CKMS II, Inc. v. Ho, No. 53354-1-I (WA 12/27/2004), No. 53354-1-I

• Decision Date: 27 December 2004
• Docket Number: No. 53354-1-I
• Court: Washington Supreme Court
• Parties: CKMS II, INC., a Washington corporation, and CHUNG K. CHOE and MICHELLE CHOE, husband and wife, Appellants, v. CHANG KYU HO and HEA RYUN HO, husband and wife, in their marital community, HYUN SUK YOO, a/k/a SHAUN YOO and `JANE DOE' YOO, husband and wife, in their marital community, AMERICA'S CHOICE REALTY, a business entity, `JOHN DOE,' broker for America's Choice Realty, and `JANE DOE,' spouse of `JOHN DOE,' in their marital community, Defendants, and SANG J. NOH and `JANE DOE' NOH, husband and wife, in their marital community and LANDOVER CORPORATION, d/b/a COLDWELL BANKER, Respondents. CHANG HO and HEA RYUN HO, husband and wife, and their marital community, Third Party Plaintiffs, v. CKMS, INC., Third Party Defendant. CKMS, INC., Third Party Plaintiff, v. SARAWASER CORPORATION, Third Party Defendant.

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Unpublished Opinion

CKMS II, INC., a Washington corporation, and CHUNG K. CHOE and MICHELLE CHOE, husband and wife, Appellants, v. CHANG KYU HO and HEA RYUN HO, husband and wife, in their marital community, HYUN SUK YOO, a/k/a SHAUN YOO and `JANE DOE' YOO, husband and wife, in their marital community, AMERICA'S CHOICE REALTY, a business entity, `JOHN DOE,' broker for America's Choice Realty, and `JANE DOE,' spouse of `JOHN DOE,' in their marital community, Defendants, and SANG J. NOH and `JANE DOE' NOH, husband and wife, in their marital community and LANDOVER CORPORATION, d/b/a COLDWELL BANKER, Respondents.

CHANG HO and HEA RYUN HO, husband and wife, and their marital community, Third Party Plaintiffs, v. CKMS, INC., Third Party Defendant.

CKMS, INC., Third Party Plaintiff, v. SARAWASER CORPORATION, Third Party Defendant.

No. 53354-1-I

Court of Appeals of Washington, Division One.

Filed: December 27, 2004

Appeal from Superior Court of King County. Docket No. 02-2-19787-6. Judgment or order under review. Date filed: 10/10/2003. Judge signing: Hon. James D Cayce.

Counsel for Appellant(s), Karl Yongsuk Park, Law Offices of Karl Park, 1010 S 336th St Ste 312, Federal Way, WA 98003-7355.

Counsel for Defendant(s), Molly B. Kenny, Attorney at Law, 800 5th Ave Ste 4100, Seattle, WA 98104-3100.

Counsel for Respondent(s), Chase Christian Alvord, Tousley Brain Stephens PLLC, 700 5th Ave Ste 5600, Seattle, WA 98104-5056.

Coreen Rebecca Ferencz, Attorney at Law, 700 5th Ave Ste 5600, Seattle, WA 98104-5056.

AGID, J.

When their newly-purchased motel did not raise the revenue they expected, Chung and Michelle Choe sued real estate agent Sang Noh for tortious conduct and violation of the Consumer Protection Act (CPA). The trial court dismissed the case on summary judgment, denied the Choes' request to amend their complaint, and awarded attorney fees and costs to Noh. Because the Choes present no evidence to create a genuine issue of material fact about any of their claims, we affirm.

FACTS

Chung and Michelle Choe have owned and operated at least seven businesses in the Seattle-Tacoma area. Sometime in 2000, the Choes' real estate agent, Shaun Yoo, informed the Choes that a Ramada Limited motel in Des Moines was for sale. Yoo introduced the Choes to Sang Noh, a Coldwell Banker real estate agent who was representing the motel's sellers, Chang and Hea Ho.

At Yoo's request, Noh familiarized the Choes with the motel and provided them with information about the motel's past and present financial performance. Noh got this information while he was handling earlier transactions for the motel and the Hos. Sometime during the transaction, Mr. Choe asked Noh to provide certain documents to the Choes' banks for their loan applications. Mr. Choe also asked for Noh's assistance in completing the Ramada franchise license application and getting a projection of the motel's future financial performance. Noh referred Mr. Choe to a certified public accountant who used information provided by Mr. Choe and Mr. Ho to complete the franchise license application and financial projection.

In December 2000, the Choes purchased the motel from the Hos. The Purchase and Sale Agreement listed the buyer as CKMS, Inc., a corporation owned by the Choes.¹ The Agreement also named Noh as the listing agent and Yoo as the buyers' agent. In March 2001, the parties signed an addendum to the Agreement which removed all contingencies on the motel's sale. The sale closed in May 2001. Shortly thereafter, the Choes discovered that business was slow, the motel remodel the Hos had done was allegedly defective and incomplete, and a new Ramada Inn and Suites had recently opened near the Sea-Tac airport.² Several months later, the September 11 attacks occurred, devastating the travel industry. The Choes' motel lost money, and the Choes accused Noh of misrepresenting the motel's financial information and of failing to tell them about the defective remodel and the new Ramada Inn and Suites.

In August 2002, the Choes filed this suit against Noh and Coldwell Banker (collectively Noh) alleging misrepresentation, breach of partnership agreement, negligence, unfair business practice, fraud, negligent hiring, and negligent supervision.³ On September 12, 2003, Noh moved for summary judgment. On September 29, 2003, the Choes moved to amend their complaint. On October 8, 2003, the trial court granted the Choes' motion to amend. Two days later, the court granted Noh's motion for summary judgment. In light of the summary judgment order, Noh filed a motion to reconsider the decision granting leave to amend. The court granted the motion and vacated the order. The court also awarded Noh attorney fees and costs. The Choes appeal all of the court's orders.

DISCUSSION

I. Summary Judgment

In reviewing a trial court's decision to grant summary judgment, this court reviews questions of law de novo.⁴ We consider all facts and reasonable inferences in the light most favorable to the nonmoving party.⁵ Absent a genuine issue of any material fact, the moving party is entitled to summary judgment as a matter of law.⁶ Summary judgment is proper `only if reasonable persons could reach only one conclusion from all of the evidence.'⁷

The Choes base their action on three factual allegations: Noh (1) misrepresented the motel's business volume, profit, and rental income, (2) failed to disclose that the Hos' remodel project was faulty and incomplete, and (3) failed to disclose that a new Ramada near the Sea-Tac airport was to be built. In support of these allegations, the Choes presented profit and loss statements, cash flow projection statements, and Noh's handwritten notes. But none of these documents creates a genuine issue of material fact that permits the Choes' suit to survive summary judgment.

First, to succeed with their fraud claim, the Choes must prove by clear, cogent, and convincing evidence⁸ that Noh represented an existing, material fact that he knew to be false.⁹ Further, the Choes must prove that Noh expected them to act upon the representation, the Choes did not know the representation was false, and the Choes reasonably relied on the truth of the representation to their detriment.¹⁰ Similarly, to succeed with their negligent misrepresentation claim, the Choes must show by clear, cogent, and convincing evidence¹¹ that Noh supplied false information while guiding them in a business transaction and the Choes justifiably relied on the misrepresentation and suffered injuries as a consequence.¹² The Choes must also show that in obtaining or communicating the information, Noh failed to exercise reasonable care or competence.¹³

In this case, both of these claims fail because the Choes present no evidence that Noh knowingly presented false information. Although it is unclear from the record and their briefing, the Choes appear to rely on the disparities in various financial documents to prove their claims. But nowhere do the Choes demonstrate that Noh knew the documents were inaccurate, or that he failed to exercise reasonable care. In fact, both Mr. and Mrs. Choe admitted in their depositions that they knew of no evidence demonstrating that Noh knew the information was incorrect. When asked whether she had any evidence that Noh provided incorrect information, Mrs. Choe responded `No, I did not.' And when asked whether he had any reason to believe that Noh knew a financial projection document was inaccurate, Mr. Choe responded, `That I don't know.' Similarly, when asked if he had any evidence that Noh knew the November and December 2000 profit and loss statements were incorrect, Mr. Choe responded, `I don't know.' Throughout his deposition, Mr. Choe consistently admitted, directly or indirectly, that he had no evidence that Noh knew his information was incorrect. It seems that the only evidence the Choes rely upon is that the motel's ultimate, actual income did not match the past or projected income. But statements that amount to opinion or predictions, such as financial projections, cannot form the basis of a fraud or negligent misrepresentation claim.¹⁴

Similarly, the Choes present no evidence that Noh knew of the new Ramada Inn and Suites and improperly concealed that information. When asked what evidence he had to demonstrate that Noh was aware that the new hotel was being built, Mr. Choe responded, `I have no evidence, no written form. But you know, the two people are experts in this area, real estate brokering business, motel, specializing in motels. I think it impossible for them, you know, for them not to know about that.' This supposition is insufficient to survive summary judgment.

Finally, in an addendum to their Purchase and Sale Agreement, the Choes agreed to eliminate the contingencies `with the clear and distinct understanding that all profits are future.' In that same document, the Choes indicated their understanding that broker or his agent have no knowledge of the accuracy of the information {the Choes} have been supplied and made no warrant, expressed or implied, as to such information. {The Choes} agree that broker or his agent is not responsible for the accuracy of any information {the Choes} received and hold broker harmless from any claims or damages resulting from its use and therefore {the Choes} have looked only to Seller and to {the Choes'} own investigation.¹⁵

The Choes clearly waived their ability to claim that Noh provided information that he knew was incorrect. Therefore, even viewing all facts and reasonable inferences in the light most favorable to the Choes, the fraud and negligent misrepresentation claims cannot go forward as the evidence fails to create a genuine issue of material fact. This is especially so given that the Choes must prove these claims with clear, cogent, and convincing evidence.

Similarly, the Choes' negligence claim against Noh cannot survive summary judgment. To establish a negligence claim, the Choes must prove...