Woodmansee v. Peterson

• Decision Date: 07 March 2011
• Docket Number: No. 64402-5-I,64402-5-I
• Court: Washington Court of Appeals
• Parties: JOSEPH D. WOODMANSEE and KIMBERLY A. WOODMANSEE, husband and wife, Respondents/ Cross Appellants, v. ROBERT S. PETERSON, Appellant/ Cross Respondent.

JOSEPH D. WOODMANSEE and KIMBERLY A. WOODMANSEE, husbandand wife, Respondents/ Cross Appellants,

v.ROBERT S. PETERSON, Appellant/ Cross Respondent.

No. 64402-5-I

COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION ONE.

Filed: March 7, 2011

UNPUBLISHED

Cox, J.

In this second review of this case, Robert Peterson makes 22 assignments of error to findings and conclusions of the trial court in the bench trial following remand in the prior review. Because there was no error in the trial court's comprehensive and correct findings, but two errors in its conclusions, we affirm in part. Because the trial court committed legal error when it refused to award prejudgment interest and attorney fees to Joseph and Kimberly Woodmansee, we reverse in part. Accordingly, we remand for further proceedings solely on the parts of the decision that we reverse.

The facts regarding the underlying real estate transactions between these parties are outlined in our prior opinion following our grant of discretionary review in Woodmansee v. Peterson.¹ In that review, specific performance and attorney fees were at issue. We affirmed in part, reversed in part, and remanded for further proceedings. We expressly declined to address other claims regarding Peterson's actions or omissions in these transactions.

Following remand by this court, Peterson sold his interest in Parcel 3 to the Woodmansees for $135,000 per acre. The Woodmansees then went to trial on their amended complaint against Peterson. The court found Peterson liable in a bench trial for breach of duty, fraud, wrongful interference with a business expectancy, and promissory estoppel. The court awarded the Woodmansees prejudgment interest on the difference between the amount paid to Peterson for his interest in Parcel 3 and the original Purchase and Sale Agreement (PSA) price. It denied prejudgment interest on the excess amount paid for his co-owners' interests. It also denied the Woodmansees' request for attorney fees.

Peterson appeals, and the Woodmansees cross-appeal.

BREACH OF FIDUCIARY DUTIES

Peterson argues that the trial court erred in finding that he breached any fiduciary duties to the Woodmansees. We disagree.

Peterson challenges 15 findings of fact and 19 conclusions of law of the trial court. We limit our review to those challenges that are necessary to decidethe legal theories supporting Peterson's liabilities. We note that regardless of the theory of liability, the damages remain the same.

Breach of a fiduciary duty requires the plaintiff to prove: "(1) the existence of a duty owed; (2) a breach of that duty; (3) a resulting injury; and (4) that the claimed breach was the proximate cause of the injury."² An agent has a duty to act in good faith, to fully disclose his interest in and his actions involving the affected property, and to deliver all benefits derived from a breach of these duties to the principal.³

An agency relationship may arise when one engages another to perform a task for the former's benefit.⁴ Consent between the parties and control are the essential elements of an agency relationship.⁵ The principal may either control or have the right to control the performance of the benefit.⁶ "It is the existence of the right of control, not its exercise, that is decisive."⁷

Whether a party acts as another's agent or breaches a fiduciary duty are both questions of fact.⁸ A trial court's findings of fact are reviewed for substantial evidence.⁹ Substantial evidence is evidence sufficient to persuade a fair-minded, rational person of the finding's truth.¹⁰ Unchallenged findings of fact are verities on appeal.¹¹ We review de novo the trial court's conclusions of law to determine if they are supported by the findings of fact.¹²

Here, the trial court appears to have prepared its own comprehensive findings in this bench trial. Among them are the following:

11.Peterson volunteered to act as agent for Woodmansees to communicate the original PSA to [James Hillman, Ed Sheron, Shirley Sheron, and Alayna Sheron (collectively the "co-owners")] and obtain their signatures. As a licensed real estate broker for 40 years, Peterson knew that in undertaking to get the other owners' signatures on the PSA, he was acting as an agent for Woodmansees.

12. Woodmansees consented to Peterson's offer, and in reliance on Peterson, forewent having Torset [the Woodmansees' agent] contact Hillman and Sherons. Peterson substituted for Woodmansees' agent, Torset, in the performance of these specific acts. Woodmansees retained the right to control Peterson in how he proceeded to obtain the signatures. Woodmansees could have had Peterson bring back the PSA signature sheet and proceed toobtain the signatures themselves. Peterson was Woodmansees' agent for the purpose of obtaining the other owners' signatures.

13. Torset had a number of conversations with Mr. Peterson about the status of the execution of the PSA. Peterson told him that the co-owners were hard to contact, and that he was still attempting to get their signatures. That was a misrepresentation upon which Woodmansees and Torset relied to their detriment. Peterson was always able to contact the Sherons. Peterson always knew how to contact Hillman and had contacted Hillman at his address on a number of occasions during the relevant time period. If Peterson had told Torset and Woodmansee that he had not attempted to contact the co-owners, then they would have contacted Hillman and Sherons themselves. Peterson showed a lack of fairness and good-faith dealing throughout.

....

15. On August 12, 2004, Peterson wrote back to Woodmansees that Peterson had communicated the PSA to the co-owners of Parcel 3, that the co-owners had rejected the price of $65,000 per acre, and that the co-owners demanded a price of $100,000 per acre. This misrepresented these matters.

....

17. Woodmansees offered $100,000 per acre for Parcel 3 in reliance on Peterson's misrepresentations.

....

31. The day after Sherons and Woodmansees executed the third PSA for parcel 3, Peterson wrote a letter to Woodmansees stating that he had not yet gotten the signature of Hillman, and asked Woodmansees to give him more time to do so. This request was an acknowledgement that Woodmansees were entitled to control him in communicating with Hillman and Sherons.¹³

Peterson challenges findings 11, 12, 13, and 31. He does not challenge findings 15 or 17. Thus, these latter findings are verities on appeal. Accordingly, there is no dispute that he misrepresented material information tothe Woodmansees, as finding 15 states.

Peterson challenges the portion of finding 11 that states that he was the Woodmansees' agent for obtaining the co-owners' signatures on the PSA and that he, therefore, owed them duties of good faith and loyalty. Peterson does not challenge the court's finding that his experience as a real estate agent meant that he understood he was acting as the Woodmansees' agent. He also does not dispute that he volunteered to get his co-owners' signatures on the PSA for the Woodmansees. Based on these unchallenged findings, there was substantial evidence that Peterson was acting as the Woodmansees' agent to obtain the signatures.

He challenges findings 12 and 31: that the Woodmansees had a right to control him. He claims that his failure to obtain his co-owners' signatures demonstrated the Woodmansees' lack of control. This argument makes no sense. It is the existence of the right of control that is key, not its exercise.¹⁴ In a letter, Peterson explained to Torset and Woodmansee that he had not yet received Hillman's signature, "I know I can somehow work this all out by no later than November 1st; bear with me." Peterson's request is substantial evidence that the Woodmansees controlled his performance in obtaining the signatures.

Finally, Peterson challenges the statement in finding 13 that he showed a lack of fairness and good-faith dealing, but does not challenge the description of his behavior. There can be no reasonable dispute that these actions constitutesubstantial evidence that Peterson breached his duty of good faith.

The findings outlined above, which either are verities on appeal or are supported by substantial evidence, support the elements of breach of fiduciary duty. Peterson owed the Woodmansees a duty of loyalty and good faith in obtaining his co-owners' signatures on the PSA because he was acting as their agent in that regard. He was their agent because both parties consented that he should obtain the signatures and the Woodmansees had the right to control his performance of that action. Peterson breached his duties to them by not contacting the co-owners with the original offer and stating that they would not accept less than $100,000 per acre. Peterson's breach proximately caused the Woodmansees' injuries because they increased their offer per acre in reliance on his misrepresentations. If the Woodmansees had known that Peterson did not give the co-owners the original PSA, they would have obtained the signatures themselves. Peterson's breach also proximately caused the Woodmansees to pay an increased price for Peterson's interest in Parcel 3. The Woodmansees would have paid $65,000 per acre for that interest if Peterson had obtained the co-owners' signatures as promised.

Peterson argues that Buckley v. Hatupin¹⁵ and McLennan v. Investment Exchange Co.¹⁶ require a different result. In both cases, a seller's agent misrepresented a property's lowest price.¹⁷ The buyer subsequently sued torecover the difference between the price paid and the price authorized by the seller.¹⁸ Neither plaintiff could recover because the court held that the agent was clearly the seller's agent and no confidential relationship existed between the buyer and the agent.¹⁹

Here, the trial court properly found that Peterson was the Woodmansees' agent in securing the other owners' signatures. He breached his duty as their agent and his breach proximately caused their damages. The cases...