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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DAVID M. DICKSON and CHRISTOPHER G. STELZER, Respondents, v. AVISTA ENERGY, INC., Appellant.

No. 27745-3-III ) ) ) ) ) ) ) ) ) )

Division Three

UNPUBLISHED OPINION

Schultheis, C.J. -- Energy traders David Dickson and Christopher Stelzer worked under employment contracts with Avista Energy, Inc. when Avista sold its operating assets to another company. Mr. Dickson and Mr. Stelzer received pay and bonuses pending the sale. Before their last day of work at Avista, the traders accepted positions with the purchasing company and demanded that Avista pay severance benefits for termination under their employment contracts. Avista refused. The traders sued for breach of contract. The court granted summary judgment in their favor and awarded them contractual attorney fees and double severance payments under RCW 49.52.070 as exemplary damages for

No. 27745-3-III Dickson v. Avista Energy, Inc. willful deprivation of severance. Avista appeals. The issues on appeal are whether the severance clause in the employment contracts was triggered by Avista's sale of its assets and, if such severance payments were due, whether the matter was the subject of a bona fide dispute that precludes exemplary damages under RCW 49.52.070. We conclude that the severance clause was triggered and the trial court correctly ordered exemplary damages. We therefore affirm and grant the traders attorney fees as provided in RCW 49.52.070. FACTS Mr. Dickson and Mr. Stelzer were energy traders for Avista. Both traders signed employment contracts with Avista.1 On April 17, 2007, Avista announced the sale of its operating assets to Coral Energy Holding, L.P., a subsidiary of Shell Oil Company. The transaction closed on July 30. While Avista's assets were sold to Coral, Avista retained the stock in its company. Mr. Dickson signed a contract on May 22 accepting a position with Coral in Spokane. Mr. Stelzer signed an offer of employment with Coral on June 8 for a position in San Diego. Mr. Stelzer ultimately turned down the offer due to the higher cost of living and decrease in benefits connected to the Coral position.

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The contracts set forth identical terms relevant to this appeal. 2

No. 27745-3-III Dickson v. Avista Energy, Inc. The traders received communications from various Avista benefits personnel, each referencing the traders' termination date of June 30, 2007. Further, according to Dennis Vermillion, Chief Operating Officer of Avista, there were no jobs available for the traders at Avista after June 30. On September 4, the traders sent a letter to Avista, demanding payment under the severance provision of their respective employment contracts with Avista. Each contract had the same severance provision: Upon termination of the Employee's employment by the Company without Cause, Avista will pay the Employee a single lump sum severance payment equal to a total of twelve months (12) of the Employee's then current monthly salary to the Employee, less all applicable taxes payable on the first regular payroll following the Employee's last day of employment. Employee shall be subject to a three (3) month non-competition period as described in Section 8. Clerk's Papers (CP) at 78, 99. In its response, Avista claimed that the severance provision of the contracts was not triggered because the traders voluntarily chose to resign their positions by accepting employment with Coral.2 The traders filed suit on November 16, 2007, seeking declaratory relief and money damages for breach of contract and unpaid wages. Following discovery, the parties filed

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Avista has since abandoned this position. 3

No. 27745-3-III Dickson v. Avista Energy, Inc. competing motions for summary judgment. The traders argued that the terms of the contracts provided for the payment of the severance benefits. Avista argued that severance benefits were not due the traders because the traders' contracts did not expressly provide that the sale of the company's assets triggered the severance clause. After oral argument on October 3, 2008, the trial court issued a memorandum opinion on October 23, deciding the matter in the traders' favor. The court entered orders and judgments after finding Avista liable for exemplary damages under RCW 49.52.070, prejudgment interest, and attorney fees. This timely appeal follows. DISCUSSION a. Severance An order of summary judgment in a declaratory judgment action is reviewed de novo, in which the appellate court performs the same inquiry as the trial court. McNabb v. Dep't of Corr., 163 Wn.2d 393, 397, 180 P.3d 1257 (2008). "Facts and reasonable inferences are considered in the light most favorable to the nonmoving party and questions of law are reviewed de novo." Id. "The purpose of contract interpretation is to determine the intent of the parties." Navlet v. Port of Seattle, 164 Wn.2d 818, 842, 194 P.3d 221 (2008) (citing Berg v. Hudesman, 115 Wn.2d 657, 663, 801 P.2d 222 (1990)); see Tanner Elec. Coop. v. Puget

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No. 27745-3-III Dickson v. Avista Energy, Inc. Sound Power & Light, 128 Wn.2d 656, 674, 911 P.2d 1301 (1996) ("The touchstone of contract interpretation is the parties' intent."). The intent of the parties controls the interpretation of all contract terms. Farmers Ins. Co. of Wash. v. Miller, 87 Wn.2d 70, 73, 549 P.2d 9 (1976). "We search for intent th[r]ough the objective manifest language of the contract itself." Navlet, 164 Wn.2d at 842 (citing Hearst Commc'ns, Inc. v. Seattle Times Co., 154 Wn.2d 493, 503, 115 P.3d 262 (2005)). "Contract construction involves the application of legal principles to determine the legal effect of contract terms." Id. (citing Hearst, 154 Wn.2d at 502 n.9). Here, the issue is whether the traders were terminated without cause, thereby triggering the provision that entitles them to 12 months' pay as severance. Avista argues that regardless of the provision of the contracts, the facts of this case are governed by this court's decision in Lardy v. United States Testing Co., Inc., Severance Pay Plan, 84 Wn. App. 825, 930 P.2d 347 (1997). As the traders point out, numerous facts distinguish their case from Lardy. Lardy involved the sale of a hazardous waste testing facility that was sold to another company. 84 Wn. App. at 826. The employees were informed of the impending sale and were given the option of continued employment with the new company. The majority of the employees agreed to continue as employees of the new company. The employees

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No. 27745-3-III Dickson v. Avista Energy, Inc. never missed a day of work due to the sale and continued with the same job, at the same facility, at the same or similar tasks, and for almost the same compensation. Id. at 826-27. The selling company had a severance plan under the Employee Retirement Income Security Act of 1974, 29 U.S.C.

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