Opinion
No. 63874-2-I.
October 19, 2009.
Appeal from the Superior Court, Kitsap County, No. 06-2-01941-7, Leonard W Costello, J., entered September 26, 2008.
Reversed by unpublished opinion per Lau, J., concurred in by Cox and Appelwick, JJ.
Kitsap County appeals a trial court order granting Swinerton Builders Northwest and M.B. Diddy Construction, Inc.'s CR 60(b)(1) motion to vacate a stipulation and agreed order of dismissal based on drafting mistakes by Diddy and Swinerton's attorneys who prepared the stipulation and order of dismissal. Because "poorly drafted language" or other errors by a party's attorney are insufficient grounds to vacate a judgment or order, we conclude the trial court abused its discretion in granting the motion to vacate the stipulation and order of dismissal. Accordingly, we reverse.
FACTS
The facts are undisputed. Kitsap County contracted with Swinerton to construct the Kitsap County Administration Building. Swinerton subcontracted with Diddy for earthwork services on the project. On August 18, 2006, Diddy sued Swinerton, asserting breach of contract, misrepresentation, and unjust enrichment claims. In the same action, it also sued Kitsap County, asserting a retainage claim against moneys earned by Swinerton and held in trust by Kitsap County pursuant to chapter 60.28 RCW.
On contracts involving public improvements or work, chapter 60.28 RCW requires the public body to reserve a sum from monies earned by the contractor and to retain such sums in a trust fund for the protection and payment of subcontractors, suppliers, and workers on the project.
After successfully mediating their dispute, Diddy and Swinerton memorialized the settlement terms in a handwritten, signed CR 2A agreement. Under this agreement, Swinerton agreed to pay Diddy $35,000 and the parties agreed to dismiss the lawsuit with prejudice. Although Kitsap County did not participate in the mediation or sign the CR 2A settlement agreement, it signed both the stipulation and order of dismissal as did Diddy and Swinerton.
CR 2A provides, "No agreement or consent between parties or attorneys in respect to the proceedings in a cause, the purport of which is disputed, will be regarded by the court unless the same shall have been made and assented to in open court on the record, or entered in the minutes, or unless the evidence thereof shall be in writing and subscribed by the attorneys denying the same."
The stipulation prepared by Diddy and Swinerton's attorneys stated in part,
COMES NOW, Plaintiff M.B. Diddy Construction, Inc. and Defendants Swinerton Builders Northwest . . . and Kitsap County Administration, by and through their undersigned attorneys of record, and stipulate that all claims asserted herein, or which could have been asserted herein, by and between them, shall be dismissed with prejudice, without admission of liability, and without costs to any party.
The parties to this action hereby release and discharge each other, their employees, officers, agents, successors, assigns, and sureties from any [and] all claims, demands, causes of action and liabilities . . ., known or unknown, asserted or unasserted . . . arising from the Project in any manner. . . .
And the dismissal order stated, "[A]ll claims asserted herein, or which could have been asserted herein, by and between Plaintiff M.B. Diddy Construction, Inc. and Defendants Swinerton Builders Northwest . . . and Kitsap County Administration, are hereby dismissed with prejudice, and without costs to any party." The stipulation and order of dismissal were presented to and signed by a superior court judge on January 15, 2008.
On the following day, Swinerton served Kitsap County with a second complaint for breach of contract in the construction of the Kitsap County Administration Building. In response to this lawsuit, the County notified Swinerton of its intention to move for summary judgment based on the January 15, 2008 stipulation and order of dismissal. Diddy and Swinerton then jointly moved the court to vacate the stipulation and order of dismissal, arguing that the stipulation and order of dismissal language releasing claims against Kitsap County constituted a mistake under CR 60(b)(1). After a hearing on September 26, 2008, the motion judge agreed and vacated the stipulation and order of dismissal finding, "It appears to me under Rule 60 that a mistake was made in the drafting of the stipulation and order of dismissal. It was either inadvertent or however you want to characterize it, but it appears to me there was a mistake in the language that was drafted." Verbatim Report of Proceedings (Sept. 26, 2008) at 10-11. The County now appeals.
Analysis
A trial court's vacation of a judgment or order will be overturned on review only if the trial court abused its discretion. Lane v. Brown Haley, 81 Wn. App. 102, 105, 912 P.2d 1040 (1996). A court abuses its discretion when its decision is based on untenable grounds or reasoning. Luckett v. Boeing Co., 98 Wn. App. 307, 309, 989 P.2d 1144 (1999). The law favors resolution of cases on their merits and, accordingly, favors their finality. Haller v. Wallis, 89 Wn. 2d 539, 544, 573 P.2d 1302 (1978).
Relief from judgments and orders are governed by CR 60(b).
On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons:
(1) Mistakes, inadvertence, surprise, excusable neglect or irregularity in obtaining a judgment or order.
On appeal, Kitsap County argues that "poorly drafted language" or other errors by an attorney do not constitute sufficient grounds to vacate a judgment under CR 60(b)(1). Specifically, Kitsap County contends that the trial court's decision was based on untenable grounds because, as a matter of law, an attorney's negligence or incompetence may never support vacation of a judgment under CR 60(b)(1). Diddy and Swinerton maintain that under CR 60(b)(1), the release of all claims language in the stipulation and order of dismissal constitutes a mistake that permits a trial court to vacate the order. They acknowledge that language releasing claims against Kitsap County was the result of "poor[] draft[ing]" and the use of "a boilerplate provision." Br. of Resp't at 12.
While CR 60(b)(1) provides a vehicle to vacate a judgment or order based on mistake, inadvertence, surprise, excusable neglect, or irregularity, Kitsap County correctly notes that Washington courts have long held that an attorney's negligence or incompetence does not constitute grounds for vacating a judgment under CR 60(b). This is so because under the law of agency, if an attorney is authorized to appear on behalf of a client, that attorney's acts are binding on the client.
In Haller, Haller moved to vacate a judgment that approved a settlement of her child's personal injury claim. Haller, 89 Wn.2d at 542. The Supreme Court held that the attorney's negligence is attributable to the client and concluded that the trial court did not abuse its discretion in denying vacation of the settlement judgment. Haller, 89 Wn.2d at 547, 550.
"If an attorney is authorized to appear, the jurisdiction over the defendant is perfect, and the subsequent action of the attorney, not induced by the fraud of the adverse party, is binding on the client at law and in equity. According to Lord Hardwicke, `when a decree is made by consent of counsel, there lies not an appeal or rehearing, though a party did not really give his consent, but his remedy is against his counsel; but if such decree was by fraud and covin, it may be relieved against, not by rehearing or appeal, but by original bill,' and such beyond doubt is still the rule. The rule that a party cannot in equity find relief from the consequence of his own negligence or of a mistake of the law is equally applicable where the mistake or neglect is that of his attorney employed in the management of the case."
Haller, 89 Wn.2d at 547 (quoting 3 Edward W. Tuttle, A Treatise of the Law of Judgments § 1352, at 2776-77 (5th ed. rev. 1925)).
And on the question of what showing is necessary to set aside a judgment by consent, the court reasoned,
"If [the judgment] conforms to the agreement or stipulation, it cannot be changed or altered or set aside without the consent of the parties unless it is properly made to appear that it was obtained by fraud or mutual mistake or that consent was not in fact given, which is practically the same thing. It will not be set aside on the ground of surprise and excusable neglect. Neither is an error or misapprehension of the parties, nor of their counsel, any justification for vacating the judgment, although the counsel consented to it because deceived by fraudulent misrepresentations of third parties that his client was willing to pay the judgment. Erroneous advice of counsel, pursuant to which the consent judgment was entered is not [a] ground for vacating it."
Haller, 89 Wn.2d at 544 (quoting 3 Tuttle, supra, at 2776-77). Because Haller failed to demonstrate fraud, collusion, or irregularity, the court determined the judgment could not be set aside. Haller, 89 Wn.2d at 550.
