Law Office Of Paul W. Taylor, V, Joseph Woodmansee ( 2013 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
THE LAW OFFICE OF PAUL W. No. 69158-9-1
TAYLOR, INC., P.S., a Washington
corporation, DIVISION ONE
Appellant,
v. UNPUBLISHED OPINION
JOSEPH D. WOODMANSEE and
KIMBERLY A. WOODMANSEE,
husband and wife,
Respondents. FILED: August 26, 2013
Schindler, J. — Joseph D. Woodmansee and Kimberly A. Woodmansee
(Woodmansee) appeal the order granting summary judgment on the claim of The Law
Office of Paul W. Taylor, Inc., PS (Taylor) for breach of the settlement agreement. The
settlement agreement required Woodmansee to pay Taylor $200,000 for attorney fees
out of escrow after the closing date for the sale of certain property. Because
Woodmansee did not pay Taylor after the scheduled closing occurred, we affirm.
FACTS
Joseph D. Woodmansee and Kimberly A. Woodmansee (Woodmansee) develop
vacant land to sell for residential development. Woodmansee entered into a contract
with home builder D.B. Johnson Construction, Inc., England Family, LLC (DBJC) to sell
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developed lots at a predetermined price in Digby Heights, a housing development in
Mount Vernon. DBJC refused to purchase the lots, claiming the lots did not conform to
contract specifications. Woodmansee invoked the arbitration provision in the contract
for specific performance and to obtain clarification of disputed terms of the contract.
The Law Office of Paul W. Taylor, Inc., PS (Taylor) agreed to represent
Woodmansee in the arbitration. Woodmansee entered into a contingency fee
agreement with Taylor. The fee agreement contained the following contingency fee
provisions:
In lieu of the foregoing payment schedule, the client shall pay a
cash advance of $30,000. Of that amount, $25,000.00 shall constitute a
non-refundable advance for attorney fees to be paid by Monday, July 19,
2010 and $5,000.00 for costs to be paid within thirty days. The latter
amount to be guaranteed to be replenished and maintained at $5,000.00
as needed for deposition and other arbitration and other related costs. If
that condition is not met, attorney will withdraw.
Attorney will defer payment of the remainder of its fees and take
that amount as a contingent fee of 33% of the total amount recovered
upon settlement or arbitration provided attorney is paid within 30 days
following settlement or arbitration decision. This amount will be due and
owing regardless of the timing of any settlement agreement. The client
will agree not to contest fees. Ifcollection efforts must be taken to obtain
payment of award then the contingent fee increases to 40%.
The arbitration began in November 2010. In November 2011, the panel ruled
that Woodmansee's tender of the property was deficient "to some degree" but did not
constitute a material breach of the agreement.
We agree that the tender was, to some degree, deficient but do not agree
that the deficiencies constituted the failure of a condition precedent or a
material breach. Both parties have submitted evidence of the estimated
cost to cure these deficiencies. We decline to require DBJC to accept the
lots as tendered or specify an amount of credit to DBJC for the cost to
cure. As follows in paragraph 7 hereof, the Contract remains in effect until
October 24, 2011 and Woodmansee is free to tender these same lots
(provided all of the deficiencies are cured), or to tender other conforming
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lots, pursuant to the provisions of Paragraphs 11 and 12 of the Exclusive
Purchase Agreement.
The arbitration award required DBJC to purchase up to 150 lots by October 24, 2011,
resulting in net proceeds to Woodmansee of approximately $10.5 million.
Woodmansee refused to pay attorney fees to Taylor. Woodmansee took the
position that because no damages were awarded in the arbitration, Taylor was not
entitled to attorney fees under the contingency fee agreement. Taylor asserted he was
entitled to payment of attorney fees because the fee agreement expressly states that he
is entitled to "33% of the total amount recovered upon settlement or arbitration." Taylor
attempted to negotiate an agreement with Woodmansee to pay the fees owed but
Woodmansee refused to negotiate.
Despite repeated demands, Taylor received no payment for attorney fees.
Nonetheless, Taylor continued to represent Woodmansee in additional disputes with
DBJC over interpretation of the contract. Following another arbitration hearing, the
panel issued a supplemental award for the sale of 71 lots in Digby Heights. The closing
date for the 71 lots was scheduled for March 22, 2011.
On March 17, 2011, Taylor filed a lawsuit against Woodmansee. Taylor alleged
breach of the contingency fee agreement, quantum merit, and a claim for an attorney
fee lien. Taylor served DBJC and the escrow company handling the closing scheduled
for March 22 with a notice of the attorney fee lien. The sale closed on March 22 and the
lots sold for $4,699,791.
On May 26, Taylor and Woodmansee engaged in mediation and entered into a
settlement agreement for payment of attorney fees. Woodmansee agreed to pay Taylor
$200,000 out of the proceeds of another sale in Digby Heights that was scheduled to
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close on October 24, 2011.
On October 21, 2011, an arbitration panel decided that 10 non-conforming lots
would be excluded from the closing scheduled for October 24. The sale closed on
October 24. The day after the closing, Woodmansee informed Taylor that there were
insufficient funds available to pay his fees.
On November 18, Taylor filed an amended complaint alleging Woodmansee
breached the settlement agreement reached at mediation. Taylor filed a motion for
summary judgment on the claim for breach of the settlement agreement. The court
granted Taylor's motion for summary judgment. Woodmansee appeals.
ANALYSIS
Woodmansee contends the settlement agreement is unenforceable because the
agreement expressly states that the deadline for payment of the fees was October 24,
2011, and the agreement became null and void after that date. Taylor contends that
under the plain language of the settlement agreement, the payment of attorney fees
was contingent on the sale of the lots on October 24, 2011, and Woodmansee breached
the agreement by refusing to pay the amount owed out of escrow. We agree with
Taylor.
A contract "should be construed as a whole and, if reasonably possible, in a way
that effectuates all of its provisions." Colorado Structures, Inc. v. Ins. Co. of the West,
161 Wn.2d 577, 588, 167 P.3d 1125 (2007).1 Courts construe agreements to give
effect to every word so as not to render any word superfluous. Nishikawa v. U.S. Eagle
High, LLC. 138 Wn. App. 841, 849, 158 P.3d 1265(2001).
1(Footnotes omitted-
No. 69158-9-1/5
Here, the settlement agreement provided, in pertinent part:
1. Defendants Joseph and Kimberly Woodmansee will pay Plaintiff
$200,000 at the closing of the sale of Digby Heights to D.B. Johnson
Construction, Inc., England Family, LLC, and/or any other Johnson-
owned company, entity, principal, alter ego, or individual (hereinafter
"Johnson"). Plaintiff shall be paid directly out of closing through
escrow. Defendants shall also reimburse Plaintiff $571.74 for unpaid
costs within 10 days after release of Plaintiff's lien;
2. This agreement is binding on all parties until the October 24, 2011
closing date, or, if the arbitrators extend the closing date, until
December 30, 2011, but no later than that date even if the arbitrators
extend the closing date beyond December 30, 2011. At the expiration
of the October 24, 2011 closing date, or if applicable, December 30,
2011, Plaintiff alone may agree to extend the deadline for closing and
payment of $200,000. If applicable deadline expires and Plaintiff does
not give written notice to extend the deadline, this Agreement is null
and void and of no effect. At that point the parties shall retain all rights
that they had against one another.
The settlement agreement further provided:
B.4. Agreement Contingent on Sale of Real Property.
This settlement agreement is contingent on the future sale of lots in
a development known as Digby Heights, the property at the center of the
AAA arbitration dispute in which Taylor represented the Woodmansees.
The Woodmansees shall pay Taylor Two Hundred Thousand Dollars
($200,000.00) directly out of escrow at the closing of the sale of lots in
Digby Heights to D.B. Johnson Construction, Inc., England Family, LLC.
Woodmansees' counsel shall also disclose immediately in writing to Mr.
Taylor any significant change in the status of the Woodmansee/Johnson
Digby lot transaction and notify Plaintiff of any change in status that would
affect the payment herein.
B.5. Agreement Binding and Dates of Termination if
Agreed Payment Not Paid.
The agreement is binding on all parties until the October 24, 2011
closing date, or, ifthe AAA arbitrators extend the closing date, until
December 30, 2011, but no later than that date even if the arbitrators
extend the closing date beyond December 30, 2011.
The deadline for closing and payment of Two Hundred Thousand
Dollars ($200,000.00) out of escrow shall not be extended unless it is
specifically extended in writing in Taylor's sole discretion. If the applicable
deadline expires, and Taylor does not give written notice to extend the
deadline, then this agreement is null and void and of no effect. At that
point the parties shall retain all rights that they had against one another.
No. 69158-9-1/6
Woodmansee argues that the language, "binding on all parties until the October
24, 2011 closing date," and "[i]f the applicable deadline expires . . . then this agreement
is null and void and of no effect," means that there was no obligation to pay Taylor after
the October 24 closing date.
But Woodmansee's argument ignores the unambiguous language that "[t]his
settlement agreement is contingent on the future sale of lots in a development known as
Digby Heights. . . . The Woodmansees shall pay Taylor Two Hundred Thousand Dollars
($200,000.00) directly out of escrow at the closing."2 Under the plain language ofthe
agreement, the sale of lots triggered the obligation to pay the attorney fees from escrow.
Because the closing did in fact occur by the deadline, under the express terms of the
agreement, Woodmansee had an obligation to pay the $200,000 in attorney fees to
Taylor. To construe the agreement otherwise would mean that Woodmansee could
simply breach the agreement by refusing to pay at the time of closing, and then claim
the agreement expired and there was no obligation to pay.
Woodmansee also argues that because the settlement agreement was an
executory contract, Taylor could not enforce the settlement agreement. But as Taylor
contends, the fact that the settlement agreement was executory does not prevent the
non-breaching party from enforcing it. In an executory contract, the original claim is
suspended pending performance of the compromise agreement. Rosen v. Ascentrv
Techs.. Inc.. 143 Wn. App. 364, 369-70, 177 P.3d 765 (2008). The non-breaching party
2The settlement agreement also specifically refers to "[t]he deadline for closing and payment."
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No. 69158-9-1/7
has the choice of either enforcing the settlement agreement or enforcing the original
claim:
"[W]ith an executory accord, pending full performance of the accord - the
compromise agreement - the original claim is merely suspended. It is not
discharged until the promised performance is complete. Breach of the
accord empowers the claimant with the choice of enforcing the accord or
the original claim."
Rosen. 143 Wn. App. at 369-70 (quoting 13 Sarah Howard Jenkins, Corbin on
Contracts § 69.1, at 278 (rev. ed. 2003)). As our supreme court has recognized, "The
law is clear. When the debtor breaches the accord, the creditor can choose whether to
sue." Crawford v. Allen. 66 Wn.2d 693, 695, 404 P.2d 767 (1965). Here, Taylor chose
to sue after Woodmansee breached the settlement agreement.
Woodmansee also contends that Taylor was judicially estopped from claiming
that the agreement was enforceable by taking the inconsistent position that the
agreement was void in the motion to lift the stay.
To determine whether to apply the doctrine of judicial estoppel, a trial court
considers three factors:
(1) whether the party's later position is clearly inconsistent with its earlier
position, (2) whether acceptance of the later inconsistent position would
create the perception that either the first or second court was misled, and
(3) whether the assertion of the inconsistent position would create an
unfair advantage for the asserting party or an unfair detriment to the
opposing party.
Anfinson v. FedEx Ground Package Svs.. Inc.. 174Wn.2d851, 861-62,281 P.3d 289(2012).3
3{Citations and internal quotation marks omitted.)
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No. 69158-9-1/8
Here, the settlement agreement provided that until closing of the sale of the lots,
or expiration if there was no closing, all court proceedings would be stayed.
The pending action will be dismissed with prejudice and without costs
once closing, payment, and execution of the release and other settlement
documents have occurred. Until that time, or when this Agreement
expires, all proceedings shall be stayed. Plaintiff shall immediately
release all liens on the applicable projects.
On November 4, 2011, Taylor filed a motion to lift the stay and a motion to
amend the complaint. Taylor sought to lift the stay because it was unclear whether the
stay was lifted once the breach occurred.
Plaintiff moves the Court for an order lifting the Stay entered nunc
pro tunc to June 1, 2011 pursuant to Stipulation and Order submitted by
the parties because the Defendants have failed to make the payment as
they had agreed to by October 24, 2011 pursuant to a Settlement
Agreement executed by the parties.
. . . Because the order entered does not clearly state the stay [is]
automatically lifted if payment is not made on October 24, 2011, or the
Settlement Agreement is extended in writing by Plaintiff, in Plaintiffs sole
discretion, this motion is deemed necessary.
In response, Woodmansee argued that the stay should remain in effect and the
parties should be ordered back to mediation. In the reply, Taylor addressed
Woodmansee's contention that he refused to return to mediation:
By the terms of the Settlement Agreement, which incorporates the
Settlement Memo by reference, the Settlement Agreement is null and void
if the Settlement Agreement is not extended in writing by the Plaintiff in the
Plaintiff's sole discretion. As of November 2, 2011, the date of expiration
of the Second Extension, the Settlement Agreement was terminated. The
only reason Plaintifffiled a Motion to Lift the Stay [is] because the
language in the second paragraph of the Order for Stay that should have
included the October 24, 2011 date was in error. Just because the
Settlement Agreement has terminated does not in any way mean that the
Parties cannot return to mediation; it only means that the Parties would
have to mutually agree to return to mediation. Without additional
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No. 69158-9-1/9
consideration being paid to extend the stay or other good reason or
benefit to return to mediation, Plaintiff has no reason to continue to
mediate an agreement that was breached by WOODMANSEE.
In context, Taylor did not take an inconsistent position as to the validity and
enforceability of the agreement. The settlement agreement states that it "is binding on
all parties until the October 24, 2011 closing date," unless Taylor agreed to an
extension. Taylor argued that because he did not agree to an extension of the
settlement agreement, and without additional consideration or good cause, there was
no reason to return to mediation.
We affirm. Under the terms of the settlement agreement and upon compliance
with RAP 18.1, Taylor is entitled to attorney fees and costs on appeal.4
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WE CONCUR:
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