Court Opinion

ID: 4168495
Source: CourtListenerOpinion
Date Created: 2017-05-15 20:34:06.61014+00
Date Added: 2024-06-11T14:23:38.978278
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
MARIA HEDGER, a single person,    )
                                  )              No. 74149-7-1
                    Respondent,   )
                                  )              DIVISION ONE
              v.                  )                                                      •
                                  )              PUBLISHED OPINION
LISA GROESCHELL and JOHN DOE )
GROESCHELL, wife and husband, and )
the marital community composed    )
thereof,                          )
                                  )                                             ••••••
                   Appellant.     )              FILED: May 15, 2017

       TRICKEY, J. — Maria Hedger sued Lisa Groeschell for personal injuries
sustained in an automobile accident. After Hedger prevailed at mandatory

arbitration, Groeschell sought a jury trial de novo. During the litigation, the court

imposed several thousand dollars in sanctions against Groeschell.

       The jury awarded Hedger less in damages than the arbitrator had awarded.

The trial court then determined that Groeschell had not improved her position from

the arbitration because the amount of sanctions ordered against her, combined

with Hedger's damages, were greater than the arbitration award. Accordingly, the

court awarded Hedger attorney fees.

       Groeschell appeals the trial court's award of attorney fees to Hedger.

Because the trial court should not have considered the sanctions it imposed

against Groeschell when comparing her postarbitration and posttrial positions, we

reverse the award of attorney fees.

       Groeschell also appeals the trial court's decision to sanction her for raising

the deception doctrine defense on the eve of trial. Because we agree with the trial
No. 74149-7-1 /2

court that Groeschell's actions constituted procedural bad faith, we affirm the

imposition of sanctions.

                                       FACTS

       Hedger and Groeschell were in a car accident in September 2013. Hedger

proceeded straight through an intersection as Groeschell started to make a left

turn. The two vehicles collided.

       Hedger sued Groeschell for negligence. The case proceeded to mandatory

arbitration. Hedger prevailed at arbitration. The arbitrator found Groeschell to be

entirely at fault and awarded Hedger $17,880.10 in damages. The arbitrator later

amended that award to include $931.76 in statutory costs and fees, for a total

award of $18,811.86.

       Groeschell requested a trial de novo. Prior to trial, the court sanctioned

Groeschell for failing to participate in good faith in the mediation and failing to

timely disclose expert witness reports.

       A few days before trial, Groeschell asserted a deception doctrine defense.

Groeschell withdrew the defense when she could not produce written documents

showing she had raised it at arbitration. The court sanctioned her $3,125 for

procedural bad faith.

       The jury returned a verdict for Hedger but found her to be five percent at

fault. It also found that her combined economic and general damages totaled only

$11,200. Thus, Hedger's total damage award at trial was $10,640. The court

awarded $2,162.15 in statutory costs.1 The three sanctions the court imposed on

1 That amount represents the cost of deposition transcripts for Dr. Steven Watson and
Groeschell. It does not appear to include the $835.76 in other statutory costs that the
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No. 74149-7-1 /3

Groeschell totaled $6,147.49. The total judgment after the trial de novo was

$18,949.64.

        Hedger moved for attorney fees under MAR 7.3 on the ground that

Groeschell had not improved her position after the trial de novo. The court agreed

with Hedger and awarded her over $60,000 in attorney fees.

        Groeschell appeals the award of sanctions based on the deception doctrine

defense and the trial court's award of attorney fees under MAR 7.3.

                                        ANALYSIS

                                         Sanctions

        Groeschell argues that the trial court abused its discretion in sanctioning

her for raising the deception defense on the eve of trial. Specifically, she argues

that pleading a contributory negligence defense satisfies any need to plead the

deception doctrine defense and that, regardless, Hedger had sufficient notice that

Groeschell intended to rely on the deception doctrine. Because the deception

doctrine raises different issues than a general contributory negligence defense,

and Groeschell did not otherwise provide adequate notice, we disagree.

       The trial court has the inherent authority to sanction a party for "bad faith."

State v. S.H., 102 Wash. App. 468, 475, 8 P.3d 1058 (2000). "Procedural bad faith

is unrelated to the merits of the case and refers to 'vexatious conduct during the

court determined it should award for statutory attorney fees, reports and records, filing
fees, and service of process fees. Added with the deposition costs, the statutory costs
award should have been $2,997.91, which was the amount Hedger's attorney indicated
she was going to record. The parties included only $2,162.15 in statutory costs when they
calculated the total judgment. The parties or trial court may wish to address this issue on
remand. If failing to include that $835.76 was an error, the total judgment after the trial de
novo should be $19,785.40. The failure to include the $835.76 in costs does not affect
our decision.
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No. 74149-7-1/4

course of litigation.'" Rogerson Hiller Corp. v. Port of Port Angeles, 96 Wash. App.
918, 928, 982 P.2d 131 (1999)(quoting Jane P. Mallor, Punitive Attorneys' Fees

for Abuses of the Judicial System,61 N.C. L. Rev. 613,644 (1983)). The conduct

can include delaying or disrupting litigation. S.H., 102 Wn:App. at 475. To support

sanctions under this inherent power, the trial court must make a finding that the

litigant acted in bad faith. S.H., 102 Wash. App. at 475.

       This court reviews a trial court's decision to award sanctions for an abuse

of discretion. S.H., 102 Wash. App. at 473.

       Here, on August 27, 2015, during pretrial hearings, Hedger objected that

Groeschell had raised a deception defense for the first time in her report from

expert witness Bryan Jorgenson, which was filed on August 21, 2015. The court

asked Groeschell why she was raising the defense so late. Groeschell noted that

she had pleaded contributory negligence as an affirmative defense, and believed

that was enough to give Hedger notice of her intent to use the deception doctrine

as a defense.

       Groeschell also said that she was not raising the defense late because she

had argued the deception doctrine defense at arbitration.2 The court asked if she

had referred to the defense in writing in any of her arbitration materials, to which

Groeschell responded, "That I'm going to have to look into, Your Honor."3 The

court asked, "And then, and you specifically made the argument, the deception

defense argument[,] to the arbitrator?," to which she replied, "Yes."4

2 Hedger retained new counsel for the trial de novo.
3 Report of Proceedings(RP)(Aug. 27, 2015) at 59.
4 RP (Aug. 27, 2015) at 59.

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No. 74149-7-1 / 5

         The trial court deferred its ruling to give Groeschell an opportunity to

produce a writing showing that she had raised the deception defense at arbitration.

That afternoon, Groeschell informed the court that she could not find any mention

of the deception defense in her prehearing statement of proof or the arbitration

decision. She repeated that she still believed that she had argued the deception

doctrine defense at arbitration, but withdrew the deception doctrine defense for

trial.

         After trial, Hedger moved for sanctions based on Groeschell's late

disclosure of the deception defense. The court accepted Groeschell's assertion

that she had not willfully misrepresented whether she had raised the defense at

arbitration, but found, in its oral ruling, that, before hiring an expert and asserting

this defense on the eve of trial, Groeschell should have assessed "whether it was

appropriate to inject it at such a late date before trial."5 In its written ruling, the trial

court found that Groeschell's actions were "unfair" to Hedger and caused her to

"divert her attention away from trial preparation to investigate th[at] particular

defense and prepare to address it at trial."6 The court awarded Hedger $3,125 in

sanctions, as attorney fees for the time Hedger's counsel, associate, and paralegal

spent addressing the deception doctrine defense and the motion for sanctions.

         Groeschell's primary argument is that there was no procedural bad faith

because she raised contributory fault as an affirmative defense in her answer and

the deception doctrine is a component of that defense.7 Because the deception

5 RP (September 25, 2015) at 79.
6 Clerks Papers(CP) at 438-39.
7 In a footnote in her opening brief, Groeschell argues, in the alternative, that this court
should reverse the sanctions because the trial court did not make an explicit finding of bad
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No. 74149-7-I /6

defense raises factual issues that are distinct from those raised by contributory

fault, we disagree.

       In order to "avoid surprise," defendants must affirmatively plead specific

defenses and "'any other matter constituting an avoidance or affirmative defense."

Mahoney v. Tingley, 85 Wash. 2d 95, 100, 529 P.2d 1068 (1975)(quoting CR 8(c)).

A general denial is appropriate if the defense does not raise any new issues. See

Shinn Irrigation Equip., Inc. v. Marchand, 1 Wash. App. 428, 430-31, 462 P.2d 571

(1969). "Denials must be definite enough to inform the adverse party of the issues

he must be prepared to meet." Shinn Irrigation, 1 Wash. App. at 430 (quoting 1A

Barron & Holtzoff, Federal Practice and Procedure,§ 277, at 147).

       While a defendant may rely on both the contributory fault and deception

doctrines to allocate responsibility to a plaintiff for her injuries, the deception

doctrine applies only in specific circumstances. Under the doctrine of contributory

fault, the plaintiff is responsible for whatever portion of her injury is attributable to

her own fault. RCW 4.22.005. That fault includes all "acts or omissions, including

misuse of a product, that are in any measure negligent or reckless toward the

person or property of the actor or others." RCW 4.22.015. But the deception

doctrine applies only "where a favored party has somehow deceived a reasonably

faith. A finding that the party's behavior was "inappropriate and improper' is tantamount
to a finding of bad faith." S.H., 102 Wash. App. at 475 (quoting Wilson v. Henkle, 45 Wn.
App. 162, 175, 724 P.2d 1069 (1986)). But, "in the absenee of an express finding,
appellate courts have upheld sanctions where an examination of the record establishes
that the court found some conduct equivalent to bad faith." State v. Gassman, 175 Wash. 2d
208, 211, 283 P.3d 1113 (2012). Here, the trial court said that it had "the authority to
assess attorney fees for bad faith conduct in litigation" and then awarded fees "on that
basis." RP (September 25, 2015) at 79. We conclude that the trial court's findings are
sufficient to establish a finding of bad faith.
                                           6
No. 74149-7-1/7

prudent disfavored driver so as to cause that driver to proceed on the assumption

that there was a fair margin of safety." Wood v. City of Bellindham, 62 Wash. App.
61, 66,813 P.2d 142(1991).

        Unlike contributory fault, the deception defense always puts what the

defendant saw at issue because "[o]ne cannot be deceived by that which he does

not see." Tobias v. Rainwater, 71 Wash. 2d 845, 853, 431 P.2d 156 (1967).

Therefore, the deception defense raises an issue that a general contributory fault

defense does not. It is a separate affirmative defense that the defendant must

plead in order to comply with CR 8(c). Accordingly, the trial court did not abuse its

discretion by sanctioning Groeschell for raising the defense for the first time on the

eve of trial.

        Groeschell argues that, regardless of any rigid pleading requirements,

sanctions were not appropriate because Hedger had sufficient notice of her

defense. We disagree. Groeschell included an instruction for the deception

defense in her proposed jury instructions, which she filed on August 17, 2015, nine

days before trial began. This was more than a month past the discovery cut-off.

        Moreover, it was not until August 27, 2015, when Hedger received

Groeschell's trial brief, that Hedger would have been able to connect Groeschell's

legal argument to the factual basis for asserting it.8 In her trial brief, Groeschell

asserted that she "observed [Hedger's] vehicle slowing" as the "traffic light turned

from green to yellow."8 Then, according to Groeschell, Hedger accelerated into

8 Groeschell argues that her expert witness discussed the deception defense in his report,
but that report does not appear in the record. Regardless, Hedger did not receive that
report until August 21, 2015, still only a few days before trial.
9 CP at 1006.

                                            7
No. 74149-7-1 / 8

the intersection, after the light turned red.

       Neither Groeschell's answer to Hedger's complaint nor her answers to

Hedger's interrogatories asserted that Groeschell observed Hedger slow down as

she approached the intersection. Hedger should not have had to address this new

factual assertion after the discovery cut-off and right before trial began. As the trial

court found, this was unfair to Hedger. It was not an abuse of discretion for the

trial court to sanction Groeschell and have her pay the attorney fees that Hedger

incurred in responding to the new defense and moving to sanction Groeschell for

raising the defense so late.

                                  Improved Position

       Groeschell argues that the trial court erred by awarding attorney fees to

Hedger under MAR 7.3. Specifically, she contends that she improved her position

at the trial de novo because the jury awarded Hedger less in damages than the

arbitrator had. Hedger responds that the trial court properly compared the total

judgment after arbitration with the total judgment after the trial de novo. We hold

that the trial court should not have considered the sanctions it imposed against

Groeschell in its determination of whether she improved her position and, that

without those sanctions, Groeschell did improve her position.

        When a party seeks a trial de novo after mandatory arbitration and fails to

improve her position, she must pay the other party's reasonable attorney fees.

RCW 7.06.060(1); MAR 7.3. A party's "position prior to trial should be interpreted

as an ordinary person would." Nelson v. Erickson, 186 Wash. 2d 385, 387, 377 P.3d
196 (2016).

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No. 74149-7-1 /9

       Until recently, this court consistently held the court should assess a party's

position by comparing comparables. See, e.g., Wilkerson v. United Inv., Inc., 62
Wash. App. 712, 717, 815 P.2d 293(1991); Tran v. Yu, 118 Wash. App. 607, 615-16,

75 P.3d 970 (2003). But, in Bearden v. McGill, this court concluded that the trial

court should compare only the jury verdict and the arbitrator's initial award. 197
Wash. App. 852, 860-61, 391 P.3d 577 (2017). The court will not conclude that a

party has improved its position when the party did so only by prevailing on a claim

that was not arbitrated. See Christie-Lambert Van & Storage Co., Inc. v. McLeod,

39 Wash. App. 298, 304, 693 P.2d 161 (1984).           Accordingly, the court should

consider only the portion of a jury's verdict attributable to claims that were

arbitrated.

       In Tran, the only issue at arbitration was the plaintiffs damages. 118 Wn.

