Opinion
No. 63912-9-I.
January 10, 2011. UNPUBLISHED OPINION
Appeal from a judgment of the Superior Court for King County, No. 06-2-14221-7, Christopher A. Washington, J., entered July 21, 2009.
Affirmed in part, reversed in part, and remanded by unpublished opinion per Leach, A.C.J., concurred in by Cox and Spearman, JJ.
Terry Terrace Apartments, LLC (TTA), the former owner of an apartment complex converted to a condominium, appeals a trial court determination that it is not entitled to any portion of the rent from a presale lease of the building's rooftop to Seattle SMSA Limited Partnership, d/b/a Verizon Wireless, LLC. It also appeals the dismissal of its claims against individual unit owners for breach of contract, unjust enrichment, and reformation, and an award of attorney fees to the unit owners.
Because TTA did not retain any interest in the property when it conveyed the individual condominium units, it is not entitled to any part of the rent. The trial court properly determined that TTA failed to present evidence sufficient to create a genuine issue of fact concerning its claims against the individual unit owners. Finally, because these claims arose out of TTA's sale contracts with the unit owners, the trial court properly awarded them fees under an attorney fee provision contained in the contracts.
BACKGROUND
In June 2002, TTA executed a five-year lease with Verizon Wireless, allowing Verizon to install and maintain a cellular tower on the rooftop of an apartment building TTA owned. The lease included options for four five-year extensions. Verizon agreed to pay a one-time, nonrefundable payment of $3,000 and an annual rent of $24,000 for the first year, increasing at a minimum of five percent for each subsequent year. The lease also stated, "Should the LESSOR . . . decide to sell all or any part of the Property to a purchaser other than LESSEE, such sale shall be under and subject to this Agreement and LESSEE's rights hereinunder."
In July 2002, TTA recorded a declaration converting the apartment building into a 26-unit condominium. Exhibit A to this declaration contained the only reference to any Verizon lease and provided,
It is anticipated (but not guaranteed) that the Condominium will be subject to a Building/Rooftop Lease Agreement between Declarant as Lessor and Seattle SMSA Limited Partnership d/b/a Verizon Wireless as Lessee, pursuant to which the annual rental during the first year shall be $24,000[.] 90% of all rental under the Lease shall remain the property of Declarant and 10% shall be assigned to the Association[.]
TTA simultaneously recorded a public offering statement (POS). An analysis of the operating budget for the condominium attached to the POS included a nearly identical paragraph. It also projected income from the Verizon lease to Terry Terrace Condominium Owners Association, the homeowners' association (HOA), indicating an "estimated share of Rooftop lease income" of $2,400.
The first condominium unit sold in October 2002. The first unit-owner-elected board of directors took office in April 2005. Shortly afterward, the HOA sent letters to TTA and Verizon, asserting its authority to seek recoupment of lease proceeds paid to TTA and to terminate the lease. TTA responded with a letter denying these assertions. Verizon responded with a letter challenging the HOA's right to terminate the lease.
In April 2006, the HOA sued TTA and Verizon. It asserted claims against TTA for declaratory judgment, unjust enrichment, and conversion and claims against Verizon for unjust enrichment and ejectment. TTA answered and counterclaimed for tortious interference with a contract. TTA also filed a third party complaint against the individual unit owners, claiming breach of contract, unjust enrichment, and reformation.
In July 2006, the HOA moved for summary judgment, contending that the lease was void from the date of its execution or the date on which the HOA sought termination and that it was entitled to lease proceeds paid to TTA. The unit owners joined the HOA's motion and filed their own summary judgment motion, requesting dismissal of TTA's claims. TTA filed a cross motion for summary judgment, which Verizon joined, seeking dismissal of the HOA's claims.
At a hearing on the summary judgment motions in February 2007, the HOA argued that RCW 64.34.312, RCW 64.34.320, and RCW 64.34.348 each provided a basis for granting it relief. The trial court preliminarily ruled that neither RCW 64.34.320 nor RCW 64.34.348 applied. The court reserved judgment on the applicability of RCW 64.34.312 pending additional briefing from the parties. The court also granted the unit owners' motion for summary judgment, dismissing TTA's third party complaint and awarding the unit owners reasonable attorney fees and costs.
In May 2007, the court ruled that RCW 64.34.312(1)(p) required transfer of the lease and lease proceeds to the HOA. However, the court did not decide when the HOA acquired its interest in the lease proceeds, leaving the parties to resolve that issue without court involvement.
When the parties could not reach an agreement, the HOA moved for entry of an order requiring TTA to transfer the lease and its proceeds effective July 10, 2002. In October 2007, the trial court ruled that RCW 63.34.312(1)(p) required TTA to transfer to the HOA the lease and any proceeds received on or after July 10, 2002. In November 2007, TTA sought review in this court of the trial court's decisions. We dismissed this appeal in September 2008 because the trial court had neither resolved all claims nor certified its decisions as final under CR 54(b).
After the parties stipulated to the amounts collected under the lease after July 10, 2002, the HOA moved for summary judgment on the issues of damages and prejudgment interest. In July 2009, the trial court granted this motion, awarding the HOA $144,285.00 in lease proceeds, $49,264.68 in prejudgment interest, $42,800.00 in attorney fees, and $2,269.00 in costs.
TTA appeals. No other party filed a cross appeal.
STANDARD OF REVIEW
This court reviews a summary judgment order de novo, engaging in the same inquiry as the trial court. Summary judgment is proper if, after viewing all facts and reasonable inferences in the light most favorable to the nonmoving party, there are no genuine issues as to any material fact and the moving party is entitled to judgment as a matter of law. We may affirm the trial court's decision on any ground supported by the record. The interpretation and applicability of a statute presents questions of law reviewed de novo.
Quadrant Corp. v. Am. States Ins. Co., 154 Wn.2d 165, 171, 110 P.3d 733 (2005).
CR 56(c); Torgerson v. N. Pac. Ins. Co., 109 Wn. App. 131, 136, 34 P.3d 830 (2001).
Allstot v. Edwards, 116 Wn. App. 424, 430, 65 P.3d 696 (2003).
Quality Food Ctrs. v. Mary Jewell T, LLC, 134 Wn. App. 814, 817, 142 P.3d 206 (2006).
ANALYSIS
Preliminarily, we address a procedural matter. In the HOA's briefing it contends the trial court should have declared the lease void or subject to termination under the Washington Condominium Act, chapter 64.34 RCW. Where, as here, a respondent seeks affirmative relief, it must first file a notice of appeal. Because the HOA did not file a notice of appeal, we decline to review this issue.
RAP 2.4(a); see also N. Coast Elec. Co. v. Selig, 136 Wn. App. 636, 646-47, 151 P.3d 211 (2007).
TTA contends the trial court erred when it required TTA to transfer the lease and payments from Verizon to the HOA. We disagree.
TTA's arguments assume that the deeds it used to convey individual units to purchasers transferred less than all of TTA's interest in the apartment building. The statutory warranty deeds delivered by TTA do not support this assumption.
A conveyance of real property by statutory warranty deed conveys all of the grantor's right, title, and interest in the described property, unless additional language in the deed clearly and expressly limits or qualifies the interest conveyed. This deed creates warranties in favor of the grantee, including that the estate is free from all encumbrances. The grantor must specifically exclude any lien, encumbrance, or other matter intended to be outside the scope of this warranty. This exclusion is typically placed in the "subject to" clause in the body of the conveyance and does not limit the nature or duration of the estate granted, only the scope of the warranty.
Brown v. State, 130 Wn.2d 430, 437, 924 P.2d 908 (1996).
Wash. State Bar Ass'n, Real Property Deskbook § 32.7(3) (1996).
Real Property Deskbook § 32.7(3).
Unlike an exclusion, an exception withdraws from a deed's operation some part of the property which would have otherwise passed to the grantee under the general description. The part withdrawn exists at the time of the grant and remains in the grantor unaffected by the deed. In contrast, a reservation creates on behalf of the grantor a new right issuing out of the property granted that did not exist as an independent right before the time of the grant.
Biles v. Tacoma, Olympia Grays Harbor R.R. Co., 5 Wash. 509, 511-12, 32 P. 211 (1893).
Biles, 5 Wash. at 512.
Biles, 5 Wash. at 512.
The trial court record contains only one example of the deeds used by TTA to convey individual units as they sold. This deed conveys a condominium by unit number and reference to a survey map and plans as well as the condominium declaration, "SUBJECT TO EXCEPTIONS SET FORTH ON ATTACHED EXHIBIT `A' AND BY THIS REFERENCE MADE A PART HEREOF AS IF FULLY INCORPORATED HEREIN." Exhibit A lists nine items, including matters disclosed in certain recorded instruments, possible encroachments, liens and taxes that may be owed, and a memorandum of lease. The reference to the memorandum of lease identifies the lessor as TTA, the lessee as Verizon Wireless, and the recording information for the memorandum. The deed contains no language purporting to except from the deed's grant any interest in the property conveyed or to reserve to the grantor any right to any part of the lease payments.
