King v. Rice

• Decision Date: 08 September 2008
• Docket Number: No. 60461-9-I.,60461-9-I.
• Citation: 146 Wn. App. 662,191 P.3d 946
• Parties: Paul H. KING, Appellant, v. Steve RICE and Barbara Rice, individually and the marital community comprised thereof, dba Sunlight Construction, Respondents.
• Court: Washington Court of Appeals

191 P.3d 946

146 Wn. App. 662

Paul H. KING, Appellant, v. Steve RICE and Barbara Rice, individually and the marital community comprised thereof, dba Sunlight Construction, Respondents.

No. 60461-9-I.

Court of Appeals of Washington, Division 1.

September 8, 2008.

Paul H. King, Seattle, WA, pro se.

David Benjamin Johnston, Attorney at Law, Gregory A. McBroom, Kevin Blair Hansen, Livengood Fitzgerald & Alskog, Kirkland, WA, for Respondents.

LEACH, J.

¶ 1 In this action for damages claimed for the destruction of a modular living unit situated on recently purchased property, the parties dispute whether the structure was real property conveyed to the buyers with the underlying real estate, or whether it remained the personal property of the seller. An object located on real estate is real property if it is annexed to the realty, its use or purpose is applied to or integrated with the use of the realty, and the annexing party intended it to be a permanent addition to the freehold. Because we cannot say as a matter of law that the structure was real property and because the respondents' claimed authority to destroy it under the parties' agreement raises a question of fact, we reverse the summary judgment dismissing the seller's complaint and remand for further proceedings.

FACTS

¶ 2 In 2003, respondents Steve and Barbara Rice executed an agreement to purchase real property from appellant Paul King. The agreement, while purporting to convey raw land only, expressly stated that it constituted "the entire understanding between the parties and supersedes all prior or contemporaneous understandings and representations. No modification of this Agreement shall be effective unless agreed in writing and signed by Buyer and Seller."

¶ 3 Two structures — a house on a permanent foundation and a modular living unit on blocks — were located on the property. King had purchased the modular structure and moved it to the property in 1984. Although the structure included a kitchen, bathroom, bedroom, and living room, King alleged he had never hooked it up to utilities and only used it to store a few tools. King further alleged that the parties orally agreed that the structure was his personal property. The purchase and sale agreement made no mention of any structures or personal property.

¶ 4 The sale closed around April 6, 2004. Escrow instructions signed by both parties included a provision that "[t]he buyer shall have 20 days after closing to remove the house presently built on the parcel."

¶ 5 In his complaint, King alleged that he sent a worker to the property between April 11 and April 16, 2004, to prepare the modular structure for moving. This would have been after closing. In his declarations and deposition, however, King stated that the worker actually began preparing the structure for moving prior to closing and was asked to leave the property after closing. Steve Rice partially corroborated this time frame, stating in his declaration that on April 8, after closing, he asked a mover on the property to leave.

¶ 6 That same day, Rice faxed King a list of conditions for removing the structure, including prior authorization, a storage fee, and liability insurance. King did not respond, but Rice did receive a fax from Roger Knight, King's paralegal. The fax quoted the escrow provision stating that "[t]he buyer shall have 20 days after closing to remove the house presently built on the parcel." Knight indicated that this provision required Rice to move the modular structure off the property without damaging it within 20 days. On April 19, Rice demolished the structure with a backhoe.

¶ 7 King sued the Rices for breach of contract, negligent destruction of personal property, and malicious mischief. He alleged that the structure was his personal property and alternatively that Rice destroyed the structure "by negligence or malicious mischief" or in breach of a written agreement.¹ Rice moved for summary judgment on the grounds that King had no interest in the structure because the deed and purchase and sale documents "unambiguously convey title"² to Rice.³ In colloquy with King's counsel during oral argument the court confirmed that the issue before it was what, if any, right King had in the structure and Rice's position that the purchase and sale documents transferred ownership in the structure to Rice.⁴ The court agreed with Rice and dismissed King's complaint. In its oral ruling, the court concluded that the structure was not personal property as a matter of law and that the conveyance documents therefore transferred ownership to the Rices.⁵ It did not decide any other issue regarding the merit, or lack thereof, of any of King's claims. It specifically did not "even reach the conversion issue on this motion."⁶

¶ 8 King moved for reconsideration and, for the first time, submitted a closing document in which he granted the Rices an extension for closing. In a "P.S.," King stated, "We would like about 10 days to move the house." At the bottom of the document, Steve Rice wrote: "Steve Rice acknowledges receipt of extension of closing till April 6th 2004."

