IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON GUSTAVO NELSON ARZOLA, an individual, MICHAEL KLATT, an individual, and SUSAN PROSSER, an individual, Appellants/Cross Respondents, CARL TAYLOR, an individual, Plaintiff,

NAME INTELLIGENCE, INC., a Washington corporation; and JAY WESTERDAL, an individual, Respondents/Cross Appellants. No. 71455-4-1 DIVISION ONE PUBLISHED OPINION

FILED: June 15, 2015 O r~J CO O c=> -ACS. S C- rn_-.

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### Trickey, J. —Where a party has voluntarilysatisfied a trial court decision 

### that the appellate court later modifies, RAP 12.8 requires the trial court to order restitution in appropriate circumstances. Here, the defendants appealed a 

### judgment that awarded the plaintiffs damages for nonpayment of wages. This courtmodified that judgment, determining that the compensation paidplaintiffs did not constitute wages. Thus, the defendants were entitled to recover the monies they had paid for exemplary damages, attorney fees, and litigation expenses. Defendants were also entitled to prejudgment interest assessed from the time payment was made. The defendants cross appeal the interest rate for prejudgment interest 

### awarded, asserting that the trial court was required to impose the statutory rate of 

### 12 percent. Because this is an action in equity, the court can determine theNo. 71455-4-1/2 

### prejudgment interest rate. Here, the trial court awarded 5 percent prejudgment interest. Underthe circumstances, the trial court did not abuse its discretion in its equitable award ofprejudgment interest. We affirm. FACTS Gustavo Arzola, Michael Klatt, and Susan Prosser (collectively, Arzola) 

### were employees of Name Intelligence Inc. (Nl), a Washington corporation cofounded by respondent Jay Westerdal, its chief executive officer, president, and 100 percent shareholder. Arzola sued Nl for monies owed under stock right cancellation agreements. The trial court determined that the amounts owed 

### constitutedwages. Thetrial courtentered a judgment on February 18,2011,which included exemplary damages, attorney fees, and costs as required under chapter 49.52 RCW. 

### Nl and Westerdal paid the judgment in full, submitting a check to Arzola's counsel. At the same time, they notified Arzola that they were appealing the 

### judgment. On appeal, Nl andWesterdal challenged thetrial court's decision that payments owed to Arzola constituted wages entitling Arzola to exemplary damages oftwice the amount of wages wrongfully withheld, as well as attorney fees and costs. This court held thatthe monies owed did not constitute wages and 

### reversed the award ofexemplary damages, attorneyfees, and costs.1 Nl and Westerdal filed a motion under RAP 12.8 to recoverthe monies paid 

### along with 12percentprejudgmentinterest. Thetrial courtawardedthemonies Nl

1Arzola v. Name Intelligence. Inc.. 172 Wn. App. 51, 288 P.3d 1154 (2012). 2No. 71455-4-1/3 

### had paid for exemplary damages, attorney fees, and costs, but awarded only the 

### 5 percent prejudgment interest. Arzolatimely appeals.2 Nl and Westerdal cross appeal, arguing that the prejudgment interest rate should be 12 percent. ANALYSIS This court reviews an award under RAP 12.8 for a manifest abuse of discretion. Ehsani v. McCullough Family P'ship. 160 Wn.2d 586, 589, 159 P.3d 

### 407 (2007). An abuse ofdiscretion occurs only when exercised in a manifestly unreasonable manner or on untenable grounds. In re Marriage ofLittlefield, 133 Wn.2d 39, 46-47, 940 P.2d 1362 (1997). RAP 12.8 provides: 

### If a party has voluntarily or involuntarily partially or wholly satisfied a trial court decision which is modified by the appellate 

### court, the trial court shall enter orders and authorize the issuance of 

### process appropriate to restore to the party any property takenfrom thatparty, the value ofthe property, orin appropriate circumstances, 

### provide restitution. An interestin property acquired by a purchaser 

### in goodfaith, under a decision subsequently reversed or modified, shall not be affected by the reversal ormodification of that decision. 

### Aparty isentitled to a refund where one has satisfied a later reversedjudgment. Sloan v. Horizon Credit Union, 167 Wn. App. 514, 520, 274 P.3d 386 (2012). 

### Arzola's argument that RAP 12.8 does not require restitution after modification of ajudgment is notwell taken. Our Supreme Court has construed RAP 12.8 as requiring practitioners and courts to look to the common law of restitution as set forth in the Restatement of Restitution to determine the post

2Arzola filed a motion for reconsideration more than 10 days after the judgment. The court denied the motion as untimely.No. 71455-4-1/4 

### reversal remedy. Ehsani, 160 Wn.2d at 590. Section 74 of the Restatement of Restitution (1937) states: A person who has conferred a benefit upon another in compliance with a judgment,
... is entitled to restitution if the judgment is reversed or set aside, unless restitution would be inequitable or the 

### parties contract that payment is to be final; if the judgment is modified, there is a right to restitution ofthe excess. Under RAP 12.8 and section 74 of the Restatement of Restitution, Nl and Westerdal are entitled to be restored to theiroriginal positons upon reversal ofthe 

### trial court's judgment. See Simonson v. Fendell. 101 Wn.2d 88, 93,675 P.2d 1218 (1984) ("The general principle is that rescission contemplates restoration of the parties to as neartheir former positionas possible or practical."). On remand from this court, the trial court awarded Nl and Westerdal $254,598.36, calculated as follows: $145,007.00 (exemplary/double damages for 2009) $7,381.82 (exemplary/double damages for 2010) $97,860.00 (attorney fees) $4,349.54 (litigation costs) 

### Procedurally, Arzola argues that the trial court should have conducted an evidentiary hearing on the RAP 12.8 motion. Both parties submitted declarations in support of their positions. The trial court issued itsruling withoutoral argument. The facts are undisputed and thus there was no need for an evidentiary hearing. See Kwiatkowski v. Drews. 142 Wn. App. 463, 479, 176 P.3d 510 (2008). 

### Arzola then argues that because RAP 12.8 provides an equitable remedy, the trial court should have assessed what benefit they received from the monies 

### paid. Specifically, Arzola contends that the amounts paid fortaxes and attorneyNo. 71455-4-1 / 5 

### fees were not a direct monetary benefit to them and therefore should be excluded from restitution. 

### Insupport, Arzola submitted declarations establishing the amountoffederal 

### income taxes paid on the funds distributed to each of them. Inresponse, Nl and Westerdal provided a declaration by a certified public accountant indicating that 

### such payments were recoverable under section 1341 of the Internal Revenue Code. Under that section, Arzola could elect to either deduct the repayment on their tax returns or claim a refundable tax credit, whichever option provided the most tax benefit. Arzola did not submit anything to refute this declaration. 

### Citing Ehsani, Arzola argues that the attorney fees paid were not a benefit to them and therefore should not have been assessed against them. Arzola's 

### reliance on Ehsani for this argument is misplaced. There, the judgmentwas paid 

### intothe attorney's clienttrust account. The clientsspecificallydirected the attorney 

### todistribute proceeds to the clients' creditors and to himself. Ehsani, 160Wn.2d at 589. But here, thejudgment itself awarded attorney fees to the lawyers as part 

### of a statutory scheme. The fees paid were erroneously awarded under RCW 49.48.030. Neither Nl nor Westerdal should not bear the attorney fee expenses 

### Arzola paidto theirattorneys. Arzola's situation is moresimilarto Sloanv. Horizon CreditUnion, 167 Wn. App. 514, 274 P.3d 386 (2012), where the court permitted restitution under RAP 12.8 for CR 11 attorney fees in a judgment that was subsequently reversed. Arzola contends nextthatthe trial courterred inentering a jointjudgment in 

### favor of both Nl and Westerdal and jointlyagainstallthree plaintiffs. Arzola arguesNo. 71455-4-1/6 thatWesterdalwas notentitledto be ajudgmentdebtorbecause Nl paid the check. 

