Case Name: Leya Rekhter et al., Respondents, v. The Department of Social and Health Services et al., Appellants; Natasha Pfaff, Respondent, v. Robin Arnold-Williams, as Secretary of the Department of Social and Health Services, et al., Appellants; Service Employees International Union 775 et al., Respondents, v. Robin Arnold-Williams, as Secretary of the Department of Social and Health Services, et al., Appellants
Court: Washington Supreme Court
Jurisdiction: Washington
Decision Date: 2014-04-03
Citations: 180 Wash. 2d 102
Docket Number: No. 86822-1
Parties: Leya Rekhter et al., Respondents, v. The Department of Social and Health Services et al., Appellants. Natasha Pfaff, Respondent, v. Robin Arnold-Williams, as Secretary of the Department of Social and Health Services, et al., Appellants. Service Employees International Union 775 et al., Respondents, v. Robin Arnold-Williams, as Secretary of the Department of Social and Health Services, et al., Appellants.
Judges: Wiggins, González, and Gordon McCloud, JJ., concur.
Reporter: Washington Reports
Volume: 180
Pages: 102–155

Head Matter:
[No. 86822-1.
En Banc.]
Argued May 14, 2013.
Decided April 3, 2014.
Leya Rekhter et al., Respondents, v. The Department of Social and Health Services et al., Appellants. Natasha Pfaff, Respondent, v. Robin Arnold-Williams, as Secretary of the Department of Social and Health Services, et al., Appellants. Service Employees International Union 775 et al., Respondents, v. Robin Arnold-Williams, as Secretary of the Department of Social and Health Services, et al., Appellants.
Robert W. Ferguson, Attorney General, Jay D. Geek, Deputy Solicitor General, Elizabeth C. Beusch, Deputy, Carrie L. Bashaw, Senior Counsel, and Michael M. Young, Assistant, for appellants.
Darrell L. Cochran and Michael T. Pfau (of Pfau Cochran Vertetis Amala PLLC); Dmitri L. Iglitzin and Jennifer L. Robbins (of Schwerin Campbell Barnard Iglitzin & Lavitt LLP); and Gregory A. McBroom, John J. White Jr., and Kevin B. Hansen (of Livengood Alskog PLLC), for respondents.

Opinion:
Owens, J.
¶1 In this class action case, a jury found that the Department of Social and Health Services (DSHS) violated the implied duty of good faith and fair dealing in its contracts with individual providers who live with the DSHS clients for whom they provide care. The jury found that the providers incurred $57,123,794.50 in damages, and the judge awarded an additional $38,652,219.85 in interest. The DSHS clients who lived with their providers also filed a class action suit, but the judge did not allow them to recover any damages. We uphold the jury's verdict for the providers, the judge's decision to disallow the clients from recovering damages, and the dismissal of the providers' wage claims, because all comply with Washington law. However, we reverse the judge's award of prejudgment interest because the damages could not be determined with certainty.
FACTS
¶2 DSHS provides public assistance for in-home care for certain individuals with disabilities, referred to herein as "clients." To provide this assistance, DSHS contracts with individual care providers to perform necessary services for clients. In their contracts with DSHS, the providers agree to assist with those personal care services and household tasks included in the client's "service plan." The providers also agree that DSHS will pay only for authorized services in the client's service plan and that their monthly payment will not exceed the amount authorized in the service plan. The contracts explicitly incorporate by reference the service plan of the particular client, but because the contracts are signed before the service plan is created, key terms such as tasks to be performed and authorized hours are left undefined until long after the contract is executed.
¶3 Beginning in 2003, DSHS implemented the Comprehensive Assessment and Reporting Evaluation (CARE) process to determine how many hours of paid assistance a client was eligible to receive. Part of the CARE process was the shared living rule, which automatically reduced assistance for in-home care by 15 percent for clients that live with their providers. The rationale for the shared living rule was that the providers would already be performing certain household tasks (shopping, laundry, housekeeping, meal preparation, and wood supply services) even if they were not providing in-home care for a person with a disability. The shared living rule created an irrebuttable presumption that clients living with their providers needed 15 percent less paid assistance, even if those clients did need assistance with those household tasks.
¶4 When DSHS reduced the authorized hours of support for a client pursuant to the shared living rule, it did not change or reduce the service plan's list of services the provider was required to perform. Indeed, even when a service plan specifically described a client's need for help with shopping or cooking as "[t]otal dependence" and instructed the caregiver to complete such tasks, DSHS still eliminated payment for such household tasks because the client lived with the provider. See Clerk's Papers (CP) at 3982-84. As a result, live-in providers were required by contract to perform necessary services without compensation. The structure of the agreements also resulted in DSHS's requiring live-in providers to perform the same services as live-out providers for less compensation.
¶5 In 2004, three affected clients filed administrative appeals of determinations made pursuant to the shared living rule. The administrative law judges dismissed the appeals because they did not have authority to review the validity of agency rules. The three affected clients sought review in the courts, and in 2005, two trial courts held that the shared living rule was invalid under federal law. Those decisions were stayed pending a consolidated appeal, and in May 2007, this court affirmed the trial courts and found the rule violated federal law that required parity for individuals on Medicaid. Jenkins v. Dep't of Soc. & Health Servs., 160 Wn.2d 287, 290-91, 157 P.3d 388 (2007). Throughout this process, DSHS continued to apply the shared living rule. DSHS ultimately repealed the shared living rule effective June 29, 2007, and began reassessing affected clients — a process that was not completed until June 2008.
¶6 Shortly after Jenkins, separate class action lawsuits were filed on behalf of clients and providers affected by the shared living rule between April 2003 and June 2008. The lawsuits were consolidated in 2009. Prior to trial, the trial judge granted summary judgment to DSHS on the providers' claims that DSHS (1) wrongfully withheld wages, in violation of RCW 49.52.050 and .070 and (2) failed to pay the providers for all hours worked, in violation of the Washington Minimum Wage Act (MWA), chapter 49.46 RCW.
¶7 At trial, the jury found that DSHS "breached an implied duty of good faith and fair dealing with the Provid ers as to [DSHS's] performance of a specific term in the Individual Provider Contracts." CP at 2985. The jury found that the providers incurred $57,123,794.50 in damages. The trial judge ruled that prejudgment interest applied to the jury's verdict for the providers, which amounted to $38,652,219.85.
¶8 The jury was not instructed to render an advisory verdict on the clients' claim, but the judge accorded the jury verdict on the providers' claim substantial weight in considering the clients' claim. The trial judge then found that the clients "suffered the same damages as the Provider Class" but that they should not be awarded a money judgment because "the Client Class actually received the Rule related services and thus it sues to pass damages through to the Provider Class." CP at 3473-75.
¶9 DSHS appealed both the $57.12 million judgment and the award of $38.65 million in prejudgment interest. The clients and providers cross appealed, arguing that the clients should have been awarded damages. We granted direct review.
ISSUES PRESENTED
¶10 1. As a matter of law, could the jury find that DSHS violated an implied duty of good faith and fair dealing?
¶11 2. Do the jury instructions accurately reflect the law related to the implied duty of good faith and fair dealing?
¶12 3. Did the trial judge correctly disallow compensation to clients in light of the judgment for providers?
¶13 4. Did the trial judge correctly grant summary judgment to DSHS on the providers' wage claims?
¶14 5. Was the trial judge's award of prejudgment interest proper?
¶[15 6. Should any party receive attorney fees?
ANALYSIS
1. The Jury's Finding That DSHS Violated an Implied Duty of Good Faith and Fair Dealing Is Consistent with Washington Law
¶16 The jury found that when DSHS implemented the shared living rule and automatically reduced the hours it would authorize for live-in providers, it breached an implied duty of good faith and fair dealing as to its performance of a specific term in its provider contracts. DSHS claims that the jury's finding fails as a matter of law because it (1) contradicts the jury's other finding that DSHS did not breach a contract term; (2) adds a "free-floating obligation of good faith and fair dealing" to its contracts, Appellants' Opening Br. at 5, 29-30; and (3) enforces duties arising from a statute and not the terms of the contract. Because the issue is whether the jury award is prohibited as a matter of law, our review is de novo. For the reasons described below, DSHS's arguments fail.
A. The Duty of Good Faith and Fair Dealing Can Arise Even When There Is No Breach of an Express Contract Term
¶17 DSHS argues that as a matter of law, the jury cannot find a violation of the duty of good faith and fair dealing without first finding a violation of a contractual term. We disagree. As the Seventh Circuit has said, "It is, of course, possible to breach the implied duty of good faith even while fulfilling all of the terms of the written contract." Metavante Corp. v. Emigrant Sav. Bank, 619 F.3d 748, 766 (7th Cir. 2010), cert. denied, 131 S. Ct. 1784 (2011). Similarly, the California Supreme Court observed that the "breach of a specific provision of the contract is not a necessary prerequisite [to a breach of good faith and fair dealing claim]. Were it otherwise, the covenant would have no practical meaning, for any breach thereof would necessarily involve breach of some other term of the contract." Carma Developers (Cal.), Inc. v. Marathon Dev. Cal., Inc., 2 Cal. 4th 342, 373, 826 P.2d 710, 6 Cal. Rptr. 2d 467 (1992) (citation omitted). The Seventh Circuit's and California Supreme Court's reasoning applies here. If DSHS's assertion were true, there could never be a violation of a duty of good faith and fair dealing unless there were also a violation of an express contract term. Such a requirement would render the good faith and fair dealing doctrine superfluous, and thus DSHS's claim is incorrect.
B. The Duty of Good Faith and Fair Dealing Arises When One Party Has Discretionary Authority To Determine a Future Contract Term
¶18 DSHS argues that the jury's finding adds a "free-floating obligation of good faith and fair dealing" to its contracts. Appellants' Opening Br. at 5, 29-30. However, as described below, the duty of good faith and fair dealing arises when one party has discretionary authority to determine a future contract term. Here, the contracts gave DSHS the discretionary authority to pay providers for authorized hours pursuant to the service plans, which were developed at the discretion of DSHS after the contracts were finalized. Thus, the duty of good faith and fair dealing arose in connection with those contract terms, and the jury found that DSHS breached that duty as to the performance of a specific contractual term. As a result, DSHS's claim that the jury added a "free-floating obligation of good faith and fair dealing" is incorrect.
¶19 Under Washington law, "[t]here is in every contract an implied duty of good faith and fair dealing" that "obligates the parties to cooperate with each other so that each may obtain the full benefit of performance." Badgett v. Sec. State Bank, 116 Wn.2d 563, 569, 807 P.2d 356 (1991). DSHS and the providers agree that the implied covenant of good faith and fair dealing cannot add or contradict express contract terms and does not impose a free-floating obligation of good faith on the parties. Instead, "the duty [of good faith and fair dealing] arises only in connection with terms agreed to by the parties." Id.; Johnson v. Yousoofian, 84 Wn. App. 755, 762, 930 P.2d 921 (1996) ("The implied duty of good faith is derivative, in that it applies to the performance of specific contract obligations. If there is no contractual duty, there is nothing that must be performed in good faith." (citations omitted)).
¶20 In particular, the duty of good faith and fair dealing arises "when the contract gives one party discretionary authority to determine a contract term." Goodyear Tire & Rubber Co. v. Whiteman Tire, Inc., 86 Wn. App. 732, 738, 935 P.2d 628 (1997); see Amoco Oil Co. v. Ervin, 908 P.2d 493, 498 (Colo. 1995) ("The duty of good faith and fair dealing applies when one party has discretionary authority to determine certain terms of the contract, such as quantity, price, or time."). When asked to apply Washington law in this area, the Ninth Circuit concluded that "[g]ood faith limits the authority of a party retaining discretion to interpret contract terms; it does not provide a blank check for that party to define terms however it chooses." Scribner v. WorldCom, Inc., 249 F.3d 902, 910 (9th Cir. 2001).
¶21 In this case, the contract gave DSHS discretion over future terms. DSHS has a specific contractual obligation to determine and pay providers for hours authorized in the service plans. DSHS prepared the service plans after the contract was formed with the providers and after the providers began performing services. Thus, at the time that DSHS and an individual provider executed a provider contract, neither DSHS nor the provider knew what services would be needed by the clients or how much would be paid to the providers. These provisions give DSHS the discretion to set a future contract term: the quantity of hours and the types of services for which providers will be compensated.
¶22 The dissent contends that DSHS does not have discretion to determine the quantity of hours for which providers will be compensated because that amount is determined by the CARE process and DSHS does not have discretion to deviate from the amount determined through the CARE process. This ignores the fact that DSHS created the CARE process using its discretion. While there were some statutory limitations placed on DSHS, those statutes did not prescribe how DSHS was to determine the hours of care for which a DSHS client is eligible. Instead, DSHS had ample discretion to design the process that set the contractual term.
¶23 The dissent acknowledges that Aventa Learning, Inc. v. K12, Inc., 830 F. Supp. 2d 1083 (W.D. Wash. 2011), came to the same conclusion that we do: that the implied duty of good faith and fair dealing applies when one party has discretion to select the formula or method used to calculate a particular value in the contract. But the dissent essentially argues that because DSHS has multiple roles as a government agency, it is exempt from the duty of good faith and fair dealing. This is an artificial distinction. It does not acknowledge DSHS's role in both negotiating the contract and using its discretion to determine a key term of the contract by designing the CARE process that controlled the number of hours authorized as part of the client's service plan. A head that wears two hats is nonetheless only one head. Exempting DSHS from this duty because it is a government agency is not supported by our precedent, and we decline to adopt such an exemption without justification.
¶24 The dissent contends that both parties were "bound by the hours authorized by the service plan," dissent at 137 (emphasis omitted), and thus DSHS did not have discretion over the hours authorized. But it is unreasonable to conclude that DSHS was simply "bound" by the service plan when that plan was created using a formula of DSHS's own design. In this case, DSHS used its discretion to implement a new rule that eliminated a certain amount of compensation for those service providers who lived with the clients. We do not see how one can come to the conclusion that DSHS had no discretion in determining the number of hours of care for which a client is eligible when DSHS was the entity that created the system — using its discretion— that determined those hours.
¶25 The dissent argues that DSHS did not have discretion because certain procedural steps would have to be taken for it to change the CARE process. But the existence of such procedural requirements simply means that DSHS did not have unconditional authority to change the process. While governmental agencies have some procedural limitations on their discretion, it does not follow that substantively they have no discretion. Such a conclusion is overly formalistic and ignores the on-the-ground reality that DSHS was the party that had control over the formula for authorized service hours.
¶26 As described above, when a party has discretion over a future contract term, it has an implied duty of good faith and fair dealing in setting and performing that contractual term. Here, the contract provided that service providers would be paid for the hours authorized in the service plan pursuant to the CARE process. DSHS was the party responsible for determining the hours that would be authorized because it designed the CARE process that produced that determination. When DSHS exercised discretion to create the systems that produced the service plans and reduce the hours those plans authorized for live-in providers, its actions were governed by an implied covenant of good faith, and the jury found that DSHS violated that covenant.
¶27 In light of the jury's finding that DSHS breached the duty of good faith and fair dealing as to a specific term in the contract, DSHS's reliance on cases where the duty of good faith did not apply because there was no contract term is misplaced. See, e.g., Badgett, 116 Wn.2d at 570-72 (holding that "[w]hile the parties may choose to renegotiate their agreement, they are under no good faith obligation to do so"); Yousoofian, 84 Wn. App. at 762-63 (holding that the duty of good faith did not apply to a landlord's refusal to consent to a lease agreement when the contract gave the landlord the unconditional right to do so); Seattle-First Nat'l Bank v. Westwood Lumber, Inc., 65 Wn. App. 811, 820, 822-23, 829 P.2d 1152 (1992) (holding that the trial court erred by imposing a duty of good faith on Seattle-First in relation to a course of dealing when that course of dealing conflicted with the express terms of the contract). DSHS relies heavily on Monotype Corp. v. International Typeface Corp., but in that case the jury found that the parties did not intend for the contract to prohibit certain conduct, and therefore it would be redundant to ask whether that conduct breached an implied covenant of good faith. 43 F.3d 443, 452-53 (9th Cir. 1994). None of these cases concern a contract like this one, where one party retained discretionary authority to determine a future contract term.
C. A Statutory Violation Can Constitute a Breach of the Duty of Good Faith and Fair Dealing
¶28 DSHS argues that even if there was a duty of good faith and fair dealing, no breach could be found because that would depend on enforcing external, statutory duties. DSHS argues that Medicaid comparability is a statutory duty owed to clients, not a contractual duty owed to providers. DSHS contends that because the providers' legal basis for relief is created by statute, it cannot be enforced as an implied contractual duty.
¶29 DSHS confuses what is violated with how it is violated. While DSHS is correct that a breach of a duty imposed by statute does not create an action on a contract, Boguch v. Landover Corp., 153 Wn. App. 595, 615, 224 P.3d 795 (2009), the duty that providers seek to enforce here is a contractual duty around a contractual term. The contrac tual term is the determination of the hours of care for which each client is eligible, and DSHS had discretion in its performance of that term because it created' the CARE process that made that determination. Therefore, DSHS had an implied duty of good faith and fair dealing in its performance of that term. Here, the jury found that DSHS violated that contractual duty when it decided to automatically reduce the payments for in-home care providers. Furthermore, excusing breaches of the duty of good faith when those breaches are also statutory violations would neither protect the reasonable expectations of contracting parties nor encourage parties to obey the law.
¶30 Because we uphold the jury's verdict for the providers, we need not analyze the providers' alternative theories of recovery.
2. The Jury Instructions Accurately Reflected the Law Related to the Implied Duty of Good Faith and Fair Dealing
¶31 DSHS claims that instructions 18 and 19 misstated the law related to the implied duty of good faith and fair dealing and that the judge abused his discretion by failing to give its proposed instructions 35, 35A, and 25A. "Jury instructions are sufficient when they allow counsel to argue their theory of the case, are not misleading, and when read as a whole properly inform the trier of fact of the applicable law." Bodin v. City of Stanwood, 130 Wn.2d 726, 732, 927 P.2d 240 (1996). Because the jury instructions in this case, when read as a whole, accurately state the law, are not misleading, and allow both sides to argue their theory of the case, there is no error.
¶32 DSHS first claims that instruction 19 required the jury to apply the duty of good faith and fair dealing even if the shared living rule was not part of the contract. Appellants' Opening Br. at 43-44. DSHS points to the first sentence of instruction 19:
If you find that reduction of authorized hours by application of the Shared Living Rule was not a part of the provider contract, you must consider the claim that [DSHS] violated the duty of good faith and fair dealing in applying the [shared living rule].
CP at 2980. However, that introductory sentence merely indicated that if the jury found that DSHS's application of the shared living rule did not violate an express term of the contract, the jury must then turn to the question of whether the application of the rule violated the duty of good faith and fair dealing. The jury instructions overall make it quite clear that the duty of good faith and fair dealing applies only in relation to the performance of specific terms of the contract. See, e.g., CP at 2979 (Instruction 18 states, "[The] duty of good faith and fair dealing . exists only in relation to the performance of specific terms in the contract and cannot be used to contradict contract terms or require a party to accept new or different contract obligations."). Indeed, the question to the jury on the verdict form specifically states, "Do you find that [DSHS] breached an implied duty of good faith and fair dealing with the Providers as to [DSHS's] performance of a specific term in the Individual Provider Contracts?" CP at 2985 (emphasis added). Taken in context, instruction 19 is not misleading.
¶33 In a very similar claim, DSHS claims another sentence in instruction 19 fails to indicate that the duty of good faith and fair dealing arises only in relation to the performance of a specific contract term. The relevant sentence states:
To establish breach of the implied duty of good faith and fair dealing, providers must prove that in reducing a client's authorized hours by application of the [shared living rule], [DSHS] acted in a manner that prevented the provider from attaining his or her reasonable expectations under the contract.
CP at 2980. But this sentence does not attempt to list all of the requirements that providers must prove — it is simply listing one of the elements that the providers must prove in order to prevail on their claim. As noted above, the rest of the instructions describe the other elements of a breach of good faith and fair dealing claim, including that the duty arises only in relation to the performance of specific terms of the contract. See CP at 2980, 2985. "It has long been the rule of this court that individual instructions may not be singled out for consideration without reference to the entire set of instructions which were given." Nelson v. Mueller, 85 Wn.2d 234, 238, 533 P.2d 383 (1975). Looking beyond individual sentences, which can state only one portion of a rule, the jury instructions as a whole accurately reflect the law.
