Opinion
No. 26286-3-III.
February 14, 2008.
Appeal from a judgment of the Superior Court for Spokane County, No. 05-2-04451-3, Salvatore F. Cozza, J., entered June 28, 2007.
Affirmed by unpublished opinion per Thompson, J. Pro Tem., concurred in by Schultheis, A.C.J., and Kulik, J.
David Henry and his wife Dana (Henrys) appeal an order granting summary judgment in favor of John Green and his wife Lori (Greens). The Henrys contend that summary judgment was improper because: (1) the parol evidence rule is inapplicable as the Henrys made no attempt to modify the Green-Trotter agreement; (2) the integration clause in the Green-Trotter agreement is invalid as a false boilerplate clause; (3) the statute of frauds does not apply; (4) equitable relief should create a constructive trust in favor of the Henrys; (5) there should be an implied contract in favor of the Henrys; (6) Thomas Trotter's affidavit should not be stricken because there is no inconsistency in the disputed statements. We affirm.
FACTS
In 1986, David Henry met John Green in Alaska. In 1997, Mr. Henry and his wife Dana moved to the Spokane area, where they met Thomas Trotter and his wife Joyce (Trotters). In late 1997 or early 1998, the Trotters sold the Henrys a home with 10 acres in Greenacres, Washington.
In 2004, the Greens sold their home in Alaska and moved to the Spokane area, where they resided in the Henrys' basement for nine months. Mr. Green and Mr. Henry also discussed forming a partnership to develop a 28-acre parcel adjacent to the Henrys' property. The parcel was owned by the Trotters. According to Mr. Henry, the Henrys and the Greens agreed that if the Henrys could buy the Trotter property for an acceptable price, Mr. Green would provide the cash from the sale of his Alaska property. Then, at such time as Mrs. Henry's pending lawsuit settled, the Greens would sell the Henrys eight acres of that property for development (Henry-Green oral agreement). The Henry-Green eight-acre oral agreement was never put into writing.
In approximately May 2004, Mr. Henry contacted Mr. Trotter regarding the 28-acre property. Mr. Henry told Mr. Trotter that he and his partner, Mr. Green, wanted to purchase the 28 acres for development. After considerable negotiation with Mr. Henry, Mr. Trotter agreed to a price of $150,000. However, Mr. Green was unwilling to pay more than $145,000, so Mr. Henry agreed to pay the additional $5,000 through a promissory note. Both Mr. Henry and Mr. Green informed Mr. Trotter that the Greens were providing the entire $145,000 amount. However, they also told Mr. Trotter that the Greens were going to hold eight acres of the property for the Henrys and sell it to them for the same price per acre, less the $5,000 contribution (Henry-Trotter oral agreement). On June 1, 2004, the Greens and the Trotters signed the written real estate purchase and sale agreement (Green-Trotter Agreement). The Green-Trotter Agreement specifically provided that the purchase price was $145,000. The Trotters conveyed the property to the Greens for $145,000. As part of the closing a real estate excise tax affidavit was signed by both buyers and sellers listing the sale price as $145,000. Also, as part of the closing, the Trotters signed a document listing the sale price at $145,000. This document was provided to the United States Department of Housing and Urban Development. Approximately a year after the closing, the Henrys paid off the $5,000 promissory note.
After the sale closed, the Greens denied they had an agreement to sell the eight acres to the Henrys. The Henrys brought this lawsuit against the Greens asserting claims for constructive trust, unjust enrichment, and implied contract. The Greens moved for summary judgment, arguing that the parol evidence rule and the real estate statute of frauds, RCW 64.04.010, prevented enforcement of an oral agreement for the conveyance of real estate. The Greens also moved to strike parts of Thomas Trotter's affidavit. The trial court granted summary judgment in favor of the Greens, but denied the motion to strike Mr. Trotter's affidavit. The Henrys appealed.
ANALYSIS
When reviewing an order for summary judgment, we engage in the same inquiry as the trial court. Korslund v. DynCorp Tri-Cities Servs., Inc., 156 Wn.2d 168, 177, 125 P.3d 119 (2005). All facts and reasonable inferences are considered in a light most favorable to the nonmoving party, while all questions of law are reviewed de novo. Berger v. Sonneland, 144 Wn.2d 91, 102-03, 26 P.3d 257 (2001). Summary judgment is appropriate where there are no disputed issues of material fact and the prevailing party is entitled to judgment as a matter of law. Sperr v. City of Spokane, 123 Wn. App. 132, 136, 96 P.3d 1012 (2004).
A. Parol Evidence
The parol evidence rule bars extrinsic evidence offered to contradict or supplement an integrated, unambiguous instrument. Denny's Rests., Inc. v. Sec. Union Title Ins. Co., 71 Wn. App. 194, 202, 859 P.2d 619 (1993). The parol evidence rule "`has no application to a collateral agreement upon which the instrument is silent, and which does not purport to affect the terms of the instrument.'" Becker v. Lagerquist Bros., Inc., 55 Wn.2d 425, 429 n. 3, 348 P.2d 423 (1960) (quoting Sav. Bank of So. Calif. v. Asbury, 117 Cal. 96, 103, 48 P. 1081 (1897)). Admissible extrinsic evidence does not include evidence that would show an intention independent of the instrument; or evidence that would vary, contradict, or modify the written word. Hollis v. Garwall, Inc., 137 Wn.2d 683, 695, 974 P.2d 836 (1999). The parol evidence rule excludes evidence of an oral agreement which the parties could reasonably be expected to have embodied in their contract. Shelton v. Fowler, 69 Wn.2d 85, 95, 417 P.2d 350 (1966).
Washington uses the Berg rule to define the use of extrinsic evidence: "[E]xtrinsic evidence is admissible as to the entire circumstances under which the contract was made, as an aid in ascertaining the parties' intent." Berg v. Hudesman, 115 Wn.2d 657, 667, 801 P.2d 222 (1990). In approving the Berg context rule, the Washington Supreme Court stated that extrinsic evidence is not admitted for the purpose of importing an intention not expressed in the writing, but to give meaning to the words employed. Id. at 669 (citing J. W. Seavey Hop Corp. v. Pollock, 20 Wn.2d 337, 348-49, 147 P.2d 310 (1944)). Extrinsic evidence illuminates what was written, not what was intended to be written. Id.
The Henrys, relying on Becker v. Lagerquist Brothers, argue that extrinsic evidence of the $5,000 Henry-Trotter oral agreement is a collateral agreement that does not modify the $145,000 written Green-Trotter Agreement. However, the oral agreement would in fact modify the Green-Trotter written agreement. It changes the written sales price of the Green-Trotter Agreement from $145,000 to $150,000. Furthermore, Becker is distinguishable because there was considerable undisputed written evidence that the earnest money agreement in Becker was only a partial integration. Becker, 55 Wn.2d at 430-31. However, the written Green-Trotter Agreement is sufficiently detailed to reach the reasonable conclusion that the Henry-Trotter eight-acre oral agreement should have been included. Thus, we hold that the parol evidence rule applies to the Green-Trotter Agreement and inconsistent extrinsic evidence of the Henry-Trotter oral agreement is inadmissible.
B. Integration Clause
We review findings of fact for substantial evidence, defined as a "quantum of evidence sufficient to persuade a rational fair-minded person that the premises is true." Sunnyside Valley Irrigation Dist. v. Dickie, 149 Wn.2d 873, 879, 73 P.3d 369 (2003). We review questions of law de novo. Id. at 880.
An agreement may be only partially integrated, notwithstanding an integration clause, if the clause is false boilerplate, because parties are not bound by incorrect statements of fact. Denny's, 71 Wn. App. at 203. A boilerplate integration clause may be held void when enforcement of such a clause would amount to endorsement of a fraud. S. Kitsap Family Worship Ctr. v. Weir, 135 Wn. App. 900, 907, 146 P.3d 935 (2006). In determining whether a clause is false boilerplate, a court considers: (1) whether the prior agreement was the inducing and moving cause of the final contract; (2) whether a prior agreement forms part of the consideration for the final contract; and (3) whether the final contract was executed on the faith of the prior agreement. McGregor v. First Farmers-Merchants Bank Trust Co., 180 Wash. 440, 444, 40 P.2d 144 (1935). "`A party to a contract is not bound by a false recital of fact, and parol evidence is admissible to show the true state of affairs.'" Black v. Evergreen Land Developers, Inc., 75 Wn.2d 241, 250, 450 P.2d 470 (1969) (quoting Cook v. Vennigerholz, 44 Wn.2d 612, 616-17, 269 P.2d 824 (1954)).
Paragraph 13(d) of the written Green-Trotter Agreement contains an integration clause, which provides, "[t]here are no verbal agreements or understandings which modify this Agreement. This Agreement constitutes the full understanding between Buyer and Seller." Clerk's Papers at 32.
