Se Boise Boat & Rv Storage, Llc, Apps. v. Jay And Corinne Graham, Res. ( 2020 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
SE BOISE BOAT & RV STORAGE, LLC,) No. 79618-6-I
an Idaho limited liability company, and A
)
BOISE PROJECT, LLC, an Idaho limited
) DIVISION ONE
liability company, )
) UNPUBLISHED OPINION
Appellants, )
)
v. )
)
JAY GRAHAM, and CORINNE GRAHAM, )
a married couple, )
)
Respondents. )
)
HAZELRIGG, J. — Idaho business entities SE Boise Boat & RV Storage, LLC
and A Boise Project, LLC (collectively BBRV) sued Idaho residents Jay and
Corrine Graham (the Grahams) in King County alleging claims based on BBRV’s
operating agreement. The trial court granted the Grahams’ motion to dismiss
based on improper venue and, applying the lodestar method, awarded them
$21,880.20 in attorney fees and costs. BBRV asserts that the trial court abused
its discretion in failing to segregate time and limit the fee award to hours reasonably
expended. We affirm and also grant the Grahams request for attorney fees on
appeal.
Citation and pinpoint citations are based on the Westlaw online version of the cited material.
No. 79618-6-I/2
FACTS
BBRV comprises two Idaho business entities formed for the purpose of
purchasing and developing real property in Ada County, Idaho and operating a
storage facility at that property. The Grahams are residents of Idaho and members
of BBRV. The operating agreement for BBRV contains a clause designating Ada
County, Idaho as the location for venue.
On June 27, 2018, eight of BBRV’s ten members, without notice to the
Grahams, agreed to amend the operating agreement to change the location for
venue to King County, Washington. BBRV then filed suit in King County against
the Grahams alleging breach of fiduciary duty, breach of duties of good faith and
fair dealing, breach of contract, and dissociation of the Grahams from BBRV. The
Grahams filed a motion to dismiss all claims for lack of personal jurisdiction, lack
of subject matter jurisdiction, improper venue, and failure to state a claim. In its
opposition to the Grahams’ motion to dismiss, BBRV disclosed the operating
agreement amendment and asserted that venue in King County was now proper.
In reply, the Grahams argued that BBRV’s secret attempt to amend the operating
agreement was illegal under Idaho law.
On January 4, 2019, the trial court granted the Grahams’ motion to dismiss
on the basis that “[v]enue is not proper in this court under the governing operating
agreement.” The Grahams then moved for an award of $21,880.20 in attorney
fees and costs based on the BBRV operating agreement, RCW 4.28.185(5), and
equitable considerations. The motion included a request for 62.24 hours of
attorney time at an hourly rate of $290 for Washington counsel Patrick Bageant,
2
No. 79618-6-I/3
and 15.10 hours of attorney time at an hourly rate of $210 for Idaho counsel
Thomas J. Lloyd.
On January 23, 2019, the trial court entered findings of fact and conclusions
of law in support of its order awarding attorney fees and costs to the Grahams.
The court found that each of BBRV’s claims was an attempt to enforce or interpret
the BBRV operating agreement, and that dismissal of those claims entitled the
Grahams to reasonable attorney fees as the prevailing party under the language
of that contract.1 The court further found that the Grahams were entitled to fees
under RCW 4.28.185(5).2 Applying the lodestar method, the court then found that
the amount of attorney fees and costs claimed by the Grahams was reasonable.
The court entered the following pertinent findings:
With respect to Hollystone Law’s time, $290 is an extremely
reasonable rate based upon the qualifications and experience of the
relevant timekeeper, and the nature of the legal analysis required by
the Plaintiff’s claims.
....
Similarly, 62.24 hours was a reasonable amount of time to review the
record, research and prepare two legal briefs on a motion to dismiss,
and prepare for, attend, and argue the motion itself. This amount of
time is particularly fair in that it does not reflect the actual time spent.
It does not, for example, include time spent by all time keepers and
it does not even include all time spent by the primary timekeeper.
....
With respect to Elam & Burke’s time, $210 is a reasonable rate in
Boise, Idaho, and an extremely reasonable rate in Seattle,
Washington, based upon the qualification and experience of the
1
The BBRV operating agreement provides: “In the event any Proceeding is
commenced for the purpose of interpreting or enforcing any provision of this Agreement,
the prevailing party in such Proceeding shall be entitled to recover a reasonable attorneys’
fee in any such Proceeding or any appeal thereof in addition to the costs and
disbursements allowed by law.”
2
RCW 4.28.185(5) provides: “In the event the defendant is personally served
outside the state on causes of action enumerated in this section, and prevails in the action,
there may be taxed and allowed to the defendant as part of the costs of defending the
action a reasonable amount to be fixed by the court as attorneys’ fees.”
3
No. 79618-6-I/4
relevant timekeeper, and the nature of the work Plaintiffs’ claims
required . . . . As to the amount of time spent, 15.1 hours—which
represents only some but not all of the actual time devoted to this
matter—is a more-than-fair basis upon which to calculate a lodestar
for [ ] the work [that] Elam & Burke did.
....
Finally, no adjustment is warranted. The quality of Defendants’
counsel’s work is on par with or above the work produced by other
counsel working at the same rate.
Accordingly, the court awarded $21,880.20 to the Grahams, the full amount they
requested. BBRV appealed the fee award.
ANALYSIS
BBRV does not challenge the legal basis for awarding fees and costs to the
Grahams as the prevailing party. Rather, it asserts that the amount awarded was
manifestly unreasonable. We disagree.
The trial court may award attorney fees only when authorized by statute,
contract, or recognized ground of equity. Panorama Vill. Condo. Owners Ass’n Bd.
of Dirs. v. Allstate Ins. Co., 144 Wn.2d 130, 143, 26 P.3d 910 (2001). Whether a
trial court is authorized to award attorney fees is a question of law reviewed de
novo. Gander v. Yeager, 167 Wn. App. 638, 646, 282 P.3d 1100 (2012). When
attorney fees are authorized, we will uphold the attorney fee award absent a
manifest abuse of discretion. Mahler v. Szucs, 135 Wn.2d 398, 435, 957 P.2d 632(1998) (overruled on other grounds by Matsyuk v. State Farm Fire & Cas. Co., 173
Wn.2d 643, 272 P.3d 802 (2012)). A trial court abuses its discretion if its decision
is manifestly unreasonable or based on untenable grounds. Mayer v. Sto Indus.,
Inc., 156 Wn.2d 677, 684, 132 P.3d 115 (2006).
4
No. 79618-6-I/5
Trial courts apply the lodestar method of calculating reasonable attorney
fees. Ewing v. Glogowski, 198 Wn. App. 515, 521, 394 P.3d 418 (2017). The court
determines the number of hours reasonably expended in the litigation based on
documentation of the work performed and the attorney who performed the work.
Bowers v. Transamerica Title Ins. Co., 100 Wn.2d 581, 597, 675 P.2d 193 (1983).
“[T]he party seeking fees bears the burden of proving the reasonableness of the
fees.” Mahler, 135 Wn.2d at 434. The court may adjust the lodestar up or down to
reflect factors not considered in the lodestar. Ewing, 198 Wn. App. at 521. To
provide an adequate record for review, the court must enter findings of fact and
conclusions of law in support of the award. Fiore v. PPG Indus., Inc., 169 Wn. App.
325, 351, 279 P.3d 972 (2012).
BBRV asserts that the trial court erred in failing to require segregation of
hours, inconsistent with its duty to discount hours that are unreasonable under
controlling standards. It contends that it was improper for the trial court to
determine that 77.34 hours of attorney time was reasonable and to grant the full
amount of requested fees where the Grahams raised multiple alternative grounds
for dismissal but prevailed only on their venue argument.
“In determining the number of hours reasonably expended, the court ‘should
discount hours spent on unsuccessful claims, duplicated or wasted effort, or
otherwise unproductive time.’” Fiore, 169 Wn. App. at 352 (quoting Chuong Van
Pham v. City of Seattle, Seattle City Light, 159 Wn.2d 527, 538, 151 P.3d 976(2007). However, “[w]here a party achieves ‘substantial relief’ on the basis of a
set of claims involving ‘a common core of facts and related legal theories,’ it is not
5
No. 79618-6-I/6
necessary to reduce the party’s attorney fees simply because the court did not
adopt each contention raised.” Hous. Auth. of City of Seattle v. Bin, 163 Wn. App.
367, 378, 260 P.3d 900 (2011). “Litigants in good faith may raise alternative legal
grounds for a desired outcome, and the court’s rejection of or failure to reach
certain grounds is not a sufficient reason for reducing a fee. The result is what
matters.” Bright v. Frank Russell Invest., 191 Wn. App. 73, 80, 361 P.3d 245 (2015)
(quoting Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 76 L. Ed. 2d 40(1983)) (emphasis omitted).
Here, the Grahams sought and successfully obtained dismissal of BBRV’s
claims, all of which stemmed from BBRV’s attempt to enforce or interpret the
parties’ operating agreement. The court did not reject any of the Grahams’
arguments. They were entitled to defend against BBRV’s claims on every non-
frivolous argument available. In awarding attorney fees and costs to the Grahams
as the sole prevailing party, the trial court was not required to limit the award to
hours spent on the one defense on which it based its decision. Moreover, the trial
court found that the amount requested was “particularly fair in that it does not
reflect the actual time spent.” The trial court did not abuse its discretion in declining
to further segregate the fee award where the record shows counsel segregated
the petition before submitting it.
BBRV further contends that the fee award was excessive because a venue
ruling is purely procedural and does not resolve the issues on the merits. But the
BBRV operating agreement provides for an award of fees to the prevailing party in
any “[p]roceeding [ ] commenced for the purpose of interpreting or enforcing any
6
No. 79618-6-I/7
provision of this Agreement.” Dismissal on the merits is not required. Moreover,
defendants need not prevail on the merits to be entitled to fees under RCW
4.28.185(5). Voicelink Data Servs., Inc. v. Datapulse, Inc., 86 Wn. App. 613, 626-
28, 937 P.2d 1158 (1997).
BBRV next argues that the trial court should have discounted time
expended defending its breach of fiduciary duty claim, which may eventually be
resolved through litigation in Ada County, Idaho or in federal court in Boise. “It is
appropriate to discount work which could be useful in ancillary or parallel litigation.”
Absher Const. Co. v. Kent School Dist. No. 415, 79 Wn. App. 841, 847, 917 P.2d
1086 (1995). But BBRV does not assert that the Grahams are party to any pending
litigation, and counsel for the Grahams are not involved in any other case in which
BBRV is a party. We cannot say the trial court abused its discretion in declining to
discount the fee award on the basis that the Grahams might eventually need to
defend a breach of fiduciary duty claim.
Lastly, BBRV asserts that the award, which included hours billed by two
attorneys, unreasonably compensated the Grahams for duplicated effort and
overstaffing. But the Grahams were forced to hire Washington counsel solely
because BBRV improperly attempted to amend the venue clause in the operating
agreement to bring the case in King County. The additional hours were not
duplicative or wasteful.
The Grahams and BBRV each request an award of attorney fees on appeal
based on the operating agreement, RCW 4.28.185(5), and RAP 18.1.
“Reasonable attorney fees are recoverable on appeal if allowed by statute, rule, or
7
No. 79618-6-I/8
contract” and properly requested under RAP 18.1. In re Guardianship of Wells, 150
Wn. App. 491, 503, 208 P.3d 1126 (2009). Because the Grahams prevail on
appeal, they are entitled to fees and costs upon compliance with RAP 18.1(d).
Affirmed.
WE CONCUR:
8