                                                                                              F1 ED
                                                                                       COURT OF APPEALS
                                                                                             ONISIOM 11

                                                                                       2013 JUN 27 AM 9:32

                                                                                       SVTE..
                                                                                           OF       S iIGT
                                                                                        Ov
                                                                                                          t
    IN THE COURT OF APPEALS OF THE STATE OF W

                                          DIVISION II

THE BERT KUTY REVOCABLE LIVING
TRUST, by its TRUSTEE, DAVID NAKANO,                                    No. 42811 3 II
                                                                                  - -
                        Appellant,

       V.




GERRY and JOHN DOE MULLEN, husband and                    ORDER WITHDRAWING OPINION IN
wife; MICHAEL and JANE DOE MULLEN,                       RESPONSE TO MOTION TO ENLARGE
husband and wife; D. .INC., ba/
                   C      d/ /                             TIME AND TO PUBLISH OPINION
NORTHWEST PROPERTIES OF S. .
                         W                                    AND FILING AMENDED PART
WASHINGTON, a Washington corporation;                               PUBLISHED OPINION
Columbia River Properties, Inc., Washington
                               a
corporation; FREDERICK and JANE DOE
LEMP, husband and wife;NEW ENTERPRISE,
LLC, a Washington LLC;ROBERT and
DANIELE HAYES, husband and wife; RUSTY
and JANE DOE FIELDS, husband and wife;
ENDEAVOR, INC. d/ a ENDEAVOR
                 b/
CONSULTANTS INC.;  JOHN and JANE DOES 1
10.
                                  Respondents _ __ __ I __ _ --- - __
                             1.




       THIS MATTER came before the court on the motion of a third party requesting an

extension of time to file a motion to publish and requesting publication of the opinion filed in this

court on April 30,2013. Respondents filed no response objecting to publication of the opinion and

appellant filed a response citing no objection to a part published opinion.

        Upon consideration of the,motion and responses thereto, it is hereby

        ORDERED, that the unpublished opinion filed        on   April 30, 2013, is   withdrawn and the
0.
 42811 3 II
       - -



amended part   published opinion   is filed   simultaneously   with this order.




                                                     2
                                                                                   F II. —
                                                                                       ICI
                                                                           lRT OF
                                                                           k^. APPEALS
                                                                             O-
No. 42811 3 II
          - -                                                                   lb1[
                                                                                Calt:
                                                                                    l

                                                                          2013 JUN 21 AM 9 32

                                                                           STA.. OF
                                                                           a..::


    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                       DIVISION II

THE BERT KUTY REVOCABLE LIVING
TRUST,by its TRUSTEE, DAVID NAKANO,                               No. 42811 3 II
                                                                            - -
                             Appellant,

       V.                                                 PART PUBLISHED OPINION


GERRY and JOHN DOE MULLEN, husband and
wife;MICHAEL and JANE DOE MULLEN,
husband and wife;D. .INC., b a/
                   C         d/ /
NORTHWEST PROPERTIES OF S. .       W
WASHINGTON, a Washington corporation;
Columbia River Properties, Inc., Washington
                               a
corporation; FREDERICK and JANE DOE
LEMP, husband and wife;NEW ENTERPRISE,
LLC, a Washington LLC; ROBERT and
DANIELE HAYES, husband and wife; RUSTY
and JANE DOE FIELDS, husband and wife;
ENDEAVOR, INC. d/ a ENDEAVOR
                   b/
CONSULTANTS INC. JOHN and JANE DOES 1
10.
                             Respondents.


       VAN   DEREN J. . The Bert Kuty Revocable Living Trust ( uty Trust)appeals the
                   T. —
                    P                                        K

trial court's summary judgment dismissal of its claim for an accounting of proceeds from a

trustee's sale against Robert and Daniele Hayes and summary judgment dismissal of its




                                               91
No. 42811-
    11-  3



successor liability claim against Columbia River Properties, Inc. We affirm the trial court and
award attorney fees to the Hayeses on appeal.

                                                  FACTS


        This dispute stems from a failed real estate transaction and subsequent nonjudicial

foreclosure, which the Kuty Trust alleged was an equity stripping scheme. The Kuty Trust

owned various parcels of real property that it listed for sale through its real estate agent, Jerry

Mullen of D. .Inc. d/ a Northwest Properties of S. . Washington. Mullen introduced the
           C        b/                           W

Kuty Trust trustee, David Nakano, to Rusty Fields of Endeavor, Inc. Nakano understood that

Endeavor assisted purchasers of real property.

         In 2006, Mullen and Fields presented the Kuty Trust with a prospective buyer,New

Enterprises, LLC,for the undeveloped lot involved in the instant lawsuit. New Enterprises

offered to purchase the lot for $ 0, 00 with a combination of financing sources. The Kuty Trust
                                8 0

accepted a small down payment and a promissory note secured by a deed of trust for the

remainder of the purchase price. New Enterprises executed a promissory note for $ 6, 00 and a
                                                                                5 0

deed of trust securing the note in favor of the Kuty Trust.

         New Enterprises then entered into a speculative construction loan agreement with

LeGrand Investments, LLC,in which LeGrand Investments agreed to loan up to $ 38, 00 to
                                                                           2 0

New Enterprises for the lot and for funds to construct a single family residence. New Enterprises

1
 In the unpublished portion of the opinion, we discuss the Kuty Trust's contention that the trial
court erred it granting summary judgment dismissal of the Kuty Trust's other claims against the
Hayeses and in awarding attorney fees and costs against the Kuty Trust. We also discuss the
Hayeses' request for attorney fees on appeal.

2 New Enterprises, LLC was owned by Frederick Lemp.
3
    LeGrand Investments, LLC   was   owned   by   Darren Williams.
No.42811 3 II
         - -



executed a promissory note for $ 38, 00 to LeGrand Investments and secured the note through a
                               2 0

deed of trust on the lot. This transaction required the Kuty Trust to subordinate its deed of trust

to LeGrand Investments' deed of trust. Fields and Endeavor structured the deal and prepared the

documents.


       New Enterprises' promissory note to LeGrand Investments was for a face amount of

238, 00,but it was labeled a " uilding Construction Line of Credit."Clerk's Papers (CP)at
   0                         B         /

146. The note provided, This promissory note is a line of credit and shall be disbursed to the
                        "

borrower in draws that   are   acceptable   to the lender."CP at 146.   By its provisions, the note

matured on November 16, 2007, a year from its execution, and a balloon payment for the

principal advanced and compound interest was due at that time. LeGrand Investments recorded

its deed of trust on November 17, 2006. Also on November 17, 2006, LeGrand Investments,

through its managing member, Darren Williams,wired New Enterprises an initial loan

disbursement of 31, 00 to purchase the property. On November 30, 2006, LeGrand
                $ 0

Investments, through Williams, issued a $ , certified check to New Enterprises as an initial
                                        9000

construction draw.__ $ 0, 00 was the totaldisbursed under the promissory noteline of credit --
                  This 4 0                                               -    /

to New Enterprises from LeGrand Investments.

       Robert and Daniele Hayes were looking for an investment opportunity with an attractive

rate of return. The Hayeses had no involvement in the initial loan transaction or any ownership

interest or other involvement with LeGrand Investments. The Hayeses purchased LeGrand

Investments' interest in the promissory note line of credit and deed of trust on the Kuty Trust lot
                                              /

for $ 0, 00 which was the amount LeGrand Investments had disbursed to New Enterprises,
    4 0 —

LeGrand Investments assigned all rights and interest in its deed of trust to the Hayeses on



                                                     5
No. 42811 3 II
          - -



November 29, 2006, and the assignment was recorded that same day. LeGrand Investments

assigned all its rights and interest in the promissory note to the Hayeses on December 1, 2006.

       New Enterprises defaulted on the LeGrand Investments Hayes promissory note by failing
                                                            /

to pay the loan balance when it matured and became due on November 16, 2007. The Hayeses

commenced foreclosure proceedings. The Hayeses hired an attorney to serve as trustee for the

foreclosure proceedings. New Enterprises did not respond to the Hayeses' notice of default. The

trustee scheduled a trustee's sale for July 25,2008, and sent notice of the sale by first class mail

and certified mail to New Enterprises and to the Kuty Trust because it held a junior security

interest in the property. The notice of trustee's sale provided that the principal owing was

40, 00,plus interest, late charges, and default interest for a total of 63, 24.
  0                                                                     62.
                                                                        $ 7

        On April 30, 2008, the Kuty Trust's attorney requested evidence of the loan claimed in

the notice of foreclosure. On May 9,the trustee sent the Kuty Trust's attorney documentation

showing the $ 000 in loan disbursements to New Enterprises. On June 11, and on June 12, the
            40,

Kuty Trust's new attorney requested proof of the funds advanced on the loan and a copy of the

promissory note and deed of trust being foreclosed.The trustee provided the requested _
                "

documentation to the new attorney.

        On July 2,2008, the Kuty Trust sued, alleging various claims related to an equity

stripping scheme including: 1)
                            ( breach of contract, negligence, negligent misrepresentation,

malpractice and violation of the consumer protection act against the Mullens, D. .Inc.,
                                                                               C      and




                                                  G
No.42811 3 II
         - -



Columbia River Properties; 2)
                           ( breach of contract against New Enterprises and the Lemps; 3)
                                                                                       (
fraud, violation of consumer protection act, negligent misrepresentation and or negligence
                                                                             /

against the Fieldses, Endeavor, New Enterprises, the Lemps, LeGrand Investments, and the

Hayeses; and (4)conversion of funds against the Hayeses.

          The trustee's sale was held on July 25. The Hayeses directed the trustee to credit the

entire outstanding obligation secured by the deed of trust as their opening bid at the sale. Robert

Hayes testified in his declaration that he did not tender any funds or documentation as part of the

bid at the trustee's sale. There were no other bidders at the sale, so the Hayeses' credit bid was

successful. The trustee provided the Hayeses with a trustee's deed for the property but did not
                                                                                                                        5
prepare   or   file   a   written notice of   surplus   because there   were no   monies   paid to   him at the sale.


          The Hayeses' attorney, who was also the trustee, wrote a letter to counsel for the Kuty

Trust noting that the Kuty Trust had waived its right to contest the sale or the underlying

obligations on the property because it had not used the statutory presale remedies. Accordingly,
he requested that the Kuty Trust dismiss its lawsuit against the Hayeses.

          The Hayeses movedfor surnmary judgment dismissal of the claims against t em. The
                                                           -

Kuty Trust opposed the motion, moved for a continuance of the motion under CR 56( ) allow
                                                                                f to

further discovery, and filed an amended complaint adding a claim for an accounting of

foreclosure proceeds. On November 14, 2008, the trial court granted partial summary judgment

4
  The original complaint named NWREP, Inc. db a Northwest Properties of S. . Washington as
                                                / /                           W
a defendant, but the complaint was later amended to substitute D. .Inc. d/ a Northwest
                                                                C        b/
Properties of S. . Washington for NWREP, Inc. The second amended complaint also added
                W
Columbia River Properties as a defendant alleging that Columbia River Properties was a
successor company to D. .Inc.
                      C

5. See RCW 61. 4.
           080.
             2
6
    See RCW 61. 4.
            130.
              2
                                                              7
No. 42811 3 II
          - -



in favor of the Hayeses. It granted summary judgment dismissal with prejudice of the Kuty

Trust's claims " hallenging either the validity or the finality of the trustee's sale of the subject
               c

real property"and claims "challenging the validity of the debt as described in the Notice of

Trustee's Sale and foreclosed upon by the trustee's sale."CP at 257. But the trial court did not

dismiss the Kuty Trust's claims against the Hayeses for fraudulent misrepresentation.

        After responding to interrogatories, the Hayeses renewed their motion for summary

judgment, requesting that, he trial court dismiss the remainder of the Kuty Trust's claims against
                         t

them. Both Robert Hayes and the trustee provided declarations in support of the renewed motion

for summary judgment. The Kuty Trust conceded that the Hayeses should be dismissed from the

civil conspiracy and fraud claims, but the Kuty Trust requested that the Hayeses be dismissed

without prejudice in case further discovery revealed the Hayeses were involved in the alleged

equity stripping scheme. The Kuty Trust opposed summary judgment on the accounting claim

and argued that it should proceed to trial. On January 30, 2009,the.rial court granted the
                                                                   t

Hayeses' motion for summary judgment dismissal with prejudice of all remaining claims against

them


        The Kuty Trust filed a second amended complaint substituting D. .Inc. for NWREP,
                                                                      C

Inc.because the Kuty Trust learned that Mullen worked for D. .Inc. rather than NWREP, Inc.
                                                           C

The Kuty Trust also added Columbia River Properties as a defendant and alleged that if the Kuty

Trust obtained a judgment against D. .Inc., was unable to recover it,Columbia River
                                   C      but

Properties should be liable as D. .Inc.' successor company.
                                C s

        Columbia River Properties moved for summary judgment, arguing that it was not liable

as a successor company to D. .Inc. It filed a declaration from Chris Fry,the sole shareholder of
                           C

Columbia River    Properties, in support   of its motion.   Fry incorporated   and   was   the   prior   owner
No. 42811 3 II
          - -



of D. .Inc., he sold his entire interest in 2004 and moved to California. In 2009, he returned
    C      but

to southwest Washington and was employed by D. .Inc. He was appointed corporate secretary,
                                             C

but he held no ownership -nterest. D. . Inc.' business was struggling, so a few months later,
                         i          C s

Fry incorporated Columbia River Properties and quit working for D. .Inc. When D. . Inc.
                                                                 C             C

dissolved, most of its employees and real estate agents were hired by Columbia River Properties.

Through Fry's efforts, Columbia River Properties acquired a portion of D. .Inc.' former
                                                                        C s

business.


       The Kuty Trust filed a cross motion for summary judgment, arguing that the material

facts were not in dispute and that the trial court should hold as a matter of law that Columbia

River Properties was liable as a successor company of D. .Inc. In the alternative, the Kuty
                                                       C

Trust requested that the trial court deny Columbia River.Properties' motion and proceed to trial:

       In support of its summary judgment motion, the Kuty Trust submitted a declaration with

a document from the Mullens' bankruptcy proceeding. On Columbia River Properties' motion,
the bankruptcy document was stricken as hearsay. Thus, the trial court did not consider the

Mullens' bankruptcy document iri deciding the " ummary judgment motion.
                                              s

       On April 1, 2011, the trial court granted Columbia River Properties' motion for summary

judgment. The trial court denied both parties' requests for attorney fees. The Kuty Trust

unsuccessfully sought reconsideration of the evidentiary ruling and the grant of summary

judgment to Columbia River Properties.

7
 In one section of its bankruptcy filings,the Mullens were directed to "[ ist all property that has
                                                                          1]
been repossessed by a creditor, sold at a foreclosure sale, transferred through a deed in lieu of
foreclosure or returned to the seller, within one year immediately preceding the commencement
of this case."CP at 538 (emphasis omitted).The Mullens listed Fry as the " reditor or seller"
                                                                         c
and Northwest Properties as the " escription and value of property," January 15,2009, as the
                                d                                  and
date of repossession, foreclosure sale,transfer or return."CP at 538 (capitalization omitted).
                                                 0
No. 42811-
    11-  3



         The Kuty Trust's case continued to trial against defendants not parties to this appeal.

Based on the evidence presented at trial and the orders of default against the defendants, the trial

court entered findings of fact and conclusions of law. The trial court entered judgment against

D. .Inc., Enterprises, and the Lemps on multiple theories. The Kuty Trust was awarded
 C      New
77
127, 89.in damages and $ 0, 35.in attorney fees and costs. The record provided on
   4                   44
                       7 1

appeal does not reveal the outcome of litigation against the Mullens, the Fields, LeGrand

Investments, or   Endeavor.

         The Kuty Trust timely appeals the three interlocutory orders granting summary judgment

dismissal of all claims against the Hayeses and Columbia River Properties.

                                             ANALYSIS


         The Kuty Trust argues that ( )
                                    1 summary judgment dismissal of its claims for an

accounting of the proceeds of the trustee's sale against the Hayeses was improper because

several genuine issues of material fact regarding the value of the note,the price at the foreclosure

sale, and the postsale apportionment of the sale proceeds remain; and (2) trial court erred in
                                                                        the

granting Columbia River Properties'"
                                   summaryjudgment motion and denying the Kuty Trust's
                                                                       -

summary judgment motion on the claim that Columbia River Properties was a successor to D. .
                                                                                        C

Inc. We disagree and affirm the trial court's rulings.


8
    The Lemps filed a pro se answer denying all allegations, but it appears from the record that
they did not further,defend the lawsuit.

9 Endeavor and Rusty Fields answered the complaint and filed a motion to dismiss. LeGrand
Investments also filed an answer and denied the allegations. No other information is available to
this court.

10
  The trial court's summary judgment dismissal of the Kuty Trust's unjust enrichment, fraud,
and civil conspiracy claims against the Hayeses is discussed in the unpublished portion of this
opinion.
                                                  10
No. 42811 3 II
          - -



I.     STANDARD OF REVIEW


       We review a trial court's order for summary judgment de novo,performing the same

inquiry as the trial court. Ruvalcaba v. Kwang Ho Baek, 175 Wn. d 1, 6,282 P. d 1083 (2012).
                                                              2             3

       Summary judgment should only be granted if after considering all the pleadings,
       affidavits, depositions or admissions and all reasonable inferences drawn
       therefrom in favor of the nonmoving party, it can be said (1)that there is no
       genuine issue as to any material fact, 2)
                                              ( that all reasonable persons could reach
       only one conclusion, and (3)that the moving party is entitled to judgment as a
       matter of law.


Baker v. Schatz, 80 Wn. App. 775, 782, 912 P. d 501 (1996).A genuine issue of material fact
                                            2              "

exists. here reasonable minds could differ on the facts controlling the outcome of the litigation."
      w

Ranger Ins. Co. v. Pierce County, 164 Wn. d 545, 552, 192 P. d 886 (2008).
                                        2                  3

       The moving party bears the burden of demonstrating that there is no genuine issue of

material fact. Atherton Condo. Apartment -Owners Ass'n Bd. OfDirs. V. Blume Dev. Co.,
                                                                                    115

Wn. d 506, 516, 799 P. d 250 (1990).After the moving party submits adequate affidavits,the
  2                  2              "`

nonmoving party must set forth specific facts which sufficiently rebut the moving party's

contentions and disclose the existence of a genuine issue as to a material fact."'
                                                                                Visser v. Craig,

139 Wn. App. 152, 158, 159 P. d 453 (2007)quoting Meyer v. Univ. of Wash.,105 Wn. d 847,
                            3              (                                    2

852, 719 P. d 98 (1986)). " nonmoving party fails to do so,then the summary judgment is.
          2            If the

proper."Vallandigham v. Clover Park Sch. Dist. No. 400, 154 Wn. d 16, 26, 109 P. d 805
                                                              2                3

2005).

II.    SUMMARY JUDGMENT ORDERS WERE APPROPRIATE


       A. Accounting Claim

       The Kuty Trust argues that the trial court erred by granting summary judgment dismissal

of its claim for an accounting of trustee's sale proceeds against the Hayeses because several


                                                11
No. 42811 3 II
          - -



genuine issues of material fact remain regarding the value of the promissory note, the price at the

trustee's sale, and the postsale apportionment of the proceeds. We disagree.

        The statutory deed of trust is a "`
                                         three party transaction in which land is conveyed by a
                                               -

borrower, the grantor, to a trustee, who holds title in trust for a lender,the beneficiary, as security

for credit   or a   loan the lender has   given the   borrower. "'   Bain v. Metro. Mortg. Grp.,
                                                                                               Inc.,
                                                                                                   175

Wn. d 83, 92 93,285 P. d 34 (2012)internal quotation marks omitted)quoting 18 WILLIAM B.
  2          -       3             (                               (

STOEBUCK & JOHN W.WEAVER, WASHINGTON PRACTICE: REAL ESTATE: TRANSACTIONS §                          17. 3,

at 260 (2d ed. 2004)).
                    Chapter 61. 4 RCW governs deeds of trust in Washington. In re Tr. s
                              2                                                       '

Sale ofReal Prop. ofGiannusa, 169 Wn. App. 904, 907, 282 P. d 122 (2012).Under this act, if
                                                          3

the borrower defaults under the terms of the obligation secured by a deed of trust that grants the

trustee the power of sale, the trustee may usually foreclose the deed, of trust and sell the property

without judicial supervision at a trustee's sale. Former RCW 61. 4.
                                                             005(
                                                                8 1998);
                                                                2 ) (  RCW

030;
61. 4.
  2   Bain, 175 Wn. d at 93; Giannusa, 169 Wn. App. at 907. Any person other than the
                  2

trustee, including the beneficiary, may bid at the trustee's sale. RCW 61. 4.The
                                                                       070(
                                                                          1
                                                                          2 ).

beneficiary may bid up t0the amount ofits secured obligation without paying the trustee

additional sums by making a " redit bid ":
                            c

        The trustee shall, at the request of the beneficiary, credit toward the beneficiary's
        bid all or any part of the monetary obligations secured by the deed of trust. If the
        beneficiary is the purchaser, any amount bid by the beneficiary in excess of the
        amount so credited shall be paid to the trustee....the purchaser is not the
                                                                  If
        beneficiary, the entire bid shall be paid to the trustee.

RCW 61. 4.The trustee shall apply the proceeds of the sale first to the expenses of the
    070(
       2
       2 ):

sale, including trustee and attorney fees, and second to the obligation secured by the deed of

trust. RCW 61. 4.
           080(
              1 2). (
              2 ), trustee shall deposit the surplus proceeds, if any, with the
                  The

clerk of the superior court of the county in which the sale took place. RCW 61. 4.A
                                                                            080(
                                                                               3
                                                                               2 ).                          "

                                                          12
No. 42811 3 II
          - -



second deed of trust beneficiary has a superior interest in the surplus over the borrower."

Giannusa, 169 Wn. App. at 908.

       New Enterprises defaulted on its obligation to repay the Hayeses under the terms of the

speculative loan agreement and the promissory note. Because the obligation was secured by a

deed of trust, the Hayeses, as the beneficiaries of the deed of trust, commenced nonjudicial

foreclosure proceedings under RCW 61. 4. The notice of trustee's sale, which was sent to the
                                    2

Kuty Trust, clearly stated the default amount due was $ 3, 24.which was based on a
                                                      62,
                                                      6 7

calculation of principal, interest, and late charges. The trustee provided the Kuty Trust with

copies of the check and wire transfer evidencing the $ 0, 00 principal loan disbursements when
                                                     4 0

the Kuty Trust's attorneys requested such evidence.

       The Hayeses' bid was the only bid at the trustee's sale. The Kuty Trust did not bid. At

the Hayeses' direction, the trustee credited them with the entire outstanding obligation as their

opening bid. There were no other bids, so the Hayeses' credit bid was successful. The trustee's

declaration stated, T] were no monies, let alone an[ ]surplus monies paid to me at the
                    "[ here                        y

sale."CP at 278.


       The Kuty Trust alleges that the trial court erred by granting summary judgment on its

accounting claim against the Hayeses because genuine issues of material fact existed about the

value of the note,price at the trustee's sale, and the postsale apportionment of proceeds. But a

genuine   issue of material fact does not exist here —notwithstanding   the Kuty Trust's dispute

about the note, price, and distribution of proceeds—
                                                   because the disputed facts do not control the

outcome of this claim. See Ranger Ins.,164 Wn. d at 552.
                                             2

       The Hayeses had no obligation to account for the proceeds of the trustee's sale. It is the

duty of the trustee to collect proceeds of the sale and treat them in accordance with the statutory

                                                 13
No. 42811 3 II
          - -



provisions. RCW 61. 4.080. The Hayeses were beneficiaries of the deed of trust and the
                070, .
                  2

buyers at the trustee's sale, but they were not the trustee. Thus, we hold that the Kuty Trust's

claim for an accounting from the Hayeses fails as a matter of law,and it was properly dismissed

on summary judgment.

         Even if the Hayeses had a duty to account for the proceeds of the sale or if the Kuty Trust

had sued the trustee for an accounting, the undisputed record shows that the trustee's sale did not

generate surplus proceeds. Thus, there were no surplus proceeds to account for and no proceeds

that the Kuty Trust could claim based on their junior security interest foreclosed by the sale.

         The Kuty Trust's theory is that the Hayeses tendered their deed of trust and or promissory
                                                                                      /

note (both stating that the debt was $ 000)to purchase the property at the trustee's sale."
                                     238,
The Kuty Trust argues that because the Hayeses were only owed the amount distributed on the
loan ($ 000 principal plus interest and late charges for a total of 63, 24.the remainder of
     40,                                                            62),
                                                                    $ 7

the " roceeds"approximately $ 74, 00)should have been available to satisfy the second -
    p          (            1 0

position secured interest of the Kuty Trust. The Kuty Trust argues that the face.value of the note

and the p rice at the foreclosure sale are   disputed and
                                                p>          thus   summ   judgment on the accounting

claim was improperly granted. But this is not a true factual dispute. The Hayeses do not dispute

that the deed of trust and promissory note both state a face amount of 238, 00. And the Kuty
                                                                       $ 0

Trust's allegation of the purchase price being disputed is based solely on its understanding that

the deed of trust and or promissory note was "
                      /                      tendered"to purchase the property at the trustee's

sale. But the Kuty Trust does not present any personal knowledge of the trustee's sale. Thus,

Robert Hayes' and the trustee's testimony about the sale is factually undisputed.


11
     The Kuty Trust oscillates between alleging that the Hayeses tendered their promissory note,
the deed of trust, or both, as payment at the trustee's sale.
                                                     14
No.42811 3 II
         - -



       Any dispute stems from the Kuty Trust's misplaced focus on the " ace value"of the
                                                                      f

promissory note and/or deed of trust and its mischaracterization of the Hayeses' credit bid. As

the Hayeses point out, the " ace value"of the deed of trust or promissory note is not relevant
                           f

under the statutes governing nonjudicial foreclosure.

       RCW 61. 4.
           f) to state the " um owing on the obligation
           040(
              1)( the trustee
              2 requires      s

secured by the [d] of t] in the notice of sale. Here,New Enterprises owed the Hayeses
                 eed [ rust"

the principal amount of the loan ($ 000)plus interest, default interest, and a late charge, which
                                 40,

totaled $ 3, 24.at the time of the notice of sale. The $ 38, 00 listed on the deed of trust is
        62
        6 7                                            2 0

irrelevant to the foreclosure proceeding because it was not the amount in default.at the time of

foreclosure.


       At the foreclosure sale, the Hayeses instructed the trustee to make a credit bid in the

amount of the monetary obligations secured by the deed oftrust, as provided in RCW 61. 4.
                                                                                   070.
                                                                                     2
The monetary obligation secured by the deed of trust was only $ 3, 24.so their credit bid
                                                              62,
                                                              6 7

could not exceed that amount. See RCW 61. 4. The undisputed testimony from Robert
                                      070.
                                        2

Hayes and the trustee is that the Hayeses did not tender "their deed of trust orpromissory note -
                                                  "        -

as payment.

       Moreover, tender of a promissory note or deed of trust is not one of the forms of payment

at a trustee's sale authorized by statute. RCW 61. 4.
                                               070(
                                                  2 amounts
                                                  2 ) (must be paid to the trustee

in the form of cash, certified check, cashier's check, money order, or funds received by verified

electronic transfer).The Hayeses' credit bid was the sole bid at the trustee's sale and, thus, it

was the winning bid. The Kuty Trust's allegation that the purchase price at the sale was

238, 00 is not supported by any evidence.
   0



                                                 15
No. 42811 3 II
          - -



       Because the Hayeses' winning bid was not in excess of their credit bid,they were not

required to pay any amount to the trustee. See RCW 61. 4.Thus, the trustee could not
                                                   070(
                                                      2
                                                      2 ).

have received any surplus sale proceeds to deposit with the superior court for ultimate

disbursement to second -position secured parties whose interest was foreclosed by the sale. See

RCW 61. 4. Accordingly, even if the Kuty Trust had sought an accounting of foreclosure
    080.
      2

proceeds from the correct party, there are no genuine material facts in dispute and we hold as a

matter of law that there are no funds for which to account because the trustee's sale did not


generate any surplus proceeds. Thus, the trial court did not err by dismissing the Kuty Trust's

claim for an accounting on summary judgment

       B. Successor Liability Claim

       The Kuty Trust also assigns error to the trial court's order granting summary judgment to

Columbia River Properties and denying the Kuty Trust's motion for summary judgment on its

claim that Columbia River Properties was liable as a successor company of D. .Inc.12 In its
                                                                           C
opening brief on appeal, the Kuty Trust argues that the trial court erred and asks us to reverse

and remand to the triatcourt with directions to against Columbia River
                             "

Properties. But in its reply brief,the Kuty Trust states that the trial court erred by resolving key

factual disputes and it requests that we reverse and remand to the trial court for trial on its

successor liability theories.

        We decline to address the arguments made in the Kuty Trust's reply brief because they

were not preserved and are too late to warrant consideration: RAP 2. (
                                                                  a); Canyon
                                                                   5 Cowiche


 12
  After Columbia River Properties moved for summary judgment, the Kuty Trust filed a
combination response and cross motion for summary judgment. The Kuty Trust agreed that the
material facts were undisputed and that the issue should be resolved on summary judgment, but
the Kuty Trust argued that the trial court should grant summary judgment in its favor.
                                                  16
No. 42811 341
          -



Conservancy v. Bosley, 118 Wn. d 801, 809, 828 P. d 549 (1992).Thus, we address only
                             2                  2

whether the trial court erred by granting Columbia River Properties' motion for summary

judgment rather than the Kuty Trust's motion for summary judgment.

         The parties dispute whether Columbia River Properties is liable for judgments against

D. .Inc.based on some apparent connections between Columbia River Properties and D. . Inc.
 C                                                                                C

Fry incorporated D. .Inc. in 1998. Fry owned all corporate stock of D. . Inc. and was its
                  C                                                  C

president until he sold his entire interest in the corporation to Mike and Gerry Mullen and

relocated to California in December 2004. The Mullens purchased D. . Inc. for $ 05, 00, for
                                                                 C            1 0

which Fry took a promissory note. Fry did not hold any corporate position in D. ,Inc. while he
                                                                              C

was in California. In California,Fry worked in a few real estate brokerages, including running a

property management office for two years. During the four years that Fry lived in California, his

contact with the Mullens and D. .Inc. was limited to a handful of social visits when he was in
                              C

the area.


         At the end of   2008, Fry   was   considering leaving California and began   to   search for   job

in Washington or Oregon._
                        Frycontacted D. .Inc. ask about ajob and learned that D. .Inc:
                                      C     to                                 C
needed   a   property manager because the previous manager had quit.13      In February 2009,Fry

returned from California and began work for D. .Inc. as manager of its property management
                                             C

division. Fry did not acquire any shares of D. .Inc., he was appointed as the corporate
                                             C      but

secretary and a signatory on the corporate bank account so that he could manage the business

while the Mullens were on vacation.




13
  Property management entails managing property for owners, including collecting rents and
coordinating maintenance, rather than facilitating sales.
                                                      17
No. 42811 3 II
          - -



       D. .Inc. was struggling financially by the time Fry returned from California. Creditors
        C

called the office on a regular basis, and it was clear to Fry that the business was headed in the

wrong direction. Fry decided to open his own real estate and property management business. He

incorporated Columbia River Properties in May 2009 and quit working for D. .Inc. The
                                                                         C

Mullens allowed Fry to use D. . Inc.' commercial address to incorporate Columbia River
                            C      s

Properties as a courtesy and convenience because Fry was still working at D. .Inc. and did not
                                                                           C

yet have commercial space of his own. Columbia River Properties was issued a real estate

license on June 30, 2009, When Columbia River Properties opened for business on August 1,

2009, it opened at a new and separate location from D. .Inc. The Mullens informed Fry that
                                                     C

they closed down D. .Inc., Fry was not involved in the process.
                  C      but

       Generally, a corporation purchasing the assets of another corporation does not become

liable for the debts and liabilities of the selling corporation. Cambridge Townhomes, LLC v.

Pac. Star Roofing, Inc., Wn. d 475, 481 82,209 P. d 863 (2009).But the general rule does
                       166 2            -       3

not apply i£ there is an express or implied agreement for the purchaser to assume liability;
           1) "(

O the purchase is a de facto mer ger or consolidationO the P urchaser is a were continuation
2                                                     3

of the seller; or ( ) transfer of assets is for the fraudulent purpose of escaping liability."'
                  4 the

Cambridge Townhomes, 166 Wn. d at 482 (quoting Hall v. Armstrong Cork, Inc., Wn. d
                           2                                               103 2

258, 261 62,692 P. d 787 (1984))
         -       2

       In Meisel   v. M   & N Modern    Hydraulic Press, Co., Supreme Court considered
                                                            our

whether liability should be imposed against Modern Hydraulic Corporation ( odern)based on
                                                                         M

its connection to M & N Modern       Hydraulic   Press   Company ( &N). Wn. d 403, 404 05,
                                                                 M    97  2            -

             1982).M &
645 P. d 689 (
     2                       N manufactured hydraulic presses. Meisel, 97 Wn. d at 404 05
                                                                            2          -

Nicholas   Brodsky, Jr. owned   99   percent of M & N' corporate stock shares, and he personally
                                                     s

                                                    18
No. 42811 3 II
          - -



owned the   land, buildings, and equipment that M & N leased to conduct its manufacturing

activities. Meisel, 97 Wn. d at 404.
                         2                  Brodsky transferred all of his    M & N stock back to the


corporation and to his mother for consideration. Meisel, 97 Wn. d at 404. Brodsky then
                                                              2

incorporated Modern and became its sole officer and shareholder. Meisel, 97 Wn. d at 404.
                                                                              2

