Association v. Isabella Estates

• Decision Date: 19 November 2001
• Docket Number: No. 48428-1-I.,48428-1-I.
• Citation: 109 Wash.App. 230,34 P.3d 870
• Court: Washington Court of Appeals
• Parties: MARINA COVE CONDOMINIUM OWNERS ASSOCIATION, Respondent, v. ISABELLA ESTATES, a Washington limited partnership; Harvey Cherewick and Jane Doe Cherewick, husband and wife; Randolph Cherewick and Jane Doe Cherewick, husband and wife; Deanne Radke and John Doe Radke, wife and husband; and Does 1 Through 35, Inclusive, Appellants, and Trigny Corp., a Washington corporation, Defendant.

34 P.3d 870

109 Wash.App. 230

MARINA COVE CONDOMINIUM OWNERS ASSOCIATION, Respondent, v. ISABELLA ESTATES, a Washington limited partnership; Harvey Cherewick and Jane Doe Cherewick, husband and wife; Randolph Cherewick and Jane Doe Cherewick, husband and wife; Deanne Radke and John Doe Radke, wife and husband; and Does , Inclusive, Appellants, and Trigny Corp., a Washington corporation, Defendant.

No. 48428-1-I.

Court of Appeals of Washington, Division 1.

November 19, 2001.

Martin L. Zionitz, Mark J. Wilson, Peizer Richards & Zionitz, Seattle, for Appellants.

Jeffrey G. Frank, Bullivant Houser Bailey, Seattle, for Defendant.

Jo M. Flannery, James L. Strichartz, Seattle, Jerry H. Stein, Los Angeles, CA, for Respondent.

BAKER, J.

The Marina Cove Condominium Owners Association (the Association) sued the condominium's developer, Isabella Estates, for breach of implied warranties of quality under the Washington condominium act (WCA). The trial court denied Isabella Estates' motion to compel binding arbitration under the parties' limited warranty agreement. Because the right to judicial proceedings may not be waived under the WCA, we affirm.

I

Isabella Estates, through its general partner, Lakewood Construction,¹ built a 33-unit condominium project called the Marina Cove Condominiums. As an addendum to both its declaration of covenants² and its public offering statement,³ it attached the Lakewood Construction Limited Warranty, a detailed and comprehensive document that sets forth the nature and extent of express warranties offered, detailed exclusions, and the parties' contractual remedies.

After all the units were sold, the homeowners discovered alleged defects in the construction of the buildings. When they were unable to resolve their warranty disputes, the homeowners association sued for breach of implied warranties under the Washington condominium act. Isabella Estates moved to dismiss on the ground that the parties must submit to binding arbitration under the terms of the limited warranty. The issue was tried pursuant to chapter 7.04 RCW. The trial court determined that the Lakewood Construction Limited Warranty was unenforceable. Isabella Estates appeals.

II

Preliminarily, Isabella Estates argues for reversal and remand because the Association failed to serve it with notice of presentation and copies of proposed findings of fact and conclusions of law. CR 52(c) states:

Unless an emergency is shown to exist, or a party has failed to appear at a hearing or trial, the court shall not sign findings of fact or conclusions of law until the defeated party or parties have received 5 days' notice of the time and place of the submission, and have been served with copies of the proposed findings and conclusions....

In this case, no emergency or failure to appear by Isabella Estates excuses the Association's noncompliance with CR 52(c). Moreover, the fundamental role of each party in the presentation of findings of fact and conclusions of law makes it rare that violation of the rule would constitute harmless error.⁴ Here, however, the issues on appeal involve solely questions of law, upon which the trial court's findings of fact and conclusions of law have no bearing. Because the Association's failure to comply with CR 52(c) did not prejudice Isabella Estates, remand is not required.

Isabella Estates argues that the parties are bound by their agreement to submit to binding arbitration under the Lakewood Construction Limited Warranty. The Association argues that the limited warranty was not a negotiated agreement of the parties, but contends that we need not determine whether the parties entered into such an agreement because the Washington condominium act does not permit parties to waive enforcement of its provisions by judicial proceeding.

In 1989, the Legislature adopted the WCA⁵ to make uniform the law among the states concerning the creation and management of condominiums, and the consumer protections for condominium purchasers.⁶ RCW 64.34.100(2), which is part of the act, states, "Any right or obligation declared by this chapter is enforceable by judicial proceeding." Isabella Estates interprets the language as creating a cause of action, but not as establishing a substantive right that may not be altered by agreement.

