Opinion
29306-8-III
01-26-2012
YAKIMA AIR TERMINAL-McALLISTER FIELD, an agency of the City of Yakima and County of Yakima, Washington, Respondent, v. M.A. WEST ROCKIES CORPORATION, a Nevada corporation, Appellant.
UNPUBLISHED OPINION
Siddoway, J.
M.A. West Rockies Corporation was a tenant of Yakima Air Terminal at McAllister Air Field in Yakima, Washington. It challenges its eviction through an unlawful detainer action, claiming that in light of its payments and the airport's application of deposits, eviction was improper. We conclude that the propriety of the eviction turns on a number of disputed matters, factual and legal, on which we have inadequate findings and conclusions for effective review. We remand for entry of additional findings and conclusions, with final disposition to await further proceedings.
M.A. West moved to substitute the Langdon Family Revocable Trust as appellant; its motion was granted by our commissioner on June 6, 2011.
FACTS AND PROCEDURAL BACKGROUND
M.A. West leased approximately 215, 884 square feet of airport ramp space at McAllister Air Field in Yakima, Washington, from Yakima Air Terminal-McAllister Field, an agency of the city of Yakima and Yakima County. The monthly rent was $2,718.29, due by the tenth of the month. West acquired its lease by assignment. As a condition to consenting to the assignment, the airport required West to enter into an agreement under which West deposited and agreed to replenish a $3,000.00 security deposit to be held by the airport.
West used the leased property to conduct what are referred to as through-the-fence (TTF) operations, meaning operations that permit access to an airfield by aircraft from land that is adjacent to, but not a part of, airport property. By late 2009, the Federal Aviation Administration (FAA) was increasingly insisting that airports eliminate TTF access to public airfields. See Fed. Aviation Admin., U.S. Dep't of Transp., Order No. 5190.6B, FAA Airport Compliance Manual § 12.7, at 12-6 (effective Sept. 30, 2009) ("As a general principle, the FAA does not support agreements that grant access to the public landing area by aircraft stored and serviced offsite on adjacent property."). The FAA's position led to contention between the airport and West as to West's future operations, which were already foundering. In December 2009, the airport proposed to purchase West's property, using grant monies it could obtain from the FAA, but discussions did not lead to agreement. In March 2010, the airport began to require West's strict compliance with the lease and security deposit agreement upon threat of forfeiture of the lease, as was its right.
The Order can be found at http://faa.gov/documentLibrary/media/Order/5190_6b.pdf.
As of early March, West had failed to pay rent for the months of January and February 2010. On March 4, the airport exercised its option under the parties' security deposit agreement to apply the security deposit it was holding toward West's obligations. The parties' security deposit agreement generally provided that the airport could apply the deposited funds at its option to rent arrears and certain legal costs. Upon notice from the airport that the deposit had been applied, West was required within five days to replenish the deposit. On March 4, the airport's lawyer prepared and signed a "Notice of Application of Deposit Towards Unpaid Rent" directed to West at its airport address, notifying West that its $3,000.00 deposit "has been applied by Yakima Air Terminal as follows:"
1. $185.00 for attorney fees incurred by Yakima Air Terminal in the preparation of notices regarding unpaid rent.
2. $50.00 for replacement of lost badge.
3. $61.45 towards accrued interest on the unpaid rent owed.
4. $2,703.55 to unpaid rent owed.Clerk's Papers (CP) at 34. The notice further provided that West was required to "within five (5) days, deposit such sum of $3,000 with Yakima Air Terminal to return the total deposit held by Yakima Air Terminal to $3,000." Id.
It is undisputed that West made a $3,000 deposit on or before March 15 in response to this notice. The timing is in dispute but in this particular case does not matter.
It appears undisputed that as of March 15, with the initial deposit having been applied to rent, the deposit account having been replenished, the March rent having become due, and before any other attorney fee assessments or applications of the security deposit, the amount owed by West for rent was $5,451.32 in principal amount plus approximately $51.36 in finance charges.
All of our determinations of amounts owed rely on rough estimates of the finance charges, which accrued at 12 percent per annum; we have not attempted to determine them precisely, which accounts, we believe, for small discrepancies between some of our figures and those provided by the parties.
