Robert Emerick, V Cardiac Study Center, Inc,ps , 189 Wash. App. 711 ( 2015 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DR. ROBERT EMERICK, M.D.,
No. 72834-2-1
Appellant/Cross Respondent,
DIVISION ONE
rr r-170 Wn. App. 248, 286 P.3d 689(2012) (Emerick I).
Relying on the trial court's favorable judgment, but while CSC's appeal was
pending, Emerick opened a new practice, Choice Cardiovascular. Emerick opened the
practice about a quarter of a mile away from one of CSC's Pierce County offices in June
2011. Emerick describes Choice Cardiovascular as a unique concierge cardiovascular
medicine practice that is different than CSC's "traditional" practice.
In Emerick I, Division Two held that the trial court misapplied Washington law when
it granted Emerick's motion for summary judgment. Id. at 250. The Emerick I court said
the trial court erred, because it did not apply the three part test established by the
Washington Supreme Court for determining whether a noncompete covenant is
reasonable.1 jd, at 259. Consequently, it reversed the trial court's order granting
1The test for reasonableness asks (1) whether the restraint is necessary to protect
the employer's business or goodwill, (2) whether it imposes on the employee any greater
restraint than is reasonably necessary to secure the employer's business or goodwill, and
No. 72834-2-1/4
summary judgment, vacated the attorney fee award to Emerick, and remanded for further
proceedings. jd\ It also awarded CSC its statutory attorney fees. ]g\ Emerick filed a
petition for review to the Washington Supreme Court, and it was denied. See Emerick v.
Cardiac Studv Ctr.. Inc.. 175 Wn.2d 1028, 291 P.3d 254 (2012).
On May 17, 2013, on remand, CSC again filed a motion for summary judgment to
enforce the noncompete covenant. On September 11, 2013, the trial court entered an
order granting CSC's motion for summary judgment enforcing the noncompete covenant
and providing CSC injunctive relief. It concluded that the noncompete covenant is
necessary to protect CSC's protectable business interests. But, it also concluded that the
covenant not to compete in paragraph 13(e) is overly broad and unreasonable and
therefore unenforceable with respect to its geographic and temporal restraints. As a
result, the trial court reformed the covenant to reduce the geographical limitations on
Emerick's cardiology practice to a two mile radius of CSC's current offices and reduced
the temporal restriction to four years. The trial court found that the four years began in
September 2009 when Emerick was terminated. It deducted 20 months from that four
year period for the time between September 2009 and June 2011 before Emerick began
improperly competing with CSC. The trial court ordered that the remaining 28 months,
would begin once Emerick relocated his new practice. The trial court clarified that nothing
would enjoin Emerick from practicing cardiology at a hospital or emergent care clinic,
making house calls, prescribing medicine, ordering tests, or otherwise caring for patients,
(3) whether enforcing the covenant would injure the public through loss of the employee's
service and skill to the extent that the court should not enforce the covenant, i.e., whether
it violates public policy. Perry v. Moran. 109 Wn.2d 691, 698, 748 P.2d 224 (1987),
judgement modified on recons. on other grounds. 111 Wn.2d 885, 766 P.2d 1096 (1989).
No. 72834-2-1/5
and nothing would preclude a patient from selecting the cardiologist of his or her choice.
Finally, the trial court concluded that CSC obtained injunctive relief and substantial
enforcement of the noncompete agreement against Emerick and was thus the
substantially prevailing party.
On September 25, 2013, CSC, as the substantially prevailing party, moved for
attorney fees. On October 18, 2013, the trial court entered its judgment and findings of
fact and conclusions of law regarding the award of attorney fees and costs to CSC. It
concluded that CSC was entitled to attorney fees and costs for all activities, hearings, and
motions related to the litigation except the fees and costs of the Emerick I appeal. The
trial court found that the fees on the appeal were denied by Division Two and declined to
award them.
Emerick appeals the trial court's order granting CSC's motion for summary
judgment, its judgment and order granting CSC's motion for prevailing party attorney fees
and costs, and its findings of fact and conclusions of law regarding CSC's award of
attorney fees and costs. Specifically, Emerick claims the trial court erred when it granted
CSC injunctive relief beyond the terms of the noncompete, when it found that CSC was
the substantially prevailing party, and when it awarded attorney fees without making
necessary reductions. CSC cross appeals the trial court's denial of its request for fees
from its earlier successful appeal.
No. 72834-2-1/6
DISCUSSION
I. Reasonabilitv and Enforceability of the Noncompete Covenant
Emerick argues that the trial court erred in granting CSC's motion for summary
judgment. Specifically, he argues that the covenant, even as reformed, is unreasonable
and unenforceable.
This court reviews a grant or denial of summary judgment de novo. Washburn v.
City of Federal Way. 169 Wn. App. 588, 609, 283 P.3d 567 (2012), affd, 178 Wn.2d 732,
310 P.3d 1275 (2013). Summary judgment is appropriate where there is no genuine issue
as to any material fact and the moving party is entitled to judgment as a matter of law.
CR 56(c). In conducting this inquiry, the court must view all facts and reasonable
inferences in the light most favorable to the nonmoving party. Hisle v. Todd Pac.
Shipyards Corp.. 151 Wn.2d 853, 860-61, 93 P.3d 108 (2004).
As a preliminary matter, Emerick argues that summary judgment was inappropriate
because there are disputed material facts as to the reasonableness of the noncompete
covenant. These facts include whether (1) Emerick traded on CSC's goodwill in
establishing his new practice, (2) Emerick is in competition with CSC, (3) CSC has any
goodwill to protect given Emerick's unique practice, different patient pool, and ability to
continue seeing patients that he treated while working for CSC, and (4) the location of
Emerick's new practice unreasonably competes with CSC's location given the fact that
Emerick has no signage and cannot be seen from CSC's office. Emerick contends that
he raised these genuine issues of material fact below and CSC failed to rebut them,
relying instead on conclusory statements.
No. 72834-2-1/7
But, these facts go to whether Emerick's current cardiology practice is causing
actual harm to CSC, which has no bearing on the reasonableness and enforceability
determination. That determination considers the reasonability of the noncompete
covenant as written as opposed to whether and how much the employer experiences
actual harm and competition.2
Under Washington law, noncompete covenants are enforceable if they are
reasonable and lawful. Emerick I, 170 Wn. App. at 254. The determination of whether a
covenant is reasonable is a question of law. See Alexander & Alexander, Inc. v.
Wohlman, 19 Wn. App. 670, 684, 578 P.2d 530 (1978). As the reasonability of the
noncompete covenant is a legal question, this court's review is de novo. Labriola v.
Pollard Grp.. Inc.. 152 Wn.2d 828, 832, 100 P.3d 791 (2004).
The three part test for reasonableness asks (1) whether the restraint is necessary
to protect the employer's business or goodwill, (2) whether it imposes on the employee
any greater restraint than is reasonably necessary to secure the employer's business or
goodwill, and (3) whether enforcing the covenant would injure the public through loss of
the employee's service and skill to the extent that the court should not enforce the
covenant, i.e., whether it violates public policy. Perry v. Moran, 109 Wn.2d 691, 698, 748
2 It is worth noting that much of the case law considering the enforceability and
reasonability of noncompete covenants does discuss whether the employee was actually
in competition at the time the action commenced. See, e.g., Perry, 109 Wn.2d at 694;
Knight, Vale. Gregory & McPaniel. 37 Wn. App. 366, 367, 680 P.2d 448 (1984). But,
those cases are all breach of contract cases where the employer needed to prove actual
harm—not actions for declaratory relief where only general covenant enforceability was
at issue. Perry. 109 Wn.2d at 694; McPaniel, 37 Wn. App. at 367; Nw. Indep. Mfrs. v.
Dep't of Labor & Indus.. 78 Wn. App. 707, 712, 899 P.2d 6 (1995).
No. 72834-2-1/8
P.2d 224 (1987), judgment modified on recons. on other grounds. 111 Wn.2d 691, 748
P.2d 224 (1987).
A. Necessary for Employer
The first factor in the three part test is whether the noncompete restraint is
necessary to protect the employer's business or goodwill. ]d.
A restrictive covenant protects an employer's business as warranted by the nature
of employment. Wood v. May. 73 Wn.2d 307, 310, 438 P.2d 587 (1968). An employee
who joins an established business gains access to his employer's customers and
acquires valuable information as to the nature and the character of the business, jd. This
exposure to the employer's clients and business model allows the employee to compete
with his employer after he leaves the employment, jd. To protect the employer's
business, equity allows the employer to require the employee to sign a noncompetition
agreement, jd.
Specifically, the law in Washington is clear that an employer has a " 'legitimate
interest in protecting its existing client base'" and in prohibiting the employee from taking
its clients. Emerick I, 170 Wn. App. at 255 (quoting Perry. 109 Wn.2d at 700). And,
Washington courts have recognized the importance of an employer investment, providing
office space, equipment, and an existing patient following, in the medical noncompete
agreement context. Ashley v. Lance. 75 Wn.2d 471, 476, 451 P.2d 916 (1969).
Here, there is clear evidence in the record that CSC had protectable goodwill and
business interests. CSC spent 40 years developing goodwill in the community before it
hired Emerick. Before Emerick arrived, CSC was a well-established, longstanding
cardiology practice with a large patient census, a highly recognized name, a strong
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No. 72834-2-1/9
reputation, and referral sources through all of its long established relationships. Emerick
acknowledged these facts when he signed the Agreement, and, as a shareholder, he
would have had the benefit of enforcing the noncompete against any other departing
member.
Further, CSC provided Emerick with an immediate client base and established
referral sources when Emerick moved to Washington to practice in an oversaturated and
competitive cardiology market.3 Emerick, as a shareholder, benefitted from CSC's
reputation, connections, and facilities. And, he was privy to information about CSC's
business—including confidential information.
Still, Emerick argues that CSC failed to demonstrate why the noncompete was
necessary to protect its goodwill and business interests. He contends that it was not
enough that CSC prove, via generalized statements, that it has protectable business
interests. He claims that CSC needs to prove that the noncompete is necessary to protect
its business interests, because Emerick has already taken actual affirmative steps to
threaten CSC's business interests.
He is wrong. CSC needs to demonstrate a protectable interest exists and that
Emerick could pose a threat to that interest if not adequately restrained. CSC has done
so. It does not have to prove actual competition or damages. Emerick does not dispute
that he could have competed and damaged CSC. He merely asserts that he has not
relied on CSC's referral sources or traded on his prior employment at CSC since leaving
3 Emerick argues that CSC's claim that its client base is a protectable business
interest is belied by the fact that CSC acknowledged that Emerick can continue seeing
the patients he treated while he was employed by CSC. But, that argument acknowledges
both that the interest exists and that only a portion of it is not subject to protection.
No. 72834-2-1/10
CSC, and therefore the enforcement of the covenant is not necessary. But, it is the
potential to compete—not the actual competition—that makes the noncompete
necessary. In fact, he has an office in close proximity to CSC from which he practices
cardiology. The risk is clear, as is the need for the restraint.
We hold that CSC had business interests and goodwill to protect and that the
noncompete agreement was necessary to protect those interests.4
B. Scope of Restraint
The second reasonableness factor focuses on the extent to which the covenant
adversely affects the employee's ability to earn a living. Emerick I, 170 Wn. App. at 256.
Generally, a court determines the reasonableness of a covenant by analyzing its
geographic and temporal restrictions. See Wood. 73 Wn.2d at 311-12. If the trial court
determines that certain terms of the covenant are unreasonable—such as the geographic
and temporal scope of the restraint—the entire covenant does not fail. |cL at 312. The
court should still seek to enforce the covenant to the extent reasonably possible to
accomplish the contract's purpose.5 jd. Specifically, the court considers whether partial
4 Emerick also relies on an unpublished federal order to argue that the noncompete
covenant here fails under this first factor of the test, because noncompete covenants
should never create general restrictions on competition. See Order of the U.S. District
Court, Amazon.com. Inc. v. Powers. 2012 WL 6726538, at *9 (W.D. Wash. Dec. 27,
2012). But, even assuming Amazon was binding authority on this court, the Amazon
court conceded that although Washington courts have looked more favorably on
restrictions against working with specific former clients or customers, Washington courts
will enforce general noncompetition restrictions that apply in a limited geographical area.
Id. at *9. Here, the trial court enforced the noncompete, but with geographic restrictions.
Therefore, Emerick fails to provide support for his assertion that the generally restrictive
nature of the noncompete is per se unnecessary to protect CSC's interests.
5 Emerick also agreed to this partial enforcement when he signed the Agreement.
Paragraph 13(f) of the Agreement stated that "In the event a court of competent
jurisdiction should decline to enforce any provision of paragraph 13(e), such paragraph
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No. 72834-2-1/11
enforcement is possible without injury to the public and without injusticeto the parties, jd.
at 313.
In Emerick I, Division Two instructed the trial court to balance CSC's actual
protectable business interests against the time and geographic restrictions on Emerick's
ability to earn a living. 170 Wn. App. at 257. On remand, as to the geographic restriction,
the trial court accepted CSC's concession that the covenant as written—preventing
Emerick from practicing in all of Pierce County and Federal Way—was too broad. The
trial court took judicial notice of a map of Pierce County and concluded that a two mile
area of protection around each of CSC's offices would serve to protect CSC's business
interests, but would also allow Emerick viable areas of Pierce County in which to locate
his practice. And, the trial court emphasized that the noncompete covenant does not
restrict Emerick's ability to work at any hospital. As to the temporal restriction, the trial
court reformed the covenant's original restraints to four years instead of the five years
originally in the covenant. It reasoned that four years would be appropriate to protect
CSC's interests in being free of competition from Emerick and that it would be a
reasonable amount of time for Emerick to build a practice at a place that is reasonably
distant from CSC's current offices.
Under the terms of the reformed noncompete covenant, Emerick can practice
cardiology at a hospital or emergent care clinic, make house calls, prescribe medicine,
order tests, set up an office outside of the geographically limited area, and otherwise care
for patients he previously treated at CSC or any other patients who wish to see him.
shall be deemed to be modified to restrict [Emerickj's competition with [CSC] to the
maximum extent, in both time and geography, which the court shall find enforceable."
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No. 72834-2-1/12
Emerick is only precluded from establishing an office within the geographical areas set
by the terms of the covenant and from soliciting CSC's patients. Still, Emerick argues
that the geographic and temporal restraints the covenant imposes—even the reformed
restraints—are excessive and unreasonable.6
Emerick argues that as a matter of law, the temporal restraint is unreasonable,
because no Washington appellate court has ever found that a four or five year restrictive
covenant is reasonable. He cites to Perry in which the court stated, "It may be that a
clause forbidding [accounting services] for a 5-year period is unreasonable as a matter
of law." 109 Wn.2d at 703-04. But, the Perry court did not hold that a five year
noncompete is unreasonable as a matter of law. And, the noncompete at issue in Perry
did not have geographical limitations7—distinguishing it from the temporally and
geographically limited noncompete at issue here. Id. at 693, 701-02.
Emerick also relies on Armstrong v. Taco Time International. Inc.. 30 Wn. App.
538, 541, 635 P.2d 1114 (1981) to support that no Washington appellate court has ever
found a four or five year temporal restraint reasonable. The original noncompete
covenant in Taco Time prevented former franchisees from selling Mexican food nationally
6 Emerick contends that this court must consider the reasonableness of the
geographic and temporal limitations separately. In so far as Emerick urges this court to
completely divorce the reasonability of the noncompete covenant's temporal limitation
from the geographic limitations, his argument is flawed. While courts have engaged in
the geographic and temporal reasonableness analyses separately, Emerick points to no
authority that explicitly says the two factors must be considered in isolation.
7 Emerick also relies on Labriola. 152 Wn.2d at 847 (Madsen, J., concurring) for
the assertion that broad sweeping postemployment restraints that generally limit
competition are never reasonable. But, the majority in Labriola did not reach the
determination as to whether the noncompete agreement was reasonable. ]<± at 842.
And, the noncompete agreement analyzed in Justice Madsen's concurrance in Labriola
was much broader in geographical scope (75 miles) than the noncompete covenant here.
Id, at 847, 831.
12
No. 72834-2-1/13
for five years after termination of the franchise, jd. at 540. The trial court reduced the
five year noncompete to two-and-a-half-years, jd. at 541. The Court of Appeals also
reformed the geographic restrictions of the noncompete. Id. at 545. It reduced the
national scope of the covenant to areas covered by existing franchise agreements with
which the former franchisee would be competing, ]d_. Even though the covenant in Taco
Time was reformed to a shorter duration than the four or five years here, the geographic
limitations in Taco Time were more restrictive and had the potential to exclude very large
geographic areas. See id. Therefore, Emerick errs in so far as he relies on Taco Time
for the assertion that two-and-a-half-years is a more appropriate temporal restriction
without considering the connected geographic limitations.
Emerick argues that although the trial court correctly concluded that the original
five year temporal restraint was unreasonable, it erred when it rewrote the restraint for
"such a lengthy time period"—four years. But, none of the case law cited leads us to
conclude that Emerick's argument that a four or five year temporal term in a noncompete
covenant is per se unreasonable as a matter of law. The temporal term must be
considered in the context of the entire convenant.
Emerick also argues that the trial court erred in concluding that a two mile
geographic restriction is reasonable. Emerick argues that there is no evidence in the
record showing that such a restriction is necessary to preserve CSC's legitimate business
interests. In support of his argument, Emerick once again relies on evidence that his new
practice is not attracting any patients or business away from CSC. This argument is
misplaced. The necessity of some restriction was addressed in consideration of the first
13
No. 72834-2-1/14
factor. Consideration of duration and geography are more properly focused on whether
the restriction is excessive.
Washington courts have previously concluded that geographically restricted areas
greater than two miles are reasonable. See, e.g.. Taco Time. 30 Wn. App. at 544-45(concluding that a 25 mile geographic limitation might be insufficient to protect franchisees
from competition); Alexander. 19 Wn. App. at 687-88 (concluding that a geographic
limitation of the "greater Seattle area" was reasonable). None of the case law cited
establishes that the two mile geographic restraint is per se unreasonable as a matter of
law.
Under the reformed noncompete, Emerick is not restrained from practicing
cardiology at any hospital or emergent care clinic, making house calls, prescribing
medicine, ordering tests, or otherwise caring for patients. While Emerick is restricted from
establishing a practice within a two mile radius of any existing CSC office for four years,
the reformed noncompete does not preclude him from establishing a competitive
cardiology practice immediately outside of the restricted area. Emerick has not
established, on balance, that the reformed noncompete covenant as a whole
unreasonably infringes on his ability to earn a living in cardiology or that it provides
unreasonable protection to CSC.
We conclude that the temporal and geographic scope of the reformed covenant is
reasonable.
C. Public Policy
The public policy factor of the three part reasonableness test requires the court to
balance possible harm to the public by not enforcing the covenant against the employer's
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No. 72834-2-1/15
right to protect its business. Wood. 73 Wn.2d at 309-10. Emerick first argues that CSC's
noncompete covenant creates a substantial risk of injury to the public and that restrictive
covenants against doctors violate public policy as a matter of law. In so arguing, Emerick
effectively asks this court to disregard the first two factors of three part test.
In Emerick I, Division Two reiterated the three part test and stated that
"Washington courts have not yet held that restrictive covenants between physicians are
unenforceable." 170 Wn. App. at 259. The Emerick I court criticized Emerick's argument
that the balancing was unnecessary and criticized his reliance on cases from other
jurisdictions that have declined to enforce covenants between physicians, jd. at 258-59.
It reasoned that reliance on cases from other jurisdictions was inappropriate, because
some of the other jurisdictions have legislatively precluded restrictive covenants in a
medical setting and Washington has not done so. jd. And, it cited to Ashley. 75 Wn.2d
473, where the Washington Supreme Court upheld a noncompete agreement among
physicians. Emerick 1.170 Wn. App. at 259. After Emerick Iwas decided, the Washington
Supreme Court denied Emerick's petition for review. See Emerick v. Cardiac Studv Ctr..
Inc.. 175 Wn.2d 1028, 291 P.3d 254 (2012).
Therefore, to the extent Emerick claims that all noncompete covenants between
physicians are void as a matter of public policy—and attempts to avoid engaging in the
requisite three part analysis and individualized balancing test under Washington law—his
argument fails. But, we must still consider whether enforcement of the covenant creates
a possibility of harm to the public. See Emerick I, 170 Wn. App. at 257. Such harm may
include restraint of trade, limits on employment opportunities, and denial of public access
15
No. 72834-2-1/16
to necessary services. |d_, And, if necessary, we must balance these concerns against
the employer's right to protect its business, id.
Under the reformed covenant, Emerick is able to practice in Pierce County and
Federal Way. The proscribed areas are circles of a two mile radius. This would not force
Emerick's patients to travel inordinate distances. And, nothing in the covenant would
preclude Emerick from practicing cardiology on his former or new patients at any hospital
or preclude a patient from selecting and using the cardiologist of his or her choice.
Therefore, we conclude that the reformed covenant does not result in denial of public
access to necessary services or cause any other harm to the public.
After applying the appropriate three part test, we conclude that the reformed
noncompete covenant is reasonable and enforceable.
II. Injunctive Relief
Next, Emerick argues that even if the covenant as reformed by the trial court is
reasonable and enforceable as written, the trial court erred when it granted injunctive
relief and when it tolled the duration of the noncompete until Emerick relocates his office.
The trial court ordered that for 28 months after Emerick relocates his cardiology
practice from its current address, Emerick is enjoined from maintaining his practice in a
location within two miles of CSC's offices. The trial court reasoned that Emerick was not
competing with CSC from his termination in September 2009 to June 2011 when he
opened his practice—20 months. Therefore, it concluded that Emerick was entitled to
credit for those 20 months and needed to honor only the remaining 28 months of the 48
month restriction.
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No. 72834-2-1/17
Because a trial court has broad discretionary authority to fashion equitable
remedies, this court reviews such remedies under the abuse of discretion standard.
Cornish College of the Arts v. 1000 Virginia Ltd. P'ship. 158 Wn. App. 203, 221, 242 P.3d
1 (2010).
Emerick first argues that injunctive relief is not available after a noncompete
covenant expires.8 He cites to Alexander for this assertion. In Alexander, the Court of
Appeals held that because the noncompete covenant had expired by the time the case
reached the Court of Appeals, it was not within its authority to award injunctive relief. See
19 Wn. App. at 688. But, it specifically stated that had the trial court found that the
noncompete covenants were valid, it could have granted injunctive relief because the
covenant had not yet expired at that point, jd.
Here, at the time the trial court ordered the injunctive relief, September 11, 2013,
the original terms of the five year noncompete had not yet expired. The original five year
noncompete would not have expired until September 30,2014. Because the noncompete
covenant was still viable at the time the trial court awarded the injunctive relief, this case
is distinguishable from Alexander.
Emerick's reliance on National School Studios, Inc. v. Superior School Photo
Service, Inc.. 40 Wn.2d 263, 242 P.2d 756 (1952) and Economics Laboratory. Inc. v.
Donnolo. 612 F.2d 405 (9th Cir. 1979) is similarly misplaced. In National Schools, the
8 Emerick also assigned error to the trial court's conclusion that he was in
competition with CSC in violation of the noncompete covenant and claims that there are
disputed facts that exist as to whether injunctive relief is even appropriate. But, he
provides no additional argument or authority to support it. A party waives an assignment
of error not adequately argued in its brief. Milligan v. Thompson, 110 Wn. App. 628, 635,
42 P.3d 418 (2002); see RAP 10.3(a)(6).
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No. 72834-2-1/18
trial court declined to order injunctive relief. 40 Wn.2d at 265. The Washington Supreme
Court found that the question was moot, because no judgment it entered for injunctive
relief could have become effective prior to the expiration of the restrictive covenant. Id.
at 270. Here, although the original restrictive period has now elapsed, we are not in a
position where we need to order injunctive relief—the trial court has already done so.
And, it did so prior to the expiration of the original restrictive period. In Economics
Laboratory, the Ninth Circuit concluded that the district court should have denied a
request for an injunction that was first made after the restrictive period had elapsed. 612
F.2d at 408. Again, in Emerick's case, the trial court ordered injunctive relief during the
original restrictive period.
Next, Emerick argues that the trial court had no basis to toll the running of the
noncompete covenant. And, Emerick argues that the tolling effectively granted CSC a
seven year restrictive covenant in excess of what was bargained for or what is
reasonable.
But, in so arguing, Emerick is effectively asking this court to credit Emerick with
two years of compliance with the noncompete covenant when he has been practicing
cardiology in violation of the covenant. Ifwe were to accept Emerick's argument that the
covenant should not have been tolled, the restrictive covenant would have expired
September 30, 2013. That would mean that Emerick used the litigation to his
advantage—the covenant would have expired before resolution of the dispute and
Emerick would have violated the restrictive covenant without consequence.
The trial court granted the injunctive relief just days before the noncompete
covenant would have expired. We conclude that trial court was within its equitable
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No. 72834-2-1/19
authority and did not abuse its discretion when it tolled the running of the noncompete
covenant until Emerick is in compliance to ensure that Emerick was not rewarded for his
violation of the covenant. The trial court did not abuse its discretion when it granted
equitable relief that provides CSC the benefit of its bargain.9
III. Substantially Prevailing Party
Emerick also contends that the trial court erred when it concluded that CSC was
the substantially prevailing party. Specifically, Emerick claims that, because the trial court
rejected the relief sought by both parties and instead granted relief neutral to each party's
requests, neither party is the prevailing party.
In general, a prevailing party is one who receives an affirmative judgment in his or
her favor. Riss v. Angel. 131 Wn.2d 612, 633, 934 P.2d 669 (1997). If neither party
wholly prevails, then the determination of who is a prevailing party depends upon who is
the substantially prevailing party, jd. at 633-34. This question depends upon the extent
of the relief afforded the parties. Id Whether a party is a prevailing party is a mixed
question of law and fact that this court reviews under an error of law standard. Cornish
College. 158 Wn. App. at 231.
Emerick first claims that, because the trial court concluded that CSC's noncompete
was unreasonable and unenforceable, the court granted Emerick the relief he sought from
the outset. At the outset of the litigation, Emerick filed a complaint seeking declaratory
relief that paragraph 13 of the Agreement—in its entirety—is void and unenforceable as
9 Moreover, although Emerick's relocation may come at great expense and
inconvenience to him, that need not inform our decision. Emerick took a calculated risk
by opening his practice in June 2011 while the appeal in Emerick I was pending. And,
the trial court considered the expense and inconvenience to Emerick when it made its
ruling. As such, it provided Emerick nearly eight months to relocate his office.
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No. 72834-2-1/20
against public policy. Emerick sought a permanent injunction enjoining CSC from
enforcing paragraph 13 and a judgment declaring paragraph 13 unenforceable.
Conversely, CSC sought declaratory relief that the noncompete covenant is enforceable.
Emerick argues that the trial court must have found the noncompete covenant
unenforceable before it could revise the agreement. He relies on Perry for the assertion
that a modification to a covenant is proper only where the original covenant is
unenforceable. But, Emerick's reliance on Perry for that assertion is misplaced. The
Perry court concluded that the trial court erred in modifying the covenant, because the
covenant there was reasonable and therefore did not require modification. 109 Wn.2d at
703. It did not hold that a trial court must find the entirety of a restrictive covenant
unenforceable before it may modify it.
Moreover, the trial court did not conclude that the noncompete was unreasonable
and totally unenforceable. Rather, it concluded, "The covenant not to compete ... is
overly broad, unreasonable and therefore unenforceable with respect to the geographic
(Pierce County and Federal Way, Washington) and temporal (60 months) restraints it
seeks to impose, as those restraints are greater than is reasonably necessary to protect
Defendant's interests."
Emerick then relies on authority from other jurisdictions. Specifically he contends
that there is no reported Washington decision addressing whether there is a prevailing
party for purposes of attorney fees when the trial court modifies a noncompete covenant.
But, there is analogous case law that states that simply because one party is not afforded
as much relief as is originally sought, does not mean that the opposing party has obtained
relief. Silverdale Hotel Associates v. The Lomas & Nettleton Co.. 36 Wn. App. 762, 774,
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No. 72834-2-1/21
677 P.2d 773 (1984). In Silverdale. Lomas & Nettleton argued that neither party prevailed
in the case, because both parties received relief. See Id. But, the court rejected that
argument stating that just because the damages against Lomas & Nettleton were not as
high as Silverdale originally prayed for, does not mean that Lomas & Nettleton received
relief. Id. at 774. Similarly, here, just because certain terms of the noncompete were
modified, does not mean that Emerick received relief when the covenant was still
substantially enforced.
