534 P.3d 339
Wash.2023Background
- Dalton M purchased Parcel 0402 at a 2011 tax sale; the tax sale extinguished the mortgage lien on that parcel.
- U.S. Bank (through its trustee) later foreclosed and recorded a trustee’s deed purporting to convey both adjoining parcels (9008 and 0402) to the bank.
- Dalton M sued for quiet title, slander of title, and unjust enrichment; the trial court found Dalton M owned Parcel 0402, awarded judgment on slander of title, and awarded attorney fees based on the slander claim.
- The Court of Appeals reversed the slander-of-title judgment for failure to prove the “pending sale or purchase” element, but sua sponte raised an unpleaded equitable theory and awarded fees to Dalton M for alleged prelitigation bad faith.
- The Supreme Court granted review and reversed the Court of Appeals’ fee award, holding the appellate court improperly raised a new, fact‑dependent theory sua sponte, engaged in impermissible factfinding, and that prelitigation bad faith is not a recognized basis here to shift fees as costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an appellate court may sua sponte award attorney fees on an unpleaded, fact‑dependent equitable theory (prelitigation bad faith) | RAP 12.1 permits courts to raise issues sua sponte; bad faith was litigated sufficiently | Raising a new, separate claim on appeal without prior pleading or trial notice violates RAPs and due process; unfair surprise | Reversed: Appellate court erred. It cannot adjudicate a distinct, unlitigated claim sua sponte or imply missing factual findings to support such a claim. |
| Whether prelitigation bad faith (refusal to honor a valid claim) is a recognized equitable ground to award fees as costs | Fees may be awarded in equity for prelitigation bad faith that forced suit | Maytown and related precedent foreclose fee awards as costs for prelitigation conduct; such relief fits as damages in other claims, not as costs | Held: No. Maytown forecloses awarding attorney fees as costs for prelitigation bad faith; fees must be tied to a recognized statutory/contractual or equitable ground properly litigated. |
| Whether fees survive when the only claim that provides special‑damages fees (slander of title) is reversed | Malicious‑publication findings or quiet‑title victory justify fees | Fees must be tied to a prevailing claim that authorizes fees; reversed slander claim removes that basis | Held: Fees must be tethered to a prevailing claim; reversal of slander claim eliminates the only recognized basis here; quiet title does not authorize fees on these facts. |
| Standard for “malicious publication” in slander of title — negligence, recklessness, or intent? | Malice can include reckless disregard or unintentional conduct | Malice requires intentional and calculated action (not mere negligence) | Held: Malice requires more than negligence; intentional, knowing misconduct is required (follow Rorvig and Centurion). |
Key Cases Cited
- Clark County v. W. Wash. Growth Mgmt. Hr’gs Bd., 177 Wn.2d 136 (2013) (appellate courts must not adjudicate separate, resolved claims not raised by parties)
- Maytown Sand & Gravel, LLC v. Thurston County, 191 Wn.2d 392 (2018) (prelitigation bad faith cannot be used to award attorney fees as costs; such harm belongs in damages context)
- Chambers v. NASCO, Inc., 501 U.S. 32 (1991) (courts invoking inherent power for sanctions/fees must respect due process)
- Rorvig v. Douglas, 123 Wn.2d 854 (1994) (slander of title requires intentional malicious acts forcing litigation)
- Centurion Props. III, LLC v. Chicago Title Ins. Co., 186 Wn.2d 58 (2016) (malicious publication is not satisfied by simple negligence)
- In re Recall of Pearsall‑Stipek, 136 Wn.2d 255 (1998) (trial court must make explicit bad faith findings when awarding fees in equity)
- Greengo v. Pub. Emps. Mut. Ins. Co., 135 Wn.2d 799 (1998) (RAP 12.1 allows courts to raise new issues only when closely tied to presented questions)
- Greenlaw v. United States, 554 U.S. 237 (2008) (party‑presentation principle: courts normally decide only parties’ presented questions)