DWYER, J.
¶ 1 Attorney fees recoverable pursuant either to a contractual indemnity provision or to the theory of equitable indemnity are damages that must be proven by competent evidence at trial, just as must be any other element of damages. In this case, the trial court awarded attorney fees based upon a prevailing party provision of a purchase and sale agreement, a contractual indemnity provision, and principles of equitable indemnity. Nevertheless, in awarding these "costs and fees," the trial court relied solely upon the posttrial motions and declarations of the parties. No evidence of these expenses was produced at trial. Nor did the trial court attempt to segregate those fees arising as damages from those arising as costs recoverable pursuant to the contractual prevailing party provision. Accordingly, we reverse in part and affirm in part.
¶ 2 In July of 1980, John Radovich
¶ 3 Even before the execution of the quitclaim deed, the commercial parcel was leased to Douglas and Margie Burbridge, who operated a boat business on the property. In
¶ 4 In 2004, Radovich also agreed to sell his one-half interest in the commercial parcel to the Burbridges. Radovich and the Burbridges signed a purchase and sale agreement in February 2004. Pursuant to this agreement, Radovich paid for the Burbridges to obtain title insurance to ensure marketable title. Pacific Northwest Title Insurance Company (PNWT), which was employed to perform the title search, failed to discover the existence of the recorded 1981 quitclaim deed. Thereafter, the Burbridges assigned their rights under the purchase and sale agreement to Bridges, and Radovich conveyed his interest in the commercial parcel to Bridges by statutory warranty deed.
¶ 5 In 2007, Bridges agreed to sell the commercial parcel to Supreme Northwest Inc. (doing business as Seattle Boat). PNWT was again employed to provide title insurance, and, once again, the company failed to identify the 1981 quitclaim deed. Bridges then conveyed the commercial parcel to Seattle Boat by bargain and sale deed.
¶ 6 Following this conveyance, NYBA brought suit against Seattle Boat, seeking a declaratory judgment quieting title in NYBA to the property described in the 1981 quitclaim deed. Seattle Boat answered this complaint and filed a third party complaint against Bridges and the Burbridges, alleging breaches of their 2007 purchase and sale agreement and the 2007 bargain and sale deed. In turn, Bridges filed a fourth party complaint against Radovich and Keyes, alleging breach of the 2004 statutory warranty deed, breach of the related purchase and sale agreement, and unjust enrichment.
¶ 7 Both Radovich and Bridges moved for summary judgment. The trial court denied Radovich's motion without explanation. The court then determined that, as a matter of law, if the 1981 quitclaim deed was valid and enforceable, Radovich breached the 2004 statutory warranty deed and related purchase and sale agreement. Following a bench trial, the trial court determined that the quitclaim deed was invalid and unenforceable based upon several legal and equitable principles.
¶ 8 Thereafter, Bridges moved for an award of attorney fees and costs against Radovich based upon (1) the prevailing party provision of the 2004 purchase and sale agreement, (2) the indemnity provision of the purchase and sale agreement, and (3) principles of equitable indemnity. Radovich opposed this motion and requested an evidentiary hearing on the issue of attorney fees. The trial court denied the request for an evidentiary hearing and, based solely on the written submittals, granted Bridges' motion and awarded fees and costs in the amount of $376,469.41.
¶ 9 Radovich appeals from the trial court's denial of his summary judgment motion, the court's order granting partial summary judgment to Bridges, and the subsequent award of attorney fees and costs.
¶ 10 As a threshold matter, we note that we have determined in the linked appeal that the trial court erred by ruling that the 1981 quitclaim deed was neither intended to convey fee title nor enforceable. See Newport Yacht Basin Ass'n of Condo. Owners v. Supreme Nw., Inc., 168 Wn.App. 56, 277 P.3d 18 (2012). Nevertheless, because the trial court's award of attorney fees to Bridges was based upon three separate theories — none of which the court viewed as depending upon the validity of the quitclaim deed — it remains necessary for us to determine the propriety of the fee award.
¶ 11 In addition, we note that the trial court treated each of Bridges' three alternative
¶ 12 We address the issues as presented to us by the parties.
¶ 13 Radovich first contends that the trial court erred by determining that, as a matter of law, in the event that the quitclaim deed was determined to be valid, Radovich breached the 2004 statutory warranty deed and related purchase and sale agreement. We disagree.
