Michael Scott Fladseth & Brickstone Holdings Llc, V. Moses Land Grow, Llc ( 2021 )

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
MOSES LAND GROW, LLC, a No. 81603-9-I
Washington Limited Liability Company
DIVISION ONE
Respondent,
UNPUBLISHED OPINION
v.
BRICKSTONE HOLDINGS, LLC, a
Washington Limited Liability Company;
MICHAEL SCOTT FLADSETH and JANE
DOE FLADSETH, husband and wife, and
their marital community,
Appellant.
ANDRUS, A.C.J. — Michael Fladseth appeals a judgment entered against
him in favor of his former joint venture partner, Moses Land Grow, LLC (MLG). He
contends material issues of fact precluded summary judgment on MLG’s claims of
breach of contract and misrepresentation. He also argues the trial court
miscalculated the judgment amount. We disagree and affirm.
FACTS
In March 2017, Fladseth and MLG formed Brickstone Holdings, LLC
(Brickstone), a joint venture engaged in the business of purchasing and developing
real property located at 10843 1st Avenue South in Seattle. They signed an
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operating agreement under which Fladseth agreed to act as manager of Brickstone
and to make an initial capital contribution of “one half (1/2) of the $550,000
purchase price and related costs.” Fladseth agreed to serve without
compensation. MLG agreed to make, as its initial capital contribution, “half (1/2)
of the $550,000 purchase price and related costs by wire transfer to escrow for
closing and additional development costs thereafter.” If either member failed to
make their initial capital contribution within ten days from the effective date of the
operating agreement, the defaulting member’s interest would terminate.
As manager, Fladseth was given the authority to make “all decisions
concerning the operation and management of the Company’s business,” including
executing loans and encumbrances of the company and its assets. But on the
same day the parties executed the operating agreement, they also executed a
corporate resolution that provided that “[a]ny single expense in excess of $20,000
. . . shall be approved by a majority of the members before it is executed by the
manager.”
It is undisputed that MLG made its initial capital contribution of $275,000 to
fund its 50 percent share of the property purchase. MLG subsequently discovered
that Fladseth never made a cash capital contribution. Instead, in late April 2017,
Fladseth, on behalf of Brickstone, obtained a loan of $297,840 from a lender
named Eastside Funding, LLC (Eastside) and used the loan proceeds to fund his
share of the purchase price. Fladseth also executed an “Unconditional Guaranty
of Payment and Performance,” purportedly on behalf of MLG, in which he
committed MLG to repaying the Eastside promissory note. MLG’s representative,
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Julinda Juniarty, testified that Fladseth was never a manager, member, or agent
of MLG and had no authority to execute any loan guaranty on its behalf. Fladseth
did not dispute this evidence.
At the same time Fladseth signed the loan documents for the purchase of
the property, he entered into a separate construction loan agreement with
Eastside, under the terms of which Eastside agreed to lend Brickstone
$154,500.00 to finance its development and construction expenses. He executed
a “Construction Promissory Note,” agreeing to pay off the balance of the note by
September 16, 2017. And Fladseth executed a “Construction Deed of Trust,
Security Agreement and Fixture Filing,” pledging the property as collateral for the
loan.
The purchase closed on or about April 21, 2017. Juniarty testified that
before the sale closed, Fladseth showed her what purported to be an estimated
settlement statement for the property and this statement did not reflect the fact that
Brickstone had taken out any loans to fund the acquisition.
When MLG discovered that Fladseth had used loan proceeds to fund his
share of the purchase price and that Fladseth had signed a guaranty in MLG’s
name, Juniarty demanded that Fladseth be personally responsible for the loan. On
May 1, 2017, Fladseth signed a document entitled “Brickstone Holdings LLC
Resolution re: Fladseth Loan Responsibility” (the May 1 Promissory Note) in which
he acknowledged his personal responsibility for the loan he had taken out in
Brickstone’s name. The document further provided:
M. Scott Fladseth agrees that this resolution, both in concert
with the Operating Agreement and as a free standing instrument,
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shall serve as a binding contract, agreement, and promissory note
reflecting his responsibility for the 1st Street project loan as set forth
above subject to full enforcement under the Laws of the State of
Washington.
In October 2017, Fladseth took out a new loan for $280,000, doing so this
time in his name personally and in the name of Brickstone, from a new lender,
Kevin Downey. He executed a new promissory note and agreed to repay it with
interest at a rate of 12 percent by August 19, 2018. Fladseth also executed, on
behalf of Brickstone, a deed of trust, again pledging the property as collateral for
the loan. Fladseth used the proceeds from this loan to pay off the Eastside
construction loan of $154,500.
There is no evidence in the record that Fladseth incurred any costs to
renovate any portion of the property. According to Fladseth, he immediately began
looking for buyers for the warehouse. He testified that Juniarty was anxious to sell
the property and wanted him to find a buyer quickly. Although Fladseth secured a
few offers, each fell through.
In July 2018, MLG initiated litigation against Fladseth and Brickstone,
alleging that Fladseth had not made a capital contribution as required by the
operating agreement, that Fladseth had taken out loans in Brickstone’s name and
encumbered the property without MLG’s knowledge or consent, and that Fladseth
had misappropriated rental income. MLG alleged claims of breach of fiduciary
duty, fraud or misrepresentation, fraudulent concealment, breach of contract, and
conversion, and sought an accounting from Fladseth, an injunction removing him
as manager of the company, and a dissolution of Brickstone.
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On October 8, 2018, Fladseth executed a purchase and sale agreement
with a buyer named Todd Bell for the price of $930,000, subject to financing and a
45-day feasibility study. On October 22, 2018, the court appointed a custodial
receiver to take over management of Brickstone. The receiver took over
negotiations relating to the ultimate sale to Bell. On December 14, 2018, the court
approved the sale of the property to Bell. Although the revised purchase and sale
agreement is not in the record, the excise tax affidavit shows the final purchase
price was of $900,000.
As directed by the trial court, the receiver used the proceeds of the sale to
pay off the debts Fladseth had caused Brickstone to incur. After paying off the
company’s loans, the closing costs, taxes, and sales commissions, the net
proceeds of the sale were $101,154.49. As required by the order authorizing the
sale, the receiver deposited those proceeds with the registry of the King County
Superior Court.
MLG moved for summary judgment on two of its claims, breach of contract
and misrepresentation. It sought $397,905.83 in damages from Fladseth. It also
filed a motion to have the net sales proceeds on deposit with the court distributed
to MLG to offset Fladseth’s debt.
In November 2019, the trial court granted MLG’s motions, finding Fladseth
liable for breach of contract and misrepresentation. It awarded MLG $397,905.83,
to be offset by the amount disbursed to MLG from the remaining sale proceeds.
The court subsequently awarded MLG attorney fees of $39,694, and costs of
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$2,163.32, based on a provision in the operating agreement. It entered final
judgment against Fladseth after MLG voluntarily withdrew all remaining claims.
Fladseth appeals the judgment against him.
ANALYSIS
Fladseth argues the trial court erred in granting summary judgment because
there are questions of fact as to whether he breached the operating agreement or
misrepresented his capital contribution and whether he caused MLG to incur any
damages. We disagree.
Summary judgment is appropriate when there are no genuine issues of
material fact and the moving party is entitled to judgment as a matter of law. CR
56(c); Messenger v. Whitemarsh, 13 Wn. App. 2d 206, 210, 462 P.3d 861 (2020).
“A genuine issue of material fact exists when reasonable minds could differ on the
facts controlling the outcome of the litigation.” Messenger, 13 Wn. App. 2d at 210
(quoting Dowler v. Clover Park Sch. Dist. No. 400, 172 Wn.2d 471, 484, 258 P.3d
676 (2011)).
If the moving party satisfies its initial burden of showing no issues of fact
exist, the burden shifts to the nonmoving party to bring forth specific facts to rebut
the moving party's contentions. Elcon Constr., Inc. v. E. Wash. Univ., 174 Wn.2d
157, 169, 273 P.3d 965 (2012). Although all facts and reasonable inferences must
be interpreted in the light most favorable to the nonmoving party, Messenger, 13
Wn. App. 2d at 210, “[t]he nonmoving party may not rely on speculation,
argumentative assertions, ‘or in having its affidavits considered at face value; for
after the moving party submits adequate affidavits, the nonmoving party must set
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forth specific facts that sufficiently rebut the moving party's contentions and
disclose that a genuine issue as to a material fact exists.’” Becker v. Wash. State
Univ., 165 Wn. App. 235, 245-46, 266 P.3d 893 (2011) (quoting Seven Gables
Corp. v. MGM/UA Entm't Co., 106 Wn.2d 1, 13, 721 P.2d 1 (1986)).
We review rulings on summary judgment de novo. Messenger, 13 Wn. App.
2d at 210.
Breach of Contract
Fladseth first argues that the trial court erred in granting summary judgment
because there are issues of fact as to whether he breached the operating
agreement. MLG argued below that Fladseth breached the operating agreement
by failing to make a cash capital contribution within ten days of the effective date
of that agreement and he violated the expenditure resolution by taking out a
construction loan, well in excess of the $20,000 limit, without MLG’s authorization
or consent. Fladseth contends he pledged a promissory note for his half of the
purchase price and this pledge constituted a permissible capital contribution under
the language of the operating agreement. He also maintains that he had the
authority under the operating agreement to encumber the property and the
corporate expense resolution did not limit his ability to take out loans on
Brickstone’s behalf. We address each issue in turn.
Fladseth’s Capital Contribution
The operating agreement required each member of Brickstone to make an
initial capital contribution of one-half of the $550,000 purchase price within ten
days of the effective date of the operating agreement.
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Fladseth concedes he contributed no cash to Brickstone or to the purchase
of the property. Instead, Fladseth argues he made a non-monetary capital
contribution by pledging to repay the $297,840 loan he took out in Brickstone’s
name. There are several problems with this argument.
First, the operating agreement became effective on March 28, 2017, when
Fladseth and MLG executed it. Fladseth did not execute any promissory note until
May 1, 2017, more than 10 days after the operating agreement’s effective date. If
the May 1 Promissory Note was an acceptable non-monetary capital contribution,
he did not make it until after the expiration of the 10-day period. Based on this
undisputed evidence, Fladseth breached paragraph 3.3 of the operating
agreement and his membership in Brickstone terminated on the day of breach.
Second, paragraph 1.7 of the operating agreement defined “Capital
Contribution” as:
[T]he amount of money, the forgiveness of any debt, and the
Fair Market Value of any services or property (other than money)
contributed to the Company (net of liabilities secured by such
contributed property that the Company is considered to assume or
take “subject to” under IRC Section 752) in consideration of a
Percentage Interest held by such Member. A Capital Contribution
shall not be deemed a loan.
“Fair Market Value” is also a defined term. The “Fair Market Value” of any property
contributed by a member to the company “shall be the value of such property, as
mutually agreed by the contributing Member and the Company.”
These provisions of the operating agreement required Fladseth to
contribute either money or other “property” with an agreed-upon fair market value.
There is no evidence in the record that Fladseth and Brickstone reached an
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agreement on the value of Fladseth’s pledge to repay the Brickstone loan.
Depending on Fladseth’s personal wealth (or lack thereof) and assets he owned
to back up this promissory note, its fair market value could have been zero.
Fladseth contends that RCW 25.15.191 permits members to pledge
promissory notes as their capital contributions in limited liability companies. That
statute provides:
The contribution of a member to a limited liability company may
consist of tangible or intangible property or other benefits to the
limited liability company, including money, services performed,
promissory notes, other agreements to contribute cash or property,
or contracts for services to be performed.
But under RCW 25.15.018(1), the limited liability company agreement governs
relations among members. Chapter 25.15 RCW only governs “[t]o the extent the
limited liability company agreement does not otherwise provide . . .” RCW
25.15.018(2). Because the parties to this operating agreement expressly defined
what the members considered to be acceptable initial capital contributions, RCW
25.15.191 does not apply. While the word “property” in paragraph 1.7 of the
operating agreement could conceivably include a promissory note, because a
promissory note may be a type of intangible property, In re Davis, 35 B.R. 795,
799 (Bankr. W.D. Wash. 1983) (intangible property includes stocks, bonds,
promissory notes and franchises), the value of any such property remained subject
to an agreement between the member and the company as to that property’s fair
market value. No such agreement existed here.
Finally, even if the parties had agreed that Fladseth could contribute a
promissory note as his initial capital contribution, he presented no evidence that
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the note had an actual value of one-half of the purchase price, as required by
paragraph 3.2 of the operating agreement. Generally, when a member’s capital
contribution is only that member’s own promissory note, the member’s capital
account would be $0. See 31 DALE CARLISLE & BROOKE JOHNSON, W ASHINGTON
PRACTICE, W ASHINGTON BUSINESS LAW 804 cmt. to 25.15.191 (2019 ed.). If
Fladseth’s promissory note had a value of $0, he cannot claim he contributed one-
half of the $550,000 purchase price.
The trial court did not err in concluding that there were no genuine issues
of material fact regarding Fladseth’s breach of the operating agreement based on
his non-payment of one-half of the purchase price within ten days of the execution
of that agreement.
Construction Loan as Encumbrance and Not Expense
Fladseth also contends he did not breach the operating agreement by taking
out loans in Brickstone’s name because he was authorized to execute loans and
to encumber the property. We agree in part and disagree in part.
Section 5.1 of the operating agreement provided:
Except as otherwise set forth in this Agreement, all decisions
concerning the operation and management of the Company’s
business shall be made by the Manager, and the decisions and the
day to day operations of the Company shall be executed by the
Manager. This includes, but is not limited to, execution of loans and
encumbrances of the Company and its assets and holdings both real
and chattel, entry of contracts and agreements on behalf of the
Company and concerning its assets and holdings both real and
chattel, and sale, disposition, acquisition, and any other action
related to current, future, or past assets and holdings of the Company
both real and chattel.
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The expense resolution, executed simultaneously, provided that “[a]ny single
expense in excess of $20,000 . . . shall be approved by a majority of the members
before it is executed by the manager.” At issue is whether this “expense” restriction
applied to the $297,840 loan Fladseth executed to effectuate the acquisition of the
property, the $154,500 loan Fladseth executed to cover anticipated development
costs after the sale closed, or the $280,000 loan Fladseth executed to pay off the
$154,500 loan.
The parties clearly contemplated that Brickstone would incur costs to
acquire the land and additional costs to develop it. The operating agreement
provided that “the LLC is engaged in the business of purchasing and developing
the land at 10843 1st Ave South in Seattle WA 98168.”
But paragraph 3.2 of the operating agreement contemplated that all of
Brickstone’s acquisition costs would be covered by each member’s initial capital
contribution. If, as Juniarty testified, MLG believed that each member would be
contributing 50 percent of the cost to acquire the land, there would have been no
reason to cap Fladseth’s borrowing authority for the acquisition. And there is
nothing in the expense resolution that suggests the contrary. We conclude the
expense limitation resolution did not limit Fladseth’s authority to execute a loan to
acquire the land. 1
But the expense limitation did apply to Fladseth’s ability to incur expenses
for developing the property. Paragraph 3.2.2 of the operating agreement contains
1
We do not suggest that Fladseth acted appropriately by incurring this debt. He admitted that the
$297,840 loan was for his personal benefit, and not the benefit of Brickstone, when he signed the
May 1 Promissory Note and took responsibility for paying off the loan.
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MLG’s agreement to be responsible for covering “additional development costs”
that Brickstone incurred after acquisition. It makes sense that MLG would limit
Fladseth’s spending authority on such development costs given MLG’s
commitment to cover them. We therefore conclude the expense limitation
resolution did limit Fladseth’s authority to spend money to develop this property or
to borrow money to cover such expenses.
There is no evidence Fladseth sought MLG’s consent for the construction
loan or for any development expenses. When Fladseth signed the construction
loan agreement with Eastside, he represented to the lender that the loan proceeds
would be used to cover the cost of developing and constructing a “residential
dwelling” on the property. 2 According to Eastside’s records, it advanced $150,000
to Brickstone on or about May 1, 2017. Juniarty testified that “Mr. Fladseth told
[MLG] that he would provide [MLG] with an accounting for the “ʻrenovationʼ” costs
he had undertaken for the Property. To date, he has never provided such an
accounting.” Fladseth did not dispute this testimony.
Indeed, there is no evidence of what Fladseth did with the funds Eastside
advanced to Brickstone. Fladseth produced a WhatsApp chat log of messages he
and Juniarty exchanged between October 26, 2017 and July 26, 2019 to
demonstrate that he kept her updated on his progress in trying to sell the property.
But not a single message relates to expenses Fladseth wanted or needed to incur
to develop the property before he could market or sell it. These messages all relate
to prospective purchasers, anticipated sale dates and renting the warehouse
2
We assume the reference to a residential dwelling was an error given that Fladseth testified the
property Brickstone acquired was a small commercial warehouse.
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space to tenants pending sale. There is no evidence Fladseth sought or obtained
MLG’s approval, orally or in writing, for any development costs associated with this
property, despite incurring liability to Eastside for $150,000 in development costs.
The trial court did not err in concluding that, based on this record, there are no
disputed facts that Fladseth violated the spending limit resolution by borrowing
$150,000 for development costs he never incurred.
Fladseth appears to suggest that he improved the property in some way just
based on the difference between the May 2017 purchase price of $550,000 and
the December 2018 sales price of $900,000. But if Fladseth had invested money
to improve the property, he would have been in the best position to identify these
improvements. He provided no such evidence. And facts required to defeat a
motion for summary judgement must be based on more than mere possibility or
speculation. Doe v. Dep't of Transp., 85 Wn. App. 143, 147, 931 P.2d 196 (1997).
There is nothing in the record to suggest that Fladseth invested any funds in the
property in order to enhance its value.
The uncontested evidence demonstrates that Fladseth breached the
operating agreement by not making the requisite capital contribution within ten
days of the execution of the operating agreement and by exceeding the expense
spending limit by borrowing $154,500 for development costs and then not using
the proceeds for these expenses. Summary judgment on the contract claim was
appropriate.
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Negligent Misrepresentation
Fladseth next argues the trial court erred when it found him liable for
misrepresentation because (1) he did not misrepresent his capital contribution to
MLG; (2) MLG did not rely on any such misrepresentation; and (3) MLG was not
damaged by any misrepresentation.
To establish negligent misrepresentation, MLG must show:
(1) the defendant supplied information for the guidance of others in
their business transactions that was false, (2) the defendant knew or
should have known that the information was supplied to guide the
plaintiff in [their] business transactions, (3) the defendant was
negligent in obtaining or communicating the false information, (4) the
plaintiff relied on the false information, (5) the plaintiff's reliance was
reasonable, and (6) the false information proximately caused the
plaintiff damages.
Merriman v. Am. Guar. & Liab. Ins. Co., 198 Wn. App. 594, 613, 396 P.3d 351(2017) (quoting Ross v. Kirner, 162 Wn.2d 493, 499, 172 P.3d 701 (2007).
MLG contended that Fladseth committed misrepresentation by failing to
disclose that he had not contributed cash as his initial capital contribution and had
instead taken out a loan in Brickstone’s name to purchase the property. Juniarty
testified she did not know, before closing on the property, that Fladseth had failed
to make a cash capital contribution. Fladseth did not dispute this testimony.
Juniarty also testified that, prior to closing the purchase, Fladseth showed her an
estimated settlement statement that did not include the loan he had taken out to
finance the acquisition. Fladseth did not dispute this evidence. Juniarty testified
Fladseth took out these loans without MLG’s knowledge and consent. Again,
Fladseth did not dispute this evidence.
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Ordinarily, an omission, by itself, cannot constitute negligent
misrepresentation. Ross, 162 Wn.2d at 499. But a party may be liable for
negligent misrepresentation for an omission if he has a duty to disclose, which can
arise in a business transaction if imposed by a fiduciary relationship or other similar
relationship of trust or confidence. Van Dinter v. Orr, 157 Wn.2d 329, 333-34, 138
P.3d 608 (2006). Under Washington’s Limited Liability Company Act, in a
manager-managed LLC, the manager owes a fiduciary duty to the LLC and its
members. Dragt v. Dragt/DeTray, LLC, 139 Wn. App. 560, 575, 161 P.3d 473(2007); Dickens v. Alliance Analytical Laboratories, LLC, 127 Wn. App. 433, 440,
111 P.3d 889 (2005).
Fladseth, as Brickstone’s manager, owed a fiduciary duty to both Brickstone
and MLG not to supply false information to them. Here, Fladseth did not disclose
the existence of the Eastside loans, one of which Fladseth had obtained by signing
a forged guarantee on behalf of MLG. This evidence was sufficient to prove
negligent misrepresentation.
The undisputed evidence also proves that MLG reasonably relied on
Fladseth’s misrepresentation. Juniarty testified that, had she known that Fladseth
had not made his capital contribution, MLG would have either rescinded its own
capital contribution or withdrawn from the purchase of the property.
Fladseth argues that MLG could not have relied on this misrepresentation
because it knew of the loans. To support this, Fladseth points to the May 1
Promissory Note and to the WhatsApp messages. But neither proves that Juniarty
knew about the loans before the purchase closed on April 21. The May 1
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Promissory Note came a week after closing. The WhatsApp messages occurred
months after closing as well. The fact that Juniarty knew of the loans in May 2017
does not contradict her testimony that MLG reasonably relied on Fladseth’s
misrepresentations in April 2017 when it made its capital contribution and allowed
the sale to close.
Finally, the undisputed evidence establishes that MLG was damaged by
Fladseth’s misrepresentations. But for the misrepresentation, MLG would have
retained the $275,000 it contributed to Brickstone. The trial court properly found
Fladseth liable for misrepresentation.
Damages
Finally, Fladseth contends there are genuine issues of material fact
regarding MLG’s claimed damages.
“Generally, the measure of damages for breach of contract is that the
injured party is entitled to recovery of all damages naturally accruing from the
breach, and to be put in as good a position as he would have been in had the
contract been performed.” Nw. Land & Inv., Inc. v. New W. Fed. Sav. & Loan
Ass'n, 57 Wn. App. 32, 43, 786 P.2d 324 (1990). Damages recoverable for
negligent misrepresentation are limited to those necessary to compensate the
plaintiff for the pecuniary loss to him caused by the misrepresentation. Janda v.
Brier Realty, 97 Wn. App. 45, 50, 984 P.2d 412 (1999) (quoting RESTATEMENT
(SECOND) OF TORTS § 552B (AM. LAW INST. 1977)). This includes “pecuniary loss
suffered otherwise as a consequence of the plaintiff's reliance upon the
misrepresentation.” Id.
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The trial court awarded MLG $397,905 in damages. The court calculated
this amount by taking the total sale price of $900,000, subtracting $104,188.33 in
closing costs, unpaid real estate taxes, and sale commissions, for net sales
proceeds of $795,811.67. Had Fladseth not encumbered the property with
personal loans, or with construction loans, the proceeds of which appear to have
vanished, this sum would have been Brickstone’s profit. Under the operating
agreement, MLG was entitled to 50 percent of that amount, or $397,905.83. The
trial court correctly concluded that this amount is what MLG would have received
from the sale of the property but for Fladseth’s misrepresentation and breach of
the operating agreement.
Fladseth argues that these damages were miscalculated because there are
genuine issues of fact whether MLG’s actions contributed to its damages. Fladseth
contends MLG intervened in the management of the property, causing Brickstone
to default on its loan obligations. He argues that the costs associated with these
loan defaults should be attributable to MLG. But Fladseth agreed to be personally
liable for the Eastside loan of $297,840. Any default on this loan was not MLG’s
legal responsibility; it was his. We do not have any of the receivership pleadings
in the record before us, as Fladseth has not challenged the order appointing a
receiver. But the receivership statute allows the appointment of a receiver in very
limited circumstances, including when a company is insolvent and unable to meet
its debts. There is no evidence in this record to suggest MLG was responsible for
the Brickstone’s financial condition warranting the appointment of a receiver.
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Fladseth next contends MLG’s counsel began collecting rents from the
tenants of the property starting in July 2018, leading to what he identified as
“penalty interest on various loans.” But we have no further details other than this
vague, uncorroborated statement. It is insufficient to create a genuine issue of
material fact.
Finally, Fladseth asserts that MLG is somehow responsible for the property
being sold for $900,000 rather than the $930,000 price he negotiated before the
appointment of the receiver. Again, this accusation is not substantiated by any
evidence. The sale agreement Fladseth negotiated before the receiver took over
was subject to both a financing contingency and a feasibility contingency. We can
only speculate as to what negotiations occurred to lift either of these contingencies.
And the trial court’s calculation of MLG’s damages accounted for this decreased
return by basing MLG’s award on the lower sale price.
Fladseth failed to present evidence to create a genuine issue of material
fact as to the amount of MLG’s damages. Summary judgment for MLG was thus
appropriate.
B. Attorney Fees on Appeal
Both Fladseth and MLG request attorney fees on appeal.
A party may request an award of attorney fees and costs if the applicable
law provides the right to recover fees and costs on appeal. RAP 18.1(a). Here,
the operating agreement provides that if either member fails to make their required
capital contributions within ten days of the agreement’s effective date, that member
shall indemnify the other member from any “loss, cost, or expense, including
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reasonable attorney fees incurred, caused by the failure to make such Capital
Contribution.”
MLG prevailed on its claim that Fladseth failed to make his capital
contribution and was awarded attorney fees below. Because MLG is the prevailing
party on appeal, we award it reasonable attorney fees incurred on appeal, subject
to compliance with RAP 18.1.
We affirm.
WE CONCUR:
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