Court Opinion

ID: 4995031
Source: CourtListenerOpinion
Date Created: 2021-09-27 20:20:40.245231+00
Date Added: 2024-06-11T08:16:48.860908
License: Public Domain

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON

MOSES LAND GROW, LLC, a                               No. 81603-9-I
Washington Limited Liability Company
                                                      DIVISION ONE
                    Respondent,
                                                      UNPUBLISHED OPINION
             v.

BRICKSTONE HOLDINGS, LLC, a
Washington Limited Liability Company;
MICHAEL SCOTT FLADSETH and JANE
DOE FLADSETH, husband and wife, and
their marital community,

                    Appellant.

       ANDRUS, A.C.J. — Michael Fladseth appeals a judgment entered against

 him in favor of his former joint venture partner, Moses Land Grow, LLC (MLG). He

 contends material issues of fact precluded summary judgment on MLG’s claims of

 breach of contract and misrepresentation.       He also argues the trial court

 miscalculated the judgment amount. We disagree and affirm.

                                      FACTS

       In March 2017, Fladseth and MLG formed Brickstone Holdings, LLC

 (Brickstone), a joint venture engaged in the business of purchasing and developing

 real property located at 10843 1st Avenue South in Seattle. They signed an
No. 81603-9-I/2

operating agreement under which Fladseth agreed to act as manager of Brickstone

and to make an initial capital contribution of “one half (1/2) of the $550,000

purchase price and related costs.”            Fladseth agreed to serve without

compensation. MLG agreed to make, as its initial capital contribution, “half (1/2)

of the $550,000 purchase price and related costs by wire transfer to escrow for

closing and additional development costs thereafter.” If either member failed to

make their initial capital contribution within ten days from the effective date of the

operating agreement, the defaulting member’s interest would terminate.

       As manager, Fladseth was given the authority to make “all decisions

concerning the operation and management of the Company’s business,” including

executing loans and encumbrances of the company and its assets. But on the

same day the parties executed the operating agreement, they also executed a

corporate resolution that provided that “[a]ny single expense in excess of $20,000

. . . shall be approved by a majority of the members before it is executed by the

manager.”

       It is undisputed that MLG made its initial capital contribution of $275,000 to

fund its 50 percent share of the property purchase. MLG subsequently discovered

that Fladseth never made a cash capital contribution. Instead, in late April 2017,

Fladseth, on behalf of Brickstone, obtained a loan of $297,840 from a lender

named Eastside Funding, LLC (Eastside) and used the loan proceeds to fund his

share of the purchase price. Fladseth also executed an “Unconditional Guaranty

of Payment and Performance,” purportedly on behalf of MLG, in which he

committed MLG to repaying the Eastside promissory note. MLG’s representative,

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No. 81603-9-I/3

Julinda Juniarty, testified that Fladseth was never a manager, member, or agent

of MLG and had no authority to execute any loan guaranty on its behalf. Fladseth

did not dispute this evidence.

        At the same time Fladseth signed the loan documents for the purchase of

the property, he entered into a separate construction loan agreement with

Eastside, under the terms of which Eastside agreed to lend Brickstone

$154,500.00 to finance its development and construction expenses. He executed

a “Construction Promissory Note,” agreeing to pay off the balance of the note by

September 16, 2017. And Fladseth executed a “Construction Deed of Trust,

Security Agreement and Fixture Filing,” pledging the property as collateral for the

loan.

        The purchase closed on or about April 21, 2017. Juniarty testified that

before the sale closed, Fladseth showed her what purported to be an estimated

settlement statement for the property and this statement did not reflect the fact that

Brickstone had taken out any loans to fund the acquisition.

        When MLG discovered that Fladseth had used loan proceeds to fund his

share of the purchase price and that Fladseth had signed a guaranty in MLG’s

name, Juniarty demanded that Fladseth be personally responsible for the loan. On

May 1, 2017, Fladseth signed a document entitled “Brickstone Holdings LLC

Resolution re: Fladseth Loan Responsibility” (the May 1 Promissory Note) in which

he acknowledged his personal responsibility for the loan he had taken out in

Brickstone’s name. The document further provided:

               M. Scott Fladseth agrees that this resolution, both in concert
        with the Operating Agreement and as a free standing instrument,

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No. 81603-9-I/4

       shall serve as a binding contract, agreement, and promissory note
       reflecting his responsibility for the 1st Street project loan as set forth
       above subject to full enforcement under the Laws of the State of
       Washington.

       In October 2017, Fladseth took out a new loan for $280,000, doing so this

time in his name personally and in the name of Brickstone, from a new lender,

Kevin Downey. He executed a new promissory note and agreed to repay it with

interest at a rate of 12 percent by August 19, 2018. Fladseth also executed, on

behalf of Brickstone, a deed of trust, again pledging the property as collateral for

the loan. Fladseth used the proceeds from this loan to pay off the Eastside

construction loan of $154,500.

       There is no evidence in the record that Fladseth incurred any costs to

renovate any portion of the property. According to Fladseth, he immediately began

looking for buyers for the warehouse. He testified that Juniarty was anxious to sell

the property and wanted him to find a buyer quickly. Although Fladseth secured a

few offers, each fell through.

       In July 2018, MLG initiated litigation against Fladseth and Brickstone,

alleging that Fladseth had not made a capital contribution as required by the

operating agreement, that Fladseth had taken out loans in Brickstone’s name and

encumbered the property without MLG’s knowledge or consent, and that Fladseth

had misappropriated rental income. MLG alleged claims of breach of fiduciary

duty, fraud or misrepresentation, fraudulent concealment, breach of contract, and

conversion, and sought an accounting from Fladseth, an injunction removing him

as manager of the company, and a dissolution of Brickstone.

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No. 81603-9-I/5

      On October 8, 2018, Fladseth executed a purchase and sale agreement

with a buyer named Todd Bell for the price of $930,000, subject to financing and a

45-day feasibility study. On October 22, 2018, the court appointed a custodial

receiver to take over management of Brickstone.          The receiver took over

negotiations relating to the ultimate sale to Bell. On December 14, 2018, the court

approved the sale of the property to Bell. Although the revised purchase and sale

agreement is not in the record, the excise tax affidavit shows the final purchase

price was of $900,000.

      As directed by the trial court, the receiver used the proceeds of the sale to

pay off the debts Fladseth had caused Brickstone to incur. After paying off the

company’s loans, the closing costs, taxes, and sales commissions, the net

proceeds of the sale were $101,154.49. As required by the order authorizing the

sale, the receiver deposited those proceeds with the registry of the King County

Superior Court.

      MLG moved for summary judgment on two of its claims, breach of contract

and misrepresentation. It sought $397,905.83 in damages from Fladseth. It also

filed a motion to have the net sales proceeds on deposit with the court distributed

to MLG to offset Fladseth’s debt.

      In November 2019, the trial court granted MLG’s motions, finding Fladseth

liable for breach of contract and misrepresentation. It awarded MLG $397,905.83,

to be offset by the amount disbursed to MLG from the remaining sale proceeds.

The court subsequently awarded MLG attorney fees of $39,694, and costs of

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No. 81603-9-I/6

$2,163.32, based on a provision in the operating agreement. It entered final

judgment against Fladseth after MLG voluntarily withdrew all remaining claims.

       Fladseth appeals the judgment against him.

                                     ANALYSIS

       Fladseth argues the trial court erred in granting summary judgment because

there are questions of fact as to whether he breached the operating agreement or

misrepresented his capital contribution and whether he caused MLG to incur any

damages. We disagree.

       Summary judgment is appropriate when there are no genuine issues of

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

56(c); Messenger v. Whitemarsh, 13 Wn. App. 2d 206, 210, 462 P.3d 861 (2020).

