Auburn Valley Industrial Capital Llc v. Ross B. Hansen

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
AUBURN VALLEY INDUSTRIAL
CAPITAL LLC, a Delaware limited NO. 69568-1-
liability company,
DIVISION ONE
Respondent,
UNPUBLISHED OPINION
— He
ROSS B. HANSEN and JANE DOE
HANSEN, individually and their
marital community, d/b/a
NORTHWEST TERRITORIAL MINT; ;'-'~o;:
NORTHWEST TERRITORIAL MINT, X2» com.
LLC, a Washington limited liability
company,
en
FILED: July 14, 2014
Appellants.
Leach, J. — Ross Hansen, d/b/a/ Northwest Territorial Mint, and
Northwest Territorial Mint LLC (collectively NW Mint) appeal the trial court's
findings of fact, conclusions of law, and judgment holding NW Mint liable for
Auburn Valley Industrial Capital LLC's remedial action costs under the Model
Toxics Control Act (MTCA), chapter 70.105D RCW, and for damages for
breaching its commercial lease with Auburn. NW Mint also appeals the court's
supplemental judgment and order awarding attorney fees and costs to Auburn.
Substantial evidence supports the trial court's findings of fact, which support its
conclusions that NW Mint breached the lease. Because NW Mint identifies no
NO. 69568-1-1/2
costs recoverable under the MTCA that are not recoverable under the lease, we
do not decide if the MTCA applies to this case. NW Mint fails to show that the
trial court abused its discretion when it awarded costs and fees to Auburn. We
affirm.
FACTS
NW Mint is a full service mint that fabricates coins and other metallic
items. In May 2002, Ross Hansen, d/b/a/ Northwest Territorial Mint, signed a six-
year agreement with MegaWest LLC to lease suite 101 of a commercial-
industrial property.1 The building was new when this lease began, and Ross
Hansen, d/b/a/ Northwest Territorial Mint, was the first tenant in suite 101. In
July 2007, MegaWest sold the building and assigned its interest in the lease to
Auburn. NW Mint occupied the premises and was a tenant under the lease from
December 31, 2002, until April 30, 2010, when the lease ended.
Section 11 of the lease stated,
1 In December 2002, Hansen formed Northwest Territorial Mint LLC, which
was not a party to this lease agreement. The trial court concluded,
Northwest Territorial Mint, LLC was acting as a Tenant under the
Lease and as an operator of the mint business at the Auburn
property from December 31, 2001 through the end of NW Mint's
lease in April of 2010. NW Mint's operations at the Auburn property
were held out to the public as operations of Northwest Territorial
Mint, LLC. Northwest Territorial Mint, LLC succeeded to enough of
Hansen's rights and obligations under the Lease to be considered a
Tenant under the Lease. At a minimum, Northwest Territorial Mint,
LLC occupied the leased premises as its principal place of business
and made all of the monthly Lease payments to Auburn from 2007
until the end of the Lease.
The premises leased is located in an area zoned as M-1, which permits uses
including "residential, daycare, preschools, nursery schools, health and fitness
clubs, restaurants, and other uses."
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NO. 69568-1-1/3
HAZARDOUS WASTE. Tenant shall not store, generate, dispose
of or otherwise allow the release of any hazardous waste or
materials in, on or under the Premises, Property or Project or any
adjacent property, or in any improvements placed on the Premises.
Except as otherwise provided, Tenant represents and warrants to
Landlord that Tenant's intended use of the Premises does not
involve the use, production, disposal or bringing on to the Premises
of any Hazardous Waste. As used herein, the term "Hazardous
Waste" includes any substance, waste or material defined or
designated as hazardous, toxic or dangerous (or any similar term)
by any federal, state or local statute, regulation, rule or ordinance
now or hereafter in effect, including, but not limited to, the
Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. § 9601, or the Washington Model Toxics
Control Act ("MTCA"), RCW 70.105D.010 et seq. Tenant shall
promptly comply with all statutes, regulations and ordinances, and
with all orders, decrees or judgments of governmental authorities or
courts having jurisdiction, relating to the use, collection, treatment,
disposal, storage, control, removal or cleanup of Hazardous Waste
in, on or under the Premises or any adjacent property, or
incorporated in any improvements, at Tenant's expense. After
notice to Tenant and a reasonable opportunity for Tenant to effect
such, Landlord may, but is not obligated to, enter upon the
Premises and take such actions and incur such costs and
expenses to effect such compliance as it deems advisable to
protect its interest in the Premises; provided, however, that
Landlord shall not be obligated to give Tenant notice and an
opportunity to effect such compliance if (i) such delay might result
in material adverse damage to Landlord or the Property, (ii) Tenant
has already had actual knowledge of the situation and a reasonable
opportunity to effect such compliance, or (iii) an emergency exists.
Whether or not Tenant has actual knowledge of the release of
Hazardous Waste on the Premises or Property or any adjacent
property as the result of Tenant's use ofthe Premises, Tenant shall
reimburse Landlord for all costs and expenses incurred by Landlord
in connection with such compliance activities. Tenant shall notify
Landlord immediately of any release of any Hazardous Waste in,
on, under or from the Premises, Property or Project. Tenant shall
indemnify, defend and hold harmless Landlord against any and all
losses, liabilities, suits, obligations, fines, damages, judgments,
penalties, claims, charges, cleanup costs, remedial actions, costs
and expenses (including, without limitation, consultant fees,
attorneys' fees and disbursements) which may be imposed on,
incurred or paid by, or asserted against Landlord or the Premises,
Property or Project by reason of, or in connection with (i) any
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NO. 69568-1-1/4
misrepresentation, breach of warranty or other default by Tenant
under this Lease, or (ii) the acts or omissions by Tenant under this
Lease, or (iii) the acts or omissions of Tenant, or any sublessee or
other person for whom Tenant would otherwise be liable, resulting
in the release of any Hazardous Waste. This indemnity and
Tenant's other duties under this paragraph 11 shall survive the
termination of this Lease.
Section 13 of the lease stated,
Tenant will at all times during the Term keep the Premises and all
systems therein and the doors and windows thereof neat, clean and
in good order, repair and in a sanitary condition. . . . Except for
reasonable wear and tear and damage by fire or unavoidable
casualty, Tenant will at all times preserve the Premises in as good
repair as they are now or may hereafter be put to. All repairs shall
be at Tenant's sole cost and expense, except for repairs required
for the outside roof, exterior walls and foundation which shall be
Landlord's responsibility. Tenant will, at all times, cause the
Premises to comply with all ordinances, regulations, rules or orders
of every governmental entity undertaking jurisdiction over the
Premises.
This provision also stated, "Tenant agrees that at the expiration or sooner
termination of this Lease, Tenant will quit and surrender the Premises without
notice, and in a neat and broom clean condition." The lease also contained the
following attorney fee and cost provision:
If Landlord employs an attorney or if Landlord brings suit to recover
any rent due hereunder, or for breach of any other provision of this
Lease . . . , Landlord shall be awarded its attorney's fees, statutory
court costs, and all other litigation costs and expenses expended or
incurred in connection with such action and in any appellate or
collection proceedings. All sums due from Tenant to Landlord shall
bear interest at the Default Interest rate.
In June 2007, before purchasing the property, Auburn hired EBI
Consulting to perform a phase Ienvironmental site assessment ofthe building. A
phase I environmental site assessment report informs a potential purchaser or
lender if the property contains or likely contains any recognized environmental
NO. 69568-1-1/5
conditions—any hazardous substances on a property under conditions that
indicate an existing release, a past release, or a material threat of a release of
any hazardous substances into structures on the property or into the ground,
groundwater, or surface water of the property. Recognized environmental
conditions include hazardous substances under conditions in compliance with
laws but do not include de minimis conditions. Because a phase I environmental
site assessment is a screening tool to determine if any recognized environmental
conditions warrant additional investigation, it does not include any actual
sampling. A phase I environmental site assessment also affords its user the
ability to satisfy one of the requirements to qualify for the innocent landowner,
contiguous property owner, or bona fide prospective purchaser limitations on
liability under the federal Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601, as well as the
MTCA. Federal standards govern these assessments.
EBI's phase I environmental site assessment report noted that NW Mint
used the property to produce commemorative coins. NW Mint used machinery
and equipment including presses, stamps, and saws, and it used a commercial-
grade soap to polish the coins. EBI's report identified no evidence of recognized
environmental conditions or evidence of leaks, staining, or obvious
accumulations of metal dust.2 EBI's assessment did not include interviews with
2 At trial, a representative from EBI testified, "And in the context of those
concentrations being relatively high concentrations in our sampling, for example,
we would be—that amount would be spread out over a square foot. So the
NO. 69568-1-1/6
any individuals from NW Mint. It also did not include inspections of HV/AC,
heating, ventilation, or air conditioning systems, or of roof areas. Auburn relied
on EBI's phase Ienvironmental site assessment when it purchased the property.3
In May 2010, after the lease ended, Auburn hired EBI to survey the entire
condition of the premises. This survey included an industrial hygiene
assessment to allow Auburn "to be sure that the property was safe for lease in an
unrestricted manner to any particular type of tenant that they could attract to the
property." EBI's survey did not include a human health risk assessment. If
contamination levels in collected samples were below EBI's own surface
contamination limits, EBI would certify the facility as clean and certify that a
tenant could occupy the premises without restrictions or limitations.
In its "Site Cleanliness Investigation Report," EBI determined that based
on its own surface contamination limits, the premises was "grossly contaminated
with toxic metal dusts, fines, and process residuals."4 EBI found, "All
ability to observe that is very limited." He also testified that EBI only later
became aware that NW Mint conducted industrial processes on the premises,
such as furnaces for melting metal, locations for pouring melted metal into molds,
blasting operations, and electroplating.
3 The trial court concluded that Auburn undertook all appropriate inquiry
into the previous ownership and uses of the premises consistent with good
commercial practice.
4 In this report, EBI stated,
There are currently no regulatory limits addressing surface
contamination for industrial type settings, so EBI has developed
surface contamination limits based on regulatory daily intake and
exposure limits. If the contaminant concentration is less than these
developed surface limits, EBI is willing to confirm that the surfaces
are clean and that the facility is clean/free of hazardous toxic
contamination. However, all of the five (5) composite samples had
sufficient contamination to indicate that the facility is contaminated
NO. 69568-1-1/7
manufacturing areas greatly exceed the limits for silver, selenium, and copper.
Additionally, at least one area exceeds the limit for each of the following toxic
metals: Arsenic, cadmium, chromium, lead, cobalt, manganese, nickel and zinc."
EBI concluded, "Inhalation of the toxic metal dusts or skin contact of settled dust
could have significant harmful health effects." Further, "[a]ny settled dusts or
metal fines would likely be listed or characterized as a regulated hazardous
waste." EBI recommended that workers properly trained in exposure to
hazardous substances clean the facility.
Before receiving EBI's report, Auburn did not believe that NW Mint
released hazardous substances at the premises. Auburn shared the report with
NW Mint and included a letter stating,
Pursuant to, among others Sections ... 11 ("Hazardous
Waste"), 13 ("Maintenance and Repairs; Redelivery")... of the
Lease, we are affording your client the opportunity under the Lease
to take steps to remediate the contamination of the premises.
Action needs to be taken to bring contaminant levels down to safe
levels within the parameters of the specifications in the enclosed
report.
EBI issued a "Lease Space Move Out Survey" in June 2010 after
inspecting the physical condition of the premises. In its report, EBI noted that
Hansen would not allow photographs of the building's interior and would not
provide answers about his business or manufacturing processes. EBI was
with a number of toxic metals and should not be leased or occupied
without further cleaning and decontamination.
At trial, a representative from EBI testified, "We used our approach, and if
somebody had offered a scientifically based actual alternative to cleaning up the
property, that we could have ... had a dialogue on, we were more than happy to
do that. That never happened."
NO. 69568-1-1/8
unable to access the roof. EBI shared this survey with NW Mint and enclosed a
letter stating, "EBI Consulting has concluded that Ross Hansen did not properly
maintain the premises nor return the premises in good working condition as
required under the terms of the Lease."
Auburn established a deadline of June 1, 2010, for NW Mint "to agree to
assume full responsibility for clean-up of the premises to a condition meeting the
terms of the lease and satisfactory to EBI Consulting, such that the landlord is in
a position to safely market this space and to have that clean-up done
immediately." NW Mint hired AMEC, an environmental consultant, to review
EBI's report. Before allowing AMEC to inspect the property, Auburn initially
insisted that NW Mint agree to responsibility for "whatever clean-up that is
determined by the experts needs to be done." NW Mint declined. In response to
NW Mint's renewed request to access the premises, Auburn wrote a letter
stating,
Because [Hansen] had been equivocal in prior communications
regarding your client as liable for this contamination, we believed it
would be an act of good faith on your client's part to acknowledge
his responsibility for such contamination, and that doing so would
facilitate better cooperation between the parties and a common
purpose to addressing and remediating the contamination,
especially given your client's lack of cooperation with the owner in
the past.[5]
AMEC completed its review of EBI's report in June 2010. AMEC
concluded, "It is the opinion of AMEC that the EBI's methodology and approach
5Auburn ultimately permitted industrial hygienist Elisabeth Black to access
the premises and conduct sampling.
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NO. 69568-1-1/9
are flawed and cannot be relied upon to determine whether there is a potential
health risk to occupants of the building." It noted, "AMEC has not established
clean-up criteria for this facility at this time, but we would certainly use different
methodology to do so." It also stated, "Further investigation is needed, and they
may conclude that there are areas that need to be cleaned up."
In June 2010, industrial hygienist Elisabeth Black developed a proposal for
NW Mint "to facilitate the removal of settled dust and metals." She expressed "no
reason to believe that the EBI results weren't accurate." Black "took issue with,
perhaps, their sampling method and clean-up criteria they established, but from
my perspective, in counseling my client, it seemed like going to clean-up was
likely the simplest option." NW Mint rejected Black's proposal.
In August 2010, Black presented NW Mint with a proposal to identify the
levels of metals and surface dust on the premises. Auburn's expert, Stephen
Frost, accompanied Black as she sampled the premises and took side-by-side
samples.
In November 2010, Black issued a report concluding, based on a limited
amount of information, that the premises posed a potential hazard. Black also
stated in her report, "Whether or not this condition creates an adverse health
impact to a future tenant of the building cannot be determined based on available
information." She noted that the elevated samples were not attributable to
background contamination from natural and human sources—these samples
exceeded background levels. And she found that the metal concentrations and
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NO. 69568-1-1/10
types of metals were unusual.6 Black recommended that an "experienced
abatement firm with training in hazardous waste operations" conduct a "thorough
cleaning" "according to a protocol prepared by a certified industrial hygienist."
Auburn hired Clean Harbors to clean the premises. EBI oversaw Clean
Harbors' remediation, which took place from January through October 2011.
Clean Harbors cleaned the premises according to EBI's contamination limits.
In October 2011, EBI issued to Auburn a certification letter confirming that
future tenants could use suite 101 without restrictions or limitations attributable to
hazardous metals. In March 2012, EBI issued a "Facility Cleaning &
Decontamination Certification and Environmental Closure Report," which
documented the investigation and remediation work in suite 101.
In 2009, Auburn sued Hansen for breach of contract, seeking injunctive
relief and damages arising out of a dispute about access to an electrical room,
phone room, and common areas of the premises. In 2010, Auburn sued NW
Mint, asserting breach of contract claims arising under the lease and a claim to
recover "remedial action costs" under RCW 70.105D.080. Auburn claimed that
NW Mint breached the lease by contaminating the building with hazardous
6 Black testified,
[T]his is not a condition you would typically encounter, either in
types of metals or concentrations of metals. It is unusual because
we rarely ever get metals and surface dust values for an industrial
facility, it is type sampling that's fairly rare, unless it is directed at
lead, for which there are standards; it is not typically done.
