Court Opinion

ID: 4157554
Source: CourtListenerOpinion
Date Created: 2017-04-03 20:20:10.775118+00
Date Added: 2024-06-11T14:30:59.913051
License: Public Domain

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON

DEBORAH EWING and KEVIN EWING,                         No. 74773-8-1
Husband and wife,

                    Respondents,
                                                       DIVISION ONE
      V.

KATRINA E. GLOGOWSKI, an individual;                   PUBLISHED OPINION
THE GLOGOWSKI LAW FIRM, PLLC, a
Washington professional limited liability                                       ▪    Cf)

Company; GREEN TREE SERVICING LLC,
                                                                               •
                                                                               -▪0   rn
a Washington limited liability company; THE
BANK OF NEW YORK, MELLON TRUST                                                 c4)         "TJ
COMPANY, N.A., a national banking                                                     ri)171
association; GREENPOINT MANUFACTURED)                                          =7.               •••••
HOUSING CONTRACT TRUST, PASS                )
THROUGH CERTIFICATES SERIES 2000-5, )
a foreign business trust,                   )
                                            )
                     Appellants.            )          FILED: April 3, 2017

      SPEARMAN, J. — Deborah Ewing filed a wrongful foreclosure lawsuit

against Green Tree Servicing, LLC,(Green Tree) in which Ewing alleged, among

other things, violations of the Consumer Protection Act(CPA), chapter 19.86

RCW and Deed of Trust Act(DTA), chapter 61.24 RCW. After protracted

litigation, Green Tree made an offer of judgment to Ewing for $50,000 and

reasonable attorney fees and costs. Ewing accepted the offer of judgment. The

trial court awarded Ewing $246,307.50 in attorney fees after disallowing 125

hours for unsuccessful or wasteful activities and applying a 1.5 multiplier. Green

Tree appeals the attorney fee award. We affirm the trial court in all respects and

grant Ewing's request for attorney fees on appeal.
No. 74773-8-1/2

                                      FACTS

      Deborah Ewing owned a home with a mortgage that was serviced by

Green Tree Servicing, LLC. In spite of being current on payments, Ewing

received a notice of default on her mortgage in June 2011. In the notice of

default, trustee Katrina Glogowski of Glogowski Law Firm, PLLC alleged that

Ewing failed to make payments from March through June 2011. In an attempt to

save her home, Ewing sued Green Tree and Glogowski Law Firm in February

2012, but Glogowski nonjudicially foreclosed and sold the home.

      With summary judgment motions pending, Ewing retained an attorney in

March 2014. She amended the complaint to add defendants, causes of action

under the Deed of Trust Act, Consumer Protection Act, and additional claims. In

response, Green Tree threatened CR 11 sanctions unless Ewing's counsel

dropped all causes of action except the CPA claim. Green Tree echoed this

litigation position when it answered the amended complaint and requested

$25,000 in sanctions against Ewing.

       Ewing began propounding discovery against Green Tree and deposing

witnesses. Likewise, Green Tree sought discovery and deposed Ewing and her

witnesses. During this process, Green Tree first produced a copy of Ewing's

promissory note with an attestation that the original note was lost. Included with

the note was an allonge making the note payable to Bank of New York Mellon,

signed by a Green Tree employee. It was later discovered that the person who

signed the allonge was not an employee until after the foreclosure on Ewing's

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No. 74773-8-1/3

home. The allegedly fraudulent allonge supported Ewing's theory that the note

did not grant Green Tree authority to foreclose on her home.

       Green Tree and codefendant Bank of New York Mellon Trust Company

(BNYMTC) moved for summary judgment on February 9, 2015, seeking to

dismiss all of Ewing's ten causes of action. Glogowski and Glogowski Law Firm

joined this motion. On March 12, 2015, the trial court granted in part Green Tree

and BNYMTC's summary judgment motion. The court dismissed Ewing's

husband as a plaintiff and dismissed all claims as to BNYMTC. It dismissed all

causes of action against Green Tree except for those under the DTA and CPA.

The trial court also dismissed all causes of action against defendants Glogowski

and Glogowski Law Firm except for the DTA cause of action. Ewing moved for

reconsideration, which was denied. Green Tree moved to strike Ewing's jury

demand. The request was denied but Green Tree was permitted to renew the

motion upon narrowing of the issues.

