Roger Bel Air v. 1st Security Bank Of Washington ( 2014 )


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  •                                                                             2DMi APR -7 kA S'-l*3
    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
    ROGER BEL AIR and NICK BRINEY,                          No. 69856-7-1
    doing business as BEL AIR & BRINEY
    a Washington general partnership,                       DIVISION ONE
    Appellants,
    UNPUBLISHED OPINION
    1ST SECURITY BANK OF
    WASHINGTON,
    Respondent.                  FILED: April 7, 2014
    Schindler, J. — Bel Air & Briney appeal summary judgment dismissal of the
    breach of contract action against 1st Security Bank of Washington. We affirm.
    FACTS
    Koichi Yagi, his son Peter Yagi, his daughter Kandace Yagi, and her husband
    Richard Furukawa (collectively the Yagis) purchased and jointly owned commercial real
    estate in the Seattle area. The testamentary trust of Koichi's deceased wife Anna also
    held an ownership interest in the properties.1
    On December 17, 2002, Washington Credit Union obtained a default judgment
    against Koichi in the amount of $31,054.72. 1st Security Bank ofWashington (Bank) is
    1We refer to the individual members of the Yagi family by their first names for purposes of clarity
    and mean no disrespect by doing so.
    No. 69856-7-1/2
    the successor in interest to Washington Credit Union. The Bank obtained a judgment
    lien on a six-unit apartment building in SeaTac owned by the Yagis.
    When the local real estate market collapsed, after the Yagis unsuccessfully
    attempted to refinance, they sold several commercial properties at a loss. In August
    2006, the Yagis obtained a loan from Bel Air & Briney (BA&B). BA&B is a general
    partnership owned by Roger Bel Air and Nick Briney. BA&B makes direct commercial
    loans and purchases "discounted contracts." BA&B agreed to loan $200,000 to the
    Yagis for a fee of $10,000.
    The promissory note states the Yagis promise to pay BA&B $210,000 "with
    interest on the unpaid principal balance at the rate of twelve percent (12.0%) per annum
    from the date of closing." The note provides that the loan is payable in installments of
    $2,100 due on the 14th of every month for six months and on February 14, 2007, "the
    unpaid balance of principal with unpaid interest due shall be due and payable in full."
    The note also states that if the Yagis fail to make any payment when due, a 24 percent
    default interest will apply as well as late charges calculated at 10 percent of each late
    payment. The promissory note was secured by a deed of trust on the SeaTac
    apartment building owned by the Yagis.
    The Yagis made six monthly interest payments of $2,100 but were not able to
    pay the balance due on February 14, 2007. BA&B agreed to extend payment of the
    balance due from February 2007 to February 2010. Peter Yagi filed a petition for
    bankruptcy relief in September 2010.
    On October 7, 2010, BA&B filed a complaint against Koichi Yagi, Peter Yagi,
    Kandace Yagi, her spouse Richard Furukawa, and the testamentary trust of Anna Yagi.
    No. 69856-7-1/3
    BA&B alleged the defendants were in default and owed $178,283.79 on the promissory
    note.
    On November 3, BA&B obtained a default judgment against Koichi, Kandace,
    Furukawa, and the testamentary trust in the amount of $183,580.75. Kandace,
    Furukawa, and Koichi filed for bankruptcy on January 6, 2011. Koichi died on
    September 3, 2011. In his will, Koichi named Kandace as the personal representative
    of his estate.
    On January 4, 2012, Briney called the Bank and spoke to Loan Control
    Representative Paula Smith. Briney told Smith that he held a deed of trust on the
    apartment building the Yagis owned and he knew the Bank had a judgment lien
    recorded against the property as a result of the 2002 judgment entered against Koichi.
    Briney told Smith the apartment "was possibly going to foreclosure" and that he "wanted
    to settle the judgment so he would have clear title." At the time, the total amount owed
    on the judgment was $60,790.72. In a letter to Briney dated January 4, Smith offered to
    release the judgment against Koichi if Briney paid $30,000 to the Bank. Smith stated
    that the offer "will remain through May 1, 2012." The letter states, in pertinent part, "1st
    Security Bank of Washington will accept $30,000 to release our judgment."
    In early April, Briney called Smith and asked if the Bank would reconsider the
    offer. Briney wanted the Bank to assign the judgment to him instead of releasing it.
    Smith told Briney that an assignment "would be fine with the Bank."
    In late April, Briney asked Smith if the Bank would extend the time to accept the
    offer. On April 27, Smith sent an e-mail to Briney stating that the Bank "will be happy to
    extend our offer to you through the 30th of May.
    No. 69856-7-1/4
    BA&B reached a settlement with Kandace and Furukawa. On May 1, BA&B's
    attorney sent the attorney representing the Koichi estate, Kandace, and Furukawa a
    "Stipulation and Agreement to Pay Judgment" (Stipulation) signed by Briney and Bel Air.
    The Stipulation states that Kandace and Furukawa agree to pay BA&B $217,500 on a
    payment schedule. The Stipulation states that "[o]n completion of these payment terms,
    the plaintiffs will release their deed of trust and judgment liens against the secured
    property and all defendants, and execute a full satisfaction of judgment in this matter."
    The letter asks the attorney for the estate to verify that payment of the $217,500 would
    satisfy the 2010 judgment in favor of BA&B and not the 2002 judgment the Bank
    obtained against Koichi. The letter states, in pertinent part:
    Bel Air & Briney has discovered that a judgment was entered
    against Koichi Yagi in 2002 in favor of Washington Credit Union (now First
    Security Bank of Washington).... Bel Air & Briney might acquire that
    judgment by assignment.
    I assume it was intended that the only judgment referred to in [the
    Stipulation] is the one Bel Air & Briney has obtained against your clients. I
    am simply asking you to confirm that if Bel Air & Briney acquires the First
    Security Bank of Washington judgment, timely payment of the $217,000
    will not also satisfy the First Security Bank of Washington judgment.
    On May 1, Smith and Briney exchanged e-mails regarding the Bank's offer to
    assign the judgment. On May 2, Smith asked for Briney's address in order to prepare a
    letter confirming the Bank's offer. Briney provided the address and name of BA&B.
    According to Smith, "This was the first that I was informed that Mr. Briney was
    associated with a company." Smith sent Briney a letter confirming the Bank's offer to
    assign the judgment to BA&B if BA&B paid $30,000. The letter states, "1st Security
    Bank of Washington, fda Washington Credit Union agrees to assign the judgment:
    Washington Credit Union vs. Koichi Yagi for the sum of $30,000.00."
    No. 69856-7-1/5
    That same day, Smith sent an e-mail to Briney stating that the Bank would prefer
    a cashier's check or certified funds and told Briney that he could deliver the check to the
    Bank's office. Briney replied that he was "not in a big hurry" and that "[cjoming to your
    office to 'close' this would be fine." Smith responded that she would be out of the office
    on Friday, May 4 and would be back in the office on Monday, May 7.
    On May 9, the attorney for the estate sent an e-mail to the attorney for BA&B
    confirming that the Stipulation between Kandace, Furukawa, and BA&B did not affect
    the 2002 judgment the Bank obtained against Koichi: "fTJhere wasn't any intent in this
    agreement to discharge a separate judgment held by Washington Credit Union, a non
    party."
    On May 10, the attorney for the estate sent an e-mail to the Bank stating he
    represents the estate and Kandace as the personal representative of the estate. The
    attorney attached a copy of Koichi's death certificate and Koichi's will designating
    Kandace as the personal representative. The attorney states that he recently learned of
    the existence of the 2002 judgment the Bank held against Koichi. The attorney's e-mail
    states, in pertinent part:
    [Tjhere appears to be a ten-year-old judgment in King County Superior
    Court Case No. 02-2-22968-9, in favor of Washington Credit Union and
    against Koichi Yagi (December 17, 2002). The purpose of my inquiry is to
    determine: (1) whether First Security Bank is the legal successor-in-
    interest to Washington Credit Union and thus has an interest in the 2002
    judgment, and (2) if so, who at [the Bank] has authority to negotiate a
    payment of the judgment.
    Smith responded to the attorney's e-mail the afternoon of May 10 and asked the
    attorney to call her. The attorney for the estate called and told Smith that the debtor
    Koichi Yagi was deceased and that he was representing Koichi's heirs. The attorney
    No. 69856-7-1/6
    also told Smith that Koichi's heirs were in negotiations with BA&B to settle a separate
    debt. Smith told the attorney that the Bank had an outstanding offer to BA&B to
    purchase the 2002 judgment for $30,000.
    After talking to the attorney for the estate, Smith sent an e-mail to Briney asking,
    "Where do we stand? We received some paperwork . .. from attorney Robert Wilson
    [who] represents [the] estate of Koichi Yagi & personal rep Kandace Yagi." In response,
    Briney tried to reach Smith by phone and left a voicemail about coming to Smith's office
    to "complete the transaction." Briney also sent an e-mail to Smith stating, "Paula:
    Please call me." That same afternoon, Briney purchased a cashier's check payable to
    the Bank in the amount of $30,000. Briney called the Bank and left Smith a second
    voicemail message the next day, May 11.
    On May 11, the attorney for the estate offered to pay $32,000 to satisfy the
    judgment "on the condition of customer confidentiality and privacy." The Bank accepted
    the estate's offer. Later that day, Smith called Briney to tell him that "the Bank was
    going to satisfy the judgment on Monday" and revoked the Bank's offer to assign the
    judgment to BA&B. Smith later said she had no reason to think Briney would object to
    satisfaction of the judgment: "Satisfying the judgment with the debtor's estate would
    place Mr. Briney and [BA&B] back into first position on the debtor's property, which was
    the only reason given to the Bank as the need for this transaction."
    On May 18, the Bank filed a "Full Satisfaction of Judgment" in King County
    Superior Court stating that "the judgment entered herein on December 17, 2002 has
    been fully paid, and the Clerk is authorized and directed to enter a full satisfaction of
    judgment."
    No. 69856-7-1/7
    On September 20, 2012, BA&B filed a breach of contract lawsuit against the
    Bank. BA&B alleged that the Bank and BA&B "were parties to a contract whereby the
    Bank agreed to transfer its interest in the 2002 Judgment to Bel Air & Briney in return for
    ... payment of $30,000 by May 1, 2012." BA&B alleged that the Bank later agreed to
    extend the deadline until May 30. BA&B sought damages in the amount of $30,790.72,
    "the difference between the amount Koichi owed on the 2002 Judgment in May 2012
    ($60,790.72) and the $30,000 the Bank had agreed to accept from Bel Air & Briney in
    exchange for the assignment of the 2002 judgment."
    The Bank filed a motion for summary judgment dismissal of BA&B's claim. The
    Bank asserted that because BA&B never accepted the Bank's offer, a binding contract
    was not formed. The Bank asserted the January 4 letter offering to release the
    judgment and the May 2 letter offering to assign the judgment in exchange for $30,000
    could be accepted only by performance. The Bank stated there was no evidence that
    BA&B performed by paying the Bank $30,000.
    In support, the Bank submitted a declaration from Paula Smith. Smith states that
    the January 4 and May 2 letters she wrote on behalf of the Bank were offers that could
    only be accepted by full payment of the $30,000:
    My letters to Mr. Briney of January 4th and May 2nd respectively
    were offers that can only be accepted by tendering the full amount of the
    funds. The Bank did not seek a promise to tender the $30,000, nor would
    we accept such a promise. As a Loan Control Specialist, much of my
    duties include collecting bad debts and judgments. We do not typically
    agree to take any action until we first receive payment in full of the agreed
    funds. In this business we often are promised many things as we attempt
    to collect a debt. Just as often those promises are not fulfilled.
    No. 69856-7-1/8
    In opposition, BA&B did not dispute that the offers from the Bank could be
    accepted only by performance. But BA&B claimed that it performed by purchasing a
    cashier's check and placing phone calls to the Bank.
    The court granted the motion for summary judgment and dismissed the lawsuit
    against the Bank. The order states, in pertinent part:
    THE COURT FINDS that the offers of Defendant 1st Security Bank
    of Washington (the "Bank") to Plaintiffs were offers of unilateral contract
    that can only be accepted by full performance;
    THE COURT FINDS that Plaintiffs [sic] efforts in obtaining a
    cashier's check and placing phone calls to the Bank were merely
    preparations to perform and do not constitute part performance of the
    Bank's unilateral offer; and
    THE COURT FURTHER FINDS that Plaintiff failed to fully perform
    as required in the Bank's offers and, therefore, no contract was created.
    BA&B appeals.
    ANALYSIS
    BA&B contends the court erred by dismissing its lawsuit against the Bank. BA&B
    argues that purchasing a cashier's check and leaving the voicemails on May 10 and 11
    constituted part performance and created an enforceable unilateral contract. The Bank
    argues that because BA&B merely took steps to perform, no enforceable contract
    exists. We agree with the Bank.
    The law recognizes two kinds of contracts: bilateral and unilateral. Multicare
    Med. Ctr. v. Dep't of Soc. & Health Servs.. 
    114 Wash. 2d 572
    , 583, 
    790 P.2d 124
    (1990),
    overruled in part bv statute on other grounds as stated in Neah Bay Chamber of
    Commerce v. Dep't of Fisheries. 119Wn.2d 464, 
    832 P.2d 1310
    (1992). The essential
    distinction between a bilateral and a unilateral contract is the method of acceptance.
    
    Multicare, 114 Wash. 2d at 584
    . Under a unilateral contract, an offer cannot be accepted
    8
    No. 69856-7-1/9
    by promising to perform. Rather, "the offeree must accept, if at all, by performance, and
    the contract then becomes executed." 
    Multicare. 114 Wash. 2d at 584
    .
    "[T]he offer or promise of the one party does not become binding or
    enforceable until there is performance by the other party, whereas, [in a
    bilateral contract], it is not performance which makes the contract binding,
    but rather the giving of a promise by the one party for the promise of the
    other."
    
    Multicare. 114 Wash. 2d at 584
    2 (quoting Hiqqins v. Egbert. 
    28 Wash. 2d 313
    . 317-18. 
    182 P.2d 58
    (1947)). For purposes of a unilateral contract, "consideration consists of the
    offeree performing the requisite terms of the offer." 
    Multicare. 114 Wash. 2d at 584
    . An
    offeror may revoke an offer of unilateral contract at any time before the offeree
    performs. Knight v. Seattle-First Nat'l Bank. 
    22 Wash. App. 493
    , 496, 
    589 P.2d 1279
    (1979).
    Here, the May 2 letter from the Bank was an offer to assign the judgment to
    BA&B if BA&B paid the Bank $30,000. There is no dispute that BA&B never actually
    paid the Bank $30,000. Nonetheless, BA&B argues purchasing the cashier's check and
    leaving the voicemails for the Bank on May 10 and 11 constitutes part performance,
    making the unilateral contract enforceable.
    The Restatement of Contracts section 45 (1932) states that if an offeree gives
    part of the requested consideration, the offeror of the unilateral contract is bound: " 'If
    an offer for a unilateral contract is made, and part of the consideration requested in the
    offer is given or tendered by the offeree in response thereto, the offeror is bound by a
    2 (Second alteration in original.)
    No. 69856-7-1/10
    contract.'" 
    Knight. 22 Wash. App. at 495
    (quoting Restatement of Contracts § 45).3
    "[P]art performance by the offeree may preclude withdrawal of the offer." 
    Knight. 22 Wash. App. at 496
    .
    But preparation is not enough to constitute part performance, even if those steps
    are essential to accepting the offer. 
    Knight. 22 Wash. App. at 498
    . The comments to
    Restatement of Contracts section 45 set forth the factors the court should consider in
    determining whether the offeree has performed and the unilateral contract is
    enforceable:
    The distinction between preparing for performance and beginning
    performance in such cases may turn on many factors: the extent to which
    the offeree's conduct is clearly referable to the offer, the definite and
    substantial character of that conduct, and the extent to which it is of actual
    or prospective benefit to the offeror rather than the offeree, as well as the
    terms of the communications between the parties, their prior course of
    dealing, and any relevant usages of trade.
    Restatement (Second) of Contracts § 45 cmt. f (1981); see also Restatement of
    Contracts § 45 cmt. a.
    We conclude that obtaining the cashier's check and leaving voicemails were
    steps taken in preparation of accepting the offer. The terms of the offer for a unilateral
    contract required BA&B to pay the Bank $30,000. BA&B never paid any portion of the
    $30,000. While BA&B's purchase of the cashier's check was clearly in reference to the
    Bank's offer, the undelivered cashier's check was of no actual or prospective benefit to
    3 The Restatement (Second) of Contracts discusses part performance in terms of creating
    an "option contract:"
    Where an offer invites an offeree to accept by rendering a performance and does not
    invite a promissory acceptance, an option contract is created when the offeree tenders or
    begins the invited performance or tenders a beginning of it.
    Restatement (Second) of Contracts § 45 (1981). Whilethe parties separately address whether an
    option contract was formed, we need not separately address the issue. The first and second
    Restatement of Contracts merely use different terminology in discussing part performance as a
    method of accepting a unilateral contract. The analysis is the same. Compare Restatement (Second)
    of Contracts § 45 cmt. f wjth Restatement of Contracts § 45 cmt. a.
    10
    No. 69856-7-1/11
    the Bank until delivery. Further, the Bank presented evidence that in its attempts to
    collect debts, the Bank "do[es] not typically agree to take any action until we first receive
    payment in full of the agreed funds."
    BA&B's attempt to distinguish Knight is unpersuasive. In Knight, the court held
    that the offeree did not establish an enforceable unilateral contract by merely preparing
    to undertake performance. 
    Knight, 22 Wash. App. at 499
    . The court reasoned,
    The terms of the offer called for the withdrawal of Johnston's offer to buy
    and tender of the purchase price. The Knights promise to pay, absent any
    tender of the money, is immaterial since the offer called for acceptance by
    performance, not by promissory obligation.
    
    Knight, 22 Wash. App. at 498-99
    . Here, just as in Knight, the offer called for tender of an
    amount of money and the offeree never paid.
    Because an enforceable contract was not formed, the court did not err in granting
    the Bank's motion for summary judgment.4 We affirm.
    WE CONCUR:
    4 BA&B also argues for the first time on appeal that even if BA&B did not partially perform, the
    Bank's misconduct excuses its failure to do so. We do not address arguments raised for the first time
    on appeal. RAP 2.5(a); Lunsford v. Saberhaaen Holdings. Inc., 
    139 Wash. App. 334
    , 338, 
    160 P.3d 1089
    (2007).
    11
    

Document Info

Docket Number: 69856-7

Filed Date: 4/7/2014

Precedential Status: Non-Precedential

Modified Date: 10/30/2014