Brodsky   terminated M &      N' leases and then leased his equipment, land, and buildings to
                               s

Modern, which commenced manufacturing a custom line of hydraulic presses. Meisel, 97 Wn. d
                                                                                       2

at 404 05. M &
       -              N stopped manufacturing when Brodsky terminated its leases, but it continued

to service its machines and collect accounts receivable.           Meisel, 97 Wn. d
                                                                                2     at 405. M & N was


later dissolved. Meisel, 97 Wn. d at 405.
                              2

       The plaintiff, Meisel, was injured while operating equipment that her employer had

purchased   from M & N. Meisel, 97 Wn. d at 405. Meisel sued M &
                                     2                                          N,which dissolved shortly

after commencement of the suit, and Modern under multiple successor liability theories. Meisel,

97 Wn. d at 405. On appeal from summary judgment dismissal of Meisel's claims against
     2

Modern, our Supreme Court rejected Meisel's initial characterization of Modern as a successor

company of M      &    N and,thus, did notanalyze whether the case fit within an exception to the -
                                                              "                               -

general rule of nonliability for corporate successors. Meisel, 97 Wn. d at 405, 407.
                                                                    2

       The Court held that an essential prerequisite to the entire inquiry was whether there was a

transfer of assets from M &         N to Modern. Meisel, 97 Wn. d at 407. The Court held that
                                                              2

Modern    was   not   a successor
                                    corporation because   none   of M & N' assets were transferred to
                                                                         s


Modern. Meisel, 97 Wn. d at 409. Although Modern used the same land, buildings, and
                     2

equipment   that M & N used, those assets did not         belong   to M &   N;they belonged to Brodsky

personally. Meisel, 97 Wn. d at 409. Brodsky had merely divested himself of ownership of M
                         2

  N and began a new corporation. Meisel, 97 Wn. d at 409.
                                              2

                                                      19
No. 42811 3 II
          - -



       Similarly, Columbia River Properties is not a successor of D. . Inc. because there was no
                                                                   C

meaningful transfer of assets from Columbia River Properties to D. . Inc. Columbia River
                                                                 C

Properties purchased two file cabinets from D. .Inc.for $ 0 each, but it acquired no other
                                             C          5

equipment. Fry explained that D. . Inc. did not transfer its clients to Columbia River Properties.
                               C

Fry had to pursue the clients and convince them to sign with him at Columbia River Properties.

       D. . Inc. did not, and could not, transfer its real estate listing agreements or property
        C
                                                       14
management   contracts to Columbia River   Properties.      Fry explained that a licensed real estate

broker cannot transfer a listing agreement to another brokerage without the property owner's

consent. A listing stays with a broker until it expires or is cancelled by both parties. But "[ s
                                                                                             a]

D. ., wound down and closed its business, it terminated management contracts and listing
 C Inc.

agreements."CP at 504. Columbia River Properties was able to obtain some of that business,

but in each case, the property owner was free to contract with any licensed brokerage. Fry

testified that there were not a significant number of re-
                                                        signings, maybe one or two.

       Columbia River Properties did acquire 25 to 30 property management contracts that were

formerly held byD.
              C. - Fry testified that D. .Inc.' property management contracts were
                - Inca                 C s

primarily month to month transactions. Fry had to pursue the clients and convince them to sign

with him at Columbia River Properties. Fry called the clients, told them about his new company,

and asked them to sign with him at Columbia River Properties. He did not tell them that D. .
                                                                                         C

Inc. was closing, but he knew that D. .Inc. was informing its clients that it was closing down.
                                    C

He also noted that many of the clients were clients that Fry had initially acquired when he owned

D. .Inc.
 C




14 D. .Inc.' business was primarily real estate sales, but it also had a property management
    C s
division that accounted for 20 to 25 percent of its gross income.
                                                 20
No. 42811 3 II
          - -



       When D. .Inc. closed down,Fry offered the former D. .Inc. real estate agents and
             C                                           C

employees jobs at Columbia River Properties. The majority of real estate agents working for

D. . Inc. at the time it closed, including Gerry Mullen,joined Columbia River Properties. A
 C

former bookkeeper and a former maintenance person also came to work at Columbia River

Properties. But the real estate agents and employees were not transferred.from D. .Inc. to
                                                                                C

Columbia River Properties.

       The Kuty Trust alleges that Columbia River Properties acquired D. .Inc.' webpage,
                                                                       C s

telephone number, and goodwill. The website for D. . Inc. and Columbia River Properties
                                                 C

looked nearly identical, but Fry declared that he did not acquire D. .Inc.' website. When Fry
                                                                   C s

was the owner of D. .Inc.he used a company to design his website, and when he started
                  C

Columbia River Properties, he called the same company and asked them to make him a new

website using a template similar to the one they had previously designed for him. The websites

have separate domain names. Fry asked Mullen if he would be abandoning D. .Inc.' telephone
                                                                        C s

number when it closed down. Mullen agreed to sign a release of the numbers with Comcast.

There is no evidence that Fry acquired D. . Inc's goodwill;the most"obvious sources of
                                        C

goodwill—
        business name and locationare unique.
                                  —

       The Kuty Trust argues that these facts show that Columbia River Properties is a "mere




                                              21
No. 42811 3 II
          - -


                                   15
continuation"of D. . Inc.
                 C                      Br. of Appellant at 44. To determine whether a successor business

is a mere continuation of the seller business, we consider two factors: 1)
                                                                        ( whether there is a

common identity between the officers, directors, and stockholders of the selling and purchasing

companies and (2) sufficiency of the consideration running to the seller corporation in light
                the
                              16
of the assets being sold.          Cambridge Townhomes, 166 Wn. d at 482. Our objective is to
                                                              2

discern whether the "`
                    purchaser represents             merely   a new   hat for the seller. "'   Cambridge

Townhomes, 166 Wn. d at 482 (internal quotation marks omitted) quoting Cashar v. Redford,
                 2                                             (

28 Wn. App. 394, 397, 624 P. d 194 (1981)).
                           2

         But under the facts of this case, the Kuty Trust did not present any evidence

demonstrating that D. . Inc.made a meaningful transfer of assets to Columbia River Properties.
                    C

Without a transfer of assets, Columbia River Properties is not a successor company of D. . Inc.
                                                                                       C

See Meisel, 97 Wn. d at 407 (recognizing that the general rule of no successor liability and the
                 2



15 At the trial court, the Kuty Trust also briefly addressed two other exceptions: express or
implied agreement to assume liabilities and the transfer of assets for a fraudulent purpose of
escap liabilities. But in its opening brief on appeal, the Kuty Trust focuses solely on the
    p g                        p      g          pP             Y                     Y
mere continuation"exception. In its reply brief,the Kuty Trust states that three of the four
exceptions apply—
                express or implied assumption of liability,mere continuation, and fraudulent
transferbut provides argument only on the " ere continuation"exception. Reply Br. of
        —                                 m
Appellant at 13. We do not address the implied or express agreement to assume liabilities or the
fraudulent purpose exceptions alluded to in the Kuty Trust's reply brief because arguments
raised for the first time in a reply brief are too late to warrant consideration, and the arguments
first mentioned in the reply brief are not developed or supported by citations to authority or the
record. RAP 10.a)(Cowiche Canyon Conservancy, 118 Wn. d at 809; Howell v. Spokane
                      6);
                      3(                                              2
   Inland Empire Blood Bank, 117 Wn. d 619, 624, 818 P. d 1056 (1991).
                                          2                     2
16
     Division One added   a   third part to the test —whether
                                                       there is a transfer of all or substantially
all of the predecessor corporation's assets. Gall Landau Young Const. Co. v. Hedreen, 63 Wn.
App. 91, 97, 816 P. d 762 (1991).In Eagle Pacific Insurance Co. v. Christensen Motor Yacht
                    2
Corp., Wn. App. 695, 706 n. ,934 P. d 715 (1997),
         85                        1      2             affd, 135 Wn. d 894, 959 P. d 1052
                                                                       2                2
1998), rejected the addition of a third element and applied the traditional two -factor test. In
          we
2009, in Cambridge Townhomes, our Supreme Court applied the traditional two -factor test
without discussing a third factor. 166 Wn. d at 482.
                                         2
                                                         22
No. 42811 3 II
          - -



exceptions to the general rule presuppose a transfer, in some form, of assets from one business to

another).Because Columbia River Properties is not a successor company of D. .Inc.,
                                                                          C

application of the " ere continuation"analysis is inappropriate and flawed. See Meisel, 97
                   m

Wn. d at 405, 407, 409. For example, the first factor, which compares the identity of officers,
  2

directors, and stockholders, presupposes that the comparison will be between the " elling"and
                                                                                 s

purchasing"corporations. Cambridge Townhomes, 166 Wn. d at 482. Moreover, the second
                                                    2

factor is whether the selling corporation received adequate consideration for the transfer of its

assets. See Cambridge Townhomes, 166 Wn. d at 482. When there is no sale or transfer of
                                       2

assets, these factors do not apply. Thus, we hold that the trial court did not err by finding that

Columbia River Properties was not liable as a successor corporation to D. .Inc.
                                                                        C

       In sum, the trial court properly granted summary judgment dismissal of the Kuty Trust's

claim against Columbia River Properties and its claim against the Hayeses for an accounting of

the trustee's sale proceeds. As further discussed in the unpublished portion of this opinion, we

affirm the trial court on the remaining issues and award attorney fees on appeal to the Hayeses.

