Willie Russell And Christine Harper v. Carleen Matson

• Court: Court of Appeals of Washington
• Decided: April 21, 2014
• Docket: 69843-5
• Status: Unpublished

Opinion

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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

WILLIE RUSSELL and CHRISTINE F. No. 69843-5-1 HARPER, husband and wife, DIVISION ONE Appellants,

CARLEEN MATSON, NICOLE NG-A-QUI, JEFFREY ST. GEORGE, UNPUBLISHED OPINION LYNN BAMBERGER and STEPHEN BAMBERGER and the marital community composed thereof; and LYNNE WORLEY-BARTOK and JOHN DOE WORLEY-BARTOK, and the marital community composed thereof, THE BROADWAY CONDOMINUMS, a Washington Non-Profit Corporation,

Respondents. FILED: April 21, 2014

Schindler, J. —Willie Russell and Christine F. Harper appeal the decision to

impose sanctions under CR 11 and RCW 4.84.185 and entry of the judgment for

$76,710.14 in attorney fees. We reverse the imposition of sanctions under CR 11 and

RCW 4.84.185, vacate the judgment, and remand to Judge Dingledy to address

whether to award fees under RCW 4.84.185.

FACTS

The facts are undisputed. Willie Russell and Christine F. Harper (Russell) own a

condominium unit at The Broadway Condominiums in Everett. On November 12, 2010, No. 69843-5-1/2

Russell filed a complaint against current and former board members and officers of the

Broadway Condominium Association, Carleen Matson, Nicole Ng-A-Qui, Jeffrey St.

George, Lynn Bamberger, Stephen Bamberger, Lynne Worley-Bartok, and John Doe

Worley-Bartok (defendants).1 On March 18, 2011, the court granted the defendants'

motion for a more definite statement.

Russell sent a copy of the amended complaint to the attorney representing the

defendants. On April 4, 2011, the attorney sent a letter to Russell stipulating to filing the

amended complaint and asking Russell to "agree to a 30 day stay of all discovery and

other litigation activities" to "allow our office to complete the necessary investigation into

our obligations under the RPCs." Russell agreed to the request for a 30-day stay.

Russell filed the amended complaint on April 7, 2011. The amended complaint

alleged that while acting as board members or officers of the Broadway Condominium

Association, the defendants violated the "Bylaws and the Covenants, Conditions,

Restrictions and Reservations of the Broadway Condominiums," as well as the "laws of

the State of Washington." Russell also alleged the defendants denied him access to

records, improperly prevented him from serving on the board, failed to properly conduct

required audits, and failed to preserve a warranty on siding work on the building.

Russell requested access to all of the board records, damages, and attorney fees and

costs. Russell attached to the amended complaint a report prepared by one of the

defendants. The report identifies the specific provisions of the bylaws, covenants,

conditions, and restrictions that members of the board did not comply with or enforce.

1 Matson and Ng-A-Qui were past presidents and members of the board, Lynne Worley-Bartok was a member of the board and the current president, St. George was a member of the board, and Lynn Bamberger was an appointed representative to the board. No. 69843-5-1/3

Almost a year later on February 10, 2012, the defendants filed an answer to the

amended complaint. The answer does not request the imposition of sanctions or

request fees under either CR 11 or RCW 4.84.185.

On March 6, defense counsel asked Russell to agree to another stay because of

the asserted need to withdraw from the case and avoid undue prejudice to the

defendants. Russell agreed to the request and signed the proposed stipulation to stay

the proceedings for 60 days. Based on the stipulation, the court entered an order

staying proceedings until May 7, 2012.

The defendants' attorney did not withdraw. Instead, two weeks after the

expiration of the stay, the defendants filed a motion to dismiss under CR 12(b)(6). The

defendants argued the amended complaint failed to identify legal theories on which

Russell sought recovery, and failed to describe damages sustained by Russell. The

defendants also argued Russell did not have standing to file the complaint against them

because the real party in interest was the Broadway Condominium Association, and

derivative actions on behalf of a nonprofit corporation are not permitted under

Washington law. The defendants requested the court award attorney fees under RCW

4.84.185, arguing the "claim is frivolous and advanced without reasonable cause."

In response, Russell argued he sustained damages and had standing as an

aggrieved party. Russell cited Washington cases where courts allowed actions by

"aggrieved individuals in a homeowner's association against individuals on boards and

committees of the association."

