Real Mkt. Data v. Blue Stone Entm't

• Docket Number: 83346-4-I
• Decision Date: 24 January 2022
• Parties: REAL MARKET DATA, LLC, a Washington State Limited Liability Company, Appellant, v. BLUE STONE ENTERTAINMENT, LLC, a Washington State Limited Liability Company, and ROY J. JOHNSON and MARY E. JOHNSON, husband and wife, Respondents.
• Court: Washington Court of Appeals

1

REAL MARKET DATA, LLC, a Washington State Limited Liability Company, Appellant, v. BLUE STONE ENTERTAINMENT, LLC, a Washington State Limited Liability Company, and ROY J. JOHNSON and MARY E. JOHNSON, husband and wife, Respondents.

No. 83346-4-I

Court of Appeals of Washington, Division 1

January 24, 2022

UNPUBLISHED OPINION

Chun J.

Real Market Data, LLC sued Blue Stone Entertainment, LLC for breach of contract. Following a bench trial, the trial court accepted the interpretation of the contract advanced by Blue Stone and awarded Real Market Data only a fraction of the damages and attorney fees it sought. Real Market Data appeals. For the reasons below, we affirm.

I. BACKGROUND

Roy Johnson and Mary Johnson^[1] owned a controlling share of Diamond Game Enterprises Inc. Diamond Game leased "Promotional Sweepstakes" game stations to two "entertainment centers" owned and operated by Ysleta del Sur Pueblo (Tribe) in Texas. To use the game stations, patrons make "charitable donations," which help fund tribal programs like "health care, public safety, veterans' services education, elder care, day care and after school programs." For each "donation," a patron can win "the Sweepstakes."

From 2011 to 2013, the Johnsons were in the process of selling Diamond Game to a larger gaming company, Amaya Americas. But a suit brought by the Texas Attorney General was pending against the Tribe and Diamond Game. Amaya refused to purchase Diamond Game unless it was protected from liability, which required Diamond Game to give up its Texas division.

On January 2, 2014, the Johnsons formed Blue Stone Entertainment, LLC to act as a "pass-through" or "intermediary between Diamond Game and the [T]ribe." Blue Stone would lease the game stations from Diamond Game and assume liability in the Texas litigation, and then Blue Stone would operate and maintain the game stations for the Tribe. Once Blue Stone was substituted for Diamond Game in the litigation, Amaya bought Diamond Game.

While working on the sale of Diamond Game to Amaya, Roy approached his neighbor and friend, Mark Witschger. Mark and his wife, Bridget Witschger, operated Real Market Data, LLC, a real estate data business. Roy asked Mark if Real Market Data could assist Blue Stone, and Mark agreed.^[2] The next day, Blue Stone and Real Market Data entered an "Independent Contractor Agreement." Section 3 of the agreement states, "In consideration of the Services provided during the Term, Blue Stone Entertainment LLC shall pay Contractor at a rate of 20% of net revenue collected under the promotional sweepstakes agreement (Exhibit A), paid on a bi-weekly basis commencing as of the Effective Date." (Emphasis added.)

On January 16, Blue Stone concurrently entered an "Equipment Lease Agreement" with Diamond Game and a "Promotional Sweepstakes Agreement" with the Tribe. Under the Equipment Lease Agreement, Blue Stone leased the stations from Diamond Game. Under the Promotional Sweepstakes Agreement, Blue Stone operated and maintained the stations for the Tribe.

The Equipment Lease Agreement provides that Diamond Game is the "Service Provider," and Blue Stone would pay Diamond Game "[a] service fee equal to five percent (5%) of Net Donations payable to Service Provider pursuant to the Service Agreement." Also, the agreement defines "Net Donations" as "the sum of all Sweepstakes donations made via the Donation Stations less sweepstake prize payouts paid in connection with the Donation Stations during the applicable period."

The Promotional Sweepstakes Agreement provides that Blue Stone was the "Operator." That agreement says, "(a) Tribe shall collect the total Net Donations made via the Donation Stations. As a 'Fee' for operating the promotional Sweepstakes and providing the related Equipment, Tribe shall pay to Operator an amount calculated as set forth in Exhibit A-1." Exhibit A-1 provides that net donations are "[t]he sum of all Sweepstakes donations made via the Donation Stations less Sweepstakes prize payouts paid for each Donation Station during the applicable period." It also provides that the operator fee is "30% of Net Donations (fee for Operator's administration of the Sweepstakes and provision of Equipment)" and that "5% of Net Donations shall be payable by Operator from its Fee to Service Provider pursuant to the Service Agreement between Operator and Service Provider."

Blue Stone operated for about 22 months from 2014 to 2016.

