Wachovia Sba Lending v. Kraft

• Decision Date: 30 May 2007
• Docket Number: No. 34714-8-II.,34714-8-II.
• Citation: 138 Wn. App. 854,158 P.3d 1271
• Parties: WACHOVIA SBA LENDING, d/b/a Wachovia Small Business Capital, a Washington corporation, Respondent, v. Deanna D. KRAFT, individually, Appellant.
• Court: Washington Court of Appeals

158 P.3d 1271

138 Wn. App. 854

WACHOVIA SBA LENDING, d/b/a Wachovia Small Business Capital, a Washington corporation, Respondent, v. Deanna D. KRAFT, individually, Appellant.

No. 34714-8-II.

Court of Appeals of Washington, Division 2.

May 30, 2007.

Douglas N. Kiger, Blado Kiger PS, Tacoma, WA, for Appellant.

Alexander Sether Kleinberg, Eisenhower & Carlson PLLC, Tacoma, WA, for Respondent.

HOUGHTON, C.J.

¶ 1 Deanna Kraft appeals the trial court's refusal to award her attorney fees under RCW 4.84.330 and costs under RCW 4.84.010, .060, and .080. We affirm.

FACT

¶ 2 In June 1997, Kraft's husband (now her former husband) took out a Small Business Administration Loan (Loan) from Wachovia SBA Lending, Inc. d/b/a Wachovia Small Business Capital in order to purchase a home and an in-home veterinary business. Kraft's husband executed a Small Business Administration Promissory Note (Note), secured by a Deed of Trust on Kraft and her husband's North Carolina home. Kraft did not sign the Note. Kraft executed a Small Business Administration Guaranty (Guaranty) in connection with the Note. Wachovia claims to hold the Guaranty signed by Kraft and secured by the Deed of Trust on the North Carolina home.

¶ 3 By the terms of the Guaranty, the debtor agreed to pay all sums owed to the holder of an underlying Note, which Wachovia also claims to hold. The Note requires the debtor to pay "reasonable attorney's fees and costs" incurred in satisfaction of the debt.¹ Clerk's Papers (CP) at 32. The Note does not require the holder to pay the debtor's attorney fees or costs. Thus, the Note and Guaranty, if enforceable, require Kraft to pay Wachovia's attorney fees and costs but do not require Wachovia to pay Kraft's attorney fees or costs.

¶ 4 Under the Deed of Trust, Wachovia foreclosed on Kraft's former residence in North Carolina. Wachovia then sued Kraft on the Note and Guaranty in Pierce County Superior Court, seeking a deficiency balance of $78,196.77.² Kraft answered that she was the guarantor, but she pleaded North Carolina law and, among others, the affirmative defense of choice of remedy.

¶ 5 Wachovia unsuccessfully moved for summary judgment. Over Kraft's objection, Wachovia then sought leave to dismiss its complaint without prejudice, which the court granted. See CR 41(a)(1)(B), (a)(4). Kraft asked the trial court to reserve the issue of attorney fees and costs. The trial court apparently refused to reserve the issue of attorney fees because "it may hang out there for eternity if the parties do decide to settle and go away and never inform this Court."³ Report of Proceedings at 12. The trial court declined to award attorney fees and costs to either party. Kraft appeals.⁴

ANALYSIS

¶ 6 Kraft relies on RCW 4.84.330⁵ and argues the trial court erred in failing to reserve the attorney fees issue and allowing her to show her prevailing party attorney fees and costs. She urges de novo review.

¶ 7 Wachovia argues RCW 4.84.330 will not support an award of attorney fees because a voluntary dismissal without prejudice is not a "final judgment" within the statute's meaning. Resp't's Br. at 10-12. Wachovia asserts that where the plaintiff takes a voluntary dismissal without prejudice, we must review the denial of attorney fees for manifest abuse discretion. Thus, we first identify the appropriate standard of review.

¶ 8 The applicability of RCW 4.84.330 is a question of law. Quality Food Ctrs. v Mary Jewell T, L.L.C., 134 Wash.App. 814, 817, 142 P.3d 206 (2006). We review questions of law de novo. Mohr v. Grant, 153 Wash.2d 812, 823, 108 P.3d 768 (2005).

¶ 9 Wachovia is correct that we review an award of attorney fees for abuse of discretion, that is, whether it was based on tenable grounds or reasons. Taliesen Corp. v. Razore Land Co., 135 Wash.App. 106, 141, 144 P.3d 1185 (2006). But where the meaning of an attorney fee statute is at issue, we review the decision to award or not award attorney fees de novo as a question of law.⁶ Keystone Masonry, Inc. v. Garco Constr., Inc., 135 Wash.App. 927, 936-37, 147 P.3d 610 (2006) (attorney fees on change of venue under RCW 4.12.090).

ATTORNEY FEES

¶ 10 For RCW 4.84.330 to apply: (1) the action must be "on a contract or lease," (2) the contract must contain a unilateral attorney fee or cost provision, and (3) there must be a "prevailing party." RCW 4.84.330. The mere allegation of an enforceable contract containing a unilateral attorney fee provision satisfies the statute's first two requirements. Labriola v. Pollard Group, Inc., 152 Wash.2d 828, 839, 100 P.3d 791 (2004). Here, the parties agree the Note contains a unilateral attorney fee provision incorporated to the Guaranty. The narrow question remains whether the trial court's dismissal without prejudice is within RCW 4.84.330's "prevailing party" language.

¶ 11 Under RCW 4.84.330, the defendant generally prevails by successfully defending a contract action. Mike's Painting, Inc. v. Carter Welsh, Inc., 95 Wash.App. 64, 68, 975 P.2d 532 (1999). The defendant also generally prevails where the plaintiff voluntarily dismisses its action under CR 41. Anderson v. Gold Seal Vineyards, Inc., 81 Wash.2d 863, 867-68, 505 P.2d 790 (1973)⁷ (construing former RCW 4.28.185 (1959)); Escude v. King County Pub. Hosp. Dist. No. 2, 117 Wash.App. 183, 193, 69 P.3d 895 (2003) (construing RCW 4.84.185); Marassi v. Lau, 71 Wash.App. 912, 918-19, 859 P.2d 605 (1993) (construing RCW 4.84.330); W. Stud Welding, Inc. v. Omark Indus., Inc., 43 Wash.App. 293, 295-96, 716 P.2d 959 (1986) (construing RCW 4.84.330). But the applicability of RCW 4.84.330 to a CR 41 dismissal without prejudice is a matter of first impression.

¶ 12 "The primary goal of statutory interpretation is to ascertain and give effect to the legislature's intent and purpose." In re Seattle Popular Monorail Auth., 155 Wash.2d 612, 627, 121 P.3d 1166 (2005). We must consider the statute as a whole and give all its language effect. Seattle Popular Monorail Auth., 155 Wash.2d at 627, 121 P.3d 1166. We review related statutes as a means of identifying legislative intent. Seattle Popular Monorail Auth., 155 Wash.2d at 627, 121 P.3d 1166. We resort to statutory construction only if the statute can reasonably be interpreted in more than one way. Pub. Util. Dist. No. 2 v. N. Am. Foreign Trade Zone Indus., L.L.C., 159 Wash.2d 555, 566-67, 151 P.3d 176 (2007).

¶ 13 The statute defines "prevailing party" as "the party in whose favor final judgment is rendered." RCW 4.84.330. The statute does not define "final judgment." RCW 4.84.330. The term "final judgment" is facially unambiguous — it refers to any court order having preclusive effect. Thus, we refer to Webster's Third New International Dictionary. See Sleasman v. City of Lacey, 159 Wash.2d 639, 643, 151 P.3d 990 (2007) (where a statute is unambiguous, resorting to dictionary is appropriate). "Final," in its legal sense, means

ending a court action or proceeding leaving nothing further to be determined by the court or to be done except the administrative execution of the court's finding but not precluding an appeal — used of a court order, decision, judgment, decree, or sentence; compare INTERLOCUTORY: being a court finding that is conclusive as to jurisdiction and precluding the right to appeal to or continue the case in any other court upon the merits.

WEBSTER'S THIRD NEW INTERN'L DICTIONARY 851 (2002).

¶ 14 "Judgment," in its legal sense, means "a formal decision or determination given in a cause by a court of law or other tribunal." WEBSTER'S, supra, at 1223. Black's Law Dictionary similarly defines "final judgment" as "[a] court's last action that settles the rights of the parties and disposes of all issues in controversy, except for the award of costs (and, sometimes, attorney's fees) and enforcement of the judgment." BLACK'S LAW DICTIONARY 859 (8th ed.2004).

¶ 15 As we have previously stated in the attorney fee context, "the effect of a voluntary dismissal `is to render the proceedings a nullity and leave the parties as if the action had never been brought.'" Beckman v. Wilcox, 96 Wash.App. 355, 359, 979 P.2d 890 (1999) (quoting Bonneville Assocs., Ltd. P'ship v. Barram, 165 F.3d 1360, 1364 (Fed. Cir.1999)) (internal quotation marks omitted). In Beckman, we held a condemnee to be the prevailing party under RCW 8.24.030 where the condemnor took a voluntary dismissal without prejudice. 96 Wash.App. at 358, 365-66, 979 P.2d 890. But we reasoned that the statute at issue did not predicate attorney fees on the entry of judgment. Beckman, 96 Wash.App. at 361-62, 979 P.2d 890. In contrast, the statute does precisely that — expressly requiring a "final judgment" before we may deem either party a "prevailing party."⁸ A voluntary dismissal without prejudice is not a final judgment because it is not "a formal decision or determination" "leaving nothing further to be determined by the court." WEBSTER'S, supra, at 1223, 851; accord State v. Taylor, 150 Wash.2d 599, 601, 80 P.3d 605 (2003) (dismissal without prejudice is not "final"). Wachovia is free to file a new action against Kraft, leaving final judgment on their dispute for a future day.

¶ 16 We note the purpose behind RCW 4.84.330 is remedial — unilateral attorney fee provisions are to be applied bilaterally. Quality Food Ctrs., 134 Wash.App. at 817, 142 P.3d 206. Kraft's argument is eminently compelling — that, given this purpose, a plaintiff should not be permitted to avoid attorney fee reciprocity after having tested his or her claim against summary judgment and causing the defendant to incur costs and attorney fees for naught. But given the definition of "final judgment," we cannot say that the legislature intended a suit dismissed without prejudice to yield a "prevailing party" under RCW 4.84.330.⁹ Accordingly, under the plain language of the statute, Kraft's request for attorney fees is misplaced, and we must affirm, although on other grounds, the trial court's refusal to...