Subsequent cases have adhered to this general rule, holding that attorney negligence or incompetence is an insufficient ground to justify relief from a judgment against the client. For example, in Lane v. Brown, we rejected the Lanes' arguments that their attorney's failure to contact witnesses, failure to advise them of a motion for summary judgment, reliance on an incorrect legal theory at summary judgment, and late filing of a notice of appeal warranted vacation of the judgment under CR 60(b). Lane, 81 Wn. App. at 104-05, 109. In holding that CR 60(b) relief was not warranted, we reversed the trial court's vacation order, reasoning that "erroneous advi[c]e of counsel, error of counsel, surprise, or excusable neglect are not grounds to set aside a consent judgment (a settlement approved in court.)." Lane, 81 Wn. App. at 109 (citing Haller, 89 Wn.2d at 544). Indeed, "[a]bsent fraud, the actions of an attorney authorized to appear for a client are binding on the client at law and in equity. The `sins of the lawyer' are visited upon the client." Rivers v. Wash. State Conference of Mason Contractors, 145 Wn.2d 674, 679, 41 P.3d 1175 (2002) (footnote omitted).
And in M.A. Mortenson Co. v. Timberline Software Corp., 93 Wn. App. 819, 970 P.3d 803 (1999), aff'd, 140 Wn.2d 568, 998 P.2d 305 (2000), we similarly rejected Mortenson's claim that its attorney's failure to amend the complaint to add fraud and misrepresentation claims until after the trial court granted summary judgment in favor of Timberline warranted CR 60(b) vacation of the summary judgment dismissal order. Mortenson, 93 Wn. App. at 838. Applying Lane, we concluded, "Generally, the incompetence or neglect of a party's own attorney is not sufficient grounds for relief from a judgment in a civil action." Mortenson, 93 Wn. App. at 838.
Diddy and Swinerton do not challenge the general rule stated in these cases. Rather, they point to our decision in Ebsary v. Pioneer Human Services, 59 Wn. App. 218, 796 P.2d 769 (1990). But their reliance on Ebsary is misplaced. In that case, a decedent's surviving children and the assignee of his surviving wife, the Department of Labor and Industries (DLI), brought claims for wrongful death and related actions. Ebsary, 59 Wn. App. at 221-22. DLI, without any authority or participation from the children, signed a broadly worded settlement agreement prepared by defendants. The stipulation, release, and judgment's plain language encompassed the children's claims. Ebsary, 59 Wn. App. at 223. On motion by DLI, the trial court entered an order vacating the judgment and found that DLI and the two defendants lacked the authority to affect the claims of the children. Ebsary, 59 Wn. App. at 224. We affirmed the trial court on grounds of mistake under CR 60(b)(1) but made clear that DLI's lack of authority to settle the children's claims was central to the holding. Ebsary, 59 Wn. App. at 226, 228.
Unlike here, Ebsary implicated an exception to the general rule binding a party by the acts of his attorney. Vacation of a judgment is warranted when an attorney surrenders a "substantial right" of his client through unauthorized stipulations or compromises. See Graves v. P.J. Taggares Co., 94 Wn.2d 298, 304-05, 616 P.2d 1223 (1980); In Re Marriage of Burkey, 36 Wn. App. 487, 490 n. 2, 675 P.2d 619 (1984); see also Morgan v. Burks, 17 Wn. App. 193, 199-200, 563 P.2d 1260 (1977) (upholding vacation of settlement and order of dismissal entered without client's authorization). The present case is distinguishable from Ebsary because Diddy and Swinerton's attorneys, with their clients' authority, drafted and entered into the stipulation and order of dismissal with Kitsap County. Accordingly, Diddy and Swinerton are bound by the acts of their attorneys including their attorneys' mistakes in drafting the stipulation and order.
The record does not show and Diddy and Swinerton do not contend that they drafted and signed the stipulation and order of dismissal without their clients' authorization.
Finally, the attorneys' "poor[] draft[ing]" and use of "a boilerplate provision" in the stipulation and order of dismissal here encompass the type of attorney neglect that the Haller line of cases holds is insufficient to justify vacation of an order or judgment under CR 60(b)(1). Br. of Resp't at 12. We continue to adhere to the well-established rule that the negligence or incompetence of a party's own attorney is not sufficient grounds for relief from a judgment or order. Accordingly, we conclude that the trial court abused its discretion in vacating the stipulation and order of dismissal and we reverse.
Given our resolution of this case, we do not address Kitsap County's contract arguments.
WE CONCUR.