Real Market Data sued Blue Stone for breach of contract. It alleged Blue Stone failed to pay it "20% of the net revenue" of the earnings from January 2014 to February 2017. Real Market Data alleged Blue Stone's net revenue was $5, 282, 122.08, but that Blue Stone paid Real Market Data only $127, 233.57, about 2.4 percent. Real Market Data claimed it was entitled to the difference between 20 percent of what Blue Stone received ($5, 282, 122.08 x .20 = $1, 056, 424.42) and what it received ($127, 233.57), which it calculated to be $929, 190.84.^[3]

The trial court interpreted "20% of net revenue" to mean "what money [Blue Stone] took in (which was 30% of the net donations) minus 5% payable to the service provider as well as the cost of leasing the machines." It also found that Roy received $586, 541 from Blue Stone. Because Mark received $127, 233.57, the court found that he received less than 20 percent of the "net profit" ($586, 541 + $127, 233.57 = $713, 774.57; $127, 233.57 / $713, 774.57 =0.178 or 17.8 percent).

To make up the difference between what he received and what Blue Stone owed, the court awarded Mark $15, 520.34. Blue Stone no longer exists and has no assets; the trial court determined the Johnsons were liable for that amount.

The court determined that because the court awarded Real Market Data $15, 520.34 when it sought $929, 190.84, it received .0167 of the amount it pursued. The court determined Real Market Data was entitled to the proportional amount of attorney fees requested; because Real Market Data requested $95, 525, the court awarded it $1, 595.27.

Real Market Data moved for, and the trial court denied, reconsideration.

Real Market Data appeals.

II. ANALYSIS

A. Independent Contractor Agreement - "Net Revenue"

We "follow the objective manifestation theory of contracts. Under this approach, we attempt to determine the parties' intent by focusing on the objective manifestations of the agreement, rather than on the unexpressed subjective intent of the parties." Hearst Commc'ns, Inc. v. Seattle Times, 154 Wn.2d 493, 503, 115 P.3d 262 (2005). "We generally give words in a contract their ordinary, usual, and popular meaning unless the entirety of the agreement clearly demonstrates a contrary intent." Id. at 504.

As for extrinsic evidence, our use of it is not limited to interpreting contracts with an ambiguous term. Berg v. Hudesman, 115 Wn.2d 657, 668-69, 802 P.2d 222 (1990). We may look to the "surrounding circumstances and other extrinsic evidence ... 'to determine the meaning of specific words and terms used' and not to 'show an intention independent of the instrument' or to 'vary, contradict or modify the written word.'" Hearst Commc'ns, 154 Wn.2d at 503 (emphasis omitted) (quoting Hollis v. Garwall, Inc., 137 Wn.2d 683, 695-96, 974 P.2d 836 (1999)). Extrinsic evidence is not admissible as "'evidence of a party's unilateral or subjective intent as to the meaning of a contract word or term.'" Go2Net, Inc. v. C I Host, Inc., 115 Wn.App. 73, 84, 60 P.3d 1245 (2003) (quoting Bort v. Parker, 110 Wn.App. 561, 574, 42 P.3d 980 (2002)).

"We review a trial court's decision following a bench trial by asking whether substantial evidence supports the trial court's findings of fact and whether those findings support the trial court's conclusions of law." Viking Bank v. Firgrove Commons 3, LLC, 183 Wn.App. 706, 712, 334 P.3d 116 (2014). We review de novo the trial court's conclusions of law. Id.

1. Ordinary Meaning

"A contract term is ambiguous only when, viewed in context, two or more meanings are reasonable. When multiple meanings are reasonable, which meaning reflects the parties' intent is a question of fact." Healy v. Seattle Rugby, LLC, 15 Wn.App. 2d 539, 545, 476 P.3d 583 (2020) (citing GMAC v. Everett Chevrolet, Inc., 179 Wn.App. 126, 135, 317 P.3d 1074 (2014)). When a contract term is undefined, we often turn to dictionary definitions to determine its ordinary meaning. Seattle Tunnel Partners v. Great Lakes Reinsurance (UK) PLC, 18 Wn.App. 600, 611, 492 P.3d 843 (2021), pet, for review granted, No. 100168-1 (Wash. Jan. 5, 2022). Typically, we use "standard English language dictionaries." Boeing Co. v. Aetna Cas. & Sur. Co., 113 Wn.2d 869, 877, 784 P.2d 507 (1990).

Real Market Data assigns error to finding of fact 13, which states, "The term 'net revenue' from the Independent Contractor Agreement is not the 'net donations' as defined under the Promotional Sweepstakes Agreement and is more akin to 20% of the net profit of [Blue Stone] during the term of its operation of these 'donation stations.'"

Real Market Data and Blue Stone assert that the Independent Contractor Agreement's use of the "net revenue" is unambiguous but they interpret it differently. Real Market Data contends that "20% of net revenue" unambiguously is "20 percent of the money collected by Blue Stone from the Tribe under the promotional sweepstakes agreement," which means 20 percent of $5, 282, 122.08. Blue Stone contends it means that Real Market Data was only entitled to "20% of Blue Stone's profit-the operator fee minus expenses-and not 20% of the total operator fee" under the Promotional Sweepstakes Agreement. We conclude that the ordinary meaning supports the trial court's interpretation that net revenue is 20 percent of Blue...