Court Opinion

ID: 4672497
Source: CourtListenerOpinion
Date Created: 2021-03-29 20:18:06.502419+00
Date Added: 2024-06-11T08:03:07.668155
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
                      DIVISION ONE
MILWAUKIE LUMBER COMPANY,                  )      No. 82052-4-I
                                           )
                     Respondent,           )
                                           )
       v.                                  )
                                           )
VERISTONE FUND I, LLC,                     )      UNPUBLISHED OPINION
                                           )
                     Appellant.            )
                                           )

       VERELLEN, J. — A party who willfully ignores a summons and complaint

cannot later take advantage of the court’s authority to vacate a default judgment

entered in the action. Because the trial court found Veristone Fund I, LLC willfully

ignored a properly served summons and complaint and substantial evidence

supports its findings, the court did not abuse its discretion by denying Veristone’s

motions to vacate.

       An award of compound postjudgment interest is strongly disfavored.

Because the judgments entered by the trial court award compound postjudgment

interest without explicit contractual authorization, the court erred.

       The trial court awarded the Milwaukie Lumber Company (MLC) attorney

fees without entering findings of fact, and it entered sanctions against Veristone

without identifying a clear legal basis or entering findings of fact. Because findings

of fact are required to allow review of both, remand is required.
No. 82052-4-I/2

       Therefore, we affirm in part, reverse in part, and remand for further

proceedings.

                                        FACTS

       Veristone financed the development of five lots in Camas, Washington.

The parcels at issue here are Lot 2, Lot 3, and Lot 4. Veristone received and

recorded multiple deeds of trust on each lot.

       MLC entered into a supply contract with Emerald Valley Development for

sale and delivery of building materials to the lots. MLC made its last delivery to

Lot 2 on July 19, 2017. On September 29, it filed a lien on Lot 2 for $38,027.95.

MLC made its last deliveries to Lots 3 and 4 in December. On February 22, 2018,

MLC filed liens on Lots 3 and 4 for $28,022.77 and $15,143.63, respectively.

       On May 11, 2018, MLC filed summonses and complaints—one for each

lot—to foreclose its three liens and have it declared the first-position lienholder.

MLC alleged Veristone’s deeds of trust were inferior to its liens. On May 30, a

process server delivered the summonses and complaints to Veristone. About two

weeks later, MLC filed amended complaints that were nearly identical to the

original complaints and mailed them to Veristone.

       Veristone never appeared. On July 2, MLC moved for entry of default

judgments. The court granted its motions the same day, entering default

judgments declaring MLC’s interests superior to Veristone’s.

       On August 24, Veristone moved to vacate the default judgments. The court

denied its motions, finding that Veristone had been properly served. The court

                                           2
No. 82052-4-I/3

explained Veristone “chose not to respond” and had “a strategic reason why they

waited to bring this motion to set aside.”1

       MLC sought entry of judgments against Emerald Valley and requested

attorney fees. Veristone opposed those efforts. In its reply to Veristone’s

opposition filings, MLC requested “its fees for having to respond to this improper

objection as sanctions under CR 11.”2 The court entered judgments identifying

MLC as the creditor and Emerald Valley as the debtor. It awarded postjudgment

interest of two percent per month based on MLC’s contract with Emerald Valley.

The court entered judgments for $87,128.41, including $29,577 in attorney fees,

on Lot 2; $66,275.14 on Lot 3; and $49,926.03 on Lot 4. The court also entered

orders requiring that Veristone pay MLC $29,577 for the Lot 2 litigation, $66,275

for Lot 3, and $49,926 for Lot 4.

       Veristone appeals.

