Horne v. Aune
| Decision Date | 01 November 2005 |
| Docket Number | No. 31896-2-II.,31896-2-II. |
| Citation | 130 Wn. App. 183,121 P.3d 1227 |
| Court | Washington Supreme Court |
| Parties | Cecilia A. HORNE, a single person, Respondent and Cross Appellant, v. Steven E. AUNE, a single person, Appellant and Cross Respondent. |
Steven E. Aune (Appearing Pro Se), Gig Harbor, WA, for Appellant.
Christopher Marti Constantine of Counsel Inc, Tacoma, WA, for Respondent/Cross-Appellant.
¶ 1 In this appeal, we are asked to decide whether in winding up a partnership, the Revised Uniform Partnership Act (RUPA), chapter 25.05 RCW, requires a public sale of partnership property; or whether the court may instead allow a partner to purchase the property for its agreed value with cash payment to the other partner of his partnership interest?
¶ 2 Steven Aune appeals a court order requiring him to sell his one-half partnership interest in real property to Cecilia Horne. He demands a public sale of the property, with cash distribution of the proceeds.
¶ 3 Because RUPA's winding-up provision, RCW 25.05.330, does not mandate a public sale of partnership property as the only means of liquidating partnership assets, we affirm. And given the facts of this case, we hold the trial court did not abuse its discretion by allowing Horne to purchase the property instead of listing her home with a real estate agent.
¶ 4 Horne cross-appeals the dismissal of her breach of fiduciary duties, breach of contract and conversion claims, and denial of her motion for a continuance. We affirm.
¶ 5 In July 2002, when Horne and Aune intended to pursue a family life together, they purchased property in Gig Harbor as tenants in common. As experienced real estate investors, they viewed the $303,500 purchase as an investment opportunity. Each contributed equally toward the down payment and obtained joint financing for the balance.
¶ 6 Horne, Aune, and Horne's son, William (then 12 years old), moved into the house in August 2002. Horne and Aune experienced relationship troubles almost immediately. Aune refused to pay half the utilities because he believed Horne and her son consumed more than half. In October, Aune and Horne argued during a road trip, and Aune left Horne and her son by the side of the road in Port Angeles.
¶ 7 On November 4, they signed a written agreement describing their respective rights and obligations for the property. Horne drafted the agreement. It opens with, "This will serve as the legal jargon to indicate that this is a legal and binding agreement which supersedes any other legal and binding agreements, obligations, encumbrances or matters of inheritance involving [the property]." Clerk's Papers (CP) at 200. The agreement states that Horne and Aune "are equal partners in said property sharing equally in ownership, care, upkeep and title and mortgage obligations including property taxes and property insurance costs." CP at 200. The agreement provides that both parties would deposit sufficient funds in a joint bank account to pay property expenses. Both parties agreed to maintain life insurance policies to cover their mortgage obligation and to submit any disputes to mediation.
¶ 8 Finally, the agreement has the following provision:
[6.] If either party is lawfully, but unwillingly removed from the property by law enforcement or by invoking a restraining order or any other method, the party remaining in residence will be solely financially responsible for upholding all expense obligations pertaining to the mortgage, taxes, insurance and care and upkeep of the property until the removed party returns and peaceable co-habitation resumes. Upon return, both parties will resume the equally shared obligations of this real estate agreement as stated herein.
¶ 9 The parties dispute which of them formulated this language, but they do not dispute that Horne drafted the document and both of them signed it in the presence of a notary. Horne understood that Aune wanted this provision because his ex-wife had obtained a protection order against him during their marital dissolution, forcing him out of the home that he had built and lived in. He believed that he had been treated unfairly and wanted to ensure that the same thing would not happen to him again.
¶ 10 On December 8, an altercation occurred at the home. During an argument, Aune pushed Horne aside and assaulted her son, William.1 Both William and Horne called 911. Aune left. A deputy sheriff took a report and referred it to the prosecutor's office. Aune returned and, at Horne's urging, left on a trip five days later for a "cooling off period" to visit his brother in the Midwest. 3 Report of Proceedings (RP) at 297. While he was gone, Horne obtained a protection order against him. The prosecutor charged Aune with two counts of fourth degree assault.
¶ 11 Horne gave the sheriff Aune's return flight schedule. Two deputies arrested Aune when his plane landed at Sea-Tac airport on December 23, 2002. He entered an Alford plea and received a deferred sentence. North Carolina v. Alford, 400 U.S. 25, 37, 91 S.Ct. 160, 27 L.Ed.2d 162 (1970) (). As a condition of his deferred sentence, he could have no contact with Aune or William. Also, a protection order remained in effect through the time of trial, with a limited exception to discuss property settlement.
¶ 12 Horne and Aune had a joint bank account in which they deposited monies for payment of house expenses. They both paid house expenses through December 2002, except that Aune continued to dispute his share of the utilities bill. Aune did not contribute toward household expenses following his arrest.
¶ 13 Horne has remained in possession of the home and has paid all expenses, including the mortgage, since January 2003. Horne asked Aune to continue to pay half of the home expenses but he refused, invoking paragraph 6 of the partnership agreement.
¶ 14 Horne and Aune unsuccessfully sought to mediate in spring 2003. In April 2003, Horne sent Aune a letter purporting to nullify the partnership agreement. Aune did not respond.
¶ 15 Horne sued Aune in September 2003. Her claims included: breach of partnership agreement; breach of fiduciary duty; accounting, dissolution, and winding up of partnership; and conversion/replevin. She alleged that the partnership could no longer function, necessitating a winding up and dissolution. She requested that the real property be sold and that she be permitted to purchase Aune's interest in the property at a reasonable sum to be determined by the court.
¶ 16 In his answer, Aune admitted that the partnership should be dissolved and wound up, but he denied that he had breached the agreement or any fiduciary duty. He requested a formal accounting, followed by a judgment for his share of the partnership property.
¶ 17 Horne and Aune attempted to mediate the lawsuit issues in March 2004. Both parties agreed that it would be better for one or the other to buy the house rather than publicly sell it in order to avoid the transaction costs of a public sale. But they were unable to agree on who would buy out whom, or at what price. Horne wanted to buy out Aune by repaying his down payment of $30,830. Aune wanted to buy out Horne but refused to make a firm commitment until he had an opportunity to inspect the house. Horne did not want Aune at the house and refused to permit him to inspect the property or retrieve his personal belongings. Horne also resisted efforts to have the house appraised, but an appraiser eventually valued the house at $335,000. Both parties agreed to the appraisal's accuracy.
¶ 18 Trial was set for March 25, 2004. On March 8, Horne took Aune's deposition. A week before trial, she discharged her attorney and entered a notice to proceed pro se. Two days before trial, Horne requested deposition transcripts. She was unable to obtain them in time for trial.
¶ 19 Trial occurred March 25, 26, 29, and 30, 2004. Horne requested a continuance because she did not have the deposition transcripts. The trial court denied the motion.
¶ 20 At trial, Horne agreed that the fair rental value of the property exceeded her expenditures during the time she retained exclusive possession and use of the property.
¶ 21 Horne testified that Aune had taken several of her personal belongings, including a cellular telephone, mailbox key, and some tools. Aune testified that he did not.
¶ 22 The court found the written partnership agreement valid and enforceable, including paragraph 6. The court also decided that Horne failed to prove breach of fiduciary duty, breach of contract, or conversion. The court valued the property at $335,000, with a mortgage balance of $235,000. The court concluded that the partnership had $100,000 equity in the home and each party would receive 50 percent of the gross equity and/or net proceeds on its sale.
¶ 23 The court ordered that the partnership was dissolved and should be wound up and that the property should be sold, with each party receiving 50 percent of the net proceeds. The court further ordered that, in lieu of a public sale, the partnership could be wound up by either party buying out the other's interest for $50,000 within 45 days. The order provided that if neither party elected to purchase the property, or if the parties were "deadlocked," the property would be listed for sale with a licensed real estate agent, to be sold publicly, with distribution of the proceeds.
¶ 24 Both parties wanted to purchase the property and each tendered $50,000. Horne presented pre-approval for a loan to purchase the property. Instead of ordering the property publicly sold, the court held an evidentiary hearing to determine who could purchase it. The court stated that it was "inclined" to...
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