Frank M. Hensley & Marlyce Hansen, Et Ux v. Heritor, Inc ( 2015 )

FILED
COURT OF APPEALS
DIVISION 11
2015 FEB 24
11P4 9: 26
STATE OF WASHINGTON
BY
E9ITy
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
FRANK M. HENSLEY and MARLYCE A. No. 44473 -9 -II
HANSEN, husband and wife,
Appellants, UNPUBLISHED OPINION
v.
HERITOR, INC.; NOELE TIFFANY and
JOHN DOE" TIFFANY; MILLER
UTILITIES, LTD.; G. MILLER, " JANE DOE"
MILLER; the marital community of G.
MILLER and ` JANE DOE" MILLER; and R.
UTILITIES CO.,
Respondents.
BJORGEN, A.C. J. — Frank Hensley and Marlyce Hansen appeal a trial court' s dismissal
of their suit against two entities, Heritor Inc. and Miller Utilities Ltd., that own an interest in the
community water system serving lots they own, as well as against two corporate officers in those
No. 44473 -9 -II
entities.' Hensley and Hansen' s suit alleged that Heritor had breached a duty to provide water
service adequate for reasonable domestic needs and that this breach also constituted a violation
of Washington' s Consumer Protection Act ( CPA), chapter 19. 86 RCW. The trial court granted
Heritor' s motion for dismissal at the end of Hensley and Hansen' s presentation of their case- in -
chief. Because substantial evidence supports the trial court' s findings of fact related to the
dismissal, which in turn support its legal conclusion that dismissal is warranted under CR
41( b)( 3), we affirm.
FACTS
In 1996 Pioneer Western Investments Associates, a corporation of which Hensley was
president and in which he and Hansen owned a half interest, loaned money secured by title to a
number of lots in a development called Ripplewood. The borrower defaulted on the loan and, to
avoid foreclosure, conveyed the lots by quitclaim deed to Pioneer Western in 1999.
Hensley and Hansen later purchased the remaining half of Pioneer Western. After doing
so, Hensley assigned Pioneer Western' s only asset, title to six lots in Ripplewood, to himself and
Hansen by quitclaim deed.
Ripplewood' s recorded plat contains a servitude stating that:
Seller agrees to install a water system upon sale of 50% of the lots, or within 2
years' time for the use of buyer and buyer agrees to use said water system when it
is installed and approved by the Public Health Department of the State of
Washington. Buyer agrees to pay to Seller promptly upon completion of his
hookup a charge therefore not to exceed $ 85. 00. From the time water is delivered
1 We refer to the defendants collectively as Heritor unless necessary to identify a specific
defendant. Hensley and Hansen' s complaint alleged that Miller Utilities Ltd. (Miller Utilities)
was the record owner of the lot containing the community water system' s well and pump house
and that Heritor Inc. " claim[ ed] ownership of the water system." Clerk' s Papers ( CP) at 30, 32.
While admitting that Heritor Inc. claimed an ownership interest in the water system and that
Miller Utilities was the record owner of the relevant lot, the defendants denied that Miller
Utilities was the owner -in -fact of the lot.
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to Buyer' s lot by said hookup, Buyer agrees to pay a monthly use charge based on
the rates established by the Washington State Public Services Commission.
Clerk' s Papers ( CP) at 39.
Ripplewood' s seller installed the water system required by the servitude in or before
1971, when the Washington State Department of Health (Department) approved it. The water
system includes trunk lines that cover the entire development and the necessary meters and
valves to enable each lot to connect. Nineteen of Ripplewood' s lots connected to the system
before the year 2000. The lots Hensley and Hansen now own were not among these; neither
Hensley and Hansen nor their predecessors -in-interest ever requested connection.
In 2000 the Department changed the regulations governing Ripplewood' s water system.
Although the system operates legally under the new rules for its current number of connections,
it must make capital improvements to increase capacity before it may add new connections.
