### IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION II 2ND HALF LLC, No. 49815

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- II Appellant,

v. HEATHER RANKOS and GEORGE RANKOS, and their marital community, and BARBARA WEBSTER, UNPUBLISHED OPINION

Respondents, JAMES and JUDITH BETOURNAY and their marital community, Defendants.
J OHANSON , J.

— 2nd Half LLC appeals the superior court’s order granting George and Heather Rankos’s summary judgment motion. 2 nd Half brought an action against the Rankoses and Barbara Webster, board members of the North Oakes condominium owners’ association (Association), for t heir failure to exercise reasonable care in collecting unpaid Association dues. 2nd Half argues that because the board members owed 2 nd Half a duty of care, the superior court erred when it concluded that 2nd Half could not maintain a direct, rather than derivative, claim against the board members. Because 2nd Half lacks standing, we affirm. Filed Washington State Court of Appeals Division Two May 1, 2018No. 49815

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2 FACTS
I. B ACKGROUND 1 James and Judith Betournay, 2nd Half (owned by Jeff and John Graham’s family), an LLC owned by Webster, and an LLC owned by the Rankoses each owned condominium units in the North Oakes condominium community. Sometime before January 2015, the Betournays fa iled to pay Association dues and assessments, so the Association recorded a lien against the Betournays’ unit. The Association, under Jeff Graham’s leadership, pursued a claim against the Betournays for unpaid dues. Also in January, during the Associat ion’s pending litigation against the Betournays, John and Jeff Graham were removed from the Association board, and a new board was instated. The Betournays cast votes in the election to remove the Grahams from the board. With the Grahams removed, the boa rd consisted of Webster and the Rankoses. 2 Around this time, the Betournays were in negotiations to transfer their unit to their bank by a deed in lieu of foreclosure, and the Betournays asked the Association to release their lien to make the property t ransfer possible. On February 9, the Association granted a lien release to the Betournays. The lien release removed the security interest the Association had in the Betournays’

1 For background information, we rely on the record provided by the parties but recognize that these facts come from Webster’s summary judgment motion and not the Rankoses’ summary judgment motion. We do not rely on these facts in deciding the appeal of th e Rankoses’ summary judgment decision.

2 The Grahams challenged their removal from the board, but we held that the removal was proper. Graham v. Rankos , noted at 193 Wn. App. 1051 (2016).No. 49815

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unit, but the unit owner, which would eventually be the bank, remained liable for unpaid dues. The Betournays executed a deed in lieu of foreclosure in favor of their bank. The new Association board chose not to proceed to trial against the Betournays in the lawsuit to collect dues. On September 28, the action against the Beto urnays was dismissed without prejudice. In November, the bank paid the Association $12,194.84, which is the full amount of the outstanding dues balance on the Betournays’ former unit. The Betournays owe no additional
dues.
II. 2 ND H ALF ’ S C LAIM AND S U MMARY J UDGMENT M OTIONS A. 2 ND H ALF ’ S C LAIM In October, before the Betournays’ outstanding dues had been paid, 2nd Half filed a complaint against the Rankoses, Webster, and the Betournays. 2 nd Half claimed that the Association board members breached their duty under the condominium declaration and RCW 64.34.308 to “exercise ordinary and reasonable care to advance the interests of the Association” when the board allegedly failed to collect unpai d Association dues owed by the Betournays. Clerk’s Papers (CP) at 8. 2nd Half asserted that in failing to hire a lawyer to pursue a claim against the Betournays for unpaid dues, the board members “unreasonably and wrongly exposed the Association to poten tial liability and loss of money for dues that’s long been unpaid.” CP at 8. The complaint repeatedly refers to the breach of duty owed to the Association and makes no reference to a duty owed to 2nd Half or individual Association members. In its requ ests for relief, 2nd Half asked, in relevant part, for the superior court to (1) find that the defendant board members breached their statutory duty of reasonable care by “trad[ing]
the Association’s right to recover unpaid dues from the Betournays for vot es to oust Jeff and JohnNo. 49815

