Court Opinion

ID: 2753715
Source: CourtListenerOpinion
Date Created: 2014-11-20 18:13:16.657776+00
Date Added: 2024-06-11T12:45:40.715623
License: Public Domain

FILED 

                                                                    November 20, 2014 

                                                                In the Office of the Clerk of Court 

                                                              W A State Court of Appeals, Division III 

         IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON 

                            DIVISION THREE 

EXTERRA, LLC, a Washington Limited           )
company,                                     )        No. 317S1-0-III
                                             )
                      Appellant,             )
                                             )
      vs.                                    )
                                             )        UNPUBLISHED OPINION
CLE ELUM GATEWAY PROPERTY,                   )

LLC, a Washington limited liability          )

company; CORSTONE CONTRACTORS                )

LLC, a Washington Limited liability          )

company,                                     )

                                             )

                      Respondents,           )

                                             )

TRAVELERS CASUALTY & SURETY                  )

COMPANY OF AMERICA, a bonding                )

company,                                     )

                                             )

                      Defendant.             )

      FEARING, J. -    Exterra LLC (Exterra) sought to foreclose a materialmen's lien

because, it alleged, Cle Elum Gateway Property LLC (Gateway) and Corstone

Contractors LLC (Corstone) failed to pay for its construction services. Exterra also sued
No.31751-0-III
Exterra, LLC v. Cle Elum Gateway Property, LLC

Corstone for breach of contract. On summary judgment, the trial court dismissed

Exterra's foreclosure claim because it previously released and waived its claim.

       On appeal, Exterra argues summary judgment was improper because the waiver

and release documents it signed are ambiguous and create an issue of material fact.

Exterra also argues the court lacked jurisdiction to hear Corstone's summary judgment

motion because it previously dismissed Corstone from the suit and despite Corstone

remaining a defendant by reason of a cross-claim asserted by Gateway. Alternatively,

Exterra argues Corstone waived any affirmative defense, including release and waiver,

because Corstone failed to plead them. We affirm the trial court.

                                      FACTS

      On September 15, 20 10, Gateway contracted with Corstone to construct a

McDonald's restaurant in Cle Elum, Washington. On September 29, Corstone

subcontracted a portion of that work to Exterra. In exchange for Exterra's excavation and

paving work, Corstone agreed to pay Exterra $48,704.

      To receive payment for services, Exterra agreed to:

             submit to the CONTRACTOR applications for payment at such
      reasonable times as to enable the CONTRACTOR to timely apply for and
      obtain payment from OWNER. Each application for payment shall include
      appropriate waivers and releasesfrom SUBCONTRACTOR and from its
      subcontractor's materialmen, suppliers, and third party independent
      contractors, if any, for the period concerning which the
      SUBCONTRACTOR is requesting payment.

Clerk's Papers (CP) at 10 (emphasis added). If the parties disputed their rights and

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obligations under this contract, they agreed the substantially prevailing party was entitled

to recover its expenses, including attorney fees and costs. Exterra also agreed to defend

and indemnify Corstone from any actions arising out of the services it performed under

the contract.

       During the succeeding months, Exterra performed excavating, paving, and grading

for the McDonald's restaurant lot. Corstone made three progress payments: $12,230.55

on November 29,2010, $1,820.66 on January 18,2011, and $264.06 also on January 18.

Total payments were $14,315.27.

       In accordance with the contract, Corstone required Exterra to sign waivers. On

November 24,2010, January 14,2011, and February 3,2011, Exterra executed

"Unconditional Waiver and Release of Claims and Lien Upon Progress Payment." CP at

90, 133-34. We reproduce below only the last waiver since all three contain the same

language other than the date covered and the amount Corstone paid. The waivers read:

              The undersigned does hereby waive and release any and all claims,
       of any type, kind or character, for labor, services, equipment, rented or
       supplied, and materials furnished, including any mechanic's or
       materialman's lien, equitable lien, stop notice, equitable adjustment, or
       bond claim (public or private) that the undersigned has or may ever have in
       any manner arising out of work, labor, services, equipment, material or
       supplies furnished by or through the undersigned in connection with the
       Project or the Contract through the date of 12/31/2010.
              The undersigned further warrants and certifies that as of the date of
       this waiver it has previously been paid a total of$14,315.27 in connection
       with the project.
              The undersigned hereby agrees to Indemnify and hold the Owner
       [Gateway] and Corstone Contractors LLC harmless from any claim, cause

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Exterra, LLC v. Cle Elum Gateway Property, LLC

       of action or liability, including but not limited to costs, expenses, interest,
       and attorneys' fees arising from any claims hereafter made on account of
       work, labor, services, equipment, materials or supplies through the date of
       12/31/2010. This waiver and release shall also be effective in the event of
       any bankruptcy court action that may ultimately deprive the undersigned of
       entitlement to the payment hereunder.
              This is a partial Waiver and Release, the total unpaid balance of the
       Subcontract Agreement will be paid upon. final cometion fo [sic] the
       Project.

CP at 90.

       In addition to the unconditional waivers, Exterra executed two "Conditional

Waiver and Release of Claims and Lien" on January 14 and February 3,2011. CP at

135-36. In the conditional waivers, Exterra again agreed to fully waive and release any

and all claims arising from the work it performed prior to December 31, 2010, "except

for the following items which are in dispute _ _ _ _." CP 135-36. In other words,

the conditional waivers asked Exterra to identify any items it was not releasing. Exterra

left both blanks empty.

       Charles Tudor, owner of Exterra, signed a declaration in opposition to Corstone's

summary judgment motion. In the affidavit, Tudor testified that Exterra's "last day on

the job was January 4, 2011, however we were [Exterra was] on the job site on

March 29,2011." CP at 115.

      On January 20, 2011, Exterra filed a claim of lien on the Cle Elum lot with the

Kittitas County Auditor in the principal sum of $47,432.25, for labor, professional

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services, and material. Exterra signed the lien on December 13,2010. The lien identified

January 4, 2011, as the last date that Exterra performed labor, provided services, or

furnished materials.

                                      PROCEDURE

       On May 12, 2011, Exterra sued to foreclose on its materialmen's lien and alleged

Gateway and Corstone failed to pay for its construction services. On July 14, 2011,

before Gateway or Corstone filed an answer, Exterra moved under CR 41 to voluntarily

dismiss Corstone from its lien foreclosure suit. During the pendency of the motion,

Gateway answered Exterra's complaint, asserted affirmative defenses, and filed a cross

claim against Corstone. Corstone, Gateway alleged, was required to indemnity it from

Exterra's claim. On July 28, 2011, the trial court granted Exterra's CR 41 motion and

dismissed Corstone. The order does not mention the cross-claim filed by Gateway.

       On September l3, 2011, Corstone filed its answer to Gateway and brought a

counterclaim and third party claim. Corstone asserted the counterclaim against Exterra

for failing to repair defective work. Corstone asserted the third-party claim against

Charles Tudor and his wife because they personally guaranteed Exterra's performance.

      On November 15, 2011, Exterra sent an e-mail to Gateway and Corstone

questioning whether Corstone remained a party following Exterra's motion for voluntary

dismissal. In response, Gateway, stated:

              In response to your e-mail dated November 15, 2011. Our records

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       show that our third party complaint against Corstone was filed on our abut
       [sic] July 20, 2011. The order dismissing Corstone was entered on July 28,
       2011. I believe Corstone is dismissed from your client's claim but was not
       dismissed by my client's claims.
               As I understand it, Corstone has filed an answer to our complaint
       and filed a third party complaint against Chuck Tudor based upon his
       personal guarantee of the contract. Again, if I am incorrect please advise.

CP at 156. Corstone responded to the group later that day, stating:

              In my review of the file, I agree with the lay of the land described by
       Mr. Holt [counsel for Gateway]. Corstone also filed a Cross Claim against
       Exterra, which was sent to you in September. Answers are due from both
       Chuck Tudor and Exterra.

CP at 156.

       Exterra never responded to the e-mails. On April 25, 2012, Exterra filed its

answer to Corstone's cross claim and third-party complaint. In its answer, Exterra

asserted that Corstone is not a party to the lien foreclosure action, although Exterra did

not allege Corstone lacked standing to bring a cross claim against Exterra. On April 25,

2012, Exterra also filed a Note for Trial Setting, listing Corstone as a party.

       In May 2012, Exterra responded to interrogatories and requests for production sent

by Corstone. In an answer to one interrogatory, Exterra declared that Corstone owed

$47,432.25. In another interrogatory, Corstone requested that Exterra state with

particularity and describe in detail how it calculated its claim of lien. Exterra responded:

"See the attached invoices and change orders." CP at 83. The attached invoices and

change orders showed the last date of work to be November 16,2010.

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        On June 27, 2012, Corstone sent Exterra a letter requesting Exterra file a release of

lien and dismiss its lien foreclosure action based on the waivers Exterra previously

signed. A month later, on July 24, 2012, Corstone again asked Exterra to voluntarily

dismiss its lawsuit given the unconditional waiver it signed. Exterra never responded to

either letter .

       .Based on the unconditional waivers Exterra signed, Corstone moved for summary

judgment and Gateway joined. Exterra resisted the motion by arguing an ambiguity in

the language of the waivers prevented the court from dismissing its lien foreclosure

action. Its owner, Charles Tudor testified by declaration:

               In support of its motion for summary judgment, Corstone produces a
        copy of the Unconditional Waiver and Release of Claims and Lien Upon
        Progress Payment that I signed on February 3, 2011. That document was
        prepared by Corstone. My understanding of that document was that Exterra
        was waiving its right to claim a lien as to the monies that it had been paid
        on the project. However, Exterra was not waiving any such rights as to
        monies it had not been paid, but were due. That is evidenced by the
        statement.
               "This is a partial Waiver and Release, the total unpaid balance
               of the Subcontract Agreement will be paid upon final
               comletion fo [sic] the Project."

CP at 115.

        Exterra also argued, in opposition to the defense summary judgment motion, that

Corstone lacked standing since Exterra previously dismissed it from the complaint. The

court postponed deciding Corstone and Gateway's summary judgment motion pending

resolution of the standing issue.

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       In a supplemental brief to the court, Corstone argued it gained standing through

the cross claim Gateway filed. The court agreed with Corstone and Gateway in a

memorandum decision dated March 13,2013. The court found Corstone had standing

and dismissed Exterra's lien foreclosure action based on the waivers it executed.

       On April 5, 2013, Exterra moved the court to reconsider its order. In its motion to

reconsider Exterra argued for the first time Corstone could not bring a summary

judgment motion because it did not raise release as a defense in its answer. Corstone

argued it provided Exterra sufficient notice of its release defense in its June and July

2012 letters requesting Exterra dismiss its suit. On April 17, 2013, the court denied

Exterra's motion to reconsider its order. Pursuant to the parties' contract, the trial court

awarded Corstone reasonable attorney fees and costs in the sum of $25,607.74.

                                  LA W AND ANALYSIS

                                        Jurisdiction

       Exterra first argues the trial court lacked jurisdiction to hear Corstone's summary

judgment motion because Exterra previously dismissed Corstone from its lien foreclosure

action. We question whether "jurisdiction" is the correct term to use in this context.

Jurisdiction traditionally consists of two concepts. Subject matter jurisdiction governs

the court's authority to hear a particular type of controversy, not a particular case.

Dougherty v. Dep't a/Labor & Indus., 150 Wn.2d 310,317,76 P.3d 1183 (2003);

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No. 31751-0-II1
Exterra, LLC v. Cle Elum Gateway Property, LLC

Ralph v. Dep 't a/Natural Res., 171 Wash. App. 262, 267-68, 286 P.3d 992 (2012),

review granted, 176 Wn.2d 1024,301 P.3d 1047 (2013). Personal jurisdiction is

jurisdiction over the parties by reason of consent, domicile, residence, presence,

appearance in an action, or doing business in a state. SCM Grp. USA, Inc. v.

Protek Machinery Co., 136 Wash. App. 569, 574, 150 P.3d 141 (2007). The trial

court held subject matter jurisdiction over a lien foreclosure on property within its

county. The court held personal jurisdiction over the parties by reason of

conducting business in the county. Rather than addressing jurisdiction, we review

our civil rules to determine if the trial court had authority to entertain Corstone's

summary judgment motion.

       Voluntary dismissal is governed by CR 41. Under CR 41, a party has a

mandatory, absolute right to dismissal of its action without prejudice, fixed on the day of

the filing of the motion. Calvert v. Berg, 177 Wn. App. 466,472, 312 P.3d 683 (2013).

A defendant is not thereafter entitled to claim a setoff or seek affirmative relief so as to

prevent the granting of a nonsuit. Krause v. Borjessan, 55 Wn.2d 284,285,347 P.2d 893

(1959). Entry of a judgment after the order of dismissal exceeds the jurisdiction of the

court. Cork Insulation Sales Co. v. Torgeson, 54 Wash. App. 702, 705, 775 P.2d 970

(1989). Because Corstone filed its cross claim after Exterra dismissed it from the suit,

Exterra argues the court lacked jurisdiction to grant Corstone summary judgment.

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No. 31751-0-111
Exterra, LLC v. Cle Elum Gateway Property, LLC

       If Corstone was the only other party, Exterra would be correct. But Exterra also

sued Gateway. Gateway, in tum, filed a cross claim against Corstone. Although Exterra

filed its motion to dismiss before Gateway filed its cross claim and Corstone may have

been dismissed upon the filing of the motion, Gateway could have joined Exterra as a

third party defendant anyway. Exterra never objected to Corstone remaining a party to

the suit as a result of the cross claim.

       Gateway had the right to challenge the lien and to bring a summary judgment

motion to dismiss the lien. In fact, Gateway joined Corstone's summary judgment

motion and thus the motion could proceed as Gateway being the movant.

       We find no Washington decision directly on point. But logic and economy

compels our ruling. The trial court held authority to entertain the summary judgment

motion.

                                           Failure to File Answer

       Exterra next argues Cor stone could not raise release or waiver as an affirmative

defense because Corstone failed to plead the defenses. Under CR 8(c) a party "shall set

forth affirmatively. . . release ... and any other matter constituting an avoidance or

affirmative defense." Generally, affirmative defenses are waived unless they are (1)

affirmatively pled, (2) asserted in a motion under CR 12(b), or (3) tried by the express or

implied consent of the parties. Bickford v. City ofSeattle, 104 Wash. App. 809, 8l3, 17
P.3d 1240 (2001). A party does not waive its affirmative defense merely because it fails

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No. 31751-0-III
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to plead it. Where the party fulfills the policy goal animating the rule-to avoid

surprise-courts will permit the affirmative defense. Henderson v. Tyrrell, 80 Wn. App.

592,624,910 P.2d 522 (1996).

               It is to avoid surprise that certain defenses are required by CR 8(c) to
       be pleaded affirmatively. In light of that policy, federal courts have
       determined that the affirmative defense requirement is not absolute. Where
       a failure to plead a defense affirmatively does not affect the substantial
       rights of the parties, the noncompliance will be considered harmless.
       Tillman v. National City Bank, 118 F.2d 631,635 (2d Cir.l941). Also,
       objection to a failure to comply with the rule is waived where there is
       written and oral argument to the court without objection on the legal issues
       raised in connection with the defense. Joyce v. L.P. Steuart, Inc., 227 F.2d
407 (D.C. Cir. 1955). There is a need for such flexibility in procedural
       rules.

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

       We recognize that Corstone failed to plead release as an affirmative defense.

Nevertheless, Corstone notified Exterra of its defense by letters on June 27 and July 24,

2012, before it filed the summary judgment motion. In its motion opposing summary

jUdgment, Exterra did not object to Corstone's defense. Exterra did not raise CR 8 as a

bar to Corstone's defense until after it lost the summary judgment motion and moved for

reconsideration. Exterra waived any objection to the failure to plead release as an

affirmative defense when it preceded with written and oral argument on the issue.

                            Summary Judgment Motion Merits

       Exterra contends summary judgment was improper because language in the

waivers is ambiguous and required extrinsic evidence to ascertain its meaning. This court

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No. 31751-0-III
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reviews summary judgment motions de novo, engaging in the same inquiry as the trial

court. A/oa v. Port a/Seattle, 176 Wn.2d 460,466,296 P.3d 800 (2013). Summary

judgment is appropriate ifthere are no genuine issues of material fact and the moving

party is entitled to judgment as a matter of law. A/oa, 176 Wash. 2d at 466. The

interpretation of a contract can be a mixed question of law and fact. Rekhter v. Dep 't 0/

Soc. & Health Servs., 180 Wn.2d 102,134,323 P.3d 1036 (2014). When the contract

presents no ambiguity and no extrinsic evidence is required to make sense of the contract

terms, contract interpretation is a question oflaw. Rekhter, 180 Wash. 2d at 134.

       An ambiguity exists if the language is susceptible to more than one reasonable

interpretation. Holden v. Farmers Ins. Co. a/Wash., 169 Wash. 2d 750, 756,239 P.3d 344

(2010). A contract is not ambiguous simply because the parties suggest opposing

meanings. Martinez v. Kitsap Pub. Servs., 94 Wash. App. 935, 944, 974 P.2d 1261 (1999).

An ambiguity will not be read into a contract where it can reasonably be avoided by

reading the contract as a whole. McGary v. Westlake Investors, 99 Wash. 2d 280, 285, 661
P.2d 971 (1983).

       The release and waiver Exterra signed is a contract and its construction is

governed by contract principles. Barton v. Dep't o/Transp., 178 Wn.2d 193,208,308

P.3d 597 (2013). To interpret such a release, courts looks to the parties' intent. Us. Life

Credit Life Ins. Co. v. Williams, 129 Wash. 2d 565, 569, 919 P.2d 594 (1996).

              Determination of the intent of the contracting parties is to be

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No. 31751-0-II1
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       accomplished by viewing the contract as a whole, the subject matter and
       objective of the contract, all the circumstances surrounding the making of
       the contract, the subsequent acts and conduct of the parties to the contract,
       and the reasonableness of respective interpretations advocated by the
       parties.

Berg v. Hudesman, 115 Wn.2d 657,667, 801 P.2d 222 (1990) (quoting Stender v. Twin

City Foods, Inc., 82 Wn.2d 250,254,510 P.2d 221 (1973». A court may consider

extrinsic evidence to ascertain the parties' intent, but unilateral or subjective purposes

and intentions about the meanings of what is written do not constitute evidence of the

parties'intentions. Lynott v. Nat'l Union Fire Ins. Co., 123 Wn.2d 678,684,871 P.2d

146 (1994); Wm. Dickson Co. v. Pierce County, 128 Wash. App. 488, 493, 116 P.3d 409

(2005). Extrinsic evidence is admissible as an aid to ascertain the parties' intent when it

describes the circumstances under which the contract was made. Berg, 115 Wash. 2d at

667.

       Exterra argues the declaration of its managing member, Charles Tudor, created an

ambiguity as to the intent of the parties. Tudor testified to his "understanding" that the

release only waived Exterra's right to claim a lien as to monies already paid on the

project, not any rights to monies it had not been paid, but were due. Tudor emphasizes

the last sentence in the unconditional waiver: "[t]his is a partial Waiver and Release, the

total unpaid balance of the Subcontract Agreement will be paid upon final comletion fo

[sic] the Project." CP at 115.

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No. 31751-0-III
Exterra, LLC v. Cle Elum Gateway Property, LLC

       Charles Tudor did not testify as to the circumstances under which the parties

signed the release. Tudor's declaration testimony details his subjective belief as to the

parties' intent. Subjective beliefs do not constitute evidence when construing and

applying a contract.

       Charles Tudor's testimony contradicts the plain language of the release. The

release provided:

              The undersigned does hereby waive and release any and all claims,
       of any type ... for labor ... arising out of work ... furnished by or through
       the undersigned in connection with the Project or the Contract through the
       date of 12/3112010.

CP at 90. Contrary to Tudor's belief, the release language did not depend on whether

Corstone paid amounts owed under the contract. Rather, the releases operated against

claims for work performed before an identified date, December 31, 20 I O.

       Exterra acknowledges the "releases appear to be absolute," but argues the last

sentence describing the waiver and release as "partial" creates an ambiguity. Br. of

Appellant at 11. Exterra avers the trial court ignored this language when it determined no

ambiguity exists. Nevertheless, as already stated, use of the word "partial" was intended

to reserve claims for work after an identified date. The partial waiver language reserved

Exterra's right to the money under the contract notwithstanding its waiver to any lien

claim arising out of work performed after December 31, 2010.

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No. 31751-0-111
Exterra, LLC v. Cle Elum Gateway Property, LLC

       Viewing the waiver and releases as a whole, its subject matter, and objective, no

ambiguity exists. In the unconditional waiver and release, Exterra "waive[d] and

releaserd] any and all claims, of any type, kind or character ... including any mechanic's

or materialman's lien ... that [Exterra] has ... arising out of work, labor, services,

equipment, material or supplies furnished by or through [Exterra] in connection with the

Project or the Contract through the date of 12/3112010." CP at 90. The conditional

waiver and release contained a space for Exterra to list any outstanding claims it retained.

Exterra did not list any.

       Because no ambiguity exists, the trial court properly granted summary judgment

for Corstone and Gateway.

       We note that Charles Tudor testified that Exterra did not complete its work on the

project until, at the earliest January 4, 2011, or at the latest, spring 2011. The releases

signed by Exterra waived claims for work only before December 31, 2010. If Exterra

had not provided discovery responses to the contrary, we would remand the case because

of a question of fact as to whether Exterra's lien should remain an encumbrance because

of work performed after December 31, 2010.

       Exterra responded to an interrogatory as to the basis of the amount claimed by

referring Corstone to invoices. The invoices showed the last date of work to be

November 16, 20 IO. Exterra supplied no explanation as to the contradiction between its

owner's declaration and its interrogatory answer. Out of fairness to its opponents,

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No. 31751-0-III
Exterra, LLC v. Cle Elum Gateway Property, LLC

Exterra may not respond to discovery with one version of facts and then testify, in

response to a summary judgment motion, with contradictory facts.

       Self-serving affidavits contradicting prior depositions cannot be used to create an

issue of material fact. Davis v. Fred's Appliance, Inc., 171 Wash. App. 348, 357, 287 P.3d
51 (2012); McCormickv. Lake Wash. Sch. Dist., 99 Wash. App. 107, 111,992 P.2d 511

(1999). When a party has given clear answers to unambiguous deposition questions

which negate the existence of any genuine issue of material fact, the party cannot

thereafter create such an issue with an affidavit that merely contradicts, without

explanation, previously given clear testimony. Klontz v. Puget Sound Power & Light

Co., 90 Wash. App. 186, 192, 951 P .2d 280 (1998).

       The cited opinions concern incongruous deposition testimony, not interrogatory

answers. We discern no relevant difference between the two, however. Interrogatory

answers are also given under oath and may be used to impeach. CR 33(a) and (b). More

reason exists to apply the incongruous testimony rule to interrogatory answers. In a

deposition, the party has scant time to respond to a question. A party has at least 30 days

to reflect on an interrogatory question before answering.

                                Reasonable Attorney Fees

       Exterra argues Corstone was not entitled to attorney fees and costs because it was

not a party to the litigation. For the reasons previously declared, Corstone was a party.

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No. 31751~0-III
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Corstone held a duty to Gateway to remove the lien. The lien suit arises out of

Corstone's and Exterra's contract, which contained a fee shifting clause.

       Exterra does not challenge the trial court's actual award of attorney fees, or the

reasonableness of it. As such, Corstone's award of attorney fees, and the reasonableness

of it, are verities on appeal. See Regan v. McLachlan, 163 Wash. App. 171, 17S, 257 P.3d
1122 (2011). The trial court did not err in granting Corstone attorney fees.

       Corstone raises four bases for awarding it attorney fees and costs on appeal.

Because its request goes unchallenged and has merit, this court need address only the

first. Corstone requests attorney fees under RAP lS.1. RAP lS.l(a) permits an award of

attorney fees and costs on appeal if granted by applicable law. Corstone is entitled to

reasonable attorney fees under the terms of the waiver and release documents signed by

Exterra. Thus, Corstone may recover attorney fees on appeal.

                                     CONCLUSION

      We affirm the trial court's grant of summary judgment to Corstone dismissing the

lien foreclosure action and granting Corstone attorney fees and costs. We award

Corstone reasonable attorney fees and costs on appeal and direct that a court

commissioner determine the amount of the award.

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No. 31751-0-II1
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      A majority of the panel has determined this opinion will not be printed in the

Washington Appellate Reports, but it will be filed for public record pursuant to RCW

2.06.040.

WE CONCUR:

  ~I                        C!;t 

 ~(\                    

      Lawrence-Serr y, J.

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