COSMOPOLITAN ENGINEERING GROUP INC v. ONDEO DEGREMONT INC (2005)

PART PUBLISHED OPINION

¶ 1 Cosmopolitan Engineering Group, Inc., (Cosmopolitan) appeals the trial court's (1) refusal to award attorney fees against both Ondeo Degremont, Inc. (Ondeo) and its surety bond under RCW 18.27.040(6);  (2) denial of prejudgment interest on the jury's damages award to Cosmopolitan for its unpaid fees by Ondeo;  and (3) summary dismissal of its materialmen's lien claim.   We affirm the trial court's denial of prejudgment interest and its summary dismissal of Cosmopolitan's lien claim, but we reverse and remand for entry of judgment for attorney fees against Ondeo under RCW 18.27.040(6).

FACTS

A. Wastewater Development Plans

¶ 2 Miller Brewing Company (Miller) ¹ sought to develop its brewery plant in Tumwater, Washington, into a wastewater treatment plant and also investigated the possibility of a remote facility to reuse wastewater in Olympia, Washington.   Miller eventually cancelled both development plans.

¶ 3 Ondeo was Miller's engineering contractor for the wastewater treatment plant.   It is undisputed that in 2001, Cosmopolitan was Ondeo's subcontractor for the wastewater treatment plant and that Cosmopolitan was responsible for engineering design and local permitting.   In September 2001, Cosmopolitan contracted directly with Miller to investigate the possibility of a remote reuse wastewater facility in Olympia (also called the Briggs location).

¶ 4 Then in July 2002, Ondeo and Cosmopolitan together developed a proposal at Miller's request to explore the feasibility of a remote facility to reuse wastewater in Olympia.   Although it is undisputed that Ondeo and Cosmopolitan jointly submitted this proposal, the parties dispute the proposal's contents and whether Ondeo terminated its relationship with Cosmopolitan after this proposal.

¶ 5 In December 2002 and January 2003, Cosmopolitan attended two meetings with officials from the City of Tumwater regarding the development of the wastewater treatment plant.   Cosmopolitan later invoiced Ondeo for its professional services related to these meetings.   Ondeo disputes that Cosmopolitan had a contractual relationship with them at this time, arguing that Cosmopolitan acted solely at Miller's request.

¶ 6 On January 8, 2003, Miller publicly announced its plans to sell its brewery plant in Tumwater and cancelled all its prior development plans.   On March 28, 2003, Cosmopolitan filed a materialmen's lien under chapter 60.04 RCW against Miller's property for its unpaid services, including its 2001 work with Ondeo and its December 2002 and January 2003 meetings with the City of Tumwater.   Cosmopolitan later amended its lien claim to $100,420 for unpaid services.   Cosmopolitan's lien claim identified Ondeo as an indebted party and Miller as the property owner.

¶ 7 In July 2003, Cosmopolitan filed a complaint to foreclose on its lien.   Cosmopolitan's complaint named both Ondeo and its contractor's bond under the Contractor Registration Act (CRA), chapter 18.27 RCW.

B. Summary Judgment and Jury Trial on Contract and Equitable Theories

¶ 8 Miller and Ondeo moved for summary dismissal of Cosmopolitan's lien claim.   The trial court granted Miller's motion and dismissed the lien claim because it found that Miller had paid Cosmopolitan for the direct contract they had.   After a request for clarification, the court stated that it was dismissing the lien claim against Ondeo because Cosmopolitan untimely filed the claim on the alleged work it performed for Ondeo.

¶ 9 But the court allowed Cosmopolitan's breach of contract and its equitable claims against Ondeo to go forward, finding that the complex facts relating to their professional relationship made summary judgment inappropriate.

¶ 10 Neither party objected to the court's jury instructions directing the jury to consider Cosmopolitan's breach of contract theory and its equitable theories of promissory estoppel and unjust enrichment/quantum meruit.   The jury instructions informed the jury that Cosmopolitan's contract and equitable theories of recovery were mutually exclusive.   Although the court expressly asked the parties at the jury instruction conference if a special verdict form or interrogatory were required, Cosmopolitan proposed, and the court accepted, a general verdict form that specified only the jury's damages award but did not identify the underlying legal or equitable theory supporting a verdict for damages.

¶ 11 A jury found for Cosmopolitan and awarded the company all its claimed unpaid fees for a total of $100,420.

C. Post-trial Motions

¶ 12 Miller and Ondeo moved for attorney fees, based in part on their assertion that they defended a frivolous lien claim.   Cosmopolitan also moved for attorney fees and costs under the prevailing party fee shifting provision of RCW 18.27.040(6).   Cosmopolitan also requested prejudgment interest based on the jury's award.

¶ 13 The court awarded Miller and Ondeo attorney fees for dismissal of the lien claim, although for an amount less than the parties' requested.   The court awarded Cosmopolitan attorney fees against Ondeo's bond under RCW 18.27.040(6) for $3,000.   Although the court found Cosmopolitan's interpretation of RCW 18.27.040(6)'s fee shifting provision persuasive, it ultimately sided with Ondeo's argument that RCW 18.27.040(6) was designed to limit awards to the contractor's bond without imposing an obligation on the contractor.   The court also denied Cosmopolitan's request for prejudgment interest, ruling that given the general verdict form, it could not precisely determine how the jury determined its award.

ANALYSIS

I. RCW 18.27.040(6)

¶ 14 Cosmopolitan argues that the trial court misinterpreted RCW 18.27.040(6) by awarding attorney fees solely against Ondeo's bond, but not against Ondeo.   Cosmopolitan emphasizes that the trial court erroneously based its ruling on Subcontractors & Suppliers Collection Servs. v. McConnachie, 106 Wash.App. 738, 741, 24 P.3d 1112 (2001).   Ondeo argues on appeal that Cosmopolitan has waived this argument because of its failure to propose a special verdict form specifying a breach of contract claim. Ondeo also asserts that Cosmopolitan's interpretation of RCW 18.27.040(6), to require an attorney fees award against both a contractor and its bond, is overbroad.

¶ 15 We review the trial court's ruling de novo because statutory interpretation is a matter of law.  State v. Beaver, 148 Wash.2d 338, 344, 60 P.3d 586 (2002).  “The court's fundamental objective is to ascertain and carry out the legislature's intent, and if the statute's meaning is plain on its face, then the court must give effect to that plain meaning as an expression of legislative intent.”  State ex rel. Citizens Against Tolls v. Murphy, 151 Wash.2d 226, 242, 88 P.3d 375 (2004).   We also examine the statutory scheme.  Murphy, 151 Wash.2d at 242, 88 P.3d 375.

¶ 16 The CRA “is a comprehensive scheme governing contractors” that “defines a contractor, creates categories of exemptions, regulates business practices and requires that contractors be registered.”  Int'l Commercial Collectors, Inc. v. Carver, 99 Wash.2d 302, 304, 661 P.2d 976 (1983).  RCW 18.27.140 expressly states the CRA's purpose is to “afford protection to the public including all persons, firms, and corporations furnishing labor, materials, or equipment to a contractor from unreliable, fraudulent, financially irresponsible, or incompetent contractors.”  (Emphasis added).

 ¶ 17 “A contractor in substantial compliance with the CRA may sue in contract or under alternative theories such as quantum meruit.”  Bort v. Parker, 110 Wash.App. 561, 571, 42 P.3d 980 (2002) (relying on Murphy v. Campbell Inv. Co., 79 Wash.2d 417, 422-23, 486 P.2d 1080 (1971)) (emphasis added);  see also Williamson, Inc. v. Calibre Homes, Inc., 147 Wash.2d 394, 400, 54 P.3d 1186 (2002) (reaffirming Murphy and the application of the substantial compliance doctrine to the CRA).

¶ 18 The CRA requires all contractors to file a surety bond and obtain public liability and property damage insurance.  RCW 18.27 .040, .050.   A party may sue a contractor and its bond for breach of contract or equitable relief.  RCW 18.27.040, .080.

 ¶ 19 In 2001, the legislature added a fee shifting provision for prevailing parties that stated:

The prevailing party in an action filed under this section against the contractor and contractor's bond or deposit, for breach of contract by a party to a construction contract, is entitled to costs, interest, and reasonable attorneys' fees.   The surety upon the bond is not liable in an aggregate amount in excess of the amount named in the bond nor for any monetary penalty assessed pursuant to this chapter for an infraction.

RCW 18.27.040(6) ² (emphasis added).

 ¶ 20 Given the foregoing case law, the CRA's purpose, and RCW 18.27.040(6)'s plain language, we hold that as a matter of law a prevailing party under this provision is entitled to attorney fees against both the opposing contractor and its bond.   Thus, the trial court erred in ruling that RCW 18.27.040(6) limits a prevailing party's attorney fees, interest, and costs to the other contractor's bond only.

¶ 21 Cosmopolitan contends that interpreting RCW 18.27.040(6) to apply to both a contractor and its bond is consistent with the CRA's purpose to protect plaintiffs from negligent contractors.   We agree.   As aptly stated in Cosmopolitan's appellate brief, “The circumstances in which the bond would be sufficient to pay both the contractor's liability and the costs, interest, and attorneys' fees would be rare.   The Legislature would not have been providing meaningful relief if it limited such an award to only the amount of the contractor's bond.”   Br. of Appellant at 15 (emphasis in original).

¶ 22 Cosmopolitan also correctly states that RCW 18.27.040(6)'s express limits of recovery on the surety bond is based on the bond's inherent vicarious liability for the contractor's breach of an agreement.   See Br. of Appellant at 11 (“The contractor has the primary obligation and the surety agrees to undertake the obligation, up to the amount of its bond.”) (relying on Restatement (Third) Suretyship and Guaranty § 1, cmt. d (1996)).   Thus, RCW 18.27.040(6)'s inclusion of this legal principle should not be interpreted as the legislature's intent to deny a prevailing party attorney fees against a contractor.   Ondeo provides no meaningful response to these assertions.

¶ 23 Ondeo's arguments supporting the trial court's interpretation of RCW 18.27.040(6) are unpersuasive.   Ondeo ignores the court's acknowledgment that RCW 18.27.040(6)'s plain language supported Cosmopolitan's interpretation.   See Report of Proceedings (RP) (Apr. 30, 2004) at 14 (“I tend to agree that it [RCW 18.27.040(6) ] appears to speak both of the contractor and the contractor's bond.”).   Further, the trial court's exclusive reliance on Ondeo's interpretation of McConnachie is misplaced.  McConnachie's review of the CRA predates RCW 18.27.040(6), which the legislature added in 2001.   And McConnachie concerned the invalidity of a party's service of process under RCW 18.27.040 that did not seek recovery against a contractor's bond.  106 Wash.App. at 741, 24 P.3d 1112.   Here, Cosmopolitan sued Ondeo and its surety bond under RCW 18.27.040, and the parties do not dispute Cosmopolitan's proper service under RCW 18.27.040(3).

¶ 24 Ondeo's reference to the American Rule, which generally requires each party be responsible for their own attorney fees, fails to recognize the established principle that a special statute like RCW 18.27.040(6) controls.   See In re Impoundment of Chevrolet Truck, WA License # A00125A, 148 Wash.2d 145, 160-61, 60 P.3d 53 (2002);  see also Wilkerson v. United Inv., Inc., 62 Wash.App. 712, 716, 815 P.2d 293 (1991).

¶ 25 Finally, Ondeo contends on appeal that Cosmopolitan was required to submit a special verdict form specifying a breach of contract theory in order to prevail under RCW 18.27.040(6).   But Ondeo did not advocate this theory at trial.³  And Ondeo does not challenge the trial court's attorney fee award to Cosmopolitan against the surety bond.   Thus, we decline to review Ondeo's argument because of its inconsistency with its arguments below.   RAP 2.5;   Postema v. Postema Enter., Inc., 118 Wash.App. 185, 193, 72 P.3d 1122 (2003), review denied, 151 Wash.2d 1011, 89 P.3d 712 (2004).⁴

¶ 26 In summary, we hold that RCW 18.27.040(6)'s fee shifting provision for a prevailing party applies to both a contractor and its surety bond.   We remand for the determination of appropriate attorney fees and costs against Ondeo under RCW 18.27.040 because the trial court did not make this finding.   See, e.g., Mehlenbacher v. DeMont, 103 Wash.App. 240, 245, 11 P.3d 871 (2000) (if trial court does not make express findings of fact for attorney fees award, remand for recalculation is required).   But we emphasize that the trial court noted that the efforts of Cosmopolitan's counsel merited an increased award for attorney fees under lodestar factors.⁵  See RP at 38 (“I could have found that [Cosmopolitan's counsel] could have collected attorneys' fees under the principles in Absher to actually increase her fees by as much as 30 percent based upon the skill with which she prosecuted the case and the result she achieved.   I'm saying this on the record and I don't mind being held to that.”).

¶ 27 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 shall be filed for public record pursuant to RCW 2.06.040, it is so ordered.

II. Prejudgment Interest

¶ 28 Cosmopolitan argues that the trial court erred in denying its request for prejudgment interest because the invoices for their unpaid fees equal the amount of the jury's award.   Ondeo responds that because the jury instructions expressly allowed the jury to determine the award based on mutually exclusive theories of breach of contract and unjust enrichment, the trial court could not find prejudgment interest without exercising its discretion.

¶ 29 We review a trial court's denial of prejudgment interest for an abuse of discretion.  Egerer v. CSR West, LLC, 116 Wash.App. 645, 652, 67 P.3d 1128 (2003).   A trial court generally allows for prejudgment interest when the amount is liquidated.   A claim is liquidated where “ ‘the evidence furnishes data which, if believed, makes it possible to compute the amount with exactness, without reliance on opinion or discretion.’ ”  Egerer, 116 Wash.App. at 653, 67 P.3d 1128 (quoting Prier v. Refrigeration Eng'g Co., 74 Wash.2d 25, 32, 442 P.2d 621 (1968)) (additional citation omitted).   In contrast, an unliquidated claim does not merit prejudgment interest because the sum's precise amount “must in the last analysis depend upon the opinion or discretion of the judge or jury.”  Egerer, 116 Wash.App. at 653, 67 P.3d 1128 (quoting Prier, 74 Wash.2d at 33, 442 P.2d 621) (additional citation omitted) (emphasis added).

¶ 30 Prejudgment interest should not be awarded in a judgment based on quantum meruit.  Modern Builders, Inc. of Tacoma v. Manke, 27 Wash.App. 86, 96-97, 615 P.2d 1332 (1980).   Further, “[t]he nature of the claim, not its characterization as sounding in contract or negligence, decides the issue.”   Hansen v. Rothaus, 107 Wash.2d 468, 472, 730 P.2d 662 (1986) (emphasis added).

¶ 31 Here, the trial court acknowledged the similarity of Cosmopolitan's recovery of unpaid fees to its invoices to Ondeo;  however, the trial court stated that although:

the actual verdict appeared to be coinciding with what the billing or contracted amounts were down to even the penny, the 27 cents or whatever it was, doesn't necessarily mean that the jury found that the basis was contract and not quantum meruit or unjust enrichment since they were instructed they could use either one of those [theories] and we didn't send interrogatories to them.

RP at 17.

¶ 32 Indeed, it is undisputed that the court's jury instructions gave the jury broad discretion to determine a damages award based on different theories of recovery.   See, e.g., Clerk's Papers (CP) at 865 (requiring the jury to base a damages award under Cosmopolitan's breach of contract theory by finding “losses that were reasonably foreseeable at the time the contract was made”);  CP at 871 (requiring the jury to base a damages award under Cosmopolitan's quantum meriut theory by finding “the reasonable value” of Cosmopolitan's services to Ondeo and that they are not bound by the alleged contract price).

¶ 33 Thus, the jury was allowed to use its discretion to determine a damages award and the trial court correctly determined that it could not speculate about how the jury reached its award under the general verdict form.   Cosmopolitan's arguments ignore the importance of these facts.   The trial court did not abuse its discretion in denying Cosmopolitan's request for prejudgment interest.

III. Summary Dismissal of Lien Claim

¶ 34 Cosmopolitan argues that the trial court erred in granting Ondeo's summary judgment motion regarding its lien claim under chapter 60.04 RCW based on timeliness.   Cosmopolitan requests that we award attorney fees, interest, and costs to them as a prevailing party under chapter 60.04 RCW.

¶ 35 But this issue is moot because Cosmopolitan's damage award was the same amount as that sought under the lien claim for unpaid fees and Ondeo has paid the judgment.   Cosmopolitan does not challenge the trial court's summary dismissal of Miller under both the CRA and the lien statute.   Furthermore, Cosmopolitan's request that we vacate the award of Ondeo's attorney fees based on its defense of the lien claim is unreviewable under these facts.   Thus, we do not review this issue.

IV. Attorney Fees on Appeal

¶ 36 Cosmopolitan seeks attorney fees on appeal under RAP 18.1 and 14.3.   We decline Cosmopolitan's request because it fails to meaningfully discuss legal authority or cite to the record in support of its request.   RAP 10.3;  RAP 18.1(b);  Austin v. U.S. Bank of Wash., 73 Wash.App. 293, 313, 869 P.2d 404 (1994).   Further, Cosmopolitan has not substantively prevailed under chapter 60.04 RCW. Regarding RCW 18.27.040(6), the statute does not expressly allow for attorney fees on appeal and such an award would be premature here because the trial court will determine attorney fees on remand.

¶ 37 We affirm the trial court's denial of prejudgment interest and its summary dismissal of Ondeo on the lien claim but we reverse and remand for the trial court to determine and award Cosmopolitan its attorney fees against Ondeo under RCW 18.27.040(6).

FOOTNOTES

1.   The parties' stipulated by motion to dismiss Miller from this appeal.   The motion was granted by a commissioner of this court and Miller is no longer a party to this appeal.

2.   Laws of 2001, ch. 159 § 3.

3.   We note that Ondeo's cursory mention of this argument in one footnote of a trial brief is unpersuasive given the entire record.   Further, RAP 10.3(a) and (b) preclude our review because Ondeo's appellate brief fails to cite this footnote.

4.   The CRA allows a contractor to substantially comply with its standing provision to sue under the statute for both breach of contract and equitable relief.  RCW 18.27.080;  Bort v. Parker, 110 Wash.App. at 569, 572, 42 P.3d 980 (2002).   Consequently, we note without holding that Ondeo's interpretation of RCW 18.27.040(6) to provide attorney fees only when a plaintiff specifically asserts a breach of contract claim appears unduly narrow and inconsistent with the CRA's purpose and intent.   See also Williamson v. Calibre Homes, Inc., 147 Wash.2d 394, 401, 54 P.3d 1186 (2002) (emphasizing that “[t]he substantial compliance doctrine is rooted in the judiciary's longstanding effort to give legislative commands a rational interpretation founded upon their design.”).   Compare RCW 18.27.080 (CRA cause of action is “for the collection of compensation for the performance of any work or for breach of any contract”) with RCW 18.27.040(3) (action against surety bond for “any of the items referred to in this chapter” including breach of contract and also “claimed labor [ ] performed and benefits accrued ․ or the claimed contract work was substantially completed or abandoned.”) (emphasis added).

5.   We do not overlook Ondeo's contention that Cosmopolitan failed to segregate fees.   But Cosmopolitan provided a detailed motion that segregated its fees charged to Miller from those charged to Ondeo.   Further, contrary to Ondeo's selective quotation of Hume v. Am. Disposal Co., 124 Wash.2d 656, 672, 880 P.2d 988 (1994), a party must attempt to segregate fees;  however, a trial court can exercise its discretion, examine the record, and find a segregation of fees impractical or unreasonable.  Loeffelholz v. Citizens for Leaders with Ethics & Accountability Now, 119 Wash.App. 665, 690-91, 693, 82 P.3d 1199, review denied, 152 Wash.2d 1023, 101 P.3d 107 (2004) (citing Hume ).

VAN DEREN, J.