Sonja O. Beal & Robert E. Beal, Res/cross-app. v. Richard D. Campbell, App/cross-res. ( 2015 )

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
SONJA 0. BEAL & ROBERT E. BEAL, No. 72919-5-1
wife and husband, and their heirs,
successors, and assigns, en
O
o
Respondents/Cross-Appellants,
DIVISION ONE fN-1
v.
JAMES C. LOPEZ and TESSA B.
FRANCIS, husband and wife, and their UNPUBLISHED OPINION
heirs, successors, and assigns;
R CHARD D. CAMPBELL and
REBECCA LEE MARCY, husband and
Wife; and ALL OTHER PERSONS OR
PARTIES UNKNOWN CLAIMING ANY
R GHT, TITLE ESTATE, LIEN OR
INTEREST IN THE REAL ESTATE
DESCRIBED IN THE COMPLAINT,
Appellants/Cross-Respondents. FILED: October 12. 2015
Spearman, C.J. — In a dispute between the grantor and grantee of
residential property, the trial court granted summary judgment for the grantee,
finding as a matter of law that the grantor had breached the covenant of seisin,
the covenant of quiet possession, and the covenant to defend. At trial, the court
awarded the grantee damages for lost property and attorney fees incurred
defending title. The grantor appeals the trial court's decision granting summary
judgment to the grantee on the breach ofwarranty issue. Both parties appeal the
awards of damages and attorney fees. Finding no error, we affirm.
No. 72919-5-1/2
FACTS
Richard D. Campbell and his wife, Rebecca Lee Marcy (collectively
"Campbell"), bought a 1.42 acre residential property on Vashon Island at a
trustee sale in May 2011. In November 2011, Campbell sold the property to
Sonja and Robert Beal ("Beal") by statutory warranty deed. In March 2013, Beal
had the property surveyed and staked the boundaries in preparation for building
a fence.
Beal's neighbors to the south, James C. Lopez and Tessa B. Francis
("Lopez"), objected and told Beal to stay off the land. Lopez asserted that an
existing fence, located about 50 feet north of Beal's survey markers, had been
erected in 1998 and had been treated as the property boundary since that time.
Lopez retained an attorney who informed Beal that Lopez intended to take title to
the property by adverse possession. Lopez's counsel sent Beal a statement from
Lopez's predecessor in interest confirming that he had erected the fence in 1998
and had continuously used and maintained the disputed land until selling it to
L^pez in 2007.
Beal retained an attorney who tendered defense to Campbell on March
27, 2013, pursuant to the covenant to defend included in a statutory warranty
d«>ed under RCW 64.04.030. Beal's attorney informed Campbell that a potential
defense to adverse possession would soon be barred by the statute of
limitations, and urged Campbell to retain counsel in a timely manner. Campbell
stated that he accepted the tender of defense. He communicated with Beal and
Beal's attorney, sought information about Lopez's claim and possible defenses,
No. 72919-5-1/3
and proposed possible courses of action. Campbell also stated that he did not
agree to pay damages to Beal for lost property and that he did not agree to pay
for Beal's attorney. Campbell did not retain an attorney and intended to act pro
se defending Beal's title. Campbell urged Beal to settle and stated that he would
only defend title if Lopez instituted legal proceedings, but not if Beal filed to quiet
tit
In September 2013, Beal filed a complaint against Lopez to quiet title and
adainst Campbell for breach of warranty. Lopez counterclaimed for adverse
possession. Campbell, acting pro se, filed a motion for summary judgment asking
the court to absolve him of any obligation to defend title or pay legal costs. The
trial court denied this motion. Lopez filed a motion for summary judgment on the
aqverse possession claim, which the court also denied.1
Beal and Campbell entered into a settlement agreement with Lopez and
ah agreed judgment quieting title in Lopez was entered on March 25, 2014.
Campbell and Beal filed cross motions for summary judgment on the breach of
warranty claim. The court granted partial summary judgment to Beal, finding as a
matter of law that Campbell had breached the covenant of seisin, the covenant of
qijjiet possession, and the covenant to defend.
The remaining issue at trial was damages. Beal offered the testimony of
arli appraiser who valued the lost property at $2.02 per square foot for a total of
1 Campbell and Beal both filed briefs in opposition to Lopez's motion for summary
judgment. Campbell, acting pro se, asserted that Lopez had not met his burden of proof. Beal
argued that summary judgment was premature and requested more time for discovery.
No. 72919-5-1/4
$18,446.52. Campbell testified that based on his experience as a real estate
broker and investor, the value of the land was about $3,000 total or $0.33 per
square foot. The court found the appraiser to be more credible and more
persuasive than Campbell, and awarded $18,446.52 in damages for the lost
property. The court also found that all of Beal's attorney fees from the time Beal
tendered defense to Campbell on March 27, 2013, until the agreed judgment was
entered on March 25, 2014, were incurred defending title and constituted
damages for Campbell's breach of the warranty to defend. The court awarded
Beal $21,310 in attorneys' fees.
Campbell appeals the grant of summary judgment to Beal on the breach
of warranty issue. Campbell and Beal both appeal the awards of damages and
attorney fees.
DISCUSSION
Breach of Warranty2
This court reviews a summary judgment order de novo. Camicia v.
Hbward S. Wright Constr. Co.. 179 Wash. 2d 684, 693, 317 P.3d 987 (2014).
Summary judgment is appropriate if the evidence in the record demonstrates that
there are no genuine issues of material fact and the moving party is entitled to
judgment as a matter of law. CR 56(c); Becker v. Washington State Univ., 165
Wash. App. 235, 245-46, 266 P.3d 893, 899 (2011). The nonmoving party may not
rely on speculation, but must "set forth specific facts that sufficiently rebut the
2 RCW 64.04.030 provides that every conveyance by statutory warranty deed includes
thi covenants of seisin, quiet possession and the duty to defend title.
No. 72919-5-1/5
moving party's contentions and disclose that a genuine issue as to a material fact
exists." Seven Gables Corp. v. MGM/UA Entm't Co., 106 Wn.2d 1,13, 721 P.2d
1 (1986) (citing Dwinell's Cent. Neon v. Cosmopolitan Chinook Hotel. 21 Wn.
App. 929, 587 P.2d 191 (1978)). We consider all facts in the light most favorable
to the nonmoving party and review all questions of law de novo. Erickson v.
Chase, 156 Wash. App. 151, 156,231 P.3d 1261 (2010).
The covenant of seisin guarantees that the grantor has the possession,
the right of possession, and the complete legal title to the property. Double L
Properties, Inc. v. Crandall. 51 Wash. App. 149, 153, 751 P.2d 1208 (1988). A
grantor "breaches the covenant of seisin if, at the time of sale, an adverse
claimant is actually in possession of all or a portion of the land conveyed,
whether his claim is rightful or wrongful." ]d. at 156.
Campbell asserts that the trial court erred in finding that he had breached
the covenant of seisin because Beal failed to provide sufficient evidence that
Lopez was in possession of the disputed portion at the time he bought the
property. Beal submitted declarations from Lopez and Welch stating that they
treated the existing fence as the property line and that Lopez was in possession
of the disputed portion of land at the time Campbell conveyed the property.
Campbell did not submit evidence to rebut Beal's affidavits. All of the evidence
before the trial court supported Beal's motion. The trial court did not err in
granting summary judgment to Beal on the issue of breach of seisin.
Campbell next argues that the trial court erred in its analysis of the
covenant of quiet possession. The covenant of quiet possession guarantees that
No. 72919-5-1/6
the grantee "shall not, by force of paramount title, be evicted from the land or
deprived of its possession." Foley v. Smith, 14 Wash. App. 285, 290-91, 539 P.2d
874 (1975) (citing 20 Am.Jur.2d Covenants, Conditions, & Restrictions § 50
(1965)). Paramount title may be established by evidence of adverse possession
for the statutory period of time. Hovt v. Rothe, 95 Wash. 369, 373, 163 P. 925
(1917). Eviction may be actual or constructive. ]cL A constructive eviction occurs
when a third party is in possession of the property at the time of conveyance and
refuses to quit upon demand. Id
Campbell argues that summary judgment was improper because Beal was
not evicted from the land, Lopez did not have paramount title, and Campbell did
not have the opportunity to defend. His arguments are without merit. The
undisputed evidence before the court established that Lopez was in possession
of the disputed land, refused to quit, and had adversely possessed the land for
the statutory period of time.
Campbell relies on Hovt to assert that Lopez's demand that Beal stay off
the disputed land did not work a constructive eviction. His reliance is misplaced.
The Hovt court held that possession by an adverse possessor operates as a
constructive eviction. Hovt, 95 Wash, at 373-374. Campbell's argument that
Lopez did not have paramount title is similarly unfounded. It is well settled that
adverse possession for the statutory period of time establishes paramount title.
6
No. 72919-5-1/7
ld^ at 373.3 Campbell also relies on Mellorv. Chamberlin. 100 Wash. 2d 643, 673
>.2d 610 (1983) to argue that summary judgment for breach of the covenant of
quiet possession was improper because he did not have a fair opportunity to
defend. This argument, too, is unavailing because Mellor addresses, not the
covenant of quiet possession, but the covenant to defend. ]d. at 648-649. The
trial court did not err in granting summary judgment to Beal on the issue of
brfeach of the covenant of quiet possession.
Campbell next argues that the trial court erred in granting summary
judgment to Beal on the issue of the covenant to defend. The covenant to defend
guarantees that "no lawful, outstanding claims against the property exist."
Erickson, 156 Wash. App. at 158 (citing Masto v. Kumakichi Corp., 90 Wash. App.
157, 164, 951 P.2d 817 (2010)). It further guarantees that the grantor, upon
tender of defense, will provide a good faith defense to title. Edmonson v.
Popchoi, 172 Wash. 2d 272, 283, 256 P.3d 1223 (2011). To establish breach of the
warranty to defend, a grantee must establish (1) that a third party has asserted a
superior right to the property, (2) that the grantee has properly tendered defense
to the grantor, and (3) that the grantor has refused the tender. Erickson, 156 Wn.
Abp. at 158-159.
3 We also reject Campbell's argument that the denial of Lopez's motion for summary
judgment demonstrates that Lopez did not have paramount title. The denial of a motion for
summary judgment does not determine the merits of a claim. See, e.g., Rodin v. O'Beirn, 3 Wn.
App. 327, 332, 474 P.2d 903 (1970) (noting that while the denial of a motion for summary
jdgment is usually grounded upon the presence of a triable issue of fact, it may rest on other
grounds); Johnson v. Rothstein. 52 Wash. App. 303, 305-06, 759 P.2d 471 (1988) (stating that the
denial of summary judgment is not a decision that determines the action).
Nb. 72919-5-1/8
Campbell disputes each of these elements and argues that Lopez did not
h^ve superior title, Beal did not properly tender defense, and Campbell did not
refuse the tender. His arguments are without merit. Beal established through
evidence that Lopez had adversely possessed the property for the statutory
period of time, that Beal repeatedly tendered defense to Campbell, and that,
although Campbell stated that he accepted tender, he placed numerous
conditions on his acceptance and did not retain an attorney to defend Beal's title.
Campbell failed to refute Beal's evidence.4 We hold that the trial court did not err
in finding as a matter of law that Campbell breached the covenant to defend.
Damages
Both parties appeal the award of damages. The reasonableness of an
avvard for damages is a question of fact, which this court reviews for abuse of
discretion. Harmony at Madrona Park Owners Ass'n v. Madison Harmony Dev.,
Inc., 143 Wash. App. 345, 357-58, 177 P.3d 755 (2008). An appellate court
generally will "not disturb an award of damages made by the fact finder unless it
IS outside the range of substantial evidence in the record.. . ." Harmony at
Madrona Park Owners Ass'n v. Madison Harmony Dev.. Inc., 160 Wash. App. 728,
737, 253 P.3d 101 (2011) (guoting Mason v. Mortgage Am., Inc., 114Wn. 2d
842, 850, 792 P.2d 142 (1990)). A trial court "necessarily abuses its discretion if
4 Campbell argues that Beal's tenderofdefense was ineffective because it was made
bdfore litigation commenced. He also argues that he acted pro se in defending Beal's title and
was not obligated to retain an attorney. He provides no legal support for these arguments and we
accordingly reject them.
8
No. 72919-5-1/9
it awards damages based upon an improper method of measuring damages."
Farmer v. Farmer. 172 Wash. 2d 616, 625, 259 P.3d 256 (2011).
Damages for lost property represent the difference between the value of
thb property as represented and the value of the property actually conveyed.
Johnson v. Brado, 56 Wash. App. 163, 783 P.2d 92 (1989). Campbell argues that
the trial court relied on an improper method to calculate damages, and thus
necessarily abused its discretion. His argument is without merit.
At trial, Beal presented the testimony of a licensed real estate appraiser
with 18 years' experience in the Vashon Island real estate market. In valuing the
property, the appraiser performed a visual inspection, researched comparable
properties, and assessed the value of the land without improvements to arrive at
'site value," or value of the land apart from any structures on it. Verbatim
Report of Proceedings (VRP) at 39. She used the site value to determine the
land value per square foot and, thus, the value of the lost property. The appraiser
valued the lost property at $18,446.52. Campbell testified that in his experience
as. an investor and licensed real estate broker, the sale price of the property
would have decreased by about $3,000 if it had been sold without the portion of
the land claimed by Lopez. The trial court found the appraiser more credible and
more persuasive than Campbell and awarded $18,446.52 in lost property
damages.
On appeal, Campbell asserts that lost property value can only be
determined in reference to the existing improvements on the lot, not by assessing
the value of an improved lot as though it were vacant. Although Campbell cites to
No. 72919-5-1/10
numerous cases, these affirm only that damages for lost property represent the
difference between the market value of the property as represented and the
rrjarket value of the property actually conveyed. See, e.g., Johnson, 56 Wash. App.
at 166; Friebe v. Supancheck. 98 Wash. App. 260, 269, 992 P.2d 1014 (1999);
Hburdinger v. Till. 1 Wash. 2d 335, 339, 96 P.2d 262 (1939). Campbell does not
provide support for his assertion that the appraiser's method of determining
market value was improper.5 We hold that the trial court did not rely on an
injiproper method to calculate damages.
Beal also challenges the amount of the lost property award. Beal contends
that the trial court erred when it held that Beal was entitled to interest on the lost
prjoperty only from the date of the oral ruling when the lost property damages
became liquidated.6 Beal argues that Edmonson establishes that grantees
should be awarded interest on the value of the lost property from the time of
conveyance. Edmonson does not support this argument because the award of
lost property damages was not at issue in that case. Id. at 277. We reject Beal's
argument as unfounded.
5 In discussing appropriate methods to calculate lost property damages, the Friebe court
cited to Sahalee Country Club, Inc. v. State Bd. of Tax Appeals. Friebe, 98 Wash. App. at 269
(citing Sahalee Country Club. Inc. v. State Bd. of Tax Appeals. 108 Wash. 2d 26, 735 P.2d 1320
(H387)). In Sahalee, the Court specifically recognized three appraisal methods approved by the
American Appraisal Institute. Sahalee, 108 Wash. 2d at 33. One of these, the cost method, involves
estimating the value of the land as if vacant. J<1
6 Prejudgment interest is allowed as a matter of right when the claim is liquidated.
Colonial Imports v. Carlton Northwest. Inc.. 83Wn. App. 229, 245, 921 P.2d 575 (1996). Aclaim
is liquidated when the amount of damages are known with exactness. Prier v. Refrigeration
Engineering Co., 74 Wash. 2d 25, 32, 442 P.2d 621 (1968). Beal does not dispute the trial court's
ru ing that the damages became liquidated on the date of the oral ruling.
10
Nb. 72919-5-1/11
Both parties dispute the award of attorney fees for breach of the covenant
tcj defend. Agrantee may recover as damages those attorney fees incurred
defending title that were proximately caused by the grantor's breach of the
covenant to defend. Edmonson v. Popchoi. 155 Wash. App. 376, 384, 228 P.3d
780 (2010) affd, 172 Wash. 2d 272, 256 P.3d 1223 (2011). See also Mastro. 90
Wash. App. at 166-67 (analyzing whether breach of the covenant to defend was the
proximate cause of attorney fees). Attorney fees incurred in a suit brought by the
grantee against the grantor for breach of warranty are not recoverable. Mellor.
100 Wash. 2d at 649-650. Where attorney fees are recoverable for only some part
of a party's claims, the trial court must generally segregate the recoverable from
the nonrecoverable fees. Loeffelholz v. Citizens for Leaders with Ethics and
Accountability Now (CLEAN.). 119 Wash. App. 665, 691, 82 P.3d 1199 (2004).
The reasonableness of an award of attorney fees is reviewed for abuse of
discretion, jd. at 690.
Campbell argues that the trial court erred because it failed to segregate
\tie attorney fees Beal incurred in his suit against Campbell from those he
incurred in his suit against Lopez. We reject this argument. The trial court
examined the attorney fees incurred by Beal and heard testimony from Beal,
Beal's attorney, and Campbell concerning the fees. The court found that
Campbell's conditional and ineffective responses to the tender of defense forced
Beal to join his complaint against Campbell to his complaint against Lopez. The
trial court thus found that all of Beal's attorney fees until the settlement were
incurred defending title, and that Campbell's breach of the covenant to defend
11
No. 72919-5-1/12
was the proximate cause of those fees. The evidence supports the trial court's
decision.
Beal also appeals the award of attorney fees. Beal argues that the trial
cburt erred in awarding him only those attorney fees incurred until the settlement
with Lopez. Beal contends that he should have received, in addition, the attorney
fees he incurred after the settlement with Lopez until the grant of summary
judgment against Campbell either as damages for Campbell's breach of the
covenant to defend or in equity.
Beal's arguments are unavailing. A grantee may recover from a grantor
who has breached the covenant to defend only those attorney fees incurred
defending title. Edmonson, 155 Wash. App. at 384; Mellor. 100 Wash. 2d at 649-650.
Alter settling the adverse possession claim, Beal's further attorney fees were not
incurred in defense of title.7 The additional fees were thus not recoverable as
damages for Campbell's breach of the covenant to defend.
Beal's argument in equity also fails. Equitable indemnity allows recovery of
expenses incurred by an innocent party defending against litigation caused by
the wrongful act of another. Dauphin v. Smith, 42 Wash. App. 491, 494-95, 713
P.2d 116 (1986). It does not provide a means to recover attorney fees incurred in
a separate suit against the wrongdoer. Brock v. Tarrant, 57 Wash. App. 562, 572,
7 Beal argues that the "abnormal nature ofthis case" and Campbell's "extreme bad faith"
justify finding that Beal's additional attorney fees were incurred in defense of title and were
proximately caused by Campbell's breach. Brief of Respondent at 39-40. Beal offers no legal
support for this argument. Beal's argument also fails because the trial court expressly found that
Campbell did not act in bad faith.
12
No. 72919-5-1/13
789 P.2d 112 (1990).8 We find no error and affirm the trial court's award for
damages.
Beal also requests attorney fees on appeal under RAP 18.1 and 18.9(a),
asserting that Campbell filed a frivolous appeal. We decline to award fees on
appeal.
Brock, 57 Wash. App. at 572. The innocent party was forced
to defend against the wrongdoer the same issues that he would have had to defend against the
original plaintiff. ]d. Those are not the circumstances presented here.
13