Opinion
No. 50768-1-I consolidated with No. 51060-6-I.
Filed: September 29, 2003. DO NOT CITE. SEE RAP 10.4(h). UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 00-2-30633-4. Judgment or order under review. Date filed: 06/14/2002.
Counsel for Appellant(s), Michael David Brandt, Durham Brandt PLLC, 1524 Alaskan Way Ste 100, Seattle, WA 98101-3531.
Marja E. Selmann, Durham Brandt PLLC, 1524 Alaskan Way Ste 1000, Seattle, WA 98101-3531.
Counsel for Respondent(s), Larry James Landry, Attorney at Law, 1820 E Union St, Seattle, WA 98122-2832.
Larry Lackie, the seller of a house, appeals the trial court's decision to require specific performance of a residential purchase and sale agreement with the buyer Renee Ellis. Lackie argues that his attorney did not have authority to modify the terms of the agreement and the trial court's decision was not supported by substantial evidence. He also challenges the trial court's award of attorney fees to Ellis and denial of his CR 60 motion to amend the judgment. We affirm the trial court.
FACTS
In May 1999, Lackie agreed to lease a house he owned to Ellis. In January 2000, Lackie and Ellis entered into a lease agreement with an option to purchase with seller financing. In May 2000, Ellis exercised the option and she and Lackie signed a purchase and sale agreement (the agreement).
The agreement contains four terms that are pertinent on appeal. First, the closing date was July 31, 2000. Second, there was a restriction on the source of funds that could be used by Ellis:
Buyer represents that Buyer has sufficient funds to close this sale in accordance with this Agreement and is not relying on any contingent source of funds or gifts, except to the extent otherwise specified in this Agreement.
Exhibit 9.
Third, the promissory note included a 'no encumbrances' clause: The property securing this note may not be sold, transferred, or further encumbered. Fourth, Ellis's attorney's office was named as the closing agent.
The promissory note was incorporated into the purchase and sale agreement as an addendum.
Exhibit 9.
When the parties entered into the lease and the agreement, Lackie was represented by Stuart Carson and Ellis was represented by Larry Landry. Sometime after June, Carson withdrew as Lackie's attorney. Lackie met with a new attorney, Peter Perron, on Thursday, July 27, a few days before the scheduled July 31 closing date.
On Friday, July 28, Perron contacted Landry. During that conversation, Landry told Perron that Ellis needed to extend the July 31 closing date, and that she intended to obtain funds for the down payment from a commercial lender and use the property as collateral. Because these changes required modification of the agreement, Perron immediately called Lackie. Lackie told Perron he agreed to changing the closing date but wanted to think about the other changes over the weekend. According to Perron, Lackie did not have a 'special objection to the idea or the concept of {Ellis} getting a loan for the down payment because, after all, why should he care where the cash came from as long as he got the cash at closing.'
Crown Finance Company of Renton, Inc. (Crown Finance).
Report of Proceedings (RP) (5/13-14/02) at 37-38.
In an effort to facilitate the closing, Perron then drafted Addendum B and a revised promissory note. Addendum B changed the closing date from Monday, July 31 to Friday, August 4 and stated that 'the Deed of Trust referenced in Paragraph 5 of the Purchase and Sale Agreement shall have priority over any and all other subsequent liens on the subject property.' The revised promissory note did not include the no encumbrances provision that was in the earlier version. Perron faxed a cover letter and these documents to Landry's office at the end of the day on July 28. The cover letter stated:
Exhibit 1.
Please let me know if this is OK. We conceded to your requests, but I added a lien priority provision to the Deed of Trust, and made the note a 30 year term.
Exhibit 1.
On Monday, July 31, Perron attempted to contact Landry but was only able to reach his assistant, Vanessa Gray Douglas. After that conversation, Perron sent a second letter to Landry confirming his representation of Lackie and requesting the closing documents:
Please be advised that I now represent Dr. Lackie. Vanessa confirmed to me verbally today your client's acceptance of the Addendum 'B' to the Purchase and Sale Agreement.
Therefore, please provide me with the closing documents for my client to sign prior to Friday. I will then have him sign his documents here and return them to your office by Friday afternoon.
Exhibit 3.
On Wednesday, August 2, Perron told Douglas that Lackie had decided not to go forward with the closing because he could not agree to the changes. Despite Lackie's decision, Douglas sent the closing documents to Perron the next day because '{e}ven though he had said they weren't going to follow through with the transaction we felt it was better to send the documents over so that would {sic} we were complying with our side of the transaction.'
RP (5/13-14/02) at 212.
On August 4, Perron sent a letter to Landry reiterating Lackie's unwillingness to agree to the new terms and informing him that Ellis was in default:
The above-referenced Purchase Sale Agreement did not close on July 31st, as stated in the above-referenced contract. While Vanessa of your office confirmed to me verbally your client's consent to my proposed Addendum 'B' to the Purchase and Sale Agreement, after discussing the matter further with my client, he is not willing to agree to the new terms. Nor is he willing to participate in any way with your client's attempted financing of the remainder of the downpayment {sic}.
Therefore, the above referenced contract, as written, is now technically in default.
Exhibit 4.
After the transaction failed to close, Ellis continued to try to reach an agreement with Lackie. Lou Berg of Crown Finance contacted Perron in an attempt to convince him that Lackie should agree to Ellis's terms. On August 9, Landry's office sent Perron a revised Addendum B that extended the closing date to Friday, August 11 and eliminated Ellis's request to encumber the property. After consulting with Lackie, Perron rejected this proposal and asked Ellis to vacate the house. Ellis remained in the house and did not pay rent for August or September.
In early September, Lackie served Ellis with a notice to pay rent or vacate. When Ellis did not pay rent or vacate, Lackie filed an unlawful detainer action in December and the court scheduled a show-cause hearing. Ellis answered the unlawful detainer action and filed counterclaims. Ellis's counterclaims alleged that she was entitled to possession of the property pursuant to the purchase and sale agreement and that Lackie had 'either negligently or intentionally engaged in outrageous conduct which caused severe emotional distress.' At the show-cause hearing, the trial court concluded that Ellis was in unlawful detainer, directed the clerk to issue a writ of restitution and ordered Ellis to pay back rent for August through December 18, 2000. The court certified Ellis's counterclaims for trial and issued a case scheduling order. Lackie then filed a motion for summary judgment on Ellis's counterclaims.
Clerk's Papers (CP) at 16.
The court also awarded Lackie his attorney fees and costs. The amount owed on the unlawful detainer judgment was paid into the court and disbursed to Lackie in January 2001. The record indicates that Ellis continued to pay $1000 per month in rent.
Enforcement of the writ of restitution was stayed pending the trial.
The court granted summary judgment on the tort claims, but denied summary judgment on the breach of contract claim.
At the trial on Ellis's breach of contract claim, the court found that she was able to obtain the funds necessary to close and concluded that the transaction failed to close solely because of Lackie's breach of the agreement. At Lackie's request, the court ordered an accounting for the payments made by the parties. On June 14, 2002, the trial court ordered specific performance of the June 2000 agreement and the July 28, 2000 Addendum B. The court's order provided that the new closing date was July 1, 2002 and that Ellis was required to pay $73,377.81 to Lackie at closing.
The court also awarded attorney fees and costs of $23,688.75 to Ellis. Ellis was unable to obtain financing to purchase the house by July 1, 2002. On July 9, Lackie demanded that she vacate the house. Ellis vacated the property as requested. Lackie filed a motion to amend the judgment. He argued that Ellis's inability to obtain financing by July 1, 2002 was new evidence that showed she did not have the funds necessary to close in July 2000 and that she made misrepresentations at trial. Lackie also argued that Ellis's failure to perform made specific performance inequitable. The trial court denied Lackie's motion. Lackie appeals the trial court's decision to order specific performance. He also appeals portions of the trial court's attorney fee award to Ellis and its denial of the motion to amend the judgment.
CP at 277-300, 313-329.
DISCUSSION Perron's Authority
Lackie argues that the changes Perron made to the agreement relinquished a substantial right and that Perron did not have the authority to alter the terms of the agreement. Addendum B, drafted by Perron, removed the requirement that Ellis make the down payment from her own funds and substituted a lien priority provision for the former provision that prohibited further encumbrances. The trial court ruled that Perron's changes did not constitute the surrender of a substantial right and Lackie was bound by the terms in Addendum B. '{A}n attorney is without authority to surrender a substantial right of a client unless special authority from his client has been granted him to do so.' Graves v. P.J. Taggares Co., 94 Wn.2d 298, 303, 616 P.2d 1223 (1980), (quoting 30 A.L.R.2d 944 sec. 3 (1953)). Whether a surrendered right is 'substantial' and requires special authorization is reviewed de novo. See Graves, 94 Wn.2d at 303-305. Lackie relies on Budlong v. Budlong, 31 Wn. 228, 71 P. 751 (1903), to argue that the modifications to the agreement surrendered a substantial right and are as significant as the waiver of a security interest in that case.
Washington courts have found that substantial rights were compromised in a variety of settings: settlement of a cause of action, Morgan v. Burks, 17 Wn. App. 193, 563 P.2d 1260 (1977), Timm v. Timm, 34 Wn. 228, 75 P. 879 (1904); failure to record testimony necessary for review in a parental deprivation proceeding, In re Coggins, 13 Wn. App. 736, 537 P.2d 287 (1975); stipulation that a client is mentally ill without a hearing, In re Houts, 7 Wn. App. 476, 499 P.2d 1276 (1972); stipulation to entry of contempt order against the client, In re Marriage of Maxfield, 47 Wn. App. 699, 737 P.2d 671 (1987); waiver of request for jury trial, Graves v. P.J. Taggares, 94 Wn.2d 298, 616 P.2d 1223 (1980); waiver of right to produce medical evidence where large variations in damages depend upon testimony, Id.; and stipulation to vicarious liability (the issue on which liability rested), Id., all constitute surrender of a substantial right. In a contract setting, waiver of security for payment of monthly sums, Budlong v. Budlong, 31 Wn. 228, 71 P. 751 (1903), and surrendering of property without securing rescission of a contract to purchase, Barton v. Tombari, 120 Wn. 331, 207 P. 239 (1922), surrendered a substantial right.
In Budlong, as part of a prior dissolution between the parties, the wife quitclaimed her interest in a house to the husband in exchange for an agreement that she have:
. . . a life estate in the premises if she remained unmarried, subject, only, to the condition that if {the husband}, the holder of the fee, should sell the property, she would surrender possession, if he secured her the monthly payments of the monthly rental value of the premises.
Budlong, 31 Wash. at 235 (emphasis added). When the husband sold the property, the attorneys agreed on a monthly sum to be paid by the husband, and the former wife agreed to that sum. The former wife's attorney also consented to release the husband from having to provide security for the monthly payments. The Court concluded that there was 'no testimony that {the former wife} authorized the waiving of security for the payment of the monthly sums as they should mature.' Budlong, 31 Wash. at 236. The Court also stated that, 'without special authority from {the client} to waive the giving of the security which her written contract required, her attorney could not waive so valuable a contract right.' Id.
The present case is distinguishable from Budlong. Unlike Budlong, the security provision in favor of Lackie was not waived; it was modified to allow additional but secondary encumbrances. Because the terms of Addendum B provided that Lackie's lien would have priority, the effect is not significant. While the allowance of additional liens on property can compromise a primary lien-holder's interest, where priority is preserved the diminishment in value is not a surrender of a substantial right. Similarly, the modification to allow Ellis to use contingent funds for the down payment did not surrender a substantial right. Perron's testimony indicated that Lackie was not particularly concerned about the source of the money he received at closing. And because of Lackie's lien priority, no default or foreclosure action on any subsequent encumbrance could affect the deed of trust. Furthermore, based on the trial court's findings there was no uncertainty that Ellis would be able to obtain the funds necessary to close. We agree with the trial court that Perron's changes to the agreement did not surrender a substantial right of Lackie's.
Lackie argued that '{t}he change in the 'no further encumbrance' provision meant that any default by Ms. Ellis in her payments on the down payment loan could involve Dr. Lackie in a foreclosure action brought by the holder of the junior deed of trust.' Appellant's Brief (App. Br.) at 29.
The prohibition of additional encumbrances could in some situations be a substantial right that could not be surrendered without an explicit grant of authority.
Substantial Evidence of Ellis's Access to Funds
The trial court's conclusion that Lackie's breach was the sole reason the transaction failed to close in July 2000 was based in part on its finding that during '{t}he week of July 31, 2000, Ms. Ellis was prepared to sign documents and bring in funds sufficient to close the purchase of the subject property,' and further that 'from at least July 28, 2000, Lou Berg, of Crown Finance Company of Renton, Inc., was ready to fund this transaction and was waiting for the transaction to close.' Lackie argues these findings are not supported by substantial evidence. We disagree.
CP at 227.
CP at 228.
When the trial court weighs the evidence, our review is limited to determining whether substantial evidence supports the trial court's findings of fact. Ridgeview Properties v. Starbuck, 96 Wn.2d 716, 719, 638 P.2d 1231 (1982). 'Substantial evidence is evidence in sufficient quantum to persuade a fair-minded person of the truth of the declared premise.' Id. Crown Finance loan officer Lou Berg testified that although Ellis's initial loan application was denied, eventually she qualified for a loan of up to $33,000. According to Berg, there were two ways to structure the loan:
RP (5/13-14/02) at 94, 96. Ellis also testified that Crown Finance had approved her loan for a down payment and that Crown Finance was willing to make the loan with or without encumbering the property being purchased.
the loan could be secured with the property being purchased or with Ellis's parents' property. Lackie argues that because Crown did not comply with RCW 31.04.155 and RCW 31.04.102, two provisions of the Consumer Loan Act, Berg's testimony is not credible and is 'unsupported and self-serving.' Under RCW 31.04.155, a lender is required to keep documents related to a loan. Lackie claims that Crown did not have any documents regarding Ellis's prospective loan. But it does not appear from the record that Lackie asked Berg to produce any of these documents, and Berg testified that '{i}n this particular case I kept most of the documents I felt was {sic} related to keep {sic} in the file.' Under RCW 31.04.102, lenders must make certain disclosures to their borrowers about the terms of a loan. There is no dispute that Crown did not provide a written disclosure to Ellis about the loan. Lackie argues that Crown Finance was therefore not prepared to loan her money. The trial court considered and rejected this argument because it found Berg's testimony that Crown would loan her money more credible. 'The trial court's credibility findings are not subject to review on appeal.' Dewberry v. George, 115 Wn. App. 351, 362, 62 P.3d 525 (2003). Substantial evidence supported the trial court's findings that Crown Finance was going to loan Ellis money and that she had the funds necessary to close.
RP (5/13-14/02) at 95.
App. Br. at 40.
The only document from Crown Finance that appears in the record is one that was faxed to Perron's office on August 3, 2000, as part of the closing documents. Its terms are consistent with the loan arrangements described by Berg and Ellis.
RP (5/13-14/02) at 104.
(1) For all loans made by a licensee that are not secured by a lien on real property, the licensee must make disclosures in compliance with the truth in lending act.
(2) For all loans made by a licensee that are secured by a lien on real property, the licensee shall provide to each borrower within three business days following receipt of a loan application a written disclosure containing an itemized estimation and explanation of all fees and costs that the borrower is required to pay in connection with obtaining a loan from the licensee.
(3) In addition, for all loans made by the licensee that are secured by a lien on real property, the licensee must provide to the borrower an estimate of the annual percentage rate on the loan and a disclosure of whether or not the loan contains a prepayment penalty within three days of receipt of a loan application.
Motion to Amend the Judgment
Lackie claims the trial court erred in denying his CR 60(b) motion to amend the judgment. Lackie asked the trial court to amend the order and vacate the award of attorney fees based on CR 60(b)(3), (4), (6), and (11) because Ellis's inability to close in July 2002 was new evidence that showed she did not have the funds necessary to close in July 2000 and that she had made misrepresentations at trial. He also argued specific performance was inequitable.
We review a trial court's denial of a Civil Rule 60(b) motion to amend or vacate a judgment for abuse of discretion. Scanlon v. Witrack, 110 Wn. App. 682, 686, 42 P.3d 447, rev. denied, 147 Wn.2d 1024 (2002). The trial court's discretion is 'abused' when exercised on untenable grounds or for untenable reasons. Scanlon v. Witrack, 110 Wn. App. at 686. CR 60(b)(3) provides for relief from final judgment on the basis of '{n}ewly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under rule 59(b).' CR 60(b)(3) only applies to evidence in existence at the time an order was entered. In re Marriage of Knutson, 114 Wn. App. 866, 872, 60 P.3d 681 (2003). Ellis's inability to obtain funds to close the transaction in 2002 is not evidence that could have been discovered when the trial court entered its June 14, 2002 order. CR 60(b)(4) provides for relief from a judgment if there is fraud, misrepresentation or other misconduct by an adverse party. Under In re Estate of Toth, 91 Wn. App. 204, 211, 955 P.2d 856 (1998) (quoting, Lindgren v. Lindgren, 58 Wn. App. 588, 596, 794 P.2d 526 (1990) (emphasis omitted)), 'the moving party must establish that the adverse party's fraudulent conduct prevented the moving party from 'fully and fairly presenting its case or defense'.'
A party attacking a judgment under 60(b)(4) must establish the fraud, misrepresentation, or other misconduct by clear and convincing evidence. Lindgren, 58 Wn. App. at 596. While Lackie argued that Ellis's inability to close in 2002 suggested that she made misrepresentations during trial, he neither cited nor offered any evidence to support this argument. Lackie has not met his burden under CR 60(b)(4). CR 60(b)(6) provides for relief where the judgment 'has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application.' 'This provision of CR 60(b) allows the trial court to address problems arising under a judgment 'where a change in circumstances after the judgment is rendered makes it inequitable to enforce the judgment.' Pacific Security Companies v. Tanglewood, Inc., 57 Wn. App. 817, 820, 790 P.2d 643 (1990), quoting Metropolitan Park Dist. of Tacoma v. Griffith, 106 Wn.2d 425, 438, 723 P.2d 1093 (1986). In the motion to amend the judgment, neither party asked that the real estate transaction be specifically enforced. Therefore, when the court considered the motion, the judgment did not have prospective application and CR 60(b)(6) did not apply. Pacific Security Companies, 57 Wn. App. at 820.
Finally, CR 60(b)(11) allows a trial court to amend a judgment for 'any other reason justifying relief from the operation of the judgment.' Below and on appeal, Lackie cites CR 60(b)(11) but presents no argument.
Therefore, we do not address CR 60(b)(11). R.A. Hanson Co., Inc. v. Magnuson, 79 Wn. App. 497, 505, 903 P.2d 496 (1995). None of the CR 60(b) sections Lackie relied on provided an appropriate basis for relief from the judgment. The trial court's denial of Lackie's 60(b) motion was not an abuse of discretion.
Attorney Fee Award
Finally, Lackie contends that the trial court's attorney fee award is not reasonable because Ellis was not the prevailing party on all the issues in the litigation. Specifically, Lackie challenges the inclusion of fees for: (1) hours spent opposing the unlawful detainer action; (2) half of the time spent opposing Lackie's summary judgment motion; (3) time spent opposing Lackie's motion for an accounting, and (4) the fees for Landry's appearance as a witness at his deposition because Landry was the escrow agent in addition to being Ellis's attorney. Under RCW 4.84.330, where a contract includes a provision that attorney's fees and costs incurred to enforce the contract shall be awarded, the prevailing party is entitled to reasonable attorney's fees and costs.
RCW 4.84.330 provides in relevant part:
In any action on a contract or lease where such contract or lease specifically provides that attorney's fees and costs, which are incurred to enforce the provisions of such contract or lease, shall be awarded to one of the parties, the prevailing party, whether he is the party specified in the contract or lease or not, shall be entitled to reasonable attorney's fees in addition to costs and necessary disbursements.
As used in this section 'prevailing party' means the party in whose favor final judgment is rendered.
Paragraph q of the Purchase and Sale Agreement provides: If Buyer or Seller institutes suit against the other concerning this Agreement the prevailing party is entitled to reasonable attorneys' fees and expenses. The prevailing party is the one who receives an affirmative judgment in its favor. Riss v. Angel, 131 Wn.2d 612, 633, 934 P.2d 669 (1997). If neither party wholly prevails, the prevailing party is the one who substantially prevails and that determination depends on the relief afforded. Mike's Painting, Inc. v. Carter Welsh, Inc., 95 Wn. App. 64, 68, 975 P.2d 532 (1999). We review a trial court's determination of reasonable attorney's fees for manifest abuse of discretion. Rainier Nat. Bank v. Lewis, 30 Wn. App. 419, 424, 635 P.2d 153 (1981).
The trial court awarded Ellis her attorney fees 'because {she was} the prevailing party.' Lackie claims that the fee award 'included compensation for attorney's fees incurred in connection with issues on which Ms. Ellis was not the prevailing party.' But a party need not prevail on every issue to be deemed the 'prevailing party' for the purposes of an attorney fee award. Mike's Painting, 95 Wn. App. at 68. The crux of the dispute between Lackie and Ellis was breach of the agreement. Ellis successfully brought a breach of contract claim and was awarded the relief she sought, namely, specific performance of the agreement. And even if she did not prevail in every aspect of the case, she was the substantially prevailing party and was entitled to an award of attorney fees.
RP 6/4/02 at 18.
App. Br. at 46.
Lackie also argues that Ellis is not entitled to attorney's fees for the time Landry spent as a witness at his deposition because the deposition would not have been necessary if Landry had not 'made himself a witness by acting in two conflicting roles.' Lackie does not cite any authority to support his argument that the trial court abused its discretion by awarding fees for this time. And even if Landry had not been the escrow agent, he would attend the deposition of the escrow agent as Ellis's attorney.
See RAP 10.3(a)(5), State v. Lord, 117 Wn.2d 829, 853, 822 P.2d 177 (1991) (argument unsupported by legal authority will not be addressed on appeal).
Attorney Fees on Appeal
Ellis requests fees on appeal in her brief: '{b}ased upon the foregoing, the appellants {sic} appeal in this matter must be denied and respondent should be granted all costs and fees incurred herein.' This request is similar to Wilson Court Ltd. Partnership v. Tony Maroni's Inc., 134 Wn.2d 692, 710 fn. 4, 952 P.2d 590 (1998) where the party prevailing on appeal 'include{d} a request for attorney fees and costs in the last line of the conclusion of its Supplemental Brief, but {did} not include a separate section in its brief devoted to the fees issue as required by RAP 18.1(b).' As the Wilson court found, the briefing requirement is mandatory. Id., citing Phillips Bldg. Co. v. An, 81 Wn. App. 696, 705, 915 P.2d 1146 (1996). A party's failure to adhere to these requirements means that the fee request must be denied. Wilson Court Ltd. Partnership, 134 Wn.2d at 710 fn. 4.
Respondent's Brief at 26.
CONCLUSION
The modifications to the purchase and sale agreement were not substantial because Lackie's lien had priority. Further, the trial court's decision was supported by substantial evidence. The trial court did not abuse its discretion in denying Lackie's CR 60(b) motion or in awarding Ellis's attorney fees at trial. The trial court is affirmed and Ellis's request for attorney's fees is denied.
KENNEDY and COX, JJ., concur.