Donald J. Noble, V. Robert And Jane Doe Wolford

• Court: Court of Appeals of Washington
• Decided: February 20, 2024
• Docket: 84728-7
• Status: Unpublished

Opinion

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DONALD J. NOBLE, a single man, No. 84728-7-I

Appellant, DIVISION ONE

v. UNPUBLISHED OPINION ROBERT C. WOLFORD and JANE DOE WOLFORD, husband and wife,

Respondents.

SMITH, C.J. — In 2010, Donald Noble inherited two parcels of land from his

parents. After failing to pay property taxes, Noble received notice that he was in

danger of foreclosure. Unable to pay the debt himself or obtain a loan, Noble

turned to Robert Wolford, his employer, for help. In 2014, in exchange for

Wolford paying the tax debt, Noble executed quitclaim deeds for the

parcels. Noble never repurchased the property. In 2021, Noble sued Wolford,

alleging that the transaction constitutes an equitable mortgage and seeking an

order quieting title. The trial court denied all of Noble’s claims. On appeal, Noble

argues the court erred in concluding there was no equitable mortgage and that

the agreement both violated the real estate statute of frauds and was

substantively and procedurally unconscionable. Finding his arguments

unpersuasive, we affirm. No. 84728-7-I/2

FACTS

In 2010, Donald Noble inherited two parcels of land in Granite Falls,

Washington (“the property”). The property was Noble’s childhood home, which

he later received by way of a quitclaim deed when his father died. He took the

land clear of any debt or mortgage.

In 2014, Noble received notice that the property was two months away

from being auctioned off in a tax foreclosure sale because he had failed to pay

the property taxes. As Noble had missed the date to initiate a payment plan,

Snohomish County required he pay the entire tax debt, totaling $23,587.60.

Noble attempted to secure a loan through a number of sources but was

unable to do so. Noble grew increasingly anxious and reached out to his

coworker, Scott Miller, in late 2014. Miller, while unwilling to finance the loan

himself, offered to contact their employer, Robert Wolford. Miller informed Noble

that Wolford would loan Noble the money and then Noble could take out a home

loan to repay him the full amount, plus $5,000 in interest. Noble accepted this

plan and met Wolford at the county assessor’s office on the morning of the

foreclosure sale.

At the assessor’s office, Wolford told Noble that he would only pay the

property taxes if Noble deeded the land to him. He then presented two quitclaim

deeds that his attorney, his girlfriend at the time, had prepared. Noble signed the

deeds. Wolford then paid the property taxes. At the time Noble signed the

2 No. 84728-7-I/3

deeds, the property had an assessed value of $219,500. Wolford received the

property for $23,587.60, which was 11 percent of the assessed value.1

A few weeks after the foreclosure sale, Wolford presented Noble with a

“rent to own agreement” with an effective date of December 31, 2014. Per the

agreement, Noble could repurchase the property for $48,795.92, provided he

exercised this “option to purchase” by April 30, 2015.2 Noble attempted to

secure a loan to pay Wolford but was again unsuccessful. Noble did not exercise

his option to purchase by April 2015, but continued to live on the property and

pay rent. Wolford continued to pay all of the taxes on the property.

Noble’s rent took the form of withholdings from his paycheck. These

withholdings were labelled “employee long term loan.” And although Noble was

injured in a work accident in August 2019 and instructed by the Department of

Labor and Industries not to work, he continued to work “under the table” to pay

rent. Noble testified at trial that Wolford regularly threatened the sell the house if

Noble refused to work.

In October 2021, Wolford sent Noble notice of an increase in rent,

followed by a letter instructing him to disregard the increase in rent and informing

1 Wolford likely would have been able to buy the property at a similar amount had the foreclosure sale gone forward. Snohomish County would not have been able to keep any extra money it made on the sale, meaning it would have sold the property for the amount of the outstanding tax debt anyway. Tyler v. Hennepin County, Minnesota, 598 U.S. 631, 639, 143 S. Ct. 1369, 215 L. Ed. 2d 564 (2023). 2 The agreement, which was effective as of December 31, 2014, stated

that Noble must exercise the option to purchase by April 31, 2014. Since this date precedes the effective date of the agreement, it appears to be a typographical error.

3 No. 84728-7-I/4

him that his tenancy had been terminated. Noble then sued for an equitable

mortgage and quiet title, as well as requesting a preliminary injunction staying the

eviction process and prohibiting marketing the property or any adverse

employment action. While the lawsuit was pending, the court granted Noble’s

preliminary injunction as to the eviction and marketing of the property, but denied

it as to his employment. Within hours of the court granting the injunction, Wolford

attempted to raise the rent from $1,850 to $5,000 a month. In February 2022,

Wolford terminated Noble’s employment. Noble continued to live on the

property.

In August 2022, Noble’s equitable mortgage claim proceeded to trial.

Noble testified that he did not intend to use the land as collateral and that, had

Wolford specifically asked for a mortgage to the secure the loan, he was not sure

if he would have agreed. Wolford testified that he never intended that the loan

constitute a mortgage. The court concluded that Noble failed to prove the

existence of an equitable mortgage by clear and convincing evidence.

Noble appeals.

ANALYSIS

Standard of Review

We review findings of fact for substantial evidence. Sunnyside Valley Irrig.

Dist. v. Dickie, 149 Wn.2d 873, 879, 73 P.3d 369 (2003). Substantial evidence is

evidence sufficient to convince a rational-minded person of the assertion’s truth.

Dickie, 149 Wn.2d at 879. If the fact at issue must be shown by clear and

convincing evidence, substantial evidence must show the fact is highly probable.

4 No. 84728-7-I/5

In re Dependency of A.M.F., 23 Wn. App. 2d 135, 141, 514 P.3d 755 (2022). We

review legal questions de novo. A.M.F., 23 Wn. App. 2d at 141.3

Equitable Mortgage

Noble asserts that the court erred in concluding no equitable mortgage

existed when it determined there was no intent to establish one. Wolford

contends that the court could not have found an equitable mortgage existed

when both Noble and Wolford testified that there was never an intent to create

one. We agree with Wolford.

The doctrine of equitable mortgage allows a court to reform a transaction

to match the intention of the parties. Beverly v. Davis, 79 Wash. 537, 539-40,

140 P. 696 (1914). “Where the transactions actually occurring between the

parties are clearly of such a nature as to show a deed absolute in form to have

been a mortgage, courts of equity will construe it as such.” Plummer v. Ilse, 41

Wash. 5, 11, 82, P. 1009 (1905). Put another way, if the parties intended the

transaction to be a mortgage, the court may consider the transaction to be a

mortgage, regardless of the paperwork. Plummer, 41 Wash. at 11. And the

court will look beyond the face of that paperwork, considering all surrounding

circumstances to determine intent. Parker v. Speedy Re-Finance, Ltd., 23 Wn.

App. 64, 70, 596 P.2d 1061 (1979).

3 Noble also asserted on appeal that the quitclaim deeds did not satisfy the real estate statute of frauds, chapter 64.04 RCW, because they were not signed in the presence of a notary. In general, we do not consider issues raised for the first time on appeal. RAP 2.5(a). As he failed to raise the issue below, we decline to reach it.

5 No. 84728-7-I/6

Noble argues that he intended to create a mortgage and that the court

should have inferred his intent to do so. He contends that his intent to create a

mortgage undermines both the quitclaim deeds and “rent to own” agreement.

But while a court may infer intent, here, the sticky wicket is that both Wolford and

Noble testified they had no intent to create a mortgage. Noble provides no

authority to suggest a court should infer intent over explicit testimony to the

contrary.

Noble testified more than once that he did not intend to use the property

as collateral for a loan. During direct examination, Noble testified that if Wolford

had asked for a mortgage to secure his loan, he was not sure if he would have

agreed. Wolford similarly testified that he never intended the transaction to be a

mortgage. With explicit testimony from both parties denying an intent to create a

mortgage, we conclude that the trial court did not err in finding that Noble failed

to establish an equitable mortgage by clear and convincing evidence.

Unconscionability

Noble next argues that the quitclaim deeds, if not categorized as a

mortgage, are both procedurally and substantively unconscionable. Wolford

counters that Noble waived this issue. We conclude that Noble did not waive the

issue, as an equitable mortgage is a remedy for unconscionability, but we

disagree that the agreement actually was unconscionable. The quitclaim deeds

were neither one-sided nor monstrously harsh and Noble had the opportunity to

understand the deal. Similarly, the “rent to own” agreement was not one-sided or

harsh and did not leave Noble without any meaningful choice.

6 No. 84728-7-I/7

Unconscionability is a feature of contract law, which we review de novo.

Adler v. Fred Lind Manor, 153 Wn.2d 331, 344, 103 P.3d 773 (2004); McKee v.

AT&T Corp., 164 Wn.2d 372, 383-84, 191 P.3d 845 (2008). When analyzing

substantive unconscionability, courts look to whether a contract is one-sided or

overly harsh. Adler, 153 Wn.2d at 345. When considering procedural

unconscionability, courts look to “(1) the manner in which the contract was

entered, (2) whether [the parties] had a reasonable opportunity to understand the

terms of the contract, and (3) whether the important terms were hidden in a maze

of fine print, to determine where a party lacked a meaningful choice.” Burnett v.

Pagliacci Pizza, Inc., 196 Wn.2d 38, 54, 470 P.3d 486 (2020).

Here, Noble argues that the power imbalance and quick turnaround time

of the quitclaim deeds establish substantive unconscionability, while the

agreement is procedurally unconscionable because it is a “maze of fine print” that

stripped Noble of any meaningful choice. Noble, however, improperly conflates

the documents. Noble signed the quitclaim deeds with the understanding that, in

return, Wolford would pay the property taxes so Noble would be in a position to

buy the property back rather than lose it to foreclosure. That said, Wolford was

under no obligation to provide a “rent to own” agreement to make that possible.

He could have simply had Noble lease the property until he was able to purchase

it. Accordingly, the language of the “rent to own” agreement should not affect the

unconscionability of the quitclaim deeds, and vice versa. We analyze the deeds

and the agreement separately to determine unconscionability.

7 No. 84728-7-I/8

a. Quitclaim Deeds

The quitclaim deeds were not unconscionable because they were neither

one-sided nor monstrously harsh and Noble had reasonable opportunity to

understand the deal.

Noble argues that the circumstances surrounding the deeds are one-sided

because they stem from a power imbalance between Noble and Wolford. We

disagree. Here, Noble initiated the entire transaction. When Noble discovered

he was two months away from losing his property, he sought funding in a variety

of different ways. He started with his bank, reached out to individual money

lenders, and eventually turned to asking friends. Finally, Noble, by way of Miller,

requested Wolford’s help. Wolford stepped in to help, and likely, to make a little

money. He did not use his power as Noble’s employer to force his hand.

And the deeds themselves were not one-sided or monstrously harsh. It is

important that we do not take the deeds out of the context in which they were

signed. Wolford offered the quitclaim deeds as part of an oral agreement that

allowed Noble to buy his property back, for the price of $5,000, on top of the

taxes and fees that Wolford paid to save the property. This is a balanced

transaction. Noble retained the ability to live on his property and the opportunity

to buy it back for a reasonable price. Wolford gained collateral, in the form of the

quitclaim deeds, with an eventual $5,000 payout. Without the quitclaim deeds as

collateral, there would have been nothing to guarantee that Noble would ever pay

Wolford back. Therefore, the deeds were essential in balancing the transaction.

8 No. 84728-7-I/9

It is also worth noting that, though Wolford bought the property for well

below its assessed value, another buyer would likely have been able to obtain

the property for a similar amount had the County gone through with the tax

foreclosure sale. Under these circumstances, the amount that Wolford paid in

exchange for the quitclaim deeds does not make the deeds substantively

unconscionable.

As for procedural unconscionability, the issue centers on whether Noble

had reasonable opportunity to understand the terms of the deal. We conclude

that he did. Noble points to the quick turnaround time that Wolford presented for

Noble to sign the deeds. And while there was a limited time frame, Noble

provides no evidence that the language in the quitclaim deeds was so overly

complicated as to hide important terms or that he had no understanding of what

he was signing. In fact, the record indicates that Noble understood the

ramifications of signing the quitclaim deeds. There is no requirement that a party

have ample time to debate, just that there is a reasonable opportunity to

understand. Noble had the latter.

b. “Rent to Own” Agreement

Similarly, the “rent to own” agreement was neither substantively nor

procedurally unconscionable. The agreement benefitted Noble by allowing him

to stay on the property and providing him with a way and some time to purchase

it back, and was not one-sided, overly harsh, or unnecessarily complicated.

Noble contends that the agreement is procedurally unconscionable

because the document is a “maze of fine print.” This argument is unpersuasive

9 No. 84728-7-I/10

for two reasons. First, Noble had more than enough time to understand and sign

the agreement. Proffered in December of 2014, Noble had until April of 2015 to

sign on and find a loan. This is clearly sufficient time for Noble to read through

and understand the terms of the agreement. And second, despite Noble’s

assertions, no evidence exists that the font size of the agreement impeded his

ability to understand the agreement. The agreement was not so complicated as

to hide important details and negate any meaningful choice.

Noble also asserts that Wolford used his authority as Noble’s employer to

force him to sign the agreement after “outrageously” increasing the sales price,

making the agreement substantively unconscionable. But this ignores, again,

both the fact that Noble instigated the entire transaction and that Wolford testified

as to asking for only $5,000. Noble sought other funding before allowing Miller to

set up the deal with Wolford. Wolford did not seek out the interaction, much less

use his role as Noble’s employer to force Noble’s hand. And although the

language of the “rent to own” agreement required Noble to pay $48,795.92 to

repurchase the property, Wolford, Noble, and Miller all testified that Wolford

would only charge Noble $5,000 on top of the tax debt. There is a reasonable

chance that the $48,795.92 requirement was a typographical error, especially

since there was already one mistake in the document. But even if Wolford did

raise the price, he was still only asking for 21 percent of the value of the property.

This is not monstrously harsh.

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Attorney Fees

Both parties request attorney fees on appeal. Noble concedes that there

is no statute or contract providing for an award of fees here, but requests fees

based on equity. Wolford requests attorney fees under RCW 59.18.290, which

allows for the recovery of reasonable fees following unlawful detainer. We

decline to award fees to either party.

1. Equitable Fees

Attorney fees are generally not recoverable by the winning party unless

the recovery of fees is permitted by contract, statute, or a recognized ground in

equity. McGreevy v. Or. Mut. Ins. Co., 128 Wn.2d 26, 35, 904 P.2d 731 (1995).

Noble concedes that there is no contract or statute here. Instead, he

requests fees based on equity, pointing to the disparity of bargaining power

between Noble and Wolford and Wolford’s “grossly inequitable, outrageous, and

unfair behavior.” Because Noble is not the prevailing party on appeal, we decline

to award Noble fees.

2. Unlawful Detainer

Unlawful detainer exists when a tenant maintains control over or excludes

the landlord from property after the termination of a rental agreement. RCW

59.18.290(2). In such a circumstance, the prevailing party may recover

reasonable attorney fees. RCW 59.18.290(2).

Noble maintained control of the property beyond the termination of his

rental agreement. However, Wolford has yet to bring an action for unlawful

11 No. 84728-7-I/12

detainer. As he provides no other basis upon which to award fees, we decline to

award Wolford attorney fees on appeal.

We affirm.

WE CONCUR: