Opinion
No. 63881-5-I.
October 19, 2009.
Appeal from the Superior Court, Pierce County, No. 05-2-12405-4, Robert Henry Peterson, J. Pro Tem., entered November 7, 2008.
Affirmed by unpublished opinion per Becker, J., concurred in by Lau and Leach, JJ.
Phil Nothstein sued Pennebaker Construction Services, Inc., alleging that work on his house had not been properly finished. Pennebaker claimed Nothstein's suit was barred by an accord and satisfaction. The trial court entered judgment in Nothstein's favor and awarded him attorney fees. We affirm and award Nothstein his attorney fees on appeal.
Because William Pennebaker was the primary person acting on behalf of Pennebaker Construction Services, Inc., we refer to Pennebaker throughout this opinion as an individual rather than a corporation.
Pennebaker begins his appeal with the assertion that the material facts in this matter are undisputed and established by the clerk's papers. In reality, the facts were disputed, and the dispute was resolved by findings of fact entered by the court after a bench trial. Unchallenged findings of fact are considered verities on appeal. In the Matter of the Contested Election of Schoessler, 140 Wn.2d 368, 385, 998 P.2d 818 (2000). Pennebaker has not assigned error to any of the court's findings of fact, and as a result, those facts establish the framework for our analysis.
According to the facts found by the trial court, Nothstein hired Pennebaker in 2003 to construct a kit home. Nothstein was dissatisfied with Pennebaker's work. He claimed that Pennebaker either failed to fully complete certain components of the project, or that his work was below acceptable standards.
The parties met with a mediator on September 30, 2004. Nothstein presented an eight-page punchlist of items he wanted finished or fixed. At the end of the mediation, the parties entered into a written settlement agreement, to which the punchlist was attached with notations about what was to be done on each item. Pennebaker agreed to complete items on the list within two weeks. Nothstein agreed to pay Pennebaker $28,000 within 30 days. Pennebaker would then release the lien he had filed. The agreement provided that if litigation was needed to enforce the settlement agreement, the prevailing party would be entitled to recover reasonable attorney fees.
The record reflects that Pennebaker and his crew returned to the house once after this, but Nothstein still did not regard the work as complete. Nothstein sent a check for $25,000 directly to defense counsel indicating that funds to cover the check would not be deposited until Pennebaker fixed certain punchlist items Nothstein said were still incomplete. Pennebaker sent Nothstein a letter dated November 5, 2004, asserting that all the necessary work had been done. Several days later, Pennebaker received from Nothstein a check for $3,000 and was informed that the $25,000 check had also been funded. Pennebaker did not do any more work on Nothstein's house.
This is the point at which Pennebaker's version of the facts differs from the facts found at trial. Pennebaker contends that Nothstein paid the $28,000 "without further objection", and that by doing so Nothstein "knowingly" elected to avoid litigation even though he may have "silently" wished for additional services.
Nothstein, however, testified that he called Pennebaker on November 8 after receiving a letter threatening a lawsuit if Pennebaker was not paid in full by November 11, 2004. Nothstein said he and Pennebaker discussed over the telephone the items that needed attention, and Pennebaker agreed to come back within the next week to finish them if Nothstein sent the rest of the money. Telephone records introduced at trial supported Nothstein's assertion that he had a conversation with Pennebaker on November 8, 2004.
Approximately one year later, Nothstein filed the present lawsuit. Pennebaker answered in part that Nothstein's claim was barred because of an accord and satisfaction. He took the position that his obligation was discharged upon receipt of Nothstein's payment of $28,000.
Crediting Nothstein's testimony, the trial court found that on November 8, 2004, Nothstein did call Pennebaker and Pennebaker assured Nothstein that the punchlist items would be completed, specifically including a problem with the exterior siding. The court further found when Nothstein sent the check for $3,000 and funded the previous check for $25,000, he did so based upon Pennebaker's assurance that the remaining items would be completed.
Because Pennebaker did not fulfill his promise to return and finish the work, the court rejected Pennebaker's argument that Nothstein's full payment of $28,000 established an accord and satisfaction. Evidence admitted at trial included pictures of the house showing gaps in the trim and discoloration where the siding had been caulked. The finding that Pennebaker's workmanship was unacceptable was additionally based upon the judge's observations during a visit to the site. The court entered judgment for $3,968 in favor of Nothstein, including $1,900 to correct the appearance of the Hardi-Plank siding, and $1,100 to correct gaps in the finish trim. The court awarded Nothstein $3,000 in attorney fees. Pennebaker appeals.
ACCORD AND SATISFACTION
Pennebaker argues that the court committed reversible error by allowing Nothstein to "undo" the settlement the parties reached in the mediation. He contends the parties' written communications established an accord and satisfaction as a matter of law.
To have an accord and satisfaction, the parties must have a bona fide dispute, an agreement to settle the dispute (the accord), and execution of that agreement (the satisfaction). Paopao v. Dept. of Social and Health Svc., 145 Wn. App. 40, 46, 185 P.3d 640 (2008). Both parties must intend to create an accord and satisfaction. U. S. Bank v. Whitney, 119 Wn. App. 339, 351, 81 P.3d 135 (2003).
The court's conclusion that Nothstein's payment of $28,000 did not establish an accord and satisfaction is dependent on the court's finding that during the November 8 telephone conversation, Pennebaker gave his assurance that the trim and siding would be fixed. Pennebaker argues that the evidence of the parties' telephone conversation on November 8, as well as other evidence of telephone conversations occurring between the attorneys and between Nothstein and his attorney, was improper parol evidence that should not have been considered. We first note that Pennebaker did not object to the evidence at trial. But even assuming the alleged error concerns a legal issue and no objection was required to preserve it, Pennebaker's argument is not persuasive.
Extrinsic or parol evidence may not be used to vary or contradict the written words in an agreement. Hearst Communications, Inc. v. Seattle Times Co., 154 Wn.2d 493, 503, 115 P.3d 262 (2005). But extrinsic evidence regarding the circumstances surrounding an instrument's execution and the acts and conduct of the parties subsequent to the contract's making may be admissible to determine the parties' intent. Hearst, 154 Wn.2d at 503-04.
The written agreement required Pennebaker to complete the work on the checklist. The evidence of what was said during the telephone conversations was not used to vary or contradict the written words of the settlement agreement. Rather, the evidence was used by Nothstein to show that by paying the $28,000, he did not intend to release Pennebaker from his contractual obligation to complete the work. By insisting on his right to have Pennebaker fix the problems with the siding and the trim, Nothstein was not — as Pennebaker would have it — attempting to rescind or modify the parties' written agreement. Rather, he sought to enforce it. The trial court did not err by rejecting Pennebaker's defense of accord and satisfaction.
DEFECTS IN SIDING
Pennebaker contends the judgment should not have included damages for defective installation of the siding.
One of the provisions in the settlement agreement was "Address Hardi Plank per manufacturer Rep's recommendation make repair if necessary. Parties to be present site when manuf. Rep. looks at house." The punchlist attached to the agreement listed the siding problem as the first item, where it was described as "Hardi Plank not caulked at any seams. It also has nail heads exposed, not covered, and open missdrilled holes not filled and repaired. This will cause substantial water damage." Next to this item is the notation "caulk seams, nail holes."
Clerk's Papers at 21.
Clerk's Papers at 22.
Although the record reflects that Pennebaker did do some caulking in response to the problem as listed in the punchlist, the court found that the Hardi Plank problem remained as a significant defect:
Hardi-Plank appearance, particularly on the North side, is not good indicating that the caulking that was done pursuant to the punchlist was somehow defective in that the seams are evident and there has been a bleaching-or leaching — out from the ends of the Hardi-Plank boards. The resulting appearance around the whole house is unacceptable and below minimum acceptable industry standards. The reasonable cost to correct this by repainting or restaining is $1,900.
Finding of Fact 5(a).
Pennebaker's assignment of error concerning this issue characterizes the error as the court relying on its own "non-expert judicial opinion" about whether the siding installation was defective despite the agreement's requirement that the siding be addressed according to the recommendation of a manufacturer's representative. Pennebaker does not argue the issue or cite authority concerning it in his opening brief. There is a cursory reference to it in the brief's concluding paragraph: "The trial court erred by allowing a partial judgment for the cost of painting the house when there is no evidence that a Hardi Plank representative ever determined that the siding was installed defectively."
Appellant's Br. at 2.
Resp't Br. at 13.
Nothstein contends that Pennebaker has waived any issue concerning the judgment for the siding by failing to address it in his opening brief. See, e.g., Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 802, 828 P.2d 549 (1982). This contention is not without merit, as Pennebaker's opening brief provides very little to work with on the siding issue. We do not hold that Pennebaker has waived the issue entirely, but we do not find error. The settlement agreement does not state that it was Nothstein's responsibility to get in touch with the siding company. The court's unchallenged finding indicates that Pennebaker did do some caulking pursuant to the punchlist. Pennebaker did not present evidence showing that he followed the manufacturer's recommendation when doing the caulking. There was substantial evidence supporting the trial court's finding that Pennebaker did not adequately address the Hardi Plank problem. On this record, we cannot find that the trial court erred by awarding damages for the defective siding.
AWARD OF ATTORNEY FEES
The settlement agreement provided that if litigation was necessary to enforce the agreement, the party who prevailed would be entitled to recover his reasonable attorney fees.
At the end of trial, the court entered judgment in favor of Nothstein for the cost of repairing the defects in the trim and siding. At the same time the court found that Nothstein had not carried his burden with respect to other alleged defects: "All of plaintiff's other claims for failure to complete punchlist items are either de minimis, have been performed by defendant, or are too detailed." The court decided that Nothstein was the prevailing party because he had prevailed in regard to the major problems.
Finding of Fact 6.
Nothstein requested more than $17,000 in attorney fees. The court found the fees charged by Nothstein's counsel were reasonable for the services performed. "However, the court finds that given the amount in controversy it would not be reasonable to award attorney's fees in excess of $3,000." Finding of Fact 8. Accordingly, the award of attorney fees was for only $3,000.
Pennebaker assigns error to the attorney fee ruling. He argues that he substantially prevailed and therefore he, not Nothstein, was entitled to an attorney fee award.
Fee decisions are matters within the discretion of the trial court. Mahler v. Szucs, 135 Wn.2d 398, 435, 957 P.2d 632 (1998). A trial court abuses its discretion in awarding attorney fees if the award is manifestly unreasonable or is based upon untenable grounds. Crest Inc. v. Costco Wholesale Corp., 128 Wn. App. 760, 772, 115 P.3d 349 (2005). Errors of law constitute an abuse of discretion. Council House, Inc. v. Hawk, 136 Wn. App. 153, 159, 147 P.3d 1305 (2006).
In general, the prevailing party is one who receives an affirmative judgment in its favor. Riss v. Angel, 131 Wn.2d 612, 633, 934 P.2d 669 (1997). If neither party wholly prevails, however, the party who substantially prevails is the prevailing party. Transpac Development, Inc. v. Oh, 132 Wn. App. 212, 217-19, 130 P.3d 892 (2006). Whether a party is a "prevailing party" is a mixed question of law and fact that is reviewed under an error of law standard. Kyle v. Williams, 139 Wn. App. 348, 356, 161 P.3d 1036 (2007).
If each party prevails on a major issue, there may be no prevailing party for attorney fee purposes. Phillips Bldg. Co. v. An, 81 Wn. App. 696, 702, 915 P.2d 1146 (1996).
Pennebaker reasons that he was the prevailing party because the court found that, other than the siding and trim, he completed the items on Nothstein's list, or the items were de minimis or too detailed to enforce. But Pennebaker prevailed only in regard to minor problems, such as installing light bulbs, missing screws on a switch plate, and a loose hand rail. The trial court found that Pennebaker did not fulfill his obligations regarding the two most widespread and significant problems. Pennebaker does not directly assign error to that finding, and it is supported by substantial evidence. Under these circumstances we conclude the court did not err by failing to designate Pennebaker as the prevailing party.
Pennebaker alternatively contends the court erred by rejecting his request to decide the award of attorney fees by using the proportionality approach of Marassi v. Lau, 71 Wn. App. 912, 859 P.2d 605 (1993), abrogated on other grounds by Wachovia SBA Lending, Inc. v. Kraft, 165 Wn.2d 481, 200 P.3d 683 (2009). The court decided the Marassi apportionment approach was not appropriate under the circumstances:
Because this action essentially concerned the single issue of whether the defendant had performed its obligations under the punchlist that was part of the settlement agreement, and since the defendant manifestly did not do so in two important regards (widespread instances of unacceptable interior trim installation, and inadequate caulking of the exterior trim resulting in a job so far below minimum standards of workmanship that the entire house must be repainted or restained), it would be inappropriate in the Court's view to apply a proportionality approach comparing which party prevailed on each component of the punchlist to determine which party was the prevailing party. The Court finds that under these circumstances the plaintiff was the prevailing party.
Finding of Fact 8.
In Marassi, although the plaintiffs received an affirmative judgment, they prevailed on only two of their original claims; five were dismissed, and the defendants successfully defended at trial against the remaining five. Marassi, 71 Wn. App. at 915-917. The trial court awarded the plaintiffs attorney fees as the prevailing party. The award was reversed on appeal and the matter returned to the trial court with directions to award attorney fees to the plaintiffs for the two claims on which they prevailed and to award attorney fees to the defendants for the five claims on which they prevailed, and then to offset one against the other. Marassi, 71 Wn. App. at 920. Marassi thus recognized that the net affirmative judgment rule or the "substantially prevailing" standard does not lead to a fair and just result in all cases and held that the proportionality approach may be the preferred approach "where multiple distinct and severable contract claims are at issue." Marassi, 71 Wn. App. at 917.
Here, the trial court determined that Nothstein was the prevailing party because the only issue in the case was whether Pennebaker completed his obligations under the settlement agreement, and Nothstein prevailed on that issue. The trial court's findings support this conclusion. This was not truly a case where the parties litigated distinct and severable contract claims and, therefore, Marassi was not applicable.
Marassi, of course, is not the only tool available when a trial court is confronted with a request for a large award of attorney fees after a trial at which the prevailing party's success has been only partial. In deciding what sum constitutes a "reasonable" award, a trial court generally has the discretion to discount "the amount of fees attributable to counsel's work on unsuccessful claims distinct from, and unrelated to, work done on behalf of the successful result." Eagle Point Condominium Owners Ass'n v. Coy, 102 Wn. App. 697, 714, 9 P.3d 898 (2000). The trial court used that discretion here in making the decision to award only $3,000 when the expense Nothstein actually incurred was $17,000.
Nothstein asks for attorney fees on appeal under RAP 18.1. A contract providing for an award of attorney fees at trial also supports such an award on appeal. Nothstein is the prevailing party in this appeal. He is entitled to reasonable attorney fees on appeal subject to compliance with RAP 18.1.
Affirmed.
WE CONCUR.