Midtown Limited Partnership v. Thomas F. Bangasser ( 2020 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
MIDTOWN LIMITED
PARTNERSHIP, a Washington No. 78998-8-I
limited partnership; FATHOM (consolidated with
PROPERTIES LLC, a Washington 78995-3-I & 79871-5-I)
limited liability corporation; THE
MARGARET ELLEN DELANEY DIVISION ONE
TRUST, a California trust;
MARGARET E. DELANEY, an UNPUBLISHED OPINION
individual; TATOOSH LLC, a
Washington limited liability
corporation; CAROL ZAREK, an
individual; and ELIZABETH HALL, an
individual,
Respondents,
v.
THOMAS F. BANGASSER,
individually and on behalf of the
marital community of Thomas F.
Bangasser and Melissa Bangasser,
Appellant,
and
BANGASSER & ASSOCIATES, INC.,
a Washington corporation,
Defendant.
SMITH, J. — This consolidated appeal arises from the trial court’s
resolution of a fundamental partnership dispute between pro se appellant
Thomas Bangasser and the limited partners of MidTown Limited Partnership
Citations and pin cites are based on the Westlaw online version of the cited material.
No. 78998-8-I/2
(MidTown), all of whom are his siblings or entities owned by siblings.1 Thomas
argues that the trial court erred by concluding that he waived arbitration and that
MidTown’s counsel did not have a conflict of interest. He also challenges the trial
court’s award of attorney fees and costs to MidTown. We affirm and also award
attorney fees and costs to MidTown on appeal.
FACTS
MidTown is a Washington limited partnership.2 The primary asset of the
partnership was several parcels of commercial real estate in Seattle. Thomas
was the general partner of MidTown from 1988 until June 2015, when the other
four limited partners unanimously voted to remove him as general partner and
replace him with their sister Margaret Delaney due to increasing discomfort with
his management. Delaney immediately began to prepare the property for sale.
In September 2015, Thomas sued MidTown for breach of the partnership
agreement, asserting that MidTown failed to compensate him for his partnership
interest and for his past services as general partner. He also sought a security
interest in the property and the appointment of a receiver for sale of the property.
The trial court struck the lis pendens and awarded fees against him. Thomas
1
We refer to Thomas Bangasser by his first name for clarity and mean no
disrespect in doing so.
2
This is the fifth appeal arising directly or indirectly from the partnership dispute
among these parties. See Bangasser v. MidTown Limited P’ship, No. 75226-0-I (Wash.
Ct. App. Apr. 24, 2017) unpublished, http://www.courts.wa.gov/opinions/pdf/752260.pdf;
Hall v. Bangasser, No. 76077-7-1 (Wash. Ct. App. Jan. 16, 2018) unpublished,
http://www.courts.wa.gov/opinions/pdf/760777.pdf; Bangasser v. Bangasser, No. 77398-
4-I (Wash. Ct. App. Jan. 14, 2019) unpublished,
http://www.courts.wa.gov/opinions/pdf/773984.pdf; Bangasser v. Bangasser, No. 78595-
8-I (Wash. Ct. App. Oct. 14, 2019) unpublished,
http://www.courts.wa.gov/opinions/pdf/785958.pdf. The underlying facts are set forth in
those unpublished opinions and will be repeated here only as necessary.
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No. 78998-8-I/3
then amended his complaint to assert that he was wrongfully removed as general
partner, that the property was undervalued, that MidTown owed him
management fees, and that the court should intervene in the process of valuing
and distributing partnership assets. The court granted MidTown’s motion for
partial summary judgment and awarded attorney fees to MidTown, and we
affirmed. Bangasser v. MidTown Limited P’ship, No. 75226-0-I (Wash. Ct. App.
Apr. 24, 2017) unpublished, http://www.courts.wa.gov/opinions/pdf/752260.pdf.
Thomas nevertheless continued to insist that he was the sole legitimate
general partner of MidTown and to act in accordance with this position. He
insisted that the limited partners had undervalued the property, that his general
partner interest comprised more than 21 percent of the value of the partnership,
and that MidTown owed him a management fee. He notified professionals
involved in the valuation and sale of the property that they should take no further
action in selling it. He filed a lawsuit in federal district court arguing that he had
granted a right of first refusal to acquire the property to his friend Omari Tahir-
Garrett or to Africatown Community Land Trust, and he filed a lis pendens in
connection with this claim. The federal court dismissed the claim and canceled
the lis pendens. Thomas then opposed the partnership’s efforts to remove Tahir-
Garrett and a homeless encampment from the property.
On June 17, 2016, MidTown served a complaint in arbitration on Thomas
pursuant to section 13.11 of the partnership agreement, which provides that
“[a]ny dispute, controversy or claim arising out of or related to his Agreement, or
the breach thereof, shall be resolved by binding arbitration.” Thomas did not
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No. 78998-8-I/4
respond to the complaint. Instead, in a letter to the clerk of this court seeking an
amended briefing schedule, he asserted that the demand for arbitration was a
“strategy . . . intended to obstruct the orderly advance of this appeal on its
merits.”
On December 30, 2016, MidTown renewed its demand for arbitration.
Thomas’s new counsel rejected the demand:
[T]his matter already began litigation in [the first state action]
because MidTown preserved no arbitration rights thereby waiving
their arbitration rights. Furthermore, the issues involved with this
case require a judicial forum because of the various equitable
defenses we intend to present and the potential effects of the case
on the community.
In May 2017, MidTown sold the property for $23,300,000. MidTown’s
general partner set aside $5 million as a contingency for claims and lawsuits and
allocated the remaining funds equally among the five limited partners. Thomas
claimed that he had sold half of his interest in the partnership to Africatown, so
half of his share was deposited into a court registry. Because Thomas
subsequently made statements inconsistent with this position, MidTown filed an
interpleader action to determine who was entitled to those funds. The remaining
distributable funds were distributed to Thomas’s daughter and to his creditors.
On June 14, 2017, MidTown filed suit against Thomas seeking declaratory
relief on all remaining partnership disputes, including (1) the number of units
each partner held, (2) whether Thomas was a general or limited partner, (3)
whether he was owed a commission for his services as general partner, (4) how
much he was owed for his general partner interest, (5) whether the new general
partners had mismanaged the partnership or its property, (6) whether the
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No. 78998-8-I/5
property sale was reasonable and in accordance with the partnership agreement,
and (7) to whom Thomas’s general partnership interest should be paid.
Thomas’s answer did not assert a right to arbitrate. Thomas then filed numerous
counterclaims against MidTown asserting breach of the partnership agreement,
breach of fiduciary duty, piercing the corporate veil, promissory estoppel,
compensation for services to the partnership, unjust enrichment, disgorgement of
funds owing, and failure to produce records.
After the parties engaged in substantial discovery and secured a date for a
summary judgment hearing, Thomas moved to compel arbitration pursuant to the
partnership agreement. The court ruled that Thomas had waived his right to
enforce the arbitration agreement and denied the motion. The court
subsequently entered three separate partial summary judgment orders resolving
all substantive partnership issues in MidTown’s favor and dismissed Thomas’s
counterclaims. The court awarded MidTown $400,000.00 in attorney fees and
$53,441.04 in costs. Thomas appealed.
ANALYSIS
Arbitration
Thomas contends that the trial court erred in concluding that he waived
arbitration pursuant to the partnership agreement. We review an order denying a
motion to compel arbitration de novo. Verbeek Props., LLC v. GreenCo Envtl.,
Inc., 159 Wash. App. 82, 86, 246 P.3d 205 (2010).
“[W]aiver is an intentional relinquishment or abandonment of a known right
or privilege.” Schuster v. Prestige Senior Mgmt., LLC, 193 Wash. App. 616, 631,
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No. 78998-8-I/6
376 P.3d 412 (2016). “The right to arbitrate is waived by ‘conduct inconsistent
with any other intention but to forego a known right.’” Verbeek, 159 Wash. App. at
87 (quoting Lake Wash. Sch. Dist. No. 414 v. Mobile Modules Nw, Inc., 28 Wn.
App. 59, 62, 621 P.2d 791 (1980)). “Whether waiver occurs necessarily depends
on the facts of the particular case and is not susceptible to bright line rules.”
Schuster, 193 Wash. App. at 633.
“To establish waiver of the right to arbitration, the party opposing
arbitration must demonstrate ‘(1) knowledge of an existing right to compel
arbitration; (2) acts inconsistent with that existing right; and (3) prejudice to the
party opposing arbitration resulting from such inconsistent acts.’” Wiese v. Cach,
LLC, 189 Wash. App. 466, 480, 358 P.3d 1213 (2015) (internal quotation marks
omitted) (quoting Letizia v. Prudential Bache Sec., Inc., 802 F.2d 1185, 1187 (9th
Cir. 1986)).
“Washington courts apply a strong presumption in favor of arbitration.”
Heights at Issaquah Ridge Owners Ass’n v. Burton Landscape Grp., Inc., 148
Wash. App. 400, 405, 200 P.3d 254 (2009). The party opposing arbitration bears
“the burden of showing the arbitration clause is inapplicable or unenforceable.”
Otis Hous. Ass’n v. Ha, 165 Wash. 2d 582, 587, 201 P.3d 309 (2009).
Here, the trial court stated that Thomas waived his right to enforce the
arbitration clause because “the answer and counterclaim do not assert the right
to arbitration, the parties participated in substantial discovery, and this motion
was filed after plaintiffs’ motion for summary judgment was scheduled. The delay
and resulting expenses caused prejudice.” Thomas does not assign error to
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No. 78998-8-I/7
these findings, and they are verities on appeal. Cowiche Canyon Conservancy v.
Bosley, 118 Wash. 2d 801, 808, 828 P.2d 549 (1992).
Regardless, we agree with MidTown that the record amply supports a
finding of waiver. First, Thomas knew there was an existing right to enforce
arbitration. He signed the amendment adding the arbitration clause to the
partnership agreement in 2003, and he refused MidTown’s arbitration demand in
2016. Second, his acts were inconsistent with his claim of a right to arbitrate. He
filed suit in state and federal court raising disputes arising from the partnership
agreement without asserting a right to arbitration. He then disregarded or
rejected MidTown’s June and December 2016 demands for arbitration. And
when MidTown filed suit against Thomas in 2017, Thomas filed counterclaims
without asserting a right to arbitrate. Thomas did not demand arbitration until
December 2017, just as MidTown was preparing to move for summary judgment.
Third, Thomas’s refusal to arbitrate caused MidTown to incur substantial litigation
expenses. “‘When a party has expended considerable time and money due to
the opposing party’s failure to timely move for arbitration and is then deprived of
the benefits for which it has paid by a belated motion to compel, the party is
indeed prejudiced.’” Jeoung Lee v. Evergreen Hosp. Med. Ctr., 7 Wash. App. 2d
566, 585, 434 P.3d 1071 (quoting Martin v. Yasuda, 829 F.3d 1118, 1127 (9th
Cir. 2016)), review granted, 193 Wash. 2d 1029 (2019).
Thomas’s reliance on Henry Schein, Inc. v. Archer & White Sales, Inc.,
139 S. Ct. 524, 202 L. Ed. 2d 480 (2019), is entirely misplaced. The Schein court
held that “[w]hen the parties’ contract delegates the arbitrability question to an
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No. 78998-8-I/8
arbitrator, the courts must respect the parties’ decision as embodied in the
contract.” 139 S. Ct. at 531. Schein has nothing to do with waiver. Moreover,
there is nothing in the MidTown partnership agreement indicating that the parties
agreed an arbitrator would decide whether waiver had occurred.
Thomas also asserts that section 9.5 of the partnership agreement,
entitled “Value of Partnership,” confers a separate right to arbitrate the valuation
of his general partner unit. But the arbitration clause applies to “any” dispute
under the agreement, and section 9.5 is silent regarding arbitration. Thomas
waived arbitration of all issues, including valuation.
Joinder of Parties
Thomas contends that the trial court erred in failing to join his daughter
Lauren Bangasser, Africatown Community Land Trust, and MidTown Community
Land Trust as necessary parties under CR 19. But Thomas failed to raise this
issue below. In general, issues not raised in the trial court may not be raised on
appeal. RAP 2.5(a); Roberson v. Perez, 156 Wash. 2d 33, 39, 123 P.3d 844
(2005). We therefore decline to consider it.
Attorney Conflict of Interest
Thomas challenges the trial court’s finding, made in the context of its
refusal to order contempt, that there is no basis for his allegation that MidTown’s
counsel has a conflict of interest.3 Whether the circumstances demonstrate a
conflict under the ethical rules is reviewed de novo. State v. Regan, 143 Wn.
App. 419, 428, 177 P.3d 783 (2008).
3
Although Thomas assigns error to this finding, he does not challenge the trial
court’s denial of his motion for contempt on this basis.
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No. 78998-8-I/9
“The attorney-client relationship is a fiduciary one as a matter of law and
thus the attorney owes the highest duty to the client.” Perez v. Pappas, 98
Wash. 2d 835, 840-41, 659 P.2d 475 (1983). “Rules of professional conduct should
be construed broadly to protect the public from attorney misconduct.” In re
Marriage of Wixom, 182 Wash. App. 881, 898, 332 P.3d 1063 (2014).
RPC 1.7 prohibits a lawyer from representing a client if a concurrent
conflict of interest exists. “A concurrent conflict of interest exists if: (1) the
representation of one client will be directly adverse to another client; or (2) there
is a significant risk that the representation of one or more clients will be materially
limited by the lawyer’s responsibilities to another client, a former client or a third
person or by a personal interest of the lawyer.” RPC 1.7(a). “[T]he phrase
‘significant risk’ underscores that this inquiry does not require a fully materialized
conflict, but rather looks to the potential for conflict.” Arden v. Forsberg &
Umlauf, PS, 189 Wash. 2d 315, 326, 402 P.3d 245 (2017). “A lawyer represents
conflicting interests when, on behalf of one client, it is the lawyer's duty to
contend that which the lawyer’s duty to another client requires him or her to
oppose.” Wixom, 182 Wash. App. at 898.
Thomas appears to argue that MidTown’s counsel represented conflicting
interests by representing both the partnership and its majority partners against
him. But Thomas sued MidTown in 2015 after his removal as general partner,
thereby placing his interests at odds with theirs. MidTown’s counsel then
represented the partnership, its general partner, and the majority limited partners
in litigation against Thomas. MidTown’s counsel never represented Thomas. “A
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No. 78998-8-I/10
lawyer employed or retained by an organization represents the organization
through its duly authorized constituents.” RPC 1.13(a). And a lawyer
representing an organization “may also represent any of its directors, officers,
employees, members, shareholders or other constituents.” RPC 1.13(g).
Nothing in these rules prevents MidTown’s counsel from representing the
interests of the partnership and its majority partners against Thomas, a minority
partner. Cases cited by Thomas are factually distinguishable and entirely
inapposite. There is no conflict of interest.
Summary Judgment
Thomas challenges all three orders granting partial summary judgment in
favor of MidTown. We review summary judgment orders de novo. Hayden v.
Mut. of Enumclaw Ins. Co., 141 Wash. 2d 55, 63-64, 1 P.3d 1167 (2000). Summary
judgment is appropriate when there is no genuine issue of material fact and the
moving party is entitled to a judgment as a matter of law. CR 56(c); Kruse v.
Hemp, 121 Wash. 2d 715, 722, 853 P.2d 1373 (1993).
Thomas argues that these orders should be overturned based on the
alleged conflict of interest, but he does not provide any substantive analysis or
identify an issue of material fact that should have prevented the rulings. Claims
presented without meaningful analysis also need not be considered. Norcon
Builders, LLC v. GMP Homes VG, LLC, 161 Wash. App. 474, 486, 254 P.3d 835
(2011). Regardless, his conflict of interest claim lacks merit.
Thomas further asserts that the trial court failed to identify the evidence it
relied on in granting summary judgment, but he is incorrect. He also challenges
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No. 78998-8-I/11
the orders on the basis that the trial court failed to identify the specific facts that
were contested and uncontested. But findings of fact are not necessary on
summary judgment. Davenport v. Wash. Educ. Ass’n, 147 Wash. App. 704, 715
n.23, 197 P.3d 686 (2008).
Thomas also claims that the trial court erred in dismissing MidTown’s
untried damages claims without prejudice. But CR 41(a)(1)(B) requires that a
trial court dismiss a case “[u]pon motion of the plaintiff at any time before plaintiff
rests at the conclusion of plaintiff's opening case.” MidTown so moved, and
dismissal without prejudice was entirely proper.
Attorney Fees
Thomas contends that the trial court erred in entering an award of attorney
fees without including appropriate findings and conclusions in the record and
clear supporting documentation for its lodestar calculation. We disagree.
We will uphold an attorney fee award unless we find the trial court
manifestly abused its discretion. Ewing v. Glogowski, 198 Wash. App. 515, 521,
394 P.3d 418 (2017). A trial court abuses its discretion when it exercises
discretion on untenable grounds or for untenable reasons. Chuong Van Pham v.
City of Seattle, 159 Wash. 2d 527, 538, 151 P.3d 976 (2007).
The trial court uses the lodestar calculation to determine reasonable
attorney fees. Berryman v. Metcalf, 177 Wash. App. 644, 660, 312 P.3d 745
(2013). The lodestar is “the number of hours reasonably expended on the
litigation multiplied by a reasonable hourly rate.” Berryman, 177 Wash. App. at
660. The requesting attorney must provide reasonable documentation of their
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work performed. Bowers v. Transamerica Title Ins. Co., 100 Wash. 2d 581, 597,
675 P.2d 193 (1983). “The court must limit the lodestar to hours reasonably
expended, and should therefore discount hours spent on unsuccessful claims,
duplicated effort, or otherwise unproductive time.” Bowers, 100 Wash. 2d at 597.
Thomas asserts that the fee award should be reversed and remanded to
arbitration due to conflict of interest and to provide a meaningful record of the
amount and basis for the award. But the trial court based its award on detailed
findings and conclusions. It found that the rates charged were reasonable, that
Thomas prevailed on no claims, that his inconsistent positions and refusal to
arbitrate increased the cost of litigation, and that MidTown was the prevailing
party except with respect to the damages claims it voluntarily dismissed.
Moreover, the $400,000 attorney fee award was a substantial reduction from the
lodestar. The trial court did not abuse its discretion.
Attorney Fees on Appeal
Thomas and MidTown both request attorney fees on appeal. RAP 18.1
permits a party to recover attorney fees on appeal where authorized by
applicable law. “A contractual provision for an award of attorney’s fees at trial
supports an award of attorney’s fees on appeal under RAP 18.1.” W. Coast
Stationary Eng’rs Welfare Fund v. City of Kennewick, 39 Wash. App. 466, 477, 694
P.2d 1101 (1985).
Here, section 13.10 of the MidTown partnership agreement provides: “In
the event of any litigation arising out of this Agreement, the prevailing party shall
be entitled to reasonable attorneys’ fees and court costs.” Accordingly, we award
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fees and costs incurred in the present appeal to MidTown as the prevailing party,
subject to compliance with RAP 18.1.
Affirmed.
WE CONCUR:
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