IN THE COURTOFAPPEALS OFTHE STATE OFWASHINGTON RANJIV HAYRE and SUKHJIWAN HAYRE, Respondents,

v. DEAN STREETandJANIS L. STREET, husband andwife, individuallyandtheir marital community, Appellants, EVERGREEN MONEYSOURCE MORTGAGE CORPORATION, a Washingtoncorporation; MORTGAGE ELECTRONIC REGISTRATION, INC. ("MERS"), a Delawarecorporation; and SAXON MORTGAGESERVICES, INC., a Texascorporation, Defendants. ) No. 68494-9-1 DIVISION ONE UNPUBLISHED OPINION

FILED: June 17, 2013 U3 to

Appelwick, J. — The Hayres and Street are tenants in common of a 26 acre investment property that became the subject of a partition action. The trial court 

### granted the Hayres motion to enforce a settlement agreement pursuant to CR 2A. However, the Hayres have notestablished thatthe form ofdeed to be used to transfer 

### the propertyis not a material term missingfromthe agreement. We reverse, vacatethe awardofattorneyfees, and remand.No. 68494-9-1/2

FACTS InApril 2006, Ranjiv and Sukhjiwan (Jiwan) Havre purchased a 26 acre property in Enumclaw for $865,000 at a foreclosure auction. The Hayres asked their friend, Dean Street, to invest in the property with them. Street agreed to pay the Hayres 

### $288,333 for a one-third interest inthe property. Thus, Ranjiv, Jiwan, and Streeteach owned a one-third interest as tenants in common. They planned to fixthe property and sell it, and they agreed that none of them would transfer their interest to a third party. They agreed to equallysharethe costofmaintenance and any profits or losses. 

### In May2007, the parties arranged to borrow $1.5 million againstthe property and disbursed $500,000 to each co-tenant. Street is the only person who signed the promissory note, but the Hayres each signed the deed of trust encumbering the property. 

### In September 2007, the parties agreed to list the property for $2,795 million. Street, a licensed real estate agent, has beentrying to sellthe propertyeversince. Throughoutthis time, Streethas been responsiblefor managing the property. He takes care of mortgage payments, property taxes, and insurance. He also pays for maintenance of the property. He kept a detailed ledger of his expenditures and periodically received reimbursement from the Hayres for their two-thirds share. The Hayres stopped reimbursing Street in September 2009. They wished to deed their interest in the property to Street and relieve themselves of their obligation to pay for two-thirds ofthe property's expenses. Streetdeclined.No. 68494-9-1/3


### InMarch 2011, the Hayres filed a complaintenumerating three causes of action. 

### First, they asked the court to appoint a referee to sell the property and distribute the proceeds. Second, they sought a declaratory judgment that they had no obligations under the note. Third, they alleged that Street used the property to operate an equestrian business, and sought rentfor his use ofthe property atthe fair marketvalue 

### to be determined at trial. Although he agreed that the property should be sold, Street counterciaimed to recover prior and future expenses, and he sought damages for the 

### Hayres' refusal to cooperate with Street's attempt to arrange a short sale of the property. InMay 2011, the trial courtappointed RebeccaWiess to serve as a referee at
an hourly rate of$250. 

### On February 6, 2012, Street's attorney, Michael Hunsinger, called the Hayres' attorney, Lawrence Glosser. He offered to settle for $50,000 from the Hayres, a 

### transfer of the Hayres' interest in the property, and a mutual release of all claims. Glosser verbally counter-offered for $40,000. Later that afternoon, Hunsinger responded to the counter-offerin an e-mail: Dean rejects [the Hayres'] counter-offerof$40,000. He renews his 

### offer to accept payment of$50,000 and transfer of title to the property to him and his wife, with mutual releases. Ifthat is rejected, Dean would like 

### to meetbriefly with Ranjiv Hayre. You may also attend, as long as you do not participate. Please respond no laterthan noon tomorrow. Two minutes later, Glosserresponded: I am authorized to accept the offer of $50k and conveyance of the property to Dean Street in exchange for a full and complete release of all claims and causes ofaction related to the acquisition and ownership ofthe propertywhetherpast, present, future, known orunknown.No. 68494-9-1/4 

### Ifthat works, Iwill strike my motion before Judge Heavey and we can workon an agreeable settlementand release. Hunsingerreplied: Agreed. Please prepare the paperwork. The nextday, February7, the Hayres senta draft settlementagreement: Here is a draft of the Settlement Agreement and Release and the QCD [quit claim deed] and Excise Tax Affidavit. Ithink the exemption on the Excise Tax Affidavit would apply to this case, but if for some reason it doesn'twork we can probablyhavethe transferordered bythe Court. Getbackto me with anyquestions comments, or suggested changes. The same day that the Hayres sent a draft agreement, Street informed Hunsingerthat he would only accept a settlement for $50,000 on the condition that the company servicing the $1.5 millionnote, Saxon Mortgage, agreed to a short sale and waived any deficiency on the loan. Hunsingerwrote to Glosser and Wiess on February 8 to inform them ofthe bad news: Itwas Dean Street's understanding that the agreement to accept 

### $50,000 and a deed from the Hayres in return for their full release was conditional upon Saxon's agreement to a short sale that resulted in no additional obligationsfrom the Streets to Saxon. Of course, Saxon has not yet made any such agreement. Moreover, Iam sure that [Glosser] and his clients' willingness to enter into such a settlement agreement did not contemplate such a condition. I apologizeforthe lack of clarity. Accordingly, I do not yet have authority to enter into such an agreementwith the Hayres on behalfofthe Streets until we know Saxon's position regarding a short sale, and on behalfof Saxon, David [Elkanich] understandably first wants to know what pending agreement Saxon is being asked to approve. Dean is in the process of providing David with that information.No. 68494-9-1/5
The Hayres filed a motion to enforce the settlement agreement. They argued that the e-mail exchange was a binding settlement pursuant to CR 2A. The trial court granted the motion. It found that the settlement was not made or accepted as a conditional settlement and that Hunsinger was acting as an attorney and agent for Street. Itfound thatthe materialterms ofthe settlementwere (a) paymentof$50,000to Street, (b) transfer of the Hayres' interest in the property to Street, and (c) the mutual 

### release ofall claims. The order gave the parties eight1 days to consummate the agreement. Ifthey could not do so, then the Hayres were ordered to deposit the $50,000 into the registry ofthe court and itwould fall to Wiess to convey the property 

### from the Hayresto Street. The trial court also ordered Streetto paythe Hayres $500for the costofbringing the motion to enforce settlement. DISCUSSION 

### Settlement agreements are governed by general principles of contract law. Evans &Son. Inc. v. City ofYakima. 136 Wn. App. 471, 477, 149 P.3d 691 (2006). A 

### validagreementrequires a meeting ofthe minds on essentialterms. ]cL To determine if informal writings are sufficient to establish a binding settlement agreement, we must 

### concludethat (1) the parties agreed to the subjectmatter, (2) all ofthe provisions of the agreement were set out in the writings, and (3) the parties intended a binding agreement prior to the time ofthe signing and delivery of a formal contract. ]g\ at 475-
76.



### 1The parties had 12 days from the date the order was signed, but 8 days from the date it was filed.No. 68494-9-1/6
The purpose of CR 2A is to give certainty and finality to settlements. Condon v. 

### Condon, Wn.2d , 295 P.3d 86, 89 (2013). The party moving to enforce a settlement agreement carries the burden of proving that there is no genuine dispute
over the existence and material terms of the agreement. Brinkerhoffv. Campbell, 99 

### Wn. App. 692, 696-97, 994 P.2d 911 (2000). We consider the evidence in the light mostfavorable to the nonmoving party and determine whether reasonable minds could reach but one conclusion. Id. at 697. Where a trial court relies solely on affidavits or declarations, we review its orderenforcing settlementde novo. ]d at 696. I. Binding Agreement 

### Parties may enter a contractual relationship with informal writings even when they contemplate that a subsequentformal contract will be executed. Plumbing Shop, Inc. v. Pitts, 67 Wn.2d 514, 519, 408 P.2d 382 (1965). The mere anticipation of a 

### formal memorialization does not alone suggest that the parties intended to be bound 

### only by such a document. Morris v. Maks, 69 Wn. App. 865, 871-72, 850 P.2d 1357 (1993). Street argues that the parties did not intend a binding agreement prior to the execution of a formal contract. He claims that, to the contrary, they merely made an unenforceable agreementto agree. 

### Streetrelies primarily on Evans. Inthat case, the City of Yakima contracted with Evans &Son, Inc. to perform deep tilling work in a city park. 136 Wn. App. at473. The city learned that deep tilling was not necessary in a portion of the park and directed 

### Evans to stop working until itheard otherwise. ]a\ The citydelayed providing further guidance, and Evans alleged it lost over $150,000 as a result ofthe delay. Id. In a letter, the city offered to settle for $40,000. Id at 473-74. The letter cautioned thatNo. 68494-9-1/7 "'[settlement is contingenton execution of a SettlementAgreementthat Iwill draft.'" Id at 474 (alteration in original). Evans's attorney accepted the amount of $40,000 to "resolve all issues pertaining to the
. . . construction contract." Id The city sent a draft settlement agreement. Jd After Evans's attorney revised the agreement, the city reminded Evans that "'[settlement is contingent on execution of a Settlement Agreementthat Iwill draft.'" Jd (alteration in original). Evans took the position thatthe release inthe draft agreementwas unacceptably broad, because itreleased any and all claims against the city, instead of just claims arising from the specific construction contract at issue. Jd Evans refused to release all potential, unrelated claims. Jd at 474-75. It sued the city for delay damages. Id at 475. The Court of Appeals concluded that the letters between the parties showed only a desire to reach a settlement and the monetary amount of settlement, and they did not suggest that they themselves were the binding agreement. Jd at 477-78. Indeed, the court emphasized thefact thatthe city repeatedly and explicitly asserted that settlementwas subjectto the execution of a settlementagreementdrafted by the city. Jd at474, 477. In contrast, Hunsinger and Glosser reached an unequivocal agreement. Hunsinger made an initial written offer to "accept payment of $50,000 and transfer of title to the property to him and his wife, with mutual releases." Glosser reiterated the terms ofthe agreement and told Hunsinger, "Ifthatworks, Iwillstrike my motion before Judge Heavey and we can work on an agreeable settlement and release." Hunsinger unequivocally replied, "Agreed. Please prepare the paper work." The e-mails did not contain any language conditioning settlement on the execution of a more formal agreement. They merely contemplated the execution of a conforming settlement andNo. 68494-9-1/8
release. The contemplation of a future, formal memorialization did not diminish the binding nature oftheiragreement. The unequivocal nature of the agreement is further evidenced by Street's acceptance of the Hayres' offer to strike a pending motion to compel Street's wife to appearfor a deposition. The Hayres had been vigorously pursuing the deposition, and 

### Street had been vigorously opposing it. Street has not offered any explanation of why hewould have agreedto strikethe motion ifsettlementhad notbeen achieved. Moreover, statements by Street and Hunsinger subsequently indicated their belief that an agreement had been reached. Two days after the parties agreed to terms, and a day after the Hayres sent a draft agreement, Hunsinger wrote a letter explaining that Street believed "the agreement to accept $50,000 and a deed from the Hayres in return for theirfullreleasewas conditional upon Saxon's agreementto a short sale." He went on to explain that he knew the Hayres' "willingness to enter into such a settlement agreement did not contemplate such a condition." In a declaration in response to the Hayres' motion to enforce settlement, Street stated, "Itwas my belief 

### that the agreement . . . was contingent upon the lender of the $1.5 million loan . . . agreeing that my wife Jan and Iwould not be liable for any deficiency after Ifinally sell the property. Without that condition I would not have authorized the settlement agreement." These statements by Hunsingerand Streetclearlyindicate recognition that there was an agreement. The issue they identify is that Hunsinger had failed to communicate one ofhis client's conditions in the offer. But, Street does not contestthe trial court's determination that Hunsingerwas acting as Street's agent and had authority

8No. 68494-9-1/9

to bind him based on that relationship. Both the offer and acceptance were clearly communicated. An agreementwas formed.
II. Material Terms Despite their intent evidenced in the e-mail language to enter a binding agreement, Street argues that he and the Hayres nevertheless failed to reach agreement on four material terms. Specifically, he alleges thatthey did not discuss the scope ofrelease, which party or parties would pay referee's fees, which party or parties would pay excise taxes or what the excise tax affidavit would say, or the form ofdeed that would be used to effectuate transfer. Notably, case law does not provide a clear 

### definition of"material."2 Rather, whatconstitutes amaterialterm is dependentuponthe particular facts of a given case. Sea-Van Invs. Assocs. v. Hamilton. 125 Wn.2d 120, 126, 881 P.2d 1035 (1994). Black's Law Dictionary defines "material" as, "[o]fsuch a nature that knowledge ofthe item would affect a person's decision-making; significant; essential." Black'sLawDictionary 1066 (9th ed. 2009). A. Scope ofRelease Street argues that he and the Hayres did not agree on the scope ofthe mutual release ofclaims, because they did notdiscuss "whetherthe Hayres could be liable for
a deficiencyifthe lenderdid not agree to a shortsale." But, the parties clearlydid agree
on the scope ofrelease. Hunsinger wrote to Glosser that the settlementwould involve "mutual releases." Glosser responded that it would include "a full and complete


### 2 Although the parties dedicatesignificantbriefing toMorris and Evans, neither ofthose cases contains anything more than conclusory statements that a given term is, or is not, material. Neither attempts to comprehensively define the term "material," and we decline to do so here.No. 68494-9-1/10
released of all claims and causes of action." Hunsinger replied, "Agreed." That 

### language encompassed any cause ofaction related to liability on the $1.5 million loan, which was central to the very claim being settled. Street's desire to continueto hold the 

### Hayres liable on the note, ifSaxon did not agree to waive any deficiency resulting from the short sale, was merely an unexpressed condition on settlement that we will not consider. See, e.g., Hearst Commc'ns, Inc. v. Seattle Times Co., 154 Wn.2d 493, 503, 115 P.3d 262 (2005). Moreover, Street points to release language inthe Hayres' draft 

### settlement agreement to support his assertion that the trial court ordered a broader release than the parties contemplated. But, the trial court did not enforce the Hayres' 

### draft settlementagreement. Itenforced the settlementas expressed inthe attorneys' emails and ordered "mutual release ofany claims."
B- Referee's Fees Street asserts that the parties never discussed who would pay referee's fees. But, thatissue is controlled by statute: The cost of partition, including fees of referees and other disbursements 

### including reasonable attorney fees . . . shall be paid by the parties respectively entitled to share in the lands divided, in proportion to their respective interests therein. RCW 7.52.480. The trial court determined the fees to be paid when itappointed Wiess and directed that she would be paid $250 per hour. Under RCW 7.52.480, those fees
were to be paid in proportion to the parties' interest inthe property. The parties could 

### have negotiated for a specific division ofthefees, but sincethe statute provides thatthe fees are divided in proportion to the parties' interest in the property, the term was not material.

10No. 68494-9-1/11

C Excise Tax Streetlikewise arguesthat he andthe Hayres did not discuss whatthe excisetax affidavit would say or who would pay it. Again, however, excise taxes are an issue controlled by statute. WAC 458-61A-208 provides a detailed description of whether excise taxes are owed when property is transferred pursuant to an order of sale by a court. In fact, it specifically gives two examples that explain when excise taxes are 

### owed when there is a transferofpropertyfrom one tenantincommon to another. WAC 458-61A-208(2). And, RCW 82.45.080 provides that the excise tax is the seller's 

### obligation.3 Thedispute concerning theexcise taxaffidavit arose aftertheagreement
was reached, when Street balked at signing the tax affidavit. Any such disagreement, 

### however, does not necessarily alterthe materiality ofdetermining which party orparties would pay any excise tax owed. The agreement is not invalid by virtue of missing a term thatis controlled and supplied by statute. D. Form of Deed 

### Street argues that the parties did not agree on the form of deed that would be used to transferthe property, which range in quality from a statutorywarranty deed to a quit claim deed. In a statutorywarrantydeed, the grantorwarrants: (1)Thatat the time ofthe making and delivery ofsuch deed he or shewas 

### lawfully seized ofindefeasible estate infee simple, inand to the premises therein described, and had good rightand full powerto convey the same; (2) thatthe samewerethen freefrom allencumbrances; and (3) thathe or 

### she warrants to the grantee, his or her heirs and assigns, the quiet and 

### 3The Hayres asserted at oral argument that the tax issue actually relates to propertytax that may be owed bythe selleras a resultofremoving the propertyfrom its agricultural classification. Nothing in the record demonstrates the property was necessarily being changed from its agricultural classification. And, that issue is not containedwithin Street's briefing on appeal.

11No. 68494-9-1/12 peaceable possession of such premises, and will defend the title thereto against all persons who may lawfully claimthe same. RCW 64.04.030. At the other end of the spectrum, in a quit claim deed the grantor conveys only the then existing legal and equitable rights of the grantor, with no guarantee ofwhatthose rights are. RoederCo. v. K&EMoving &Storage Co., 102Wn. App. 49, 56-57, 4 P.3d 839 (2000). In Hubbell vWard, the Supreme Court listed 13 terms material to a proposed real estate contract. 40Wn.2d 779, 782-83, 246 P.2d 468 (1952). Those terms encompass the form ofdeed: "(a) time and manner for transferring title; (b) procedure for declaring forfeiture; (c) allocation of risk with respect to damage or destruction; (d) insurance provisions; (e) responsibility for: (i) taxes, (ii) repairs, and (iii) water and utilities; (f) restrictions, if any, on: (i) capital improvements, (ii) liens, (iii) removal or replacement of personal property, and (iv) types of use; (g) time and place for monthly payments; and (h) indemnification provisions." Sea-Van. 125 Wn.2d at 128 (quoting Kruse v. Hemp. 121 Wn.2d 715, 722, 853 P.2d 1373 (1993) (citing Hubbell, 40 Wn.2d at 782-83)). The Sea-Van court concluded that those material terms are not limited to the context of real estate contracts. Id at 128- 29. It explained that it had never made such a distinction, and that the terms are equally applicable inthe deed oftrustcontext. ]g\ The Hayres argue thatthis case is in neitherthe real estate contract nor deed of trust context, and that the Hubbell terms do not apply in the CR 2A context. But, the Sea-Van court held that the relevance of the Hubbell terms is not limited to cases involving real estate contracts. ]d at 128-29. Itsuggested that the terms have broad relevance, not that they apply only in the real estate contract or deed oftrust context. Id. And, the same rationale underlying the Hubbell line of cases applies here.

12No. 68494-9-1/13 

### Agreements concerning the transfer of real property "must be definite enough on material terms to allow enforcement without the court supplying those terms." 

### Setterlund v. Firestone. 104 Wn.2d 24, 25, 700 P.2d 745 (1985). The trial court is unable to ordertransferfromthe Hayres to Streetwithout specifying the form ofdeed. Further, the Hayres rely on readily distinguishable cases to supporttheir assertion that the Hubbellterms do not apply inthe CR 2Acontext. Inthose cases, the courtheld that oral agreements stipulated to in open court are not invalid under the statute offrauds. See Snyderv. Tompkins. 20 Wn. App. 167, 172, 579 P.2d 994 (1978); Deerv. Deer, 29 Wn.2d 202, 212, 186 P.2d 619 (1947). There was no argument in either Snyder or Deerthatthe stipulationswere insufficientlydefinite. However, we also reject the implication from Street's argument that the Hubbell terms are always material. Whether a specific term is material is dependent upon the facts of a given case. Sea-Van, 125Wn.2d at 126. This case illustrates thetruth ofthat proposition. Many ofthe Hubbell terms, such as restrictions on capital improvements or the time and place for monthly payments, are not implicated at all. The discussion above concerning referee's fees and excise tax shows that even those terms that are arguably implicated are notnecessarily material. The question remaining is whetherthe form ofdeed is material in this case. Below, Street argued in his response to the Hayres' motion to enforce settlement that the form of deed was a missing material term. The Hayres did not address that argument at all in their reply. On appeal, their argument that the form ofdeed is not material is limited to a bare assertion, supported only by inapposite cases, that Hubbell and its progeny do not apply here. They offer no argumentthatthe form ofdeed is not

13No. 68494-9-1/14
material underthe facts ofthis case. Yet, they bearthe burden to provethatthere is no genuine dispute over the existence and material terms ofthe agreement. Brinkerhoff. 99Wn. App. at696-97. At least three factors suggest the form of deed was not material. First, the Hayres and Street already share the same quality of title as tenants in common. 

### Second, all parties knew the property was encumbered by a $1.5 million loan and the agreement did not contemplate that encumbrance being discharged. Thus, a statutory warranty deed without exceptions was not available. Third, the parties not only knew the property was encumbered, they knew itwas encumbered beyond its market value. They knew Street had signed the note and the Hayres had not. They knewthe release terms included claims related to that note. Thus, Streetwas taking the property subject to that liability. However, the record contains no evidence of whether additional encumbrances existed on the propertythat should have been addressed inthe deed. It does not demonstrate that no provisions beyond a quit claim were material to the transaction. Viewing the evidence inthe lightmostfavorableto Street, thesefactors alone are not sufficient to establish that reasonable minds could reach but one conclusion, that theform ofdeed was notmaterial or thata quit claim deed was necessarily sufficient. A genuine dispute concerning whether the parties agreed on all material terms remains. 

### Thetrial courterredby granting the Hayres' motion to enforcesettlement.4 This isnot to saythatthe Hayres could notrenewtheirmotion on appropriate evidence. 

### 4Street also claims that thetrial court erred bygranting themotionto enforce on six days notice and denying his motion to continue. Because we reverse, we do not reach that issue.

14No. 68494-9-1/15

III. Attorney Fees The Hayres requested attorney fees intheirmotion to enforce settlement, but did not cite any authorityjustifying the fees: The Court has discretion to impose an award of attorneys' fees in connection with this matter. Here, the Plaintiffs incurred attorneys' fees when Michael Hunsinger directed Mr. Glosser to draft the settlement documents, which were promptly done. In addition, the Plaintiffs have incurred costs in connection with bringing this motion to enforce a legally binding settlementagreement. The trial court awarded the Hayres $500, stating only, "judgment is entered against Defendant Dean Street in favor of Plaintiffs inthe amount of $500.00 for the attorneys fees incurred as a result [of] their having to bring this Motion." Attorney fees may be awarded only when authorized by a private agreement, a statute, or a recognized ground ofequity. In re Marriage ofMacGibbon, 139 Wn. App. 496, 504, 161 P.3d 441 (2007). On appeal, the Hayres hypothesize that the trial court could have awarded the fees pursuant to its equitable powers or as sanctions for disavowing the settlement agreement and forcing the Hayres to file a motion to enforce settlement. Because we reverse, we necessarily vacate the award ofattorneyfees. Moreover, even ifthere was
an equitable basis to impose fees, neither the trial court nor the Hayres identified that equitable basis. Further, the fees cannotbe upheld as an award ofsanctions, because the Hayres did not request sanctions and the trial court did not enumerate any sanctionable conduct. See, e.g., N. Coast Elec. Co. v. Selig, 136 Wn. App. 636, 649, 151 P.3d 211 (2007) (party should make motion for sanctions as soon as it becomes
aware they are warranted and the trial court must make explicit findings as to which pleadings violated CR 11 and how such pleadings constituted a violation); RCW

15No. 68494-9-1/16
4.84.185 ("This determination shall be made upon motion by the prevailing party" and "upon written findings by thejudge.").
We reverse and remand.

WE CONCUR: 

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