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Nicholson v. Thrifty Payless, Inc.

United States District Court, W.D. Washington, Seattle

May 22, 2014

BRENT NICHOLSON, et al., Plaintiffs,
THRIFTY PAYLESS, INC., et al., Defendants.


ROBERT S. LASNIK, District Judge.

On February 18, 2014, the Court granted in part and denied in part defendants' summary judgment motions. Defendants filed a timely motion for reconsideration on a number of issues. Dkt. #59. Pursuant to Local Civil Rule 7(h)(3), the Court gave plaintiffs an opportunity to respond to the motion for reconsideration: no reply was requested. Dkt. #62. The Court expressed particular interest in defendants' arguments regarding San Pablo and Santa Rosa and the acknowledgment requirement under Washington law. Each of defendants' arguments are considered below.

A. San Pablo and Santa Rosa

Defendants argue that plaintiffs repudiated the leases for San Pablo and Santa Rosa, thereby excusing defendants' performance under the leases and immunizing them from any liability arising out of the letters of termination. While this argument was not clearly asserted in the underlying motion for summary judgment with regards to San Pablo, [1] defendants did provide evidence from which a reasonable fact-finder could conclude that plaintiffs told defendants that they were walking away from both projects. With regards to Santa Rosa, plaintiff Nicholson let defendants know that he was "dropping this deal as [he] could not go forward without 100% certainty from RAD now." Dkt. #28-4 at 109. With regards to San Pablo, Nicholson announced on April 1, 2009, that he had "lost control of the San Pablo deal, " that he had lost all of the money he had invested in the project, and that he could not make the required deposit and close on the land purchase in a timely manner. Dkt. #28-4 at 32.

Anticipatory repudiation requires a clear and positive statement or action that expresses an intent not to perform under the contract. Wallace Real Estate Inv., Inc. v. Groves , 124 Wn.2d 881, 898 (1994). Both statements, standing alone, could be interpreted as declarations that plaintiffs would not be completing the projects. Taken in the larger context of the parties' relationship, however, the meaning of the statement regarding Santa Rosa is less clear. The day before Nicholson made the statement, defendants had demanded changes to the original Santa Rosa lease in order to accommodate their new return on investment requirements. Nicholson then sent the "dropping this deal" email, essentially indicating that he could not agree to the proposed changes for that project. In context, the email appears to be part of the restructuring that defendants had initiated. The conduct of the parties thereafter also supports a finding that the statement was not intended to be and was not interpreted as a repudiation. The parties continued to discuss the project and agree to revised delivery dates, and defendants ultimately issued a termination letter based on the failure to timely deliver the project. Defendants are not entitled to judgment as a matter of law on their assertion that plaintiffs repudiated the Santa Rosa lease.

With regards to the San Pablo project, the repudiation is both clear and positive. Unrelated to any on-going negotiations between the parties, Nicholson told defendants that he had lost control of the site and the money he had invested and that defendants no longer needed to worry about the project. Defendants expressed regret about the demise of the project and removed it from the T-Rex tracking system. Repudiation does not, however, automatically terminate a contract. Hemisphere Loggers & Contractors, Inc. v. Everett Plywood Corp. , 7 Wn.App. 232, 234 (1972). While the non-repudiating party has the option to treat the contract as broken, it need not do so: "[i]t is commonly said that there is no breach or that the repudiation does not operate as a breach until such repudiation is treated as a breach by the other party." Walker v. Herke , 20 Wn.2d 239, 254 (1944) (quoting 12 Am. Jur, Contracts ยง 395). While the non-repudiating party would be entitled to rely on the repudiation to excuse his own performance or to file an immediate action for damages without having to wait for the repudiating party to actually fail to perform ( Hemisphere Loggers , 7 Wn.App. at 234-35; Trompeter v. United Ins. Co. , 51 Wash.2d 133, 316 P.2d 455 (1957)), it could also treat the contract as still in existence and insist on performance. The option to choose expires, however, if the repudiating party withdraws the repudiation before the non-repudiating party has materially changed its position in reliance on the repudiation.

Shortly after sending the "lost control" email, plaintiffs made it clear that they were still working to regain control of the San Pablo site and declined to sign a lease termination document presented by defendants. Defendants were aware that plaintiffs believed San Pablo was still in play, yet they did not declare an anticipatory breach, withhold their own performance, or otherwise make a material change of position in reliance on the alleged repudiation. Rather, defendants waited until the day the original delivery window expired to a termination letter based on an actual, rather than an anticipated, breach. Having chosen to proceed as if the contract were still in force, there is an issue of fact regarding whether plaintiffs effectively withdrew the repudiation.

B. Concord and Sunnyvale

Defendants argue that, because Nicholson declined to take part in a conference call scheduled for December 2, 2009, the T-Rex report that it sent to him the previous day is a nullity. The argument is factually unsupported and logically tenable. The T-Rex report at issue reflected agreements reached during the previous conference call. There is no indication that those dates were not mutually agreed upon or that Nicholson otherwise rejected the November 30, 2009, T-Rex report.

C. Abandonment of All Projects

Defendants argue that plaintiffs abandoned all of the projects months before the termination letters were issued. To the extent defendants are arguing that plaintiffs repudiated all of the leases, the argument is untimely and defendants have not identified the necessary clear and positive statement as to each project.

D. Ability to Perform

Defendants argue that plaintiffs cannot prevail in this action because they have not shown that they were willing and able to perform under the leases. Plaintiffs were, however, taking steps to develop the projects: in other words, they were performing. Defendants seem to be arguing that plaintiffs are barred from bringing a breach of contract claim unless they were ready, willing, and able to make immediate delivery of the projects. The "ready, willing, and able" requirement arose in circumstances where the party asserting a breach was also in default. See Willener v. Sweeting , 107 Wn.2d 388, 394 (1986); Kreger v. Hall , 70 Wn.2d 1002, 1009 (1967). Those circumstances do not apply here if the factfinder determines that the delivery dates for the various leases were extended into the future. If that were the case, the time for performance had not yet come when defendants issued the termination letters. In addition, Nicholson has stated that, despite the woes that beset the construction industry during the national liquidity crisis, plaintiffs would have been able to raise the additional funds necessary to complete the projects if defendants had not breached their promises to extend the delivery dates. While that assertion is rather doubtful as to the San Pablo project (which had a ...

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