Henry v. Green, No. 26286-3-III (Wash. App. 2/14/2008)
| Decision Date | 14 February 2008 |
| Docket Number | No. 26286-3-III,26286-3-III |
| Parties | DAVID M. HENRY and DANA L. HENRY, husband and wife, Appellants, v. LORI L. GREEN and JOHN L. GREEN, wife and husband, Respondents. |
| Court | Washington Court of Appeals |
Appeal from Spokane Superior Court. Docket No: 05-2-04451-3. Judgment or order under review. Date filed: 06/28/2007. Judge signing: Honorable Salvatore F Cozza.
Counsel for Appellant(s), Michael S Bissell, Campbell Bissell & Kirby PLLC, 7 S Howard St Ste 416, Spokane, WA, 99201-3816.
Counsel for Respondent(s), Geoffrey D. Swindler, Law Offices of Geoffrey D. Swindler, 316 W Boone Ave Ste 880, Spokane, WA, 99201-2346.
David Henry and his wife Dana (Henrys) appeal an order granting summary judgment in favor of John Green and his wife Lori (Greens). The Henrys contend that summary judgment was improper because: (1) the parol evidence rule is inapplicable as the Henrys made no attempt to modify the Green-Trotter agreement; (2) the integration clause in the Green-Trotter agreement is invalid as a false boilerplate clause; (3) the statute of frauds does not apply; (4) equitable relief should create a constructive trust in favor of the Henrys; (5) there should be an implied contract in favor of the Henrys; (6) Thomas Trotter's affidavit should not be stricken because there is no inconsistency in the disputed statements. We affirm.
In 1986, David Henry met John Green in Alaska. In 1997, Mr. Henry and his wife Dana moved to the Spokane area, where they met Thomas Trotter and his wife Joyce (Trotters). In late 1997 or early 1998, the Trotters sold the Henrys a home with 10 acres in Greenacres, Washington.
In 2004, the Greens sold their home in Alaska and moved to the Spokane area, where they resided in the Henrys' basement for nine months. Mr. Green and Mr. Henry also discussed forming a partnership to develop a 28-acre parcel adjacent to the Henrys' property. The parcel was owned by the Trotters. According to Mr. Henry, the Henrys and the Greens agreed that if the Henrys could buy the Trotter property for an acceptable price, Mr. Green would provide the cash from the sale of his Alaska property. Then, at such time as Mrs. Henry's pending lawsuit settled, the Greens would sell the Henrys eight acres of that property for development (Henry-Green oral agreement). The Henry-Green eight-acre oral agreement was never put into writing.
In approximately May 2004, Mr. Henry contacted Mr. Trotter regarding the 28-acre property. Mr. Henry told Mr. Trotter that he and his partner, Mr. Green, wanted to purchase the 28 acres for development. After considerable negotiation with Mr. Henry, Mr. Trotter agreed to a price of $150,000. However, Mr. Green was unwilling to pay more than $145,000, so Mr. Henry agreed to pay the additional $5,000 through a promissory note. Both Mr. Henry and Mr. Green informed Mr. Trotter that the Greens were providing the entire $ 145,000 amount. However, they also told Mr. Trotter that the Greens were going to hold eight acres of the property for the Henrys and sell it to them for the same price per acre, less the $5,000 contribution (Henry-Trotter oral agreement). On June 1, 2004, the Greens and the Trotters signed the written real estate purchase and sale agreement (Green-Trotter Agreement). The Green-Trotter Agreement specifically provided that the purchase price was $145,000. The Trotters conveyed the property to the Greens for $145,000. As part of the closing a real estate excise tax affidavit was signed by both buyers and sellers listing the sale price as $145,000. Also, as part of the closing, the Trotters signed a document listing the sale price at $145,000. This document was provided to the United States Department of Housing and Urban Development. Approximately a year after the closing, the Henrys paid off the $5,000 promissory note.
After the sale closed, the Greens denied they had an agreement to sell the eight acres to the Henrys. The Henrys brought this lawsuit against the Greens asserting claims for constructive trust, unjust enrichment, and implied contract. The Greens moved for summary judgment, arguing that the parol evidence rule and the real estate statute of frauds, RCW 64.04.010, prevented enforcement of an oral agreement for the conveyance of real estate. The Greens also moved to strike parts of Thomas Trotter's affidavit. The trial court granted summary judgment in favor of the Greens, but denied the motion to strike Mr. Trotter's affidavit. The Henrys appealed.
When reviewing an order for summary judgment, we engage in the same inquiry as the trial court. Korslund v. DynCorp Tri-Cities Servs., Inc., 156 Wn.2d 168, 177, 125 P.3d 119 (2005). All facts and reasonable inferences are considered in a light most favorable to the nonmoving party, while all questions of law are reviewed de novo. Berger v. Sonneland, 144 Wn.2d 91, 102-03, 26 P.3d 257 (2001). Summary judgment is appropriate where there are no disputed issues of material fact and the prevailing party is entitled to judgment as a matter of law. Sperr v. City of Spokane, 123 Wn. App. 132, 136, 96 P.3d 1012 (2004).
The parol evidence rule bars extrinsic evidence offered to contradict or supplement an integrated, unambiguous instrument. Denny's Rests., Inc. v. Sec. Union Title Ins. Co., 71 Wn. App. 194, 202, 859 P.2d 619 (1993). The parol evidence rule "'has no application to a collateral agreement upon which the instrument is silent, and which does not purport to affect the terms of the instrument.'" Becker v. Lagerquist Bros., Inc., 55 Wn.2d 425, 429 n.3, 348 P.2d 423 (1960) (quoting Sav. Bank of So. Calif. v. Asbury, 117 Cal. 96, 103, 48 P. 1081 (1897)). Admissible extrinsic evidence does not include evidence that would show an intention independent of the instrument; or evidence that would vary, contradict, or modify the written word. Hollis v. Garwall, Inc., 137 Wn.2d 683, 695, 974 P.2d 836 (1999). The parol evidence rule excludes evidence of an oral agreement which the parties could reasonably be expected to have embodied in their contract. Shelton v. Fowler, 69 Wn.2d 85, 95, 417 P.2d 350 (1966).
Washington uses the Berg rule to define the use of extrinsic evidence: "[E]xtrinsic evidence is admissible as to the entire circumstances under which the contract was made, as an aid in ascertaining the parties' intent." Berg v. Hudesman, 115 Wn.2d 657, 667, 801 P.2d 222 (1990). In approving the Berg context rule, the Washington Supreme Court stated that extrinsic evidence is not admitted for the purpose of importing an intention not expressed in the writing, but to give meaning to the words employed. Id. at 669 (citing J. W. Seavey Hop Corp. v. Pollock, 20 Wn.2d 337, 348-49, 147 P.2d 310 (1944)). Extrinsic evidence illuminates what was written, not what was intended to be written. Id.
The Henrys, relying on Becker v. Lagerquist Brothers, argue that extrinsic evidence of the $5,000 Henry-Trotter oral agreement is a collateral agreement that does not modify the $145,000 written Green-Trotter Agreement. However, the oral agreement would in fact modify the Green-Trotter written agreement. It changes the written sales price of the Green-Trotter Agreement from $145,000 to $150,000. Furthermore, Becker is distinguishable because there was considerable undisputed written evidence that the earnest money agreement in Becker was only a partial integration. Becker, 55 Wn.2d at 430-31. However, the written Green-Trotter Agreement is sufficiently detailed to reach the reasonable conclusion that the Henry-Trotter eight-acre oral agreement should have been included. Thus, we hold that the parol evidence rule applies to the Green-Trotter Agreement and inconsistent extrinsic evidence of the Henry-Trotter oral agreement is inadmissible.
We review findings of fact for substantial evidence, defined as a "quantum of evidence sufficient to persuade a rational fair-minded person that the premises is true." Sunnyside Valley Irrigation Dist. v. Dickie, 149 Wn.2d 873, 879, 73 P.3d 369 (2003). We review questions of law de novo. Id. at 880.
An agreement may be only partially integrated, notwithstanding an integration clause, if the clause is false boilerplate, because parties are not bound by incorrect statements of fact. Denny's, 71 Wn. App. at 203. A boilerplate integration clause may be held void when enforcement of such a clause would amount to endorsement of a fraud. S. Kitsap Family Worship Ctr. v. Weir, 135 Wn. App. 900, 907, 146 P.3d 935 (2006). In determining whether a clause is false boilerplate, a court considers: (1) whether the prior agreement was the inducing and moving cause of the final contract; (2) whether a prior agreement forms part of the consideration for the final contract; and (3) whether the final contract was executed on the faith of the prior agreement. McGregor v. First Farmers-Merchants Bank & Trust Co., 180 Wash. 440, 444, 40 P.2d 144 (1935). "'A party to a contract is not bound by a false recital of fact, and parol evidence is admissible to show the true state of affairs.'" Black v. Evergreen Land Developers, Inc., 75 Wn.2d 241, 250, 450 P.2d 470 (1969) (quoting Cook v. Vennigerholz, 44 Wn.2d 612, 616-17, 269 P.2d 824 (1954)).
Paragraph 13(d) of the written Green-Trotter Agreement contains an integration clause, which provides, Clerk's Papers at 32.
The Henrys argue that the integration clause is false boilerplate. However, there is no claim of fraud by the Henrys, and the Henrys do not claim to have been unaware of the written terms of the Green-Trotter Agreement. The integration clause is unambiguously and plainly stated in the Green-Trotter Agreement. The Henrys could not have understood the contract obligations unless they read the...
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