FRANCALANGIA v. 603 FIFTH AVENUE, 52003-2-I (Wash.App. 11-1-2004)

No. 52003-2-IThe Court of Appeals of Washington, Division One.
Filed: November 1, 2004 UNPUBLISHED OPINION

Appeal from Superior Court of King County. Docket No. 01-2-10136-6. Judgment or order under review. Date filed: 02/13/2003. Judge signing: Hon. Terry Lukens.

Counsel for Appellant/Cross-Respondent, Charles Edward Watts, Attorney at Law, 850 Skyline Twr, 10900 NE 4th St, Bellevue, WA 98004-5873.

Counsel for Respondent/Cross-Appellant, Samuel Ervin Jr Baker, Oles Morrison Rinker Baker LLP, 701 Pike St Ste 1700, Seattle, WA 98101-3930.

John Todd Henry, Oles Morrison Rinker Baker, 701 Pike St Ste 1700, Seattle, WA 98101-3930.

Eileen I. McKillop, Oles Morrison Rinker Baker LLP, 701 Pike St Ste 1700, Seattle, WA 98101-3930.

APPELWICK, J.

The Francalangias brought suit against 603 Fifth Avenue, L.L.C. (603 Fifth Avenue), the developer of their condominium, and its two members after some apartments constructed across the street obstructed the view from their condominium. Prior to the Francalangia’s purchase of their condominium, the sales agent for the developer had shown them a model of the condominium building and its surroundings to illustrate view potential from the condominium’s upper floor units. The model depicted a prospective, neighboring building, the Tera Apartments, as permitting a clear view of the landscape from the Francalangia’s condominium. Once built, however, the Tera Apartments did obstruct the view from the Francalangia’s unit. The trial court found that the developer breached an express view warranty under the Washington Condominium Act (WCA) and negligently misrepresented the view prospects. The trial court awarded the Francalangias damages of $60,000. The trial court dismissed charges against the two individual members of 603 Fifth Avenue. The Francalangias argue on appeal that they should have been awarded a greater amount in damages, and that the trial court erred in dismissing claims against the 603 Fifth Avenue’s individual members. The respondents cross-appeal the trial court’s finding that the view waivers in the parties’ Addendum to their Purchase and Sales Agreement (PSA) and in the Public Offering Statement (POS) were inoperable under the WCA. We hold the view waivers were effective. We reverse the trial court’s award to the Francalangias. We affirm the trial court’s dismissal of Skillingstad and Godfrey.

FACTS
603 Fifth Avenue was the developer of a condominium project located at 520 Sixth Avenue (520 Condominiums) in Kirkland. Phil Godfrey (Godfrey) and Jeff Skillingstad (Skillingstad) were each 50/50 members of the L.L.C. In 1996, 603 Fifth Avenue entered into a contract with Skillingstad Construction Company for the construction of the 520 Condominiums. James and Jinnie Francalangia attracted by the emphasis on `incredible views’ in 603 Fifth Avenue’s advertisements for the 520 Condominiums, became interested in purchasing a unit in the summer of 1998.

In 1997, SECO Development, Inc. (SECO) was in the early phases of the construction of an apartment complex, the Tera Apartments, located directly south of the 520 Condominium building. In response to Kirkland’s construction moratorium, SECO filed suit against Kirkland to enjoin it from stopping the Architectural Design Review (ADR) process of the Tera Apartments. In October, 1997, the city of Kirkland and SECO entered in to a Stipulated Order. A set of hand-drawn plans (courtesy drawings) for the Tera Apartments were attached to the Stipulated Order. The drawings indicated that the maximum height of the three Tera Apartment buildings would be 134 feet. This height was below the level of the Francalangia’s fifth floor condominium. The Stipulated Order provided that Kirkland would continue the ADR process, but that any deviation of the building `bulk, mass, height, or setback’ from the drawings attached to the Stipulated Order were subject to the City’s approval.

In December 1997, 603 Fifth Avenue hired an architectural firm to create a `massing’ model (the model) of the 520 Condominiums. Constructed of foam and cardboard and based on the courtesy plans and on drawings of surrounding structures on file with the Kirkland Building Department, the model included a replica of the proposed Tera Apartments. The model showed the height of the planned Tera Apartments as lower than the Francalangia’s fifth floor condominium. 603 Fifth Avenue received the finished massing model in January 1998.

In January 1998, 603 Fifth Avenue also commissioned the architects to create composite photographs (CADD photographs) depicting the potential views from the 520 Condominium, and the possible impact to those views of the Tera Apartment project. The CADD photographs were also based on the courtesy drawings and on other information obtained from the Kirkland Building Department. Both the model and the CADD photographs were given to Torgerson Associated/Coldwell Banker Bain (CBB) the real estate agency marketing the 520 Condominiums. The model and CADD photographs were housed in 603 Fifth Avenue’s sales office, first located at one of 603 Fifth Avenue’s nearby project sites, and later, in the 520 Condominium building itself.

In July 1998, Mr. Francalangia called Mary Geisel (Geisel) to arrange to see the 520 Condominiums. Geisel was listed in marketing materials, including brochures and newspapers, as the contact person for the 520 Condominiums. When Mr. Francalangia inquired about the height of the Tera Apartments, Geisel stated that although the fourth floor units of the 520 Condominium building might have compromised views, the fifth floor units would have `sweeping views,’ as depicted on 603 Fifth Avenue’s marketing brochure. The model contained no warning, limitation or other disclaimer that it might not accurately represent the finished height of the Tera Apartments. Geisel did not inform the Francalangias that the model might not accurately represent the finished height of the Tera Apartments. In July 1998, the Francalangias entered into a Condominium PSA and an Addendum to the PSA (Addendum), for a fifth floor unit of the 520 Condominiums. The Addendum stated, in part:

Buyer acknowledges that the Unit is in an urban environment and Seller makes no warranties regarding views.

The Francalangias also read, signed, and received a copy of the 520 Condominiums POS, which stated, in part:

The Seller makes no warranty or representation that the view from the Unit will not be obstructed in whole or in part at any time in the future.

The Francalangias closed on their condominium sometime in late August or September 1998. In October 1998, SECO submitted revised drawings of the Tera Apartments showing that their height would be higher than represented on the initial courtesy drawings which 603 Fifth Avenue had obtained in 1997. In March 2001, the Francalangias filed an action against the respondents alleging that they had misrepresented views, had breached express and implied warranties under the WCA, and violated Washington’s Consumer Protection Act (CPA).

The trial court concluded that the view waiver contained in the Addendum was inoperable because the Tera Apartments were not completed until after the parties had signed the Addendum. The trial court also concluded that Geisel was 603 Fifth Avenue’s apparent agent, and that the model was an express view warranty under the WCA, RCW 64.34.443(1)(b). The trial court also found that 603 Fifth Avenue had negligently misrepresented the 520 Condominium’s view potential. The trial court awarded the Francalangias $60,000 in damages, and approximately $25,000 in attorney fees and costs, against 603 Fifth Avenue. The trial court dismissed with prejudice the Francalangia’s claims against Godfrey and Skillingstad. The Francalangias on appeal assert that the trial court erred in awarding them only $60,000 in damages. They also appeal the trial court’s dismissal, with prejudice, of their claims against Godfrey and Skillingstad.[1] The respondents cross-appeal the trial court’s conclusion that the view waiver in the Addendum was inoperable. They also appeal the trial court’s conclusion that 603 Fifth Avenue negligently misrepresented the view from the Francalangia’s unit. Finally, the respondents’ cross-appeal the trial court’s conclusion that Geisel was 603 Fifth Avenue’s apparent agent.

ANALYSIS I. View Waiver
We first address the respondents’ assertion that the trial court erred when it concluded that under chapter 64.34 RCW the view waiver contained in the Addendum was inoperable. Statutory interpretation is a question of law, reviewed under an error of law standard. Marina Cove Condo. Owners Ass’n v. Isabella Estates,109 Wn. App. 230, 235, 34 P.3d 870 (2001).

On July 21, 1998, the Francalangias read and signed a PSA and an Addendum to the PSA. The Addendum included the following provision:

Buyer acknowledges that the Unit is in an urban environment and Seller makes no warranties regarding views.

The Tera Apartments’ building permit was revised a number of times and did not become final until the fall of 1998, after the Francalangias signed the Addendum.

The trial court concluded:

The claimed `waiver’ in the Addendum to the Condominium Purchase and Sale Contract signed by the parties as to view does not apply in this situation given the fact that at the time the waiver was signed by the Plaintiffs, the `defect’ in terms of the ultimately built Tera Apartments would not exist and therefore there was simply no defect to `waive.’

RCW 64.34.445, the WCA, provides condominium purchasers the benefit of the following implied warranties:

(1) A declarant and any dealer warrants that a unit will be in at least as good condition at the earlier of the time of the conveyance or delivery of possession as it was at the time of contracting, reasonable wear and tear and damage by casualty or condemnation excepted.
(2) A declarant and any dealer impliedly warrants that a unit and the common elements in the condominium are suitable for the ordinary uses of real estate of its type and that any improvements made or contracted for by such declarant or dealer will be:

(a) Free from defective materials; and

(b) Constructed in accordance with sound engineering and construction standards, and in a workmanlike manner in compliance with all laws then applicable to such improvements.

RCW 64.34.445(4) permits declarants to exclude or modify these implied warranties `as specified in RCW 64.34.450.’ RCW 64.34.450
states:

(1) Except as limited by subsection (2) of this section, implied warranties of quality:
(a) May be excluded or modified by written agreement of the parties; and
(b) Are excluded by written expression of disclaimer, such as “as is,” “with all faults,” or other language which in common understanding calls the buyer’s attention to the exclusion of warranties.
(2) With respect to a purchaser of a unit that may be occupied for residential use, no general disclaimer of implied warranties of quality is effective, but a declarant and any dealer may disclaim liability in an instrument signed by the purchaser for a specified defect or specified failure to comply with applicable law, if the defect or failure entered into and became a part of the basis of the bargain.

(Emphasis added.) Contemplating the Legislature’s purpose in adopting the WCA, this court in Marina Cove stated:

Thus it is not knowledge of existing defects that is material, but rather the awareness of the significant financial exposure a buyer faces by reason of the disclaimer. Although these disclaimers will generally be executed in the context of conversion condominiums, paragraph 5 makes clear that a declarant/dealer of a new condominium may make specific disclaimers as well. Consistent with the [Uniform Condominium Act] Comment, we hold that specific defects need not be known at the time of contracting in order to properly disclaim an implied warranty under the WCA.

Marina Cove, 109 Wn. App. at 242 (emphasis added).[2] Accord Park Avenue Condo. Owners Ass’n v. Buchan Dev., LLC, 117 Wn. App. 369, 376-77, 71 P.3d 692 (2003). Therefore, it was error for the trial court to conclude the waiver was inoperative because the defect did not exist at the time the Addendum was signed.

The Francalangias assert that the waiver language in the Addendum was boilerplate language, and thus not part of the bargain, as required under RCW 63.34.450. They contend that there is no evidence that the disclaimer in the Addendum was part of the bargain. We disagree.

Mr. Francalangias testified that a view was `a necessity’ and affected the Francalangias’ decision to purchase their 520 Condominium unit. The importance of view to the Francalangias suggests that they had more, not less, incentive to be vigilant in their review of the Addendum.

Nevertheless, as Mr. Francalangia testified, he and Mrs. Francalangia read, understood, and initialed every page of the Addendum prior to signing it. We conclude that the view waiver was part of the basis of the bargain.

The Francalangias argue that the model constituted an express warranty regarding views under RCW 64.34.443(1)(b) the WCA’s express warranty provision, which states:

Any model or written description of the physical characteristics of the condominium at the time the purchase agreement is executed, including plans and specifications of or for improvements, creates an express warranty that the condominium will conform to the model or description except pursuant to RCW 64.34.410(1)(v).

The Francalangias assert that Geisel negligently represented the view in statements to them and by displaying the model to them in the sales office. They also contend that Godfrey and Skillingstad should be liable based on directing the creation of the model, making it available to prospective purchasers, and as principals for Geisel as an apparent agent.

In addition to the Addendum, the Francalangias read, signed, and received a copy of the 520 Condominiums POS, which stated:

The Seller makes no warranty or representation that the view from the Unit will not be obstructed in whole or in part at any time in the future.

It also stated:

REPRESENTATIONS. A purchaser may not rely on any representation or express warranty unless it is contained in the public offering statement or made in writing signed by the declarant or by any person identified in the public offering statement as the declarant’s agent. The Declarant does not designate any agent for the foregoing purpose.

Finally, the POS stated:

Purchaser and Selling Agent further acknowledge: that Selling Agent does not have the authority to make, and has not made, any representation or promise on behalf of Seller; and that Seller is liable only for representations and promises contained either in the P.O.S. or other written document signed by Seller.

Although the trial court discussed only the view waiver in the Addendum, we note that the court’s holding in Marina Cove that `whether a defect was known and existing at the time of disclaimer is not determinative of its validity’ is applicable to the POS as well. Marina Cove, 109 Wn. App. at 240.

The Francalangias knowing and voluntary execution of the Addendum and the POS were subsequent to the representations made by Geisel and subsequent to the viewing of the model. The Addendum and the POS clearly raised an issue central to the Francalangias’ purchase — the view. The Addendum and the POS indicated that the model, representations made by anyone other than the seller, and warranties not contained in the POS were not authorized, not valid, and could not be relied upon. The Francalangias admittedly read the provisions on view waiver in the Addendum and read the POS and voluntarily signed both. We hold that the Addendum and POS effectively disclaimed and extinguished any express warranty that may have arisen from the model or from Geisel’s representations. Because the view waiver was valid, we reverse the judgment of the trial court.

III. Attorney Fees and Costs
We need not address the remaining issues in this appeal except for attorney fees. The respondents assert that the trial court erred in finding them liable for fees and costs under the CPA. They also assert that they are entitled to fees and costs on appeal.

`A party is entitled to attorney fees on appeal if a contract, statute, or recognized ground of equity permits recovery of attorney fees at trial and the party is the substantially prevailing party.’ Hwang v. McMahill, 103 Wn. App. 945, 954, 15 P.3d 172 (2000).

The PSA provision for attorney fees was deleted by the parties. The respondents note that the Francalangias did not prove a CPA claim in the proceedings below. We conclude that neither the contract nor the CPA provide a basis for fees. The remaining possible basis for fees is RCW 64.34.455, which states:

If a declarant or any other person subject to this chapter fails to comply with any provision hereof or any provision of the declaration or bylaws, any person or class of persons adversely affected by the failure to comply has a claim for appropriate relief. The court, in an appropriate case, may award reasonable attorney’s fees to the prevailing party.

Clearly the respondents are the prevailing party on this appeal. However, we do not believe this is an appropriate case for award of fees contemplated by the statute. This is largely a case of first impression regarding waiver of not only implied warranty under the WCA, but also of apparent express warranties imposed by the WCA. The respondents were responsible for the preparation of the model and authorizing a selling agent to display the model which constituted an express warranty under the statute. They were also responsible for preparation of the Addendum and the POS, which contained view waivers which purported to eliminate the warranties they previously created. In this way they created the conflict over which they were sued. The Francalangias were responsible for their own choices and actions. Both parties contributed significantly to the controversy. We decline to award fees.

IV. Conclusion
The trial court erred in concluding that the view waivers contained in the Addendum and in the POS were inoperable under the WCA. The Francalangias waived any view warranty they may have otherwise had when they signed the Addendum and the POS. We reverse the trial court’s award of $60,000 in damages, and $25,000 in fees and costs to the Francalangias. We affirm the trial court’s dismissal of Skillingstad and Godfrey as individual plaintiffs.

GROSSE and W. BAKER, J., Concur.