¶ 9 After granting a motion to strike the new evidence and other untimely filings, the court denied reconsideration in part because King attempted to "improperly supplement the record with new arguments and evidence that he could have but did not submit to the Court on summary judgment." The court also denied King's postjudgment request to amend his complaint to add claims for declaratory relief and breach of contract.⁷

DECISION

¶ 10 We review a summary judgment order de novo, engaging in the same inquiry as the trial court and viewing the facts and all reasonable inferences in the light most favorable to the nonmoving party.⁸ Summary judgment is proper only if the pleadings, depositions, answers to interrogatories, admissions, and affidavits show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.⁹ We do not decide appeals on the basis of issues not clearly stated in the moving party's opening summary judgment papers.¹⁰

¶ 11 King contends the superior court erred in concluding as a matter of law that the modular structure was not personal property and that the conveyance documents therefore transferred it to the Rices. We agree. At common law, personal property is a fixture and, therefore, part of real property if (1) the property is actually annexed to the realty, (2) its use or purpose is applied to or integrated with the use of the realty, and (3) the annexing party intended a permanent addition to the freehold.¹¹ Each element of this test must be met before an article may properly be considered a fixture.¹² The annexing party's objective intent at the time of installation is the most important factor.¹³ This intent may be inferred from the circumstances, including the nature of the article affixed, the annexor's relation to the freehold (i.e., owner, lessee, etc.), the manner of annexation, and the purpose for which the annexation is made.¹⁴

¶ 12 It is undisputed that King purchased the modular structure and moved it onto his property in 1984. He describes the unit as a "fully contained house, cedar framed with ... a kitchen with mahogany cabinets, two skylights, one bedroom, a sliding glass door, and a large living room." The structure is wired and plumbed but has never been attached to the ground or utilities, has never been listed on county tax records as a building, and has only been used for storing a few tools. Viewing these facts in a light most favorable to King and in light of the common law test outlined above, we cannot say as a matter of law that the structure was real property.¹⁵

¶ 13 In addition, King correctly points out that the status of an object located on real estate may be determined by agreement, and such agreement "may be either in writing or parol."¹⁶ Because King alleged below that the parties "agreed that the house was my personal property and not to be included in the purchase agreement" and because the parties' boilerplate integration clause does not necessarily preclude consideration of a parol agreement,¹⁷ there may be an additional basis for concluding that the structure was personal property.

¶ 14 Respondents argue in the alternative that even if the structure is King's personal property, the escrow instruction stating that the "buyer shall have 20 days after closing to remove the house" gave them authority to destroy it.¹⁸ While the meaning of "buyer" is clear and undisputed,¹⁹ the meaning of "remove" is not. Specifically, it is not clear that the word "remove" authorized destruction of the modular structure. Under the "context rule" of contract interpretation, the parties' intent is determined by viewing the contract as a whole, the objective of the contract, the contracting parties' conduct, and the reasonableness of the parties' respective interpretations.²⁰ Extrinsic evidence may be considered regardless of whether the contract terms are ambiguous.²¹ While extrinsic evidence may not modify or contradict a written contract in the absence of fraud, accident, or mistake, we may use it to clarify the meaning of words employed in the contract.²² This is the case even when there is an integration clause, as long as the court uses the extrinsic evidence to explain undefined contract terms, not to modify, vary, or contradict terms of the written contract.²³ If extrinsic evidence does not resolve the ambiguity, the contract will be construed against the drafter.²⁴

¶ 15 On the record before us, we cannot say as a matter of law that the escrow instruction authorized the Rices to destroy the modular structure.²⁵ And contrary to respondents' assertions, King's negligence and malicious mischief claims are not barred by the economic loss rule. That rule bars recovery for an alleged breach of tort duties where a contractual relationship exists and the losses are...