Unusual, because I think, as I have said before, it puts the land
owner or properties owner in a condition that was going to require
some action to move forward and make that space leasable for
unrestricted use.
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NO. 69568-1-1/11
substances, as defined by federal and state law, by damaging the building in
excess of normal wear and tear, and by failing to remove tenant improvements.
Auburn alleged over $1.3 million in damages. On February 11, 2011, the trial
court consolidated these cases.
In January 2012, Auburn hired toxicology expert John Schell to conduct a
human health risk assessment of the leased premises—a quantitative evaluation
of risk.7 Schell testified at trial that a "cleanup level" under the MTCA is a
protective level that is safe for human health. He concluded that the levels of
arsenic, chromium-VI, copper, and selenium exceeded the MTCA cleanup
standards.8 Schell testified that before Clean Harbors cleaned the premises,
"Based on my calculations of a risk based cleanup level, some of those metals,
the concentrations in the dust, posed a potential health threat."
In June 2012, NW Mint applied to the Washington State Department of
Ecology's Voluntary Cleanup Program (VCP).9 The Department of Ecology
(Ecology) rejected NW Mint's application, reasoning,
We did not accept your application because the release you
reported does not constitute a hazardous waste site requiring
remedial action under the Model Toxics Control Act (MTCA),
7 Schell testified that "risk is a function of both the toxicity of the material
and the dose that is received."
8 Schell relied upon a bulk dust sample analysis that Stephen Frost
conducted, which determined the concentrations of constituent metals. Schell
noted that using the United States Environmental Protection Agency's calculation
method, the levels of silver also exceeded the cleanup standard.
9 The VCP supports independent cleanup actions. It allows owners and
operators of contaminated sites to enter into an agreement with the Department
of Ecology to review cleanup-related documents and to issue opinions about
compliance with the MTCA.
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NO. 69568-1-1/12
Chapter 70.105D RCW. This opinion is based on an analysis of
whether there has been a "release" into the "environment" of a
"hazardous substance" as defined by MTCA, Chapter 70.105D
RCW, and its implementing regulations, Chapter 173-340 WAC.
Documents provided to Ecology state that areas within the building
contain dust composed of silver, selenium, copper, arsenic,
cadmium, chromium, lead, cobalt, manganese, nickel and zinc.
From the documents provided, metal dust did not enter the
"environment". Rather, the dust was contained within the building.
This opinion is regarding the administrative and technical
requirements of MTCA, and is not an opinion regarding whether
other local, state or federal requirements may apply to the facility.
In July 2012, NW Mint filed a second application to the VCP. This
application was not different materially from NW Mint's first application. Ecology
rejected this application, reasoning,
We did not accept your application because the data provided to
Ecology is insufficient to show a release into the environment of a
hazardous substance. This decision is based on an analysis of
whether there has been a "release" into the "environment" of a
"hazardous substance" as defined by MTCA, Chapter 70.105D
RCW, and its implementing regulations, Chapter 173-340
WAC. . . . Ecology makes no determination as to whether there is a
threatened release of a hazardous substance. The VCP is not
designed for review of remedial actions related solely to a
threatened release.
Documents provided to Ecology state that areas within the building
contain dust composed of silver, selenium, copper, arsenic,
cadmium, chromium, lead, cobalt, manganese, nickel and zinc
(collectively "metals dust"). Ecology received no sampling data of
surface water, ground water, drinking water supply, land surface or
subsurface strata, or ambient air. If such data is provided, you may
reapply to enter the VCP.
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NO. 69568-1-1/13
This decision is regarding whether Ecology will accept your
application to enter the VCP. This decision is not an opinion
regarding whether other local, state or federal requirements may
apply to the facility. This decision does not determine whether any
independent remedial action performed at the facility is the
substantial equivalent of an Ecology-conducted or Ecology-
supervised remedial action. Such determinations are made by a
court. See RCW 70.105D.080. The state, Ecology and its officers
and employees are immune from all liability, and no cause of action
of any nature may arise from any act or omission in providing this
informal advice and assistance. See RCW 70.105D.030(1)(i).
On October 15, 2012, the trial court entered 155 findings of fact, 31
conclusions of law. The court concluded that Hansen and Northwest Territorial
Mint LLC were "strictly liable, jointly and severally, for all remedial action costs
incurred by Auburn at the Auburn property." On November 14, 2012, the trial
court entered an order granting in part and denying in part Auburn's motion to
amend these findings of fact and conclusions of law and entered a judgment in
favor of Auiburn.10 In the judgment, the court awarded to Auburn $869,746.53 in
remedial action costs under the MTCA and damages for NW Mint's breach of the
lease. The court also awarded attorney fees and costs to Auburn under the
MTCA and the lease.
On June 4, 2013, the trial court entered a supplemental judgment and
order awarding $1,582,046.61 in costs and attorney fees to Auburn.
NW Mint appeals.
10 The court removed legal fees from Auburn's remedial action costs,
reducing the calculation from $657,818.68 to $391,573.23. NW Mint does not
appeal this order.
