Cohen v. Graham

• Citation: 44 Wn.App. 712,722 P.2d 1388
• Decision Date: 04 August 1986
• Docket Number: 15279-3-I,Nos. 13930-4-,s. 13930-4-
• Parties: Norman W. COHEN, Respondent, v. Thomas P. GRAHAM and Marsha Graham, husband and wife, Appellants, v. Norman W. COHEN and Verlaine Keith-Miller-Cohen, husband and wife, and the marital community composed thereof, Respondents.
• Court: Court of Appeals of Washington

Page 712

44 Wn.App. 712

722 P.2d 1388

Norman W. COHEN, Respondent, v. Thomas P. GRAHAM and Marsha Graham, husband and wife, Appellants, v. Norman W. COHEN and Verlaine Keith-Miller-Cohen, husband and wife, and the marital community composed thereof,

Respondents.

Nos. 13930-4-I, 15279-3-I.

Court of Appeals of Washington,

Division 1.

Aug. 4, 1986.

Robert Gould, Nancy K. Bourgois, Gould, Russo & Bitreim, Thomas P. Graham, Jeffrey S. Laws, Graham

Laws & Dalglish, Seattle, for Thomas P. Graham.

David T. Kirkland, Kirkland & Coughlin, Seattle, for Norman W. Cohen.

GROSSE, Judge.

These consolidated appeals result from an arbitration award settling a dispute arising from a purchase and sale agreement between the parties. Cohen appeals the vacation of the judgment confirming the arbitration award and the trial court's finding him in contempt. In a separate appeal made prior to the vacation of the judgment, Graham appeals the confirmation of the award.

Graham and Cohen had practiced law together for approximately 15 years before deciding to dissolve their partnership. The dissolution of the law practice was not an amicable one. The parties entered into a purchase and sale agreement (agreement) wherein Graham purchased an airplane and all of Cohen's interest in the law firm for $70,000. To that end, Graham executed a promissory note agreeing to pay a lump sum of $15,000 and monthly payments of $2,500 to commence on October 1, 1982 until paid in full. The agreement also provided that late payments were subject to 12 percent interest. The agreement contained a covenant not to compete which provided in pertinent part:

Cohen agrees to leave all existing client files, excepting that pertaining to Vern Parks, with Graham & Cohen, Inc., P.S., and Cohen agrees not to contact these clients (except Parks) regarding existing legal matters, and will not handle any such matters.

Sometime in October, Graham mailed letters to clients announcing the departure of Cohen from the firm and informing them that he would be handling their cases in the future. In the meantime, Cohen had set up his own practice and learned of Graham's letters to former clients. Cohen thereupon drafted his own letter to former clients making it clear that he was willing and available to handle any of their legal matters. Several former clients brought their existing legal matters to Cohen. Many of these had contacted Cohen prior to his letter announcing his continued availability for their legal matters.

As a result of Cohen's action, Graham ceased making the monthly payments on the promissory note. In November of 1982, Cohen brought an action in district court to collect the November payment. Graham answered and counterclaimed, removing the action to superior court and staying it pending the outcome of arbitration as required under the agreement.

Both parties were represented by counsel during the arbitration proceeding. The arbitrator found that both parties violated the agreement. It was further found that the clause in the agreement providing that Cohen "will not handle any such matters" limited Cohen's ability to practice law, was violative of CPR DR 2-108(B), ¹ and contravened public policy. However, the arbitrator ruled that the clause was severable and did not void the other provisions of the agreement.

The arbitrator's award required Graham to pay 12 percent interest on all delinquent payments. This was to be offset by the sum of $5,000 which the arbitrator required Cohen to pay because of Cohen's failure to inform Graham of the work he was doing which resulted in unnecessary duplication. Although the agreement provided for mandatory attorney's fees, the arbitrator denied them on the grounds that both parties prevailed. All other claims of the parties were denied.

Under the award, however, Cohen was required to render an accounting of clients' matters which were transferred to him from the law practice after September 1, 1982 within 30 days of the award. Such fees or receipts resulting from these cases were required to be apportioned on a quantum meruit basis. If a proper apportionment could not be agreed upon between the parties, the award provided for further arbitration.

Cohen moved to confirm the arbitration award except for the provision denying attorney's fees. Graham moved to vacate the award on the grounds that it was not a final award and the arbitrator's interpretation of the clause restricting Cohen's practice was an error of law.

An order confirming the arbitration award was entered on October 19, 1983. Graham appealed the confirmation of the award to this court in a timely period.

While this appeal was pending, Graham sought an accounting on those cases which were transferred to Cohen. To that end, Graham brought various motions of contempt against Cohen for failure to render an accounting in accord with the arbitration award. Cohen was found in contempt of court on at least three separate occasions. Finally, on June 27, 1984, Cohen was ordered to render an accounting by July 6, 1984 or the arbitration award would be vacated. Cohen failed to render a satisfactory accounting and the award was vacated.

Cohen's Appeal

Cohen appeals the vacation of the judgment confirming the arbitration award and the trial court's order finding him in contempt. If the trial court's order vacating the judgment of confirmation is valid, then, presumably, the issues raised by Graham in his appeal from that judgment are in large part moot. Therefore, we will deal with the contempt issue first.

The issues with regard to contempt are controlled by the decision in State v. Boatman, 104 Wash.2d 44, 700 P.2d 1152 (1985). There, the Supreme Court reiterated three grounds on which a court may rely when using its contempt powers: (1) RCW 9.23.010; (2) RCW 7.20.010, and (3) the inherent power of the court to enforce orders. Boatman, at 46, 700 P.2d 1152. Before utilizing those three grounds, it is necessary to determine whether the order is coercive or punitive. If the object of the court's action is punishment then, except when the offensive conduct occurs in the presence of the court, the contemner is entitled to a jury trial. If the object of the court's action is coercion then the final written order on contempt must contain provisions whereby offenders may purge themselves. Boatman, at 48, 700 P.2d 1152.

In the instant matter, as in Boatman, it is not clear what the trial court had in mind as the basis for its contempt order. Here, because neither of the remedies provided by the two statutory grounds was utilized, the trial court's action can be sustained only if it was an exercise of the court's inherent power to punish violation of orders and judgments. However, utilization of that inherent power requires as a necessary precondition a finding by the trial court that the statutory bases will prove inadequate. Boatman, at 48, 700 P.2d 1152. No such determination was made in the instant case. Even if the trial court had so found the order is defective because if intended as punishment no jury trial was provided, and if intended as...