PIPER v. DEPARTMENT OF LABOR AND INDUSTRIES (2004)

OPINION PUBLISHED IN PART

This is an attorney fee dispute arising after a jury found the Board of Industrial Insurance Appeals (Board) had erred in determining that Tricia Piper's lung illness was not an occupational disease.   The trial court awarded Ms. Piper attorney fees for services rendered both before the Board and the trial court.   The Department of Labor & Industries (Department) appealed the fee award as it relates to Board work, contending the award violates RCW 51.52.130 and Supreme Court precedent.   Ms. Piper cross-appealed the trial court's hourly rate decision and its denial of certain travel expenses.   We agree with the Department, and reverse in part.   We disagree with Ms. Piper and affirm in part.

FACTS

Ms. Piper's alleged exposure to toxic chemicals at a dry cleaning establishment caused an industrial injury;  however, the Department denied her claim for industrial insurance benefits.   Ms. Piper aggressively and successfully litigated her claim before an Industrial Insurance Appeals Judge (IAJ).   The Board reversed the IAJ in a split decision.   The superior court jury reversed the Board, and the trial court remanded the matter to the Department with directions to award benefits that are not at issue here.

The trial court retained jurisdiction to determine attorney fees and costs.   Ms. Piper's counsel submitted a detailed claim for the services of multiple attorneys and paralegals, and for costs.   Her two principal Seattle-based attorneys billed at $300 to $350 per hour.   Most of counsels' work was done before the Department and Board.   Ms. Piper then moved for a total fee award of $215,085.75, based on a “lodestar” of $143,390.50 with a multiplier of 1.5.

In opposition, the Department filed affidavits of several Spokane-based attorneys with extensive worker's compensation experience.   They generally charged lower fees.

On August 22, 2002, the trial court entered findings of fact and conclusions of law generally favorable to Ms. Piper.   The trial court accepted nearly all of counsel's claimed work hours but it disallowed travel time related to the superior court trial.  “A reasonable hourly rate of $200.00 is awarded with a multiplier of 1.5 for all attorney time.”   Clerk's Papers (CP) at 143 (Finding of Fact “kk”).

After noting the remedial purpose underlying Title 51 RCW, the trial court concluded, “[t]he attorneys' fee award should be sufficient so that the benefits to which Tricia Piper is entitled are not unfairly reduced by the cost of litigation.”   CP at 144 (Conclusion of Law 6).   The trial court awarded a base amount of $73,951 in attorney fees increased by a 1.5 lodestar multiplier to $110,926.50.   The court awarded $11,148.14 in costs and $5,301.00 in paralegal fees (without a multiplier), then entered a consistent judgment.

The Department unsuccessfully sought reconsideration and then appealed.   Ms. Piper cross-appealed.

ANALYSIS

A. RCW 51.52.130

 The issue is whether RCW 51.52.130 authorizes the trial court to award the prevailing worker attorney fees incurred before the Board in addition to attorney fees before the superior court.   In short, it does not.   Borenstein v. Dep't of Labor & Indus., 49 Wash.2d 674, 306 P.2d 228 (1957);  Rosales v. Dep't of Labor & Indus., 40 Wash.App. 712, 700 P.2d 748 (1985).

The statute partly states:

․

If in a worker or beneficiary appeal the decision and order of the board is reversed or modified and if the accident fund or medical aid fund is affected by the litigation, or if in an appeal by the department or employer the worker or beneficiary's right to relief is sustained, or in an appeal by a worker involving a state fund employer with twenty-five employees or less, in which the department does not appear and defend, and the board order in favor of the employer is sustained, the attorney's fee fixed by the court, for services before the court only, and the fees of medical and other witnesses and the costs shall be payable out of the administrative fund of the department.

RCW 51.52.130 (emphasis added).

The statute contains “no provision for the recovery of attorney's fees from or payable by the department for services rendered before the board.”   Borenstein, 49 Wash.2d at 676, 306 P.2d 228 (citing Harbor Plywood Corp. v. Dep't of Labor & Indus., 48 Wash.2d 553, 559-60, 295 P.2d 310 (1956));  accord Rosales, 40 Wash.App. at 716, 700 P.2d 748.  “If such fees are to be paid by the department, it is a matter of policy to be determined and directed by the legislature through the enactment of a statute clearly providing for the payment of such fees by the department of labor and industries.”   Borenstein, 49 Wash.2d at 676-77, 306 P.2d 228.   It is error for a superior court to award such fees.  Rosales, 40 Wash.App. at 716, 700 P.2d 748.   Borenstein and Rosales are directly on point and control here.

Ms. Piper incorrectly contends RCW 51.52.130 is ambiguous and thus in need of a liberal construction in her favor.   The clear holdings of Borenstein and Rosales render her argument untenable.   In any event, the statute is unambiguous.   The fees and attorney charges for representing a worker may be “fixed” by the trial court for purposes of resolving potential disputes over the appropriate fee.  RCW 51.52.130.   But such fees are “payable” by the Department only when the worker prevails in superior court, and even then such fees are paid solely “for services before the court.”   RCW 51.52.130;   Borenstein, 49 Wash.2d at 676, 306 P.2d 228;  Rosales, 40 Wash.App. at 716, 700 P.2d 748.

Ms. Piper incorrectly insists the following sentence in a subsequent Supreme Court opinion overrules Borenstein:  “The court may even award fees for the attorney services before the Department and the Board if the court determines that the fee fixed by the director or the Board for these services was inadequate.”  Brand v. Dep't of Labor & Indus., 139 Wash.2d 659, 670 n. 5, 989 P.2d 1111 (1999) (citing RCW 51.52.130).   A proper reading of Brand shows the quoted footnote is a fleeting and unbinding dictum.   See, e.g., ETCO, Inc. v. Dep't of Labor & Indus., 66 Wash.App. 302, 307, 831 P.2d 1133 (1992) (noting an appellate court is not bound by dicta).

Resolving an issue having no bearing on Borenstein, the Brand court held that a trial court may not reduce a prevailing worker's attorney fee award where the worker is partially successful in an appeal before the superior court or appellate court.   See Brand, 139 Wash.2d at 670-72, 989 P.2d 1111.   That is not the issue in this case.  Borenstein is controlling and binds us until the Supreme Court decides otherwise.   See State v. Gore, 101 Wash.2d 481, 487, 681 P.2d 227 (1984).

 Ms. Piper offers alternative theories to affirm the trial court's award for fees for work before the Board.   Generally, an appellate court may affirm a trial court on any theory supported by the pleadings and the record even if the trial court did not consider that theory.  LaMon v. Butler, 112 Wash.2d 193, 200-01, 770 P.2d 1027 (1989).

First, Ms. Piper insists public policy supports the fee award.   She cites no controlling authority supporting her proposition that policy concerns justify a lower court overruling Supreme Court precedent.   See Gore, 101 Wash.2d at 487, 681 P.2d 227.   Policy considerations are best left to the legislature.   See Borenstein, 49 Wash.2d at 676-77, 306 P.2d 228.

 Second, Ms. Piper suggests CR 11 sanctions.   But, she did not move for CR 11 sanctions below.   And, CR 11 sanctions are appropriate where a party or attorney files frivolous pleadings.  Manteufel v. Safeco Ins. Co. of Am., 117 Wash.App. 168, 175-76, 68 P.3d 1093, review denied, 150 Wash.2d 1021, 81 P.3d 119 (2003).   The Department's pleadings are not frivolous and, objectively, the Department's opposition to Ms. Piper's claim was based upon conflicting evidence on the cause of her condition.   Hindsight is not an appropriate standard for applying CR 11.   See In re Cooke, 93 Wash.App. 526, 529, 969 P.2d 127 (1999).   Finally, we do not engage in CR 11 fact-finding.  Biggs v. Vail, 124 Wash.2d 193, 197, 876 P.2d 448 (1994).   Accordingly, Ms. Piper's CR 11 argument is unpersuasive.

 Next, Ms. Piper contends the Department was subject to sanctions under RCW 4.84.185.   But Ms. Piper did not file a motion for sanctions within 30 days after the judgment.  Id. Consequently, Ms. Piper's demand for sanctions is time-barred.  Id.

 Finally, Ms. Piper asserts Department bad faith justifies a fee award.   In egregious cases, a trial court may award a prevailing party attorney fees on a finding that the losing party acted in bad faith or wantonness.   See, e.g., Miotke v. City of Spokane, 101 Wash.2d 307, 338, 678 P.2d 803 (1984);  Pub. Util. Dist. No. 1 of Snohomish County v. Kottsick, 86 Wash.2d 388, 390, 545 P.2d 1 (1976). Notwithstanding the remedial purpose of Title 51 RCW to compensate injured workers, we cannot say on this record that the Department's position was taken in bad faith.   Conflicting evidence as to causation was presented, and the Department's evidence persuaded the Board.   Accordingly, Ms. Piper's bad faith argument is unpersuasive.