The trial court did not err when it concluded that CSC was the substantially
prevailing party.
IV. Fee Award Calculation
Emerick argues that the trial court abused its discretion when it awarded CSC
$204,251.39 in attorney fees and costs. The trial court's fee award included expenses
for all activities, hearings, and motions related to this litigation, including those through
the entry of the findings and conclusions related to the attorney fee award. We review an
award of attorney fees for abuse of discretion. Steele v. Lundgren. 96 Wn. App. 773, 780,
982 P.2d 619 (1999).
Emerick first argues that CSC's fees should be limited to the amount of fees for
prevailing on its motion for summary judgment. He further argues that CSC is not entitled
to fees for claims on which it was previously unsuccessful. But, Emerick provides no
authority to support either of these assertions. Therefore, he has not established that the
trial court abused its discretion.
Emerick also contends that CSC is not entitled to attorney fees for administrative
tasks performed by attorneys. He contends that CSC billed $3,275 in attorney time for
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administrative tasks. Emerick requested a reduction of the same amount of fees for
administrative tasks below. While compensation for administrative tasks such as
preparing pleadings for duplication, delivering copies, and requesting copies, are not
within the realm of reasonable attorney fees, the trial court acknowledged that CSC
excluded those billings. N. Coast Elec. Co. v. Selig. 136 Wn. App. 636, 644, 151 P.3d
211 (2007). The trial court found that CSC reduced its request for attorney fees by $6,326
or other noncompensable time included in the billing records. It reasoned that this amount
exceeded the amount of reductions Emerick sought. On appeal, Emerick does not
specify why the $6,326 reduction was inadequate to address the administrative tasks in
the billing. As such, we have no grounds upon which to conclude the trial court abused
its discretion in refusing to reduce the fee award further.
Emerick then contends that the trial court improperly awarded CSC attorney fees
for matters unrelated to the litigation. Specifically, he contends that CSC was not entitled
to fees for its efforts to terminate Emerick, to determine its potential conflicts of interest,
corporate work for CSC, legal action CSC considered against nonparties, and its work on
malpractice coverage. But, Emerick provides no authority to support the assertion that
the trial court did not exclude fees for unrelated work nor does he provide specific
argument or authority indicating that the trial court abused its discretion in making its
calculation.
Finally, Emerick claims that the fees and costs were unreasonable because CSC
did not exercise billing discretion. He contends this is so, because 15 attorneys worked
on the briefing constituting duplicative work. Emerick compares the amount of fees he
was entitled to earlier in the litigation to the amount of fees CSC would have collected at
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that point in time and claims that CSC's fees were 405 percent greater. But, Emerick
does not provide any authority for the assertion that a party is per se not entitled to fees
when it has a large number of attorneys working on the case or because its fees are much
higher than its opponent's fees.
Finally, CSC incurred costs when it hired an analyst to determine the ratio of adult
cardiologists to population in Pierce County and Federal Way. It did so in order to show
that the public would not be harmed by the restrictions placed on Emerick by the
noncompete provision. Emerick claims that the $7,400 cost of the analyst was
unreasonable, because "it is excessive given the market." But, Emerick provides no
authority to support this assertion.
Emerick provides no basis upon which we can conclude that the trial court abused
its discretion in ordering the fee award in the amount that it did.
V. CSC's Fees for Emerick I
CSC cross appeals and argues that the trial court erred as a matter of law by
denying it fees incurred during the Emerick I appeal.
Whether a party is entitled to attorney fees is an issue of law that this court reviews
denovo. Unifund CCR Partners v. Sunde. 163 Wn. App. 473, 484, 260 P.3d 915 (2011).
RAP 18.1 states that applicable law must grant a party the right to recover reasonable
attorney fees or expenses on review before the Court of Appeals. RCW 4.84.330
provides attorney fees to the prevailing party on contracts that specifically provide for an
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attorney fee and costs award. Here, the Agreement authorized attorney fees to the
prevailing party, including fees on appeal.10
Division Two first issued its opinion in Emerick I, unpublished, on February 23,
2012. In that opinion, Division Two vacated Emerick's attorney fee award, remanded for
further proceedings, and awarded CSC statutory attorney fees on appeal. Emerick I, slip
op. at 11. Subsequently, on July 10, 2012, Division Two issued an order amending the
opinion. Order Amending Opinion, Emerick v. Cardiac Studv Ctr.. Inc.. No. 41597-6-11, at
1-2 (Wash. Ct. App. Jul. 10, 2012). The order clarified that it awarded CSC its costs on
appeal as the prevailing party, but it denied CSC's request for attorney fees under RAP
18.1, because CSC did not devote a section of its opening brief to the request for fees,
jd. Then, on August 8, 2012, Division Two issued an order amending the opinion again
and granting a motion to publish. Order Amending Opinion & Granting Motion to Publish,
Emerick v. Cardiac Studv Ctr.. Inc.. No. 41597-6-11 (Wash. Ct. app. Jul. 10, 2012). Among
other things, the order reverted to the language regarding CSC's fees from the original
opinion—CSC is awarded statutory attorney fees. jd. at 1-2. There was no mention of
CSC's RAP 18.1 fees.
On remand, the trial court found that CSC's attorney fees were reasonable for work
performed at the trial court both before and after remand, but it ultimately determined that
CSC did not have a legal basis for recovering its prevailing party attorney fees for the
appellate work. It concluded this was so, because CSC did not follow RAP 18.1's
10 Paragraph 18 of the agreement provided that, "If either party shall bring any suit
or action against the other for any type of relief, declaratory or otherwise, including any
appeal thereof, arising out of this Agreement, the prevailing party shall have and recover
against the other party, in addition to all court costs and disbursements, such sum as the
court may adjudge to be reasonable attorney's fee." (Emphasis added.)
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No. 72834-2-1/25
procedural requirement that a party seeking attorney fees request them in its opening
brief. In its findings of fact, the trial court reasoned that the fees on appeal were already
denied by the Court of Appeals. As a result, it declined to award CSC $83,169.50 in fees
incurred on the appeal and $1,368.87 in costs.
CSC claims that the trial court erred as a matter of law when it denied CSC its
reasonable attorney fees incurred on appeal. It argues that Washington case law
supports an award of prevailing party attorney fees under RAP 18.1 only where the party
requesting those fees is the prevailing party in the underlying action. CSC argues that it
was not yet the prevailing party on the underlying action until it prevailed on its motion for
summary judgment. Therefore, it claims any request for fees pursuant to RAP 18.1 before
Division Two would have been premature.
CSC's appeal was a challenge to the trial court's order granting Emerick's motion
for summary judgment. See Emerick I, 170 Wn. App. at 250. The Emerick I court's
decision had the effect of undoing Emerick's status as the prevailing party, but the court
had not yet concluded—and could not yet conclude—that CSC should prevail on the
merits of the underlying action. See Id. at 259. CSC did not directly appeal—nor could
it—the trial court's denial of its motion for summary judgment. Therefore, a request for
fees as the prevailing party on the underlying action would have been premature.
Emerick claims that CSC should be estopped from arguing that a fee award was
premature, because it sought attorney fees under RAP 18.1. But, simply because CSC
made a premature request for attorney fees, does not mean that it was ineligible to
request those fees at a later time—when it was determined to be the prevailing party on
the merits of the underlying action.
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Emerick also argues that CSC should be estopped from arguing that it was not yet
determined to be the prevailing party on appeal because the Emerick I court awarded
CSC statutory attorney fees. In other words, Emerick argues that because the trial court
declared CSC a prevailing party for purposes of statutory attorney fees on the first appeal,
CSC would have been awarded any other prevailing party attorney fees at that time had
the Emerick I court wished to award them.
But, the Emerick I court awarded CSC statutory attorney fees not based on a
prevailing party contract theory. While not specified in Emerick I, the court likelyawarded
the statutory fees pursuant to RCW 4.84.080 which provides for $200 of fees in all actions
where a judgment is rendered in the court of appeals after argument. RCW 4.84.080 is
different than RCW 4.84.330, which provides for recovery of prevailing party attorney fees
under a contract.
It was not until after CSC prevailed on summary judgment—until the trial court
determined that the noncompete covenant was reasonable as reformed—that CSC
became the prevailing party on the underlying contract. Therefore, CSC had no reason
to request, and the Emerick I court could not reach the issue of, CSC's prevailing party
fees under RCW 4.84.330 and RAP 18.1 until that time. Itthus delayed that determination
pending resolution of the underlying action on remand.
The trial court erred to the extent that it believed the holding in Emerick I precluded
it from awarding CSC attorney fees for the first appeal once it determined that CSC was
the substantially prevailing party. We remand to the trial court for consideration of a
reasonable attorney fee award, including fees from the first appeal.
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No. 72834-2-1/27
VI. Fees for the Current Appeal
Both Emerick and CSC argue that they are entitled to attorney fees and costs for
this appeal.
Emerick argues that he is entitled to attorney fees and costs pursuant to RAP
18.1(a) as the prevailing party on this appeal. Similarly, CSC argues that it is the
prevailing party in the action and is entitled to fees under RAP 18.1, the terms of the
Agreement, and RCW 4.84.330.
CSC prevailed on every issue in this appeal, and is therefore entitled to fees under
RAP 18.1. Because we remand to the trial court for reconsideration of the Emerick I
attorney fee award, we also remand for the trial court to award reasonable attorney fees
for this appeal. See RAP 18.1 (i) (stating that the appellate court may direct that the
amount of fees and expenses be determined by the trial court after remand).
We remand to the trial court for an award of fees to CSC. We otherwise affirm.
WE CONCUR:
J".
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