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Recent Appellate Decisions: May 24 – 31, 2012

Washington Supreme Court

May 31, 2012

Broughton Lumber Co. v. BNSF Ry. No. 85905-1

Jongeward v. BNSF Ry. No.  85781-4

Timber trespass – treble damages – fire – negligence on neighboring property

A person is subject to treble damages under the timber trespass statute if the person “shall cut down, girdle or otherwise injure, or carry off any tree…”  The question presented in these companion cases, certified from two different federal courts, is whether “other injury” includes damage to trees resulting from a fire started on neighboring property.  In both cases the Washington Supreme Court held (6-3) that “other injury” does not extend to damages from fire.  But both opinions confirm that a direct trespass that causes immediate (not collateral) injury to trees may be pursued even if the defendant has never been on the plaintiff’s property.

Broughton –  “We therefore hold that a plaintiff cannot recover damages under former RCW 64.12.030 and RCW 64.12.040 for trees damaged by a fire that spreads from a defendant’s neighboring parcel, where the alleged acts or omissions of the defendant caused only collateral injury.  We further hold that a plaintiff may recover from a defendant who commits a direct trespass that causes immediate, not collateral, injury to a plaintiff’s tree, timber, or shrub, even if the defendant has never been physically on the plaintiff’s property.”

Jongeward – “[A] defendant who causes a fire that spreads and damages trees on a plaintiff’s property does not “otherwise injure” the plaintiff’s trees for the purposes of the timber trespass statute … a plaintiff may recover from a defendant who commits a direct trespass against a plaintiff’s trees, causing injury that is immediate and not consequential, even if the defendant has never been physically present on the plaintiff’s property.”

Wash. Ass’n for Substance Abuse & Violence Prevention v. State No. 87188-4

Initiative – single subject – subject in title

The Washington Constitution requires that legislation, including an initiative, must address a single subject and the subject must appear in the title.  The Washington Supreme Court (5-4) held that the provisions of Initiative 1183 all fit within the general subject of liquor, and that the subject-in-title requirement was satisfied by the reference to “license fees based on sales” without any reference to a tax.

May 24, 2012

Albice v. Premier Mortgage Services of Washington No. 85260-0

Nonjudicial Deed of Trust Foreclosure – 120-day sale period – equitable exception to failure to enjoin sale – bona fide purchaser – (trustee’s deed requires factual recitations)

A nonjudicial deed of trust foreclosure sale may be continued by the trustee, but the sale must occur within 120 days of the notice of sale. If a borrower fails to enjoin a sale, then trustees and purchasers typically argue that the statutory waiver provisions preclude any post-sale challenge.

Here, the borrower defaulted on a loan secured by a residential deed of trust, entered into a forbearance agreement, and made catch-up payments under that agreement.  The lender/trustee accepted several late payments, but then rejected the final payment for being a few days late.  The foreclosure sale was conducted more than 120 days after the initial notice of sale.  The borrower did not receive actual notice of the final sale, and did not receive a 10-day notice of breach required in the forbearance agreement.  The borrower did not seek to restrain the sale.   A third party purchased at the foreclosure sale for a fraction of the value of the residence.  In litigation between the borrower and the purchaser, the trial court held rejected the borrower’s post-sale challenges and quieted title in the purchaser.  Division II reversed.

The Washington Supreme Court held that:

  1. The sale was invalid because it was conducted after the 120-day statutory deadline without the issuance of a new notice of sale;
  2. The borrower did not waive the defect because it would not be equitable to require that the borrower enjoin the foreclosure sale when the borrower relied upon the forbearance agreement and promptly sued after learning the property had been sold;
  3. The purchaser at the foreclosure sale was not a protected bona fide purchaser because he had experience with nonjudicial foreclosures, he knew the initial sale date, he knew how to contact and had previously contacted the borrower, and he knew that the sale was being conducted more than 120 days after the initial sale date.

NOTE:  The opinion also includes commentary at footnote 9 suggesting that the trustee’s deed must include factual recitations about the history of the foreclosure rather than a mere general recital that ‘all legal requirements have been complied with’.  While dicta, this observation is certain to catch the eye of lenders, trustees, title insurers, and borrowers filing post-sale challenges.

Two justices concurred in the result based on the narrower theory that a grossly inadequate sales price coupled with unfair circumstances surrounding the sale provides an adequate basis to invalidate the sale.  The concurring justices argue that: the majority opinion undermines confidence in the deed of trust system by promoting post-sale challenges; the purchaser here was a bona fide purchaser; and general deed recitals contained in countless Washington trustee’s deeds are adequate.

Div. I Washington State Court of Appeals

May 29, 2012

Greenbank Beach and Boat Club, Inc. v Bunney No. 66308-9

Restrictive covenant – remedies – attorney fees – prelitigation bad faith

When a homeowner violates a restrictive covenant limiting the height of residences, the trial court has authority to order a homeowner to modify the house.  Here the trial court also imposed attorney fees on the homeowner on equitable theory of prelitigation bad faith.  Division I held that an award of attorney fees on this basis is only available if there was prelitigation action that implicated the authority of the court: “Prelitigation bad faith is not available as an equitable basis for an award of attorney fees where the actions found to be taken in bad faith did not pose a threat to the authority of the court.”

Moore v Commercial Aircraft Interiors LLC No. 66279-1

Tortious interference – expectation of employment – improper purpose or improper means –– good faith affirmative defense – blacklisting statute RCW 49.44.010

This factually complicated case turns on whether an individual has a viable claim for tortious interference with his expectation of employment when a prior employer threatens to sue a competitor if the competitor hires the individual.

After working first for C and then for V, Moore signed consulting contracts with both C and V to assist them in negotiating an acquisition of one by the other.  When the negotiation failed, C rehired Moore.  Several months later, C laid Moore off in a general reduction of force.  Moore had not signed any non-compete, but had signed 3 different agreements promising not to use or disclose C’s trade secrets and know-how.

V offered Moore a position, but wrote to C to confirm that C had no objection to Moore working for V.  C objected on the basis that Moore was intimately familiar with C’s trade secrets, know how and other confidential information.  C advised V that if it employed Moore, C would bring legal action to protect against such unfair competition by V.  V declined to hire Moore.  Moore sued C alleging unlawful interference with his prospects of employment and a violation of the blacklisting statute.  On cross-motions for summary judgment, the trial court dismissed Moore’s action.

On appeal, Div. I held that:

  1. C’s threat of a lawsuit did not support an inference of an improper purpose or improper means required for tortious interference with a business’ expectancy, and Moore did not satisfy his initial burden to demonstrate C’s bad faith or malice.
  2. Even if Moore had established all elements of his prima facie case, C established the affirmative defense of a legally protected interest that it believed in good faith might be impaired if Moore was employed by V.
  3. Moore argued that C was not acting in good faith because C’s assertion of a legally protected interest relies upon the “inevitable disclosure doctrine” that has not been adopted in Washington. That doctrine allows a plaintiff in a trade secrets case to obtain an injunction preventing an employee from working for a competitor by demonstrating that the employee would inevitably disclose the former employer’s confidential or trade secret information. Div I declined to either adopt or reject the inevitable disclosure doctrine because “this is a tortious interference case, not a trade secret case.”  Further, even under the inevitable disclosure doctrine, an injunction does not require a showing that the employee has engaged in affirmative misconduct, and C is not required to demonstrate misconduct by Moore.
  4. The blacklisting statute (RCW 49. 44.010) provides a civil cause of action if a person willfully and maliciously makes a statement to prejudice the mind of an employer against a person seeking employment, but Moore failed to present any evidence of malice by C.

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