No. 57995-9-I.The Court of Appeals of Washington, Division One.
February 11, 2008.
Appeal from a judgment of the Superior Court for King County, No. 03-2-15510-1, Richard A. Jones, J., entered March 14, 2006.
Affirmed by unpublished opinion per Lau, J., concurred in by Schindler, A.C.J., and Dwyer, J.
LAU, J.
After Paul Hanson lost property in a nonjudicial foreclosure proceeding, he sued the trustee and the trustee’s agent for breach of fiduciary duty. A jury found that the trustee’s agent did not breach his fiduciary duty, but awarded Hanson $1 in damages for the trustee’s breach of fiduciary duty. Hanson’s primary challenge on appeal is that, as a matter of law, the trustee’s agent breached his fiduciary duty because he was not impartial as between the creditor and the debtor. We hold that there was substantial evidence to support the jury’s verdict and that Hanson’s remaining arguments regarding breach of contract, jury instructions, and attorney fees have no merit. Accordingly, we affirm.
FACTS
Hanson hired Washington State Utilities (WSU) to perform excavation and utilities work on property he was developing in Kent. WSU performed the work, but Hanson did not pay all that he owed. WSU’s attorney, Shawn Hicks, filed a lien for $85,057. WSU then sued Hanson for breach of contract and judicial foreclosure on the lien. Hanson did not respond, so the trial court entered default judgment against Hanson and foreclosed the lien in WSU’s favor.
Hanson asked WSU to release the judgment lien so that he could refinance a piece of property in Auburn, Washington. WSU did so in exchange for Hanson’s agreement to execute a deed of trust against property he owned in Kirkland. Hanson paid WSU $15,000, but failed to respond to WSU’s requests for additional payments.
WSU foreclosed its deed of trust against the Kirkland property under chapter 61.24 RCW. Hicks contacted Northwest Administrative Services to conduct the foreclosure proceeding. Northwest issued a statutory notice of default to Hanson, stating the total amount owing and specifying what he must do to cure the default and the consequences if he did not. On June 27, 2002, Northwest sent Hanson a notice of a trustee’s sale to take place three months later. This notice told Hanson that the total amount due ($92,789.96) must be paid in its entirety to stop the sale.
A week before the trustee’s sale, Hanson filed for bankruptcy, which stayed WSU’s foreclosure proceeding. WSU asked the bankruptcy court to lift the stay because Hanson had no equity in the property, and the bankruptcy court lifted the stay effective December 16, 2002.
WSU intended to hold its trustee’s sale on December 20. On December 18, Hanson’s attorney told WSU that Hanson would pay $30,000 for a two-week extension of the trustee’s sale if WSU agreed to accept a discounted amount on the debt due. WSU agreed that Hanson’s $30,000 payment would extend the sale until January 3, and that $70,000 via cashier’s check or wire transfer would satisfy the debt and stop the sale if paid by noon on January 3. But if Hanson failed to pay by noon, a trustee’s sale would be held at 2 p.m. A written extension agreement was executed on December 19.
Northwest sent out the statutory notice to continue the sale, but then realized that its principals would both be unavailable on January 3. Northwest principal Kokie Adams asked Hicks if he could conduct the trustee’s sale, and he agreed to do so, though he had never conducted a sale before. Adams prepared documents giving Hicks authority to conduct the sale and told him how to proceed.
On January 2, the day before the trustee’s sale, Hanson applied for a construction loan from Seattle Funding Group. He intended to use this money to pay WSU, even though he knew that the loan would not be processed before the trustee’s sale. Later that day, Hanson’s attorney called Hicks again, asking WSU for a one-day extension of the extension agreement for $10,000. Hicks consulted with WSU and notified Hanson’s attorney that WSU refused Hanson’s request.
On the morning of January 3, Hanson met with the Seattle Funding Group loan officer to see if he could get an advance on the loan. The loan officer refused. Hanson’s father-in-law gave him a $40,000 cashier’s check that morning, but he was not able to get a cashier’s check from his own bank for the remaining $30,000 before noon. Hanson deposited a personal check for $70,000 into Hicks’s attorney trust account at 11:57 a.m., even though he knew that his account balance was only about $500. Hanson told his attorney that he had deposited a check into Hicks’s account before noon, but did not tell him it was a personal check. When his attorney learned this from Hicks, he told Hanson to convert the personal check into a cashier’s check. Hanson’s attorney told Hicks that Hanson would try to convert the check before 2 p.m. Hicks said that it was too late for a $70,000 payment, implying that because the noon deadline had passed, Hanson would have to pay the entire $109,954 debt at the time of the sale.
At 2 p.m., Hicks conducted the trustee’s sale. Hicks kept the sale open until 2:30 so that the high bidder, Greg Finn, could obtain a cashier’s check in the exact amount of his bid. At 2:07, Hanson deposited a cashier’s check for $70,000 into Hicks’s attorney trust account. Hicks told the bank to return the check to Hanson, and he deposited Finn’s cashier’s check into Northwest’s account. Northwest approved the sale and issued a trustee’s deed to Finn.
Hanson sued WSU, Finn, Northwest, and Hicks to invalidate the trustee’s sale, to reconvey the deed of trust, for breach of contract, and for breach of fiduciary duties. The trial court dismissed Hanson’s claims against WSU and Finn on summary judgment, but allowed Hanson’s claims against Northwest and Hicks for breach of fiduciary duty to proceed to trial.
The jury found that Hicks did not breach the trustee’s fiduciary duty to Hanson. It also found that Northwest breached its fiduciary duty to Hanson, with comparative fault allocated 80 percent to Hanson and 20 percent to Northwest and total damages of $1. The trial court awarded attorney fees and costs to Hicks under the deed of trust provisions and denied Hanson’s motion to vacate the verdict. Hanson appeals.
ANALYSISBreach of Fiduciary Duty
Hanson’s primary argument is that the trial court should have granted his partial summary judgment motion as to Hicks because Hicks’s actions constituted a breach of fiduciary duty as a matter of law. Hanson claims it was a conflict of interest for Hicks to act as both trustee and attorney for the beneficiary, particularly when Hicks failed to resign as trustee once he knew that Hanson had requested an extension of time and was attempting to cure the form of his check. Instead, Hicks intentionally breached his fiduciary duty to Hanson by continuing to act as trustee and refusing to postpone the trustee’s sale, thereby obtaining a $30,000 windfall for WSU. Hanson further contends that once Hicks knew that he was trying to convert his personal check into a $70,000 cashier’s check, Hicks was required to tell Hanson that he needed to pay the full amount of the debt to stop the sale.
The Washington deed of trust act prescribes the procedure for nonjudicial foreclosure under a deed of trust’s power of sale. RCW 61.24.040. If the trustee follows the statutory procedure, the sale becomes final. Udall v. T.D. Escrow Servs., Inc., 159 Wn.2d 903, 906, 154 P.3d 882 (2007). The act “contains several safeguards to ensure that the nonjudicial foreclosure process is fair and free from surprise.” Cox v. Helenius, 103 Wn.2d 383, 387, 693 P.2d 683 (1985). The trustee in such a proceeding owes fiduciary duties to both the creditor and debtor. Cox, 103 Wn.2d at 389. The trustee is obligated to (1) act impartially between debtor and creditor, (2) present the sale under every possible advantage to the debtor as well as to the creditor, (3) use good faith and every requisite degree of diligence in conducting the sale, (4) attend equally to the interest of debtor and creditor alike, and (5) take reasonable and appropriate steps to avoid sacrifice of the debtor’s property and his interest. Id.; Meyers Way Dev. v. Univ. Sav. Bank, 80 Wn. App. 655, 665-66, 910 P.2d 1308
(1996).
As a preliminary matter, we note that Hanson assigned error not to the jury’s verdict, but rather to the trial court’s denial of his motion for partial summary judgment on this issue.[1] This approach is procedurally incorrect. “When a trial court denies summary judgment due to factual disputes, as here, and a trial is subsequently held on the issue, the losing party must appeal from the sufficiency of the evidence presented at trial, not from the denial of summary judgment.” Adcox v. Children’s Orthopedic Hosp. Med. Ctr., 123 Wn.2d 15, 35 n. 9, 864 P.2d 921 (1993); Caulfield v. Kitsap County, 108 Wn. App. 242, 249, 29 P.3d 738 (2001). We therefore treat this issue as if it were an appeal from the denial of a motion for judgment as a matter of law, applying a de novo standard of review and viewing the evidence in the light most favorable to the nonmoving party to determine whether there is substantial evidence or any reasonable inference therefrom that would sustain a jury verdict for the moving party. Rowe v. Vaagen Bros. Lumber, Inc., 100 Wn. App. 268, 274, 996 P.2d 1103
(2000).
We conclude that there is substantial evidence to support the jury’s finding that Hicks did not breach his fiduciary duty. WSU and Hicks acted in accordance with the terms of the extension agreement, and Hanson has not shown why those terms should not have been enforced. A trustee is not obligated to ensure that a debtor protects his own interests. Cox, 103 Wn.2d at 389.
Although one purpose of the deed of trust act is to allow interested parties an adequate opportunity to prevent wrongful foreclosure, Plein v. Lackey, 149 Wn.2d 214, 225, 67 P.3d 1061 (2003), Hanson has not shown that he lacked adequate opportunity. WSU agreed to one extension of time, and the extension agreement was very specific about what Hanson needed to do to prevent foreclosure. Hanson admitted he knew and understood the terms of the agreement, yet he did not comply with the terms of the agreement before noon and did not attempt to pay the full amount before the sale. This is not a situation where a trustee misled the debtor about how to stop the sale or knew that the debtor did not understand the terms of a deed of trust. See, e.g., Cox, 103 Wn.2d at 386-90. Moreover, Hanson did not object to jury instructions 6, 7, and 9, which described the duties of the trustee. Accordingly, Hanson was not entitled to judgment as a matter of law, either at the time of his summary judgment motion or after the subsequent trial.
Breach of Contract
Hanson contends that the trial court erred in dismissing his breach of contract claim against WSU on summary judgment because he substantially complied with the extension agreement by tendering a $70,000 personal check three minutes before the deadline. We review summary judgment orders de novo, engaging in the same inquiry as the trial court. Folsom v. Burger King, 135 Wn.2d 658, 663, 958 P.2d 301 (1998). Hanson’s argument is unpersuasive. He delivered a personal check from an account with insufficient funds in violation of the extension agreement, which makes clear that timeliness and form of payment are crucial terms. Rains v. Lewis, 20 Wn. App. 117, 122, 579 P.2d 980 (1978); Jacks v. Blazer, 39 Wn.2d 277, 285, 235 P.2d 187
(1951). Such conditional tender does not constitute substantial compliance.
Jury Instructions
Hanson argues that the trial court erroneously instructed the jury as to comparative fault. An appellate court reviews de novo alleged errors of law in a trial court’s instructions to the jury. Barrett v. Lucky Seven Saloon, Inc., 152 Wn.2d 259, 266, 96 P.3d 386 (2004). An erroneous jury instruction is not a ground for reversal unless it is prejudicial. RWR Mgmt., Inc., v. Citizens Realty Co., 133 Wn. App. 265, 278, 135 P.3d 955 (2006). A jury instruction is prejudicial if it substantially affects the outcome of the case. RWR, 133 Wn. App. at 278.
Hanson’s original claims against Hicks and Northwest were for breach of fiduciary duty, an intentional tort. One of Hanson’s experts, David Leen, testified regarding the scope of a trustee’s duty. Hicks and Northwest argued that Leen’s testimony was relevant only under a negligence theory and moved to amend the pleadings to include a negligence claim. The trial court granted the motion and therefore instructed the jury on comparative fault. Hanson argues that this instruction was prejudicially erroneous because it diverted the jury’s attention away from the core issue — fiduciary duty. We disagree. The trial court properly amended the pleadings to conform to the evidence, and Hanson does not challenge that decision. Moreover, Hanson’s bald assertion that the comparative fault instructions “changed the tenor, focus and argument in the case away from the core issue of breach of fiduciary duty,” Brief of Appellant, at 51, does not establish prejudice.
