Pilling v. Eastern and Pacific Enterprises Trust
| Decision Date | 08 July 1985 |
| Docket Number | No. 10700-3-I,10700-3-I |
| Citation | 702 P.2d 1232,41 Wn.App. 158 |
| Court | Washington Court of Appeals |
| Parties | Dorothy PILLING, Appellant, v. EASTERN AND PACIFIC ENTERPRISES TRUST, a Washington Trust, Defendant, and M.J. Stewart and Jane Doe Stewart, his wife and their marital community, Respondents, and Renton Mortgage and Escrow, Inc., a Washington corporation, Defendant, and Weldon Thompson, as designated broker of Renton Realty, Respondent, and Daniel Edelson and Shirley Edelson, his wife, Defendants, and Arnold Hernandez and Jane Doe Hernandez, his wife, Respondents, and Benton Realty, Defendant. Daniel EDELSON and Shirley Edelson, his wife, Plaintiffs, v. RENTON MORTGAGE & ESCROW, INC., a Washington corporation, a/k/a Renton Mortgage & Escrow Co.; Edwin G. Stevenson and Jane Doe Stevenson, his wife; Eastern Pacific Enterprises Trust, a/k/a Eastern and Pacific Enterprises Trust; Gene Dawley Co.; M.J. Stewart and Jane Doe Stewart, his wife; James P. McQuade and Jane Doe McQuade, his wife; Scandia Industries, an unknown association; Wrights Business Services, Inc.; Edward R. Wright and Jane Doe Wright, his wife; Dorothy Pilling, Defendants. |
Robben & Blauert, Roger E. Rahlfs, Seattle, for appellant.
Myron J. Stewart, Renton, Pro Se and Pacific Eastern Enterprises, Renton Mortgage & Escrow.
Weldon Thompson, pro se.
James S. Munn, Seattle, for Arnold Hernandez.
Thomas Dreiling, Seattle, for Daniel Edelsons.
Dorothy Pilling appeals from that portion of a judgment dismissing her claims against Renton Realty, its broker, Weldon Thompson, and its salesman, Arnold Hernandez. She claims the trial court erred by failing to find that the realtors breached their fiduciary duty to her. We affirm.
On January 13, 1977, Dorothy Pilling listed her home for sale with Benton Realty, through its salesperson, Pauline Courey. The listing agreement provided for a multiple listing of the property through Real Estate Multiple, Inc. (REMI), of which respondent Renton Realty was a member. Arnold Hernandez, a real estate salesman employed by Renton Realty, noticed Pilling's listing in REMI and brought it to the attention of one Myron J. Stewart. Stewart owned Renton Mortgage and Escrow, Inc. and Eastern and Pacific Enterprises Trust, among other enterprises. Renton Realty, through its broker, Weldon Thompson, had assisted Stewart in previous real estate transactions.
Hernandez and Stewart viewed Pilling's property, and Hernandez informed Pilling that Stewart, on behalf of Eastern and Pacific Enterprises Trust, wanted to make an offer to purchase. Pilling directed Hernandez to discuss the offer with her son-in-law, Ronald Goodmansen, who was the branch manager of a mutual savings bank and an experienced mortgage loan officer.
After Hernandez and Stewart met with Goodmansen to discuss the transaction, Hernandez drafted two earnest money agreements, one for the improved and another for the unimproved portions of Pilling's property. Hernandez also typed, at Stewart's direction, separate "closing instructions" for each purchase and attached them to the earnest money agreements. The "closing instructions" for the sale of the unimproved property required Pilling to subordinate her security interest in that property to a security for financing necessary to construct a duplex on the property. Hernandez delivered these documents to Pilling and Goodmansen, who reviewed them and proposed a change in the payment terms. The change was accepted by Stewart, and the documents were signed on March 6, 1977. Although the earnest money agreement did not specify the method of sale, a blank standard form real estate contract accompanied the documents. Both Pilling and Goodmansen assumed that a real estate contract was to be the method of sale.
On March 5, 1977, Edwin G. Stevenson executed a deed of trust, acting as "Trustee for Eastern Pacific Enterprises Trust", in favor of Wright's Business Services, Inc. as beneficiary. This deed of trust, describing Pilling's improved property, secured a promissory note for $23,000 and was recorded on April 4, 1977. This was 7 days prior to the closing, which did not occur until April 11, 1977. On or about March 31, Wright assigned the note and deed of trust to Renton Mortgage and Escrow.
The sale closing on April 11 was held in the offices of Renton Mortgage and Escrow. Pilling was accompanied at the closing by her listing real estate agent, Pauline Courey, of Benton Realty. Goodmansen, Stewart, Thompson and Hernandez were not present. Instead of executing a real estate contract, Pilling signed two warranty deeds, and took back deeds of trust. She later testified that she did not understand what a deed of trust was. The next day after the closing, April 12, Stewart, acting on behalf of Renton Mortgage and Escrow, assigned the note and deed of trust on Pilling's improved property to Daniel Edelson and his wife. This assignment was recorded April 18. Stewart and/or Renton Mortgage received $20,682 from the Edelsons for the note and deed of trust. Pilling's deeds of trust were recorded May 24, without her knowing the improved portion of her property was encumbered by the deed of trust sold to the Edelsons.
In June 1977, Pilling brought an action to void the sale to Eastern and Pacific Enterprises and to cancel the deeds of trust involving her property. She also sought damages from Stewart and Renton Realty. In a separate action, the Edelsons brought a third party complaint against Pilling to foreclose the deed of trust they held on Pilling's property. The two actions were consolidated, and Pilling was allowed to amend her complaint to quiet title in her name against the Edelsons and to join Arnold Hernandez as a defendant in her claim for damages. The matter went to trial in May 1981.
At the close of Pilling's case, the trial court dismissed the claims against Thompson, Hernandez and Renton Realty. The trial court ordered foreclosure of the deed of trust against the improved portion of Pilling's property and quieted title to the unimproved portion in Pilling. Foreclosure of the Edelsons' deed of trust was for the amount of $34,446.48, and the trial court gave Pilling a judgment against Stewart for the same amount. 1
In its written findings of fact and conclusions of law, the trial court concluded that Hernandez neither breached a duty to Pilling nor made any material misrepresentation of fact to her. The trial court based this conclusion, in part, on its factual finding that Goodmansen was aware that Stewart owned Renton Mortgage and Escrow.
On appeal, Pilling challenges these findings of fact and conclusions of law, asserting that they are not supported by the evidence. She argues that Thompson and Hernandez owed her a fiduciary duty of care and loyalty and breached this duty by: (1) failing to disclose to her that Stewart owned Renton Mortgage and Escrow; (2) failing to monitor the closing of the sale in order to assure it was done in accordance with the contract; and (3) failing to disclose Stewart's plan to subordinate her security interest on the improved portion of the property.
The Washington Supreme Court has held that the real estate brokerage firm with whom property is listed for sale becomes the agent of the seller for the purpose of finding a purchaser; from this agency relationship arises the duty and the obligation on the part of the listing broker, as well as on the part of any subagents, to exercise the utmost good faith and fidelity toward the seller in all matters falling within the scope of employment. Mersky v. Multiple Listing Bureau of Olympia, Inc., 73 Wash.2d 225, 228, 437 P.2d 897 (1968).
The broker's duty of good faith includes the duty of full disclosure, requiring that the agent:
make, in all instances, a full, fair, and timely disclosure to the principal of all facts within the knowledge or coming to the attention of the broker or his subagents which are, or may be, material in connection with the matter for which the broker is employed, and which might affect the principal's rights and interests or influence his actions.
(Citations omitted.) Mersky, at 229, 437 P.2d 897.
Hernandez concedes that this duty exists, but contends that the duty applies only to a listing broker. This contention is without merit. In a multiple listing situation, the...
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