Opinion
No. 58611-4-I.
February 19, 2008.
Appeal from a judgment of the Superior Court for Skagit County, No. 05-2-00652-1, John M. Meyer, J., entered June 22, 2006.
Affirmed by unpublished opinion per Lau, J., concurred in by Schindler, A.C.J., and Dwyer, J.
After Alexander Mclaren and David and Jillian Cutter entered into a vacant land purchase and sale agreement, Mclaren refused to close the transaction and then relisted the property at a higher price. The Cutters sued, seeking specific performance of the agreement and damages.
After a bench trial, the trial court concluded (1) the Cutters were ready, willing, and able to close the purchase and sale transaction but were prevented from doing so because Mclaren refused to close, (2) the Cutters did not breach the agreement, (3) Mclaren was solely responsible for the transaction not closing, and (4) he is estopped from claiming the transaction expired on January 7, 2005. The trial court ordered specific performance and awarded the Cutters damages and attorney fees and costs in accordance with the agreement. Because substantial evidence amply supports the trial court's findings, we affirm.
FACTS
Alexander Mclaren owned several lots in Anacortes that he intended to sell. David and Jillian Cutter entered into a vacant land purchase and sale agreement with Mclaren to purchase one of the lots for $250,000. The transaction was scheduled to close on or before November 30, 2004, and the closing agent was to be First American Title of Anacortes.
The purchase and sale agreement required that the Cutters deposit $1,000 as earnest money. Previously, for a transaction unrelated to this case, the Cutters had placed earnest money of $1,000 into an account at First American. That money was transferred, less a cancellation fee of $53.95, into another escrow account as earnest money for the purchase of Mclaren's property. Neither Mclaren nor the Cutters knew there was only $946.05 in escrow as earnest money.
On November 23, Wells Fargo Mortgage approved the Cutters for a loan of $575,000 to pay for the lot and construction of a house. Wells Fargo forwarded the loan approval to First American. The Cutters deposited $50,000 with Wells Fargo as a down payment.
On November 30, Mclaren requested an extension of time for the closing because he wanted it to occur in 2005 for tax purposes. Mclaren also wanted the transaction to be a tax-deferred 1031 exchange. The parties agreed that the transaction would be a 1031 exchange and that the closing would occur "on or before 1-7-05 but not before 1-2-05." Ex. 5.
In December 2004, First American advised Mclaren that he could not convey clear title to the Cutters because his business partner, John Cox, had recorded a Notice of Beneficial Interest against the property. Mclaren filed a lawsuit against Cox to clear the title but did not disclose the cloud on the title to the Cutters.
On January 6, the Cutters executed closing documents on their loan with Wells Fargo, including signing the deed of trust and other necessary documents. On January 7, 2005, the day the closing was to take place, Mclaren obtained an order clearing the title. On the same day, he delivered a copy of the order to First American's office in Mount Vernon. From the Mount Vernon office, he called the Anacortes office, seeking to close the transaction. The Anacortes office could not close the transaction because the closing documents were not prepared and, at trial, escrow officer Vicki Hoffman explained why.
Q. That closing date was for January 7th, 2005?
A. Correct.
Q. Did you prepare any documents with respect to closing on that date? A. No, I did not. Q. Why not?
A. Mr. Mclaren had not yet hired a 1031 facilitator to prepare documents. I prepared my documents from the facilitator's documents.
Verbatim Report of Proceedings (VRP) (May 17, 2006) at 61-62. The testimony continued.
Q. When did you receive any information that this transaction was going to close as scheduled on January 7th, 2005?
A. We had an addendum extending the closing date to January 7th.
Q. Did Mr. Mclaren clear that beneficial interest filed against his property prior to January 7th.
A. It was on January 7th.
Q. Now, prior to January 7th had you prepared any closing documents? A. No. Q. Why not?
A. He had not hired a facilitator. . . .
Q. Could the same transaction have closed on January 7th, 2005? A. No. Q. Why not?
A. He was doing a 1031 exchange. I had no exchange documents available and very short notice as far as-
Q. You don't prepare exchange documents, do you? A. No, I do not.
VRP (May 17, 2006) at 64-65.
Mclaren told Hoffman that he would come to First American of Anacortes on the following Monday to close the transaction. Hoffman and a 1031 officer prepared the documents over the weekend. On Monday, January 10, the Cutters and Mclaren appeared at different times at First American to sign closing documents. The Cutters signed the documents, but Mclaren refused to sign because of an error in the amount of the real estate commission, a charge against the property by Cox, and because the payoff amount was the amount of Mclaren's entire parcel. The trial court found that "[n]one of the disputed charges against the proceeds involved Cutter nor were they caused in any way by Cutter. . . ." Clerk's Papers (CP) at 67 (finding of fact 22). The court also found that "MCLAREN had several options available to him with respect to the disputed charges that would have allowed him to close on January 10, 2005, MCLAREN elected not to close the transaction." CP at 67 (finding of fact 22). Mclaren assigns error to these findings.
By about January 18, the problems with the closing documents had been solved to Mclaren's satisfaction. He refused to close the transaction, however, and stated that the agreement had lapsed on its own terms as of January 7, 2005. The trial court found that "[d]espite multiple documented attempts by the CUTTERS and others, MCLAREN refused to close and requested his realtor relist the property at a significantly higher price." CP at 69 (finding of fact 41).
In April 2005, the Cutters filed suit against Mclaren seeking specific performance of the purchase and sale agreement and damages. A bench trial was held where Mclaren, a former attorney, represented himself. After the Cutters rested their case, Mclaren moved for a directed verdict, arguing that the transaction expired under the express terms of the agreement when the closing date of January 7 passed due to error and inaction by the Cutters and First American. The court denied the motion.
The trial court concluded that Mclaren was solely responsible for the failure of the transaction to close on January 7 and 10 and that Mclaren was "estopped from claiming that the transaction had terminated on January 7, 2005. . . ." CP at 67 (finding of fact 26). The court ordered specific performance of the agreement and awarded the Cutters $122,421.02 in damages and $45,064.51 in attorney fees. Mclaren appeals.
ANALYSIS
Specific Performance
Mclaren argues that the trial court erred by ordering specific performance. Specific performance is available where a buyer is ready, willing, and able to conclude an earnest money agreement but is prevented from doing so because "the other contracting party has by word or act indicated that he will not perform his duties under the contract." Kreger v. Hall, 70 Wn.2d 1002, 1009, 425 P.2d 638 (1967); see also Sienkiewicz v. Smith, 97 Wn.2d 711, 717, 649 P.2d 112 (1982) ("The trial court found that Mr. Sienkiewicz was ready, willing and able at all times to conclude the transactions. . . . Consequently, the trial court deemed specific performance was appropriate. We agree."); Dean v. Gregg, 34 Wn. App. 684, 685, 663 P.2d 502 (1983) (Specific performance ordered where "On the date set for closing, plaintiffs were ready, willing and able to pay the purchase price in cash, and they had signed all documents requiring their signatures."); Inv. Syndicates, Inc. v. Clark, 3 Wn. App. 1001, 1003, 478 P.2d 752 (1970) (specific performance correctly ordered where "plaintiff was at all times ready, willing and able to conclude the purchase"). The trial court did not err in ordering Mclaren to specifically perform because substantial evidence supports its conclusion that the Cutters were ready, willing, and able to close the purchase and sale agreement on January 7 and 10.
Findings of fact are reviewed under the substantial evidence standard. Perry v. Costco Wholesale, Inc., 123 Wn. App. 783, 792, 98 P.3d 1264 (2004). Substantial evidence is evidence sufficient to persuade a fair-minded person of the truth of the asserted premise. Perry, 123 Wn. App. at 792. This is a deferential standard that views all reasonable inferences in the light most favorable to the prevailing party. Korst v. McMahon, 136 Wn. App. 202, 206, 148 P.3d 1081 (2006). "The fact finder measures witness credibility, and we do not review that determination on appeal." Miles v. Miles, 128 Wn. App. 64, 70, 114 P.3d 671 (2005). Where there is substantial evidence, the Court of Appeals will not substitute its judgment for that of the trial court even though the court might have resolved a factual dispute differently. Korst, 136 Wn. App. at 206. Unchallenged findings of fact are verities on appeal. Perry, 123 Wn. App. at 792.
There was substantial evidence that the Cutters were ready, willing, and able to pay for Mclaren's property. The court found that the Cutters were approved by Wells Fargo for a loan of $575,000, and Mclaren does not assign error to this finding. Dianne Martin, the branch manager and home mortgage consultant for Wells Fargo Home Mortgage, testified that the Cutters did everything required of them for their loan.
Q. During the course of this transaction, did the Cutters do everything that was requested of them with regard to providing information to the bank?
A. Yes.
Q. Is there anything the Cutters needed to do in order for this loan to be — for this transaction to be closed, anything other than what they already did?
A. No.
Q. Was this loan ready to be closed as of January 7th, 2005?
A. Yes.
VRP (May 16, 2006) at 7-8. On January 6, the Cutters signed the deed of trust and other documents at the Wells Fargo office so that the funds were ready to be wired to First American Title.
