Paradiso v. Drake, 33921-8-II.

Citation143 P.3d 859,135 Wn. App. 329
Decision Date03 October 2006
Docket NumberNo. 33921-8-II.,33921-8-II.
PartiesJohn PARADISO, as trustee of the Revocable Living Trust of John Paradiso, Respondent, v. Jeanne E. DRAKE, a married woman as her separate estate, Appellant.
CourtCourt of Appeals of Washington

Annette L. Monnett, Contract Attorney, Fircrest, WA, Terrence Clayton Posey, Tacoma, WA, for Appellant.

David John Corbett, Eisenhower & Carlson PLLC, Tacoma, WA, Philip Albert Talmadge, Anne Elizabeth Melley, Talmadge Law Group PLLC, Tukwila, WA, for Respondent.

PART PUBLISHED OPINION

ARMSTRONG, J.

¶ 1 Jeanne E. Drake agreed to sell "as is" nine vacant lots to John Paradiso's Living Trust (the Trust). Drake refused to close the sale because a neighbor's septic drain field encumbered one of the lots and the proposed warranty deed did not contain the "as is" language present in the original sales agreement. The Trust sued for specific performance, and the trial court granted the Trust summary judgment. On appeal, Drake argues that she could not close because she could not convey clear title to the lots. In the alternative, she asserts that even if she breached the purchase and sale agreement, the agreement limited the Trust to recovering its earnest money deposit. Finally, Drake challenges the trial court's attorney fees award and its failure to strike a declaration and certain escrow records the Trust submitted in support of its summary judgment motion. Finding no error, we affirm.

FACTS

¶ 2 Jeanne Drake agreed to sell nine vacant lots on Ketron Island to John Paradiso's Living Trust. Johnnie Paradiso (Paradiso), one of John's daughters, had a durable power of attorney to act on the Trust's behalf; she negotiated the sale with Drake's husband. In the purchase and sale agreement, the Trust agreed to pay $65,000 for the lots and the parties agreed to close the sale on November 27, 2004.1 The Trust paid the agreed upon $1,000 earnest money deposit.

¶ 3 One of the lots (Lot 8) had a septic drain field that served a neighbor's property. Although the parties dispute when they learned of the drain field, they agree that they both knew about it before the original closing date. Before closing, Drake's realtor, Susan Boyer, called Paradiso and explained that the parties needed to record a written easement for the septic drain field on Lot 8. After Boyer told Paradiso that Drake could not draft and record the easement before the closing date, Paradiso signed a document offering to extend the closing date; Drake never signed the extension. Shortly before the original closing date, the Trust deposited the full purchase price in escrow.

¶ 4 Before the sale closed, Pat Lord, the owner of the lot the septic drain field serviced, approached Drake and offered to purchase Lot 8 and another lot adjoining her property, both of which Drake had already contracted to sell to the Trust. Drake agreed to sell Lord the two lots for $65,000. Drake's husband, Bill Graves, accepted a $10,000 down payment from Lord before the closing date of Drake's contract with the Trust.

¶ 5 Drake refused to close. She explained that certain errors and omissions in the closing documents and the deed precluded her from signing those documents. Specifically, she said that the closing documents did not contain the warranty disclaimers that the parties agreed on during negotiations. Drake maintained that this excused her from performing under the contract because she could not provide the quality of title the agreement called for. Thus, according to Drake, the purchase and sale agreement expired and because the closing documents had not been signed, she intended to complete the sale to Lord. The Trust's attorney wrote Drake a letter demanding performance, but she refused.

¶ 6 The Trust sued for specific performance and attorney fees and costs under the purchase and sale agreement. The parties unsuccessfully attempted to settle their dispute.

¶ 7 Both parties moved for summary judgment. Before the summary judgment hearing, Drake moved to strike the escrow company's Transaction Memo Log,2 statements in David Corbett's declaration,3 and statements in Paradiso's declaration recounting conversations with Graves, Boyer, and Lord. The trial court granted Drake's motion with respect to Boyer's and Lord's statements, ruling that Lord's statements were irrelevant and that the record did not sufficiently show that Boyer was Drake's agent.

¶ 8 The trial court granted the Trust's summary judgment motion and ordered Drake to convey title to the nine lots by statutory warranty deed, subject to whatever rights the neighbor had or may acquire to the drain field on Lot 8. The trial court also awarded the Trust $24,732.95 in attorney fees and costs.

¶ 9 The principal issue is whether the trial court erred in granting the Trust specific performance in spite of the possible drain field encumbrance on one of the lots.

ANALYSIS

I. THE PURCHASE AND SALE AGREEMENT

1. Standard of Review

¶ 10 We review a summary judgment de novo. Korslund v. Dyncorp Tri-Cities Servs., Inc., 156 Wash.2d 168, 177, 125 P.3d 119 (2005) (citing Hubbard v. Spokane County, 146 Wash.2d 699, 707-08, 50 P.3d 602 (2002)). Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. CR 56(c).

¶ 11 We interpret unambiguous contracts as a matter of law. State v. Brown, 92 Wash.App. 586, 594, 965 P.2d 1102 (1998). Summary judgment is proper even if the parties dispute the legal effect of a certain provision of an unambiguous contract. Brown, 92 Wash.App. at 594, 965 P.2d 1102 (citing Mayer v. Pierce County Med. Bureau, Inc., 80 Wash.App. 416, 420, 909 P.2d 1323 (1995)). The nonmoving party, however, may not rely on speculation, argumentative assertions, or conclusory statements. Seattle Police Officers Guild v. City of Seattle, 151 Wash.2d 823, 848, 92 P.3d 243 (2004); Overton v. Consol. Ins. Co., 145 Wash.2d 417, 430, 38 P.3d 322 (2002).

2. Did Drake Breach the Agreement?

¶ 12 Drake states that she refused to close because the deed did not contain the "as is" and "no warranty" language contained in the contract. Clerk's Papers (CP) at 66. She claims that she did not breach the agreement because the contract's "as is" clause effectively disclaimed any title warranties as well as all warranties regarding the property's physical condition. She argues that without the disclaimer, she would have been liable for damages because she could not provide clear title to Lot 8 because of the drain field.

¶ 13 But as we will discuss below, the Trust clearly signaled its intent to waive any claim for breach of a warranty based on the drain field. Most importantly, the Trust agreed to extending the closing date so Drake's realtor could prepare and record an easement covering the drain field. Having agreed to record an easement, the Trust could not object to excluding the recorded encumbrance in the warranty deed. In fact, the Trust never objected to excepting the drain field encumbrance from the warranty deed.

3. Is the Trust Entitled to Specific Performance?

¶ 14 Drake argues that the contract's express language precludes the Trust from seeking specific performance.

¶ 15 Generally, the court has discretion to allow a buyer specific performance of a real estate purchase agreement. Sheldon v. Hallis, 72 Wash.2d 993, 997, 435 P.2d 988 (1967) (quoting Tombari v. Griepp, 55 Wash.2d 771, 775, 350 P.2d 452 (1960)); Chan v. Smider, 31 Wash.App. 730, 735, 644 P.2d 727 (1982) (citing Carpenter v. Folkerts, 29 Wash.App. 73, 76, 627 P.2d 559 (1981)). To obtain specific performance, a party must present clear and unequivocal evidence that "`leaves no doubt as to the terms, character, and existence of the contract.'" Kruse v Hemp, 121 Wash.2d 715, 722, 853 P.2d 1373 (1993) (quoting Powers v. Hastings, 93 Wash.2d 709, 713, 612 P.2d 371 (1980)). Specific performance is an appropriate remedy for a seller's breach only when (1) damages are not an adequate remedy for the buyer, (2) the buyer has not defaulted on its obligations, and (3) the contract does not expressly bar specific performance. See Kreger v. Hall, 70 Wash.2d 1002, 1009, 425 P.2d 638 (1967) (party seeking performance cannot be in default); Chan, 31 Wash.App. at 735, 644 P.2d 727 (inadequacy of damages); 18 WILLIAM STOEBUCK & JOHN WEAVER, WASHINGTON PRACTICE, REAL ESTATE, § 16.8, at 245 (2d ed.2004) (specific performance unavailable if the parties have expressly excluded that remedy).

¶ 16 Drake argues that the agreement expressly states that the Trust has no right to specific performance. She maintains that the contract allows the Trust to recover only its $1,000 earnest money payment.

¶ 17 We follow the objective manifestation theory of contracts, looking for the parties' intent by its objective manifestations rather than the parties' unexpressed subjective intent. Hearst Commc'ns, Inc. v. Seattle Times Co., 154 Wash.2d 493, 503, 115 P.3d 262 (2005) (citing Max L. Wells Trust v. Grand Cent. Sauna & Hot Tub Co. of Seattle, 62 Wash.App. 593, 602, 815 P.2d 284 (1991)). Thus, we consider only what the parties wrote, giving words in a contract their ordinary, usual, and popular meaning unless the agreement, as a whole, clearly demonstrates a contrary intent. Hearst Commc'ns, Inc., 154 Wash.2d at 504, 115 P.3d 262 (citing Universal/Land Constr. Co. v. City of Spokane, 49 Wash.App. 634, 637, 745 P.2d 53 (1987); J.W. Seavey Hop Corp. of Portland v. Pollock, 20 Wash.2d 337, 348-49, 147 P.2d 310 (1944)).

¶ 18 Paragraph "c" of the contract provides:

Condition of Title. ....[T]itle to the Property shall be marketable at Closing. The following shall not cause the title to be unmarketable: . . . easements and encroachments, not materially affecting the value of or unduly...

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