Ye v. Labaz

• Decision Date: 13 December 2021
• Docket Number: 81807-4-I,81240-8-I
• Parties: REN HOU YE and ZHONG QIONG TAN, a married couple, and the marital community composed thereof, Plaintiffs, v. MICHAEL LABAZ, individually; and ROWLING INVESTMENTS, LLC, a Washington limited liability company, Appellants, BUILDERS CAPITAL OPPORTUNITY FUND, LLC, a Washington professional limited liability company, Defendant, YOU ZHOU LIAO and HAI YAN LIU, a married couple, and the marital community composed thereof, Respondents.
• Court: Washington Court of Appeals

REN HOU YE and ZHONG QIONG TAN, a married couple, and the marital community composed thereof, Plaintiffs, v. MICHAEL LABAZ, individually; and ROWLING INVESTMENTS, LLC, a Washington limited liability company, Appellants, BUILDERS CAPITAL OPPORTUNITY FUND, LLC, a Washington professional limited liability company, Defendant, YOU ZHOU LIAO and HAI YAN LIU, a married couple, and the marital community composed thereof, Respondents.

Nos. 81807-4-I, No. 81240-8-I

Court of Appeals of Washington, Division 1

December 13, 2021

UNPUBLISHED OPINION

BOWMAN, J.

Rowling Investments LLC (Rowling) appeals the trial court's summary judgment order dismissing its lawsuit against You Zhou Liao and Hai Yan Liu (Sellers) for breach of a statutory warranty deed. Rowling also argues the trial court erred by awarding the Sellers their attorney fees. We affirm the order dismissing Rowling's lawsuit but reverse the trial court's award of attorney fees.

FACTS

Rowling bought a parcel of land from the Sellers in the Beacon Hill neighborhood of King County, intending to develop it into a condominium complex. The Sellers acquired the property in 1994, lived there for about eight years, and then rented it to tenants. At one point, the Sellers considered developing the property and commissioned a survey, which they filed with the King County Recorder's Office in November 2006. The survey documented the property boundaries and showed a chain link fence on the northwest corner of the parcel that did not match the boundary line.

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In March 2017, the Sellers and Rowling executed a residential real estate purchase and sale agreement (REPSA). During the escrow process, the Sellers gave details about their knowledge of the property in their "Form 17" disclosures. The Form 17 disclosures stated that title to the property was not subject to "any encroachments, boundary agreements, or boundary disputes." Before the sale closed, the Sellers gave Rowling a copy of the 2006 survey showing the placement of the chain link fence. Rowling's title insurance report also noted, "Fences do not conform to the boundary lines."

In June 2017, the Sellers recorded a statutory warranty deed (Deed) conveying the property to Rowling. The Deed conveyed title subject to any conditions "which may appear in the public record," including on any recorded survey. Rowling then began building townhomes on the property.

During construction, Rowling and neighboring property owners Ren Hou Ye and Zhong Qiong Tan (Ye/Tan) became involved in a confrontation over their shared boundary line. Ye/Tan asserted a chain link fence marked the line. But Rowling claimed the boundary was several feet beyond the chain link fence. Rowling removed the chain link fence, about three feet of soil, and "other improvements" owned by Ye/Tan in the disputed area.

Ye/Tan sued Rowling, ^[1] claiming adverse possession and seeking to quiet title to the disputed area in their favor. They also sought money damages for trespass and waste. Rowling tried to tender its defense back to the Sellers under the Deed but they refused to accept. Rowling then sued the Sellers by third party complaint for breach of statutory warranty. Both parties moved for summary judgment. Rowling asserted that the Sellers "breached the statutory warranties contained in the [D]eed." The Sellers argued the face of the Deed unambiguously excluded liability for conditions affecting title shown in public records, including those on the 2006 recorded survey.

The trial court granted summary judgment for the Sellers and dismissed Rowling's third party complaint. The trial court also awarded the Sellers attorney fees under the attorney fee provisions in the REPSA. Rowling appeals both the order granting the Sellers' motion for summary judgment and the judgment for attorney fees.

ANALYSIS

Rowling argues the trial court erred in dismissing its claims on summary judgment "because the trial court improperly interpreted an ambiguous [D]eed and improperly relied upon conflicting extrinsic evidence," resolving inferences against Rowling to discern the parties' intent. Rowling also argues the court erred in refusing to apply the doctrine of equitable estoppel. We disagree. Summary Judgment

We review a trial court's order granting summary judgment de novo. Frisino v. Seattle Sch. Dist. No. 1, 160 Wn.App. 765, 776, 249 P.3d 1044 (2011).^[2] We undertake the same inquiry as the trial court. Wilson v Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982). That is, we examine the record, including the pleadings depositions, answers to interrogatories, admissions on file and affidavits, in the light most favorable to the nonmoving party, drawing all reasonable inferences in the nonmoving party's favor, to determine whether a genuine material issue of fact exists. Landstar Inway, Inc. v. Samrow, 181 Wn.App. 109, 120, 325 P.3d 327 (2014) (citing Kofmehl v. Baseline Lake, LLC, 177 Wn.2d 584, 594, 305 P.3d 230 (2013); CR 56(c)). Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); White v. State, 131 Wn.2d 1, 9, 929 P.2d 396 (1997). By cross moving for summary judgment, the parties concede there are no material issues of fact. Pleasant v. Regence BlueShield, 181 Wn.App. 252, 261, 325 P.3d 237 (2014) (citing Tiger Oil Corp. v. Dep't of Licensing, 88 Wn.App. 925, 930, 946 P.2d 1235 (1997)).

RCW 64.04.030 governs statutory warranty deeds and includes a covenant to defend against another's claim to title. Edmonson v. Popchoi, 172 Wn.2d 272, 278, 256 P.3d 1223 (2011), aff'g Edmonson v. Popchoi, 155 Wn.App. 376, 228 P.3d 780 (2010). When executed in accordance with the statutory language, such deeds warrant that the conveyance, among other things, is "free from all encumbrances." RCW 64.04.030(2). But a deed may include express limitations, even if it is otherwise in statutory warranty form. See Wash. State Grange v. Brandt, 136 Wn.App. 138, 146, 148 P.3d 1069 (2006) (the deed's express "limiting language" as to the duration of transfer "conveyed something less than an absolute fee simple interest"); Harris v. Ski Park Farms, Inc., 62 Wn.App. 371, 376, 814 P.2d 684 (1991) (citing Studebaker v. Beek, 83 Wash. 260, 265, 145 P. 225 (1915) ("An exception in a deed is a clause that withdraws from its operation some part of the thing granted and which otherwise has passed to the grantee under the general description.")), aff'd, 120 Wn.2d 727, 844 P.2d 1006 (1993).

To interpret a statutory warranty deed, we consider mixed questions of law and fact. Veach v. Culp, 92 Wn.2d 570, 573, 599 P.2d 526 (1979). The intent of the parties is a factual question but the legal consequences of that intent are questions of law. Ray v. King County, 120 Wn.App. 564, 571, 86 P.3d 183 (2004). We apply principles of contract interpretation when interpreting deeds. Popchoi, 155 Wn.App. at 386. Under the objective manifestation theory of contracts, we look for the parties' intent through their objective manifestations rather than any unexpressed subjective intent. Paradiso v. Drake, 135 Wn.App. 329, 336, 143 P.3d 859 (2006). And we give contract terms their ordinary meaning where possible. Storti v. Univ. of Wash., 181 Wn.2d 28, 39, 330 P.3d 159 (2014) (citing Lawrence v. Nw. Cas. Co., 50 Wn.2d 282, 285, 311 P.2d 670 (1957)). We interpret unambiguous contracts as a matter of law. State v. Brown, 92 Wn.App. 586, 594, 965 P.2d 1102 (1998).

Here, the Sellers recorded the Deed conveying their property to Rowling with express limitations:

This conveyance is subject to covenants, conditions, restrictions and easements, if any, affecting title, which may appear in the public record, including those shown on any recorded plat or survey.

The trial court determined that this language unambiguously disclaimed any warranties as to conditions affecting title apparent in the 2006 recorded survey, including the disputed area. The court ruled:

[T]he [D]eed itself is crystal-clear that this property was subject to the recorded survey. It's right on the face of the [D]eed. It's not a long and complex deed, nothing is buried in fine print here, it's standard exclusionary language, and the survey was recorded from 2006. The buyer was put on express notice that the [D]eed did not warrant defects and title disclosed by the survey.

Reviewing the record de novo, we reach the same conclusion. The Deed conformed to the requirements of RCW 64.04.030. It also contained an express limitation that the Sellers did not warrant against conditions affecting title appearing in the public record, including on "any recorded plat or survey." This unambiguous language overcomes the statutory presumption in RCW 64.04.030(2) that a warranty is "free from all encumbrances."^[3] And the discrepancy between the fence line and boundary line of the property appeared on the face of the 2006 survey, which the Sellers recorded as part of the public record. The trial court did not err in granting summary judgment for the Sellers.

Equitable Estoppel

Rowling also argues that the trial court should have equitably estopped the Sellers from relying on the "subject to" language of the Deed because the Sellers' represented that the property was free from boundary encroachments in the Form 17 disclosures.^[4]

The doctrine of equitable estoppel" 'prevents a party from taking a position inconsistent with a previous one where inequitable consequences would result to a party who has justifiably and in good faith relied.'" Wilson v. Dep't of Ret. Sys., 15 Wn.App. 2d 111, 122, 475 P.3d 193 (2020) (quoting Silverstreak, Inc. v. Dep't of Labor & Indus., 159 Wn.2d 868, 887, 154 P.3d 891 (2007)). The doctrine applies if (1) a...