Opinion
No. 59007-3-I.
July 7, 2008.
Appeal from a judgment of the Superior Court for Whatcom County, No. 05-2-01677-5, Ira Uhrig, J., entered September 22, 2006.
Reversed and remanded by unpublished opinion per Appelwick, J., concurred in by Grosse and Cox, JJ.
A reference in a Vacant Land Purchase and Sale Agreement to specific lots in Karen's Subdivision, a preliminary plat, was insufficient to satisfy the statute of frauds. Summary judgment and specific performance were improperly ordered against the seller on the facts of this case, despite the seller's alleged anticipatory breach of the agreement. We reverse the summary judgment and specific performance, and remand for determination of damages and award of attorney's fees.
Facts
Donald and Karen Rasmussen applied to subdivide their three lots into approximately 20 lots in a development called Karen's Subdivision. On August 23, 2004, Karen's Subdivision received preliminary plat approval. On December 3, 2004, Donald Rasmussen notified realtors of 20 lots for sale immediately. On December 8, 2004, Jason Ragsdale, President of Tercel Corporation, offered $1.2 million for 15 of the lots in Karen's Subdivision. On January 10, the City of Bellingham Department of Public Works approved the engineered plans for Karen's Subdivision, revised to conform to the terms of the preliminary plat approval. Ragsdale received copies of these plans soon after. Ragsdale and the Rasmussens completed a Vacant Land Purchase and Sale Agreement (VLPSA) on January 13, 2005. Ragsdale deposited $30,000 of earnest money in escrow.
Donald's brother, Duane was also an owner of one of the lots but he later executed a quitclaim deed transferring all ownership to Donald and Karen Rasmussen.
RCW 58.17.205 authorizes the sale of lots following preliminary plat approval conditioned on final plat approval. "If performance of an offer or agreement to sell, lease, or otherwise transfer a lot, tract, or parcel of land following preliminary plat approval is expressly conditioned on the recording of the final plat containing the lot, tract, or parcel under this chapter, the offer or agreement is not subject to RCW 58.17.200 or 58.17.300 and does not violate any provision of this chapter. All payments on account of an offer or agreement conditioned as provided in this section shall be deposited in an escrow or other regulated trust account and no disbursement to sellers shall be permitted until the final plat is recorded."
The VLPSA was signed initially by Ragsdale (of Tercel) on January 7, 2007, and faxed to Rasmussen. Donald and Karen Rasmussen signed it on January 10, 2007 and faxed it back to Ragsdale. When Ragsdale learned there was a Mrs. Rasmussen, he added Karen Rasmussen to the contract as a seller and faxed the changes to the Rasmussens for approval. The Rasmussens faxed their approval of this change on January 13, 2007.
The Rasmussens undertook the work necessary to obtain final plat approval. In April 2005, the Rasmussens' plans for the subdivision changed. According to Donald Rasmussen, third parties, including utility companies delayed final plat approval. And, due to a change in circumstances, the Rasmussens intended to keep the lots and undertake development of the lots, themselves. They no longer planned to sell the property to Tercel. Citing the Rasmussens' anticipatory breach of the contract, Tercel filed a lawsuit in July 2005 seeking specific performance of the contract, and later amended to include a request for damages.
The parties filed cross motions for summary judgment. After two hearings, the trial court granted summary judgment for Tercel, denied summary judgment for the Rasmussens, and ordered the Rasmussens to specifically perform the purchase and sale agreement. The court retained jurisdiction to enforce the specific performance. On December 9, 2005, the trial court denied reconsideration of the summary judgment and ordered the Rasmussens to finish the work necessary for plat approval. In July 2006, the Rasmussens requested instructions that detailed their obligations to satisfy specific performance. The court issued those instructions on September 22, 2006. The Rasmussens obtained final plat approval and completed the transaction with Tercel. On October 20, 2006, the court awarded attorney fees and costs to Tercel and issued an order confirming the Rasmussens' compliance with the order of specific performance. The Rasmussens then appealed all the orders issued by the trial court pertaining to the transaction.
Discussion
When reviewing a summary judgment order, the appellate court undertakes the same inquiry as the trial court. Thompson v. Peninsula Sch. District No. 401, 77 Wn. App. 500, 504, 892 P.2d 760 (1995). Summary judgment is proper when there are no genuine issues of material fact and the moving party is entitled to a judgment as a matter of law. CR 56(c). The moving party bears this burden of proof. LaPlante v. State, 85 Wn.2d 154, 158, 531 P.2d 299 (1975). All facts and inferences are considered in the light most favorable to the non-moving party. Ashcraft v. Wallingford, 17 Wn. App. 853, 854, 565 P.2d 1224 (1977).
The Rasmussens argue that because the sale of lots in a preliminary plat is clearly conditioned on final plat approval, there is no final contract, no breach and nothing to specifically perform. Rasmussens further assert that the statute of frauds precludes specific performance of this VLPSA. We reject the assertion that breach is impossible prior to satisfaction of the condition of final plat approval. We also reject the notion that specific performance is never available to cure such a breach. Donald Rasmussen does not dispute that he renounced his intent to sell the lots to Tercel under the terms of the VLPSA. Assuming the renunciation constituted an anticipatory breach as alleged, the question is whether on these facts it may be cured by specific performance.
The Rasmussens contend that the VLPSA violates the statute of frauds which renders the agreement tentative and non-binding. The alleged violation of the statute of frauds arises from an inadequate legal description. A valid legal description for platted property must include, or refer to a document which includes, the lot number(s), block number, addition, city, county, and state. Martin v. Seigel, 35 Wn.2d 223, 229, 212 P.2d 107 (1949).
[I]in order to comply with the statute of frauds, a contract or deed for the conveyance of land must contain a description of the land sufficiently definite to locate it without recourse to oral testimony, or else it must contain a reference to another instrument which does contain a sufficient description.
Bigelow v. Mood, 56 Wn.2d 340, 341, 353 P.2d 429 (1960) (citing Bingham v. Sherfey, 38 Wn.2d 886, 234 P.2d 489 (1951); Martin, 35 Wn.2d 223; Fosburgh v. Sando, 24 Wn.2d 586, 166 P.2d 850 (1946); Barth v. Barth, 19 Wn.2d 543, 143 P. 2d 542 (1943); Martinson v. Cruikshank, 3 Wn.2d 565, 101 P.2d 604 (1940)). The parties do not dispute that this longstanding rule applies here.
The VLPSA contained the following property description:
4. Property Tax Parcel Nos.: to be assigned at final plat approval (Whatcom County) Street Address: XXX East Bakerview, Bellingham Washington 98226 Legal Description: Lots 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15, 16, 17, 18 of Karen's sub-division which is currently located at 1711, 1785 1795 East Bakerview.
This description is insufficient on its face to satisfy Martin. The VLPSA authorized the closing agent to attach the correct legal description of the property. The agent attached the title information for the three parcels of land being platted as Karen's Subdivision. The attached title information contained legal descriptions and tax parcel numbers for the original three lots being subdivided, but also includes property not being subdivided or purchased by Tercel. This description, therefore, is overbroad and cannot serve as the legal description for the lots in the contract. Berg v. Ting, 125 Wn.2d 544, 553-54, 886 P.2d 564 (1995). The VLPSA contains the state, county, city, lot numbers, and reference to a subdivision. In the absence of an attached legal description, Tercel relies on incorporation by reference to the subdivision. The question, then, is whether this reference to Karen's Subdivision, which is a preliminary plat, is sufficiently specific to satisfy the statute of frauds.
The trial court believed that the description in the VLPSA and attached legal description provides all the essential information to direct someone to the city documents which contain the preliminary plat approval and documentation on Karen's Subdivision. "[C]an't somebody or could somebody take that document, look at it, see that it's situated in Whatcom County, see an address on Bakerview and then run down to the city and find that document?" In the court's opinion, parol evidence was unnecessary to acquire the legal description of the land to be sold under the VLPSA. "Those documents are filed with the city. I don't think you need parol evidence to find those documents. I think you need to go to the city to look for them, but I don't think you need to resort to parol evidence." Based on this conclusion, the trial court found that the agreement satisfies the statute of frauds through incorporation by reference.
Washington case law only has one example of incorporation by reference. See, Bingham, 38 Wn.2d at 889. In Bingham, the Court held a reference to a tax parcel number adequate because a tax parcel number was statutorily required on the assessor's public record. "[A] reference to this public record furnishes the legal description of the real property involved with sufficient definiteness and certainty to meet the requirements of the statute of frauds." Id. The assessor had a statutory duty to maintain public record of the tax parcels and corresponding properties.
Similarly, the county maintains publicly accessible records of plat applications, which may include information about the deed or other instrument of title for the property involved. We agree with the trial court that a VLPSA reference to a public file, relating to a subdivision, found at a government office is allowable and can satisfy the statute of frauds. But, we disagree that the reference in this VLPSA was sufficient to satisfy the statute of frauds. Unlike in Bingham, where the tax number led to a specific document without resort to parol evidence, the reference in this contract failed to identify a specific document or instrument.
The subdivision had received preliminary plat approval at the time the Rasmussens offered the lots for sale. The approval of the plat was based on findings which required changes from the application and altered the dimensions and numbering of the lots. The plat had to be re-engineered to provide a corrected description of the lots as approved. The city had not approved the re-engineered drawings when the offer of sale was made.
They were approved on January 10, the date the Rasmussens signed the VLPSA. As evidence that the lots in the VLPSA conformed to the lots on the approved re-engineered drawings, Tercel introduced the Rasmussens' letter offering the lots for sale. The letter contains lot numbers and corresponding square footages. They do not match the lot numbering or lot size in the preliminary plat application. The lot numbering and lot size do fit the re-engineered lot lines that brought the subdivision into compliance with the preliminary plat approval conditions. But, the VLPSA does not specifically refer to the re-engineered drawings in the file and approved on January 10. We cannot infer that the parties intended to reference that document nor can we infer a proper legal description, based on the other documents in the file, testimony of city staff, or the Rasmussens' offer letter. All such evidence violates the extrinsic evidence prohibition of the statute of frauds. Martin, 35 Wn.2d at 228-29.
If Tercel had provided a clear reference in the VLPSA to the re-engineered plat map approved by Public Works, or attached the drawings to the contract, we could rely on the specifically referenced document for the legal description. But, as the VLPSA stands, the reference to Karen's Subdivision in the VLPSA does not identify, with sufficient specificity, existing documents that contain a complete legal description without resort to parol evidence. Therefore, the legal description violates the statute of frauds. Without a sufficient legal description, the court cannot order specific performance of the contract. Herrmann v. Hodin, 58 Wn.2d 441, 443, 364 P.2d 21 (1961). The trial court erred in granting specific performance.
Tercel requests an opportunity to argue additional grounds for specific performance — namely reformation and part performance. Courts have reformed defective property descriptions resulting from mutual mistake. See, Lofberg v. Viles, 39 Wn.2d 493, 236 P.2d 768 (1951); Tenco Inc. v. Manning, 59 Wn.2d 479, 486, 368 P.2d 372 (1962); Bergstrom v. Olson, 39 Wn.2d 536, 236 P.2d 1052 (1951). But, "[r]eformation is not appropriate if the agreement expresses the intent of the parties but the legal description is merely incomplete." Key Designs, Inc. v. Moser, 138 Wn.2d 875, 888, 983 P.2d 653 (1999) (citing Williams v. Fulton, 30 Wn. App. 173, 176-77, 632 P.2d 920 (1981); Halbert v. Forney, 88 Wn. App. 669, 673, 945 P.2d 1137 (1997)). Since this VLPSA reflects the intent of both the Rasmussens and Tercel, but contains a flawed legal description, reformation does not take the contract out of the statute of frauds. Reformation is not available as a matter of law.
Tercel attempts to invoke part performance to remove the VLPSA from the statute of frauds, relying on Dunbabin v. Allen Realty Co., 26 Wn. App. 660, 613 P.2d 570 (1980). "[A] contract for the sale of land which does not satisfy the statute of frauds is enforceable by the part performance of the parties when the purchaser takes exclusive possession of the property in reliance of the contract with the assent of the seller, tenders payment of the purchase price and makes substantial improvements in the property." Id. at 665. In Dunbabin, the seller of a building alleged that the closing agent lacked authority to close the sale and a violation of the statute of frauds. The Dunbabin court found significance in the fact that the parties clearly knew the property at issue because "[t]he legal description appeared in several documents prepared subsequent to the earnest money contract, including the real estate contract, and the notice of intention to declare a forfeiture." Id. at 665-66. Also, the purchaser made a series of payments on the real estate contact, paid real estate taxes following the closing of the sale, and made substantial improvements on the property. Id. at 663, 665.
Tercel prepared a curb cut map and site-specific plans for the homes it intended to develop. It offered these plans as evidence that both parties clearly knew the lots which were intended for sale under the VLPSA. These documents do evidence general intent, but they do not contain a legal description of the lots. Unlike the purchaser in Dunbabin, Tercel did not take exclusive property of the lots, and, except for the escrow funds in trust, did not perform on the contract. Tercel's reliance on Dunbabin is misplaced. We see no basis to hold that part performance removes this VLPSA from the statute of frauds.
We reverse the summary judgment, vacate the award of attorney fees, and remand to the trial court for further proceedings on the claim for damages and award of attorney fees. Both parties request fees on appeal under RAP 18.1 and the VLPSA. The prevailing party at both the trial court and on appeal should receive reasonable attorney fees and expenses at the conclusion of the litigation.
WE CONCUR: