A Washington Appeals Court has granted an appeal filed by a collection operation to require a state court judge show his math on how he determined the amount of attorney’s fees to award plaintiffs in a case that alleged the collection operation was illegally charging prejudgment interest on the unpaid debt.
The background: The dispute began when the collection operation filed suit in 2019 to recover more than $15,000 in unpaid rent and fees from two tenants who had moved out of their apartment. A default judgment was entered against the tenants for more than $17,000, including prejudgment interest, but the judgment was later vacated.
- The tenants responded with counterclaims, arguing that the collection operation was improperly charging prejudgment interest from the date tenants vacated their units. They sought to certify a class of similarly affected tenants under Washington’s Collection Agency Act and Consumer Protection Act.
- While the trial court initially denied class certification, additional tenants later joined the case. A settlement was eventually reached in 2023, with the collection operation agreeing to pay $87,000 to class members and $1,000 service awards to class representatives. Importantly, the settlement allowed class counsel to seek attorney fees and costs, which became a point of contention.
- The trial court awarded class counsel nearly $285,000 in attorney fees and more than $3,400 in costs, slightly less than the $300,000 fee request.
The ruling: The appeals court affirmed that attorney fees were appropriate under the settlement agreement but agreed with the collection operation that the trial court had not adequately justified the amount. The panel noted that “trial courts must articulate the grounds for a fee award, making a record sufficient to permit meaningful review”.
- Because the judge reduced the requested amount without explaining why, the appeals court reversed that part of the ruling and sent the case back for proper findings and conclusions. “Looking to the trial court’s order, we cannot be sure why or how the court landed on the amount that it did,” the Appeals Court wrote.
- The appeals court also granted attorney fees for the plaintiffs on appeal, with the trial court to determine the amount.
