Opinion
No. 30525-9-II
Filed: May 3, 2005 UNPUBLISHED OPINION
Appeal from Superior Court of Pierce County. Docket No: 01-2-07878-5. Judgment or order under review. Date filed: 06/03/2003. Judge signing: Hon. Bruce W Cohoe.
Counsel for Appellant(s), Stephen H. Demarest, Attorney at Law, 7005 Icicle Rd, Leavenworth, WA 98826-9366.
Counsel for Respondent/Cross-Appellant, John A. Long, Attorney at Law, 22525 SE 64th Pl Ste 262, Issaquah, WA 98027-5387.
Steven Eugene Knapp, Floyd Pflueger, 2505 3rd Ave Ste 300, Seattle, WA 98121-1445.
Ray and Laura Reichenberg own property adjacent to land owned by Premier Design, LLC. The Reichenbergs and Premier each intended to use their respective properties for residential development. The Reichenbergs purchased their property from Walter Riley, who had given Premier permission to regrade a slope between the properties.
A dispute arose between the parties when Northwest Cascade, Inc., Premier's subcontractor, extended the slope onto the Reichenbergs' property beyond the point to which the parties had agreed. After several failed attempts to resolve the issue, and after the Reichenbergs stopped development of their property due to the encroachment, Premier sued the Reichenbergs, who counterclaimed and filed a cross-claim against Northwest. Following trial, the court denied all claims except for the Reichenbergs' breach of contract claim, on which it awarded limited damages for five months of development delay.
On appeal, the Reichenbergs raise several issues that mainly concern denied claims and the damages award. Premier and Northwest also appeal, primarily assigning error to the trial court's conclusion that the encroachment had delayed the development of the Reichenbergs' land. We hold that the trial court erred in denying the Reichenbergs' trespass action, but it did not err in denying the third party beneficiary or public nuisance claims or the action for a breach of an implied contract between the Reichenbergs and Northwest. On remand, the Reichenbergs may pursue the trespass action and seek damages for the breach of contract claim against Premier, but they are not entitled to development delay damages. Thus, we affirm in part and reverse in part.
FACTS
The Reichenbergs own a 9.8-acre parcel of land, which they purchased from Riley in September 2000 to develop a residential subdivision. Reichenberg v. Pierce County, noted at 120 Wn. App. 1006, 2004 WL 194372, at *1. Their property adjoins acreage owned by Premier. Reichenberg, 2004 WL 194372, at *1. The Reichenberg property is at the base of a jagged and nearly vertical slope that bisects the two properties. Reichenberg, 2004 WL 194372, at *1. The slope, which was the result of mining operations, is part of the Reichenberg property.
The initial contract of sale in 1998 had been to Pacific Hansa, Inc., but it assigned its interest to Pac Dev II, a LLC with the Reichenbergs and Pacific Hansa as its members. But due to financing requirements, the sale was completed with the Reichenbergs as the sole purchasers. They do, however, hold the property on behalf of Pac Dev II. Thus, any reference to the Reichenbergs includes Pac Dev II as well.
In 1998, Pierce County issued Premier a permit to develop a subdivision plat for its property. Reichenberg, 2004 WL 194372, at *1. The permit required that Premier stabilize the slope but specified that it could not change the slope or its elevation. Reichenberg, 2004 WL 194372, at *1.
In September 1999, Riley, who then owned the Reichenberg property, and Premier entered into a verbal agreement authorizing Premier to increase the slope to a 3:1 grade, provided that it did not encroach onto Riley's property by more than 30 feet. Premier contracted with Northwest to perform the slope grading work and other subdivision plat improvements. But the slope grading, completed in September 1999, did not conform to Riley and Premier's verbal agreement. In certain areas, the slope encroached between 40 and 50 feet onto the Riley property.
Although Riley's reasons for consenting are not clear, it appears that regrading the slope provided visual appeal as well as served to fill in certain uneven portions of Riley's property.
The Reichenbergs became aware of the encroachment in December 1999, three months after the slope regrading but several months before the property's closing date. At this time, the Reichenbergs proposed that the slope be divided between the two properties and that both sides split the $194,000 estimated cost of a retaining wall to control the slope. Premier rejected the Reichenbergs' proposal but offered to pay either $10,000 to leave the slope as is or to restore the slope to its original condition at an estimated cost of $4,000. The Reichenbergs rejected both counter offers and maintained that removing the encroachment would require county approval because such removal might destabilize the slope.
Although the record contains mixed references to either the Reichenbergs, Riley, or Pac Dev II as responsible for the slope negotiations that occurred prior to the September 2000 sale of the property, the trial court found that the Reichenbergs controlled the negotiations.
The Reichenbergs notified Pierce County of the encroachment and the County informed Premier that the encroachment issue would need to be resolved before final plat approval of Premier's property. All parties involved met with the County Planning Department on January 29, 2001. Consistent with an earlier letter, the County told the Reichenbergs at the meeting that County approval was not necessary in order for the encroachment to be removed. After the meeting, the Reichenbergs again proposed that the parties split the cost of a retaining wall. This time, the Reichenbergs proposed that Premier pay $60,000, with the Reichenbergs and Pac Dev II paying the remainder.
When Premier rejected this proposal, the Reichenbergs sent a letter to the County reasserting their concerns about a possible destabilization of the slope if the encroachment was removed. In response, the County changed its position and issued a letter in which it concluded that Premier should submit a revised grading plan and geotechnical report to address the encroachment.
On March 6, 2001, Northwest again offered, at no cost, to remove the encroachment and stabilize the slope to prevent erosion. The Reichenbergs again rejected the offer, demanding that plans be submitted to and approved by the County. On March 14, Premier submitted a revised geotechnical report and grading plan to the County. The County accepted the plan subject to the Reichenbergs' approval. The plan did not call for the construction of a retaining wall and the Reichenbergs did not give their approval. Reichenberg, 2004 WL 194372, at *1.
In May 2001, Premier sued the Reichenbergs, Riley, and Northwest. The Reichenbergs counterclaimed and cross-claimed against Northwest, alleging that the slope constituted a trespass and a breach of the oral contract between Riley and Premier. Reichenberg, 2004 WL 194372, at *1. The Reichenbergs sought damages primarily for the delays in the development of their property caused by the encroachment. The trial court eventually denied all claims except for the Reichenbergs' breach of contract claim, on which it found in the Reichenbergs' favor. On May 24, 2002, the trial court ordered Northwest to remove the encroachment. The regrading was completed in July 2002.
In awarding damages, the trial court found that the Reichenbergs had failed to reasonably mitigate their damages. The trial court found that the Reichenbergs unnecessarily decided to delay development of the property until the encroachment issue was resolved. The trial court also found that regardless of the encroachment, the County would have required the Reichenbergs to build a retaining wall before it approved their development plans. As such, the court found the Reichenbergs' demand for County approval of the encroachment's removal to be `unreasonable and baseless' and attributable to the Reichenbergs' desire to force Premier into paying for part of the retaining wall. Clerk's Papers (CP) at 133. But the trial court awarded five months of development delay damages to cover the period from the Reichenbergs' purchase of the property in September 2000 to Northwest's offer to remove the slope in March 2001. The trial court found this five-month period to be an ample amount of time for an experienced land developer like the Reichenbergs to come to a resolution regarding the encroachment.
The Reichenbergs, Premier, and Northwest each appeal.
ANALYSIS Trespass Action
The Reichenbergs first challenge the trial court's conclusion that the encroachment did not constitute a trespass. It appears that the trial court made this ruling because it found that the slope encroachment was the result of Northwest's negligent, rather than intentional, acts. But an action for trespass is viable whether the intrusion is intentional or negligent. Borden v. City of Olympia, 113 Wn. App. 359, 373, 53 P.3d 1020 (2002), review denied, 149 Wn.2d 1021 (2003). The record reflects that the encroachment was an unprivileged remaining on the Reichenbergs' land because it exceeded the 30-foot agreement. As such, the encroachment was a trespass. Bradley v. Am. Smelting Ref. Co., 104 Wn.2d 677, 693, 709 P.2d 782 (1985); Restatement (Second) of Torts sec. 158 cmt. c, m (1965).
Premier and Northwest assert that the Reichenbergs may not maintain an action for trespass because the encroachment existed before they purchased the property. As authority for this position, they cite Free Methodist Church Corp. of Greenlake v. Brown, 66 Wn.2d 164, 401 P.2d 655 (1965), as authority for their position. In Brown, the court held that the plaintiff could not recover for the unlawful removal of lateral support occurring prior to its purchase of the land. 66 Wn.2d at 166. But Brown does not address a trespass that begins before and continues after the sale of property. A trespass is actionable, as occurred here, where it is `an ongoing invasion of a plaintiff's possession of his property.' Will v. Frontier Contractors, Inc., 121 Wn. App. 119, 124 n. 1, 89 P.3d 242 (2004). Moreover, Riley assigned the Reichenbergs all his rights relative to the encroachment when they bought the property. Thus, the Reichenbergs had the right to maintain an action for the encroachment's trespass on their land and the trial court erred by concluding otherwise.
But the Reichenbergs also assert that the trial court erred in not awarding them treble damages and attorney fees pursuant to RCW 4.24.630. Under that statute, treble damages and attorney fees may be awarded against one who `wrongfully' trespasses onto another's property and causes injury. Under RCW 4.24.630, a person acts `wrongfully' when he or she `intentionally and unreasonably commits the act or acts while knowing, or having reason to know, that he or she lacks authorization to so act.' RCW 4.24.630(1). What distinguishes RCW 4.24.630 from the common law of trespass is the requirement that the action be intentional and not merely negligent. See Borden, 113 Wn. App. at 374.
The Reichenbergs point to no evidence contradicting the trial court's finding that Northwest did not intend to commit a trespass. See generally In re Contested Election of Schoessler, 140 Wn.2d 368, 385, 998 P.2d 818 (2000) (trial court's findings will be upheld if supported by substantial evidence). What the Reichenbergs do cite is testimony by Northwest employees that they believed the regrading was to be based on a 3:1 grade, rather than the 30-foot limitation. But this mistaken belief does not equate to a `wrongful' act within the meaning of RCW 4.24.630 and there is no evidence that Northwest knew of the 30-foot limitation and intentionally ignored it in regrading the slope. See Borden, 113 Wn. App. at 373-74 (concluding that city approval of drainage project that led to flooding was negligent, as opposed to `wrongful').
The Reichenbergs also argue that
[Northwest] based a half-million dollars worth of dirt work on preliminary plans, ran the job from the back of a pick-up truck, supervised by a bloke with no knowledge of critical slopes, never bothered to review the geotechnical report expressly incorporated into the plans, ignored the plan notation calling for on-site observations during dirt movement, cared less about staking the clearing limits and disregarded its own standard procedure of getting permission in writing.
Br. of Appellant at 30-31 (footnotes omitted). Again, even accepting these `assertions' on their face, they merely suggest that Northwest's actions were negligent. There is nothing in the record to contradict the trial court's finding that the encroachment was the result of negligence, and thus, the Reichenbergs are not entitled to treble damages or attorney fees under RCW 4.24.630.
The Reichenbergs also assert that they are entitled to attorney fees on an equitable basis. See Dayton v. Farmers Ins. Group, 124 Wn.2d 277, 280, 876 P.2d 896 (1994) (The imposition of attorney fees must be based upon some agreement (contract), a statute, or some recognized ground in equity.). But because the Reichenbergs do not articulate what equitable ground supports such an award, and none is apparent, we reject this claim.
Third Party Beneficiary Action
The Reichenbergs also contend that they are third party beneficiaries to the grading contract between Premier and Northwest, which therefore entitles them to sue Northwest for the encroachment. A third party beneficiary contract exists when the contracting parties intend to create one. Postlewait Constr., Inc. v. Great Am. Ins. Co., 106 Wn.2d 96, 99, 720 P.2d 805 (1986). The test of intent is an objective one: Whether performance under the contract necessarily and directly benefits the third party. Postlewait Constr., Inc., 106 Wn.2d at 99. An incidental, indirect, or inconsequential benefit to a third party is insufficient to demonstrate an intent to create a contract directly obligating the promisor to perform a duty to a third party. Del Guzzi Constr. Co. v. Global Northwest Ltd., 105 Wn.2d 878, 886, 719 P.2d 120 (1986).
In McDonald Construction Co. v. Murray, 5 Wn. App. 68, 485 P.2d 626, review denied, 79 Wn.2d 1009 (1971), a construction company undertook construction of an addition to a commercial building. The construction contract provided that the work was to be completed within a certain period because the owner had found a tenant for the premises. When the construction company failed to meet the deadline, the prospective tenant sued, seeking lost profits from the construction company under the theory that it was a third party beneficiary to the construction contract. In affirming the trial court's dismissal of the tenant's claim, Division One concluded that the tenant derived no direct benefit from the construction contract and `[a]ny benefit which [the tenant] could assert would be derived from the intervening tenancy agreement which it had with the [owner].' Murray, 5 Wn. App. at 71.
Like the tenant in Murray, the Reichenbergs are not third party beneficiaries of the contract between Premier and Northwest because they derived no direct benefit from it. See also Restatement (Second) of Contracts sec. 302 cmt. e, illus. 19 (1979) ('A contracts to erect a building for C. B then contracts with A to supply lumber needed for the building. C is an incidental beneficiary of B's promise, and B is an incidental beneficiary of C's promise to pay A for the building.'). Any claim they have must come from the oral agreement that Riley had with Premier.
In their assignments of error, the Reichenbergs also assert that the trial court erred in not finding an implied contract between them and Northwest. But because the Reichenbergs provide no legal briefing on this issue, we do not address it. McAndrews Group, Ltd. v. Ehmke, 121 Wn. App. 759, 765, 90 P.3d 1123 (2004).
Public Nuisance Action
The Reichenbergs also appeal the trial court's dismissal of their public nuisance claim, which was based on Pierce County Code (PCC) 17A.10.130 and RCW 7.48.210. Under PCC 17A.10.130(J), `[a]ny work carried out contrary to the provisions [of Title 17A of the PCC] shall constitute a public nuisance and may be enjoined as provided by the statutes of the State of Washington.' Title 17A of the PCC concerns construction and infrastructure regulations. Under RCW 7.48.210, a private person may maintain an action for a public nuisance `if it is specially injurious to himself but not otherwise.'
According to the Reichenbergs, Premier and Northwest's regrading of the slope constituted a public nuisance under Title 17A of the PCC, not because it created the encroachment, but because it was done without County approval. But even if the failure to obtain County approval turned the slope regrading into a public nuisance, the Reichenbergs are barred from bringing suit. The regrading took place with Riley's acquiescence. The Reichenbergs are precluded from bringing a public nuisance claim when they were assigned any such claim from an individual who acquiesced in having the slope regraded without County permission. See Kramarevcky v. Dep't of Soc. Health Servs., 122 Wn.2d 738, 743 n. 1, 863 P.2d 535 (1993) (discussing the `clean hands' doctrine).
Breach of Contract Action and Development Delay Damages
Each of the parties challenge the trial court's award for five months of development delay damages on the Reichenbergs' contract claim. It is undisputed that Northwest's regrading of the slope was a breach of the oral contract between Riley and Premier. The Reichenbergs contend that they were entitled to development delay damages from the time they owned the property until the encroachment was removed, a 22-month period, because their demands for County approval were reasonable. Premier and Northwest argue that ample evidence supported the trial court's findings that (1) the Reichenbergs could have continued to develop their property even with the encroachment; and (2) the demand for County approval regarding the encroachment was pretextual. They maintain that these findings cannot be harmonized with the trial court's decision to award any development delay damages. We agree with Premier and Northwest.
Substantial evidence supports the trial court's following finding on pretext:
Reichenberg saw [the slope encroachment] as a potential windfall. There was, if his theory that this was a trespass and required new plans for its removal, tremendous leverage over [Premier]. . . . He clearly felt he could force Premier Design to either build a wall for him, or at a minimum, share the cost. A wall, which now according to testimony, had a cost of $194,350.00.
CP at 131-32. The Reichenbergs asserted that County approval was required due to concerns over destabilization of the initial slope. But on at least two occasions, the County had rejected the Reichenbergs' request for County involvement. And even after the County agreed to request that a revised grading plan and geotechnical report be submitted, the Reichenbergs were willing to overlook the County's involvement if Premier would pay up to $60,000 for a retaining wall. According to the Reichenbergs' own expert, this retaining wall was necessary regardless of the encroachment issue. Lastly, even after the County approved Premier's revised geotechnical report and grading plan on April 19, 2001, the Reichenbergs refused to submit to its terms. Tellingly, this County-approved plan did not require a retaining wall.
Likewise, substantial evidence supports the trial court's finding that the Reichenbergs could have proceeded with development plans without first resolving the encroachment. There is no evidence in the record that a 9.8-acre subdivision development had to come to a grinding halt because there was 20 feet of excess dirt on one part of the property's boundary. But the Reichenbergs assert that the slope issue froze their construction loan and delayed completion of a geotechnical report that was required for an administrative use permit (AUP). But the section of the loan agreement the Reichenbergs contend froze their loan does not state that the loan process would stop if litigation concerning the property arose. Rather, this section of the agreement states that the Reichenbergs would be considered in default if they discontinued development without satisfactory cause for a period of 14 days.
As to the AUP, its issuance hinged on 51 different conditions, of which the geotechnical report was only one. The Reichenbergs do not assert that the other 50 conditions had been met or that the uncompleted conditions hinged on the geotechnical report. In fact, the project engineer for the Reichenbergs' property testified that the encroachment did not affect the ability to comply with any of the AUP conditions. And according to the project engineer, when he testified on November 13, 2002, the County had still not approved several conditions of the AUP, including a sewer plan and a final development and grading plan that had only been given to the County on November 12, 2002.
With these valid findings in mind, the question then is whether they support any award of development delay damages. The answer to that question is very clearly no. Premier and Design offered to correct the encroachment once it became of concern to the Reichenbergs. The Reichenbergs denied that offer, giving a pretextual reason which `hid' their goal of forcing Premier and/or Northwest to contribute to the cost of a retaining wall. The Reichenbergs have not offered any reason supported in the record for why the encroachment delayed development of the property. As such, there is no basis for development delay damages and we reverse the trial court's award.
The Reichenbergs also assert that there was insufficient evidence to find that Premier and Northwest were willing to restore the slope when it became an issue to the Reichenbergs. But Premier did offer to restore the slope to its original position on March 9, 2000. Similarly, Northwest offered to regrade the slope in January and March 2001. The record also shows that on August 3, 2000, Northwest had proposed to Premier that it be permitted to `furnish all materials and perform all labor necessary' to correct the encroachment. Ex. 154. The Reichenbergs assert that these offers were not made in good faith and that Premier would not have permitted Northwest to remove the dirt. But the Reichenbergs point to no evidence supporting this claim and the August 3, 2000 letter between Northwest and Premier undercuts any assertion that the offers to restore the slope were not in good faith.
Premier's Entitlement to Attorney Fees
In awarding damages to the Reichenbergs, the trial court concluded that Premier was entitled to be indemnified by Northwest. Premier asserts that the trial court erred in concluding that it was not entitled to attorney fees from Northwest under the regrading contract. Because we reverse the development delay damages award, this issue is moot. But we address it because it may arise on remand. Premier bases its attorney fee claim on a contract clause that awards attorney fees for actions to collect fees due under the contract. But the Reichenbergs' encroachment claim does not involve a contract fee collection issue between Premier and Northwest and this provision is inapplicable. Premier is not entitled to attorney fees on this basis.
Award of Damages to Pac Dev II
Premier and Northwest also challenge the trial court's decision to award damages to Pac Dev II instead of to the Reichenbergs. Again, we address this issue because it may arise again on remand. Premier and Northwest do not challenge the finding that the Reichenbergs held the property on behalf of Pac Dev II. Although they assert that Pac Dev II was not a party to this case, the trial court specifically ordered that the pleadings be amended to add Pac Dev II. As such, Pac Dev II is a proper party to this action and it is entitled to damages if proved on remand.
CONCLUSION
The trial court erred in denying the Reichenbergs' trespass action, but it did not err in denying the third party beneficiary or public nuisance claims or the action for a breach of an implied contract between the Reichenbergs and Northwest. On remand, the Reichenbergs may pursue the trespass action and seek damages for the breach of contract claim against Premier, but they are not entitled to development delay damages.
Affirmed in part and reversed in part. Remanded for further proceedings.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
HOUGHTON, J. and HUNT, J., Concur.