Alaska Structures, Inc. v. Charles J. Hedlund ( 2018 )

FILLD
COURT OF APPEALS DIV 1
STATE OF WASIIItiaTOZ4
2018 Ail 16 10: 8
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
ALASKA STRUCTURES, INC., )
an Alaska corporation, ) DIVISION ONE
)
Appellant, ) No. 76105-6-1
)
v. ) UNPUBLISHED OPINION
)
CHARLES J. HEDLUND, )
)
Respondent. ) FILED: January 16, 2018
)
DWYER, J. — Alaska Structures, Inc.(AKS) appeals from the trial court's
order awarding attorney fees and costs to Charles Hedlund. We conclude that
the trial court erred by awarding Hedlund fees and costs incurred in advancing an
unsuccessful legal theory. Accordingly, we reverse.
Hedlund was employed by AKS from February 2007 until January 2010.
As a condition of his employment, Hedlund signed a confidentiality agreement
(Agreement) that prohibited him from disclosing certain confidential information
during and following his employment with AKS. The Agreement also contained a
fee shifting provision, stating that "[Un the event either party is required to institute
legal action to enforce the provisions of this Agreement, the prevailing party in
such litigation shall be entitled to recover its reasonable attorney's fees as well as
costs, expenses and disbursements."
No. 76105-6-1/2
In March 2010, AKS was burglarized twice. The burglaries were part of a
string of burglaries in the area and were publicized on television and in
newspapers.
In August 2011, an anonymous user—later revealed to be Hedlund—
posted a message on an Internet jobsite forum concerning the burglaries. The
message criticized the security measures at AKS. Shortly thereafter, AKS filed a
complaint in King County Superior Court against "John Doe," alleging that the
poster was a party to the Agreement and had violated the Agreement by
disclosing confidential information on a public website.
AKS subpoenaed Cox Communications, a Georgia entity, in order to
identify the anonymous poster. Counsel for Hedlund objected to the subpoena.'
AKS then filed a motion to compel, which Hedlund opposed. The Georgia court
granted the motion and Hedlund was ultimately identified as the anonymous
poster. AKS filed an amended complaint naming Hedlund as the defendant in
this suit.
Hedlund argued that he was sued as a result of his postings to a public
forum and moved to dismiss the claim pursuant to Washington's anti-SLAPP
statute, RCW 4.24.525.2 Following a hearing, the trial court found that the anti-
SLAPP statute applied and that AKS was unable to demonstrate that its action
1 Without identifying Hedlund as the attorney's client.
2 Washington's anti-SLAPP statute, RCW 4.24.525, established a "special motion to
strike any claim" that acted to immediately halt discovery pending resolution of the motion. If the
moving party prevailed on the motion, the statute authorized an award of attorney fees and costs
in connection with the motion as well as an additional award of $10,000. RCW 4.24.525(6)(a)(i),
(ii). The anti-SLAPP statute was ruled unconstitutional in 2015. Davis v. Cox, 183 Wash. 2d 269,
351 P.3d 862(2015).
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No. 76105-6-1/3
for violation of the Agreement had any merit. The trial court awarded Hedlund
attorney fees and costs as well as an additional $10,000 pursuant to the anti-
SLAPP statute.
AKS appealed the trial court's ruling to this court. We reversed the trial
court's order, concluding that Hedlund did not meet the threshold standard for
application of the anti-SLAPP statute. Alaska Structures, Inc. v. Hedlund, 180
Wash. App. 591, 603-04, 323 P.3d 1082(2014). Our holding in that case
addressed only the application of the anti-SLAPP statute. "The issue of whether
Hedlund violated the confidentiality agreement may well tend itself to summary
judgment dismissal, and Hedlund may be entitled to attorney fees under that
contract." Hedlund, 180 Wash. App. at 603. A commissioner of this court awarded
AKS costs totaling $6,180.57. Hedlund petitioned our Supreme Court for review,
which it denied.
On remand, Hedlund moved for summary judgment asserting that AKS
lacked proof that he had violated the agreement. The trial court granted his
motion. The trial court also awarded Hedlund attorney fees and costs:
The Court HEREBY Orders that pursuant to the [Agreement]
that Defendant shall be awarded his reasonable attorney's fees and
all costs incurred in this action to date, including fees and costs
incurred in connection with the Georgia proceedings, the Division
One Court of Appeals action, before the Washington State
Supreme Court, and while litigating as a John Doe. These fees and
costs shall be paid by Plaintiff[AKS]. The appellate cost award
issued by the appellate courts against Hedlund is deemed a cost
and as such it, and any interest, would be required to be repaid to
Hedlund by [AKS].
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No. 76105-6-1/4
Hedlund requested a total award of $148,734.52. The trial court reduced the fee
award by $17,182.10, awarding fees and costs totaling $131,552.42. AKS
appeals the award of fees and costs.
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AKS contends that the trial court erred by awarding Hedlund attorney fees
and costs associated with the anti-SLAPP motion. AKS asserts that it prevailed
against Hedlund's anti-SLAPP motion and that, as a result, the hours spent
advancing that legal theory should be discounted from the award. We agree.
A
"When reviewing an award of attorney fees, the relevant inquiry is first,
whether the prevailing party was entitled to attorney fees, and second, whether
the award of fees is reasonable." Ethridge v. Hwang, 105 Wash. App. 447, 459, 20
P.3d 958(2001). "Whether a specific statute, contractual provision, or
recognized ground in equity authorizes an award of fees is a question of law and
is reviewed de novo." Kaintz v. PLG, Inc., 147 Wash. App. 782, 785-86, 197 P.3d
710(2008). Whether the amount of fees awarded was reasonable is reviewed
for an abuse of discretion. Am. Nat'l Fire Ins. Co. v. B&L Trucking & Constr. Co.,
82 Wash. App. 646, 669, 920 P.2d 192(1996), aff'd, 134 Wash. 2d 413, 951 P.2d 250
(1998).
A prevailing party is one who receives an affirmative judgment in his or her
favor. Riss v. Angel, 131 Wash. 2d 612, 633, 934 P.2d 669(1997). "If neither
wholly prevails, then the determination of who is a prevailing party depends upon
who is the substantially prevailing party, and this question depends upon the
4
No. 76105-6-1/5
extent of the relief afforded the parties." Riss, 131 Wash. 2d at 633. "Under the
lodestar methodology, a court must first determine that counsel expended a
reasonable number of hours in securing a successful recovery for the client.
Necessarily, this decision requires the court to exclude from the requested hours
any wasteful or duplicative hours and any hours pertaining to unsuccessful
theories or claims." Mahler v. Szucs, 135 Wash. 2d 398, 434, 957 P.2d 632, 966
P.2d 305(1998). The party seeking fees bears the burden of proving the
reasonableness of the fees. Mahler, 135 Wash. 2d at 434.
AKS brought this suit against Hedlund for an alleged violation of the
Agreement. "The issue here is a simple contractual issue—whether or not
Hedlund violated a contract he signed with his former employer." Hedlund, 180
Wash. App. at 603. As the trial court determined on summary judgment, he had
not. There is no dispute that, pursuant to the fee shifting provision of the
Agreement, Hedlund is entitled to recover attorney fees and costs incurred in
defending against that claim.3
But Hedlund did more than simply defend against the merits of the claim.
Rather than promptly moving for summary judgment, Hedlund opted to first
pursue an independent legal theory that, if successful, would have resulted in an
award of $10,000 in addition to attorney fees and costs.
3 It is for this reason that Hedlund is entitled to fees and costs associated with the
Georgia proceeding. AKS first filed its breach of contract claim against John Doe and then
sought to compel the identity of the anonymous poster. This was an action to enforce the
Agreement. Pursuant to the fee shifting provision, Hedlund is entitled to recover attorney fees
and costs stemming from actions brought to enforce the Agreement.
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No. 76105-6-1/6
The parties dispute whether Hedlund's anti-SLAPP motion constituted a
"claim" against which AKS could prevail. But "Washington case law recognizes
that a reasonableness determination requires the court to exclude 'any hours
pertaining to unsuccessful theories or claims." SAK & Assocs., Inc. v. Ferguson
Constr., Inc., 189 Wash. App. 405, 421, 357 P.3d 671 (2015)(quoting Mahler, 135
Wash. 2d at 434). Hedlund's anti-SLAPP motion advanced a legal theory separate
and distinct from the merits of the contractual claim. Our determination that
Hedlund did not meet the threshold standard for application of the anti-SLAPP
statute confirmed that his legal theory was wholly unsuccessful. Hedlund, 180
Wash. App. at 603-04.
By failing to discount the hours spent on Hedlund's anti-SLAPP motion
from the fee award, the trial court awarded Hedlund fees and costs associated
with an unnecessary and unsuccessful legal theory. In so doing, the trial court
erred. Accordingly, we reverse the trial court's order and remand for entry of an
award that excludes attorney fees and costs incurred in Hedlund's appeals to this
court and the Supreme Court, including the appellate award assessed against
him that was deemed a cost by the trial court.4
4 Hedlund and AKS each request an award of appellate fees and costs pursuant to RAP
18.1 and the fee shifting provision of the Agreement. As AKS prevailed in this court, it is entitled
to an award of appellate costs. But because Hedlund was both the prevailing party on the
ultimate issue and the losing party in this stage of the proceeding, neither party is entitled to an
award of appellate fees. Upon compliance with RAP 18.1, a commissioner of this court will enter
an appropriate cost award.
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No. 76105-6-1/7
Reversed.
We concur:
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