Reconsideration denied March 17, 2014.
Appeal from Snohomish Superior Court. Docket No: 08-2-10683-5. Date filed: 02/07/2012. Judge signing: Honorable Eric Z Lucas.
John E. Glowney (of Stoel Rives LLP ), for petitioner.
Jeffrey A. Beaver (of Graham & Dunn PS ) ( Ingrid L. Moll (of Motley Rice LLC ) and Ellen R. Werther (of Ressler & Ressler ), of counsel), for respondents.
AUTHOR: Ronald Cox, J. WE CONCUR: Michael S. Spearman, A.C.J., Marlin Appelwick, J.
[179 Wn.App. 131] ¶ 1 This is the second time that this case is before this court on discretionary review. Previously, we reversed and remanded for further proceedings. We now reverse and remand with directions, this time to a different judge.
¶ 2 Everett Chevrolet (EC) was a car dealership in Everett, Washington. John Reggans is its sole shareholder. GMAC provided financing for EC to purchase new and used vehicles. In exchange, EC granted GMAC a security interest in EC's equipment, inventory, and proceeds.
¶ 3 A core document governing the financing arrangement is the Wholesale Security Agreement (WSA), which is [179 Wn.App. 132] dated December 10, 1996. It contains provisions that we more fully describe later in this opinion.
¶ 4 The parties signed several amendments to the WSA. None appear to have changed the relevant provisions of this agreement.
¶ 5 EC also had a revolving line of credit with GMAC. This is documented in the Revolving Line of Credit Agreement (RLCA), which is dated October 16, 2000. We also discuss provisions of this agreement later in this opinion.
¶ 6 Reggans testified that in 2006, the auto market started declining. He testified that EC earned approximately $700,000 in 2006 but earned only $28,000 in 2007. In late 2007, Reggans sought a $300,000 increase in the credit limit. GMAC agreed and increased the credit line to $800,000.
¶ 7 During 2008, the situation deteriorated. EC was unable to improve its position.
¶ 8 By letter dated December 15, 2008, GMAC terminated EC's wholesale credit line and revolving line of credit and also made demand for full payment of both. The principal amounts then due were $5,530,666.13 on the wholesale credit line and $738,000.00 on the revolving line of credit.
¶ 9 This litigation followed. GMAC sought to enforce its rights as a secured creditor seeking replevin of its security. A three-week hearing on this request occurred in March and April 2009. The trial court denied GMAC's request for replevin.
¶ 10 GMAC sought discretionary review, which we granted. This court reversed the trial court's denial of replevin and remanded. This court did not reach the merits of the underlying dispute between the parties.
[179 Wn.App. 133] ¶ 11 On remand, GMAC moved for summary judgment to dismiss EC's " bad faith" counterclaims. The trial court orally denied GMAC's motion. In the order that followed, the court incorporated its oral rulings, which articulated its reasons for denying the motion.
¶ 12 GMAC sought discretionary review for a second time. We granted review on the basis that the trial court's denial of summary judgment was probable error that limited the freedom of a party to act.
¶ 13 GMAC argues that the trial court erred by failing to grant GMAC's motion for summary judgment to dismiss EC's bad faith claims. GMAC identifies these as " EC's first through third counterclaims and EC's affirmative defense of Estoppel in Pais ... and its untitled affirmative defense, contained in ¶ 2.6 of EC's Answer."  We agree.
¶ 14 " In a summary judgment motion, the moving party bears the initial burden of showing the absence of an issue of material fact."  If the moving party meets this burden, " the inquiry shifts to the party with the burden of proof at trial ... ."  The nonmoving party must then set forth specific facts showing a genuine issue for trial. Summary judgment is appropriate only if there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law.
[179 Wn.App. 134] ¶ 15 On appeal, a denial of summary judgment is reviewed de novo, and an appellate court performs the same inquiry as the trial court.
¶ 16 We deem abandoned any matters argued
below that are not raised on appeal.
¶ 17 GMAC asserts that the duty of good faith does not limit GMAC's right to demand repayment at any time for any reason. In opposition, EC contends that GMAC's argument is based on the " false premise" that GMAC had a demand note. Accordingly, EC disputes that GMAC had the authority under the WSA to demand payment for all amounts advanced under this agreement. We conclude that the WSA contains a demand obligation and, because controlling law holds that a good faith obligation does not bar enforcing a demand obligation, we agree with GMAC.
¶ 18 Whether the WSA contains a demand obligation is the threshold and controlling issue in this case. If we decide that the only reasonable reading of the WSA is that it contains a demand obligation, then Allied Sheet Metal Fabricators, Inc. v. Peoples National Bank of Washington  controls. Accordingly, GMAC's enforcement of the demand obligation would not be barred by a good faith obligation.
¶ 19 " The 'touchstone of contract interpretation is the parties' intent.'"  " Washington courts follow the objective manifestation theory of contracts, imputing an intention [179 Wn.App. 135] corresponding to the reasonable meaning of the words used." 
¶ 20 " An interpretation which gives effect to all of the words in a contract provision is favored over one which renders some of the language meaningless or ineffective."  A court will not read ambiguity into a contract " 'where it can reasonably be avoided.'" 
¶ 21 Whether a contract is ambiguous is a question of law. A contract provision is not ambiguous merely because the parties to the contract suggest opposing meanings. " 'If only one reasonable meaning can be ascribed to the agreement when viewed in context, that meaning necessarily reflects the parties' intent; if two or more meanings are reasonable, a question of fact is presented.'"  Summary judgment as to a contract interpretation is proper if the parties' written contract, viewed in light of the parties' other objective manifestations, has only one reasonable meaning.
¶ 22 A demand note is payable immediately on the date of its execution. This court in Allied set forth the general rule regarding such matured obligations:
" An instrument is payable immediately if no time is fixed and no contingency specified upon which payment is to be made. A [179 Wn.App. 136] demand note is payable immediately on the date of its execution--that is, it is due upon delivery thereof; and, unless a statute declares otherwise, or a contrary intention appears expressly or impliedly upon the face of the instrument, a right of action against the maker of a demand note arises immediately upon delivery and no express demand is required to mature the note or as a prerequisite to such right to action,
commencement of a suit being sufficient demand for enforcement purposes." 
¶ 23 Here, the document that is the basis of EC's primary challenge is the WSA, not a promissory note like in Allied. But a demand obligation is not confined to promissory notes. Thus, there is no reason to conclude that the analysis of the legal issues is any different when a demand obligation is contained in an agreement other than a promissory note. EC fails to cite any authority to support such a difference.
¶ 24 In general, when an agreement includes demand language along with other contract terms, a court must carefully consider the agreement to determine if it contains a true demand obligation. We do so here.
¶ 25 In this case, the " upon demand" provision in the second paragraph of the WSA is unambiguous and is a demand obligation. It states:
[EC] agree[s] upon demand to pay to GMAC the amount it advances or is obligated to advance to the manufacturer or distributor for each vehicle with interest at the rate per annum designated by GMAC from time to time and then in force under the GMAC Wholesale Plan.
¶ 26 This provision contains express demand language on its face. Consistent with the authority we previously quoted from Allied, there is no time fixed for when payment is due for GMAC's advances. The obligation matures when [179 Wn.App. 137] made. Likewise, there is no contingency specified upon which payment of the advances is to be made. And there is no contrary intention that appears either expressly or impliedly upon the face of this provision of the ...