RWR Management, Inc. v. Citizens Realty Co.
Court of Appeals Division III
State of Washington
Opinion Information Sheet
Docket Number: 23507-6-III
Title of Case: RWR Management, Inc. v. Citizens Realty Co., et al
File Date: 05/30/2006
SOURCE OF APPEAL
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Appeal from Superior Court of Spokane County
Docket No: 02-2-06971-6
Judgment or order under review
Date filed: 10/22/2004
Judge signing: Hon. Kathleen M O'Connor
JUDGES
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Authored by Stephen M Brown
Concurring: Dennis J. Sweeney
John A. Schultheis
COUNSEL OF RECORD
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Counsel for Appellant(s)
Cheryl Rani Guttenbe Adamson
Attorney at Law
6725 W Clearwater Ave
Kennewick, WA 99336-1788
Diehl Randall Rettig
Attorney at Law
6725 W Clearwater Ave
Kennewick, WA 99336-1788
Counsel for Respondent(s)
Robert Allan Dunn
Dunn & Black PS
10 N Post St Ste 200
Spokane, WA 99201-0705
Charles Kenneth Wiggins
Wiggins & Masters PLLC
241 Madison Ave N
Bainbridge Island, WA 98110-1811
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
RWR MANAGEMENT, INC., a ) No. 23507-6-III
Washington corporation d/b/a R. )
W. ROBIDEAUX & COMPANY , )
) Division Three
Respondent, )
) PUBLISHED OPINION
v. )
)
CITIZENS REALTY COMPANY, a )
Washington corporation; LINCOLN )
INVESTMENT COMPANY OF SPOKANE; )
RPS II, L.L.C. d/b/a RIVER PARK )
SQUARE; and CPC DEVELOPMENT, )
INC., a Washington corporation )
d/b/a THE PENNEY'S BUILDING, )
)
Appellants. )
)
BROWN, J.--Citizens Realty Company, Lincoln Investment Company of
Spokane, RPS II, L.L.C. d/b/a River Park Square, CPC Development, Inc.
d/b/a The Penney's Building (collectively RPS) appeal a $6.5 million
quantum meruit judgment obtained by RWR Management Inc. d/b/a R.W.
Robideaux & Co. (RWR). Although finding contracts existed, a jury rejected
damages for RWR's written and oral contract claims. RPS contends the jury
verdicts are inconsistent. Additionally, RPS contends instructional and
evidentiary error occurred at trial. Finally, RPS contends the trial court
erred in disqualifying prior counsel. We reject each contention, and
affirm.
FACTS
RPS owns the River Park Square shopping mall and garage in downtown
Spokane. RWR is a property management and consulting firm. In 1988, RWR
became the managing and leasing agent for River Park Square. Robert W.
Robideaux is RWR's president and principal. RPS and RWR amended their
management agreement, requiring RWR to 'assist Owner in redevelopment of
River Park Square' and perform such duties 'as directed by Owner.' Ex. P-
17.
RPS later requested Mr. Robideaux to become RPS's 'right hand' and chief
coordinator for the redevelopment project. Report of Proceedings (RP) at
273; Ex. P-26. RWR agreed. In 1996, the parties entered into a
coordination agreement to replace all their prior written and oral
agreements regarding RWR's role in the River Park Square redevelopment.
This agreement was later modified by Exhibit P-107, increasing RWR's
monthly compensation. The modified contract provided RPS 'will at the
completion of this Agreement review and determine the bonus amount to be
paid to {RWR}, if any, at {RPS's} sole discretion.' Ex. P-107 at 4.
Through the years, several of the parties' agreements were memorialized by
the law firm Witherspoon, Kelley, Davenport & Toole, P.S. (Witherspoon).
RWR did not retain independent counsel to represent it in negotiating the
agreements. Witherspoon represented RWR and Mr. Robideaux on several
unrelated matters.
Between 1999 and 2000, the parties continued to negotiate RWR's fees
relating to both its management and consulting services. In October 2002,
RWR unsuccessfully requested a flat compensation fee of $550,000 for
'unpaid past services and contributions' to the River Park Square project.
Ex. P-155. This amount was a settlement amount; RWR actually felt it was
owed between $1,009,862 and $1,725,102 in uncompensated fees.
Negotiations broke down, prompting RWR to sue in November 2002. RWR
alleged, among other things, breach of contract and quantum meruit/unjust
enrichment. RWR alleged RPS was unjustly enriched because RWR provided
substantial 'hours of time, services, and effort' of which it was not
compensated. Clerk's Papers (CP) at 27. RPS terminated all agreements
between the parties. RWR requested disqualification of RPS's counsel,
Witherspoon, based on conflict of interest. Filing a memorandum opinion,
the court disqualified Witherspoon. The court declined reconsideration.
At trial, RWR offered a letter from a potential development director
asking for a development fee of six percent of total project costs. The
total project costs were approximately $115 million. Mr. Robideaux
testified RWR took over the development director role. Additionally,
during trial, RWR submitted a damages summary, requesting $7,790,825 in
specified unpaid development fees and agent/broker fees.
Mr. Robideaux testified he previously requested more compensation from
RPS because 'our company and myself, we could not continue the way we were
going.' RP at 699-700. RWR's accountant, Gordon Budke, testified the
Robideauxs and their companies 'were in high financial stress.' RP at 961.
He further testified RWR was in 'financial hurt' and its expenses were
close to its incoming management fee from RPS, which limited Mr.
Robideaux's salary. RP at 978.
The court heard argument regarding whether a proposed RPS exhibit showing
Mr. and Mrs. Robideaux's sources of income from 1993 to 2002 should be
admitted. RWR successfully argued the parties' prior motion in limine,
dismissing the parties' individually from the lawsuit, precluded the
proposed exhibit. The court ruled 'none of their personal income outside
of that which they have received from entities at issue here is relevant.'
RP at 987. This ruling precluded further cross-examination regarding the
Robideauxs' personal finances.
During trial, the court reserved a portion of RWR's breach of contract
claim relating to an alleged refusal by RPS to provide insurance coverage
and indemnify RWR in previous bondholder litigation. Further, the court
dismissed RWR's trespass, misappropriation, and tortuous interference
claims. The court declined to give RPS's proposed Jury Instruction No. 52,
providing:
Due to rulings made by the Court on a number of matters outside the
presence of the jury, you are instructed not to consider, and should
disregard, plaintiff's claims against defendants for:
(1) trespass to property;
(2) misappropriation of, or interference with, plaintiff's property,
including prospective tenant lists;
(3) interference with plaintiff's business relationships with third
parties;
(4) breach of contract for failure to provide insurance coverage for the
bondholders' litigation; and
(5) breach of contract for failure to indemnify plaintiff for its time and
expense associated with the bondholders' litigation.
CP at 1730-731.
The court instructed on the remaining claims and directed the jury to
consider evidence admitted 'that relates to that claim.' CP at 1733 (Jury
Instruction No. 1). The court instructed that if the jury finds 'no
enforceable oral contract between the parties' it must award RWR the
reasonable value of services performed if proven by a preponderance of the
evidence that RWR performed the services with RPS's knowledge and RPS knew,
or should have known, RWR expected payment. CP at 1751 (Jury Instruction
No. 16).
During deliberations, the jury inquired if it could bind RPS to future
legal fees incurred by RWR regarding the bondholder litigation. The court
responded, it had 'reserved all issues associated with the bondholders
litigation.' CP at 1971.
The jury returned a verdict for $6.5 million in quantum meruit for
RWR's uncompensated services which RPS benefited from and knew, or should
have known, were performed in the expectation of payment. The jury made a
special finding that RPS breached the management agreement with RWR, but
awarded no damages. The jury made a special finding that RPS did not
breach the coordination or modified coordination agreement relating to
RWR's redevelopment services. In Question No. 5 of the special verdict
form, the jury found the parties did enter into 'an oral contract.' CP at
1776. The jury also made a special finding in Question No. 6 of the
special verdict form that RPS breached 'any oral contracts' with RWR, but
when asked in Question No. 7 of the special verdict form about the amount
of damages, the jury again declined to award damages. CP at 1777. The
special verdict form states:
If you answer Question No. 7 with any amount
of money, do not answer any of the remaining questions, sign the verdict
form and return it to the bailiff. If you do
not answer Question No. 7, proceed to Question No. 8.
CP at 1777. Since the jury did not award any amount of money in Question
No. 7, it went to the next question related to RWR's request for quantum
meruit damages. RPS did not formally object to the special verdict form or
claim the verdicts were inconsistent prior to the court discharging the
jury.
RPS unsuccessfully moved for a CR 50(b) motion for judgment as a
matter of law and alternatively a CR 59(a) motion for a new trial. The
court reasoned evidence existed sufficient for the jury to find both
enforceable and unenforceable oral contracts and '{t}he development
director, which was the bulk of the damages request, was not an enforceable
oral contract.' RP at 1479. The court concluded the jury properly made 'a
finding based upon quantum meruit for the function of development
director.' RP at 1479.
RPS appealed.
ANALYSIS
A. Quantum Meruit Recovery
The initial issue is whether the trial court erred in denying RPS's CR
50(b) motion for judgment as a matter of law and allowing quantum meruit
recovery in light of allegedly inconsistent verdict forms. Alternatively,
RPS assigns error to the trial court's denial of its CR 59(a) motion for a
new trial based upon excessive damages.
Initially, RWR argues RPS's lack of objection below bars the inconsistent
verdicts issue. However, RPS timely filed a post-trial motion, bringing
the issue to the trial court's attention, thus satisfying RAP 2.5.
A CR 50(b) post-trial motion for judgment as a matter of law is
limited to situations where the court can find there is neither evidence
nor reasonable inference therefrom sufficient to sustain the verdict.
Aluminum Co. of Am. v. Aetna Cas. & Surety Co., 140 Wn.2d 517, 529, 998
P.2d 856 (2000). We interpret the evidence most strongly against the
moving party and in the light most favorable to the opponent. Id. We
review a CR 59(a) new trial motion ruling for abuse of discretion. Id. at
537.
'The determination of damages is peculiarly within the province of the
jury, . . . and courts are reluctant to interfere.' Stevens v. Gordon, 118
Wn. App. 43, 54, 74 P.3d 653 (2003). We will not disturb a jury award
'unless it is outside the range of substantial evidence, shocks the
conscience of the court, or was the result of passion or prejudice.' Id.
The trial court lacks discretion to reduce a jury's damages award if the
verdict is within the range of credible evidence. Green v. McAllister, 103
Wn. App. 452, 461, 14 P.3d 795 (2000). Even when the damages are
conflicting or disputed, if it can be said that the jury could 'believe or
disbelieve some of it and weigh all of it and remain within the range of
the evidence in returning the challenged verdict, then it cannot be found
as a matter of law' that the verdict was motivated by passion or prejudice.
James v. Robeck, 79 Wn.2d 864, 870-71, 490 P.2d 878 (1971).
Quantum meruit, a Latin phrase meaning 'as much as he deserves,' is
'based on the premise that one who uses and enjoys the labor and materials
of another should not be unjustly enriched thereby.' Ausler v. Ramsey, 73
Wn. App. 231, 232, 868 P.2d 877 (1994). Quantum meruit is an equitable
remedy provided when a contract between two parties has failed. Id.
Here, the jury found enforceable, breached contracts, plus services
rendered outside these contracts to justify quantum meruit damages.
Because juries return inconsistent verdicts for various reasons, including
mistake, compromise, and lenity, and despite the inherent discomfort
surrounding inconsistent verdicts, both the United States Supreme Court and
the Washington Supreme Court have held that a general or special verdict
adverse to a party will not be vacated merely because it is arguably
inconsistent with a general or special verdict favorable to that party.
United States v. Powell, 469 U.S. 57, 65, 105 S. Ct. 471, 83 L. Ed. 2d 461
(1984); State v. McNeal, 145 Wn.2d 352, 357, 37 P.3d 280 (2002).
Even so, a seemingly inconsistent verdict must still be supported by
sufficient evidence. Sufficient evidence exists if the record contains
enough evidence to persuade a rational, fair-minded person that it is true.
Winbun v. Moore, 143 Wn.2d 206, 213, 18 P.3d 576 (2001).
Commonly, changes occur between contracting parties requiring additional
performance outside the contract. A contractor, for example, may recover
on a quantum meruit theory when substantial changes occur not covered by
the contract, and the effect of such changes is to require extra work or to
cause substantial loss to the contractor at the benefit of the owner.
Hensel Phelps Constr. Co. v. King County, 57 Wn. App. 170, 174, 787 P.2d 58
(1990). Thus, although a contractor is presumed to be bound by the terms
to which he agreed, he cannot be presumed to have bargained away his right
to claim damages resulting from changes the parties did not contemplate
when making the contract. Id.
Similarly, RPS and RWR entered into several oral and written contracts, but
multiple unanticipated changes occurred during the course of the agreed
work. RWR's role significantly changed. The record shows the parties'
contracted for some, but not all changes. For example, Mr. Robideaux
testified to the extensive development consulting services he performed
while acting as development coordinator. While RPS contends otherwise,
questions of fact are left to the trier of fact and not subject to
appellate review. Boeing Co. v. Heidy, 147 Wn.2d 78, 87, 51 P.3d 793
(2002) (citing Davis v. Dep't of Labor & Indus., 94 Wn.2d 119, 124, 615
P.2d 1279 (1980)). In other words, a fair-minded, reasonable person could
be convinced of changes requiring extra performance outside the parties'
contracts.
Illustratively, in Question No. 5 of the special verdict form says 'an oral
contract,' but Question No. 6 says 'any oral contracts.' CP at 1776-777.
And, Question No. 8 of the special verdict form asked solely, 'Did
Plaintiff perform services for Defendants' benefit in addition to those
required by the written contracts' without additionally asking about oral
contracts. CP at 1777.
In sum, we conclude the special verdict form, approved by both parties,
permitted the jury to proceed to Question No. 8, concerning quantum meruit
recovery. Sufficient evidence exists to support the jury's finding that
RWR provided work outside the parties' oral and written contracts. The
uncompensated additional work supports a quantum meruit award. Next, we
turn to the reasonableness of the damages award.
We will overturn a jury verdict solely when it is clearly unsupported by
substantial evidence. Burnside v. Simpson Paper Co., 123 Wn.2d 93, 107-08,
864 P.2d 937 (1994). We 'will not willingly assume that the jury did not
fairly and objectively consider the evidence and the contentions of the
parties relative to the issues before it. The inferences to be drawn from
the evidence are for the jury and not for this court.' Id. (citations
omitted).
Quantum meruit cases damages are measured by the reasonable value of the
benefit conferred on the defendant. Ducolon Mech., Inc. v.
Shinstine/Forness, Inc., 77 Wn. App. 707, 712, 893 P.2d 1127 (1995). The
burden is on the plaintiff to prove the reasonable value of the services
rendered. Eaton v. Engelcke Mfg., Inc., 37 Wn. App. 677, 682, 681 P.2d
1312 (1984).
RPS argues the bulk of damages requested by RWR were covered by their
contracts. RWR requested over $7.7 million in damages for unpaid
development fees and agent/broker fees. How the jury arrived at $6.5
million is not detailed in the special verdict form. However, the record
shows substantial direct and inferential evidence supporting the jury award
for unpaid fees to which they found RWR entitled by virtue of the services
Mr. Robideaux performed on behalf of RWR. Further, RWR submitted evidence
from another development coordinator showing six percent of total project
costs as an acceptable development fee. Consequently, the quantum meruit
amount is reasonable and supported by substantial evidence.
B. Proposed Jury Instruction
The issue is whether the trial court erred by abusing its discretion
in declining to give RPS's Proposed Jury Instruction No. 52, instructing
the jury to disregard several dismissed causes of action.
We review a trial court's decision whether to give a particular instruction
for abuse of discretion. Stiley v. Block, 130 Wn.2d 486, 498, 925 P.2d 194
(1996). Discretion is abused when the trial court's decision rests on
untenable grounds or untenable reasons. State ex rel. Carroll v. Junker,
79 Wn.2d 12, 26, 482 P.2d 775 (1971). Trial court error on jury
instructions is not grounds for reversal unless it is prejudicial. Stiley,
130 Wn.2d at 498-99 (citing Brown v. Spokane County Fire Protection Dist.
No. 1, 100 Wn.2d 188, 196, 668 P.2d 571 (1983)). An error is prejudicial
if it affects the outcome of the trial. Id.
Here, the record does not contain the court's grounds for refusing to give
RPS's proposed instruction. However, the court stated the remaining
instructions sufficiently 'put before the jury four issues that the jury
has to decide.' RP at 1347. Generally, instructions are sufficient when
counsel may argue their case theory based upon the instructions given, and
the instructions are not misleading. Keller v. City of Spokane, 146 Wn.2d
237, 249, 44 P.3d 845 (2002). Considerable discretion is allowed when
tailoring instructions to fit case facts. State v. Reay, 61 Wn. App. 141,
146-47, 810 P.2d 512 (1991). The court's introductory instruction guided
the jury to consider evidence relating to the individual claims and they
presumably followed the court's instructions. In re Pers. Restraint of
Davis, 152 Wn.2d 647, 713, 101 P.3d 1 (2004). We find no error in the
court's instructions as given.
Even assuming the court's ruling was in error, we find no prejudice. The
special verdict form made no mention of the dismissed tort claims. And,
the court's response to the jury's inquiry regarding the bondholder
litigation instructed the jury that the court had 'reserved all issues
associated with the bondholders litigation.' CP at 1971. Thus, RPS cannot
show the lack of its proposed instruction affected the outcome of trial.
C. Personal Finances Evidence
The issue is whether the trial court erred by abusing its discretion
in excluding evidence regarding the Robideauxs' personal finances and
concluding it was irrelevant. RPS contends Mr. Robideaux and his
accountant opened the door for such evidence.
Our standard of review for evidentiary rulings is abuse of discretion.
City of Spokane v. Neff, 152 Wn.2d 85, 91, 93 P.3d 158 (2004) (citing State
v. Ellis, 136 Wn.2d 498, 504, 963 P.2d 843 (1998)). Under ER 401, evidence
is relevant if it has 'any tendency to make the existence of any fact that
is of consequence to the determination of the action more probable or less
probable than it would be without the evidence.'
During trial, Mr. Robideaux testified to the financial hardship of his
company, inferring he and his company could not continue the way things
were going. RWR's accountant, Mr. Budke, testified RWR was in 'financial
hurt' and 'high financial stress,' and its expenses were close to its
incoming management fee from RPS, limiting Mr. Robideaux's salary. RP at
978; RP at 961. Such vague references do not necessarily open the door for
evidence pertaining to the Robideauxs' personal financial status given
their dismissal from the lawsuit. The Robideauxs' personal finances do not
pertain to whether RPS received unjust enrichment from RWR. Thus, the
court had tenable grounds to find evidence relating to the Robideauxs'
personal finances was inappropriate and irrelevant. Therefore, the court
did not abuse its discretion.
D. Counsel Disqualification
The final issue is whether the trial court erred in disqualifying
RPS's prior counsel for conflict of interest, considering RPS's contention
Witherspoon did not have an existing attorney-client relationship with RWR
regarding this litigation.
Whether circumstances demonstrate a conflict under ethical rules is a
question of law we review de novo. State v. Vicuna, 119 Wn. App. 26, 30-
31, 79 P.3d 1 (2003), review denied, 152 Wn.2d 1008 (2004). Determining
the proper resolution of this alleged conflict requires the exercise of
discretion, and we review the trial court's resolution for abuse of
discretion. Public Util. Dist. No. 1 v. Int'l Ins. Co., 124 Wn.2d 789,
812, 881 P.2d 1020 (1994); see also Wheat v. United States, 486 U.S. 153,
164, 108 S. Ct. 1692, 100 L. Ed. 2d 140 (1988). Denial of a
reconsideration motion is reviewed for abuse of discretion. Go2Net, Inc.
v. C I Host, Inc., 115 Wn. App. 73, 88, 60 P.3d 1245 (2003).
We consider two factors in attorney disqualification questions arising from
alleged conflict of interest. Kurbitz v. Kurbitz, 77 Wn.2d 943, 947, 468
P.2d 673 (1970). First, we consider if the matters embraced within the
pending suit involving an attorney's former client are substantially
related to matters on which the attorney or someone in his association
previously represented the former client. Id. (citing W. E. Bassett Co. v.
H. C. Cook Co., 201 F. Supp. 821 (D. Conn. 1961)). Second, if the attorney
in the present litigation did not formerly represent the adverse client,
but had access to confidential information which is material to the present
suit, then the attorney should disqualify himself. Kurbitz, 77 Wn.2d at
947 (citing United States v. Trafficante, 328 F.2d 117 (5th Cir. 1964)).
Both considerations apply here.
In its memorandum opinion, the court reasoned RWR disclosed confidences to
Witherspoon, did not hire independent counsel to represent it in the
negotiations of the parties' agreements, and considered Witherspoon its
attorneys. While the court announced findings in its memorandum opinion,
they were based on materials presented for its consideration in an ER
104(a) preliminary fact inquiry concerning the attorney-client privilege.
The court's interlocutory decision was not presented for discretionary
appellate review. Consequently, we question the viability of the issue now
that the matter has been tried with able counsel. RPS has presented no
authority or persuasive argument that any remaining relief, under the
circumstances, would include a new trial. Hence, the issue is moot.
Nevertheless, the court did not abuse its discretion in disqualifying
Witherspoon based upon a conflict of interest.
In sum, substantial evidence supports the jury's verdict in favor of
RWR. Further, the trial court did not abuse its discretion in declining
RPS's proposed jury instruction, precluding evidence regarding the
Robideauxs' personal finances, and disqualifying RPS's prior counsel.
Affirmed.
Brown, J.
WE CONCUR:
Sweeney, C.J.
Schultheis, J.