The Cutters also provided a down payment of $50,000. Sharon Garrard, the Wells Fargo employee responsible for preparing the loan documents, testified about a meeting she had with the Cutters on January 6 where the Cutters signed their loan documents and deposited $50,000 into escrow.
Q. How much money did the clients have to put into escrow?
A. They deposited $50,000 with me.
Q. Is that money still in escrow?
A. It's still in escrow.
VRP (May 16, 2006) at 76.
Garrard testified that the Cutters did everything necessary to finalize the loan.
Q. As of January 6th, 2005 were the Cutters required to sign any more documents to obligate themselves to this Wells Fargo mortgage? Was there anything else they had to do?
A. No.
VRP 77 (May 16, 2006). Mclaren's real estate agent, Rich Ballow, also testified that the Cutters were ready to close the transaction.
Q. To your knowledge were the Cutters prepared to close on January 7th 2005?
A. Yes.
Q. Do you know of any circumstances that would have prevented the Cutters from closing?
A. No.
VRP (May 10, 2006) at 110.
There was substantial evidence that the Cutters were ready, willing, and able to take the steps necessary to close the transaction. The escrow officer, Hoffman, testified that the Cutters were ready to close on both January 7 and 10:
Q. Anybody tell you to prepare [a revised closing statement and statutory warranty deed]?
A. The Cutters asked me. They were ready to close again; so I updated my documents.
Q. Did you have any reason to believe that the Cutters were not ready to close on January 7th, 2005?
A. That they were not, no.
Q. On January 10th did you have any reason to believe the Cutters were not ready, willing, and able to close?
A. No.
VRP (May 17, 2006) at 75-76. Jillian Cutter testified that she and her husband were ready to close. Finally, the court's conclusion that the Cutters were ready, willing, and able to close the transaction is supported by exhibit 7, the signed deed of trust. Mclaren argues that the Cutters were not ready, willing, and able to close because they did not make a down payment to him or First American. But he does not cite to any provision in the agreement requiring the Cutters to pay the down payment to him or First American. The court found that the Cutters "paid $50,000 as down payment on their loan with Wells Fargo Mortgage. That payment satisfies the down payment requirement." CP at 63 (finding of fact 8). This finding is supported by the testimony of Garrard, the Wells Fargo employee responsible for preparing the loan documents.
Material Breach
Mclaren next argues that the trial court erred by concluding that he had a duty to close because the Cutters materially breached the agreement in various ways. We reject these arguments.
The Cutters allegedly breached by not providing Mclaren a loan commitment letter from Wells Fargo as required by the agreement. The Cutters concede that the financing addendum to the agreement required them to provide Mclaren with a copy of the loan commitment letter and that they did not do so in a timely manner. They correctly argue, however, that Mclaren waived his opportunity to terminate the agreement on this basis because he did not give them notice of his election to terminate.
The remedy for failure to timely provide the loan commitment letter is set forth in paragraph 3 of the financing addendum. "Within 3 days after the earlier of the Seller's receipt of the letter of loan commitment or the date it was due, Seller may give notice of Seller's election to terminate this Agreement. . . ." CP at 13. On this issue, the trial court found that
[a] commitment letter was generated by Wells Fargo Mortgage and mailed to the CUTTERS on December 3, 2004, but was not delivered by Buyer to Seller. Paragraph 3 of the Financing Addendum provides in pertinent part, that Seller, within three days of receipt of the letter of commitment or the date it was due, may give notice of Seller's election to terminate the agreement. MCLAREN did not give Buyer a notice of termination.
CP at 64 (finding of fact 9) (emphasis added). The court also found that "MCLAREN did not request updated letters of loan commitment from CUTTER." CP at 64 (finding of fact 10). Mclaren does not assign error to these finding, and therefore, they are verities on appeal. Additionally, Mclaren concedes that when the Cutters failed to tender the loan commitment letter, he "did not exercise his right to terminate the agreement at that point." Br. of Appellant at 6.
Mclaren next contends that the Cutters breached the agreement because First American was not given written assurance of payment from Wells Fargo. We reject this argument because Mclaren does not cite to any part of the agreement that required Wells Fargo to give written assurance of payment to First American.
Finally, Mclaren argues that the Cutters breached by not depositing $1,000 into escrow as earnest money. As explained above, there was $946.05 in escrow, but the agreement required $1,000. The trial court found that this deficiency did not constitute a material breach. "At all times relevant to this case, neither party was aware that First American Title Company had deducted $53.95 from the $1000.00 earnest money. The $53.95 shortfall of earnest money is not material to this transaction." CP at 63 (finding of fact 5). Mclaren assigns error to this finding and contends that it is a conclusion of law and should be analyzed as such.
