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Target National Bank v. Higgins

Court of Appeals of Washington, Division 3

March 20, 2014

Target National Bank, Respondent ,
v.
Jeanette E. Higgins, Appellant

Oral Argument December 5, 2013

Page 1216

Appeal from Spokane Superior Court. Docket No: 11-2-00984-4. Date filed: 04/13/2012. Judge signing: Honorable Maryann C Moreno.

Kirk D. Miller (of Kirk D. Miller PS ); and Michael D. Kinkley (of Michael D. Kinkley PS ), for appellant.

Roy A. Umlauf and Adam Cox (of Forsberg & Umlauf PS ), for respondent.

AUTHOR: George B. Fearing, J. WE CONCUR: Stephen M. Brown, J., Teresa C. Kulik, J.P.T.

OPINION

Page 1217

Fearing, J.

[180 Wn.App. 168] ¶ 1 Target National Bank sued Jeanette Higgins for defaulting on a credit card debt. The trial court granted Higgins' motion for summary judgment. As the prevailing party, Higgins requested $11,076 in reasonable [180 Wn.App. 169] attorney fees and costs under both RCW 4.84.250 and RCW 4.84.330, respectively labeled " the small claims settlement statute" and the " reciprocal attorney fees clause statute." The trial court denied fees under RCW 4.84.250, ruling that Higgins gave no notice that she sought fees under the statute. The trial court granted Higgins fees and costs under the Target contract and RCW 4.84.330 but limited the award to $5,625 because of the minimal amount in dispute. Higgins appeals this award as deficient. We agree with her that she may recover fees under RCW 4.84.250 and that, based upon the policies behind the statute, the amount in dispute should not be a factor when awarding reasonable attorney fees. We reverse and remand for an additional hearing on the amount of fees to award.

FACTS

¶ 2 Target filed suit for breach of contract against Jeanette Higgins for nonpayment of a credit card debt in the amount of $2,052.37. In its complaint, Target requested reasonable attorney fees, although it did not identify any basis for the request. In a default judgment motion, Target also claimed it was " entitled to its costs and attorney fees pursuant to contract and/or statute." Clerk's Papers (CP) at 12. In her answer, Higgins denied liability, admitting only that she " at one time had an account with some Target affiliated entity." CP at 6. She also requested " reasonable attorney fees and costs for the defense of such action." CP at 7. The answer did not specify any basis upon which attorney fees were sought.

¶ 3 Jeanette Higgins sent to Target a notice of deposition, requests for production, interrogatories, and requests for admissions. After the deadline for answering discovery passed, Higgins moved for summary judgment, claiming that Target failed to respond,

Page 1218

in discovery, with any admissible evidence to prove a debt. In addition, Higgins argued that Target's law firm was an unlicensed debt collector, the [180 Wn.App. 170] lack of a license barred the action, and Target failed to show compliance with consumer protection laws.

¶ 4 Before the hearing on Jeanette Higgins' summary judgment, Target moved for summary judgment and responded to Higgins' requests for discovery. As part of its response to Jeanette Higgins' summary judgment motion, Target filed a copy of the purported credit card agreement. Section 12 of that agreement reads, in part:

DEFAULT/TERMINATION OF CREDIT PRIVILEGES. ... If we refer your Account to an attorney for collection, you must pay to us all costs and expenses of collection, including attorneys' fees, to the extent not prohibited by law.

CP at 137.

¶ 5 After motions were filed but before any summary judgment hearing, Jeanette Higgins wrote Target, through counsel, offering to settle if Target paid her $3,700 in attorney fees incurred to date. The letter contained no reference, however, to RCW 4.84.250 or any other statutory basis for an award of attorney fees. The letter did not even expressly state that Higgins would seek an award of reasonable attorney fees and costs from the court, if successful in litigation. The letter read, in part:

Thank you for your letter dated November 22, 2011. My client agrees that it is in the parties['] best interest to settle this matter and not waste anymore of the court[']s time or incur any additional attorney's fees and costs. Thus, my client is willing to accept the sum of $3700.00 to resolve the state-court lawsuit. This amount reflects an approximation of my attorney fees incurred to date and will necessarily increase should your client force me to perform additional work in this matter.

CP at 256.

¶ 6 The trial court heard Target's motion for summary judgment first. The trial court denied Target's motion, ruling that Target failed to produce admissible evidence to support a debt owed by Higgins. Two weeks later, the trial court granted Higgins' motion for summary judgment. The [180 Wn.App. 171] trial court repeated its ruling that Target failed to produce admissible evidence to establish a foundation for the Target credit card agreement.

¶ 7 Jeanette Higgins requested an award of reasonable attorney fees and costs. In support of the request, Higgins filed a declaration from her counsel and a log of the services counsel performed. A memorandum in support of her application for fees was the first mention of either RCW 4.84.250 or RCW 4.84.330 being the basis for the request. Higgins requested $5.25 in costs; $7,788.50 in attorney fees for 36.3 hours worked at $225.00 per hour; and a multiplier of one and one-half for an exceptional outcome and counsel's representing a client who would typically lack representation.

¶ 8 Target moved for reconsideration of the summary judgment ruling, which motion the trial court denied. Higgins responded to this motion for reconsideration and moved to strike the declaration of opposing counsel supporting the motion. Higgins' counsel also filed a second declaration in support of defendant's motion for award of attorney fees and costs. With the addition of time spent responding to the motion for reconsideration, Higgins sought $9,333.50 for 44.1 hours worked.

¶ 9 On the day scheduled for the fees hearing, Target's new counsel, who had yet to file a notice of appearance, requested a continuance. The trial court granted this request and continued the hearing two weeks. Higgins' counsel then filed a third declaration, which added time for the additional hearing and phone calls with opposing counsel. The new request was $10,143.50 in attorney fees for 47.7 hours worked.

¶ 10 Target filed a declaration from its counsel in opposition to Higgins' motion for attorney fees. The declaration stated, in part, that counsel was not notified that Higgins sought an award of fees under RCW 4.84.250 until judgment was granted to Higgins. Higgins replied to this motion the next day. Higgins' counsel also filed his last declaration [180 Wn.App. 172] in support of attorney fees and costs seeking an additional $877.50 for 3.9 hours worked for the reply.

Page 1219

¶ 11 The trial court ruled that Higgins failed to meet RCW 4.84.250's notice requirement. The trial court, however, awarded attorney fees and costs to Higgins under the Target contract and RCW 4.84.330. The court reduced Higgins' counsel's proposed hours worked from 51.85 hours to 25 hours. The award was $5,625, based upon an hourly rate of $225. The trial court noted by hand, in its written order, that " [t]he court also considered the amount in controversy--$2,052.37." CP at 272.

LAW AND ANALYSIS

Notice Under the Small Claims Settlement Statute

¶ 12 When a party seeks reasonable attorney fees and costs on two grounds and is granted fees and costs under one ground, a court generally need not determine if the party may recover attorney fees under the second ground. The trial court granted Jeanette Higgins reasonable attorney fees and costs under RCW 4.84.330, but she assigns error to the trial court's failure to grant her full request for fees. She claims the trial court mistakenly considered the amount in controversy as a factor when discounting the fees sought. More importantly, Higgins posits that RCW 4.84.250, the small claims settlement statute, unlike RCW 4.84.330, the reciprocal attorney fees clause statute, encourages a full award in claims under $10,000. The trial court denied recovery under RCW 4.84.250. Therefore, we must address whether Higgins is entitled to an award under the small claims settlement statute. In specific, we must address whether Higgins needed to provide notice under the statute and, if so, whether she gave sufficient notice. Higgins otherwise qualifies for fees under RCW 4.84.250.

¶ 13 This court reviews the legal basis for an award of attorney fees de novo. Hulbert v. Port of Everett, 159 Wn.App. 389, 407, [180 Wn.App. 173] 245 P.3d 779 (2011). In Washington, attorney fees may be awarded only when authorized by a private agreement, a statute, or a recognized ground of equity. Labriola v. Pollard Grp., Inc., 152 Wn.2d 828, 839, 100 P.3d 791 (2004). RCW 4.84.250 authorizes a trial court to award attorney fees, under certain circumstances, in disputes of $10,000 or less. Under RCW 4.84.250, a trial court shall award the prevailing party attorney fees if the statutory requirements are satisfied. Davy v. Moss, 19 Wn.App. 32, 33-34, 573 P.2d 826 (1978).

¶ 14 RCW 4.84.250 states in full:

Notwithstanding any other provisions of chapter 4.84 RCW and RCW 12.20.060, in any action for damages where the amount pleaded by the prevailing party as hereinafter defined, exclusive of costs, is seven thousand five hundred dollars or less, there shall be taxed and allowed to the prevailing party as a part of the costs of the action a reasonable amount to be fixed by the court as attorneys' fees . After July 1, 1985, the maximum amount of the pleading under this section shall be ten thousand dollars.

(Emphasis added.) A plaintiff is the prevailing party only if her recovery exceeds the amount at which she offered to settle. RCW 4.84.260. RCW 4.84.280 outlines the procedure for a settlement offer and requires that the offer be made at least 10 days prior to trial. Beckmann v. Spokane Transit Auth., 107 Wn.2d 785, 787, 733 P.2d 960 (1987). A defendant is the prevailing party if the plaintiff recovers nothing, even if the defendant made no settlement offer, or, if a settlement offer is made, the award is less than the offer. RCW 4.84.270; see Puget Sound Nat'l Bank v. Burt, 56 Wn.App. 868, 786 P.2d 300 (1990). The purpose of RCW 4.84.250 is to encourage out-of-court settlements and to penalize parties who unjustifiably bring or resist small claims. Williams v. Tilaye, 174 Wn.2d 57, 62, 272 P.3d 235 (2012); Beckmann, 107 Wn.2d at 788; Harold Meyer Drug v. Hurd, 23 Wn.App. 683, 687, 598 P.2d 404 (1979). " The obvious legislative intent is to enable a party to pursue a meritorious small [180 Wn.App. 174] claim without seeing his award diminished in whole or in part by legal fees." Northside Auto Serv., Inc. v. Consumers United Ins. Co., 25 Wn.App. 486, 492, 607 P.2d 890 (1980).

¶ 15 Common law has consistently required that the party from whom attorney fees are sought receive notice before trial

Page 1220

that it may be subject to fees under the pertinent statute. Lay v. Hass, 112 Wn.App. 818, 824, 51 P.3d 130 (2002); Pub. Utils. Dist. No. 1 of Grays Harbor v. Crea, 88 Wn.App. 390, 393-94, 945 P.2d 722 (1997) ( PUD No. 1 ). The law with respect to the timing, form, and content of notice required for an award under RCW 4.84.250 has experienced a convoluted history. We review the key cases in an attempt to discern whether Washington law is lenient enough to deem Target on notice that Higgins sought fees under RCW 4.84.250.

¶ 16 In Tatum v. R& R Cable, Inc., 30 Wn.App. 580, 585, 636 P.2d 508 (1981), we held that the " provisions of RCW 4.84.250" must be pled to put the defendant on notice of the fact that the plaintiff seeks attorney fees under the statute. The holding, if taken literally, would require the litigant to quote from the statute in addition to referencing the statute in the complaint or answer. The Tatums' award exceeded their offers to settle, but they pled the statute providing for treble damages for damage to trees, not RCW 4.84.250, in their prayer seeking an award of reasonable attorney fees and costs. Thus, we denied the request for fees.

¶ 17 We followed the holding of Tatum in Warren v. Glascam Builders, Inc., 40 Wn.App. 229, 698 P.2d 565 (1985), and applied the holding to a fee request under RCW 49.48.030, which provides for recovery of fees in an action in which the claimant recovers judgment for wages or salary. In his complaint, Warren asked for an award of reasonable attorney fees and costs but did not cite the statute. Therefore, he was denied a fee award.

¶ 18 The Supreme Court overruled Tatum and Warren in Beckmann . Beckmann sued for personal injuries and, 11 days before trial, delivered to the transit authority an offer [180 Wn.App. 175] to settle for $3,000. Beckmann, 107 Wn.2d at 787. The offer informed the transit authority that it was tendered pursuant to RCW 4.84.280, a statute related to RCW ...


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