Smith v. Behr Process Corp.

• Decision Date: 13 September 2002
• Docket Number: No. 25670-3-II.,25670-3-II.
• Citation: 113 Wash.App. 306,54 P.3d 665
• Parties: Deborah and Randall SMITH, Russell and Janyce Taylor, Russell and Eulala Shute, Clay and Lynn Westby, and Richard L. Johnson and Jay Johnson, Mark and Tamara Feeser, Scott and Kristine Tomlin, Scott and Judy Heiner, Mike and Connie Stullick, individually and on behalf of all individuals and entities similarly situated, Respondents/Cross Appellants, v. BEHR PROCESS CORPORATION, a foreign corporation, Appellants/Cross Respondents.
• Court: Washington Court of Appeals

54 P.3d 665

113 Wash.App. 306

Deborah and Randall SMITH, Russell and Janyce Taylor, Russell and Eulala Shute, Clay and Lynn Westby, and Richard L. Johnson and Jay Johnson, Mark and Tamara Feeser, Scott and Kristine Tomlin, Scott and Judy Heiner, Mike and Connie Stullick, individually and on behalf of all individuals and entities similarly situated, Respondents/Cross Appellants, v. BEHR PROCESS CORPORATION, a foreign corporation, Appellants/Cross Respondents.

No. 25670-3-II.

Court of Appeals of Washington, Division 2.

September 13, 2002.

Fredric Tausend, Theodore J. Angelis, Helen Bergman Moure, Philip Mosby Guess, Preston, Gates & Ellis, Evan L. Schwab, Margarita V. Latsinova, Dorsey & Whitney, Seattle, WA, for Appellants/Cross-Respondents.

David L. Edwards, Edwards & Hagen, Aberdeen, WA, Paul Lester Stritmatter, Stritmatter, Kessler, Hoquiam, WA, Kevin Coluccio, Garth L. Jones, Michael E. Withey, Stritmatter, Kessler, Whelan, Seattle, WA, Charles Kenneth Wiggins, Bainbridge Is, WA, for Respondents/Cross-Appellants.

SEINFELD, J.

Behr Process Corporation appeals a judgment against it in this class action lawsuit. It claims trial court error in (1) certifying as a class all users of several Behr coating products in 19 western Washington counties; (2) entering a default judgment as to liability because of Behr's discovery violations; (3) making various rulings in the post default damages trial; (4) awarding treble damages under Washington's Consumer Protection Act (CPA) to the class representatives; (5) refusing to recuse; and (6) awarding attorney fees and costs under the CPA. The class cross-appeals the trial court's denial of treble damages to the represented class members under the CPA.

Finding no abuse of discretion in certifying the class, in granting a default judgment, in conducting a jury trial on damages and an evidentiary hearing on treble damages under the CPA, or in declining to recuse, we affirm in part. But finding an absence of findings to support a portion of the CPA attorney fees and trial court error in failing to segregate attorney time spent on other theories, we reverse and remand the attorney fees award for further consideration. Regarding the class's cross-appeal, we find that the trial court erred in concluding that it had no discretion to award treble damages under the CPA to the represented class members. Thus, we also remand for consideration of such an award.

FACTS

Behr sells its products through 90 retail outlets in western Washington. In May 1998, the class sued Behr on behalf of all residents of 19 western Washington counties who had used four Behr products: "Super Liquid Raw-Hide" Nos. 12 and 13 and "Natural Seal Plus" Nos. 80 and 92. Clerk's Papers (CP) (Packet 1) at 2. The class's complaint alleged that these products, which were intended for use on exterior wood surfaces, caused extensive mildew damage to the class members' homes.

The second amended complaint alleged: (1) breach of common law contract and good faith and fair dealing, RCW 62A.1-203; (2) breach of implied warranties, RCW 62A.2-314 and RCW 62A.2-315; (3) breach of express warranties, RCW 62A.2-313; and (4) violations of Washington's CPA, RCW 19.86 et seq.¹ The trial court granted the class's certification motion in January 1999 and later granted its motion for partial summary judgment, finding that Behr had breached the implied warranty of merchantability and express warranties.

The court ordered both parties to disclose their expert and lay witnesses by August 16, 1999, and to complete discovery by February 28, 2000; it scheduled trial for May 2, 2000. When Behr failed to meet the witness disclosure deadline, the class moved for sanctions under CR 37(b). Finding that Behr had violated the pre-trial scheduling order, the trial court set new disclosure deadlines, precluded Behr from deposing the class's experts until it disclosed its own, and awarded attorney fees to the class.

In April 2000, the class moved for an order excluding two Behr experts based on Behr's failure to disclose their opinions and the bases for them. Behr responded that its expert disclosures were incomplete because the class had not provided its final expert opinions. Nonetheless, Behr voluntarily struck one of the experts. The trial court then excluded that part of the other expert's testimony that did not depend on the opinions of the class's experts.

On Friday, April 28, 2000, the class deposed the manager of a Troy Chemical Corporation (Troy) paint laboratory. Troy had provided the mildewcide in the allegedly defective Behr products. The manager testified that tests Troy performed at Behr's request showed a possible chemical incompatibility between the mildewcide in Behr's coating products and other ingredients and that Troy had reported the test results to Behr.

Behr had failed to disclose the testing or the test reports during discovery. Consequently, on May 1, the Monday following the deposition, the class brought an emergency motion regarding this violation. Behr responded with a request to delay jury selection and hold an evidentiary hearing on the class's motion two weeks later. The court rejected the request to delay jury selection but allowed the parties a week to investigate the alleged discovery violations.

The trial court held a three-day evidentiary hearing on the class's motion for sanctions. The class initially based the motion on Behr's failure to timely produce information about an exterior exposure test that Troy had conducted for Behr between March and September 1999 and the results of a chemical stability test that Troy had provided to Behr in December 1999. Both tests involved the challenged products. While investigating these alleged discovery violations, the class also discovered additional undisclosed documents.

On May 15, the trial court found that Behr had willfully and deliberately failed to disclose evidence, that the class and the judicial system were substantially prejudiced by this failure, and that only a default judgment would adequately remedy the harm to the class and also punish Behr. The court then entered a default judgment against Behr as to liability on all of the class's claims and ordered trial to proceed solely on the issue of damages.

The class then moved to exclude evidence of the class members' failure to mitigate damages and for a directed verdict on damages. In support, the class asserted that (1) the default order converted the class's allegations in its complaint to verities; (2) under the Uniform Commercial Code (UCC), once a plaintiff establishes a breach of warranty, the plaintiff is automatically entitled to incidental damages and consequential damages if there is supporting proof; (3) Behr had no evidence of alternative remediation as it had not disclosed any relevant witnesses and the trial court had earlier excluded Behr's experts for failing to make a timely and adequate disclosure; (4) Behr had neither disclosed any witnesses nor provided other evidence to rebut the class's damage matrices; and (5) under the UCC, a seller who defends a breach of warranty claim on the basis of product misuse may not also argue failure to mitigate.

The trial court granted the motion to exclude evidence of the class's failure to mitigate. Thus, the case went to the jury solely on the amount of damages.

At the damages trial, the court summarized its previous legal rulings for the jury, including the fact that liability had been established on each of the class's claims. During the four-day trial, the jury heard testimony from the nine class representatives, the class's expert witness, and Behr's co-chairman. The court then instructed the jury that certain facts had been established; that Behr was liable as a matter of law; that the class members had been damaged as a direct and proximate result of Behr's acts or omissions; that the jury could not consider a variety of evidence, including the class members' failure to maintain their homes or otherwise mitigate the damages; and that class members were entitled to recover certain types of damages.

The jury awarded damages ranging from $14,454 to $87,818 to the class representatives. The jury also adopted damage matrices setting forth damage amounts for the represented class members who used the subject products.

The trial court next held an evidentiary hearing on the class's motion for an award of treble damages for the CPA violations established by the default order. There was no live testimony, only exhibits, documents, and deposition excerpts provided by the class and one affidavit offered by Behr's counsel. Behr objected to this evidentiary hearing procedure. The trial court awarded treble damages to the class representatives but concluded that the CPA did not authorize an award of treble damages to the represented class members.

Finally, the trial court held a hearing on the class's motion for attorney fees and costs awardable under the CPA and as compensation for Behr's discovery violations. The trial court granted both motions, awarding $2,053,688 in attorney fees under the CPA and $130,245 in attorney fees and costs for the discovery violations.

DISCUSSION

I. CLASS CERTIFICATION

Behr challenges the trial court's decision to certify the class, asserting that the class failed to satisfy the commonality, typicality, and higher predominance requirements of CR 23. At the time the trial court heard the certification motion, the class action complaint alleged seven claims: breach of common law contract and good faith and fair dealing; breach of implied warranty; breach of express warranty; CPA violations; intentional, reckless or negligent misrepresentation; negligence; and strict liability. The putative class sought compensatory and statutory damages, including attorney fees and treble damages, and injunctive relief.

We review the trial court's class certification decision for a manifest abuse of discretion. Lacey Nursing...