Court Opinion

ID: 4583227
Source: CourtListenerOpinion
Date Created: 2020-11-03 16:17:06.895616+00
Date Added: 2024-06-11T13:42:27.831426
License: Public Domain

FILED
                                                                       NOVEMBER 3, 2020
                                                                   In the Office of the Clerk of Court
                                                                  WA State Court of Appeals Division III

            IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
                               DIVISION THREE

ALLEGIANCE PROPERTIES, LLC, a                   )
Washington Limited Liability Company,           )         No. 36896-3-III
and ROBERT A. GILLES, INC., a                   )
Washington corporation,                         )
                                                )
                      Petitioners,              )
                                                )         UNPUBLISHED OPINION
       v.                                       )
                                                )
JANET E. RICHART, a single woman;               )
and Does 1-10,                                  )
                                                )
                      Respondents.              )

       FEARING, J. — The buyers of real estate, Allegiance Properties, LLC and Robert

Gilles, Inc. (collectively Allegiance) sue the seller, Janet Richart, as the result of

underground oil storage tanks and soil contamination being present on the property,

despite representations by the seller to the contrary. The trial court granted summary

judgment dismissal of all contract and common law claims, but reserved for trial the

buyer’s claim under the Model Toxics Control Act (MTCA), former ch. 70.105D (2016)

(this chapter was recodified as chapter 70A 305 RCW, effective July 11, 2020: we cite to

the former version, effective in 2017 at the time of the events in this case.). We reverse
No. 36896-3-III
Allegiance Properties LLC v. Richart

both rulings, thereby dismissing the MTCA cause of action, but remanding for further

proceedings the causes of action for fraud and misrepresentation.

                                          FACTS

       This appeal involves the purchase of a commercial parcel and building by

Allegiance from Janet Richart in 2015. After the filing of this suit, Richart died, and her

estate has been substituted as a party. We continue to refer to Janet Richart as the

defendant in this suit.

       In May 2001, Janet Richart purchased the purchaser’s interest in a real estate

contract for a commercial building, constructed in 1907, located on the southwest corner

of the intersection of Monroe Street and Carlisle Avenue in Spokane. Richart acquired

the property from Michael J. O’Brien and Marguerite V. O’Brien. While the O’Briens

owned the building, Allegiance’s principals, Kevin McKee and Robert Gilles, served as

property managers.

       In April 2001, before purchasing the commercial building, Janet Richart procured

a visual inspection report. Under the subheading “FUEL SOURCE,” the report

disclosed:

               There are several old pipes going into the ground on the SW corner
       of the building. It would be advisable to get information from the owner on
       the status of these tanks. Recommend checking with local fire department
       for closure and removal of these tanks. Normally they are to be closed and
       removed after 12 months, recommend further investigation.

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Clerk’s Papers (CP) at 564, 572. We do not know whether Richart asked the O’Briens

for more information regarding the status of the tanks before she purchased the building.

       In its appellate brief, Allegiance writes that, according to two declarations of

Banner Fuel employees, Janet Richart paid for the pumping of fuel oil into one of the

underground storage tanks and paid Banner Fuel to maintain one of the inside furnaces

that burned the oil stored in one or more of the tanks. Allegiance cites CP 61 and 63 for

the location of the declarations in the record. We find no such declarations at the

specified pages.

       During fifteen years of ownership of the Carlisle Avenue building, Janet Richart

operated an antique business, The Vintage Rabbit. In October of 2015, Richart and

Kevin McKee, managing member of Allegiance, discussed the sale of the building to

Allegiance. Richart’s real estate agent Ryan Towner prepared a purchase and sale

agreement, in which Richart offered to sell her vendee’s interest in the commercial

building to Allegiance for $410,000. Richart signed the proposed agreement on

November 4, 2015. Towner sent the agreement to McKee.

       Paragraph 5 of the November 4 proposed purchase and sale agreement, prepared

by Janet Richart’s agent, granted Allegiance a thirty-day contingency period, in which to

rescind the transaction if not satisfied with the condition of the property. The paragraph

stated, in part:

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Allegiance Properties LLC v. Richart

              Buyer’s obligations under this Agreement are conditioned upon
       Buyer’s satisfaction in Buyer’s sole discretion, concerning all aspects of the
       Property, including its physical condition; the presence of or absence of any
       hazardous substances. . . . This Agreement shall terminate and Buyer shall
       receive a refund of the earnest money unless Buyer gives written notice to
       Seller within 30 days . . . (the “Feasibility Period”) of Mutual
       Acceptance stating that this condition is satisfied.

CP at 19. Paragraph 12 of the agreement read:

              12. SELLER’S REPRESENTATIONS . . . There are no Hazardous
       Substances . . . currently located in, on, or under the Property in a manner
       or quantity that presently violates any Environmental Law . . . [T]here are
       no underground storage tanks located on the Property.

CP at 22.

       After November 4, 2015, Janet Richart and Kevin McKee negotiated the price for

the commercial building. Between November 4 and 10, Richart reduced her asking price

to $405,000. In turn, on November 10, 2015, Richart signed a seller’s disclosure

statement. In the statement, Richart checked boxes that declared she did not know if the

property contained any environmental substances or contamination and she did not know

whether any fuel storage tanks were present on the property. Richart handwrote “to

survive closing” on the first page of the seller’s disclosure statement. CP at 38.

       After receiving Janet Richart’s offer to sell the Carlisle Avenue building, Kevin

McKee, on behalf of Allegiance, attempted to hire an inspector that could complete an

inspection of the property within thirty days. McKee learned that, because of busy

schedules, no local inspector could complete a feasibility study within a month. So

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Allegiance Properties LLC v. Richart

Allegiance requested a ninety-day, rather than a thirty-day, inspection period from Janet

Richart. McKee typed a November 11, 2015 e-mail to Janet Richart’s real estate agent

Ryan Towner, which message read:

              Thanks Ryan. I think we may be just too far apart. At [$]365,000
       I’m willing to take the risk. At $405,000 with all the uncertainties, it is just
       not worth it. Not only are we looking at rehab costs—windows, brickwork,
       roof, heating, framing, lighting, flooring, plumbing, landscaping, asphalt,
       drainage—but also the unknowns. The property condition report indicates
       Jan doesn’t know a lot of the answers regarding the shape of the building.
       Are there buried oil tanks, lead, asbestos? What remediation is the city
       going to require? What about change of use requirements? I met with the
       fire marshal yesterday about something else, he was requiring a sprinkler
       system on that rehab. I suppose if Jan wanted to give me a 90 day
       feasibility study, and be willing to drop the price if there are any unknown
       costs or requirements, I could entertain a higher price. Otherwise, I’m
       done.
              Best of Luck,
              Kevin

CP at 122.

       After receiving Kevin McKee’s November 11 e-mail, Janet Richart lowered the

purchase price to $395,000. The parties did not amend the purchase and sale agreement

to extend the feasibility period beyond the thirty-day period contemplated in the original

draft agreement.

       On November 15, 2015, Kevin McKee, on behalf of Allegiance, signed the

purchase and sale agreement, whose front page contained numerous purchase price

numbers scribbled and interlineated with the final price being $395,000. Paragraphs 5

and 12 as initially drafted by Ryan Towner, respectively the paragraphs authorizing a

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Allegiance Properties LLC v. Richart

feasibility study and containing seller representatives, remained unchanged in the final

agreement.

       Under the Carlisle Avenue building purchase and sale agreement first drafted by

Ryan Towner, the sale would close within fourteen days after removal of all

contingencies. In the final signed agreement, the parties agreed to extend closing to

January 15, 2016. Thereafter, the parties mutually extended the closing date multiple

times until the sale closed on March 1, 2016.

       The purchase and sale agreement also included an Inspection Addendum executed

by the parties, bearing dates November 3 and November 10, 2015. Paragraph 1.a.

provided, in part:

              1. xa. INSPECTION CONTINGENCY. This Agreement is
       conditioned on Buyer’s subjective satisfaction with inspections of the
       Property and the improvements on the Property. Buyer’s inspections may
       include, at Buyer’s option and without limitation, the structural, mechanical
       and general condition of the improvements to the Property, compliance
       with building and zoning codes, an inspection of the Property for hazardous
       materials, a pest inspection, and a soils/stability inspection. The inspection
       must be performed by Buyer or a licensed person (or exempt from
       licensing) under Chapter 18.280 RCW.
              ....
              BUYER’S NOTICE. This inspection contingency SHALL
       CONCLUSIVELY BE DEEMED WAIVED unless within
       _______________days (10 days if not filled in) after mutual acceptance of
       this Agreement, (the “Initial Inspection Period”), Buyer gives notice (1)
       approving the inspection and waiving this contingency; (2) disapproving
       the inspection and terminating the Agreement; (3) that Buyer will conduct
       additional inspections; or (4) proposing repairs to the property or
       modifications to the Agreement. If Buyer disapproves the inspection and
       terminates the Agreement, the Earnest Money shall be refunded to Buyer

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Allegiance Properties LLC v. Richart

               ....
               ATTENTION BUYER: If Buyer fails to give timely notice, then
       this inspection contingency shall be deemed waived and Seller shall not be
       obligated to make any repairs or modifications.
               ....
               b. Additional Inspections. If an inspector so recommends, Buyer
       may obtain further evaluation of any item by a specialist at Buyer’s option
       and expense if, on or before the end of the Initial Inspection Period, Buyer
       provides Seller a copy of the inspector’s recommendation and notice that
       Buyer will seek additional inspections. If Buyer gives timely notice of
       additional inspections, Buyer shall have        10     (5 days if not filled in)
       after giving the notice to obtain the additional inspection(s) by a specialist.
               ....
               e. Oil Storage Tanks. Any inspection regarding oil storage tanks or
       contamination from such tanks shall be limited solely to determining the
       presence or non-presence of oil storage tanks on the Property, unless
       otherwise agreed upon in writing by Buyer and Seller.

CP at 35-36 (boldface omitted). In the original document, the parties hand marked the

box next to the numeral 1 at the beginning of the paragraph.

       Paragraph 4 of the Inspection Addendum included the following provision:

               4. WAIVER OF INSPECTION. Buyer has been advised to obtain
       a building, hazardous substances, building and zoning code, pest or
       soils/stability inspections, and to condition the closing of this Agreement on
       the results of such inspection, but Buyer elects to waive the right and buy
       the Property in its present condition. Buyer acknowledges that the decision
       to waive Buyer’s inspection options was based on Buyer’s personal
       inspection and Buyer has not relied on representations by Seller, Listing
       Broker or Selling Broker.

CP at 36 (boldface omitted). Unlike paragraph 1, the parties left the box next to the

numeral 4 in this paragraph blank.

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No. 36896-3-III
Allegiance Properties LLC v. Richart

       Before closing of the sale on March 1, 2016, Allegiance did not conduct any

feasibility studies or inspections, including environmental inspections. After execution of

the purchase and sale agreement on November 6, 2015, Allegiance never sought an

extension of the feasibility study period.

       After closing on the purchase of the vendee’s interest, Allegiance took possession

of the Carlisle Avenue building. In May of 2016, an inspector from the city of Spokane

found evidence of underground storage tanks on the property. Kevin McKee contacted

Rob’s Demolition, a company that removes underground storage tanks. After

discovering nine underground heating oil tanks, Rob’s Demolition removed five of the

tanks and filled the remaining four. All nine abandoned tanks were previously used to

store heating oil for the building. Each tank was approximately 300 gallons in size.

Rob’s Demolition sent soil samples taken around all nine underground storage tanks to

Test America, whose testing revealed petroleum contaminated soil below one of the

tanks, numbered tank 7.

       Allegiance reported the soil contamination to the Washington State Department of

Ecology (DOE). DOE recommended that Allegiance excavate and remove the

contamination. According to Jeffrey Leppo, a senior environmental geologist and owner

of Leppo Consulting, LLC, Allegiance failed to notify the public under the provisions of

MTCA before conducting remediation work on the Carlisle Avenue land.

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No. 36896-3-III
Allegiance Properties LLC v. Richart

                                       PROCEDURE

       Allegiance sued Janet Richart alleging that Richart failed to disclose the existence

of the nine underground storage tanks on the Carlisle Avenue property. CP 3-16.

Allegiance asserted claims for: (1) fraud, (2) intentional misrepresentation, (3) negligent

misrepresentation, (4) breach of warranty, (5) relief under MTCA, (6) violation of the

Consumer Protection Act, ch. 19.86 RCW, and (7) breach of written contract. Allegiance

sought damages, but not rescission of the sale.

       Janet Richart denied liability under all claims. Richart raised the affirmative

defenses, among others, of actual knowledge by Allegiance of the existence of

underground storage tanks, waiver, estoppel, and failure to comply with MTCA.

       Janet Richart moved for summary judgment. In a declaration in support of her

motion for summary judgment, Richart denied any memory, at the time of selling the

Carlisle Avenue property to Allegiance, of the fifteen-year-old inspection report she

obtained when she purchased the Carlisle Avenue building. She sought dismissal of all

but the MTCA claims on the basis that she never misrepresented the condition of the

property and Allegiance assumed any risk of the presence of underground tanks and soil

contamination.

       As part of her summary judgment motion, Janet Richart also argued that

Allegiance, in equity or contractually, waived its right to assert and was estopped from

asserting an MTCA claim. Richart declared that she never received written advance

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No. 36896-3-III
Allegiance Properties LLC v. Richart

notice, before Allegiance’s contractor performed remedial work. She also declared that,

during her ownership of the property, the underground storage tanks were not used.

Richart averred that she never used or disposed of any heating oil from the tanks.

      During summary judgment oral argument, Janet Richart’s counsel commented:

             But let’s talk a little bit about MTCA and what is and isn’t. Okay.
      We never said that she isn’t a PLP [potentially liable person]. That’s
      conceded. Under the statutory definition, she’s a PLP. The issue isn’t
      whether she’s a PLP. The issue is whether at the time she was a PLP, an
      owner/operator, there was a release on the property. And we’ve presented
      evidence, in the way of her declaration, that there was no evidence of a
      release during the time they owned it. Counsel said something again, no
      evidence in the record, he said all ten tanks leaked. No evidence in the
      record of that. There was evidence of one tank that leaks.

Report of Proceedings (RP) at 50.

      The trial court granted Janet Richart’s motion for partial summary judgment as to

Allegiance’s claims for fraud, intentional misrepresentation, negligent misrepresentation,

breach of contract, breach of warranty, and the Consumer Protection Act. Summary

judgment was denied on the MTCA claim. The trial court later denied motions for

reconsideration filed by each party. This court’s commissioner granted discretionary

review of the summary judgment rulings.

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Allegiance Properties LLC v. Richart

                                   LAW AND ANALYSIS

                                       Feasibility Period

       In a letter decision granting summary judgment, the trial court emphasized that, in

Kevin McKee’s November 11, 2015 e-mail message, Allegiance forwarded a

counteroffer to Janet Richart, which offer included new terms. Allegiance wanted a

$40,000 reduction in price and ninety days to conduct a feasibility study. According to

the trial court, the parties, following the counteroffer, agreed to a $10,000 price reduction

and a ninety days feasibility study. The court noted that, absent Allegiance’s request for

ninety days to complete a feasibility study, Allegiance would have been entitled to the

property in the condition warranted by Janet Richart. We agree with Allegiance that the

trial court misread the e-mail and the parties’ conduct thereafter. The parties never

agreed to extend the feasibility period, or, at the least, a dispute of facts exists as to

whether the parties agreed to extend the feasibility period.

       We review a trial court’s decision on a motion for summary judgment de novo.

Clark County Fire District No. 5 v. Bullivant Houser Bailey P.C., 180 Wash. App. 689,

698, 324 P.3d 743 (2014). When reviewing a summary judgment order, this court

engages in the same inquiry as the trial court by viewing the facts and all reasonable

inferences in the light most favorable to the nonmoving party. Lunsford v. Saberhagen

Holdings, Inc., 166 Wash. 2d 264, 270, 208 P.3d 1092 (2009). Summary judgment is

appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on

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No. 36896-3-III
Allegiance Properties LLC v. Richart

file, together with the affidavits, if any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to a judgment as a matter of law.” CR

56(c). A material fact is one on which the outcome of the litigation depends in whole or

in part. Atherton Condominium Apartment-Owners Association Board of Directors v.

Blume Development Co., 115 Wash. 2d 506, 516, 799 P.2d 250 (1990). The nonmoving

party in a summary judgment may not rely on speculation. Specialty Asphalt &

Construction, LLC v. Lincoln County, 191 Wash. 2d 182, 191, 421 P.3d 925 (2018). .

       We observe that the purchase and sale agreement falls silent on enlarging the

feasibility period. The trial court mistakenly conflated the extensions of the closing date

with the the contract feasibility period. Janet Richart did not even argue before the trial

court that she extended the feasibility period to ninety days.

       No document shows that Janet Richart agreed to an extension of the feasibility

period. Instead, she counteroffered to Allegiance’s counteroffer with another offer that

contained no promise to extend the period. Generally, a purported acceptance that

changes the terms of the offer in any material respect operates only as a counteroffer and

does not consummate a contract. Sea-Van Investments Associates v. Hamilton, 125
Wash. 2d 120, 126, 881 P.2d 1035 (1994). Therefore, Janet Richart’s response to Kevin

McKee’s November 11 e-mail message canceled any of the terms mentioned by McKee

in the message. Allegiance instead accepted Richart’s counterproposal, and the executed

purchase and sale agreement retained the thirty-day feasibility period.

                                              12
No. 36896-3-III
Allegiance Properties LLC v. Richart

       Section 22(a) of Allegiance’s and Janet Richart’s executed purchase and sale

agreement contained an integration clause. The subparagraph read:

              Complete Agreement. This Agreement and any addenda and
       exhibits thereto state the entire understanding of Buyer and Seller regarding
       the sale of the Property. There are no verbal or other written agreements
       which modify or affect the Agreement.

CP at 26 (emphasis added). An integration clause is a strong indication that the parties

intended complete integration of a written agreement. M.A. Mortenson Co. v. Timberline

Software Corp., 140 Wash. 2d 568, 579-80, 998 P.2d 305 (2000).

       At the time Kevin McKee sent the November 11, 2015 e-mail, the parties

continued negotiations. Had the parties intended for a ninety days feasibility study as

contemplated by the e-mail, one would assume the written agreement, signed four days

later by the buyer, would have altered the feasibility period clause.

       In her declaration, Janet Richart testified that she extended the feasibility study

period. Nevertheless, Kevin McKee denied this allegation in his responding declaration.

Although this court need not resolve this factual dispute between Richart and McKee, the

records support McKee’s version of the facts.

       The trial court may have reasoned that multiple delays in closing resulted from

Allegiance’s desire for additional time to complete a feasibility study. The factual record

contains evidence that all delays resulted from gaining written approval of the underlying

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No. 36896-3-III
Allegiance Properties LLC v. Richart

seller and holder of the real estate contract. At the least, a question of fact exists as to

whether Janet Richart afforded Allegiance additional time for a feasibility study

                                     Acceptance of Risk

       Janet Richart contends that, even if the parties did not extend the feasibility study

period, Allegiance, by failing to inspect the Carlisle Avenue property during the thirty-

day feasibility period, accepted the property in its present condition and accepted the risk

of environmental contamination. In essence, Richart asserts waiver. Richart also

contends that, under language in the purchase and sale agreement and the inspection

addendum, Allegiance purchased the property “as is.” Richart cites primarily to

paragraph 4 of the inspection addendum to support her claim. Richart further argues that

Allegiance’s claims for fraud, intentional misrepresentation, and negligent

misrepresentation do not survive her summary judgment motion because the undisputed

facts show no justifiable reliance on any representations. We disagree.

       Allegiance contends that, since the feasibility period was never extended,

Allegiance was justified in relying on Janet Richart’s representations in paragraph 12(i)

and disclosures in the purchase and sale agreement. Allegiance urges that the

underground storage tanks were not reasonably ascertainable because it could not find

someone to conduct a phase I study in thirty days. Allegiance further contends it had no

duty to find the storage tanks based on Richart’s written representations.

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No. 36896-3-III
Allegiance Properties LLC v. Richart

       To analyze a claim of negligent misrepresentation, this court asks whether: (1) the

defendant made a negligent misrepresentation, (2) a party relied on the misrepresentation

causing the party harm, and (3) the party was justified in relying on the

misrepresentation. Hoel v. Rose, 125 Wash. App. 14, 18, 105 P.3d 395 (2004). To prevail

on a claim of negligent misrepresentation, a plaintiff must prove by clear, cogent, and

convincing evidence that he or she justifiably relied on the information that the defendant

negligently supplied. Hoel v. Rose, 125 Wn. App at 18. The law of fraud and intentional

misrepresentation also requires justifiable reliance. Whether a party justifiably relies on

information is a question of fact generally not amendable to summary judgment.

Babcock v. Mason County Fire District No. 6, 144 Wash. 2d 774, 792, 30 P.3d 1261 (2001).

       We confront principles of law and Washington decisions that clash. On the one

hand, when the complaining party can reasonably ascertain correct information, it may

not justifiably rely on the other party’s statement. Beckendorf v. Beckendorf, 76 Wash. 2d
457, 464, 457 P.2d 603 (1969); Rainier National Bank, Bellevue Midlakes Branch v.

Clausing, 34 Wash. App. 441, 446, 661 P.2d 1015 (1983). A plaintiff claiming negligent

misrepresentation must not have been negligent in relying on the representation. Ross v.

Kirner, 162 Wash. 2d 493, 500, 172 P.3d 701 (2007).

       On the other hand, when the seller gives the buyer a positive, distinct, and definite

representation, the buyer may rely on that representation and need not conduct further

inquiry concerning the particular facts involved. Douglas Northwest, Inc. v. Bill O’Brien

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No. 36896-3-III
Allegiance Properties LLC v. Richart

& Sons Construction, Inc., 64 Wash. App. 661, 679, 828 P.2d 565 (1992). Ordinary

prudence does not require a person to test the truthfulness of representations made to him

by another who intends the representations be believed and acted on, even though the

party to whom such representations are made may have an opportunity to ascertain the

truth for himself. Jennes v. Moses Lake Development Co., 39 Wash. 2d 151, 159, 234 P.2d
865 (1951). Under this rule, if the representations are of a character to induce action and

do induce it, the only question to be considered is whether the misrepresentations actually

deceived and misled the complaining party. Jennes v. Moses Lake Development Co., 39
Wash. 2d at 159. Under such circumstances, even if the buyer had relevant information

easily available to him or her, the buyer lacks any duty to review the information. Jennes

v. Moses Lake Development Co., 39 Wash. 2d at 159.

       We, at least for purposes of reviewing a summary judgment dismissal of the

buyer’s claim, rely on the second line of principles. Beckendorf v. Beckendorf and

Rainier National Bank, Bellevue Midlakes Branch v. Clausing contained no facts of a

definitive, written representation. In paragraph 12 of the purchase and sale agreement,

Janet Richart affirmatively proclaimed the lack of hazardous substances and underground

storage tanks on the Carlisle Avenue property. The second line of rules promotes

honesty and fair dealing in business transactions.

       Allegiance relies on two real estate boundary cases to support its proposition that

it had a right to rely on Janet Richart’s representations in the purchase and sale agreement

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No. 36896-3-III
Allegiance Properties LLC v. Richart

that there were no hazardous substances or underground storage tanks on the Carlisle

Avenue property. In Weinstein v. Sprecher, 2 Wash. App. 325, 467 P.2d 890 (1970), Max

and Florence Weinstein purchased a tract of land from E. E. Sprecher. The written

agreement described the tract as containing “30 acres more or less.” Weinstein v.

Sprecher, 2 Wash. App. at 326. Sprecher’s listing agreement with the selling broker also

mentioned the land contained 30 acres more or less. Weinstein viewed the land from the

road, but he did not walk the property because of the thickly wooded hillside. Four years

later, Weinstein discovered that the tract contained only 24.6 acres, rather than 30.

Weinstein sued and the Court of Appeals held that the doctrine of caveat emptor did not

apply. Instead, Weinstein had the right to rely on the seller’s representation that the tract

contained “30 acres more or less,” when the plot of land had no visible boundaries. The

court reasoned that the boundaries were neither defined nor ascertainable without a

survey. The court concluded that, under the circumstances, the buyer held no obligation

to perform a survey.

       In Alexander Myers & Company v. Hopke, 88 Wash. 2d 449, 565 P.2d 80 (1977), the

Supreme Court ruled that the buyer of land could justifiably rely on the purchaser’s

representations of acreage when the boundaries are not reasonably ascertainable and the

purchaser could not have determined them without a survey.

       We deem Weinstein and Myers analogous. In the two decisions, the buyer could

not reasonably ascertain the boundary lines of the purchased property without a survey.

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No. 36896-3-III
Allegiance Properties LLC v. Richart

Allegiance contends that, if a buyer need not perform a survey in order to justifiably rely

on the representations of a seller, it should be entitled to rely on a representation from the

seller as to the condition of the land without performing an environmental study.

Likewise, a question of fact exists as to whether Allegiance could have reasonably

ascertained the presence of underground storage tanks on the Carlisle Avenue property.

Although some piping may have suggested the presence of tanks, a reasonable person

might conclude, based on Janet Richart’s representations of the lack of tanks, that the

pipes served another purpose. We do not know the steps needed to determine the

presence of the tanks. Perhaps a potential buyer should dig throughout the entire

property to search for hidden problems, but we leave for a trier of fact the reasonableness

of such efforts.

       Even if Allegiance should have known of the existence of underground storage, a

question remains as to whether Allegiance should have known of the presence of

contamination. Ascertaining contamination might require the hiring of an environmental

specialist and significant and pricey work. A simple land survey may be easier to obtain

than a Phase I environmental investigation.

       We also deem Jenness v. Moses Lake Development Co., 39 Wash. 2d 151 (1951) apt.

The buyer of a tavern, restaurant, and hotel sued to rescind the transaction on the basis

that the seller misrepresented the income that the business had received. The seller

argued that the buyer had no right to rely on any representations of income since the

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No. 36896-3-III
Allegiance Properties LLC v. Richart

seller made the business’s accounting records available to the buyer and those records

would have shown the true financial condition of the business. The Supreme Court

reversed a ruling in favor of the seller and decreed rescission of the sale. Because of the

positive representations of income of the business, the buyer lacked any obligation to

review the accounting records made available to him. The buyer could reasonably rely

on the misrepresentations, which later proved to be false.

          On appeal, Janet Richart contends that Allegiance acknowledged its knowledge of

the risks associated with the property in Kevin McKee’s November 11, 2015 e-mail.

Richart adds that Allegiance contracted for inspection rights to resolve the unknowns,

which rights it failed to exercise. Finally, according to Richart, Allegiance cannot claim

justifiable reliance based on the “Waiver of Inspection” provision in the inspection

addendum. We disagree with each of these contentions.

          In his November 11 e-mail, Kevin McKee acknowledged the possibility of

underground tanks and environmental contamination. A reasonable trier of fact could

conclude that the knowledge of a possibility does not preclude Allegiance from arguing it

did not reasonably rely on Janet Richart’s representations of the absence of tanks and

contamination. To repeat, paragraph 12 of the purchase and sale agreement plainly

stated:

                 There are no Hazardous Substances . . . currently located in, on, or
          under the Property in a manner or quantity that presently violates any

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Allegiance Properties LLC v. Richart

       Environmental Law . . . [T]here are no underground storage tanks located
       on the Property.

CP at 22 (emphasis added).

       Kevin McKee wanted additional time for Allegiance to be able to perform a study

as to the underground conditions on the Carlisle Avenue property. Janet Richart refused

the additional time. Allegiance then agreed to purchase the property on Richart’s

promise that her representations about underground storage tanks would survive closing.

These additional facts could lead a trier of fact to conclude Allegiance justifiably relied

on Richart’s representations.

       Paragraph 4, the “Waiver of Inspection” provision, does not control the parties’

contractual relationship. Unlike the box next to paragraph 1 in the addendum, the parties

left the box next to paragraph 4 unmarked.

       Janet Richart also claims that, for purposes of Allegiance’s cause of action for

fraud, Allegiance provided the court no evidence conflicting with Richart’s declaration

that she did not know of the presence of underground storage tanks. We deem there to be

a question of fact as to the lack of knowledge. We recognize that in the seller’s

disclosure statement, Richart proclaimed a lack of knowledge of the presence of tanks.

Nevertheless, although she testified she had no memory of the visual inspection report

given to her fifteen years earlier and claimed that the report only mentioned the

possibility of tanks, she also specifically agreed to the lack of underground storage tanks

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No. 36896-3-III
Allegiance Properties LLC v. Richart

in the purchase and sale agreement. A trier of fact could reasonably conclude that one

does not positively represent the absence of a condition on her property unless she had

knowledge of the absence, particularly in light of the earlier report.

       Allegiance only assigns error to dismissal of its fraud and misrepresentation

claims. We deem intentional misrepresentation the same cause of action as fraud.

Therefore, we do not address the dismissal of the breach of warranty, breach of contract,

and Consumer Protection Act claims. We reverse dismissal of the fraud and negligent

misrepresentation claims on summary judgment.

                                           MTCA

       We now address Janet Richart’s cross-appeal. Richart contends that the trial court

mistakenly denied dismissal of Allegiance’s MTCA claim for six reasons. First, the court

erroneously rejected her defenses of estoppel and waiver. Second, Richart argues that

Allegiance failed to present any facts showing that underground storage tank 7, the only

tank suffering a leak, leaked during the time of Richart’s ownership of the Carlisle

Avenue property. Third, no facts show that Richart caused a release of any hazardous

substance that contributed to a threat or potential threat to human health or the

environment. Fourth, no facts show that Allegiance’s investigation and remediation

efforts constituted a substantial equivalent of a Department of Ecology conducted or

supervised remediation. Fifth, Allegiance failed to give public notice necessary to

impose liability on another party. Sixth, the parties made a mistake, for which Allegiance

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No. 36896-3-III
Allegiance Properties LLC v. Richart

should be responsible. Because we agree with Richart’s second contention, we do not

address her other arguments.

      MTCA states that “a person may bring a private right of action, including a claim

for contribution or for declaratory relief, against any other person liable under RCW

70.105D.040 for the recovery of remedial action costs” related to contamination of

property resulting from hazardous materials, including oil. Former RCW 70.105D.040

(2013) lists five ways a party can be liable under MTCA:

              (1) Except as provided in subsection (3) of this section, the
      following persons are liable with respect to a facility:
              (a) The owner or operator of the facility;
              (b) Any person who owned or operated the facility at the time of
      disposal or release of the hazardous substances;
              (c) Any person who owned or possessed a hazardous substance and
      who by contract, agreement, or otherwise arranged for disposal or treatment
      of the hazardous substance at the facility, or arranged with a transporter for
      transport for disposal or treatment of the hazardous substances at the
      facility, or otherwise generated hazardous wastes disposed of or treated at
      the facility;
              (d) Any person (i) who accepts or accepted any hazardous substance
      for transport to a disposal, treatment, or other facility selected by such
      person from which there is a release or a threatened release for which
      remedial action is required, unless such facility, at the time of disposal or
      treatment, could legally receive such substance; or (ii) who accepts a
      hazardous substance for transport to such a facility and has reasonable
      grounds to believe that such facility is not operated in accordance with
      chapter 70.105 RCW; and
              (e) Any person who both sells a hazardous substance and is
      responsible for written instructions for its use if (i) the substance is used
      according to the instructions and (ii) the use constitutes a release for which
      remedial action is required at the facility.

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No. 36896-3-III
Allegiance Properties LLC v. Richart

(Emphasis added). RCW 70A.305.020(22)(b), former RCW 70.105D.020, defines

“owner” for purposes of MTCA as including:

             (22) “Owner or operator” means:
             ....
             (b) In the case of an abandoned facility, any person who had owned,
      or operated, or exercised control over the facility any time before its
      abandonment. . . .

(Emphasis added.) Former RCW 70.105D.040 and former RCW 70.105D.020(22)(b)

repeatedly reference a “facility.” Under former RCW 70.105D020(8),

             “Facility” means (a) any building, structure, installation, equipment,
      pipe or pipeline (including any pipe into a sewer or publicly owned
      treatment works), well, pit, pond, lagoon, impoundment, ditch, landfill,
      storage container, motor vehicle, rolling stock, vessel, or aircraft, or (b)
      any site or area where a hazardous substance, other than a consumer
      product in consumer use, has been deposited, stored, disposed of, or placed,
      or otherwise come to be located.

      Allegiance reads the definition of “owner” under former RCW

70.105D.020(22)(b) together with former RCW 70.105D.040(1)(a) to argue that Janet

Richart faces liability because of abandonment of one or more storage tanks during

Richart’s ownership. Under this theory, Allegiance need not show that any leak from

tank 7 occurred during Richart’s ownership. Allegiance contends that the undisputed

facts show that all underground storage tanks were abandoned during Richart’s

ownership of the property since Allegiance never used the tanks once it purchased the

Carlisle Avenue property.

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No. 36896-3-III
Allegiance Properties LLC v. Richart

       Former RCW 70.105D.020(22)(b) mentions an owner of the facility “before its

abandonment.” We question the utility of Allegiance’s contention because the argument

assumes use of the tanks ended with its purchase of the Carlisle Avenue property. So the

abandonment came at the time of the purchase, and Janet Richart never owned the tanks

before the facility’s abandonment.

       More importantly, we disagree with Allegiance’s reading of the definition of

“owner of facility” when read with the definition of “facility” under former RCW

70.105D.020(8). The definition references a “storage container,” but, when reading the

statute as a whole, the language suggests looking at the facility as a whole if the same

person owns the entire property. Otherwise, the definition of “facility” could merely

reference a storage container or pipe.

       In Suddath Van Lines, Inc. v. Department of Environmental Protection, 668 So. 2d
209, 212 (Fla. Dist. Ct. App. 1996), the Florida appellate court, when reviewing

participation in the state’s abandoned tank restoration program under the Florida version

of MTCA, determined that the court must view the property as a whole, not the operation

of one tank or storage system when deciding whether the property constituted a “facility.”

Allegiance cites no case law that holds a court should look to discrete tanks when

determining when a facility has been abandoned.

       We note that, under former RCW 70.105D.040(1)(b), Janet Richart could incur

liability if the leak from tank 7 occurred during her ownership. We agree with Richart

                                            24
No. 36896-3-III
Allegiance Properties LLC v. Richart

that no facts support a conclusion that the leak occurred during her ownership. On

appeal, Allegiance does not argue to the contrary.

       Allegiance also contends that Janet Richart conceded, during summary judgment

oral argument, that she was a potentially liable person. We recognize that counsel,

during argument, inartfully commented that Richart “is a PLP [potentially liable

person.]” RP at 50. We are uncertain as to the full extent that counsel intended to agree

that Richart was a potentially liable party. He may have intended simply to state that,

during some window of time, Richart was an owner of the Carlisle Avenue property.

Nevertheless, when taken in context, we do not conclude that Richart conceded that she is

liable by reason of any release occurring during her ownership or by reason of

abandonment of the property or the tanks. After counsel remarked that “she’s a PLP,”

counsel proclaimed that Janet Richart argues that no leak of contamination occurred

during her ownership. RP at 50. Counsel added that Richart should be awarded

summary judgment because of the lack of evidence of any leak during her tenure at the

Carlisle Avenue property. Therefore, we conclude that counsel’s concession does not

preclude argument about the absence of evidence of a leak or absence of facts as to

abandonment of the facility, an argument related to the absence of a leak.

                                       Attorney Fees

       On appeal, Allegiance seeks recovery of its reasonable attorney fees and costs

under the purchase and sale agreement and under RCW 70.105D.080, now RCW

                                            25
No. 36896-3-III
Allegiance Properties LLC v. Richart

70A.305.080, a provision of MTCA. The contract and the statute afford the prevailing

party in an action recovery of reasonable attorney fees and costs. Under RAP 18.1(a), the

prevailing party is entitled to attorney fees and costs on appeal if requested and if

“applicable law grants to a party the right to recover reasonable attorney fees.”

       We are dismissing Allegiance’s request for contribution or indemnification under

MTCA. So Allegiance may not recover fees under MTCA. Although we have reversed

summary judgment dismissal of Allegiance’s claims for fraud and negligent

misrepresentation, we remand for further proceedings such that Allegiance has not

prevailed, at least not yet, on its claims. Therefore, we deny Allegiance an award of

reasonable attorney fees and costs under contract, subject to the trial court later awarding

fees incurred on appeal for the fraud and misrepresentation claims if Allegiance prevails.

       Janet Richart seeks recovery of reasonable attorney fees and costs, but only under

the purchase and sale agreement. Because we reverse judgment for Richart based on

claims stemming from the agreement, we deny Richart recovery of fees, subject to the

trial court later awarding fees incurred on appeal for the fraud and misrepresentation

claims if Richart prevails.

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No. 36896-3-III
Allegiance Properties LLC v. Richart

                                    CONCLUSIONS

      We reverse summary judgment dismissal of Allegiance’s causes of action for

fraud and misrepresentation. We reverse the trial court’s order denying Janet Richart

summary judgment dismissal of Allegiance’s MTCA claim and direct the trial court to

dismiss the MTCA cause of action.

      A majority of the panel has determined this opinion will not be printed in the

Washington Appellate Reports, but it will be filed for public record pursuant to RCW

2.06.040.

                                            _________________________________
                                            Fearing, J.

WE CONCUR:

______________________________
Korsmo, J.

______________________________
Pennell, C.J.

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