IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
LARRY COSTELLO and CHRISTY No. 73060-6-1 <"f * COSTELLO, rn - DIVISION ONE SO oS Appellants, 1 -J — 3>--
3a* v. ac arr- o• *
TANNER ELECTRIC COOPERATIVE, UNPUBLISHED en
Respondent. t FILED: March 7. 2016
COX, J. — The Costellos, who are members of Tanner Electric
Cooperative (Tanner), appeal the dismissal of their action against Tanner for
allegedly withholding Cooperative records and imposing an unlawful monthly fee
on members who opt out of its "smart meter" program. They also appeal orders
granting Tanner summary judgment on its counterclaim for unpaid charges and
penalties, and awarding attorney fees and costs. We affirm in part and reverse in
part.
Tanner is a cooperative electrical utility organized under RCW 24.06. In
2009, Tanner decided to replace its members' electricity meters with "smart
meters" that eliminate the need for meter reading. Because smart meters
generate detailed information about members' electricity use, several Tanner
members, including appellants Larry and Christy Costello, expressed privacy
concerns. In response, Tanner created an opt-out policy allowing members to No. 73060-6-1/2
keep their old meters if they paid a $23.33 monthly fee covering the cost of
reading their meter.
The Costellos declined to participate in the smart meter program but
refused to pay the opt-out fee between February 1, 2013 and October 15, 2013.
In May 2013, the Costellos filed this action, alleging that the opt-out fee
unlawfully burdened their state constitutional right to privacy,1 violated the
Consumer Protection Act,2 and violated a statutory prohibition on discrimination
in the provision of utility services.3 The complaint further alleged that, as
members of Tanner, the Costellos were entitled to inspect books and records
relating to the smart meter program. Tanner counterclaimed for unpaid charges,
penalties, and interest. It also sought attorney fees and costs.
In October 2013, the Costellos paid all of their outstanding opt-out fees. A
notice accompanying their payment stated that they did not concede the fee's
validity and reserved the right to challenge it in this action.
In February 2014, Tanner moved for a protective order restricting the
Costellos' access to certain information. In particular, Tanner sought to limit
access to information protected by a confidentiality agreement between Tanner
and the smart-meter vendor, Aclara Technologies, LLC. Supporting declarations
and pleadings described the confidential information as "Aclara engineering and
1 Article 1, Section 7 Wash. Const.; RCW 80.28.090-. 100.
2 RCW 19.86.
3 RCW 49.60. No. 73060-6-1/3
design data and information, drawings, security features, technical specifications
and other proprietary information about Aclara's . . . metering equipment and
communications software."4 The information included Aclara's "research,
development, trade secrets . . . and intellectual property" as well as information
about Tanner's smart meter system and business that allegedly could adversely
affect "Tanner's ability to protect member power usage data and personally
identifying information" from disclosure.5 Tanner argued that the proprietary
nature of the information and the confidentiality agreement established the "good
cause" necessary for a protective order under CR 26(c) and justified limiting
disclosure to counsel and/or an independent expert. The Costellos argued that
Tanner failed to demonstrate good cause and that any language restricting
access to their attorney or expert should be removed so they could inspect the
documents themselves.
The Costellos then moved for partial summary judgment on their claim for
access to Tanner's books and records. Tanner moved for partial summary
judgment on the Costellos other three claims under CR 12(c) and/or CR 56.
On March 21, 2014, the court granted partial summary judgment
dismissing the Costellos' constitutional, discrimination, and CPA claims. The
court dismissed the first two claims under CR 12 and the CPA claim under CR 56
and Haberman v. Washington Pub. Power Supply Svs., 109Wn.2d 107, 171-72,
4 Clerk's Papers at 1734.
5 Id. No. 73060-6-1/4
744 P.2d 1032 (1987), amended. 109 Wn.2d 107, 750 P.2d 254 (1988). The
court denied the Costellos' motion for summary judgment on their access to
records claim.
The court also granted Tanner a protective order restricting access to
confidential information. The order states in pertinent part:
a receiving Party may disclose Highly Confidential Documents or the information contained in such Documents only to the receiving Party's counsel of record in this Litigation, and/or to independent experts or consultants for the receiving Party who have signed the "Acknowledgment and Agreement to Be Bound."[6]
The order defines "Attorneys" as "counsel of record." The order further provides
that "[a]ny party may apply ... for a modification of the Protective Order." After
the court entered the protective order, the Costellos' counsel withdrew and they
proceeded pro se.
Tanner then moved for summary judgment on the Costellos' access to
records claim. At the hearing on the motion, the Costellos argued that they were
entitled to view the "highly confidential" documents under RCW 24.06.160, the
corporate books and records statute. They further argued that Tanner had not
shown good cause for the protective order and was abusing the "confidential"
designation permitted by the order. Tanner's counsel responded that the
Costellos' access to records claim was moot because Tanner had either
provided, or stood ready to provide to counsel or an expert, the requested
6 Clerk's Papers at 789-90. No. 73060-6-1/5
records. When the court asked what effect the Costellos' current pro se status
had under the protective order, Tanner's counsel replied:
Well, it's very clear that the order was intended to allow access only to counsel, independent counsel and expert. We think you would have to revise it at your discretion, if you believe that it should be revised. . . . But we would - we don't think that they can make an end [run] around your order simply to allow Mr. Costello access to these records."171
The Costellos did not ask the court to modify the protective order.
Instead, they argued that "in the plain language of the protective order, there are
no specific constraints on us as the receiving party from having the highly
confidential information."8 The court then asked the Costellos whether they had
an expert or legal training. The Costellos stated they had neither. When the
court asked whether a consultant would be necessary to "effectuate the terms of
the protective order,"9 the Costellos argued that the expense of a consultant
"would impose ... an unfair financial burden" and that they were "well qualified to
evaluate" the confidential information themselves.10
The court granted summary judgment dismissing the Costellos' access to
records claim, stating in part:
there is no disputed issue of material fact as to the first cause of action set forth in the plaintiffs' Complaint, that the documents plaintiffs seek are outside the scope of those required to be allowed inspection under RCW 24.06.160 and under Tanner's Member
7 Report of Proceedings (September 12, 2014) at 8-9.
8li±at21.
9 Id, at 22.
10 Id. No. 73060-6-1/6
Access to Information Policy, that defendant has already allowed plaintiffs inspection of the requested documents under this Court's terms (i.e., the Protective Order entered in this matter), and that the defendant is entitled to judgment dismissing that claim as a matter of law.[11]
The Costellos moved to dismiss Tanner's counterclaims, but the court
denied the motion and ultimately granted summary judgment for Tanner in the
amount of $45.70.
On April 24, 2015, the court entered an order awarding Tanner attorney
fees and costs. The order states in pertinent part:
a. Plaintiffs entered into a Membership Agreement contract with Defendant. The Membership Agreement contained a provision which provided that reasonable attorney fees would be paid to Defendant in the event it was necessary an attorney needed to be retained to collect on amounts that were due to Defendant. As Plaintiffs would not pay Defendant the amount they owed, claiming that the outstanding amounts were based on charges that were against the law, Defendant incurred attorney fees in disproving Plaintiffs' reasons for not paying the charges and in collection of the charges. As a result, Plaintiffs are to be made to pay Defendant's attorney fees incurred in opposing Plaintiffs' Counts II, III and IV of the complaint and are to be made to pay Defendant's attorney fees incurred in bringing counterclaims for payment of amounts due.
b. Plaintiffs' complaint contained three separate causes of action which were not well grounded in fact and/or not warranted by existing law. Count II of Plaintiffs' complaint alleged that Defendant's smart meters invaded Plaintiffs' privacy. However, as Plaintiffs' never had a smart meter installed, it was factually impossible for the smart meters to invade Plaintiffs' privacy. Count III of Plaintiffs' complaint was wholly baseless as it alleged that Defendant violated Washington's law against discrimination; Plaintiffs claim that they are members of a protected class by virtue of their legal claim and ideology against smart meters was tautologically self-serving. Plaintiffs' claim IV that Defendant
1Clerk's Papers at 1364 (emphasis added). No. 73060-6-1/7
violated Washington Consumer Protection Law was unsupportable under the law.
c. Defendant was the prevailing party in this matter which contained monetary claims for less than $10,000. Defendant properly provided a written settlement letter to Plaintiffs which was rejected. Defendant later was awarded judgment in an amount that exceeded the amount Defendant offered to settle this dispute. Accordingly, pursuant to RCW 4.84.250, attorney fees and costs in defense of Plaintiffs claims seeking monetary relief (i.e. Counts II, III, and IV) and associated with their affirmative counterclaims are mandated. The purpose of this statute involves penalizing parties who unjustifiably bring or resist small claims.
d. Tanner is also entitled to statutory fees and costs available under RCW 4.84.080 as the prevailing party on all counts.1121
The court awarded Tanner $119,617.53 in attorney fees and $10,189.87 in costs.
The Costellos appeal the dismissal of their access to records and CPA claims,
the judgment on Tanner's counterclaims, and the award of attorney fees and
costs.
ACCESS TO BOOKS AND RECORDS
The Costellos first contend the court erred in dismissing their claim for
access to Tanner's books and records on summary judgment. On review of a
summary judgment, we engage in the same inquiry as the trial court.13 Summary
judgment is appropriate if there is no genuine issue of material fact and the
12 Clerk's Papers at 2165-66 (emphasis added).
13 New Cingular Wireless PCS. LLC v. City of Clyde Hill. 187 Wn. App. 210, 215, 349 P.3d53(2015). No. 73060-6-1/8
moving party is entitled to a judgment as a matter of law.14 The court properly
granted summary judgment on this claim.
The Costellos' complaint alleged in part that, as members of the
cooperative, they had a right to review Tanner's records and that Tanner failed to
provide "information regarding the smart meter program." Because some of the
records related to a third party vendor and proprietary information, the trial court
granted Tanner's request for a protective order limiting the Costellos' access to
"highly confidential" information. The order stated that "a receiving Party may
disclose Highly Confidential Documents . . . only to the receiving Party's counsel
of record in this Litigation, and/or to independent experts or consultants."15 The
Costellos contend the court misinterpreted this provision, arguing that "[tjhere is
no language restricting pro se litigants from receiving Highly Confidential
information" and "no 'Attorney's Eyes Only' language in the Protective Order."16
Interpretation of a court order is a question of law that we review de
novo.17 We interpret such orders to give effect to the issuing court's intent.18
The protective order in this case plainly states that highly confidential information
14 CR 56(c).
15 Clerk's Papers at 789-90.
16 Appellants' Brief at 21-22.
17 In re Marriage of Thompson. 97 Wn. App. 873, 877, 988 P.2d 499 (1999).
18 Hillv. Hill, 3 Wn. App. 783, 786, 477 P.2d 931 (1970), overruledon other grounds by Stokes v. Pollev. 145 Wn.2d 341, 37 P.3d 1211 (2001).
8 No. 73060-6-1/9
can be disclosed by the receiving party "only to the receiving Party's counsel of
record in this Litigation, and/or to independent experts or consultants . . . who
have signed the "Acknowledgment and Agreement to Be Bound."19 The order
does not provide for disclosure of highly confidential information to a party.
Significantly, the order, which was drafted and entered when the Costellos were
represented by counsel, equates "counsel of record" with "attorneys." The order
nowhere addresses parties proceeding pro se. The plain language of the order
thus limits disclosure to officers of the court or experts bound by a nondisclosure
agreement. It also effectuates the court's intent, which it expressed by adopting
Tanner's proposed order without modifying the access restrictions as requested
by the Costellos.
We reject the Costellos' argument that the words "[a] receiving party may
disclose" in the order implicitly grant the receiving party the right to review highly
confidential information before disclosing the information to others. This
interpretation reads language into the order and is contrary to the court's intent.
We also reject the Costellos' claim that the court restricted them from
accessing information they needed to prosecute their case. To the contrary, the
protective order allowed them to access highly confidential information through
counsel or an expert or through modification of the order after their attorney
withdrew. The record demonstrates that the Costellos were fully aware of these
options and declined to pursue them.
19 Clerk's Papers at 790 (emphasis added). No. 73060-6-1/10
To the extent the Costellos suggest the court's protective order is
somehow trumped by the corporate books and records statute, RCW 24.06,20
their claim is neither sufficiently argued nor persuasive. RCW 24.06.160
provides:
Each corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its members, shareholders, board of directors, and committees having any of the authority of the board of directors; and shall keep at its registered office or principal office in this state a record of the names and addresses of its members and shareholders entitled to vote. All books and records of a corporation may be inspected by any member or shareholder, or his or her agent or attorney, for any proper purpose at any reasonable time.[211
The parties agree that this statute applies to Tanner. The Costellos claim,
however, that the emphasized language permits them to access the records at
issue in this case.
But even assuming the Costellos' broad reading of "All books and records"
is correct,22 CR 26(c) allows a court to protect records upon a proper showing.23
20 See n.4, supra.
21 (Emphasis added.)
22 See Nakata v. Blue Bird. Inc.. 146 Wn. App. 267, 275, 191 P.3d 900 (2008) (holding under a different corporate record statute, RCW 23B.16.020, that "Cooperative association members have the right to inspect and copy business records, including accounting records, excerpts from minutes of any meeting of the board of directions, and the record of shareholders.").
23 CR 26(c) provides in part:
(c) Protective Orders. Upon motion by a party or by the person from whom discovery is sought, and for good cause shown, the court in which the action is pending . . . may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following: (1) that the discovery not be had; (2) that the discovery may be had only on specified terms and conditions, including a designation of the time or place; (3) that the
10 No. 73060-6-1/11
Any conflict between the statute and CR 26(c) is governed by well-settled
principles. "When a court rule and a statute conflict, the court will attempt to
harmonize them, giving effect to both."24 If they cannot be harmonized, "the court
rule will prevail in procedural matters and the statute will prevail in substantive
matters."25 The Costellos do not mention, let alone apply, these principles.
Accordingly, any claim that the statute controls over the court rule is insufficiently
argued and need not be considered.26
We note, however, that the statute and court rule appear to be easily
harmonized by reading them to grant broad access to corporate books and
records, but allowing the court, upon a proper showing, to restrict such access to
a party's counsel or expert. Moreover, courts avoid interpretations of statutes
that lead to absurd results.27 To read RCW 24.06.160 as allowing direct access
discovery may be had only by a method of discovery other than that selected by the party seeking discovery; (4) that certain matters not be inquired into, or that the scope of the discovery be limited to certain matters; (5) that discovery be conducted with no one present except persons designated by the court; (6) that the contents of a deposition not be disclosed or be disclosed only in a designated way; (7) that a trade secret or other confidential research, development, or commercial information not be disclosed or be disclosed only in a designated way. . . .
24 City of Fircrest v. Jensen. 158 Wn.2d 384, 394, 143 P.3d 776 (2006).
25 Putman v. Wenatchee Valley Med. Ctr.. 166 Wn.2d 974, 980, 216 P.3d 374 (2009).
26 State v. Elliott. 114 Wn.2d 6, 15, 785 P.2d 440 (1990) (appellate court need not consider claims that are insufficiently argued); State v. Marintorres, 93 Wn. App. 442, 452, 969 P.2d 501 (1999) (appellate court need not consider pro se arguments that are conclusory); State v. Thomas, 150 Wn.2d 821, 868-69, 83 P.3d 970 (2004) (court will not review pro se arguments that receive only passing treatment).
27 Mechlinq v. City of Monroe. 152 Wn. App. 830, 845, 222 P.3d 808 (2009) (when interpreting statutes, courts avoid any "unlikely, absurd, or strained result.").
11 No. 73060-6-1/12
to any and all documents, no matter how sensitive or confidential, would arguably
lead to such a result.
The Costellos also contend that, even accepting the court's interpretation
of the protective order, some documents did not qualify as "highly confidential"
documents or were not associated with the third party contract and should have
been disclosed. The recourse for these alleged abuses of the order was
provided by sections 11 (c) and (d) of the protective order. But because the
Costellos proceeded without counsel or an expert, and because they failed to
move to modify the protective order, they were unable to view or meaningfully
challenge any erroneous confidential designations. Furthermore, the order
dismissing the access to records claim states that "defendant has already
allowed plaintiffs inspection of the requested documents under this court's terms
(i.e., the Protective Order entered in this matter."28 This statement indicates that all requested records were either provided to the Costellos or were designated as
highly confidential and available for inspection via the protective order. The Costellos' claim to the contrary is unreviewable since the protected documents
are not in this court's record. We note, however, that it appears from Tanner's
"Log of Highly Confidential Documents Withheld Pursuant to Protective Order" that virtually all of the requested information listed by the Costellos at page 20 of their opening brief has been provided via the protective order.
28 Clerk's Papers at 1364 (emphasis added).
12 No. 73060-6-1/13
In light of our conclusions, we need not reach the Costellos' challenges to
the court's reliance on Tanner's information policy and RCW 24.06.160.
