Opinion
No. 28975-0-II
Filed: February 23, 2005 UNPUBLISHED OPINION
Appeal from Superior Court of Kitsap County. Docket No. 99-2-01532-2. Judgment or order under review. Date filed: 05/17/2002. Judge signing: Hon. Karen B. Conoley.
Counsel for Appellant(s), Janet A. Irons, Attorney at Law, 1400 112th Ave SE Ste 100, Bellevue, WA 98004-6901.
Counsel for Respondent(s), Joseph P. Whitney, Attorney at Law, PO Box 246, Port Gamble, WA 98364.
Counsel for Respondent/Cross-Appellant, Drake Dee Mesenbrink, Mesenbrink Law Offices PS Inc, 20307 Viking Ave NW Ste 103, Poulsbo, WA 98370-8321.
Thomas Collins O'Hare, Smith O'Hare PS Inc, PO Box 68, Silverdale, WA 98383-0068.
Richard Ingraham and owners of lots upland from Ingraham's waterfront lot signed an agreement granting the upland owners an easement for beach access over Ingraham's waterfront lot. The upland lot owners assumed the easement was along an old road the parties had used for years to get to the beach. The recorded agreement, however, mistakenly located the easement some distance from the old road. When Kathleen Purvis purchased Ingraham's waterfront lot, she told the upland lot owners about the actual easement location established by the agreement; she also blocked use of the old road for beach access. The upland owners then sued Ingraham and Purvis to reform the easement agreement to describe the old road as the easement.
Kathleen's husband, Robert Purvis, is a named party in the underlying lawsuit. Because it is unclear from the record whether Robert is an active participant in this appeal, we refer to the Purvises collectively as Purvis.
The trial court ruled that Ingraham and the upland owners were mutually mistaken as to the easement location when they signed the agreement, and that Purvis was not a bona fide purchaser without notice of the claimed road easement. The court reformed the agreement to establish part of the easement along the old road. The trial court also denied Purvis damages against Ingraham for his failure to defend the easement location as set by the agreement. Purvis appeals, arguing that the evidence did not establish that Ingraham mistakenly believed the agreement located the easement on the old road when he signed it. Ingraham and Purvis both dispute the trial court's attorney fees decisions. We affirm.
FACTS
In 1973 and 1978, Richard Ingraham purchased parcels of land known as the Greely and Whitely properties located between Highway 104 and Port Gamble Bay in Kitsap County, Washington. In 1990, Ingraham subdivided the Greely property into three lots. He sold Lot 1 to Quinn Sunderlin and Tammie Riley and Lot 2 to Mark and Ashley Wagoner. Ingraham continued to live on Lot 3.
Addendums to the real estate contracts described 'a perpetual easement for access to and use of the beach' but did not include a specific location of the easement. Exhibit 6. Old Whitely Road was the only way to get to the sand spit beach and the parties understood that it would be used as the access route. Sunderlin and Riley sold Lot 1 to James and Jenifer Aydelotte in 1995.
During the 1990s, Ingraham subdivided Lot 3 into four lots, designated A-D. Ingraham sold Lots A-C and lived on Lot D. The real estate contract for Lot A conveyed a 'perpetual easement for access to and use of the beach' and mentioned participating in the maintenance of the access route and beach 'as specified by the Seller and other members of the immediate community holding the same access rights.' Exhibit 11. According to Ingraham, 'easement for access' meant Old Whitely Road. Report of Proceedings (RP) (August 20, 2001) at 211.
Lola Robb purchased Lot A but her daughter and her husband, the current tenants, continued to live on the lot. The daughter inherited the property when her mother died and Ingraham quit claimed her the property in 1995.
Nothing in the real estate contract conveying Lot C referred to a beach access easement, but Ingraham testified that he did not discuss this matter with the purchaser, Pam Regan, because he was in a relationship with her and she was living with him at the time. Ingraham completed subdividing Lot 3 in 1996. David and Ginelle Todd purchased Lot A in May 1996.
In the fall of 1995, the Wagoners retained attorney Kathleen Wright because they wanted to exercise an option to acquire more property from Ingraham. When Wright reviewed the Wagoners' real estate contract, she discovered that it did not legally describe the location of the beach access easement. Wagoner spoke with the Adairs, Aydelottes, and Regan, and they retained Wright to resolve the legal issues relating to the easement's location. While the Todds' purchase of Lot A was pending, Ingraham started talking with Thomas Runge and Kathy Woods about purchasing Lot B. Runge and Woods told Ingraham they wanted to move the easement from Old Whitely Road to the northern border of Lot B. Ingraham agreed, explaining that he did not 'have any problem with where they put [the easement], as long as they understood that the [upland owners] had access to the beach.' RP (August 21, 2001) at 254.
Ingraham authorized Runge to contact the company that was preparing the latest short plat about relocating the easement to the northern border of Lot B. Ingraham contacted Runge and Woods before Wright contacted him on behalf of the upland owners. But the potential sale to Runge and Woods never occurred and Ingraham eventually sold the lot to Kathleen Purvis.
In January 1996, Wright wrote Ingraham about the discrepancies in the real estate contracts and asked him to help solve the problems. On April 8 and 9, Ingraham and the upland owners signed the agreement Wright prepared (Wright Easement Agreement). But Exhibit F, which depicted the location of the easement created by the Wright Easement Agreement, was not attached at the time the upland owners and Ingraham signed it. And Pam Regan and Ashley Wagoner testified that they believed the Wright Easement Agreement created an easement along the Old Whitely Road. The easement was recorded on April 19, 1996. When Wagoner reviewed a final copy of the recorded easement, she thought the route along the northern border of Lot B 'lined up' with Old Whitely Road. RP (September 21, 2001) at 1341.
Regan signed on April 14.
Ingraham testified that he never talked with Wright specifically about whether the beach access easement would be over Old Whitely Road; he also stated that Old Whitely Road was the only existing beach access route at the time. He testified that he signed the agreement even though no map was attached because he 'just wanted to get it over with. [He] wanted the [upland owners] to have what they wanted and [he] assumed they knew what they wanted.' RP (December 17, 2001) at 1556.
Kathleen Purvis and her husband first saw Lot B sometime between late December 1996 and February 1997. They immediately noticed a discrepancy between the existing pathway, i.e., the Old Whitely Road, and the recorded easement showing the easement along the northern edge of Lot B. Kathleen obtained a copy of the Wright Easement Agreement; talked with two lawyers about the problem; talked with the Kitsap County Department of Community Development about moving the access; and she talked with several upland lot owners about moving the access. The upland owners were not willing to move the access.
In February 1997, Purvis offered $90,000 for Lot B. After the first offer expired, Purvis continued to negotiate with Ingraham on a variety of issues, including the easement location. They next offered $58,000 for the lot, citing potential easement problems as the reason for the reduced offer. At some point, Robert Purvis withdrew from the negotiations because of his concerns about the easement problem. Kathleen Purvis and Ingraham ultimately signed a purchase agreement for $80,000, dated September 3, 1997.
On December 11, 1997, Ingraham signed an addendum to the September 3 purchase and sale agreement, which provided:
SELLER confirms that the beach access easement granted to owners named as GRANTEES by Agreement effective June 1, 1995, and recorded under Auditor's file No. 9604190090, [Wright Easement Agreement] is located along the East side of LOT A and then along the North boundary of LOT B as shown on the Map (Exhibit F) and not in its present location on the West side of LOT B and then crossing LOT B on a diagonal through the center of LOT B.
SELLER further warrants that he clearly intended to relocate the beach access easement to the North line of LOT B at the time he granted said easement and grantees accepted the easement as delineated on the Map. SELLER will testify to the above if summoned.
This warranty shall survive closing of the sale of LOT B. Exhibit 43.
On December 15, 1997, Ingraham signed a statutory warranty deed for Lot B in favor of Purvis. Purvis erected a fence across Old Whitely Road and posted a sign informing the neighbors that she believed the fence was necessary to assert her legal rights and that the neighbors' access to the beach was along the northern edge of Lot B.
The Todds, Adairs, Wagoners, Aydelottes, and Pamela Regan sued Purvis to quiet title to an easement along the existing pathway of Old Whitely Road or, in the alternative, for an express easement as described in the Wright Easement Agreement. They also sued Ingraham for breach of contract. Purvis counterclaimed for quiet title to Old Whitely Road and cross-claimed against Ingraham for breach of the December 1997 addendum to the purchase and sale agreement for Lot B and for breach of the statutory warranty deed.
During trial, Ingraham settled with all of the upland owners except the Todds. The trial court reformed the Wright Easement Agreement, finding that at the time they signed it, the upland owners and Ingraham were mutually mistaken as to the location of the easement the agreement established. The court established a new easement to run a short distance along the northern border of Lot B to the wetlands and then join the existing path of Old Whitely Road. The trial court ruled against Purvis on her claim based on the December 1997 addendum, but it concluded that Ingraham had breached the statutory duty to defend title and awarded Purvis $10,000 in attorney fees and $1,500 for costs. The trial court also rejected Purvis's damages claim, finding that the easement location did not diminish Lot B's value.
ANALYSIS I. Reformation of the Easement
The trial court reformed the easement after finding that Ingraham and the upland owners were mutually mistaken as to the location of the easement described in the Wright Easement Agreement and that Kathleen Purvis was not an innocent bona fide purchaser. Purvis argues that the upland owners did not establish mutual mistake by clear, cogent, and convincing evidence and that she is an innocent third party detrimentally impacted by the reformation. She challenges several findings of fact, contending that substantial evidence does not support them.
We review a trial court's findings of fact and conclusions of law in two steps. Landmark Dev. Inc. v. City of Roy, 138 Wn.2d 561, 573, 980 P.2d 1234 (1999). We first consider whether substantial evidence supports the findings; if it does, we consider whether the findings support the conclusions of law. Landmark, 138 Wn.2d at 573. Where the burden of proof is by clear, cogent, and convincing evidence, evidence is substantial only if it makes 'highly probable' the court's findings. In re Marriage of Schweitzer, 132 Wn.2d 318, 329, 937 P.2d 1062 (1997) (quoting In re Det. of LaBelle, 107 Wn.2d 196, 209, 728 P.2d 138 (1986)).
Trial courts may reform an instrument if clear, cogent, and convincing evidence shows a mutual mistake. Wilhelm v. Beyersdorf, 100 Wn. App. 836, 843, 999 P.2d 54 (2000). A mutual mistake exists if the parties have the same intent at the time of the transaction and the signed writing does not express that intent. Wilhelm, 100 Wn. App. at 843. A bona fide purchaser of land who has no actual or constructive knowledge of an easement generally takes title free of the easement's burden. Wilhelm, 100 Wn. App. at 846 (citing Crescent Harbor Water Co. v. Lyseng, 51 Wn. App. 337, 346, 753 P.2d 555 (1988)). The court may not reform an agreement if reformation will unfairly affect innocent third parties. Asotin County Port Dist. v. Clarkston Comty. Corp., 2 Wn. App. 1007, 1011, 472 P.2d 554 (1970) (quoting Leonard v. Wash. Employers, Inc., 77 Wn.2d 271, 279, 461 P.2d 538 (1969)).
Kathleen Purvis seems to argue that although she knew of the easement location problem before she purchased the property, she is nonetheless an innocent purchaser because she tried to ensure that the easement would not run down the middle of her property before she purchased it and the Old Whitely Road location is a severe detriment. We disagree.
Purvis discovered a discrepancy between Old Whitely Road and the recorded easement the first time she visited the property and when she reviewed a copy of the recorded version of the Wright Easement Agreement before making their first offer. In addition, Purvis knew that she was buying into a dispute. She talked with two lawyers about the easement location problem. She also talked with the upland owners and knew they claimed the Old Whitely Road location and were not willing to abandon the claim. Thus, substantial evidence supports the trial court's finding that Kathleen Purvis was not an innocent purchaser.
And Purvis does not challenge the trial court's finding that, '[a]t the time the [upland owners] signed the Wright Easement, they believed the instrument described the location of Old Whitely Road. The [upland owners] intended that the instrument memorialize their rights to use the Old Whitely Road easement to the beach and sand spit.' Clerk's Papers (CP) at 871. This finding is therefore a verity. Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 808, 828 P.2d 549 (1992). Thus, the mutual mistake issue turns on whether the evidence shows that Ingraham had the same intent when he signed the Wright Easement Agreement.
Purvis does challenge finding of fact 22, which found that the upland owners thought the Wright Easement Agreement, after it was recorded with Exhibit F attached, described Old Whitely Road as their easement. But she challenges it only to the extent it found Ingraham intended the agreement to convey an easement along the existing pathway, i.e., Old Whitely Road.
The thrust of Purvis's argument is that Ingraham could not have shared the upland owners' intent that the Wright Easement Agreement memorialized their right to use the Old Whitely Road because Ingraham had previously agreed to move the easement to Lot B's northern border during the Runge-Woods negotiations.
Exhibit F to the Wright Easement Agreement, which depicted the proposed relocation of the easement, was not attached at the time the upland owners and Ingraham signed it. The 'Use of the Access' paragraph to the agreement described the easement as running 'from the northernmost point of the common boundary between [Lots A and B] and heading in an easterly and then southerly direction, the access shall be natural and a pedestrian walkway.' Exhibit 10. The trial court found that this description and Exhibit F described an easement different from Old Whitely Road but did approximate its location and shape.
Ingraham testified he did not read the agreement carefully and he 'wanted [the upland owners] to have what they wanted and I assumed they knew what they wanted.' RP (December 17, 2001) at 1556. As the trial court orally ruled, 'Ingraham thought the [easement's] location was chosen by the [upland owners], and [the upland owners] thought the location was the existing easement.' RP (December 21, 2001) at 6.
The gist of this testimony is that Ingraham was agreeable to whatever location the upland owners wanted. Although other evidence suggests that Ingraham may have believed that the Wright Easement Agreement described the northern boundary easement location, this credibility issue was for the trial judge to resolve. And the trial judge was entitled to accept Ingraham's testimony as to his intent over his apparently inconsistent statements before trial. Further, it is for the trial court to weigh the persuasive force of Ingraham's testimony. Having accepted Ingraham's explanation of his intent, the trial court could find it sufficiently persuasive to satisfy the clear, cogent, and convincing standard. Thus, substantial evidence supports the trial court's finding that the upland owners and Ingraham shared the same intent at the time they signed the Wright Easement Agreement.
Ingraham's later negotiations with Runge and Woods and his addendum statement that he intended the easement to be located to the north when he granted it.
Purvis cross-examined Ingraham extensively about the inconsistencies in his statements.
II. Value of the Purvis Property
Purvis argues that the trial court erred in finding that the lot's market value was $80,000 and that the reformed easement did not diminish it.
The trial court found that the best evidence of Lot B's fair market value 'as is' was $80,000. CP at 875. This finding was based on a December 1997 offer in that amount from a neighbor, Melvin Robbins. Robbins had no plans to develop the property; he wanted it for a greenbelt next to his property. But Edward Greer, a certified real estate appraiser, testified that the location of the easement might have a limited, but not measurable, impact on the property's value, provided that the owner could locate utilities and have a building site sufficient for his purposes. And the trial court found that Purvis had installed a well and had an approved septic design. Sufficient evidence supports the trial court's finding that the reformed easement did not diminish Lot B's value.
III. Warranty to Defend Title
Ingraham cross appeals the trial court's conclusion that he breached the statutory warranty to defend title. He makes a lengthy argument concerning a general breach of the warranties in a statutory warranty deed. But the trial court concluded only that he breached the warranty to defend title and awarded Purvis $11,500 in attorney fees and costs. Ingraham argues the trial court erred because Purvis failed to tender defense of title.
A grantor conveying land by a statutory warranty deed makes five covenants against title defects:
(1) that the grantor was seised of an estate in fee simple (warranty of seisin); (2) that he had a good right to convey that estate (warranty of right to convey); (3) that title was free of encumbrances (warranty against encumbrances); (4) that the grantee, his heirs and assigns, will have quiet possession (warranty of quiet possession); and (5) that the grantor will defend the grantee's title (warranty to defend).
Mastro v. Kumakichi Corp., 90 Wn. App. 157, 162, 951 P.2d 817 (1998) (quoting 17 William B. Stoebuck, Washington Practice, Real Estate: Property Law sec. 7.2, at 447 (1995)).
The warranty to defend title is a future covenant that no lawful, outstanding claims against the property exist. Mastro, 90 Wn. App. at 164 (citing 6A Richard R. Powell, Powell on Real Property sec. 900[2][d], [e] (Patrick J. Rohan ed., 1991)). The breach of this warranty occurs only if there is an actual or constructive eviction under paramount title. Mastro, 90 Wn. App. at 164. As a result, a third party's claim of superior right is usually established in an action between the grantee and the third party. Mastro, 90 Wn. App. at 164.
To recover under the warranty to defend, the grantee must tender the defense to the grantor. Mastro, 90 Wn. App. at 164. Specifically, the grantee must notify the grantor (1) of the pending action; (2) that if liability is found, the grantee will look to the grantor for indemnity; (3) that the notice constitutes a formal tender of the right to defend; and (4) if the grantor refuses to defend, it will be bound to the factual determination in the original action in the subsequent litigation between them. Mastro, 90 Wn. App. at 164-65 (quoting Dixon v. Fiat-Roosevelt Motors, Inc., 8 Wn. App. 689, 692-93, 509 P.2d 86 (1973)).
The trial court concluded that although Purvis did not tender defense to Ingraham, she did not prejudice Ingraham because he had notice of and participated in the lawsuit and because Purvis's defense was a cross claim against him.
We agree that Purvis's failure to tender defense did not prejudice Ingraham. Ingraham had notice of the action: He was named as a co-defendant in the upland owners' quiet title action. The cross claims put Ingraham on notice that Purvis would look to him for damages. Because he actively participated in the lawsuit, Ingraham was bound by the trial court's findings and conclusions.
And Ingraham did not defend Purvis's title during the trial. Instead, he took the position that he and the upland owners were mutually mistaken as to the easement location described in the Wright Easement Agreement; accordingly, he agreed with the upland owners that the agreement should be reformed.
IV. December 1997 Addendum
Purvis argues that the trial court erred when it held that Ingraham did not breach the 1997 addendum. Under the addendum, he confirmed that the easement in the Wright Easement Agreement was located along the northern border of Lot B and warranted that he intended to move the easement to that location.
In its oral ruling, the trial court explained that it was not finding a breach because Purvis knew that Ingraham had rejected hold harmless and indemnity language in a draft version of the addendum and because the addendum affirmed facts, not the actual location of the easement, and 'confirms what the recorded Wright easement says, but it does not identify where the easement actually is.' RP (December 21, 2001) at 21. Under the addendum, Ingraham 'confirm[ed]' that the 'beach access easement granted to [upland owners] by [the recorded Wright Easement Agreement] is located along the East side of LOT A and then along the North boundary of LOT B as shown on the Map (Exhibit F) and not in its present location.' Exhibit 43.
The trial court was correct. Ingraham confirmed the location of the easement he granted the upland owners under the Wright Easement Agreement and that this location was different than the easement's present location, i.e., Old Whitely Road. This is a statement of fact, not a warranty or promise as to the easement's actual location at the time he signed the addendum.
Purvis argues, however, that Ingraham breached the addendum by failing to testify that he intended to relocate the easement to the northern boundary of Lot B. She is correct that Ingraham did not support the northern location of the easement at trial. But the trial court found that Ingraham breached the warranty deed and awarded Purvis attorney fees for the breach. The breach centered on the upland owners' successful claim that the easement should be located along the Old Whitely Road the same claim that forms the basis of Ingraham's breach of the addendum. If Ingraham had testified as he promised in the addendum, Purvis likely would have prevailed on the reformation issue. He did not and Purvis lost the reformation issue. But the trial court held that she was not damaged by the reformed easement location. In either event, Purvis's only loss was the attorney fees she incurred in defending against the reformation, and the trial court awarded those. She has not shown that her fees were greater because the trial court found a statutory warranty deed breach rather than an addendum breach.
V. Purvis's Attorney Fees Claim
Purvis argues that the trial court erred when it awarded her only $11,500 in attorney fees and costs, rather than the $38,235.27 she sought. She claims she is entitled to the full fees in connection with Ingraham's failure to defend title.
The trial court awarded Purvis the fees and costs she incurred for defending against the upland owners' lawsuit but not for asserting her claims against Ingraham. The trial court reduced Purvis's award for two reasons: (1) the amount in controversy, and (2) half of the fees were incurred in pursuing Purvis's claims against Ingraham.
We review an attorney fee award for an abuse of discretion. Smith v. Behr Process Corp., 113 Wn. App. 306, 341, 54 P.3d 665 (2002). Washington courts calculate reasonable attorney fees under the lodestar method. Smith, 113 Wn. App. at 341. Under this method, the court multiplies the reasonable hourly rate by the reasonable number of hours incurred; the court may, in rare instances, adjust it upward or downward at its discretion. Svendsen v. Stock, 143 Wn.2d 546, 559, 23 P.3d 455 (2001). A trial court can consider a variety of factors when determining a reasonable fee, including the amount of potential recovery. Martinez v. City of Tacoma, 81 Wn. App. 228, 240, 914 P.2d 86 (1996) (quoting Blair v. Wash. State Univ., 108 Wn.2d 558, 570, 740 P.2d 1379 (1987)).
Here, the trial court agreed with Purvis's attorney's hourly rate and the number of hours he worked on the case. And the trial court's reduction was based on factors it could properly consider — that about half of the fees had been incurred defending against the upland owners and the amount in controversy or of potential recovery. We find no error in the trial court's calculation of Purvis's attorney fees and costs award for Ingraham's breach of warranty.
VI. Ingraham's Attorney Fee Claim
Ingraham argues that the trial court erred when it concluded that he was not a prevailing party on Purvis's claim for breach of the December 1997 addendum and that it should award him attorney fees incurred in defending against this claim. We have held that Ingraham did breach his promise to testify in support of the northern boundary but that the breach added nothing to Purvis's attorney fees. Because Ingraham breached the addendum, he is not entitled to attorney fees.
VII. Attorney Fees on Appeal
Purvis and the Todds both ask for appellate fees and costs in the general summary or conclusion paragraphs of their opening briefs. Purvis cites RAP 18.1 and RAP 14.4 only in the general conclusion to her reply brief. This is insufficient under RAP 18.1(b), which requires a party to make the request in a dedicated section of a party's opening brief. The Todds' similar request is also insufficient. Therefore, we deny Purvis's and the Todds' request for appellate fees and costs.
Affirmed.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
HUNT, J. and VAN DEREN, J., concur.