"We are committed to: The highest ethical standards. Uncompromising honesty and integrity." —The Windermere Mission Statement "In the real estate business somebody's word is very important. If you say you're going to do something, you've got to do it." —Windermere CEO Geoff Wood's Public Affirmation

 

Throughout Windermere Real Estate's multi-state franchise network office culture of corruption and open profit on agent/broker unethical misconduct, is Windermere's SCA Redmond, Washington, office the most dishonest and unethical Windermere franchise of all?

PAUL STICKNEY WINDERMERE REAL ESTATE'S MILLION-DOLLAR FAILURE TO DISCLOSE A CONFLICT OF INTEREST TO WINDERMERE SCA REDMOND CLIENTS MARK AND CAROL DECOURSEY. Read the Washington State Appeals Court Opinion here.

GET TO KNOW THE PLAYERS: WINDERMERE SCA REDMOND IS PROUD HOME TO CERTIFIED SWINDLER and CROOKED WINDERMERE REALTOR, PAUL STICKNEY (left). Plundering Paul was officially adjudged by Washington courts as having a conflict of interest and failing to disclose it to his Windermere SCA clients—Mark and Carol DeCoursey—when he sold them a Redmond house, and then recommended a remodeling company. But Stickney neglected to mention he was AN OWNER of the remodeling company, who absolutely ruined their home. Stickney testified that he DID NOT KNOW he was named as the company's VP until AFTER the DeCoursey's lawsuit began. Stickney's shenanigans set the DeCourseys back nearly 7 years litigation while Windermere stalled and appealed all the way to the state supreme court; with resulting costs, damages and fees exceeding more than a million dollars. But Windermere founder John W. Jacobi and Windermere SCA's owners, Craig and Rosalie Shriner, are completely unabashed about continuing to collect commissions on Plundering Paul, their insurance company paid the damage, after all. READ THE WINDERMERE REDMOND SCA/PAUL STICKNEY WINDERMERE REAL ESTATE $1,030,627.00 JUDGMENT HERE

 

Focus on Risk, Law, and Unethical Misconduct in Realty Services:

The Paul H. Stickney, Paul H. Stickney Real Estate Services, Inc., and Windermere Real Estate/SCA Redmond

 

SUPERSEDEAS BOND

Also alternatively spelled "superscedeas" bond

 

From BLACK'S LAW DICTIONARY:

supersedeas bond (soo-per-see-dee-es). An appellant's bond to stay execution on a judgment during the pendency of the appeal. Fed. R. App. P. 8(b). See SUPERCEDE (2). CF. appeal bond.

DOWNLOAD A COPY OF THE STICKNEY/WINDERMERE REDMOND SCA SUPERSEDEAS BOND HERE

SUPERIOR COURT OF WASHINGTON FOR THE COUNTY OF KING

 

NO. 06-2-24906-2SEA

 

SUPERSEDEAS BOND

 

V&E MEDICAL IMAGING SERVICES, INC.. a Washington corporation, doing business as AUTOMATED HOME SOLUTIONS,

 

Plaintiff,

 

vs.

 

MARK DECOURSEY and CAROL DECOURSEY, husband and wife, individually and the marital community composed thereof,

 

Defendants/Third Party Plaintiffs,

 

vs.

 

HOME IMPROVEMENT HELP, a Washington corporation; RICHARD BIRGH, an individual; CONSTRUCTION CREDIT CORPORATION, a Washington corporation; HERMAN RECOR, ARAKI, KAUFMAN, SIMMERLY & JACKSON, PLLC; PAUL STICKNEY and WINDERMERE REAL ESTATE, S.C.A., INC.,

 

Third Party Defendants.

 

KNOW ALL MEN BY THESE PRESENTS Paul H. Stickney, Paul H. Stickney Real Estate Services, Inc., and Windermere Real Estate/SCA, Inc., as Principals, and National Union Fire Insurance Company of Pittsburgh, Pa., a corporation authorized to transact surety business in the State of Washington, as Surety, are held and firmly bound unto Mark DeCoursey and Carol DeCoursey, as obligees, in the just and full sum of One Million Five Hundred Thousand and 00/100ths Dollars ($1,500,000.00).

 

WHEREAS, on the 27th day of February, 2009, a final judgment was rendered by the Superior Court of the State of Washington, in and for the County of King, in the above-entitled and numbered action in favor of the defendants/third party plaintiffs, Mark DeCoursey and Carol DeCoursey, and against third party defendants, Paul H. Stickney, Paul H. Stickney Real Estate Services, Inc., and Windermere Real Estate/SCA, Inc., adjudging and decreeing that Mark DeCoursey and Carol DeCoursey will have and recover from Paul H. Stickney, Paul H. Stickney Real Estate Services, Inc., and Windermere Real Estate/SCA, Inc., the principal sum of One Million Thirty Thousand Six Hundred Twenty-Seven and 00/100ths Dollars ($1,030,627.00), with interest as provided in RCW 4.56.110(3), from November 14, 2008, until paid, together with attorney fees and costs awarded Mark DeCoursey and Carol DeCoursey in this action; and

 

WHEREAS, said Paul H. Stickney, Paul H. Stickney Real Estate Services, Inc., and Windermere Real Estate/SCA, Inc., have appealed, to the Court of Appeals, Division I, of the State of Washington, from the November 14, 2008 judgment, the December 26, 2008, Amended Judgment, and intend to file an amended notice of appeal to include the above-mentioned judgment and the whole thereof; and

 

WHEREAS, Paul H. Stickney, Paul H. Stickney Real Estate Services, Inc., and Windermere Real Estate/SCA, Inc. desire to suspend execution of said judgment pending such further proceedings on appeal;

 

NOW, THEREFORE, the condition of this obligation is such that, if the above-named third party defendants, Paul H. Stickney, Paul H. Stickney Real Estate Services, Inc., and Windermere Real Estate/SCA, Inc., shall pay, or cause to be paid, to the defendants/third party plaintiffs, Mark DeCoursey and Carol DeCoursey, all costs, fees, interest, and damages that may be awarded against them on the appeal, or on the dismissal thereof, and shall satisfy and perform the judgment appealed from in full, together with interest thereon, if for any reason the appeal is dismissed or the judgment affirmed, and shall satisfy in full such modification of the judgment as the court may adjudge and award, then this obligation shall be void; otherwise to remain in full force and effect, subject to the liability of the Surety not exceeding the sum of One Million Five Hundred Thousand and 00/100ths Dollars ($1,500,000.00).

           

Signed, sealed, and dated this 5^th day of March, 2009.

 

Paul H. Stickney, Paul H. Stickney Real Estate

Services, Inc, and Windermere Real

Estate/SCA, Inc.

Principals by Reed McClure

 

BY [Wiilam R. Hickman]

 

Attorney for Paul H. Stickney,

Paul H. Stickney Real Estate Services,

Inc, and Windermere Real Estate/SCA, Inc.

 

 

National Union Fire Insurance Company of

Pittsburgh, Pa.

 

BY [Rachel Richardson]

Rachel Richardson, Attorney-in-Fact

 

Bond No. 94-35-61

 

 

______________________________________

Case Update: Stipulation and Order for Dismissal

 

Windermere Founder John W. Jacobi's Washington Loan Company, Craig and Rosalie Shriner's Windermere Real Estate S.C.A. Redmond, and its Agent Christopher Judd, Sued for Intentional Misrepresentation and Other Claims in Alleged "...unlawful scheme to enrich themselves at the expense of plaintiffs and others..." READ THE COMPLAINT HERE

 

• RECENT CASE UPDATES •

 

DEFENDANTS' OPPOSITION TO MOTION FOR SUMMARY JUDGMENT:

"Judd had told Mr. Shriner several times that his family had money and would help him out if he was unable to satisfy his obligations..."

 

PLAINTIFFS’ REPLY IN SUPPORT OF SUMMARY JUDGMENT MOTION:

"Defendants try to confuse the definition of a windfall."

Defendants Washington Loan Company and Windermere Real Estate S.C.A. Redmond must be compelled by court to produce discovery.

(Above L to R) The Governing Persons of the Washington Loan Company: 1) Windermere Founder John W. Jacobi is listed as President of the Washington Loan Company; 2) Timothy Wissner, CFO of franchiser Windermere Services, and CFO of Windermere Solutions, is listed as Washington Loan Company Vice President; 3) Kendra Vita, Manager of franchiser Windermere Services Company is listed as Secretary of the Washington Loan Company; 4) franchiser Windermere Services Company General Counsel, attorney Paul S. Drayna—WSBA #26636—is listed as Registered Agent of the Washington Loan Company; 5) Don Riley, Washington Loan Company manager; 6) Windermere Real Estate S.C.A. Redmond owner Craig Shriner; 7) Windermere Redmond SCA managing broker Aaron Shriner; 8) Windermere Redmond SCA agent Christopher Judd. The Washington Loan Company's business license states that its registered trade name is Windermere Real Estate / Eastlake.

 

____________________________________

 

 

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

 

DIVISION ONE

 

No. 62912-3-I

 

UNPUBLISHED OPINION

 

FILED: November 8, 2010

 

V&E MEDICAL IMAGING SERVICES, INC., a Washington corporation, d/b/a AUTOMATED HOME SOLUTIONS,

 

Plaintiff.

 

RICHARD BIRGH, JANE DOE BIRGH, individually and the marital community, HOME IMPROVEMENT HELP, a Washington corporation, CONSTRUCTION CREDIT CORPORATION, HERMAN RECOR, ARAKI KAUFMAN SIMMERLY & JACKSON PLLC, KENNETH MICHAEL, BACON, JANE DOE BACON, individually and their marital community MICHAEL JOHN CONNOLLY, JANE DOE CONNOLLY, individually and their, marital community, CITY OF REDMOND, WELLS FARGO BANK ACCOUNT 6000398773 in lieu of bond, JOHN DOE (1) and JOHN DOE(2),

 

Third Party Defendants.

 

MARK DeCOURSEY and CAROL DeCOURSEY, husband and wife and the marital community composed thereof,

 

 

Respondents,

 

v.

 

PAUL STICKNEY, PAUL H. STICKNEY REAL ESTATE SERVICES, INC., and WINDERMERE REAL ESTATE S.C.A., INC.,

 

Appellants.

 

Dwyer, C.J. —Mark and Carol DeCoursey purchased a home intending to remodel it. Their real estate agent, Paul Stickney, recommended a contractor but did not disclose that he was financially connected to the contractor. The contractor performed inferior work and the DeCourseys eventually sued Stickney. Stickney appeals from the jury’s verdict finding him liable for breach of his fiduciary duty and for a violation of the Consumer Protection Act (CPA), ch. 19.86 RCW, contending that the trial court erred in several respects. We agree that the trial court’s award of costs to the plaintiffs was erroneous. However, finding no other error, we otherwise affirm the judgment, remanding only for a recalculation of the cost award.

 

I

 

In 2004, the DeCourseys moved to Washington. They purchased a home with the help of Paul Stickney, a Windermere Real Estate agent. The DeCourseys intended to renovate the home, and Stickney recommended the hiring of contractor Home Improvement Help, Inc. (HIH), which was owned and operated by Richard Birgh. Numerous issues arose with the quality and the nature of HIH’s work. The remodeled home was finished behind schedule and presented structural and other safety concerns. The DeCourseys were unable to obtain an occupancy permit.

 

A subcontractor of HIH sued the DeCourseys because it had not been paid for work performed on the DeCourseys’ home. The DeCourseys answered and filed a third-party complaint against Birgh, HIH, Stickney, Windermere, ¹ the City of Redmond,² and others. The DeCourseys alleged claims for fraud, breach of contract, negligence, and violation of the CPA against these parties. The DeCourseys initially proceeded pro se, although they received advice from several attorneys.

 

After the discovery process began, the DeCourseys filed a motion for a protective order related to questions asked in a deposition, including questions about which attorneys they had consulted and paid. At a hearing before Judge John Erlick, the defendants argued that because the DeCourseys were claiming attorney fees, they should be required to answer questions regarding who they had contacted and what fees they had incurred. The DeCourseys responded that while they had contacted “lawyers,” those lawyers were not “attorneys.” Report of Proceedings (RP) (Aug 23, 2007) at 44-46.

 

The trial court then determined that opposing counsel could inquire into any attorney fees that the DeCourseys had incurred. At this point, Mark

 

_________________________________

 

¹ At trial, Windermere agreed, and the jury was instructed, that if Stickney was found liable for any of the claims against him, Windermere was vicariously liable. Thus, unless the context indicates otherwise, we refer to Stickney and Windermere jointly as “Stickney” throughout this opinion.

 

² The DeCourseys alleged that the City of Redmond failed to properly permit and inspect the project, which allowed HIH to work in violation of the city’s ordinances and state law

 

________________________________________

 

DeCoursey responded that they were not claiming attorney fees other than the statutory attorney fee. The trial court accepted that the DeCourseys were waiving or dismissing any claim for attorney fees beyond the statutory attorney fee. As a result, the trial court orally ruled that the DeCourseys were not required to answer questions about their attorneys and that “any claim for attorney’s fees above and beyond statutory attorney’s fees shall not be pursued.” RP (Aug. 23, 2007) at 61. When asked whether the ruling included fees for the CPA claim, the trial court responded that it “[i]ncludes any and all attorney’s fees.” RP (Aug. 23, 2007) at 61. The written order is more limited, stating:

 

(8) The DeCourseys shall not be required to testify regarding attorneys’ fees incurred, including the identity of the attorney, the fees incurred, and the amounts paid. This does not affect attorney client privilege. In open court, the DeCourseys are dismissing/not pursuing any claim for attorney fees beyond statutory fees of $250.

 

Clerk’s Papers (CP) at 707. The DeCourseys moved for reconsideration, which was denied.

 

In September 2007, attorneys began representing the DeCourseys. The DeCourseys filed a notice of discretionary review of Judge Erlick’s order, seeking review of the order to the extent that it dismissed their right to seek attorney fees, including fees associated with their CPA claim. A commissioner of this court denied the motion.

 

In November 2007, the trial court granted summary judgment in favor of the DeCourseys on their claims against HIH because HIH was an unregistered contractor. Prior to trial, in October 2008, Birgh and HIH settled with the DeCourseys, agreeing to pay them $270,000. The settlement released Birgh and HIH from all claims and also released Stickney in his capacity as an officer of HIH but not in his individual capacity. It also required that the DeCourseys delete, remove, and refrain from publishing any references to any Birgh family member, business, or lawyer on any of the DeCourseys’ several web sites. The DeCourseys will owe $25,000 per breach if they violate this settlement condition.

 

Subsequently, all of the parties except Stickney and Windermere were dismissed from the litigation and, in November 2008, the trial proceeded between the DeCourseys and Stickney. The DeCourseys’ only remaining claims were for breach of fiduciary duty, fraud, and violation of the CPA.

 

Evidence presented at trial established that Stickney had breached his fiduciary duty when he failed to disclose his conflict of interest. In 1996, Stickney and Birgh had entered into a joint venture to develop real property. Together, they incurred a joint debt obligation, which at the time of trial had a principal amount of $400,000. Under the terms of their joint venture agreement, Stickney was responsible for making the loan payments. However, when Stickney could not afford to make payments, Birgh would do so if he had the financial resources available. Other evidence suggested that Stickney was entangled with Birgh and HIH. Stickney had provided Birgh with a cellular telephone and Birgh had used Stickney’s computer server to store HIH documents. In addition, HIH’s incorporation documents stated that Stickney was the company’s vice president and a 20 percent shareholder, although no nonhearsay evidence showed Stickney to be directly involved with HIH. Stickney testified that he did not know that he was named as HIH’s vice president until after the DeCourseys’ lawsuit began.

 

Joseph and Mary Calmes, two of Stickney’s former clients, testified that Stickney recommended Birgh and HIH to them and that Stickney actively represented that he had no financial relationship with Birgh. The Calmeses testified that they fired Birgh and HIH because their remodel was not being timely completed and the work appeared to be substandard. However, the Calmeses both testified that they did not recall reporting their dissatisfaction with Birgh or HIH to Stickney other than to relate their concern about the slow pace of the construction.

 

 

In addition to the DeCourseys and the Calmeses, Stickney had referred 29 of his clients to Birgh between 1999 and 2004. Stickney testified that Birgh was the only contractor that he recommended, although he always informed his clients that they could compare Birgh to other contractors. There was no evidence presented of any other clients who were dissatisfied with Birgh’s work. Stickney did not remember telling any of his clients that he was involved in a joint venture with Birgh because, as he testified, he “felt there was no conflict of interest.” RP (Oct. 23, 2008) at 134.

 

Several witnesses testified regarding the damages to the DeCourseys’ house as a result of Birgh’s work. The estimated cost of repair was $525,289.78.

 

The jury returned a verdict in favor of the DeCourseys on their claims for breach of fiduciary duty and for violation of the CPA but found that the DeCourseys failed to prove fraud.³ The jury awarded the DeCourseys $515,900 in damages for Stickney’s breach of fiduciary duty and $6,300 for Stickney’s violation of the CPA: a total damage award of $522,200. Stickney moved for judgment as a matter of law, a new trial, or remittitur. This motion was denied. The trial court then granted the DeCourseys’ motion for an award of attorney fees. It found $356,142 in fees reasonably incurred and increased this by a 30 percent multiplier, resulting in a total attorney fee award of $462,985. In addition, the DeCourseys were awarded $45,442 in costs. ⁴

 

Stickney appeals.

 

 

II

 

________________________________

 

³ The jury answered 10 questions on a special verdict form related to the three claims, including specific questions about whether Stickney had a conflict of interest, whether he failed to disclose such a conflict of interest, and whether his failure to disclose had proximately caused the DeCourseys to incur damages.

 

⁴ The amount of the total attorney fee award and the amount of the total cost award that we recite herein are obtained from the trial court’s oral statements. These amounts are different than those recited in the judgment summary contained within the final judgment. The judgment summary apparently contains a “scrivener’s error. . . . It appears that $442.00 was erroneously added to the attorney’s fee award and subtracted from the cost award.” Respt’s Br. at 17. Furthermore, the judgment entered against Stickney is in the amount of $1,030,427.00. This is $200 less than the sum of the jury’s verdict, the cost award, and the attorney fee award.

 

________________________________

 

Stickney first contends that the trial court’s instructions to the jury regarding conflicts of interest were erroneous. We disagree.

 

“Jury instructions are sufficient when they allow counsel to argue their theory of the case, are not misleading, and when read as a whole properly inform the trier of fact of the applicable law.” Bodin v. City of Stanwood, 130 Wn.2d 726, 732, 927 P.2d 240 (1996). We review de novo the adequacy of challenged jury instructions. State v. Mills, 154 Wn.2d 1, 7, 109 P.3d 415 (2005). “[W]here a jury instruction correctly states the law . . . ‘the court’s decision to give the instruction will not be disturbed absent an abuse of discretion.’” Singh v. Edwards Lifesciences Corp., 151 Wn. App. 137, 151, 210 P.3d 337 (2009) (quoting Micro Enhancement Int’l, Inc. v. Coopers & Lybrand, LLP, 110 Wn. App. 412, 430, 40 P.3d 1206 (2002)). The jury instructions given herein correctly stated the law governing conflicts of interest and were consistent with relevant statutes and with common law principles of agency.

 

In 1996, the legislature enacted comprehensive legislation defining the duties of real estate agents. Sing v. John L. Scott, Inc., 134 Wn.2d 24, 32-33 n.3, 948 P.2d 816 (1997). Specifically, pursuant to chapter 18.86 RCW, a buyer’s real estate agent owes several nonwaivable duties to the buyer. The statute imposes on real estate agents a duty to timely disclose to the buyer any conflicts of interest, a duty of loyalty to the buyer requiring that the agent take “no action that is adverse or detrimental to the buyer’s interest in a transaction,” a duty “to advise the buyer to seek expert advice on matters relating to the transaction that are beyond the agent’s expertise,” and a duty not to disclose confidential information from or about the buyer. RCW 18.86.050. The buyer’s real estate agent also owes nonwaivable duties of care, including the duty to exercise reasonable skill and care, to deal honestly and in good faith, and “to disclose all existing material facts known by the licensee and not apparent or readily ascertainable to a party.” RCW 18.86.030. These statutory requirements are consistent with the traditional common law fiduciary duties owed by agents to principals.