On June 28, Judge Dingledy heard argument on the CR 12(b)(6) motion to

dismiss. The court reserved ruling on the motion. Approximately one month later, No. 69843-5-1/4

Judge Dingledy dismissed the lawsuit for lack of standing. The order granting the

defendants' motion to dismiss does not address the request for attorney fees under

RCW 4.84.185.

On the last day to file an appeal of the order of dismissal, the defendants

scheduled a motion for the imposition of sanctions and attorney fees under CR 11 and

RCW 4.84.185 to be heard on the motions calendar. In support of the request for an

award of $57,603.11, the defendants' attorney submitted a declaration with the billing

rate per hour and the total number of hours billed by attorneys and paralegals "in

defending Defendants in this litigation and related lawsuits filed by Plaintiffs." In

response, Russell argued that the imposition of sanctions was not warranted under

either CR 11 or RCW 4.84.185. Russell also argued the declaration did not support the

request.

On October 26, the defendants filed a revised motion requesting an award of

$76,710.14 in attorney fees and costs under CR 11 and RCW 4.84.185. The revised

motion also asks the court to find Russell was a "vexatious litigant." In support of the

revised fee request, the attorney submitted a supplemental declaration stating that an

additional 10 hours had been billed in preparing the revised motion. The attorney

submitted a second supplemental declaration on November 19 listing nine "examples of

certain activities/events that occurred between August 29, 2012 and October 26, 2012,

which warranted the increased amount of attorney's fees sought as a sanction."

On November 21, Judge Okrent denied the motion to find Russell a vexatious

litigant, but granted the request to award attorney fees in the full amount of $76,710.14 No. 69843-5-1/5

under CR 11 and RCW 4.84.185. The court entered written findings of fact and

conclusions of law. Russell appeals.

ANALYSIS

Russell contends the court erred in awarding attorney fees under CR 11 and

RCW 4.84.185. We review an award of sanctions under CR 11 or RCW 4.84.185 for

abuse of discretion. State ex rel. Quick-Ruben v. Verharen, 136 Wn.2d 888, 903, 969

P.2d64(1998).

CR11

Russell argues the court erred by imposing sanctions under CR 11 because the

defendants failed to give timely notice of CR 11 sanctions. We agree. "The purpose

behind CR 11 is to deter baseless filings and to curb abuses of the judicial system."

Bryant v. Joseph Tree. Inc.. 119 Wn.2d 210, 219, 829 P.2d 1099 (1992). "Both

practitioners and judges who perceive a possible violation of CR 11 must bring it to the

offending party's attention as soon as possible." Biggs v. Vail. 124 Wn.2d 193, 198, 876

P.2d 448 (1994). Therefore, "a party should move for CR 11 sanctions as soon as it

becomes aware they are warranted." N. Coast Elec. Co. v. Selig, 136 Wn. App. 636,

649, 151 P.3d 211 (2007). "Without such notice, CR 11 sanctions are unwarranted."

Biggs. 124 Wn.2d at 198.

Here, the undisputed record shows that the defendants did not timely notify

Russell of the possibility of requesting CR 11 sanctions. The defendants stipulated to

the amended complaint but did not file an answer to the amended complaint until nearly a year later. The answer does not request the imposition of sanctions under either CR 11 or RCW 4.84.185. After Russell agreed to the attorney's request for another 60-day No. 69843-5-1/6

stay, the defendants filed a motion to dismiss and, for the first time, requested fees for a

frivolous claim "advanced without reasonable cause" under RCW 4.84.185. The

defendants did not request the imposition of sanctions under CR 11 until nearly a month

after Judge Dingledy dismissed the lawsuit for lack of standing. Because the

defendants did not provide timely notice, we hold the court erred in awarding attorney

fees under CR 11.

RCW 4.84.185

Russell also contends the court erred in awarding attorney fees under RCW

4.84.185. RCW 4.84.185 provides, in pertinent part:

[U]pon written findings by the judge that the action, counterclaim, cross- claim, third party claim, or defense was frivolous and advanced without reasonable cause, [the court may] require the nonprevailing party to pay the prevailing party the reasonable expenses, including fees of attorneys, incurred in opposing such action, counterclaim, cross-claim, third party claim, or defense.

"[Bjefore awarding attorney fees under RCW4.84.185, the court must make

written findings that the lawsuit in its entirety is frivolous and advanced without

reasonable cause." Selig. 136 Wn. App. at 650 (citing Verharen. 136 Wn.2d at 901).

Here, the findings of fact do not address RCW 4.84.185. Conclusion of law 2.8 recites

the language of RCW 4.84.185. Conclusions of law 2.9 and 2.10 state that the

defendants are entitled to attorney fees because they were "the prevailing party" on the

motion to dismiss. The conclusions of law state, in pertinent part:

2.8 RCW 4.84.185 states that where the court determines that the action "was frivolous and advanced without reasonable cause," the court may "require the nonprevailing party to pay the prevailing party the reasonable expenses, including fees of attorneys, incurred in opposing such action." No. 69843-5-1/7

2.9 The Defendants were the prevailing party, in that Judge Dingledy granted Defendants' motion to dismiss on the basis of Plaintiffs' lack of standing. 2.10 Defendants are therefore entitled to an award of attorney fees and costs against Plaintiffs pursuant to CR 11 and RCW 4.84.185.

The defendants claim conclusion of law 2.5 stating that "the lawsuit was not

warranted by existing law," and conclusion of law 2.7 stating the lawsuit "was part of an

overall course of conduct which resulted in harassment of the Defendants," justify the

award of fees under RCW 4.84.185. But these conclusions of law clearly address the

award of sanctions under CR 11, not RCW 4.84.185. Because the findings of fact do

not address whether the lawsuit in its entirety is frivolous and advanced without

reasonable cause, we reverse and remand to Judge Dingledy.2

Because we remand, we also address the argument that the record does not

support an award of attorney fees in the amount of $76,710.14. We review the

reasonableness of an attorney fee award for abuse of discretion. Bowers v. Transam.

Title Ins. Co.. 100 Wn.2d 581, 599, 675 P.2d 193 (1983). RCW 4.84.185 authorizes the

court to award "reasonable expenses, including fees of attorneys, incurred." "The

burden of demonstrating that a fee is reasonable always remains on the fee applicant."

Absher Constr. Co. v. Kent Sch. Dist. No. 415. 79 Wn. App. 841, 847, 917 P.2d 1086

(1995) (citing Scott Fetzer Co.. Kirbv Co. Div. v. Weeks. 122Wn.2d 141, 151, 859 P.2d

1210 (1993)). In awarding reasonable attorney fees under RCW 4.84.185, a trial court

must "sufficiently explain" the objective basis for its fee award to permit appellate

2The fact that Judge Dingledy took more than a month to consider the motion to dismiss indicates the lawsuitwas not frivolous in its entirety. See, e^fl., Bldq. Indus. Ass'n of Wash, v. McCarthy. 152 Wn. App. 720, 746, 218 P.3d 196 (2009) (fact that the trial court asked for additional briefing and permitted additional argument indicates that, at least in court's mind, the case before it was not frivolous). No. 69843-5-1/8

review. Highland Sch. Dist. No. 203 v. Racy. 149 Wn. App. 307, 316, 202 P.3d 1024

(2009).

Absence of an adequate record upon which to review a fee award "will result in a

remand of the award to the trial court to develop such a record." 224 Westlake. LLC v.

Engstrom Props.. LLC. 169 Wn. App. 700, 741, 281 P.3d 693 (2012) (citing Mahler v.

Szucs. 135 Wn.2d 398, 435, 957 P.2d 632 (1998), overruled on other grounds by

Matsvuk v. State Farm Fire & Cas. Co.. 173 Wn.2d 643, 272 P.3d 802 (2012)).

Here, the attorney provided two nearly identical declarations listing the total

number of hours billed by five attorneys and the total number of hours billed by

paralegals. The declarations fall far short of the standard required. In 224 Westlake.

we reversed an award of attorney fees where, as here, the fee applicant only submitted

a list of the total hours expended by each timekeeper but did not "distinguish among the

tasks accomplished during the hours claimed." 224 Westlake. 169 Wn. App. at 740. We reverse the imposition of sanctions, vacate the judgment of $76,710.14, and

remand to Judge Dingledy to address whether an award of fees is warranted under

Sr-JL^WflQ, WE CONCUR: