WEBER v. PD DEVELOPMENT, INC., 29295-5-II (Wash.App. 7-13-2004)

No. 29295-5-IIThe Court of Appeals of Washington, Division Two.
Filed: July 13, 2004 UNPUBLISHED OPINION

Appeal from Superior Court of Thurston County. Docket No: 01-2-01869-5. Judgment or order under review. Date filed: 11/20/2002. Judge signing: Hon. Paula K Casey.

Counsel for Petitioner(s), Thomas Charles Althauser, Attorney at Law, PO Box 210, Centralia, WA 98531-0210.

Wayne Delos Jr Hagen, Attorney at Law, 110 W Market, PO Box 2016, Aberdeen, WA 98520-0333.

Gregory B. Durr, Attorney at Law, Old World Bldg Ste 103, 100 So. I St., Aberdeen, WA 98520-6502.

Counsel for Defendant(s), James Garnet Baker, Grays Harbor Co Pros Ofc, 102 Broadway Ave W Rm 102, Montesano, WA 98563-3621.

Counsel for Respondent/Cross-Appellant, Paul August Kampmeier, Attorney at Law, 2317 E John St, Seattle, WA 98112-5412.

Eric D. `knoll’ Lowney, Attorney at Law, 2317 E John St, Seattle, WA 98112-5412.

QUINN-BRINTNALL, C.J.

A subdivision’s developer (PD Development, Inc.), a mining company (Northwest Rock, Inc.),[1] and a subdivision’s homeowner’s association (Capitol Ridge Homeowners Association), appeal a partial summary judgment[2] in favor of property owners (Sally and Gregory Weber) enforcing that subdivision’s residential use covenants and declaring amendments to the covenants to be invalid. PD appeals the trial court’s failure to rule on its motion to strike portions of declarations submitted by the Webers, and the Association appeals the trial court’s failure to rule on its motion for change of venue and for continuance of the motion hearing so that it could conduct discovery. The Webers cross-appeal the amount of the attorney fees awarded to them, and PD appeals the trial court’s determination that the Association, PD, and PD’s president and sole shareholder are jointly and severally liable for the fees.

The Webers are entitled to the benefit of their covenants. Section IX of the covenants carries a specific purpose to maintain the subdivision’s residential character and it limits the lot owners’ right to amend the covenants by requiring 75 percent of the homeowners to vote to approve. The covenants cannot be circumvented by removing the lots from the subdivision. Thus, we affirm the trial court’s grant of summary judgment enforcing the covenants and declaring the amendments invalid and hold that, as a matter of law, a gravel pit is not consistent with a residential use restriction.

We also hold that any error by the trial court in refusing to rule on the appellants/cross-respondents’ venue and continuance motions and motion to strike before ruling on summary judgment was harmless and we uphold the trial court’s award of attorney fees to the Webers under the attorney fee provision of the covenants. But we remand to the trial court for findings on its calculation of the attorney fees and the appellants/cross-respondents’ respective liability for these fees.

FACTS
PD is the developer of the Capitol Ridge Subdivision Phase I (`Capitol Ridge’), which consists of Lots 1 through 23, and Lots 57 through 75 of Large Lot Subdivision 90-04, Grays Harbor County, Washington, near Capitol Forest. Paul Blake is the owner and sole shareholder of PD. PD owns nine lots in the subdivision, and Blake individually owns two lots.

Blake signed and recorded the subdivision’s covenants and restrictions in February 1993.[3] In 1994, the covenants were amended, apparently to correct an error in the legal description of the property, and they were re-filed.[4] The initial term of the covenants runs until 2013, after which the covenants automatically extend for successive periods of 10 years, unless they are rescinded by a two-thirds vote of the property owners. The covenants contain a residential use restriction and prohibit any noxious or offensive activity on any lot.[5] The covenants allow for amendments `by an instrument signed by not less than [75 percent] of the Owners’[6] and they provide for reasonable attorney fees and costs for enforcement of the covenants. 1 Clerk’s Papers (CP) at 25.

The Webers purchased Lot 65 in 1996. One reason the Webers decided to purchase the lot was that they were seeking an area without industrial development (they felt their previous home’s property value had been diminished by nearby development). The Webers had seen a Capitol Ridge brochure at their realtor’s office promising, `[C]ovenants assure that this area will remain a pleasant, rural, attractive area.’ 1 CP at 108.

Northwest Rock operates a quarry on property adjacent to the subdivision.[7] In early 2001, Northwest Rock decided it wanted to expand into four lots on the subdivision owned by PD: Lots 57, 58, 59, and part of Lot 63. The proposed expansion would have brought the quarry within 300 feet of the Webers’ property. Northwest Rock sent a letter to lot owners on July 17, 2001, and on July 24 met with them to discuss the planned expansion. On August 10, 2001, Northwest Rock and PD filed an application for a conditional use permit to expand the quarry.

In late August and early September 2001, Northwest Rock representatives met with the Webers, who informed the Northwest Rock representatives of the covenants and gave them copies. On September 4, 2001, the Webers called the first meeting of the Association[8] to inform the other homeowners of Northwest Rock’s plans.[9] The Association collected the property owners’ concerns about the expansion and submitted them in writing to Northwest Rock.

On September 24, 2001, Northwest Rock submitted a proposal to the Association offering to provide various benefits to the property owners: to provide crushed rock for road maintenance; pay the Association three cents for every ton of rock removed from the quarry; limit hours of operation; keep all crushing, washing, and stockpiling in the present location; and maintain and enhance buffers. The recently elected Association Board of Directors (which did not include the Webers, but did include Blake) voted to propose to the property owners the release of Lots 57, 58, 59, and 63 from the subdivision.

On October 8, 2001, the Board of Directors sent a letter to the lot owners requesting their vote on whether to accept the Northwest Rock proposal. Of the 29 letters received from identifiable lot owners, 21 voted to accept the proposal. The Association then circulated for signature a written amendment to the covenants releasing the four lots. More than 75 percent of the homeowners signed the amendment, with PD/Blake signing for 11 parcels. PD filed and recorded the amendment in January 2002. Meanwhile, Northwest Rock, wary that the Association had `not finalized its position,’ decided to withdraw its conditional use permit application in late October 2001. 4 CP at 707. The Association went on with its plan to amend the covenants, `still want[ing] the benefits from the expansion’ of the quarry. Br. of Appellant Association at 8.

In the meantime, the Webers had consulted an attorney, and on October 5, 2001, sued Northwest Rock, Blake, and PD to enforce the covenants. The Webers also sought relief against Grays Harbor County, seeking to enjoin the County from issuing a conditional use permit they claimed the County continued to process the permit application despite being on notice of the covenants. The Webers filed a motion for partial summary judgment on December 24, 2001.

Following the covenant amendment, the Webers added the Association as a defendant on February 28, 2002. On April 2, the Association filed its motions to change venue and to strike the Webers’ summary judgment hearing date. On the same date, PD/Blake filed a motion to strike portions of the Webers’ declarations in support of their summary judgment motion.

On April 19, 2002, the trial court granted the Webers partial summary judgment, ruling that the amendments to the covenants that removed the four lots were invalid. The court did not rule on the Association’s motion for change of venue before granting the motion for summary judgment because apparently it was unaware that the Association had only recently joined as a defendant, and therefore the court did not believe that the motion was properly before it. The court did not rule on the Association’s motion to continue the hearing to give it more time to conduct discovery, nor did it rule on PD/Blake’s motion to strike evidence.

The Webers moved for an award of attorney fees and costs. Following oral arguments on the issue of attorney fees on August 9, 2002, the trial court awarded the Webers $12,000, significantly less than the $46,798.37 they had requested. But the trial court found PD, Blake, and the Association `jointly and severally’ liable for the fees.