 

Under the common law, “[a]n agent has a duty not to deal with the principal as or on behalf of an adverse party in a transaction connected with the agency relationship.” Restatement (Third) of Agency § 8.03 (2006). An official comment to this section states that this duty is formulated broadly so that an agent is required to “disclose adverse interests to the principal so that the principal may evaluate, as only the principal is situated to do, how best to protect its interests in light of the agent’s interest.” Restatement, supra, § 8.03 cmt. b, at 293; see also Mersky v. Multiple Listing Bureau of Olympia, Inc., 73 Wn.2d 225, 229, 437 P.2d 897 (1968) (“[T]here flows from this agency relationship . . . the legal, ethical, and moral responsibility . . . to make, in all instances, a full, fair, and timely disclosure to the principal of all [material] facts . . . which might affect the principal’s rights and interest or influence his actions.”).

 

The phrase “conflicts of interest” is defined neither in chapter 18.86 RCW nor in the Restatement. However, the definition of “conflict of interest” contained in Black’s Law Dictionary is informative: “A real or seeming incompatibility between one’s private interests and one’s public or fiduciary duties.” Black’s Law Dictionary 341 (9th ed. 2009).

 

Here, the trial court instructed the jury that:

 

Paul Stickney had a duty to the DeCourseys to disclose any conflicts of interest he may have had in his dealings with the DeCourseys. Defendant Paul Stickney had a duty to disclose any financial or business relationships, or prospects for personal gain or benefit he may have had with or through any third party involved

in any way with the transaction at issue in this case.

 

Richard Birgh and HIH, Inc. are such third parties in the transaction in this case.

 

Instruction 7 (CP at 973). The trial court also instructed the jury that:

 

An agent has a conflict of interest if he has any interest in a transaction adverse to the principal. Here, Stickney owed a duty to the DeCourseys to scrupulously avoid representing any interest antagonistic to that of the DeCourseys in transactions relating to their home, or otherwise engaging in self-dealing, without the explicit and fully informed consent of the DeCourseys. If you find that Paul Stickney violated his duties with relation to the DeCourseys, you must determine the amount of damages proximately caused to the DeCourseys by Paul Stickney’s violation.

 

Instruction 9 (CP at 975).

 

The trial court’s instructions on Stickney’s duty and on that which

constitutes a conflict of interest correctly stated the law, as reflected in chapter

18.86 RCW and in the Restatement (Third) of Agency.⁵  They were not

 

_____________________________________________

 

⁵ Stickney proposes that where there is only a possibility that the agent will receive an indirect benefit by not disclosing a business or professional relationship, the agent does not have

_______________________________________________________

 

 

misleading. Therefore, the trial court properly instructed the jury. ⁶

 

III

 

Stickney next contends that the breach of his fiduciary duty to disclose any conflicts of interest was not proved to be a proximate cause of the DeCourseys’ injuries arising from the negligent remodeling of their house.⁷ We disagree.

 

“[P]roximate cause consists of two elements: cause in fact and legal causation.” City of Seattle v. Blume, 134 Wn.2d 243, 251, 947 P.2d 223 (1997). Cause in fact concerns actual “but for” causation, which exists when the act produced events “in a direct unbroken sequence which would not have resulted had the act not occurred.” Hertog v. City of Seattle, 138 Wn.2d 265, 282-83, 979 P.2d 400 (1999). Legal causation “involves the question of whether liability should attach as a matter of law, even if the proof establishes cause in fact.” Blume, 134 Wn.2d at 252.

 

____________________________________

 

a duty to disclose this potential conflict of interest. However, such a limitation is not supported by the statute or by common law, and it does not advance the purpose of requiring the full disclosure of conflicts of interest, which is to protect the principal and allow the principal to properly evaluate how best to protect his or her interests. See Restatement, supra, § 8.03; Mersky, 73 Wn.2d at 229-31. The trial court did not err by not instructing the jury on such a limitation.

 

⁶ In addition, the trial court did not err by refusing to give Stickney’s proposed conflict of interest instruction, which was based on criminal cases discussing circumstances in which an attorney has an impermissible conflict of interest pursuant to professional obligations in a Sixth Amendment context. Conflicts of interest that would implicate a criminal defendant’s right to conflict-free counsel are vastly different from the type of conflicts that Stickney had a duty to disclose to his principals.

 

⁷ “Whether a duty exists is a question of law that we review de novo, while breach and proximate cause are generally questions for the trier of fact.” Estate of Bordon v. Dep’t of Corrections, 122 Wn. App. 227, 235, 95 P.3d 764 (2004). “We will overturn a jury verdict only when it is clear there is no substantial evidence to support it.” Doyle v. Nor-West Pac. Co., 23 Wn. App. 1, 4, 594 P.2d 938 (1979).

___________________________________

 

To satisfy the “but for” test, the DeCourseys had to establish that the act complained of “probably caused” the alleged injury. Daugert v. Pappas,104 Wn.2d 254, 260, 704 P.2d 600 (1985). The question is whether “‘the performance of the defendant’s duties would have avoided loss, and what loss it, would have avoided.’” Senn v. Nw. Underwriters, Inc., 74 Wn. App. 408, 418, 875 P.2d 637 (1994) (quoting Barnes v. Andrews, 298 F. 614, 616 (S.D.N.Y. 1924)). “Cause in fact is usually a question for the jury.” Joyce v. Dep’t of Corr., 155 Wn.2d 306, 322, 119 P.3d 825 (2005).

 

Stickney argues that the DeCourseys did not prove cause in fact because they failed to present concrete evidence connecting Stickney’s breach of fiduciary duty to the DeCourseys’ injuries. In support of this argument, Stickney relies on our holding in Smith v. Preston Gates Ellis, LLP, 135 Wn. App. 859, 147 P.3d 600 (2006). In our decision in Smith, a legal malpractice action, we held that the plaintiff had “to demonstrate that a better contract or full disclosure would have prevented the injury or improved his recovery.” 135 Wn. App. at 864. In so holding, we stated that the plaintiff therein could not survive summary judgment because:

 

Smith could not specifically identify an alternative that would have led to a better outcome. “I can’t tell you what I would have done but I would not have entered into this contract.” He could only speculate that he might have looked for another builder but that he was committed to building his “dream home.” Smith cannot rely on such speculation to defeat summary judgment. He must present specific facts to rebut Preston’s claims. Smith’s conjectures do not rise to the level of fact and specificity necessary to prevent summary judgment.

 

Smith, 135 Wn. App. at 865 (citations omitted).

 

In contrast to the plaintiff in Smith, the DeCourseys presented more concrete evidence of a possible better outcome: the DeCourseys would not have hired Birgh and HIH had they known about the conflict of interest. Stickney told the DeCourseys that Birgh was “a very good contractor” and did “the best work for the best prices.” RP (Oct. 22, 2008) at 16. Mark DeCoursey testified that they took Stickney’s recommendation as “an independent reference.” RP (Oct. 22, 2008) at 39. When Stickney recommended Birgh, the DeCourseys “believed Stickney was operating in our best interests.” RP (Oct. 22, 2008) at 38. Mark DeCoursey testified that had Stickney informed him about the conflict of interest, he would have recognized that Stickney was “operating as a salesman, not as my trusted real estate agent.” RP (Oct. 23, 2008) at 53. Thus, had the DeCourseys been informed that Stickney had a conflict of interest, they would have been skeptical of Stickney’s recommendation and they would have recognized that Stickney’s recommendation was not necessarily made with the DeCourseys’ best interests in mind. As a result, Mark DeCoursey testified, the DeCourseys would not have hired Birgh and HIH if they had known about Birgh’s and HIH’s relationships with Stickney. Furthermore, Mark DeCoursey also testified that he and his wife would not have even purchased the house had it not been for Birgh’s assurances that he could complete the desired renovations within the DeCourseys’ price limit.

 

This testimony is bolstered by the fact that Birgh and HIH were operating as unlicensed contractors. Mark DeCoursey testified that they would not have hired Birgh had they known that he was not a licensed contractor. In addition, evidence was presented that Birgh had previously performed deficiently and untimely. The jury was entitled to believe that the DeCourseys truly would not have hired Birgh and HIH had Stickney informed them about his conflict of interest. “‘The inferences to be drawn from the evidence are for the jury and not for this court.’” Burnside v. Simpson Paper Co., 123 Wn.2d 93, 108, 864 P.2d 937 (1994) (quoting State v. O’Connell, 83 Wn.2d 797, 839, 523 P.2d 872 (1974)). We do not “disturb the jury’s determinations as to persuasiveness of the evidence or credibility of witnesses.” Valdez-Zontek v. Eastmont Sch. Dist., 154 Wn. App. 147, 158, 225 P.3d 339 (2010).

 

Therefore, there was sufficient evidence from which the jury could find that Stickney’s failure to inform the DeCourseys about his conflict of interest led the DeCourseys to hire Birgh, who was an unlicensed contractor who had performed poorly in the past. “But for” Stickney’s recommendation made in violation of his fiduciary duty to disclose his conflict, the DeCourseys would have hired a competent, licensed contractor and they would not be the owners of an essentially valueless house. Cause in fact is a question for the jury, Joyce, 155 Wn.2d at 322; sufficient evidence supports the jury’s determination herein.

 

To determine whether the DeCourseys have proved legal causation, we must ask whether “[t]he injury suffered is not so remote as to preclude liability.” Schooley v. Pinch’s Deli Market, Inc., 134 Wn.2d 468, 483, 951 P.2d 749 (1998). “[D]etermination of legal liability will be dependent on ‘mixed considerations of logic, common sense, justice, policy, and precedent.’” Hartley v. State, 103 Wn.2d 768, 779, 698 P.2d 77 (1985) (quoting King v. Seattle, 84 Wn.2d 239, 250, 525 P.2d 228 (1974)). Legal causation is grounded in “policy considerations as to how far the consequences of defendant’s acts should extend. It involves a determination of whether liability should attach as a matter of law given the existence of cause in fact.” Hartley, 103 Wn.2d at 779. We must consider whether the connection between the defendant’s act and its ultimate result is “too remote or insubstantial to impose liability.” Hartley, 103 Wn.2d at 781.

 

Determining legal causation in this instance rests on whether the DeCourseys’ damages are too remote from Stickney’s recommendation of Birgh and HIH made without disclosing his conflict of interest. Real estate agents owe their buyer-principals the duty of utmost loyalty. The agent has an “obligation to be forthright and straightforward in the handling of [the] principal’s business.” Mersky, 73 Wn.2d at 230-31. The policy behind requiring disclosure of conflicts of interest is to allow buyer-principals to make informed decisions. There is an inherent risk “that the agent’s objectivity may be distorted” by a conflict of interest, and the principal should be aware of potential bias inherent in the agent’s recommendations or suggestions. Mersky, 73 Wn.2d at 230. The information may potentially influence the buyer’s actions. “As Justice Brandeis once wrote: ‘Sunlight is said to be the best of disinfectants, electric light the most efficient policeman.’” Cogan v. Kidder, Mathews & Segner, Inc., 97 Wn.2d 658, 663, 648 P.2d 875 (1982) (quoting L. Brandeis, Other People’s Money, ch. 15 (1914)). This is why it is “of no consequence . . . that the broker may be able to show that the breach of his duty of full disclosure and undivided loyalty did not involve intentional or deliberate fraud, or did not result in injury to the principal, or did not materially affect the principal’s ultimate decision in the transaction.” Mersky, 73 Wn.2d. at 231.

 

The policy underlying this duty of disclosure is obvious; it is both to insure the undivided loyalty of the agent and “to assure the principal that he may have and rely upon the impartial and unreserved fidelity of his agent throughout the course of the transaction for which the agent was employed.”

 

Cogan, 97 Wn.2d at 662-63 (quoting Mersky, 73 Wn.2d at 230). In the absence of required disclosures, buyers reasonably and justifiably assume that their real estate agent is acting in their best interests.

 

The DeCourseys were justified in assuming Stickney’s recommendation for a good contractor was being made by their agent who was acting in their best interests and with undivided loyalty. Stickney’s failure to disclose his conflict of interest prevented the DeCourseys from making a meaningful, informed decision about their choice of contractor. That the contractor they chose was ultimately unlicensed and negligent may not be the direct fault of Stickney, but their decision to choose that contractor was made without the necessary information that Stickney’s recommendation was biased and potentially not made in their best interest. Therefore, the “‘mixed considerations of logic, common sense, justice, policy, and precedent’” weigh in favor of holding that Stickney’s wrongful action was a legal cause of the DeCourseys’ injuries. Hartley, 103 Wn.2d at 779 (quoting King, 84 Wn.2d at 250).⁸

 

Accordingly, Stickney’s breach of his duty to disclose his conflict of interest was properly found by the jury to be a proximate cause of the DeCourseys’ damages.⁹

 

^{__________________________________________________________________}

 

⁸ Stickney argues that his actions were not the legal cause of the DeCourseys’ injuries because “[t]o the extent that Stickney set in motion a chain of events, his involvement was limited to a small segment at the beginning of the chain. He had no role in deciding where it went.” Appellant’s Br. at 62.

 

When there is an intervening act that is not reasonably foreseeable, “‘it must be regarded as a superseding cause negating the claim of proximate or legal cause.’” Maltman v. Sauer, 84 Wn.2d 975, 982, 530 P.2d 254 (1975) (quoting Cook v. Seidenverg, 36 Wn.2d 256, 264, 271 P.2d 799 (1950)). Thus, when there is an independent intervening act of a third person that was not foreseeable, there is a break in the causal connection between the defendant’s breach and the plaintiff’s injury. Schooley, 134 Wn.2d at 482.

 

Stickney may not have intended that Birgh and HIH perform negligently by causing large delays, performing substandard work, and causing numerous cost overruns, and no direct evidence was presented establishing that Stickney was aware that Birgh and HIH had ever so performed for Stickney’s clients previously. However, whether an independent cause—here, Birgh’s and HIH’s negligence—“is reasonably foreseeable is generally a question of fact for the jury.” McCoy v. Am. Suzuki Motor Corp., 136 Wn.2d 350, 358, 961 P.2d 952 (1998). The jury herein was instructed that “it is not a defense that some other cause may also have been a proximate cause, if in the exercise of ordinary care, the defendant should have anticipated the other proximate cause.” CP at 980. In finding for the DeCourseys, the jury plainly determined that Birgh’s and HIH’s negligence was reasonably foreseeable. There was ample evidence presented from which the jury could make such a determination.

 

⁹ Stickney argues in his opening brief that he was denied a fair trial because the trial court “absolutely forbade any evidence or argument that other parties caused the DeCourseys’ damages.” Appellant’s Br. at 65. Our rules require an appellant to set forth “[a] separate concise statement of each error a party contends was made by the trial court, together with the issues pertaining to the assignments of error.” RAP 10.3(a)(4). We “will only review a claimed error which is included in an assignment of error or clearly disclosed in the associated issue pertaining thereto.” RAP 10.3(g). Stickney assigns error to the trial court “[r]ejecting all evidence that other

 

IV

 

Stickney next contends that the trial court erred by permitting the DeCourseys to seek an award of construction defect damages. This is so, Stickney alleges, because only disgorgement of the real estate commission can be awarded against an agent who fails to disclose a conflict of interest. We disagree.

 

Stickney is correct that several reported cases discuss forfeiture of the real estate agent’s commission as a remedy for a failure to disclose a conflict of interest. See, e.g., Girard v. Myers, 39 Wn. App. 577, 588, 694 P.2d 678 (1985); Ross v. Perelli, 13 Wn. App. 944, 946, 538 P.2d 834 (1975). In these cases, however, there was an absence of any actual injury to the principal. See also Restatement, supra, § 8.01 cmt. d(2), at 259 (“Forfeiture may be the only available remedy when it is difficult to prove that harm to a principal resulted

____________________________________________

 

parties caused the construction defect damages.” Appellant’s Br. at 4-5. The related issue on appeal is stated to be whether Stickney was “denied a fair trial because the court: . . . rejected all evidence that other parties caused the construction defect damages.” Appellant’s Br. at 5. There are no specific assignments of error to particular evidentiary rulings by the trial court. We will not conduct an independent, exhaustive search of the lengthy record in this case in an effort to identify possible rulings in order to determine whether they constituted an abuse of discretion. Accord United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991) (“A skeletal ‘argument’, really nothing more than an assertion, does not preserve a claim. . . . Especially not when the brief presents a passel of other arguments. . . . Judges are not like pigs, hunting for truffles buried in briefs.”).

 

As to those specific evidentiary rulings noted by Stickney in his briefing, Stickney contends only that those evidentiary rulings were in error because they prevented Stickney from arguing his theory of the case. Stickney claims that the trial court excluded “all evidence” tending to show that the actions of others besides Stickney were superseding or even contributory causes of the DeCourseys’ damages. However, the record establishes otherwise. In fact, abundant evidence was presented at trial regarding the negligence of Birgh, HIH, the City of Redmond, and others. During closing arguments, Stickney’s attorney forcefully argued that the actions of others were superseding causes of the DeCourseys’ injuries and that Stickney could not have foreseen that Birgh and HIH would perform negligently. The trial court’s rulings did not prevent Stickney from arguing his theory of the case.

__________________________________________________

 

from the agent’s breach or when the agent realizes no profit.”).

 

“An agent is subject to any losses incurred from his breach of duty.” Cogan, 97 Wn.2d at 667 (holding agent who breached duty of loyalty responsible for both commission and the additional interest that had accrued due to an extension of time granted by seller at agent’s request). An agent who breaches his or her fiduciary duty is responsible for the amount of actual damages sustained by the principal as a result. Monty v. Peterson, 85 Wn.2d 956, 959, 540 P.2d 1377 (1975); Restatement, supra, § 8.01 cmt. d. In addition, when agents breach their duty of undivided loyalty to the principal, courts have the discretion to order the commission disgorged if necessary to prevent such agents from benefiting from their wrongful conduct. Monty, 85 Wn.2d at 959-60; Restatement, supra, § 8.01 cmt. d(2).

 

Stickney’s assertion that the DeCourseys’ only remedy was disgorgement of Stickney’s $6,300 commission is without merit.

 

V

 

Stickney next contends that there was insufficient evidence presented that his actions impacted the public interest and, thus, the DeCourseys failed to prove their CPA claim. We disagree.

 

To establish a CPA violation, a plaintiff must prove five elements: that the defendant engaged in (1) an unfair or deceptive act or practice that (2) occurred in trade or commerce, (3) impacts the public interest, (4) and caused injury to the plaintiff in her business or property, and (5) that the injury is causally linked to the unfair or deceptive act. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 780, 719 P.2d 531 (1986). Only the public interest element is at issue in this appeal.

 

Disputes between real estate agents and their clients are private disputes, as opposed to consumer transactions. Hangman Ridge, 105 Wn.2d at 790 (citing McRae v. Bolstad, 101 Wn.2d 161, 676 P.2d 496 (1984) (realtor property buyer); Bowers v. Transamerica Title Ins. Co., 100 Wn.2d 581, 675 P.2d 193 (1983) (escrow closing agent-client)). However, while these disputes may be private, they will be found to affect the public interest if there is a likelihood that others have been or will be injured in exactly the same fashion. Hangman Ridge, 105 Wn.2d at 790. “[T]here must be shown a real and substantial potential for repetition, as opposed to a hypothetical possibility of an isolated unfair or deceptive act’s being repeated.” Eastlake Constr. Co. v. Hess, 102 Wn.2d 30, 52, 686 P.2d 465 (1984). When a private dispute is the basis of the CPA claim, four factors—none of which is dispositive and not all of which need to be present indicate whether the public interest is affected:

 

(1) whether the alleged acts were committed in the course of defendant’s business; (2) whether the defendant advertised to the public in general; (3) whether the defendant actively solicited this particular plaintiff, indicating potential solicitation of others; (4) whether the plaintiff and defendant have unequal bargaining positions.

 

Michael v. Mosquera-Lacy, 165 Wn.2d 595, 605, 200 P.3d 695 (2009) (citing Hangman Ridge, 105 Wn.2d at 791).¹⁰

 

Here, the alleged unfair or deceptive act or practice was Stickney’s failure to disclose his conflict of interest. The evidence introduced at trial was sufficient to establish that there was a real and substantial likelihood that others have been or would be injured in exactly the same fashion and that this unfair practice had a substantial potential for repetition. First, Stickney testified that he recommended only Birgh and HIH to his clients and did not ever explain his joint venture with Birgh to any client. Second, Stickney’s client list reveals that he had referred Birgh and HIH to 31 clients in five years. Stickney’s breach of his fiduciary duty to the DeCourseys was not an isolated event but, rather, was a generalized course of conduct. Thus, Stickney’s failure to disclose his conflict of interest was shown to impact the public interest.

 

Stickney argues that the DeCourseys did not satisfy the four factors indicating that a private dispute affects the public interest.¹¹ However, it is not necessary that all four of the factors discussed in Hangman Ridge be established. 105 Wn.2d at 790-91. Here, Stickney’s actions were committed in the course of his real estate business, there was evidence that he advertised to the general public,¹² and there was evidence that the DeCourseys and Stickney

 

____________________________________________

 

¹⁰ Whether a particular action gives rise to a violation of the CPA is a question of law, whereas the question of whether a party committed a particular act is reviewable under the substantial evidence test. Sign-O-Lite Signs, Inc. v. DeLaurenti Florists, Inc., 64 Wn. App. 553, 560-61, 825 P.2d 714 (1992).

 

¹¹ Stickney is correct that the third factor is absent: the undisputed evidence was that Stickney did not actively solicit the DeCourseys’ business. Rather, the DeCourseys contacted Stickney after getting a referral through a neighbor.

 

¹² Stickney identified himself as a Windermere real estate agent, and Windermere

 

______________________________________________________

 

were in unequal bargaining positions.¹³  Thus, evidence was presented that three of the four factors were satisfied. Furthermore, because Stickney recommended only Birgh to more than 30 clients, the DeCourseys showed a “real and substantial potential for repetition.” Eastlake Constr. Co., 102 Wn.2d at 52. Therefore, substantial evidence was presented by which the jury could find that all of the elements of the DeCourseys’ CPA claim were proved.

 

VI

 

Stickney next contends that the trial court erred by refusing to offset the amount of damages awarded by the jury by the amount of the DeCourseys’ settlement with Birgh and HIH and by refusing to permit evidence of the settlement based on the collateral source rule. He argues that the trial court’s errors resulted in a double recovery for the DeCourseys. We disagree.

 

Where a plaintiff has obtained a judgment against a nonsettling defendant but has already recovered proceeds for the same damages from settling defendants, the defendant may be entitled to seek an offset. See Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wn.2d 654, 674-75, 15 P.3d 115 (2000); Pederson’s Fryer Farms, Inc. v. Transamerica Ins. Co., 83 Wn. App. 432, 451- 52, 922 P.2d 126 (1996). However, where a nonsettling defendant claims a right

 

________________________________________

 

advertises widely in the area through its web site and signage. In fact, Stickney directed the DeCourseys to use the Windermere web site in reviewing real estate listings that he sent to them.

 

¹³ Stickney was an experienced Washington real estate agent. The DeCourseys were new to Washington and had purchased only one other home, and they were relying on Stickney as their real estate agent. The jury could reasonably find that the DeCourseys were not in an equal bargaining position with Stickney.

________________________________________________

 

to offset its responsibility to pay monetary damages because the plaintiff received proceeds from settling defendants, the nonsettling defendant “has the burden of establishing what part of the settlement was attributable to the claim it seeks to offset.” Puget Sound Energy, Inc. v. Alba Gen. Ins. Co., 149 Wn.2d 135, 141, 68 P.3d 1061 (2003).¹⁴ Thus, the nonsettling defendant bears the burden of proving double recovery. Were it otherwise, “‘such a rule would encourage litigation and reward the nonsettling [party] for refusing to settle.’” Puget Sound Energy, 149 Wn.2d at 141 (quoting Weyerhaeuser, 142 Wn.2d at 674). Where the settlement did not constitute payment for only the plaintiff’s damages for which the judgment was obtained, the defendant must prove what portion of the settlement should be offset.

 

The settling defendants in Puget Sound Energy, Weyerhaeuser, and Pederson’s obtained a benefit from the settlement beyond merely making a monetary payment for the plaintiffs’ claims. The settling defendants in Puget Sound Energy “obtained a release . . . from any number of risks and expenses associated with, among other things, the trial and appeal process.” 149 Wn.2d at 141. The settling defendants in Weyerhaeuser “also purchased certainty by avoiding the risks of an adverse trial outcome—not to mention forgoing the expenses associated with a lengthy trial and appeal.” 142 Wn.2d at 673. The settling defendants in Pederson’s did not merely pay for the plaintiff’s cleanup

 

____________________________________

 

¹⁴ A trial court’s decision to grant or deny an offset is reviewed for an abuse of discretion. Eagle Point Condo. Owners Ass’n v. Coy, 102 Wn. App. 697, 701, 9 P.3d 898 (2000).

 

___________________________________________

 

costs but, rather, the settlement was made “in exchange for a release of liability for all past, present and future environmental claims.” 83 Wn. App. at 452. In each of those cases, the nonsettling defendants did not demonstrate what portion of the settlement monies was attributable to the same injuries for which the nonsettling defendants were responsible and, thus, no offset was warranted. Puget Sound Energy, 149 Wn.2d at 142; Weyerhaeuser, 142 Wn.2d at 675; Pederson’s, 83 Wn. App. at 452.

 

Here, the same is true. Birgh and HIH, as the settling defendants, did more than just settle a claim with the DeCourseys. They also avoided the risks and expenses of trial and appeal. See Puget Sound Energy, 149 Wn.2d at 141; Weyerhaeuser, 142 Wn.2d at 673. This settlement was not mere payment for negligent construction; the monetary settlement was made in exchange for a release of liability for all claims relating to Birgh’s and HIH’s work on the DeCourseys’ house, including a release from payment of attorney fees and costs. Moreover, the settlement limits the DeCourseys’ ability to discuss Birgh’s and HIH’s negligence. Thus, Birgh and HIH obtained an enforceable restriction on the DeCourseys’ public disparagement of them, their work, and their honesty. The settlement here did not simply constitute payment only for the DeCourseys’ direct injuries. See Weyerhaeuser, 142 Wn.2d at 673.

 

To the extent that the settlement monies compensated the DeCourseys for the construction defects, it was Stickney’s burden to prove that the DeCourseys received a double recovery. However, Stickney did not demonstrate what part, if any, of the settlement was attributable to construction defects. “Thus, no showing of double recovery was made.” Pederson’s, 83 Wn. App. at 452. The trial court acted properly by not reducing the amount of the award entered against Stickney.

 

For the same reason, assuming—without deciding—that the collateral source rule pertains to this settlement, Stickney was not entitled to have evidence of the settlement admitted at trial and was not entitled to a reduction in the judgment entered against him. The collateral source rule precludes a defendant from offsetting the plaintiff’s damages with evidence of payments received by the plaintiff from a source independent of the defendant, for the same injury caused by the defendant. Ciminski v. SCI Corp., 90 Wn.2d 802, 804, 585 P.2d 1182 (1978).¹⁵ The defendant, seeking the benefit of the other source, has the burden of showing that the payments were made to compensate for the same injury. This was not proved at trial. The trial court did not err.¹⁶

 

VII

 

^{________________________________________________________________}

¹⁵ “The very essence of the collateral source rule requires exclusion of evidence of other money received by the claimant so the fact finder will not infer the claimant is receiving a windfall and nullify the defendant’s responsibility.” Johnson v. Weyerhaeuser Co., 134 Wn.2d 795, 803, 953 P.2d 800 (1998).

 

¹⁶ Stickney assigns error to the trial court’s decision to grant the DeCoursey’s motion to exclude evidence of the DeCourseys’ settlement with Birgh and HIH. Appellant’s Br. at 2 (Assignment of Error 6). Stickney does not provide a corresponding issue statement pertaining to this assignment of error, contrary to our rules. RAP 10.3(a)(4). RAP 10.3(a)(6) requires the appellant to present argument supporting the issues presented for review, citations to legal authority, and references to relevant parts of the record. Stickney presents neither legal authority nor argument supporting this assignment of error. Therefore, Stickney has waived this assignment of error and we will not further consider it. Smith v. King, 106 Wn.2d 443, 451-52, 722 P.2d 796 (1986).

 

__________________________________________________

 

 

Stickney next contends that the trial court erroneously refused to instruct the jury that the DeCourseys’ damages were to be measured at the time they were sustained rather than at the time of the trial. He makes this contention because the estimate prepared in 2008 by the DeCourseys’ expert regarding the cost of repairing the DeCourseys’ house was in an amount significantly higher than estimates prepared in 2004 and in 2005.

 

RAP 10.3(a)(6) requires argument supported by citation to authority. Stickney fails to cite any authority relevant to his proposition.¹⁷ In addition, Stickney’s argument has no merit considering that the testimony at trial was that the cost estimate from 2008 included repairs for damage that was discovered after the earlier estimates were generated. Thus, the earlier estimates did not account for all of the DeCourseys’ losses. The trial court’s instruction on the measurement of damages was not erroneous.

 

VIII

 

Stickney next contends that the economic loss rule prevents the DeCourseys from recovering any economic damages based on their breach of

______________________________________________

 

¹⁷ Instead, Stickney cites to Thompson v. King Feed & Nutrition Services, Inc., 153 Wn.2d 447, 105 P.3d 378 (2005), Falcone v. Perry, 68 Wn.2d 909, 416 P.2d 690 (1966), and Harkoff v. Whatcom County, 40 Wn.2d 147, 241 P.2d 932 (1952). These decisions address various methods for measuring damages, including the method that calculates the cost to repair the damaged property and the method that calculates the diminution in the market value of the property as a result of the damage caused by the defendant. These decisions discuss the appropriate circumstances for utilizing different methods for calculating damages and explain which one the finder of fact should follow in awarding damages to the plaintiff. They do not, however, address the appropriate time frame for measuring the cost to repair damaged property. Thus, these decisions are inapposite to Stickney’s contention that the DeCourseys’ damages should have been measured based on the cost of repair as calculated using 2005 prices, when the damage initially occurred, rather than the cost of repair based on 2008 prices.

________________________________________________________

 

fiduciary duty claim against him. Stickney, however, failed to interpose this issue in this litigation in a timely manner. Thus, he cannot be afforded appellate relief.

 

In the trial court, Stickney did not raise the economic loss doctrine¹⁸ as a defense until he brought a postverdict motion for judgment as a matter of law, a new trial, or remittitur. This was untimely. “[T]he post-trial discovery of a new theory of recovery is not sufficient reason to either grant a new trial or reconsider a previously entered judgment pursuant [to] CR 59.” Vaughn v. Vaughn, 23 Wn. App. 527, 531, 597 P.2d 932 (1979) (plaintiff sued her insurance company for bad faith in handling her tort action; after trial court ruled against her, she moved for reconsideration on an alternative theory of recovery). “‘A new claim of error brought forward for the purpose of reversing a judgment is too late if made for the first time on the motion for new trial.’” Teratron Gen. v. Institutional Investors Trust, 18 Wn. App. 481, 489-490, 569 P.2d 1198 (1977) (quoting Puget Sound Marina, Inc. v. Jorgensen, 3 Wn. App. 476, 480-81, 475 P.2d 919 (1970)). Indeed, a party finding a jury verdict unsatisfactory may not “suddenly propose a new theory of the case.” JDFJ Corp. v. Int’l Raceway, Inc., 97 Wn. App. 1, 7,

______________________________________

 

¹⁸ The economic loss rule prohibits plaintiffs from recovering in tort those economic losses “‘to which their entitlement flows only from a contract.’” Alejandre v. Bull, 159 Wn.2d 674, 682, 153 P.3d 864 (2007) (internal quotation marks omitted) (quoting Factory Mkt., Inc. v. Schuller Int’l, Inc., 987 F. Supp. 387, 395 (F.D. Pa. 1997)). The reason for this rule is that “‘tort law is not intended to compensate parties for losses suffered as a result of a breach of duties assumed only by agreement.’” Alejandre, 159 Wn.2d at 682 (quoting Factory Mkt., 987 F. Supp. At 395). However, the prohibition of the economic loss rule does not extend to all professional malpractice claims. Boguch v. Landover Corp., 153 Wn. App. 595, 618, 224 P.3d 795 (2009); Jackowski v. Borchelt, 151 Wn. App. 1, 14-15, 209 P.3d 514 (2009), review granted, 168 Wn.2d 1001, 226 P.3d 780 (2010).

_____________________________________________

 

970 P.2d 343 (1999) (plaintiff moved for posttrial reconsideration alleging that it was entitled to treble rather than actual damages under a statute not raised at trial). As we recently stated:

 

[H]ere, the motion for reconsideration arguments were based on new legal theories with new and different citations to the record. [Appellant] offers no explanation for why these arguments were not timely presented. CR 59 does not permit a [party] to propose new theories of the case that could have been raised before entry of an adverse decision.

 

Wilcox v. Lexington Eye Inst., 130 Wn. App. 234, 241, 122 P.3d 729 (2005).

 

Stickney did not raise the applicability of the economic loss rule to the trial court, either orally or in writing, at any time prior to entry of the jury’s verdict. Further indication that Stickney did not identify the economic loss doctrine as a potential defense prior to finding the jury’s verdict unsatisfactory is that Stickney did not propose any jury instructions on this defense theory.

 

The burden is on the parties to a lawsuit to propose jury instructions covering their respective theories. A party is bound by the legal theories pleaded and argued before the jury renders a verdict.

. . . .

In our judgment it follows that if a party fails to propose instructions on a particular theory of recovery, that theory is taken out of the case, and it cannot be reinstituted under the guise of a [postverdict] motion.

 

Browne v. Cassidy, 46 Wn. App. 267, 270, 728 P.2d 1388 (1986) (citations omitted). The same is true for most theories of defense as it is for theories of recovery. By failing to timely present the defense, Stickney waived it.

 

For all of the reasons discussed above, Stickney raised this theory too late for it to be considered by the trial court.

 

Nor is Stickney entitled to raise this issue on appeal. “A lawsuit cannot be tried on one theory and appealed on others.” Teratron, 18 Wn. App. at 489; see also RAP 2.5. This rule does not exist for our convenience. Rather,

 

[i]t proceeds upon the salutary principle that it is in the public interest that the trial court be the forum both for thought and after thought to the end that litigation may be terminated as early in the litigation process as possible, thereby avoiding unnecessary appeals. The rule would seem especially applicable when the issues raised are in the nature of affirmative defenses requiring a factual hearing and findings to resolve the factual issues raised.

 

Puget Sound Marina, Inc. v. Jorgensen, 3 Wn. App. 476, 480-81, 475 P.2d 919 (1970).

 

The applicability of the economic loss doctrine was a mere afterthought, first raised following the trial. The economic loss doctrine was not part of, or even closely related to, the defense theories presented at trial. The applicability of the economic loss doctrine to the DeCourseys’ claims constitutes an issue that was not properly preserved for appellate review.

 

IX

 

Stickney next contends that the Real Estate Purchase & Sale Agreement (REPSA) between the DeCourseys and the seller of the house limits his liability to the DeCourseys. This is so, he avers, because of the REPSA provision purporting to limit the real estate agent’s liability for damages arising out of referrals of contractors.¹⁹ Stickney’s argument fails.

 

To begin, Stickney was not even a party to the REPSA. More importantly, Stickney was not sued as a guarantor of his referral. Rather, he was sued for his breach of fiduciary duty. Stickney’s duty to disclose conflicts of interest was not waivable. RCW 18.86.050(1). Therefore, no provision in the REPSA could limit Stickney’s liability for his breach of such a fiduciary duty. Accordingly, his contention lacks merit.

 

X

 

 

Stickney next contends that Judge Fox, the trial judge, was precluded from awarding attorney fees to the DeCourseys because he could not modify Judge Erlick’s earlier order stating that the DeCourseys were “dismissing/not pursuing” any claim for attorney fees. We disagree.

_____________________________________________________

 

¹⁹ The relevant REPSA provision, in an “Additional Clauses Addendum,” provides: RECOMMENDATIONS AND REFERRALS. Agent may assist Buyer or Seller with locating, selecting or scheduling service providers, such as home inspectors, contractors and lenders. Agent cannot guarantee, ensure or be responsible for the quality or performance of the services or to the financial responsibility of third parties. Other vendors are available, and the price and quality of such services is competitive. Buyer and Seller agree to exercise their own judgment regarding such service providers.

 

EX. 33 at 11.

 

Initially, we note that we are not convinced that Judge Fox modified Judge Erlick’s order. The circumstances surrounding the entry of Judge Erlick’s order reveal that the DeCourseys were dismissing a claim to attorney fees for those attorneys whom they had consulted prior to the hearing. Judge Erlick’s order was made in connection with the DeCourseys’ CR 26(c) motion for a protective order, in which the DeCourseys sought to preclude questions regarding several attorneys whom the DeCourseys had earlier consulted. Judge Erlick ordered that the DeCourseys did not have to disclose information about the attorneys because the DeCourseys were not attempting to have the defendants pay the fees incurred for those attorneys’ services. It is not the case that Judge Erlick’s order related to other, yet-to-be-hired lawyers. Therefore, Judge Fox was not precluded from determining that Judge Erlick’s order contained “nothing in it which would preclude the award of attorney fees since that time.” RP (February 6, 2009) at 6.

 

However, even assuming that Judge Erlick’s order was intended to apply to future attorney services, a modification of this order was not necessarily improper. Generally, a trial court’s pretrial ruling is subject to modification. The trial judge is entitled to reexamine the matter and reconsider the ruling unless it was denominated a final decision. Central Puget Sound Reg’l Transit Auth. v. Heirs & Devisees of Eastey, 135 Wn. App. 446, 464-65, 144 P.3d 322 (2006) (Cox, J., concurring); accord MGIC Fin. Corp. v. H.A. Briggs Co., 24 Wn. App. 1, 8, 600 P.2d 573 (1979). Pursuant to CR 54(b), a decision that adjudicates fewer than all of the claims in an action is not final unless the trial court makes a written finding that there is no just reason for delay of the entry of judgment. In the absence of such a finding, a ruling resolving fewer than all claims “is subject to revision at any time.” CR 54(b). Where the initial order did not resolve all of the claims against all of the parties and the trial court made no CR 54(b) certification, the trial court “had authority to modify its initial judgment.” Ledcor Indus. (USA), Inc. v. Mut. of Enumclaw Ins. Co., 150 Wn. App. 1, 14 n.33, 206 P.3d 1255, review denied, 167 Wn.2d 1007 (2009).

 

In this case, Judge Erlick’s pretrial ruling regarding attorney fees did not resolve all of the claims against all of the parties and the trial court made no CR 54(b) certification. Accordingly, the trial court “had authority to modify its initial judgment.” Ledcor, 150 Wn. App. at 14 n.33.²⁰ Thus, Judge Fox was entitled to reexamine Judge Erlick’s earlier ruling.

 

Nevertheless, Stickney incorrectly contends that the denial of discretionary review by a commissioner of our court somehow precluded Judge Fox from awarding fees. The cases Stickney cites in support of his argument are readily distinguishable: they were decided on the merits. Hough v. Ballard, 108 Wn. App. 272, 31 P.3d 6 (2001); Gould v. Mut. Life Ins. Co., 37 Wn. App. 756, 683 P.2d 207 (1984). The “denial of discretionary review of a superior

___________________________________________

 

²⁰ We recognize that Judge Fox did not believe that he was modifying Judge Erlick’s earlier order. However, we may affirm the trial court on any basis supported by the record, whether or not the trial court relied on that basis in its decision. Amy v. Kmart of Wash. LLC, 153 Wn. App. 846, 868, 223 P.3d 1247 (2009).

____________________________________________________

 

court decision does not affect the right of a party to obtain later review of the trial court decision or the issues pertaining to that decision.” RAP 2.3(c). Nor does denial of discretionary review affect the trial court’s authority to modify its rulings. Indeed, Stickney cites to no authority suggesting otherwise.

 

Stickney also argues that Judge Fox was statutorily disqualified from ruling on the DeCourseys’ request for attorney fees because he was “not present and sitting as a member of the court at the hearing of a matter submitted for its decision.” RCW 2.28.030(2). However, RCW 2.28.030 “means no more than that a judge may not pass upon a matter that was never properly submitted to him.” In re Jaime v. Rhay, 59 Wn.2d 58, 61, 356 P.2d 772 (1961). “[A] successor judge lacks authority to enter findings of fact on the basis of testimony heard by a predecessor judge,” In re Marriage of Crosetto, 101 Wn. App. 89, 95, 1 P.3d 1180 (2000), but a successor judge can enter findings of fact based on testimony and argument that was actually presented to that judge. Cf. Wold v. Wold, 7 Wn. App. 872, 877, 503 P.2d 118 (1972) (new trial required in dissolution action where findings of fact inadequate and trial judge no longer on the bench). The matter of attorney fees was properly submitted to Judge Fox. He made his decision based on the evidence and argument presented to him.

 

Stickney also argues that Judge Erlick’s order is a final order because the DeCourseys did not appeal from it. He is correct that Judge Erlick’s order became final—it became final at the conclusion of the trial court proceedings when the judgment was entered. The DeCourseys did not cross-appeal, assigning error to the order. This is of no moment. The present finality of Judge Erlick’s order in no way affected Judge Fox’s earlier decision to award attorney fees to the DeCourseys.

 

By virtue of the finality of Judge Erlick’s order, the DeCourseys cannot now attempt to obtain an award of attorney fees for the lawyers they consulted while they were acting pro se. They do not seek to.

 

Judge Fox did not err in ruling that the DeCourseys were entitled to an award of attorney fees.²¹

 

XI

 

Stickney next contends that the amount of the trial court’s award of attorney fees was in error because the trial court did not enter specific findings of fact, did not require segregation of fees, and applied a 30 percent loadstar multiplier. We disagree.

 

A party may recover attorney fees only when a statute, contract, or recognized ground of equity so permits. Panorama Vill. Condo. Owners Ass’n Bd. of Dirs. v. Allstate Ins. Co., 144 Wn.2d 130, 143, 26 P.3d 910 (2001). “Whether a party is entitled to attorney fees is an issue of law that we review de novo.” Little v. King, 147 Wn. App. 883, 890, 198 P.3d 525 (2008). “Whether the fee award is reasonable is a matter of discretion for the trial court, which we

_______________________________________

 

²¹ The DeCourseys moved to strike portions of Stickney’s reply brief, contending that portions of Stickney’s reply brief contain new arguments regarding Judge Fox’s decision to award attorney fees. Given our resolution of this issue, the motion is moot.

________________________________________________

 

will alter only if we find an abuse of discretion.” Bloor  v. Fritz, 143 Wn. App. 718, 747, 180 P.3d 805 (2008).

 

The trial court must use the lodestar method of calculating an award of attorney fees,²² which requires that the trial court determine that a reasonable number of hours were expended and that the hourly rate is reasonable. Mahler v. Szucs, 135 Wn.2d 398, 434, 957 P.2d 632, 966 P.2d 305 (1998). The trial court must independently decide what is reasonable, rather than merely relying on billing records. Mayer v. City of Seattle, 102 Wn. App. 66, 79, 10 P.3d 408 (2000). The court must exclude any wasteful or duplicative hours. Mahler, 135 Wn.2d at 434. The trial court must also create an adequate record for appellate review of fee award decisions. Mahler, 135 Wn.2d at 435.

 

The trial court herein made specific findings that the number of hours expended and the billing rates charged by the DeCourseys’ attorneys were reasonable. The trial court was presented with evidence of the billing rate of each of the DeCourseys’ attorneys and with more than 50 pages of detailed billing statements, which had been reviewed and abridged in order to remove the hours expended on claims unrelated to the prevailing claims against Stickney.²³ Therefore, the trial court established an adequate record for review.

 

The trial court must segregate fees applicable to each claim where

____________________________________________

 

²² “The lodestar fee is the reasonable number of hours incurred in obtaining the successful result multiplied by the reasonable hourly rate.” Bloor, 143 Wn. App. at 750.

 

²³ The trial court did not discuss the DeCourseys’ submission concerning the attorneys they had consulted while they were still acting pro se. However, based on the amount of attorney fees actually awarded, it is apparent that these fees were not included within the award of attorney fees.

____________________________________________________

 

possible. Smith v. Behr Process Corp., 113 Wn. App. 306, 344-45, 54 P.3d 665 (2002). However, where the trial court finds that the claims are “so related that no reasonable segregation of . . . claims can be made, there need be no segregation of attorney fees.” Hume v. Am. Disposal Co., 124 Wn.2d 656, 673, 880 P.2d 988 (1994). Here, the trial court made a specific finding that segregation of attorney fees between claims would be impracticable. While this is not a finding of impossibility, our Supreme Court has accepted a trial court’s finding that segregation of CPA fees could not realistically be done because proof of the CPA claims required proof of the elements of the other claim. Mayer v. Sto Indus., 156 Wn.2d 677, 692-93, 132 P.3d 115 (2006). Here, the DeCourseys’ CPA claim was based on Stickney’s breach of fiduciary duty. Therefore, the trial court’s finding that segregation was impracticable was proper.

 

Stickney also contends that the trial court erred by applying a 1.3 multiplier to its award of attorney fees, arguing that the evidence does not support an enhancement. The trial court awarded the 1.3 multiplier “because of the high-risk nature of this particular litigation.” RP (Feb. 6, 2009) at 5. The trial court made no additional statements with regard to why a multiplier was appropriate and the written order awarding fees does not provide any factual findings regarding the appropriateness of the multiplier. The DeCourseys argued below that it was financially risky for their attorneys to accept their case because, although they had an hourly fee agreement, there was a possibility that their attorneys would not be able to recover fees from the DeCourseys if they did not prevail because the DeCourseys were so indebted.

 

In rare instances, the trial court may, in its discretion, award an adjustment to the attorney fees based on factors that the lodestar calculation has not already taken into account, including the contingent nature of success in the case and the quality of the work performed. Morgan v. Kingen, 166 Wn.2d 526, 539, 210 P.3d 995 (2009); Bowers, 100 Wn.2d at 593-94. When the trial court considers the contingent nature of success, it is “‘necessarily an imprecise calculation and must largely be a matter of the trial court’s discretion.’” Morgan, 166 Wn.2d at 539 (quoting Chuong Van Pham v. Seattle City Light, 159 Wn.2d 527, 542, 151 P.3d 976 (2007)). “‘A trial court awards a contingency adjustment solely to compensate for the possibility . . . that the litigation would be unsuccessful and that no fee would be obtained.’” Morgan, 166 Wn.2d at 539 (quoting Bowers, 100 Wn.2d at 598-99).

 

Here, there was a possibility that no fees would be obtained. At the time that the DeCourseys’ attorneys appeared on the DeCourseys’ behalf, the DeCourseys had limited finances and there was a significant risk that the attorneys would never recover their fees if the DeCourseys did not prevail in the lawsuit. The trial court recognized that the legal implications of Stickney’s failure to disclose “were strenuously fought.” RP (Feb. 6, 2009) at 5. Moreover, the attorneys accepted the DeCourseys’ representation shortly after Judge Erlick’s order. The uncertainty caused by Judge Erlick’s ruling made it a possibility that the DeCourseys would not be able to recover any attorney fees. Thus, the trial court did not abuse its discretion in deciding to award a 30 percent multiplier.

 

Accordingly, the trial court’s calculation of attorney fees was not made in error.

 

XII

 

Stickney finally contends that the trial court’s award of costs was in error. We agree.

 

In addition to permitting an award of attorney fees, the CPA permits a successful plaintiff to recover the costs of his or her lawsuit. RCW 19.86.090. However, the plaintiff in a CPA action cannot recover costs beyond those statutorily defined in RCW 4.84.010. Nordstrom, Inc. v. Tampourlos, 107 Wn.2d 735, 743, 733 P.2d 208 (1987). “RCW 4.84.010 entitles a prevailing party to recover, in general, filing fees, costs for service of process, notary fees, reasonable expenses for reports and records entered into evidence, [and] statutory attorney and witness fees.” Sto Indus., 156 Wn.2d at 694.

 

Here, the record reveals that the $45,442 in costs awarded to the DeCourseys included costs for parking, faxing documents, photography, transcription, expert witnesses, and legal research. These costs are not authorized by RCW 4.84.010. The trial court did not demonstrate how the award of these costs is consistent with Nordstrom.²⁴ Therefore, the trial court erred by awarding costs in excess of those authorized in RCW 4.84.010. Remand is necessary to correct the cost award.

 

XIII

 

The DeCourseys request an award of attorney fees on appeal pursuant to RAP 18.1. Where a statute or contract allows an award of attorney fees at trial, an appellate court has authority to award fees on appeal. Standing Rock Homeowners Ass’n v. Misich, 106 Wn. App. 231, 247, 23 P.3d 520 (2001).

 

The CPA provides adequate grounds for such an award in the present case. However, the attorney fees awarded to the DeCourseys must be limited to those portions of the appeal related to the CPA claim. There is no separate, contractual basis to award attorney fees. See Boguch v. Landover Corp., 153 Wn. App. 595, 615, 224 P.3d 795 (2009).²⁵ Upon proper application, a

_____________________________________________

 

²⁴ The DeCourseys contend that, pursuant to the REPSA, they were entitled to expenses beyond those authorized in RCW 4.84.010. The REPSA states, “If Buyer or Seller institutes suit against the other concerning this Agreement, the prevailing party is entitled to reasonable attorneys’ fees and expenses.” CP at 1438. The plain terms of this provision authorize an award of attorney fees and expenses only when the buyer and seller are engaged in litigation with one another concerning the sale of the house. The DeCourseys have not sued the seller of the house and, contrary to the DeCourseys’ contention, this provision does not authorize an award of expenses against Stickney beyond those authorized in RCW 4.84.010.

 

²⁵ In our decision in Boguch, we held that attorney fees could not be awarded pursuant to the contract because the plaintiff’s claim alleging that his real estate agents had breached their statutory duties under chapter 18.86 RCW was a tort claim, rather than a claim on the contract. 153 Wn. App. at 617. We stated:

 

A prevailing party may recover attorney fees under a contractual fee-shifting provision such as the one at issue herein only if a party brings a “claim on the contract,” that is, only if a party seeks to recover under a specific contractual provision. If a party alleges breach of a duty imposed by an external source, such as a statute or the common law, the party does not bring an action on the contract, even if the duty would not exist in the absence of a contractual relationship.

 

Boguch, 153 Wn. App. at 615; see also CHD, Inc. v. Boyles, 138 Wn. App. 131, 140, 157 P.3d

415 (2007) (“The contract containing the attorney fees provision must be central to the

_____________________________________________________

 

commissioner of this court will enter an appropriate order.

 

Affirmed in part. Reversed in part and remanded to the trial court for a corrected calculation of the award of costs.

 

Dwyer, C.J.

 

We concur:

 

Schindler, J

Applewick, J

____________________________________________

 

controversy.”).

 

We do not concern ourselves with the basis for the trial court’s award of attorney fees, as that issue was not raised on appeal. RAP 2.5.

 

______________________________________

 

(Above L to R) The Governing Persons of the Washington Loan Company: 1) Windermere Founder John W. Jacobi is listed as President of the Washington Loan Company; 2) Timothy Wissner, CFO of franchiser Windermere Services, and CFO of Windermere Solutions is listed as Washington Loan Company Vice President; 3) Kendra Vita, Manager of franchiser Windermere Services Company is listed as Secretary of the Washington Loan Company; 4) franchiser Windermere Services Company General Counsel, attorney Paul S. Drayna—WSBA #26636—is listed as Registered Agent of the Washington Loan Company; 5) Don Riley, Washington Loan Company manager; 6) Windermere Real Estate S.C.A. Redmond owner Craig Shriner; 7) Windermere Redmond SCA managing broker Aaron Shriner; 8) Windermere Redmond SCA agent Christopher Judd. The Washington Loan Company's business license states that its registered trade name is Windermere Real Estate / Eastlake.

Read the original Complaint in the case here. Defendants Washington Loan Company and Windermere Real Estate S.C.A. Redmond must be compelled by court to produce discovery.

 

IN THE SUPERIOR COURT OF THE STATE OF WASHINGTON

 

IN AND FOR THE COUNTY OF KING

 

FRED AND KATHLEEN REPASS,

 

Plaintiff,

 

v.

 

 

WINDERMRERE REAL ESTATE/S.C.A., INC.; CHRISTOPHER JUDD, a single man; WASHINGTON LOAN COMPANY, Inc., a Washington corporation; and ALISON A. HAIG, as trustee of subject of deed of trust,

 

Defendants.

 

NO. 09-2-46671-8 SEA

 

DEFENDANTS' OPPOSITION TO MOTION FOR SUMMARY JUDGMENT

 

This opposition memorandum is submitted by and on behalf of Defendants Windermere Real Estate/S.C.A., Inc. and Washington Loan Company.

 

1. INTRODUCTION

 

Plaintiffs ask this court to disregard a valid lien from their property. Plaintiffs do not contend that the deed of trust was not properly recorded or perfected. Indeed Plaintiffs admit that the "Windermere Deed of Trust" was properly recorded against the property. Motion for Summary Judgment ("MSJ") at 4, 11. 9-11. Rather, Plaintiffs contend that because the deed of trust was not cleared from title in their purchase of the property, that they are now entitled to avoid the encumbrance. In essence the Plaintiffs ask this court to remove the subject deed of trust from their property.

 

Plaintiffs have title insurance. Commonwealth Land Title Company of Puget Sound, LLC ("Commonwealth") issued title insurance to Plaintiffs in their purchase of the property. Commonwealth missed the subject deed of trust in its title examination. Exhibit 1, Declaration of David C. Daniel. Although Commonwealth learned shortly after closing of its error, it waited 6 months before notifying Plaintiffs (in September, 2008) that it had missed the subject deed of trust on title. In its letter to Plaintiffs, Commonwealth accepted responsibility for the missed deed of trust and assured Plaintiffs that they would be protected from any action taken by the lienholder. Exh. 2, Daniel Dec.

 

The named Plaintiffs in this action are Fred and Kathleen Repass. However Fred Repass testified under oath that this is not his lawsuit; it is Commonwealth's lawsuit.

A. I didn't file the lawsuit technically. They did. And because of the title policy, I understood that I had to go along with it. But what I was asking them to do is pay it off so I am out of the picture. They said, we don't have to do that. So here we are.

Exh. 3, Daniel Dec., Repass Deposition at 30-1.

 

This case is entirely being pursued by Commonwealth to avoid payment on Repasses' title claim for which Commonwealth has accepted responsibility. Plaintiffs ask this court to disavow the lien position of the subject deed of trust on the basis that the properly secured and perfected lienholder should not obtain an "unearned windfall". However, Plaintiffs fail to establish (a) any legal or equitable basis on which this court should order the cancellation of a valid lien, particularly on summary judgment, or (b) that any "unearned windfall" would actually result to the lienholder. Further, the remedy Plaintiffs seek in their motion is not equitable subrogation, inasmuch as they are not looking to be placed into the shoes of another. Rather, Plaintiffs are asking this court to subordinate the subject deed of trust to the Plaintiffs interest in the property.

 

Plaintiffs have not met their initial burden of proof necessary to shift the burden to the nonmoving party on summary judgment. They have not offered sufficient evidence that they are entitled to judgment as a matter of law. The caselaw on which they rely is not analogous to the case-at-hand, and they incorrectly state that the "only issue before the court has already been decided by the Washington State Supreme Court." MSJ at 8, 11. 20-1. Indeed the question at hand has never been answered by the Washington courts. Finally, the question of equitable subrogation, or subordination, is one that is entirely fact-driven. Although Plaintiffs clearly downplay the materiality of the facts, and the existence of any dispute over the facts, the truth of the matter is that there are significant factual disputes at hand on highly material issues.

 

Namely, the factual disputes herein include: (a) whether an unearned windfall would or could result to Defendants, and if so in what amount and how; (b) whether Defendants believed that they stood to gain from the sale of the Kirkland Home from Judd to Repass; (c) whether the facts here constitute a basis for equitable subrogation when Plaintiffs do not look to step into the shoes of another, but rather to take a superior position to a validly recorded and perfected deed of trust; and (d) that even though Plaintiffs admit they themselves were aware of the subject deed of trust prior to closing, they claim that Defendants willfully and knowingly acted in concert to allow the sale to close without the deed of trust being cleared, even though there is not a shred of evidence to support such a claim.

 

For the reasons set forth herein, Plaintiffs motion must fail.

 

II. STATEMENT OF FACTS

 

Washington Loan Company's ("WLC") primary purpose is to make bridge loans to Windermere clients and customers. An ordinary bridge loan is used to allow a Windermere client to buy a property without having yet sold their previous home. It is a short term loan in which the contract provides that repayment is due within 9 months or upon the sale of the person's previous home, whichever occurs first. The loan is secured by a lien against the previous home, and the homeowner is required to list that property for sale with the Windermere franchise through which the loan is originated. WLC requires that the Windermere franchise through which the loan is originated must guarantee repayment of the loan. Exh. 4, Daniel Dec., Riley Deposition at 16-7.

 

WLC and Windermere Real Estate/SCA, Inc. ("Windermere SCA") are not connected in any substantive way. WLC is wholly owned by John Jacobi. Windermere SCA is a Windermere franchise wholly-owned by Craig Shriner. Mr. Shriner and Windermere SCA do not have any financial interest or control over WLC. Declaration of Craig Shriner.

 

Defendant Chris Judd ("Judd") is an agent licensed with Windermere SCA. Judd, as a homeowner and not as an agent for a Windermere client, applied for a loan from WLC in the amount of $300.000 in December, 2005, intending to use the loan proceeds to completely remodel a home he owned in Seattle (the "Golden Gardens Home"). Exh. 5, Daniel Dec. WLC knew of Judd's intended use of the funds, and that this was therefore not an ordinary "bridge loan". Exh. 4, Daniel Dec., Riley Deposition at 36-37. To secure the loan, Judd granted a deed of trust against the Golden Gardens Home. Exh. 5, Daniel Dec. Based on Judd's loan application, it appeared at the time that the Golden Gardens Home had plenty of equity to provide adequate security for the loan. Id.

 

Shortly into his improvement/remodel project of the Golden Gardens Home, Judd encountered numerous construction issues. Exh. 6, Daniel Dec., Judd Deposition at 86-7. These construction issues required additional expenditures to complete the remodel project. Judd applied for an additional loan from WLC in the amount of $100,000 in February, 2006 to deal with the additional expenditures. Exh. 7, Daniel Dec. This loan was also secured by a deed of trust against the Golden Gardens Home. Id. Judd estimated the approximate value of the Golden Gardens Home at this time at $1.3 million. His estimate of value had increased $100,000 over the December, 2005 estimate due to the substantial improvements he had made to the property. Moreover, it appeared that Judd still had $400,000 in equity in the Golden Gardens Home at this time. Id.

 

The construction issues significantly delayed Judd's improvement project. As of August, 2006, Judd still had not completed the remodel project. Exh. 6, Daniel Dec. Nonetheless, Judd continuously marketed the Golden Gardens Home for sale. After trying to sell the property for many months without completion of the remodel, Judd determined that he needed to take the property off the market and complete the remodel project in order to procure a buyer. Id.

 

A year after WLC made the loans, Judd requested that WLC subordinate its deeds of trust against the Golden Gardens Home to allow him to refinance the first position mortgage. Exh. 4, Daniel Dec., Riley Deposition at 62-3. In consideration for agreeing to the subordination, WLC requested additional security. WLC and Judd agreed that a third deed of trust would be given as security. Exh. 4, Daniel Dec., Riley Deposition at 80-1. This deed of trust was secured against Judd's personal residence in Kirkland (the "Kirkland Home") and had a face value of $400,000 (being the aggregate of the $300K and $100K loans). It is this third deed of trust, and the Kirkland Home, that are the subject matter of this litigation. This third deed of trust was recorded in March, 2007. Exh. 8, Daniel Dec.

 

By August, 2007 Judd had finally completed the remodel project on the Golden Gardens Home. He listed the property for sale at $1,249,999. Exh. 6, Daniel Dec., Judd Deposition at 89-90. Unfortunately, Judd was unable to sell the property at the price he expected. By early 2008 Judd had reduced the listing price to $949,000. Id. Judd was having problems covering mortgage payments on two properties for much longer than he intended. By late 2007 the real estate market had begun to slow down significantly. Judd was affected by the slow-down in two ways. First, he was having a difficult time selling either of his properties. Second, his income was down significantly. By early 2008 Judd was in arrears on the Kirkland Home mortgage payments by nearly $40,000. Exh. 6., Daniel Dec., Judd Deposition at 101-104.

 

In February, 2008 the first position mortgage holder of the Kirkland Home commenced foreclosure proceedings. Id. However, the trustee conducting the foreclosure failed to provide notice of the sale to WLC. Page 1 of the notice of trustee's sale clearly shows that WLC is not listed among the lienholders who received notice of the sale. Exh. 9, Daniel Dec. The trustee, Karen Gibbon, has confirmed that WLC was not notified of the foreclosure. Exh. 10, Daniel Dec. This is because the WLC deed of trust on the Kirkland Home did not appear on the trustee's sale guarantee (title report) ordered by Ms. Gibbon.

 

As mentioned previously, WLC loans are due nine months from the date of issue, or upon sale of the secured property, whichever occurs first. By early 2008, therefore, Judd's loans were well in arrears. WLC approached Windermere SCA and Mr. Shriner as guarantor of the loans at that time to seek payment or a satisfactory alternative. WLC, Windermere SCA, and Mr. Shriner agreed to enter into an assignment agreement in which WLC would assign to Windermere SCA all rights against Judd, and Windermere SCA would in turn sign a new promissory note payable to WLC personally guaranteed by Mr. Shriner for the full amount of the Judd loans plus interest. By agreeing to this arrangement, WLC agreed to allow Windermere SCA more time to facilitate repayment of the Judd debts. Windermere SCA granted WLC a deed of trust against its office building in Kirkland as security for the new note. Exh. 11, Daniel Dec., Shriner Deposition at 83-4.

 

Meanwhile, Judd had entered into a purchase and sale contract for the sale of the Golden Gardens Home. Judd was represented in that sale by an agent from a separate real estate firm in located in Ballard. Exh. 6, Daniel Dec., Judd Deposition at 89-91. The escrow agent on that sale contacted WLC for a payoff demand on the WLC deeds of trust. Again, there were two deeds of trust on the Golden Gardens Home, one for $300k and one for $100k. The sale of the Golden Gardens Home was expected to (and did ultimately) render significant proceeds to WLC against Judd's debt. Id.

 

Additionally, around the same time, Judd had entered into a contract to sell the Kirkland Home to Plaintiffs Repass for a purchase price of $1,070,000. Judd was represented in this sale by a John L. Scott agent named Kirk Russell, a self-proclaimed short sale expert. Windermere SCA was not involved in the sale to Repass. Windermere SCA received no commission or anything of value whatsoever in Judd's sale to Repass. Exh, 6, Daniel Dec., Judd Deposition 48-9,105.

 

Although WLC suspected that there would be little to no equity in the Kirkland Home, it did at least know that a short sale could not close without WLC removing its lien. Thus, WLC knew that at some point the escrow agent would contact WLC for a payoff demand. At that time, WLC would have been able to approach Judd for payment. WLC also would have been in a position to require that the senior lienholders "kick some money down the line" in order to obtain a closing on the sale. In other words, WLC could have required that the senior lienholders relinquish some funds to WLC in order to obtain WLC's lien release, and a closing on the sale. Simply put, WLC stood to reap some gain from a short sale of the Kirkland Home regardless of the fact that it was upside-down in equity. Exh. 11, Daniel Dec., Shriner Deposition at 85-6.

 

In addition to demanding funds from the senior lienholders in a short sale, WLC and its guarantors, Windermere SCA and Shriner, would have used the short sale as an opportunity to demand that Judd produce funds. Id. Judd had told Mr. Shriner several times that his family had money and would help him out if he was unable to satisfy his obligations to WLC. Mr. Shriner in particular had planned on objecting to a lien release on the Kirkland Home unless Judd made an arrangement to satisfy the debts through family assets. Id.

 

See attached Declaration of Richard Phenneger (Mr. Phenneger, a father figure to Judd, states that he would have loaned Judd $50,000 - $60,000 had Judd asked him for help at that time).

 

WLC, Windermere SCA, and Mr. Shriner had no reason to believe that the pending sale to Repass could close without escrow or Judd coming to WLC and requesting a reconveyance of the WLC deed of trust. However, the Repass sale indeed did close without WLC ever being contacted for a payoff. The title report issued by Commonwealth did not reveal the WLC deed of trust. Exh. 1, Daniel Dec. However, Repass admits that prior to closing, he learned of the WLC deed of trust from his son (who says he found it on a RealList.com, a website often utilized by real estate professionals). See Complaint, ¶15.

 

Neither Mr. Shriner nor anyone at WLC or Windermere SCA ever saw a title report for the subject property or had knowledge that the subject deed of trust was missing from title. They were all shocked to learn that the subject transaction had closed without escrow having contacted them for a payoff demand. After the sale had closed, it was too late for them to do anything about it.

 

III. ISSUE PRESENTED

 

Whether this court must deny Plaintiffs' motion for summary judgment when Plaintiffs have failed to meet their burden of proof necessary to shift the burden to Defendants, when the law does not support the remedy requested by Plaintiffs, and when genuine issues of material fact would preclude Plaintiffs' right to summary judgment in any event, with such disputed facts including: (a) whether Defendants truly stand to receive an unequitable gain or "unearned windfall" from Commonwealth's insuring of Repasses' title, (b) whether Defendants could have recovered any money in conjunction with Judd's sale of the Kirkland Home to Repass, (c) whether Plaintiffs’ contentions in this lawsuit of collusion and willful actions in concert by the Defendants are totally without merit and unsupported by any evidence, (d) whether Repass had actual knowledge prior to closing of the subject deed of trust, and (e) whether Commonwealth is a mere volunteer in its acceptance of responsibility for the Repasses’ title claim?

 

IV. EVIDENCE RELIED UPON

 

Defendants rely on the Declarations of David C. Daniel, Craig Shriner, and Richard Phenneger, and on the pleadings and documents on file herein.

 

V. LEGAL AUTHORITY AND ARGUMENT

 

A. Summary Judgment Standard.

 

According to CR 56(c), a court must deny a party's motion for summary judgment if the files and records, viewed in the light most favorable to the nonmoving party, present genuine issues of material fact. Mutual of Enumclaw Ins. Co. v. USF Ins, Co., 164 Wn.2d 411, 191 P.3d 866 (2008). On summary judgment motion, burden is on moving party to prove there is no genuine issue as to fact which could influence outcome at trial. Hartley v. State, 103 Wn.2d 768, 698 P.2d 77 (1985). If the moving party fails to satisfy its burden, summary judgment must be denied. Id. If reasonable minds could reach more than one conclusion, then summary judgment is inappropriate. Vallandingham v. Clover Park School Dist. No. 400, 154 Wn.2d 16, 109 P.3d 805(2005).

 

B. Equitable subrogation does not apply.

 

Plaintiffs’ requests for equitable subrogation are unsupported by the laws of equitable subrogation for several reasons.

 

1. Plaintiffs are not subrogating into the shoes of another.

 

Plaintiffs ask this court to equitably subrogate them, the Plaintiffs, to a position superior to that of the subject deed of trust. Such is not equitable subrogation. Subrogation is the act of stepping into the shoes of another to avoid unjust enrichment; "Subrogation is the substitution of one person in place of another ... so that he who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies, or securities." Bank of America v. Prestance Corp., 160 Wn.2d 560, 565, 160 P.3d 17 (2007) (citation for quote omitted). The Plaintiffs do not ask to be substituted into the shoes of another, but rather to be given a superior position to the subject deed of trust. In essence, they are asking the court to disregard the Defendants' properly recorded and perfected lien by giving Plaintiffs superiority to it. Plaintiffs step into a currently unoccupied position; there are no shoes which Plaintiffs would be filling.

 

2. Equitable subrogation is not allowed if a junior interest is prejudiced.

 

Even if the Plaintiffs were properly seeking equitable subrogation, the law would not support the remedy in this case. The remedy is being sought specifically at the expense of and to the prejudice of the subject deed of trust held by Windermere SCA. "Equitable subrogation should never be allowed if a junior interest is materially prejudiced….” Bank of America, 160 Wash.2d at 572, 160 P.3d 17.

 

Additionally, as Repass himself testifies, this is Commonwealth’s lawsuit and not his. The reason this case exists is because of Commonwealth’s error in its title examination and its resulting obligation to Repass. Washington caselaw is clear that equitable subrogation does not extend in favor of a title insurer when such would alleviate the insurer of its own negligence at the expense of an innocent third party creditor. Kim v. Lee, 145 Wn.2d 79, 31 P.3d 665 (2001).

 

In the instant case, legal remedies and equity suggest that the loss should fall on the title company rather than the innocent judgment creditor. As in Coy, this case was *92 precipitated by the title company's negligence and failure to acknowledge the lien. Yakima Title not only failed to discover Kim's judgment lien when it conducted its title search for the Lees' loan from Pioneer, as in the Coy case, but also failed to acknowledge the lien when it had actual knowledge of it from Kim's counsel. With the information at hand, Yakima Title still issued the title policy insuring PHH's first lien position. Applying equitable subrogation to extend in favor of Yakima Title would result in alleviating Yakima Title of its own negligence and complete disregard of the actual notice at the expense of an innocent judgment creditor.

 

Kim v. Lee, 145 Wn.2d 79, 91-2, 31 P.3d 665 (2001).

 

The Repasses’ rights here are not at issue. Commonwealth has accepted responsibility for the title claim, regardless of the fact that Repass admits that he had knowledge of the subject lien prior to closing. As Repass himself admits, this lawsuit is pursued by Commonwealth with the intention of avoiding a financial obligation to Repass at the expense of a valid and innocent third party lienholder. Such an instance as in this case is the very basis upon which title insurance is needed and procured. To allow the carrier here to avoid its responsibility which it has accepted to Repass by disregarding the Windermere SCA deed of trust clearly flies in the face of the title insurer's obligation, Washington caselaw, and the very equities which would otherwise support the remedy of equitable subrogation, which by definition is intended to prevent unjust enrichment, not provide for it. Commonwealth issued a title policy and now rather than pay the claim, it seeks to have this court order a properly recorded and perfected lien disregarded.

 

3. Commonwealth is a mere volunteer.

 

The Washington Supreme Court explained in Coy v. Raabe, 69 Wn.2d 346, 418 P.2d 728 (1966), that a title insurance company is particularly limited in its right to employ subrogation. The Coy Court held that it was "not the province of the court to relieve a title insurance company of its contractual obligation..." Coy, 69 Wn.2d at 351. The Court stated that "[subrogation] will be applied where any person, other than a mere volunteer, will suffer damage because of the unjust enrichment of another." Coy, 69 Wn.2d at 350-1. (Emphasis added.)

 

The Repass title policy excludes coverage for issues of title that were actually known by the insured. Exh. 1, Daniel Dec. Repass admits in the Complaint that he knew of the subject deed of trust prior to closing. As such, Commonwealth's election to accept responsibility for the title claim was an election, a voluntary action, and not an obligation under the policy. For some reason, Commonwealth waited 6 months before notifying the Repasses of the defect in their title. Exh. 2, Daniel Dec. In that letter, however, the insurer clearly accepts responsibility for the claim as a mere volunteer, which would preclude the remedy of equitable subrogation.

 

4. Bank of America is not an analogous case.

 

Plaintiffs reliance on Bank of America v. Prestance Corporation, 160 Wn.2d 560, 160 P.3d 17 (2007) is misplaced. The Court ruled there that a refinancing lender/mortgagee is entitled to equitable subrogation into shoes of the original lien positions, regardless of either its actual or constructive knowledge of intervening interests.

 

The case at hand does not concern a refinance. Bank of America stands for the equitable result that is reached by allowing a homeowner to seek out favorable refinancing without the lender having to forfeit its established lien position, thereby being an exception to the "first in time" rule in Washington concerning perfecting liens. Equitable subrogation of the new loan to the original lien position allows a tremendous benefit to society of refinancing and competitive lending.

 

Our case is further unique in terms of subrogation inasmuch as the title insurer in here played a role in creating the problem. But for the title insurance company's mistake in missing the subject deed of trust, the transaction never would have closed. WLC, Windermere SCA, and Mr. Shriner would have maintained their leverage over Judd and could have negotiated a settlement for the amounts Judd owes them. Richard Phenneger would have contributed in Judd's favor had he been given the opportunity.

 

It appears that the case at hand indeed presents an issue of first impression for the Washington courts.

 

C. Disputed Facts.

 

There are several genuine issues of material fact that are in dispute. First, Plaintiffs inaccurately contend that an "unearned windfall" would result to Defendants if they are allowed to maintain their properly recorded and perfected deed of trust lien position on the Kirkland Home. Craig Shriner has incurred substantial expense in maintaining the interest payments on the delinquent loans and in defending this lawsuit being brought by Commonwealth to avoid its coverage obligations. He is invested significantly in this matter. There is substantial evidence that proves that even if Commonwealth made a substantial contribution against the debts secured against the Kirkland Home (according to its obligations as a title insurer), that even then the Defendants would still be out a substantial sum of money. The contention that an unearned windfall will result to Defendants is unsupported and incorrect.

 

Second, Plaintiffs inaccurately contend that Defendants concede that there was never any hope of recovering any money from the sale of the Kirkland Home. Chris Judd had told Craig Shriner on numerous occasions that if push came to shove, he could reach out to family for money. Defendants were therefore prepared to use the sale of the subject property as leverage against Judd to force him to reach out to family members for money. The sale "could not" close without the subject lien being released. Indeed, Chris Judd did have family who would have been willing to help him financially at the time, had the request been made. See Declaration of Richard Phenneger.

 

Moreover, Plaintiffs entire case is premised upon inaccurate contentions of collusion and willful misrepresentation by the Defendants. There is no proof whatsoever that WLC, Windermere SCA, or Mr. Shriner had knowledge that the sale to Repass was closing. Indeed, the evidence clearly shows that they were awaiting a payoff demand from escrow, which we now know never came. Plaintiffs' demands for an equitable remedy flow from their belief of collusion on the part of the Defendants. Their collusion theories are specious and inflammatory, and totally unsupported by evidence. Plaintiffs provide no evidence to the contrary.

 

1. There will be no unearned windfall.

 

Craig Shriner, owner of Windermere SCA, has spent over $100,000 already in making interest payments on the Judd debts and on defending this lawsuit being pursued by Commonwealth in the name of Repass. It is helpful to examine the numbers as they are now, in the context of this lawsuit and the circumstances as they are presently, as compared to how things would have been had Commonwealth not missed the deed of trust and had never started this lawsuit.

 

Take first the hypothetical scenario that Commonwealth had not missed the deed of trust, and the lawsuit never came about. The total balance of the outstanding debt at the time of the closing of the two sales (Kirkland Home and Golden Gardens Home) was approximately $473,000.00 (including accrued interest). The Golden Gardens Sale rendered roughly $117,000.00 against the debt, leaving a balance of $356,000.00. Subtract from that the $100,000 that Mr. Shriner has spent over the course of this lawsuit; he could have instead put that money towards the balance owing at the time. That leaves what would have been a remaining balance in 2008 of $256,000.00. If you further reduce that balance by the amount that Chris Judd could have obtained from his family in the sale of the home to Repass ($60k-$70k, see Dec. of Phenneger), you are left with a balance of approximately $190k - $200k.

 

Now, look at the numbers given the context of the lawsuit. After the Golden Gardens Sale, the outstanding balance was $356k. Add to that the $100k that Mr. Shriner has had to spend to maintain the loan while defending this lawsuit from Commonwealth, and Mr. Shriner's exposure rises to $456,000.00.

 

Thus, even if Commonwealth contributed over $250,000.00 towards the payment of the Judd debts now, Mr. Shriner would still be walking away with zero windfall. Being forced to defend this lawsuit and divert his resources has caused him substantial hardship which he otherwise would not have incurred. There is no windfall.

 

2. Judd's family would have provided him money.

Chris Judd told Mr. Shriner on several occasions that if push came to shove that he would be able to reach out to members of his family for money. Richard Phenneger, a "father figure" to Chris Judd, submits a declaration that he could have and would have given Chris Judd money to help him avoid his financial troubles in March, 2008, had he been asked. See Declaration of Richard Phenneger. Of course, as the Kirkland Home closed without any notice ever having been given to WLC or Windermere SCA, Mr. Shriner's plan to require Judd to obtain money from his family to pay down the debts was thwarted, as all leverage to apply pressure was lost when the sale closed.

 

3. Plaintiffs' contentions that Defendants acted willfully and in concert to allow the sale to Repass to close are specious, inflammatory, and totally without merit.

 

Plaintiffs claim intentional misrepresentation against the Windermere SCA and WLC defendants in this case. These claims require that Plaintiffs prove knowledge by the Defendants that the deed of trust had not been removed, or that the title report omitted disclosure of the deed of trust. There is not a shred of evidence to suggest any such knowledge. WLC was the lienholder who would have been contacted for a payoff. WLC manager Don Riley has testified that his attention was on the closing of the Golden Gardens Home and not the Kirkland Home, as he expected there to be more equity available in Golden Gardens for a payoff. Regardless, however, Riley knew that without a payoff demand and agreement, the Kirkland Home could not sell. WLC’s lien was perfected.

 

Likewise, Craig Shriner and Windermere SCA were third parties entirely. Escrow would not have contacted Windermere SCA for a payoff even if it had known of the deed of trust. WLC was the lienholder; Mr. Shriner and Windermere SCA were mere third party guarantors. There is no evidence that Windermere willfully stood by and allowed this sale to close, or knowledge that Windermere knew Repass was mistaken.

 

VI. CONCLUSION

 

For all of the reasons set forth herein, the Court must deny Plaintiffs’ motion for summary judgment. A proposed order will be provided at the time of the hearing.

 

DATED this 16th day of September, 2011.

 

DEMCO LAW FIRM, P.S.

 

By_______________________________________

Lars E. Neste, WSBA #28781

David C. Daniel, WSBA #34410

Attorneys for Windermere Real Estate/S.C.A.

Inc., and Washington Loan Company

 

 

 

 

 

 

 

IN THE SUPERIOR COURT OF WASHINGTON

IN AND FOR THE COUNTY OF KING

 

FRED AND KATHLEEN REPASS,

 

Plaintiffs,

 

V.

 

WINDERMERE REAL ESTATE/S.C.A., INC.; CHRISTOPHER JUDD, a single man;

WASHINGTON LOAN COMPANY, Inc., a Washington corporation; and ALISON A. HAIG, as trustee of subject of deed of trust,

 

Defendants.

 

Cause No. 09-2-46671-8

 

PLAINTIFFS’ REPLY IN SUPPORT OF SUMMARY JUDGMENT MOTION

 

1. REPLY

 

Fred and Kathleen Repass are not asking the court to "disregard a valid lien" from their property as Defendants suggest. Rather, they are asking the court to relegate Defendants' deed of trust to the same position it was in before Plaintiffs paid approximately $1,000,000.00 to purchase the Kirkland Property. Defendants offer no principled reason why they should receive an unearned collection windfall.

 

The question of whether equitable relief is appropriate is a question of law. Niemann v. Vaughn Cmty. Church, 154 Wh.2d 365, 374, 113 P.3d 463 (2005); Bank of Am., N.A. v.

 Prestance Corp., 160 Wn.2d 560, 564, 160 P.3d 17, 19 (2007). Even considering Defendants’ so called "disputed facts" in the light most favorable to Defendants, equitable relief in favor of Plaintiffs is appropriate.

 

Applying an equitable remedy will not prejudice Defendants. When Defendants recorded their $400,000.00 deed of trust against the Kirkland Property their deed of trust was recorded in a junior position. It was recorded junior to a First Franklin first deed of trust in the amount of $900,000.00 and a First Franklin second deed of trust in the amount of $225,000.00.¹ WLC’s $400,000.00 deed of trust was also recorded behind two DSHS liens for back child support. The first of the DSHS liens was recorded on September 7, 2007, for $33,000.00 and the second was recorded on January 17, 2008, for $40,010.28.² Accordingly the liens were ranked against the Kirkland Property as follows:

 

 

Defendants do not even attempt to distinguish the long line of authority cited in Plaintiffs’ opening brief which all allow equitable subrogation to a purchaser, like Fred and Kathleen Repass, who paid money to pay off mortgages as part of a purchase. Rather, in an

 

_________________________________

 

¹ Second Declaration of Erin M. Stines ("Stines Second Dec."), Exhibit S and T, First Franklin Deeds of Trust.

² Stines Second Dec., Exhibits U and V, DSHS liens.

_________________________________

 

attempt to elevate their junior position and obtain a collection windfall, Defendants cite Kim v. Lee, 145 Wn.2d 79, 91-2 (2001) for the out-dated notion that a title company should pay a creditor whenever a lien is missed on title. They argue that under Kim knowledge (actual or constructive) of a prior lien bars the application of the doctrine of equitable subrogation. Defendants fail, however, to acknowledge that five years after Kim was decided our Washington State Supreme Court changed the landscape of the doctrine when it decided Bank of America, N.A. v. Prestance Corp., 1.60 Wn.2d 560, 562, 160 P.3d 17 (2007).

 

Under Prestance, knowledge of intervening interests is not relevant "as long as the junior interests are not materially prejudiced, then equitable subrogation maintains the proper priorities" Prestance, 160 W11.2d at 578. The court in Prestance advocates that "equitable subrogation is a broad doctrine and should be followed whenever justice demands it and where there is no material prejudice to junior interest." Prestance, 160 Wn.2d at 581.

 

Defendants claim to have recorded their lien against the Kirkland Property when dramatic changes in the real estate market changed their expectation that their loans to Chris Judd would be paid back with proceeds from the sale of his Golden Gardens property. But at the time their $400,000.00 deed of trust was recorded WLC expected to get "nothing" from the Kirkland Property.³ WLC expected to get "nothing" from the Kirkland Property because WLC knew its deed of trust would be recorded in a junior position. Plaintiffs simply ask this court to relegate Defendants' deed of trust to the same position it was in before Plaintiffs paid approximately $1,000,000.00 to satisfy senior deeds of trusts to purchase the Kirkland Property. If Defendants expected to get "nothing" before Chris Judd's sale to Fred and

____________________________

 

³ Stines Dec., Exhibit R, Riley Email sent February 27, 2008.

____________________________

 

Kathleen Repass there is no principled reason for them to expect anything more today. There is no prejudice.

 

Washington is not the only state to adopt the Prestance approach to equitable subrogation and courts around the country are expanding the scope of the doctrine. A recent Arizona bankruptcy court, for example, has gone so far as to extend the application of the doctrine to a deed of trust that was mistakenly not recorded. In In re Gutang, 2011 WL 2457647 (Bankr.D.Ariz) (attached to Stines Second Dec. at Exhibit W) two creditors (Chase and Deutsche Bank) argued for a first lien position against real property. The court ultimately held that although Deutsche Bank’s lien was mistakenly not recorded it was entitled to priority by equitable subrogation. The court reasoned that Chase did not bargain for a superior lien position. In re Gutang, 2011 WL 245 7647.

 

Just as Chase did not bargain for a senior lien position, Defendants did not bargain for a senior lien position. Giving Defendants the benefit of a senior lien now where they paid nothing for it and had only an expectation of getting "nothing" is not supported by Washington law and it is not equitable.

 

Defendants in their effort to better their position in the Kirkland Property now cry to the court that this litigation has burdened Mr. Shriner with attorneys’ fees and that under no circumstance will any of the Defendants walk away from this deal with money in their pockets - thus trying to defeat Plaintiffs’ position that Defendants stand to earn a windfall. Defendants try to confuse the definition of a windfall.

 

A windfall of this kind is a collection windfall - an unexpected opportunity to pay down a debt that even "shocked" Defendants. As a result, Defendants seek to profit from it only because Fred and Kathleen Repass paid approximately $1,000,000.00 to purchase the Kirkland Property. Plaintiffs object to the prospect of Defendants jumping (without consideration) into a first lien position and using that position to satisfy Chris Judd's debt. Mr. Shriner's decision to spend money on attorneys’ fees protecting a worthless lien position is not relevant to the issue of law before the court.

 

Furthermore, Defendants’ creative theory that equitable subrogation should be denied here because Fred and Kathleen Repass are mere "volunteers" is not relevant, not properly before the court, and not supported by Washington law.

 

It is black letter law in Washington that a plaintiff insured against a loss is the real party in interest - not the insurance company. Weber v. Biddle, 72 Wn.2d 22, 28, 431 P.2d 705, 710 (1967). In Weber, plaintiff maintained action as real party in interest against a wrongdoer where he was insured against a loss by a liability policy. Alaska Pacific S.S. Co. v. Sperry Flour Co., 94 Wash. 227, 162 P. 26 (1917). This rule stands to reason in this case as a title company cannot quiet title to property it does not own. If title is not cleared in Plaintiffs’ names, Defendants’ may attempt to foreclose their interest thus threatening the Plaintiffs' interest in the Subject Property.

 

And to the extent that Defendants are raising an objection under Civil Rule 17(a) there is no basis for that objection. CR 17(a) provides that an action shall not be dismissed for absence of the real party in interest until a reasonable time after objection to such absence, Fitch v. Johns-Manville Corp., 46 Wn. App. 867, 733 P.2d 562 (1987). Defendants cite no authority for raising their objection in response to a summary judgment motion less than one month before trial.

 

Furthermore, Defendants neglect to analyze the modem function of the rule which is simply to protect against a subsequent action by the party actually entitled to recover, and to insure generally that the judgment will have its proper effect as res judicata. Sprague v. Sysco Corp., 97 Wn. App. 169, 982 P.2d 1202, review denied, 140 Wn.2d 1004, 999 P.2d 1262 (1999). There is no threat here that a title company will later bring another action seeking recovery against Defendants on the same claims raised in this case. Defendants’ objection is meaningless.

 

Finally, even if the court could somehow find Mr. Phennegar's declaration credible it is not relevant to the narrow question of law presented to the court. If considered it should be considered for the sole purpose of establishing damages which is not an issue currently before this court.

 

II. CONCLUSION

 

In sum, Defendants’ lien position is not prejudiced by the application of an equitable remedy. Equitable subrogation will not extinguish Defendants’ lien. Rather it will relegate Defendants’ lien to the same lien position they had before Plaintiffs purchased the Kirkland Property. Defendants have not paid for and never expected a first lien position.

 

Accordingly, Plaintiffs Motion for Summary Judgment should be GRANTED. Equity demands that Plaintiffs’ interests in the Kirkland Property be declared prior over any interest of the Defendants.

 

DATED this 20th day of September, 2011.

 

FIDELITY NATIONAL LAW GROUP

 

s/ Erin M. Stines _____________

Erin M. Stines, WSBA # 31501

Fidelity National Law Group

A Division of Fidelity National

    Title Group, Inc.

1200 – 6^th Avenue, Suite 620

Seattle, WA 98101

(206) 223-4525

(206) 223-4527 - FAX

 

Attorney for Plaintiffs

 

Windermere Founder John W. Jacobi's Washington Loan Company, Windermere Real Estate S.C.A. Redmond and its Agent Christopher Judd, Sued for Intentional Misrepresentation and Other Claims in Alleged "...unlawful scheme to enrich themselves at the expense of plaintiffs and others..."

Defendants Washington Loan Company and Windermere Real Estate S.C.A. Redmond must be compelled by court to produce discovery.

NO. 09-2-46671-8 SEA; COMPLAINT FOR: INTENTIONAL MISREPRESENTATION; QUIET TITLE; BREACH OF WARRANTY; DECLARATORY AND INJUNCTIVE RELIEF; filed in King County Superior Court on December 28, 2009.

Under “I. PARTIES” the Complaint in part states:

2. Christopher Judd (“Judd”) is believed to be a single man residing in King County. At all times material herein, Judd was a licensed real estate agent employed by or working under Windermere Real Estate / SCA, Inc. (“Windermere Real Estate”) a real estate office located in Kirkland, Washington.

3. Windermere Real Estate is a Washington corporation engaged in the business of representing members of the public in purchasing and selling real estate in King County, Washington. Windermere Real Estate employs licensed real estate agents to engage in such services, and either it or its principals act as a broker responsible for oversight and supervision of the sales and purchase related real estate activities of its employees.

4. Washington Loan Company, Inc. (“WLC”) is a Washington corporation owned by or related to Windermere Real Estate or its principals. On information and belief, WLC makes loans to customers and/or real estate salespersons of Windermere Real estate in connection with real estate related transactions.

5. Alison A. Haig (“Trustee Haig”) is a successor trustee under a deed of Trust dated March 29, 2007 recorded under King County Recording No. 20070330002740 (“Deed of Trust”) originally between Judd and WLC. This defendant is included in this action solely in her capacity as trustee.

6. Defendants Judd, Windermere and WLC are hereafter sometimes referred to jointly as “Real Estate Professionals.”

The Complaint in part under “II BACKGROUND” continues:

7. Defendants Judd, Windermere Real estate, and WLC created or participated in an unlawful scheme to enrich themselves at the expense of the plaintiff and others, by permitting and/or facilitating the sale of a residence to Mr. and Mrs. Repass by misrepresentations and omissions of adverse facts known to them but not known to the plaintiffs.

8. Judd is a licensed real estate salesperson. At all times herein, Judd worked for and was supervised by Windermere Real Estate which served as a supervising broker of Judd’s work-related activities. Using funds and/or credit of Windermere Real Estate and related party WLC, Judd purchased residential properties for his own account for resale.

9. In April 2004, Judd purchased a residential property located at 8812 Golden Gardens Drive N.W. (“Golden Gardens House”) for $475,000. Shortly after the purchase, Judd encumbered the property with several mortgages. In late 2005 or early 2006, WLC loaned Judd $400,000. Some months later, WLC and Judd agreed to record a deed of trust on the heavily encumbered Golden Gardens house purportedly to secure the antecedent debt.

10. On information and belief, the WLC loan to Judd was guaranteed by Windermere Real Estate or one of its principal owners.

11. In April 2006, and after the defendants completed the loan in connection with the above transactions, Judd purchased the Kirkland Property which is the subject of this action in Kirkland, Washington. Judd encumbered that property with mortgages exceeding the value of the Kirkland Property.

12. Thereafter, on March 30, 2007, Judd and WLC executed another deed of trust purportedly using the Kirkland Property to secure the same previous antecedent loans involving the Real Estate Professionals in 2005 or early 2006.  This deed of trust is dated March 29, 2007 and recorded under King County Recording No. 20070330002740 (“Deed of Trust”). The amount of this encumbrance exceeded  the value of the Kirkland Property by several hundred thousand dollars.  The defendant Real Estate Professionals, Judd, Windermere Real Estate and WLC were aware that this Deed of Trust was worthless to secure the prior debt and that it was inferior to all prior encumbrances for which the aggregate indebtedness already exceeded the value of the Kirkland Property.

13. In February 2008, prior secured lenders on the Kirkland Property initiated foreclosure proceedings. The defendant Real Estate Professionals were each aware of these proceedings and were aware that a result of the foreclosure proceedings would be the extinguishment of their junior deed of trust.

14. Judd and Windermere Real Estate undertook to sell the Kirkland Property before the foreclosure. Windermere Real Estate (or its affiliate office) was the listing broker. When the Kirkland Property was listed for sale, the total encumbrances against it exceeded the value of the property by several hundred thousand dollars. Defendants and each of them (excluding the Trustee Haig) knew that if the Deed of Trust between them was disclosed to a purchaser, the Kirkland Property could not be sold.

15. At no time did any of the defendant Real Estate Professionals disclose the existence of the Deed of Trust to plaintiffs. However, prior to closing, Mr. Repass discovered the subject Deed of Trust of record. He objected to it. Defendant Judd and other representatives of Windermere Real Estate assured him that the Deed of Trust would be eliminated from title before closing and placed on another property. Mr. Repass relied upon this representation. Subsequently, plaintiffs were provided a title report prior to closing which did not disclose the subject Deed of Trust and they assumed that defendants had eliminated the Deed of Trust from title as had been represented would be done. In fact, the Real estate Professionals became aware that the title report omitted the Deed of Trust by mistake. With knowledge of this material mistake, defendants intentionally remained silent and deliberately refrained from removing the Deed of Trust from the title to the property as promised. Plaintiffs were unaware of the mistake and in good faith relied at their substantial detriment upon defendants to do what was promised — remove the deed of trust from title before closing.

16. The Real Estate Professional Defendants’ purpose in remaining  silent in the face of adverse material facts affecting the transaction was purposeful and intended to serve their own interest at the expense of others. The defendants’ silence was intended to allow: (1) defendants Judd and/or Windermere Real estate to receive substantial commissions on a sale which would not have otherwise occurred; (2) to give an otherwise worthless and questionable Deed of Trust value and priority on the property of innocent persons; (3) to avoid personal guaranty obligations owed by Windermere Real Estate or its principal; (4) defendant Judd to totally avoid any personal obligations on his loan; and (5) to attempt to secure an involuntary payment by other innocent persons through foreclosure of the Deed of Trust who were never a party to the defendants’ transactions. Defendants’ intentional silence continued through the closing of the Kirkland Property and the purchase by the plaintiffs. Shortly thereafter, within hours of closing, the defendants’ representatives demanded payment for the Judd loan as a condition of removing their Deed of Trust against plaintiffs’ property.

17. Contemporaneous with the plaintiffs’ closing, WLC and Windermere Real Estate restructured the original loan transaction with defendant Judd so that WLC could avoid accountability for its participation in the surrounding circumstances and so that Windermere Real Estate and/or its principals could avoid preexisting guaranty obligations of the antecedent debt and attempt to wrongfully realize payment against plaintiffs’ property. The restructuring was consummated by an assignment of the Deed of Trust by WLC to Windermere Real Estate but the assignment was not recorded until weeks after the plaintiffs’ transaction closed.

18. Within two weeks of the closing of the plaintiffs’ transaction, defendant Judd sold his Golden Gardens home, which also had a Deed of Trust against it purportedly securing the same loan obligations between Judd and WLC, guaranteed by Windermere Real Estate. Defendants released and reconveyed the Deed of Trust on the Golden Gardens home for the same underlying obligations in connection with that sale transaction in return for receipt of a fraction of the amount of Judd’s underlying obligation.

19. Based upon the foregoing allegation, plaintiffs assert the following causes of action:

The Complaint continues in part:

III. FIRST CAUSE OF ACTION
(AGAINST ALL REAL ESTATE PROFESSIONAL DEFENDANTS)

INTENTIONAL MISREPRESENTATION

20. The Real Estate Professionals, individually and collectively, knew the Deed of Trust remained on the Kirkland Property at the time the plaintiffs purchased the Kirkland Property.

22. The Real Estate Professionals, individually and collectively, knew plaintiffs were acting under a mistake as to the removal of the Deed of Trust on the Kirkland Property. On information and belief, each Real Estate Professional defendant was aware that (1) this Deed of Trust had not been removed from the title to the Kirkland Property; (2) the title report had mistakenly omitted disclosure of the Deed of Trust; and (3) Mr. and Mrs. Repass would not consummate the purchase of the Kirkland Property unless the Deed of Trust was first removed from the title.

23. The Real Estate Professionals failed to inform the plaintiffs of the fact that the Deed of Trust remained on the Kirkland Property for the unlawful purposes of (1) fraudulently inducing the purchase and sale of the Kirkland Property to plaintiffs, (2) effecting commissions on the sale of Judd and Windermere Real Estate, (3) avoiding Windermere Real Estate’s personal guaranty obligation, and (4) ensuring priority of payment to Washington Loan Company on the $400,000 Deed of Trust to which it would not have otherwise received.

24. The knowing and intentional failure of the Real Estate Professionals to disclose the existence of the Deed of Trust resulted in a material impairment of the value of the Kirkland Property and a material impairment to Mr. and Mrs. Repass.

25. Under the circumstances, each of the Real Estate Professionals acted in concert to save their own interest at the expense of plaintiffs and are liable for all damage and loss proximately caused therefrom.

IV. SECOND CAUSE OF ACTION
QUIET TITLE

27. Based upon the foregoing and the conduct of the Real Estate Professionals, plaintiffs are entitled to have title to their property quieted, free and clear of the Deed of Trust recorded under King County Recording No. 20070330002740.

28. This Deed of Trust is of doubtful validity and is additionally, unenforceable under the circumstances.

29. Defendants always intended to remove the Deed of Trust prior to the sale of the Kirkland Property because it had no priority or value against the subject property. Defendants’ inequitable conduct in connection with this transaction effected an equitable forfeiture of foreclosure of the Deed of Trust as a result of their silence in failing to disclose to plaintiffs the continued encumbrance of the Deed of Trust in the face of a known mistake and knowing reliance by plaintiffs that it had been removed.

V. THIRD CAUSE OF ACTION
(AGAINST JUDD)
BREACH OF WARRANTY

31. Judd conveyed the subject property to plaintiffs free and clear by a Statutory Warranty Deed filed under King County Recording No. 20080327002203. Judd’s conveyance of the property free and clear by Statutory Warranty Deed to plaintiffs in the face of the Deed of Trust constitutes a breach of his warranty obligations of title under the Statutory Warranty Deed for which the plaintiffs are entitled to resulting monetary damages and attorney fees and costs, in an amount to be proven at trial.

VI. FOURTH CAUSE OF ACTION
(AGAINST ALL DEFENDANTS)
DECLARATORY RELIEF

33. PURSUANT TO RCW 7.24.010 et seq., plaintiffs are entitled to a judgment of declaratory relief decreeing that the subject Deed of Trust is of no force and effect against plaintiffs’ property and/or that the subject Deed of Trust was equitably foreclosed as a result of the actions and conduct of the Real estate Professional defendants.

VII. FIFTH CAUSE OF ACTION
(AGAINST WINDERMERE REAL ESTATE AND TRUSTEE HAIG)
INJUNCTIVE RELIEF

35. Plaintiffs would be irreparably and wrongfully harmed by any action undertaken to foreclose the subject Deed of Trust under the surrounding circumstances.

36. Plaintiffs are entitled to a preliminary and permanent injunction restraining defendant Windermere Real Estate as assignee of the subject Deed of Trust and Trustee Haig, from undertaking any action to foreclose the Deed of Trust or adversely effect the title to plaintiffs’ property or their right to peaceful enjoyment thereof.

WHEREFORE, plaintiffs pray for judgment against defendants as follows:

1. Quiet title. A decree quieting title in their property free and clear of that Deed of Trust dated March 29, 2007 and recorded under King County Recording No. 20070330002740;

2. Misrepresentation. Judgment jointly and severally against the Real Estate Professionals (Judd, Windermere Real Estate and WLC) for all damages resulting from their intentional and material misrepresentations and unlawful acts;

3. Breach of Warranty. For monetary damages in an amount to be proven at trial against defendant Judd for breach of his warranty of title under the Statutory Warranty Deed dated March 19, 2008 and recorded under King County Recording No. 20080327002203, including attorneys’ fees;

4. Declaratory Relief. Declaratory judgment declaring and decreeing that the Deed of Trust, filed under King County Recording No. 20070330002740, no force or effect against plaintiffs’ property; or in the alternative, that the subject Deed of Trust was equitably forfeited or foreclosed as a result of the wrongful conduct of defendants.

5. Injunctive Relief. For preliminary and permanent  injunctive relief restraining defendant Windermere Real estate and Trustee Haig or any successor trustee from taking any action to foreclose or adversely affect plaintiffs property in any way related to the subject Deed of Trust.

6. Attorneys’ Fees and Costs. For judgment of reasonable attorneys’ fees and costs against defendants in an amount to be proven at trial or by separate hearing thereafter.

 

THE WINDERMERE DEFENDANTS DO NOT ANSWER:

On March 15, 2010, Plaintiffs Repass filed a MOTION AND DECLARATION FOR ORDER OF DEFAULT, stating in part under:

 “I. RELIEF REQUESTED

Plaintiffs move the Court for an order of default against the defendants because they have failed to appear, plead or otherwise defend against the plaintiffs’ Complaint.”

WINDERMERE REAL ESTATE S.C.A. REDMOND FINALLY ANSWERS:

In its Answer and Affirmative Defenses of Defendant Windermere Real Estate/S.C.A., Inc., filed on March 22, 20110, Windermere S.C.A. states in part under:

1. ANSWER TO COMPLAINT

2. Insufficient knowledge as to first sentence. Deny that Judd was employed by Windermere. Admit that Judd was a real estate salesperson licensed with Windermere. Deny all remaining allegations.

8. Insufficient knowledge as to first sentence. Admit that Judd was formerly a licensed real estate salesperson with Windermere. Deny all remaining allegations.

Editorial notes:

1. To escape liability, Windermere’s latest defense strategy is to state that agents of Windermere are NOT agents of Windermere; and instead it now portrays Windermere agents as “independent contractors” and agents “licensed to…” Windermere.  As in the recent DeCoursey v. Paul Stickney/Windermere S.C.A. conflict of interest case where the Washington State Appeals Court recently upheld the trial court’s verdict and award in excess of $1,000,000, agent Paul Stickney was presented at trial as NOT BEING an agent of Windermere S.C.A., why the court did not buy. Indeed, even Windermere’s own website refers to its agents as being “agents.”

2. At this writing, despite Windermere S.C.A.'s assertion that Judd was "formerly" with Windermere, Judd is still listed as an agent at Windermere S.C.A. Redmond, selling homes with Windermere S.C.A. Redmond agent Lynn Sanborn.

Under “II. AFFIRMATIVE DEFENSES,” Windermere’s Answer in part continues:

2. WLC and Windermere are unrelated entities.

WINDERMERE FOUNDER JOHN W. JACOBI’S WASHINGTON LOAN COMPANY FINALLY ANSWERS

In its Answer and Affirmative Defenses of Defendant Washington Loan Company, Inc., filed on March 22, 20110, the Washington Loan Company states in part under:

II. AFFIRMATIVE DEFENSES

2. WLC and Windermere Real Estate/S.C.A., Inc. are unrelated entities;

3. WLC is no longer in any way related to the loans to Judd or the security interests supporting those loans. WLC conveyed its interests to Windermere Real estate/S.C.A., Inc. in March, 2008 for adequate consideration. As such, WLC is improperly named as a defendant in this matter.

 

An ORDER OF DEFAULT RE DEFENDANT CHRISTOPHER JUDD is filed on March 29, 2010

WINDERMERE S.C.A. AND WASHINGTON LOAN COMPANY REFUSE TO PROVIDE DISCOVERY

A MOTION TO COMPEL DISCOVERY FROM WASHINGTON LOAN COMPANY, INC. AND WINDERMERE REAL ESTATE/S.C.A., INC. is filed on August 19, 2010, by Plaintiffs Repass, stating in part under:

RELIEF REQUESTED

Pursuant to CR 37(a)(2) and (4) of the Civil Rules for Superior Court and LR 37, plaintiffs move for order compelling responses to discovery and for terms against both defendants, Windermere Real Estate/S.C.A., Inc. (“Windermere Realty”) and Washington Loan Company (“WLC”). Separate sets of discovery were served upon counsel for both defendants several months ago. To date, responses have not been provided after several extensions and accommodations. Specifically, the following deficiencies exist:

1. Plaintiffs’ First Set of Interrogatories and Requests for Production of Documents to Windermere Real Estate/S.C.A., Inc. No written responses to interrogatories or requests for production have been provided. What documents have been produced do not allow anyone to determine what, if any, requests for production they are intended to relate.

2. Plaintiffs’ First Set of Interrogatories and Requests for Production of Documents to Washington Loan Company, Inc.

a. No responses to any requests for production;

b. No signed verification as provided.

FACTS

The same attorneys represent both Windermere Realty and WLC. Separate sets of the above discussed discovery were served upon counsel, Lars Neste and David Daniel of the Demco Law Firm, P.S. via U.S. Mail on April 22, 2010. Responses to both sets of discovery were due May 27. No responses were received. On June 1, a CR 37 conference was held the defendants’ attorney regarding both sets of discovery. By email on June 15, attorney Daniel provided responses to WLC related interrogatories.  Documents from WLC were promised shortly; they have never been provided. Responses to the Windermere Realty discovery were not provided, but were promised the following week. Although some documents were produced by Windermere Realty, no written response to the Windermere Realty discovery has ever been provided and what documents were provided were not identified as responsive to any particular request or interrogatory. Consequently, plaintiffs cannot determine whether compliance  has been made to any Windermere Realty request for production.  CR 34(b) requires documents produced to be organized and labeled to correspond with categories produced, which was not done either.

On August 31, 2010, the court filed an ORDER GRANTING PLAINTIFFS’ MOTION TO COMPEL DISCOVERY FROM WASHINGTON LOAN COMPANY, INC. AND WINDERMERE REAL ESTATE/S.C.A., INC.

___________________________________________________

 

 

Washington State Appeals Court Affirms Trial Court Verdict and Award in DeCoursey v. Windermere Real Estate S.C.A. Redmond's Agent, Paul Stickney, with Attorney Fee Adjustments and Recalculation of Costs

 

Excerpted and condensed from the Washington State Appeals Court's Unpublished Opinion in No. 62912-3-1:

 

Dwyer, C.J. —Mark and Carol DeCoursey purchased a home intending to remodel it. Their real estate agent, Paul Stickney, recommended a contractor but did not disclose that he was financially connected to the contractor. The contractor performed inferior work and the DeCourseys eventually sued Stickney. Stickney appeals from the jury’s verdict finding him liable for breach of his fiduciary duty and for a violation of the Consumer Protection Act (CPA), ch. 19.86 RCW, contending that the trial court erred in several respects. We agree that the trial court’s award of costs to the plaintiffs was erroneous. However, finding no other error, we otherwise affirm the judgment, remanding only for a recalculation of the cost award.

I

 

In 2004, the DeCourseys moved to Washington. They purchased a home with the help of Paul Stickney, a Windermere Real Estate agent. The DeCourseys intended to renovate the home, and Stickney recommended the hiring of contractor Home Improvement Help, Inc. (HIH), which was owned and operated by Richard Birgh. Numerous issues arose with the quality and the nature of HIH’s work. The remodeled home was finished behind schedule and presented structural and other safety concerns. The DeCourseys were unable to obtain an occupancy permit.

A subcontractor of HIH sued the DeCourseys because it had not been paid for work performed on the DeCourseys’ home. The DeCourseys answered and filed a third-party complaint against Birgh, HIH, Stickney, Windermere,1 the City of Redmond,2 and others. The DeCourseys alleged claims for fraud, breach of contract, negligence, and violation of the CPA against these parties. The DeCourseys initially proceeded pro se, although they received advice from several attorneys.

 

Evidence presented at trial established that Stickney had breached his fiduciary duty when he failed to disclose his conflict of interest. In 1996, Stickney and Birgh had entered into a joint venture to develop real property. Together, they incurred a joint debt obligation, which at the time of trial had a principal amount of $400,000. Under the terms of their joint venture agreement, Stickney was responsible for making the loan payments. However, when Stickney could not afford to make payments, Birgh would do so if he had the financial resources available. Other evidence suggested that Stickney was entangled with Birgh and HIH. Stickney had provided Birgh with a cellular telephone and Birgh had used Stickney’s computer server to store HIH documents. In addition, HIH’s incorporation documents stated that Stickney was the company’s vice president and a 20 percent shareholder, although no nonhearsay evidence showed Stickney to be directly involved with HIH. Stickney testified that he did not know that he was named as HIH’s vice president until after the DeCourseys’ lawsuit began.

Several witnesses testified regarding the damages to the DeCourseys’ house as a result of Birgh’s work. The estimated cost of repair was $525,289.78.

The jury returned a verdict in favor of the DeCourseys on their claims for breach of fiduciary duty and for violation of the CPA but found that the DeCourseys failed to prove fraud.3 The jury awarded the DeCourseys $515,900 in damages for Stickney’s breach of fiduciary duty and $6,300 for Stickney’s violation of the CPA: a total damage award of $522,200. Stickney moved for judgment as a matter of law, a new trial, or remittitur. This motion was denied. The trial court then granted the DeCourseys’ motion for an award of attorney fees. It found $356,142 in fees reasonably incurred and increased this by a 30 percent multiplier, resulting in a total attorney fee award of $462,985. In addition, the DeCourseys were awarded $45,442 in costs.

Stickney appeals.

II

Stickney first contends that the trial court’s instructions to the jury regarding conflicts of interest were erroneous. We disagree.

III

Stickney next contends that the breach of his fiduciary duty to disclose any conflicts of interest was not proved to be a proximate cause of the DeCourseys’ injuries arising from the negligent remodeling of their house. We disagree.

IV

Stickney next contends that the trial court erred by permitting the DeCourseys to seek an award of construction defect damages. This is so, Stickney alleges, because only disgorgement of the real estate commission can be awarded against an agent who fails to disclose a conflict of interest. We disagree.

V

Stickney next contends that there was insufficient evidence presented that his actions impacted the public interest and, thus, the DeCourseys failed to prove their CPA claim. We disagree.

VI

Stickney next contends that the trial court erred by refusing to offset the amount of damages awarded by the jury by the amount of the DeCourseys’ settlement with Birgh and HIH and by refusing to permit evidence of the settlement based on the collateral source rule. He argues that the trial court’s errors resulted in a double recovery for the DeCourseys. We disagree.

VII

Stickney next contends that the trial court erroneously refused to instruct the jury that the DeCourseys’ damages were to be measured at the time they were sustained rather than at the time of the trial. He makes this contention because the estimate prepared in 2008 by the DeCourseys’ expert regarding the cost of repairing the DeCourseys’ house was in an amount significantly higher than estimates prepared in 2004 and in 2005.

RAP 10.3(a)(6) requires argument supported by citation to authority. Stickney fails to cite any authority relevant to his proposition.17 In addition, Stickney’s argument has no merit considering that the testimony at trial was that the cost estimate from 2008 included repairs for damage that was discovered after the earlier estimates were generated. Thus, the earlier estimates did not account for all of the DeCourseys’ losses. The trial court’s instruction on the measurement of damages was not erroneous.

VIII

Stickney next contends that the economic loss rule prevents the DeCourseys from recovering any economic damages based on their breach of fiduciary duty claim against him. Stickney, however, failed to interpose this issue in this litigation in a timely manner. Thus, he cannot be afforded appellate relief.

IX

Stickney next contends that the Real Estate Purchase & Sale Agreement (REPSA) between the DeCourseys and the seller of the house limits his liability to the DeCourseys. This is so, he avers, because of the REPSA provision purporting to limit the real estate agent’s liability for damages arising out of referrals of contractors.19 Stickney’s argument fails.

X

Stickney next contends that Judge Fox, the trial judge, was precluded from awarding attorney fees to the DeCourseys because he could not modify Judge Erlick’s earlier order stating that the DeCourseys were “dismissing/not pursuing” any claim for attorney fees. We disagree.

XI

Stickney next contends that the amount of the trial court’s award of attorney fees was in error because the trial court did not enter specific findings of fact, did not require segregation of fees, and applied a 30 percent loadstar multiplier. We disagree.

XII

Stickney finally contends that the trial court’s award of costs was in error. We agree.

In addition to permitting an award of attorney fees, the CPA permits a successful plaintiff to recover the costs of his or her lawsuit. RCW 19.86.090. However, the plaintiff in a CPA action cannot recover costs beyond those statutorily defined in RCW 4.84.010. Nordstrom, Inc. v. Tampourlos, 107 Wn.2d 735, 743, 733 P.2d 208 (1987). “RCW 4.84.010 entitles a prevailing party to recover, in general, filing fees, costs for service of process, notary fees, reasonable expenses for reports and records entered into evidence, [and] statutory attorney and witness fees.” Sto Indus., 156 Wn.2d at 694.

Here, the record reveals that the $45,442 in costs awarded to the DeCourseys included costs for parking, faxing documents, photography, transcription, expert witnesses, and legal research. These costs are not authorized by RCW 4.84.010. The trial court did not demonstrate how the award of these costs is consistent with Nordstrom.24 Therefore, the trial court erred by awarding costs in excess of those authorized in RCW 4.84.010. Remand is necessary to correct the cost award.

XIII

The DeCourseys request an award of attorney fees on appeal pursuant to RAP 18.1. Where a statute or contract allows an award of attorney fees at trial, an appellate court has authority to award fees on appeal. Standing Rock Homeowners Ass’n v. Misich, 106 Wn. App. 231, 247, 23 P.3d 520 (2001). The CPA provides adequate grounds for such an award in the present case. However, the attorney fees awarded to the DeCourseys must be limited to those portions of the appeal related to the CPA claim. There is no separate, contractual basis to award attorney fees. See Boguch v. Landover Corp., 153 Wn. App. 595, 615, 224 P.3d 795 (2009).25 Upon proper application, a commissioner of this court will enter an appropriate order.

Affirmed in part. Reversed in part and remanded to the trial court for a corrected calculation of the award of costs.

Download and read the entire Opinion text here.

 

__________________________________________

 

 

Windermere Real Estate SCA Redmond and its agent Paul Stickney's conflict of interest

 

(Above) Windermere SCA Redmond's conflict of interest hider, Paul Stickney

Mark and Carol DeCoursey of Redmond, Washington, have also been recipients of Windermere’s predatory speech-suppressing "Dark Clause," which contains the outrageous and Orwellian Windermere language “The DeCourseys agree that they shall not communicate with any person about their dispute with Windermere unless asked, and if asked, will state only that they have resolved their claim to their satisfaction.” (DeCoursey Dark Clause here.)

 

The DeCourseys were shopping for a home in Washington just as the market was really heating up in 2003. In April of 2004, they began dealing with Windermere Real Estate/SCA Realtor Paul Stickney. Stickney formulated a home purchase and renovation combo deal, and connected DeCourseys with a construction company whose work he had known of for years, and contended was “…the best.” Stickney did not inform DeCourseys just how well acquainted he actually WAS with the construction company’s president; that his knowledge of the company’s expertise was limited to light remodeling, like carpet and paint; or that Stickney himself was a 20% shareholder in the company and was also its registered vice president. Stickney was also indebted for over $150,000 on a land speculation venture with the construction company’s president, and they were behind in payments. Their renovation receipts were often used to keep the loan current.

 

Because of the contractor’s incompetence and Stickney’s undisclosed conflict of interest, the DeCourseys’ home and finances were irrevocably damaged. Along with myriad other blunders, a bathtub had been electrified with enough voltage to cause death—110 VAC. The DeCourseys have testified that without all of Stickney’s stealthy misrepresentations, they would never have purchased the home. Windermere wouldn’t resolve DeCourseys’ dilemma affably, of course, and insisted that they sue or go away, so years of litigation commenced, further jeopardizing DeCourseys’ home and financial future. In a convoluted legal action, DeCourseys were cast as defendants, cross-claimants, and third party plaintiffs. A trial court found in their favor and against Windermere, awarding them $1.03 million in damages and legal expenses. Windermere appealed the decision, disputing facts established by a jury, so it argued that Stickney’s actions were permitted by law; and also that the trust DeCourseys originally placed in Stickney was their own error. The appeal is pending, and if Windermere does not get the favorable decision it seeks, the case will likely go to the supreme court. The DeCourseys' have endured the distress more than 6 years litigation, and were forced to liquidate retirement investments, all for simply buying a home through Windermere Real Estate SCA in Redmond.

 

Meanwhile, Windermere still profits on Conflict of Interest Hider Paul Stickney.

 

Access the $522,200 trial court judgment against Windermere SCA and Stickney here.

 

For greater detail on the Decoursey report, visit RenovationTrap.com, Windermere-Victims.com, and Windermere-Gallery.com.

 

 

________________________________

 

The Windermere Real Estate Relocation Rape Case:

Court Declares that Windermere "...condoned a rape by a business colleague..."

 

Editorial Preface: The incredibly violent and insidious psychological ramifications of rape, connected through an “abusive work environment” serves as an unfortunate yet credible subtext for the way in which Windermere Real Estate treats employees and damaged customers alike: Windermere’s application of aggressive, wasteful and mendacious litigation to stall and ruin innocent consumers, serves as the coercive metaphor of corporate power and arrogance: Windermere has no concern for the social damage it has done to people or communities. It cares only about how to manipulate the law and the courts to avoid any legal responsibility.

 

(Above L to R) Windermere CEO Geoff Wood (far left) is currently listed as a Governing Person of Windermere Relocation. Peggy Scott (second from left), also a current Governing Person of Windermere Relocation, "... did not give Little any advice about going to the police, and she did not conduct an investigation of Little's complaint or any follow-up interview with Little." Windermere General Counsel, attorney Paul Drayna (third from left) is listed as the registered agent of RELO LLC, the current entity name of Windermere Relocation. Windermere Founder John W. Jacobi (fourth from left) along with Gayle Glew (far right) are listed as Governing Persons of Windermere Relocation during the Little case. Glew told Ms. Little he did not want any "clouds in the office," and subsequently, after she would not accept a pay cut, that she should clean out her desk.

All citizens who abhor such treatment of women in the workplace should recall Maureen Little v. Windermere Relocation when choosing real estate services. WindermereWatch visitors will also want to read the United States District Court of Appeals Ninth Circuit's Order and Amended Opinion from the Little case.

 

Summarized and excerpted from a decision by the U.S. Court of Appeals

 

Maureen Little was employed by Windermere Relocation Services (“Windermere”) as a Corporate Services Manager, a position that required her “to develop an ongoing business relationship and relocation contacts with corporations in order to obtain corporate clients needing relocation services for their employees.” Until she was terminated, she received only positive feedback from her supervisors. Windermere’s records confirm that during the relevant period, Little had the best transaction closure record of all corporate managers by a large margin.

Unlike the other managers, Little’s employment contract provided that Little would receive $2,000 monthly, plus a $1,000 monthly override and $250 per closed sale. The override was based on the assumption that Little would close four transactions per month, with a provision for rollover when she did not make the target. According to Windermere President Gayle Glew, the other managers had not received the $1,000 override.

One of Windermere’s clients was the Starbucks Corporation. Some time in 1997, Little performed some relocation services for Starbucks Human Resources Director, Dan Guerrero, on a contract basis, and she learned from him that Starbucks was dissatisfied with its primary relocation provider. Glew told Little that he would “do whatever it takes to get this account” and that Little should “do the best job she could.” Thus, little believed that, as part of her job, she was to build a business relationship with Guerrero to try and get the Starbucks account, and she had at least two business lunches with Guerrero toward this end.

On October 14, Little accepted Guerrero’s invitation to discuss the account at a restaurant. After eating dinner with Guerrero and having a couple of drinks, Little suddenly became ill and passed out. She awoke to find herself being raped by Guerrero in his car. She fought him off and jumped out of the car, but again she became violently ill. Guerrero put her back in the car and took her to his apartment, where he raped her again. Little fell asleep, and when she awoke he was raping her again. Afterward, he showered and drover her to her car.

Little was reluctant to tell anyone at Windermere about the rape because, in her own words, “I knew how important the Starbucks account was to Mr. Glew. Mr. Glew would ask me on a consistent basis the status of the account and I was afraid that if I told him about the rape, he would see me as an impediment to obtaining the Starbucks account.” This belief was reinforced when, a few days after the rape, Little reported the rape to Chris Delay, Director of Relocation Services (apparently not one of Little’s supervisors), and Delay advised her not to tell anyone in management. Little believed that Delay feared “what might happen to [Little] if [she] did tell.”

On October 23, about nine days after the rape, Little reported it to Peggy Scott, the Vice President of Operations, who was designated in Windermere’s Harassment Policy as a complaint-receiving manager. Little described Scott’s response:

She came out around the desk and I could tell she was upset and she just gave me a hug and said she wished there was something she could do. She didn't understand what I was going through. She asked me if I was in therapy. Then she proceeded to tell me she wouldn't say anything to [Glew] unless I proceeded to seek legal action [against Dan Guerrero].

 

Scott told Little that "[s]he thought it would be best that [Little] try to put it behind [her] and to keep working in therapy," and that she should discontinue working on the Starbucks account. She did not give Little any advice about going to the police, and she did not conduct an investigation of Little's complaint or any follow-up interview with Little. Scott testified in her deposition that, because the rape occurred outside the "working environment," she believed that it fell outside the scope of Windermere's Harassment Policy.

 

Despite Little's supposed removal from the Starbucks account, Glew continued to ask her about the status of the Starbucks account during the next six weeks. "[As of December 2,] Gayle was asking me questions about Starbucks ... a couple of times every month to see what the status was." Concerned by Glew's questions, Little told her immediate supervisor, Linda Bellisario, the Vice President of Sales and Marketing, on December 2, 1997, about the rape. Little had been reluctant to tell Bellisario because she "felt that [Bellisario] would immediately go to Gayle and Gayle would terminate my position.... I knew how much this account meant to him. He said he would do whatever it took to get this account." Bellisario told Little to inform Glew of the incident.

 

When Little told Glew of the rape, which, according to Glew, was the first he had heard of it, Glew's" immediate response was that he did not want to hear anything about it." He told Little that she would have to respond to his attorneys. Glew then informed her that he was restructuring her salary from $3,000 monthly to $2,000 monthly plus $250 per closed transaction. The pay reduction was effective immediately and non-negotiable. Bellisario, who was present at that portion of the meeting, appeared "surprised and upset" to Little.

 

Little found the pay cut unacceptable, and Glew told her to go home for two days to think it over "because he did not want any `clouds in the office.'" When Little still found the pay cut unacceptable two days later, Glew told her it would be best if she moved on and that she should clean out her desk.

 

Little brought suit against Windermere, alleging unlawful discrimination and retaliation in violation of Title VII, 42 U.S.C. § 2000e, and the Revised Code of Washington § 49.60; wrongful discharge in violation of public policy; and intentional, reckless, and/or negligent infliction of emotional distress. The district court granted summary judgment in favor of Windermere on all four claims.

 

Little appealed dismissal of her claims, and the appeals court reversed in part, and ruled:

 

In sum, taking the facts in the light most favorable to Little, because her employer effectively condoned a rape by a business colleague and its effects, Little was subjected to an abusive work environment that "detract[ed] from [her] job performance, discourage[d] [her] from remaining on the job, [and kept her] from advancing in [her] career[]."

 

Incredibly, Windermere asked for a rehearing, but "...the panel has voted to deny the petition for rehearing and to reject the suggestion for rehearing en banc.

 

________________________________

 

WINDERMERE: AMERICA'S PREDATORY REAL ESTATE ENTERPRISE

Consumer advocates, legal experts and elected lawmakers all agree that the American real estate industry demands greater regulation to protect consumers from the human disaster of real estate fraud perpetrated by unethical realtors employed at companies like Windermere Real Estate. Windermere manipulates our clogged, inundated courts and the justice system to stall, wear down and financially exhaust victimized consumers, many of whom are wiped-out by the cost of pursuing civil justice in a process where innocent victims must CHASE perpetrators of real estate fraud through the courts AFTER a fraudulent offense has been committed. Acts of fraud are so common and widespread throughout the Windermere real estate network, that the defense of real estate fraud has become has become just another bottomline expense on the Windermere balance sheet. And the litigation nightmare of real estate fraud can happen to anyone who deals with Windermere Real Estate. It could happen to you. Windermere is by far the most unethical, deceitful, and culturally toxic real estate company operating in the United States. Windermere knowingly, deliberately, and unabashedly profits on corrupt franchise owners, brokers and agents with proven histories of fraud and ethical misconduct, many of whom are profiled in the pages of WindermereWatch.com. Despite Windermere's well-documented assault on victim speech rights, more and more unconscionable cases of Windermere fraud continue emerging.

Windermere is headquartered in Seattle, at franchiser Windermere Services Company. It was founded by John W. Jacobi, and he has kept the company a private, family-owned enterprise, eluding the transparency and ethical accountability required by stockholders. For decades, Windermere has harnessed the art of positive PR, affixing itself—however superficially—to community art events, the homeless, and even an annual college rowing competition which opens Seattle's boating season—the Windermere Cup—irresponsibly promoted by, and in conjunction with, the University of Washington. But those are the disingenuous and cynical sideshows created by an adept market manipulator, shown only briefly to the public, to obscure and obfuscate Windermere's true predatory nature.

FRANCHISER WINDERMERE SERVICES' MANAGEMENT TEAM AND DESIGNATED GOVERNING PEOPLE: EXPERTS IN MARKETING FRAUD, ABUSE OF THE LEGAL PROCESS, AND AT COERCING DAMAGED WINDERMERE CLIENTS INTO SILENCE BY SUPPRESSING THEIR SPEECH RIGHTS

The shameless greed and repugnant ethics of Seattle's Jacobi family, deliberately profiting on the loss and suffering of Windermere victims through commissions on the fraudulent home deals and unlawful misconduct of dishonest Windermere agents, brokers and franchise owners. Forget human decency, commercial reputation or social responsibility—it's all about the money.

Before turning the business over to his children and son-in-law, Windermere founder John W. Jacobi (left) simply ignored any complaints of fraud from Windermere victims, sending them straight to the lawyers. Yet despite claims of retirement, Jacobi is still indeed quite active at franchiser Windermere Services Company:

In Complaint 10-2-36192-8 SEA, filed in King County Superior Court on October 12, 2010, Windermere Services Company has sued former Windermere Puyallup Canyon Road owner Joe Maxwell for default on an “Unconditional Guaranty of Payment” promissory note. The Maxwell Answer and Counterclaims state that the “Plaintiff's [Windermere Services Company] claims are barred by Plaintiff’s fraud, duress, and unclean hands,” and alleges $4,000,000 in damages and violation of Washington's Franchise Investment Protection Act; and also that "The alleged Note and Guarantee are unconscionable and unenforceable." Maxwell's Counterclaims state "6. The WPCR Operating Agreement contains a provision granting Jacobi a special veto power which among other things, states that the company shall conduct its business and manage its affairs in accordance with the directions of Jacobi and all management decisions are subject to Jacobi’s review," and "13. In early 2006, WSC and Jacobi decided to open another WSC office in the territory in which WPCR was operating, despite the objections of Maxwell. As a result of the opening of this new WSC office, WPCR lost a significant number of its real estate agents and revenue that transferred to the new office in Graham, Washington," and "14. As a direct result of these actions taken by WSC and Jacobi, WPCR was left with a large debt burden and overhead, and WPCR’s revenue was significantly reduced... 22. On September 14, 2010, Maxwell heard from a real estate agent working at WPCR that the agent had received and email from WSC notifying him WPCR’s franchise had been terminated. This notice was sent to WPCR’s real estate agents before Maxwell learned of the termination of WPCR’s franchise." Read the complete report on this case here.

Jacobi's Washington Loan Company is also currently being sued for Intentional Misrepresentation—read that report here. And the Windermere affiliated service company, Commonwealth Land Title Company of Puget Sound, has recently been found negligent by a jury who awarded the third-party plaintiffs $1,190,000. Read the Commonwealth report here.

 

Current Governing Person and Windermere Services Company CEO Geoffrey P. Wood (left) is married to John W. Jacobi's daughter, Jill Jacobi-Wood. Wood is the chief architect of Windermere marketing fraud, inducing business volume through—among other fraudulent promotion—an express warranty of "The highest ethical standards. Uncompromising honesty and integrity." When called upon to honor his company's warranty, Wood instructs Demco lawyers—led by Matthew F. Davis–to sue vocal victims for libel and defamation. Wood is also a Governing Person of Windermere Relocation, the subject enterprise of Windermere's employee rape case. He was briefly a real estate sales person in 1994, but that license was CANCELLED in 1995, and Wood currently has no real estate license of any kind that WindermereWatch can find.

 

Governing Person Jill Jacobi-Wood (left), Windermere Services President, is a licensed real estate broker in Washington State, and as such is subject to the statutory condition of RCW 18.86.030 "(d) To deal honestly and in good faith." For her part in Windermere's marketing fraud and malfeasance, Jacobi-Wood's RE license should be cancelled by the Washington State DOL's real estate division. By promoting honesty and integrity—while in reality—she is suing and coercing Windermere victims to shutup about their Windermere experience, Jacobi-Wood is hardly dealing honestly and in good faith.

 

 

Governing Person John O'Brien "OB"Jacobi (left) is General Manager of franchiser Windermere Services Company and also has many Windermere realty brokerage offices. He's a licensed real estate broker who is also called upon by statutory law to "Deal honestly and in good faith." But John "OB" Jacobi instead promotes fraudulent claims of honesty and integrity, and falsely sues victims of Windermere misconduct for libel and defamation to intimidate them and coerce their silence. Then this junior Jacobi runs away and voluntarily dismisses his own mendacious lawsuit when a victim refuses to sign Windermere's dark clause settlement agreement that has cost the victimized party so much distress and money and to defend.

 

 

Windermere Services Governing Person and attorney—WSBA# 26636—Paul Drayna (left) has even more stringent ethical requirements placed upon him through his collateral professions of Lawyer and Notary Public; and Drayna is also bound by the Model Rules of Professional Conduct. But Mr. Drayna is not just practicing marketing fraud at Windermere. As Windermere in-house counsel, Drayna oversees Windermere's legal strategy of abusing process by falsely suing victims for libel and defamation, and then attempting to intimidate and coerce those victims out of their speech rights and into Windermere's Dark Clause silence agreement. When victims WON'T sign the Windermere Dark Clause, Drayna runs away too, and voluntarily dismisses his own company's lawsuit under Civil Rule 41—but only after first costing the victim thousands to defend the phony lawsuit. Drayna is even copied on the mendacious, Demco-authored settlement documents meant to quash speech rights and be signed by Windermere victims.

 

WINDERMERE'S DEMCO LAW FIRM: ESCHEWING ETHICS and DOING WHAT OTHER LAWYERS JUST WON'T DO

 

Attorney and multi-office Windermere broker John Demco (left) is the ethically-elastic Windermere kingpin lawyer who operates Demco Law, Windermere’s in-house legal firm, whose primary job is to stall and outspend small fry consumers damaged by dishonest Windermere brokers, agents and franchise owners. When an innocent real estate consumer has the misfortune to suffer one of Windermere’s many bad apples, Demco Law Firm will refuse to settle the matter forthrightly, no matter what conspicuously unlawful or offensive conduct the agent or broker has committed. Demco and Windermere will force the aggrieved party to sue or swallow their damage and go away—standard Windermere operating procedure.

 

WindermereWatch has compiled voluminous evidence that Windermere-Demco attorney Matthew F. Davis (left), WSBA# 20939, is the kind of lawyer about which jokes are coined. Davis is franchiser Windermere Services' frontline bully—the guy in the legal trenches actually wrecking lives, making threats, and suing victims who speak out. When Shakespeare was recommending "The first thing we do, let's kill all the lawyers," in Henry the Sixth, Part 2, he was talking about egomaniacal lawyers like Matt Davis.

Attorney Matt Davis of Windermere's Demco Law Firm is so unethical, so deceitful and intimidating, that he's famous in law circles. As Windermere-Demco's lead attorney, Matthew F. Davis is renown for his dishonesty, dubious legal tactics, lack of decency and disrespect for the rules of professional conduct. He will do absolutely anything to win—without regard for truth or justice. He will lie to courts and opposing parties. He will file fallacious and erroneous documents with the court. He will email opposing parties telling them not to hire a lawyer when he has just served them a lawsuit. He will call a judge's chambers and request more time without informing the opposing party. He will file orders for a bench trial when he knows a jury trial has been demanded and paid for. He will trick, stall, coerce, menace and threaten. He will invent and extend mendacious Windermere litigation and abuse the legal process for no other reason than to exhaust an opponent’s pocketbook. If he can, he will get YOUR attorney to quit—a favorite tactic.

Windermere, Davis and Demco Law will push a $5 cat poop case all the way to the state supreme court just to avoid paying damages—because it’s all in the Windermere operating budget. And in the end, Windermere and Davis will try to coerce silence about your Windermere experience by trying to make you sign a "settlement" agreement that terminates your speech rights, so you can't ever inform the public about your Windermere debacle. What if you DON'T sign that you'll shut up, and then SPEAK UP instead? Windermere-Demco's Matt Davis will sue you for libel and defamation, then run away and dismiss his own lawsuit on the eve of trial—because after all—you're telling the truth.

Windermere's Clear and Overt Marketing Fraud:

"THE HIGHEST ETHICAL STANDARDS. UNCOMPROMISING HONESTY AND INTEGRITY."

—The Windermere Real Estate Mission Statement

Windermere widely promotes its deceptive express warranty in sales documents and on the internet which states "We are committed to... The highest ethical standards. Uncompromising honesty and integrity." In other Windermere promotion, like the Puget Sound Business Journal, Windermere CEO Geoff Wood is quoted as saying "In the real estate business somebody's word is very important. If you say you're going to do something, you've got to do it." The article goes on to say, "Geoff oversees marketing, legal, financial and internet development services throughout the Windermere network..." Mr. Wood claims absolute dominion over both Windermere legal and internet strategy, making him chief architect of Windermere marketing fraud.

Effective reportage can be harsh in recounting facts, but it must be said in consideration of all the Windermere victims profiled here who truly sought Windermere's vaunted honesty and integrity, that Windermere Services CEO Geoffrey P. Wood is simply lying when he states his company's utterly false and fraudulent commitment to honesty and integrity. He both lies and deceives again when he says that "In the real estate business somebody's word is very important. If you say you're going to do something, you've got to do it." Wood clearly doesn't do what he says he's going to do—be committed to uncompromising honesty and integrity. Wood himself is indeed IN the real estate business and his word is absolutely no good at all. He sues victims of Windermere misconduct for trade libel and defamation to shut them up, and then he tries to use the legal system to suppress victims' speech rights when they ask him to actually perform on the warranty he promotes. As this website proves, Mr. Wood does anything BUT what he says he's gonna do. Far from providing victimized Windermere customers a commitment to high ethical standards, honesty and integrity, Wood and Windermere run away and hide behind their lawyers when innocent consumers are ruined by their Windermere experience.

John W. Jacobi, Geoff Wood, his wife Jill Jacobi-Wood, and governing cohorts John O'brien "OB" Jacobi and attorney Paul Drayna have gone to the absolute ends of the earth in stonewalling, ignoring, denying and fleeing any and all responsibility for Windermere wrongdoing and misconduct. When called upon by victimized Windermere consumers to make good on its warranty of honesty and integrity, Windermere even states in legal pleadings that Windermere agents are NOT agents of Windermere at all—but independent contractors. As the legally-designated Governing People and top managers of the Windermere empire who drive policy, ethics and market promotion, it demands repeating that John W, Jacobi, Geoff Wood, Jill Jacobi-Wood, John OB Jacobi and attorney Paul Drayna are all clearly lying when they promise high ethical standards and uncompromising honesty to the public and consumers of real estate services.

Protect your life, home, family and future by cancelling or not renewing your Windermere listing. Don't risk doing business with Windermere Real Estate, the brand built on lies, fraud and ruined lives. Refuse to fund public predator Windermere Real Estate with commission from the sale of your home.

________________________________

Is WindermereWatch.com of social benefit to consumers and the public? You decide:

Windermere Real Estate is one of our country’s largest real estate companies and widely promotes a fraudulent express warranty that states “We are committed to... The highest ethical standards. Uncompromising honesty and integrity.” The definition of an express warranty from Black's Law Dictionary is: "A warranty created by the overt words or actions of the seller. • Under the UCC, an express warranty is created by any of the following: (1) an affirmation of fact or promise made by the seller to the buyer relating to the goods that becomes the basis of the bargain."

But when customers are victimized by dishonest Windermere brokers and agents, and complain in writing through legal counsel to franchiser Windermere Services Company, it is absolutely silent in the face of clear and convincing evidence, and forces the customer to sue or go away. In many cases, unsuspecting consumer lives are thrown into complete chaos through costly litigation; and also because the subject homes may actually be uninhabitable or unserviceable for reasons about which Windermere knew and had a legal obligation to disclose—but did not. For some victims, the long and expensive litigation forced upon them even results in bankruptcy and homelessness. Despite their clear evidence, many victims go on to lose in court because they can't afford attorneys or have no legal experience, and Windermere exploits those impediments to endless advantage—lives, homes, and personal finances are ruined forever. And Windermere expects those victims to just go away without their lives and homes, merely for buying a house through Windermere Real Estate, innocently.

Although such irrefutable evidence of Windermere broker/agent misconduct has been presented to franchiser Windermere Services Company, it knowingly continues collecting commissions from dishonest agents and brokers by deliberately passing them on to other unwitting consumers. Just one example is Windermere S.C.A. Redmond's Paul Stickney, who received a $522,200 court judgment for not disclosing a conflict of interest, but is still producing commissions for his Windermere SCA franchise, and Windermere Services Company. Is that the "Highest ethical standards. Uncompromising honesty and integrity?" You may want to search and visit more websites about Windermere's predatory business conduct.

When victims use the media to report their Windermere experiences honestly, Windermere sues them for libel and defamation through false lawsuits to intimidate, silence, and hush bad PR—read one of those lawsuits here. It then tries to coerce victims into signing a “dark clause settlement agreement” that permanently terminates their speech rights—read some of those "settlement" agreements here. Through an expensive and emotionally distressing roller coaster ride with Windermere's nasty Demco lawyers, a victim of Windermere fraud is told they will be taken all the way to trial on trumped-up libel and defamation charges, and if they don't sign the dark clause, their life and future will be ruined. When a victim persists in refusing to sign, Windermere voluntarily dismisses its own lawsuit under Civil Rule 41, just before trial, after costing the victim years and yet thousands more to defend against the false action. This predatory legal tactic is known as abuse of process or malicious prosecution. In one example cited below, franchiser Windermere Services Company served an outspoken victim a lawsuit for libel and defamation, and then immediately sent them an email instructing that they "...need not hire an attorney," and further stating, “…we will try to resolve this directly and outside the legal system.”

Every Windermere office in every state is legally tied to franchiser Windermere Services Company's fraudulent express warranty, false advertising, predatory conduct and policies through privity and its pecuniary franchise agreement. Some legal observers believe that Windermere's conduct has RICO and Civil Rights violation implications. If you have recently purchased a Windermere franchise without having been disclosed Windermere's falling brand value, PR decline, and its adverse website problems, click here for its duty of disclosure under Federal Trade Commission rules. Proof that Windermere Services Company knew about WindermereWatch.com in March of 2007 is in this document.

Windermere Real Estate is a textbook corporate predator who operates franchises in Washington State, Oregon, California, Arizona, Nevada, Utah, Idaho, Montana, Hawaii and British Columbia. Windermere repeatedly makes the false claim that it has offices in Wyoming, but it does not. If you’re buying or selling property through ANY Windermere office, a percentage from your transaction will be used by franchiser Windermere Services Company to silence and financially ruin innocent parties who’ve encountered Windermere fraud. Windermere won't pay legitimate damages or acknowledge wrongdoing, and will stall settlement of cases all the way to state supreme courts, a legal strategy that Windermere routinely employs to bankrupt victims and exhaust their resources.

We believe the information presented here is of profound social benefit to consumers and the community, and we are dedicated to providing it.

THROUGH FEES AND COMMISSIONS PAID TO FRANCHISER WINDERMERE SERVICES COMPANY, EVERY WINDERMERE NETWORK OFFICE IN EVERY STATE IS AN ENTHUSIASTIC PARTNER AND KNOWING ACCESSORY TO WINDERMERE MARKETING FRAUD AND ITS PREDATORY POLICIES

(Back to top)