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Three Ace Construction Co. v. Hall

December 19, 1996

THREE ACE CONSTRUCTION CO., INC., A WASHINGTON CORPORATION, RESPONDENT,
v.
NORMA L. HALL, AND NORMA L. HALL, AS PERSONAL REPRESENTATIVE OF THE ESTATE OF JOHN A. HALL, JR., DECEASED; ALSO ALL OTHER PERSONS OR PARTIES UNKNOWN CLAIMING ANY RIGHT, TITLE, ESTATE, LIEN, OR INTEREST IN THE REAL ESTATE DESCRIBED IN THE COMPLAINT HEREIN, APPELLANTS. NORMA L. HALL, AND NORMA L. HALL, AS PERSONAL REPRESENTATIVE OF THE ESTATE OF JOHN A. HALL, JR., DECEASED, RESPONDENT/CROSS-CLAIMANT, V. DELFIN R. ABREJERA AND ELLEN ABREJERA, HUSBAND AND WIFE D/B/A 3 ACE CONSTRUCTION CO., INC.; AND 3 ACE CONSTRUCTION CO., INC., A WASHINGTON CORPORATION; AND THREE ACE CONSTRUCTION CO., INC., A BUSINESS ENTITY; AND AMERICAN STATES INSURANCE COMPANY, A CORPORATION; JOHN DOE AND JANE SMITH, AN UNMARRIED MAN AND AN UNMARRIED WOMAN, DEFENDANTS.



Appeal from Superior Court of King County. Docket No: 92-2-10990-5. Date filed: 07/11/94. Judge signing: Hon. Michael J. Fox.

Authored by Faye C. Kennedy. Concurring: Walter E. Webster, William W. Baker.

The opinion of the court was delivered by: Kennedy

KENNEDY, A.C.J. -- Three Ace Construction sued Norma and John Hall after they refused to purchase the home constructed for them by Three Ace.

The Halls claimed that the home was defective. After a bench trial, Three Ace obtained a judgment for the contract balance less certain credits and for attorney fees against the Halls. Norma Hall *fn1 appeals, contending that the court erred in concluding that Three Ace substantially performed its duties under the contract, in setting the amount of damages, and in awarding attorney fees. Both parties request attorney fees on appeal. We affirm in part, reverse in part, and award attorney fees on appeal to Hall.

FACTS

During the spring and summer of 1990, John and Norma Hall looked at homes throughout the south Seattle area in anticipation of building a home of their own. The couple wanted their new home to be fully accessible to Mr. Hall, who had had one of his legs amputated. In early summer 1990, the Halls noticed and became interested in the "Chinn house." They met with the builder, Del Abrejera of Three Ace Construction, Inc., and his wife Ellen. A series of Discussions culminated in the Halls' purchase of a lot and the parties' entry into a contract for the construction of a home very similar to the Chinn house on that lot. By the terms of the agreement, the Halls quit-claimed the lot to Three Ace and Three Ace took out a construction loan, secured by a deed of trust against the property. Three Ace agreed to be totally responsible for the payment of the construction loan, and to reconvey the house and lot to the Halls when the home was built, free and clear of encumbrances.

The Hall lot was steeper and narrower than the lot upon which the Chinn house stood. During the next few months, the Halls met with Three Ace's building designer, John Fliss, on several occasions and were informed that the Three Ace standard design used for the Chinn home would have to be modified to meet the particular configurations of the Hall lot. After the building plans were reviewed *fn2 by the Halls, they were submitted to the Seattle Department of Construction and Land Use, and approved.

Construction began shortly thereafter.

Three Ace was aware that the ease of Mr. Hall's accessibility into the home was very important to the Halls. The Chinn home, upon which the Hall home was modeled, had no difference in elevation between the garage floor and the floor of the family room. Similarly, the plans for the Hall home provided for no change in elevation between the garage and the family room because the Halls had planned for Mr. Hall to be able to easily enter from the garage and to use rooms on that level for his personal bedroom and bathroom.

Three Ace encountered difficulty in laying out the foundation for the house in such a way that the garage floor and the family room floor were level. If the floors were constructed as planned, the driveway would be steeper than the 20% grade limit set by the Seattle Building Code. Mr. Abrejera discussed the problem with Mr. Hall, who was then recovering from the amputation of his other leg. Mr. Hall rejected Abrejera's proposed solution of lowering the garage floor to four feet below the elevation of the family room. The Halls wrote to Abrejera and requested that the garage and family room floors be made level despite the fact that this would change the driveway approach. After consulting with a Seattle building inspector at the site, Mr. Abrejera agreed to raise the garage to the level of the family room and to change the slope of the driveway so that a portion of it would exceed the 20% grade limit.

Four days after their first letter, the Halls again wrote to Mr. Abrejera, directing that construction be stopped until problems relating to the size of the dining room and the foundation of the garage had been resolved. Mr. Abrejera received the letter but refused to stop construction. He proceeded to build the home as provided in the original plans but with an increased driveway slope.

The home was completed in April 1992. Despite the fact that portions of the driveway exceeded the 20% grade limit set by the Seattle Building Code, City inspectors issued a certificate of occupancy. The Halls, after inspecting the home, believed that it departed significantly from the house they had agreed to purchase and refused to proceed to closing. If the deal had closed, the Halls would have paid Three Ace $189,000 obtained through their own financing, and Three Ace would have paid off the construction loan, including accrued interest, and would also have been obligated to pay off a sewer lien against the property. Eventually, Three Ace quitclaimed the house and lot to the construction lender, in full satisfaction of the construction loan.

Three Ace sued the Halls, requesting among other alternative forms of relief damages and attorney fees for the breach of the parties' purchase and sale agreement. By Three Ace's calculations at trial, the Halls owed $13,000 representing the profit that Three Ace expected to make on the deal. The Halls counterclaimed, requesting among other things the return of their down payment and the purchase price of the lot.

The trial Judge found that although the home did not comply in every respect with the plans, it did not suffer from any defect so material as to release the Halls from their contractual obligation. The Judge concluded that Three Ace had substantially performed and awarded it the $13,000 projected profit, offset for credits given to the Halls ...


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