PD/Blake, the Association, and Northwest Rock appeal the trial court’s partial summary judgment in favor of the Webers and the court’s order making the Association, PD, and Blake jointly and severally liable for the Webers’ attorney fees. The Webers cross-appeal the amount of their attorney fee award.

ANALYSIS Summary Judgment
PD/Blake, the Association, and Northwest Rock contend that the trial court erred in granting the Webers’ summary judgment motion because there were genuine issues of material fact as to whether adoption of the covenant amendments was reasonable.

The trial court held:

B) The covenants at issue in this case . . . provide that no lot in the Capitol Ridge subdivision shall be used for non-residential development. . . . The intention and purpose of these covenants is to limit the use of the lots in the subdivision to residential purposes.

C) An express reservation of power authorizing less than 100 percent of property owners within a subdivision to adopt new restrictions respecting the use of privately owned property is valid, provided that such power is exercised in a reasonable manner consistent with the general plan of development.

D) As a matter of law, a mine for rock or gravel is not reasonably consistent with residential development.

4 CP at 743-44.[10]

1. Standard of Review
When reviewing an order of summary judgment, we engage in the same inquiry as the trial court. Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982). Summary judgment is appropriate only if the pleadings, affidavits, depositions, and admissions on file demonstrate the absence of any genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. CR 56(c). Like the trial court, we must consider all facts submitted and all reasonable inferences from them in the light most favorable to the nonmoving party and we will uphold the motion only if, from all the evidence, reasonable persons could reach but one conclusion. Wilson, 98 Wn.2d at 437.

2. Amendment of Covenants
A covenant is an agreement or promise of two or more parties that something is done, will be done, or will not be done; in modern usage, the term covenant generally describes promises relating to real property that are created in conveyances or other instruments. Hollis v. Garwall, Inc., 137 Wn.2d 683, 690-91, 974 P.2d 836 (1999) (citing 9 Richard R. Powell, Powell on Real Property, sec. 60.01[2], at 60-5 (1998); Shafer v. Bd. of Tr. of Sandy Hook Yacht Club Estates, Inc., 76 Wn. App. 267, 274, 883 P.2d 1387 (1994), review denied, 127 Wn.2d 1003 (1995)). A restrictive covenant limits the manner in which one may use his or her own land Meresse v. Stelma, 100 Wn. App. 857, 864 n. 7, 999 P.2d 1267
(2000) (quoting City of Olympia v. Palzer, 107 Wn.2d 225, 229, 728 P.2d 135
(1986)). Interpretation of language contained in a restrictive covenant is a question of law. Meresse, 100 Wn. App. at 864 (quoting Parry v. Hewitt, 68 Wn. App. 664, 668, 847 P.2d 483 (1992)).

The following cases make it clear that mining is incompatible with a residential use restriction and that the covenant amendment now at issue was invalid as a matter of law.

Shafer, relied on by the trial court here, involved a large, luxury waterfront residential development. 76 Wn. App. at 268-69. The plaintiff challenged new covenants adopted by the majority of property owners that prohibited, for example, the storage of junk vehicles on individual properties for more than six months. Shafer, 76 Wn. App. at 271. The court held:

[A]n express reservation of power authorizing less than 100 percent of property owners within a subdivision to adopt new restrictions respecting the use of privately owned property is valid, provided that such power is exercised in a reasonable manner consistent with the general plan of the development.

Shafer, 76 Wn. App. at 273-74. Thus, under the terms of the original Shafer covenants, the property owners had the power to adopt the new restrictions. 76 Wn. App. at 277.

