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Estate of Carter v. Carden

Court of Appeals of Washington, Division 1

December 30, 2019

ESTATE OF LOIS S. CARTER, Respondent,
v.
BRYAN D. CARDEN and TERA M. CARDEN, Husband and Wife and the marital community comprised thereof, Petitioners.

          Dwyer, J.

         This is a discretionary review of a summary judgment order dismissing a contract claim and a subsequent order authorizing the termination of water service to a family home. The Estate of Lois Carter (the Estate) owned two lots, Lot A and Lot B. The Estate sold Lot B, which contained a residence, to Bryan and Tera Carden, representing that the residence would be supplied with potable water from a well on Lot A. Subsequent to the sale, a dispute arose between the parties and the Estate sued the Cardens.

         This discretionary review arises from the dismissal, on summary judgment, of the counterclaim brought by the Cardens asserting that the Estate failed to provide a shared well agreement as required by the purchase and sale agreement (2013 PSA) by which the Cardens purchased Lot B. The trial court granted partial summary judgment for the Estate, concluding that the Cardens, in bad faith, had prevented the Estate from performing its obligations under the 2013 PSA. The trial court ordered that the Estate was excused from providing a shared well agreement. Subsequently, it authorized the Estate to terminate the Cardens' access to the water from the well on Lot A. On discretionary review, the Cardens assert that they did not act in bad faith and that the trial court erred both when it granted summary judgment and when it subsequently authorized the termination of water service to their residence. We agree and reverse both orders.

         I

         Lois and Donald Carter owned property in Freeland, on Whidbey Island. In 1986, the Carters decided to subdivide their property, through a short plat application, into two parcels, Lot A and Lot B. As part of the subdivision process, the Carters sought approval from Island County (the County) for a public water system consisting of a well on Lot A that would provide water to both Lot A and Lot B. That same year, the Carters executed and recorded an "Operation and Maintenance Agreement" (1986 Agreement) that stated that the Carters, as owners of both Lot A and Lot B, granted the owners of Lot B an easement, to run with the land, for the use and purpose of conveying water from the well on Lot A to Lot B. The 1986 Agreement also stated that the owners of Lots A and B each possessed an undivided one-half interest in and to the use of the well and water system on Lot A. Although it is unclear from Island County records whether the approval process to list the well on Lot A as a public water system was ever completed, the County did list the well as a two party public water system.

         Subsequently, the Carters built a home on Lot B, which was supplied with water from the well on Lot A.[1] However, in 2008, the County informed the Carters that the well did not meet the water quality requirements of a public water system. Because the well only served the single residence on Lot B, the Carters asked the County to deactivate the well's listing as a public water system. The County complied.

         In 2013, following the Carters' deaths, Bryan and Tera Carden purchased Lot B and the Carters' former residence from the Estate. In the 2013 PSA, the Estate represented that Lot B is connected to a well and the parties agreed that a "Shared Well agreement [was] to be recorded prior to closing."

         In an attempt to comply with the terms of the 2013 PSA, the Estate recorded a shared well agreement in 2013 (2013 Shared Well Agreement), prior to closing the sale with the Cardens. However, the Estate did so without first submitting the 2013 Shared Well Agreement to the County to get approval for the well to be again listed as a public water system. It was not until July 2015 that the Estate submitted its 2013 Shared Well Agreement to the County for the purpose of listing the well on Lot A as a public water system. Upon receipt of the 2013 Shared Well Agreement, the County initially sent the Estate a letter approving the listing of the well on Lot A as a public water system. However, only a month later, the County revoked this approval and informed the Estate that approval was conditional on the payment of an outstanding application fee and on the correction of deficiencies in the 2013 Shared Well Agreement, chief among them being the failure of the agreement to address the previously existing 1986 short plat and the accompanying 1986 Agreement. To date, these conditions have not been met and the well remains not listed as a public water system.

         Meanwhile, the Cardens, concerned that the Estate was not properly managing the well, hired an attorney, Robert Brewster, to assist in enforcing their water rights. Brewster noticed several deficiencies with the recorded 2013 Shared Well Agreement.[2] After discussing these issues with representatives of the Estate, it was agreed that Brewster would draft a new shared well agreement to supersede both the 1986 short plat and accompanying 1986 Agreement, and the 2013 Shared Well Agreement. Brewster then drafted this agreement (2015 Shared Well Agreement). However, it was never signed by the Estate or the Cardens and was never recorded.

         While the Estate was in negotiation with the Cardens regarding a new shared well agreement, it was also attempting to sell Lot A. The Estate attracted a buyer, Heidi Norris, who initially agreed to purchase the property and was permitted to move on to the property (in an RV) prior to closing the sale. Norris was informed of the well agreement issues involving her would-be neighbors, the Cardens, and she informed the Estate that she could not accept the 2015 Shared Well Agreement drafted by Brewster. Based on Norris's feedback, the Estate proposed two modifications to the 2015 Shared Well Agreement. Specifically, the Estate wanted to add (1) a clause requiring the Cardens to give 24 hours' notice to the owner of Lot A before entering onto Lot A to access the well (with an exception in case of emergencies), and (2) a clause providing that the shared well agreement would be void if the parties did not sign it within 30 days of each other. The Cardens did not agree to these additional terms, negotiations stalled, and Norris ultimately decided not to purchase the property.

         Subsequently, the Estate sued the Cardens, alleging that it failed to sell Lot A to Norris because of tortious interference by the Cardens. The Estate alleged that the Cardens went on to Lot A and harassed Norris after she moved onto Lot A. The Estate alleged that Norris backed out of purchasing Lot A because of the Cardens' interference. The Cardens answered by denying the Estate's allegations and raising counterclaims, including a claim for breach of contract for the failure to provide "a valid and legally approved agreement for the operation of the well and water system" on Lot A as required by the 2013 PSA.

         Then, in 2017, the Estate sent the Cardens an updated version of the 2015 Shared Well Agreement that included the Estate's two previously proposed additional terms regarding notice and signing requirements (2017 Shared Well Agreement). When the Cardens declined to sign the 2017 Shared Well Agreement, the Estate moved for partial summary judgment seeking dismissal of the Cardens' counterclaim for breach of contract. The Estate argued that the Cardens' failure to sign the 2017 Shared Well Agreement violated their contractual duty of good faith and fair dealing under the 2013 PSA and that this excused the Estate from its contractual obligation to provide an acceptable shared well agreement.

         The trial court agreed with the Estate and granted partial summary judgment, concluding that the Cardens acted in bad faith when they declined to sign the 2017 Shared Well Agreement. The trial court reasoned that it was (1) reasonable to require 24 hours' notice, excepting cases of emergency, before the Cardens could enter on to Lot A, and (2) reasonable to require the parties to sign the agreement within 30 days of each other because of the Cardens' alleged harassment of Norris. The trial court ordered that the "Estate's performance of its contractual obligation to provide [the Cardens] a Shared Well Agreement is excused because [the Cardens] obstructed its performance."

         Then, fearing that the Estate would terminate their access to the well, the Cardens filed a motion seeking to enjoin the Estate from shutting off the Cardens' water. The Cardens asserted that (1) as the owners of Lot B, they had an easement to access and use the well on Lot A as the result of the 1986 short plat and the 1986 Agreement, and (2) the Cardens had relied on the Estate's representation-when purchasing Lot B-that the Lot B residence was connected to and served by the Lot A well and the Estate should be equitably estopped from terminating this connection. The trial court disagreed, concluding that there was no easement and that the Cardens' breach of their duty of good faith-by failing to sign the 2017 Shared Well Agreement-gave the Cardens ...


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