Opinion
No. 53024-1-I
Filed: August 23, 2004 UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 00-2-08449-8. Judgment or order under review. Date filed: 07/18/2003. Judge signing: Hon. Dean S Lum.
Counsel for Appellant(s), Doug Owens, Attorney at Law, 911 6th St. Anacortes, WA 98221-1716.
Counsel for Respondent(s), Joseph G. Nolan, Attorney at Law, 215 Columbia St, Seattle, WA 98104.
After quieting title and extinguishing three deeds of trust, a trial court awarded a lender a $30,000 equitable lien on Kumnuan Wattanasathit's property, which had been improved with funds from a series of loans fraudulently obtained by Wattanasathit's brother. Wattanasathit contends the court erred in making this award because there was insufficient evidence to prove his house had been improved using loan funds or that he benefited from the improvements. The lender cross-appeals, arguing the court erred by voiding the deeds of trust, and alternatively, that it is entitled to a larger equitable lien and prejudgment interest. The $30,000 equitable lien was justified, was within the range of evidence, and is not subject to prejudgment interest. We therefore affirm.
FACTS
Kumnuan Wattanasathit emigrated from Thailand in late 1994. Shortly after his arrival, his grandmother deeded him a house in Des Moines, Washington. Wattanasathit's brother, Terapong, had obtained a driver's license in Wattanasathit's name. Terapong recorded the deed, and, without Wattanasathit's approval or knowledge, procured a series of loans against the property in Wattanasathit's name.
The house was in an `unlendable' condition and could not qualify for a traditional mortgage loan. Terapong applied for two home improvement loans from lender CLS, the first for $34,000 and the second for $7,000. CLS ordered an inspection, which revealed that substantial work was needed. CLS made the loans. An appraisal approximately five months later noted that improvements were under way, and valued the property, with the improvements completed, at $125,000. Based on this appraisal, a third loan, packaged by CLS for Weyerhaeuser Mortgage Company, was approved for $93,000. Some of these funds were used to retire the first two loans.
Wattanasathit discovered what had happened only after he was contacted by an insurance adjustor, who was investigating a claim made by Terapong in Wattanasathit's name concerning a vehicle owned by Wattanasathit. The adjustor informed Wattanasathit that the Des Moines house was being sold at a nonjudicial foreclosure sale. Wattanasathit immediately brought this action to quiet title and set aside the deeds of trust.
Wattanasathit commenced this action against Bishop Lynch of King County, as trustees, Weyerhaeuser Mortgage Company, beneficiary, Nationscredit Home Equity Services, assignment beneficiary, Nida Sinarsa (Terapong's wife) and Terapong Wattanasathit, and their marital community, and Cateleya Sinarsa (Nida's mother). Nida, Terapong, and Cateleya defaulted, and Wattanasathit voluntarily dismissed Bishop Lynch.
The trial court found that Wattanasathit had not signed the deeds of trust, had not authorized Terapong to do so, and had not ratified the loans. Accordingly, it extinguished the deeds of trust. The court found, however, that Wattanasathit had benefited from the improvements made with the loan funds, and imposed an equitable lien of $30,000 on the property to prevent his unjust enrichment.
Wattanasathit appealed, and Weyerhaeuser cross-appealed. We dismissed the appeals without prejudice because the record was insufficient for review. Wattanasathit v. Bishop Lynch of King County, 117 Wn. App. 1006, 2003 WL 21267843 (2003). On remand, the court entered written findings of fact and conclusions of law. This appeal and cross-appeal followed.
DISCUSSION
The Deeds of Trust are Void. We first address Weyerhaeuser's claim that the court erred in its conclusion that Wattanasathit's property is not subject to the deeds of trust, including one Weyerhaeuser has assigned to First Union Bank. Appellate courts review conclusions of law de novo, and must determine whether the conclusions are supported by the trial court's findings of fact. Dempere v. Nelson, 76 Wn. App. 403, 406, 886 P.2d 219 (1994); Landmark Dev., Inc. v. City of Roy, 138 Wn.2d 561, 573, 980 P.2d 1234 (1999).
Despite this assignment, we refer to the defendant-creditor as Weyerhaeuser to avoid confusion and conform to the parties' briefing.
Weyerhaeuser argues we should `hold the brothers to the law of ratification and agency and reverse the judgment voiding the deed of trust.' Resp. Br. at 13. But the trial court found that Terapong had not acted as Wattanasathit's agent, and that finding is supported by the record. Although Weyerhaeuser emphasizes that Terapong used a driver's license with Terapong's photo and Kumnuan's name, this speaks as much to Terapong's fraudulent schemes as to any possible collusion between the two. And as the court noted, there was no evidence that Wattanasathit specifically ratified, or was even aware of, any of the loans.
Weyerhaeuser acknowledges the court's finding, but does not assign error to it. Unchallenged findings of fact are normally verities on appeal, but appellate courts may excuse a party's failure to assign error where the briefing makes the nature of the challenge clear and the challenged finding is argued in the text of the brief. Noble v. Lubrin, 114 Wn. App. 812, 817, 60 P.3d 1224 (2003).
Wattanasathit has consistently maintained that he had no knowledge of the loans until he was contacted by the insurance investigator about another matter. And while the court found Wattanasathit was not a credible witness, other evidence supports his testimony in this regard. Notably, the record shows that the house had been fraudulently conveyed to Terapong's mother-in-law, purportedly by Wattanasathit and his `wife' Nida Sinarsa. Sinarsa was in fact Terapong's wife. The subsequent disappearance of Terapong, his wife, and his mother-in-law further suggests larcenous motives.
The court's conclusion that the deeds of trust were void is supported by its unchallenged finding that the loans were signed by an imposter who had no authority to bind Wattanasathit or his property, which is in turn supported by the record. Because we agree the deeds of trust were void, we proceed to Wattanasathit's claims.
The Loans Were Used to Improve the House. Wattanasathit contends there is no evidence to support the court's findings that the loan funds were used to improve the house. Findings of fact will not be disturbed on appeal if they are supported by substantial evidence. Bering v. SHARE, 106 Wn.2d 212, 220, 721 P.2d 918 (1986). Substantial evidence exists if the record contains evidence of sufficient quantity to persuade a fair-minded, rational person of the truth of the declared premise. Id.
Wattanasathit correctly points out that no direct evidence proved the loan proceeds were used to pay any particular contractor or for any particular materials. But the court's finding is supported by ample evidence nonetheless.
CLS loan officer Greg Baldwin testified that the house was in an `unlendable' condition for a traditional mortgage loan. Report of Proceedings (RP) (Aug. 28, 2001) at 7. CLS's preloan inspection revealed the house needed significant improvements, including a new kitchen and bathroom, complete interior paint, all new floor coverings, and repair of rot in the kitchen, bath, and living room areas. The man who performed the inspection testified the house was not livable at the time. Wattanasathit himself admitted the kitchen and bathroom floors and roof were all in bad shape when he obtained the property. Baldwin testified that the first two loans were made to rehabilitate the house so it would later qualify for a traditional mortgage, and that, to the best of his knowledge, the loan proceeds were used to improve the house. And while Baldwin had no direct knowledge of how the money was spent, he testified that `[r]ight after the money was distributed, a lot of home improvement was done.' RP (Aug. 28, 2001) at 12.
The appraisal performed to support the subsequent Weyerhaeuser loan showed that the house's condition had improved. The appraisal notes, `At the time of inspection, the owner was completing renovation of certain items.' Clerk's Papers at 50. The appraisal contains a list of deficiencies being corrected, including the new roof, floor repair, and new floor coverings in the kitchen and bath, installation of kitchen cabinets and countertops, installation of new drywall and a tub and shower surround in the bathroom, window replacement, interior paint, new vapor barrier in crawl space, and new closet doors. Wattanasathit acknowledged that the roof, kitchen, and bathroom had been fixed. The Weyerhaeuser loan was approved because these improvements were being made.
To rebut this strong circumstantial evidence, Wattanasathit emphasizes Baldwin's admission that `the assumption that the $34,000 went into the house would be, at best, at this moment, an unproven assumption.' RP (Aug. 28, 2001) at 13. But Baldwin explained it was not uncommon to lack such proof: `[A] lot of times in situations like this, that documentation wouldn't have been required as long as we saw that the work was being done. If [the appraiser] went out and did those inspections and determined that the work was indeed being finished, they wouldn't require [documentation].' Id. at 15. Finally, Baldwin pointed out that Terapong `ran out of money part way through the [rehabilitation] process and needed to come back for more.' Id. at 16.
This evidence creates a strong inference that the CLS loan proceeds were used to improve the house. And there is little evidence to the contrary. Wattanasathit testified he believed the money for the improvements came from the restaurant owned by Terapong and his wife; however, the court found Wattanasathit was not a credible witness, and Wattanasathit had no evidence to support his belief.
In sum, the house was in terrible condition before the CLS loans were obtained, the loans were made to rehabilitate the property, and significant improvements were made as soon as the loan funds were distributed. The finding that loan proceeds were used to improve the house is supported by substantial evidence.
Wattanasathit Benefited From the Loans. Wattanasathit next contends there is no substantial evidence to support the court's finding that he benefited from the loans and improvements to his house. This argument is unpersuasive given another of the court's findings: `The house and property had a value of $57,000 before the loan improvements and a value of $125,000 after the improvements.' Clerk's Papers at 187. Wattanasathit has not assigned error to this finding, and unchallenged findings of fact are verities on appeal. Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 808, 828 P.2d 549 (1992). As the property owner, Wattanasathit clearly benefited from an increase in property value. Furthermore, as a result of the improvements, the house is habitable, and Wattanasathit and at least two of his siblings have been able to live there. It is clear that Wattanasathit benefited from the improvements to his house.
Equitable Lien. Both parties assign error to the court's finding that First Union Bank (Weyerhaeuser's assignee) is entitled to an equitable lien of $30,000 as a result of Wattanasathit's unjust enrichment. Wattanasathit contends the record does not support a lien in any amount, while Weyerhaeuser argues it was entitled to a lien of $68,000 the full amount of the increase in property value. We reject both arguments because the equitable lien is within the range of substantial evidence in the record. See Mason v. Mortgage America, Inc., 114 Wn.2d 842, 850, 792 P.2d 142 (1990) ('An appellate court will not disturb an award of damages made by the fact finder unless it is outside the range of substantial evidence in the record, or shocks the conscience, or appears to have been arrived at as the result of passion or prejudice.').
Wattanasathit correctly observes the court's award does not easily correspond to any of the figures relevant to this case. Nevertheless, the evidence plainly supports a lien of at least $30,000. As noted, if all of the improvements called for by the appraisal were actually completed, the full $68,000 increase in the value of the property was due to those improvements. On the other hand, there was no evidence that all of the improvements called for by the appraisal were in fact completed. And of the repairs that were complete, the court noted substandard workmanship, and that some of the repairs had been completed with Wattanasathit's own labor. Under the circumstances, the court was well within its discretion to determine that the amount by which Wattanasathit was unjustly enriched was less than the appraisal figure. See Mason, 114 Wn.2d at 850 (`The amount of damages is a matter to be fixed within the judgment of the fact finder. A trier of fact has discretion to award damages which are within the range of relevant evidence.').
Prejudgment Interest. Prejudgment interest is proper when the damages are `liquidated' or determinable by computation with reference to a fixed standard without reliance on opinion or discretion. Prier v. Refrigeration Eng'g Co., 74 Wn.2d 25, 32, 442 P.2d 621 (1968). Damages are not liquidated "where the exact amount of the sum to be allowed cannot be definitely fixed from the facts proved, disputed or undisputed, but must in the last analysis depend upon the opinion or discretion of the judge or jury as to whether a larger or smaller amount should be allowed." Id. at 33 (emphasis omitted) (quoting C. McCormick, Damages (Hornbook Series) sec. 54 (1935)). This court reviews the trial court's decision to deny prejudgment interest for abuse of discretion. Litho Color, Inc. v. Pacific Employers Ins. Co., 98 Wn. App. 286, 300, 991 P.2d 638 (1999).
Weyerhaeuser contends it was entitled to prejudgment interest because `the net improved value to the property is determinable without speculation.' Resp. Br. at 25. As noted above, the court did not arrive at the amount by which Wattanasathit was unjustly enriched by simply adopting the before and after figures in the loan appraisal. The court clearly exercised discretion to determine the amount for which a lien was justified. Weyerhaeuser's claim was unliquidated, and the court did not abuse its discretion by refusing to impose prejudgment interest.
Affirmed.
GROSSE and COX, concur.