Woodmansee v. Peterson, No. 56047-6-I (WA 5/1/2006)

• Court: Washington Supreme Court
• Writing for the Court: Cox
• Decision Date: 01 May 2006
• Docket Number: No. 56047-6-I
• Citation: Woodmansee v. Peterson, No. 56047-6-I (WA 5/1/2006), No. 56047-6-I (Wash. May 01, 2006)
• Parties: JOSEPH D. WOODMANSEE and KIMBERLY A. WOODMANSEE, husband and wife, Respondents, v. ROBERT S. PETERSON, Appellant.

Page 1

Unpublished Opinion

JOSEPH D. WOODMANSEE and KIMBERLY A. WOODMANSEE, husband and wife, Respondents, v. ROBERT S. PETERSON, Appellant.

No. 56047-6-I

Court of Appeals of Washington, Division One.

Filed: May 1, 2006

Appeal from Superior Court of Skagit County. Docket No: 04-2-02102-5. Judgment or order under review. Date filed: 03/10/2005. Judge signing: Hon. Susan K Cook.

Counsel for Petitioner(s), Ralph I. Freese, Attorney at Law, 7009 212th St SW Ste 203, Edmonds, WA 98026-7742.

Counsel for Respondent(s), Jeffrey T. Broihier, Attorney at Law, 720 3rd Ave Ste 1600, Seattle, WA 98104-1813.

COX, J.

A purchaser may obtain specific performance of a contract for the sale of realty under appropriate circumstances.¹ Subject to the restriction that a court may not order something that the parties to such a contract have not agreed upon, a court may order either party to partially perform when it is no longer possible to perform in accordance with the terms of the contract.² Here, there was a valid and enforceable agreement between Robert S. Peterson and Joseph and Kimberly Woodmansee to sell what these parties describe as "Parcel 2." Accordingly, the trial court properly ordered specific performance to sell Parcel 2. But there was never any enforceable agreement between these parties to sell Peterson's undivided one-half interest in what they describe as "Parcel 3." Thus, there was no authority to order specific performance to require Peterson to convey his undivided one-half interest in Parcel 3. We affirm in part, reverse in part, and remand for further proceedings.

The material facts for purposes of this discretionary review are undisputed. Robert Peterson signed three separate Vacant Land Purchase and Sale Agreements (PSAs) dated April 15, 2004 to sell contiguous parcels of land for development by Joseph and Kimberly Woodmansee (collectively "Woodmansee"). The sale of what the parties describe as "Parcel 1" closed and is not at issue in this appeal.

Parcel 2 consists of 20 acres solely owned by Peterson. Parcel 3 consists of approximately 18 acres. Peterson owns an undivided one-half interest in that parcel as a tenant in common with other owners. Ed, Shirley, and Alayna Sheron (collectively "Sheron") and Jim Hillman each own an undivided one-quarter interest in this parcel.

After Peterson and Woodmansee signed PSAs for Parcels 2 and 3, these parties disputed the terms of both agreements. Moreover, the tenants in common for Parcel 3, other than Peterson, did not sign the original PSA dated April 15, 2004 for that parcel. They signed later agreements for that parcel, one of which was dated September 27, 2004, which was signed solely by them and Woodmansee.

The sales of the two parcels in dispute did not timely close, and Woodmansee commenced this action. Woodmansee sought specific performance of the sales of Parcel 2 and Parcel 3, and, alternatively, partition of Parcel 3, among other relief.³

Woodmansee moved for summary judgment, and the trial court denied Peterson's motion for continuance. Thereafter, the court granted in part Woodmansee's motion and ordered specific performance. In its order, the trial court expressly reserved for later determination Woodmansee's claim against Peterson for damages, dismissed Peterson's counterclaims, and awarded Woodmansee attorney fees.⁴ Peterson executed, under protest, the necessary documents for the sales of Parcel 2 and his undivided one-half interest in Parcel 3 to Woodmansee. Contemporaneously with the closing of the latter sale, the tenants in common for the remaining interests in Parcel 3 separately conveyed their interests to Woodmansee.

This court granted Peterson's request for discretionary review.⁵

SPECIFIC PERFORMANCE

Peterson makes three basic arguments. First, he claims that the two PSAs lack material terms — price — that precluded the grant of specific performance. Second, he contends Woodmansee was unable to close the transactions on the agreed closing date. Third, he contends that the trial court lacked a basis to force him to convey his undivided one-half interest in Parcel 3 to Woodmansee. We disagree with the first two propositions but agree, in part, with his arguments supporting the third.

This court may affirm an order granting summary judgment if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law.⁶ Summary judgment is proper when reasonable minds could reach but one conclusion regarding the material facts.⁷ Review of all trial court rulings made in conjunction with a summary judgment is de novo.⁸

"It is fundamental that in order to . . . enable the court to decree specific performance, the terms of the contract must be clear, definite, certain, and complete. The contract must be free from doubt, vagueness and ambiguity, so as to leave nothing to conjecture or to be supplied by the court."⁹ "A greater degree of certainty is required for specific performance in equity than is necessary to establish a contract as the basis of an action at law for damages."¹⁰

A purchaser may obtain specific performance of a contract for the sale of realty under appropriate circumstances.¹¹ Subject to the restriction that a court may not order something that the parties to such a contract have not agreed upon, a court may order either party to partially perform when it is no longer possible to perform in accordance with the terms of the contract.¹² While a trial court has broad discretion fashioning equitable remedies, "the question of whether equitable relief is appropriate is a question of law," which we review de novo.¹³

Price

Peterson argues that the trial court erred in ordering specific performance because the PSAs for both Parcel 2 and Parcel 3 lack specification of the purchase prices, which are material terms, and are therefore unenforceable. Specifically, he contends that the closing documents for each parcel shifted the significant financial burden of paying open space tax recapture to him as seller. According to Peterson, this "materially impacted" the purchase price. Alternatively, he argues that the PSAs are ambiguous as to the price term because the legal descriptions in both documents incorporate the open space designation. These arguments are wholly unpersuasive.

"A court of equity will not decree specific performance of a contract which does not fix the price or consideration clearly, definitely, certainly, and unambiguously, or provide a way by which it can be fixed with certainty."¹⁴ A contract may provide a way by which the purchase price may be fixed with certainty.¹⁵

First, the PSA for Parcel 2 expressly states that the purchase price is $1,337,500.00 and further states in an addendum that the price is based on a rate of $65,000 per acre. The PSA for Parcel 3 expressly states that the purchase price is based on the same rate of $65,000 per acre. There is no ambiguity in these sales prices.

Second, Peterson's argument that the closing documents somehow create ambiguity as to price for either sale is plainly wrong. The contracts that established the material terms of the sales, including the price for each, are the PSAs, not the documents that the parties later executed at closing of the sales.

Third, that Peterson had the statutory obligation to pay the open space tax recapture obligation arising from the termination of the open space tax designation has nothing to do with establishing price. His payment of that tax obligation is akin to his payment of his pro-rated share of real estate taxes at closing of these transactions. Pro-ration of such taxes does not modify the purchase price. Neither does payment of the tax recapture obligation.

Moreover, a contract that is silent on the issue of a statutory tax burden is not ambiguous.¹⁶ By statute, the seller must bear the burden of additional taxes upon sale of property designated as "open space" unless the buyer signs a notice of classification continuance.¹⁷ Peterson is charged with the knowledge of his statutory obligation.¹⁸ Woodmansee did not sign a notice of continuance, nor do the PSAs contain any requirement that he do so.

Peterson cites Key Design, Inc. v. Moser¹⁹ to argue that documents demonstrating his knowledge of the tax obligation when executing the contract are inadmissible to establish the price term in the purchase and sale agreement. Though Key Design rejected permitting judicial admissions to establish material terms in a real estate PSA,²⁰ Peterson's reliance on it is misplaced. Peterson's actual knowledge of his tax obligation is of no legal significance.²¹

Finally, Peterson cites no authority for the novel proposition that the inclusion of the open space designation in the legal description of the properties creates ambiguity in the price term. As we have said, the price for each parcel is unambiguous. We need not further address this argument.²²

We conclude that the PSAs are not unenforceable due either to ambiguity in the purchase price or because of the open space tax recapture.

Closing Date

Peterson further argues that neither PSA is enforceable because Woodmansee was unable to close on December 15, 2004, the closing date required by the contracts. Specifically, he contends funding, contingent upon an appraisal the bank did not receive until December 17, 2004, was unavailable on the contractual closing date. The record does not support Peterson's contention. The declaration of James Vandermey, the senior vice president of People's Bank, states that "{o}n the closing date of December 15, 2004, all the closing funds for both parcels were available {to the} Woodmansees to purchase the properties. The only condition remaining to be satisfied was Mr. Peterson's execution of the closing documents."²³

Peterson relies selectively on Vandermey's deposition. There, the bank official explained that the appraisal that was used for underwriting had initially been done for Whidbey Island Bank and...