App. at 616. After a trial de novo, the jury awarded the plaintiff less than the

arbitrator had awarded, but, because of CR 37 sanctions and statutory costs, the

plaintiff's total award at trial was higher than her award at arbitration. Tran, 118
Wash. App. at 616. The Court of Appeals held that the statutory costs and CR 37

sanctions "should not be considered in a MAR 7.3 determination" because they

had not been before the arbitrator. Tran, 118 Wash. App. at 616. Accordingly, the

defendant had improved her position and the plaintiff was not entitled to fees under

MAR 7.3. Tran, 118 Wash. App. at 616-17.

       Initially, the Supreme Court "generally" agreed with the Court of Appeals'

comparing comparables doctrine. Haley v. Highland, 142 Wash. 2d 135, 154, 12 P.3d

119(2000). More recently, in Niccum v. Enguist, the Supreme Court clarified that

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No. 74149-7-1 / 10

it had not adopted the doctrine of comparing comparables—but it did not reject the

doctrine. 175 Wash. 2d 441, 448, 286 P.3d 966 (2012). The court noted that none

of the comparing comparables cases dealt with "postarbitration offers of

compromise." Niccum, 175 Wash. 2d at 448. Taking a "straightforward" approach to

the issue, the court compared the lump sum of the settlement offer to the total

judgment at the trial de novo. Niccum, 175 Wash. 2d at 452-53.

       This court reviews de novo an award of attorney fees under MAR 7.3.

Bearden, 197 Wash. App. at 855.

        Here, Hedger's initial award at arbitration was $17,880.10, which increased

to $18,811.86 with statutory costs. After the trial de novo,the jury awarded Hedger

only $10,640. Comparing only the initial arbitration award and the jury verdict,

Groeschell improved her position. Thus, we conclude that an award of attorney

fees under MAR 7.3 would be inappropriate. But the final judgment, which

included statutory costs and sanctions, was $18,949.64.1°

        Hedger argues that this court must include the more than $6,000 in

sanctions in its MAR 7.3 determination or it will allow Groeschell to "game the

system."11 We disagree and adhere to this court's decision in Tran. The court

should not include sanctions in its MAR 7.3 determinations.12

w See footnote 1, explaining possible error in the trial court's calculation of final judgment.
For purposes of this analysis, we use the trial court's figures. The difference does not
impact our analysis.
11 Br. of Resp't at 1.
12 Moreover, trial courts follow certain principles when determining what sanctions to
impose. Wash. State Physicians Ins. Exch. & Ass'n v. Fisons Corp., 122 Wash. 2d 299, 355,
858 P.2d 1054(1993). Paramount among them is that the court should impose "the least
severe sanction that will be adequate." Fisons, 122 Wash. 2d at 355-56.
         Each time Groeschell behaved improperly during the litigation, the trial court
carefully considered her behavior and imposed an appropriate sanction. If the court
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No. 74149-7-1 /11

       Here, the parties attended mediation in July 2015. Afterward, Hedger

moved for sanctions against Groeschell, arguing that she had refused to

meaningfully prepare for or participate in the mediation. The court awarded

Hedger $2,000 in attorney fees, $422.49 in costs and fees for the mediation, and

a $100 sanction, for a total of $2,522.49. The court also sanctioned Groeschell

$500 for failing to timely file the report of her expert witness. And, as discussed

thoroughly above, the trial court sanctioned Groeschell $3,125 for improperly

raising the deception doctrine defense right before trial.

       None of the sanctions imposed here related to the merits of the case.

Furthermore, none of the sanctions were or could have been litigated before the

arbitrator, because each was based on Groeschell's conduct during the trial de

novo process. We will not consider them in the MAR 7.3 determination.

       The purpose of MAR 7.3 is to discourage meritless appeals. Nelson, 186
Wash. 2d at 388. The jury reduced Hedger's damages by roughly 40 percent.

Clearly, Groeschell's appeal had merit. We reverse the award of attorney fees.

                              Attorney Fees on Appeal

       Hedger requests attorney fees on appeal. A party who is entitled to attorney

fees under MAR 7.3 after a trial de novo because the opposing party failed to

improve its position, is entitled to attorney fees on appeal if that party appeals and,

once again, fails to improve its position. See Boyd v. Kulczyk, 115 Wash. App. 411,

includes sanction awards in its MAR 7.3 determination, it will essentially be imposing an
additional $60,000 sanction against Groeschell.
        Including sanctions in a MAR 7.3 determination would also disregard the court's
warning that sanctions should not become a "fee shifting" mechanism or profitable
"cottage industry" for attorneys. See Fisons, 122 Wash. 2d at 356.
                                           11
No. 74149-7-1/12

417,63 P.3d 156 (2003). But Groeschell improved her position on appeal. Thus,

Hedger is not entitled to attorney fees.

      We reverse the trial court's award of attorney fees under MAR 7.3, and

remand for entry of a new judgment consistent with this opinion.

WE CONCUR:

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