CONSUMER PROTECTION ACT CLAIM
The court dismissed the Costellos' Consumer Protection Act claim on
summary judgment. The court expressly relied on Haberman v. Washington
Public Power Suppiv System.29 In Haberman, the State Supreme Court held
that rural electric cooperatives are exempt from the CPA, stating:
Intervenors take exception to the trial court's conclusion that because rural electric cooperatives are otherwise regulated, they are exempt from the CPA. The CPA exempts "transactions permitted by any other regulatory body". RCW 19.86.170. See Tokarz v. Frontier Fed. Sav. & Loan Ass'n, 33 Wn. App. 456, 464 n.5, 656 P.2d 1089 (1982). The Rural Electrification Administration (REA), a federal agency, closely monitors and extensively controls the acts of rural electric associations borrowing money from the REA. In re Dairvland Power Coop.. 37 F.P.C. 12, 18 (1967). Here, however, the record contains no assertion that any of the respondent electrical associations were Administration borrowers and therefore subject to such control by the REA. Nevertheless, as the rural electric cooperatives, like the respondent PUD's and municipal utilities, are nonprofit, consumer- owned utilities serving those who reside within their service areas, there exists no public policy reason as expressed by the CPA why the cooperatives should not be likewise exempt from the CPA. Moreover, these entities allegedly violated the CPA only by virtue of their relationship with the Supply System, which is exempt from the CPA. We conclude that to subject the respondent rural electric cooperatives to potential CPA liability would be contrary to the Legislature's purpose in excluding municipal corporations from liability under the CPA. Therefore, we hold in light of the unique facts of this case that, like the Supply System and other governmental entities admittedly exempt from the CPA, respondent rural electric cooperatives are also exempt from the CPA under our
29109Wn.2d 107, 171-72, 744 P.2d 1032, 1072 (1987), amended, 109Wn.2d 107,750 P.2d 254 (1988).
13 No. 73060-6-1/14
reasoning in Washington Natural Gas Co. v. PUD 1, supra at 98. We affirm the trial court's dismissal of intervenors' CPA claims against respondents.'301
Because Tanner is a "rural electric cooperative,"31 Haberman's holding, which is
binding on this court,32 exempts Tanner from the CPA.
This conclusion is buttressed by Haberman's reliance on Washington
Natural Gas Co. v. PUD1. 77 Wn.2d 94, 98, 459 P.2d 633 (1969). In that case,
the court noted that
[b]y its very terms, that act, RCW 19.86[.010(1)], includes only 'natural persons, corporations, trusts, unincorporated associations and partnerships.'.. . Nowhere does its language imply that municipal corporations or political subdivisions of the state are within the definition of persons and entities made subject to it. Thus, the legislature did not employ language designed to bring public utility districts within the operation of the statute nor leave room to include them within it by construction.1331
The same is true here. The Costellos' attempts to distinguish or limit
Haberman's holding are not persuasive.
We also reject their argument that the text and legislative history of SHB
1896 indicate that the CPA applies to Tanner. Tanner correctly points out, and
the Costellos concede, that the relevant portion of SHB 1896 was later removed
by HB 2264 before SHB 1896 became effective.
30 Haberman, 109 Wn.2d at 171.
31 Tanner Elec. Co-op v. Puqet Sound Power & Light Co., 128 Wn.2d 656, 659, 911 P.2d 1301 (1996).
32 Fondren v. Klickitat County, 79 Wn. App. 850, 856, 905 P.2d 928 (1995) (decisions of the State Supreme Court are binding on all lower state courts).
33 77 Wn.2d at 98.
14 No. 73060-6-1/15
The superior court did not err in dismissing the Costellos' CPA claim.
TANNER'S COUNTERCLAIM
The Costellos next contend the superior court erred in granting Tanner
summary judgment on its counterclaim for $45.70 in unpaid charges and $0.89 in
pre-judgment interest. They contend the counterclaim is barred by the doctrine
of accord and satisfaction and is contrary to Tanner's bylaws. They also contend
there are issues of fact as to the amount owing on the counterclaim.
In the argument section of their opening brief, the Costellos provide one
conclusory sentence in support of their accord and satisfaction claim: "An accord
and satisfaction was accomplished prior to Tanner claiming late fees and
interest."34 This is insufficient. We do not consider issues that are inadequately
argued or given only passing treatment on appeal, and we apply this rule to
attorneys and pro se litigants alike.35
The Costellos also claim Tanner's billing method violates its bylaws.
According to the Costellos, the bylaws only require payment for energy actually
used by a member. Therefore, they maintain they properly refused to pay energy
charges that exceeded their actual use and any late fees on those unpaid
charges. We disagree.
In an effort to reduce the frequency and cost of meter readings for opt-out
members, Tanner adopted a policy whereby opt-out members' meters are read
34 Appellants' Brief at 40.
35 Note 13, supra.
15 No. 73060-6-1/16
quarterly. In the first two months of a quarter, Tanner bills these members for an
estimated usage based on their usage history. In the third month, Tanner bills
them based on the quarterly meter reading and 'trues up' the total quarter
charges by crediting or billing for any difference between the members' actual
usage and their estimated use. Nothing in Tanner's bylaws precludes this billing
method. And contrary to the Costellos' assertions, Tanner's method of truing up
charges quarterly is consistent with bylaws requiring members to pay for energy
used by or provided to a member.
The Costellos further assert that Tanner's "budget billing" method for opt-
out members does not comply with the budget billing option described in its
monthly statements and is made up "out of thin air."36 But as Tanner explains in
its response, budget billing for opt-out members is distinct from the budget billing
option in members' monthly statements. The former is described in Tanner's opt-
out policy as follows:
Members who are not served through an AMI Meter shall be billed for estimated usage each month under Tanner's "budget billing" plan, which bills members based on estimated monthly usage and does not require monthly meter reads. In addition, such members shall be assessed a monthly charge of $23.33 to cover the cost to Tanner of sending a technician to the member's residence to perform periodic "true up" meter reads, and to manually input usage information into Tanner's billing system. In the month following any "true up" meter read, Tanner will adjust the member's bill up or down to reflect actual usage compared to the amount billed/paid under the budget billing plan. If there is more than one non-AMI Meter at a residential metering location, there
36 Appellants' Brief at 43 n.53.
16 No. 73060-6-1/17
shall be an additional monthly charge of $5 for each additional non- AMI MeterJ371
Lastly, the Costellos contend the opt-out fee, which started at $23.33 and
later increased to $30, is also unsubstantiated and created "out of thin air."38
Tanner responds, and the Costellos do not dispute, that its rates and policies are
entitled to a presumption of validity, and that the presumption can be overcome
only by showing that the rate is arbitrary and capricious.39 Tanner contends its
opt-out fee for periodically reading the Costellos' meter is "well within the range
of what other utilities charge . . . and is based on cost inputs similar to those for a
service call."40 Evidence in the record, including the declaration of Tanner's
general manager Steven Walter, support this contention. Tanner's opt-out fee is
in fact well within the range of opt-out fees charged by other electric utilities. The
record also demonstrates that the fee is not created "out of thin air," as the
Costellos allege. According to Tanner's policies and declarations, the $23.33
37 Clerk's Papers at 1723-24 (emphasis added).
38 Appellants'Brief at 41.
59 Cf. e.g., Faxe v. City of Grandview. 48 Wn.2d 342, 352, 294 P.2d 402 (1956) ("Rates established by a municipality for utility service to inhabitants are presumptively reasonable" and the person challenging the rates must show that it is unreasonable); Mun. of Metro. Seattle v. Div. 587. Amalgamated Transit Union. 118 Wn.2d 639, 646, 826 P.2d 167 (1992) quoting City of Tacoma v. Citv of Tacoma Taxpayers. 108 Wn.2d 679, 695, 743 P.2d 793 (1987) ("We limit judicial review of municipal utility choices to whether the particular contract or action was arbitrary or capricious, or unreasonable."); see also Davis v. Cox, 180 Wn. App. 514, 535, 325 P.3d 255, 267, review granted. 182 Wn.2d 1008 (2014), rev'd on other grounds. 183 Wn.2d 269 (2015) (decision of cooperative board comes within ambit of business judgment rule, which "cautions against courts substituting their judgment for that of the board of directors, absent evidence of fraud, dishonesty, or incompetence.").
40 Respondent's Brief at 38 n.34.
17 No. 73060-6-1/18
monthly fee is based on a $70 service call fee for "sending a technician to the
member's residence to perform periodic 'true up' meter reads," and the cost of
manually inputting usage information into Tanner's billing system.41 The service
call fee is based on wages, benefits and vehicle operating costs. There is no
issue of fact as to whether Tanner's fee is arbitrary and capricious.
The Costellos argue, however, that there are issues of fact concerning
Tanner's actual cost basis for the opt-out fee. They point to the following
calculations, which they submitted below, to support their contention:
Plaintiff live[s] 5 miles from the Tanner main office where the serviceman is dispatched and administrative duties are performed. At the posted speed limit, it takes less than 8 minutes to drive that distance one way. Total time for a meter read is less than 16 minutes. At an IRS mileage rate of 0.56/mile and a burdened labor rate of $55/hr., the actual cost based charge for a single meter read is $20.27 (not $90 [per trip currently claimed by Tanner, or the original $70 per trip)]. The cost of four [quarterly] meter reads annually, spread over 12 months ... is $6.76.[42]
These calculations do not create a material issue of fact. They were not
submitted by an expert, do not include Tanner's cost of inputting meter readings
into Tanner's billing system, are based in part on the unsupported assumption
that the Costellos are entitled to an individualized opt-out fee based on how far
they live from Tanner's main office,43 and do not rebut Tanner's evidence that
41 Clerk's Papers at 1724.
42 Clerk's Papers at 1385.
43 Cf. Hillis Homes v. PUD 1. 105 Wn.2d.288, 301, 714 P.2d 1163 (1986) (charges need not be individualized according to the benefits accruing to each specific customer as long as the charge has a practical basis and the classification of customers is reasonable).
18 No. 73060-6-1/19
their opt-out fee is within the range of opt-out fees charged by similar providers.
Therefore, the Costellos' calculations do not establish a genuine issue of material
fact whether the opt-out fee is arbitrary and capricious.
The Costellos also claim that even ifTanner's opt-out fee is not arbitrary
and capricious, there is a genuine issue of material fact whether Tanner correctly
calculated the amount owed on its counterclaim. They contend Tanner
"overcharged them in the amount of $198.97 due to energy overcharge and
computational errors."44 This contention is apparently based on the Costellos'
argument, rejected above, that they had no obligation under Tanner's bylaws to
pay estimated charges that exceeded actual meter readings for a given month.
But as discussed above, Tanner's billing method for opt-out members is
consistent with the bylaws because charges are trued up quarterly to reflect the
Costellos' actual usage. The bylaws require the Costellos to pay for their actual
usage and their refusal to do so is unjustified.
Finally, the Costellos argue that Tanner's calculation of the amount owing
is mathematically incorrect. This argument fails for two reasons. First, the
Costellos' argument in their brief consists of conclusory assertions that do not
demonstrate the computational errors they allege. Instead, the Costellos merely
cite to superior court pleadings and appendices to their brief to support their
44 Appellants' Brief at 42.
19 No. 73060-6-1/20
conclusory claims. This is not sufficient.45 Second, their argument was first
raised on reconsideration below and involved analysis and calculations not
previously presented to the court. A trial court need not consider such new
claims for the first time on reconsideration.46 We review a court's ruling on
reconsideration for abuse of discretion.47 Thus, even if the argument had been
properly presented in the Costellos' appellate briefs, we could not say the trial
court abused its discretion in denying the motion for reconsideration.
ATTORNEY FEES AND COSTS
The Costellos next contend the court abused its discretion in awarding
Tanner attorney fees and costs. They maintain that the court's three bases for
the award - the membership agreement, the small claims statute (RCW
4.84.250), and the frivolous action statute (RCW 4.84.185) - do not support an
award in this case.
RCW 4.84.250 provides that in cases involving claims of $10,000 or less,
attorney fees and costs may be awarded to the prevailing party. For purposes of RCW 4.84.250, a party is a "prevailing party" iftheir recovery exceeds the
« See Holland v. Citv of Tacoma. 90 Wn. App. 533, 538, 954 P.2d 290 (concluding that a party who merely referenced his trial court briefs in his appellate briefs, rather than using space in his appellate brief to set forth the arguments, 'has abandoned the issues for which he attempted to incorporate arguments by reference to trial briefs or otherwise'), review denied, 136 Wn.2d 1015(1998).
46 See e.g.. Wilcox v. Lexington Eve Inst.. 130 Wn. App. 234, 241, 122 P.3d 729 (2005) (affirming denial of reconsideration where argument on reconsideration raised new arguments and relied on new portions of the record). 47 Id.
20 No. 73060-6-1/21
amount of their settlement offer.48 The Costellos concede that Tanner recovered
more than it offered in settlement of its counterclaims, but contend the amount it
recovered should have been less. We have rejected that contention above. The
court did not abuse its discretion in awarding fees and costs for Tanner's
counterclaim. The court did, however, abuse its discretion in also awarding fees
under RCW 4.84.250 for Tanner's defense against the Costellos' complaint
because the offer of settlement was solely on Tanner's counterclaims.
The Costellos next contend the court abused its discretion in awarding
fees to Tanner under the membership agreement. That agreement states in part:
d. If the account is placed with an attorney or sued, I agree to pay a reasonable amount for attorney fees, and if placed with a collection agency I realize holder will be damaged in the amount charged for collection; and therefore agree to pay, as liquidated damages and in addition to the balance then due, an amount equal to said collection charge, not exceeding however, fifty percent of said unpaid balance.
e. ... in the event a suit is commenced for the purpose of collecting any past due bill, then venue may be laid at the option of Tanner Electric Cooperative, in King County, Washington.[49]
The trial court awarded fees under this provision for Tanner's counterclaim to
collect unpaid charges and/or late fees and for its defense against the Costellos'
constitutional, statutory, and CPA claims, stating:
The Membership Agreement contained a provision which provided that reasonable attorney fees would be paid to Defendant in the event it was necessary an attorney needed to be retained to collect
48 Filipino American League v. Carino. 183 Wn. App. 122, 129, 332 P.3d 1150(2014).
49 Clerk's Papers at 2096.
21 No. 73060-6-1/22
on amounts that were due to Defendant. As Plaintiffs would not pay Defendant the amount they owed, claiming that the outstanding amounts were based on charges that were against the law, Defendant incurred attorney fees in disproving Plaintiffs' reasons for not paying the charges and in collection of the charges. As a result, Plaintiffs are to be made to pay Defendant's attorney fees incurred in opposing Plaintiffs' Counts II, III and IV of the complaint and are to be made to pay Defendant's attorney fees incurred in bringing counterclaims for payment of amounts due.[50]
We agree with the trial court's conclusion that the attorney fee provision
applies to actions to collect unpaid charges.51 Therefore, the court properly
applied the provision to Tanner's counterclaim for unpaid charges.
We disagree, however, with the court's conclusion that the fee provision
applied to Tanner's defense against the Costellos' constitutional and statutory
challenges to the opt-out fee. The trial court reasoned that Tanner's defense to
those claims was essentially a collection effort because the Costellos' "would not
pay Defendant the amount they owed." But this is not entirely accurate.
On October 18, 2013, shortly after filing their complaint, the Costellos paid
all unpaid opt-out fees and thereafter paid the opt-out fee under protest. They
also did not contest the legality of any late fees and offered to pay them following
clarification of certain alleged billing errors at issue in the counterclaim. Thus, as
50 Clerk's Papers at 2165.
51 The Costellos' argument that the membership agreement is a contract of adhesion, and therefore unenforceable, and is too conclusory to merit discussion. See Zuver v. Airtouch Commc'ns. Inc.. 153 Wn.2d 293, 304, 103 P.3d 753 (2004) ("[T]o the extent that the characterization of a contract as an adhesion contract has any relevance to determining the validity of a contract, it is only in looking for procedural unconscionability; the fact that an agreement is an adhesion contract does not necessarily render it procedurally unconscionable.'
22 No. 73060-6-1/23
of October 18, 2013, Tanner's defense against the Costellos' claims regarding
the opt-out fee could not fairly be characterized as an action to collect unpaid
opt-out fees. Accordingly, Tanner is not entitled to fees and costs incurred in
defending against the Costellos' claims after October 18, 2013.
Tanner argues alternatively that it was entitled to fees for defending
against the Costellos' claims under the frivolous action statute, RCW 4.84.185.
But fees may be awarded under that statute only if all claims against the
prevailing party were frivolous.52 The Costellos point out that while the trial court
found three of their claims frivolous, it did not find their claim for access to
records frivolous. Tanner does not dispute that point or argue that the access to
records claim was frivolous. Therefore, Tanner is not entitled to fees under RCW
4.84.185. Because the award of attorney fees must be recalculated, the
Costellos' arguments regarding fee segregation are best addressed to the trial
court on remand.
ATTORNEY FEES ON APPEAL
Citing the same authorities it cites in support of the award of attorney fees
below, Tanner requests attorney fees as the prevailing party on appeal. "If
[attorney] fees are allowable at trial, the prevailing party may recover fees on
appeal as well."53 Although the appeal is not frivolous and fees are therefore not
52 State ex rel. Quick-Ruben v. Verharen. 136 Wn.2d 888, 903-04, 969 P.2d 64 (1998) (fees may be awarded under RCW 4.84.185 only if lawsuit is frivolous in its entirety).
53 Landberg v. Carlson, 108 Wn. App. 749, 758, 33 P.3d 406 (2001).
23 No. 73060-6-1/24
available on appeal under RCW 4.84.185, Tanner is entitled to fees under the
contract and RCW 4.84.250 for that portion of its fees on appeal relating to the
resolution of its counterclaim. The amount of the award of fees shall be
determined by the trial court on remand pursuant to RAP 18.1 (i) and the other
Rules of Appellate Procedure.
The orders on summary judgment are affirmed. The award of attorney
fees is reversed in part and remanded for further proceedings consistent with this
opinion.
6wi.J- WE CONCUR:
"T/iqIq y i —1