       Glogowski also moved for summary judgment to dismiss all claims against

her personally. The trial court granted summary judgment as to Glogowski, but

allowed the DTA claim against her firm to proceed.

       In April 2015, Green Tree renewed its motion to strike the jury demand, to

which the Glogowski Law Firm joined. The court denied the motion. Green Tree

requested reconsideration, which was denied. In May, Green Tree requested a

continuance of the trial, which Ewing opposed. The court granted the

continuance. Ewing moved to compel discovery from Green Tree, which the

court granted in part.

                                        3
No. 74773-8-1/4

        On May 27, 2015, Ewing amended her complaint for a second time,

adding claims for fraud, punitive damages, and injunctive relief. On July 16,

2015, Green Tree moved for summary judgment against these newly added

claims, and again sought dismissal of the DTA and CPA claims. The Glogowski

Law Firm joined in Green Tree's motion for summary judgment. On July 31,

2015, Ewing cross-moved for summary judgment against Green Tree on her

CPA and DTA claims, and against the Glogowski Law Firm for violations of the

DTA. In a single order, the trial court dismissed Ewing's newly added claims, but

denied Green Tree summary judgment on the DTA and CPA claims. Ewing's

summary judgment motion as to her CPA and DTA claims against Green Tree

was denied. But the trial court granted Ewing's summary judgment motion as to

the Glogowski Law Firm, finding that it violated the DTA. Thus, Ewing's motion

for summary judgment was granted in part and denied in part.

       The parties mediated on September 11, 2015. Green Tree offered Ewing

$40,000, while Ewing's final demand at mediation was $1,250,000.

        On September 14, 2015, Green Tree successfully moved for judicial

notice.1 On September 18, 2015, Green Tree made a CR 68 offer of judgment for

$50,000 plus reasonable and necessary costs, disbursements, and attorney fees.

On September 25, Green Tree filed motions in limine in which the Glogowski Law

Firm joined. Ewing accepted the offer of judgment on September 28, 2015.

       1 Green Tree requested that the court take judicial notice of facts from websites about the
merger of Bank One, N.A. and JP Morgan Chase, N.A., and about Bank of New York Mellon's
name change.

                                                4
No. 74773-8-1/5

       On February 12, 2016, the trial court entered a final judgment with a total

attorney fee award of $246,307.50. Using the lodestar methodology, the trial

court found that counsel's hourly rate of $250 for associates and $300 for

partners was reasonable. The trial court struck 125 hours of associate attorney

billed time for unsuccessful claims or theories, or for entries that were vague or

blank. This resulted in a lodestar calculation of $147,035. The trial court applied a

1.5 multiplier and added in paralegal services for a total fee award of

$246,307.50. Adding costs, the entire amount is $247,104.47.

       Green Tree appeals this award.

                                   DISCUSSION

       An appellate court will uphold an attorney fee award unless it finds the trial

court manifestly abused its discretion. A trial court abuses its discretion when it

exercises discretion on untenable grounds or for untenable reasons. Chuong Van

Pharri v. City of Seattle, 159 Wash. 2d 527, 538, 151 P.3d 976 (2007).

       The trial court uses the lodestar calculation to determine reasonable

attorney fees. Berryman v. Metcalf, 177 Wash. App. 644, 660, 312 P.3d 745 (2013).

The lodestar is the number of hours reasonably expended on the litigation

multiplied by a reasonable hourly rate. Id. at 660. The requesting attorney must

provide reasonable documentation of their work performed. Bowers v.

Transamerica Title Ins. Co., 100 Wash. 2d 581, 597,675 P.2d 193(1983). The

court limits the lodestar to hours reasonably expended. It "should therefore

discount hours spent on unsuccessful claims, duplicated effort, or otherwise

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No. 74773-8-1/6

unproductive time." Id. at 597. After the lodestar is calculated, the court may

adjust it up or down to reflect factors not considered in the lodestar.

       Green Tree argues that the amount of the trial court's award of attorney

fees was in error because the trial court did not exclude enough hours for

unsuccessful work, and did not account for Ewing's "unreasonable" settlement

and litigation posture.

       Green Tree identifies 249.6 hours that Ewing's attorneys spent on

unsuccessful and unsupportable work. The trial court discounted 125 hours for

unsuccessful and unsupportable work in several areas:

      Work done to amend the complaint to add claims which were eventually
      dismissed should not be included. Work done to oppose defense motions
      for summary judgment which resulted in dismissal of claims or parties
      should not be included. Work on motions in limine and the motion for
      judicial notice was mostly unsuccessful and only some of that work should
      be compensated. And there are a few entries which cannot be attributed
      because they are vague or blank. In all, I have found approximately 125
      hours billed at the associate's rate that should be stricken from the
      attorney's fees.

Clerk's Papers(CP) at 820. Here, the trial court was presented with over thirty

pages of detailed billing records from Ewing's attorneys, which had been

reviewed and annotated by Green Tree's attorney. These records reflected work

on a large number of motions for which the trial court reviewed briefing, heard

argument, and issued orders. Well situated in this respect, the court made

specific findings that some of Ewing's attorney's hours were spent on

unsuccessful and partially successful activities, and granted full, partial, or no

credit for hours spent on such activities. The court established an adequate

record for review, and did not abuse its discretion by discounting 125 hours for

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No. 74773-8-1/7

unsuccessful claims, duplicated effort, or otherwise unproductive time. This

disallowance includes any alleged litigation "unreasonableness" by Ewing,

because any such behavior would be reflected in unsuccessful or unproductive

work and disallowed.

        We also reject Green Tree's argument that the fee award should be

reduced for unreasonableness in settlement. Evidence of conduct or statements

made in negotiations is not admissible to prove the validity of the claim or its

amount. ER 408. Evidence of settlement negotiations of an underlying claim are

not admissible as to proving attorney fees for that claim.2 Humphrey Indus., Ltd.

v. Clay St. Assocs., LLC, 170 Wash. 2d 495, 508, 242 P.3d 846 (2010). Ewing's

settlement conduct is not admissible, so the trial court did not abuse its discretion

by not factoring it into the lodestar calculation.

         Green Tree next contends that the trial court abused its discretion by

finding that the time that Ewing's counsel spent pursing claims against Glogowski

could not be segregated from the claims against Green Tree.

        "If attorney fees are recoverable for only some of a party's claims, the

award must properly reflect a segregation of the time spent on issues for which

fees are authorized from time spent on other issues," even where the claims

overlap or are interrelated. Mayer v. City of Seattle, 102 Wash. App. 66, 79-80, 10

P.3d 408(2000)(citing Dash Point Village Assoc. v. Exxon Corp., 86 Wash. App.
2 Green Tree suggests that evidence of Ewing's conduct in settlement negotiations could
go toward whether she was acting in good faith, as provided by Matteson v. Ziebarth, 40 Wash. 2d
286, 242 P.2d 1025, 1029(1952). But Matteson is a case under the Washington Limited Liability
Corporation Act, which has a good faith fee provision that is not relevant to determining attorney
fee awards in this case.

                                                7
No. 74773-8-1/8

596, 611, 937 P.2d 1148 (1997)); Loeffelholz v. Citizens for Leaders with Ethics

& Accountability Now (C.L.E.A.N.), 119 Wash. App. 665, 690, 82 P.3d 1199 (2004).

The trial court must also segregate time spent litigating claims against

codefendants. But segregation of attorney fees is not required if the trial court

determines that the claims are so related that no reasonable segregation can be

made. Loeffelholz, 119 Wash. App. at 691.

       In a wrongful foreclosure case under the CPA, a beneficiary can face

liability for the actions of its trustee. Klem v. Washington Mut. Bank, 176 Wash. 2d
771, 790, 295 P.3d 1179(2013). Where the beneficiary so controls the trustee so

as to make the trustee a mere agent of the beneficiary, then as principal, the

beneficiary may be liable for the acts of its agent. Id. at 791 n.12. A beneficiary

can also face liability for the actions of its trustee under the DTA. Walker v.

Quality Loan Serv. Corp., 176 Wash. App. 294, 313, 308 P.3d 716(2013). In her

DTA cause of action, Ewing alleged that trustee Glogowski failed to exercise

good faith, independence, and neutrality where they also provided services for

Green Tree. At oral argument, Green Tree conceded its potential liability for the

Glogowski Law Firm's DTA's violation. Under Klem and Walker, Green Tree and

Glogowski's liability was interdependent. It was a proper exercise of the trial

court's discretion to not segregate time on claims against them.

       Green Tree next argues that the trial court erred in its adjustment of the

lodestar. It argues that the fee award should have been adjusted downward

because it was grossly disproportionate to the underlying judgment, and that the

trial court should not have awarded the multiplier.

                                          8
No. 74773-8-1/9

        After calculating the lodestar, the trial court may adjust it up or down

based on factors not yet taken into consideration. Bowers, 100 Wash. 2d at 598.

These factors include the contingent nature of success (the risk factor) and the

quality of work performed. Id. "In adjusting the lodestar to account for this risk

factor, the trial court must assess the likelihood of success at the outset of the

litigation." Id.

        In assessing the reasonableness of a fee request, a vital consideration is

"the size of the amount in dispute in relation to the fees requested. Scott Fetzer

Co. v. Weeks, 122 Wash. 2d 141, 150, 859 P.2d 1210 (1993). But an appellate

court "'will not overturn a large attorney fee award in civil litigation merely

because the amount at stake in the case is small." Berryman, 177 Wn. App. at

660(quoting Mahler v. Szucs, 135 Wash. 2d 398, 433, 957 P.2d 632(1998)). In

determining the amount of an award, the court must consider the purpose of the

statute allowing for attorney fees. Fetzer, 122 Wash. 2d at 149. "[W]hen litigation

under the Consumer Protection Act produces protection for everyone who might

in the future be injured by a specific violation, then it follows that the

reasonableness of the attorney's fee should be governed by substantially more

than the import of the case to the plaintiff alone." Berryman, 177 Wash. App. at 674

(citing Connelly v. Puget Sound Collections. Inc., 16 Wash. App. 62, 65, 553 P.2d
1354 (1976)).

        Here, the trial court *plied a 1.5 multiplier to the lodestar. In doing so, the

court considered declarations by parties' counsel and other practicing attorneys

that discussed the contingencies involved in the litigation. The trial court awarded

                                           9
No. 74773-8-1/10

a 1.5 multiplier because of the significant risk that they would never be

compensated for their work, the remedial nature of the CPA and DTA, and to

encourage representation of clients with claims under those statutes. The trial

court did not abuse its discretion by awarding attorney fees with a multiplier far

greater than the underlying judgment.

        Green Tree also contends that the trial court erred by not considering

whether the hourly rate of Ewing's counsel already compensated them for the

risk of this contingency fee case. The record does not indicate that the attorney's

fee did factor in the contingency. The mere absence of a finding on this fact does

not justify overturning a fee award.3 Somsak v. Criton Techs./Heath Tecna, Inc.,

113 Wash. App. 84, 98-99, 52 P.3d 43(2002). The trial court did not abuse its

discretion by applying the 1.5 multiplier.

        Finally, Green Tree argues, without citation to caselaw, that the

disproportionate award is a disincentive to making an offer of judgment under CR

68. It argues that as a matter of policy, disproportionate awards pursuant to CR

68 should be reversed. Green Tree fails to explain how concerns about

disproportionate awards under CR 68 are not adequately addressed by the

exercise of discretion within the lodestar calculation and a downward and upward

adjustment. We decline Green Tree's invitation to create a rule capping attorney

fees awarded pursuant to an offer of judgment.

         3 Green Tree cites McGreevy v. Oregon Mut. Ins. Co., 90 Wash. App. 283, 951 P.2d 798
(1998), which remanded a fee award to the trial court based on several factors while also noting
that the trial court did not have sufficient evidence that the hourly rate did not take the
contingency arrangement into account.

                                               10
No. 74773-8-1/1 1

Attorney fees on appeal

        Ewing additionally requests an award of attorney fees on appeal under

RCW 19.86.090.4 That provision grants attorney fees to a person injured by a

violation of the CPA who brings a civil action to recover his or her damages.

Because Ewing prevails on appeal, we award her appellate fees.

        Affirmed.

                                                                       r
                                                                       , \
WE CONCUR:

VQ-(2% fae-N(T

       4 Green Tree argued in opposition to an award of appellate fees for the first time at oral
argument. They contended that appellate fees could not be awarded under their CR 68 offer of
judgment, which authorized attorney fees only through the date of their offer of judgment,
September 18, 2015. We decline to consider an argument made for the first time at oral
argument.

                                                11