Boguch v. Landover Corp.

Decision Date21 December 2009
Docket NumberNo. 62446-6-I.,62446-6-I.
Citation224 P.3d 795,153 Wash.App. 595
CourtWashington Court of Appeals
PartiesGeoff BOGUCH, Appellant, v. The LANDOVER CORPORATION, a Washington Corporation (d/b/a Coldwell Banker Bain); Windermere Real Estate/East, Inc., a Washington Corporation; Wendy M. Lister and John Doe Lister, and the marital community comprised thereof; and Rondi Egenes and John Doe Egenes, and the marital community comprised thereof, Respondents.

DWYER, A.C.J.

¶ 1 To prevail on a claim that a real estate agent's negligence caused a financial loss on the sale of property, the property owner must show that, but for the agent's negligence, he or she would have sold the property on terms more advantageous than those of the eventual sale. Geoff Boguch failed to adduce evidence establishing that, had his realtors not published an inaccurate depiction of the boundary lines of his property, he would have sold that property on more advantageous terms than the terms of the eventual sale. Boguch's assertion that he would have sold the property for a higher price than he eventually did is speculative. Accordingly, we affirm the trial court's order granting summary judgment in the realtors' favor.

¶ 2 Also at issue is whether one of Boguch's realtors is entitled to an award of attorney fees under her contract with Boguch. A provision in the contract provides for an award of attorney fees to the prevailing party in an action brought to enforce the terms of the agreement. However, a party may recover attorney fees under a contractual provision such as the one at issue herein only where the underlying action is brought on the contract and the contract is central to the dispute. Where a party alleges a breach of a duty imposed by a source other than the contract, the action is not on the contract, even if the duty would not exist in the absence of a contractual relationship. Although Boguch claimed a breach of contract, the litigation herein concerned Boguch's claims that the realtors breached the common law and statutory duties they owed to Boguch in representing his interests. Therefore, pursuant to the contract's fee-shifting provision, Boguch's realtor may not recover fees incurred for time spent defending against Boguch's tort claims. Because the realtor's contractual fee-recovery right is limited to fees incurred in defense of an action brought on the contract, the realtor must segregate the time her lawyers spent defending against Boguch's tort claims from the time they spent defending against his breach of contract claim in order to prove her entitlement to a fee award. Accordingly, we vacate the trial court's award of attorney fees and remand for a recalculation of the award.

I

¶ 3 In February 2001, Boguch entered into an exclusive sale and listing agreement with two real estate brokers—Wendy Lister of the Landover Corporation and Rondi Egenes of Windermere Real Estate/East, Inc. (collectively, the "realtors")—for the sale of waterfront property located in the town of Hunts Point, Washington. The initial duration of the agreement was for six months and was thereafter renewable on a month-to-month basis. Pursuant to the agreement, the realtors were responsible for listing Boguch's property with the Northwest Multiple Listing Service (MLS) in exchange for a five percent sales commission. Before the parties entered into the agreement, Lister suggested that the property should be listed for sale at $3.85 million and indicated that Boguch should expect to sell the property for approximately $3.5 million. Boguch subsequently listed the property at $3.85 million.

¶ 4 During the first six months the property was on the market, no one offered to purchase it. In September, in response to the lack of interest in the property, Boguch, in consultation with the realtors, reduced the listing price to $3.475 million. The reduced price, however, did not spark interest among buyers. Over the next six months, no one expressed interest in purchasing the property.

¶ 5 In March 2002, the realtors posted an aerial photograph of the property on the MLS website. The photograph contained superimposed lines depicting the property's boundaries. The lines, however, were inaccurate. They depicted the property as being smaller in area and less uniform in shape than it actually was. Instead of depicting the property as a waterfront lot roughly shaped as a parallelogram, the photograph indicated that one of the boundary lines along the length of the property ran in a jagged fashion, meandering toward and away from the property's center line. This boundary line made the property appear to be unevenly narrow at certain points. The inaccurate line also made it appear as though foliage having the potential to interfere with views of the water from Boguch's house on the property was rooted on an adjacent property. Further, the lines made the length of the property's shoreline appear to be shorter than it actually was.

¶ 6 More than two years passed after the realtors posted the photograph on the MLS website before anyone noticed these errors. Sometime in either late spring or early summer of 2004, Art Whittlesey, another real estate broker associated with Landover, contacted Boguch about the property. Whittlesey explained to Boguch that he had shown the property to Todd Bennett, a developer and mutual acquaintance of both Whittlesey and Boguch who was interested in buying waterfront property either as an investment or for his own use. After viewing Boguch's property, Bennett decided that he was not interested in purchasing it. In his conversation with Whittlesey about Bennett's decision not to make an offer on the property, Boguch became aware that the aerial photograph posted on the website inaccurately depicted the property's boundary lines. Despite being aware of the inaccurate depiction, however, Boguch did not immediately raise this issue with either Lister or Egenes. Instead, he continued to list the property with them, even though no one had offered to purchase the property during the entire time that it was on the market. At some point in the summer of 2004, Boguch discussed the inaccurate photograph with the realtors, and they removed the erroneous image from the website. Boguch then allowed his contract with the realtors to expire at the end of July.

¶ 7 In August 2004, Boguch listed the property with Whittlesey, further reducing the asking price to $3.395 million. Within six months of doing so, a couple offered to purchase the property for between $2.7 and $2.8 million. In April 2005, Boguch sold the property to these buyers for $2.975 million.

¶ 8 Boguch subsequently sued Lister and Egenes and their respective firms, bringing a common law negligence claim against them, as well as a claim that the realtors breached their professional duties under chapter 18.86 RCW.1 In bringing these claims, Boguch alleged that the realtors were negligent in posting the inaccurate depiction of the property boundary lines on the Internet and that, but for their negligence, he would have sold the property sooner and for a higher price than he eventually did. Boguch also brought an unspecified breach of contract claim against the realtors.

¶ 9 Shortly before trial, the realtors moved for summary judgment, contending that Boguch could not put forth evidence establishing that their alleged negligence was the proximate clause of his claimed injuries. Any verdict in Boguch's favor, they asserted, would necessarily be based on speculation.

¶ 10 In opposition, Boguch argued that several pieces of circumstantial evidence satisfied his burden of establishing a prima facie claim of negligence against the realtors. Boguch maintained that this evidence, when viewed as a whole, showed that the inaccurate boundary line depiction triggered a vicious cycle of reduction in the property's market value. According to Boguch's theory, the erroneous boundary lines made the property appear overpriced and thus deterred prospective buyers from offering to purchase the property. Prospective buyers' reluctance to consider the property, in turn, caused the property to sit on the market longer than it would have otherwise. Consequently, Boguch asserted, the property's market value was further reduced, as prospective buyers assumed that the property was overpriced because it had been on the market for a relatively long period of time. The longer the property sat on the market, Boguch argued, the more difficult it became to sell.

¶ 11 In support of these contentions, Boguch pointed to evidence that the eventual buyers were unwilling to pay a higher price for the property because they believed that the length of time the property was on the market meant the property was overpriced or somehow flawed. According to Whittlesey's deposition testimony, the buyers' agent stated during negotiations that the buyers "did not want to go forward with the deal ... because of the time the property had been on the market" and that they believed "something must be the matter with the property because of that time without a sale." Boguch testified similarly in his deposition. Boguch also submitted e-mail correspondence he received from Whittlesey in 2005 summarizing statements of the buyers' agent to this effect. Lister herself and Whittlesey testified in their depositions that Internet advertisements are vital to the marketing of real estate, and, further, confirmed that buyers often consider properties that sit on the market for a prolonged period of time to be risky investments.

¶ 12 To support the allegation that the erroneous photograph caused the property to languish on the market, Boguch relied on statements allegedly made by Paula Fortier, the manager of the Landover office in which Lister worked. According to...

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