CRJ Kim, Inc. v. JKI Investments, Inc.
| Decision Date | 14 March 2017 |
| Docket Number | 48566-4-II |
| Parties | CRJ KIM, INC., a Washington corporation, Respondent, v. JKI INVESTMENTS, INC., a Washington corporation, and DAVID KIM and JANE KIM, husband and wife and the marital community thereof, Appellants. |
| Court | Washington Court of Appeals |
UNPUBLISHED OPINION
JKI Investments, Inc., appeals the trial court's summary judgment order granting CRJ Kim, Inc., specific performance of the parties' purchase and sale agreement (PSA) to sell a Super 8 hotel in Port Angeles. JKI's president, David Kim, also appeals the trial court's ruling denying his summary judgment motion to dismiss CRTs claim of tortious interference with that contract.
We hold that (1) the PSA was an enforceable contract even though it did not allocate a portion of the purchase price to the hotel property; (2) the PSA's financing addendum, which stated that the PSA would terminate unless CRJ provided notice within 60 days after mutual acceptance of the PSA that it had satisfied or waived a requirement that it obtain new financing, applied to this transaction; (3) JKI neither waived the 60-day notice deadline nor was estopped from asserting the deadline as grounds for termination even though JKI continued discussions with CRTs lender after the deadline passed; and (4) David Kim is entitled to summary judgment on CRTs tortious interference with a contractual relationship claim.
Accordingly we reverse the trial court's grant of summary judgment in favor of CRJ on its specific performance claim and the denial of David Kim's summary judgment motion on CRTs tortious interference claim. We remand for entry of judgment in favor of JKI on the specific performance claim and in favor of David Kim on the tortious interference claim. We also hold that JKI is entitled to recover its attorney fees and costs on appeal.
On December 31, 2014, [1] CRJ and JKI reached a mutual agreement on the PSA's final terms, which provided that CRJ would pay $3.5 million in exchange for the "commercial real estate and all improvements thereon . . . commonly known as Super 8 Motel; 2104 E. 1st St" in Port Angeles. Clerk's Papers (CP) at 137. The PSA specifically incorporated several attachments, including an amendment with typed and handwritten provisions (the Amendment) and a form document entitled "Financing Addendum." CP at 153-54. Among other provisions, the Amendment contained a covenant not to compete in which JKI agreed not to own or operate a business that competes with the hotel for 60 months. The PSA's purchase price provided consideration for all of the hotel's property, including real property and personal property, as well as the covenant not to compete.[2] The PSA indicated that the sale's closing date would be March 31, 2015.[3]
The PSA did not allocate the purchase price between the real property, personal property, and covenant not to compete. And there is no evidence that the parties ever discussed or even considered allocation when drafting the PSA. The PSA provided a procedure for valuing the personal property included in the sale, but not for valuing the real property, the hotel's goodwill, or the covenant not to compete. PSA Financing Provisions
The body of the PSA, the Amendment, and the Financing Addendum all addressed CRT's financing. Paragraph 1 of the PSA provided that the purchase price would be payable as "[a]ll cash at closing contingent on new financing in accordance with the Financing Addendum (attach CBA Form PS_FIN) " CP at 137.
The Amendment provided that "[t]his offer is contingent upon Buyer obtaining financing from [a] lender" and that "financing from the lender is subject to satisfactory of [sic] Appraisal, Phasel [sic] report and Phase 2 report if necessary." CP at 149. The Amendment did not include a time by which CRJ had to comply with this contingency or include a notice requirement.
The Financing Addendum, denominated as "CBA Form PSFIN" as referenced in paragraph 1 of the PSA, was a form document that allowed the parties to choose among one of three financing options: new financing, assumption of existing financing, or seller financing. Each option included an empty box the parties could check off, indicating their selection. The parties did not check off any of the Financing Addendum's three options.
The Financing Addendum's new financing section stated that "Buyer's obligations under the [PSA] are contingent on Buyer obtaining new financing." CP at 153. CRJ had to complete a written application for financing within five business days after waiver or satisfaction of the feasibility contingency in paragraph 5 of the PSA, under which contingency CRJ was required to give notice within 60 days of mutual acceptance that it was satisfied with all aspects of the property. The new financing section included a blank for the percent of the purchase price for which CRJ would be required to obtain financing, and "80" was typed in the blank. CP at 153. The new financing section further stated:
The [PSA] shall terminate and Buyer shall receive a refund of the earnest money unless Buyer gives notice that this condition is satisfied or waived on or before days (60 days if not completed) following mutual acceptance of the [PSA].
CP at 153. This 60-day period ended on March 2, 2015 based on a mutual acceptance date of December 31, 2014.[4]
In early February 2015, the parties executed an addendum to the PSA that contained various provisions, including that CRJ would open an escrow with a $50, 000 deposit. On February 12 CRJ signed a notice that it had inspected the hotel and that CRJ agreed to remove the feasibility contingency in paragraph 5 of the PSA. CRTs real estate broker sent the notice and evidence of the $50, 000 escrow deposit to JKI on February 13.
On February 13, CRJ also submitted a loan application to BBCN bank. BBCN responded on February 17 with a letter stating that it was interested in providing financing and stating proposed terms without making any commitment. CRTs broker notified JKI no later than February 18 that CRJ had applied for financing. JKI's president, David Kim, began communicating with BBCN by February 20. On March 2, the day of the financing notice deadline, David Kim exchanged e-mails with BBCN about financing issues.
CRJ did not provide written notice to JKI before March 2 that the financing contingency had been satisfied or waived. CRJ did not obtain final approval for financing until March 19.
Until March 9, JKI continued to communicate with BBCN via e-mail about providing financial information and access to the hotel's financial information. JKI also continued to work with CRJ, providing information about the hotel's employees and other details about the business.
On March 19, JKI's attorney notified CRJ that JKI considered the PSA to be terminated. The letter cited, among other things, CRJ's failure to provide timely notice as required in the Financing Addendum's new financing provision. Until this time, JKI had given no indication that it did not intend to go forward with the transaction.
CRJ continued to move toward closing and completed the closing documents. On March 24, CRJ provided JKI with a signed addendum to the PSA proposing to allocate $3 million to the real property, $300, 000 to the non-compete agreement, $100 000 to goodwill, and $100, 000 to personal property. JKI did not agree to or sign this addendum. CRJ also informed JKI that it had obtained loan approval and approval to obtain a Super 8 Motel franchise and had signed the transaction's closing escrow instructions provided by the parties' escrow agent. Those closing instructions stated that closing could not occur until the parties agreed to an allocation of the purchase price. JKI did not agree to or sign the closing instructions.
Several months later, JKI's real estate agent approached David Kim about the possibility of completing the transaction. David Kim indicated that he was angry with CRJ due to comments CRJ made during a tour of the hotel, which he believed resulted in several employees quitting. David Kim also stated that, because of that hassle and the cost associated with defending CRJ's lawsuit, he would only reconsider selling the hotel if CRJ added $1 million to the purchase price. He also told JKI's agent that "I just do not want to sell to this particular Buyer because I hate him 100%." CP at 376.
CRJ filed this lawsuit seeking to compel JKI's performance under the PSA and for damages incidental to JKI's delay in closing the sale. In an amended complaint, CRJ added David Kim as a party and asserted a claim for tortious interference with a contractual relationship against him.
The parties filed cross motions for summary judgment. The trial court granted CRJ's motion and denied JKI's motion. The court ruled that the Financing Addendum was part of the PSA, but suggested that the Amendment's financing clause - which had no deadline - prevailed. And the court ruled that even if the 60-day deadline in the Financing Addendum applied, JKI waived that deadline by its conduct after March 2. Therefore, the court ruled that CRJ was entitled to specific performance of the PSA. The trial court also denied David Kim's motion for summary judgment on the tortious interference with a contractual relationship claim.
JKI appeals the trial court's order.
We review summary judgment orders de novo. Keck v Collins, 184 Wn.2d 358, 370, 357 P.3d 1080 (2015). On summary judgment, we construe all evidence and reasonable inferences in favor of the nonmoving party. Id. Summary judgment is appropriate when the record shows "no genuine issue as to any material fact" and "the moving party is...
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