Lopez v. Reynoso

• Decision Date: 23 August 2005
• Docket Number: No. 22631-0-III.,22631-0-III.
• Parties: Stephany F. LOPEZ, Appellant, v. Ramon REYNOSO and Jane Doe Reynoso, d/b/a Triple R Auto Sales, a sole proprietorship; and Colonial American Casualty and Surety Company, a foreign corporation, Respondents.
• Court: Washington Supreme Court

118 P.3d 398

129 Wn. App. 165

Stephany F. LOPEZ, Appellant, v. Ramon REYNOSO and Jane Doe Reynoso, d/b/a Triple R Auto Sales, a sole proprietorship; and Colonial American Casualty and Surety Company, a foreign corporation, Respondents.

No. 22631-0-III.

Court of Appeals of Washington, Division 3, Panel Three.

August 23, 2005.

COPYRIGHT MATERIAL OMITTED

David B. Trujillo, Law Offices of David B. Trujillo, Yakima, WA, for Appellant.

Alexander A. Friedrich, Yusen & Friedrich, Seattle, WA, Howard N. Schwartz, Attorney at Law, Yakima, WA, for Respondents.

SCHULTHEIS, J.

¶ 1 Parol evidence is generally admissible to construe a written contract and to determine the intent of the parties. Berg v. Hudesman, 115 Wash.2d 657, 669, 801 P.2d 222 (1990). However, parol evidence cannot add to, modify, or contradict the terms of a fully integrated contract. Id. at 670, 801 P.2d 222.

¶ 2 Stephany Lopez bought a used car from Ramon Reynoso (doing business as Triple R Auto Sales) pursuant to an installment sales contract. When Ms. Lopez did not make all the payments listed in her amortization schedule, Mr. Reynoso repossessed the car. Ms. Lopez sued for replevin and additional recovery. She moved to exclude parol evidence offered by Mr. Reynoso to show that a $2,000 payment by Ms. Lopez on the day of the sale or one day later was deducted from the sale price listed on the contract. She contends the $2,000 was actually an additional payment that reduced her obligation under the contract. The trial court allowed the parol evidence and entered judgment for Mr. Reynoso.

¶ 3 On appeal, Ms. Lopez contends the trial court erred in admitting parol evidence that contradicted terms in the integrated contract. She also argues the trial court applied the incorrect standard of evidence. We conclude that the trial court was justified in examining extrinsic evidence to determine whether the contract was the final expression of the parties' agreement. Because we also conclude that the trial court's decision is based on the proper evidentiary standard and is supported by the evidence, we affirm.

FACTS

¶ 4 Mr. Reynoso began selling used cars as Triple R Auto Sales in May 2000. His family had known Ms. Lopez for several years. In late May 2000, Ms. Lopez visited Triple R and asked the price of a 1994 Ford Explorer. Mr. Reynoso was out of town, but an employee called him and learned that the asking price was $8,500. Ms. Lopez tried to negotiate a lower price with the employee, but he asked her to return when Mr. Reynoso could talk with her.

¶ 5 Two days later, on June 2, Ms. Lopez purchased the Explorer from Mr. Reynoso. According to her, the parties agreed to a sale price of $6,500 with $500 down and interest at three percent. She claims she gave Mr. Reynoso $500 down in cash but never received a receipt for the payment. Mr. Reynoso claims he agreed to lower the sale price to $8,000 if Ms. Lopez agreed to pay $2,000 down. He asserts Ms. Lopez's boyfriend, Fernando Ortega, gave him $1,800 on June 2, when the agreement was executed, and Ms. Lopez brought in the additional $200 the next day. The receipt for the $1,800 payment is undated and numbered 3100; the receipt for the $200 payment is dated June 3, 2000 and numbered 3112.

¶ 6 Mr. Reynoso insists Ms. Lopez did not want the sales contract to show that the couple had paid $2,000 down. He was not sure why Ms. Lopez wanted the contract to state the sale price was $6,500 with a down payment of $500, but because the payments would be the same, he agreed to write it the way he says Ms. Lopez wanted it. At trial, Mr. Reynoso's daughter, a childhood friend of Ms. Lopez, testified that she witnessed the execution of the contract and that Ms. Lopez had the idea to write the contract with a price reduced by $2,000 because she did not want Mr. Ortega's name to be on the title to the car.

¶ 7 The terms of the contract, as drafted by the Triple R accountant on June 2, state that the price of the vehicle is $6,500, the tax and license fee are over $500, and the down payment is $500, for a total price of $6,533.¹ Language at the bottom of the purchase order form states: "This order cancels and supercedes any prior agreement and as of the date herein comprises the complete and exclusive statement of the terms of this agreement." Clerk's Papers (CP) at 58. After Ms. Lopez signed the agreement, the accountant compiled an amortization schedule for $250 monthly payments and gave a copy to Ms. Lopez. This schedule indicates that Ms. Lopez's last payment was due in September 2002.

