Williamson, Inc. v. Calibre Homes, Inc.

• Decision Date: 19 September 2002
• Docket Number: No. 71493-2.,71493-2.
• Citation: 147 Wash.2d 394,54 P.3d 1186
• Court: Washington Supreme Court
• Parties: WILLIAMSON, INC., and Masters, Inc., both Washington corporations, Respondents, v. CALIBRE HOMES, INC., a Washington corporation, Petitioner.

54 P.3d 1186

147 Wash.2d 394

WILLIAMSON, INC., and Masters, Inc., both Washington corporations, Respondents, v. CALIBRE HOMES, INC., a Washington corporation, Petitioner.

No. 71493-2.

Supreme Court of Washington, En Banc.

Argued May 14, 2002.

Decided September 19, 2002.

David Kerruish, Seattle, for Petitioner.

Davidson Czeisler & Kilpatric, Kenneth Davidson, Hively Zeno Drake & Hively, Richard Hively, Kirkland, for Respondents.

JOHNSON, J.

This case requires us to determine whether the substantial compliance doctrine applies to the real estate brokers and salespersons act (REBSA), chapter 18.85 RCW, and whether Williamson, Inc., substantially complied with the licensing requirements of REBSA. Calibre Homes, Inc. (Calibre) argues the substantial compliance doctrine does not apply to REBSA. Calibre further argues that even if the doctrine applies to REBSA, Williamson, Inc., did not have an officer who was also a broker and therefore did not substantially comply with REBSA. The Court of Appeals reversed the trial court and held Williamson, Inc., substantially complied with REBSA. We agree with the Court of Appeals. We hold the substantial compliance doctrine applies to REBSA, and Williamson, Inc., substantially complied with REBSA. The Court of Appeals is affirmed.

FACTS

Calibre is a homebuilder that buys raw land, subdivides it, and builds single family homes on the individual lots. In early 1996, Calibre retained Curtis Williamson (Curtis),¹ at that time a licensed real estate salesperson with Windermere Real Estate, to perform real estate sales services for Calibre. In late 1996, Curtis moved from Windermere Real Estate to Masters, Inc., (Masters), a licensed brokerage under the ReMax franchise name. Calibre continued to retain the services of Curtis. Betsy Williamson (Betsy) joined her husband Curtis in the real estate sales field in 1997. Like Curtis, she "hung" her license at Masters.

Around this time, Curtis and Betsy formed Williamson, Inc. Betsy and Curtis employed the corporate form to address various separate and community property issues that arose after they married. Williamson, Inc., is a closely held corporation; Curtis and Betsy are, and have always been, the sole shareholders, officers and directors of Williamson, Inc. According to the complaint, "Williamson, Inc .... operated as a real estate agent for Masters under certain agreements which entitle Williamson, Inc., to receive payment of all commissioners [sic] earned by Williamson, Inc. on real estate transactions[.]" Clerk's Papers at 130-31 (Complaint ¶ 1.3).

In November, 1997, Calibre designated ReMax/Masters as its exclusive agent for "[l]ots 1-7 in the preliminary plat of Pacific Pointe[,]" effective until November 11, 1998. Clerk's Papers at 138. Masters signed the exclusive agency agreements by the hand of Curtis, who himself signed as "Williamson, Inc. Curtis Williamson-President." Clerk's Papers at 138. On October 6, 1998, the parties extended the exclusive agency agreement for lots two through seven until October 6, 1999. Masters again signed by Curtis, who signed as "Williamson, Inc., by Curtis Williamson Sec./ Treas." Clerk's Papers at 139-44. On December 31, 1998, Calibre unilaterally terminated the services of Betsy and Curtis, Williamson, Inc., and Masters. Within two months of terminating the exclusive agency agreements all six lots comprising the Pacific Pointe development were sold.

Williamson, Inc., and Masters filed suit on July 22, 1999, seeking damages for breach of contract or relief under the doctrines of promissory estoppel and quantum meruit. Calibre moved for summary judgment, arguing Williamson, Inc., was an unlicensed real estate salesperson. On February 17, 2000, the Snohomish County Superior court granted Calibre's motion for summary judgment. Williamson, Inc., and Masters appealed. Division One of the Court of Appeals reversed the trial court, holding the doctrine of substantial compliance applied to REBSA, and Williamson, Inc., substantially complied with REBSA. Williamson, Inc. v. Calibre Homes, Inc., 106 Wash.App. 558, 570, 23 P.3d 1118 (2001). Calibre sought, and we granted, review of these two holdings.

ANALYSIS

Summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as matter of law. Marquis v. City of Spokane, 130 Wash.2d 97, 105, 922 P.2d 43 (1996). An appellate court reviewing a grant of summary judgment engages in the same inquiry as the trial court; we review questions of law de novo, and view the facts of the case and all reasonable inferences therefrom in a light most favorable to the nonmoving party. Marquis, 130 Wash.2d at 105, 922 P.2d 43.

Calibre retained Masters as its real estate broker. Masters was a real estate broker and held a valid broker's license until April 28, 1999. Curtis and Betsy Williamson are real estate salespersons. Each of them held valid real estate salesperson licenses at all times relevant to this action and fully complied with the licensing requirements of REBSA. They were also employees of Masters, and as such, "hung" their licenses at Masters. In addition to being employees of Masters, Curtis and Betsy were the sole shareholders, officers and directors of Williamson, Inc., a valid Washington corporation. Williamson, Inc., operated through its sole agents, Curtis and Betsy Williamson. Williamson, Inc., was also an employee of Masters. Like Curtis and Betsy, Williamson, Inc., acted as a real estate salesperson; "`[r]eal estate salesperson' or `salesperson' means any natural person employed, either directly or indirectly, by a real estate broker, or any person[²] who represents a real estate broker in the performance of any of the acts specified in subsection (1) of this section[.]" RCW 18.85.010(2). Unlike Curtis and Betsy, however, Williamson, Inc., was not a licensed real estate salesperson. It failed to comply with RCW 18.85.120(2):

Any person desiring to be a ... real estate salesperson[ ] must pass an examination as provided in this chapter.... Concurrently, the applicant shall:

(1) Pay an examination fee as prescribed by the director by rule.

(2) If the applicant is a corporation, furnish a certified copy of its articles of incorporation, and a list of its officers and directors and their addresses....

(3) Furnish such other proof as the director may require concerning the honesty, truthfulness, and good reputation, as well as the identity, which may include fingerprints, of any applicants for a license, or of the officers of a corporation. .making the application.

Calibre argues that because Williamson, Inc., was an unlicensed real estate salesperson, RCW 18.85.100 bars it from suing for the allegedly owed commissions:

No suit or action shall be brought for the collection of compensation as a ... real estate salesperson, without alleging and proving that the plaintiff was a duly licensed... real estate salesperson prior to the time of offering to perform any such act or service or procuring any promise or contract for the payment of compensation for any such contemplated act or service.

Calibre further argues the legislature rejected our application of the substantial compliance doctrine to the contractor registration act, chapter 18.27 RCW, thereby impugning the precedential value of Murphy v. Campbell Investment Co., 79 Wash.2d 417, 486 P.2d 1080 (1971), on which the Court of Appeals relied in its opinion. See Calibre, 106 Wash. App. at 564-65,

23 P.3d 1118. Finally, Calibre argues that even if the substantial compliance doctrine applies to REBSA, Williamson, Inc., did not substantially comply with RCW 18.85.170(1), since neither Curtis nor Betsy are licensed real estate brokers.

We applied the substantial compliance doctrine to the contractor registration act in Murphy. In that case, two contractors applied for a certificate of registration as specialty contractors. Although they carried public liability and property damage insurance as required by law, they failed to include proof of their insurance in their application. Meanwhile, the two contractors negotiated contracts with Campbell Investment Company (Campbell) for labor, materials and equipment for construction. After signing the contracts and starting work, the two contractors learned the Division of Special Licensing rejected their application for failure to provide proof of insurance. The contractors resubmitted their application with the required proof and received their registration. As the work progressed, their relationship with Campbell turned sour. The two contractors eventually filed notices of lien claims and sued Campbell. The trial court dismissed their suit because they were not registered contractors when they negotiated the contract upon which they sought to sue.

In Murphy, we identified the purpose of the contractor registration act: "`RCW 18.27, et seq., was designed to prevent the victimizing of a defenseless public by unreliable, fraudulent and incompetent contractors, many of whom operated a transient business from the relative safety of neighboring states.'" Murphy, 79 Wash.2d at 421, 486 P.2d 1080 (quoting Stewart v. Hammond, 78 Wash.2d 216, 219, 471 P.2d 90 (1970)). We then examined the contractor registration act to identify the "crucial devices" the legislature utilized to effect the purpose of the act. We held those "crucial devices" were the contractor's surety bond and public liability and property damage insurance. Murphy, 79 Wash.2d at 421, 486 P.2d 1080. We further held the registration requirement was designed simply to aid the public in identifying contractors with the minimum qualifications prescribed by the legislature. Murphy, 79 Wash.2d at 422, 486 P.2d 1080.

Despite Calibre's argument to the contrary, the legislature did not reject our application of the substantial compliance doctrine to the contractor registration act. In fact, a careful reading of the contractor registration...