BISHOP v. JEFFERSON TITLE COMPANY INC., 107 Wn. App. 833 (2001)
28 P.3d 802
JAMES BISHOP, et al., Appellants v. JEFFERSON TITLE COMPANY, INC.,
Respondents.
No. 25202-3-II.
The Court of Appeals of Washington, Division Two.
Filed: August 10, 2001.
Page 834
Nature of Action: Action for damages against a title company for
legal malpractice and violation of the Consumer Protection Act. The
plaintiffs were involved in a real
Page 835
estate transaction. A limited practice officer employed by the defendant
prepared the forms and served as closing officer for the transaction.
Superior Court: The Superior Court for Jefferson County, No.
98-2-00179-7, William E. Howard, J., on October 9, 1999, entered a
summary judgment in favor of the defendant.
Court of Appeals: Holding that the plaintiffs' legal malpractice and
Consumer Protection Act claims were actionable against the defendant
and that there remained unresolved issues of material fact as to the
issues of liability and damages, the court reverses the judgment and
remands the case for further proceedings.
Lane J. Wolfley (of Wolfley Basden Hansen), for appellants.
Alan B. Hughes (of Alan B. Hughes, P.S.), for respondent.
Paul Hieb, pro se.
Kenneth W. Masters on behalf of Washington State Bar Association, amicus
curiae.
HUNT, J.
James and Melody Bishop appeal dismissal of their legal malpractice
action against Jefferson Title Company. The Bishops claimed that
Jefferson Title's Limited Practice Officer committed malpractice when she
erroneously completed unauthorized form documents for two real estate
transactions to which they were parties. The Bishops also appeal an
attorney fee award to Jefferson Title and ask that we grant summary
judgment in their favor. Holding that summary judgment and the attorney
fee award to Jefferson Title were error, we reverse and remand for trial.
Page 836
FACTS
I. LAND TRANSFERS
A. DECHANTAL'S PURCHASE OF 48 ACRES (10 LOTS) AND
ENCUMBRANCE OF 42 ACRES
Alain & Judith DeChantal (DeChantal) were real estate developers in
Jefferson County. In 1990, DeChantal purchased 48 acres of land,
comprising ten parcels, financed with a $205,000 development loan from
Pacific Coast Investment Company. The loan was secured by a deed of trust
for 42 acres of land, which was recorded April 30, 1990, under Jefferson
County Auditor's file no. 330300.
B. DECHANTAL'S SALE TO BISHOP
James Bishop was a contractor who had worked exclusively for
DeChantal's developments for many years. In 1991, DeChantal sold two
parcels, together with non-exclusive easements,[fn1] to James and Melody
Bishop (Bishop). Bishop recorded the statutory warranty deed from
DeChantal, which contained the following reservation:
Subject to: Deed of Trust recorded April 30, 1990 under
auditor's file no. 330300 in favor of Pacific Coast
Investment Company which the grantor herein agrees
to continue to pay according to its terms, and to
pay in full not later than the date on which the grantee's
indebtedness to the grantor secured by the above-described
real estate is fully paid and satisfied.
Clerk's Papers at 119. DeChantal apparently advanced $19,200 in credit to
Bishop for the purchase.
As part of the transaction, Bishop recorded a deed of trust for both
parcels in favor of DeChantal, securing repayment
Page 837
of this debt.[fn2] DeChantal and Bishop also signed Exhibit "B"[fn3] to
the deed of trust ("Exhibit B"). "Exhibit B" provided further information
concerning DeChantal's 1990 deed of trust to Pacific Coast Investment and
Bishop's 1991 deed of trust to DeChantal. "Exhibit B" stated: "[The]
[b]eneficiary hereby agrees with the Grantor to discharge the First Note
to the Holder thereof . . . and to hold Grantor harmless from any
liability in connection therewith." "Exhibit B" designated DeChantal as
the beneficiary, Bishop as the grantor, and Pacific Coast as the first
note holder.
Vicky Lockhart, the Limited Practice Officer (LPO) for escrow agent
Jefferson Title, served as closing officer for DeChantal's land sale to
Bishop. DeChantal transferred additional property in the development to
Bishop by a quit claim deed.[fn4]
C. BISHOP'S SALE TO HIEB
In 1994, Bishop sold Paul Hieb six parcels of property along with
appurtenant easements.[fn5] In an addendum to their purchase and sale
agreement, Bishop and Hieb provided:
The deed of trust shall be an "all-inclusive" deed
of trust, second to an underlying encumbrance with
Pacific Coast Investment Company.
Page 838
Clerk's Papers at 208. The escrow instructions stated:
[T]he undersigned have examined and hereby approve
for use in this escrow the following documents as
to content and form: Statutory Warranty Deed, Excise
Tax Affidavit, Promissory Note and Deed of Trust.
Clerk's Papers at 209.
The 1994 Bishop-to-Hieb statutory warranty deed stated that it was
"subject to" the 1990 DeChantal-to-Pacific Coast deed of trust.
Critically, the deed stated that the "grantor herein" must "pay in full"
the 1990 deed of trust between DeChantal and Pacific Coast:
SUBJECT TO: DEED OF TRUST RECORDED APRIL 20 [sic],
1990 UNDER AUDITOR'S FILE No. 330300 AND ASSIGNMENTS
THERETO WHICH THE GRANTOR HEREIN SHALL PAY ACCORDING
TO ITS TERMS; AND PAY IN FULL NOT LATER THAN THE DATE
ON WHICH THE GRANTEE'S INDEBTEDNESS TO THE GRANTOR
SECURED BY THE ABOVE-DESCRIBED REAL ESTATE IS FULLY
PAID AND SATISFIED.
Clerk's Papers at 178. But Bishop, not DeChantal, was the grantor in the
1994 deed.
Hieb executed a deed of trust in favor of Bishop, securing payment of
$65,712.50 that Hieb owed Bishop for the land. But "Exhibit B" to this
deed of trust, "attached hereto and made a part" of the deed, utilized
the same language, terminology, and party designations from "Exhibit
B" to the 1991 DeChantal-Bishop deed of trust. The 1994 "Exhibit
B" mentions both the 1994 deed of trust securing Hieb's $65,712.50 debt
to Bishop and the 1990 deed of trust securing DeChantal's $205,000 debt
to Pacific Coast (the "First Note"); it does not mention the 1991 deed of
trust securing Bishop's $19,200 debt to DeChantal.
Bishop, Hieb, and DeChantal signed Exhibit B to the 1994 Hieb-Bishop
deed of trust. Exhibit B required the beneficiary to pay the underlying
first note:
Beneficiary hereby agrees with Grantor to discharge
the First Note to the Holder thereof in accordance
with the terms and
Page 839
conditions therein and to hold Grantor harmless from any
liability in connection therewith.
Clerk's Papers at 193. But the 1994 Exhibit B does not identify the
grantor or the beneficiary.[fn6] The 1994 deed of trust grantor is Paul
Hieb, and Bishop is the beneficiary. Again, Vicky Lockhart, the LPO for
Jefferson Title, served as closing officer for the Bishop-Hieb
transaction.
D. HIEB PAYS BOTH HIS DEBT TO BISHOP AND DECHANTAL'S DEBT TO
PACIFIC/OLYMPIC COAST
DeChantal defaulted on his debt to Pacific Coast's
successor-in-interest, Olympic Coast Investment, and declared
bankruptcy. In 1997, Olympic Coast commenced a trustee's sale of seven
lots in DeChantal's development, including the two lots that DeChantal
had sold to Bishop and that Bishop, in turn, had sold to Hieb —
Parcels II and VI, as well as Parcels VII and VIII (two of the three
parcels originally quit-claimed from DeChantal to Bishop).[fn7] Hieb had
paid off his obligation to Bishop for his parcels. Hieb also paid $54,000
of DeChantal's debt to Olympic Coast in order to obtain a partial release
from the underlying deed of trust and to unencumber his parcels.
II. LAWSUITS
In May 1998, Hieb sued Bishop to recover the $54,000 he had paid on
DeChantal's behalf, plus costs and attorney fees. Jefferson Title was
joined as a third party defendant. The trial court severed the Hieb v.
Bishop trial from the Bishop v. Jefferson Title Company trial.
Page 840
A. HIEB V. BISHOP
In April 1999, following a trial on Hieb's claims against Bishop, the
court entered Findings of Fact and Conclusions of Law. The trial court
awarded Hieb $61,147.50 plus $6,969 in attorney fees, for a total
judgment against Bishop of $67,116.50. Although this action is not part
of the instant appeal, it provides the basis for the financial harm that
Bishop suffered as a result of Jefferson Title's alleged negligence.
B. BISHOP V. JEFFERSON TITLE
Both Bishop and Jefferson Title moved for summary judgment. The
trial court granted Jefferson Title's motion and denied Bishop's,
ruling:
The several declarations filed by the two parties are,
basically, declarations of individuals who would qualify
as expert witness at trial. While these declarants
reach differing conclusions, they do not create issues
of material fact. The basic facts are not in dispute.
. . . .
After review of all the declarations submitted by both
parties, Admission to Practice Rule 12 (Limited
Practice Rule For Closing Officers), and the memoranda
of counsel, it is this court's conclusion that as a
matter of law there was neither a violation of the
Consumer Protection Act nor legal malpractice on the
part of Third Party Defendant Jefferson Title.
Clerk's Papers at 589-90. The trial court dismissed with prejudice all
third-party claims against Jefferson Title and awarded it $26,876.55 in
expenses, attorney fees and costs, "pursuant to written agreement."
ANALYSIS
I. SUMMARY JUDGMENT — STANDARD OF REVIEW
On a motion for summary judgment, the trial court must view all evidence
and draw all reasonable inferences in
Page 841
favor of the nonmoving part; then it must deny the motion if the evidence
and inferences create any question of material fact. Scott v. Pac. West
Mountain Resort, 119 Wn.2d 484, 487, 834 P.2d 6 (1992). On appeal, we
engage in the same inquiry as the trial court. DeYoung v. Providence Med.
Ctr., 136 Wn.2d 136, 140, 960 P.2d 919 (1998); Benjamin v. Washington
State Bar Ass'n, 138 Wn.2d 506, 515, 980 P.2d 742 (1999). Summary
judgment is appropriate if there is no genuine issue of material fact and
the moving party is entitled to judgment as a matter of law. Kruse v. Hemp,
121 Wn.2d 715, 722, 853 P.2d 1373 (1993); CR 56(c). Applying this
standard, we hold that the trial court erred in granting summary judgment
to Jefferson Title on Bishop's malpractice and consumer protection claims.
II. LIMITED PRACTICE OF LAW — APR 12
Admission to Practice Rule (APR) 12 creates an exception to the general
rule that only licensed attorneys may practice law in the state of
Washington.[fn8] The rule authorizes "certain lay persons to select,
prepare and complete legal documents incident to the closing of real
estate and personal property transactions." To become certified to engage
in this limited practice of law such lay persons must first pass an
examination. APR 12 (b)(2)(ii).[fn9]
APR 12(d) governs the scope of practice for non-lawyers authorized to
provide limited legal services in closing real estate transactions:
Page 842
Scope of Practice Authorized by Limited Practice Rule:
Notwithstanding any provision of any other rule to
the contrary, a person certified as a closing officer
under this rule may select, prepare and complete documents
in a form previously approved by the Board for use
in closing a loan, extension of credit, sale or other
transfer of real or personal property. Such documents
shall be limited to deed, promissory notes, guaranties,
deeds of trust, reconveyances, mortgages, satisfactions,
security agreements, releases, Uniform Commercial
Code documents, assignments, contracts, real estate
excise tax affidavits, and bills of sale. Other documents
may be from time to time approved by the Board.
(Emphasis added.) Consistent with this provision, APR 12(b)(2)(vii)
provides that the Limited Practice Board "shall approve standard forms for
use by closing officers in the performance of services authorized by this
rule."
APR 12(e) prescribes the circumstances under which certified closing
officers may prepare and complete these Board-approved documents:
Certified closing officers may render services
authorized by this rule only under the following
conditions and with the following limitations:
(1) Agreement of the Parties. Prior to the
performance of the services, all parties to the
transaction shall have agreed in writing to the basic
terms and conditions of the transaction.
(2) Disclosure to the Parties. The closing officer
shall advise the parties of the limitations of the
services rendered pursuant to this rule and shall
further advise them in writing:
(i) that the closing officer is not acting as the
advocate or representative of either of the parties;
(ii) that the documents> <prepared> by the closing officer
will affect the legal rights of the parties;
(iii) that the parties' interest in the documents
may differ;
(iv) that the parties have a right to be represented by
lawyers of their own selection; and
(v) that the closing officer cannot give legal
advice as to the manner in which the documents affect
the parties.
Page 843
(Emphasis added.) Here, it is undisputed that the LPO advised the parties
in writing about the items prescribed in APR 12(e)(2) (i) through (v).
There is substantial factual dispute, however, about whether the LPO
also advised the parties of the `limitations of the services rendered'
and a legal dispute about the extent of her duty to do so. APR 12(e)(2).
A. STANDARD OF CARE[fn10]
Jefferson Title concedes that its LPOs practice "law by selecting and
preparing approved real estate documents" under APR 12. But it contends
that here its LPO merely inserted "lawyer drafted clauses into lawyer
drafted real estate forms" and, thus, was not engaged in the <unauthorized>
<practice> <of> <law>. Jefferson Title further argues that: (1) because it
served as escrow agent, it owed no duty to provide legal advice to
Bishop; and (2) because it provided Bishop with the standard notice that
the documents affected legal rights and he had a right to be represented
by a lawyer, Jefferson Title did not engage in the <unauthorized> <practice>
<of> <law>. We disagree.
1. LIMITED PRACTICE UNDER APR 12
Jefferson Title's LPO partially complied with APR 12 when she selected
and prepared some standard documents for closing real estate
transactions. But beyond that, she did not comply. First, she did not
confine her selection of documents to those the Board had approved.
Second, she did not advise the parties of the limitations of her
practice. Third, when she exceeded the authorized scope of limited
practice, she was required to meet the same standard of care as a licensed
attorney. Bishop has provided substantial evidence to show she did not
meet such standard of care, and that evidence is sufficient to preclude
summary judgment for Jefferson Title.
Page 844
a. Use of Unauthorized Forms
Jefferson Title's LPO used "Exhibit B," the so-called "wrap-around"
document, in both contested transactions. But Exhibit B was not a form
previously approved by the Board.[fn11] The preparation of "Exhibit B" by
Jefferson Title's attorney does not satisfy this strict requirement of APR
12(d) and (b)(2)(vii). The suitability of `Exhibit B' and its comparison
with the forms authorized by the Limited Practice Board raise a significant
issue of material fact to be resolved at trial.
b. Failure to Advise of Limitations
Jefferson Title contends that: (1) because its LPO complied with APR
12(e)(2)(i) — (v), it fulfilled its duty to the real estate
transaction parties, including Bishop; and (2) thereafter, it was
incumbent on Bishop to seek independent legal counsel if he so chose. But
this argument ignores the conjunctive "and" that precedes the five-part
written disclosure requirement of APR 12(e)(2)(i) — (v).
In addition to such five-part written disclosure, the LPO must advise
the parties about the limitations of the services rendered under the
limited practice rule. APR 12(e)(2). The record here reveals no
additional advice about the LPO's limitations beyond the five enumerated
in APR 12(e)(2)(i) — (v). Thus, on the record before us, it appears
that Jefferson Title failed to fulfill this duty prescribed as a
condition of the limited practice of law under the rule. Its LPO exceeded
the scope of APR 12 limited practice.
Page 845
2. BEYOND THE SCOPE OF APR 12 LIMITED PRACTICE
In closing Bishop's real estate transactions, Jefferson Title's
LPO engaged in the practice of law by using Exhibit B and filling
in blanks. The Supreme Court has held that a mortgage company
engaged in the practice of law by selecting and
completing the various documents necessary to process
[a] residential home loan. This cannot be seriously
disputed. The practice of law includes the selection
and completion of legal instruments by which legal
rights and obligations are established. It is
established that the selection and preparation of
promissory notes and deeds of trust is the practice of
law.
Perkins v. CTX Mortgage Co., 137 Wn.2d 93, 97, 969 P.2d 93 (1999)
(citations omitted). The court further held that "in order to fully
safeguard the public interest," lenders must comply with the standard of
care of a practicing attorney when preparing legal documents that are
ordinarily incident to lenders' financing activities. Perkins, 137 Wn.2d
at 106. Thus, Jefferson Title is held to the same standard of care as a
practicing attorney. Perkins, 137 Wn.2d at 93; Cultum v. Heritage House
Realtors, Inc., 103 Wn.2d 623, 694 P.2d 630 (1985); Bowers v.
Transamerica Title Ins. Co., 100 Wn.2d 581, 675 P.2d 193 (1983).
Perkins distinguished the practice of law from lay people entering
"objective data," which is "unlikely to result in the uncertain legal
rights with which this court has been concerned." Perkins, 137 Wn.2d at
106. But here, unlike the mortgage company in Perkins, Jefferson Title's
LPO did more than enter objective data into standard, approved, form
documents. Rather, she used unapproved documents that she did not
understand, and she used designations and inserted language into
documents that significantly affected the parties' obligations, without
knowing or understanding the legal impact of the modified deed or attached
Page 846
Exhibit B,[fn12] contrary to APR 12 (g). Thus, she engaged in the
<unauthorized> <practice> <of> <law>.[fn13]
B. BREACH OF DUTY
Jefferson Title's LPO failed to advise Bishop that she was using a
closing document modified from the approved form allowed under APR 12 and
failed to advise the parties of the limitations of such practice,
contrary to APR 12(e)(2).[fn14] APR 12(d) limits the LPO to "documents in
a
Page 847
form previously approved by the Board for use in closing a loan,
extension of credit, sale or other transfer of real or personal
property." (Emphasis added.)
An LPO engages in the <unauthorized> <practice> <of> <law> and exceeds the
grant of authority under APR 12(d) if she uses documents not approved
by the Limited Practice Board. Here, the LPO failed in her duty to
"advise the parties of the limitations of the services rendered pursuant
to this rule." APR 12(e)(2). Thus, Bishop has made out a prima facie
case of malpractice.[fn15]
Our review of the record shows that Bishop raised significant issues of
material fact concerning Jefferson Title's actions sufficient to defeat a
motion for summary judgment. Specifically, "Exhibit B" improperly
subjected Bishop's successors to others" debts, which in turn resulted in
monetary damages to Bishop.[fn16] Thus, grant of summary judgment to
Jefferson was reversible error.
Page 848
III. OTHER CLAIMS
A. BISHOP'S MOTION FOR SUMMARY JUDGMENT ON LIABILITY
Bishop also asks us to "direct judgment for [him] on both issues of
liability and remand the case to the Superior Court for jury trial on the
issue of damages." Bishop has established a prima facie case of APR 12
malpractice and has alleged sufficient facts to take his case to the jury
on the issues of damages and causation.
Liability for legal malpractice requires proof of four
elements: (1) the existence of an attorney-client
relationship giving rise to a duty of care on the part
of the lawyer; (2) an act or omission breaching that
duty; (3) damage to the client; and (4) the breach of
duty must have been a proximate cause of the damages
to the client. Hizey v. Carpenter, 119 Wn.2d 251,
260-61, 830 P.2d 646 (1992).
Nielson v. Eisenhower & Carlson, 100 Wn. App. 584, 589, 999 P.2d 42
(2000). "The measure of damages for legal malpractice is the amount of
loss actually sustained as a proximate result of the attorney's conduct."
Matson v. Weidenkopf, 101 Wn. App. 472, 484, 3 P.3d 805 (2000) citing
Tilly v. Doe, 49 Wn. App. 727, 732, 746 P.2d 323 (1987).
Viewing the evidence and inferences in the light most favorable to
Jefferson Title, as we must on Bishop's motion for summary judgment, we
cannot say on the record before us that Bishop is entitled, as a matter
of law, to judgment on the issue of liability. Taking the evidence in the
light most favorable to Jefferson Title, the nonmoving party, there remain
questions of material fact concerning whether Jefferson Title's malpractice
was the proximate cause of the damage to Bishop. It is still reasonably
possible, for example, that Jefferson Title may prove at trial that Bishop
is partly responsible for his damages because he failed to consult
independent legal counsel and because he failed to protect himself
against DeChantal's financial irresponsibility.
Moreover, the record is not clear how Bishop would have
Page 849
acted had Jefferson Title not been engaged in malpractice or the
<unauthorized> <practice> <of> <law>. The record does show that Bishop was
deceived by DeChantal who, for example, sent Bishop a document labeled
"reconveyance," which lulled Bishop into believing that he had the final
paperwork for the property and clear title. The record also shows that
Bishop did not understand the nature of the document he signed in
connection with the 1994 Hieb Transaction:
Q. You knew at the time that you signed Exhibit 12 and
the other document concerning the `94 transaction
that if DeChantal didn't fulfill his commitments to
the underlying lender, Pacific Coast, that there
could be problems, correct?
A. No.
Q. You didn't understand that?
A. No, I didn't understand that. I didn't understand
that I would be taking on a $205,000 debt for a
$65,000 piece of property.
Clerk's Papers at 452, Bishop Deposition page 63.
In drafting the documents, DeChantal's deception was compounded when
Jefferson Title's LPO negligently drafted the property transfer documents
between Bishop and Hieb. But this negligence does not make Jefferson
Title automatically and solely liable as a matter of law for Bishop's
damages; DeChantal may also be liable. Thus, we hold that the trial
properly denied Bishop's motion for summary judgment.
B. CONSUMER PROTECTION ACT
Bishop also contends the trial court erred in granting summary judgment
to Jefferson Title on his claim for damages under Chapter 19.86 RCW, the
Consumer Protection Act (CPA). To sustain an action under the CPA, the
plaintiff must show that the defendant's conduct (1) was "unfair or
deceptive" (2) was "in the conduct of trade or
Page 850
commerce;" (3) impacted "the public interest;"[fn17] (4) injured "the
plaintiff in his or her business or property;" and (5) was causally
linked to the "injury suffered."[fn18] "[T]he question of whether
particular actions gave rise to a violation of the Consumer Protection
Act is reviewable as a question of law." Svendsen v. Stock, 143 Wn.2d 546,
553, 23 P.3d 455, 459 (2001), citing Keyes v. Bollinger, 31 Wn. App. 286,
289, 640 P.2d 1077 (1982).
In Bowers, 100 Wn.2d at 581, the court ruled that (1) the escrow
company, Transamerica, negligently engaged in the practice of law; (2)
such actions were unfair and deceptive under the CPA; (3) Transamerica
was engaged in trade or commerce; and (4) Transamerica's <unauthorized>
<practice> <of> <law> impacted the public interest. Similarly, Bishop's claims
meet the CPA criteria. Bishop has alleged sufficient facts to support his
claim that Jefferson Title's unauthorized and negligent practice of law
caused him financial harm by unfairly causing him, in essence, to pay for
the same land twice. Bishop first paid DeChantal for his original land
purchase, but DeChantal pocketed the money rather than applying it to pay
off the encumbrance on the land. Bishop also assigned a $36,000 note to
DeChantal in
Page 851
exchange for the property that Bishop eventually sold to Hieb.
