Opinion
No. 61649-8-I.
September 14, 2009.
Appeal from the Superior Court, King County, No. 06-2-05945-0, Laura Gene Middaugh, J., entered March 18, 2008.
Affirmed by unpublished opinion per Lau, J., concurred in by Becker and Leach, JJ.
This appeal involves a dispute that arose when Rexford Lawrence sought to exercise an option to purchase a condominium he had been leasing from Mary Fung Koehler. The trial court granted partial summary judgment for Lawrence after determining that Koehler breached the option agreement. Trial proceeded on the issue of damages, resulting in a judgment for Lawrence. Koehler appeals both decisions. We affirm in all respects.
FACTS
The following facts are undisputed. In early 1999, Rexford Lawrence was seeking a new residence. Mary Fung Koehler, a licensed real estate broker and Lawrence's friend, showed Lawrence available property in Woodinville, where Lawrence hoped to live. Lawrence had money for a down payment but was unable to obtain a mortgage to purchase a residence due to credit problems. Lawrence and Koehler found a condominium to purchase in Woodinville. Koehler agreed to purchase the condominium and lend her credit by taking out a mortgage in her name. Koehler would be the nominal purchaser, and Lawrence would occupy the condominium on a long-term lease with an option to purchase. To accomplish, this Lawrence and Koehler executed two contracts. First, on January 12, 1999, they executed a residential lease for 20 years. Lawrence agreed to pay rent equivalent to the monthly mortgage payments and all expenses, including homeowner dues, real estate taxes, and insurance. Lawrence made the payments to Koehler, who passed them through to the appropriate entity. Second, on March 3, 1999, the parties executed an option to purchase the condominium. Under the agreement, until February 28, 2019, Lawrence would have the option to purchase the property from Koehler by paying off all encumbrances and paying one-third of the net appreciation of the property, plus any advances Koehler made. The parties agreed at trial that Lawrence owed Koehler no advances. "Net appreciation" was defined as "the fair market value less purchase price, less acquisition costs, less costs of exercise of this option."
On March 4, 1999, Koehler's purchase of the condominium closed. The purchase price was $146,950, and Koehler's costs were $3,945.26. Lawrence provided the down payment of approximately $57,000. Koehler obtained a loan for $95,517. Koehler took title to the property and earned a commission of $4,408.50. Lawrence took possession of the property and lived there continuously until his death in 2008.
On September 22, 2005, Lawrence gave Koehler written notice of his intent to exercise the option to purchase and obtained an appraisal valuing the property at $230,000. Koehler rejected the appraisal, refused to comply with the terms of the written option, and demanded $50,000.
In February 2006, Lawrence filed a complaint for breach of contract, seeking specific performance or damages. Koehler answered the complaint, asserting that Lawrence had failed to maintain insurance on the condominium for the full term of his occupancy, thereby vitiating the option and affecting her bankruptcy filing as to other properties she owned. Koehler also alleged that she entered into the arrangement only to accommodate Lawrence and that she intended to be responsible for the mortgage for only two years. In this regard, Koehler raised a dispute regarding the source of the funds Lawrence used for the down payment. Koehler alleged that at the time of the purchase, Lawrence claimed the money came from his elderly aunt and that he was her only surviving heir. Koehler alleged that over the years she repeatedly asked Lawrence about his aunt, and he repeatedly lied that she was still living. In addition to denying her own breach of the option, Koehler alleged that Lawrence's conduct amounted to breach of contract, although she failed to denominate her allegations as counterclaims. Koehler sought a determination that the option was void and an award of damages.
Lawrence also alleged claims for promissory fraud, promissory estoppel, and violation of the Consumer Protection Act (CPA).
Koehler also alleged that Lawrence's conduct amounted to promissory fraud, promissory estoppel, and violation of the CPA.
Discovery proceeded. In response to interrogatories, Koehler answered that when she signed the lease and option, she was suffering from pain, memory loss, attention deficit, and other difficulties that affected her ability to freely and voluntarily enter the agreements. She also stated that in June 2005 during her bankruptcy proceeding, she first learned Lawrence had not purchased insurance on the interior of the condominium. Regarding the fair market value of the condominium as of September 22, 2005, Koehler answered, "Fair market value is willing buyer, willing seller, neither under compulsion to buy or sell. The market was rising at the time and still is."
Lawrence moved for summary judgment. For purposes of the motion, Lawrence conceded that he defaulted on the lease, but argued that the lease and the option to purchase were separate legal obligations and that his performance on the lease had no bearing on whether he was entitled to specific performance and/or damages for Koehler's breach of the option to purchase. He also argued that despite Koehler's assertions regarding her mental capacity and Lawrence's alleged lies about his aunt, Koehler raised no affirmative defenses such as duress or fraud that would allow her to avoid her contractual obligations, and that in any event, she long ago waived her right to avoid the contract.
Lawrence filed a motion for a protective order to preclude Koehler from demanding answers to questions regarding his social security number, his European travel over the last 15 years, personal and contact information about his former spouses from two prior marriages, both of which were dissolved before 1999, financial information related to the dissolutions, personal and contact information about his children, and his tax returns and other financial information since 1999. Lawrence argued that the information was personal and not relevant to the pending action. About the same time, Koehler filed a motion to compel Lawrence to answer her interrogatories. The trial court denied Koehler's motion to compel, granted Lawrence's motion for a protective order, and granted Koehler's request to continue the summary judgment hearing and trial date.
Koehler's motion to compel is not in the appellate record.
Koehler opposed summary judgment, arguing that the option to purchase was incomplete and unenforceable because it did not include a mechanism to determine fair market value and, thus, the purchase price. For the same reason, Koehler argued that specific performance was not an available remedy. In his reply, Lawrence conceded that he was not entitled to specific performance and sought only an award of damages. The trial court granted partial summary judgment for Lawrence. The court determined that the lease and option to purchase were separate and distinct legal obligations and that Lawrence's breach of the lease, if any, had no bearing on any determination regarding Koehler's liability for breach of her obligations under the option. The court also determined there was no factual basis for Koehler's alleged affirmative defenses of fraud, duress, and mental impairment and struck them. As to the option to purchase, the court further determined: Koehler breached her obligations under the option without legal excuse when she failed to honor Lawrence's September 22, 2005 notice of exercise; as of that date, Koehler was obligated to convey the property to Lawrence upon his payment of one-third of the property's net appreciation from the March 4, 1999 date of purchase to September 22, 2005. The net appreciation was to be calculated by deducting from the September 22, 2005 fair market value the original purchase price of $146,950.00, Koehler's costs of $3945.26 in acquiring the property, and costs incurred by the sale of the property from Koehler to Lawrence pursuant to exercise of the option. The court concluded that Koehler was liable to Lawrence for breach of the option and that Lawrence was entitled to damages in an amount to be determined at trial. The court dismissed all claims for specific performance and all counterclaims with prejudice, and thereafter denied reconsideration.
Trial commenced on the issue of damages before a different judge. The court found no factual support for Koehler's defense of mental impairment, noting that although Koehler was disorganized, for the most part she was competent, coherent, and able to present her case. The parties stipulated that as of September 22, 2005, the property had a fair market value of $270,000 and that its current value was $256,000. The court found that Koehler's sale costs of the property to Lawrence would have been $14,468 in expenses of both parties, $18,457.50 in Koehler's capital gains from the sale, $13,000 in income taxes Koehler incurred on the money Lawrence paid her; and $13,000 in management fees owed to Koehler. Based on the stipulation and formula set out in the option agreement and summary judgment order, the court found a net appreciation of $60,179.24.
Before findings and conclusions were entered, Lawrence moved to withdraw his stipulation to the costs associated with exercise of the option and to reopen the case for additional evidence on this issue. Koehler moved to set aside the summary judgment order, withdraw her stipulations to fair market value and costs, and to reopen the case as to fraud and misrepresentation. The court treated Koehler's motion as a CR 60 motion. The court denied both Lawrence's and Koehler's motions "for reasons stated on the record."
There is no record in this court of the hearing or the court's reasons.
Subsequently, the court entered findings of fact, conclusions of law, and judgment for Lawrence in the amount of $109,076.77 and thereafter denied Lawrence's motion for reconsideration.
Lawrence filed but later withdrew a notice of cross-appeal.
ANALYSIS
Koehler has raised 17 assignments of error and 13 issues. The bulk of her arguments are directed to the partial summary judgment order. We review an order of summary judgment de novo, engaging in the same inquiry as the trial court. Benjamin v. Wash. State Bar Ass'n, 138 Wn.2d 506, 515, 980 P.2d 742 (1999). Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c). Clements v. Travelers Indem. Co., 121 Wn.2d 243, 249, 850 P.2d 1298 (1993). We construe the facts and reasonable inferences in the light most favorable to the nonmoving party, Lipscomb v. Farmers Ins. Co. of Wash., 142 Wn. App. 20, 27, 174 P.3d 1182 (2007), but mere allegations or argumentative assertions will not defeat summary judgment. White v. State, 131 Wn.2d 1, 9, 929 P.2d 396 (1997).
Enforceability of the Option. Koehler contends that the option to purchase was invalid because it did not include a basis to determine fair market value and, therefore, the purchase price. Relying on Keystone Land Dev. Co. v. Xerox Corp., 152 Wn.2d 171, 94 P.3d 945 (2004), she contends that the option to purchase was no more than an unenforceable agreement to agree. Koehler's reliance on Keystone is misplaced, as it involved at most an implied agreement to agree. Keystone, 152 Wn.2d at 180.
An option to purchase real property is a contract in which the owner, in return for valuable consideration, agrees that another shall have the privilege of buying the property within a specified time and upon the stated terms and conditions. Valley Garage, Inc. v. Nyseth, 4 Wn. App. 316, 318, 481 P.2d 17 (1971). "Once the option is exercised, it becomes a contract of purchase and sale binding upon the parties." Valley Garage, 4 Wn. App. at 318. Accord, Turner v. Gunderson, 60 Wn. App. 696, 700, 807 P.2d 370 (1991). We follow the objective manifestation theory of contracts, looking for the parties' intent as objectively manifested rather than their unexpressed subjective intent. Hearst Commc'ns, Inc. v. Seattle Times Co., 154 Wn.2d 493, 503, 115 P.3d 262 (2005). Thus, we consider only what the parties wrote, giving words in a contract their ordinary, usual and popular meaning unless the agreement as a whole clearly demonstrates a contrary intent. Hearst Commc'ns, 154 Wn.2d at 504. There need only be reasonable certainty of terms for a manifestation of assent. Contract terms are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy. See Restatement (Second) of Contracts § 33 (1979).
A greater degree of certainty in terms is required in an action for specific performance than in an action for damages. Hedges v. Hurd, 47 Wn.2d 683, 289 P.2d 706 (1955); Valley Garage, 4 Wn. App. at 318-19. To obtain specific performance, a party must present clear and unequivocal evidence that leaves no doubt as to the terms of the contract. Paradiso v. Drake, 135 Wn. App. 329, 335, 143 P.3d 859 (2006) (citing Kruse v. Hemp, 121 Wn.2d 715, 722, 853 P.2d 1373 (1993)). Although Lawrence initially sought specific performance, he withdrew the request and instead argued only that he was entitled to damages for Koehler's breach. The option to purchase is enforceable if it provides a basis for determining the existence of a breach and for giving an appropriate remedy.
This standard is met. Under the agreement, Lawrence had 20 years to purchase the property from Koehler by paying off all encumbrances and paying one-third of the net appreciation of the property, i.e., fair market value less purchase price and defined costs. In September 2005 when Lawrence gave notice of his exercise of the option, a licensed appraiser valued the property at $230,000. Koehler objected to the appraisal on several grounds. She argued that she never agreed fair market value would be determined by appraisal and instead provided her own definition of fair market value as "willing buyer, willing seller, neither under a compulsion to buy or sell." This definition provides no basis for determining fair market value and appears contrary to the purpose of the option agreement. Although Koehler argued that the appraisal was too low and that in May 2005, the condominium was valued at $237,000, she provided no alternate appraisal. Her demand for $50,000 was similarly unsupported by evidence. Moreover, despite the earlier dispute over value, at trial Koehler and Lawrence stipulated that the fair market value of the property as of September 2005 was $270,000 and the present value was $256,000. The trial court did not err in finding the option to purchase enforceable.
Lawrence's Alleged Breach of the Lease. Koehler contends that Lawrence breached the lease by failing to obtain insurance on the condominium, thereby nullifying the option, and that the lack of insurance somehow affected a bankruptcy proceeding regarding other property Koehler owned. Koehler failed to support her argument with citations to the record or authority. We decline to consider it further. Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 809, 828 P.2d 549 (1992) (appellate court will not consider an assignment of error unsupported by citation to the record and citation of authority).
Koehler also contends that the trial court erred in finding that the lease and option are separate and legally distinct and that Lawrence's breach of the lease, if any, had no bearing on Koehler's liability for breach of the option to purchase. Koehler's only argument is that Lawrence drafted the option, identifying the parties as lessor/optionor and lessee/optionee and including a clause that if the option were exercised, the lease would terminate. Koehler has cited no authority in support of her argument that this language requires a determination that the lease and option are not separate. We decline to consider it further. Bohn v. Cody, 119 Wn.2d 357, 368, 832 P.2d 71 (1992) (appellate court will not consider inadequately briefed argument); Cowiche Canyon, 118 Wn.2d at 809.
Koehler's Motion to Compel. Koehler contends that the trial court erred in denying her motion to compel Lawrence to answer interrogatories directed to the addresses and phone numbers of his daughter and former wives to establish a possible basis for impeaching his statements about his aunt, his finances, and support enforcement proceedings.
Under CR 26(b)(1), parties are generally permitted discovery of any matter not privileged that appears reasonably calculated to lead to the discovery of admissible evidence. We review denial of a motion to compel for an abuse of discretion. Rhinehart v. Seattle Times Co., 51 Wn. App. 561, 574, 754 P.2d 1243 (1988). We need not consider Koehler's argument because her motion to compel is not in the record before us. Starczewski v. Unigard Ins. Group, 61 Wn. App. 267, 276, 810 P.2d 58 (1991) (appellant must provide an adequate record for review). Lawrence's motion for a protective order, however, is in the record. Even if we were to consider Koehler's argument, she has failed to demonstrate that the trial court abused its discretion in denying her motion to compel and granting Lawrence's motion for a protective order.
Misrepresentation, Fraud, and Mental Impairment. Koehler contends that the trial court erred in dismissing her affirmative defenses of misrepresentation, fraud, duress, and mental incapacity. Koehler argues that Lawrence lied about the state of his finances and the source of the money for the down payment, thereby fraudulently inducing her to agree to buy the condominium and lease it to him. She also contends that he lied when he represented he had obtained insurance on the condominium and continued to say that his aunt was still living. She further contends that she lacked the mental capacity to enter into the agreements due to long-standing mental impairment resulting from injuries.
Koehler's arguments fail. She failed to raise the defenses in her answer, and although the trial court thereafter denied Koehler's motion to amend without prejudice for failure to comply with CR 15, apparently Koehler never amended her answer. Moreover, as the trial court determined, Koehler provided no factual support for the defenses. On appeal, Koehler fails to support her arguments with citation to authority or cogent argument. We decline to consider the arguments further. Bohn, 119 Wn.2d at 368; Cowiche Canyon, 118 Wn.2d at 809.
If Koehler did file an amended answer, it is not in the record on appeal.
Conflicting Evidence. Koehler contends that the trial court improperly ignored conflicting evidence regarding her mental health, the loan officer's role in suggesting the agreements, representations regarding Lawrence's aunt, and the "fabricated" financial benefit to her from the agreements. Brief of Appellant, at 22. Again, Koehler fails to cite to the record or authority and fails to present cogent argument demonstrating that the alleged disputed facts have any bearing on issues regarding her breach of the option agreement.
Koehler's remaining contentions are directed to decisions made at trial on damages. Koehler contends that the court erred in not allowing evidence and refusing to consider issues resolved on partial summary judgment. The court treated Koehler's oral motion as a CR 60 motion to vacate, but found Koehler presented no evidence warranting relief under CR 60. There was no error. See Clausing v. Kassner, 60 Wn.2d 12, 18-19, 371 P.2d 633 (1962) (trial court did not err in denying defendant's motion during trial to reconsider facts resolved on partial summary judgment).
Forced Stipulations. Koehler contends that she was forced to stipulate to the fair market value of the property and the costs from which the court determined damages. Koehler has cited no authority in support of her argument, and more importantly, no evidence in the record to support it. We decline to consider it further. Bohn, 119 Wn.2d at 368; Cowiche Canyon, 118 Wn.2d at 809.
Neither Koehler nor Lawrence was satisfied with the stipulated amounts for fair market value and costs, but the trial court held both parties to the agreed amounts.
Affirmed.