Hosmer Holdings, Llc v. Baylis Architects, Inc.

Court of Appeals of Washington·Decided February 10, 2020·No. 79597-0·Unpublished

Opinion

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

HOSMER HOLDINGS LLC, a ) Washington limited liability company, ) No. 79597-0-I )

Appellant, ) DIVISION ONE

v. )

BETTY TONG and BML DEVELOP- ) MENT CORPORATION, a Washington ) corporation, )

Defendants, )

)

and ) UNPUBLISHED OPINION )

BAYLIS ARCHITECTS, INC., a ) FILED: February 10, 2020 Washington corporation, and ) COLLIERS INTERNATIONAL WA, LLC,) a foreign limited liability company, )

)

Respondents.

SMITH, J. — In 2017, Hosmer Holdings LLC discovered that a commercial

property it owned in Bellevue contained less square footage than Hosmer believed when it purchased the property in 2016. It sued Colliers International

WA LLC, which in 2014 had provided an offering memorandum containing an incorrect square footage for the property to Oscar Pong, a Hosmer principal. It also sued Baylis Architects Inc., whose principal displayed an incorrect square footage for the property during a May 2016 meeting with Pong. Hosmer asserted claims of negligent misrepresentation and violation of the Consumer Protection Act (CPA), chapter 19.86 RCW, against both Colliers and Baylis. The trial court

No. 79597-0-1/2 summarily dismissed all claims, and Hosmer appeals.

We hold with regard to Hosmer’s negligent misrepresentation claims that Hosmer failed to raise a genuine issue of material fact as to whether the square footage information provided by Colliers and Baylis proximately caused damages to Hosmer. We hold further that Hosmer failed to raise a genuine issue of material fact with regard to the injury and causation elements of its CPA claims. Therefore, we affirm.

BACKGROUND

This case arises from the sale of a property located at 10223 NE 10th Street in Bellevue (Property), which was purchased by BML Development Corporation in 1989. In 1995, BML retained Brian Brand of Baylis Architects to design a retail building, known as the Moltissimo Building, on the Property. The Moltissimo Building was constructed between 1996 and 1997. A site plan prepared by Baylis in 1996 indicated that the Property was 29,081 square feet. Baylis did not perform any design services on the Moltissimo Building after construction was completed in 1997.

In approximately 2014, BML, through its principal, Betty Tong, began discussing marketing the Property with Colliers. Colliers and BML entered into a written listing agreement effective April 28, 2014. Colliers prepared marketing materials for the Property, including a multipage offering memorandum describing the Property. In its executive summary, the offering memorandum states, “The site is 34,001 square feet.” And on its “Property Information” page, the memorandum states that the “Land Area” is “34,001 SF / 0.78 Acres per

No. 79597-0-1/3 KCAO.” The term “KCAO” is not defined in the memorandum, but Pat Mutzel, a Colliers agent involved in marketing the Property, later explained that it stands for “King County Assessor’s Office.” Specifically, Mutzel declared that Tong did not give Colliers any information about the Property’s dimensions; thus, Colliers used the 34,001 square footage stated on the KCAO website. The offering memorandum’s table of contents page contains a disclaimer stating, in part, ‘Colliers International makes no guarantees, representations or warranties of any kind . . . regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information.”

Mutzel also testified in his declaration that Colliers had engaged an architect, Carlos de Ia Torre, to create conceptual drawings for the marketing materials. In an April 28, 2014, email on which Mutzel was copied, de Ia Torre wrote, “{Mutzel}- Thanks again . . . One thing that is strange is that the King County Parcel info and Bellevue info state this as 34,001 square feet, but when I dimension it from the maps I am only getting around 28,300 or so.” Mutzel later testified that because de Ia Torre was not a land surveyor and Mutzel did not know how de Ia Torre came up with that square footage, Colliers was comfortable using the figure from the KCAO website “and telling buyers where we got that information and letting them rely on their own efforts to make sure that’s accurate or not.”

In 2014, Mutzel met with Oscar Pong, a senior member of the Pong family, to discuss the Property. The Pong family has, through various entities,

No. 79597-0-1/4 purchased and redeveloped several commercial properties, and Oscar Pong has been the family member primarily responsible for selecting properties and negotiating their purchase. According to his deposition testimony, Pong began developing hotels in the 1980s and has since developed 10 to 20 commercial properties. At the 2014 meeting, Mutzel gave Pong a copy of the offering memorandum. After that meeting, Pong reviewed the memorandum but decided not to make an offer on the Property. In August 2014, BML’s listing agreement with Colliers expired. Although BML allowed Colliers ‘to continue to market the property for a short time after expiration,” Colliers’ “exclusivity pretty much ended at the end of [the] 2014 calendar year.”

In 2015, Pong discussed the Property with another agent, Steven Paravia of SRE Commercial, who had become involved in marketing the Property. Paravia gave Pong another copy of the Colliers offering memorandum. On May 11, 2015, Pong made an offer of $13 million for the Property on behalf of MBK LLC, a Pong family entity. According to Pong’s later declaration, this offering price “was based upon approximately $382 per square foot for 34,001 square feet.” BML did not accept the offer.

Pong remained interested in the Property, and Tong suggested that he meet with Brand to discuss redevelopment opportunities for the Property. Brand later recalled that Paravia asked “whether [Brand] would be willing to meet with a buyer interested in redeveloping the property” and that “the buyer had some questions about developing a high-rise building and wanted to discuss how to achieve maximum building height.”

No. 79597-0-115 Brand met with Pong, Pong’s son Paul, Paravia, and another broker in May 2016. Brand later explained that at the time of the May 2016 meeting, the maximum building height for the Property was 90 feet for residential use, but that an anticipated change to Bellevue’s land use code would allow a residential use building on the Property to be developed up to 160 feet. At the meeting, Brand offered his opinions regarding how to maximize building height under the anticipated code change. To facilitate the discussion, Brand “typed the Moltissimo Building’s address into [the] King County’s Parcel Viewer website.” Brand later explained that doing so allowed him to confirm the Property’s location and ascertain the property’s zoning designation. A pop-up window appeared with information about the Property, including its area. Brand displayed the Parcel Viewer results on a monitor for the benefit of those present at the meeting. The pop-up window indicated that the Property’s area was 34,001 square feet. According to Pong, Brand “referenced the 34,001 square footage, and discussed development possibilities using that square footage.” The meeting lasted about an hour. When asked at his deposition about the purpose of the meeting and whether his offering price for the Property changed after the meeting, Pong testified:

A. So originally the price already gone from 13 million to 15 million, and I say no more. But the seller, Betty Tong, insisted [on] $16 million. And she said that, You can build more than 90; you can go ahead and ask the architect; you can actually build to 160. That’s why we had [the] meeting with Baylis Architect[s].

And then after the meeting, I was thinking, if I can really build so tall, then I will accept the $16 million, so that’s after the meeting. And this is also based on 34,000 square foot, and I can build up to 160 feet. That’s why I accepted

No. 79597-0-1/6

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