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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

GBC INTERNATIONAL BANK, a

California corporation,

Respondent,

v.

QUEEN ANNE BUILDERS, LLC, a

Washington limited liability company,

SEATTLE SIGNATURE HOMES, INC.,

a Washington corporation, CROWN

DEVELOPMENT, INC., a Washington

corporation, ANDY RYSSEL, an

individual and the marital community of

ANDY RYSSEL and RENEE RYSSEL,

Defendants,

CORY J. BURKE and GENEANNE G.

BURKE, and the marital community

composed thereof, GREG H. BLUNT,

an individual and the marital community

of GREG H. BLUNT and JILL BLUNT,

Appellants,

JOHN H. BARGREEN, and individual

and the marital community of JOHN 0.

BARGREEN and TERI O. BARGREEN,

Defendants.

No. 68240-7-

DIVISION ONE

UNPUBLISHED OPINION

FILED: June 10, 2013

Grosse, J. — A bank's action to recover monies from signators and

guarantors of an unsecured note is not precluded because those same signators

and guarantors also received a separate loan which was secured by a deed of

trust on property that the bank judicially foreclosed. Here, the documents clearly

showed that the loan at issue was unsecured. Under these circumstances, the
No. 68240-7-1 / 2

trial court did not err when it ruled that as a matter of law that the foreclosure on

the deed of trust did not prohibit the bank from seeking to recover the monies

owed on the unsecured loan. Accordingly, we affirm.

In 2007, Queen Anne Builders, LLC (Queen Anne) refinanced property

with a $1,515,000.00 loan (Loan 4190) from Shoreline Bank. The loan was

evidenced by a business loan agreement executed the same day. As collateral

for Loan 4190, Queen Anne granted Shoreline Bank a deed of trust in the

underlying real property. Loan 4190 matured on September 8, 2008. Property

values had plummeted and the property was appraised at less than the loan's

value. Shoreline Bank and Queen Anne executed a change interim agreement

extending the maturity of the loan for 60 days to permit Queen Anne to figure out

a plan of action.

Shoreline Bank agreed to extend the maturity date of Loan 4190 for a year

and a half to May 8, 2010. In return, because the property was appraised at less

than the loan's value, the bank required that Loan 4190 be paid down, interest

reserves be set-aside during that time, and that all real property taxes be paid

current. The bank agreed to issue a second loan for $500,000.00 (Loan 2545)

as a line of credit to pay down the Loan 4190 from $1.5 million to bring it line with

the loan to value guidelines. Both loans were guaranteed by Andy and Renee

Ryssel, Cory and Geneanne Burke, Greg and Jill Blunt, and John and Teri

Bargreen (collectively, Burke).1

1John and Teri Bargreen have been dismissed from this suit and are no longer

parties.
No. 68240-7-1 / 3

On April 27, 2010, both loans were in default due to nonpayment. On

April 28, 2010, Shoreline Bank filed a complaint against Queen Anne and Burke.

On September 24, 2010, Shoreline Bank nonjudicially foreclosed its deed of trust

against the property on Loan 4190.2 On October 1, 2010, Washington State

closed Shoreline Bank and the Federal Deposit Insurance Corporation (FDIC)

was appointed as receiver. On the same date, GBC International Bank (GBC)

became the successor in interest to the FDIC.

At the close of a five day jury trial, the trial court ruled "as a matter of law

that the foreclosure on the 4190 [Loan] did not foreclose the 2545 [Loan]." The

remaining issues were sent to the jury which found that there was no fraud when

the loan was made, that GBC was not estopped from enforcing the loan against

the defendants, and that there were no misrepresentations. After the jury's

verdict in favor of GBC, the trial court issued a judgment in the amount of

$578,465.18. Burke appeals.

Burke first argues that the trial court erred in holding that the foreclosure

on Loan 4190 did not preclude the bank from bringing this action to recover on

the promissory note for the $500,000.00 in Loan 2445. There is no merit to this

contention. The loan documents are clear that only one loan, Loan 4190, was

collateralized by the deed of trust. Loan 2545 was a separate, unsecured line of

credit guaranteed by Burke. Documents for the second loan clearly indicate that

it was unsecured and that the property was not listed as collateral. Unlike Loan

2 At the time of the trustee's sale, the outstanding balance owed to Shoreline

Bank was $1,117,316.14. Shoreline Bank bid $900,000.00, took over the

property, and later sold it for $490,000.00, leaving a loan deficiency of

$217,316.00. (September 24, 2010).
No. 68240-7-1/4

4190, Loan 2445's promissory note for the $500,000.00 listed no collateral. The

change in terms agreement with Queen Anne specifically states that the

$500,000.00 line of credit is unsecured. The deed of trust does not apply to Loan

2545 because the document granting the line of credit for Loan 2545 did not

reference that it was secured by the real estate. The trial court's ruling was

correct.

Instruction

Burke next argues that the court erred in refusing to give his proposed jury

instruction on estoppel.3

Burke proposed the following jury instruction:

Washington law does not permit a party to enforce an oral

agreement to loan money offensively against a bank in order to

make the bank loan money. However, Washington law does not

prevent a party from relying upon an oral agreement to loan money

defensively to excuse performance.

The court rejected this instruction because it was unnecessarily complicated and

difficult for a jury to understand the concept of using a statute defensively as

opposed to offensively. Instead, the trial court offered Instruction 14, which listed

the elements of estoppel as they applied to the present case.4 Additionally,

Instruction 13 provided:

3 "A trial court's decision to give a jury instruction is reviewed de novo if based

upon a matter of law, or for abuse of discretion if based upon a matter of fact."

Kappelman v. Lutz. 167 Wn.2d 1, 6, 217 P.3d 286 (2009). "Instructions are

sufficient if they permit each party to argue his theory of the case, are not

misleading, and when read as a whole, properly inform the trier of fact of the

applicable law." Farm Crop Energy. Inc. v. Old Nat'l Bank of Washington. 109

Wn.2d 923, 750 P.2d 231 (1988).

4The doctrine of equitable estoppel applies when a party acts to his prejudice in

reasonable reliance on the assurances of another. Equitable estoppel requires
No. 68240-7-1 / 5

A party is not allowed to make a claim that contradicts or repudiates

its earlier statement, admission, or conduct on which another has

reasonably relied, if the relying party would be injured by such

contradiction or repudiation. This is known as "estoppel."

Instructions 8 and 9 were identical to 6A Washington Practice: Washington

Pattern Jury Instructions: Civil 301.06, 301.05 (6th ed. 2012). The instructions

permitted the jury to decide the intended meaning of the contract language and

whether it was integrated.5

clear, cogent, and convincing evidence of "(1) a party's admission, statement or

act inconsistent with its later claim; (2) action by another party in reliance on the

first party's act, statement or admission; and (3) injury that would result to the

relying party from allowing the first party to contradict or repudiate the prior act,

statement or admission." Kramarevckv v. Dep't of Soc. & Health Servs., 122

Wn.2d 738, 743, 863 P.2d 535 (1993).

5 Instruction 8 provided:

A contract is to be interpreted to give effect to the intent of

the parties at the time they entered the contract.

You are to take into consideration all the language used in

the contract, giving to the words their ordinary meaning, unless the

parties intended a different meaning.

You are to determine the intent of the contracting parties by

viewing the contract as a whole, considering the subject matter and

apparent purpose of the contract, all the facts and circumstances

leading up to and surrounding the making of the contract, the

subseouent acts and conduct of the parties to the contract, and the

reasonableness of the respective interpretations offered bv the

parties.

(Emphasis added.)

And Instruction 9 provided:

If you find that all of the provisions of an [sic] agreements

between GBC International Bank and the Defendants are contained

in a single written document, and that the document was intended

by the parties as their final agreement on the subjects addressed in

it, then you may not consider evidence outside of the written

document to add to, subtract from, vary, or contradict that written

document.

However, if vou find that such written document was not

intended to be a complete expression of all of the terms agreed

upon bv those parties, that is. that the document does not contain
No. 68240-7-1 / 6

These jury instructions permitted Burke to argue his theory of the case

that GBC was estopped from enforcing the guaranties because they were given

only after misrepresentations from Shoreline Bank that it would provide a

construction loan. Testimony from several loan officers and representatives from

the bank refuted this proposition. Burke extensively cross-examined the bank's

witnesses and put forth his own testimony from the guarantors that they were

induced to sign the guarantee loans by the promise that a construction loan

would be forthcoming, which would buy out their interest. That matter is one of

fact for the jury which had adequate guidance.

In addition, we reject Burke's assertion that his instruction language was

necessary because he was prejudiced by language contained in the bank's

notice of final agreement that "[o]ral agreements or oral commitments to loan

money, extend credit, or to forebear from enforcing repayment of a debt are not

enforceable under Washington law."6 Such language is required by statute for a

credit agreement to beenforceable against a creditor.7

all of the terms of their agreement, then vou may also consider

evidence of the circumstances surrounding the making of the

agreement to supply additional terms of the agreement between the

parties, but only if they are not inconsistent with the provisions of

the written document.

A contract that was intended bv the parties as their final

agreement on the subjects addressed therein may nevertheless be

unenforceable due to fraud or eguitable estoppel.

(Emphasis added.)

6 RCW 19.36.140.

7 RCW 19.36.110 provides that "[a] credit agreement is not enforceable against

the creditor unless the agreement is in writing and signed by the creditor." See

also RCW 19.36.140 (setting forth the requirements for notices to be included in

credit agreements).
No. 68240-7-1 / 7

Judgment on Jury Verdict

The jury found in favor of GBC and in a special verdict form awarded the

bank "[t]he dollar amount that is currently due on Loan No. 2545."8 GBC moved

for an order of entry of judgment for the amounts owing on the construction loan

together with interest. The trial court issued a judgment in the amount of $578,

465.18.

The actual amount owed was not in dispute.9 The promissory note

provided that the principal amount was $500,000.00, specified the method for

In a special verdict form, the courtsubmitted the following question to the jury:

Question 8: If you find that Queen Anne Builders, LLC or any

guarantor is liable to GBC International Bank on Loan No. 2545,

what is the amount of damages?

(Write the dollar amount that is currently due onLoan No. 2545)

The jury did not write in a dollar amount, but instead wrote on the line provided:

"The dollar amount that is currently due on Loan No. 2545."

9After the verdict was delivered, outside the jury, the following colloquy occurred:

THE COURT: I assume that everyone agrees that they wrote the

amount due on the loan and that we all agree what that amount is[.]

The actual dollar amount isn't in dispute.

MR. WILLIG: Yeah.

MR. GOSS: It's true.

THE COURT: Okay.

MR. GOSS: Although we do have the 22,000 that's out there that's

THE COURT: It wasn't actually submitted to them. It wasn't argued

to them.
No. 68240-7-1 / 8

calculation of interest, and the amount owed is merely a simple mathematical

calculation. Courts have entered judgment in the proper amount where the

amount, as here, is a matter of mere calculation.10

Dawn Beagan, Vice President of Credit Administration, stated that the

total amount currently due for Loan 2545 was $574,479.16, including the

principal balance of $500,000.00, accrued interest of $74,479.16 as of October

25, 2011, at the per diem interest rate of 7 percent (which equals the per diem

amount of $97.22).

Burke argues that there was a discrepancy of some $22,684.00. Burke

arrives at that figure from the testimony of Kathleen Bennett, Andy Ryssel's

bookkeeper, who stated that in her opinion the first loan only needed to be paid

down to $1,140,000.00, instead of the $1,117,316.14.11 But that $22,684.00 was

in fact applied to the first loan as evidenced by Bennett's response to a query

from counsel whether she meant that Queen Anne did not get the benefit of that

$22,684.00.

10

MR. BUTLER: Your Honor, I think we'd be happy to rely on the

testimony as presented at trial by Dawn Beagan. I believe that

amount was the same as was quoted in closing argument, that if

there's any question that amount was testified to.

THE COURT: Well, I'll let you have your further discussion about it,

but within the week - actually, by next Wednesday, if possible, if

you could submit a judgment on verdict, okay?

See Buffington v Henton. 70 Wash. 44, 47, 126 P. 58 (1912) (a general verdict

finding a breach of contract against one party, permitted the court to enter

judgment to the proper amount as fixed by the contract itself, where such amount

is a matter of mere calculation).

11 $375,000.00 was paid to Loan 4190, reducing its total amount due and owing

to $1,117,316.14.

8
No. 68240-7-1 / 9

Oh, of course not. No, what happened was they needed to reduce

the loan to one million 140 and they were only supposed to use

enough to get the loan, the first loan, to that one million 140. It didn't

require the full 375,000 to get to that amount. If they had only

reduced it to one million 140 there would have been $22,000 more

available on the second loan to advance for interest.

Moreover, when offering instructions, the parties agreed that the amount

was not disputed, only whether GBC was estopped from seeking repayment by

the guarantors.

Under RAP 18.1, GBC requests attorney fees on appeal. Because the

contract includes a provision for attorney fees, GBC is entitled to fees on appeal

as the prevailing party.12

Affirmed.

~*Vw

A

WE CONCUR:

12 See Reeves v. McClain. 56 Wn. App. 301, 311, 783 P.2d 606 (1989) ("A

contractual provision for an award of attorney fees at trial supports an award of

attorney fees on appeal.").