Court Opinion

ID: 4301365
Source: CourtListenerOpinion
Date Created: 2018-08-06 19:24:32.1413+00
Date Added: 2024-06-11T14:02:51.392658
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

 GOEBEL DESIGN GROUP, LLC, an                 )
                                                                                 , CP CI
                                                                                r"*
 Arizona limited liability company,           )          No. 77090-0-1
                                              )                                 MP     try-4
                      Respondent,             )         DIVISION ONE
                                              )                             *-or-
               v.                             )         UNPUBLISHED OPINION 7,7
                                                                             )Arl,
                                                                                 37-
                                              )                                  VC
 CLEAR NRG, LLC d/b/a INNOVA                  )                                  %I?    **4
 CONSTRUCTION, a Washington limited           )                                         =.."<
 liability company; WESTERN SURETY            )
 CO., a domestic/foreign insurer,             )
                                              )
                      Appellants.             )         FILED: August 6, 2018
                                              )

       APPELWICK, C.J. — The trial court found that the communication between
the parties' counsel constituted a settlement agreement under CR 2A. Clear

argues that no agreement was formed. We reverse and remand.

                                      FACTS

       Goebel Design Group LLC contracted with Clear NRG LLC1 to perform

services for a project. Clear agreed to (1) repair and install new carpet,(2) paint,

(3) remove and install new sconces, and (4) repair and install new wallcoverings.

Goebel believed Clear's performance was defective. On September 27, 2016,

Goebel filed a complaint against Clear for breach of contract, unjust enrichment, a

claim on Clear's bond, and attorney fees.

       After Goebel filed its complaint, attorneys for Goebel and Clear began

settlement discussions. Clear offered to settle for 12 monthly payments to Goebel

       1 Clear does business as lnnova Construction. We refer to it in this opinion
as "Clear."
No. 77090-0-1/2

of $2,550, with mutual waivers and releases of claims. Goebel offered to settle for

$50,000, and a personal guarantee by Clear's sole member, Nigel D'Hondt. Clear

declined, citing the personal guarantee. Goebel then offered to settle for $65,000

with no personal guarantee. Clear counteroffered to settle for $40,000 and a

personal guarantee, or $55,000 and no personal guarantee.

        Goebel made another offer to settle the lawsuit via e-mail on February 23,

2017:

        Hello David — my client is willing to do the following:

          •   Personal guarantee
          •    2K [(thousand)] a month
          •   25 months(may need extra month with interest)
          •   Confession of judgment
          •   Mutual releases
          •   6% interest on unpaid balance (will provide amortization
              schedule)/ 12% default interest

        The above is the deal. We are at the end of the road. Please confirm
        and 1 will prepare the documents. Thanks.

On March 13, 2017 Clear's counsel responded to this offer by stating, "Looking

like my client is inclined to accept your most recent settlement proposal. Devil is

in the details though. Send me the docs to review." On March 14, 2017, counsel

for Goebel then sent draft settlement documents to counsel for Clear. The

settlement documents included an attorney fee provision. Clear's counsel edited

those documents, and returned them to Goebel on March 15. That same day

counsel for Goebel responded that it had incorporated the majority of Clear's

changes, except for one substantive change. Clear responded that it had not

intended to make that change, and described that single rejection as "fine."

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No. 77090-0-1/3

       Five days after that exchange, counsel for Goebel e-mailed counsel for

Clear stating, "[J]ust checking in on the settlement agreement. Are we good?"

Clear's counsel responded the next day, "Waiting to hear back from my client."

One week later, on March 28, Goebel's counsel e-mailed Clear:

      David - can you please provide me with an update. I am having
      trouble understanding why this is taking so long. Please note, the
      first payment date of April 1. No matter where we are in the process,
      your client should be prepared to make that payment. Thank you.

The following day, on March 29, Clear's counsel responded, "Attached payment

being mailed to Goebel today. I will follow up with my client and try to get the

doc[ument]s executed." The message included an image of the check made out

to "Goebel Design Group." Goebel's attorney responded the same day by saying

"Thank you."

       But, on April 10, Clear's counsel e-mailed Goebel's counsel stating, "My

client is leaning towards choosing the option with the higher amount but no

personal liability. . . . My client is asking for credit for the $2,000 payment made on

4/1 to reduce the principal from 65K to 63K." Goebel's counsel responded by

stating,

      [W]e already have a deal and your client has started making
      payments in accordance with the terms of that deal. Even more, we
      already negotiated the terms of the settlement agreement and COJ
      [(confession of judgment)]. Please have your client execute the
      documents that we agreed to in the middle of March so that we can
      put this matter to rest.
       On April 24, 2017, Goebel filed a CR 2A motion to enforce the purported

settlement agreement. The trial court granted the motion, and denied Clear's

motion for reconsideration. Clear appeals.

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No. 77090-0-1/4

                                  DISCUSSION

       Clear makes three arguments on appeal. First, it argues that the trial court

erred in determining that an agreement was formed. Second, if there was an

agreement, it argues that the trial court erred in holding that that agreement is

enforceable against D'Hondt personally. Third, Clear argues that the trial court

erred in awarding attorney fees to Goebel under the agreement. Both parties seek

attorney fees on appeal.

  I.   Existence of Settlement Agreement

       First, Clear argues that no contract existed, because the parties'

communications were insufficient to create a contract.        The content of the

communications between the parties is not disputed. Instead, the parties simply

disagree as to whether those communications and acts were sufficient to create

an agreement.

       The court's authority to enforce a settlement agreement is derived from

court rule and statute. Howard v. Dimaggio, 70 Wash. App. 734, 737, 855 P.2d 335

(1993). CR 2A provides:

               No agreement or consent between parties or attorneys in
       respect to the proceedings in a cause, the purport of which is
       disputed, will be regarded by the court unless the same shall have
       been made and assented to in open court on the record, or entered
       in the minutes, or unless the evidence thereof shall be in writing and
       subscribed by the attorneys denying the same.
And, RCW 2.44.010 provides:

              An attorney and counselor has authority:

             (1) To bind his or her client in any of the proceedings in an
       action or special proceeding by his or her agreement duly made, or

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No. 77090-0-1/5

      entered upon the minutes of the court; but the court shall disregard
      all agreements and stipulations in relation to the conduct of, or any
      of the proceedings in, an action or special proceeding unless such
      agreement or stipulation be made in open court, or in presence of
      the clerk, and entered in the minutes by him or her, or signed by the
      party against whom the same is alleged, or his or her attorney.

Our Supreme Court has commented on the role of these two provisions as follows:

             The purpose of the cited rule and statute is to avoid such
      disputes and to give certainty and finality to settlements and
      compromises, if they are made. While the compromise of litigation
      is to be encouraged, negotiations toward a compromise are not
      binding upon the negotiators. Where, as here, it is disputed that the
      negotiations culminated in an agreement, noncompliance with the
      rule and statute leaves the court with no alternative. It must
      disregard the conflicting evidence as they direct.
Eddleman v. McGhan,45 Wn.2d 430, 432, 275 P.2d 729 (1954).

      An agreement is disputed within the meaning of CR 2A if there is a genuine

dispute over the existence or material terms of the agreement. In re Patterson, 93
Wash. App. 579, 583-84, 969 P.2d 1106 (1999). The party moving to enforce a

settlement agreement carries the burden of proving there is no genuine dispute as

to the material terms or existence of the agreement. Brinkerhoff v. Campbell, 99

Wn. App.692,696-97, 994 P.2d 911 (2000). If the moving party meets its burden,

"the nonmoving party must respond with affidavits, declarations, or other evidence

to show there is a genuine issue of material fact." Patterson, 93 Wn. App. at 584.

       This court reviews a decision regarding the enforcement of a settlement

agreement de novo. Lavigne v. Green, 106 Wash. App. 12, 16, 23 P.3d 515 (2001).

"The trial court follows summary judgment procedures when a moving party relies

on affidavits or declarations to show that a settlement agreement is not genuinely

disputed." Condon v. Condon, 177 Wash. 2d 150, 161-62, 298 P.3d 86(2013). The

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No. 77090-0-1/6

trial court must view the evidence in the light most favorable to the nonmoving

party and determine whether reasonable minds could reach but one conclusion.

Cruz v. Chavez, 186 Wash. App. 913, 920, 347 P.3d 912(2015).

       This court applies general principles of contract law to settlement

agreements. Id. A valid contract requires a meeting of the minds on the essential

terms. Evans & Son, Inc. v. City of Yakima, 136 Wn. App. 471,477, 149 P.3d 691

(2006).   Washington follows the objective manifestation test for contracts.

Keystone Land & Dev. Co. v. Xerox Corp., 152 Wash. 2d 171, 177, 94 P.3d 945

(2004). Accordingly, for a contract to form, the parties must objectively manifest

their mutual assent. Id. at 177-178. To determine whether a party has manifested

an intent to enter into a contract, this court imputes an intention corresponding to

the reasonable meaning of a person's words and acts. Multicare Med. Ctr. v. Dep't

of Soc. & Health Servs., 114 Wash. 2d 572, 587, 790 P.2d 124 (1990), overruled in

part on other grounds by Neah Bay Chamber of Commerce v. Dep't of Fisheries,

119 Wash. 2d 464, 832 P.2d 1310 (1992).             "Acceptance" is an expression,

communicated by word, sign, or writing to the offeror, of the intention to be bound

by the offer's terms. Veith v. Xterra Wetsuits, LLC, 144 Wash. App. 362, 366, 183
P.3d 334 (2008). Under the Restatement (Second) of Contracts § 53(Am. Law

Inst. 1981), an offeree may accept an offer by performance,' provided that the

offeror invites such an acceptance. And, a contract exists when the intention of

the parties is plain and the terms of a contract are agreed upon even if one or both

of the parties contemplated later execution of a writing. Veith 144 Wn.App. at 366.

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No. 77090-0-1/7

       To prevail, Goebel has the burden of identifying the acceptance of the

contract. Brinkerhoff, 99 Wn. App. at 696-97 ("[T]he 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."). Goebel's e-

mail of April 10, 2017 asserted an agreement was reached mid-March. On March

13, Clear's counsel stated, "Looking like my client is inclined to accept your most

recent settlement proposal.       Devil is in the details though.    Send me the

doc[ument]s to review." This statement suggests potential future acceptance—

"[l]ooking like"—but not outright acceptance by the client. When viewed in the light

most favorable to Clear, it is not an objective manifestation of assent to be bound

to the terms of Goebel's offer.

       Counsel then exchanged contract drafts. When counsel for Clear returned

the documents to Goebel on March 15, 2017, he stated, "I sent these to Nigel this

morning for his input. I haven't received his input back, but I sort of doubt he'll

have any further changes." When viewed in the light most favorable to Clear, it is

not an objective manifestation of assent to be bound to the terms of Goebel's offer.

       On March 21, 2017, Clear's counsel told Goebel that he was still waiting to

hear back from his client. Then, on March 28, Goebel demanded that "[n]o matter

where we are in the process, your client should be prepared to make that

payment." On March 29, Clear responded, "Attached payment being mailed to

Goebel today. I will follow up with my client and try to get the doc[ument]s

executed." He then mailed the $2,000 payment. Goebel could have meant that

"the process" was the process of formally executing the agreed upon terms, rather

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No. 77090-0-1/8

than negotiating a settlement.       But, Goebel's subjective intent is irrelevant.

Keystone, 152 Wn.2d at 177("Washington follows the objective manifestation test

for contracts."). The "process" was susceptible to at least two meanings. As such,

Goebel's e-mail cannot be read as stating that an initial payment will be a

manifestation of acceptance of settlement. Clear's e-mail response did not state

acceptance of the proposed agreement. In a light most favorable to Clear, this e-

mail exchange, coupled with the payment, does not demonstrate an objective

manifestation of assent to the proposed terms.

        Under the summary judgment standard applicable here, Goebel did not

carry its burden. A reasonable trier of fact could conclude that the parties did not

reach an agreement. We reverse the trial court's decision finding that the parties

reached a CR 2(a) agreement. And, because we conclude that no agreement was

reached, we reverse the trial court's award of attorney fees to Goebel, and need

not address whether the agreement is personally enforceable against D'Hondt.

  II.   Attorney Fees

        Clear argues that it is entitled to fees on appeal. The draft agreement sent

from Goebel to Clear contained an attorney fee provision. That provision remained

unchanged in the redlined document Clear returned to Goebel.

        RCW 4.84.330 provides for fees in any action on contracts with an attorney

fee provision:

        In any action on a contract or lease ... , where such contract or
        lease specifically provides that attorneys' fees and costs, which are
        incurred to enforce the provisions of such contract or lease, shall be
        awarded to one of the parties, the prevailing party, whether he or she
        is the party specified in the contract or lease or not, shall be entitled

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No. 77090-0-1/9

        to reasonable attorneys' fees in addition to costs and necessary
        disbursements.

In Herzog Aluminum, Inc. v. General American Window Corp., this court observed

that "the broad language li]n any action on a contract' found in RCW 4.84.330

encompasses any action in which it is alleged that a person is liable on a contract."

39 Wash. App. 188, 197, 692 P.2d 867, 872 (1984)(alteration in original). And, in

Strvken v. PaneII, we interpreted this principle from Herzog as recognizing "a right

to fees in a defendant who successfully proved, in an action on a contract, that no

contract had been formed." 66 Wash. App. 566, 572, 832 P.2d 890(1992).

        Here, Clear is a defendant in an action on a purported contract with a fee

provision that has successfully proved that no contract had been formed.

Therefore, Clear is entitled to its reasonable costs on appeal, including attorney

fees.

        We reverse the trial court's order recognizing a settlement agreement and

awarding reasonable attorney fees to Goebel, award Clear its reasonable costs

and fees on appeal, and remand to the trial court for further proceedings consistent

with this opinion.

WE CONCUR:

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