Kloster v. Roberts

• Decision Date: 06 February 2014
• Docket Number: 30546-5-III
• Court: Washington Court of Appeals
• Parties: THELMA, KARL, LOW, and KARIN KLOSTER, Appellants, v. SCHENECTADY ROBERTS, PACIFIC RIM BROKERS, INC., a corporation, AMERI-TITLE, INC., a corporation, and DOES ONE through FIFTY, inclusive, Respondents, FIRST AMERICAN TITLE INSURANCE COMPANY, a corporation, Respondent and Cross Appellant. MICHAEL MOORE, Defendant.

THELMA, KARL, LOW, and KARIN KLOSTER, Appellants, v. SCHENECTADY ROBERTS, PACIFIC RIM BROKERS, INC., a corporation, AMERI-TITLE, INC., a corporation, and DOES ONE through FIFTY, inclusive, Respondents, FIRST AMERICAN TITLE INSURANCE COMPANY, a corporation, Respondent and Cross Appellant. MICHAEL MOORE, Defendant.

No. 30546-5-III

Court of Appeals of Washington, Division 3

February 6, 2014

UNPUBLISHED OPINION

FEARING, J.

Karl and Thelma Kloster, and Karl's parents, Lori and Karin Kloster (Klosters) bought a vacant lot (Lot 1) in rural Klickitat County thinking they held an access easement over property bordering to the south. The easement, however, was not signed by the grantor, and the parties to this suit assume the easement does not bind the neighboring property. When the neighboring property owner blocked use of the easement, the Klosters, despite having an alternate access route, filed suit for misrepresentation, against their seller of Lot 1, the real estate broker, their title company, and the title company's local agent. They sought additional damages from the title company and its agent and underwriter for breach of the insurance contract, breach of the duty to defend and indemnify, bad faith, and violation of the Consumer Protection Act (CPA) chapter 19.86 RCW. The title company counterclaimed for a declaratory judgment that its policy provided no coverage. After a series of summary judgment dismissals of some defendants and a jury trial on the remaining claims, judgment was entered for all defendants except the title company, which was ordered to pay the cost to cure the lack of an easement and some of the Klosters' attorney fees related to the title insurance coverage issue.

The Klosters appeal most of the trial court rulings. Among other assignments of error, the Klosters contend the trial court erred (1) in dismissing their claim, on summary judgment against the seller of the property; (2) in denying their motion to include the developer in his individual capacity as a necessary party; (3) in dismissing the broker as successor in interest of the developer; (4) in concluding that the title company's agent was not a coinsurer of their title (5) in ruling that there was insufficient evidence that the agent was negligent; (6) in concluding that the title company did not breach the title policy, the unfair claims settlement practices regulations, or the CPA; (7) in dismissing the Klosters' claims for noneconomic damages and all economic damages except "cost of cure"; (8) in awarding the broker and the seller attorney fees; and (9) in denying the Klosters' foil claim for attorney fees from the title company. The title company cross appeals contending the trial court erred (1) in ruling that the Klosters had coverage under the title policy for a purported access easement, (2) in allocating $9, 000 against the title company as a cost of cure, and (3) in awarding attorney fees to the Klosters.

In a marathon opinion necessitated by the many issues raised on appeal, we affirm the trial court's rulings in favor of the seller, real estate broker, and developer principally on the ground that no representation was given to the Klosters concerning an access easement. We reverse the judgment entered against the title company on the ground that its policy did not cover the loss.

FACTS

Since the trial court dismissed some of the Klosters' claims on summary judgment and the jury ruled on other claims of the Klosters, this outline of facts contains, where respectively appropriate, testimony from summary judgment affidavits and from trial.

In 1978, Alvin (Fred) Heany created short plat WS-146 on a 23-acre parcel he owned in Klickitat County.^[1] The short plat consisted of four tracts, each subject to easements and use reservations. Tract 1, north of Tract 2, was divided into Lots 1 and 2. In addition to owning the land, Heany was a real estate broker, who operated under the name of Pacific Rim Properties (Pacific Rim), a sole proprietorship.

In 1979, Fred Heany filed an application for a long plat subdivision called Pacific Rim Estates, which included land found within short plat WS-146. The map attached to the long plat application showed a 30-foot wide access easement along the northern border of Tract 2 for the benefit of the owners of Lots 1 and 2, Tract 1, as well as a 30-foot wide easement along the southern border of Lots 1 and 2 for the benefit of Tract 2. The 30-foot wide easement across the southern border of Lot 2 also benefited Lot 1. A 60-foot width is required by Klickitat County for a public right-of-way.

Klickitat County insisted, for a long plat, that all property owners affected by rights-of-way sign the plat and join in the dedication of their property for roads. In 1981, pending final approval of the long plat application, Heany sold, on contract, Tract 2 to Michael Fester, subject to "[t]hose easements and reservations of record" on the short plat. Ex. 52. Fester agreed with Heany to permit an access easement across the northern 30-feet of Tract 2.

In November 1981, owners of property within the Pacific Rim subdivision signed the long plat application, which included a dedication of access easements. The owner of Lot 2, Tract 1, signed the application acknowledging his dedication of an easement along his southern border for the benefit of Lot 1 and other land. Robert Blades, a real estate salesperson for Pacific Rim, notarized the signatures, including Fred Heany's signature. The signature of Michael Fester, owner of Tract 2, however, was inadvertently omitted. Klickitat County approved the long plat application and Heany recorded the plat in December 1981 without Fester's signature.

In 1982, Fred Heany and Robert Blades incorporated Pacific Rim Properties as Pacific Rim Brokers, Inc. (PRB). Heany transferred his ownership interest in PRB to Blades one year later.

Fred Heany's fulfillment deed to Michael Fester, for Tract 2 was recorded in 1983 without mention of the long plat or the easement across the northern boundary of the land. Fester sold Tract 2 to Larry and Rhonda Rickey in 2000. The map attached to the Rickeys' title insurance policy did not show an easement encumbering the northern 30 feet of their land. The Rickeys constructed and used a road, along their northern boundary, as a driveway.

Defendant Schenectady Roberts inherited Lots 1 and 2, Tract 1, from her father, who purchased the lots from Fred Heany. In 2005 Roberts sold, for $38, 000, Lot 1 to the Klosters. Karl and Thelma Kloster had previously bought and sold multiple properties. PRB served as listing agent for the sale of Lot 1. Adrian Palmer, an agent of PRB, acted as buying agent of the Klosters.

At the time of the sale and during the events leading to the sale, Roberts resided in California. She had no direct contact with the Klosters. Roberts had no knowledge of any easements or the lack of easements, nor was she aware of any representations made by PRB.

PRB agent Adrian Palmer showed the land to Thelma and Karl Kloster. During the showing, according to deposition testimony of Palmer, he "shared his feelings with both Karl and Thelma that there was an easement." Palmer provided to Karl Kloster a copy of the plat map that showed a 30-foot access easement along the northern edge of Tract 2, and Palmer represented to Karl Kloster that the plat map was accurate.

During the showing, the Klosters and Adrian Palmer noticed a barbed wire fence along the boundary of Tract 2 and Lot 1 that blocked access to the easement on the north end of Tract 2. Palmer still believed an easement existed across the northern part of Tract 2 and extended across the fence line, but he stated to the Klosters that the fence might be a problem. The Klosters were then still contemplating whether to purchase the property. The Klosters never thereafter asked Palmer about the fence.

Adrian Palmer shared his concern about the barbed wire fence with PRB's Robert Blades. Blades told Palmer that he would contact the Rickeys. Blades left the Rickeys a telephone message, but never spoke with them. Palmer did not tell the Klosters of his conversation with Blades.

As part of the sale, Schenectady Roberts and the Klosters signed, in January 2005, a Vacant Land Purchase and Sale Agreement (VLPSA). The agreement provided for attorney fees and costs to the prevailing party "[i]f the Buyer, Seller, or any real estate licensee or broker involved in this transaction is involved in any dispute relating to this transaction." Clerk's Papers (CP) at 3744. The VLPSA also read that "[a]ll terms of this Agreement, which are not satisfied or waived prior to closing, shall survive closing. These terms shall include, but not be limited to, representations and warranties, attorneys fees and costs, , .. etc." CP at 3745.

Defendant Ameri-Title, Inc., serving as First American Title Insurance Company's agent, conducted a title search for Lot 1 and issued a preliminary commitment for title insurance. The preliminary title commitment included an appended partial plat map. The map showed a 30-foot access easement along the northern border of Tract 2 and 30-foot access easements along the southern borders of Lots 1 and 2. As may be surmised, neither Michael Fester nor his successors in interest, the Rickeys, signed a document agreeing to the easement across Tract 2, and the lack of written approval gives rise to this suit. Also, if the Klosters deemed the 30-wide easement across the southern end of Lot 2, Tract 1, to be sufficient, this suit may not have ensued, despite the lack of an easement across the northern boundary of Tract 2.

Printed across the top of the map attached to the commitment was a disclaimer:

ANY SKETCH ATTACHED HERETO IS DONE SO AS A COURTESY ONLY AND IS

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