Chicago Title Insurance v. Richard Campbell & Rebecca L. Marcy, Apps ( 2014 )

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
CHICAGO TITLE INSURANCE CO., No. 69927-0-
a Washington corporation,
DIVISION ONE
Plaintiff,
RICHARD CAMPBELL and REBECCA UNPUBLISHED
LEE MARCY, husband and wife, and
their marital community, FILED: June 9. 2014
Appellants,
and
ROSALIND M. GREENBERG, an
individual,
Respondent.
COX, J. - Chicago Title Insurance Co. commenced this interpleader
action and placed into the registry of the court an earnest money deposit held in
escrow for a failed real estate transaction. On cross motions for summary
judgment, the court awarded the deposit to the prospective buyer, Rosalind
Greenberg. Because there were no genuine issues of material fact for trial, and
the buyer was entitled to judgment as a matter of law, we affirm.
In April 2011, Greenberg and her terminally ill husband resided in Green
Bay, Wisconsin. They decided to purchase a home for their daughter, Madeline,
in the Puget Sound area. While Madeline and real estate agent Donna Cowles
looked at properties, Greenberg remained in Wisconsin to be with her husband
during his hospice care.
No. 69927-0-1/2
On April 26, 2011, Greenberg submitted a preapproval loan application to
a Green Bay branch of Merrill Lynch. The Greenbergs had several investment
and savings accounts at the branch. The loan application did not initially identify
a specific property for purchase.
In late April, the Greenbergs made an offer to purchase a property in
Redmond. That offer was not accepted. Shortly thereafter, the Greenbergs
made a full price offer to buy for $370,000 the Kirkland residence of Richard
Campbell and Rebecca Marcy ("Campbell").1 That offer was accepted.
On May 1, 2011, the parties executed a purchase and sale agreement
(PSA). The PSA provided for a closing date of June 8, 2011. A financing
addendum stated in part:
1. DOWN PAYMENT / LOAN APPLICATION.
a. Loan Application. This Agreement is contingent on buyer obtaining the
following loan or loans to purchase the Property. ..:... Conventional
First.... Buyer agrees to pay . . . $170,000 down, in addition to the
Loans and to make written application for the Loans to pay the balance of
the Purchase Price and pay the application fee, if required, for the subject
Property within 5 days . . . after mutual acceptance of this Agreement. . . .
4. EARNEST MONEY. If Buyer... is unable to obtain financing after a
good faith effort, then on Buyer's notice, this Agreement shall terminate.
The Earnest Money shall be refunded to the Buyer after Buyer delivers to
Seller written confirmation from Buyer's lender confirming (a) the date
Buyer's loan application for the subject property was made; (b) that Buyer
possessed sufficient funds to close; and (c) the reasons Buyer's
application was denied.[2]
1We adopt the parties' naming conventions and refer to appellants as
"Campbell" and respondent as "Greenberg."
2 Clerk's Papers at 13.
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No. 69927-0-1/3
Greenberg subsequently deposited $7,000 into escrow as earnest money.
In a declaration submitted below, Greenberg alleged she phoned Scott
Mainard at Merrill Lynch on May 4, 2011, and informed him of the PSA.
On May 6, 2011, she exchanged e-mails with Mainard and requested a
pre-approval letter. Mainard responded that the mortgage landscape had
changed dramatically, that loan processing took longer than before, and that he
would likely not have anything for her until the next week.
On May 17, 2011, Merrill Lynch issued a pre-approval letter stating that
Greenberg was pre-approved for a mortgage loan of $148,000. An attached
document entitled "Your Next Steps in the Financing Process" provided a
checklist of steps Greenberg needed to take to complete the financing process.
When asked about the checklist at her deposition, Greenberg said she received it
when her husband's health "took a tremendous turn for the worse" and she "was
giving up control of everything" to her agent and her financial advisor at Merrill
Lynch. She added that she "didn't know there was anything else I needed to do
other than wait for papers to come to me." Campbell points to nothing in the
record showing that Merrill Lynch did not obtain whatever was required to
approve the loan.
On May 23, 2011, following an inspection of Campbell's home, Greenberg
negotiated a reduction in the purchase price to $341,000.
On June 1, 2011, Greenberg's agent requested an extension of the
closing date by e-mail, stating that Merrill Lynch needed it to sell stock for the
No. 69927-0-1/4
down payment. Greenberg corroborated this in her declaration, alleging that
Scott Mainard at Merrill Lynch asked for the extension of time.
On Friday, June 3, 2011, Greenberg's agent informed Campbell by e-mail
that Merrill Lynch needed the extension "partly because of the way real estate is
handled in [Wisconsin]. The bank was expecting to have 45 days after the
inspection contingency was removed. They are working diligently on this and will
keep us apprised of any changes in the closing date." Greenberg echoed the e-
mail in her declaration, stating that Scott Mainard told her "it is standard practice
in Wisconsin to have 45 days to close after the inspection contingency has been
removed."
On June 3, 2011, Merrill Lynch employees stated in an internal e-mail that
it was time "to turn this preapproval [of Greenberg's loan] into live registration."
According to Campbell, this refers to the process of converting a general pre-
approval into a property-specific loan application. There is nothing in this record
showing that any delay in initiating live registration was due to acts or omissions
of Greenberg.
On June 4, 2011, Greenberg's agent stated in an e-mail that Campbell
had not signed an extension of the closing date and wanted "information about
the progress of the loan which hasn't been started yet." Although Campbell
suggests this shows that the loan process had not yet been started by
Greenberg, this is mere speculation by him. The record plainly shows that
Greenberg had started the loan application process.
No. 69927-0-1/5
On June 5, 2011, Campbell informed Greenberg's agent that he would not
grant an extension without "a thorough understanding of the issues at hand and
the resolutions going forward."
Internal Merrill Lynch documents show that it was actively processing the
loan application during the final week before closing. Nothing in the documents
indicates that Merrill Lynch's efforts were slowed by any omissions on
Greenberg's part. Greenberg alleged below that she "worked furiously" to find
another financing option, that she spoke with Ken Harding at Windemere
Mortgage, and that she was unable to find any entity that could fund the loan by
the closing date. She further alleged that "at all times our cash stores were
adequate to fund the down payment on the property."
On June 8, 2011, Campbell offered to extend the closing date for an
additional $10,000. Greenberg declined the offer and the sale did not close.
On June 9, 2011, Campbell informed Greenberg she was in default under
the agreement and demanded that she forfeit the earnest money. Greenberg
disagreed and declined to authorize release of the earnest money by Chicago
Title.
On June 25, 2011, Greenberg's husband passed away.
On October 14, 2011, Chicago Title filed this interpleader action. The
court subsequently granted Chicago Title's motion for discharge and the matter
proceeded with Greenberg and Campbell asserting their respective claims to the
fund.
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No. 69927-0-1/6
Greenberg filed a cross claim against Campbell, alleging that "Campbell
has refused to release the Earnest Money and is in breach of the Purchase and
Sale Contract." Campbell also filed a cross claim. He alleged that Greenberg
breached several terms of the real estate contract, including requirements for a
loan application on the subject property within five days and an implied duty of
good faith and fair dealing. Both parties moved for summary judgment.
In her motion, Greenberg argued that she was entitled to summary
judgment because "Campbell does not have evidence that [she] defaulted under
the [PSA]," she pursued financing in good faith, and the financing contingency in
the agreement excused her from closing. In his response and counter-motion for
summary judgment, Campbell argued that Greenberg's motion ignored her
failure to obtain funds for a down payment, her failure to make a written
application for a loan on the subject property within five days of mutual
acceptance, alleged alterations to her loan application, and her failure to make a
good faith effort to obtain financing. At the hearing on summary judgment,
Campbell also argued that Greenberg had not acted in good faith because she
failed to take any action on the checklist she received for finalizing her loan.
The superior court granted Greenberg's motion for summary judgment,
stating in part:
There's also no question that there was a prior offer made on
an unrelated property, and under the facts before me, the
application initially was made for that property.
It is also clear from reviewing all of the facts that the intent of
Ms. Greenberg was to change her loan application to the second
No. 69927-0-1/7
property, the Kirkland property of Mr. Kirkland (sic) -- excuse me -
of Mr. Campbell's and that she did everything she needed to do
from Merrill Lynch's proposal and perspective to accomplish that
change in address. And that's not unusual. She's getting
preapproved, the amounts, the figures are very similar.
I understand the concern that Mr. Campbell makes, some
suggestion of fraud. I simply can't find that there are any facts that
support that. I find that under the circumstances the burden is on
Mr. Campbell to show -- there's no question that she didn't obtain
financing, but then there's a burden on Mr. Campbell to show that
for some reason that she didn't obtain financing because of some
legal inability to follow through by Ms. Greenberg. that she did
something improper. And I don't find that she did, and I don't find
that Mr. Campbell sustained the burden that she did anything other
than what she was required to do by Merrill Lynch to continue with
the case.
There is the suggestion that she - on the second issue, on
the down payment issue, there's a suggestion - and I would say it's
conjecture - that she didn't have the funds to put $170,000 down,
but we have her affidavit that she did as well as brokerage
statements that suggest that she did as well.
And so I again find that Mr. Campbell did not sustain the
burden to show that she didn't have the money to pay the $170,000
at the time that it was scheduled to initially close, which was that
June 8th date.
So long story short, I do find that summary judgment in Ms.
Greenberg's favor is appropriate.[3]
The court also awarded Greenberg $21,853 in attorney fees under an
attorney fee provision in the PSA. Campbell appeals.
STANDARD OF REVIEW
The sole issue on appeal is whether the superior court erred in granting
summary judgment. We review that decision de novo, engaging in the same
3 Report of Proceedings (Jan. 8, 2013) at 23-25 (emphasis added).
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No. 69927-0-1/8
inquiry as the trial court.4
A party may move for summary judgment by pointing out the absence of
evidence to support the opposing party's case.5 If a party carries that initial
burden, the burden then shifts to the opposing party to set forth specific facts
showing a genuine issue of material fact for trial.6 The nonmoving party may not
rely on speculation or "mere allegations, denials, opinions, or conclusory
statements" to establish a genuine issue of material fact.7 Summary judgment is
proper ifthe pleadings, affidavits, depositions, and admissions on file
demonstrate that there is no genuine issue of material fact and that the moving
party is entitled to summary judgment as a matter of law.8 All reasonable
inferences from the evidence must be drawn in favor of the nonmoving party.9
Applying these principles here, we conclude the court did not err in granting
summary judgment.
BURDEN OF PROOF
Initially, the parties disagree on the applicable burden of proof. Greenberg
correctly notes, and Campbell does not dispute, that a party moving for summary
4 Dillon v. Seattle Deposition Reporters. LLC, 179 Wn. App. 41, 58-59,
316P.3d 1119(2014).
5 Young v. Key Pharmaceuticals, Inc., 112 Wn.2d 216, 225 n.1, 770 P.2d
182(1989).
6 jd, at 225.
7 Int'l Ultimate. Inc. v. St. Paul Fire & Marine Ins. Co., 122 Wn. App. 736,
744, 87 P.3d 774 (2004).
8 CR 56(c); Dillon, 179 Wn. App. at 59.
9 Lamon v. McDonnell Douglas Corp., 91 Wn.2d 345, 349, 588 P.2d 1346(1979).
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No. 69927-0-1/9
judgment can carry their initial burden by pointing out the absence of evidence
supporting the opposing party's claim.10 Greenberg moved for summary
judgment on this basis below, arguing that Campbell had no evidence supporting
his claim that she breached their agreement and that she was therefore entitled
to the earnest money. The trial court adopted Greenberg's position, concluding
that "there's a burden on Mr. Campbell to show that. . . she didn't obtain
financing because . . . she did something improper."11 For the first time in his
reply brief, Campbell argues that this is not the appropriate burden of proof. We
do not consider arguments raised for the first time in a reply brief.12
GENUINE ISSUE OF MATERIAL FACT
Turning to the merits, Campbell contends the superior court erred in
concluding there was no evidence supporting his claim that Greenberg breached
the parties' agreement. He maintains there was evidence that she breached the
contract in two respects.
First, he contends "Greenberg failed to make a good faith effort to obtain
financing." He points out that "[t]here is in every contract an implied duty of good
faith and fair dealing . . . ."13 The duty "arises only in connection with terms
agreed to by the parties."14 This court has held that when, as here, a real estate
10 Young, 112 Wn.2d at 225 n.1.
11 Report of Proceedings (Jan. 8, 2013) at 24.
12 Cowiche Canyon Conservancy v. Boslev, 118 Wn.2d 801, 809, 828
P.2d 549 (1992).
13 Badgett v. Sec. State Bank. 116 Wn.2d 563, 569, 807 P.2d 356 (1991).
14 Id,; Johnson v. Yousoofian, 84 Wn. App. 755, 762, 930 P.2d 921 (1996).
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No. 69927-0-1/10
contract makes third-party financing a condition of the duty to close, "[a] buyer
has a duty to act in good faith to attempt to obtain third-party financing."15
It is undisputed that third-party financing was a condition precedent of
Greenberg's duty to close. It is also undisputed that Greenberg applied for
financing on April 26, 2011 and received a preapproval letter on May 17, 2011.
Campbell argues the trial court erroneously focused on the April 26, 2011
application, that the application was "immaterial," and that the good faith issue
actually turned on the May 17, 2011 preapproval letter and Greenberg's inaction
thereafter. He contends an issue of fact exists whether Greenberg acted in good
faith during that period.16 He points out, as he did in summary fashion at oral
argument below, that the checklist attached to the May 17, 2011 preapproval
letter outlined the steps she needed to take for final approval of her loan. He
contends Greenberg's inaction regarding the checklist, "coupled with the parallel
lack of action at Merrill Lynch [and] the lack of documents or Merrill Lynch
testimony ... to prove otherwise," demonstrate a lack of good faith. We
disagree.
15 Salvo v. Thatcher, 128 Wn. App. 579, 585, 116P.3d 1019(2005).
16 Although Campbell discusses several questions he raised below
regarding the April 26, 2011 financing application, he does so to show the
misplaced focus of the trial court. He concludes that the April 26, 2011 financing
application is irrelevant and that Greenberg's breach occurred between May 17,
2011 and the closing date. Accordingly, we do not address the arguments
relating to the April 26, 2011 application. We note, however, that these
arguments also suffer from Campbell's erroneous view of the burden of proof.
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No. 69927-0-1/11
As discussed above, it was Campbell's burden to provide evidence
showing a breach of the duty of good faith. Although he contends Greenberg
took no action on the loan checklist, she stated in her deposition that, due to her
husband's illness, she had turned everything over to her agent and her financial
advisor at Merrill Lynch. There is no evidence to show that anything needed by
Merrill Lynch to process the loan was not timely provided, either by her, her
agent, or her financial advisor. Campbell also fails to discuss the specific matters
on the list and provides no evidence that they were in any way related to Merrill
Lynch's failure to fund the loan by the closing date. Likewise, he provides no
evidence supporting his claim that there was a "parallel lack of action at Merrill
Lynch" between May 17th and early June. Even if such evidence existed, there
is no evidence that Merrill Lynch's lack of action was caused by any action or
omission by Greenberg.
On the other hand, there is unrebutted evidence that the delay in
processing the loan was not Greenberg's fault. On June 01, 2011, Greenberg's
agent stated in an e-mail to Campbell that the lender needed an extension of the
closing date in order to sell stock for the down payment. Two days later, she
explained to Campbell that the extension was also due to "the way real estate is
handled in [Wisconsin]. The bank was expecting to have 45 days after the
inspection contingency was removed. They are working diligently on this and will
keep us apprised of any changes in the closing date."
11
No. 69927-0-1/12
In addition, Greenberg's actions in June showed good faith efforts to
obtain financing. When it became apparent that Merrill Lynch could not fund the
loan by the closing date, Greenberg did not terminate the agreement but instead
sought an extension of the closing date to finalize the loan. She also pursued
alternative financing.
In sum, Campbell failed to produce evidence demonstrating a genuine
issue of fact whether Greenberg breached her duty to pursue financing in good
faith.17
Second, Campbell contends Greenberg's failure to tender the down
payment fund breached the PSA. But tender of the down payment was excused
under the agreement if financing was unavailable.18 And while Greenberg's
efforts to procure a down payment are relevant to the question of her good faith,
Campbell points to nothing showing that Greenberg did not make good faith
efforts to obtain the down payment. Instead, he simply argues that Greenberg
came forth with no evidence showing that she made good faith efforts to procure
the down payment by the closing date. But as discussed above, the burden was
17 Campbell argues in passing that "[t]he trial court erred in allowing
admission of the alleged May 4th application" because "it is considered a 'lost
instrument.'" App. Br. at 31. This argument apparently refers to Greenberg's
claim that she notified Merrill Lynch on May 4th that her prior financing application
now applied to the offer she made on Campbell's property. This argument
appears to be made for the first time on appeal and, in any event, is too
conclusory to merit discussion. RAP 2.5(a); MP Medical Inc. v. Wegman, 151
Wn. App. 409, 420-21, 213 P.3d 931 (2009).
18 See Salvo, 128 Wn. App. at 586.
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No. 69927-0-1/13
on Campbell to demonstrate Greenberg's lack of good faith.
Campbell fails to demonstrate a genuine issue of fact. Greenberg was
entitled to judgment as a matter of law. The superior court properly granted
Greenberg's motion for summary judgment. And Greenberg was entitled to an
award of her attorney fees and expenses under the "prevailing party" provision in
the PSA.
Likewise, Greenberg is entitled to reasonable fees and expenses under
that provision on appeal, subject to her compliance with RAP 18.1.
We affirm the order on summary judgment and award fees on appeal to
Greenberg.
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WE CONCUR:
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