“A genuine issue of material fact exists when reasonable minds could differ on the

facts controlling the outcome of the litigation.” Messenger, 13 Wn. App. 2d at 210

(quoting Dowler v. Clover Park Sch. Dist. No. 400, 172 Wn.2d 471, 484, 258 P.3d

676 (2011)).

       If the moving party satisfies its initial burden of showing no issues of fact

exist, the burden shifts to the nonmoving party to bring forth specific facts to rebut

the moving party's contentions. Elcon Constr., Inc. v. E. Wash. Univ., 174 Wn.2d

157, 169, 273 P.3d 965 (2012). Although all facts and reasonable inferences must

be interpreted in the light most favorable to the nonmoving party, Messenger, 13

Wn. App. 2d at 210, “[t]he nonmoving party may not rely on speculation,

argumentative assertions, ‘or in having its affidavits considered at face value; for

after the moving party submits adequate affidavits, the nonmoving party must set

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No. 81603-9-I/7

forth specific facts that sufficiently rebut the moving party's contentions and

disclose that a genuine issue as to a material fact exists.’” Becker v. Wash. State

Univ., 165 Wn. App. 235, 245-46, 266 P.3d 893 (2011) (quoting Seven Gables

Corp. v. MGM/UA Entm't Co., 106 Wn.2d 1, 13, 721 P.2d 1 (1986)).

       We review rulings on summary judgment de novo. Messenger, 13 Wn. App.

2d at 210.

Breach of Contract

       Fladseth first argues that the trial court erred in granting summary judgment

because there are issues of fact as to whether he breached the operating

agreement. MLG argued below that Fladseth breached the operating agreement

by failing to make a cash capital contribution within ten days of the effective date

of that agreement and he violated the expenditure resolution by taking out a

construction loan, well in excess of the $20,000 limit, without MLG’s authorization

or consent. Fladseth contends he pledged a promissory note for his half of the

purchase price and this pledge constituted a permissible capital contribution under

the language of the operating agreement. He also maintains that he had the

authority under the operating agreement to encumber the property and the

corporate expense resolution did not limit his ability to take out loans on

Brickstone’s behalf. We address each issue in turn.

Fladseth’s Capital Contribution

       The operating agreement required each member of Brickstone to make an

initial capital contribution of one-half of the $550,000 purchase price within ten

days of the effective date of the operating agreement.

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No. 81603-9-I/8

      Fladseth concedes he contributed no cash to Brickstone or to the purchase

of the property.    Instead, Fladseth argues he made a non-monetary capital

contribution by pledging to repay the $297,840 loan he took out in Brickstone’s

name. There are several problems with this argument.

      First, the operating agreement became effective on March 28, 2017, when

Fladseth and MLG executed it. Fladseth did not execute any promissory note until

May 1, 2017, more than 10 days after the operating agreement’s effective date. If

the May 1 Promissory Note was an acceptable non-monetary capital contribution,

he did not make it until after the expiration of the 10-day period. Based on this

undisputed evidence, Fladseth breached paragraph 3.3 of the operating

agreement and his membership in Brickstone terminated on the day of breach.

      Second, paragraph 1.7 of the operating agreement defined “Capital

Contribution” as:

             [T]he amount of money, the forgiveness of any debt, and the
      Fair Market Value of any services or property (other than money)
      contributed to the Company (net of liabilities secured by such
      contributed property that the Company is considered to assume or
      take “subject to” under IRC Section 752) in consideration of a
      Percentage Interest held by such Member. A Capital Contribution
      shall not be deemed a loan.

“Fair Market Value” is also a defined term. The “Fair Market Value” of any property

contributed by a member to the company “shall be the value of such property, as

mutually agreed by the contributing Member and the Company.”

      These provisions of the operating agreement required Fladseth to

contribute either money or other “property” with an agreed-upon fair market value.

There is no evidence in the record that Fladseth and Brickstone reached an

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No. 81603-9-I/9

agreement on the value of Fladseth’s pledge to repay the Brickstone loan.

Depending on Fladseth’s personal wealth (or lack thereof) and assets he owned

to back up this promissory note, its fair market value could have been zero.

      Fladseth contends that RCW 25.15.191 permits members to pledge

promissory notes as their capital contributions in limited liability companies. That

statute provides:

      The contribution of a member to a limited liability company may
      consist of tangible or intangible property or other benefits to the
      limited liability company, including money, services performed,
      promissory notes, other agreements to contribute cash or property,
      or contracts for services to be performed.

But under RCW 25.15.018(1), the limited liability company agreement governs

relations among members. Chapter 25.15 RCW only governs “[t]o the extent the

limited liability company agreement does not otherwise provide . . .” RCW

25.15.018(2). Because the parties to this operating agreement expressly defined

what the members considered to be acceptable initial capital contributions, RCW

25.15.191 does not apply. While the word “property” in paragraph 1.7 of the

operating agreement could conceivably include a promissory note, because a

promissory note may be a type of intangible property, In re Davis, 35 B.R. 795,

799 (Bankr. W.D. Wash. 1983) (intangible property includes stocks, bonds,

promissory notes and franchises), the value of any such property remained subject

to an agreement between the member and the company as to that property’s fair

market value. No such agreement existed here.

      Finally, even if the parties had agreed that Fladseth could contribute a

promissory note as his initial capital contribution, he presented no evidence that

                                       -9-
No. 81603-9-I/10

the note had an actual value of one-half of the purchase price, as required by

paragraph 3.2 of the operating agreement. Generally, when a member’s capital

contribution is only that member’s own promissory note, the member’s capital

account would be $0. See 31 DALE CARLISLE & BROOKE JOHNSON, W ASHINGTON

PRACTICE, W ASHINGTON BUSINESS LAW 804 cmt. to 25.15.191 (2019 ed.).            If

Fladseth’s promissory note had a value of $0, he cannot claim he contributed one-

half of the $550,000 purchase price.

      The trial court did not err in concluding that there were no genuine issues

of material fact regarding Fladseth’s breach of the operating agreement based on

his non-payment of one-half of the purchase price within ten days of the execution

of that agreement.

Construction Loan as Encumbrance and Not Expense

      Fladseth also contends he did not breach the operating agreement by taking

out loans in Brickstone’s name because he was authorized to execute loans and

to encumber the property. We agree in part and disagree in part.

      Section 5.1 of the operating agreement provided:

      Except as otherwise set forth in this Agreement, all decisions
      concerning the operation and management of the Company’s
      business shall be made by the Manager, and the decisions and the
      day to day operations of the Company shall be executed by the
      Manager. This includes, but is not limited to, execution of loans and
      encumbrances of the Company and its assets and holdings both real
      and chattel, entry of contracts and agreements on behalf of the
      Company and concerning its assets and holdings both real and
      chattel, and sale, disposition, acquisition, and any other action
      related to current, future, or past assets and holdings of the Company
      both real and chattel.

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No. 81603-9-I/11

The expense resolution, executed simultaneously, provided that “[a]ny single

expense in excess of $20,000 . . . shall be approved by a majority of the members

before it is executed by the manager.” At issue is whether this “expense” restriction

applied to the $297,840 loan Fladseth executed to effectuate the acquisition of the

property, the $154,500 loan Fladseth executed to cover anticipated development

costs after the sale closed, or the $280,000 loan Fladseth executed to pay off the

$154,500 loan.

        The parties clearly contemplated that Brickstone would incur costs to

acquire the land and additional costs to develop it. The operating agreement

provided that “the LLC is engaged in the business of purchasing and developing

the land at 10843 1st Ave South in Seattle WA 98168.”

        But paragraph 3.2 of the operating agreement contemplated that all of

Brickstone’s acquisition costs would be covered by each member’s initial capital

contribution. If, as Juniarty testified, MLG believed that each member would be

contributing 50 percent of the cost to acquire the land, there would have been no

reason to cap Fladseth’s borrowing authority for the acquisition. And there is

nothing in the expense resolution that suggests the contrary. We conclude the

expense limitation resolution did not limit Fladseth’s authority to execute a loan to

acquire the land. 1

        But the expense limitation did apply to Fladseth’s ability to incur expenses

for developing the property. Paragraph 3.2.2 of the operating agreement contains

1
 We do not suggest that Fladseth acted appropriately by incurring this debt. He admitted that the
$297,840 loan was for his personal benefit, and not the benefit of Brickstone, when he signed the
May 1 Promissory Note and took responsibility for paying off the loan.

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No. 81603-9-I/12

MLG’s agreement to be responsible for covering “additional development costs”

that Brickstone incurred after acquisition. It makes sense that MLG would limit

Fladseth’s spending authority on such development costs given MLG’s

commitment to cover them.             We therefore conclude the expense limitation

resolution did limit Fladseth’s authority to spend money to develop this property or

to borrow money to cover such expenses.

        There is no evidence Fladseth sought MLG’s consent for the construction

loan or for any development expenses. When Fladseth signed the construction

loan agreement with Eastside, he represented to the lender that the loan proceeds

would be used to cover the cost of developing and constructing a “residential

dwelling” on the property. 2 According to Eastside’s records, it advanced $150,000

to Brickstone on or about May 1, 2017. Juniarty testified that “Mr. Fladseth told

[MLG] that he would provide [MLG] with an accounting for the “ʻrenovationʼ” costs

he had undertaken for the Property. To date, he has never provided such an

accounting.” Fladseth did not dispute this testimony.

        Indeed, there is no evidence of what Fladseth did with the funds Eastside

advanced to Brickstone. Fladseth produced a WhatsApp chat log of messages he

and Juniarty exchanged between October 26, 2017 and July 26, 2019 to

demonstrate that he kept her updated on his progress in trying to sell the property.

But not a single message relates to expenses Fladseth wanted or needed to incur

to develop the property before he could market or sell it. These messages all relate

to prospective purchasers, anticipated sale dates and renting the warehouse

2
 We assume the reference to a residential dwelling was an error given that Fladseth testified the
property Brickstone acquired was a small commercial warehouse.

                                             - 12 -
No. 81603-9-I/13

space to tenants pending sale. There is no evidence Fladseth sought or obtained

MLG’s approval, orally or in writing, for any development costs associated with this

property, despite incurring liability to Eastside for $150,000 in development costs.

The trial court did not err in concluding that, based on this record, there are no

disputed facts that Fladseth violated the spending limit resolution by borrowing

$150,000 for development costs he never incurred.

      Fladseth appears to suggest that he improved the property in some way just

based on the difference between the May 2017 purchase price of $550,000 and

the December 2018 sales price of $900,000. But if Fladseth had invested money

to improve the property, he would have been in the best position to identify these

improvements. He provided no such evidence. And facts required to defeat a

motion for summary judgement must be based on more than mere possibility or

speculation. Doe v. Dep't of Transp., 85 Wn. App. 143, 147, 931 P.2d 196 (1997).

There is nothing in the record to suggest that Fladseth invested any funds in the

property in order to enhance its value.

      The uncontested evidence demonstrates that Fladseth breached the

operating agreement by not making the requisite capital contribution within ten

days of the execution of the operating agreement and by exceeding the expense

spending limit by borrowing $154,500 for development costs and then not using

the proceeds for these expenses. Summary judgment on the contract claim was

appropriate.

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No. 81603-9-I/14

Negligent Misrepresentation

       Fladseth next argues the trial court erred when it found him liable for

misrepresentation because (1) he did not misrepresent his capital contribution to

MLG; (2) MLG did not rely on any such misrepresentation; and (3) MLG was not

damaged by any misrepresentation.

       To establish negligent misrepresentation, MLG must show:

       (1) the defendant supplied information for the guidance of others in
       their business transactions that was false, (2) the defendant knew or
       should have known that the information was supplied to guide the
       plaintiff in [their] business transactions, (3) the defendant was
       negligent in obtaining or communicating the false information, (4) the
       plaintiff relied on the false information, (5) the plaintiff's reliance was
       reasonable, and (6) the false information proximately caused the
       plaintiff damages.

Merriman v. Am. Guar. & Liab. Ins. Co., 198 Wn. App. 594, 613, 396 P.3d 351

(2017) (quoting Ross v. Kirner, 162 Wn.2d 493, 499, 172 P.3d 701 (2007).

       MLG contended that Fladseth committed misrepresentation by failing to

disclose that he had not contributed cash as his initial capital contribution and had

instead taken out a loan in Brickstone’s name to purchase the property. Juniarty

testified she did not know, before closing on the property, that Fladseth had failed

to make a cash capital contribution. Fladseth did not dispute this testimony.

Juniarty also testified that, prior to closing the purchase, Fladseth showed her an

estimated settlement statement that did not include the loan he had taken out to

finance the acquisition. Fladseth did not dispute this evidence. Juniarty testified

Fladseth took out these loans without MLG’s knowledge and consent. Again,

Fladseth did not dispute this evidence.

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No. 81603-9-I/15

       Ordinarily,   an   omission,    by    itself,   cannot   constitute     negligent

misrepresentation.    Ross, 162 Wn.2d at 499.          But a party may be liable for

negligent misrepresentation for an omission if he has a duty to disclose, which can

arise in a business transaction if imposed by a fiduciary relationship or other similar

relationship of trust or confidence. Van Dinter v. Orr, 157 Wn.2d 329, 333-34, 138

P.3d 608 (2006).      Under Washington’s Limited Liability Company Act, in a

manager-managed LLC, the manager owes a fiduciary duty to the LLC and its

members. Dragt v. Dragt/DeTray, LLC, 139 Wn. App. 560, 575, 161 P.3d 473

(2007); Dickens v. Alliance Analytical Laboratories, LLC, 127 Wn. App. 433, 440,

111 P.3d 889 (2005).

       Fladseth, as Brickstone’s manager, owed a fiduciary duty to both Brickstone

and MLG not to supply false information to them. Here, Fladseth did not disclose

the existence of the Eastside loans, one of which Fladseth had obtained by signing

a forged guarantee on behalf of MLG. This evidence was sufficient to prove

negligent misrepresentation.

       The undisputed evidence also proves that MLG reasonably relied on

Fladseth’s misrepresentation. Juniarty testified that, had she known that Fladseth

had not made his capital contribution, MLG would have either rescinded its own

capital contribution or withdrawn from the purchase of the property.

       Fladseth argues that MLG could not have relied on this misrepresentation

because it knew of the loans. To support this, Fladseth points to the May 1

Promissory Note and to the WhatsApp messages. But neither proves that Juniarty

knew about the loans before the purchase closed on April 21.                 The May 1

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No. 81603-9-I/16

Promissory Note came a week after closing. The WhatsApp messages occurred

months after closing as well. The fact that Juniarty knew of the loans in May 2017

does not contradict her testimony that MLG reasonably relied on Fladseth’s

misrepresentations in April 2017 when it made its capital contribution and allowed

the sale to close.

       Finally, the undisputed evidence establishes that MLG was damaged by

Fladseth’s misrepresentations. But for the misrepresentation, MLG would have

retained the $275,000 it contributed to Brickstone. The trial court properly found

Fladseth liable for misrepresentation.

Damages

       Finally, Fladseth contends there are genuine issues of material fact

regarding MLG’s claimed damages.

       “Generally, the measure of damages for breach of contract is that the

injured party is entitled to recovery of all damages naturally accruing from the

breach, and to be put in as good a position as he would have been in had the

contract been performed.” Nw. Land & Inv., Inc. v. New W. Fed. Sav. & Loan

Ass'n, 57 Wn. App. 32, 43, 786 P.2d 324 (1990). Damages recoverable for

negligent misrepresentation are limited to those necessary to compensate the

plaintiff for the pecuniary loss to him caused by the misrepresentation. Janda v.

Brier Realty, 97 Wn. App. 45, 50, 984 P.2d 412 (1999) (quoting RESTATEMENT

(SECOND) OF TORTS § 552B (AM. LAW INST. 1977)). This includes “pecuniary loss

suffered otherwise as a consequence of the plaintiff's reliance upon the

misrepresentation.” Id.

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No. 81603-9-I/17

      The trial court awarded MLG $397,905 in damages. The court calculated

this amount by taking the total sale price of $900,000, subtracting $104,188.33 in

closing costs, unpaid real estate taxes, and sale commissions, for net sales

proceeds of $795,811.67.      Had Fladseth not encumbered the property with

personal loans, or with construction loans, the proceeds of which appear to have

vanished, this sum would have been Brickstone’s profit. Under the operating

agreement, MLG was entitled to 50 percent of that amount, or $397,905.83. The

trial court correctly concluded that this amount is what MLG would have received

from the sale of the property but for Fladseth’s misrepresentation and breach of

the operating agreement.

      Fladseth argues that these damages were miscalculated because there are

genuine issues of fact whether MLG’s actions contributed to its damages. Fladseth

contends MLG intervened in the management of the property, causing Brickstone

to default on its loan obligations. He argues that the costs associated with these

loan defaults should be attributable to MLG. But Fladseth agreed to be personally

liable for the Eastside loan of $297,840. Any default on this loan was not MLG’s

legal responsibility; it was his. We do not have any of the receivership pleadings

in the record before us, as Fladseth has not challenged the order appointing a

receiver. But the receivership statute allows the appointment of a receiver in very

limited circumstances, including when a company is insolvent and unable to meet

its debts. There is no evidence in this record to suggest MLG was responsible for

the Brickstone’s financial condition warranting the appointment of a receiver.

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No. 81603-9-I/18

       Fladseth next contends MLG’s counsel began collecting rents from the

tenants of the property starting in July 2018, leading to what he identified as

“penalty interest on various loans.” But we have no further details other than this

vague, uncorroborated statement. It is insufficient to create a genuine issue of

material fact.

       Finally, Fladseth asserts that MLG is somehow responsible for the property

being sold for $900,000 rather than the $930,000 price he negotiated before the

appointment of the receiver. Again, this accusation is not substantiated by any

evidence. The sale agreement Fladseth negotiated before the receiver took over

was subject to both a financing contingency and a feasibility contingency. We can

only speculate as to what negotiations occurred to lift either of these contingencies.

And the trial court’s calculation of MLG’s damages accounted for this decreased

return by basing MLG’s award on the lower sale price.

       Fladseth failed to present evidence to create a genuine issue of material

fact as to the amount of MLG’s damages. Summary judgment for MLG was thus

appropriate.

B. Attorney Fees on Appeal

       Both Fladseth and MLG request attorney fees on appeal.

       A party may request an award of attorney fees and costs if the applicable

law provides the right to recover fees and costs on appeal. RAP 18.1(a). Here,

the operating agreement provides that if either member fails to make their required

capital contributions within ten days of the agreement’s effective date, that member

shall indemnify the other member from any “loss, cost, or expense, including

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No. 81603-9-I/19

reasonable attorney fees incurred, caused by the failure to make such Capital

Contribution.”

      MLG prevailed on its claim that Fladseth failed to make his capital

contribution and was awarded attorney fees below. Because MLG is the prevailing

party on appeal, we award it reasonable attorney fees incurred on appeal, subject

to compliance with RAP 18.1.

      We affirm.

WE CONCUR:

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