                                     ANALYSIS

I. Vacating Default Judgment

       We review a trial court’s decision on a motion to vacate a default judgment

under CR 60(b)(1) for abuse of discretion.3 A court abuses its discretion where its

decision rests on untenable grounds or was made for untenable reasons.4

       1   Report of Proceedings (RP) (Sept. 12, 2018) at 32-34.
       2   Clerk’s Papers (CP) at 1264.
       3 Little v. King, 160 Wn.2d 696, 702, 161 P.3d 345 (2007) (citing Yeck v.
Dep’t of Labor & Indus., 27 Wn.2d 92, 95, 176 P.2d 359 (1947)).
       4
       TMT Bear Creek Shopping Ctr., Inc. v. Petco Animal Supplies, Inc., 140
Wn. App. 191, 199, 165 P.3d 1271 (2007) (citing Showalter v. Wild Oats, 124 Wn.
App. 506, 510, 101 P.3d 867 (2004)).

                                              3
No. 82052-4-I/4

       A. Vacation For Mistakes, Inadvertance, Surprise, or Excusable Neglect

       A motion to vacate default judgment under CR 60(b)(1) presents a question

of equity requiring the trial court to balance Washington’s preference for resolving

disputes on their merits with the value placed upon an organized, responsive, and

responsible judiciary.5 The court weighs four factors when deciding this question:

       (1) That there is substantial evidence extant to support, at least
       prima facie, a defense to the claim asserted by the opposing party;
       (2) that the moving party’s failure to timely appear in the action, and
       answer the opponent’s claim, was occasioned by mistake,
       inadvertence, surprise or excusable neglect; (3) that the moving
       party acted with due diligence after notice of entry of the default
       judgment; and (4) that no substantial hardship will result to the
       opposing party.[6]

But when a defendant caused the default by willfully failing to appear, the second

factor outweighs the others because equity demands the judgment stand to avoid

rewarding misconduct.7 “[E]quity will not allow for vacation of [a default] judgment

if the actions leading to default were willful. Willful defiance of the court’s authority

can never be rewarded in an equitable proceeding.”8 The movant has the burden

of demonstrating that equity favors vacating the judgment.9

       MLC argues the court correctly denied Veristone’s motions to vacate

because it found Veristone was properly served and willfully failed to appear.

       5   Id. (citing Little, 160 Wn.2d at 703; Showalter, 124 Wn. App. at 510).
       6   White v. Holm, 73 Wn.2d 348, 352, 438 P.2d 581 (1968).
       7   TMT Bear Creek, 140 Wn. App. at 206.
       8   Id.
       9   White, 73 Wn.2d at 352.

                                            4
No. 82052-4-I/5

Veristone contends it was not properly served with summonses, so it could not

have intentionally failed to appear. If Veristone was properly served and chose to

ignore the summonses, then, regardless of the strength of its defenses, the court

did not abuse its discretion by denying the motions to vacate for all three lots.10

       We review a ruling about proper service of process de novo.11 But

Veristone did not challenge the validity of the professional process server’s

affidavit of service, making it presumptively correct.12 Veristone also did not

challenge the court’s finding of fact that it was properly served, making the finding

a verity on appeal.13 Instead, Veristone argues the court erred by relying upon

written testimony and evidence, rather than live testimony, to determine service

was proper. Because the decision to decide a motion on affidavits is “purely

discretionary,”14 we review the court’s ruling for abuse of discretion.

       CR 43(e) governs taking evidence on motions. CR 43(e)(1) provides that a

trial court considering a motion “may hear the matter on affidavits” or “may direct

that the matter be heard wholly or partly on oral testimony or depositions.”      But

       10See TMT Bear Creek, 140 Wn. App. at 206 (“[E]quity will not allow for
vacation of the judgment if the actions leading to default were willful.”).
       11Streeter-Dybdahl v. Nguyet Huynh, 157 Wn. App. 408, 412, 236 P.3d 986
(2010) (citing Pascua v. Heil, 126 Wn. App. 520, 527, 108 P.3d 1253 (2005)).
       12   Id. (citing Woodruff v. Spence, 75 Wn. App. 207, 210, 883 P.2d 936
(1994)).
       13
        Rosander v. Nightrunners Transp., Ltd., 147 Wn. App. 392, 397 n.1, 196
P.3d 711 (2008) (citing In re Estate of Jones, 152 Wn.2d 1, 8, 93 P.3d 147 (2004);
RAP 10.3(g)).
       14   Rivard v. Rivard, 75 Wn.2d 415, 419, 451 P.2d 677 (1969).

