Ballo v. James S. Black Co.

692 P.2d 182, 39 Wash. App. 21
CourtCourt of Appeals of Washington
DecidedNovember 29, 1984
Docket5581-7-III
StatusPublished
Cited by12 cases

This text of 692 P.2d 182 (Ballo v. James S. Black Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ballo v. James S. Black Co., 692 P.2d 182, 39 Wash. App. 21 (Wash. Ct. App. 1984).

Opinions

Green, A.C.J.

— James S. Black and James S. Black, Inc., appeal a decision in a civil antitrust action involving an alleged conspiracy in restraint of trade and unfair competition in the development of a residential area in Spokane. Initially, this was a class action, but the class was decerti-fied leaving only the Ballos as plaintiffs.

The issue which we find dispositive of this appeal is whether, after entering findings of fact, the court erred in concluding there were per se violations of RCW 19.86.020-.030. We have considered this issue based solely on the court's findings and reverse.

[23]*23While the trial court entered 85 findings of fact, the following are pertinent to the Ballos: James S. Black, Inc., is a real estate brokerage and development firm. James S. Black is a licensed real estate broker. Lowell Stack is an independent residential home building contractor, as is Orville Mark. In 1967, Mr. Black, Lowell Stack, Don Stack, Mr. Mark, Guy Wilcox and Lyle Wilcox incorporated Comstock Development Corporation (CDC). Each owned 20 percent of the shares of CDC except Guy and Lyle Wilcox, who owned 10 percent each. Mr. Black was the president of CDC; Mr. Mark and Lowell Stack were also officers. CDC, with capital received from the shareholders and other borrowed capital, purchased undeveloped land in the Com-stock area. When CDC was formed, Lowell Stack and Mr. Mark expected the corporation would supply them with land upon which to construct homes; the Wilcox brothers anticipated CDC would supply them with excavation work; and Mr. Black expected his real estate company would market the Comstock subdivision.

CDC's sole function has been the development and sale of residential building lots. CDC carefully controlled the numbers, sizes, styles and prices of homes built in the area. In 1976 and thereafter, the shareholders of CDC who were also builders selected the lots in rotation among themselves. No other builders were involved after 1976 except Dave Mark and Paul Rodeen, close relatives of two officer shareholders. Shortly after the lots were selected, earnest money agreements were executed between CDC and the builder. "It was agreed that the builders would pay [CDC] a nominal down payment of $25.00 to hold the lot until it was 'sold' by the builder." When a customer desired to purchase a lot and have a custom home built, the builder to whom the lot had been allocated would execute an earnest money agreement with his customer for the sale of the lot before construction of the home commenced. At the time of closing, CDC deeded the lot directly to the builder's customer.

In 1977, Gary and Kristin Bailo, working with Glenmar [24]*24Freeman of Sullivan Realty, decided to purchase a lot in the Comstock area. The lot was offered to the Ballos for $11,000 by Lowell Stack. The Ballos agreed to that price without negotiation. The closing agent paid CDC $9,350 and Lowell Stack the difference of $1,650, pursuant to CDC's apparent authorized builder's discount. The lot was deeded directly to the Ballos from CDC. The Ballos agreed to the following conditions: (1) use the services of the builder to whom the lot was allocated; and (2) pay 6 percent commission on the combined price of the lot and the estimated price of the house to be constructed.

In October 1978 the Ballos filed a class action complaint against James S. Black, Inc., Sullivan Realty, Inc., CDC and Messrs. Black, Stack and Mark. Count 1 alleged a price fixing and tying arrangement in violation of the Consumer Protection Act (CPA) and count 2 alleged breach of fiduciary duty and constructive fraud. The Ballos sought certification of the class of all purchasers of speculative and custom homes in the Comstock subdivision. The court determined CR 23(a) was satisfied but certified a smaller class consisting of the Ballos and other purchasers of custom homes built by Stack or Mark in the Comstock area. A notice was sent to purchasers in the potential class informing them of their rights, including the right to opt out. Shortly after the notices were received, the court learned that Messrs. Black, Stack and Mark had been responsible for personal contact with most of the potential class members. The court ruled this contact violated the spirit of the certification order and appointed two special masters to determine whether the contact influenced the class members' decision to opt out, as a vast majority of them had done. Following the special masters' report, the court found the potential class members were supplied with sufficient information to make a voluntary and intelligent decision, the class was decertified and this action proceeded with the Ballos as sole plaintiffs. Consequently, we are concerned only with the Ballos and the circumstances surrounding the purchase of their lot in the Comstock area.

[25]*25Following a bench trial, the court determined the defendants combined and conspired with other builders to fix prices of Comstock lots and homes in restraint of trade, RCW 19.86.030, and constituted an unfair method of competition, RCW 19.86.020. Such price fixing, the court concluded, was a per se violation of these statutes. The court found that as a result of the agreement between Black, Stack and Mark to establish the minimum price at which the lots would be offered for sale by CDC to the public, the Ballos were damaged in the amount of $1,650 — the difference between what Ballos paid for the lot and CDC's price to Lowell Stack. It was also determined the agreement to charge a 6 percent commission on custom homes damaged the Ballos in the amount of $5,500. On the Ballos' motion, a hearing was held and the court awarded them treble damages of $21,450 plus costs and attorney fees in the amount of $213,731.48. A $110,000 settlement was approved between the Ballos and all defendants except Mr. Black and James S. Black, Inc. The settlement amount was deducted and judgment for $125,181.48 was entered against Mr. Black and his company. A permanent injunction was also entered enjoining Black and James S. Black, Inc., from certain activities when acting in concert with two or more builders.

Mr. Black and James S. Black, Inc., appeal claiming the court blindly applied the per se rule, failed to analyze the relationship of the alleged conspirators, and erroneously condemned legitimate restraints established by a joint venture development corporation. The Ballos cross-appeal challenging the court's decertification of the class.

The Consumer Protection Act was enacted in 1961 to promote free competition in the marketplace for the ultimate benefit of the consumer. State v. Black, 100 Wn.2d 793, 799, 676 P.2d 963 (1984). RCW 19.86.030 provides: "Every contract, combination, in the form of trust or otherwise, or conspiracy in restraint of trade or commerce is hereby declared unlawful." This provision is patterned after and contains nearly identical language to the federal [26]*26Sherman Antitrust Act, 15 U.S.C. § l.1 When the Legislature enacted the CPA, it anticipated our courts would be guided by the interpretation given by the federal courts to the corresponding federal statutes.

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Ballo v. James S. Black Co.
692 P.2d 182 (Court of Appeals of Washington, 1984)

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Bluebook (online)
692 P.2d 182, 39 Wash. App. 21, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ballo-v-james-s-black-co-washctapp-1984.