       A majority ofthe panel having determined that only the fore g oin gP
           J    y       p          g                    Y                 portion of this opinion
                                                                                           p


will be printed in the Washington Appellate Reports and that the remainder shall be filed for

public record in accordance with RCW 2.6.it is so ordered.
                                     040,
                                       0

III.   SUMMARY JUDGMENT DISMISSAL OF REMAINING CLAIMS WAS APPROPRIATE


       The Kuty trust also appeals the trial court's summary judgment dismissal of its claims for

unjust enrichment, fraud, and civil conspiracy against Robert and Daniele Hayes.

       A.      Unjust Enrichment Claim

       The Kuty Trust argues that there is a "triable"case on its unjust enrichment claim. Br.of

Appellant at 34. Although the Kuty Trust does not formally assign error to any trial court ruling

                                                 23
 No.42811 3 II
          - -



 on this issue or discuss an alleged error of the trial court, it appears that the Kuty Trust is arguing

 that the trial court erred by granting summary judgment dismissal of its unjust enrichment claim

 against the Hayeses.. the Kuty Trust's complaint does not allege an unjust enrichment claim.
                     But

 The Kuty Trust argues that it amended its complaint to add an unjust enrichment claim against

 the Hayeses. The Hayeses argue that an unjust enrichment claim was not before the trial court.

           The Kuty Trust amended its original complaint to add a section titled " ccounting of
                                                                                 A

 Foreclosure Proceeds."CP at 266 (boldface omitted).Our review of the complaint, amended

 complaint, and second amended complaint does not reveal anything approximating an unjust

 enrichment claim. In its reply brief,the Kuty Trust argues that the unjust enrichment claim was

raised below because it is essentially the same as the accounting claimit is merely " second
                                                                       —            a

perspective on the fundamental claim about the distribution of the proceeds of the foreclosure

sale."Reply Br.of Appellant at 4. The Kuty Trust does not provide authority to support this
characterization.


           We do not address the Kuty Trust's unjust enrichment claim because the Kuty Trust did

not present it to the trial does not otherwise argue that preservation was not required. - _ _

See RAP 2. (
        a) (
         5 stating that generally an issue cannot be raised for the first time on appeal unless

it is     manifest error
        a "                affecting   a   constitutional   right "); Giannusa, 169 Wn. App. at 912.

          B. Fraud and Civil Conspiracy Claims

           The Kuty Trust also assigns error to the trial court's summary judgment dismissal with

prejudice of its claims for fraud and civil conspiracy against the Hayeses. The Kuty Trust

concedes that the claims were improbable and, thus, dismissal was proper; but the Kuty Trust

argues that the trial court should have dismissed the claims without prejudice to allow refiling if

subsequent discovery revealed evidentiary support for the claims.

                                                            24
No. 42811 3 II .
          - -



          Although the Kuty Trust assigned error and framed a question regarding the alleged error,

it did not devote any portion of its opening brief to this issue, nor did it discuss, cite to the

record, or cite authority related to dismissal with prejudice rather than without prejudice. The

Hayeses noted in their response brief that the Kuty Trust appeared to abandon the issue. We

agree.


          We will not address an assignment of error that appears abandoned. RAP 10.
                                                                                 a)(
                                                                                   6)
                                                                                   3(

appellate brief should contain argument supporting issues presented for review, citations to legal

authority, and references    to relevant     parts of the record);
                                                                 Howell        v.   Spokane & Inland Empire

Blood Bank, 117 Wn. d 619, 624, 818 P. d 1056 (199 1)assignment.of error unsupported by
                  2                  2                (

legal argument will not be considered on appeal).For the first time in its reply brief, the Kuty

Trust provides argument that the fraud and civil conspiracy claims against the Hayeses should

not have been dismissed with prejudice because the Hayeses were potentially liable parties i.
                                                                                           — e.,

although discovery had not produced any evidence to support the claims against the Hayeses,

neither had it disproved the claim. We will not consider an issue raised for the first time in a

reply brief. Cowiche Canyon Conservancy, 118 Wn. d at 809 (
                                               2      -   stating that an 'issue raised and
                                                                                        -
                                                                                           17
argued   for the first time in   a   reply brief is   too late to warrant   consideration),

          Thus, we do not address the assignment of error because the Kuty Trust waived it by not

developing an argument supporting its assignment of error in its opening brief, the issue was first

17
     But even if we addressed the Kuty Trust's argument, the Kuty Trust fails to inform us how the
Hayeses' potential liability affects the trial court's analysis of a summary judgment motion. Nor
did the Kuty Trust provide authority or analysis related to its request for voluntary dismissal.
The Kuty Trust alleges without authority that the trial court " hould have allowed further
                                                               s
discovery into those claims and should have allowed the [Kuty] Trust to assert or dismiss the
claims based on the outcome of that discovery."Reply Br.of Appellant at 6. Generally, without
argument and citation to authority, we will not review an assignment of error. RAP 10.  a)( 6);
                                                                                            3(
Howell, 117 Wn. d at 624.
              2

                                                           25
No.42811 3 II
         - -



addressed in its reply brief and, even in the reply brief, the argument and authority was

inadequate. See RAP 10.
                    a)(Cowiche Canyon Conservancy, 118 Wn. d at 809; Howell, 117
                      6);
                      3(                                 2

Wn: d at 624.
  2


 IV.      CR 11 SANCTIONS AND RCW 4.4.ATTORNEY FEES AND COSTS
                                  185
                                    8


          After the claims against the Hayeses were dismissed on summary judgment, the Hayeses

requested attorney fees and costs under CR 11 and RCW 4.4.alleging that the Kuty Trust's
                                                      185,
                                                       8

claims against the Hayeses were frivolous and filed without a reasonable prefiling inquiry. The

Hayeses' attorney presented a declaration detailing his experience and hourly rate and attached a

billing invoice detailing costs and his time spent defending the Hayeses. The Kuty Trust

opposed the motion for attorney fees and costs, arguing that it did not violate CR 11 and RCW

185
4.4.because its attorney conducted an elaborate and detailed approximately six week long
 8

investigation before filing the action. The Kuty Trust's attorney filed a declaration explaining
                             18
his   prefiling investigation.    Further,the Kuty Trust noted that it did not oppose dismissal of the

fraud and civil conspiracy claims against the Hayeses once discovery and investigation in
                                                                                 19-
another case cast doubt on the     Hayeses' involvement   in the   alleged scheme.     Thus, the Kuty

Trust argued that the claims against the Hayeses were not frivolous when filed or litigated.




18 We discuss the attorney's declaration in the analysis of attorney fees.
19
   The Kuty Trust served discovery requests that included interrogatories on the Hayeses at the
time it filed the complaint, but the Hayeses moved for summary judgment before answering the
discovery requests. The Hayeses provided answers to the interrogatories only after claims
survived the first summary judgment motion. After the Kuty Trust received new information in
a different casenot involving the Kuty Trust or the parties on appeal and the Hayeses'
                 —                                                     —
answers to interrogatories denying involvement in the alleged scheme under penalty of perjury,
the Kuty Trust did not oppose the Hayeses' summary judgment motion and conceded that the
civil conspiracy and fraud claims against the Hayeses should be dismissed.
                                                    26
No. 42811 3 II
          - -



           In the alternative, the Kuty Trust argued that the Hayeses' fee request should not be

granted in its entirety because the Hayeses' late discovery substantially increased fees on both

sides. The trial court granted the Hayeses' motion for attorney fees under CR 11 and RCW

185.
4.4. The court ordered the Kuty Trust and its counsel to pay $
 8                                                           20
                                                             7, for attorney fees
                                                               265.

and costs incurred in responding to the Kuty Trust's claims.

           The Kuty Trust assigns error to the trial court's imposition of attorney fees and costs

under CR 11 and RCW 4.4.for filing a frivolous lawsuit without a reasonable prefiling
                    185
                      8

inquiry into the legal and factual basis for its suit against the Hayeses. The Kuty Trust also

argues that even if the award of attorney fees was appropriate, the trial court erred by failing to

do a proper lodestar analysis in determining the amount of the fees. We disagree.

           A. CR 11 Sanction and RCW 4.4.Fees and Costs
                                     185
                                       8


           We review a trial court's award of attorney fees under RCW 4.4.or CR 11 for abuse
                                                                      185
                                                                       8

of discretion and will reverse only if the trial court exercised its discretion on untenable grounds

or for untenable reasons. In re Recall Charges Against Lindquist, 172 Wn. d 120, 135 36,258
                                                                        2            -

P:
 3    9 2011        We review findings of act f6r substantial evidence,_ -
                                                                      which is a quantum of

evidence sufficient to persuade a rational person that the premise is true. Stiles v. Kearney, 168

Wn. App. 250, 260, 277 P. d 9,review denied, 175 Wn. d 1016 (2012).Unchallenged findings
                        3                          2

of fact are verities on appeal. In re Estate ofJones, 152 Wn. d 1, 8, 93 P. d 147 (2004).
                                                            2             3

           Under RCW 4.4.in any civil action, a court may award attorney fees to the
                     185,
                       8

prevailing party if the action was "
                                   frivolous and advanced without reasonable cause."RCW

185. "`
4.4. A lawsuit is frivolous when it cannot be supported by any rational argument on the
  8

law   or   facts. "' Stiles, 168   Wn. App. at 260 (internal quotation marks omitted) quoting Skimming
                                                                                      (

v. Boxer, 119 Wn. App. 748, 756, 82 P. d 707 (2004)).
                                     3

                                                       27
No. 42811 3 II
          - -



        Under CR 11, an attorney's signature on a pleading, motion, or legal memoranda

constitutes the attorney's certification that the attorney has

       read the pleading, motion, or legal memorandum, and that to the best of the ...
       attorney's knowledge, information, and belief, formed after an inquiry reasonable
       under the circumstances: ( )it is well grounded in fact; 2)it is warranted by
                                   1                              (
       existing law or a good faith argument for the extension, modification, or reversal
       of existing law or the establishment of new law.

CR 11 also provides:

        If a pleading, motion, or legal memorandum is signed in violation of this rule, the
       court ...  may impose upon the person who signed it,a represented party, or both,
       an appropriate sanction, which may include an order to pay to the other party or
       parties the amount of the reasonable expenses incurred because of the filing of the
       pleading, motion, or legal memorandum, including a reasonable attorney fee.

       A trial court may not impose CR 11 sanctions for a baseless filing ` nless it also finds
                                                                          u

that the attorney who signed and filed the [pleading, motion, or legal memorandum] failed to

conduct a reasonable inquiry into the factual and legal basis of the claim."'
                                                                           Stiles, 168 Wn. App.

at 261 (alteration and emphasis in original)quoting- ryant v. Joseph Tree, Inc., Wn. d 210,
                                            (      B                           119 2
220, 829 P. d 1099 (1992)).
          2              Courts evaluate an attorney's conduct and prefiling investigation

using objective standard that asks what was reasonable to believe at the time of theoffending

filing. Stiles, 168 Wn. App: at 261 62. To impose sanctions, the trial court must enter findings
                                    -

specifying the actionable conduct. Stiles, 168 Wn.App. at 262.

       In its order granting attorney fees, the trial court made detailed findings of fact and




                                                  W.
No. 42811 3 II
          - -



conclusions of law supporting its award. We review the trial court's challenged findings of fact
and conclusions of law. But the Kuty Trust failed to challenge any of the trial court's findings of

fact.




20
     The trial court's findings of fact state:
                     1.    The [Kuty Trust] and its attorney filed this lawsuit on July 2,2008:
          In both the original complaint and the subsequent amended complaint, the [Kuty
          Trust] affirmatively alleged that Mr. Hayes, either directly or [illegible] agents,
          had made affirmative misrepresentations to the [Kuty Trust] prior to the [Kuty
               s sale of property to the defendant New Enterprise[s], The [Kuty
          Trust]'                                                            LLC.
          Trust] further alleged that the Hayes[ s]and the other defendants had engaged in
                                               e
          a "conspiracy" to commit "    equity stripping fraud" to steal the [ Kuty Trust]'
                                                                                         s
          equity by first convincing the [Kuty Trust] to take a second deed of trust on the
          property, and then foreclosing a first deed of trust for an inflated amount beyond
          the amount actually loaned.
                  2.      Over two months prior to filing this lawsuit the [ Kuty Trust]
          requested evidence that the principal amount claimed due in the Hayes[ s]'   e
          Notice of Foreclosure which listed $40, 00. in principal, $
                                —             000                   96
                                                                    18, 54. in
                                                                      4
          interest and penalties, plus other costs and advances estimated to date in the
          amount of $2,40had actually been loaned to the defendant New
                           001. —
          Enterprise[s]. May 9, 2008, the Hayes[ s]'attorney sent copies of
                          On                             e
          documentation of the $
                               00
                               40, 00.in loan disbursements to the [Kuty Trust]' then
                                 0                                            s
          attorney.
                 3.      On June 11, and again on June 12, 2008, the [Kuty Trust]'
                                                                                s current
          attorney wrote two more letters to the Hayes[ s]'
                                                         e      attorney, again requesting
          copies of the same documentation of the lending previously provided to-Kuty[
               s prior
          Trust]'         counsel. On June 19, 2008, the Hayes[ s]'
                                                                 e     attorney forwarded
          copies of the same documentation to [the Kuty Trust]'
                                                             s counsel.
                 4.      Thus, long before the [ Kuty Trust] filed its original complaint,
          much less its later amended complaint, the [Kuty Trust] and its attorney were
          aware that the Hayes[ s]were seeking only to foreclose in the amount of the loan
                              e
          actually made,  not some inflated amount as alleged in the complaint. Despite

          being aware that there was absolutely no factual basis for the alleged Hayes[ s]'
                                                                                        e
          involvement in the "equity stripping fraud" complained of in the [Kuty Trust]'  s
          complaint, the [Kuty Trust] and its attorney nonetheless filed this lawsuit against
          the Hayes[es].
                   5.     On November 14, 2008 the [Kuty Trust] amended its complaint to
          include a claim for an accounting from the Hayes[ s]of alleged proceeds from the
                                                           e
          trustee's sale. On January 30, 2009, the Court granted the Hayes[ s]'
                                                                            e     motion for
          summary judgment and dismissed all of the [Kuty Trust]'  s claims against them,
          including the claim for an accounting, as that claim was not only factually without
          meritthere having been no monies paid at the sale it was directed at the wrong
                                                               —
                                                   29
No. 42811-
    11-  3



       Instead, the Kuty Trust asserts that its . nsuccessful substantive claims are well-
                                                u

recognized causes of action in Washington and meritorious under the circumstances. And the

Kuty Trust further asserts that its counsel carried out an elaborate prefiling investigation,

directing us   to its counsel's declaration   explaining   the   prefiling investigation .   The Kuty Trust's




       party, because only the trustee, not the beneficiary of a deed of trust or a
       purchaser at a trustee's sale, has any duty to account for surplus proceeds pursuant
       to the provisions of Chapter 61. 4 RCW.
                                        2
CP at 340 43. Based on its findings of fact, the trial court entered the following conclusions of
          -
law:
                  1. [The Kuty Trust]' s counsel failed to adequately investigate or
       make reasonable inquiry into the facts supporting the [Kuty Trust]' s complaint,
       and further ignored the facts he did obtain and included clearly false claims in the
       two complaints he filed in this matter. These actions constitute violations of Civil
       Rule 11.
                 2.  The claims made by the [Kuty Trust] against the Hayes[ s]in its
                                                                           e
       complaints herein were frivolous and advanced without reasonable cause.
CP at 343.

