Opinion
No. 26341-0-III.
June 10, 2008.
Appeal from a judgment of the Superior Court for Douglas County, No. 07-2-00089-2, John Hotchkiss, J., entered June 29, 2007.
Affirmed by unpublished opinion per Korsmo, J., concurred in by Sweeney and Brown, JJ.
Jon Port, doing business as Real Homes, entered into a one-page agreement with Eric and Dona Potter to purchase real property owned by the Potters described as "property 19 lots 35th St/cascade St E. Wenatchee WA" for a total price of $1,235,000. Approximately three months later, Mr. Potter returned to Mr. Port $40,000 he previously had tendered, and terminated the agreement. Mr. Port filed an action for breach of contract or specific performance in Douglas County Superior Court. The court granted summary judgment for the Potters. Because the legal description of the property is insufficient, the agreement violates the statute of frauds and is unenforceable. Accordingly, we affirm the order of summary judgment in favor of the Potters.
On August 12, 2006, Mr. Port went to the Potters' home to discuss purchasing real property owned by the Potters, located in East Wenatchee at 35th and Cascade Streets. The Potters' home is located on this property. Mr. Port and Mr. Potter reached an agreement that Mr. Port, through his business Real Homes, would purchase the property. The property would be converted into 19 lots, comprised of 15 lots and a 4-lot short plat. At the time of the agreement, the property was not divided in this manner. In the presence of Mr. Potter, Mr. Port put the agreement in writing. The writing is a one-page document, describing the property as "property 19 lots 35th St/Cascade St E. Wenatchee WA," providing a total price of $1,235,000, and setting forth a payment schedule. The payment schedule provided $80,000 was due upon construction plan approval. Mr. Port, Mr. Potter, and Mrs. Potter each initialed and dated the agreement.
Also on August 12, 2006, Mr. Port tendered $20,000 to the Potters. In October 2006, Mr. Potter verbally informed Mr. Port he received construction plan approval and water line approval for the property. Mr. Port then tendered an additional $20,000 to the Potters, informing Mr. Potter he would pay the remaining $60,000 owed on the $80,000 due upon construction plan approval within a few days. At that point, according to Mr. Potter, he had incurred approximately $200,000 in construction costs, and needed this additional money. Mr. Port asserts he tendered the additional $60,000 to the Potters on November 10, 2006. The Potters assert they never received this additional $60,000.
On November 11, 2006, Mr. Port and Mr. Potter met at Smitty's Restaurant. Mr. Potter gave Mr. Port a check for $40,000, comprising the two $20,000 payments received by the Potters, and terminated the agreement. Additionally, Mr. Port asserts Mr. Potter returned the $60,000 check he gave him the previous day.
Mr. Port asserts he took the following actions with respect to the property, in accordance with the agreement: put up signage on 35th and Cascade Streets to advertise lots for sale; contacted Mr. Potter's engineer to develop a lot map of the 15 lot subdivision; applied for a permit to build a home on Cascade Street; paid $525 for an on-site evaluation and design of a septic system for the Cascade Street home; submitted a permit application for a septic system for the Cascade Street home; and submitted a permit application for water review for a single building permit for the Cascade Street home.
Mr. Port filed a complaint against the Potters for breach of contract and specific performance. The Potters moved for summary judgment. The trial court granted the Potters' motion and dismissed all claims on the basis that the legal description of the property in the agreement was deficient and violated the statute of frauds, and the agreement did not have sufficient terms for the court to enforce it. Mr. Port appealed.
The issue is whether the trial court erred in granting summary dismissal of Mr. Port's claims for breach of contract and specific performance. Mr. Port contends an enforceable contract was formed between himself and the Potters.
This court reviews a trial court's grant of summary judgment de novo, engaging in the same inquiry as the trial court. Hubbard v. Spokane County, 146 Wn.2d 699, 706-707, 50 P.3d 602 (2002). Summary judgment is proper if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c). All facts and reasonable inferences are construed in the light most favorable to the non-moving party. Hubbard, 146 Wn.2d at 707. Summary judgment should be granted if reasonable persons could reach but one conclusion based on all of the evidence. Id.
Here, it appears there are no issues of material fact, and, therefore, the issue before this court is whether the Potters were entitled to judgment as a matter of law. Although the parties dispute whether Mr. Port made a $60,000 payment to the Potters, and whether Mr. Port brought this action with clean hands, the outcome of the case does not depend on these facts. See Owen v. Burlington N. Santa Fe R.R., 153 Wn.2d 780, 789, 108 P.3d 1220 (2005) (citing Hisle v. Todd Pac. Shipyards Corp., 151 Wn.2d 853, 861, 93 P.3d 108 (2004)) (stating in the summary judgment context, "[a] material fact is one that affects the outcome of the litigation").
Legal Description of the Property
A contract for the sale of land requires a legal description. Martin v. Seigel, 35 Wn.2d 223, 212 P.2d 107 (1949); Key Design, Inc. v. Moser, 138 Wn.2d 875, 983 P.2d 653 (1999). In Martin v. Seigel, the plaintiff brought an action for specific performance of an earnest money agreement, whereby the plaintiff agreed to purchase real property from the defendants, described in the agreement as " 309 E. Mercer . . . in the City of Seattle, County of King, State of Washington." Martin, 35 Wn.2d at 224. The Supreme Court found this agreement unenforceable, reasoning the legal description of the property set forth therein was insufficient. Id. at 229. The court held "every contract or agreement involving a sale or conveyance of platted real property must contain, in addition to the other requirements of the statute of frauds, the description of such property by the correct lot number(s), block number, addition, city, county and state." Id.
In Key Design, Inc. v. Moser, the parties entered into an earnest money agreement, whereby the plaintiff agreed to purchase, and the defendants agreed to sell, property described in the agreement as "the property commonly known as VINCE'S FITNESS CENTER 1711 HEWITT Street in the City of EVERETT, SNOHOMISH County, Washington." 138 Wn.2d at 878. The agreement further stated the property was "legally described as (full and complete legal description must be inserted prior to execution by parties)," but a legal description was not inserted into the agreement. Id. Subsequent to entering this agreement, the defendants agreed to sell the property to someone else. Id. at 879. The plaintiff brought an action against the defendants and the purchaser of the property, alleging several claims, including breach of contract and specific performance against the defendants. Id. at 879-880. The defendants moved for summary judgment, arguing the earnest money agreement could not be enforced, pursuant to the statute of frauds, because it did not contain a legal description of the property. Id. at 880. The trial court granted the motion, and the Supreme Court, on direct review, affirmed. Id. at 880, 889. The court declined the plaintiff's request to overrule Martin v. Seigel, acknowledging "the Martin court already recognized the strictness of the rule and declined to change it." Id. at 883.
Here, Mr. Port, doing business as Real Homes, entered into an agreement with the Potters, to purchase property owned by the Potters, described as "property 19 lots 35th St/cascade St E. Wenatchee WA." Under Martin v. Seigel, this is not a legally sufficient property description. See Martin, 35 Wn.2d at 229. Identifying the property by the intersecting streets, city, and state, is less descriptive than the descriptions by street address, city, county, and state held unenforceable in Martin and Key Design, Inc. See Martin, 35 Wn.2d at 228-229; Key Design, Inc., 138 Wn.2d at 880-884. Mr. Port appears to argue the Martin rule does not apply because the land at issue here is not platted and the Martin rule is limited to contracts for the sale of platted real property. See Martin, 35 Wn.2d at 229. Nonetheless, Mr. Port's argument lacks merit. Although at the time of the agreement the property at issue was not divided into 19 lots, the property itself was platted. Accordingly, the agreement violates the statute of frauds and is unenforceable. Id.
Furthermore, Mr. Port asks this court, for the first time in his reply brief, to correct the defective property description in the agreement by reformation, under the doctrine of mutual mistake. See Key Design, Inc., 138 Wn.2d at 888 (citing Berg v. Ting, 125 Wn.2d 544, 554, 886 P.2d 564 (1995) (stating "reformation is available if the inadequate legal description is the result of a scrivener's error or a mutual mistake of the parties."). However, Washington appellate courts will not consider arguments raised for the first time in a reply brief. Lewis v. City of Mercer Island, 63 Wn. App. 29, 31, 817 P.2d 408, review denied, 117 Wn.2d 1024 (1991). Accordingly, we will not consider whether the doctrine of mutual mistake applies here.
Material Terms
Although the agreement between Mr. Port and the Potters is unenforceable based on the insufficient legal description alone, the agreement suffers from an additional infirmity. A real estate contract must contain 13 material terms:
(a) [T]ime and manner for transferring title; (b) procedure for declaring forfeiture; (c) allocation of risk with respect to damage or destruction; (d) insurance provisions; (e) responsibility for: (i) taxes, (ii) repairs, and (iii) water and utilities; (f) restrictions, if any, on: (i) capital improvements, (ii) liens, (iii) removal or replacement of personal property, and (iv) types of use; (g) time and place for monthly payments; and (h) indemnification provisions.
Sea-Van Invs. Assocs. v. Hamilton, 125 Wn.2d 120, 128, 881 P.2d 1035 (1994) (citing Kruse v. Hemp, 121 Wn.2d 715, 722, 853 P.2d 1373 (1993)).
Here, the agreement between Mr. Port and the Potters lacks all of the material terms required in a real estate contract, except for terms of payment. Mr. Port nonetheless argues the agreement is sufficiently definite to enforce because its provisions are capable of being made certain by the aid of legal presumption or evidence of established customs, citing Valley Garage, Inc. v. Nyseth, 4 Wn. App. 316, 481 P.2d 17 (1971).
In Valley Garage, Inc., the plaintiffs leased property from the defendant, and the lease included an option to purchase. Id. at 317. Affirming the trial court's order of specific performance, the court of appeals reasoned "[t]he indefinite provisions of the contract may all be rendered certain through reference to legal presumptions and established customs." Id. at 319. Importantly, however, the court first found the option to purchase contained the elements essential to a cash sale, "a description of the property subject to sale and a method for determination of a price which may be specifically enforced." Id. at 318 (citing Richardson v. Harkness, 59 Wash. 474, 110 P. 9 (1910)); see also Duprey v. Donahoe, 52 Wn.2d 129, 134, 323 P.2d 903 (1958) (quoting Hecketsweiler v. Parrett, 185 Or. 46, 51, 200 P.2d 971 (1948) (stating "[a] cash sale has been defined as `one conditioned on payment concurrent with delivery of the deed.'"). For purposes of specific performance, a cash sale is distinguished from an installment purchase. Kruse, 121 Wn.2d at 722 n. 1. Although it would enforce an agreement for a cash sale, the Valley Garage, Inc. court specifically stated "the parties could not be ordered to prepare and execute a real estate purchase contract (since this would require a further meeting of the minds)." Valley Garage, Inc., 4 Wn. App. at 318.
Here, specific performance cannot be ordered, because Mr. Port and the Potters made no specific provision for a cash sale, and instead provided for a total price payable according to a payment schedule. See also, e.g., Kruse, 121 Wn.2d at 722 n. 1 (declining to order specific performance of a purchase option because "the parties precluded the possibility of a cash sale"). If this court were to enforce this agreement, it would be in the position of supplying terms on which there was clearly no meeting of the minds. Accordingly, in addition to its unenforceability based upon the insufficient legal description, the agreement is unenforceable based upon its failure to include the 13 material terms required in a real estate contract.
Part Performance Equitable Estoppel
Mr. Port also argues if the court finds the agreement is not in compliance with the statute of frauds, it may be enforced under the doctrine of part performance or, alternatively, under the doctrine of equitable estoppel.
In support of his argument for part performance, Mr. Port points to the $40,000 he tendered to the Potters; the additional $60,000 he claims he tendered to the Potters; and that the Potters incurred approximately $200,000 in construction costs. Additionally, the record shows Mr. Port contacted Mr. Potter's engineer to develop a lot map of the 15 lot subdivision; he applied for a permit to build a home on Cascade Street; paid $525 for an on-site evaluation and design of a septic system for the Cascade Street home; submitted a permit application for a septic system for the Cascade Street home; and submitted a permit application for water review for a single building permit for the Cascade Street home.
"The doctrine of partial performance exists as a means of removing an oral contract for the lease or sale of real property from the statute of frauds." Kruse, 121 Wn.2d at 724. Furthermore, "[t]he part performance doctrine also applies to written agreements failing to satisfy the statute of frauds." Id. at 725 (citing 2 A. Corbin, Contracts § 420, at 452-53 (1950)). The elements of the doctrine of part performance are: "(1) delivery and assumption of actual and exclusive possession; (2) payment or tender of consideration; and (3) the making of permanent, substantial and valuable improvements, referable to the contract." Powers v. Hastings, 93 Wn.2d 709, 717, 612 P.2d 371 (1980) (citing Richardson v. Taylor Land Livestock Co., 25 Wn.2d 518, 528-529, 171 P.2d 703 (1946)). In general, the party asserting the doctrine must establish two of these three elements. Bartlett v. Betlach, 136 Wn. App. 8, 15, 146 P.3d 1235 (2006), review denied, 175 P.3d 1092 (2007) (citing Ting, 125 Wn.2d at 557-558). In addition, to obtain specific performance under the doctrine of part performance, the party must satisfy the following threshold requirement: "[T]he contract [must] be proven by evidence that is clear and unequivocal and which leaves no doubt as to the terms, character and existence of the contract." Powers, 93 Wn.2d at 713 (quoting Miller v. McCamish, 78 Wn.2d 821, 829, 479 P.2d 919 (1971)) (alterations in original). Furthermore, if the party seeks legal damages, rather than specific performance, this threshold requirement can be satisfied with a lower degree of proof: "less than `clear and unequivocal' evidence suffices." Powers, 93 Wn.2d at 715-717.
Here, even if this court assumes Mr. Port can satisfy the threshold requirement, he can only establish one of the three elements of the doctrine of part performance set forth above. First, Mr. Port cannot establish the possession element, because there is no evidence in the record of his actual and exclusive possession of the property. Second, considering the evidence in the light most favorable to Mr. Port, the $100,000 payment tendered to the Potters can establish the consideration element. Third, however, there is no evidence of permanent, substantial and valuable improvements. "Improvements must be permanent, substantial, and valuable." Bartlett, 136 Wn. App. at 16 (citing Powers, 93 Wn.2d at 717) (emphasis added). The actions taken by Mr. Port, including developing a lot map, obtaining a design for a septic system, and applying for permits, do not rise to the level of permanent, substantial, and valuable improvements to the property. Likewise, Mr. Port made no showing of what the effect the approximately $200,000 construction costs incurred by the Potters had on the property. Moreover, Mr. Port does not cite, and we cannot find, authority for relying upon the actions of the non-moving party to establish part performance. Therefore, assuming the threshold requirement can be satisfied by Mr. Port, he nonetheless cannot establish actual and exclusive possession, nor can he establish permanent, substantial, and valuable improvements to the property. Accordingly, part performance does not apply here.
Next, Mr. Port argues the agreement may be enforced under the doctrine of equitable estoppel. He argues at the time the agreement was formed, Mr. Potter, who was in the best position to have knowledge of the legal description as the owner of the property, made a statement as to the property's description, and therefore, should be estopped from obtaining relief from the contract by claiming the legal description is inadequate. It should be noted Mr. Port does not cite, and we cannot find, any authority applying the doctrine of equitable estoppel to enforce a contract for the sale of real property.
"Equitable estoppel may apply in a situation where one party makes an admission, statement, or act, which another party justifiably relies on to its detriment." Schoonover v. State, 116 Wn. App. 171, 179, 64 P.3d 677 (2003) (citing Dep't of Ecology v. Campbell Gwinn, L.L.C., 146 Wn.2d 1, 19, 43 P.3d 4 (2002)). The party asserting the doctrine must establish three elements: "(1) an admission, act or statement inconsistent with a later claim; (2) another party's reasonable reliance on the admission, act or statement; and (3) injury to the other party which would result if the first party is allowed to contradict or repudiate the earlier admission, act or statement." Id. at 179-180 (quoting Campbell Gwinn, L.L.C., 146 Wn.2d at 20). Furthermore:
In order to create an estoppel it is necessary that: "[t]he party claiming to have been influenced by the conduct or declarations of another to his injury, was himself not only destitute of knowledge of the state of facts, but was also destitute of any convenient and available means of acquiring such knowledge; and that where the facts are known to both parties, or both have the same means of ascertaining the truth, there can be no estoppel."
Leonard v. Washington Employers, Inc., 77 Wn.2d 271, 280, 461 P.2d 538 (1969) (quoting Wechner v. Dorchester, 83 Wash. 118, 145 P. 197 (1915)) (citation omitted).
Here, the agreement was drafted by Mr. Port in the presence of Mr. Potter. The agreement was drafted at the Potters' home, which is located on the property at issue. Consequently, Mr. Port knew the location of the property. Further, Mr. Port could have gone to the county assessor's office and obtained the legal description of the property by looking at the recorded statutory warranty deeds for the property. Mr. Port had the same means of ascertaining the truth as to the legal description as the Potters. See Leonard, 77 Wn.2d at 280-281. Mr. Port was not "destitute of any convenient and available means of acquiring such knowledge." Id. at 280. Accordingly, there can be no estoppel under these facts.
New Argument on Appeal
Finally, for the first time on appeal, Mr. Port argues the statute of frauds does not apply here because the agreement was not for the sale of land. Rather, he argues the agreement was a joint venture to develop the lots and sell real estate to a third party, which is not required to be in writing, citing Malner v. Carlson, 128 Wn.2d 521, 910 P.2d 455 (1996). Mr. Port further argues the court should consider this argument for the first time on appeal because it involves the right to maintain the action. See Bennett v. Hardy, 113 Wn.2d 912, 918, 784 P.2d 1258 (1990).
"Failure to raise an issue before the trial court generally precludes a party from raising it on appeal." New Meadows Holding Co. v. Washington Water Power Co., 102 Wn.2d 495, 498, 687 P.2d 212 (1984) (citing Smith v. Shannon, 100 Wn.2d 26, 37, 666 P.2d 351 (1983)); see also RAP 2.5(a). This allows "the trial court an opportunity to rule correctly upon a matter before it can be presented on appeal." New Meadows, 102 Wn.2d at 498 (citing Lake Air, Inc. v. Duffy, 42 Wn.2d 478, 482, 256 P.2d 301 (1953)). An exception to this general rule exists "`when the question raised affects the right to maintain the action.'" Bennett, 113 Wn.2d at 918 (quoting Maynard Inv. Co. v. McCann, 77 Wn.2d 616, 621, 465 P.2d 657 (1970); New Meadows, 102 Wn.2d at 498). Here, however, Mr. Port asserts a completely new legal theory than that raised below. The exception discussed in Bennett v. Hardy does not apply to Mr. Port: his new legal theory does not affect his right to maintain the action. Accordingly, Mr. Port is precluded from raising this new argument on appeal.
Similar to the argument on the contract itself, construction of this document as joint agreement to develop would also fail for the reason that the material terms of such an agreement are lacking. Other than setting the price and the number of lots involved, the document contains nothing describing who would bear development costs, how any profits or losses would be divided, etc.
The trial court did not err in granting summary dismissal of Mr. Port's claims for breach of contract and specific performance.
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.
SWEENEY, J. and BROWN, J., concur.