Opinion Information Sheet

			

                                                                               FILED
                                                                          February 16, 2012
                                                                    In the Office of the Clerk of Court
                                                                  WA State Court of Appeals, Division III

       IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

EVERGREEN MONEYSOURCE                               No.  29766-7-III
MORTGAGE COMPANY d/b/a                          )
EVERGREEN HOME LOANS, a                         )
Washington Corporation,                         )   Division Three
                                                )
                      Appellant,                )
                                                )
              v.                                )   PUBLISHED OPINION
                                                )
LARRY SHANNON and JANE DOE                      )
SHANNON, husband and wife; and                  )
GUILD MORTGAGE COMPANY, a                       )
California Corporation,                         )
                                                )
                      Respondents.              )
                                                )

       Kulik, C.J.  --  Beginning in 1997, Larry Shannon operated a real estate lending 

office in Moses Lake, Washington.  Over the years, the office served as a branch office 

for six different residential lenders.  From March 2007 through April 2009, the office was 

affiliated with Evergreen Moneysource Mortgage Company (Evergreen).  On April 30, 

2009, this relationship ended and, the next day, the entire Moses Lake branch became 

affiliated with Guild Mortgage (Guild).  Evergreen filed this action, alleging breach of  

No. 29766-7-III
Evergreen Moneysource Mort. Co. v. Shannon

contract and breach of the duty of loyalty by Mr. Shannon; tortious interference with 

business expectancy and contractual relations by Mr. Shannon and Guild; and a violation 

of the Consumer Protection Act (CPA), chapter 19.86 RCW, by Mr. Shannon and Guild.  

The court dismissed these claims and denied Evergreen's motion for leave to amend to 

add a claim based on Washington's Uniform Trade Secrets Act (UTSA), chapter 19.108 

RCW.  We affirm the trial court's dismissal of the breach of contract, tortious 

interference, and CPA claims.  We also affirm the denial of the motion to amend.  We 

conclude that the wrongful disclosure claim was not set forth in the complaint.  We 

reverse the dismissal of the breach of duty of loyalty claim related to employee 

solicitation.

                                            FACTS

       In 1997, Larry Shannon opened an office in Moses Lake to obtain loans for 

homebuyers.  From 1997 until 2007, the Moses Lake office was affiliated with six 

different lenders.  On March 28, 2007, Mr. Shannon became employed with Evergreen. 

As part of his employment with Evergreen, Mr. Shannon signed a branch manager 

agreement. 

       Beginning in November 2008, Evergreen, at times, was unable to fund or timely 

fund a number of loans that the Moses Lake office was ready to close.  This situation 

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continued into the spring of 2009.  Mr. Shannon discussed this matter with Evergreen's 

president, Keith Frachiseur, on several occasions.  On April 10, 2009, Mr. Frachiseur 

came to the Moses Lake office and spoke to all of the employees.  He made promises 

concerning how Evergreen would fund loans in the future.  He also promised a retention 

bonus for each employee who remained with Evergreen.  

       Evergreen and the Moses Lake branch concluded their relationship on April 30, 

2009.  Mr. Shannon and the Moses Lake branch affiliated with Guild, effective May 1. 

       Charles Nay, regional vice president for Guild, was responsible for recruitment.  In 

February 2009, he approached Mr. Shannon about moving his mortgage origination 

branch to Guild.  

       Before Guild extended an offer to the Moses Lake branch, Mr. Shannon 

gave Mr. Nay (1) Evergreen's profit and loss statement, (2) Evergreen's rate list, and 

(3) Evergreen's loan originator agreement.  Evergreen alleges that this information was 

confidential and that Guild was on notice of Evergreen's claims of ownership and 

confidentiality, or, alternatively, Evergreen's claim of a trade secret.  

       Mr. Nay stated he was unaware that any of this information belonged to Evergreen 

or that it was confidential.  Mr. Nay believed that Mr. Shannon was providing his own 

internal branch information and that Mr. Shannon had a right to do so.  Mr. Nay stated 

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that Guild did not look at the price sheet because Guild's loan pricing is set by market 

forces and with reference to Guild's internal cost structure.  Evergreen's rate list would 

not apply to Guild.  

       Mr. Shannon points out that during the time his office was affiliated with 

Evergreen, the information contained in the rate sheet was not confidential and could be 

located on the Internet.  Mr. Nay asked Mr. Shannon to provide the loan officers'

compensation plan so that he could compare it to Guild's standard terms to see if Guild's 

standard terms would accommodate the Moses Lake branch's desire to become affiliated 

with Guild.  Mr. Nay maintains that he did not use the sample loan officer agreement to 

sculpt or otherwise determine the terms of the compensation agreement offered by Guild. 

       The final piece of information provided by Mr. Shannon to Mr. Nay was the profit 

and loss statement.  Guild maintains that Evergreen offers no evidence showing that the 

profit and loss statement was confidential or that Mr. Nay was aware of Evergreen's 

claim of confidentiality. 

       Evergreen maintains that Mr. Nay used Evergreen's profit and loss information to 

prepare two pro forma reports.  These reports show that the Moses Lake branch would 

make approximately $3.1 to $3.33 million in the first month with Guild.  Mr. Frachiseur 

states that he reviewed the two pro formas created for the Moses Lake branch and the 

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projections for the first month's gross income -- $3.1 to $3.33 million -- could not be 

accomplished unless Evergreen's existing customer base or loans were moved to Guild. 

       Guild denies using the profit and loss information provided by Mr. Shannon for 

any purpose.  Guild believed that Mr. Shannon had the right to share the information.  

Guild agrees that it created a pro forma analysis showing projections as to how Mr. 

Shannon's branch would perform if affiliated with Guild.  Guild contends that Evergreen 

failed to present evidence showing that the profit and loss information was confidential or 

that Guild was aware the information was confidential. 

       Mr. Shannon and the Moses Lake branch terminated their affiliation with 

Evergreen, and the branch became affiliated with Guild on May 1, 2009.  Evergreen 

contends Mr. Shannon agreed that up until this date, all customers coming in the door 

would belong to Evergreen.  In Evergreen's view, Mr. Shannon and his office also agreed 

to close as many loans as possible in Evergreen's pipeline before May 1.  After that date, 

Evergreen personnel would close any remaining unclosed loans.  

       Evergreen contends that despite these promises, Mr. Shannon worked to divert 

loans from Evergreen to Guild, prior to May 1.  Specifically, Evergreen asserts that after 

Mr. Shannon and the Moses Lake branch became affiliated with Guild, Mr. Shannon 

moved 17 Evergreen customers to Guild. 

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       Evergreen filed suit against Mr. Shannon and Guild.  Evergreen's complaint was 

based on three sets of allegations: (1) that in March 2009, Mr. Shannon began originating 
loans for Guild, (2) that Mr. Shannon originated fictitious loans,1 and (3) that Mr. 

Shannon solicited Evergreen employees to work for Guild.  Based on these allegations, 

Evergreen alleged five causes of action: breach of contract, breach of duty of loyalty, 

tortious interference with business expectancy, tortious interference with contractual 

relations, and violation of the CPA. 

       Evergreen filed a motion for partial summary judgment.  As part of this motion, 

Evergreen asserted that Mr. Shannon breached his contract with Evergreen by disclosing 

Evergreen's profit and loss sheet, rate sheet, and loan originator agreement.  

       On November 15, 2010, Mr. Shannon filed a motion for summary judgment.  

Guild joined in this motion.  On November 17, six months after the deadline to amend 

pleadings, Evergreen sought leave to amend its complaint.  In its motion, Evergreen 

sought to include a claim based on the UTSA.  On January 10, 2011, the court denied the 

motion to amend.  On February 8, the court granted summary judgment in favor of Mr. 

Shannon and Guild, dismissing all of Evergreen's claims.  Mr. Shannon was awarded his 

attorney fees and costs based on the branch manager agreement between Mr. Shannon 

       1 This claim was dismissed by the trial court and is not mentioned in Evergreen's 
briefs.

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and Evergreen.  

       Evergreen appeals, alleging the court erred by dismissing the breach of contract 

claim and the breach of duty of loyalty claim made against Mr. Shannon, and the CPA 

claims and tortious inference claims against Mr. Shannon and Guild.  Evergreen also 

seeks the reversal of the award of $97,755.33 in attorney fees awarded to Mr. Shannon.  

Mr. Shannon and Evergreen seek attorney fees on appeal.  Evergreen also challenges the 

court's decision to deny the motion for leave to amend.  

                                         ANALYSIS

       Summary judgment is proper when the pleadings and the evidence show that there 

is no genuine issue as to any material fact and that the moving party is entitled to 

judgment as a matter of law.  CR 56(c).  Once the moving party has made and supported 

his or her motion, the nonmoving party must come forward with specific facts showing 

that a genuine issue of fact exists for trial.  CR 56(e).  When reviewing a summary 

judgment, the appellate court must consider the facts and all reasonable inferences 

therefrom in the light most favorable to the nonmoving party.  Wilson v. Steinbach, 98 

Wn.2d 434, 437, 656 P.2d 1030 (1982).  

       If the moving party is the defendant, who meets his or her showing, the inquiry 

shifts to the plaintiff.  At that point, the plaintiff must make a showing sufficient to 

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establish the existence of each essential element to that plaintiff's case in order to defeat 

summary judgment.  Young v. Key Pharmaceuticals, Inc., 112 Wn.2d 216, 225, 770 P.2d 

182 (1989) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. 

Ed. 2d 265 (1986)).

       Throughout its briefs, Evergreen repeatedly argues that its complaint impliedly 

states a wrongful disclosure claim against Mr. Shannon and Guild.  According to 

Evergreen, Guild and Mr. Shannon used Evergreen's confidential information to lure the 

entire Moses Lake branch over to Guild.  Evergreen uses this same argument to support 

its request to amend its complaint in order to add a UTSA claim.

       I.     Breach of Contract Claim and Breach of Duty of Loyalty Claim 
              Against Mr. Shannon

       Improper Solicitation of Evergreen's Employees. Paragraph 7 of the branch 

manager agreement reads, in part:  

       After Agent leaves Evergreen's employment, Agent shall not, on his/her 
       own behalf or on behalf of any third party, directly or indirectly, solicit or 
       aid anyone in the solicitation of any employees of Evergreen.

Clerk's Papers (CP) at 555 (emphasis added). Evergreen contends the court erred by 

dismissing its breach of contract and breach of duty of loyalty claims against Mr. 

Shannon.  Evergreen asserts that Mr. Shannon violated the branch manager agreement 

with Evergreen and his duty of loyalty to Evergreen by (1) improperly soliciting 

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Evergreen's employees, (2) improperly soliciting Evergreen's customers, and 

(3) improperly disclosing Evergreen's confidential and proprietary information to Guild.

       During the period of employment, an employee has a duty to refrain from 

soliciting customers for a rival business or to act in direct competition with his or her 

employer's business.  Kieburtz & Assocs., Inc. v. Rehn, 68 Wn. App. 260, 265, 842 P.2d 

985 (1992) (quoting Restatement (Second) of Agency § 393 cmt. e (1958)).

       Mr. Shannon contacted Guild in February 2009.  Evergreen and the Moses Lake 

branch concluded their relationship on April 30, 2009.  The Moses Lake branch affiliated 

with Guild, effective May 1.  Any solicitation of employees by Mr. Shannon occurred 

before the Moses Lake branch left their at-will employment with Evergreen. Hence, 

Evergreen presents no evidence that Mr. Shannon breached paragraph 7 of the contract.  

       But there is a question as to whether Mr. Shannon breached his duty of loyalty to 

Evergreen by soliciting employees during the last few months he worked for Evergreen.  

Mr. Shannon contends there is no evidence to support Evergreen's employee solicitation 

claim.  

       However, Rita Nicholas testified that Mr. Shannon wanted her to move with him 

to Guild and that the move was discussed in terms of the whole group of employees going 

to Guild.  Significantly, Ms. Nicholas testified that she had no independent contact with 

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Evergreen Moneysource Mort. Co. v. Shannon

Guild other than through Mr. Shannon.  Ms. Nicholas stated:

       Q.     So, in other words, at some point in time it became clear that like the 
              medical benefits available at Guild were a little more expensive than 
              the medical benefits at Evergreen; is that fair to say?
       A.     Yes.
       . . . .
       Q.     At some point in time, did somebody tell you there would be 
              additional compensation from Guild to make up the difference in 
              benefits?
       A.     Yes.
       Q.     And who told you that?
       A.     Larry.

CP at 546. At his deposition, Mr. Nay testified that the objective was to bring over the 

whole package -- all of the employees.  

       Based on this testimony, there is a question of material fact as to whether Mr. 

Shannon breached his duty of loyalty by soliciting Evergreen's employees before he left 

Evergreen's employment. 

       Mr. Shannon argues that Evergreen's solicitation claim was properly dismissed 

because Evergreen failed to provide evidence as to damages.  When asked to list any and 

all damage Evergreen sustained because of Mr. Shannon's alleged solicitation of Moses 

Lake employees, Evergreen's representative testified that there was none.  However, Mr. 

Frachiseur, while not providing a dollar amount, did provide information concerning the 

lost loans, commission expense, and bonuses, which could be used when calculating 

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damages.  

       The court erred by dismissing Evergreen's breach of loyalty employee solicitation 

claim against Mr. Shannon.

       Improper Solicitation of Evergreen's Customers. Paragraph 6 of the agreement 

provides, in part:

       Non-independently developed contacts, clients or customers shall remain 
       the property of Evergreen.  Upon termination of this Agreement, Agent 
       shall deliver and surrender all documents and loan information to 
       Evergreen.  Agent acknowledges and agrees that the business opportunities 
       and relationships reflected in all documents are Evergreen's sole and 
       exclusive property.  Once processing on any customer or borrower's 
       application has commenced by Evergreen, Agent shall not remove any file 
       or any documents from such file.

CP at 554.

       Evergreen asserts that at least 17 of Evergreen's customers ended up closing loans 

with Guild rather than Evergreen.  Mr. Shannon refers to these loans as the lost loans.  

Evergreen bases this conclusion on the pipeline reports prepared for each company.  In 

Evergreen's view, once a borrower's name appeared on Evergreen's pipeline report, the 

individual was then considered to be an Evergreen customer.  

       While Evergreen bases its lost loans claim on the matching names found in 

Evergreen's and Guild's pipeline reports, Guild looks at the matter differently.  Guild 

refers to a document it prepared that summarizes various declarations and other evidence.  

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Guild's document establishes the date a person becomes a customer by using the date of 

the relevant purchase and sales agreement.  Guild argues that Evergreen cannot show that 

it would have closed any of the lost loans.

       Specifically, the document prepared by Guild shows:

       Loans released by Evergreen to Guild                                3

       Loans failing to meet Evergreen's standards                         2

       Loans not closed by Evergreen or Guild                              2

       Loan application started after 4/30/09                              5

       Purchase and sale agreements signed & loan applications             5
                   started after  4/30/09 

                             TOTAL                                        17

See CP 961-63.

       In her declaration, Anne Fisher explains that she was the loan originator on 9 of 

the 17 loans.  She states that on each of the loans she originated, the individual contacted 

her after May 1, 2009, and asked her to obtain the loan through Guild.    
       Evergreen focuses on three particular loan applications for borrower "G.L,"2

borrower "D.T.," and borrower "T.C." Each of these borrowers appeared on the pipeline 

       2 Borrowers are listed in Evergreen's and Guild's pipeline reports with their last 
name first.  This convention is adopted here.

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Evergreen Moneysource Mort. Co. v. Shannon

reports for both Evergreen and Guild. However, each of these borrowers told Mr. 

Shannon that they wanted to stay with his office.

       Evergreen uses these three declarations to support its argument.  But these 

declarations favor Mr. Shannon, not Evergreen.  

       Evergreen relies on an e-mail dated April 22, 2009, from Mr. Shannon to Guild.  

This e-mail reads:

       Currently we have about 50 or 60 files that we need to get into the system.  
       We need to close between 25 and 30 of these files in May.  We are starting 
       to have issues with borrowers and realtors and need to move forward as 
       soon as we can.

CP at 618.

       However, Evergreen makes no effort to explain this e-mail in terms of the numbers 

appearing on the pipeline reports.

       Here, Guild presented evidence demonstrating why borrowers named in 

Evergreen's pipeline report elected to finish their loans with Guild.  Evergreen makes no 

effort to counter this evidence.

       The court did not err by granting summary judgment in favor of Mr. Shannon and 

Guild with regard to the lost loans claim.  

       Improper Disclosure of Confidential and Proprietary Information. Evergreen 

contends that a claim for improper disclosure of confidential and proprietary information 

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was pleaded in the complaint.  Alternatively, Evergreen argues that an improper 

disclosure claim is implicit in the complaint and that the court erred by dismissing it.  

Evergreen contends that this claim is different than the cause of action for violation of the 

UTSA that Evergreen sought to add in its motion for leave to amend.  

       Evergreen asserts that the improper disclosure claim in its complaint is based on

paragraph 6 of the agreement.  Paragraph 6 provides that Mr. Shannon cannot disclose 

Evergreen's proprietary information.

       Evergreen maintains that Mr. Shannon violated the agreement by disclosing 

Evergreen's confidential and proprietary information to Guild.  Specifically, Evergreen 

contends that Mr. Shannon breached his obligation to Evergreen by disclosing 

Evergreen's (1) profit and loss sheet, (2) rate list, and (3) loan originator agreement.

       CR 8 provides:

       A pleading which sets forth a claim for relief . . . shall contain (1) a short 
       and plain statement of the claim showing that the pleader is entitled to relief 
       and (2) a demand for judgment for the relief to which he deems himself
       entitled.
       "[P]leadings are primarily intended to give notice to the court and the opponent of 

the general nature of the claim asserted."  Lightner v. Balow, 59 Wn.2d 856, 858, 370 

P.2d 982 (1962).  A complaint must state the nature of a plaintiff's claims and the legal 

theories upon which the claims rest.  Molloy v. City of Bellevue, 71 Wn. App. 382, 385, 

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859 P.2d 613 (1993). "[P]leadings are to be liberally construed; their purpose is to 

facilitate proper decision on the merits, not to erect formal and burdensome impediments 

to the litigation process."  State v. Adams, 107 Wn.2d 611, 620, 732 P.2d 149 (1987) 

(citing Caruso v. Local Union No. 690 of Int'l Bhd. of Teamsters, 100 Wn.2d 343, 349, 

670 P.2d 240 (1983)).  

       "[I]nitial pleadings which may be unclear may be clarified during the course of 

summary judgment proceedings."  Id.  However, while inexpert pleading is permitted, 

insufficient pleading is not.  Dewey v. Tacoma Sch. Dist. No. 10, 95 Wn. App. 18, 23, 

974 P.2d 847 (1999).  "'A pleading is insufficient when it does not give the opposing 

party fair notice of what the claim is and the ground upon which it rests.'"  Id. (quoting 

Lewis v. Bell, 45 Wn. App. 192, 197, 724 P.2d 425 (1986)). "A party who does not plead 

a cause of action or theory of recovery cannot finesse the issue by later inserting the 

theory into trial briefs and contending it was in the case all along." Id. at 26.

       Evergreen contends that a claim for improper disclosure of confidential and 

proprietary information was pleaded in the complaint as part of its claim for the improper 

closing of Evergreen's customer's loans.  Evergreen points to the following language in 

the complaint:

       [T]he Agreement provided that all contracts, clients or customers developed 
       during [Mr.] Shannon's employment with Evergreen belonged to 
       Evergreen.

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              . . . .
              3.2  Pursuant to the Agreement, [Mr.] Shannon promised, amongst 
       other things, to use his best and exclusive efforts to originate loans for 
       Evergreen, acknowledged that all clients and files for loans originated 
       during his employment belonged to Evergreen, and agreed not to solicit 
       Evergreen employees and input false information into Evergreen's files.
              3.3  [Mr.] Shannon failed to honor his obligations under the 
       Agreement.

CP at 5, 7.

       In its prayer for relief, Evergreen asks "[f]or an Order that [Mr.] Shannon and 

Guild return all client files to Evergreen, which were originated during [Mr.] Shannon's 

employment."  CP at 10-11.

       This language is insufficient to put Mr. Shannon on notice that Evergreen intended 

to plead a claim for improper disclosure of confidential and proprietary information.  

Evergreen failed to give Mr. Shannon fair notice of the disclosure claim or the grounds 

upon which it rested.  

