Doug Kruger, Resp. v. Michael Moi, App. ( 2015 )

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2015 FEB-2 AH 10= 01
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DOUG KRUGER, a single man, NO. 70503-2-1
Respondent, DIVISION ONE
v.
MICHAEL MOI, individually and as
Personal Representative of the
ESTATE OF SHERRI MOI, UNPUBLISHED OPINION
Appellant. FILED: February 2, 2015
Lau, J. — Michael Moi appeals a trial court's order to transfer a real property
deed to Doug Kruger before Moi could redeem the property. He also appeals the trial
court's denial of his motion for reconsideration. Moi contends that the redemption
period should have been extended by 60 days because Kruger failed to provide a
verified statement of profits and expenses as required by RCW 6.23.090(2). He also
contends the trial court erred by denying his motion to reconsider when, following the
court's order to extend the redemption period for five days, Kruger refused to allow Moi
to redeem. Because both parties either invited the claimed error that induced the trial
court to order transfer of the deed after a five-day extension of the redemption period or
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the trial court erred when it failed to rule on whether Kruger satisfied the statutory
verification requirement, we reverse and remand with instructions to the trial court that it
may elect either (1) to address whether attorney Rick Wathen unjustifiably refused to
honor his representations to the court entitling relief to Moi or (2) to decide the merits of
the statutory verification question. We reverse and remand for further proceedings
consistent with this opinion.1
FACTS
The facts are well known to the parties. Doug Kruger and Michael Moi have
been litigating this real property dispute since approximately 2006. The background
facts are detailed in our previous unpublished opinion in Kruger v. Moi, 176 Wn. App.
1014, 2013 WL 4746931 (2013). This appeal arises from Kruger's attempt to satisfy a
2007 default judgment against Moi involving the real property located at 2832 27th
Avenue West, Seattle, WA 98199 (the "Magnolia property") and Moi's subsequent
attempt to redeem it.
On March 9, 2012, Kruger filed a motion for order to clerk for issuance of a writ,
seeking a writ of execution involving Moi's parcel Bof the Magnolia property.2 Kruger
sought to recover the amount the court awarded him in the 2007 default judgment.
Kruger calculated that the recoverable amount (the original award with interest and
other costs) totaled $82,831.08. On March 22, the court granted Kruger's order over
1We find no fault with the trial court's approach to this unnecessarily difficult and
contentious case as evidenced in this record.
2The 2007 default judgment ordered the parties to convey the Magnolia parcels
to each other so that each would hold title to one parcel. Moi did not challenge this
default judgment. Moi conveyed parcel Ato Kruger by quit claim deed. Kruger did not
transfer parcel B to Moi. Moi, 176 Wn. App. 1014.
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Moi's objection, though it found the amount owed on the judgment was only $57,663.87.
The court then issued a writ of execution directing the sheriff to satisfy the amount owed
to Kruger with the Magnolia property. At the sheriff's sale on May 25, 2012, Kruger
purchased the Magnolia property for $70,479.29, the amount of Kruger's 2007 judgment
award as calculated by his attorney, Rick Wathen.3
On April 3, 2013, in compliance with RCW 6.23.030, Kruger notified Moi that the
redemption period for the Magnolia property expires on May 25, 2014—exactly 12
months from the date Kruger acquired the property at the sheriff's sale.4 Moi submitted
his notice of intent to redeem on May 21, 2013. The following day, Kruger provided an
itemized statement for redemption stating that Moi had until May 28 to pay the full cost
of redemption, amounting to $87,032.61.
Moi noticed that Kruger's itemized statement totaled roughly $8,000 dollars more
than the purchase price of the Magnolia property, plus interest. Accordingly, on May 24,
Moi filed with the sheriff a demand for a "written and verified statement of the amounts
of rents and profits thus received and expenses paid and incurred regarding [the
Magnolia property]." A party seeking redemption is allowed to request such a statement
before the redemption period expires under RCW 6.23.090(2).
On May 28, Kruger responded to this request by e-mail. The e-mail included two
attachments. The first is a spreadsheet of expenses. However, the dates of these
3To partially satisfy the second judgment award from 2010, Kruger also
purchased a Ballard property owned by Moi at the same sheriff's sale. However, the
Ballard property is not relevant to this appeal.
4Both parties agree that May 25, 2014 was not the correct date that the
redemption period expired. May 25, 2014 was a Saturday, and May 27 was a holiday,
therefore the redemption period expired on May 28, 2014.
