Court Opinion

ID: 2641144
Source: CourtListenerOpinion
Date Created: 2013-11-05 01:14:13.667209+00
Date Added: 2024-06-11T09:09:15.393091
License: Public Domain

2013NOV-I* Ai-il|:08

 IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

WEST COAST, INC., a Washington
corporation,                                   No. 69255-1-1

                    Appellant,                 DIVISION ONE

               v.                               UNPUBLISHED OPINION

CAMANO CO-OPERATIVE WATER
AND POWER COMPANY, a
Washington corporation,

                    Respondent.                FILED: November 4, 2013

       Grosse, J. — A contract missing material terms is nothing more than an

agreement to agree, unenforceable as a matter of law. Here, the location of the

water pipes was an essential element of the parties' agreement to install pipe for

water distribution to the proposed housing sites.   Because the parties did not

agree to where the water pipes would be located, there was no "meeting of the

minds" on the essential terms and, thus, no contract. We affirm the trial court's

decision that there was no contract.

       The trial court awarded Camano Co-Operative Water and Power

Company (Co-op) a judgment for unpaid dues and assessments owed on 21

shares purchased by West Coast, Inc. The purchase of 20 of those shares was

conditioned upon approval of the development of the land. Such approval could

not occur without the installation of the water pipe. No water pipe was installed.

Thus, there was no contract. We reverse the trial court's award on the Co-op's

counterclaim against West Coast of dues for the 20 shares.
No. 69255-1-1/2

                                   FACTS

       In January 2004, West Coast signed a purchase and sale agreement for

property on Camano Island with the intent of developing single family homes on

the property, known as Saratoga Ridge.       In order to develop the land, Island

County required West Coast to provide a fire hydrant with sufficient water flow to

the property site for fire services.   Water was provided by the Co-op, a small

cooperative utility owned by the residential property owners on the west side of

Camano Island. The Co-op contracts with Water & Wastewater Services, LLC,

owned by Kelly Wynn, to manage the water system.

       John Robinett, the principal of West Coast, contacted Wynn and the Co

op board regarding water requirements.        Wynn faxed Robinett a two-page

memorandum and three pages of drawings of the water distribution system

created by the Co-op's engineer, George Bratton, for a previously interested

party. The drawings depict the existing water system in the area in 2004. The

drawings show the location of the only 4-inch water main to be on the west side

of West Camano Drive.      The Bratton memorandum contained two options for

installing the required fire flow to Saratoga Ridge.   Option one was from the

south; option two approached from the north. Robinett wanted to pursue option

one, which would provide 500 gallons per minute.       The Bratton memorandum

described option one as "1,910 feet of 4-inch AC [(asbestos cement)] pipe on

West Camano Dr. south of Uplands road."             Sometime after the Bratton

memorandum was created, the word "south" was crossed out of that phrase and

the word "north" was handwritten in.
No. 69255-1-1/3

        At the same time, the Co-op wanted to improve its antiquated water

system and orally agreed to cost share with West Coast, intending to make the

needed upgrades at the same time West Coast installed a new main line. This

was never put into writing.

        In February 2005, Bratton prepared bid documents for installing the water

main.   Those documents were approved by the Co-op and forwarded to the

Department of Health (Department).          The Department eventually granted

approval after certain adjustments. The approval was then sent to West Coast,

which balked because the plans required three crossovers and eleven residential

service connections on its installation of an 8-inch water main, significantly

increasing the project's cost.

        West Coast sued the Co-op for breach of contract/anticipatory repudiation,

negligent and intentional misrepresentation, and estoppel. The complaint alleged

that the Co-op violated its agreement to cost share and thus breached the

contract. On April 4, 2011, the trial court granted summary judgment dismissal of

West Coast's complaint, finding that the cost-sharing claim was based on an oral

agreement and was time barred because more than three years had elapsed.

        On reconsideration, the trial court re-affirmed its decision dismissing the

action for cost sharing as time barred but determined that there was still an issue

about whether the Co-op had placed additional conditions on its agreement as

alleged in the complaint. The Co-op then brought a counterclaim for unpaid

membership fees due for West Coast's purchase of 20 additional shares. After a

bench trial on the remaining issues, the court found that there was no binding
No. 69255-1-1/4

agreement between the parties and dismissed the breach of contract claim. The

court found in favor of the Co-op on its counterclaim for money owing on the

shares for the Co-op. Because the Co-op bylaws provided for attorney fees, the

court also awarded fees and costs expended for that portion of the litigation.

West Coast appeals.

                                   ANALYSIS

       "The touchstone of contract interpretation is the parties' intent."1
Washington courts follow the "objective manifestation" theory of contracts.2 A
valid contract requires an objective manifestation of mutual assent to its terms,

rather than any unexpressed subjective intent of the parties.3 Courts will not
impose obligations that the parties did not assume for themselves.4 A formation
of a contract requires that there be an objective manifestation of mutual assent of

both parties.5 Intent may be imputed based on the ordinary meaning of the
words within the contract.6 Words in a contract are given their ordinary, usual,
and popular meaning unless the entirety of the agreement clearly demonstrates a

contrary intent.7

1 Tanner Elec. Coop, v. Puaet Sound Power & Light Co.. 128 Wash. 2d 656, 674,
911 P.2d1301 (1996).
2 Hearst Commc'ns. Inc. v. Seattle Times Co.. 154 Wash. 2d 493, 503, 115 P.3d
262 (2005); State v. R.J. Reynolds Tobacco Co., 151 Wash. App. 775, 783, 211
P.3d 448 (2009).
3 Hearst. 154 Wash. 2d at 503.
4 Condon v. Condon. 177 Wash. 2d 150, 162-63, 298 P.3d 86 (2013).
5 P.E.Svs..LLCv.CPICorp., 176 Wash. 2d 198, 207, 289 P.3d 638 (2012).
6 Hearst. 154 Wash. 2d at 503.
7 Hearst, 154 Wash. 2d at 504 (citing Universal/Land Constr. Co. v. City of Spokane.
49 Wash. App. 634, 637, 745 P.3d 53 (1987)).
No. 69255-1-1/5

      There must be agreement on the essential terms to give rise to a

contract.8 The findings of fact are critical to the resolution ofwhetherthere was a
contract and those findings are reviewed to determine whether substantial

evidence exists to support them.9 The application of the law to the facts is a
question of law and subject to de novo review.10 The court reviews de novo the
trial court's conclusions of law to determine if they are supported by the findings

offact.11 Unchallenged findings offact are verities on appeal.12
      The trial court entered extensive findings of fact and conclusions of law

which support its ruling that West Coast's breach of contract claim was based on

a complete misunderstanding of the water system along West Camano Drive.

West Coast believed it was replacing a 4-inch main located along the east side of

West Camano Drive with an 8-inch PVC (polyvinyl chloride) pipe to be installed

on that same side.     West Coast relied on a misinterpretation of the Bratton

memorandum, thinking that its chosen option, option one, described work "north"

of Uplands Road, when in reality it described work "south" of Uplands Road.13
Unchallenged finding of fact 13 states that the only 4-inch main on the street was

located on the west side.

8 Condon.177 Wn.2d at 208-09.
9 Sunnvside Valley Irr. Dist. v. Dickie. 149 Wash. 2d 873, 879, 73 P.3d 369 (2003).
10 Brundridae v. Fluor Fed. Servs.. Inc.. 164 Wash. 2d 432, 441, 191 P.3d 870
(2008).
11 Bingham v. Lechner. 111 Wash. App. 118, 127, 45 P.3d 536 (2002) (citing City of
Seattle v. Megrev. 93 Wash. App. 391, 393, 968 P.2d 900 (1998)).
12 BrundridgerT6"4 Wn.2d at 439-40.
13 Exhibit 71 shows Bratton's memorandum with the word "south" struck out and
replaced with the handwritten word "north."
No. 69255-1-1/6

      The parties' discussions "never resolved how West Coast's new water

main was going to 'replace' the existing main, [or] how existing customers would

be reconnected (if at all)."    Indeed, Robinett testified about a letter he sent

transmitting his signed extension agreement in which he acknowledged that the

contract had missing elements. Robinett admitted on cross-examination that the

agreement does not specifically state where the 8-inch pipe would be placed or

in which direction any pipe laying would start.

       Placement of the 8-inch pipe was an essential element of the agreement.

The court's extensive findings support its conclusion that there was no objective

manifestation of this essential element.    The trial testimony showed that each

party objectively manifested different intents, and thus, there was no "meeting of

the minds" on how the agreement would work.14 There was, therefore, no
enforceable contract.

       Nor is there any merit to West Coast's claim for promissory estoppel.

"Promissory estoppel requires the existence of a promise.           A promise is a

manifestation of intention to act or refrain from acting in a specified way, so made

as to justify a promissee in understanding that a commitment has been made."15
Here, there is no promise. The mere fact that there is a written document entitled

"Agreement" is insufficient to sustain a finding that there was, in fact, a valid

contract. We affirm the trial court's holding that no contract existed.

14 In re G.W.-F. 170 Wash. App. 631, 640, 285 P.3d 208 (2012).
15 Tacoma Auto. Mall. Inc. v. Nisssan N. Am., Inc.. 169 Wash. App. 111, 127, 279
P.3d 487 (2012) (internal quotation marks and citations omitted).
No. 69255-1-1/7

Counterclaim for dues owed Co-op

       The trial court determined that West Coast owed the Co-op $107,894.65

in past dues for its 21 shares. As an owner of the undeveloped land, West Coast

owned one share in the Co-op.       When West Coast learned that the cost of

shares was increasing from $5,000 to $7,000, West Coast purchased 20

additional shares for the proposed home sites on the property.         When West

Coast transmitted the $100,000 check for payment of the 20 additional shares, it

did so with the following letter:

       Please find enclosed a check for $100,000 to pay for 20 water
       shares for the Plat of Saratoga Ridge. It is understood that there is
       currently a share that runs with the existing lot. In the event that
       the Plat was not approved as proposed or approved for less than
       the proposed 21 lots, West Coast, Inc. may sell back to the Co-op
       any unused water shares for the same price they were purchased
       for ($5,000.00).

West Coast contends that this conditional offer was accepted by the Co-op when

it cashed the check.      Because West Coast's version of the placement of the

water pipes was not accepted, it contends that the Co-op is obligated to

purchase those back. West Coast is incorrect. The letter merely states that

West Coast "may" sell back the shares to the Co-op for the same price

purchased. West Coast made no demand to the Co-op to buy back the shares,

and thus, the Co-op was under no obligation to do so.

       The only issue presented on this record and briefing is whether it was

error for the trial court to award the Co-op dues it identified in its counterclaim.

On this issue, we conclude that the purchase of 20 shares was contingent on the

approval of the development plan proposed by West Coast—a contingency
No. 69255-1-1/8

rendered impossible by the failure of the parties to form a binding contract.

Because this contingency never occurred, the Co-op's right to collect dues

allegedly owing on the shares is nonexistent.     The trial court thus erred as a

matter of law in determining that the Co-op was entitled to those sums.16
      We cannot determine from this record what the dues would be for the one

share that West Coast owes.         We presume that the Co-op will need to

recalculate dues owed by its shareholders and that the one share may thus be

greater than 1/21 of the dues owed.

      In conclusion, we affirm the trial court's finding that no contract was

formed, but reverse its decision on the Co-op's counterclaim against West Coast

for unpaid dues and assessments owed on 20 of the 21 shares it purchased.

The matter is remanded for proceedings in accord with this opinion.

WE CONCUR:

16 West Coast seems to rely on its nonpayment of dues as its expression that it
wanted to sell back the shares to the Co-op. But as evidenced by Co-op board
minutes, West Coast had been late in paying its dues previously. Thus,
nonpayment of dues cannot be considered a demand for the Co-op to
repurchase those shares. Further, its argument does not address what
significance, if any, to give to the fact that unchallenged finding of fact 67 notes
that the plat was approved by the County.

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