Hanna v. Margitan

1

MARK HANNA and JENNIFER HANNA, husband and wife, Respondents, v. ALLAN MARGITAN and GINA MARGITAN, husband and wife, Appellants.

No. 39077-2-III

Court of Appeals of Washington, Division 3

May 30, 2024

UNPUBLISHED OPINION

Lawrence-Berrey, C.J.

Allan and Gina Margitan appeal the trial court's enforcement of their settlement agreement. We affirm.

FACTS

Mark and Jennifer Hanna and Allan and Gina Margitan are neighbors in Nine Mile Falls. The Margitans own two parcels of land one on either side of the Hannas' parcel. The Margitans desire to use one of the parcels, parcel 3, as a rental property. According to Mr. Margitan, the water line servicing parcel 3 was leaking and otherwise noncompliant with plat requirements, and thus needed to be replaced. The Margitans have a road and utility easement across the Hannas' property.

On July 9, 2019, Mr. Margitan drove an excavator onto the Hannas' land and began digging a hole in the easement. Mr. Margitan later claimed he was digging "to determine if there was enough spacing" between the Hannas' abandoned septic drain field and his leaking water line "to install a new drinking water line and data cable." Clerk's Papers (CP) at 54. While digging, Mr. Margitan struck and broke an underground geothermal pipe, a "critical component of the Hannas' . . . heating/cooling system." Id. at 4. Unable to control the temperature of their home, the Hannas hired contractors to fix the broken geothermal line. When the contractors arrived, Mr. Margitan confronted them, threatening to sue if they damaged his utilities. Apparently perturbed by Mr. Margitan's vehement threats of litigation, the contractors refused to repair the Hannas' pipe.

The Hannas subsequently sued the Margitans (hereinafter the "2019 action"), asking the superior court to enjoin the Margitans from further interfering with the Hannas' repair of their geothermal line. The Hannas' complaint also sought damages for nuisance and trespass.

The Margitans, represented by counsel, answered the Hannas' complaint in the 2019 action by denying certain allegations and asserting affirmative defenses. The Margitans also brought several counterclaims. First, they alleged the Hannas had "interfere[d] with . . . their easement," seeking both damages and injunctive relief.

CP at 26, 224. Specifically, the Margitans contended the Hannas' geothermal line and abandoned septic drain field were "encroachments" on the easement that needed to be removed. Id. at 26, 224.

Next the Margitans brought a nuisance counterclaim, primarily claiming that the proximity of the Hannas' geothermal line to the Hannas' new septic system created "noxious and foul odors."^[1] Id. at 27, 225. The Margitans also contended the Hannas had created a nuisance through the filing of "serial legal actions." Id. at 227. Finally, the Margitans alleged the Hannas intentionally damaged the easement by grading and plowing rock toppings that the Margitans had placed on the road. The Hannas answered the Margitans' counterclaims and asserted affirmative defenses of their own.

The superior court granted the Hannas' motion for a preliminary injunction, enjoining the Margitans from further interfering with the Hannas' repair of their geothermal line through threats to sue the Hannas' contractors.^[2] The court required the Hannas to post a $2,500 bond with the court clerk, protecting the Margitans in the event the Hannas' contractors damaged the Margitans' utilities.

Injunction in place, the Hannas' contractors excavated and repaired the broken geothermal line. "Given that the repair work authorized by the . . . injunction was performed without incident," the Hannas requested a release of the $2,500 bond back to them. CP at 130. The Margitans opposed the release of the bond amount, baldly asserting that the mere presence of the Hannas' geothermal line interfered with their use of the easement. The superior court granted the Hannas' motion to release the bond, and, on the Hannas' motion, imposed CR 11 sanctions on Mr. Margitan.

The repairs to their geothermal system complete, the Hannas stipulated to the dismissal of their affirmative claims in the 2019 action, leaving only the Margitans' counterclaims remaining. The Hannas moved for partial summary judgment on the counterclaims. The Hannas sought dismissal of the Margitans' claims for interference with the easement and nuisance insofar as they were based on the mere presence of the Hannas' abandoned drain field and geothermal line within the easement. The superior court granted the motion agreeing with the Hannas that Mr. Margitan's theory undergirding these claims was barred by res judicata and collateral estoppel.^[3] The court also summarily dismissed the Margitans' counterclaim for "serial litigation," and sanctioned the Margitans, calling it a "baseless claim." CP at 1106.

Parallel to the 2019 action, Mr. Margitan sued the Hannas and their counsel^[4] in a separate action in November 2021 (hereinafter the "2021 action"). Contrary to the 2019 action where the Margitans retained counsel, Mr. Margitan signed the operative complaint in the 2021 action pro se. In the 2021 action, Mr. Margitan alleged the Hannas inflicted emotional distress on him-both intentionally and negligently-and invaded his privacy. Among Mr. Margitan's litany of grievances alleged in the 2021 complaint, he included purportedly tortious conduct by the Hannas' adult "daughter" and "son," who were not named defendants in the suit.

On April 27, 2022, with a trial date mere days away, the Hannas and Margitans agreed to a settlement after hours of negotiations. A written agreement executed that day stated that both the 2019 action and the 2021 action had "respectively settled under the following terms and conditions." CP at 1228-29.

Under the settlement, the parties agreed that the Hannas would instruct their insurer, PEMCO, to pay $85,000.^[5] Of this sum, $50,000 would be paid directly to the Margitans, while $35,000 would be placed in their counsel's trust account to be held there, until the Hannas (1) hired a contractor to dig a trench across their land for installation of a replacement water line servicing the Margitans' rental home, and (2) decommissioned their geothermal system.^[6] Should the costs of excavation and replacing the heating/cooling system be less than $35,000, the remainder would be released to the Margitans. The Hannas also agreed to destroy copies of all records obtained through earlier subpoenas that Mr. Margitan had opposed.

"In exchange" for this consideration, in paragraph 5 of the settlement agreement, the Margitans agreed to "dismiss the [2019 action and 2021 action] with prejudice and without costs and . . . execute a Release of All Claims arising out of the incidents alleged in said Complaints." CP at 1228 (emphasis added). The parties each promised the terms of the settlement would remain confidential. The settlement agreement was signed by the Hannas, the Margitans, and their respective attorneys.

The parties presented their settlement agreement to the superior court the next day. The court asked the attorneys to explain "the general nature of" the agreement. Rep. of Proc. (RP) (Apr. 28, 2022) at 5. The Hannas' counsel summarized the agreement as follows:

[T]he concept is that funds that are paid will be utilized by Hanna to replace his heating system and also some funds to dig the water line that was in dispute. . . . [T]here'll also be some compensation . . . for the Margitans . . . in addition to that. Any funds that aren't expended by the Hannas to replace their heating system or do the excavation will also revert back to Mr. Margitan.

. . . .

There's also a provision to make sure that we . . . destroy or return the confidential records and materials that Mr. Margitan was concerned about. . . . Greg [the Margitans' attorney], if you want to throw something more in. . . . [O]f course it results in a release of all claims and a dismissal with prejudice of those two actions.

Id. at 6-7 (emphasis added). The Margitans' attorney immediately replied: "Judge, I think that accurately describes it." Id. at 7 (emphasis added). The judge thanked both sets of counsel and instructed them to "get [her] a[n] order of dismissal once you've got all this ironed out." Id.

Over the next several weeks, the parties' attorneys communicated about how to word the release of claims, exchanging numerous drafts via e-mail. A point of contention in these negotiations was the Margitans' belief that the settlement required the Hannas to do more than dig a trench for the installation of a new water line. The Margitans wanted the Hannas to be required to excavate until they located another, abandoned water line, which the Margitans wanted to use as a conduit for an Internet connection. The Hannas made clear they had no opposition to the Margitans' installation of an Internet line in the easement, but they pointed to the settlement agreement itself, which contemplated the Hannas would dig a single trench adjacent to the existing water line.

In the meantime, the Hannas located contractors to perform the promised work, received a check for $85,000 from PEMCO, and stood by, ready to tender the settlement funds to the Margitans' counsel once a release was executed. Nevertheless, the failure of the Hannas to swiftly perform-notwithstanding that no release of claims had been executed-apparently enraged Mr. Margitan, whose attorney wrote to the Hannas' counsel on May 31, 2022, declaring that, "[O]ur clients [are] on the verge of renouncing the entire agreement." CP at 1297 (emphasis added).

Then on June 8, 2022, without informing either the Hannas or his own attorneys, Mr. Margitan personally wrote a letter to the chief executive...