Thatcher v. Salvo

128 Wash. App. 579
CourtCourt of Appeals of Washington
DecidedJuly 25, 2005
DocketNo. 54837-9-I
StatusPublished
Cited by8 cases

This text of 128 Wash. App. 579 (Thatcher v. Salvo) 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
Thatcher v. Salvo, 128 Wash. App. 579 (Wash. Ct. App. 2005).

Opinion

¶1 According to the Default provision of the Residential Real Estate Purchase and Sale Agreement (REPSA), if the buyer “fails, without legal excuse, to complete the purchase of the Property,” the seller is entitled to retain the earnest money deposit.1 The buyer, Michael J. Salvo, appeals the trial court’s decision that the sellers, David and Carol Thatcher, were entitled to retain his earnest money deposit as damages under the Default provision of the REPSA. We conclude the financing contingency in the REPSA provides a legal excuse for Salvo’s failure to complete the purchase, and Salvo’s failure to provide notice under the Financing Addendum does not establish a breach of the Default provision in the REPSA. We reverse and remand.

Schindler, J.

FACTS

¶2 On June 30, 2003, David and Carol Thatcher accepted Michael Salvo’s offer to purchase their waterfront home in Seattle for $845,000. The Thatchers and Salvo executed a standard form REPSA.2 The standard form Financing Addendum was incorporated into the REPSA.3 The REPSA closing date was scheduled for August 20,2003. The REPSA required an $18,000 earnest money deposit from Salvo. The parties in the Financing Addendum made the REPSA contingent on Salvo obtaining a conventional purchase loan and required him to apply for financing within five days. [582]*582The Financing Addendum also includes seller and buyer termination notice provisions. Salvo submitted a completed loan application to his lender on June 30.

¶3 As the August 20 closing date approached, Salvo told the real estate agent his lender had not approved the loan application and he was unable to obtain financing to purchase the house by the closing date. At Salvo’s request, the Thatchers agreed to extend the closing date to August 29.

|4 On August 26, the Thatchers received another offer to purchase the property for $871,000. Because of the uncertainty about Salvo’s ability to meet the closing deadline and purchase the property, the Thatchers began negotiations with the prospective buyer. On August 27, the real estate agent told Salvo the Thatchers were considering another offer and emphasized the need to obtain financing before the REPSA expired on August 29.

¶5 Salvo did not have financing by the August 29 closing date. On September 2, the Thatchers sent a letter to the real estate agent with an itemized list of improvements Salvo requested for a total cost of $1,752.60. The Thatchers said they would withhold the amount from Salvo’s earnest money if Salvo did not tender funds to purchase the house. On September 4, the Thatchers accepted the other offer and scheduled the closing date for October 9. Salvo obtained approval for the loan from his mortgage lender on September 5.

f 6 On September 9, Salvo received a Rescission of Purchase & Sale Agreement (Rescission) signed by the Thatchers. In the Rescission, the escrow company was directed to disburse $1,752.60 of the $18,000 earnest money to the Thatchers and the remainder to Salvo. Salvo did not agree or sign the Rescission.

¶7 On September 10, Salvo filed a lis pendens against the Thatchers’ property. On September 17, the Thatchers demanded removal of the lis pendens and threatened to sue Salvo for wrongfully clouding title if he did not. On September 23, Salvo filed a document entitled “Memorandum and [583]*583Notice of Interest in Real Property” (Notice of Interest).4 The Notice of Interest asserted a contractual right to purchase the Thatchers’ house. On September 25, the Thatchers again requested Salvo remove the lis pendens and the Notice of Interest. The Thatchers offered to return most of the earnest money to Salvo but retain $5,000 for attorneys’ fees incurred in response to the lis pendens and $1,752.60 for the repairs Salvo asked them to make on the property. On October 3, Salvo filed a lien release form purporting to release the lis pendens, but not the Notice of Interest.

¶8 As a result of the lis pendens and Notice of Interest, the buyers who made the other offer refused to purchase the property.

¶9 On October 31, 2003, the Thatchers sued Salvo for breach of the REPSA, slander of title, to quiet title, and for damages. The Thatchers requested damages under ROW 4.28.320, ROW 7.28.150, and Rorvig v. Douglas, 123 Wn.2d 854, 873 P.2d 492 (1994), for breach of the REPSA, loss of the bargain, carrying costs, and unfavorable tax consequences. The Thatchers asked the court to enter a temporary restraining order quashing the lis pendens and Notice of Interest, a declaratory judgment quieting title to their property and awarding them the earnest money, prejudgment interest, and attorneys’ fees and costs. Salvo answered and asserted counterclaims against the Thatchers for specific performance of the REPSA and return of the earnest money.

f 10 The Thatchers filed a motion for partial summary judgment to quash the lis pendens, dismiss Salvo’s counterclaim for specific performance, and strike Salvo’s affirmative defenses relating to specific performance. The Thatchers argued the REPSA expired when Salvo failed to close on August 29, and therefore Salvo had no right to purchase the property.

[584]*584¶11 The trial court granted the Thatchers’ motion for partial summary judgment and ruled the REPSA expired on the closing date, August 29, 2003. The court quashed the lis pendens and Notice of Interest because Salvo did not have “any subsisting contractual interest” in the property.5

¶12 After the court granted the Thatchers’ motion for partial summary judgment, the Thatchers agreed to sell their house to the same buyers who made the offer in August 2003. The sale closed on April 29.

¶13 The Thatchers filed a motion for final summary judgment arguing they were entitled to a judgment awarding them the earnest money as liquidated damages for Salvo’s default under the REPSA, damages from Salvo improperly filing the lis pendens and Notice of Interest, prejudgment interest and attorneys’ fees and costs. Salvo claimed he was entitled to return of his earnest money deposit because, after good faith efforts, he was unable to obtain financing, and the Thatchers did not establish the necessary elements for slander of title damages. The court ruled that as a matter of law, Salvo was in default under the REPSA because he failed, without legal excuse, to purchase the property on August 29. The court awarded the Thatchers the $18,000 earnest money deposit, damages resulting from the filing of the lis pendens including the mortgage interest, real estate taxes, utilities and insurance the Thatchers paid on the property, prejudgment interest on the earnest money deposit and actual damages, and attorneys’ fees and costs. Salvo appeals.

ANALYSIS

¶[14 Salvo argues the trial court erred in ruling the Thatchers were entitled to the earnest money deposit under the terms of the Default provision of the REPSA.

¶[15 When reviewing a decision to grant summary judgment, this court engages in the same inquiry as the [585]*585trial court. Reynolds v. Hicks, 134 Wn.2d 491, 495, 951 P.2d 761 (1998).

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Bluebook (online)
128 Wash. App. 579, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thatcher-v-salvo-washctapp-2005.