Norcon Builders LLC v. Gmp Homes Vg LLC, 65251-6-I -I
| Decision Date | 28 February 2011 |
| Docket Number | NO. 65251-6-I -I,65251-6-I -I |
| Court | Washington Court of Appeals |
| Parties | NORCON BUILDERS, LLC, a Washington limited liability company, Plaintiff, v. GMP HOMES VG, LLC; INSAF ORAIVEJ; WARD A. BAUGHER, JR. and GRACE BAUGHER, individually and the marital community composed therein; JEFFREY D. and ALICE ABERCROMBIE,) individually and the marital community composed therein; STARPOINT SHOPS, LLC; CAROLYN L. MCINTOSH; LINDA D. RAYMOND; BARBARA A. GARCIA; KYLE M. YASUI; LARRY K. RAGUN and) KATHLEEN LEAVITT, individually and the marital community composed therein; DAVID and MARGARET JOBE, individually and the marital community composed therein; SARAH NINTEMAN; HIRONORI D. and YOSHIKAZU JO, individually and the marital community composed therein; YIBELTAL ABDI and ELNATA DEGEFA, individually and the marital community composed therein; DAVID L. ISLAND and MARIA ZIMENA BERNAL, individually and the marital community composed therein; BRITTON T. WHITWORTH; HILLARY J.H. and STEVEN C. LAMBERT, individually and the marital community composed therein; JEREMY D. and AMY B. MARTIN, individually and the marital community composed therein; LEROY A. MAXWELL;DEROVANESSIAN HOLDINGS, LLC, a Washington limited liability company; R. GREG PRENDERGAST and MARIA PRENDERGAST, individually and the marital community composed therein; CORRINE L. DEAL; CHRISTOPHER J. HART; LAURENE ANN POYTHRESS and ALBERT DOUGLAS DYER, individually and the marital community composed therein; ANNIE JUNYE LIU and KIEN KIT HO, individually and the marital community composed therein; WILLIAM P. GABEL; WEI ZHENG CHEN and QI-NA ZHAO, individually and the marital community composed therein; ELLEN BALLY; ERWIN T. LAM;ELSA M. BENITEZ; KAREN PAULSELL; LISA LEE MORITZ; DANITA F. JOLLY; MICHAEL JEROME HULL; JANETTE C. LITTLE and MARK G. THOMAS, individually and the marital community composed therein; TAMARA L. and TYLER S. JOHNSON, individually and the marital community com- ELIZABETH A. GREEN, individually and the marital community composed therein; HEIDI M. ANDERSON; JENNY L. SEELENBACHER; BRUCE G. YAN; DANIEL and NEDA STOLL, individually and the marital community composed therein; SZ-TSUNG SUN and CHAO-JUNG HUNG, individually and the marital community composed therein; ANDREW W, MAHON; CHARLES S. MAHON and JENNIFER J. MAHON, individually and the marital community composed therein; KI H. HONG; SAIYED RAZA ABBAS NAQVI and SYEDA MEHWISH TAHIRA NAQVI, individually and the marital community composed therein; PHILIP v. PALIOS; LORI K. BECKER; KIRSTEN GRUMET; SAMPURNA SEN and RAM SANKAR DAS, individually and the marital community composed therein; WEI DAVID ZHANG;PATRICK K. REILLY; ASIF JABBAR; SOHAIL K. MIRZA and ATIYYA S. MIRZA, individually and the marital community composed therein; SUSAN E. CAMICIA; NINA A. YURAKOVA; TURNKEY PROPERTIES, INC.; ASHLEY NARANJO; DAVID L. JEFFERY; BRIAN MARTINEZ and STACEY MARTINEZ, individually and the marital community composed therein; HELEN ELISE TANNER; FRONTIER BANK; GRAND-GLACIER, LLC; MICHAEL R. MASTRO; MERIT MECHANICAL, INC.;3D ROOF SYSTEMS, LLC; MILLER CONDOMINIUM MARKETING, LLC JAMES STILES and DANIELA STILES, husband and wife; WASHINGTON MUTUAL BANK; JP MORGAN CHASE BANK, NA; QUICK MORTGAGE SERVICES, LLC; HOME FUNDING CENTRAL, INC.; LIBERTY FINANCIAL GROUP, INC.; LINDA ROSE; FIRST NATIONAL HOME MORTGAGE, now known as NORTHWEST MORTGAGE ADVISORS, INC.; BANK OF AMERICA, NA; SUN TRUST MORTGAGE, INC.; MORTGAGE MASTER, INC.; COUNTRYWIDE BANK FSB; LO, INC., DBA RELIANCE MORTGAGE, INC.; DHI MORTGAGE COMPANY LTD; HOMESTEAD MORTGAGE, INC.; STATE OF WASHINGTON; BOEING EMPLOYEES' CREDIT UNION; US BANK, NA; EAGLE HOME MORTGAGE, LLC; THE WASHINGTON STATE HOUSING FINANCE COMMISSION; NORTH- WEST MORTGAGE ALLIANCE; FLAGSTAR BANK, FSB; AMTRUST BANK; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendants, RYAN K. and STEPHANIE C. JOSWICK, individually and the marital community composed therein; ERICH B. and ERIN M. NAUMANN, individually and the marital community composed therein; STEVEN M. OPPENHEIM; JOHN MICHAEL O'CONNOR; LAURA KLEBS, Appellants, LIBERTY CAPITAL STARPOINT EQUITY FUND, LLC; Respondent, |
Lau, J. — Following escrow agent First American's failure to secure the release of secondary construction lender Liberty Capital's deed of trust on the sale of five condominium units, Liberty gave notice of intent to nonjudicially foreclose its deed of trust on those units. The unit owners (UOs) appeal the trial court rulings (1) dismissing the quiet title action, (2) dissolving the preliminary injunction, and (3) authorizing nonjudicial foreclosure against their units. They argue (1) title to their units should be quieted in them based on equitable estoppel, (2) a constructive trust should be imposed for the value of their units based on unjust enrichment, and (3) in the alternative, both the UOs and their lenders should be equitably subrogated to the primary lender's first priority position for the purchase price of their units. Because the UOs fail to establish relief under equitable estoppel and unjust enrichment and because equitable subrogation would result in material prejudice to Liberty, we affirm the trial court rulings.
Owner/developer GMP Homes developed the Starpoint Condominiums in 2006 and 2007 on two parcels of land in Issaquah. To finance construction, GMP borrowed $26 million from Frontier Bank. Norcon Builders, LLC, the prime contractor, began construction on the project in the first half of 2006. By July 2006, GMP needed additional construction financing and borrowed $1.9 million from Liberty.1 After selling 88 of the 98 units (including the five units that are the subject of this appeal), GMP became insolvent. Frontier, Norcon, and Liberty were each left unpaid.
The Frontier, Norcon, and Liberty loans were all secured by liens against theproject property and units. Except for the five units at issue in this appeal, the creditors' priority was as follows:
• First-place priority—Frontier, with a claim against all unsold units based on its partial deed that was released with each sold unit.
• Second-place priority—Norcon, based on its mechanic's lien with a claim against all sold or unsold units.
• Third-place priority—Liberty, as a secondary lender with a claim against all unsold units based on its deeds of trust. FF 3-4, 12-13, 59-60.
Liberty's 2006 loan agreement2 contemplated that it would receive a "zero payout" on the sales of the first 75 units, with most of the sale price going to pay down Frontier's superior deed of trust. The agreement allowed for such a procedure "[p]rovided Borrower is not in default... and the obligation in favor of Frontier Bank is being reduced at a rate that will amortize such indedebtedness over the course of the first seventy-five (75) Condominium Unit closings." Ex. 107 at 1. This arrangement would leave proceeds from the final 23 sales available to pay Liberty.
FF 22.3 In order to close a sale at Starpoint, escrow agent First American would "ask[] Liberty Capital's [manager,] David Dammarell to 'email or fax me a notice that you're collecting $0.00 on this payoff.'" FF 22 (quoting Ex. 223); RP (Jan. 12, 2010) at 31. And First American "needed Liberty Capital's approval on each closing [and] to confirm that Liberty was in agreement regarding how [the closing agent] would distribute the sale proceeds from each closing." FF 24. That agreement was required to be in writing. FF 31. Liberty describes the process:
(1) prior to sale closing, (2) First American requested in writing Liberty's approval of the sale and provided Liberty with a written HUD [Department of Housing and Urban Development] statement indicating the proposed disposition of sale proceeds, (3) which disposition Liberty either conditionally or unconditionally (or, alternatively, not at all) approved, (4) in writing by a confirmatory email sent prior to sale closing.
Br. of Respondent at 3 (footnote omitted). This description is consistent with Dammarell's testimony describing the closing process:
"Ms. Warthan [of First American4] would email me a HUD 1 statement, or I would be cc'd on a HUD 1 statement, and we would review, and if we approved the financial terms of that, then I would email back and say, we are owed zero on this transaction."
In all of the Starpoint sales, except those involving the UOs condominiums, 5 First American requested and received the agreement of Frontier and Liberty to a partial reconveyance of their deeds of trust prior to the closing on each unit. But in the sales of the UOs condominiums, 6 in August and September of 2007, First American failed to ask for or obtain Liberty's consent to reconvey their deed of trust. The trial court found "by a preponderance of the evidence that First American closed the five disputed closings without receiving any prior approval from Liberty Capital." FF 53.
On October 9, 2008, Liberty sent an e-mail to First American asking that it provide a full list of sold units because it did not have complete and accurate records. FF 50 (citing Ex. 237). After reviewing First American's list of sold units, Dammarell informed First American that there were discrepancies between Liberty's list of approved sales and First American's. FF 51. The trial court found that the "earliest time at which [Liberty] understood that it had not provided approvals for the five unit sales" was October 2008.7 FF 45. Liberty maintained that it had not approved a deed reconveyance for the five units and it therefore asked First American to purchase its note. FF 54.
Meanwhile, on July 18, 2008, Norcon filed this lawsuit to foreclose on its mechanic's lien against Starpoint.8 CP at 1-33. On September 19, 2008, Norconobtained an $821,270.39 default judgment against GMP. CP at...
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