But we applied the same Shafer test in Meresse and invalidated the Meresse covenant amendment. There, subdivision covenants allowed a majority of the lot owners `to change or alter [the covenants] in full or in part.’ Meresse, 100 Wn. App. at 859 (emphasis omitted). The majority of lot owners voted to override the minority owner, Meresse, and relocate the subdivision access road onto Meresse’s property by characterizing the action as `maintenance, repairs’ or `additional construction on the road,’ which did not require unanimous approval under the covenants. Meresse, 100 Wn. App. at 867. We held that the language of the covenants `[did] not place a purchaser or owner on notice that he or she might be burdened, without assent, by road relocation at the majority’s whim.’ Meresse, 100 Wn. App. at 866-67. We stated `[t]he law will not subject a minority of landowners to unlimited and unexpected restrictions on the use of their land merely because the covenant agreement permitted a majority to make changes to existing covenants.’ Meresse, 100 Wn. App. at 866
(citing Boyles v. Hausmann, 246 Neb. 181, 517 N.W.2d 610, 617
(1994)). The Meresse homeowners did not act in `a reasonable manner consistent with the general plan of the development’ and the amendment was invalid. 100 Wn. App. at 865 (emphasis omitted).

Likewise, in Hollis, a lot owner in a subdivision with a residential use restriction began an operation that included blasting, crushing rock, production of asphalt, development of a slurry pond, and continuous truck traffic to remove the crushed rock from the property. Nearby property owners sued for damages and an injunction. The Court stated, `[w]ithout construing the other uses that might be allowed in a residential subdivision, it seems clear that a mining and rock crushing business is not residential or incidental to a residential use.’ Hollis, 137 Wn.2d at 699.[11] The trial court ruled as a matter of law and was not required to balance the equities before granting the desired injunction. Hollis, 137 Wn.2d at 699-700.

And finally, in Lakemoor Community Club, Inc. v. Swanson, 24 Wn. App. 10, 600 P.2d 1022, review denied, 93 Wn.2d 1001 (1979), we held that where a covenant limited use of lots in a subdivision to `residential purposes,’ a provision that no lot should be used as a street or as a public way to areas outside the subdivision `without the written consent of the [developer],’[12] which was not to be unreasonably withheld, did not make it permissible for the developer to convey a tract to a grantee and then to grant `consent’ to the grantee to use the tract as an access route. The developer had informed potential purchasers orally and via brochure that the subdivision would be self-contained, consist of no more than 300 lots, and be protected by a `closed’ road system. Lakemoor, 24 Wn. App. at 12-13.

We stated:

[T]he clause in the Declaration of Restrictions, which reserves to the owner `the right to alter, amend, repeal or modify these restrictions at any time in its sole discretion’ is a valid clause so long as it is exercised in a reasonable manner as not to destroy the general scheme or plan of development.

Lakemoor, 24 Wn. App. at 15 (emphasis added) (quoting Flamingo Ranch Estates, Inc. v. Sunshine Ranches Homeowners, Inc., 303 So.2d 665, 666
(Fla.Dist.Ct.App. 1974)). Because the road would have destroyed the general scheme of development, we found that the consent provision did not give the developer the power to abrogate the clear purpose of the covenants. Lakemoor, 24 Wn. App. at 16.

Shafer, Meresse, Hollis, and Lakemoor[13] demonstrate that summary judgment was appropriate here. There is no disputed issue of material fact regarding whether mining in the subdivision[14] was permissible as a matter of law mining is not consistent with the subdivision’s residential use restriction. See Hollis, 137 Wn.2d at 699. Here, more than 75 percent of homeowners voted to `amend’ the covenants, but the action was no more permissible than if PD had itself voted to amend the covenants when it still owned enough lots to control the vote. See Lakemoor, 24 Wn. App. at 17 (holding that a developer cannot unilaterally abrogate the clear purpose of restrictive covenants, where doing so would thwart the `justifiable interests and expectations of the individual lot owner’). See also I Washington Real Property Deskbook, 3d ed. 1997 (Wash. State. Bar Ass’n), sec. 14.6, at 14-45 (stating rule that in a subdivision where lot owners purchase in reliance on a common plan, a release is ineffective to terminate an individual restriction unless all owners within the common plan who are benefited by the restriction join it). Thus, we agree with the trial court that a vote of less than 100 percent of property owners to amend the covenants to permit mining in Capitol Ridge a use not `reasonably consistent with the general plan of development’ (I Report of Proceedings (RP) at 33) is invalid as a matter of law.

Failure to Rule on Appellants/Cross-Respondents’ Motions
PD/Blake next contend that the trial court abused its discretion in failing to grant its CR 56(e) motion to strike portions of the Webers’ declarations before ruling on the summary judgment motion. Likewise, the Association contends that the trial court erred in failing to grant its motion to change venue and CR 56(f) motion to strike the hearing date (effectively, seeking a continuance) before ruling on summary judgment.

1. PD/Blake Motion to Strike Evidence
PD contends that the trial court violated CR 56(e)[15] by failing to strike portions of the Webers’ declarations or affidavits and that the trial court improperly relied on that evidence in granting the Webers’ summary judgment motion.

In response to PD/Blake’s request to identify which exhibits in addition to the declarations the trial court was relying on, the trial court stated that it was relying on Exhibits A (plat map of Capitol Ridge), E (corrected 1994 covenants), and F (1993 covenants) to Sally Weber’s declaration in support of revised motion for summary judgment.[16] Later, the court added, `This does not say that I did not read or consider the declarations or affidavits, but it does indicate that I have identified exhibits which I specifically relied on, in addition to the declarations. . . . But this is a legal question. It was not dependent upon the affidavits.’ II RP at 62.

The trial court may not consider inadmissible evidence when ruling on a motion for summary judgment. Dunlap v. Wayne, 105 Wn.2d 529, 535, 716 P.2d 842 (1986). But a ruling on a motion to strike is within the trial court’s discretion. Orion Corp. v. State, 109 Wn.2d 621, 638, 747 P.2d 1062 (1987), cert. denied, 486 U.S. 1022 (1988).

On appeal, the only document that PD/Blake specifically challenge is a letter from real estate agent Larry Weaver, attached as Exhibit D to `DECLARATION OF SALLY WEBER IN SUPPORT OF REVISED MOTION FOR PARTIAL SUMMARY JUDGMENT.’ 2 CP at 356. PD/Blake describe the letter as unsworn hearsay. But the trial court did not rely on the letter in granting the Webers’ motion. Even if the trial court erred in refusing to strike, summary judgment was granted as a matter of law, and the error, if any, was harmless.

2. Association Motion for Change of Venue
The Association contends that the trial court erred in failing to grant its motion to change venue and that the trial court lacked jurisdiction to hear the case because the County was an improper defendant.

On April 2, 2002, the Association filed a motion to change venue from Thurston County to Grays Harbor County because `Plaintiffs added [Grays Harbor] County as a defendant solely to claim that RCW 36.01.050[17]
allows them to file suit in this Court.’ 3 CP at 421.

At the April 19, 2002 hearing, the trial court decided to hear the summary judgment motion first, believing that the change of venue motion was not properly before it. The court later stated that it `may have been an oversight’ to consider summary judgment before considering venue. I RP at 39.

The filing requirements of RCW 36.01.050, `Venue of actions by or against counties,’ relate only to venue, not to the trial court’s subject matter jurisdiction. Shoop v. Kittitas County, 149 Wn.2d 29, 37-38, 65 P.3d 1194 (2003). We review a venue decision only for abuse of discretion. Russell v. Marenakos Logging Co., 61 Wn.2d 761, 765, 380 P.2d 744 (1963); West v. Osborne, 108 Wn. App. 764, 770, 34 P.3d 816, review denied, 145 Wn.2d 1012 (2001). A trial court abuses its discretion when it exercises its discretion on untenable grounds or for untenable reasons. State ex rel. Carroll v. Junker, 79 Wn.2d 12, 26, 482 P.2d 775
(1971). And a trial court’s wrongful denial of a motion for a change of venue is harmless error absent a showing of prejudice. See Geroux v. Fleck, 33 Wn. App. 424, 427-28, 655 P.2d 254 (1982) (citing Lincoln v. Transamerica Inv. Corp., 89 Wn.2d 571, 578, 573 P.2d 1316 (1978)), review denied, 99 Wn.2d 1003 (1983).

Here, the Association fails to articulate any prejudice that may have resulted from the Thurston County venue[18] and we must therefore assume that any error was harmless. See Russell, 61 Wn.2d 765 (`[E]xcept in rare instances . . . the mills of justice grind with equal fineness in every county of the state.’). We also reject the Association’s argument that Thurston County lacks jurisdiction. See Shoop, 149 Wn.2d at 37-38.

3. Association’s Motion to Strike Hearing Date
The Association also contends that the trial court erred in failing to strike the hearing date.

On April 2, 2002, the Association filed a CR 56(f) motion to strike the hearing date to give it time to conduct discovery. The trial court considered the summary judgment motion before considering the other motions. The Association complains that it had only 40 days from the time it was added to the lawsuit until the hearing on motion for summary judgment.

CR 56(f) provides:

Should it appear from the affidavits of a party opposing the [summary judgment] motion that he cannot, for reasons stated, present by affidavit facts essential to justify his opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.

We review a trial court’s denial of a CR 56(f) motion for abuse of discretion. Tellevik v. Real Prop. Known as 31641 W. Rutherford St., Located in City of Carnation, Wash., All Appurtenances Improvements Thereon, 120 Wn.2d 68, 90, 838 P.2d 111, 845 P.2d 1325 (1992); Coggle v. Snow, 56 Wn. App. 499, 504, 784 P.2d 554 (1990). A trial court may deny a motion for a continuance when (1) the requesting party does not offer a good reason for the delay in obtaining the desired evidence; (2) the requesting party does not state what evidence would be established through the additional discovery; or (3) the desired evidence will not raise a genuine issue of material fact. Tellevik, 120 Wn.2d at 90; Turner v. Kohler, 54 Wn. App. 688, 693, 775 P.2d 474 (1989).

Here, the Association claims that the evidence it sought could have shown that the quarry is actually compatible with the Capitol Ridge subdivision, a disputed issue of material fact. But no factual showing could have altered the trial court’s conclusion that mining was incompatible as a matter of law with the residential use covenant. Thus, the error, if any, was harmless.

Award of Attorney Fees Under Covenant/Award Against Blake Individually 1. Award of Attorney Fees for Enforcement of Covenant
Both PD/Blake and the Association dispute the trial court’s award of attorney fees to the Webers based on Meresse v. Stelma, 100 Wn. App. 857, 999 P.2d 1267 (2000). They also argue that the enforcement provision in the covenants ought not to apply because no violation of the covenants had yet occurred. We disagree. Webers are entitled to an award of attorney fees.

The Capitol Ridge covenants mandate the award of attorney fees to the Association or any property owner in an action to enforce the covenants or restrictions.[19] The relevant provision states:

Enforcement. The Association, or any Owner, shall have the right to enforce, by any proceeding at law or in equity, all restrictions, conditions, covenants, reservations, liens and charges now or hereafter imposed by the provisions of this Declaration. Failure by the Association or by any Owner to enforce any covenant or restriction herein contained shall in no event be deemed a waiver of the right to do so thereafter. In any enforcement proceeding, the prevailing party shall be entitled to recover its costs and reasonable attorneys’ fees and costs.

2 CP at 382 (emphasis added).

The attorney fee provision in Meresse read:

If the parties hereto or any future owners of the above described property or their assigns shall violate or attempt to violate any of the covenants, restrictions, reservations or agreements herein from the date of purchase it will be lawful for any other person or persons owning real estate situated in Constant Oaks . . . to prosecute any proceedings at law or equity against the persons violating or attempting to violate any restrictions, reservations, covenants, or agreements, and either to prevent him or them from doing so or to recover damages of other dues [sic] from such violation including attorneys fees and court costs.

100 Wn. App. at 868. We denied the request for attorney fees, stating:

The Meresses also seek attorney fees, contending that Stelma’s attempt to amend the restrictive covenants was an `unreasonabl[e] misus[e] [of] the express powers in the covenants.’ . . . [H]owever, the trial court did not find Stelma’s actions unreasonable only invalid. And the instrument containing the original restrictive covenants merely provided for attorney fees if lot owners violated or attempted to violate `any restrictions, reservations, covenants, or agreements.’ Stelma’s exercise of the majority-vote provision to amend the covenants was not such a violation.

Accordingly, we decline to award attorney fees to either party.

Meresse, 100 Wn. App. at 868-69.

We disagree with appellants/cross-respondents that Meresse stands for the per se rule that if covenants are amended, no attorney fees may be awarded for enforcement of the original covenants. Moreover, we are not constrained to reach the same result as Meresse because the facts of that case differ from the present case in two important ways. First, the Webers sued to enjoin a violation of the covenant even before the Association sought to amend the covenants. In Meresse, the property owners seeking enforcement brought a declaratory judgment action only after the other lot owners had voted to amend the covenants. Second, unlike the language in Meresse, the language in the enforcement provision here is clear and states that the prevailing party `shall be entitled’ to attorney fees.[20]

Blake/PD also claim that `no actual violations of the residential only restriction . . . occurred’ and `[n]o violation occurred on any portion of any lot within [the] subdivision.’ Br. of Appellant PD/Blake at 21-22. Thus, they argue that because no mining had yet occurred in the subdivision, the Webers’ lawsuit cannot be an `enforcement’ action. But appellants/cross-respondents do not offer any authority for the proposition that `enforcement’ of a covenant should be so narrowly construed as to ripen only after mining has begun, and we decline to accept their argument.[21]

2. PD/Blake’s Liability for Attorney Fees
PD/Blake contend that the trial court erred in disregarding the corporate form and finding both Blake and PD liable for attorney fees, because it was the Association that acted to amend the covenants. Blake also contends that the trial court erred in finding him individually liable.[22]

As a matter of law, the developer seeking to introduce mining into the subdivision in violation of the covenants, PD, is liable for the attorney fees expended by the Webers to enforce the covenants. But Blake’s second argument, that there is no basis for holding him individually liable for the attorney fees, requires further analysis.

The purpose of the corporate form is to limit shareholder liability. Meisel v. M N Modern Hydraulic Press Co., 97 Wn.2d 403, 411, 645 P.2d 689 (1982). Disregarding the corporate form, or `piercing the corporate veil,’ is an equitable remedy imposed only in exceptional circumstances. Truckweld Equip. Co., Inc. v. Olson, 26 Wn. App. 638, 643-44, 618 P.2d 1017 (1980). A plaintiff seeking to impose direct shareholder liability must demonstrate that: (1) the corporate form has been intentionally used to violate or to evade a duty; and (2) disregard of the corporate form is necessary to prevent an unjustified loss to the creditor. Meisel, 97 Wn.2d at 409-10.

Here, the Webers asserted in their complaint and amended complaint that `[o]n information and belief, the standards for piercing the corporate veil have been met.’ See 1 CP at 12; 2 CP at 263.[23] The Webers’ brief on revised motion for partial summary judgment does not discuss disregard of the corporate form. At oral arguments on the motion for summary judgment, the Webers’ counsel stated only:

I think that P D . . . and . . . Blake should be jointly and severally liable for a large portion of the fees. . . . I don’t think it makes sense to not hold . . . Blake personally liable because I think it was his personal responsibility to uphold the covenants that ran to his land and he didn’t do that.

II RP at 81.
Without further explanation, the trial court stated in its oral ruling, `I’m going to make Paul Blake, P D Development and Capital [sic] Ridge Homeowners Association jointly and severally liable for attorney fees in this matter in the amount of $12,000.’ II RP at 82-83.

Although `an appellate court may sustain a trial court on any correct ground, even though that ground was not considered by the trial court,’[24] the trial court’s basis for holding Blake individually liable is unclear, and we remand for further analysis by the trial court and for the entry of findings on whether piercing PD’s corporate veil is appropriate here. Calculation of Attorney Fees (Webers’ Cross-Appeal) and Request for Attorney Fees on Appeal.

The Webers cross-appeal contending that the trial court abused its discretion in failing to calculate their award of attorney fees based on the lodestar method. In its written summary judgment order, the trial court simply stated, `Plaintiffs are hereby awarded attorneys fees in the amount of $12,000.’ 4 CP at 745.[25]

The lodestar method is used in determining an award of attorney fees as costs. Mahler v. Szucs, 135 Wn.2d 398, 434, 957 P.2d 632, 966 P.2d 305
(1998); Scott Fetzer Co. v. Weeks, 114 Wn.2d 109, 124, 786 P.2d 265
(1990). A court must first determine that counsel expended a reasonable number of hours in securing a successful recovery for the client. Mahler, 135 Wn.2d at 434; Scott Fetzer Co. v. Weeks, 122 Wn.2d 141, 151, 859 P.2d 1210 (1993). This requires the court to exclude from the requested hours any wasteful or duplicative hours and any hours pertaining to unsuccessful theories or claims. Mahler, 135 Wn.2d at 434; Fetzer, 122 Wn.2d at 151. Counsel must provide contemporaneous records documenting the hours worked. Mahler, 135 Wn.2d at 434. Finally, the lodestar fee, calculated by multiplying the reasonable hourly rate by the reasonable number of hours incurred in obtaining the successful result, in rare instances may be adjusted upward or downward in the trial court’s discretion. Mahler, 135 Wn.2d at 434 (citing Fetzer, 122 Wn.2d at 150; Travis v. Washington Horse Breeders Ass’n, 111 Wn.2d 396, 759 P.2d 418
(1988)).

We require the trial court to develop an adequate record to review an attorney fee award. This includes findings of fact and conclusions of law. Mahler, 135 Wn.2d at 435 (citing Smith v. Dalton, 58 Wn. App. 876, 795 P.2d 706 (1990); Rhinehart v. Seattle Times, 59 Wn. App. 332, 798 P.2d 1155 (1990); Bentzen v. Demmons, 68 Wn. App. 339, 842 P.2d 1015
(1993); State Farm Mut. Auto. Ins. Co. v. Johnson, 72 Wn. App. 580, 871 P.2d 1066, review denied, 124 Wn.2d 1018 (1994)).

Here, the basis for the trial court’s award is unclear, and we remand for a calculation of fees using the lodestar method.

Finally, the Webers contend that they are entitled to costs and attorney fees on appeal under RAP 18.1[26] and the fee provision in the covenant. Because the Webers are entitled to attorney fees under the covenant provision, they are entitled to their attorney fees on appeal for the costs of responding to appellants/cross-respondents’ claims. Such an award must be limited to those fees related to issues on which the Webers actually prevailed if the trial court determines that Blake is not individually liable for attorney fees, the Webers shall not be entitled to their fees related to that issue on appeal.[27] We also note that because the Webers sought a remand for a calculation of attorney fees according to the lodestar method, they have substantially prevailed on that issue,[28] regardless of the result of such a calculation.

We affirm in part. We remand for the entry of findings on the trial court’s award of attorney fees to the Webers and on the parties’ liability for those fees.

A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.

ARMSTRONG, J., SEINFELD, J.P.T., Concur.