Kofmehl v. Baseline Lake, LLC

• Decision Date: 20 June 2013
• Docket Number: No. 87395–0.,87395–0.
• Citation: 305 P.3d 230,177 Wash.2d 584
• Parties: Patrick H. KOFMEHL, an individual, Petitioner, v. BASELINE LAKE, LLC, a Washington limited liability company, Respondent.
• Court: Washington Supreme Court

177 Wash.2d 584

305 P.3d 230

Patrick H. KOFMEHL, an individual, Petitioner,

v.BASELINE LAKE, LLC, a Washington limited liability company, Respondent.

No. 87395–0.

Supreme Court of Washington, En Banc.

June 20, 2013.

Robert Allan Dunn, Susan C. Nelson, Dunn Black & Roberts, P.S., Spokane, WA, for Petitioner.

George M. Ahrend, Ahrend Albrecht PLLC, Ephrata, WA, for Respondent.

WIGGINS, J.

[177 Wash.2d 587]¶ 1 Patrick H. Kofmehl contracted to buy a piece of land from Baseline Lake LLC. By the time of closing, the parties disputed the amount of land covered by the sale agreement. Kofmehl was willing to close the transaction only if the disputed portion was included in the sale. Baseline was willing to close the transaction only if the disputed portion was excluded, and so the sale failed to close. The trial court invalidated the contract for failure to comply with the statute of frauds and denied specific performance to either party.

¶ 2 The issue before us is whether Kofmehl is entitled to recover the down payment he paid before the dispute arose. Under this court's prior cases, a buyer in a land sale contract that is unenforceable under the statute of frauds may not recover restitution if the vendor is ready, willing, and able to perform under the terms of the contract. Schweiter v. Halsey, 57 Wash.2d 707, 711, 359 P.2d 821 (1961). The trial court made no finding that either party had breached—let alone repudiated—and probably could not do so without making determinations of fact. Therefore, we affirm the Court of Appeals, which reversed the summary judgment granting restitution.

FACTS AND PROCEDURAL HISTORY

I. The Transaction

¶ 3 Baseline acquired title to a property described as “Farm Unit 182, Irrigation Block 73, Columbia Basin Project, Grant County, Washington, according to the plat thereof filed November 29, 1951.” Clerk's Papers (CP) at 88. Farm Unit 182, Irrigation Block 73 (FU 182, Block 73), consists of approximately 43 acres. CP at 69.

¶ 4 Baseline subsequently listed for sale two parcels within FU 182, Block 73 totaling 30.12 acres. CP at 99. The listed property consisted of a parcel of 17.40 acres, priced at $935,000, and a parcel of 12.72 acres, priced at $750,000, and purchasers could buy either parcel separately or both parcels for $1,650,000. Id. Baseline intended to retain the northwest 3.93 acres of the property to build a private school. CP at 69. Baseline's survey map, CP at 74, indicates the 17.40–acre parcel, the 12.72–acre parcel, and the 3.93–acre parcel labeled “EXCLUDED.” ¹

IMAGE

CP at 74.

[177 Wash.2d 589]¶ 5 As it turns out, the three parcels, consisting of 3.93 acres, 12.72 acres, and 17.40 acres, add up to a total of 34.05 acres, leaving an additional 9.04 acres of FU 182, Block 73. As the later-filed short plat discloses, this 9.04 acres is the unmarked bottom section of the survey map reproduced above. CP at 98. There appears to be no dispute that the sale did not include this 9.04 acres.

¶ 6 On March 9, 2007, Kofmehl offered to purchase “[a]pproximatly [sic] 30.12 acres of vacant land situated between 10th Avenue and 13th and legally described as follows: all inside and a part of FU 182, Block 73, Columbia Basin Project, Grant County Tax Parcel number 20–0838–000.” CP at 84. Kofmehl offered a purchase price of $1,500,000, including $5,000 earnest money, and the offer was contingent on the following conditions:

1. Review & approval of the property and it's [sic] lot lines by the purchaser within two weeks of acceptance of this offer by the seller.

2. Final annexation into the City of Quincy by the City of Quincy.

3. Seller agrees to pay to purchaser “late comer fees” of $29,475.00 to the purchase if seller chooses to develop the 3.93 acres he has excluded from the overall parcel number shown above.

5. [sic] If seller decides not to develop the 3.93 acres he will give this purchaser a 45–day (after seller decides not to develop the 3.93 acres) right of first refusal on that land at a price equal to what the purchaser is paying per square foot for the 30.12 acres included in this offer.

Id. This offer was not accepted. A month later, Kofmehl and Baseline entered into a real estate purchase and sale agreement (hereinafter Agreement) for the purchase of approximately 30.12 acres of vacant land inside of FU 182, Block 73. The legal description of the property was incomplete because it did not include a metes and bounds description, nor had the property been short platted. The Agreement authorized the selling or listing broker to attach a correct legal description.

¶ 7 Kofmehl agreed to pay a purchase price of $1,650,000, including $50,000 earnest money. The Agreement was contingent on, among other things, preliminary plat approval from the city of Quincy and “Accessibility of city sewer.” CP at 75. The final signature was obtained on April 17, 2007. The closing date was set for April 15, 2008, which was eventually extended to July 1, 2008.

¶ 8 On May 8, 2007, Baseline's listing agent faxed Kofmehl's broker a preliminary plat clearly delineating “Lot 1” as 30.13 acres, comprising the same area that the survey map (pictured supra at 3, CP at 74) had marked for sale. CP at 90–91. “Lot 2” comprised the northwest 3.93 acres that had been marked “EXCLUDED.” Id. “Lot 3” comprised the remaining 9.04 acres of FU 182, Block 73. Id. Kofmehl raised no objection, and on June 30, 2008, the plat was finalized with the Grant County auditor as depicted here:

IMAGE

CP at 98.

¶ 9 On July 1, 2008, Baseline submitted closing documents for the purchase of “Lot 1, Baseline Short Plat, according to the Short Plat thereof recorded in Volume 21 of [177 Wash.2d 591]Short Plats, pages 55 and 56, records of Grant County, WA.” CP at 772. At this time, the sewer line did not come up to the edge of the property. However, the city of Quincy had confirmed the “availability of sewer” and promised to “assist a developer in planning of sewer service to this Property.” CP at 334. The city also later confirmed the existence of easements “to provide for sewer to the subject property.” CP at 335.

¶ 10 Kofmehl refused to sign the closing documents. Rather, he complained that the land conveyed did not include the 3.93 acres marked “EXCLUDED” on the survey map (pictured supra at 3, CP at 74) and ultimately platted as Lot 2 (pictured supra at 5, CP at 98). Kofmehl also asserted that Baseline had failed to ensure “accessibility of sewer”—a provision that he apparently understood to mean that Baseline would construct a sewer line to the property. CP at 620 (“Furthermore, I testified that pure accessibility would be ‘if the sewer lines were laid across both of those properties and stubbed into this property....’ ” (quoting Ex. A, Parts II. 3–6, at 40)).

II. Trial Court Proceedings

¶ 11 Kofmehl sued Baseline in Grant County Superior Court, asking alternatively for specific performance of the Agreement, damages for breach, and rescission of the Agreement. Baseline counterclaimed for specific performance or damages.

¶ 12 The parties brought cross motions for summary judgment. On May 1, 2009, the trial court dismissed Baseline's counterclaim for specific performance because the Agreement failed to satisfy the statute of frauds. CP at 304. In a second summary judgment, the trial court dismissed Baseline's amended counterclaim for promissory estoppel or part performance. CP at 742–46, 865–69. The court reserved for later decision Kofmehl's claims for rescission and restitution.

¶ 13 In a third summary judgment motion, Baseline argued that under Washington law, a buyer cannot obtain restitution of an earnest-money payment where the vendor has not repudiated the sale agreement but is ready, willing, and able to perform as agreed. Schweiter, 57 Wash.2d at 711, 359 P.2d 821. However, the trial judge reasoned that the parties could not have performed “as agreed” because the parties failed to reach a meeting of the minds. The trial judge reasoned that because neither party was clearly in breach, but both parties were responsible for the failure of the contract, equity demanded that the parties be returned to their pre-Agreement state—Kofmehl should recover his money, and Baseline should recover its land. The trial court awarded Kofmehl $87,842.78 in restitution (including earnest money, engineering fees, and title fees), as well as attorney fees and costs. CP at 850–52.

III. Court of Appeals Proceedings

¶ 14 Baseline appealed all decisions of the trial court to Division Three of the Court of Appeals. The Court of Appeals took review and subsequently issued a partially published opinion, Kofmehl v. Baseline Lake, LLC, 167 Wash.App. 677, 275 P.3d 328 (2012).

¶ 15 The Court of Appeals affirmed the trial court's holding that the Agreement fell afoul of the statute of frauds, as the parties had not contested that issue. Id. at 690, 275 P.3d 328. Turning to the award of restitution, the Court of Appeals drew on the well-established Washington principle that

“a vendee under an agreement for the sale and purchase of property which does not satisfy the statute of frauds, cannot recover payments made upon the purchase price if the vendor has not repudiated the contract but is ready, willing, and able to perform in accordance therewith, even though the contract is not enforceable against the vendee either at law or in equity.”

Schweiter, 57 Wash.2d at 711, 359 P.2d 821 (quoting Dubke v. Kassa, 29 Wash.2d 486, 487, 187 P.2d 611 (1947)).

¶ 16 Pointing to this court's decision in Johnson v. Puget Mill Co., 28 Wash. 515, 68 P. 867 (1902), the Court of Appeals held that the vendor's repudiation or failure to perform must be established before the purchaser may recover restitution. Kofmehl, 167 Wash.App. at 692, 275 P.3d 328. That is, “[t]o demonstrate that Baseline's retention of the earnest money was unjust, [Kofmehl] must prove that Baseline was unwilling to perform its obligations under the Agreement. Establishing the meaning of the...