abuse of discretion.
Protect the Peninsula' s Future v. City of Port Angeles, 175 Wash. App. 201, 218, 304 P.3d 914,
review denied, No. 89113 -3 ( Wash. Nov. 6) ( 2013). Because Fidelity never asked the trial court
to rule on this issue, the trial court never had the opportunity to exercise that discretion.
15
No. 43873 -9 -II
County, 59 Wn. App. at 897. And here, the trial court already awarded Fidelity $ 1, 652. 96, its
costs and fees accrued in bringing the interpleader action.
ATTORNEY FEES
Fidelity argues that it is entitled to attorney fees on appeal. However, because Fidelity
has not prevailed in this appeal, we deny this request. City ofLongview v. Wallin, 174 Wash. App.
763, 792, 301 P.3d 45, review denied, No. 89065 -0 ( Wash. Nov. 6) ( 2013).
We affirm the trial court' s summary dismissal of this case. Even assuming that Fidelity
properly pleaded a contractual indemnity claim, the escrow instructions do not support Fidelity' s
argument that it should be reimbursed for defending itself from a negligence counterclaim based
on the agreement of the parties.
A majority of the panel having determined that this opinion will not be printed in the
Washington Appellate Reports, but will be filed for public record in accordance with RCW
2. 06. 040, it is so ordered.
rr /
QUINN- BRINTNALL, P. J.
We concur:
PENOXAV,f.
Mk-,<,
1. ,
MAXA, J.
16