Duke & Duke Constr., LLC v. Emery

DUKE & DUKE CONSTRUCTION, LLC,a Washington limited liability company, Appellant/Cross-Respondent, v. EDWIN H. EMERY and "JANE DOE" EMERY,

individually and the marital community thereof;

PATRICIA PRONESTI and "JOHN DOE" PRONESTI,

individually and the marital community thereof, Respondents/Cross-Appellants.

EDWIN H. EMERY, a single man, Third Party Plaintiff/Respondent,

v.

DUKE YOUNG, and "JANE DOE" YOUNG, individually and the marital community;

D&D, LLC, a Washington Limited Liability Company, Third Party Defendants/Appellants.

No. 79182-6-I

C/w No. 79210-5

C/w No. 79281-4

COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION ONE

March 16, 2020

UNPUBLISHED OPINION

CHUN, J. — While incarcerated and awaiting trial, Edwin Emery signed a purchase and sale agreement (Duke PSA) with "D&D LLC or assign" for the sale of his home. Later, after Emery attempted to rescind the Duke PSA and signed a purchase and sale agreement with Patricia Pronesti (Pronesti PSA), Duke & Duke, Construction, LLC, sued him for breach of contract, quiet title, and specific performance, and sued Pronesti for tortious interference with contractual relations. Emery and Pronesti filed counterclaims and Emery asserted third-party claims against Duke Young and D&D.

On cross-motions for summary judgment, the trial court dismissed Duke & Duke's claims because it determined the company had materially breached the Duke PSA. The court additionally dismissed all of Emery's and Pronesti's claims due to briefing issues. The court awarded Emery attorney fees and costs pursuant to the Duke PSA.

We conclude that Duke & Duke materially breached the contract and therefore affirm the trial court's dismissal of its claims. Additionally, because neither Emery nor Pronesti responded to Duke & Duke and Young's September 7 motion for summary judgment, we affirm dismissal of their claims. Finally, we decide that the trial court did not commit an error of law by designating Emery as the prevailing party and awarding him fees and costs. However, to the extent the trial court held Young personally responsible for the award, it erred, since it did not make any findings to justify disregarding the corporate form. We remand for clarification on this issue.

I. BACKGROUND

A. Facts

Emery has lived in his house in Seattle, Washington (Property) since 1962. On August 21, 2017, police arrested him on criminal charges of possession of child pornography.

On August 27, 2017, Pat Hester, an agent of Duke & Duke, went to the King County jail to meet with Emery about the possibility of purchasing the Property. According to Hester, the following occurred: he spoke with Emery for about 25 to 30 minutes, during which he showed Emery, through a glass window, a written offer to purchase the Property for $800,000; Emery expressed a willingness to sell the Property, but requested an additional $75,000. Duke & Duke agreed to the additional sum and Emery signed the Duke PSA on September 12, 2017.

The Duke PSA lists "D&D LLC or assign" as the buyer and sets the closing date for December 1, 2017. In an addendum, the Duke PSA states, "Buyer will release $75,000.00 of earnest money to seller after the waiver of title contingency. Buyer gives escrow permission to release earnest money to seller once funds clear escrow. Earnest money to be deposited TEN days after mutual acceptance." The Duke PSA provides that "[t]ime is of the essence."

On September 13, 2017, Duke & Duke recorded the Duke PSA with the King County Recorder's Office. The same day, D&D assigned its interest in the Duke PSA to Duke & Duke. Duke & Duke failed to deposit $75,000 in escrow within ten days of mutual acceptance.

In October 2017, Pronesti visited Emery in jail. Pronesti told Emery that she had observed the Property and noticed that "it was being broken into," "[g]arbage was being thrown in the yard," and "there was quite a bit of hate crimes against the house and the property." Pronesti asked Emery if he wanted to hire her to repair and manage the Property. Pronesti offered her "services and$350,000 in exchange for one-third interest in the Property." Emery agreed. Pronesti then offered to find an attorney to draft documents for the transaction on his behalf. Emery signed the undated Pronesti PSA with the agreed upon terms.

On November 6, 2017, Emery signed a Rescission Agreement rescinding documents signed before October 30, 2017 (except the Pronesti PSA), which included the Duke PSA. Emery additionally signed a quitclaim deed that conveyed a one-third interest in the Property to Pronesti. The next day, November 7, 2017, Pronesti recorded the Rescission Agreement and quitclaim deed with the King County Recorder's Office.

On November 17, 2017 Duke & Duke deposited $25,000 in earnest money into escrow. Duke & Duke deposited an additional $800,000 into escrow on December 1, 2017, but Emery refused to close.

B. Procedural History

Duke & Duke sued Emery and Pronesti on December 7, 2017. Against Emery, Duke & Duke claimed breach of contract and requested specific performance and quiet title. As to Pronesti, Duke & Duke sought to quiet title and claimed tortious interference with contractual relations.

On February 12, 2018, Pronesti filed counterclaims against Duke & Duke to quiet title and for tortious interference with contractual relations. On February 13, 2018, Emery filed counterclaims against Duke & Duke to quiet title and claiming tortious interference with contractual relations, fraud, intentional infliction of emotional distress (MED), and violations of the Consumer Protection Act (CPA). Emery also filed a third-party complaint against Young and D&Dclaiming tortious interference with contractual relations, fraud, IIED, and CPA violations.

Duke & Duke and Young moved for summary judgment on September 7, 2018. They asked the court to determine that Emery breached the Duke PSA and to hold Pronesti liable for tortious interference with a contractual relationship. They further requested that the court dismiss Emery and Pronesti's lawsuits with prejudice. Neither Emery nor Pronesti responded.

Emery filed a cross-motion for partial summary judgment on September 10, 2018. Emery argued that he was the only party that could seek specific performance under the Duke PSA, Duke & Duke was not entitled to quiet title, and Duke & Duke breached the Duke PSA. Emery also requested attorney fees and costs.

On October 5, 2018, the court granted in part and denied in part Duke & Duke and Young's motion for summary judgment, and granted in part and denied in part Emery's cross-motion for partial summary judgment. The court agreed with Emery that only he could sue for specific performance under the Duke PSA. The court additionally determined that Duke & Duke had materially breached the Duke PSA by not depositing $75,000 in escrow within ten days of mutual acceptance. Accordingly, the court dismissed Duke & Duke's claims against Emery and Pronesti. The court further dismissed Emery's causes of action for improper briefing and Pronesti's causes of action for failure to provide briefing in response to Duke & Duke and Young's summary judgment motion. The court reserved ruling on Emery's request for attorney fees, but later granted his motionand awarded him $19,897.03 in fees and costs.

Duke & Duke appeals the partial denial of its motion for summary judgment and, along with Young, appeals the order awarding fees and costs to Emery. Emery appeals the partial denial of his cross-motion for partial summary judgment and the court's dismissal of his counterclaims and third party claims. Pronesti appeals the dismissal of her counterclaims.

II. ANALYSIS

We review de novo a trial court's decision on summary judgment. Woods View II, LLC v. Kitsap County, 188 Wn. App. 1, 18, 352 P.3d 807 (2015). We will affirm an order granting summary judgment only "if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Woods View, 188 Wn. App. at 18. Reviewing courts conduct the same inquiry as the trial court and view all facts and their reasonable inferences in the light most favorable to the nonmoving party. Pac. NW Shooting Park Ass'n v. Citv of Sequim, 158 Wn.2d 342, 350, 144 P.3d 276 (2006).

A. Material Breach

Duke & Duke claims the trial court erred by finding it materially breached the Duke PSA because its failure to place the earnest money in escrow was not material. Emery asserts the court correctly determined Duke & Duke committed a material breach. We agree with Emery.

A party's material breach of a contract discharges the other party's duty to perform. Jacks v. Blazer, 39 Wn.2d 277, 285, 235 P.2d 187 (1951). "A material breach is one that 'substantially defeats' a primary function of an agreement."224 Westlake, LLC v. Enastrom Prop., LLC, 169 Wn. App. 700, 724, 281 P.3d 693 (2012) (quoting Park Ave. Condo. Owners Ass'n v. Buchan Devs., LLC, 117 Wn. App. 369, 383, 71 P.3d 692 (2003)). "[W]hen an agreement makes time of the essence, fixes a termination date, and there is no conduct giving rise to estoppel or waiver, the agreement becomes legally defunct upon the stated termination date if performance is not tendered." Vacova Co. v. Farrell, 62 Wn. App. 386, 407, 814 P.2d 255 (1991). Whether a breach is material constitutes a question of fact. 224 Westlake, 169 Wn. App. at 724.

Here, the Duke PSA provides, "Time is of the essence." The addendum to the Duke PSA requires Duke & Duke to deposit $75,000 in escrow ten days after mutual acceptance. Duke & Duke contends that mutual acceptance occurred on September 12, 2017. The parties agree the Duke PSA requires Duke & Duke to deposit $75,000 in escrow by September 23, 2017.¹ Duke & Duke concedes that it failed to deposit the money in escrow by September 23, 2017, and that it did not place sufficient funds in escrow until December 1, 2017. Because the Duke PSA states that time is of the essence and sets a time for the earnest money to be in escrow, Duke & Duke's failure...