Willener v. Sweeting

Decision Date11 December 1986
Docket NumberNo. 52577-3,52577-3
Citation730 P.2d 45,107 Wn.2d 388
PartiesGregory B. WILLENER and Douglas B. Mykol, d/b/a Colorado Land and Holding Company, Appellants, v. Stanley J. SWEETING; Arden H. Sweeting; James F. Boyle and Kathleen Boyle, husband and wife; and Pacific National Bank of Washington, as Trustee for John L. Crawford, Respondents.
CourtWashington Supreme Court

Barney & Weiner, P.S., Richard M. Barney, Jr., Seattle, for appellants.

McGavick, Graves, Beale & McNerthney, Robert L. Beale, Tacoma, for Arden Sweeting.

Kane, Vandeberg, Hartinger & Walker, James A. Krueger, Harold T. Hartinger, Tacoma, for Stanley Sweeting, et al.

DOLLIVER, Chief Justice.

Plaintiffs commenced an action to recover lost profits and earnest money deposits paid pursuant to an agreement to purchase real property. Plaintiffs claim defendants breached the agreement by failing to deliver marketable title at closing. Plaintiffs appeal the denial by the trial court of their claim for lost profits, attorney fees, and start-up costs. As cross appellants, the defendants seek a reversal of the trial court's refund of Defendants purchased 20 acres of undeveloped land in Pierce County at the intersection of Phillips Road and Steilacoom Boulevard. They sold the northerly 13 acres and paid off their contract of purchase. In August 1966, defendants leased the southeast corner of the property to Standard Oil Company of California. Standard Oil built a service station on the property and was in possession of the leased property during 1979 and 1980.

plaintiffs' earnest money plus interest.

In 1978 defendants listed the remaining 7 acres for sale with Lundstrom, Inc., a real estate office. Douglas B. Mykol, one of the plaintiffs, was a real estate agent who worked for Lundstrom. A prospective buyer made an offer for the property in 1978, but forfeited the deposit in 1979 when the earnest money agreement expired. At that point, on July 26, 1979, plaintiffs Douglas Mykol and Gregory B. Willener, calling themselves the Colorado Land and Holding Company, submitted the earnest money agreement at issue in this case. They paid $10,000 as provided in this agreement and proposed to pay $215,000 at closing no later than December 15, 1979, with the balance of $535,000 to be paid in full within 3 years. The sale excluded the land leased to Standard Oil. Soon thereafter, plaintiffs accepted earnest money from another party for the resale of a part of the property lying adjacent to the Standard Oil parcel. The price was $90,000 and that transaction was also to close on December 15, 1979.

Defendants agreed in the earnest money agreement to cooperate with plaintiffs in obtaining a short plat of the property and to grant an easement for ingress, egress, and utilities over the private roads of the short plat. Plaintiffs were to pay for all improvements to the plat. This short plat was not a condition precedent to the closing of the sale. Plaintiffs had until September 15, 1979, to conduct surveys and soil tests and make other studies as they deemed necessary, at their expense. They also had until September 15 to elect not to proceed and recover $5,000 of their deposit, or if they proceeded, the full $10,000 would Plaintiffs employed an engineering, planning, and survey firm to assist them in obtaining the short plat. On August 29, plaintiffs accepted the preliminary title report and defendants signed a short plat of the property. Defendants' principal spokesman, Stanley J. Sweeting, at that point suspected Standard Oil had made improvements which encroached both on the county right of way and on the property being sold to plaintiffs. He notified the Lundstrom agency of this boundary problem and Lundstrom suggested that the surveyors should resolve it.

                be nonrefundable and they would deposit an additional $5,000 and extend the agreement to October 15.   By October 15, plaintiffs had to elect finally whether to close by December 15;  if they decided not, the full $15,000 would be forfeited
                

On August 30, plaintiffs agreed to sell another part of the land they were buying to Kentucky Fried Chicken of Tacoma, Inc., with a closing date of December 15.

On September 5 and again on September 17, plaintiffs informed defendants that the land occupied by Standard Oil varied somewhat from the property described in the lease and suggested a change in the legal description in the lease. Plaintiffs also exercised their option to continue the transaction and paid an additional $5,000 deposit.

On September 19, Lundstrom, ostensibly the sellers' agent, suggested to the sellers/defendants by letter that they had the responsibility of correcting the legal description problem and should retain an engineering firm to do so. Defendants responded by directing Lundstrom to disburse the deposited funds to them and indicating they would proceed according to the written agreement. On October 2, all parties signed an agreement stating that the short plat was satisfactory to the buyers; the sellers did not guarantee the accuracy of the short plat; the buyers had completed all surveys, soil tests, and studies satisfactorily; all funds paid to date could be disbursed to sellers and were not refundable; and buyers would inform sellers by October 15, 1979, whether they would proceed to closing. The Defendant Sweeting then obtained Standard Oil's consent to an amendment of the lease to reflect the legal description including the land actually occupied by Standard Oil, including the encroachment of some 10 feet upon the land being sold. Defendants informed plaintiffs that a disparity between the leasehold description and the short plat would not negate the closing requirement or change the property described in the earnest money agreement. Mykol agreed to have his engineer draft an amendment to the lease, which would reduce slightly the size of the property being sold and increase commensurately the property being leased. He sent an amendment of the lease to sellers for their signatures. At closing, the amendment was not signed by defendant Pacific National Bank of Washington, as trustee for John L. Crawford nor by Standard Oil Company. The amendment was never delivered into escrow, but the escrow company was otherwise prepared to close the transaction. Also, at closing, the escrow company had received only $1 from plaintiffs as funds to close the sale.

                deposits were disbursed to sellers immediately.   On October 15, buyers stated that all contingencies had been met and they would close
                

On December 19, 1979, past the closing date, plaintiffs notified defendants the sale could not be closed because defendants were unable to convey the exact property described in the earnest money agreement. They blamed defendants for forcing a closing that might expose the plaintiffs to lawsuits and claims against the property, and requested an extension of the closing dated to December 28 so that defendants could correct the leasehold legal description.

Defendants requested an additional $10,000 as consideration for an extension to December 28, which plaintiffs "paid" in the form of $1 in cash and a note for $9,999 due December 28, 1979. On December 21 defendants, except the John L. Crawford Trustee, signed a real estate contract to sell the property. On December 28, plaintiffs repeated their position that the deal could not close because defendants The trial court denied plaintiffs' claim for damages, lost profits, and recovery of start-up expenses, but ordered a full refund of their earnest money and cancellation of the note representing the earnest money of December 28. The court also awarded plaintiffs interest and costs. Plaintiffs appealed from the court's denial of their claim for lost profits and expenses. Defendants cross-appealed from the court's refunding of the earnest money deposits and denial of attorney fees. The case was transferred to this court pursuant to RAP 4.3 on March 19, 1986.

                would not deliver title free and clear, but offered to negotiate and extend the time for solving the problem.   Defendants demanded payment of the note representing additional earnest money, and later notified buyers that the earnest money agreement was null and void.   Approximately 5 months later, plaintiffs instigated this action
                

Plaintiffs are challenging the trial court's conclusion of law claiming the findings of fact do not support the court's conclusions. Appellate review is limited to determining whether the trial court's findings are supported by substantial evidence and, if so, whether the findings in turn support the conclusions of law. Goodman v. Darden, Doman & Stafford Assocs., 100 Wash.2d 476, 670 P.2d 648 (1983).

Plaintiffs claim there is no evidence to support many of the trial court's conclusions of law. Upon review of the record, this contention is unfounded. The record supports the trial court's judgment. We affirm the trial court's decision awarding plaintiffs a refund of their earnest money plus interest and denying plaintiffs' claim for lost profits, attorney fees, and start-up costs. We deny defendants' cross appeal.

I

Plaintiffs claim they are entitled to judgment for loss of profit and recovery of their start-up costs because defendants breached the earnest money agreement. Defendants claim plaintiffs' failure to tender the down payment at closing precludes a breach of contract suit.

If a contract requires performance by both parties, the party claiming nonperformance of the other must establish as a matter of fact the party's own performance. Reynolds Metals Co. v. Electric Smith Constr. & Equip. Co., 4 Wash.App. 695, 483 P.2d 880 (1971). Thus, the first issue to resolve is whether plaintiffs sufficiently performed under the agreement to claim nonperformance of defendants.

The trial court stated in conclusion of law 8:

Neither plaintiffs nor defendants performed under the July 30, 1979, Earnest Money Agreement. The defendants did not deposit in...

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