21
  The Kuty Trust's counsel filed a declaration explaining his prefiling investigation. He stated
that in March 2008,two individuals who had sold real property approached him independently
with similar experiences in which they sold property for a small down payment and a second -
position note and deed of trust for the balance of the sale price. The transactions were structured
similarly and both resulted in the sellers losing their security interests in the property when the
buyers quickly defaulted on the note secured by' he first -
                                                   t        position deed of trust. The attorney's
investigation revealed that the transactions involved some of the same parties, including
Endeavor. It appeared to the attorney that the buyers and lenders were colluding to strip the
equity from the sellers in second -position. The lender in this case, LeGrand Investments,
appeared to be related to Endeavor, the third party who structured the deal and drafted the
documents, because it had used Endeavor in its own purchases and shared office space with
Endeavor or had office space near Endeavor at one point.
        In a different transaction, the owner of the defaulting buyer was a principal of and
registered agent for Endeavor. The attorney also discovered that the owner of the corporate
lender in one of the other transactions was primarily employed marketing an online tax
avoidance scheme that appeared to be illegal and to have been incorporated into the real estate
transactions the attorney was investigating. The attorney also learned of a third seller who had
been 'involved in similar transaction and lost his security interest.
       The attorney declared that he did as much investigation as he could do without formal
discovery but that the evidence supported an argument that there was a scheme of intentional and
fraudulent equity stripping through foreclosure in the transactions. He filed the lawsuit against
all parties involved in the transactions, including the Hayeses, because the evidence suggested
                                                     30
No. 42811-
    11-  3



brief merely reargues the merits of its substantive claims without addressing the trial court's

findings of fact and conclusions of law.

       As our Supreme Court has explained, this is an inappropriate approach on appeal:

       As a general principle, an appellant's brief is insufficient if it merely contains a
       recitation of the facts in the light most favorable to the appellant even if it
       contains a sprinkling of citations to the record throughout the factual recitation. It
       is incumbent on counsel to present the court with argument as to why specific
       findings of the trial court are not supported by the evidence and to cite to the
       record to support that argument. See RAP 10. .For the most part counsel has not
                                                      3
       done this.
               Strict adherence to the aforementioned rule is not merely a technical
       nicety. Rather, the rule recognizes that in most cases, like the instant, there is
       more than one version of the facts. If we were to ignore the rule requiring counsel
       to direct argument to specific findings of fact which are assailed and to cite to
       relevant parts of the record as support for that argument, we would be assuming
       an obligation to comb the record with a view toward constructing arguments for
       counsel as to what findings are to be assailed and why the evidence does not
       support these findings. This we will not and should not do.

In re Estate ofLint, 135 Wn. d 518, 531 32,957 P. d 755 (1998).
                           2            -       2

       Here,the trial court found that the Kuty Trust's fraud and civil conspiracy claims were

not factually supported because the Hayeses were seeking to foreclose the amount of the loan

actually made, not an inflated amount as alleged in the complaint and that the Kuty Trust knew

that there was no factual basis for the Hayeses' involvement in the alleged scheme.

       The trial court also found that the claim for accounting of proceeds was not factually or

legally supported because there were no monies paid at the sale and because the Hayeses had no

duty to account for proceeds of the trustee's sale. Finally, the trial court found that the Kuty

Trust's counsel "
                failed to adequately investigate or make reasonable inquiry into the facts


concerted efforts among all defendants. He concedes that he did not have direct evidence of the
Hayeses' involvement in the sale of the Kuty Trust property,but that the Hayeses appeared to be
the principal beneficiary of the equity stripping scheme because they got the property for a
fraction of its value. This strongly suggested to the attorney that the Hayeses were involved in
the scheme even though they purchased the lender's interest after the initial sale and loan.
                                                 31
No. 42811 3 II
          - -



supporting the [Kuty Trust]'
                          s complaint, and further ignored the facts he did obtain and included

clearly   false claims in the two   complaints   he filed in this matter. "   CP at 343.


          We hold that the unchallenged findings of fact support the trial court's conclusions that

the Kuty Trust's counsel violated CR. 1 and that the Kuty Trust's claims were frivolous and
                                    1

advanced without reasonable cause. Because the trial court's imposition of sanctions was not

unreasonable or based on untenable grounds, we affirm it. Stiles, 168 Wn. App. at 263.

          B. Amount of the Attorney Fee Award

          The Kuty Trust also argues that the trial court erred by failing to do a lodestar analysis to

determine the amount of attorney fees to award. We disagree.

          Under the lodestar methodology, the trial court must determine the reasonable number of

hours expended by counsel and the reasonableness of the hourly rate of counsel. Mahler v.

Szucs, 135 Wn. d 398, 435, 957 P. d 632, 966 P. d 305 (1998).The lodestar fee is calculated
             2                  2             2

by multiplying the reasonable hourly rate by the reasonable hours incurred by counsel.

Mahler, 135 Wn. d at 435. In Mahler, our Supreme Court reaffirmed that an adequate record
              2

upon which to
 P                       a fee award required and held that findingg s of fact andconclusions of
                                       n


law are required to establish such a record. 135 Wn. d at 435.
                                                   2

          Here,the Hayeses' attorney requested fees and costs, stated his qualifications and

customary hourly rate, and attached a timesheet detailing his work on the case and costs

incurred. The Hayeses' attorney had been practicing law since 1993 and was a partner in his law

firm. His hourly rate was $ 00,which he believed to be reasonable and customary for his
                          250.

level of experience in the community, but he had billed the Hayeses only $ 25. 0 per hour. He
                                                                         2 0

22
   The trial court erroneously labeled this finding of fact a conclusion of law,but we review it as
a finding of fact regardless of its label. Willener v. Sweeting, 107 Wn. d 388, 394, 730 P. 0 45
                                                                        2                   2
1986).
                                                       32
No. 42811 3 II
          - -



declared that he had spent 28. 0 hours on the matter resulting in $ 390.in fees and $ 20
                             4                                    00
                                                                  6,                285.

in costs. He had also spent an additional 2. hours preparing the Hayeses' motion for attorney
                                           5

fees and costs, and he anticipated spending another 4 hours reviewing the Kuty Trust's response

pleadings, preparing a reply, and appearing for the argument for an additional $
                                                                               50.
                                                                               1,462.

       In its oral ruling,the trial court determined that $ 00 was a reasonable hourly rate for the
                                                          2

locale. The trial court also found that the hours requested were reasonable. The trial court

explained its attorney fee award on the record, but it did not make written findings of fact and

conclusions of law.


       Although the trial court did not include its calculation in its written findings of fact and

conclusions of law, its oral findings'and conclusions of law are sufficient for our review. The

oral record is clear, and the Kuty Trust does not allege that the hourly rate was unreasonable or

that the hours credited by the court were unreasonable. We do not require the unnecessary step

of remanding to the trial court to amend its written findings of fact to include the analysis when

the analysis is clear from the record and there is no substantive challenge to the court's analysis.

V.     ATTORNEY FEES AND COSTS ON APPEAL


       The Hayeses request attorney fees and costs under RAP 18. (
                                                             a),
                                                               9 which permits such an

award against a party who files a frivolous appeal. "An appeal is frivolous under RAP 18. if it
                                                                                        9

raises no debatable issues and is so devoid of merit that there is no reasonable possibility of

reversal."Andrus v. Dep't of Transp.,128 Wn. App. 895, 900, 117 P. d 1152 (2005).
                                                                 3

        We hold that the Kuty Trust's appeal against the Hayeses is frivolous. The Kuty Trust's

appeal on their claim for an accounting of foreclosure proceeds is factually and legally without

merit because the Hayeses had no duty to account for proceeds of a trustee's sale and, even if



                                                 33
No. 42811 3 11
          - -




they did,the undisputed evidence shows that the Hayeses purchased the property on a credit bid

so there were no proceeds to account for.

       The Kuty Trust's appellate arguments related to its unjust enrichment, civil conspiracy,

and fraud claims were not preserved, presented too late to warrant consideration, or inadequately

briefed. Finally, the trial court's unchallenged findings of fact clearly supported its conclusion

that the Kuty Trust and its counsel violated CR 11 and supported an award of fees and costs

under RCW 4.4.by filing claims against the Hayeses that were frivolous and advanced
          185
            8

without reasonable care. The trial court did not enter written findings of facts and conclusions of

law demonstrating its lodestar analysis for the fee award, but its oral decision is sufficient to

review its analysis and, he Kuty Trust does not allege that the trial court's determination of
                       t

counsel's hourly rate or time spent was unreasonable.

       The Kuty Trust presented no debatable point of law and the chance for reversal was

nonexistent. Thus,the Kuty Trust's appeal against the Hayeses is frivolous and supports an

award of reasonable appellate fees and costs to the Hayeses, which a commissioner shall

determine upon compliance with RAP 18 9( ); --
                                      : a

       We affirm the trial court and award attorney fees on appeal to the Hayeses.
                                                          i


                                                                   f:



We concur:




           I


PWN(A
WO swICK, C.J.




                                                  34
