Bishop v. Jefferson Title Co., Inc.
| Decision Date | 10 August 2001 |
| Docket Number | No. 25202-3-II.,25202-3-II. |
| Citation | 107 Wash.App. 833,28 P.3d 802 |
| Parties | James BISHOP and Melody Bishop, husband and wife, Appellants, v. JEFFERSON TITLE COMPANY, INC., a Washington Corporation, Respondent. |
| Court | Washington Court of Appeals |
Lane J. Wolfley, Wolfley, Basden, Hansen, Port Angeles, for Appellants.
Alan Bradford Hughes, Alan B. Hughes, P.s., Seattle, for Respondent.
Kenneth Wendell Masters, Wiggins Law Office, Bainbridge, for Amicus Curiae Wash. State Bar Ass'n.
Paul Hieb, Chimacum, pro se.
James and Melody Bishop appeal dismissal of their legal malpractice action against Jefferson Title Company. The Bishops claimed that Jefferson Title's Limited Practice Officer committed malpractice when she erroneously completed unauthorized form documents for two real estate transactions to which they were parties. The Bishops also appeal an attorney fee award to Jefferson Title and ask that we grant summary judgment in their favor. Holding that summary judgment and the attorney fee award to Jefferson Title were error, we reverse and remand for trial.
Alain & Judith DeChantal (DeChantal) were real estate developers in Jefferson County. In 1990, DeChantal purchased 48 acres of land, comprising ten parcels, financed with a $205,000 development loan from Pacific Coast Investment Company. The loan was secured by a deed of trust for 42 acres of land, which was recorded April 30, 1990, under Jefferson County Auditor's file no. 330300.
James Bishop was a contractor who had worked exclusively for DeChantal's developments for many years. In 1991, DeChantal sold two parcels, together with non-exclusive easements,1 to James and Melody Bishop (Bishop). Bishop recorded the statutory warranty deed from DeChantal, which contained the following reservation:
Subject to: Deed of Trust recorded April 30, 1990 under auditor's file no. 330300 in favor of Pacific Coast Investment Company which the grantor herein agrees to continue to pay according to its terms, and to pay in full not later than the date on which the grantee's indebtedness to the grantor secured by the above-described real estate is fully paid and satisfied.
Clerk's Papers at 119. DeChantal apparently advanced $19,200 in credit to Bishop for the purchase.
As part of the transaction, Bishop recorded a deed of trust for both parcels in favor of DeChantal, securing repayment of this debt.2 DeChantal and Bishop also signed Exhibit "B"3 to the deed of trust ("Exhibit B"). "Exhibit B" provided further information concerning DeChantal's 1990 deed of trust to Pacific Coast Investment and Bishop's 1991 deed of trust to DeChantal. "Exhibit B" stated: "[The][b]eneficiary hereby agrees with the Grantor to discharge the First Note to the Holder thereof ... and to hold Grantor harmless from any liability in connection therewith." "Exhibit B" designated DeChantal as the beneficiary, Bishop as the grantor, and Pacific Coast as the first note holder.
Vicky Lockhart, the Limited Practice Officer (LPO) for escrow agent Jefferson Title, served as closing officer for DeChantal's land sale to Bishop. DeChantal transferred additional property in the development to Bishop by a quit claim deed.4
In 1994, Bishop sold Paul Hieb six parcels of property along with appurtenant easements.5 In an addendum to their purchase and sale agreement, Bishop and Hieb provided:
The deed of trust shall be an `all-inclusive' deed of trust, second to an underlying encumbrance with Pacific Coast Investment Company.
Clerk's Papers at 208. The escrow instructions stated:
[T]he undersigned have examined and hereby approve for use in this escrow the following documents as to content and form: Statutory Warranty Deed, Excise Tax Affidavit, Promissory Note and Deed of Trust.
The 1994 Bishop-to-Hieb statutory warranty deed stated that it was "subject to" the 1990 DeChantal-to-Pacific Coast deed of trust. Critically, the deed stated that the "grantor herein" must "pay in full" the 1990 deed of trust between DeChantal and Pacific Coast:
Clerk's Papers at 178. But Bishop, not DeChantal, was the grantor in the 1994 deed.
Hieb executed a deed of trust in favor of Bishop, securing payment of $65,712.50 that Hieb owed Bishop for the land. But "Exhibit B" to this deed of trust, "attached hereto and made a part" of the deed, utilized the same language, terminology, and party designations from "Exhibit B" to the 1991 DeChantal-Bishop deed of trust. The 1994 "Exhibit B" mentions both the 1994 deed of trust securing Hieb's $65,712.50 debt to Bishop and the 1990 deed of trust securing DeChantal's $205,000 debt to Pacific Coast (the "First Note"); it does not mention the 1991 deed of trust securing Bishop's $19,200 debt to DeChantal.
Bishop, Hieb, and DeChantal signed Exhibit B to the 1994 Hieb-Bishop deed of trust. Exhibit B required the beneficiary to pay the underlying first note:
Beneficiary hereby agrees with Grantor to discharge the First Note to the Holder thereof in accordance with the terms and conditions therein and to hold Grantor harmless from any liability in connection therewith.
Clerk's Papers at 193. But the 1994 Exhibit B does not identify the grantor or the beneficiary.6 The 1994 deed of trust grantor is Paul Hieb, and Bishop is the beneficiary. Again, Vicky Lockhart, the LPO for Jefferson Title, served as closing officer for the Bishop-Hieb transaction.
DeChantal defaulted on his debt to Pacific Coast's successor-in-interest, Olympic Coast Investment, and declared bankruptcy. In 1997, Olympic Coast commenced a trustee's sale of seven lots in DeChantal's development, including the two lots that DeChantal had sold to Bishop and that Bishop, in turn, had sold to Hieb—Parcels II and VI, as well as Parcels VII and VIII (two of the three parcels originally quit-claimed from DeChantal to Bishop).7 Hieb had paid off his obligation to Bishop for his parcels. Hieb also paid $54,000 of DeChantal's debt to Olympic Coast in order to obtain a partial release from the underlying deed of trust and to unencumber his parcels.
In May 1998, Hieb sued Bishop to recover the $54,000 he had paid on DeChantal's behalf, plus costs and attorney fees. Jefferson Title was joined as a third party defendant. The trial court severed the Hieb v. Bishop trial from the Bishop v. Jefferson Title Company trial.
In April 1999, following a trial on Hieb's claims against Bishop, the court entered Findings of Fact and Conclusions of Law. The trial court awarded Hieb $61,147.50 plus $6,969 in attorney fees, for a total judgment against Bishop of $67,116.50. Although this action is not part of the instant appeal, it provides the basis for the financial harm that Bishop suffered as a result of Jefferson Title's alleged negligence.
Both Bishop and Jefferson Title moved for summary judgment. The trial court granted Jefferson Title's motion and denied Bishop's, ruling:
After review of all the declarations submitted by both parties, Admission to Practice Rule 12 (Limited Practice Rule For Closing Officers), and the memoranda of counsel, it is this court's conclusion that as a matter of law there was neither a violation of the Consumer Protection Act nor legal malpractice on the part of Third Party Defendant Jefferson Title.
Clerk's Papers at 589-90. The trial court dismissed with prejudice all third-party claims against Jefferson Title and awarded it $26,876.55 in expenses, attorney fees and costs, "pursuant to written agreement."
On a motion for summary judgment, the trial court must view all evidence and draw all reasonable inferences in favor of the nonmoving party; then it must deny the motion if the evidence and inferences create any question of material fact. Scott v. Pac. West Mountain Resort, 119 Wash.2d 484, 487, 834 P.2d 6 (1992). On appeal, we engage in the same inquiry as the trial court. DeYoung v. Providence Med. Ctr., 136 Wash.2d 136, 140, 960 P.2d 919 (1998); Benjamin v. Washington State Bar Ass'n, 138 Wash.2d 506, 515, 980 P.2d 742 (1999). Summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Kruse v. Hemp, 121 Wash.2d 715, 722, 853 P.2d 1373 (1993); CR 56(c). Applying this standard, we hold that the trial court erred in granting summary judgment to Jefferson Title on Bishop's malpractice and consumer protection claims.
Admission to Practice Rule (APR) 12 creates an exception to the general rule that only licensed attorneys may practice law in the state of Washington.8 The rule authorizes "certain lay persons to select, prepare and complete legal documents incident to the closing of real estate and personal property transactions." To become certified to engage in this limited practice of law such lay persons must first pass an examination. APR 12(b)(2)(ii).9
APR 12(d) governs the scope of practice for non-lawyers authorized to provide limited legal services in closing real estate transactions:
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