Northwest Motors, Ltd. v. James

• Citation: 822 P.2d 280,118 Wn.2d 294
• Decision Date: 23 January 1992
• Docket Number: No. 57708-1,57708-1
• Court: United States State Supreme Court of Washington
• Parties: NORTHWEST MOTORS, LTD., a Washington corporation, Respondent, v. Kenneth R. JAMES, and Rhondda C. James, husband and wife, Petitioners.

Page 294

118 Wn.2d 294 822 P.2d 280 NORTHWEST MOTORS, LTD., a Washington corporation, Respondent,
v.
Kenneth R. JAMES, and Rhondda C. James, husband and wife, Petitioners. No. 57708-1. Supreme Court of Washington,
En Banc. Jan. 23, 1992.

Michael M. Hanis, Renton, for petitioners.

Steven W. Klug, Seattle, for respondent.

SMITH, Justice.

Petitioners Kenneth R. and Rhondda C. James appeal a ruling of the Court of Appeals, Division One, granting an increase in the amount of a King County

Page 295

Superior Court judgment in favor of Respondent Northwest Motors, Ltd., awarding attorneys' fees to respondent, and reversing an award of attorneys' fees to Petitioners James.

We affirm the Court of Appeals.

The recitation of facts is principally adapted from the opinion of the Court of Appeals and the findings of fact by the trial court. ¹

On May 22, 1984, Dr. Kenneth R. James (Petitioner) took his 1976 Jaguar XJ6 automobile for repairs to Northwest Motors, Ltd. (Northwest), an automotive repair shop specializing in Jaguars. He advised that his automobile had a gasoline leak, loss of water from the radiator, and a failed interior lamp. He also asked for an oil change. Petitioner did not request, nor did he receive, a written or oral cost estimate. He had been a customer of Northwest for 2 years. Upon examination of the Jaguar, Northwest employees discovered and replaced a failed fuel cooler and changed the oil. The cost was $256.14.

Inspection of the automobile also revealed a loss of cooling system pressure and contamination of the coolant and engine[822 P.2d 281] oil. When Petitioner James went to pick up his automobile, Northwest's owner, Talbott Campbell, advised him that the engine required further testing because of apparent contamination of the oil. Petitioner James indicated that he would return the automobile to Northwest for further service within a few days.

As promised, Petitioner James returned the automobile a few days after May 22, 1984. He parked it in front of the Northwest Motors repair shop without an appointment. Later that day, Petitioner telephoned Mr. Campbell and authorized him to test the Jaguar engine. Mechanics found water in the oil, indicating either a blown cylinder head gasket, a cracked or warped cylinder head, or a cracked block. Campbell informed Petitioner that he would have to remove the cylinder head to determine the precise problem, and that it would take from 3 to 5 days. Over the telephone,

Page 296

Petitioner James authorized the work, but did not request or receive an oral or written cost estimate.

Approximately 3 days later, Mr. Campbell telephoned Petitioner and reported to him that mechanics determined that the cylinder head was warped and the engine block was cracked between each cylinder. He asked Petitioner to come to the shop, but Petitioner declined. Instead, Petitioner asked for an oral estimate of the repair cost. Mr. Campbell gave Petitioner an estimate of $2,500, consisting of $500 for a used engine block and $2,000 labor for removal of the faulty one and installation of the replacement. He advised Petitioner that a new block could be obtained more quickly, but it would cost three times as much as a used one. The trial court found that the $2,500 estimate was the only one to which James consented, and that he believed that amount would cover all repair costs, including the cost for initial servicing of his automobile.

Northwest claimed that Petitioner was responsible for additional charges for reconditioning the radiator, replacing coolant and heater hoses, and installing other engine supports.

After a few days, in early June 1984, Petitioner James began telephoning Northwest to find out when repairs to his Jaguar would be completed. Mr. Campbell did not return his calls. They finally established communication by telephone. On June 28 or 29, 1984, Mr. Campbell told Petitioner that a used engine block had been located and the repairs would begin. As the work proceeded, Petitioner telephoned Mr. Campbell several times, but he was inaccessible to Petitioner until July 19, 1984. On that date, Mr. Campbell informed Petitioner that he had lost a mechanic and was running behind schedule. Petitioner told Mr. Campbell that he needed a replacement automobile, and indicated he would obtain a rental one. Mr. Campbell told Petitioner that his Jaguar would be available in a few days. After a few days, Petitioner released the rental automobile under the assumption that his Jaguar would be ready. The cost of the rental was approximately $100.

Page 297

By July 19, 1984, Petitioner James advised Northwest that he wanted his Jaguar back regardless of the state of repair. About that time, Petitioner decided he would tender a check for the repairs in order to get his Jaguar back, but also decided he would stop payment on the check if he thought the charges were unfair. He believed $2,500, less a discount for inordinate delay, would be fair. He did not communicate any of these thoughts to Mr. Campbell or anyone else at Northwest.

The used engine block was installed in the Jaguar a few days later, but cooling system problems developed. Repairs for this took another week. On July 28, 1984, Petitioner telephoned Northwest about his Jaguar and was told that it was ready, but only required road testing. Petitioner informed Mr. Campbell that he wanted to pick up the Jaguar before leaving for a trip to Australia. Mr. Campbell assured him it would be ready. However, when Petitioner telephoned again to determine when he could pick it up, he was told it was not ready.

Petitioner James then left for Australia, and asked his secretary to telephone about [822 P.2d 282] the Jaguar while he was away on his trip. She was advised by Northwest that the automobile would not be ready until September 4, 1984. On that date, by then having returned from Australia, Petitioner James went to pick up his automobile. He was presented with invoices totaling $3,696.42. This was the first time he was told the cost would be more than $2,500, despite approximately 20 telephone calls to Northwest. After some discussion, Mr. Campbell agreed to reduce the invoice by $100 for rental expense and for Petitioner's "time and patience." Petitioner examined the documents and indicated his acceptance of the amount stated in them. Petitioner James asked for permission to pay one-half of the amount due then and the other half later, but Mr. Campbell refused. Petitioner then issued his check for $3,596.42, representing the total due of $3,696.42, less $100 for automobile rental. Mr. Campbell then returned Petitioner's Jaguar to him.

Page 298

Petitioner James immediately directed his bank to stop payment on the $3,596.42 check payable to Northwest Motors. The bank dishonored the check on September 5, 1984. Petitioner immediately wrote Mr. Campbell a letter informing him that he had stopped payment because he was dissatisfied with the delay and with the cost of the repairs. He included in that letter another check payable to Northwest in the amount of $2,000. Northwest sent a "Notice of Sale/Chattel Lien", claiming $5,000 was owed. On January 25, 1985, Northwest sent Petitioner a notice of dishonor on the $3,596.42 check. When Petitioner did not pay, Northwest then filed this action against the Jameses to recover on the dishonored check.

The matter was submitted to mandatory arbitration in July 1985. The arbitrator awarded Northwest $3,029.30, with an award of $2,200 for attorneys' fees, for a total of $5,229.30. On October 25, 1985, Petitioner James offered $3,500 as settlement. Northwest rejected his offer.

Petitioner James appealed the arbitration award to the King County Superior Court and proceeded to trial de novo. The Honorable Nancy Ann Holman determined that Northwest had violated the Automotive Repair Act (RCW 46.71) and that Northwest was entitled only to the $2,500 that Petitioner James originally agreed to pay, less a $100 offset for automobile rental costs. The court determined that Petitioner James was justified in issuing a stop payment order on the check and that he was not liable to Northwest for attorneys' fees. The trial court awarded Petitioner James attorneys' fees in the amount of $4,989.80.

The Court of Appeals, Division One, on March 26, 1990, reversed the trial court and remanded the case for proceedings consistent with its opinion. The Honorable Susan R. Agid, writing pro tempore for the court, concluded that Petitioner James had not been justified in stopping payment on the check for $3,596.42 because the check constituted an "account stated". The court held that Petitioner was liable for the amount written on the check and for attorneys' fees, damages, and collection costs pursuant to RCW 62A.3-

Page 299

515(1). The Court of Appeals also reversed the trial court's award of attorneys' fees.

The question presented on this appeal is whether the Court of...