Mayer v. Sto Industries, Inc.

132 P.3d 115
CourtWashington Supreme Court
DecidedApril 6, 2006
Docket76720-3
StatusPublished
Cited by268 cases

This text of 132 P.3d 115 (Mayer v. Sto Industries, Inc.) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mayer v. Sto Industries, Inc., 132 P.3d 115 (Wash. 2006).

Opinion

132 P.3d 115 (2006)
156 Wash.2d 677

Kurtis R. and Pamela MAYER, Petitioners,
v.
STO INDUSTRIES, INC., a foreign corporation doing business in the State of Washington, Respondent,
Marvin Windows, Inc., a foreign corporation doing business in the State of Washington; Northwest Tile, Inc., a Washington corporation; and McSweeney Steel Company, Inc., a Washington corporation, Defendants.

No. 76720-3.

Supreme Court of Washington, En Banc.

Argued February 14, 2006.
Decided April 6, 2006.

*116 James Benjamin Meade, Forsberg & Umlauf, Margaret Yvonne Archer, Bradley Alan Maxa, Gordon Thomas Honeywell, Tacoma, for Petitioner/Appellants.

Philip Albert Talmadge, Anne Elizabeth Melley, Talmadge Law Group PLLC, Tukwila, Kenneth F. Hobbs, Stafford Frey Cooper, Seattle, for Appellee/Respondents.

OWENS, J.

¶ 1 We are asked to resolve several issues involving the trial court's award of discovery sanctions, attorney fees, costs, and damages against the manufacturer of a defective, *117 stucco-like product applied to the exterior of the plaintiffs' home. Remanding the matter, the Court of Appeals directed the trial court to eliminate a portion of the sanctions award and make additional findings on the record supporting the imposition of sanctions. The Court of Appeals also ordered the trial court to recalculate the attorney fees and costs assessed under the Consumer Protection Act (CPA), chapter 19.86 RCW. We reverse the Court of Appeals on the foregoing issues, but we affirm the conclusion of the trial court and Court of Appeals that the plaintiffs were entitled to damages not only for the physical repair of their home but also for the home's diminished value.

FACTS

¶ 2 Kurtis and Pamela Mayer began remodeling their waterfront vacation home in Dash Point in 1988. In April 1989, contractors applied to the exterior of the home the Exterior Insulation Finish System (EIFS), a synthetic stucco product manufactured by Sto Industries. In 1990, after the Mayers noticed water damage below the windows, the windows were recaulked. Four years later, the Mayers discovered dry rot around the window trim and in the substructure of the exterior walls. The Mayers sued Sto and others in April 1995. By early 1997, the Mayers had settled their claims with all defendants except Sto. The Mayers' claims against Sto under the CPA and the Washington product liability act (WPLA), chapter 7.72 RCW, were tried to a jury in June 1997 before Pierce County Superior Court Judge John A. McCarthy. The jury returned a defense verdict.[1]

¶ 3 After the verdict, an attorney in North Carolina representing plaintiffs in EIFS litigation sent the Mayers a copy of a 1991 memorandum written by Sto's technical services manager, Thomas Remmele, in which Remmele admitted that the EIFS was inherently flawed. Because Remmele had testified to the contrary at the Mayers' trial, the Mayers filed a motion under CR 59, seeking a new trial based upon the newly discovered evidence. The trial court denied the motion, as well as the Mayers' subsequent motion for reconsideration, and the Mayers appealed.

¶ 4 In an unpublished decision, the Court of Appeals reversed the trial court's denial of the Mayers' motion for a new trial, concluding that "[a]dmission of the memorandum may have changed the result of the trial because it admits what the Mayers were forced to try to prove through other means— that the system has an inherent flaw." Mayer v. Sto Indus., Inc., noted at 97 Wash.App. 1029, 1999 WL 704714 at *7, 1999 Wash.App. LEXIS 1651, at *20. The Mayers then filed a motion in the trial court seeking discovery sanctions against Sto under CR 26(g) and this court's decision in Washington State Physicians Insurance Exchange & Ass'n v. Fisons Corp., 122 Wash.2d 299, 858 P.2d 1054 (1993). In an oral ruling, Judge McCarthy concluded "that Sto had committed a discovery abuse" but that the calculation of an appropriate remedy would have to await the outcome of a second trial. Clerk's Papers (CP) at 3475.

¶ 5 After the parties accepted Judge McCarthy's offer to recuse himself, the case was reassigned to Pierce County Superior Court Judge Rosanne Buckner and tried before a jury in April and May 2002. The Mayers used the Remmele memo, as well as dozens of other previously withheld documents, to support their claim that Sto was liable under the CPA and the WPLA for its failure to warn. The jury returned a verdict for the Mayers. The Mayers were awarded $266,653.75 in damages,[2] along with the maximum *118 award of $10,000 in treble damages under the CPA. For the attorney fees and costs that the Mayers incurred in the second trial, they were awarded, under the CPA fee-shifting provision, $352,693.50 in attorney fees and $48,691.05 in costs.

¶ 6 As to the Mayers' renewed motion for discovery sanctions, the trial court imposed the following monetary sanctions against Sto to compensate the Mayers for the first trial and first appeal: $468,147.29 in attorney fees and expenses for the first trial; $276,732.75 in interest on that sum; and $33,717 in attorney fees for the first appeal. The trial court stated that the discovery sanctions "serve[d] only to compensate the Mayers for the wasted effort from the first trial" and that the attorney fees requested for the first appeal were likewise "reasonable to compensate them for Sto's discovery abuse." CP at 3476.

¶ 7 Sto appealed, and the Mayers cross-appealed. The Court of Appeals held that the trial court erred in four respects: (1) awarding sanctions without following the procedures set forth in Burnet v. Spokane Ambulance, 131 Wash.2d 484, 933 P.2d 1036 (1997); (2) imposing interest on the sanctions; (3) awarding attorney fees under the CPA for the second trial without excluding the time spent on non-CPA matters; and (4) failing to clarify that the costs awarded for the second trial must be limited to those listed in RCW 4.84.010. Mayer v. Sto Indus., Inc., 123 Wash.App. 443, 98 P.3d 116 (2004). The Court of Appeals upheld the trial court's instruction entitling the Mayers to damages for both the cost of restoration and the diminution in value.

¶ 8 The Mayers petitioned this court for review, and Sto raised additional issues in its answer. We granted review, and both parties thereafter filed supplemental briefs.

ISSUES

¶ 9 (1) Did the trial court abuse its discretion in awarding monetary compensatory discovery sanctions without following the procedures set forth in Burnet, 131 Wash.2d 484, 933 P.2d 1036?

¶ 10 (2) Did the Court of Appeals correctly conclude that the trial court had awarded "interest on the sanctions"? If the interest awarded was not "interest on the sanctions" but "interest as a sanction," was the award an abuse of the trial court's discretion?

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132 P.3d 115, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mayer-v-sto-industries-inc-wash-2006.