### But the judgment listed both Nl and Westerdal as the judgment debtor. Further, the order clauses specified that judgment in the amount of $256,698.36 was 

### againstJayWesterdal, individually. BecauseWesterdal was individually liable, he is entitled to be reimbursed. The fact that Nl paid the check is immaterial. See Sloan, 167 Wn. App. at 519-21 (not material thatsomeone otherthan thejudgment debtor tendered funds in satisfaction of the debt). 

### The firstjudgment listed each of the employees as the judgment creditors. The trial court did not enter separate judgments. A judgment against all was appropriate on remand. Prejudgment Interest 

### The trial court awarded 5 percent prejudgment interest. Arzola argues that 

### no prejudgment interest should be awarded. Nl and Westerdal cross appeal asserting that the trial court was required to impose 12 percent prejudgment
interest. 

### This court reviews prejudgment interest awards for abuse of discretion. Scoccolo Const.. Inc. ex rel. Curb One. Inc. v. City ofRenton, 158 Wn.2d 506, 519, 

### 145 P.3d 371 (2006). An award of prejudgment interest is appropriate where a 

### party retains funds rightly belonging to anotherparty and thereby denies the party the use value of the money. Crest. Inc. v. Costco Wholesale Corp., 128 Wn. App. 760, 775, 115 P.3d 349 (2005). A prevailing party is entitled to prejudgment 

### interest, provided the damages are liquidated. Lakes v. von der Mehden. 117Wn. 

### App. 212, 214, 70 P.3d 154 (2003). Here, the claim is liquidated because theNo. 71455-4-1/7

measure ofdamages does not require the exercise of discretion. Eqerer v. CSR W.. LLC. 116 Wn. App. 645, 653, 67 P.3d 1128 (2003). Thus, an award of prejudgment interest is appropriate. Weturn now to the question ofwhetherthe trial courterred inimposing only 

### 5 percent prejudgment interest. Interest is not a penalty but compensation for the loss ofuse ofthose funds. Jones v. Best. 134Wn.2d 232, 242, 950 P.2d 1 (1998). 

### Here, the prejudgment interest is not awarded pursuant to RCW 19.52.010(1). Rather, its basis lies in the court rule, RAP 12.8. Restitution to a 

### judgmentdebtorfor the amounts paid by thejudgmentdebtorto satisfy ajudgment that is later modified by the appellate court is an equitable remedy. Ehsani. 160 Wn.2d at 589-90. Inmatters of equity, trialcourts have broad discretionary powers 

### to fashion equitable remedies and we review the trial court's consideration of the 

### equities forabuse of discretion. Recreational Equip.. Inc. v. World Wrapps Nw.. Inc.. 165 Wn. App. 553, 559, 266 P.3d 924 (2011). Nl and Westerdal were deprived ofthe use oftheir funds and the payment 

### of interest is appropriate here to avoid injustice.3 The trial court awarded "a reasonable, equitable rate of interest of 5 [percent] on the above amount of 

### restitution, from the date of payment of the judgment on March 2, 2011 ."4 Under the circumstances here, we conclude that the 5 percent interest was not so

3 An award of less than the 12 percent prejudgment interest requested by Nl and Westerdal was appropriate where the trial court had evidence before itthat two of the plaintiffs had placed the money in their bank accounts where itearned .5 percent and .41 percent interest. Neither the third plaintiffnor the third plaintiff's attorneys submitted any evidence ofthe interestmade on the moniesfrom thejudgment. In view of this, a reduction ofthe 12 percent prejudgment interest rate requested was appropriate. 4Clerk's Papers (CP) at 98.No. 71455-4-1/8 manifestly unreasonable or based on such untenable grounds as to constitute an abuse ofdiscretion. We affirm the trial court. 

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WE CONCUR:


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—No. 71455-4-1 Arzola v. Name Intelligence, Inc.

- Concurrence
Leach, J. (concurring)

— Iconcur in the result only.