At oral argument, TTA agreed that the deeds used to convey title to the remaining 25 units were similar and that no deed contained language expressly purporting to except any interest in the property or to reserve to the grantor any right to any part of the lease payments. Instead, TTA asserted that the "subject to" provision noted above reserved rent payments to TTA. This language did not limit the conveyance of the property described in the deeds either in scope or duration. Instead, it only excluded from each deed's warranties any warranty regarding the nine items listed in exhibit A, including the Verizon lease. No language in the deed can be characterized as clearly and expressly qualifying either the scope or duration of the property interest conveyed. The "subject to exceptions" language did not treat the lease any differently than any of the other eight items for which warranties were excluded. No words in the deed even reference the rent payments, let alone purport to reserve the right to receive them. Consequently, TTA conveyed its entire interest in the property as a matter of law, including its interest in the Verizon lease.
Although it retained no interest in the lease, TTA contends the trial court erred in ruling that RCW 64.34.312(1)(p) required TTA to transfer the Verizon lease and any proceeds from the lease received on or after July 10, 2002. RCW 64.34.312(1)(p) provides:
(1) Within sixty days after the termination of the period of declarant control provided in RCW 64.34.308(4) or, in the absence of such period, within sixty days after the first conveyance of a unit in the condominium, the declarant shall deliver to the association all property of the unit owners and of the association held or controlled by the declarant including, but not limited to:
. . . .
(p) Any leases of the common elements or areas and other leases to which the association is a party.
TTA claims that this provision does not apply to any lease to which the HOA is not a party. This argument lacks merit. Although TTA asserts that this statute is an administrative provision intended to facilitate turnover of the underlying documents, without creating new substantive rights of ownership, we do not reach this issue given our construction of TTA's deeds to the unit owners.
When interpreting a statute, our aim is to ascertain the legislature's intent. "[I]f the statute's meaning is plain on its face, then the court must give effect to that plain meaning as an expression of legislative intent." Interpretations that give meaning and effect to every word are favored over those that render parts of the statute redundant or superfluous.
Dep't of Ecology v. Campbell Gwinn, LLC, 146 Wn.2d 1, 9-10, 43 P.3d 4 (2002).
Campbell Gwinn, 146 Wn.2d at 9-10.
Parents Involved in Cmty. Sch. v. Seattle Sch. Dist. No. 1, 149 Wn.2d 660, 685, 72 P.3d 151 (2003) (quoting Cox v. Helenius, 103 Wn.2d 383, 387, 693 P.2d 683 (1985)).
TTA claims that the modifying phrase "to which the association is a party" in subparagraph (p) applies to both relative clauses, "leases of the common elements or areas" and "other leases." We disagree. Because "leases of the common elements" "to which the association is a party" is a subcategory of "other leases" "to which the association is a party," TTA's suggested construction renders redundant the first relative clause. However, reading subsection (p) as requiring delivery of any "leases of the common elements," even those to which the HOA is not a party, in addition to "other leases to which the association is a party," gives meaning to all the language of the statute and is more consistent with the Condominium Act's allocation of control over common areas. Because the Verizon lease is a lease of common elements, RCW 64.34.312(1)(p) required that TTA deliver the lease documents and rent to the HOA.
Under the Condominium Act, a condominium is comprised of real property designated for individual ownership and the remainder designated for common ownership by the owners of those portions. RCW 64.34.020(9). All property in a condominium not included in an individual unit is a common element. RCW 64.34.020(6).
Alternatively, TTA argues that if its rights to the lease terminated, they did so on April 25, 2005, when the first unit-owner-elected board of directors took office, not on July 10, 2002, the day TTA recorded the declaration. Although we reject TTA's argument, we agree that the trial court erred in deciding when TTA's interest in lease payments terminated.
TTA owned the building in fee simple and retained all of the lessor's interest in the property leased to Verizon, until it conveyed the first unit. At that point, TTA conveyed an individual unit and an undivided fractional interest in the common elements. With each conveyance of a unit, TTA reduced its leasehold interest by an amount equal to the interest in the common elements conveyed. TTA's leasehold interest reached zero when it sold the last unit. TTA's leasehold interest eroded gradually over the period of time it took to sell all of the condominium units. By failing to take this into account, the trial court erred when calculating the amount of damages owed by TTA.
TTA also alleges that estoppel and waiver bar the HOA's claims to the lease proceeds. Specifically, TTA claims that the individual purchase agreements incorporated the POS and declaration by reference, which in turn incorporated the lease by reference. Thus, the HOA, through the conduct of the individual unit owners, accepted TTA's retention of the right to receive future Verizon lease payments at the time of purchase. Again, we disagree. Even if the purchase agreements incorporated these documents, the record does not support waiver or estoppel.
"A `waiver' is the intentional and voluntary relinquishment of a known right." "To constitute a waiver other than by express agreement, there must be unequivocal acts or conduct . . . evidencing an intent to waive." "[W]aiver by conduct occurs if the actions of the person against whom waiver is claimed are inconsistent with any intention other than waiver."
Birkeland v. Corbett, 51 Wn.2d 554, 565, 320 P.2d 635 (1958).
Birkeland, 51 Wn.2d at 565.
Shinn v. Thrust IV, Inc., 56 Wn. App. 827, 843-44, 786 P.2d 285 (1990) (citing Birkeland, 51 Wn.2d at 565).
Here, the POS and declaration stated, "It is anticipated (but not guaranteed) that the Condominium will be subject to a Building/Rooftop Lease" between the declarant and Verizon. This language merely expresses a future intent to enter into a lease. And purchasing a condominium created by a declaration containing this language is neither an express waiver nor evidence of unit purchasers' unequivocal intent to waive an interest to lease proceeds. As one condominium purchaser testified,
My understanding of this paragraph when I read it is that it says it is anticipated but not guaranteed that the condominium had been subject [to the lease]. I don't perceive it as something we need to get out of. I perceive it as a right of the homeowners' association of Terry Terrace to gain the proceeds of a lease on our roof.
Because the act of purchasing a condominium under these terms is consistent with an understanding that the lease proceeds could belong to the HOA, we find no waiver by conduct.
A claimant alleging equitable estoppel as a basis for depriving another of legal title to real property must prove by "`very clear and cogent evidence'" the following three elements:
Sorenson v. Pyeatt, 158 Wn.2d 523, 539, 146 P.3d 1172 (2006) (quoting Tyree v. Gosa, 11 Wn.2d 572, 578, 119 P.2d 926 (1941)).
(1) a party's admission, statement, or act inconsistent with its later claim; (2) action by another party in reliance on the first party's act, statement or admission; and (3) injury that would result to the relying party from allowing the first party to contradict or repudiate the prior act, statement, or admission.
Kramarevcky v. Dep't of Soc. Health Servs., 122 Wn.2d 738, 743, 863 P.2d 535 (1993).
Because TTA cannot satisfy the first prong, its estoppel claim fails, and we do not analyze application of the remaining prongs. TTA does not identify any admission, statement, or act of the HOA or its individual members inconsistent with the HOA's claims. A failure to affirmatively question TTA's obscure description of its intent to lease to Verizon does not constitute the necessary admission, statement, or act.
Next, TTA posits three reasons why the trial court erred in dismissing its third party complaint against the individual unit owners. None have merit.
First, TTA contends the trial court dismissed the third party complaint because it initially ruled that TTA would retain the lease and lease proceeds. Thus, the basis for the dismissal disappeared when the trial court later awarded the lease and lease proceeds to the HOA. However, at the time the court dismissed TTA's third party complaint, it had yet to decide whether TTA or the HOA would be entitled to the lease proceeds because it reserved deciding the application of RCW 64.34.312.
Second, TTA claims that it discounted the unit price in consideration of the Verizon lease; thus, a genuine issue of material fact remained as to whether the termination of its alleged right to lease payments unjustly enriched unit owners. Again, we disagree.
To prove unjust enrichment, a claimant must show (1) that a party conferred a benefit on another party, (2) the other party appreciated or knew of the benefit, and (3) that party's acceptance or retention of the benefit under the circumstances makes it inequitable for the party to retain the benefit without paying its value.
Bailie Commc'ns, Ltd. v. Trend Bus. Sys., Inc., 61 Wn. App. 151, 159-60, 810 P.2d 12 (1991).
In this case, no evidence in the record supports a finding that TTA and any unit purchaser agreed to a discounted price due to the Verizon lease or even that any individual purchaser was aware at the time of purchase that TTA claimed to have conferred this benefit. In fact, the only evidence that TTA discounted the units stems from the declaration of Tim Kennedy, the TTA member responsible for selling the units. He asserts, without supporting documentation, "In determining the sales price for each unit, I factored in the income Terry Apartments was going to receive from the Verizon lease." This evidence is insufficient to create an issue of fact as to either the first or second prongs.
Third, TTA claims that reformation of the purchase agreement is required to remedy the unit owners' unjust enrichment. Because we find no unjust enrichment, we also reject this claim.
TTA also challenges the trial court's award of attorney fees and costs to the HOA and to the individual unit owners. Whether a party is entitled to attorney fees is an issue of law we review de novo. We review the reasonableness of the amount of fees awarded under the abuse of discretion standard.
Ethridge v. Hwang, 105 Wn. App. 447, 460, 20 P.3d 958 (2001).
Ethridge, 105 Wn. App. at 460.
The trial court awarded fees to the HOA under RCW 64.34.455, which grants the court discretion to award attorney fees to the prevailing party "in an appropriate case":
If a declarant or any other person subject to this chapter fails to comply with any provision hereof or any provision of the declaration or bylaws, any person or class of persons adversely affected by the failure to comply has a claim for appropriate relief. The court, in an appropriate case, may award reasonable attorney's fees to the prevailing party.
TTA contends that this is not an appropriate case in which to award fees because this lawsuit deals with an interpretation of the Condominium Act rather than willful violation of the Act. TTA notes that the trial court found the legal issues challenging and that no clear legal authority controlled the issues. However, whether a case under the Act is appropriate for an award of fees is a discretionary decision that we will not disturb unless the trial court abused its discretion. The Act directs courts to administer its remedies "to the end that the aggrieved party is put in as good a position as if the other party had fully performed." This mandate applies to the Act's provision for an award of attorney fees. Against this mandate we cannot say that the trial court abused its discretion by awarding fees to the HOA simply because the court struggled to reach a decision on an issue not clearly controlled by precedent.
Eagle Point Condo. Owners Ass'n v. Coy, 102 Wn. App. 697, 715, 9 P.3d 898 (2000).
RCW 64.34.100.
Eagle Point, 102 Wn. App. at 713.
The trial court awarded fees to the individual unit owners pursuant to the attorney fee provision in the individual purchase agreements, "If Buyer or Seller institutes suit against the other concerning this Agreement, the prevailing party is entitled to reasonable attorneys' fees and expenses." TTA asserts that the trial court erred because TTA's claims were "not on the contract." We disagree.
"Under Washington law, for purposes of a contractual attorneys' fee provision, an action is on a contract if the action arose out of the contract and if the contract is central to the dispute." TTA asserted three claims against the individual unit owners: (1) breach of the purchase agreement containing the fee provision, (2) reformation of the purchase agreement containing the fee provision, and (3) unjust enrichment based upon a claim that denying TTA the Verizon lease payments would deny TTA the full economic benefit of the terms of the sales evidenced by the purchase agreements containing the fee provision. A mere description of these claims demonstrates the lack of merit to TTA's assertion that they do not arise out of the purchase agreements. The trial court did not err in awarding the individual unit owners attorney fees.
Seattle-First Nat'l Bank v. Wash. Ins. Guar. Ass'n, 116 Wn.2d 398, 413, 804 P.2d 1263 (1991).
Citing only RAP 18.1, the HOA requests attorney fees on appeal. However, the HOA did not comply with the requirements of RAP 18.1(b) and case law interpreting this rule. It failed to devote a section of its brief to this request, cited no authority authorizing the award, and provided no argument in support of its request. We deny the HOA's request for attorney fees on appeal. The unit owners also ask for attorney fees on appeal, citing to RAP 14.2, RAP 18.1, and to the purchase agreement provision previously quoted. Because the contracts authorize a fee award, the unit owners are prevailing parties on appeal, and they have complied with RAP 18.1(b), we award the individual unit owners reasonable attorney fees and costs on appeal, subject to their compliance with RAP 18.1(d).
CONCLUSION
TTA conveyed all its interest in Terry Terrace Condominiums to the 26 individual unit owners without excepting or reserving any interest in the property, including, without limitation, any right to receive future rent. But TTA conveyed this interest incrementally as it sold each condominium unit. We therefore affirm the trial court decisions awarding the HOA the lease and lease revenue, the dismissal of TTA's third party complaint against the individual unit owners, and the trial court's award of attorney fees to both the HOA and the unit owners. We reverse the trial court's calculation of lease revenue owed to the HOA and remand for further proceedings consistent with this opinion. Finally, we award the individual owners their attorney fees and costs on appeal subject to their compliance with RAP 14.4(a) and 18.1(d).
WE CONCUR.