Opinion
No. 62038-0-I.
December 14, 2009.
Appeal from a judgment of the Superior Court for King County, No. 07-2-34798-4, Jay V. White, J., entered May 23, 2008.
Affirmed by unpublished opinion per Schindler, C.J., concurred in by Cox and Appelwick, JJ.
Chesil Thye and Michelle Shih (the Thyes) appeal summary judgment dismissal of their lawsuit against Zenture Pacific Homes, Inc. (Zenture) seeking specific performance of a Residential Real Estate Purchase and Sale Agreement (REPSA), and damages. In the REPSA, Zenture agreed to construct a house on the lot it owned according to the terms and specifications in the attached Builder Addendum. The REPSA provides that because "[t]ime is of the essence," closing shall occur within five days after Zenture received a certificate of occupancy. Under the terms of the REPSA, in order to close, the Thyes had to have the funds available in escrow for immediate disbursement to Zenture. If the Thyes were unable to close within the five-day period, Zenture could terminate the agreement. The Thyes assert that because Zenture breached the terms of the REPSA by terminating the agreement without providing written notice, the court erred in granting summary judgment. The Thyes also assert that dismissal was improper because they did not breach the REPSA, and Zenture did not carry its burden of proof on summary judgment. Zenture contends that because the Thyes did not set forth admissible facts showing that they had the funds to close, the court did not err in granting summary judgment and denying the motion for reconsideration. We affirm summary judgment dismissal of the lawsuit and denial of the motion for reconsideration.
FACTS
Frank DiCostanzo and his son Anthony "Tony" DiCostanzo own Zenture Pacific Homes, Inc. (Zenture). On May 10, 2005, Zenture purchased a residential lot in Renton.
The DiCostanzos are the sole owners, officers, and shareholders of Zenture. Apparently, title to the property was transferred to the DiCostanzos instead of Zenture because of an error made by the title company. For purposes of the opinion, we refer to Zenture as the owner of the property.
On October 22, Chesil Thye and Michelle Shih (the Thyes) entered into a Residential Purchase and Sales Agreement (REPSA) with Zenture. Real estate agent Shawn Maxey represented the Thyes. Real estate agent Diane Jones represented Zenture. Zenture agreed to sell the lot to the Thyes and construct a house for $460,000. The REPSA contains a four-page Presale Addendum and a fifteen-page "Zenture Pacific Homes Builder Addendum A" that sets forth the terms and model specifications to construct the house. The Thyes deposited earnest money of $10,000 with the designated closing agent Lawyers Title Agency of South Puget Sound, Inc.
The REPSA states that "[t]ime is of the essence of this Agreement" and closing will occur within five days after Zenture receives an approved certificate of occupancy permit under the terms of the REPSA. The Thyes agreed to pay Zenture "the Purchase Price, including the Earnest Money, in cash at Closing. . . ."
The Presale Addendum states in pertinent part:
Closing of this sale shall occur by the later of 1 yr of mutual acceptance after the issuance of building permit . . . provided, however, if Seller has not completed the improvements and obtained a Certificate of Occupancy for them prior to the Closing Date for any reason, Seller may extend the Closing Date for up to 30 days without further liability. Notwithstanding the foregoing, any specific completion dates and Closing Dates given by Seller are subject to extension for a reasonable time at Seller's option due to the unavailability of material, labor disputes . . . and other conditions beyond Seller's control.
The Presale Addendum also states that "[c]losing shall not be deemed to have occurred until Buyers funds are available for immediate disbursement to Seller. . . ."
Paragraph 38 of the Builder Addendum defines closing as "the availability of funds at the escrow company" within five days after receiving the certificate of occupancy. If the Buyer is unable to close, the Seller can terminate the agreement.
Paragraph 38 of the Builder Addendum states in pertinent part:
Closing. Closing shall be understood to be distinct and different form [sic] signing of final closing documents which typically occurs two or three days prior to closing. Closing shall be defined as the availability of funds at the escrow company specified by the Seller by 12:00 noon in US funds, drawn on a local bank. Funds which are not available as prescribed, shall have a delayed closing until the next banking business day. . . .
Real Estate Purchase and Sale Agreements most often state that closing shall occur on or before a specific date; but in any event before a subsequent date. It is the Seller's intent that closing occur within five (5) days or [sic] Seller receiving an approved occupancy permit as issued by the governing municipality or an appraiser's certificate of completion, whichever occurs first. If Buyer is unable to close within the five (5) day period as outlined above Seller may void the Real Estate Purchase and Sale Agreement retaining all funds deposited as earnest money, prepaid cost extras, change orders or otherwise. To avoid this situation it is in the Buyer's best interest to have a temporary occupancy agreement prepaid and in place, or if financing is not approved, be prepared to pay Seller extension fees to offset Seller's financing carrying charges.
. . .
Buyer agrees to sign all necessary closing documents within five (5) days of issuance of certificate or [sic] occupancy or 48 hours of notification by the closing agent that closing documents are ready for signature, whichever comes first.
Unless otherwise specified, the REPSA also provides that any notice required by the agreement must be in writing.
Notices. In consideration of the license to use this and NWMLS's companion forms and for the benefit of the Listing Agent and the Selling Licensee as well as the orderly administration of the offer, counteroffer or this Agreement, the parties irrevocably agree that unless otherwise specified in this Agreement, any notice required or permitted in, or related to, this Agreement (including revocations of offers or counteroffers) must be in writing. Notices to Seller must be signed by at least one Buyer and shall be deemed given only when the notice is received by Seller, by Listing Agent or at the licensed office of Listing Agent. Notices to Buyer must be signed by at least one Seller and shall be deemed given only when the notice is received by Buyer, by Selling Licensee or at the licensed office of Selling Licensee.
The parties agreed to extend the closing date several times due to construction delays. The last extension on July 29, 2007 states — "Closing date to be extended to November 30, 2007 or before."
According to Frank DiCostanzo, on October 6, he told the real estate agent for the Thyes that King County had issued a certificate of occupancy. Four days later, on October 10, Zenture received a "Pre-closing Walkthrough List" from the Thyes. In the walk-through list the Thyes identify more than a dozen items Zenture needs to address before closing. The list states that the Thyes want "the builder to remedy all these items prior to closing according to the builder's [sic] addendum #3. If the builder does not want to do these items the buyer would be satisfied with this walk list for $6,000."
Zenture sent a letter to the Thyes dated Friday, October 12, notifying them that Zenture was terminating the REPSA under Paragraph 38 because the Thyes had not closed within five days of issuance of the certificate of occupancy on October 6. The letter states that although the Thyes told Zenture earlier that week that they did not "have financing in place," Zenture would consider renegotiating the sale of the house if the Thyes secured financing. The letter states:
On Friday, October 6th, 2007, Zenture Pacific Homes notified you that King County issued a Certificate of Occupancy on the house located at 16117 SE 114th Street in Renton. This notification to you started a 5 day window to close financing of your purchase as detailed in Paragraph 38 of Builder Addendum A (text from this paragraph appears at the bottom of this letter) of the October 22, 2005 Purchase and Sale Agreement to close financing on the home. Through ongoing and constant communication through our agents, you were fully aware of the status of construction and the pending receipt of the Certificate of Occupancy. Therefore, the fact that you were unable to close pursuant to the provisions of the contract can only be assessed as 1) your inability to secure financing (you made it clear on multiple occasions that financing was fully arranged, and then later communicated last week it was necessary to pursue a new bank; you clearly mislead the facts of your financing; or 2) your decision to not complete this transaction.
It is absolutely essential that we move to protect our investment in this property and from ongoing costs incurred from further delays. Your requests for further changes to the residence when you should have been closing the purchase is further evidence that you are unable to close this transaction.
Therefore, we have elected to pursue all remedies specified in Paragraph 38 and cancel the Purchase and Sale Agreement. We will be moving quickly to relist the home and protect our company from incurring further expense.
Although, you communicated earlier in the week that you do not have financing in place, we would consider selling you the home if you can reconcile your financing problems. Pursuant to the terms in Paragraph 38, it would be our intent to renegotiate the price of the home based on current market conditions. Please let us know your interest in moving forward and we can discuss a revised selling price.
Of course, should you be interested in moving forward, it would be necessary we determine the new terms by 5 PM on Monday, October 15, 2007. We plan on listing the home on the MLS by Tuesday or Wednesday of next week. Time is of the essence. . . . We have highlighted the pertinent sections of Paragraph 38 above.
According to Zenture's real estate agent Diane Jones, sometime that weekend she told the Thyes' real estate agent that Tony DiCostanzo was still willing to close despite the October 12 letter. Jones testified that she "spoke with Tony DiCostanzo and he advised that if the buyers would hurry in to timely close, ZENTURE would in fact close as well."
The Thyes said the first time they learned that a certificate of occupancy had been issued was when they received the October 12 letter on Saturday, October 13. Upon receipt of the October 12 letter cancelling the REPSA, the Thyes took steps to close.
After receiving closing instructions and documentation from the Thyes' lender Countrywide Bank, escrow agent Diane MacKenzie prepared the closing documents. Countrywide agreed to pay $368,000 at closing contingent on the Thyes' payment of the additional $102,234.95 necessary to close. The Disbursement Conditions provide in pertinent part:
G.6 Sufficient Borrower Funds to Close
Settlement Agent must have received from Borrower cash or other good funds sufficient to pay all amounts shown on the Settlement Statement as payable buy [sic] Buyer.
The Escrow Instructions also required the Thyes to deposit all funds necessary to close.
On October 16, MacKenzie notified the Thyes and Zenture that the closing documents were ready to sign. The Thyes signed the closing documents late in the afternoon of October 17.
On October 18, MacKenzie received $85,402 by wire transfer from the Thyes' account at Washington Mutual Savings Bank. MacKenzie did not receive the remaining $16,832.95 needed to close, and later returned the $85,402 to the Thyes.
In her declaration, MacKenzie testified in pertinent part:
9. Countrywide Funding considered their lending on the receipt of these funds as an integral part of the overall closing. As it stood, I could not have closed the transaction without additional funds presented to escrow.
10. The transaction never closed. Ultimately, I contacted the purchaser and they authorized me to wire the funds totaling $85,402.00 back to them.
On October 18 at 11:13 a.m., Zenture's attorney notified MacKenzie by e-mail that Zenture terminated the REPSA on October 12.
Accompanying please find a termination letter sent out to buyer's agent Shawn Maxey via e-mail on Friday, Oct 12, 07. [Corrected by Zenture's attorney to "Sat Oct 13th" in e-mail sent within the next hour]. Receipt was acknowledged by Maxey that same day and the notice was forwarded to Listing Agent Diane Jones that same day. Receipt was acknowledged by Diane Jones that same day.
I understand that notice of termination was orally conveyed to escrow by a Zenture Pacific agent via Diane Mills and/or Gayle MacKenzie the following Monday, Oct 15, 07.
Please place a copy of the termination notice in the escrow file and take no further action on the file at this time.
At 1:34 p.m., MacKenzie notified the Thyes' real estate agent by e-mail that Zenture did not intend to sign the closing documents.
On October 30, the Thyes sued Zenture and the DiCostanzos for breach of the REPSA and disregard of the corporate entity. The Thyes filed a lis pendens on the property and sought specific performance and damages. Zenture filed an answer and counterclaim for wrongfully filing the lis pendens and damages.
The Thyes requested that Zenture's corporate form be disregarded to require the DiCostanzos to deliver title to the property under the REPSA.
Zenture filed a motion for summary judgment dismissal of the lawsuit. Zenture's primary argument was that the Thyes were unable to perform and did not have the funds necessary to close. Zenture also argued that the Thyes received oral notification on October 6. In the alternative, Zenture argued that even if written notification was required and the closing date was five days after the Thyes received the October 12 letter on October 13, the Thyes did not have the funds to close on October 18. In addition, Zenture asserted that the walk-through list constituted an anticipatory breach of the agreement and that Zenture cancelled the REPSA based on irreconcilable differences as defined in the Builder Addendum.
Irreconcilable Differences.
Should the working relationship between the Buyer and Seller deteriorate to a level unacceptable to the Seller, the Seller may, at his sole discretion void the Teal Estate Purchase and Sale Agreement by refunding to the Buyer all deposits paid to Seller or subcontractors, for materials and labor that is part of the new home. Refund of all deposits shall be Buyer's sole remedy for cancellation of the transaction and shall constitute the total liquidated damages to which the Buyer is entitled.
In response, the Thyes argued that because Zenture repudiated the REPSA in the October 12 letter and again on October 18, the Thyes had no obligation to close under the terms of the REPSA. The Thyes also argued that there were material issues of fact as to Zenture's other arguments and the irreconcilable differences provision in the Builder Addendum was unconscionable.
In reply, Zenture reiterated that the Thyes "did not have the funds necessary to close and thus were unable to close." Zenture also pointed to the Thyes' refusal to respond to interrogatories requesting financial information concerning their ability to close. In response to interrogatories, the Thyes state in pertinent part:
Plaintiffs object to this interrogatory as it is not likely to lead to admissible evidence and is information to which the Defendants are not entitled unless they obtain a monetary judgment against the Plaintiffs.
. . .
Plaintiffs object to this Request for Production as it is not likely to lead to admissible evidence and is information to which the Defendants are not entitled unless they obtain a monetary judgment against the Plaintiffs.
In addition, Zenture argued that the Thyes had the opportunity to perform, that written notice of the certificate of occupancy was not required, and that the Thyes' walk-through list constituted an anticipatory breach of the REPSA.
On May 23, 2008, the court entered an order granting Zenture's motion for summary judgment and dismissing the Thyes' lawsuit. The court reserved ruling on attorney fees.
The Thyes filed a motion for reconsideration under CR 59 (a)(7), on the grounds that the evidence did not justify the decision or it was contrary to law, and under CR 59 (a)(9), on the grounds that "'substantial justice has not been done.'" For the first time, the Thyes claimed in the motion for reconsideration that they had the funds available to close on October 18. Chesil Thye testified that they deposited $85,402 into escrow and that on October 18 they had arranged to transfer the additional $16,832.95 needed to close.
That same day, on October 18, 2007, we set up a wire transfer totaling $16,832.95 from another account that had enough funds to cover the remaining total needed to close the transaction. A true and correct copy of the bank statement from Wells Fargo Bank, for banking activities between October 13, 2007 and November 14, 2007, which shows the $16,955.64 of our funds that were available on October 18, 2007 is attached hereto as Exhibit 1.
In support, Chesil Thye attached a redacted copy of a Wells Fargo Bank statement for October 13 through November 14, 2007.
The Activity Summary section of the Wells Fargo bank statement shows total deposits of $18,740.45, but all other information is redacted. The Activity Detail for all withdrawals is also redacted, except for the daily balance summary for October 18 showing a balance of $16,955.64.
Zenture filed a response and a motion to strike Chesil Thye's declaration and the attached bank statement. Zenture argued that the new information submitted by Chesil Thye was previously available and that despite repeated discovery requests, the Thyes refused to disclose any financial information. Zenture also argued that Chesil Thye's assertion that he had made arrangements for a wire transfer of the funds necessary to close was not supported by admissible facts and the bank statement was inadmissible hearsay. Zenture argued the court should deny the motion for reconsideration because the Thyes did not present admissible evidence showing that they had the funds to close.
On June 24, the court entered an "Order Denying Plaintiff's Motion for Reconsideration and Allowing Supplemental Reply for the Record on or Before 6/30/08." The order grants Zenture's motion to strike the declaration of Chesil Thye "in its entirety" and the "copy of the purported Wells Fargo Bank Statement" attached as an exhibit to Chesil Thye's declaration. However, the order expressly allows the Thyes to "supplement the record if they deem it necessary by way of further reply on or before June 30, 2008." The Thyes did not supplement the record or file any further reply.
Zenture filed a motion for attorney fees and costs. Zenture argued it was entitled to attorney fees under either the lis pendens statute or the REPSA. The REPSA provides:
Attorneys' Fees. If Buyer or Seller institutes suit against the other concerning this Agreement, the prevailing party is entitled to reasonable attorneys' fees and expenses.
The court entered findings of fact and conclusions of law and a judgment awarding Zenture attorney fees and costs of $40,218.21.
The Thyes appeal the summary judgment order dismissing their lawsuit, the order denying their motion for reconsideration, and the judgment awarding Zenture attorney fees and costs.
ANALYSIS
The Thyes assert that Zenture breached the REPSA by not providing written notice of the certificate of occupancy on October 6 and terminating the agreement on October 12. The Thyes also argue that they did not breach the REPSA, and that Zenture did not carry its burden to prove that the Thyes received oral notice on October 6, or that Zenture was in a position to perform. In their reply brief, the Thyes also argue that because Zenture did not present evidence that the Thyes were not ready, willing and able to close, the court erred in granting summary judgment dismissal.
For the first time on appeal, the Thyes argue that Zenture failed to prove the certificate of occupancy was issued. The Thyes also argue for the first time on appeal, that the closing date was October 19 and not October 18 based on the provision in the REPSA excluding weekends from the five-day time computation. We do not consider issues raised for the first time on appeal. RAP 2.5(a); Demelash v. Ross Stores, Inc., 105 Wn. App. 508, 527, 20 P.3d 447 (2001).
We review summary judgment de novo. Kruse v. Hemp, 121 Wn.2d 715, 722, 853 P.2d 1373 (1993). Under CR 56, the moving party bears the initial burden of showing the absence of genuine material issues of fact and that the moving party is entitled to judgment as a matter of law. Young v. Key Pharmaceuticals, Inc., 112 Wn.2d 216, 225, 770 P.2d 182 (1989).
Anticipatory repudiation occurs when one of the parties to a contract either expressly or impliedly repudiates the contract prior to the time of performance. Versuslaw, Inc. v. Stoel Rives, LLP, 127 Wn. App. 309, 321, 111 P.3d 866 (2005). A contracting party's intent to repudiate may be "expressly asserted or circumstantially manifested by conduct." CKP, Inc. v. GRS Constr. Co., 63 Wn. App. 601, 620, 821 P.2d 63 (1991) (quoting, Hemisphere Loggers and Contractors, Inc. v. Everett Plywood Corp., 7 Wn. App. 232, 234, 499 P.2d 85 (1972)). The party must make "a clear and positive statement or action that expresses an intention not to perform the contract." Alaska Pac. Trading Co. v. Eagon Forest Products, Inc., 85 Wn. App. 354, 365, 933 P.2d 417 (1997).
Where, as here, the contract requires performance by both parties, "the party claiming nonperformance of the other must establish as a matter of fact the party's own performance." Willener v. Sweeting, 107 Wn.2d 388, 394, 730 P.2d 45 (1986). If a party repudiates, the other party is relieved of the duty to tender performance only if that party is ready, willing and able to perform. Kreger v. Hall, 70 Wn.2d 1002, 1009, 425 P.2d 638 (1967). Zenture asserts that even if it repudiated the REPSA by terminating the agreement on October 12, the court properly granted summary judgment because the Thyes did not present admissible facts showing they were ready, willing, and able to timely close.
As the moving party, a defendant can meet its initial burden on summary judgment in one of two ways. A defendant can set forth its version of the facts and allege there is no genuine issue as to those facts. Hash v. Children's Orthopedic Hosp. Med. Ctr., 110 Wn.2d 912, 916, 757 P.2d 507 (1988). Or, in the alternative, a defendant can point out "'that there is an absence of evidence to support the nonmoving party's case.'" Young, 112 Wn.2d at 225 n. 1 (quoting, Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L.Ed.2d 265 (1986)). If the defendant shows that there is insufficient evidence to support the plaintiff's case, the requirement to set forth specific facts does not apply because "a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex, 477 U.S. at 323. In addition, as noted in White v. Kent Medical Center, Inc., 61 Wn. App. 163, 170-171, 810 P.2d 4 (1991),
It is difficult to prove a negative, and in some circumstances the only way that the moving party will be able to show that there is no material issue of fact is by way of reply to the responding party's citations to the record." Once the moving party meets its initial burden, the burden then shifts to the nonmoving party to set forth specific facts showing a genuine issue of material fact exists for trial. Pac. Nw. Shooting Park Ass'n v. City of Sequim, 158 Wn.2d 342, 351, 144 P.3d 276 (2006).
Assuming, without deciding, that the Thyes were entitled to written notice that the five-day time period to close was triggered by issuance of the certificate of occupancy. And assuming, without deciding, that Zenture's October 12 letter terminating the agreement was an anticipatory repudiation of the REPSA, the Thyes did not meet their burden of presenting admissible evidence showing there were genuine issues of material facts as to whether they were ready, willing and able to perform. After Zenture met its initial burden on summary judgment of showing there was no evidence the Thyes were ready, willing and able to close, the burden shifted to the Thyes to show there were material issues of fact by setting forth admissible evidence showing they had the funds to close.
On appeal, the Thyes contend that after Zenture cancelled the agreement on October 13, they took steps to close by signing the closing documents on October 17 and making arrangements the next morning to deposit the $102,234.95 needed to close. The Thyes assert that even though they were informed that Zenture had not signed the closing documents on October 17, "Thye deposited $85,402.00 with escrow and set up a wire transfer for $16,955.64 to occur that day." In support of the assertion that they had the funds to close, the Thyes rely on the testimony of Chesil Thye that he arranged a wire transfer of $16,832.95, the additional funds needed to close.
Appellant Brief at 10.
While the Thyes assign error to the order denying their motion for reconsideration, the Thyes do not separately assign error or present any argument concerning the trial court's decision to grant Zenture's motion to strike Chesil Thye's declaration and the attached bank statement. Where an appellant fails to assign error or present argument in violation of RAP 10.3(a), the appellate court will not consider the issue for the first time on appeal. Ang v. Martin, 154 Wn.2d 477, 487, 114 P.3d 637 (2005); Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 809, 828 P.2d 549 (1992). Because the Thyes did not assign error or present argument concerning the trial court's decision to strike the declaration of Chesil Thye and the attached bank statement, the Thyes cannot cite to or rely on that evidence on appeal.
Nevertheless, we conclude the trial court did not abuse its discretion in striking Chesil Thye's declaration and denying the Thyes' motion for reconsideration. We review the decision to strike the declaration and denial of the motion for reconsideration de novo. Folsom v. Burger King, 135 Wn.2d 658, 663, 958 P.2d 301 (1998). Affidavits in opposition to summary judgment, must be based on personal knowledge, and must set forth admissible evidentiary facts to show the declarant is competent to testify. "Affidavits containing conclusory statements without adequate factual support are insufficient to defeat a motion for summary judgment." Guile v. Ballard Cmty. Hosp., 70 Wn. App. 18, 25, 851 P.2d 689 (1993).
Below, the Thyes did not, and could not, argue on reconsideration that Chesil Thye's declaration and the attached bank statement should be considered as new evidence under CR 59(a)(4). A trial court does not abuse its discretion in refusing to consider new evidence submitted on reconsideration when the evidence was available earlier. Adams v. Western Host, Inc., 55 Wn. App. 601, 608, 779 P.2d 281 (1989). Moreover, Chesil Thye did not provide facts in support of the assertion that he had arranged a wire transfer for the additional funds necessary to close. For instance, he does not state when, how, or with whom he arranged the wire transfer.
Because the Thyes did not meet their burden of presenting admissible evidence showing they were ready, willing and able to provide the necessary funds to close, we affirm summary judgment dismissal of their lawsuit against Zenture and denial of the motion for reconsideration. As the prevailing party, upon compliance with RAP 18.1, Zenture is entitled to attorney fees on appeal under the REPSA.
WE CONCUR: