Puget Sound Financial v. Unisearch, Inc.

47 P.3d 940
CourtWashington Supreme Court
DecidedJune 6, 2002
Docket71222-1
StatusPublished
Cited by26 cases

This text of 47 P.3d 940 (Puget Sound Financial v. Unisearch, Inc.) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Puget Sound Financial v. Unisearch, Inc., 47 P.3d 940 (Wash. 2002).

Opinion

47 P.3d 940 (2002)
146 Wash.2d 428

PUGET SOUND FINANCIAL, L.L.C., a Washington limited liability company, f/k/a Factors of Puget Sound, L.L.C., Respondent,
v.
UNISEARCH, INC., a Washington corporation, Petitioner.

No. 71222-1.

Supreme Court of Washington, En Banc.

Argued January 31, 2002.
Decided June 6, 2002.

*941 Foster, Pepper & Shefelman, Camden Hall, Roger Mellem, Sharon Cates, Seattle, for Petitioner.

Young, DeNormandie & Oscarsson, P.C., Karien Balluff, Shannon Braden, Seattle, for Respondent.

Delbert D. Miller on behalf of National Public Records Research Association, amicus curiae.

BRIDGE, J.

Between 1993 and 1996, Puget Sound Financial L.L.C., f/k/a Factors of Puget Sound (Factors), routinely contacted Unisearch, Inc. (Unisearch) by telephone to request that Unisearch search for specified Uniform Commercial Code (U.C.C.), Title 62A RCW, filings in Washington. Unisearch would conduct the requested searches and then send the search results in a report to Factors. All of the search reports included the statement, "The responsibility for maintaining public records rests with the filing officer, and Unisearch, Inc. will accept no liability beyond the exercise of reasonable care."[1] Unisearch charged $25 for each search, and every invoice contained the statement "Liability Limited to Amount of Fee."[2] Unisearch completed 47 such searches prior to the present dispute. We are now asked to determine whether limitations on consequential damages presented in regular invoices for the purchase of commercial services can be enforced against a business purchaser. We hold that these liability limitation clauses are a part of the contract for services between Factors and Unisearch. Factors' recovery, if any, against Unisearch is limited to $25.

FACTS

Factors is in the business of purchasing accounts receivable from companies and loaning money to other businesses. Puget Sound Fin., L.L.C. v. Unisearch, Inc., No. 46705-1-I, slip op. at 2, 2001 WL 508369 (Wash.Ct. App. May 14, 2001). Beginning in 1993, Factors hired Unisearch to conduct searches of U.C.C. filings in Washington to locate existing liens on a potential applicant's assets. Factors would telephone Unisearch and request a U.C.C. search under a particular name. Unisearch would complete the search and then send a search report and invoice to Factors.

In July 1996, Factors contacted Unisearch requesting a search for "The Benefit Group, Inc."[3] Unisearch produced a search report for "The Benefit Group, Inc." indicating that no U.C.C. filings were found. Unisearch charged Factors $25 for this service.

Upon receiving the report, Factors loaned The Benefit Group $100,000, secured by existing and future accounts receivable and other business assets. A year later, The Benefit Group defaulted on the loan. When Factors attempted to realize on the collateral, it discovered *942 that Travelers Insurance Co. (Travelers) had a preexisting priority lien. Travelers' lien was filed under the name, "The Benefits Group, Inc." Unisearch had failed to locate this plural spelling of Factors' requested search.[4]

PROCEDURAL HISTORY

Factors filed a lawsuit against Unisearch in July 1998, alleging negligence and breach of contract. Both parties filed motions for summary judgment, which the trial court denied. The trial court found that there was a triable issue of fact whether Unisearch exercised reasonable care when conducting its search, and a trial was set for March 27, 2000. Prior to trial, both parties filed additional motions for summary judgment; Unisearch claimed that if found liable, Factors' recovery for damages would be limited to $25. The trial court denied Factors' motion for summary judgment on liability, but granted Unisearch's motion for summary judgment on damages, finding that "`[i]f plaintiff were to establish liability ... arising either in contract or in tort, the measure of damages ... would be limited to the cost of the services rendered, viz., $25.00.'"[5] Factors appealed.

The Court of Appeals held that the trial court had abused its discretion in granting Unisearch's motion for summary judgment as to damages and remanded to proceed to trial on both liability and damages. The court stated, "Summary judgment would only be proper if Unisearch is able to show that Factors undisputedly agreed to include the limitations clause in their agreement for subsequent transactions."[6] The court held that "[t]he clause at issue is valid and enforceable as long as a fact finder determines that the parties bargained for the term."[7] The court disagreed with Unisearch's argument that the invoices created a course of dealing warranting summary judgment, stating "Unisearch has not shown that Factors unequivocally agreed to be bound by the terms of the invoice."[8]

Unisearch here seeks review of the Court of Appeals' reversal of the trial court's grant of partial summary judgment limiting Unisearch's potential liability, and Factors' recovery, to $25.

ANALYSIS

Appellate courts review summary judgment motions de novo, interpreting all facts in the light most favorable to the nonmoving party, Factors in this case. Marquis v. City of Spokane, 130 Wash.2d 97, 104-05, 922 P.2d 43 (1996). Summary judgment is appropriate when there are no genuine issues of material fact and the case can be decided as a matter of law. Id.

Contract Formation

Factors and Unisearch entered into an oral contract when Factors contacted Unisearch requesting its services. The terms of the oral contract are not in dispute. The parties do dispute whether the language in the search report and the invoices modified this oral contract, or were part of the contract itself. Factors asserts that it never accepted the liability limitation clause. Unisearch contends that the course of dealing between the parties established the liability limitation clause as part of the contract. As Unisearch emphasized, and we agree in part, "The invoice stated the price and quantity terms. Without both the search report and the invoice, there was no contract." Pet. for Review at 6. We hold that the language in *943 the search reports and invoices was part of the contract.

Trade usage and course of dealing are relevant to interpreting a contract and determining the contract's terms. See generally Bremerton Concrete Prods. Co. v. Miller, 49 Wash.App. 806, 745 P.2d 1338 (1987). Ambiguity is not required before evidence of trade usage or course of dealing can be used to ascertain the terms of a contract. RESTATEMENT (SECOND) OF CONTRACTS §§ 222 cmt. b, 223 cmt. b (1981).

Section 222 of the Restatement pertaining to trade usage states:

(1) A usage of trade is a usage having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to a particular agreement. It may include a system of rules regularly observed even though particular rules are changed from time to time.
(2) The existence and scope of a usage of trade are to be determined as questions of fact. If a usage is embodied in a written trade code or similar writing the interpretation of the writing is to be determined by the court as a question of law.

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Bluebook (online)
47 P.3d 940, Counsel Stack Legal Research, https://law.counselstack.com/opinion/puget-sound-financial-v-unisearch-inc-wash-2002.