¶34 Next, DSHS claims that instruction 19 was incorrect when it indicated that (1) if the contract gives DSHS unconditional authority to determine a contract term, there is no duty of good faith and fair dealing but (2) if the contract does not give unconditional authority "or is silent as to [DSHS]'s authority," the jury must determine whether the duty has been breached. CP at 2980. DSHS does not actually argue that this inaccurately reflects the law and does not point to any cases that contradict this statement of the law; instead, DSHS essentially challenges how the jury applied the law to this case. In fact, the instructions accurately reflect the case law in this area: the duty of good faith and fair dealing arises when a contract gives a party discretionary authority to determine a contract term. See Goodyear Tire, 86 Wn. App. at 738. However, if a contract gives a party unconditional authority to determine a term, there is no duty of good faith and fair dealing. See Yousoofian, 84 Wn. App. at 762-63 (where landlord had an "absolute privilege" to refuse to consent to a tenant's lease assignment, there was no contractual duty to which the duty of good faith attached). Appellants do not show how this instruction constituted error.
¶35 Finally, DSHS claims that the trial court abused its discretion when it declined to give proposed instructions 25A, 35, and 35A. Instruction 25A stated that the CARE tool and federal regulations were terms of the provider contract merely because the service plans and federal regulations are incorporated into the contract by reference. Instruction 35 addressed the same issues as instructions 18 and 19 but did not include certain sentences that DSHS found problematic, as described in the paragraphs above. Instruction 35A stated that the provider contracts did not include a duty to disclose to providers the impact of the shared living rule, and thus the failure to disclose did not constitute a breach of contract or of the implied duty of good faith and fair dealing.
¶36 A trial judge's decision not to issue a jury instruction is reviewed for abuse of discretion. Stiley v. Block, 130 Wn.2d 486, 498, 925 P.2d 194 (1996). When this court reviews jury instructions, it looks to the jury instructions as a whole, with the primary purpose of allowing both parties to fairly state their case. See Gammon v. Clark Equip. Co., 104 Wn.2d 613, 616-18, 707 P.2d 685 (1985) (evaluating whether excluding a particular jury instruction was error when reading the jury instructions as a whole rather than examining the missing jury instruction standing alone). Here, DSHS does not show how the trial judge's decision against these instructions constituted an abuse of discretion. As a whole, the jury instructions allowed both sides to argue their theory of the case, accurately stated the law, and were not misleading; as a result, we see no basis for overturning the jury verdict.
3. The Trial Judge Correctly Disallowed Compensation to Clients in Light of the Judgment for Providers
¶37 In their cross appeal, the clients challenge the trial judge's ruling that they are not entitled to judgment for damages. The trial judge reasoned that the client class should not be awarded a money judgment because the clients sued to pass damages through to the provider class. Since judgment was entered for the providers, judgment could not also be entered for the clients to pass through to the providers. In accordance with this court's policy of preventing double recovery, we affirm the trial judge's ruling.
¶38 Although the parties cite no case law regarding this precise type of double recovery — judgment both for contractors that were not paid for providing services to clients and for the clients themselves — Washington courts have consistently implemented rules designed to prevent double recoveries. See Lange v. Town of Woodway, 79 Wn.2d 45, 49, 483 P.2d 116 (1971) (adopting the election of remedies doctrine for "the sole purpose of preventing double redress for a single wrong"); Rice v. Janovich, 109 Wn.2d 48, 61-62, 742 P.2d 1230 (1987) (holding that the trial court erred by giving jury instructions for both assault and outrage for the same conduct because it allowed for the possibility of double recovery); Sherry v. Fin. Indem. Co., 160 Wn.2d 611, 621-22, 160 P.3d 31 (2007) (discussing rules designed to prevent double recovery in the context of an underinsured motorist).
¶39 In this case, the trial judge ruled that
the Client Class is not entitled to judgment for the damages because judgment for that amount will be entered in favor of the Provider Class and only one recovery can be permitted. The presence of a judgment entered in favor of the Provider Class precludes entry of a judgment in favor of [the] Client Class.
CP at 3475. Essentially, the trial judge reasoned that the two lawsuits were alternative theories of recovery and that only one should be allowed. See id. ("the Client Class actually received the Rule related services and thus it sues to pass damages through to the Provider Class"). The clients suggested that they could receive an award offset by the judgment for the providers. Presumably, the purpose of such an offset award would be to allow the clients to recover attorney fees as the prevailing party. See Part 5, infra. The trial judge declined that option, noting that the ruling for the clients "must account for and acknowledge" the final judgment entered for the providers. CP at 3475. He further reasoned that "the clients cannot receive directly the monetary payment for services that were wrongfully withheld." CP at 3476.
¶40 We affirm the trial judge's reasoning. Although the parties chose to bring claims resting on alternative theories of recovery, the judge found that the providers and the clients suffered the same damages. As a result, entering judgments for both classes would amount to a double recovery, a result courts seek to avoid. The clients sought damages in order to compensate providers for the services they performed without compensation — compensation the providers received in the form of damages for their contract claim. Once judgment was entered for the providers, the trial judge appropriately disallowed a monetary judgment for the clients under their alternative theory of recovery.
¶41 The clients point to a seemingly inconsistent finding of fact from the trial judge: "The court finds that the Client Class suffered the same damages as the Provider Class, $57,123,794.50." CP at 3473-74. However, the court went on to clarify that "[t]he Client Class has proved the same damages claimed by the Provider Class claim, except that the Client Class actually received the Rule related services." CP at 3475 (emphasis added). Thus the trial judge's earlier finding does not undermine his legal conclusion that he could not enter judgment for both classes because it would amount to double recovery.
¶42 Because we affirm the trial judge's ruling that the clients are not entitled to recovery, we do not reach DSHS's other arguments as to why the clients are barred from recovery.
4. The Trial Judge Correctly Granted Summary Judgment to DSHS on the Providers' Wage Claims
¶43 Prior to trial, the judge granted summary judgment to DSHS on the providers' claims that DSHS had (1) wrongfully withheld wages in violation of RCW 49.52.050 and .070 and (2) failed to pay the providers for all hours worked in violation of the MWA. The providers cross appealed this ruling, arguing that (1) DSHS is the payroll agent for the clients and thus has liability under RCW 49.52.050 and .070 and (2) DSHS had forced providers to perform unpaid, off-the-clock work, thus violating the MWA. We affirm the trial judge.
¶44 First, while RCW 49.52.050 and .070 do apply to agents of employers, the providers have not shown that DSHS is an agent for the client. The providers contend that an entity is an agent if it "has control over the funds or the decision to pay" based on Ellerman v. Centerpoint Prepress, Inc., 143 Wn.2d 514, 522, 22 P.3d 795 (2001). Br. of Resp'ts Rekhter et al. at 76. But that is not what Ellerman holds. In Ellerman, we held that in order to prevail on a wage claim, the employee must show that the party withholding the wages was both an agent and had control over the payment of wages. 143 Wn.2d at 522-23 ("[T]he statutes in question require more than the establishment of an agency relationship. Rather, there must be a showing that an agent had some control over the payment of wages before personal liability attaches to the agent." (emphasis added)). And here, the providers have not shown any agency relationship under the common law.
¶45 Second, the MWA applies to the employer-employee relationship, which does not apply to DSHS's relationship with the providers. The MWA defines " '[e]mployer' " as "any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee." RCW 49.46.010(4). The providers argue that DSHS was acting in the interest of an employer because it controlled payment to the providers. However, as discussed above, DSHS's role as a payor of Medicaid funds did not create an agency relationship between the client and DSHS. In addition, under state law, the state is considered the employer of the providers "[s]olely for the purposes of collective bargaining." RCW 74.39A.270(1). Furthermore, the contract between DSHS and the providers expressly states that the contractor is not "an officer, employee, or agent of DSHS" and that the provider "agrees not to claim for the [provider] any rights, privileges or benefits which would accrue to an employee of the State of Washington." Ex. 1, at 5. The trial judge correctly granted summary judgment to DSHS on the providers' wage claims.
5. The Trial Judge's Award of Prejudgment Interest Was Improper
¶46 DSHS appeals the trial court's award of prejudgment interest, contending that the damages could not have been calculated with certainty prior to the entry of judgment. Prejudgment interest is available "(1) when an amount claimed is 'liquidated' or (2) when the amount of an 'unliquidated' claim is for an amount due upon a specific contract for the payment of money and the amount due is determinable by computation with reference to a fixed standard contained in the contract, without reliance on opinion or discretion." Frier v. Refrigeration Eng'g Co., 74 Wn.2d 25, 32, 442 P.2d 621 (1968). A claim is liquidated "where the evidence furnishes data which, if believed, makes it possible to compute the amount with exactness, without reliance on opinion or discretion." Id. (emphasis added); see 1 Dan B. Dobbs, Dobbs Law of Remedies § 3.6(1), at 337 (2d ed. 1993) (citing Hansen v. Rothaus, 107 Wn.2d 468, 472-73, 730 P.2d 662 (1986)). The rationale for this rule is that it would be unfair to hold a defendant accountable for interest on an amount that is unquantifiable and unfore seeable prior to a jury verdict. A defendant cannot stop the running of interest by paying the plaintiff if that defendant does not know the amount due. See Dobbs, supra, at 351-52.
¶47 The damages in this case are the difference between what providers were paid under the shared living rule and what providers should have been paid under the individualized CARE formula. However, the CARE formula requires individualized data to be entered in order to determine the number of paid hours, and such data was not entered or collected during the times at issue in this case. Thus, at trial the jury heard from various experts who testified as to how to estimate what data would have been entered into the CARE formula without the shared living rule.
¶48 DSHS argues that because the individualized data called for under the CARE assessment was not collected during the period of the shared living rule, the authorized hours cannot be determined with exactness. If the authorized hours for each client cannot be determined with exactness, then the provider class's damages cannot be determined exactly and prejudgment interest is not allowed. We agree. While the mathematical methods of estimation provided by the experts might be statistically sophisticated, ultimately they provided only estimates. Because the relevant data was never actually entered or collected, there was no way for the jury to determine how many uncompensated hours were worked and thus what the exact amount of damages was. Since the damages are neither liquidated nor ascertainable, prejudgment interest is unavailable.
6. There Is No Basis on Which To Award Attorney Fees to Any Party
¶49 DSHS has not requested attorney fees or appealed any trial court decisions on attorney fees and costs. Thus, this court has no basis for awarding attorney fees to DSHS.
¶50 The providers argue that they should be awarded attorney fees pursuant to RCW 49.52.070. However, that statute applies to employers who fail to pay wages. The providers prevailed on a contract claim and not on their wage claims. As a result, the providers have provided no statutory basis for attorney fees.
¶51 Finally, the clients argue that they should be awarded attorney fees under the policy underlying RCW 74.08.080(3). That statute provides for attorney fees for a DSHS client or applicant if "the superior court, the court of appeals, or the supreme court renders a decision in favor of the appellant." RCW 74.08.080(3). The purpose of that policy is both punitive and deterrent, as it is "designed to encourage the agency to render careful and correct decisions at the initial stage, under penalty of having to pay the costs of correcting its mistakes when its decisions are overturned on appellate review." Whitehead v. Dep't of Soc. & Health Servs., 92 Wn.2d 265, 269-70, 595 P.2d 926 (1979). However, as discussed above, the trial judge concluded that "[t]he Client Class has proved the same damages claimed by the Provider Class claim, except that the Client Class actually received the Rule related services." CP at 3475. The trial judge then entered judgment for the provider class but not the client class. Since the trial court did not enter a decision in favor of appellants, they do not qualify for attorney fees under the statute.
CONCLUSION
¶52 After a lengthy trial, a jury found that DSHS violated its duty of good faith and fair dealing in the performance of a specific term of its contracts with providers. This verdict accords with relevant law, and we affirm it. We also affirm the trial judge's ruling that the clients cannot recover because they sued only to pass the damages through to the providers and the decision to grant summary judgment to DSHS on the providers' wage claims. However, we reverse the trial judge's award of prejudgment interest because the damages could not be determined with certainty.
Wiggins, González, and Gordon McCloud, JJ., concur.
The providers claim that DSHS is challenging the evidentiary basis for the jury's verdict and thus is barred from bringing this challenge because it failed to file a postverdict CR 50(b) or CR 59 motion. However, DSHS is not challenging the evidentiary basis for the verdict — it is challenging whether the law provides a basis for relief. Consequently, it is not barred from filing this appeal.
The respondents claim that DSHS's exceptions to the jury instructions were not specific enough at trial to allow the trial judge to fully understand" their legal claims and thus DSHS failed to preserve its appeal. We disagree. After discussing each of the potential jury instructions, DSHS attempted to describe each of their exceptions in detail on the record and the trial judge responded, "And let me add here that we've had extensive discussions about these instructions. I believe I understand your positions. At this point I am not going to change the instructions that I'm going to give. And all of your arguments on why they are incorrect are preserved in the record. You don't need to put them in the record now; just make clear that you are excepting to them so that you've got an appealable issue." 14 Verbatim Report of Proceedings at 2602. On this record, we do not see how we could conclude that DSHS did not properly describe their exceptions at trial.