Court Opinion

ID: 2715696
Source: CourtListenerOpinion
Date Created: 2014-08-06 17:28:31.769375+00
Date Added: 2024-06-11T15:14:06.965230
License: Public Domain

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON

ROBERT W. DAHLGREN,
a single man,                                   No. 70895-3-1

                    Respondent,                 DIVISION ONE

                                                UNPUBLISHED OPINION

NORTHWEST TRUSTEE SERVICES,
INC., and CHASE HOME FINANCE,
LLC, successor by merger to CHASE
MANHATTEN MORTGAGE
CORPORATION, successor by merger
To CHASE MORTGAGE COMPANY,
a national banking corporation,

                    Defendants,

             and

OMEGA P. PAULITE, a single woman,

                    Appellant.                  FILED: August 4, 2014

                                                                                           o

       Spearman, C.J. —This matter arises from appellant Omega Paulite's
breach of a property settlement agreement that she entered into with respondent^   en

                                                                                   i
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                                                                                        "'-~or~
Robert Dahlgren as part of their divorce. Paulite was awarded the marital               .y ~v m
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                                                                                                 a

residence and agreed to assume sole liability for the mortgage note. But Paulite
                                                                                   o

failed to remove Dahlgren from liability for the note and then defaulted on the
mortgage. Subsequently, Dahlgren's credit was damaged and he brought an
action for breach of the property settlement agreement. The issues before us are
whether the trial courterred in (1) awarding Dahlgren $176,891.57 in attorney
fees and (2) awarding Dahlgren $56,306 in damages on summary judgment. We
conclude that (1) Paulite's objections to the attorney fee award are waived
No. 70895-3-1 / 2

because she did not raise them below and (2) summary judgment on damages

was improper. We remand for further proceedings on damages.

                                      FACTS

       In 2003, Dahlgren and Paulite, who were married in 1999, borrowed

money from Chase Manhattan Mortgage Corporation (Chase) to buy a home (the
Property) in Bellevue, Washington. In 2007, they decided to divorce and
executed a property settlement agreement (PSA) on July 31, 2007. Under the
PSA, Paulite was awarded sole ownership ofthe Property and was required to
assume sole liability for the mortgage. Dahlgren was to be released from liability.
Dahlgren executed a quitclaim deed in favor of Paulite in November 2007. The
PSA was incorporated into the decree of dissolution filed on January 30, 2008.
       In October 2008, Dahlgren contacted Chase regarding the process of
releasing him from liability on the mortgage note and deed of trust. Because the
value of the Property was significantly more than the balance on the mortgage
note, Chase agreed to release Dahlgren. Dahlgren complied with Chase's
instructions and paid a processing fee.

       In late 2009, Dahlgren learned that Paulite had defaulted on the loan and
that Chase had reported the default negatively on his credit. When Dahlgren
called Chase, he was informed that Paulite had not returned a consent form that
Chase had sent to her. As a result, Chase had not released Dahlgren from
 liability. In 2010, Chase initiated nonjudicial foreclosure proceedings on the
 Property and issued a notice of trustee's sale, setting a sale date of November
 29,2010.
No. 70895-3-1 / 3

      In November 2010, Dahlgren filed suit against Chase and the trustee. He

alleged that Chase wrongfully refused to release him from liability under the note

and deed of trust. The trustee's sale was subsequently stricken. In February

2011, Dahlgren amended his complaint to sue Paulite for breach of the PSA and

decree of divorce. He alleged that she failed to (1) keep the obligation to Chase

current; (2) remove him from the deed oftrust and release him from the note; and
(3) defend, indemnify, and hold him harmless from the Chase claim. He alleged
that Paulite's acts and omissions had resulted in Chase reporting the default

negatively on his credit. He further alleged that his credit rating was important to
his work as a consultant on the nation's power grid because of regular

background checks. Paulite filed an answer containing a general denial.
       On September 7, 2011, Dahlgren filed a motion for partial summary
judgment, contending there was no genuine issue of material fact regarding
Paulite's liability for breach of the PSA. Dahlgren sought an order that would
allow the Property to be sold (through the imposition ofa constructive trust or
through the appointment of a receiver) and the proceeds used to satisfy the
claims of Chase, Dahlgren, and any other lien holders.

       Paulite did not timely respond and did not appear at the October 7, 2011
hearing on the motion.1 On the day of the hearing, the trial court entered an order
granting Dahlgren's motion, ruling that he was entitled to summary judgment on
liability and appointing him as acting trustee for the Property. The order

       1Paulite filed an untimely reply on October 11, 2011. CP 37-39.
                                              3
No. 70895-3-1/4

contained findings of fact and conclusions of law. Also on the day of the hearing,

Dahlgren gave Paulite a 20-day notice to vacate the Property.

        Over the next year, Dahlgren was delayed from taking possession of the

Property. In October 2011 and then in May 2012, Paulite filed for chapter 13
bankruptcy. Dahlgren filed an adversary action in both matters. The first
proceeding was dismissed by the bankruptcy court in March 2012. The second
proceeding was filed when Dahlgren had an unlawful detainer action pending
against Paulite and stayed the process of removing her from the Property. After
the automatic stay expired on June 8, the state court action could proceed.
        On May 3, 2012, on Dahlgren's motion, the trial court entered a CR 54(b)
order directing the entry of final judgment as to its October 2011 partial summary
judgment order.

        At some point, Paulite's family members and innocent tenants had begun
living in the Property and she had entered into written leases with them. Dahlgren
filed unlawful detainer actions against Paulite and her family members and
sought writs of restitution. By the end of October 2012, Dahlgren had obtained
writs of restitution for Paulite and her family members, and the innocent tenants

had moved out.2 Dahlgren brought the Property to a saleable condition and then
moved for the appointment of a custodial receiver so that the Property could be
sold free and clear of the judgment liens against Paulite. On January 7, 2013, the
court entered an order appointing a receiver. The court also entered findings of

         2Dahlgren had worked with the innocent tenants so that they could stay through October
 2012, the end of their lease term.

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No. 70895-3-1 / 5

fact and conclusions of law that Dahlgren was entitled to reimbursement for his

expenses, costs, and attorney fees incurred in getting Paulite out of the Property

and preparing it for sale.

       On January 17, 2013, the bankruptcy court entered an order stating that

the Property could be sold in the state court receivership proceedings.3 The
receiver, after obtaining an acceptable purchase and sale agreement, moved for

authorization to sell the Property. Dahlgren filed a limited objection on March 1,

agreeing to the sale on the condition that his expenses, costs, and attorney fees
were paid in accordance with the court's orders entered on October 7, 2011 and
January 7, 2013. Paulite filed an objection to the motion on March 8.
        On March 11, 2013, the court entered an order authorizing the receiver to

close the sale ofthe Property. As part ofthe order, the court awarded Dahlgren
$176,891.57, as well as costs in preparing the Property for sale.4 Dahlgren
received $88,381.52 from the sale; no additional proceeds remained. Paulite
sought discretionary review, assigning error to the award of attorney fees.
        The issue of Dahlgren's damages for his breach of PSA claim was still
unresolved. On March 27, 2013, Dahlgren moved for summary judgment on

damages, seeking $56,306 for losses of business income he had allegedly

        3By then, the bankruptcy court had granted Paulite's request to convert her second
bankruptcy action to a chapter 7 proceeding.
        4 The order stated:
        Plaintiff Dahlgren isentitled tofull reimbursement ofhis attorney's fees in the
        total amount of $176,891.57, as reimbursement for Payments made to Enhance
        the Collateral which shall be charged against and paid out of the receivership,
        and shall be entitled to a first and paramount lien against the Property in the
         same manner as the Receiver's fees and costs.
 Clerk's Papers (CP) at 66.
No. 70895-3-1 / 6

suffered in 2010. Paulite responded, submitting her own declaration. On April 26,

2013, the trial court granted Dahlgren's motion and entered an order awarding

$56,306 in damages. Paulite sought discretionary review. Dahlgren moved for

$17,946.12 in attorney fees and costs incurred after the sale of the Property. The

court denied the motion.

        On August 12, 2013, the trial court entered a final judgment and orderof
dismissal, which included findings of fact and conclusions of law confirming its

prior rulings on liability, damages, and attorney fees. Paulite appealed. This court
closed the petitions for review and consolidated the issues with Dahlgren's

appeal.5

                                          DISCUSSION

        The two issues before us are (1) whether the trial court properly awarded

$176,891.57 in attorney fees to Dahlgren in March 2013 and (2) whether the trial
court properly granted summary judgment on damages in April 2013, awarding
$56,306 to Dahlgren for his breach of PSA claim.6
                                    Award of Attorney Fees

        A trial court's award of attorney fees will not be overturned absent an

abuse of discretion. Progressive Animal Welfare Soc. v. Universitv of Wash., 114

         5On August 15, 2013, Dahlgren moved in the adversary bankruptcy action for the
judgment to be found to be non-dischargeable. While the motion was pending, Paulite moved on
October2 to have the case re-converted to a chapter 13 proceeding. On October 7, the
bankruptcy court ruled that the judgment was non-dischargeable. On November 12, the court
denied Paulite's motion to reconvert. Paulite's case was dismissed without discharge on
 November 25, 2013.
         6While Paulite devotes a significant amount ofbriefing to hercontention that the trial
court erred in granting Dahlgren's motion for partial summary judgment in October 2011, Paulite
 has not appealed that order and it is not properly before this court.
No. 70895-3-1 / 7
Wash. 2d 677, 688, 790 P.2d 604 (1990). A trial court abuses its discretion when

"the exercise of its discretion is manifestly unreasonable or based upon

untenable grounds or reasons." jd. at 688-89.

       Paulite argues that the trial court's March 2013 award of attorney fees

must be reversed because (1) Dahlgren was not a prevailing party, where a final

judgment had not yet been entered at the time of the award and (2) the attorney

fees were not reasonable under a lodestar analysis7 and included fees for work

that was unrelated, unnecessary, and unproductive. But Paulite did not make

these arguments below.8 Generally, this court does not consider arguments that
are raised for the first time on appeal. Karlbero v. Otten, 167 Wash. App. 522, 531,

280 P.3d 1123 (2012); see ajso RAP 2.5(a); Draper Mach. Works. Inc. v.
Hagberg, 34 Wash. App. 483, 488, 663 P.2d 141 (1983) (refusing to consider for
first time on appeal whether trial court improperly determined amount ofattorney
fees awarded). Nor does Paulite explain why she may raise these objections for
the first time on appeal. Furthermore, she does not argue that the trial court erred
in its October 2011 or January 2013 orders, which awarded Dahlgren all of his
attorney fees as administrative costs and expenses.9

        t See Bowers v. Transamerica Title Ins. Co.. 100 Wash. 2d 581, 675 P.2d 193 (1983).
        8It appears that Paulite objected to Dahlgren's request for attorney fees, but the
objection does not appear in the record and we are unable to determine what arguments Paulite
did make. Nonetheless, Paulite does notdispute Dahlgren's assertion that she failed to raise
these arguments below.
        9The trial court's October 7, 2011 order granting partial summary judgment included the
following conclusion of law:
        DAHLGREN is empowered by this Court to take such steps as may be
        necessary so that the Subject Property can be sold as set forth in this Order. This
        includes, but is not limited to:
No. 70895-3-1 / 8

       Paulite also contends that the trial court failed to enter findings of fact and

conclusions of law regarding the reasonableness of the attorney fee award and

that remand is therefore required under Mahler v. Szucs, 135 Wash. 2d 398, 957
P.2d 632, 966 P.2d 305 (1998). Under Mahler, trial courts must create an

adequate record for review offee award decisions and the absence of such a
record will result in remand to the trial court to develop such a record. Id at 435.

       The trial court's August 2013 order of dismissal confirmed the court's prior

award of attorney fees and included the following findings of fact:

       5. Paulite has violated the court orders dated October 7, 2011 and
       July 19, 2012. She failed to respect the findings ofthe court related
       to Dahlgren's right to control the Subject Property. She failed to
       cooperate in the sale ofthe Subject Property. These violations
       resulted in additional and otherwise avoidable attorney's fees and
       costs being incurred by Dahlgren.

       7. This dispute has involved a multiplicity of litigation as a result of
       Paulite's actions. These include this matter, four bankruptcy court
       actions, three unlawful detainer actions, and two complaints by
       Paulite to the Washington State BarAssociation. Within this action
       there was a motion for injunction, three motions for summary
       judgment, imposition of a constructive trust, appointment of a
       receiver and sale of the Subject Property, and this motion, as well
       as others. The multiplicity of actions is a direct result ofthe acts and
       omissions of Paulite, and attorney's fees incurred by Dahlgren in
       those actions are caused by Paulite's improper and unconscionable
       conduct. All of these actions relate to Dahlgren's efforts to obtain
       the benefits of the Property SettlementAgreement ("PSA") and
        Dissolution Decree, and result from Paulite's breach of her
       obligations under that Agreement and Decree.

                d. To be compensated for his time, costs and fees as an administrative
                6XD6nS6[.l
CP at 34-35. The January 7, 2013 order confirmed Dahlgren's right to recover his attorney fees
and costs as "administrative expenses," CP at 932, and further states:
       2.36 To the extent Plaintiff has made or will make Payments to Enhance the
        Collateral, any and all such payments shall be charged against and paid out of
        the receivership, and shall be entitled to a first and paramount lien against the
        Property in the same manner as the Receiver's fees and costs.
CP at 940.

                                                 8
No. 70895-3-1 / 9

      8. Dahlgren's attorney's fees and costs requested relate to
      breaches by Paulite of the PSA and/or Note and Deed of Trust. The
      attorney's fees and costs requested could have been avoided if
      Paulite had complied with her obligations. Many of the attorney's
      fees and costs incurred by Dahlgren arose directly from Paulite's
      procedural hurdles to the sale of the Subject Property.
      9. A review of the file in this matter discloses that this dispute has
      involved a wide range of legal issues and procedural complexities. .

      10. Many of these issues were novel, difficult and time-consuming.
      Having such a wide variety of issues in one matter presented
      challenges that were unusual if not unique to this case. The
      willingness of Dahlgren's attorneys to work on these numerous
      areas avoided a multiplicity of bankruptcy, family law and debtor-
      creditor counsel that likely reduced the amount of attorney's fees
       that otherwise would have been incurred.

CP at 122-25. We conclude that these findings, none of which Paulite specifically

challenges, were adequate to support the award of attorney fees. Furthermore,
we conclude that where Paulite's arguments on appeal as to why the award was

in error were waived, the trial court's failure to enter more specific findings offact
or conclusions of law as to the reasonableness of the fee award was harmless.

We do not understand Mahler to stand for the proposition that, even though none

of a party's arguments on appeal asserting error in an attorney fee award (stated
differently, the bases for reviewing the award) were made below, the absence of
findings of fact and conclusions of law automatically requires remand.
                         Summary Judgment on Damages

       This court reviews summary judgment de novo. Davies v. Holy Family

Hosp., 144 Wash. App. 483, 491, 183 P.2d 283 (2008). Summary judgment is
appropriate if the record shows that there is no genuine issue as to any material
fact and the moving party is entitled to judgment as a matter of law. ]cL (citing CR
No. 70895-3-1/10

56(c); Ruff v. County of King. 125 Wash. 2d 697, 703, 887 P.2d 886 (1995)). A

motion for summary judgment "'should be granted only if, from all the evidence,

reasonable persons could reach but one conclusion.'" Lewis v. Bours, 119 Wash. 2d
667, 669, 835 P.2d 221 (1992) (quoting Marincovich v. Tarabochia, 114 Wash. 2d
271, 274, 787 P.2d 562 (1990)). All facts and reasonable inferences are

construed in the light most favorable to the nonmoving party. Dowler v. Clover

Park Sch. Dist. No. 400, 172 Wash. 2d 471, 485, 258 P.3d 676 (2011). The initial

burden is on the moving party to show that there are no genuine issues of
material fact. Pacific Nw. Shooting Park Ass'n v. Citv of Seguim, 158 Wash. 2d 342,

350, 144 P.3d 276 (2006). "Once the moving party has met its burden, the
burden shifts to the nonmoving party to present admissible evidence

demonstrating the existence of a genuine issue of material fact." Ig\ at 351.
       In a breach of contract claim for damages, a plaintiff must show the

breach proximately caused the damages claimed. Northwest Indeo. Forest Mfrs.
v.Dep't of Labor and Indus., 78 Wash. App. 707, 712, 899 P.2d 6 (1995). Damages

recoverable for a breach of contract are those which "'may fairly and reasonably

be considered either arising naturally, i.e., according to the usual course of
things, from such breach of contract itself, orsuch as may reasonably be
supposed to have been in the contemplation of both parties, at the time they
made the contract, as the probable result of the breach of it.'" Gaolidari v.
Denny's Rests., Inc., 117 Wash. 2d 426, 446, 815 P.2d 1362 (1991) (quoting Hadley

v. Baxendale, 9 Ex. 341, 354, 156 Eng. Rep. 145, 151 (1854)).