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NO. 69568-1-1/14
STANDARD OF REVIEW
We review challenged findings of fact by examining if substantial evidence
supports the findings and if the findings in turn support the conclusions of law.11
Substantial evidence exists if it is sufficient to persuade a fair-minded, rational
person of the truth of the matter asserted.12 Unchallenged findings of fact are
verities on appeal.13 A trial court's interpretation of contract language presents
an issue of law that we review de novo.14
We review the legal basis for an attorney fee award de novo but review
the reasonableness of the award amount for abuse of discretion.15 A trial court
abuses its discretion if its decision is manifestly unreasonable or based on
untenable grounds.16
ANALYSIS
NW Mint raises three issues. First, it claims that it did not breach the
parties' lease. Second, NW Mint contends that the MTCA does not apply to the
premises at issue and that it did not violate this statute. Third, NW Mint asserts
11 State v. Ross, 106 Wn. App. 876, 880, 26 P.3d 298 (2001) (citing State
v. Dempsev, 88 Wn. App. 918, 921, 947 P.2d 265 (1997); State v. Hill. 123
Wn.2d 641, 647, 870 P.2d 313 (1994)).
12 State v. Lew, 156 Wn.2d 709, 733, 132 P.3d 1076 (2006) (citing State
v. Mendez, 137 Wn.2d 208, 214, 970 P.2d 722 (1999)).
13 Hill, 123Wn.2dat644.
14 224 Westlake. LLC v. Enqstrom Props., LLC, 169 Wn. App. 700, 716,
281 P.3d 693 (2012) (citing Knipschield v. C-J Recreation, Inc., 74 Wn. App. 212,
215, 872P.2d 1102(1994)).
15 W. Consultants. Inc. v. Davis, 177 Wn. App. 33, 38, 310 P.3d 824(2013) (citing Hulbert v. Port of Everett, 159 Wn. App. 389, 407, 245 P.3d 779(2011)).
16 State v. Emery, 161 Wn. App. 172, 190, 253 P.3d 413 (2011) (quoting
State v.Allen. 159 Wn.2d1, 10, 147 P.3d 581 (2006)).
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that the trial court abused its discretion when it awarded fees and costs to
Auburn. We affirm NW Mint's liability under the lease and the court's attorney
fee and cost award. As a result, we do not need to reach NW Mint's MTCA
claim.17
NW Mint makes three challenges to its liability under the lease. First, NW
Mint claims that "the residual metals NW Mint left at the Premises did not present
a risk of actual harm to human health or the environment." Second, it alleges,
"NW Mint complied with all statutes, regulations and orders concerning
hazardous wastes." Third, NW Mint asserts, "NW Mint left the Premises in a
'broom clean' condition, which is the Lease's only cleanup standard." We reject
these contentions.
The trial court found, "Section 13 of the Lease applies to the physical
condition of Suite 101, and the 'broom clean' specification in Section 13 does not
modify or supersede the requirements of Section 11 of the Lease regarding
hazardous substances." It also found, "NW Mint did not cooperate with Auburn's
investigation and cleanup of the contamination in 2010 and 2011." The court
concluded, "NW Mint stored, generated, disposed, or otherwise released
hazardous materials on the premises, in breach of Section 11 [of] the Lease." It
also concluded, "NW Mint failed to notify Auburn of the release of hazardous
17 Auburn contends that NW Mint's brief fails to comply with RAP 10.3.
Because the nature of Auburn's challenges are clear, Auburn shows no prejudice
from any alleged violation, and RAP 1.2 requires us to interpret these rules
liberally to promote justice and facilitate the decision of cases on the merits, we
waive any technical violations of RAP 10.3.
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NO. 69568-1-1/16
waste at the Auburn Property in breach of Section 11 of the Lease." Additionally,
it concluded, "Auburn provided NW Mint notice and a reasonable opportunity to
comply with measures that Auburn deemed advisable to protect its interest in the
Auburn Property. NW Mint failed to undertake any appropriate or meaningful
remedial action." NW Mint breached section 13 "by failing to maintain the
premises in good order and repair at the time ofsurrender on April 30, 2010."
NW Mint claims, "Before the Lease terminated in 2010, Auburn never
objected to NW Mint's use of metals such as silver, copper and nickel in its
manufacturing processes. Auburn never claimed that NW Mint's operations
breached Section 11 of the Lease." It asserts that the trial court "erred in
concluding that the mere presence of metallic dust in the Premises constituted a
breach of Section 11 of the Lease" because "Auburn did not introduce any
evidence that the residual metallic dust, which was in the Premises at lawful, de
minimus [sic] levels, presented a threat to human health or the environment."
The record shows that NW Mint "store[d], generate^], dispose[d] of or
otherwise allow[ed] the release of any hazardous waste released hazardous
materials" on the premises and did not notify Auburn of these releases. The trial
court found, "Hazardous substance metal fumes, dust and residues were
dispersed throughout the facility and were also released to the 'environment,' as
evidenced by high levels of hazardous substance metal dust/residue found
outside of the building, both on the roof and on the loading dock area outside of
the building."
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Although NW Mint assigns error to the court's conclusion that "[t]he metal
dust/residue, including arsenic, chromium, lead, selenium, silver, copper, nickel,
and zinc, at the Auburn Property are hazardous substances as defined by
MTCA/CERCLA," it does not support this assignment of error with any argument.
If a party fails to support an assignment of error with legal arguments, we do not
consider them on appeal.18 The lease prohibited any storage, generation,
disposal, or other releases of hazardous materials, regardless of whether the
releases posed a risk to human health or the environment. NW Mint fails to
establish its compliance with section 11 of the lease.
NW Mint also breached the lease because it did not maintain the premises
in "neat, clean and in good order, repair and in a sanitary condition," as section
13 required. NW Mint rejected Auburn's requests to clean the premises to
enable Auburn to relet it to a new tenant. Even if NW Mint "quit and
surrendered] the Premises ... in a neat and broom clean condition," these
violations were sufficient to constitute a breach of both section 11 and section 13.
NW Mint also challenges its liability under the MTCA. RCW 70.105D.080
states,
Except as provided in RCW 70.105D.040(4)(d) and (f), a person
may bring a private right of action, including a claim for contribution
or for declaratory relief, against any other person liable under RCW
70.105D.040 for the recovery of remedial action costs. In the
action, natural resource damages paid to the state under this
is Howell v. Spokane & Inland Empire Blood Bank, 117 Wn.2d 619, 624,
818 P.2d 1056 (1991) (citing Schmidt v. Cornerstone Invs.. Inc.. 115 Wn.2d 148,
795 P.2d 1143 (1990); Howell v. Spokane & Inland Empire Blood Bank. 114
Wn.2d 42, 46, 785 P.2d 815 (1990)).
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NO. 69568-1-1/18
chapter may also be recovered. Recovery shall be based on such
equitable factors as the court determines are appropriate.
Remedial action costs shall include reasonable attorneys' fees and
expenses. Recovery of remedial action costs shall be limited to
those remedial actions that, when evaluated as a whole, are the
substantial equivalent of a department-conducted or department-
supervised remedial action. Substantial equivalence shall be
determined by the court with reference to the rules adopted by the
department under this chapter. . . . The prevailing party in such an
action shall recover its reasonable attorneys' fees and costs. This
section applies to all causes of action regardless of when the cause
of action may have arisen.
A "remedial action" is
any action or expenditure consistent with the purposes of this
chapter to identify, eliminate, or minimize any threat or potential
threat posed by hazardous substances to human health or the
environment including any investigative and monitoring activities
with respect to any release or threatened release of a hazardous
substance and any health assessments or health effects studies
conducted in order to determine the risk or potential risk to human
health.'19]
RCW 70.105D.040 states,
(1) [T]he following persons are liable with respect to a facility:
(a) The owner or operator of the facility;
(b) Any person who owned or operated the facility at the time of
disposal or release of the hazardous substances;
(2) Each person who is liable under this section is strictly liable,
jointly and severally, for all remedial action costs and for all natural
resource damages resulting from the releases or threatened
releases of hazardous substances.
An "owner or operator" is "[a]ny person with any ownership interest in the facility
or who exercises any control over the facility."20 A "facility" includes "any
building" or "any site or area where a hazardous substance, other than a
19 Former RCW 70.105D.020(26) (2007).
20 Former RCW 70.105D.020(17)(a).
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NO. 69568-1-1/19
consumer product in consumer use, has been deposited, stored, disposed of, or
placed, or otherwise come to be located."21
Auburn argues that it is entitled to recover the same amount of fees and
costs under the lease and the MTCA. NW Mint identifies no costs recoverable
under the MTCA that are not recoverable under the lease. Because we affirm
NW Mint's liability under the lease, we do not address MTCA's applicability to this
case.
Finally, NW Mint makes four challenges to the trial court's supplemental
judgment and order awarding attorney fees and costs. First, NW Mint claims that
the court "abused its discretion by accepting Auburn's billing statements without
question and failing to deduct for wasteful and duplicative work." Second, NW
Mint contends, "The trial court abused its discretion by failing to segregate the
time related to Auburn's unsuccessful tenant improvement claim." Third, it
alleges, "Auburn's attorneys spent unnecessary time on post-judgment matters,
including the Fee Motion." Fourth, NW Mint asserts, "The trial court abused its
discretion by awarding Auburn every penny of its claimed $425,767.28 in costs."
The trial court awarded $425,767.28 in litigation expenses, $1,116,279.33
in attorney fees, and $50,000.00 in "[f]ees/costs for December 2012 through
entry of supplemental judgment." Its award also included a $10,000.00 credit for
a security deposit. The court concluded, "The evidence supports a full award of
all of Auburn's 'remedial action' legal expenses under MTCA and its attorneys'
21 Former RCW 70.105D.020(5).
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NO. 69568-1-1/20
fees and costs under the 2002 Lease based on both the traditional 'lodestar'
analysis and an 'equitable factors' analysis."
Generally, Washington courts apply the lodestar method to calculate
attorney fees.22 The court awarding attorney fees makes an independent
determination about the reasonableness of the fees requested.23 The fee
applicant bears the burden of establishing that a fee is reasonable.24
To apply the lodestar method, the court considers first the number of
hours reasonably expended on the matter.25 "'[T]he attorneys must provide
reasonable documentation of the work performed.'"26 This documentation must
include at least (1) the number of hours worked, (2) the type of work performed,
and (3) the category of attorney who performed the work.27 The court does not
need to conduct an hour-by-hour analysis of each lawyer's time sheets, so long
as the court provides a consideration of the relevant factors and reasons
22 Mahler v. Szucs, 135 Wn.2d 398, 433, 957 P.2d 632 (1998), overruled
on other grounds by Matsvuk v. State Farm Fire & Cas. Co.. 173 Wn.2d 643, 272
P.3d 802 (2012).
23 McGreevv v. Or. Mut. Ins. Co.. 90 Wn. App. 283, 291, 951 P.2d 798(1998) (quoting Absher Constr. Co. v. Kent Sch. Dist. No. 415, 79 Wn. App. 841,
847, 917 P.2d 1086 (1995)), overruled on other grounds by Panorama Vill.
Con'do. Owners Ass'n Bd. of Dirs. v. Allstate Ins. Co.. 144 Wn.2d 130, 26 P.3d
910(2001).
24 Absher Constr. Co.. 79 Wn. App. at 847 (citing Blum v. Stenson. 465
US 886, 897, 104 S. Ct. 1541, 79 L. Ed. 2d 891 (1984); Scott Fetzer Co. v.
Weeks, 122 Wn.2d 141, 151, 859 P.2d 1210 (1993)).
25 McGreevv, 90 Wn. App. at 291.
26 McGreevv. 90 Wn. App. at 292 (quoting Bowers v. Transamerica Title
Ins. Co.. 100 Wn.2d 581, 597, 675 P.2d 193 (1983)).
27 McGreevv, 90 Wn. App. at 292 (citing Bowers. 100 Wn.2d at 597).
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NO. 69568-1-1/21
sufficient to review the amount of the fee award.28 "The awarding court should
take into account the hours spent on unsuccessful claims, duplicated effort, or
otherwise unproductive time."29
The second step in the lodestar method requires the court to determine if
the hourly fee charged was reasonable.30 As a third step, the court multiplies the
numbers from the first two steps to produce the lodestar fee.31
Finally, the court may adjust the lodestar amount up or down to reflect
factors not already considered.32 The party proposing a deviation from the
lodestar amount bears the burden of justifying it.33
When a contract specifies that a party may recover costs beyond statutory
costs, the prevailing party is not limited to statutory costs, and the court will
enforce the parties' intended meaning.34
The trial court found, "Auburn has provided contemporaneous records
documenting the number of hours worked by its counsel as part of the remedial
action and in the course of the litigation. These records adequately informed the
court of the type of work performed and the category of attorney who performed
the work." It also found, "The hourly rates charged by Auburn's counsel were
28 McGreevv. 90 Wn. App. at 292 (quoting Absher Constr. Co.. 79 Wn.
App. at 848).
29 McGreevv. 90 Wn. App. at 292 (citing Bowers. 100 Wn.2d at 597).
30 McGreevv. 90 Wn. App. at 291.
31 McGreevv. 90 Wn. App. at 291.
32 Bowers. 100 Wn.2d at 598-99.
33 Bowers. 100 Wn.2d at 598 (quoting Copeland v. Marshall. 641 F.2d
880, 892 (D.C. Cir. 1980)).
34 Ethridqe v. Hwang, 105 Wn. App. 447, 462, 20 P.3d 958 (2001).
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NO. 69568-1-1/22
reasonable at the time the client was billed for services. The attorneys
representing all parties were very experienced and produced exceptional work."35
The court concluded, "The hours expended and hourly rates charged by
Auburn's counsel as 'remedial action' attorneys' fees in this case were
reasonable."
NW Mint claims that the trial court awarded fees for duplicative work,
including "[e]xcessive contacts between Auburn's counsel," "[duplication of effort
in reviewing pleadings and documents," and "[duplication of effort in conducting
depositions or attending hearings." The court entered the following findings of
fact:
9. The court also has made a reduction for duplicative
efforts at trial. It was not necessary to have four partner level
lawyers present at the entire trial, particularly due to the fact that
one lawyer never made any oral representation to the court and the
other lawyer's participation was limited to questioning two
witnesses on the first day of trial. The presence of these attorneys
was unnecessarily duplicative. Given that there were two
experienced lawyers already representing Auburn at trial, the court
does not find it necessary that Mr. Johnson was present for trial or
that Mr. Hamell remained after his witnesses testified on the first
day of trial. The court will reduce the award for their trial time. Mr.
Johnson billed approximately 104 hours at $33,800, and Mr. Hamell
billed 104 hours at $30,680.
10. Defendants argued that other time was duplicative as
well. The court does not find this defense argument convincing.
This case was aggressively litigated by the Defendants and Auburn
had the right to respond in kind. The communication between
plaintiff's counsels was reasonable and not excessive. The court
finds that plaintiff's counsels reasonably allocated their resources
for their motions practice and depositions. Finally, the court finds
that the costs requested are appropriate given the broad definition
of costs in MTCA claims.
35 NW Mint does not challenge the hourly fees of Auburn's attorneys.
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NO. 69568-1-1/23
11. Aside from the specific reductions discussed above,
the evidence established that Auburn's counsel expended a
reasonable number of hours in representing Auburn with respect to
Auburn's "remedial action" responses to the contamination caused
by Defendants, and in achieving a successful litigation result to
resolve Auburn's claims under MTCA and under the 2002 Lease.
12. As evidenced by the detailed documentation provided
by Auburn, the hours billed by Auburn's counsel as part of the
remedial action and in the course of the litigation of the MTCA and
the 2002 Lease claims were not wasteful or duplicative.
NW Mint fails to cite any controlling authority in challenging the amount of
communications among Auburn's attorneys or any authority showing that the
entries were improperly vague. NW Mint also cites no authority establishing that
having multiple attorneys review pleadings and documents is improper. Further,
although NW Mint claims that the trial court abused its discretion by awarding
more than $27,000 in fees when only one of the two attorneys who attended
depositions and hearings for Auburn actually represented Auburn, it fails to
indicate which specific entries that it is challenging.36 Therefore, NW Mint fails to
show that the trial court awarded fees for duplicative work.
