Opinion
No. 52603-1-I
Filed: August 23, 2004 UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 01-2-26767-1. Judgment or order under review. Date filed: 06/25/2003. Judge signing: Hon. Mary I Yu.
Counsel for Appellant(s), Kevin Thornton Ireland, Attorney at Law, 216 Crockett St, Seattle, WA 98109-2518.
Rand L. Koler, Koler Fitzsimmons PS, 615 2nd Ave Ste 760, Seattle, WA 98104-2200.
Counsel for Respondent(s), Christopher Troy Lyons, Attorney at Law, 640 E Whidbey Ave, Oak Harbor, WA 98277-5901.
The appellants Ezat Nourbakhsh and Hossein Eslami took possession of certain property owned by the respondent Robert Melvin through an assignment of a lease from the previous tenant. They operated a grocery store on the premises for several years. Before the expiration of the original lease, appellants sold the grocery store to Saheed Mehrsadeh. The appellants assigned to Mehrsadeh 'all right, title and interest in, to and under said Lease'.
Assignment of Lease, Exhibit 62.
Appellants filed suit against Melvin in September 2001, alleging, among other things, breach of contract under the lease agreement, tortious interference with their contract with the purchaser, violations of the consumer protection act, and defamation. The trial court, after a bench trial, found in favor of appellants on their tortious interference of contract claim and awarded them $21,500. The trial court found that appellants had no right to sue for breaches of the lease, because they had assigned all rights in the lease to the purchaser of the grocery. The trial court awarded attorneys' fees to Melvin under a prevailing party provision in the lease. The fee award to Melvin was $19,402.25. The trial court dismissed all other claims asserted by appellants for lack of evidence.
The primary issue is whether the trial court correctly concluded that appellants could not maintain their claim against Melvin for allegedly breaching the lease.
Melvin filed an answer generally denying all of Nourbakhsh's assertions and claims. As trial drew near at the end of February, 2003, Melvin filed a trial brief and claimed Nourbakhsh had assigned his right to sue for breaches of the lease when he made the assignment to Mehrsadeh. Nourbakhsh filed a motion in limine on February 11th, to exclude the issue from consideration at trial. The trial court reserved judgment.
Trial took place on February 19, 20 and 25, 2003. Nourbakhsh submitted Exhibit 80, a document signed by Mehrsadeh and dated February 12, 2003. Mehrsadeh states in the document that he did not intend to receive any rights to sue Melvin that may have arisen before he took over the lease, and that he was reassigning any such rights to Eslami and Nourbakhsh. The trial court found 'that the assignment was complete and that the plaintiffs assigned their right to sue under the terms of the lease' to Mehrsadeh. The court further found that 'the testimony and argument regarding a reservation of personal rights by the plaintiffs to sue under the lease is not credible', and that the testimony of Mehrsadeh ''did not support Plaintiffs' argument that at the time of assignment there was an intent to reserve such rights of the assignment.' The court also found 'that the document, exhibit 80, signed days before trial, is not credible evidence of an intent to reserve rights.'
Finding 2.14, Clerk's Papers at 75.
Finding 2.15, Clerk's Papers at 75.
Finding 2.16, Clerk's Papers at 75.
Finding 2.17, Clerk's Papers at 75.
ISSUE OF ASSIGNMENT — NOT WAIVED
Nourbakhsh contends that assignment was an affirmative defense, and the trial court should have deemed it waived and excluded it from consideration. He argues he had no opportunity to conduct discovery on the issue, explore the factual basis regarding the assignment, or adequately brief the issue for trial. The trial court rejected this argument:
Although Plaintiffs complained that late disclosure of the defense of assignment prejudiced the Plaintiffs at trial, the court does not find that Plaintiffs suffered any prejudice; the parties and counsel were aware of the assignment and opportunity to explore the issue existed during discovery and in fact, was discussed during a deposition of the Defendant.
Finding 2.18, Clerk's Papers at 75.
The civil rules provide, in relevant part, that a party shall set forth affirmatively in its responsive pleading certain specific defenses such as 'accord and satisfaction, arbitration and award . . . and any other matter constituting an avoidance or affirmative defense.' Assignment is not one of the specific defenses listed in the rule.
The appellate court reviews decisions regarding application of the civil rules for abuse of discretion. Sprague v. Sysco Corporation, 97 Wn. App. 169, 982 P.2d 1202 (1999). A trial court abuses its discretion when its decision is manifestly unreasonable, or exercised on untenable grounds or for untenable reasons. State ex rel. Carroll v. Junker, 79 Wn.2d 12, 26, 482 P.2d 775 (1971).
Nourbakhsh has failed to cite any authority demonstrating that assignment of the lease was an affirmative defense. Even if the assignment was an affirmative defense, failure to plead an affirmative defense is harmless if it does not affect substantial rights of the parties. Mahoney v. Tingley, 85 Wn.2d 95, 529 P.2d 1221 (1975). Nourbakhsh could have, but did not, request a continuance in order to brief the issue properly for trial. The court allowed Nourbakhsh to litigate his claims for breach of the lease agreement at trial. Nourbakhsh has failed to show that the trial court's decision to allow Melvin to argue the issue of assignment affected his substantial rights. We find no abuse of discretion in permitting Melvin to argue assignment as a defense.
ASSIGNMENT OF RIGHT TO SUE
Nourbakhsh contends the right to sue on accrued causes of action arising out of the lease did not pass with the assignment.
The assignment states that appellants assign 'all right, title and interest in, to and under said Lease' to Mehrsadeh.
Exhibit 62.
The trial court made the following conclusion of law:
As a matter of law, plaintiffs' breach of contract claims based on the lease fail due to the complete assignment of the lease to Mr. Mehrsadeh; the plaintiffs assigned any right to sue the defendant under the terms of the lease.
Conclusion of Law 3.8, Clerk's Papers at 77.
An assignment is a contract and is interpreted or construed according to rules of contract construction. Boley v. Greenough, 22 P.3d 854 (Wyoming, 2001). The basic principles are (1) the intent of the parties controls; (2) the court ascertains the intent from reading the contract as a whole; and (3) a court will not read an ambiguity into a contract that is otherwise clear and unambiguous. Mayer v. Pierce County Med. Bureau, Inc., 80 Wn. App. 416, 420, 909 P.2d 1323 (1995). A reviewing court should give words their ordinary meaning. Corbray v. Stevenson, 98 Wn.2d 410, 415, 656 P.2d 473 (1982).
Nourbakhsh contends he never intended to assign the right to sue on accrued causes of action. He attempts to base this argument, in part, on the concept that under CR 17(a) he remained the real party in interest on the lease even after assigning it. To the extent he relies on CR 17(a), we will not consider his argument as he did not raise it below until his post-trial motion for reconsideration. The trial court denied this motion and there is no showing of abuse of discretion in doing so.
The trial court found appellants did not intend to reserve rights from the assignment. Findings of fact will not be reversed so long as they are supported by substantial evidence. Credibility determinations are for the trier of fact and are not subject to review. State v. Camarillo, 115 Wn.2d 60, 71, 794 P.2d 850 (1990). The court's findings as to intent are supported by substantial evidence, and will not be reversed.
Nourbakhsh also argues that under Washington law, accrued causes of action for breaches of a lease are personal and, as a matter of law, do not pass upon assignment. He relies on Gillam v. City of Centralia, 14 Wn.2d 523, 530, 128 P.2d 661 (1942). Gillam is not on point. The court stated that the 'right to damages for an injury to property is a personal right belonging to the owner, which will not pass by deed unless expressly conveyed.' Gillam, 14 Wn.2d at 530. The claims of breach of lease that Nourbakhsh seeks to assert do not involve damages for an injury to real property.
To be personal to the assignor and incapable of assignment, accrued causes of action relating to the property assigned are those that a party may assert independently of the ownership of the property. Federal Financial Company v. Gerard, 90 Wn. App. 169, 178, 949 P.2d 412 (1998). Nourbakhsh has not shown how he could assert a cause of action for breach of the lease agreement independent from the lease itself.
Nourbakhsh next asserts that the majority rule is that accrued causes of action arising out of an assigned contract do not pass under the assignment unless the assignment specifically or impliedly designates them. In support of this proposition, he relies on Central Wyoming Medical Laboratory, LLC v. Medical Testing Lab, Inc. et al., 43 P.3d 121 (Wyoming, 2002). But the contract in that case contained an explicit reservation of rights. No accrued causes of action arising under the lease here were explicitly or implicitly reserved in the assignment. Central Wyoming does not assist appellants' argument.
Melvin cites Knott v. McDonald's Corporation, 147 F.3d 1065 (9th Cir. 1998). Knott is directly on point. As here, the sellers expressly assigned all their right, title, and interest in certain franchises to the buyers. 'This assignment, while admittedly broad, is not ambiguous. . . . In short, 'all' means all.' Knott, 147 F.3d at 1067.
Washington follows the same rule applied in Knott, namely that courts look to the language of the contract where its terms are clear and unambiguous. Marine Enterprises, Inc. v. Security Pacific Trading Corp., 50 Wn. App. 768, 773, 750 P.2d 1290 (1988). Here, the assignment unambiguously conveys to Mehrsadeh 'all right, title and interest in' the lease agreement. All means all. As a matter of law, the assignment was complete.
Nourbakhsh asserts in passing that 'If Appellants' assignment of lease is considered a valid assignment of claims, there is no reason to invalidate Mr. Mehrsadeh's reassignment of claims back to Appellants.' But Nourbakhsh has not demonstrated that he argued below that Exhibit 80, the purported reassignment, was a valid reconveyance of the right to sue. Even if he did, the burden was his to obtain a finding on the issue. The absence of any such finding is construed against Nourbakhsh. Xieng v. Peoples National Bank, 120 Wn.2d 512, 844 P.2d 389 (1993). Similarly undeveloped is an argument that appellants remained obligated to Melvin through privity of contract. This cannot be raised for the first time on appeal.
Appellant's Brief at 25.
In short, the trial court correctly concluded that the lease assignment was complete. Because the appellants assigned to Mehrsadeh any right they may have had to sue Melvin under the terms of the lease, we need not address the arguments raised by appellants concerning alleged breaches of the lease. And we need not separately address the dismissal of the Consumer Protection Act claim. That claim alleges that Melvin's common area maintenance charges were unfair and deceptive as to all tenants. Because appellants assigned all their rights on the lease, they no longer have standing to complain of unfairness in the common area maintenance charges.
ATTORNEY FEES TO MELVIN
Nourbakhsh contends that the trial court erred by enforcing the attorney fees provision of the lease at the same time that it concluded he had no standing to enforce the lease.
The lease contains a provision for an award of attorney fees to the prevailing party:
In the event of any action or proceeding brought by either party against the other under this Lease, the prevailing party shall be entitled to recover for the fees of its attorney's in such action or proceeding, including costs of appeal, if any, in such amount as the court may adjudge reasonable as attorney's fees.
Lease Agreement, Exhibit 3, Article 34 sec. 15.
A defendant who successfully defends a breach of contract lawsuit by proving the absence of an enforceable contract is entitled to attorney fees based on the provisions of the purported contract sued upon. Herzog Aluminum Inc. v. General American Window, 39 Wn. App. 188, 692 P.2d 867 (1984). Under Herzog, it was proper for the court to award attorney fees to Melvin under the lease provision once the court determined that he was the prevailing party on the claims of breach of lease. Because the court dismissed the claims against Melvin for breach of lease, there can be no doubt that he is the substantially prevailing party.
The trial court did not enter findings showing how it arrived at the figure of $19,402.25 for the attorney fees award. The absence of an adequate record upon which to review a fee award will result in a remand to develop such a record, including findings of fact and conclusions of law. See Mahler v. Szucs, 135 Wn.2d 398, 435, 957 P.2d 632 (1998). The fees awarded should be only for hours reasonably spent on the lease claims, and the findings should demonstrate this.
The judgment is affirmed. The fee award is vacated and remanded.
GROSSE and AGID, JJ., concur.