Windermere Real Estate/East, Inc. v. Forman

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WINDERMERE REAL ESTATE/EAST, INC., a Washington corporation, Appellant, v. SANDRA L. FORMAN, an unmarried person, as her separate estate, KENNETH WOOLCOTT and JANE DOE WOOLCOTT, husband and wife, TODD ANSON and JANE DOE ANSON, husband and wife, TIM O'KEEFE and JANE DOE O'KEEFE, husband and wife, JASON WOOD and JANE DOE WOOD, husband and wife, and UMBRELLA DEVELOPMENT LLC, a Delaware limited liability company. Respondents.

No. 84977-8-I

Court of Appeals of Washington, Division 1

February 20, 2024

UNPUBLISHED OPINION

Coburn, J.

Following a failed commercial real estate transaction, Windermere Real Estate/East Inc. (Windermere), the broker managing the original sale, sued the seller of the property, Sandra Forman, and the new buyer, Umbrella Development LLC as well as Umbrella's individual owners (collectively referred to as Umbrella). Windermere originally sought from Forman, under the theories of breach of contract, unjust enrichment and promissory estoppel, its commission under its purchase and sale agreement (PSA) with the original buyers. It later added a forfeiture claim for return of its portion of the earnest money plus prejudgment interest. Windermere dismissed all but its forfeiture claim, which it was awarded via summary judgment. The trial court awarded Windermere an undisputed $50,000, half of the earnest money deposit, but denied its request for prejudgment interest. The court, without addressing Windermere's objections, also granted all of Forman's attorneys' fees with an offset of the $50,000 owed to Windermere. The court limited Windermere's attorneys' fees to $50.

The trial court granted Umbrella's summary judgment motion dismissing Windermere's tortious interference claim because it was barred by the statute of limitations. The court granted Umbrella's attorneys' fees after Umbrella requested fees based on an unrelated signed release of claims and indemnity agreement that was not entered into by Windermere. We reverse the court's denial of Windermere's request for prejudgment interest and remand for the trial court to reconsider both Forman's and Windermere's attorneys' fees in light of this ruling as well as the need to address on the record Windermere's objections. Because, based on this record, it is unclear if Windermere prevailed on all major issues on appeal as between it and Forman, we direct the trial court on remand to consider Windermere's appellate attorneys' fees after the court revisits the award of attorneys' fees below. We reverse attorneys' fees awarded to Umbrella because no tenable basis existed to award such fees and also deny Windermere's request for attorneys' fees on appeal as to Umbrella for the same reason.

FACTS

Sandra Forman owned a commercial property in Bellevue and decided to sell it. On July 26, 2016, Forman entered into a purchase and sale agreement to sell the property to Bellevue Pacific Properties Group (BPPG). Forman was not represented by a broker in the transaction. BPPG employed Windermere Real Estate/East Inc. (Windermere) as the "Selling Firm" in the agreement, with Brooks Beaupain, a Windermere agent, listed as the selling broker. Beaupain and two others formed BPPG.

BPPG agreed to pay a $100,000 earnest money deposit for the sale. Section 26 of the PSA addresses "seller's acceptance and brokerage agreement" and provides in relevant part

Seller agrees to sell the Property on the terms and conditions herein, and further agrees to pay a commission in a total amount computed in accordance with the listing or commission agreement. If there is no written listing or commission agreement Seller agrees to pay a commission of 2.500% of the sales price . . . The commission shall be apportioned between Listing Firm and Selling Firm as specified in the listing or any co-brokerage agreement. If there is no listing or written co-brokerage agreement, then Listing Firm shall pay to Selling Firm a commission of 2.500% of the sales price . . . Seller assigns to Listing Firm and Selling Firm a portion of the sales proceeds equal to the commission. If the earnest money is retained as liquidated damages, any costs advanced or committed by Listing Firm or Selling Firm for Buyer or Seller shall be reimbursed or paid therefrom, and the balance shall be paid one-half to Seller and one-half to Listing Firm and Selling Firm according to the listing agreement and any co-brokerage agreement. In any action by Listing Firm or Selling Firm to enforce this Section, the prevailing party is entitled to reasonable attorneys' fees and expenses.

BPPG brought in two investors, including Kenneth Woolcott, to purchase the Forman property. Woolcott contributed the $100,000 earnest money.

Around this time Beaupain hoped to join One Pacific Sports (OPS) which was owned by Woolcott and another BPPG partner. In August 2017, Beaupain signed a "RELEASE AND WAIVER OF ALL CLAIMS, COVENANT TO NOT SUE AND INDEMNITY AGREEMENT" (Release). The release provides

FOR AND IN CONSIDERATION of being considered for an offering of units in One Pacific Sports, the undersigned ("the Releasor") does hereby fully release and discharge One Pacific Sports, and its subsidiaries and affiliates such as but not limited to Bellevue Pacific Properties Group as well as KENNETH J WOOLCOTT, Six Degrees Capital, LLC, Six Degrees Capital Development, LLC, JAMES JENSEN and their respective agents, employees, members, representatives, executors, administrators, attorneys and insurers ("Releasees"), from and against any and all claims, suits, demands and/or liabilities, of whatever kind or nature, and in any way connected with or arising out of Releasor's past and/or future business relationships with said Releasees.

The Releasor hereby agrees to reimburse Releasees for any and all costs and attorneys' fees that may be incurred in protecting their rights under this Release.

By June 2018, BPPG still had not closed on the PSA. Beaupain and other business associates argued about whether the commission under the PSA should be divided or whether Beaupain should retain the entire sum. Meanwhile, Woolcott developed a back-up offer through his new partnership entity called Umbrella Development LLC, comprised of associates of Beaupain. Instead of closing the sale to BPPG, Forman sold to Umbrella in July.

Windermere, acting at the direction of Beaupain, sued Forman, alleging that Windermere was owed the 2.5 percent commission, a sum of $376,250 from Forman, asserting the theories of breach of contract, unjust enrichment, and promissory estoppel. The initial complaint did not include a claim for half of the earnest money deposit as provided for under Section 26 of the PSA.

At a later deposition, Windermere asked Forman about the earnest money forfeiture. Forman readily acknowledged that Windermere was entitled to one-half of the earnest money, amounting to $50,000. Windermere subsequently filed an amended complaint adding a claim for the earnest money forfeiture. In cross motions for summary judgment, Windermere asserted the $50,000 earnest money forfeiture claim in a footnote. In its order on Windermere's motion for summary judgment, the trial court found that it was undisputed that Forman had retained the earnest money after the sale did not close and had breached the contract by not returning the $50,000 to Windermere. The trial court ruled that there remained genuine issues of material fact precluding summary judgment as to Windermere's claims for the commission under Section 26 of the PSA at that time.

Windermere later filed a second amended complaint adding Umbrella. In the amended complaint, Windermere retained its claim for breach of contract regarding the forfeiture claim against Forman, as well as its claims for unjust enrichment and promissory estoppel regarding the commission under Section 26. Windermere added a claim of tortious interference with business relations against Umbrella defendants.

The court subsequently granted Umbrella's motion for summary judgment on the basis that the statute of limitation had lapsed before Windermere filed suit. Windermere dismissed its remaining claims against Forman, leaving only the forfeiture claim for which it had already prevailed at summary judgment.

All parties requested attorneys' fees. The matters were heavily litigated.

Forman moved for an award of attorneys' fees on the basis that she had successfully defended against Windermere's claims which attempted to enforce the payment of commission under the PSA. Windermere objected to Forman's attorneys' fees arguing that they should be segregated by claims and that they included unnecessary work defending Umbrella after Forman's claims were resolved. Windermere moved for $64,570.76 in attorneys' fees and costs to be paid by Forman on the basis that it had been a prevailing party because the court awarded it one-half of the earned money deposit under the PSA. Windermere also requested $26,547.94 in prejudgment interest on the award of the $50,000 forfeiture claim.

The court denied Windermere's request for prejudgment interest. Observing that Windermere did not segregate its attorneys' fees request associated with the forfeiture claim, the trial court awarded Windermere $50 in attorneys' fees for the time spent preparing that claim.^[1] The trial court found that Forman was the prevailing party. ^[2] The court denied Windermere's request for pre-judgment interest, awarded Forman the full $152,974.95 in attorneys' fees and costs requested, but offset the amount with the $50,000 owed to Windermere. The court found that Forman's counsel submitted declarations establishing the "reasonable costs and fees incurred" and that the "affidavit established that duplicative and inefficient work had been removed prior to entering the...