NW Mint also alleges that the trial court failed to exclude the requested
fees and costs related to Auburn's unsuccessful tenant improvement claim.37 It
argues that because the fact pattern for this claim was unrelated to the fact
pattern for the contamination claim, the court "abused its discretion by
36 NW Mint cites a declaration offering expert opinion on Auburn's cost
and fee application, but the entries included in that document do not total
$27,000.
37 Section 14 of the lease required NW Mint to remove all of its
improvements that Auburn requested itto remove.
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NO. 69568-1-1/24
unquestioningly accepting Auburn's unsupported estimate of the time its
attorneys spent on the unsuccessful tenant improvement claim."
A trial court need not segregate attorney fees when it finds that claims are
"so related that no reasonable segregation of successful and unsuccessful claims
can be made."38 The trial court found,
Auburn was unsuccessful in its tenant improvement claim and the
award should be reduced for the hours expended on that claim.
The tenant improvement claim constituted a minimal amount of
work however, and there are limited invoices that are applicable to
it. . . . The court finds that the invoices were sufficient to determine
the work performed in this lawsuit. Much of the testimony provided
and the work performed regarding the tenant improvement claim
related to Auburn's other property damage and contamination
claims; hence, the claims were inextricably intertwined. The tenant
improvement claim itself was simply a very minor part of the
litigation. Nevertheless, a reduction is necessary and the court
accepts the 100 hour estimate proffered by the Plaintiff totaling
approximately $37,000 in reduction as reasonable and frankly,
perhaps generous.
The court rejected NW Mint's argument that it was impossible to
determine the number of hours expended on the tenant improvement claim. NW
Mint cites no evidence indicating that the tenant improvement claim rested on a
different common core of facts than the contamination claim. The trial court did
not abuse its discretion.
NW Mint also contests the fees awarded for "post-judgment matters,
including the Fee Motion." It challenges the court's order denying NW Mint's
motion to strike declarations and exhibits supporting Auburn's motion for attorney
fees and costs or to continue the fee hearing. In its motion, NW Mint claimed
38 Hume v.Am. Disposal Co., 124 Wn.2d 656, 673, 880 P.2d 988 (1994).
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NO. 69568-1-1/25
that declarations and attached documents filed with Auburn's reply in support of
its motion for attorney fees and costs constituted "new evidence" that NW Mint
did not have adequate time to analyze. The trial court relied upon this
challenged evidence when it determined that Auburn's fee request was
reasonable.
We will reverse a trial court's denial of a continuance only upon a showing
of both an abuse of discretion and resulting prejudice.39 NW Mint cites no
specific billing record to support its contention. The evidence submitted with
Auburn's reply raised no new issues; it simply rebutted the arguments made in
NW Mint's response to Auburn's motion for attorney fees and costs.40
Additionally, Auburn provided many of the documents to NW Mint previously.
We reject NW Mint's arguments.
Finally, NW Mint claims that Auburn was not entitled to recover deposition
expenses, daily transcription charges, travel costs for parties, lay witness travel
costs, support staff overtime, computer management software, copying charges,
and meal expenses during trial. The lease's attorney fee and cost provision
entitles Auburn to recover "its attorney's fees, statutory court costs, and all other
litigation costs and expenses expended or incurred in connection with [an action
39 State v. Herzog, 69 Wn. App. 521, 524, 849 P.2d 1235 (1993).
40 See Colwell v. Holy Family Hosp., 104 Wn. App. 606, 616, 15 P.3d 210(2001) ("The party moving for summary judgment must raise all of the issues on
which it believes it is entitled to summary judgment in its initial motion. A trial
court may not grant summary judgment to the moving party on issues that are
first raised in rebuttal." (citing White v. Kent Med. Ctr.. Inc.. 61 Wn. App. 163,
168, 810 P.2d 4 (1991); Mollov v. City of Bellevue. 71 Wn. App. 382, 385, 859
P.2d 613 (1993))).
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NO. 69568-1-1/26
for breach of the lease] and in any appellate or collection proceedings. All sums
due from Tenant to Landlord shall bear interest at the Default Interest rate."
The trial court concluded, "The legal services provided by Auburn's
counsel were necessary and appropriate to guide and assist Auburn in the
investigation and remediation of the former NW Mint Facility and to achieve a
successful litigation result to resolve Auburn's claims under MTCA and under the
2002 Lease." NW Mint fails to show that the broad lease provision precludes
Auburn from recovering the cited costs and expenses.
Both parties request fees and costs incurred on appeal under RAP 18.1,
RCW 70.105D.080, RCW 4.84.330, and the lease. Because Auburn prevails in
this appeal, it is entitled to recover attorney fees and costs under RAP 18.1,
RCW 4.84.330, and the lease.
CONCLUSION
Substantial evidence supports the trial court's findings, which support its
conclusions that NW Mint breached its lease with Auburn. NW Mint fails to show
that the trial court abused its discretion when it awarded Auburn all of its fees and
costs under the lease. We do not reach the applicability of the MTCA to this
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NO. 69568-1-1/27
case. We affirm the trial court and award fees and costs to Auburn incurred on
appeal upon its compliance with RAP 14.4.
WE CONCUR:
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