Court Opinion

ID: 4385168
Source: CourtListenerOpinion
Date Created: 2019-04-08 19:48:23.667261+00
Date Added: 2024-06-11T14:22:56.244069
License: Public Domain

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON

  JDB CONSTRUCTION CORP., dibla,                                                             )   No. 76705-4-I
  JOHNSON DESIGN HOMES, a                                                                    )
  Washington corporation,                                                                    )   DIVISION ONE

                             Respondents,                                                    )   UNPUBLISHED OPINION

                             v.                                                              )
 HAl LIANG ZHANG and LI PING WU,                                                             )
 individually and on behalf of their marital                                                 )
 community,

                            Appellants.
__________________________________________________________________________________________   )
 HAl LIANG ZHANG and LI PING WU,                                                             )
                            Appellants,
                                                                                             )
                            v.

 JOHNSON CHEN and GRACE WANG,                                                                )
 and their marital community; and JDB                                                        )
 CONSTRUCTION CORP., d/b/a                                                                   )
 JOHNSON DESIGN HOMES,                                                                       )
                            Respondents,
                                                                                             )
 JDB CONSTRUCTION CORP.,                                                                     )
                            Third-Party Plaintiff,                                           )
 WOODSIDE BUILDERS, INC.,                                                                    )
                            Third-Party Defendant.                                           )   FILED: April 8, 2019
No. 76705-4-1/2

        HAZELRIGG-HERNANDEZ, J.    —   Hai Liang Zhang and Li Ping Wu alleged that

Johnson Chen, owner of JDB Construction Corp., made misrepresentations that

fraudulently induced them to contract. Zhang and Wu seek reversal, arguing that

the trial court erred in dismissing two of their claims and in excluding evidence of

three of Chen’s alleged statements.       Because the Zhang and Wu have not

demonstrated a genuine question of material facts as to the elements of the

fraudulent inducement or negligent misrepresentation claims and the court did not

abuse its discretion in excluding evidence, we affirm.

                                       FACTS

        In 2013, Hai Liang Zhang and Li Ping Wu (collectively, the Zhangs) moved

their family to Bellevue, Washington from Richmond, British Columbia. At that

time, Zhang owned a pawn business in China. In the preceding ten or more years,

Zhang had owned and sold three to four other businesses in China, including two

construction manufacturing businesses and a heating business.           Before that,

Zhang worked for the Chinese government overseeing certification of construction

projects for nearly 10 years ending in 2003. The Zhangs had lived in Canada since

2007. When they moved to Bellevue, they began searching for a home builder to

build them a large, single-family residence. The Zhangs found JDB Construction

Corp. with the assistance of a family friend, Bin Li, who is a licensed contractor in

Richmond, British Columbia.

        JDB Construction Corp., doing business as Johnson Design Homes, is a

luxury design-and-build company owned by Johnson Chen and his wife, Grace

Wang.    The Zhangs had a number of meetings with Chen in November and

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No. 76705-4-1/3

December2013 to see samples of Chen’s work, including Chen’s own home. The

Zhangs are not able to speak, read, or write in English. They decided to hire JDB

in part because Chen speaks Chinese.

       On December 15, 2013, after dinner at Chen’s house, the Zhangs signed a

contract with JDB to design their home. Zhang asserts that Chen would not give

them the contract beforehand because he said his contracts were trade secrets.

The design contract was written in English. Zhang testified that, when he asked

for the contract in Chinese, Chen laughed and said, “[T]his is America.” The design

contract specified a nonrefundable fee of $50,000, of which $40,000 would be

credited to the cost of construction if the Zhangs hired JDB to construct the house.

Zhang testified that he believed the cost of the design work to be $10,000 and did

not know that the full $50,000 was nonrefundable if he did not hire JDB to construct

the house. Chen stated that the Zhangs provided payment of $50,000 to JDB

shortly after signing the design contract.

       On July 10, 2014, again after dinner at Chen’s house, the Zhangs signed a

contract with JDB to construct the main floor and second floor of the home. Zhang

stated that he did not know they were going to sign any contracts that day.

Typically, JDB builds luxury homes at one of three price levels: $250 per square

foot, $300 per square foot, or $350 per square foot.        However, the Zhangs

negotiated a base price of $180 per square foot. The same day, the parties signed

an addendum for construction of the basement and various upgrades that were

not covered by the base price. Zhang stated that he specifically and repeatedly

asked Chen whether the contracts contained the same terms that they had

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    No. 76705-4-1/4

    discussed orally and Chen assured him that they did.       Both the construction

    contract and the addendum were written in English. Chen testified that JDB does

    not offer its contracts in any language other than English. The Zhangs were given

    a copy of the contract they had signed.      The main construction agreement

contained a 15-day grace period before any payment was due and the Zhangs

waited the full 15 days before providing the initial payment to JDB.

          JDB began construction on the house in July 2014. When the relationship

between the parties deteriorated, Zhang requested that JDB suspend work on the

house. JDB suspended all work on the partially-completed home on February 14,

2015.

          On June 24, 2015, JDB Construction filed suit against the Zhangs alleging

breach of contract, breach of implied covenant of good faith and fair dealing, unjust

enrichment, conversion, and foreclosure of lien. Five days later, the Zhangs filed

suit against Chen, his wife Grace Wang, and JDB (collectively, JDB), alleging

violations of the Consumer Protection Act1 (CPA), or, in the alternative,

misrepresentation, fraud, promissory estoppel, negligence, breach of contract,

conversion, and tort of outrage. The two cases were consolidated pursuant to a

stipulation of the parties.

          On September 30, 2016, JDB filed a motion for summary judgment seeking

dismissal      of the Zhangs’      claims   of fraudulent   inducement,    fraudulent

misrepresentation, negligent misrepresentation, breach of alleged oral contract,

conversion, all claims against Chen and Wang in their personal capacities, and the

1   Chapter 19.86 RCW.

                                            4
No. 76705-4-1/5

CPA claim. The motion was granted for the fraudulent concealment and fraud in

the execution claims. The motion was also granted as to claims of fraudulent

inducement based on the following alleged misrepresentations by Chen: that Chen

would not cheat them like other contractors, that Chen could not provide his

contracts in Chinese, that Chen could not provide his contracts in advance

because they were trade secrets, and that the English contracts contained all of

the terms to which the parties had orally agreed. However, the motion was denied

as to the claims of fraudulent inducement based on the alleged misrepresentations

that Chen was an architect and engineer, was knowledgeable about construction

law, and could construct a house with the quality of a $250 per square foot house

for $180 per square foot. The negligent misrepresentation claim was granted in

part and denied in part consistent with the court’s rulings on the fraudulent

inducement claims.

       The following claims made bytheZhangs remained fortrial: (1) conversion,

as to any claim that Chen removed construction materials from the Zhangs

property after they had paid for them; (2) fraudulent inducement or, in the

alternative, negligent misrepresentation based on the alleged representations that

Chen was an architect or engineer, that Chen was knowledgeable about

construction law, and that Chen could construct a house with the quality of a $250

per square foot house for a price of $180 per square foot; and (3) breach of

contract.

       Before trial, JDB filed a motion in limine asking the trial court to exclude

testimony at trial that was relevant only to the dismissed claims. The court heard

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No. 76705-4-1/6

oral argument on the motion in limine on February 7, 2017 and granted the motion

in part as to, among other things, any evidence that Chen could not provide his

contracts to the Zhangs in Chinese and any evidence that Chen would not provide

his contracts for review before signing because they were trade secrets. The court

ruled that this evidence was precluded under two evidentiary rules. First, it was

precluded by ER 402 because it was not relevant to the Zhangs’ remaining claims

and defenses. Additionally, it was precluded by ER 403 because it would be a

waste of time; it was likely to cause undue delay, unfair prejudice, and confusion

of the issues; and any probative value was outweighed by the danger of unfair

prejudice.

       The trial court rejected the Zhangs’ attempts to present evidence of Chen’s

refusals to provide them with a Chinese translation of the contracts or to allow them

an opportunity to have them translated before signing. The trial judge excluded

this evidence pursuant to the pretrial ruling.      The trial judge also excluded

testimony that Chen told the Zhangs immediately after signing the construction

contract and addendum that they were stuck with the contracts and could not do

anything to change them.

      The jury returned a verdict in favor of JDB and awarded it damages of

$240,000. The jury rejected the Zhangs’ breach of contract claim, finding that JBD

did not breach the contract and did not overcharge the Zhangs for the work

performed prior to termination of the contract. The jury also rejected all of the

construction defects that the Zhangs alleged. The jury found that the Zhangs had

                                         6
No. 76705-4-117

failed to prove any of their claims of fraudulent inducement and negligent

misrepresentation. The Zhangs timely appealed.

                                    ANALYSIS

       The Zhangs assign error to the trial court’s dismissal on summary judgment

of two claims of fraudulent inducement or, in the alternative, negligent

misrepresentation and to the exclusion of evidence of Chen’s alleged statements.

Because the Zhangs have not shown reasonable reliance on the alleged

statements or abuse of discretion in excluding evidence, we affirm.

       Summary Judgment

      We review summary judgment orders de novo, “considering the evidence

and all reasonable inferences from the evidence in the light most favorable to the

nonmoving party.” Keck v. Collins, 184 Wash. 2d 358, 370, 357 P.3d 1080 (2015).

Summary judgment is appropriate where there is no genuine issue as to any

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

When the nonmoving party is the plaintiff and it has failed to make a factual

showing sufficient to establish an element essential to a claim, summary judgment

is warranted. Young v. Key Pharmaceuticals, Inc., 112 Wash. 2d 216, 225, 770 P.2d
182 (1989). “Any doubts as to the existence of a genuine issue of material fact

[are] resolved against the moving party.” Atherton Condo. Apt-Owners Ass’n Bd.

of Dirs. v. Blume Dev. Co., 115 Wash. 2d 506, 516, 799 P.2d 250 (1990).

      The Zhangs assign error to the trial court’s dismissal of “two of their claims

of fraud in the inducement of contract and negligent misrepresentation on

summary judgment.” But they do not identify which two other than saying claims

                                         7
No. 76705-4-1/8

of fraud or negligent misrepresentation “based on the fact that Chen had refused

to give them a copy of the contract in Chinese, or on the fact that Chen had refused

to give them any opportunity to read the contract before they signed it.” Any claims

regarding Chen’s alleged representations about the contents of the English

contracts and the parties being “stuck” with the contracts are not at issue here.

       A. Fraudulent Inducement

       In order to make out a claim for fraud, a plaintiff must show proof of all nine

essential elements of the claim:

       (I) a representation of existing fact, (2) its materiality, (3) its falsity,
       (4) the speaker’s knowledge of its falsity, (5) the speaker’s intent that
       it be acted upon by the person to whom it is made, (6) ignorance of
       the falsity on the part of the person to whom the representation is
       addressed, (7) the latter’s reliance on the truth of the representation,
       (8) the right to rely upon it, and (9) consequent damage.

Elcon Constr., Inc. v. E. Wash. Univ., 174 Wash. 2d 157, 166, 273 P.3d 965 (2012).

Each element must be proven by clear, cogent, and convincing evidence. Id. A

claim of fraud fails in the absence of any one of the nine elements. Frontier Bank

v. Bingo lnvs., LLC, 191 Wash. App. 43, 59, 361 P.3d 230 (2015).

       The Zhangs allege that the statements by Chen that (1) in America it was

not possible to have a contract written in Chinese and (2) he could not give them

the contracts to review in advance because the documents were trade secrets

amounted to fraudulent misrepresentations.           However, the Zhangs have not

presented sufficient factual support that they reasonably relied on the truth of these

representations when deciding whether to sign the contracts. Therefore, summary

judgment was appropriate.

                                            8
No. 76705-4-1/9

       To defeat summary judgment, the Zhangs first must make a sufficient

factual showing that they actually relied on the truth of Chen’s statement when

deciding whether to enter into the contracts. The Zhangs argue that they have

shown actual reliance on Chen’s statement that he could not provide the contracts

in Chinese with Zhang’s assertion that he and Wu never would have signed the

contracts “[hjad [they] known the contracts did not contain all of what [they] agreed

to.” However, this statement is not directly applicable to Chen’s representation

about providing the contracts in Chinese. As explained above, Chen’s statements

regarding the contents of the English contracts are not at issue in this appeal. The

Zhangs do not point to any other evidence showing that they relied on Chen’s

assertion that he could not provide the contracts in Chinese other than the

statement that they believed the representation. Similarly, the Zhangs have not

made a showing that Chen’s statement that he could not provide the contracts

beforehand induced them to sign the contracts. Any reliance on Chen’s allegedly

false statements regarding the contents of the contracts is not at issue here.

       Reliance on a fraudulent misrepresentation must be reasonable under the

circumstances. Williams v. Joslin, 65 Wash. 2d 696, 698, 399 P.2d 308 (1965).

Whether reliance is reasonable is normally a question of fact, but “where the court

finds that no rational person could find the plaintiff reasonably relied on the

defendant’s representation, the trial court can decide that question as a matter of

law.” Hawkins v. Empres Healthcare Mcimt., 193 Wash. App. 84, 100, 371 P.3d 84

(2016). Even if the Zhangs did actually rely on Chen’s statements when deciding

                                         9
No. 76705-4-1110

to sign the contract, they must also show that their reliance on those assertions

was reasonable under the circumstances.

       The Zhangs argue that their reliance on the truth of Chen’s statements was

reasonable because of the personal relationship that they had built up with Chen

over the preceding months. Even if this is true, it does not necessarily follow that

Chen’s inability to provide them with contracts that they could read would

reasonably induce them to sign contracts that they could not read. Inability to

provide readable contracts seems unlikely to make a reasonable person more

inclined to sign a contract that they could not read. Likewise, the Zhangs have not

shown that any reliance on the statement that Chen could not provide the contracts

in advance was reasonable. Much like the first claim, inability to provide contracts

for review before signing would not make a reasonable person more likely to sign

the contracts.

       The Zhangs rely heavily on Gaines v. Jordan, 64 Wash. 2d 661, 393 P.2d 629

(1964), and Biorklund v. Seattle Electric Co., 35 Wash. 439, 77 P. 727 (1904), for

the proposition that a contract is voidable when one party makes false

representations about the contents of the contract to a party who cannot read the

contract and the illiterate party reasonably relies on those representations when

deciding whether to sign the contract. However, as previously discussed, neither

of the dismissed claims to which the Zhangs have assigned error concern

representations about the contents of the contracts.

      The Zhangs have not established a genuine issue of material fact as to all

nine elements of fraud with respect to Chen’s statements (1) that he could not

                                        10
No. 76705-4-I/il

provide the contracts in Chinese and (2) that his contracts were trade secrets and

he could not provide them for review in advance of signing. The trial court did not

err in dismissing these claims.

       B. Negligent Misrepresentation

       The Appellants allege that the trial court also erred in dismissing the

negligent   misrepresentation     claims        based   upon   the   same    alleged

misrepresentations as the fraudulent inducement claims above. In response to

JDB’s motion for summary judgment, the Zhangs argued that the alternative claims

of negligent misrepresentation were available in the event that Chen’s alleged false

statements were made negligently rather than intentionally. Because the claims

of negligent misrepresentation were framed as alternative claims, the Zhangs did

not rely on any additional evidence.

       To make a claim for negligent misrepresentation, a plaintiff must show proof

of the six elements of the claim by clear, cogent, and convincing evidence. Lawyers

Title Ins. Corp. v. Baik, 147 Wash. 2d 536, 545, 55 P.3d 619 (2002). The plaintiff

must prove that: (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 business

transactions, (3) the defendant was negligent in obtaining or communicating the

false information to the plaintiff, (4) the plaintiff relied on the false information

supplied by the defendant, (5) the plaintiff’s reliance on the false information was

justified (that is, it was reasonable under the surrounding circumstances), and (6)

the false information was the proximate cause of the damages to the plaintiff. ki.

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No. 76705-4-1/12

These elements mirror many of the required elements of fraud in the inducement

and the last three elements of each claim are virtually identical. Id.; Elcon Constr.,
174 Wash. 2d at 166, 273 P.3d 965.

       As discussed above, the Zhangs have not demonstrated actual reliance or

the right to rely for either of the two alleged misrepresentations. Therefore, the

Zhangs have not established a genuine issue of material fact as to the six elements

of negligent misrepresentation with respect to Chen’s statements (1) that he could

not provide the contracts in Chinese and (2) that his contracts were trade secrets

and he could not provide them for review in advance of signing. The trial court did

not err in dismissing these claims.

II.    Exclusion of Evidence

       The Zhangs contend that the trial court erred in excluding testimony at trial

that (1) Chen refused to give the Zhangs copies of the contracts before signing

them, (2) Chen refused to translate the contracts into Chinese stating that it was

not possible in America, and (3) Chen told the Zhangs that they were stuck with

the contract after they signed it. As stated above, the Zhangs’ claims at trial

included breach of contract and fraudulent inducement or, in the alternative,

negligent misrepresentation based the alleged representations that Chen was an

architect or engineer, that Chen was knowledgeable about construction law, and

that Chen could construct a house with the quality of a $250 per square foot house

for a price of $180 per square foot.

       Evidence which does not have a tendency to make a material fact more or

less probable is not admissible. ER 401, 402. The admission or exclusion of

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No. 76705-4-1/13

evidence is largely within the sound discretion of the trial court. Maehren v. City of

Seattle, 92 Wash. 2d 480, 488, 599 P.2d 1255 (1979). The trial court’s decision to

admit or exclude evidence is entitled to great deference and should be overturned

only for manifest abuse of discretion. State v. Pavlik, 165 Wash. App. 645, 650,

268 P.3d 986 (2011). A court abuses its discretion only when no reasonable

person would take the view adopted by the trial judge. State v. Castellanos, 132
Wash. 2d 94, 97, 935 P.2d 1353 (1997). Failure to exercise discretion is an abuse of

discretion. Bowcutt v. Delta North Star Corp., 95 Wash. App. 311, 320, 976 P.2d 643

(1999).

      The Zhangs first argue that the trial court failed to exercise any discretion in

excluding evidence regarding Chen’s alleged representations that he could not

give the Zhangs the contracts before signing and that he could not provide the

contracts in Chinese. The Zhangs assert that the trial judge mistakenly believed

that the judge who had dismissed the corresponding fraudulent inducement claims

on summary judgment had also determined that this evidence was inadmissible.

This argument is not supported by the record. During oral argument on JDB’s

motion in limine, the trial court acknowledged that statements by a party-opponent

are generally admissible unless they are not relevant.          It clarified that any

statements proposed as evidence had to be relevant to the breach of contract

claim or one.of the three remaining fraud or negligent representation claims. The

court then walked through the pieces of evidence that JDB proposed for exclusion

in their written motion and asked the Zhangs how these pieces of evidence were

relevant to the remaining claims. Indeed, the court found that some of Chen’s

                                         13
No. 76705-4-1/14

alleged statements were still relevant even though the claims of fraudulent

inducement based on those statements had been dismissed. By engaging in this

analysis on the record, the trial court showed that it exercised discretion when

excluding specific evidence and did not simply defer to the summary judgment

ruling.

          The Zhangs then argue that, if the trial court exercised discretion, it abused

its discretion because the excluded evidence should have been admitted. In their

response to the motion in limine, the Zhangs argued that the statement that Chen

could not provide the contracts in Chinese was “[r]elevant to [the] context of

contract formation, Chen’s intent and plan to defraud ZhanglWu, Chen’s cultivation

of their relationship, Zhang/Wu’s reliance on JDB’s fraudulent and negligent

misrepresentations, and      .   .   .   provide the context of why ZhanglWu acted the way

they did throughout the contract performance.” They also contended that this

statement was relevant to their defense of JDB’s breach of contract claim,

causation, and damages.

          This statement does not appear to be relevant to any of the remaining

fraudulent inducement claims based on Chen’s alleged representations that he

was an architect or engineer, that he was knowledgeable about construction law,

or that he could construct a house with $250-per-square-foot quality for a cost of

$180 per square foot. The statement also does not make any fact material to the

breach of contract claim or defense more or less probable, as the Zhangs’ defense

to JDB’s breach of contract claim seems to mirror their affirmative fraud claims.

Accordingly, the trial court did not abuse its discretion in excluding this evidence.

                                                  14
No. 76705-4-1115

       Regarding the statement that Chen would not provide his contracts for

review beforehand because they were trade secrets, the trial court was explicit in

its assessment that it was “not relevant to anything.” It stated specifically that this

statement did not relate to the breach of contract, negligent misrepresentation,

conversion, or remaining fraudulent inducement claims. The Zhangs argued in

their written response to the motion in limine that this statement was relevant for

the same reasons as the previous statement, as well as to rebut Chen and Wang’s

testimony that the Zhangs were shown the contracts for review beforehand. The

trial court considered this written response as well as the oral argument before

ruling that the statements were not relevant to the remaining claims.

      When Zhang testified at trial, the judge sustained objections to the following

questions: “Were you given any contract beforehand to review or to have

somebody review for you?,” “Did you ask them to let you take the contracts home

to read or have somebody review?,” and “Did Mr. Johnson Chen tell you that you

have to sign it before you can take it home?” The judge made clear that this

testimony was being excluded pursuant to the motions in limine. Outside the

presence of the jury, the Zhangs expressed concern about the application of the

motion in limine, arguing that the objections had curtailed their ability to rebut

testimony that they were given copies of the contracts in advance. In fact, JDB

had not elicited any direct testimony from Chen or Wang that the Zhangs were

given the contracts in advance. The Zhangs had elicited this testimony from Chen

and Wang on cross-examination. The judge clarified her grounds for excluding the

evidence:

                                         15
No. 76705-4-1/16

       [Y]ou’re really trying to pursue a case that your clients--it’s more
       along the line of a breach of contract, that they should be able to walk
       away from the contract because it was unclear, it was vague, and
       more importantly, they didn’t understand it, they didn’t speak the
       language, and they didn’t have an opportunity to review it or take it
       home. In effect, that they were kind of hoodwinked. That’s what
       you’ve portrayed here. But that’s not a breach of contract claim, and
       that already went before Judge Andrus, so that’s why I am curtailing
       your ability to admit this evidence.

We agree that this evidence was not relevant to any of the remaining fraudulent

inducement claims, the breach of contract claim or defense, or the conversion

claim. The trial court did not abuse its discretion in excluding this evidence.

       The Zhangs argue that the trial court abused its discretion by excluding

testimony that Chen told Zhang and Wu that they were “stuck” with the contract

immediately after signing it because “that’s how the law works.” The court first

heard this piece of evidence when the Zhangs made an offer of proof regarding

objections to questions about reviewing the contracts. The court noted that it had

not heard this statement before and it was not included in its rulings on the motions

in limine. Wu subsequently testified that “after we signed the contract, Johnson

[C hen] joked that, ‘You know, after you sign the contract, its words on the paper.

There’s—it is—you cannot change the contract anymore.” JDB objected to this

testimony and the jury was instructed to disregard the statement. The court did

not state the basis for the exclusion of this evidence. The Zhangs contend that

this statement was relevant to their claim at trial of fraudulent inducement based

on Chen’s alleged representation that he was knowledgeable about construction

law. This statement does not make any material fact relating to that claim more or

less probable and the trial court did not abuse its discretion in excluding it.

                                          16
No. 76705-4-1/17

III.   Attorney Fees

       JDB argues that this appeal is frivolous and requests an award of attorney

fees and costs pursuant to RAP 18.9(a). An appeal is frivolous if it presents no

debatable issues upon which reasonable minds could differ and it is so lacking in

merit that there was no reasonable possibility of reversal. In re Marriage of Foley,

84 Wash. App. 839, 847, 930 P.2d 929 (1997). Any doubts as to whether the appeal

is frivolous should be resolved in favor of the appellant. Pub. Emps. Mut. Ins. Co.

v. Rash, 48 Wash. App. 701, 706, 740 P.2d 370 (1987). Although the Zhangs have

not adequately proven their claims, this high standard of frivolity has not been met

here. JDB’s request for attorney fees and costs is denied.

Affirmed.

WE CONCUR:

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