Opinion
No. 58985-7-I.
December 24, 2007.
Appeal from a judgment of the Superior Court for King County, No. 05-2-28468-4, Douglass A. North, J., entered October 5, 2006.
Affirmed by unpublished opinion per Becker, J., concurred in by Coleman and Cox, JJ.
A purchase and sale agreement for retail property stated that it would terminate unless, within 30 days of mutual acceptance, the buyer gave the seller written notice of the satisfaction of certain inspection contingencies. The buyer told the seller that he had inspected the property and found it acceptable, but the buyer failed to provide written notice of his satisfaction. The seller raised the price and the buyer sought specific performance of the contract. Because the requirement for written notice benefited both parties and was not waived, the trial court properly concluded that the contract terminated automatically when the buyer failed to give written notice within 30 days. Summary judgment for the seller was properly granted.
When reviewing an order for summary judgment, the appellate court engages in the same inquiry as the trial court. Mt. Park Homeowners Ass'n v. Tydings, 125 Wn.2d 337, 341, 883 P.2d 1383 (1994). This court will affirm summary judgment if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. CR 56(c). All facts and reasonable inferences are considered in the light most favorable to the nonmoving party and all questions of law are reviewed de novo. Mt. Park Homeowners Ass'n, 125 Wn.2d at 341.
Buyer Brett Alkan and seller Robert Wheeler have known each other for years. Alkan manages real estate for a living. He became interested in purchasing a gas station and retail complex that Wheeler owned in North Bend. Wheeler had leased the gas station to a man named Wagih Abu-Rish since 1994. Abu-Rish held a right of first refusal if Wheeler ever sold the gas station.
Alkan offered to pay Wheeler's stated price of $1.875 million for the two properties together on February 15, 2004. Alkan prepared a purchase and sale agreement on a standard form for the sale of commercial real estate. Alkan modified the form to give the buyer 30 days (instead of the standard provision for 20 days) to waive the inspection contingencies. The provision in which this change was made, paragraph 5, reads as follows:
INSPECTION CONTINGENCY. This Agreement shall terminate and Buyer shall receive a refund of the earnest money unless Buyer gives written notice to Seller within 30 days (20 days if not filled in) of mutual acceptance of this Agreement stating that Buyer is satisfied, in Buyer's reasonable discretion, concerning all aspects of the Property, including without limitation, its physical condition; the presence of or absence of any hazardous substances; the contracts and leases affecting the property; the potential financial performance of the Property; the availability of government permits and approvals; and the feasibility of the Property for Buyer's intended purpose. If such notice is timely given, the inspection contingencies stated in this Section 5 shall be deemed to be satisfied.
The number "30" is filled in in handwriting on the purchase and sale agreement.
Clerk's Papers at 84 (Purchase and Sale Agreement).
Alkan signed the agreement on February 15 and Wheeler signed on February 17. Alkan agreed to tender $20,000 in earnest money to Wheeler and pay $300,000 of the purchase price at the closing on March 31, 2005.
Alkan inspected the retail property on March 4. He talked with the tenants leasing the retail space and inspected the roof and the heating, ventilation, and air conditioning systems for the building. Alkan contacted Wheeler on March 10 and told him that he had inspected the retail property, that "everything looked fine," and that he found the property "acceptable."
Clerk's Papers at 43 (Alkan's Declaration, Aug. 28, 2006).
Meanwhile, Wheeler had presented the signed contract to Abu-Rish to trigger his right of first refusal on the gas station. Abu-Rish insisted that the retail property and the gas station property had to be separated into two different purchase and sale agreements. At Wheeler's request, Alkan created new agreements on March 22, 2005. Alkan signed the new agreements in late March and Wheeler signed them on April 7, 2005. The new contract for the gas station listed the purchase price as $1.3 million. A separate contract for the retail property listed its purchase price as $575,000. The parties agree that these purchase and sale agreements superseded the contract drafted and signed in February 2005. Each of them had the same inspection contingency provision as the original contract.
In April 2005, Abu-Rish elected to buy the gas station. Alkan told Wheeler that he was ready, willing, and able to close on the retail property. Wheeler responded that he would like to wait on proceeding with that sale until he had closed with Abu-Rish on the gas station property. Alkan agreed to this request. They agreed not to make any unnecessary expenditures in relation to the sale of the retail property until the deal with Abu-Rish closed. Alkan contacted Wheeler several times about the property between April and June. Each time, Wheeler told Alkan he wanted to wait until the gas station closing was complete before closing on the retail property.
Clerk's Papers at 427 (Abu-Rish's Declaration, Sept. 21, 2006).
In June 2005, after Wheeler finally closed the gas station sale with Abu-Rish, he took the position that his contract with Alkan for the retail property had terminated by its own terms. He told Alkan that he was increasing the purchase price for the retail property to $800,000. Alkan refused to pay that amount. He filed this lawsuit to enforce the March 2005 purchase and sale agreement that listed the purchase price as $575,000.
Both parties moved for summary judgment. Alkan claimed that he was entitled to specific performance of the contract. Wheeler countered that there was no agreement to enforce because the contract had terminated when Alkan failed to submit timely written notice that he was satisfied with the condition of the property. The court denied Alkan's motion for summary judgment and granted Wheeler's motion dismissing the case with prejudice. Alkan appeals.
The plain and unambiguous terms of the contract that Alkan himself drafted state that the buyer must give written notice to the seller that the buyer is satisfied with all aspects of the property or else the agreement terminates. Alkan concedes that he did not give written notice. Therefore, by its own terms the contract terminated on May 7, 2005-30 days after its mutual acceptance.
Alkan attempts to avoid this result by arguing that the provision for written notice was waived by the words and conduct of both parties. He relies primarily on two cases that deal with enforcement of requirements for written notice in construction contracts, Mike M. Johnson, Inc. v. County of Spokane, 150 Wn.2d 375, 386, 78 P.3d 161 (2003) and American Safety Cas. Ins. Co. v. City of Olympia, 133 Wn. App. 649, 137 P.3d 865 (2006), review granted, 160 Wn.2d 1017 (2007).
Washington law generally enforces contractual notice provisions unless those procedures are waived. Mike M. Johnson, Inc., 150 Wn.2d at 386-87. When a contract requires written notice, actual notice does not suffice. Mike M. Johnson, Inc., 150 Wn.2d at 391. A party to a contract may waive a contract provision that is meant for its benefit. Such a waiver "'requires unequivocal acts of conduct evidencing an intent to waive.'" Mike M. Johnson, Inc., 150 Wn.2d at 386, quoting Absher Constr. Co. v. Kent Sch. Dist. No. 415, 77 Wn. App. 137, 143, 890 P.2d 1071 (1995). But a party cannot unilaterally waive a contractual provision that benefits both parties. Local 112, I.B.E.W. Bldg. Ass'n. v. Toml inson Dari-Mart, Inc., 30 Wn. App. 139, 143, 632 P.2d 911 (1981). And waiver will not be inferred from doubtful or ambiguous factors. U.S. Oil Ref. Co. v. Lee Eastes T ank Lines, Inc., 104 Wn. App. 823, 830-31, 16 P.3d 1278 (2001).
In Mike M. Johnson, Inc., a contractor handling a sewer construction project for Spokane County sent letters expressing concern about a work change order and stated that additional consideration would be due. These letters did not comply with the mandatory protest and claim procedure detailed in the contract, and the county viewed them as too conclusory to support the later claim for additional compensation. The county denied the contractor's claim. The Supreme Court held that the trial court properly granted summary judgment to the county and rejected the contractor's argument that the county's actual notice of the claim excused compliance with the agreed procedure for submitting claims. And the record showed no conduct by the county evidencing its intent to waive compliance with the protest and claim procedures. Therefore, the contractor had raised no genuine issue of material fact regarding waiver. Mike M. Johnson, Inc., 150 Wn.2d at 391.
In American Safety, this court considered the precedent established in Mike M. Johnson, Inc. in connection with a contract dispute, and concluded that the facts warranted a trial on the issue of waiver. Katspan, a contractor for a sewer project in Olympia, did not meet all of its contractual obligations, including staying on the contract schedule. The city ordered Katspan to finish the project despite disagreements about additional wages due. Under the contract, Katspan had 180 days from when the project was accepted as complete to bring a claim against the city. This deadline was March 9, 2002.
During construction, Katspan became insolvent and assigned all rights under the contract to its insurer, American Safety. American Safety and the city began to discuss Katspan's claim for additional compensation. Their discussions went on from November 2001 to May 2004, with the city demanding details to back up the claim. After American Safety compiled the requested information, the city informed American Safety that it was no longer willing to consider the matter and a lawsuit would be untimely. American Safety sued the city. The court granted summary judgment to the city, holding that American Safety had not waived the 180-day provision of the contract.
On appeal, this court distinguished Mike M. Johnson, Inc., concluding that the facts of the case could support a finding of waiver:
If the City had no intention of allowing future litigation on American Safety's claims, it could have informed American Safety that it was relying on strict conformance with the contract terms. The City could also have halted all communication with American Safety after March 9, 2002. . . .
The City's continued requests for information, its reference to future litigation, and its new deadline for production well beyond the contract limitations period create different inferences such that reasonable minds could differ about whether the City waived the contract terms.
American Safety Cas. Ins., 133 Wn. App. at 660.
Alkan contends that in this case too there are sufficient facts to support a finding of waiver. He contends that the inspection contingency was solely for the buyer's benefit, so he no longer could unilaterally waive the requirement that notice to the seller be in writing. Alkan claims that he satisfied the inspection contingencies when he told Wheeler that he had completed an inspection of the premises and that "everything looked fine" and he found the property "acceptable."
Clerk's Papers at 43 (Alkan's Declaration, Aug. 28, 2006).
The inspection contingency cannot be seen as solely for Alkan's benefit. The substantive aspect of the provision did benefit Alkan in that it enabled him to rescind the deal and receive a full refund of his earnest money if he was not satisfied with the property after inspecting it. But the procedural aspect of the provision benefited Wheeler. A requirement for the buyer to confirm in writing that he is satisfied with all aspects of the property helps to prevent the disputes and proof problems that tend to arise with oral waivers. In particular, having a written waiver from the buyer regarding hazardous substances on a property protects a seller who might otherwise be exposed later to an allegation that he failed to disclose such substances. Because a reasonable factfinder could not find that the inspection contingency was solely for Alkan's benefit, Alkan could not unilaterally waive that provision.
Alkan next contends that a written waiver was not necessary because Wheeler received actual notice that Alkan was satisfied with the condition of the property. This argument fails in light of Mike M. Johnson, Inc. where the court held that the city's actual notice of the contractor's claims for additional wages did not excuse the contractor for noncompliance with the contract's mandatory protest and claim provisions. Mike M. Johnson, Inc., 150 Wn.2d at 377. Further, there is nothing in the record demonstrating that Wheeler had actual notice that Alkan's statements about the condition of the property were in relation to the inspection contingency. Alkan admits that he did not expressly reference the purchase and sale agreement when discussing his inspection with Wheeler, he did not use the words "inspection contingency," and he did not mention that he was satisfied with any of the other detailed terms listed in the inspection contingency. If Alkan wanted an oral statement to be an acceptable method of notifying Wheeler that he was satisfied with the condition of the property, he should have negotiated that term with Wheeler and included it in the contract.
Alkan next claims that Wheeler waived the requirement for written notice that Alkan was satisfied with the property by putting him off while the sale to Abu-Rish was pending. Alkan declares that he called Wheeler several times between April 7, 2005 and June 5, 2005, while Wheeler was waiting for the sale of the gas station to Abu-Rish to close. Alkan states that during those conversations with Wheeler, Wheeler never demanded written notice. He says he understood from the conversations with Wheeler that their contract was on hold until Wheeler finalized the sale with Abu-Rish. Alkan reasons that if Wheeler viewed the agreement as having actually terminated on May 7, 2005, the deadline for Alkan to submit a written waiver, Wheeler should have told him so. According to Alkan, the fact that Wheeler instead kept him dangling throughout the next month as though his offer was still valid makes his case like American Safety.
This argument fails because, even if American Safety was correctly decided, the record of Alkan's conversations with Wheeler does not contain unequivocal evidence that would support a finding of waiver by Wheeler. The most that can be said is that Wheeler put Alkan off when Alkan asked about moving forward with the sale. An inference that Wheeler thereby waived the requirement for written notice is not available. The record does not even establish that these conversations occurred after the May 7 deadline passed, and so the circumstances are quite different from the two years of ongoing communication and discussions that occurred post-deadline in American Safety.
In summary, Alkan did not comply with the contractual requirement that he submit a written waiver of the inspection contingency. Because there is no evidence in the record that Wheeler waived the requirements for written notice, Alkan was not excused from his duty to give written notice. Upon his failure to do so, the agreement between Alkan and Wheeler terminated automatically.
PAROL EVIDENCE
Alkan contends that the trial court erred by refusing to consider parol evidence when interpreting the contract. Alkan wanted the trial court to consider, as evidence that the written notice requirement was not material to whether, the fact that Wheeler had not required AbuRish to submit a written waiver of the inspection contingency before they closed the transaction involving the gas station.
Surrounding circumstances and other extrinsic evidence can be used to determine the meaning of specific words and terms used, but not to show an intention independent of the instrument or to vary, contradict, or modify the written word. Hearst Communications, Inc. v. Seattle Times Co., 154 Wn.2d 493, 503, 115 P.3d 262 (2005). Alkan attempts to use the evidence related to Wheeler's dealings with Abu-Rish to show an intention that is independent of Wheeler's contract with Alkan. He does not show how it relates to specific terms used in their own contract. The court properly excluded this information.
EQUITABLE ESTOPPEL
Alkan contends that Wheeler is equitably estopped from arguing that he should not be required to perform under the agreement. We decline to consider this argument because it was not raised below. RAP 2.5(a).
ATTORNEY'S FEES
Paragraph 21 of the contract provides: "If Buyer or Seller institutes suit concerning this Agreement, the prevailing party is entitled to reasonable attorneys' fees and expenses. In the event of trial, the amount of the attorney's fee shall be fixed by the court." A contractual provision for an award of attorney fees at trial supports an award of attorney fees on appeal. Reeves v. McClain, 56 Wn. App. 301, 311, 783 P.2d 606 (1989). As the prevailing party, Wheeler is entitled to an award of attorney fees on appeal.
Clerk's Papers at 217 (Purchase and Sale Agreement).
Affirmed.