Betty Frye And Todd Duty, Apps. v. Jdh Investment Group Llc, Res.

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
BETTY FRYE, an individual; and No. 79318-7-I
TODD DUTY, an individual,
DIVISION ONE
Appellants,
v.
JDH INVESTMENT GROUP LLC, a UNPUBLISHED OPINION
Nevada LLC; THOMAS J. DOWNIE,
individually and on behalf of his
marital community;
Respondents,
BLAKE HADDOCK, individually and
on behalf of his marital community;
and RANDALL JACKSON, individually
and on behalf of his marital
community,
Defendants.
CHUN, J. — This case regards a dispute over promissory notes as well as
tort and contract claims concerning real estate. Betty Frye and Todd Duty 1 sued
JDH Investment Group, LLC, and Thomas Downie (respondents). Frye claimed
fraud, obtaining money or property under false pretenses, elder abuse,
intentional infliction of emotional distress, legal malpractice, civil conspiracy,
violations of the Washington Consumer Protection Act, negligent
1
While both Frye and Duty sued the respondents, Frye appears to have been the
primary party to the suit and transaction. Accordingly, below, we refer to the appellants
as “Frye.”
Citations and pin cites are based on the Westlaw online version of the cited material.
No. 79318-7-I/2
misrepresentation, and breach of contract. Frye also filed a lis pendens. JDH
and Downie counterclaimed for tortious interference with a business expectancy.
JDH also counterclaimed for breach of contract, breach of the implied duty of
good faith, and slander of title, and requested damages and release of the lis
pendens.
After a bench trial, the trial court dismissed Frye’s claims and ruled in
favor of JDH and Downie on their counterclaims. Frye appeals. For the reasons
discussed herein, we affirm.
I. BACKGROUND
A. Facts
Frye sold undeveloped property in Auburn (Auburn property) to JDH for
$3 million on June 14, 2013. As a part of the sale, Frye received $2 million in
cash and two promissory notes (Auburn notes)—each for $500,000 and secured
by the Auburn property. One of the Auburn notes would mature on December
14, 2013, and the other would mature on June 14, 2014. JDH is the obligor on
the Auburn notes. The Auburn notes state that they bear five percent interest per
annum “until paid,” with six percent late charges. As a part of the transaction,
one of JDH’s members, Sue Jones, personally extended the $2 million that went
to Frye, treating the funds as a loan to JDH with the Auburn property as
collateral.
Also on June 14, 2013, Frye loaned $1.55 million to Northshore
Montessori, Inc., a daycare business run by Downie, who was also a founding
2
No. 79318-7-I/3
member of JDH.2 Downie’s attorney, Randall Jackson, prepared the promissory
note from the daycare (Daycare note).3 Jackson claims that neither Frye
requested nor Downie offered a personal guarantee. After Downie signed the
note as Northshore Montessori’s president, but before delivering it to Frye,
Jackson noticed language stating that Downie personally guarantees the
Daycare note. Jackson crossed out the language and then gave the note to
Frye. Jackson claimed that he used a template to draft the Daycare note and
that he mistakenly included personal guarantee language that he used in a prior
transaction.
Between October and November of 2014, Frye also personally loaned
$85,000 to Downie through two notes.
On February 8, 2017, JDH received preliminary plat approval for the
Auburn property. By this time, the Auburn notes were several years overdue.
Downie, by then the sole member of JDH, attempted to refinance the loans on
the property with Pyatt Broadmark Management, LLC. Pyatt placed $5.8 million
in escrow in anticipation of the refinancing. As part of the closing process, the
escrow company needed a payoff quote from Frye indicating the amount due
under the Auburn notes and a release of her deeds of trust. In May 2017,
Downie and Jackson approached Frye on behalf of JDH and tendered $1.2
million—$500,000 for each note, plus five percent interest—in exchange for her
release of the Auburn notes. But Frye argued the 12 percent statutory interest
2
Downie was once married to Frye’s daughter. At the time of the transaction, the
couple were divorced but had reconciled.
3
Jackson also acted as JDH’s manager.
3
No. 79318-7-I/4
rate applied to the Auburn notes since they were post-maturity, and demanded
$1.5 million. Frye increased her demand to $1.6 million, then $1.7 million, stating
she could charge whatever she wanted, since the refinancing depended on her
releasing the Auburn notes. JDH, bewildered by Frye’s demands, refused to pay
more than $1.2 million. When it became apparent to Pyatt that the parties had
deadlocked, it withdrew its refinancing offer.
On June 14, 2017, JDH received a letter of intent to purchase the Auburn
property from Toll Brothers, who proposed a purchase price of $7.8 million.
B. Procedural History
On August 23, 2017, Frye filed a lis pendens referencing the Auburn
property and an associated complaint.
The next day, Frye sued JDH and Downie.4 Frye’s suit claimed: against
Downie, elder abuse, intentional infliction of emotional distress, and breach of
contract for nonpayment on the personal loans and the Daycare note; and
against all defendants, civil conspiracy, fraud, false pretenses, violations of the
Washington Consumer Protection Act, and negligent misrepresentation. Frye
pleaded for damages, injunctive relief to prevent sale of the Auburn property or
use of it as collateral, rescission of the deeds and return of the property, interest,
and attorney fees.
JDH and Downie counterclaimed for tortious interference with a business
4
Frye also named Blake Haddock, an original member of JDH who helped
facilitate the sale of the Auburn property, as a defendant. Frye additionally named
Jackson. The trial court dismissed the claims against Haddock and Jackson; Frye does
not assign error to such dismissal.
4
No. 79318-7-I/5
expectancy; JDH counterclaimed for breach of contract, breach of the implied
duty of good faith, slander of title, unjust enrichment, and also requested
damages, a declaratory judgment on the amounts owed on the Auburn notes,
and release of the lis pendens.
The matter proceeded to a bench trial. During closing argument, Downie
conceded that he owed $85,000 on the personal notes to Frye, plus 12 percent
interest.
On November 5, 2018, the trial court dismissed Frye’s claims and ruled in
favor of JDH and Downie on their tortious interference counterclaim, and in favor
of JDH on their breach of contract, breach of implied duty of good faith, and
slander of title counterclaims. The trial court also declared that JDH owed $1.2
million on the Auburn notes, since they bore five percent interest even after
maturity and the late fees provision on the notes was unenforceable. The trial
court also found that Downie did not personally guarantee the Daycare note, and
since Northshore Montessori was not a party to the action, dismissed Frye’s
claim to recover under the Daycare note. Finally, the trial court awarded JDH
and Downie attorney fees. After subtracting the damages from the counterclaims
and attorney fees from the amounts owed on the Auburn notes, the trial court
concluded that JDH owed $646,908 to Frye. After subtracting damages and
attorney fees from the amounts owed on his personal notes to Frye, the trial
court concluded that Downie owed Frye $12,801. Frye appeals.
5
No. 79318-7-I/6
II. ANALYSIS
When reviewing a trial court’s findings of fact and conclusions of law, we
limit review to whether substantial evidence supports the findings of fact and
whether the findings of fact support the conclusions of law. Douglas v. Visser,
173 Wash. App. 823, 829, 295 P.3d 800 (2013). “Substantial evidence is evidence
sufficient to persuade a fair-minded, rational person of the declared premise.”
Douglas, 173 Wash. App. at 829. Additionally, we defer to a trial court’s
determinations of the weight and credibility of the evidence. Mueller v. Wells,
185 Wash. 2d 1, 9, 367 P.3d 580 (2016).
RAP 10.3(g) requires appellants to make specific assignments of error to
the trial court’s findings of fact, with reference to the finding by number. We “will
only review a claimed error which is included in an assignment of error or clearly
disclosed in the associated issue pertaining thereto.” RAP 10.3(g). “RAP 10.3
requires an appellant to present argument to the reviewing court as to why
specific findings of fact are in error and to support those arguments with citation
to relevant portions of the record.” In re Disciplinary Proceeding Against Burtch,
162 Wash. 2d 873, 895, 175 P.3d 1070 (2008). Where an appellant “fail[s] to
pinpoint any argument as to why specific findings of fact are not supported by
substantial evidence . . . [,] [we need not] unearth arguments from the record for
the benefit of an appellant.” Burtch, 162 Wash. 2d at 896. “Assignments of error
not argued or further referred to in a brief are treated as abandoned.” In re
Estate of Wimberley, 186 Wash. App. 475, 503, 349 P.3d 11 (2015). Unchallenged
findings of fact are verities on appeal. Mueller, 185 Wash. 2d at 9.
6
No. 79318-7-I/7
Frye assigns error specifically to six of the trial court’s findings of fact—69,
and 76 through 80—and three of its conclusions of law—66, 67, and 85. Frye
assigns error generally to the remaining findings of fact and conclusions of law in
her assignments of error. Throughout the argument section of her brief, Frye
makes additional assignments of error to the trial court’s conclusions of law and
findings of fact. We treat those findings of fact not specifically identified by Frye
in her assignment of error or argument section as verities.
A. Amounts Owed on Notes to Frye
Frye argues that the trial court improperly calculated the amounts owed on
the Auburn notes. First, she asserts that the trial court mistakenly concluded that
a five percent interest rate applies to the matured notes, instead of the statutory
twelve percent rate; she contends the parties did not agree on a post-maturity
interest rate. Second, she argues that the trial court erroneously concluded that
the six percent late charges for missed balloon payments in the Auburn notes
constitute an unenforceable penalty. Third, she argues that, if a 12 percent
interest rate applied to the notes post-maturity or late charges applied, then the
trial court improperly determined that JDH’s $1.2 million tender stopped interest
from accruing on the Auburn notes. JDH disagrees. We conclude that a five
percent interest rate applied to the Auburn notes post-maturity, that the six
percent late charges constituted unenforceable penalties, and that the $1.2
million tender stopped interest from accruing on the notes.
7
No. 79318-7-I/8
1. Post-Maturity Interest Rate
The trial court concluded that, because the Auburn notes state that they
bear five percent interest “until paid,” and nothing in RCW 19.52.010 suggests
that parties must agree to a separate post-maturity rate, the Auburn notes bore
five percent interest even after default. RCW 19.52.010(1) provides a statutory
interest rate of 12 percent. Frye argues that this rate applies to the Auburn
notes, because the fact that the Auburn notes state that they bear five percent
interest “until paid” means that they bear five percent interest until maturity, and
then the statutory rate thereafter.
We review de novo questions of contract interpretation that do not depend
on extrinsic evidence and statutory interpretation. 4518 S. 256th, LLC v. Karen
L. Gibbon, P.S., 195 Wash. App. 423, 435, 382 P.3d 1 (2016). “The purpose of
contract interpretation is to determine the parties’ intent.” Roats v. Blakely Island
Maint. Comm’n, Inc., 169 Wash. App. 263, 274, 279 P.3d 943 (2012). Washington
courts focus on the agreement’s objective manifestations to ascertain the parties’
intent. Martin v. Smith, 192 Wash. App. 527, 532, 368 P.3d 227 (2016). Martin
explains this approach further:
We impute an intention corresponding to the reasonable meaning of
the words used. The parties’ subjective intent is irrelevant if we can
ascertain their intent from the words in the agreement.
We give words their ordinary, usual, and popular meaning unless
the entirety of the agreement clearly demonstrates a contrary intent.
We interpret only what was written in the agreement, not what the
parties intended to write. Additionally, a contract provision is not
ambiguous merely because the parties to the contract suggest
opposing meanings. We will not read ambiguity into a contract where
it can reasonably be avoided.
8
No. 79318-7-I/9
192 Wash. App. at 532–33 (internal quotation marks and citations omitted). In light
of these principles, we conclude that the Auburn notes’ “until paid” language
means that they bore five percent interest even after maturity.
RCW 19.52.010 provides that “every loan or forbearance of money,
goods, or thing in action shall bear interest at the rate of twelve percent per
annum where no different rate is agreed to in writing between the parties.”
“When a party beaches an obligation to pay a liquidated debt, a new forbearance
is created.” TJ Landco, LLC v. Harley C. Douglass, Inc., 186 Wash. App. 249, 256,
346 P.3d 777 (2015).
Frye argues that JDH’s failure to pay the Auburn notes on time constituted
a forbearance, and that after the forbearance, the statutory interest rate applies.
Frye cites a decision from the federal bankruptcy court in the Western District of
Pennsylvania in support of her argument that the “until paid” rate applies up to
the maturity of the notes, and then the statutory rate applies. See In re Dilts, 143
B.R. 644, 646 (Bankr. W.D. Pa. 1992) (“In the absence of an express agreement
to the contrary, the legal rate of interest applies from the date of maturity
irrespective of the rate prescribed in the instrument for the period prior to
maturity.”). Citing Palmer v. Labree, 23 Wash. 409, 420–21, 63 P. 216 (1900),
which in turn cites a decision from 1842—Ludwick v. Huntzinger, 1842 WL 4909
(Pa. 1842)—Frye says that Washington has “long aligned itself with
Pennsylvania law on this point.” But we decline this invitation to follow non-
Washington authority.
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No. 79318-7-I/10
Over a century ago, in Bank v. Doherty—which remains good law—our
Supreme Court interpreted a note that provided an interest rate of two percent
and listed no rate after maturity. 42 Wash. 317, 328, 84 P. 872 (1906). The
Supreme Court declared that the statutory rate applied after maturity, and said
that “[i]f the parties had intended the note in question to draw interest at the rate
of [two percent] per month after maturity, it would have been an easy matter to
have placed such an intention beyond doubt by simply adding the words ‘until
paid’ after the words [two percent] per month.” Bank, 42 Wash. at 330 (emphasis
added).
Around five years ago, in TJ Landco, the Court of Appeals favorably cited
Bank for the proposition that “[o]ur cases have long distinguished between
agreements to pay interest at maturity and agreements to pay interest ‘until
paid.’” 186 Wash. App. at 258. TJ Landco interprets the terms “until paid” in
RCW 4.56.110—a statute governing post-judgment interest—and in the parties’
contracts. 186 Wash. App. at 258. Because the parties’ contract modification did
not include “until paid” language, the court determined that the statutory interest
rate applied after default. 186 Wash. App. at 260. RCW 4.56.110 specifically
states that “[j]udgments founded on written contracts, providing for the payment
of interest until paid at a specified rate, shall bear interest at the rate specified in
the contracts.” (Emphasis added.) RCW 19.52.010 does not include similar
“until paid” language. However, it is telling that TJ Landco cites Bank—not a
case about post-judgment interest—for an interpretation of the “until paid”
language, and states that “until paid” is a term of art. TJ Landco, 186 Wash. App.
10
No. 79318-7-I/11
at 258. Thus, the trial court properly concluded that parties intended “until paid”
in the note to mean that the five percent rate applies even after default.
Frye also points to certain text messages she sent Downie, wherein she
stated a 12 percent interest rate applies after default, to support an argument that
the parties intended for the statutory rate to apply after default. But a court may
not consider evidence of a party’s unilateral or subjective intent as to the
meaning of a contract word or term. Pitell v. King County Pub. Hosp. Dist. No. 2,
4 Wash. App. 2d 764, 774, 423 P.3d 900 (2018).
Frye also invokes the last antecedent rule. The Auburn notes state that
“[JDH] promises to pay to [Frye] or order, at [address] the sum of [$500,000], with
interest from June 14, 2013 until paid, at the rate of 5.00% per cent, per annum,
shall be due and payable on [due date].” Frye argues that “a comma before the
qualifying phrase ‘shall be due and payable on [due date]’ means the parties
intended this maturity date qualifying phrase to apply to all prior antecedents
including the antecedent with the ‘until paid’ phrase.” In effect, she argues that
the five percent interest rate only applies until the due date. Under the last
antecedent rule, “the presence of a comma before the qualifying phrase is
evidence the qualifier is intended to apply to all antecedents instead of only the
immediately preceding one.” City of Spokane v. County of Spokane, 158 Wash. 2d
661, 673, 146 P.3d 893 (2006). As the provision in question defies meaningful
application of the last antecedent rule, Frye’s argument fails.
We conclude that the trial court properly determined the Auburn notes
bore five percent interest even after maturity.
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No. 79318-7-I/12
2. Late Charge Enforceability
Frye argues that the trial court erred in concluding that the six percent late
charge on the Auburn notes constitute unenforceable penalties. The
respondents disagree. We conclude that the trial court did not err on this issue.
The Auburn notes each provide, “In the event any payment is not paid
within 10 days of the due date, [JDH] shall pay to [Frye] a LATE CHARGE of
6.00% of the payment due in addition to each payment due and unpaid.” The
trial court treated these late charge provisions as liquidated damages clauses,
and Frye does not argue the trial court improperly did so.
Washington courts will typically uphold a liquidated damages provision
unless it constitutes a penalty or is otherwise unlawful. Wallace Real Estate Inv.,
Inc. v. Groves, 124 Wash. 2d 881, 886, 881 P.2d 1010 (1994). The party asserting
a right to liquidated damages need not prove actual damages. Wallace, 124
Wash. 2d at 892. However, the “amount fixed [as liquidated damages] must be a
reasonable forecast of just compensation for the harm that is caused by the
breach.” Walter Implement, Inc., v. Focht, 107 Wash. 2d 553, 559, 730 P.2d 1340
(1987). “[L]iquidated damages agreements fairly and understandingly entered
into by experienced, equal parties with a view to just compensation for the
anticipated loss should be enforced.” Wallace, 124 Wash. 2d at 886 (emphasis
added). “Determination of whether the test is met depends on the facts and
circumstances of each case.” Walter Implement, 107 Wash. 2d at 559.
Frye argues that JDH is a sophisticated party that has entered into other
contracts with high interest late fee provisions in support of her argument that the
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No. 79318-7-I/13
six percent late charges are reasonable. But even where the parties to such an
agreement are sophisticated, we must nevertheless analyze whether the
liquidated sum acts as a reasonable pre-estimate of loss. See Wallace, 124
Wash. 2d at 894–97 (conducting such a review of reasonability even where the
parties were sophisticated). The late charge provisions do not purport to
compensate Frye for the harm from late payment. No evidence in the record
suggests that the parties intended that the late charge provisions estimate Frye’s
losses in the event of late payment. The late charge provisions thus constitute
unenforceable penalties.
Frye argues in her reply that the late charges estimate her collection costs
and lost opportunity from larger profits. Typically, we will not consider arguments
raised for the first time in a reply brief, since the respondent has no meaningful
opportunity to respond. Cowiche Canyon Conservancy v. Bosley, 118 Wash. 2d
801, 809, 828 P.2d 549 (1992). Additionally, her argument amounts to a post-
hoc rationalization for enforcing the late charge provision; before and during trial,
Frye indicated that she understood the late charge provision not as a late charge
provision, but as an adjustment of the interest rate after default. “Courts will look
to the intention of the parties to make an accurate assessment of the clause’s
purpose.” Walter Implement, 107 Wash. 2d at 559. Frye’s prior purported
understanding of the late charge clause does not accord with the proposition that
the parties intended it to be a reasonable forecast of her losses in the event of
late payment. The trial court properly determined the late charge provisions on
the Auburn notes constitute unenforceable penalties.
13
No. 79318-7-I/14
3. Effect of Tender on Accrual of Interest
“[T]ender of the amount due must be unconditional in order to stop interest
from running. Tender of less than the full amount due under the contract
constitutes a conditional tender.” Jones v. Best, 134 Wash. 2d 232, 243, 950 P.2d 1
(1998). Thus, if JDH owed more than its $1.2 million tender, it was conditional,
and would not have stopped interest from accruing on the notes. Since we
determine the Auburn notes continued to accrue only five percent interest after
maturity, and the late charges constituted unenforceable penalties, the $1.2
million tender was for the correct amount due. Thus, the trial court properly
determined that the tender was not conditional and it stopped interest from
accruing on the notes. See RCW 62A.3-603(c) (“If tender of payment of an
amount due on an instrument is made . . . the obligation of the obligor to pay
interest after the due date on the amount tendered is discharged.”).
B. Downie Guarantee of the Daycare Note
Frye argues the trial court erred in finding that Downie did not personally
guarantee the Daycare note. The respondents argue the trial court’s finding on
this subject is supported by substantial evidence. We agree with the
respondents.
“A scrivener’s error occurs when the intention of the parties is identical at
the time of the transaction but the written agreement errs in expressing that
intention.” Glepco, LLC v. Reinstra, 175 Wash. App. 545, 561, 307 P.3d 744
(2013). A scrivener’s error must be established by clear, cogent, and convincing
evidence. Glepco, 175 Wash. App. at 560–61. “Clear, cogent, and convincing
14
No. 79318-7-I/15
evidence exists when the ultimate fact in issue is shown by the evidence to be
highly probable.” In re Dependency of K.R., 128 Wash. 2d 129, 141, 904 P.2d 1132
(1995) (internal quotation marks and citation omitted). We determine the intent
of the parties “by viewing the contract as a whole, the subject matter and
objective of the contract, all the circumstances surrounding the making of the
contract, the subsequent acts and conduct of the parties to the contract, and the
reasonableness of respective interpretations advocated by the parties.” Glepco,
175 Wash. App. at 561. Additionally, we may affirm the trial court on any basis
supported by the record. Larson v. State, 9 Wash. App. 2d 730, 744, 447 P.3d 168
(2019).
The copy of the Daycare note in the record signed June 14, 2013,
designated as Exhibit 22, states that Downie personally guarantees the Daycare
note. For the following reasons, this constituted a scrivener’s error.
Jackson, who drafted the Daycare note, testified as follows: The Daycare
note contained Downie’s personal guarantee because he used a template from a
previous transaction and neglected to delete the personal guarantee language.
According to Jackson, Frye did not request a personal guarantee, and Downie
did not offer a guarantee. Jackson testified that on June 17, 2013, he went to the
bank with Frye to wire money out from her account. While at the bank, Jackson
was reviewing the documents he had brought, and noticed the personal
guarantee language on the Daycare note. Since the language was mistakenly
included, he crossed off the guarantee. Jackson pointed out the correction to
Frye, and offered to have Downie execute a new note. Frye indicated that she
15
No. 79318-7-I/16
did not want Downie to execute a new copy.5 Jackson gave Frye the Daycare
note.
Downie also testified that he did not personally guarantee the note. He
said Frye did not request a personal guarantee, and he did not offer her a
guarantee. Frye testified that she lost her original version of the note.
Based on the foregoing testimonial evidence, the trial court found that
Downie did not personally guarantee the Daycare note. We need not weigh
Frye’s statements to the contrary, since the trial court found that Frye was not
credible on any issue in dispute. The trial court also found that, standing alone,
Downie’s testimony was not reliable, but that it was credible, since “transaction
documents, written communications, and the testimony of every non-party
witness” corroborated it.6 The trial court also found that Jackson was credible
and reliable on every issue in dispute. We defer to a trial court’s determinations
as to the weight and credibility of the evidence. Mueller, 185 Wash. 2d at 9. Since
the factual dispute of whether Downie personally guaranteed the note depends
on the weight and credibility of Downie, Frye, and Jackson’s testimony, we
conclude that it is highly probable that the inclusion of the personal guarantee
5
Frye argues that Downie’s testimony about the personal guarantee conflicts
with Jackson’s, and that Downie understood that he personally guaranteed the Daycare
note. But Downie unequivocally stated that he did not personally guarantee the note,
and that it was his understanding—as a non-lawyer—that Northshore Montessori
“personally guaranteed” the note, and that he signed on Northshore Montessori’s behalf.
6
Eight non-party witnesses testified during trial.
16
No. 79318-7-I/17
language constituted scrivener’s error. Thus, the trial court properly found
Downie did not guarantee the Daycare note.7
C. JDH and Downie’s Counterclaims
Frye argues the trial court erred by ruling in JDH and Downie’s favor on
their counterclaims. She argues that: (1) she had no contractual obligation to
accept JDH’s offer of tender; (2) the trial court erroneously concluded that her
complaint and lis pendens constituted slander of title; and (3) the trial court erred
in concluding that she is liable to JDH and Downie for tortious interference with a
business expectancy. JDH and Downie disagree. We conclude that the trial
court properly ruled on these counterclaims.
1. JDH’s Breach of Contract Claim
Frye argues she had no contractual obligation to accept JDH’s tender
offer. We disagree.
First, the Auburn notes require that, “when paid, this note and the Deed of
Trust must be surrendered to the trustee with request for reconveyance.” Next,
every contract contains an implied duty of good faith and fair dealing. Badgett v.
Security State Bank, 116 Wash. 2d 563, 569, 807 P.2d 356 (1991). This duty does
7
Exhibit 22 is a version of the Daycare note without the personal guarantee
language crossed out. Frye argues that, since the respondents did not object in limine
to Exhibit 22’s authenticity, they cannot later claim that Exhibit 22 did not represent the
final version of the note. But admission of evidence “does not restrict the trier of fact’s
authority to determine the weight of the evidence after hearing all of the evidence and
the arguments of opposing parties.” ER 904(d). Here, the trial court weighed the copy
of the Daycare note in the record against Downie’s, Frye’s, and Jackson’s testimony,
and concluded that Exhibit 22 did not represent the parties’ full agreement. Further, the
respondents do not argue that the exhibit should not have been admitted; but instead
that the note was altered after Downie signed it but before it was delivered to Frye, so
the exhibit does not represent the agreement of the parties.
17
No. 79318-7-I/18
not oblige a party to accept a material change in the contract, but does require
the parties to perform in good faith the obligations imposed by their agreement.
Badgett, 116 Wash. 2d at 569. Frye argues she had no obligation to accept a
reduced payoff amount for the Auburn notes; but as discussed above, JDH’s
$1.2 million tender was for the correct amount due. Because Frye refused the
tender, demanded amounts in excess of $1.2 million, and asserted that she could
charge whatever she wanted, since the refinancing depended on her release of
the Auburn notes, the trial court properly determined that Frye violated her
obligations under the notes and the implied covenant of good faith.8
2. JDH’s Slander of Title Claim
Frye argues the trial court erroneously concluded her complaint and lis
pendens constituted slander of title. We disagree.
Slander of title is: “(1) false words; (2) maliciously published; (3) with
reference to some pending sale or purchase of property; (4) which go to defeat
plaintiff’s title; and (5) [resulting in] pecuniary loss.” Centurion Prop. III, LLC v.
Chicago Title Ins. Co., 186 Wash. 2d 58, 80-81, 375 P.3d 651 (2016). We address
these elements in turn.
8
Frye also argues that JDH could have paid “under protest” the full amount she
demanded, and then sued to recover the alleged overcharges, as in Rodgers v. Rainier
Nat’l Bank, 111 Wash. 2d 232, 757 P.2d 976 (1988). But as noted by the respondents,
Frye did not raise this argument below, and accordingly, we need not consider it.
RAP 2.5(a). Additionally, Frye points to no authority that suggests JDH must have paid
under protest in these circumstances.
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No. 79318-7-I/19
a. False words
We agree with the trial court’s conclusion that the plaintiffs included false
allegations in their complaint.
On August 23, 2017, Frye filed a lis pendens referencing the Auburn
property, which states that the “[p]laintiffs have superior right, title and interest to
all defendants in a portion of the [Auburn property] under claims as specified in
the Complaint.” “[T]he Complaint” is a reference to the complaint filed by Frye on
August 24, 2017, wherein she alleged fraud and that she passed title to the
defendants under false pretenses, and requested rescission of the deeds and
return of the Auburn property.
As a part of the fraud and false pretenses claims in the complaint, Frye
contended that Downie misrepresented his involvement in JDH. The trial court
determined that Frye had failed to satisfy her burden of proof on the elements of
the claims. From such, the trial court concluded that she made false allegations
in the complaint, including “the allegation that [Frye] had been deceived in a
manner that would justify rescinding the sale of the property that had occurred in
2013.” Frye does not assign error to the trial court’s finding that she knew of
Downie’s involvement in JDH “from the beginning”; this unassigned factual
finding is a verity on appeal. Since the facts are to the contrary of Frye’s
assertion that Downie misrepresented his involvement in JDH, the complaint
contained false words.
19
No. 79318-7-I/20
b. Maliciously published
Frye argues JDH did not prove malice, but does not argue that the trial
court improperly concluded that the filing of the complaint and recording of the lis
pendens constituted “publishing.”9
The trial court properly concluded that Frye published the complaint and
lis pendens with malice. In determining as such, the trial court made the
following unchallenged findings of fact: After the parties came to a disagreement
about the amount owed on the Auburn notes, Frye changed her demand first
from $1.5 to $1.6, then to $1.7 million, “saying that she could demand whatever
she wanted because JDH needed her payoff to close its refinance”; JDH refused
to pay these additional amounts; and shortly thereafter, Frye filed her complaint
and lis pendens. “The element of malice is met when the slanderous statement
is not made in good faith or is not prompted by a reasonable belief in its veracity.”
Rorvig v. Douglas, 123 Wash. 2d 854, 860, 873 P.2d 492 (1994). That Frye filed
her complaint and lis pendens shortly after JDH refused to pay her more than
was owed on the notes supports the trial court’s conclusion that Frye made false
allegations maliciously, and in bad faith, to extort money in excess of the amount
actually owed on the notes.
9
Frye argues that the trial court erred in reaching Conclusion of Law 90, wherein
the trial court determined that the filing of the complaint and recording of lis pendens
constituted publishing. However, Frye did so as a part of her argument regarding
privilege—addressed below—and not as a part of her argument regarding malicious
publishing.
20
No. 79318-7-I/21
c. Reference to some pending sale or purchase of property
The pending sale element requires more than a mere expectation that
negotiations about a sale might begin; actual negotiations or offers suffice.
Rorvig, 123 Wash. 2d at 860 (citing Clarkston Com’ty Corp. v. Asotin County Port
Dist., 3 Wash. App. 1, 472 P.2d 558 (1970)). Frye argues no sale was pending at
the time the complaint and lis pendens were filed, but JDH had received a letter
of intent from Toll Brothers to purchase the Auburn property on or before
November 1, 2017 by this time.
d. Defeating plaintiff’s title
The complaint and lis pendens go to defeat JDH’s title insofar as they
allege Frye has a right to rescission of the contract transferring them the
property. The lis pendens unequivocally clouded JDH’s title to the property.
See, e.g., RCW 4.28.328(1)(a) (“‘Lis pendens’ means a lis pendens . . . or other
instrument having the effect of clouding title to real property.”). The trial court
properly concluded that JDH established this element.
e. Pecuniary loss
Frye does not contest the trial court’s conclusion that JDH and Downie
suffered pecuniary loss as a result of her wrongful conduct, or the underlying
factual findings supporting it. Thus, we uphold the trial court’s determination as
to this element.
f. Privilege defense
Frye argues that JDH’s slander of title counterclaim fails because the lis
pendens and complaint were absolutely privileged. See McNeal v. Allen, 95
21
No. 79318-7-I/22
Wn.2d 265, 267, 621 P.2d 1285 (1980) (“Allegedly libelous statements, spoken
or written by a party or counsel in the course of a judicial proceeding, are
absolutely privileged if they are pertinent or material to the redress or relief
sought, whether or not the statements are legally sufficient to obtain that relief.”).
Frye claimed privilege in her Reply and Affirmative Defenses to the Respondents’
Counterclaims, but not with argument or citation to legal authority. Thus, Frye
raises this argument for the first time on appeal and we decline to consider it.10
See RAP 2.5.
The trial court properly determined that Frye is liable for slander of title.
3. JDH and Downie’s Tortious Interference Claim
The trial court determined Frye was liable for tortious interference with a
business expectancy due to her interference with JDH and Downie’s efforts to
10
But even if considered, under RCW 4.28.328(3), “[u]nless a claimant
establishes a substantial justification for filing the lis pendens, a claimant is liable to an
aggrieved party who prevails in defense of the action in which the lis pendens was filed
for actual damages,” as well as reasonable attorney fees and costs.
Additionally, in Centurion, our Supreme Court, in concluding that the tort of
slander of title requires malicious conduct and not mere negligence, stated that “if simple
negligence were the rule, a party claiming an erroneous but good faith interest in real
property would not be entitled to litigate [their] claim and have an adjudication without
fear of being penalized in damages.” 186 Wash. 2d at 81. This statement suggests good
faith lis pendens filings are sufficiently protected by the tort’s malice element, without
need for an absolute privilege. See also 50 AM. JUR. 2d § 520 (“The filing of a lis
pendens notice, however, is not a privileged act and can form the basis for a slander of
title claim where the filing is instituted for a purpose other than securing adjudication of a
plaintiff’s claim and is without reasonable belief in a valid claim, or in other words, is an
improper filing.”).
While the trial court did not make a ruling on privilege—perhaps because Frye
did not adequately argue the issue—it did, in granting JDH’s claim for attorney fees
associated with slander of title, conclude that Frye’s demand for default interest lacked
any justification, and that “Frye’s testimony was so contrary to the evident facts . . . as to
suggest bad faith.” Further, as discussed above, the trial court properly concluded that
Frye acted with malice.
22
No. 79318-7-I/23
refinance, and JDH’s efforts to sell the Auburn property. We agree with the trial
court.
Tortious interference with a contract requires:
(1) the existence of a valid business expectancy, (2) that the
defendant had knowledge of that expectancy; (3) an intentional
interference inducing or causing termination of the expectancy; (4)
that the defendant interfered for an improper purpose or used
improper means; and (5) resultant damage.
Greensun Group, LLC v. City of Bellevue, 7 Wash. App. 2d 754, 767–68, 436 P.3d
397 (2019) (internal ellipses, quotation marks and citation omitted). Finally, good
faith may privilege an interferer’s actions. Greensun, 7 Wash. App. 2d at 777. We
address these elements in turn.
a. Valid business expectancy
The trial court found that Toll Brothers sent JDH a letter of intent to
purchase the Auburn property for $7,800,000. Frye argues no business
expectancy existed as to Toll Brothers, because the letter of intent did not bind
the parties to sale. Frye does not argue that no business expectancy existed as
to the refinancing.
Courts require less than an enforceable contract to establish a business
expectancy; a reasonable expectation of a prospective contractual relationship
may suffice. Greensun, 7 Wash. App. 2d at 768–69. Although the letter of intent
did not bind the parties to sale, it nevertheless created a reasonable expectation
of a prospective contractual relationship sufficient to constitute a business
expectancy. This unchallenged finding of fact supports the trial court’s
23
No. 79318-7-I/24
conclusion that a valid business expectancy existed as to the refinancing and
sale.
b. Knowledge
Frye argues she did not know of the Toll Brothers’ letter of intent, and that
she was not informed the refinancing would fail unless a deal was reached. This
element requires that Frye knew of “facts giving rise to the presence of the
business expectancy.” Greensun, 7 Wash. App. 2d at 771.
The trial court’s findings establish that Frye knew of the refinancing. Frye
need not have known of the possibility of the refinancing’s failure, but only of the
expectancy itself. The trial court found that Frye knew of the business
expectancy of the sale.11 While Downie and JDH did not specifically inform her
of the Toll Brothers’ letter of intent, Frye knew they were making efforts to sell the
property after they obtained preliminary plat approval. Frye does not challenge
the trial court’s findings establishing that she had knowledge of the refinancing,
and substantial evidence supports the trial court’s finding that she had knowledge
of the sale.
11
The trial court apparently found that Frye knew of the sale in Conclusion of
Law 57. “We treat mislabeled findings of fact or conclusions of law as what they actually
are, and review them accordingly.” State v. Conway, 8 Wash. App. 2d 538, 552 n.8, 438
P.3d 1235 (2019). “Findings of fact are determinations of whether evidence shows that
something occurred or existed. Conclusions of law are determinations made by a
process of legal reasoning from facts in evidence.” Casterline v. Roberts, 168 Wash. App.
376, 382–83, 284 P.3d 743 (2012) (internal quotation marks, ellipses, and citations
omitted). Further, the trial court stated that, “[t]o the extent the following Findings of Fact
contain legal conclusions those shall be deemed Conclusions of Law, and to the extent
the following Conclusions of Law contain factual findings, those shall be deemed
Findings of Fact.” Here, the trial court’s conclusion that Frye knew of the sale more
resembles a finding of fact; thus, we review it to determine if it is supported by
substantial evidence.
24
No. 79318-7-I/25
c. Intentional interference
Frye argues she did not interfere with the refinancing or sale. “A party
intentionally interferes with a business expectancy if it desires to bring it about or
if [they] know that the interference is certain or substantially certain to occur as a
result of [their] action.” Greensun, 7 Wash. App. 2d at 772 (internal quotation
marks and citation omitted). Analysis of this element does not consider good
faith. Greensun, 7 Wash. App. 2d at 772.
Unchallenged findings of fact demonstrate that Frye insisted first on a
$1.5 million payment for release of her notes, then $1.6, then $1.7 million; by
doing so, Frye intentionally interfered with the refinancing. The trial court also
found that Frye induced Jones to delay issuing a payoff quote.12 This finding is
supported by substantial evidence; Jackson claims that Frye asked Jones to
delay her payoff quote until Frye “got what she wanted.” Frye’s attempts to
induce Jones to delay issuing a payoff quote also constitute intentional
interference with the refinancing.
By filing her complaint and lis pendens action, it was substantially certain
that JDH’s title to the Auburn property would be clouded and sale would be more
difficult.13 See, e.g., RCW 4.28.328(1)(a). Frye intentionally interfered with any
sale by filing her complaint and lis pendens.
12 “We treat mislabeled findings of fact or conclusions of law as what they actually
are, and review them accordingly.” Conway, 8 Wash. App. 2d at 552 n.8 The portion of
this conclusion stating that Frye induced Jones to delay issuing a payoff quote
constitutes a finding, not a conclusion.
13
Frye assigns error to Finding of Fact 99, which states that the lis pendens
acted as a “preliminary injunction” preventing sale and refinancing. But whether this is
25
No. 79318-7-I/26
The trial court’s conclusion that Frye intentionally interfered with JDH and
Downie’s business expectancies is supported by unchallenged findings of fact, or
by findings that are, in turn, supported by substantial evidence.
d. Improper purpose or improper means
Frye argues she did not act with improper purpose or use improper means
to prevent the refinancing or sale. A plaintiff establishes this element when the
defendant acts with improper motive, improper means, or both. Greensun, 7 Wn.
App. 2d at 773. The trial court ruled that Frye acted with an improper purpose,
and used improper means to effectuate the improper purpose.
“Exercising one’s legal interest in good faith is not improper interference.”
Elcon Constr., Inc. v. E. Wash. Univ., 174 Wash. 2d 157, 168, 273 P.3d 965 (2012).
But when a party acts with greed, hostility, or retaliation, they demonstrate an
improper purpose. Elcon, 174 Wash. 2d at 169. Frye claims she had a good faith
basis for demanding $1.5 million on the Auburn notes. But even assuming as
such, no good faith basis existed for demanding $1.6 million, then $1.7 million.
The trial court’s unchallenged findings of fact establish that Frye claimed she
could demand whatever she wanted, since otherwise, JDH would not be able to
refinance. Her demands and statement that she could ask for whatever she
wanted reflect hostility as her purpose for interfering with the refinancing. Thus,
the trial court’s findings support its conclusion that she interfered with the
refinancing for an improper purpose.
an accurate representation of the lis pendens’ effect need not be resolved, since the lis
pendens also interfered with the sale by clouding JDH’s title to the Auburn property.
26
No. 79318-7-I/27
“To show improper means, the plaintiff must demonstrate the defendant
had a duty not to interfere. To establish such a duty, the plaintiff may point to a
statute, regulation, recognized common law, or established standard of trade or
profession.” Greensun, 7 Wash. App. 2d at 773. Under Washington law, every
contract has an implied duty of good faith and fair dealing. Rekhter v. State,
Dep’t of Soc. and Health Serv., 180 Wash. 2d 102, 112, 323 P.3d 1036 (2014). As
discussed above, the trial court’s unchallenged findings of fact support its
conclusion that Frye maliciously published her complaint and lis pendens. By
maliciously filing the complaint and lis pendens, Frye acted in bad faith and via
improper means. The trial court’s findings support its conclusion that Frye acted
with improper means to cloud JDH’s title to the Auburn property, effectively
preventing its sale.
e. Resultant damage
Frye argues that JDH failed to prove resultant damage, since the Toll
Brothers’ letter of intent cannot serve as a reasonable estimate of the Auburn
property’s value. Frye also argues the trial court erred in its determination of the
refinancing damages. Claims of damages must be proved with reasonable
certainty and supported by evidence sufficient to afford a reasonable basis for
estimating loss. Greensun, 7 Wash. App. 2d at 776.
The trial court found that portions of the refinance monies were intended
to go to Downie, and that he suffered $60,063 in damages as a result of the
failure of the refinancing. These unchallenged findings of fact support the trial
27
No. 79318-7-I/28
court’s conclusion that Downie suffered $60,063 as a result of Frye’s tortious
interference.14
The trial court found that JDH suffered $407,151 in additional carrying
costs as a result of the failure of the refinance and sale. It is unclear exactly what
portion of the carrying costs can be attributed to the failure of the refinance and
what portion of these damages can be attributed to the failure of the sale of the
Auburn property, but Frye does not meaningfully dispute the trial court’s
computation of damages.15
Additionally, the trial court found that JDH suffered $106,457 in loss of use
of net proceeds as the result of the failure of the sale, and used the purchase
price from the Toll Brothers’ letter of intent to compute JDH’s damages. Frye
argues that this is an improper computation, since the sale to Toll Brothers was
14
Frye argues that Downie did not have standing to assert tortious interference
since, as the sole LLC member, he suffered no distinct injury separate from the LLC.
See Woods View II, LLC v. Kitsap County, 188 Wash. App. 1, 22–24, 352 P.3d 807 (2015).
Frye appears to have raised this argument below only during oral argument at the
hearing on her motion for reconsideration. Based on the record, it is unclear what
provision of law Frye referred to in making this argument. We need not consider issues
an appellant failed to raise below. See State v. Burden, 104 Wash. App. 507, 515, 17 P.3d
1211 (2001) (determining the State waived an argument where it only, and obliquely,
raised such argument during oral argument, and not in its briefing); RAP 2.5(a). In any
event, JDH also asserted the tortious interference claim, so the $60,063 claimed by
Downie would otherwise have gone to JDH, of which Downie is the sole member.
15
Frye does not assign error to Finding of Fact 101. However, Frye argues that
after its oral ruling, the trial court improperly allowed JDH and Downie to amend their
claimed damages, and also erred by “denying [her] motion for reconsideration to correct
mathematical errors made in their calculations.” Frye does not offer legal authority in
support of her proposition that this court should disregard the trial court’s damages
calculations, or in support of her claim that the trial court improperly allowed amendment
of claimed damages. We need not consider arguments unsupported by legal authority.
Cowiche Canyon Conservancy, 118 Wash. 2d at 809; RAP 10.3(a)(5).
28
No. 79318-7-I/29
speculative, and the value listed in the letter of intent did not represent the fair
market value of the Auburn property.
As to whether the sale to Toll Brothers was too speculative to support an
award of damages, first, the question is not whether an actual sale would have
happened, but whether Frye interfered with a reasonable business expectancy.
As already addressed, she did so. Second, the respondents presented evidence
that Frye’s conduct prevented the sale.
As to the Auburn property’s value, JDH need only prove its damages with
reasonable certainty. See Greensun, 7 Wash. App. 2d at 776; see also Rorvig, 123
Wash. 2d at 861 (“Evidence of damages is sufficient if it affords a reasonable basis
for estimating the loss and does not subject the trier of fact to mere speculation
or conjecture.”). “Fair market value is the amount a willing buyer would pay a
seller who is willing but not obligated to sell.” U.S. Tobacco Sales and Mktg. Co.,
Inc., v. Dep’t of Revenue, 96 Wash. App. 932, 940, 982 P.2d 652 (1999) (internal
quotation marks and citation omitted). Here, Toll Brothers expressed a
willingness to purchase the property for $7.8 million, and Frye presented no
evidence suggesting an alternative value for the property.
Because the Toll Brothers sale was not too speculative to support an
award of damages, and the letter of intent reasonably estimates the property’s
value, substantial evidence supports the trial court’s findings as to the Auburn
property’s value and JDH’s damages.
29
No. 79318-7-I/30
f. Good faith
Frye argues she cannot be liable for tortious interference because she
acted in good faith. “Good faith may privilege an [interferer]’s actions and
thereby serve as an affirmative defense to a tortious interference claim.”
Greensun, 7 Wash. App. 2d at 777. But as discussed above, by increasing her
demands for payment and by maliciously filing the complaint and lis pendens,
Frye did not act in good faith.
Because all the trial court’s conclusions as to the foregoing elements of
the tort are supported by the trial court’s findings, which are in turn supported by
substantial evidence, and Frye cannot claim she interfered in good faith, the trial
court properly concluded Frye is liable for tortious interference with a business
expectancy.
E. Attorney Fees
Frye argues the trial court improperly awarded fees to JDH and Downie
because (1) her claims were not based on the parties’ purchase and sale
agreement (PSA), (2) the counterclaims do not support an award of fees, (3) the
fee provision in the Daycare note does not allow fees to Downie for escaping
liability as a guarantor, and (4) the award is unreasonable and excessive since it
does not use the lodestar method. The respondents disagree on all counts, and
request an award of appellate fees under RAP 18.1. We agree with the
respondents and award them fees on appeal.
“A party is entitled to attorney fees on appeal if a contract, statute, or
recognized ground of equity permits recovery of attorney fees at trial and the
30
No. 79318-7-I/31
party is the substantially prevailing party.” Hwang v. McMahill, 103 Wash. App.
945, 954, 15 P.3d 172 (2000). We review de novo a trial court’s award of
attorney fees under contract, and review a discretionary decision on fees and the
reasonableness of the fee award for an abuse of discretion. Gander v. Yeager,
167 Wash. App. 638, 647, 282 P.3d 1100 (2012). The trial court granted an
attorney fee award of $263,916, with 60 percent of those fees allocated to
defense of the claims related to the Auburn sale, 20 percent allocated to the
counterclaims, and 20 percent to Frye’s other monetary claims against Downie.
1. Fee award to JDH—PSA
The PSA under which Frye transferred the Auburn property to JDH allows
for an award of attorney fees to the prevailing party in “any action . . . involving
the [Auburn property] whether founded in tort, contract or equity.” Frye argues
the trial court improperly awarded fees based on her complaint because she did
not seek rescission of the PSA and did not even mention it in her complaint.
However, in her complaint, Frye alleged Downie and JDH obtained the
Auburn property under false pretenses and committed fraud by inducing her to
enter a real estate contract with a false representation. Further, she requested
rescission of her transfer of the Auburn property. Frye’s claims plainly related to
the Auburn property and the transfer of it—as required by the attorney fees
provision in the PSA—whether or not she directly referenced the PSA. Thus, the
trial court properly relied on the attorney fees provision in the PSA as a basis for
awarding fees.
31
No. 79318-7-I/32
2. Fee award to JDH—counterclaims16
The trial court based its award of fees for the counterclaims on the
attorney fee clauses in the Auburn notes. The trial court also granted attorney
fees based on the slander of title cause of action because it concluded that Frye
filed her complaint and lis pendens in bad faith. Frye argues that JDH has no
right to collect fees based on the Auburn notes. Frye also argues that the trial
court improperly concluded the complaint and lis pendens were filed in bad faith,
so the trial court improperly awarded fees on slander of title grounds.
The Auburn notes provide, “Should suit be commenced to collect this note
or any portion thereof, such sum as the Court may deem reasonable shall be
added hereto as [attorney] fees.” It is unclear whether this provision constitutes a
one-way attorney fee provision, but even if so, RCW 4.84.330 would render this
provision bilateral, and allow JDH to recover under it for their counterclaims that
stem from Frye’s refusal to accept payment on the Auburn notes. RCW 4.84.330
provides:
In any action on a contract or lease entered into after September 21,
1977, where such contract or lease specifically provides that
[attorney] fees and costs, which are incurred to enforce the
provisions of such contract or lease, shall be awarded to one of the
parties, the prevailing party, whether [they] is the party specified in
the contract or lease or not, shall be entitled to reasonable [attorney]
fees in addition to costs and necessary disbursements.
Additionally, “attorney fees are recoverable as special damages in a
slander of title action.” Rorvig, 123 Wash. 2d at 861. While the trial court concluded
16
The trial court granted attorney fees to Downie based on his defense of Frye’s
attempts to recover on the Daycare note, addressed below, and not on his tortious
interference counterclaim.
32
No. 79318-7-I/33
that Frye acted in bad faith, it need not have done so to impose attorney fees for
the slander of title action. Thus, the trial court properly determined that the
success of JDH’s breach of contract, tortious interference, and slander of title
actions entitled them to attorney fees.
3. Fee award to Downie
Frye argues Downie is not entitled to attorney fees because the fees
provision in the Daycare note entitles only the “Maker” of the note—i.e.,
Northshore Montessori—to attorney fees, but Downie is not the “Maker,” and
thus cannot recover.
The Daycare note states that “[t]he Maker shall pay all costs and
expenses, including reasonable [attorney] fees . . . incurred in collecting payment
on this note.” RCW 4.84.330 renders this provision bilateral and likewise would
allow the “Maker” of the note to recover reasonable attorney fees in actions
incurred in collecting payment on the Daycare note.
While it is true that Downie did not make the Daycare note, Frye alleged
that he was liable on it as a personal guarantor. The broad language of
RCW 4.84.330 encompasses any action in which it is alleged that a person is
liable on a contract, and Frye alleged as such against Downie here. Herzog
Alum., Inc., v. Gen. Am. Window Corp, 39 Wash. App. 188, 197, 692 P.2d 867
(1984). Thus, the trial court properly granted attorney fees to Downie.
4. Method of computation
Frye argues the trial court erred in its computation of attorney fees
because it did not use the lodestar method, and instead allowed block billing by
33
No. 79318-7-I/34
respondents’ attorneys.
The lodestar method entails multiplying a reasonable number of hours
times a reasonable hourly rate. Bowers v. Transamerica Title Ins. Co., 100
Wash. 2d 581, 597, 675 P.2d 193 (1983). A failure to address block billing concerns
constitutes reversible error. Berryman v. Metcalf, 177 Wash. App. 644, 658–59,
312 P.3d 745 (2013). We review the reasonableness of a fee award for abuse of
discretion. Gander, 167 Wash. App. at 647. “Discretion is abused when the trial
court exercises it on untenable grounds or for untenable reasons.” Berryman,
177 Wash. App. at 657.
Here, the trial court initially calculated an attorney fee award of
$283,678.47, based on a $350 per hour rate paid to the respondents’ attorney
Michael Zeno. However, based on Zeno’s 34-year experience and the prevailing
hourly rate for attorneys of his experience, skill, and education, the trial court
determined the award was unreasonably low and increased his hourly rate to
$450, increasing the award by $69,640. The trial court additionally recognized
that Jackson had performed considerable work on the case, noted that Jackson
had spent 186 hours on legal tasks for the case at a rate of $400 per hour, and
increased the award by $74,400. However, the trial court then recognized that
Zeno had made entries based on block billing, and addressed that concern by
returning to its initial fees calculation of $283,678.47. Then, the trial court further
reduced the award to $263,916, finding some of the work performed by a
paralegal involved in the case should receive a lower hourly rate.
The trial court addressed any concerns regarding block billing by returning
34
No. 79318-7-I/35
to its initial fees calculation at the lower, “unreasonable” rate. The trial court did
not abuse its discretion, and the fee award was reasonable.
5. Appellate fees
Because we affirm the judgment in the respondents’ favor, we also
determine they are the prevailing parties on appeal. Since the trial court properly
determined the PSA, Auburn notes, and slander of title action can serve as an
appropriate basis for fees, we accordingly conclude that the respondents, as the
prevailing parties, are entitled to attorney fees under the same terms, subject to
their compliance with RAP 18.1.
We affirm.
WE CONCUR:
35