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expenses fall between April 3, 2001 and January 15, 2012. There are no expenses
listed during the redemption period—May 25, 2013 through May 28, 2014. The second
attached document contains a list of numbers totaling $3061.93. No explanation of any
kind accompanies these numbers. Further, neither Kruger nor his attorney signed the
documents. Kruger believed that he had complied with Moi's request. On May 29, he
filed a motion requesting the court to issue an order compelling the sheriff to transfer the
Magnolia property deed.
On June 7, Moi filed a response to Kruger's motion. Moi argued that the
documents Kruger provided failed to satisfy the requirement under RCW 6.23.090(2) for
a "written and verified statement of the amounts of rents and profits thus received and
expenses paid and incurred " RCW 6.23.090(2). Moi also contended that Kruger's
failure to provide a written, verified statement of expenses and profits extended the
redemption period by 60 days, during which Moi could file an accounting action to
determine the actual cost of redemption.
On June 11, the court heard oral argument on Kruger's motion. After several
minutes of argument over whether Kruger had satisfied the statutory requirement for a
written, verified statement of costs, Kruger's attorney, Rick Wathen, offered to resolve
the issue by waiving the amount in dispute:
MR. WATHEN: Your honor, it's going to cost my client more than $10,000
to continue down this path of nonsense.
They cannot dispute the purchase price paid under Itemized No. 1. They
cannot dispute the 12 percent interest. Can't do it. Okay? They can dispute the
real estate taxes and the $6,000 there. If the Court grants our motion, I will
waive on behalfof my client that $10,000 that's in dispute. Problem solved.
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Report of Proceedings (June 11, 2013) (RP) at 37. To avoid "this path of nonsense,"
Kruger's attorney offered to waive the amount in dispute—the ambiguous amount from
the original itemized statement that prompted Moi to request a written, verified
statement of costs pursuant to RCW 6.23.090(2). The court stated that if Kruger waived
the amount in dispute, then whether he satisfied the verification statute was irrelevant—
"there is nothing left to argue about." RP at 38.
Following Kruger's offer, Moi's attorney, Elena Garella, sought to clarify how the
offer to waive the disputed amount affected the redemption period:
MS. GARELLA: Since Mr. Wathen has so graciously offered to take off
money so that we can redeem, how many days do we have to redeem? It seems
to me that it might be appropriate to say that we get another five days because it
takes that number of days after verification.
MR. WATHEN: Your Honor, I'm not going to waive anything if it's going to
continue this matter along the way.
I graciously waived on behalf of my client a substantial amount of money
which—they can't get—they are not also telling you Mr. Kruger—or Mr. Moi has
judgments ahead of my client's judgment on this property. He is not getting
financing. And I don't care—I know enough about financing, you're not going to
be able to—
MS. GARELLA: I object to all of your characterizations that are not before
this court.
THE COURT: Okay. I don't have—I mean—
MS. GARELLA: I mean, if we're going to be entitled to redeem under
these new numbers, it seems to me that it's appropriate to have a few days to
redeem. Otherwise, the whole waiver issue is meaningless.
MR. WATHEN: Your Honor—
MS. GARELLA: Under the statute—
MR. WATHEN: --if they come to me with a cash offer to redeem at those
numbers within five days. I will represent to the Court I will make a good-faith
effort to get it done. Mv client just wants to get paid.
THE COURT: Okav. What I'm going to ask is that vou not put the
properties up for five days—for sale—
MR. WATHEN: Agreed.
THE COURT: --for five days to give them an opportunity to redeem to
you.
MR. WATHEN: On the record. I will represent to the Court and to counsel
I will not list those properties for sale for five days.
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THE COURT: Okay.
RP at 41-43 (emphasis added). The same day, June 11, the court issued an order
granting Kruger's motion for an order for the sheriff to transfer the deed. The trial court
also instructed the sheriff's attorney, who was present at the hearing, to "hold [the deed]
for five days" to allow Moi to redeem the property. RP at 43. The order noted that
Kruger had waived the amount in dispute.
On June 14, Garella e-mailed Wathen to confirm the proposed redemption
amount:
Moi will tender the redemption amount for Magnolia Parcel B and pay off the
deficiency judgment on Monday [June 17, 2013].
I calculate the amounts due as $26.386.07 for the deficiency judgment plus
$79.469.74 for the 5 day 'redemption' opportunity that vou guaranteed on the
record in Superior Court on Tuesday, for a total of $105,855.81.
IF YOU DISAGREE WITH THE NUMBERS SET FORTH, please advise me as to
what you believe the correct numbers are, and how that number was calculated,
as Moi must obtain a cashier's check in the proper amount.
Unless you direct otherwise, the check will be made out to Cole Lether Wathen
Leid & Hall PC IOLTA.
(Emphasis added.) (Boldface omitted.) On Sunday, June 16, while still within the five-
day redemption period, Wathen replied, indicating that no order extended the
redemption period: "Ms. Garella—If you will recall correctly, I agreed not to list the
property for sale for a period of 5 days. I do not recall and the court did not grant any
order extending the redemption period." This response clearly suggests Wathen's
intent not to honor the five-day redemption period ordered by the court in reliance on his
previous in-court representations. The next morning, on June 17, the last day of the
five-day redemption period, Garella sought e-mail clarification from Wathen: "I see. So
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I should not bother to have the lender make out the check because Kruger will not
transfer the property to Moi? Let me know so I can tell the lender to not bother.
Thanks." When Wathen failed to respond, Garella sent him an e-mail:
Rick [Wathen], it is almost 4 pm and you have not responded to this inquiry from
9 am this morning. Obviously I have to assume that you mean what vou emailed
yesterday—that in Court vou only said you would "hold" the property for five
days, not that Moi could redeem it during that time. I think that it was obvious
that we had 5 days to redeem.
Anyway, no lender is willing to cut a cashier's check without written verification
that Kruger will allow Moi to "redeem" at the "discount" rate you offered at last
Tuesday's court hearing. At this point, in fact, the two lenders I have been
dealing with are so turned off by these shenanigans that I am not sure they are
worth approaching again even if you agree to accept the 105k.
So Kruger gets Magnolia, at least until we reverse this matter on appeal. You
seem to think that the practice of law involves misrepresentations, trickery, and
as [appellate court] judge Leach said, "sharp practices." It is quite shameful.
(Emphasis added.)
On June 19, Moi moved for reconsideration of the court's decision to order the
sheriff to transfer the deed. Moi argued that reconsideration was warranted because
Kruger failed to honor the agreement reached during oral argument. Moi also
requested the court to impose CR 11 sanctions against Wathen and Kruger. The court
denied the reconsideration motion and sanction request. Moi appealed.
ANALYSIS
Moi argues that the trial court erred when it issued the order transferring the deed
to Kruger because Kruger failed to provide a verified statement of profits and expenses
as required by RCW 6.23.090(2). Under that provision, a failure to provide a verified
statement extends the redemption period by 60 days. RCW 6.23.090(2). Therefore,
according to Moi, without a verified statement, the trial court lacked the legal authority to
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transfer the deed to Kruger. See, e^, Kennedy v. Trumble, 32 Wn. 614, 73 P.698
(1903), Edwins v. Hiqhline Sav. & Loan Ass'n. 15 Wn. App. 660, 551 P.2d 135 (1976).
Kruger responds, arguing that he satisfied the statutory requirement for verification and
that the trial court properly transferred the deed.
The record shows that the trial court never ruled on the statutory verification
issue. Rather, as quoted above, the parties each made representations to the court that
led it to order transfer of the deed only after a five-day extension period during which
Moi could redeem the property. By allegedly failing to honor those representations, the
parties may have invited error. In re Marriage of Morris, 176 Wn. App. 893, 900, 309
P.3d 767 (2013) ("The invited error doctrine prohibits a party from setting up an error
below and then complaining of it on appeal.").
Either (1) the parties invited error by making representations that induced the trial
court to issue an order transferring the deed following a five-day extension of the
redemption period or (2) the trial court erred by failing to rule on whether Kruger
satisfied the statutory verification requirement. In view of the unique circumstances
presented here, we reverse and remand with instructions to the trial court. The court on
remand may elect either to address the invited error question by determining whether
Wathen refused to honor his representations to the court, entitling relief to Moi. Or, if
the trial court elects not to address that issue, then the court must address the merits of
the statutory verification question. If Kruger's verification was adequate, then the
redemption period has run. If the verification was inadequate, then the trial court should
address what remedy is available to Moi.
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CONCLUSION
For the reasons discussed above, we reverse and remand the trial court's order
transferring the deed and the trial court's denial of Moi's reconsideration motion for
further proceedings consistent with this opinion.
WE CONCUR:
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