Opinion
No. 60633-6-I.
June 9, 2008.
Appeal from a judgment of the Superior Court for King County, No. 07-2-06566-1, John P. Erlick, J., entered August 24, 2007.
Affirmed by unpublished per curiam opinion.
The parties' real estate purchase and sale agreement required the buyers to waive a financing contingency by a date certain, making the earnest money deposit nonrefundable. When the buyers failed to comply with their promise, the trial court granted summary judgment in favor of the seller and ordered disbursement of the earnest money to the seller. We affirm.
FACTS
For purposes of appeal, the relevant facts are undisputed. On October 6, 2006, appellants Thomas and Julianne Johnson executed a residential real estate purchase and sale agreement offering to purchase the Clyde Hill home of respondent Joel Kneisley for $1,749,000. The Johnsons' offer was subject to financing and various contingencies related to the condition of the property.
Paragraph 5 of the financing addendum provided that if the Johnsons did not waive the financing contingency and were unable, despite a good faith effort, to obtain financing, the agreement would terminate and the earnest money would be returned. Paragraph 3 required the Johnsons to provide within 20 days a commitment letter from the lender reciting the status of the loan application. After 20 days, Kneisley had the option to give written notice requiring the Johnsons to waive the financing contingency within three days. If the Johnsons did not waive the contingency within three days, the agreement terminated and the earnest money was returned. Under the terms of the agreement, forfeiture of the earnest money was the sole remedy for the Johnsons' failure, without legal excuse, to complete the purchase.
Paragraph 5 of the financing addendum provided, " Earnest Money. If Buyer has not waived this financing contingency, and is unable to obtain financing after a good faith effort then, on Buyer's notice, this Agreement shall terminate and the Earnest Money shall be refunded to Buyer after Buyer delivers to Seller written confirmation from Buyer's lender. . . ."
Paragraph 3 of the Financing Addendum provided, " Review of Letter of Loan Commitment/Termination. Seller may give notice of Seller's election to terminate this Agreement at any time after the letter of loan commitment is due or received, whichever occurs first. If, within 3 days after Seller's notice, Buyer does not waive this financing contingency by notice, this Agreement shall terminate and the Earnest Money shall be refunded to Buyer. . . ."
On October 7, 2006, Kneisley submitted a counteroffer containing several proposed changes, including the following handwritten provision in paragraph 10 of the optional clauses addendum. "Buyer agrees to waive the finance contingency on or before October 26, 2006. Buyer's earnest money deposit shall become non-refundable upon the waiving of the contingency." The Johnsons initialed Kneisley's provision and accepted the counteroffer on the same day with no further changes. The Johnsons paid $50,000 earnest money into an escrow account. At some point, Kneisley arranged for repairs to the house as specified in the agreement and removed his personal belongings.
On November 16, 2006, the Johnsons notified Kneisley that their loan application had been denied and that they were rescinding the purchase agreement. Kneisley refused to return the $50,000 earnest money and filed this action when the Johnsons failed to authorize disbursement of the money from escrow. The Johnsons counterclaimed for return of the earnest money.
On cross motions for summary judgment, the trial court denied the Johnsons' motion and granted Kneisley's motion, ordering disbursement of the earnest money to Kneisley. The court also awarded Kneisley $13,497.43 in attorney fees and costs.
DECISION
When reviewing a grant of summary judgment, an appellate court undertakes the same inquiry as the trial court and considers the evidence and the reasonable inferences therefrom in the light most favorable to the nonmoving party. Schaaf v. Highfield, 127 Wn.2d 17, 21, 896 P.2d 665 (1995). Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c). Neither party alleges the existence of material factual issues requiring trial.
A court's goal in interpreting a contract is to ascertain the intent of the parties. Berg v. Hudesman, 115 Wn.2d 657, 663, 801 P.2d 222 (1990). We consider a party's objective manifestations of intent, including those expressed in the contract itself, not the party's unexpressed subjective intentions. BNC Mortgage, Inc. v. Tax Pros, Inc., 111 Wn. App. 238, 249-50, 46 P.3d 812 (2002). "In the contract interpretation context, summary judgment is improper if the parties' written contract, viewed in light of the parties' other objective manifestations, has two or more reasonable but competing meanings." Diamond "B" Constructors, Inc. v. Granite Falls Sch. Dist., 117 Wn. App. 157, 161, 70 P.3d 966 (2003).
The central issue on appeal is the meaning of paragraph 10 of the optional clauses addendum. In paragraph 10, which Kneisley inserted as part of his counteroffer, the Johnsons promised to waive the financing contingency by October 26, 2006, making their earnest money deposit nonrefundable. The Johnsons maintain that because paragraph 10 did not expressly supersede or modify any other provisions of the agreement, Kneisley had to provide written notice as required by paragraph 3 of the financing addendum in order to force a waiver of the financing contingency. Because Kneisley did not do so, the Johnsons claim they were entitled to rescission of the agreement and return of their earnest money under paragraph 5 of the financing addendum. But the Johnsons' arguments are not persuasive because they ascribe no meaning to their promise in paragraph 10.
The Johnsons contend that paragraph 10 of the optional clauses addendum can be harmonized with the financing addendum by construing it as allowing them to elect whether to waive or satisfy the financing contingency within 20 days "if they wanted to avoid the risk of termination by the seller." Br. of Appellant at 15. They conceded that if they elected to waive the financing contingency within 20 days, the earnest money became nonrefundable. But they claim that if they failed to waive or satisfy the financing contingency within 20 days, then Kneisley was required to provide written notice in order to force a waiver.
But the Johnsons were completely free to undertake precisely the same actions under the terms of their original offer. Their arguments fail to ascribe any meaning to their clear and unambiguous promise to waive the financing contingency by a date certain. Such an interpretation renders paragraph 10 meaningless. A contract interpretation is not reasonable if it renders some of the contract language meaningless or ineffective. Better Fin. Solutions, Inc. v. Transtech Elec., Inc., 112 Wn. App. 697, 711, 51 P.3d 108 (2002).
Contrary to the Johnsons' assertions, paragraph 10 did not render the financing contingency "illusory," requiring them "to waive and forfeit their downpayment, whether the loan could be obtained or not." Br. of Appellant at 11. The Johnsons' original offer did not impose a specific deadline for obtaining financing, although the seller had an option to force a waiver of the contingency or termination of the agreement. Paragraph 10 effectively modified an open-ended provision with one that required the Johnsons to obtain financing or waive the contingency by a specific date. The clear deadline in paragraph 10, coupled with the Johnsons' promise, necessarily limited application of the provisions in the financing addendum. The Johnsons were in the best position to know whether they were likely to obtain financing or planned to waive the contingency, and they have not suggested that their agreement to paragraph 10 was undermined by duress or mistake.
In summary, paragraph 10 is subject to only one reasonable interpretation. The Johnsons unambiguously promised that they would waive the finance contingency by October 26, 2006, making their earnest money nonrefundable. They did not do so. The trial court did not err in denying the Johnsons' motion for summary judgment, entering summary judgment in favor of Kneisley, and ordering disbursement of the earnest money to Kneisley under the terms of the parties' agreement.
In their brief, the Johnsons address several alternative arguments that Kneisley raised in the trial court. Because Kneisley does not rely on these arguments on appeal, we do not address them.
The trial court awarded attorney fees to Kneisley as the prevailing party under the terms of the agreement. Kneisley is also entitled to an award of attorney fees on appeal. See RAP 18.1(b). His request for attorney fees on appeal is granted, subject to compliance with RAP 18.1(d).
Affirmed.
FOR THE COURT: