Kimberly Han v. Robert J. Cartano, et ux ( 2020 )

FILED
JUNE 16, 2020
In the Office of the Clerk of Court
WA State Court of Appeals Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
Kimberley Han and Silverwater Nature )
Place, LLC, ) No. 37360-6-III
)
Appellants, )
)
v. )
) UNPUBLISHED OPINION
Robert J. Cartano and Maureen M. )
Cartano, )
Respondents.
FEARING, J. — Silverwater Nature Place, LLC, (Silverwater) appeals the superior
court’s release of a lis pendens on property formerly owned by the company. We affirm
the removal of the lis pendens because Silverwater sues for money damages, not for an
interest in the property.
FACTS
Because we base our decision on the Silverwater’s amended complaint, we extract
the facts from that complaint. Silverwater captions the complaint: “AMENDED
Complaint to Quiet Title.” Clerk’s Papers (CP) at 9.
Silverwater, solely owned and managed by Kimberly Han, formerly owned
property on Silverdale Way in scenic, serene Silverdale. On August 4, 2017, Silverwater
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Han v. Cartano
and Robert and Maureen Cartano signed a real estate purchase and sale agreement for the
sale of the property at $425,000. According to the written agreement, the parties agreed
that the property would be transferred by statutory warranty deed.
Fee title to the subject property shall be conveyed from Seller to
Buyer at time of closing by Statutory Warranty Deed subject to the
aforesaid Symington Deed of Trust.
CP at 15 (emphasis added). The deed also included an integration clause.
Buyer and Seller agree that there are no oral or written
representations which are not contained herein and that there are no verbal
or other agreements which modify or effect this Purchase Agreement and
that this Purchase Agreement supersedes any prior understanding(s) or
agreement(s) between Buyer and Seller for purchase and sale of the subject
property. All representations by Seller in this Purchase Agreement are
limited to the best of Seller’s knowledge.
CP at 16.
According to Silverwater, the true agreement between the parties was a loan of
$350,000 from Robert and Maureen Cartano to Silverwater encumbered by the Silverdale
property rather than a sale of the property. To create the encumbrance, Silverwater, on
August 3, 2017, executed a quit claim deed for the property to Robert and Maureen
Cartano. Someone recorded the quit claim deed on July 19, 2018, after the
commencement of this suit.
Under the verbal agreement and contrary to the written purchase and sale
agreement, Silverwater unofficially continued to own the property, and Silverwater
enjoyed ninety days, during which it could sell the property. During that time
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Silverwater could continue to receive rents of $1850 per month on the property. In fact,
Silverwater collected those rents.
Also under the verbal agreement, if Silverwater did not sell the property within
ninety days, Robert and Maureen Cartano could sell the property. On such a sale, the
Cartanos could keep $400,000 of the purchase price, with $50,000 of this sum
representing interest on the $350,000 loan. Silverwater was entitled to any sale proceeds
above $400,000.
On September 6, 2017, despite this alleged verbal agreement for a loan,
Silverwater signed a statutory warranty deed conveying the property to Robert and
Maureen Cartano. On September 11, 2017, the parties recorded the deed with the county
auditor. A closing statement for the transaction from Fidelity National Title Company
confirmed the September 11, 2017 closing date, but identified a sales price of $350,000
rather than the $425,000 identified in the purchase and sale agreement.
At the time that Silverwater filed suit in May 2018, Robert and Maureen Cartano
had a pending sale of the property for $549,000. Silverwater worried that the Cartanos
would keep all of the sales proceeds, rather than deliver $149,000 to Silverwater. In the
amended complaint, Silverwater does not allege that the Cartanos lacked authority to sell
the Silverdale property. Silverwater does not ask to enjoin any sale by the Cartanos.
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PROCEDURE
On May 23, 2018, Kimberly Han and Silverwater (collectively Silverwater) filed
suit to quiet title to the Silverdale property. On the same day, Silverwater recorded a lis
pendens with the county auditor. On June 8, 2018, Silverwater filed its amended
complaint to quiet title. The amended complaint asked:
A. For judgment quieting title of above-described real property in
Plaintiff Silverwood.
B. In the alternative for the court to order that the verbal agreement
between the parties be followed.
C. For plaintiff’s attorney fees and costs and disbursements herein.
D. For such other and further relief as the court may deem just and
proper.
CP at 11.
