Opinion
No. 57243-1-I.
April 30, 2007.
Appeal from a judgment of the Superior Court for King County, No. 01-2-35501-5, Richard A. Jones, J., entered October 21, 2005.
Reversed and remanded by unpublished opinion per Ellington, J., concurred in by Agid and Cox, JJ.
Paul McLaughlin and Wanda Nicholas agreed to binding arbitration to resolve a dispute about their interests in a house. The arbitrator set terms for buyout options. Eventually, McLaughlin obtained an order declaring that he had complied with the terms of the award, and quieting title in his name. A year afterward, on Nicholas' motion, the court vacated its order, ruling that McLaughlin had failed to provide Nicholas with proper notice of his motion and had not in fact complied with the terms of the award. We agree that McLaughlin's notice to Nicholas was insufficient. But he had indeed complied with the award, and was entitled to the order quieting title. We therefore reverse.
BACKGROUND
In March 1997, Paul McLaughlin and Wanda Nicholas bought a house in a "50-50 Partnership." Clerk's Papers at 55. Title was in McLaughlin's name. Nicholas lived there, and her rent and other payments were to go towards establishing her equity in the house.
By 2000 the deal had soured, Nicholas was paying no rent, and McLaughlin and Nicholas disputed their respective interests in the property. McLaughlin filed an action to determine their ownership rights, and the parties agreed to binding arbitration.
The arbitrator determined the value of each party's interest and established a schedule for buyout or liquidation. Nicholas had the first right of purchase, which gave her until October 16, 2002 to buy McLaughlin's interest for $52,720. If Nicholas failed to purchase the house by the deadline, McLaughlin had until November 15, 2002 to purchase Nicholas' interest for $21,280. If neither party purchased the other's interest, the property was to be sold as soon as possible and the proceeds divided in the same proportions. McLaughlin's attorney, Gerald Robison, was assigned to handle escrow.
The buyout amounts were calculated from each party's respective investment, and included consideration of moneys due from Nicholas to McLaughlin for unpaid rents: "Said sum [of $52,720.00] takes into account the past due rent awarded in paragraph 2, above, and shall be increased by the amount of any future rents accruing." Clerk's Papers at 193. The arbitrator also ordered Nicholas to cancel and release two documents she had recorded claiming an ownership interest.
Nicholas continued to occupy the house without making payments. She failed to purchase McLaughlin's interest, and recorded a third document claiming an ownership interest in the house.
The first day he could do so under the arbitration award, McLaughlin exercised his right to purchase. He sent Nicholas a letter stating that he was prepared to cash her out. He calculated the buyout amount per the arbitrator's award of $21,280, reduced by rents due, on the assumption she would vacate the residence by October 31, 2002. He noted that the award required Nicholas to release the lis pendens and other clouds on the title. He also proposed that Nicholas sign a quitclaim deed, in return for which he would refrain from entering judgment on the arbitration award. On November 4, 2002, McLaughlin deposited $22,000 into Robison's trust account.
The purchase did not go forward. Nicholas responded to McLaughlin's letter with a four-page letter of her own, essentially rejecting the arbitrator's ruling and demanding a "true 50-50 Ownership." Clerk's Papers at 122. She reargued the evidence at issue in the arbitration, including moneys McLaughlin allegedly owed her and the proper allocation of remodeling expenses, and laid out a detailed proposal for an entirely different result. She characterized the arbitration award as a "proposal" made by McLaughlin and the arbitrator.
On December 16, Nicholas moved out of the house. The following month, Robison mailed a check for the purchase price to her attorney. Nicholas refused to accept the check. In July 2003, she stopped by Robison's office, but again refused to accept McLaughlin's payment. Throughout these events, Nicholas was experiencing severe financial difficulties. At some point, she began living in her car and moved to Florida.
In August 2004, McLaughlin filed a motion to confirm compliance with the judgment and quiet title in his name. Nicholas' whereabouts were unknown, but Robison's paralegal e-mailed her the motion papers. She received the e-mail, but the response she tried to submit never reached the court. The court granted McLaughlin's motion and entered an order declaring McLaughlin in compliance and quieted title in his name. McLaughlin deposited the funds owed to Nicholas with the clerk of the court and sold the property.
Ten months after the sale, Nicholas brought a CR 60(b) motion to vacate the order on grounds of mistake, fraud, or injustice. The court granted the motion, finding that McLaughlin had failed to give Nicholas adequate notice of his motion to confirm compliance with the judgment and quiet title, and also finding that his tender of the purchase price was not effective because it was conditional. In addition, the court ordered the parties to "split the proceeds from the [previous] sale of the property according the terms of the Arbitration Award." Clerk's Papers at 286-87.
McLaughlin appeals. Nicholas cross appeals the court's failure to award prejudgment interest.
ANALYSIS
CR 60(b) motions are addressed to the sound discretion of the trial court, whose judgment will not be disturbed absent a showing of a manifest abuse. In re Marriage of Burkey, 36 Wn. App. 487, 489, 675 P.2d 619 (1984). A court abuses its discretion when its decision or order is manifestly unreasonable, exercised on untenable grounds, or exercised for untenable reasons. State v. Brown, 132 Wn.2d 529, 572, 940 P.2d 546 (1997).
A post-judgment motion must be personally served upon the opposing party and must (1) contain a notice informing the party of her right to respond, including the deadline for responding and where the response must be filed, (2) state that failure to respond may result in the requested relief being granted, and (3) state that the party's lawyer has not been served. CR 5(b)(4), (5). Service "shall be made by delivering a copy to [the party] or by mailing it to him at his last known address." CR 5(b)(1).
Nicholas left no forwarding address with her attorney, the court, Robison or McLaughlin. Robison's paralegal filed an affidavit stating that no one had a forwarding address for Nicholas, but that he had e-mailed the motion pleadings to Nicholas and had served all the motion papers on Nicholas' most recent attorney of record. His e-mail to Nicholas informed her of the date of the hearing, the fact that it was scheduled without oral argument, and the name of the judge. The pleadings were attached, but the paralegal was unable to e-mail the exhibits or the note for motion.
Nicholas acknowledged the paralegal's e-mail the same day, and later that afternoon, e-mailed him a response addressing the merits of the motion. The next day, she e-mailed her response to the judge, addressing the merits of the motion and requesting a continuance. A court clerk e-mailed a reply explaining that e-mail was not a proper response. Nicholas then sent a response via certified mail, but the court never received it.
McLaughlin contends the e-mailed notice to Nicholas was sufficient because Nicholas had both actual notice of the motion and time to respond. But even if emailed service were allowed in these circumstances (it is not), McLaughlin's notice failed to advise Nicholas where to file her response, as required by the rule. Nicholas knew of the motion, but not how to present her views to the court. This outcome is precisely what the rule seeks to prevent. The court did not abuse its discretion in determining that Nicholas lacked the notice required by the rule.
This does not end our inquiry, however, because Nicholas can prevail on a motion to vacate only if she can produce substantial evidence with which to oppose the claim. Otherwise, "there is no point to setting aside the judgment and conducting further proceedings." Pfaff v. State Farm Mut. Auto Ins. Co., 103 Wn. App. 829, 834, 14 P.3d 837 (2000). Because McLaughlin's tender was sufficient, Nicholas has no defense to his motion.
Whether a tender is properly refused depends upon the sufficiency of the reason given at the time of the events. Weinberg v. Naher, 51 Wash. 591, 593, 99 P. 736 (1909). In Weinberg, mortgagors tendered an interest payment by sending it to the mortgagee's bank. The mortgagee later argued that tender was insufficiently formal. The court rejected the argument because the mortgagee had not refused tender on that basis at the time:
See also Zeimantz v. Blake, 39 Wash. 6, 10, 80 P. 822 (1905) (appellant is "estopped" from complaining on appeal that tender was insufficient because he did not refuse to perform on that ground; at the time of the events, he "denied any liability whatsoever under the contract").
If these objections had been made at the time of the tender, and not overcome by a more formal tender, or if the refusal to accept had been made without giving a reason, doubtless the tender would have been insufficient. But . . . the reason for the refusal to accept the money . . . was that the interest was past due.
Id. at 598.
The court below believed McLaughlin's tender was ineffective because it was conditional. Nicholas also contends it was untimely and not for the correct amount. But Nicholas' reason for refusing McLaughlin's check was none of those. Rather, she disagreed with the arbitrator's award, despite her agreement to be bound by it. Her reason was therefore insufficient to justify her refusal of McLaughlin's tender. She cannot advance new reasons now.
Even if Nicholas' new arguments were timely, they are unavailing. The allegedly additional conditions were a contingent payment amount, a requirement that Nicholas to move out, a demand that she remove clouds on the title, and a demand for a quitclaim deed.
But under the award, the exact amount owed to Nicholas depended upon how long she lived in the house without paying rent. In his letter, McLaughlin set forth his calculation of the payment amount, and wrote, "The above calculations are contingent upon Ms. Nicholas vacating the residence no later than October 31, 2002." Clerk's Papers at 118. This is not a condition requiring that Nicholas move out. It is an explanation of the payment calculation. Further, the award does not expressly require Nicholas to move out upon McLaughlin's purchase of her interest, but it does require that the purchase price account for past due rents, and makes no provision for Nicholas to remain in tenancy thereafter. Nicholas' suggestion that the award contemplates that McLaughlin will either continue renting to her or file an unlawful detainer action to evict her is unfounded and unreasonable.
The award also required Nicholas to release the various notices she had filed claiming ownership of the property. Though the arbitrator did not specify the precise sequence of events, he ordered an escrow, which contemplates conditional delivery of funds until performance of the seller's obligations. Lechner v. Halling, 35 Wn.2d 903, 912, 216 P.2d 179 (1950). Transfer of clear title is understood. McLaughlin's "contingency" requiring Nicholas to remove clouds on the title is consistent with the arbitration award.
Nor did McLaughlin condition his tender upon Nicholas' willingness to sign a quitclaim deed. Rather, he "proposed" that she sign a quitclaim deed, in return for which he would agree not to enter judgment on the award. Clerk's Papers at 197. By its plain language this was an offer, not a condition. Nicholas relies heavily on the closing sentence of McLaughlin's letter, "Once the above conditions have been met, [I] will disburse the funds." Id. Though the term "conditions" (and the earlier term "contingent") may have been inartful, in the context of the award, the tender letter is unambiguous and does not impose additional conditions.
Finally, Nicholas also argues that McLaughlin's tender was untimely and was not for the full amount required. These arguments also fail. Tender is a willingness to pay, accompanied by the ability and an attempt to pay. King v. O/S Nordic Maiden, 587 F. Supp. 46, 48 (W.D. Wash. 1984). McLaughlin deposited $22,000 in escrow on November 4, 2002, which was 11 days before the arbitrator's deadline. The amount deposited exceeded the maximum possibly due under award. A tender that exceeds the maximum possible is a satisfactory tender. Walsh v. Colvin, 53 Wash. 309, 313, 101 P. 1085 (1909).
Despite improper notice of the motion, Nicholas is not entitled to vacation of the order confirming compliance and quieting title unless she has a viable defense. CR 60(e)(1) (a party must show "the facts or errors upon which the motion is based," and, if she is the defendant, "the facts constituting a defense to the action"); Borg-Warner Acceptance Corp. v. McKinsey, 71 Wn.2d 650, 652, 430 P.2d 584 (1967) (in the absence of willful disobedience on the part to the defendant, we first look to the showing made as to the existence of a meritorious defense to determine what constitutes sufficient grounds for a motion to vacate). Considering the evidence in the light most favorable to Nicholas, she has presented no viable defense to the relief requested by McLaughlin. We therefore reinstate the order confirming compliance and quieting title in McLaughlin, decline to reach Nicholas's cross appeal, and remand for such further proceedings as may be appropriate.
Reversed and remanded.
WE CONCUR: