Willie Russell And Christine Harper v. Carleen Matson ( 2014 )

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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 GEORGE, UNPUBLISHED OPINION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,
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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
RCW 4.84.185.
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WE CONCUR:
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