Opinion
No. 60339-6-I.
April 21, 2008.
Appeal from a judgment of the Superior Court for King County, No. 06-2-08587-6, Sharon S. Armstrong, J., entered June 22, 2007.
Affirmed by unpublished per curiam opinion.
Benito and Elva Lozano appeal the trial court's order granting summary judgment to Western Peterbilt, Inc. They contend there were issues of fact that Peterbilt waived its contractual right to repossess a leased truck for failure to make timely payments because it accepted some late payments before eventually terminating the lease and repossessing the truck. The lease, however, expressly allowed Peterbilt to accept a late payment with a surcharge as a remedy for a missed payment without waiving its right to terminate the lease in the event of continued failures to pay.
Because Peterbilt's course of performance was consistent with the lease, as a matter of law there was no waiver of the lease terms. Summary judgment was proper. We affirm.
FACTS
Peterbilt entered into a commercial equipment lease with Lozano in 2004. At the time, Lozano executed an addendum that specified that the lease governed a 2004 Peterbilt long haul truck and set monthly payments beginning April 2004. In September, Lozano executed a second addendum covering a 2005 model year truck, with monthly payments beginning in November. Under the combined terms of the lease and addenda, Lozano was obligated to make payments of $2,568.61 and $2,186.65 on the fifteenth of each month for the two trucks.
Benito Lozano signed the lease. Peterbilt filed suit against Lozano and his wife, Elva, alleging Benito Lozano acted on behalf of the marital community, which the Lozanos admitted in their answer. We refer to the defendants collectively as Lozano.
Between January and November 2005, Lozano made several late payments, incurring more than $1,500 in late charges under the lease provisions. Lozano failed to pay most of the August obligation and made no payments for December. In January 2006, Peterbilt offered to allow Lozano to become current by resuming regular monthly payments and paying a specified portion of the arrearage and accrued late fees by January 16. Lozano did not do so, but delivered several checks to Peterbilt's Pasco office on February 16. However, Lozano ultimately retrieved two of the checks, leaving only a check in partial payment of the outstanding arrearage and another check that was ultimately dishonored. The payment did not satisfy Peterbilt's January offer.
Peterbilt then exercised its option to terminate the lease for nonpayment, repossessed one of the trucks, and began seeking to repossess the other truck. Lozano refused to produce the other truck, and in March 2006, he attempted to submit another partial payment. The check amount was insufficient to satisfy the lease obligation and arrearage. Peterbilt returned the check to Lozano.
Unable to locate the second truck, Peterbilt filed suit for replevin, a judgment for the remaining amount owing on the lease, and attorney fees. Lozano counterclaimed for breach of contract, conversion, replevin, and violation of the Consumer Protection Act on the theory that he had not defaulted because Peterbilt had waived its right under the lease to repossess without notice by previously accepting late payments. The trial court granted Peterbilt's motion for replevin of the second truck and denied Lozano's motion for summary judgment.
Peterbilt propounded requests for admission to Lozano as to whether he admitted default under the lease. Lozano responded by acknowledging that he was in default of the written terms of the lease, but asserting he was not in default within the meaning of the Uniform Commercial Code. Peterbilt then moved for summary judgment requesting dismissal of Lozano's counterclaims and the award of attorney fees and costs. The trial court granted Peterbilt's motion.
Lozano appeals.
ANALYSIS
Preliminarily, Peterbilt contends that we need not even reach the issue of whether summary judgment was appropriate because the trial court necessarily rejected Lozano's claim of wrongful repossession and lack of a default when it granted Peterbilt's motion for replevin of the second truck. Peterbilt argues that Lozano's default and the lawfulness of the repossession was therefore the law of the case by the time the trial court granted Peterbilt's motion for summary judgment at issue in this appeal.
Peterbilt, however, cites no authority for this argument. Moreover, none of the three distinct doctrines covered by the broad rubric "law of the case" appears to apply here. See Lutheran Day Care v. Snohomish County, 119 Wn.2d 91, 113, 829 P.2d 746 (1992). Two of those applications address the preclusive effect of prior appellate decisions, not prior trial court decisions, and the third deals with the effect of jury instructions to which there was no objection. Lutheran Day Care, 119 Wn.2d at 113. We accordingly address the merits of Lozano's appeal.
We review summary judgment orders de novo, engaging in the same inquiry as the trial court. Folsom v. Burger King, 135 Wn.2d 658, 663, 958 P.2d 301 (1998). Summary judgment is appropriately granted when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Domingo v. Employees' Credit Union, 124 Wn. App. 71, 77-78, 98 P.3d 1222 (2004). If facts are disputed, all evidence and its reasonable inferences are considered in the light most favorable to the nonmoving party. Domingo, 124 Wn. App at 78.
Lozano argues there are material issues of fact that Peterbilt waived the lease provisions allowing it to terminate the lease and engage in self-help repossession as a remedy for missed payments. Specifically, Lozano contends that Peterbilt's repeated acceptance of late payments and late fees during the period before it repossessed the first truck was inconsistent with the provisions allowing Peterbilt to declare a default and engage in repossession without notice. See RCW 62A.2A-207 ("[C]ourse of performance is relevant to show a waiver or modification of any term inconsistent with the course of performance.").
But for such a waiver to occur, the course of performance must truly be inconsistent with the terms of the contract. See Seattle-First Nat'l Bank v. Westwood Lumber, Inc., 65 Wn. App. 811, 826, 829 P.2d 1152 (1992). There is no waiver, for example, when a party forgoes a contractually authorized remedy for an initial default, but asserts it for a later default, if the contract allows the party to choose or forgo any particular remedy for each default in a series. Westwood Lumber, 65 Wn. App. at 826 (allowing earlier notes in a series to expire without demanding payment did not waive bank's right to demand timely payment on the last note because the terms provided that on default, the holder could either forgo collection or demand immediate payment).
Similarly, courts will not find a waiver based on delay in asserting a particular contractual remedy when the parties have expressly agreed that such a delay does not constitute a waiver. Meyers Way Dev. Ltd. P'ship v. Univ. Sav. Bank, 80 Wn. App. 655, 910 P.2d 1308 (1996) (bank did not waive a claim for default interest by failing to assert it timely when the note expressly provided bank's failure at any time to assert a claim for default interest would not defeat the claim or serve as a waiver).
As in Westwood Lumber and Meyers Way, Lozano's claim of waiver fails as a matter of law because he presented no evidence that Peterbilt engaged in any behavior that was actually inconsistent with retaining its right to terminate the lease and repossess the trucks under the lease. The lease defined events of default as including any failure to pay the full amount due on any due date. It expressly provided multiple remedies for any default at the lessor's option, including both additional charges for late payments and lease termination and repossession without notice. The lease further provided that no choice of any one remedy by the lessor constituted an election of that remedy to the exclusion of any other available remedy. In addition, the lease provided that "[n]o waiver of a default is a waiver of any other default or subsequent breach of this Agreement by Lessee." Clerk's Papers at 68.
It was therefore entirely consistent with the terms of the lease for Peterbilt to accept late payments and late charges before deciding, upon Lozano's continued defaults, to exercise its option to terminate the lease and repossess the trucks. Contrary to Lozano's claim, Peterbilt's actions did not violate a contracting party's general duty of honesty and fair dealing because "the duty of good faith does not extend to obligate a party to accept a material change in the terms of its contract." Badgett v. Sec. State Bank, 116 Wn.2d 563, 569, 807 P.2d 356 (1991). Rather, Peterbilt simply was standing on the terms of the lease as it was entitled to do. Badgett 116 Wn. 2d at 570.
Lozano's claim of waiver fails as a matter of law. Because the plain language of the lease allowed for repossession without any notice whatsoever, his additional argument that Peterbilt gave insufficient notice before repossessing the truck also necessarily fails. Summary judgment was appropriate.
Peterbilt requests attorney fees. Fees are expressly provided for in the lease. Subject to compliance with RAP 18.1, the request is granted.
Affirmed.