Douglas v. Jepson

945 P.2d 244, 88 Wash. App. 342
CourtCourt of Appeals of Washington
DecidedOctober 13, 1997
Docket37756-6-I
StatusPublished
Cited by4 cases

This text of 945 P.2d 244 (Douglas v. Jepson) 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
Douglas v. Jepson, 945 P.2d 244, 88 Wash. App. 342 (Wash. Ct. App. 1997).

Opinion

Ellington, J.

— Joel Douglas and Ronald Jepson held property together for many years as tenants in common. After receiving an offer to buy the whole property, Douglas purchased Jepson’s interest without disclosing the third-party offer. We are asked to consider whether the summary judgment order entered in favor of Jepson should be reversed because a question of fact exists as to whether Douglas had a duty to disclose the third-party offer. We reverse and remand for trial because the parties’ cotenant relationship does not by itself impose a duty of disclosure. Whether such a duty exists depends on a question of fact, namely, whether the parties were engaged in a joint venture to sell the property.

FACTS

In 1975, Douglas, with his wife Barbara, purchased 15 acres of real estate for commercial development as tenants in common with Jepson and his then wife, Claire. This real estate was then improved and zoned for commercial development.

In 1991, the property was divided into three parcels, Lots A, B, and C. Shortly thereafter, Claire, now Jepson’s *345 ex-wife, exchanged her interest in Lots B and C for Jepson’s interest in Lot A. Claire and the Douglases then sold Lot A to HCWA Realty Corporation, a/k/a "Home Club.” Thus, Lot A was now owned by Home Club and Lots B and C were jointly owned among the Douglases 1 and Jepson as tenants in common.

Lots B and C are located between the Home Club lot and an access street. To provide ingress and egress between the Home Club store and the street, and to enhance the value of Lots B and C, reciprocal easement agreements were executed. These agreements held Jepson and Douglas liable to Home Club for the costs of filling, leveling, and paving Lots B and C. These costs were estimated at $415,000, but proved to be $1.1 million. Unknown to Douglas, Home Club hired Jepson as the supervising engineer on this project. As the costs of these improvements greatly exceeded expectations, Douglas visited the site with Jepson and discovered that a contractor was "shorting its loads.” Douglas maintains that at this point Jepson still did not reveal that he was the supervising engineer of the project.

Douglas sued Home Club and Jepson over who was responsible for the cost overruns. This dispute was settled in arbitration, with Jepson held liable for significantly more of the overruns than Douglas. The settlement occurred in October 1993. Douglas and Jepson have not spoken since. Sometime before they stopped speaking, the parties had placed a "for sale” sign on the property. The sign listed both Douglas and Jepson’s phone numbers and remained posted on the land for all times pertinent to this appeal.

In November, 1993, Jepson and Douglas sold Lot B to Toys 'R Us. This deal had been pending for more than two years. Because Jepson and Douglas were not speaking, *346 communications between them were made through Douglas’ attorney, Roland Balloun. On January 5, 1994, Terranomics Retail Services, on behalf of the electronic store, "The Good Guys,” contacted Douglas to express an interest in buying Lot C for $1.2 million. On that same day, Douglas negotiated to buy Jepson’s interest in the property. Jepson ultimately accepted Douglas’ offer of $450,000 because he "needed the money to purchase other property that [he] was interested in.” Balloun negotiated this sale on behalf of Douglas.

Douglas never disclosed to Jepson that the Good Guys were interested in the property. Douglas testified that he did not want Jepson involved in the Good Guys deal because Jepson had frustrated similar negotiations in the past. The deal was finalized approximately five months after Jepson sold his interest to Douglas.

In November, 1994, Douglas filed this action, seeking a declaratory ruling as to whether Jepson was entitled to certain moneys based on their previous business dealings. Jepson counterclaimed for damages, contending that Douglas had breached a fiduciary duty by failing to disclose the Good Guys’ offer.

Jepson moved for summary judgment on his claim that Douglas had breached a fiduciary duty by failing to disclose the Good Guys’ offer. To support his position that he and Douglas had a partnership, Jepson produced several documents in which Douglas either purports to speak on behalf of the other cotenants or on behalf of a partnership. The most recent of these documents bears a date from 1991.

Douglas denied that a partnership ever existed, and testified that although he and Jepson contemplated forming a partnership, this idea was rejected on three separate occasions. To support his theory that no partnership existed, Douglas noted that Jepson was routinely late with his mortgage payments, and despite the fact that these late payments put the property at risk of foreclosure, Douglas never made any payments for Jepson. Douglas also noted that he had not spoken to Jepson since October 1993. *347 The court granted Jepson’s summary judgment motion, stating that "the facts that are uncontroverted in this case satisf[y] the court that the parties to this lawsuit entered upon a joint venture” and that Douglas "clearly] violated] his obligation to deal in good faith and in an honest fashion with his partner[.]”

DISCUSSION

Summary Judgment

Summary judgment is proper only if there are no issues of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c). When reviewing a summary judgment order, this court engages in the same inquiry as the trial court and considers only evidence and issues raised below. Washington Fed’n of State Employees, Council 28 v. Office of Fin. Mgmnt., 121 Wn.2d 152, 156-57, 849 P.2d 1201 (1993); RAP 9.12. When reasonable minds could reach but one conclusion, questions of fact can be decided as matters of law. See, e.g., Allen v. State, 118 Wn.2d 753, 760, 826 P.2d 200 (1992). Facts must be considered in the light most favorable to the nonmoving party. See, e.g., Malnar v. Carlson, 128 Wn.2d 521, 534-35, 910 P.2d 455 (1996).

The trial court found that Douglas breached his obligation to deal with his partner Jepson in good faith. Whether a partnership exists depends on the intention of the parties, which is ascertained by examining all of the facts and circumstances, including the parties’ actions and conduct. Malnar, 128 Wn.2d at 535. For example, in Malnar, the parties disputed whether they entered into a partnership for the purchase, sale, and development of a piece of land. The court noted that although the parties had entered into similar partnerships in the past, the issue of whether a partnership existed as to the development of the property in question could not be decided on summary judgment because the nonmoving party declared under oath that no partnership agreement existed. Malnar, 128 Wn.2d at 524-25, 536.

Like the defendant in Malnar,

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945 P.2d 244, 88 Wash. App. 342, Counsel Stack Legal Research, https://law.counselstack.com/opinion/douglas-v-jepson-washctapp-1997.