Charles Woods, Resp/cross V Tom And Karen Hall, Apps/cross-respondents

CourtCourt of Appeals of Washington
DecidedJune 20, 2017
Docket48507-9
StatusUnpublished

This text of Charles Woods, Resp/cross V Tom And Karen Hall, Apps/cross-respondents (Charles Woods, Resp/cross V Tom And Karen Hall, Apps/cross-respondents) 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.

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Charles Woods, Resp/cross V Tom And Karen Hall, Apps/cross-respondents, (Wash. Ct. App. 2017).

Opinion

Filed Washington State Court of Appeals Division Two

June 20, 2017

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION II CHARLES R. WOODS, an unmarried man, No. 48507-9-II

Respondent, Cross Appellant,

v.

TOM and KAREN HALL, husband and wife, in UNPUBLISHED OPINION their individual and marital capacities; HALLMARK GROUP, LLC, a Washington limited liability company; HARWOODS, LLC, a Washington limited liability company; and RTM ENTERPRISES, LLC, a Washington corporation,

Appellants, Cross Respondents.

SUTTON, J. — This appeal arises from a dispute between Charles Woods and Tom and

Karen Hall involving the repossession of certain business assets from a restaurant that Woods

owned. The Halls appeal the trial court’s order and judgment that they were liable for conversion

for selling the restaurant’s assets. Woods cross appeals the trial court’s order denying him an

award of prejudgment interest and attorney fees.

We hold that (1) the trial court’s finding of fact, that Woods owned the bar and stove hood,

is not supported by substantial evidence; therefore the court erred in imposing conversion liability

on the Halls for that property, (2) substantial evidence supports the trial court’s findings of fact as

to the undisputed assets and the findings support the court’s conclusion of law that the Halls

converted the undisputed business assets, (3) the trial court properly calculated conversion

damages, but that the value of the bar and stove hood must be deducted from the award of damages, No. 48507-9

and (4) the trial court did not err by denying Woods prejudgment interest on the damages or by

denying Woods an award of attorney fees and costs.

Thus, we affirm the trial court’s order and judgment in part and reverse in part. We affirm

the trial court’s order and judgment in granting Woods’s conversion claim on the undisputed

business assets, awarding damages on those assets, and denying prejudgment interest and attorney

fees and costs to Woods. But we reverse the order and judgment in granting Woods’s conversion

claim on the bar and stove hood and awarding damages for those two assets. Thus, we remand for

the trial court to deduct the amount of those two assets and modify the order and judgment

accordingly.

FACTS

I. BACKGROUND

A. RESTAURANT LEASE

Woods formed Harwoods, LLC (Harwoods), to open a restaurant and bar with the same

name. In June 2009, Harwoods signed a five-year commercial lease with Hallmark Group, LLC,

to rent restaurant space inside the Camas Hotel. The Halls owned Hallmark. Under a lease

provision, upon termination of the lease, Harwoods was not to “remove any original improvements

installed by [Hallmark], or permanent partitions, attached electrical or plumbing items or other

alterations or additions added by [Harwoods]; unless requested by [Hallmark].” Clerk’s Papers

(CP) at 52. Harwoods was required to remove “all personal property and trade appliance.” CP at

52. Under the lease, the Hallmark gave Harwoods a “tenant improvement allowance” to install

the stove hood. CP at 49. Woods remodeled the restaurant space and the restaurant opened in

January 2010.

2 No. 48507-9

B. PURCHASE AND SALE AGREEMENT

In 2011, Woods entered into a purchase and sale agreement (PSA) with the Halls for the

Halls to buy Harwoods,1 and for the Halls to assume the lease. The Halls agreed to make monthly

payments of $1,200 to Woods, and granted Woods a security interest in the business’s assets as

collateral for the loan until the debt was paid. Under the PSA, the Halls granted Woods a security

interest in Harwoods’s “inventory, equipment, accounts, and supplies.” Ex. 1. Upon default,

Woods had the remedy of repossessing the “business assets” and had “the right at his discretion to

reinstate the current lease agreement.” Ex. 1.

The Halls reopened the restaurant under a new name. Because the Halls also owned

Hallmark, which owned the Camas Hotel, the Halls took over both the landlord’s (Hallmark) and

the tenant’s (Harwoods) obligations under the lease.

C. DEFAULT AND REPOSSESSION

On June 25, 2012, the Halls notified Woods that they were defaulting on their payments,

that they were ready to return the restaurant and all tangible assets, but if Woods did not want to

resume operating the restaurant, that they would purchase the assets. The Halls attached a signed

transfer of all membership interest in Harwoods to Woods. The Halls stated that if Woods did not

respond by July 2, that the Halls would assume that he did not want to resume operating the

restaurant and Woods would need to repossess the assets by July 15. On July 15, Woods declined

to repossess Harwoods or reinstate the lease; and stated that if the Halls had not made a payment

by August 10, he would remove the business assets and stated that the assets included the bar and

1 The PSA included the purchase of the restaurant and all ownership interest in the LLC.

3 No. 48507-9

stove hood. Over the next several weeks, Woods and the Halls attempted to negotiate retrieval by

Woods of the business assets. But the Halls disagreed that the bar and stove hood were subject to

repossession by Woods under the PSA because the Halls claimed that these assets were owned by

Hallmark under the lease.

As to removal of the assets by Woods, the Halls stated that

[a]ny attempt made to remove these items will be considered conversion and theft. The Halls intend to have police assistance available during the removal of the business assets. Any attempt to remove these fixtures will result in your agents’ immediate removal from the premises.

Ex. 48.

On August 24, Woods sent an email to the Halls that stated that Woods, under the PSA,

has elected to repossess all business assets and will do so with a truck, curbside, at 10:00 AM on September 5, 2012. We demand that your clients cease and desist all business operations immediately to preserve assets and inventory, and that they get all assets and inventory to the door or curbside on September 5 [in] time for retrieval.

Ex. 48. After several more exchanges, they agreed on September 8 as the date for Woods to

retrieve the assets, but did not agree on a location.

The Halls agreed to allow Woods to access the restaurant to retrieve the undisputed

personal property only. Woods demanded that the assets be delivered curbside and the Halls

refused. The Halls then canceled the retrieval date and notified Woods that the Halls’ new tenant

was interested in some of the assets. Woods responded that he would be retrieving the assets on

September 8, as scheduled, and demanded the assets be delivered curbside.

On September 8, Woods arrived with a truck and crew to retrieve the assets. The Halls

refused to deliver the assets curbside and Woods refused to enter the premises. Woods left without

4 No. 48507-9

any of the assets. On September 11, the Halls sent Woods a letter stating that they will consider

the assets abandoned if Woods did not retrieve them by September 15. On November 1, the Halls

sold the restaurant assets to the new tenant for $10,000.

II. PROCEDURE

Woods sued the Halls and Hallmark seeking a declaratory judgment and asserting claims

for conversion, unjust enrichment, replevin, and judicial foreclosure of security agreement.2 The

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