Eric & Charlene Engelland v. First Horizon Home Loans ( 2014 )


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    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
    DIVISION II
    ERIC R. ENGELLAND, and CHARLENE C.                                           No. 43420 -2 -II
    ENGELLAND, a marital community,
    Appellants,
    V.
    FIRST HORIZON HOME LOANS, a
    division of FIRST TENNESSEE BANK
    NATIONAL ASSOCIATION, a District of
    Columbia corporation licensed to do business
    in Washington state, and QUALITY LOAN
    SERVICE CORP. OF WASHINGTON, a                                         UNPUBLISHED OPINION
    Washington state corporation,
    WORSWICK, C. J. —     In this mortgage dispute, Eric and Charlene Engelland ( collectively,
    Engelland) appeal from an order enforcing a settlement agreement with First Horizon Home
    Loans. Engelland argues that the trial court erred by ( 1) ruling that the parties entered into the
    settlement agreement and ( 2) awarding attorney fees to First Horizon. We agree that the trial
    court erred, vacate its order enforcing settlement and attorney fee award, and.remand for further
    proceedings.   We further   deny   each   party'   s request   for attorney fees   on appeal.
    No. 43420 -2 -II
    FACTS
    A.     Background
    In two loans from First Horizon, Engelland borrowed a total of $810, 000 to finance the
    purchase of and    improvements to       residential   property in Silverdale, Washington.'       Both loans
    were secured with deeds of trust in the property. First Horizon assigned servicing of the loans to
    Nationstar Mortgage.
    Engelland and First Horizon executed a loan modification agreement in 2007 and a
    special forbearance agreement in 2009. But Engelland defaulted, and a trustee' s sale was
    scheduled for June 17, 2011.
    On June 6, 2011, Engelland commenced this action by filing a six -count complaint
    against First Horizon, alleging ( 1) wrongful institution of a nonjudicial foreclosure; 2 ( 2)
    violations   of the Consumer    Protection Act,       chapter   19. 86 RCW; ( 3) breach   of contract; ( 4)   unjust
    enrichment; (   5) promissory estoppel; and ( 6) fraud in the inducement. On June 15, Engelland
    moved for a temporary restraining order to restrain the trustee' s sale. After a contested hearing,
    the trial court restrained First Horizon from conducting the trustee' s sale until July 1.
    The first loan   was   for $650, 000   and   the   second   for $ 160, 000.
    2 Engelland also named Quality Loan Service Corp. of Washington as a defendant and alleged it
    was liable under this count. But Engelland stipulated to the dismissal of Quality Loan with
    prejudice. Quality Loan is not a party to this appeal.
    0)
    No. 43420 - -II
    2
    On June 20, Engelland further moved for a preliminary injunction restraining the
    trustee' s sale. The trial court denied this motion and Engelland' s subsequent motion to
    reconsider.
    On August 2, Engelland filed a first notice of appeal, which was treated as a petition for
    discretionary review, seeking our review of the order denying the preliminary injunction. Later,
    on December 21, the parties stipulated that they had " reached an understanding on the
    3
    underlying dispute. "     Br. of Resp' t., App. A at 1 ( Joint Mot. for Withdrawal / ismissal of Pet.
    D
    for Discretionary Review, Engelland v. First Horizon Home Loans, No. 42440 -1 - II (Wash. Ct.
    App.   Dec. 21, 2011)).   Based on that stipulation, our commissioner dismissed Engelland' s
    petition for discretionary review. See RAP 18. 2.
    B.       Communications Regarding a Settlement Agreement
    Shortly after Engelland sought discretionary review, counsel for both parties began
    negotiating a settlement agreement to ( 1) resolve Engelland' s claims against First Horizon and
    2) modify both loans. During these negotiations, the trustee' s sale was postponed and
    ultimately cancelled.
    On August 10, 2011, First Horizon' s counsel, Andrew Yates, transmitted a financial
    worksheet that reflected its offer to modify the first loan only. On August 12, Engelland' s
    attorney, Chad Ahrens, replied with a counteroffer to modify both loans and to dismiss
    3 It is clear that at the time of this stipulation, the parties had not executed an agreement settling
    the underlying dispute.
    3
    No. 43420 -2 -II
    Engelland' s claims. Over several weeks that followed, First Horizon developed a
    counterproposal.
    After a phone call between counsel on September 26, Ahrens confirmed by e -mail that
    Engelland " authorized me to request that we proceed to draft settlement documents based on the
    terms discussed."       Clerk' s Papers ( CP) at 59. Ahrens and Yates also agreed to execute a " CR 2A
    agreement" if it was necessary. CP at 58 -59.
    On October 12 and again on October 19, Ahrens asked when Yates planned to transmit
    the settlement documents they had discussed. On November 28, Yates transmitted two
    documents     on   behalf of First Horizon: ( 1) a draft loan modification agreement addressing the
    first loan only and ( 2) a draft settlement agreement addressing Engelland' s claims and the second
    loan. Yates noted that the draft settlement agreement " contemplate [d] a $ 250 payment by your
    clients on   Dec. 1,"   which was three days away. CP at 61.
    By   December 27, First Horizon had     not received a response.   Yates   e- mailed   Ahrens, " If
    I do not hear from you in writing tomorrow I will assume that [ Engelland] does not accept the
    proposed loan modification and settlement and we will seek appropriate relief from the court and
    advise   the trustee accordingly."    CP at 75. The following day, Ahrens responded by ( 1)
    proposing changes to the draft settlement agreement and ( 2) stating that Engelland requested no
    changes to the loan modification agreement. Ahrens further wrote,
    While my clients intend on proceeding with the settlement and corresponding
    release documents, please note that, until such time as the settlement agreement is
    executed, they proceed without waiver of any rights afforded by the law ....      I
    mention this particularly in light of your reference to nonjudicial foreclosure
    M
    No. 43420 -2 -II
    below and not because I anticipate that my clients will fail to proceed with
    settlement.
    CP at 74.
    On January 18, 2012, Yates e- mailed Ahrens a " redline" version of the proposed
    settlement agreement. CP at 88. The redline version included some of Engelland' s proposed
    changes, but it excluded others that were unacceptable to First Horizon.
    On February 3, Yates also e- mailed a completely revised loan modification agreement
    containing new commencement dates and terms that were " slightly more favorable to
    4
    Engelland]. "      CP   at   101.   Unlike the draft that preceded it, the revised loan modification
    agreement was prepared by Nationstar, the loan servicer.
    Nationstar communicated directly with Engelland while Ahrens and Yates were
    negotiating on behalf of their clients. In August 2011, a Nationstar representative called
    Engelland to discuss a potential loan modification and followed up by e- mailing Engelland an
    application.__ hrens asked
    A                       Yates to   confirm   that First Horizon— not Nationstar —would handle
    any loan    modification.       Yates   asked   First Horizon " to   confirm and   clarify," but the record does
    not show whether First Horizon did so. CP at 165.
    Further, in January 2012, Nationstar sent Engelland a mortgage loan statement showing,
    among other things, a negative escrow balance of $33, 566. Although Engelland had expected
    that the loan modification agreement would capitalize the negative escrow balance, Nationstar' s
    4 The revised loan modification agreement contained a significantly lower interest rate beginning
    in the seventh year and continuing until maturity.
    5
    No. 43420 -2 -II
    statement caused Engelland to question whether his potential settlement agreement with First
    Horizon would prevent Nationstar from collecting on the negative escrow balance. According to
    Engelland, inconsistent information provided by First Horizon and Nationstar " contribute[ d] to
    our overall lack of trust in dealing with [First Horizon] and [ explained] why we insist on any
    proposed    settlement agreement            including    clear and express       terms."   CP at 178.
    On   February         13, Yates   e- mailed   Ahrens   and    declared, "[ W] e need to get the settlement
    agreement and       loan    mod executed        this   week."    CP at 129. On February 17, Ahrens replied,
    M]y clients have authorized me to indicate that they will execute the attached
    versions of the settlement agreement and loan modification agreement ( provided
    that   the     settlement      agreement       dates    are [   again]    updated,    e.   g.   payment   to
    commence         3/ 1/ 12)   as soon as      the   negative   escrow     balance is   addressed.     In the
    interest of expediting resolution and anticipating that the escrow balance will be
    accounted for and addressed in short order by [ First Horizon],       I will have
    Engelland] execute a clean version of the settlement agreement ( with adjusted
    dates) and loan modification agreement to be released upon resolution of the
    above escrow impound issue.
    CP at 128.
    In a February 27 phone conversation between Ahrens and Ronald Beard, another attorney
    representing First Horizon, Beard answered each of Ahrens' s remaining questions about the
    terms of the settlement agreement and the status of the negative escrow balance. Yates then
    transmitted an updated settlement agreement to Ahrens and requested that Engelland sign
    ASAP."        CP   at   128.    The updated settlement agreement called for monthly payments to begin
    March 1, [ 2012],"         and stated that the agreement would take effect upon delivery of signed
    copies.    CP at 133
    n
    No. 43420 -2 -II
    In an e -mail also sent February 27, Ahrens thanked Beard for addressing the negative
    escrow      balance issue       and   further     replied, "      While I can' t promise producing [ Engelland' s]
    signatures        today, I   can promise         that I'   ll   get   back to   you   by   the   end of   the   day."   CP   at   141.   But
    Ahrens did not get back to Beard and did not produce Engelland' s signature on the updated
    settlement agreement.
    On March 12, Beard e- mailed Ahrens to state that all issues were resolved and to ask,
    do                   to   delay finalizing            this                                    the terms are agreed ?" CP
    Why              you continue                                           settlement when all of
    at   141.    In a phone call with Yates later that day, Ahrens stated for the first time that Engelland
    5
    wanted       to   delay the   commencement             date for        payments until       June 1.
    By e -mail, Yates responded that First Horizon considered June 1 unacceptable and would
    therefore "        file   a motion   to   enforce    these      agreements."          CP at 144. Ahrens denied that any
    settlement agreement had been executed because none of the parties signed it, none of the
    attorneys for the parties signed it, and Engelland had not authorized Ahrens to sign it.
    Ahrens further insisted that Engelland' s concern about the negative escrow balance was a
    legitimate concern about " the mixed and confusing communications our clients have received
    from [ First Horizon]           and   Nationstar." CP at 173.                   Lastly, Ahrens repeated his proposal of a
    settlement agreement and                  loan   modification agreement with payments                      to   commence      June 1.     It
    appears from the record that counsel for First Horizon did not respond.
    5 Engelland later averred that June 1 was an appropriate date because his wife had begun
    receiving aggressive treatment for cancer.
    7
    No. 43420 -2 -II
    C.       The Trial Court' s Order Enforcing Settlement
    First Horizon moved to enforce the settlement agreement, asserting that the parties " have
    reached a   full   and   final   agreement   to   settle   this   case"   but that Engelland " simply    refuse[   d]" to
    execute the agreement as promised. CP at 27 -28. After hearing argument from counsel, the trial
    court determined on the basis of declarations and attached documents that the parties executed
    both the loan modification agreement and the settlement agreement as of March 1, 2012.
    The trial court explained,
    The February 17th e -mail from Mr. Ahrens bound his clients to the agreement
    once      the    escrow     issue   was     settled.        That [    agreement]     had   a March     1 st
    commencement            date.   It was as clear as anything from a lawyer in negotiations
    can   be   clear     that this was the agreement             except [ as   to] the   escrow   issue.   The
    escrow     issue      was resolved [         Consequently, there is a deal, and I
    eventually]....
    am going to hold that the Engellands are bound to it.
    Verbatim Report          of   Proceedings ( VRP) ( Apr.       2, 2012) at 29. Observing that Engelland had
    already missed two payments due March 1 and April 1, the trial court further directed First
    Horizon   to make a _ reasonable         accommodation             for their   missed payments. _   VRP ( Apr. 2, 2012
    at 30.
    In addition, First Horizon requested attorney fees pursuant to the settlement agreement' s
    attorney fee provision. The trial court awarded First Horizon $7, 380 in reasonable attorney fees
    incurred in enforcing the settlement agreement.
    Engelland       appeals.
    No. 43420 - -II
    2
    ANALYSIS
    1. ENFORCEABILITY OF THE SETTLEMENT AGREEMENT
    Engelland argues that the trial court erred by enforcing the settlement agreement because
    the agreement was not properly executed. First Horizon disputes this claim and further argues,
    as a threshold matter, that Engelland is equitably estopped from denying the existence of an
    enforceable settlement agreement. We reject First Horizon' s threshold argument and agree with
    Engelland that the trial court erred by enforcing the settlement agreement.
    A.        Equitable Estoppel
    First Horizon argues that Engelland is equitably estopped from denying the existence of
    an enforceable settlement agreement because Engelland stipulated to the dismissal of his petition
    6
    for   discretionary   review.       We disagree.
    Equitable estoppel allows a court to hold a party to a representation it made when
    inequitable consequences would otherwise result to another party who has justifiably and in good
    faith   relied on   the   representation.   Wilson   v.   Westinghouse Elec.    Corp.,      
    85 Wn.2d 78
    , 81, 
    530 P. 2d 298
     ( 1975). Equitable         estoppel   has three   elements: (   1) an admission, statement, or act that
    is inconsistent     with a subsequent assertion; (        2) an action by another party in reasonable reliance
    on the admission, statement, or act; and ( 3) an injury that the relying party would suffer if the
    admission, statement, or act were repudiated.               Colonial   Imp., Inc.   v.   Carlton Nw., Inc., 121
    6 First Horizon also asserts that equitable estoppel applies because Engelland " disavow[ ed] the
    agreement to settle," but this assertion presumes that the parties had a binding agreement. Br. of
    Resp' t at 30. We address that issue below.
    I
    No. 43420 -2 -II
    Wn.2d 726, 734, 
    853 P. 2d 913
     ( 1993).         The party claiming that equitable estoppel applies bears
    the burden of establishing each element by clear, cogent, and convincing evidence. Colonial
    Imports, 121 Wn.2d at 734, 736.
    Because First Horizon did not raise equitable estoppel in the trial court, the trial court
    made no findings as to the elements of equitable estoppel. Although RAP 2. 5( a) allows us to
    affirm the decision below on any ground supported by the record, First Horizon invites us to
    make our own findings as to each element. But it is not the role of an appellate court to find
    facts. Quinn     v.   Cherry   Lane Auto Plaza, Inc.,, 
    153 Wn. App. 710
    , 717, 
    225 P. 3d 266
     ( 2009).
    Therefore First Horizon' s equitable estoppel claim is not an alternative ground on which we may
    affirm the judgment below.
    B.        Execution of the Settlement Agreement
    Engelland argues that the trial court erroneously enforced the settlement agreement
    because ( 1) there was a genuine factual issue as to whether the parties reached a complete and
    final   agreement and ( 2)-    the-execution of any settlement agreement did not comply with CR 2A
    and RCW 2. 44. 010. We agree with Engelland' s first contention and do not reach the second.
    When a motion to enforce a settlement agreement relies on affidavits or declarations, the
    trial court considers the motion according to summary judgment procedures. Condon v. Condon,
    
    177 Wn.2d 150
    , .161, 
    298 P. 3d 86
     ( 2013);        see   CR 56( c)   (   summary judgment is appropriate when
    there is no genuine issue of material fact and the moving party is entitled to judgment as a matter
    of   law).   Thus the moving party bears the burden of showing that there is no genuine dispute as
    10
    No. 43420 -2 -II
    7
    to the   settlement agreement' s existence and                  its   material      terms.       Condon, 
    177 Wn.2d at 162
    . The
    trial court must decide whether, viewing the evidence in the light most favorable to the
    nonmoving party, reasonable minds could reach only one conclusion. Condon, 
    177 Wn.2d at 162
    . When genuine issues of material fact exist, the trial court abuses its discretion if it fails to
    hold   an   evidentiary       hearing   to   resolve   the factual issues. 8          Condon, 
    177 Wn.2d at
    162 n.4.
    9
    We   review    the trial court' s    decision     on      this   motion    de   novo.        Condon, 
    177 Wn.2d at 162
    .
    Thus we engage in the same inquiry as the trial court. TracFone Wireless, Inc. v. Dep' t of
    Revenue, 
    170 Wn.2d 273
    , 280 -81, 
    242 P. 3d 810
     ( 2010).
    Engelland argues that a genuine issue of material fact exists as to whether the parties
    reached a final settlement agreement because they did not resolve the commencement date for
    payments and because First Horizon did not satisfy Engelland' s concerns about the negative
    7 First Horizon claims that ( 1) it met its burden and ( 2) Engelland then failed to produce specific
    evidence sufficiently rebutting its contentions and disclosing a genuine factual dispute. Because
    we decide that First Horizon failed to meet its initial burden, we do not decide whether
    Engelland provided a sufficient rebuttal.
    8
    The trial court did not conduct an evidentiary hearing here.
    9 First Horizon concedes that the summary judgment standard applies. But, citing two non-
    binding cases, First Horizon also asserts that enforcement of a settlement agreement is essentially
    an action    for   specific performance       that   is   reviewed        for   an abuse of         discretion."   Br. of Resp' t at
    12 n.8 ( citing Adams v. Johns -
    Manville Corp., 
    876 F.2d 702
    , 704 ( 9th Cir. 1989) and Morris v.
    Maks, 
    69 Wn. App. 865
    , 868, 
    850 P. 2d 1357
     ( 1993)).                We disagree with this assertion because
    our Supreme Court' s decision in Condon clarified that de novo review is appropriate and the
    abuse of     discretion       standard   does   not    apply.     
    177 Wn.2d at
    161 -62 n.4.
    11
    No. 43420 -2 -II
    10
    escrow     balance.         In response, First Horizon claims that the parties' informal e -mails show that
    they executed an agreement despite the absence of a signed formal document. We agree with
    Engelland.
    Settlement agreements are contracts. Riley Pleas, Inc. v. State, 
    88 Wn.2d 933
    , 937 -38,
    
    568 P. 2d 780
     ( 1977).         To form a contract, the parties must objectively manifest their mutual
    assent    to the definite terms     of an offer.         Keystone Land & Dev. Co.             v.   Xerox   Corp.,   
    152 Wn.2d 171
    , 177 -78, 
    94 P. 3d 945
     ( 2004). Whether there was mutual assent is a question of fact.
    Keystone, 
    152 Wn.2d at
    178 n. 10. An enforceable contract is distinguished from an
    unenforceable agreement            to   agree,   i. e., "`   an agreement to do something which requires a further
    meeting of the minds of the parties and without which [the contract] would not be complete. "'
    Keystone, 
    152 Wn.2d at
    175 -76 ( quoting Sandeman v. Sayres, 
    50 Wn.2d 539
    , 541 -42, 
    314 P. 2d 428
     ( 1957)).
    On February 17, 2012, Ahrens represented that Engelland would sign the settlement
    agreement     if two       conditions were met: (            1) the commencement date was changed to March 1- and
    2) the   negative escrow        balance    was " addressed."            CP   at   128.   On February 27, First Horizon' s
    attorneys sent Ahrens an updated settlement agreement containing a March 1 commencement
    date, stated that the negative escrow balance would be capitalized, and requested that Engelland
    10
    For the first time in his reply brief, Engelland also argues that the settlement agreement was
    not executed in accordance with the statute of frauds, RCW 19. 36. 010. But an issue raised for
    the first time in a reply brief is too late to warrant consideration. Cowiche Canyon Conservancy
    v. Bosley, 
    118 Wn.2d 801
    , 809, 
    828 P. 2d 549
     ( 1992).
    12
    No. 43420 -2 -II
    sign "   ASAP."    CP at 128. But First Horizon did not receive a signed copy from Engelland, and
    Engelland did not make a payment on March 1.
    Viewed in the light most favorable to Engelland, the record shows that the parties did not
    form a contract for two reasons. First, Ahrens' s February 17 e -mail was not an offer of definite
    terms but instead an agreement to agree on the status of the negative escrow balance. Second,
    Engelland did not accept First Horizon' s February 27 offer by commencing payments on March
    1 or otherwise manifesting his assent to the offer.
    Claiming that the parties' informal e -mails show the execution of a binding agreement to
    settle, First Horizon relies on the three -part test stated in Morris v. Maks, 
    69 Wn. App. 865
    , 869,
    
    850 P. 2d 1357
     ( 1993). 11 But the Morris.test is unavailing to First Horizon.
    According to Morris, even when the parties. contemplated signing a formal written
    agreement,     informal    writings are sufficient      to   establish a   binding   contract when "(   1) the subject
    matter    has been   agreed upon, (     2) the terms are all stated in the informal writings, and ( 3) the
    parties intended a binding agreement prior to the time of the signing and delivery of a formal
    contract."     Morris, 69 Wn. App. at 869 ( citing Loewi v. Long, 
    76 Wash. 480
    , 484, 
    136 P. 673
    1913)).     But here, the third element is lacking because the parties expressly did not intend a
    l i First Horizon also relies on an unpublished federal decision, McKelvey v. Am. Seafoods, No.
    C99- 2108L, 
    2000 WL 33179292
     ( W. D. Wash. Apr. 7, 2000). But                         GR 14. 1( b), a party
    under
    may      cite another   jurisdiction'   s unpublished   decision only if two conditions are met: ( 1) the
    jurisdiction' s rules permit citations to its unpublished decisions and ( 2) the party files a copy of
    the decision along with its brief. Neither condition is met here. See FED. R. APP. P. 32. 1( a)
    permitting     citation   to   unpublished   federal decisions issued in 2007         or   later). Therefore First
    Horizon has violated GR 14. 1( b) and we refuse to consider the unpublished case. Condon, 
    177 Wn.2d at
    165 -66.
    13
    No. 43420 - -II
    2
    binding agreement prior to the delivery of a signed formal contract. Instead, the unsigned
    settlement agreement provided that " this Agreement shall not be effective until all of the Settling
    Parties have signed the Release Agreement, and the various counterparts are delivered to all
    Settling   Parties       or
    and /    their   respective counsel."     CP at 203.
    First Horizon' s argument is unpersuasive. We vacate the trial court' s order enforcing the
    settlement agreement.
    Il. ATTORNEY FEES
    Engelland further argues that the trial court erred by awarding reasonable attorney fees to
    First Horizon. We agree.
    A court may award attorney fees only when authorized by a contract, a statute, or a
    recognized ground       in equity. Bowles        v.   Dep' t ofRet. Sys.,   
    121 Wn.2d 52
    , 70, 
    847 P. 2d 440
    1993).    The threshold question of whether a trial court is authorized to award attorney fees is a
    question of    law,   which we review       de   novo.    Gander v. Yeager, 
    167 Wn. App. 638
    , 646, 
    282 P. 3d 1100
     ( 2012).    But when attorney fees are authorized, we review an attorney fee award for an
    abuse of discretion. Gander, 167 Wn. App. at 647.
    Engelland claims that, in the absence of an enforceable settlement agreement, the trial
    court lacked authority to award reasonable attorney fees. Other than arguing that an enforceable
    14
    No. 43420 -2 -II
    settlement agreement existed, First Horizon does not dispute this claim. Because the trial court
    12
    erred   by   enforcing the   settlement agreement, we' also vacate   the trial   court' s   attorney fee   award.
    ATTORNEY FEES ON APPEAL
    Both parties request reasonable attorney fees and costs on appeal. We deny both
    requests.
    Under RAP 18. 1, the prevailing party is entitled to attorney fees on appeal when
    applicable law authorizes the award. See McGuire v. Bates, 
    169 Wn.2d 185
    , 191, 
    234 P. 3d 205
    2010).      We deny First Horizon' s request because it is not the prevailing party.
    Citing Herzog Aluminum, Inc. v. General American Window Corp., 
    39 Wn. App. 188
    ,
    
    692 P. 2d 867
     ( 1984),    Engelland claims he is entitled to reasonable attorney fees and costs under
    the purported settlement agreement. 13 But Engelland' s reliance on Herzog is misplaced.
    12 We do not address Engelland' s alternative argument that the attorney fee award was partially
    erroneous to the extent that it included nonrecoverable fees incurred in negotiating, rather than
    enforcing, the settlement agreement.
    13 The purported settlement agreement provided:
    Attorneys' Fees and Costs. The Parties hereto shall bear their own fees, costs and
    expenses incurred in connection with the negotiation, drafting and consummation
    of   this   Agreement.     However,    if any party institutes legal proceedings in
    connection with, or for the enforcement of this Agreement or any provision of it,
    the prevailing party shall be entitled to recover from the losing party its costs,
    including reasonable attorneys' fees, at both trial and appellate levels.
    CP at 201.
    15
    No. 43420 -2 -II
    Herzog, 39 Wn. App. at 191 -97, interpreted RCW 4. 84.330, 14 which provides in relevant
    part:
    In any action on a contract or lease entered into after September 21, 1977, where
    such contract or lease specifically provides that attorneys' fees and costs, which
    are incurred to enforce the provisions of such contract or lease, shall be awarded
    to one of the parties, the prevailing party, whether he or she is the party specified
    in the contract or lease or not, shall be entitled to reasonable attorneys' fees in
    addition to costs and necessary disbursements.
    Thus when a contract allows only one party to recover attorney fees in an action to enforce the
    contract, RCW 4. 84. 330 entitles the other party to recover reasonable attorney fees if it prevails.
    See Wachovia SBA      Lending, Inc.     v.   Kraft, 
    165 Wn.2d 481
    , 489, 
    200 P. 3d 683
     ( 2009). Our
    Supreme Court has approved Herzog' s holding that RCW 4. 84. 330 applies even when the
    contract   containing the attorney fee       provision      is invalidated. Labriola    v.   Pollard   Grp.,   Inc., 
    152 Wn.2d 828
    , 839, 
    100 P. 3d 791
     ( 2004) ( citing              Herzog, 39 Wn. App. at 196 -97).
    However, Engelland is not the prevailing party under RCW 4. 84. 330. RCW 4. 84. 330
    further defines the prevailing party         as "   the party_in    whose   favor final judgment is    rendered."    For
    the purposes of RCW 4. 84. 330, a final judgment disposes of all issues in controversy.
    Wachovia, 
    165 Wn.2d at
    491 -92. Our determination that the trial court erred by enforcing the
    settlement agreement does not dispose of all issues in controversy; instead it requires the trial
    court to take further action to decide the remaining issues consistent with this opinion. Without a
    14 In 2011, the legislature amended RCW 4. 84. 330 to insert gender -neutral language and change
    a singular noun    to the   plural.   LAWS    of    2011,   ch.   336, § 131.   The amendments do not affect our
    analysis.
    rV1
    No. 43420 -2 -II
    final judgment in his favor, Engelland is not the prevailing party and cannot recover attorney
    15
    fees.
    We vacate the trial court' s order enforcing settlement and its award of attorney fees to
    First Horizon. We remand for further proceedings consistent with this opinion.
    A majority of the panel having determined that this opinion will not be printed in the
    Washington Appellate Reports, but will be filed for public record in accordance with RCW
    2. 06. 040, it is so ordered.
    Forget
    15 Moreover, the attorney fee provision here is bilateral, in that it allows either party to recover
    attorney fees if it prevails. But RCW 4. 84. 330 generally does not apply when a contract contains
    a bilateral attorney fee provision. Kaintz v. PLG, Inc., 
    147 Wn. App. 782
    , 786 -87, 
    197 P. 3d 710
    2008).
    17