       Evergreen next contends that the improper disclosure claim was pleaded through 

discovery.  In Adams, the court concluded that "initial pleadings which may be unclear 

may be clarified during the course of summary judgment proceedings."  Adams, 107 

Wn.2d at 620.  Here, the complaint is not unclear; a wrongful disclosure claim is simply 

not made.

       Evergreen supports its argument by relying on documents and deposition 

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testimony.  The references to pages in the depositions of Mr. Shannon and Mr. Nay do 

not contain questions or answers that clearly indicate that Evergreen was pursuing an 

improper disclosure claim.  

       Given that the complaint does not contain even an unclear reference to an 

improper disclosure claim, later statements by Mr. Frachiseur did not clarify the 

complaint.  Evergreen did not plead a claim of improper disclosure of confidential and 

proprietary information in its complaint.

       The court erred by dismissing the breach of duty of loyalty claim against Mr. 

Shannon relating to the employee solicitation.  The court did not err by dismissing the 

breach of contract claims or by refusing to consider the improper disclosure of 

confidential and proprietary information claim. 

       II.    Tortious Interference

       A defendant is liable for tortious interference with a contractual or business 

expectancy when (1) there exists a valid contractual relationship or business expectancy,

(2) the defendant had knowledge of the same, (3) the defendant's intentional interference 

induced or caused a breach or termination of the relationship or expectancy, (4) the 

defendant's interference was for an improper purpose or by improper means, and (5) the 

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plaintiff suffered damage as a result.  Pleas v. City of Seattle, 112 Wn.2d 794, 800-05, 

774 P.2d 1158 (1989).  

       Tortious Interference with Employees. Evergreen first argues that Mr. Shannon 

and Guild tortiously interfered with its contractual and business expectancies with its 

employees.

       To prove these claims, Evergreen had to prove that it had a valid expectancy in the 

continued employment of the Moses Lake branch employees.  See Woody v. Stapp, 146 

Wn. App. 16, 24, 189 P.3d 807 (2008).  The employees of the Moses Lake branch were 

at-will employees.  Importantly, "at-will employees do not have a business expectancy in 

continued employment."  Id.

       Evergreen relies on Calbom v. Knudtzon, 65 Wn.2d 157, 396 P.2d 148 (1964).  In 

Calbom, the trial court made a finding concerning the existence of an attorney-client 

relationship, whereby the plaintiff attorney was engaged to undertake the long-term 

probate of an estate.  Id. at 163.  The defendants argued that the attorney was only 

engaged to perform services for the limited purpose of admitting the will to probate and 

securing an order authorizing continuation of the business.  Id. Examining the evidence 

as a whole, the appellate court concluded that even though the attorney-client relationship 

was terminable at will, the evidence and reasonable inferences supported the trial court's 

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finding of an existing attorney-client privilege that the attorney had every right to 

anticipate would continue.  Id. at 164.

       Here, Evergreen has provided no circumstances showing an employer-employee 

relationship with Moses Lake employees that was anything other than an at-will 

relationship.

       Tortious Interference with Evergreen's Customers. Evergreen next argues that 

Mr. Shannon and Guild tortiously interfered with Evergreen's business expectation that 

its customers would close their loans with Evergreen.  Evergreen asserts that Guild 

interfered with Evergreen's expectation by assisting Mr. Shannon in diverting 

Evergreen's customers' loans to Guild.  The evidence Evergreen offered to support these 

claims is the list of 17 borrowers' names that appeared on both Evergreen's pipeline 

reports and Guild's pipeline reports. 

       In response to this list of names, Mr. Shannon and Guild offered a summary 

detailing the evidence for each loan.  This summary shows that none of the borrowers 

were taken from Evergreen.  As noted earlier, in response to this evidence, Evergreen had 

to come forward with evidence showing it had an expectancy interest in at least one of 

the loans.  It did not.  Evergreen failed to raise a question of material fact as to the

interference with business expectancy and contractual relations claims.  Evergreen also 

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asserts that, examining the projected income on Guild pro forma reports for the first 

month, it is obvious that Guild was planning the transfer of Evergreen's customers' loans 

to Guild.  This argument is not persuasive. 

       Evergreen has failed to put forward sufficient facts to raise a question of material 

fact with respect to its claim of tortious interference based on the solicitation of the lost 

borrowers.  The court did not err by dismissing the tortious inference claim against Mr. 

Shannon and Guild.

       III.   Consumer Protection Act

       Under Washington's CPA, a defendant violates the CPA when its (1) unfair or 

deceptive act, (2) occurred in commerce, (3) affected the public interest, (4) and 

proximately caused, (5) damage to the plaintiff's business or property.  Hangman Ridge

Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 784-85, 719 P.2d 531 

(1986).  Evergreen does not allege any per se violation of the CPA.  To establish a claim 

under the CPA, Evergreen must demonstrate that the alleged misconduct impacted public 

interest.  

       "The [first] two elements may be established by a showing that (1) an act or 

practice which has a capacity to deceive a substantial portion of the public (2) has 

occurred in the conduct of any trade or commerce."  Id. at 785-86.  Under the first 

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element, the plaintiff must prove either that a per se unfair trade practice exists, or that 

the act in question "'had the capacity to deceive a substantial portion of the public.'"  

Brown v. Brown, 157 Wn. App. 803, 816, 239 P.3d 602 (2010) (quoting Hangman Ridge, 

105 Wn.2d at 785).  

       Evergreen also does not allege a per se unfair trade practice.  Additionally, 

Evergreen failed to allege any specific deception or deceptive acts.  In short, Evergreen 

failed to create a question of material fact as to whether the conduct alleged would have 

the capacity to deceive anyone, much less a substantial portion of the public.

       The purpose section of the CPA, RCW 19.86.920, demonstrates "a clear intent to 

protect the general public by means of the CPA as a whole."  Hangman Ridge, 105 

Wn.2d at 788.  The public interest element of the Hangman Ridge test may be established 

in one of two different ways.  Id. at 789.  Specifically, (1) through a per se claim, or (2) 

by the plaintiff satisfying a factor derived from the Hangman Ridge case.  Id. at 789-90.  

Evergreen has not pleaded or asserted a per se claim; consequently, Evergreen had to 

offer evidence to satisfy a Hangman Ridge factor.

       "[I]t is the likelihood that additional plaintiffs have been or will be injured in 

exactly the same fashion that changes a factual pattern from a private dispute to one that 

affects the public interest."  Id. at 790.  Significantly, conduct that is not directed at the 

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public, but, rather, at a competitor, lacks the capacity to impact the public in general.  

Goodyear Tire & Rubber Co. v. Whiteman Tire, Inc., 86 Wn. App. 732, 744, 935 P.2d 

628 (1997) (public interest not affected despite tire dealers tactics to secure dealership 

expansions).

       Because this is a private dispute, the facts that determine whether there is an 

impact on public interest are: (i) whether the acts were committed in the course of 

defendant's business; (ii) whether the defendant actively advertised to the public in 

general; (iii) whether the defendant actively solicited this particular plaintiff, indicating 

potential solicitation of others; and (iv) whether the plaintiff and defendant occupy 

unequal bargaining positions.  Hangman Ridge, 105 Wn.2d at 790-91.

       Here, Evergreen cannot show that Guild's and Mr. Shannon's conduct was 

directed at the public.  Evergreen contends that Guild's use of Evergreen's confidential 

and proprietary information constituted anti-competitive actions that affected the public.  

But this claim is not before the court because it was not pleaded in the complaint. 

       Taking the facts in the light most favorable to Evergreen, Evergreen has failed to 

meet the public interest element of the Hangman Ridge test.

       The court did not err by dismissing Evergreen's claims against Guild and Mr. 

Shannon based on a violation of the CPA. 

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No. 29766-7-III
Evergreen Moneysource Mort. Co. v. Shannon

       IV.    Motion to Amend

       Evergreen contends the trial court abused its discretion by denying Evergreen's 

motion for leave to amend its complaint.  Evergreen seeks to amend its complaint to add a 

claim based on the UTSA.

       On July 15, 2009, Evergreen filed its complaint.  This complaint asserted five 

causes of action: breach of contract, breach of a duty of loyalty, tortious interference with 

a business relationship, tortious interference with contractual relations, and violation of 

the CPA.  These claims were based on allegations that (1) in March 2009, Mr. Shannon 

began originating loans for Guild, (2) Mr. Shannon apparently "originated fictitious loans 

for Evergreen," and (3) Mr. Shannon also "solicited Evergreen employees to work for 

Guild." CP at 6.  

       On February 5, 2010, Guild supplied Evergreen with the three documents that 

serve as the basis for its motion for leave to amend.  These documents are (1) an 

Evergreen profit and loss statement, (2) an Evergreen loan originator agreement, and 

(3) an Evergreen rate list.  See Resp't Larry Shannon's Br. at 27.

       In its scheduling order, the trial court established May 18, 2010, as the last day to 

amend pleadings.  The cutoff for discovery was October 20.  When Evergreen brought its 

motion for leave to amend on November 17, the case had not been set for trial.  On 

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No. 29766-7-III
Evergreen Moneysource Mort. Co. v. Shannon

January 10, 2011, the trial court denied Evergreen's motion for leave to amend.  On 

February 8, the court granted summary judgment, dismissing all claims against Mr. 

Shannon and Guild. 

       When amendment of a complaint must be accomplished by leave of the court, 

leave to amend shall "be freely given when justice so requires." CR 15(a).  The 

amendment of pleadings is within the discretion of the trial court and its ruling will not be 

reversed absent an abuse of discretion.  Walla v. Johnson, 50 Wn. App. 879, 882, 751 

P.2d 334 (1988).  Discretion is abused when it is exercised on untenable grounds or for 

untenable reasons.  State ex rel. Carroll v. Junker, 79 Wn.2d 12, 26, 482 P.2d 775 

(1971).

       "Although undue delay is a legitimate ground for denying leave to amend the 

pleadings, such delay must be accompanied by prejudice to the nonmoving party."  

Walla, 50 Wn. App. at 883.  "The touchstone for denial of an amendment is the prejudice 

such amendment would cause."  Caruso, 100 Wn.2d at 350.

       Mr. Shannon and Guild argue that they were prejudiced by Evergreen's undue 

delay in filing its motion for leave to amend.  Mr. Shannon and Guild assert that the 

amendment will require the parties to complete additional discovery and to repeat already 

conducted discovery.  For example, according to them, discovery must be undertaken to 

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No. 29766-7-III
Evergreen Moneysource Mort. Co. v. Shannon

investigate the basis for Evergreen's claim that the three items qualify as trade secrets and 

to determine whether there was misappropriation, improper means, independent 

economic value, and whether efforts were undertaken to maintain the documents'

secrecy.  The trial court heard the arguments of counsel and reviewed the pleadings and 

the documents listed in Exhibit A of the order denying the motion to amend.  These 

documents included schedules, orders, numerous declarations, and memoranda.  It is 

doubtful that these documents and files constitute trade secrets.

       We conclude that the trial court did not abuse its discretion by denying the motion 

to amend.

       V.     Attorney Fees

       Mr. Shannon was awarded attorney fees of $97,755.33 by the trial court.  An 

award of attorney fees is allowed if authorized by law.  RAP 18.1.  A contractual 

provision that allows for attorney fees and costs is authority to grant such fees and costs 

on appeal to the prevailing party.  Farm Credit Bank of Spokane v. Tucker, 62 Wn. App. 

196, 207, 813 P.2d 619 (1991).  The branch manager agreement contains a fee provision 

that entitles the prevailing party to its reasonable attorney fees and costs.

       Mr. Shannon seeks an award of fees on appeal.  Pursuant to RAP 18.1(i), we refer 

the award of attorney fees on appeal to the trial court following remand.  

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No. 29766-7-III
Evergreen Moneysource Mort. Co. v. Shannon

       VI.    Conclusion  

       We affirm the dismissal of the breach of contract claim.  We affirm the court's 

dismissal of CPA claims.  We affirm the dismissal of the motion to amend.  We affirm 

the dismissal of the tortious interference claims.  We conclude that the wrongful 

disclosure claim was not set forth in the complaint. We reverse the dismissal of the 

breach of duty of loyalty claim related to employee solicitation.  We remand to the trial 

court for trial and determination of attorney fees at trial and on appeal.

                                                    _________________________________
                                                    Kulik, C.J.

WE CONCUR:

__________________________________                  _________________________________
Korsmo, J.                                          Siddoway, J.

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