Eagle Point Condominium Owners Ass'n v. Coy

9 P.3d 898, 102 Wash. App. 697, 2000 Wash. App. LEXIS 1796
Court of Appeals of Washington·Decided September 18, 2000·No. No. 44746-7-I·Published·Cited by 83 cases

Opinion

Becker, A.C.J.

— A condominium association obtained judgment against a developer for breach of express and implied warranties under the Condominium Act, ch. 64.34 RCW. Although the Association did not prove all of its claims, and refused a pretrial settlement offer greater than the net damages awarded at trial, the trial court did not err in finding the Association to be the prevailing party for purposes of awarding attorney fees under the statute. We affirm the judgment and remand for entry of findings and conclusions explaining the calculation of the fee award.

FACTS

The Eagle Point Condominiums are an eight-unit development on the south shore of Lake Whatcom. Peter Coy was the developer, seller, and declarant. He was also a one-third owner and president of Brixx Design and Development, the contractor that constructed the buildings. Between 1993 and 1994 five of the eight units were sold. The other three units are owned by Coy, who maintains them as rental properties.

The owners of the five units, following occupancy, complained about construction defects. Brixx responded by performing certain repair work under its one- and two-year warranties. Brixx did not remedy all complaints, and the quality of the repair work did not always satisfy the owners.

Brixx ceased doing business in 1995. Coy and the owners were unable to agree at that time on what should be done to resolve the owners’ remaining complaints. The Eagle Point Owners Association, together with several individual unit owners, sued Coy and Brixx in 1996. To document their damages, the Association retained a construction consultant. The consultant identified various problems which he attributed to defects in construction and installation. His [701] report evaluated the total damages at approximately $750,000.

A mediation in November 1998 achieved a release of the Association’s claims against Brixx in exchange for a payment of $65,000 to the Association. A four-day bench trial in February, 1999 resulted in a judgment on the claims against Coy under the Washington Condominium Act, ch. 64.34 RCW. The court found Coy, as the declarant, liable to the Association for breach of express and implied warranties to the extent of $77,441. Two unit owners received individual judgments against Coy for $1,000 and $3,000.

Coy asked the court to offset the judgment against him by $65,000, the amount of the Brixx settlement. And both sides claimed to be entitled to an award of attorney fees as the prevailing party. At the court’s request, the parties provided posttrial briefing on both issues. In findings and conclusions entered on April 28, 1999, the court allowed Coy an equitable setoff of $55,000 for the Brixx settlement, for a net damage award to the Association of $22,441. The court found that the Association was the prevailing party in the lawsuit under the Condominium Act, and awarded $25,000 in attorney fees and $176 in statutory costs, for a total judgment of $47,617. Coy appeals the judgment in favor of the Association but not the judgments in favor of the individual owners. The Association cross appeals.

OFFSET

Both parties appeal the court’s decision to offset the amount of the judgment by $55,000. The Association contends the offset was too large while Coy contends the court should have given him credit for the entire $65,000 Brixx paid in settlement. We review a trial court’s decision to grant an offset for abuse of discretion. See Robinson v. McReynolds, 52 Wn. App. 635, 640, 762 P.2d 1166 (1988). A court abuses its discretion if its decision is not based on tenable grounds or tenable reasons. Layne v. Hyde, 54 Wn. App. 125, 135, 773 P.2d 83 (1989).

[702] In setting off the Brixx settlement, the trial court’s equitable purpose was to assure that the Association did not recover from both Brixx and Coy for the same damage. It is a basic principle of damages, both tort and contract, that there shall be no double recovery for the same injury. Public Employees Mut. Ins. Co. v. Kelly, 60 Wn. App. 610, 618, 805 P.2d 822, review denied, 116 Wn.2d 1031 (1991); Robinson, 52 Wn. App. at 639.

According to the Association, the court lacked a tenable basis for the offset because the losses compensated by the award of damages against Coy were different from the losses compensated by the Brixx settlement. The Brixx warranty covered only those construction defects discovered within a period of one or two years. It also excluded coverage for features such as outbuildings, driveways, bulkheads, patios and landscaping. The Association takes the position that the claims on which it succeeded against Coy at trial either were for problems excluded by the terms of Brixx warranty or were discovered after the warranty period, and therefore were not within the ambit of Brixx’s liability.

Arguably, some of the claims the Association proved against Coy could never have been proved against Brixx if Brixx had remained a defendant. But as the trial court found, the Association initially asserted all its claims against both Coy and Brixx, without any differentiation as to the party responsible. The parties to the Brixx settlement did not allocate it to any particular claim of damage. At the time of the Brixx settlement, Brixx had not litigated on any defense or legal theory that would have limited its potential liability for any or all of the damages claimed by the Association. The Association continued to assert the same claims against Coy after the settlement without any indication that any particular claim had been satisfied.

To be able to separate out the claims for which Brixx had no liability, the trial court would have had to find the date each defect was discovered and to categorize each defect in terms of the Brixx warranty exclusions. At trial the Asso[703] ciation did not present evidence in a way that would have enabled the court to make such findings; and it has not assigned error to the trial court’s failure to make such findings. We therefore hold that the trial court was within its discretion to conclude that an offset was necessary as a matter of equity to ensure that the plaintiffs did not recover damages from both Coy and Brixx for the same defects.

Coy contends a complete setoff of the $65,000 Brixx settlement was necessary to avoid double recovery, and asserts there is no factual or legal basis supporting the court’s reduction of that amount by $10,000.

The $10,000 reduction was for the claim of Richard Watson, one of the unit owners who joined in the lawsuit. Watson had an independent contract with Brixx to provide various upgrades to his unit. He claimed damages estimated by the Association at $10,000, arising out of the alleged failure of Brixx to install and adjust his interior doors properly. After finding that Watson’s claim arose solely from his separate contractual agreement with Brixx, the court denied him any recovery against Coy.

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Eagle Point Condominium Owners Ass'n v. Coy, 9 P.3d 898, 102 Wash. App. 697, 2000 Wash. App. LEXIS 1796 (Wash. Ct. App. 2000).

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