V & E Medical Imaging Services, Inc. v. Stickney

• Decision Date: 08 November 2010
• Docket Number: 62912-3-I
• Court: Washington Court of Appeals
• Parties: V & E MEDICAL IMAGING SERVICES, INC., a Washington corporation, d/b/a AUTOMATED HOME SOLUTIONS, Plaintiff. v. PAUL STICKNEY, PAUL H. STICKNEY REAL ESTATE SERVICES, INC., and WINDERMERE REAL ESTATE, S.C.A., INC., Appellants. RICHARD BIRGH, JANE DOE BIRGH, individually and the marital community, HOME IMPROVEMENT HELP, a) Washington corporation, CONSTRUCTION CREDIT CORPORATION, HERMAN RECOR ARAKI KAUFMAN SIMMERLY & JACKSON PLLC, KENNETH MICHAEL BACON, JANE DOE BACON, individually and their marital community MICHAEL JOHN CONNOLLY, JANE DOE CONNOLLY, individually and their marital community, CITY OF REDMOND, WELLS FARGO BANK ACCOUNT 6000398773 in lieu of bond, JOHN DOE (1) and JOHN DOE(2), Third Party Defendants. MARK DeCOURSEY and CAROL DeCOURSEY, husband and wife and the marital community composed thereof, Respondents,

V & E MEDICAL IMAGING SERVICES, INC., a Washington corporation, d/b/a AUTOMATED HOME SOLUTIONS, Plaintiff. RICHARD BIRGH, JANE DOE BIRGH, individually and the marital community, HOME IMPROVEMENT HELP, a) Washington corporation, CONSTRUCTION CREDIT CORPORATION, HERMAN RECOR ARAKI KAUFMAN SIMMERLY & JACKSON PLLC, KENNETH MICHAEL BACON, JANE DOE BACON, individually and their marital community MICHAEL JOHN CONNOLLY, JANE DOE CONNOLLY, individually and their marital community, CITY OF REDMOND, WELLS FARGO BANK ACCOUNT 6000398773 in lieu of bond, JOHN DOE (1) and JOHN DOE(2), Third Party Defendants. MARK DeCOURSEY and CAROL DeCOURSEY, husband and wife and the marital community composed thereof, Respondents, v. PAUL STICKNEY, PAUL H. STICKNEY REAL ESTATE SERVICES, INC., and WINDERMERE REAL ESTATE, S.C.A., INC., Appellants.

No. 62912-3-I

Court of Appeals of Washington, Division 1

November 8, 2010

UNPUBLISHED OPINION

Dwyer C.J.

Mark and Carol DeCoursey purchased a home intending to remodel it. Their real estate agent, Paul Stickney, recommended a contractor but did not disclose that he was financially connected to the contractor. The contractor performed inferior work and the DeCourseys eventually sued Stickney. Stickney appeals from the jury's verdict finding him liable for breach of his fiduciary duty and for a violation of the Consumer Protection Act (CPA), ch. 19.86 RCW contending that the trial court erred in several respects. We agree that the trial court's award of costs to the plaintiffs was erroneous. However, finding no other error, we otherwise affirm the judgment, remanding only for a recalculation of the cost award.

I

In 2004, the DeCourseys moved to Washington. They purchased a home with the help of Paul Stickney, a Windermere Real Estate agent. The DeCourseys intended to renovate the home, and Stickney recommended the hiring of contractor Home Improvement Help, Inc. (HIH), which was owned and operated by Richard Birgh. Numerous issues arose with the quality and the nature of HIH's work. The remodeled home was finished behind schedule and presented structural and other safety concerns. The DeCourseys were unable to obtain an occupancy permit.

A subcontractor of HIH sued the DeCourseys because it had not been paid for work performed on the DeCourseys' home. The DeCourseys answered and filed a third-party complaint against Birgh, HIH, Stickney, Windermere, ^[1] the City of Redmond ^[2] and others. The DeCourseys alleged claims for fraud, breach of contract, negligence, and violation of the CPA against these parties. The DeCourseys initially proceeded pro se, although they received advice from several attorneys.

After the discovery process began, the DeCourseys filed a motion for a protective order related to questions asked in a deposition, including questions about which attorneys they had consulted and paid. At a hearing before Judge John Erlick, the defendants argued that because the DeCourseys were claiming attorney fees, they should be required to answer questions regarding who they had contacted and what fees they had incurred. The DeCourseys responded that while they had contacted "lawyers, " those lawyers were not "attorneys." Report of Proceedings (RP) (Aug 23, 2007) at 44-46.

The trial court then determined that opposing counsel could inquire into any attorney fees that the DeCourseys had incurred. At this point, Mark DeCoursey responded that they were not claiming attorney fees other than the statutory attorney fee. The trial court accepted that the DeCourseys were waiving or dismissing any claim for attorney fees beyond the statutory attorney fee. As a result, the trial court orally ruled that the DeCourseys were not required to answer questions about their attorneys and that "any claim for attorney's fees above and beyond statutory attorney's fees shall not be pursued." RP (Aug. 23, 2007) at 61. When asked whether the ruling included fees for the CPA claim, the trial court responded that it "[i]ncludes any and all attorney's fees." RP (Aug. 23, 2007) at 61. The written order is more limited, stating:

(8) The DeCourseys shall not be required to testify regarding attorneys' fees incurred, including the identity of the attorney, the fees incurred, and the amounts paid. This does not affect attorney client privilege. In open court, the DeCourseys are dismissing/not pursuing any claim for attorney fees beyond statutory fees of $250.

Clerk's Papers (CP) at 707. The DeCourseys moved for reconsideration, which was denied.

In September 2007, attorneys began representing the DeCourseys. The DeCourseys filed a notice of discretionary review of Judge Erlick's order, seeking review of the order to the extent that it dismissed their right to seek attorney fees including fees associated with their CPA claim. A commissioner of this court denied the motion.

In November 2007, the trial court granted summary judgment in favor of the DeCourseys on their claims against HIH because HIH was an unregistered contractor. Prior to trial, in October 2008, Birgh and HIH settled with the DeCourseys agreeing to pay them $270, 000. The settlement released Birgh and HIH from all claims and also released Stickney in his capacity as an officer of HIH but not in his individual capacity. It also required that the DeCourseys delete, remove, and refrain from publishing any references to any Birgh family member, business, or lawyer on any of the DeCourseys' several web sites. The DeCourseys will owe $25, 000 per breach if they violate this settlement condition.

Subsequently, all of the parties except Stickney and Windermere were dismissed from the litigation and, in November 2008, the trial proceeded between the DeCourseys and Stickney. The DeCourseys' only remaining claims were for breach of fiduciary duty, fraud, and violation of the CPA.

Evidence presented at trial established that Stickney had breached his fiduciary duty when he failed to disclose his conflict of interest. In 1996, Stickney and Birgh had entered into a joint venture to develop real property. Together, they incurred a joint debt obligation, which at the time of trial had a principal amount of $400, 000. Under the terms of their joint venture agreement, Stickney was responsible for making the loan payments. However, when Stickney could not afford to make payments, Birgh would do so if he had the financial resources available. Other evidence suggested that Stickney was entangled with Birgh and HIH. Stickney had provided Birgh with a cellular telephone and Birgh had used Stickney's computer server to store HIH documents. In addition, HIH's incorporation documents stated that Stickney was the company's vice president and a 20 percent shareholder, although no non-hearsay evidence showed Stickney to be directly involved with HIH. Stickney testified that he did not know that he was named as HIH's vice president until after the DeCourseys' lawsuit began.

Joseph and Mary Calmes, two of Stickney's former clients, testified that Stickney recommended Birgh and HIH to them and that Stickney actively represented that he had no financial relationship with Birgh. The Calmeses testified that they fired Birgh and HIH because their remodel was not being timely completed and the work appeared to be substandard. However, the Calmeses both testified that they did not recall reporting their dissatisfaction with Birgh or HIH to Stickney other than to relate their concern about the slow pace of the construction.

In addition to the DeCourseys and the Calmeses, Stickney had referred 29 of his clients to Birgh between 1999 and 2004. Stickney testified that Birgh was the only contractor that he recommended, although he always informed his clients that they could compare Birgh to other contractors. There was no evidence presented of any other clients who were dissatisfied with Birgh's work. Stickney did not remember telling any of his clients that he was involved in a joint venture with Birgh because, as he testified, he "felt there was no conflict of interest." RP (Oct. 23, 2008) at 134.

Several witnesses testified regarding the damages to the DeCourseys' house as a result of Birgh's work. The estimated cost of repair was $525, 289.78.

The jury returned a verdict in favor of the DeCourseys on their claims for breach of fiduciary duty and for violation of the CPA but found that the DeCourseys failed to prove fraud.^[3] The jury awarded the DeCourseys $515, 900 in damages for Stickney's breach of fiduciary duty and $6, 300 for Stickney's violation of the CPA: a total damage award of $522, 200. Stickney moved for judgment as a matter of law, a new trial, or remittitur. This motion was denied. The trial court then granted the DeCourseys' motion for an award of attorney fees. It found $356, 142 in fees reasonably incurred and increased this by a 30 percent multiplier, resulting in a total attorney fee award of $462, 985. In addition, the DeCourseys were awarded $45, 442 in costs.^[4]

Stickney appeals.

II

Stickney first contends that the trial court's instructions to the jury regarding conflicts of interest were erroneous. We disagree.

"Jury instructions are sufficient when they allow counsel to argue their theory of the case, are not misleading, and when read as a whole properly inform the trier of fact of the applicable law." Bodin v. City of Stanwood, 130 Wn.2d 726, 732, 927 P.2d 240 (1996). We review de novo the adequacy of challenged jury instructions. State v Mills, 154 Wn.2d 1, 7, 109 P.3d 415 (2005). "[W]here a jury instruction correctly states the law . 'the court's decision to give the instruction will not be disturbed absent an abuse of discretion.'" Singh v. Edwards Lifesciences Corp., 151 Wn.App. 137, 151, 210 P.3d 337 (2009) (quoting Micro Enhancement Int'l, Inc. v. Coopers &...