Soundbuilt Northwest Llc, V Thomas Price ( 2015 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
SOUNDBUILT NORTHWEST, LLC, a
Washington limited liability company, No. 72837-7-1
Respondent, DIVISION ONE
v.
UNPUBLISHED OPINION
THOMAS PRICE and PATRICIA
PRICE, husband and wife, individually
And their marital community composed
thereof; and HYUN UM and JIN S. UM, »>>»»
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husband and wife, individually and their e.n
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marital community composed thereof,
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d/b/a P&U CAPITAL PARTNERS, LLC CO
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Trickey, J. — Where an appellate court has already determined that a party
is the prevailing party in a prior appeal, that party remains a prevailing party on
remand to the trial court for an award of attorney fees as provided for in a contract.
Here, the trial court erred in not awarding attorney fees to the defendants who
succeeded in getting the action dismissed on appeal based on the doctrine of res
judicata.
The trial court further erred in limiting appellate fees awarded to those
incurred prior to the defendants' filing bankruptcy.
FACTS
A six day bench trial in March 2010 resulted in a judgment in favor of
Soundbuilt Northwest, LLC against Thomas and Patricia Price, Huynh Um and Jin
S. Um, d/b/a P&U Capital Partners, LLC (collectively, Price). That judgment
awarded Soundbuilt $5,990,916.08, including attorney fees ($91,120.50) and
No. 72837-7-1 / 2
costs ($2,281.78) under the real estate purchase and sale agreement (REPSA).
Price appealed the judgment. While the matter was on appeal, Price filed
bankruptcy.
On October 18, 2011, Division Two of the Court of Appeals, in an
unpublished opinion, held that the doctrine of res judicata barred Soundbuilt's
action and reversed the trial court's judgment in favor of Soundbuilt, remanding the
case to the trial court for "a final order of dismissal." Soundbuilt Nw.. LLC v. Price,
noted at 164 Wn. App. 1019,2011 WL 4929137. at *5. review denied, 174Wn.2d
1007, 278 P.3d 1112(2012).
Additionally, Division Two awarded attorney fees to Price as the prevailing
party and remanded to the trial court to establish the amount. In its decision
Division Two stated:
The REPSA attorney fees provision, however, provides that the
prevailing party in "any other action arising out of this Agreement or
the transactions contemplated hereby . . . shall be entitled to an
award of reasonable attorneys fees and court costs incurred in such
action or proceeding ... regardless of whether such action proceeds
to final judgment." Accordingly, we grant Price and Um reasonable
attorney fees and costs on appeal pursuant to the REPSA and RAP
18.1. Except for those costs the commissioner of this court will
determine pursuant to RAP 14.3 and 14.6, the trial court should
determine the reasonable amount of the award on remand. RAP
18.1(i).
Price, 2011 WL 4929137, at *5 (citation omitted). The Supreme Court denied
Soundbuilt's petition for review of Division Two's decision. Soundbuilt Nw., LLC v.
Price, 174 Wash. 2d 1007, 278 P.3d 1112 (2012).
Price moved to vacate the judgment and requested attorney fees and costs.
The trial court entered an order vacating the judgment and dismissing the case
No. 72837-7-1 / 3
with prejudice, but reserved for future determination, Price's requests for an award
of attorney fees and costs.
Price submitted affidavits requesting attorney fees of $109,418.75 for the
trial, plus 3.0 hours for preparation and hearing of the motion in the amount of
$930.00, $83,118.00 for fees on appeal, and $4,908.73 for costs and expenses at
trial court level.
On January 17, 2014, the trial court granted Price's motion for fees but only
for those fees incurred on appeal. The trial court specifically found that the attorney
fees incurred at the appellate court were reasonable, but limited recovery to
$51,283.50, the amount incurred prior to Price's filing bankruptcy.
Because Division Two's opinion did not specifically refer to Price's ability to
recover attorney fees for the trial, the trial courtfound it was without authority to do
so. The trial court did, however, award the costs incurred at trial.
Price appealed. On February 12, 2014, the bankruptcy court entered an
Amended Ex Parte Order Granting Trustee Authority to Employ Special Counsel
Nunc Pro Tunc. The order permitted appellate counsel to represent Price and
authorized the trial court to award attorney fees and costs regardless of when they
occurred. Division Two's commissioner, over Soundbuilt's objection that it was
unfair, permitted Price to supplement the record with the bankruptcy order,
reasoning that both the order's nunc pro tunc status and the trial court's January
2014 order left open the option for Price to obtain an order at a future date.
Price appeals the limitation of his attorney fees.
No. 72837-7-1 / 4
ANALYSIS
Appellate Fees
In its order limiting the fees to those incurred before the bankruptcy filing,
the trial court stated that such fees "will not be awarded by this court absent an
order by the bankruptcy court affirming the employment of Salvador Mungia and
the law firm of Gordon Thomas Honeywell."1
Before the trial court's ruling, the bankruptcy court had already ratified
trustee Eric Orse's management authority to collect the attorney fee award
rendered in the current suit. The trial court failed to recognize this order. After the
trial court's decision, the bankruptcy court entered a formal order, issuing its order
nunc pro tunc. Because the trial court specifically found thefees requested for the
first appeal to be reasonable, Price is entitled to the entire amount of $83,118.00.
Attorney Fees at Trial
RCW 4.84.330 provides for an award of attorney fees where provided for in
a contract. Here, Division Two has already determined that the REPSA provided
for such an award.
Whether a party is a "prevailing party" is a mixed question of law and fact
that is reviewed under an error of lawstandard. Eaale Point Condo. Owners Ass'n
v. Coy, 102 Wash. App. 697, 706, 9 P.3d 898 (2000). "[T]he determination ofwho is
a prevailing party depends upon who is the substantially prevailing party, and this
question depends upon the extent of the relief afforded the parties." Riss v. Angel,
131 Wash. 2d 612, 633, 934 P.2d 669 (1997).
Clerk's Papers (CP) at 1384.
No. 72837-7-1 / 5
Soundbuilt argues that there has been no determination of who the
prevailing party is. We disagree. Division Two has already held that Price is the
prevailing party entitled to attorney fees under the REPSA and remanded to the
trial court to determine the amount. Such remand necessarily included an award
of attorney fees at the trial level. The trial court's finding that it was without
authority to award such fees on remand was error.
Soundbuilt's citation to Hertz v. Riebe, 86 Wash. App. 102, 936 P.2d 24
(1997), is not helpful. There, the plaintiffs sued to recover earnest money tendered
in connection with a failed real estate purchase. The defendants counter-claimed
for rent owed during the plaintiffs' occupancy of the property. The court found a
breach of the REPSA, but at the same time ruled in favor of the defendants on
their counter-claim for rent. Because those claims were of equal magnitude there
was no clear winner.
Nor is Soundbuilt's citation to Transpac Development. Inc. v. Oh, 132 Wn.
App. 212, 130 P.2d 892 (2006), of any assistance. In Transpac, the trial court
refused to award attorney fees to the defendant tenant underthe terms of a lease
agreement and RCW 4.84.330. The court reasoned that neither party was the
prevailing party because, although the landlord did not prevail on any of its claims,
the tenant also did not prevail on any of his counterclaims. We remanded, holding
that where distinct and severable contract claims are involved, the court cannot
refuse to award attorney fees to a prevailing party without a detailed consideration
ofwhat actually happened in the litigation. Transpac, 132 Wash. App. at 219.
No. 72837-7-1 / 6
Such a proportionality approach is only awarded where "several distinct and
severable claims" are at issue. Marassi v. Lau, 71 Wash. App. 912, 917, 859 P.2d
605 (1993), abrogated on other grounds by Wachovia SBA Lending, Inc. v. Kraft,
165 Wash. 2d 481, 200 P.3d 683 (2009).
In this case, there were no affirmative claims, only affirmative defenses.
Here, Price is the clear winner having won dismissal of all Soundbuilt's claims.
Moreover, Division Two of this court has already determined Price to be the
prevailing party. That is the law of this case.2
In view of the fact that Soundbuilt was awarded over $91,000.00 in attorney
fees after the bench trial in which it mistakenly prevailed, Price's request for
$109,418.75 appears to be reasonable. Soundbuilt does not attack the
reasonableness of those fees, but only argues that the trial court has discretion to
reduce the fees. This argument is incorrectly based on Soundbuilt's theory that it
somehow prevailed at the trial against Price's defenses to its action and it is only
the trial court that can determine who prevails.
Nor is there any substance to Soundbuilt's claim that Price lost in its
argument to reform the contract to prevent individual liability. Had Soundbuilt not
improperly proceeded with this claim, Price would never had had to assert any
defenses with regard to such liability. Soundbuilt's position is untenable in view of
Division Two's determination that Price was the prevailing party.
2 Under the law of the case doctrine, an appellate court will generally refuse to consider
issues that were decided in a prior appeal. See Folsom v. County of Spokane, 111 Wash. 2d
256, 263-64, 759 P.2d 1196 (1988).
6
No. 72837-7-1 / 7
However, the record does not indicate that the trial court considered the
reasonableness of the fee request for the trial and Price requests this court to
remand for a determination that the attorney fees requested are reasonable.
Additionally, Price requests attorney fees for this second appeal. Because
"[a] contractual provision for an award of attorney fees at trial supports an award
of attorney fees on appeal," Price is entitled to attorney fees for this appeal as the
prevailing party.3
Accordingly, we affirm the trial court's finding that Price's request for the
attorney fees for the first appeal was reasonable and award the entire amount of
fees requested ($83,118.00) for the first appeal. We reverse the trial court's denial
of fees for the trial and remand for its determination whether the fees requested
are reasonable. Because we are remanding for a determination of reasonable
fees at the trial, we also remand to the trial court for a determination of the amount
of fees that should be awarded for Price's successful second appeal in this matter.
Affirmed in part, reversed in part, and remanded for further proceedings.
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WE CONCUR:
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3 Reeves v. McClain, 56 Wash. App. 301, 311, 783 P.2d 606 (1989).