Next, Hanson alleges the trial court erred in refusing to give his proposed instruction regarding the Rules of Professional Conduct for attorneys. But Hanson did not object when the trial court refused to give them. If a court fails to give a proposed instruction, the party must take exception to that failure, following the procedure of CR 51(f). Goehle v. Fred Hutchinson Cancer Research Ctr., 100 Wn. App. 609, 614, 1 P.3d 579 (2000). An exception is necessary to create a record for review. Goehle, 100 Wn. App. 615-17. There is no evidence in the record that Hanson took exception to the trial court’s rejection of his proposed instruction, so we decline to review the merits of this claim.
Next, Hanson challenges the following jury instruction as to the calculation of damages:
If you find for the plaintiffs, you should consider the fair market value of the property as of January 3, 2003, less the amount of debt attached to the property at that time and any other expenses which plaintiffs would have paid to redeem the property at a foreclosure sale. . . .
Clerk’s Papers at 167. Hanson contends that this instruction was erroneous because the jury’s consideration of the property value in 2003 would not have created a “make whole” remedy for Hanson in 2006 and because the jury was directed to discount the property value to include closing costs of a sale.
We reject both of these arguments. First, it is well established that the measure of damages in a case of total loss of property is the fair market value of the property at the time of loss. Sollenberger v. Cranwell, 26 Wn. App. 783, 788, 614 P.2d 234 (citing Mieske v. Bartell Drug Co., 92 Wn.2d 40, 593 P.2d 1308 (1979)); McCurdy v. Union Pac. R. Co., 68 Wn.2d 457, 413 P.2d 617 (1966). Second, as the language of the instruction makes clear, the jury was not instructed to discount the property by the amount of closing costs. Such language would have been improper as there was no evidence Hanson would have incurred closing costs since he had no plans to sell the property. Rather, the jury was instructed to discount the value of the property for the costs of redeeming the property at the foreclosure sale — costs that Hanson would have necessarily incurred if the property had not been sold to Finn at the trustee’s sale.
Attorney Fees
Hanson challenges the trial court’s attorney fee rulings on three grounds. First, he contends that the trial erred in awarding Hicks attorney fees based on the deed of trust because Hicks did not sign it and there is no privity between Hicks and Hanson. Whether a party is entitled to attorney fees under a contract is an issue of law that is reviewed de novo. Tradewell Group, Inc. v. Mavis, 71 Wn. App. 120, 126-27, 857 P.2d 1053
(1993). We hold that the award of attorney fees and costs to Hicks was proper. The deed of trust expressly provides for an attorney fee award to the prevailing party in a foreclosure proceeding. Hicks prevailed below. The lack of Hicks’s signature on the deed of trust is immaterial. The grantor, Hanson, was the only party required to sign it. Hicks, acting as the trustee’s agent, is entitled to the same obligations and benefits under the deed of trust as the trustee.
Second, Hanson objects to Hicks’s attorney fee award on the basis that the trial court did not make the findings required by Mahler v. Szucs, 135 Wn.2d 398, 433-35, 957 P.2d 632 (1998), to create an adequate record for reviewing the award. Whether the amount of the award is reasonable is reviewed for abuse of discretion. American Nat’l Fire Ins. Co. v. BL Trucking Constr. Co., 82 Wn. App. 646, 669, 920 P.2d 192 (1996). The trial court’s amended order included the requisite findings, and Hanson has not demonstrated that any of the work done by the two law firms was duplicative. We conclude that the trial court did not abuse its discretion in finding that all the hours expended were reasonable.
Third, Hanson contends he was the prevailing party against Northwest, so he — not Northwest’s agent Hicks — should have been awarded fees. Although Hanson requested attorney fees in his complaint, he did not file a cost bill or otherwise affirmatively request attorney fees after trial. In his objection to Hicks’s cost bill on other grounds, he requested extra time to file his own cost bill against Northwest, but never did so. Generally, issues not raised at trial are not considered on appeal. Fuqua v. Fuqua, 88 Wn.2d 100, 105, 558 P.2d 801 (1977). We decline to consider this request.
We grant Hicks’s and Northwest’s request for attorney fees on appeal as prevailing parties, based on the deed of trust attorney fee provision.
Affirmed.
We Concur: