FILED FEBRUARY 23, 2023 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
UMPQUA BANK, ) ) No. 38653-8-III Appellant, ) ) v. ) ) CHARLES A. GUNZEL, III, and ) UNPUBLISHED OPINION GINELLE F. GUNZEL, husband and ) wife, ) ) Respondent. )
STAAB, J. — Umpqua Bank appeals from a judgment for attorney fees entered by
the superior court after Umpqua dismissed its complaint against Charles and Ginelle
Gunzel for breach of contract and fraudulent transfer.1 Simultaneous to filing its
complaint, Umpqua Bank filed a lis pendens associated with the fraudulent transfer claim
against property in Ginelle’s name. The contract in question provided for attorney fees
and contained a choice of law provisions, applying Oregon law to any disputes.
Following voluntary dismissal of the complaint and lis pendens, Charles was granted his
attorney fees under the contract and RCW 4.28.328.
1 To avoid confusion, this opinion refers to Charles and Ginelle Gunzel by their first names. No. 38653-8-III Umpqua Bank v. Gunzel, et al
Umpqua Bank appeals the award, arguing that the superior court erred in applying
Oregon substantive law to find that Charles was a prevailing party and Washington
procedural law in determining that Charles’s request for fees was timely. Umpqua Bank
also challenges the award of fees for the fraudulent transfer claim and associated lis
pendens. Charles requests his attorney fees on appeal. We affirm the superior court’s
award of attorney fees. We grant Charles’ request for fees on appeal associated with the
breach of contract claim but exercise our discretion to deny attorney fees on appeal
associated with the lis pendens claim.
BACKGROUND
In a separate lawsuit initiated in 2019, Umpqua Bank brought an action against
Charles and Ginelle Gunzel, as husband and wife, to enforce a personal guaranty
executed by Charles for his company, Cornerstone Building Co. The superior court
determined that the Gunzel marital community and Ginelle individually were not
properly a part of the action because the contract predated the marriage. The contract at
issue contained a provision regarding the governing law:
This Guaranty will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Oregon without regard to its conflicts of law provisions.
Clerk’s Papers (CP) at 245. The contract also contained a provision providing for an
award of attorney fees and costs to Umpqua Bank related to litigation of the contract.
This included fees and costs related to “any and all appeals.” CP at 245.
2 No. 38653-8-III Umpqua Bank v. Gunzel, et al
In the summer of 2019, while the original action was still pending, the attorneys
for each party discussed settlement, including Charles’ solvency and the property he
owned. When Umpqua Bank indicated that Charles had recently sold or transferred
property on Nottingham Drive (Nottingham Property), Charles’ attorney indicated that
the property was Ginelle’s separate property from a prior divorce and provided a title
history on the property.
Meanwhile, both parties filed motions for summary judgment, and the superior
court granted Umpqua Bank’s motion in January 2020, determining that the personal
guaranty was enforceable against Charles. Umpqua Bank v. Gunzel, 16 Wn. App. 2d
795, 800-01, 483 P.3d 796 (2021). Umpqua Bank subsequently recorded a judgment
against the Gunzels’ real property.
Charles appealed from summary judgment, and ultimately this court determined
that Umpqua Bank’s claim failed on statute of limitations grounds. Id. at 816.
Accordingly, this court reversed and remanded for the superior court to grant summary
judgment in favor of the Gunzels. Id.
In February 2021, while the appeal in the original action was still pending,
Umpqua Bank brought a separate action against Charles and Ginelle Gunzel for
fraudulent transfer and breach of contract. Umpqua Bank alleged that Charles had
fraudulently conveyed real property on Nottingham Drive (Nottingham Property) that had
been solely in his name to his wife, Ginelle, and by doing so, Charles breached his
3 No. 38653-8-III Umpqua Bank v. Gunzel, et al
contract with Umpqua Bank. At the same time, Umpqua Bank filed a lis pendens against
the Nottingham Property that it alleged had been fraudulently conveyed.
In March 2021, shortly after Umpqua Bank filed its second complaint, this court
issued its opinion in the appeal from the first action. See Gunzel, 16 Wn. App. 2d 795.
Umpqua Bank informed Charles’ counsel that, based on the opinion, it was not necessary
for him to file an answer because the action may be dismissed. Charles’ attorney again
pointed out to Umpqua Bank’s attorney that its allegations concerning title of the
Nottingham Property were inaccurate, outlining its title history to demonstrate that the
property was Ginelle’s separate property.
In September 2021, because Umpqua Bank had not dismissed the action, Charles
filed a motion for summary judgment. The following month, on October 8, the parties
agreed to, and the superior court entered, a stipulated order for a voluntary dismissal,
without prejudice, of Umpqua Bank’s complaint.
Charles then filed a motion for recovery of costs and attorney fees on October 18.
He argued he was entitled to attorney fees for claims arising from the breach of contract
claim because Oregon law applied to claims arising out of the contract and he was the
prevailing party under Oregon law. He also argued he was entitled to fees related to the
claim for fraudulent transfer and the associated lis pendens under RCW 4.28.328 because
Umpqua Bank was not substantially justified in filing the lis pendens.
4 No. 38653-8-III Umpqua Bank v. Gunzel, et al
In response, Umpqua Bank maintained that Oregon law did not apply to the breach
of contract claim and there was no entitlement to fees under RCW 4.28.328 because
Charles was not the prevailing party and Umpqua Bank was substantially justified in
filing the lis pendens.
The superior court held a hearing on Charles’s motion. Counsel for Umpqua Bank
did not attend the hearing. The superior court granted Charles’ request for attorney fees,
finding he was entitled to fees for the breach of contract claim as the prevailing party
under Oregon law and he was entitled to fees for the fraudulent conveyance and lis
pendens, as Umpqua Bank was not substantially justified in recording the lis pendens.
Umpqua Bank appeals.
ANALYSIS
1. ATTORNEY FEES FOR BREACH OF CONTRACT CLAIM
The first question we address is whether the superior court erred in applying
Oregon law to Charles’s request for attorney fees as the prevailing party in Umpqua
Bank’s claim for breach of contract. Umpqua Bank maintains that the trial court should
have applied Washington law and contends that under Washington law, Charles was not
the prevailing party and therefore was not entitled to attorney fees. We disagree.
Choice of law is a question of law this court reviews de novo. Shanghai
Commercial Bank Ltd. v. Kung Da Chang, 189 Wn.2d 474, 479, 404 P.3d 62 (2017).
Resolving a choice of law dispute such as this one, where a contract contains a provision
5 No. 38653-8-III Umpqua Bank v. Gunzel, et al
designating the parties’ choice of law, requires this court to determine (1) whether an
actual conflict of law exists, and if so, (2) whether the choice of law provision in the
contract is effective. Erwin v. Cotter Health Ctrs., 161 Wn.2d 676, 692, 167 P.3d 1112
(2007).
“‘When parties dispute choice of law, there must be an actual conflict between the
laws or interests of Washington and the laws or interests of another state before
Washington courts will engage in a conflict of laws analysis.’” Id. (quoting Seizer v.
Sessions, 132 Wn.2d 642, 648, 940 P.2d 261 (1997)). Where the result of an issue is
different depending on which state’s law is applied, there is an actual conflict. Id.
The contract at issue contains a provision that awards Umpqua Bank costs and
attorney fees incurred in connection with enforcement of the contract. Under Oregon
law, a unilateral provision such as this is interpreted to provide bilateral enforcement,
meaning that attorney fees and costs will be awarded to “the party that prevails on the
claim,” whether that be Umpqua Bank or Charles Gunzel. Oregon Revised Statute
(ORS) 20.096.
Additionally, Oregon law defines a dismissed party as a prevailing party absent
“circumstances [that] support[ ] a finding to the contrary.” Goodsell v. Eagle-Air Estates
Homeowner Ass’n, 280 Or. App. 593, 604, 383 P.3d 365 (2016). Notably, in Oregon, the
question of attorney fees is a question of substantive law. Seattle-First Nat’l Bank v.
Schriber, 51 Or. App. 441, 447-48, 625 P.2d 1370 (1981). Attorney fees awarded
6 No. 38653-8-III Umpqua Bank v. Gunzel, et al
pursuant to ORS 20.096 “are not merely costs incidental to judicial administration,
awarding them is a matter of substantive, rather than procedural, right.” Schriber, 51 Or.
App. at 448. Because Charles was a dismissed party here, he would be entitled to
attorney fees under Oregon law.
Similarly, under Washington law, the provision providing for an award of attorney
fees is interpreted to provide attorney fees and costs to “the prevailing party, whether he
or she is the party specified in the contract . . . or not.” RCW 4.84.330. However, this
statute defines “prevailing party” as “the party in whose favor final judgment is
rendered.” RCW 4.84.330 (emphasis added). And the Washington Supreme Court has
clearly stated that a voluntary dismissal is not a final judgment under this statute.
Wachovia SBA Lending, Inc. v. Kraft, 165 Wn.2d 481, 492, 200 P.3d 683 (2009).
Because the parties entered into a voluntary dismissal here, Charles would not be entitled
to attorney fees under Washington law.
Because the outcome differs depending on whether Oregon or Washington law
applies, there is an actual conflict. Because there is an actual conflict, we examine
whether the contract provision is effective.
Where parties have included a choice of law provision in their contract, a
determination of whether the provision is effective is governed by section 187 of the
Restatement (Second) of Conflict of Laws (Am. Law Inst. 1971). Shanghai Commercial
Bank Ltd., 189 Wn.2d at 482-83. Section 187 states in relevant part:
7 No. 38653-8-III Umpqua Bank v. Gunzel, et al
(1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.
RESTATEMENT.
The issue in Umpqua Bank’s claim, whether Charles breached his contractual
obligation by allegedly transferring his property to Ginelle, is one that could have been
resolved by including an explicit provision in the contract. In fact, the contract does
contain a provision related to such an issue: “Guarantor has not and will not, without
prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer or
otherwise dispose of all or substantially all of Guarantor’s assets, or any interest therein.”
Assuming that the property was in fact Charles’, the contract could have contained a
provision that was simply a broader version of the one already included and prevented
Charles from transferring any of his real property assets without prior written consent of
the lender. Because a specific contractual provision could have resolved the breach of
contract issue, this court should determine that the choice of law provision is effective
and Oregon law applies.
Umpqua Bank claims that this court should apply the most significant relationship
test to determine the choice of law. However, the most significant relationship test is
applied to resolve contractual choice of law issues where the parties failed to make an
express choice of law. Shanghai Commercial Bank Ltd., 189 Wn.2d at 482. Here, the
8 No. 38653-8-III Umpqua Bank v. Gunzel, et al
parties clearly have included a choice of law provision in the contract designating Oregon
law as the governing law. Accordingly, this court should determine that the most
significant relationship test does not apply.
There is an actual conflict between Oregon and Washington law. Additionally, the
choice of law provision contained in the contract is effective, and the question of an
award of attorney fees is a question of substantive law. Thus, Oregon law should apply
to determine whether Charles was entitled to his attorney fees. Under Oregon law, as a
dismissed party, Charles is deemed to have prevailed. Therefore, the trial court correctly
concluded that Charles is entitled to attorney fees under the contract.
Umpqua Bank also argues that, if Oregon law does apply, under the Oregon Rule
of Civil Procedure (ORCP) 68C(2), Charles was required to plead or bring a motion
regarding his right to attorney fees “as soon as possible.”2 Br. of Appellant at 37.
2 Specifically, the rule states: C(2)(a) Alleging right to attorney fees. A party seeking attorney fees shall allege the facts, statute, or rule that provides a basis for the award of fees in a pleading filed by that party. Attorney fees may be sought before the substantive right to recover fees accrues. No attorney fees shall be awarded unless a right to recover fees is alleged as provided in this paragraph or in paragraph C(2)(b) of this rule. C(2)(b) Alternatives. If a party does not file a pleading but instead files a motion or a response to a motion, a right to attorney fees shall be alleged in the party’s motion or response, in similar form to the allegations required in a pleading. ORCP 68.
9 No. 38653-8-III Umpqua Bank v. Gunzel, et al
Umpqua Bank claims that his failure to do so prevents him from subsequently requesting
attorney fees under Oregon law. Because this rule is procedural instead of substantive,
we apply Washington law.
Even where a contract contains a choice of law provision “[a] court usually applies
its own local law rules prescribing how litigation shall be conducted.” Boudreaux v.
Weyerhaeuser Co., 10 Wn. App. 2d 289, 313 n.14, 448 P.3d 121 (2019) (quoting
RESTATEMENT, supra, § 122). Thus, even in cases where this court applies the
substantive law of another jurisdiction, Washington procedural law still applies to issues
concerning how the litigation is conducted. Id.. Notably, Oregon also follows this rule.
Seattle-First Nat’l Bank, 51 Or. App. at 446.
Rules and regulations regarding how litigation should be conducted are
procedural. See In re Marriage of Ulm, 39 Wn. App. 342, 345, 693 P.2d 181 (1984)
(statute of limitations is procedural); Smith v. Am. Mail Line, Ltd., 58 Wn.2d 361, 366,
363 P.2d 133 (1961) (Washington rule determining standard for deciding motion for new
trial is procedural). A rule regarding when to bring a claim for attorney fees isprocedural
because it governs the “how” of the proceeding and not the substance of the right.
Umpqua Bank cites to no authority that would support this court determining otherwise.
Under Washington law, Charles’ motion for attorney fees was timely. The
applicable rule requires that a claim for attorney fees shall be made by motion “filed no
later than 10 days after entry of judgment.” CR 54(d)(2). “A judgment is the final
10 No. 38653-8-III Umpqua Bank v. Gunzel, et al
determination of the rights of the parties in the action and includes any decree and order
from which an appeal lies. A judgment shall be in writing and signed by the judge and
filed forthwith as provided in rule 58.” CR 54(a)(1).
Here, the order granting dismissal was filed on October 8. The dismissal
constituted a judgment because it was the final determination of the rights of the parties
related to the action. Gunzel filed his motion for fees on October 18, ten days after the
dismissal.3
The superior court did not err in awarding Charles his attorney fees for the breach
of contract claim.
2. ATTORNEY FEES FOR FRAUDULENT CONVEYANCE AND LIS PENDENS CLAIM
The next issue we address is whether the superior court erred in granting Charles’
request for attorney fees incurred to defend against the fraudulent transfer claim and
associated lis pendens. Umpqua Bank claims that Charles was not entitled to fees
because he did not prevail in his defense of the action and Umpqua Bank was
substantially justified in filing the lis pendens. Again, we disagree.
3 Umpqua Bank argues, for the first time on appeal, that Oregon law cannot apply because under the doctrine of res judicata Charles is estopped from denying liability and Charles is not entitled to attorney fees under the contract because Umpqua Bank did not actually bring a claim for breach of contract. We decline to address these issues as they are raised for the first time on appeal. See RAP 2.5(a).
11 No. 38653-8-III Umpqua Bank v. Gunzel, et al
Whether there is a legal basis to award attorney fees is a question of law that is
reviewed de novo. Gander v. Yeager, 167 Wn. App. 638, 646, 282 P.3d 1100 (2012).
In Washington, claimants who file a lis pendens may be liable for the opposing
party’s attorney fees under certain circumstances:
(2) A claimant in an action not affecting the title to real property against which the lis pendens was filed is liable to an aggrieved party who prevails on a motion to cancel the lis pendens, for actual damages caused by filing the lis pendens, and for reasonable attorneys’ fees incurred in canceling the lis pendens. (3) Unless the 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 caused by filing the lis pendens, and in the court’s discretion, reasonable attorneys’ fees and costs incurred in defending the action.
RCW 4.28.328 (emphasis added). “Aggrieved party” includes “a person against whom
the claimant asserted the cause of action in which the lis pendens was filed.” RCW
4.28.328(1)(c).
Under the lis pendens statute, RCW 4.28.328, “Damages and fees are appropriate
where the claimants provide no evidence of a legal right to the property. But where the
claimants have a reasonable, good faith basis in fact or law for believing they have an
interest in the property, a lis pendens is substantially justified.” South Kitsap Family
Worship Ctr. v. Weir, 135 Wn. App. 900, 912, 146 P.3d 935 (2006) (citation omitted).
12 No. 38653-8-III Umpqua Bank v. Gunzel, et al
Umpqua Bank argues that Charles neither prevailed on a motion to cancel the lis
pendens nor prevailed in defense of the lis pendens filing. Moreover, Umpqua Bank
claims that there has been no showing that it was not substantially justified in filing the
lis pendens. Thus, Umpqua Bank claims that the superior court erred in awarding
attorney fees to Charles. Charles does not argue that he prevailed on a motion to cancel
the lis pendens; instead, he only claims that he prevailed in his defense of the action and
Umpqua Bank was not substantially justified in filing the lis pendens. Accordingly,
RCW 4.28.328(3) is the only applicable portion of the statute.
The statute does not define the term “prevails.” “‘[I]n the absence of a statutory
definition this court will give the term its plain and ordinary meaning.’” State v. Watson,
146 Wn.2d 947, 954, 51 P.3d 66 (2002). Here, the result of this case was that Umpqua
Bank agreed to dismiss its complaint without prejudice. This included a dismissal of the
fraudulent conveyance claim and the associated lis pendens. Umpqua Bank’s argument
that it is not liable because it voluntarily dismissed the claim and released the lis pendens
is unpersuasive. Charles was an aggrieved party, and he prevailed in defense of the
fraudulent conveyance claim brought by Umpqua Bank. At the time Umpqua Bank’s
action was dismissed, Charles had a pending motion for summary judgment and to cancel
the lis pendens.
Umpqua Bank also appears to argue, without citing to any legal authority, that
Charles could not have succeeded in his defense because he never answered Umpqua
13 No. 38653-8-III Umpqua Bank v. Gunzel, et al
Bank’s complaint and the only action Charles took was filing a motion for summary
judgment along with a motion to cancel the lis pendens. The superior court never
considered these motions because Umpqua Bank dismissed the action prior to any
hearing on the motions. But Charles did prevail when Umpqua Bank released its claim to
the property. Moreover, this argument ignores the fact that attorney fees were incurred in
defending the action, including communications, research, and drafting the motion. The
amount of work that goes into a case is rarely reflected only in the pleadings filed.
Indeed, the record before this court contains correspondence between the attorneys in this
case discussing possible resolution of the issues on multiple occasions. Charles did not
need to file an answer or win a motion to prevail.
Umpqua Bank next claims that attorney fees were improper because it was
substantially justified in filing the lis pendens. It claims that it was substantially justified
because Charles transferred the property to Ginelle during the pendency of the prior
litigation where Umpqua Bank had prevailed in superior court. However, this claim
ignores the fact that Charles produced documents demonstrating that the property was,
and remains, the separate property of Ginelle whom the superior court determined was
not liable for the underlying contract. Umpqua Bank does not dispute the fact that it was
notified in July 2019, prior to bringing this action, that the property in question belonged
14 No. 38653-8-III Umpqua Bank v. Gunzel, et al
to Ginelle. It also does not deny that it was reminded of this in March 2021 after the
filing of the lis pendens.4
As Ginelle’s separate property, the property in question was not subject to
Charles’ debts or contracts. See RCW 26.16.010 (“Property and pecuniary rights owned
by a spouse before marriage . . . shall not be subject to the debts or contracts of his or her
spouse.”). Because Umpqua Bank knew the nature of the property and the title history, it
had no reasonable, good faith basis for believing it had an interest in the property.5
Accordingly, it was not substantially justified in filing the lis pendens.
The superior court did not err in granting Charles his attorney fees related to the
fraudulent transfer claim and associated lis pendens.
4 Although Umpqua Bank does state that the property belonged to Charles, it relies solely on its complaint to support this claim. Because its complaint was not verified, it is not evidence. See Carlson v. Milbrad, 68 Wn.2d 847, 849, 415 P.2d 1020 (1966). 5 Umpqua Bank argues, for the first time in its reply brief and without citation to legal authority, that the Uniform Fraudulent Transfer Act, ch. 19.40 RCW, does not permit Charles to recover attorney fees. We decline to address this issue raised for the first time in a reply brief and without legal authority. See Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 809, 828 P.2d 549 (1992) (“An issue raised and argued for the first time in a reply brief is too late to warrant consideration.”); RAP 10.3(c); Regan v. McLachlan, 163 Wn. App. 171, 178, 257 P.3d 1122 (2011) (“We will not address issues raised without proper citation to legal authority.”).
15 No. 38653-8-III Umpqua Bank v. Gunzel, et al
3. ATTORNEY FEES ON APPEAL
Finally, we address whether Charles should be granted his attorney fees on appeal.
We grant Charles’ request for fees related to the breach of contract claim but determine
that he is not entitled to attorney fees related to the fraudulent conveyance claim.6
Under RAP 18.1, a party may recover their attorney fees or costs on appeal where
applicable law permits.
Charles requests that he be awarded fees under the breach of contract claim. The
attorney fee provision in the contract at issue specifically states that it covers attorney
fees and costs on appeal as well as at the trial court level. Moreover, “when a contract
provides for an attorney fee award in the trial court, the party prevailing before this court
may seek reasonable attorney fees incurred on appeal.” Viking Bank v. Firgrove
Commons 3, LLC, 183 Wn. App. 706, 717-18, 334 P.3d 116 (2014). Since Charles
prevailed on his claim related to breach of contract on appeal, he should also be awarded
his attorney fees on appeal so long as he complies with RAP 18.1(d).
Charles also requests attorney fees and costs under “reasonable attorneys’ fees and
costs incurred in defending the action.” RCW 4.28.328(3).
We exercise our discretion and decline to award Charles his fees pertaining to this
claim. See 134th Street Lofts, LLC v. iCap Nw. Opportunity Fund, LLC, 15 Wn. App. 2d
6 Neither party addresses whether Oregon law should apply to any part of Charles’s request for attorney fees on appeal.
16 No. 38653-8-III Umpqua Bank v. Gunzel, et al
549, 567, 479 P.3d 367 (2020) (denying request for attorney fees under RCW 4.28.328(2)
when award of attorney fees for cancelling lis pendens was the only issue on appeal).
We affirm the superior court’s judgment for attorney fees and award Charles his
costs and attorney fees related to defending the breach of contract claim on appeal,
provided he complies with RAP 18.1(d).
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.
_________________________________ Staab, J.
WE CONCUR:
_________________________________ Fearing, J.
_________________________________ Pennell, J.