Consolidated Midland, Inc. v. Arbor Valley Farms, Llc ( 2019 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION ONE
CONSOLIDATED MIDLAND, INC., ) No. 77939-7-1
)
Appellant, )
)
v. )
)
ARBOR VALLEY FARMS, LLC; ) UNPUBLISHED OPINION
JOHN ANTHONY HALL; NANCY )
HALL; GERALD HALL, ) FILED: April 8, 2019
)
Respondents. )
)
VERELLEN, J. — Consolidated Midland, Inc.(CM)agreed to withdraw its
adverse possession claims against Arbor Valley Farms, LLC and the Hall family
(AVF) in exchange for AVF dismissing its timber trespass and waste counterclaims
and granting CM a permanent easement for "access" on the "existing roads" on
AVF's property. Because the parties objectively manifested in open court their
intent to settle the lawsuit, there is an enforceable CR 2A settlement agreement.
The parties' contemplation of the need to stake the roadway does not render the
settlement a mere agreement to agree, especially in light of CM's unequivocal
statements in the trial court that the in court agreement was enforceable. The trial
court did not err when it determined the in court agreement was enforceable.
Therefore, we affirm.
No. 77939-7-1/2
FACTS
In 1981, CM purchased three parcels in North King County. T&L Nursery, a
subsidiary of CM, began operating a nursery on the property. In 1986, CM began
using a strip of land on the south border of the adjacent parcel and a strip of land
on the west border of the adjacent parcel. CM used portions of the two strips of
land as access roads. Portions were also used for employee parking, equipment
storage, and composting.
In 2012, John Hall and his parents, Jerald and Nancy Hall, purchased the
adjacent parcel and formed AVF. In early 2013, the Halls complained about CM's
use of the two strips of land. On September 17, 2014, CM filed this lawsuit to
quiet title through adverse possession. In response, the Halls and AVF denied the
adverse possession claim and raised counterclaims for timber trespass and waste.
On January 26, 2015, the court granted CM's motion for summary judgment
on the adverse possession claim. The case proceeded on AVF's counterclaims.
Trial was set for May 16, 2016.
On May 17, 2016, after pretrial motions but before jury selection began, the
parties announced to the court they had reached a settlement agreement. Under
the terms of the settlement agreement, "[t]he summary judgment on both access
roads are retracted in exchange for the granting of a permanent easement on both
access roads."' The agreement was read into the record in open court under
CR 2A.
1 Report of Proceedings(RP)(May 17, 2016) at 231.
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On the same day, the parties traveled to the subject property and placed
stakes to mark the easement boundaries. Counsel for CM drafted a handwritten
"staking agreement" generally describing the easement boundaries.2 The parties
signed the staking agreement, and it was sent to the court the following day.
The parties agreed to have Thomas Woldendorp survey the property to
establish a legal description of the easement. When Woldendorp was unavailable,
Wolfgang Mueller, the president of CM, commissioned Triad Associates to conduct
a survey. After receiving a copy of the survey, AVF objected to the survey and
claimed CM moved the stakes referenced in the handwritten staking agreement.
AVF obtained their own survey from Jeff Harstad. CM objected and claimed
AVF's survey did not reflect their earlier agreement. CM moved to enforce the
settlement agreement and asked the court to use the Triad survey to generate a
legal description of the easement. AVF also moved to enforce the agreement but
asked the court to use the Harstad survey.
On October 5, 2015, the trial court "ratified" the settlement agreement,
rescinding summary judgment and granting an easement. The court determined
"[i]t is clear that the parties intended that the easements follow the existing roads,"
but the court also acknowledged that "the parties indicated they needed to walk
the property [Ito confirm the location of the easement in question."3 The
2 Ex. 12.
3 Clerk's Papers(CP) at 424-25.
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No. 77939-7-1/4
court determined the staking agreement was ambiguous and reliance on outside
evidence was necessary for interpretation. And the court held any ambiguities in
the staking agreement must be interpreted in favor of AVF because it was drafted
by CM's counsel.
In reviewing the Triad survey commissioned by CM and the Harstad survey
commissioned by AVF, the court determined:
The Triad survey does not appear to comport in any way with the
agreement to follow the existing roads. The Harstad survey appears
to come closer. However, the Harstad survey includes a granting of
an easement from Consolidated Midland to the Halls/Arbor Valley
Farms, which was not part of the settlement agreement.[4]
The court set an evidentiary hearing "for the sole purpose of interpreting the
settlement agreement as to the location of permanent easements."5
On November 18, 2016, William Hawkins of Pace Engineers, Inc. surveyed
the location of the existing access roads. The purpose of the survey "was to
identify the property lines of the parties' parcels and to locate the existing travel
way."6
The court held the evidentiary hearing on December 6, 2016, January 17,
2017, and March 7, 2017. And on June 6, 2017, the court issued an order
finalizing settlement. In the order, the court characterized the issue as whether the
staking agreement altered or amended the May 17, 2016 in-court CR 2A
agreement.
4 CP at 425.
5 CP at 427.
6 CP at 649.
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The court found "[t]he CR 2A agreement provided the easements would be
on 'existing roads,' which are not straight."' The court also found that after arriving
at the property to place the stakes on May 17, 2016, the parties "orally agreed that
it would simplify matters for description purposes to make the easements straight
lines."8 But the court concluded it was not possible to determine where the parties
intended those lines to run because "[Mitnesses" memories were faulty as to what
photographs were taken when, what stakes were planted by whom, and where the
points of reference are.79
As a result, the court determined, the staking agreement could not alter the
in-court agreement. The court concluded the agreement clearly provided the
permanent easements would follow the existing access roads. Because the Pace
survey outlined the existing roads, the court used the Pace survey to set the
boundaries of the easement.
On December 18, 2017, the court entered the final order on CR 2A
settlement agreement consistent with the June 6, 2017 order.
CM appeals.
7 CP at 648.
8 Id.
9 Id.
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ANALYSIS
I. Contract Formation
CM argues the trial court erred when it found the in court settlement
agreement was a valid and enforceable contract. CM presents several
overlapping theories to support this argument.
Contract interpretation is a mixed question of law and fact.1° The primary
purpose of contract interpretation is to ascertain the parties' intent.11
[W]e ascertain the intent of the contracting parties "by viewing the
contract as a whole, the subject matter and objective of the contract,
all the circumstances surrounding the making of the contract, the
subsequent acts and conduct of the parties to the contract, and the
reasonableness of respective interpretations advocated by the
parties."[12]
The validity and enforceability of a settlement agreement is determined
under substantive contract law.13
First, CM contends the agreement was not enforceable because the parties
did not mutually assent to the exact boundaries of the easement.
"An essential element to the valid formation of a contract is the parties'
objective manifestation of mutual assent."14 The objective manifestation test
focuses "on the 'reasonable meaning of the contract language to determine the
10Mutual of Enumclaw Ins. Co. v. USF Ins. Co., 164 Wash. 2d 411, 424 n.9,
191 P.3d 866 (2008).
11 Berg v. Hudesman, 115 Wash. 2d 657, 663, 801 P.2d 222(1990).
12 Mutual of Enumclaw, 164 Wash. 2d at 424 n.9 (internal quotation marks
omitted)(quoting id. at 667).
13 Evans & Sons, Inc. v. City of Yakima, 136 Wash. App. 471, 477, 149 P.3d
691 (2006).
14 Cruz v. Chavez, 186 Wash. App. 913, 920, 347 P.3d 912 (2015).
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No. 77939-7-1/7
parties' intent.'"15 "'We impute an intention corresponding to the reasonable
meaning of the words used.'"16 When considering the parties' intent, we "'give
effect to .. . the intent of the parties at the time of execution."17
On May 17, 2016, before reading the agreement into the record, AVF's
counsel informed the court, "the agreement we've reached is they want to use the
road."18 According to the terms of the agreement, "[t]he summary judgment on
both access roads are retracted in exchange for the granting of a permanent
easement on both access roads."19 When the court asked what the parties meant
by "where the roads currently are," CM's counsel responded, "[t]he existing
roads."2° Moments later, CM's counsel reiterated that the parties' agreed the
easement was on the "[e]xisting road."21 At the time of execution of the
agreement, CM and AVF mutually assented that the easement would follow the
existing access roads.
Second, CM contends the agreement was not enforceable because the
terms concerning the location and boundaries of the easement were not
15RSD AAP, LLC v. Alyeska Ocean, Inc., 190 Wash. App. 305, 315, 358 P.3d
483(2015)(internal quotation marks omitted)(quoting Viking Bank v. Firgrove
Commons 3, LLC, 183 Wash. App. 706, 712, 334 P.3d 116 (2014)).
16 Id. (quoting Hearst Commc'ns Inc. v. Seattle Times Co., 154 Wash. 2d 493,
503, 115 P.3d 262(2005)).
17 Id. at 316 (emphasis added)(alteration in original)(quoting 25 DAVID K.
DEWOLF, KELLER W.ALLEN, & DARLENE BARRIER CARUSO, WASHINGTON PRACTICE:
CONTRACT LAW AND PRACTICE § 5:8, at 187-88 (3d ed. 2004)).
18 RP (May 17, 2016) at 228 (emphasis added).
19 Id. at 231 (emphasis added).
29 Id. (emphasis added).
21 Id. at 237(emphasis added).
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No. 77939-7-1/8
sufficiently definite. Rather, CM argues the parties formed an unenforceable
agreement to agree because they still needed to stake the location of the road.
"An agreement to agree is ``an agreement to do something which requires a
further meeting of the minds of the parties and without which it would not be
complete.'"22 Agreements to agree are unenforceable in Washington.23
To form a contract, "the terms assented to must be sufficiently definite."24
"If an offer is so indefinite that a court cannot decide just what it means and fix
exactly the legal liability of the parties, its acceptance cannot result in an
enforceable agreement."25 "However, indefiniteness as to an immaterial term is
not fatal. Where the parties have intended to finalize a bargain, any uncertainty as
to incidental or collateral matters is generally not harmful to the validity of the
contract."26 Additionally, "Washington courts 'will not give effect to interpretations
that would render contract obligations illusory.'"27
On May 17, 2016, before the parties read the CR 2A agreement into the
record, AVF's counsel informed the court:
22Keystone Land & Dev. Co. v. Xerox Corp., 152 Wash. 2d 171, 175-76, 94
P.3d 945(2004)(quoting Sandeman v. Savres, 50 Wash. 2d 539, 541-42, 314 P.2d
428 (1957)).
23 Id.
24 Id. at 178.
25 16th Street Investors, LLC v. Morrison, 153 Wash. App. 44, 55, 223 P.3d
513(2009).
26 25 DEWOLF et al., § 2:27, at 90-91 (citing Restatement(Second) of
Contracts § 32-33, cmt. a (1981)).
27 SAK & Assocs., Inc. v. Ferguson Const., Inc., 189 Wash. App. 405, 412,
357 P.3d 671 (2015)(quoting Taylor v. Shigaki, 84 Wash. App. 723, 730, 930 P.2d
340 (1997)).
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No. 77939-7-1/9
[T]he only issue that we have is that we need to go out there and
actually walk the road which is the boundary. Because the
agreement we've reached is they want to use the road, we say, "Fine
we'll give you an easement for the road, but you return the adverse
possession property, and we'll just stake the road so everyone
knows exactly where it is." So that is the only issue remaining before
we can actually complete the settlement.E281
A few moments later, John Hall asked,"How does this all work?" His
counsel replied:
[T]he settlement we've agreed upon is going to be put on the record
for the court. . . . But then we still have to go out and []look at the
boundary and do the stakes. The problem is, is that if there is a
dispute on that, it kind of messes everything up. The problem is, is
that my clients want to know exactly where it is going to be on the
road. . . .[a]nd they want to visualize it. And so they need to actually
go out there and stand in the road and say,"Put a stake here, here,
here, here," and then we can measure it and then we actually have a
physical description that everyone agrees to.[29]
CM's counsel offered to "put the other terms in, then only the staking would
be left" and AVF's counsel agreed.3°
After a question from the court, CM's counsel clarified the boundaries would
be measured from the existing roads, and the parties would "stake that where
everybody knows then what the permanent easement is."31
After the agreement was read into the record, the following exchange
occurred:
COURT: From what I'm hearing, . . . I hear that there is a
settlement reached, then the only contingency is
simply the location-
28 RP (May 17, 2016) at 228-29.
28 Id. at 230-31.
3° Id. at 231.
31 Id. at 232.
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No. 77939-7-1/10
AVF: Of the road.
COURT: —that needs to be simply confirmed.
AVF: Correct.
CM: Yes.
COURT: It's not subject to dispute, we just—you just need to
go out there to make sure that it's—
CM: Existing road, we're going to stake it, and that's that.
AVF: Well, actually, wait a minute. . . . The area was that
they were going to say, "This is what! need in the
road." Because the road meanders. In fact, you
know, if you look at this, you can see immediately
what the problem is, is that the road comes around.
This one, it's not a problem, but the road comes
around this corner and it does dipsy-doodle. And so,
you know, what it is, is we asked Mr. Mueller,"What
do you need?" And he says, "I need enough space
for two of my carts to go by and a truck to go around."
And we say, "That's no problem. We can agree to
that." And that was what the basis was, that we were
going to go out and stake the road to accommodate
that. And that may take a little more, it may take a
little less of what's actually there, but it's to give him
that ability. . . . We need to go out there, we need to
stake the road, and everybody agree,"Yeah, that's
the road that's going to be"—that we agree on. And
that's the only thing that remains.[321
The agreement addressed the material terms regarding the easement. The
parties agreed the easement would be on the existing access roads. At a certain
point in the road, which the parties refer to as a "dipsy doodle," AVF agreed to
32 RP (May 17, 2016) at 237-38.
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No. 77939-7-1/11
allow CM enough room (width) for two carts33 and a truck. The purpose of staking
the road was to allow AVF to visualize the easement.
Although AVF's counsel mentioned the easement might require a little more
or a little less at the "dipsy doodle," the parties' contemplation of staking the
location did not constitute an agreement to agree. Neither party was free to walk
away from the in court agreement. The court confirmed this point on May 17,
2016 before the parties left to go stake the roads:
All right. So from my perspective, the case has been settled, can't
go home tonight and say,"Changed my mind, Judge, let's keep
going with the trial." I'm moving on to another case.[34]
In response, both parties agreed the case was settled. As long as the
easement remained on the existing road at the width of the existing travel way, as
agreed on the record, the agreement was binding. The only variation to width was
limited to a defined standard (two carts and a truck) at one single point (dipsy
doodle). In this context, staking the width of the two carts and a truck at the "dipsy
doodle" is a collateral matter. CM's argument would effectively render the in-court
agreement illusory. The parties objectively manifested an intent to be bound to a
settlement, not an agreement to agree.
In the alternative, CM argues, even if the settlement agreement was
enforceable, the failure of a condition precedent precluded enforcement. CM
argues the parties' discussion about staking the road was a condition precedent.
33 As made clear in the numerous photographs admitted into evidence, the
nursery uses unpowered uniformly sized four-wheel rectangular carts to move
plants around. See CP at 329, 330, 332.
34 RP (May 17, 2016) at 238.
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No. 77939-7-1/12
Conditions precedent are "those facts and events, occurring subsequently
to the making of a valid contract, that must exist or occur before there is a right to
immediate performance, before there is a breach of contract duty, before the usual
judicial remedies are available.'"35
Although "words such as 'provided that,'on condition,' when,"so that,'
'while,' as soon as,' and 'after' suggest" a condition precedent,36 CM fails to
provide any meaningful argument or authority to establish the parties' in-court
comments concerning staking should be construed as a condition precedent.
CM also challenges the trial court's conclusion that the staking agreement
was ambiguous. The staking agreement provides three reference points, staked
by the parties on May 17, 2016. The points connect to form a boundary on the
south and west edges of AVF's property. The trial court heard three days of
testimony concerning the location of the stakes. Neither party could identify
precisely where the stakes were placed on May 17, 2016 nor document whether
those stakes were subsequently moved. Our review of the record, along with
CM's argument, does not give any further clarity to this issue. As a result, the trial
court did not err when it concluded the staking agreement is ambiguous.
35 Tacoma Northpark, LLC v. NW, LLC, 123 Wash. App. 73, 79, 96 P.3d 454
(2004)(quoting Ross v. Harding, 64 Wash. 2d 231, 236, 391 P.2d 526 (1964)).
36 Id. at 80 (quoting Jones Assoc. v. Eastside Prop., 41 Wash. App. 462, 46,
704 P.2d 681 (1985)).
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No. 77939-7-1/13
II. Judicial Estoppel
CM moved the trial court to enforce the settlement agreement. But on
appeal, CM argues the trial court erred in enforcing the agreement. Judicial
estoppel precludes CM from asserting a clearly inconsistent position.
"'Judicial estoppel is an equitable doctrine that precludes a party from
asserting one position in a court proceeding and later seeking an advantage by
taking a clearly inconsistent position."37 In determining whether judicial estoppel
applies, we consider three factors:
(1)[W]hether 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 the
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.[38]
"Acceptance of an initial position is a precondition to the application of
judicial estoppel."39
On appeal, CM contends the agreement is insufficiently definite to be
enforced. CM claims the parties entered into an unenforceable agreement to
agree:
[T]he exact location of the easement was a critical part of the
agreement between the parties. Indeed, the entire settlement
depended upon both sides mutual agreement to the easement
location. Although the parties "agreed to agree" once they got to the
property, the[y] ultimately found that each had a very different idea of
37 Arkison v. Ethan Allen, Inc., 160 Wash. 2d 535, 538, 160 P.3d 13(2007)
(quoting Bartley-Williams v. Kendall, 134 Wash. App. 95, 98, 138 P.3d 1103 (2006)).
38 Anfinson v. FedEx Ground Package Sys., Inc., 174 Wash. 2d 851, 861-62,
281 P.3d 289(2012)(quoting id. at 538-39).
39 Taylor v. Bell, 185 Wash. App. 270, 284, 340 P.3d 951 (2014).
13
No. 77939-7-1/14
what the permanent easement should look like. As a consequence,
the parties did not place a material term of the purported settlement
agreement on the record, and once each party reviewed the other's
survey, it beca[me] clear that they failed to agree upon all of the
contract's material terms. Under these circumstances, a valid and
enforceable contract cannot exist.[401
This is clearly inconsistent with CM's position before the trial court. CM
moved the trial court to enforce the in court settlement agreement.41 Specifically,
CM asked the court "to intervene one more time and enforce the terms of the
settlement reached during a trial in her court and read into the record."42 And CM
framed the issue as "Whether the court should enforce the settlement agreement
reached in her court on May 17, 2016? — Yes."43 CM's proposed order provided:
1. That the Summary Judgment order of January 26, 2015 is revised
and rescinded, with the result that the property awarded to
Consolidated Midland, Inc. by adverse possession in said order is
nullified, said property returning to John Hall, Jerry Hall, Nancy Hall
and Arbor Valley Farms[.]
2. That Consolidated Midland Inc. is granted a permanent easement
for ingress and egress.[441
AVF also sought to enforce the agreement but asked the court to use
a different survey to describe the easement. In the context of addressing
AVF's arguments, Mueller declared, "I have consistently said Consolidated
will stick with what was said in court and stick with the signed staking
40 Appellant's Br. at 32-33.
41CP at 184-86.
42 CP at 185 (emphasis added).
43 Id.
44 CP at 209-10.
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No. 77939-7-1/15
agreement."45 And in CM's memorandum in opposition to AVF's motion,
CM represented, "This matter is settled. It was settled on the basis of two
unambiguous contracts—one, put on the record on May 17, 2016, and the
second, the signed Staking Agreement of May 17, 2016 setting out the
specific boundaries of Consolidated's permanent easement."46
The court accepted CM's representations when it entered its October 11,
2016 order ratifying the CR 2A agreement. The court determined, "It is clear that
the parties intended that the easements follow the existing roads."47 And the court
concluded, although the parties appeared to agree to use straight lines, "rather
than the somewhat meandering version of the existing roads," the staking
agreement memorializing the location of the straight lines was ambiguous.48 As a
result, the court denied CM's request that the Triad survey be used to define the
easement. "The Triad survey does not appear to comport in anyway with the
agreement to follow the existing roads. . . and goes into unimproved Hall/AVF
property, contrary to the settlement agreement."49 The court ordered, "the
settlement agreement entered in court on May 17, 2016 is ratified as follows: . . .
Consolidated Midland, Inc., together with John Hall, Jerry Hall, Nancy Hall, and
45 CP at 342.
46 CP at 360.
47 CP at 425.
45 CP at 424-25.
49 CP at 425.
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No. 77939-7-1/16
Arbor Valley Farms, LLC, are granted permanent easements for ingress and
egress for both access roads."5°
CM asks this court to reverse the court's order ratifying the settlement
agreement and rescinding summary judgment. The result would be to reinstate
the adverse possession judgment in favor of CM and proceed to trial on AVF's
counterclaims. This would create an unfair advantage for CM. CM repeatedly
represented to the trial court that the in court settlement agreement was
enforceable. The trial court accepted these representations when it ratified the
agreement. CM cannot assert on appeal that the in court agreement was
unenforceable.
III. Requirements of CR 2A
CM also contends the court abused its discretion in enforcing the settlement
agreement because the agreement did not strictly comply with the requirements of
CR 2A.
A trial court's authority to compel enforcement of a settlement agreement is
governed by CR 2A and RCW 2.44.010.51 We review a trial court's decision to
enforce a CR 2A settlement agreement under the abuse of discretion standard.52
A trial court abuses its discretion when its decision is manifestly unreasonable or
based on untenable grounds or reasons.53
50 CP at 426.
51 Morris, 69 Wash. App. 865, 868, 850 P.2d 1357 (1993).
52 Id.
53 Id.
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No. 77939-7-1/17
CR 2A provides:
No agreement or consent between parties or attorneys in respect to
the proceedings in a cause, the purport of which is disputed, will be
regarded by the court unless the same shall have been made and
assented to in open court on the record, or entered in the minutes, or
unless the evidence thereof shall be in writing and subscribed by the
attorneys denying the same.
Similarly, RCW 2.44.010 provides:
An attorney and counselor has authority:
(1) To bind his or her client in any of the proceedings in an action or
special proceeding by his or her agreement duly made, or entered
upon the minutes of the court; but the court shall disregard all
agreements and stipulations in relation to the conduct of, or any of
the proceedings in, an action or special proceeding unless such
agreement or stipulation be made in open court, or in presence of
the clerk, and entered in the minutes by him or her, or signed by the
party against whom the same is alleged, or his or her attorney.
CR 2A "precludes enforcement of a disputed settlement agreement not
made in writing or put on the record, whether or not common law requirements are
met."54 And even if the "in writing or put on record" requirements have not been
satisfied, the court is precluded from enforcing the agreement only if there is a
genuine dispute over the existence of material terms of the agreement.55
Here, because the parties did read the terms of the settlement agreement
into the record in open court on May 17, 2016, CR 2A does not bar enforcement of
the agreement.
54 In re Marriage of Ferree, 71 Wash. App. 35, 40, 856 P.2d 706 (1993).
55 Id. at 40-41.
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No. 77939-7-1/18
CM also argues CR 2A bars enforcement if the agreement does not contain
all material terms. But CM fails to cite any authority to support this assertion, and
a review of the rule and surrounding case law does not reveal such a requirement.
CR 2A does not preclude enforcement of the settlement agreement.
IV. Fees on Appeal
AVF seeks fees on appeal under RAP 18.9.
Under RAP 18.9(a), an appellate court "may order a party. . . who uses
these rules for the purpose of delay. . . to pay terms or compensatory damages to
any other party who has been harmed by the delay." "An appeal is frivolous if
there are no debatable issues upon which reasonable minds might differ and it is
so totally devoid of merit that there was no reasonable possibility of reversal."56
Although CM's appeal is unsuccessful, the appeal is not frivolous because it
presents debatable issues. We deny AVF's request for fees on appeal.
Therefore, we affirm.
WE CONCUR:
56 Fay v. Nw Airlines, Inc., 115 Wash. 2d 194, 200-01, 796 P.2d 412, 415
(1990).
18