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Graham” and (2) find that defendants are “ liable to the Association for the fees, and collection costs . . . alleged to be $20,000” that “would have been recovered from the Betournays, but which
have been made unrecoverable on acco unt of the defendants[’] acts and omissions.” CP at 9

- 10 (emphasis added). The complaint did not allege any injury or damages to 2 nd Half or its property. The complaint also contained allegations that the Rankoses’ attorney improperly obtained and manag ed $50,000 of proceeds from a sheriff’s sale on one of the condominium units. 3

B

. T HE R ANKOS ES ’ M OTION FOR S UMMARY J UDGMENT On October 24, 2016, the Rankoses filed a motion for summary judgment. The Rankoses’ motion apparently assumed that the issue r egarding the Betournay dues had been resolved by a previous order granting Webster’s summary judgment motion. On February 19, 2016, Webster had filed a motion for summary judgment. The superior court granted Webster’s motion on the
basis that 2nd Half fa iled to show that the board owed 2nd Half a duty of care, and even if the board owed a duty to 2 nd Half, the duty was not breached because the bank paid the sums at issue. The Rankoses’ motion stated that “Barbara Webster has already been dismissed from t his case because the Complaint fails to state any claims against her. The Court should enter an order dismissing [the Rankoses] from this suit for the same reasons.” CP at 537. And the Rankoses’ motion stated, “The sole remaining claim in this action is that counsel for the Rankos[es]” mishandled proceeds from a sheriff sale. CP at 537.

3 This issue is not relevant to this appeal, but it was at issue in the Rankoses’ summary judgment motion below.No. 49815

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The Rankoses’ motion further stated, in relevant part, that 2 nd Half “cannot establish a duty, breach, injury or causation.” CP at 543. And it stated, “Even if ther e was an actual claim, there is no recovery available directly to 2 nd Half.” CP at 544. In 2nd Half’s response to the Rankoses’ summary judgment motion, it attacked the grounds on which the superior court granted Webster’s summary judgment motion. Spe cifically, it challenged the conclusion that the Association board owed no duty of care to individual homeowners. And 2nd Half argued that under Alexander v. Sanford , 4 a homeowners’ association board owes a duty of care to individual homeowners such that an individual homeowner may file a lawsuit directly against board members. It argued that because the Alexander court held that an individual homeowner may sue homeowners’ association board members, 2 nd Half may sue the board members in this case.
In a responsive memorandum, the Rankoses argued that unlike the homeowners in Alexander , 2 nd Half failed to allege injury to itself or damages owed to 2 nd Half, and thus it lacked standing to bring its complaint. When the superior court considered the Ranko ses’ summary judgment motion, it considered the parties’ briefing discussed above, the declaration of the Rankoses’ attorney, Elizabeth Powell, in support of the motion, and the declaration of Jeff Graham in opposition. Powell’s declaration and its attach ments contained no evidence relevant to the Betournay dues issue. 5 Similarly, Jeff Graham’s declaration briefly mentioned that the board members “are not

4 181 Wn

. App. 135 , 325 P.3d 341 (2014).

5 The attachments contain documents related to the sheriff sale issue, attorney fees, and conflicts of interest involving 2 nd Half’s attorney.No. 49815

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fairly calculating the amounts everyone owes,” but provided no additional statements to explain
or pr ovide a factual basis for the Betournay dues claim. CP at 548. Graham’s declaration focuses almost exclusively on allegations that are not relevant on appeal, including the issue related to the sheriff’s sale. The Graham declaration did not discuss any damages that 2 nd Half suffered as a result of the board’s alleged breaches of duty. In its oral ruling, the superior court agreed with the superior court’s prior Webster ruling;
it did not think that Alexander allowed 2nd Half to file a direct claim aga inst Association board members. The superior court granted the Rankoses’ summary judgment motion. 2nd Half appeals.
ANALYSIS
I. T HRESHOLD I SSUES As threshold matter s , we address two issues: whether 2 nd Half appealed the Webster summary judgment order, and whether the superior court’s oral statements are properly before us. We hold that neither the Webster order nor the superior court’s oral rulings are properly before us.
A. W EBSTER M OTION N OT A PPEAL ED Webster and the Rankos es argue that the Webster order is not properly before this court.
We agree . Applying court rules to the facts is a question of law we review de novo. Wiley v. Rehak , 143 Wn.2d 339, 343, 20 P.3d 404 (2001). An appellate court ’ s review is necessarily limited by the scope of a given appeal , which is determined by the notice of appeal, the assignments of error, and the substanti ve argumentation of the parties

. Clark County v. W

. Wash

. Growth Mgmt

. Hr ’g s Bd. , 177 W n .2d 136, 144 , 298 P.3d 704 (2013)

. The notice of appeal must designate the decision or part of decision that the party wants reviewed. RAP 5.3(a); Clark County , 177 Wn.2d at 144

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45. After a decision or part of a decision has been identified in the notice of appeal, the assignments of error and substantive argumentation further narrow which claims and issues the parties have presented for appellate review. Clar k County , 177 Wn.2d at 14 5

. Here, 2nd Half’s notice of appeal designates only the order granting the Rankoses’ summary judgment motion, and it fails to mention the order granting Webster’s motion. The notice of appeal says, “2nd Half, LLC seeks review by [t]he Court of Appeals Division II of the Superior Court’s final Order dismissing all claims entered November 23, 2016. A copy of the Order appealed is attached.” CP at 630. The attached order granted the Rankoses’ summary judgment
motion and does not mention Webster. As such, the notice of appeal designated only the Rankoses’
order. Arguably, 2nd Half’s assignments of error and substantive arguments apply to both summary judgment orders, but assignments of error and argument may not expand the scop e of review. See Clark County , 177 Wn.2d at 144

- 45. Because 2nd Half did not designate the Webster order in its notice of appeal, any arguments it raises regarding that order are outside this appeal’s
scope. B. S UPERIOR C OURT ’ S O RAL R ULINGS 2nd Half challenges the superior court’s oral ruling on reconsideration of Webster’s summary judgment motion. And 2 nd Half challenges the superior court’s oral statements regarding the Rankoses’ summary judgment motion. The Rankoses and Webster argue that we should not consider 2nd Half’s arguments related to the superior court’s oral statements because appellate review of summary judgment motions is de novo and oral statements cannot be used to

“ ‘ impeach . . . the judgment. ’ ” Resp’ts’ Resp. at 3 (quoting Rutter v. Rutter’s Estate , 59 Wn.2dNo. 49815

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781, 784, 370 P.2d 862 (1962))

. We agree that the superior court’s oral rulings are not properly before us.
We do not consider matters outside the record on direct appeal. State v. McFarland , 127 Wn.2d 322, 338, 899 P.2d 1251 (1995). In addition, w e do not consider a superior court ’ s superfluous findings of fact and conclusions of law because w e review orders gr anting summary judgment de novo. Westberry v. Interstate Distrib. Co. , 164 Wn. App. 196, 204, 209, 263 P.3d 1251 (2011). Here, although 2nd Half extensively discusses and quotes the superior court’s statements during the hearing for 2nd Half’s motion for reconsideration for the Webster order, 2nd Half failed to designate this transcript on appeal. As such, it is outside our reco rd, and we do not consider it. Furthermore, our de novo review of 2nd Half’s challenge to the Rankos es ’ summary judgment
order does not include consideration of the superior court’s “superfluous” discussion. See Westberry , 164 Wn. App. at 204, 209. To t he extent 2nd Half challenge s the superior court’s oral statements and reasoning as a basis to deny summary judgment, its claim fails.
II. S UMMARY J UDGMENT The parties dispute whether the Rankoses’ summary judgment motion was properly granted. We agre e with the Rankoses and Webster that 2 nd Half lacks standing and that summary judgment was properly granted

. A. P RINCIPLES OF L AW We review a superior court’s order granting summary judgment de novo. Loeffelholz v. Univ. of Wash. , 175 W n .2d 264, 271, 285 P.3d 854 (2012). “We review the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party’s favor.”No. 49815

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Lakey v. Puget Sound Energy, Inc. , 176 W n .2d 909, 922, 296 P.3d 860 (2013). Summary judgment is ap propriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Loeffelholz , 175 W n .2d at 271. “A genuine issue of material fact
exists where reasonable minds could differ on the facts controlli ng the outcome of the litigation.” Ranger Ins. Co. v. Pierce County , 164 W n .2d 545, 552, 192 P.3d 886 (2008). Standing is a threshold issue, which we review de novo. Alexander , 181 Wn

. App. at 149

.

“‘ To have standing, one must have some protectable interest that has been invaded or is about to be invaded. ’” Alexander , 181 Wn. App. at 149

- 50 (quoting Orion Corp. v. State , 103 W n .2d 441,
455 , 693 P.2d 1369 (1985) )

. To establish a condominium board’s breach of duty under RCW 64.34.308, a plaintiff mus t prove duty, breach, causation, and damages. Alexander , 181 W n . App.
at 170

. B. N O S TANDING 2nd Half argues, as it did before the superior court, that it should survive summary judgment because the board owed a duty of care to 2 nd Half, and thus it was authorized to bring a direct rather than a derivative action against the board members. We hold that even if the board members owed a duty of care to 2 nd Half, 2 nd Half has not established that it has standing in this case, and thus its claim fails.
2 nd Half relies solely on Alexander to support that the board owed a duty of care to individual homeowners such that 2nd Half can properly maintain an action against the board members for their failure to exercise reasonable care in coll ecting the Betournays’ dues. 2 nd Half is correct that a homeowners’ association may owe a duty of care to individual members of the
association in some circumstances. Alexander , 181 Wn. App. at 169

- 70. But 2 nd Half has failedNo. 49815

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to explain how the board’s alleged failure to exercise reasonable care in collecting dues owed to the Association breached a duty of care owed to 2nd Half or invaded any of 2 nd Half’s protectable
interests. 6
In Alexander , individual homeowners in the association had standing to s ue board members when the homeowners alleged that the board members engaged in acts that caused water intrusion and other defective conditions that damaged and reduced the value of homeowners’ real property and resulted in repair costs to homeowners. 181 Wn. App. at 147, 149

- 50. The Alexander court specifically stated that because the homeowners sued on behalf of themselves for damages caused to their own personal property, the homeowners had standing to sue for the alleged injury; as such, the court said that it did not need to decide whether a derivative action would have been proper because homeowners were alleging damage to their individual property and not the homeowners’ associations’ interest. 181 Wn. App. at 150 n.15.
Alexander , involving claim s for individual property damage, does not support 2nd Half’s claim that it can sue the Association board for failing to collect dues owed to the Association . 2nd Half’s complaint alleged no individual damage to itself or its property. Instead, the compl aint’s prayer for relief, in relevant part, asked the superior court to find that defendants are “ liable to the
Association for the fees, and collection costs . . . alleged to be $20,000” that “would have been recovered from the Betournays, but which have been made unrecoverable on account of the defendants[’] acts and omissions.” CP at 10 (emphasis added). 2 nd Half has not attempted to

6 2nd Half also failed to assert a breach of duty owed to 2nd Half in its complaint. Its complaint asserts that the board members only breached a duty owed to the Association as a whole. Thus, even if 2 nd Half could have maintained an action against the b oard members based on a breach of duty owed to 2nd Half, that is not the action that 2 nd Half asserted.No. 49815

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explain how these damages owed to the Association in any way impact 2 nd Half’s individual interests. Thus, even if Alex ander supports that the Association board owed a duty of care to 2 nd Half, the case does not support that 2nd Half had standing to bring a direct action against the Association where, unlike the homeowners in Alexander , 2 nd Half alleged no damages to itself. 181 Wn. App. at 149

- 50. 2nd Half has not demonstrated that it individually has a protectable interest that has been invaded by the board members’ alleged breach of duty. See Alexander , 181 Wn. App. at 150; Orion Corp

. , 103 W n .2d at 455 . Because 2 nd Half has failed to point to any facts showing that its protectable interest was invaded, it has not established that it has standing to directly sue the Association , and the Rankoses and Webster are entitled to summary dis missal. 7
III. A TTORNEY F EES Webster and the Rankoses argue that under the condominium declaration, RCW 64.34.455, and RAP 18.9, they are entitled to attorney fees and costs. We award costs and fees as provided by the parties’ condominium declaration.
Whether a party is entitled to attorney fees under a contract or statute is a question of law we review de novo. Tradewell Grp

. , Inc. v. Mavis , 71 W n . App. 120, 126, 857 P.2d 1053 (1993).
A ttorney fees may be awarded when authorized by a contract, a statute, or a recognized ground in equity. Labriola v. Pollard Grp

. , Inc. , 152 W n .2d 828, 839 , 100 P.3d 791 (2004)

.

7 Webster and Rankos also argue that even if the board owed a duty to 2nd Half, it failed to support a breach of duty or damages because the dues were actually paid . Because the superior court, in considering Rankoses’ summary judgment motion, did not have before it affidavits or other evidence that would support a finding that the dues were paid, such evidence is not properly before this court and we c annot consider whether the dues were actually paid.No. 49815

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RCW 64.34.455 authorizes an award of fees to a prevailing party in an action brought under a condominium declaration. Marina Condo

. Homeowner ’ s Ass ’ n v. Stratford at Marina, LLC , 161
W n . App. 249, 265 , 254 P.3d 827 (2011)

. Here, the c ondominium d eclaration states that “if any dispute should arise regarding the terms of this Declaration . . . the prevailin g party shall recover reasonable attorney’s fees and costs, including those for appeals.” CP at 464. 2nd Half’s complaint alleges that the Rankoses and Webster violated their duty of reasonable care provided under the declaration. As the prevailing part ies in this lawsuit, the Rankoses and Webster are entitled to fees under the declaration and under RCW 64.34.455. Labriola , 152 W n .2d at 839 ; Marina Condo

. Homeowner ’ s Ass ’ n , 161
W n . App. at 265

. We also award attorney fees under RAP 18.9. RAP 18.9(a) allows us to award sanctions, such as a grant of attorney fees and costs to an opposing party, when a party brings a frivolous appeal. An appeal is frivolous when there are no debatable issues upon which reasonable minds
may differ, and it is so totally devoid of merit that there was no reasonable possibility of reversal. Granville Condo

. Homeowners Ass ’ n v. Kuehner , 177 W n . App. 543, 557

- 58 , 312 P.3d 702 (2013)

. W e resolve all doubts as to whether an appeal is frivolous in favor of the appel lant. Granville Condo. Homeowners Ass’n , 177 Wn. App. at 558.
2 nd Half’s appeal is frivolous. Much of its argument focuses on alleged errors in the superior court’s oral rulings when our standard of review on summary judgment is de novo and the oral statements are irrelevant and unreviewable. In addition, its argument on appeal regarding Alexander is frivolous

. See Granville Condo

. Homeowners Ass ’ n , 177 W n . App. at 557

- 58 . 2 nd Half’s assertion that the board members owe a duty of care to homeowners could not result inNo. 49815

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reversal because 2 nd Half failed to allege an inv asion of any of its own interests, and therefore it did not establish that it had standing to bring a direct claim against the board members. 2 nd Half made no attempt to explain why Alexander should be controlling here. This frivolous claim should result in sanctions. Subject to Webster’s and the Rankoses’ compliance with RAP 18.1, we award their attorney fees on appeal in an amount to be determined by a commissioner of this court. We affi rm. A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record in accordance with RCW 2.06.040, it is so ordered.

JOHANSON, J. We concur:

MAXA, C.J.

MELNICK, J.