The trial court erred.   The remedy is to reverse and remand for recalculation of the award.

A majority of the panel having determined that only the foregoing portion of this opinion will be printed in the Washington Appellate Reports and that the remainder, having no precedential value, shall be filed for public record pursuant to RCW 2.06.040, it is so ordered.

B. Evidence Supporting Findings

The issue is whether the trial court's findings of fact are supported by substantial evidence and, if so, whether those findings support the attorney fee award.

We review challenged findings of fact for substantial evidence.  In re Contested Election of Schoessler, 140 Wash.2d 368, 385, 998 P.2d 818 (2000).   Substantial evidence means evidence sufficient to persuade a fair-minded rational person of the truth of the asserted matter.  Id. If we are satisfied substantial evidence supports the challenged findings of fact, those findings become binding on appeal.  Id. Likewise, we will accept unchallenged findings of fact as verities on appeal.  Id. We will not re-weigh the evidence or disturb the trial court's credibility determinations.   See Standing Rock Homeowner's Ass'n v. Misich, 106 Wash.App. 231, 244, 23 P.3d 520, review denied, 145 Wash.2d 1008, 37 P.3d 290 (2001).

First, the Department broadly contends findings of fact “d” through “ee” and “hh” through “ll” are irrelevant as to the attorney fee award.   In general, the findings of fact must be relevant to support the trial court's conclusions of law.   See Ottgen v. Clover Park Tech. College, 84 Wash.App. 214, 218 n. 2, 928 P.2d 1119 (1996).   However, the Department provides no meaningful argument directed to individual findings.   This is unhelpful.  RAP 10.3(a)(5);  see also Ottgen, 84 Wash.App. at 218 n. 2, 928 P.2d 1119 (declining to examine assignments of error unsupported by argument and citation to authority).   Even so, in our discussion of RCW 51.52.130 we decided no fees are recoverable for work before the Board, thus rendering findings regarding board work unnecessary and further discussion moot.   Whether the findings bear on the multiplier is discussed below.

Next, regarding substantial evidence, the Department first generally attacks findings “e” through “ee” and “hh” through “ll,” on the basis that the Department reasonably handled its case. But, the issue is whether substantial evidence exists to support the trial court's adverse findings.   Detailed discussion is necessary to review the Department's sweeping claims.   See Standing Rock Homeowner's Ass'n, 106 Wash.App. at 243, 23 P.3d 520 (noting that complaining party has burden of showing challenged findings are not supported by the record).   We cannot re-weigh contested evidence decided in favor of an award.  Id. at 244, 23 P.3d 520.   Accordingly, the Department has waived its substantial evidence challenge to finding “e” through “ee” and “hh” through “ll.”   See Valley View Indus. Park v. Redmond, 107 Wash.2d 621, 630, 733 P.2d 182 (1987) (noting the appellate court will not discuss an assignment of error lacking argument in the brief).   Next, we discuss a few challenges specific enough to review.

Finding of Fact “i” states:  “Prior to making their determination relating to cause, neither the Department nor its experts took a detailed history from Tricia Piper.”   CP at 140.   Regarding Dr. Heusner and Dr. Sparks, Ms. Piper testified Dr. Heusner did not take a detailed history;  she discussed her condition with the doctor for about five minutes.   Dr. Heusner's physical examination of Ms. Piper was not pertinent to discovering the source of her lung problem.   Dr. Heusner performed no tests on Ms. Piper.   Nor did Dr. Heusner speak with any of Ms. Piper's treating physicians.   Dr. Heusner did not test the work site for contaminants. Dr. Sparks never saw Ms. Piper, but did look at some of her treatment records.   The evidence could lead a rational fair-minded person to conclude that the Department's doctors took no “detailed” medical history from Ms. Piper.   Accordingly, substantial evidence supports Finding of Fact “i.”

The foregoing testimony of Drs. Heusner and Sparks also generally supports Finding of Fact “k”:  “The Department's experts did not follow their own announced protocol of:  (1) taking a detailed history from the patient;  (2) securing testing evidence concerning the level and route of exposures;  and (3) communicating with treating physicians concerning the cause of the patient's disease.”   CP at 140.

Finding of Fact “o”:  “Even after learning of Dae Uh's citations for chemical violations, the Department and its attorneys never informed the Department's experts of that fact.”   CP at 141.   Dae Uh owned the dry cleaning store.   He admitted he failed to reveal in interrogatories several WISHA violations regarding the handling of toxic chemicals at the work site.   The Department's doctors did not know of the WISHA violations at the time they reviewed Ms. Piper's case.   Although broadly worded, evidence does support the experts' lack of knowledge and a failure to advise them of what the trial court apparently believed was significant evidence.

Finding of Fact “w” refers to unchallenged findings “u” and “v.” CP at 142.   Finding of Fact “u” states:  “The attorneys Tricia Piper hired reasonably retained an investigator to inspect the building and track down witnesses, concerning Tricia Piper's working conditions.”   CP at 142.   Finding of Fact “v” states:  “Tricia Piper's new attorneys reasonably retained her treating physicians and expert pulminologists for the purpose of performing detailed scientific analyses on the cause of her interstitial lung disease.”   CP at 142.   Finding of Fact “w” states:  “Paragraphs (u) and (v) above were essential functions in the performance of any reasonable investigation and should have been performed by the Department of Labor & Industries.”   CP at 142.

The Department does not provide reasoned argument for challenging Finding of Fact “w.” The Department does not explain why it is not responsible for conducting a thorough investigation of an injured worker's claims.   The Department claims no evidence showed it did not complete a reasonable investigation.   But, a rational trier of fact could conclude otherwise based upon the extensive Board record and evidence showing a perfunctory investigation of Ms. Piper's claim.   While the Department prevailed before the Board, the IAJ who tried the case issued 59 pages of findings and conclusions favoring Ms. Piper's claims.   Like the IAJ, the superior court jury and judge found her claim compelling.

Finding of Fact “y” states:  “The Department of Labor & Industries and its attorneys made no effort, and offered no money, to settle the claim at any time during its history.”   CP at 142.   The record generally supports the finding.   The Department litigated the matter to the bitter end, albeit within the exacting Department guidelines of Title 51 RCW. The Department lacks the flexibility to “settle” cases like a private entity;  its range of action is controlled by statute to allow, deny, modify, reopen, or close a claim.   See generally chapter 51.32 RCW (setting forth provisions controlling determination and payment of claims).   Basically, this was a case of an injured worker who could not persuade the Department to allow her claim.   While Finding of Fact “y” may go too far in criticizing the Department and the AAG, it bears on the fee award.

C. Multiplier

The issue is whether the trial court erred in applying a 1.5 multiplier to the lodestar considering the findings and conclusions.

Preliminarily, the Department contends Ms. Piper waived this issue by failing to respond in her brief.   However, the Department, as the appealing party, has the burden to establish that the trial court erred.   See Standing Rock Homeowner's Ass'n v. Misich, 106 Wash.App. 231, 243, 23 P.3d 520, review denied, 145 Wash.2d 1008, 37 P.3d 290 (2001) (noting that appealing party bears the burden of showing the trial court erred).   By not responding, Ms. Piper runs the risk of having this issue decided on unchallenged arguments.   Adams v. Dep't of Labor & Indus., 128 Wash.2d 224, 229, 905 P.2d 1220 (1995).   But we will not treat her failure to respond as a concession.

Generally, an appellate court reviews the reasonableness of an attorney fee award under the abuse of discretion standard.  Boeing Co. v. Heidy, 147 Wash.2d 78, 90, 51 P.3d 793 (2002);  Brand v. Dep't of Labor & Indus., 139 Wash.2d 659, 665, 989 P.2d 1111 (1999).  “A trial court abuses its discretion only when the exercise of its discretion is manifestly unreasonable or based on untenable grounds or reasons.”  Boeing, 147 Wash.2d at 90, 51 P.3d 793 (citing Brand, 139 Wash.2d at 665, 989 P.2d 1111).

In the case of a worker awarded Industrial Insurance benefits, the trial court applies the lodestar method in calculating the attorney fee award.  Brand, 139 Wash.2d at 666, 989 P.2d 1111;  Bowers v. Transamerica Title Co., 100 Wash.2d 581, 675 P.2d 193 (1983).  “A court arrives at the lodestar award by multiplying a reasonable hourly rate by the number of hours reasonably expended on the matter.” Brand, 139 Wash.2d at 666, 989 P.2d 1111 (citing Scott Fetzer Co. v. Weeks, 122 Wash.2d 141, 149-50, 859 P.2d 1210 (1993)).  “The lodestar amount may be adjusted to account for subjective factors such as the level of skill required by the litigation, the amount of potential recovery, time limitations imposed by the litigation, the attorney's reputation, and the undesirability of the case.”  Brand, 139 Wash.2d at 666, 989 P.2d 1111 (citing Bowers, 100 Wash.2d at 597, 675 P.2d 193;  Rules of Professional Conduct (RPC) 1.5(a)).   Ordinarily, a trial court's decision on whether to apply a multiplier to a lodestar attorney fee is a matter falling within the trial court's discretion. Boeing, 147 Wash.2d at 90-91, 51 P.3d 793.

“The appellate courts exercise a supervisory role to ensure that discretion is exercised on articulable grounds.”  Eagle Point Condo. Owners Ass'n v. Coy, 102 Wash.App. 697, 715, 9 P.3d 898 (2000) (citing Mahler v. Szucs, 135 Wash.2d 398, 434-35, 957 P.2d 632 (1998)).  “To withstand appeal, a fee award must be accompanied by findings of fact and conclusions of law to establish a record for review.”  Eagle Point Condo.   Owners, 102 Wash.App. at 715, 9 P.3d 898 (citing Brand, 139 Wash.2d at 664, 989 P.2d 1111;  Mahler, 135 Wash.2d at 433-35, 957 P.2d 632. Findings and conclusions that are entirely conclusory require remand for entry of findings and conclusions explaining the basis for the trial court's fee award.  Eagle Point Condo. Owners, 102 Wn.App. at 715-16.

Illustratively, Division One of this court recently affirmed a trial court's application of a 1.5 multiplier to the lodestar fee awarded under RCW 51.52.130.  Somsak v. Criton Technologies/Health Tecna Inc., 113 Wash.App. 84, 98, 52 P.3d 43, 63 P.3d 800 (2003).   The Somsak court noted with approval that the trial court found specific factors justifying an upward departure from the lodestar.  Id.

Here, the trial court's factual findings are not as succinct as shown in Somsak.   Nevertheless, certain of the trial court's findings address factors justifying application of the multiplier.  “The case presented novel and unique questions involving an emerging science and the relationship of interstitial lung disease and toxic chemical exposure.   In order to prove the case, the lawyers were required to familiarize themselves with the medicine and scientific research on these subjects.”   CP at 142 (Finding of Fact “aa”).   “Both of the plaintiff's attorneys are highly experienced trial attorneys.   The case could not have been successfully litigated by junior attorneys.   The State took an uncompromising stance and directed substantial efforts and resources to the defense.”   CP at 142 (Finding of Fact “bb”).

“Although plaintiff's counsel were not precluded from taking no other clients, the amount of time devoted to this case necessarily precluded work on other cases, including cases that might have paid on an hourly basis or had greater prospects of recovery.”   CP at 143 (Finding of Fact “cc”).  “Plaintiff's attorneys encountered the risks that Tricia Piper would die during the pendency of the case.”   CP at 143 (Finding of Fact “ee”).  “The case was not ‘desirable’ because of its age, contingent nature and the strength of the defense raised.”   CP at 143 (Finding of Fact “hh”).

In sum, the record supports the trial court's findings;  this was a hard fought case with a novel medical issue, requiring considerable legal expertise, and with an uncertain outcome.   In light of the foregoing findings, we cannot say the trial court abused its discretion in applying a 1.5 multiplier.   See Somsak, 113 Wash.App. at 98-99, 52 P.3d 43.

D. Cross-Appeal Issues

The presented issues relate to whether the trial court erred in deciding the reasonable hourly rate of $200 and excluded certain travel time.   Apart from a fleeting reference to RCW 51.52.130, Ms. Piper's argument lacks citation to any legal authorities.  RAP 10.3(a)(5).   We will not consider an assignment of error unsupported by reasoned argument and citation to legal authority.   RAP 10.3(a)(5);  Cowiche Canyon Conservancy v. Bosley, 118 Wash.2d 801, 809, 828 P.2d 549 (1992).   In any event, the trial court had a tenable basis for its decision.   The case was tried mainly in Spokane, so it is reasonable to award fees based on local market rates.   Accordingly, the trial court did not err.

Reversed and remanded for recalculation of the award.

BROWN, C.J.