Meidan Koti, LLC v. Stenersen
| Decision Date | 01 June 2022 |
| Docket Number | 55815-7-II |
| Parties | MEIDAN KOTI, LLC, a Washington limited liability company, Appellant, v. LLOYD STENERSEN and DEBORAH STENERSEN, husband and wife and the marital community composed thereof, Respondents. |
| Court | Washington Court of Appeals |
UNPUBLISHED OPINION
Dale A and Jaana H. Haagen, through Meidan Koti LLC, entered into a residential real estate purchase and sale agreement with Lloyd and Deborah Stenersen to buy the Stenersens' home barn, and shop. The Stenersens ran a wedding venue business using the barn. The Stenersens disclosed some defects with the stucco siding on the house, but they did not disclose a 2006 inspection report that showed high levels of moisture underneath the stucco siding in multiple locations. They also did not have the permits necessary to host weddings in the barn.
Before closing, multiple contractors performed inspections at the property. The reports revealed high levels of moisture under the siding in several locations, and the siding inspector recommended further investigation. The Haagens also learned prior to closing that the barn lacked the requisite permits and licenses to operate as a commercial wedding venue. The sale closed in 2016 despite these issues.
In 2020, the Haagens learned it would cost more than $750, 000 to repair the stucco siding, a sum far in excess of what they originally expected. Meidan Koti sued the Stenersens alleging fraud, fraudulent concealment, and misrepresentation related to the stucco siding, wedding venue permits, and other ancillary issues. The trial court granted the Stenersens' motion for summary judgment, dismissed Meidan Koti's claims, and denied Meidan Koti's motion for reconsideration.
On appeal, Meidan Koti argues the trial court improperly relied on an integration clause in the parties' purchase and sale agreement, there were genuine issues of material fact as to what the Haagens were told and understood before closing and the Haagens had very little information just prior to closing about the problems with the stucco and the permits. Meidan Koti contends that the trial court erred in granting summary judgment for the Stenersens. We disagree and affirm.
The Stenersens owned property in Clark County containing a house constructed in 1999, a shop, and a barn. The house had stucco siding. In 2006, at the request of Lloyd Stenersen, certified contractors conducted an Exterior Insulation and Finish System (EIFS) inspection of the house. The inspection reported "elevated moisture readings ranging from 19.2% to 32.4%" underlying the stucco siding in multiple locations. Clerk's Papers (CP) at 33 (boldface omitted). Moisture readings over 20 percent "in the underlying wood sheathing . . . create conditions conducive to decay of the underlying wood wall assembly." CP at 41. The inspection "recommend[ed] a further invasive investigation." Id.
The Stenersens maintained the stucco siding by caulking and recaulking the windows, but they did not conduct a further investigation as recommended in the 2006 report. The Stenersens also filed multiple defective siding affidavits with Clark County and received a property tax reduction as a result from 2006 to 2016.
In 2014, the Stenersens began running a business hosting weddings out of the barn. In May 2015, the county gave notice that the Stenersens did not have the necessary permits to host weddings in the barn. The wedding venue was required, in part, to become permitted as a winery. The Stenersens began the permitting process, including applying for a permit to use the barn for "barrel aging of wine." CP at 141.
In spring 2016, the Stenersens listed the property for sale with a realtor for a price of $2.5 million. By June, the Haagens expressed interest in purchasing the property, and they visited the property with the realtor. Dale Haagen had experience developing and selling real estate. Some of his experience included hiring contractors to perform utility and zoning work as well as listing and selling properties as a real estate agent for a number of years.
On June 7, 2016, the Haagens made an offer to buy the property for $1.75 million with $100, 000 earnest money. When making the offer, Dale Haagen explained a lower price was warranted, in part because it was hard to value the wedding venue as it was unclear whether "governmental requirements" could be met. CP at 261. He told the realtor he was "willing to buy the property 'AS-IS', without Seller representations or warranties, relative to potential Wedding Barn 'issues' regardless of whether they are known or unknown at the time of purchase." CP at 262.
The parties then executed a residential real estate purchase and sale agreement on June 14, 2016.The agreement provided that $100, 000 would be paid as earnest money. The agreement also allowed for an inspection period before closing, and it contained an integration clause stating that the agreement CP at 20. The parties also executed an addendum with an "as is" clause, which read, "Property to be sold 'AS IS' without seller representations or warranties, relative to potential wedding venue/barn issues regardless if they are known or unknown at the time of purchase." CP at 22.
On June 20, 2016, the parties executed another addendum to the purchase and sale agreement, increasing the purchase price to $1.95 million.
Id. The Stenersens did not mention the 2006 stucco inspection in the disclosure statement.
In July 2016, Northwest Home Inspectors LLC inspected the property. The inspection found moisture stains in the attics, cracks in the ceilings, moisture stains and cracks in the siding, wood rot in the trim of all buildings, and moisture damage around doors and windows. Northwest Home "[r]ecommend[ed] having a stucco contractor evaluate the stucco." CP at 172.
On July 14, 2016, Dale Haagen sent an e-mail to the realtor discussing the issues raised in the inspection and the costs to perform repairs. In his e-mail, Haagen emphasized that the inspectors "pointed out a lot of things that aren't favorable (and are expensive overall to correct) and the initial EIFS/Stucco reviewer has expanded the recognition that the place needs, at a minimum, a lot of immediate [money] put into it." CP at 197. Haagen also acknowledged that "there is a lot of dry rot on the premises (all buildings) that must be dealt with and it will take a lot of time to cut it out and properly replace the rotting wood areas." Id. Moisture was another concern for Haagen, who noted, "[A] lot of previous moisture, in non-desired places, ha[d] been identified in the home," as well as "blistering and warping in upper window ledges/sills, etc." CP at 198. Haagen also noted after the inspection "a substantial amount of additional staining on the outside surface of the EIFS and there [are] cracks and damaged areas in numerous places." Id. He sought to reduce the sale price from $1.95 million to $1.8 million in exchange for a sale of the property "AS-IS" with no repairs except replacing any damaged windows that were still under warranty. CP at 199.
On July 17, 2016, Lloyd Stenersen responded by e-mail saying that he had already significantly dropped the sale price and he was only willing to provide the Haagens $2, 000 for further repairs. The Stenersens also offered to return the Haagens' earnest money if they were having second thoughts. Ultimately, the Stenersens extended the time before the earnest money became nonrefundable to allow a more thorough investigation of the stucco.
On July 21, 2016, Inspection Tech LLC completed an inspection of the stucco siding for the Haagens and prepared a report. The inspection found elevated moisture readings, caulking failure, impact damage, improper attachment to the EIFS, and missing mesh. The inspection identified elevated moisture readings in two locations on the main house. The report also recorded water damage to soffit material that needed replacement, and impact damage that was "cosmetic." CP at 161. The report concluded that "[t]he EIFS should be removed and the underlying subsiding inspected for damage" and "recommend[ed] a qualified EIFS contractor perform the repair work, " CP at 161-62. This inspection revealed fewer areas of elevated moisture than the 2006 inspection, of which the Haagens remained unaware.
On July 26, 2016, the Haagens received a $7, 758.71 estimate for repairs based on the Northwest Home inspection. However, Dale Haagen noted in an e-mail that he was aware this estimate did not include the findings made in the Inspection Tech inspection related to elevated moisture readings and the recommended stucco removal.
On July 27, 2016, the parties executed an Inspection Response Form 35, where they agreed that the Stenersens would credit $2, 000 at closing for dry rot, fund the $7, 758.71 in repairs covered in the estimate, and replace certain doors and windows if they were still under warranty. At this point, the inspection contingency closed and the earnest money became nonrefundable.
On September 16,...
To continue reading
Request your trial