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Bastaich v. Kenworth Northwest Inc.

April 28, 1997

GEORGE P. BASTAICH, D/B/A GEORGE'S AUTO SALES, APPELLANT, CROSS-RESPONDENT,
v.
KENWORTH NORTHWEST, INC., RESPONDENT, CROSS-APPELLANT.



Appeal from Superior Court of King County. Docket No: 93-2-23005-2. Date filed: 06/14/95. Judge signing: Hon. Robert S. Lasnik.

Authored by Susan R. Agid. Concurring: Ann L. Ellington, H. Joseph Coleman.

The opinion of the court was delivered by: Agid

AGID, J. -- In 1993, George P. Bastaich purchased a new truck from Kenworth Northwest, Inc. under a conditional sales agreement. The agreement contained a "cross-collateralization clause" giving Kenworth a security interest in the truck to secure all past and future debts.

Bastaich's former girlfriend defaulted on the couple's prior debt to Kenworth and it repossessed the new truck. Bastaich filed a complaint for conversion, which the trial court dismissed on Kenworth's summary judgment motion. Bastaich appeals the trial court's order, arguing that the clause was voidable under the doctrines of unilateral mistake, substantive and procedural unconscionability, that it lacked mutual assent and consideration, and was waived or modified by Kenworth. We disagree and affirm the trial court. Kenworth cross-appeals for attorney fees.

FACTS

George Bastaich and his long-term girlfriend, Barbara Wilmoth, entered into a contract with Kenworth for the sale of used trucks and equipment in 1991. The contract listed Bastaich and Wilmoth as the buyers and Kenworth as the seller. Bastaich and Wilmoth later separated and their property was divided in dissolution proceedings. The court assigned the Kenworth debt to Wilmoth. After the dissolution, Bastaich went to Walter Beard, Kenworth's director of corporate credit, and asked to be removed from the 1991 debt. Beard refused, but did tell Bastaich that he understood that Wilmoth had possession and control of the collateral. He also told Bastaich that he would not be involved in the account unless it went into default, in which case he would remain responsible for the debt.

In 1993, Bastaich began operating his own auto sales business and approached Kenworth to arrange for a conditional sales agreement for a new truck. That contract contained the disputed "cross-collateralization clause" which gives the seller a security interest in the truck to secure all past, present, and future debt arising between the buyer and seller.

The clause gave Kenworth a security interest in the new truck as collateral for the 1991 debt as well as the debt Bastaich incurred in the purchase of the truck. Both contracts stated that the seller was entitled to repossess the collateral if it became insecure and specifically provided that the buyer's failure to pay the agreed sum was grounds for the seller's insecurity.

After Bastaich signed the 1993 contract, neither he nor Wilmoth made the June, July, or August payments on the 1991 debt. Kenworth sent two letters to Bastaich, informing him that the prior debt was in default.

Bastaich admits that he received these letters. On September 2, 1993, he brought his new truck into Kenworth's shop for repairs, and Kenworth repossessed it. Kenworth repossessed the new truck, rather than the trucks purchased under the 1991 agreement, because it was in the Kenworth shop at the time, and the other trucks would have been more difficult to locate.

On November 24, 1993, Bastaich filed an amended complaint for conversion in the King County Superior Court. The complaint alleged that Bastaich had a contract to rent the truck which he could not complete because it was repossessed and that Kenworth unlawfully converted his property and violated the Consumer Protection Act. *fn1 Kenworth answered that it lawfully repossessed the truck under the 1991 and 1993 contracts and counterclaimed for the amounts due under the contracts, as well as reasonable attorney fees.

Discussion

In reviewing a trial court's order granting summary judgment, this court reviews the record de novo. Mountain Park Homeowners Ass'n, Inc. v. Tydings, 125 Wash. 2d 337, 341, 883 P.2d 1383 (1994). An order granting summary judgment must be affirmed if no material factual issues exist and the moving party was entitled to judgment as a matter of law. Mountain Park, 125 Wash. 2d at 341. All inferences and questions of fact must be considered in the light most favorable to the non-moving party. Mountain Park, 125 Wash. 2d at 341.

Bastaich's first contention is that the cross-collateralization clause is voidable under the doctrines of ...


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