Opinion
No. 18688-1-III.
Filed: June 20, 2000. DO NOT CITE. SEE RAP 10.4(h). UNPUBLISHED OPINION
Appeal from Superior Court of Chelan County, No. 93-2-00090-6, Hon. John E. Bridges, August 3, 1999, Judgment or order under review.
Douglas J. Takasugi, Jeffers Danielson Sonn Aylward, for Appellant(s).
Thomas F. O'Connell, Davis Arneil Dorsey Kight, for Defendant(s).
Larry W. Larson, for Respondent(s).
Don and Irene Potter of Pioneer Construction rented a hydraulic crane from Duncan Crane Service, Inc. While in the Potters' possession, the crane tipped over and was damaged. Duncan sued the Potters and won the rental costs and interest that accrued while the crane was being fixed. On appeal, the Potters contend the trial court erred in concluding that they retained possession of the crane during its repairs.
They also argue Duncan was not entitled to damages because it did not present evidence of actual loss of rent. We affirm.
Facts
The Potters do not challenge the trial court's findings of fact; consequently, the findings are verities on appeal. Moreman v. Butcher, 126 Wn.2d 36, 39, 891 P.2d 725 (1995).
During negotiations with the Potters for rental of a 55-ton self-propelled crane, Duncan's owner, William Fairbanks, told the Potters they would be responsible for insuring the fair market value of the crane. He did not mention that the rental agreement also requires the lessee to insure rental value during repair periods. Mr. Potter told Mr. Fairbanks he did not know anything about insurance so he would have his insurance agent call Mr. Fairbanks to arrange the required insurance coverage. The parties agreed to the rental agreement as discussed. When the Potters' insurance representative called Duncan, neither Mr. Fairbanks nor the Duncan bookkeeper told the representative that the rental agreement required rental insurance, and Duncan never sent the insurance company a copy of the agreement. Subsequently, the insurance representative sent Duncan a certificate of insurance. Although the coverage did not include rental insurance, Duncan accepted it without further comment.
The two-page rental agreement, signed on February 11, 1992, provided that the Potters would pay monthly rental of $6,500 and the costs of transporting the crane from and back to Duncan in Moses Lake. In relevant part, the agreement states that the crane was rented for a minimum of one month, 'and if LESSEE retains said property after the expiration of said term, such retention shall be construed as a continuance of this lease, at the same rental, and under the same terms, until said property is so returned to LESSOR, at the place above specified {Moses Lake}.' Additionally, the document provides that 'LESSEE agrees to keep said property in the same condition as when received. The LESSEE agrees to keep said property in repair, at LESSEE's expense.' The provision regarding damages and rental insurance provides as follows:
The LESSEE hereby assumes all risks of fire or other casualty, and agrees to indemnify LESSOR for all damages or loss to said property from fire or other casualty, and agrees to keep said property insured with Inland Marine All Risk Contractor's Equipment Coverage in the amount shown above and to insure the rental value of said property for that period of time required to repair or replace it, should it be damaged or destroyed as a result of fire or other casualty covered under the said insurance at the same rate of rental, as agreed to in the foregoing.
Duncan delivered the crane to the Potters on February 13. Mr. Potter did not read the entire rental agreement before he signed it on delivery.
On March 11, the last day of the minimum term for the rental agreement, the crane tipped over and was extensively damaged. After he was notified of the accident, Mr. Fairbanks contacted Coast Crane Company of Spokane, the only facility in eastern Washington capable of repairing the crane. The Potters agreed with Mr. Fairbanks that Coast Crane should do the repairs and that Duncan would transport the crane to Spokane. Because hauling restrictions prevented transport over the weekend, the crane was moved first to Moses Lake on Friday, March 13, and on the following Monday was sent to Coast Crane in Spokane.
It took six months for Coast Crane to repair the crane, which was finally returned to Duncan in Moses Lake on September 16, 1992. The Potters paid the base one-month rental for the crane, and their insurance paid for transportation to and from Coast Crane as well as for all damages to the crane. Duncan began billing the Potters in April 1992 for the rent due during the time the crane was being repaired. Ultimately Duncan claimed the Potters owed it $39,867 for rent from mid-April to mid-September, together with accrued interest of $13,334 (as of April 30, 1995). The Potters refused to pay rent for the period the crane was being repaired.
In February 1993 Duncan filed suit seeking payment of the unpaid rent and interest. Both the Potters and Duncan moved for summary judgment.
Concluding that the Potters were only liable for the actual loss sustained by Duncan, the trial court granted the Potters' motion and in January 1996 awarded them attorney fees. Duncan appealed and in an unpublished opinion. The subsequent bench trial on Duncan's complaint was held on October 1, 1998.
Finding that the crane was not returned to Duncan for service as a rental until after the repairs, the court concluded that the Potters 'retained' the crane under contract during that six-month period. Consequently, the court ordered the Potters to pay the rent and interest due. On the other hand, the trial court found that Duncan could not enforce the terms of the agreement regarding the rental insurance because both parties effectively modified the terms of that provision. Final judgment for Duncan totaled $83,578, including $10,070 in attorney fees (awarded pursuant to the rental agreement).
Discussion
On appeal, the Potters contend the findings do not support the conclusion that they were liable under the contract for rent during the crane's repairs. Because they only challenge the conclusions of law, and because those conclusions involve the legal consequences flowing from a contract term, our review is de novo. DuVon v. Rockwell Int'l, 116 Wn.2d 749, 753, 807 P.2d 876 (1991); Knipschield v. C-J Recreation, Inc., 74 Wn. App. 212, 215, 872 P.2d 1102 (1994).
Central to the interpretation of a contract is the intent of the parties. Scott Galvanizing, Inc. v. Northwest EnviroServices, Inc., 120 Wn.2d 573, 580, 844 P.2d 428 (1993). If we can ascribe only one reasonable meaning to the agreement when we view it in context, that meaning necessarily reflects the parties' intent. Martinez v. Kitsap Pub. Servs., Inc., 94 Wn. App. 935, 943, 974 P.2d 1261 (1999) (citing Interstate Prod. Credit Ass'n v. MacHugh, 90 Wn. App. 650, 654, 953 P.2d 812 (1998)).
Ambiguity will not be read into a contract, and we will not find ambiguity merely because the parties suggest opposing meanings. Martinez, 94 Wn. App. at 944. Even if the contract language is not ambiguous, we may look to the circumstances surrounding the making of the agreement, the subsequent conduct of the parties and the reasonableness of their interpretations in making our determination of the contract's meaning. Berg v. Hudesman, 115 Wn.2d 657, 665-69, 801 P.2d 222 (1990). Absent fraud, accident or mistake, however, this extrinsic evidence is not admissible for the purposes of adding to, modifying or contradicting the terms of a written contract. J.W. Seavey Hop Corp. v. Pollock, 20 Wn.2d 337, 348, 147 P.2d 310 (1944).
In this case, the rental agreement provides that the lease will be considered continued under the same terms if the lessee retains the property after the one-month minimum, with the lease ending on the date the crane is returned to the lessor at Moses Lake. Specifically, the agreement provides that '{s}aid rent is to begin on the day the said property is delivered to LESSEE, and is to end on the day that said property is returned by LESSEE to LESSOR, at Moses Lake.' The second page of the agreement states that 'LESSEE agrees to keep said property in the same condition as when received. The LESSEE agrees to keep said property in repair, at LESSEE's expense.' Further, the lessee assumed all risks of fire or other casualty and agreed 'to indemnify LESSOR for all damages or loss to said property from fire or other casualty{.}' The lessee also agreed to 'insure the rental value of said property for that period of time required to repair or replace it{.}'
In the context of the entire agreement, the trial court concluded that the Potters retained the crane until it was returned in its original condition to Duncan, ready for service and continued rental. This conclusion logically follows from the rental terms and the allocation of responsibilities. See Martinez, 94 Wn. App. at 944 (contract terms are given their ordinary meanings); In re Foreclosure of Liens, 123 Wn.2d 197, 202, 867 P.2d 605 (1994) (our task is to determine whether the findings support the conclusions of law and the judgment). The Potters caused the damage to the crane while it was in their possession, and they were contractually responsible for its repairs. It follows that while they were having the crane repaired, they had not yet returned it to Duncan. The trial court noted that although Duncan transported the crane first to Moses Lake before moving it to Coast Crane for repairs, the crane was not actually returned for use until after the repairs were completed. A reasonable reading of this unambiguous two-page contract is that the Potters agreed to be responsible for all damages and loss of use incurred after they took delivery of the crane and before they returned it in its original condition.
According to the undisputed facts, Duncan suffered damages from the loss of use. The value of those damages was calculated by determining the amount of rent that would have been paid during the six-month repair period, plus accrued interest. Even assuming they were responsible for the lost rental value of the crane during the repair period, the Potters contend they are not liable for these damages because Mr. Fairbanks, acting as their agent, failed to arrange rental coverage for them as he promised.
They assert that if he had told their insurance agent the contract required them to insure the rental value during repair periods, their carrier would have covered the damages here. This argument raises issues of agency and promissory estoppel.
An agency relationship is a question of fact and results from the manifestation of consent by one person that another will act on his or her behalf. Mullen v. North Pac. Bank, 25 Wn. App. 864, 877, 610 P.2d 949 (1980). The relationship may arise without an express understanding between the principal and agent that it has been created. Estes v. Lloyd Hammerstad, Inc., 8 Wn. App. 22, 25, 503 P.2d 1149, 88 A.L.R.3d 1071 (1972). But agency does not exist unless the facts establish mutual consent and control by the principal of the agent. Uni-Com Northwest, Ltd. v. Argus Publ'g Co., 47 Wn. App. 787, 796, 737 P.2d 304 (1987) (citing Moss v. Vadman, 77 Wn.2d 396, 463 P.2d 159 (1969)). Control is not established if the asserted principal merely retains the right to determine whether the agent performs in conformity with the contract; the principal must control the manner of performance. Uni-Com, 47 Wn. App. at 796-97 (citing Bloedel Timberlands Dev., Inc. v. Timber Indus., Inc., 28 Wn. App. 669, 674, 626 P.2d 30 (1981)).
Here, the record shows neither consent nor control. The trial court found that the Potters told Mr. Fairbanks to give the Potters' insurance agent the information on necessary coverage under the rental agreement. It did not find that Mr. Fairbanks agreed, even by inference, to act on the Potters' behalf or subject to their control. The Potters retained the responsibility under the contract to arrange insurance coverage. Although Mr. Fairbanks failed to provide adequate information regarding the insurance needed, he was not under any fiduciary obligation as an agent of the Potters to provide this information. The Potters had no actual control over the manner of Mr. Fairbanks's performance; accordingly, the parties' relationship remained one of lessor and lessee, rather than principal and agent. See Uni-Com, 47 Wn. App. at 797.
In their attempts to hold Duncan responsible for their failure to obtain rental insurance, the Potters also appear to advance an argument for application of promissory estoppel. 'The doctrine of promissory estoppel has been applied to render enforceable a gratuitous or somewhat indefinite promise to obtain insurance.' Hellbaum v. Burwell Morford, 1 Wn. App. 694, 700, 463 P.2d 225 (1969). The elements of promissory estoppel include (1) a promise which (2) the promisor should reasonably expect will cause the promisee to change position, and (3) that actually causes the promisee to change position (4) in justifiable reliance on the promise, so that (5) injustice can be avoided only by enforcement of the promise. Havens v. CD Plastics, Inc., 124 Wn.2d 158, 171-72, 876 P.2d 435 (1994). Crucial to the application of this equitable principle is the existence of a promise.
According to the undisputed findings here, Mr. Fairbanks agreed to tell the Potters' insurance agent what insurance was required by the rental agreement. The agent called Mr. Fairbanks, drew up a plan that covered everything discussed in the telephone call, sent the plan to Mr. Fairbanks and was never informed that the coverage was inadequate. Our question is whether, by agreeing to discuss insurance needs with the Potters' agent, Mr. Fairbanks made a promise to provide complete and accurate information — a promise upon which the Potters relied to their detriment. Neither the Potters nor their insurance agent obtained a copy of the rental agreement, and merely relied on the oral representations of its terms. On the other hand, the Potters retained the duty of providing the insurance coverage required by the agreement. Linked with this duty was the responsibility to read the insurance policy and the rental agreement and to undertake an understanding of their terms. See Yakima County (West Valley) Fire Protection Dist. No. 12 v. City of Yakima, 122 Wn.2d 371, 389, 858 P.2d 245 (1993) (duty to read a contract before signing it).
On balance, we find inadequate evidence in the record to support application of promissory estoppel. Even if Mr. Fairbanks's agreement to discuss the rental agreement's insurance needs with the Potters' agent constituted a promise to provide complete information, the Potters did not reasonably rely on that promise. They retained a duty to read both the rental agreement and the insurance policy before signing. Id.
Finally, the Potters contend the trial court incorrectly based damages on the loss of rent during the crane's repairs. They argue Duncan failed to show that others had attempted to rent the crane while it was out of commission. The simple answer is that the trial court awarded damages under the contract, finding that the Potters retained the crane during the repair period and were therefore liable for rent pursuant to the agreement.
Consequently, Duncan need not prove that it lost other potential lessees during the repair period.
Attorney Fees
Both parties request attorney fees pursuant to the rental agreement and RCW 4.84.330 (applying the agreement to the lessee as well as the lessor). Leen v. Demopolis, 62 Wn. App. 473, 485, 815 P.2d 269 (1991).
The rental agreement provides that 'LESSEE hereby agrees to pay all expenses, including a reasonable Attorney's fee, that may be incurred by LESSOR in enforcing this agreement and/or in collecting the rent provided herein{.}' The prevailing party on appeal, Duncan here, is entitled to attorney fees under the agreement. RCW 4.84.330; RAP 18.1; American Fed. Savings Loan Ass'n v. McCaffrey, 107 Wn.2d 181, 194-95, 728 P.2d 155 (1986).
Affirmed. Attorney fees awarded to Duncan.
A majority of the panel has determined that this opinion will not be printed in the Washington Appellate Reports but it will be filed for public record pursuant to RCW 2.06.040.
Schultheis, J.
WE CONCUR: Sweeney, A.C.J., Kato, J.