However, the required capital improvements are not all -or- nothing. Ripplewood' s water utility
may make improvements to add a limited number of connections, rather than having to make the
necessary improvements to serve all of its lots before adding any new connections.
After the Department changed the regulations in 2000, Hensley and Hansen attempted to
sell their lots, but failed to do so. Attributing this failure to the lack of water service to the lots,
they filed suit against Heritor. The suit asserted two causes of action relevant to this appeal: ( 1)
breach of the " duty to provide water service to meet reasonable domestic needs for the lots
owned by the plaintiffs," and ( 2) violations of the CPA arising from the breach of the duty to
provide water service. 2 CP at 33.
2
Hensley and Hansen also alleged that Heritor had recorded a frivolous lien against their lots.
They produced no evidence to support the allegation, the trial court dismissed it, and they do not
claim on appeal that the trial court erred by doing so.
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No. 44473 -9 -II
At trial, Hensley testified that the Department' s changed regulations had resulted in a
moratorium on new connections to Ripplewood' s water system and that the lack of water service
to his and Hansen' s lots meant that any buyer could not get a building permit. Hensley opined
that this lack of water service halved the value of each lot to approximately $ 5, 000. Hensley also
admitted that he had never requested water service from Ripplewood' s utility.
Heritor moved for dismissal under CR 41( b)( 3) at the end of Hensley and Hansen' s case-
in- chief In doing so, it argued that Hensley and Hansen failed to show breach of any duty
because they had never requested service or paid the necessary connection fees. They also
contended that without any breach of the duty to provide water service, there was no unfair or
deceptive act that would create a CPA violation. The trial court granted this motion after finding
that
1. The Plaintiffs['] Second Amended Complaint relied upon a Declaration
contained in the Plat of Ripplewood Tracts ... regarding providing a water system
for the Tracts.
2. A water system was installed and approved by the State Department of
Public Health in[ ] 1971. However Plaintiff testified that he does not want water to
his six lots and has not requested to be hooked up to water. Since Plaintiffs have
not hooked up asby the Declaration,[]
required Plaintiffs[']
claim that the
Defendants have breached their duty to provide water service to meet reasonable
domestic needs to Plaintiffs' lots cannot be sustained.
4. Plaintiffs[,] having failed to present evidence that the Defendants did not
provide water service to Plaintiffs['] lots, have failed to support their claim that the
Defendants are in violation of Chapter RCW 1986.
CPat5.
Hensley and Hansen now appeal the dismissal of their claims.
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ANALYSIS
I. STANDARD OF REVIEW
Under CR 41( b)( 3), 3 in a bench trial the court " may grant a motion to dismiss at the
close of the plaintiff' s case either as a matter of law or a matter of fact." Commonwealth Real
Estate Servs. v. Padilla, 149 Wn. App. 757, 762, 205 P.3d 937 ( 2009). The parties here agree
that the trial court dismissed Hensley and Hansen' s claims as a matter of fact. The trial court' s
entry of findings of fact " strongly suggests" that they are correct. In re Dependency ofSchermer,
161 Wash. 2d 927; 940, 169 P.3d 452 ( 2007). We therefore agree with the parties and, accordingly,
review " whether substantial evidence supports the trial court' s findings and whether the findings
support its conclusions of law." Padilla, 149 Wash. App. at 762 ( citing Schermer, 161 Wash. 2d at
939 -40).
II. DUTY TO PROVIDE WATER SERVICE
Hensley and Hansen contend that the trial court erred by finding that Heritor did not
breach a duty to provide water service under either the plat agreement or state law, arguing that
the evidence of the moratorium suffices to show the breach.4 Heritor, contends that the trial court
properly found no breach, because Hensley and Hansen never requested water service. We agree
with Heritor and affirm the trial court.
3 CR 41( b)( 3) states, in pertinent part:
After the plaintiff, in an action tried by the court without a jury, has completed the
presentation of his evidence, the defendant, without waiving his right to offer
evidence in the event the motion is not granted, may move for a dismissal on the
ground that upon the facts and the law the plaintiff has shown no right to relief.
The court as trier of the facts may then determine them and render judgment against
the plaintiff or may decline to render any judgment until the close of all the
evidence.
4 The claim by Hensley and Hansen that the two corporate officers are individually liable is
derivative of the breach of duty claim. Our affirmance of the trial court' s conclusion that no
breach of duty occurred is therefore determinative of these claims.
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No. 44473 -9 -II
A. Duty Under the Plat
Hensley and Hansen first contend that Heritor breached a duty to provide water service
arising from the servitude in Ripplewood' s recorded plat. Heritor contends that it owed no duty
because Hensley and Hansen never requested water service. This issue turns on when the duty to
provide water service imposed by the plat arose. If, as Hensley and Hansen claim, Ripplewood' s
utility had a duty to provide service as soon as the water system was installed and approved,
Heritor is in breach because Hensley and Hansen cannot currently get service due to the
moratorium. If, as Heritor claims, the duty arises upon a request for service, there was no breach
because a condition precedent to breach, a request for service, never occurred here. Based on
language in the plat, we hold that the duty to provide water service arose upon a request for
service.
When interpreting a servitude, we attempt to determine the intent of the parties. Riss v.
Angel, 131 Wash. 2d 612, 621, 934 P.2d 669 ( 1997). We give the servitude' s words their ordinary
meanings and construe the document in its entirety. Riss, 131 Wash. 2d at 621.
Read in its entirety, the servitude did not impose an immediate duty on Ripplewood' s
utility to provide water to Ripplewood' s lots. The first sentence of the servitude obligated
Ripplewood' s seller to build a water system and the buyers of lots in Ripplewood to use the
system after its approval by the Department. The seller complied with this duty by installing the
trunk lines and the meters and valves necessary for individual connections. The remainder of the
servitude, however, distinguishes installation and approval of the system from the actual
provision of service. The second sentence obligates buyers to pay connection fees after
hookup" rather than after installation and approval of the overall system. CP at 39. The third
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No. 44473 -9 -II
sentence requires buyers to pay monthly service charges after " water is delivered," which, again,
is distinguished from installation and approval. CP at 39.
By distinguishing installation and approval of the system from the connection of
customers, the servitude conditions the utility' s duty to provide service to individual lots on
something besides the initial installation and approval of the system. Generally, that something
else is a request for service by the customer. N. States Power Co. v. Nat' l Gas Co., 232 Wis. 2d
541, 549, 606 N.W.2d 613 ( 1999) ( quoting 64 AM. JuR. 2D Public Utilities § 16 ( 1972)). The
servitude here appears to implicitly follow this rule: water service begins at some time after
installation and approval of the system, and customers connect by requesting to do so. See N
States Power Co., 232 Wis. 2d at 549 ( quoting 64 AM. JuR. 2D Public Utilities § 16 ( 1972)).
Reading the servitude to require a request for service before any duty to provide service
exists gives effect to the intent of the parties in agreeing to the servitude. The servitude is a
mutual exchange of promises. Ripplewood' s seller agreed to build a water system for use of the
buyers of lots in Ripplewood. This gave Ripplewood' s buyers access to water when they chose
to develop their lots. Ripplewood' s buyers promised to use the water system to the exclusion of
others, but this duty to use the system is triggered only when the lot owners need water.5 This
interpretation of the servitude serves the seller' s intent by allowing it to recoup money spent on
the water system without saddling lot buyers with fees they do not want or need, which could
decrease the marketability of Ripplewood' s lots in contravention of the seller' s purposes. This
interpretation of the servitude also serves the buyers' intent by ensuring that lot owners have
access to water service when they want to develop their lots.
5 We note that a large majority of Ripplewood' s lot owners have never requested water service.
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A request for service was thus a condition precedent to any breach by Heritor, and the
trial court found that Hensley and Hansen never made any request for service. See Ross v.
Hardin, 64 Wash. 2d 231, 236, 391 P.2d 526 ( 1964) ( quoting 3A Corbin, Contracts, §§ 631, 632
1960)). Substantial evidence supports this finding, since Hensley repeatedly testified to that
fact. Without the occurrence of the condition precedent, Hensley and Hansen cannot not show a
breach of duty by Heritor. Partlow v. Mathews, 43 Wash. 2d 398, 406, 261 P.2d 394 ( 1953). The
trial court' s conclusion that Hensley and Hansen' s suit should be dismissed thus flows directly
from its finding that Heritor breached no duty.
Hensley and Hansen appear to contend they did not need to request service because doing
would have been futile and ' the law does not require performance of futile acts. "' Music v.
United Ins. Co. ofAm., 59 Wash. 2d 765, 768 -69, 370 P.2d 603 ( 1962) ( quoting Mass. Bonding &
Ins. Co. v. Springsteen, 1955 OK 142, 283 P.2d 819, 823 ( 1955)). However, the record contains
evidence showing that a request for service would not be, futile, because the connection fees for
Hensley and Hansen' s lots would pay for the capital improvements necessary to lift the
moratorium to the extent needed to serve their lots. Evidence at trial also showed that utilities
commonly use connection fees like the ones Hensley and Hansen would owe to pay for the costs
of complying with changed regulations. We therefore reject Hensley and Hansen' s argument
that they were excused from requesting service because of the futility of doing so.
Absent a request for service from Hensley and Hansen, the servitude unposed no duty on
Heritor to supply water to their lots. Without a duty to provide service, dismissal under CR
41( b)( 3) was appropriate.
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B. Duty Under State Law
Hensley and Hansen next argue that Heritor owed a duty to provide water to their lots
under state law. Hensley and Hansen claim that this duty arose from RCW 70. 119A.060( 1)( a),
which provides that "[ p] ublic water systems shall comply with all applicable federal, state, and
local rules." One of Washington' s rules, WAC 246- 290 -420( 1), requires that "[ a] 11 public water
systems shall provide an adequate quantity and quality of water in a reliable manner at all times
consistent with the requirements of this chapter. "6
Whether RCW 70. 119A.060( 1) and WAC 246- 290 -420( 1) imposed a legal duty on
Heritor to provide water to the subject lots is a question of law, Crowe v. Gaston, 134 Wash. 2d
509, 515, 951 P.2d 1118 ( 1998), turning on our interpretation of those provisions. We interpret
agency regulations just as we interpret statutes. Cobra Roofing Servs. v. Dep' t ofLabor &
Indus., 122 Wn. App. 402, 409, 97 P.3d 17 ( 2004). We attempt to discern and give effect to the
agency' s intent. See Dep' t of Ecology v. Campbell & Gwinn, LLC, 146 Wash. 2d 1, 9 -10, 43 P.3d 4
2002). We discern that intent from the plain meaning imparted by the text of the regulation and
any related regulations. See Campbell & Gwinn, 146 Wash. 2d at 10 -12. Where the provision
remains susceptible to more than one reasonable interpretation after the plain meaning analysis,
it is ambiguous and we turn to extrinsic evidence of the agency' s intent. See Campbell & Gwinn,
146 Wash. 2d at 12.
Chapter 246 -290 WAC makes clear that any duty imposed on public water utilities by
WAC 246- 290 -420( 1) is owed only to consumers of the utility' s services. WAC 246 -290-
001( 1), which defines the purpose and scope of chapter 246 -290 WAC, states that the chapter' s
6 Ripplewood' s water system is a public water system. See WAC 246- 290 -020( 1).
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No. 44473 -9 -II
purpose is to " define basic regulatory requirements and to protect the health of consumers using
public drinking water supplies." Other subsections of WAC 246 -290 -420 also focus on the term
consumer." E.g., WAC 246- 290 -420( 2), ( 5), ( 7), ( 8)( c). Similarly, the statutory purpose of the
State' s regulation of public water systems is to protect consumers' health. RCW 70. 119. 010.
Given the scope of the duty owed under WAC 246 -290 -420( 1), and the trial court' s
finding that Hensley and Hansen had never requested water service, Heritor owed no duty to
provide water service to Hensley and Hansen' s lots. A consumer is " someone who buys goods
or services for personal, family, or household use, with no intention of resale; a natural person
who uses products for personal rather than business purposes." BLACK' S LAW DICTIONARY at
382 ( 10th ed.). Hensley and Hansen never requested water service for their lots, and the record
does not show that they are consuming water supplied to those lots. Therefore, they are not
consumers of Heritor' s water service. For that reason, they cannot claim the benefit of any duty
under WAC 246 -290 -420( 1) and therefore cannot claim a duty under RCW 70. 119A.060( 1).
In addition, Hensley and Hansen' s position would conflict with the purpose of chapter
70. 119 RCW and would raise contradictions in the regulations themselves. As noted, the
purpose of the State' s regulation of public water systems is to protect consumers' health. RCW
70. 119. 010. In service of that purpose, the State determined in 2000 that capital improvements
must be made to the Ripplewood system to increase capacity before any new connections may be
added. To now read another public water system regulation, WAC 246- 290 -420( 1), to impose a
duty on the Ripplewood utility to add new customers in violation of the 2000 order sacrifices
both consistency and service of the public health.
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No. 44473 -9 -I1
For these reasons, state law does not impose a duty on Heritor to provide water service to
Hensley and Hansen' s lots under the present circumstances. The trial court' s dismissal of
Hensley and Hansen' s suit flows from its findings and is consistent with governing law.7
III. THE CPA
Hensley and Hansen contend also that Heritor' s breach of its duty to provide water
service to their lots constituted a violation of the CPA. Their CPA claim thus depends on a
breach of duty by Heritor. Because we hold that Heritor did not breach any duty, the CPA claim
must fail.
IV. ATTORNEY FEES
Hensley and Hansen do not request attorney fees. Heritor seeks reasonable attorney fees,
contending that Hensley' s and Hansen' s appeal is frivolous under RAP 18. 9.
RAP 18. 9 authorizes the award of reasonable attorney fees " as sanctions, terms, or
compensatory damages when the opposing party files a frivolous appellate action." Advocates
for Responsible Dev. v.. W. Wash. Growth Mgmt. Hr' gs Bd., 170 Wash. 2d 577, 580, 245 P.3d 764
2010). An appeal is frivolous within the meaning of RAP 18. 9
if, considering the entire record, the court is convinced that the appeal presents no
debatable issues upon which reasonable minds might differ, and that the appeal is
so devoid of merit that there is no possibility of reversal.
7
Hensley and Hansen contend that dismissal was inappropriate because the trial court never
addressed their statutory and rule -based duty argument. We may sustain the trial court' s
judgment on any grounds " established by the pleadings and supported by the proof." Gross v.
City of Lynnwood, 90 Wash. 2d 395, 401, 583 P.2d 1197 ( 1978). As shown above, the trial court' s
findings support the trial court's dismissal, since under them Heritor owed no duty to provide
service to Hensley and Hansen' s lots.
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Advocates for Responsible Dev., 170 Wash. 2d at 580. We resolve any doubt about the
frivolousness of an appeal in favor of the appellant so as to avoid chilling the exercise of the
right to appeal. Skinner v. Holgate, 141 Wash. App. 840, 858, 173 P.3d 300 ( 2007).
Here, there is no authority on point that would reduce Hensley and Hansen' s argument to
the frivolous, and a person could read the plat agreement in the way they advocate. We hold that
the appeal is not frivolous and decline to award attorney fees.
CONCLUSION
We affirm the trial court' s dismissal of Hensley and Hansen' s complaint.
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 in accordance with RCW 2. 06. 040,
it is so ordered.
4,c.X
We concur:
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