¶ 14 In reviewing an order for summary judgment, we engage in the same inquiry as the trial court. Folsom v. Burger King, 135 Wn.2d 658, 663, 958 P.2d 301 (1998). Summary judgment is properly granted where the pleadings, affidavits, depositions, and admissions demonstrate "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." CR 56(c). All evidence must be considered in the light most favorable to the nonmoving party, and summary judgment may be granted only where reasonable persons could reach but one conclusion. Lamon v. McDonnell Douglas Corp., 91 Wn.2d 345, 349-50, 588 P.2d 1346 (1979).
¶ 15 Here, the trial court determined "as a matter of law that if the 1981 Quit Claim Deed is later found to be valid and enforceable, then [Radovich] breached [the] 2004 Statutory Warranty Deed to [Bridges] and the related 2004 Purchase and Sale Agreement ("P & SA") with the Burbridges for failing to convey fee title to the property described in the 2004 Statutory Warranty Deed and related P & SA, and for failing to defend said title."
¶ 16 As indicated by the trial court's order, Radovich conveyed the commercial parcel to Bridges by statutory warranty deed. This type of deed carries five covenants, which insure against both defects incurred by the immediate grantor and by any prior owner. RCW 64.04.030. The grantor warrants to the grantee:
Mastro v. Kumakichi Corp., 90 Wn.App. 157, 162, 951 P.2d 817 (1998) (quoting 17 WILLIAM B. STOEBUCK, WASHINGTON PRACTICE: REAL ESTATE: PROPERTY LAW, § 7.2, at 447 (1995)). As Professor Stoebuck explains, the warranty of seisin is a "present" covenant — it is breached only where "the grantor did not own the covenanted estate on the date the deed was given." 18 WILLIAM B. STOEBUCK & JOHN W. WEAVER, WASHINGTON PRACTICE: REAL ESTATE: TRANSACTIONS, § 14.4, at 119 (2012). Moreover, "the mere absence of that estate constitutes a breach; it is not necessary that the grantee suffer an intrusion against possession by another person." STOEBUCK & WEAVER, supra, § 14.4, at 119.
¶ 17 Radovich does not dispute that, pursuant to the purchase and sale agreement and statutory warranty deed, he assumed the obligation to convey fee title to his undivided one-half interest in the commercial parcel to Bridges. Nor does he assert that these documents failed to except the property described in the 1981 quitclaim deed. Instead, Radovich contends that he could not have breached the 2004 statutory warranty deed to Bridges because Bridges subsequently conveyed the commercial parcel in a "new independent transaction" in which Radovich took no part. However, no authority supports Radovich's assertion that liability for the breach of a statutory warranty deed is
¶ 18 Nevertheless, Radovich asserts that the summary judgment order was improper because Bridges could not be liable to Seattle Boat based on the third party complaint in which Seattle Boat sued Bridges for failing to convey fee title to the entire commercial property. In support of this argument, Radovich contends that the 2007 bargain and sale deed used to convey the commercial parcel makes clear that Bridges did not warrant that it was seized of an estate in fee simple.
¶ 19 Radovich next contends that, because Bridges was not the prevailing party in its litigation against Radovich, the trial court erred by awarding attorney fees to Bridges based upon the prevailing party provision in the purchase and sale agreement. We agree.
¶ 21 Here, the 2004 purchase and sale agreement provides:
Relying on the same reasoning on appeal as it did at trial, Bridges asserts that it was the "substantially prevailing party" because the trial court granted its motion for partial summary judgment, thus assigning liability to Radovich for breach of the purchase and sale agreement and the statutory warranty deed in the event that the quitclaim deed was found to be valid and enforceable.
¶ 22 Whether a party is a "prevailing party" is a mixed question of law and fact that is reviewed pursuant to an error of law standard. Cornish College of the Arts v. 1000 Virginia Ltd. P'ship, 158 Wn.App. 203, 231, 242 P.3d 1 (2010), review denied, 171 Wn.2d 1014, 249 P.3d 1029 (2011). As a general rule, a prevailing party is one that receives an affirmative judgment in its favor. Marassi v. Lau, 71 Wn.App. 912, 915, 859 P.2d 605 (1993), abrogated on other grounds by Wachovia SBA Lending, Inc. v. Kraft, 165 Wn.2d 481, 200 P.3d 683 (2009). A prevailing party need not succeed on its entire claim to qualify for attorney fees, but it must substantially prevail in order to be entitled to such an award. Silverdale Hotel Assocs. v. Lomas & Nettleton Co., 36 Wn.App. 762, 773-74, 677 P.2d 773 (1984). Moreover, a successful defendant can also recover as a prevailing party. Marine Enters., Inc. v. Sec. Pac. Trading Corp., 50 Wn.App. 768, 772, 750 P.2d 1290 (1988). The defendant need not have made a counterclaim for affirmative relief, as the defendant can recover as a prevailing party for successfully defending against the plaintiff's claims. See Marassi, 71 Wash.App. at 916, 859 P.2d 605.
¶ 23 Here, Bridges' fourth party complaint against Radovich was based upon the theory that Radovich breached the covenants of the statutory warranty deed and the provisions of the purchase and sale agreement. In its order granting partial summary judgment to Bridges, the trial court determined that, if the quitclaim deed was valid, then Radovich breached both the deed and the agreement as a matter of law. However, as these breaches were contingent upon the validity of the quitclaim deed, the court's order did not represent an affirmative judgment in Bridges' favor. Instead, because the trial court subsequently determined that the deed was, in fact, invalid, Radovich successfully defended against Bridges' claims that Radovich breached the 2004 statutory warranty deed and related purchase and sale agreement. The trial court erred by awarding attorney fees to Bridges based upon the prevailing party provision.
¶ 24 Radovich next contends that the trial court erred by awarding attorney fees to Bridges based upon the indemnification provision of the purchase and sale agreement. We agree.
¶ 25 "In order to prove an indemnity claim, a plaintiff must demonstrate that there exists a contract containing an indemnity provision that binds the defendant to reimburse the plaintiff for the amount claimed." Jacob's Meadow, 139 Wash.App. at 757 n. 3, 162 P.3d 1153. Indemnity agreements are subject to the fundamental rules of contract interpretation — "the intent of the parties controls; this intent must be inferred from the contract as a whole; the meaning afforded the provision and the whole contract must be reasonable and consistent with the purpose of the overall undertaking; and if any ambiguity exists, it must be resolved against the party who prepared the contract." Knipschield v. C-J Recreation, Inc., 74 Wn.App. 212, 215, 872 P.2d 1102 (1994) (citing Jones v. Strom Constr. Co., 84 Wn.2d 518, 520, 527 P.2d 1115 (1974)). Although clauses purporting to exculpate an indemnitee from liability flowing solely from its own acts or omissions are not favored and are strictly construed, Jones, 84 Wash.2d at 520, 527 P.2d 1115, we will enforce such provisions where the language of the agreement unquestionably demonstrates that this was the intent of the parties. Snohomish County Pub. Transp. Benefit Area Corp. v. FirstGroup America, Inc., 173 Wn.2d 829, 271 P.3d 850, 854 (2012).
¶ 26 Here, the relevant section of the 2004 purchase and sale agreement between the Burbridges and Radovich reads:
After determining that Radovich had not accepted Bridges' tender of defense, the trial court ruled that Bridges was "entitled to attorney fees and costs through the indemnification provision in the [purchase and sale agreement]."
¶ 27 The trial court correctly determined that the broadly-worded indemnification provision of the purchase and sale agreement applied to Seattle Boat's claims against Bridges. This provision requires Radovich to indemnify Bridges for "any and all liabilities or claims ... arising in respect of the Property." We have previously determined that the phrase "any and all claims" is to be given its ordinary meaning and includes all types of claims. MacLean Townhomes, LLC v. Am. 1st Roofing & Builders, Inc., 133 Wn.App. 828, 831, 138 P.3d 155 (2006). Moreover, because Seattle Boat's claims against Bridges were based upon Bridges' failure to convey fee title to the entire commercial parcel — an event that was predicated upon Radovich's prior conveyance of a portion of that property through the 1981 quitclaim deed — these claims arose "in respect of the Property" and related to a "period prior to the closing." Finally, there is no indication that Radovich's duty to indemnify pursuant to this agreement depends upon whether Bridges prevails against the claims brought by a third party and relating to the commercial property.