When Bishop sold the land to Heib, the parties did not realize that the
LPO-prepared documents, namely Exhibit B, subjected Bishop to paying
DeChantal's underlying deed of trust. The LPO allegedly misled both
Bishop and Hieb by creating an appearance of competent use of appropriate
legal forms, without advising them of the limitations of her practice or
that the forms were not approved for use by a LPO. By serving as escrow
agent, Jefferson Title was engaged in trade or commerce; such
<unauthorized> <practice> <of> <law> by its LPO impacted not only the parties to
the transactions at issue here, but also those members of the public
similarly situated. Ultimately, Hieb paid part of DeChantal's debt in
order to unencumber his land, and Bishop paid the $67,116.50 judgment to
reimburse Hieb. In essence, Bishop paid for the same land twice. Bishop's
CPA claim should go to trial. Accordingly, we hold that the trial court
erred in granting summary judgment to Jefferson Title on Bishop's CPA
claim.
IV. ATTORNEY FEES
A. JEFFERSON TITLE
The trial court awarded Jefferson Title $26,876.55 in attorney fees
"pursuant to written agreement," found in paragraph 9 of the escrow
instructions:
Should any disputes arise between parties interested
in property or funds covered by these instructions,
you shall have the option to hold all matters pending
in their then existing status or to join in or commence
a court action, deposit the money and documents referred
to herein into the Registry of the Court or upon holding
this escrow open for determination of the rights of
the parties, you will be relieved of all responsibility.
It is further agreed that in the event of any suit
or claim made against you by either or both parties
to this agreement, that said party shall be required
to pay you all expenses, costs and
Page 852
reasonable attorneys' fees in connection therewith,
whether suit is instituted by you or any of the
parties hereto.
Clerk's Papers at 210 (emphasis added). Jefferson Title contends that
this provision supports the trial court's award of attorney fees simply
because Bishop instigated the litigation. We disagree.
Contract language is a matter of law, which we review de novo. Caroff
v. Farmers Ins. Co. of Wash., 98 Wn. App. 565, 568, 989 P.2d 1233
(1999); Litho Color, Inc. v. Pac. Employers Ins. Co., 98 Wn. App. 286,
295, 991 P.2d 638 (1999). Here, paragraph nine cannot be reasonably
interpreted to impose Jefferson Title's attorney fees on Bishop when
Bishop sues Jefferson Title for malpractice and prevails.
We find instructive Eifler v. Shurgard Capital Mgmt. Corp.,
71 Wn. App. 684, 861 P.2d 1071 (1993), in which the court interpreted
similar language: The "[t]enant agrees to pay all costs and expenses,
including attorneys fees and reasonable service fees, of Landlord in
enforcing the terms of this lease." Eifler, 71 Wn. App. at 698. The court
ruled,
This language might entitle Shurgard to costs and
reasonable attorney fees if it were suing Eifler to
enforce the lease. However, it does not entitle
Shurgard to costs and attorney fees where Eifler is
suing Shurgard to enforce his rights under the common
law and the CPA.
Eifler, 71 Wn. App. at 698 (footnote omitted).
Similarly here, paragraph 9 of the escrow instructions might entitle
Jefferson Title to "expenses, costs and reasonable attorneys' fees" if
Bishop were suing to enforce the escrow instructions concerning the
property or funds covered by the real estate transaction. But, as in
Eifler, Bishop sued Jefferson Title to enforce "rights under the common law
and the CPA." Eifler, 71 Wn. App. at 698.
Paragraph 9 does not support the trial court's award of attorney fees to
Jefferson Title or Jefferson Title's request for attorney fees and expenses
on appeal under RAP 18.1. Accordingly, we reverse the trial court's award
of attorney
Page 853
fees to Jefferson Title below; and we deny attorney fees to Jefferson
Title on appeal.
B. BISHOP
Bishop requests attorney fees on appeal under the Consumer Protection
Act, RCW 19.86.090. Bowers discussed the proper calculation of CPA
attorney fees, but a majority did not agree on the applicable method. The
Bowers court provided the following direction to the trial court on
remand:
Our resolution of this issue requires that the trial
court reconsider the matter of attorney fees to calculate
a lodestar figure which does not include time for
duplicated work or other unproductive time. The lodestar
thus obtained may be adjusted to reflect the contingent
nature of the litigation. No adjustment should be
made for the quality of work.
Bowers, 100 Wn.2d at 601. Similarly here, if Bishop prevails on his CPA
claim after trial on remand, then the trial court should calculate attorney
fees owing to Bishop both at trial and for this appeal.
V. MOTION TO STRIKE WOLFLEY'S AFFIDAVIT
Jefferson Title moved to strike the affidavit of Lane J. Wolfley, who
serves as Bishop's counsel. The trial court did not mention the motion to
strike in its Findings of Fact and Conclusions of Law. Although Jefferson
Title did not cross appeal the trial court's failure to rule on its motion,
Jefferson Title now ask us to strike the affidavit on appeal. A party may
include in an appellate brief "only a motion which, if granted, would
preclude hearing the case on the merits." RAP 17.4(d). Jefferson Title's
motion does not meet this requirement. Even were we to grant the motion
and strike the Wolfley affidavit, Jefferson Title does not show how such
action would preclude the trial court from hearing this case on the merits.
Therefore, we deny the motion to strike.
Page 854
CONCLUSION
We affirm the trial court's denial of Bishop's motion for summary
judgment on the issue of liability. We reverse summary judgment for
Jefferson Title on Bishop's claims of malpractice and CPA violations, and
we remand for trial on the issues of liability and damages.
We reverse the trial court's award of attorney fees to Jefferson Title
below and deny Jefferson Title attorney fees on appeal. The trial court
may award trial and appellate attorney fees to Bishop under the Consumer
Protection Act, RCW 19.86.090, if Bishop ultimately prevails on his CPA
claim.
ARMSTRONG, C.J., and QUINN-BRINTNALL, J., concur.
Review denied at 145 Wn.2d 1025 (2002).
[fn1] The 1991 statutory warranty deed from DeChantal conveyed two
parcels, Parcels II and VI, to Bishop. (Roman Numerals used herein since
parcels have different or duplicative designations in different
transactions.) These parcels were designated as parcels "A" and "B" in
exhibit "A" to the warranty deed.
[fn2] The deed of trust in the record does not contain the full legal
description of the properties involved in the Bishop-to-DeChantal deed of
trust. Throughout the record there is a missing page in the
Bishop-to-DeChantal deed of trust, which should describe Parcel B (parcel
VI), along with the appurtenant easement parcels. The legal descriptions
in the Bishop-to-DeChantal transaction do not match up with the property
descriptions in the DeChantal-to Bishop transaction.
[fn3] "Exhibit B" was prefaced with the writing "TO FURTHER PROTECT THE
SECURITY HEREOF, Beneficiary and Grantor agree as follows[.]"
[fn4] Bishop testified that he exchanged a $36,000 note for a quit
claim deed to 20 acres of property within DeChantal's development.
[fn5] The 1994 statutory warranty deed from Bishop to Hieb apparently
involved six parcels, Parcels II and VI (designated in the deed as
parcels "D" and "E" respectively), as well as Parcels III, VII and VIII
(designated in the deed as parcels "A," "C" and "B" respectively).
Bishop's brief mentions "6 lots totaling 15 acres." Based on the record,
five parcels (Parcels II, III, VI, VII, VIII) appear to comprise 27.36
acres.
[fn6] The 1994 Exhibit B also refers to the "beneficiary's" first note
on the deed of trust to Pacific Coast.
[fn7] The foreclosure also included two parcels not involved in this
case, parcels IV and V; it did not include parcel III, a five-acre
parcel that Bishop deeded to Hieb in 1994.
[fn8] A lawyer shall not: "[a]ssist a person who is not a member of the
Bar in the performance of activity that constitutes the <unauthorized>
<practice> <of> <law." RPC 5.5(b). It is the duty of the court "to protect the
public from the activity of those who, because of lack of professional
skills, may cause injury whether they are members of the bar or persons
never qualified for or admitted to the bar." Bennion, Van Camp, Hagen &
Ruhl v. Kassler Escrow, Inc., 96 Wn.2d 443, 447, 635 P.2d 730, (1981),
citing Washington State Bar Ass'n v. Great W. Union Fed. Sav. & Loan
Ass'n, 91 Wn.2d 48, 60, 586 P.2d 870 (1978). RCW 2.48.180 provides
criminal penalties for the practice of law without bar membership:
"Unlawful practice of law is a crime. A single violation of this section
is a gross misdemeanor."
[fn9] The rule also requires LPOs to complete minimum continuing education.
APR 12 (f).
[fn10] We review de novo legal issues concerning standard of care and
the existence of a duty. See, e.g., Branom v. State, 94 Wn. App. 964,
968, 974 P.2d 335, review denied, 138 Wn.2d 1023 (1999).
[fn11] Among the forms authorized by the Limited Practice Board are: (1)
LPB No. 35 "Subordination Agreement;' (2) LPB No. 60 "Release of Lien;"
and (3) LPB No. 61 "Partial Release of Lien." 1C KELLY KUNSCH,
WASHINGTON PRACTICE METHODS OF PRACTICE, § 86.26. The record does not
indicate whether the LPB-approved form "Subordination Agreement" would
have sufficed for the transactions among DeChantal, Bishop, and Hieb. The
affidavit of Jefferson Title's expert, Jane Stafford, a practicing LPO
and member of the Limited Practice Board, states that "Exhibit B" does
not violate APR 12; but she fails to state whether the language of
"Exhibit B" is the subordination form approved for LPOs by the Limited
Practice Board.
[fn12] Jefferson Title's LPO Lockhart testified about her understanding
of what language to include in documents involving underlying
encumbrances:
Q. . . . The underlying mortgage was encumbered not
only the property that was being sold, . . . and,
also, was of a value much larger than the value of
the . . . parcel being sold. Was it your
understanding that it was appropriate to use this
type of language in that situation?
A. I don't have any other language in that situation
to use but that so that would be the one to use.
Q. Did you explain to either of the parties the
possible pitfalls or difficulties that could occur
by failing to obtain the Deed release from the
underlying. . . .
A. I . . .
Q. . . . . Original?
A. . . . . don't — I don't recall.
. . . .
Q. And is it your impression, also, that a — a
wrap transaction is appropriate when the
underlying encumbrance, in this case a Deed of
Trust, is an obligation much larger than the value
of the land being sold and extends to other
properties as well?
A. Yes.
Report of Proceedings at 10 and 20, respectively.
[fn13] The limited practice rule "in no way" expands, narrows, or affects
`existing law in the following areas:'
(4) The lack of authority of a certified closing
officer to give legal advice without being licensed to
practice law;
(5) The standard of care which a certified closing
officer must practice when carrying out the functions
permitted by this rule. APR 12 (g). The existing law
before and after promulgation of APR 12 is that the
standard of care for a non-attorney closing a real
estate transaction is that of a practicing attorney.
APR 12 initially promulgated in 1983, did not change
this standard. Bowers, 100 Wn.2d at 587 (1983)
(decided on facts arising in 1979) and Perkins, 137
Wn.2d at 97 (1999) both apply the same standard.
[fn14] Amicus Washington State Bar Association argues that
The LPO also had to advise the parties that the
services she rendered were limited in at least two
ways. First, the LPO had to advise the parties that
she was not authorized to close using the modified
documents because they were not in a form approved by
the Board. . . . Second, the LPO had to advise the
parties that she could not close at all unless they
either obtained independent counsel regarding the
legal effect of the modifications, or agreed to close
with the attorney who drafted the unapproved,
nonstandard modification and addendum.
Brief of WSBA at 10.
[fn15] Accordingly, we need not reach Bishop's argument that the
"wrap-around" deed of trust used by Jefferson Title in the 1991
DeChantal/Bishop transaction, without a deed of partial reconveyance, is
not legally appropriate for the transaction as a matter of law.
[fn16] As Bishop points out, "The Statutory Warranty Deed of May 6,
1994, between the Bishops and Hieb required the Bishops to pay the
underlying debt owed by DeChantal on the entire land development!"
Moreover, the record shows a clerical error in the 1994 deed from Bishop
to Hieb, which incorrectly states that the 1990 deed of trust from
DeChantal to Pacific Coast was recorded April 20, 1990. The correct date
of recording for the DeChantal to Pacific Loan deed of trust is April,
30, 1990. And the language in the 1994 statutory warranty deed improperly
mixes up the grantors and grantees. Bishop is the grantor, and Hieb is
the grantee, yet the "subject to" language fails to consider that
DeChantal, and not Bishop, is the grantor in the underlying 1990 deed of
trust.
[fn17] The criteria for determining public interest are as follows:
[W]hether the public has an interest in any given action
is to be determined by the trier of fact from several
factors, depending upon the context in which the alleged
acts were committed. . . .
Where the transaction was essentially a private dispute (see, e.g., .
. . Bowers v. Transamerica Title Ins. Co., 100 Wn.2d 581, 675 P.2d 193
(1983) (escrow closing agent — client)), it may be more difficult
to show that the public has an interest in the subject matter. . . .
Factors indicating public interest in this context include: (1) Were the
alleged acts committed in the course of defendant's business? (2) Did
defendant advertise to the public in general? (3) Did defendant actively
solicit this particular plaintiff, indicating potential solicitation of
others? (4) Did plaintiff and defendant occupy unequal bargaining
positions? As with the factors applied to essentially consumer
transactions, not one of these factors is dispositive, nor is it
necessary that all be present. The factors in both the "consumer" and
`private dispute' contexts represent indicia of an effect on public
interest from which a trier of fact could reasonably find public interest
impact. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co.,
105 Wn.2d 778, 789-91, 719 P.2d 531 (1986). See also, Anhold v. Daniels,
94 Wn.2d 40, 45, 614 P.2d 184 (1980).
[fn18] Hangman Ridge, 105 Wn.2d at 784-85. |
