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In the Matter of the Trustee's Sale Of Real Property of SANDRA GARROSS, Appellant v. ADA PIPKIN, Respondent.

ANNE L. ELLINGTON, J.

In this appeal from an order disbursing funds from a trustee's sale of real property, we affirm the trial court's order granting attorney fees to Ada Pipkin.

FACTS

In 1994, Alvin and Ada Pipkin loaned Junice Bolton and her daughter Sandra Garross $47,023.36 to purchase a home. Bolton and Garross signed a promissory note for the loan, purchased the land and, as security for the note, executed a deed of trust naming the Pipkins as beneficiaries. The promissory note provided for reasonable attorney fees incurred in collecting the note. When Alvin died, Ada became the sole owner of the note.

The note required no payments; instead, the principal and interest were due one year after Junice Bolton died. Bolton died on May 14, 1997, so the note was to be fully repaid by May 14, 1998. Garross defaulted, and trustee Bruce Keithly initiated a deed of trust foreclosure sale. Keithly agreed to continue the foreclosure sale three times at Garross' request.

The sale finally started at 10:00 a.m. on January 29, 1999. Jeffrey and Tara Cole paid $149,600 cash for the property. That same morning, Garross, apparently acting pro se, filed for bankruptcy in an attempt to stay the foreclosure. The bankruptcy court clerk stamped her application as received at 10:14 a.m. Keithly moved for relief from the stay that automatically resulted from Garross' bankruptcy filing, and the bankruptcy court annulled the stay retroactively to the time of the foreclosure sale. Garross appealed the bankruptcy court order to the United States District Court, Judge Barbara Rothstein. After filing the appeal, but before the District Court ruled, Garross filed an adversary proceeding in bankruptcy court in which she named everyone connected with the matter as defendants, including Keithly, the law firm of Keithly, Weed, Graafstra and Benson, Ada Pipkin, and the Coles. The central issue in that complaint was the same issue before Judge Rothstein:

whether the foreclosure sale was void because it was held after the automatic stay was in effect.

In October of 1999, Judge Rothstein affirmed the bankruptcy court's annulment of the stay. The defendants named in Garross' complaint in the adversary proceeding moved for summary judgment. Garross did not contest the motion, and the bankruptcy court dismissed the case. Keithly then deposited $82,769.96 in `excess sale proceeds' into the Superior Court registry so the court could determine how to disburse the funds. Garross did not contest the amount Pipkin claimed she owed on the note, nor did she contest the validity of the foreclosure sale. The sole issue before the Superior Court was how to allocate the excess proceeds among the competing claimants, including Pipkin, who requested post-sale attorney fees.

The Superior Court order disbursed the funds as follows:

1. Clerk of the Court file fee $110.00
2. Payment to Ada Pipkin $21,139.69
3. Payment to Robert T. Garross $20,692.43
4. Payment to Helmut Kah $18,500.00
5. Payment to Sandra Lynn Garross $22,327.84
TOTAL $82,769.96

Clerk's Papers at 8.

The rationale for the disbursement is as follows. Robert Garross, Sandra's brother, had a one-quarter interest in the home, and therefore a one-quarter interest in the excess sale proceeds ($82.769.96/4 = $20,692.43). Helmut Kah represented Sandra Garross in the bankruptcy proceedings, and she assigned Kah $18,500 of the excess proceeds to pay for his legal services. Pipkin received $21,139.69 for reasonable attorney fees incurred while collecting the money owed on the promissory note, including fees incurred in the bankruptcy and District court proceedings.

DISCUSSION

Res Judicata and Collateral Estoppel

Garross' sole argument is that Pipkin's claim for fees is barred by res judicata and collateral estoppel.

Pipkin takes the position that Garross cannot appeal the order disbursing the excess proceeds, because she accepted the benefits of the order and provided no security for the appeal. We disagree. A party may accept the benefits of a trial court decision without losing the right to appeal if, `regardless of the result of the review based solely on the issues raised by the party accepting benefits, the party will be entitled to at least the benefits of the trial court decision[.]' RAP 2.5(b)(1)(iii). Here, Garross challenges only the amount disbursed to Pipkin. Were she to prevail, the amount of Pipkin's disbursement would be reduced or reversed and Garross would be entitled to more of the excess proceeds. In short, regardless of the result of the appeal, Garross is entitled to at least the amount of excess funds awarded by the trial court, and is therefore not precluded from challenging the disbursement order under the acceptance of benefits rule.

`Claim preclusion, traditionally known as res judicata, prohibits a party from bringing a claim already litigated or a claim that could have been litigated in a prior action.' Knuth v. Beneficial Washington, Inc., 107 Wn. App. 727, 731, 31 P.3d 694 (2001), review denied, 145 Wn.2d 1035 (2002). A prior judgment has preclusive effect when the two proceedings are identical in four respects: (1) persons and parties; (2) cause of action; (3) subject matter; and (4) the quality of the persons for or against whom the claim is made. Knuth, 107 Wn. App. at 731. Here, the two proceedings did not involve identical causes of action or subject matter.

The sole issue being litigated in bankruptcy court was whether an automatic stay was in effect at the time of the trustee's sale, rendering the sale void. The sole issue in the Superior Court was how to disperse excess proceeds from the trustee's sale. Garross contends Pipkin could have sought fees from the bankruptcy court. But Pipkin had no cause of action before that court, and Garross has not established that Pipkin could have requested fees in the only action in which she participated the motion for summary dismissal of Garross' adversary proceeding. More to the point, the bankruptcy court had no jurisdiction over the excess funds from which Pipkin's fees were to be satisfied. The Superior Court proceeding therefore was not barred by res judicata. Nor was the Superior Court proceeding barred by collateral estoppel, which prevents relitigation of a particular issue or determinative fact. Hadley v. Maxwell, 144 Wn.2d 306, 311, 27 P.3d 600 (2001). The two proceedings here concerned completely different issues. Collateral estoppel has no application.

Attorney Fees

A party is entitled to attorney fees on appeal if a contract, statute, or recognized ground of equity permits recovery of attorney fees at trial, and the party is the substantially prevailing party. Syrett v. Reisner McEwin, 107 Wn. App. 524, 532, 24 P.3d 1070 (2001). Here, the promissory note provides for reasonable attorney fees incurred to collect the note, the trial court awarded such fees below, and Pipkin is the substantially prevailing party on appeal. She is entitled to an award of attorney fees for this appeal.

Sanctions

Pipkin seeks sanctions for a frivolous appeal. An appellate court can order a party or counsel who files a frivolous appeal to pay sanctions to any other party who has been harmed by the delay. RAP 18.9(a); Orwick v. Fox, 65 Wn. App. 71, 90-91, 828 P.2d 12 (1992). An appeal is frivolous if it cannot be supported by any rational argument on the law or facts. Orwick, 65 Wn. App. at 90. In determining whether an appeal is frivolous, we examine the record as a whole, and any doubts as to whether the appeal is frivolous will be resolved in favor of the appellant. Orwick, 65 Wn. App. at 90. Pipkin contends Garross' appeal is frivolous, and seeks sanctions against both Garross and her attorney; specifically, she asks that Garross and Kah be held jointly liable for her attorney fees.

In Orwick, we affirmed dismissal of a variety of claims against the State, and held that sanctions against both the appellants and their attorney were appropriate under RAP 18.9(a) because the appeal raised no debatable issues:

Examining the record as a whole, as to Orwick's claims against the State defendants, the dispositive issues on appeal have not turned on the complexities of 42 U.S.C. § 1983 nor on any unusual aspects of the other applicable law. Rather, the decision has been based on well-recognized principles which apply to virtually all summary judgment proceedings. Those principles are or should be well recognized by every practicing attorney.

Orwick, 65 Wn. App. at 91.

Here, as in Orwick, Garross' appeal raises no debatable issues. The dispositive issue on appeal is not complex, but rather turns on a straightforward application of well-established and easily-recognizable collateral estoppel and res judicata principles. These are principles that `should be well recognized by every practicing attorney.' The record plainly belies Garross' argument on appeal. We therefore hold Garross and Kah jointly and severally liable for Pipkin's reasonable fees incurred in responding to a frivolous appeal. See Orwick, 65 Wn. App. at 91-92.

Affirmed.

WE CONCUR: APPELWICK, J., BECKER, J.

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Comments

IN RE TRUSTEE'S SALE OF REAL PROP., 48312-9-I (Wash.App. 9-3-2002)
(Sep 3, 2002)