Amundson v. Lemcke, 77265-1-I

CourtCourt of Appeals of Washington
Writing for the CourtANDRUS, J.
Docket NumberNo. 77265-1-I,c/w No. 77461-1,c/w No. 77462-0,77265-1-I
PartiesRON AMUNDSON and EDEL AMUNDSON, husband and wife, and their marital community, Appellants/Cross-Respondents, v. JAMES ROGER LEMCKE and DONNARAE LEMCKE, husband and wife, and their marital community; KENNETH HARTUNG and JEANETTE BETH MEANS, husband and wife, and their marital community; TRAVIS KRANT and STACY KRANT, husband and wife, and their marital community, Respondents/Cross-Appellants.
Decision Date21 October 2019


ANDRUS, J. — Ron and Edel Amundson, prospective purchasers of a property situated on Lake Union owned by James and Donnarae Lemcke (Sellers), appeal the dismissal of their claim for specific performance. The Amundsons challenge the validity of a right of first refusal held by Kenneth Hartung, Jeanette Means, and Travis and Staci Krant, who are houseboat owners and moorage tenants on the Sellers' property (Tenants). The Amundsons also contend that the Tenants failed to properly exercise their right of first refusal by offering to purchase the property on terms that did not match the Amundsons' offer.

The Sellers and Tenants cross-appeal the denial of damages to the Sellers and attorney fees and costs to the Tenants under the lis pendens statute, RCW 4.28.328.

We conclude that the Tenants' right of first refusal was valid and that the material terms of their offer matched those in the Amundsons' offer. We therefore affirm summary judgment and the dismissal of the Amundsons' complaint. We similarly affirm the denial of the Sellers' claim of damages and the Tenants' claim for attorney fees under the lis pendens statute because the Amundsons had substantial justification for filing a lis pendens when they initiated this lawsuit.


The Sellers1 own property situated on Lake Union in Seattle (Property). The Property consists of a cottage and a dock with three moorage spaces, each of which accommodates one floating home. Houseboat owners Travis and Staci Krant have leased moorage space from Donnarae since 2015. Kenneth Hartung and Jeanette Means, fellow houseboat owners, have leased their moorage space since 1974.2

Donnarae granted these Tenants a right of first refusal to purchase the Property in the event she chose to sell it. The Krants' right of first refusal is documented in their written lease, dated June 1, 2015:

9. Right of First Refusal: For good consideration in hand received, I as Landlord, agree that if I decide to sell the property, all three houseboat owners will have first right of refusal (either individually or collectively) on the property, but NOT the moorage slips separately. The houseboat owners will have 60 days to match any bona-fide offer tendered for the purchase of the property if any such offer should be presented from other than the three houseboat owners.

Hartung and Means did not have a written lease with Donnarae, but Donnarae testified that she orally promised Means and Hartung a right of first refusal. Means and Hartung also testified that they inherited a right of first refusal from Richard Duke, the previous owner of their houseboat.

In 2016, the Sellers listed the Property for sale for $1.8 million. On May 3, 2016, the Amundsons submitted a list-price cash offer, contained on a standard Commercial Brokers Association Purchase and Sale Agreement form. On May 5, 2016, the Sellers submitted a counteroffer by adding a proposed addendum:

Buyer, Ron Amundson, may only assign this contract to an LLC controlled by himself and/or his immediate family members.
Buyer agrees to provide proof of funds sufficient for closing on or before 5:00 PM on May 9, 2016 or this contract is null and void.
. . .
Pursuant to the terms of existing floating home moorage site rental agreements, each of the three moorage site tenants have a 60 day right of first refusal allowing them individually or collectively to match any offer received by Seller. Any purchase and sale agreement secured through this listing shall be subject to and contingent upon the expiration or waiver of the right of first refusal. If any one or more existing floating home moorage site tenants (or entity formed and controlled by them) exercise their right of first refusal and purchase the subject property, then the Selling Office portion of the commission will be waived.

The Amundsons accepted this counteroffer, and the parties executed an agreement that same day (Amundson PSA).

The next day, the Amundsons' real estate broker, Peter Argeres, sent Mark Anderson, the Sellers' listing agent, a copy of the Amundsons' Merrill Lynch account statement, showing a portfolio valued at over $9 million, to satisfy the proof of funds requirement. Anderson acknowledged the Sellers' acceptance of the documentation as adequate to satisfy the contingency.

The Sellers notified the Tenants of the Amundson PSA on May 9, 2016, and informed them that they had 60 days to match the Amundsons' offer. On July 7, 2016, the Tenants' attorney, Phil Miller, notified the Sellers' attorney, Gregory Petrie, of the Tenants' intent to exercise their right of first refusal. The Tenants submitted a proposed agreement on the same standard Commercial Brokers Association form as the Amundson PSA (the Tenants' PSA). The Tenants' offer included the following addendum:

1. Buyer may assign this contract to a Washington non-profit corporation to be operated as a cooperative in which the named individuals comprising Buyer collectively own not less than a 50% interest.
2. Buyer agrees to provide proof of funds sufficient for closing on or before 5 pm on July 14, 2016 or this contract is null and void.
. . .
5. Form 17 and Form 22-J as attached to the "Amundson PSA" dated May 3 are incorporated herein.

To satisfy their proof of funds requirement, the Tenants submitted numerous bank statements reflecting liquid assets of approximately $1.2 million and a loan approval letter from Sound Community Bank. The bank'sletter noted that the Tenants intended to include a fourth co-borrower, Katence Olson, on the loan. The loan commitment was conditioned on, among other things, an appraisal of the Property.

Anderson, the listing agent, sent an e-mail to Petrie, the Sellers' attorney, questioning the adequacy of the Tenants' documentation:

I don't think this offer is a valid matching offer. Other buyer [Amundson] offer includes proof of funds for closing on addendum near back of offer. If houseboat owners need financing to close, then it's subject to an appraisal, unless bank provides approval letter which states buyers are approved, have access to funds, and most importantly it does not require an appraisal for closing.

Petrie responded: "I agree that if they intend to rely upon any financing, they must show they have liquid assets to close in the event the bank refuses to loan the money."

On July 14, 2016, Petrie met with the Sellers to discuss the competing agreements. The Sellers chose to accept the Tenants' offer and to terminate the agreement with the Amundsons. Donnarae felt that the Tenants' PSA was materially the same as the Amundson PSA and was a valid exercise of the Tenants' right of first refusal.

Petrie notified Argeres that the Sellers had accepted the Tenants' offer and subsequently provided him with a copy of the Tenants' proof of funds. Argeres challenged the adequacy of the Tenants' documentation:

My calculations come up to about $1.2 million which is only two thirds of the necessary matching amount. Two thirds is not a matching amount. Therefore, this is not a matching offer per the Purchase and Sale Agreement. So the prospective Buyers "Tenants" did not satisfy providing proof of funds sufficient for closing per our Purchase and Sale agreement dated May 3, 2016. Please remove the Tenant'sFirst Right to Purchase so my Buyer [Amundson] can proceed to closing.

The Sellers chose to proceed with the sale to the Tenants. Hartung, Means, the Krants, and Olson applied for a loan with Sound Community Bank in late July 2016 and executed loan commitments with the bank in mid-August 2016.

While the Tenants worked to close the transaction, on August 3, 2016, the Amundsons tendered the full purchase price by cashier's check to the closing agent, First American Title Insurance Company, and demanded that it close the transaction pursuant to the terms of the Amundson PSA. But the firm refused to complete the transaction.

On August 11, 2016, the Amundsons filed a complaint against the Sellers and the Tenants, seeking specific performance of the Amundson PSA. They filed a notice of lis pendens on the Property at the same time. The lis pendens precluded the Sellers from delivering clear title to the Tenants, causing the bank to refuse to close on the Tenants' loan.

After conducting discovery, the Amundsons moved for summary judgment against both the Sellers and the Tenants "to determine who may buy that Lake Union property." The Tenants also moved for summary judgment, claiming that they were rightfully entitled to purchase the Property because their offer was a matching offer.

On July 20, 2017, the trial court granted summary judgment to the Tenants, holding that the two agreements, while not the "mirror image" of one another, "did not materially vary . . . so as to render void the right of first refusal." It concluded that "The [Sellers'] acceptance of [the Tenants'] purchase and sale agreementrendered the Amundsons' contract null and void." The trial court then dismissed the Amundsons' complaint.

On August 3, 2017, the Tenants and the Sellers signed a "Stipulation and Judgment of Specific Performance," providing for the sale of the Property to the Tenants in the event the Amundsons did not prevail on appeal. The trial court entered this judgment on August 4, 2017.

The Sellers subsequently sought attorney fees under Paragraph 21 of the Amundson PSA and the lost interest on the $1.8 million purchase price under the lis pendens statute, RCW 4.28.328. The Tenants also sought an award of...

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