Court Opinion

ID: 4570768
Source: CourtListenerOpinion
Date Created: 2020-09-29 18:15:01.896044+00
Date Added: 2024-06-11T13:30:43.520675
License: Public Domain

Filed
                                                                                          Washington State
                                                                                          Court of Appeals
                                                                                           Division Two

                                                                                         September 29, 2020

    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                          DIVISION II

 134th STREET LOFTS, LLC,                                             No. 52896-7-II

                Appellant,

         v.

 iCAP NORTHWEST OPPORTUNITY FUND,                              UNPUBLISHED OPINION
 LLC,   and  iCAP   PACIFIC   NW
 MANAGEMENT, LLC,

                Respondents,

         and

 134th STREET LOFTS II, LLC,

                 Nominal Third-Party
                 Respondent.

       CRUSER, J. — 134th Street Lofts, LLC (134th Street Lofts) appeals from various orders on

partial summary judgment and summary judgment in favor of iCap Northwest Opportunity Fund

(iCap). 134th Street Lofts argues that the trial court erred in awarding attorney fees incurred by

iCap in canceling the lis pendens because the lis pendens was properly filed in an action affecting

title to real property. 134th Street Lofts also argues that the trial court improperly granted summary

judgment because iCap breached its duty of good faith and fair dealing when it failed to remove a

deed of trust on a property owned by the parties through their proxy entity.

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No. 52896-7-II

          We hold that the trial court did not err in awarding attorney fees iCap incurred in canceling

the lis pendens because the dispute did not involve title to real property. We further hold that the

trial court properly granted summary judgment in favor of iCap because there is no genuine dispute

of material fact that iCap did not breach the duty of good faith and fair dealing,

          Accordingly, we affirm.

                                                FACTS

                                         I. ENTITY FORMATION

          On November 3, 2015, 134th Street Lofts and iCap formed an entity called “134th Street

Lofts II, LLC” (Project Entity). Clerk’s Papers (CP) at 73. The entity was created to “own, hold,

develop, and construct improvements on, sell or refinance, and otherwise deal with” real property

located in Clark County, Washington. Id. at 120. The Project Entity’s goal was to develop the

property into an apartment building. As designated by the Project Entity’s formation agreement

(LLC Agreement), 134th Street Lofts and iCap are the only managers and members of the Project

Entity.

          Pursuant to the Management Services Agreement (MSA) between the Project Entity and

134th Street Lofts, 134th Street Lofts was to serve as the developer of the property. Among its

responsibilities as developer, 134th Street Lofts was required to obtain a loan on behalf of the

Project Entity, approved by the managers and members, to finance the project. Parkview Financial

Fund 2015, LP, (Parkview Financial) provided the first position construction loan to the Project

Entity, secured by the property. Under the express terms of the construction loan between the

Project Entity and Parkview Financial, no other liens or encumbrances on the property were

permitted.

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No. 52896-7-II

                   II. INITIAL DISPUTE AND JANUARY SETTLEMENT AGREEMENT

       After the project was underway, a dispute arose wherein iCap alleged that 134th Street

Lofts did not complete some of its contractual obligations as a manager under the LLC Agreement

and as a developer under the MSA. On June 27, 2017, iCap filed a complaint against 134th Street

Lofts. In addition to allegations of breach of contract and tortious interference with a business

expectancy, iCap sought an injunction that would require 134th Street Lofts to cooperate in

transitioning management of the Project Entity to iCap.

       Under the LLC Agreement, iCap was entitled to remove 134th Street Lofts from its position

as manager on the occurrence of a “Termination Event,” such as 134th Street Lofts’ breach of

contract. Id. at 106. The MSA also provided that following a “Termination Event,” 134th Street

Lofts would relinquish any authority to act as developer on behalf of the Project Entity. Id. at 139.

134th Street Lofts denied iCap’s allegations and raised several counterclaims, including breach of

the duty of good faith and fair dealing.

       Following months of negotiations, on January 16, 2018, 134th Street Lofts and iCap

entered into a Settlement Agreement that amended both the LLC Agreement and the MSA. This

Settlement Agreement established 134th Street Lofts as the sole operating manager of the Project

Entity and developer of the property. Aside from several modifications in the Settlement

Agreement, the LLC Agreement and the MSA remained in full force and effect. 134th Street Lofts

agreed that the Project Entity would pay iCap $6,170,506.32 by June 1, 2018. The anticipated

completion date for the project was in June of 2018, and thus the property development would

either be marketable or eligible for permanent “take-out” financing at that time, enabling 134th

Street Lofts to cause the Project Entity to make this payment. Id. at 66. The Settlement Agreement

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No. 52896-7-II

also contained an attorney fee provision, which provided that where a party to the agreement

initiates a lawsuit to enforce its terms, the prevailing party is entitled to reasonable attorney fees

and costs.

       134th Street Lofts also agreed that the Project Entity would execute a promissory note in

favor of iCap for $1,850,000, secured by a deed of trust against the property and payable to iCap

by October 1, 2018. iCap agreed that the deed of trust was subordinate to the senior Parkview

Financial loan that had previously been secured against the property. iCap recorded the deed of

trust with the Clark County Auditor.

       In entering the Settlement Agreement, neither party anticipated that Parkview Financial

would object to iCap’s subordinate and subsequent lien on the property. But when Parkview

Financial learned that iCap had a second lien secured against the property, it refused to release

further funds for construction of the project unless iCap removed its deed of trust. 134th Street

Lofts immediately asked that iCap remove its deed of trust, but iCap did not do so until

approximately three weeks after 134th Street Lofts’ request.

       In the several weeks that elapsed before iCap removed its deed of trust and Parkview

Financial disbursed funds, contractors were not paid for their work and left the job site. By the

time the funds were made available, the cost of restarting work and completing the job had

substantially increased. As a result, the project was further delayed, and the delay prevented 134th

Street Lofts from adhering to contractual budget and schedule requirements and from timely

making the $6.1 million payment to iCap required under the Settlement Agreement.

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No. 52896-7-II

                        III. CURRENT LAWSUIT AND LIS PENDENS ACTION

       After an unsuccessful attempt at negotiating an amendment to the prior Settlement

Agreement, iCap sent 134th Street Lofts a notice of default and termination. iCap also asserted its

right under the Settlement Agreement to assume management of the Project Entity and to terminate

134th Street Lofts as developer due to the occurrence of a Termination Event.

       134th Street Lofts filed a lawsuit against iCap, alleging that iCap breached its contract by

violating its duty of good faith and fair dealing and by failing to remove the deed of trust on the

property for several weeks after Parkview Financial notified the Project Entity that it would

withhold further disbursement of construction loan funds. In addition, 134th Street Lofts sought

declaratory relief asking that the trial court order iCap to grant 134th Street Lofts an eight-month

extension on its project completion and payment deadlines. 134th Street Lofts also sought

injunctive relief, asking that the trial court restrain iCap from assuming control over the Project

Entity unless iCap could demonstrate that it could procure the funding needed to complete the

project.

       Shortly after filing the complaint, 134th Street Lofts recorded a lis pendens on the property

in Clark County. iCap was in the process of replacing the Parkview Financial loan with a loan

from a different lender, but the new lender declined to close the loan while the property was

encumbered by the lis pendens. The new loan was scheduled to close when the final payment on

the Parkview Financial loan was due, but because the new loan did not close as anticipated, iCap

had to arrange for an emergency extension on the payment with Parkview Financial to avoid

default and foreclosure on the property. iCap was required to pay just under $140,000 in fees to

procure a one-month extension from Parkview Financial.

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No. 52896-7-II

                                     IV. PROCEDURAL HISTORY

       iCap moved to cancel the lis pendens, arguing that the lis pendens was improper because

134th Street Lofts’ claims did not affect title to real property. The trial court granted iCap’s motion

and canceled the lis pendens. The trial court also informed iCap that it had the right to move for

damages, and costs and fees pursuant to RCW 4.28.328.

       Shortly thereafter, iCap moved for partial summary judgment, arguing that it did not breach

the duty of good faith and fair dealing because it was entitled to maintain a deed of trust on the

property under the Settlement Agreement. The trial court granted iCap’s motion for summary

judgment and dismissed 134th Street Lofts’ claims. The trial court ruled that iCap was entitled to

move for attorney fees and costs as the prevailing party pursuant to a provision in the parties’

Settlement Agreement.

       iCap subsequently filed a motion for summary judgment on damages and fees related to

the lis pendens, a motion for summary judgment regarding 134th Street Lofts’ liability for breach

of contract resulting from 134th Street Lofts’ failure to adhere to its repayment and development

schedules under the Settlement Agreement, and a motion for fees and costs as the prevailing party.

The trial court granted iCap’s motions for summary judgment and entered a judgment ordering

that 134th Street Lofts pay iCap the principal sum of $139,977.42 under RCW 4.28.328(2) for

wrongful recordation of the lis pendens. In addition, the trial court awarded iCap $41,624.43 in

attorney fees and costs, of which $13,847 was awarded pursuant to RCW 4.28.328(2) for wrongful

recordation of the lis pendens, and the remainder was awarded as reasonable fees and costs

pursuant to the parties’ Settlement Agreement.

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No. 52896-7-II

        134th Street Lofts appeals the order granting partial summary judgment, the order granting

summary judgment on damages and fees related to the lis pendens, and the order granting iCap’s

motion for summary judgment on 134th Street Lofts’ liability for breaching the Settlement

Agreement.

                                            DISCUSSION

                 I. ATTORNEY FEES FOR WRONGFUL RECORDATION OF LIS PENDENS

A. LEGAL PRINCIPLES

        Under RCW 4.28.320, a party in an action affecting title to real property may file a notice,

or lis pendens, with the county auditor regarding the pendency of the action. Pendergrast v.

Matichuk, 189 Wash. App. 854, 867, 355 P.3d 1210 (2015). Filing a lis pendens serves two purposes.

Snohomish Reg’l Drug Task Force v. 414 Newberg Rd., 151 Wash. App. 743, 752, 214 P.3d 928

(2009). First, once a lis pendens is recorded, prospective purchasers and encumbrancers have

constructive notice that title to the property is in dispute and that the record owner’s interest is in

question. Id. Second, on filing, the lis pendens “freeze[s] the status of the property in time,”

preventing a party to the underlying action from transferring their interest “because the cloud on

the title follows the transfer.” Id. As a result, once the lis pendens is recorded, any person or entity

that subsequently acquires an interest in the property does so “subject to the property’s ultimate

disposition in the pending suit as that suit was filed.” Id.

        RCW 4.28.328(2) provides,

                 A claimant in an action not affecting the title to real property against which
        the lis pendens was filed is liable to an aggrieved party who prevails on a motion
        to cancel the lis pendens, for actual damages caused by filing the lis pendens, and
        for reasonable attorneys’ fees incurred in canceling the lis pendens.

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No. 52896-7-II

        RCW 4.28.328(3) presents an alternative means for recovering damages and attorney fees

resulting from the filing of a lis pendens. This statute provides,

                Unless the claimant establishes a substantial justification for filing the lis
        pendens, a claimant is liable to an aggrieved party who prevails in defense of the
        action in which the lis pendens was filed for actual damages caused by filing the lis
        pendens, and in the court’s discretion, reasonable attorneys’ fees and costs incurred
        in defending the action.

RCW 4.28.328(3).

        Washington courts have not established specific guiding criteria to aid in determining

whether an action “affects title to real property” under RCW 4.28.328(2). However, in a case

involving a lis pendens filed in an easement dispute, this court relied on persuasive authority from

Arizona, which has a similar lis pendens law. Schwab v. Seattle, 64 Wash. App. 742, 748, 826 P.2d
1089 (1992). Arizona courts also consider whether the action affects title to real property when

determining whether a lis pendens was wrongfully recorded. Santa Fe Ridge Homeowners’ Ass’n

v. Bartschi, 219 Ariz. 391, 395-96, 199 P.3d 646 (Ct. App. 2008).

        In Schawb, this court adopted the Arizona courts’ construction of Arizona’s lis pendens

law that considers an action affecting title to real property one that “involv[es] an adjudication of

rights incident to title to real property.” 64 Wash. App. at 748 (citing Tucson Estates, Inc. v. Superior

Court, 151 Ariz. 600, 729 P.2d 954, 959 (Ct. App. 1986)). Applying this construction, this court

held that an easement which grants a property owner a right to access another property is an action

affecting a right incident to title. Id. at 749.

        “[A] lawsuit affects a right incident to title if any judgment would expand, restrict, or

burden a property owner’s rights as bestowed by virtue of that title.” Santa Fe Ridge Homeowners’

Ass’n, 219 Ariz. at 396. Arizona courts have considered whether the judgment involved in a lawsuit

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No. 52896-7-II

would bind future owners of the property or govern rights tied to ownership of the property. Id. at

397; see also Tucson Estates, 729 P.2d at 959 (holding that a lawsuit regarding an implied

restrictive covenant pertaining to use of a golf course by mobile home residents implicated rights

incident to title because determination of the dispute in favor of the residents would create a right

to use the golf course that arose from ownership of the mobile home lots).

B. ANALYSIS

       134th Street Lofts argues that the trial court wrongfully imposed attorney fees under RCW

4.28.328(2) because the action affects title to real property. 134th Street Lofts claims that title to

real property is implicated in this case because the dispute involved control over the Project Entity,

and the Project Entity has the “legal right to transfer, encumber, or enact any other title action for

a property.” Br. of Appellant at 11. 134th Street Lofts specifically limits its assignment of error to

the trial court’s imposition of $13,847 in attorney fees incurred by iCap in canceling the lis

pendens. 134th Street Lofts does not also assign error to the trial court’s imposition of nearly

$140,000 in damages incurred as a result of the wrongful recordation of the lis pendens. 1

       iCap contends that 134th Street Lofts misapprehends the trial court’s ruling and the

distinction between RCW 4.28.328(3) and RCW 4.28.328(2). iCap asserts that 134th Street Lofts’

argument is premised on whether it had substantial justification for filing the lis pendens, which

1
  Although 134th Street Lofts appeals from the trial court’s order granting summary judgment on
damages and fees related to the lis pendens, which includes both the $140,000 award for damages
and $13,847 for attorney fees, it does not assign error or otherwise argue that the $140,000 award
for damages was improperly awarded. If 134th Street Lofts prevailed on its theory that it did not
wrongfully record the lis pendens, then the trial court would have also erred in imposing $140,000
in damages under the same statute for the same reason. It is not clear why 134th Street Lofts limited
its assignment of error to the imposition of attorney fees.

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No. 52896-7-II

would only be relevant if the trial court awarded fees under RCW 4.28.328(3). However, as iCap

points out, the trial court actually awarded fees under RCW 4.28.328(2). Thus, the relevant

question is whether the trial court properly imposed attorney fees under RCW 4.28.328(2).

        iCap defends the trial court’s decision to impose damages and attorney fees because title

to the property was not at issue. iCap asserts that there is a critical distinction between control over

the entity and title to the property, and that even if 134th Street Lofts was removed as manager and

developer, 134th Street Lofts remained a member of the Project Entity as provided by the LLC

Agreement and was still entitled to share in the proceeds of the development as a member.

        134th Street Lofts’ claim fails because regardless of the outcome of the lawsuit pertaining

to management of the Project Entity, the Project Entity’s rights as title owner are unaffected, and

this action does not affect title to real property. That is, the trial court’s judgment regarding whether

134th Street Lofts could continue to act as a manager and developer on behalf of the Project Entity

would not result in expanding, restricting, or burdening the Project Entity’s rights to the property

“as bestowed by virtue of that title.” Santa Fe Ridge Homeowners’ Ass’n, 219 Ariz. at 396. The

trial court’s judgement does not bind future owners of the property, nor does it govern rights that

are tied intrinsically to ownership of the property itself. See id.

        134th Street Lofts’ argument that the dispute in the underlying lawsuit affects title to real

property because it concerns “the legal right to transfer, encumber, or enact any other title action

for the property” (Br. of Appellant at 11) fails when considered in light of the purpose for filing a

lis pendens. A party files a lis pendens to provide notice to prospective purchasers and

encumbrancers of the property that the scope of the interest they intend to acquire or encumber is

not settled and may change depending on ultimate disposition of the lawsuit. Snohomish Reg’l

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No. 52896-7-II

Drug Task Force, 151 Wash. App. at 752. This makes sense, given that “[a] grantor of property can

convey no greater title or interest than the grantor has in the property.” Firth v. Lu, 146 Wash. 2d
608, 615, 49 P.3d 117 (2002).

       Here, the Project Entity owns the property, and thus the Project Entity, not iCap or 134th

Street Lofts, sells, refinances, or otherwise conveys the property. The manager merely acts as an

agent on behalf of the Project Entity, with decision-making authority to bind the Project Entity and

exercise the powers of the Project Entity. Regardless of which entity, iCap or 134th Street Lofts,

acts as manager and makes the decision to convey the property, the actual interest conveyed is

unaffected by the identity of the decision-maker. There is no reason to notify prospective

purchasers or encumbrancers when the identity of the agent changes because the record owner of

the property remains the same and has the same interest to convey.

       Accordingly, the action does not affect title to real property and the trial court properly

awarded iCap attorney fees incurred in canceling the lis pendens pursuant to RCW 4.28.328(2).

                    II. THE IMPLIED DUTY OF GOOD FAITH AND FAIR DEALING

A. SUMMARY JUDGMENT STANDARD

       We review an order granting summary judgment de novo and consider all the evidence and

reasonable inferences drawn 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 no genuine issue of material fact exists, and the moving party is entitled to judgment as a

matter of law. Id. “‘A material fact is one that affects the outcome of the litigation.’” Morgan v.

Kingen, 166 Wash. 2d 526, 533, 210 P.3d 995 (2009) (quoting Owen v. Burlington N. & Santa Fe

R.R., 153 Wash. 2d 780, 789, 108 P.3d 1220 (2005)).

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No. 52896-7-II

B. LEGAL PRINCIPLES

       An implied duty of good faith and fair dealing exists in every contract. Rekhter v. Dep’t of

Soc. & Health Servs., 180 Wash. 2d 102, 112, 323 P.3d 1036 (2014). This duty obligates both parties

to a contract to cooperate with one another so that each party may obtain the full benefit of

performance. Id. It compels the parties to a contract to maintain “‘faithfulness to an agreed

common purpose and consistency with the justified expectations of the other party.’” Edmonson

v. Popchoi, 172 Wash. 2d 272, 280, 256 P.3d 1223 (2011) (quoting RESTATEMENT (SECOND)              OF

CONTRACTS § 205 cmt. a (AM. LAW INST. 1981)).

       The duty of good faith and fair dealing does not impose a “free-floating obligation” on the

parties to a contract. Rekhter, 180 Wash. 2d at 113. Instead, the duty must arise “‘in relation to

performance of a specific contract term.’” Keystone Land & Dev. Co., v. Xerox Corp., 152 Wash. 2d
171, 177, 94 P.3d 945 (2004) (quoting Badgett v. Security State Bank, 116 Wash. 2d 563, 570, 807
P.2d 356 (1991)). This duty cannot add or contradict a contract’s express terms. Rekhter, 180
Wash. 2d at 113. Consequently, a party is not obligated to accept a material change to the terms of

its contract to avoid breach. Badgett, 116 Wash. 2d at 569. A party does not breach the duty of good

faith when it “simply stands on its rights to require performance of a contract according to its

terms.” Id. at 570.

       In interpreting contractual provisions, Washington courts follow the “objective

manifestation theory of contracts.” Hearst Commc’ns Inc., v. Seattle Times Co., 154 Wash. 2d 493,

503, 115 P.3d 262 (2005). This approach requires courts construing contractual provisions to

determine the parties’ intent by focusing on their “objective manifestations of the agreement”

corresponding with the “reasonable meaning of the words used.” Id. at 503. The unexpressed,

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No. 52896-7-II

subjective intent of the parties in entering the agreement “is generally irrelevant if the intent can

be determined from the actual words used.” Id. at 504. Unless clearly designated otherwise, words

in a contract are given their “ordinary, usual, and popular meaning.” Id.

C. ANALYSIS

       134th Street Lofts argues that summary judgment was improper because iCap breached the

duty of good faith and fair dealing, preventing each party from enjoying the benefit of

performance, when iCap did not remove the deed of trust it held on the property immediately upon

134th Street Lofts’ request. 134th Street Lofts asserts that once Parkview Financial indicated that

it would withhold further disbursement of funds, both 134th Street Lofts and iCap had new

responsibilities arising pursuant to the duty of good faith and fair dealing to timely get the project

on track. 134th Street Lofts acknowledges that it had a responsibility to obtain new financing that

would not conflict with iCap’s deed of trust, but it claims iCap had a concomitant duty to remove

the deed of trust while 134th Street Lofts secured a new construction loan.

       134th Street Lofts contends that iCap’s delay of three weeks constituted a breach of the

duty of good faith and fair dealing because although the payment secured by the deed of trust was

not due to iCap for many months, 134th Street Lofts required funding immediately in order to pay

sub-contractors and purchase supplies. By failing to timely remove the deed of trust, 134th Street

Lofts contends, iCap undermined the Project Entity’s ability to adhere to the development

schedule, breaching Settlement Agreement terms and the duty of good faith and fair dealing arising

from those terms.

       iCap responds that the trial court properly granted summary judgment because iCap did

not breach the implied duty of good faith and fair dealing when it waited three weeks to remove

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No. 52896-7-II

the deed of trust against the property. iCap contends that 134th Street Lofts’ claim improperly

imposes a free-floating duty of good faith and fair dealing that was not attached to any term in the

Settlement Agreement. iCap further argues that it did not have a duty of good faith and fair dealing

that required it to forfeit an express right guaranteed under the Settlement Agreement.

       iCap was entitled to summary judgment because 134th Street Lofts’ framing of iCap’s duty

in this case improperly (1) imposes a material change to existing terms in the Settlement

Agreement and (2) creates new obligations beyond those contained in the contract. Consequently,

because 134th Street Lofts cannot show that it was denied the benefit of iCap’s performance under

the existing agreement, iCap did not breach the implied duty of good faith and fair dealing.

       Here, iCap did not breach the implied duty of good faith and fair dealing as alleged by

134th Street Lofts because it was entitled to encumber the property with the deed of trust under

the express terms of its Settlement Agreement. iCap was not required to accept a material change

to the terms of its contract to fulfill its obligation to act in good faith. See Badgett, 116 Wash. 2d at

569. “As a matter of law, there cannot be a breach of the duty of good faith when a party simply

stands on its rights to require performance of a contract according to its terms.” Id. at 570. But

134th Street Lofts argues that iCap had a duty to immediately forfeit its contractual right to secure

the promissory note until 134th Street Lofts was able to procure alternate financing that would

permit an additional encumbrance on the property. In effect, 134th Street Lofts suggests that iCap

was compelled to quickly accept a worse position than it bargained for, and that both parties had

agreed to, because the three-week delay in removing the deed of trust prevented 134th Street Lofts

from meeting its own contractual obligations. This position is untenable because the duty of good

faith and fair dealing cannot contradict express terms in a contract. Rekhter, 180 Wash. 2d at 113.

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No. 52896-7-II

       Moreover, iCap did not breach its duty of good faith and fair dealing because there was no

contract term obligating the specific performance that 134th Street Lofts asserts iCap did not carry

out in good faith. 134th Street Lofts’ claim fails because the duty of good faith and fair dealing is

derivative rather than free-standing; it must arise in relation to a party’s performance of its

contractual obligations. Badgett, 116 Wash. 2d at 569. Although 134th Street Lofts asserts that iCap’s

obligations to act in good faith by immediately removing the deed of trust comes from paragraphs

6(b) and 16 of the Settlement Agreement, it interprets these contractual provisions in a manner that

expands the scope of their plain meaning. This argument fails because neither term creates the

obligation suggested by 134th Street Lofts.

       First, paragraph 6(b) of the Settlement Agreement describes the procedures for requesting

draws of construction loan funds, and it requires both 134th Street Lofts and iCap to agree to the

draw request. This provision states that iCap shall review draw requests submitted by 134th Street

Lofts within two days of receiving them, and that it should not unreasonably withhold, delay, or

condition its approval of the draw requests. 134th Street Lofts interprets this provision to require

“immediate action on funding concerns” (Br. of Appellant at 13), but this reading of the contract

provision is overbroad. This provision does not compel iCap to forgo rights secured under the

Settlement Agreement in the event that the lender declines to disburse funds. Nor does this case

involve an allegation that iCap failed to act in good faith because it withheld, delayed, or

conditioned its approval of 134th Street Lofts’ request to draw funds from the construction loan.

This paragraph, therefore, cannot be construed to give rise to iCap’s good faith duty to remove the

deed of trust immediately on request.

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No. 52896-7-II

       Next, paragraph 16 of the Settlement Agreement contains a general “[f]urther [a]ssurances”

clause, which provides that the parties agree to execute any further documents or take further

actions “as may be reasonable and appropriate in order to carry out the purpose and intent of this

agreement.” CP at 166. Applying the objective manifestation approach to contract interpretation,

the plain language of this paragraph indicates that the parties meant it to serve as a catch-all

provision providing for both parties’ continued adherence toward carrying out the objective of

their agreement. See Hearst, 154 Wash. 2d at 504. In paragraph 8, the Settlement Agreement

expressly provides for creation of a promissory note, secured by the deed of trust. Therefore,

securing the promissory note in favor of iCap with a deed of trust constitutes one goal inherent to

the Settlement Agreement. Nothing in the plain language of paragraph 16 indicates that by

requiring the parties to take reasonable and appropriate further actions as may be necessary, the

parties intended that provision to compel either party to immediately forfeit rights guaranteed by

other express terms.

       The implied duty of good faith and fair dealing protects a party’s justified expectations in

entering the agreement. Edmonson, 172 Wash. 2d at 280. It exists to ensure that the parties receive

the full benefit of performance as provided by the contract. Rekhter, 180 Wash. 2d at 112. But here,

134th Street Lofts could not fairly expect, in entering the Settlement Agreement, that iCap should

swiftly accept a substantial reduction in its rights under the contract with no return benefit. Nor

does the record reflect that iCap engaged in any action that deprived 134th Street Lofts of the full

benefit of iCap’s performance of its obligations under the Settlement Agreement. Taken together,

there is no evidence that iCap violated its duty of good faith and fair dealing and iCap was entitled

to summary judgment as a matter of law.

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No. 52896-7-II

                                        ATTORNEY FEES

       iCap requests attorney fees on appeal under RAP 18.1(a). It claims that it is entitled to fees

under RCW 4.28.328, RCW 4.84.330, and section 23 of its Settlement Agreement.

       iCap was awarded fees by the trial court under RCW 4.28.328(2), which provides

reasonable attorney’s fees incurred in canceling a lis pendens. This court was not involved in

canceling the lis pendens, but only reviewed the trial court’s decision to award fees pursuant to

this statute. We decline to award any additional fees on appeal under this statute.

       For any action on a contract,

       where such contract . . . 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 to reasonable attorneys’ fees in addition
       to costs and necessary disbursements.

RCW 4.84.330. Section 23 of the Settlement Agreement provides for attorney fees and costs and

states that “should a Party initiate litigation to enforce the terms of this Agreement, the prevailing

party shall be entitled to its reasonable attorney fees and costs.” CP at 168.

       In filing the lawsuit against iCap, 134th Street Lofts sought damages for iCap’s alleged

breach of the duty of good faith and fair dealing. This type of claim necessarily arises from a

contract and therefore constitutes litigation initiated to enforce the terms of an agreement within

the meaning of RCW 4.84.330. We therefore award reasonable attorney fees in favor of iCap in

an amount to be determined by the commissioner of this court.

                                          CONCLUSION

       We hold that the trial court did not err in awarding iCap attorney fees incurred in canceling

the lis pendens because the action did not affect title to real property. We also hold that iCap was

                                                  17
No. 52896-7-II

entitled to summary judgment because there was no genuine dispute of material fact that iCap did

not breach the duty of good faith and fair dealing when it waited three weeks before removing the

deed of trust. We grant iCap’s request for attorney fees on appeal.

        Accordingly, we affirm.

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

Washington Appellate Reports, but will be filed for public record in accordance with RCW 2.06.040,

it is so ordered.

                                                     CRUSER, J.
 We concur:

 LEE, C.J.

 GLASGOW, J.

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