BORTON & SONS, INC., a Washington State corporation, Appellant,
BURBANK PROPERTIES, LLC, a Washington State limited liability company, Respondent.
will permit an option to purchase property to be exercised
late in order to avoid a forfeiture when significant
improvements have been made to the property. The trial court
ruled that respondent Burbank Properties satisfied this
condition and allowed the option to be exercised a mere eight
days late. We disagree and reverse.
farmed approximately 164 acres it owned in Walla Walla County
adjacent to orchards owned by appellant Borton & Sons.
Burbank, whose sole owner is Eric Rogers, purchased the
property in 2012 after having leased the land for farming
since 2000. Burbank used the land to grow early season
potatoes. Potatoes deplete the soil of nutrients and are
subject to diseases that require strict crop rotation.
Potatoes are grown one year and then the land is given over
to other crops for at least one to two years. Historically,
Burbank had followed one year of potato planting with two
years of grass or hay planting.
years of depressed potato prices, Burbank faced financial
difficulties that threatened its operation. A settlement with
one of its lenders required Burbank to sell the potato farm
land. However, Burbank's early season potato contracts
were a significant component of its operations. Accordingly,
it settled on a plan to sell the land at a reduced rate, farm
the land on lease terms during the interim, and repurchase
the property at a reasonable sum. In essence, the land was
being used to secure a short-term loan.
appraisal valued the land at $1, 875, 000 and Burbank offered
the land for sale for $300, 000 less. The following day,
desiring to purchase the land that bordered its apple
orchards, Borton offered $1, 550, 000 for the land. The
parties rapidly reached an agreement that included the
following terms relevant to this appeal: Burbank could
repurchase the land for $1, 800, 000 by December 31, 2018;
Burbank had to exercise its repurchase option prior to
December 31, 2017, by sending notice to Borton by certified
or registered mail; Burbank would lease and farm the land
during 2016, 2017, and 2018 at an annual rent of $78, 775.
Borton required the one year notice because it needed to
order trees for its orchard one year in advance of its need
for the trees.
2017, Burbank harvested a potato crop and thereafter planted
Timothy hay that it expected to harvest in 2018 and 2019. At
least twice during 2017, Burbank advised Borton
representatives that it intended to exercise the repurchase
option. On December 28, 2017, Eric Rogers prepared a written
notice to Borton that Burbank would exercise its offer to
repurchase the land. However, he did not mail the notice
until January 4, 2018, and sent it by regular mail instead of
by registered mail. Borton received the notice January 8,
2018. Believing the notice ineffectual, Borton wrote Burbank
and demanded that it sign a notice that the option was
terminated. Burbank responded that it had exercised the
option and was planning to close on the property by December
initiated a declaratory judgment action to determine the
status of the purchase option. Burbank answered and
counterclaimed for its own declaratory judgment, arguing both
that it properly exercised its option and that it was
entitled to an equitable grace period to do so. Discovery was
rapidly conducted and both parties soon sought summary
judgment. The competing motions then were argued to the trial
court. Burbank contended that it would lose the value of the
Timothy hay and the equity it would obtain by repurchasing
the property. Borton argued that Burbank had failed to timely
or properly give notice, was unable to perform the purchase,
and had not made any improvements justifying equitable
trial court concluded that an equitable grace period was
called for due to the potential loss of hay and equity.
Report of Proceedings at 16. An order was entered granting
summary judgment for Burbank and authorizing it to close on
the property by December 31, 2018. Burbank was also awarded
its attorney fees based on the lease agreement. Borton's
motion for summary judgment was denied, as was its subsequent
motion for reconsideration.
then timely appealed to this court. A panel heard oral
argument of this case at Whitman College in Walla Walla.
dispositive issue is whether the trial court erred in its
respective summary judgment rulings by awarding equitable
relief. We address that issue before briefly turning to the
question of attorney fees.
traditional interplay of law and equity provides a
complicated puzzle on these facts. Principles of summary
judgment and contract law inform our approach to this
court reviews declaratory judgment actions the same as it
does any other civil case. To-Ro Trade Shows v.
Collins, 144 Wn.2d 403, 410, 27 P.3d 1149 (2001).
Summary judgment rulings are reviewed de novo since an
appellate court sits in the same position as the trial court.
Hubbard v. Spokane County, 146 Wn.2d 699, 706-07, 50
P.3d 602 (2002). Summary judgment is proper when, after
viewing the evidence in a light most favorable to the
opposing party, there are no issues of material fact and the
moving party is entitled to judgment as a matter of law.
Trimble v. Wash. State Univ., 140 Wn.2d 88, 93, 993
P.2d 259 (2000). All facts and reasonable inferences are
construed in the light most favorable to the nonmoving party.
Id. Summary judgment should be granted if reasonable
persons could reach but one conclusion based on all of the
option contract is "a complete, valid and binding
agreement" to which general contract principles apply.
Bennett Veneer Factors, Inc. v. Brewer, 73 Wn.2d
849, 853, 441 P.2d 128 (1968). "In applying these
general contract principles, our primary goal in interpreting
the option contract is to ascertain the parties' mutual
intent." Chevalier v. Woempner, 172 Wn.App.
467, 476, 290 P.3d 1031 (2012). Under the "objective
manifestation" theory of contracts, we determine the
parties' intent by focusing on the objective
manifestations expressed in their contract rather than
focusing on unexpressed subjective intentions. Hearst
Commc'n, Inc. v. Seattle Times Co., 154 Wn.2d 493,
503, 115 P.3d 262 (2005). Thus, courts will "impute an
intention corresponding to the reasonable meaning of the
words used" in the contract. Id. The
parties' subjective intent "is generally irrelevant
if the intent can be determined from the actual words
used" in the contract. Id. at 504. Courts will
interpret what was "written instead of what was intended
to be written." Id. "Accordingly, we give
language in the option contract its ordinary, usual, and
popular meaning unless the contract clearly demonstrates a
contrary intent." Woempner, 172 Wn.App. at 476.
Ambiguities in a contract typically are construed against the
drafter. Rouse v. Glascam Builders, Inc., 101 Wn.2d
127, 135, 677 P.2d 125 (1984).
option holder may exercise an option by complying with the
terms of acceptance set forth in the option agreement.
Whitworth v. Enitai Lumber Co., 36 Wn.2d 767, 770,
220 P.2d 328 (1950). If the option is exercised
unconditionally in accordance with the terms of the contract,
the seller must sell the property in accordance with the
terms of the option. Id. If the option is not
exercised within the time or manner specified, all rights
under the contract, along with any consideration given, are
forfeited. Id. at 770-71. A court may order specific
performance of the contract if the option is properly
exercised and the seller refuses to convey the property. 3
Eric Mills Holmes, Corbin on Contracts § 11.13, at 570
(rev. ed. 1996). The terms of an option contract are to be
strictly construed and, generally, time is of the essence.
Pardee v. Jolly, 163 Wn.2d 558, 572, 182 P.3d 967
basis of this hornbook law, Borton correctly claims that it
should have prevailed at summary judgment because Burbank did
not exercise the option at the proper time and in the proper
manner. However, Washington recognizes that in some instances
equity will excuse the untimely exercise of an option to
purchase real estate. An equitable remedy is an
extraordinary, not ordinary, form of relief. Sorenson v.
Pyeatt, 158 Wn.2d 523, 531, 146 P.3d 1172 (2006). A
court will grant equitable relief only when there is a
showing that a party is entitled to a remedy and the remedy
at law is inadequate. Orwick v. City of Seattle, 103
Wn.2d 249, 252, 692 P.2d 793 (1984). Whether a party is
entitled to equitable relief "is in large part a matter
addressed to the discretion of the trial court, with
discretion to be exercised in light of the facts and
circumstances of the particular case." Heckman
Motors, Inc. v. Gunn, 73 Wn.App. 84, 88, 867 P.2d 683
argues that it is entitled to equitable relief in order to
avoid an inequitable forfeiture. Washington recognizes that
equitable relief may be warranted in limited circumstances
where an inequitable forfeiture would otherwise result.
Wharf Rest., Inc. v. Port of Seattle, 24 Wn.App.
601, 611, 605 P.2d 334 (1979). This is because forfeitures
"are not favored in law and are never enforced in equity
unless the right thereto is so clear as to permit no
denial." Pardee, 163 Wn.2d at 574. When the
holder of an option makes valuable permanent
improvements to the property with the intention to give
its notice to exercise or extend the option, but then fails
to timely give such notice, an equitable period of grace may
be appropriate. Wharf, 24 Wn.App. at 611 (emphasis
added) (citing 1 Arthur l. Corbin, Corbin on Contracts §
35, at 146-47 (1963)). Wharf astutely noted:
The courts which have considered this problem have not found
the solution simple. On the one hand is equity's
abhorrence of a forfeiture. On the other hand is the general
reluctance of courts to relieve a party from its own
negligent failure to timely exercise an option, when to do so
might tend to introduce instability into business
transactions and disregard commercial realities.
Id. at 610.
1. The divestiture of property without compensation. 2. The
loss of a right, privilege, or property because of a crime,
breach of obligation, or neglect of duty. . . . 3. A
destruction or deprivation of some estate or right because of
the failure to perform some contractual obligation or
Black's Law Dictionary 765 (10th ed. 2014).
argues that it did not have to make a permanent improvement
to the land in order to seek relief in equity and that it
would constitute an inequitable forfeiture to forego the
value it would have gained by selling the property at market
value in 2016 and the value of the hay it had planted but
could not harvest in 2019. We disagree with his first two
arguments and conclude the other was unproved.
an annual crop as one has been doing for years does not
constitute a permanent improvement in the land. Burbank has
provided no authority to the contrary and tacitly seems to
agree by, instead, arguing it had no need to establish
permanent improvement. We disagree. All four of the
Washington cases on this topic begin with, and continue to
rely on, Wharf. And Wharf was very clear in
its reliance on Professor Corbin's hornbook that the only
cases in which equity might relieve a party from its
negligent mistake was when "he had made valuable
permanent improvements with intention to give the
notice." 24 Wn.App. at 611 (quoting Corbin).
leaseholder in Wharf had an agreement with Port of
Seattle and had exercised options to renew its prior lease
agreements. Id. at 603. In 1977, after 25 years as
leaseholder, Wharf inadvertently failed to exercise its
option and had to sue to regain its lease after Port of
Seattle found a new lessee. Id. at 604. After a
trial, the court awarded an equitable grace period and
ordered specific performance of the option to renew.
Id. at 604-05. The court found that Wharf had made
permanent improvements to the property "with the
intention of exercising its option and remaining on the
premises." Id. at 612. On appeal, Division One
of this Court held that equitable relief period was proper
under the special circumstances. Id. at 609. It
summarized those circumstances: (1) failure to give notice
was inadvertent, (2) an inequitable forfeiture would result,
(3) the lessor had not changed its position in reliance on
the failure to timely exercise the option, (4) the lease was
long-term, having existed 25 years, and (5) there was no
undue delay. Id. at 612-13. There was evidence that
the restaurant was making improvements at the very time the
option was supposed to be exercised. Id. at 612.
cases following Wharf similarly have involved
significant levels of permanent improvements. In
Heckman, the parties had jointly cleared land and
built a building to house an automobile dealership. 73
Wn.App. at 85. Like Wharf, the Heckman
court relied on the same passage from Corbin
indicating that equity stepped in only when a substantial
permanent improvement might be forfeited. Id. at 87.
permanent improvements also were at issue in Pardee.
There, the trial court found that the plaintiff who had
failed to timely exercise its option had put in 2, 500 hours
of work and spent $20, 669.58 for repairs in order to build
up equity as collateral for purchasing the property. 163
Wn.2d at 576. The court considered these figures "a
significant forfeiture." Id. Since the trial
court erroneously had granted relief on a different basis,
the Supreme Court reversed and remanded for the trial ...