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Haley v. Hume

Court of Appeals of Washington, Division 1

September 9, 2019

JEFFREY HALEY, an individual, Appellant,
KATHLEEN HUME, an individual; and FIRST AMERICAN TITLE INSURANCE COMPANY, formerly known as Pacific Northwest Title Company, Respondent.

          Mann, A.C.J.

         Jeffrey Haley appeals the trial court's summary judgment dismissal of his claim that Kathleen Hume violated their statutory warranty deed by abandoning an easement prior to selling her property to Haley. Haley also appeals the trial court's summary judgment dismissal of his claim against First American Title Insurance Company (First American) for failing to defend.

         Because the statute of limitations has run on Haley's warranty claims, the trial court correctly dismissed Haley's claims against Hume. Because general exception 3 in the title insurance policy applies, the trial court also correctly dismissed Haley's claims against First American. Finally, the trial court did not err in denying Hume's motion for an award of attorney fees and sanctions. We affirm.


         This case concerns Lot B of Mercer Island Short Plat No. MI-78-4-018, and an easement located on the adjacent open space Tract A. At issue is the 2005 sale of Lot B by Hume to Haley, and specifically whether Haley purchased the right to ingress, egress, and park, on the easement in Tract A. The following is a not-to-scale representation of the properties at issue.

         (Image Omitted)

         In 1979, the owner of Tract A granted a 10-foot-wide and 140-foot long easement along the southern edge of Tract A to the owners of Lot B for utilities, vehicular and pedestrian ingress and egress, and parking. The easement was necessary to provide access over a paved road on Tract A to Lots C and D. Persons accessing Lots C and D would cut across the Lot B driveway and proceed on the paved access road on Tract A to reach their properties.

         On September 6, 2000, Hume purchased Lot B. In 2001, John Pugh purchased Lot D and Tract A. In 2001, Pugh applied for a variance and permit from the City of Mercer Island to remove approximately 95 linear feet of the underground culvert on Tract A and expose, or daylight, that portion of the stream connecting to Lake Washington. The application also sought to remove the entire access driveway in the easement area on Tract A and to install a new driveway access serving Lots C and D on the north side of Tract A. The new driveway was located outside of the required 75-foot stream setback and included a bridge over the open stream. The plans included significant landscaping improvements, shade trees, and an 18-inch high rockery along the sides of the stream channel.

         At the same time, Pugh approached Hume with his proposed plan for improvements on Tract A. Hume agreed to Pugh's plan because it eliminated the need for vehicles and pedestrians to cut across her driveway. Hume also believed that Pugh's plan created additional privacy and safety to her property, was a visual improvement, and added value to her home. Hume agreed to abandon a portion of the easement in Tract A.

         After the City of Mercer Island approved Pugh's variance and permit, he removed the paved access road on Tract A, opened the culvert to create an open stream with an 18-inch high rockery along the sides of the channel, and planted trees and other landscaping. The opening of the stream corridor and the removal of the previous access road in the easement area made it impossible for vehicles or pedestrians to use the easement area for ingress, egress, or parking. Hume conceded that after 2001, no surface use of the easement was possible and she abandoned any claim of easement rights in Tract A with the exception of easement rights for underground utilities serving Lot B. All of the improvements to the stream and Tract A were completed in late 2003 and early 2004.

         In 2005, Haley purchased Lot B by statutory warranty deed from Hume. In connection with the purchase, Haley obtained a title insurance policy from Pacific Northwest Title Insurance Company, Inc., the predecessor of First American.[1]

         In 2012, Haley discovered the original easement on Tract A. Haley asked Pugh for permission to build a pedestrian bridge over the steam and widen his driveway into the easement area for additional parking. Pugh refused this request and informed Haley that Hume had previously abandoned the easement. Haley filed suit against Pugh, and Pugh counterclaimed against Haley to quiet title to the easement. During litigation, Pugh submitted a declaration from Hume that admitted she had consented to the improvements to the easement area and was aware that the improvements were an abandonment of her easement rights.

         The trial court granted summary judgment in favor of Pugh declaring that Hume abandoned the easement except the rights to utility, sewage, and drainage to the extent those utilities served Haley's property. This court affirmed the trial court in an unpublished decision. Haley v. Pugh, No. 70649-7-I (Wash.Ct.App. Oct. 27, 2014) (unpublished),

         On November 26, 2012, prior to the trial court's final decision on summary judgment, Haley tendered his defense to First American. First American rejected Haley's tender of defense.

         On December 21, 2016, Haley filed suit against Hume and First American. Haley asserted that by abandoning the easement Hume violated the statutory warranties included in their deed. Haley also asserted that First American acted in bad faith when it denied Haley's tender of defense, and that First American's conduct amounted to a breach of the Consumer Protection Act, ch. 19.86 RCW. First American filed a counterclaim against Haley seeking a declaratory judgment that it owed no duty to defend Haley.

         In October 2017, each party moved for summary judgment. Hume also requested her attorney fees and costs and asked the court to sanction Haley under CR 11 and RCW 4.84.185. On November 3, 2017, the trial court denied Haley's motion, granted Hume's motion, and denied Hume's request for attorney fees and costs. On November 6, 2017, the trial court granted First American's motion and dismissed the case. Haley appeals both orders.


         Haley first contends that the trial court erred in dismissing Haley's claims against Hume for her breach of present and future warranties. We disagree.

         We review summary judgment decisions de novo and engage in the same inquiry as the trial court. Mastro v. Kumakichi Corp., 90 Wn.App. 157, 162, 951 P.2d 817 (1998). "Summary judgment is appropriate only where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law." Mastro, 90 Wn.App. at 157 (citing CR 56(c)). "All facts and reasonable inferences therefrom must be viewed in the light most favorable to the nonmoving party." Post v. City of Tacoma, 167 Wn.2d 300, 308, 217 P.3d 1179 (2009).

         A. A statutory warranty deed provides five guarantees against title defects:

(1) that the grantor was seised of an estate in fee simple (warranty of seisin); (2) that he had a good right to convey that estate (warranty of right to convey); (3) that title was free of encumbrances (warranty against encumbrances); (4) that the grantee, his heirs and assigns, will have quiet possession (warranty of quiet possession); and (5) that the grantor will defend the grantee's title (warranty to defend).

Mastro, 90 Wn.App. at 162 (quoting 17 William B. Stoebuck, Washington Practice: Real Estate: Property Law § 7.2, at 447 (1995)). The warranties of seisin, the right to convey, and against encumbrances, are present covenants. Present covenants are breached, if at all, at the time of conveyance. Double L Properties, Inc. v. Crandall, 51 Wn.App. 149, 152, 751 P.2d 1208(1988). The warranties of quiet enjoyment and to defend are future covenants. "These covenants are generally breached after conveyance, when a third party asserts a claim to the property." Rowe v. Klein, 2 Wn.App. 2d 326, 329, 409 P.3d 1152 (2018).[2] The statute of limitations for an action based on contract or written agreement, including breach of a statutory warranty deed, is six years. RCW 4.16.040(1); Erickson v. Chase, 156 Wn.App. 151, 231 P.3d 1261 (2010); Whatcom Timber Co. v. Wright, 102 Wash. 566, 568, 173 P. 724 (1918).


         We first address Haley's claim that Hume breached the present covenants. Haley does not dispute that more than six years have elapsed since the 2005 warranty deed conveyance. Haley instead argues that the discovery rule should apply. The discovery rule is "a rule for determining when a cause of action accrues and the statute of limitations commences to run." 1000 Virginia Ltd. Partnership v. Vertecs Corp., 158 Wn.2d 566, 587, 146 P.3d 423 (2006). Haley argues that because Hume concealed the fact that she abandoned the easement until 2012, it was impossible for him ...

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