Grant Cnty. Port Dist. No. 9 v. Wash. Tire Corp.

• Decision Date: 21 April 2015
• Docket Number: No. 31673–4–III.,31673–4–III.
• Citation: 187 Wash.App. 222,349 P.3d 889
• Court: Washington Court of Appeals
• Parties: GRANT COUNTY PORT DISTRICT NO. 9, Port of Ephbata, Respondent, v. WASHINGTON TIRE CORPORATION, a Washington Corporation, Appellant, Chicago Title Company of Oregon, an Oregon corporation, Defendant.

187 Wash.App. 222

349 P.3d 889

GRANT COUNTY PORT DISTRICT NO. 9, Port of Ephbata, Respondent

v.WASHINGTON TIRE CORPORATION, a Washington Corporation, Appellant

Chicago Title Company of Oregon, an Oregon corporation, Defendant.

No. 31673–4–III.

Court of Appeals of Washington, Division 3.

April 21, 2015.

Christopher Robert Osborn, Foster Pepper PLLC, Seattle, WA, Neil Armstrong Dial, Eisenhower Carlson PLLC, Tacoma, WA, for Appellant.

Katherine Lynn Kenison, Anna Christine Franz, Ephrata, WA, for Respondent.

OPINION PUBLISHED IN PART

LAWRENCE–BERREY, J.

¶ 1 Grant County Port District No. 9 (the Port) and Washington Tire Corporation (WTC) entered into an earnest money agreement (EMA). Under this agreement, WTC agreed to purchase real property from the Port. Shortly before closing, the Port commissioners voted to terminate the agreement. The trial court granted summary judgment in favor of the Port, concluding that the Port was entitled to repudiate the agreement. The trial court also held that WTC's exclusive remedy under the EMA for the Port's breach was rescission and return of its $40,000 earnest money. We hold that the Port was not entitled to repudiate the agreement and that the EMA does not provide the exclusive remedy for the Port's breach. We therefore reverse the trial court and remand for further proceedings.

FACTS

¶ 2 As this is an appeal from summary judgment orders favoring the Port, we set forth the facts in the light most favorable to WTC, the nonmoving party.

¶ 3 WTC's principal, Abraham Hengyucius (Abraham), was born in China and earned a PhD from Nanjing University in China. In about 2005, Abraham formed American Tire Corp., a New Jersey corporation to develop and deliver giant off-the-road (OTR) tires. OTR tires are expensive, industrial-sized tires used on large vehicles, primarily in the mining industry.

¶ 4 In about November 2007, the Seattle Office of the Washington State Department of Community Trade and Economic Development wrote to Abraham to discuss a potential facility in Washington. In 2007 and 2008, Abraham visited Washington to view potential sites for a manufacturing facility, including a site off of Interstate 90 in Grant County.

¶ 5 In July 2008, Abraham formed WTC as the entity responsible for developing the new OTR tire plant in Washington. In 2009, Abraham formed Washington Investment & Development, LLC (WID), which started working to identify and obtain commitments from investors wishing to obtain an EB–5 visa. Such a visa allows foreign nationals who invest significant sums in the United States to obtain a green card. WID procured several investors to invest in a proposed tire facility in Washington. WTC also engaged Scott Fraser of GVA Kidder Mathews to act as a buyer's broker on its behalf. Mr. Fraser assisted in determining WTC's operational needs, and traveled with Abraham toward locating an appropriate manufacturing site in Washington.

¶ 6 In August 2008, Mr. Fraser and Abraham visited a 96–acre site located in Ephrata, which was owned by the Port. WTC concluded that this location was a good fit for its planned tire manufacturing facility. Mr. Fraser submitted an offer to purchase the property on WTC's behalf, including a proposed purchase and sale agreement. The Port proposed its own contract and, on October 1, 2008, Abraham executed the EMA. The EMA contemplated a number of conditions which were required to be met prior to closing. WTC deposited $40,000 into escrow.

¶ 7 In furtherance of satisfying these conditions, Abraham, on behalf of WTC, met with various government agencies, including the Governor's Office of Regulatory Assistance, Grant County public utility district, Grant County economic development council (EDC), city of Ephrata officers, and several Port officers. WTC retained Columbia Northwest Engineering and environmental professionals to finalize off-site infrastructure, water, sewer, and air studies. WTC worked with the Department of Ecology in Spokane to discuss environmental, waste water, and air permit issues, and the Port required that WTC process all studies necessary to obtain Federal Aviation Administration (FAA) approval of the land transaction. In July 2009, WTC completed and submitted a 30–year traffic study. In December 2009, WTC provided the Port with a 254–page report relating to environmental issues.