On March 15, the airport's lawyer prepared and signed a second "Notice of Application of Deposit Towards Unpaid Rent" directed to West notifying West that its $3,000.00 deposit "has been applied by Yakima Air Terminal as follows:"
1. $754.50 for attorney fees incurred by Yakima Air Terminal in the preparation of notices regarding application of deposit.
2. $45.00 for service of process of notices regarding application of deposit.
[3]. $2,200.50 to unpaid rent owed.CP at 86. This notice again stated that West's $3,000 deposit needed to be replenished in five days. If the airport applied the deposit made in early March as indicated by this notice of application of deposit, the status of rents and deposits as of March 15 was as follows:
Rent owed: $5,451.32 less $2,200.50 = $3,250.82.
Finance charges: $51.36 plus additional accruals.
Attorney fees: None; fees assessed would have been satisfied by application of deposits.
Deposit account: $0, with replenishment due.
The airport's finance administrator did not account for West's deposit as reported by the notice of application of deposit; she treated the $3,000 as remaining on deposit as security. And at the same time the airport's lawyer prepared and signed the notice of application of deposit, he prepared and signed a "Notice of Default for Failure to Pay Rent, " which-treating the deposit as if it had not been applied-stated that
rent at the rate of $2,718.29 per month for the months of January, February and March 2010, together with delinquency charges of twelve percent (12%) per annum thereon in the amount of $6,250.82 as of March 15, 2010, which amount shall continue to accrue at the rate of $2.08 per day until paid, is now due, payable and delinquent.CP at 36. The notice of default further stated that "the said rent, deposit increase, leasehold taxes, and delinquency charges" must be paid "within ten (10) days of the date of service of this Notice upon you." Id.
The airport's equivocation in the two March 15 notices concerning whether West's security deposit was or was not applied to rent and other amounts owed was later explained as resulting from "a failure of communication" between the airport's lawyer and its finance administrator, Rebecca Brown. Report of Proceedings (RP) at 44.
There is a $799.50 discrepancy between the $6,250.82 in "rent" demanded by the March 15 notice of default and the $5,451.32 in rent and finance charges that Ms. Brown would later testify was due on March 15. The discrepancy largely reflects the attorney fees and service of process charges that the airport assessed on March 15.
The process server to whom the airport entrusted its two March 15 notices for service on West was unable to personally serve an authorized representative of the corporation on that day. He therefore affixed copies on what he characterized as a "conspicuous place on the property, " as permitted by RCW 59.12.040. CP at 206. Given that manner of service, the two notices were also mailed to West on March 15 as required by the statute.
On March 22, West sent several checks, totaling $3,014.74, which the airport received on March 24. One was in the amount of $2,718.29, the monthly rent liability, and since the security deposit account still held the $3,000.00 paid earlier in the month, Ms. Brown applied the three checks to rent. The position in which these payments left the parties depends, again, on whether the airport applied the earlier March replenishment of the security deposit to the rent and expenses itemized in its March 15 notice of application of deposit.
If the airport applied the early March deposit to the expenses itemized in its March 15 notice of application of deposit, the status of rents and deposits following application of the March 22/24 payments was as follows:
Rent owed: $3,250.82 less $3,014.74 = $236.08.
Finance charges: $51.36 plus additional accruals.
Attorney fees: None; all assessed had been satisfied by application of deposits.
Deposit account: $0, with replenishment due.
If the airport did not apply funds in the deposit account as represented, the status of rents and deposits following application of the March 22/24 payments was as follows:
Rent owed: $5,451.32 less $3,104.74 = $2,346.58.
Finance charges: $51.36 plus additional accruals.
Attorney fees and costs: $754.50 in fees and $45.00 in service costs due.
Deposit account: $3,000.00 remaining from early March.RP at 44.
A final payment of $2,920.56 was tendered by West on March 26 or March 29. Brad Goodspeed, West's president and registered agent, testified that he hand delivered the payment to the airport on March 26, a Friday, at 4:15 p.m., and, finding no one present, slipped it under the office door.
Payment of $2,920.56 more than covered the rent owed, whether the airport held the early March security deposit replenishment payment in the deposit account or applied it in accordance with its March 15 notice of application of deposit. If the airport held the deposit replenishment in the deposit account, then the amount tendered was not enough to cover the attorney fees that had been included in the total demanded in the notice of default. The airport refused to accept the tender, returning West's checks on March 29.
The airport filed a complaint for unlawful detainer on March 30. On April 16, West paid $6,251 into the registry of the court for the rent owed and delinquency charges.
A show cause hearing was held on May 20. Evidence presented at the show cause hearing was largely through earlier-filed declarations, although witnesses were allowed to testify to matters not addressed in their declarations on file with the court. In presenting their positions, the parties did not dispute that in light of the 10-day cure period provided by the notice of default, West had 10 days following service of the notice to cure a default in the payment of rent. The parties are also agreed that because the notice was mailed the time to cure was extended-by one day, as provided by RCW 59.12.040, and by three days, by the terms of the lease-thereby giving West until March 28 to make its payment. Br. of Resp't at 4, 14. But a number of other legal issues and several other factual issues were in contention.
The trial court took the matter under advisement. On June 10, it entered the airport's proposed findings of fact, conclusions of law, and order directing the issuance of a writ of restitution and judgment. The findings and conclusions were later amended, but only to include the damage award, including attorney fees. The airport received $6,251 from the registry of the court on June 11.
On June 10, a writ of restitution issued. The writ was not formally executed because West vacated the premises. West timely filed motions for reconsideration, which were denied. West appeals, asking that we reverse the writ of restitution and judgment and remand this case with directions to restore it to the leased property.
ANALYSIS
Relief under the unlawful detainer statute requires: (1) the tenant's breach, (2) notice to the tenant of the existence of a breach together with an opportunity to correct, and (3) failure by the tenant to correct the breach. RCW 59.12.030(3), (4); see also Wilson v. Daniels, 31 Wn.2d 633, 643, 198 P.2d 496 (1948). The unlawful detainer statute is strictly construed in favor of the tenant. Hous. Auth. v. Terry, 114 Wn.2d 558, 563, 789 P.2d 745 (1990). A party who fails to comply with the unlawful detainer statute may not maintain the action or avail itself of the superior court's jurisdiction. Tacoma Rescue Mission v. Stewart, 155 Wn.App. 250, 254 n.9, 228 P.3d 1289 (2010) (correcting cases that speak of the court "lacking jurisdiction").
When a tenant contracts with his landlord for a specific period or manner of notice, compliance with such a condition is a jurisdictional prerequisite to relief in an unlawful detainer proceeding. Cmty. Invs., Ltd. v. Safeway Stores, Inc., 36 Wn.App. 34, 37-38, 671 P.2d 289 (1983) (where lease provided 20-day notice to cure default, unlawful detainer action could not be based on less notice). In addition, a "termination notice that fails to follow the lease's terms is ineffective to maintain an unlawful detainer action." Tacoma Rescue Mission, 155 Wn.App. at 255; Gray v. Gregory, 36 Wn.2d 416, 418-19, 218 P.2d 307 (1950).
Where a landlord's right to forfeit a lease for unlawful detainer is tried to the court, we review whether substantial evidence supports the trial court's findings and whether the findings support its conclusions of law. Commonwealth Real Estate Servs. v. Padilla, 149 Wn.App. 757, 762, 205 P.3d 937 (2009). Review of the adequacy of a termination notice under a lease, as with interpretation of the lease generally, is de novo. Duvall Highlands, LLC v. Elwell, 104 Wn.App. 763, 771 n.18, 19 P.3d 1051 (2001).
Although West makes seven assignments of error, each of them challenges, in substance, the trial court's two findings of fact and two conclusions of law supporting or determining that West committed unlawful detainer. Our principal problem at this stage of the appeal is that while the existence of unlawful detainer turns on a minimum of four issues of law identified by the parties and two issues of fact, the findings and conclusions prepared by the airport and entered by the trial court do not indicate the court's assessment of specific disputed matters; most importantly, we do not know what the court came to believe about the two key factual disputes.
Some or all of the following contested issues, and conceivably more, bear on whether West was in unlawful detainer at the time the airport filed its action for summary eviction on March 30.
The parties have raised additional contested issues, but we identify those that appear to us to be key. In remanding, we do not limit the matters on which the court should enter specific findings or conclusions to these issues alone; any others that are material to the court's decision should be addressed.
Disputed Issues of Fact
1. Did the airport apply the $3,000 security deposit reimbursement payment that West made in the first half of March 2010 as itemized in its March 15 notice of application of deposit or did it hold it as a deposit?
On the one hand, the notice of application of deposit, signed by the airport's lawyer and admitted in evidence, says that the deposit was applied as represented therein. CP at 34. In another connection (collection of payments) the airport argues that its lawyer was its authorized agent. On the other hand, Ms. Brown testified that she did not move the funds from the deposit account and make bookkeeping entries applying the deposit to the expenses itemized in the notice of application of deposit. She testified that she "didn't officiate" application of the deposit to arrears and believes there was a "failure of communication" between herself and the lawyer. RP at 44. At the show cause hearing, the airport's lawyer presented her testimony as to the arrears at various times based on her bookkeeping treatment of the funds rather than on the representations made in the notice of application of deposit. Yet in connection with West's motion for reconsideration, the airport represented to the court that "[a]lthough the Air Terminal did not actually apply the $3,000 deposit, that amount should be applied to the unpaid rent and charges owed by MA West as set forth in the March 15, 2010 Notice of Application of Deposit." CP at 137 (emphasis added), 139. The airport's arguments as to why West was in lawful detainer after March 26 or 29 vary depending on whether the deposit was applied to expenses or held as a deposit. We need a factual determination from the trial court, which heard the testimony on this issue.
2. Did West tender its $2,920.56 payment on March 26 or 29?
Mr. Goodspeed testified by declaration that he delivered three checks from West totaling $2,920.56 "to the airport 3/26/10 at 4:15 when I returned from the Tri-Cities. The door was locked and parking lot empty. I slipped the checks under the door in a sealed envelope. The airport returned them on March 29, 2010." CP at 82.
When questioned about her receipt of the checks, Ms. Brown testified,
[airport's lawyer]: Now, did you-did you receive payment from Mr. Goodspeed in March, after the 26th or thereabouts?
[Ms.] Brown: We did. I have a record of the log in where the checks-we received several checks on the 26th I believe it was. RP at 36. Following testimony from Ms. Brown about her handling of the checks earlier received on March 24, her attorney touched upon final tender of payment again:
[AIRPORT'S LAWYER]: And then did you receive subsequent to the 24th, did you receive some more checks from M.A. West Rockies?
[MS.] BROWN: We did.
[AIRPORT'S LAWYER]: And what date did you receive those checks?
[MS.] BROWN: That was received I believe on the 26th, I think I left it down on the table there, the copy of the check in log. We log inaudible-I do have a copy of the checks that were returned one of them is actually dated the 26th.
[AIRPORT'S LAWYER]: Did you-did you write a letter to M.A. West Rockies-
[MS.] BROWN: I did-
[AIRPORT'S LAWYER]: With-when you returned those checks?
[MS.] BROWN: I did.
[AIRPORT'S LAWYER]: And I'm handing you Mr. Goodspeed's declaration date[d] May 18th and Exhibit "M" to that declaration, do you recognize that letter?
[MS.] BROWN: Yes.
[AIRPORT'S LAWYER]: Would you tell the Court what that letter is?
[MS.] BROWN: That is the company letter that I sent with the three checks that I returned on March 29th on the advice of counsel.
[AIRPORT'S LAWYER]: Okay and so you did not accept those checks that were delivered on March 26th?
[MS.] BROWN: No.
[AIRPORT'S LAWYER]: And you returned them with this letter on the 29th?
[MS.] BROWN: Yes. RP at 37-38. On cross-examination, Ms. Brown testified:
[WEST'S LAWYER]: I see. Okay and so then on March 26th, Mr. Goodspeed wrote a check for $2,719.00 is this the one they returned?
[MS. BROWN]: Mmm Hmm.
[WEST'S LAWYER]: Now, that's what-that is what was returned because you felt it was eleven days instead of ten days?
[MS.] BROWN: On advice of counsel, I returned it.RP at 47.
On appeal, the airport argues that it proved, and the trial court implicitly found, that the checks were delivered by West to the airport on March 29. It relies on the letter attached as exhibit M to Mr. Goodspeed's declaration, which Ms. Brown was shown and identified when examined. That letter states:
We are returning to you the above referenced checks which we received on March 29, 2010. We are unable to accept them because they were not delivered to us within the time stipulated in the Notice with which you were served on March 15, 2010.CP at 109. Once again, the airport's arguments as to why West was in unlawful detainer after March 26 vary depending on whether West's $2,920.56 payment was delivered to the airport on the 26th or 29th. We need the trial court's finding on that score.
Disputed Issues of Law
Among the disputed issues of law addressed at the trial court and in the parties' briefing on appeal are the following:
Did the airport waive breaches other than the payment of rent by accepting rent paid on March 22?
Was the airport within its rights in refusing tender of the final $2,920.56 by West because it was delivered to the wrong location?
Was the airport within its rights in refusing tender of the final $2,920.56 by West because it did not include attorney fees and costs included in the amount demanded by the notice of default; specifically, what notice requirements and cure period, if any, apply to the airport's demand for fees and costs under the lease and for unlawful detainer purposes?
If the early March deposit reimbursement was applied to arrears in accordance with the airport's March 15 notice of application, was West's failure to reimburse the deposit a breach that could itself place West in unlawful detainer and if so, what notice and cure period, if any, apply?
As West argues, the findings and conclusions entered by the trial court do not address the contested issues on which the outcome of this matter turns. Two findings, numbers 4 and 7, nominally address factual issues, although West argues that finding 4 is a conclusion of law masquerading as a finding of fact. The two findings provide:
4. The time allowed by law has passed since service and posting of said Notice, and Defendant failed and/or refused [to] pay the rent and delinquency charges in compliance with the terms of the Lease Agreement or to surrender the premises in compliance with the Notice of Default for Failure to Pay Rent.
7. There are no substantial issues of material fact of the right of Plaintiff to be granted the other relief prayed for in the Complaint.CP at 159-60. The conclusions of law are no more helpful in identifying the basis on which the trial court resolved the parties' disputes. The pertinent conclusions provide:
1. The Court has jurisdiction over the subject matter . . . to this suit.
2. Defendant is guilty of unlawful detainer as provided by RCW 59.12.030(3).CP at 160.
Findings of fact must be entered in all cases tried without a jury. CR 52. The court is not required to include evidentiary facts in its findings, but it must make findings of fact for all ultimate facts and material issues. Whitney v. McKay, 54 Wn.2d 672, 678-79, 344 P.2d 497 (1959); Wold v. Wold, 7 Wn.App. 872, 875, 503 P.2d 118 (1972). Ultimately, the findings must inform the appellate court "'what questions were decided by the trial court, and the manner in which they were decided.'" Daughtry v. Jet Aeration Co., 91 Wn.2d 704, 707, 592 P.2d 631 (1979) (internal quotation marks omitted) (quoting Bowman v. Webster, 42 Wn.2d 129, 134, 253 P.2d 934 (1953)). It is improper for an appellate court to search out a material or ultimate finding of fact from the evidence in the record because it would place the court in the initial decision-making process rather than maintaining its function of review. Id.
Where more formal findings of fact and conclusions of law are necessary for appellate review, remand for their entry is appropriate. Little v. King, 160 Wn.2d 696, 707, 161 P.3d 345 (2007). In Little, at 707, the Supreme Court cited with approval Foxtrap, Inc. v. Foxtrap, Inc., 217 U.S.App.D.C. 130, 671 F.2d 636, 642 (1982), which holds that the requirement of Federal Rule of Civil Procedure 52(a) that the court identify the findings and conclusions upon which its actions are grounded is particularly important in cases where there are multiple legal theories available, which depend on different factual underpinnings.
West's appeal may have merit, but the two factual determinations identified are needed in order to determine which of the legal arguments made by the parties matter for purposes of appeal. Having concluded that we cannot effectively review this matter without further findings by the court, we remand for entry of additional findings and conclusions, with the ultimate disposition of this appeal, including the parties' request for attorney fees, to await further proceedings.
A majority of the panel has determined that this opinion will not be printed in the Washington Appellate Reports but it will be filed for public record pursuant to RCW 2.06.040.
WE CONCUR: Korsmo, A.C.J. Sweeney, J.