Statutory interpretation is a question of law, which we review under an error of law standard.⁷ Our first task is to determine whether or not the statute is ambiguous. A statute is ambiguous if it is susceptible to more than one reasonable interpretation.⁸ But a court does not discern ambiguity simply because more than one interpretation is conceivable.⁹ The terms in RCW 64.34.100 in the context of the statute as a whole reflect no ambiguity.

When interpreting an unambiguous statute, a court derives its meaning from the wording of the statute itself.¹⁰ Plain words do not require construction.¹¹ Moreover, courts assume that the Legislature means exactly what it says.¹² In this case, it is RCW 64.34.455 that creates a cause of action. It states in pertinent part:

If a declarant or any other person subject to this chapter fails to comply with any provision hereof or any provision of the declaration or bylaws, any person or class of persons adversely affected by the failure to comply has a claim for appropriate relief....

The text of RCW 64.34.100(2) provides the method by which a claim is maintained. The Legislature's choice of language, that the act "is enforceable by judicial proceeding" is definitive, and any argument that it should be interpreted as permissive is eclipsed by RCW 64.34.030, which states:

Except as expressly provided in this chapter, provisions of this chapter may not be varied by agreement, and rights conferred by this chapter may not be waived....

Regardless of whether terms of the act express a substantive right or make some other provision, neither may be modified by agreement unless explicit authority to do so exists elsewhere in the chapter. The WCA grants that authority in several of its sections,¹³ but it allows for no modification of RCW 64.34.100(2).

Isabella Estates contends that such a holding is contrary to Washington's strong public policy favoring arbitration.¹⁴ We agree that Washington courts voice a preference for arbitration in other contexts, but we will not defy express provisions of a statute to further that policy.¹⁵ Moreover, nothing in the language of RCW 64.34.030 and .100 prevents parties from mediating or otherwise settling their disputes in any manner they wish, including nonbinding arbitration. The WCA only restricts parties' ability to abrogate enforcement of its terms by judicial proceeding should alternative methods of dispute resolution fail.

III

We next review the validity of the warranties set forth in the Lakewood Construction Limited Warranty in light of the Legislature's stated intent that the WCA not prevent or be inconsistent with the use of insured warranty programs.¹⁶ Isabella Estates assigns error to the trial court's conclusion that the limited warranty is unenforceable as an impermissible general disclaimer of implied warranties under the WCA. In addition to any express warranties a declarant¹⁷ or dealer¹⁸ might offer, a purchaser of a condominium has the benefit of the following implied warranties under the WCA:

Implied warranties of quality

(1) A declarant and any dealer warrants that a unit will be in at least as good condition at the earlier of the time of the conveyance or delivery of possession as it was at the time of contracting....

(2) A declarant and any dealer impliedly warrants that a unit and the common elements in the condominium are suitable for the ordinary uses of real estate of its type and that any improvements made or contracted for by such declarant or dealer will be:

(a) Free from defective materials; and

(b) Constructed in accordance with sound engineering and construction standards, and in a workmanlike manner in compliance with all laws then applicable to such improvements. ...¹⁹ (Emphasis added).

The act allows declarants or dealers to exclude or modify these warranties as follows:²⁰

(1) Except as limited by subsection (2) of this section, implied warranties of quality:

(a) May be excluded or modified by written agreement of the parties ...

(2) With respect to a purchaser of a unit that may be occupied for residential use, no general disclaimer of implied warranties of quality is effective, but a declarant and any dealer may disclaim liability in an instrument signed by the purchaser for a specified defect or specified failure to comply with applicable law, if the defect or failure entered into and became a part of the basis of the bargain.²¹

In this case, the Lakewood Construction Limited Warranty sets forth an exhaustive list of items covered or excluded. It describes the developer's responsibilities for each warranted item as follows:

The Performance Standards list specific items (Defects) within each separate area of coverage. The first section covers Workmanship and Materials; the second section covers Systems. The standards are expressed in terms of performance criteria. For easy comprehension, the format is designed as follows:

Possible Deficiency—a brief statement, in simple terms, of problems that may be encountered.

Performance Standard—a performance standard relating to a specific deficiency.

Responsibility—a statement of the corrective action required of the Builder to repair the deficiency or a statement of the Condominium Owner's maintenance responsibilities.

The performance standards under the limited warranty are measured by governmental rules, regulations and building codes, the condominium's plans and specifications, the standards set forth in the agreement itself, and locally accepted building practices. Essentially, the limited warranty sets forth the statutory and common law standards of quality for implied warranties.²²

The trial court found that the list of...