                                         10
No. 70895-3-1 /11

       Here, the damages sought by Dahlgren were for lost business income as

a result of the drop in his credit rating, which he alleged was due to Paulite's

breach of the PSA. Paulite does not dispute that Dahlgren suffered damage to

his credit rating after her default or that his business income declined in 2010;

she only disputes that the decline in his income was caused by her breach ofthe
PSA. She contends summary judgment was improper because (1) Dahlgren's

evidence of the financial harm he suffered due to her breach of the PSA was

circumstantial and the inferences from his evidence were capable of several

conclusions and (2) Paulite's declaration created an issue offact that Dahlgren's
lost business income was proximately caused byfactors unrelated to his credit

rating. We agree with Paulite that Dahlgren did not meet his initial burden of
showing the absence of an issue of material fact as to the amount of damages.
        Dahlgren submitted circumstantial evidence to prove the amount of his
damages.10 He submitted evidence that his credit rating before Paulite's default
was in the 800s, that it dropped to the mid-600s after the default, and that it
improved to the mid-700s after the foreclosure was stopped. He submitted
evidence that, after the drop in his credit rating, his available credit was reduced,
he was denied extensions of credit, and he lost over $20,000 in credit usage. He

also submitted evidence, in the form of his declaration, that his company could

not pursue hiring because of the reduction in his available credit; that he was

        10 Dahlgren did not offer direct evidence of his lost business income. For example, he did
not offer evidence that current clients of hiscompany, Jet Set Labs, terminated the company's
services because of his credit report or evidence that prospective clients refused to hire the
 company because of his credit report.
                                                11
No. 70895-3-1/12

ready and able to work in 2010; and that he experienced a drop in his annual

income in 2010 because of his inability to bring in new clients. Finally, Dahlgren

provided his tax returns for the years 2006 to 2010. His tax returns demonstrated

that his average annual adjusted gross income for the years 2006 to 2009 was

$162,857. His 2010 tax return showed an adjusted gross income of $106,551.

Thus, the difference between his average income for several years leading up to

2010 and his income in 2010 was $56,306. On the basis of this evidence,

Dahlgren sought a damages award of $56,306 for lost income in 2010.
       We conclude that the amount of damages was improperly decided on

summary judgment on the basis of Dahlgren's evidence. If the evidence and the
inferences therefrom were considered in the light most favorable to Paulite, it

cannot be said that reasonable minds could conclude only that the entire

decrease in Dahlgren's income in 2010 was due to Paulite's breach of the PSA
and default on the Chase mortgage. He failed to meet his initial burden to

demonstrate there were no genuine issues of material fact.

       The last issue before us is whether, as Paulite contends, the trial court

erred in including the following language in its summary judgment order on

damages:

       The Court also find[s that] Dahlgren is entitled to a setoff of
       damages resulting from 2011 and 2012 wage loss and loss of credit
       capacity, to be proven in the event Paulite pursues any alleged
       damages from the property settlement agreement.

CP at 97. Paulite contends that the "alleged damages" referred to in the court's

order are based on her claim, unrelated to the lawsuit before the court, alleging

                                          12
No. 70895-3-1/13

Dahlgren's fraudulent concealment of assets. We agree with Paulite that the

language improperly appears to allow Dahlgren to maintain jurisdiction for future

claims that had not been pleaded or proven below (where his amended

complaint was filed in February 2011) and that the language should be stricken

on remand.

                                  Attorney Fees on Appeal

       Dahlgren seeks attorney fees on appeal, citing RAP 18.1 and the attorney

fee provision in the PSA.11 We deny the request. Where both parties prevail on

major issues, there is no prevailing party. Kvsar v. Lambert, 76 Wash. App. 470,
493, 887 P.2d 431 (1995) (citing American Nursery Prods.. Inc. v. Indian Wells

Orchards, 115 Wash. 2d 217, 235, 797 P.2d 477 (1990)). Because Dahlgren

prevails on only one of two major issues on appeal, he is not the prevailing party.
       Affirmed in part, reversed in part, and remanded for further proceedings.

                                                                 tcM^
WE CONCUR-                                                   t
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