Munro v. Swanson, No. 55811-1-I/2 (Wash. App. 2/20/2007)
| Decision Date | 20 February 2007 |
| Docket Number | No. 55811-1-I/2,No. 55811-1-I,Consolidated with No. 56082-4-I,55811-1-I/2,55811-1-I |
| Court | Washington Court of Appeals |
| Parties | GERALD W. MUNRO, individually, as Trustee of Survivor's Trust A of the Munro Family Trust dated March 7, 1996, and as Trustee of Decedent's Trusts B and C of the Munro Family Trust dated March 7, 1996; MICHAEL E. MUNRO and WILLIAM L. MUNRO, Co-Trustees of the Gerald Munro Irrevocable Trust dated December 28, 2001, Respondents/Cross-Appellants, v. DAVID SWANSON and MELODY SWANSON and the marital community composed thereof; WHITEHEAD ENTERPRISES, LLC, a Washington limited liability company; BURIEN NISSAN, INC., a Washington corporation; EASTSIDE HYUNDAI, LLC, a Washington limited liability company. Appellants/Cross-Respondents, KIRKLAND NISSAN INC., a Washington corporation; MELODY'S KIRKLAND NISSAN, INC., a Washington corporation; MICHAEL R. FILED: February 20, 2007 MASTRO; Defendants. |
Appeal from King County Superior Court. Docket No: 03-2-16889-1. Judgment or order under review. Date filed: 02/01/2005. Judge signing: Honorable Douglas D Mcbroom.
Counsel for Appellant/Cross-Respondent, Scott Arnold Smith, Riddell Williams PS, 1001 4th Ave Plaza Ste 4500, Seattle, WA, 98154.
Daniel Joseph Gunter, Riddell Williams PS, 1001 4th Ave Ste 4500, Seattle, WA, 98154-1065.
Frederick H. Ockerman, Attorney at Law, 9757 Ne Juanita Dr Ste 100, Kirkland, WA, 98034-4299.
Counsel for Respondent/Cross-Appellant, Brian William Esler, Miller Nash LLP, 601 Union St Ste 4400, Seattle, WA, 98101-1367.
Daniel Andrew Brown, Miller Nash LLP, Two Union Square, 601 Union St Ste 4400, Seattle, WA, 98101-1367.
Jeffrey M Hawkinson, Pepple Johnson Cantu & Schmidt, PLLC, 1218 3rd Ave Ste 1900, Seattle, WA, 98101-3051.
Counsel for Other Parties, Frederick H. Ockerman, Attorney at Law, 9757 Ne Juanita Dr Ste 100, Kirkland, WA, 98034-4299.
Thomas Huber Grimm, Thomas H. Grimm, P.S., 970 5th Ave Nw Ste 3, Issaquah, WA, 98027-2469.
Landlord Gerald Munro terminated a commercial lease with David and Melody Swanson (Swansons) based on several alleged breaches, including a sublease to Whitehead Enterprises, LLC (Whitehead, LLC). Three months after sending a notice of termination, Munro filed a complaint for ejectment, quiet title, declaratory judgment, writ of assistance, and unjust enrichment against the Swansons and Whitehead, LLC. The Swansons and Whitehead, LLC denied material breach and claimed a 20-day notice-and-opportunity-to-cure under the lease. The trial court granted summary judgment in favor of Munro, finding that the lease had been breached, and proceeded with a bench trial on damages. Munro's litigation attorneys withheld information during discovery that should have been disclosed and were sanctioned for discovery abuse. The trial court denied Whitehead, LLC's motion for a new trial.
Munro was awarded attorney fees.
We affirm the summary judgment, the sanctions imposed for discovery abuse, and the determination that Munro was entitled to fees. However, the findings of fact are inadequate to support the award of fees. We vacate the attorney fees award and remand to the trial court to make a determination of attorney fees based on the necessary findings of fact.
In 1993, Landlord Gerald Munro entered into a 10-year commercial Ground Lease (Lease) with two five year options with the Swansons. The Lease governed use of the property in Kirkland, Washington (the Property). On December 18, 2001, the Swansons executed an "Assignment for Collateral Purposes" (Assignment) for the Ground Lease to Michael Mastro. In November of 2001, a receiver was appointed for the two corporations owned by the Swansons. The receivership was settled in July 2002 and formally dismissed in September 2002. Munro received rent during this time.
In August of 2002, Melody Swanson told Munro that they were selling their business to Butch Whitehead. However in her declaration she testified that she did not mention "Whitehead Enterprises, LLC" or "Burien Nissan" or "Eastside Hyundai," or the Lease or the Property in question. On August 29, 2002, the Swansons assigned their leasehold interest to Whitehead, LLC. On August 30, 2002, the Swansons sold their business to Whitehead, LLC. Whitehead, LLC moved onto the Property on September 3, 2002.
The next day Munro went to a dealership belonging to the Swansons to pick up the rent check. This dealership was not located on the Property occupied by Whitehead, LLC. Munro deposited this rent check on September 5. The name on this check was "Burien Nissan." As shown in the record, the names on checks that Munro received from the Swansons were frequently different.
One week after picking up the check, Munro received a call from neighboring automobile owner Lee Johnson, regarding the activity on the Property. Munro drove by and saw "New Ownership" signs on the Property.
On September 20, 2002, Thomas Hazelrigg (Hazelrigg), the Swansons' agent, called Munro, leaving a recorded message regarding the new activity on the Property. Munro called his attorney, Guy Towle (Towle) of Miller Nash, on that same day and played the voicemail message recording it onto Towle's voicemail. In a September 26, 2002, phone conversation Towle informed Hazelrigg that if an assignment of the Lease had already taken place it was in violation of the Lease and the Lease ought to be terminated. He also said there might be a willingness to re-write the Lease for a longer period if the rent was increased. Towle summarized the conversation in typed notes, recording the date as September 26, 2002. Munro's litigation attorneys at Miller Nash were made aware of these notes sometime in the fall of 2002, and were given a copy of them prior to Hazelrigg's deposition on June 11, 2003. Hazelrigg did not inform the Swansons or Whitehead, LLC of the content of this phone conversation.
Hazelrigg also left voicemail messages for Munro on October 10, 2002 and October 16, 2002. Munro again played these messages for Towle. On October 15, 2002, the Swansons closed on the sale of their business to Whitehead, LLC. On October 16, 2002, Munro sent the Swansons a notice terminating the Lease. On January 30, 2003, Munro filed a complaint for ejectment, quiet title, declaratory judgment, writ of assistance, and unjust enrichment against the Swansons and Whitehead, LLC.1 On April 9, 2003, the Swansons filed a one-page general denial and asserted no affirmative defenses. On the same day, Whitehead, LLC filed a more substantial answer, in which they denied that the Lease was terminated. Whitehead, LLC's affirmative defenses included failure to mitigate damages, laches, and waiver and estoppel. Whitehead, LLC also filed a counterclaim, seeking a declaration that the Lease was not in default and requesting attorney fees.
On April 25, the court set a summary judgment hearing date of June 20, 2003. On May 30, Whitehead, LLC filed a motion for continuance, based on gaps in their deposition of Gerald Munro. Attached to this motion was a second set of interrogatories. At the same time, Whitehead, LLC sent a subpoena duces tecum directed to Towle asking that he produce documents relating to
[t]he date and time of any communications . . . between June 1 and October 31, 2002 . . . between (a) Miller Nash or Plaintiffs and (b) any third parties which relate in any way to the subject matter of this lawsuit or Plaintiffs. This would include (but is not limited to) all "documents" relating to phone calls or communications to or from Thomas Hazelrigg. On June 9, 2003, Munro filed a motion for a protective order to quash the subpoena, which was noted for consideration on June 18. Munro asserted attorney-client privilege, work product protections, and argued that it was not relevant to the affirmative defenses pled by Whitehead, LLC. The trial court denied Whitehead, LLC's motion to continue on June 9.
On June 11 Hazelrigg, the Swansons' agent, was deposed about the timing and content of the phone conversation with Towle. Hazelrigg stated that he told Towle about the assignment to Whitehead, LLC, and that Towle indicated that this was grounds for terminating the Lease. Hazelrigg also testified in his deposition that he thought the conversation took place sometime around October 15, or 16, of 2002.
On June 17, 2003, Munro filed his reply in support of his motion for a protective order. He gave the trial court a sealed envelope containing the declaration of Guy Towle and other responsive documents "[i]n the event . . . [that] the Court believes a review of the responsive documents is necessary to determine the scope of the privilege." On June 18, Whitehead, LLC filed its objection to Munro's submission of the sealed envelope containing Guy Towle's declaration.
On June 20 the trial court orally denied Whitehead, LLC's motion for partial summary judgment, and granted Munro's motion for partial summary judgment.
On July 11, Whitehead, LLC filed an amended answer adding counterclaims for unjust enrichment and equitable estoppel. Whitehead, LLC claimed rights to reimbursement, from Plaintiffs, for all the payments it made for taxes, improvements, utilities, and rent plus interest.
On July 24 the trial court issued a written order regarding its summary judgment rulings, concluding that the receivership and the assignment for the benefit of creditors were events of default under the lease which justified termination by Munro. The trial court held that events of default were not subject to the notice-and-opportunity-to-cure provision. The court did not reach the claims that the sublease or delinquent payment of taxes were events of default. Further, the trial court quieted title to the property in the name of Munro, terminated the Lease between Munro and the Swansons, voided the assignment for collateral purposes between the Swansons and Michael Mastro, declared the sublease and assignment between the...
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