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Anderson v. Valley Quality Homes Inc.

January 7, 1997

GEORGE L. ANDERSON AND KATHRYN D. ANDERSON, HUSBAND AND WIFE, PETITIONERS,
v.
VALLEY QUALITY HOMES, INC., A WASHINGTON CORPORATION, RESPONDENT.



Appeal from Superior Court of Chelan County. Docket No: 42002042. District Court County: Kittitas. Date filed: 12/01/94. Judge signing: Hon. Michael E. Cooper.

Petition for Review Denied June 3, 1997,

Authored by John A. Schultheis. Concurring: Dennis J. Sweeney, Philip J. Thompson.

The opinion of the court was delivered by: Schultheis

SCHULTHEIS, J. RCW 43.22.440 requires that the Department of Labor and Industries establish minimum standards and rules for the installation of mobile homes, and expressly provides "failure to remedy any breach of the standards and rules so established, upon adequate notice and within a reasonable time, is a violation of the consumer protection act, chapter 19.86 RCW and subject to the remedies provided in that chapter." Valley Quality Homes, Inc., violated building site and foundation standards when it installed George and Kathryn Anderson's mobile home and did not remedy the violations. The District Court concluded Valley violated the consumer protection act (CPA) and awarded the Andersons treble damages and attorney fees. The Superior Court modified the judgment after it concluded (1) RCW 43.22.440 does not create a "per se" CPA violation and (2) the Andersons did not establish a public interest impact, a necessary element of a private CPA action required by Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wash. 2d 778, 719 P.2d 531 (1986). We granted discretionary review and, for the reasons discussed below, we reverse the Superior Court and reinstate the judgment of the District Court.

In August 1991 the Andersons bought a mobile home from Valley after company salesman Robert Nichols approved the staked building site prepared by Mr. Anderson and guaranteed delivery and installation by October 26, 1991. Valley delivered the unit to the site in two pieces on October 25, but placed one-half of it on the prepared pad and one-half of it off the pad. Despite Mrs. Anderson's request that it be properly located, the next day Valley installed the mobile home half on and half off the pad, on inadequate perimeter footings, then later finished the interior and connected water and sewer lines. The improper installation caused uneven settling, resulting in cracked walls, and violated both the manufacturer's installation manual and state regulations.

The Andersons filed this lawsuit in June 1993 in District Court. They sought a $5,000 refund for Valley's failure to have the installation completed by October 26, costs of correcting the improper installation, damages for some uncorrected deficiencies in the home, and treble damages and attorney fees under the CPA. The court found Valley substantially complied with the delivery/installation deadline, so a refund was not warranted, but Valley was liable for the $1,400 cost of installing perimeter footings below the frost line in conformance with regulations and for the $140 cost of repairing a defective shower drain. The court concluded Valley's violations of the Washington Administrative Code (WAC) regulations automatically constituted a violation of the CPA under the express language of RCW 43.22 and, moreover, that the Andersons established all five Hangman Ridge elements of a private CPA action. The court trebled the Andersons' $1,540 actual damages and awarded them $4,620, plus $5,666.55 in attorney fees and $1,643.22 in costs, for a total judgment of $11,929.77.

Valley appealed the judgment to the Superior Court. That court found the facts are not in dispute and Valley violated the WAC regulations at issue, *fn1 but it concluded the Andersons did not establish their CPA claim. The court first addressed the "per se" violation issue, stating:

Hangman Ridge dispels the confusion surrounding the per se language by clarifying its various meanings. "Per se" may indicate either an act that, by statutory declaration, satisfies the unfair and deceptive act or practice element, or an act that satisfies, by statutory declaration, the public interest element. RCW 43.22.440(3) utilizes no special language whatsoever to indicate violations of Chapter 43.22 RCW are either unfair and deceptive acts or practices or public interest impact violations. Therefore, Valley Quality Homes, Inc.'s actions as found by the court are not per se violations. Because there were no per se violations, the burden was on Andersons to prove the elements of the Consumer Protection Act as set out in Hangman Ridge.

(Footnotes omitted.)

The court then agreed the Andersons established four of the Hangman Ridge elements, but it found they did not establish the fifth. The court held there was no factual basis for the trial court's Conclusion that Valley's unfair and deceptive acts and practices, in light of the number of homes it sells, affect the public interest. The court limited the Andersons' award to actual damages and remanded for a determination of the prevailing party for purposes of awarding fees under the terms of the contract. Our commissioner granted discretionary review.

The primary issue before us is whether the Superior Court erred as a matter of law when it held that RCW 43.22.440(3) does not establish a per se violation of the CPA. We conclude it did.

In Hangman Ridge, the Supreme Court identifies five elements, all statutorily based, that a plaintiff must prove in order to prevail in a private CPA action: (1) an unfair or deceptive act or practice, (2) occurring in trade or commerce, (3) which affects the public interest, (4) injury to the plaintiff in his or her business or property, and (5) causation. The court then describes the elements and various ways to establish them.

One way a plaintiff may establish the first two elements is by showing that the alleged conduct constitutes a per se unfair trade practice. The court explains "[a] per se unfair trade practice exists when a statute [that] has been declared by the Legislature to constitute an unfair or deceptive act in trade or commerce has been violated" and gives examples of such statutes: RCW 19.09.340 (charitable solicitations), RCW 19.105.500 (camping clubs), RCW 19.102.020 (chain distribution schemes), RCW 19.110.170 (business opportunities), RCW 18.28.185 (debt adjustment), RCW 18.39.350 (embalming), RCW 58.19.270 (land development), RCW 63.10.050 (consumer leases), and RCW 64.36.170 (time-share offerings). Hangman Ridge, 105 Wash. 2d at 786-87.

The court notes the Legislature, not the court, is the appropriate body to establish the interaction between other statutes and the CPA by declaring a statutory violation to be a per se unfair trade practice. Therefore, the court confirms "[when] the Legislature specifically defines the exact relationship between a statute and the CPA, this court will acknowledge that relationship." Id. at 787 (emphasis added).

A plaintiff may also satisfy per se the third element, a public interest showing, by establishing the defendant violated a statute containing a specific legislative declaration of public interest impact. Examples of such statutes include RCW 46.70.005 ("The legislature . . . declares that the distribution and sale of vehicles . . . vitally affects . . . the public interest . . ."), RCW 46.80.005 (public interest in sales of motor vehicle parts), and RCW 48.01.030 (public interest in the business of insurance). The court "emphasized that when a statute containing a legislative public interest pronouncement can be shown to have been violated, only the public interest requirement is satisfied per se. The other four elements of a private CPA action must be separately established." Hangman Ridge, 105 Wash. 2d at 791-92.

The court then discusses the confusion resulting from different uses of the "per se" terminology in the ...


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