                                           5
No. 82052-4-I/6

when a determination requires evaluating witness credibility to resolve an issue of

fact, the trial court can abuse its discretion by not holding an evidentiary hearing.15

       In Rivard v. Rivard, divorced parents petitioned the court to clarify the

father’s visitation schedule.16 The parties filed “sharply conflicting” affidavits, and

the trial court heard argument on the matter before adopting the father’s proposed

visitation schedule.17 The mother appealed and argued the trial court’s decision

was an abuse of discretion because it decided the motion without holding an

evidentiary hearing.18 The Supreme Court upheld the decision to resolve the

matter solely on the affidavits because they “contained ample evidence upon

which a ruling could be made as to visitation rights,” and the mother did not

otherwise show an abuse of discretion.19

       By contrast, the court in Woodruff v. Spence remanded for the taking of live

testimony when a buyer moved to vacate a seller’s default judgment due to

ineffective service of process.20 The seller submitted an affidavit of service stating

the buyer had been personally served on January 20, 1992, at his house in

Renton.21 The buyer submitted an affidavit stating he was not served, a

       15
        Harvey v. Obermeit, 163 Wn. App. 311, 327, 261 P.3d 671 (2011) (citing
Woodruff, 76 Wn. App. at 210).
       16   75 Wn.2d 415, 451 P.2d 677 (1969).
       17   Id. at 416.
       18   Id. at 419.
       19   Id. at 420.
       20   76 Wn. App. 207, 209-10, 883 P.2d 936 (1994).
       21   Id. at 209.

                                           6
No. 82052-4-I/7

declaration stating he was in Bellingham on January 20, and declarations from two

people who were at his house on January 20 denying that a process server visited

that day.22 The court concluded the affidavits and declarations presented an issue

of fact that could be resolved only by assessing credibility. 23

       Here, MLC presented a valid affidavit of service and a declaration from the

professional process server detailing how he served Veristone. He swore to

personally serving Veristone’s registered agent, Meghann Good, at Veristone’s

office with summonses and complaints, several exhibits, and notices of

assignment to a judicial department. His declaration explained he asked the

receptionist for Good, and the receptionist said she would get her. A woman

identifying herself as Good appeared, looked at the documents, and

acknowledged service. The server’s contemporaneous handwritten notes, which

were attached to his declaration, described Good’s appearance.24 A different

affidavit of service from a different process server’s recent personal service on

Good largely corroborated this description.

       Veristone submitted two declarations from Good contesting service. She

declared, “I do not recall ever being personally served” and explained Veristone’s

internal record-keeping system did not show “that I, or anyone else at Veristone,

       22   Id. at 210.
       23   Id.
       24
        See CP at 1633 (describing Good as a 40 year-old White woman with
brown hair, standing 5’5’’, and weighing 140 pounds); CP at 1757 (describing
Good as a 40 year-old White woman with black hair, standing 5’3’’, and weighing
140 pounds).

                                           7
No. 82052-4-I/8

received the Summons and Complaint on May 30, 2018.”25 She contested the

process server’s description of her.26 Veristone did not provide any evidence to

corroborate Good’s statements about service or its record-keeping system.

        Veristone fails to show the court abused its discretion by declining to hold

an evidentiary hearing. Good’s general denial of having been served and bare

assertion about Veristone’s record-keeping system do not compel an evidentiary

hearing. The process server’s valid affidavit is presumptively correct, 27 and MLC

corroborated it with the process server’s detailed declaration and supporting notes.

The minimal variations between the process server’s description of Good and her

description of herself are not compelling. As in Rivard, the evidence submitted

was sufficient to decide the matter, even though the parties asserted different

facts. Unlike Woodruff, Veristone did not corroborate its assertion that it was not

served, despite having access to the documents and potential declarants needed

to rebut MLC’s affidavit of service. Veristone fails to show the court abused its

discretion under CR 43(e)(1) by finding service of process was proper without

        25   CP at 58.
         Good described herself as standing 5’0’’ tall and weighing 120 pounds.
        26

Unlike Streeter-Dybdahl, where service was ineffective when the process server
claimed to personally serve a defendant identified as a 5’8’’ tall, 140 pound man
and the defendant was actually a 5’1’’ tall, 110 pound woman, 157 Wn. App. at
411, the differences between Good’s description and the process servers’ are
minor.
        27   Streeter-Dybdahl, 157 Wn. App. at 412 (citing Woodruff, 75 Wn. App. at
210).

                                           8
No. 82052-4-I/9

holding an evidentiary hearing.28 Because Veristone was properly served, the

question is whether Veristone’s failure to appear was willful.

       Veristone asserts a failure to appear is willful only if done knowingly.

Assuming without deciding that this standard is correct, the record supports the

trial court’s conclusion that Veristone willfully failed to appear.

       The trial court found Veristone was properly served, meaning it knew of its

obligation to appear. In its oral ruling on the motions to vacate, the court found

Veristone “chose not to respond” and had “a strategic reason why they waited to

bring this motion to set aside: so that [MLC] could not cure [allegedly deficient

service].”29

       Veristone challenges the court’s finding of willfulness, contending the court

lacked a basis in law or fact to conclude it had a strategic reason to not appear.

Although Veristone did not assign error to any findings of fact, this argument is

best understood as a substantial evidence challenge. A finding of fact is

supported by substantial evidence when there is sufficient evidence to convince a

       28 See Northwick v. Long, 192 Wn. App. 256, 266-68, 364 P.3d 1067 (2015)
(affirming denial of a motion for an evidentiary hearing to resolve credibility
determination on service of process where the defendant had opportunity to
discover process server’s assertions).
       29RP (Sept. 18, 2018) at 32-34. The trial court offered this explanation
when asked whether the court was making a finding of willfulness. It is reasonably
viewed as a finding of willfulness in support of the court’s denial of Veristone’s
motions to vacate. See Grieco v. Wilson, 144 Wn. App. 865, 872, 184 P.3d 668
(2008) (“And if findings of fact are incomplete, the appellate court may look to the
superior court's oral decision to understand the court’s reasoning.”) (citing
Lakewood v. Pierce County, 144 Wn.2d 118, 127, 30 P.3d 446 (2001)).

                                            9
No. 82052-4-I/10

reasonable person of its truth.30 As the party challenging the finding, Veristone

has the burden of proving it was unsupported.31

       Veristone was properly served with summonses, complaints, and

scheduling notices. It was reminded of the action a few weeks later when it

received three amended complaints in the mail, each with a cause number,

naming it as a defendant and alleging its deeds of trust were inferior to MLC’s

liens. When addressing service of process, Good’s declarations did not explain

what happened to the summonses and complaints properly served on Veristone

and did not identify any mistakes to explain Veristone’s failure to appear.

Substantial evidence supports the trial court’s conclusion that Veristone chose not

to respond.

       MLC also noted to the trial court that Veristone had a strategic reason to

avoid responding before the 90-day limitation period of RCW 60.04.141 ran, and

the court accepted this explanation. By delaying its motion to vacate, Veristone

could avoid alerting MLC in time to cure any defect in service.

       Veristone challenges this reasoning on several grounds, none of which are

compelling. In its opening brief, Veristone contends the time limit on service

applies only to service upon the owner and not a secured lender. But, as pointed

out by MLC in its brief, Bob Pearson Construction Inc. v. First Community Bank of

       30Norcon Builders, LLC v. GMP Homes VG, LLC, 161 Wn. App. 474, 497,
254 P.3d 835 (2011) (citing Brin v. Stutzman, 89 Wn. App. 809, 824, 951 P.2d 291
(1998)).
       31
        Id. (citing Fisher Props., Inc. v. Arden-Mayfair, Inc., 115 Wn.2d 364, 369,
798 P.2d 799 (1990)).

                                         10
No. 82052-4-I/11

Washington expressly holds the 90-day time limit on service extends to any party

asserting an interest in the property, so service past 90 days prevents

enforcement of the lien against the unserved party.32 Veristone contends that Bob

Pearson should not be considered on appeal because it was not cited to the trial

court. But the issue was squarely before the trial court, and citing authority

addressing that issue is proper on appeal. Veristone also contends no evidence

shows it was actually aware of the 90-day time limit on service, but it cites no

authority requiring explicit evidence of actual awareness.

       For the first time during oral argument in this court, Veristone argued that

the trial court’s reasoning was incorrect because RCW 60.04.141 actually provides

“eight months and 90 days” from the date a lien was filed to serve all parties.

Veristone is incorrect. The specific statutory rules for filing and service of process

in RCW 60.04.141 “must be followed in order to prevent expiration of a lien.”33

The plain language of the statute expressly provides service must be made “within

ninety days of the date of filing the action.”34 And Washington courts confirm the

time limit for service is 90 days from the date of filing the action. “To prevent

expiration of a valid lien, the lien claimant must (1) file a lawsuit within 8 months of

       32
        111 Wn. App. 174, 179, 43 P.3d 1261 (2002) (citing Davis v. Bartz, 65
Wash. 395, 397, 118 P. 334 (1911)).
       33
        Diversified Wood Recycling, Inc. v. Johnson, 161 Wn. App. 859, 886, 251
P.3d 293 (2011) (citing Pac. Erectors, Inc. v. Gail Landau Young Constr. Co., 62
Wn. App. 158, 165, 813 P.2d 1243 (1991)).
       34   RCW 60.04.141 (emphasis added).

                                           11
No. 82052-4-I/12

recording the lien and (2) make service . . . within 90 days of filing suit.”35 A lien

claimant does not have eight months and ninety days from the filing of a lien to

serve an action for foreclosure of the lien. And because the 90 day limit is a

statutory requirement, there is a reasonable inference that Veristone and its

attorneys were aware of the time limit for service.

       MLC recorded its lien on Lot 2 on September 29, 2017. MLC recorded liens

on Lots 3 and 4 on February 22, 2018. It had to file suit to enforce the lien on Lot

2 by May 29, 2018. MLC chose to enforce all three liens at the same time and

filed complaints to enforce them on May 11, 2018. It then had 90 days from May

11, 2018, to serve the lots’ owners and any other parties against whom MLC

wanted to enforce its rights as a lienholder.36 If MLC failed to properly serve

Veristone by August 9, 2018, then its foreclosure as to all three lots could not

impact Veristone. Veristone received amended complaints by mail in mid-June

and spoke with MLC on August 7 about the default judgments. If it had genuine

questions about proper service, it did not raise them until August 24, when it filed

the motions to vacate. From this, a reasonable factfinder could conclude

Veristone purposefully waited until after expiration of the 90-day limitations period

to allege insufficient service of process. Substantial evidence supports the court’s

finding that Veristone had a strategic reason it chose not to appear. Because

       35Diversified Wood, 161 Wn. App. at 887; see Bob Pearson, 111 Wn. App.
at 179 (RCW 60.04.141 “requires a lien claimant to sue within eight months and
serve within 90 days any party against whom the claimant seeks to enforce its
lien.”).
       36   Diversified Wood, 161 Wn. App. at 887; Bob Pearson, 111 Wn. App. at
179.

                                           12
No. 82052-4-I/13

Veristone chose not to appear for a strategic reason, its failure to appear was

willful.37

        The strength of a party’s defenses are immaterial if it declines to raise them

in court by willfully failing to appear.38 Because Veristone willfully failed to appear,

the court did not abuse its discretion by denying Veristone’s motions to vacate the

default judgments.

        B. Vacation Due To Irregularity

        Veristone argues the court abused its discretion because MLC obtained its

default judgment through irregularities in its complaints. Both MLC’s original and

amended complaints stated Veristone’s “deeds of trust are inferior in priority to

MLC’s claim of construction lien.”39 Veristone alleges these were

misrepresentations and warranted vacation.

        An error of law is not an irregularity requiring vacation of a judgment under

CR 60(b).40 Vacation may be warranted under CR 60(b)(1) from irregularities

“relating to want of adherence to some prescribed rule or mode of proceeding,”

such as “procedural defects unrelated to the merits.”41

        37We note a finding of willfulness is not limited to when a party has a
strategic reason for not appearing.
         See TMT Bear Creek, 140 Wn. App. at 206 (“[E]quity will not allow for
        38

vacation of judgment if the actions leading to default were willful.”).
        39   CP at 4, 16.
        40In re Marriage of Tang, 57 Wn. App. 648, 654, 789 P.2d 118 (1990)
(citing Burlingame v. Consol. Mines & Smelting Co., 106 Wn.2d 328, 336, 722
P.2d 67 (1986)).
        41
        Id. (citing In re Adamec, 100 Wn.2d 166, 174, 667 P.2d 1085 (1983); 4 L.
ORLAND, W ASHINGTON PRACTICE: RULES PRACTICE § 5713, at 543 (3rd ed. 1983)).

                                          13
No. 82052-4-I/14

       Veristone compares this case to Mosbrucker v. Greenfield Implement,

Inc..42 Mosbrucker is not apt. The Mosbrucker defendant did not willfully fail to

appear, and the plaintiff’s inaccurate factual allegations caused a procedural

irregularity affecting “the integrity of the proceedings.”43 Thus, the court concluded

the equities favored vacation.44

       Here, however, MLC’s allegations about lien priority presented legal

questions because lien priority is a question of law.45 MLC brought suit to have

this legal question answered. Because Veristone’s alleged error is actually an

alleged error of law, and Veristone fails to allege a procedural irregularity unrelated

to the cases’ merits, the court did not abuse its discretion by refusing to vacate.46

II. Judgment Interest Rate & Attorney Fees From Trial

       Veristone argues the court erred by entering a judgment interest rate of two

percent per month and by awarding MLC attorney fees without entering findings of

fact. MLC contends both issues are beyond the scope of this appeal.

       It is well-established that “[a] CR 60(b) motion is not a substitute for appeal

and does not allow a litigant to challenge the underlying judgment.” 47 Exceptions

       42   54 Wn. App. 647, 774 P.2d 1267 (1989).
       43   Id. at 652, 654.
       44   Id. at 653-54.
       45   Kim v. Lee, 145 Wn.2d 79, 85-86, 31 P.3d 665 (2001).
       46   Tang, 54 Wn. App. at 654.
       47Winter v. Dep’t of Soc. & Health Servs. on behalf of Winter, 12 Wn. App.
2d 815, 830, 460 P.3d 667 (citing Bjurstrom v. Campbell, 27 Wn. App. 449, 451,
618 P.2d 533 (1980)), review denied, 196 Wn.2d 1025, 476 P.3d 565 (2020); see,
e.g., Pamelin Indus., Inc. v. Sheen-U. S. A., Inc., 95 Wn.2d 398, 403, 622 P.2d

                                          14
No. 82052-4-I/15

to this rule exist for issues affecting fundamental constitutional rights, for

challenges to the trial court’s jurisdiction, and—within our discretion under

RAP 12.2—as justice may require.48 Veristone does not argue its challenges are

constitutional or to the court’s jurisdiction, and it does not mention RAP 12.2.

However, because these issues could affect the recovery of other junior

lienholders, despite Veristone’s waiver of its right to contest the judgments’ merits

by willfully refusing to appear, we will consider them.

       A. Postjudgment Interest Rate

       The court awarded postjudgment interest to accrue at a rate of “2% per

month.”49 The court also awarded prejudgment interest. Veristone challenges

only the postjudgment interest rate, arguing it violates the 12 percent cap on

postjudgment interest required by RCW 4.56.110(4) and RCW 19.52.020(1).

       Awards of postjudgment interest are reviewed de novo as a question of

law.50 A compound postjudgment interest rate is disfavored, so the parties’

agreement must expressly provide for it.51

1270 (1981) (“We are mindful of the rule that an error of law may not be corrected
by a motion pursuant to CR 60(b), but must be brought up on appeal.”).
       48   State v. Santos, 104 Wn.2d 142, 145-46, 702 P.2d 1179 (1985).
       49   CP at 686, 1415, 2129.
       50TJ Landco, LLC v. Harley C. Douglass, Inc., 186 Wn. App. 249, 256, 346
P.3d 777 (2015) (citing Sintra, Inc. v. Seattle, 96 Wn. App. 757, 761, 980 P.2d 796
(1999)).
       51Xebek, Inc. v. Nickum & Spaulding Assocs., Inc., 43 Wn. App. 740, 743,
718 P.2d 851 (1986) (citing Goodwin v. Nw. Mut. Life Ins. Co., 196 Wash. 391,
402-03, 406, 83 P.2d 231 (1938)).

                                           15
No. 82052-4-I/16

       MLC argues its contract with Emerald Valley authorizes this compound

interest rate, analogizing to Xebek, Inc. v. Nickum & Spaulding Associates, Inc.52

In Xebec, the court considered whether two contracts authorized an award of

compound interest.53 One contract provided “[l]ate charges of 1½% per month

shall be applied to all billings which have not been paid within thirty (30) days after

receipt.”54 The other contract required that the “[c]ontractor will submit invoices

twice monthly for services rendered under this Agreement. The terms of payment

are net thirty (30) days, or a 1½ percent per month late charge will become

effective.”55 The court concluded these terms were “not explicit enough” to

authorize an award of compound postjudgment interest.56 However, the court

affirmed because the trial court relied upon the 1.5 percent interest rate to award a

flat postjudgment simple interest of 18 percent per annum.57

       MLC’s contract with Emerald Valley contained a provision allowing for

interest to accrue:

       Applicant’s signature attests financial responsibility, ability to pay
       [MLC] invoices in accordance with the following terms: 1% 10th, net
       11th. Invoices are considered to be past due on the 12th of the
       month. A late payment charge of 2% per month will be assessed
       after the 26th ($2 minimum). Applicant agrees to pay reasonable

       52   43 Wn. App. 740, 718 P.2d 851 (1986).
       53   Id. at 742.
       54   Id. at 743.
       55   Id.
       56   Id.
       57   Id.

                                          16
No. 82052-4-I/17

       attorney fees, cost of collection and court costs that may arise in the
       enforcement of these terms.[58]

Because the facts surrounding the contract are undisputed, we interpret the

contract de novo as a matter of law.59

       The first three sentences set payment requirements for the ordinary course

of business. The fourth sentence authorizes additional payments “that may arise

in the enforcement of these terms.”60 Thus, a “late payment charge of 2% per

month” refers to prejudgment charges on sums already owed. Like Xebec, the

contract does not expressly provide for a postjudgment compound interest rate.

Because the contract does not specify a postjudgment interest rate and

compounding postjudgment interest is strongly disfavored, the court was limited to

an award of simple interest per annum.

       B. Attorney Fees From Trial

       Veristone challenges the amounts of attorney fees awarded, arguing the

court failed to enter adequate findings of fact to support its awards. When

awarding attorney fees, the trial court “must supply findings of fact and conclusions

of law sufficient to permit a reviewing court to determine why the trial court

awarded the amount in question.”61 The findings must “show how the court

resolved disputed issues of fact and the conclusions must explain the court's

       58   CP at 23.
       59 Jones Assocs., Inc. v. Eastside Props., Inc., 41 Wn. App. 462, 465, 704
P.2d 681 (1985) (citing Yeats v. Estate of Yeats, 90 Wn.2d 201, 204, 580 P.2d 617
(1978); In re Estate of Larson, 71 Wn.2d 349, 354, 428 P.2d 558 (1967)).
       60   CP at 23.
       61   SentinenC3, Inc. v. Hunt, 181 Wn.2d 127, 144, 331 P.3d 40 (2014).

                                          17
No. 82052-4-I/18

analysis.”62 Because the trial court did not enter findings of fact or conclusions of

law for its attorney fee awards, thereby preventing review of its reasonableness

determinations, remand is required.63

       MLC argues that CR 55(b)(1) vitiates this requirement because it states

“[f]indings of fact and conclusions of law are not necessary under this subsection

even though reasonable attorney fees are requested and allowed.” The rules of

civil procedure are interpreted to effectuate the drafters’ intent.64 The plain

language of CR 55(b)(1) does not preclude entry of findings of fact for an award of

attorney fees on default judgment for an amount certain. As noted, effective

appellate review requires findings revealing how the trial court arrived at the

amount of attorney fees. MLC cites no authority for the proposition that the

drafters of CR 55(b)(1) intended to prevent meaningful review of attorney fees.

Remand is required for entry of findings of fact.

III. Sanctions

       At the same time the trial court entered a judgment on Lot 2, it also entered

an “Order Granting Plaintiff’s Motion for Entry of Judgment.”65 For Lots 3 and 4, it

simultaneously entered amended judgments and “Order[s] Granting Plaintiff’s

       62   Berryman v. Metcalf, 177 Wn. App. 644, 658, 312 P.3d 745 (2013).
       63   Mahler v. Szucs, 135 Wn.2d 398, 435, 957 P.2d 632 (1998).
       64 Denney v. City of Richland, 195 Wn.2d 649, 653, 462 P.3d 842 (2020)
(citing Dep’t of Ecology v. Campbell & Gwinn, LLC, 146 Wn.2d 1,9-10, 43 P.3d 4
(2002)).
       65   CP at 1412.

                                          18
No. 82052-4-I/19

Motion[s] to Correct Judgment.”66 The three orders granting MLC’s motions to

enter or correct judgments also required that Veristone pay MLC $29,577 for the

Lot 2 litigation, $66,275 for Lot 3, and $49,926.03 for Lot 4.

       Although the amounts correlate to the fee awards imposed against Emerald

Valley, the orders do not state a basis for the award or explain the amounts

awarded against Veristone. MLC’s motions to enter or correct judgment requested

sanctions against Veristone under CR 11 “in the amount of [MLC’s] fees for having

to respond to this improper objection.”67 If the court’s award to MLC was a

sanction against Veristone for violating CR 11, the trial court must “specify the

sanctionable conduct in its order.”68 “The court must make a finding that either the

claim is not grounded in fact or law and the attorney or party failed to make a

reasonable inquiry into the law or facts, or the paper was filed for an improper

purpose.”69 Remand is appropriate when the trial court fails to do so.70

       Remand is required for the trial court to articulate the basis for the awards

and to enter explicit findings supporting the amount of any awards. If the awards

are based upon a violation of CR 11, the court must enter specific findings

identifying the sanctionable conduct and the basis for a reasonable sanction.

       66   CP at 685, 689, 2128, 2132.
       67   CP at 528, 1261, 1970.
       68Heckard v. Murray, 5 Wn. App. 2d 586, 595, 428 P.3d 141 (2018)
(quoting Biggs v. Vail, 124 Wn.2d 193, 201, 876 P.2d 448 (1994)).
       69   Biggs, 124 Wn.2d at 201.
       70
        See id. at 201-02 (remanding for entry of findings when the trial court did
not make adequate findings to explain CR 11 sanctions).

                                          19
No. 82052-4-I/20

IV. Attorney Fees On Appeal

       Both Veristone and MLC request attorney fees from this appeal under

RAP 18.1 and RCW 60.04.181(3). RCW 60.04.181(3) authorizes an award of

attorney fees to the prevailing party in a lien priority action, including fees incurred

in proceedings in the Court of Appeals. Because MLC prevails on the issues

involving lien priority, we award it reasonable attorney fees upon compliance with

RAP 18.1(d).

V. Conclusion

       The trial court did not abuse its discretion by denying Veristone’s motions to

vacate default judgments. The court erred by entering an award of compound

postjudgment interest when it was limited to an award of simple interest per

annum. Remand is required for entry of findings of fact for the court’s award of

attorney fees and for the sanctions it entered against Veristone.

       Therefore, we affirm in part, reverse in part, and remand.

WE CONCUR:

                                           20