¶ 8 In January 2010, WTC arranged for its investors to visit Port officials and the surrounding area. In March 2010, the Port's manager, Michael Wren, visited China to meet with WTC's investors. This meeting was arranged at WTC's cost and expense. During the meeting, Mr. Wren was introduced to a number of Chinese people and was made aware of the Chinese custom of Chinese people using Americanized names when working with people in the West. In May 2010, WTC similarly arranged for Washington state senators to visit China in support of WTC's investment in Washington.

¶ 9 On July 20, 2010, Mr. Wren notified WTC that the Port had received the Land Release Notification from the FAA. WTC responded by accepting the conditions of the land sale transaction. By doing so, WTC satisfied all of its conditions under the EMA. The Port was responsible for completing the two tasks remaining before the sale could close: (1) clear title relating to easements, and (2) obtain a single tax identification number for the parcel.

¶ 10 In late July 2010, WTC arranged another meeting and presentation for investors to visit the property. The program included a slot for Abraham to speak. On August 2, 2010, Abraham provided Grant County EDC with the visitors' legal names, including his own Chinese name. In the e-mail, Abraham requested that “ ‘Regarding the agenda, please kindly change my name to Jacqueline Zhn=ang (sic) for the presentation.’ ” Clerk's Papers (CP) at 319. The Port apparently concluded that Abraham intended to make the presentation under a different name (Jacqueline Zhang). Abraham subsequently clarified to Terry Brewer and the Port that “ ‘[Ms.] Zhang is a lady responsible for EB–5 marketing’ ” and that “ ‘Hengyu Zhang is my Chinese name’ ” and “ ‘Abraham is my American name.’ ” CP at 319. The Port immediately requested that the FAA delay the land transfer documentation being prepared for the impending closing.

¶ 11 On August 4, 2010, Mr. Wren wrote to Abraham stating that he did not want the name issue “ ‘to get blown out of proportion’ ” but that he was “ ‘tasked by [the Port's] commissioners to get some clarification so that we can continue to support [WTC].’ ” CP at 319 (alterations in original). In the e-mail, Mr. Wren noted the common cultural practice of using a western name; “ ‘After being in China myself, I understand how common the use of American names is, however, can you please show me something (fax) that shows your legal name to include Abraham, since that is what you've signed all of the documents by?’ ” CP at 319. Mr. Wren indicated that the Port would not move forward without this information.

¶ 12 On August 6, 2010, WTC provided copies of Abraham's identification showing his Chinese name and made clear that Abraham Hengyucius is his American name. On August 13, 2010, Mr. Wren sent Abraham a letter from the Port's legal counsel, Kathryn Kennison. In the letter, Ms. Kennison acknowledged the nearly two years of progress on the project that WTC had performed to satisfy the conditions prior to closing, resulting in the Port finally obtaining FAA approval to close. Ms. Kennison wrote, “ ‘Before proceeding any further with closing this transaction, the Port will require certification from a Washington attorney known to myself who deals extensively in commercial transactions which established the legitimate incorporation of Washington Tire Corporation, and the legal authority of “Abraham Hengyucious” [sic] to bind Washington Tire Corporation as its President.’ ” CP at 320 (alterations in original).

¶ 13 WTC provided the Port with its articles of incorporation and certificate of incorporation. Abraham also offered to execute any and all documents the Port might require to resolve the Port's concerns. Abraham used his American name on the articles of incorporation in which he signed as “Incorporator,” and he also was identified on the Secretary of State's website as the chairman of WTC. CP at 337.

¶ 14 On August 27, 2010, Abraham legally changed his name from Hengyu Zhang to Abraham Hengyucius. Abraham provided the Port with a copy of the Pierce County District Court's Order Changing Name, filed on August 27, 2010. In addition, WTC had its broker—Mr. Fraser—go to Ephrata to meet with the Port, and he offered to have WTC execute whatever replacement documents may be required to further clarify Abraham's authority to execute documents as Abraham Hengyucius on behalf of WTC.

¶ 15 Although the Port received documentation and assurances from WTC on the issues it deemed important, it did not timely receive the “certification from a Washington attorney known to [the Port's attorney] who deals extensively in commercial transactions” verifying Abraham's authority. CP at 253. On September 20, the Port commissioners voted to terminate the EMA based on “unresolved issues regarding WTC['s] corporate status and Mr. Hengyucius' [Zhang] authority to sign on behalf of WTC.” CP at 140. The Port soon after brought this declaratory action, seeking to have the court declare that WTC breached the EMA by failing to give adequate assurances, or, alternatively, that WTC's exclusive remedy for the Port's breach was return of its $40,000 earnest money deposit. WTC counterclaimed for specific performance or, alternatively, damages under theories of restitution and promissory estoppel. WTC also counterclaimed for rescission and return of its earnest money, but later chose not to pursue this relief.

¶ 16 In the first summary judgment proceeding, the trial court held as a matter of law that WTC anticipatorily breached the EMA by failing to give adequate assurances, and this failure allowed the...