¶ 8 According to Mr. Reynoso, Ms. Lopez was often late with payments and did not make her December 2001 payment. When she appeared at his office in January 2002 with a $250 payment, he refused it, claiming she owed him for two months. Ms. Lopez contends she asserted at that time that her $2,000 payment was made after the sale agreement and lowered her obligation by another $2,000, which would be paid in full by the December 2001 payment. Mr. Reynoso says Ms. Lopez did not claim she had paid the full amount with the December payment. Ms. Lopez again offered to pay $250 in February 2002 and Mr. Reynoso again rejected the payment. He repossessed the Explorer in March 2002. Later that month, Ms. Lopez hired Molly Earhart to prepare an amortization schedule based on a purchase price of $7,033 (the sale price plus tax and license), a down payment of $500, and a post-sale payment of $2,000. According to this new amortization schedule, Ms. Lopez's final payment should have been only $145 in January 2002.

¶ 9 Ms. Lopez filed a complaint against Mr. Reynoso, his wife, Triple R, and the bonding company on April 11, 2002. She requested return of the Explorer, treble damages, and attorney fees for breach of the contract and violations of chapter 46.70 RCW (proscribing unfair motor vehicle business practices) and chapter 19.86 RCW (Washington's Consumer Protection Act). In September 2002 she moved for an order in limine to exclude parol evidence and for judgment on the pleadings. The motions were denied after a hearing. After a bench trial in September 2003, the court entered judgment for the defendants. Ms. Lopez's motion for reconsideration was denied and the trial court's findings, conclusions, and judgment were entered on November 14, 2003. The notice of appeal was timely filed.

PAROL EVIDENCE

¶ 10 Ms. Lopez first challenges the trial court's consideration of evidence extrinsic to the written contract. She contends the trial court used this evidence to contradict or vary the express, unambiguous terms of the integrated contract. We review the trial court's findings of fact regarding the admissibility of parol evidence for substantial evidence. Weyerhaeuser v. Tacoma-Pierce County Health Dep't, 123 Wash.App. 59, 65 96 P.3d 460 (2004); Ban-Co Inv. Co. v. Loveless, 22 Wash.App. 122, 130, 587 P.2d 567 (1978). The evidence is viewed in the light most favorable to the prevailing party, and we defer to the trier of fact on issues of witness credibility. Weyerhaeuser, 123 Wash.App. at 65, 96 P.3d 460.

¶ 11 In Washington, "[t]he touchstone of contract interpretation is the parties' intent." Tanner Elec. Coop. v. Puget Sound Power & Light, 128 Wash.2d 656, 674, 911 P.2d 1301 (1996). This intent may be discerned from the language of the agreement as well as from viewing the objective of the contract, the circumstances around its making, the subsequent conduct of the parties, and the reasonableness of their respective interpretations. Scott Galvanizing, Inc. v. N.W. EnviroServices, Inc., 120 Wash.2d 573, 580-81, 844 P.2d 428 (1993). Under the parol evidence rule, "prior or contemporaneous negotiations and agreements are said to merge into the final, written contract," Emrich v. Connell, 105 Wash.2d 551, 556, 716 P.2d 863 (1986), and evidence is not admissible to add to, modify, or contradict the terms of the integrated agreement. DePhillips v. Zolt Constr. Co., 136 Wash.2d 26, 32, 959 P.2d 1104 (1998); Berg, 115 Wash.2d at 670, 801 P.2d 222. But the parol evidence rule is only applied to writings intended as the final expression of the terms of the agreement. Emrich, 105 Wash.2d at 556, 716 P.2d 863; RCW 62A.2-202.² Extrinsic evidence may be used to ascertain the intent of the parties, to properly construe the writing, and to determine whether the writing is actually intended to be the final expression of the agreement. DePhillips, 136 Wash.2d at 32, 959 P.2d 1104; Morgan v. Stokely-Van Camp, Inc., 34 Wash.App. 801, 806, 663 P.2d 1384 (1983).

¶ 12 Generally people have the right to make their agreements entirely oral, entirely in writing, or partly oral and partly in writing. Diel v. Beekman, 1 Wash.App. 874, 879-80, 465 P.2d 212 (1970) (quoting Barber v. Rochester, 52 Wash.2d 691, 698, 328 P.2d 711 (1958)). With a written contract, "it is the court's duty to ascertain from all relevant, extrinsic evidence, either oral or written, whether the entire agreement has been incorporated in the writing or not. That is a question of fact." Barber, 52 Wash.2d at 698, 328 P.2d 711. If the writing is a complete integration, any terms and agreements that are not contained in it are disregarded. Morgan, 34 Wash.App. at 807, 663 P.2d 1384 (quoting 5 R. MEISENHOLDER, WASHINGTON PRACTICE § 121, at 125 (1965)). If it is not intended to be the complete expression of the parties' intent—in other words, if it is only partially integrated—the writing may be supplemented or replaced by consistent terms or agreements shown by a preponderance of the evidence. Id.; see also Denny's Rests., Inc. v. Sec. Union Title Ins. Co., 71 Wash.App. 194, 202, 859 P.2d 619 (1993).

¶ 13 The Lopez-Reynoso written agreement executed on June 2, 2000 stated that the cash price of the vehicle was $6,500, the down payment was $500, and Ms. Lopez would make 26 payments of $250 and a final payment of $264.87. The sales contract included an integration clause that stated that the writing...