On July 3, 2018, Robert and Maureen Cartano filed a motion to cancel the lis
pendens. With the motion, the Cartanos argued that, as a result of the recorded statutory
warranty deed, Silverwater holds no legal interest in the property. They also contended
that any unwritten agreement did not survive the real estate sale and purchase agreement
and deed and violated the statute of frauds.
Robert Cartano signed a declaration in support of the motion to remove the lis
pendens. Cartano acknowledged that an agreement existed pertaining to the sale of the
property within the first ninety days after closing, but denied one existed thereafter.
Cartano also stated that the Cartanos entered a contract to sell the property to a third party
and the lis pendens would prevent the sale and cause them damage.
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On July 12, 2018, the day before the hearing to cancel the lis pendens, Kimberly
Han, on behalf of Silverwater, filed a type written letter to the court outlining facts. The
letter repeated allegations from the amended complaint. The letter added that Silverwater
offered, in February 2018, to repay the loan in full, but Robert Cartano refused payment.
On the day of the motion hearing, Kimberly Han sought a continuance. The court
denied the motion to continue.
The trial court ruled Kimberly Han’s letter to be untimely, but considered the letter
anyway and concluded that the facts alleged therein did not provide a defense to the
motion to remove the lis pendens. The court lifted the lis pendens since Silverwater
lacked any writing that contradicted the execution of the statutory warranty deed. The
trial court awarded Robert and Maureen Cartano reasonable attorney fees and costs.
On August 24, 2018, Silverwater filed a notice of appeal with the trial court. In
September 2018, the Cartanos sold the property.
LAW AND ANALYSIS
Before reviewing the merits of the appeal, we must resolve two arguments raised
by Robert and Maureen Cartano in an attempt to gain summary dismissal of the appeal.
The Cartanos alternatively argue that the appeal is moot and the trial court’s lifting of the
lis pendens is not an appealable order.
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Mootness
Robert and Maureen Cartano argue that this reviewing court can not provide
Silverwater effective relief since the the Cartanos sold the Silverdale property after the
trial court canceled the lis pendens. Silverwater responds that, at the time it filed its
appeal, the property had not sold. Silverwater contends that the third party purchased the
property at his or her own risk and subject to the lis pendens.
A case is technically moot when this court cannot provide the basic relief
originally sought. In re Detention of Swanson, 115 Wash. 2d 21, 24, 793 P.2d 962, 804
P.2d 1 (1990). Or, when effective relief can no longer be granted, the case is moot.
Dioxin/Organochlorine Center v. Pollution Control Hearings Board, 131 Wash. 2d 345,
350, 932 P.2d 158 (1997); Orwick v. City of Seattle, 103 Wash. 2d 249, 253, 692 P.2d 793
(1984).
Robert and Maureen Cartano’s argument of mootness assumes that the lis pendens
did not survive Silverwater’s appeal because the trial court already ordered the
cancellation of the lis pendens. We note that Silverwater never posted a bond to stay the
trial court’s ruling and wonder whether a bond is required for the lis pendens to encumber
the property during the appeal process. One Washington decision suggests that the
appellant must obtain a stay, must post a bond, or must do both in order for the lis
pendens to retain efficacy after the trial court’s order canceling the lis pendens. Beers v.
Ross, 137 Wash. App. 566, 575, 154 P.3d 277 (2007). Two other state opinions intimate
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that no stay or bond is needed. Morton v. Le Blank, 125 Wash. 191, 196-97, 215 P. 528
(1923); Guest v. Lange, 195 Wash. App. 330, 340, 381 P.3d 130 (2016). The latter
decision observes that the weight of authority from other jurisdictions suggests that a
notice of appeal alone preserves the lis pendens. Guest v. Lange, 195 Wash. App. at 339.
We decline to decide whether Silverwater needed to procure a stay of the trial
court’s order or to post a bond in order for a purchaser of the property to take title subject
to the lis pendens. Even assuming the issue on appeal to be moot, mootness does not
remove jurisdiction from this court to hear the appeal. DeFunis v. Odegaard, 84 Wash. 2d
617, 628, 529 P.2d 438 (1974). Because of the confused nature of the law on the
effectiveness of a lis pendens during the appeal process, we rest our decision on another
ground.
Appealability
Alternatively, Robert and Maureen Cartano argue that Silverwater had no right to
appeal because the order releasing the lis pendens did not dispose of all claims before the
superior court and the order is not a “Decision Determining Action” under RAP 2.2(a)(3)
(emphasis omitted). Pursuant to RAP 2.2(a)(3), a decision determining the action, for
purposes of permitting an immediate appeal, includes:
Any written decision affecting a substantial right in a civil case that
in effect determines the action and prevents a final judgment or
discontinues the action.
(Emphasis added.)
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We deem Washington Dredging & Improvement Co. v. Kinnear, 24 Wash. 405,
407, 64 P. 522 (1901) instructive. In this ancient decision, the Washington Supreme
Court determined that refusal to permit the removal of a lis pendens affected a substantial
right. The court wrote:
The lis pendens is evidently viewed by the law as a cloud on the title
to land which it describes. The appellants have an undoubted right to have
that cloud removed. The order of the court refusing to remove it is an
order affecting their substantial rights, and is therefore appealable.
(Emphasis added.)
Robert and Maureen Cartano distinguish Washington Dredging on the basis that
no other claims were pending before the superior court at the time of the appeal in the
previous case. By contrast, Silverwater still maintains her claim for damages alleged in
her quiet title claim. Silverwater responds that whether an action is ongoing lacks
relevance to the determination that the court order affected a substantial right.
In R.O.I., Inc. v. Anderson, 50 Wash. App. 459, 748 P.2d 1136 (1988), this court
stated that a lis pendens serves to cloud title and puts third parties on notice of pending
litigation. The court observed that a lis pendens has the ability to bind a third party to all
proceedings after a lis pendens is filed as if they are an original party to the action. Based
on the reasoning of R.O.I., Inc. v. Anderson, we conclude that the cancelation of a lis
pendens affects a substantial right because the cancelation potentially affects the
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relationship between Silverwater and any third party who might purchase the real
property.
Cancelation of Lis Pendens
We reach the merits as to whether the superior court correctly canceled
Silverwater’s lis pendens on the property owned by Robert and Maureen Cartano.
A “lis pendens” is an “instrument having the effect of clouding the title to real
property.” RCW 4.28.328(1)(a). A party to an action “affecting title to real property”
may file a notice of lis pendens with the county auditor. RCW 4.28.320. We later focus
on this clause in RCW 4.28.320. This filing gives constructive notice to third parties that
the title may be clouded. RCW 4.28.320. In Washington, a lis pendens is procedural
only; it does not create substantive rights in the person recording the notice. Guest v.
Lange, 195 Wash. App. at 336 (2016).
RCW 4.28.320 governs when a court may cancel a notice of lis pendens. The
statute reads, in part:
And the court in which the said action was commenced may, at its
discretion, at any time after the action shall be settled, discontinued or
abated, on application of any person aggrieved and on good cause shown
and on such notice as shall be directed or approved by the court, order the
notice authorized in this section to be canceled of record, in whole or in
part, by the county auditor of any county in whose office the same may
have been filed or recorded, and such cancellation shall be evidenced by the
recording of the court order.
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We read, with RCW 4.28.320, RCW 4.28.328 enacted in 1994. The statute also permits
relief for aggrieved parties against whose property claimants improperly filed a lis
pendens. RCW 4.28.328 declares in relevant part:
(2) A claimant in an action not affecting the title to real property
against which the lis pendens was filed is liable to an aggrieved party who
prevails on a motion to cancel the lis pendens, for actual damages caused
by filing the lis pendens, and for reasonable attorneys’ fees incurred in
canceling the lis pendens.
(3) Unless the claimant establishes a substantial justification for
filing the lis pendens, a claimant is liable to an aggrieved party who
prevails in defense of the action in which the lis pendens was filed for
actual damages caused by filing the lis pendens, and in the court’s
discretion, reasonable attorneys’ fees and costs incurred in defending the
action.
(Emphasis added.) This second statute also contains the key phrase involving an action
“affecting title to real property.”
Robert and Maureen Cartano moved to cancel the lis pendens pursuant to
RCW 4.28.328(2). The couple argued that Silverwater’s suit did not place title at issue
such that Silverwater lacked any right to cloud the title with a lis pendens. The Cartanos
further argued that Silverwater lacked any claim against the property’s title because the
doctrine of merger and the statute of frauds precluded any enforcement of an alleged
agreement to return the property to it. The trial court concluded that Silverwater lacked a
reasonable basis for filing the lis pendens, although the court did not identify the basis for
this conclusion.
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No Washington case law addresses what constitutes “affecting title to real
property” for purposes of RCW 4.28.328. In the past, this court has observed that the
Arizona statute governing lis pendens echoes Washington’s statute, and we have relied
on case law from Arizona regarding how to construe our lis pendens statute. Schwab v.
City of Seattle, 64 Wash. App. 742, 748, 826 P.2d 1089 (1992). Arizona’s lis pendens
statute also requires the courts to consider whether the claim “affect[s] title to real
property.” Santa Fe Ridge Homeowners’ Association v. Bartschi, 219 Ariz. 391, 396,
199 P.3d 646 (Ct. App. 2008) (quoting ARIZ. REV. STAT. ANN. § 12-1191(A)).
Under Arizona law, a lawsuit “affects a right incident to title if any judgment
would expand, restrict, or burden a property owner’s rights as bestowed by virtue of that
title.” Santa Fe Ridge Homeowners’ Association v. Bartschi, 219 Ariz. at 396. The
claimant improperly files a lis pendens if the claim lacks any basis for asserting that the
action affects title or on finding that the claim is not supported by credible evidence.
Santa Fe Ridge Homeowners’ Association v. Bartschi, 219 Ariz. at 395.
Silverwater observes that she captioned her amended complaint as a “complaint to
quite title.” She also requested, in the prayer for relief, that the superior court quiet title
to the disputed property on its name.
The statute controlling quiet title actions informs our decision. A plaintiff filing
an action to quiet title must “set forth in his or her complaint the nature of his or her
estate, claim, or title to the property, and the defendant may set up a legal or equitable
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defense to plaintiff’s claims; and the superior title, whether legal or equitable, shall
prevail.” RCW 7.28.120. Not every person who desires to bring a quiet title claim to
property may do so. Pursuant to RCW 7.28.010 the person filing the claim must have a
“valid subsisting interest in real property” as well as “a right to possession.”
Silverwater’s amended complaint stated that she unofficially owned the property,
yet Robert and Maureen Cartano had authorization to sell after ninety days. The
complaint alleged that Silverwater feared the Cartanos would sell the property for
$549,000, to a third-party, and keep all funds without following the verbal agreement
between the parties. This language affords no reasonable basis for an assertion to title to
the land. Instead, the allegations support only a claim for damages. Silverwater
conceded that Robert and Maureen Cartano could sell the property. Filing of a lis
pendens was inconsistent with the power to sell. The gist of Silverwater’s complaint is
that the Cartanos intend to keep the sale proceeds.
Silverwater in essence seeks recovery of $159,000 from the proceeds of the sale
by Robert and Maureen Cartano. Silverwater could have sought attachment of those
funds, but failed to do so.
The law does not afford one a lis pendens when seeking a money judgment.
(N)otice of lis pendens may not properly be filed except in an action,
a purpose of which is to affect directly the title to the land in question. . . .
The lis pendens statute does not apply, for example, to an action the
purpose of which is to secure a personal judgment for the payment of
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money even though such a judgment, if obtained and properly docketed, is
a lien upon land of the defendant described in the complaint.
Bramall v. Wales, 29 Wash. App. 390, 395, 628 P.2d 511 (1981) (citations omitted).
Because Silverwater’s suit does not seek an interest in the real property, we need not
address Robert and Maureen Cartano’s alternative arguments that, because of the doctrine
of merger and the statute of frauds, Silverwater lacks credible evidence to support a claim
to the real property.
Silverwater also contends that the trial court erred by canceling the lis pendens as
the action was never “settled, discontinued or abated” as required under RCW 4.28.320.
She argues finality of an action is required before a lis pendens may be canceled.
Nevertheless, as stated above, RCW 4.28.320 governs those lis pendens filed which
affect the title to real property. Because Silverwater does not seek to affect title to the
property, it should have never filed the lis pendens.
Attorney Fees
Robert and Maureen Cartano request attorney fees pursuant under RCW 4.28.328.
Because the Cartanos prevail, we award them fees on appeal.
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CONCLUSION
We affirm the superior court’s order removing the lis pendens clouding title to the
Silverdale property. We grant Robert and Maureen Cartano reasonable attorney fees and
costs on appeal.
A majority of the panel has determined this opinion will not be printed in the
Washington Appellate Reports, but it will be filed for public record pursuant to RCW
2.06.040.
_________________________________
Fearing, J.
WE CONCUR:
______________________________
Lawrence-Berrey, J.
______________________________
Pennell, C.J.
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