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Ruiz Fajardo Ingenieros Asociados S.A.S. v. Flow International Corp.

United States District Court, W.D. Washington, Seattle

July 2, 2019



          The Honorable Richard A. Jones United States District Judge.

         This matter comes before the Court on Plaintiff Ruiz Fajardo Ingenieros Asociados S.A.S.'s (“Ruiz Fajardo”) Motion for Attorney Fees and Costs. Dkt. # 84. Defendant Flow International Corporation (“Flow”) has opposed this Motion, and Ruiz Fajardo has filed a Reply. Dkt. ## 103, 105. For the reasons stated below, the Court GRANTS IN PART AND DENIES IN PART Ruiz Fajardo's Motion.

         I. BACKGROUND

         On December 13, 2016, Ruiz Fajardo brought this action against Flow, asserting claims under Washington law against Flow for breach of contract and warranty arising out of the sale of a waterjet cutting machine. Dkt. # 1. On October 25, 2018, Flow brought a motion for partial summary judgment against Ruiz Fajardo. Dkt. # 32. Specifically, Flow sought summary judgment on: following: (1) whether the consequential damages limitation contained in the Contract is enforceable; (2) whether the only warranty in which Plaintiff can base its breach of warranty claim is the single express limited warranty contained in the Contract, and if so, whether the terms of the warranty mandate that the warranty extends for only one year after the date of shipment; and (3) whether Plaintiff revoked its acceptance of the machine. Dkt. # 42 at 6. The Court ruled in favor of Flow on the latter two grounds, and determined there was a genuine issue of material fact genuine issue of material fact “as to whether the remedy limitation in the Contract failed its essential purpose, and whether the Contract's limitation on consequential damages is valid.” Id. at 9.

         A jury trial began on January 28, 2019 and concluded on February 6, 2019. Dkt. # 61-66. Shortly before the jury rendered its verdict, the jury asked the Court: “In lieu of lost profits may we award compensation in form of the amount of contract price of a Mach 4 $437, 830?” Dkt. # 72. After conferring with counsel, the Court responded: “You may award damages you believe are appropriate and recoverable in light of the instructions provided to you.” Id. at 2; see also Dkt. # 68. On February 7, 2019, the jury entered a verdict in favor of Ruiz Fajardo, awarding Ruiz Fajardo $437, 830 in unspecified damages. Dkt. # 74.


         A. Ruiz Fajardo is Entitled to Attorney's Fees Under RCW 4.84.330

         Where the court exercises jurisdiction over state law claims, it generally relies on state law regarding the recovery of attorney fees. MRO Communications, Inc. v. AT & T Co., 197 F.3d 1276, 1281 (9th Cir. 1999). Under Washington law, a court shall award “reasonable” attorney's fees to the prevailing party in a contract dispute. See RCW 4.84.330. According to RCW 4.84.330, “[i]n any action on a contract . . ., where such contract . . . specifically provides that attorney's fees and costs, which are incurred to enforce the provisions of such contract . . ., shall be awarded to one of the parties, the prevailing party, whether he is the party specified in the contract . . . or not, shall be entitled to reasonable attorney's fees in addition to costs and necessary disbursements.” Id. The purpose of RCW 4.84.330 is to convert unilateral attorney fees provisions into bilateral provisions. See Mahler v. Szucs, 135 Wash.2d 398, 957 P.2d 632, 650-51 (1998) (explaining that public policy forbids one-way attorneys' fee provisions). RCW 4.84.330 is designed to ensure that parties will not be deterred from bringing actions on a contract or lease “for fear of triggering a one-sided fee provision.” Wachovia SBA Lending, Inc. v. Kraft, 165 Wash.2d 481, 498, 200 P.3d 683 (2009).

         For the purposes of this provision, “an action is on a contract if the action arose out of the contract and if the contract is central to the dispute.” Seattle First Nat'l Bank v. Wash. Ins. Guar. Ass'n, 116 Wash.2d 398, 413, 804 P.2d 1263 (1991). A “prevailing party” is simply a “party in whose favor final judgment is rendered.” RCW 4.84.330. “The language of the statute is mandatory with no discretion except as to the amount.” Kofmehl v. Steelman, 80 Wash.App. 279, 286, 908 P.2d 391 (1996).

         Here, there seems to be little dispute that the underlying action is “on a contract.” There is also no dispute the parties' Agreement contained an attorney's fees provision. Although it was written initially to benefit Flow, under RCW 4.84.330 the fees and costs of litigation would be available to Ruiz Fajardo if it was the “prevailing party.” Dkt. # 85, Ex. 2 at 26.

         The parties instead dispute whether Ruiz Fajardo is entitled to any fees at all as the “prevailing party” in this lawsuit. On February 7, 2019, this Court entered judgment in favor of Ruiz Fajardo on the lone breach of warranty claim at trial. Dkt. # 76. Ruiz Fajardo is thus a “prevailing party” on the breach of warranty claim under RCW 4.84.330. See RCW 4.84.330 (“As used in this section ‘prevailing party' means the party in whose favor final judgment is rendered.”). Flow counters that Ruiz Fajardo is not the “prevailing party” because it did not win on all claims, as the Court ruled for Flow on Ruiz Fajardo's rescission claim at the summary judgment stage. Dkt. # 93 at 9-10. The Court does not agree. Under Washington law, if neither party wholly prevails, then the party that substantially prevails on its claims is the prevailing party. Marine Enterprises, Inc. v. Security Pac. Trading Corp., 50 Wash.App. 768, 772, 750 P.2d 1290, review denied, 111 Wash.2d 1013 (1988). The substantially prevailing party need not prevail on their entire claim. See Silverdale Hotel Assocs. v. Lomas & Nettleton Co., 36 Wash.App. 762, 774, 677 P.2d 773, review denied, 101 Wash.2d 1021 (1984). Accordingly, despite Flow's partial summary judgment victory on certain issues, Ruiz Fajardo still “substantially prevailed” as it succeeded on its primary breach of warranty claim at trial.

         The effect of this finding, while permitting Ruiz Fajardo to collect its fees and costs in this litigation, is not as straightforward as Ruiz Fajardo suggests. Washington courts recognize that the “substantially prevailing party standard . . . may not lead to a fair or just result in the situation where a party receives an affirmative judgment on only a few distinct and severable contract claims.” Mike's Painting, Inc. v. Carter Welsh, Inc., 95 Wash.App. 64, 68, 975 P.2d 532, 535 (1999) (citing Marassi v. Lau, 71 Wash.App. 912, 917, 859 P.2d 605 (1993)). In this circumstance, “the plaintiff should be awarded attorney fees for the claims it prevails upon, the defendant should be awarded attorney fees for those claims it successfully defends and the awards should be offset.” Mike's Painting, 95 Wash.App. at 68-69. The Court agrees with Flow that Ruiz Fajardo presented its breach of contract claim (relying heavily on a revocation theory) and its breach of warranty claim as separate and distinct claims, and Ruiz Fajardo prevailed only on the latter. See, e.g., Dkt. # 1 at ¶ 43 (“Flow breached its contract with Ruiz Fajardo. Flow also breached its warranty to Ruiz Fajardo.”). Had Flow submitted its own request for attorney fees in connection with Ruiz Fajardo's breach of contract claim, the Court may be inclined to offset Ruiz Fajardo's award with Flow's own. As it stands, Flow has submitted no such documentation. Ruiz Fajardo also indicates it has removed time entries associated with this, and other unsuccessful theories, from its fee request, though as indicated below, the Court is somewhat skeptical of this claim. Dkt. # 100 at 4. Accordingly, the Court will attempt to make appropriate and reasonable deductions of Ruiz Fajardo's award, where necessary and appropriate, based on Flow's partial victory at summary judgment.

         B. The Court Grants in Part and Denies in Part Ruiz Fajardo's Requested Fees

         In Washington, courts use the lodestar method to determine a reasonable attorney fee award. Mahler v. Szucs, 135 Wash.2d 398, 957 P.2d 632, 650-51 (1998). The Court must determine a lodestar by multiplying a reasonable hourly rate or rates by the number of hours reasonably expended in the ...

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