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TJ Landco, LLC v. Harley C. Douglass, Inc.

Court of Appeals of Washington, Division 3

March 5, 2015

TJ Landco, LLC, Respondent ,
v.
Harley C. Douglass, Inc., et al., Appellants

Appeal from Spokane Superior Court. Docket No: 10-2-00576-0. Judge signing: Honorable Maryann C Moreno. Judgment or order under review. Date filed: 09/16/2013.

Steven J. Hassing, for appellants.

Timothy B. Fennessy (of Layman Law Firm PLLP ); and Bradley C. Crockett and William S. Hislop (of Wolff Hislop & Crockett PLLC ), for respondent.

Authored by Kevin M. Korsmo. Concurring: Laurel H. Siddoway, George B. Fearing.

OPINION

Page 778

[186 Wn.App. 252] Kevin M. Korsmo, J.

[¶1] This appeal arises from the modification of the provisions of a contract governing payment and interest. Concluding that the trial court adopted a reasonable construction of the contract at the bench trial, we affirm the interest rate rulings and remand for an additional hearing of the question of the attorney fee award for work performed by law students.

FACTS

[¶2] The subject of the contract was land near the southwest border of the city of Spokane. Respondent TJ Landco LLC agreed in February 2004 to sell the 94 acre parcel of land to appellant Harley C. Douglass Inc. (Douglass) for $3.6 million. The seller was required to obtain preliminary plat approval from the city of Spokane and

Page 779

obtain the city's agreement to extend water and sewer by the end of 2005.

[¶3] The parties used a standard real estate purchase and sale agreement form. An addendum to that form included the following language concerning the purchase price and interest:

1) Purchase price of 3.6 Million Dollars ($3,600,000.00) to be paid as follows:
A) Two Million Dollars ($2,000,000.00) as down payment due at closing
B) The balance of One Million Six Hundred Thousand Dollars will be paid in annual installments of $250,000.00 per year plus interest until paid in full.
C) The unpaid balance will carry and [sic] interest rate of 6% per annum.
D) The first annual payment will begin exactly 2 years from the date of closing.
E) Purchaser and Seller agree that the interest rate for the first two years of this transaction will carry the minimum Federal Rate allowable. At the end of the first two years the interest rate will be 6% per annum until balance is paid in full.
F) ... .
[186 Wn.App. 253] G) Deed releases will be prepared on a per acre basis on the remaining balance of land and executed according to the installment payment schedule noted above.

Clerk's Papers (CP) at 49.

[¶4] Three of the provisions mentioned interest, and two of them gave competing commands concerning the rate to be charged. Subsequent developments were to make the situation more complicated.

[¶5] The preliminary plat approval was received October 9, 2006, and the sale closed thereafter. Tod Lasley, the owner of Landco, met on December 22, 2006, with Harley Douglass, the owner of Douglass. The two men agreed that at that point Douglass owed Landco $1,114,558.19. Douglass paid $114,558.19 at that time. On a balance sheet accounting for payments made and balance owing on the land sale, the men added two separate handwritten notes. Each was dated December 22, 2006, and signed by both men. The first stated:

1,000,000.00 Balance,
Payment of 200,000.00 per year for 5 years at ...

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