¶ 28 Radovich contends, however, that because it was Bridges' failure to discover the recorded 1981 quitclaim deed that led to Seattle Boat's complaint, the provision cannot be interpreted to require indemnification for claims arising from Bridges' own errors. Although it is undoubtedly true that the conduct
¶ 29 Nevertheless, the trial court's award of attorney fees was improper. As we have previously explained, attorney fees sought pursuant to a contractual indemnity provision are an element of damages that must be proved to the trier of fact. Jacob's Meadow, 139 Wash.App. at 760, 162 P.3d 1153. The goal of awarding money damages is to compensate for losses that are actually suffered, and a party claiming damages has the burden of proving its losses. ESCA Corp. v. KPMG Peat Marwick, 86 Wn.App. 628, 639, 939 P.2d 1228 (1997), aff'd, 135 Wn.2d 820, 959 P.2d 651 (1998). Accordingly, a party seeking the recovery of attorney fees pursuant to an indemnity provision bears the burden of presenting evidence regarding the reasonableness of the amount of fees claimed. Jacob's Meadow, 139 Wash. App. at 761, 162 P.3d 1153. Moreover, "[a]s an element of damages, the measure of recovery... must be determined by the trier of fact." Jacob's Meadow, 139 Wash.App. at 760, 162 P.3d 1153. Such damages must be proved at trial. Jacob's Meadow, 139 Wash. App. at 760, 162 P.3d 1153.
¶ 30 Here, no evidence of Bridges' damages was adduced at trial. In an order bifurcating the trial into two phases, the trial court set a case schedule for the second phase of trial to "address all remaining issues, including damages." However, although the trial date was set for February 22, 2011, no such trial was ever held. Instead, following the completion of the first phase of trial, Bridges submitted a posttrial motion for "an award of attorneys' fees and costs against Radovich." The declaration of the lead attorney for Bridges accompanied the motion. The declaration contained a detailed accounting of the hourly rates of Bridges' attorneys, the time spent on particular aspects of the case, and descriptions of the work performed.
¶ 31 Clearly, Bridges' damages were not proved at trial. No evidence or testimony regarding Bridges' expenses or losses was ever presented to the court in its role as trier of fact.
¶ 32 Radovich next contends that the trial court erred by awarding attorney fees to Bridges based upon the principle of equitable indemnification. We agree.
¶ 33 Equitable indemnity constitutes a recognized equitable ground under which attorney fees may be awarded. Blueberry Place Homeowners Ass'n v. Northward Homes, Inc., 126 Wn.App. 352, 358-59, 110 P.3d 1145 (2005). "[W]here the acts or omissions of a party to an agreement or event have exposed one to litigation by third persons — that is, to suit by persons not connected with the initial transaction or event — the allowance of attorney's fees may be a proper element of consequential damages."
¶ 34 The elements of this form of equitable indemnity are:
Manning v. Loidhamer, 13 Wn.App. 766, 769, 538 P.2d 136 (1975). All three elements must be satisfied for liability to attach. Manning, 13 Wash.App. at 769, 538 P.2d 136. A trial court's decision that the elements of equitable indemnity are met is a legal conclusion that is subject to de novo review on appeal. Tradewell, 71 Wash.App. at 126-27, 857 P.2d 1053.
¶ 35 Here, in its judgment and order awarding attorney fees, the trial court determined that Bridges incurred "substantial legal fees and costs because of the actions of Radovich." The court identified these actions as (1) the "attempt to convey the same property twice," (2) "forgetting about the purported conveyance via quit claim deed to NYBA," (3) "orchestrating a take over of the Board of the NYBA to ensure it was hostile to the development proposed by [Seattle Boat]," and (4) "using his voting power and persuasion to initiate and pursue this litigation." The court then concluded that Bridges was "entitled to attorney fees under the statutory warranty deed because Radovich bears some responsibility for [Bridges'] involvement in this lawsuit."
¶ 36 As an initial matter, because attorney fees awarded pursuant to the principle of equitable indemnity are an element of damages, the trial court's award of attorney fees shares the same defect as its award pursuant to the contractual indemnity provision of the purchase and sale agreement. Because these damages were not proved at
¶ 37 Moreover, for several additional reasons, the theory of equitable indemnity was improperly relied upon by the trial court. First, in order for the theory to apply, it must be proved that the defendant committed a "wrongful act or omission" against the party bringing the claim. Manning, 13 Wash.App. at 769, 538 P.2d 136. Generally, this wrongful act must involve a breach of contract or tortious conduct by the party against whom the claim is asserted. Manning, 13 Wash.App. at 772, 538 P.2d 136. Radovich's use of his voting power within the NYBA and his orchestration of a board takeover were not "wrongful acts" within this sense; nor were these acts directed toward Bridges.
¶ 38 Similarly, Radovich's attempt to convey the same property twice cannot properly be viewed as a wrongful act or omission. Because the trial court previously determined that the 1981 quitclaim deed did not, in fact, convey fee title under the court's ruling, it cannot be that Radovich's conveyance of the commercial property to Bridges was wrongful. Indeed, pursuant to this ruling, Radovich breached neither the covenants of the statutory warranty deed nor his obligation to convey fee title pursuant to the purchase and sale agreement. Accordingly, there was no wrongful act or omission by Radovich supporting the application of equitable indemnification.
¶ 39 In addition, pursuant to well-established Washington law, "`a party may not recover attorney fees under the theory of equitable indemnity if, in addition to the wrongful act or omission of A, there are other reasons why B became involved in litigation with C.'" Blueberry Place, 126 Wash.App. at 359, 110 P.3d 1145 (quoting Tradewell, 71 Wash.App. at 128, 857 P.2d 1053). Thus, Bridges cannot recover attorney fees under the theory of equitable indemnity if, in addition to Radovich's acts or omissions, there were other reasons for Seattle Boat's claims against Bridges. Here, it is undisputed that the title insurer — Bridges' agent during its transaction with Radovich — failed to discover the recorded 1981 quitclaim deed. Moreover, as the recording of a deed imparts constructive notice of the estate or interest acquired to all subsequent purchasers, Biles-Coleman Lumber Co. v. Lesamiz, 49 Wn.2d 436, 438, 302 P.2d 198 (1956), Bridges itself must be charged with notice of the potential title defect. Nevertheless, Bridges failed to notify Seattle Boat of this issue prior to the 2007 sale of the commercial property. Accordingly, because Bridges' own acts and omissions contributed to its involvement in litigation with Seattle Boat, as did the negligent acts and omissions of the title insurer, Bridges cannot rely on principles of equitable indemnification to seek recovery of attorney fees from Radovich.
¶ 40 Finally, we note that Radovich and Bridges contracted regarding damages for breach of the 2004 purchase and sale agreement. The broadly-worded indemnity provision of the agreement stipulated that such damages would include attorney fees incurred in defense of third party claims against the purchaser. Where parties have contracted to fix their rights and liabilities, we see no room for equity to interfere with the bargain of the parties. See 3 DAN B. DOBBS, LAW OF REMEDIES § 12.12(2), at 315 (2d ed. 1993) ("[O]nce the parties have bargained about a discrete subject matter, their bargain, not a judicially imposed rule[,] controls their rights.").
¶ 41 Here, having bargained for a contractual indemnity provision, Bridges cannot now rely on principles of equitable indemnity to obtain consequential damages in the form of attorney fees. Because Radovich's liability
¶ 42 Both Radovich and Bridges contend that they should be awarded their attorney fees and costs on appeal. However, as numerous issues in the case remain unresolved, it cannot be determined which party will ultimately substantially prevail on the merits in this action. Accordingly, an award of attorney fees is inappropriate at this time.
¶ 43 We affirm the trial court's orders denying summary judgment to Radovich and granting partial summary judgment to Bridges. We reverse the trial court's award of attorney fees to Bridges and remand for further proceedings.
We concur: LEACH, C.J., and ELLINGTON, J.
Moreover, in light of our determination in the linked appeal that the quitclaim deed is valid and enforceable, the trial court must address this issue on remand. If Bridges is not, in fact, liable to Seattle Boat for breach of the 2007 bargain and sale deed, the damages to Bridges resulting from Radovich's breach of the 2004 statutory warranty deed will be substantially limited.
Second, the Burbridges' knowledge of the quitclaim deed is irrelevant to the question of Radovich's breach. It is well-established that a grantee's knowledge of a defect does not eliminate a grantor's liability for that defect. Edmonson v. Popchoi, 172 Wn.2d 272, 283-84, 256 P.3d 1223 (2011); Fagan v. Walters, 115 Wn. 454, 457, 197 P. 635 (1921). Accordingly, neither contention provides a basis to disturb the trial court's order granting partial summary judgment.