The Henrys argue that the integration clause is false boilerplate. However, there is no claim of fraud by the Henrys, and the Henrys do not claim to have been unaware of the written terms of the Green-Trotter Agreement. The integration clause is unambiguously and plainly stated in the Green-Trotter Agreement. The Henrys could not have understood the contract obligations unless they read the simple terms on the face of the Green-Trotter Agreement. See H.D. Fowler Co. v. Warren, 17 Wn. App. 178, 180-81, 562 P.2d 646 (1977). The integration clause is a valid and enforceable part of the Green-Trotter Agreement.
C. Real Estate Statute of Frauds
The real estate statute of frauds, RCW 64.04.010, provides in relevant part, "[e]very conveyance of real estate, or any interest therein . . . shall be by deed." Furthermore, to be valid, a deed must be in writing and include the acknowledged signature of the party bound thereby. RCW 64.04.020.
The Henrys argue that they had two oral agreements to transfer property: (1) an agreement to purchase property from the Trotters, and (2) an agreement for the Greens to transfer the eight acres. However, neither agreement was in writing. Therefore, both agreements are void under the real estate statute of frauds.
D. Constructive Trust
A constructive trust arises when the person holding title to property has an equitable duty to convey it to another person on the grounds that they would be unjustly enriched if permitted to retain it. Baker v. Leonard, 120 Wn.2d 538, 547-48, 843 P.2d 1050 (1993). The statute of frauds does not preclude the use of parol evidence to establish a constructive trust. Dowgialla v. Knevage, 48 Wn.2d 326, 333, 294 P.2d 393 (1956) (citing Moe v. Brumfield, 27 Wn.2d 714, 717, 179 P.2d 968 (1947)). A constructive trust occurs when property is taken in the name of a grantee who did not advance the consideration. Manning v. Mt. St. Michael's Seminary of Philosophy Science, 78 Wn.2d 542, 545-46, 477 P.2d 635 (1970); Richards v. Richards, 5 Wn. App. 609, 611, 489 P.2d 928 (1971).
The Henrys argue that a constructive trust should be created for their benefit. However, this property was taken in the name of the Greens, and payment was made by the Greens. Thus, the Henrys are not entitled to a constructive trust in land that the Greens purchased for themselves.
E. Implied Contract
The Henrys also argue a theory based on an implied contract in law in their complaint and memorandum opposing summary judgment. There are two classes of implied contracts; those implied in law and those implied in fact. Chandler v. Wash. Toll Bridge Auth., 17 Wn.2d 591, 600, 137 P.2d 97 (1943).
The implied contract in law is called a quasi-contract and arises from an implied legal duty or obligation and is not based upon any consent or agreement. Id. An implied contract in fact arises from the facts and circumstances showing a mutual consent and intention to contract. Id. However, Washington law prohibits an implied contract from circumventing the statute of frauds. See Cushing v. Monarch Timber Co., 75 Wash. 678, 135 P. 660 (1913). In Cushing, the plaintiff sued the defendant claiming a broker's commission for obtaining a buyer for the defendant's land. Id. at 679. The written broker agreement did not contain all of the terms of the agreement, nor did it properly describe the land to be sold. Id. at 679-80, 685. The court held that because parol evidence was necessary to complete the agreement's terms, the statute of frauds voided the agreement. Id. at 685. The plaintiff then argued that he had an implied contract with the defendant outside the statute of frauds. Id. at 687. The court held that, "[t]o permit a recovery upon the quantum meruit or upon an implied contract would be to defeat the purpose of the statute and supply by implication a contract which the statute expressly says may only be proven by written evidence." Id. Here, like in Cushing, the statute of frauds applies and an implied contract granted in favor of the Henrys would circumvent the statute of frauds. Thus, we hold that no implied contract can be found in favor of the Henrys.
F. Motion to Strike Parts of Thomas Trotter's Affidavit
We do not reach this issue. Because the court granted summary judgment and we affirmed that decision, the Trotter affidavit is irrelevant to this appeal.
CONCLUSION
Summary judgment was proper. There are no genuine issues of material fact and the Greens are entitled to judgment as a matter of law.
Affirmed.
A majority of the panel has determined this opinion will not be printed in the Washington Appellate Reports, but it will be filed for public record pursuant to RCW 2.06.040.
Schultheis, A.C.J., Kulik, J., concur.