United States District Court, W.D. Washington
ORDER ON REMAND
S. Lasnik United States District Judge
matter comes before the Court on “Defendants'
Motion for Order in Response to Remand.” Dkt. # 176.
The Ninth Circuit Court of Appeals remanded this matter to
the undersigned for (a) further consideration of plaintiff
Brent Nicholson's personal liability for attorney's
fees under the lease agreements he signed on behalf of the
LLC plaintiffs and (b) a determination regarding defendant
Thrifty's entitlement to prejudgment interest on its
Personal Liability for Fee Award
reasons set forth in the Court's “Order Denying
Motion to Release Funds, ” the Court finds that
Nicholson is personally liable for attorney's fees under
the lease agreements even though he was not a party to the
contracts. All of the plaintiffs, including Nicholson,
asserted a breach of contract claim against defendants based
on the lease agreements. Dkt. # 1-2 at 29. Given his
relationship to and control over the plaintiff LLCs,
Nicholson's contract claim was colorable and, had he
prevailed on that claim, he would have been entitled to a fee
award under the terms of the contract.
do not dispute that the overpayments made to No One to
Blaine, LLC, resulted in a liquidated claim or that
prejudgment interest is generally awarded on such claims in
order to compensate for the “use value” of the
money from the time of loss to the date of judgment. See
Hansen v. Rothaus, 107 Wn.2d 468, 472-73 (1986);
Hadley v. Maxwell, 120 Wn.App. 137, 141-42 (2004).
The parties disagree, however, regarding the appropriate
interest rate that applies in this case, the date upon which
interest began to accrue, and whether a reduction should be
made based on equitable considerations.
on judgments in Washington is governed by RCW 4.56.110, which
provides five different interest rates depending on the
nature of the claim upon which judgment is entered.
“[J]udgments founded on the tortious conduct of
individuals or other entities” accrue interest at a
rate tied to the published prime rate of the federal reserve
system. RCW 4.56.110(3)(b). In this case, that rate is 5.25%.
Judgments founded on contracts that do not specify an
interest rate accrue interest at 12%. The issue, then, is
whether the $103, 500 judgment on Thrifty's counterclaim
was founded on a tort or a contract theory.
reviewed the pleadings and relevant motions in this matter,
the Court finds that Thrifty's counterclaim and the
resulting judgment were based in tort. Thrifty's
counterclaim avoids labels and is based solely on allegations
of a contractual obligation to pay rent through August 31,
2010, mistaken payments thereafter, and plaintiffs'
failure to repay or reimburse the amounts mistakenly paid.
Dkt. # 17 at 22-23. In its motion for summary judgment,
Thrifty argued that plaintiffs' “wrongfully
retained” the overpayments. Dkt. # 88 at 35. These
allegations and arguments mirror a conversion claim, where
“a person intentionally interferes with chattel
belonging to another, either by taking or unlawfully
retaining it, thereby depriving the rightful owner of
possession.” Alhadeff v. Meridian on Bainbridge
Island, LLC, 167 Wn.2d 601, 619 (2009). Thrifty did not
and could not identify a provision of the lease agreement
that was breached, and the cases on which it relied for the
relief requested are based on various tort causes of action.
U.S. Bank v. Henderson, 2007 WL 2492738, at *2-3
(W.D. Wash. Aug. 29, 2007) (overpayment for stock certificate
during merger gave rise to a claim based on the principles
“that no one ought unjustly to enrich himself at the
expense of another” and that a party who “has
received money which in equity and good conscience should
have been paid to” another “ought, by the ties of
natural justice, to pay it over.”) (quoting Seekamp
v. Small, 39 Wn.2d 578, 584 (1951)); Davenport v.
Wash. Educ. Ass'n, 147 Wn.App. 704, 721 (2008)
(evaluating common law claims of conversion and restitution).
Thrifty's counterclaim was based on erroneous payments
not required by the contracts: plaintiffs' liability
arose when it was unjustly enriched and/or failed to return
what, in equity and good conscience, should have been paid
over. Thus, the 5.25% interest rate applies.
interest normally begins to accrue at the time of the loss in
order to compensate the injured party for the use value of
the wrongfully withheld money. Plaintiffs argue that the loss
occurred all at once in May 2011, but there is nothing in the
record to support such speculation. The lease agreements, the
course of conduct between the parties, and plaintiffs'
accounting records show that rent was paid monthly in $11,
500 installments, not in a lump sum in May 2011.
plaintiffs argue that the award of prejudgment interest
should be reduced based on equitable considerations,
primarily the facts that the overpayment was the result of
Thrifty's unilateral mistake and that Thrifty did not
make a demand for repayment until it filed its counterclaim
on August 17, 2012. Even if plaintiffs arguably did not
convert Thrifty's property until demand was made,
plaintiffs were unjustly enriched from the moment they
received the payments. Despite the chaos of the real estate
market in the relevant time frame and the complexity of the
parties' business relationship, plaintiffs knew that the
interim rent payments after August 2010 were not being used
for any purpose that would benefit Thrifty (such as securing
the Blaine property and/or building the retail space).
Plaintiffs had stopped making payments on the loan in July
2010, negating any justification for the accepting and
retaining the interim rental payments after the contractual
obligation expired. The equities do not warrant a further
reduction in the interest rate or the time over which
interest must be paid.
of the foregoing reasons, the Court finds that (a) Brent
Nicholson is personally liability for attorney's fees
under the lease agreements he signed on behalf of the LLC
plaintiffs and (b) Thrifty is entitled to prejudgment
interest on its counterclaim at the rate of 5.25% from the
date of each overpayment. The Clerk of Court is directed to
enter judgment in this matter in favor of defendants.
 The Court has not reevaluated
Nicholson's personal liability for any award of
prejudgment interest. That issue was finally resolved against