Opinion
No. 59305-6-I.
November 5, 2007.
Appeal from a judgment of the Superior Court for King County, No. 05-2-37788-7, Palmer Robinson, J., entered November 21, 2006.
Affirmed by unpublished opinion per Agid, J., concurred in by Schindler, A.C.J., and Dwyer, J.
Paula Azoulay appeals from an order on summary judgment ruling that she was not entitled to the return of her earnest money when she rescinded an agreement to purchase Conyetta Gunn's property. Although she had waived her right to make the agreement contingent on an inspection, she ultimately terminated the agreement based on additional defects she discovered during visits to the property, claiming that Gunn failed to deliver an amended disclosure statement and failed to correct these defects before closing. The trial court ruled that by waiving the inspection contingency, Azoulay waived any defects unknown to Gunn at the time she completed the initial disclosure statement. Because her waiver expressly stated that she would not condition the purchase based on defects discovered by an inspection, we affirm.
FACTS
Azoulay made an offer on a residence for sale by Gunn. Gunn accepted the offer, and the parties entered into a purchase and sale agreement on July 31, 2005. According to the agreement, Azoulay agreed to waive inspection of the property by checking the following box on the agreement form:
WAIVER OF INSPECTION. Buyer has been advised to obtain a building, hazardous substances, building and zoning code, pest or soils/stability inspection, and to condition the closing of this Agreement on the results of such inspection(s), but Buyer elects to waive the right and buy the property in its present condition. Buyer acknowledges that the decision to waive Buyer's inspection options was based on Buyer's personal inspection and Buyer has not relied on representations by Seller, Listing Agent or Selling Licensee.
She did not waive her right to receive a seller's disclosure statement that would identify existing defects known to the seller.
Upon mutual acceptance of the agreement on July 31, 2005, Gunn provided a disclosure statement identifying known defects on the property. Gunn prepared this statement on July 28, 2005. Azoulay then tendered $25,000 in earnest money which was held by Assurance Escrow, the closing agent. Closing was set for August 31, 2005.
Before closing, Azoulay visited the property several times and advised Gunn that she had discovered three additional defects that were not listed in the disclosure statement. First, she learned that a fence and some landscaping contained within the fence encroached on the neighbor's property. She claims that after she discovered this, she "was informed that Gunn would resolve the encroachment." On August 3, Gunn provided Azoulay with a notarized statement explaining that she installed the fence with the neighbor's permission and that this arrangement had been in place for 35 years.
There is some dispute in the record about when Azoulay actually first learned of the encroachment. According to Gunn, Azoulay asked Gunn's agent about the boundaries during a visit to the property before she made an offer and the agent told Azoulay she would have Gunn provide a letter explaining the boundaries. According to Azoulay, she did not ask about the property line or fence before she made an offer, but only recalls that at some point, the agent said, "'the fence is not the property line.'"
Azoulay also reported that she discovered extensive dry rot around the door to the house. She learned this from a contractor who visited the property to give her an estimate for potential improvements to the house. Gunn asserted that she had no knowledge of the dry rot.
Finally, Azoulay reported that she smelled gas during additional visits to the property. She claims that she first noticed the gas smell "[a]pproximately a week before . . . closing." According to Gunn, Azoulay first reported that she smelled gas on August 3, and then reported it a second time on August 22, during another visit to the property. Both times, Gunn called the gas company and had a leak repaired that same day. On August 25, Azoulay's attorney wrote to the real estate brokers stating that Azoulay wanted to proceed with the purchase, but only if "certain concessions [were] made." The letter stated that she was entitled to a price reduction based on, among other things, Gunn's failure to disclosure the dry rot problem and the encroachment issue. Azoulay also forwarded to Gunn an estimate for the dry rot repairs.
On August 29, Azoulay visited the property again and reported a gas smell. Gunn called the gas company, and a service person came out that day, confirmed that there was still a leak, and determined that the only way to repair the leak was to replace the furnace. That same day, Gunn obtained two bids for replacement furnaces and forwarded them to Azoulay, along with a letter offering to pay for the furnace replacement or credit Azoulay for the replacement cost at closing. The letter also stated that one of the furnace companies could do the replacement in one day and that it could be done that week.
On that same day, after receiving Gunn's furnace replacement offer, a second attorney hired by Azoulay sent a letter to Gunn notifying her that Azoulay intended to terminate the agreement because Gunn failed to provide an amended disclosure statement and demanding the return of the earnest money. Azoulay never responded to Gunn's replacement offer and refused to sign the final documents on the closing date. Assurance Escrow then filed an interpleader action in King County Superior Court to determine disposition of the earnest money.
Azoulay filed an answer in the interpleader action and moved for summary judgment, contending that she was entitled to the earnest money because she had the right to rescind the agreement under RCW 64.06.040, based on Gunn's failure to provide an amended disclosure statement or correct the gas leak and dry rot defects before closing. The court denied Azoulay's summary judgment motion and ruled in favor of Gunn, awarding her the earnest money and reasonable attorney fees and costs. The court noted that the dry rot and gas leak were "the kinds of 'defects' that a buyer's inspection, expressly waived by the purchaser, would have discovered." The court then concluded that Azoulay waived any defects that were not known to the seller at the time she completed the disclosure statement but were later discovered by the buyer. Azoulay filed a motion for reconsideration, which was denied.
I. Waiver of the Right to Rescind under RCW 64.06.040
Azoulay contends that the trial court erred by holding that she waived any defects that were unknown to the seller when she agreed to waive the inspection contingency. She asserts that because she did not waive her right to receive a seller's disclosure statement, she was entitled to the remedies provided in RCW 64.06.040. Thus, she argues, she had a right to receive an amended disclosure statement identifying undisclosed defects and a right to rescind if the seller failed to correct those defects.
This court reviews summary judgment orders de novo and engages in the same inquiry as the trial court. We will affirm a summary judgment if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. We construe the facts and all reasonable inferences from those facts in the light most favorable to the nonmoving party.
Sheikh v. Choe, 156 Wn.2d 441, 447, 128 P.3d 574 (2006).
CR 56(c); Huff v. Budbill, 141 Wn.2d 1, 7, 1 P.3d 1138 (2000).
Hertog v. City of Seattle, 138 Wn.2d 265, 275, 979 P.2d 400 (1999).
We resolve these issues by examining the terms of the agreement and RCW 64.06.040, which provides a right of rescission based on the later discovery of undisclosed defects. The purchase and sale agreement provides that if the buyer fails to complete the purchase "without legal excuse," she forfeits the earnest money. Under RCW 64.06.030, the buyer has a statutory right to rescind the agreement within three days of receiving the seller's disclosure statement. The buyer also has a statutory right to rescind under RCW 64.06.040 based on the discovery of undisclosed defects that were not known to the seller when she completed the disclosure statement. Under that statute, once the seller is aware of additional information or an adverse change occurs that renders the disclosure statement inaccurate, she must either (1) provide an amended disclosure statement, or (2) take "whatever corrective action is necessary so that the accuracy of the disclosure is restored, or the adverse change is corrected," at least three days before the closing date. If the seller provides an amendment, the buyer may rescind the agreement within three business days of receiving the amendment. If the seller does not provide an amendment, the buyer may rescind if the seller fails to take corrective action at least three days before the closing date.
This provision states in full:
The parties agree that RCW 64.04.005 shall apply and that in the event the Buyer fails, without legal excuse, to complete the purchase of the Property, then that portion of the Earnest Money which does not exceed 5% of the Purchase Price shall be forfeited to the Seller as the sole and exclusive remedy available to Seller for such failure.
Azoulay asserts that once she invoked her right to receive a disclosure statement, she was entitled to rescind under RCW 64.06.040 based on the discovery of additional defects that were not identified in the disclosure statement. But by waiving the inspection contingency, Azoulay waived this rescission right: She agreed not to condition the purchase on defects that were unknown to the seller and discovered afterward during an inspection of the property. The inspection contingency waiver expressly states that Azoulay agreed to waive her right "to condition the closing of this Agreement on the results of [an] inspection?." Thus, even though RCW 64.06.040 provided her a right to rescind based on the discovery of undisclosed defects that were unknown to the seller, she chose to waive it. Therefore, by the terms of the agreement, she could not rescind the agreement based on defects that were unknown to the seller when she prepared the disclosure statement and could have been discovered by an inspection.
Gunn also refers to a section of the agreement that states: "Buyer waives the right to receive an amended Real Property Transfer Disclosure Statement . . . based on conditions identified in any inspection." But this was part of the inspection contingency portion to which she did not agree and did not check off. Although this specific section was not actually crossed out with "waived" written across it like the rest of the inspection contingency section on the previous page, it was clearly part of this section — it was just continued on the next page.
Contrary to Azoulay's assertions, this waiver is not somehow inconsistent with or invalidated by the fact that she did not waive receipt of a disclosure statement. Rather, by requiring Gunn to disclose all known defects, the disclosure statement served to limit the waiver to unknown defects that were discoverable by an inspection. While Azoulay is correct that she did not expressly waive her right to receive an amended disclosure statement or to require corrective action under RCW 64.06.040 for defects discovered after she received the disclosure statement, these rights were without the remedy of rescission. By waiving the inspection contingency, she waived her right to rescind if the seller failed to comply with these requirements.
II.Rescission Based on Discovery of the Encroachment
Azoulay argues that she had a right to rescind under RCW 64.06.040 based on her discovery of the property encroachment because Gunn failed to provide an amended disclosure statement identifying this defect and failed to correct this defect. Gunn did not identify the encroachment in her disclosure statement, but she provided a letter explaining the encroachment two days after she completed the disclosure statement. Azoulay contends that because this letter did not constitute an amended disclosure statement under the statute and did not correct the defect, she was entitled to rescind under RCW 64.06.040.
The disclosure statement contains no answers at all from Gunn to the question about encroachments; she did not check any of the boxes marked "no," "yes," or "don't know" to answer this question. Presumably she left this blank because the parties had already discussed this issue and Gunn had agreed to provide an explanation.
As discussed above, the inspection waiver applied only to those undisclosed defects that were unknown to the seller and discoverable by an inspection. Thus, it did not apply to the encroachment because it was an undisclosed defect known to the seller when she completed the disclosure statement. But Azoulay still did not have a right to rescind under RCW 64.06.040 because the encroachment was neither a defect that was unknown to Gunn when she completed the disclosure statement nor an adverse change occurring after she completed the disclosure statement.
This statutory right to rescind applies only if, after the date on which a seller completes a disclosure statement, "the seller becomes aware of additional information, or an adverse change occurs which makes any of the disclosures made inaccurate." The encroachment was not a condition of which Gunn became aware after she completed the disclosure statement nor was it an adverse change occurring after she completed the disclosure statement; this was a fact known to her for 35 years. Thus, the rescission remedy provided in RCW 64.06.040 was not available for nondisclosure of this fact. Consequently, we need not address Azoulay's argument that Gunn did not properly comply with the statute.
11RCW 64.06.040.
Even if Azoulay had a right to rescind under RCW 64.06.030, she failed to do so within the statutory time period. That statute provides that the buyer may rescind within three days of receiving the disclosure statement. She received the disclosure statement on July 31 and had until August 3 to rescind. But she did not do so, even though she had received Gunn's letter explaining the encroachment by this date. In fact, she chose to do nothing with that information until almost a month later when on August 29, she had her attorney notify Gunn that she wished to terminate the agreement. Because she had no "legal excuse" to rescind based on nondisclosure of the encroachment, the trial court properly ruled that she must forfeit the earnest money.
III. Rescission Based on Discovery of the Gas Leak
Azoulay contends she had a right to rescind because Gunn failed to provide an amended disclosure statement about the gas leak and did not take timely corrective action to repair it. It is undisputed that Gunn had no knowledge of the gas leak when she completed the disclosure statement and that it was investigated and confirmed by the gas company during three separate visits to the property. Each time Azoulay reported that she smelled gas around the property, the gas company inspected the property and confirmed the leak.
While these were not "official" property inspections, Azoulay's detection of the gas smell and the gas company's investigations of the smell were de facto inspections. They served the purpose of an inspection, which was to look more closely at the property to determine if it had any additional defects. As such, Azoulay did not have a right to rescind the agreement based on Gunn's failure to correct the gas leak because this was a condition unknown to Gunn and discovered by an inspection. By seeking to terminate the agreement based on this discovery, Azoulay sought to condition the purchase on the results of an inspection, a right she explicitly waived in the inspection contingency waiver.
Azoulay challenges the trial court's finding that the gas leak was a defect that would have been discoverable by an inspection. She contends that the gas leak was a condition that did not exist at the time Gunn provided the disclosure statement but arose after mutual acceptance and might not have been discoverable by an inspection. Thus, she argues, the inspection waiver did not apply and she had a right to rescind under RCW 64.06.040 because Gunn did not take timely corrective action to repair the leak.
We disagree. The fact that the leak may have arisen after mutual acceptance did not somehow trigger her statutory right to rescind when she had already waived that right. Azoulay's inspection contingency waiver covered conditions discoverable by an inspection and was not limited to those that existed at the time of mutual acceptance. While the waiver states that the buyer agrees to buy the property "in its present condition," it also states that the buyer agrees not to condition the purchase on the results of an inspection. It did not limit the inspection period, which could occur anytime within the contingency period. The waiver therefore covered any defects that would have been discovered by an inspection, regardless of when the defect arose. Azoulay waived her right to rescind if an inspection would have revealed the gas leak, regardless of when the leak originated.
Azoulay contends that "[t]here is no way to know whether the gas leak, which did not occur until after mutual acceptance and after completion of the initial Disclosure Statement, would have even arisen during an inspection contingency period." Azoulay's suggestion that the leak did not exist at the time of mutual acceptance and might not have been detected by an inspection is speculative and unsupported by the record. The record indicates that she first noticed the gas leak on August 3. Thus, it would have been discoverable by at least that date, which was only three days after mutual acceptance and presumably would have been within the inspection contingency period had there been one.
There was no specified time period here because Azoulay waived inspection. Her argument on this point is thus purely speculative.
Contrary to Azoulay's assertions, this is not conclusive evidence that the leak did not exist before August 3, and there is no evidence in the record to indicate that it did not exist at the time of mutual acceptance. Rather, the record indicates only that there was no inspection before that time. In any event, the leak was in fact revealed during Azoulay's and the gas company's inspections of the property, amply demonstrating that this defect was discoverable by an inspection. Viewing these facts in the light most favorable to the nonmoving party, the court correctly concluded that there was sufficient evidence to establish that an inspection would have revealed the leak and Azoulay therefore could not rescind on this basis.
Thus, because the rescission remedy under RCW 64.06.040 was not available to Azoulay, we need not address whether Gunn's efforts to repair the gas leak amounted to corrective action under the statute. Those efforts, while admirable, were not required. Azoulay's rescission on this basis was also "without legal excuse."
IV. Rescission Based on Discovery of the Dry Rot
Azoulay contends that she had a right to rescind based on the discovery of the dry rot because Gunn failed to provide an amended disclosure statement identifying this condition and did not take corrective action to repair this condition. She maintains that by requesting a disclosure statement, she did not waive her rights to receive an amended disclosure statement and to rescind if Gunn failed to take corrective action by three days before closing. We disagree.
Like the gas leak, Gunn did not know about the dry rot at the time she provided the disclosure statement and it was only discovered by Azoulay's later inspection of the property. Azoulay discovered the dry rot sometime after mutual acceptance, when her contractor told her about it. The contractor's visit unquestionably involved an inspection of the property, as the purpose of his visit was to assess it for potential improvements. Gunn asserted that she had no knowledge of the dry rot, even after she had the door replaced. There is nothing in the record to dispute this assertion except an unsupported speculation by Azoulay's first attorney that Gunn "tactically positioned" furniture to conceal the dry rot.
As discussed above, Azoulay waived her right to rescind based on discovery of a defect that was unknown to the seller at the time she completed the disclosure statement and was discovered by an inspection. Thus, she did not have a right to rescind under RCW 64.06.040 when Gunn failed to provide a disclosure statement identifying the dry rot and failed to correct this defect. Once again, her attempt to rescind on this basis was "without legal excuse."
V. Propriety of Trial Court's Grant of Summary Judgment in Favor of Gunn
Azoulay argues that the trial court erred by granting summary judgment for Gunn because she did not properly note a motion for summary judgment. We disagree. As Gunn points out, a court may grant summary judgment for a nonmoving party when it would result in either dismissing the moving party's suit or awarding relief sought by or uncontestedly due the non-moving party.
Leland v. Frogge, 71 Wn.2d 197, 201, 427 P.2d 724 (1967) (citing Rubenser v. Felice, 58 Wn.2d 862, 365 P.2d 320 (1961); 4 Orland, Wash. Prac. 66 (1966)).
In her response to Azoulay's motion for summary judgment, Gunn requested the following relief: "An order of the Court denying the Co-Defendant Paula Azoulays' Motion for Summary Judgment," "An order of the court awarding the disputed earnest money to Co-Defendant Conyetta Gunn," and "An order of the Court awarding Defendant Gunn her costs and attorney's fees under paragraph (q) of the real estate purchase and sale agreement." The trial court's order on summary judgment stated: "Defendant Gunn is entitled to judgment directing the clerk of the court to disburse the funds deposited by the interpleader defendant Azoulay to her, together with her reasonable attorneys' fees and costs." Thus, Gunn requested the relief that was granted by the trial court's ruling. It was also relief "uncontestedly due," because the purchase and sale agreement specifically provided that the parties agreed that if the buyer failed to complete the purchase without legal excuse, the earnest money "shall be forfeited to the seller as the sole and exclusive remedy" and attorney fees and costs awarded to the prevailing party. The trial court therefore properly granted judgment for Gunn.
VI. Motion for Reconsideration
Finally, Azoulay assigns error to the trial court's denial of her motion for reconsideration. But she did not brief the issue or cite any legal authority in her opening brief, despite her assertion in her reply brief that she "extensively briefed" the issue. Presumably, this meant she did so by virtue of her argument on the trial court's denial of her summary judgment motion. But her opening brief does not even discuss the grounds she argued in her motion for reconsideration; it simply refers to the trial court's denial of her motion.
A party abandons an issue on appeal by failing to brief it. This court will not consider an issue absent argument and citation to legal authority. When a party presents no argument in its opening brief on an assignment of error, that assignment of error is waived. "An issue raised and argued for the first time in a reply brief is too late to warrant consideration." Thus, we do not consider this issue.
State v. Wood, 89 Wn.2d 97, 99, 569 P.2d 1148 (1977); Talps v. Arreola, 83 Wn.2d 655, 657, 521 P.2d 206 (1974).
State v. Dennison, 115 Wn.2d 609, 629, 801 P.2d 193 (1990).
Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 809, 828 P.2d 549 (1992).
Id. (citing In re Marriage of Sacco, 114 Wn.2d 1, 5, 784 P.2d 1266 (1990)).
Nonetheless, it is without merit: The motion to reconsider raised the same issues already disposed of in this appeal.
VII. Attorney Fees
While Gunn does not cite RAP 18.1 in her request for attorney fees, the parties agree that the purchase and sale agreement authorizes attorney fees to the prevailing party in a suit "concerning this Agreement." Thus, because Gunn is the prevailing party, we affirm the trial court's award of attorney fees and award her attorney fees on appeal contingent on her complying with RAP 18.1.
WE CONCUR: