Court Opinion

ID: 2644722
Source: CourtListenerOpinion
Date Created: 2013-12-03 19:41:38.971016+00
Date Added: 2024-06-11T08:43:57.279337
License: Public Domain

G00,T OF A' PPEALS
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    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                                    DIVISION II

FIDELITY NATIONAL TITLE INSURANCE                                                      No. 43873 -9 -II
COMPANY, a Washington insurance
company,

                                       Appellant,

          V.

PORT ORCHARD FIRST LIMITED                                                     UNPUBLISHED OPINION
PARTNERSHIP, a Washington limited
partnership; SUPPORT SERVICES
COMMERCIAL, LLC, a Washington limited
liability company,

          QuiNN- BRINTNALL, P. J. —               After a failed real estate transaction between Port Orchard

First Limited        Partnership ( "      Port Orchard First ")    and         Support Services     Commercial, LLC

  Support Services "),          escrow agent   Fidelity   National Title Insurance Co. ( " Fidelity          ") brought an

interpleader      action   to   resolve   which   party   was entitled    to    a $   50, 000 earnest money deposit it

held. In response, Port Orchard First brought a counterclaim against Fidelity, alleging that it was

negligent      in performing its     fiduciary     role as   an escrow agent.          Port Orchard First and Support

Services eventually dismissed all claims against each other and successfully moved the trial

court   to ( 1)   voluntarily dismiss Port Orchard First'        s negligence counterclaim against            Fidelity, ( 2)

disburse the       escrow   money to Support Services,            and (   3)    dismiss the    action   on   the    pleadings
No. 43873 -9 -II

under   CR 12( c)         on   the   grounds   that "    all claims for relief [ had] been granted or dismissed by

agreement."       Clerk' s Papers ( CP) at 297.

          Fidelity now appeals, arguing that the trial court erred in dismissing the action because

the parties' escrow instructions provided that Port Orchard First and Support Services must pay

Fidelity' s costs and attorney fees for having to defend any action related to the real estate

transaction— including a              permissive counterclaim           for   Fidelity' s   own negligence.    Port Orchard

First maintains that because Fidelity failed to timely plead a contractual indemnity claim, the

trial court did not err in dismissing the action on the pleadings.

          We affirm the trial court and conclude that even assuming Fidelity properly pleaded a

contractual indemnity claim, it would not be entitled to an award of costs and fees for having to

defend     a   negligence        action    unrelated     to the interpleader          action   because the   parties'   escrow

instructions do      not       expressly   allow   for   an   attorney fee    award   in   such circumstances.   In addition,

the escrow instructions do not " evidence a clear and unequivocal intention to indemnify" Fidelity

from its   own negligence.            Nw. Airlines       v.   Hughes Air     Corp.,   104 Wash. 2d 152, 155, 702 P.2d 1192

 1985).        Accordingly, the trial court properly concluded that no outstanding claims remained

when it dismissed the action on the pleadings.

                                                                FACTS

           In May 2009, Support Services agreed to buy the Lund Pointe Apartments from Port

Orchard First.        Support Services and Port Orchard First engaged escrow company Fidelity to

serve as       the closing      agent.     Prior to the scheduled closing of the transaction, Support Services

deposited $ 50, 000 with Fidelity per the terms of the parties' purchase and sale agreement, signed

all of the closing documents required at escrow, and deposited all the necessary proceeds. to

execute    the    sale.    Just prior to closing, Port Orchard First attempted to force Support Services to

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No. 43873 -9 -II

sign an "     affordability          agreement,"       a situation not contemplated by the parties' purchase and sale

agreement.           In an attempt to resolve the situation, Port Orchard First and Support Services

extended the closing date of the transaction to September 7, 2009.

            The parties failed to resolve their dispute prior to the September 7 deadline. Port Orchard

First later notified Support Services that it would no longer require it to sign an affordability

agreement.          However, at that point, the time to close the transaction had lapsed and Support

Services      sought         a   return of    the $ 50, 000     earnest      money deposit.       Port Orchard First refused to

sign    a   recission         agreement        allowing      Fidelity    to   return   the deposit to       Support Services.       In

October 2009, Fidelity notified Port Orchard First and Support Services that if the parties failed

to deliver mutually signed instructions regarding the earnest money deposit by October 23, it

would       file   an   interpleader         action.   This letter specifically        notified   the   parties   that "[ i]n the event

this occurs, the court costs and attorney fees will be deducted from the funds prior to the

disbursement to the court designated recipient" of the earnest money deposit. CP at 46.

             On December 11, 2009, Fidelity brought an interpleader action in Kitsap County Superior

Court       pursuant         to RCW 4. 08. 160         and   CR 22,     and   deposited the $ 50, 000       earnest money deposit

with    the   court.'         Fidelity sought a ruling from the trial court ( 1) declaring it discharged from its

obligations         to Support Services            and   Port Orchard First, ( 2)        requiring Support Services and Port

Orchard First to be interpleaded to                          settle   their dispute     over   the   earnest      money deposit, ( 3)

  RCW 4. 08. 160                 allows "[   a] nyone having in his or her possession, or under his or her control,
any property            or   money ...       where more than one person claims to be the owner of [or] entitled to
       such property [ or] money" to " commence an action in the superior court against all or any of
such persons, and have their rights, claims, interest, or liens adjudged, determined, and adjusted
in   such     action."            CR 22( a)     allows   a plaintiff     to join as defendants "[
                                                                           p] ersons having claims
against       the          when their claims are such that the plaintiff is or may be exposed to
                    plaintiff ...

double or multiple liability."

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No. 43873 -9 -II

dismissing     it from the interpleader           action   between Support Services          and   Port Orchard First, ( 4)

enjoining Port Orchard First and Support Services from legal proceedings against it concerning

the   deposit, ( 5)   awarding           it   reasonable       costs    and   attorney fees " upon disposition of the

interpleader    proceedings,"          and ( 6) awarding it " any additional or further relief which the court

finds   appropriate, equitable or             just." CP   at   5.   Fidelity included a copy of the purchase and sale

agreement with its interpleader complaint but did not include a copy of the parties' escrow

instructions or specifically allege that Support Services and Port Orchard First should be jointly

and severally liable for its costs and attorney fees accrued in defending any action related to the

real estate transaction pursuant to the terms of the parties' escrow instructions.

         In its answer to the interpleader complaint, Support Services argued that it was entitled to

return of the earnest money deposit as " it was the actions of Port Orchard [ First] that caused the

transaction to    fail." CP       at   29.    Support Services did not bring any counterclaims against Fidelity.

Port Orchard First failed to respond to the complaint and in April 2010, Fidelity moved the trial

court   for the   relief requested            in its   complaint.       Fidelity   specifically   requested " an   award   of

reasonable attorneys' fees and costs incurred in having to file the interpleader action in the
                              2
amount of $1,     522. 96."       CP at 37.

          On   May    11,     Port Orchard First supplied its answer to the complaint and a motion

opposing    Fidelity' s     discharge from the interpleader               action.    In both the answer and its motion

opposing Fidelity' s discharge, Port Orchard First counterclaimed that Fidelity acted negligently

2
    As with its complaint, Fidelity did not submit the escrow instructions for the trial court' s
review with this motion or argue that Port Orchard First and Support Services should be held
jointly and severally liable for its costs and attorney fees pursuant to the terms of the escrow
 instructions. Instead, Fidelity argued that as a matter of law, it could not be held liable for any
 costs accruing in the action pursuant to.RCW 4. 08. 170.

                                                                    M
No. 43873 -9 -II

in failing to get extension agreements signed by the parties prior to the expiration of the parties'

purchase and sale agreement.                  Accordingly, it requested that the court deny Fidelity' s motion to

be discharged from the interpleader                     action.    That same day, Fidelity responded to Port Orchard

First'   s counterclaim,       denying        that it    acted    negligently.         Fidelity    requested "[       d] ismissal of Port

Orchard First[' s] claim against [ Fidelity] with prejudice and without award of any fees or costs."

CP   at   48.   Fidelity' s response again requested an award of its reasonable costs and attorney fees

 upon      disposition    of   the interpleader          proceedings."            CP   at   48.   But Fidelity did not request an

award of costs or attorney fees specifically related to defending Port Orchard First' s negligence

action.

           Later, Fidelity also submitted a reply to Port Orchard First' s motion opposing Fidelity' s

discharge from the interpleader                 action.      In the reply, Fidelity argued that nothing in the escrow

instructions      required     it to "    get   closing      extension       agreements           signed   by   the    defendants"    and,

accordingly, "[      a] failure to do something not required by the instructions is not a breach of the

escrow agreement or a            breach       of contract."       CP   at   86.   Thus, Fidelity requested that the trial court

grant its motion to discharge it from the interpleader action and " award its reasonable attorney' s

fees      and   expenses."       CP      at   88.       Fidelity included (         for the first time) the             parties'   escrow

instructions with this motion but failed to specifically argue that the parties should be liable for

its costs and attorney fees pursuant to the terms of the escrow instructions.

           In    June,    Fidelity moved for entry of an order dismissing Port Orchard First' s

counterclaim pursuant to CR 12( b)( 6) and again asked that the trial court dismiss it from the

interpleader      action.      This motion requested an award of "reasonable attorney' s fees incurred in

having to defend Port Orchard [ First' s] unsupported Counterclaim, directly against Port Orchard

 First]."       CP   at   102.    Fidelity          argued   that Port Orchard First' s               counterclaim         was "   entirely

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No. 43873 -9 -II

unsupported        by   law"       and, pursuant       to CR 11, the trial        court should "   impose sanctions against

Port Orchard [ First], to include                   a reasonable     attorney fee in the   amount of $3,         725. 00."    CP at

107 -08.      Fidelity again requested attorney fees and costs incurred in having to file the

interpleader       action     in the      amount       of $ 1,   522. 96.   Fidelity' s request for relief again failed to

contend that Support Services and Port Orchard First should be held jointly and severally liable

for its costs and attorney fees pursuant to the terms of the escrow instructions.

           After considering the parties' pleadings, affidavits, and argument of counsel, the trial

court denied Fidelity' s motion to be dismissed from the lawsuit as it would not dismiss Port

Orchard First' s        negligence counterclaim on a                 CR 12( b)( 6)   motion.    The trial court did; however,

award      Fidelity $    1, 652. 96, "       which represents reasonable attorney fees and costs incurred in

bringing    this   action."        CP   at   133.    Fidelity did not appeal this ruling.

           In March 2011, the trial court denied a motion for summary judgment brought by Support

Services.       Support Services sought to have all of Port Orchard First' s claims against it dismissed

with   prejudice        and   to be       awarded       the   remainder     of   the interpleaded funds.          In denying the

motion,     the trial    court concluded             that "[ g] enuine issues of     material   fact   exist."   CP   at   183.   The

trial court set the case for trial on June 25, 2012, and the parties began discovery.

           On    February          17,' 2012,       Fidelity moved to amend its reply to Port Orchard First' s

negligence counterclaim after deposing Richard Brown, Port Orchard First' s general partner.

Fidelity sought to amend its reply to include as a defense to the negligence claim that " Port

Orchard [ First]         lacked express authority to sell the property which is the subject of these

proceedings and therefore could not have closed the transaction regardless of any actions taken

by [ Fidelity]."        CP    at   199.      In addition, Fidelity sought to amend its reply to include an express

claim   that     pursuant      to the terms           of   the   parties'   escrow instructions, Port Orchard First and

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No. 43873- 9- 11

Support Services should be held jointly and severally liable for Fidelity' s attorney fees and costs

in   having   to defend Port Orchard First' s                counterclaim.        This claim was based on the following

provision of        the   escrow   instructions: "     The parties jointly and severally agree to pay the Closing

Agent' s costs, expenses and reasonable attorney' s fees incurred in any legal action arising out of

or   in   connection with      the Transaction."        CP at 94.

            That same day, Port Orchard First moved the trial court to voluntarily dismiss its
                                                                                                              3
negligence        counterclaim          against   Fidelity    pursuant        to CR 41(      a)(   1)( 13).       Fidelity opposed the

voluntary dismissal to the extent that it believed it had " a contractual right to recover attorney

fees      under   the Escrow Instructions"             as    explained        in its   motion       to   amend.       CP   at   206.   On

February      23,     Port Orchard First opposed Fidelity' s motion to amend its reply to Fidelity' s

negligence          counterclaim,       arguing that because the               court "   must dismiss Port Orchard First' s

counterclaim under            CR 41,     Fidelity' s   motion   is   moot."       CP   at   238. Support Services joined Port

Orchard First'        s motion     to   deny Fidelity' s     motion      to   amend      its reply. Support Services and Port

Orchard First also agreed to dismiss all actions against each other and requested that the earnest

money deposit be             released to Support Services.                On February 28, the trial court granted Port

Orchard First' s motion for voluntary dismissal and denied Fidelity' s motion to amend its reply to

the negligence counterclaim. Fidelity did not appeal this ruling.

            On March 20, Port Orchard First moved the trial court to release the earnest money

deposit to Support Services.                Fidelity opposed this motion, arguing that prior to release of the

funds, the court should conduct a hearing to determine whether, pursuant to the terms of the

parties' escrow instructions, Fidelity' s costs and attorney fees related to defending Port Orchard

3
     CR 41(   a)(   1)( B)   makes   voluntary dismissal mandatory                 when "[     u] pon motion of the plaintiff at

any time before plaintiff rests at the conclusion of his opening case."

                                                                     7
No. 43873 -9 -II

First'   s negligence counterclaim should             be   paid out of   the   earnest    money deposit.   In reply, Port

Orchard First argued that Fidelity had specifically disclaimed any interest in the earnest money

in its   complaint and, second,          it " did   not plead a contractual       indemnity    claim."   CP   at   254.   On

March 30, the trial court granted Port Orchard First' s motion to disburse the earnest money

deposit to Support Services ( less the $               1, 652. 96 previously awarded to Fidelity for having to

bring    the interpleader action).       Fidelity did not appeal this ruling.

           On June 22, Port Orchard First and Support Services jointly moved to dismiss the " action

on the pleadings under CR 12( c) as all claims for relief have been granted or dismissed by

agreement."        CP   at   297.    Port Orchard First and Support Services argued that prior to Fidelity' s

unsuccessful motion to amend its reply to Port Orchard First' s negligence counterclaim, Fidelity

never argued that it was entitled to costs and attorney fees based on language in the escrow

instructions.       In addition, Port Orchard First and Support Services argued that all the relief

requested     in   Fidelity' s      complaint   had been      granted:    Port Orchard First and Support Services

agreed to discharge Fidelity from its obligations in regard to the earnest money deposit, they

were interpleaded and settled their dispute over the earnest money deposit, they agreed that

Fidelity should be dismissed as a party to the interpleader action, they agreed to be enjoined from

further legal action against Fidelity concerning the earnest money deposit, and the trial court

already awarded Fidelity its reasonable costs and attorney fees for bringing the interpleader

action.

           Fidelity responded to the motion for judgment on the pleadings and moved for partial

summary judgment on the issue of costs and attorney fees related to defending against Port

Orchard First' s     negligence counterclaim.              Fidelity   argued   that the
No. 43873- 9- 11

          defendants' promise to indemnify Fidelity for fees and costs is clearly not
          predicated on a judicial determination or finding that Fidelity is the prevailing
          party in this lawsuit.        Rather, the escrow instructions created an indemnification
          obligation designed to prevent a situation where the escrow agent would be
          required to bear the costs, expenses and attorney' s fees incurred in connection
          with litigation over the transaction.

CP at 314 -15.

          On August 1, the trial court denied Fidelity' s motion for partial summary judgment and

granted    Port Orchard First and Support Services'                    motion   for judgment     on   the   pleadings.   On

August 31, the trial court amended this order to reflect that in granting the motion for judgment

on the pleadings, it considered argument of counsel, a number of pleadings, declarations, and

transcripts from prior hearings that occurred in the case. Fidelity appeals this amended dismissal

order.

                                                      DISCUSSION

STANDARD OF REVIEW

          We   review     a   CR 12( c) dismissal         on   the    pleadings   de   novo.    Burton v. Lehman, 153
Wash. 2d 416, 422, 103 P.3d 1230 ( 2005).               A dismissal under CR 12( c) is appropriate only if "it is

beyond doubt that the plaintiff can prove no facts that would justify recovery, considering even

hypothetical facts      outside   the   record."     In re Wash. Builders Benefit Trust, 173 Wash. App. 34, 80,

293 P.3d 1206,        review    denied, 177 Wash. 2d 1018 ( 2013). "                 Like   a    CR 12( b)( 6) motion, the

purpose [ of a CR 12( c) motion] is to determine if a plaintiff can prove any set of facts that would

justify   relief."    P.E. Systems, LLC        v.   CPI   Corp.,     176 Wash. 2d 198, 203, 289 P.3d 638 ( 2012).          As

is the case with a CR 12( b)( 6) motion, we " must take the facts alleged in the complaint, as well

as hypothetical facts consistent therewith, in the light most favorable to the nonmoving party."

Davenport      v.    Wash. Educ. Ass'     n,   147 Wn.     App.      704, 715, 197 P.3d 686 ( 2008).         Additionally,

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No. 43873 -9 -II

 we interpret contract provisions that do not require reference to extrinsic evidence de novo; they

present questions of   law." Myers       v.   State, 152 Wn.    App. 823, 827, 218 P.3d 241 ( 2009),   review

denied, 168 Wash. 2d 1027 ( 2010).

ESCROW INSTRUCTIONS

         Fidelity argues that it is entitled to reimbursement of its costs and attorney fees accrued in

defending Port Orchard First' s negligence counterclaim pursuant to the express terms of the

parties' escrow instructions. We disagree. Although Washington does allow " for parties to enter

into indemnity     agreements . . .      whereby one party contractually agrees to indemnify, to be

financially   responsible    for, the   other   party'   s negligence,"    such an agreement must be clearly

spelled out. Nw. Airlines, 104 Wash. 2d at 154. Here, the provision at issue appears only to require

the parties to reimburse Fidelity for expenses related to interpleader actions and does not clearly

purport to indemnify Fidelity for its own negligence or guarantee its reimbursement for having to

defend   actions unrelated    to interpleader     actions.   Thus, the provision does not support Fidelity' s

argument that Port Orchard First and Support Services should be held liable for Fidelity' s costs

and fees accrued in defending the negligence action.

         A.        INDEMNITY CLAUSES

          Indemnity clauses are. subject to fundamental rules of contractual construction, and are

to be construed reasonably so as to carry out, rather than defeat, their purpose. Any ambiguity is

to be   resolved   against   the drafter."      N. Pac.    Ry. Co.   v.   Sunnyside   Valley   Irrigation Dist., 85
Wash. 2d 920, 922, 540 P.2d 1387 ( 1975). "           An often -
                                                             repeated rule of construction for interpreting

indemnity clauses is that they are to be viewed realistically, recognizing the intent of the parties

to allocate as between them the cost or expense of the risk of losses or damages arising out of

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No. 43873 -9 -II

performance       of   the   contract."   Dirk v. Amerco Mktg. Co. of Spokane, 88 Wash. 2d 607, 613, 565
P.2d 90 ( 1977).

            C] lauses purporting to exculpate an indemnitee from liability for losses flowing from

his own acts or omissions are not favored as a matter of public policy and are to be clearly drawn

and   strictly   construed."      Dirk, 88 Wash. 2d   at   613.     As our Supreme Court explained in Northwest

Airlines,

                Washington initially found, and some state courts currently find, a clear
         and unequivocal intention to indemnify for indemnitee' s own negligence by
         looking at the entire contract or at the all- encompassing language of the
         indemnification clause; the term negligence itself need not actually be used.
                Washington currently requires, as do some other states, that more specific
         language be used to evidence a clear and unequivocal intention to indemnify the
         indemnitee' s own negligence.
104 Wash. 2d at 155 ( citations omitted).

         B. "          DISPUTES AND INTERPLEADER" CLAUSE

         Fidelity argues that Port Orchard First and Support Services should be held jointly and

severally liable for costs and attorney fees it accrued in defending the negligence counterclaim

based on the following provision in the parties' escrow instructions:

          Disputes      and    Interpleader.   Should any dispute arise between the parties, and /or
          any other party, concerning the Property or funds involved in the Transaction, the
          Closing Agent may, in its sole discretion, hold all documents and funds in their
          existing status pending resolution of the dispute, or join in or commence a court
          action, deposit the money and documents held by it with the court, and require the
          parties to answer and litigate their several claims and rights among themselves.
          The parties jointly and severally agree to pay the Closing Agent' s costs, expenses
          and reasonable attorney' s fees incurred in any legal action arising out of or in
          connection with the Transaction or these instructions, whether such lawsuit is
          instituted     by    the   Closing   Agent, the      parties,   or   any   other   person.   Upon
          commencement of such interpleader action and the deposit of all funds and
          documents of the parties, the Closing Agent shall be fully released and discharged
          from all obligations to further perform any duties or obligations otherwise
          imposed by the terms of this escrow.

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No. 43873 -9 -II

CP at 94.

           Fidelity' s    argument    hinges      on   the   second sentence of          this   provision.    It argues that this

sentence "    allows Fidelity to receive its fees and costs for being pulled, into litigation for any

reason related to the real estate transaction, regardless of who brought the lawsuit, what the

issues were, or who prevails" because this " is a simple indemnity clause designed to insure that

Fidelity does       not   incur   excess or unanticipated costs as            the    escrow agent."          Br. of Appellant at

27 -28. This interpretation is unpersuasive for a number of reasons.

           First, the provision' s opening sentence provides that should " any dispute arise between

the parties, and /or any other party, concerning the Property or funds involved in the Transaction,

the   Closing    Agent may ...         commence a court action ...                 and require the parties to answer and

litigate    their   several       claims    and    rights     among     themselves."             CP   at   94.    This   sentence

differentiates between " the         parties" ( or "     any   other   party ")   and "   the   Closing    Agent" ( Fidelity)   and

clearly contemplates Fidelity bringing an interpleader action when a dispute arises between the
buyer      and seller —as     occurred      here   with      Port Orchard First          and    Support Services —or      when a

dispute involving a third party occurs, perhaps a third party with colorable claim to title of the

apartment complex.            But this sentence does not address what should occur when a party has a

dispute     with " the    Closing   Agent,"    Fidelity.

            Second, Fidelity' s argument attempts to sever the second sentence from the rest of the

provision at issue. But it is a basic rule of contract interpretation that the parties' intent " must be

ascertained     from reading the           contract as a whole."         Felton     v.   Menan Starch Co., 66 Wash. 2d 792,

797, 405 P.2d 585 ( 1965).           Here, while the second sentence of the provision is broadly worded,

the first and third sentences clearly limit the language in the second sentence to situations where

Fidelity     must    be    reimbursed       for its    costs   and     expenses     related      to interpleader    actions.    As

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No. 43873 -9 -II

discussed above, the first sentence clearly refers to Fidelity' s right to bring an interpleader

action.   And immediately following the " any legal action" language in the second sentence, the

third   sentence    begins       with "[ u] pon     commencement               of such   interpleader     action."     CP at 94

 emphasis     added).      The "    such"     in the third sentence necessarily relates back to the sentences

immediately     preceding it.         Accordingly, the provision at issue provides that whenever Fidelity

becomes involved in         an    interpleader     action ( whether.         they have instituted      such action or not),   the

buyer    and seller must reimburse            it for its    costs and       attorney fees. 4    The title of this section of the

contract, "   Disputes     and   Interpleader," reinforces this interpretation.

          Finally, as previously mentioned, Washington law requires " that more specific language

be used to evidence a clear and unequivocal intention to indemnify the indemnitee' s own

negligence."        Nw. Airlines, 104 Wash. 2d                     at   155.     For instance, in Northwest Airlines, the

indemnification clause at issue stated that Northwest would be indemnified from all injuries

    whether or not caused         by [ its   own] negligence." 104 Wash. 2d    at    156. Thus, our Supreme Court

held that "[    e] ven     under [    Washington'          s]   more      stringent, requirement"        for indemnifying an

indemnitee'    s own negligence, "           the involved indemnification clause clearly includes coverage for

the   indemnitee'   s negligence."           Nw. Airlines, 104 Wash. 2d at 156. Here, even if the language in the

second sentence       is   read    broadly ( i.e., read without the limiting language of the first and third

sentences),    it does     not   unequivocally      indemnify Fidelity from its                own negligence.       Accordingly,

Fidelity' s argument fails for this reason as well.

4
    We note that in the case of construing ambiguous provisions in a contract, it has long been the
rule    in Washington that           where "     language of a contract is susceptible of two constructions
    courts] will adopt that interpretation which is unfavorable to the one who so drafts or supplies"
the    contract.  Clise Inv. Co. v. Stone, 168 Wash. 617, 620 - 21, 13 P.2d 9 ( 1932). Here, Fidelity
 supplied the escrow instructions at issue and we must construe any ambiguities against Fidelity.

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No. 43873 -9 -II

           C.        FEES INCURRED IN BRINGING INTERPLEADER ACTION

           The provision at issue allows Fidelity to recover costs and attorney fees incurred in

bringing the interpleader action. It does not cover a situation, like this one, where a party brings

a negligence action against              Fidelity.      And, generally, "          absent a contract, statute, or recognized

ground of       equity,"    costs and     attorney fees       are not recoverable.            Rorvig v. Douglas, 123 Wash. 2d
854, 861, 873 P.2d 492 ( 1994).             However, this does not end the inquiry. Arguably, costs accrued

in defending a counterclaim filed in response to an interpleader action could be recoverable if the

counterclaim       is intertwined        with   the interpleader         action.     In C -C Bottlers, Ltd. v. J.M. Leasing,

Inc., 78 Wn.       App.     384, 896 P.2d 1309 ( 1995), Division Three of this court addressed a similar

situation and rejected this argument.

           In that   case,   C -C Bottlers       sued    J.M.     Leasing     to   collect on     two promissory        notes.    Both

notes    included    a "   garden variety attorney fees clause which provided for recovery of the costs

and expenses of collection,              including      suit."    C - Bottlers, 78 Wash. App.
C                                    at   386.     In response to

the action, J.M. Leasing counterclaimed against C -C Bottlers, arguing that C -C Bottlers had

committed        securities     fraud.    C - Bottlers, 78 Wash.
C                                 App.    at   386.    The trial court granted C -C

Bottlers' motion for summary judgment " on the notes but delayed entry of the judgment until

 J. M.   Leasing' s]       counterclaims        could    be tried."       C - Bottlers, 78 Wash.
C                            App.     at   386.     After a

bench trial, the court dismissed the counterclaims and awarded " attorney fees and costs for the

entire '   litigation based         on    the    attorney        fees    provision     in the       notes,"    believing that the

counterclaims        were "      substantially interwoven               and   inseparable"        from C -C Bottlers' action to

obtain a    judgment       on   the promissory       notes.      C -C Bottlers, 78 Wash. App. at 386 -87.

           On     appeal,       Division     Three       disagreed.           After        determining    that       J. M.    Leasing' s

counterclaims        were       permissive ( rather       than compulsory), it held that "` [                 t] he prevailing party

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No. 43873 -9 -II

should be awarded attorney fees only for the legal work completed on the portion of the claim

permitting     such an award',          because while collateral claims may well be related to the contract

claim and therefore conveniently tried together, they need not be resolved in order to decide the

primary      claim."   C -C Bottlers, 78. Wn. App.              at   389 ( quoting       King County        v.   Squire Inv. Co., 59

Wn.   App.    888, 897, 801 P.2d 1022 ( 1990), review denied, 116 Wash. 2d 1021 ( 1991)).

            Here, Fidelity' s negligence counterclaim was permissive as it could have been brought as

a separate action.      See CR 13( b). "        Permissive counterclaims ` do not affect, nor are they affected

by,   the   outcome'   of      the   original claim."     Atlas      Supply,      Inc.   v.   Realm, Inc.,       170 Wash. App. 234,

238, 287 P.3d 606 ( 2012) ( quoting C -C Bottlers, 78 Wn.                          App.      at   387).   After Support Services

and Port Orchard First dismissed all claims against each other, the escrow money was released,

and Fidelity was reimbursed its costs for having to bring the interpleader action, Port Orchard

First' s negligence counterclaim could still have been litigated had it not requested that the claim

be voluntarily dismissed. Accordingly, as in C -C Bottlers, absent a contract provision or ground

in equity      dictating   a   different   result,   Fidelity   was       only   entitled     to " attorney fees ...     for the legal

work completed         on      the   portion   of   the [ interpleader       action]     permitting        such   an   award."   King

5
    Fidelity repeatedly stresses in its briefing the frivolous or meritless nature of Port Orchard
First' s    negligence counterclaim.           Fidelity, however, never moved the trial court to enter " written
findings ...     that the action, counterclaim, cross -claim, third party claim, or defense was frivolous
and advanced without reasonable cause"                    pursuant        to RCW 4. 84. 185.           Case law explicitly holds
that a party can move, under RCW 4. 84. 185, to receive an attorney fee award in the event that a
frivolous lawsuit is voluntarily dismissed. See, e. g., Biggs v. Vail, 119 Wash. 2d 129, 136, 830 P.2d
350 ( 1992); Eller v. E. Sprague Motors & R. V' s, Inc., 159 Wash. App. 180, 193 -94, 244 P.3d 447
 2010). But because Fidelity never moved the court to enter findings on whether Port Orchard
First'   s counterclaim was          frivolous,     we cannot    decide that issue: under RCW 4. 84. 185, this court
reviews a trial court' s denial of a request for reasonable attorney fees for an abuse of discretion.
Protect the Peninsula' s Future v. City of Port Angeles, 175 Wash. App. 201, 218, 304 P.3d 914,
review      denied, No. 89113 -3 ( Wash. Nov. 6) ( 2013).                   Because Fidelity never asked the trial court
to rule on this issue, the trial court never had the opportunity to exercise that discretion.
                                                                     15
No. 43873 -9 -II

County, 59   Wn.   App.     at   897.    And here, the trial        court   already   awarded     Fidelity $ 1, 652. 96, its

costs and fees accrued in bringing the interpleader action.

ATTORNEY FEES

        Fidelity   argues   that it     is   entitled   to attorney fees    on appeal.        However, because Fidelity

has not prevailed in this appeal, we deny this request. City ofLongview v. Wallin, 174 Wash. App.
763, 792, 301 P.3d 45,     review      denied, No. 89065 -0 ( Wash. Nov. 6) ( 2013).

        We   affirm   the trial   court' s     summary dismissal       of   this   case.     Even assuming that Fidelity

properly pleaded a contractual indemnity claim, the escrow instructions do not support Fidelity' s

argument that it should be reimbursed for defending itself from a negligence counterclaim based

on the agreement of the parties.

        A majority of the panel having determined that this opinion will not be printed in the

Washington Appellate Reports, but will be filed for public record in accordance with RCW

2. 06. 040, it is so ordered.

                                                                                      rr /

                                                                 QUINN- BRINTNALL, P. J.
We concur:

PENOXAV,f.
   Mk-,<,
                            1. ,
MAXA, J.

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