IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON RYAN AND WAGES, LLC, a Washington) limited liabilitycompany through its members, JULIA MCCORD and THE CONJUNCTIONAL PATRIOTIC SOVEREIGN PATHWAY, Appellant/ Cross-Respondent,

v. TOM WAGES, an individual, Respondent/ Cross-Appellant,

REDDING LAKE STEVENS, LLC, an Oregon limited liabilitycompany, Respondent. No. 68253-9-1 DIVISION ONE

UNPUBLISHED OPINION FILED: March 18,2013 t^O <^> i->.~--. S- ^nO f^K -y3 ,.-,--. , -,—, ___- --*- -*"Ot cx> -:.-.. -or•• '^c

Becker, J. — One cannot sue for breach under a contractthat has a 

### prevailing party attorney fee clause and then cryfoul when held liable for an award offees to a successful defendant. After Redding Lake Stevens LLC won 

### dismissal from Ryan and Wages LLC's lawsuit forbreach ofcontract, the court 

### properly applied the equitable mutualityofremedies doctrine to award ReddingNo. 68253-9-1/2 

### prevailing party fees underthe contract. Finding no error in this decision, or in the decisions challenged by Tom Wages in his cross appeal, we affirm.

FACTS 

### Tom Wages and Doris Ryan formed Ryan and Wages LLC (the company) in 2004. In December 2005, Ryan died and her interest inthe company passed 

### to her son and daughter, Floyd Ryan and Julia McCord. We will refer to Floyd Ryan and Julia McCord as "the heirs." 

### Around the same time, the company and an Oregon investmentfirm were 

### forming Redding Lake Stevens LLC (Redding), a realestate venture to develop two assisted living facilities, one in Redding, California, and the otherin Lake 

### Stevens, Washington. The Redding projectwas built, butdue to a problem of
seweraccess, itwas not possible to build a facility on the Lake Stevens property. The heirs filed a derivative shareholder action on behalfofthe company, 

### in which they sued Redding forbreaching its own operating agreement. They also sued TomWages for misappropriating companyfunds and sought his 

### removalas managerof the company. In May2010, Wages counterclaimed for 

### judicial dissolution of the company. The heirs did not oppose the dissolution request. 

### InDecember 2010, while the dissolution was pending, Redding paid the 

### company $1.25 million. This money became the focal issue in the dissolution 

### dispute between Wages and the heirs. Despite the pendingdissolution, Wages 

### argued the money should bedistributed to the members as income according toNo. 68253-9-1/3 

### their ownership ofthe company. Such a distribution would have resulted in Wages receiving around $635,000. The followingyear, in September2011, the court granted Redding 

### summaryjudgmentdismissal fromthe heirs' shareholderaction forbreach of contract. The court awarded Redding $43,237.60 in attorney fees. In December2011, a two-day bench trial was held to resolve the dissolution and distribution ofthe company's assets. The company's operating 

### agreement required that in a corporate dissolution, assets were to be distributed first to creditors, and next to members due a return oftheir initialcapital 

### contributions. The court heard testimony fromWages, from the heirs, and from 

### the company's certified publicaccountant, MichaelCunningham, aboutthe parties' contributions to and withdrawals fromthe company. 

### The testimony reflected that the company's onlyliquid assets were the $1.25 million held in an attorney trust account and a bank account containing 

### about $2,000. Cunningham calculated thatWages had received more payouts 

### from the company than he initially putin, so thatWages had a negative capital balance. Cunningham calculated the heirs' balance of unpaid returns on their initial contributions at over $3 million. According to Cunningham, the heirs' 

### capital account balance was "much, much higher than the availablecash to distribute" during the dissolution. The courtentered findings of fact and conclusions oflaw, distributing the full $1.25 million to the heirs, reserving only 

### enough to cover the company's last debts tothird parties and the attorneyfeeNo. 68253-9-1/4 award to Redding. 

### The heirs appeal the attorney fee award to Redding. Wages appeals the distribution ofthe full $1.25 million to the heirs.

ATTORNEY FEES 

### The heirs sued Redding forbreaching the Redding Lake Stevens LLC 

### Operating Agreement. Their complaint included a requestfor attorney fees and costs. Paragraph 13.4 of the operating agreement authorized an award of reasonable attorney fees to the prevailing party in any suit "commenced to enforce or interpret any provision of this Agreement": 

### ATTORNEYS' FEES: Ifany legal proceeding is commenced to 

### enforce or interpret any provision of this Agreement, the prevailing 

### party shall beentitled to recover reasonable attorneys' fees attrial and on any appeal (including but notlimited to expert witness fees, transcript costs and othersimilarexpenses), in addition to the costs and disbursements allowed by law. 

### After Redding won summarydismissal from the suit by persuading the courtitwas not a partyto the operating agreement that created it, the courtrelied 

### onparagraph 13.4toaward Redding morethan$43,000 in attorneyfees and costs. The heirs contend this award constituted legal error. 

### Whether a specificstatute, contractualprovision, or recognized groundin 

### equity authorizes an award ofattorneyfees is a question oflaw reviewed de novo. Tradewell Group. Inc. v. Mavis, 71 Wn. App. 120, 126, 857 P.2d 1053 (1993). We find no error inthe fee award. The award was a straightforwardNo. 68253-9-1/5 

### application of the equitable doctrine of mutuality ofremedies. See generally Herzoq Aluminum, Inc. v. Gen. Am. Window Corp.. 39 Wn. App. 188, 692 P.2d 867 (1984). Ifthe heirs had prevailed against Redding in their suit to enforce the Redding Operating Agreement, they would have been entitled to an award of 

### fees from Redding under paragraph 13.4. Because Redding prevailed inthe action instead, the mutuality doctrine permits it to claim the same entitlement. The mutuality ofremedies doctrine authorizes contractual attorney fee awards

even after the contract itselfis ruled invalid or unenforceable. Kaintz v. PLG, Inc., 147 Wn. App. 782, 789, 197 P.3d 710 (2008). The heirs argue the Kaintz holding is limited to cases where the parties to the litigation are also parties to the contract, and where the contract is ruled unenforceable as to all parties. But neither Kaintz northe authorities itrelies on impose any such limits on the rule. Here, the contract allowed an award of attorney fees to the "prevailing party." This standard terminology means the prevailing party in the litigation. It is not a limitation to the parties to the agreement, as the heirs argue. We affirm the fee award to Redding. Redding also requests an award of its fees and costs for defending this appeal. Paragraph 13.4 expressly provides for such relief. Redding's request is granted.

IN LIMINE RULING Wages contends the court erred as a matter of law by granting the heirs' motion in limine. Wages planned to introduce an expertwitness at trial to offerNo. 68253-9-1/6 

### the opinion that the $1.25 million paymentfrom Redding should be characterized
as "income" or "profits," as opposed to a return of "capital." Wages expected the testimony to support his argumentthat he was entitled to receive a share ofthe money before the court considered the parties' relative capital account balances. The heirs argued the testimony was irrelevant. The courttentatively granted the motion but leftthe matter open forfurther discussion during trial. "Now, whether or not it's helpful for the Court or the Court needs this experttestimony, it's a little bitearly for me to say. ... at this point I'm going to grant the motion." When given an opportunity to renew his objection to the tentative ruling during trial, however, Wages' counsel responded, "Actually, that won't be necessary. We'll rest our case now, too, Your Honor." Having effectively withdrawn his challenge to the in limine ruling attrial, Wages has waived this challenge on appeal. In a comparable situation, where a courttentatively denies a party's motion in limine and the evidence that is the subject ofthe motion is later introduced at trial, the losing party is obligated to
renew an objection to the evidence inorderto preserve the errorfor review. Sturgeon v. Celotex Corp., 52 Wn. App. 609, 623, 762 P.2d 1156 (1988). By failing to renew objections attrial when the opportunity is offered, the objecting party fails "to give the trial court an opportunity to correctthe error at the time when itcould and should have been corrected." Sturgeon, 52 Wn. App. at 623. We apply the same rationale here. Bywithdrawing his challenge to the in limine ruling attrial, Wages removed the matterfrom the court's consideration. IfNo. 68253-9-1/7 

### the ruling was error, Wages gave the court no opportunity to correct it. Inany event, the rulingwas not erroneous. The expert's proposed testimony was irrelevantto thejudicial dissolution trial. In a dissolution, the court 

### is required to distribute the corporation's assets according to a hierarchy 

### specified inthe company's operating agreement, or according to a statutory hierarchy if no operating agreement exists. See Noble v. A & R Envtl. Servs., LLC, 140Wn. App. 29, 35, 164 P.3d 519 (2007), citing RCW 25.15.300. Here, the company's operating agreement required the court to distribute the 

### company's remaining assets first to repay debts to creditors, and next to repay members in return oftheir capital contributions. Paymentto members "inrespect oftheir share ofprofits"—the step Wages wished the court would take first, before members' capital contributions were returned—was the very last step of the process underthe operating agreement. Wages' only claim before the court was forjudicial dissolution under chapter 25.15 RCW. The opening statements reflected Wages' understanding that the purpose ofthe trial was to dissolve the company. The courtwas required to follow the dissolution scheme setforth in the company's operating agreement. The expert's testimony to distinguish "income" from "capital" was irrelevant to that task. Wages argues the expert's testimony was nevertheless relevant because

a subsection ofthe dissolution statute cross-references a statute permitting "interim distributions" of income to members "before the member's dissociationNo. 68253-9-1/8 

### from the limitedliability company and before the dissolution and winding up thereof" RCW 25.15.215 (emphasis added), cited in RCW25.15.300(1)(b). The dissolution statute places these distributions inthe second step ofthe distribution hierarchy—but itdoes so only "unless otherwise provided in a limited liability company agreement." RCW 25.15.300(1 )(b). Here, the company's operating agreement did provide otherwise. Itmade payments to members in return of their capital contributions the second step ofthe distribution hierarchy, while 

### relegating income distributions to members to the last step ofthe process. 

### Wages contends he became entitled to a distribution from the $1.25 million atthe time the money was received in December 2010, and since he did not receive a distribution at that time, he became a creditor whose debt should 

### have been repaid as the first step ofdissolution under RCW 25.15.230. But by December2010, when Redding made the payment at issue, the parties were 

### well into their litigation ofWages' claim for dissolution. Bythen the members' entitlementto distributions under RCW 25.15.230 had passed. 

### The expert's testimony would also have been cumulative. Wages' counsel remarked at trialthat his expert's testimony "may or may not be necessary," 

### depending on howCunningham, the company's accountant, testified. Wages cross-examined Cunningham at length. AfterCunningham finished testifying, 

### Wages withdrew his objection to the inlimine ruling, signalingWages' own belief thatthe expert's testimony was no longer necessary. The exclusion ofevidence which is cumulative or has speculative probative value is not reversible error.

8No. 68253-9-1/9 

### Havens v. C&D Plastics, Inc., 124 Wn.2d 158, 169-70, 876 P.2d 435 (1994).

FINDINGS OF FACT Wages assigns errorto the court's findings offact and conclusions of law in which the court determined the value ofthe heirs' initial contributions to the company and adopted Cunningham's calculations as to all parties' capital account balances. A trial court's factual determinations are not disturbed ifthey

are supported by substantial evidence. Davis v. Dep't of Labor &Indus., 94 Wn.2d 119, 123, 615P.2d 1279(1980). Ifsubstantial evidence supports the finding, itdoes not matterthat otherevidence may contradict it. State v. Camarillo, 115 Wn.2d 60, 71, 794 P.2d 850 (1990). Substantial evidence supported the court's decision to rely on Cunningham's calculations ofthe parties' capital account balances. Cunningham 

### gave detailed testimony and was subjectto cross-examination and direct examination by the court. Cunningham's process, ledgers, correspondence with the parties concerning his calculations, and the tax returns he prepared were examined in court. The story he told was consistentwith the parties' testimony. The courtfound his testimony credible and his calculations reliable. It is not our 

### role as an appellate courtto substitute ourjudgmentforthat ofthe trial court, or 

### to weigh the evidence orthe credibility ofwitnesses. Davis, 94 Wn.2d at 124. The $4,048,000 valuation given by the courtto the 13.3-acre Lake Stevens property was also supported by substantial evidence. The parties 

### agreed to that value inthe Redding Operating Agreement, which allparties—No. 68253-9-1/10 

### including Wages—signed in2005. Cunningham testified that he understood the 

### tax value of the Lake Stevens property was around $3.4 million before the parties agreed to a higher "book value." Cunningham gave testimony that he reported 

### the $4,048,000 value to the Internal Revenue Service on the heirs' K-1 corporate
tax forms. Although Wages testified that he and the heirs mutually agreed to delete 

### the $4,048,000 value forthe property when they executed the firstamendmentto the Operating Agreement, this was a matter sharply contested attrial and the courtwas not obliged to believe Wages' testimony. We also rejectWages' argument that the court erred as a matter of contract interpretation by failing to adjustthe $4,048,000 figure downward based

on exhibit C to the Redding Operating Agreement. An appellate court's primary goal in interpreting a contract is to ascertain the parties' intent. Anderson Hay & Grain Co. v. United Dominion Indus., Inc., 119 Wn. App. 249, 254, 76 P.3d 1205 (2003), review denied, 151 Wn.2d 1016(2004). Exhibit C provided that the value of a contribution should be reduced by $23,000 for each ofthe 176 planned units not actually built on the Lake Stevens property. Since no units were ever built on the property, this argumentwould place the value ofthe property at $0. That suggestion is frivolous. Moreover, exhibit C's adjustment calculation refers specifically to a contribution amounttotaling $3,048,312, not $4,048,000. It is therefore not clearthat the parties ever intended exhibit C to be used to adjust the Lake Stevens property's value.

10No. 68253-9-1/11 Wages argues for the first time in his reply brief on appeal that the court's


### use of the $4,048,000figure was errorbecause Cunningham reflected uncertainty at trial as to whetherthis was a proper valuation ofthe Lake Stevens 

### property. This argument is a nonstarter; the courtdid not rely on Cunningham's opinions to determine the property value. That value was setforth inthe Redding Operating Agreement, signed by all parties in 2005. Cunningham testified plainly that no matter how the numbers shifted to accountfor a few uncertainties, Wages' capital account balance would still be in the negative, while the heirs' unreturned initialcontributions were inthe millions. The courtdid not err by returning the $1.25 million to the heirs. Even after receiving that distribution, they still bore significant losses. Affirmed. Redding Lake Stevens LLC's request for fees and costs on appeal is granted, subjectto compliance with RAP 18.1.

WE CONCUR:


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