The materiality of a breach is a question of fact. Bailie Communications, Ltd. v. Trend Bus. Sys., 53 Wn. App. 77, 82, 765 P.2d 339 (1988) ("The ultimate question . . . is whether [the party's] breach was material. This issue is reviewable as a question of fact."). The trial court's finding that the $53.95 shortfall was not material is supported by substantial evidence. Neither the parties nor the real estate agent knew about the shortfall. RP (May 10, 2006) at 105 (testimony of Rich Ballow) ("Q. So far as you knew there was a thousand dollars in escrow and the Cutters had complied fully? A. Yes."). Additionally, $53.95 is a small amount compared to the purchase price of $250,000. Finally, the entire amount of the purchase price would be paid at closing.
Mclaren relies on Nadeau v. Beers, 73 Wn.2d 608, 440 P.2d 164 (1968) for his argument that the shortfall in earnest money was a material breach. Nadeau concerned an earnest money agreement for the purchase of property for $28,000. An earnest money deposit of $5,000 was due and payable before the closing date of 120 days after the execution of the agreement. The sellers received a certified check in the amount of the full purchase price 123 days after the execution of the agreement. The sellers did not know that 123 days had passed. While they accepted the check, they refused to give the buyer the deed to the property because they wanted to confer with their attorney. After discussing the matter with their attorney, they learned that the 120-day closing period had expired and they "rejected the tender upon the grounds that the agreement had terminated." Nadeau, 73 Wn.2d at 609. The Supreme Court declared that the agreement was "legally defunct" and reversed the trial court judgment granting the buyers specific performance. Nadeau, 73 Wn.2d at 610.
Nadeau is not helpful because in that case the court did not discuss whether any breaches of the earnest money agreement were material. Instead, the Nadeau court was concerned with whether the sellers had waived the 120-day time limit, not whether the buyers' failure to pay within 120 days was a material breach. Here, the issue is whether the inadvertent shortfall in earnest money was a material breach. Substantial evidence supports the trial court's finding that it was not.
Failure to Close
Mclaren's next contention is that substantial evidence does not support the trial court's finding that he was solely responsible for the transaction not closing on January 7 and 10. First, substantial evidence does support the trial court's finding that Mclaren was solely responsible for the transaction not closing on January 7. As explained above, the Cutters were ready, willing, and able to close the transaction. And as explained above, the transaction could not close on January 7 because Mclaren had not hired a 1031 officer to prepare closing documents. This was Mclaren's responsibility, and the court found that "[t]he failure of First American to have closing documents prepared was without fault of the Cutters." CP at 66 (finding of fact 19). Mclaren does not assign error to this finding.
Substantial evidence also supports the court's finding that Mclaren was responsible for the transaction not closing on January 10. Mclaren assigns error to, but does not make any argument against, the court's finding that "[n]one of the disputed charges against the proceeds involved CUTTER nor were they caused in any way by CUTTER. . . ." CP at 67 (finding of fact 22). It is therefore a verity on appeal because an appellate court will not consider an assignment of error that is unsupported by argument. Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 809, 828 P.2d 549 (1992).
While the erroneous charges needed to be corrected, Mclaren cites no authority for his argument that these errors excused him from performing his obligation to convey the property to the Cutters. Additionally, substantial evidence supports the trial court's finding that "MCLAREN had several options available to him with respect to the disputed charges that would have allowed him to close on January 10, 2005." CP at 67 (finding of fact 22). On cross-examination, Mclaren eventually conceded that he could have closed the transaction.
Q. . . . You could have instructed the escrow company to leave the disputed amount in escrow pending further instruction, correct?
A. What you're asking is I could have waived the escrow instructions. But I didn't want to do that.
Q. No. I'm asking you, you could have told escrow to leave the disputed amounts in escrow, close the transaction, and we'll resolve these disputed amounts subsequent to this closing. You could have done that, right?
A. I had no obligation to do that.
Q. I wasn't asking if you had an obligation.
THE COURT: No, wait a second. Could you have done that?
THE WITNESS: It's not relevant.
THE COURT: That's not responsive. Could you have done that?
THE WITNESS: I would like to explain.
THE COURT: Could you have done it, "yes" or "no?"
THE WITNESS: I had no obligation to do it.
BY MR. TAYLOR:
Q. That wasn't the question sir.
THE COURT: Let's assume we all agree. Had you no obligation to do it, could you have?
THE WITNESS: I assume I could have done anything.
VRP (May 17, 2006) at 37-38. Later in his testimony, Mclaren confirmed that he could have closed the transaction.
Q. One of those options would have been to refuse to pay the claims and demand that you close the transaction, correct?
A. Yes.
VRP (May 17, 2006) at 40.
Mclaren also argues that the transaction could not have closed on the January 7 or 10 because there were no funds available to pay a $4,500 excise tax, and thus, no way to record a statutory warranty deed showing title in the Cutters' name. We disagree because it was Mclaren's obligation to pay the tax. See RCW 82.45.080 ("The tax levied under this chapter [excise tax on real estate sales] shall be the obligation of the seller . . ."). As explained above, if Mclaren had closed the transaction, he would have had the proceeds of the sale to pay the excise tax and the statutory warranty deed could have been recorded. The trial court's finding that Mclaren was responsible for the transaction not closing on January 7 or 10 is supported by substantial evidence.
Equitable Estoppel
Mclaren's final contention is that he was not obligated to close because the transaction expired on its own terms on January 7. And he assigns error to the trial court's conclusion that "[b]y his actions and conduct, MCLAREN is estopped from claiming that the transaction had terminated or expired on January 7, 2005. . . ." CP at 67 (finding of fact 26). We reject Mclaren's argument because the trial court's conclusion is amply supported by the evidence.
Equitable estoppel is a principle by which a court can prevent a party from taking a position inconsistent with a previous position. Berschauer/Phillips Constr. Co. v. Seattle Sch. Dist. 1, 124 Wn.2d 816, 831, 881 P.2d 986 (1994).
Equitable estoppel requires: (1) an admission, statement, or act inconsistent with a claim afterward asserted; (2) action by another in reasonable reliance on that act, statement, or admission; and (3) injury to the party who relied if the court allows the first party to contradict or repudiate the prior act, statement, or admission. Estoppel is not favored and a party asserting estoppel must prove each of its elements by clear, cogent and convincing evidence.
Berschauer, 124 Wn.2d at 831 (citation omitted).
The trial court correctly concluded that Mclaren made a "statement . . . inconsistent with a claim afterward asserted." Berschauer, 124 Wn.2d at 831. First, Mclaren does not assign error to finding of fact 19.
On January 7, 2005, MCLAREN prevailed in his motion to eliminate the beneficial interest. . . . McLAREN also confirmed that he wanted to complete a tax deferred 1031 exchange as provided for in the Purchase and Sale Agreement. In a telephone conversation with McLAREN, Vicki Hoffman, First American Title Company escrow officer in its Anacortes office, advised McLAREN that the paperwork could not be completed in time to close the transaction that day. McLAREN stated that he would come into her office on Monday, January 10, 2005. McLAREN did not state or indicate in any way that he would not sign the closing documents or proceed with the transaction if it did not close on January 7, 2005. . . .
CP at 66 (emphasis added). Second, in his brief, Mclaren concedes that "[h]e verbally consented to appear on January 10 and sign closing documents. . . ." Br. of Appellant at 8. In fact, he did appear at First American on January 10 in order to close the transaction.
The court also correctly concluded that the Cutters reasonably relied on Mclaren's statements and actions extending the closing date to January 10 and they would be injured if the court allowed Mclaren to repudiate them. It is undisputed that the Cutters relied on these statements and signed the closing documents on January 10 in expectation that the sale would close that day. It is also undisputed that the Cutters suffered damages because they were not able to buy the lot they wanted at the agreed-upon price and at the interest rate they had secured with their loan. The trial court did not err in concluding that Mclaren was "estopped from claiming that the transaction had terminated or expired on January 7, 2005. . . ." CP at 67 (finding of fact 26).
Finally, we must decide whether the Cutters are entitled to attorney fees on appeal. They were awarded attorney fees and expenses by the trial court as the prevailing party pursuant to the agreement, which provides that "[i]f the Buyer or Seller institutes suit against the other concerning this Agreement, the prevailing party is entitled to reasonable attorneys' fees and expenses." CP at 11 (section p). It is well established that "[a] contractual provision for an award of attorney's fees at trial supports an award of attorney's fees on appeal under RAP 18.1." West Coast Stationary Eng'rs Welfare Fund v. City of Kennewick, 39 Wn. App. 466, 477, 694 P.2d 1101 (1985). As the prevailing party, the Cutters are entitled to an award of attorney fees on appeal.
For the foregoing reasons, we affirm.
WE CONCUR: