Ruzumna v. McGuinness, No. 54086-6-I (WA 2/22/2005)

• Decision Date: 22 February 2005
• Docket Number: No. 54086-6-I,54086-6-I
• Court: Washington Supreme Court
• Parties: DAVID RUZUMNA, a married man, as his separate estate, Respondent, v. TIMOTHY McGUINNESS, and JILL OSBORNE McGUINNESS, husband and wife, and the marital community comprised thereof, Appellants.

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Unpublished Opinion

DAVID RUZUMNA, a married man, as his separate estate, Respondent, v. TIMOTHY McGUINNESS, and JILL OSBORNE McGUINNESS, husband and wife, and the marital community comprised thereof, Appellants.

No. 54086-6-I

Court of Appeals of Washington, Division One.

Filed: February 22, 2005

Appeal from Superior Court of King County. Docket No. 03-2-39887-0. Judgment or order under review. Date filed: 03/23/2004. Judge signing: Hon. Steven C Gonzalez.

Counsel for Appellant(s), James N. Jr Jory, Anderson Law Group PLLC, 20819 72nd Ave S Kent, WA 98032-2393.

Counsel for Respondent(s), David Ruzumna, Law Office of David Ruzumna PLLC, 1411 4th Ave Ste 1510, Seattle, WA 98101.

PER CURIAM.

Before transferring a company car to his former colleague, David Ruzumna handwrote a short contract stating that his colleague, Timothy McGuinness, would indemnify him for all traffic tickets, accidents, and lease payments. When Ruzumna later received an invoice for overdue lease payments, he sued McGuinness for breach of contract. The trial court granted summary judgment in Ruzumna's favor, and McGuinness appeals. We hold that although evidence establishes that Ruzumna intentionally misrepresented the contract's contents to McGuinness, under these circumstances McGuinness could not justifiably rely on the misrepresentation. The contract is therefore enforceable. We affirm the judgment, but reverse the trial court's attorney fees award.

FACTS

In January 2002, attorney David Ruzumna received an employment offer from the Anderson Law Group (ALG). As part of this offer, ALG promised to give Ruzumna a company car. To facilitate this arrangement, Ruzumna leased a Lexus, and ALG agreed to make the lease payments.

In June 2003, Ruzumna left ALG.¹ In July 2003, ALG attorney Timothy McGuinness met with Ruzumna to retrieve the company car. According to McGuinness, the two discussed automobile liability at that time. Because Ruzumna's name was on the lease but McGuinness was going to be driving the car, McGuinness agreed to assume liability for traffic tickets and accidents. Ruzumna handwrote a contract and according to McGuinness told him that the contract memorialized McGuinness' agreement to assume responsibility for tickets and accidents. McGuinness signed the contract in his personal capacity and as a member of ALG. The contract states: Tim McGuinness agrees to indemnify, defend, and hold Ruzumna harmless for any and all liability arising from McGuinness or McGuinness' agents (or others using the vehicle w/ or w/o McGuinness' permission) use or possession of the vehicle, as well as all lease payments and disposition fees (including excess mileage charges) associated with the vehicle.²

McGuinness states that he did not read the contract until approximately one hour after signing it. At that point, he realized that the document contained an additional provision making him liable for all lease payments. McGuinness allegedly phoned Ruzumna to object to and repudiate this additional provision. According to McGuinness, Ruzumna admitted to unilaterally imposing the lease payment provision.

McGuinness took possession of the car on the same day that he signed the contract. In September 2003, the car's lessor attempted to repossess the vehicle from Ruzumna for failure to make lease payments.³ Ruzumna referred the lessor to McGuinness, who ultimately returned the car to the lessor. In October 2003, the lessor billed Ruzumna for approximately $7,000, the balance due under the lease.

In October 2003, Ruzumna sued McGuinness for breach of contract, monies due, promissory estoppel, and unjust enrichment, alleging that McGuinness failed to pay Ruzumna or the lessor for the amount due under the lease, in violation of their contract. In March 2004, the trial court granted Ruzumna's motion for summary judgment and ordered McGuinness to pay Ruzumna approximately $7,000 plus prejudgment interest, costs, and attorney fees. McGuinness appeals.

DISCUSSION

In reviewing a trial court's decision to grant summary judgment, we review questions of law de novo.⁴ The court considers all facts and reasonable inferences in the light most favorable to the nonmoving party.⁵ Absent a genuine issue of any material fact, the moving party is entitled to summary judgment as a matter of law.⁶ Summary judgment is proper `only if reasonable persons could reach only one conclusion from all of the evidence.'⁷

I. Fraudulent Misrepresentation

McGuinness argues that he is not liable for the lease payments because the contract is invalid. Specifically, he argues that Ruzumna committed fraud in the execution by misrepresenting the contract's contents.⁸ But Ruzumna points out that McGuinness signed the contract without reading it. Therefore, according to Ruzumna, McGuinness may not succeed with a fraud claim because he cannot prove that he was justified in relying on Ruzumna's representations.

Parties have a duty to read any contract they sign,⁹ and a party who voluntarily signs a contract may not later attempt to avoid that contract on the basis that he or she was ignorant of its contents.¹⁰ `One who accepts a written contract is conclusively presumed to know its contents and to assent to them{.}'¹¹ But this rule does not apply when a contracting party has committed fraud, misrepresentation, or some other wrongful act.¹² Here, McGuinness attempts to avoid the contract by arguing that Ruzumna fraudulently misrepresented the contract's contents. A misrepresentation¹³ is fraudulent if a person makes an assertion, intends that the assertion induce another to manifest his/her assent, and (1) knows the assertion is not in accord with the facts, (2) lacks confidence in the truth of the assertion, or (3) says that the assertion is made on some basis knowing that it was not so made.¹⁴ A fraudulent misrepresentation renders a contract void¹⁵ if the assertion induced the other party to enter into the contract and that party justifiably relied on the assertion.¹⁶ The burden of proving a fraudulent misrepresentation is on the party seeking to void the contract.¹⁷ That party must prove fraud by clear, cogent, and convincing evidence.¹⁸

In his declaration, McGuinness states that Ruzumna asked him to sign a writing that would make McGuinness responsible for traffic tickets and accidents. McGuinness agreed, reiterating that he would be responsible only for traffic tickets and accidents and telling Ruzumna that he did not have the authority to sign for ALG. McGuinness' declaration also states that when he later contacted Ruzumna to object to the contract's lease indemnity provision,

I told him that what at {sic} he had done was dishonest. I told him that he and I had talked and agreed about tickets and accidents. He agreed with me and said that he felt bad about that, but only for a moment. He agreed that we never talked about lease obligations. He said that he needed something else because he did not trust other members of ALG.

In his declaration, Ruzumna declines to comment on McGuinness' allegations, stating instead that the allegations are not material to this case: I have chosen to not respond to the allegations of dishonesty made by Mr. McGuinness, as I do not believe those allegations are relevant to the case before the Court. So that my silence in responding to the allegations are {sic} not interpreted as agreement, I will state for the record that the allegations by Mr. McGuinness and my former partners regarding my conduct during our partnership dissolution are either false or in some cases partially true but grossly misleading.

Ruzumna's declarations never address who said what when he and McGuinness signed the July 2003 contract.¹⁹ He offers no evidence that he accurately informed McGuinness of the contract's contents. In other words, Ruzumna presents nothing to contradict McGuinness' allegations.²⁰

The undisputed evidence therefore indicates that Ruzumna knowingly and inappropriately misrepresented the contract's contents to McGuinness. It also indicates that Ruzumna's misrepresentation induced McGuinness to sign the contract, as McGuinness testified that he would not have signed it if he had known what the contract said. The remaining question, then, is whether McGuinness justifiably relied on Ruzumna's misrepresentation.

`{R}eliance upon a fraudulent representation `must be reasonable under the circumstances, that is, a party may not be heard to say that he relied upon a representation when he had no right to do so."²¹ The extent to which one must verify the truth of the representation depends upon the circumstances of the case.²²

If a party has an opportunity to read a plain and unambiguous contract, he or she needs to exercise little diligence to ascertain the truth of an allegedly fraudulent representation.²³ This is especially the case here, where the contract is very short and written in plain English. McGuinness is an attorney who is trained to read and understand contracts. And there was no special relationship of trust and confidence between McGuinness and Ruzumna: the record indicates that the two had an acrimonious and, at one point, litigious relationship. Finally, McGuinness makes no allegation that Ruzumna prevented him from reading the contract. This is not a situation where the misrepresented party was visually impaired,²⁴ unable to verify the accuracy of the representation,²⁵ or unable to understand English.²⁶ McGuinness clearly could and should have read the contract, and his failure to do so renders his reliance on Ruzumna's assertions unjustified.²⁷ We conclude that McGuinness failed to prove fraudulent misrepresentation in the contract's execution, and thus the contract was valid and enforceable. We affirm the trial court's decision on summary judgment.

II. Attorney Fees

Both Ruzumna and McGuinness ask for attorney fees on appeal. A party may recover attorney fees on appeal if an applicable law grants that right.²⁸ RCW 4.84.330...