Banner Bank v. Reflection Lake Community Ass'n

• Court: Court of Appeals of Washington
• Decided: February 1, 2024
• Docket: 39039-0
• Status: Unpublished

Opinion

FILED FEBRUARY 1, 2024 In the Office of the Clerk of Court WA State Court of Appeals, Division III

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION THREE

BANNER BANK, a Washington ) No. 39039-0-III corporation, ) ) Plaintiff, ) ) v. ) ) REFLECTION LAKE COMMUNITY ) UNPUBLISHED OPINION ASSOCIATION, a nonprofit corporation; ) and RICK SMITH, ) ) Respondents, ) ) JAMES POWERS, ) ) Appellant. )

LAWRENCE-BERREY, J. — James Powers appeals the trial court’s denial of his

motion to stay, including entry of judgment against him in accordance with this court’s

mandate. Reflection Lake Community Association and Rick Smith appeal the trial

court’s denial of their request for attorney fees and costs incurred on remand. We deny

both appeals, award respondents their reasonable attorney fees for responding to Mr. No. 39039-0-III Banner Bank v. Reflection Lake Cmty. Ass’n

Powers’ frivolous appeal, and affirm.

FACTS

This is the second time this matter has come before this court. We previously

decided Banner Bank v. Reflection Lake Community Association, No. 38048-3-III, slip

op. (Wash. Ct. App. Jan. 25, 2022) (unpublished), https://www.courts.wa.gov/

opinions/ pdf/380483_unp.pdf (Banner Bank I).

Banner Bank I stemmed from an interpleader action filed by Banner Bank to

determine the rights to accounts it held between two competing boards of directors of

Reflection Lake Community Association (RLCA). Id. at 1. James Powers originally

served on RLCA’s board as an appointed director and president. See id. at 4. He and the

other eight appointed directors failed to hold a timely election as required by RLCA’s

bylaws. See id. at 2. A small group of community members formed an election

committee and collected signatures from 70 percent of the RLCA members demanding

that the board hold an election. Id. The appointed board refused to hold an election, so

the election committee organized and held a special election. Id. RLCA members

ultimately removed seven of the eight appointed directors, including Mr. Powers, and

elected a new board. Id. at 2-3. Mr. Powers contested the election. Id. at 4.

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When the newly elected board attempted to access RLCA’s bank accounts with

Banner Bank, Mr. Powers informed the bank that there were two competing boards of

directors. Id. at 2-3. Banner Bank froze RLCA’s accounts and filed a complaint for

interpleader naming Mr. Powers, president of the appointed board, Rick Smith, president

of the elected board, and RLCA itself, as defendants. Id. at 4. The trial court granted

summary judgment in favor of RLCA and Mr. Smith (collectively hereafter, RLCA). Id.

at 10. Mr. Powers appealed. Id.

On November 9, 2021, while Banner Bank I was pending in this court, the parties

entered into a CR 2A mediated settlement agreement. Under the terms of the agreement,

the parties agreed to stay two existing lawsuits: (1) the interpleader action, Spokane

County Superior Court No. 20-2-03199-32, and (2) a second lawsuit, Spokane County

Superior Court No. 20-2-03213-32, commenced by Mr. Powers and other removed board

members, which requested declaratory relief unrelated to the interpleader action. The

settlement agreement stated in relevant part:

The parties agree to stay the current lawsuits between the parties until such a time as RLCA and the Reflection Water Association successfully transfer ownership or operation of the Reflection Lake eastside water system to a third party, at which time the parties hereto agree to execute appropriate full and final releases, settlement documents and other necessary confirming documents, and to enter an Order of Dismissal with Prejudice and Without Costs in Spokane County Superior Court Cause No. 20-2-03213-32 and

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dismiss the appeal of summary judgment granted in Spokane County Superior Court Cause No. 20-2-03199-32.

Clerk’s Papers (CP) at 6.

Six days later, counsel for Mr. Powers filed a motion in this court requesting that

we stay our review in Banner Bank I, citing the signed settlement agreement. One day

later, counsel withdrew the motion, explaining, “The undersigned counsel was

misinformed, and the parties do not wish to stay the above-captioned matter, regardless

of settlement status.” Revised Br. of Resp’t, App. at 5-6 (emphasis added). Accordingly,

we proceeded with our review.

We affirmed the trial court’s decision. We also awarded RLCA its attorney fees

and costs for a frivolous appeal because “Mr. Powers failed to raise any debatable issue

that might result in the reasonable probability of reversal.” Banner Bank I, No. 38048-3-

III, slip op. at 18.

RLCA submitted a cost bill and an application for attorney fees pursuant to

RAP 18.1(d). Mr. Powers did not object or otherwise respond. We awarded RLCA

$14,637.50 for its attorney fees and $140.88 for its costs. On April 13, 2022, we issued

our mandate, which included the attorney fee and cost award against Mr. Powers.

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Trial court proceedings

Mr. Powers moved the trial court to enforce the settlement agreement in the

declaratory action. The trial court granted Mr. Powers’ motion and entered an order that

deemed the settlement agreement enforceable and binding between the parties.

Soon after, RLCA filed a proposed order entering judgment against Mr. Powers in

this, the interpleader action. In addition to the mandated attorney fees and costs from

Banner Bank I, the proposed order also included a request for the trial court to award

RLCA $1,745 in additional attorney fees and costs against Mr. Powers. In its briefing to

the trial court, RLCA did not explain or provide authority for its request for the additional

attorney fees and costs.

Mr. Powers then filed a motion in the interpleader action to stay (1) all matters

pertaining to or arising from the appeal in Banner Bank I, including entry of judgment

against him for attorney fees and costs, and (2) all pending matters in the trial court

between the parties. He argued “the appeal should have been stayed,” and the trial court

should stay entry of a judgment against him because of the parties’ settlement agreement.

CP at 16.

Mr. Powers additionally objected to entry of judgment in the interpleader action.

He argued that RLCA’s attempt to obtain entry of judgment in accordance with our

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mandate in Banner Bank I violated the settlement agreement and disregarded the trial

court’s earlier order in the declaratory action that deemed the settlement agreement

enforceable.

RLCA countered by arguing (1) the mandate in Banner Bank I was binding on the

trial court, (2) Mr. Powers waived application of the stay by failing to raise the issue on

appeal, and (3) Mr. Powers’ motion and objection was a part of a pattern of tactical delay

and abusive litigation.

The trial court held a hearing on Mr. Powers’ motion to stay and RLCA’s proposed

judgment. The court denied the motion to stay and entered judgment in accordance with

our mandate. It also denied RLCA’s request for additional attorney fees and costs, the

basis for which RLCA had failed to explain either in its briefing or during the hearing.

Mr. Powers timely appealed the trial court’s entry of judgment and denial of his

motion to stay. RLCA timely cross appealed the trial court’s denial of its request for

additional attorney fees and costs.

ANALYSIS

A. POWERS’ APPEAL: ENTRY OF JUDGMENT

Mr. Powers argues the trial court erred when it denied his motion to stay and

entered judgment against him pursuant to our mandate in Banner Bank I. We disagree.

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Standard of review

Mr. Powers’ appeal potentially involves interpretation of the CR 2A settlement

agreement signed by the parties. “Normal contract principles apply to the interpretation

of a CR 2A agreement.” In re Marriage of Pascale, 173 Wn. App. 836, 841, 295 P.3d

805 (2013). “Interpretation of the terms of a contract is a question of law and is reviewed

de novo by the appellate court.” Knipschield v. C-J Recreation, Inc., 74 Wn. App. 212,

215, 872 P.2d 1102 (1994). When the language of a contract is in question, the court will

“determine the parties’ intent by focusing on the objective manifestations of the

agreement, rather than on the unexpressed subjective intent of the parties.” Hearst

Commc’ns, Inc. v. Seattle Times Co., 154 Wn.2d 493, 503, 115 P.3d 262 (2005). A

person’s signature on the contract is an objective manifestation of an intent to be bound.

Retail Clerks Health & Welfare Tr. Funds v. Shopland Supermarket, Inc., 96 Wn.2d 939,

944, 640 P.2d 1051 (1982). At that point, the burden shifts to the party seeking to avoid

the contract to prove why the contract should not be enforced. Id.

RLCA raises four arguments why the settlement agreement is not enforceable with

respect to the interpleader action: (1) the trial court lacked authority to deviate from our

mandate in Banner Bank I, (2) Mr. Powers waived enforcement of the settlement

agreement with respect to the interpleader action, (3) Mr. Powers is judicially estopped

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from enforcing the settlement agreement, and (4) we should affirm as a matter of policy.

We limit our analysis to RLCA’s two strongest arguments.

1. The trial court lacked authority to deviate from our mandate

RLCA argues the trial court was not permitted to deviate from our mandate in

Banner Bank I, which directed entry of judgment against Mr. Powers. We agree. This

rule is well established in our case law and court rules. Our Supreme Court stated almost

100 years ago:

“A trial court has no authority to enter any judgment or order not in conformity with the order of the appellate court. That order is conclusive on the parties, and no judgment or order different from or in addition to that directed by it can have any effect, though it may be such as the appellate court ought to have directed. Where the mandate of an appellate court directs a specific judgment to be entered, the tribunal to which such mandate is directed must yield obedience thereto. No modification of the judgment so directed can be made by the trial court, nor can any provision be ingrafted on or taken from it.”

Gudmundson v. Commercial Bank & Tr. Co., 160 Wash. 489, 496, 295 P. 167 (1931)

(quoting 2 RULING CASE LAW Appeal and Error § 244, at 289 (1914)); see also State ex

rel. Wolferman v. Superior Ct., 8 Wash. 591, 593, 36 P. 443 (1894).

Contrary to Mr. Powers’ argument that the rule from those cases is superseded by

the rules of civil procedure, the rule continues to be enforced in Washington. E.g., State

v. Strauss, 93 Wn. App. 691, 697, 969 P.2d 529 (1999) (quoting RAP 12.2) (“Once an

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appellate court issues its mandate, the court’s decision becomes ‘effective and binding on

the parties to the review and governs all subsequent proceedings in the action in any

court.’”). In other words, the holding of the appellate court “must be followed in all of

the subsequent stages of the same litigation.” State v. Schwab, 163 Wn.2d 664, 672, 185

P.3d 1151 (2008). This rule is the principle behind the law of the case doctrine. See

Bank of Am., NA v. Owens, 177 Wn. App. 181, 189-90, 311 P.3d 594 (2013) (“The law of

the case doctrine binds the parties, the trial court, and subsequent appellate courts to the

holdings of an appellate court in a prior appeal until such holdings are authoritatively

overruled.”).

The Rules of Appellate Procedure support the aforementioned rules. Under

RAP 18.1(h), “[t]he clerk will include the award of attorney fees and expenses in the

mandate . . . . The award of fees and expenses . . . may be enforced in the trial court.”

Under RAP 14.6(c), “[t]he commissioner or clerk will award costs in the mandate . . . .

An award of costs may be enforced as part of the judgment in the trial court.” Under

RAP 12.2,

[u]pon issuance of the mandate of the appellate court as provided in rule 12.5, the action taken or decision made by the appellate court is effective and binding on the parties to the review and governs all subsequent proceedings in the action in any court . . . . After the mandate has issued, the trial court may, however, hear and decide postjudgment motions

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otherwise authorized by statute or court rule so long as those motions do not challenge issues already decided by the appellate court.

Here, our mandate in Banner Bank I directed the trial court to enter judgment in

the interpleader action, which the appeal stemmed from. Consistent with the above-stated

rules, the trial court lacked authority to deviate from our mandate in that case.

2. Mr. Powers waived his right to enforce the settlement agreement with respect to the interpleader action

“‘The doctrine of waiver ordinarily applies to all rights or privileges to which a

person is legally entitled. A waiver is the intentional and voluntary relinquishment of a

known right, or such conduct as warrants an inference of the relinquishment of such

right.’” Schroeder v. Excelsior Mgmt. Grp., LLC, 177 Wn.2d 94, 106, 297 P.3d 677

(2013) (quoting Bowman v. Webster, 44 Wn.2d 667, 669, 269 P.2d 960 (1954)).

Here, assuming the parties had entered into a valid and enforceable settlement

agreement during our review of Banner Bank I, Mr. Powers waived his right to enforce it

with respect to the interpleader action. The signed settlement agreement is dated

November 9, 2021. Six days later, Mr. Powers filed a motion requesting that we stay our

review in Banner Bank I, citing the signed settlement agreement. One day later, Mr.

Powers withdrew his motion to stay review, explaining, “[t]he undersigned counsel was

misinformed, and the parties do not wish to stay the above-captioned matter, regardless

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of settlement status.” Revised Br. of Resp’t, App. at 5-6 (emphasis added). Accordingly,

we proceeded with our review, issued our decision awarding frivolous attorney fees and

costs, and issued our mandate in Banner Bank I.

Mr. Powers’ action in withdrawing his motion to stay and the language that he

wanted the appeal to be decided “regardless of settlement status” shows an intentional

and voluntary choice to relinquish the right to enforce the settlement agreement with

respect to the interpleader action. His failure to request reconsideration of our decision in

Banner Bank I confirms the objective clarity of his waiver.

B. RLCA’S CROSS APPEAL: ADDITIONAL ATTORNEY FEES AND COSTS

RLCA cross appeals, arguing (1) the trial court abused its discretion by denying its

request for additional attorney fees and costs, (2) it is entitled to attorney fees and costs

for defending a frivolous appeal, and (3) we should enjoin Mr. Powers from further

litigating this matter against it. We address each argument in turn.

1. The trial court did not abuse its discretion

RLCA first argues that the trial court abused its discretion by denying its request

for attorney fees, both for its efforts in entering judgment and for opposing Mr. Powers’

motion to stay.

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First, RLCA argues we intended it to recover its reasonable attorney fees and costs

for having judgment entered in accordance with the mandate. We did not. In Banner

Bank I, RLCA requested its reasonable attorney fees and costs on appeal for defending a

frivolous appeal. This is what we awarded.

Second, RLCA argues it should be entitled to recover its reasonable attorney fees

and costs for opposing Mr. Powers’ motion to stay, describing Mr. Powers’ conduct as

intransigent and oppressive. RLCA did not raise this argument below as a basis for

recovering attorney fees and costs, and we decline to consider it for the first time on

appeal. RAP 2.5.

2. RLCA is entitled to an award of reasonable attorney fees for responding to Mr. Powers’ frivolous appeal

RLCA next argues we should award reasonable attorney fees and costs to it on

appeal because this appeal is frivolous. We agree.

RAP 18.9(a) authorizes the appellate court, on its own initiative or on motion of a

party, to order a party or counsel who files a frivolous appeal “to pay terms or

compensatory damages to any other party who has been harmed by the delay or the failure

to comply or to pay sanctions to the court.” Appropriate sanctions may include

compensatory damages or an award of attorney fees and costs on appeal to the opposing

party. Yurtis v. Phipps, 143 Wn. App. 680, 696, 181 P.3d 849 (2008).

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In determining whether an appeal is frivolous, we examine the entire record for

whether “the appeal presents no debatable issues upon which reasonable minds might

differ, and [whether] the appeal is so devoid of merit that there is no possibility of

reversal.” Advocs. for Responsible Dev. v. W. Wash. Growth Mgmt. Hr’gs Bd., 170

Wn.2d 577, 580, 245 P.3d 764 (2010).

Our review of the entire record convinces us that Mr. Powers’ appeal is so devoid

of merit that there is no possibility of reversal. As discussed above, Mr. Powers expressly

waived his right to have the settlement agreement enforced with respect to the

interpleader action. Subject to RLCA’s compliance with RAP 18.1(d), we award it

reasonable attorney fees and costs for responding to Mr. Powers’ appeal.

3. We decline to enjoin Mr. Powers from further litigating this matter against RLCA

RLCA requests that we enjoin Mr. Powers from litigating this matter further

against it. It points to our decision in Yurtis v. Phipps, 143 Wn. App. at 693-96, as

support for its argument. We decline RLCA’s request.

In Yurtis, we enjoined Ms. Yurtis from further litigation over a 1991 land

transaction after she made numerous unsuccessful attempts to overturn one of our prior

decisions. Id. at 696. Over the course of more than 10 years and two separate lawsuits,

Ms. Yurtis unsuccessfully appealed to this court multiple times, attempted to recall our

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mandate twice, petitioned the Washington Supreme Court for discretionary review three

times, and petitioned the United States Supreme Court for certiorari and rehearing. Id. at

684-89. The trial court, this court, and the Washington Supreme Court imposed sanctions

against Ms. Yurtis multiple times over the course of her continued litigation. Id. Her

litigation culminated in our decision in Yurtis, where we viewed her appeal to be another

attempt to relitigate the same issue that had been “repeatedly rejected” and prohibited her

from filing any further claims or appeals against the defending party. Id. at 695-96.

In Yurtis, we explained, while we appreciated the need for appellate review, “‘we

also are mindful of the need for judicial finality and the potential for abuse of this revered

system by those who would flood the courts with repetitive, frivolous claims which

already have been adjudicated at least once.’” Id. at 693 (quoting In re Pers. Restraint of

LaLande, 30 Wn. App. 402, 405, 634 P.2d 895 (1981)). We also acknowledged that we

have “inherent power to control the conduct of litigants who impede the orderly conduct

of proceedings.” Id. (citing RCW 2.28.010(3); In re Marriage of Lilly, 75 Wn. App. 715,

720, 880 P.2d 40 (1994)). “Accordingly, a court may, in its discretion, place reasonable

restrictions on any litigant who abuses the judicial process.” Id. (citing In re Marriage of

Giordano, 57 Wn. App. 74, 78, 787 P.2d 51 (1990)).

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Here, Mr. Powers' conduct does not warrant our exercising our inherent power to

enjoin him from further litigation in this case. His conduct here is unlike the extreme

conduct in Yurtis. This is the first time Mr. Powers has raised these particular issues on f appeal. While we conclude that his appeal here is frivolous, it does not rise to the same

extreme level as the litigation in Yurtis, which concerned one issue that was "repeatedly

rejected" by our Washington courts. We decline to enjoin Mr. Powers from further

litigation against RLCA. We hope the specter of attorney fee sanctions will be a

sufficient deterrent from raising further frivolous arguments.

Affirmed.

A majority of the panel has determined this opinion will not be printed in the

Washington Appellate Reports, but it will be filed for public record pursuant to

RCW 2.06.040.

Lawrence-Berrey, J.

WE CONCUR:

~~ ,.:r. Fearing, C .J. Cooney, J.